YAN MEI and YAN DONG the Joint and Several Administrators of the Estate of FONG LAP CHUNG GEORGE, Deceased AND ANOTHER v. FONG LAP SHAN

HCA 1562/2022 & HCA 104/2023

(Consolidated)

[2026] HKCFI 1339

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NOS 1562 OF 2022 AND 104 OF 2023

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BETWEEN

(Consolidated pursuant to the Order of Master David Chan dated 15^th May 2023)

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DECISION

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1.  This is the hearing of the summons dated 16 February 2026 issued by the Defendant (“D”) to enter judgment on his counterclaim against the 1^st and 2^nd Plaintiffs (“P1” and “P2”, collectively “Ps”) and to strike out the claims by P1 and P2, and for various consequential reliefs and orders, including to vacate the PTR scheduled on 5 March 2026 and the trial scheduled to commence on 8 June 2026 (with 8 days reserved), both fixed before me as the trial judge.

2.  The relevant background facts and the parties’ cases have been set out in the Decision of Master Teresa Wu dated 29 November 2024 ([2024] HKCFI 3464), the Decision of Deputy High Court Judge Anthony H K Chan SC dated 31 October 2025 ([2025] HKCFI 5287), and the Decision of Deputy High Court Judge Gary C C Lam dated 15 December 2025 ([2025] HKCFI 6437). In summary:

(1) P1 is the estate of Mr Fong Lap Chung George (“Deceased”) who died intestate on 25 December 2016. It is represented by P2 (the Deceased’s wife) and her elder brother, Mr Yan Dong, as the joint and several administrators.

(2) D is the younger brother of the Deceased, and the registered owner of House 10, JC Castle in Tai Po. House 10 and its adjacent House 11 (owned by the Deceased) were combined as one big residence and was at the material times resided by the Deceased, D and their family members.

(3) Ps claim that the Deceased was the beneficial owner of House 10 which D held under a common intention constructive trust for the Deceased. They seek a declaration of the beneficial ownership in House 10 in P1’s favour and an order to transfer the legal title to P1.

(4) D claim that House 10 was an inter vivos gift to him from the Deceased. He counterclaims against Ps for delivery of vacant possession of House 10, mesne profits and other damages, including mortgage payments which D has been making.

(5) On 29 November 2024, Master Teresa Wu made an interim payment order against P1 (“Interim Payment Order”). The Interim Payment Order was in relation to the mortgage payments and the Government rates and rent for House 10 which (as the Master held) would have to be paid by P1 to D even if Ps succeed at trial.

(6) P1 failed to fully comply with the Interim Payment Order. D therefore took out a summons on 10 September 2025 for an order that unless Ps comply with the Interim Payment Order by paying the outstanding payments with interest in full by 4pm on 26 September 2025, Ps’ claim be dismissed and judgment be entered on D’s counterclaim.

(7) The summons was heard by Deputy High Court Judge Anthony H K Chan SC on 31 October 2025. As of that day, the total outstanding and unpaid sum under the Interim Payment Order was HK$460,538 (“Sum”). P1 claimed that it has financial difficulties to pay the Sum.

(8) Deputy Judge Chan SC declined to make an unless order on that occasion. He held that it was premature for D to apply for an unless order without first resorting to other less draconian means available under the civil procedures. Instead, he ordered P1 to pay the Sum to D within 21 days from the date of service of the order, with interests reserved (“Payment Order”).

(9) P1 did not comply with the Payment Order. D took out a summons on 9 December 2025, asking for the same unless order which Deputy Judge Chan SC had refused to grant on 31 October 2025. That summons was heard by Deputy High Court Judge Gary C C Lam on 15 December 2025. D argued before Deputy Judge Lam that the Payment Order should be regarded as the last chance for P1, and it was the right time to make sure that the Interim Payment Order and the Payment Order would be complied with by way of an unless order, or else Ps should be met with draconian circumstances proportionate to repeated breaches of court orders. As Deputy Judge Lam observed in his Decision:

(a) The Interim Payment Order and the Payment Order were against P1 only. There was no reason why P2, in her personal capacity, should be affected.

(b) The payment in question arises from D’s counterclaim. The sanction in the unless order should be related to the counterclaim rather than P1’s own claim.

(c) The subject matter is landed property. It cannot be said that P1’s claim is unmeritorious at this stage. The sanction sought by D would mean that without any trial giving Ps a fair opportunity, the subject property would be awarded to D. The sanction sought by D, if it would come into effect, would be disproportionate.

(d) The appropriate sanction for further non-compliance with the Interim Payment Order and the Payment Order should be to debar P1 from defending against D’s counterclaim. Deputy Judge Lam made clear that P1 may still pursue its claim, although there is practical effect arising from the sanction: for example, P1 would not be able to adduce evidence to defend against D’s counterclaim for damages and injunction against P1, and P2 would have to defend the counterclaim against her out of her own pockets without resort to P1.

(10) In the end, Deputy Judge Lam ordered that unless P1 do pay the Sum to D by 4pm on 19 January 2026, P1 shall be debarred from defending D’s counterclaim as set out in the Defence and Counterclaim (“Unless Order”). He ordered P1 to forthwith pay the costs of the application to D on an indemnity basis, summarily assessed at HK$120,000.

3.  P1 failed to comply with the Unless Order. This prompted D to take out the present summons. As set out in the skeleton argument of Mr Andrew H P Lau for D, the summons comprises 4 applications:

(1) to enter judgment on D’s counterclaim against P1 following the Unless Order which debarred P1 from defending against the counterclaim, either pursuant to RHC Order 14 rule 5, or Order 19 rule 7;

(2) to dismiss P1’s claim as an abuse of process on the basis that the claim is a “mirror image” of the debarred defence to D’s counterclaim;

(3) to dismiss P2’s claim for lack of standing following the striking out of P1’s claim; and

(4) to enter judgment on D’s counterclaim against P2.

4.  Mr Lau’s argument may be summarized as follows:

(1) Pursuant to the Unless Order, P1 is debarred from defending D’s counterclaim. D was therefore entitled to seek summary judgment or judgment in default of defence against P1.

(2) Once judgment is entered on D’s counterclaim against P1, this establishes D’s right to possession to House 10. This has (in Mr Lau’s words) a number of “domino effects”:

(a) P1 can no longer maintain its claim over House 10 based on common intention constructive trust which is a “mirror image” of its defence to counterclaim. Its claim must therefore be struck out.

(b) P2 lacks the independent standing to either make a claim or maintain a defence on behalf of P1. D is entitled to enter judgment against P2 on all claims derivative of, or dependent upon, P1’s constructive trust allegations.

(c) P2 (in her personal capacity as the occupier of House 10) is estopped from disputing D’s title (as owner) to House 10. P2 has no viable defence to D’s claim for possession and arrears of rent.

5.  D’s applications are all founded on the premise that by reason of the sanction under the Unless Order, Ps are no longer allowed to pursue even their main claim, such that D should now be granted judgment on the counterclaim and the main claim (which is said to be a “mirror image” of the defence to the counterclaim) should be struck out and dismissed.

6.  As a start, I agree with Ms Rowena Ng appearing for Ps that D’s present application is an abuse of process. D’s attempt to seek an unless order for the dismissal of Ps’ claim and judgment on counterclaim following non-compliance with the Interim Payment Order and Payment Order was refused by Deputy Judge Lam. By the present summons, D is seeking what Deputy Judge Lam had expressly refused to grant to D. It is not open to D to argue that there was material change of circumstances since the Unless Order was granted, namely P1’s non-compliance. When Deputy Judge Lam considered the appropriate sanction to impose in the Unless Order, it was premised on the eventuality of P1’s non-compliance. He expressly held that it would be disproportionate to impose the sanctions of entering judgment on D’s counterclaim and dismissing Ps’ claims. If D was not satisfied with the terms of the Unless Order, he ought to have appealed it, rather than making this application which effectively is the second bite on the cherry.

7.  In any event, D has misunderstood the effect of the Unless Order, and specifically what follows from P1 being debarred from defending the counterclaim.

8.  It is necessary to first identify specifically what claim(s) advanced by D which P1 is now debarred from defending as the sanction under the Unless Order. This requires a careful examination of D’s pleaded case and reliefs set out in the Defence and Counterclaim. I reject Mr Lau’s contention that the Court should undertake a “macro” view of D’s overall case and should not “indulge” in the pleadings or undertake a “micro-examination” of the pleaded reliefs. D is not entitled to go beyond his pleaded case, which defines the four corners of his claims, the specific reliefs sought against each of P1 and P2, and the underlying basis.

9.  Mr Lau accepted that there were 3 heads of claim involving P1 pleaded in the Defence and Counterclaim:

(1) Paragraph 37: an order for contribution of at least 50% of the reinstatement works to divide up House 10 and House 11 as 2 independent buildings (against P1 and/or P2);

(2) Paragraph 39: an interlocutory injunction to remove the four unauthorized building works (“UBWs”) in House 10 under a Building Order (against P1 and/or P2); and

(3) Paragraph 40: pleaded as an “alternative claim against P1 (according to P1 and P2’s case)”, for payment of damages, stamp duty and penalty, and interim payment for mortgage payments and Government rent and rates.

10.  For the claim under paragraph 37, the pleaded basis was set out in paragraph 25 of the Defence and Counterclaim, as follows:

“Upon inspection of House 10 for the [UBWs], and in order to implement the order for vacant possession, House 10 and House 11 shall be reinstated as 2 separate independent buildings according to the approved building plans. D seeks contribution of no less than half of the total cost of reinstatement works against P2.” (emphasis added)

11.  D’s own pleaded case is therefore that he only seeks contribution of the cost of reinstatement against P2 alone (not P1, the estate), as part of the implementation of the order for vacant possession, which was again sought only against P2. The claim under paragraph 37 therefore, on D’s own case, does not target or involve P1.

12.  For the claim under paragraph 39, the pleaded basis was set out in paragraph 28 of the Defence and Counterclaim, as follows:

“As a result of the Deceased’s breach of Representation 9, the BO had ensured in 2015. Much efforts were made on gaining access to House 10 for the purpose of compliance with the law but in vain due to the persistent obstructions from P2 (Aff-D §§13-21). A mandatory injunction to order P1 and P2 to grant access to D and his agent and servant to House 10 for carrying out inspection, survey, design, planning and construction works is appropriate in the circumstances without pending trial.” (emphasis added)

13.  On D’s own pleaded case, the injunction was necessitated by P2’s purported obstruction of access to House 10. The claim under paragraph 39 therefore does not target or involve P1.

14.  That leaves the claim against P1 based on paragraph 40. Mr Lau accepted that judgment could not be entered at this stage for such claim, when it was pleaded as an “alternative” claim based on the Court first finding in favour of the case advanced by Ps, namely House 10 was held by D on constructive trust in favour of P1.

15.  Properly analyzed, even if P1 is debarred from defending against D’s counterclaim against it, there is no pleaded relief specifically directed against P1 in the Defence and Counterclaim which is capable of giving rise to, or justifying, any judgment against P1 at this stage.

16.  Furthermore, debarring P1 from defending the counterclaim does not in itself means that the Court should enter judgment on the counterclaim against P1. It is still incumbent upon D to prove his counterclaim against P1. To put in simple terms, P1 is entitled to put D to strict proof of his claims. The Court therefore has to receive and evaluate the testimony of the witnesses and other evidence presented by D in support of his counterclaim, and this can only be done at trial.

17.  For completeness, D’s reliance on Order 19 rule 7 to enter judgment in default of defence against P1 is misplaced. That rule only applies if a party fails to file a defence to a claim. Mr Lau submitted that there is “an abundance of case law” that an order debarring a party from defending a claim is automatically to be treated as if that party has failed to file a defence. He did not submit any supporting case authorities at the hearing, and after the hearing he had provided 2 cases which, on a careful reading, do not support his contention:

(1) In Chan Wai Lung v Lee Shu Yen [2025] HKCFI 2406 at [5], Deputy High Court Judge Le Pichon held that the defendants had failed to comply with an unless order and were debarred from defending the proceedings and their Defence was struck out, and the plaintiff was entitled to obtain judgment in default of defence (see [2025] HKCFI 952 at [8] for the terms of the unless order). This case does not assist D when the Unless Order did not specifically impose the sanction of striking out the Defence to Counterclaim in the event of non-compliance.

(2) In JSC BTA Bank v Mukhtar Kabulovich Ablyazov (HCMP 341/2014, 17 February 2014) at [28], Zervos J remarked that there were default judgments obtained against the defendant in the English Courts in circumstances where a court order was made debarring him from defending. Based on one of the related English cases (JSC BTA Bank v Mukhtar Ablyazov [2012] EWCA Civ 639), one could see that the sanction imposed by the unless order expressly included the striking out of the defence and granting liberty to the plaintiff to enter judgment against the defendant: see [4]. This case is therefore far from supporting Mr Lau’s proposition that an order debarring a party from defending a claim is, in itself, to be treated as a failure to file a defence that triggers rule 7.

(3) I agree with Ms Ng that the above two cases illustrated that there is no automatic consequence of striking out the defence and entering judgment against a defaulting party absent clear and express terms to such effect in the order itself.

(4) I reject Mr Lau’s submissions that whether an order is drafted to “debar a party from defending the claim” (in what Mr Lau described as the “short form”) or “striking out the defence” (in what Mr Lau described as the “long form”), “the legal effect is the same”, namely that the defence “is treated as though it never existed” and “is to be treated as a nullity”. The sanctions imposed in the Unless Order must be clearly spelt out, and strictly construed. If D seeks to strike out P1’s defence to counterclaim as a consequence of debarring P1 from defending the counterclaim, such an order must be expressly sought from the Court. D did not do so.

18.  Ultimately, one needs to consider the express wording of Order 19 rule 7 itself, which applies only where the defendant “fails … to serve a defence on the plaintiff”. In the present case, notwithstanding the operation of the Unless Order, it plainly cannot be said P1 had failed to serve a defence on D in respect of the counterclaim. Order 19 rule 7 is not engaged.

19.  In any event, as noted in Hong Kong Civil Procedure 2026 §19/7/13, the Court retains a discretionary power whether to give judgment even if the case falls within the terms of Order 19 rule 7. Since I am not satisfied that P1 is debarred from pursuing the main claim against D, which outcome may mean that it is inappropriate for the Court to enter judgment on the counterclaim, I would in any event refuse to grant default judgment on the counterclaim under Order 19 rule 7 as a matter of discretion.

20.  The remaining parts of D’s summons are premised upon judgment on counterclaim being entered against P1, and therefore naturally fall away in view of the analysis above.

21.  I also add that even if judgment on counterclaim is entered against P1, this is only a procedural sanction against P1 for non-compliance with the Unless Order. This does not amount to a determination of D’s substantive rights as the owner of House 10, and is incapable of giving rise to the “domino effects” advocated by Mr Lau in [4] above.

22.  In any event, as Deputy Judge Lam pointed out, even if P1 is debarred from defending D’s counterclaim against it, Ps may still pursue their claim. To suggest otherwise would be to drive Ps from their driving seat without giving them a fair opportunity at trial, which outcome Deputy Judge Lam had expressly rejected as being disproportionate. There is no basis to strike out Ps’ claim even though P1 did not comply with the Unless Order. The remedy for such non-compliance lies elsewhere.

23.  I should add, for completeness, that in paragraph 4 of the summons, D also sought final judgment for a sum of HK$780,760.02, comprising: (a) the amount ordered under the Unless Order; (b) monthly sums payable under the Interim Payment Order; (c) accrued rates and Government rent concerning House 10; and (d) the previously assessed costs awarded in favour of D. I do not see it appropriate to grant final judgment for any of these items. Insofar as the accrued rates and Government rent are concerned, D’s substantive entitlement ought to be adjudicated at trial. Insofar as the other items are concerned, D is effectively seeking enforcement of extant Court orders. As I noted above, the remedy for such non-compliance lies elsewhere.

24.  For the above reasons, I dismiss D’s summons.

25.  There is no reason why costs should not follow the event. I make a costs order nisi (to be made absolute within 14 days in the absence of any application to vary by way of summons) that D is to pay Ps’ costs of the application (including costs of the hearing and any costs reserved) in the manner described in [27] below.

26.  Ps are to file and serve their statement of costs on or before 10 March 2026, and D is to file and serve his list of objections on or before 17 March 2026. I will then summarily assess costs on papers.

27.  Half of the assessed costs shall be apportioned to each of P1 and P2. For the part apportioned to P1, it shall be set off against the assessed costs payable by P1 to D under the Unless Order. For the part apportioned to P2, it shall be paid forthwith by D.