HENRY SHING HIM CHOW AND ANOTHER v. VICTOR LING KAM TONG AND ANOTHER

HCMP 1305/2021 &
HCA 1521/2021
(Heard together)

[2025] HKCFI 1729

HCMP 1305/2021

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 1305 OF 2021

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AND

HCA 1521/2021

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1521 OF 2021

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(Heard together)

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D E C I S I O N

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INTRODUCTION

1.  On 14 October 2024, I handed down the decision in these two proceedings which were heard together: see [2024] HKCFI 2737.

2.  In HCMP 1305/2021:

(1)  I dismissed the stay application of the 1^st and 2^nd defendants;

(2)  I granted summary judgment against them; and

(3)  I allowed the new evidence application of the 1^st and 2^nd defendants.

3.  In HCA 1521/2021:

(1)  I dismissed the stay application of the 1^st and 2^nd defendants;

(2)  I dismissed the stay application of the 3^rd defendant; and

(3)  I allowed the new evidence application of the 1^st and 2^nd defendants.

4.  Arising from the above, the defendants took out the following four summonses which are now before the court:

(1)  summons filed on 28 October 2024 by the 1^st and 2^nd defendants in the HCA proceedings;

(2)  summons filed on the same day by the 3^rd defendant in the same proceedings;

(3)  summons filed on 3 February 2025 by the 1^st and 2^nd defendants in the HCMP proceedings; and

(4)  another summons filed on the same day by the 1^st and 2^nd defendants in the HCA proceedings.

5.  Put broadly, by the above summonses, the defendants are seeking leave to appeal from my decision, including the costs order, and a stay of execution or an interim stay of the proceedings pending the intended appeals.

6.  By consent of the parties, the applications are dealt with by paper disposal. The parties have the same legal representation as in the original hearing. I shall adopt below the defined terms and paragraph numbers in the decision.

PROCEDURAL ISSUES

7.  It cannot be denied that in the course of making these applications, the Trustees have made a number of procedural missteps. For example, their summons for seeking leave to appeal (ie para 4(1)) was filed in the HCA proceedings only, but not in the HCMP proceedings. Also, their appeal from my decision to grant summary judgment in the HCMP proceedings should be as of right. Yet, they failed to lodge the appeal directly with the Court of Appeal within the prescribed time. They are now out of time.

8.  The various issues were discussed at the call-over hearing on 17 January 2025. Also, at that hearing, I dismissed the Trustees’ application to vary the costs order nisi made in para 243 of the decision.

9.  Subsequently, the Trustees took out the two summonses in para 4(3) and (4) in an attempt to rectify the mistakes.

10.  As a result of all these, what I need to deal with now are, in summary, the following applications.

11.  By the Trustees:

(1)  leave to appeal against my decision refusing to stay the HCMP proceedings in favour of the BVI courts. This application is made out of time;

(2)  leave to appeal against my decision refusing to stay the HCA proceedings in favour of the BVI courts. This application is made within time;

(3)  extension of time to appeal against my decision granting summary judgment in the HCMP proceedings;

(4)  leave to appeal against my order dismissing their costs variation application at the call-over hearing. This application is made within time; and

(5)  stay of execution or interim stay of proceedings in both sets of proceedings pending the intended appeals.

12.  By Chow:

(1)  leave to appeal against my decision refusing to stay the HCA proceedings in favour of the BVI courts. This application is made within time; and

(2)  interim stay of proceedings in the HCA proceedings pending the intended appeal.

LEGAL PRINCIPLES

13.  The principles governing applications for leave to appeal are well established. The applicant needs to show that the appeal has a reasonable prospect of success or there is some other reason in the interests of justice why the appeal should be heard: section 14AA(4) of the High Court Ordinance, Cap 4. A “reasonable prospect of success” means an appeal with prospects that are more than “fanciful”, without having to be “probable”: SMSE v KL [2009] 4 HKLRD 125 at para 17. To meet the “reasonable prospect of success” test, an applicant is required to show more than just an arguable case, but an appeal that has merits and ought to be heard, although he does not have to demonstrate that the appeal will probably succeed: Wynn Resorts (Macau) SA v Mong Henry [2009] 5 HKC 515 at para 19.

14.  In an application for extending time to appeal, the court takes into account the length of the delay, the reasons for the delay, the chances of success of the intended appeal, and the prejudice to the other party if time is extended. Where the delay is inexcusable, the applicant must show a real prospect of success on the merits, not just a reasonable prospect of success. See, eg, The Hongkong and Shanghai Banking Corporation Ltd v Sy Shun Wu [2018] HKCA 736 at paras 8 and 9. This approach should equally apply in an application for extending time to apply for leave to appeal (where leave is required in the first place).

15.  This approach will apply to the Trustees’ applications in para 11(1) and (3) above.

16.  As will be seen below, I am not satisfied that their proposed grounds of appeal in relation to the stay decision, the summary judgment decision and the costs variation decision meet the lower threshold of “reasonable prospect of success”. Their applications in para 11(1) to (4) therefore fail for that reason. In the circumstances, in respect of the applications in para 11(1) and (3), there is no need for me to express any view on the extent of the delay and whether it is excusable, and then to decide whether the higher threshold of “real prospect of success” should apply.

17.  For the same reason, the minimum requirement for staying execution of my decision pending any appeal is not met. The Trustees’ application to stay the enforcement of the summary judgment in the HCMP proceedings and to stay the HCA proceedings (ie para 11(5)) should therefore be dismissed: Star Play Development Ltd v Bess Fashion Management Co Ltd [2007] 5 HKC 84 at para 9(6). It is hence unnecessary for me to consider whether the reasons put forward in support of the stay are good reasons or not.

18.  Equally, I am not satisfied that the proposed grounds of appeal put forward by Chow in the HCA proceedings are reasonably arguable. His leave to appeal application is therefore dismissed. His stay application is also dismissed for the same reason. There is no need for me to consider whether the appeal would be rendered nugatory if stay is refused, which is the reason which Chow puts forward in support of his stay application.

19.  I shall now explain why I consider that the proposed grounds of appeal of the Trustees and Chow are not reasonably arguable.

THE TRUSTEES’ PROPOSED GROUNDS OF APPEAL

20.  I shall first deal with the Trustees’ applications in para 11(1) to (3). The draft notice of appeal contains 12 grounds. However, Mr Todd’s written submissions are not organised by reference to the 12 grounds. Because of that, I have found it difficult to correlate the contents of his submissions with the individual grounds.

21.  The other difficulty I have is over the drafting of the proposed grounds as they appear in the draft notice. I have to say that there does not appear to be any coherent structure in that document. As an illustration, the first ground takes up almost four pages. It covers the errors which they contend I made on Issues (4), (5) and (8) as identified in the decision. Then, in the subsequent grounds, these same issues are discussed again. For instance, the second ground makes a new point relating to Issue (5) and the third ground goes back to why I was wrong on Issue (8).

22.  In the discussion below, I will not attempt to re-organise the points scattered across the various grounds. I shall simply discuss the contentions in the order in which they appear in the draft notice.

The first ground

23.  As far as I can see, the first ground contains three main contentions.

The first ground – the first contention

24.  The first contention appears in ground 1(a) to (d)(ii)(3). It is argued that I was wrong at law not to give full effect to the exclusive jurisdiction clause in the Settlement Deed. Specifically:

(1)  I misdirected myself by holding that the existence of a third party could undermine the importance and effect of the clause.

(2)  I was wrong to have relied on a forum non conveniens decision against Chow in order to breach the Trustees’ right to have their case heard in the jurisdiction nominated by the exclusive jurisdiction clause.

(3)  In the process, I was wrong to re-introduce the forum non conveniens test via the third party claim.

(4)  The plaintiffs’ case was not equally weighted between the Trustees and Chow. The claim against Chow is not an independent one but one wholly dependent on the claim against the Trustees. The Trustees could be sued with the issues against Chow left to enforcement.

(5)  The justification of allied litigation to reimpose a forum non conveniens to displace the implementation of the exclusive jurisdiction clause was inconsistent.

25.  This contention is a challenge of my ruling in Issue (8).

26.  As can be seen from the decision, the discussion of Issue (8) was premised on the tentative conclusion which I had reached on Issue (3). Under Issue (3), the material question was whether the settlors’ autonomy should be respected and their intention upheld. This was a separate question from the question of which forum was clearly or distinctly the appropriate forum to try the dispute. I therefore held that it was not appropriate to conduct a Spiliada exercise when deciding whether the parties should adhere to clause 17: see paras 143 and 153.

27.  Under Issue (8), however, I was addressing a wider question than the one under Issue (3). I was to decide which court would be better placed to hear the present proceedings and the question would be ultimately answered by considering which option would better serve the interests of justice: para 215.

28.  Plainly, this question warranted a broader enquiry than that under Issue (3). I saw, and still see, nothing objectionable in taking into account all relevant factors, including the forum non conveniens ones, both as a matter of principle and on the authorities. In any event, the forum factor was only one of the matters which I took into account in deciding between Hong Kong and the BVI as the better option to hear the case: paras 216 to 220.

29.  That was the process which I had gone through in reaching the answer to Issue (8). I did not seek to apply a forum non conveniens test alone or on its own, which is what the Trustees seem to suggest here.

30.  In respect of the Trustees’ suggestion that that plaintiffs’ case was not “equally weighted” between the Trustees and Chow and that the claim against the latter was wholly dependent on the claim against the former, it is not immediately clear to me how that factor, if correct, operates to show that I erred in my ruling under Issue (8). Mr Todd has not elaborated on this in his written submissions. I do not want to speculate here but it may be that the Trustees wish to raise the same point which is made in the fourth ground in Chow’s draft notice of appeal. If that is the case, then what I say in paras 118 to 119 below will address the point.

31.  For these reasons, I do not consider that the first contention has a reasonable prospect of success.

The first ground – the second contention

32.  The second contention appears in ground 1(d)(ii)(4).

33.  The Trustees contend that I was wrong to hold that Chow could not avail himself of the exclusive jurisdiction clause. He is being sued as a constructive trustee or trustee de son tort by a beneficiary under the Trust. He has assumed duties or powers under the Trust and is therefore bound by the exclusive jurisdiction clause: Lewin on Trusts (20^th ed) at para 11-078.

34.  This contention challenges my ruling in Issue (5). I should record here that the trustee de son tort argument was not relied on by the Trustees or Chow at the hearing (though there was a passing reference made by Mr Todd to it in the “Introduction” section of his skeleton submissions.)

35.  The role of Chow vis-à-vis the Trust, if any, is to be gathered from the plaintiffs’ pleaded case. (Neither the Trustees nor Chow had said anything about this in the stay applications.) I summarised the plaintiffs’ pleaded case in para 29. That summary was based on the pleas made in paras 20, 22, 29, 31 and prayer paras (a) and (b) of the statement of claim. In my view, according to that case, Chow cannot be properly characterised as a trustee de son tort. Nor can it be said that he has assumed duties or powers under the Trust.

36.  The meaning of a trustee de son tort is explained in Lewin at para 42-101:

“If a person by mistake or otherwise assumes the character of trustee when it does not really belong to him, he becomes a trustee de son tort and he may be called to account by the beneficiaries for the money he has received under the colour of the trust. A trustee de son tort closely resembles an express trustee, and is a constructive trustee of the first kind in the classification of constructive trusts we have given earlier in this work. … While it is essential, if a person is to become a trustee de son tort, that he consciously takes the office of trustee, it does not matter whether he knows all the trusts or the extent of his powers. …” (underline added)

37.  In the limitation context, Lewin further explains, at para 50-067:

“A person who voluntarily intermeddles in a trust and acts as a trustee, sometimes called a trustee de son tort, is clearly a constructive trustee and is within section 21 of the 1980 Act. …” (underline added)

38.  There is also a definition set out in Equity and Trusts (10^th ed) by Hudson at para 12.8 (an authority cited by Ms Eu):

“… Where a person who has not been officially appointed as a trustee of an express trust interferes with or involves herself in the business of the trust so as to appear to be acting as a trustee, that person shall be deemed to be a trustee. Smith LJ stated the nature of this form of constructive trust in the following way:

[I]f one, not being a trustee and not having authority from a trustee, takes upon himself to intermeddle with trust matters or to do acts characteristic of the office of trustee, he may therefore make himself what is called in law trustee of his own wrong – ie, a trustee de son tort, or, as it is also termed, a constructive trustee. ” (underline added)

39.  In the statement of claim, there is no plea that Chow was a trustee de son tort. There is no plea that he intermeddled in the Trust or consciously took the office of trustee or did acts characteristic of a trustee vis-à-vis the Trust. There is therefore no basis to treat Chow as a trustee de son tort. (I should add that I make no comment here on whether Chow is entitled to invoke clause 17 of the Settlement Deed even if he can be regarded as a trustee de son tort.)

40.  As regards the issue of whether Chow is a constructive trustee and has as such assumed duties or powers under the Trust with the result that he should now be able to rely on clause 17 as against the plaintiffs, I dealt with this point in paras 201 and 202.

41.  Mr Khaw now submits, and I agree, that the constructive trust as revealed in the plaintiffs’ pleaded case belongs to the type which is imposed by equity on strangers to a trust as a remedial mechanism for giving relief in equity: see, eg, Timmerton Co Inc v Equity Trustee Ltd [2015] 1 HKLRD 247 at paras 15 to 19, 25.

42.  As explained in Timmerton, there are two categories of constructive trust.

43.  The first category refers to someone who although not appointed as trustee, has assumed the duties by a lawful transaction which is independent of and preceded the breach of trust and is not impeached by the plaintiff. The second is where the trust obligations arise as a direct consequence of the unlawful transaction impeached by the plaintiff. The constructive trustee in the first category really is a trustee. And if the trust assets are not applied in accordance with the trust, equity will enforce the obligations that he has assumed.

44.  On the other hand, in the second category, such a person is not in fact a trustee at all, even though he may be liable to account as if he were. He never assumes the position of a trustee, and if he receives the trust property at all, it is adversely to the plaintiff by an unlawful transaction which is impugned by the plaintiff. He is a stranger to the trust and incurs liability by reason of his participation in the transaction which the plaintiff seeks to impeach.

45.  In the statement of claim, there is no plea that Chow had assumed the role of a trustee prior to the transfer of the shares of the Company to him, which is the transaction which the plaintiffs now complain about. Accordingly, any constructive trust which may arise in this case would fall with the second category of constructive trust. For present purposes, Chow is a stranger to the Trust and cannot be regarded as a trustee. There is no reason why he should be entitled to rely on clause 17 as against the plaintiffs. (Similarly, I make no comment on whether Chow can invoke the clause if he can be characterised as a constructive trustee under the first category.)

46.  For the above reasons, I do not find the second contention to be reasonably arguable.

The first ground – the third contention

47.  The third contention appears in ground 1(d)(ii)(5) to (6).

48.  The Trustees contend that I was wrong in my forum non conveniens determination.

(1)  They were deprived of the opportunity of giving evidence on this issue, including where the Trust’s company’s business was primarily carried on and where documents were to be found.

(2)  They were entitled to hold back their defence pending determination of the jurisdiction issue. The forum non conveniens determination needed to await the filing of the defence.

(3)  A complex issue arose on the true construction of the Trust as to whether the 2^nd plaintiff could benefit.

(4)  I gave no or no sufficient weight to the governing law of the Trust being BVI law.

(5)  I was wrong to hold the existence of ongoing proceedings in the BVI to be a neutral factor.

49.  This ground challenges my determination in Issue (4). As regards the argument in sub-para (1) and (2) above, I dealt with this point in paras 164 to 169. When one says that a defendant is entitled to “keep his powder dry” in not disclosing his defence in a stay application made on the ground of forum non conveniens, it simply means that the non-disclosure in itself would not be fatal to his application. In the present case, the Trustees had a choice to file evidence regarding their defence when they filed the stay applications. They chose not to do so. And they would have to live with the consequence, namely that the forum non conveniens analysis would be done solely with reference to the plaintiffs’ case. It is wrong for the Trustees to now claim that they had been deprived of the opportunity to adduce evidence. There is no merit in this argument.

50.  As regards the argument in sub-para (3) above, I dealt with this point in paras 178 to 179. Even up to now, Mr Todd has not explained where the complexity lies. There is no merit in this argument.

51.  As regards the argument in sub-paras (4) and (5) above, I dealt with these factors in paras 177 to 181 and paras 189 to 194, respectively.

52.  For the above reasons, I do not find the third contention to be reasonably arguable.

The second ground

53.  Under the second ground, the Trustees argue that I misdirected myself in holding that Chow was a stranger to the exclusive jurisdiction clause. He is the 1^st plaintiff’s uncle and the 2^nd plaintiff’s cousin-in-law. More importantly, he had become, according to the plaintiffs, the constructive trustee of the trust property.

54.  This ground is a repetition of the argument made in the second contention of the first ground. I repeat what I have said above. The additional point here is the personal relationship between Chow and the plaintiffs.

55.  However, the Trustees have merely pointed out the existence of the relationship. They have not gone on to explain specifically how that relationship would connect Chow to the Trust with the result that he should become entitled to rely on the exclusive jurisdiction clause. In the absence of such explanation, I do not consider that it is reasonably arguable that Chow can indeed rely on the clause by reason of his personal relationship with the plaintiffs.

The third ground

56.  Under the third ground, the Trustees contend that the existence of a claim against a third party did not exonerate the plaintiffs from being bound by clause 17, which should have continued to apply even if the plaintiffs added the additional defendant to the writ. They ought to have been bound by the terms of the Trust whosoever they were seeking relief from or where they were taking advantage of the Trust.

57.  This ground challenges the ruling in Issue (8) and repeats part of the first contention of the first ground. I repeat what I have said above. This ground therefore has no reasonable prospect of success.

The fourth ground

58.  Under the fourth ground, the Trustees argue that I wrongly distinguished Lammas Global Corporation v Barclays Bank (Suisse) SA HCA 2411/2009, 13 April 2011. It is said that the exclusive jurisdiction clause was intended to be of universal application, applying to both “friendly” and “hostile” litigation. Thus it would apply to any claim involving a breach of trust. The view I expressed in para 224 was wrong. A breach of trust action is usually taken out by a beneficiary and it usually involves an attempt to recover from a third party who has been wrongly enriched by the breach of trust.

59.  This is a challenge of my ruling in Issue (8). This ground is a rehash of the argument previously made. I dealt with this in paras 221 to 230. I therefore do not find that this ground is reasonably arguable.

The fifth ground

60.  Under the fifth ground, the Trustees say that I misled myself as a matter of law by asking this question in Issue (8) – “the task is to decide, as between Hong Kong and the BVI, which court is better placed to hear the present proceedings”: para 215.

(1)  This test directly contradicted what Lord Neuberger said in Crociani v Crociani [2014] UKPC 40, 17 ITELR 624 at para 36: “This is not to suggest that the court has some freewheeling unfettered discretion to do whatever seems fair when it comes to trusts.”

(2)  I appeared to have adopted a balance of convenience test. Instead I should have adopted a test of electing Hong Kong only if there were “exceptional circumstances” as per Noble Power Investments Ltd v Nissei Stomach Tokyo Co Ltd [2008] 5 HKLRD 631 and Re Lam Kwok Hung Guy [2022] 4 HKLRD 793, [2022] HKCA 1297; (2023) 26 HKCFAR 119, [2023] HKCFA 9 or, alternatively, only where there were “sufficiently good reasons” as per A v B [2022] HKCFI 1031. I also appeared to apply the Spiliada test, which failed to give sufficient weight to the pre-eminence of clause 17.

61.  In paras 74 and 75 of the decision, I held that an exclusive jurisdiction clause in a trust instrument should be adhered to unless there are “sufficiently good reasons” not to do so.

62.  In disposing of Issue (8), in addition to asking the question set out in para 215, I also returned to the question of whether there were sufficiently good reasons for not enforcing clause 17 against the plaintiffs when their claims against Chow were also taken into account: see paras 218 and 219. At this stage of the analysis, I consider that it was legitimate for the court to consider a broader range of matters, including (but not limited to) what the Trustees are now referring to as factors of convenience. In the process, I did not treat the court’s discretion as completely unfettered. I repeat paras 26 to 29 above.

63.  For these reasons, this ground is not reasonably arguable.

The sixth ground

64.  Under the sixth ground, the Trustees say that I erred in holding that the imperative was “a genuine need to avoid parallel proceedings”: para 219. They say that the best way to avoid wasteful duplication would be to allow the case to continue in the BVI. I erred in taking into account irrelevant consideration when I held the genuine need to avoid parallel proceedings as a basis for depriving the Trustees of their entitlement to enforce the exclusive jurisdiction clause.

65.  This is, again, a challenge of my ruling in Issue (8).

66.  What I have said in paras 26 to 29 above applies equally here. For the same reasons, I am of the view that this ground is not reasonably arguable.

The seventh ground

67.  Under the seventh ground, the Trustees contend that I was wrong to grant summary judgment in the HCMP proceedings. Unlike the HCA proceedings, there was no 3^rd defendant here. It was therefore wrong as a matter of law to enter judgment where the court held that the exclusive jurisdiction clause was effective as between all the parties in the HCMP proceedings.

68.  There is no merit in this contention.

69.  There can be no dispute that the claims against the Trustees and those against Chow are inextricably linked. This was in fact accepted by the Trustees in their supplemental skeleton submissions lodged previously. Mr Todd made the following submission:

“The Plaintiffs’ actions are intimately linked with all three Defendants. … The misappropriation claim is tied to the ‘breach of trust’/disclosure claim against the Trustees. Both involve whether or not the transaction constituted a breach of trust …”

70.  It follows that the HCMP proceedings and the HCA proceedings should be dealt with together. The court had dealt with them together. In the end, both stay applications were dismissed. In the HCMP proceedings, the threshold for granting summary judgment was met: see paras 236 to 240. Hence judgment was entered.

71.  Against their previous acceptance that the claims against the Trustees and those against Chow are “intimately linked”, it is wrong for the Trustees to now attempt to single out the HCMP proceedings and argue that these proceedings should be treated separately and differently from the HCA proceedings.

The eighth ground

72.  Under the eighth ground, the Trustees argue that I was wrong to penalise them for “keeping their powder dry” and not filing a defence at this stage. If the court was correct in not staying the HCMP proceedings in favour of the BVI courts, then I should have granted the Trustees 28 days to file a defence, as I had directed in the HCA proceedings. Furthermore, it is contended that I went into error by eliding a right to seek with a right to have disclosure. The considerations set out in Schmidt v Rosewood Trust Ltd [2003] UKPC 26, [2003] 2 AC 709 at para 67 are relevant. There is a need to balance the competing interests of different beneficiaries, the trustees themselves and third parties. There are issues as to personal or commercial confidentiality. These considerations were inapt for the summary judgment procedure.

73.  In my view, there is no merit in the contention regarding the filing of defence in the HCMP proceedings. First, those proceedings were commenced by way of originating summons. No pleadings are required. Second, in the summary judgment application, once the plaintiffs had demonstrated a prima facie case of their entitlement to summary judgment, the burden then fell on the Trustees to show that they had a defence: see para 236. They could have done so by setting out their defence in the opposing affidavit evidence. They did not do so. They did not put forward any substantive defence at all. In the affirmation evidence, they only referred to the jurisdiction challenge: see paras 45 and 239. Judgment was entered on that basis. Under the procedural framework for summary judgment, where the Trustees wanted to “keep their powder dry” and not disclose their defence, they would have to face the consequence. There is no reason to give them a second chance.

74.  As regards the contention that there were considerations relevant to the summary judgment application which were not apt to be decided on a summary basis, the Trustees could have listed out these considerations in order to resist the application. But they did not do so. Even now, they still have failed to identify precisely and specifically what those considerations are and how they operate in this case. A generic assertion that there is a need to balance competing interests is not sufficient and does not amount to an arguable defence. This contention has no merit.

The ninth ground

75.  Under the ninth ground, the Trustees say that they were entitled to withhold their defence until jurisdiction was determined. In fact, in the affidavit, it was advertised that there was a defence but jurisdiction needed to be determined first.

76.  This is the same point made under the eighth ground. I reject this ground for the same reasons stated above.

The tenth ground

77.  Under the tenth ground, the Trustees say that I referred to the court’s powers to administer and intervene but this was not a case for the court taking over the administration or intervening.

78.  This ground is not reasonably arguable. First, the decision which I made does not amount to the court taking over the administration of the Trust. Second, I exercised my discretion and ruled that there should be a departure from the express clause nominating the BVI courts to be the exclusive jurisdiction in the circumstances of this case: para 219. The reasons for me doing so were set out in the discussion of Issue (8). This ground does not spell out what error I had made in the process and therefore ought to be rejected.

The eleventh ground

79.  Under the eleventh ground, the Trustees contend that I erred in law in holding that the 2^nd plaintiff was one of the parties entitled to the disclosure. It is argued that by virtue of clause 18.1 of the Settlement Deed, the 2^nd plaintiff was not one of the beneficiaries of the Trust and is therefore not entitled to the disclosure of the trust documents.

80.  In the decision, I referred to the construction point in the context of the stay applications in paras 38 and 172.

81.  Mr Khaw now argues that the 2^nd plaintiff’s beneficial entitlement was confirmed in clauses 9.1(a) and 9.2 of the Settlement Deed.

82.  In her opinion, Ms Nicola Roberts, the Trustees’ BVI law expert, pointed to an apparent inconsistency between clauses 9.1 and 18. However, it is notable that she did not express any definitive view of her own on how the clauses should be properly construed. She did not say that clause 18 should take precedence over clause 9.1. Her conclusion was instead that the BVI court would be the most appropriate court to resolve the issue and the Trustees may be required to seek a determination from that court.

83.  In the circumstances, given that the burden in the summary judgment application was for the Trustees to raise an arguable defence, I consider that they had failed to discharge the burden in that the experts had failed to express any view on the construction issue as a matter of BVI law.

84.  This ground therefore has no reasonable prospect of success.

The twelfth ground

85.  Under the twelfth ground, the Trustees say that I was wrong to hold that the Hong Kong court should exercise a supervisory power over a trust whose proper law was BVI and which had an exclusive jurisdiction in their favour.

86.  This ground has no reasonable prospect of success. I repeat what I have said in para 78 (the second point) above.

87.  In summary, I find that none of the 12 proposed grounds of appeal put forward by the Trustees have any reasonable prospect of success.

Any other reason why the appeal should be heard?

88.  Mr Todd submits that the following question of law would amount to a reason in the interests of justice why the appeal should nonetheless be heard:

“when Ps have failed to establish “strong reasons” to convince the court why they should be freed from their contractual bargain in the EJC, does the Court have the discretion to depart from the EJC? If so, what are the considerations in deciding whether to exercise such a discretion? ”

89.  In Issue (8), I found that there were sufficiently good reasons justifying a departure from the exclusive jurisdiction clause: paras 218 and 219. I did not find that (1) there were no sufficiently good reasons, but (2) nonetheless the clause should still not be adhered to. Hence, the question posed by Mr Todd does not arise. There is therefore no other reason why the appeal should be heard.

Leave to appeal against the costs variation decision

90.  In para 243 of the decision, I made a costs order nisi that the plaintiffs do have costs of the stay applications, the costs of the HCMP proceedings (including the summary judgment application), and that the costs of the new evidence applications be in the cause of the respective stay applications.

91.  By para 3 of the summons dated 28 October 2024 (ie para 4(1)), the Trustees sought to vary the costs order nisi as follows:

(1)  75% of the costs of and occasioned by their stay application in the HCA proceedings be paid by the plaintiffs with a certificate for two counsel; and

(2)  costs of and occasioned by their new evidence application be paid by the plaintiffs with a certificate for two counsel.

92.  That summons came before me at the call-over hearing on 17 January 2025.

93.  At the hearing, I asked counsel for the Trustees (not the present counsel) to state the ground for the variation sought. I made the remark that the ground was not apparent from the supporting affirmation. Notwithstanding that time was given for counsel to take instructions and review the papers, he was not able to inform the court of any ground in support. I therefore proceeded to dismiss the application.

94.  This is what I said when delivering the ruling:

“The 1^st and 2^nd defendants are not able to state the ground for varying the costs order nisi. There is no other reason for me to entertain this application. I therefore dismiss paragraph 3 of the summons taken out by the 1^st and 2^nd defendants on 28 October 2024.”

95.  What is now before me is the Trustees’ application for leave to appeal against the decision made on that day.

96.  The draft notice of appeal contains four paragraphs, which in turn reveal two contentions.

97.  Under the first contention, the Trustees argue that out of the eight issues identified in para 49 of the decision, Issues (1), (2), (3) and (8) were between the plaintiffs and the Trustees. In the end, the court ruled against the plaintiffs on Issues (1), (2) and (3) and in their favour on Issue (8). It is now contended that the first three issues were distinct and/or complex issues which had taken up significant time and resources to resolve. For that reason, costs should be awarded applying the issue-based approach. Hence, the plaintiffs should pay 75% of the Trustees’ costs.

98.  Under the second contention, the Trustees say that the costs of the new evidence application should follow the event. As I had allowed the application, the Trustees should have those costs.

99.  I should say at once that these two grounds cannot be regarded as proper grounds of appeal against the decision which I made at the call-over hearing. For that reason, the leave application should be refused.

100.  I dismissed the costs variation application because the Trustees were not able to state the ground in support when asked to do so. If they want to appeal against that decision now, they should point to errors in my reasoning or in my decision-making process, which warrant the intervention by the Court of Appeal. However, the proposed grounds of appeal are completely silent on this. The Trustees having failed to identify any error, there is simply no room for the Court of Appeal to intervene.

101.  What they are now doing in the draft notice of appeal is setting out the grounds to vary the costs order nisi, which is what they ought to have done (but did not do) in the original costs variation application. The application for leave to appeal is not an avenue for them to have a second chance to do that.

102.  I therefore decline to grant leave to the Trustees to appeal against the costs variation decision.

103.  However, if I am wrong on this in that I should look at the proposed grounds of appeal with a view to seeing whether they are good grounds for varying the costs order nisi, I would still decline to grant leave.

104.  As regards the costs of the stay application, the proposed ground does not justify the variation sought even assuming that the issue-based approach is appropriate.

(1)  While the proposed variation may reflect the success of the Trustees on three out of the four issues (as a matter of arithmetic), it does not account for the plaintiffs’ success on the remaining one issue at all. Mr Todd has not explained in his submissions why it would be fair or proper for the court to ignore altogether the plaintiffs’ success.

(2)  In any event, the starting point here is that the plaintiffs were the ultimate successful party in the stay application. What the Trustees are now asking the court to do is not merely to deprive the plaintiffs of their costs incurred on the issues on which they had failed, but to go one step further to order them to pay the costs of the Trustees, the ultimate unsuccessful party, on those issues. Again, Mr Todd has not identified any basis why the court should do so.

105.  As regards the proposed variation for the costs of the new evidence application, it is well settled that costs are very much a matter of discretion for the first instance judge, and the Court of Appeal will be very circumspect in intervening in a decision with such high discretionary content. It will only interfere when it is satisfied that the decision of the judge is either wrong in principle or plainly wrong: see, eg, China Medical Technologies, Inc (in liquidation) v Wu Xiaodong [2024] HKCA 310 at para 5.

106.  The only justification put forward for the proposed variation is that costs should follow the event. The new evidence application is an interlocutory application by nature. In an interlocutory application, “costs follow the event” is only one of the costs options. In the end, I ordered on a nisi basis that costs should be in the cause of the stay application, which is plainly another costs option in the circumstances. Mr Todd has not explained why the former option is more preferable to the latter. There is therefore no good reason for varying the costs order nisi.

CHOW’S PROPOSED GROUNDS OF APPEAL

107.  Chow has four proposed grounds of appeal.

108.  While differently worded, these grounds are in substance the same as some of the grounds put forward by the Trustees, perhaps with the exception of Chow’s fourth ground. I therefore hope that I can be forgiven for disposing of Chow’s grounds by simply cross-referencing to the relevant paragraphs above in which I have dealt with the same points without responding in detail to each of them.

109.  Under the first ground, Chow contends that I erred in incorrectly identifying Chow as a “complete stranger to the Trust” without properly considering his involvement and connection to the Trust and his unique position on the facts and the pleaded claims.

(1)  Chow is the son of one of the settlors of the Trust. He is being sued as a constructive trustee for the beneficiaries. There is no good reason why clause 17 should not be observed.

(2)  It is not appropriate to apply the Spiliada test. I wrongly reversed my own conclusion and refused to stay by in effect applying the Spiliada test because of Chow being sued as an additional defendant.

110.  This ground is not reasonably arguable for the reasons I set out in paras 35, 40 to 45 and 55 above.

111.  Under the second ground, Chow avers that I erred in failing to properly analyse and apply the decision of Lammas Global.

(1)  I overlooked the substantial ties Chow has with both the plaintiffs and the Trust as well as the Trustees in the present case. I erred in concluding that the claims against Chow were not foreseeable at the time the Trust was established. It was foreseeable that any claim for breach of trust against the Trustees would involve persons involved in the constructive trust arising by operation of law.

(2)  Relying on Part 2 of the Settlement Deed, Chow says that any breach of trust arising out of acts of the Trustees under that Part should be governed by clause 17. Chow’s position should be viewed through the same lens. It is foreseeable and within the contemplation of the parties as well as the drafters of the Settlement Deed that any individuals who interact with the trust property with the Trustees cannot be said to be strangers to the Trust.

112.  This ground is not reasonably arguable for the reasons I set out in para 59 above. I should add that the contention that any individual who interacts with the trust property cannot be said to be a stranger is obviously putting the case far too high and is contrary to para 11-080 of Lewin, quoted in para 200.

113.  Under the third ground, Chow contends that I erred in the exercise of my discretion by failing to give sufficient weight to clause 17.

(1)  I failed to apply the correct test of finding exceptional circumstances as per Noble Power in order to disapply the exclusive jurisdiction clause. There are no exceptional circumstances in this case.

(2)  Having concluded that it was inappropriate to conduct a Spiliada exercise in determining whether to exercise my discretion in para 153, there was no need to delve into it later on when I dealt with Issue (8).

(3)  In any event, I erred in finding that the BVI proceedings was a neutral factor or that the application of the BVI law was a neutral factor only.

(4)  It was plainly wrong to give excessive weight to the status of Chow being a non-party to the Settlement Deed. He had agreed to submit to the jurisdiction of the BVI and the plaintiffs’ claims against him can be adequately addressed in the BVI proceedings which had already been commenced. It was not for this court to impose its own preferences regarding the most convenient forum.

114.  Ms Eu submits that by focusing on convenience alone, I overlooked the significance of the settlors’ autonomy, which should guide judicial discretion in favour of upholding the settlors’ intention. While I acknowledged the importance of respecting the settlors’ autonomy, I did not implement it. By allowing the claims against Chow to proceed in Hong Kong, I subverted the settlors’ intention by favouring convenience over the explicit terms of clause 17, and also disregarded the legal certainty that this clause was designed to provide. In my legal analysis, I was wrong to dilute the “sufficiently good reasons” threshold into a mere weighing of practicalities, reducing it to a balancing exercise that undermined the autonomy of the settlors in favour of convenience.

115.  This ground is not reasonably arguable for the reasons I set out in paras 26 to 29, 61 and 62 above.

116.  Under the fourth ground, Chow contends that I erred by treating the plaintiffs’ claims against the Trustees and Chow as separate and distinct.

(1)  Chow’s alleged involvement, as pleaded, is inherently dependent on the plaintiffs’ claims against the Trustees. The claims against him cannot stand independently without establishing a breach of trust by the Trustees. As such, the plaintiffs’ claims arising from the same set of facts ought to be tried in the same jurisdiction governed by clause 17.

(2)  I was wrong in reversing the order of importance or the priorities of the claims against the defendants and finding that the claims against all the parties should be tried in Hong Kong.

117.  In the written submissions, Ms Eu warns that my ruling sets a dangerous precedent by allowing beneficiaries to circumvent exclusive jurisdiction clauses by suing third parties or non-parties to the trust instruments. This would undermine the autonomy of settlors and also disregard the caution against unfettered discretion articulated in Crociani. By labelling Chow as a stranger to the Trust, I overlooked the fundamental reality that his alleged actions directly related to the administration of the Trust, thereby compromising the framework designed to protect the interests of the parties involved under the Settlement Deed.

118.  I observed in para 208 that the claims against the Trustees and those against Chow are inextricably linked as they arise from one single incident, namely the alleged transfer of the shares of the Company. On that basis, I can agree that it can be said that the claims against Chow are dependent on the claims against the Trustees. However, it must be pointed out at the same time that the converse is also true. Without Chow being the recipient, the alleged breach of trust on the part of the Trustees could not have been completed. I think it would be fairer to say that the two sets of claims are interdependent on each other.

119.  Therefore, insofar as Chow is now saying that the claims against the Trustees are more important, or enjoy a higher priority, than the claims against Chow, I do not share that view. This matter cannot therefore carry any weight in the exercise of the court’s discretion.

120.  I also do not agree with Ms Eu’s submission that my ruling would set a dangerous precedent in the way she suggests or otherwise. My ruling was not to the effect that whenever there is a third party, who is not subject to the trust instrument, is also being sued alongside the trustee by a beneficiary, the court should depart from the exclusive jurisdiction clause contained in the trust instrument. Instead, I held that the existence of such a third party claim was plainly a factor which the court should take into account in determining the forum for the resolution of the dispute. That was the issue that I tried to tackle under Issue (8). How that factor, if applicable, would affect the exercise of the discretion must depend on the circumstances of each individual case.

121.  For these reasons, I do not find that this ground has any reasonable prospect of success.

ORDERS

122.  For the above reasons, I dismiss the summonses set out in para 4 above.

123.  The plaintiffs ask for indemnity costs in the written submissions. However, they have not put forward any basis for that. I make a costs order nisi that the plaintiffs do have costs of the summonses, including all reserved costs, to be taxed on the party and party basis if not agreed, with a certificate for two counsel.

124.  For the same reasons set out in para 244, I consider that taxation would be more appropriate than summary assessment. I should also point out that the statement of costs submitted by the plaintiffs has not made any apportionment between the applications brought by the Trustees and Chow. I would have real difficulty in making the apportionment myself if I were to proceed with summary assessment.