CONFEDERATED ASSETS GROUP LTD (incorporated in the British Virgin Islands) AND OTHERS v. NG KWOK CHING AND OTHERS

HCA 188/2010

[2025] HKCFI 4368

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 188 OF 2010

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BETWEEN

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D E C I S I O N

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Introduction

1.  This is a case which has been dragged on for over 15 years.

2.  Prompted by a summons issued on 11 April 2025 for leave to amend the Counterclaim, I directed the parties on 13 May 2025 to, inter alia, file affidavit evidence to explain the inaction in these proceedings since 2016, and to show cause as to why the action and Counterclaim (as defined below) should not be dismissed under Order 25 rules 1(4) and 1(6) and the Court’s inherent jurisdiction (“13 May 2025 Order”).

3.  At the call-over hearing on 16 May 2025, these directions were made into an order (with the consent of the Plaintiffs (“Plaintiffs”) and the 1^st, 3^rd, 4^th and 5^th Defendants (“D1, 3-5”; “D1”, “D3”, “D4”, and “D5” respectively and “Defendants” collectively)) (“16 May 2025 Order”).

4.  On 1 September 2025, I heard submissions from the parties on the issue set out at §2 above. I reserved my judgment at the hearing, and this is my decision.

Background

5.  Given the prolonged history of this case, I do not consider it necessary to set out the whole background to this case. I refer to my judgments in Ng Kwok Piu Philip v To Pui Kui HCA 51/2007, 6 March 2014 (“Expert Evidence Judgment”) andNg Kwok Piu Philip & Ors v To Pui Kui & Ors, HCA 51/2007 & HCA 1040-1041/2009, 6 January 2016 (“3 Actions Judgment”) and Deputy High Court Judge Winnie Tam’s judgment in To Pui Kui v Ng Oi Che & Ors HCA 522/2008, 3 March 2014, which have set out the background of this case. I will only highlight the relevant parts of the undisputed background and procedural history.

Procedural background leading up to the present action

6.  The present action, originally commenced on 5 February 2010, is part of a series of legal proceedings that arose between two camps of a divided family. After the death of the family patriarch (Mr Ng Po Sum), the family was split into two groups, which led to a number of proceedings concerning, inter alia, the shareholding in certain family-owned companies.

7.  The various actions are as follows:

a.  HCA 523/2008, which concerned the shareholding in a family company known as Confederated Assets Group Limited, the 1^st Plaintiff in this action (“P1”).

b.  HCA 522/2008, which concerned alleged misappropriations from the late Mr Ng Po Sum’s bank accounts and safe deposit box.

c.  HCA 51/2007, HCA 1040/2009 and HCA 1041/2009 (“3 Actions”), which concerned the shareholding in a number of family companies bearing the name “Hultucktong”.

8.  On 22 September 2010, Au J (as he then was) ordered, inter alia:

a.  The consolidation of HCA 51/2007, HCA 523/2008, HCA 1040/2009 and HCA 1041/2009;

b.  HCA 524/2008 to be heard after the consolidated hearing of the above four actions;

c.  HCA 522/2008 to be heard after the consolidated hearing of the four actions and after the hearing of HCA 524/2008.

9.  On 22 July 2011, Au J granted leave to set down the present action for trial to be heard immediately after the trial of HCA 51/2007, HCA 523/2008, HCA 524/2008, HCA 1040/2000 and HCA 1041/2009, with 2 days reserved.

10.  On the first day of trial originally set down to commence on 20 September 2012, Deputy High Court Judge Seagroatt considered that there would be an “indigestible load to be dealt with” if these actions were to be tried together, and proposed that judgment on HCA 523/2008 be given first. On 30 November 2012, Deputy High Court Judge Seagroatt handed down judgment in HCA 523/2008.

11.  On 12 February 2014, this Court ordered, inter alia, that (i) the 3 Actions be tried together and (ii) the present action be tried after the conclusion of the trial of the 3 Actions (“12 Feb 2014 Order”).

12.  On 3 March 2014, Deputy High Court Judge Winnie Tam handed down judgment in HCA 522/2008.

13.  The trial of the 3 Actions took place on various dates in January, February, September, and October 2015 before me. The 3 Actions Trial Judgment was handed down on 6 January 2016.

14.  The trial for the present action was re-fixed and set down for 7 December 2015.

The present action

15.  This action concerns one of the family companies, Excellent Best, the 6^th Defendant (“D6”), which owned and still owns four landed properties in Hong Kong.

16.  D6 became a subsidiary of P1 in 1999. Through a restructuring (which was recognized by the Court in the 3 Actions Trial Judgment) P1 has in substance become the sole owner of D6, with the 2^nd Plaintiff holding 1 ordinary share on trust for P1; and the 3^rd Plaintiff and D4 holding non-voting deferred shares.

17.  By writ issued on 5 February 2010, the Plaintiffs commenced this action against D1-5 (with D6 being joined for the relief sought concerning it) in respect of (1) the transfer of shares in D6 held by the Plaintiffs and D4 to D3 and D5; and (2) unlawful appointment of directors to D6. An amended writ and the Statement of Claim were filed on 22 April 2010.

18.  On 23 July 2010, D1, 3-5 and D6 jointly filed the Defence and Counterclaim. In their counterclaim (“Counterclaim”), D1, 3-5 and D6:

a.  sought to challenge the restructuring which took place in 1999, and the Plaintiffs’ shareholdings in D6.

b.  sought a declaration that D1 beneficially owns the properties held by D6.

19.  On 20 July 2015, D1 was adjudged bankrupt by a bankruptcy order (“Bankruptcy Order”). There was previously another bankruptcy order against D1 in 2000, but that was discharged in 2004 and is therefore immaterial to the present case.

20.  At the pre-trial review hearing on 24 November 2015, D4 was absent. I ordered that, inter alia, the counterclaim of D4 be provisionally struck out pursuant to Order 25, rule 1C and that the pre-trial review be adjourned to 27 November 2015.

21.  At the adjourned pre-trial review hearing on 27 November 2015, the Trustees-in-Bankruptcy of D1 (“Trustees”) confirmed that they would not pursue the Counterclaim and that they would only provide consent for D1 to proceed should he be able to provide the indemnity required by them. D1 applied to adjourn the trial that was set down to commence on 7 December 2015. I ordered, inter alia¸ that D1’s application to adjourn the trial be dismissed and that he be given time to provide the indemnity as required by the Trustees up to 10:00 am on Day 1 of the trial.

22.  D1 did not provide the indemnity by the deadline.

23.  I gave judgment for the Plaintiffs on 7 December 2015, substantially granting the relief sought by Plaintiffs in this action (“7 Dec2015Judgment”). I also ordered that the trial of the Counterclaim only (except D4’s counterclaim which had been provisionally struck out) be adjourned and stayed up to 19 January 2016 (“7 Dec 2015 Order”).

24.  None of the Defendants appealed against the 7 Dec 2015 Judgment.

25.  On 27 January 2016, I ordered that the Counterclaim be set down for trial for 5 days. Notwithstanding such order, the setting down never happened.

26.  On 12 July 2017, D1’s Bankruptcy Order was annulled.

27.  On 9 March 2018, D1 took out a “Notice of Intention to Proceed” in respect of his Counterclaim.

28.  On 11 April 2025, D1, 3-6 filed a summons seeking leave to amend the Counterclaim (“Amendment Summons”). By the amended Counterclaim, D1, 3-5 and D6 sought to maintain the challenge against the restructuring in 1999 and to advance a new case that the properties held by D6 were beneficially owned by D1’s children (including D3) and his late wife.

29.  The events described at §§2-4 above followed the filing of the Amendment Summons. Notwithstanding that the 13 May 2025 Order refers to the dismissal of the action and Counterclaim, it is only the Counterclaim which remains in the action for the consideration.

30.  On 30 May 2025, D1 and D3 each filed an affirmation (D3’s affirmation was exhibited to an affirmation of their solicitors) seeking to explain the inaction in this action since 2016 and to show cause why the Counterclaim should not be dismissed.

Legal principles

31.  The applicable principles are not in dispute.

32.  The leading authority on the principles concerning the Court’s power to dismiss an action where the claimant has failed to prosecute is the Court of Final Appeal’s decision inWing Fai Construction Co Ltd. v Yip Kwong Roberts(2011) 14 HKCFAR 935. There is no dispute (and I agree) that the same principles should apply in relation to a defendant’s failure to prosecute his counterclaim. The principles in Wing Fai Construction, as explained by Ma CJ at §§75 and 80 are as follows:

a.  Striking out is a remedy of the last resort, and should only be used where it would be plain and obvious to do so. If there are other measures that are more appropriate to be taken, those alternative measures ought to be taken.

b.  Abuse of the process of the court is the foundation for the exercise of the jurisdiction to strike out for delay.

c.  Abuse can take many forms. Mere delay will not necessarily amount to abuse. The delay should be both inordinate and inexcusable, and abuse should be shown. Abuse included (per Birkett v James) inordinate and inexcusable delay causing prejudice to a defendant or contumelious conduct. It might also take many other forms such as inexcusable non-compliance with or wholesale disregard of an order of the court or the rules of court, litigation anxiety (Biss prejudice) and the existence of an interim injunction pending trial which aggravates the prejudice.

d.  Where abuse is clearly demonstrated, proceedings can be struck out even where prejudice to the defendant cannot be shown. However, in the majority of applications to strike out for delay, the aspect of prejudice will often be extremely relevant.

e.  The conduct of the parties is a relevant consideration for the court, both to the question of abuse as well as to the overall justice of the case.

f.  Post-CJR, all parties to the proceedings have an obligation to prosecute the proceedings and assist the court in furthering the underlying objectives, so that it is highly relevant to consider any failure on the part of the parties in this regard.

g.  The court must also have regard to the considerations wider than those of the immediate parties. There are other litigants who are entitled to have their disputes resolved and their day in court. Thus, the fact that the limitation period has not expired is not a factor militating against striking out for want of prosecution.

h.  The power to strike out for delay is discretionary and derives from the inherent jurisdiction of the court. The inherent jurisdiction of the court exists to avoid injustice, prevent abuse, preserve the dignity of the court and facilitate the administration of justice. In exercising its discretion, a court must ultimately ask itself the question of whether or not in the circumstances, it is just to strike out. A mechanistic approach in which the bigger picture is lost sight of is to be eschewed.

33.  Counsel had also helpfully referred me to a number of authorities setting out the above principles: Poosaala Ram Prasad v Cathay Pacific Airways Ltd. [2025] HKCFI 416 at §23 (per Cheng J); Hanly International Ltd v Maurice Choy [2020] HKCFI 590 at §§88-89 (per B Chu J).

34.  I also find the exposition of the principles in DHCJ Winnie Tam SC’s judgment in Tang Hing Kwong and Chung Siu Ching and John David Andrew Ip and Andrew Patrick Willis HCA 7927/2000, 7 March 2013 at §§27-30 helpful:

“27. Delay is inordinate where it is materially longer than the time usually regarded by the profession and the courts as an acceptable period: Hong Kong White Book 2012 Vol 1 paragraph 24/L/5. Whether or not there has been inexcusable delay should be examined primarily from the defendant’s point of view or at least objectively. Reasonable allowances may be given to good causes. Ho Hip Lik & Anor v Kwam Man Ho & Others [1996] 2 HKLR 184 at 186 per Liu JA.

28. Delay which is inordinate is prima facie inexcusable. It is for the plaintiff to make out a credible excuse for the delay; Trill v Sacher [1993] 1 WLR 1379 at 1397H-1340 A.

29. Delay caused by impecuniosity or lack of finance were not as such excusable. Even though the court might afford an impecunious plaintiff certain indulgence while he was trying to raise funds or otherwise progress the case, there was likely to come a time when his action had to be struck out: Hymer v Mass Transit Railway Corp & Others [2000] 2 HKLRD 590 at 607-609.

30. Where the delay is inordinate and inexcusable, but a fair trial is still possible, it is still open to the Court to exercise its discretion to dismiss the action for want of prosecution if serious prejudice can be shown: per Godfrey JA in Can-Asia Capital v Kwok Yee William [1995] 1 HKC 521 at 525.”

35.  Counsel for both parties had made submissions on what is termed the “Grovit” abuse, which refers to a situation of a plaintiff taking a unilateral decision not to pursue a claim for a substantial period of time while maintaining an intention to pursue it at a later time (in other words, “warehousing” a claim). Counsel for the Plaintiffs submitted that this type of abuse can be established even if prejudice to the defendant (ie the Plaintiffs in this case) is not shown. Although Counsel for D1, 3-5 submitted that there is no “Grovit” abuse on the facts, I do not believe there is any real disagreement between the parties on the principle of “Grovit” abuse.

36.  I should start with the “Grovit” abuse under Hong Kong law. In Wing Fai §75(4), Ma CJ held:

“In the context of abuse, some mention should be made of“warehousing”. I have already referred to this earlier. Merely for a party to start proceedings and then delay (which will often involve a failure to comply with the applicable rules of court) will not necessarily amount to an abuse justifying an order to strike out an action. The appropriate remedy in such cases may be for the court to exercise some of the powers I have already mentioned (such as the making of peremptory orders, the payment into court of substantial sums etc). In order for the “warehousing” of claims to justify striking out, it must be clear that the plaintiff is abusing the process of the court. Accordingly, where the “warehousing” of claims indicates that there is simply no intention to bring proceedings to a conclusion or there is a “wholesale disregard”of the rules or court orders, abuse can be found to exist: see Grovit v Doctor, 647G–H; Arbuthnot Latham, 1436F–G. In Arbuthnot Latham, reference was made to “stale proceedings which bring the litigation process into disrespect” (at p.1437C–D). I also place emphasis on another passage contained in Lord Woolf’s judgment in that case (at p.1437E): “The courts exist to assist parties to resolve disputes and they should not be used by litigants for other purposes”. In Grovit v Doctor, as we have seen, the abuse took the form of the plaintiff refusing to progress the proceedings despite a letter from the defendants’ solicitors asking the plaintiff to proceed with the action or abandon it: at pp.645H–646A.” (emphasis added)

37.  Counsel for the Plaintiffs referred me to Watford Control Instruments v Brown [2024] EWHC 1125 (Ch), where Richards J (after explaining the historical development of the principle of “Grovit” abuse at §§22-24) set out the legal principles as follows:

a.  The court is entitled to dismiss the proceedings once the conclusion is reached that the reason for the delay was one which involved abusing the court process in maintaining an action when there is no intention to prosecute to trial. It “can” be an abuse for a claimant to commence and continue litigation without having an intention to bring that litigation to a conclusion. The existence of that intention alone can therefore in principle be sufficient to constitute the abuse irrespective of whether the defendant has suffered any prejudice (citing Lord Woolf in Grovit v Doctor [1997] 1 WLR 640): §§24-25;

b.  The dividing line between an “abuse” and “non-abuse” involves a consideration of the reason why the claimant decided unilaterally to put the proceedings on hold for a substantial period of time and on the strength of that reason, objectively considered, having regard to the length of the period: §§26-27.

c.  Once the action came to amount to an abuse of the process of the Court, it required to be struck out unless compelling reasons to the contrary could be demonstrated: §§33-35.

38.  Watford Control was applied by Recorder William Wong SC in 謝紅玲 v 李偉斌律師行 [2024] HKCFI 3578 at §§30-31, though the learned Recorder did not dismiss the case for want of prosecution on the facts.

39.  I consider the principles set out in Watford Control to be entirely consistent with §75(4) of Wing Fai. Where the Court is confident that the “warehousing” of claim amounted to an abuse of process (by the lack of an intention to bring proceedings to a conclusion or a “wholesale disregard”of the rules or court order), then it is open to the Court to strike out the claim under Order 18 rule 19(1)(d).

40.  In the absence of “Grovit” abuse, the Court would consider whether the delay has caused serious prejudice to the defendant or there is a real risk of impossibility of a fair trial: Wing Faiat §75(4). I emphasise that these are alternative pathways to justify a striking out for want of prosecution.

41.  On the question of prejudice, counsel for D1, 3-5 referred to the principles as set out in Tsang Foo Keung v Chu Jim Mi Jimmy HCA 7140/1995, 12 July 2013 at §80 (per G Lam J, as he then was):

a.  The burden lies on the defendant to show prejudice or the impossibility of a fair trial. The discharge of that burden will normally require evidence specifying the particular disadvantage suffered or anticipated by the defendant, though in appropriate cases inferences may be drawn by the judge.

b.  The court has to look at all the circumstances when considering whether there is prejudice or whether it will not be possible to have a fair trial.

c.  The prejudicial effect of delay on a defendant and the effect of delay on the possibility of a fair trial depend in large measure on the nature of the issues in the case, in particular whether the evidence is predominantly in documentary form or whether the crucial evidence may be largely oral.

d.  Where the prejudice relied on is the dimming of witnesses’ memories due to the lapse of time, a generalised assertion that memories must have grown fainter will generally not be sufficient. However, it is not essential in every case that there should be evidence of particular respects in which potential witnesses’ memories have faded. So long as there are primary facts from which inferences can properly be drawn, there is nothing wrong with doing so.

e.  The defendant must also show that there is prejudice or inability to have a fair trial, as the case may be, caused by the delay in the action. The defendant cannot therefore merely rely on prejudice caused by the delay of the plaintiff in issuing the writ.

f.  The court may take into account what the defendant could reasonably be expected to have done which could have avoided or mitigated the prejudice he suffers or anticipates. If, for example, the defendant relies on the dimming of witnesses’ memories through the passing of time, the court will usually want to know what steps the defendant has taken in locating and proofing the potential witnesses.

42.  I also have in mind the following principles referred to by Counsel for the Plaintiffs:

a.  The court takes a broad view of what constitutes prejudice. It includes prejudice to the court, the administration of justice, and other litigants: Poosaala Ram Prasad at §24; Asparou Ianev Dimitrov v. Dominic Tak Ming Lau [2024] 5 HKLRD 487 at §42.

b.  Prejudice to a defendant by delay is not confined to death of witnesses, their fading memories, or loss of records. There is much prejudice to a defendant in having an action hanging over his head indefinitely, not knowing when it is going to be brought to trial (i.e. Biss prejudice): Wing Fai at §75(3); Biss v Lambeth, Southwark & Lewisham Health Authority [1978] 2 All ER 125 at 131.

Whether there is inordinate and inexcusable delay

43.  On the facts, and having given careful consideration to the agreed chronology of events, it is clear that there has been inordinate and inexcusable delay on the part of D1, 3-5 in their prosecution of the Counterclaim. This is so whether one considers the delay from the filing of the Counterclaim on 23 July 2010, or the discharge of D1’s Bankruptcy Order on 12 July 2017, or the filing of D1’s Notice of Intention to Proceed on 9 March 2018.

44.  There is delay of over 14 years from the filing of the Counterclaim, nearly 8 years from the discharge of D1’s Bankruptcy Order, and 7 years from the filing of the Notice of Intention to Proceed.

45.  Such delay of 7/8 years (over 14 years if counting from the filing of the Counterclaim) is by any measure inordinate. In Poosaala Ram Prasad, the delay of more than 8 years was found to be contumelious (§25). In Asparou Ianev Dimitrov, the delay to prosecute the appeal was for more than 6 years, and that was found to be inordinate and inexcusable (§§37-38).

46.  The Defendants seek to rely mainly on the fact that D1 was made bankrupt on 20 July 2015, and that he could not proceed with the Counterclaim without the consent of the Trustees. D1 further claims that he did not have the financial means to provide the Trustees with the security they required as a condition for their consent to D1’s pursuit of the Counterclaim. He claims that he could no longer recall what had happened at the 27 January 2016 hearing, and why the order for setting down had been made on 27 January 2016 (“27 Jan 2016 Order”) without the Trustees’ consent. The further explanation proffered for his failure to act was that D1 had mistakenly believed that the Counterclaim was only to be tried after all the appeals against/relating to the 3 Actions Judgment had been finally determined, and that it was only on 31 August 2020 that the Court of Appeal dismissed the appeals against the 3 Actions Judgment, and leave to appeal to the Court of Final Appeal was dismissed in “around 2021”.

47.  In my judgment, none of the reasons can excuse the delay.

48.  As Counsel for the Plaintiffs pointed out, D1 had all along participated in the action, and D3-D5 were all along legally represented. All the Defendants were aware of the making of the 27 Jan 2016 Order.

49.  Although the Notice to Act filed for D1 in this action in November 2015 was filed by solicitors acting for the Trustees, other solicitors have been on the Court record for D1 himself, after his Bankruptcy Order was annulled in July 2017.

50.  The excuse, that D1 could not recall what had happened at the hearing on 27 January 2016, is simply feeble. He and the solicitors who acted for him could have made inquiries with the solicitors for the Plaintiffs, and if necessary, could have conducted a search of the Court file and records. The 27 Jan 2016 Order was in any event drawn up, and served on the Defendants.

51.  For the period of D1’s bankruptcy, it can be understood that D1 was under financial difficulties and could not provide the indemnity for costs which was sought by the Trustees before the Counterclaim could be pursued. However, a defendant’s lack of means to pursue an action or counterclaim is not a good reason to justify delay (Tang Hing Kwong at para 29). The court may have some sympathy for a party in the position of D1, but the extraordinary length of the delay in this case outweighs any indulgence that can be afforded to him. Moreover, D1’s financial constraints do not satisfactorily explain the delay on the part of D3-5.

52.  In fact, at the hearing before this Court on 7 December 2015, D1 had indicated in the presence of the Trustees that he was able to pay the debt and discharge his Bankruptcy Order, and I had explained to him the importance of doing so and to avoid further delay in the conduct of these proceedings. For some reason, D1 did not thereafter proceed with the discharge of the Bankruptcy Order, notwithstanding the assurance given by him as to his ability to do so.

53.  Leaving aside D1’s financial difficulties and the question of the Trustees’ consent for the time being, the Bankruptcy Order was finally discharged in July 2017. There was no good reason why D1 failed to take any action to proceed with the Counterclaim from July 2017 to April 2025 (when the summons for amendment of the Counterclaim was issued). This lapse lasted more than 7 years. It was 8 months after the discharge of the D1 Bankruptcy Order that D1’s solicitors took steps to file a Notice of Intention to Proceed in the action.

54.  As for D1’s assertion that he had mistakenly thought that the trial of the Counterclaim could only take place after the final resolution of the appeals in the 3 Actions, I do not find this credible. The 12 Feb 2014 Order made it clear that HCA 188 of 2010 would be tried “after the conclusion of the trial of the (3 Actions)”. By the time of the hearing on 27 January 2016, when the order for the action to be set down for trial was made, this Court had already delivered judgment in the 3 Actions on 6 January 2016. No appeal had yet been initiated against the judgment on 27 January 2016.

55.  Significantly, the reason proffered by D1 (that the trial of the Counterclaim was only to take place after the final conclusion of the appeals in the 3 Actions) is contradicted by the fact that a Notice of Intention To Proceed with the action was filed by his solicitors on 9 March 2018, before the outcome of the appeals in the 3 Actions.

56.  As for D3, he was a counterclaimant in this action, and the Counterclaim could have been pursued by D3 in his own right at all material times. The statements of truth to the Defence and Counterclaim were signed by both D1 (in his own name and on behalf of D4-6) as well as D3 himself. The Counterclaim is as much D1’s, as it is D3’s. D3 failed to take any action, only because (as he admitted in an affirmation signed by him) he had no intention to prosecute the Counterclaim without D1’s participation and involvement. As Counsel for the Plaintiffs pointed out, this is significant when the intended Defence and Counterclaim to be made by the amendments is that D3 and his two siblings are claimed to be the beneficial owners of the properties held by D6, and that D1 did not have any beneficial interest. The only party in the Counterclaim with the alleged beneficial interest in the properties has stated unequivocally that he had no intention to proceed with the action between late 2017 and early 2018.

57.  The Court of Appeal dismissed the appeals in the 3 Actions, and handed down Judgment on 31 August 2020. Notwithstanding D1’s professed understanding that the trial of the Counterclaim was to take place after the determination of the appeals, no action was taken by him to pursue the Counterclaim, in the interim between August 2020 and 11 April 2025, when the application for amendment of pleadings was made.

58.  D1’s only explanation was that during this time, his attention was turned to handling the “aftermath” of the dismissal of the appeal in the 3 Actions (whatever that may mean). On D1’s own admission, he did not turn his mind to this action until 20 May 2024, when he received demand letters from solicitors acting for Excellent Best seeking vacant possession of the properties which are part of the subject matter of dispute in this action. According to D1, he then sought legal advice from his lawyers, and due to the complex procedural history and the interrelation with other proceedings, a considerable time was required to collate all the relevant documents, to give instructions to his lawyers, and for his lawyers to render legal advice to him.

59.  D6 has since instituted proceedings (“HCA 1942/2024”) for vacant possession of the properties.

60.  In my judgment, there was no good reason at all for D1’s inaction from 2021 to 2024 (when the demand letters were first received for vacant possession of the properties), nor why the application to amend the pleadings in this action could only be made in April 2025.

61.  The delay in this action is not only inordinate, but inexcusable.

“Grovit” abuse

62.  I remind myself that mere delay is not sufficient to strike out a claim on the basis of want of prosecution. Abuse of process must be shown. I also bear in mind that the power to strike out is discretionary and that I should not adopt a mechanistic approach.

63.  Counsel for the Defendants submitted that it cannot be shown that D1 had no intention to bring the Counterclaim to a conclusion or that there had been a wholesale disregard of the relevant rules or court orders, and thus there was no “Grovit” abuse.

64.  Taking into account all the circumstances of the present case, I am satisfied that the Defendants’ conduct and inaction demonstrates that they had unilaterally decided not to pursue the Counterclaim, until April 2025.

65.  First, the significant delay in this case alone is sufficient for me to draw an inference of an intention not to bring proceedings to a proper conclusion. As observed by Ma, CJ in Wing Fai at §81(2), “a delay in the post-CJR era of two years would almost inevitably involve several breaches of court orders and Rules of Court, and would be indicative perhaps of an intention not to bring proceedings to a proper conclusion” (emphasis added). In addition to the delay, the Defendants failed to comply with the 27 Jan 2016 Order.

66.  Second, as stated above, I do not find much of D1’s explanation for the delay in various periods credible or believable. For the 3-year period from 2021 to 20 May 2024, D1 did not even bother to provide any meaningful explanation for the delay. As I found above, on D1’s own admission, he accepted that he did not turn his mind to the present action until 20 May 2024 when he received the demand letters for vacant possession. This precisely illustrates that D1 did not have the intention to pursue his claims in the present action, and had effectively abandoned the Counterclaim. D1 also did not complain that, during the 2021 to 2025 period, he lacked the financial resources to pursue the Counterclaim.

67.  Third, I do not find it credible for D1 to blame his inaction on his “misunderstanding” of court orders and litigation procedure. D1 was at all times legally represented. Had he intended to prosecute the Counterclaim, his lawyers would have been his first port of call, who then would have presumably assisted D1, 3-5 to pursue the Counterclaim with diligence. D1, 3-5 did not even make an effort to make the proper enquiries with their own lawyers.

68.  Fourth, the abusiveness of D1, 3-5’s warehousing of the Counterclaim is also illustrated by the fact that, on one hand, D1 complained about his lack of financial resources to pursue the Counterclaim (on which I do not make any finding, and I have not been provided with any evidence on D1’s financial circumstances at the relevant period after the discharge of the Bankruptcy Order); but on the other hand, D1 had instructed his solicitors to issue the “Notice of Intention to Proceed” to put the Plaintiffs on notice of his alleged intention to pursue the Counterclaim. If it were the case that D1 did not have the financial resources to pursue the Counterclaim, the inference of D1’s intention to issue the “Notice of Intention to Proceed” was to warehouse the Counterclaim for future use despite knowing that he was not in a position to pursue it at the time. It is abusive to have the Counterclaim hanging over the Plaintiffs’ heads in these circumstances.

69.  Fifth, the conduct of D1 in HCA 1942/2024 is also indicative of his intention not to proceed with the Counterclaim and their wholesale disregard of the court’s rules or orders. I am entitled to take into account the Defendants’ conduct in HCA 1942/2024 given that, as Counsel for the Defendants submitted, the Counterclaim and HCA 1942/2024 are inter-related.

70.  The Statement of Claim in HCA 1942/2024 was filed on 13 May 2025. Counsel for the Plaintiffs submitted that D1 was subject to an unless order to file his Defence by 13 August 2025. D1 missed this deadline and D1 is now barred from doing so. No application for relief from sanctions has been taken out. By letter dated 15 August 2025 (after the deadline of the unless order had passed), D1’s solicitors stated that they were unable to locate D1 to sign the statement of truth despite their best effort.

71.  The above facts were not disputed. However, Counsel for the Defendants submitted that they will apply for relief from sanctions in due course, and that the matters in HCA 1942/2024 are not relevant to this hearing. I disagree. Although I am not concerned with the merits of any intended relief from sanctions application, the very fact that D1 had missed a court deadline under an unless order is serious and reflective of his intention not to bring the litigation to a conclusion. Even his own solicitors could not get instructions from him to ensure that HCA 1942/2024 can be properly conducted. This not only shows D1’s cavalier attitude towards the proper and responsible conduct of proceedings, but also evinces his abuse of the Counterclaim, to pursue it only when it is convenient for him to do so.

72.  D1’s intention of warehousing the Counterclaim must also be shared by D4 and D5. It is undisputed in the pleadings that D1 controls D4 and D5. The statements of truth of D4 and D5 were signed by D1. D1 also made his affirmation on behalf of D3-5.

73.  As to D3, it is clear that he had left everything concerning the conduct of this action and the Counterclaim to his father, D1, and did not meaningfully participate at any stage. He said it himself that “[a]t all material times, I have consulted and deferred to my Father’s decisions regarding the conduct of these proceedings – for example, the engagement of legal representatives and taking of litigation steps”. D3 also said that he had no intention to proceed with the Counterclaim without the participation of D1.

74.  D3’s intention of warehousing the Counterclaim (and thus guilty of “Grovit” abuse) is even more pronounced when one looks at the amended version of the Counterclaim, in which the Defendants seek to advance a case that it was in fact D3, together his two siblings, who beneficially owns the properties held by D6, and that D1 did not have any beneficial interest in the said properties. On the Defendants’ case, D3, among the Defendants, is the only person having beneficial interest in the properties. Yet, D3 has not taken carriage to prosecute the Counterclaim in any meaningful and responsible manner.

75.  On this basis, I am satisfied that the Plaintiffs have established “Grovit” abuse and it is open to me to strike out the Counterclaim. There is no good reason why the Court should devote any further time and resources on the Counterclaim, when there are more deserving and responsible litigants which desire the valuable time of the Court in resolving their genuine disputes.

Prejudice

76.  It is not strictly necessary for me to consider the question of prejudice given my finding on the above. Nonetheless, I also find that the Plaintiffs have sufficiently established prejudice in light of the Defendants’ inordinate and inexcusable delay.

77.  Counsel for the Defendants submitted that the Plaintiffs had not filed any evidence of any prejudice suffered by them because of the delay, or as to whether a fair trial is possible. Although the burden is on the Plaintiffs to establish these, it is open to the Court to draw inferences on the presence of prejudice: Tsang Foo Keung at §80(2).

78.  The only substantive submissions made by the Defendants is that fair trial would still be possible given that Mr Philip Ng (a director and shareholder of the Plaintiffs, and one of the witnesses for the Plaintiffs) had caused D6 to commence HCA 1942/2024, which involves issues that overlap with the Counterclaim. Without going into details of the issues in the present action and Counterclaim and HCA 1942/2024, I accept that the issues in these two actions have a substantial degree of overlap, both concerning, in part, the roperties. While the trial for the Counterclaim would no doubt require hearing of oral evidence and the fading of witnesses’ memory is not ideal, absent any specific evidence from either party (e.g. what type of evidence would be lost, what steps had been taken to preserve the evidence, the extent to which the parties will need to rely on the oral vs documentary evidence, and the extent to which the fading of memory would affect the parties’ case), I am not prepared to find that a fair trial of the Counterclaim would be impossible in the circumstances.

79.  However, as mentioned above, the impossibility to attain a fair trial is but one way to justify striking out.

80.  I accept the submissions made by the Plaintiffs, that Biss prejudice is shown in this case in light of the inordinate and inexcusable delay and the Defendants’ warehousing of the Counterclaim, as found above. It is prejudicial to the Plaintiffs to have the Counterclaim hanging over their heads for over 14 years.

81.  This is especially so given the conduct and attitude of the Defendants, which, as I have found, demonstrated a clear unilateral intention of not pursuing the Counterclaim for a substantial period of time, with the intention to pursue it at a later time only, if appropriate or convenient to them (the “Grovit” abuse issue).

82.  I am prepared to infer that Plaintiffs were anxious to see the present action to an end. The unfortunate delay to the trial originally set down was not caused by the Plaintiffs, but due to D1’s inability to provide the indemnity required. The Plaintiffs had already substantially obtained the reliefs they sought by the 7 Dec 2015 Judgment, against which no appeal was filed. From the Plaintiffs’ perspective, it is fair to say that they are entitled to have treated this action as completed and the Counterclaim as “dead”. Issues concerning the restructuring and shareholding of the family companies have already been finally determined by the judgment in the 3 Actions. The family members should not be permitted to re-open these issues, and the ownership of the assets, again.

83.  Further, I take into account also the wider context of the family dispute resulting in numerous litigations stretching to almost 20 years since the commencement of HCA 51/2007, as well as the various appeals involved. Although the parties cannot quite put everything behind them at this stage in light of HCA 1942/2024, this remaining action only concerns the narrow issue as to the beneficial ownership of the properties which are the subject matter of the action. On the other hand, the amended version of the Counterclaim raises a number of new factual allegations. I accept the submissions of the Plaintiffs’ Counsel, that if the amendments were allowed, it would cause further substantial delay and costs in dealing with the new case. It would be prejudicial to the Plaintiffs to disturb their peace of mind by “reviving” the Counterclaim, especially in the amended form.

Disposition

84.  Accordingly, I find that there was inordinate and inexcusable delay in prosecuting the Counterclaim and there was “Grovit” abuse in this case. The Plaintiffs would also suffer prejudice to have the Counterclaim revived, and hanging over their heads. Overall, I consider it just to exercise my discretion to strike out the Counterclaim, and with the Counterclaim struck out, the Amendment Summons should be dismissed.

85.  Costs should follow the event. I make an order nisi that the costs of the Amendment Summons and costs occasioned by this Court’s 13 May 2025 Order and 16 May 2025 Order be to the Plaintiffs, with certificate for 1 counsel, to be taxed if not agreed.

86.  Lastly, I thank counsel for their assistance.