CHEUNG WAI KIE EDWIN AND ANOTHER v. CHEUNG WAI SUM AND ANOTHER

HCA 20/2024

[2025] HKCFI 3547

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 20 OF 2024

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D E C I S I O N

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Introduction

1.  The plaintiffs and the 1^st defendant are siblings. The plaintiffs’ claim arose from their disputes relating to Shing On Realty Company Limited (“Shing On”) and Gold Pool (HK) Limited (“Gold Pool”) which are two private companies founded by their late father Mr Cheung Chiu Moon (“the Deceased”).

2.  By summons dated 12 September 2024 (“the SOS”), the defendants apply to strike out the plaintiffs’ claims in the Statement of Claim dated 6 February 2024 (“the SOC”). In response, the plaintiffs have made the following 9 applications:

(1)  by summons dated 12 December 2024 (“Inspection and Amendment Summons”) (filed on 13 December 2024) for (i) an order for production and inspection of documents and (ii) leave to amend the SOC after inspection;

(2)  by summons dated 27 December 2024 (‘the Relief Summons”) for relief from sanction from an order of Registrar Kwang dated 13 December 2024 (“the Registrar Order”).

(3)  by summons dated 8 January 2025 (“the 1^st Amendment Summons”) for amending the Relief Summons by adding the relief that the plaintiffs be appointed as the persons to represent the estate of the Deceased (“the Estate”) for the purpose of this action.

(4)  by their Notice of Appeal dated 14 January 2025 (“the 1^st NOA”) for their appeal against the Registrar Order;

(5)  by summons dated 27 January 2025 (“the 1^st EOT Summons”) for an extension of time to issue the 1^st NOA;

(6)  by their Notice of Appeal dated 27 January 2025 (“the 2^nd NOA”) for their appeal against the Order of Master Ho dated 13 January 2025 (“Master Ho’s 3^rd Order”);

(7)  by summons dated 14 February 2025 (“the 2^nd EOT Summons”) for an one-day time extension to issue the 2^nd NOA;

(8)  by summons dated 28 April 2025 (“the 28/4/25 Summons”) for leave to amend the Relief Summons and/or the 1^st Amendment Summons for the purpose of replacing the draft Amended Statement of Claim attached thereto; and

(9)  by summons dated 2 May 2025 (“the Amendment of Writ Summons”) for leave to amend the Writ of Summons filed on 4 January 2024 (“the Writ”) as per the draft Amended Writ of Summons annexed thereto.

3.  The sheer number of applications made by the plaintiffs suggests that something has gone wrong. For comprehension of this Decision, it is imperative to set out the procedural history of this matter at the outset.

4.  The first hearing of the SOS took place on 4 October 2024 before Master Ho. The plaintiffs indicated to the learned master that they would apply to amend their SOC. The plaintiffs understood that their locus was under challenged and they indicated that they would bring in the Estate. On that basis, the learned master ordered that the hearing of the SOS be adjourned to 1 November 2024 for another call-over hearing (“Master Ho’s 1^st Order”).

5.  At the hearing on 1 November 2024, the plaintiffs indicated to Master Ho that they had not yet made an application to amend the SOC. The learned master ordered that the SOS be adjourned to 13 December 2024 for another call-over hearing before the Registrar or a Master and that if the application to amend the Statement of Claim is taken out by the plaintiffs, it should be made returnable on 13 December 2024 (“Master Ho’s 2^nd Order”). As recorded in the recital of Master Ho’s 2^nd Order, the order was made on the undertaking given to the court by the plaintiffs’ solicitors that an application for leave to amend the SOC would be taken out by 4 December 2024 (“the Undertaking”).

6.  At the 3^rd call-over hearing of the SOS on 13 December 2024 before the Registrar (“the 13/12/24 Hearing”), in breach of the Undertaking, the plaintiffs had not made any application for amendments of the SOC save that the Inspection and Amendment Summons was filed at 1105 hours on the same day immediately before the 13/12/24 Hearing and made returnable on 20 December 2024.

7.  In paragraph 1 of the Registrar’s Order, a sanction that the plaintiffs be debarred from seeking to amend the SOC in response to the SOS upon their failure to honour the Undertaking (“the Sanction”) was imposed. The Registrar further ordered that the SOS be adjourned for substantive argument on 28 March 2025 with 3 hours reserved.

8.  By the Registrar’s Order, it was further ordered that the plaintiffs’ solicitors do file and serve an affirmation to explain the breach and the reasons for their failure to honour the Undertaking for the purpose of considering imposition of sanction and upon filing of the said affirmation, the court would fix a hearing before Master Ho to consider what sanction would be imposed for the breach of the Undertaking. The Registrar further ordered that attendance of the defendants’ solicitors at that hearing be excused.

9.  The plaintiffs reacted to the Registrar’s Order by taking out the Relief Summons and the Amendment of the Relief Summons, which were heard together by Master Ho on 13 January 2025. Master Ho dismissed both Summonses forthwith by his order dated 13 January 2025 (“Master Ho’s 3^rd Order”).

10.  This prompted the plaintiffs to issue the 1^st NOA for an appeal against the Registrar Order on the following day. The 1^st NOA was eventually filed on 15 January 2025 and it was out of time.

11.  It was not until 28 January 2025 that the plaintiffs filed the 1^st EOT Summons.

12.  For reasons best known to the plaintiffs, on the same day, the plaintiffs issued the 2^nd NOA. It was again out of time by 1 day. This delay necessitated the 2^nd EOT Summons.

13.  At the hearing of the 1^st and 2^nd NOAs and the 1^st and 2^nd EOT Summonses on 21 February 2025, this court asked the parties to bring forth all their applications including the SOS for substantive argument on 9 May 2025 so that all their disputes could be resolved at the same time.

14.  Unexpectedly during the adjournment, the plaintiffs made two additional applications.

15.  They took out the 28/4/25 Summons principally for the purpose of amending the draft Amended Statement of Claim to resist the SOS if permitted. Then, just a week before this hearing, the plaintiffs saw fit to issue the Amendment of Writ Summons. Neither Shing On nor Gold Pool appeared at the hearing.

The 2 EOT Summonses and the 2 NOAs

16.  Logically I should first dispose of the 2 EOT Summonses and the 2 NOAs. My conclusion on these matters would have a strong bearing on the remaining applications.

17.  Ms Wong, together with Ms Lam, for the plaintiffs, submits that the 1^st NOA and the 2^nd NOA are alternative cases.

18.  There is no dispute between the parties on the applicable principles relating to applications for extension of time to appeal. The court should conduct a discretionary balancing exercise and take into account all the relevant factors, particularly, (1) the length and reasons for the delay, (2) the merits of the intended appeal and (3) the prejudice to the winning party if the time extension is granted: Lee Chick Choi v Best Spirits Co Ltd (unreported, HCMP 371/2015, 21.5.2015) per Kwan JA at §19.

19.  I decided to determine the 2^nd EOT and the 2^nd NOA first. The 2^nd NOA was 1 day late and the delay can be said to be minimal. It was taken out only after the 1^st NOA had been issued and is clearly a fallback. In the event of a dismissal of their intended appeal against the Registrar Order, the plaintiffs still have another chance to be relieved from the sanction imposed by the Registrar.

20.  In light of the minimal lateness, I proceed to consider the merits of the intended appeal. In my view, Master Ho’s 3^rd Order is plainly right.

21.  The Relief Summons was taken out pursuant to O.2 r.5, Rules of the High Court (“RHC”) and the plaintiffs sought relief from the Sanction. O.2 r.5 provides that on an application for relief from any sanction imposed for a failure to comply with any rule or court order, the court shall consider all the circumstances and such an application for relief must be supported by evidence.

22.  Ms Wong could not identify any non-compliance with any rule or a court order on the part of the plaintiffs resulting in the imposition of the Sanction.

23.  Plainly, there is none. It is evident that the Sanction imposed was not for the plaintiffs’ failure to comply with any rule or a court order. In Master Ho’s 2^nd Order, no particular consequences in the event of a breach of the Undertaking by the plaintiffs was specified. He made no unless order. The Sanction was imposed by the Registrar expressly due to the plaintiffs’ failure to honour the Undertaking.

24.  In the premises, I hold that Master Ho’s conclusion that O.2 r.5 is not engaged and his dismissal of the Relief Summons cannot be faulted.

25.  Master Ho further dismissed the 1^st Amendment Summons by his 3^rd Order.

26.  By the 1^st Amendment Summons, the plaintiffs seek to make an additional application for a representation order under O.15 r.15(1) of the RHC so that the plaintiffs could represent the Estate.

27.  The 1^st Amendment Summons was only filed in the afternoon of 9 January 2025 which was a Friday. The hearing took place less than 2 clear days later and no reasons was given for its lateness. The lateness is inexcusable. The representation order sought was intended to resist the challenge of the plaintiffs’ lack of locus and to save their SOC. The plaintiffs should have made the application much earlier.

28.  Remarkably, the 1^st Amendment Summons was not supported by proper evidence. Mr Walter Wong filed his 3^rd affirmation dated 8 January 2025 and exhibited thereto an unsigned affirmation of Edwin. Mr Wong explained that Edwin was out of town at the moment and it would take time for him to sign his affirmation upon his return to Hong Kong. He said that the plaintiffs’ solicitors undertook to file and serve the affirmation of Edwin once it was executed. Up to now, the plaintiffs’ solicitors have not filed an affirmation of Edwin duly signed by him in support of his application for a representation order.

29.  Further, given Master Ho’s refusal to grant any relief from the Sanction, the Sanction remains in force and no amendments to the SOC could be allowed before the determination of the SOS. The plaintiffs should not be allowed to amend the SOC and change their capacity through the backdoor. It is inappropriate to grant a representation order under these circumstances.

30.  For these reasons, I opine that the 1^st Amendment Summons was rightly dismissed.

31.  In the result, I find no merit in the plaintiffs’ intended appeal by way of the 2^nd NOA and on this ground alone, I refuse to grant the extension of time sought by the plaintiffs. In the result, both the 2^nd EOT Summons and the 2^nd NOA fall to be dismissed.

32.  For the 1^st EOT and the 1^st NOA, the latter is 19 days late. The delay is not substantial.

33.  The only explanation given by the plaintiffs for the delay is that they had pursued different legal avenues for seeking relief from the Registrar Order. I do not accept this explanation. There was nothing to stop the plaintiffs from trying different legal avenues but they should have been mindful of the time frame for appeal against the Registrar Order. The delay was clearly caused by their misconceived application to Master Ho by way of the Relief Summons. It was not until the Relief Summons was dismissed by Master Ho’s 3^rd Order that the plaintiffs found it necessary to issue the 1^st NOA with a view to the removal of the Sanction in the Registrar Order.

34.  Though the plaintiffs does not admit the real cause of the delay, I am unable to conclude that the plaintiffs deliberately allowed the deadline to pass. It appears to me that they should have acted on legal advice and invoked the wrong procedure to achieve their goal.

35.  I proceed to consider the merit of their appeal. It is trite that an appeal from a decision of a master before a judge is by way of a rehearing. The crux of the intended appeal is that the Sanction should not have been imposed.

36.  I have read the transcript of the 13/12/24 Hearing. It was the 3^rd call-over hearing of the SOS. The Registrar refused to hear any oral explanation for the breach of the Undertaking from the bar table and he demanded affidavit evidence to be placed before Master Ho. The Registrar once remarked that the Sanction should be imposed not as a matter of case management but as a matter of court discipline. He explained that if he did not impose the Sanction, it would be unfair to the defendants to wait further after the first hearing of the SOS on 4 October 2024. But for the indication of the plaintiffs that they would amend the SOC, the usual directions for filing evidence and leave to fix a hearing date for the substantive argument would have been given at the first hearing.

37.  I am of the view that the Sanction was imposed not really as a penalty for the plaintiffs’ breach of the Undertaking. It appears to me that the Registrar exercised his discretion to impose the Sanction so as to avoid any further delay caused to the substantive hearing of the SOS and it was essentially a case management decision.

38.  Thus, The Sanction was immediately followed by the directions as to the filing of affirmation evidence and the fixation of a hearing date for the substantive argument of the SOS. The Registrar clearly did not want any purported application of the plaintiffs to amend their SOC to cause further delay to the disposal of the SOS.

39.  At the end, the Registrar expressly reserved the issue of sanction to be decided by Master Ho pending the filing of an affirmation by the plaintiffs’ solicitors to explain the breach of the Undertaking.

40.  Given the ample time given to the plaintiffs to make their application to amend their SOC, I do not believe the Registrar acted wrongly in principle or otherwise clearly wrong in his imposition of the Sanction.

41.  The Registrar made it clear that the plaintiffs were debarred from seeking to amend the SOC in response to the SOS only. By reason of the Sanction, it would be the SOC which falls to be considered in the determination of the SOS.

42.  The plaintiffs should still be able to apply for leave to amend the SOC if it could survive the striking out application. It is trite that striking out is the last resort. It would be inappropriate to strike out a pleading if its deficiencies are capable of being cured by amendments even when the formulation of the amendments is not before the court: Hong Kong Civil Procedure 2025 Vol.1 §18/19/4 at 565. Despite the absence of an application to amend the SOC, it would still be open to the plaintiffs to show that their SOC can be saved by proper amendments and hence their SOC should not be struck out. I do not accept Ms Wong’s submission that the Sanction is wholly disproportionate and the consequences are disastrous.

43.  In the circumstances, I find that the Registrar had every reason to impose the Sanction and I cannot see anything wrong, let alone plainly wrong, with his case management decision.

44.  For these reasons, the 1^st EOT, and hence the 1^st NOA, must be dismissed.

The SOS

45.  Now I turn to the SOS and the focal pleading is the SOC. The relevant legal principles are not in dispute. It is clear that the defendants bear the burden to show a plain and obvious case in order to strike out the plaintiffs’ claim.

46.  Ms Wong reminds this court that disputed facts are to be taken in favour of the plaintiffs in this striking out application and there should no trial on affidavits.

47.  The defendants rely on all four grounds under O.18 r.19(1)(a) to (d) for their striking out application. As far as the ground of abuse of the process of the court is concerned, Recorder Manzoni SC in Polyline Development Limited v Ching Lin Chuen & Ors. [2021] HKCFI 483 said this at §15,

“… this is designed to ensure that the machinery of the courts is used for a bona fide purpose, and is not abused. A claim can be struck out as an abuse of the process of the court where it is groundless, including where the claim is obviously and plainly time-barred.”

48.  The case of the plaintiffs can be summarised as follows.

49.  The 1^st defendant Mr Cheung Wai Sum (“Sum”) is the elder brother of both the 1^st plaintiff Mr Cheung Wai Kei Edwin (“Edwin”) and the 2^nd plaintiff Ms Cheung Lai Hing (“Hing”). The Deceased was their father.

50.  The Deceased founded Shing On in 1982 and Gold Pool in 1996. Prior to 2016, the Deceased was the majority shareholder in each of Shing On and Gold Pool. Edwin and Madam Loh, the 2^nd defendant herein, were the minority shareholders of Shing On and Gold Pool. Edwin and Madam Loh are a married couple and they were directors to both companies.

51.  The Deceased passed away on 24 December 2018 in the Mainland.

52.  The Deceased purportedly signed a set of Instrument of Transfer and Sold and Bought Notes on 8 March 2016 (collectively “the SO Transfer Documents”) to transfer to Sum the whole of his shareholding in Shing On, i.e. 10,400 ordinary shares (“the Transferred SO Shares”) at the nominal price of HK$10,400.00. The Transfer Documents were subsequently stamped and registered in the relevant corporate documents filed with Companies Registry including an Amended Annual Return (Form NAR1) dated 30 November 2016 and received by the Companies Registry only on 8 January 2018 and the annual accounts of Shing On.

53.  The plaintiffs say that the SO Transfer Documents are forged documents and have no legal effect.

54.  Thus, the plaintiffs seek a declaration that the SO Transfer Documents are null and void and an order that the records of Shing On filed with the Companies Registry be rectified to restore the pre-transfer position.

55.  Alternatively, the plaintiffs seek a declaration that Sum should hold the Transferred SO Shares and all dividends and benefits accruing therefrom on constructive trust or resulting trust for the Estate.

56.  The plaintiffs make a similar allegation of forgery in respect of the Deceased’s purported transfer of all his 520 ordinary shares of Gold Pool (“the Transferred GP Shares”) to Sum by the Instrument of Transfer and Sold and Bought Notes created on 13 April 2016 (“the GP Transfer Documents”). They say that the GP Transfer Documents are forged documents and so they are null and void.

57.  The plaintiffs seek similar relief in respect the Transferred GP Shares.

58.  The plaintiffs have additional complaints about the affair of Gold Pool.

59.  Gold Pool was the owner of a shop unit and a car parking space in Shau Kei Wan (“the SKW Properties”). On 15 May 2018, Sum on behalf of Gold Pool executed an assignment to sell the SKW Properties at the price of HK$60,000,000.00.

60.  Thereafter, there were some purported loans extended to Sum and unauthorised remittances to the accounts of Sum and Madam Loh or third parties. The plaintiffs say that all these purported loans and remittances were procured by the defendants without notice given to all members let alone their approval by way of a resolution. The plaintiffs say that these purported loans and remittances were for improper purposes and the defendants were in breach of their fiduciary duties owed to Gold Pool.

61.  The plaintiffs pray for an order for an inquiry and account in respect of the sale proceeds of the SKW Properties and all the monies misappropriated by each of them by way of purported loans and unauthorised remittances.

62.  The plaintiffs ask for Sum’s immediate repayment of the sum of HK$25,521,259.00 with interest thereon being the aggregate amount of the purported loans extended to him. The plaintiffs further ask for the defendants’ account for the sum of HK$5,682,989.60 and restitution for the like amount being monies misappropriated by them by way of unauthorised remittances.

Locus Standi?

63.  Mr Lai, together with Mr Tsang, for the defendants, submits that the plaintiffs’ claim is thoroughly bad and not amenable to amendments because of their lack of locus standi and the limitation issue.

64.  It cannot be disputed that both the SO Transferred Shares and the GP Transferred Shares were the properties of the Deceased. Neither of the plaintiffs is privy to the transfers of these shares. I fail to see how they can have the locus standi to bring a claim against Sum in respect of these transfers and seek the declarations in respect of these shares.

65.  Mr Lai highlights to this court that the action is a nullity. Up till now, no order of appointment has been made by the court pursuant to O.15 r.6A(4)(a) so that the plaintiffs could represent the Estate. Even such an order cannot retrospectively validate an invalidly commenced action: Ching Mun Fong, deceased v Hock Kim Thye (Machinery) Ltd. [2025] HKCFI 1348.

66.  Mr Lai draws my attention to Lam Sik Ying v Lam Sik Shi [2020] HKCA 659. There, Lam VP (as he then was), giving the judgment of the Court of Appeal, at §§32-34, held that the appeal brought by a former administrator and not by the incumbent administrator of the estate was a nullity and ought to be struck out.

67.  Mr Lai also refers to Lam Sik Ying: Perpetual Trust Limited v Kobe Investments Limited [2022] HKCFI 2762 in which DHCJ Kenneth Wong followed Lam Sik Ying and accepted that an action commenced by a person in the name of an estate of a deceased without obtaining letters of administration is a nullity (§46).

68.  Mr Lai submits that when it comes to nullity, one cannot downplay the capacity issue as an irregularity which can be remedied by a retrospective representation order.

69.  Ms Wong submits that the plaintiffs could and should be granted a representation order so that they could pursue their claim against the defendants to safeguard and preserve the Estate.

70.  To support her argument, Ms Wong first relies on Re Estate of Luk Kim Ying [2008] 5 HKLRD 743. There, the plaintiff sued in her own capacity as a purported beneficiary of the estate of Madam Luk and by paragraphs 1 and 3 of the Amended Originating Summons asked for a declaration as to the beneficial ownership of three properties and an order for inquiry as to whether her estate suffered damage caused by the second defendant. She also asked to be appointed the administratrix of the estate by paragraph 2 of the Amended Originating Summons.

71.  Jeremy Poon J (as he then was) considered whether the plaintiff was entitled to bring the present action in the context of a striking out application challenging the locus standi of the plaintiff. At §§22 to 24, the learned judge said this,

“22. The problem lies with Paras. 1 and 3. No doubt an action can be commenced on behalf of Madam Luk’s estate to seek redress as per Paras. 1 and 3. However, in the absence of a grant, a purported beneficiary such as the plaintiff simply does not have the locus to sue on behalf of the estate. For it is trite that a party cannot purport to sue on behalf of an intestate estate unless and until that person is granted the letters of administration : Ingall v. Moran [1944] KB 160. Any action commenced by such a party purportedly on behalf of the estate must be struck out.

23. Here, as noted, the plaintiff sued in her own personal capacity as a purported beneficiary of Madam Luk’s unadministered estate. What she was entitled to in respect of her rights in the estate is a chose in action, capable of being invoked for any purpose connected with the proper administration of the estate: Commissioner of Stamp Duties (Queensland) v. Livingston [1965] AC 694 (PC), per Viscount Radcliffe at p. 717C-D, applied in Ip Cheung Kwok v. Sin Hua Bank Trustee Ltd [1990] 1 HKLR 497.

24. In my view, it is reasonably arguable that the plaintiff’s complaints underlying Paras. 1 and 3 are something connected with the proper administration of Madam Luk’s estate. The extent of the 2^nd defendant’s beneficial ownership in the properties concerned and arguably the failure of duty on the part of the OS qua committee, if any, in protecting the estate are matters that need to be determined for the purposes of properly administrating Madam Luk’s estate. That gives the plaintiff locus to pursue Paras. 1 and 3.”

72.  At §28, the learned judge held that in an action commenced by a purported beneficiary to obtain the protection of the court to ensure the due administration of the estate, it is necessary to join the personal representative of the estate or to a suitable party to represent the estate. In the absence of joinder, the action is irregular, though not a nullity, and is liable to be struck out. The learned judge then accepted at §27 that there was a need for timely protection of the assets of the estate. If the procedural irregularity was not remedied, the action was liable to be struck out.

73.  On that basis, the learned judge granted a representation order to the plaintiff.

74.  Mr Lai brought to my attention to the fact that the representation order was subsequently set aside by the Court of Appeal in Re Estate of Luk Kim Ying (unreported, CACV 2/2009, 26.6.2009). In fact, it was set aside by the Court of Appeal in Re Estate of Luk Kim Ying [2020] HKCA 805.

75.  In Re Estate of Luk Kim Ying (unreported, CACV 2/2009, 26.6.2009), the Court of Appeal was asked to determine whether the judge had jurisdiction to make the representation order pursuant to O.15 r.15. It was decided by the Court of Appeal that this question should be deferred pending the determination of the status of the various parties in a related probate action.

76.  Eventually, after the conclusion of the probate action, the appeal relating to the representation order was restored before the Court of Appeal in [2020] HKCA 805. In light of the factual findings in the probate action that the 2^nd defendant was declared to be the lawful adopted daughter of the deceased and the plaintiff had no interest in the estate of the deceased, the Court of Appeal concluded that the plaintiff had no locus standi to represent the estate of the deceased and hence the representation order was set aside (§§7-9).

77.  On the other hand, the Court of Appeal decision in Ip Cheung Kwok v Sin Hua Bank Trustee Ltd [1990] 1 HKLR 497, cited by Poon J (as he then was) in Re Estate of Luk Kim Ying is of relevance.

78.  There, the plaintiff sued in his personal capacity, claiming to be the next of kin of a deceased settlor and hence a beneficiary of his estate. The settlor procured the assignment of trust properties to trustees. The plaintiff brought the action for a declaration to the effect that trusts affecting two leasehold properties were void for perpetuity and other reasons and that a resulting trust arose in favour of the settlor’s estate. At the trial, the defendant applied to strike out his claim on the ground that the plaintiff had no locus standi to bring the action. The trial judge then made a representation order under O.15 r.15 to authorise the plaintiff to represent the estate the settlor’s estate and continue the proceedings. The defendant appealed.

79.  The Court of Appeal confirmed that the trial judge had jurisdiction to make the representation order. Clough JA at p.515F held that the proceedings as originally constituted were irregular but not a nullity. Ingall v Morgan [1944] KB 160 (CA) was distinguished by reason of the fact that the plaintiff brought the proceedings purportedly in a capacity which he did not have. Clough JA observed that the plaintiff there brought proceedings in his personal capacity and as a claimant to a sole beneficial entitlement to the settlor’s estate for relief which, in his judgment, the court strictly had jurisdiction to grant him (assuming he established that he was the settlor’s sole next of kin) in the absence of the settlor’s personal representative or a party representing the estate.

80.  The key issue is whether these proceedings are an irregularity curable by a representation order or whether these proceedings are a nullity which must be struck out. This depends on the capacity in which the plaintiffs commenced these proceedings.

81.  In the present case, the plaintiffs are the beneficiaries of the Estate, the Deceased having passed away intestate. This is not in dispute. In the Writ and the SOC, the plaintiffs sue in their own personal capacity only and there is no allegation that they make the claim in the capacity of the administratrix of the Estate. They should be entitled to a chose in action in respect of their rights in the Estate capable of being invoked for any purpose connected with the proper administration of the Estate.

82.  All of the Transferred SO Shares, the Transferred GP Shares, the purported loans and the unauthorised remittances would affect the size of the Estate and have a bearing on the proper administration of the Estate. Following Ip Cheung Kwok and Re Estate of Luk Kim Ying, in the circumstances of the present case, I am of the view that a representation order could be granted to the plaintiffs on a proper application made under O.15 r.5 and their claim should not be struck out for want of locus standi.

Time-barred?

83.  The transfers of the Transferred SO Shares and the Transferred GP Shares (“the Transfers”) were completed more than 6 years before the commencement of this action. Mr Lai points out that on the own evidence of Edwin, he was made aware of the Transfers in June 2017 when Sum told him about this at a yacht club. The Deceased denied the Transfers to him when Edwin made enquiries with him.

84.  Mr Lai further points to the NAR1s filed with the Companies Registry in which the Transfers were reflected. Mr Lai submits that as a director, Edwin is deemed to have constructive notice of the Transfers.

85.  Mr Lai submits that section 20 of the Limitation Ordinance, Cap. 347 (“LO”) does not assist the plaintiffs and their pleaded case of constructive trust falls squarely within the Type 2 trust subject to the 6-year limitation period: Hui Chun Ping v Hui Kau Mo (2024) 27 HKCFAR 634 at §§21,29 and 37.

86.  Ms Wong contends that the claim relating to the Transfers is not time-barred. First, she submits that Hing was only aware of the Transfers in or around late December 2018.

87.  Further, Ms Wong submits that the plaintiffs may pray in aid section 26 of the LO, which allows a postponement of limitation period in case of fraud, concealment or mistake.

88.  It is indicated that the plaintiffs intend to add an alternative plea of mistake in respect of the Transfers.

89.  Mr Lai has made a cogent submission on the weakness of the fraud claim of the plaintiffs referring to their pleaded case and their evidence. He validly points out that the alternative plea of mistake is inconsistent with the plea of forgery. O.18 r.2A, however, allows inconsistent allegations to be pleaded in the alternative so long as the pleader has reasonable grounds for so doing.

90.  I am inclined to agree with Ms Wong that at the interlocutory stage I should not attempt to resolve the limitation issues, which are not very straightforward to me. Factual disputes have to be resolved. It is at least not a plain and obvious case to me that the plaintiffs’ claim arising from the Transfers must be time-barred and there is no chance that the plaintiffs can rely on section 26 of the LO.

91.  For the claim relating to the purported loans and the unauthorised remittances (“the Misappropriation Claim”), Mr Lai correctly points out that the plaintiffs are seeking to change it into a common law derivative action. This is the reason why the plaintiffs intend to add Gold Pool as defendant.

92.  Mr Lai submits that if the new common law derivative action is allowed, the defendants will be deprived of an accrued limitation defence by operation of the relation back rule. Mr Lai reminds this court of the conditions set out in sections 35(5) and (6) of the LO and O.20 r.5.

93.  It is not plain and obvious to me that the limitation period of the derivative claim has already expired despite section 26 of the LO. On the evidence, the Misappropriation Claim is a genuine one and it is based on the same facts already pleaded.

94.  I am aware that Hing is not a shareholder of Gold Pool herself but Edwin is. I see no unfairness caused to the defendants to allow Edwin to pursue the derivative action to prosecute the Misappropriate Claim.

95.  All in all, I am unable to accept that the defendants have met the high threshold of striking out the SOC. The current claim of the plaintiffs is problematic but is curable by a representation order and appropriate amendments. I, therefore, cannot accede to the application of the defendants by the SOS.

The Inspection and Amendment Summons

96.  I can dispose of this summons briefly. It was taken out shortly before the 13/12/2024 Hearing and the plaintiffs’ purpose is just too obvious. It was intended to further delay their application for amending the SOC despite the Undertaking. It is difficult to see how the documents sought to be inspected could shed light on their pleaded case relating to the Transfers.

97.  I accept the submissions of Mr Lai that the plaintiffs have failed to show that an order for inspection of the documents is necessary for fairly disposing of the cause of matter or for saving costs.

98.  I accept the evidence of the defendants that inspection of the Transfer Documents has been completed and the defendants have disclosed copies of such documents. The originals are kept with the accounting companies and the plaintiffs can have access to the originals. The AGM papers of Shing On and Gold Pool were already in the possession of Edwin.

99.  In the circumstances, I am not minded to exercise my discretion to order inspection and paragraph 1 of the Inspection and Amendment Summons is rejected. It follows that paragraph 2 must be rejected too.

The 28/4/25 Summons and the Amendment of Writ Summons

100.  By the 28/4/25 Summons, the plaintiffs seek to amend the Relief Summons. In light of the dismissal of the Relief Summons, it has become otiose and must be dismissed.

101.  For the Amendment of Writ Summons, I believe that it is necessary to adjourn the same pending a proper application for a representation order and amendments of the SOC. I so order.

Conclusion and Orders

102.  For the reasons given, I dismiss the 1^st and 2^nd EOTs and the 1^st and 2^nd NOAs. I further dismiss the Inspection and Amendment Summons and the 28/4/25 Summons.

103.  Costs should follow the event in respect of these summonses and applications. I make a costs nisi that the plaintiffs should pay costs of and occasioned by them to the defendants including any costs reserved, to be taxed if not agreed.

104.  I further dismiss the SOS and direct that the plaintiffs do on or before 12 September 2025 take out a summons under O.15 r.15 for their application for a representation order to be supported by an affirmation and a summons for leave to amend the SOC. Any applications for an extension of time to make any of these applications must be supported by affirmations and to be determined by this court. I may give directions on these summonses for paper disposal if the parties could not reach any agreement on them.

105.  I order on a nisi basis that costs of and occasioned by the SOS and the Amendment of Writ Summons be reserved pending the determination of the expected applications for a representation order and leave to amend the SOC.

106.  Last but not least, I thank Ms Wong, Ms Lam, Mr Lai and Mr Tsang for their helpful assistance.