BEIJING SONGXIANGHU ARCHITECTURAL DECORATION ENGINEERING CO LTD v. KITTY KAM also known as WANG YUZHI

HCA 1289/2022

[2025] HKCFI 3356

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

HIGH COURT ACTION NO 1289 OF 2022

____________

____________

__________________________________

REASONS FOR DECISION

__________________________________

1.  At the end of the first day of the trial on the preliminary issue as defined in Master Frances Lok SC’s Order dated 23 October 2024 of whether the beneficial interest of a property known as Flat B on the 16^th Floor of Tower 2, Larvotto, No.8 Ap Lei Chau Praya Road, Hong Kong (“the Property”) should be vested in the defendant (“D”) or the intervener (“I”) in this case (“the Preliminary Issue”), I dismissed D and I’s claims.  I also made a declaration that the Property’s legal and beneficial interest vested with D. Consequential costs orders and further directions in relation to 2 further ex parte charging orders nisi applied for by the plaintiff (“P”) were also made by me after hearing submissions from the parties.

2.  I said I would reduce the decisions I made above at the hearing into writing and would provide the reasons for my decisions in due course. Here are the reasons.

BACKGROUND       

Events leading to the trial on the Preliminary Issue

3.  Originally 2 days had been reserved for the trial in open court involving 5 counsel and 3 parties’ solicitors for the Preliminary Issue.  This is an issue raised by D and I for the first time after a charging order: notice to show cause application was made by P on 29 January 2024.  A charging order nisi was subsequently made by Master Dick Ho on 19 March 2024 (“the Charging Order Nisi”).  Before that, D had on several different occasions, whether in her own affirmations or through her solicitors by letters, specifically confirmed that the Property was owned by her.

4.  D is a litigant who has been severely criticized by Anthony Chan J and Deputy High Court Judge KC Chan in several of their judgments / decisions in this case before.  Both of the learned judges have described D as someone who has deployed “litigation gamesmanship” throughout these proceedings.  It has also been revealed that D has persistently flouted, ignored and blatantly breached the orders of the Court throughout the present proceedings.  The history of this case strongly suggests to this Court that D seems to think that she is above the law and she can ignore and flout the orders of the Court as and when she likes.  She would also deploy whatever litigation games and tactics in order to frustrate the claims of P and the orders made by the Court.

5.  The Preliminary Issue is yet another classic example of how D tries to play this game and to perfect her skill in litigation gamesmanship.  Except this time she involves her mother, I, in this case.  They basically joined together to raise the Preliminary Issue in order to try to defeat P’s legitimate request to enforce a costs order of HK$650,000 (plus interest) made by Anthony Chan J.  They ran this issue for over a year and only chose to abandon it on the first day of the trial by not turning up in court to prove it.

6.  Briefly, the history leading to the events on the first day of the trial can be summarized in the following paragraphs.

7.  On 13 January 2023, Anthony Chan J granted a Mareva injunction against D and in favour of P in the sum of HK$253,048,682 prohibiting D from removing assets up to that amount from Hong Kong.  She was also prohibited from, inter alia, disposing of and/or dealing with or diminishing the value of her assets in Hong Kong, including the Property.

8.  By way of a summons dated 14 December 2022, D applied for a stay of proceedings (“the Stay Summons”).

9.  The Stay Summons was dismissed by Anthony Chan J on 13 January 2023 with an order nisi that the costs of it be paid by D to P. 

10.  On 8 March 2023, Anthony Chan J made an order that the costs of and occasioned by P’s summons dated 5 October 2022 and the Stay Summons be summarily assessed at HK$650,000.

11.  On 29 January 2024, in its capacity as the judgment creditor, P applied for the charging order: notice to show cause against D for the sum of HK$650,000 plus interest (which amounted to a sum of HK$696,440.91) ordered by Anthony Chan J on 8 March 2023.

12.  The hearing to show costs was originally fixed to be heard before Master SP Yip on 5 March 2024.

13.  By an Order dated 19 March 2024, Master Dick Ho ordered D to file and serve her affidavit in opposition to the Charging Order Nisi and directed P to file evidence in reply.  D was represented by her then solicitors at the hearing.  One can assume that the Preliminary Issue must have been raised by D for the first time as the master made the directions for parties to file evidence on the issue at that hearing.

14.  On 28 May 2024, D filed the 6^th affirmation of Kitty Kam (“Kam 6^th”), for the first time formally raising the issue in writing that the beneficial owner of the Property actually belonged to I, her mother Madam Liu and not her.  This is despite of the fact that she was the registered owner of the Property since the date when the Property was first purchased. I also filed the affirmation of Liu Jiang Fan dated 6 May 2024 (“Liu 1^st”) to support this newly raised claim of beneficial interest of the Property actually belonged to her rather than D.  The Court would describe the claims made were based on some rather wild and far-fetched assertions but without any credible documents in support.    

15.  On 15 July 2024, P filed the 8^th affirmation of Luk Ka Yan, a solicitor from P’s firm, inter alia, in reply to the claims and allegations raised by D and I in their affirmations.

16.  On 23 October 2024, seeing the urgency of the matter and the newly asserted claims, Master Frances Lok SC made the Order that the Preliminary Issue to be heard substantively on the first available date before a bilingual judge (“Master Lok’s Order”).  Further directions were given by Master Lok for parties to file another round of affirmation evidence.  Significantly, under §7 of Master Lok’s Order, it has been specifically ordered that the affirmations filed would stand as evidence-in-chief of the respective deponents for the trial and all deponents who filed affirmation(s) shall attend the trial for cross-examination, failing which their evidence shall not be admitted in evidence at the trial. 

17.  Master Lok also gave directions for the parties to file and serve opening submissions and list of authorities, trial timetable, dramatis personae and chronology.  Since D and I were the parties who asserted the beneficial interest claim and caused the Preliminary Issue to be heard, Master Lok ordered her and I to file the above documents at least 14 days before the trial.  P was ordered to file its submissions and list of authorities  at least 7 days before the trial.

18.  The trial for the Preliminary Issue was later fixed before me for trial on 21 July 2025 (with 22 July 2025 reserved) after consultation with counsel’s diaries.         

19.  As a result of some of the wild and far-fetched claims made by D and I, P took out 2 separate summonses dated 27 March 2025 applied for (1) discovery and inspection of some of the documents mentioned in Kam 13^th and Liu 1^st (“the Discovery & Inspection Summons”) and (2) interrogatories against D and I (“the Interrogatories Summons”). 

20.  By an order dated 29 April 2025, this Court ordered the above 2 summonses to be heard before the trial on the Preliminary Issue.  The hearing of those summonses was later fixed to be heard before me on 14 July 2025 (with 1 day reserved). 

21.  Consistent with D’s conduct throughout these proceedings, both D and I did not respond to the requests made under the Discovery & Inspection Summons and the Interrogatories Summons. Nor did they lodge any skeleton submissions and list of authorities pursuant to the practice directions.

22.  Instead, very belatedly and without any prior notice, D through her solicitors sent a cheque of HK$782,174.43 on 8 July 2025 in purported settlement of P’s claim under the Charging Order Nisi including the interests thereof.  D asked the Court to vacate the hearing for the above 2 summonses as in her view she has already settled all her liabilities under the Charging Order Nisi. This was not accepted by P nor by the Court.

23.  At the hearing on 14 July 2025, I made an Order directing D and I to file and serve affidavit evidence in order to make discovery of the complete and unredacted documents requested by P under the Discovery & Inspection Summons within 3 days.  By another order made by me on the same date, this Court also ordered them to answer the interrogatories requested by P under the Interrogatories Summons.  The Court ordered costs of and occasioned by those 2 summonses to be paid by D and I to P on an indemnity basis, such costs to be summarily assessed by the Court and to be paid forthwith.

24.  Again, consistent with her usual behavior, D has simply ignored my Orders. On this occasion, her mother has also ignored them. 

Events that took place on the first day of trial              

25.  §7 of Master Lok’s Order has made it clear that D and I are going to be barred from relying on the affirmations filed by them on the Preliminary Issue if they do not turn up in court and subject themselves to cross-examination at the trial.  

26.  On the first day of the trial, both D and I failed to turn up.

27.  The Court has been informed by Ms Leung for D and Ms Yau for I that they have no instructions to argue the Preliminary Issue on behalf of their respective clients at the trial at all. Their instructions are limited to argue on the issue of costs arising out of the Charging Order Nisi and the costs resulting from the Preliminary Issue, including the trial fixed for hearing the issue before me on 21 July 2025.  

28.  Given the repeated “litigation gamesmanship” played by D as mentioned by both Anthony Chan J and DHCJ KC Chan in several of their previous judgments / decisions in this case, the absence of D and I at the first day of the trial perhaps was not surprising.  It is consistent with D’s contemptuous and appalling conduct throughout these proceedings.  Only this time she was joined by her mother, I in this case.

29.  However, it means that 2 days reserved for the trial, which are “milestone dates” under the CJR, would be wasted if the Court were not able to proceed with the trial on the Preliminary Issue. Also, it would mean that the issue will be left undecided by the Court with the possibility that D and I will able to raise the same issue again in some future dates.

30.  As D and I had failed to provide any discovery and inspection of the documents and answered any interrogatories ordered by the Court on 14 July 2025, it is reasonable to assume that D and I knew well that their case is very flimsy and without any solid foundation at all.

31.  As the Preliminary Issue was raised and asserted by them, D and I carry the burden of proof. It is for them to prove the beneficial ownership of the Property vested with I and not D at the trial.

32.  They have failed to do so by firstly not lodging any skeleton submissions and list of authorities as ordered by Master Lok; and secondly by not turning up in court to prove the issue.

33.  In this case, instead of simply paying up the sum under the Charging Order Nisi together with interest and the fixed costs thereof back in March 2024, D and I chose to raise the Preliminary Issue and forced P to file evidence and investigate into the issue.  They also caused the Court to spend a great deal of public resources to entertain their claim and to reserve at least 1 day for the two summonses and 2 days for the trial, when, as it turned out, all along they had no intention to turn up in court and prove the issue.   

34.  In this futile exercise, D managed to delay the whole proceedings for at least 16 months, ie from the date of the Charging Order Nisi in March 2024 to the date of the trial, causing a lot of unnecessary costs and time incurred by P and wasting a lot of the precious resources of the Court.  None of those costs incurred by P have been met by D to date.

35.  At the hearing, Ms Leung has invited the Court to accept an “undertaking” from D that she would agree to be barred from raising the Preliminary Issue in any future charging order nisi applications instead of having the Court proceeding with the trial.  Given D’s record in ignoring or disobeying most if not all the orders of the Court in the past and her skills in litigation gamesmanship, I have no hesitation to dismiss such a request as I have no confidence in D (and her mother for that matter) that she will abide to any orders made by this Court at all.      

36.  I agree with Mr Lam’s submissions that the Court should proceed with the trial on the Preliminary Issue.

37.  I therefore invited Ms Leung and Ms Yau to call D and I as witnesses and proceed with proving the Preliminary Issue at the trial since it is an issue raised by their clients and must be proved by them.

38.  Ms Leung and Ms Yau both confirmed that they did not have instructions to conduct the trial on the Preliminary Issue on behalf of their clients.  In any event, both D and I were not in court.  They therefore were not in the position to proceed with proving the Preliminary Issue.

39.  Under such circumstances, I have invited Mr Lam to address me as why the Court should not proceed with the trial and decide on the Preliminary Issue immediately.

Decision of the Court in relation to the Preliminary Issue

40.  Having heard Mr Lam’s submissions, I am satisfied that since D and I have called no evidence on the Preliminary Issue, I find there is absolute no basis or evidence to support their hollow and unsubstantiated allegations that the beneficial interest is vested in I.  In this regard, I agree with the legal principles set out in Mr Lam’s skeleton submissions on the Preliminary Issue and the authorities relied on by him.  Since D is the registered owner of the Property and the legal owner of it, in the absence of any credible evidence produced by her and I to the contrary (which there is none), there is simply no basis for her to suggest that the beneficial interest should somehow be vested in somebody else.

41.  The Court therefore found that the allegations made by D and I on the alleged beneficial ownership not proven and their claims made under the Preliminary Issue must be dismissed.

42.  The Court further made a declaration that both the legal and beneficial interest of the Property was and is belonged to D and not I or anybody else.

43.  The Court then adjourned the case to the afternoon for P to address me on the proposed terms of the draft order based on the decisions I made on the Preliminary Issue and for the parties to address me on the issue of costs, including the figure of the summary assessment on those costs.

Order made by the Court  

44.  When the parties returned to court in the afternoon, Mr Lam presented me with a draft order based on the decisions I made above.  I invited Ms Leung and Ms Yau to address me on the draft and in particular on the issue of costs. 

45.  Having heard submissions from the parties, I made the following orders at the end of the hearing (“the Order”):-

“(1)  The Defendant is the legal and beneficial owner of Flat B, 16^th Floor, Tower 2, Larvotto, No. 8 Ap Lei Chau Praya Road, Hong Kong (the “Property”)

(2)  The Defendant and the Intervener’s assertion that the Intervener is the beneficial owner of the Property (the “Preliminary Issue”) be dismissed;

(3)  Costs of and occasioned by the Preliminary Issue, including the Plaintiff’s summons for discovery and inspection and the Plaintiff’s summons for leave to file and serve interrogatories both dated 27 March 2025, the trial of the Preliminary Issue as defined in the Order of Master Frances Lok SC dated 23 October 2024 and all reserved costs be payable forthwith by the Defendant and the Intervener, jointly and severally, on an indemnity basis, with certificate for 2 counsel, summarily assessed at HK$1,075,000.00.

(4)  The hearing for the Charging Order: Notice to Show Cause dated 29 January 2024 be adjourned to a date to be fixed with 30 minutes reserved before Deputy High Court Judge Gary Lam on 16 September 2025 at 9:30 am and to be heard together with:

(a)  The Charging Order: Notice to Show Cause dated 21 July 2025 (by the 8^th Affirmation of Chan Sin Yuen Sharmaine dated 15 July 2025)(the “2^nd Charging Order”); and

(b)  The Charging Order: Notice to Show Cause dated 21 July 2025 (by the 9^th Affirmation of Chan Sin Yuen Sharmaine dated 17 July 2025) (the “3^rd Charging Order”).

(5)  The Defendant do have leave to file affirmation evidence, if so advised, in respect of the 2^nd Charging Order and the 3^rd Charging Order within 28 days hereof.

(6)  The Plaintiff do have leave to file evidence in reply, if so advised, in respect of the 2^nd Charging Order and the 3^rd  Charging Order within 14 days hereof.

(7)  No further affirmations to be filed without the leave of the Court.

(8)  Costs of the 2^nd Charging Order and the 3^rd Charging Order be reserved.

(9)  There be liberty to apply.”

Reasons for the Order made

46.  On the issue of costs, in my view, there is no reason why all the costs in relation to the Preliminary Issue should not follow the event. 

47.  §(3) of the Order deals with the costs for the assertion of the Preliminary Issue including the Discovery & Inspection Summons and the Interrogatories Summons; the trial of the Preliminary Issue as defined in the Order of Master Frances Lok SC dated 23 October 2024; and all reserved costs be payable forthwith by D and I, jointly and severally, on an indemnity basis, with certificate for 2 counsel and to be summarily assessed.

48.  The only objections to the above proposed draft costs order suggested by P by Ms Leung and Ms Yau for D and I are: (1) they should not be jointly and severally liable to pay for those costs; (2) there should not be a certificate for 2 counsel; and (3) the actual amount which has been summarily assessed.

49.  Very belatedly, Ms Leung informed the Court that over lunch time she was able to obtain instructions that D is willing to bear all the above costs herself and asks the Court not to make any costs order against her mother, ie I.  She submits that I should not be responsible for any of the costs, whether partly, jointly or severally.  D’s rationale is that since P now has the Property as security against any costs to be payable under the Preliminary Issue and all the related applications, there is no reason why a separate costs order should be imposed on her mother.  Ms Yau made similar submissions on behalf of I.

50.  I disagree.

51.  I very much see this whole saga of raising the Preliminary Issue as yet another “litigation gamesmanship” played by D in order to defeat P’s legitimate request to seek the amount of HK$650,000 costs plus interest to be paid under the Charging Order Nisi.  By colluding with her mother together, they came up with this far-fetched and totally unmeritorious story of somehow it was I who was the beneficial owner of the Property.  This bold assertion was hardly supported by any credible documentary evidence at all disclosed under the affirmations filed by them.  When D and I were asked to produce documents to support their claims and to answer interrogatories about how the agreement and funds to purchase the Property come about, they simply chose to ignore those requests.  They managed to drag this simple matter to pay a modest amount of costs ordered by Anthony Chan J for 16 months without having to pay a single cent for it.  After all the farce, they decided not to appear at the trial to prove the Preliminary Issue.

52.  I therefore find that they both are equally responsible for bringing this whole Preliminary Issue in the first place and maintaining it for the past 16 months or so.  In my opinion, it was very much a “joint effort” between the mother and the daughter.  Without one of them to support each other’s story, this argument on beneficial ownership could not even take off the ground.  I do not see why they should not be both held liable for the costs incurred by P.  I therefore ordered that those costs mentioned in §(3) of the draft order should be borne by them jointly and severally.  I also see little point in making a technical distinction between the relatively small amount of costs incurred by P in dealing with I’s solicitors as contrast to those incurred in dealing with D’s solicitors.  To me, both D and I, as the daughter and the mother, are in this whole scheme of raising and maintaining the unmeritorious claim of beneficial ownership together. I do not see why they should not be held jointly and severally liable for those costs.

53.  For the issue of certificate for 2 counsel, I consider claiming the costs of 2 counsel (where in fact 3 counsel appeared on behalf of P) is perfectly reasonable in the circumstances of this case.  Considering the importance of the Preliminary Issue which will have a huge impact on whether P will likely to be able to recover parts of its costs and the judgment debt that had been granted in its favour so far, I consider the use of senior counsel and an experienced junior counsel is amply justified and proportionate.  I therefore allowed certificate for 2 counsel in this case.

54.  For the summary assessment on the costs itself, I bear in mind that this is for a gross sum assessment and the Court should take a broad brush approach to the figures claimed instead of going through each and every single item as in a taxation hearing.

55.  Having taken into account of the objections raised by Ms Leung and Ms Yau on behalf of their clients, I had summarily assessed the costs for the matters stated under §(3) of the draft order submitted by Mr Lam at HK$1,075,000.00, based on the statement of costs submitted to the Court at the hearing.  Subsequently, on 22 July 2025, P’s solicitors wrote to the Court and stated that in the above statement of costs they had inadvertently omitted counsel’s brief for attending the hearing for the Discovery & Inspection Summons and the Interrogatories Summons heard by the Court on 14 July 2025.  As I had already ordered the costs of those 2 summonses to be paid to P on an indemnity basis on 14 July 2025, it is clear that it was a genuine omission on the part of P.  Since the Court has a general jurisdiction to amend or rectify its order before it is sealed when there are strong reasons to do so: See Sun Jianqiang v Trans-Island Limousine Service Ltd [2004] 1 HKC 533 at §§25-28, I consider inadvertent failure of the parties to draw the Court’s attention to a relevant fact is one of them.  I consider the omission to draw the Court’s attention to the above counsel’s bill is plainly a relevant fact and constitutes strong reason for the Court to amend or rectify the Order made by me at the end of the hearing on 21 July 2025.  In the circumstances, the summarily assessed costs under §(3) of my Order will be amended to a figure of HK$1,300,000.00.

56.  For §(4) of the Order, I directed the Charging Order to Show Cause dated 29 January 2024 to be adjourned to be heard by Deputy High Court Judge Gary Lam on 16 September 2025 at 9:30 am together with the 2^nd Charging Order and the 3^rd Charging Order mentioned therein.

57.  I would like to say a few words about the 2^nd Charging Order and the 3^rd Charging Order here.

58.  The 2^nd Charging Order: Notice to Show Cause was dated 21 July 2025 and supported by the 8^th affirmation of Chan Sin Yuen Sharmaine dated 15 July 2025.  It is basically an ex parte application made by P for a charging order nisi to ask D to show cause based on the debt owed by the D resulting from the 31 different costs orders that the Court has ordered D to pay in these proceedings so far (“the 31 Costs Orders”).  They ranged from small sums like fixed costs of HK$1,040 which D agreed to pay under some consent summonses to large sums up to HK$1.7 million summarily assessed by DHCJ KC Chan as a result of the various decisions and findings made against D.  It is not disputed by Ms Leung that all the costs under the 31 Costs Orders were supposed to be paid forthwith but D has so far not paid any of them.  Not even a single cent.  The total net sum owed by D to P under the 31 Costs Orders added up to a staggering sum of HK$4,362,450.00 With interest, it added up to a sum of HK$4,577,026.61 as of 15 July 2025.

59.  There is no reason in my view why P is not entitled to issue a 2^nd Charging Order to ask D to show cause as to why the outstanding debt under the 31 Costs Orders should not be made absolute, provided sufficient time and notice are given to D to do so.   

60.  For the 3^rd Charging Order: Notice to Show Cause dated 21 July 2025, it is supported by the 9^th affirmation of Chan Siu Yuen Sharmaine dated 17 July 2025.  In short, this is based on the outstanding judgment debt in the sum of HK$220,548,682.00 together with interest pursuant to the Partial Judgment obtained against D on 25 October 2024.  The total outstanding debt owed by D (as judgment debtor) to P (as judgment creditor) including interest in the amount of HK$83,012,436.09 added up to a total sum of HK$303,561,118.09.

61.  No payment has been made by D to settle any part of the outstanding judgment debt and the entirety of the outstanding judgment debt remains wholly unsatisfied by D to date.  This is not disputed by Ms Leung at the hearing.

62.  Although D has lodged an appeal in CACV 495/2024 and CAMP 247/2024 against the Partial Judgment, the substantive hearing of which is fixed on 7 November 2025 to be heard by the Court of Appeal, there is no stay of execution applied for by D. 

63.  Again, I see no reason why P is not entitled to issue the 3^rd Charging Order to ask D to show cause as to why the outstanding debt arising out of the Partial Judgment should not be made absolute, provided sufficient time and notice are given to D to do so.  

64.  Hence, for §(5) of the Order, I allowed D to file affirmation evidence within 28 days instead of the original suggested time of 14 days.  Similarly, I have allowed 14 days for P to file evidence in reply instead of 7 days.

65.  I also added a new §(9) to give parties liberty to apply as requested by Ms Leung.