ASPAROUH IANEV DIMITROV as administrator of the estate of KALOIAN IANEV DIMITROV (Deceased) v. DOMINIC TAK MING LAU also known as LAU TAK MING

CACV 266/2017, [2024] HKCA 1011

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 266 OF 2017

(ON APPEAL FROM HCA NO. 1079 of 2015)

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DECISION

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Hon Cheung JA (giving the Decision of the Court) :

I. Introduction

1.  This is an application by the plaintiff by summons dated 14 May 2024 (‘the striking‑out summons’) seeking the following reliefs :

‘ 1. The Defendant/Appellant’s Notice of Appeal filed on 21 November 2017 and his Supplementary Notice of Appeal filed on 12 February 2018 be dismissed or struck out for want of prosecution or otherwise being an abuse of the Court’s process; and

2. The costs of this action and this application be to the Plaintiff/Respondent, to be taxed if not agreed.’

2.  We consider it appropriate to determine the application on paper without an oral hearing. 

II.  Background

3.  The relevant factual background and procedural history are as follows :

1)  The plaintiff’s claim against the defendant

4.  The plaintiff is the administrator of the estate of his brother, Kaloian Ianev Dimitrov (‘the Deceased’), who shortly before his death in 2015 commenced the present action against the defendant.

5.  The plaintiff’s case is that the Deceased and the defendant entered into a number of agreements whereby the defendant was engaged as his agent to carry out investments for him in Hong Kong. Pursuant to those agreements, he caused funds to be transferred to the accounts of companies under the defendant’s control for the purpose of investment. Despite repeated requests, the defendant failed or refused to return his investment to him in accordance with their agreements.

6.  The defendant denied having entered into the agreements as pleaded, except one which he said was signed by him when he felt being intimidated.  He admitted receiving funds caused to be transferred by the Deceased for the purpose of investment and that he carried out investment as an agent, but alleged that the funds and the investment belonged to another person named Alexander Mirtchev and not the Deceased.

7.  By a summons dated 25 January 2017, the plaintiff sought summary judgment or alternatively, interim payment, against the defendant. 

8.  On 25 October 2017, Deputy High Court Judge To granted summary judgment to the plaintiff against the defendant for the sum of US$24,180,000 with interest.

2)  The defendant’s appeal against the Judgment and application to stay the execution of the Judgment        

9.  On 21 November 2017, the defendant lodged a notice of appeal against the judgment (‘NOA’) and a notice of setting down the appeal. 

10.  On 5 February 2018, the defendant applied for a stay of execution of the judgment pending appeal. 

11.  On 12 February 2018, the defendant filed a supplementary notice of appeal (‘SNOA’).

12.  On 15 June 2018, the Court of Appeal allowed the stay of execution of the judgment conditional upon the defendant paying US$12 million into Court within 21 days thereof (‘Stay Decision’).  However, the defendant did not comply with the condition and hence the judgment came into effect.

3)  The defendant’s appeal against the Stay Decision

13.  On 12 July 2018, the defendant filed a notice of motion seeking leave to appeal to the Court of Final Appeal against the Stay Decision. 

14.  On 27 September 2018, the Court of Appeal refused the defendant’s application for leave to appeal to the Court of Final Appeal against the Stay Decision.

15.  On 25 October 2018, the defendant filed in the Court of Final Appeal the notice of intended application for leave to appeal and the notice of motion for leave to appeal against the Court of Appeal’s refusal for appeal against the Stay Order. 

16.  On 30 October 2018, the Court of Final Appeal issued a summons under Rule 7(1) of the Hong Kong Court of Final Appeal Rules (Cap. 484) indicating that the appeal against the Stay Decision discloses no reasonable grounds for leave to appeal and requested the defendant to show cause for not dismissing the application on or before 27 November 2018.  It appears that the defendant did not file any submissions before the stipulated deadline.

17.  Throughout this entire period, both sides were legally represented, with Boase Cohen & Collins (‘BC&C’) acting for the plaintiff and Tanner de Witt (‘TDW’) acting for the defendant.

4)  Enquiries made by the plaintiff with TDW and Miao & Co.                                            

18.  After 2018, no further steps were taken by both parties in relation to the appeal against the judgment until 8 February 2023 when BC&C wrote to TDW seeking TDW’s confirmation as to whether it still had instructions to act for the defendant in these proceedings.

19.  On the same day, TDW replied (copied to Miao & Co (‘M&C’)) stating that M&C (in association with Han Kun Law Offices (‘Han Kun’)) had supposedly been instructed to act in their place from 24 June 2022 onwards.  

20.  On 14 February 2023, BC&C wrote to Han Kun enquiring whether it has instructions to act for the defendant in these proceedings.  However, it appears that BC&C did not receive any response.

5)  The Summons

21.  By a letter dated 27 February 2024 (copied to TDW by fax and the defendant by post) BC&C asked the Court to clarify the status of the appeal or otherwise give directions to dismiss or strike out the appeal.

22.  On 25 March 2024, the Registrar of Civil Appeals directed as follows :

‘1. It appears from the Court file that no further steps have been taken by the parties after the Decision by the Court of Appeal dated 27 September 2018.

2. If the Plaintiff’s solicitors considered that the Notice of Appeal lodged by the Defendant should be dismissed or struck out, appropriate application should be taken out by the Plaintiff.  The Court will not entertain application by way of letter.’

23.  On 26 March 2024, the plaintiff filed a notice of intention to proceed.   

24.  However, as no further steps were taken by the plaintiff after the filing of the notice of intention to proceed, on 8 May 2024, the Registrar directed the parties’ solicitors to indicate to the Court as to their respective position in respect of the present appeal on or before 27 May 2024.

25.  On 14 May 2024, the plaintiff issued the striking‑out summons under the inherent jurisdiction of the Court and filed a supporting affirmation on the same day.  The Summons and the supporting affirmation were served on TDW and also sent by post to the defendant.

26.  On 22 May 2024, TDW applied to cease to act for the defendant.  Order to that effect was granted on 30 May 2024 and TDW officially came off the record on 11 June 2024.

27.  On 17 June 2024, as no affirmation in opposition was filed and served within 14 days by the defendant after the service of the supporting affirmation, the Registrar directed that unless the defendant do file and serve affirmation(s) in opposition on or before 28 June 2024, the defendant shall be deemed to have waived his right to do so.  In such event, the parties should proceed to comply with [36(5)‑(12)] of Practice Direction 4.1 (‘PD 4.1’).

28.  On 12 July 2024, pursuant to [36(5)] of PD 4.1, the plaintiff served the application bundle and his written submissions in support of the striking‑out summons.

29.  On 2 August 2024, the Registrar wrote to the parties stating, inter alia, that despite his directions, the defendant still failed to file his affirmation in opposition.  Further, the defendant failed to file and serve his written submissions in opposition within 14 days after the service of the application bundle and the written submissions in support by the plaintiff’s solicitors. Accordingly, the Registrar directed that unless the defendant do file and serve his written submissions in opposition on or before 19 August 2024, he shall be deemed to have waived his right to file and serve the same and the Summons will be referred to the Court of Appeal for determination without notice.

30.  On 19 August 2024, the defendant filed an unsworn affirmation (‘Unsworn Affirmation’) and stated, inter alia, in the cover letter that ‘[k]indly invite the Honourable Court to allow me to file the attached affirmation (now in draft) with exhibits, which I shall affirm before a notary public and file, within the next week commencing 19 August 2024)’.  In the Unsworn Affirmation, the defendant also provided an address in the Mainland for service, which is contrary to the requirement in Order 6, rule 5(1)(b) of the Rules of the High Court (Cap. 4A) (‘RHC’) which required a party to provide an address within Hong Kong for service of court documents. 

31.  In view of the fact that no sworn affirmation and written submissions in opposition were filed and served by the defendant, and that the defendant provided a Mainland address for service, on 27 August 2024, the Registrar made the following directions :

‘ 1. It is noted that despite the court’s directions dated 13 June and 2 August 2024, the Defendant has failed to file and serve his affirmation and written submissions in opposition. As per the court’s directions, the Defendant shall be deemed to have waived his rights to file and serve these documents. The Summons will be referred to the Court of Appeal for determination without further notice to the Defendant.

2. It is further noted that the 1^st Affirmation of Lau Tak Ming received by the court on 19 August 2024 was not affirmed by the Defendant.  According to the letter from the Defendant, he would arrange his affirmation be affirmed “… within next week commencing 19 August 2024”. However, as at date hereof, no such affirmation has been filed by the Defendant. In such circumstances, the 1^st Affirmation of Lau Tak Ming will not be considered by the Court of Appeal.

3. In the 1^st Affirmation of Lau Tak Ming, the Defendant has provided a PRC address for service (see para. 2 thereof).  This is not acceptable by the court.

4. According to Order 6, rule 5(1)(b), Rules of High Court, the Defendant must provide an address within Hong Kong for service of court documents (see the case of Wong Yu Cho v Ling Dai Hong (CACV 59/2013, unreported, 5 May 2015, at paragraphs 7-8). As such, if the Defendant does not wish to use the Shek O High Land address for service of documents on him, he must as soon as possible file and serve a Notice of Change of Address giving a new Hong Kong address for service of documents. Otherwise, court documents may continue to be served at his Shek O High Land address which appears to be his usual and last known address in Hong Kong.’ 

32.  On 11 September 2024, the Court registry received two letters both dated 10 September 2024 from the defendant. In one of the letters, the defendant stated, inter alia, that the striking‑out summons only came to his notice on 16 August 2024 and ‘[k]indly invite the Honourable Court to allow me to file the attached affirmation with exhibits, which I shall affirm before a notary public and file, within next week commencing on 10 Sept 2024’.  Meanwhile, in another letter, the defendant stated that ‘my filing was delayed due to a Recent Heart Attack that required me attending the HKU Hospital in Shenzhen’ and ‘I have multiple illness, including Liver, Heart and Blood clots.’  Both of these letters were affirmed before a notary public on 10 September 2024.

33.  As of today, despite the letters dated 19 August 2024 and 10 September 2024, the defendant still has not filed any sworn affirmation with the Court.

III.  Our view

1)  Striking out

34.  The Court of Appeal has inherent jurisdiction to strike out a notice of appeal where an appeal is plainly not competent, or where the appeal is frivolous, vexatious or an abuse of process of the Court.  In the case of the latter, the inherent jurisdiction would be exercised on precisely the same basis as if Order 18, rule 19 of the Rules of the High Court (‘RHC’) applied to notices of appeal: Leung Chung Lan Lorraine v Hang Seng Bank Ltd [2019] HKCA 1408 at [34];  Competition Commission v W. Hing Construction Company Limited and others (CACV 257/2019) at [16]; Cheung Ting Kau, Vincent v Koo Siu Ying & Anor [2021] HKCA 139 at [3.2].

35.  The principles on striking out for want of prosecution have been comprehensively reviewed by Ma CJ (as he then was) in Wing Fai Construction Co Ltd v Yip Kwong Robert (2011) 14 HKCFAR 935.  It is sufficient to state that the foundation for the jurisdiction to strike out for delay is based on an abuse of the process of the Court by the party whose case is to be struck out.  Inordinate and inexcusable delay causing prejudice to a defendant, contumelious conduct or initiating proceedings without any intention to bring them to a conclusion which is commonly referred to as ‘warehousing a claim’, are examples of abuse (Wing Fai at [66]).

2)  Inordinate and inexcusable delay

36.  In this case, the plaintiff relies on inordinate and inexcusable delay and prejudice to the plaintiff, the Court and the administration of justice to strike out the appeal.

37.  In our view, there has unquestionably been inordinate delay on the part of the defendant in prosecuting the present appeal.  After the SNOA was served and filed in February 2018, the defendant did not take any steps for more than six years.  Even after the plaintiff made enquiries with TDW and M&C/Han Kun in relation to the appeal in February 2023, there continued to be inaction from the defendant for another one and a half years. 

38.  Order 1A, rule 1(b) RHC expressly requires that a case should be dealt with as expeditiously as possible.  The defendant is clearly in breach of this requirement in allowing the appeal to languish for more than six years.

39.  As to whether the inordinate delay is inexcusable, pursuant to the Registrar’s directions made on 17 June, 2 August and 27 August 2024, the defendant is deemed to have waived his right to lodge his written submissions or affirmation in opposition, and that the Unsworn Affirmation will not be considered by the Court.   That said, we have considered the Unsworn Affirmation on a de bene esse basis and note that the explanations proffered by the defendant for the inactivity are as follows :

(1)  In 2018 and early 2019, there was ‘financial crisis’ in South China, which had ‘seized most, if not, [his] strength and energy in the past few years’.

(2)  In 2019, there were serious disturbances in Hong Kong.  Most communications between people and business between nearby places in the Mainland and Hong Kong came to a ‘halt’.

(3)  From 2020 to 2023, both the Mainland and Hong Kong had experienced extreme difficulties and lockdowns due to outbreaks of COVID‑19.

40.  We are of the view that, even if the Unsworn Affirmation is admissible, the explanations for the inactivity given by the defendant do not withstand scrutiny at all.

(1)  First and foremost, despite claiming that there was ‘financial crisis’ in South China in 2018 and early 2019, which had allegedly ‘seized most, if not, [his] strength and energy in the past few years’, the defendant was still able to engage counsel to settle the application for stay of execution of the judgment and the appeal against the Stay Decision between February and October 2018.   If the defendant was able to give instructions in relation to such applications, there is no reason why he could not have given instructions to his legal representatives to prosecute the appeal back in 2018.  This is especially the case when, in response to the plaintiff’s allegation that the defendant did not prosecute the appeal with diligence, the defendant confirmed on oath before a notary public back in April 2018 that ‘I do not see any merits or advantage to drag on the case without fixing a date. On the contrary, I hope that the appeal on the Judgment can be brought before this Honourable Court as soon as possible’ (see [7] of the Defendant’s 2^nd affirmation dated 6 April 2018 filed in support of his application for stay of execution of the Judgment). 

(2)  Second, contrary to the defendant’s allegation that most communications between people and business between nearby places in the Mainland and Hong Kong came to a ‘halt’ in 2019, communication was still possible and prevalent via electronic means back in 2019. 

(3)  Third, the defendant did not give any particulars as to what were the ‘extreme’ difficulties brought by the outbreaks of COVID‑19 and the lockdowns between 2020 and 2023.  If what he meant was inability to communicate with his legal representatives to prosecute the appeal, again, the defendant could still have given instructions to his legal representatives via electronic means if he had the genuine intention to prosecute the appeal.

(4)  Even if, for the purpose of argument, the explanations offered by the defendant amount to reasonable explanations, the defendant should still have prosecuted the appeal as soon as possible after the end of 2023.  However, he did not give any reasons as to why he could not have done so in the Unsworn Affirmation.

41.  In view of the above, we are of the view that the delay in prosecuting the appeal is inordinate and inexcusable.

3)  Prejudice

42.  Prejudice can take many forms.  Apart from the traditional ones, such as prejudice caused by proceedings hanging over the head of a defendant causing undue anxiety (Wing Fai, at [75(3)]), the Court recognizes that one should take a broader view and prejudice also includes prejudice to the Court and the administration of justice and other litigants when the Court’s limited resources are abused. Thus, in Wong Shui Kee Roger v Victor Chu & Co [2011] 4 HKLRD 594, this Court held as follows :

‘ 29. Moreover, it must not be forgotten that, in the present era, prejudice includes prejudice to the courts and the other litigants when the court’s limited resources are misused. As Lord Woolf MR noted in Arbuthnot Latham Bank Ltd v Trafalgar Holdings Ltd [1998] 1 WLR 1426, 1436D/E–F/G

... any delay which occurs from now on will be assessed not only from the point of view of the prejudice caused to the particular litigants whose case it is, but also in relation to the effect it can have on other litigants who are wishing to have their cases heard and the prejudice which is caused to the due administration of civil justice.’

43.  However, where abuse has been clearly demonstrated, for example, where there was contumelious conduct on the part of a party, proceedings could be struck out even where prejudice to the other side could not be shown : Wing Fai, at [75(7)].

44.  In the present case, the plaintiff alleges that prejudice has been caused to him by proceedings hanging over his head and to the Court and the administration of justice by reason of the inordinate and inexcusable delay.

45.  In this regard, this Court has not lost sight of the fact that, whilst the defendant is obviously guilty of inordinate delay, the plaintiff (who all along has been legally represented) also appears to be happy to adopt a ‘let sleeping dogs lie’ attitude by not taking any steps in the appeal for more than five years until February 2023 when he issued letters to TDW and M&C/Han Kun enquiring about the progress of the appeal.   When no meaningful response was given, the plaintiff waited for another one year and only wrote a letter to the Court on 27 February 2024 seeking the Court’s clarification as to the status of the appeal or otherwise directions for dismissal or striking out of the appeal.  Such an approach is expressly frowned upon and discouraged by the Court of Final Appeal in Wing Fai :

‘ 75(8) … Thus, post-CJR, where all parties to the proceedings have the obligation to prosecute the proceedings and assist the Court in furthering the underlying objectives, it would be highly relevant to consider any failure on the part of the parties here. As far as the defendant is concerned, I would say once again that there is no place anymore for defendants to adopt the attitude of “letting sleeping dogs lie”. No longer will it be possible (if it ever was) for a defendant to sit idly by and do nothing, in the hope that sufficient delay would be accumulated so that some sort of prejudice can then be asserted’.

46.  Accordingly, in our view, any prejudice caused by the hanging of proceedings over the plaintiff’s head for more than six years is partly due to the plaintiff’s own making and we are not satisfied that the plaintiff’s conduct is free from blame. 

47.  However, this Court has to carry out a balancing exercise.  It is of note that 

(1)  the defendant was well aware of the need to prosecute the appeal diligently as early as April 2018 (see [40(1) above]).  However, he still did not take any actions for more than six years in respect of the present appeal even though he was legally represented throughout this entire period.  This remains the case even after enquiries were made by the plaintiff as to the status of the appeal in February 2023.

(2)  as can be seen from [29], [31] and [33] above, the defendant had repeatedly ignored the Registrar’s directions and failed to file written submissions and affirmation in opposition within the stipulated deadlines.  The defendant also failed to comply with the Court rules and the Registrar’s direction in providing a Hong Kong address for service of court documents. 

(3)  further, even though the defendant was fully aware of the need to file a sworn affirmation (see [30] and [32] above), as of today, the defendant still has not filed any sworn affirmation to oppose the summons.  In this regard, we also note that the defendant managed to affirm two letters before a notary public on 10 September 2024 and filed the same with the Court on 11 September 2024 (see [32] above).  Therefore, there is no reason why he could not have affirmed the Unsworn Affirmation before the notary public on the same day and seek the Court’s leave to file it if he was genuine in prosecuting the appeal.

48.  We are of the view that the defendant has failed to show that he has any genuine intention in prosecuting the appeal and has a wholesale disregard of the court rules and orders.  As a result, he has wasted and abused the Court’s limited resources.  We accordingly find that there is prejudice caused to the due administration of civil justice.  

4)  Other matters

49.  For completeness, we also deal with the defendant’s contention in the Unsworn Affirmation that it would be ‘most unfortunate, if not miscarriage of justice’ for this Court to make a decision on the basis that he did not have the full set of case papers and correspondences because they were served on him at his Hong Kong address when it is known to the plaintiff that he is currently residing in the Mainland and that the plaintiff had already obtained an order for sale against this Hong Kong property in HCMP 887/2018. BC&C informed the Court by letter dated 21 October 2024 that the defendant has been uncooperative and refused to hand over possession of the property.

50.  We see no merit in such a contention for the following reasons :

(1)  To begin with, the striking‑out summons and the supporting affirmation were served upon TDW on 14 May 2024, and sent by post to the defendant at his Hong Kong address on the same day.  Given that, up to 11 June 2024, the solicitors on record for the defendant remained to be TDW, the service of the documents upon TDW on 14 May 2024 was valid : Hong Kong Civil Procedure 2025, [67/1/7]; and

(2)  In any event, it is a litigant’s duty to report his change of address and solicitors, as well as to provide an address within Hong Kong for service of documents as per Order 6, rule 5(1)(b) and Order 67, rule 1 RHC : Wong Yu Cho v Ling Dai Hong (CACV 59/2013, unreported, 5 May 2015), at [7]‑[8].  If he does not, then he has to bear the consequence which such failure brings.  

51.  Accordingly, whilst we are fully aware that striking out is considered to be a measure of last resort (Wing Fai, at [75(1)]), having considered all the circumstances of the case, we find that this is an appropriate case for us to exercise our discretion to strike out the appeal. 

IV.  Conclusion

52.  Accordingly, we strike out the appeal with costs to the plaintiff.  We will summarily assess the plaintiff’s costs which include counsel fees at $50,000.

53.  The costs order and the summary assessment are orders nisi.  These orders will be made absolute if there is no application for variation by any party within 14 days of the handing down of this judgment.