A & M Manufacturing and Marketing Ltd v. Iu Po Shing

CACV 15/2011

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 15 OF 2011

(ON APPEAL FROM DCCJ NO. 2153 OF 2003)

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BETWEEN

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Before: Hon Tang Acting CJHC, Fok JA and Lam J in Court

Date of Hearing: 6 September 2011

Date of Judgment: 6 September 2011

Date of Handing Down Reasons for Judgment: 14 September 2011

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REASONS FOR JUDGMENT

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Hon Tang Acting CJHC:

1.I agree with the reasons for judgment of Fok JA and with the orders proposed.

Hon Fok JA:

Introduction

2.The plaintiff commenced this action by writ in the District Court dated 14 April 2003.

3.By summons dated 1 April 2010, the defendant applied for an order that the action be dismissed or struck out for want of prosecution and/or as an abuse of process of the court.  On 10 June 2010, Master B. Mak dismissed that application.

4.The defendant appealed against the Master’s decision.  By his judgment dated 26 August 2010, Deputy District Judge R. Yu allowed the appeal, set aside the Master’s order and acceded to the defendant’s summons.

5.Leave to appeal having been granted by Rogers VP on 5 January 2011, the plaintiff appealed to this court against the Judge’s order.

6.At the conclusion of the hearing, we allowed the appeal and indicated that we would hand down our reasons for doing so at a later date.  These are our reasons.

The issues in the action

7.The claim is a simple one for repayment of the balance of a loan.  It is alleged that an agreement was reached between the plaintiff, acting through Mrs Sonia Ng, one of its directors, and the defendant (who was a partner in a firm of solicitors), whereby the plaintiff would lend HK$700,000 to the defendant.  The sum of HK$700,000 was duly paid by the plaintiff to the defendant by cheque dated 25 June 1999 and the defendant signed on a copy of the cheque to acknowledge receipt.  On 15 March 2000, the defendant paid the plaintiff a sum of HK$250,000.  The plaintiff says this was partial repayment of the outstanding loan.  The remaining HK$450,000 has not been repaid and this is the subject of the plaintiff’s claim in the action.

8.In his defence, the defendant denies the loan agreement with the plaintiff and denies that the HK$700,000 cheque was a loan by the plaintiff to him.  He says that the cheque was “a personal dealing between Mrs Ng and the Defendant and had nothing to do with the Plaintiff”.  So far as the HK$250,000 payment is concerned, the defendant says that this sum was paid to the plaintiff as agent for Mrs Ng, at her request made to the defendant on or about 15 March 2000.

9.The issues in the action are therefore very straightforward.  The first issue is whether a loan agreement was entered into between the plaintiff and the defendant on 25 June 1999.  The next issue concerns the nature of the payment of HK$250,000 made on 15 March 2000.  The defendant’s liability for the plaintiff’s claim of HK$450,000 will depend on the outcome of those two issues.

The procedural history of the action

10.It is apparent from the evidence that Mrs Ng had tried to contact the defendant in the period after the payment on 15 March 2000.  These attempts included a letter of demand from the plaintiff to the defendant dated 17 June 2002 which was sent to his office address but returned on the basis that he no longer worked there.

11.The writ was issued on 14 April 2003 but it was not served immediately upon its issue.  The evidence discloses that attempts to serve it on the defendant were unsuccessful due to the defendant’s absence from Hong Kong.  On 8 June 2005, the plaintiff made an application for extension of the validity of the writ and, on 20 December 2005, the plaintiff made a further application for extension of the validity of the writ. The writ was then served on the defendant on 28 December 2005.

12.On 6 January 2006 the defendant filed an acknowledgement of service and on 3 February 2006 the defence was filed.

13.On 18 June 2007 the plaintiff gave notice of intention to proceed.  A summons for directions was taken out by the plaintiff on 30 July 2007 and, on 6 August 2007, Master S.T. Poon made an order by consent that (a) the parties file and serve their respective lists of documents within 14 days, i.e. on or before 28 August 2007, (b) the parties exchange signed witness statements within 56 days, i.e. on or before 9 October 2007, and (c) the plaintiff apply for a pre-trial review within three months from the inspection of documents, i.e. on or before 3 December 2007.

14.In compliance with part (a) of Master Poon’s consent order referred to above, the defendant filed his list of documents on 20 August 2007 and the plaintiff filed its list of documents on 21 August 2007.  On 18 December 2007 the plaintiff filed a supplemental list of documents.  The parts of the consent order requiring the parties to exchange signed witness statements and requiring the plaintiff to apply for a pre-trial review were not complied with.

15.After the exchange of lists of documents, the defendant’s solicitors wrote to the plaintiff’s then solicitors, Messrs Li & Partners, on 24 August 2007, 17 September 2007 and 29 September 2007 requesting copies of the documents disclosed but received no reply.  Similarly, after the plaintiff’s supplemental list of documents was filed, the defendant’s solicitors requested from Messrs Li & Partners copies of the documents disclosed but, again, received no reply.

16.Messrs Li & Partners were replaced as the plaintiff’s solicitors by another firm, Messrs Kenneth C.C. Man & Co, on 25 March 2008 and the defendant’s solicitors directed a request to the plaintiff’s new solicitors for copies of the documents disclosed.  Eventually, on 27 June 2008, Messrs Kenneth C.C. Man & Co provided the defendant’s solicitors with copies of the disclosed documents.  In return, the defendant’s solicitors provided the plaintiff with copies of the documents listed in the defendant’s list of documents.

17.On 1 March 2010, the plaintiff filed another notice of intention to proceed.  This was then followed by the defendant’s summons seeking to dismiss or strike out the action.

The Judgment below

18.It was not disputed that the plaintiff’s claim would be statute-barred and a new action seeking to recover the balance of the alleged loan could not be commenced if the defendant’s summons seeking the dismissal or striking out of this action were acceded to.

19.The Deputy Judge noted that the defendant sought the dismissal or striking out of the action on three bases:

(1)  First, on the basis of the principle in Birkett v James [1978] AC 297, namely that the defendant suffered serious prejudice as a result of inordinate and inexcusable delay on the part of the plaintiff;

(2)  Secondly, on the basis of the principle in Grovit v Doctor [1997] 2 All ER 417, namely that the plaintiff had no intention of prosecuting the action to trial such that this was an abuse of process of the court; and

(3)  Thirdly, on the basis of the judgment of Reyes J in Nanjing Iron & Steel Group International Trade Co Ltd v STX Pan Ocean Co Ltd, unrep., HCAJ 177 of 2006, 7.9.09, in which it was held that, under the regime introduced by the Civil Justice Reform, it was contrary to the underlying objective in O.1A r.1(b) to allow an action to languish for two years and that, in the absence of compelling reason, this was sufficient cause to strike out the claim.

20.In respect of the Birkett v James principle, the Deputy Judge noted that he was concerned only with the second limb of the principle, namely inordinate and inexcusable delay on the part of the plaintiff or its lawyers giving rise to a substantial risk that it is not possible to have a fair trial of the issues in the action or is such as is likely to cause or to have caused serious prejudice to the defendant.

21.The Deputy Judge identified two periods of delay, namely (i) a period of about 16 months from the date of the service of the defence in February 2006 until the summons for directions taken up by the plaintiff in July 2007, and (ii) a period of about 27 months from the filing of the plaintiff’s supplemental list of documents in December 2007 until the date of the defendant’s summons seeking the dismissal of this action for want of prosecution in April 2010.

22.The Deputy Judge noted that it was conceded by counsel for the plaintiff that there was inordinate and inexcusable delay from December 2007 to April 2010.  He therefore noted that the issue before him was whether the defendant suffered serious prejudice as a result.

23.The enquiry into the possible prejudice to the defendant focused primarily on the defendant’s former secretary, Ms Amy Leung.  She had sent to Mrs Ng a copy of the bank pay-in slip in respect of the payment to the plaintiff of HK$250,000 on 15 March 2000 under cover of a facsimile transmittal record on the letterhead of the defendant’s firm dated 17 March 2000. It was submitted on behalf of the plaintiff that the delay had resulted in the defendant being unable to locate Ms Leung and also in the likelihood that, even if she were located, she would not be able to recall how or why the sum of HK$250,000 was paid to the plaintiff.

24.The Deputy Judge held that, although the delay had not been the reason for the defendant’s loss of contact with Ms Leung, it did cause prejudice to the defendant in that he could not rule out the submission of the defendant that, even if he could now locate her, Ms Leung might not be able to recall the reason for the payment of HK$250,000, which could shed light on the nature of the original loan of HK$700,000.

25.In addition, the Deputy Judge held that, although he had not stated in his affirmation that he had any difficulty with his memory, he was prepared to infer from the long lapse of time that the defendant would have a fading memory and thus suffer serious prejudice.  He disagreed with the plaintiff’s submission that the case was well-documented, hence the importance of the oral evidence.

26.For these reasons the Deputy Judge held that the action should be dismissed for want of prosecution.

27.In respect of the Grovit v Doctor principle, the Deputy Judge held that, given the two periods of inactivity, there was prima facie evidence that the plaintiff did not intend to proceed with the case to trial.

28.In respect of the first period of delay, the Deputy Judge accepted the explanation of Mrs Ng that this was due to her health. In her affirmation opposing the defendant’s summons, Mrs Ng explained that she was diagnosed in October 2005 to be suffering from a cerebral aneurysm.  In December 2005 she was advised that there was a risk that the aneurysm might rupture resulting in death or permanent disability.  She was accordingly recommended to avoid overworking and excessive stress.  She underwent surgery on 3 March 2006 to treat her aneurysm and, following surgery, for which she was hospitalised for three days, had to rest for several months thereafter.  In mid-2006, following an MRI scan of her brain, Mrs Ng was diagnosed to be suffering from another aneurysm in her right internal carotid artery.  Surgery was originally scheduled to be carried out of 18 October 2006 but, on the day scheduled for the surgery, she was advised by the surgeon that it would be too risky to operate.  Instead, she was advised to keep her blood pressure under control and to avoid stress.  She has been undergoing MRI scans of her brain every six months to monitor the situation.

29.As to the second period of delay, the Deputy Judge noted the concession on the part of the plaintiff that this was inordinate and inexcusable.

30.He rejected her explanation that this period of delay was caused by her need to search for corporate documents of Caran Limited, a company in which Mrs Ng and the defendant had been directors and investors.  As to her explanation that the delay was due to ill health, he held that her health condition, which had stabilised since October 2006 did not justify inactivity for a period of 27 months. He noted that Mrs Ng’s evidence was that it was always her intention to proceed with the action once she had recovered from her illness but, while expressing sympathy for her misfortune, he held that there was no justification for leaving the progress of this action to be decided entirely by her health.  He concluded that her conduct was that of warehousing the case until it was convenient for her to pursue it and that this was an abuse.

31.Further, the Deputy Judge noted that no explanation had been offered for not complying with Master Poon’s order for the exchange of witness statements and to apply for a pre-trial review.  He held that this was a total disregard of the applicable rules and order of the court, which was an abuse.

32.For these reasons the Deputy Judge held that the inactivity of the plaintiff amounted to an abuse and that, taking all matters into account, it would be fair to strike out the action.

33.In respect of the defendant’s submission based on the judgment of Reyes J in Nanjing Iron & Steel Group International Trade Co Ltd v STX Pan Ocean Co Ltd, the Deputy Judge considered that he was bound by the decision of this Court in Re Wing Fai Construction Co Ltd [2010] 3 HKC 593 disagreeing with Reyes J’s judgment and that, in any event, it was not necessary for him to consider this argument since he had found in favour of the defendant on the first two bases of the application.  There is no respondent’s notice in respect of this aspect of the Deputy Judge’s judgment.

The grounds of appeal

34.The first submission advanced in support of this appeal by Mr K.M. Chong, counsel for the plaintiff, (appearing with Mr Lester Lee) is that the Deputy Judgeerred in holding that the defendant had suffered prejudice as a result of the plaintiff’s delay of such severity to warrant the Draconian measure of dismissal for want of prosecution.

35.Secondly, he submits that the Deputy Judge erred in holding that the plaintiff had abused the processes of the court by delaying the prosecution of the action.

36.Thirdly, he submits that the Deputy Judge erred in holding that, in the circumstances, it was just and fair to strike out the plaintiff’s claim.

37.This being an appeal from an exercise of discretion on the part of the Deputy Judge, we are only entitled to reverse his decision where we are satisfied that he has erred in principle or is otherwise plainly wrong.

Dismissal for want of prosecution

38.As will be recalled, the Deputy Judge found prejudice from the delay to be established in respect of the defendant’s inability to locate Ms Leung and in respect of the impairment of the defendant’s own memory.

39.As to the inability to locate Ms Leung, I consider that, notwithstanding the submissions to the contrary of Mr Frederick Chan, counsel for the defendant, the Deputy Judge was wrong to hold that the absence of Ms Leung (or, even if she were located, her diminished memory) constituted material prejudice to the defendant since her inability to explain the reason for the payment of HK$250,000 deprived him of evidence as to the nature of the original loan of HK$700,000.

40.There is no suggestion that Ms Leung was privy to any conversation between Mrs Ng and the defendant at the time of the payment of HK$700,000 on 26 June 1999. Nor is there any suggestion in the defence or the defendant’s evidence that Ms Leung was privy to any conversations with either Mrs Ng or the defendant as to the nature or purpose of the payment of HK$250,000 made on 15 March 2000.  All she is said to have done is to have faxed the copy of the relevant bank pay-in slip to Mrs Ng under cover of a facsimile transmittal record.  In short, there is simply no proper evidential basis for the defendant’s suggestion that Ms Leung would be a material witness regarding how and why that sum was paid to the plaintiff and not to Mrs Ng.  That being the case, there is no question of Ms Leung’s evidence having any bearing on the issue of the nature of the original loan of HK$700,000.

41.In the circumstances, I consider that the Deputy Judge was wrong in principle in taking into account any alleged prejudice caused to the defendant by reason of his inability to locate Ms Leung as a witness or the extent to which her memory may have faded.

42.That error of principle entitles this court to exercise its discretion afresh on the question of whether the plaintiff’s action should be dismissed for want of prosecution.  As to this, Mr Chan submitted that the Deputy Judge was right to draw the inference that the defendant had established sufficient prejudice to justify the dismissal of the action on the basis of the impairment of his memory by reason of the delay.

43.It would appear that the Deputy Judge attached the degree of importance he did to the oral evidence, and hence the question of prejudice by reason of the defendant’s diminished memory, because of his view that the case was not well-documented.

44.With respect to the Deputy Judge, I do not consider he was correct in this regard.  As I have indicated above, the issues in this action are very straightforward.  From the plaintiff’s perspective, the case is well-documented.  The nature of the loan as a personal loan from the plaintiff to the defendant is supported by the acknowledgement of receipt signed by the defendant dated 26 June 1999 and the partial repayment of that loan is supported by the facsimile transmittal record attaching a copy of the bank pay-in slip in respect of the HK$250,000.  The oral evidence will merely be speaking to facts supported by the existing documentation.

45.Furthermore, even though it was returned to the plaintiff, the plaintiff’s letter dated 17 June 2002 addressed to the defendant sets out a near-contemporaneous account, from the plaintiff’s perspective, of how and why the cheque for HK$700,000 came to be given to the defendant.  It also deals with how and why, according to the plaintiff’s case, the payment of HK$250,000 was made by the defendant on 15 March 2000.

46.The contrary submission of the defendant, that the case is not well-documented, appears to be a reflection of the fact that the defence case is essentially unparticularised.  It will be recalled that the defence pleads that the cheque for HK$700,000 received by the defendant was not a loan from the plaintiff but rather was “a personal dealing between Mrs Ng and the Defendant”.  However, there is nothing by way of particulars either in the pleaded defence or in further and better particulars of that pleading or elsewhere.  It lies ill in the mouth of the defendant, in my opinion, to make a wholly vague and unparticularised assertion in his defence and then to make the submission that the case is not well-documented.  That submission simply begs the question, what case?

47.I turn then to consider the question of whether it is right to infer serious prejudice from the delay constituted by the diminution in the defendant’s own memory.

48.There is no direct evidence of this but it has been held that it is not essential in every case that there should be evidence of particular respects in which potential witnesses’ memories have faded. Instead, in order to determine whether a defendant has suffered the necessary prejudice when it is in the form of the impairment of witnesses’ recollections as a result of inordinate and inexcusable post-writ delay, the court must examine with care all the circumstances of the case, including both the affidavit evidence as well of the issues disclosed by the pleadings.  So long as there are primary facts from which inferences can properly be drawn, there is nothing wrong with doing so.  See, Shtun v Zaleska [1996] 1 WLR 1270 at p. 1285B-C (per Gibson LJ) applied by this court in Yeung Kit Ling v Ma Kwan Ho Lawrence & Anor [2011] 3 HKC 115 at §26 (per Stock VP).

49.It is not necessary, in my view, to examine the cases relied upon by Mr Chan supporting the proposition that a court may infer prejudice arising from delay.  Each case necessarily turns on its own facts and whether or not, in any given case, it is appropriate to draw the inference depends upon all the circumstances of that case: see per Gibson LJ in Shtun v Zaleska (supra.) at p. 1287G.

50.Insofar as the action did not effectively commence until 2005, the plaintiff is not to blame for that delay, which would appear to have been the result of the defendant leaving the jurisdiction.  Nevertheless, once the action was commenced, one would expect the defendant to have examined the claim against him and to have determined what, if any, defence to advance.

51.As I have set out above, the issue in respect of liability for the balance of the alleged HK$700,000 loan turns on whether that sum was advanced by the plaintiff to the defendant as a loan (as the plaintiff contends) or was a payment made by Mrs Ng personally to the defendant in respect of “a personal dealing” between them (as the defendant contends).  One can assume (in the absence of any explanation as to the steps taken by the defendant in the preparation of his defence) that the defendant must know what he is referring to in his own defence when he asserts that the payment was in respect of a personal dealing and, in particular, what that personal dealing was and why Mrs Ng was paying him the sum of HK$700,000 in connection with that dealing.

52.The fact that the defendant may be taken to know these matters is also supported by an examination of the items disclosed in his list of documents filed on 20 August 2007.  The first item in the list of documents is said to be a copy receipt dated 26 June 1999 from the defendant to Mrs Ng in respect of a cashier order issued by the Shanghai Commercial Bank Ltd of the same date for HK$300,000.  Items 3 to 11 concern documents relating to Caran Limited, which as noted above, was a company in which Mrs Ng and the defendant were directors and investors.

53.There is no explanation in the defendant’s pleadings or evidence as to why these documents might be relevant.  However, the plaintiff’s evidence is that, in order to advance the sum of HK$700,000 to the defendant, it entered into a loan agreement with the Shanghai Commercial Bank Ltd to borrow HK$1 million.  The bank statement of the plaintiff dated 30 June 1999 shows, amongst the entries for 26 June 1999, the sum of HK$1 million being deposited as “loans credit”.  It also shows a withdrawal of HK$300,000 as “C/O withdrawal” (presumably C/O referring to cashier order) and a withdrawal of HK$700,000 as “clearing cheque 493460” (that being the number of the cheque by which the alleged loan was made to the defendant).  In the circumstances, the defendant is plainly aware of the receipt in respect of the cashier order for HK$300,000 and, one can infer, of its relevance (if any) to this action.

54.Furthermore, the company documents of Caran Limited consist mainly of annual returns for that company from 1994 to 1999.  In the absence of any reference to this company in the plaintiff’s pleading, one can infer that the defendant himself is aware of any relevance of these documents to the action.

55.For all these reasons, I would not, with respect to the Deputy Judge, draw the inference that the defendant has suffered serious prejudice constituted by his impaired memory due to the delay for which the plaintiff is responsible.  It follows that I would not have dismissed this action for want of prosecution.

Abuse of process

56.The threshold for a strike out on the grounds that the delay constitutes an abuse of process is necessarily high.  There are two bases on which the court will hold that this threshold is met.

57.First, if it is shown that the plaintiff is maintaining the action where there is no intention to carry it to trial, the action is liable to be struck out: this is the principle in Grovit v Doctor (supra.) as identified by this court in New China Hong Kong Group Ltd & Anor v AIG Asian Infrastructure Fund LP & Ors [2005] 1 HKLRD 383 at §§10-11.

58.Secondly, the court may conclude that it is appropriate to strike out an action as an abuse if the plaintiff is guilty of a series of inordinate and inexcusable delays in complete disregard of the rules of the court and with full awareness of the consequences: see Choraria v Sethia [1998] CLC 625 per Nourse LJ at p. 630F and New China Hong Kong Group Ltd & Anor v AIG Asian Infrastructure Fund LP & Ors at §16. As Woo VP there noted, this is an example of abuse of process or contumelious conduct, which is the first limb of Birkett v James.

59.The threshold is necessary high because otherwise there is, as Stone J recognised in New China Hong Kong Group Ltd & Anor v AIG Asian Infrastructure Fund LP & Or at §66, a danger of the well-established Birkett v James doctrine being emasculated by the back door.  Thus, in that case, Stone J endorsed the view of Auld LJ in Miles v McGregor (unrep., Court of Appeal, 23.1.98) that the abuse of process route is for cases of an exceptional nature where the conduct of the party in default amounts to an affront to the court and to its rules: ibid. at §69.

60.As noted above, the Deputy Judge concluded that Mrs Ng’s decision, on behalf of the plaintiff, to wait until she recovered from her medical condition before proceeding with the case was equivalent to her warehousing the action until a convenient time and hence an abuse of process.  He also held that the plaintiff’s failure, in the absence of explanation, to comply with Master Poon’s order for the exchange of witness statements and to apply for a pre-trial review constituted an abuse.

61.The question here, in my view, is whether there was a proper basis for the Deputy Judge to reach either of those conclusions.

62.In my view, and with respect to the Deputy Judge, there was no such basis.

63.As to the Deputy Judge’s conclusion that the plaintiff was abusing the court’s process by warehousing the action, it is important to note that a lack of intention to bring the litigation to a conclusion is the key element of this particular type of abuse: see per Lord Woolf in Grovit v Doctor at pp. 647G and 648A.   The lack of relevant intention is necessary since mere delay, without more, does not amount to an abuse of process: see New China Hong Kong Group Ltd & Anor v AIG Asian Infrastructure Fund LP & Ors at §13.

64.In my judgment, that element of lack of intention to bring the litigation to a conclusion was not present in this case and the Deputy Judge erred in principle in holding that it was.  Mrs Ng’s evidence that her medical condition was the reason behind her not prosecuting the action was accepted by the Deputy Judge.  The assertion in that evidence that she intended to proceed with the action once she had recovered is not consistent with the Deputy Judge’s holding that she had commenced the action with no intention to bring it to a conclusion.  On the contrary, Mrs Ng’s evidence was that, when she recovered, she did intend to prosecute the action.

65.Mr Chan submitted in his skeleton submissions that, since the plaintiff is a company, Mrs Ng’s participation is not essential and that the plaintiff could continue to prosecute the action by its other directors.  This submission ignores the reality that the plaintiff was operated by Mrs Ng as its only active director and its largest shareholder. Further, Mrs Ng is the only representative of the plaintiff who is identified as having dealt with the defendant.  In these circumstances, it is not realistic to expect the action to be prosecuted otherwise than with Mrs Ng’s participation.

66.I turn to consider the Deputy Judge’s conclusion that the plaintiff’s failure, in the absence of explanation, to comply with Master Poon’s order for the exchange of witness statements and to apply for a pre-trial review constituted an abuse.

67.In my view, although it would have been prudent for the plaintiff to seek relevant extensions of time for compliance with these orders, I do not regard the failure to comply with them as being an abuse of the court’s process.  That is in no way to condone non-compliance with court orders but the reality is that these orders (which were made before the coming into effect of the CJR in April 2009) were not unless orders specifying any consequence for non-compliance.  Other relevant considerations seem to me to be that Mrs Ng adduced positive evidence that one of the reasons for her inactivity was the time taken by her to gather documents relating to Caran Limited (in order to investigate the vague and unparticularised suggestion that the personal dealing referred to by the defendant concerned their previous investment in that company); that the order for exchange of witness statements was mutual and the defendant was equally guilty of non-compliance; that this was the first occasion of non-compliance with specific orders by the plaintiff; and, that it was open to the defendant, if minded to put the plaintiff at risk of an adverse order in the event of non-compliance, to seek appropriate unless orders.

68.For my part, therefore, I do not consider that, in the circumstances of this case, there was abuse of process on the part of the plaintiff by reason of its non-compliance with Master Poon’s orders and I would not have struck out the action as an abuse of process.

Should the action be struck out?

69.For the reasons set out above, I consider that this court is entitled to exercise its discretion afresh on the question of whether the action should be struck out as an abuse of process and, for my part, I would not exercise that discretion to do so.  It follows therefore that I do not consider that it would be just and fair to strike out the action (that being a matter that would otherwise still have been necessary for the court to consider: see New China Hong Kong Group Ltd & Anor v AIG Asian Infrastructure Fund LP & Ors at §16).

Disposition

70.Although the plaintiff’s success in this appeal means that the action survives this attack by the defendant, it seems to me that active case management is required to ensure that the action is now prosecuted with due diligence.  The parties and their legal representatives must now comply with their duty to assist the court to further the underlying objectives of the rules (O.1A r.3 of the Rules of the District Court), in particular underlying objectives (b), (c) and (f).

71.To this end, in addition to allowing the appeal, I would make the following orders nisi by way of case management, namely that:

(1)  Unless the defendant specify, by way of further and better particulars of paragraph 2(b) of his defence, what positive defence is being asserted by the plea that the cheque for HK$700,000 received by him from Mrs Ng was “a personal dealing between Mrs Ng and the Defendant and had nothing to do with the Plaintiff” within 28 days of the date of the handing down of this judgment, paragraph 2(b) of his defence be struck out without further order;

(2)  Unless the plaintiff serves witness statements of witnesses of fact within 56 days thereafter, it be debarred from calling any witness of fact at the trial of this action;

(3)  Unless the defendant serves witness statements of witnesses of fact within 56 days after compliance by him with paragraph (1) above, he be debarred from calling any witness of fact at the trial of this action;

(4)  Unless the plaintiff issues a summons applying for a pre-trial review under Order 34 of the Rules of the District Court within 3 months after compliance by the defendant with paragraph (1) above, the action be struck out without further order.

72.These steps are the initial steps of active case management that should now be taken in respect of this action.  It will be for the District Court masters and judges dealing with the action to impose such further active case management directions as may be appropriate or necessary.

73.So far as the costs of this appeal are concerned, I would make an order nisi that the defendant pay the plaintiff’s costs of the appeal.

74.So far as the costs below are concerned, I would make an order nisi to reinstate the order for costs of Master Mak dated 10 June 2010 and, in respect of the application before the Deputy Judge below, that the defendant pay the plaintiff’s costs of that application.

75.It would be appropriate to assess summarily the plaintiff’s costs for this appeal and the application before the Deputy Judge below.  I therefore direct the plaintiff’s solicitors to submit a bill of costs within 7 days hereof.  The defendant’s solicitors should submit any response thereto within 7 days thereafter.

Hon Lam J:

76.I agree and have nothing to add.

Mr K M Chong & Mr Lester Lee, instructed by Messrs K.M. Lai & Li, for the Plaintiff/Appellant

Mr Frederick H F Chan, instructed by Messrs Bernard Wong & Co., for the Defendant/Respondent