Read the full judgment text of CACV 329/2021 on BabelCite. This Court of Appeal judgment was delivered on 18 August 2023 before Kwan VP, Yuen JA and G Lam JA.
Civil procedure – res judicata – cause of action estoppel – issue estoppel – abuse of process – Henderson v Henderson abuse – collateral attack – privity of interest – discretionary trust – eligible beneficiaries – striking out – judgment writing – extensive incorporation of counsel's submissions – Lo family trust – Great Eagle Holdings – Family of Lo Ying Shek – HSBC International Trustee Limited – The Lo family founded the Great Eagle group of companies, with a discretionary trust (the Trust) established in 1984 for the Lo family, of which HSBC International Trustee Limited was appointed trustee in 1999. By 2016 the Trust held approximately 33% of Great Eagle Holdings Ltd, with eligible beneficiaries numbering around 90 across four generations – In 2016 Madam Lo (de facto settlor and eligible beneficiary) issued letters of request to the Trustee to purchase additional GE shares and to distribute the entire Trust fund to her; the Trustee did not comply – Madam Lo brought HCA 3246/2016 and HCA 355/2018 alleging breach of trust; the 2019 Judgment after a 33-day trial dismissed all her claims, including the 'Controlling Shareholding Claim', the 'AGM Claim' and the 'Conflict of Interest Claim' (the Overlapping Claims) – Lu (Madam Lo's son, an eligible beneficiary and Appointor/Guardian) issued his own writ against the Trustee, KS (another son), Nina, and related entities in February 2018 in HCA 404/2018, alleging similar breach of trust claims – The Trustee and KS applied to strike out parts of Lu's statement of claim; Wilson Chan J struck out sections D, E, F and G (§§32–100) on the Trustee's application and various other paragraphs on KS's application, and disallowed certain amendments – On appeal, the Court of Appeal first held that approximately 92% of the first instance judgment (221 of 239 paragraphs) was copied from counsel's submissions, almost entirely from the submissions of the winning parties (the Trustee and KS), with only 7 of 214 copied paragraphs taken from Lu's submissions – This extensive copying gave rise to a justifiable grievance that justice was not seen to be done; a judgment is the 'core work-product' of a judge and the good impression created by judicial engagement during the hearing cannot displace the impression of uncritical adoption of the winning side's submissions – The court therefore determined the issues afresh without any deferential standard of review – On privity of interest, the court held that the doctrine is narrow; a person ought not to be condemned unheard, and the cases of Gleeson v J Wippell, China North Industries Investment Ltd v Chum and Genesee Enterprises Ltd v Abou-Rached demonstrate the strictness of the requirements – Objects of a discretionary trust do not have a common interest; they have individual rights, and 'persons with separate but identical interests in the same question are not privies' – A 'sense of concern or conceivable personal ramifications' in the subject matter is insufficient – Close involvement in the preparation and conduct of prior proceedings does not suffice to make a person a co-plaintiff in substance – The 'standing by' principle is a very narrow exception requiring strong and exceptional circumstances – The court held that Madam Lo and Lu's interests were not parallel: Madam Lo brought her claims partly as de facto settlor seeking return of the entire Trust fund to her, which if successful would have defeated the rights of all other eligible beneficiaries – The 'issues of central importance' in Madam Lo's Actions did not feature in Lu's Action – It was not realistic or practicable for Lu to join as co-plaintiff given potential conflicts and pleaded differences – The Trustee's failure to use available procedural steps (representation order, notice to non-parties, case management) was relevant – On Henderson v Henderson abuse against the Trustee, the court held it is a rare case where relitigation of an issue not previously decided between the same parties or their privies will amount to an abuse; Lu did not initiate proceedings to mount a collateral challenge since no final decision existed when he brought his action in February 2018 – On abuse against KS (who was a witness, not a party, in Madam Lo's Actions), his position was even further removed; no authority supports the proposition that a non-party's claim against another non-party can be estopped merely because the latter gave evidence in prior proceedings; In re Norris and JSC BTA Bank v Ablyazov are directly supportive – On amendments, the amendments ancillary to the Overlapping Claims should be allowed because the appeal against striking out succeeded – The 'shareholders whose proxies have been provided from time to time to KS to vote' part of the 'allies' definition was rejected as insufficiently particularised, lacking temporal restriction, and imposing a disproportionate and oppressive burden on KS to trawl through proxies at every GE general meeting since late 2015 – The court allowed the appeal in CACV 329/2021 and set aside the striking out orders, and referred Lu's Action to the Listing Judge for assignment to another trial judge – The court allowed the amendment appeals in CACV 181/2022 and CACV 180/2023 save for the rejected part of the 'allies' definition – The court dismissed the appeal in CACV 181/2023 (Order 15 rule 14 application) as not pursued – Costs ordered in favour of Lu at 85% with a certificate for two counsel.
Legal issues: Deficiency in the first instance judgment from extensive copying of counsel's submissions · Privity of interest between Madam Lo and Lu for res judicata · Henderson v Henderson abuse of process against the Trustee · Henderson v Henderson abuse of process against KS · Disallowance of proposed amendments to the statement of claim
Outcome: Appeal allowed. The first instance orders striking out parts of the statement of claim in Lu's Action are set aside. The appeals in CACV 181/2022 and CACV 180/2023 relating to the application to amend the statement of claim are allowed in part. The appeal in CACV 181/2023 (relating to Order 15 rule 14) is dismissed as not pursued.
Cited by 16 cases · Cites 12 cases