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

HCA 1289/2022

[2025] HKCFI 4497

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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I.  INTRODUCTION

1.  Before me were:-

(1)  Charging Order: Notice to Show Cause filed on 7 February 2024, (the “1^st Charging Order Nisi”) charging on the property in the name of the Defendant (the “Property”);

(2)  Charging Order: Notice to Show Cause filed on 12 August 2025 (the “2^nd Charging Order Nisi”) charging on the Property; and

(3)  Charging Order: Notice to Show Cause filed on 12 August 2025 (the “3^rd Charging Order Nisi”) charging on the Property.

2.  The 1^st Charging Order Nisi was in respect of:-

(1)  A judgment sum of HK$650,000.00 by judgment dated 8 March 2023 (the “2023 Judgment”) with interest of HK$46,440.91 accrued thereon as at 23 January 2024, totalling HK$696,440.91; and

(2)  “the costs of this application”.

3.  The 2^nd Charging Order Nisi was in respect of 31 costs orders in the proceedings totalling HK$4,362,450.00 (the “31 Costs Orders”) made between 26 January 2023 and 29 May 2025 and “the costs of this application”.

4.  The 3^rd Charging Order Nisi was in respect of a judgment sum of HK$220,548,682.00 entered on 25 October 2024 (the “Default Judgment”) as a result of the Defendant’s failure to comply with an unless order dated 27 September 2024 (the “Unless Order”) and the accrued interest thereon, totalling HK$303,561,118.09, and “the costs of this application”.

5.  Mr Arthur Poon, counsel for the Plaintiff, submitted that I should make the three Charging Order Nisi absolute. Ms Euchine Ng, leading Ms Valerie Kwok, counsel for the Defendant, submitted that I should discharge the 1^st Charging Order Nisi, and adjourned the 2^nd and 3^rd Charging Orders Nisi after the determination of the outstanding appeals and applications (discussed below).

6.  At the end of the hearing, I made the following order:-

(1)  The 1^st Costs Order Nisi be made absolute in respect of HK$650,000.00 and interest thereon in the sum of HK$139,183.37 as at 16 September 2025, and the costs of HK$1,365,000.00;

(2)  The 2^nd Costs Order Nisi be made absolute in respect of HK$4,362,450.00 and interest thereon in the sum of HK$277,682.74, and the costs of HK$58,000.00; and

(3)  The 3^rd Costs Order Nisi be made absolute in respect of HK$220,548,682.00, interest thereon in the sum of HK$69,342,367.47 and HK$16,710,921.54 as at 16 September 2025 and the costs of HK$58,000.00.

7.  These are my reasons.

II.  THE 1^ST CHARGING ORDER NISI

8.  In respect of the 1^st Charging Order Nisi:-

(1)  After it was made on 29 January 2024, in March 2024, the Defendant raise a preliminary issue that the Property was beneficially owned not by the Defendant but his mother.

(2)  On 23 October 2024, Master Frances Lok SC made an order that the preliminary issue shall be tried first. The trial of the preliminary issue was fixed to take place on 21 July 2025 with two days reserved.

(3)  Just two weeks before the scheduled hearing, on 8 July 2025, the Defendant sent to the Plaintiff a cheque of HK$782,174.43 (the “1^st Cheque”) in an attempt to settle the 2023 Judgment with interest accrued thereon.

(4)  However, the Plaintiff refused to cash the 1st Cheque on the ground that the sum did not include the “costs of this application”. “The costs of this application” had, at that time, not yet been taxed because the preliminary issue, being part of the application to make the 1st Charging Order Nisi absolute, was yet to take place.

(5)  On 10 July 2025, in writing, the Plaintiff demanded the Defendant to pay “the costs of this application” in the sum of HK$1,821,910.00.

(6)  On 10 July 2025, the Defendant replied, saying that the costs in the bill of costs were well beyond the standard cost of HK$10,400.00 even on an indemnity basis for an application for charging order nisi according to the “Lump Sum Assessment References Figures” issued by the Law Society. Instead, the Defendant sent out a cheque of HK$10,400.00 (the “2^nd Cheque”) as “the costs of this application”.

(7)  On 21 July 2025, the trial of the preliminary issue took place before DHCJ Andrew Li. The Defendant’s legal representatives did not have any instructions, however, to argue on the preliminary issue; nor did the Defendant or her mother, though having filed affirmations, attend the Court for cross-examination. DHCJ Andrew Li answered the preliminary issue in favour of the Plaintiff, that is, the Defendant has beneficial ownership in the Property, and assessed the costs to be HK$1,300,000.00: see [2025] HKCFI 3356.

9.  Mr Poon submitted that the Plaintiff was entitled not to cash the 1^st Cheque because the 1^st Cheque did not include “the costs of this application” and the 2^nd Cheque was insufficient to cover “the costs of this application”. Ms Ng submitted that “the costs of this application” was not an ascertained sum and therefore cannot be part of the 1^st Charging Order Nisi.

10.  A charging order can only be made in respect of an ascertained sum. As Ms Ng pointed out, the practice is that when making a charging order nisi absolute, the Court would at the same time assess “the costs of this application” and add the assessed costs to the charging order absolute.

11.  However, in my view, it does not follow that the chargor nisi has to accept the payment of the underlying sum without the costs of the application for the charging order, when the costs have yet to be fixed. The parties have to apply some common sense. For example, if the application is a run-of-the-mill application for a chagrining order, the standard costs according to the Law Society could be a good reference. It would probably be reasonable for the chargor nisi to accept the payment with the standard costs and if he refuses to do so, this would be a consideration the Court will take into account in determining whether to make the charging order nisi absolute when the payment is still on the table for acceptance, and there may also be costs consequence. However, where the costs of the application, due to substantially disputed issues, would be reasonably expected to be far more substantial than the standard costs, it would probably be reasonable for the chargor nisi to refuse the chargee’s offer of the standard costs only, and it would probably lie ill in the charge nisi’s mouth to say that it has made any genuine offer to settle the matter. Of course, if the chargee nisi would separate the underlying sums and the costs, that may make life easier – for instance, in offering to pay the underlying sum and the costs, the chargee nisi makes it clear that if the chargor nisi does not accept the costs, the chargor nisi should still accept the underlying sum and leaving the charging order application in respect of the costs to be argued and determined. At the end of the day, if the matter has to proceed to determination of a grant of a charging order absolute, the Court would usually assess the costs at the same time and add the assessed costs to the charging order absolute. The chargee can there and then still make the payment to discharge the charging order.

12.  In the present case, the Defendant’s offer of the standard costs near the trial of the preliminary issue in exchange for the complete discharge of the 1^st Charging Order Nisi was, in my view, disingenuous. By the time of the trial of the preliminary issue, the costs could by no way anywhere near the standard costs. It was entirely reasonable for the Plaintiff to reject this offer, because otherwise, the 1^st Charging Order Nisi would be discharged and the Plaintiff would lose the protection of a chagrining order in respect of the costs of the application that would be included in the charging order absolute.

13.  Upon DHCJ Andrew Li’s decision, the costs were assessed at HK$1,300,000.00. For the further costs incurred up to the hearing before me, at the end of the hearing before me, I summarily assessed the costs of the present application as well.

14.  Therefore, I rejected Ms Ng’s argument that the 1^st and 2^nd Cheques were already payment of the sums in the 1^st Charging Order Nisi. The Plaintiff was entitled to reject them in the circumstances. The delivery of the 1^st and 2^nd Cheques should not stop the accrual of interest on the underlying sums.

III.  THE 1^ST, 2^ND AND 3^RD CHARGING ORDERS NISI

15.  In respect of all the 1^st, 2^nd and 3^rd Charging Orders Nisi, Ms Ng first submitted that on 5 September 2025, the Defendant filed summons for an application for stay of the execution of the Default Judgment (the “Stay Application”) pending appeal against the Default Judgment lodged on 22 November 2024 (the “Default Judgment Appeal”). The Stay Application would be heard on 16 October 2025 for directions. Ms Ng submitted that if the Stay Application would succeed, then the Plaintiff would not be entitled to enforce the 3^rd Charging Order Nisi.

16.  The Default Judgment was made on 25 October 2024. The Default Judgment Appeal was lodged on 22 November 2024. The purported reason for the inordinate delay in applying for a stay only one year later was that the Defendant thought that the merits of the appeal but in the light of DHCJ Andrew Li’s comments that there was no stay application: see §62 of his Lordship’s decision, the Defendant thought fit now to make the Stay Application.

17.  I was unable to accept this reason as any good reason. The Defendant was all along legally advised, and it was well established that an appeal did not operate as a stay. It was the Defendant’s own decision whether to apply for a stay or not, but the Court proceeded on the well-established principle and thus the Plaintiff was prima facie entitled to execute an order made in its favour.

18.  Secondly, Ms Ng submitted that the Default Judgment Appeal (to be heard on 7 November 2024), and the application for leave to appeal against the Unless Order lodged on 30 December 2024 (the “Application for Leave against the Unless Order”), if they would succeed, would mean that (1) the underlying liability of the 3^rd Charging Order Nisi would be asset aside; and (2) out of the 31 Costs Orders underlying the 2^nd Charging Order Nisi, a quarter of the total liability would be set aside. However, in my view, in the absence of any stay pending the Default Judgment Appeal, the Default Judgment Appeal itself was not a reason not to make the charging order nisi absolute. In respect of the Application for Leave against the Unless Order, there would at most be a quarter of the 31 Costs Orders set aside, and in any event, there was no stay of any of the costs order despite the Application for Leave against the Unless Order.

19.  Thirdly, referring to that the Defendant’s application by summons filed on 8 November 2024 for relief from sanction (the “Relief From Sanction Application”) of the Unless Order, which was adjourned on 27 February 2025 with liberty to restore after the determination of the Default Judgment Appeal, Ms Ng submitted that making the 3^rd Charging Order Nisi would frustrate the regime of relief from sanction. In my view, the Relief From Sanction Application would depend on the outcome of the Default Judgment Appeal. Further and in any event, while the Relief From Sanction Application was adjourned pending the determination of the Default Judgment Appeal, there was no stay or not even any application for a stay of the sanction of the Unless Order, namely, the Default Judgment.

20.  Fourthly, referring to the appeal lodged on 18 August 2025 against DHCJ Andrew Li’s declaration in respect of the preliminary issue in favour of the Plaintiff, Ms Ng submitted that if his Lordship’s judgment would be set aside, then the basis for all the Charging Orders Nisi, being that the Defendant beneficially owned the Property, would not subsist and all the Charging Orders Nisi should be set aside as a result. My short answer was that again, there was no stay or not even any application for stay of the declaration.

21.  Fifthly, Ms Ng submitted that if the Court would make the Charging Orders Nisi absolute now, and if the underlying basis would be set aside, then costs would be wasted in unwinding any enforcement. However, in my view, a charging order absolute was not a sales order, which was not a matter before me. A charging order absolute mainly gives security and priority. Ms Ng was right in submitting that the priority would date back to the date of the Charging Orders Nisi. However, I did not agree with her that this would mean that the Plaintiff would suffer no prejudice from the Court not making the orders absolute. After all, the burden lied upon the Defendant to show cause why the Charging Orders Nisi should not be made absolute. A delay in making them absolute, without good reason, in my view would be prejudice to the Plaintiff’s right.

22.  Sixthly, Ms Ng submitted that the unchallenged liabilities (taking into account the Default Judgment Appeal and the Application for Leave against the Unless Order) would be HK$3,228,450.00 only, while the value of the Property was HK$47,430,000.00. Ms Ng submitted that it would be disproportional to make the Charging Orders Nisi or any of them absolute. However, as I explained above, there was no stay of the relevant orders. Further and in any event, as Mr Poon submitted, which I agreed:-

(1)  I was entitled to consider all relevant matters such as the chargee’s conduct: see Union Finance Ltd v Leung Wai Ling [2000] 2 HKC 821 at 824C per Chung J;

(2)  The Defendant’s conduct had been criticised by the Court as “abusive” and deploying “games and tactics”: see [2023] HKCFI 159 at §38 per Anthony Chan J (as he then was); [2024] HKCFI 3068 at §24 per DHCJ KC Chan; [2025] HKCFI 3356 at §5 per DHCJ Andrew Li;

(3)  The Defendant did not settle any costs order underlying the 2nd Charging Order Nisi, even though only a quarter of the total sum were challenged (though not stayed);

(4)  The Defendant had adduced no evidence that he had any other assets within jurisdiction;

(5)  The Defendant’s mother had filed affirmation to show any hardship, and in any event, a charging order, as explained above, only gives security and priority, but not a sales order itself; and

(6)  I did not agree with Ms Ng that I should consider each of the Charging Orders Nisi individually in determining proportionality. All the Charging Orders Nisi were made in the same proceedings between the same parties. It would, in my view, be appropriate here to consider them all together in determining proportionality.

IV.  CONCLUSION

23.  In the circumstances, having considered, individually and as a whole, the reasons advanced by Ms Ng, I thought it appropriate to grant the order set out in §6 above.

24.  Lastly, I thank Mr Poon and Ms Ng as well as Ms Kwok for their assistance.