Applications to strike out civil proceedings for delay or want of prosecution - the way forward

The Court of Final Appeal has, in Liquidator of Wing Fai Construction Company Limited v Yip Kwong Robert and Others (FACV 3/2011, 8 December 2011), informed practitioners of the approach the courts must now take when faced with applications to strike out civil proceedings for delay or want of prosecution on the part of the plaintiff. Parties thus now have the principles which courts should adopt in the post-Civil Justice Reform (CJR) era. Gavin Lewis, Gareth Thomas and Robert Hunt  examine these principles and suggest the best way forward in future cases where a defendant is faced with a plaintiff who appears unwilling to move proceedings forward towards trial. 

A restatement of the applicable principles

Pre-CJR, the courts in Hong Kong had been applying the law of England & Wales that had developed since the House of Lords' judgment in Birkett v James [1978] AC 297. Briefly, under the pre-CJR regime, the court had the power to strike out proceedings where it was satisfied that there was:

i. contumelious default (ie. breach of court orders) or abuse of the court process; or

ii. inordinate and inexcusable delay, coupled with prejudice to the defendant as a result.

The Court of Final Appeal, concentrating on the more frequently used second limb, unanimously held that mere delay on the part of the plaintiff would no longer be a proper ground for dismissal of proceedings for delay or want of prosecution unless:

 i. it was plain and obvious that by reason of the delay a plaintiff should be deprived of the opportunity to go to trial for the resolution his dispute; and

ii. there was an element of abuse of the process of the court by the plaintiff. In that context, "inordinate and inexcusable delay causing prejudice to a defendant, contumelious conduct or initiating proceedings without any intention to bring them to a conclusion" were all given as examples of abuse.

The Chief Justice iterated that "the foundation for the jurisdiction to strike out for delay must be abuse of process… I find it difficult to conceive of a case where a court will strike out for delay unless there is an element of abuse". As a result, striking out is now very much a remedy of last resort.

Indeed, striking out under this head is likely to be more difficult, given the high level of pro-activity required of all the parties to litigation under the post-CJR regime, prompting the Chief Justice to warn that he would expect to see virtually no applications to strike out for delay except in cases where a peremptory order (ie. an order providing that "unless" the plaintiff do some act within a prescribed time it be barred thereafter from doing that act) or provisions made under the court's case management powers under the CJR had also not been complied with. Further, even if delay were evident, it was up to the courts to make greater use of their post-CJR powers focusing on the underlying objectives, rather than to strike out an action (the main underlying objective being to seek to achieve a "just" resolution of the particular dispute between the parties, where possible).

Ma CJ was critical of two particular litigation strategies that were common pre-CJR:

"Sleeping dogs"

Pre-CJR proceedings were largely party-driven and a defendant could usually let "sleeping dogs lie" (ie. allow inactive proceedings to remain dormant). Ma CJ emphasised that this attitude was no longer acceptable post-CJR, where all parties have the obligation to progress an action.

Warehousing litigation

Warehousing of claims, whereby a plaintiff issued a number of actions against various parties and selected which actions to proceed with and which to put on hold in the meantime. Ma CJ stated abuse of process may be established where there is no intention to bring proceedings to trial however good tactically the reason for warehousing them.

Other issues addressed by the judgment were:

Limitation period

In the pre-CJR regime, courts were reluctant to strike out actions for delay when the limitation period had not expired, given that parties could simply institute fresh proceedings. Ma CJ held that, post-CJR, this should no longer be a factor which will militate against an order for striking out. The normal course would now be, if the criteria for striking out had been established, to "strike out the action for delay and leave it to the plaintiff to institute fresh proceedings". In such circumstances, given that a plaintiff had failed to proceed with its first claim, it would have to justify bringing new proceedings.

"Straddle" cases

Wing Fai itself involved an application to strike out for delay or want of prosecution which was made pre-CJR but heard post-CJR. Although no guidance had been given in Hong Kong as to the transitional provisions applicable in relation to proceedings already in existence, the Court unanimously held that the parties must take the law as they find it at the time the matter is determined. Applying the principles to the facts of Wing Fai, the Court held that the necessary element of "abuse" was lacking, in spite of a clear period of delay. The appeal was therefore dismissed.

Comments

We anticipate that this important judgment will inevitably reduce the number of applications to strike out civil proceedings for delay, as delay alone will no longer be a justification for striking out proceedings unless accompanied by an element of abuse of process of the court (examples of which are highlighted in the judgment). More particularly, only in the plainest or most obvious of cases, where the requisite abuse is clearly demonstrated, will courts consider striking out proceedings under this head.

Defendants faced with a recalcitrant plaintiff are now expected to press forward with the proceedings. Should the plaintiff remain unwilling to proceed, it can expect soon enough to be subject to a peremptory (or "unless") order, the breach of which will lead to the strike out of its claims. Whilst "letting sleeping dogs lie" was in the past most definitely a less expensive option for defendants in such circumstances, the measures commended to litigants by the Chief Justice will, if employed strategically by defendants, lead to greater certainty at an earlier stage in dormant proceedings.