Welly Grace Ltd and Others v. Keung Yee Man and Others

HCA 649/2023

[2025] HKCFI 956

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 649 OF 2023

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DECISION

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1.This is an application about an intended payment into court of HK$78,000 and it is met with resistance. Normally, a party who obtains an injunction over an amount of money welcomes a payment into court in exchange for the injunction being discharged. This is due to the immediate recourse that party enjoys over the monies paid into court if the claim is ultimately successful. The paradox here is that the attempt to make payment into court by a party subject to an interim injunction is opposed by the those who obtained the interim injunction.

2.The background to this dispute is set out in Mr Recorder Eugene Fung SC’s decision in these proceedings (Welly Grace Limited v Keung Yee Man [2023] HKCFI 3082 at [2] to [12]), which I gratefully adopt.

3.The 9^th Defendant (“Hui”) is the mother-in-law of the 1^st Defendant (“Keung”).  Keung is said to be a main culprit behind the alleged misappropriations.  It is alleged that Keung and her family have personally received over HK$55 million in funds that belong to the Plaintiffs.  Hui is one of the recipients to the tune of HK$78,000 from the 1^st Plaintiff.  This sum is alleged to be part of the overall misappropriated funds and it was paid to Hui through eight payments made to her HSBC bank account from February 2021 to September 2022. 

4.On 3 May 2023, the Plaintiffs applied for, among other things, proprietary injunctive relief against Hui.  No evidence was filed by Hui in opposition to the application.  The matter was eventually adjourned for substantive argument to be heard on 20 November 2023. 

5.On 14 November 2023, Messrs David YY Fung & Co, solicitors acting for Hui, D5 and D6 stated that their clients “do not intend to contest the Plaintiffs’ application for interlocutory injunction”. This was stated to be without prejudice to their position in the main action. They requested that a draft consent summons be prepared by the Plaintiffs’ solicitors for consideration.  Eventually, the parties agreed on the terms of the consent summons, and a consent order was granted by Mr Recorder Eugene Fung SC on 17 November 2023 (“the Injunction Order”).

6.Under the Injunction Order, the 9^th Defendant (“Hui”) is prohibited from dealing with the HK$78,000 transferred from 1^st Plaintiff to her HSBC bank account together with all traceable proceeds or assets of those sums.  The duration is “until the determination of the trial of this Action, or further order of the court”.  The Injunction Order does not have any provision for liberty to apply or payment into court.  

7.After an unsuccessful attempt to deal with the matter through correspondence, on 30 August 2024 Hui applied to discharge the Injunction Order upon her making a payment into court of HK$78,000 within 14 days.  This is the application before the court now.  The evidence shows that the HSBC account had a minimal balance of HK$25.34 at the time when the Injunction Order was granted. 

8.Hui explained that she has suffered inconvenience and distress from having her HSBC bank account and credit card frozen. Her evidence is that she withdrew the monies from her bank account by ATM and had subsequently spent the funds on household expenses.  She says that she believed that these were regular housekeeping contributions from her family members, and she had no idea that the sums were trust funds.

9.The first ground on which this application is opposed is that the Injunction Order was a consent order which represented a contractual bargain between the parties.  It was said that there are no established grounds to justify the court to intervene and interfere with the contract.  These would include grounds such as mistake, misrepresentation or fraud.  Since the Injunction Order does not provide for the possibility of a discharge by way of payment into court, it is inappropriate for Hui to invite the court to effectively vary the Injunction Order. 

10.I am unable to accept this argument.  In fairness to Mr Chen, it was not developed at any length in oral submissions. Not every consent order is subject to the restrictive limitations on court interference. It is important to differentiate between two types of consent orders.  The first category consists of consent orders made pursuant to an agreement reached between the parties, or evidencing a contract binding between them.  The court will only interfere on the same grounds as it would with any other contract, or where there are exceptional circumstances.  In contrast, the second category are consent orders where a party simply does not object to an order being made in the terms proposed, in which case there is no real contract between the parties.  In this situation the order may be varied or amended by the court in the same circumstances as any other court order made without consent: Jingcheng Asia Group Ltd v Asian Institute of Advanced Medicine Ltd [2025] HKCFI 305 at [14] per DHCJ KC Chan; CY Tsun Investment Co Ltd v The Incorporated Owners of Hoi To Court (HCSA 16/2003, 2 July 2004) at [30-33] per A Cheung J (as he then was).

11.In my view, the Injunction Order falls within the latter category.  It is clear to me that Hui did not oppose the order sought in light of the time and costs associated with opposing it, and her stance in correspondence was without prejudice to her position in the main action.  This resonates with common sense given the relatively small amount of money at stake, as compared with the disproportionate legal costs likely to be incurred in opposing the injunction.  The Injunction Order is not, in my view, subject to the restrictive limitations on variations which are applicable to consent orders which embody or evidence a genuine contract concluded between the parties.  Further, and in any event, the Injunction Order itself provides for the possibility of variation by way of court order since it is expressly subject to any further order of court.  So even if it did embody a contract its terms do not preclude an application for variation. 

12.I turn to the second ground of opposition.  Mr Chen argues that Hui should have applied to discharge the Injunction Order at the substantive hearing in November 2023, and she ought to have filed evidence in opposition and argued her case at the injunction hearing.  Thus, it is said that that the points now made were open to Hui to make previously.  Therefore, the points cannot be taken now at a subsequent interlocutory hearing.  Mr Chen submits that Hui’s current willingness to make a payment into court of HK$78,000 does not amount to material change in circumstances, let alone a legally significant one. 

13.It is argued that this amounts to abuse in the Henderson sense – which encapsulates the point that that the bringing of a claim may, without more, amount to abuse if the court is satisfied that the claim should have been raised in earlier proceedings if it was to be raised at all (Ngai Few Fung v Cheung Kwai Heung [2008] 2 HKC 111 at [16] per Cheung JA).  Mr Chen stresses the Henderson abuse doctrine extends to interlocutory decisions (Chanel Ltd v FW Woolworth & Co Ltd [1981] 1 WLR 485, and if a point is open to a party on an interlocutory application and is not pursued, the applicant cannot take the point at a subsequent interlocutory hearing in the absence of a material change of circumstances or new facts (Compania Sud Americana De Vapores SA v Hin-Pro International Logistics Ltd [2015] 2 HKLRD 458 at [16-17]; China Health Group Ltd v Li Zhong Yuan [2021] HKCFI 3806 at [20] per DHCJ MK Liu; Keep Bright Ltd v Super Auto Investments Ltd, HCCT 16/2010, 12 January 2012 at [45] per Hon Au J (as he then was)).  

14.I am unable to agree that the present application is abusive.  Hui does not seek to discharge the Injunction Order on the basis that it never should have been granted on the merits.  All she wishes to do is to make a payment into court of HK$78,000 to discharge the injunction.  Should the payment be made, those funds will be available to the Plaintiffs in the event that they prove their claim against Hui after trial. This is not a situation where Hui is seeking to challenge the factual or legal basis on which the Injunction Order was granted.  The considerations in that situation may well be different, but that is not the situation before the court.  Nor do I believe that this is an application which is objectively adverse to the interests of the Plaintiffs since the contemplated payment into court provides immediate recourse should they win at trial.  In a very real sense, they are better off with the payment into court.  In my view, this feature is crucial in distinguishing the present application from others where Henderson abuse arising from interlocutory hearings has been found to exist. 

15.I consider that the stance of the Plaintiffs in this case is, with respect, absolutist and dogmatic.  In essence, it boils down to a party who fails to reach an agreement on payment into court being included an interim injunction order, should be precluded from subsequently raising it with the court unless there is some express provision allowing for that to happen.  I take the view that this is an extreme position.  The overarching question on which attention must be focused is whether, in all the circumstances, a party is misusing or abusing the process of the court by seeking to raise before it an issue which could have been raised before.  This is a broad and merits-based judgment which takes account of the public and private interests involved.  It is wrong to hold that because a matter could have been raised in earlier proceedings that it should have been, so as to render the raising of it in later proceedings necessarily abusive (Johnson v Gore Wood & Co (a firm) [2002] 2 AC 1, 31D-E per Lord Bingham; Ngai Few Fung at [16-19] & [22]) per Cheung JA; Total Lubricants HK Ltd v De Chanterac (No. 2) [2013] 2 HKLRD 838 at [30] per Kwan JA (as she then was)).  In my mind, the Plaintiffs’ approach is contrary to the above principles.      

16.I do not consider that the absence of a material change of circumstances is necessarily fatal to Hui’s application.  It is still necessary to take into all of the facts of the case, and form a broad, merits-based judgment as to whether there is a misuse of court process in the present case.  Of particular importance here is the benign nature of the application before the court and that the Injunction Order itself contemplates the possibility of variation by a further order of the court.  Moreover, I am unable to see any unjust harassment of the Plaintiffs by the making of the present application.  Further, I am unable to agree that acceding to this application undermines finality or otherwise undercuts the efficiency of litigation.  The ability of the court to grant a variation over an interim injunction where it is appropriate and in the interests of justice to do so should be exercised with a degree of flexibility and pragmatism in mind, particularly where there is no significant prejudice to the side complaining of abuse. 

17.I have not lost sight of the point that the Injunction Order is proprietary in nature and it covers all traceable proceeds or assets in relation to the HK$78,000.  There is the theoretical possibility that the funds have been used to acquire a different asset, which might have appreciated in value.  However, there is unchallenged evidence that Hui has spent those funds already on housekeeping expenses.  At the interlocutory stage, what I can say is that given the fairly modest amounts involved, especially when each withdrawal was for HK$10,000 at most and made over a period of time, this is not an inherently improbable account. 

18.Mr Chen suggests that this application might be a ‘test case’ for other defendants in these proceedings.  I understood the argument to mean that other defendants might rely on this decision and seek to make payment into court in order to avoid the injunction attaching to traceable proceeds or assets.  I make it clear that this decision is not intended to be a precedent that any application for payment into court by other defendants in these proceedings will necessarily be allowed by the court.  There is also a suggestion that it is incredible for Hui to make the present application when her HSBC account only has a negligible account balance, and that there may be other undisclosed bank accounts which have been frozen.  At this stage, there is no clear evidence to that effect, and in any event, I am unable to reject Hui’s evidence about the inconvenience caused by having her HSBC bank account and credit card frozen as fanciful or untrue. 

19.For all of these reasons, I will allow Hui’s application and I grant an order in terms of [1-2] of her summons dated 30 August 2024. 

20.At the hearing, I heard the parties on costs. Hui seeks indemnity costs of this application to be assessed on a gross sum basis.  I have considered those submissions, and I do not think this is an appropriate case to order indemnity costs against the Plaintiffs. 

21.As to gross sum assessment, both parties submitted bills of costs.  Hui’s solicitors have presented a Skeleton Bill for HK$190,005. The court takes a broad-brush approach, but it will still carefully review the bill submitted to guard against excessive fees being claimed.  I take the view that Hui’s Skeleton Bill is clearly excessive for a straightforward matter of this nature.  First, there appears to be significant duplication of work across three fee earners for a simple matter.  Second, there also appears to be duplication given that counsel has been instructed to draft the summons and settle the affirmations.  Third, as I pointed out at the hearing, the affirmations prepared by Hui contained significant amounts of irrelevant matters.  Fourth, up to the hearing, Hui still inexplicably maintained that the Injunction should be discharged even without payment into court even this was not the relief sought in her summons.[1]  

22.Viewing the matter in the round, I take the view that the costs to be allowed on a gross sum assessment should be reduced significantly.  I make an order that the Plaintiffs pay Hui’s costs of this application summarily assessed at HK$60,000. 

Mr David Chen, instructed by Messrs J. Chan, Yip, So & Partners, for the 1^st to 11^th Plaintiffs

Ms Sharon Ng, instructed by Messrs Cheung & Liu, for the 9^th Defendant