He Ken and Others v. The Personal Representative of the Estate of Tang Wah also known as Tang Wah Kee, Deceased

HCA 66/2000

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 66 OF 2000

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BETWEEN

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Coram : Before Master Levy in Chambers

Date of Hearing : 23 and 25 March 2011

Date of Delivery of Ruling : 25 March 2011

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R U L I N G

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A. Background Leading to the Application to Dismiss

1.The Plaintiffs (landlords) issued the writ in January 2000 against the personal representative of the tenant (the deceased) in respect of two pieces of agricultural land in the New Territories for possession after a number of alleged breaches of an oral tenancy agreement that was created back in 1950.

2.Upon the Defendant having filed the Defence, pleading was deemed to have been closed in March 2000.

3.Due to the Plaintiffs’ inaction, the Defendant issued an application in May 2002 to dismiss the action for having failed to issue a summons for directions.  The court did not dismiss the action on that occasion, but gave the usual O.25 directions.

4.By the order of Master Lung dated 26 February 2003 (“Setting Down Order”), the Master granted leave to the Plaintiffs to set the case down for trial within 42 days (the action should have been therefore set down by April 2003), and further ordered the parties to submit a letter to court to confirm the length of the trial estimated by counsel in charge.  The leave to set down, according to paragraph 2 of the Setting Down Order, is conditional upon the parties complying with 4 specified conditions, which conditions include the exchange of witness statements, the filing of the hearsay notice within 14 days, and the obtaining of counsel’s advice within 28 days.

5.Apart from having filed affirmations of a witness and a witness statement of another witness of the Plaintiffs in March 2003, the Plaintiffs did nothing to comply with the Setting Down Order.

6.After a lapse of close to about 6 years, the Plaintiffs, instead of taking steps to  set the case down for trial, issued on 31 December 2008 an O.14 application (“O.14 Summons”) for summary judgment. Although the court has directed the O.14 Summons to be heard by a Judge, the Plaintiffs have not fixed a date for the hearing of the O.14 Summons.

7.The Plaintiffs’ inaction has led to the Defendant issuing the present summons on 8 November 2010 to apply to dismiss the action under O.34 (2) for having failed to set the action down for trial under the Setting Down Order, and further under the inherent jurisdiction of the court on the ground that the Plaintiffs have been guilty of prolonged or inordinate and inexcusable delay to the prejudice of the Defendant.

B. Delays Complained of

8.Counsel for the Defendant, Mr. Lam, submitted in his skeleton submission that there have been two periods of delay.  The first period of delay runs from the date of the Setting Down Order to the date of the O.14 Summons.  The second period of delay is from the date of the 2^nd call-over hearing of the O.14 Summons in February 2009 to the date of the present application.

9.The periods of delay complained of clearly straddle the period before and after the commencement of the Civil Justice Reform (“CJR”) on 2 April 2009, which has brought changes to civil practice and procedure.  It is therefore necessary for me to decide first and foremost how this court should approach the present application.  Should the law prevailing before or after the commencement of CJR be applicable, and if yes, how the law should be applied in respect of each periods of delay as found by the court?

C. The Applicable Principles

10.The only Hong Kong case that was cited in respect of delay that straddles both periods of pre-and-post the introduction of CJR is the decision of Kuok Luen (Macau) Agente De Programs Televisivos & Ors. v Tidetime Sun (Group) Ltd. & Ors., HCA1456 of 2006 (unrep.), a decision of the learned Master Ng, who surveyed in great detail, authorities of both Hong Kong[1]  and UK[2] in respect of dismissal for delay that had straddled the period occurring pre- and post CJR (and for UK, the commencement of Civil Procedural Rules “CPR”)).

11.Mr. Chong, counsel for the Plaintiffs, also referred to an unreported English decision of Annodeus Entertainment Ltd. and Anr. v Gibson and Anor., ((C.D.) Neuberger J, 2 February 2000), which is also concerned with the period of delay having occurred before and after the commencement of the UK’s CPR.  The learned Judge in that case set out 9 factors a court should take into account when considering a dismissal for inaction.

12.The nine factors, briefly stated, are as follows :

(i)  A claimant has a duty to get on with proceedings, and is liable to sanctions if he does not.

(ii)  This duty was taken more seriously even before the commencement of the CPR (Arbuthnot was cited).

(iii)  After the commencement of CPR, it has become more important to keep to the time limit laid down by the CPR or by the court (the speech of Lord Woolf MR in Biguzzi v Rank Leisure plc [1999] 4 All ER 934).

(iv)  In the old law, a claim could be dismissed for want of prosecution if the delay falls within either of the two requirements elucidated in Birkett v Jame.

(v)  The court is now prepared to dismiss a claim for delay even if neither of the Birkett v James requirements is satisfied.

(vi)  The duty of a claimant to pursue an action expeditiously and in accordance with the rules is all the more important when the plaintiff has already had a significant benefit at the expense of the defendant from the action.

(vii)  The CPR enable the court to adopt a more flexible approach.  The previous “all or nothing “ extremes of either dismissing the claim for delay or permitting it to continue are now merely the two ends of a spectrum.  The court has other sanctions at its disposal which it can and in appropriate cases, should impose rather than adopting one of the two extreme positions.

(viii)  The sanction to be invoked should have regard to the overriding objectives of the CPR in that it must be proportionate.

(ix)  Factors such as (a) length of the delay, (b) the explanation for delay, (c) the degree of non-observance of the rules or court order, (d) prejudice caused to the defendant, (e) effect of delay on trial, (f) the effect of the delay on other litigants and other proceedings, (g) the extent, if any , to which the defendant can be said to have contributed to the delay, (h) the conduct of the claimant and the defendant in relation to the action, (i) other special factors of relevance.

13.After the hearing, I have further considered Winpo Development Ltd v Wong Kar Fu & Ors., HCA 3541/1993 (Fok J., 8 February 2011) , which has not been cited by either counsel.  This case is mentioned because the delay complained of had also occurred before as well as after the introduction of the CJR.  The learned Judge in that case discussed the correct approach to be adopted by a court for delay having occurred pre-and post CJR.  I have not asked counsel to address me on this authority because I do not think the principles elucidated in Winpo will be in dispute, and that they are also not that different to those discussed by Master Ng (in Kuok Luen (Macau) Agente De Programs Televisivos ) and Neuberger, J. (in   Annodeus Entertainment Ltd ).

14.According to Fok J., the correct approach to be adopted is this: since the commencement of the CJR, the court has a duty to further the underlying objectives by actively managing cases by ensuring that a case is dealt with as expeditiously as is reasonable practicable, to promote a sense of reasonable proportion and procedural economy, and to ensure that the resources of the court are distributed fairly (§§ 29 and 30).  Further, the learned Judge, after having considered Wing Fai Construction Co. Ltd[3], took the view that for a delay having occurred before and after the introduction of the CJR, the court must look at the matter of delay in the context in which it occurred as a party is not be blamed for not observing a rule that did not exist at the relevant time.  Where the delay occurred after the commencement of the CJR, the court will have to take into consideration of any non-observance of the new rules (per §33).

15.Bearing these principles in mind, I will next consider whether the delay complained of is inordinate, and if yes, how the principles discussed above should be applied.

D. Discussion

A. Are the Delays Complained of Inordinate?

A.1 First Period of Delay

16.The first period of delay complained of happened between 2003 (when the Setting Down Order was made) and 2008 (the issuance of the O.14 summons), which fell within the pre- CJR. 

17.The explanation for the inaction between the period of the deadline for setting down the case for trial and the beginning of 2005, according to the Plaintiffs was due to the terminal illness of the handling solicitor, whose condition the Plaintiffs had been kept in the dark. His handling solicitor had sadly died in early 2005 from the terminal illness.

18.Upon the death of the handling solicitor, the Plaintiffs changed their solicitors in February 2005.  The new solicitor (the Plaintiffs explained) took quite some time in digesting the papers and understanding the nature of the claim.  Despite having had one conference with counsel in early 2006, the new solicitor had not done anything in relation to the action.  In the affirmation in opposition to this application filed by the 3^rd Plaintiff’s father on behalf of the Plaintiffs, it is deposed that the delay was further compounded by the fact that the Plaintiffs were residents outside HK. Whilst the father resides in Hong Kong, he is however aged 79, and he found it difficult to complain against the inaction of the replacement solicitor.

19.The illness of a handling solicitor, in my view, is a reasonable excuse. After the change of solicitor in February 2005, I find the Plaintiffs or their legal advisers have simply let the case go to sleep.  I cannot accept that the inaction on the part of their solicitors can constitute a good excuse, and find that for a period of more than 3 years, that is, between the periods from 2005 to 2008, there is inordinate delay.

A.2 Second Period of Delay

20.After the issuance of the O.14 summons in December 2008, the Plaintiffs’ explanation for the delay was that they were unable to get in touch with their solicitors.  Hence, eventually, in June 2010, the Plaintiffs changed solicitors again.

21.The explanation for this period of delay is similarly to that for the later part of the first period of delay discussed above, that is, the solicitors’ inaction.  For the same reason given above, I do not accept it is excusable.  The engagement of legal representatives does not, in my view, obviate the duty of a plaintiff to actively communicate with his legal advisers for the purpose of getting on with proceedings.  The delay of about 2 years for this period is plainly inordinate.

B. Factors to be considered

22.The Defendant has not sought to dismiss the action on what it is commonly known as the Grovit v Doctor ([1997] 1 WLR 640) abuse of process ground, that is, the plaintiff is shown not to have any intention to bring to a conclusion of a case which he has commenced. If this ground is relied on, the defendant will not be required to show prejudice.

23.Notwithstanding, however, as the principles elucidated in authorities discussed above have shown, I should consider the application with regard to the relevant underlying objectives under the CJR instead of constraining myself to the old principle of Birkett v James.  I should consider whether it is just to allow the action to be continued in the light of the background of the dispute, the effect of the delay it has on the Defendant and on the subsequent trial, and whether it is fair to deprive the Plaintiffs of a chance to continue with the action in all the circumstances.

24.Three alleged breaches of the terms of an oral tenancy identified in the present claim created were allegedly committed in different times.  In respect of a breach of the change of land user, it is alleged that it was committed in 1987. Concerning the alleged breach regarding the erection of illegal structure and failing to pay rent, it is said to have occurred in 1992.  As a result of the alleged breaches, the Plaintiffs claim that they have forfeited the lease by refusing to accept payment of rent. 

25.Apart from the non-payment of rent (which the Defendant denies), the Defendant has in fact admitted the change of land use as well as the erection of illegal structures.  The defence to the change of land use is based on an alleged waiver through the Plaintiffs’ acquiescence. The defence to the erection of illegal structures is of the alleged necessity. 

26.On the Defendant’s pleaded case, it would appear that the admitted breaches are continuing. The Defendant has the burden of proof by adducing positive evidence in relation to the defence.  The Defendant, instead of suffering from any prejudice, has in fact enjoyed the fruit of the Plaintiff’s inaction by continuing with the commercial activities now being conducted on the subject land.

27.It is also said that the son of the Deceased, who is currently occupying the land and is now the Defendant, has suffered a stroke, and as a result has become absent minded.  It is therefore asserted that the son has not been able to locate the original rental receipt that is said to be crucial to the allegation of non-payment of rent.  It is therefore contended that the Defendant would suffer prejudice.

28.There is no medical evidence to support this assertion.  As discussed above, the Plaintiffs’ case, apart from the non-payment of rent, is substantially is based on the other two alleged breaches of the oral tenancy.  In fact, it is not in dispute that the Defendant and his sister-in-law are occupying the land for business purpose.  The delay seems to have caused (quite ironically perhaps) more prejudice to the Plaintiffs than to the Defendant.

29.Further, I also note that it is not a case whether the Plaintiffs did not have any intention to continue with the proceedings.  Quite the contrary is the truth.  After the latest change of solicitors in June 2010, and before the present application in November 2010, the Plaintiffs have since obtained counsel advice in August 2010, conducted a site visit on 18 October 2010 by counsel and solicitors for the purpose of preparing for trial, and immediately the next day on 19 October 2010, their solicitors wrote an open letter to the Defendant’s solicitors intimating to the Defendant that they were prepared to withdraw the O.14 Summons with cost to the Defendant with proposed   directions for the purpose of bringing the action to trial.

30.The Defendant did not respond to the Plaintiffs’ proposal, and instead resorted to the present application to dismiss the action.

31.In the circumstances, this is a case, in my view, despite the Plaintiffs being guilty of inordinate delay, falls within the exceptional circumstances that I should not exercise my discretion to put the proceedings to an end. The summons is therefore dismissed.

32.However, in the light of the long delay, I am inclined to give case management directions by imposing a tight timetable with peremptory order with dismissal as the sanction for default in ensuring that this case can proceed to trial as expeditiously as possible.

33.I am further inclined to, subject to submissions, depart from the usual cost order in depriving the Plaintiffs’ costs (despite they have succeeded in resisting the present summons) to show the court’s strong disproval of the substantial delays that have occurred.

Hearing on 23 March 2011:

Mr. Simon H.W. Lam instructed by Messrs. Andrew Chan & Co. for Defendant.

Mr. K.M. Chong instructed by Messrs. Y.T. Szeto & Co. for Plaintiffs.

Hearing on 25 March 2011:

Mr. Y F Luk of Messrs Andrew Chan & Co. for Defendant

Mr. J Fok instructed by Messrs by Messrs Y.T. Szeto & Co. for Plaintiffs.

[1] Nanjing Iron & Steel Group International Trade Co. Ltd v STX Pan Ocean Co. Ltd & anor, HKAJ 177/2006, Reyes, J.; Wing Fai Construction Co. Ltd. [2010] 3HKC593 C.A.

[2] Birkett v  James [1978] A.C.297; Arbuthnot Latham Bank Ltd v Trafalgar Holdings Ltd [1998] 2 All ER 181

[3] See F/N. 1 above