HE KEN AND OTHERS v. The Personal Representative of the Estate of TANG WAH also known as TANG WAH KEE, deceased

HCA66/2000

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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J U D G M E N T

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1.  The plaintiffs commenced this action by Writ endorsed with a Statement of Claim on 4 January 2000. The Statement of Claim was amended on 25 November 2002.

2.  The plaintiffs own a parcel of land in the North as tenants in common in equal shares, as successors in title to the original owners.  The defendants are the personal representatives of Tang Wah Kee, deceased, who was the tenant under an oral agreement made in or about 1950. The tenancy is alleged to be an agricultural tenancy.

3.  It is alleged that in about 1987, in breach of the tenancy agreement the deceased changed the user of the land from agriculture to commercial shop premises and created illegal structures in the form of stalls on the land.  I say the deceased, but it may well be the deceased’s successors in title but it matters not as far as the allegation is concerned.  The plaintiffs’ predecessors in title gave notice of objection to the activities but the deceased and/or his personal representatives have failed and and/or refused to revert the user of the land to agricultural purposes.  Further structures were erected in 1992.

4.  Furthermore the deceased and/or the defendants have failed to pay rent for the said land since January 1992.  The defendants contend that the agents of the plaintiffs’ predecessors failed or refused to collect rent since the early 1990’s.  However their position has shifted somewhat in that they now contend that in 1993 they paid rent for 15 years in advance i.e. up to 2007, and that they have a receipt to this effect. The genuineness of the receipt is disputed.

5.  The Amended Defence of 11 February 2002 contends that the land was let for residential occupation and that it was agreed that the deceased could use the land to operate his business.  Alternatively the Defence pleads waiver or acquiescence in respect of any change of user. The works in or about 1992 were not, it avers, new structures but remedial works to the original structures, which the plaintiffs, or their predecessors accepted.

6.  The action has had a rather long drawn-out history.  I need only pick out the principal events.

7.  In May 2002 the defendants took out a summons to strike out the action for want of prosecution.  This was dismissed on 27 November 2002 when a number of other orders was made by Master Mary Yuen. The plaintiffs duly served a Notice of Intention to proceed on 2 October 2002.

8.  Not much happened in 2003 save that on 26 February Master Lung gave leave for the action to be set down for the trial within 42 days.  Then it seemed to go to sleep for a while.

9.  Aerial photographs were obtained in 2004 and regrettably the plaintiffs’ solicitor, who had been ill for some time and therefore unable to progress the action, died in 2005.  There was a change of firm of solicitors for the plaintiffs in February 2005 and a handwriting expert was instructed.

10.  Further Notices of Intention to proceed were given in January and June 2006, and again in October 2008 followed swiftly by a summons for judgment under Order 14, in December 2008.  On the hearing of this in January 2009 Master Levy adjourned it until the following month for a call over hearing to deal with setting down the action for trial.  On 9 April 2010 came another Notice of Intention to proceed.  Then in June of the same year the plaintiffs changed solicitors again.

11.  The year 2010 saw, in relative terms, a flurry of activity with the plaintiffs’ solicitors writing in October to the defendant’s solicitors seeking to withdraw their Order 14 summons (taken out in December 2008) and take out a case management summons.  This precipitated a summons to dismiss for want of prosecution taken out by the defendant’s solicitors on 8 November 2010.  This came before Master Levy on 25 March 2011 and it is her dismissal of this which occasions this appeal before me.

12.  Although this is a rehearing I have had the advantage of reading the transcript of the judgment of the learned master.  The matters ventilated and argued before me were those with which she was faced.

13.  In an extremely careful and comprehensive judgment she reviewed, as I have done, but in more detail the history of the action.  She then set out the applicable principles in accordance with the periods of delay identified, and how they should be approached since they fell either side of the coming into force of the Civil Procedure Rules.  I agree entirely with her approach and her application of the case law.  The detailed consideration of NeubergerJ (as he then was) in Annodeus Entertainment Ltd and another-v-Gibson and another—unreported—Chancery Division, 2 February 2000, is particularly apposite.  He identified nine factors.  I shall identify the last three as having particular relevance to this situation:

“Seventhly, the CPR enable the court to adopt a more flexible approach … 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. Those weapons, those sanctions, are discussed in the judgment of Lord Woolf, MR in Biguzzi v Rank Leisure Plc [1999] 4 All E.R. 934, [1999] 1 WLR 1926 … They include payments into court, providing for no interest in favour of a claimant … and for appropriate directions and supervision for the future conduct of the trial.”

“Eighthly, in light of general principle and the overriding objective … the sanction, if any, to be invoked by the court to deal with a particular case of delay should be proportionate. To dismiss a claim where the claimant appears to stand a reasonable chance of success and of recovering substantial damages is a strong thing to do.”

“Ninthly, it appears to me that it is normally relevant to consider the following factors. First, the length of the delay; secondly, any excuses put forward for the delay; thirdly, the degree to which the claimant has failed to observe the rules of court or any court order; fourthly, the prejudice caused to the defendant by the delay; fifthly, the effect of the delay upon trial; … seventhly, the extent if any to which the defendant can be said to have contributed to the delay; eighthly, the conduct of the claimant and the defendant in relation to the action; ninthly, other special factors of relevance in the particular case.”

14.  It is clear to me that the learned Master took all these features into account.  I would add only that the cause of action is a continuing cause and even if the plaintiffs’ proceedings were to be brought to a halt now, it would be open to them to start afresh.  This remains a factor to be considered.

15.  It is important to bear in mind the nature of this action.  It relates to land and an oral tenancy granted in or about 1950. At issue is a significant amount of value both for the plaintiffs on the one hand and for the defendant on the other.  It is not surprising that only one party to the agreement is still living and she is aged and abroad.  A resolution of the dispute is essential for the clarification of rights. Although there is some prejudice to the defendants, as there will be to most defendants as a consequence of delayed progress in proceedings, I am not convinced that there is anything like substantial prejudice. 

16.  Although one must sympathise with the defendant over the loss of family members and his own ill-health in the intervening years, on the crucial issues I do not consider that whether this action was tried in 2002 or 2012 such events would make any difference.  Over the intervening years the defendants have had the profitable uninterrupted user of land which they may not have been entitled to.  A number of features of the available evidence is curious, in particular the purported receipt of rent covering the period 1993 to 2007 and dated January 1993, covering in fact 15 years.  The structures are on the face of it illegal in that there is no evidence supporting their approval or consent.  But it is not for me to try any issues.

17.  To put an end to these proceedings would be to occasion enormous prejudice to the plaintiffs and potentially give the defendants an undeserved benefit of significant proportions, and as a consequence prevent the examination of alleged fraudulent activity.  It would leave an unhealthy vacuum.

18.  A consideration of the authorities helpful and essential as it is—and I am indebted to Mr Rimsky Yuen, SC for the defendant and Mr Kevin Chong for the plaintiffs  for their cogent, direct and succinct arguments—serves to illustrate how carefully one must bear in mind the intrinsic nature of the particular cause of action or litigation, being reviewed.  This is where Neuberger J’s approach is so informative and constructive.  The application of rigid principle is in my judgment inappropriate.

19.  I am satisfied that there has not been any intentional or contumelious delay, but there has been serious delay, some of it inexcusable.  However it does not in my judgment prevent there being a fair trial.

20.  Master Levy’s appraisal, conclusions and rationale cannot be faulted and I adopt them in their entirety.  She has also followed Neuberger J’s seventh factor in providing appropriate directions and supervision for the future conduct of the trial.  It would be a pointless exercise therefore for me to repeat them “in extenso” without attribution thereby plagiarising her judgment.  It would be somewhat artificial and certainly unnecessary to reprint pages of her judgment in quotation marks.

21.  The appeal is therefore dismissed with costs. It has occurred to me that where solicitors who have acted for the plaintiffs in the past, i.e. the predecessors of the plaintiffs’ current solicitors, have been responsible for delay and inactivity, their failings should be reflected in a severe taxation of any costs they seek to recover either against the defendants or against their own clients.  I leave the parties to direct this part of my judgment to the attention of any Taxing Master involved in later stages of this action.

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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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:

Hearing on 25 March 2011: