Tarn Dai-mey (in Her Capacity As the Intended Administratrix of the Estate of Chu Hsiao-chiu Alias Chu Tony Hsiao-chiu Alias Chu Hsiao Chiu) v. Ma Jinrui and Another

HCA 2994/2018

[2021] HKCFI 897

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 2994 OF 2018

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D E C I S I O N

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I. Introduction

1.There are four applications issued by the 1^st and 2^nd defendants before the Court:

(1)  An application by summons dated 17 May 2019 to discharge the ex parte Mareva injunction order granted by Recorder Eugene Fung SC on 28 December 2018 against the defendants and extended by subsequent orders pending the determination at this hearing (the “Discharge Application”).

(2)  An application by summons dated 17 May 2019 to strike out the amended writ of summons, or alternatively, summary dismissal of the action upon a determination of a point of law pursuant to RHC Order 14A (the “Striking Out Application”).

(3)  An application by summons dated 12 June 2019 to set aside the ex parte carry-on order dated 5 March 2019 (the “Carry-on Order”) appointing the plaintiff (“Madam Tarn”) to represent the estate of Chu Hsiao-Chiu (the “Estate”) for the purpose of the present proceedings pursuant to RHC Order 15 r.6A(3) and (4) (the “Setting Aside Application”); and

(4)  An application by summons dated 17 June 2019 to disallow and strike out the amendment to the writ made or purportedly made pursuant to RHC Order 20 r.1 on 4 February 2019 (the “Disallowance Application”).

2.In the course of the hearing on 28 August 2020, Mr Ernest Ng, counsel for Madam Tarn, indicated that he would no longer pursue the continuation of the Mareva Injunction against the 2^nd defendant (“Mr Ma”) and consented to its discharge. I so ordered and reserved the question of costs.

II.   Background

3.The late Chu Hsiao-Chu (also own as Tony Chu) (the “Deceased”) died intestate from a drowning accident while sailing in Thailand on 2 June 2018.

4.Madam Tarn and Stephanie Wen-shi Tang (“Ms Tang”) are respectively the mother and the younger sister (half-blood) of the Deceased. Ms Tang resides and is a licenced attorney in California, USA.

5.The 1^st defendant, Ms Ma Jinrui (“Ms Ma”) was the Deceased's partner and cohabitee for some 20 years or so immediately prior to his death, and Mr Ma is Ms Ma's younger brother.      

The Norwich Pharmacal Orders

6.On 24 September 2018, Madam Tarn, in the purported capacity as “Intended Administratrix” of the Estate, issued an Originating Summons through her solicitors, Messrs Tanner de Witt (“TDW”), in HCMP 1555/2018 against Hang Seng Bank Limited (“HSB”) for Norwich Pharmacal orders in respect of a private banking account and all other assets of Ms Ma maintained with HSB.

7.Madam Tarn sought copies of all bank account opening documents and bank statements from September 2013 onwards and permission to identify specific transactions from those bank statements and to obtain copies of further documents relating to those transactions. She also sought orders that HSB be restrained from revealing or disclosing to Ms Ma or any third party any information or documents relating to those proceedings (sometimes referred to as a “gagging order”). The application was supported by an Affidavit made by Ms Tang dated 21 September 2018 (“Ms Tang’s HCMP Affidavit”).

8.Although the Originating Summons was issued inter partes naming HSB as the respondent, typical of applications of this nature, HSB maintained a neutral position (provided that it was indemnified for its legal costs and costs of compliance) and did not appear at the hearing on 15 October 2018 before Deputy High Court Judge Dawes SC, who granted the orders sought. I shall refer to this order as the “1^st HCMP Order”. HSB duly complied with the order on 23 October 2018 by providing the requisite documents to TDW. From the documents disclosed, it was revealed that Ms Ma maintained two accounts with HSB, namely, the said private banking account, which appears to be a securities account (“Ms Ma’s (or her) Securities Account”) and a bank account numbered 787-33652x-888[1] (“Ms Ma’s (or her) Bank Account”) (collectively, “Ms Ma’s (or her) Accounts”).

9.By an application dated 7 November 2018, Madam Tarn sought and obtained from Deputy High Court Judge ST Poon further Norwich Pharmacal orders in HCMP 1952/2018 in respect of Mr Ma’s bank account numbered 39560395x-888^[2] (“Mr Ma’s (or his) Bank Account”) and other bank accounts maintained by Mr Ma with HSB, including copies of all bank account opening documents and bank statements from 2 June 2018 onwards.  Madam Tarn was also permitted to identify specific transactions from those bank statements and to obtain copies of further documents relating to those transactions.  The order, which was obtained without notice to Mr Ma, again contained a “gagging order” against HSB.  I shall refer to this order as the 2^nd  HCMP Order.

The Writ and Mareva Injunction

10.On 28 December 2018, after having considered the documents obtained pursuant to the 1^st and 2^nd HCMP Orders, Madam Tarn issued the writ in the present action as the sole plaintiff again in the purported capacity as “Intended Administratrix of the Estate of Chu Hsiao-Chu”.         

11.On the same day the writ was issued, Mr Jeffrey Haydn Lane (“Mr Lane”) of TDW, acting on behalf of Madam Tarn, applied and obtained ex parte from Recorder Eugene Fung SC a Mareva injunction against the defendants’ assets in Hong Kong up to a total value of HK$30,894,996.69, including in particular (1) any monies in Ms Ma’s Bank Account and Mr Ma’s Bank Account; (2) a life insurance policy (the “Life Policy”) maintained with Hang Seng Insurance Company Limited (“HS Insurance”); and (3) any money in any other accounts held by Ms Ma or Mr Ma at any other bank(s) in Hong Kong (the “Mareva Injunction”).

12.The Mareva Injunction contained the usual ancillary disclosure orders against each of the defendants for disclosure of their assets of an individual value of HK$15,000 or more in Hong Kong. Leave was also sought and granted pursuant to RHC Order 11 r.1(1)(p) for Madam Tarn to serve the writ of summons and other documents on Mr Ma out of the jurisdiction at an address in Shanghai, Mainland China. Significantly, no leave for service outside of the jurisdiction was sought as against Ms Ma, a matter which I shall return to later.

13.The application was supported by an affidavit made by Mr Lane dated 28 December 2018 (“Mr Lane’s Affidavit”), which inter alia referred to and exhibited Ms Tang’s HCMP Affidavit and the documents obtained from HSB pursuant to the 1^st and 2^nd HCMP Orders. Madam Tarn did not make an affidavit in support of the Mareva Injunction application at the ex parte stage. It is evident from the affidavits filed by Ms Tang that she has played a key role on behalf of Madam Tarn in the HCMP proceedings and continues to do so in these proceedings.

III.   The Mareva Injunction

14.Madam Tarn’s case before the ex parte Judge, as set out in Ms Tang’s HCMP Affidavit and Mr Lane’s Affidavit, was as follows.

Ms Tang’s HCMP Affidavit

15.After the death of the Deceased, Ms Tang assisted her mother, Madam Tarn, in “investigating and collecting” assets belonging to the Estate around the world.

16.In Hong Kong, the assets are said to include “two items of real estate, a bank account and a car…”. The two items of real estate were:

(1)  A residential unit known in a development as Bella Vista, No. 3 Ying Fai Terrace, Hong Kong, (the “Bella Vista Flat”); and

(2)  A residential unit, namely, Flat H on the 65^th Floor of Tower 9, in a development known as Carmel Cove, No. 1 Kin Tung Road, Caribbean Coast (“Caribbean Coast”), Tung Chung, Lantau Island (the “Lantau Flat 65H”).

Both of which were registered in the sole name of the Deceased.

17.The Deceased had no children and for the last 20 years of his life, he co-habited with Ms Ma at the Bella Vista Flat. The Deceased was said to have made his fortune in the computer business and made substantial investments in real estate and stocks thereafter until his death. As far as Ms Tang was aware, during the time Ms Ma was with the Deceased, she did not work and had no income of her own.

18.Madam Tarn and Ms Tang believed that the monies and assets in Ms Ma’s Accounts in fact belonged to the Deceased. She said she came to learn of the accounts when the Deceased offered to lend her money to purchase a property in Los Angeles, California, USA, in August 2017. On that occasion, he emailed to her copies of Ms Ma’s Accounts as proof of funds to assist her in the purchase. She stated that she was,

“…under the impression that all of the monies and stocks in these accounts belonged to my brother as he had full control and access to these accounts and he always referred to them as part of his assets and discussed how the stocks were performing in these accounts during many of our telephone conversations”.

19.Ms Tang did not end up purchasing the property. However, in January 2018, she wished to purchase another property, and the Deceased again sent to Ms Tang copies of the account summaries of Ms Ma’s Accounts as proof of funds and showed that he had previously wired US$576,800 from Ms Ma’s Bank Account for the purchase of “his real property in Los Angeles”.

20.On 16 January 2018, the Deceased wired US$625,000 directly into an escrow account for Ms Tang’s purchase of the property (the “US$625,000 Transfer”). Ms Tang explained that:

“Throughout the years, my brother had always maintained that he owned all of the real properties and all of the real properties and all of the monies and stocks in Hong Kong, whether they were maintained in his or Ms Ma’s name. He had total control and access to these properties and bank accounts and was able to manage, withdraw or dispose of any of these assets at his will as clearly demonstrated in the transactions of his own property in American in 2015 and my property in 2018. Thus, I am firmly of the belief that the monies standing to the credit of the Accounts are assets of his Estate and should properly be accounted for and treated as such.”

As at 31 March 2018, the net position of Ms Ma’s Securities Account was HK$29,235,467.11.

21.Shortly after the death of the Deceased, Ms Tang approached Ms Ma and asked her to assist Madam Tarn in identifying the Deceased’s assets.  Ms Tang accepts that Ms Ma identified the two residential units and a bank account registered in the name of the Deceased, “but did not volunteer any information” in respect of Ms Ma’s Accounts.

22.“When challenged”, Ms Ma acknowledged the existence of Ms Ma’s Accounts and also identified another residential unit, namely, Flat A on the 65^th Floor of Tower 9, in Caribbean Coast (“Lantau Flat 65A”) registered in her own name. She claimed, however, that Lantau Flat 65A and Ms Ma’s Accounts were gifts to her by the Deceased. She was willing to give the Lantau Flat 65A to Madam Tarn “as part of the Estate’s assets but she wanted to keep all of the monies and assets in [Ms Ma’s Accounts]” (this is disputed by Ms Ma). She also refused to disclose the exact value of the monies and assets in the accounts.

23.After the Deceased’s funeral, Ms Ma was said to be uncooperative in providing information and documents relating to her Accounts to Madam Tarn or Ms Tang, who insisted that they form “part of the Estate’s Assets”.  Ms Ma also told Ms Tang and Madam Tarn that the account statements for Ms Ma’s Accounts were sent to Mainland China.

24.On 18 June 2018, Ms Ma met with Ms Tang and Madam Tarn at HSB’s main office in Central, and they were shown a statement of Ms Ma’s Accounts with a balance of HK$200,000. Ms Tang confronted Ms Ma about the HK$30,000,000 balance she had been shown by the Deceased in Ms Ma’s Securities Account in January 2018. Ms Ma was “visibly surprised and flustered and immediately hid in the restroom [and]… fled from [HSB’s] office and returned to the Bella Vista property”.

25.Ms Tang then requested Ms Ma to meet with her and Madam Tarn at Madam Tarn’s solicitors’ office on 19 June 2018 to discuss the Deceased’s assets. However, she refused to attend and “fled back to China” on 20 June 2018 and “ceased all communication with us…”.

26.Ms Tang then went to the Bella Vista Flat and discovered from Ms Ma’s mail that that Ms Ma had sold shares in her Securities Account in the total value of HK$4,585,230 and transferred US$585,000 from her Accounts on 14 June 2018, the day before her brother’s funeral, “…without consultation to my mother or indeed myself, notwithstanding our previous inquires with regard to the Accounts on behalf of the Estate”.

27.Ms Tang and Madam Tarn made a report to the police. Ms Tang then described Ms Ma as having “absconded to [Mainland] China to undertake a period of mourning…[and] resisted all attempts to contact her and appears no longer to be willing to cooperate in assisting the Estate.”

28.It is not entirely clear from the Ms Tang’s HCMP affidavit, Mr Lane’s Affidavit or the ex parte Skeleton Argument how the precise sum of HK$30,894,996.69 claimed in the writ and restrained by the Mareva Injunction was calculated. However, it is said that this was the approximate sum believed to have been once held but now “misappropriated” from Ms Ma’s Accounts.

Mr Lane’s Affidavit

29.The account opening documents obtained from the 1st HCMP Order confirmed that Ms Ma was “the named beneficial owner” of her Account and that the Deceased was named as an authorised person to manage the account. Ms Ma also stated in the documents that the source of the funds paid into the account was her “fiancée”, i.e. the Deceased. Mr Lane observed that this was “consistent with Ms Tang’s belief that whilst the Account was maintained in Ms Ma’s name, [the Deceased] was at all times the source of its funds and its beneficial owner, and both retained and exercised full authority over the account.”

30.From the bank statements, Mr Lane observed that,

“[Ms Ma’s Account] was used regularly for maintaining [the Deceased’s] share portfolio and shows payments made into and from the account by [the Deceased] and by one Rita Tong. With one exception, in the five years that the account was operated prior to [the Deceased’s] death, the only payments made to the account by Ms Ma were foreign currency exchanges between her accounts and then for only a few thousands of dollars. The one exception took place on 16 January 2018 when the sum of US$49,995 was deposited to the account from an account maintained by Ms Ma in [Mainland] China. All other monies paid to and from the account appear to have been sourced from accounts owned and/or controlled by [the Deceased].”

31.He further explained that,

“With regard to “Rita Tong”, who makes numerous payments to and from the account, I am advised by Ms Tang and verily believe that this is a reference to another nominee account maintained by [the Deceased] in the name of a family member. All references in the bank statements to payments made to or from Rita Tong, therefore, are in fact to payments initiated by [the Deceased] from his nominee account maintained in that name…”

32.Mr Lane identified 46 specific transactions which can be seen from the bank statements and in respect of which Madam Tarn obtained further disclosure. The documents showed that the majority of those transactions were “sourced through” the Deceased and Rita Tong, whereas Ms Ma was “seldom mentioned in the statements.” This, Mr Lane said, was entirely consistent with Ms Tang’s evidence that the Deceased had referred to Ms Ma’s Account as “his” account and “his” monies.

33.Mr Lane then describes from the statements activities in Ms Ma’s Accounts after the death of the Deceased:

June 2018

(1)  On 11 June 2018 (some 9 days after the death of the Deceased), she realised approximately US$595,000 in shares. Some of the proceeds were used to settle a loan from HSB and a further HK$4,750,113.91 was invested in an insurance policy with HS Insurance.

(2)  On 19 June 2018, she attended HSB to remove the Deceased as an authorised person.

(3)  On 20 June 2018, she paid HK$394,476 to the Government, likely for stamp duty for share transactions.

(4)  On 22 June 2018, she used US$1,573,481 out of share sale proceeds of US$1,624,393 to purchase the Life Policy.

July 2018

(5)  On 27 July 2018, the HK$4,750,113.91 invested in the earlier insurance policy was credited back to her (due to cancellation of the policy) and the sum was then remitted to Mr Ma’s Bank Account.

August 2018

(6)  On 15 August 2018, she sold a further tranche of shares, realising US$283,854.17.

(7)  On the same date, a sum of HK$130,000 was remitted from Mr Ma’s Bank Account to Ms Ma’s Bank Account and used to pay a further sum to the Government, likely to be for stamp duty for share transactions.

Mr Lane infers from the fact that funds were transferred from Mr Ma’s Bank Account to Ms Ma’s Bank Account that she had control also over Mr Ma’s Bank Account.

(8)  On 17 August 2018, share sale proceeds of HK$2,225,416.69 were used to repay an outstanding loan to HSB.

September 2018

(8)  Further share sales took place throughout September 2018 up until 29 September 2018. From the monies realised by the sale, HK$3.8 million and US$672,421.33 were paid to Mr Ma’s Bank Account, leaving a balance of HK$276,433.56 in Ms Ma’s Bank Account.

34.Mr Lane then concludes:

“The Plaintiff’s tracing exercise to date, therefore, has confirmed that since the death of [the Deceased], Ms Ma has liquidated almost all of the assets previously held in [Ms Ma’s Accounts] and has also identified [Mr Ma’s Bank Account] as the account to which not less than HK$13,781,550 of monies sourced from [Ms Ma’s Account] has been paid…”

35.From the 2^nd HCMP Order, Madam Tarn obtained the account opening documents which showed Ms Ma as an “authorised person” to operate Mr Ma’s Bank Account. Further, bank statements for the account showed that as at 7 November 2018, the account had a balance of HK$901,808.65, “…meaning that more than HK$12 million received from [Ms Ma’s Bank Account] has yet to be accounted for…”.

Preliminary Observations on Case before ex parte Judge

36.There was no explanation proffered in either Ms Tang’s HCMP Affidavit or Mr Lane’s Affidavit as to why the Deceased would have held monies and securities in Ms Ma’s Accounts if they belonged, or if he and Ms Ma intended that they were to belong solely, to him. As Ms Tang accepted, the Deceased had his own bank account and two residential properties under his own name in Hong Kong. Further, insofar as he needed a nominee account, he already made use of one under the name of “Rita Tong”. No explanation was proffered for the Deceased’s use of that account either, a matter to which I will come back later.

37.It is important to bear in mind that although Ms Ma was not legally married to the Deceased, there is no dispute that she was his partner and cohabitee for the last 20 years of his life. In the circumstances, it seems to me that even if the assets in her Accounts had originated from the Deceased, there are likely to be cogent arguments that she had a beneficial interest in them, whether as gifts to her or there being some form of joint ownership.

38.The Deceased was plainly an educated and sophisticated businessman, and if his intention were that the assets were to be held by Ms Ma on trust for him solely, one would have expected some form of documentation to that effect. The fact that the Ms Ma allegedly did not have an income of her own or that the Deceased had represented to Ms Tang and dealt with those assets as if they were his own assets must again be viewed in the context of his relationship with Ms Ma and the fact that he had decided to place them in her sole name.

39.Madam Tarn’s case against Mr Ma, as set out in the indorsement of claim and in her affidavit evidence, is primarily that he was a recipient of assets from Ms Ma’s Accounts. It is therefore largely, if not solely, dependent upon her primary claim being successful against Ms Ma.

40.As to alleged suspicious conduct on the part of Ms Ma, the fact that she did not volunteer to give full disclosure to Madam Tarn or Ms Tang of the assets in her Accounts, being accounts in her own name, is neither surprising nor necessarily suggestive of deceptive or evasive intent. Ms Ma plainly believed that those assets belonged to her. Whilst this is disputed by Madam Tarn and Ms Tang, she is the legal owner of those assets, and as mentioned above, there is no unequivocal evidence that she held them on trust for the Deceased. Ms Ma was under no obligation voluntarily to disclose details of what she believed to be her own assets to Madam Tarn or Ms Tang.

41.Notwithstanding the pejorative terms used by Ms Tang in her HCMP Affidavit that Ms Ma had “fled” or “absconded” back to the Mainland on 20 June 2018, if Ms Ma had truly intended to abscond with all of her assets, she could easily have liquidated her Accounts immediately after the Deceased’s death and remitted the proceeds to Mainland China or elsewhere. She did not do so. In fact, the sale of shares in Ms Ma’s Accounts took place periodically over the course of some 3 months after the Deceased’s death and her return to Mainland China.

42.Moreover, the expenditure of US$1,624,393 from her Accounts on 22 June 2018 to purchase the Life Policy, which is a stationary asset, points away from any attempt to remove or conceal her assets. There is also no suggestion that she made any attempt to dispose of Lantau Flat 65A registered in her name.

43.For the reasons above, I am not convinced that Madam Tarn had shown a particularly strong case either on merits or on risk of dissipation before the ex parte Judge – nor, I would add here, has the evidence subsequently filed by her in response to the Discharge Application improved her case significantly on either front.

44.That said, as I explained in Pacific Rainbow International Inc. v Shenzhen Wolverine Tech Ltd and Others (unreported) HCA 3023/2016 (2 May 2017) at paras 39-42, the threshold of a “good arguable case” for the purposes of a Mareva Injunction is not a particularly high one, being one “…which is more than barely capable of serious argument, and yet not necessarily one which the judge believes to have a better than 50% chance of success”.  For present purposes, I am prepared to accept that the threshold has been met.

45.As to risk of dissipation, it is trite law that the perceived risk must be supported by some credible material and should not be too readily inferred: See eg Eastman Chemical Limited v Heyro Chemical Company Limited [2012] 3 HKLRD 307 at §26. In my view, the case before the ex parte Judge in this regard was borderline.

46.Notwithstanding the above, I have come to the firm conclusion that the Mareva Injunction must in any event be discharged on the grounds of serious material non-disclosure, a matter which I shall come to presently.

Serious Material Non-Disclosure 

47.Litigants and their legal representatives need no further reminder on the duty of full and frank disclosure in ex parte applications. This is particularly important in applications for Mareva injunction relief, which are never lightly granted and have long been regarded as one of the strongest orders in the arsenal of the civil courts. The nature and extent of the duty were helpfully summarised by Anthony Chan J in UES International (HK) Ltd v Maritima Maruba SA (unreported), HCA 632/2011, 19 November 2013 at §§11-18 and need no repetition here (see also Velatel Global Communications Inc & Anor v Chinacomm Ltd & Ors [2012] HKCU 2178 at §§25-31).

48.In support of the Discharge Application, Ms Ma explained in her affirmation evidence that, inter alia:

(1)  Although she and the Deceased were not formally married, they lived as husband and wife and presented themselves to their friends and family members as such. They never formally married as she comes from a Muslim family and her faith does not allow her to marry a non-Muslim.

(2)  Throughout the years, she devoted much time and effort with the Deceased to build his business and company in Zhuhai, where they had met in 1995. She and the Deceased were both shareholders of the Cayman Islands company which held the Zhuhai company. They eventually sold their shares in 2000 and spent most of their time travelling and making investments.

(3)  Although she accepted that the majority of the funds in her Accounts came from the Deceased, they were gifts to her. That being the case, when the Deceased requested to borrow money from her for temporary cashflow needs, she always agreed. Therefore, under this arrangement, from time to time, the Deceased withdrew monies from Ms Ma’s Account with her consent and authorization.

(4)  As regards the US$625,000 Transfer to Ms Tang, the transfer was made with her “consent and authorisation”. She felt obliged to help Ms Tang, being the Deceased’s sister, to purchase the property in Los Angeles.

(5)  The following passage is important:

“… as regards the [the US$625,000 transfer], on 15.1.2018 (the “15 January 2018 Email”), [Ms Tang] sent an email to [the Deceased] confirming the key terms of the loan of US$615,000 to be borrowed from me. In the 15 January 2018 Email, it was clearly stated that I was the lender and [Ms Tang] the borrower. Subsequently, it was agreed that the amount of the loan shall be US$625,000 which was evidenced by a “Preliminary Bridge Loan Agreement” (the “Loan Agreement”) entered into between [Ms Tang] and me dated 17.01.2018.”

Ms Ma exhibited both the 15 January 2018 Email and the Loan Agreement, the latter bearing the signatures of both Ms Ma and Ms Tang.

49.Critically, neither the 15 January 2018 Email nor the Loan Agreement was referred to or exhibited in either Ms Tang’s HCMP Affidavit or Mr Lane’s Affidavit, being the only affidavits before the ex parte Judge.  It is worthwhile to set out Ms Tang’s response to Ms Ma’s evidence in her own words:

“I had several discussions via Skype with [the Deceased] as to how I should repay the US$625,000 loan to him. After negotiation of the specific terms, [the Deceased] proposed that I drafted [sic] a Preliminary Bridge Loan Agreement so I can prove that the loan came from a legitimate source if necessary… [She then exhibited screenshots of her communications on Skype with the Deceased]

As shown on page 21 [of her exhibits], [the Deceased] instructed me to put “Ma Jinrui” as the lender for the loan since [Ms Ma’s Bank Account] was in her name in order to minimize any confusion even though the loan agreement was between [the Deceased] and me. As shown in our Skype communication, [the Deceased] was the one dictating the terms of the repayment and referenced the fund for the loan as “his money”… At no time did I have any communication with Ms Ma concerning the purchase of the property or the loan between [the Deceased] and me for said purchase.

…

With regard to Ms Ma’s claim that she “loaned” me the money to purchase my property in 2018…this is yet another fabrication… [The Deceased] was the one who loaned me the money to purchase the property in January 2018. All of the conversations concerning the loan were between [the Deceased] and me and the fund came from [the Deceased’s] money kept in [Ms Ma’s Accounts]. The [Loan Agreement] was drafted to formalize our agreement and as a precaution in the event that I need to provide documentation to show that the funds came from a legitimate source. At no time did I communicate with Ms Ma concerning my purchase of the property or this loan. In fact, [the Deceased] told me that he did not tell anyone about our deal. Ms Ma was not aware of this “loan” until after [the Deceased’s] death when she went through [the Deceased’s] private emails and communications on his personal laptop and phone…”

50.First of all, it is not Ms Tang’s evidence that she had inadvertently forgotten or misplaced the 15 January 2018 Email or the Loan Agreement. Rather, she disputes the effect of the documents and Ms Ma’s contention that the monies in her Accounts were lent by her to Ms Tang rather than by the Deceased.

51.There may well be a genuine dispute on these documents which can only be resolved at trial. However, that is plainly not the point. Both the 15 January 2018 Email and the Loan Agreement are highly material documents relevant to the substantive merits of Madam Tarn’s case. In particular, these are contemporaneous documents that on their face directly contradict Ms Tang’s evidence in her HCMP Affidavit that the US$625,000 Transfer was demonstrative of the Deceased’s ownership of the monies and securities in Ms Ma’s Accounts. As will be recalled, the circumstances surrounding the US$625,000 Transfer was one of the main pillars supporting Madam Tarn’s case of beneficial ownership before the ex parte Judge. There can be no reasonable excuse for the non-disclosure of these documents.

52.Moreover, I have some reservations concerning Ms Tang’s response as cited above:

(1)  She said that the Deceased “…instructed me to put “Ma Jinrui” as the lender for the loan since [Ms Ma’s Bank Account] was in her name in order to minimize any confusion even though the loan agreement was between [the Deceased] and me…”.

Further, the Loan Agreement was drafted as a “…precaution in the event that I need to provide documentation to show that the funds came from a legitimate source”.

(2)  However, none of the reasons now suggested by Ms Tang for naming Ms Ma as the lender in the Loan Agreement can be seen from the screenshots of the Skype communications exhibited by her:

Ms Tang:     “preparing the email to you right now… lender “Hsiao chiu chu”? The transfer receipt you showed me before only has your name.”

Deceased:    “ma nun rio”, proc passport

Ms Tang:     ““ma nun rio”? ok”

Deceased:    “ma jin rui”…”

The Deceased did not in fact give any reasons in that conversation and certainly nothing about “…minimising any confusion even though the loan agreement was between [the Deceased] and [Ms Tang].”

(3)  It can also be seen from the rest of the Skype communication that the Deceased insisted upon strict repayment terms by Ms Tang, remarking that, inter alia, “I need you to promise things you can really do, not like previously when you said a lot but did not do anything.”. This casts at least some doubt on Ms Tang’s contention that the Loan Agreement was merely “as a precaution in the event that I need to provide documentation to show that the funds came from a legitimate source”. Rather, the precaution appears to have been to ensure that Ms Tang repaid the loan on time.

(4)  I also have some difficulty with Ms Tang’s contention that Ms Ma was unaware of the loan until after the death of the Deceased.  As mentioned above, the Loan Agreement, which set out clearly both the amount and purpose of the loan, was on the face of it signed by both Ms Tang and Ms Ma. Indeed, on Ms Tang’s own case that the document was intended to provide documentation to show that the funds came from a legitimate source, the document would hardly have served its alleged purpose had it been left unsigned by the lender.

53.A further instance of serious material non-disclosure relates to Mr Lane’s description of “Rita Tong” in his Affidavit, namely, that “I am advised by Ms Tang and verily believe that this is a reference to another nominee account maintained by [the Deceased] in the name of a family member.” (emphasis added)

54.As revealed in the evidence, Rita Tong is none other than Madam Tarn herself, a fact that is not in dispute. Even if this were unknown to Mr Lane at the time he made his affidavit, this certainly could not have been unknown to Madam Tarn or Ms Tang.

55.No explanation has been given by Mr Lane for the non-disclosure, a matter which I regret to say is somewhat unsatisfactory and to which I will come back later. Ms Tang’s non-disclosure of her mother’s identity as Rita Tong was not accidental. In her reply evidence, she explained that:

“… The name “Rita Tong” was the alias used by my mother over 40 years ago when she lived in Hong Kong. After my mother left Hong Kong in early 1980s, she ceased using that name. However, [the Deceased] started using the name “Rita Tong” to maintain bank accounts and to purchase the boat in Hong Kong. Given that my mother had little to no direct knowledge of the day-to-day transactions effected by [the Deceased] with the accounts maintained in the name “Rita Tong”, it is our intention to not confuse the Court with respect to [the Deceased’s] dealings with respect to the bank accounts in the name “Rita Tong” since my mother had not used that name for over 40 years and had no knowledge of any specific transactions associated with those accounts. It is certainly not a willful concealment as suggested by Ms Ma. In fact, the issue relating to any accounts maintained in the name “Rita Tong” has no relevance to the actual matter before the Court with respect to the misconduct by Ms Ma and Ma Ming in divesting [the Deceased’s] assets after his death…”

56.On Ms Tang’s own evidence, therefore, a conscious decision was made by her and Madam Tarn to withhold the fact that “Rita Tang” was Madam Tarn. Irrespective of the extent of Madam Tarn’s knowledge as to the details of the transactions of those accounts in her own name, this was a matter which ought to have been fully and frankly disclosed in the ex parte application. It is not suggested that Madam Tarn or Ms Tang themselves had somehow not equated Madam Tarn with “Rita Tong”. Indeed, the Deceased could not conceivably have opened and operated accounts in the name of “Rita Tong” without at least Madam Tarn’s initial participation and consent.

57.Given that Madam Tarn (and those representing and assisting her) had the time and made the effort to obtain the HCMP 1^st and 2^nd Orders, it is difficult to see how they could not have, in the 6 months between the death of the Deceased and the ex parte application, obtained further information relating to transactions in her own account. As Ms Tang herself deposed, she and Madam Tarn were well aware that the Deceased had allegedly used her name, “to maintain bank accounts and to purchase [a] boat in Hong Kong”.

58.As mentioned above, no explanation was given to the ex parte Judge as to why the Deceased allegedly chose to hold his assets in the names of Ms Ma and Rita Tong as nominees. In her reply evidence, Madam Tarn sought to explain that,

“… [the Deceased] had never told me that he had given any real property or significant assets to Ms Ma as a gift. In fact, he had always referred to all of the real properties and bank accounts, whether in his own name, in the name of “Rita Tong”, or in Ms Ma’s name, as his assets and properties. He told me that he transacted in certain real estate or stock investment using Ms Ma’s name in order to bypass some tax implications or transaction restrictions against foreigners as he was not a Hong Kong resident or a citizen of People’s Republic of China. That’s also the same reason why he needed to use the bank account maintained in the name of “Rita Tong” as I was a Hong Kong resident.”

59.Ms Tang gave a similar explanation in her affidavit, although neither of them explained what were the “tax implications” or “transaction restrictions”. Although it is well known that in recent years additional stamp duty has been imposed on the acquisition of real property by non-Hong Kong residents, there is no such duty or “transaction restrictions” in respect of bank or securities accounts in Hong Kong.

60.I should mention that Ms Tang also said in her reply evidence that the Deceased “…once told her that he did not want to directly wire any funds from his own bank accounts in Asia to the US because he had been living in Asia for over 15 years and he had not filed any tax returns or reported anything to the U.S…”. It is unclear from the evidence, however, what was the Deceased’s tax status in the US, and there was certainly no mention of any potential US tax implications on the part of the Deceased in the ex parte application. In an affidavit of Anthony Thomas Marrin, a solicitor at TDW, filed on 4 February 2019 (“Mr Marrin’s Affidavit”), the Deceased was described as a Taiwanese citizen and was said to have been domiciled there.

61.More importantly, I disagree that Rita Tong’s identity as Madam Tarn had “no relevance” to her application before the ex parte Judge. The Deceased’s alleged use of Madam Tarn (as opposed to merely some “family member”) to maintain accounts and hold assets belonging to him in Hong Kong was plainly material:

(1)  First in permitting the Deceased to use her name to acquire and hold assets in Hong Kong, Madam Tarn must have been well aware of the reasons for (if any) and the extent of the Deceased’s alleged practice of using nominee accounts to hold some (but not all) of his assets. Yet, she remained silent on the issue in her ex parte application.

(2)  The fact that the Deceased had the choice of using and did in fact use since the 1980s (although to what extent remains unclear) his mother’s name to operate bank accounts and to hold assets inevitably raises the question why it was necessary, if at all, to use Ms Ma also as his nominee, as Madam Tarn now alleges.

(3)  There is nothing in the evidence to suggest that the Deceased became estranged from his mother or could no longer use Rita Tong’s account. To the contrary, Mr Lane deposed that numerous transactions in Ms Ma’s Accounts were “sourced through” the Deceased and Rita Tong.

(4)  The fact that the assets in question were held in Ms Ma’s Accounts rather than Rita Tong’s alleged nominee account raises at least the possibility that the Deceased treated the monies and securities in Ms Ma’s Accounts differently from those in the alleged nominee account.

(5)  Even on Madam Tarn’s evidence, the Deceased did not hold all his assets in Hong Kong under the names of nominees. As mentioned above, the Deceased had at least one bank account in Hong Kong and two residential units, which were of significant value, under his own name. In fact, Ms Ma exhibited records in her evidence from the Lands Registry showing that the Deceased had previously held at least 5 additional residential properties in Hong Kong in his own name.

62.In my judgment, the 15 January 2018 Email, the Loan Agreement and the true identity of Rita Tong are all relevant and material to the merits of Madam Tarn’s case and should have been disclosed to the ex parte Judge.

63.The non-disclosure of the 15 January 2018 Email and the Loan Agreement was particularly inexcusable having regard to the fact that they directly contradicted Ms Tang’s evidence in her HCMP Affidavit. Ms Tang is a lawyer (even if not in this jurisdiction) and would undoubtedly have been shown Mr Lane’s Affidavit and Mr Lane’s Skeleton Argument prior to the ex parte application, both of which contain sections purporting to comply with the duty of full and frank disclosure. As mentioned above, these non-disclosures cannot be categorised as inadvertent omissions, and I have found the explanations given by Ms Tang to be highly unsatisfactory.

64.On the grounds of these non-disclosures alone, I would have discharged the Mareva Injunction. Regrettably, however, the non-disclosures do not end here, as I shall come to below.

Events after ex parte Mareva Injunction

65.The ex parte Order and return date summons came back before the learned Recorder on 4 January 2019. As neither Ms Ma nor Mr Ma appeared in Court, the Recorder adjourned the return date summons to 1 February 2019 and continued the Mareva Injunction until that date.

66.Madam Tarn placed before the court an affirmation dated 3 January 2019 of Cheung Kiu Wan (“Mr Cheung”), a messenger in the employ of TDW, who explained that he served the ex parte Order and supporting documents on HSB and HS Insurance on 31 December 2018. He further deposed that:

“I did on Wednesday, 2 January 2019 at approximately 4:50 pm attempt to serve the Court Documents under the cover of a letter from TDW to the 1st Defendant in a sealed envelope, at her last known address at [Lantau Flat 65A]. I arrived at the lobby at the Address at approximately 4:50 pm and was stopped by the security guards. I informed the security guards that I was there to serve Court documents upon Ma Jinrui at the Address. They refused my entrance into the premises. The security guards then called the Address through the intercom but no one answered. I then asked the security guards whether I could access the letter box of the Address so that I may insert the Court documents through the letter box. The security guards rejected my request. I therefore left the premises with the Court Documents”.

As matters transpired, this was misleading.

67.In Ms Tang’s HCMP Affidavit, she deposed that, “At the time of his death, my brother [i.e. the Deceased] and Ms Ma lived at the Bella Vista property in Hong Kong…” and that Ms Ma stayed at the Bella Vista Flat when she returned to Hong Kong on 17 June 2018 after the Deceased’s funeral.

68.There was no explanation, however, in Ms Tang’s HCMP Affidavit, Mr Lane’s Affidavit or Mr Cheung’s Affidavit as to how the Lantau Flat 65A then became by 31 December 2018 Ms Ma’s “last known address”. The address for Ms Ma stated on the writ was also the Lantau Flat 65A address.

69.It was only in Ms Tang’s reply evidence that she explained that she and Madam Tarn had instructed the property management at the Bella Vista Flat to prohibit Ms Ma from entering the property. According to Ms Tang, Mr Ma and Ms Ma attempted to enter the property “in late 2018” but was denied entry pursuant to Madam Tarn and Mr Ma’s instructions.

70.More importantly, however, Ms Tang deposed that:

“In addition to the Bella Vista property, [the Deceased] also bought two adjoining flats, Flat A and Flat H located on the 65^th Floor of Tower 9… Caribbean Coast. [The Deceased] bought Flat H in his own name but placed Flat A in Ms Ma’s name. He then removed the party wall separating the two flats and turned the space into one large residential space. He also sealed the main entrance to Flat A and used the main entrance to Flat H to enter the now-combined single residence. In other words, the only way to access either Flat A or Flat H is through the main entrance of Flat H.

At the time of [the Deceased’s] death, both flats of the Caribbean Coast property were occupied by tenants pursuant the Preliminary Tenancy Agreement dated 1 December 2016….

A few months after [the Deceased’s] death, we discovered that the tenants at the Caribbean Coast property stopped paying rent completely after September 2018. Ms Tarn’s attorney then sent a letter to the tenants in November 2018 informing them about [the Deceased’s] death and Ms Tarn’s role as the administrator of his estate and inquiring whether they wish to continue with the lease of the Caribbean Coast property in accordance with the terms of the Preliminary Tenancy Agreement which was set to expire in December 2018. However, the tenants never responded to the letter.

On 19 May 2019, my mother and I visited the Caribbean Coast property but no one was available despite the fact that the property appeared to be occupied. I left a written note by the door asking the tenants to contact Ms Tarns attorney ASAP. The next morning, Ms Tarn’s attorney received a call from someone claiming to be the tenant for the Caribbean Coast property. This individual advised the attorney that Ms Ma contacted the tenants a few months ago and instructed them to pay the rent for the Caribbean Coast Property to another account. The individual also told the attorney that they advised Ms Ma they would like to extend the lease until June 2019 and she agreed…”

71.As can be seen from this passage, not only were Madam Tarn and Ms Tang aware that Lantau Flat 65A (together with Flat 65H) had been let out and was occupied by a tenant at the time of the Deceased’s death, but Madam Tarn’s “attorney”, presumably TDW, was also well aware of this fact. There is no suggestion that they made any attempt to ascertain whether the tenant had vacated the units as at the date of the writ and the Mareva Injunction on 28 December 2018. In fact, it is now clear that the tenant remained in occupation up to at least May 2019.

72.As Madam Tarn, Ms Tang and TDW well knew, Ms Ma was likely not present or contactable at that address. The essence or purpose of “usual or last known address” under RHC Order 1 r.1(2) is a location where the person may be reached or where contact or communication in written form, such as by letter, could be established (see e.g. Hong Kong Civil Procedure 2021, para 10/1/12). Whilst it is not inconceivable that service at that address might eventually come to Ms Ma’s attention as the registered owner of Flat 65A, this was plainly a matter which should have been brought to the attention of the learned Recorder at the latest by the return date (and to the subsequent return date Judges), as Madam Tarn remained under a continuing duty of full and frank disclosure.

73.Moreover, from the evidence filed by Madam Tarn before the ex parte Judge, Madam Tarn must have known that there was at least a real possibility that Ms Ma was not even in Hong Kong at the time of the ex parte Order.

74.As mentioned above, in Ms Tang’s HCMP Affidavit, she said that “Without notifying us, Ms Ma then returned back to [Mainland] China on 20 June 2018 and ceased all communication with us.”. In the same affidavit, she continued, “Following the withdrawal of monies from the account, Ms Ma has absconded to [Mainland] China to undertake a period of mourning. She resisted all attempts to contact her and appears no longer to be willing to cooperate in assisting the Estate.”

75.Leaving aside the difficulty in reconciling “absconding” and “undertaking a period of mourning”, there was no suggestion at the ex parte stage that Ms Ma ever returned to Hong Kong. In Mr Lane’s Affidavit, he deposed that “Ms Ma has not contacted the Plaintiff since she left for [Mainland] China for her period of mourning.” It was only in her reply affidavit that Ms Tang said that she had been informed by the management office of Bella Vista that Ms Ma and Mr Ma attempted to gain access “in late 2018” but were denied entry.

76.At least two Mainland Chinese addresses can be seen from the HSB documents obtained pursuant to the 1^st HCMP Order (1) an address in Shanghai, namely, 中國上海市長寧區延安西路1168號碧瑤行政公寓2603室(the “Shanghai Property”) can clearly be seen from HSB bank statements; and (2) an address in Urumqi (Wulumuqi), namely, Tian Shan District, He Ping Wan Lu, 26 Hao, 1 Hao Lu, 1 Dayuan, 302 Hao (the “Xinjiang Property”) was listed in the account opening documents as Ms Ma’s “overseas address”.

77.Although these documents were exhibited to Mr Lane’s Affidavit, no mention of the Shanghai or the Xinjiang Properties was made in the body of his Affidavit or in the Skeleton Argument placed before the ex parte judge, and no application was made for leave to serve the writ and the Mareva Injunction on Ms Ma at those addresses. Ms Tang merely stated in her HCMP Affidavit that Ms Ma told her the statements for her Accounts had been mailed to Mainland China.

78.More importantly, in August 2018, Madam Tarn had commenced civil proceedings in Beijing Chaoyang People’s Court (the “Beijing Court”) against Ms Ma in respect of two properties and a carpark in Mainland China which Madam Tarn contended were held by Ms Ma on behalf of the Deceased (the “Beijing Action”). One of the properties was the Shanghai Property and the others were a carpark and a residence in Beijing (the “Beijing Properties”). In a Notice of Commencement of Civil Action [民事起訴狀] filed by Madam Tarn setting out the basis of her claim against Ms Ma, Ms Ma’s address was stated to be the Xinjiang Property, together with a Mainland Chinese telephone number. I will come back later to the Beijing Action, which was never disclosed to the ex parte Judge.

79.Even if Madam Tarn or TDW were unaware whether Ms Ma was in fact in Hong Kong or in Mainland China, the very real possibility or likelihood that she was in Mainland China (in which case, service of the writ in Hong Kong under RHC Order 10 r.1 could not be effective service on her) should at least have been drawn to the attention of the judges hearing the return date summons, so long as service had not been duly effected on her and the matter remained ex parte.

80.The adjourned return date summons was heard by Marlene Ng J on 1 February 2019. Placed before the Court was Mr Cheung’s 2^nd affirmation dated 29 January 2019, where he explained that he had sent by registered post the writ, the ex parte Order and supporting documents to Ms Ma at the Lantau Flat 65A address, but according to the website of Hong Kong Post, the letter remained uncollected at the Tung Chung Post Office as at 7 January 2019. Again, no mention was made in Mr Cheung’s 2^nd affirmation (or elsewhere) of: (1) the fact that the Lantau 65A address was likely to be occupied by a tenant; (2) Ms Ma may be in Mainland China at the time of the ex parte Order and thereafter; (3) Ms Ma’s Mainland Chinese addresses; or (4) the fact that the Beijing Action was actively progressing between Madam Tarn and Ms Ma (see below).

81.At the hearing, her Ladyship raised concerns as to Madam Tarn’s capacity to sue as an “Intended Administratrix” of the Estate. She thus adjourned the return date summons to be heard on 15 February 2019 upon Madam Tarn’s undertaking to rectify the issue concerning her capacity.

82.The matter came before Anthony Chan J on 15 February 2019. Placed before the court was Mr Marrin’s Affidavit filed on 4 February 2019. Mr Marrin did not address any issue of service and was solely concerned with Madam Tarn’s capacity to represent the Estate. This is now the subject matter of inter alia the Setting Aside Application, which I will come back to later.

83.It does not appear that any further attempts were made by Madam Tarn to serve or otherwise inform Ms Ma in Hong Kong or in Mainland China of the action and the Mareva Injunction. As for Mr Ma, service in Mainland China would have to be effected through the Mainland Chinese judicial authorities pursuant to RHC Order 11 r.5A, which will normally take between 4-6 months. There is no evidence, however, as to what steps TDW had undertaken since the ex parte Order to set into motion or progress with such service.

84.Although the standard form order in PD 11.2 does not make express provision for this, I understand that ex parte judges nowadays often require an undertaking from the plaintiff to notify the defendant immediately of the ex parte order and to provide related documents through electronic means such as by email, even though such notification may not itself constitute proper service. This is especially important in the case of defendants overseas or in Mainland China, given that service will often take a prolonged period of time. I firmly agree with and commend such an approach.

The Mareva Gagging Order

85.In her affirmation evidence, Ms Ma explained that in January 2019, she and Mr Ma discovered that their HSB accounts had been suspended. However, despite their enquiries, HSB refused to provide them with further information. This was perhaps not surprising given that the Mareva Injunction contained the following order, which is a departure from the standard form order in PD 11.2:

“Until the Return Date as defined below, except for the purpose of obtaining legal advice, the Defendants and anyone else with knowledge or notice of this Order must not directly or indirectly inform anyone of the proceedings to which this Order was made or of the contents of this Order or any evidence given in this action or otherwise warn anyone that proceedings have been or may be brought against them or anyone else by the Plaintiff.”

(the “Mareva Gagging Order”)

86.In his ex parte Skeleton, Mr Lane sought to justify the Mareva Gagging Order as follows:

“The Plaintiff’s allegations against the Defendants are very serious, and as is apparent from the evidence filed in support of this application by the Plaintiff, they are currently taking action against the Defendants to ascertain the precise role they have played in the scheme to misappropriate monies from the Plaintiff. Whilst investigations continue, the Plaintiff requests that secrecy restrictions be imposed against the disclosure of the order to prevent notification of others who may be in a position to dissipate assets or destroy evidence.”

No authority was cited to the ex parte Judge in support of such an order.

87.In A Co v B Co [2002] 2 HKC 497, Ma J (as he then was) recognised in the context of granting Norwich Pharmacal relief the Court’s jurisdiction under section 21L of the High Court Ordinance (Cap 4) to grant gagging orders. His Lordship then continued at paras 38-41:

“A gagging order is granted where there are grounds to believe that once a wrongdoer is aware he is being pursued, steps may be taken by him to frustrate any claim that may be made against him or any investigations being carried out. In Banco Ambrosiano Andino SA v Banque Nationale de Paris [1985] HKLR 72, Mantell J was asked to grant a gagging order following the grant of Norwich Pharmacal relief. He did so, remarking at 74G-H,

‘It seems to me that if the first part of the order is not to be nugatory [i.e. the Norwich Pharmacal order], the supposed wrong-doers must not discover that they are being pursued. The second part of the order would seem to follow...’

…

Gagging orders are also exceptional remedies. By depriving the party affected of the opportunity to investigate facts in circumstances where that party may incur personal liability, is a serious intrusion into what otherwise would be a party’s basic rights. It also in a sense condemned the person identified as a wrongdoer without a balanced picture being provided to the court at this stage.

In these circumstances, a strong case has to be made out that an order should be made…” (emphasis added)

88.The exceptional nature of gagging orders as explained in A Co v B Co was never brought to the attention of the ex parte Judge. Moreover, the situation before the ex parte Judge was very different from the 1^st and 2^nd HCMP Orders, when no claim had yet been brought by Madam Tarn against Ms Ma or Mr Ma, and she did not yet have the protection of the Mareva Injunction. It seems to me that once substantive proceedings have been commenced against a defendant, very strong justification is required before a gagging order should be granted against the defendant or any third parties. The potential for injustice and the intrusion into fundamental rights are all the more pronounced in such a situation, as demonstrated in the present case.

89.I am cognisant that a gagging order was made by Deputy High Court Judge Kent Yee in the context of a Mareva injunction in Zimmer Sweden AB v KPN Hong Kong Ltd & Anor (unreported) HCA 2264/2013, 2 May 2014. However, that was an obvious case of fraud where a rogue impersonated the plaintiff’s chief financial controller and convinced an employee of the plaintiff to remit funds to a third party, which was then remitted onwards to two defendants, KNP and BT. Mareva injunctions were granted against the two defendants together with a gagging order.  The identity of the fraudster remained unknown. In continuing the Mareva injunctions and the gagging order, the Judge observed:

“Given the position of Zimmer Sweden that KNP and BT worked in concert with the 1^st Fraudster, I accept that there is a reasonable risk that the personnel of KNP and BT may tip off the 1^st Fraudster and all his accomplices so that other viable recovery actions would be hindered or rendered nugatory.”

90.In my view, the present case, even at its highest, does not come close to the situation in Zimmer Sweden. The order is in any event too wide in scope, as it would have arguably rendered the defendants in breach of the order merely by instructing legal advisers and informing them of these proceedings. I would therefore have discharged the Mareva Gagging Order in any event.

Delay in Service

91.Ms Ma explained that as a result of HSB’s refusal to inform her or Mr Ma of the Mareva Injunction, it was not until February 2019 that Ms Ma and Mr Ma’s solicitors, Messrs Hon & Co. (“H&C”), noticed the names of their clients on the daily cause list and came to know of the present proceedings.

92.On 18 February 2019, H&C wrote to TDW indicating that they had instructions to act for the defendants and to accept legal proceeding on behalf of their clients. They requested copies of the relevant court documents and stated that they would file a Notice to Act upon receiving them from TDW.

93.Surprisingly, TDW did not respond to H&C for over one week, prompting H&C to write a further letter to TDW on 28 February 2019. H&C explained that they had been unable to retrieve the court documents from the High Court Registry as the file was temporarily not available, and that given the urgent need to seek counsel’s advice, they reiterated their request for copies of the relevant court documents.

94.It was only on 5 March 2019 (over 2 weeks after H&C’s first request) that H&C received under cover of a letter dated 4 March 2019 the amended writ and the ex parte Order and supporting documents. This is, to say the least, highly unsatisfactory. There was no conceivable reason for TDW not to have served the documents on H&C forthwith. Indeed, Madam Tarn’s (standard) undertakings in the ex parte Order included undertakings that she would issue and serve the defendants with the writ and the relevant documents “as soon as practicable”, and that anyone notified of the Order would be given a sealed copy of it by her solicitors.

Non-Disclosure of the Beijing Action

95.As mentioned above, Madam Tarn commenced the Beijing Action against Ms Ma in August 2018, some 4 months before the application for the Mareva Injunction. In fact, court proceedings took place in the afternoon of 1 November 2018, as shown by an official court document with the seal of the Beijing Court.

96.A number of further steps had also been taken place in the Beijing Action before TDW sent copies of the writ and Mareva Injunction to H&C on 4 March 2019, including an application by Madam Tarn on 22 February 2019 to amend the reliefs sought, lists of evidence filed by Madam Tarn on various dates, lists of evidence filed by Ms Ma on 25 February 2019 and comments by the parties on their respective opponent’s evidence.

97.No mention of the Beijing Action, in which Madam Tarn eventually failed, was made in any of the evidence placed before the ex parte Judge or the subsequent judges hearing the return date summonses prior to service on Ms Ma and Mr Ma. The allegations in Ms Tang’s HCMP Affidavit and Mr Lane’s Affidavit that there had been no contact between Madam Tarn and Ms Ma after she left Hong Kong on 20 June 2018 were therefore misleading.

98.I note that in an affidavit by Zuo Yuru, Madam Tarn’s Mainland Chinese lawyer in the Beijing Action, he said:

“At the beginning of the trial, Ms Tarn did not possess the evidence relating to the payments made by Mr Chu for the purchase of [the Shanghai Property] and [the Beijing Property]. As Ms Ma argued that she purchased these properties herself, the judge believed that Ms Ma should have the documents showing that payments were made for the purchase of these properties and that she purchased them herself. Therefore, the judge asked Ms Ma to present the transaction and payment records to the court or appear before the court to explain the details of the payment. Ms Ma refused to appear before the court on the ground that she suffered from depression. She also did not provide any transaction and payment records…”

99.It is unclear from Mr Zuo’s affidavit at which hearing Ms Ma failed to appear, and whether this was before or after the Mareva Injunction.  It is not for this Court to comment upon Ms Ma’s conduct of the Beijing Action, which is a matter solely for the Beijing Court. However, it is clear that Ms Ma actively contested the Beijing Action through her legal representatives and in the end prevailed. On 12 March 2020, the Beijing Court handed down judgment in favour of Ms Ma and dismissed all claims by, amongst others Madam Tarn. Madam Tarn filed an appeal on 14 April 2020, which had yet to be concluded at the time of the hearing.

100.The existence and progress of the Beijing Action should plainly have been disclosed to the ex parte Judge for at least three reasons:

(1)  First, as mentioned above, it contradicts the impression given by Ms Tang in her HCMP Affidavit and Mr Lane’s Affidavit that Ms Ma had “absconded” to Mainland China and was uncontactable. Even if she could not be contacted personally, she could easily have been contacted through her Mainland Chinese legal representatives, who were actively defending the Beijing Action.

(2)  Second, the Xinjiang Address used by Madam Tarn in the Notice of Commencement of Civil Action at least suggested that Madam Tarn knew Ms Ma was possibly not in Hong Kong at the time of the Mareva Injunction. She should have drawn to this matter to the attention of the ex parte Judge or sought leave to serve the writ and Mareva Injunction order out of the jurisdiction on her in Mainland China.

(3)  Third, the issues in the Beijing Action bear significant similarity to those in this action and may well be pertinent to the merits of Madam Tarn’s claims in Hong Kong.

Reminder on Duty of Solicitors

101.I regret to find it necessary for the Court to comment on TDW’s conduct in these proceedings. As mentioned above, Mr Lane gave no explanation for the non-disclosure of Rita Tong’s identity in his Affidavit in support of the ex parte Mareva Injunction. It is well established that where a solicitor has innocently filed an affidavit which he later discovers to be false, he owes a duty to the Court if he continues to act as the solicitor to put the matter right at the earliest moment (see e.g. Hong Kong Civil Procedure 2021 at para 41/5/4). The description of Rita Tong as merely a “family member”, when viewed in the context of Mr Lane’s Affidavit was highly misleading, even if not, strictly speaking, false in that it implicitly suggested that Rita Tong was a family member other than the Madam Tarn herself.

102.The incident once again shows why solicitors should not, save in exceptional circumstances, be giving evidence on behalf of their client. No reason was given in Mr Lane’s Affidavit as to why Madam Tarn or Ms Tang could not have made the supporting affidavit for the Mareva Injunction.I give Mr Lane the benefit of the doubt that the reason was unrelated to the concealment of Rita Tong’s identity. The Court has the power to require a solicitor to explain why he or she believed it proper to make an affidavit in place of the client (see e.g. Hong Kong Civil Procedure 2021 at para 41/5/4), and if not for the orders I make dismissing the action (see below), I would have required such an explanation from Mr Lane.

103.I have already commented on the misleading nature of Mr Cheung’s affirmations relating to his attempted service of the writ and the Mareva Injunction on Ms Ma at her “last known address” at Lantau Flat 65A, especially when Madam Tarn remained at the time under a duty of continuing full and frank disclosure to the Court. Whilst affirmations of service are often perfunctory and made by relatively junior staff within a firm of solicitors, they are nonetheless solemn statements on oath and demand the same degree of care in preparation as any other affidavits placed before the Court.

Discharge of Mareva Injunction

104.The non-disclosures I have set out above are serious and material and cannot be said to be the result of mere inadvertence. Having regard to the principles laid down by the Court of Appeal in Excel Courage Holdings Ltd v Wong Sin Lai [2014] 3 HKLRD 642 at §§56 to 58 (and recently confirmed in Fantastic State Limited v Tien’s Organic Farm & Ors [2019] HKCA 687 at §39), I have no hesitation in discharging the Mareva Injunction against both Ms Ma and in refusing any regrant. As mentioned above, I would have discharged the Mareva Injunction on the grounds of non-disclosure of the 15 January 2018 Email, the Loan Agreement and the true identity of Rita Tong alone.

105.For the avoidance of doubt, in exercising my discretion against regrant, I have taken into account, inter alia, the strength of Madam Tarn’s case on the merits as well as on risk of dissipation. It is unnecessary for me to set out here all of the disputed issues in the affidavit evidence, which I have considered. I would merely observe that Ms Ma’s evidence, including the contemporaneous documents exhibited, raises at least a strongly arguable defence on the merits to Madam Tarn’s claims. These are matters for another forum.

106.As mentioned above, in the course of the hearing, Mr Ng no longer pursued the continuation of the Mareva Injunction against Mr Ma. Had such a concession not been made, I would have discharged the Mareva Injunction on the grounds of material non-disclosure against Mr Ma as well and refused a regrant. I should mention that no application was made by Mr Ma to set aside leave to serve him out of the jurisdiction in Shanghai. Had such an application been made, I would similarly have discharged the leave order.

107.In the circumstances, I make an order in terms of the Discharge Application. I regret to say that this is one of the more serious cases of material non-disclosure I have seen, and it is only right that Ms Ma and Mr Ma are to have their costs of the return date summons and the Discharge Application, including any reserved costs, to be taxed on an indemnity basis and payable forthwith. I so order on a nisi basis. It is unnecessary for me give any directions on gross sum assessment, for reasons which will become apparent below.

108.For the avoidance of doubt, no criticism is made against Mr Ng, who appeared only for the first time before Deputy High Court Judge Keith Yeung SC (as he then was) on 18 June 2019.

IV.             The Striking Out, Setting Aside and Disallowance of Amendment Applications

109.I shall deal with these 3 applications together, as they all revolve around the issue concerning Madam Tarn’s locus standi to commence and continue the present action action.

110.As mentioned above, Madam Tarn issued the writ on 28 December 2018 (and previously obtained the 1st and 2nd HCMP Orders) purportedly in her capacity as the “Intended Administratrix” of the Estate.  On that date, she had not yet been granted letters of administration. It is unclear from the evidence whether she has since been granted administration, although as I shall explain below, this is in fact irrelevant.

111.Although Madam Tarn was described as the “Intended Administratrix” of the Estate in the heading of the action, in his ex parte Skeleton, Mr Lane misrepresented that Madam Tarn was acting “in her capacity as the executor of the Estate of her late son...” (emphasis added).  Ms Tang, however, said in her HCMP Affidavit that the Deceased had died intestate and that Madam Tarn was “the only person at law entitled to administer the estate”. In fact, no person was entitled to administer the Estate at the time.

112.As mentioned above, at the second return date hearing on 1 February 2019, Marlene Ng J raised concerns as to Madam Tarn’s capacity to sue as an “Intended Administratrix” of the Estate. TDW then sought to amend the writ without leave on 4 February 2021 purportedly pursuant to RHC Order 20 r.1 by changing the name of the plaintiff from Madam Tarn to “Chu Hsiao-Chiu alias Chu Tony Hsiao-Chiu alias Chu Hsiao Chiu, deceased”.

113.The purported amendment without leave under rule 1 could not have been correct. Rule 1(3)(a) clearly provides that the rule has no application to, “the addition, omission or substitution of a party to the action or an alteration of the capacity in which a party to the action sues or is sued.” It is clear that the purported amendment was for the substitution of a party, namely, the plaintiff, and I did not understand Mr Ng to contend otherwise.

114.Rather, Mr Ng referred the Court to rule 4, which provides, inter alia:

“(1) Within 14 days after the service on a party of a writ amended under rule 1(1)… that party may apply to the Court to disallow the amendment.

(2) Where the Court hearing an application under this rule is satisfied that if an application for leave to make the amendment in question had been made under rule 5 at the date when the amendment was made under rule 1(1) or rule 3(1) leave to make the amendment or part of the amendment would have been refused, it shall order the amendment or that part to be struck out…”

115.First, Mr Ng submitted that the Disallowance Application was late, having only been made on 17 June 2019, some 3 months after the (purported) amended writ was served on H&C on 5 March 2019. Rule 4(1) provides that a party may apply to the Court to disallow an amendment under rule 1(1) within 14 days after service of the amended writ.

116.More importantly, Mr Ng submitted that by reason of rule 4(2), the proper question to be asked in the circumstances was whether the Court would have granted leave to amend had an application for leave been made pursuant to rule 5 on 4 February 2019.  

117.I disagree. In my judgment, there is no question in this case of any amendment to be disallowed. Rule 4 is concerned with cases where there has been an amendment without leave that was, at least on its face, a valid one.  This is not such a case.  There was never a valid amendment under rule 1 in the first place as the rule had no application to the type of amendment purported to have been made.  I reject Mr Ng’s submission that “Any non-compliance (if any) with O. 20 r.1(3)(a) should be seen as no more than [an] irregularity which can be cured”.

118.The purported amendment was thus a nullity devoid of legal effect.  For all intents and purposes, the writ remained and remains in its original form. There was nothing to disallow. That is sufficient to dispose of the matter, and I make an order on the Disallowance Application that the purported amendment to the writ be struck out.

119.It follows that the Carry-On Order made pursuant to RHC Order 15 r.6A(3) and (4) must be set aside. Rule 6A(3) provides that:

“An action purporting to have been commenced by or against a person shall be treated, if he was dead at its commencement, and the cause of action survives, as having been commenced by his estate or against it in accordance with paragraph (1) as the case may be, whether or not a grant of probate or administration was made before its commencement.”

Rule (4) then provides inter alia:

“In any such action as is referred to in paragraph (1) or (3) -

(a) …the personal representatives of the deceased or any person interested in the deceased’s estate may, during the period of validity for service of the writ or originating summons, apply to the Court for an order appointing a person to represent the deceased’s estate for the purpose of the proceedings or, if a grant of probate or administration has been made, for an order that the personal representative of the deceased be made a party of the proceedings, and in either case for an order that the proceedings be carried on by or against the person appointed or, as the case may be, by or against the personal representative, as if he had been substituted for the estate.”

120.Mr Ng submitted that, “If the Amended Writ stands, the action is one “purported to have been commenced” by the Deceased and the Carry-On Order also stands.” However, given my view that the purported amendment on 4 February 2019 was a nullity, the plaintiff was and remains Madam Tarn, not the Deceased. The action thus falls outside of rule 6A(3), and no carry on order could be made under rule 6A(4). This is clear from the decision of the Court of Appeal in Chung Yi Yuen (the intended administrator of the estate of the deceased) v Lau Koon Shing [1999] 2 HKLRD 413 (leave to appeal to the Court of Final Appeal refused) at 416F, per Godfrey JA, which is binding on me.

121.I therefore make an order in terms of paragraph 1 of the Setting Aside Application.

122.Finally, the Striking Out Application can be disposed of shortly:

(1)  It is well established that the title of an administrator (unlike an executor) is derived solely from the grant of letters of administration. In the case of an intestacy, until and unless administration is granted, no person purporting to be, or entitled to be appointed as administrator, has title to sue in the name of the deceased.

(2)  A subsequent grant cannot retrospectively validate the writ, as the original writ was a nullity that could not be revived. The grant only enabled the plaintiff to issue a new writ.

(3)  An action commenced by a plaintiff purportedly as an administrator, when the claimant did not have that capacity, is a nullity and must be struck out.

See e.g. Millburn-Snell v Evans [2012] 1 WLR 41, CA, at paras 14-16, cited and followed in Wong Lai Mei v Kwong Pak Leung [2015] 1 HKLRD 888 at para 17; Lam Sik Ying Administrator for the Estate of Lam Tim v Lam Sik Shi and Another [2020] HKCA 659, at paras 34-37.

123.I therefore make an order also in terms of the Striking Out Application.

124.Out of completeness, I should mention that as there is no application before me for leave to amend the writ in the manner of the purported amended writ under RHC Order 20 r.5, it is unnecessary for me to consider whether it would be appropriate for me to do so at this stage.

125.There was considerable argument on this issue between Mr Ng and Mr Alex Fan, counsel for the defendants, in the context of what Mr Ng submitted was “the proper question” in the Disallowance Application. However, in the light of my decision that no valid amendment had been made under RHC Order 20 r.1, it is unnecessary for me to address those arguments. Had it been necessary to do so, I would have preferred the arguments of Mr Fan to those of Mr Ng and held that the action, being a nullity from the outset, cannot be retrospectively revived by way of amendment in circumstances such as the present.

126.In any event, I note that the action has not progressed substantively beyond the Mareva Injunction. No statement of claim had yet been filed as at the date of the hearing. As I have now discharged the Mareva Injunction, it seems to me far simpler for a properly constituted action to be commenced afresh. No issues of limitation were raised by Mr Ng before me, and there is nothing to suggest that such issues exist.

V.   Costs

127.The action is dismissed. As to the costs of the Disallowance Application, the Setting Aside Application and the Striking Out Application, I make an order nisi that the defendants are to have the costs of those applications, as well as the costs of the action, to be taxed on a party and party basis.

128.Last but not least, I thank both counsel for their assistance.

Mr Ernest CY Ng, instructed by Tanner De Witt, for the plaintiff

Mr Alex Fan, instructed by Hon & Co., for the 1^st and 2^nd defendants