KOT SEE FOR v. LAM MAN CHEUNG AND OTHERS

HCA 743/2019

[2026] HKCFI 5558

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 743 OF 2019

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BETWEEN

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DECISION

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APPLICATION BEFORE THE COURT

1.  There is before the court an application by the plaintiff by summons dated 24 June 2022 (“Application”) for the cross-examination of the 2^nd defendant on his 4^th to 7^th affirmations filed herein respectively on 23 July 2021, 10 March 2022, 27 April 2022 and 12 May 2022 (“4^th Affirmation” to “7^th Affirmation” respectively and “Affirmations” collectively).

2.  The Affirmations were made and filed by the 2^nd defendant in purported compliance with the ancillary disclosure order (“Disclosure Order”) in paragraphs 2 to 4 of the injunction order granted by Deputy High Court Judge (DHCJ) MK Liu on 3 May 2019 as continued on 24 July 2019 and amended on 14 April 2022 (“Injunction Order”).

3.  For the reasons explained below, I reject the Application.

BACKGROUND

4.  The plaintiff is a collector of Chinese ceramic antiques of the Ming and Qing Dynasties known as the “Tianminlou” (天民樓) collection. Briefly, his case is that he was induced by the fraudulent misrepresentations of the 1^st and 2^nd defendants to enter into 4 “pledge agreements” and 3 “assignments”, whereby he “pledged” and/or “assigned” 11 pieces out of his said antique collection (“Subject Antiques”) at gross undervalues as collaterals for loans (and subsequently in discharge of his liabilities therefor) or in consideration of funds advanced by the 2^nd defendant to the plaintiff. The plaintiff “borrowed” from the 2^nd defendant to finance “investments” that he believed he was placing through the 1^st defendant. The “investments” were in fact fictitious.

5.  Against this background, the plaintiff commenced the present action against the 1^st and 2^nd defendants for, inter alia, unlawful means conspiracy and fraudulent misrepresentations, seeking relief in damages as well as recission of the said purported pledge agreements and assignments, and delivery up of the Subject Antiques consequent upon recission.

6.  The 2^nd defendant’s case is that (1) he was not privy to, and had no knowledge at the material times of, the dealings between the 1^st defendant and the plaintiff, and that (2) if the 1^st defendant had made the alleged misrepresentations, he had no knowledge of the same and the 1^st defendant was not doing so as his agent/nominee/authorised representative as the plaintiff has alleged. According to the 2^nd defendant, he had made loans to the plaintiff upon 1^st defendant’s introduction. Upon the plaintiff’s defaults, the Subject Antiques were pledged and/or assigned by the plaintiff to the 2^nd defendant in discharge of the plaintiff’s liabilities (and also for further funds). Such dealings between the plaintiff and the 2^nd defendant were all bona fide arms-length commercial transactions between them.

7.  In order to safeguard the Subject Antiques pending trial, the plaintiff applied by summons dated 29 April 2019 (“Injunction Summons”) against the 2^nd defendant for, inter alia, a property preservation order and an ancillary disclosure order. On 3 May 2019, DHCJ MK Liu granted the Injunction Order which:

(1) restrains the 2^nd defendant from disposing of the Subject Antiques, pending the determination of the Injunction Summons or until further order (paragraph 1)[1];

(2) requires the 2^nd defendant to disclose by affidavit/affirmation on or before 12 noon on 19 May 2019 (paragraph 2) information to enable the plaintiff to locate, trace and take steps to preserve the Subject Antiques, including:

(a) information on the location of the Subject Antiques (paragraph 2(1));

(b) whether the Subject Antiques were in the 2^nd defendant’s possession, custody, and/or power (paragraph 2(2));

(c) if not, details of how and when the 2^nd defendant parted with the Subject Antiques (paragraph 2(3));

(d) whether the Subject Antiques have been transferred to third parties, together with supporting documentation (paragraph 2(4)); and

(e) whether the Subject Antiques have been encumbered, together with supporting documentation (paragraph 2(5));

(3) requires the 2^nd defendant to deliver up the Subject Antiques in his possession (paragraph 3);

(4) requires the 2^nd defendant to inform the plaintiff of the date and time of the delivery up of the Subject Antiques (paragraph 4); and

(5) permits the plaintiff to inspect the Subject Antiques delivered (paragraph 5).

8.  The 2^nd defendant’s appeal to the Court of Appeal (“CA”) against the Disclosure Order (i.e. paragraphs 2 to 4 of the Injunction Order) under CACV 536/2019 was dismissed by the CA (“CA Decision”) on 18 March 2021.

9.  The 2^nd defendant sought leave to appeal against the CA Decision to the Court of Final Appeal (“CFA”), firstly from the CA. The CA imposed an unless order to the effect that unless the 2^nd defendant filed an affirmation in accordance with the Injunction Order in a sealed envelope by 28 May 2021, his application for leave to appeal to the CFA would be dismissed (“CA Unless Order”). The 2^nd defendant failed to comply with such order and his application to the CA for leave to appeal to the CFA was dismissed on 28 May 2021.

10.  The 2^nd defendant then applied to the Appeal Committee of the CFA for leave to appeal against the CA Decision (under FAMV 255/2021). The Appeal Committal directed that the 2^nd defendant’s leave application would only be heard on the condition that the 2^nd defendant comply with the CA Unless Order by 23 July 2021. The affirmation filed by the 2^nd defendant in purported satisfaction of such condition was the 4^th Affirmation. The CFA granted the 2^nd defendant conditional leave to appeal the CA Decision on 17 August 2021. However, by letter dated 15 September 2021, the 2^nd defendant’s solicitors informed the CFA that the 2^nd defendant did not intend to prosecute his appeal any further. The CFA then made an order on 29 October 2021 that upon the plaintiff’s undertaking not to divulge the information disclosed in the 4^th Affirmation to third parties, the 4^th Affirmation be unsealed and leave be granted to the plaintiff to inspect, have full access to and make copies of it.

11.  The plaintiff is of the view that the 4^th Affirmation is deficient and incomplete, and thus insufficient, to achieve the objective of safeguarding and preserving the Subject Antiques pending trial. Upon the 2^nd defendant’s refusal to provide further information, the plaintiff applied for variation of the Injunction Order by summons dated 14 February 2022 (“Variation Summons”). The 2^nd defendant made and filed the 5^th Affirmation on 10 March 2022 to oppose the Variation Summons and to update the disclosure he had given in the 4^th Affirmation.

12.  On 13 April 2022, upon the plaintiff’s application by the Variation Summons, the Injunction Order was amended to require the 2^nd defendant to:

(1) disclose the personal particulars of (a) his brother, Tang Wai Kin (鄧偉乾) (“Brother”), to whom the 2^nd defendant had allegedly given possession of the Subject Antiques after 2 May 2018, and (b) one Mooi Chun Kit (“Mooi”) to whom the Brother had allegedly given possession of the Subject Antiques (see [15(1)]- [15(2)] below);

(2) disclose any agreements, terms or conditions, discussion and/or communication pertaining to the parting of possession of the Subject Antiques by the 2^nd defendant and by the Brother and Mooi;

(3) requires the 2^nd defendant to deliver up the Subject Antiques in the possession of the 2^nd defendant, the Brother and Mooi; and

(4) disclose, by affirmation, the steps he had taken to procure, effect and facilitate the delivery up of the Subject Antiques and to produce to the plaintiff any relevant documents pertaining to and evidencing the steps he has taken.

The expressions “Injunction Order” and “Disclosure Order” shall hereafter refer to the Injunction Order and Disclosure Order so amended.

13.  The 2^nd defendant subsequently filed the 6^th and 7^th Affirmations respectively on 27 April 2022 and 12 May 2022 in purported compliance with the Disclosure Order. The plaintiff considers these depositions wholly inadequate, and failing, to comply with the Injunction Order. For details, see the 2^nd and 3^rd affirmations of Chen Hoi Kei[2] respectively dated 29 April 2022 and 24 June 2022 for the plaintiff. Upon the 2^nd defendant’s refusal to provide any further information despite having been given multiple opportunities to effect proper disclosure, the plaintiff made the Application on 24 June 2022. On 9 September 2022, the defendant filed his 8^th affirmation (“8^th Affirmation” or included in “Affirmations” as indicated) by which he sought to respond to the allegations of “deficiencies”, “inconsistencies” and “contradictions” in the said 2^nd and 3^rd affirmations of Chen Hoi Kei.

14.  In tandem with the effort to compel the 2^nd defendant to comply with the Injunction Order, the plaintiff has, by originating summons dated 6 June 2019 issued under HCMP 832/2019, applied for leave to take committal proceedings against the 2^nd defendant for his said non-compliance of the same. Those proceedings are dormant but not concluded.

DISCLOSURE BY THE 2^ND DEFENDANT SO FAR

15.  To put the discussion below in context, the disclosure made by the 2^nd Defendant through the Affirmations can be fairly summarised as follows:

(1) The 2^nd defendant had given possession of the Subject Antiques to the Brother (who the 2^nd defendant then “fully trusted”) and orally told the Brother to assist in “assessing their value and possible ways to handle them” shortly after 2 May 2018. The passing of the Subject Antiques between the brothers took place at their parents’ house at 香港新界元朗廈村新圍10號 (“Yuen Long House”) A where the Brother would stay when he visited Hong Kong in the past and where he was residing at the material time. The Subject Antiques were then kept at the Yuen Long House.

(2) The Brother told the 2^nd defendant that he had, in turn, given possession of the Subject Antiques to Mooi who would assist in their evaluation and handling.

(3) The Brother sought to confirm the aforesaid by a statement dated 21 July 2021, which does not provide any new or different information about the Subject Antiques.

(4) The Brother lives in the UK. The 2^nd defendant does not have the Brother’s physical address or email address. His only means of contact with the Brother is a UK mobile telephone number (“UK Number”).

(5) The 2^nd defendant had tried contacting the Brother by calling the UK Number twice on 14 April 2022 but both calls were unanswered.

(6) On 24 April 2022, the 2^nd defendant sent a copy of the Injunction Order to UK Number.

(7) Afterwards, on the same date, the 2^nd defendant called the UK Number thrice, all of which were unanswered.

(8) The 2^nd defendant and the Brother finally connected when the 2^nd defendant called the UK Number the 4^th time on the same dated.

(9) During the telephone conversation, the Brother told the 2^nd defendant that he had already provided the 2^nd defendant with all the information that he was in a position to provide and that he had been advised by a lawyer to refuse to consent to the release of his personal details and information of his current whereabouts. The Brother refused to provide the 2^nd defendant with his precise location.

(10) Such telephone conversation was the last time the brothers spoke.

(11) As for Mooi, the 2^nd defendant does not have any means of communication. In the said telephone conversation between the 2^nd defendant and the Brother on 22 April 2022, the Brother refused the 2^nd defendant’s request for Mooi’s contact details and told the 2^nd defendant to leave Mooi alone.

(12) According to the Brother, Mooi had told him that he had been advised by his lawyer not to respond to any of the Brother’s request.

16.  It is not unfair to say that the abovementioned scanty information that the 2^nd defendant has actually imparted would not at all assist in the tracing, location, recovery or preservation of the Subject Antiques.

17.  The plaintiff finds it incredible that the 2^nd defendant would pass to the Brother the Subject Antiques which are extremely valuable without making further arrangements or making further enquiries. The 2^nd defendant’s claim that he does not have certain information cannot be taken at face value and cross-examination is warranted to test his assertion.

18.  The 2^nd defendant’s claim that he is “actually at a loss as to what further steps [he] can elicit the whereabouts of the [Subject] Antiques” cannot be accepted at face value, as at law the 2^nd defendant has power over the Subject Antiques with a presently enforceable right to possession of them: Acqua-Leisure Industries Inc v Aqua Splash Ltd (No.2) [2002] 1 HKLRD 241 at [50]-[51]. The 2^nd defendant has not utilised his right as principal.

19.  On the other hand, the 2^nd defendant has gone on oath that he has provided all information he has, and he does not have certain ordered information. In the 8^th Affirmation, he made the following statements which presumably seek to provide background for his lack of detailed knowledge and his ineffective communication with the Brother in following up on the compliance with the Injunction Order.

“9. … at the time when I asked my brother to handle the Antiques in around May 2018, I fully trusted him. I had been involved in the Macau VIP casino junket business between 1996 and 2021. My work involved greeting VIP customers to gamble and supplying them with credit lines by providing them with gambling chips. It was in daily business that I entrust clients or other business partners tens of millions of gambling chips or case just by way of a phone call or an oral agreement, most of which without a single shed of record. I have been running trust-base business for some 25 years. I trusted my brother at the time and believed in what he told me as to how he parted with the Antiques.

10. My relationship with my brother however later turned sour. On 1 January 2019 when I was arrested by the Police (for conspiracy to obtain property by deception), I have categorically told my brother not to inform our parents so as not to worry them. To my disappointment, my brother informed our parents of my arrest, causing a big quarrel between my brother and I and also within the family. Our parents got extremely worried about me. Our father soon passed away on 31 May 2019 at the age of 89, followed by our mother 8 months later on 21 January 2020 at the age of 89. … I was extremely angry with my brother. We have had lots of arguments since then. I still believe that but for him telling our parents about the arrest, their health would not have deteriorated so rapidly. My brother and I fell apart since and we barely talked like before.”

RELEVANT LEGAL PRINCIPLES

20.  Order 38, rule 2 of the Rules of the High Court (Cap 4A) gives the court power to order the attendance of the deponent of an affidavit for cross-examination. In practice, cross-examination on affidavits sworn in applications for interlocutory injunctions is very rare. See Hong Kong Civil Procedure 2026, Volume 1, paragraph 38/2/5.

21.  The principles that the court should apply in exercising the discretion in permitting cross-examination on affidavit are summarised by Kwan J (as Kwan VP then was) in Andrew Whyles Waters v Malahon Credit Co Ltd, CACV 44/2003, unreported, 14 October 2003, at [10]:

(1) The court has an unfettered discretion to permit cross-examination but an applicant is not entitled to this right as of course.

(2) The applicant has to establish that there is “good and sufficient” reason where the evidence on the affidavit will result in a final order; where evidence is for use in interlocutory matter, it may be more difficult for the court to be satisfied that the discretion should be exercised in view of the expense and delay involved.

(3) It is for the applicant to establish that cross-examination might be productive of a “useful result” at the stage that the application is made.

(4) What is “good and sufficient reason” must be examined in the light of the nature of the proceedings in which the affidavit is used. It is never the function of the court to conduct a mini trial on affidavits or to compare affidavits and make findings of fact (see Andrew Wyles Waters v Malahon Credit Company Limited, unreported, HCSD 24/2001, 21 February 2003, at [11] per Deputy High Court Judge To (as he then was).

(5) The applicant needs to show that the proposed cross-examination may be productive of a useful result at the stage that the application is made. The application will be refused if no reason can be suggested for supposing that the cross-examination will be helpful (see Wendy Wenta Seng Yuen v Philip Pak Yiu Yuen [1984] HKLR 431 at 436G per Fuad JA and Gee on Commercial Injunctions (7^th edition) at 23-037.

DISCUSSION

22.  The disclosure made in the Affirmations is not sufficient for the effective administration of the Injunction Order.

23.  The purpose of cross-examination on the Affirmations is to extract from the 2^nd defendant further information that may lead to the location and preservation of the Subject Antiques pending trial.

24.  It is not the function of the court to conduct a mini trial on affidavits or to compare affidavits and make findings of fact.

25.  The 2^nd defendant has maintained under oath he has already proffered all the requested information in his possession and does not have any further information ordered in the Injunction Order. While the plaintiff does not find the assertions of the 2^nd defendant credible, he has not shown a reasonable likelihood that the 2^nd defendant has information which should have been disclosed pursuant to the Injunction Order and which would lead to the fulfilment of the purpose of the order or that the Subject Antiques can be located and preserved: China Shanshui Cement Group Ltd v Zhang Caikui, HCA 2880/2015, unreported, 13 October 2016 at [24(b)], per Au-Yeung J. I agree, not without some reluctance, with counsel for the 2^nd defendant that the plaintiff has not demonstrated what useful purpose could be served by the order sought, and what answers could be extracted by subjecting the 2^nd defendant to cross-examination.

26.  In this regard, I echo what Mr Recorder Paul Shieh SC said in The Joint and Several Trustees of the property of Karson Oten Fan, Karno (in bankruptcy) v Kong Suk Chun, HCMP 101/2011, unreported, 29 November 2011 at [38]:

“And one may ask rhetorically what the value of cross-examination is going to be in the absence of primary documentation properly disclosed by the Defendants. Anyone who has an iota of forensic experience will know about the shortcomings of interlocutory cross-examination. It gives a Plaintiff no joy whatsoever in being able to cross-examine a witness to tears and have him or her disbelieved. Of course, we all know witnesses do not break down in the witness-box, and the last thing they would do is to confess and to produce more information upon cross-examination.”

27.  The plaintiff relies on Yau Chiu Wah v Gold Chief Investment Limited [2002] KLRD 832 at 838H per Ma J (as he then was) and (b) Tiger Resort Asia Limited v Kazuo Okada, unreported, [2019] HKCFI 1415, at [59]-[69], per DHCJ Keith Yeung SC (as Keith Yeung JA then was). Both cases can be distinguished.

28.  In the instant case, the 2^nd defendant has repeatedly maintained under oath that he has provided all the information he has had whereas both Yau Chiu Wah v Gold Chief Investment Limited and Tiger Resort Asia Limited v Kazuo Okada involved essential information that the court/applicant identified for disclosure purpose which information the respondents did not dispute having but did not provide the same. While the courts have granted the order for cross-examination in both cases, they have emphasized, inter alia, (1) such order is far from automatic and (2) pre-judgment orders for cross-examination are rare because there is no certainty that the plaintiff will eventually win and if the claim fails, the time and expense involved in the cross-examination exercise would have been wasted, and injustice done to a defendant being subjected to hostile cross-examination.

29.  I am also mindful that the plaintiff has commenced extant contempt proceedings (HCMP 832/2019) against the 2^nd defendant for his alleged failure to comply with the Injunction Order. “The Court will not grant an order for cross-examination to gather information which will be used later to impugn the defendant’s credit, or to investigate possible dealing in assets that may lead to possible contempt proceedings, or to obtain material to be used in the trial itself” China Shanshui Cement Group Ltd v Zhang Caikui, supra, at [25]-[27], per Au-Yeung J.

DISPOSITION

30.  For the above reasons, I dismiss the Application. I will deal with costs shortly.

31.  Lastly, I thank counsel for their assistance.