MAN JASON CHUN YIN v. WONG CHI KIT AND ANOTHER

HCA 595/2022

[2022] HKCFI 3238

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 595 OF 2022

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BETWEEN

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DECISION

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Introduction

1.  On 27 May 2022, and upon application by the plaintiff (“P”) on an ex parte basis, Lisa Wong J granted against the defendants (“D1”, “D2”, and collectively “Ds”) an Injunction Order (the “Injunction Order”). The Injunction Order comprises a proprietary injunction (the “Proprietary Injunction”), a Mareva injunction (the “Mareva Injunction”) and a disclosure order in aid (the “Disclosure Order”). By Summons of 30 May 2022 (the “Summons”), P seeks continuation of the Injunction Order. The Summon came before this Court during the summons day on 10 June 2022. Having heard parties, and by consent, I adjourned the Summons for substantial hearing, gave agreed directions for the further conduct of the same, and continued the Injunction Order till disposition of the Summons or further order. The Summons now comes back before this Court.

2.  Mr Vincent Lam and Mr Kurt Ng appeared for P. Mr Anthony LK Ko and Mr Andy CY Kwok appeared for Ds.

Relevant affirmations

3.  In support, P has filed 2 affirmations (of 24 May and 31 August 2022, “P/Aff1” and “P/Aff2” respectively). He also relies on the affirmation of Wu Tsz Kwan of 31 August 2022 (“Wu” and “Wu/Aff”).

4.  Whilst D1 has filed 5 affirmations (5 July (2), 11 and 24 (2) August 2022, “D1/Aff1”, “D1/Aff2”, “D1/Aff3”, “D1/Aff4”, and “D1/Aff5” respectively), his main affirmations in opposition are D1/Aff2 as supplemented by D1/Aff5 (which relevantly only exhibits a statement of an HSBC account held by D2)[1].

5.  D2 is D1’s wife. She has filed none.

Parties’ cases

6.  According to P, he owns a number of landed properties in the New Territories. He is over eighty of age. He says that he runs and manages his properties with the assistance of his tenants. He met D1 in about 2017 or 2018. They became very good friends. In about October 2020, D1 became his tenants in respect of 3 specific lots of land (the “Property”). In about early 2021, P signed a power of attorney in favour of D1 (the “Power of Attorney”). P’s main allegations, as summarized by Mr Lam, are that, D1, in the course of renting and managing certain of P’s properties, made false statements about the need for money, which false statements resulted in P (1) issuing a number bearer cheques (the “Bearer Cheques”) and (2) having transferred certain sums to D2. P also says that in September 2021, D1 without his consent used his (P’s) name to open a company called Fu Kong Kai Limited (the “Company”).

7.  Those Bearer Cheques, transfers and the nature of the alleged false statements are now, amongst other things, summarized in Appendix 1 of Mr Lam’s written submissions (“P/Appendix 1”). Mr Ko accepts that the summary is in general accurate. The following features are noted:

(a) The alleged false statements fall into the following categories:

(i) Alleged maintenance of the Property;

(ii) Alleged fine imposed by the Government;

(iii) Alleged attempted eviction of Mr Li Lau Man (“Mr Li”), another tenant of P;

(iv) Alleged attempted eviction of a Mr Ng (“Mr Ng”), an occupier of part of Lot 2453;

(v) Alleged purchase of a Mainland-Hong Kong cross border vehicle licence plate (the “Licence Plate”);

(vi) Alleged purchase of a Rolex watch for P; and

(vii) Alleged compensation payable to Wu;

(b) In respect of the Bearer Cheques:

(i) P in P/Aff1 states that the Bearer Cheques comprise 16 cheques. They were issued between April and December 2021. He has produced copies of 15 (as “MCY-8(1)” to “MCY-8(15)”, respectively “Chq #1” to “Chq #15”). He says that the copy of the other one (#862262, “Chq 862262”) could not be located;

(ii) The Bearer Cheques were all deposited into either D1’s or D2’s accounts;

(iii) Amongst the Bearer Cheques was #597572 in the amount of HK$400,000 (i.e. “MCY-8(8)” or “Chq #8”). In D1/Aff2, D1 says that that cheque had bounced upon presentment. P in P/Aff2 accepts that. That cheque hence no longer forms part of the claim. Mr Lam has confirmed this;

(c) In respect of the bank transfers:

(i) In P/Aff1, P has only mentioned one transfer, in the amount of HK$386,904.76[2] (“Transfer #1”). He says that that was in relation to the alleged purchase of the Licence Plate;

(ii) In P/Appendix 1, another transfer in the sum of HK$424,000 has been included (“Transfer #2”). Transfer #2 was first mentioned by D1 in D1/Aff1 as part of the disclosure. He elaborates upon the same in D1/Aff2[3], that it related to the recovery of Lot 2453 and the development of Lot 2124. P denies that[4]. P says that it related to another false statement by D1 to him about Wu intending to claim against him (P), and that that transfer of HK$424,000 was made for the purpose of paying Wu. Wu denies having received that sum from Ds[5];

(iii) Transfers #1 and #2 were effected into D2’s account;

(d) The removal of Chq #8 from P’s claim and the addition of Transfer #2 have the following impacts on the amount enjoined by the Injunction Order:

(i) The Proprietary Injunction related to the original 16 Bearer Cheques, said to be set out in Schedule 3 to the Injunction Order. The Injunction however does not have any Schedule 3. Mr Lam during the hearing clarified that the Proprietary Injunction covers only the Bearer Cheques (but not Transfer #1 or Transfer #2). With the removal of Chq #8, the enjoined amount now becomes HK$3,001,000, and this is the amount which Mr Lam is seeking to continue;

(ii) The amount enjoined by the Mareva Injunction is the aggregate of the original 16 Bearer Cheques and Transfer #1. That amount should similarly be reduced in any event by HK$400,000. Mr Lam confirmed during the hearing that P does not seek to add to it Transfer #2. The ceiling of the Mareva Injunction which Mr Lam is seeking to continue is therefore HK$3,387,904.76.

8.  The causes of action P relies on include fraud and deceit, breach of fiduciary duties, constructive trust, unlawful means conspiracy, knowing receipt and dishonest assistance.

9.  Ds’ case, in gist and as summarized by Mr Ko, is as follows. D1 was working for the P on a freelance basis. He was on P’s behalf working on a number of matters, which included (1) eviction of Mr Li, (2) recovery of Lot 2453 from Mr Ng, (3) the purchase of the Licence Plate, (4) he purchase of a Japanese car for P, (5) the construction of P’s new house, (6) the maintenance of the Property, and (7) the development of Lot No. 70 in Demarcation District No. 100. Mr Ko submits that the “payments that [P] made to [D1] did not only cover the costs of the work that he ordered [D1] to do on his behalf, but it also included the reimbursements that [D1] entitled to”. The Rolex watch was in fact a gift from P. It is further D1’s case that he made use of D2’s accounts to make payments in relation to the aforesaid matters.

10.  In relation to the Summons:

(a) Mr Lam submits that the thresholds (of serious issue to be tried and good arguable case) for the pleaded causes of actions have been met, that balance of convenience is in favour of the grant and continuation of the Injunction Order, and that it is just and convenient to do so. He submits that no mini-trial should be conducted, and that the complaint of material non-disclosure should be left to be investigated at trial as any finding in favour of Ds on material non-disclosure would require this Court to find for Ds on their version of facts. He submits therefore that the Injunction Order should be continued;

(b) Mr Ko’s submission is that it should not be:

(i) The main basis which he has put forward is material non-disclosure;

(ii) As clarified by him in the course of his oral submissions, Ds are not running independently any threshold ground (in the sense that that P has failed to establish any serious issue to be tried or good arguable case). What Mr Ko is submitting is that “at the ex-parte application stage, there was (probably still is) a series of matters in [P/Aff1] remain unexplained or undisclosed”[6], and if he had made all the disclosure which he failed to, the court would have found that he had failed to establish any serious issue to be tried or good arguable case;

(iii) In other words, Mr Ko is submitting that the “series of matters” which he submits P failed to disclose were material in nature, in the sense that the ex parte application would have been refused on threshold grounds had the disclosure been made, so that the Injunction Order should not now be allowed to continue, and that there should not be any re-grant.

The alleged non-disclosure or suppression of facts

11.  Mr Ko sets out at §19 of his written submission that “series of matters” which he submits D failed to explain or disclose. He gives 16 headings. Under each of those headings, Mr Ko over some 7 pages of his written submissions criticizes P for having failed to explain or disclose various aspects of what D1 says were the dealings between him and P. Those submissions may be summarized as follows:

(a) in relation to the relationship between P and D1, P is criticized for having failed to explain or disclose the reason why he would assume or expect that D1 would work for him for free;

(b) in relation to the Property, it is submitted that P has failed to explain or disclose how D1 came to know the Property was vacant, that it was D1’s initial idea to rent the Property for his solar energy project, that his business partner was Wu, why P did not tell D1 about the existence unauthorized building works, why P leased the Property to D1 for 10 years at rate below market rate, and why he did not claim against D1 in relation to the lease he granted to D1;

(c) in relation to the Power of Attorney, it is said that P did not explain or disclose the scope of powers thereunder, why he would have signed it in favour of D1 when he was already in possession of the Property, and why he did not appoint his relatives;

(d) in relation to the Company, how D1 used P’s name to set it up despite his refusal to do so, what businesses it engaged in, and that he sold the Company to D1 for HK$1.00;

(e) in relation to the maintenance of the Property, the states and conditions of the Property before 29 April 2021 and after 6 August 2021, and how exactly D1 convinced him that it required repair;

(f) in relation to the payment of fines, what lots they related to, and why he issued the cheques concerned merely on D1’s say-so;

(g) in relation to the eviction of Mr Li, that Mr Li used to be his business partner, that Mr Li had previously sued him, why P did not negotiate with him direct, how D1 convince him to issue the cheques involved, etc;

(h) in relation to the recovery of possession of Lot 2453, how D1 became aware of Mr Ng’s occupation of the same, why P did not hire any lawyer for that, how Mr Ng would have surrendered possession upon charging only HK$30,000, and the subsequent sub-division of the land;

(i) in relation the purchase of the Licence Plate, how D1 convinced him that it was a good investment, and why he believed that it could be purchased with less than HK$1,000,000;

(j) in relation to the purchase of the Rolex watch, how he was persuaded to purchase a new one when he was comfortable with his existing one, why he did not ask D1 to take him to the seller direct, and the further particulars as to how he was persuaded to gift it to “Lam Sir” who had sorted out certain unauthorized building works on the Property;

(k) in relation to the issue of the Bearer Cheques, “what exactly did [D1] tell him which convinced him not to fill in the names of the payees on those cheques”;

(l) why P had delayed in the initiation of the present action;

(m) that he has failed to disclose that he had instructed D1 to purchase the Japanese Car for him from Japan;

(n) that P has failed to disclose that he had instructed D1 to monitor the construction of P’s new house at No.63D On Long Tsuen;

(o) that P did not disclose that he had instructed D1 to set up the electricity and water supplies to Lot 70; and

(p) that he did not disclose that he commissioned D1 to develop modular houses on Lot 2124.

12.  Mr Ko then submits that “all [P] had done were making vague assertions and allegations against [D1] without giving full particulars or concrete evidence that substantiates his allegations”[7], that “the loopholes of [P’s] allegations and assertions were (and still are) everywhere”[8], that “as a seasoned businessman … it is very difficult to imagine that [P] (1) [w]ould sign over a Power of Attorney to [D1] without first considering his own family member(s) … (2) [w]ould be convinced by [D1] and issued him a number of bearer cheques so easily without asking for any details and/or particulars…”[9], and that the “story/stories that [P] told in [P/Aff1] sound(s) broken and inconsistent”[10]. Mr Ko then submits that “Without his misrepresentation of facts and/or material non-disclosure, [P] would not be able to argue that he had a good arguable case against [Ds] as alleged”[11].

13.  Mr Ko then makes the submission (and elaborated upon at §§27 to 44 of his written submissions) that the outcome of P’s application before Lisa Wong J would have been different if full and frank disclosure had been made, and that Lisa Wong J would not have granted the Injunction Order in the first place due to lack of serious issues to be tried (let along good arguable case), and lack of real risk of dissipation.

14.  Mr Ko further submits, in the context of the Mareva Injunction[12], that the evidence gives rise to realistic doubt as to the truthfulness of P’s allegations, and that:

“52. [Ds are] not asking this Court to look into the merits of the present case in detail and examining the credibility of [P] under the microscope at this stage, but this Court should still be sceptical about the [P’s] case/allegations when there are many questions and factual matters mentioned hereinabove remain unanswered and undisclosed.

53. Given the fact that there are many questions and factual details remain unexplained and/or undisclosed in [P’s] affirmations, [Ds] submit that it is more than obvious that [P] has something to hide, unwilling to disclose and/or even misrepresented to the Court when he obtained the Interlocutory Injunctions at the ex-parte stage, and he is still trying to do so at the present inter-parte stage.”

15.  Mr Ko concludes by submitting[13] that:

“Hence, it is [Ds’] submission that, the Proprietary Injunction, together with the Mareva Injunction, against [Ds] should not be continued and/or regranted due to:

(1) Either:

(a) material non-disclosure; or

(b) misrepresentation of facts on [P’s] part.

(2) [P’s] allegations against [Ds] are vexatious and/or frivolous.”

The relevant legal principles

16.  Quite a number of authorities have been cited to me on the general legal principles applicable to proprietary injunction, Mareva injunction and the several causes of action which P relies on. But in the light of the nature of Mr Ko’s main ground of objection, I need to focus only upon those principles relevant to material non-disclosure.

17.  There is no serious dispute between the parties on the applicable legal principles. Mr Ko has referred to Velatel Global Communications Inc & Anor v Chinacomm Ltd & Ors (unreported HCA 1978/2011, 26 October 2012), per Au-Yeung J at §§26 and 27. Mr Lam has referred to me Zhao Zhi Qiang v Zhao Zhiguang & Anor [2020] HKCFI 2990, per Deputy Judge MK Liu at §§50 to 57, which in turn refers to a number of authorities that include Sky Motion Holdings Ltd v China Create Capital Ltd [2019] HKCFI 2408, per Coleman J at §88, Xie Li Xin v Law Ka Yan, Thompson [2018] HKCFI 1096, per Deputy Judge Ismail SC at §60, Sino Wood Investment Ltd v Wong Kam Yin (HCA 307/2002, 23 December 2002) per Deputy Judge A Cheung (as he then was) at §§27 and 28, and Cheer Signal Development Ltd v Wong Siu Fan (HCA 780/2015, 26 October 2015), per Au-Yeung J at §§48 to 50. Of particular relevance to the present application are the following considerations:

(a) the observations of Deputy Judge A Cheung (as he then was) in Sino Wood, where he, having at §§27 and 28 recorded the substantial disputes between the parties in relation to the subject matters of the alleged material non-disclosure, observed at §31 that:

“31. I cannot decide the substantial disputes between the parties in relation to the subject matters of the alleged material non-disclosure on paper. Not only must I resist the temptation of conducting a min-trial, I must not, on the incomplete evidence that has been placed by the parties before me, seek to evaluate the ‘inherent probabilities’ of the respective competing versions of the parties …”

(b) the observations of Au-Yeung J at §48 in Cheer Signal (citing and applying Sino Wood), that:

“ 48. Where the alleged subject matters of material non-disclosure are hotly disputed by the plaintiff, the court should not and could not conduct a mini-trial to decide which party’s story is inherently more credible. Whether or not a plaintiff has made full and frank disclosure in obtaining an ex parte Mareva injunction should be investigated at the trial: Sino Wood Investment Ltd v Wong Kam Yin, at §§27-28.”

Discussion

18.  I refer to the affirmatory evidence filed by the parties. I refer also to Appendix 2 of Mr Lam’s written submission which summarizes Ds’ case and P’s reply. Similar to P/Appendix 1, Mr Ko accepts the summary to be in general correct. It is clear that parties have substantial disputes over the underlying facts. D1 in D1/Aff2 puts forward his case as to what the Bearer Cheques and transfers were for. P in reply dispute them. In respect of most, he denies having instructed or asked D1 to undertake the work which D1 says he has undertaken. P says that he has never heard of 陳偉明to whom D1 claims he had made various payments for his assistance in the eviction of Mr Li and Mr Ng. P disputes the authenticity of some of the documents which D1 has produced. He denies having agreed to remunerate D1. He says he has never agreed to gift a Rolex to D1, and had never asked D1 to help purchase any Japanese car for him.

19.  I have also summarized above the “series of matters” which Mr Ko submits P has failed to explain and explain.

20.  In the light of the parties’ respective factual cases, and the nature of that “series of matters” which forms the basis of Mr Ko’s submissions on material non-disclosure, there is clear force in Mr Lam’s submissions, which I accept, that any finding in favour of Ds in relation to the alleged suppression of facts/material non-disclosure would require the Court finding for Ds in relation to their version of facts.

21.  Mr Ko criticizes P’s allegations as being “vague”, “without full particular, or concrete evidence”, and that “loopholes … were … everywhere”.

22.  I point out the obvious. The present action is still at its early stage. Pleadings have not closed. There has not been any discovery and exchange of documents.

23.  I have considered the various documents which Mr Ko has highlighted at §34 of his written submissions. Whilst they may support Ds’ case that he did undertake certain works, they remain equivocal in relation to the core issue as to whether D1 did them upon P’s instructions, which P had denied.

24.  But most fundamentally, this Court simply cannot decide the substantial disputes between the parties in relation to the subject matters of the alleged non-disclosure on the incomplete evidence before the court. Whilst Mr Ko says that he is not asking this Court to look into merits and examine the issue of credibility “under the microscope”, in my view he in effect is. I repeat with respect the warnings given by the Courts in Sino Wood and Cheer Signal, that no mini-trial should be conducted to decide, for the purpose of deciding allegations of material non-disclosure, which parties’ story is inherently more credible.

25.  There can be no dispute that P has issued all the Bearer Cheques and made the transfers. Nor is it in dispute that Ds have received them. P has stated on oath that he has been misled. In my view, sufficient disclosure was made by P in P/Aff1 in support of his various causes of action. A good arguable case (a fortiori serious issues to be tried) was made out before Lisa Wong J. At this stage, the evidence remains sufficient to establish the threshold of good arguable case (and the same a fortiori situation).

26.  For the above reasons, I conclude that no case of material non-disclosure or misrepresentation of facts, nor has it been made out that P’s allegations are “vexatious and/or frivolous”[14].

Disposition

27.  For reasons set out above, I continue the Injunction Order till the handing down of Judgment upon trial of the action, or further order, to the extent of HK$3,001,000 in relation to the Proprietary Injunction, and to the extent of HK$3,387,904.76 in relation to the Mareva Injunction, as I have explained in §7(d) above.

28.  I further direct that P shall file and serve within 3 days from the date of the handing down of this Decision a Schedule 3 to the Injunction Order setting out full particulars of the Bearer Cheques (except Chq #8) to rectify the slip which I have pointed out in §7(d)(i) above.

Costs

29.  I have considered counsel’s submissions on costs. I see good sense in Mr Ko’s submissions that in the eventuality of the Injunction Order being continued on the basis that the allegation of material non-disclosure should only be investigated during the trial, so that the outcome of the trial would bear upon the issue of costs of this Summons, the costs of this Summons should be costs in the cause of the action.

30.  On the other hand, Ds are unsuccessful in the present Summons. To reflect that, I hold the view that the fair costs order will be that the costs of and occasioned by the Summons be P’s costs in the cause of the action, with certificate for one counsel. I make a costs order nisi to that effect. Any application for variation should be made by letter to my Clerk within 14 days, upon receipt of which this Court may hand down written directions with the view of dealing with the matter on the papers.