CHUNG PUI TONG v. The Personal Representative CHUNG SAU MIU (also known as CHUNG SAU MUI, or SAU MUI CHUNG), deceased AND OTHERS

HCA 3150/2016

[2019] HKCFI 2602

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 3150 OF 2016

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(By Original Writ)

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(By Original Writ and Order to Carry On
by Master Hui dated 10 March 2017)

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JUDGMENT

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INTRODUCTION

1.  This case has a very complicated history.  I shall start by setting out the details of the parties who formed a large family and the relationships amongst them.

2.  The head of the family was called Chung Yung (“CY”).  He had a number of spouses who bore him children.  One of them was Au Yeung Kit (“AYK”).  He died on 20 June 1966.  AYK also died on 15 August 1967.

3.  CY and AYK had a son, Chung Pui Tong (“P”), the plaintiff,who was born on 7 November 1962.  He was thus aged only 3 and 4 years when his father and mother died respectively.

4.  Chung Sau Miu (“Sau Miu”) was the eldest daughter of CY by another spouse of his.  She married someone by the name of Ho Wai Hung (“Wai Hung”).  Sau Miu died on 9 May 2010.  Her personal representative has been named as the 1^st defendant herein.  It does not appear that anyone has in fact been appointed to be a personal representative of her estate.  Wai Hung also died on 21 July 2012.

5.  Chung Sau Lan (“Sau Lan”) was the 2^nd daughter of CY by yet another spouse of his.  She has been named as the 2^nd defendant herein.  She married someone by the name of Lee Kwok Chee (“Kwok Chee”). Kwok Chee died on 29 January 2017.  “Chung Sau Lan Representing the estate of Lee Kwok Chee Deceased” has been named as the 4^th defendant herein.  Sau Lan died on 16 October 2017. 

6.  Sau Miu and Wai Hung had a daughter by the name of Catherine Ho (“Catherine”).  She has been named as the 3^rd defendant herein.

7.  Sau Lan and Kwok Chee also had a daughter by the name of Lee Kit Ying (“D5”).  She has been named as the 5^th defendant herein.

8.  D5 married a person by the name of Au Hon Ming (“D6”). He has been named as the 6^th defendant herein.

9.  At the hearing before me, Miss Eva Leung appeared for P on the instructions of Messrs Charles Wong & Co and Mr Douglas Lam SC and Mr Julian Chan appeared for D5 and D6 on the instructions of Messrs Ma Tang & Co.  The 1^st, 2^nd, 3^rd and 4^th defendants were not present or represented.

THE SUMMMONSES

10.  There were altogether four summonses before me which consisted of numerous applications.  The summonses were as follows:

(i)    P’s summons dated 11 September 2018 (“the 1^st Summons”);

(ii)   P’s summons dated 7 May 2019 (“the 2^nd Summons”);

(iii)  D5 and D6’s summons dated 10 May 2019 (“the 3^rd Summons”); and

(iv)  D5 and D6’s summons dated 14 May 2019 (“the 4^th Summons”).

I shall first give a brief summary of those four summonses before I deal with some of them in detail hereinbelow.

(A)  The 1^st Summons

11.  The 1^st Summons previously came before me on 14 September 2018 when I was sitting as a Deputy Judge.  By the first four paragraphs of the 1^st Summons, P asked for the following orders:

“ 1. Leave for the Plaintiff to amend the Writ of Summons and Statement of Claim by joining LEE KIT YING and AU HON MING both of Flat No.5 on 3^rd floor, Block C, Kai Tai Court, No.28 Kai Yip Road, Kowloon as the 5^th and 6^th Defendant in this action as per the draft amended writ of summons and amended statement of claim annexed herein;

2. LEE KIT YING be made a party and appointed as the person:-

(a) to represent the estate of Chung Sau Lan, the 2^nd Defendant in this action; and

(b) substituting Chung Sau Lan to represent the estate of Lee Kwok Chee, the 4^th Defendant in this action.

3.  The proceedings in this action be continued between the Plaintiff and LEE KIT YING, representing the estate of Chung Sau Lan as the 2^nd Defendant and representing the estate of Lee Kwok Chee as the 4^th Defendant;

4.  An order be made against LEE KIT YING and AU HON MING, the Intended 5^th and 6^th Defendant respectively, in the form attached as Annex 1 hereto.”

12.  At that hearing, the 2^nd and 4^th defendants as well as the intended 5^th and 6^th defendants, Lee Kit Ying and Au Hon Ming, were all represented by one set of lawyers, namely, Messrs Ma Tang & Co (the solicitors presently representing D5 and D6) as well as junior counsel. I made various orders as summarized below:

(i)     I made an order in the terms of paragraph 1 of the 1^st Summons.  There was in fact no opposition but consent by the 2^nd and 4^th defendants and the intended 5^th and 6^th defendants. 

(ii)    I made an order that paragraphs 2, 3 and 4 of the 1^st Summons be adjourned for substantive argument and gave directions for the filing of affirmation evidence.

(iii)   As an interim measure, I also granted a Mareva injunction against D5 and D6 whereby they were restrained from disposing of, dealing with or diminishing the value of their assets up to the value of $10 million, not including the value of their property known as “Flat No. 5 on 3^rd floor, Block C, Kai Tai Court, No. 28 Kai Yip Road, Kowloon” (“the Kai Tai Property”), until after the disposal of the 1^st Summons or further order.

(iv)   I also reserved the costs of that hearing.

13.  This is the substantive hearing of the 1^st Summons.

(B)  The 2^nd Summons

14.  By the 2^nd Summons issued on 7 May 2019, P asked for the following relief:

(i)    Leave for P to re-amend the amended statement of claim principally for the purpose of adding a claim in relation to the following additional properties:

(a)  Flat No 30 on 5^th Floor, Man Cheong Building, Ferry Street, Kowloon (“the Man Cheong Property”) and

(b)  Flat 3, 4^th Floor, 1 Kai Tak Mansions, 53 Kwun Tong Road, Kowloon (“the KTM Property”).

(ii)   Upon D5 being appointed to represent the estate of Sau Lan and the estate of Kwok Chee, D5 do make disclosure on affirmation of various classes of documents, including bank documents, and of the names and identities of other children of Sau Lan and Kwok Chee.

(iii)  In default of compliance of (ii) above by D5, P be at liberty to resort to the relevant banks for the bank statements and information under section 21 of the Evidence Ordinance.

(iv)  A wider Mareva injunction against D5 and D6 as per the draft order in Annex 2 to the 2^nd Summons.

(C)  The 3^rd Summons

15.  The 3^rd Summons was issued by D5 and D6 only four days before the hearing.  By it, D5 and D6 apply for P’s amended statement of claim to be struck out on the grounds that P’s claims are time-barred and that P has no locus to bring the same.

(D)  The 4^th Summons

16.  Finally, as late as the day before the hearing, D5 and D6 issued the 4^th Summons and asked for the interim order made by me on 14 September 2018 as referred to in paragraph 12 above be discharged on the grounds of material non-disclosure.

17.  Under normal circumstances, the logical thing to do would have been for the 3^rd Summons to be dealt with first.  If D5 and D6 were to be successful in their application under the 3^rd Summons, then P’s case would collapse.  If on the other hand D5 and D6 were not successful, then I would next have to consider the application by P for leave to re-amend the amended statement of claim.  After that, I would have to deal with the questions of representation of the relevant estates under paragraphs 2 and 3 of the 1^st Summons.  Finally, in light of my decisions on the matters stated above, I would then have to deal with the questions of whether I should discharge or should continue or re-grant the injunctions and, if the latter, on what terms and to consider what further directions I should give.

THE INTERIM APPLICATIONS AND THE RULING I MADE AND THE DIRECTIONS I GAVE AT THE HEARING ON 15 MAY 2019

18.  At the hearing on 15 May 2019, in relation to D5 and D6’s strike-out application under the 3^rd Summons and P’s application to re-amend the amended statement of claim under paragraph 1 of the 2^nd Summons, Mr Lam SC asked for both applications to be adjourned to a date to be fixed and for them to be heard together with directions for the filing of affirmation evidence.

19.  Miss Leung, whilst being amenable to P’s application for re-amendment under the 2^nd Summons being adjourned to a date to be fixed, submitted that the strike-out application under the 3^rd Summons should be dismissed summarily on the ground that, at the last hearing before me on 14 September 2018, D5 and D6 acting by their junior counsel expressly said that D5 and D6 had no objection to the joining of themselves as defendants in the case and to the filing of the amended writ of summons and the amended statement of claim.  She therefore says that the 3^rd Summons should be dismissed on two grounds:

“(i)   Res judicata: The court has already decided the issue of joinder at their first hearing.

(ii)  Henderson abuse: the issue of standing and limitation defence (the alleged grounds of striking out) could have been raised at the first hearing, but D5 and D6 decided not to advance those arguments and consented to the order.”

20.  After hearing argument on both sides, I made a ruling and gave the following directions:

(i)    I ruled that both D5 and D6’s application for strike-out and P’s application for re-amendment should be adjourned to a date to be fixed for argument in consultation with counsel’s diaries together with directions for evidence to be filed.

(ii)   In so ruling, I took into account two matters:

(a)  Before the hearing on 14 September 2018, D5 and D6 were only intended parties and had only a very short time to consider P’s application, despite the fact that they had legal representation at the hearing.

(b)  At the adjourned hearing for argument as directed above, it would still be open to P to advance the arguments which was advanced by Miss Leung regarding res judicata and the Henderson abuse.

(iii)  I then gave detailed directions for the filing of evidence by both sides.

21.  Furthermore, Miss Leung also agreed that the representation applications should be adjourned for argument to which Mr Lam SC also agreed.

22.  I therefore gave further directions as follows:

(i)    Paragraphs 2 and 3 of the 1^st Summons and paragraphs 2 and 3 of the 2^nd Summons be also adjourned to a date to be fixed in consultation with counsel’s diaries and to be heard together with the strike-out and re-amendment applications.

(ii)   I also gave detailed directions for the filing of evidence by both sides in relation to the representation applications.

23.  In the result, the only issue left for me to decide is whether I should continue the Mareva injunction against D5 and D6 which I granted on 14 September 2018 (see paragraph 12(iii) above) either in its original form or in the wider form as set out in the draft order annexed as Annex 2 to the 2^nd Summons or, if it should not be continued but discharged, whether I should re-grant the same either in its original form or in the wider form referred to above.

THE PROPRIETARY AND/OR MAREVA INJUNCTION ISSUE

24.  The crux of the Mareva injunction granted by me on 14 September 2018 which is still effective pending my present judgment and further order is as follows:

“PROPRIETARY AND/OR MAREVA INJUNCTION

3.  The 5^th and 6^th Defendants, and each of them, whether acting by themselves, their directors, servants or agents, or any of them or otherwise howsoever, be restrained from disposing, dealing with or diminishing the value of their assets up to the value of HK$10,000,000, not including the value of the Kai Tai Property stated below, until after the disposal of the Summons or further order.

4.  Paragraph 3 applies to all the respective 5^th and 6^th Defendants’ assets whether or not they are in their own names and whether they are solely or jointly owned. For the purpose of this order each of the 5^th and 6^th Defendants’ assets include any assets which he has the power, directly or indirectly, to dispose of or deal with as if it were his own. The 5^th and 6^th Defendant are to be regarded as having such power if a third party holds or controls the asset in accordance with his direct or indirect instructions.

5.  If the total unencumbered value of the 5^th and/or 6^th Defendants’ assets in Hong Kong exceeds the said sum of HK$10,000,000, the 5^th and 6^th Defendants may remove any of those assets from Hong Kong or may dispose of or deal with them so long as the total unencumbered value of their assets still in Hong Kong remains above HK$10,000,000.

If the total unencumbered value of the 5^th and/or 6^th Defendants’ assets in Hong Kong does not exceed HK$10,000,000, the 5^th and 6^th Defendants, and each of them, must not remove any of those assets from Hong Kong and must not dispose of or deal with any of them, but if he or she has other assets outside Hong Kong the 5^th and 6^th Defendants may dispose of or deal with those assets so long as the total unencumbered value of all their assets, whether in or outside Hong Kong, remains above the said sum of HK$10,000,000.

6.  This prohibition includes the following assets in particular:

(a)  The properties at Flat No. 5 on 3^rd floor, Block C, Kai Tai Court, No.28 Kai Yip Road, Kowloon (‘Kai Tai Property’);

(b)  Such other monies, assets or valuables coming into their possession from the late 2^nd Defendant and/or her agent, the late 4^th Defendant, either in her/his name or joint names or joint names with the 2^nd Defendant, or any other person, forming the traceable proceeds of the estates of Chung Yung and Au Yeung Kit respectively.

EXCEPTIONS TO THIS ORDER

7.  This Order does not prohibit each of the 5^th and 6^th Defendants from spending HK$30,000 per month towards their ordinary and proper living expenses and also spending HK$50,000 per month on legal fees and representation.

8.  This Order does not prohibit the 5^th and 6^th Defendants from dealing with or disposing of any of her or his assets in the ordinary and proper course of business.

9.  The 5^th and 6^th Defendants may agree with the Plaintiff’s solicitors that the above spending limits should be increased or that this Order should be varied in any other respect, but any such agreement must be in writing.

10. This Order shall cease to have effect if the 5^th and 6^th Defendants provide security by paying the value of HK$10,000,000 into court or make provision for security in those sums by some other method agreed with the Plaintiff’s solicitors or approved by the court.”

25.  The gist of the wider form of the Mareva injunction now sought by P are as follows:

(i)    The value of the assets to be subject to restraint should be increased from $10,000,000 to $30,000,000.

(ii)   A disclosure order in the following terms:

“ANCILLARY DISCLOSURE ORDER

5.  The 5^th and 6^th Defendants be ordered to file a joint affirmation within 28 days of the order of the Court, discovering:-

(i)    what had become of the abovesaid properties, monies, assets or valuables stated in paragraph 4(b) above and their present whereabouts verified by land search records and full particulars of bank accounts, securities and/or currencies accounts statements holding the same; and if the statements are not immediately available, the particulars of the bank accounts and securities and/or currencies accounts holding the same;

(ii)   if the abovesaid properties, monies, assets or valuables or part thereof was subsequently used for other investments and/or transferred to some other person(s), list out full particulars of such investments and/or transfer, including the identity of the transferees, their names and present addresses and relations, the time and purpose of each of such transfer;

(iii)  copies of the bank accounts statements including securities and/or currencies accounts of the 5^th and 6^th Defendants whether in her/his sole names or in their joint names with each other or with some other persons from 1^st of September 2000 or the date of transfer from the 2^nd and 4^th Defendants, if earlier, until the present.

6.  In default of compliance of the above paragraph 5(iii) by the 5^th and 6^th Defendant, the Plaintiff be at liberty to inspect and/or to take copies of the abovesaid bank statements directly from the banks concerned pursuant to S. 21 of the Evidence Ordinances, Cap. 8, subject to payment of the reasonable expenses incurred by the banks and subject to the Plaintiff’s undertaking that such information could be used only for the purposes of this action to trace estate funds and not for any other purpose.”

26.  Miss Leung has made it clear that in seeking a Mareva injunction in the wider form, she is content not to rely on P’s claim in relation to the Man Cheong Property and the KTM Property referred to in the proposed re-amended statement of claim annexed to the 2^nd Summons.

The relevant skeletal facts relied on by P

27.  P’s case on the facts can be summarized as follows:

(1)  CY made his money by operating a mahjong shop business with some partners under two names “Man Bo Loy” and “Sun Yuet Loy”.

(2)  AYK also made her money by operating another mahjong shop business with some partners under the name of “Sun King Chang”.

(3)  They were both doing very well in their businesses.

(4)  CY left a will dated 20 November 1964 (“CY’s Will”) whereby he appointed AYK as his executrix and trustee and devised and bequeathed his estate to her upon trust to pay the income to AYK during her life and, after her death, to pay the capital and income to P absolutely.  There is no trust for sale provided for in CY’s Will.

(5)  CY died on 20 June 1966 when P was aged about 3 years.

(6)  Probate of CY’s Will was subsequently granted to AYK.

(7)  AYK also left a will dated 8 July 1967 (“AYK’s Will”) whereby she appointed Sau Miu and Sau Lan as her executrices and trustees.  She devised and bequeathed her estate to Sau Miu and Sau Lan upon a trust for sale with power to postpone sale and to hold the same unto P absolutely.  She also appointed her sister Au Yeung Ting as the guardian of P during his minority.

(8)  AYK died on 15 August 1967 when P was about 4 years old.

(9)  Sau Miu and Sau Lan had never informed P about the existence of his parents’ said wills or the fact that he was the ultimate sole beneficiary of their estates.

(10)  Eventually, in as late as 2008, P discovered the existence of the said two wills.

(11)  By a letter dated 22 October 2008, Messrs Andrew Lam & Co, the solicitors then acting for P, wrote to Sau Miu and Sau Lan to demand an account of the two estates over the years.

(12)  In response to the above, subsequently, Sau Miu and Sau Lan assigned two properties known as “Flats E and F on the 9^th Floor of Nam Tin Building” to P.  Furthermore, on 20 January 2009, Sau Lan gave a cashier order in the sum of $2,733,832.12 to P.  The above were said to be all that were due to P from the two estates.

(13)  On 1 June 2009, Sau Lan provided a set of purportedly full and complete accounts of AYK’s estate (“the Purported Accounts”) to P. They were for the period between 1967 and 2008.  They were handwritten and did not seem to have been contemporaneously recorded.  They were not supported by any bank statements or other documents.

(14)  Not being satisfied with what was given to him, on 24 November 2009, P instituted an action, High Court Action No 2539 of 2009 (“HCA 2539”), against Sau Miu and Sau Lan for an account of the estates of his parents.

(15) As stated above, Sau Miu died on 9 May 2010.  It is to be noted that no one has ever applied for the grant of administration to her estate.

(16)  On 10 February 2011, Wai Hung, who had been appointed by the court to represent the estate of Sau Miu in HCA 2539, was ordered to file an affidavit exhibiting the estate accounts and verifying them on oath.  That order was not complied with and the defence of Sau Miu was deemed to be struck out.  As mentioned above, Wai Hung subsequently died on 21 July 2012.

(17)  In 2016, P commenced the present action against the 1^st to 4^th defendants.

The gist of P’s complaints

28.  The gist of P’s complaints can be summarized as follows:

(1)  As executrices and trustees of AYK’s Will, Sau Miu and Sau Lan never informed P about the two wills and the fact that he had become the sole beneficiary of his parents’ estates.

(2)  Sau Miu and Sau Lan had collected the business income and proceeds from the said mahjong businesses and misappropriated them and the other assets in the two estates.  They were all trust monies (“the Trust Monies”).

(3)  Sau Miu and Sau Lan and their own family members were all salaried workers with very limited means.

(4)  In 1968, Sau Miu and Sau Lan used part of the Trust Monies to purchase a property known as “the 12^th Floor, Man King Building, Nos. 25 – 47 Man Ying Street and Nos. 26 – 48 Man Wui Street, Kowloon (“the Man Wui Property”).

(5)  In April 1971, Sau Miu and Sau Lan established a new branch of the mahjong business with other partners of Man Bo Loy and they purchased two properties known as “Nos.296 and 298, Ground Floor, Lockhart Road, Hong Kong” (“the Lockhart Properties”) under the same partnership name of Man Bo Loy for the operation of this new business.  They claimed that the estates of CY and AYK had no interest in the new business or the Lockhart Properties.  It is P’s case that the two estates had an interest in both the new business and the Lockhart Properties.  Sau Miu had a ⅓ interest in No 298 of the Lockhart Properties under her name and Sau Lan had a ⅓ interest in No 296 of the Lockhart Properties under her name.  It is P’s case that their interests in the Lockhart Properties were purchased with part of the Trust Monies.  Furthermore, Sau Miu and Sau Lan had taken over the mahjong businesses belonging to the two estates under the guise of a new mahjong business.

(6)  In about March 1976, a ½ share in a property known as “No. 187, Queen’s Road East, Ground Floor and Cockloft, Hong Kong (“the Queen’s Road East Property”) which was in the estate of CY was sold by Sau Miu and Sau Lan as co-executrices for $150,000.  That was unnecessary and in breach of the trust under CY’s Will.

(7)  In about September 1982, another property known as “Flat O on the 3^rd Floor of the State Theatre Building, King’s Road, Hong Kong” (“the State Theatre Property”) which was also in the estate of CY was sold by Sau Miu and Sau Lan as co-executrices for $305,000. That was again unnecessary and in breach of the trust under CY’s Will.

(8)  In about July 1991, another property in the estate of CY known as “No. 36, Hau Wo Street (“the Hau Wo Street Property”) was again sold by Sau Miu and Sau Lan as co-executrices for $2,000,000.  That was again unnecessary and in breach of the trust under CY’s Will.

(9)  The proceeds of sale of the properties referred to above had not been deposited into bank accounts to earn interest as alleged by Sau Miu and Sau Lan but had been used by Sau Miu and Sau Lan to purchase other properties.

(10)  Similarly, the income from the mahjoing businesses had not been accounted to the two estates or P but had been used by Sau Miu and Sau Lan to purchase other properties.

(11)  In committing the breaches of trust under CY’s Will and AYK’s Will, Sau Miu and Sau Lan acted first in conjunction with their respective husbands and, subsequently, their respective daughters, Catherine and D5.  D5 and her husband, D6, also acted in conjunction with each other in receiving and misappropriating the Trust Monies.

(12)  D5 and D6 were very close to D2 and D4 and they all lived together for a long time before D5 and D6 moved to the Kai Tai Court Property.

(13)  P recently discovered that just seven months after he had issued HCA 2539, D5 and D6 spent $2,230,000 to purchase the Kai Tai Court Property without the aid of any mortgage.  As salaried workers, D5 and D6 would not have been able to afford such a cash purchase and that the source of the money for that purchase was Sau Lan and/or Kwok Chee.

(14)  The purchase of the Kai Tai Court Property was significant:

(a)  First, it is to be noted that No 296 Ground Floor of the Lockhart Properties was sold for just over $27 million in about August 2007. Hence, Sau Lan got over $9 million for her ⅓ share.

(b)  In November 2009, HCA 2539 was instituted.

(c)  A few months after that, on 18 June 2010, D5 and D6 entered an agreement for sale and purchase for the purchase of the Kai Tai Court Property for $2,230,000 without a mortgage.

(d)  In view of the fact that D5 and D6 were ordinary salaried workers, D6 being a bus driver, the inference to be drawn is that it was Sau Lan and/or Kwok Chee who had provided the cash from the sale of No 296 Ground Floor of the Lockhart Properties, being part of the Trust Monies, to them for the purchase in cash.

(15)  By a letter dated 24 August 2018, P’s solicitors requested D5 and D6 to provide evidence of the source of fund for their purchase of the Kai Tai Court Property.  D5 an D6 did not respond to such request.

(16)  By a letter dated 29 August 2018, P’s solicitors wrote to Messrs Ma Tang & Co, the solicitors on record for Sau Lan and the solicitors presently acting for D5 and D6, requesting Sau Lan to provide evidence as to the following:

(a)  the whereabouts of the proceeds of sale of the Lockhart Properties;

(b)  the whereabouts of the proceeds of sale of the following estate properties:

(i)    the Queen’s Road East Property;

(ii)   the State Theatre Property;

(iii)   the Hau Wo Street Property;

iv)   the respective partnership shares of CY and AYK in the three mahjong businesses.

(17)  Messrs Ma Tang & Co replied by a letter dated 31 August 2019 and said that Sau Lan had died on 16 October 2017, that they would relay the request to the children of Sau Lan (including D5) and would reply in due course.

(18)  There has been no further response to the said request.

(19)  P caused a search to be made in the Probate Registry.  It would appear that no one has applied for a grant of representation to the estate of Sau Lan.  Hence, the inference can be drawn that Sau Lan had not left any asset of value in her estate and that she must have transferred away her assets inter vivos.

(20)  Hence, it is P’s case that the inference can be drawn that Sau Lan being one of the executrices and trustees of the estate of AYK (and, in turn, of the estate of CY) had misappropriated the trust assets therein which should have been transferred to P but instead had been transferred to her children, including D5, and also D6.

(21)  Hence, P has a tracing claim of trust properties against D5 and D6.

(22)  Furthermore, as Sau Miu and Sau Lan had not given an account of the two estates to P and, as D5 and D6 being the knowing recipients from Sau Miu and/or Sau Lan of trust assets belonging to P, D5 and D6 should make discovery of information and documents as sought by P so as to enable P to trace and reclaim the trust assets.         

The case of D5 and D6

29.  D5 filed an affirmation on 1 November 2018.  In summary, she said the following:

(1)  It is incorrect to say that her parents, Kwok Chee and Sau Lan, had to live with CY because they were poor.

(2)  Kwok Chee’s family ran a very successful business in Guangzhou and Kwok Chee was well provided for because he was the eldest son.

(3)  Her parents lived with CY and his other family members because CY preferred to live with a big family.

(4)  D5 and D6 arrived in Hong Kong from Mainland China in about 1979.  At first they lived with Sau Lan at the Man Wui Property for about two years.  After they married in 1981, D5 and D6 moved out and rented a sub-divided room in a flat near the Man Wui Property.  It is untrue to say that D5 and D6 lived with D5’s parents for a long time.

(5)  It is also untrue to say that D5 had the closest relationship with her parents and that she had knowledge of all the alleged dealings of her parents with the trust assets of the two estates.  In fact, neither D5 nor D6 had any such knowledge until around late 2016 to early 2017.  It was only after the death of Kwok Chee in early 2017 that Sau Lan informed her that they had been sued by P in relation to his inheritance.

(6)  After his arrival in Hong Kong, D6 had various jobs and his income from 1979 to 1986 amounted to about $210,000.

(7)  From 1986, until his retirement in 2012, D6 worked as a bus driver with The Kowloon Motor Bus Company (1933) Limited.  His employer’s tax returns for him for the period from 1986 to 2010 (excepting 1990, 1991 and 1993) show that, during that period of about 24 years, he earned a total of $4,370,000 and from 1979 to 2010, the total was $4,580,000.  Thus, over a period of 31 years, his average earnings were about $150,000 per annum or $12,500 per month.

(8)  Regarding D5 herself, after her arrival in Hong Kong in 1979, she worked at a garment factory and earned $2,000 to $2,500 per month.  Later, she worked as an accountant in various companies.  From 1979 to 1993, she earned in total about $890,000.

(9)  In March 1993, she started her own business selling chemical materials and was highly successful.  Her firm was called “Sam Yip Industrial Chemicals Co.” (“Sam Yip”).  She was unable to locate the past bank passbooks for the current account of Sam Yip before 2010.  She has been able to produce copies of her own bank passbooks which show that, between May 1997 and April 2000, she had been receiving either $8,500 or $7,500 per month which she says were her monthly salaries from Sam Yip.  She would also receive some travel and entertainment allowances from Sam Yip from time to time.

(10)  Sam Yip also made distribution of profits. Copies of the bank passbooks for the savings account of Sam Yip and her personal bank passbooks show that she received sums which she says were distributions of profits by Sam Yip totalling about $1,400,000 over seven years from mid-1997 to mid-2004.

(11)  Thus, the total income of D5 and D6 from 1979 to 2010 would be in the region of about $10,500,000.

(12)  Everyone in her family was very frugal.

(13)  Hence, they were able to save enough money to purchase the Kai Tai Court Property without a mortgage.

(14)  By 2009, D5 and D6 had saved enough to have a fixed deposit of $3,750,000.

(15)  On 6 June 2010, they decided to purchase the Kai Tai Court Property for $2,230,000.  They paid some deposits.  As they did not want to uplift their said fixed deposit prematurely, they borrowed about $2 million from Kwok Chee and later returned it to him after their fixed deposit had matured.

(16)  Kwok Chee and Sau Lan had four children, including D5.  As some of her siblings had moved overseas, D5 had not yet got together with them to discuss about arrangements after the death of their parents.  She was hoping for the return of her siblings to return to Hong Kong to discuss about probate and/or representation of their estates.

(17)  It was only after the death of her parents that D5 realised that her parents’ estates consisted of stocks and savings the value of which totaled around $8.5 million, in addition to the Man Wui Property.

30.  Pausing here, I must say that I find the allegation of non- action and lack of knowledge or sufficient knowledge on the part of D5 in relation to the estates of Sau Lan and Kwok Chee and the estates of CY and AYK to be quite surprising. Kwok Chee died only on 29 January 2017 and Sau Lan died only on 17 October 2017.  D5 would seem to be the closest, at least physically, to her parents, she being in Hong Kong whilst her other siblings or some of them were abroad.  There is no suggestion that D5 and D6 were not on good terms with Sau Lan and Kwok Chee.  They were in fact all living together at some stage. D5 is an accountant.  One would have thought that it would only be natural for San Lan to consult D5 about the financial affairs and assets of herself and Kwok Chee, especially after P had demanded against Sau Miu and Sau Lan for information and an account and after HCA 2539 had been commenced on 24 November 2009 and Sau Lan had been ordered by the court in that action to produce an account of the estates of her parents which Sau Lan did produce in the form of a handbook for income and expenditure in December 2010.  Furthermore, the present action had been commenced by P against, inter alios, Sau Lan and Kwok Chee in 2016 in relation to the estates of Sau Lan’s parents.

31.  I also take the view that the Purported Account produced by Sau Lan in June 2009 and the said handbook produced by her in December 2010 to be inadequate as estate accounts.

32.  It is also to be noted that D5 and D6 have failed or refused to disclose their bank statements for the period between 2001 and 2010 and that there is no evidence produced by them to show how the said fixed deposit in the sum of $3.7 million odd had been accumulated, despite the allegations against them which they naturally would want to refute.  D5 has also not produced the accounts or audited accounts of Sam Yip.

33.  In my judgment, all the matters which I have set out in paragraphs 28 – 32 above would involve serious issues to be tried.

The argument of Mr Lam SC

34.  Mr Lam SC primarily submits that the injunction order granted by me on 14 September 2018 should be discharged on the ground of material non-disclosure on the part of P and that I should not re-grant it,either in its original form or in its wider form now sought by P.

35.  His grounds can be summarized as follows:

(i)    Although at the hearing before me on 14 September 2018 D5 and D6 were represented by solicitors and junior counsel, it was in fact an ex parte on notice hearing in nature and, hence, there was a duty on the part of P to make full and frank disclosure to the court.

(ii)   P had failed to make full and frank disclosure in that he had not drawn the attention of the court to the possible defences of limitation and lack of standing to sue available to D5 and D6.

(iii)  On the limitation defence, it is clear that the Kai Tai Court Property was purchased by D5 and D6 on 18 June 2010.  The writ of summons in the present action was issued only on 2 December 2016, when the six-year limitation period had already expired.

(iv)  On the lack of standing to sue defence, it is submitted that P is only a beneficiary under a trust.  He therefore cannot launch a derivative claim against alleged recipients of trust assets.

(v)   In the event that the court decides that P was guilty of material non-disclosure and that the existing injunction order should be discharged, the court should also refuse to make a re-grant because it is a very serious case of material non-disclosure.

36.  Mr Lam SC has also made it clear that D5 and D6 are willing to give an undertaking to the effect that the Kai Tai Court Property would not be disposed of pending further order of the court.

The argument of Miss Leung

37.  The argument of Miss Leung can be summarized as follows:

(i)    The hearing on 14 September 2018 was not in the nature of an ex parte on notice hearing because D5 and D6 had previously been given ample notice of the intended application.  Hence, there was no duty on the part of P to make full and frank disclosure.

(ii)   Even if that hearing was in the nature of an ex parte hearing, there was no material non-disclosure on the part of P to justify a discharge of the injunction order.

(iii)  Even if the hearing on 14 September 2018 was in the nature of an ex parte hearing and there had been material non-‌disclosure on the part of P so that the injunction order should be discharged, the court should still make a re-grant of the injunction order in all the circumstances.

(iv)  P’s application involves not just an ordinary Mareva injunction but also a proprietary tracing claim.

(v)   In any event, a Mareva injunction order should be granted on the basis of the Chabra line of authorities.

Discussion

38.  In submitting that the hearing on 14 September 2018 was an ex parte hearing in nature, Mr Lam SC has relied on a number of authorities, including Muginoho Co Ltd v Vimiu HK Co Ltd (unreported) (HCMP 107/2012, 24 February 2012), Re Pacific Bulk Shipping Ltd(unreported) (HCMP 1244/2015, 22 May 2015), MBM Metal Works Hong Kong Ltd v Nichols (unreported) [2019] HKCFI 52 and Chen Lingxia v 中國金谷國際信託有限責任公司(unreported) [2019] HKCFI 379.

39.  It seems to me that the rationale for the decisions in those cases is based on the question as to whether the defendant had been given a reasonable opportunity to argue against the application if he so wished. In the Muginoho case, DHCJ M Chan (as she then was) referred to the decision of Chu Shu Ho David v Lam Hon Lit Harry (HCA 3525/2002 and HCA 3618/2002, 30 October 2002) and said in paragraph 3 of her judgment as follows:

“In ruling that the order was an inter-partes one, Chu J pointed out that the question is not to be decided by seeing whether arguments had been advanced by both parties, but by seeing whether the opposing party had been afforded a reasonable opportunity to argue against the application if it so wished. If due notice of the application had been given to the responding party, then the hearing and the order made is to be regarded as inter-partes. In that case, seven days’ notice had been given to the responding party, who was able to make oral and written submissions on the merits of the two issues before the court: whether the application should be adjourned, and whether an interim injunction should be in place pending the determination of the summons.”

(emphasis added)

It also follows that each case must be judged on its own facts.

40.  In the present case, as mentioned in paragraph 28(15) and (16) above, on 24 August 2018 and 29 August 2018, P’s solicitors wrote to D5 and D6 and Messrs Ma Tang & Co (then on record as acting for Sau Lan) respectively and demanded the supply of information and documents by setting out their grounds in support in detail.  Those letters also gave warning that on D5, D6 and Messrs Ma Tang& Co’s client failing to respond satisfactorily within a few days, applications to the court might be made.

41.  Upon the absence of any response, P issued the 1^st Summons (an inter partes summons) on 11 September 2018 which was returnable on 14 September 2018.  At that hearing, not only did counsel for D5 and D6 not ask for an adjournment to give them more time to consider the matter and respond, he in fact had instructions to say that he would consent to the joinder of D5 and D6 and to the filing of the amended statement of claim. There was also no argument against the granting of the interim injunction order by the court.

42.  In the above circumstances, I rule that the hearing on 14 September 2018 should not be treated on the basis of an ex parte on notice hearing.  Thus, there was no duty on the part of P to make full and frank disclosure.

43.  Even if I were wrong in ruling as above, I am of the view that there was no material non-disclosure on the part of P which requires the injunction order granted on 14 September 2018 to be discharged.

44.  First, the authorities cited by Mr Lam SC all seem to refer to material non-disclosure in the context of “material facts”.  I am doubtful as to whether it equally applies to legal defences, especially when the defendant has been legally represented.  For example, in the Muginoho case, the learned judge said at paragraph 5 at page 3F as follows:

“I would not go on to say that the plaintiff did not have the duty to make disclosure to the court of material facts of which it had knowledge.” (emphasis added)

In the case of Velatel Global Communications Inc v Chinacomm Ltd (unreported) (HCA 1978/2011, 26 October 2012) which is also relied on by Mr Lam SC, DHCJ Au-Yeung (as she then was), referred to the case of Brink’s Mat Ltd v Elcombe [1988] 1 WLR 1350 at 1356F – 1357F, in paragraph 26 of her Decision and said as follows:

“What is material is for the judge to decide. Suppression of material facts will cause the court to discharge on an ex parte order without going into the merits.” (emphasis added)

45.  Furthermore, in the said quotation by DHCJ Au-Yeung from the Brink’s Mat case, there are the following paragraphs by Gibson LJ:

“(6) Whether the fact not disclosed is of sufficient materiality to justify or require immediate discharge of the order without examination of the merits depends on the importance of the fact to the issues which were to be decided by the judge on the application. The answer to the question whether the non-disclosure was innocent, in the sense that the fact was not known to the applicant or that its relevance was not perceived, is an important consideration but not decisive by reason of the duty on the applicant to make all proper inquiries and to give careful consideration to the case being presented.

(7) Finally, it ‘is not for every omission that the injunction will be automatically discharged. A locus poenitentiae may sometimes be afforded:’ per Lord Denning M.R. in Bank Mellat v. Nikpour[1985] F.S.R. 87, 90. The court has a discretion, notwithstanding proof of material non-disclosure which justifies or requires the immediate discharge of the ex parte order, nevertheless to continue the order, or to make a new order on terms

‘when the whole of the facts, including that of the original non-disclosure, are before [the court, it] may well grant … a second injunction if the original non-disclosure was innocent and if an injunction could properly be granted even had the facts been disclosed:’ per Glidewell L.J. in Lloyds Bowmaker Ltd. v. Britannia Arrow Holdings Plc.” (emphasis added)

46.  In addition, in the case of Tiong King Sing v Sam Boon Peng Yee [2011] 5 HKLRD 651 at 655, Andrew Cheung J (as he then was) said the following:

“17. Chu Hung Ching v Chan Kam Ming [2001] 1 HKC 396 was an instance where a Mareva injunction order was discharged where the plaintiff had failed to make full disclosure of changed circumstances, despite strong evidence of likely dissipation of assets.

18. Nonetheless, the court retains a discretion not to discharge the ex parte order, or to make a new order on terms. A typical example where the discretion will be so exercised is:

(a) the non-disclosure is innocent; and

(b) an injunction would still have been granted even had the facts been properly disclosed.” (emphasis added)

47.  In view of the fact that, at the hearing on 14 September 2018,counsel for D5 and D6 had instruction to consent to the joinder of D5 and D6 and to the filing of the amended writ and the amended statement of claim, that D5 and D6 subsequently filed their defence without raising the said two defences and that the same were raised only just very shortly before the hearing before me on 15 May 2019, even if the said defences should have been disclosed, they might not have been perceived by counsel for P and that the non-disclosure of the same could have been totally innocent.  It seems to me that there is, at least, justification for saying that the suggested defences were not plain and obvious to counsel on both sides. Furthermore, it is to be noted that P’s case is not limited to the Kai Tai Court Property but other assets which he is not yet in a position to identify and in relation to which the limitation defence may not be available to D5 and D6.

48.  I therefore hold that even if P had a duty to make full and frank disclosure, there was no material non-disclosure by him which would justify the discharge of the injunction order.

49.  I further hold that, in all the circumstances set out above,even if there had been material non-disclosure by P, I would exercise my discretion to make a re-grant if there is justification for the grant of an injunction order.

The other considerations for the grant or refusal of an injunction order

50.  I have already found that there are serious issues to be tried.

51.  On the question of balance of convenience and whether damages would be an adequate remedy, since on the case of P he is largely in the dark throughout the past many years as to what has happened to the trust assets in the two estates which should belong to him, I am of the view that the question as to whether damages would not be an adequate remedy should be answered in his favour.  I believe that D5 and D6 have not suggested that P would not be good for damages in case he is found to be liable on his undertaking as to damages.  Regarding the balance of convenience, I also find in favour of P.  It is of course always open to D5 and D6 to make an application to the court to vary any Mareva injunction to be made by me if there is justification for such an application.

52.  I find that P has raised a good prima facie case on his proprietary tracing claim.  I do not think that I need to deal with the Chabra line of authorities.

53.  Regarding the quantum of the assets to be frozen, in all the circumstances, I take the view that it would be fair for me to increase it to $20 million, in addition to the freezing of the Kai Tai Court Property specifically.

THE ANCILLARY DISCLOSURE ORDER

54.  In all the circumstances set out above, I take the view that I should also grant the ancillary disclosure order sought by P.

CONCLUSION

55.  I make an order in the terms of the draft order marked as Annex 2 to the summons issued by P on 7 May 2019 (the 2^nd Summons) subject to the figure “HK$30,000,000” wherever it appears in paragraphs 1, 3 and 11 of the said draft order being changed to “HK$20,000,000”.

56.  I dismiss the 4^th Summons.

57.  I also give liberty to the parties to apply in relation to the working out of the order I now make, if necessary.

COSTS

58.  I make the following costs orders nisi:

(1)  Under the 1^st Summons:

(i)    The costs under paragraph 1 thereof be in the cause;

(ii)   The costs under paragraphs 2 and 3 thereof be reserved to the Judge who is going to hear those applications;

(iii)  The costs under paragraph 4 thereof be in the cause.

(2)  Under the 2^nd Summons:

(i)    The costs under paragraphs 1, 2 and 3 thereof be reserved to the Judge who is going to hear those applications;

(ii)   The costs under paragraph 4 thereof be in the cause.

(3)  Under the 3^rd Summons:

The costs of the 3^rd Summons be reserved to the Judge who is going to hear the application under paragraph 1 thereof.

(4)  Under the 4^th Summons:

The costs of the 4^th Summons be paid by D5 and D6 to P in any event, to be taxed if not agreed.  I do not think that it is practical to make an order for summary assessment of costs in all the circumstances.

59.  Finally, it remains for me to thank counsel on both sides for their very able assistance.