H, RS v. X, Y

FCMC 6583 / 2024

[2025] HKFC 103

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MATRIMONIAL CAUSES

NO. 6583 OF 2024

(Formerly No. 6733 OF 2023)

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JUDGMENT

( Discharge of Undertakings )

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1.  By the summons dated 3 September 2024 issued by the Respondent (“Wife”) (“Discharge Summons”), she seeks to be released from her undertakings not to directly or indirectly remove any asset from:

(1)  Bright Way Consultants Limited’s BNP Paribas Account no. 8884688; and

(2)  Dancom Holding Limited’s BNP Paribas Account no. 8885249 given on or about 21 and 22 August 2023 (“Wife’s Undertaking”).

Background

2.  The salient facts have been set out in §§ 1 to 15 of My Decision (Costs and Discovery) handed down on 12 October 2023[1]. Insofar as applicable, I would use the same abbreviations below as that in my Decision.

3.  In short, on 19 June 2023, the Husband sought and DDJ GT Lung granted an urgent ex parte (on notice) injunction against the Wife together with a disclosure order. Insofar as the injunction was concerned, the Wife was restrained from removing any of her assets up to the value of US$19,395,781.5, including assets in the bank accounts of 4 BVIs, namely Bright Way, Dancom, Belsea, and Grace Chance. Bright Way has accounts with BNPP, Credit Suisse, HSBC and IB, whilst the other 3 BVIs’ only accounts are respectively with BNPP.

4.  The Husband then filed an inter-partes summons on 21 June 2023, returnable on 30 June 2023 before me.

5.  The Wife’s then solicitors Chaine, Chow & Barbara Hung (“CCBH”) filed a notice to act on 23 June 2023 and she was represented by Senior Counsel Mr Bernard Man leading Mr Cristian Tsang at the return hearing. By her written submission dated 29 June 2023, the Wife offered undertakings in lieu of continuance of injunction. That resulted in Recital D(1) of the Order dated 30 June 2023, where she undertook to the Court and the Husband not to directly or indirectly remove any assets from Dancom BNPP account and Bright Way BNPP account. At the time, the value held on these two accounts exceeded US$21M, more than the injuncted amount of US$19,395,781.5 as sought by the Husband. The matter was further adjourned to 25 August 2023 before me for substantive arguments.

6.  By way of solicitors’ correspondence dated 21 August 2023 faxed to the Husband’s then lawyers Howse Williams (“HW”) at 19:46 and two further letters dated 22 August 2023, the Wife agreed to continue with her undertakings under inter alia Recital D(1) of the Order dated 30 June 2023. That gave rise to the Wife’s Undertaking she now seeks to be discharged.

Relevant Legal Principles

7.  The legal principles governing discharge of undertakings are succinctly summarised in the case of L v C, FCMC 5952/2012 (unreported, 3 July 2015) [2015] HKFC 101. Deputy District Judge Grace Chan (as she then was) said at §22:-

“(1) An undertaking can be discharged, but not varied. This is because the litigant is not ordered to give these undertakings; he chooses to give them: Cutler (supra);

(2) The court has jurisdiction to discharge an undertaking given to the court at any stage, even if it was given in an order made by consent: Kensington Housing Trust (supra) and Mid Suffolk District Council (supra);

(3) In general, a party who has given an undertaking to the court may seek to uplift or release himself from an undertaking in any of the following situations:

(a) when there has been a material change of circumstances since the undertakings were given which are not foreseeable at the time and which make compliance not feasible;

(b) when the subject matter to which the undertakings relate no longer exists which renders compliance impossible;

(c) the party to whom the undertaking was given releases the undertaker from complying with the undertaking;

(d) when the undertaking was obtained through fraud, misrepresentation or mistake (See: TLS nee J v RCS (supra) );

(4) Whether an undertaking given to the court should be discharged is a matter of judicial discretion to be exercised if it is “just” to do so: Kensington Housing Trust (supra) at 613;

(5) However, in case where an undertaking to the court is given in lieu of a final injunction, that it is “just” to discharge the undertaking is not sufficient, “material change of circumstances” must be shown: Mid Suffolk District Council (supra) at §§52-56.”

(emphasis added)

8.  These principles were cited with approval by Au-Yeung J in the judgment of Wang Linping and Another v Huang Keqin and Others, HCMP 632/2012 and HCA 373/2014 (unreported, 23 January 2020) [2020] HKCFI 256, at §101. It was further stated at §108 that discharge of an undertaking is a draconian measure and is a judicial discretion.

9.  In D, M v D, R (also known as R, R), FCMC 1968/2009 (unreported, 4 March 2021) [2021] HKFC 48 at §§19-23, Judge Melloy gave further guidance:-

“19. … it is not disputed that the court cannot impose an undertaking on a party nor can it vary an undertaking of its own motion. The court may accept an undertaking and it may also refuse to accept an undertaking or to discharge an old one. Thus there is sometimes no alternative but for an original undertaking to remain in place, for lack of any other reasonable alternative. In such circumstances it is also open to the court to invite a party to consider making a different undertaking.

20. Counsel for the wife is correct when he says that this issue was recently reviewed by the UK’s Supreme Court in the case of Birch v Birch [2017] WLR 2959. At paragraph 5 of that judgment Lord Wilson said as follows:

“A court has no power to impose any variation of the terms of a voluntary promise. A litigant who wishes to cease to be bound by her (or his) undertaking should apply for “release” from it (or “discharge” of it); and often she [he] will accompany her [his] application for release with an offer of a further undertaking in different terms. The court may decide to accept the further undertaking and, in the light of it, to grant the application for release. Equally the court may indicate that it will grant the application for release only on condition that she [he] is willing to give a further undertaking or one in terms different from those of a further undertaking or one in terms different from those of a further undertaking currently on offer. In either event the court’s power is only to grant or refuse the application for release; and, although exercise of its power may result in something which looks like a variation of an undertaking, it is the product of a different process of reasoning.”

With respect I agree.

…

22. That remains my view now. It seems to me that the court has a very wide discretion when considering whether or not to discharge an undertaking or to accept a different undertaking in its stead. As with an application to vary under s. 11 (7) of the Matrimonial Proceedings and Property Ordinance, Cap 192, the overall intention is to achieve a fair outcome, by reference inter alia to all of the relevant circumstances of the case, including the basis upon which the parties originally entered into the consent order and whether or not there has been any material change of circumstance. Overall, I am charged with considering whether the husband’s request is just and reasonable. …

23. It seems to me that the reference by counsel for the wife, to A v A (Variation of Consent Order: Replacement Undertakings) [2018] 4 WLR 66, where the judge in that case said inter alia that consideration should be given to “avoiding serious hardship or injustice” when considering the issue of undertakings, may not be relevant given the circumstances in this particular case. On occasion it may be necessary to consider whether discharging an undertaking will cause serious hardship or injustice. I do not accept that that is necessarily the appropriate test to be applied here. …”

Any Material Change of Circumstances?

10.  The Wife’s supporting affirmation contains 36 pages with 117 paragraphs in total, the majority of which are references and criticisms on the Husband’s 1^st and 2^nd Affidavits and previous written submission in respect of the injunction. The same was rehearsed, expanded and hampered by her reply affirmation of 62 pages with 192 paragraphs. In gist, she complains about the Husband’s distortion of facts concerning the marriage, purchase of DB Property, transfer of family funds, new account opening, Dancom and Belsea held on trust for Sydney and Coco[2], and transfer of the Bright Way shares. In my view, all these are second attack based on her alleged historical events on the injunction, which must be rejected by the court.

11.  Ms Huang for the Husband submitted that the Discharge Summons is simply the Wife’s attempt to re-run her case against the injunction. All these arguments had been fully canvassed when she was represented by her then lawyers including Senior Counsel. I entirely agree and cannot accept that she could have a second bite of the cherry and use this application for backdoor appeal a year later.

12.  No doubt, there is no change of circumstances raised in her affidavit evidence, not to say any material change of circumstances, rendering compliance to be infeasible or impossible.

13.  Furthermore, the Wife’s Undertaking was accepted by me in lieu of a final injunction. As set out in L v C and approved in Wang Linping, that it is not sufficient to simply prove “just” to discharge the undertaking but “material change of circumstances” must be shown. Accordingly, her case is doomed to fail.

14.  The Wife in her submission at §§111-113 seeks to rely on (1) the transfer of the Bright Way shares back to the Husband in February 2024 and (2) the parties’ agreement on the main suit to be the changed circumstances in justifying her application for discharge.

15.  I disagree with her submissions. First, there is no admissible evidence in this regard and no leave was sought to adduce further/new evidence. Second, even if they are admitted into evidence, they are inconsistent with her own affirmations and do not form the basis of the Discharge Summons. Third, in any event, they do not make compliance of the Wife’s Undertaking not feasible or impossible. Lastly, it does not mitigate the real risks of dissipation which will be discussed below. Her arguments in this regard must be rejected.

Any “Mistake” or “Misrepresentation” as alleged

16.  Ms Huang for the Husband submitted, which I agree, that if the Husband’s case was flawed with misrepresentations as alleged and the Wife truly believed she stood a good chance to succeed, she would not have volunteered the undertakings in lieu of injunction on 29 June 2023 and agreed to continue with the Wife’s Undertaking given on 21 and 22 August 2023.

17.  In this connection, the Wife now avers that she was wrongly advised and made haste to offer the Wife’s Undertaking. She further accuses her then legal team for their inadequate preparation and lack of genuine effort in defending her rights, and she was compelled for the continuation of the Wife’s Undertaking. Offering suitable undertaking in lieu of injunction is a very common practice in this kind of application. I simply fail to see how her then lawyers had given her any wrong advice.

18.  Contrary to her allegation that she was advised of “not telling the whole story in the hearing”, in her written submission dated 29 June 2023, her Senior Counsel Mr Bernard Man leading Mr Cristian Tsang did put forward a serious complaint of material non-disclosure and raise her fundamental challenges of facts within the procedural limit. In any event, I may not be in a position to comment as to whether her legal team should be criticized or not.

19.  Even on her own evidence (if taken to be true), the advice seems to be that the injunction was unlikely to be removed and her lawyer “withheld material information (such as COIs for Dancom and Belsea) from the Court” despite her provision of the information in advance. Obviously, she was properly advised. I consider that her case on “mistake” or “misrepresentation” is plainly unfounded.

20.  Even worse, her purported argument of “misrepresentation” extended to her grievance towards the Husband’s lawyers. In short, her case is that the Wife’s Undertaking was everybody’s fault, namely her legal team (including Senior Counsel), the Husband, and even his legal team, but not herself. It speaks volumes of the lack of substance in her allegation and reinforces her misuse of the Discharge Summons for a second chance to reopen her arguments against the injunction.

21.  On the other hand, she had once made it clear that she was “happy” to give the Wife’s Undertaking to the Husband and the Court. If she had chosen to offer it as a matter of strategy, as a plea for practical solutions or otherwise, it was her decision alone. However, that does not give rise to any valid grounds for her to renege on her undertakings simply because the reality of events did not conform to her personal agenda and the law does not assist in her favour. In my judgment, her conduct in litigating this Discharge Summons is plainly and clearly an abuse of process.

Any Real Risk of Dissipation Then and Now?

Prior to Injunction

22.  In my Decision dated 13 October 2023, I had already found that there is a real risk of dissipation by the Wife.

23.  It is worth highlighting some of the most egregious facts that were indicative of the real risk of dissipation as follows:

(1)  Upon the Husband’s raised the likelihood of divorce, the Wife emailed him on 17 April 2023, threatening that if he chose to leave the family and their marriage, “[she] will fight dirty and hard to get [her] revenge from those pain and hurts [the Husband has] caused. [His] life will be miserable until the day [he dies].”

(2)  The Wife was quick to put her words into action. In mid-May 2023, the Husband lost access to the four BNPP accounts, holding the main bulk of liquid family assets of over US$35.66M as of 1 May 2023. Upon his inquiry with his account manager at BNPP, he was told to ask the Wife.

(3)  As transpired, the total value in the BNPP accounts has significantly plunged to only US$25M by 31 May 2023, with over US$10M (30%) of funds secretly transferred to the Wife’s personal account at HSBC and immediately withdrawn therefrom.

(4)  On 1 June 2023, the Husband discovered he had been wrongfully removed from directorship of Bright Way, with his shares transferred to the Wife.

(5)  Only two weeks later, on 13 June 2023, the Wife sent a WhatsApp message to the Husband: “I hired the top lawyer in Hong Kong today! I just let you know if you want to fight, the fight will be financially, emotionally and physically destroy you! It will be a long, long, long hard, hard and extremely expensive battle! I will not and would not stop until the day you are on the floor and bagging! …”

(6)  That was followed by the Wife liquidating all share positions in Bright Way’s Credit Suisse account in a rapid series of trades on 16 June 2023.

Immediately after Injunction

24.  The Wife was made fully aware of the ex parte injunction order on 19 June 2023. However, on 20 June 2023, she made attempts to instruct BNPP to transfer all the Europe dollars from Belsea’s and Dancom’s BNPP accounts to her personal account at HSBC, in blatant disregard of the interim injunction.

Post-Undertaking

25.  On 22 March 2024, the Husband was informed by the Wife’s former solicitors Tanner de Witt (“TDW”) that “Yanping has now set up the Xuxidan Trust (the “Trust”). She is minded to vest her shareholdings in Dancom and Belsea in the Trust.”

26.  The Husband’s solicitors’ correspondence to her dated 28 March 2024 exposed her ploy, upon which she immediately instructed the purported trustee to revert Dancom and Belsea back to herself. But Dancom and Belsea were settled into trust as of 2 April 2024.

27.  There is no dispute that she was in breach of the Wife’s Undertaking. She admitted to the same as per TDW’s letter dated 9 April 2024 – “…At the time of vesting, Yanping innocently did not appreciate that the transfer of the Dancom shares would be considered as an indirect “removal” of assets”. Dancom and Belsea were only put back in place on or around 6 May 2024.

28.  I find that the Wife has proven herself that she was and still is willing and ready to siphon off marital assets and not to comply with her undertakings. This is compounded by the fact that her breach occurred when she was legally represented. If she was capable of misconduct then, the chances of further misconducts that she is acting in person are much higher.

29.  Apart from the Bright Way BNPP account and Dancom BNPP account currently protected by the Wife’s Undertaking, the other half of liquid assets in Belsea’s BNPP account, and Bright Way’s Credit Suisse and IB accounts remain largely under her control. The Husband has no access to the same save for being able to view the IB account. This heightens the risks of dissipation.

30.  Given the above, I am satisfied that there be a real risk of dissipation in the future, and that it would not be just to release her from the Wife’s Undertaking.

31.  Lastly, she has failed to offer any apropriate and reasonable undertakings or measures in place of the Wife’s Undertaking. I see no reason why I have to exercise my discretion to discharge the Wife’s Undertaking.

Conclusion

32.  I find that the Wife is evidently at pain to escape from the Wife’s Undertaking. She has failed to demonstrate why the Court should exercise its discretion in favour of her application.

33.  The overall circumstances beg for the Wife’s Undertaking to be maintained to safeguard a fair determination of ancillary relief, especially in light of her repeated breach of the interim injunction in the past and potential breach in the future. Furthermore, given the high conflicts and complete breakdown of trust between the parties, it is unrealistic for the parties to cooperate with one another and manage the relevant bank accounts together, especially in light of the chronology of events that gave rise to the need for the Husband’s ex-parte injunction in the first place.

34.  Therefore, I order the Discharge Summons to be dismissed. In respect of the question of costs, Ms Huang for the Husband asked for costs on indemnity basis. I agree that it is entirely unreasonable for the Wife to take out this unmerited application and that she shall pay costs of this application, including all costs reserved, if any, on an indemnity basis to the Husband with certificate for Counsel, to be taxed if not agreed. This is an order nisi which shall be made absolute unless any parties apply to vary by summons within 14 days.