WONG YUEN HAN v. WONG SHING CHUNG AND OTHERS
HTML content
HCA 458/2013
IN THE HIGH COURT OF THE
HONG KONG SPECIAL ADMINISTRATIVE REGION
COURT OF FIRST INSTANCE
ACTION NO 458 OF 2013
________________________
BETWEEN
| WONG YUEN HAN | Plaintiff | |
| and | ||
| WONG SHING CHUNG | 1st Defendant | |
| WONG SHING KAN | 2nd Defendant | |
| TSANG LAI PING | 3rd Defendant | |
| TAI YUET HANG | 4th Defendant |
_______________________
| Before: Deputy High Court Judge B Chu in Chambers |
| Date of Hearing: 2 April 2014 |
| Date of Judgment: 20 May 2014 |
________________
J U D G M E N T
________________
Introduction
1. The summons before this court is an application by the 1st plaintiff (“P1”) for an order for, among other things, detention, custody or preservation of the properties/assets of the estate of her late parents in the possession of the defendants (“Preservation Order”).
2. This action was commenced by both P1 and her husband Mr Steven Chan (“Chan”) as the 2nd plaintiff, both acting in person.
3. The 1st defendant (“D1”) and the 2nd defendant (“D2”) are P1’s siblings. The 3rd defendant (“D3”) is the wife of D1, and the 4th defendant (“D4”) is the wife of D2. At the present hearing, D1 and D3 are represented by Counsel Mr Joseph Lee, D2 and D4 by Counsel Mr Devin Sio.
4. On 8 January 2014, Master J Wong allowed the respective applications by the 4 defendants to strike out Chan’s claims against them. The plaintiffs’ appeal was recently dismissed by DHCJ Leung on 24 March 2014. Thus, Chan is no longer in this action, and P1 now remains the sole plaintiff, and the sole applicant of the summons before this court.
5. Further, on 10 January 2014, Au-Yeung J make various orders, among which was that P1’s summons before this court was to be restricted to 6 items of properties and bank accounts (“6 Items”), which I will set out later in this judgment.
6. I would also mention at this juncture that shortly after the writ was issued, P1 and Chan had attempted to apply on ex parte basis for a Mareva injunction on two occasions, as follows:
(i) the 1st application was heard and refused by DHCJ Lok on 22 March 2013;
(ii) the 2nd application was heard and refused by A Chan J on 5 April 2013.
Background
7. The father of P1, D1 and D2 Mr Wong Cheong Sing (“Father”) married their mother Madam Au Yeung Pui Hing (“Mother”) in 1952. There were 3 children born out of the marriage. In terms of age, P1, a daughter, is the eldest, then two sons, D1 being the elder and D2 the younger.
8. P1 married Chan, a US citizen, and moved to live in California USA in 1987/1988. The other defendants have remained living in Hong Kong.
9. Father died intestate on 15 January 1995 and letters of administration were granted to Mother on 27 July 1995 in respect of the Father’s estate (“Father’s Estate”).
10. It was P1’s case that Mother was very distressed over Father’s death, and in order not to upset her further, P1, D1, D2 and Mother reached an agreement in the offices of the solicitors firm Messrs So, Keung and Yip that there would not be any distribution of Father’s Estate until Mother’s death, and upon Mother’s death, the parents’ estates (“Estates”) would be divided equally between the three siblings (“Alleged1995 Agreement”).
11. Mother later died on 17 March 2003 having previously made a will on 23 September 1995 (“Will”)[1]. Under the Will, D1 was named as her executor, and all her 3 children were beneficiaries. D1 later obtained a grant of probate on 3 May 2005 in respect of Mother’s estate (“Mother’s Estate”).
12. According to D1, there had been one distribution of the Mother’s Estate made by D1, as executor, in 2011 (“2011 Distribution”). P1 denied that there was any 2011 Distribution, saying that it was merely a small payout which D1 made “involuntarily and reluctantly” after P1’s solicitors’ letters pressuring him to produce the accounts of the Estates.
13. Due to the disputes over the Estates, P1 and Chan issued the writ in this action on 14 March 2013 with an endorsed statement of claim against the 4 defendants. In the statement of claim, P1 and Chan listed a total of 47 items of claims. What they seemed to be alleging was that the defendants had misappropriated assets belonging to the Estates.
14. They had claimed , among various things, the following:
(a) “return” to the Estates various assets, including landed properties/sale proceeds, certain share dividends, investments, jewellery, insurance policies, bereaved funeral money, withdrawals from various bank accounts which were unaccounted for, various reimbursement and expenses with no receipts, and various gifts ;
(b) reimbursements of various expenses, including their travel expenses between Hong Kong and California, legal and accountants’ expenses, investigation costs, other related expenses/costs;
(c) punitive damages and/or compensatory damages for the mental and psychological , and physical sufferings endured by them.
15. The defendants denied any wrongdoings.
16. The present summons was taken out on 17 December 2013 by P1 under Order 29 rule 2 of RHC (“Summons”), and as mentioned earlier, this had been restricted to the 6 Items, which were:
(i) Garden Vista Property, Flat D3, 13th Floor, Block D, Garden Vista Phase II, 15-17 On King Street, Shatin, New Territories, Hong Kong, under the names of the D1 and D3 (“Garden Vista Property”);
(ii) 2108 Property, Flat 8, 21st Floor, Block J, Wing Hing House, Sui Wo Court, Shatin, New Territories, Hong Kong, under the names of D2 and D4 (“2108 Property”);
(iii) 2107 Property, Flat 7, 21st Floor, Block J, Wing Hing House, Sui Wo Court, Shatin, New Territories, Hong Kong, under the names of D1 and D2 (“2107 Property”);
(iv) D3’s bank account No.043-506-1-031846-0 with Bank of China (Hong Kong) (the “043 BOC Account”);
(v) D1’s bank account No.024-298-4-071767 with Hang Seng Bank (the “298 HSB Account”); and
(vi) D1’s bank account No. 259-259299-085 with Hang Seng Bank (the “259 HSB Account”).
17. As can be seen above, D1 and/or D3 were involved in 5 of the 6 Items, whereas D2 and/or D4 were only involved in 2 of the 6 Items, namely the 2108 Property and the 2107 Property.
18. The defendants opposed P1’s Summons. In summary, D1’s position was that the 5 items of properties and bank accounts held by D1 and/or D3 did not form part of the Estates or part of any assets which could be distributable to P1. The grounds of objection set out by their Counsel Mr Lee in his skeleton submissions were (i) the 5 out of the 6 items held by D1 and/or D3 sought to be preserved were not the subject matter of the action; (ii) no explanation by P1 as to why preservation was necessary (iii) damages would be an adequate remedy to P1.
19. As for D2 and/or D4, their grounds for opposition as set out by their Counsel Mr Sio were similar to those for D1 and/or D3, namely (i) 2108 Property and 2107 Property were not the subject matter of the action; and (ii) damages would be an adequate remedy to P1.
General Legal Principles
20. Order 29 rule 2 sets out as follows:
“2.—(1) On the application of any party to a cause or matter the Court may make an order for the detention, custody or preservation of any property which is the subject-matter of the cause or matter, or as to which any question may arise therein, or for the inspection of any such property in the possession of a party to the cause or matter.
(2) For the purpose of enabling any order under paragraph (1) to be carried out the Court may by the order authorize any person to enter upon any land or building in the possession of any party to the cause or matter.
(3) Where the right of any party to a specific fund is in dispute in a cause or matter, the Court may, on the application of a party to the cause or matter, order the fund to be paid into court or otherwise secured.
(4) An order under this rule may be made on such terms, if any, as the Court thinks just.”
21. As set out in paragraph 29/8/5 of the Hong Kong Civil Procedure 2014, Vol 1, under O 29 r 2, the property must be bona fide the subject-matter of the action[2].
22. Further, the rule extends to every case where the court sees that as between plaintiff and defendant there is something which ought to be done for the security of the property, and the applicant is not required to show risk of dissipation of assets.[3] As has been said by Zimmern J in the case of Feng Loy-Chuen v Lim Yiong –Ling [1977] HKLR 471:
“For the purpose of my decision in this application I do not need to refer to the defendant’s affidavit. The High Court is not a depository of chattels at the whim and fancy of litigants. ACourt will usually make an order under Order 29 Rule 2 if in the interest of justice that as between the plaintiff and the defendant there in something which ought to be done for the security of the property for example the preservation of chattels by deposit in court premises for safe keeping (Chaplin v. Barrett)…”[4] (emphasis added)
23. However, the court will usually refuse to grant a preservation order if damages would be an adequate remedy for the plaintiff [5] as seen from had been further emphasised by Zimmern J in above Feng Loy-Chuen that, where a plaintiff could be fully compensated by payment, then it would not be necessary to grant a preservation order[6].
24. In Laguna Properties Ltd v New Trend Investment Ltd, (unreported, HCA19128/1998, 13 May 2004), Tang J (as he then was) stated:
“9. Whether an order should be made under Order 29, rule 2 is discretionary. Order 29, rule 2 is there to secure a just and proper trial of the issues. In all the circumstances, I will not make the order sought. The application is made so late that if granted it would delay the proceedings further. I am also of the view that although I cannot say that even if further illegal structures or further alleged illegal structures were found on inspection, they cannot possibly assist the plaintiff’s case, I do not believe any claims based on them are of sufficient merit to justify the further inevitable delay to the proceedings. I will not grant the order sought and it follows that the summons for preservation and inspection are dismissed.”[7] (emphasis added)
25. In Samtani v Samtani [2012] 4 HKLRD 872, DHCJ Au-Yeung (as she then was) further set out the applicable principles in respect of the granting of a preservation order, as follows:
“The applicable principles
75. In respect of preservation orders under Order 29, rule 2, the source of the court’s powers is the inherent jurisdiction to secure by orders, a just and proper trial of the issues: Hong Kong Civil Procedure 2012, Vol 1, para 29/8/1. It has to be shown that:
(i) There is property which is the subject matter of the cause or matter, or as to which any question may arise. The property must be bona fide the subject matter of the action: Scott v Mercantile Accident Insurance Co (1892) 8 TLR 320, Hong Kong Civil Procedure 2012, Vol 1, para 29/8/6;
(ii) Something ought to be done for the security of that property. The court will not be deterred from making an order for preservation of property because a party against whom the order is sought has a proprietary interest in it. An order should not be refused merely because the defendant claims that he has a discretionary power to determine whether or not the property should be preserved and how it should be preserved, when one of the issues in the case is whether or not the power is untrammeled by a duty to the plaintiff to preserve the property: Johnson v Tobacco Leaf Marketing Board [1967] VR 427, Hong Kong Civil Procedure 2012, Vol 1, para 29/8/8
76. The essential distinction between a preservation order and a Mareva injunction is that :
In an action in which the plaintiff seeks to recover his property, the court has jurisdiction to grant an interlocutory injunction restraining the disposal of property over which the plaintiff has a proprietary claim. The single most significant feature of the Mareva injunction is that it goes well beyond this and enables the court to grant the plaintiff an interlocutory injunction restraining the defendant from disposing of or even dealing with his assets, being assets over which the plaintiff asserts no proprietary claim but which after judgment may be attached to satisfy a money judgment.” Hong Kong Civil Procedure 2012,Vol 1 pp 647-648 para 29/1/51
77. For a preservation order, an enquiry into the relative merits of rival claims is not necessary: Johnson v. Tobacco Leaf Marketing Board [1967] VR 427, at 430.
What is involved is an exercise in salvage, pending, and for the purpose of, the ultimate determination. It is, therefore, relevant to consider what will be involved in that determination, and how it relates to the property sought to be preserved, and what justice demands in the way of making an order for the preservation of the property so as to prevent a determination one way or the other proving abortive.
78. Neither the rule itself nor the authorities require the applicant to show risk of dissipation of assets.
79. However, the court will refuse to grant a preservation order if damages will be an adequate remedy for the plaintiff: Feng Loy Chuen v Lim Yiong Lin [1977] HKLR 471. ”
26. In Carfield (Asia) Limited v Kwok Tan Yan and another (unreported, HCA 180/2013, 29 January 2014), Recorder Houghton SC adopted the aforementioned principles set out by DHCJ Au-Yeung (as she then was) in Samtani v Samtani and rejected the plaintiff’s application for a preservation order. In particular he noted that damages were frequently given as an alternative remedy and found that on the evidence before him there was nothing to suggest that damages would not be an adequate remedy in that particular case[8].
27. With the above principles in mind, I turn to the present case.
The 6 Items
28. P1’s claims in the action included some 46 items, among which were claims over the 6 Items which she alleged formed part of the Estates and should be returned to the Estates for distribution. The disputes relating to the 6 Items are set out hereinafter.
Garden Vista Property
29. This property was purchased in the joint names of D1 and D3 on 7 May 1999 at a consideration of HK$4,030,000 for their residence. According to the land registration record, there appeared to be no mortgage loan at the time of purchase.
30. It was P1’s case that D1 “illegally and secretly “changed the name of the holder of a securities account (“Securities Account”) from the Mother’s to his. The Securities Account was originally held by Father before his death, and later changed to Mother’s name. D1 then claimed to have sold Mother’s HSBC shares in the Securities Account worth about HK$3m in 1999 and used the net sale proceeds to purchase the Garden Vista Property.
31. D1 did not deny there was a loan from Mother of about HK$2,970,757.98, of which he said only HK$2.21m was from the sale of the HSBC shares in the Securities Account, and about HK$757,000 was a cash loan from Mother. D1 said the balance of the purchase price was made up of a payment of about HK$553,850 from the sale of his own shares, and about HK$500,000 odd from the savings of his wife, D3[9].
32. It was D1’s case that the loan from the Mother of about HK$2.97m had been repaid, firstly through a payment of about HK$ 1,700,000 through D2 over D2’s purchase of 2108 Property, and secondly there were other payments which he had made on behalf of Mother which should be deducted, leaving an outstanding balance of HK$1,101,966.98, which was then repaid by deducting from D1’s share in the 2011 Distribution[10].
33. P1 had challenged the amounts set out by D1, in that there seemed to be a sum of HK$2,856,929.52 credited into D1’s 298 HSB Account on 31 March 1999 which P1 alleged should be the sale proceeds from Mother’s HSBC shares in the Securities Account, and prior to that, a sum of HK$28,875 which P1 claimed to be dividends from the HSBC shares in the Securities Account[11].
34. P1’s case seemed somewhat confusing as although she claimed that the Garden Vista Property had to “return” to the Estates, she was also claiming that there was about HK$4-5m in the Securities Account, plus interest, amounting to a total of HK$9,780,000 which was also to “return” to the Estates. It would appear she did not accept that sale proceeds of Mother’s HSBC shares went towards the purchase price of this property.
2107 Property
35. The Father was living with the Mother in Flat 1906, Block J, Wing Hing House, Sui Wo Court in Shatin (“1906 Property”) at the time of his death in 1995. The 1906 Property was bought in about 1981 and was the former family home where all the three children had lived before they married/moved out. After Father’s death, Mother became the sole owner of the 1906 Property.
36. It was P1’s case that after Father died, Mother “kept recalling the memoirs” with Father, and because of this, Mother felt sad and then she decided to move to another flat. She started looking around and that she saw that the 2107 Property was on the market. The 2107 Property was next to the 2108 Property, which D1 and D3 had bought earlier on 3 July 1991.
37. Anyway, according to P1, Mother asked D1 and D2 to procure and help with the purchase of 2107 Property.
38. From the land registration record[12], it would appear that D1 and D2 signed an agreement for sale and purchase on 26 April 1999 for the 2107 Property in their joint names at a consideration of HK$1,660,000.
39. Subsequent thereto, there was a nomination dated 26 June 1999 (“Nomination”) executed by D1 and D1 to the vendor, to the effect that the 2107 Property was purchased by them as agent for and on behalf of the beneficial owner, who was the two of them and Mother, and they nominated Mother as joint tenants with them to take up the assignment.
40. P1 alleged that when Mother first found out that the agreement for sale and purchase for 2107 Property was signed by only D1 and D2 as joint purchasers, she had asked the sons to change the name to her sole name, but instead D1 and D2 “played tricks” and arranged for the Nomination to be executed and became joint tenants with Mother.
41. Further, according to P1, when she came back to visit Hong Kong from California for Mother’s big birthday and mid autumn festival in October 1999, Mother had told her about this “scam” by D1 and D2, and that all four of them had a meeting to discuss the matter. P1 said she told D1 and D2 either to change the name of the owner of the 2107 Property to Mother’s sole name, or to change the owner to all 4 of them. P1 said she was then told this would involve a lot of legal costs and expenses, and D2 then proposed that upon Mother’s death, Mother’s share would go to P1. P1 said she accepted this proposal.
42. In short, P1’s case seemed to be based on there being an oral agreement between her and D1 and D2 in the presence of Mother in October 1999 that the 2107 Property would be divided equally between the three of them upon Mother’s death (“Alleged 1999 Agreement”).
43. D1 and D2 had denied the Alleged 1999 Agreement and that it was their case that when Mother purchased this property, it was Mother who decided to register D1 and D2 as joint tenants of the 2107 Property together with her. All this took place about 4 years prior to Mother’s death.
44. After 2107 Property was purchased, Mother then moved into this property in 1999 and sold the 1906 Property in 2000. Mother resided in the 2107 Property until her death in 2003.
45. As to the payment of the purchase price of HK$1,660,000 for the 2107 Property, according to a memorandum apparently prepared by D3[13], there was a down payment of a total of HK$332,000 by Mother out of which HK$92,000 was paid by D1 on her behalf. D1 said he had obtained a loan on the Garden Vista Property of HK$1.5m from Dao Heng Bank out of which HK$1,328,000 was for the Mother to pay for the balance of the purchase price of 2107 Property, HK$92,000 was to repay D1, and the rest for stamp duty, legal costs and agent’s commissions, leaving only a remaining sum of HK$44,350.
46. P1 had queried what D1 said about the HK$1.5m, which according to the bank statement produced by D1 was obtained on 7 May 1999[14], which was in fact the date of completion of the Garden Vista Property and it was two months earlier than the date of completion for the 2107 Property on 5 July 1999.
47. Although Mother signed the Nomination together with D1 and D3, but P1 pointed out that there was no interpretation clause. P1’s allegation seemed to be that Mother did not understand know what she was signing. Anyway, a result of Mother’s death, D1 and D3 became surviving joint tenants.
48. The issue in relation to the 2107 Property thus appeared to be whether P1 should be entitled to 1/3 share thereof by reason of the Alleged 1999Agreement, which P1 said was also consistent with the Alleged 1995 Agreement.
2108 Property
49. P1’s case was that D2 wanted to get married in 1985 but did not have enough money to purchase a property on his own, and Father then paid for the purchase price for a property at Shatin City One for D2 (“City One Property”) on condition that D2 had to repay the money to Father, and in the mean time, Mother and D2 were to be the joint registered owners.
50. Later in 1988/1989, the City One Property was sold, and Mother and D2 jointly purchased another property at Flat 2407, Block G, Wing Mau House, Sui Wo Court in Shatin (“2407 Property”), with Father paying for the difference between the sale price of City One Property and the 2407 Property of about HK$100,000.
51. P1 alleged that on the same date as the Will, namely 23 September 1995, D2, without letting P1 know, “kicked out” Mother as owner of 2407 Property, and added his wife D4’s name in place of Mother’s. P1 further alleged that Mother did not know her name as owner had been removed and replaced by D4.
52. As mentioned earlier, the 2108 Property was in fact first purchased on 3 July 1991 by D1 and D3, as joint tenants, at a consideration of HK$1,080,000.
53. On 31 July 1999, D1 and D3 decided to sell the 2108 Property to D2 and D4, who agreed to purchase this property at a consideration of HK$1.4m as their residence. D2 and D4 later then sold the 2407 Property in 2000.
54. It was D1’s case when 2407 Property was sold, as D2 had owed him HK$1.7 m arising out of the purchase of the 2108 Property, D1 had requested D2 to pay the HK$1.7m to Mother from the sale proceeds of the 2407 Property, as part of D1’s repayment of the HK$2.97m loan from Mother.
55. P1, however, pointed out that the sale price of 2108 Property from D1 and D3 to D2 and D4 was only HK$1.4m, and not HK$1.7m.
56. Anyway, according to D2, when he purchased the 2108 Property, the difference between 2108 Property and the 2407 Property was about HK$700,000, which was paid by Mother in advance as an interest free loan to him, which he had been repaying by instalments until 2011, and the balance was set off from his share under the 2011 Distribution.
57. The City One Property and the 2407 Property were purchased in the joint names of D2 and Mother before Father had passed away. Mother’s name on the 2407 Property was removed in 1999, and this was 4 years before Mother passed away.
58. It was P1’s allegation that the 2407 Property “transformed” into the 2108 Property.
59. The 2108 Property was purchased by D2 and D4 from D1 and D3, and according to D2 and D4, the property was purchased by their own money with an interest free loan from Mother which had been fully set-off in the 2011 Distribution.
043 BOC Account held in name of D3
60. D1 and D3’s case was that there had been no deposits of money from Mother’s Estate into this account and hence the 043 BOC Account was not part of the Estates. Furthermore, any order for preservation placed on this account would cause great inconvenience to the daily routine of D3.
61. It was P1’s case that D1 and/or D3 used this bank account’s funds “to transact on the Family’s Estate’s related business and this Account is believed to have something to do with the missing 1906 Property (former parents’ matrimonial home) Sale Proceeds” (underline added). Thus, P1 seemed to be alleging that the sale proceeds of the 1906 Property, which was sold in 2000, were believed by her to have been paid into this account, and that this account was also used for the Estates.
62. P1 had produced two bank withdrawal slips dated 23 March 2011 indicating withdrawals from the 043 BOC Account respectively for HK$71,516.35 and HK$442,500.29 into the clients’ account of a solicitors’ firm Henry HC Wong & Co[15].
63. The above appeared to be the only evidence that P1 could produce at this stage.
298 HSB Account
64. The 298 HSB Account was held in the name of D1.
65. P1 alleged that D1 and/or D3 used this bank account to “transfer or deposit funds and/or dividends into this Account from the Family’s Estate’s Securities Account believed the one D1 illegally and secretly changed the name of the Securities Account Owner from Mom (originating from Dad) to His”.
66. P1 had produced a statement of account of the Securities Account dated 30 September 1997 for purchase of 400 HSBC shares, and also HSBC Holdings plc dividend payment tax voucher dated 31 December 1997 of dividends paid into this account.
67. D1 and D3’s case was whilst there was a deposit of the proceeds of sale of Mother’s HSBC stocks in 1999, this was done pursuant to Mother’s instructions and in facilitation of the loan to D1 to purchase the Garden Vista Property, but the loan had since been fully repaid. Furthermore, any order for preservation placed on this account would cause great inconvenience to the daily routine of D1.
68. P1’s allegation mainly concerned the deposit of funds/ dividends from the Securities Account, which was in 1999, which D1 had said that this was to facilitate the payment of the purchase price of the Garden Vista Property. There was no other evidence that it was used for transfers of funds from the Estates, other than from the Securities Account.
259 HSB Account- joint brokerage account in names of Mother and D1
69. P1’s case was that every one in the family knew that this was the Mother’s account and that D1’s name was there Mother was not a good money manager and that D1 was to help Mother with her finance including selling and buying of stocks etc.
70. D1’s case was that in about middle of 2000, at Mother’s suggestion, a joint securities account was opened at the Hang Seng Bank in their joint names for purchasing shares (“Joint Brokerage Account”).
71. On 20 November 2000, Mother had transferred a sum of HK$43,000 from her account 030-240 to the Joint Brokerage Account and on 27 February 2001 had purchased a lot of HSBC shares at HK$109 per share. Subsequently, on 13 March 2001, Mother transferred a sum of HK$40,000 from her account 043-279 to the Joint Brokerage Account and on 23 March 2001 purchased another lot of 400 HSBC shares at HK$89.25 per share.
72. D1’s case was that subsequently, Mother gifted to him the above shares towards end of 2001 and thereafter, no one had bought any shares in this Joint Brokerage Account.
73. The issue was thus whether the shares in the Joint Account had been gifted to D1 by Mother, and as this gift was within 3 years prior to Mother’s death, whether it should be brought back into the Estates as alleged by P1.
Main Issues for P1’ Summons
74. Turning back to the Summons, the main issues before this court were :
(i) Whether the 6 Items formed the subject-matter of P1’s action;
(ii) If so, reasons for preservation;
(iii) Whether damages would be an adequate remedy to P1.
Discussions
Whether subject-matter
75. Both Mr Lee and Mr Sio submitted that the 6 Items were not subject-matter of the action as they were not part of the Estates or part of any assets which would be distributable to P1.
76. P1, on the other hand, had relied on Samtani to support her case. In Samtani, the plaintiff had made “partnership claims” and “property claims” against the defendant. So far as the “partnership claims” were concerned, the plaintiff had claimed that the defendant had misappropriated monies from two businesses originally set by their deceased father and diverted them to his personal account. As for the “property claims”, the defendant had 7 properties registered in his name, and it was the plaintiff’s case these properties were held on resulting trust by the defendant in favour of the first business of which plaintiff claimed he held 60%.
77. The plaintiff applied for a Mareva injunction, and/or a preservation order of assets alleged to belong to the two partnerships.
78. The then DHCJ Au-Yeung dismissed the Mareva injunction on the ground that there was no evidence of defendant dissipating his assets and the plaintiff’s loss could be compensated by damages to that there was no reason to make a draconian order for a Mareva injunction as sought. However, she granted a preservation order over 3 of the properties which she said might form the subject matter of the “partnership claims” if the plaintiff’s case was accepted. As further said by her, “a preservation order can be made notwithstanding that the defendant also has interest (at least 40% as a partner even on the plaintiff’s case) in those properties”.[16]
79. As mentioned earlier, the issues over the 3 landed properties appeared to be:
(i) So far as the Garden Vista Property, whether the amount from Mother was indeed obtained by D1 “illegally and secretly” changing the name of the Securities Account and selling the shares and using the proceeds for the purchase, or whether the amount from Mother was a loan; in the former case, the Garden Vista Property might form part of the Estates if P1 were to succeed with her case, and in the latter, any unrepaid loans might form part of the Estates.
(ii) As for the 2108 Property were concerned, whether this property was indeed “transformed” from the 2407 Property, or whether it was purchased by D2 with a loan from Mother; in the former case, the 2108 Property might form part of the Estates if P1 were to succeed with her case, and in the latter, any unrepaid loan might form part of the Estates.;
(iii) In the case of the 2107 Property, whether there had been the Alleged 1999 Agreement. However, this alleged agreement was some 14 years prior to the issue of writ and may be time barred, but this had not been pleaded by the defendants. If P were to succeed with her claim as to the Alleged 1999 agreement, the 2107 Property could be part of the Estates available for distribution.
80. As for the 3 bank accounts, so far as the 043 BOC Account, there was no sufficient evidence that the monies in that account might form part of the Estates. As for the HSB Account, on the bank statement produced by D1 for March 1999[17], one could only see the deposit of the sums alleged by P1 to be from the Securities Account, but one could not see any payment out, since the completion of the Garden Vista Property did not take place until 7 May 1999. If the amount alleged to be from the Securities Account did not go towards the purchase of the Garden Vista Property, then those amounts might form part of the Estates, if P1 were to succeed with her case.
81. As for the Joint Brokerage Account, as mentioned earlier, as it was D1’s case that the shares therein were gifted to him by Mother, and if P1 were to succeed with her case that this gift was within 3 years and should be brought back into the Estates, then the shares might form part of the Estates available for distribution.
82. Having considered the above, I am of the view that apart from the 043 BOC Account, in the event P1’s case were to succeed in her claims after trial, the other 5 of the 6 Items might form part of the Estates, and the subject matter of the P1’s present action.
Why preservation is necessary
83. In the event that I am wrong on the 043 BOC Account, I will consider whether preservation is necessary in respect of all 6 Items.
84. As noted by the then DHCJ Au-Yeung in Samtani, the applicant for a preservation order must show that something ought to be done for the security of the properties sought to be preserved[18].
85. So far as the 3 landed properties were concerned, all of them were purchased with a few months of each other in 1999, and these all took place almost 4 years before Mother’s death. P1 admitted during the hearing that she knew of these purchases in 1999. Mother died in March 2003 and D1 obtained probate in May 2005, 9 years ago. As stated in para 29/8/2 of the Hong Kong Civil Procedure 2014, Vol 1, an application under O 29 r 2 should be made as soon as reasonably possible. P1 did not issue the writ until March 2013, and the Summons until December 2013. In my view, there had been long delay.
86. In P1’s supplemental affirmation filed in support of the Summons, she stated that in addition to the preservation order, she would like to go one step further to invite this court to “re-possess the 2107 Property and return it to the Estates with custody of the court while the rest of the case still in progress”. It seems so far as the 2107 Property was concerned, P1 was asking the court to take over custody of the property.
87. There was no sufficient evidence or explanation from P1 as to why it was necessary to preserve the 6 Items now or to take over custody of the 2107 Property now, 10 years after Mother’s death.
88. By now, the Garden Vista Property has been the residence of D1 and D3 for 15 years. Similarly, 2108 Property has been the residence of D2 and D4 for almost 15 years. Further, given that all the bank accounts were used by D1 and D3 in their respective daily routines, Mr Lee submitted that any preservation order imposed upon these account would cause substantial inconvenience to D1 and D3.
89. As stated in para 29/8/1 of the Hong Kong Civil Procedure 2014 Vol 1, the source of the court’s powers is the inherent jurisdiction to secure by orders, a just and proper trial of the issues.
90. As said by Zimmern J in Feng Loy –Cheung, the High Court is not a depository of chattels at the whim and fancy of litigants[19], or if I may add, custodian of properties for that matter.
91. Having considered all the above, I find no sufficient evidence as to why something ought to be done now for the security of the 6 Items and why the Preservation Order is necessary now.
Whether damages would be an adequate remedy
92. As seen from the authorities earlier referred to, it is well established that the court will usually refuse to grant a preservation order if damages would be an adequate remedy for the applicant.
93. In the present case, there is no suggestion that any of the defendants would not be able to make payment to P1 in the event that she were to succeed in the action. There was no suggestion that P1 could not be fully compensated by payment from any of the defendants.
94. Contrary to P1, all the defendants are based in Hong Kong and have a substantial amount of assets in the jurisdiction, including the 3 landed properties.
95. In my view, it is clear that damages would be an adequate remedy to P1, and I am of the view that there is no need for the court to impose the Preservation Order in respect of the 6 Items.
Conclusion
96. In the above circumstances, I order that the Summons issued on 17 December 2013 be dismissed.
97. I order P1 to pay the defendants’ costs, such costs to be summarily assessed. The defendants shall submit their statements of costs within 14 days, and P1 to submit her list of objections thereto within 14 days thereafter. Any reply by the defendants to be within 7 days thereafter. This is a costs order nisi, which shall be final after 14 days.
| (Bebe Pui Ying Chu) Deputy High Court Judge |
The plaintiff appeared in person
Mr Joseph Lee, instructed by Edmund W H Chow & Co, for the 1st and 3rd defendants
Mr Devin C I Sio, instructed by Lo & Co, for the 2nd and 4th defendants
[1] B2:252
[2] See Scott v Mercantile Acident Insurance Co (1892) 8 TLR 320
[3] See para 29/8/7 of Hong Kong Civil Procedure 2014
[4] At pg 472
[5] See para 29/8/7 of Hong Kong Civil Procedure 2014
[6] At pg 472
[7] At para
[8] See para 8, pg 4
[9] B2:172-173
[10] B2:172
[11] B2:194-196
[12] B2:156
[13] B2:152, 154
[14] B2:201
[15] B2:175
[16] Para 90, at pg 894
[17] B2:185-186
[18] At para 75(ii)
[19] At pg 47