Perpetual Trust Ltd (As Administrator of the Estate of Alexander Gavin Brown) v. Kobe Investments Ltd

HCA 1353/2021

[2022] HKCFI 2762

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1353 OF 2021

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Before:  Deputy High Court Judge Kenneth Wong in Chambers

Dates of Hearing:  27 and 28 June 2022

Date of Decision:  9 September 2022

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DECISION

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A.  INTRODUCTION

1.In this Decision, the Court deals with the following 4 summonses:

(1)  The Plaintiff's Summons dated 7 September 2021 for injunctive relief (“Injunction Application”);

(2)  The Defendant's Summons for security for costs dated 26 November 2021 (“Security for costs Application”);

(3)  The Defendant's Summons dated 26 November 2021 seeking to strike out the Plaintiff’s action (“Strike out Application”); and

(4)  The Plaintiff's Summons dated 7 February 2022 for an interim case management stay of this action (“Stay Application”).

2.In respect of the Stay Application, on 22 June 2022, 5 days before the hearing, the Plaintiff took out a Summons to amend the Summons dated 7 February 2022. At the hearing, the parties agreed that the amendments were not controversial[1], and they were allowed with costs reserved.

3.On the same day, the Defendant issued a Summons seeking leave to file and serve the 7^th Affirmation of Leung Eviana Bon Yuen dated 21 June 2022. This Affirmation sought to update this Court the progress of certain related proceedings in New Zealand. At the hearing, Mr Chua Guan-Hock SC (with Mr David Chen), for the Plaintiff, whilst accepting that most of its contents and exhibits were not controversial, took exception to certain paragraphs which referred to certain state of knowledge of Madam Kang (the Deceased’s wife, as defined in paragraph 11 below) and certain communication between her lawyers in New Zealand and the Defendant. Mr Chua complained that they were not really update of the New Zealand proceedings and should not be allowed to be admitted. I have borne in mind that his client did not have the opportunity to respond to this affirmation and particularly comment on those references. Nonetheless I did not consider those references were material to the determination of the 4 Summonses. Therefore, to save time and to avoid distraction from the main issues for the hearing, I admitted the affirmation on a de bene esse basis, with costs be in the cause.

4.On the first day of the hearing, 27 June 2022, the Defendant issued yet another Summons seeking leave to file and serve the 8^th Affirmation of Leung Eviana Bon Yuen dated 24 June 2022. This affirmation was a belated attempt to answer the Plaintiff’s complaint raised in Mr Chua’s skeleton argument that there was no statement of truth and declaration in compliance with Order 38 rules 37A and 37C from those foreign lawyers who expressed certain opinions on Australian law and New Zealand law. Those opinions are contained in letters exhibited to the Defendant’s affirmations. The Defendant therefore arranged 4 statements of truth and declarations signed by the foreign lawyers, and sought to adduce them as exhibits to this 8^th Affirmation of Leung Eviana Bon Yuen.

5.The Court of Appeal held in Re Kyko Companies and the United States District Court [2020] 5 HKLRD 30, paragraph 68, Lam VP (as he then was) that the prohibition against admissibility for lack of expert declaration under Order 38 rule 37C does not apply automatically to expert evidence set out in affidavits or affirmations, such evidence not being evidence disclosed under those rules. Mr Chua sought to distinguish this case by submitting that as the foreign law evidence sought to be adduced by the Defendant is contained in letters and not affirmations, it is not “expert evidence set out in affidavits or affirmations” as held in Re Kyko. I disagree. Those letters containing foreign law evidence are produced as exhibits to affirmations. They are read by the Court together with the body of the affirmation. I consider such exhibits are part of the affirmations and hence may be regarded as evidence set out in affirmation referred to by Lam VP in Re Kyko. Further, in complaining the lack of declaration under rule 37C, Mr Chua relied on paragraph 69 of Re Kyko. In paragraph 69, Lam VP referred to the requirement to observe the duty of an expert set out in the code of conduct under Appendix D, and remarked that it is applicable to all legal proceedings. His Lordship only referred to the requirement to observe, and did not at all refer to the requirement of making a declaration under rule 37C. It seems clear to me what His Lordship is saying is that whilst filing a signed declaration under rule 37C is not a must, nonetheless observance of his duty as an expert (notably the general duty to the Court set out in paragraphs 2-4 of the code of conduct for expert witnesses, Appendix D to the Rules of the High Court) is a must for all proceedings. For this reason, His Lordship remarked that the expert declaration under rule 37C “only” serves to highlight such duty as a matter of reminder. Therefore, it is not necessary for the Defendant to file the statements of truth and declarations under rules 37A and 37C. In any event, as to be expounded below, determination of the 4 Summonses does not rest upon resolution of foreign law issues. The hearing has yet again been sidetracked on yet another side issue. To minimize the disruption, I allowed this affirmation to be adduced de bene esse, with costs reserved.

B.  FACTS RELEVANT TO DETERMINATION OF THE 4 SUMMONS

B1.  The Deceased and the Subject CDIs

6.The subject matter of this action is 94,165,972 CHESS[2] Depositary Interests in in Astron Corporation Ltd[3] (“ACL”) (“Subject CDIs”). The Plaintiff asserts they form part of the estate (“Estate”) of the late Alexander Gavin Brown (“Deceased”). The Defendant asserts the title to them had already been vested in it when the Deceased passed away.

7.As explained by Mr David Ronald Boyce, branch manager of the Plaintiff, in paragraph 18 (3) of his Affidavit, CHESS Depository Interests are instruments used to enable securities of companies outside Australia, such as ACL (a Hong Kong company), to be traded on the ASX and settled in CHESS. The electronic transfer system used on the ASX known as CHESS cannot be used to transfer securities of Hong Kong incorporated companies. Therefore, depositary instruments known as CDIs are used to facilitate the electronic settlement of such securities. CDI holders obtain all the economic benefits of actual ownership of ACL shares. CDIs confer the beneficial interests in ACL shares on shareholders whilst the legal title to the ACL shares is held by a depositary, CHESS Depositary Nominees Pty Limited, which is a subsidiary of ASX.

8.The Subject CDIs constitute a controlling stake of 77% in ACL. They are currently registered in the name of the Defendant, Kobe Investments Limited (“Kobe” or the “Defendant”). Kobe is a company incorporated in Hong Kong. It is solely owned and controlled by Mr Tiger Brown (“Tiger”).

9.The Subject CDIs are, at the current market price of about A$0.58, worth some A$54.6 million or about HK$300.93 million. In a valuation report by Campbell Jaski, a Partner in the Corporate Value Advisory practice at PricewaterhouseCoopers Australia (instructed by solicitors for Mr Gavin Brown (“Gavin”) in New Zealand), the indicative market value of ACL as at 31 October 2020 was some A$247.4 million (or around HK$1.36 billion).

10.The Plaintiff, Perpetual Trust Ltd (“Perpetual” or the “Plaintiff”) is a statutory trustee company incorporated and registered in New Zealand pursuant to the Trustee Companies Act 1967 of New Zealand. It was appointed, by Order and Letters of Administration of the High Court of New Zealand in CIV 2021-485 on 26 March 2021 (the “NZ Letters of Administration”), as the administrator of the Estate of the Deceased.

11.The Deceased died at the age of 79, in New Zealand, on 30 November 2019. Before his death, he was the President (Executive) and a Director of ACL. He had three children from his first marriage: Gavin, Miss Julia Brown (“Julia”) and Miss Natalie Brown (“Natalie”), and one son Tiger, from his second marriage with Madam Kang Rong (“Madam Kang”).

12.ACL's principal business is mining investment and development in Australia and China. The business was used to be operated by Astron Limited (“AL”), an Australian company listed on the ASX. In 2012, AL re-domiciled the group - Astron Group in Hong Kong SAR by putting in place a new Hong Kong incorporated parent company for the Astron Group, namely ACL. The Astron Group retained a listing on the ASX through ACL as the new parent company, whose shares are traded on the ASX in the form of CDIs. The Deceased had been AL’s Director since 4 February 1988 and ACL’s director since 6 December 2011.

13.It was stated in various public documents published by AL and ACL that, both before and after the re-domiciliation, the Deceased held a controlling stake in AL and ACL:

(1)  2011: Before the re-domiciliation, the Director’s Report[4] in AL's 2011 Annual Report stated that the Deceased, as Managing Director (Executive), held an interest in 44,055,994 shares out of the total 62,294,366 shares, around 70.72% holding. From the list of AL’s 20 largest shareholders in the Investor Information section of the report, the Deceased appeared to hold his interest mainly through the top 2 shareholders, Firback Finance Limited (“Firback”) and P T Arafua Mining Limited (“Arafua”). At that time, Firback was holding 27,866,296 shares, a 44.73% holding in AL, whereas Arafua was holding 16,180,972 shares, a 25.98% holding in AL.

(2)  2012: To introduce the re-domiciliation proposal, AL issued an Information Memorandum dated 7 March 2012. It contained a list of its top 20 shareholders as at 28 February 2012. Firback and Arafua were listed as AL’s top 2 shareholders, respectively holding 27,866,296 shares (a 45.16% holding) and 16,180,972 shares (a 26.22% holding)[5].

(3)  2012: The re-domiciliation was approved, implemented and completed in May 2012. Thereafter, according to the Directors’ Report dated 24 September 2012 included in the 2012 Annual Report of Astron Group (consisting of ACL and the entities it controlled)[6], the Deceased, who was the President (Executive) and Director responsible for the operations of the Group, held an interest in 88,111,988 shares, out of the total 122,479,784 shares, a 71.94% holding, in ACL. In the Key Management Personnel Disclosures section of the report, which is part of the Notes to the Financial Statements[7], under the sub-section of “Shareholdings”[8] (defined as “details of equity instruments (other than options and rights) held directly, indirectly, beneficially or potentially beneficially by key management personnel and their related parties”), after the share swap[9] during the re-domiciliation process, the Deceased’s shareholding was recorded to have been changed from 44,055,994 shares[10] (in AL as at 1 July 2011) to 88,111,988 CDIs (in ACL as at 30 June 2012). Further, it appears from the list of 20 largest CDI holders disclosed in the Investor Information section of the report that the Deceased continued to hold his interest mainly through Firback and Arafua, which were holding 55,732,592 CDIs (a 45.50% holding) and 32,361,944 CDIs (a 26.42% holding) respectively.

(4)  2013: According to the Directors’ Report dated 27 September 2018 included in Astron Group’s Annual Report 2013[11], the Deceased was holding interest in 94,165,972 shares. In the Key Management Personnel Disclosures section of the Notes to the Financial Statements in the report, again under the sub-section of “Shareholdings”[12], it was explained that the Deceased’s interest in shareholding was increased, through purchase of interest in 6,053,984 shares, from 88,111,988 to 94,165,972 shares. Again, as recorded in the list of 20 largest CDI holders disclosed in the Investor Information section of the report, it appears that the Deceased continued to hold his interest through Firback and Arafua, which were holding 61,804,028 CDIs (a 50.46% holding) and 32,361,944 CDIs (a 26.42% holding) respectively, totalling 94,165,972 shares.

(5)  2014 – 2019: ACL's Annual Reports from 2013 to 2019 consistently recorded that the Deceased held interest in 94,183,124 shares in ACL, among which 94,165,972 CDIs were held through Arafua.

(6)  In September 2014, there was a transfer of 61,804,028 CDIs from Firback of Arafua It was evidenced by a Change of Directors' Interest Notice and a Form 604 Notice of Change of interests of substantial shareholder, both filed with the ASX in September 2014. These 2 documents recorded that after the transfer, the Deceased’s interest in ACL shares was held as follows:

(a)  Arafura: 94,165,972 CDIs;

(b)  Firback: 0 CDI; and

(c)  The Deceased: 17,152 CDIs

Total: 94,183,124 CDIs

(7)  After the death of the Deceased on 30 November 2019, ACL filed a Final Director's Interest Notice with ASX, whereby ACL gave ASX the information that when the Deceased ceased to be its director on 30 November 2019, he was the registered holder of 100 shares, and held indirect relevant interest in 94,165,972 CDIs in ACL through Arafua.

B2.  Tiger, Kobe & the Subject CDIs

14.After the Deceased passed away, on 4 December 2019, Tiger was appointed as a Director of ACL.

15.On 12 December 2019, ACL filed an Initial Director's Interest Notice, whereby it gave ASX information that when Tiger was appointed on 4 December 2019, he held “Nil” shares in ACL as registered holder and “Nil” relevant interest (which included interest in a trust) in shares of ACL of which Tiger was not the registered holder.

16.Thereafter, ACL filed a Change of Director's Interest Notice, giving ASX the information that Tiger had acquired an indirect relevant interest in 94,165,972 CDIs in ACL, which were held in the name of Kobe. The “Date of change” was stated to be 19 February 2020, with the “Value/Consideration” at AU$1 only. It was also stated that the change was an “Off market transfer”.

17.On 21 February 2020, Kobe gave a Notice[13] of initial substantial holder to ACL that it had acquired the said 94,165,972 CDIs in ACL, i.e. the Subject CDIs, carrying the voting power of 76.88%, at the cash consideration of AU$1 on 19 February 2020. However, there was an asterisked entry below the date of “19/02/2020”: “Noting the date of transfer was specified as 30/06/2018, however the transfer was registered on 19/02/2020”. Obviously, if the date of transfer was 30 June 2018 as stated in the Change of Director’s Interest Notice, the transfer would have taken place before the death of the Deceased. If however the date of transfer was 19 February 2020, the transfer would have taken place after the death of the Deceased.

B3.  Kobe’s case on the Subject CDIs

18.Kobe avers that the Deceased had no interest in the Subject CDIs either directly or indirectly through Arafua. Kobe said this was the result of a series of transactions. These transactions are pleaded in paragraph 23 of Kobe’s Defence. From what are produced by the Defendant, they are, for reasons which I shall explain below, rather complicated and confused:

(1)  On 25 February 1993, Arafua was incorporated in the British Virgin Islands (“BVI”). Callumberg Ltd (“Callumberg”) and Thornpool Ltd (“Thornpool”) were appointed directors of Arafua. Kirkcowan Ltd (“Kirkcowan”) and Knapdale Ltd (“Knapdale”) were each allotted one fully paid share in Arafua. Kirkcowan and Knapdale, each by a Declaration of Trust dated 25 February 1993, declared that they held one issued share each on trust for the Deceased.

(2)  By a Trust Deed dated 24 November 2005, an Arafua Trust was created. The Settlor was a Ms Karen Tong. The Trustee was ATL Limited. The Settled Sum was USD10.00. The Beneficiaries were Kirkcowan and Knapdale. Asialink Holdings Limited (incorporated in Cook Islands) (“Asialink (Cook Islands)”) was appointed the protector of the Arafua Trust.

(3)  The Deceased was not a named party to the Trust Deed, nor his name was mentioned in it.

(4)  By a Bought and Sold Note dated 24 November 2005, in consideration of USD1.00, Kirkcowan “as nominee for old principal” transferred 1 share of Arafua to Kirkcowan “as nominee for new principal”.

(5)  Also, by a Bought and Sold Note dated 24 November 2005, in consideration of USD1.00, Knapdale “as nominee for old principal” transferred 1 share of Arafua to Knapdale “as nominee for new principal”.

(6)  By two Declarations of Trust again dated 24 December 2005, Kirkcowan and Knapdale respectively declared that they held one issued share in trust for ATL Limited “as trustee of the Arafua Trust”.

(7)  I note that since the creation of the Arafua Trust, the Deceased was not a named party in any of the documents above, nor was his name mentioned, or his signature appearing in, any of the documents above.

(8)  One day after the Arafua Trust was created, on 25 November 2005, a Will of the Deceased was executed (“2005 Will”). The 2005 Will named Madam Kang as the executrix of the Estate. In the 2005 Will, Madam Kang was appointed as the Deceased’s executor. It also stated that, “As to my present assets, I direct my Executors to pay all my debts and then I give the balance of my Estate to Kang Rong …”. It also contains the following passages:

“ Other Assets

- I here bye (sic) state that as for shares in Astron Limited I believe I have never had any interest in Astron shares.

- I understand however that Astron shares are held in 2 discretionary trusts managed by independent trustees and it could have been possible in the future for me to become a potential beneficiary and that this is disclosed in the required disclosure to the Australian stock exchange of Astron Directors interests.

- For the avoidance of any doubt, if in any way I am deemed to have any interest in the shares, then it is my wish that [sic]

o With respect to any shares registered in Firback Finance Limited, a company owned by the Firback Trust, the interest be allotted to Natalie Helen Brown, Gavin William Brown and Julia Marcella Brown equally

o With respect to any shares registered in P.T. Arafua Mining Limited a company owned by the Arafua Trust, and any other registered owners, then the interest be allotted to Tiger Alexander Brown and held in trust for him to meet his educational and living expenses as decided by his guardian and until he has completed his University postgraduate degrees and 3 years of practical experience (or turned 30 years old)”

(9)  My immediate observation is that in this 2005 Will the Deceased did not state, “As for shares in Astron Limited I believe I do not have any interest in Astron shares.” What he stated was: “as for shares in Astron Limited I believe I have never had any interest in Astron shares” (emphasis underlined).

(10)  Obviously, the Deceased’s said unqualified statement in the 2005 Will, that he believed he has never had any interest in the shares of AL, is incorrect. First, this statement does not tally with what were recorded and represented to the public in AL’s 2011 Annual Report as mentioned in paragraph 13(1) above (that the Deceased still held a majority interest in the company in 2011). Second, it is contrary to the two Declarations of Trust dated 25 February 1993 (referred to in paragraph 18(1) above) by Kirkcowan and Knapdale that the 2 shares in Arafua were held by them on trust for the Deceased. Third, the Arafua Trust was created on 24 November 2005. Assuming (and I express no view one way or the other) the effect of the above-mentioned two Bought and Sold Notes and two Declarations of Trust all dated 24 November 2005 was to strip off the Deceased’s beneficial shareholding in AL through Arafua, this occurred just one day before the 2005 Will was executed. It would be very strange for the Deceased to state baldly in the 2005 Will that he has never had any interest in the shares of AL.

(11)  Moreover, the Court heard no explanation from Kobe as to how the two shares in Arafua became the property of the Arafua Trust. In the Trust Deed dated 24 November 2005, ATL Limited was the trustee, Kirkcowan and Knapdale were the beneficiaries and the Settled Sum was USD10.00. Although two shares in Arafua were transferred to ATL Limited as beneficial owner by the two Bought and Sold Notes as mentioned in paragraph 18(3), (4) & (5) above, these two shares did not, at least on the face, become the property of the Arafua Trust. The fact that ATL Limited was the trustee of the Arafua Trust does not automatically enable the two shares in Arafua which it owned beneficially to become an asset of the Arafua Trust.

(12)  On 3 January 2006, the board of ATL Limited ratified and confirmed the appointment of Kirkcowan and Knapdale as its nominees to hold one share each in Arafua in trust for ATL Limited. Under this arrangement, Kirkcowan and Knapdale were the trustees holding two shares in Arafua for ATL Limited. This was exactly the opposite to the arrangement of the Arafua Trust where ATL Limited was the trustee and Kirkcowan and Knapdale were the beneficiaries.

(13)  On 21 May 2012, upon the share swap during the re-domiciliation process mentioned above, 32,361,944 CDIs were converted from 16,180,972 shares in AL held by Arafua prior to the re-domiciliation scheme and were received by Arafua.

(14)  On 2 September 2014, Firback transferred 61,804,028 CDls in ACL to Arafua for a consideration of A$18,541,208.

(15)  By 2 September 2014, Arafua came to own the Subject CDIs, i.e. 94,165,972 CDIs (32,361,944 + 61,804,028 CDls) in ACL.

(16)  Tiger, exhibited[14] an undated Standard Form of Transfer of 94,165,972 shares of ACL. In paragraph 52 of his 1^st Affirmation Tiger stated that the Deceased signed as director of Kobe as the Transferee in escrow. However, the name of Kobe did not appear anywhere in the form and there is no witness to that signature. The name of the Transferee was left blank in the form. Arafua was named as the Transferor but no signature was appended on behalf of Arafua. So is the consideration for the transfer, which is left blank. This form, even in escrow, is perplexing on its face.

(17)  There was then exhibited by Tiger a Memorandum of Wishes[15] (the “Memorandum”). Tiger said at paragraph 53(1) of his 1^st Affirmation that the Deceased passed the Memorandum to ATL Limited on 12 April 2018. However, it was not dated. In essence, the Memorandum referred to the Arafua Trust and its Trust Deed executed by the Settlor[16] and directed ATL Limited as the Trustee to follow all instructions from Madam Kang. The Deceased is supposed to be the issuer of this Memorandum and signed it. However, in the Memorandum, “we” are often used: “We refer to the Deed of Settlement …”, “We wish you to act …”, “We do not wish that …”. Also, the Settlor of the Arafua Trust, Ms Karen Tong did not sign the Memorandum. It is therefore not understood in what capacity the Deceased was named as the issuer of this Memorandum or in what capacity under the Arafua Trust the Deceased personally was entitled to give instructions to ATL Limited as Trustee on matters of the Arafua Trust.

(18)  Further, in the Memorandum, there is no mention of Kobe.

(19)  Up to this stage, there was still no explanation given to the Court as to how the Subject CDIs or how the two shares in Arafua which in turn held the Subject CDIs became part of the property of the Arafua Trust.

(20)  Tiger, in paragraph 53(2)(a) of his 1^st Affirmation, exhibited a letter from Madam Kang to ATL Limited dated 29 June 2018. In this letter, Madam Kang referred to the Memorandum and suggested to ATL Limited to appoint Kobe as a beneficiary of the Arafua Trust and distribute the beneficial interest in the said two shares in Arafua absolutely and exclusively to Kobe.

(21)  As said above, as I do not understand in what capacity the Deceased issued the Memorandum or in what capacity under the Arafua Trust the Deceased personally was entitled to give instructions to ATL Limited as Trustee, I do not understand, and there is no explanation given to me, on what basis ATL Limited was obliged to act according to the instruction of Madam Kang.

(22)  Further, in this letter dated 29 June 2018 Madam Kang also referred to the beneficial interest in all the issued shares in Arafua as part of the property of the Arafua Trust. As explained above throughout, the Court saw no evidence and heard no explanation from Kobe as to how the shares in Arafua became property of the Arafua Trust.

(23)  Anyhow, all the relevant companies, including ATL Limited, followed Madam Kang’s instruction to ATL Limited in the said letter dated 29 June 2018 purportedly given pursuant to the Memorandum and acted accordingly:

(a)  On 29 June 2018, both ATL Limited and Asialink Holdings Limited (incorporated in Republic in Seychelles) ("Asialink (Seychelles)")[17] resolved to nominate Kobe as a beneficiary to the Arafua Trust and approved the distribution of the issued shares in Arafua to the Defendant absolutely and exclusively.

(b)  Also on 29 June 2018, ATL Limited and Asialink (Seychelles) executed a Deed of Addition of Beneficiary Supplemental to the Arafua Trust adding Kobe as a beneficiary to the Arafua Trust.

(c)  On 30 June 2018, Asialink (Seychelles), ATL Limited, Kobe and Tiger executed a Deed of Appointment and indemnity Supplemental to the Arafua Trust paying and applying the issued shares in Arafua unto Kobe absolutely and exclusively.

(d)  Also on 30 June 2018, Kirkcowan and Knapdale each executed a Declaration of Trust declared that it each held one of the two issued shares in Arafua on trust for Kobe.

(e)  Also on 30 June 2018, the board of Arafua approved the intended transfer of the Subject CDls to Kobe and the appointment of a Ms Tong Chau Har and a Ms Tse Wai Yin to represent Callumberg and Thornpool (i.e. directors of Arafua) to sign the relevant documents to effect the Arafua Transfer[18].

(f)  I should point out at this juncture none of the above documents in sub-paragraph (23) above bore the Deceased’s signature, whether personally or on behalf of others.

(g)  More than one year after the execution of the above documents in June 2018, on 2 December 2019, which was two days after the passing away of the Deceased on 30 November 2019, Tiger signed a written resolution of the board of Kobe, resolving that the prior transfer of the beneficial interest in two shares in Arafua to Kobe and the appointment of Kirkcowan and Knapdale as Kobe’s nominees to each hold one share in Arafua in trust for Kobe be ratified and confirmed.

(h)  Also on 2 December 2019, Callumberg and Thornpool, as directors of Arafua, signed on behalf of Arafua a Standard Transfer Form. In this Standard Transfer Form, Arafua, as the “seller”, for a consideration of A$1, sold the Subject CDIs to Kobe as the “buyer”. Tiger signed for Kobe as its director. It should be noted this form is a form completely different from the other Standard Form of Transfer said to be signed by the Deceased “in escrow” (see paragraph 18(16) above). Again, this is perplexing.

(i)  In paragraph 53(4)(b) of his 1^st Affirmation, Tiger said by this Standard Transfer Form signed on 2 December 2019, Arafua duly effected the Arafua Transfer. However, this statement seemingly conflicts with the documents referred to in paragraphs 15, 16 & 17 above, one of which was signed by Tiger himself:

i.  Tiger stated the transfer was effected on 2 December 2019. This statement contradicts the Initial Director's Interest Notice filed by ACL with ASX on 12 December 2019 which stated that Tiger had no relevant interest (which included interest in a trust) in shares of ACL of which he was not the registered holder.

ii.  Tiger’s statement is also inconsistent with the Change of Director's Interest Notice filed by ACL with ASX which stated that the “Date of change” was 19 February 2020 when Tiger acquired an indirect relevant interest in 94,165,972 CDIs in ACL, which were registered in the name of Kobe.

iii.  Tiger’s statement is further contradicted by the “Notice of initial substantial holder” to ACL, which was signed by Tiger on 21 February 2020 as Kobe’s director. This Notice stated that the date which Kobe became ACL’s substantial holder of the Subject CDIs was 19 February 2020, not 2 December 2019 as stated by Tiger. Even considering (as mentioned in paragraph 17 above) the note printed at the end of the first page of the Notice, which stated that the date of transfer was (in fact) specified as 30 June 2018, although the transfer was registered on 19 February 2020, there was no transfer taking place on 30 June 2018 according to the Defendant’s case. As mentioned in paragraph 18(23)(d) & (e) above, on 30 June 2018, two Declarations of Trust were signed and Arafua’s board approved the “intended” transfer, but the transfer did not take place on that date.

(j)  On 26 April 2021, the board of Arafua approved the transfer of each of the two shares from Kirkcowan and Knapdale to Boardroom Nominee (HK) Limited (“Boardroom Nominee”).

(k)  On 27 April 2021, by an instrument of transfer, Boardroom Nominee acquired each of the two issued share from Kirkcowan and Knapdale, and Boardroom Nominee by a Declaration of Trust declared that it held the two shares in Arafua on trust for Kobe. Kobe pleads, at paragraph 24(d) of the Defence, that it is one of the matters by reason of which the transfer of the Subject CDIs was validly effected by Arafua in favour of Kobe. This step is to this Court all the more perplexing. If, as mentioned in paragraph 18(23)(h) above, the transfer had already been effected on 2 December 2019 by the Standard Transfer Form. The Subject CDIs had already been transferred from Arafua directly to Kobe. Arafua had already fulfilled its function. Kobe did not provide any explanation to the Court as to the purpose and relevance of these steps taken on 27 April 2021.

B4.  New Zealand Proceedings

19.There is little or no controversy over this part of the facts. I recite them mainly following the Plaintiff’s skeleton argument.

20.On 30 November 2019, the Deceased passed away in Auckland, New Zealand. He was survived by:

(1)  the children from his first marriage: Natalie, Gavin, Julia, and four grandchildren; and

(2)  Madam Kang, his spouse at the time of his death and their son, Tiger.

21.At that time, no will of the Deceased could be found.

22.On 16 March 2021, the High Court of New Zealand granted the NZ Letters of Administration appointing Perpetual as the administrator of the Deceased's Estate.

23.In late September 2021, the 2005 Will was discovered in Hong Kong by Boardroom Corporate Services (HK) Ltd (“Boardroom Corporate”). Boardroom Corporate is a Hong Kong company that provides corporate secretarial services, and which acquired the company secretarial division of RSM Nelson Wheeler Hong Kong (“RSM”) in June 2005. RSM was a provider of tax, accounting, and audit services, and had been retained by the Deceased. Boardroom Corporate was “clearing out hard copy documents” when it chanced upon the original 2005 Will.

24.After discovery of the 2005 Will, seven legal proceedings concerning the Estate have been commenced, all in New Zealand except for this action:

(1)  On 7 September 2021, Perpetual issued in Hong Kong the Writ in the action and the Injunction Application.

(2)  On 24 November 2021, Gavin filed proceedings in New Zealand against Madam Kang and Perpetual seeking, among others, an injunction preventing Madam Kang from applying for a grant of probate with the 2005 Will.

(3)  On 29 November 2021, Madam Kang applied in New Zealand under the New Zealand Property (Relationships) Act 1976 for various orders that affect the division and entitlement of and in the Estate;

(4)  On 30 November 2021, Tiger filed in New Zealand a claim against Perpetual seeking the transfer of four New Zealand properties from Perpetual to him.

(5)  On 3 December 2021, Madam Kang filed in New Zealand a without notice application for the recall of the NZ Letters of Administration and for grant of probate in common form (“NZ Probate Action”). Gavin and Natalie have each filed a notice of caveat.

(6)  On 3 February 2022, Madam Kang commenced proceedings in New Zealand under the New Zealand Family Proceedings Act 1980 seeking a declaration of the validity of her marriage to the Deceased. This declaration was granted on 3 May 2022.

(7)  On 9 March 2022, Gavin commenced proceedings in New Zealand under the Family Protection Act 1955 seeking provision from the Estate for his maintenance and support. Interested persons include the Deceased's other children from his first marriage, and four grandchildren.

(8)  On 22 April 2022, Madam Kang's New Zealand Counsel filed a Memorandum of Counsel within the NZ Probate Action seeking to convene an “urgent teleconference to discuss the progression of the issues related to administration of the estate”. It was specifically submitted that “priority needs to be given to the determination of who should be administering the deceased's estate”.

(9)  On 9 May 2022, Perpetual’s New Zealand Counsel filed a Memorandum of Counsel in the proceedings described in paragraph 24(5) above, agreeing with Madam Kang’s Counsel that “the question of who should be the executor / administrator of the estate is the first issue that requires determination”. On 3 June 2022, in the same proceedings, Woolford J ordered by consent that Madam Kang was to file an application for probate in solemn form by 14 June 2022.

(10)  On 13 June 2022, Madam Kang filed in New Zealand her application for probate in solemn form, and served it on 15 June 2022 (“NZ Probate Action”).

25.So much is the fact. I shall first deal with the Defendant’s Strike Out Application.

C.  THE STRIKE OUT APPLICATION

26.The Defendant contends that the Plaintiff has no standing to commence and/or continue with the present action as it has failed to obtain a grant in Hong Kong by resealing the NZ Letters of Administration and the action is thus a nullity. Mr Marc Corlett (with Mr Jeff Yau) of Counsel, for the Defendant, submit that on this ground alone, the Plaintiff’s claim ought to be dismissed.

27.This Court is bound to agree with Mr Corlett, for the reasons below.

28.The general rule is that a grant of representation to represent a deceased person under the law of a foreign country has no operation per se in Hong Kong. No person will be recognised by the Hong Kong courts as a deceased’s personal representative unless and until he has obtained a grant of probate or letters of administration in Hong Kong, see Dicey, Morris & Collins on The Conflict of Laws, 15^th ed, 2012, paragraph 26-037.

29.Section 49 of the Probate and Administration Ordinance enables letters of administration granted by a foreign country to take effect in Hong Kong through the process of resealing:

“Where a court of probate in a designated country or place has granted probate or letters of administration in respect of the estate of a deceased person, the probate or letters so granted may, on being produced to, and a copy thereof deposited with, the court, be sealed with the seal of the court, and thereupon shall be of the like force and effect, and have the same operation in Hong Kong as if granted by that court.”

30.Not having his foreign letters of administration resealed in Hong Kong, a foreign representative of the deceased cannot sue in his character of foreign personal representative in Hong Kong, see Dicey, Morris & Collins on The Conflict of Laws, ibid., paragraph 26-037.

31.If the foreign representative sues notwithstanding he has not obtained resealing of his foreign letters of administration, since his foreign letters of administration do not take effect in Hong Kong, he has no standing to sue as the deceased’s personal representative in Hong Kong.

32.In Lam Sik Ying v Lam Sik Shi & anor. [2020] HKCA 659 at [32-40], the Court of Appeal, per Lam VP (as he then was) held as follows:

“32. HCA 4713/2001 was commenced by Victor in his capacity as the administrator of the Estate. Also, as regards the present appeal, Victor purported to file and serve the Notice of Appeal and the Notice of Setting Down an Appeal as the administrator of the Estate.

33. Actually, before Victor filed the Notice of Appeal on 13 December 2017, Victor had been removed as the administrator of the Estate by Chow J's Decision dated 4 September 2017 in HCA 1974/2015. Mr Ng Kin Yuen has become the administrator of the Estate in his stead.

34. In light of this, Mr Alan Yung, counsel for Tony, submitted that Victor, being only a beneficiary of the Estate, does not have locus standi to proceed with the present appeal. He relied on Re the Estate of Luk Kim Ying [2008] HKLRD 743 at [22], where Poon J (as he then was) stated that:

“ … in the absence of a grant, a purported beneficiary such as the plaintiff simply does not have the locus to sue on behalf of the estate. For it is trite that a party cannot purport to sue on behalf of an intestate estate unless and until that person is granted the letters of administration: Ingall v Moran [1944] KB 160. Any action commenced by such a party purportedly on behalf of the estate must be struck out.”

35. The principle in Ingall v Moran (cited in Re the Estate of Luk Kim Ying) was also considered in Millburn-Snell v Evans [2012] 1 WLR 41 at [16], in which the English Court of Appeal described as “clear law” that “an action commenced by a claimant purportedly as an administrator, when the claimant does not have that capacity, is a nullity”.

36. This line of authorities was followed in Wong Lai Mei v Kwong Pak Leung [2015] 1 HKLRD 888. In that case, the plaintiff brought proceedings against the defendant purportedly as the intended administratrix of the deceased's estate without obtaining a grant of letters of administration. Recorder Pow SC considered Millburn-Snell v Evans (at [17]) and held that “the bringing of the action and the filing of the Writ in the present case was a nullity ab initio. As Scott LJ said in Ingall, this action was born dead and could not be revived” (at [23]).

37. We agree that it is trite that a beneficiary cannot purport to sue on behalf of an estate unless and until that person is granted the letter of administration. Although Victor had been appointed as the administrator of the Estate on 24 March 1999, he was removed from such appointment on 4 September 2017. Thus, he did not and does not have the capacity to file and serve the Notice of Appeal or to proceed with the appeal on behalf of the Estate.

38. Upon Victor's removal, only the incumbent administrator of the Estate (i.e. Mr Ng Kin Yuen) has the capacity to bring the present appeal on behalf of the Estate.

39. Victor filed the Notice of Appeal purportedly as the administrator of the Estate when he had already been removed. He did not bring the appeal in his personal capacity as a purported beneficiary of the estate (in which case he ought to have joined the incumbent administrator as a necessary party to the appeal).

40. In the circumstances, the appeal was a nullity and ought to be struck out.”

33.Lam Sik Ying involves lodging of an appeal by an administrator on behalf of an estate when he has already been removed. It does not involve commencement of action by a foreign administrator as in the present case. However, as explained above, a foreign administrator who has not obtained the resealing of his foreign letters of administration in Hong Kong pursuant to section 49 of the Probate and Administration Ordinance will not be recognized by the Hong Kong courts as a deceased’s personal representative. He is no difference in any material respect from any person who does not have any standing to represent the estate of the deceased. As such, in the same way as held by the Court of Appeal in Lam Sik Ying, any action that this foreign administration brought was a nullity and ought to be struck out.

34.The Writ in the present action was issued on 7 September 2021, by the Plaintiff in its capacity as the administrator appointed by the High Court of New Zealand[19]. Although the Plaintiff has applied on 23 September 2021 in Hong Kong Probate Action No. HCAG015815/21 to reseal the NZ Letters of Administration[20], the resealing has not yet been granted[21]. As such, the Plaintiff actually has no status in so far as the administration of the Hong Kong assets of the Estate is concerned. It is quite right for Mr Chua to describe his client as “intending administrator” in the Plaintiff’s skeleton argument.

35.I therefore consider myself to be bound by Lam Sik Ying and find that the Plaintiff did not and does not have the capacity to file and serve the Writ of Summons or to proceed with this action on behalf of the Estate. This action was a nullity and must be struck out.

36.In an attempt to salvage the dire consequence, Mr Chua submitted that the Plaintiff commenced this action to safeguard the Subject CDIs, which at least arguably belong to the Estate. He admitted that the action was commenced before the NZ Letters of Administration could be resealed. But he submitted that this only renders this action an irregularity, rather than a nullity. He relied on Ip Cheung Kwok v Sin Hua Bank Trustee [1990] 1 HKLR 497, and submitted that the Court of Appeal in that judgment contrasted (1) the situation when an action was liable to be struck out if it continued without applying for a representation order for the estate or a stay to enable him to apply for a grant (at 514I); and (2) cases where an action was brought in the name of a deceased, or non-existent person, which actions would be a nullity (at 515G, 523D-E).

37.Mr Chua seemed to suggest that the present case falls into the first situation. If so, I disagree. I consider that the present case falls squarely within the second situation. It is exactly because the Plaintiff commenced this action on behalf of, and in the name of the Estate of the Deceased, a capacity which it did not have, that this action had been a nullity.

38.The Court of Appeal held the proceedings in Ip Cheung Kwok to be irregular but not null because the plaintiff there sued not in the name of the estate of the deceased but in his personal capacity, seeking a declaration that he was “the beneficiary of the estate” of the deceased. The real question in Ip Cheung Kwok is therefore whether proceedings begun in the absence of personal representative of the deceased were a nullity. At 515F of the judgment, Clough JA explained:

“Assuming lngall v. Moran [1944] KB 160 (C.A.) and the cases which applied it to have been rightly decided on the nullity point, I consider the facts of the present case to be distinguishable. In Ingall v. Moran the plaintiff purported to bring proceedings in a capacity which he did not have. In some respects it was analogous to a case where proceedings are purportedly brought in the name of a deceased person: see Tetlow v. Orela Ltd. [1920] 2 Ch 25 and c.f. Dawson (Bradford) Ltd. v. Dove [1971]1 QB 330. However, in the present case, the plaintiff brought proceedings in his personal capacity and as a claimant to a sole beneficial entitlement to the settlor's estate (a claim yet to be determined) for relief which, in my judgment, the court strictly had jurisdiction to grant him (assuming he established that he was the settlor's sole next of kin) but would not as a matter of judicial practice grant him in the absence of the personal representative of the settlor or a party representing his estate.

Thus if the plaintiff had obtained a grant at any stage during the trial and had then applied for leave under Order 20, rule 5(1) to plead his new capacity, I cannot think that it would have been right to refuse him leave on the ground that the proceedings were a nullity.”

It should be noted that Ingall v Moran, a judgment by the English Court of Appeal, has been expressly followed by the Court of Appeal in Lam Sik Ying, which I consider to be bound.

39.In the present action, as mentioned above, the Plaintiff is not suing in its personal capacity but on behalf of the Estate, in reliance on its capacity as the New Zealand administrator appointed under the NZ Letters of Administration as well as the “intending” administrator in the process of applying for resealing of the NZ Letters of Administration. However, the only way which would give the Plaintiff right to do so is the authorization from the Hong Kong Court by resealing the NZ Letters of Administration.

40.The decisive factor, for the purpose of determining whether an action is null, is not whether the plaintiff has applied for letters of representation or specifically in the present case, resealing of the foreign letters of representation, but in what capacity the plaintiff was when he commenced the action.

41.Mr Chua further submitted that the Hong Kong court in general, follows a foreign grant. To prevent injury being done to a deceased person's estate without remedy, the courts have adopted the doctrine of “relation back”, that on the grant being made the administrator's title relates back to the time of death. As and when the letters of administration are resealed, the Plaintiff will apply to amend the Writ and the Statement of Claim to alter the capacity that it would have “since acquired”. Mr Chua relied on the doctrine of “relation back” as expounded in paragraphs 647 and 649 of Halsbury’s Law of England, Vol. 103, 5^th ed. 2021 and Order 20 rule 5(4), as explained in Hong Kong Civil Procedure 2022 at paragraph 20/8/18.

42.In my view, this submission is beside the point. The only thing that counts is whether the Plaintiff had the authority to sue in the name of the Estate of the Deceased when it issued the Writ in this action. The Plaintiff would have had the authority if it had obtained either (a) letters of administration issued by the High Court of Hong Kong or (b) letters of administration issued by the High Court of New Zealand and resealed by the High Court of Hong Kong. It had neither. The action is therefore a nullity. It matters not since the Hong Kong Court usually follows a foreign grant, it will likely reseal the NZ Letters of Administration. It matters not if resealed, the Plaintiff’s title as the administrator will relate back to the time of the Deceased’s death. This was well explained by Luxmoore LJ in Ingall v Morgan [1944] KB 160 at 169:

“It is true that a person who ultimately becomes an administrator may start proceedings in the Chancery Division for the protection of an intestate's estate, and can obtain in a proper case interim relief by the appointment of a receiver pendente grant, but in all such cases the person who institutes such proceedings has a beneficial interest in the intestate's estate, for he would not obtain a grant unless he had such an interest either as heir at law or as one of the next of kin or as a creditor. In such cases the well-recognized practice in the Chancery Division is to endorse the writ in the first instance for the only relief then obtainable, namely, the appointment of a receiver pendente grant, and to apply to amend the writ after the grant has been obtained, if further relief is required, by adding a claim for administration of the estate with or without specific directions with regard to any special relief required. A study of the cases referred to in the argument, and relied on in support of the supposed difference between the common law and chancery practice, makes this position clear. … I have no doubt that the plaintiff's action was incompetent at the date when the writ was issued, and that the doctrine of the relation back of an administrator's title to his intestate's property to the date of the intestate's death when the grant has been obtained cannot be invoked so as to render an action competent which was incompetent when the writ was issued.”

43.Order 20 rule 5(4) does not assist the Plaintiff either. This rule opens the possibility for a plaintiff to alter the capacity in which he sues to a new capacity which he has acquired after the commencement of the proceedings. As paragraph 20/8/18 of the Hong Kong Civil Procedure 2022 explains, this rule allows a party to amend the capacity in which he sues as administrator after the grant of administration even though this may take place after the issue of the writ, thus negativing the earlier cases on this subject. In other words, although the letters of administration are granted to the plaintiff after the commencement of the proceedings, a plaintiff may still apply for an order to allow him to continue with the proceedings in his new capacity as the administrator. For example, if a plaintiff sues in his personal capacity as a beneficiary of an estate when he commenced the proceedings, when he subsequently obtained the letters of administration, he may apply to the Court to change his capacity and sue as the administrator. However, this rule cannot save the proceedings from being a nullity if he issued the writ in the name of the Estate, because he was incompetent to do so at the date of issuance of the writ. What he can apply for and obtain later cannot help. The proceedings were born dead.

44.Mr Chua, in his usual eloquence, asked me not to follow Lam Sik Ying and adopt instead what he describes the modern approach which is to cure irregularities whenever possible and to avoid undue technicalities in the interests of justice. In his submission, the Court should recognize the commencement of this action before resealing was an irregularity which can be cured; hence pending the resealing of the NZ Letters of Administration, should grant a temporary stay of the action, so that upon the resealing, the Plaintiff may apply under Order 20 rule 5(4) to amend to alter its capacity under the relation back doctrine whereby an administrator can rely on title subsequently acquired, which relates back to the time of death.

45.He relied on a per incuriam suggestion by the English Court of Appeal in FSHC Group Holdings Ltd v GLAS Trust Corpn Ltd [2020] Ch 365 at [136] that a court is not bound by a proposition in law which was not the subject of an argument because it was not disputed in an earlier case even if that proposition formed part of the ratio decidendi of the case.

46.In Lam Sik Ying, the proposition in law is whether an action commenced by a person in the name of an estate of a deceased without obtaining letters of administration is a nullity. This is exactly the subject of the argument in that appeal, being the main ground in the application to strike out the Notice of Appeal. It is because of the answer to this argument that the Court of Appeal struck out the subject appeal, see paragraphs 31-40 of Lam Sik Ying.

47.I therefore have no power not to follow this proposition in law in Lam Sik Ying, being its ratio.

48.As to whether I should exercise the Court’s case management power to order a temporary stay, so that these proceedings could be continued after the Plaintiff has obtained the resealing of the NZ Letters of Administration, I am afraid I do not have such power to do so when the action commenced by the Plaintiff is already a nullity. The Court’s discretion to apply the overriding objective to enable cases to be dealt with justly under the general case management powers of the Court does not confer a jurisdiction on the Court to cure defects in proceedings which are a nullity, see Kimathi and others v Foreign and Commonwealth Office (No 2) [2017] 1 WLR 1081, [17-19].

49.Lastly, I should comment on the English Queen’s Bench Division’s judgment in Caudle v L D Law Ltd [2008] 1 WLR 1540, which Mr Chua relied on. At [32, 34, 36], Wyn Williams J says as follows:

“32 In Sherrin & Bonehill, The Law and Practice of Intestate Succession, 3^rd ed (2004), para 3-002 the authors write: “The powers of an administrator to act before grant are exceptional and limited in effect to essential actions to preserve and protect the deceased’s estate.” No authority is provided for that proposition but, as it seems to me, it would be an extraordinary state of affairs if that were not so. If the trespasser in the example set out in para 24 above was not merely refusing to release the property to B but was in the process of destroying the deceased’s property it would appear extremely strange if nothing could be done, immediately, to prevent it.

34 I do not accept that the law confers the right to take immediate possession of property upon an individual but, none the less, says that such a right cannot be enforced by legal action in the courts of England and Wales. I can think of no principle or practical reason why that should be so and in the absence of clear authority I would not be prepared to accept that the law is such. …

36. On the basis of the passage in Sherrin & Bonehill it is clear, in my judgment, that a person who is entitled to the grant of letters of administration has an immediate right to possession of personal property formerly owned by a deceased if it is necessary that he takes possession to safeguard the estate. As I have found, such a person also has the right to take legal action to enforce that right.”

50.I do not accept the above paragraphs from Caudle is the accurate statement of law in Hong Kong for the purpose of this case. This is because firstly there is no authority cited in support. The learned judge referred to the textbook Sherrin & Bonehill, The Law and Practice of Intestate Succession only but even in making that proposition the textbook did not provide for any authority in support. Secondly, in the judgment the learned judge did not refer to Ingall or Millburn-Snell v Evans quoted and followed in Lam Sik Ying that I extract in paragraph 32 above, nor were these cases referred to in argument. Thirdly, without taking into account Ingall, which was directly on point and apparently a binding authority, the above remark of Wyn Williams J is, in my respectful view, per incuriam. Fourthly, in terms of substance, in my respectful view, whilst the above remark bears practical sense, it does not address the problem of lack of authority of an “intending” administrator. An executor’s authority is derived from the will which named him as the executor, hence for preservation of the assets of the estate he may commence proceedings before grant of probate. In contrast, an administrator derives his authority only from the grant. Before the grant, there is nowhere from which an “intending” administrator can derive his authority to act on behalf of the estate[22]. To put it more bluntly, particularly in the present case where the Plaintiff is not a beneficiary, a so-called “intending” administrator is just a person who is in the process of asking the Court to appoint him as the administrator. If there are competing applicants for the appointment, the rhetorical question to be asked is which one of them is entitled to commence proceedings on behalf of the estate, or is every one of them is entitled to do so? If the Plaintiff considered the NZ Letters of Administration gave it the sufficient connection to the Estate for protection of the Estate’s potential asset, i.e. the Subject CDIs, instead of commencing this action outright before resealing of the NZ Letters of Administration, I think the better course might be for Kobe to apply for appointment of the administrator pendente lite solely for the purpose of commencing this action.

51.Mr Chua referred me to the judgment of Deputy High Court Judge Horace Wong SC in Re Yien Chi Ren [2009] 5 HKLRD 413 where the learned deputy judge relied on Caudle and expressed the view at paragraphs 15-19 that it was only in exceptional circumstances, where urgent actions were required to protect the estate, that beneficiaries potentially entitled to apply for a grant of letters of administration could take proceedings before grant. But that case is clearly distinguishable from the present case. Re Yien Chi Ren concerns with an application to appoint a beneficiary under a disputed will as the sole administratrix pendente lite to bring and defend legal proceedings limited to the purpose of protecting and preserving the interest if the estate in a business owned by the deceased before his death. In that case, no action was commenced on behalf of the estate by the intending administrator as in the present case. It was exactly because the learned deputy judge considered necessary to ensure that the other legal proceedings were properly constituted and did not fail merely on the ground that no letters of administration have been granted because of the disputes in the probate action, see paragraph 24 in Re Yien Chi Ren. Hence, the view expressed by the learned judge is more of obiter. Moreover, neither Ingall nor Millburn-Snell was discussed in Re Yien Chi Ren. The learned deputy judge’s view was more likely made per incuriam, and I respectfully beg to differ.

52.I understand all the Plaintiff is doing in this action is for protection of the assets of the Estate, and in my view, there are certainly doubts on Kobe’s title in the Subject CDIs which cry out for clarification[23]. Whilst, same as what Luxmoore LJ expressed at the end of his judgment in Ingall, I cannot help feeling some regret, I have no doubt that the Statement of Claim must be struck out and the present action dismissed on the ground that it is a nullity.

D.  THE INJUNCTION APPLICATION

53.Since the Statement of Claim has been struck out and this action has been dismissed, the Injunction Application must also be dismissed.

54.If I am held to be wrong on the Strike out Application, and if this action is held to be able to survive in spite of the fact that the Plaintiff, on behalf of the Estate, brought the action without having its NZ Letters of Administration resealed in Hong Kong, I would accede to the Injunction Application. I shall set out the reasons briefly below.

D1.  Serious issue to be tried

55.I consider there is a serious issue to be tried, namely whether at the time of his death, the Deceased owned a beneficial interest in the Subject CDIs. If the answer is in the affirmative, the Deceased’s interest in the Subject CDIs shall form part of the Deceased’s Estate.

56.As noted in paragraph 13 above and its footnotes, there were produced to this Court many public records and documents of AL and ACL from about 2011 up to the death of the Deceased on 30 November 2019 showing that the Deceased beneficially owned, or in the least had interest in, the Subject CDIs. They include annual reports, directors’ reports, information memorandum, declarations made pursuant to board resolutions, directors’ interest notices, notices of change of interests of substantial shareholders, final director’s interest notice etc. They were submitted to or filed with ASX. Some of them were signed by the Deceased himself. I have reminded myself particularly that these documents could not be conclusive, given they are not primary documents showing the ownership or interest of the Subject CDIs. Nonetheless, if the Defendant’s assertion is correct, what were stated in all these documents were in fact all untrue. These does not only amount to repeated false misrepresentations to the stock exchange for a prolonged period (from 2011 to 2019) but would probably attract investigation from the regulatory authorities. Therefore, I would not dismiss the truthfulness of the contents of these documents lightly, as Mr Corlett asked me to.

57.On the other hand, the public records and documents do serve to contradict the documents produced by the Defendant. I reject Mr Corlett’s submission that the public records and documents are irrelevant as they did not record the intention of the Deceased and Arafua and did not form part of the transaction documents (produced by the Defendant).

58.As noted in paragraph 18 above, I have great difficulty in grappling with the contents of those documents produced by the Defendant. I have pointed out in that paragraph many observations which I find perplexing, illogical, hard to understand, unexplained or internally inconsistent. I have borne in mind that this is not the trial of the action, and it is not necessary to reach any definitive view. But with those observations that I made in paragraph 18 above, I find it wholly unsatisfactory to conclude in any way that the Deceased had disposed of all his interest in the Subject CDIs before his death. To the contrary, on the current state of evidence, I have no doubt to hold that there is a serious issue to be tried, as to whether the Subject CDIs form part of the Estate.

59.On the Defendant’s contention that in any event by the 2005 Will the Subject CDIs either has been vested in Tiger or has formed part of the residuary estate of which Madam Kang is the sole beneficiary. I agree with Mr Chua that this is a matter not for this Court in these applications but for the New Zealand Court in the NZ Probate Action to determine.

D2.  Balance of Convenience

60.It is not seriously disputed that the Plaintiff’s claim, i.e. the ownership of the Subject CDIs, is proprietary. In such kind of claim, the plaintiff will more readily be afforded interim remedies, in order to preserve the asset which he is seeking to recover, than one who merely seeks a judgment for debt or damages. Since preservation of the asset in dispute is of primal importance, questions of balance of convenience and preservation of the status quo ante are not of much relevance. See Republic of Haiti v Duvalier [1990] 1 QB 202 per Staughton LJ at 214A and CY Foundation Group v Cheng Chee Tock [2012] 1 HKLRD 532 at [37(2)] per Barma J (as he then was).

61.It is also not seriously disputed that it is unnecessary for the Plaintiff to show irremediable damage, or real risk of dissipation as in other types of interlocutory injunction.

62.Mr Corlett submitted that the balance is against granting of the injunction because of the irreparable damage that the injunction causes to ACL, Kobe or Tiger. I disagree for the following reasons.

63.Mr Corlett submitted that the restriction imposed on Kobe (and its owner Tiger) to dispose of the Subject CDIs exacerbates and/or prevent Kobe from addressing the chronic illiquidity problem of ACL’s shares in the market. The primary purpose of a proprietary injunction is to preserve the subject asset intact and to prevent it from being dissipated. Kobe’s intention to dispose of it, regardless of why it wishes to sell it, is the very reason why a proprietary injunction should be imposed.

64.Mr Corlett further submitted that the injunction would have tax implication on Tiger personally if the Subject CDIs are not transferred to an Australia company and if he were to move outside Australia and cease to be a tax resident of Australia. This consideration at most amounts to inconvenience to Tiger and is not comparable at all to the object of preservation of the subject asset.

65.Mr Corlett put forward the possibility of reputational damage resulting in the loss of market confidence. Neither do I consider this factor to be comparable, even in a tiny way, to the object of preservation of the Subject CDIs should it be found to be part of the Estate at the end of the proceedings.

66.Kobe and Tiger further complain that the requirement of seeking Perpetual’s prior written consent before exercising the voting right of the Subject CDIs would impede ACL’s operation. I do not find this complaint sound. Firstly, because the Subject CDIs possesses substantial (which may often be decisive) voting right in the shareholders meetings of ACL, as part and partial of the proprietary injunction, it would be appropriate to protect the Estate’s interest from being prejudiced by improper or imprudent votes, should in the end the Subject CDIs are found to be an asset of the Estate. Secondly, the consent requirement is safeguarded by the condition that such consent shall not be unreasonably withheld. Thirdly, since Kobe gave the corresponding undertaking on 10 September 2021, there is no evidence of Perpetual’s failure to give due and timely consent to Kobe’s proposed exercise of voting rights. Thirdly, no evidence of actual incidents was produced to this Court showing that Perpetual has exploited the consent requirement to interfere in or obstruct ACL’s daily management and operations.

67.As this is an application for proprietary injunction, and I have held that there is serious issue to be tried, after the balancing weighing, I am of the view that the Injunction Application should be granted, had the action not been struck out for absence of standing.

E.  THE STAY APPLICATION

68.Since the Statement of Claim has been struck out and this action dismissed, there is no action to be stayed. The Stay Application must also be dismissed consequently.

69.If I am held to be wrong in striking out the Statement of Claim, following the grant of the Injunction Application to preserve the Subject CDIs, I would agree that there should be a stay of the action pending the final determination of various proceedings in New Zealand as well as the Plaintiff’s application in HCAG 015815/21 for resealing of the NZ Letters of Administration.

70.As explained above, the Plaintiff is not a beneficiary of the Estate. It is a professional trustee. Other than the NZ Letters of Administration, it is not related to Estate and there is nowhere from which it can derive authority to act on behalf of the Estate, unlike an executor, whose authority is derived his authority from the will of the deceased. The reason is well explained by Luxmoore LJ in Ingall[24] :

“It is, I think, well established that an executor can institute an action before probate of his testator's will is granted, and that, so long as probate is granted before the hearing of the action, the action is well constituted, although it may in some cases be stayed until the plaintiff has obtained his grant. The reason is plain. The executor derives his legal title to sue from his testator’s will. The grant of probate before the hearing is necessary only because it is the only method recognized by the rules of court by which the executor can prove the fact that he is the executor. If any authority for this is required it is to be found in the judgment of Lord Parker in Chetty v. Chetty. An administrator is, of course, in a different position, for his title to sue depends solely on the grant of administration.”

71.Therefore, and as explain in section C above, unless and until the NZ Letters of Administration is resealed, the Plaintiff has no authority to interfere with the management of assets the Estate. As such, if I am held to be wrong and the Plaintiff survives the Strike Out Application, then it is plain that a stay should be granted pending the determination of the New Zealand proceedings concerning the Estate, particularly the NZ Probate Action, where the New Zealand Courts will determine at least the following two questions: (a) whether the 2005 Will can be proved in solemn form, and (b) whether the probate of the Estate should be granted to Madam Kang or any other party, and at the same time whether the NZ Letters of Administration granted to Perpetual should be recalled or revoked. I agree, and it is common ground between counsel for Madam Kang and counsel for Perpetual in New Zealand that the question of who should be the executor/administrator of the Estate is the first issue that requires determination. It is only upon determination of these issues in New Zealand then the question of whether the NZ Letters of Administration should be resealed can be decided by the Hong Kong Court.

72.As such, if I am held to be wrong and this action survives the Strike Out Action, as a matter of operational logic and necessity, it appears to me that a stay should be ordered.

73.Further, indeed this has to be so because even for an executor, whether local or foreign, where he can already rely on the will as his source of title, still the executor had to obtain a grant in Hong Kong before he could prove his title and receive and distribute properties of the estate in Hong Kong. See Nativivat v Nativivat [2013] 4 HKLRD 340 at paragraphs. 24, 29 & 43. In that case, the Court of Appeal upheld the decision of the Court below in refusing to strike out the foreign executors’ claim and granting a stay pending a Hong Kong grant to be obtained, although it added that they do not rule out there could be cases, e.g. where an executor has no prospect of obtaining a grant in Hong Kong or where an executor has no prospect of obtaining a grant in Hong Kong[25] or where an executor has been dilatory in obtaining a grant in Hong Kong without reasonable excuse[26], where a claim by an executor without a grant should be struck out instead of being stayed (paragraph 44). It may be noted that in Court of Appeal’s said analysis, it is not an option to continue with the proceedings commenced by the executor. In other words, the foreign executor must obtain the grant in Hong Kong before he could lift the stay and continue with the proceedings.

74.Therefore, for the present action, if my decision to strike it out is held to be wrong, I see no reason why I should not follow the foreign executor’s scenario in Nativivat and not to order a stay pending the Plaintiff obtaining the resealing of the NZ Letters of Administration in Hong Kong.

F.  THE SECURITY FOR COSTS APPLICATION

75.Since the action has been struck out, it is not necessary for me to deal with the Security for Costs Application.

76.If I am held to be wrong in the Strike Out Application, I still would not accede to the Security for Costs Application.

77.The Defendant applies for security of (a) its costs incurred from the Writ of Summons to the Defence and (b) its estimated costs to be incurred from its Defence to exchange of Lists of Documents. It is noted that apart from the 4 Summonses now before this Court, the costs incurred by the Defendant are limited to pleadings. As explained in section E above, I would grant a stay of these proceedings pending the final determination of all the proceedings in New Zealand and the Plaintiff’s application in Hong Kong for resealing of the NZ Letters of Administration. The stay might have to last some time. During this period, no costs need to be incurred for these proceedings. As such, coupled with the fact that the costs already incurred are not substantial (limited to pleadings), I consider to be more appropriate for this Court to deal with this application upon the uplifting of the stay.

78.Therefore, had there not been the decision to strike out, I would have adjourned the Security for Costs Application to a date to be fixed after the stay granted under the Stay Application has been lifted.

G.  CONCLUSION AND DISPOSAL OF THE 4 SUMMONSES

79.Having considered all the written and oral submissions on behalf of the parties and all the relevant circumstances, for the reasons set out above, I make the following orders.

80.In respect of the Strike Out Application, I order that the Plaintiff’s Writ of Summons filed on 7 September 2021 and Statement of Claim filed on 11 October 2021 be struck out and the present action be dismissed. Since the Plaintiff commenced these proceedings on behalf of the Estate without a grant which is valid in Hong Kong, I make an order nisi that the costs of this action including the Defendant’s Summons dated 26 November 2021 be paid by the Plaintiff (personally and not from the Estate’s assets) to the Defendant, to be taxed if not agreed.

81.In respect of the Injunction Application, I order that the Plaintiff's Summons dated 7 September 2021 be dismissed. I make an order nisi that the costs of this Summons be paid by the Plaintiff (personally and not from the Estate’s assets) to the Defendant, to be taxed if not agreed.

82.In respect of the Stay Application, I order the Plaintiff's Summons dated 7 February 2022 be dismissed. I make an order nisi that the costs of this Summons be paid by the Plaintiff (personally and not from the Estate’s assets) to the Defendant, to be taxed if not agreed.

83.In respect of the Security for Costs Application, since it is not necessary to deal with it, I make no order in respect of the Defendant's Summons dated 26 November 2021. From the cost perspective, time and costs would have been saved if the Defendant considers taking out this Summons after the determination of the Strike Out Application. Therefore, I make an order nisi that there be no order as to costs of the Summons.

84.To tie up loose ends, I should also deal with the costs question which was reserved for the two Summonses referred to in paragraphs 2 and 4 above:

(1)  In respect of the Plaintiff’s Summons dated 22 June 2022 referred to in paragraph 2 above, since it was to amend the Stay Application, I make an order nisi that costs of this Summons be in the cause of the Stay Application. Since the application failed as decided in paragraph 82 above, the effect of the order nisi is, following the order nisi made therein, that costs of this Summons will have to be paid by the Plaintiff (personally and not from the Estate’s assets) to the Defendant, to be taxed if not agreed.

(2)  In respect of the Defendant's Summons dated 27 June 2022 for leave to file and serve the 8^th Affirmation of Leung Eviana Bon Yuen (referred to in paragraph 4 above), as explained in paragraph 5 above, on the strength of the remark of Lam VP in Re Kyko, I do not consider the 8^th Affirmation is necessary or helpful. I therefore make an order nisi that costs of this Summons be paid by the Defendant to the Plaintiff, to be taxed if not agreed.

85.All the orders nisi on costs made above shall become absolute, unless either party applies to vary within 14 days from the date of this Decision.

86.It remains for me to express my gratitude towards counsel for both parties for their able and helpful assistance.

Mr CHUA Guan-Hock, SC and Mr David CHEN instructed by Robertsons for the Plaintiff

Mr Marc CORLETT and Mr Jeff YAU instructed by Howse Williams for the Defendant