BEIJING SONGXIANGHU ARCHITECTURAL DECORATION ENGINEERING CO., LTD v. KITTY KAM also known as WANG YUZHI

HCA 1289/2022

[2024] HKCFI 1658

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1289 OF 2022

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BETWEEN

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REASONS FOR DECISION

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1.  In this action, the Plaintiff claims against the Defendant (“Kam”) in respect of 2 sums, namely HK$220,548,682 (“Sum A”) and HK$32,500,000 (“Sum B”), for fraud, dishonest assistance and conspiracy to injure by unlawful means.

2.  Before me for substantive hearing and determination was Kam’s summons dated 20 November 2023 seeking an order that

a. The Plaintiff’s Statement of Claim be struck out and the Plaintiff’s claim herein be dismissed on the grounds that it discloses no reasonable cause of action, it is scandalous, frivolous or vexatious or is otherwise an abuse of process; and

b. In the alternative, the Injunction Prohibiting Disposal of Assets in Hong Kong made herein on 13 January 2023 (“the Mareva Injunction”) be discharged.

The scope, basis and issues in this striking out

3.  In the 5^th Affirmation of Kam (“Kam 5^th”)[1] filed in support of her striking out application consisting of 45 pages, she raised and elaborated on 8 points under section C thereof, which contain more submissions than disposition of facts, arguing that the Plaintiff’s allegations of fraud against her are without proper basis. To give some flavour of what the 8 points she raised are, I will set out their titles:

“C.1. The Partnership Agreement and the Subscription Agreement are valid and subsisting instruments and operated such that the Plaintiff had duly acquired an interest as a limited partner of [SSI]”

“C.2. The Plaintiff’s reliance on the Purported Maples’ 2022 LP Register is completely misleading”

“C.3. SSGI’s discretion to deal with Sum A pursuant to the Partnership Agreement”

“C.4. The Plaintiff was in any event not the representee of the First Alleged Oral Representations nor the actual payor of Sum A”

“C.5. The Plaintiff could not have relied on the First Alleged Oral Representations”

“C.6. In any event, the payment of Sum A (and any alleged loss arising from it) could not have been made in reliance upon the First Alleged Oral Representations”

“C.7. No evidence that the Second Alleged Oral Representations were ever made”

“C.8. The Plaintiff in any event could not have relied on the Second Alleged Oral Representations, nor was it the actual payor of Sum B”

4.  However, the issue of whether the Plaintiff has a good arguable case of fraud against Kam, among other issues, in fact has already been hotly contested and adjudicated in the Plaintiff’s application for the Mareva Injunction heard on 12 January 2023 before A Chan J when Kam appeared by Mr Manzoni SC (“the Mareva Application”). The learned Judge handed down his Decision the next day on 13 January 2023 by which he held in favour of the Plaintiff on that and other issues and granted the Mareva Injunction (“the Mareva Decision”).

5.  Kam did not appeal against the Mareva Decision.

6.  In his written submissions dated 28 May 2024, Mr Lam SC (leading Ms Ho and Ms Sat), counsel for the Plaintiff, submitted extensively that all these issues so raised in Kam 5^th have been considered and adjudicated by A Chan J in the Mareva Decision, and therefore it was a blatant abuse of process (under Henderson v Henderson principle) for Kam to re-argue now that the Plaintiff’s claim is bound to fail.

7.  Mr Lam submitted that the striking out should be refused on the basis of abuse of process alone, but that in any case, this is obviously not a proper case for striking out.

8.  In the written submissions dated 27 May 2024 lodged by Mr Chain SC (leading Mr Cheng and Mr Sim), counsel for Kam, it was for the first time indicated that the scope and basis relied on for the striking out were much more limited. Instead of what was asked for in the summons, Kam now seeks:

a. An order for striking out the Plaintiff’s pleaded claim for Sum A, specifically §§3 (insofar as Sum A is referred), 8 to 10, 17, 19, 21(1), 22 to 26 and Relief 1 of the Statement of Claim, on grounds of frivolousness, in that it plainly and obviously cannot succeed at trial;

b. Alternatively, an order for striking out the Plaintiff’s pleaded claim of dishonest assistance relating to Sum A and Relief 1(a) on grounds of no reasonable cause of action, that P has failed to plead any breach of trust or fiduciary duty;

c. Consequentially upon the Plaintiff’s claim for Sum A being struck out, the entire Mareva Injunction be discharged; and

d. Alternatively, the entire Mareva Injunction be discharged due to lack of any good arguable case on merits.

9.  Mr Lam SC registered a complaint over such last-minute change in the scope and basis, but was prepared to proceed with the hearing on the basis of Kam’s present stance.

10.  In Kam’s written submission and her reply skeleton submissions dated 29 May 2024, the one matter that Kam said has now been indisputably proved justifying the striking out of the claim for Sum A was that under Cayman Islands law the Plaintiff in fact has acquired an interest as a limited partner in SSI (defined below)(“the Contractual Fulfilment Point”), points C2 to C8 as raised in Kam 5^th were no longer referred to and relied on, and the Henderson abuse point as raised by Mr Lam in respect of points C2 to C8 was also not addressed to directly.

11.  Such being the parties’ latest stances, this Court enquired at the hearing and Mr Chain accepted, in my view rightly and sensibly, that since the Plaintiff’s case of fraud over Sum A has been adjudged by A Chan J as having reached the threshold of “good arguable case”, it would mean that the claim has been adjudged to be “more than barely capable of serious argument, and yet not necessarily one that the judge believes to have a better than 50% chance of success”[2], and that such level of merits of the claim logically speaking is one that has already overcome the “bound to fail” threshold.

12.  Mr Chain also confirmed that Kam was not seeking now to re-argue the matters canvassed in the Mareva Application. Mr Chain said that there was now a material change of circumstances in that there has been available since the Mareva Decision “undisputed evidence” not placed before A Chan J proving the Contractual Fulfilment Point, which would show or lead to the result that the Plaintiff’s claim over Sum A would be bound to fail.

13.  Mr Lam initially contended that there was no real material change of circumstances in that the so-called “undisputed evidence” by way of Cayman Islands law expert reports could have been, but were not, proffered in the Mareva Application. In the course of the hearing, Mr Lam did not further pursue that contention.

14.  With such narrowing of scope and basis of the striking out, the abuse of process point raised by the Plaintiff and the other 7 points raised in Kam’s 5^th (ie. points C2 to C8) were no longer in issue in this application.

Dismissing the striking out application and withdrawal of the application to discharge the Mareva Injunction

15.  At the conclusion of the hearing for the striking out and before hearing the application to discharge the Mareva Injunction, I announced my decision dismissing the striking out application and indicated that written reasons would be provided.

16.  After a short adjournment, Kam sought leave to withdraw her application to discharge the Mareva Injunction, which leave was granted and that application was withdrawn.

17.  Mr Chain did not dispute that costs should follow the event regarding the striking out and that Kam should also pay the costs of the withdrawn application to discharge the Mareva Injunction. The question outstanding was whether such costs should be taxed on an indemnity basis, as the Plaintiff asked. As discussed with counsel, this Court would indicate its provisional view thereon by way of an order nisi in these Reasons.

The applicable principles

18.  The principles applicable to striking out are trite and not controversial. However, they bear repeating in the circumstances of the present case.

19.  Striking out is an exercise of summary powers only for plain and obvious cases. One must be careful not to summarily drive a plaintiff from the judgment seat. Before the court will strike out a claim for being frivolous, it must be shown that the claim is impossible, not just improbable, to succeed and is bound to fail or can have no prospect of success or is obviously unsustainable. The mere fact that the case is weak and not likely to succeed does not suffice to merit a striking out. The burden is on the party seeking to strike out to prove so. The threshold is a high one.

20.  Mr Chain relied on the principle, which is trite and was not disputed, that where fraud is being alleged, the court will not allow allegations of such nature to be made without proper evidence and if they were made irresponsibly, it will exercise its inherent jurisdiction to strike out the same (Chinachem Charitable Foundation Ltd v Chan Wai Tong Christopher [2022] HKCA 1907 §6).

21.  Mr Chain also placed reliance on Polyline Development Ltd v Ching Lin Luen [2021] HKCFI 483 (§§69, 76 and 77) to support a proposition that where a striking out application is taken out against a statement of claim alleging fraud, the court must take an overall view of the statement of claim to identify what is the real complaint and then decide whether it is sustainable.

22.  I do not accept that Mr Recorder Manzoni SC laid down such a general proposition in that case. There, the learned Recorder was dealing with a statement of claim that he found could be described as “kitchen sink” - containing every possible cause of action that the pleader could think of. And in view of the transactions and particular set of factual and legal allegations before him, the learned Recorder approached his analysis by, among others, sorting out and identifying what the “real complaint” was. I have no doubt that, where it is appropriate to the case, such an approach may be adopted as a useful analytical process or tool. But the crux of the matter in the present case, I think, is how Mr Chain sought to force the Plaintiff’s claim herein from what it is expressed to be in the Statement of Claim into what Kam considered to be “the real complaint”. I will have to say more about this in due course.

Background and the factual setting

23.  The relevant background and factual setting were lucidly summarized by A Chan J in the Mareva Decision. I gratefully adopt the same, including the abbreviations used :

“Background

5. The Plaintiff is a Mainland company. In its dealings with Kam, the Plaintiff was acting via Mr Wang Guiwu (“Wang”). Kam (whose former name was Wang Yu Zhi) is the daughter of Mr Wang Bin, who was the former Chairman of China Insurance (Group) Company. It is not controversial that Wang Bin was a well-known figure in the Mainland business circle.

6. Sunshine Success International LP (“SSI”) is an exempted partnership registered in the Cayman Islands on 6 July 2018. Its registered office was located at the address of Maricorp Services Ltd (“Maricorp”) since its registration until February 2022 when Maricorp was replaced by Maples Corporate Services Ltd (“Maples”) as it registered agent.

7. From February 2022 until at least 8 December 2022, SSI’s registered office was located at the address of Maples. Sometime after 8 December 2022, SSI’s registered office was (and is) located at the address of Tricor Services (Cayman Islands) Ltd.

8. [Sunshine Success Global Inc (“SSGI”)] was incorporated on 5 July 2018 (1 day before SSI’s registration in the Cayman Islands) and has been SSI’s General Partner since its registration. By virtue of being the General Partner, SSGI has been in control of SSI. SSGI was (and is) a company owned and controlled by Kam.

9. Kam has been SSGI’s sole director since its incorporation. Sunshine Success Global Ltd, a BVI company incorporated on 15 May 2018, is the sole shareholder of SSGI. Kam is in turn Sunshine Success Global Ltd’s sole shareholder and sole director (appointed on date of incorporation).

Investment

10. On 1 November 2019, the Plaintiff, through an agent in Hong Kong (Kong Fung Trade Ltd), transferred Sum A into SSGI’s account held with Chiyu Banking Corp Ltd (“Account”) in accordance with the instructions of Kam. The Account was opened by Kam on about 27 July 2018. She was stated in the bank record as the ultimate owner and controller of SSGI, and is the sole signatory of the Account.

11. Sum A was for investment as a limited partner of SSI which, Wang was allegedly told by Kam, will invest in new real estate projects, including London, Japan and Australia.

12. … However, Kam’s evidence is that in Autumn 2019 she told one Mr Zhi that she was “operating a Cayman investment fund through a partnership structure” and that “the fund intended to invest primarily in commercial properties, private equity and stocks…”. The Plaintiff accepts that Zhi was acting as a go-between at various stages, whereas Kam seems to say that Zhi was the true investor of Sum A and the Plaintiff was merely his nominee.

13. On 13 November 2019, there was a transfer by SSGI under the authorization of Kam of HK$420.5 million, which included Sum A, from the Account to SSGI’s savings account. According to the bank records obtained by the Plaintiff by way of a Norwich Pharmacal Order, Sum A (mixed with other funds) might have gone back into the Account in tranches but all the money were swiftly transferred out. By 4 January 2022, there was no money left in the Account. Neither SSGI nor Kam has provided any evidence as to the current whereabouts of Sum A (or Sum B).

Agreements

14. It is common ground that on 15 December 2019, Wang on behalf of the Plaintiff signed and appended the Plaintiff’s stamp on a Partnership Agreement (經修訂和重述的有限合夥協議) and a Subscription Agreement. They were both dated 1 August 2019. Kam only appended SSGI’s stamp on the Partnership Agreement but did not sign on it on behalf of SSGI at that time. SSGI’s solicitors only provided the signed Partnership Agreement to the Plaintiff on 27 June 2022.

15. On 15 December 2019, Wang was also given by Kam a draft Letter Agreement, but that document was not signed by either party.

16. The Partnership Agreement contained, inter alia, the following terms :

Recital A, ‘[SSGI] and the Initial Limited Partner … formed [SSI] … by executing the Exempted Limited Partnership Agreement of the Partnership dated 06.07.2018 (the “Initial Limited Partnership Agreement”) …’.

Recital B, ‘The Partners desire to enter into this Agreement to amend and restate the Initial Exempted Limited Partnership Agreement in its entirety to reflect, inter alia, the admission of the additional Persons into the Partnership as Limited Partners thereof and to clarify certain terms and provisions related to the Partners’ ownership and management of the Partnership’.”

The definitions under Clause 1.1:

“‘Initial Limited Partner’ means Brilliant Investment Consultancy Limited, Deternal Management Co., Ltd, who was admitted to the Partnership to facilitate the filing of the registration and the formation of the Partnership prior to the Initial Closing Date.

‘Limited Partner’ means any Person executing this Agreement as a limited partner of the Partnership …

‘Partner’ means any General Partner or Limited Partner.

‘Partnership’ means the limited partnership formed pursuant to this Agreement, as the said limited partnership may from time to time be constituted.”

Clause 1.2 (Formation and Continuation): “The Partners hereby agree to form [SSI] ... [SSGI] shall file all amendments to the information provided in respect of the Registration ...”.

Clause 1.4 (Purpose): “The primary purpose of the Partnership is to build long-term capital appreciation generally through acquiring, holding, managing and disposing of commercial real estate investments in London, Japan, and in Australia …”.

Clause 2.7 (Report): “The fiscal year of the Partnership shall be the calendar year. As promptly as possible after the close of the first full fiscal year of the Partnership ending on 31 December, and each fiscal year of the Partnership thereafter, the Limited Partners will receive from the Partnership an annual financial report prepared by [SSGI] in accordance with the accounting standard reasonably determined by [SSGI] within one hundred and twenty (120) days of the closing of the Partnership’s fiscal year …”.

Clause 3.5 (Register and Partnership Record): “[SSGI] shall maintain or cause to be maintained at the registered office of the Partnership or such other place as it shall determine in its sole discretion: (a) … the Register which shall contain the name and address of each Person who is a Limited Partner, the date on which a Person became a Limited Partner and the date on which a Person ceased to be a Limited Partner, which Register shall be open for inspection with [SSGI]’s consent; and (b) … a record of the amount and date of the Capital Contributions of each Limited Partner and the amount and date of any payment representing a return of the whole or any part of the Capital Contributions of any Limited Partner, which record shall be open to inspection with [SSGI]’s consent”.

“Sum B

17. On 20 February 2020, the Plaintiff (through Kong Fung) transferred Sum B into the bank account of Redstone Capital Holding Corp. (“Redstone Capital”) and the bank account of Wise Bravo Ltd (“Wise Bravo”).”

The Plaintiff’s case of fraud, and matters it relied on in the Mareva Application

24.  The Plaintiff’s case pleaded in its Statement of Claim filed on 17 November 2022 is that Kam together with SSGI carried out a fraudulent scheme to deprive P of Sum A and Sum B[3].

25.  It was pleaded that Sum A and Sum B were transferred to Kam in reliance of certain oral representations made by Kam :

a. After 2 meetings between inter alios Wang and Kam and Kam having learned that the Plaintiff was seeking out investment opportunities, then in around September or October 2019 at a meeting which took place in a hotel in Beijing attended by Wang, Kam, Kam’s parents (“Mr and Mrs Wang”) and Zhi, Kam on her own behalf and on behalf of SSGI made the following oral representations (“the First Oral Representations”):

i. The new investment fund would invest in newly developed real estate properties in, inter alia, London, Japan and Australia.

ii. For the purpose of P’s investment in the new fund, P would acquire an interest as a limited partner in SSI.

iii. Kam is the manager of SSGI, the General Partner of SSI, and Kam would be responsible for all of SSI’s operations.

iv. Kam would provide information about the investment after the signing of the relevant documents.

b. In reliance of the First Oral Representations,

i. on 1 November 2019, the Plaintiff transferred Sum A to a bank account in Chiyu Banking Corporation Ltd held in the name of SSGI (“the Chiyu Account”) by 2 transfers made by Kong Fung on P’s behalf; and

ii. Wang on behalf of P executed the Partnership Agreement and the Subscription Agreement on 15 December 2019, which were backdated to 1 August 2019 upon Kam’s suggestion.

c. In or around early February 2020, Kam (acting through Mr and Mrs Wang) made to Wang on behalf of the Plaintiff (through Zhi) the following oral representations (“the Second Oral Representations”) :

i. Kam was in need of funds to repay her personal debts overseas, and asked the Plaintiff to provide the funds to her;

ii. Kam would treat the funds provided to her as the Plaintiff’s capital contribution for subscription of additional interest in SSI. She would procure SSGI and SSI to make the necessary arrangements to increase the Plaintiff’s interest in SSI.

d. In reliance of the Second Oral Representation,

i. the Plaintiff informed Kam that it agreed to so provide HK$32,500,000 to Kam upon Kam’s undertaking that she would treat the amount as P’s contribution for subscription for additional interest in SSI and would procure SSGI and SSI to make the necessary arrangements to increase P’s interest in SSI;

ii. Mr and Mrs Wang (on behalf of Kam) then informed Zhi (on behalf of P) that Kam agreed and undertook to prepare a written agreement to be signed by Kam and P to record the said arrangement; and

iii. Further upon Kam’s promise set out in the preceding sub-paragraph and on 20 February 2020, Kong Fung on behalf of P transferred HK$12,500,000 and HK$20,000,000 into accounts designated by Kam, namely and respectively, the bank account of Redstone Capital and the bank account of Wise Bravo, which together made up Sum B.

26.  It was then pleaded that the First and Second Oral Representations were false and were made fraudulently in that :

a. The Plaintiff has never acquired any interest in SSI, as shown in the Register of Partnership Interests of SSI, which showed that only SSGI, Deternal Management Co Ltd and Brilliant Investments Consultancy Limited were limited partners.

b. Kam and SSGI have never had any intention to arrange the Plaintiff to acquire any or any further interest in SSI.

c. Kam and SSGI have never had any intention to apply Sum A and Sum B to invest in newly developed real estate properties.

d. Sum A was, together with other funds, transferred out of the Chiyu Account to another bank account held by SSGI.

e. Kam has failed to provide, or procure SSGI to provide, to the Plaintiff any information about the investment of SSI, and by SSGI’s solicitors’ letter dated 13 June 2022 misled the Plaintiff by claiming that “[the Plaintiff’s] investment is secure”.

27.  The following further matters were deposed to in the affirmation evidence filed by the Plaintiff and relied on by it in the Mareva Application:

a. Since early 2020, Wang tried to contact Kam over WeChat without success. Through Zhi, Wang repeatedly asked Mr and Mrs Wang to ask their daughter to provide the Plaintiff with the executed Partnership Agreement and Letter Agreement. Wang was assured (through Zhi) by the couple that there should not be any problem. However, the requested documents were not forthcoming.

b. In around mid-February 2022, Wang managed to contact Kam through her new WeChat account.

c. Between February and March 2022, Wang made repeated requests to Kam for (a) the executed Partnership Agreement and Letter Agreement; (b) basic information about SSGI; and (c) the projects and value of SSI’s investments (“the Requests”). Such information was needed by the Plaintiff to ascertain the status of its investment with Sums A and B, and to allow information to be provided to third party investors to whom the Plaintiff might dispose of the investment.

d. However, Kam put up various excuses not to fulfil the Requests. For instance, she was looking for a Cayman lawyer to make the arrangement and she was overseas and needed more time.

e. Given Kam’s response, the Plaintiff became concerned about its investment. On 20 April 2022, the Plaintiff’s solicitors (“PCW”) issued a letter (“20 April Letter”) to both SSI and SSGI setting out the Requests again, but no response was received by the deadline of 28 April 2022.

f. On 13 May 2022, the Plaintiff obtained a Norwich Pharmacal order against Chiyu Bank. The information revealed by the documents provided by Chiyu Bank to the Plaintiff on 14 June 2022 showed that on 13 November 2019, there was a transfer by SSGI under the authorization of Kam of HK$420.5 million, which included Sum A, from the Chiyu Account to SSGI’s savings account. According to the bank records, Sum A (mixed with other funds) might have gone back into the Chiyu Account in tranches but all the money were swiftly transferred out. By 4 January 2022, there was no money left in the Chiyu Account.

g. On 30 May 2022, SSGI’s solicitors (“DP”) wrote to PCW referring to 20 April Letter but without providing any substantive reply. By another letter of DP dated 13 June 2022 to PCW, it was stated that “… in 2019 your client invested in a 15-year Cayman fund … It follows, therefore, that there is no proper basis for your client to seek disclosure orders or otherwise. Your client’s investment is secure”. No particulars were given about the investment.

h. In PCW’s reply to DP on 22 June 2022, concerned was expressed that SSGI’s bare assertion that the Plaintiff’s investment was “secured” was insufficient, and SSGI as General Partner had failed to provide documents or information about the structure and business affairs of SSI to the Plaintiff. DP replied by letter dated 27 June 2022 in which SSGI repeated that the fund which the Plaintiff invested in was for a term of 15 years and enclosed an executed copy of the Partnership Agreement.

i. On 9 September 2022, the Plaintiff obtained disclosure of the corporate records of SSI from Maples pursuant to a Court Order of the Cayman Islands (“Cayman Disclosure”). The Register of SSI obtained under Cayman Disclosure (“2022 Maples Register”), which was kept at Maples (SSGI’s then registered office) revealed that the Plaintiff was never a limited partner of SSI. The Register was certified by Maples on 16 August 2022. The 2022 Maples Register showed that the partners of SSI were SSGI, Deternal Management Co Ltd and Brilliant Investments Consultancy Ltd. According to Clause 1.1 of the Partnership Agreement, Brilliant Investments and Deternal Management were admitted as limited partners only for the purposes of registration and formation of the Partnership.

Kam’s case presented in the Mareva Application

28.  Kam said that the Plaintiff was regretting the investment and was trying to extricate itself from it before maturity. Kam raised a number of disputes by way of defence in the Mareva Application which were summarized in §§42 to 49 of the Mareva Decision.

29.  As the only contention raised by Kam’s for this striking out is the Contractual Fulfilment Point, I therefore do not think it necessary here to go into the other matters Kam disputed or alleged by way of defence. Suffice it to mention that those disputes should be resolved at trial, but I have borne those disputes in mind as backdrops to this application.

The Mareva Decision

30.  For the present purpose, I think it pertinent to recap the gist of the Mareva Decision concerning whether a good arguable case was shown, as follows.

31.  In §§56 to 61 of the Mareva Decision, the learned Judge observed that there were a number of unusual features of Kam’s case, which “are indeed telling”, including (a) SSI purported to be a multi-million dollar investment vehicle managed by SSGI, there was no sign that SSI or SSGI has any staff, (b) neither Kam nor SSGI behaved in a manner consistent with a normal and honest investment provider in that they refused to provide a fully executed copy of the Partnership Agreement to the Plaintiff as soon as practicable after having received a huge sum from it and they continuously refused to tell the Plaintiff what has happened to the money and its whereabouts, (c) Kam made vague references to an investment in a 15-year Cayman fund without any explanation or a shred of evidence.

32.  The learned Judge then analysed the principal factual controversies and contentions, including (a) whether Wang had met with Kam prior to the payment of Sum A (Wang said they did and Kam said they did not), (b) that correspondences showed that Kam steadfastly refused to tell the Plaintiff what had happened to its money, (c) the parties’ respective case over the 2022 Maples Register, (d) the Plaintiff’s case regarding the circumstances relating to the payment of Sum B was to an extent corroborated by certain WeChat messages, (d) the credibility of Wang’s evidence and (e) Kam’s contention that any breach should be determined by arbitration.

33.  The learned Judge also made reference to the Plaintiff’s reliance on certain evasive conducts of Kam after the present action was commenced (see §36-41 of the Mareva Decision), which conducts the learned Judge described as “gamesmanship” (and an indemnity costs order dated 11 November 2022 has been made to mark the disapproval).

34.  The learned Judge also considered the Plaintiff’s point, which he described as powerful, that if the Plaintiff’s money was legitimately invested, Kam and SSGI would have been most forthcoming to dispel any misunderstanding or suspicion on the Plaintiff’s part that it has been cheated by simply showing to the Plaintiff the Register of SSI and information on where the money was invested and was held. The learned Judge further observed that the point could be taken further in that if such information was provided it would be a complete answer to the Mareva Application and there would be no need for Kam to incur huge costs in defending these proceedings.

35.  The learned Judge then concluded in §74 that he was quite satisfied that there was a good arguable case of fraud against Kam.

Disclosures made by Kam after the Mareva Decision

36.  In compliance with the Disclosure Order made by A Chan J on 13 January 2023 ordering Kam to disclose the whereabouts of Sum A and Sum B, Kam disclosed that HK$170,962,682 of Sum A was kept in a bank account held in Kam’s personal name at Standard Chartered Bank Singapore Limited (account no: 631XXX) and that the balance of Sum A, namely HK$49,586,000, has been applied as management fee paid by SSI to SSGI but Kam stated that the same would in due course be transferred back into and would remain at the same account at Standard Chartered Bank Singapore. As Kam’s case was that she has no knowledge of and did not receive Sum B, there was no disclosure on it. No further information was disclosed by Kam.

37.  I note that Kam has not fully complied with the Disclosure Order as she failed to disclose the whereabouts of the said balance of HK$49,586,000. Further, there was no explanation or any detail whatsoever given relating to the purported charging of “management fee” of HK$49,586,000 by SSGI and payment to it by SSI. There were further complaints by the Plaintiff that Kam has not fully complied in other respects. I do not think I need to go into them here.

38.  Upon the Plaintiff’s direct enquiry with Standard Chartered Bank Singapore shortly after Kam’s said disclosure, it was discovered that there was no account identified by the said number “631XXX”. Upon further enquiry with Kam’s solicitors, it was only then said that the actual account number was in fact “652756XXXX” and “631XXX” was the client number.

39.  Then weeks later on 24 February 2023, Kam disclosed a very heavily redacted bank statement of the above-mentioned Singaporean account in her name which showed that HK$170,962,700 and another sum of US$6,300,000 (equivalent to HK$49,140,000) were kept in that account. There was no further information or explanation given.

“Undisputable evidence” proving that the Plaintiff had acquired an interest in SSI ?

40.  Kam now says that considering the Cayman Islands law expert reports proffered by the parties and based on undisputed facts, it is indisputably proved that the Plaintiff had acquired an interest in SSI under Cayman Islands law.

41.  In this application, the parties have proffered the following expert reports on Cayman Islands law:

a. By Kam : (i) A memorandum of advice given by Walkers (Singapore) LLP dated 23 October 2023 (“Walker 1^st”)[4], and (ii) A memorandum of advice also given by Walkers (Singapore) LLP dated 5 April 2024 (“Walker 2^nd”)[5].

b. By the Plaintiff : A memo of advice given by Conyers Dill & Pearman dated 2 February 2024 (“Conyers 2^nd”)[6].

42.  Mr Chain submitted that

a. The experts did not dispute that there were only 2 conditions for the Plaintiff’s acquisition of an interest in SSI, which were (i) the Plaintiff’s valid execution and delivery of the Partnership Agreement and the Subscription Agreement (together “the LP Agreements”) (and SSI’s execution of the same were irrelevant), and (ii) SSI’s act or indication of acceptance of the Plaintiff as a limited partner of SSI.

b. Condition 1 was indisputably satisfied according to the Plaintiff’s own case that Wang signed the LP Agreements on behalf of the Plaintiff on 15 December 2019.

c. Condition 2 was satisfied by the conducts of SSGI in requesting and receiving from the Plaintiff Sum A and by Kam on behalf of SSGI taking away the LP Agreements signed by Wang on 15 December 2019.

d. Thus, it was indisputable that under Cayman Islands law the Plaintiff had effectively from 15 December 2019 acquired an interest in SSI.

43.  Mr Lam submitted that there were clearly disputes. Among others, Conyers opined that[7]

a. whether the Plaintiff’s offer to subscribe (by executing and delivering the LP Agreements) was to be accepted was at the general partner’s (ie. SSGI’s) discretion.

b. Under section 29(1) and (4) of the Exempted Limited Partnership Act (2021 Revision)(“the ELPA”), the Register shall be prima facie evidence showing the name and other details of each person who is a limited partner.

c. However, the Plaintiff was not shown to be a limited partner of SSI in the 2022 Maples Register.

d. The Plaintiff has never enjoyed any rights or benefits as a limited partner of SSI, including receiving dividends pursuant to clause 5.2 of the Partnership Agreement or financial reports pursuant to clause 2.7. Thus, and despite Kam’s claim, it is shown that SSI has never treated the Plaintiff as a limited partner.

44.  Therefore, it seems to me that there is no substantial conflict between the respective experts on the law and it is common ground between the parties that whether the Plaintiff has actually acquired an interest in SSI would depend on whether SSGI had accepted the Plaintiff as a limited partner of SSI.

45.  The dispute is on the application of the law. Kam now contends that receiving Sum A and taking away the LP Agreements signed by Wang by Kam on 15 December 2019 amounted to sufficient act or indication of acceptance on the part of SSGI. While the Plaintiff contends that the 2022 Maples Register, as a prima facie evidence as provided by the ELPA did not show that the Plaintiff was a limited partner, nor was there any objective facts showing that the Plaintiff has been in any way from December 2019 to date been treated as a limited partner. Thus, the parties are each relying on a different set of acts/conducts/factors as proving or showing that SSGI had or had not accepted the Plaintiff as a limited partner.

46.  Mr Chain submitted effectively that the opinion and conclusion of Walkers were definitive. On the present materials and in the context of this application, I do not think I can come to that conclusion.

47.  As it is not disputed that (a) the 2022 Maples Register did not show the Plaintiff as a limited partner of SSI, (b) the entitlements of a limited partner under clauses 5.2 and 2.7 and (c) the Plaintiff has not been given or received any of these entitlements in all these times, I take the view that Conyers’ such opinion and the Plaintiff’s such contention are at least arguable.

48.  I accept Mr Lam’s submission that the parties’ disputes surrounding the 2022 Maples Register and/or whether SSGI in fact had maintained its own Register and that it had in or around January 2020 caused the Plaintiff to be registered as a limited partner in that Register allegedly maintained by SSGI (as alleged in the substantially amended §6(10) of the Amended Defence and not earlier) are matters material for deciding whether the Plaintiff has in fact acquired the interest, and that they are matters for trial.

49.  It therefore seems to me very clear that whether SSGI had in fact accepted the Plaintiff as a limited partner of SSI is a question that could not be resolved in the context of a striking out application and is a matter for trial. I thus hold that Kam has not shown to be indisputable that the Plaintiff had indeed acquired an interest in SSI.

Was the Plaintiff entitled to refer the Court to its draft Amended Statement of Claim to resist this striking out?

50.  About 2 months after Kam issued the present summons on 20 November 2023, the Plaintiff issued a summons dated 30 January 2024 to apply for leave to amend the Statement of Claim (“the Amendment Summons”).

51.  The Plaintiff seeks to add the following averments by the draft Amended Statement of Claim ;

a. By §2(4), SSI and SSGI are mere facades or devises used by Kam to perpetrate fraud or evade legal obligation and liability, they are thus alter egos of Kam and the corporate veils should be lifted.

b. By §§16A to 16E, pleading the facts surrounding the disclosure made by Kam in compliance of A Chan J’s Order dated 13 January 2023, and how Kam failed to disclose and explain a number of matters.

c. By §§20A to 20F, pleading that even if the Plaintiff acquired any interest in SSI, by reasons of the matters already pleaded and the matters now particularized in these paragraphs supporting the allegations that Kam never intended to, or procured SSGI to, perform the LP Agreements and that Kam dishonestly intended at the outset to deal with the money for her own use and benefit; and therefore the LP Agreements were mere devices used by Kam and SSGI to carry out their scheme to defraud and are null and void.

d. By adding 4 sub-paragraphs to §22 pleading as particulars in support of the Plaintiff’s claim against Kam for knowing receipt and/or dishonest assistance that Kam procured SSGI to pay the money into Kam’s personal bank account when Kam well knew the money was SSGI’s.

e. By adding the particulars to §25, pleading the overt acts in support of the Plaintiff’s claim of conspiracy to injure by unlawful means were the same matters pleaded in paragraphs 4 to 20D of the Amended Statement of Claim.

f. Adding the prayers for the relief of a declaration and an injunction in respect of Sum A.

52.  It is trite that

“Where an application to amend a pleading which was sought to be struck out had been made, it would be more expedient and convenient to deal with the striking-out application on the facts as pleaded in the proposed amended pleading” (§18/19/4 at p.558 of Hong Kong Civil Procedure 2024).

53.  The Plaintiff has been seeking to have the Amendment Summons to be heard together with the present summons, but such course was refused by Kam, and a separate set of directions for filing of evidence and then fixing a hearing date was given for the Amendment Summons.

54.  Mr Lam asked the striking out be considered on the facts and matters intended to be pleaded in the draft Amended Statement of Claim.

55.  Mr Chain asked that this Court “must be vigilant towards any attempt by P to unjustifiably muddy the waters”[8], and that the Plaintiff was not entitled to refer to or rely on the draft because, according to him, the Plaintiff has made a prior and unequivocal election and indication that the intended amendment would not be so relied on.

56.  Upon examination and with respect to Mr Chain, such assertion that the Plaintiff had so elected and indicated is completely without basis, and was based on mis-quoting completely out of context part of the Plaintiff’s solicitors’ letter dated 8 April 2024 (“P’s Letter”)[9], thus :

“3.2 By solicitors’ letter of 5^th April 2024, P described the ‘implication of the intended amendments to the [SOC] under the Amendment Summons’ as ‘irrelevant’ to D’s Strike Out Summons.

3.3 In the same letter it was further expressly stated that :

‘…Any matters contained in [D’s evidence in reply for D’s Strike Out Summons] should merely be responding to the matters raised in [P’s evidence in opposition to D’s Strike Out Summons]. Any opposition or response [D] may have in respect of the Amendment Summons should be dealt with in [D’s] other affirmation filed in opposition thereto (emphasis added) ’”

(§§3.2 and 3.3 of Kam’s written submissions)

57.  P’s Letter was written in response to Kam’s solicitors’ letter dated 2 April 2024, which, however, is not included in the hearing bundles. To show context, I would quote P’s Letter from the beginning up to the relevant part:

“We refer to your letter dated 2nd of April 2024 (the “Letter”) which was sent to us after office hour at 8:22 p.m.. Unless otherwise specified or stated, we shall adopt the abbreviations and nomenclature in the Letter.

Firstly, our client is of the view that your client has more than sufficient time (being too whole months) to consider our client’s affirmation in opposition to the Striking Out Summons filed on 8 February 2024 (the “Opposition Affirmation”). As such, we do not see the reason that your client requires yet another lengthy time extension of 35 days to file the same.

Further, with due respect, your argument of requiring more time to prepare your client’s evidence in reply in the Striking Out Summons as a result of any implication of the intended amendments to the Statement of Claim in the Action under the Amendment Summons may have on the same is irrelevant. Any matters contained in your affirmation in reply should merely be responding to the matters raised in our client’s Opposition Affirmation. Any opposition or response your client may have in respect of the Amendment Summons should be dealt with in your other affirmation filed in opposition thereto. …”

58.  Thus, it is abundantly clear that in P’s Letter, it was only said that Kam’s argument was irrelevant in that Kam argued that she need more time to file the reply affirmation for the striking out because of the alleged “implication of the intended amendments”; and it was only further emphasized that the 2 sets of affirmation evidence should confine themselves to the respective applications for which a particular affirmation was filed, which was of course the proper course to take.

59.  I therefore completely rejected this totally groundless assertion that the Plaintiff has so unequivocally elected.

60.  Moreover and it can be recalled, at the time the Plaintiff filed the Statement of Claim on 17 November 2022, it has, after much fruitless chasing for a long time, finally received a copy of the allegedly executed Partnership Agreement under cover of Kam’s solicitors’ letter dated 27 June 2022 and no or little meaningful information concerning what had become of the money and concerning the operation of SSI was, up to that point, given to the Plaintiff despite its repeated requests. Limited information was then obtained by the Plaintiff through a Norwich Pharmacal Order against Chiyu Bank and the Disclosure Order granted by A Chan J against Kam.

61.  As I set out above, the intended amendments by and large sought to plead matters that occurred or became known to the Plaintiff after the Statement of Claim was filed and to align the Plaintiff’s pleaded case in light of the discovery of those matters.

62.  In my view, quite apart from the fact that it was expedient and convenient to consider the striking out on the basis of the draft amendment, it would, in the circumstances of this case, be unjust and wrong not to allow the Plaintiff to refer to and rely on the draft amendment in this application.

63.  For these reasons, at the hearing I ruled that the Plaintiff was entitled to refer to and rely on the proposed amendments to the Statement of Claim.

Clearly not a case for striking out

64.  By reason of my views and holdings set out in paragraphs 44-49 above, Kam’s striking out application would fail in limine.

65.  At the hearing, I have invited Mr Lam to address me on the assumption, taking Kam’s case at its highest, that it was shown that the Plaintiff has actually acquired an interest in SSI. And in case I am wrong regarding my said views and holdings in paragraphs 44-49 above, I would also refuse Kam’s striking out application for the following reasons.

66.  Mr Chain argued that “the real complaint and real essence” [10] and “main complaint”[11] of P’s alleged claim in fraud for Sum A was that it never received an interest in SSI, and it being shown indisputably that the Plaintiff has acquired an interest in SSI, the Plaintiff thus has obtained exactly what it bargained for under the LP Agreements, there would be no falsity and therefore no fraud[12], and the Plaintiff would have no grounds for complaint as against Kam personally[13].

67.  With respect, such an argument is clearly untenable, and is premised on Kam’s own unilateral and asserted interpretation of the Plaintiff’s claim of fraud in relation to Sum A made under the guise of identifying “the real complaint” in purported reliance on Polyline Development Ltd v Ching Lin Luen.

68.  The Plaintiff’s claim in respect of Sum A is set out in the Statement of Claim, which is straight forward.

69.  As alluded to above, the Plaintiff’s case of fraud in respect of Sum A pleaded in the Statement of Claim is that Sum A was paid into the Chiyu Account to Kam as a result and in reliance of the First Oral Representations, which are false and made with fraudulent intent, and the representation that the Plaintiff would acquire an interest in SSI was but only one of the 4 representations pleaded in §8(1) of the Statement of Claim. In this regard, I must reject Kam’s contention that this is the “real complaint” of the Plaintiff, with the attendant alleged consequence that the Court should ignore, or treat as in any way insignificant, the Plaintiff’s claim in relation to the other representations and their alleged falsity.

70.  The other 2 representations that the Plaintiff now alleges having been made by Kam and are false are (a) “The new fund would invest in newly developed real estate properties in, inter alia, London, Japan and Australia” (§8(1)(a) of the Statement of Claim) and (b) “The Defendant would provide information about the investment after the signing of the relevant agreements” (§8(1)(d) of the Statement of Claim). It is not the Plaintiff’s case, nor Kam’s, that the Plaintiff’s claim in relation to these 2 representations would rise or fall together with that in relation to the representation that the Plaintiff would acquire an interest in SSI.

71.  There is thus no basis or any reason in support of the contention that if the Plaintiff had in fact acquired an interest in SSI, then there would be no falsity regarding the other representations pleaded in §8(1) of the Statement of Claim or that there would be no fraud.

72.  Looking at this from another angle, even if the Plaintiff has a good cause of action to sue SSI and/or SSGI (and for argument’s sake, even Kam herself) for breach of the LP Agreements, as a matter of principle, the Plaintiff is not necessarily thereby precluded from suing Kam for fraud where there are further and additional materials and evidence justifying it.

73.  As have mentioned, A Chan J have considered those further and additional matters and evidence and held that the Plaintiff has a good arguable case of fraud against Kam. I respectfully agree with the learned Judge’s assessment and conclusion.

74.  The bare and uncontested facts remain that (a) since the Plaintiff paid over Sum A, SSI has not invested in any real estate properties in London, Japan, Australia or anywhere, and (b) Kam/SSGI/SSI have not provided to the Plaintiff any real information about the investment.

75.  Moreover, as confirmed by Mr Chain upon this Court’s enquiry, despite SSI being a multi-million dollar investment vehicle and SSGI its manager and HK$49,586,000 allegedly having been charged by SSGI as management fee, thus far (ie since late 2019 to date) there is no evidence indicating that any account of whatever sort or nature has been prepared by Kam/SSGI/SSI regarding the operation, assets and investments of SSI.

76.  I further accept Mr Lam’s submission that the arguably defective and very limited nature of the disclosure provided by Kam in purported compliance with the Disclosure Order and the further information so disclosed regarding the whereabouts of the money, limited though it is, are additional matters that arguably fortified the Plaintiff’s case of fraud.

77.  Kam may have good explanations or defence to all of the above mentioned matters, but all these are to be resolved at trial.

78.  Regarding Kam’s application to strike out the Plaintiff’s claim for dishonest assistance as disclosing no reasonable cause of action, as Sum A might on one view be regarded as having been received by SSI and managed by SSGI and the Plaintiff’s case is that Kam was in de facto control of SSGI and SSI and that they schemed together in the fraud, I find the further and alternative claim against Kam of dishonestly assisting SSGI and SSI, as pleaded in §§22 and 23 of the Statement of Claim, a sustainable alternative claim and ought not be struck out.

79.  For the reasons expressed above, it was in my view very clear that it has not been shown that the Plaintiff’s claim in respect of Sum A and Kam’s dishonest assistance should be struck out. I thus dismissed Kam’s striking out application.

Order indemnity costs on nisi basis

80.  My provisional view is that this application for striking out is clearly without basis and unmeritorious, that Kam 5^th was unreasonable in length and in seeking to present arguments rather than facts and arguing as if this were a trial over those issues, but which eventually were abandoned save but one point, that the resistance against allowing the Plaintiff to refer to the draft amendment is totally unreasonable and unmeritorious, and the application to seek to discharge the Mareva Injunction was based on or consequential upon similar arguments. In the round and provisionally, I consider it clearly appropriate to order Kam to pay the costs of her summons to be taxed on an indemnity basis. I also certify for 2 counsel. I so order on nisi basis which will become absolute in 21 days unless any party applies by summons to vary within that time.

The other outstanding summonses

81.  As I indicated to the parties at the outset of the hearing, there was a clear need to manage robustly the outstanding summonses which include (a) the Amendment Summons, (b) the Plaintiff’s summons dated 8 February 2024 for a proprietary injunction, disclosure and repatriation of the money (“the Proprietary Injunction Summons”), and (c) the Plaintiff’s summons dated 29 February 2024 for this striking out and discharge application and the other outstanding applications to be heard together with similar applications made in a related proceedings before the same Judge (“the Heard Together Summons”).

82.  At the end of the hearing and with the parties’ input and consent, leave was granted to withdraw the Heard Together Summons with costs of and incidental thereto be made costs in the cause, and directions were given to file evidence in relation to the Proprietary Injunction Summons and to have the same heard together substantively with the Amendment Summons before this Court on 9 August 2024.

83.  Kam should take into consideration this Court’s observations above concerning the proposed amendment to the Statement of Claim in relation to her intended opposition against the Amendment Summons.

84.  Lastly, I thank Mr Lam, Mr Chain and their junior counsel for their assistance.