LAU YUE SUM AND OTHERS v. HUI SIU KWONG representing the Estate of LAU LEUNG SEUNG, deceased

DCCJ 1986/2020

[2022] HKDC 993

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 1986 OF 2020

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(By Original Writ, Order to carry on made my Master M. Wong on 23 April 2015 and Order to carry on made by Master R. Lai on 20 December 2019)

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J U D G M E N T

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1.  In these proceedings, the 1^st and the 2^nd plaintiffs (“Ps”)  are suing the defendant (“D”)  for the return of a specific sum of HK$2.6 million. Ps claim that the HK$2.6 million is money belonging to Ps, and D ought to return the same to them.

2.  In the trial, Ps are represented by Mr Leo Wong, and D is represented by Mr Thomas Lai, both of counsel.

3.  At the beginning of the trial, both counsel have agreed that this case can be determined by only considering the documents in the trial bundles, the statement of agreed facts dated 26 August 2022 signed by the parties (“the Statement of Agreed Facts”), and the submissions made by counsel.  It would not be necessary to hear factual evidence from the witnesses.  Accordingly, no oral evidence from the factual witnesses has been heard.  Both counsel have also agreed that the witness statements made by these witnesses should not be regarded as evidence in the trial.

A.   THE FACTS

4.  I would first set out the background facts.  The facts set out below are the matters in the Statement of Agreed Facts, and matters which are not in dispute or indisputable.

5.  Everything originated from the late Lau Wai Chau (“the Ancestor”)  who in his lifetime amassed great wealth and bought up, inter alia, Tung Shing Lei in Yuen Long, over which the Route 3 motorway and the West Rail now run.  The Ancestor had 5 wives and 8 sons (“the 8 Fongs”)  before passing away in 1933.  There was in fact a 1930 will, but the Ancestor’s legacy under the will was modified in a 1946 Deed of Family Agreement (“the 1946 DFA”)  with the consent of all the 8 Fongs.

6.  According to the 1946 DFA, the Ancestor’s estate (“the Estate”)  was divided into 8 parcels, one for each Fong and with a 9^th part devoted to setting up an ancestral worship trust.

7.  In the 1990s, inter-family litigation broke out in two sets of proceedings (HCMP 3924/1995 and HCMP 3209/1996, collectively “the 95/96 Proceedings”).  Unless otherwise indicated, the orders mentioned in the below are the orders made by the Court of First Instance in the 95/96 Proceedings.

8.  Lau Yue Kui was appointed as the administrator (“the Administrator”)  of the Estate on 8 June 1995, and remained as the Administrator until his death on 9 August 2015.  Thereafter, Lau Kin Shun Freeman was appointed as the Administrator, and he is still the Administrator.

9.  The Estate and the 8 Fongs are the parties in the 95/96 Proceedings.

10.  Lands comprising the Estate were resumed by Government.  Resumption compensation in total of HK$244,589,649.91 (inclusive of interest)  (“the Compensation Money”)  was paid into court in the 95/96 Proceedings and form part of the Estate.  The Compensation Money represents cash compensation on resumption of about 22% of the total area of the lands in the 1946 DFA.

11.  The 8 Fongs agreed that the Fongs’ respective entitlements to the Compensation Money before deduction of costs and subject to the first charge for costs of the Administrator and the 2^nd Fong shall be in accordance with the area of lands distributed to them under the 1946 DFA.  The Fongs however differed as to how the lands comprising the Estate should be divided among the Fongs, which was the main issue in the 95/96 Proceedings:

(1)  one camp (i.e. the 1^st, 2^nd and 4^th Fongs)  said the distribution should follow the 1946 DFA;

(2)  the other camp (i.e. the 3^rd, 5^th, 6^th, 7^th, and 8^th Fongs)  said that the 1946 DFA was invalid, and each Fong should instead be entitled to an equal 1/8 interest of the undivided estate.

12.  On 7 January 1998, after trial in the 95/96 Proceedings, Cheung J (as he then was)  upheld the validity of the 1946 DFA. The losing camp (i.e. the 3^rd, 5^th, 6^th, 7^th, and 8^th Fongs)  appealed against such judgment to the Court of Appeal and then to the Court of Final Appeal.

13.  The 8 Fongs were unable to obtain payment out of the Compensation Money when the validity of the 1946 DFA was under appeal.

14.  For the purpose of funding the continuation of the 95/96 Proceedings, by a consent order made by Cheung J dated 20 December 1999 (“the 1999 Payment Out Order”), the Court of First Instance ordered that, without prejudice to the costs orders already made in the 95/96 Proceedings and the contentions of the parties as to the ultimate incidence of the costs and disbursements incurred by the parties in the 95/96 Proceedings, HK$7,990,955.58 were to be paid out of the Compensation Money on account of legal costs and disbursements of the following solicitors’ firms in the 95/96 Proceedings:

C S Chan & Co. (“CSC”, solicitors for the 1st Fong)	HK$300,000.00
S Y Chu & Co. (“SYC”, solicitors for the 2nd Fong)	HK$300,000.00
Hau, Lau, Li & Yeung (“HLLY”, solicitors for the 3rd, 5th, 6th, 7th, and 8th Fongs)	HK$2,184,000.00
Philip Chan & Co. (“PC”, solicitors for the 4th Fong and the Administrator)	HK$5,206,995.58 (inclusive of the sum of HK$5,162,182.09 and interest from court of HK$44,813.71)

15.  The appeal in the 95/96 Proceedings was finally determined when the Court of Final Appeal handed down their judgment on 27 March 2000. The Court of Final Appeal confirmed the validity of the 1946 DFA. Hence, the Estate should be distributed in accordance with the 1946 DFA. The losing camp (i.e. the 3^rd, 5^th, 6^th, 7^th, and 8^th Fongs) were ordered to pay costs of the 95/96 Proceedings (including appeals therefrom) to the prevailing camp (including the 1st, 2nd and 4th Fongs).

16.  Based on the 1946 DFA and the calculation done by the surveyors (i.e. Vigers Hong Kong Limited, “Vigers”), the payment of compensation in respect of the resumed lands was calculated as follows: [1]

	Percentage of land ownership in respect of land resumed (in terms of area)
1st Fong	21.3351%
4th Fong	24.6018%
5th Fong	4.0927%
6th Fong	16.1212%
8th Fong	33.8492%

17.  By an order made by Cheung J dated 9 June 2000 (“the 2000 Payment Out Order”), it was ordered by consent that HK$100,952,499.98 were out from the Compensation Money in court to the same 5 Fongs pro rata to their respective gross entitlements as follows:-

	Amount of payment out under the 2000 Payment Out Order
1st Fong	HK$21,538,326.96
4th Fong	HK$24,836,169.79
5th Fong	HK$4,131,757.30
6th Fong	HK$16,274,846.31
8th FONG	HK$34,171,399.62

18.  IN THE SAME ORDER, IT WAS ORDERED BY CONSENT THAT HK$14,236,293.19 FROM THE COMPENSATION MONEY IN COURT WERE PAID ON ACCOUNT OF COSTS AND DISBURSEMENTS TO THE FOLLOWING SOLICITORS’ FIRMS AND THE VIGERS WITH BREAKDOWN AS FOLLOWS:-

CSC (solicitors for the 1st Fong)	HK$2,174,186.46
SYC (solicitors for the 2nd Fong)	HK $2,300,000.00
PC (solicitors for the 4th Fong and the Administrator)	HK$7,060,817.90
Vigers	HK$2,701.288.83

19.  The 2000 Payment Out Order also contains the following paragraph:

“9. IT IS FURTHER ORDERED AND DIRECTED that subject to further order of the Court:-

(A)  Each of the parties hereto shall at the expiration of 90 days from the date of this Order (time to run during the Court vacation) or the issue of the allocatur upon taxation of all the costs that have been ordered to be paid (save in so far as such costs do not require taxation, or are agreed) whichever is earlier, file and serve on all other parties a statement of their respective case as to the final entitlement, incidence and quantum as to costs and disbursements (save previously finally agreed or finally ordered by the Court);

(B)  Each of the parties hereto shall within 60 days thereafter file and exchange their affidavit evidence as to facts and expert opinions of one expert for each party; and

(C)  The hearing for the final determination of the matters aforesaid …… to a date to be fixed not before the expiration of 60 days from the last day of the exchange of affidavit evidence and expert opinions as aforesaid, for a duration to be further directed, in consultation with counsel’s diaries.”

20.  By 2 orders both dated 17 January 2001, there were final payment out in full and final satisfaction of each Fong’s respective entitlement:-

	Final payment actually received under Court Orders both dated 17 January 2001
1st Fong	HK$30,068,796.75
4th Fong	HK$34,672,721.03
5th Fong	HK$5,878,563.29
6th and 8th Fongs	HK $50,789,780.09 (i.e. sums of HK$13,500,000.00[2] and HK$37,289,780.29)

21.   It has been expressly recorded in one of the orders dated 17 January 2001 that the order was made upon, inter alia, an undertaking offered by Lau Yue Kui (i.e. the Administrator at that time) that he would file his 2^nd Affirmation (“the 2^nd Affirmation of YK Lau”) within 14 days. Thus, when the court made the two orders dated 17 January 2001, the court would have already read a draft of the 2^nd Affirmation of YK Lau. That affirmation was subsequently formally made on 22 January 2001 and filed on 29 January 2001.

22.  As on 17 January 2001, whilst it was clear that the losing camp was liable to pay costs to the prevailing camp, the exact quantum of the costs payable was yet to be agreed or taxed.

23.  On 27 June 2001, it was agreed by all parties concerned that in respect of the 2^nd Fong’s legal costs in 95/96 Proceedings and the appeals therefrom (inclusive of interest):

(1)  the 1^st Fong shall pay HK$219,855;

(2)  the 4^th Fong and the Administrator shall pay HK$2,340,394; and

(3)  the 3^rd, 5^th, 6^th, 7^th, and 8^th Fongs shall pay HK$2,281,356.

24.  On 29 June 2001, HLLY (on behalf of 3^rd, 5^th, 6^th, 7^th, and 8^th Fongs) paid SYC (solicitors for the 2^nd Fong) HK$2,281,356 by cheque. In the covering letter, HLLY said:

“We refer to your letter dated 27 June 2001 and enclose herewith our cheque for HK$2,281,356.00 being payment of our clients’ share of the legal costs and interests in HCMP 3924 and HCMP 3209 as well as those in the Court of Appeal and Court of Final Appeal.

Kindly acknowledge receipt.

In passing, we note that you have already had costs on account awarded by the Court totaling HK$300,000.00 and HK$2,300.000.00 per paragraph 1(b)  and paragraph 6 of Mr. Justice Cheung’s orders dated 20^th December 1999 and 9^th June 2000 respectively. Kindly finalise the same and reimburse our clients of their share at your early convenience.”

25.  The HK$300,000 and the HK$2,300,000 (total of these sums being HK$2.6 million) mentioned in HLLY’s letter dated 29 June 2001 are the HK2.6 million, which is the subject matter in these proceedings.

26.  On 29 June 2001, SYC by letter acknowledged receipt of the HK$2,281,356. There was an excess of payment of HK$42,105 which SYC refunded to HLLY since the original sum was adjusted downward to HK$2,239,251. In that letter, SYC said:

“We refer to the telephone conversation between Mr Andrew Li and our Mr Ricky Yu and write to acknowledge receipt of the payment made by Messrs Hau, Lau, Li & Yeung Solicitors for the sum of HK$2,281,356.00. However we have revised the Allocation of Legal Costs as the shares of legal costs in HCMP 3924/96 borne by the various parties P, D1, D4, D6 and D7 shall be in proportion to their respective entitlements to the Compensation (Paragraph 8 of Mr Justice Cheung’s Order dated 24^th January 1998). So there is an excess payment in the sum of HK$ 42,105.00 made by Messrs Hau, Lau, Li & Yeung. If you confirm the same, we shall arrange refund in due course.

We also write to remind Messrs CS Chan & Co., Solicitors and Messrs Philip Chan & Co., Solicitors to make their respective payments in due course so that upon full reimbursements for all our agreed legal costs, we shall refund the money on account previously awarded by the Court to the entitled parties as soon as possible.”

27.   As to whether the 2^nd Fong should refund the HK$2.6 million to the 6^th and 8^th Fongs, the 2^nd Fong on the one hand and the 6^th and 8^th Fongs on the other hand are of different views. Neither side can persuade the other side.

28.  In 2001, Lau Leung Wa and Lau Yue Chiu (who are Ps in this case) commenced proceedings in the Court of First Instance (i.e. HCAP 10/2001) against Lau Yue Kui (who was sued as the Administrator of the Estate and personally) and PC. In that case, Lau Leung Wa and Lau Yue Chiu sought, inter alia, an order to remove Lau Yue Kui from the office of the Administrator of the Estate. The trial of that case took place before Chung J in July and August 2005 and lasted for 12 days. On 10 March 2006, Chung J handed down a written judgment, in which his lordship dismissed the plaintiffs’ claim and ordered them to pay costs to the defendants. There is no appeal against Chung J’s judgment.

29.  On 12 April 2007, HLLY wrote to SYC and said:

“We act for Mr. Lau Leung Wa and Mr. Lau Yue Chiu of the 8^th and 6^th fongs of Lau Wai Chau, deceased.

We have instructions to issue legal proceedings against your client Madam Lau Sau Tong, for the return of legal costs of HK$2,281,356.00 in respect of HCMP 3924/95, HCMP 3209/96, CACV 33/99, CACV 59/99 and FACV 15/99 overpaid to your client, copy draft Statement of Claim enclosed.

Unless we hear positively from you within 7 days from the date hereof as to how your client would settle our clients’ claim herein, we have standing instructions to proceed with the claim as stated in the said Statement of Claim.

Please also confirm whether you have instructions to act for Madam Lau Sau Tong in this matter.”

30.  However, shortly after issuing the aforesaid letter, HLLY issued another letter to SYC (letter dated 13 April 2007), the contents of which are as follows:

“Further to our earlier letter of today, please note our clients are claiming the return of legal costs of HK$2,600,000.00 not HK$2,281,356.00.

We regret for any inconvenience caused.”

31.  On 23 April 2007, SYC wrote to PC, CSC, and HLLY. In that letter, SYC said:

“……

As the parties represented by Messrs Philip Chan & Co., Solicitors and Messrs C S Chan & Co., Solicitors have not paid their shares of their legal costs in HCMP 3924/1995 and HCMP 3209/1996, we will issue legal proceedings against them for the recovery of the legal costs plus interests. Please kindly let us know whether Messrs Philip Chan & Co., Solicitors and Messrs C S Chan & Co., Solicitors have instructions to receive service of the writ for the parties they represented in the aforesaid proceedings within the next 5 days.

In this connection, we write to inform you that Messrs Hau Lau Li & Yeung will take out proceedings to claim against our client for the recovery of HK$ 2.6 million as costs for our account paid to us pursuant to the Order granted by the Honourable Mr Justice Cheung.”

32.  On 24 April 2007, PC wrote to SYC (with copies to CSC and HLLY) and said:

“We refer to your letter dated 23/4/07 together enclosures. It appears that subsequent to the relevant payments out of Court by Orders dated 20/12/99 and 9/6/00, both Messrs. Lau Leung Wa and Lau Yue Chiu have already received all their entitlements under the Route 3 compensation as the last payments in the sums of $13,500,500.00 and $37,289,780.09 were paid to them in full and final satisfaction of their entitlements to the compensation (i.e. Route 3 compensation)  pursuant to Para.4 of Order by Cheung J. (as he then was)  dated 17/1/01, copy enclosed.

In view of the substantial amount of legal costs already incurred by all parties to be paid out of the estate, it is unlikely that there will be any refund of legal costs already paid and/or provided for. If the estate has insufficient cash to pay all the legal costs, contribution may be called for from all relevant parties.

Please inform Messrs. Hau, Lau, Li & Yeung that the interest of their clients be properly looked after by the Administrator as Orders for determination as to the final entitlement, incidents and quantums as to costs and disbursements have already been made by the Court. The major obstacles in resolving this matter namely the disputes over the Fee Agreements have just been settled and the bills under the Fee Agreements are now proceeding to taxation. Once taxation is completed, the parties may, if no agreement is reached come back to the Court for a final determination of the aforesaid matters as provided for in Para.9(c)  of Order of Cheung J. (as he then was)  made on 9/6/00.

We believe that your firm will still be involved in further legal proceedings e.g. attending taxation of the bills under the Fee Agreements, making of Vesting Orders to various Fongs, finalizing all the outstanding matters such as division and/or sale of land under the 9^th Part, setting up of the Tso under MP3924/95 etc. and further legal costs may be incurred. We have already informed you of the position of the undertaking as there are a lot of outstanding matters to be attended to in the aforesaid proceedings.

In view of the huge amount of legal costs already incurred and as events turn out some of them, are wholly unnecessary and may be avoided, it is advisable and in the interest of all parties to minimize costs and concentrate our resources on the more important and constructive matters such as to give us reasonable time to claim and collect the cash compensation from the Government on resumption of various lands and resolving matters concerning the 9^th Part for the benefit of all parties.” (Emphasis added)

33.  On 25 April 2007, SYC wrote to HLLY (with copies to PC and CSC) and said:

“We refer to your letter of 12 Apr 2007.

We are instructed that your clients Lau Leung Wa and Lau Yue Chiu have already received all their entitlements under the Route 3 compensation (“Compensation”)  as the last payments in the respective sums of $ 13,500,500.00 and $37,289,780.09 were paid to them in full and final satisfaction of their entitlements to the Compensation pursuant to paragraph 4 of the Order granted by Cheung J as he then was on 17^th January 2001. All parties as well as your clients had consented to this Order.

It is specifically denied that the said sum of $2,600,000.00 paid to our client as costs on account are monies paid from the Compensation belonging to your clients. The said sum of $2,600,000.00 was paid to our client by consent of all the parties as cost on account for our legal costs incurred or to be incurred until the conclusion of all the outstanding matters of the proceedings. Our client is the receiving party of legal costs in HCMP 3924/1995 and HCMP 3209/1996 and your clients are the paying parties and they shall also be liable and responsible for the sharing of the amounts of legal costs payable by the estate. All other parties are liable likewise. And therefore the release of such sum of $ 2.6 million shall also be made by consent of all the parties. So far there is no such consent order as there are still lots of outstanding matters to be attended to.

The aforesaid proceedings have not been completed and there are lots of outstanding matters to be attended to. In this regard, may we refer you to the letter from Messrs Philip Chan & Co., to us dated 24 Apr 2007, copies to all the parties. In fact, our client has already incurred additional legal costs in the proceedings and there are also costs orders in our favour, which are still outstanding, such as under the 2 respective Orders granted by Master J Wong on 26 Nov 2002 and Master Lung on 24 Jan 2003. Actually, further costs will also be incurred by our client in attending the taxation hearings, making of the vesting orders to various Fongs, finalising the division and sale of the 9^th part and the setting up of the Tso.

Indeed, your clients could be rest assured that as there are orders already granted in respective of each Fong as well as the estate as to Orders for their respective final entitlements, incident and quantum as to costs and disbursements by the Court. The interests of each Fong will be properly looked after by the Administrator. As noted from Messrs Philip Chan’s said letter, the finalization of the proceedings is near and the final determination of all the matters will be made. In this regard, may we urge you to expedite to cooperate with the administrator in finalizing the aforesaid outstanding matters.

In passing and without prejudice to the aforesaid, may we also draw your attention to the orders made for the respective payments of $ 300,000.00 and $2,300,000.00, it was on each case clearly stated thereon the payment was without prejudice to the contentions of the parties as to the ultimate incidence of the costs and disbursements. Hence as the matters are not yet settled, there is no question of time limited for the claim by any party arising from the said court orders.

In the premises, all your clients’ intended claim will be strenuously contested and as a result, unnecessary additional costs will be wasted.”

34.  On 4 May 2007, Ps commenced these proceedings against D in the Court of First Instance. This is HCA 903/2007. On 9 January 2020, by a consent order made in HCA 903/2007, the whole action has been transferred from the Court of First Instance to the District Court.

35.  In this case, in substance, Ps are the 6^th and 8^th Fongs, and D is the 2^nd Fong.

B.   THE PARTIES’ RESPECTIVE CASES

36.  Ps’ case is that the HK$2.6 million is from their entitlements in the Estate. After paying the HK$2,239,251 (“the HK$2.2 million”) to D, D is not entitled to keep the HK$2.6 million and must refund the same to Ps.

37.  Ps are relying upon the following causes of actions:

(1)  unjust enrichment; and

(2)  breach of contract.

38.  Regarding the contractual claim, Ps’ case as pleaded in the Statement of Claim is as follows:

“13. [In HLLY’s letter dated 29 June 2001], [HHLY] asked [D] for the reimbursement of their clients’ share of contribution towards the said payment out of the fund of $2.6 million.

14. By accepting the payment of the said agreed sum of $2,281,356 in Hong Kong, [D] impliedly agreed with [Ps] to account for and repay the said sum of $2.6 million which she earlier received in Hong Kong.  That agreement was formed in Hong Kong between [D’s] agent, [SYC] and [Ps’] agent, [HLLY].”

39.  Mr Wong submits that Ps have an alternative claim. Mr Wong says that if Ps’ claim for the return of the HK$2.6 million fails, as an alternative, Ps would claim for the refund of the HK$2.2 million by relying upon mistake as a cause of action.

40.  D denies that there is any liability to return the HK$2.6 million to Ps. In particular, in the Rejoinder dated 5 July 2016, D specifically pleaded the following:

“3. As the Administrator is still in office today and the process of administration is still in progress, [Ps] should take up the matter of claiming their rightful entitlement (including the resolution of the $2.6 million set-off or reimbursement in question)  under the judgments of the 1995 and 1996 proceedings directly with the Administrator. This is the only lawful and legitimate channel of pursuing their claim.”

C. DISCUSSION

41.  A salient feature in this case which must be borne in mind is that the Estate is not a party in these proceedings, and the Administrator has not expressed any support to Ps’ claim herein.

42.  Having considered the documents and the parties’ respective submissions, I am firmly of the view that Ps’ claim cannot succeed. In my view, there is a fundamental problem in Ps’ case. Ps must fail in their claim based upon unjust enrichment, and they must also fail in their claim based upon contract. I am also of the view that Ps are not entitled to pursue an alternative claim for the HK$2.2 million in this case.

C1.   Fundamental problem

43.  It is plain and obvious that the Compensation Money is an asset in the Estate, and the HK$2.6 million is from the Compensation Money and is a part of the Compensation Money. In other words, the HK$2.6 million is also an asset in the Estate. There is no dispute that the administration of the Estate is ongoing and is not yet complete. The Administrator has not given any assent to pass the HK$2.6 million to Ps.

44.  In the circumstances, Ps do not have any legal or beneficial interest in the HK$2.6 million. Ps also cannot take possession of the HK$2.6 million. The principles have been summarized in Williams, Mortimer and Sunnucks, Executors, Administrators and Probate (21^st Edition), §76- 03:

“Until assent or conveyance, a person interested under the will or intestacy has an inchoate right transmissible to his own representatives. It is a chose in action capable of itself being settled or transmitted. A person so interested cannot, however, without the authority of the representatives, take possession of the property, even though the testator expressly directs that he shall do so; otherwise a testator might appoint all his effects to be taken in fraud of creditors. Should he take possession the representatives may sue him for possession, trespass or conversion, according to the circumstances. Thus, although he is actually in possession of property specifically bequeathed, and the assets are fully adequate to the payment of debts, he has no right to retain property in opposition to the representatives, by whom, in such a case, an action will lie to recover it. The inchoate right, is however, equivalent to a beneficial interest under a trust for limitation purposes.”

45.  The inchoate right of a beneficiary in an unadministered estate is a chose in action to have the deceased person’s estate properly administered and applied for the beneficiary’s benefit when the administration is complete. As said by Yuen JA in Pacific Harbor Advisors Pte Ltd v Winson Federal Ltd [3]:

“28.2 …… it is well-established that a beneficiary has no legal or beneficial interest in the assets of a deceased person’s estate until administration and distribution. What a beneficiary has is only a chose in action to have the deceased person’s estate properly administered and applied for his benefit when the administration is complete: see Commissioner of Stamp Duties v Hugh Duncan Livingston [1965] 694 at 708 and 717. .…..”

46.  Assuming that D cannot keep the HK$2.6 million and must return the sum, the money should be returned to the Estate, not to Ps, for the HK$2.6 million is from the Compensation Money. In the absence of an assent from the Administrator passing the HK$2.6 million to Ps, as a matter of law, Ps do not have any legal or beneficial interest in the HK$2.6 million, and Ps cannot take possession of the HK$2.6 million. Ps only has a chose in action to require the Administrator to properly administer the Estate and distribute the assets therein in accordance with the law when the administration is complete.

47.  For this reason, with respect, Ps cannot make any claim against D, requiring D to pass the HK$2.6 million directly to Ps. Ps’ claim is misconceived and must fail.

48.  This point would be sufficient for disposing the whole case. For the sake of completeness, I would also say that even if I put aside this fundamental point, Ps are still bound to fail on each and every cause of action relied upon by them.

C2.   Unjust Enrichment

49.  Regarding unjust enrichment, the relevant questions are as follows [4]:-

(1)  Was the defendant enriched?

(2)  Was the enrichment at the plaintiff’s expense?

(3)  Was the enrichment unjust?

(4)  Are any of the defences applicable?

50.  In my judgment, Ps have failed to prove that the answers to questions (1) and (2) are in the affirmative. Accordingly, Ps’ claim based upon unjust enrichment cannot succeed.

C2.1.  Was D enriched?

51.  Ps’ claim is based upon the following premises:

(1)  The HK$2.6 million is entirely from Ps’ entitlements in the Compensation Money, and hence should be regarded as Ps’ money.

(2)  After paying the HK$2.2 million to SYC on 29 June 2001, the 6^th and 8^th Fongs’ liabilities owed to the 2^nd Fong under all the costs orders in the 95/96 Proceedings have been paid off.

(3)  By refusing to return the HK$2.6 million to Ps, D has been unjustly enriched.

52.   With respect, in my view, one of the problems in Ps’ argument is that the HK$300,000 released to SYC under the 1999 Payment Out Order, and the HK$2.3 million released to SYC under the 2000 Payment Out Order, are not security for the costs incurred by the 2^nd Fong in resisting the 6^th and 8^th Fongs’ claim in the 95/96 Proceedings, but are payments on account for costs and disbursements of SYC in the 95/96 Proceedings.

53.   According to the letter of PC (acting for the Administrator) dated 24 April 2007, as at the date of that letter, SYC would still be involved in a lot of outstanding matters in the 95/96 Proceedings, including making of vesting orders to various Fongs and setting up the Tso by using the assets in the 9^th part of the Estate. In other words, PC is saying that further costs and disbursements would be incurred by SYC in the 95/96 Proceedings. There is no evidence refuting what has been said by PC in that letter.

54.  The HK$2.6 million is a sum released to SYC on account for costs and disbursements of SYC in the 95/96 Proceedings. Although SYC received the HK$2.2 million from HLLY on 29 June 2001, as said in PC’s letter dated 24 April 2007, further costs and disbursements would be incurred by SYC in the 95/96 Proceedings. In the circumstances, there is no sufficient basis to say that by keeping the HK$2.6 million after receiving the HK$2.2 million, D must have been enriched.

C2.2.  Was the enrichment at Ps’ expense?

55.  Even if D was enriched by keeping the HK$2.6 million, in my view, it cannot be said that the enrichment was at Ps’ expense.

56.  Relying upon [3] of the 2^nd Affirmation of YK Lau, Mr Wong submits that the HK$2.6 million is from the 6^th and 8^th Fongs’ entitlements in the Compensation Money.

57.   Mr Wong further submits that although Ps do not have a legal or beneficial interest in the HK$2.6 million, the enrichment was still at Ps’ expense, for there is a sufficient causal relationship between the loss to Ps and the benefit received by D. Mr Wong relies upon the Court of Appeal’s decision in Lee Yuk Shing v Dianoor International Limited[5]. In that case, the plaintiff claimed against the defendant for the return of money for seven lots of goods described as “rough diamond stones” sold at a public auction by the defendant, but the items were in fact synthetic cubic zirconia. One of the arguments put forward by the defendant in resisting the claim is that the payment for the stones was not paid by the plaintiff but by a Mr Lo, and hence the plaintiff cannot rely upon unjust enrichment as a cause of action in support of his claim. This argument was rejected by the Court of Appeal. In the judgment, Kwan JA (as she then was) said:

“109. [counsel for the defendant] argued that the plaintiff did not discharge the burden that he was entitled to the remedy. The Stones were paid by Mr Lo who made a direct transfer from his HSBC account to Equipnet’s HSBC account and both the plaintiff’s uncle and Mr Lo said in evidence that it was the uncle who repaid Mr Lo. [counsel for the defendant] contended there was no “objective evidence” to show that the plaintiff had paid for the Stones or had contributed to payment. Since the money paid for the Stones did not belong to the plaintiff, he could have no proprietary rights over the Stones. [counsel for the defendant] also invoked the unjust enrichment principle in that the claimant has to be the direct provider of the benefit and he is not entitled to the restitution of benefits conferred by a third party rather than himself.

110.  [counsel for the plaintiff] referred us to Bank of Cyprus UK Ltd v Menelaou [2015] UKSC 66 at §§23 to 27 for the proposition that in a claim for unjust enrichment, it is unnecessary that there must be a direct payment from the claimant to the defendant.  Where there is a sufficient causal connection, in the sense of a sufficient nexus or link, between the loss to the claimant and the benefit received by the defendant, the requirement of enrichment at the claimant’s expense would be satisfied. Here, the judge accepted the uncle’s evidence that he had repaid Mr Lo for the Stones, and that the relationship between the uncle and the plaintiff was so very close that their funds and their company’s funds all belonged to the family pot: they put money into the family pot and drew what they or their business needed from it.  On this evidence, the judge found as a matter of fact the plaintiff has repaid Mr Lo (§48).  [counsel for the plaintiff] submitted that on the judge’s findings, it is sufficient to satisfy the requirement of a sufficient causal connection so that the plaintiff is entitled to sue for the remedies of rescission and return of the purchase price.

111.  I am inclined to agree with [counsel for the plaintiff]’s submissions.  I note also that the judge had accepted the plaintiff’s evidence that he was bidding in the capacity of a joint venture with his uncle and Mr Lo (§39).  The joint venture was on a “case-by-case” basis.  How the three parties would share in the profit and costs was not explored but there is nothing to cast doubt on the plaintiff’s case that the joint venture was for the plaintiff to contribute rough diamond stones, for the uncle or perhaps with the plaintiff to contribute skill and labour, and for Mr Lo to provide finance and sales outlet facilities, and then for them to share the profit in such proportion as is appropriate to their respective contribution.  That being the case, it would hardly matter as among the parties to the joint venture, who had made payment initially or who had reimbursed whom initially.  A party to the joint venture is entitled to pursue a claim for the loss to the joint venture against a third party, and account to his partners later for any recovery made.

112.  There is no substance to the arguments that the plaintiff is not entitled to the remedy claimed.”

58.  With respect, I do not think that Ps may derive any assistance from the Lee Yuk Shing case.

(1)  In Lee Yuk Shing case, the Court of Appeal has set out the relevant facts in [111] of the judgment.  In view of those facts, although the payment to the defendant was not directly from the plaintiff, the money would still be regarded as the plaintiff’s money.

(2)  Lee Yuk Shing is not a case concerning assets in an unadministered estate.  The principles set out in [44] and [45] above have not been altered by that case at all.

(3)  As a matter of law, Ps cannot be regarded as having any legal and beneficial interest in the HK$2.6 million, and Ps cannot take possession of the HK$2.6 million.

(4)  Even if D has been enriched by keeping the HK$2.6 million, the enrichment at most can be said as at the Estate’s expense, not at Ps’ expense.  That being the situation, the one which may pursue a case based upon unjust enrichment against D would be the Administrator, not Ps.

(5)  Further, one must bear in mind that what has been said by the Administrator in the 2^nd Affirmation of YK Lau are matters said by the Administrator before the two orders dated 17 January 2001 were made, and before payments out to Ps pursuant to the two orders.  See [21] above.

(6)  In their letter dated 24 April 2007, PC (acting for the Administrator)  has said that Ps “have already received all their entitlements under the Route 3 compensation as the last payments in the sums of $13,500,500.00 and $37,289,780.09 were paid to them in full and final satisfaction of their entitlements to the compensation (i.e. Route 3 compensation)  pursuant to Para.4 of Order by Cheung J. (as he then was)  dated 17/1/01…”[6] Accordingly, the stance of the Administrator is clear, i.e. Ps have already received all their entitlements in the Compensation Money.

(7)  Ps have not challenged the position adopted by the Administrator by joining the Administrator as a party in these proceedings.  The Administrator has not been given an opportunity to adduce evidence concerning the position adopted by him in PC’s letter dated 24 April 2007.

(8)  In these circumstances, I cannot disregard the position adopted by the Administrator and find that the HK$2.6 million must be Ps’ entitlements in the Compensation Money.

(9)  Further, the following matters are unknown:

(a)  Whether the Estate is owing any debt to any creditor at present; and

(b)  Whether Ps have paid off the costs owed to the Estate under the costs order made by Chung J in the judgment dated 10 March 2006 in HCAP 10/2001.

(10)  The Administrator can only distribute the assets in the Estate after paying off all the debts owed by the Estate.  Further, if Ps have not yet paid off the costs owed to the Estate in HCAP 10/2001, the Administrator would be entitled to deduct those costs from Ps’ entitlements in the Estate.  Ps’ final entitlements in the Estate can only be known after all these matters have been answered.

(11)  In view of all the above, in my view, it cannot be said that if D is required to return the HK$2.6 million, the HK$2.6 million should and would go to Ps.

(12)  In my judgment, even if D has been enriched by keeping the HK$2.6 million, it cannot be said that the enrichment is at Ps’ expense.

C3.  Contract

59.  As to Ps’ claim based upon contract as pleaded in [13] and [14] of the Statement of Claim, as submitted by Mr Lai, that claim must also fail.

60.   Firstly, in HLLY’s letter dated 29 June 2001, HHLY did not say that the payment of HK$2,281,356 was conditional upon or subject to the return of the HK$2.6 million by SYC. After mentioning the payment of HK$2,281,356, HHLY only mentioned the HK$2.6 million “in passing”. In my view, HHLY did not make an offer in this letter that upon the payment of HK$2,281,356 to SYC, SYC should return the HK$2.6 million to HHLY.

61.  Secondly, in SYC’s letter dated 29 June 2001, SYC has not said that after receiving the HK$2.2 million from HHLY, SYC would return the HK$2.6 million to HHLY. SYC only said that “…… upon full reimbursements for all our agreed legal costs, we shall refund the money on account previously awarded by the Court to the entitled parties as soon as possible.” SYC did not say that they would make any refund to HHLY. SYC only said that they would refund to “the entitled parties”.

62.  In my judgment, Ps have failed to prove their claim based upon contract as pleaded.

C4.  Alternative claim – the HK$2.2 million

63.  Having considered Ps’ case as pleaded in the Statement of Claim carefully, in my judgment, Ps have only pleaded a case for the return of HK$2.6 million. Ps have not pleaded an alternative case for the return of the HK$2.2 million. I would not allow Ps to run an unpleaded case. The alternative claim for the HK$2.2 million raised by Mr Wong in his submissions must be rejected.

D.  DISPOSITION

64.  With respect, there is no merit in Ps’ case. I dismiss Ps’ claim. There be a costs order nisi that costs of these proceedings (including all costs reserved) be paid by Ps to D, with a certificate for counsel, to be taxed if not agreed.

65.  I thank counsel for the assistance provided to the court.