CHANG WING KA JOHN v. CHANG WING DEE AND ANOTHER

HCMP 1790/2016 and HCMP 1791/2016
(Consolidated)

[2026] HKCFI 2570

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 1790 OF 2016

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IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 1791 OF 2016

_________________

_________________

DECISION

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A.      INTRODUCTION

1.  The relevant background of these actions has been set out in this Court’s Decision which was handed down on 30 December 2025 ([2025] HKCFI 6479 – “the Decision”)[1].

2.  In gist, Wing Dee is the administrator of the Estates.  Pursuant to the 2021 CFI Orders (made by DHCJ To after trial in 2020 (“the 2020 Trial”) and an undertaking which he gave on 21 May 2024, he had paid a sum of HK$132,891,345.73 (being John’s entitlements in the Estates subject to deductions) into Court on 27 May 2024, pending the finalization of the accounts of the Estates.  The sum was not released to John there and then because Wing Dee claimed that John’s entitlement was subject to certain deductions.

3.  Pursuant to an order made by consent of the parties on 3 September 2024, a sum of HK$13.7 million was paid out to John. That sum was arrived at by taking Wing Dee’s case to the highest – John would be entitled to this sum of HK$13.7 million even if all deductions asserted by Wing Dee could be substantiated.

4.  On 17 February 2025, John took out the Distribution Summons and sought the following orders:

“1. An Order that the 1^st Respondent do comply with paragraph 4 of the Order made by DHCJ To dated 11 January 2021 (as extended by the Orders of DHCJ Au-Yeung dated 21 May 2024 and 3 September 2024) by providing a just and true account on oath within 14 days of the Order made herein in respect of the items in Schedule 1 hereto (being assets forming part of the Estates of Tsui Yuen Ying and Chang Yin Ching (the ‘Estates’) and/or for which the 1^st Respondent is liable to account), hereinbelow referred to as the ‘Unaccounted Assets’.

2. An Order that the 1^st Respondent do make due distribution of the Applicant’s entitlement(s) in respect of the Unaccounted Assets within 14 days thereafter.

3. A declaration that the deductions purportedly made (or to be made) by the 1^st Respondent as set out in Schedule 2 hereto (as referred to in Report of C.S. Wong & Co CPA dated 30 September 2024 comprising and/or represented to be the purported finalised accounts of the Estates by the 1^st Respondent) are improper and/or unjustified.

4. An Order that there be an inquiry (i) into the Unaccounted Assets; and (ii) to determine the matters referred to in paragraph 3 hereinabove.

5. An Order for payment out of HK$119,191,345.73 out of the HK$119,191,345.73 remaining into Court (out of the HK$132,891,345.73 paid into Court by the 1^st Respondent pursuant to the Order of DHCJ Au-Yeung dated 21 May 2024) to the Applicant.

6. An Order that the 1^st Respondent do transfer to the Applicant (or his nominee) the shares held by 1^st Respondent in his account held with The Hongkong and Shanghai Bank (account number: xxx-xxxxxx-xxx) as set out in the first letter from Messrs Yung, Yu, Yuen & Co., to Messrs Norton Rose Fulbright Hong Kong dated 26 February 2024 (the ‘YYY February 2024 Letter’).

7.     An Order for the 1^st Respondent do distribute and/or transfer to the Applicant (or his nominee) the latter’s share of jewellery retained and/or held by the 1^st Respondent as set out in the YYY February 2024 Letter.”

5.  By consensus reached at the substantive hearing of the Distribution Summons, this Court only dealt with paragraphs 3, 4(ii), 5, 6 and 7 of the Distribution Summons in the Decision.  The rest of the said summons on “unaccounted assets” (paragraphs 1, 2 and 4(i) thereof) would be dealt with later upon the filing of further evidence by the parties.

6.  By the Decision, this Court took the view that many items of deductions relied on by Wing Dee were not justified at all.  At the end of the day, it was ordered that there be payment out of the sum of HK$112,300,894.26 (out of the total of HK$119,191,345.73[2]) to John.

7.  What remains in court is the sum of HK$6,890,451.47 (“the Remaining Sum”).

8.  The Remaining Sum was in fact part of the sum of HK$8,681,516.47 which Wing Dee claimed was the total of legal and professional fees, tax and other expenses which John has to reimburse the Estates.

9.  The breakdown of the expenses is as follows:

			CAD	HKD
Amount due from John with Bills
1.	21.7.2004	Taxed Cost HCMP 48/2001		496,439.00
2.	9.12.2004	Taxed Cost HCMP 48/2001		57,126.00
3.	12.8.2017	Vancouver Rental Tax	48,397.39
4.	26.3.2024	Vacancy Tax Act Penalty	7,921.27
5.	9.8.2024	Vancouver Tax + penalty (deemed disposition of capital assets at fair market value on taxpayer’s death)	379,268.46
6.	7.2024	Unit 101 1845 Robson Street Tenant’s Deposit paid to John by H-Pro Real Estate, Management Co	1,400.00
7.	24.10.2023	Payment to Kroll, valuation report	50,000.00
8.	13.3.2024	Payment to Kroll	10,750.00
9.	12.3.2024	Kroll Bill (CAD 60,750)
10.	19.7.2024	Kroll Bill	65,000.00
10a	14.9.2024	Kroll Bill	112,000.00
29	19.9.2024	Unit 101 1845 Robson Street Special Levy – Ex-membrane replacement (CAD 11,955.02 x 3)	35,865.06
		Sub-Total  (CAD 1 = HKD 6):	710,062.18	553,565.00 4,260,373.08
				4,813,938.08
Legal Fees in Canada
11.	26.7.2017	Fasken Martineau – legal fee	1,083.47
12.	8.3.2018	Fasken Martineau – legal fee	280.42
13.	17.6.2021	Fasken Martineau – legal fee	16,640.96
14.	6.5.2021	Hull & Hull LLP – legal fee	5,650.00
15.	25.10.2023 23.11.2023	Lindsay Kennedy LLP – legal fee Lindsay Kennedy LLP – legal fee	5,000.00 1,859.57
16.	31.12.2023	Lindsay Kennedy LLP – legal fee	4,495.46
17.	16.3.2024	Lindsay Kennedy LLP – disbursements	108.23
18.	30.4.2024	Lindsay Kennedy LLP – legal fee	7,774.82
19.	25.6.2024	Lindsay Kennedy LLP – legal fee	4,110.38
20.	31.7.2024	Lindsay Kennedy LLP – legal fee	3,344.88
21.	31.7.2024	Lindsay Kennedy LLP – legal fee summary
		Sub-Total (CAD 1 = HKD 6):	50,348.19	302,089.14
	This amount to be equally shared among John, Wing Dee and Esther			100,696.38
Legal Fees in Hong Kong
22.	30.6.2024	Taxed legal costs and disbursements		1,681,882.01
23.		Legal Costs Appeal		2,000,000.00
24.	23.9.2024	C S Wong & Co		85,000.00
		Sub-Total:		3,766,882.01
		GRAND TOTAL:		8,681,516.47

10.  Pausing here, it should be emphasised that the above table was adopted from Appendix 4 of the CS Wong Report.  In the said table, the sub-total under the first section “Amount due from John with Bills” had been miscalculated.  The figure as stated in the table (CAD 710,062.18 (HK$4,260,373.08)) is in fact incorrect.  The correct figure should be CAD 710,602.18 (HK$4,263,613.08).  This would have an impact on the orders to be made by this Court (see Section B5 below).

11.  It had been held in the Decision that:

(1) Item 1 (HK$496,439) and item 2 (HK$57,126) should not be deducted from John’s entitlement because parties have agreed not to enforce any previous costs order against each other by virtue of Clause 6(a) of the Settlement Agreement (which is dated 6 March 2009);

(2) As far as item 23 was concerned (the costs of the appeal), HK$2,000,000 was just an estimate.  As parties have since then come to an agreement that such costs be fixed at HK$762,500, an amount of HK$1,237,500 should be taken out and released to John.

12.  The combined effect of the above is that the sum of HK$1,791,065 (HK$496,439 + HK$57,126 + HK$1,237,500) should not be further retained in Court.

13.  After the release of the sum of HK$1,791,065, only the Remaining Sum (HK$6,890,451.47) is retained by the Court.

14.  By virtue of the Decision, parties were directed to discuss between themselves as to how they would like to have the matters concerning the Remaining Sum resolved, and use their best endeavours to agree on the directions to be sought from the court for the purpose of the determination thereof (if necessary).  It was expected at the time that they would finally be sensible enough to sort out the matters themselves.

15.  Unfortunately, parties were unable to reach agreement on how to dispose of the Remaining Sum.  All they could agree on was the timetable for lodging written submissions.

16.  This Decision sets out the determination of this Court, having perused parties’ respective written submissions.

17.  For the sake of clarity, I set out below the items which have to be dealt with (some figures have been adjusted pursuant to the Decision):

			CAD	HKD
Amount due from John with Bills
3.	12.8.2017	Vancouver Rental Tax	48,397.39
4.	26.3.2024	Vacancy Tax Act Penalty	7,921.27
5.	9.8.2024	Vancouver Tax + penalty (deemed disposition of capital assets at fair market value on taxpayer’s death)	379,268.46
6.	7.2024	Unit 101 1845 Robson Street Tenant’s Deposit paid to John by H-Pro Real Estate, Management Co	1,400.00
7.	24.10.2023	Payment to Kroll, valuation report	50,000.00
8.	13.3.2024	Payment to Kroll	10,750.00
9.	12.3.2024	Kroll Bill (CAD 60,750)
10.	19.7.2024	Kroll Bill	65,000.00
10a	14.9.2024	Kroll Bill	112,000.00
29	19.9.2024	Unit 101 1845 Robson Street Special Levy – Ex-membrane replacement (CAD 11,955.02 x 3)	35,865.06
		Sub-Total (CAD 1 = HKD 6):	710,062.18	4,260,373.08[3]
Legal Fees in Canada
11.	26.7.2017	Fasken Martineau – legal fee	1,083.47
12.	8.3.2018	Fasken Martineau – legal fee	280.42
13.	17.6.2021	Fasken Martineau – legal fee	16,640.96
14.	6.5.2021	Hull & Hull LLP – legal fee	5,650.00
15.	25.10.2023 23.11.2023	Lindsay Kennedy LLP – legal fee Lindsay Kennedy LLP – legal fee	5,000.00 1,859.57
16.	31.12.2023	Lindsay Kennedy LLP – legal fee	4,495.46
17.	16.3.2024	Lindsay Kennedy LLP – disbursements	108.23
18.	30.4.2024	Lindsay Kennedy LLP – legal fee	7,774.82
19.	25.6.2024	Lindsay Kennedy LLP – legal fee	4,110.38
20.	31.7.2024	Lindsay Kennedy LLP – legal fee	3,344.88
21.	31.7.2024	Lindsay Kennedy LLP – legal fee summary
		Sub-Total (CAD 1 = HKD 6):	50,348.19	302,089.14
	This amount to be equally shared among John, Wing Dee and Esther			100,696.38
Legal Fees in Hong Kong
22.	30.6.2024	Taxed legal costs and disbursements		1,681,882.01
23.		Legal Costs – Appeal		762,500.00
24.	23.9.2024	C S Wong & Co		85,000.00
		Sub-Total:		2,529,382.01
		GRAND TOTAL:		6,890,451.47

B.      DISCUSSION

B1.     Items 3, 4, 5 and 29

18.  These items relate to Canadian properties tax.  The total amount of these items is CAD 471,452.18 (HK$2,828,713.08).

19.  However, the sum of HK$2,828,713.08 in fact represents the total amount of tax rather than John’s share (1/3) of the same.  As there is no dispute that each sibling should only be responsible to bear 1/3 of the tax, there is no reason why the entire sum of the tax should be withheld. 

20.  For the above reason, there is now no dispute between the parties that the sum of HK$1,885,808.72 (i.e. 2/3 of HK$2,828,713.08) should be released to John.

21.  As for the remaining 1/3 (HK$942,904.36) which represents John’s share of the Canadian properties tax, it cannot be disputed that he would not be entitled to the distribution of this sum. 

22.  Wing Dee’s counsel suggested that such a sum should be withheld in Courts.  I would accede to this request.

B2.     Items 7 – 10, 10(a) and 24

23.  These items are Kroll’s fees (HK$1,426,500) and CS Wong’s fees (HK$85,000).

24.  Parties agree that the test on whether professional fees should be paid out of the Estates has been set out in Chiu Pak Wo v Chiu Yim Kam & Others [2019] HKCFI 2517, in which it has been held that:

(1) A trustee is entitled as of right to full indemnity out of his trust estate against all his costs, charges, and expenses properly incurred: at [8];

(2) The right of a trustee to indemnity in respect of costs extends only to costs properly incurred in the execution of the trust. By this is meant costs which have been both honestly and reasonably incurred. A doubt is to be resolved in favour of the trustee, and so the right is sometimes expressed in terms of a double negative, that is, the trustee is entitled to costs not improperly incurred: at [11].

25.  It has also been held in Anita Mussell v Christopher Patience [2019] EWHC 1231 (Ch) at [17] that one cannot deprive a trustee/administrator of his indemnity out of the estates for costs or other expenses or liabilities which they have incurred for the estate unless he has behaved “unreasonably, or committed misconduct”.

26.  The issue here is whether Wing Dee has behaved unreasonably, or committed misconduct, by engaging Kroll and CS Wong.  Another way to approach the matter is to ask whether the costs for engaging Kroll and CS Wong have been improperly incurred.

27.  On this matter, reference should be made to the Decision in which it has been held by this Court that:

“64. […] while on the face of it, it seems that Wing Dee has produced 2 separate reports (the Kroll Report and the Deloitte Report) in support of his case here, those reports were in fact done by the same person – a Mr Prakash Venkat, who is an accredited appraiser with the Appraisal Institute of Canada.

65. Pausing here, I am of the view that it is necessary to refer to the following parts of the CFI Judgment in which DHCJ To had the following to say:

‘122. In conclusion, I am satisfied that John has not given a proper account of the Canadian Properties, the use of the mortgage loans and the rental income. The mortgages appear to be fictitious. John puts suspicion on himself by excluding Esther from control of the rental income. The genuineness of the mortgages and the use of the mortgage loan had to be properly investigated. WD’s estimation of the rental income is very crude. The only proper way to do justice to all parties is to have the matter properly examined and assessed by a qualified accountant.

242. […] Intervention by a properly qualified accountant to estimate the missing information in relation to the Canadian Properties and other properties under John’s control is necessary, particularly the rental income of the Toronto Properties and the value of the Father’s equity in the Disputed Units. John’s co-operation is unlikely to be forthcoming. In the circumstances, the proposed appointments are essential steps to be taken for completing the administration of the Estates. Given the mutual distrust among the parties, these steps can safeguard the interest of all parties concerned […]’

66. While it had been held in the Appeal Judgment that the learned Judge had erroneously come to the conclusion that ‘certified accounts’ and ‘audited accounts’ are the same, the 2021 CFI Orders were not set aside. Hence, the requirement of there being a professional accountant to finalise the accounts has remained intact.

67. However, without disrespect, Mr Venkat is not an accountant at all. He is therefore not eligible to do any expert report to challenge the Control Risks Report.

68. In the Deloitte Report, it was stated by Mr Venkat that the Kroll Report was prepared by himself and Ms Connie Lee who is a chartered professional accountant[4]. In paragraph 16 of Wing Dee’s 4^th Affirmation, Wing Dee also ‘note[d] that the Kroll Report on income calculation was also prepared by Connie Lee’. However, I regret to point out that that was not what was stated in the Kroll Report, in which it was unequivocally written in the covering letter thereof that:

‘This Report has been prepared by Prakash Venkat, Kroll’s Canadian Practice Leader of Real Estate Advisory, in accordance with the Consulting and Real Property Appraisal Standards requirements set forth in the Canadian Uniform Standards of Professional Appraisal Practices (‘CUSPAP’) of the Appraisal Institute of Canada (‘AIC’), effective as of the Valuation Date […]’

(emphasis added)

69. Although the said covering letter ended with a sentence saying that Wing Dee and Esther may contact either Mr Venkat or Ms Connie Lee if they have any questions, that apparently is not a representation that the Kroll Report had been in any way contributed to by Ms Connie Lee.

70. Wing Dee’s counsel also submitted that the accounts are prepared by Ms Susan Wong who is an accountant. However, while the CS Wong Report was indeed prepared by Ms Wong, it is obvious that the basis of the CS Wong Report is the Kroll Report. Hence, this argument does not assist Wing Dee.

71. Wing Dee himself also suggested in his 4^th Affirmation that Mr Venkat is in the view of Kroll Limited the best candidate to undertake the task.  That is totally beside the point, as Wing Dee is subject to the 2021 CFI Orders which had specified the expertise of the expert.”

28.  It can be seen that the engagement of Kroll and CS Wong was in breach of the 2021 CFI Orders.  In my view, consequentially, the fees have been improperly incurred, and Wing Dee has behaved unreasonably by engaging Kroll and CS Wong.  I agree with Mr Smith SC and Ms So that there is no reason why John should be required to bear such costs.

29.  Hence, the total sum of HK$1,511,500 (HK$1,426,500 + HK$85,000) should be released to John forthwith.

B3.     Items 6 and 11 – 21

30.  John accepts that a sum of CAD 16,782.73 (HK$100,696.38), representing his share of legal fees for the Canadian properties (i.e. items 11 – 21), together with a sum of CAD 1,400 (HK$8,400) (representing a deposit paid to John in respect of Robson Unit 101) (i.e. item 6) should be withheld in Court.

31.  The total sum to be retained under these items is therefore HK$109,096.38.

B4.     Items 22 and 23

32.  Items 22 and 23 relate to the costs of the 2020 Trial and of the appeal therefrom (“the Costs of Trial and Appeal”) which John has been ordered to bear.

33.  It is undisputed that those costs remain due and unpaid by John.

34.  Wing Dee further stated that interest has continued to accrue. According to John’s calculation (which is undisputed by Wing Dee), the total amount of costs plus interest which he has to pay Wing Dee is now HK$2,967,755.87.

35.  Wing Dee therefore originally proposed that the sum of HK$1,681,882.01 (item 22) be released to him (Wing Dee) forthwith[5]. He did not mention about the sum of HK$762,500 under item 23, probably due to an oversight.

36.  On the other hand, it is undisputed that, pursuant to Allocatur (Bill No.2) dated 20 February 2025 (which is related to the cost order dated 21 May 2024 (“the 2024 Cost Order”), an amount of HK$3,276,116.72 is due and owing from Wing Dee to John. 

37.  In my view, there is no reason why the 2 sets of costs (i.e. the cost under the 2024 Cost Order and the Costs of Trial and Appeal) should not be set off against each other.  This Court therefore raised the matter with the parties by letter dated 21 April 2026, and asked them, inter alia, whether they would agree that the aforesaid 2 sets of costs be set off against each other (“the Setting Off”), and invited them to agree on the exact order to be made so as to give effect to such an agreement.

38.  By a joint letter dated 28 April 2026, the parties jointly proposed the following orders for the Setting Off (which in fact are the orders which John proposed in his Reply Written Submissions dated 2 April 2026):

(1) HK$2,967,755.87 to be paid out from the Court to Wing Dee within 14 days from the date of the Order to be made;

(2) HK$308,360.85 (being the difference between HK$3,276,116.72 owed by Wing Dee to John under Allocatur (Bill No.2) and the sum in sub-paragraph (1) above) to be paid out from the Court to John within 14 days from the date of the Order to be made, to be set off against the amount of taxed costs due and owing from Wing Dee.

39.  While it is sensible for the parties to agree to the Setting Off, with respect, I do not consider it appropriate to order that a sum of HK$2,967,755.87 be paid out to Wing Dee, because:

(1) Such a sum far exceeds the total of item 22 and item 23 (which is only in the sum of HK$2,444,382.01).  I am not prepared to release any money retained in Court for the purpose of satisfying any costs order as such (apart from the Costs of Trial and Appeal which is now not necessary), as that is not the purpose of the Payment In in the first place;

(2) If the sum of HK$2,967,755.87 has been used to set off part of the costs which Wing Dee owes John under the Allocatur (Bill No.2), there should be nothing left to be received by Wing Dee, and therefore it would be wrong in principle for Wing Dee to be paid the said sum.

40.  In my view, the matter should be looked at in the following way: After the 2 sets of legal costs are set off against each other, it is Wing Dee who should be paying a net amount to John.  In such circumstances, there is no ground for Wing Dee to insist that items 22 and 23 be further retained in Court or for them to be released to Wing Dee.  The total sum of the 2 items should therefore be released to John.

41.  I therefore order that the said sums (totalling HK$2,444,382.01) be paid out to John.

42.  As for the net balance of the 2 sets of legal costs after the Setting Off (HK$308,360.85), it is up to John to take enforcement action and cover the same from Wing Dee. 

B5.    Amount of money to be retained in the Court

43.  Under Section B1, it has been held that an amount of HK$942,904.36 should be retained in the Court; whereas under section B3, another sum of HK$109,096.38 should also be kept in the Court. 

44.  In other words, the total amount of money which should remain in the Court should be HK$1,052,000.74.

45.  However, as explained in [10] above, there has been a miscalculation in the CS Wong Report, and as a result, the actual amount of money which is currently kept in the Court is CAD 540 (HK$3,240)[6] short.

46.  Therefore, having paid out the relevant sums of money to John, the remaining amount of money is HK$3,240 less than HK$1,052,000.74 – i.e. HK$1,048,760.74.

47.  For any part of the money in Court to which John is clearly not entitled, it is up to the parties to file a consent summons and ask for such part of the money to be released to Wing Dee as administrator of the Estate.

C.      ORDER

48.  For reasons of the above, I make the following orders:

(1) An Order for payment out of the amount of HK$5,841,690.73[7] (out of the HK$6,890,451.47 in Court) to John.

(2) The remaining amount of HK$1,048,760.74[8] in Court be withheld pending determination of paragraphs 1 – 2 and 4(i) of the Distribution Summons or further order of the Court.

(3) The taxed costs of the trial of this action commencing 16 September 2020 and of the appeal therefrom due and owing from the applicant shall be set off against the costs under Allocatur (Bill No.2) dated 20 February 2025 which is due and owing from the 1^st respondent.

D.      COSTS

49.  John is the successful party as far as this Decision is concerned.  Costs should follow the event.

50.  For the above reasons, I make the following costs order nisi:

(1) The 1^st respondent shall bear the applicant’s costs of and occasioned by this application, with certificate for two counsel (save that there be no order as to the costs of the joint letter dated 28 April 2026[9]);

(2) The 1^st respondent may recover the aforesaid costs from the Estates;

(3) The applicant’s costs shall be summarily assessed in lieu of taxation.  Unless any application for variation of the costs order nisi is made within time, the applicant shall lodge and serve his statement of costs within 7 days after the expiry of the 14-day period referred to in the paragraph below.  The 1^st respondent shall lodge and serve his statement of objection within 7 days thereafter.  Summary assessment of the costs of the Distribution Summons will be conducted on paper (no matter whether any statement of objection is lodged by the 1^st respondent within time) thereafter.  The costs assessed shall be paid within 14 days after assessment.

51.  The above order nisi shall become absolute in the absence of application to vary (which, if any, will be disposed of on paper) within 14 days hereof.