Chow Po Tai v. Chen Cao Liyan and Another

HCA 2379/2024

[2025] HKCFI 5016

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 2379 OF 2024

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D E C I S I O N

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Introduction and Brief Background

1.The Plaintiff (“P”) is 94 years old, widowed with one daughter, Ms Chang Wan Sin (“Chang”). P’s case is that from the end of January to early November 2024, P was living at her residence in Shanghai whilst travelling with the 1^st Defendant (“D1”), a clansman who claims to be a distant relative of P. Chang visited P in mid-October 2024 in Shanghai and discovered in around November 2024, when she brought P back to Hong Kong and had flipped through P’s bank statements, significant sums were transferred out of P’s account. Chang also contacted P’s property manager (“Cheng”) who had managed the rental collection and property management for P and from the extracts of text messages between D1 and Cheng, noticed that D1 referred to P as “her mother” and had attempted to procure Cheng to arrange for the rent of one of P’s property (the Property as defined hereinafter) to be paid to D1’s account but Cheng did not do so. Chang then instructed solicitors to commence these proceedings against D1 and her husband, the 2^nd Defendant (“D2”), by Writ of Summons issued on 2 December 2024.

2.On the same day, following an ex parte hearing supported by an Affirmation of Chang (“Chang 1^st”), DHCJ Maria Yuen (“the Learned Judge”) granted inter alia the following orders (“Ex Parte Order”) against D1 and D2 (collectively, “Ds”):

(1)  Not in any way dispose of or deal with or create encumbrances on or diminish the value of Shop B on Ground Floor, Lee Wing Building, Nos. 156, 160 & 162 Hennessy Road, Nos 7A & 7B O’Brien Road, Hong Kong (“the Property”);

(2)  Not remove from Hong Kong or in any way dispose or deal with or diminish the value of any of his/her assets which are within Hong Kong up to the value of HK$9,215,927.08 and US$1,702,602.39 (“the Specified Sums”);

(3)  Not remove from Hong Kong, dispose of, deal with or diminish the value of all or part of such money or assets in their possession, power or control which represents the sums transferred from P’s respective accounts into the accounts of Ds and any proceeds, fruits, benefits, interest or assets derived from such sums (“the Transferred Sums”):

(a)  HK$515,927.08 on 10 January 2024 from a HSBC account number 175-318658-888 (“HSBC Account”);

(b)  HK$400,000 on 10 January 2024 from HSBC Account;

(c)  HK$900,000 on 11 January 2024 from HSBC Account;

(d)  HK$900,000 on 11 January 2024 from HSBC Account;

(e)  HK$3,000,000 on 9 September 2024 from BOCHK HKD Savings Account number 012-899-1-003897-2 (“BOC HKD Account);

(f)  US$1,047,121.55 on 9 September 2024 from BOCHK Foreign Currency Savings Account number 012-899-9-209189-8 (“BOC FCS Account”);

(g)  HK$3,000,000 on 10 September 2024 from Hang Seng Bank Limited account number 225-075712-888 SAV (“HSB HKD Account”);

(h)  US$655,480,84 on 10 September 2024 from Hang Seng Bank Limited account number 225-075712-888 FCY (“HSB FCY Account”);

(i)  HK$500,000 from on 20 September 2024 from HSBC Account; and

(4)  Ds must inform P by affidavit all his/her assets of an individual value of HK$20,000 or more in Hong Kong.

3.On 4 December 2024, the Ex Parte Order was amended by the Learned Judge inter alia to amend paragraph (1) of the Exceptions from not prohibiting Ds from spending HK$20,000 per month for his/her ordinary living expenses to HK$5,000 per week for ordinary living expenses, HK$10,000 per week for ordinary and proper business expenses and also HK$20,000 per week on legal advice and representation.

4.By Summons dated 9 December 2024 (“the Continuation Summons”), P seeks the continuation of the Ex Parte Order as amended by the Learned Judge (“Amended Ex Parte Order”) until trial or further order of the court. The Amended Ex Parte Order was continued on 13 December 2024, 10 January 2025, 7 March 2025 and 30 April 2025. It was last continued to 25 July 2025 which was to be date of the substantive hearing of the Continuation Summons. On 24 July 2025, DHCJ Kent Yee ordered the refixing of that hearing as the time allotted was only 15 minutes (being before the Summons Judge) apparently without any continuation of the Amended Ex Parte Order. Mr Hon, counsel for P, confirmed (after I pointed out this matter) that P had not sought any order from DHCJ Kent Yee for continuation of the Amended Ex Parte Order and accepted that the order has lapsed. Nonetheless, I should consider whether to regrant the orders in terms of the Amended Ex Parte Orders: see Essilor Manufacturing (Thailand) Co., Ltd v Wong Kam Wai & Ors [2020] HKCA 351 at §§41-43[1]. As counsel for parties confirmed that the lapse of the Amended Ex Parte Order should not affect the Continuation Summons, I was prepared to continue to consider the Continuation Summons.

5.The following affirmations were filed in respect of the Continuation Summons:

(1)  2^nd Affirmation of D1 (“Chen 2^nd”) and 2^nd Affirmation of Chong Yip Fung (“Chong 2^nd”) on behalf of Ds in opposition; and

(2)  2^nd Affirmation of P (“Chow 2^nd”) and 3^rd Affirmation of Wong Jin Pang (“Wong 3^rd”) on behalf of P in reply.

6.Mr Wong submitted that the 1^st Affirmation of P (“Chow 1^st”) filed on behalf of P purportedly in reply was filed without leave. However, the contents of Chow 1^st were adopted by P in Chow 2^nd. Ds opposed the filing of Chow 1^st as it is said that it was to ambush the other side with evidence that they could have and should have produced earlier when it was affirmed (13 January 2025) but was filed only on 18 July 2025. I accept there is an acceptable explanation by P why it was not filed earlier (when no directions then had been given for P to file further affirmation). I also accept Chang 1^st was made on P’s behalf because P is very elderly and had executed a Power of Attorney in favour of Chang who is her daughter. Besides, Chow 1^st is not very long and essentially adopted and confirmed Chang 1^st so I do not accept that Ds were ambushed or taken by surprise and have suffered any prejudice when they had plenty of time to file any evidence in reply before today’s hearing if they so wished as submitted by Mr Hon. Whilst Mr Wong relied on the decision of the Learned Judge in Keenact Limited & Ors v Elena Siivinen & Ors [2025] HKCFI 938 at §24 that parties to litigation should place all relevant evidence before the court as soon as possible and any attempt to “ambush” the other side with late evidence (which could and should have been produced earlier) should be discouraged, I am not satisfied the present is such a case. In the exercise of my discretion, I would allow reliance on Chow 1^st.

7.Mr Wong also objected to the allegation in Chow 2^nd in §8 that the case involves a long-term and highly calculated scheme of misappropriation of P’s assets orchestrated by her friend 李春凤 (“Li”) and D1 and jointly with other personnel. Again, P’s case as set out and made known in the Statement of Claim filed on 30 May 2025 is that D1 dishonestly procured the assignment of the Property to P and D1 as joint tenants and dishonestly procured the transfer of various sums of monies from P’s accounts. Whilst the allegation of the involvement of Li may be a new allegation, it does not materially affect P’s case as against Ds.

8.By Summons dated 1 September 2025, supported by the 3^rd Affirmation of Chang (“Chang 3^rd”), P also seeks variation of the Amended Ex Parte Order to:

(1)  Vary the Specified Sums from HK$9,215,927.08 to HK$7,000,000, and from US$1,702,609.39 to US$2,852,603.39;

(2)  To remove four of the Transferred Sums (in paragraph 2(3)(a)-(d) above) and further include the sum of US$1,150,000 transferred from HSBC Account on 28 August 2017 and the sum of HK$500,000 transferred from “HSBC Joint A/C” on 13 November 2024; and

(3)  To remove the exception for living expenses, business expenses and for legal advice and representation in respect of the Transferred Sums being restrained and in respect of other orders to vary the exception to HK$2,000,000 [sic] per week for ordinary living expenses and 10,000 per week for legal advice and representation.

9.Today is the substantive hearing of the Continuation Summons and the Variation Summons.

Discussion and Disposition

10.In Hwang Joon Sang & Anor v Golden Electronics Inc & Ors [2021] HKCFI 2425, the guiding principles on material non-disclosure were summarized by Coleman J at §37 as follows:

(1)  An applicant making an ex parte application must act fairly in all material aspects when preparing and presenting the application;

(2)  This includes the duty to disclose to the Court all matters which are material, meaning those matters material to the court’s assessment and decision whether or not to grant the relief without notice, and if so on what terms;

(3)  The test as to materiality is an objective one, and ultimately a question for the court. Hence, it is no excuse for an applicant subsequently to say that he was generally unaware, or did not believe, that the facts were relevant or important;

(4)  Non-disclosure may be material even if its effect is just to give a seriously different “flavour” to the case;

(5)  The duty of full and frank disclosure is a stringent one, designed to protect the absent party;

(6)  Therefore, if material non-disclosure has occurred at the ex parte application, the order obtained at such an application would likely be set aside automatically without going into the merits;

(7)  Nevertheless, there is a discretion to re-grant the same order. That jurisdiction should be only sparingly exercised, taking into account the need to protect the administration of justice and uphold the public interest in requiring full and fair disclosure;

(8)  Hence, an assessment will be made as to degree and extent of the culpability with regards to the non-disclosure. The more serious or culpable the non-disclosure, the more likely the court is to set its order aside and not renew it, however prejudicial the consequences;

(9)  It is therefore relevant that the breach was innocent, but there is no general rule that an innocent breach will not attract the sanction of discharge. Nor is there a general rule that a deliberate breach will attract that sanction;

(10)  The application of principles which seek to uphold the integrity of the judicial process should not be carried to such lengths as will allow them to become the instrument of injustice;

(11)  Because of the penal nature of the jurisdiction, the court should have regard to the proportionality between the punishment and the offence;

(12)  When exercising the discretion whether to re-grant the order, the court should take into account all relevant circumstances.

See also Excel Courage Holdings Ltd v Wong Sin Lai [2014] 3 HKLRD 642 at §56 per Kwan JA (as she then was).

11.Mr Wong submitted that there were two material non-disclosure to the Learned Judge.

12.Firstly, it was submitted that P misrepresented or did not disclose the true nature and extent of her relationship with D1. According to Ds, D1 was P’s niece (i.e. D1’s mother and P are sisters). Mr Wong submitted that there was incontrovertible evidence that P misrepresented to the Learned Judge that D1 was a clansman who claims to be a distinct relative (but was not) in Chang 1^st, §7, P’s Skeleton for the Ex Parte hearing, §6 and the Statement of Claim, §2.

13.Mr Wong, in particular, relied upon inter alia: (1) the will made by P dated 2 January 2019 (“the Will”) which referred to D1 as her niece (see at paragraphs 4, 5 and 6); and (2) various photographs of P and D1 taken together going back from D1’s childhood up to P’s 90^th birthday celebration (“the Photos”).

14.In relation to the Will, in Chow 2^nd, §34, P firstly, says that she does not recall having made such a will and it would be absurd for her to make the disposition in the terms of the will and secondly, she does not know anyone from Messrs. B Mak (“B Mak”) and had never engaged their services. She mentioned (at §37) that she found it extraordinary and suspicious that the Will was prepared by B Mak and had instructed her lawyers to make inquiries. B Mak has now provided: (1) the instructions provided by P to B Mak for the preparation of the Will which was signed by P on each page[2]; (2) a Will Retainer (委託書)[3] confirming the instructions given to B Mak were the result of careful thought and deliberation and represented her final wishes; (3) an Acknowledgment of Receipt signed by P confirming receipt of the original of the Will[4]; and (4) the Will[5]. From a copy of the Will, it can be seen that P executed by signing on it in the presence of a solicitor and clerk of B Mak. I accept the submissions of Mr Wong that P has never stated on oath/in her affirmation that the signatures appearing on these documents were not hers. Furthermore, it would be a very serious allegation to suggest that the solicitor of B Mak, an officer of the court, had forged the documents containing her signature. Besides, it is unlikely all those information stated therein did not come from P herself.

15.As for the Photos, in Chow 2^nd, §30, P said that she recognized herself in the various photos but cannot recall when they were taken. No other explanation was given by her how and why they would be taken if she was not long acquainted with D1 and in a sufficiently close relationship for P to attend important milestones such as Ds’ wedding in 1985, making the trip to Spain to visit D1 at her restaurant in 2002, P’s 80^th and 90^th birthday celebrations in 2010 and 2019 respectively. Whilst Mr Hon purported to downplay the significance of the Photos, all these were his submissions from the Bar table and not the explanation given by P. Besides, I am not persuaded by them. Clearly, they refute the suggestion in Chang 1^st, §§12-13 that P only knew of D1 “years ago through relatives gathering” and it was only around 2011 when P’s husband had passed away “showed more caring to P”. In Chow 2^nd, §20, P is now prepared to say it could have been a fact that Ds were introduced to her prior to 2010.

16.I am satisfied in the present case from the evidence filed (I have not set out exhaustively all the evidence filed but these were comprehensively analysed in Mr Wong’s skeleton submissions), that it is clear that there was a material disclosure or misrepresentation such that it is appropriate to consider the issue of material non-disclosure at this stage rather than dealing with this at the trial of this action: see HKCOLO.NET Limited v Hong Kong Telecommunications (HKT) Limited [2023] HKCFI 138, §§123-125 per DHCJ H Au-Yeung (as he then was).

17.Furthermore, I am of the view that the true relationship or correct depiction of the proximity of the relationship between P and D1 was material to understanding the claim’s context (where dishonest procurement of the transfer of the Property and various sums were alleged against D1) and the risk of dissipation. At the very least, it would give a seriously different flavour to P’s case.

18.Secondly, Mr Wong submitted that P materially misrepresented and did not disclose that the total sum of HK$2,715,927.08 transferred on 10 and 11 January 2024 from the HSBC Account were to P’s own accounts and not to Ds’. It is not now disputed that those sums were transferred to P’s accounts. Mr Hon pointed out that in Chang 1^st at §62 that it was stated that “it is not clear as to whether the BOCHK Amount (the HK$3,000,000 and US$1,047,121.55) and the HSBC Amount (totaling HK$3,215,927.08) were actually transferred to [D1] and/or [D2]”. In Chow’s 2^nd, §43, it was said that at the time of making the ex parte application neither P nor Chang was fully aware of the whereabouts of all the money transfer.

19.Plainly, P had the monthly statements of her own bank accounts (she has not stated in her affirmation that was not the case) and could have checked them. As Mr Wong submitted, a plaintiff has a duty to make proper enquiries before making his application for injunction and the duty of disclosure covers not only facts known to the plaintiff but also facts he would have known had he made such proper enquiries: see Tsai Lee Ting & Anor v Best Leader Precious Metals Limited & Ors [2023] HKCFI 2124 at §69 per Cheng J. Mr Hon fairly accepted that P “could have done better” but submitted that the omission was not deliberate. Again, from the Bar table, he suggested that the ex parte application was made urgently with little time but as pointed out by Mr Wong, according to Chang 1^st, she discovered the transfers in early November 2024 having saw P’s bank statements and only made the application on 2 December 2024.

20.Mr Hon also submitted that in any event, the non-disclosure was immaterial given the amounts transferred to P’s own account was about 10% of the total size of P’s claims against Ds. I disagree that the non-disclosure was not material given HK$2,715,927.08 is a substantial amount of money and the fact it was alleged that D1 had dishonestly procured the transfer of that substantial sum out of P’s account over the course of 2 days, at the very least would give a seriously different flavour to P’s case on the misappropriation of her assets by Ds.

21.Given the above two very material and significant failure to discharge P’s duty to make full and frank disclosure, I would not exercise my discretion to continue the Amended Ex Parte Order.

22.The question then is whether there should be a re-grant of an order in terms of the Amended Ex Parte Order.

23.In view of the material non-disclosure and their significance, which I regard serious and significant, having regard to the extent of culpability (whilst I accept it was not deliberate but nonetheless was not entirely blameless), the proportionality between the punishment and offence, standing back and viewing the matter as a whole, I do think it is a proportionate response to deny all injunctive relief against Ds. This is particularly when I take the view that there is no serious risk of dissipation demonstrated by solid evidence[6]. Mr Hon accepted in his skeleton that the total amount of disclosed assets by Ds exceed the value of the alleged total misappropriation so “on the face of it there was no dissipation on the total sum”[7].

24.I accept Mr Wong’s submissions that D1’s action is not consistent with someone who intends to evade justice by disposing of and concealing assets to make herself judgment-proof. As confirmed by D1[8], all the monies transferred from P’s accounts are still in Ds’ joint accounts into which they were first transferred even though they were not subject to any restraint until December 2024 and most of those monies (all of the USD and two-third of the HKD sums transferred) were placed in 3 time deposits. D1 has in detailed explained and to some extent supported her case (with Skype messages between P and her) that P had asked D1 to take care of her for the rest of her life, to help her manage her bank accounts and take care of her daily living, and had added D1 as a signatory of certain bank accounts so that D1 could help her withdraw her money if she could not move in the future etc[9].

25.Mr Wong also made other submissions which he submitted would go into the balance including the merits of P’s case and surrounding circumstances of this case which were unusual, but with no due disrespect, I do not feel it is necessary to go into them here save to say I have considered them in the round in the exercise of my discretion.

26.As I would not continue the Amended Ex Parte Order, it is not necessary for me to consider the Variation Summons.

[Submissions on costs and other matters]

27.I see no reason why costs should not follow the event. Whilst Mr Wong submitted that P should pay Ds’ costs of the Continuation Summons and Variation Summons on an indemnity basis, I did not consider I should exercise my discretion to do so not having found the material non-disclosures were deliberate, such that some condemnation of P’s behaviour was warranted and having already “penalized” P by depriving her of the fruits obtained by her (i.e. the injunctive relief against Ds).

28.I therefore ordered costs of the Continuation Summons and Variation Summons be paid by P to Ds on a party to party basis to be summarily assessed on paper. I directed P to lodge and serve any objections to Ds’ Statement of Costs within 7 days.

29.For completeness, I should record that after I orally delivered my reasons above (footnotes were not read out and some linguistic/stylistic changes have been made by me after the hearing), Mr Hon orally applied for an “interim-interim” injunction in terms of the Amended Ex Parte Order pending the filing of a notice of appeal to be issued against my refusal to continue the Amended Ex Parte Order within 28 days. I refused the application as I was not satisfied that there was any extreme urgency which required the making of an “urgent temporary stop-gap measure” and the circumstances were such that the court has to do practical justice on the balance of fairness[10] when I took the view that there was no risk of dissipation demonstrated by solid evidence.

Mr Kevin Hon, instructed by Messrs James P.Y. Lam & Co., for the Plaintiff

Mr Anson Wong Yu Yat and Mr Jonathan Ip, instructed by Messrs Tang, Wong & Chow, for the 1^st and 2^nd Defendants