LO KAI SHUI v. HSBC INTERNATIONAL TRUSTEE LTD AND OTHERS

CACV 329/2021, CACV 181/2022, CACV 180 & 181/2023,

CAMP 137/2022, [2023] HKCA 983

On appeal from [2021] HKCFI 1539

(Heard together)

CACV 329/2021

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO 329 OF 2021

(ON APPEAL FROM HCA NO 404 OF 2018)

________________________

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AND

CACV 181/2022

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO 181 OF 2022

(ON APPEAL FROM HCA NO 404 OF 2018)

________________________

________________________

AND

CACV 180 & 181/2023

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NOS 180 AND 181 OF 2023

(ON APPEAL FROM HCA NO 404 OF 2018)

________________________

________________________

AND

CAMP 137/2022

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

MISCELLANEOUS PROCEEDINGS NO 137 OF 2022

(ON AN INTENDED APPEAL FROM HCA NO 404 OF 2018)

________________________

________________________

(Heard together)

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J U D G M E N T

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Hon Kwan VP:

1.  On 1 June 2021, Wilson Chan J handed down his judgment (“Judgment”)[1] in these four applications: two applications brought by the 1^st defendant HSBC international Trustee Limited (“Trustee”) and the 2^nd defendant Lo Ka Shui (“KS”) respectively to strike out parts of the statement of claim in this action brought by Lo Kai Shui (“Lu’s Action” and “Lu”); an application of Lu for an order under Order 15 rule 14 of the Rules of the High Court that any judgment or order given in HCA 3246/2016 and HCA 355/2018 (collectively “Madam Lo’s Actions”) and any appeals therefrom shall not be binding on him in Lu’s Action; and an application of Lu for leave to amend his statement of claim in Lu’s Action.

2.  Madam Lo’s Actions were brought by Madam Tao Soh Ngun (“Madam Lo”) against the Trustee. Judgment was given by the same judge on 22 May 2019 (“2019 Judgment”)[2] after a trial of 33 days.

3.  In the Trustee’s striking out application, the Trustee argued and it was held in the Judgment that in respect of three claims in Lu’s Actions that would appear to overlap with certain claims in Madam Lo’s Actions (“Overlapping Claims”)[3], the 2019 Judgment gave rise to cause of action estoppel and issue estoppel. Lu is therefore barred from advancing the Overlapping Claims on grounds of res judicata. Further, there was abuse of process (Henderson v Henderson[4] abuse, or res judicata in the wider sense) in that it is manifestly unfair to the Trustee and contrary to public interest for Lu to bring the Overlapping Claims in Lu’s Action when he could and should have raised those claims in Madam Lo’s Actions by joining as a co-plaintiff and be bound by the outcome of Madam Lo’s Actions. Moreover, the administration of justice would be brought into disrepute in that running the Overlapping Claims in Lu’s Action would constitute a collateral attack on the 2019 Judgment. Hence, Lu should be barred from bringing the Overlapping Claims on the ground of abuse of process as well. The judge ordered sections D, E, F and G of the statement of claim (ie §§32 to 100) to be struck out.

4.  In KS’s striking out application, he argued and it was held in the Judgment that there was Henderson v Henderson abuse in that those parts of the statement of claim targeted in this striking out application would raise issues already raised and decided in Madam Lo’s Actions and issues that could and should have been litigated against KS in Madam Lo’s Actions. Raising such issues in Lu’s Action would amount to a collateral attack against the 2019 Judgment. The judge ordered §§135, 136, 137, 138.3, 138.4, 138.6, 140.3, 140.4, 140.6 and 142, and the words “D, E, F, G” in §149 of the statement of claim to be struck out.

5.  Lu’s application under Order 15 rule 14 was dismissed as academic and unnecessary. It is not necessary to say anything further about this as the appeal against the dismissal of this application was not pursued at the hearing before us[5].

6.  In respect of Lu’s application to amend the statement of claim, the judge disallowed the proposed amendments that are ancillary to or form part of one or more of the Overlapping Claims (ie §§32 to 100 of the statement of claim) as he has ordered those parts to be struck out. He also disallowed the amendments concerning an expansion of the “allies” of KS in light of the open-ended nature of such allies as pleaded.

7.  Lu appealed against the orders for striking out in the Judgment as of right. This is CACV 329/2021. For the order refusing leave to amend the statement of claim, leave to appeal was granted by the judge for some of the amendments disallowed and by the Court of Appeal for the remaining amendments disallowed. These are CACV 181/2022 and CACV 180/2023. All these appeals were heard together.

8.  The amended notice of appeal in CACV 329/2021 contained 12 grounds of appeal. As we have indicated to the parties at the outset of the hearing, we would focus on three issues in the appeal against striking out: (1) whether there is privity of interest between Lu and Madam Lo so that Lu is bound by the 2019 Judgment and barred from asserting identical causes of action and litigating the same issues that have been determined between Madam Lo and the Trustee in the 2019 Judgment[6]; (2) whether there was Henderson v Henderson abuse in bringing the claims objected to by the Trustee and KS in Lu’s Action [7]; and (3) whether bringing such claims in Lu’s Action would constitute a collateral attack against the 2019 Judgment[8].

9.  Before dealing with the above issues, it is appropriate to consider ground 12 of the amended notice of appeal, which relates to the alleged failure of the judge to undertake a proper and independent assessment of the disputed issues and the evidence and be seen to have done so, as this would impact on how we should approach the appeals from the Judgment in general.

Extensive incorporation of counsel’s submissions

10.  As pointed out in the amended notice of appeal, of the 239 paragraphs in the Judgment, 221 paragraphs were copied, in that they were copied verbatim, or copied verbatim save for minor and non-substantive changes to definitions, abbreviations, case reference format, cross-reference of internal paragraphs and slight adaptations that contain no substantive analysis such as by adding “I agree that” and “As submitted by the Trustee”.

11.  In total, 214 paragraphs were reproduced from the submissions of counsel for the Trustee (139 paragraphs) and the submissions of counsel for KS (75 paragraphs). Of the submissions of counsel for Lu, seven paragraphs were reproduced, all taken from the “Executive Summary” but none from the substantive submissions. Only 18 paragraphs in the Judgment were not copied, and none of them contains substantive analysis: seven are introductory comments, seven are concluding comments and four deal with costs. In terms of the numbers of paragraphs, approximately 92% of the Judgment was copied. Of the paragraphs that contain substantive analysis, all of them were copied from the winning parties’ submissions.

12.  This court has handed down a judgment recently in Wong To Yick Wood Lock Ointment Ltd v Singapore Medicine Co (a firm) & Ors[9]. It is unnecessary to discuss the principles and authorities that have been thoroughly canvassed in §§14.1 to 28.

13.  Mr Eugene Fung, SC[10] submitted on behalf of the Trustee that in applying the test whether a reasonable person apprised of the circumstances would conclude that the judge has not put his mind to the issues and has not rendered an independent and impartial decision, the court should adopt a more ‘nuanced’ approach. Such a reasonable person would include someone physically present during the entire course of the proceedings. Mr Fung, and Ms Elizabeth Cheung for KS[11], submitted that a person who was present during the four-day hearing before the judge would not have concluded that he did not put his mind to the issues. We were referred to the transcript showing numerous instances in which the judge raised pertinent questions of fact and law with counsel, and showed keen interest in the issues and arguments. Such a reasonable person would not have concluded that the judge has not rendered an independent and impartial decision when the Judgment became available, despite the extensive incorporation of counsel’s submissions in the Judgment.

14.  It has been said more than once that judgments are the “core work-product” of judges. They constitute “the logical and analytical explanations of why a judge arrived at a specific decision” and are “tangible proof to the litigants that the judge actively wrestled with their claims and arguments and made a scholarly decision based on his or her own reason and logic”[12]. The good impression created by the display of judicial temperament and active engagement with counsel throughout the hearing cannot effectively displace the impression given by a judgment of extensive copying that the judge has subsequently abdicated his core judicial responsibility to think through for himself the issues that he has to decide, and has uncritically adopted the submissions of the winning side, particularly when the judgment was given some considerable time after the hearing.

15.  Here, the copying has occurred to such a degree and in such a manner that gives rise to justifiable grievance that justice has not been seen to be done as to whether an independent mind has been brought to the judicial function. The incorporation of the winning parties’ submissions without addressing the losing party’s substantive arguments save as dealt with in the manner by the winning parties raises serious concerns whether the judge has truly engaged with the issues he has to decide. Regrettably, there is no choice but to conclude there is deficiency in the judicial process and this ground of appeal is made out.

16.  This leaves the appeal court with the task of considering afresh the issues in contention and determining for ourselves the answers, without the benefit of the judge’s input, despite his familiarity of the matters in dispute owing to his presiding over the trial of Madam Lo’s Actions. We are in as good a position as the court below in determining the issues, as they are issues of law and all the evidence adduced was on affidavit which we can read for ourselves with special scrutiny. We will not adopt a deferential standard of review in this instance. No weight will be attached to any exercise of discretion by the judge or his assessment whether there was abuse of process in arriving at a broad, merits based judgment upon balancing a number of factors[13]. Mr Fung and Ms Cheung have been asked to address the court on this basis.

Background

17.  The relevant background matters for present purposes may be set out as follows.

(1)  The Lo family and the Trust

18.  In around 1963, Mr Lo Ying Shek (“Mr Lo”) and Madam Lo founded the Great Eagle group of companies. In 1990, Great Eagle Holdings Ltd (“GE”) became the listed holding company of the group.

19.  Mr Lo and Madam Lo had nine children (“Children”). In order of seniority, they are: Nina Law Wai Duen (“Nina”)[14], Annie Lo Hung Suen, Antony Lo Hong Sui (“Antony”), Lo Yuk Sui, KS, Vincent Lo Hong Sui (“Vincent”), Gwen Lo Wai Ki (“Gwen”), Archie Lo Ying Sui (“Archie”) and Lu. Mr Lo passed away on 1 September 2006.

20.  In 1984, a discretionary trust (“the Trust”) was established for the Lo family pursuant to a deed of trust. Mr Lo and Madam Lo were the de facto settlors. The “eligible beneficiaries” as defined in the trust deed included Mr Lo, Madam Lo, all of their issue and any spouses of their issue born within 80 years of the establishment of the Trust. “Issue” was defined to mean all lineal descendants including adopted children. By 2016, there were four generations of beneficiaries alive, numbering in the order of 90 individuals. As provided in the trust deed, the objects or beneficiaries of this discretionary trust are an open class.

21.  The Trustee was appointed as trustee of the Trust in 1999. Since 1998, Nina, KS and Lu have held the offices of Appointor and Guardian in relation to the Trust.

22.  At all material times, the assets of the Trust have included shares in GE. As of December 2016, the shareholding of the Trust in GE represented around 33% of the issued share capital of GE.

(2)  Madam Lo’s Actions

23.  According to Lu[15], in a meeting of family members in 2015, KS wished to recommend his son Alexander to become a director of GE. When Antony and Nina queried he might be too young for the post, KS announced as he already had 22% of the shares in GE, he could remove all his siblings as directors. As Madam Lo did not wish GE to be controlled by one or some of the Children to the exclusion of the others, she issued several letters to the Trustee in 2016 requesting the latter to purchase additional shares in GE to entrench the shareholding of the Trust in GE and to ensure that the control of GE could be carried out in light of the intentions of the Children together and so family harmony could be restored. She also requested the Trustee in February 2016 to distribute the entire Trust fund to herself, or to such entity as she might direct.

24.  On 25 April 2016, a letter was issued by Lu, Antony and three other siblings to the Trustee declaring their “complete trust and agreement” with Madam Lo in her instructions to the Trustee by her two letters of wishes in January and February 2016. On 2 June 2016, Lu issued a letter to the Trustee stating that he “fully support that the entire trust assets should be distributed to [his] mother, Madam Lo” and that every family member should respect this decision of hers.

25.  The Trustee did not accede to Madam Lo’s requests. On 7 December 2016, the Trustee presented a proposal at a meeting with the Children (Madam Lo did not attend personally) to restructure the Trust by dividing it into nine sub-trusts and Madam Lo would be added as a beneficiary in each of the sub-trusts. The Trustee explained that if there was no agreement on the matter, an application would be made to the court for directions.

26.  On 9 December 2016, without sending a letter before action, Madam Lo commenced HCA 3246/2016 against the Trustee, seeking relief in respect of the Trustee’s breaches of duties in failing or refusing to accede to her requests and instructions from January to September 2016. She sought an order to compel the Trustee to comply with her requests, alternatively damages for its failure to do so, and removal of the Trustee as trustee. After the issue of the writ, she continued to send letters of request to the Trustee to purchase additional shares in GE for the Trust. On 9 February 2018, she brought HCA 355/2018 against the Trustee to introduce pleas based on factual matters which took place after the writ of the earlier action, specifically the further letters of request she sent to the Trustee from December 2016.

27.  The Trustee sent copies of the pleadings in Madam Lo’s Actions (including amendments to the pleadings) to each of the Children as the “principal beneficiaries”, and informed them in the covering letters that “the interests of the beneficiaries of the Trust may be affected” by Madam Lo’s Actions.

(3)  Events in 2017

28.  In her further letters of request to the Trustee in December 2016 and in 2017, Madam Lo specifically mentioned the need for the Trustee to protect the Trust’s controlling shareholding and single largest shareholding in GE, and the value attached to the Trust’s status as the single largest shareholder.

29.  On 30 March 2017, Lu also issued a letter to the Trustee as a beneficiary, requesting the Trustee to purchase shares in GE “for the purpose of enhancing and/or ensuring the controlling position of the [Trust] (the Lo Family as a whole) in [GE]”, that “The Lo Family and/or its trust must maintain its controlling interest in [GE]” as this “has always been the intention of [his] parents” and “A loss of such controlling interest will gravely impact the values of such block of shares, which therefore will also damage the benefits of all the beneficiaries”.

30.  On 10 May 2017, the AGM of GE took place. Out of the 193.8 million shares which were voted (which did not include the shares held by the Trust, as well as the vast majority of the shares held by KS), approximately 166.9 million voted against the re-election of Lu as Deputy General Manager and director of GE. Lu was not re-appointed as a result.

31.  On 18 May 2017, Madam Lo’s solicitors wrote to the Trustee’s solicitors arguing that the Trustee was under a duty to purchase additional shares in GE for these reasons: (1) it was the intention of the settlors and the purpose of the Trust to maintain and entrench its controlling shareholding in GE; (2) the Trust is not an investment trust and hence the Trustee should not take concentration risk into account; and (3) the Trustee has duties to safeguard and maintain the value of its shareholding in GE and the value of its shareholding would drop if the Trust should lose its status as the single largest shareholder.

32.  On 17 July 2017, Madam Lo amended her statement of claim in HCA 3246/2016 and the amendments included these averments: (1) the Trustee breached its duties by failing to implement Madam Lo’s request to purchase additional shares in GE even though the Trustee knew that the controlling shareholding held by the Trust was at risk of being jeopardised by KS gradually and continually increasing his GE shareholding; (2) the Trustee breached its duties by failing to exercise or take prompt action to ensure that it was in a position to exercise the voting powers attached to the Trust’s shares in GE at the 2017 AGM; and (3) the Trustee breached its “no conflict” duty by acting as trustee of a trust settled by KS being the KSL Trust, in circumstances where the controlling shareholding held by the Trust in GE was put at risk by KS increasing his shareholding. These are the claims said to overlap with some of the claims in Lu’s Action brought in February 2018 and described respectively in the present striking out applications as “Controlling Shareholding Claim”, “AGM Claim” and “Conflict of Interest Claim” and collectively as the “Overlapping Claims”.

33.  On 27 July 2017, Madam Lo applied for an expedited trial. The Trustee consented to this in view of her advanced age and an order was made by the court.

34.  Correspondence was exchanged between Lu’s solicitors and the Trustee’s solicitors from 2 August 2017 to 25 September 2017, in which Lu requested for copies of all the correspondence exchanged between the Trustee and Madam Lo leading to and subsequent to the commencement of HCA 3246/2016, in order to have “comprehensive understanding of the dispute” encompassed by the proceedings and to enable Lu to “properly consider his position”. The Trustee’s solicitors refused because Lu was not a party to the correspondence nor a party to HCA 3246/2016, and maintained that the pleadings provided to him should be sufficient for his purposes.

(4)  The trial of Madam Lo’s Actions and KS’s application for joinder

35.  On 14 February 2018, Lu issued the writ with a statement of claim in Lu’s Action against the Trustee, KS, Nina and two other defendants[16]. The writ was not preceded by any letter before action or formal communication with the Trustee. In the statement of claim, allegations of breach of duty were made against the Trustee based on its failure to respond to the adverse effect on the value of the Trust’s shareholding in GE posed by the increase in KS’s shareholding and against KS based on the conflict of his personal interests with his duties as an Appointor and Guardian of the Trust in that he accumulated a substantial competing shareholding along with his “allies” to the detriment of the Trust. The Trustee failed to use the voting power attributable to the Trust’s shareholding at the 2017 AGM to ensure that Lu was re-elected as a director of GE, and both the Trustee and KS are in a position of potential and/or actual conflict as the Trustee is also trustee of a trust settled by KS. Furthermore, the Trustee made distributions of Trust assets to the 4^th and 5^th defendants intended to benefit Lo Ying Shek Chi Wai Foundation, which is controlled by KS, and this constituted a fraud on a power or was otherwise a breach of trust. Lu claims damages and/or equitable compensation for the loss to the Trust, an account of profits, and removal of the Trustee and KS from their offices.

36.  The trial of Madam Lo’s Actions commenced on 29 May 2018. There was an order for a split trial on liability and quantum, so the trial was on liability only. The trial dates were divided into four tranches on various dates in the latter half of 2018 and the first quarter of 2019. On 28 May 2018, Madam Lo took out an application to further amend her statements of claim and replies in her two actions because the Trustee took objection to unpleaded claims and allegations in her opening submissions[17]. The judge allowed most of the amendments on 1 June 2018, taking the view that the amendments did not raise any new factual claims but involved matters already in issue between the parties in the proceedings[18]. He only disallowed the amendments that clearly went beyond the pleaded case (namely that the aggregate shareholding in GE held by the Trust and the Lo family members continued to represent a “dominant and/or de facto controlling shareholding” in the company, and that the interests of some of the Lo family shareholders no longer aligned with those of the other Children or that of the Trust)[19].

37.  The trial was adjourned part-heard on 15 June 2018 and due to resume on 8 November 2018. By then, Madam Lo had closed her case and the Trustee’s first witness had completed her evidence. On 10 August 2018, KS issued a summons for leave to join in Madam Lo’s Actions as the 2^nd defendant, solely for the purpose of defending the following issues and allegations in the event that these issues fell to be determined in Madam Lo’s Actions: (1) whether the increase in KS’s stake in GE has caused loss to the Trust’s shareholding in GE; and (2) whether KS’s interests were no longer aligned with those of the Trust and the other members of the Lo family, such that the Trust’s alleged controlling shareholding in GE was at risk of being jeopardised, on the basis that it was necessary and/or just and convenient to do so and to avoid the risk of inconsistent judgments in Madam Lo’s Actions and Lu’s Action.

38.  KS claimed that the late amendments to Madam Lo’s pleadings in June 2018 had changed her case. Prior to that he was content to rely on the Trustee to protect the interests of the beneficiaries other than Madam Lo. There was substantial borrowing from the statement of claim in Lu’s Action in Madam Lo’s opening submissions in May 2018. The June amendments had an impact on KS because of the effect they might have on issues that overlap with those raised in some of the claims in Lu’s Action, namely, the Controlling Shareholding Claim, the AGM Claim and the Conflict of Interest Claim. If adverse findings were to be made in Madam Lo’s Actions in relation to the overlapping issues without KS having had an opportunity to put forward his own positive case, this would result in unfairness to him. Further, his ability to defend himself against the claims in Lu’s Action might be significantly hampered or damaged if adverse findings were made against him or the Trustee in respect of the allegations in the June amendments in Madam Lo’s Actions. It was submitted that if KS were allowed to join as the 2^nd defendant in Madam Lo’s Actions, the court could exercise its case management powers actively and grant the joinder on the basis that the existing trial dates were not to be disturbed or that disturbance should be kept to a minimum, and consider hiving off the overlapping issues in Madam Lo’s Actions and adjourning them to be heard at the same time as the trial of Lu’s Action. KS gave an undertaking he would not recall Madam Lo to testify in relation to the overlapping issues if his application was granted.

39.  The Trustee’s position was that “issues of central importance” between Madam Lo and the Trustee (these issues in particular are whether there was a common understanding or otherwise that the Trustee was obliged to act in accordance with Madam Lo’s directions and, most importantly, whether Madam Lo was entitled to have transferred to her, or as she should direct, the whole of the Trust fund) should be resolved as soon as reasonably possible[20]. As for KS’s proposal of hiving off the overlapping issues to be tried with Lu’s Action, that should not interfere with the resolution of the issues of central importance in Madam Lo’s Actions and may be “the more appropriate and just course in the interests of avoiding inconsistent findings and avoiding what may otherwise be considerable duplication of costs”[21]. And given the extended timetable over which the trial was due to be conducted, it should be possible to accommodate the limited joinder of KS without disrupting the progress of the trial provided tight time limits were imposed.

40.  The joinder application was strenuously opposed by Madam Lo. The Trustee chose not to make oral submissions at the hearing of that application, having made its position known to the judge in its skeleton submissions of two pages.

41.  On 11 October 2018, the judge heard the joinder application, in the course of which he put this question to Ms Cheung for KS:

“In that case can you try to assist me in answering my concern that if that is - - if it’s the concern of KS that there should be no inconsistent finding in the two actions, how can it be just or convenient for the overlapping issues to be determined in [Madam Lo’s Actions] as between [Madam Lo] and KS in the absence of Lu?”[22]

42.  The judge gave an ex tempore decision at the conclusion of the hearing and dismissed KS’s joinder application for these reasons: (1) his application made in the midst of the trial was extremely late and should be dismissed on the ground of lateness alone; (2) he provided no satisfactory explanation for the lateness of the application. His claim that his joinder application was necessitated by Madam Lo’s amendments in June 2018 was unsupportable, as those amendments did not introduce any new factual matters; (3) in any event, KS lacked sufficient interest in Madam Lo’s Actions as (a) Madam Lo’s claims were only made against the Trustee and not against him, there were no claims or questions to be tried as between Madam Lo and KS; (b) even if there was overlap between the issues in Madam Lo’s Actions and Lu’s Action, it would not be just for those issues to be determined between KS and Madam Lo in Madam Lo’s Actions when Lu was not a party to Madam Lo’s Actions and could not take part in the cross-examination of KS; (c) KS would not be bound by any decision or finding in Madam Lo’s Actions as he was not a party to those actions, and any findings in respect of the overlapping issues in Madam Lo’s Actions would be inadmissible as evidence in Lu’s Action; (4) the court’s residual discretion should be exercised against the joinder to prevent any delay or disruption to the trial; (5) KS had no locus to ask the court to carve out the overlapping issues and make case management decisions on proceedings to which he was not a party. There was no reason why Madam Lo should be forced to defer her claims under the June 2018 amendments, which could not be segregated from the other pleaded claims against the Trustee, to some other unknown date to be fixed.

43.  There was no appeal against the judge’s dismissal of KS’s application for joinder.

44.  On 18 October 2018, Madam Lo took out an application for leave to adduce expert evidence on these issues among others: (1) whether the Trust’s shareholding in GE was a controlling shareholding and, if so, whether the controlling shareholding was under threat by reason of KS’s increased shareholding in GE and/or the Trustee’s refusal to purchase additional shares; (2) whether the Trust’s shareholding in GE held a premium value and, if so, whether the premium value was put at risk or reduced by reason of KS’s increased shareholding in GE and/or the Trustee’s refusal to purchase additional shares. The judge dismissed her application on 14 November 2018 in view of serious and unjustified delay on her part and significant disruption to the trial timetable if the proposed expert evidence were admitted. Further, some of the proposed issues for the expert were unclear as to their scope and/or were not connected with the pleaded issues[23].

45.  In respect of Lu’s Action, pleadings were closed on 7 September 2018 and each of the parties filed timetabling questionnaire in October 2018. Among the questions they were required to address were the following in Section D on “Related Proceedings”:

“D1 Are there any proceedings pending in the Court of First Instance, District Court and/or any Tribunal involving the same parties herein/related parties?

D2 If the answer to D1 is ‘yes’, should those proceedings be consolidated with this action or tried with the present action before the same Judge?”

46.  All the parties in Lu’s Action answered D1 in the affirmative and mentioned Madam Lo’s Actions as the related proceedings. The answers they gave to D2 were as follows:

“No, there are presently no plans to apply for consolidation, bearing in mind, primarily, the fact that the three actions are at different stages and in particular the trial in [Madam Lo’s Actions] have already commenced and gone part heard. That said, the situation is kept under constant review.” (Trustee and 5^th defendant, on 4 October 2018)

“No, because the trial of [Madam Lo’s Actions] has already commenced.” (KS and 4^th defendant, on 5 October 2018) (Nina, on 19 October 2018)

“No, because the 3 cases are at different stages but [Lu] will continue to review the situation depending on the development of the trial in [Madam Lo’s Actions].” (Lu, on 19 October 2018)

(5)  2019 Judgment

47.  The trial on liability in Madam Lo’s Actions concluded on 29 March 2019. Lu and KS were among the witnesses who testified for Madam Lo and the Trustee respectively and were cross-examined. The 2019 Judgment was handed down on 22 May 2019.

48.  As stated in §3 of the 2019 Judgment, the basis on which Madam Lo contended that the Trustee had to comply or should have complied with her letters of request would appear to have four main alternative elements: (1) a contention that the Trustee was obliged to comply with her instructions by reason of a “common understanding” formed between Madam Lo and Mr Lo as de facto settlors on the one hand and the original trustee on the other, to which the Trustee became a party when it became trustee in 1999; (2) a contention that the “common understanding” and/or a “legitimate expectation” created by the way in which the Trust was administered meant that overriding, alternatively some especially heavy, weight should be given to Madam Lo’s instructions; (3) a contention that in refusing to act on Madam Lo’s letters of request, the Trustee was in a position of conflict and deliberately favoured the interests of one of the eligible beneficiaries, KS, over those of the other discretionary objects of the Trustee’s powers; (4) a contention introduced by the amendments to her pleadings in July 2017 and June 2018 that in refusing to act upon Madam Lo’s letters of request, the Trustee acted in breach of duty arising from the alleged premium attached to the block of controlling shareholding in GE held by the Trust and the importance of maintaining the controlling shareholding. Six core issues were formulated in §31 of the 2019 Judgment on the pleadings as last amended, which included the Conflict of Interest Claim and the AGM Claim.

49.  The judge found against Madam Lo in respect of each of the four alternative elements and the six core issues and dismissed her claims against the Trustee in both actions.

50.  In respect of the contention in (4), the Conflict of Interest Claim and the AGM Claim, it was held: (i) it was not a purpose of the Trust to preserve a controlling shareholding in GE; (ii) the Trust has not had a controlling shareholding in the sense that it gave the Trust actual control over the outcome of any shareholders’ meeting, since July 2004; (iii) Madam Lo failed to show that the Trust’s 33% shareholding in GE at the material time carried a premium value; (iv) KS did not pose a threat to the Trust’s shareholding or interest in GE; (v) the Trustee did not owe any duties either to ensure the joint ownership and management of GE by the Children, or to ensure that the alleged controlling shareholding of GE can be maintained by the Trust; (vi) the Trustee was in any event entitled to opt not to purchase additional GE shares on the ground of concentration risk; (vii) the Trustee was not grossly negligent or in wilful default by opting not to purchase additional GE shares; (viii) the Trustee did not put itself in a position of actual or potential conflict by acting as a trustee of the KSL Trust, as it has no power or responsibility for investment decision-making; (ix) the Trustee’s inability to vote at the 2017 AGM resulted from the fact that it was not able to obtain waivers from the Appointors and Guardians because it only received notice of the AGM shortly before the meeting; (x) the Trustee’s decision to wait until it received the AGM notice and proxy forms before writing to the Appointors and Guardians was wholly reasonable; (xi) the Trustee had no duty to attend or vote at any AGM of GE and, a fortiori, it had no duty to ensure that it was in a position to exercise its voting powers at the 2017 AGM.

51.  Madam Lo appealed against the 2019 Judgment. She later agreed to discontinue her appeals and consent summonses were filed on behalf of Madam Lo and the Trustee on 4 December 2020, pursuant to which the Court of Appeal dismissed the appeals of Madam Lo with costs to the Trustee.

52.  Four months after the handing down of the 2019 Judgment, the Trustee and KS each took out a summons to strike out the Overlapping Claims and overlapping issues in the statement of claim in Lu’s Action.

53.  I would consider the issues raised in the striking out applications in this order: (1) whether there is privity of interest between Madam Lo and Lu for the 2019 Judgment to give rise to cause of action estoppel and issue estoppel; (2) as regards the Trustee, whether re-litigation of the Overlapping Claims constituted Henderson v Henderson abuse of process and/or collateral attack against the 2019 Judgment; (3) as regards KS, whether re-litigation of the Overlapping Claims constituted Henderson v Henderson abuse of process and/or collateral attack against the 2019 Judgment. If it should be held that the issue in (1) is answered in the negative, cause of action estoppel and issue estoppel would not arise and it would not be necessary to consider whether there is identity of causes of action and identity of issues for the Overlapping Claims.

Privity of interest

(1)  Relevant legal principles

54.  An important starting point is that ordinarily only parties to proceedings are bound by the outcome and care needs to be taken in the application of a rule which would depart from that. Becoming a party gives the person in question certain unassailable rights: to adduce evidence, to be heard, to seek to appeal (The Law Society v Dua [2020] EWHC 3528 (Ch) at §74(3)). It should be borne in mind that Lu had none of those rights, not being a party in Madam Lo’s Actions.

55.  As stated by Megarry V-C in Gleeson v J Wippell & Co Ltd [1977] 1 WLR 510 at 515A, “the doctrine of privity for these purposes is somewhat narrow”. “Any contention which leads to the conclusion that a person is liable to be condemned unheard is plainly open to the gravest of suspicions. A defendant ought to be able to put his own defence in his own way, and to call his own evidence. He ought not to be concluded by the failure of the defence and evidence adduced by another defendant in other proceedings unless his standing in those other proceedings justifies the conclusion that a decision against the defendant in them ought fairly and truly to be said to be in substance against him.” (at 516 B to D)

56.  Similar rationale for this narrow rule was provided in these authorities cited to us:

“As stated above, the basic rule is that, before a person is to be bound by a judgment of a court, fairness requires that he should be joined as a party in the proceedings, and so have the procedural protections that carries with it. This includes the opportunity to call any evidence he can to defend himself, to challenge any evidence called by the claimant and to make any submissions of law he thinks may assist his case. Although there are examples of cases in which a person may be found to be bound by the judgment of a court in litigation in relation to which he stood by without intervening, in my judgment those cases are illustrations of a very narrow exception to the general rule. The importance of the general rule and fundamental importance of the principle of fair treatment to which it gives expression indicate the narrowness of the exception to that rule.” (Seven Arts Entertainment Ltd v Content Media Corporation Plc & Ors [2013] EWHC 588 (Ch) at §73, per Sales J)

“… the question is whether the degree of identification of interest makes it just for the one to be bound by the outcome of proceedings about that issue involving the other, and bound regardless which way that outcome goes. The effect of identification of two parties as privies is automatic, and gives rise to an estoppel which prevents the dispute or the issue being revisited, regardless of the circumstances of the first trial, and of the outcome. It is precisely because these consequences are automatic and potentially far-reaching that the law should in my view be slow to recognise privity of interest between different persons.” (The Secretary of State for Business, Innovation & Skills v Nadhan Singh Potiwal [2012] EWHC 3723 (Ch) at §20, per Briggs J)

“The litigant has an interest in not being vexed twice in the same cause. The public also has an interest in ensuring that the scarce resources available for resolving disputes are used efficiently. There is however no reason in principle why a different party, C, who has the same complaint against B should not be free to litigate the same question. Notwithstanding, for example, the fact that A may have lost a first action, fairness normally demands that C should not be precluded by the manner in which A conducted the first action from bringing his own action, calling his own evidence and challenging the evidence called by B.” (Resolution Chemicals Ltd v H Lundbeck A/S [2014] RPC 5 at §22, per Floyd LJ)

57.  As to what may constitute privity of interest to render a person, who was not a party and is not a successor in title to a party to that litigation, privy to a party for this purpose, guidance may be found in these statements in Gleeson v J Wippell & Co Ltd at 515A to H:

“Privity for this purpose is not established merely by having ‘some interest in the outcome of litigation.’ …

First, I do not think that in the phrase ‘privity of interest’ the word ‘interest’ can be used in the sense of mere curiosity or concern. Many matters that are litigated are of concern to many other persons than the parties to the litigation, in that the result of a case will at least suggest that the position of others in like case is as good or as bad as, or better or worse than, they believed it to be. Furthermore, it is a commonplace for litigation to require decisions to be made about the propriety or otherwise of acts done by those who are not litigants. Many a witness feels aggrieved by a decision in a case to which he is no party without it being suggested that the decision is binding upon him.

Second, it seems to me that the substratum of the doctrine is that a man ought not to be allowed to litigate a second time what has already been decided between himself and the other party to the litigation. This is in the interest both of the successful party and of the public. But I cannot see that this provides any basis for a successful defendant to say that the successful defence is a bar to the plaintiff suing some third party, or for that third party to say that the successful defence prevents the plaintiff from suing him, unless there is a sufficient degree of identity between the successful defendant and the third party. I do not say that one must be the alter ego of the other: but it does seem to me that, having due regard to the subject matter of the dispute, there must be a sufficient degree of identification between the two to make it just to hold that the decision to which one was party should be binding in proceedings to which the other is party. It is in that sense that I would regard the phrase ‘privity of interest.’ Thus in relation to trust property I think there will normally be a sufficient privity between the trustees and their beneficiaries to make a decision that is binding on the trustees also binding on the beneficiaries, and vice versa.

Third, … for privity with a party to the proceedings to take effect, it must take effect whether that party wins or loses. … ‘The relationship cannot be conditional upon the character of the decision.’ ”

58.  In China North Industries Investment Ltd v Chum [2010] 5 HKLRD 1 at §81, Stock JA (as he then was) noted that some of the above statements have been criticised as circuitous and not helpful in identifying when the necessary degree of identification would make it just to hold there is privity of interest[24], and opined that the essence of the term is best gleaned by study of examples. He referred to a decision of the Supreme Court of British Columbia (Genesee Enterprises Ltd v Abou-Rached [2001] BCJ No 41) for this proposition: “The required commonality is a direct interest in the subject matter of the litigation, a parallel or corresponding interest in that subject matter and not simply a financial interest in the result of the action.” In further elucidation of this doctrine, he quoted a passage from Spencer Bower and Handley: Res Judicata, the relevant paragraph at §9.37 in the current edition (5^th ed, 2019) reads as follows:

“Privies include any person who succeeds to the rights or liabilities of a party on death, insolvency, by assignment or by statute, or who is otherwise identified in estate or interest. The party estopped by privity must have some interest, legal or beneficial, in the previous litigation or its subject matter, and accordingly assignees are privies of the assignor. Privity was described by the US Supreme Court as a mutual or successive relationship to the same right of property. Privity is a matter of substance, not form.”

59.  I respectfully agree with Stock JA the essence or sense of the term “privity of interest” is best gleaned from examples. A few would suffice for present purpose:

(i) In Gleeson v J Wippell & Co Ltd, Denne had manufactured shirts which were designed by Wippell. Ms Gleeson contended Wippell had copied her shirt. She first sued Denne (and not Wippell). A central issue was thus whether the Wippell shirt infringed Ms Gleeson’s copyright, and this fell to be decided in proceedings to which Wippell was not a party, although evidence was given in the Denne action by some Wippell employees. Ms Gleeson lost in her action against Denne on the ground that Wippell had not copied her shirt. She then brought an action against Wippell. It was held that Wippell did not take part in the Denne action. There was a trade relationship between Wippell and Denne in the course of which Denne copied a Wippell shirt at Wippell’s request, but that was all. Ms Gleeson should not be deprived of the right to attempt to do better against Wippell than she did against Denne, and Wippell was not in such privity with Denne to make it possible to invoke the doctrine of issue estoppel against Ms Gleeson.

(ii) In China North Industries Investment Ltd v Chum, China North invested in a Mainland project through its subsidiary TSL and appointed an investment management company M to administer the investments. M brought proceedings in Bermuda against China North for breach of the management agreement and China North counterclaimed contending that it suffered loss in relation to the project because M failed to produce a memorandum warning of flaws in the project or explain its effect. The Bermudan court found for M. Before judgment was given in Bermuda, China North and TSL brought actions in Hong Kong against inter alia two individuals who were also directors of M, alleging breach of fiduciary duty, breach of trust, negligence, misrepresentation and fraud in relation to the investment. One of them held 45% of the shares in a company that held 85% of the shares in M. The other was employed by M as a consultant and then as a director. It was held the fact that M acted through the two individuals was not to the point. Neither of them enjoyed “that ilk of identity of interest with [M] in the subject matter of the action”. The “sense of concern or conceivable personal ramifications” that these individuals might have had in the outcome of the action in Bermuda was not a “sufficient community of interest”. The shareholding of one individual in a company that held 85% of the shares in M did not make him M’s alter ego (at §82).

(iii) In Genesee Enterprises Ltd v Abou-Rached, Genesee held shares in CHT as trustee for its shareholders. The central dispute was whether Genesee had the right to call on Abou-Rached’s company, RAR, to purchase its shares of CHT and if so when it could exercise that right. The Genesee shareholders brought a shareholders’ petition against Genesee and Stephenson (a director of Genesee and IHI, to which Abou-Rached had transferred 65% of his shares in CHT), claiming oppression and conflict of interest. Henderson J found Stephenson to be in conflict of interest and ordered Genesee to give notice of the requests on behalf of the shareholders for conversion of their shares. When the requests for conversion were not honoured, Genesee brought an action against Abou-Rached, CHT and RAR for breach of contract. The Genesee shareholders were defendants by counterclaim in this action.

60.  Genesee argued that even though the defendants were not parties in the shareholders’ petition, they should be estopped by the findings made by Henderson J as the defendants were privy in interest to Stephenson. Abou-Rached paid the legal expenses incurred by Stephenson in defending the petition and had some influence on the course of the proceedings as a result of his relationship with Genesee’s legal counsel and his ongoing consultations with Stephenson. And both Stephenson and Abou-Rached were interested in preventing the conversion of shares from occurring. (at §240)

61.  It was held by Levine J that paying the legal fees for a party and controlling the litigation were insufficient to establish privity. “Privity requires parallel interest in the merits of an action, not simply a financial interest in the results.” Although Abou-Rached was clearly interested in the results of the shareholders’ petition, there was no evidence that he was interested in the merits of the petition. What mattered to Abou-Rached was the prevention of the share conversion, not whether Stephenson was in a conflict of interest or that the shareholders had been unfairly prejudiced. To establish that Abou-Rached was in privity to Stephenson, it would have to be established that Abou-Rached’s interests in the subject of the first dispute paralleled Stephenson’s interests. Nor was there a corresponding interest. “The cases in which privity of interest was established involve relationships in which a party’s cause of action flows from its privy’s parallel cause of action”, and “the cause of action or defence was such that either the party or privy could have presented the same legal arguments and both the party and privy would benefit directly from a successful result.”  The shareholders’ petition dealt exclusively with the conduct of Stephenson, Abou-Rached could not have been substituted for Stephenson in those proceedings, and, likewise, Stephenson could not be substituted for Abou-Rached in the subsequent action. For all those reasons, the defendants’ defence to the claim for breach of contract was not barred by issue estoppel. (at §§236, 237, 241 to 243)

62.  The above examples demonstrate the strictness of the requirements to establish the degree of identification of interest to make it just for one to be bound by the outcome of proceedings involving another.

63.  Mr Fung has not submitted that the applicable legal principles in establishing privity of interest should be any different. He merely emphasised that whether or not there is a sufficient degree of identification between the parties necessarily depends on the facts and circumstances of each case and one cannot extract any hard and fast rule from the authorities given the wide range of possible scenarios.

(2)  The law relating to “standing by”

64.  In the court below, Mr Fung argued for the Trustee that another category where the sufficient identity requirement for privity of interest may be satisfied is where B knows that his rights are being tested in the earlier proceedings involving A but stands by and allows A to ‘fight his battle’. In support of this, he cited House of Spring Gardens Ltd v Waite [1991] 1 QB 241 at 252G to 253F and Si Tou Choi Kam v Wealth Credit Ltd [2018] HKCA 250 at §§27 to 30. I am inclined to agree with Mr Ambrose Ho, SC for Lu[25] that it is best to consider the “standing by” principle as an aspect of the abuse of process doctrine or estoppel by conduct, rather than as a test for privity. For clarity, it is better to consider the cases relating to standing by separately.

65.  “Standing by” was regarded as a form of estoppel by conduct by Lord Denning in Nana Ofori Atta II v Nana Abu Bonsra II [1958] AC 95 at 101:

“The general rule of law undoubtedly is that no person is to be adversely affected by a judgment in an action to which he was not a party, because of the injustice of deciding an issue against him in his absence. But this general rule admits of two exceptions: one is that a person who is in privity with the parties, a ‘privy’ as he is called, is bound equally with the parties, in which case he is estopped by res judicata: the other is that a person may have so acted as to preclude himself from challenging the judgment, in which case he is estopped by his conduct.”

66.  In support of this kind of conduct as giving rise to estoppel, Lord Denning quoted these words of Lord Penzance in Wytcherley v Andrews (1871) LR 2 P&M 327 at 328:

“There is a practice in this court, by which any person having an interest may make himself a party to the suit by intervening; and it was because of the existence of that practice that the judges of the Prerogative Court held, that if a person, knowing what was passing, was content to stand by and see his battle fought by somebody else in the same interest, he should be bound by the result, and not be allowed to re-open the case. That principle is founded on justice and common sense, and is acted upon in courts of equity, where, if the persons interested are too numerous to be all made parties to the suit, one or two of the class are allowed to represent them; and if it appears to the court that everything has been done bona fide in the interests of the parties seeking to disturb the arrangement, it will not allow the matter to be re-opened.”

67.  Nana Ofori Atta II concerned a dispute of tribal lands in West Africa in which there had been a judgment in one action between parties who belonged to rival tribal factions. The Privy Council held that the special circumstances in West Africa made it just for the party who had stood by and allowed somebody else in the same interest to fight his battle in the previous litigation to be bound by issue estoppel, and it was not necessary to decide whether that party was a privy to a party in the previous litigation so as to be estopped on that ground also. (at 104)

68.  As pointed out in Seven Arts Entertainment Ltd at §74, Nana Ofori Atta II does not support a wide principle of issue estoppel between persons who were not parties to the previous litigation and only recognises that such an estoppel may arise under special conditions, in that case it was the custom and practice in land disputes of West Africa. As explained by Lord Denning at 102 to 103:

“The principle, as Lord Penzance said, is founded on justice and common sense. It may have been found appropriate in England only in special conditions. But there is no reason why in West Africa it should not be applied to conditions which are found appropriate for it there, but which have no parallel in England. It seems to be the recognized thing in this part of West Africa for all persons with the same interest in a land dispute to range themselves on one side or the other. Sometimes they apply to be joined as parties. On other occasions they regard the named party as their champion and support him by giving evidence. If he wins, they reap the fruits of victory. If he fails, they fall with him and must take the consequences. … It has led the Court of Appeal in West Africa to look for a principle to meet the situation and they have found it in the principle stated by Lord Penzance …”

69.  House of Spring Gardens, in which Stuart-Smith LJ and Fox LJ[26] found an issue estoppel binding on one McLeod, was likewise an exceptional case[27]. McLeod and the Waites were joint tortfeasors. Their interests were identical and they were jointly and severally liable for enormous damages under a judgment of the Irish High Court. An appeal by all three defendants to the Supreme Court was substantially unsuccessful. The Waites brought fresh proceedings in Ireland to set aside the original judgment, claiming it was obtained by fraud. McLeod was aware of the fresh proceedings but chose not to take part. Meanwhile the plaintiff issued proceedings in England to enforce the original judgment against the three defendants. In his defence, McLeod relied on the fresh Irish proceedings which were pending. After the second action in Ireland was eventually dismissed, the plaintiff proceeded with an application for summary judgment in England. The English High Court held that all three defendants were estopped from contending that the original judgment was obtained by fraud and an appeal to the Court of Appeal was dismissed. Issue estoppel arising from the second Irish action was held to bind McLeod even though he was not a party, as he could have applied to be joined and no one could have opposed his application. Instead, he made an informed decision to sit back and let the Waites fight his battle, at no expense to himself. It was just to hold him bound by the judgment in the action in which he did not take part.

70.  In those strong and exceptional circumstances, it would clearly be unjust for McLeod later to claim that he ought to be able to fight the same battle all over again in the English courts. Strong and exceptional facts would be required before the conclusion could be reached that an issue estoppel would arise by the conduct of standing by and allowing another to fight the battle in earlier litigation. This is but a “very narrow exception” to the general rule. (Seven Arts Entertainment Ltd at §§73, 78, 81)

(3)  Applying the legal principles

71.  Mr Fung submitted that in assessing whether there is privity of interest between a new party and a party to previous proceedings, one needs to examine “(a) the extent to which the new party had an interest in the subject matter of the previous action; (b) the extent to which the new party can be said to be, in reality, the party to the original proceedings by reason of his relationship with that party, and (c) against this background to ask whether it is just that the new party should be bound by the outcome of the previous litigation”. (Resolution Chemicals Ltd v H Lundbeck A/S at §32) Applying the legal principles, Mr Fung contended that Lu is in privity of interest with Madam Lo on three separate grounds: (a) he had the same direct and parallel interest in the relevant subject matters in Madam Lo’s Actions as that of Madam Lo; (b) he was closely involved in the preparation and conduct of Madam Lo’s Actions, such that he may be fairly said to be, as a matter of substance and reality, a co-plaintiff in those proceedings; (c) he chose to stand by and allow Madam Lo to fight his battle, so it is fair and just to bind him to the outcome of Madam Lo’s Actions.

72.  His arguments in support of each of these grounds ran as follows.

73.  In support of the ground that Lu has some direct and parallel interest in the subject matters in Madam Lo’s Actions as that of Madam Lo, Mr Fung’s arguments below and on appeal may be summarised as follows:

(1)  Madam Lo and Lu are both discretionary objects of the Trust. As eligible beneficiaries of the Trust, both have a right in equity to due administration of the trust. And neither Madam Lo’s Actions nor Lu’s Action involve challenges to any decision to distribute trust assets to some individual beneficiaries to the exclusion of others.

(2)  The Overlapping Claims in Madam Lo’s Actions and Lu’s Actions are all claims against the Trustee based on breach of trust. Madam Lo’s interest and Lu’s interest in pursuing each of the Overlapping Claims are identical. Both sets of proceedings are concerned with the protection and preserving of the Trust’s alleged status as controlling shareholder of GE and preventing KS from obtaining control over GE, which, if Madam Lo and Lu’s claims can be established, is a matter in which all discretionary objects of the Trust would have a common interest. There is commonality of interest in the subject matter of the litigation, and no conflict of interest between Madam Lo and Lu in their pursuit of the claims.

(3)  In relation to the AGM Claim, both Madam Lo and Lu had identical interest in the subject matter. This claim arose because of Lu’s failure to get re-elected as Deputy General Manager and director of GE.

(4)  Madam Lo and Lu both seek much of the same or similar reliefs in their respective actions, including declarations which would have the effect of compelling the Trustee to purchase additional shares in GE and orders to remove the Trustee as trustee of the Trust.

(5)  While Madam Lo had sent letters to the Trustee requesting distribution of the assets of the Trust to her, she had made clear that she did not make this request to enrich some discretionary objects at the expense of others, but only to ensure that the Trust maintains its alleged controlling shareholding in GE and none of the Children are to control GE to the exclusion of the others.

(6)  Madam Lo did not bring her claims solely in her personal capacity, as a large part of her claims (including the Overlapping Claims) was based on breach of trust and could only have been brought by her as a discretionary object of the Trust. Likewise, Lu did not bring his claims in his capacity as Appointor and Guardian of the Trust. He is simply seeking to bring claims against the Trustee for breach of trust in his capacity as a discretionary object.

(7)  Madam Lo and Lu share a very close parent/child relationship. Their interests were aligned at all material times, as illustrated by the letters sent by Lu and some of the Children to the Trustee dated 25 April 2016 and Lu’s letter to the Trustee dated 2 June 2016 in which Lu declared “complete trust and agreement” with Madam Lo’s wishes and decisions.

(8)  Lu had provided continuous assistance to Madam Lo in the conduct of Madam Lo’s Actions and voluntarily attended court as one of her witnesses. He was directly involved in most (if not all) of the factual events leading to Madam Lo’s Actions including the establishment of the Trust and its day-to-day management, the family meeting in 2015 in which KS announced he had acquired enough shares in GE to remove all his siblings as directors, the discussion between Madam Lo and some of the Children which led to her decision to issue letters to the Trustee in January and February 2016, and subsequent incidents which gave rise to further tension within the family such as the alleged “ring-fencing” of Madam Lo from some of the Children.

74.  In support of the ground that Lu was so closely involved in the preparation and conduct of Madam Lo’s Actions such that he was effectively in the position of a co-plaintiff, Mr Fung advanced these submissions below and on appeal:

(1)  Lu was closely involved in the discussions leading up to Madam Lo’s requests to the Trustee to purchase additional shares in GE and the idea of purchasing shares came from members of Lu’s camp. Lu was the driving force behind Madam Lo’s Actions.

(2)  Lu has acknowledged that he provided advice and assistance to Madam Lo in her litigation and participated in meetings with her legal advisers. Such assistance included getting Madam Lo to sign instruction letter for her solicitors and sending messages directly to her solicitors.

(3)  Madam Lo had difficulty following the developments in her actions and had to rely on others for assistance. She relied significantly on Lu. Madam Lo had stated that Lu acted against KS and Archie by helping her deal with her actions against the Trustee and she even advised Lu to hire a bodyguard to protect himself from KS and Archie.

(4)  Antony stated that Lu participated in a number of meetings with Madam Lo’s legal representatives to discuss what became Madam Lo’s Actions. Antony also stated that Lu controlled both Madam Lo and Madam Lo’s Actions and used his close relationship with her and her trust in him to pressure her into instituting and continuing those proceedings.

(5)  Records of WhatsApp messages between Lu and some of his siblings showed that Lu was involved at an early stage in the planning and preparation of what became Madam Lo’s Actions and he attended various conferences with Madam Lo’s leading counsel in 2016 and 2017.

(6)  It could be inferred from an email of Madam Lo’s solicitors to the Trustee’s solicitors dated 22 July 2016 that correspondence and court documents in Madam Lo’s Actions were all provided by Madam Lo’s solicitors to Lu.

(7)  In some interviews with the press during the trial of Madam Lo’s Actions, Madam Lo was content for Lu to speak to the press on her behalf.

75.  In support of the ground that Lu chose to stand by and allow Madam Lo to litigate on his behalf so it is fair and just to bind him to the outcome of Madam Lo’s Actions, Mr Fung made these arguments below and on appeal:

(1)  Lu must have had knowledge of the issues in dispute in Madam Lo’s Actions in light of his close involvement in the preparation and conduct of those proceedings. The Trustee had also provided each of the Children with copies of the pleadings including amendments to the pleadings.

(2)  Lu must have known from the outset that his rights were being tested in Madam Lo’s Actions. In particular, he must have known from an early stage that Madam Lo’s Actions involved issues such as (a) whether the Trustee breached its duty to purchase additional GE shares so as to preserve the Trust’s alleged controlling shareholding; (b) whether the Trustee breached its duty to take prompt action to ensure it could vote in favour of Lu’s reappointment as director of GE at the 2017 AGM; and (c) whether the Trustee placed itself in a position where its interests conflicted with its duties by acting as trustee of the KSL Trust. The core elements of the Overlapping Claims had been introduced by amendments to the pleadings in Madam Lo’s Actions in July 2017.

(3)  Insofar as Lu believed his rights and interests were not adequately represented by Madam Lo, he could easily have applied to join Madam Lo’s Actions as a plaintiff. He could have applied to do so at a very early stage and certainly before the trial began in May 2018. He should not have stood by until February 2018 when he brought his own action.

(4)  It is misconceived for Lu to rely on the dismissal of KS’s joinder application in October 2018 to say that he could not have joined in Madam Lo’s Actions. KS’s application was dismissed on the grounds of lateness, his lack of sufficient interest, and the need to prevent disruption of the trial. None of these grounds would apply to Lu.

76.  I am not persuaded by Mr Fung’s submissions.

77.  Contrary to his contention, there is not a sufficient degree of identity between Madam Lo and Lu to make them privies in interest.

78.  The mere fact that there is similarity in the Overlapping Claims in Madam Lo’s Actions and Lu’s Actions does not make their interests in pursuing such claims identical. The fact that both pursue the same goals in preserving the Trust’s alleged status as controlling shareholder of GE and preventing KS from obtaining control over GE and that both seek similar reliefs in compelling the Trustee to purchase additional shares in GE and removing the Trustee as trustee are insufficient. If the above considerations, whether separately or cumulatively, are sufficient to make Madam Lo and Lu privies, it would not have been held in cases like Gleeson v J Wippell & Co Ltd, China North Industries Investment Ltd, and Genesee Enterprises Ltd v Abou-Rached that privity of interest was not established. The “substantial overlap in interest” in their claims is insufficient to make them privies. (The Secretary of State for Business, Innovation & Skills v Nadhan Singh Potiwal at §20)

79.  The fact that Madam Lo and Lu share a very close parent/child relationship whereas the cases concerned arms-length parties in commercial transactions is immaterial. The involvement of Lu in factual events leading to Madam Lo’s Actions and his expressions of support for Madam Lo before she brought proceedings are likewise irrelevant. As stated in China North Industries Investment Ltd at §82, a “sense of concern or conceivable personal ramifications” in the subject matter of the previous litigation is not to the point.

80.  Madam Lo and Lu do not have parallel or corresponding interest in the subject matter of their respective actions. It could not be said that the cause of action in each of their respective actions is such that either one could have presented the same legal arguments and both would benefit directly from a successful result. Nor could it be said that the Overlapping Claims in Madam Lo’s Actions flow from similar claims in Lo’s Action or vice versa.

81.  Madam Lo brought her claims as de facto settlor and discretionary object of the Trust, seeking inter alia for the Trust fund to be transferred back to her. She had alleged that Mr Lo, being the only other de facto settlor, expressed his clear requests that upon his death, the original trustee should hold the capital and income of the Trust fund for Madam Lo as if she was “the sole beneficial owner” of the Trust fund and should accede to her requests and instructions at all times[28].

82.  When the claims in Madam Lo’s Actions are considered in context, instead of just focussing on the Overlapping Claims as urged upon the court by Mr Fung, it could readily be seen that the amendments to her pleadings in July 2017 and June 2018 were just one of the four alternative elements for her contention that Trustee had to comply or should have complied with her letters of request. As acknowledged by the Trustee in their skeleton submissions in KS’s joinder application, the “issues of central importance” in Madam Lo’s Actions are whether there was a common understanding or otherwise that the Trustee was obliged to act in accordance with Madam Lo’s directions and, most importantly, whether Madam Lo was entitled to have transferred to her, or as she should direct, the whole of the Trust fund. These “issues of central importance” do not feature in Lu’s Action. If her claims had been successful, that would have destroyed Lu’s rights in equity as an eligible object of the Trust.

83.  Her avowed intention that she would not enrich some discretionary objects at the expense of others and it was only to ensure that none of the Children would gain control of GE to the exclusion of the others is immaterial. She also said it was her wish “to first reclaim all the Trust assets and then determine the distribution depending on how [her] children behave.”[29] Whatever her intentions might be, the actions she brought involved a challenge to the Trustee’s decision not to distribute all the trust assets back to her, which would necessarily have been to the exclusion of all other eligible beneficiaries. It could not be said that there was substantial alignment between the interests of Madam Lo and Lu.

84.  The proposition that in relation to trust property, there will normally be a sufficient privity between trustees and their beneficiaries has no application to the situation of a discretionary trust. Mr Fung has cited in the court below these passages in Lewin on Trusts (20^th ed, 2020) at §§41-068 and 41-069:

“There is no requirement for all beneficiaries and current trustees to be claimants in claims involving a trustee as all beneficiaries will, at least in most circumstances, have a privity of interest in the proceedings as there will be a sufficient degree of identity between them such that all will be bound. [footnote 268] …

There is an exception to this rule where one or more beneficiaries have a demonstrably separate interest from that of other beneficiaries, such as where one class of beneficiaries will not benefit from any compensation recovered or may have their interests defeated, that they will not be bound and may appear separately. …”

85.  As rightly pointed out by Mr Ho, the cases cited in footnote 268 of Lewin[30] are not concerned with discretionary trusts. Objects of a discretionary trust do not have an interest or rights held in common with the other eligible beneficiaries[31]. They have individual rights including these rights: to due consideration, to compel the due administration of the trusts, to obtain information and accounts from the trustee, to bring claims for breach of trust, to compel third party recipients of trust assets to restore them to the trustee[32]. No case has been cited in which it was held that such kind of individual rights would suffice to establish privity of interest. A case cited by Mr Ho is to the contrary, see JSC Mezhdunarodniy Promyshlenniy Bank v Pugachev [2014] EWHC 3547 (Ch).

86.  In that case, the trustees of discretionary trusts applied to discharge or vary an order for disclosure of information relating to the trusts made against one Pugachev, who was one of the discretionary beneficiaries. It was argued by the claimants that the trustees should be barred from making the application because there was sufficient privity of interest between them and Pugachev to make it an abuse of process to re-litigate the question of disclosure. Reliance was placed on this statement of Megarry V-C in Gleeson v J Wippell & Co Ltd at 515H: “Thus in relation to trust property I think there will normally be a sufficient privity between the trustees and their beneficiaries to make a decision that is binding on the trustees also binding on the beneficiaries, and vice versa.” This argument was rejected by David Richards J as it assumed that the degree of control enjoyed by Pugachev over the trusts and their assets was such that privity of interest should be established. Until the facts were found, it was premature to rely on privity of interest as a bar in limine to the trustees’ application. It was stated at §32:

“I have no difficulty in saying that there is a privity of interest between trustees and a beneficiary who controls the trust and the actions of the trustees and is the sole or principal beneficiary. But, generally, a decision against only one beneficiary is not in my view binding on the trustees or through them the other beneficiaries. In the sentence just quoted, Sir Robert Megarry was careful to refer to a ‘sufficient privity between the trustees and their beneficiaries’ not between the trustees and one of their beneficiaries.”

87.  As stated in Spencer Bower and Handley: Res Judicata at §9.50: “Persons with separate but identical interests in the same question are not privies. A trustee may have obligations to a class, but the members have their own interests, and are not privies of each other.”

88.  Turning to the next ground that Lu was in effect a co-plaintiff in Madam Lo’s Actions as he was so closely involved in the preparation and conduct of the actions, it must be borne in mind that this is an application for striking out, so it must be “plainly and obviously established”[33] that Lu was a co-plaintiff as a matter of substance and reality by reason of his close involvement in the proceedings. This clearly cannot be made out from the matters urged upon us in Mr Fung’s submissions and from the available evidence.

89.  Mr Ho referred us to the affirmation of Lu[34] in which he asserted that Madam Lo was at all times in total overall control of the conduct of her lawsuit, that all decisions were made by her independently, that her solicitors and counsel made certain to talk with her in private and obtain her instructions and the siblings were only permitted to join in with her express permission. While he did give Madam Lo moral and physical support in the course of the litigation, he denied that he had encouraged the conduct of Madam Lo’s Actions. That it was Madam Lo’s own decision to sue and she was not under the pressure or control of anyone was supported by the letter of her solicitors to the solicitors of KS dated 10 July 2017, in which a detailed account was given of two meetings held at the offices of her solicitors in May and June 2017. The legal expenses were paid from her own funds. The Trustee’s counsel had stated at the trial that the Trustee would “not be inviting the Court to make any findings of inappropriate influence”.

90.  As for the allegation of Antony that Lu controlled Madam Lo’s Actions, this must be treated with some reservation. Until his letter to Lu dated 20 December 2017, Antony had asserted to his siblings that Madam Lo “was never manipulated into serving a writ”, but did so for her own good reasons, and was not “ring-fenced” by anyone. He made a volte-face in the affirmations he made on behalf of the Trustee in the present application.

91.  The WhatsApp messages in 2016 and 2017 between Lu and some of the siblings do not add anything of significance. As for the inference sought to be drawn from the email of Madam Lo’s solicitors to the Trustee’s solicitors dated 22 July 2016 that correspondence and court documents in Madam Lo’s Actions were all provided by Madam Lo’s solicitors to Lu, the writ in HCA 3246/2016 was issued after the email, in December 2016. The Trustee had provided copies of the pleadings including amendments to each of the Children. However, it would appear from the correspondence exchanged between Lu’s solicitors and the Trustee’s solicitors from 2 August 2017 to 25 September 2017 that copies of all the correspondence between the Trustee and Madam Lo leading to and subsequent to the commencement of HCA 3246/2016 were not provided to Lu.

92.  It is not necessary to resolve any conflict in evidence regarding the alleged control of Lu of Madam Lo’s Actions. In light of the assertions made on both sides, it is not possible to conclude that it is plainly and obviously established that Lu had controlled Madam Lo’s Actions such that he should be regarded as a co-plaintiff in effect. In any event, even if he had close involvement in the preparation and conduct of those proceedings, this is not sufficient to make him a privy of Madam Lo for this purpose, see China North Industries Investment Ltd at §82, Genesee Enterprises Ltd v Abou-Rached at §240, Best Year Enterprises Ltd (in liquidation) at §§43 and 76.3.

93.  The remaining ground is Lu’s conduct of “standing by” such that it is fair and just to bind him to the outcome of Madam Lo’s Actions. As mentioned, this is a “very narrow exception” to the general rule. I do not think the circumstances here are so strong and exceptional that it would clearly be unjust for Lu to be permitted to litigate the Overlapping Claims in his own action. The situation here was not that Lu could easily have applied to join Madam Lo’s Actions as a plaintiff, nor do I think he could be properly criticised for bringing his own action only in February 2018, three months before the trial of Madam Lo’s Actions.

94.  Although the pleadings in Madam Lo’s Actions were amended in July 2017 to include some of the factual allegations in respect of the Overlapping Claims, the reference in the statement of claim to a “controlling shareholding” was in the context of a plea of deliberate breach of trust rather than a negligence claim[35], and there was no associated plea that loss had been caused to the value of the Trust.

95.  Then came a shift in focus in the opening submissions of Madam Lo at the commencement of the trial in May 2018, when she sought to introduce issues from Lu’s Action into her own actions. It was due to the Trustee’s objection to unpleaded allegations that she sought leave to further amend the pleadings and the June 2018 amendments were made, raising a claim that the Trustee was in breach of duty for failing to appreciate the importance of maintaining the Trust’s controlling shareholding in GE and for failing to react to KS actively seeking to increase his shareholding which meant that the Trust’s controlling shareholding was at risk of being jeopardised.

96.  It could not be said that Lu must have known from the outset, or by July 2017 at the latest, that his rights were being tested in Madam Lo’s Actions. The correct position would have been the other way round. It was after Lu brought his own action and served his statement of claim in February 2018 that Madam Lo sought to re-focus her case at the opening of her trial in May 2018 by adopting some of the allegations from Lu’s pleading, such as §§35 and 138.4 of his statement of claim.

97.  It is apparent from the dismissal of KS’s joinder application that Lu could not easily have applied to join Madam Lo’s Actions as a plaintiff, after the trial of her actions had commenced, not to mention that intending co-plaintiffs must have no conflict of interest or possible division of opinion, as co-plaintiffs will not be allowed to sever to take inconsistent steps and must appear at the trial by the same solicitors and counsel. It could not be inferred from the two letters before action written by Lu in 2016 expressing support for Madam Lo that they would not take inconsistent steps if he should be joined as a co-plaintiff in her actions. Lu’s Action was brought not just against the Trustee but against KS as well, alleging among other things conflict of his duties in his accumulation of a competing shareholding block in GE through the KSL Trust, to the detriment of the Trust. Whilst Madam Lo had adopted some of the allegations in Lu’s pleadings in her amendments, she never sought to bring any claim against KS. In resisting KS’s application to be joined as a defendant, her counsel made clear to the court that Madam Lo only sued the Trustee and not KS because it was not her case “the fact that KS Lo increases his shares somehow by itself gives rise to a claim against KS Lo”[36].

98.  Furthermore, it was made clear to KS as well as Lu in the reasons for dismissing KS’s joinder application that even if there was overlap between the issues in Madam Lo’s Actions and Lu’s Action, it would not be just for those issues to be determined between KS and Madam Lo in her actions when Lu was not a party to those proceedings and could not take part in the cross-examination of KS. It was held that KS would not be bound by any decision or finding in Madam Lo’s Actions as he was not a party to those actions, and any findings in respect of the overlapping issues would not be admissible in Lu’s Action. Lu would reasonably have thought that this holding would likewise apply to him as a non-party and he could proceed with his own action in time.

99.  It is also pertinent to note that in the timetabling questionnaire filed by each of the parties in Lu’s Action in October 2018, no one had suggested that Madam Lo’s Actions and Lu’s Action should be consolidated or tried together before the same judge.

100.  For all the above reasons, privity of interest between Madam Lo and Lu is not established for the 2019 Judgment to give rise to cause of action estoppel or issue estoppel. The Trustee cannot invoke res judicata to strike out parts of the statement of claim in Lu’s Action. Hence, there is no need to analyse whether there is duplication of causes of action or whether certain issues in Madam Lo’s Actions and Lu’s Action are the same.

101.  I turn to consider other grounds relied on by the Trustee and KS to strike out parts of the statement of claim in Lu’s Action.

The Trustee’s case on abuse of process

102.  Unlike res judicata which is a rule of substantive law, abuse of process is a concept which informs the exercise of the court’s procedural powers.[37] To constitute abuse of process, the court must be satisfied, having made a “broad merits-based judgment” that takes account of the public interest (that there should be finality in litigation and a person should not be sued twice in the same matter) and the private interest (that a party should have access to justice to vindicate his rights) and all the circumstances of the case, that it is not just for an action to proceed[38].

103.  The essence of the Henderson v Henderson abuse is that a party ought generally not to be permitted to raise in subsequent proceedings matters which that party could and should have raised in earlier proceedings[39]. The court is concerned with balancing the interests not just of the litigants before it, but also other interests involved in the administration of justice such as other litigants in the court process, to ensure that the resources of the court are distributed fairly[40]. The abuse can also take the form of bringing the administration of justice into disrepute[41].

104.  It is not necessary to establish that the parties to the two sets of proceedings were the same or were privies, since the circumstances may be such as to bring the case within the ‘spirit of the rules’, if it would be manifestly unfair to a party in the later proceedings that the same issues should be relitigated or there is an element of vexation in the use of litigation for an improper purpose[42]. It will be a rare case where the litigation of an issue which has not previously been decided between the same parties or their privies will amount to an abuse of process[43].

105.  The Trustee complains that it finds itself in the invidious position of having to defend itself twice against highly similar claims involving the same factual witnesses and much of the same documentary evidence, even though it has put the Children on notice of Madam Lo’s Actions by sending each of them copies of the pleadings and amendments. If Lu’s Action is allowed to proceed, the Trustee would have to incur huge costs to defend itself for a second time. It would also be subject to a significant disadvantage in that Lu would have knowledge of all of the evidence and arguments which the Trustee has deployed in Madam Lo’s Actions, while the Trustee would not have corresponding knowledge about Lu’s case. It was submitted that all this is manifestly unfair to the Trustee and plainly constitutes unjust harassment.

106.  Furthermore, the Trustee contended that the administration of justice would be brought into disrepute. Given the similarity in the factual matrix and the way the Overlapping Claims are pleaded in Madam Lo’s Actions, any ruling in Lu’s favour of similar claims in his action will be inconsistent with the corresponding rulings in the 2019 Judgment. Lu will seek to undermine or effectively overturn the findings in that judgment and this will constitute a collateral attack on the 2019 Judgment.

107.  Mr Fung reiterated that Lu should have joined as a co-plaintiff to advance the Overlapping Claims because such claims are based on the same factual matrix and involve the same legal issues. The circumstances surrounding KS’s joinder application are fundamentally different to those applicable to Lu and it is unrealistic for Lu to contend that he could not have applied to join in Madam Lo’s Actions earlier.

108.  In assessing all the circumstances of the case and balancing the competing interests, it seems to me that the conduct of the Trustee should also be taken into consideration. Insofar as Mr Fung was suggesting that the focus of the inquiry should only be on the conduct of Lu as the party advancing the claim, I do not agree with him.

109.  Mr Ho submitted that the Trustee could have adopted measures to avoid any unjust harassment by having to defend itself for a second time. Its principal default was failing to join Lu or take necessary procedural steps to ensure that Lu would be bound by the 2019 Judgment. It had been open to the Trustee at all times to apply in Madam Lo’s Actions to have Lu joined as a party. Mr Ho also referred to Order 15 rules 13 (representation order)[44] and 13A (notice of action to non-parties)[45], which apply to property subject to a trust. The Trustee could have applied for a representation order for any party (including Madam Lo) to be appointed to represent any non-party beneficiary such as Lu (and other beneficiaries opposing the Trustee) in Madam Lo’s Actions. There is no absolute bar on the court making a representation order because the person to be represented objects, it is a matter of discretion for the court after balancing the concerns of all affected persons, and the remedy of a person dissatisfied with his representation is to seek to be joined as a defendant in his own right[46]. The Trustee could also have applied for an order directing that notice of Madam Lo’s Actions be served on any person who is not a party including Lu pursuant to Order 15 rule 13A.

110.  Mr Ho pointed out that in KS’s joinder application, the Trustee and KS had made submissions to the court and a number of procedural steps were canvassed in the course of the hearing, including joinder of parties, consolidation or the trying of two sets of proceedings together, case management under Order 4 rule 9[47] of the respective proceedings, and the judge noted there was no application before him under Order 4 rule 9 [48]. Neither the Trustee (the only entity that has been a party to both Madam Lo’s Actions and Lu’s Action and was in the best position to apply for case management orders with regard to both sets of proceedings) nor KS took any action in light of the possible procedural steps.

111.  I have discussed earlier whether it is appropriate for Lu to join Madam Lo’s Actions as a co-plaintiff. I cannot be satisfied that there would be no conflict or division of opinion and no possibility of inconsistent steps if Lu were to be joined as a co-plaintiff. Nor do I think Lu can be fairly criticised for not joining in Madam Lo’s Actions instead of bringing his own action, given the differences which are manifest in the pleadings of each. There is no good reason why Lu should not be permitted to conduct his own case with his own lawyers who will only act on his instructions, to bring claims against all the parties he wishes to pursue, and to argue all the points that he wishes to raise in support of his claims.

112.  To avoid the predicament that the Trustee and KS now find themselves in, of having to contest Lu’s claims notwithstanding similar claims were litigated in Madam Lo’s Actions, the proper way out was for the court to exercise its case management powers under Order 4 rule 9, by hiving off the overlapping issues in Madam Lo’s Actions and adjourning them to be heard at the same time as the trial of Lu’s Action, as suggested by KS and to which the Trustee agreed may be “the more appropriate and just course in the interests of avoiding inconsistent findings and avoiding what may otherwise be considerable duplication of costs”.

113.  The Trustee however did not take a more proactive part in seeking an appropriate case management order. And the judge did not take that course as there was no application before him under Order 4 rule 9 and in light of the vigorous opposition of Madam Lo to KS’s application for joinder.

114.  Mr Fung submitted that the alternative procedural steps could not have presented practical solutions to the problems created by Lu’s Action, as adopting one or more of those steps would have resulted in substantial unjustified delay to the resolution of Madam Lo’s Actions, and which would most likely have derailed the trial in her actions. This is contrary to the Trustee’s submissions served at KS’s joinder application, in which it was stated that given the extended timetable over which the trial was to be conducted, it should be possible to accommodate the limited joinder of KS on the overlapping issues within that extended timetable, without disrupting the progress of the trial in the meantime, provided tight time limits were imposed on any additional steps required.

115.  It is not profitable to engage in a debate who should be blamed for this state of affairs or who should bear the greater part of the blame. One thing is clear, regardless of whose failure it might be to seek appropriate case management orders from the court, it cannot be a just solution to resort to the draconian step of striking out Lu’s Action, when Lu has not had his day in court. As mentioned before, it will be a rare case where the litigation of an issue which has not previously been decided between the same parties or their privies will amount to an abuse of process. The present case is not this kind of rare case.

116.  As for bringing the administration of justice into disrepute in that there might be inconsistency between the findings in the 2019 Judgment and any ruling in his favour in Lu’s Action or that Lu would make a collateral attack on the 2019 Judgment, it is pertinent to note this statement of Lord Diplock in Hunter v Chief Constable of the West Midlands Police [1982] AC 529 at 541B to C:

“The abuse of process which the instant case exemplifies is the initiation of proceedings in a court of justice for the purpose of mounting a collateral attack upon a final decision against the intending plaintiff which has been made by another court of competent jurisdiction in previous proceedings in which the intending plaintiff had a full opportunity of contesting the decision in the court by which it was made.”

117.  It is not in every instance in which a collateral attack is mounted on a final decision that the subsequent proceedings would be regarded as an abuse of process. And not all relitigation constitutes a collateral attack. As Lord Hobhouse said in Arthur J S Hall at 743C, “There is no general rule preventing a party inviting a court to arrive at a decision inconsistent with that arrived in another case.” It is in the context of the “could and should have” cases that the Henderson v Henderson abuse of process is established (China North Industries Investment Ltd at §§58 to 61).

118.  As mentioned, it is not realistic or practicable for Lu to join as a co-plaintiff in Madam Lo’s Actions, given the differences in the pleaded case of each, nor could he be fairly criticised for bringing his own action only in February 2018. When Lu brought his action in February 2018, Madam Lo’s Actions had not been tried and there was no final decision in existence. Lu did not initiate proceedings for the purpose of making a collateral challenge against the final judgment in Madam Lo’s Actions, nor did he have an opportunity of contesting that final judgment before it was made. Even if a collateral attack may be made in Lu’s Action against some of the findings in the 2019 Judgment, it cannot be regarded as manifestly unfair or an affront to the administration of justice in the minds of right-thinking people.

119.  Having regard to all the circumstances and balancing the competing interests, I am not satisfied the Trustee has established an abuse of process such that Lu should be barred from advancing claims in his action similar to the Overlapping Claims in Madam Lo’s Actions. The Trustee’s application to strike out parts of the statement of claim in Lu’s Action on the abuse of process ground fails as well.

KS’s case on abuse of process

120.  As I am of the view that the Trustee would fail to strike out parts of Lu’s statement of claim on the grounds of res judicata and Henderson v Henderson abuse of process, this would have repercussions on KS’s striking out application on abuse of process.

121.  Ms Cheung placed much emphasis on the substantial overlap of the pleaded claims against KS in Lu’s Action with the claims in Madam Lo’s Action which were rejected in the 2019 Judgment. She submitted that the issues sought to be struck out are either issues already raised and decided in the 2019 Judgment (raised issues) or issues that could and should have been raised in Madam Lo’s Action (raiseable issues). It is only where it is not established that the plaintiff in the second action could and should have been joined as a party to the earlier action that relitigation of similar or duplicate issues would not amount to an abuse of process.

122.  Ms Cheung submitted that KS is entitled to invoke the Henderson v Henderson abuse of process, even though he was not a party to Madam Lo’s Actions and was merely a witness for the Trustee. She cited a number of authorities in support of the proposition that the Henderson v Henderson abuse serves to protect non-parties in appropriate circumstances: MCC Proceeds Inc v Lehman Bros International (Europe) [1998] 4 All ER 675; Cosby v Government of the United States of America [2000] 3 HKC 688 at 695I to 697D; Wong Shui Kee Roger v Gareth Huw Thomas, HCA 2207/2003, 17 September 2003, at §§19 to 23; Barrett v Universal Island Records Ltd [2006] EMLR 21; Lee Ming Mang Sharon v Ng Siew Seng Richard & Ors, HCA 1536/2006, 30 April 2009, at §§39 to 43; China North Industries Investment Ltd at §§52 and 55; Dr Aishah Hussin v Dr Suresh Kumarasamy & Ors [2014] 5 AMR 335. Ms Cheung submitted there is no hard and fast rule as to what configuration of parties would render the later proceedings abusive and the abuse doctrine can apply where the claimant or the defendant or both are different, citing Spencer Bower and Handley: Res Judicata at §26.15.

123.  Ms Cheung’s arguments that the circumstances in this case would plainly warrant the operation of the abuse doctrine may be stated as follows:

(1)  The Overlapping Claims in Madam Lo’s Actions and the claims against KS in Lu’s Action, although ostensibly based on different causes of action, involve the same essential factual matrix and many of the legal issues are the same, such that success in one would have meant success in the other.

(2)  Lu should not have brought his own action. He could and should have been joined as a co-plaintiff to Madam Lo’s Actions. There was no conflict of interests or division of opinion between him and Madam Lo. He was completely supportive of Madam Lo’s primary claim as de facto settlor for the return of the Trust assets according to the letters dated 25 April 2016 and 2 June 2016, and Madam Lo’s alternative claim as eligible beneficiary of the Trust is fully aligned with Lu’s claims in his action. His assertions that he did not and could not have known that Madam Lo would refocus her case by amending her pleadings are contrived. In any event, there is no justification for Lu to continue with his own action after the true shape of the claims in Madam Lo’s Actions was known to him.

(3)  As Lu was Madam Lo’s privy and her de facto co-plaintiff, not only should he have joined her actions as a co-plaintiff, he could have joined KS to Madam Lo’s Actions. The allegations against KS in Madam Lo’s Actions, which were determined in the 2019 Judgment on the merits, are serious wrongdoings. As a matter of fairness to KS, he ought to have been joined as a party to Madam Lo’s Actions instead of being harassed by those allegations again. Lu’s decision not to join KS to those actions so that all related disputes could be tried in one action could only have been deliberate and tactical. As the de facto co-plaintiff in Madam Lo’s Actions and the plaintiff in his own action, it was incumbent on Lu to seek appropriate case management directions from the court.

(4)  KS’s unsuccessful joinder application does not avail Lu. KS’s application was rejected for lateness. Lu was not in the same position as he had been closely involved in Madam Lo’s Actions from the outset, and he could have procured KS’s joinder much earlier on.

(5)  The fact that KS voluntarily gave evidence for the Trustee in Madam Lo’s Actions should work against Lu and not in his favour, as that would mean that KS’s position on the subject matter of the proceedings was known to Lu all along. In denying that he has had a dry-run of his case through the cross-examination of KS (albeit conducted by Madam Lo’s counsel), Lu has conveniently ignored his intricate involvement in Madam Lo’s Actions.

(6)  As Madam Lo’s privy and having been closely involved in her actions, Lu cannot take advantage of her belated application and failure to obtain leave to adduce expert evidence. Vexing KS again with a raised issue on which Madam Lo or Lu could and should have adduced expert evidence at an early stage of Madam Lo’s Actions is unfair and abusive.

(7)  If the relevant claims were struck out as against the Trustee but not KS, the prejudice to him would be further compounded, as there is no guarantee that the Trustee would testify for KS.

(8)  The favourable findings in the 2019 Judgment to the Trustee are binding on Lu as Madam Lo’s privy. Even though KS is not strictly bound by the 2019 Judgment not being a party, many of the allegations of wrongdoing directed against the Trustee in Madam Lo’s Actions expressly or implicitly impugned KS’s conduct. It is obviously a collateral attack against the 2019 Judgment to relitigate such allegations in the present action vis-à-vis KS just as it would be had they been relitigated against the Trustee.

124.  A number of premises on which Ms Cheung’s arguments rested have been considered and disposed of when I dealt with the Trustee’s grounds for striking out. I have considered those matters and findings afresh in light of Ms Cheung’s submissions but see no reason to come to a different view. To recap, I find that Madam Lo and Lu have no privity in interests; it could not be said that their interests are substantially aligned and it could not be envisaged there would be no conflict of interests and no possible division of opinion; it is not realistic or practicable for Lu to join in Madam Lo’s Actions as a co-plaintiff and he could not be properly criticised for bringing his own action or for doing so only in February 2018, nor could he be regarded as her co-plaintiff in substance and effect.

125.  Given these findings, I reject Ms Cheung’s contentions that Lu could and should have been joined as a co-plaintiff to Madam Lo’s Actions instead of bringing his own action, or that Lu could and should have procured KS to be joined as a party to Madam Lo’s Actions. Just as the Trustee has failed to establish abuse of process in like circumstances, KS could not have succeeded in his application.

126.  Any unfairness to KS in having to defend himself against similar allegations for a second time and that Lu has had a dry-run of his case through the cross-examination of KS by Madam Lo’s counsel pales in comparison with the unfairness to Lu if he is barred from litigating his claims for the first time in his own action. Ms Cheung had submitted for KS in his joinder application that if adverse findings were to be made in Madam Lo’s Actions in relation to the overlapping issues without KS having had an opportunity to put forward his own positive case, this would result in unfairness to him. The same could be said about Lu in this situation. Not being a party to Madam Lo’s Actions, Lu has had no opportunity to adduce evidence to support his claims, to challenge any evidence called by the opposite parties, and to make submissions to advance his case. Notwithstanding that Madam Lo had not succeeded in establishing the allegations against KS, fairness demands that Lu should not be precluded by the manner Madam Lo conducted her actions from bringing his own claims against KS, and be given free rein in pursuing his own action.

127.  I have quoted earlier the statement of Lord Hobhouse in In re Norris, in which he said at 1402 C to D in §26 that it will be a rare case where the litigation of an issue which has not previously been decided between the same parties or their privies will amount to an abuse. In that case, the Crown Court made a confiscation order after finding that the matrimonial home formed part of the accused’s realisable property, rejecting his wife’s evidence that she had a beneficial interest. When the Customs and Excise Commissioner applied to the High Court to enforce the confiscation order, the wife again asserted her beneficial interest. It was held by the House of Lords that it was not an abuse of process to relitigate the issue because she had only been a witness in the criminal proceedings, without the rights of a party[49].

128.  In re Norris was applied in JSC BTA Bank v Ablyazov (No 15) [2017] 1 WLR 603, which held that a witness who gave evidence about his claim in earlier committal proceedings for contempt but was not believed was not being abusive when he maintained his claim as a party in later proceedings brought by a bank for a charging order.

129.  KS’s position is further removed as compared to the Trustee. As pointed out by Mr Ho, the proposition advocated on behalf of KS is that a non-party’s claim against another non-party could be estopped merely on the basis that the latter had given evidence in previous proceedings to which neither had been parties. No authority has been cited for this proposition.

130.  I also agree with Mr Ho that the cases cited by Ms Cheung are distinguishable and do not advance KS’s position.

131.  In MCC Proceeds Inc, the plaintiff in the second action was the successor and assignee of the plaintiff in the first action so there was privity in interest. There was also “community of interest” between the defendant in the second action and the defendant in the first action in relation to the shares in dispute. In finding there was abuse of process, it was held by the majority of the English Court of Appeal that the defendant in the second action could easily have been joined as a defendant in the earlier action and no satisfactory explanation or evidence was provided as to why this was not done, so that all claims in relation to the title to the shares could be decided in the action and bind all interested parties. (at 694j and 696c)

132.  In Cosby v Government of the United States of America and Wong Shui Kee Roger v Gareth Huw Thomas, the applicant or plaintiff was the same in the earlier and later proceedings.

133.  Barrett v Universal Island Records Ltd concerned a second claim brought by A having compromised a previous claim. Insofar as A also brought claims on behalf of C’s estate, which had not been a party to the earlier claim or settlement, the claims were allowed to proceed as this was the first time that C’s estate had raised the claims.

134.  In Lee Ming Mang Sharon v Ng Siew Seng Richard, the wife brought proceedings for ancillary relief in the Family Court against the husband and later entered into a settlement for mutual withdrawal of claims, with the husband contributing to the wife’s costs. Almost immediately after, the wife brought an action in the High Court against the husband, his brother and a company which was formed by the husband and wife to purchase a property, raising the same issues as in ancillary relief proceedings and seeking similar reliefs. Although the brother and the company were not parties to the ancillary relief application, they had sufficient interest in the subject matter so the Family Court could have allowed them to intervene and take part. In such circumstances, there was nothing in the point that the parties in the High Court action were different and the High Court action was struck out for abuse of process against all three defendants.

135.  In China North Industries Investment Ltd, the party in the earlier proceedings in Bermuda, M, and the two individual defendants in the subsequent Hong Kong proceedings were held not to be privies. However, the action in Bermuda against M was premised upon the acts of its directors – none other than the two individuals – the very same acts of the very same people in respect of which and against whom the Hong Kong proceedings were directed. The use of different parties was but a cover, a matter of form and not substance and the procedure adopted offended the spirit of the rule of res judicata and was an abuse of process. (at §§70 and 71)

136.  As for Dr Aishah Hussin v Dr Suresh Kumarasamy & Ors, the plaintiff was sued by her former patient in earlier proceedings in which she attempted unsuccessfully to shift blame to three other doctors. Having been found negligent, the plaintiff brought an action against the three doctors raising the same allegation of negligence against them. The three defendants were not parties in the first suit but were witnesses for the patient. As the plaintiff had shifted blame to the defendants in the first suit, she should have joined them as third parties or co-defendants in the first suit but she chose not to. It was an abuse of process for the plaintiff to relitigate the same issue in another action. (at §§72, 76 to 78)

137.  For all the above reasons, KS has not established an abuse of process in respect of the raised issues or raiseable issues in Lu’s Action and the striking out application must fail.

Application of Lu to amend the statement of claim

138.  Lastly, I turn to consider Lu’s appeal in CACV 181/2022 and CACV 180/2023 against the disallowance of some of the amendments to his statement of claim.

139.  As I am of the view that Lu should succeed in his appeal against the order for striking out (CACV 329/2021), those parts of the amendments disallowed by the judge on the ground that they were ancillary or related to claims that were the subject of the striking out applications should be allowed[50].

140.  The remaining amendments disallowed relate to “allies” of KS and “proxies” (at §§3, 34, footnote 1 to §34, 135, 146 and prayer (13) of the draft amended statement of claim)[51]. At the hearing of the appeal, Mr Ho submitted to the court a new draft amended statement of claim in which he removed certain phrases in footnote 1 to §34 which connote that the “allies” of KS as defined would cover more people than those explicitly named instead of an exhaustive list of people.

141.  On the latest proposed amendments, the definition of the “allies” of KS in footnote 1 to §34 reads as follows:

“For the purposes of these pleadings, KS’s ‘allies’ are:

- Archie;

- Vincent;

- Gwen;

- Alexander;

- Kan Tak Kwong and Chu Shik Pui;

- KSL Management Limited, Katherine B L Limited, Alexander C H Limited, Elizabeth B K Limited, Nicholas C N Limited, Zachary S M Limited, Ryan S Y Limited, Mind Reader Limited, Surewit Finance Limited, Green Jacket Limited, Eagle Guardian Limited, and Evangeline S Y Limited, as well as the Trustee as trustee of the KSL Trust (in respect of KS); Adscan Holdings Limited (in respect of Archie); and Jemrick Holdings Limited (in respect of Gwen);

- shareholders whose proxies have been provided from time to time to KS to vote (without any directions/instructions as to how the votes should be cast)

For the avoidance of doubt, definitions of KS’s ‘allies’ in other pleadings of the Plaintiff should be read subject to this definition.”

142.  In my view, the only objectionable part of the proposed amendment is “shareholders whose proxies have been provided from time to time to KS to vote (without any directions/instructions as to how the votes should be cast).” Where one is seeking an indulgence from the court to introduce amendments, particularly where the application is made belatedly, the amendments should be properly and fully particularised. There is no temporal restriction on this plea (“from time to time”, not just in respect of the 2017 AGM). KS would need to trawl through each and every proxy given to him at each of GE’s general meetings held since late 2015 to ascertain whether the proxy gave him a discretion to vote or whether the proxy had specified how the voting should be carried out, to identify the shareholder who had provided the proxy, and to find out how he had voted in relation to each resolution for which a proxy was given. It seems to me that the time, labour and expense required to undertake this huge exercise is totally disproportionate and oppressive to KS. I would not allow this part of the proposed amendment.

Conclusion and orders

143.  In respect of the striking out orders in CACV 329/2021, I would allow the appeal and set aside the judge’s orders striking out the specified parts of the statement of claim and his costs order nisi awarding costs of the striking out applications to the Trustee and KS as varied by his order made on 19 April 2022. I would further order that Lu’s Action be referred to the Listing Judge for assignment to another trial judge. As for the costs below and of this appeal, I would make an order nisi that the Trustee and KS should pay Lu’s costs, with a certificate for two counsel both here and below (not three counsel as sought).

144.  For the appeals in CACV 181/2022 and CACV 180/2023 relating to the application to amend the statement of claim, I would allow the appeals and grant the amendments which have been disallowed by the judge save for these words in footnote 1 to §34 of the draft amended statement of claim which read: “shareholders whose proxies have been provided from time to time to KS to vote (without any directions/instructions as to how the votes should be cast)”. I would set aside the judge’s costs order and instead order the costs of and occasioned by the amendment shall be to the defendants in any event and the costs of the hearing below shall be paid by the Trustee and KS to Lu. The costs of the two appeals[52] should also be paid by the Trustee and KS to Lu. For the costs awarded to Lu both here and below, he should not be awarded the whole of the costs having regard to the latest amendments made only at the hearing of the appeals and since he is not entirely successful, I would allow Lu 85% of his costs both here and below, with a certificate for two counsel. The costs orders are in the nature of orders nisi.

145.  As for CACV 181/2023 which relates to Lu’s application under Order 15 rule 14, as this appeal was not pursued at the hearing, I would simply dismiss this appeal with an order nisi of no order as to costs.

Hon Yuen JA:

146.  I agree.

Hon G Lam JA:

147.  I agree with the judgment of Kwan VP.