YANG FOO-OI by LEUNG PING CHIU, ROY her next friend v. WAI WAI CHEN AND ANOTHER

HCA 1739/2010

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 1739 OF 2010

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D E C I S I O N

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1.  This is Vivien[1]’s application for leave to appeal against the order of this court dated 3 April 2017 (Order) and stay of execution (Stay) of the Order as well as the consequential order given on 22 May 2017 (Consequential Order).

2.  The Order was made pursuant to Yang’s Summons dated 13 December 2016 (Summons) seeking, inter alia, discovery from Vivian of the profits derived from the assets distributed to her by Chen so as to enable Yang to make an informed decision on the choice of remedies: equitable compensation or an account of profits (with the view to disgorgement of profits).   

3.  For the present purpose, it is important to bear in mind that the Order did not dispose of the discovery application.  By reason of complexity, eg, the size of the properties portfolio and the deployments of the assets over a long period of time (see Decision dated 3 April 2017 (Decision), §§24-27), the court was unable to determine the dispute without the assistance of an accountant.  Subsequently, the Consequential Order was made appointing a court expert after the failure of the parties to agree to the appointment of a single joint expert to provide the required assistance (see Decision, §§28-9). 

4.  It is clear from the Consequential Order that the court expert may come to the view that the discovery made by Vivian in response to the Summons is sufficient for the purpose in question. 

Leave to appeal

5.  The applicable legal principles are trite. Vivian has to demonstrate that the proposed appeal has reasonable prospects of success or there is some other reason in the interest of justice why the appeal should be heard.  Further, the Decision was one of exercise of discretion.  The Court of Appeal will only interfere with such a decision if it is shown that it is plainly wrong (see Re China Medical Technologies Inc, HCMP 576/2016, unrep, 3 November 2016, §12 (Barma JA)). 

6.  On behalf of Vivian, Mr Ho SC has advanced 4 arguments (or grounds of appeal).  Firstly, it is contended that the court was functus officio after the sealing of the Judgment entered on 29 November 2016 and/or that Yang was estopped from seeking post judgment discovery. 

7.  I am unable to find merit in this argument. Pursuant to the Judgment, Yang was entitled to make an election on the remedies, and she may apply, with proper justification, for an extension of time for the purpose (see Judgement, §267).

8.  I have already explained in the Decision, §§16-18, that Yang should not be blamed for not having the requisite information to allow her to make an informed choice over the remedies. 

9.  Secondly, it was submitted that the court had no jurisdiction to order post judgment discovery and/or that it was in disregard of principle in the exercise of discretion to allow Yang to invoke the procedure.

10.  I am a little surprised by the suggestion of absence of jurisdiction.  The authorities referred to in the Decision put to rest any such contention.   

11.  As to the innovative distinction drawn that such jurisdiction only applies to a personal remedy to disgorge the first layer of profits but not a proprietary remedy via the process of tracing.  I need only say that I have found no support for the proposition either in the authorities or in logical analysis. 

12.  In respect of the complaint over para 16 of the Decision, that a pre judgment discovery application by Yang would unlikely be fruitful, I agree with Mr Yu SC, appearing with Mr Lam for Yang, that it lies ill in Vivian’s mouth to contend that Yang should have applied before judgment for discovery of profits made by her when (i) she steadfastly maintained that she was not a fiduciary, and (ii) she herself had not given any such discovery in a satisfactory sense.

13.  It should be added that whilst the view set out in para 16 of the Decision, namely, in light of the dispute whether Vivian was a fiduciary, a pre judgment discovery application would likely be dismissed as premature or adjourned pending the resolution of the dispute, is criticised as speculation, there is no alternative suggestion put forward as to how such an application would have been dealt with, let alone resulted in discovery being ordered against Vivian. 

14.  Thirdly, it is argued that the discovery exercise is “problematic” in that there was no agreement between Yang and Vivian on the division of the assets transferred to the latter under the directions of her father, and therefore it is “entirely unclear which of the property holding vehicles should form [Yang’s] 1/3 share in the HK$4.5b assets”.  I have to say that such an argument seems to be an invitation to the court to endorse Vivian’s breach of fiduciary duty.  In the absence of the wrong committed by Vivian, the mother and daughter would no doubt have come to an agreement on the division of assets.   

15.  I agree with Mr Yu that in the absence of agreement Yang must be entitled to 1/3 share of the all the properties (or the shares in the holding companies) distributed to Vivian by her father.  This was how the equitable compensation was calculated (see Judgement, §§237-238). 

16.  Finally, there is a criticism over the appointment of accountant expert to assist the court.  I do not understand the criticism when it was Vivian’s case that the question of what had become of the HK$4.5b assets involved much complications (see Decision, §25 and Vivian’s skeleton arguments dated 30 March 2017, section D).  

17.  As to the suggestion that the expert would not be able to assist the court, firstly, that is a matter for the expert to say. Secondly, it is inconsistent with Vivian’s case that the information she had provided with the view to satisfying the discovery application was sufficient to enable her mother to make an informed decision on the choice of remedy. 

18.  For these reasons, I see no reasonably arguable ground of appeal, nor any other reason why the proposed appeal should be heard.  I therefore dismiss the leave application. 

Stay

19.  Given the lack of a meritorious appeal, which is the only ground advanced for the Stay, it must also be dismissed.

20.  I must also add that there is a strong reason for declining any stay in this case, namely, Yang is in a poor state of health and it would not be right for the resolution of these matters be delayed. 

21.  I award the costs of these applications to Yang with a certificate for 2 counsel.