TO CHUNG LEE v. NORMAN GUY DONALD and LAI KAR YAN, the Joint and Several Administrators of the Estate of LAM KAM WAI (Deceased) AND OTHERS

HCMP 1360/2025

[2026] HKCFI 3323

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 1360 OF 2025

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BETWEEN

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COSTS RULING

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1.  By an order by consent dated 5 March 2026, the Petitioner was granted leave to withdraw her summons filed on 14 August 2025 (“Summons”), the costs thereof to be dealt with on paper. The Summons was for an interlocutory injunction restraining R1-R4 (collectively, the “Respondents”) until further order and pending the trial of the Petitioner’s unfair prejudice petition (“Petition”) from causing the 5^th Respondent Golden Time Enterprises Limited (the “Company”) to pay the sum of $10.4 million (“GTE Sum Part 1”) to the estate (“Estate”) of Lam Kam Wai (the “Deceased”).

Relevant background

2.  On 5 December 2022, on the application of Rebecca Lam (“Rebecca”) and Kenneth Lam (“Kenneth”) in HCMP 1014/2021, this Court appointed Norman Guy Donald and Lai Kar Yan (“R1”) of Deloitte Touche Tohmatsu (“Deloitte”) joint administrators of the Estate of the Deceased (the “Deloitte Appointment”) in place of Jenny Lam (Jenny”) and Norman Chiu (together, the “Former Administrators”). The circumstances culminating in the Deloitte Appointment are set out in my decision in Re Estate of Lam Kam Wai [2022] HKCFI 3653 (“HCMP 1014 Decision”) to which reference should be made.

3.  Events post-HCMP 1014 are gleaned from the affirmation of Ip Ka Cheong Jeffrey (“Ip 1^st”) of Deloitte (who replaced Mr Lai as an Administrator of the Estate on 8 August 2025) filed on 20 October 2025.

4.  The Estate owns 89.9% of the Company. Following the Deloitte Appointment, in their capacity as Administrators, R1 nominated and appointed R2-R4 (“Corporate Directors”) directors of the Company.

5.  One of the assets of the Estate that required investigation was the amount of HK$193,701,306 made up of (i) an amount due to an ex-director of HK$5.2 million (in round terms) (“Amount due to Ex-Director”) and shareholders loan of approximately HK$188.5 million (“Shareholders’ Loan”) said to be owed by the Company to the Estate (collectively, the “GTE Sum”).

6.  The dispute over the GTE Sum is set out in §§18-47 of the HCMP 1014 Decision. In summary,

(i) prior to January 2021, it was Jenny’s position that the GTE Sum was owed to the Deceased;

(ii) subsequently, Jenny asserted that the bulk of the GTE Sum was due to the Petitioner[1], Madam Chan (mother of Rebecca and Kenneth) (“Madam Chan”) and herself. Jenny’s final position in HCMP 1014 was that the GTE Sum should be divided into 2 parts:

(a) GTE Sum Part 1 comprising loans made by the Deceased to the GTE for the acquisition of 2 properties in Royal Ascot, Shatin (the “Flats”); and

(b) GTE Sum Part 2 comprising largely circular round-robin funds from GTE’s subsidiary in the Mainland, Golden Time Chemical (Jiangsu) Co Ltd (“GTC”) to GTE for investing in GTC’s factory in the Mainland.

(iii) the Flats were sold for $19.5 million in June 2017 but the sale proceeds have not been distributed;

(iv) on Jenny’s evidence[2] that GTE Sum Part 2 was in the amount of US$23.5 million (approximately HK$183.3 million), GTE Sum Part 1 has a value of approximately HK$10.4 million[3]. The same is corroborated by Annie[4]’s evidence that the Deceased provided the entirety of the purchase money for the Flats;

(v) in those circumstances, the Court considered the source of GTE Sum Part 2 to be controversial and required further investigation.

7.  It is clear from Ip 1^st that the Amount Due to Ex-Director which forms part of the GTE Sum is owed to the Estate. The Company’s ledgers which the Administrators have reviewed show how that amount was incurred: namely, through transactions between the Deceased/the Estate and the Company between 1997 and 2013.

8.  Further, the only portion of the Shareholders’ Loan which is subject to any competing claims from other shareholders is GTE Sum Part 2 in the amount of HK$183.3 million. None of the shareholders have asserted any claim to the remaining amount of HK$5.2 million which forms part of GTE Sum Part 1.

9.  The computation exercise carried out by Administrators described in Ip 1^st at §§12.4-12.5 supports and is consistent with the Administrators’ view that GTE Sum Part 1 is due and owing to the estate.

10.  For those reasons, the Administrators considered that the Estate has an indisputable claim to GTE Sum Part 1 and caused their legal representatives (“Deacons”) to formally demand[5] the Company to repay the GTE Sum Part 1 to the Estate.

11.  A Board Meeting of the Company was held on 25 April 2025 to consider the Estate’s demand for repayment of the GTE Sum Part 1. The Board resolved that the issue be discussed and put to a vote by the shareholders at an AGM to be held on 19 May 2025 (“2025 AGM”) where Mr Norman on behalf of the Estate holding 89.9% of the shares and Rebecca holding 0.05% shares voted in favour. Jenny and the Petitioner who together hold 10.05% shares voted against.

12.  Prior to voting in favour of the Resolution on behalf of the Estate, the Administrators were aware that the audited financial statements of the Company for the year ended 31 December 2023 showed current assets of almost HK$89 million of which HK$63 million comprised of cash and cash equivalents. At the April 2025 Board Meeting, Jenny had advised that the Company had enough money to make payment of the GTE Sum Part 1 to the Estate.

13.  On 28 May 2025, Jenny asserted through her solicitors that the Company had limited available cash and if repayment was made the Company’s operation would be seriously harmed. That caused the representative of the Corporate Directors to visit the Company’s offices the following day when they received confirmation that the Company held a cash balance of over HK$62 million.

14.  At the date of Ip 1^st, the Company had not made the transfer as Jenny, the sole signatory of the Company’s primary bank accounts, had refused to implement the 2025 AGM Resolution. By Board resolution of 16 June 2025, 2 of the Corporate Directors were added as signatories of the Company’s bank accounts.

15.  On 4 July 2025, Jenny commenced HCA 1250/2025, a common law derivative action against the Administrators and the Corporate Directors in respect of GTE Sum Part 1 seeking, inter alia, an injunction against the implementation of the 2025 AGM Resolution.

16.  The Petitioner issued her Summons on 14 August 2025 seeking an interlocutory injunction to restrain the Respondents from repaying GTE Sum Part 1 to the Estate alongside her Petition with a return date of 29 August 2025.

17.  The Petition covers the same subject matter as HCA 1250/2025. It is unusual in that the Petitioner who is a 0.05% shareholder of the Company does not seek a buyout but merely injunctions restraining payment of GTE Sum Part 1 when her economic interest therein was no more than HK$5200.

The Petitioner’s complaints

18.  The Petitioner complains that the Respondents acted in an unfairly prejudicial manner in resolving to repay GTE Sum Part 1 to the Estate despite the fact that the debt was confirmed by Jenny and Annie (current/former directors and shareholders of the Company) in affirmations to the Court, and the Petitioner has not adduced evidence suggesting the contrary.

19.  The Respondents submit that irrespective of the underlying merits of the Petition, there was never any basis for interlocutory injunction relief. There was simply no risk of irreparable harm necessitating injunctive relief.

20.  GTE Sum Part 1 concerns HK$10.4 million when the incontrovertible evidence is that the Company had ample cash reserves to make the repayment and that R1 are administrators appointed by the Court who would undoubtedly comply with any order of the Court were the Petitioner to succeed in her claims of unfair prejudice at the end of the day. In any event, the Estate also has substantial assets, for example, the GTE shares from which any such claim could be satisfied.

21.  The Petitioner was made aware of those facts upon sight of the Respondents’ skeleton (“Respondents’ skeleton”) served on the Petitioner’s solicitors Han Kun Law Offices LLP (“HKLO”) on 22 August 2025 for the return date hearing before Harris J on 29 August 2025 as well as Ip 1^st.

22.  The Petitioner submitted that the costs of the Summons be in the cause because the relief sought was rendered otiose due to the Respondents’ conduct in paying out the HK$10.4 million on 19 December 2025 despite the pending Summons and the Petitioner’s repeated objections.

23.  Mr Joseph Wong, counsel for the Petitioner, relied on the following passage in Perrine Chamonix Ltd v Star League Limited & Anor, unrep., HCA 1139/2017, 13 September 2017 at §28:

“… if a plaintiff or an applicant withdraws an action or a summon because the defendant had done something, after the issuance of writ of summons or summons, which renders it unnecessary or academic for the plaintiff or the applicant to proceed with the action or application, the court has a full discretion to award costs to the plaintiff or applicant after taking all the circumstances of the case into consideration…”

24.  The Petitioner referred to the Respondents’ skeleton where they stated their opposition to the Summons and proposing that (i) the Summons be adjourned for substantive argument with 3 hours reserved in consultation with counsel’s diaries; (ii) Respondents to file and serve opposing affirmation within 28 days; (iii) Petitioner to file affirmation in reply within 14 days; and (iv) costs be in the cause.

25.  As the Respondents gave no indication at all that they would effect the payout soon, the Petitioner was ‘ambushed’, ‘misled’ or wrongfooted by agreeing to dispose of the hearing of the Summons scheduled for 29 August 2025 by a consent order.

26.  It is clear from §4 of the Respondents’ skeleton and Deacons’ letter of 22 August 2025 to HKLO that at the date of the Respondents’ skeleton, the Respondents had not received hearing bundles nor the Petitioner’s skeleton for the hearing scheduled for 29 August 2025 despite the Court’s timetable for filing the same. For that reason, the Respondents did not know what directions the Petitioner would propose. The Respondents also made it clear that they opposed the Summons and it was in those circumstances that they invited the Court to give directions for the further conduct of the Summons as set out in §15 of the Respondents’ skeleton. In their letter, Deacons invited the Petitioner to deal with the Summons therein by consent.

27.  I see no merit in the suggestion that the Petitioner had been ambushed, misled or wrongfooted for the following reasons:

(i) what was proposed were standard directions when an application for interlocutory injunctive relief is opposed;

(ii) it was entirely a matter for the Petitioner whether she considered an interim-interim injunction or an undertaking necessary; and

(iii) the Petitioner has not identified any basis for her suggestion that the Respondents had an obligation or duty to give an indication of when they would effect the payout prior to the substantive hearing.

28.  The correspondence exchanged between Deacons and HKLO upon the latter’s receipt of Deacons’ letter of 22 August 2025 is instructive.

(i) HKLO replied on 25 August 2025 enclosing a draft Consent Summons proposing that the Summons and the Petition be adjourned and heard together and upon R1’s undertaking to provide 14 days’ written notice prior to any transfer of GTE Sum Part 1.

(ii) Deacons replied on 26 August 2025 stating that

(a) if the Summons and the Petition were to be heard together, that would render the Summons entirely redundant;

(b) Deacons took exception to the Petitioner’s demand for an undertaking from R1 to provide 14 days’ prior notice to any transfer of HK$10.4 million, referencing the Respondents’ skeleton which explained the basis of their objection to the Summons; and

(c) in order to vacate the impending hearing scheduled for 29 August 2025 the parties should agree directions for the further conduct of the Summons and the Petition separately.

(iii) HKLO replied stating that the Petitioner was agreeable to the proposed directions for the Summons being dealt with first and was agreeable to the directions proposed with minor amendments (to which the Respondents agreed) resulting in the Consent Summons.

29.  The Petitioner knew that the Respondents opposed the injunction and the Petitioner’s request for an undertaking. The Petitioner who could have applied for an interim-interim injunction at the return date but did not do so must have accepted the possibility of a payment out occurring.

30.  The complaint that the Respondents never responded to the Petitioner’s letter of 28 November 2025 and, instead, proceeded to make the payout on 19 December 2025 without informing Petitioner (before or after the payout), is misconceived.

31.  Ip 1^st was served on HKLO on 20 October 2025 and filed on the same day setting out in full why the Administrators considered that the HK$10.4 million was due and owing to the Estate. The Administrators plainly did investigate and concluded, for the reasons fully set out in Ip 1^st at §12, that GTE Sum Part 1 was due and owing to the Estate. As there was never any extant injunction restraining the Respondents from making the payment to the Estate, they were fully entitled to do so in discharge of the Administrators’ duties to administer the Estate.

32.  The Respondents’ payout was disclosed in their Points of Defence filed on 5 January 2026. The Petitioner chose not to read the Points of Defence until late February 2026 when preparing her Points of Reply filed on 2 March 2026 and now complains about the Respondents’ delay in disclosing the payout.

33.  Had the Petitioner known about the payout immediately after the filing of the Points of Defence or had been informed by the Respondents by letter instead of the pleading, it would not have made any difference.

Conclusion

34.  Perrine Chamonix does not assist the Petitioner. The starting point is that the withdrawing party should pay the costs of the other party and costs should generally be awarded to the substantive winner: §23.

35.  The Respondents are clearly the substantive winner. Accordingly, they are entitled to the costs of this application forthwith, (including the costs of the argument on costs) to be summarily assessed.

36.  The Respondents seek costs on an indemnity basis on the basis that the Petitioner was on notice of the defects of her application by 22 August 2025 (the date of the Respondents’ skeleton) or latest by the 23 September 2025 when the Petitioner was requested to withdraw the Summons for the reasons set out in Deacons’ letter of that date to which the Petitioner never replied.

37.  In my view, costs on an indemnity basis are warranted post 23 September 2025.

38.  Accordingly, it is directed that

(i) the Respondents do lodge a revised Statement of Costs indicating which part of the costs were incurred post 23 September 2025 within 7 days of this Costs Ruling;

(ii) the Petitioner do lodge her list of objections limited to 2 pages within 14 days thereafter;

(iii) the Respondents do lodge their reply (if any) limited to one page within 7 days thereafter.