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

_________________

BETWEEN

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

______________

_______________

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.

Ms Rowena Ng, of Messrs Patrick Mak & Tse, for the Plaintiffs

Mr Andrew H P Lau, instructed by Messrs Chan & Associates, for the Defendant

HCA 1562/2022 &
HCA 104/2023
(Consolidated)

[2025] HKCFI 6437

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NOS 1562 OF 2022 AND 104 OF 2023

__________________

__________________

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

_______________________

D E C I S I O N

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I.  INTRODUCTION

1.  Before me is the Defendant’s Inter-Partes Summons filed on 9 December 2025 for an unless order that unless the 1^st Plaintiff shall comply with the interim payment order (the “Interim Payment Order”) made by Master Teresa Wu on 29 November 2024 and DHCJ Anthony HK Chan SC’s Order (the “Payment Order”) made on 31 October 2025 that the 1^st Plaintiff shall, within 21 days from 31 October 2025, pay the outstanding amount to the Defendant in the sum of HK$460,538 under the Interim Payment Order, the 1^st and 2^nd Plaintiffs’ (collectively the “Plaintiffs”) claim shall be dismissed and judgment shall be entered on the Defendant’s counterclaim, including delivery of vacant possession of the subject property to the Defendant.

II.  BACKGROUND

2.  The parties’ respective cases have been set out by Master Teresa Wu in §§4-10 of her decision (the “Master’s Decision”) granting the Interim Payment Order ([2024] HKCFI 3464). In gist, the 1^st Plaintiff, being co-administrators of the estate of the Deceased, claim that the Deceased (and therefore the estate of the Deceased) was the beneficial owners of the subject property, which they have been using and occupying, while the Defendant, the registered owner of the subject property denies. The 2^nd Plaintiff is one of the co-administrators in the 1^st Plaintiff, and the 2^nd Plaintiff has been residing in the subject property. The Plaintiffs seek a declaration of beneficial ownership in the estate’s favour and an order to transfer the legal title to the estate, while the Defendant counterclaims against the Plaintiffs for delivery of vacant possession of the subject property, mesne profits and other damages, including mortgage payments which the Defendant had been making.

3.  As said, on 29 November 2024, Master Teresa Wu made the Interim Payment Order against the 1^st Plaintiff. The interim payment was in relation to the mortgage payments. The reason for granting the Interim Payment Order was, in essence, that if the 1^st Plaintiff wins, the Deceased and its estate being the true owner would have to be responsible for the mortgage payments, and if the Defendant wins, the 1^st Plaintiff would be liable to pay mesne profits to the Defendant, who would have used part of the mesne profits to make the mortgage payments. In fact, the Plaintiffs did not dispute such liability before the Master, but only disputed quantum (see §§27(4), 30, 31, 33, 39 of the Master’s Decision).

4.  The Interim Payment Order was made. No appeal was made against that Order.

5.  There is dispute over whether the 1^st Plaintiff has complied with part of the Interim Payment Order, but there is no dispute that the 1^st Plaintiff has at today failed and/or refused to complied with it fully, if not partially. Therefore, the Defendant applied for an unless order by Inter-Partes Summons filed on 10 September 2025 (the “September Summons”). The unless order sought by the September Summons is the same as the unless order now being sought before me. On 31 October 2025, the September Summons was heard by DHCJ Anthony HK Chan SC, who refused to grant any unless order, but instead made the Payment Order.

6.  In his decision ([2025] HKCFI 5287) (the “October 2025 Decision”), his Lordship explained:-

(1)  The Defendant had not attempted other less draconian means to enforce the Interim Payment Order (§20).

(2)  “Counsel [for the Defendant] argues that unless order is the last resort. Other methods of enforcement would not be quick enough to bring about payment by the 1^st Plaintiff to stave off the bank’s action for default in mortgage repayment. But with respect, any suggestion that there is urgency because of the bank’s action seems to me to be a result of the Defendant not having applied for enforcement earlier” (§21).

(3)  “[I]t is in my view premature for the Defendant to have applied for an unless order without first resorting to other less draconian means available under our civil procedures” (§21).

(4)  The 1^st Plaintiff had no excuse not to comply with the Interim Payment Order. The 1^st Plaintiff’s alleged financial difficulties was not a good reason (§22).

(5)  The 1^st Plaintiff was aware that the Defendant was applying for an order that the 1^st Plaintiff had to comply with the Interim Payment Order within a specified time. (§23)

III.  THE PRESENT APPLICATION

7.  The present application is for the same unless order which DHCJ Anthony HK Chan SC refused to grant. Mr Andrew H.P. Lau, counsel for the Defendant, submits that the change of circumstance is the 1^st Plaintiff’s failure to comply with the Payment Order. He submits that the Payment Order should be regarded as the last chance for the 1^st Plaintiff, and this is now 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 the Plaintiffs should be met with draconian consequences proportionate to repeated breaches of court orders.

8.  Ms Rowena Ng, for the Plaintiffs, submits that the fair resolution of the dispute in accordance with the parties’ substantive rights is the most important objective and failure to comply with the Orders should not deprive of the Plaintiffs of the right to such fair resolution. As regards the reason for the breach of the Payment Order, the 1^st Plaintiff’s evidence before me is still her financial difficulties, which has already been ruled by DHCJ Anthony HK Chan SC not to be a good reason at all. In any event, the alleged financial difficulties on the evidence are mere allegation without details. I do not see why such reason and such evidence would constitute any good reason.

9.  The 1^st Plaintiff’s draft affirmation made by the 2^nd Plaintiff (signed but not affirmed) also alleges that the 1^st Plaintiff tried to sell one of the properties of the estate to raise fund, but failed. However, a failed attempt is not a good reason for not complying with a court order. This may or may not be relevant if the present application is committal proceedings, but the present application is an application for an unless order only.

10.  Notably, the 1^st Plaintiff has adduced no evidence to explain the financial position of the estate, for example, whether the estate has some other assets. In gist, the draft affirmation only alleges that the 1^st Plaintiff had financial difficulties without providing any details, that the 1^st Plaintiff attempted to sell a landed property but failed, and that the 1^st Plaintiff would continue to try to sell the property.

11.  I bear in mind the legal principles in relation to unless order as expounded in Bruce James Stinson v Gu Ming Gao[2018] HKCA 10 at §58. I consider the following:-

(1)  There is no good reason for the 1^st Plaintiff to have repeatedly breached court orders. The 1^st Plaintiff must be met with appropriate measures, or else the 1^st Plaintiff may have got a misimpression that court orders are just mere paper tigers.

(2)  There are other enforcement means which the Defendant has not taken. Mr Lau submits that a charging order application would not be quick enough given that the mortgagee bank’s application for mortgage repayment will be heard next month. With respect, I agree with the observation made at §21 of the October 2025 Decision that “any suggestion that there is urgency because of the bank’s action seems to me to be a result of the Defendant not having applied for enforcement earlier”. Mr Lau submits that this observation is completely wrong. With respect, I do not accept such submissions. There has been no good explanation as to why enforcement action had not been taken earlier at all, when the Interim Payment Order was made back in 2024.

(3)  The Interim Payment Order was against the 1^st Plaintiff only. Although the 2^nd Plaintiff is one of the co-administrators in the 1^st Plaintiff, when the Interim Payment Order was made against the 1^st Plaintiff, it means that it is the estate of the Deceased that has to pay. The same is true in respect of the Payment Order. Therefore, I see no reason why the 2^nd Plaintiff, in her personal capacity, should be affected.

(4)  The payment in question arises from the Defendant’s counterclaim. Absent any special circumstances, in my view, the sanction in the unless order should be related to the counterclaim rather than the 1^st Plaintiff’s own claim.

(5)  The subject matter is landed property. I cannot say at this stage that the 1^st Plaintiff’s claim is unmeritorious at all. The sanction as sought by the Defendant would mean that without any trial giving the Plaintiffs a fair opportunity, the subject property would be awarded to the Defendant. The sanction, if it would come into effect, would be disproportionate. Mr Lau effectively submits that the 1^st Plaintiff’s repeated breaches of court orders should deprive the Plaintiffs of such a fair opportunity for just resolution, or that the Plaintiffs deserve such deprivation. I do not see that one has to be that extreme especially when, as explained above, the Defendant here also has himself to blame for not taking other enforcement actions earlier.

12.  Having considered the above, I think it is appropriate to impose an unless order, and the sanction in the unless order should affect the 1^st Plaintiff only.

13.  As to what sanction should be imposed against the 1^st Plaintiff, given the Interim Payment Order and the Payment Order were made on the Defendant’s counterclaim only, in my view, the sanction should be that the 1^st Plaintiff shall be debarred from defending against the counterclaim. I make it clear that if the 1^st Plaintiff would be debarred from defending against the counterclaim, the 1^st Plaintiff may of course still pursue their claim. But there is practical effect of debarring the 1^st Plaintiff from defending against the counterclaim. For example, the 1^st Plaintiff would not be able to defend against the Defendant’s counterclaim for damages and injunction against the 1^st Plaintiff (which the 1^st Plaintiff would otherwise be able to defend even losing their claim by adducing expert evidence on quantum and/or pray in aid some factors that would have impact in the court’s exercise of equitable jurisdiction to grant or not grant an injunction), and the 2^nd Plaintiff would presumably have to defend against the counterclaim against her in her personal capacity out of the 2^nd Plaintiff’s own pocket without any resort to the estate. For the avoidance of doubt, the real effect of the sanction against the 1^st Plaintiff only is something to be seen, but at least the above is what I can see preliminarily at this stage.

IV.  CONCLUSION

14.  In the circumstances, I make the following order:-

(1)  Unless the 1^st Plaintiff do pay the Defendant HK$460,538 by 4pm on 19 January 2026, the 1^st Plaintiff shall be debarred from defending the Defendant’s counterclaim.

(2)  The 1^st Plaintiff shall pay the costs of the present application to the Defendant on an indemnity basis, summarily assessed at HK$120,000, forthwith.

Ms Rowena Ng of Patrick Mak & Tse, for the 1^st and 2^nd Plaintiffs

Mr Andrew H.P. Lau, instructed by Jesse H.Y. Kwok & Co., for the Defendant

HCA 1562/2022 and HCA 104/2023

(Consolidated)

[2025] HKCFI 5287

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1562 OF 2022

____________________

____________________

_____________

DECISION

_____________

INTRODUCTION

1.  Before me is a summons dated 10 September 2025 (“Unless Order Summons”) issued by the Defendant to, inter alia, enforce by way of an unless order an interim payment order dated 29 November 2024 (“IPO”) whereby Master Teresa Wu ordered the 1^st Plaintiff to make certain interim payments to the Defendant.

2.  More specifically, the IPO ordered the 1^st Plaintiff to pay to the Defendant (in respect of the use and occupation by the 1^st Plaintiff and/or the 2^nd Plaintiff of a property defined in the pleadings as “House 10”):

2.1.  HK$95,983 forthwith for the period of 1 February 2017 and 30 June 2024 to reimburse the Defendant for the mortgage repayments he had paid for House 10.

2.2.  A monthly sum of HK$45,000 after 30 June 2024, 3 days in advance of the first day of each month, and until final judgment or such order from the Court for the Defendant to effect monthly mortgage repayments of House 10.

2.3.  HK$98,700 forthwith for the period of the first quarter of 2017 and the third quarter of 2023 to reimburse the Defendant for the rates and Government rent paid for House 10.

2.4.  The rates and Government rent of House 10 after the first quarter of 2024 as determined by the Rating and Valuation Department (“RVD”) 14 days before the due date and until final judgment herein or such further order of the Court for the Defendant to effect quarterly payment to the RVD, or where appropriate, the Plaintiffs may, as directed by the Defendant, make direct payments to the RVD.

3.  In brief, the Unless Order Summons, led by the 6^th Affirmation of Kwok Hong Yee Jesse, asks for an order that unless the Plaintiffs comply with the IPO by paying the outstanding payments with interest in full by 4 pm on 26 September 2025, the Plaintiffs’ claim be dismissed and judgment be entered on the Defendant’s counterclaim. 

4.  The Unless Order Summons first came before another Judge on 15 September 2025 who gave leave to the Plaintiffs to file evidence to oppose by 4 pm on 19 September 2025, and reserved costs of the hearing. 

5.  On 19 September 2025, the Plaintiffs filed the 2^nd Affidavit of Ng Siu Ling Rowena exhibiting a signed copy of the Affirmation of Yan Dong, one of the 1^st Plaintiff, which he apparently signed in the Mainland.  On 22 September 2025, Yan Dong signed the same affirmation before the PRC Notarial Officer.

6.  On 26 September 2025, the Defendants filed the 7^th Affirmation of Kwok Hong Yee Jesse exhibiting a signed copy of the Affirmation of Fong Lap Shan dated 25 September 2025 apparently signed in New York.

7.  The parties had also filed skeleton submissions.  The Plaintiffs’ skeleton submissions came on 11 September 2025 whereas the Defendant filed 2 skeleton submissions on 12 and 26 September 2025.

8.  On 27 October 2025, I directed the Unless Order Summons be relisted before me for substantive hearing on 31 October 2025.  The parties were also directed to file updated skeleton submissions to supplement their earlier skeleton submissions, and they have done so.

9.  I also directed that no further evidence is permitted without leave of the Court and that any application for retrospective leave to file evidence would be dealt with at the hearing.  At the beginning of the hearing, I gave retrospective leave to the parties to file and serve (a) the Affirmation of Yan Dong dated 22 September 2025 (b) the 7^th Affirmation of Kwok Hong Yee Jesse dated 26 September 2025 and (c) the Affirmation of Fong Lap Shan dated 25 September 2025.

DISPOSITION

10.  It appears that the 1^st Plaintiff did initially comply with the IPO, but then failed to make payment as ordered.  The result is that the total outstanding and unpaid sum as of today is HK$460,538.  That figure is not in dispute.

11.  As far as I see it, the 1^st Plaintiff has no good answer for not paying. 

12.  Ms Rowena Ng for the 1^st Plaintiff takes two main points.  First, she argues that the provisions of the Rules of the High Court cited in the margin note of the Unless Order Summons are wrong in that they do not concern unless orders.  Second, she argues that it would be unjust and disproportionate to make an unless order with the effect of dismissing the Plaintiffs’ claim for failure to pay the outstanding sum.

13.  The first submission is plainly unmeritorious.  It is trite that citing the wrong order or rule in the margin note of a summons is not fatal.  A party is not bound to state under which order or rule he proposes to move.  It frequently happens that parties move under a particular rule and then, when they find it is a wrong one, turn to another and an order is made: Premier Fashion Wears Ltd v Chow Cheuk Man [1994] 1 HKLR 377 at 383 (Godfrey JA).

14.  There is no doubt the Court is empowered to grant an unless order in an appropriate case. 

15.  That said, it is important to bear in mind that the Court of Appeal has explained in Bruce James Stinson v Gu Ming Gao[2018] HKCA 10 §58 (Kwan JA, as she then was), that the purpose of an unless order is not to punish conduct but to secure a fair trial in accordance with the due process of law.  The draconian sanction of striking out a litigant’s claim or defence in its entirety should not be the default consequence of an unless order as it would effectively deprive the litigant of its substantive rights on account of a procedural fault.  A “more calibrated use” of such orders should be adopted following these guidelines:

15.1.  Unless orders stipulating the consequence of dismissal should not be given as a matter of course but as a last resort when the defaulter’s conduct is inexcusable.

15.2.  The conditions appended to unless orders should as far as possible be tailored to the prejudice which would be suffered should there be non-compliance.

15.3.  Other means of penalizing contumelious or persistent breaches are available, including but not limited to (a) awarding costs on an indemnity basis (b) order the payment of the plaintiff’s claim or part thereof into court where the defaulting party is a defendant (c) striking out the relevant portions of the defaulting party’s statement of claim or defence rather than the whole (d) barring the defaulting party from adducing certain classes of evidence or calling related witnesses and (e) raising adverse inferences against the defaulting party at trial.

16.  That case was about default of making discovery.  Be that as it may, I consider that the Court of Appeal’s guidance should apply mutatis mutandis to the present case.  In my view, ordinarily a party should not as a matter of course enforce an interim payment order via an unless order with striking out of the other side’s claim or defence in its entirety (as the case may be) as the consequence of default. Generally, such an unless order should be applied for as a means to enforce an interim payment order only as a last resort when the circumstances so justify.

17.  Indeed, our civil procedures provide for other means of enforcement of an order for the payment of money such as a writ of fieri facias or where a person breaches an order requiring him or her to make a payment of money within a specified time, an order of committal: Rules of the High Court O.45 r.1(1)(a) & (e), O.45 r.5. 

18.  Where an order for the payment of money does not specify a time within which that act is to be done, the Court is empowered under O.45 r.6(2) to make a subsequent order requiring that act to be done within such time after service of that order, or such other time, as may be specified therein.  Any breach of that subsequent order may be enforced by an order of committal.

19.  I am reinforced in my view by Baker & Mckenzie (A Firm) v The Grande Holdings Limited (unreported, CACV 102/2011, 14 December 2011).  In that case (see §§1-3, 6, 9, 17), the defendants appealed against, inter alia, the order of the learned judge below ordering them to make interim payment of 50% of the plaintiff’s profit costs. There was no stay and the plaintiff applied to the Court of Appeal for an order that unless the interim payments were made by a certain date, the appeal be struck out.  Yuen JA dismissed the application and noted that the plaintiff had not made any attempts to enforce the order by other means.  Instead, the plaintiff tried to strike out the appeal when the judge below had noted the defendants have reasonable grounds.  Hence, the effect of the proposed unless order would be to stifle a reasonable appeal when other less draconian methods of enforcement had not been attempted.  While each case turns on its own facts, I consider the sentiments expressed to be germane for present purposes.

20.  In my view, the circumstances of the present case do not merit the Court ordering the 1^st Plaintiff to pay the outstanding sum on an unless order basis at this stage.  The Defendant has not attempted other less draconian enforcement methods.  Mr Andrew H.P. Lau explains that the Defendant did not take out any enforcement action earlier because in 2 previous interlocutory applications, the Court made certain costs orders.  Those orders are not before me (nor are they discussed in Mr Lau’s skeletons), so I make no comment on the validity of the point.

21.  Mr Lau further says the Defendant had written to the other side to urge them to make payment, only to be met with letters to the effect that the 1^st Plaintiff had financial difficulties but would pay soon, and urged the Defendant not to take action. Those correspondence was in the earlier part of 2025.  It is for the Defendant to decide what should be a proper response.  Mr Lau argues other enforcement orders would be futile.  Counsel argues that unless order is the last resort. Other methods of enforcement would not be quick enough to bring about payment by the 1^st Plaintiff to stave off the bank’s action for default in mortgage repayment.  But with respect, any suggestion that there is urgency because of the bank’s action seems to me to be a result of the Defendant not having applied for enforcement earlier.  As I have explained, it is in my view premature for the Defendant to have applied for an unless order without first resorting to other less draconian means available under our civil procedures.

22.  Having said that, the 1^st Plaintiff has no excuse not to comply with the IPO either.  Ms Rowena Ng submits that the 1^st Plaintiff is experiencing financial difficulties.  But that is plainly not a reason not to comply with the IPO.  She claims that her client could pay the outstanding sum of HK$460,538 within 3 months.  But there is no basis for that claim.  Ms Ng tells me her client would try to borrow the funds from others.  But there is no explanation why her client could not have done so earlier. 

23.  The Unless Order Summons has been served on the Plaintiffs’ solicitors on record so the 1^st Plaintiff is clearly aware that the Defendant is applying for an order with the effect that the 1^st Plaintiff comply with the IPO order by paying the outstanding sum with interest by a specified date.

24.  Considering all the relevant circumstances in the round, I make an order that the 1^st Plaintiff do pay the outstanding sum of HK$460,538 within 21 days after service of the order.

25.  I give the parties liberty to apply.

26.  I make no order as to costs for the Unless Order Summons.  Whilst I consider it was premature to apply for an unless order in this case, what cannot be disputed is that the 1^st Plaintiff has repeatedly breached the IPO.  The 1^st Plaintiff’s conduct must not be condoned.

27.  I also dismiss the Plaintiffs’ summons dated 27 October 2025 to file a further affirmation with no order as to costs.  First, before the summons was issued, I had directed that no further evidence is permitted without leave of the Court.  Second, having considered the further affirmation on a de bene esse basis, I do not consider it is material to the fair disposal of the Unless Order Summons.  Third, the Defendant (and not the 1^st Plaintiff) should have the last word on the Unless Order Summons.

HCA 1562/2022 and HCA 104/2023
(Consolidated)

[2024] HKCFI 3464

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NOS 1562 OF 2022 AND 104 OF 2023

____________________

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

____________________

____________________

DECISION

____________________

A.INTRODUCTION

1.  This is the Defendant’s application (“the Interim Payment Application”) made by way of Summons (“the Summons”) filed on 11 June 2024 pursuant to O 29, r 12(b) of the Rules of High Court (“the RHC”) (Cap 4A) for an Order[1] that the 1^st Plaintiff be required to pay to the Defendant:

(1)  the sum of $95,983 (or such sum as the Court shall think fit) forthwith, by way of interim payment in respect of the use and occupation by the 1^st Plaintiff and/or the 2^nd Plaintiff of House 10 (“House 10”), JC Castle, 18 Shan Tong Road, Tai Po, New Territories, Hong Kong (“JC Castle”) for the period of 1 February 2017 and 30 June 2024, to reimburse the Defendant for the monthly mortgage repayments paid for House 10; or

(2)  alternative to sub-paragraph (1) above, the sum of $3,402,600 (or such sum as the Court shall think fit) forthwith, by way of interim payment in respect of the use and occupation by the 1^st Plaintiff and/or the 2^nd Plaintiff of House 10 for the period of 1 February 2017 and 30 June 2024, in accordance with the convention of Fong Lap Chung George, deceased (“the Deceased”) and the Defendant established by conduct; and

(3)  a monthly sum of $45,000 (or such sum as the Court shall think fit), by way of periodic payment 3 days in advance of the first day of each month until final judgment herein or such further order of the Court in respect of the 1^st Plaintiff’s and/or the 2^nd Plaintiff’s use and occupation of House 10, for the Defendant to effect monthly mortgage repayments of House 10 immediately after 30 June 2024; or

(4)  alternative to sub-paragraph (3) above, a monthly sum of $81,500 (or such sum as the Court shall think fit), by way of periodic payment 3 days in advance of the first day of each month until the mortgage loan of House 10 is fully discharged in December 2038 in respect of the 1^st Plaintiff’s and/or the 2^nd Plaintiff’s use and occupation of House 10, for the Defendant to effect monthly mortgage repayments immediately after 30 June 2024 in accordance with the convention of the Deceased and the Defendant established by conduct; and

(5)  the sum of $98,770 (or such sum as the Court shall think fit) forthwith, by way of interim payment in respect of the use and occupation by the 1^st Plaintiff and/or the 2^nd Plaintiff of House 10 for the period of the first quarter of 2017 and the third quarter of 2023, to reimburse the Defendant for the rates and Government rent paid for House 10 for that period; and

(6)  the sum of rates and Government rent of House 10 as determined by the Rating and Valuation Department (“the RVD”) 14 days before the due date (or upon the Defendant’s instruction, directly to the RVD), in respect of the use and occupation by the 1^st Plaintiff and/or the 2^nd Plaintiff of House 10 until final judgment herein or such further order of the Court, for the Defendant to effect quarterly payment of the rates and Government rent immediately after the first quarter of 2024.    

2.  The Plaintiffs and the Defendant are represented by their solicitors, Messrs Patrick Mak & Tse, Solicitors, and Mr Andrew H P Lau of counsel respectively.

3.  I have reserved my decision on the Interim Payment Application after the Hearing which I give now, with reasons including those related to costs in more details below.  

B.  PLAINTIFFS’ CASE

4.  The Deceased passed away on 25 December 2016.  Ms Yan Mei (“Mei”), the 2^nd Plaintiff herein, is the Deceased’s surviving wife, having given birth to their two children (“the Children”) on 25 November 2013.  Mr Yan Dong (“Dong”) is Mei’s elder brother.  Dong and Mei have become the co-administrators of the estate (“the Estate”) of the Deceased, the 1^st Plaintiff herein, from 14 October 2019.

5.  Mr Fong Lap Shan, the Defendant herein, is the Deceased’s younger brother.  The Defendant is the registered owner of House 10, the subject matter of the Interim Payment Application.      

6.  In respect of House 10, the Plaintiffs plead, among other matters, as follows[2]:

(1)  Mei is the registered owner of the property known as Garden Suite of House 31B (“House 31B”), JC Castle.  After the purchase of House 31B in 2011, the Deceased, the 2^nd Plaintiff, the 2^nd Plaintiff’s parents, Dong and his wife resided in it.

(2)  When Mei was pregnant in 2013, the Deceased purchased a bigger house, House 11 (“House 11”), JC Castle.

(3)  After the Deceased found out that House 10 was available for sale, he decided to purchase it so that he could combine it with House 11 for the whole family, including himself, the 2^nd Plaintiff, the Children, the 2^nd Plaintiff’s parents, Dong and his wife, to reside.  

(4)  In 2013, the Government implemented Doubled Ad Valorem Stamp Duty (“DSD”) on property transactions.  As both Mei and the Deceased were the registered owners of House 31B and House 11, JC Castle, the Deceased decided to purchase House 10 in the Defendant’s to save DSD. However, it was the Deceased who was the true owner of House 10.  Mei trusted the Defendant and did not object to such arrangement. 

(5)  The Defendant and the Deceased expressly agreed that House 10 did not belong to the Defendant but the Deceased (“the Agreement”).

(6)  Pursuant to the Agreement, the Deceased caused his company, then known as ICG Financial Services Limited (“ICG”), to issue documents to the Defendant to enable the Defendant to apply for mortgage (“the Mortgage”) from The Hongkong and Shanghai Banking Corporation Limited (“HSBC”) in his name.  Those documents included ones showing that the Defendant was employed by ICG before the purchase of House 10 when the Defendant had in fact never worked for ICG.  

(7)  The Deceased was responsible for paying, making or discharging all deposits, part payments, mortgage repayments and expenses incidental to the purchase of House 10 through means including by ICG. 

(8)  It was the common intention of the Deceased and the Defendant that House 10 was held on trust by the Defendant for the Deceased. 

(9)  The Deceased died intestate.  Mei and the Children are entitled to the Estate comprising House 10 under section 4(3) of the Intestates’ Estates Ordinance (“the Ordinance”) (Cap 73). 

(10)  However, the Defendant has, in breach of the Agreement, commenced action in the Lands Tribunal applying for vacant possession of House 10 and making various false statements that he was and is the true owner and landlord of House 10.  The Lands Tribunal proceedings and the present action have now been consolidated.

7.  In the above circumstances, the Plaintiffs seek:

(1)  a Declaration that House 10 is held by the Defendant on trust for the benefit of the Deceased, and after his death, the Estate, to which Mei together with the Children are entitled under the Ordinance;

(2)  an Injunction that the Defendant shall not encumber House 10 and/or increase the Mortgage and/or enter into agreement for and/or obtain additional loan using House 10 as security and/or otherwise dispose of House 10; and

(3)  an Order that the Defendant shall transfer House 10 to the 1^st Plaintiff at nil consideration.  

C.  DEFENDANT’s CASE

8.  The Defendant denies the Plaintiffs’ claims.  In gist, the Defendant’s case is that the Agreement did not exist and the common intention constructive trust is unenforceable on the grounds of illegality, breach of public policy, estoppel, laches and/or acquiescence, etc.  The Defendant alleges that the Deceased had made numerous representations to him, and avers as follows[3]:

(1)  The Deceased had caused ICG to employ the Defendant and pay the Defendant a monthly salary of $50,000.  ICG had contributed to the Defendant’s MPF as employer.  The Plaintiffs deny this. 

(2)  ICG had also signed a ‘Written Tenancy Agreement’ of House 10 with the Defendant for a term of 3 years, from 1 March 2014 to 28 February 2017, with a monthly rent of $30,000.  The Plaintiffs deny this.

(3)  From March 2014 to the fourth quarter of 2016, ICG had paid the Defendant a monthly salary of $50,000 and a monthly rent of $30,000.  The Plaintiffs deny this.

(4)  In reliance on the Deceased’s representations, the Defendant has continued to make mortgage repayments of House 10 to HSBC and paid the rate and Government rent.  The Plaintiffs dispute that the Deceased had made such representations.

9.  In addition, the Defendant counterclaims against the Plaintiffs[4] based on the matters below:

(1)  Since February 2017, the 2^nd Plaintiff and her family were living in House 10 pursuant to an ‘Oral Monthly Tenancy’ made between the 2^nd Plaintiff and the Defendant on 6 January 2017 subject to payment of a monthly rent of $45,000, exclusive of the rates and Government rent, management fees and utilities, etc.  This is denied by the Plaintiffs.

(2)  The 2^nd Plaintiff was in breach of the ‘Oral Monthly Tenancy’ in failing to pay the monthly rent promptly and in full, owing the Defendant a total sum of $2,790,000 for the period of 1 February 2017 and 31 March 2022.  By the time the ‘Oral Monthly Tenancy’ was terminated, the 2^nd Plaintiff had only paid $2,561,900.  As a result, the Defendant suffered loss and damages in the sum of $228,100 for that period.  This is denied by the Plaintiffs.

(3)  The 2^nd Plaintiff had persistently denied the Defendant’s agent access to House 10 for inspection of unauthorized building works. 

(4)  The Defendant gave the 2^nd Plaintiff formal notice to terminate the ‘Oral Monthly Tenancy’ on 25 February 2022, with effect from 31 March 2022.  The 2^nd Plaintiff had stopped paying the rates and Government rent after the quarter of January to March 2021.  The unpaid rates and Government rent for the period of April 2021 and September 2023 was $85,559.       

(5)  The 2^nd Plaintiff has refused to deliver vacant possession of House 10 to the Defendant and overstayed there since 1 April 2022.  The 2^nd Plaintiff is liable to pay the Defendant mesne profits of $720,000 from 1 April 2022 to 31 July 2023.  As the 2^nd Plaintiff has only paid $661,000, the Defendant has suffered loss and damages in the sum of $59,000.  This is denied by the Plaintiffs.       

(6)  As House 10 and House 11 are two separate, independent buildings, they should be reinstated according to the building plans.  The Plaintiffs should be ordered to grant access to the Defendant and his agent and servant to House 10 to carry out the requisite works. 

(7)  Alternatively, in the event that the Defendant is held by the Court to be a trustee holding House 10 for the Deceased, it has been agreed by conduct or convention that the alleged trust (pursuant to which the 2^nd Plaintiff stays in House 10) is subject to a monthly payment of $81,500 until the Mortgage with HSBC is discharged in December 2038.  The 2^nd Plaintiff is liable to pay a total sum of $6,356,000 for the period of 1 February 2017 and 31 July 2023.  As the 2^nd Plaintiff has paid $3,222,900, the Defendant has suffered loss and damages in the sum of $3,133,100.  This is denied by the Plaintiffs.      

(8)  Furthermore, the 1^st Plaintiff should be ordered to pay the unpaid DSD in the sum of $746,250, together with penalty. The 1^st Plaintiff should also be ordered to pay the outstanding buyer’s stamp duty (“BSD”) in the sum of $2,985,000, together with penalty.           

10.  The Defendant accordingly seeks:

(1)  damages for breach of the ‘Oral Monthly Tenancy’ against the 2^nd Plaintiff: (i) the rent in arrears of $228,100 (from 1 February 2017 to 31 March 2022); (ii) the unpaid rates and Government rent of $85,559 (from April 2021 to September 2023); (iii) the outstanding mesne profits of $59,000 (from 1 April 2022 to 31 July 2022); and (iv) the mesne profits of $45,000 per month (from 1 April 2022 onwards);

(2)  an Order for vacant possession of House 10 against the 2^nd Plaintiff;

(3)  an Order for contribution of at least 50% of the reinstatement works of House 10 and House 11;

(4)  damages suffered or to be suffered by the Defendant for failing to comply with the Buildings Ordinance (Cap. 123);  and

(5)  an interlocutory injunction to remove the unauthorized building works; or

(6)  in alternative, (i) damages for underpayments of $3,134,100[5] (from 1 February 2017 to 31 July 2023); (ii) damages for prospective loss for payment of $15,077,500 (from 1 August 2023 to 31 December 2038); (iii) an Order for payment of unpaid DSD of $746,250, together with penalty; (iv) an Order for payment of outstanding BSD of $2,985,000, together with penalty; and (v) interim payment of $103,762.

D.  APPICABLE LEGAL PRINCIPLES

11.  Against the backdrop of the ongoing dispute between the parties described above, the Defendant makes the Interim Payment Application.  In considering such application, I remind myself of the relevant material principles which are set out below.

12.  An interim payment means, in relation to a defendant, a payment on account of any damages, debt or other sum (excluding costs) which he may be held liable to pay to or for the benefit of the plaintiff.

13.  A defendant who counterclaims against a plaintiff can also seek an order for interim payment under O 29, r 18 of the RHC. 

14.  Under O 29, r 13(1) of the RHC, the amount of any interim payment ordered to be made shall be paid to the plaintiff, unless the order provides for it to be paid into Court.

15.  O 29, r 11 of the RHC provides for interim payment in respect of damages, whereas r 12 – pursuant to which the Interim Payment Application is made by the Defendant – provides for interim payment in respect of sums other than damages.

16.  Where a payment is ordered in respect of the defendant’s use and occupation of land, pursuant to O 29, r 13(4) of the RHC, the order may provide for periodical payments to be made during the pendency of the action.

17.  O 29, r 12(b) of the RHC provides:

“If, on the hearing of an application under rule 10, the Court is satisfied –

…

(b) that the plaintiff’s action includes a claim for possession of land and, if the action proceeded to trial, the defendant would be held liable to pay to the plaintiff a sum of money in respect of the defendant’s use and occupation of the land during the pendency of the action, even if a final judgment or order were given or made in favour of the defendant;…

the Court may, if it thinks fit, and without prejudice to any contentions of the parties as to the nature or character of the sum to be paid by the defendant, order the defendant to make an interim payment of such amount as it thinks just, after taking into account any set-off, cross-claim or counterclaim on which the defendant may be entitled to rely (emphasis added).”

18.  In the present case, the Defendant’s claim for interim payment is based on O 29, r 12(b) of the RHC, which provides so far as is material above, substituting “the Plaintiffs” for “the Defendant” and vice versa (see Car Po Ltd v Chan Pik Kuen, HCA 13517/1998 (unreported, 26 March 1999), at §7 per Keith J).

19.  §29/12/3 of the Hong Kong Civil Procedure 2024 (Vol 1) explains:

“…The object of this rule is to enable the court, during the pendency of the action, to order the defendant to make an interim payment to the plaintiff in respect of his continued use and occupation of the land, whoever should ultimately succeed on the claim for possession of the land itself.The underlying principle is that, during the pendency of the action, the plaintiff should not be deprived of money which he would be entitled to recover from the defendant in any event, and that conversely the defendant should not be enabled to retain money which he would be bound to pay the plaintiff in any event.

This rule operates by “decategorising” the payment by the defendant to the plaintiff during the pendency of the action and disregarding its nature or character, whether it be by way of rent, mesne profits, damages for use and occupation or for trespass or otherwise, by simply describing such payment as “an interim payment”… (emphasis added).”

20.  As set out in Maxon Investment Ltd & Another v Sino Leader (Asia) Ltd, HCA 2332/2003 (unreported, 6 July 2004), the two pre-conditions to be satisfied for an application under O 29, r 12(b) of the RHC are:

(1)  first, the plaintiff’s action includes a claim for possession of land; and

(2)  second, if the action proceeds to trial, the defendant would be held liable to pay to the plaintiff a sum of money in respect of the defendant’s use and occupation of the land during the pendency of the action, even if a final judgment or order were given or made in favour of the defendant.

21.  In respect of the first pre-condition, O 29, r 12 (b) of the RHC applies to an action for possession of land on whatever ground it is based (see Hong Kong Civil Procedure 2024 (Vol 1) at §29/12/3).

22.  With respect to the second pre-condition, the Court of Appeal in Hua Chiao Commercial Bank Ltd v Empire One Trading Ltd & Others, CACV 109/2000 (unreported, 17 May 2000) interpreted the words “even if a final judgment or order were given or made in favour of the defendant” as follows:

“6. But what if there is, as in the present case, a dispute as to what the plaintiff would be entitled to recover from the defendant in any event? In my view, the words “even if a final judgment or order were given or made in favour of the defendant” show that the interim payment should be calculated on the basis of what the defendant contends the plaintiff is entitled to recover…(emphasis added).”

23.  It is of importance that the Court cannot resolve, at an interlocutory stage, dispute of facts on affidavits, but is entitled to have regard to the apparent strengths and weaknesses of the parties’ case and evidence and to form a provisional view on the merits of the defence put up by a defendant (see Winsworld Properties Ltd v Chance Full International Development Ltd & Another, HCA 4161/2002 (unreported, 14 February 2003), at §12 per DHCJ Lam (as he then was); Wong Wai Ming v Sai Kung Flea Market & BBQ Paradise Co Ltd, HCA 2289/2008 (unreported, 20 March 2009),at §19 per Chu J (as she then was)).

24.  In Guo Jing Jing v Art Master Investment Ltd & Others, HCA 1008/2009 (unreported, 11 December 2009), Au J (as he then was) observed (at §88) that the test for granting interim payment is “a high one”.[6]

25.  It was held in Winsworld Properties Ltd (supra) that the Court has to consider the position taken by both parties when it exercises its discretion in order to reach a just decision. By way of illustration, the considerations taken into account by the Court when it reaches the second stage in the procedure for determining an application for interim payment and in exercise of its discretion were outlined in Car Po Limited (supra) (see §§11-12).

26.  In Chan Yin Man & Others v Lee Shu Man, HCA 3709/1994 (unreported, 27 February 1996), Le Pichon J (as she then was) made clear that:

(1)  O 29, r 12(b) of the RHC requires the postulation that a final judgment or order is made in favour of the defendant.

(2)  the underlying purpose of O 29, r 12 of the RHC is to mitigate the hardship or prejudice to a plaintiff which may exist during the period from the commencement of an action to the trial.

(3)  there is however no restriction implicit in the rule which prevents an interim payment order being made in the absence of evidence of need or prejudice. 

E.  INTERIM PAYMENTS

27.  After considering and applying the legal principles above to the facts of the present case, I am satisfied that the 1^st Plaintiff should make interim payment to the Defendant of:

(1)  the sum of $95,983 forthwith, in respect of the use and occupation by the 1^st Plaintiff and/or the 2^nd Plaintiff of House 10 for the period of 1 February 2017 and 30 June 2024, to reimburse the Defendant for the mortgage repayments paid for House 10;

(2)  a monthly sum of $45,000 after 30 June 2024, in respect of the 1^st Plaintiff’s and/or the 2^nd Plaintiff’s use and occupation of House 10, 3 days in advance of the first day of each month and until final judgment herein or such further order of the Court for the Defendant to effect monthly mortgage repayments of House 10;

(3)  the sum of $98,770 forthwith, in respect of the use and occupation by the 1^st Plaintiff and/or the 2^nd Plaintiff of House 10 for the period of the first quarter of 2017 and the third quarter of 2023, to reimburse the Defendant for the rates and Government rent paid for House 10 over that period; and

(4)  the rates and Government rent of House 10 after the first quarter of 2024 as determined by the RVD, in respect of the use and occupation by the 1^st Plaintiff and/or the 2^nd Plaintiff of House 10, 14 days before the due date and until final judgment herein or such further order of the Court, for the Defendant to effect quarterly payment to the RVD, or where appropriate, the Plaintiffs may, as directed by the Defendant, make direct payments to the RVD.    

28.  First of all, in view of the Defendant’s counterclaim for possession of House 10 along with payment of rent in arrears, unpaid rates and Government rent and mesne profits, etc, in the present case, the first pre-condition of O 29, r 12(b) of the RHC is met.

29.  In view of the parties’ dispute, it is plain that the Defendant’s alternative claims for the sum of $3,402,600 and the monthly sum of $81,500 are not what, by their nature, the Plaintiffs would be held liable to pay the Defendant for their use and occupation of House 10 during the pendency of the action should the action proceed and final judgment or order be given to or made in favour of the Plaintiffs after trial.  In respect of these amounts, the second pre-condition of O 29, r 12(b) of the RHC is therefore not met.

30.  On the other hand, the Plaintiffs would still be held liable for the mortgage repayments and the rate and Government Rent of House 10 even if they obtain final judgment or order in their favour at the end of the day.

E1.  Mortgage Repayments

31.  As submitted by the Defendant, there can be no dispute about this, as it is part of the Plaintiffs’ case that the Deceased, as the true owner of House 10, had paid for the Mortgage (by various means including through ICG) and the rates and Government rent, etc.[7]

32.  At the Hearing, the Plaintiffs’ solicitor reiterates that the Defendant merely holds House 10 on trust for the Deceased pursuant to the Agreement[8], and the Deceased had caused ICG to issue documents showing that the Defendant was ICG’s employee to enable the Defendant to apply for the Mortgage from HSBC.

33.  It is clear that the Plaintiffs do not oppose liability and dispute only the quantum, arguing that the sums deposited by the Plaintiffs should exceed the deductions made by HSBC[9]:

(1)  Until 28 March 2017, ICG had made monthly repayment of the Mortgage by depositing into the Defendant’s HSBC account[10].

(2)  From April 2017 to June 2024, the total sum of mortgage repayments deducted by HSBC was $3,572,618[11].

(3)  From May 2017 to June 2024, the total sum of mortgage repayments made by the Plaintiffs was $3,687,900[12].

(4)  From April 2017 to June 2024, the total sum of mortgage repayments made by the Plaintiffs exceeded the total sum of deduction by HSBC ($3,687,900 – $3,572,618 = $115,282)[13].

34.  The Plaintiffs argue that the following 3 sums (“the 3 Sums”)should be excluded[14]:

Date	Description	Amount ($)
8 January 2020	REPAYMENT 12 NOV 2019 B42108150501	42,793.00
31 May 2023	REPAYMENT 12 APR 2023 006C31120301	38,583.00
10 November 2023	REPAYMENT 12 SEP 2023 FB0A10121701	44,341.00
		---------------------------
	Total:	125, 717

35.  According to the Plaintiffs, it is ‘possible’ that the 3 Sums related to some other loans and were not applied by the Defendant for repayment of the Mortgage:

(1)  The 3 Sums were described as “DEBIT AS ADVISED” in the Defendant’s monthly bank statements[15], as opposed to the ‘usual’ description of “LOAN REPAYMENT” as seen by the Plaintiffs from 2017 to 2024[16].

(2)  The processing date of the sum of $38,583 was 31 May 2023[17]. The sums deducted by HSBC ranged from over $41,000 to around $45,000 from 2017 to 2024.  No such sum of $38,000 ever appeared.

36.  The Plaintiffs’ argument is untenable, especially after considering that the monthly statements in question show no other item which could be remotely considered a deduction or withdrawal made by HSBC for mortgage repayment.  When asked, the Plaintiffs’ solicitor has simply been unable to identify such sums that she claims to be mortgage repayments in the monthly statements for these months.  It follows that the sum of $125,717 in total should not be excluded.

37.  Furthermore, as explained by the Defendant[18], the relevant period of his claim is from February 2017.  There is no evidence that the Plaintiffs had made mortgage repayments for February and March 2017.  On the other hand, there is evidence to show that the Defendant had repaid $42,774 each for the two months in question.

38.  Accordingly, if the sums of $125,717, $42,774 and $42,774 are added back to $3,572,618, it would lead to $3,783,883.  There was a shortfall of payments to the Defendant in the sum of $95,983.

39.  In addition, the Plaintiffs should be ordered to make periodic payment of $45,000 per month from 30 June 2024 onwards until final judgment so as to enable the Defendant to effect mortgage repayments of House 10.  The Defendant should not be deprived of money during the pendency of the present action which he would be entitled to recover from the Plaintiffs in any event, and conversely, the Plaintiffs should not be enabled to retain such money which they would be bound to pay the Defendant in any event.

40.  The Plaintiffs have not really identified any valid objections to this; all that the Plaintiffs say is that they have been making mortgage repayments for more than 7 years from May 2017 and no such order is ‘necessary’.  On the quantum, the interim payment ordered should not be less than the actual monthly mortgage repayment and the Plaintiffs have not proposed any alternative figure for consideration.  In any event, if the interim payment ordered exceeds the actual repayment or vice versa, any differences and discrepancies can be addressed at the stage when the Court makes the final judgment or order under O 29, r 17 of the RHC.  

E2.  Rates and Government Rent

41.  In respect of the sum of $98,770 claimed by the Defendant, the Plaintiffs’ argument is that the total sum of mortgage repayments made by the Plaintiffs to the Defendant exceeds the total sum deducted by HSBC by $115,282 (ie $3,687,900 – $3,572,618) and such excess can be applied to cover the deficit.

42.  Given my conclusion above that there is no such surplus there is no valid reason for the Defendant not to be reimbursed for the shortfall of $98,770.  In fact, the Plaintiffs’ own case is that they have been paying for the rates and Government rent of House 10 and there is an admitted default for the period of the first quarter of 2021 and the third quarter of 2023[19].

43.  Going forward, the Plaintiffs should be ordered to make quarterly payment of the rates and Government rent as determined by the RVD after the first quarter of 2024 to enable the Defendant to effect payment of the same.   

44.  Notwithstanding that the Court should have power to award interest to compensate for the period when the defendant has been deprived of the amount of an interim payment and the plaintiff has had the use of it[20], the Defendant has not actually sought interest of the interim payment in the Summons at this stage.

F.  COSTS

45.  After considering the matters below, I make the costs order nisi that there shall be no order as to costs[21].

46.  As can be seen from the solicitors’ correspondence disclosed before me:

(1)  On 3 May 2024, the Defendant’s solicitors wrote to the Plaintiffs, requesting for, among others, interim payment for the sum of $206,661, with references to the Defence and Counterclaim and the Witness Statement of the Defendant. 

(2)  On 7 May 2024, the Plaintiffs’ solicitors requested for 21 days to retrieve records and to check the calculations before reply.

(3)  On 27 May 2024, the Plaintiffs’ solicitors came back with a substantive reply,

(a)  setting out the rates and Government rent paid by the Plaintiffs and the discrepancies in the amount of rates and Government rent levied and the amount set out by the Defendant, etc;

(b)  raising that there was surplus after deducting the mortgage repayments from the amounts paid by the Plaintiffs to the Defendant; and

(c)  requesting the Defendant to provide the HSBC monthly statements for consideration.

47.  However, so far as it can be seen, the Defendant has not attempted to provide answers to the Plaintiffs’ queries about the mortgage repayments and the rates and Government Rent[22].  Mr Lau has also been unable to point to any evidence that contradicts this observation or to demonstrate that substantive replies were provided by the Defendant at any earlier point. 

48.  Instead, the Defendant took out the Summons for the Interim Payment Application on 11 June 2024, with the support of the 2^nd Affirmation of Kwok Hong Yee Jesse.  In opposition, on 24 June 2024, the Plaintiffs filed the 2^nd Affirmation of Yan Mei, reiterating those matters regarding the mortgage repayments and the surplus in the solicitors’ correspondence.  On 9 July 2024, the Defendant filed the 4^th Affirmation of Kwok Hong Yee Jesse in reply:

(1)  It was in the 2^nd Affirmation of Kwok Hong Yee Jesse that the Defendant set out in clear terms that the Plaintiffs should not have excluded February and March 2017 from the calculation of the mortgage repayments, or omitted the third quarter of 2023 from the calculation of the rates and Government rent.

(2)  In the 4^th Affirmations of Kwok Hong Yee Jesse, the Defendant provided substantive reply clarifying why there was no surplus in the mortgage repayments and payment for rates and Government rent. 

49.  There is no explanation, nor any good reason, for why these clarifications could not have been provided earlier by the Defendant.  Had they been addressed in full in a timely manner, the contention could have been reduced, saving both time and costs.  Such conduct is not conducive to the underlying objectives of the CJR and should be appropriately reflected in the costs order.   

50.  The above costs order nisi shall become absolute in the absence of application to vary within 14 days hereof; any such application, if made, shall be made by letter, and will be disposed of on paper.