Chan, Johnson and Others v. Best Plan Development Ltd and Another

HCA 1492/2022 and HCMP 1149/2024

(Heard Together)

[2026] HKCFI 2784

HCA 1492/2022

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1492 OF 2022

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BETWEEN

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HCMP 1149/2024

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 1149 OF 2024

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________________________

BETWEEN

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(Heard Together)

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DECISION

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Introduction

1.There are 2 sets of summonses (of 2 per each set)  before this Court (collectively the “Stay Summonses”, as defined below).  In essence, they are cross applications for case management directions on the sequence in which HCA 1492/2022 (the “HCA”)  and HCMP 1149/2024 (the “HCMP”)  should be proceeded with.

2.Mr Norman Nip SC leading Mr Adrian But appeared for Best Plan Development Limited (“Best Plan”).  Mr William Wong SC leading Mr Joshua Yeung appeared for Johnson Chan (“Johnson”)  and Harmony Investment Holdings Overseas Limited (“Harmony”).  Chan Lee, Vivian Ming-wai (“Vivian”)  appeared in person.  Bonds Chan Family Holdings (PTC)  Ltd. (the “Chan Family Trustee”)  adopts a neutral stance and has asked to be excused from attending.

The parties  

3.The parties are members of the same family (or entities connected to them and their family).

4.Johnson and Vivian are respectively 1^st and 2^nd plaintiffs in the HCA, and the 1^st and 2^nd defendants in the HCMP.  They plead that Vivian “was and is at all material times the lawful wife of” Johnson.  Harmony is the 3^rd plaintiff in the HCA.  It is a company controlled by Johnson.

5.Johnson has 3 siblings (the “Siblings”), 2 of whom being Anson Chan and Lily Chan (“Anson” and “Lily” respectively).  The Siblings are the 4 children of the late philanthropists Dr Chan Shu-Kui and Madam Anita Chan Lai-Ling (“Father” and “Mother”, and collectively with the Siblings and other members of the family, the “Chan Family”).

6.Father and Mother had in their lifetime built up and amassed very substantial wealth.  Father predeceased Mother.  In 2003, Mother established the Bonds Chan Family Unit Trust (the “Chan Family Trust”). Its objectives are to preserve and increase the Chan Family’s wealth.  It has 3 beneficiaries: Anson, Johnson and Lily.  The 3 of them together hold all units in the Chan Family Trust (respectively 49%, 39% and 12%).  They do so via corporate vehicles.  Harmony is one of Johnson’s such vehicles (holding 25.67%).

7.The Chan Family Trustee is the trustee of the Chan Family Trust.  It is the 2^nd defendant in the HCA.  It has 6 directors, namely Anson, Johnson, Lily and 3 corporate entities.

8.The Chan Family Trust (via the Chan Family Trustee)  holds all of Chan Family’s assets.  It wholly owns Bonds & Sons Holdings Ltd (“BSH”), which in turn wholly owns Holdwin Limited and Bonds & Sons International Limited (“BSI”).  BSI in turn directly or indirectly wholly owns a very substantial number of companies.  The Chan Family Trustee, together with the companies directly and indirectly owned by the Chan Family Trust, have been collectively referred to as the Bonds Group.

9.Best Plan is a private limited company within the Bonds Group (wholly owned by Bonds Group Company Limited, in turn wholly owned by BSI).  It is a licensed money lender under the Money Lenders Ordinance (Cap. 163).  It primarily carries on business as such.  It is the 1^st defendant in the HCA, and the plaintiff in the HCMP.

Purchases of the Houses, and the funds therefor

10.The present disputes centre around the funds for the purchases of House No. D23 (with two car parking spaces)  and House No. D25 (with two car parking spaces), Regalia Bay, No. 88 Wong Ma Kok Road, Hong Kong (respectively “House D23” and “House D25”, collectively the “Houses”)[1].

11.Germane to the purchases and parties’ disputes are the following core documents:

(a)  2 provisional sale and purchase agreements, both dated 6 April 2018, one signed by Johnson and the other one by Vivian, whereby Johnson and Vivian respectively purchased House D23 and House D25.  The purchase price per house was HK$114,750,000 (5% as initial deposit payable upon execution, another 5% as further deposit on or before 20 April 2018, and the balance of 90% on completion before 4 p.m. on 15 June 2018);

(b)  a 2-page facility letter dated 8 June 2018 (the “Facility Letter”, which Mr Wong calls the “Term Sheet”), signed by Best Plan as lender and Johnson and Vivian as borrowers, whereby, on its face, Best Plan granted Johnson and Vivian a loan up to HK$241,000,000.  The “Term” was “One year from drawdown, renewable annually, subject to the satisfactory annual review of borrowers’ financial status by the Lender”, and the “Security” was “All monies first legal charge on” the Houses (the “Loan”, which Mr Wong calls the “Advancement”[2]);

(c)  a drawdown notice of 12 June 2018 signed and issued by Johnson and Vivian to Best Plan (the “1^st Drawdown Notice”), whereby they confirmed drawdown of HK$239,388,250 for purchase of the Houses;

(d)  a mortgage deed of 15 June 2018, signed by Johnson and Vivian as borrowers and mortgagors and by Best Plan as lender and mortgagee (the “Mortgage Deed”), whereby they, on its face, entered into an all-monies mortgage over the Houses.  The Mortgage Deed was subsequently (10 July 2018)  registered;

(e)  2 assignments of 15 June 2018, whereby House D23 and House D25 were respectively assigned to Johnson and Vivian;

(f)  another drawdown notice of 3 July 2018 signed and issued by Johnson and Vivian to Best Plan (“2^nd Drawdown Notice”), whereby they confirmed drawdown of HK$1,147,500 for payment for estate agent fees;

(g)  7 cheques between 11 September 2018 and 9 July 2019, whereby a company controlled by Johnson paid 7 sums of divers amount (in the total amount of HK$7,112,026.13)  to Best Plan.  Best Plan’s case is that they were interest payments for the Loan;

(h)  A letter dated 18 October 2022 from Best Plan to Johnson and Vivian (the “Written Demand”), whereby Best Plan made references to the Facility Letter, the 1^st and 2^nd Drawdown Notices, and the payment of interest in the aforementioned total sum, and said that “the Loan was renewed most recently for the period of 1 year on 14 June 2022”, and that as at 30 September 2022, there was unpaid interest in the sum of HK$15,658,551.82.  Best Plan demanded payment of the same;

(i)  A Notice of Default of 4 November 2022 from Best Plan to Johnson and Vivian, whereby Best Plan stated that events of default under the Mortgage Deed had occurred for non-compliance with the Written Demand, and demanded immediate repayment of HK$240,545,750 (outstanding principal)  and HK$16,430,770.43 (outstanding interest).

Parties’ stances

12.The main dispute between the parties relates to the nature and characterization of the Loan.

13.Best Plan’s stance is that the Loan is, as per the Facility Letter and Mortgage Deed, just that – a mortgage loan.  It seeks repayment of the same.

14.Johnson and Vivian deny that it was a loan simpliciter.  Their position, as summarised by Mr Wong at §32 of his written submissions (whose submissions Vivian adopts), is that:

… the Advancement was an advancement from the Chan Family Trust to him, and advanced pursuant to the following “Common Understanding”:-

(1)  The funding provided to Johnson for acquiring the [Houses] and costs of obtaining such funding (including any interest payments)  were to be an advancement made to Johnson by the Chan Family Trustee.  Such advancement would in turn be accounted for from Johnson’s share in the Chan Family Trust.

(2)  Best Plan, as a company under the Bonds Group indirectly owned by the Chan Family Trustee, would be the conduit for the Advancement.

(3)  Anson, Best Plan and/or the Bonds Group would arrange for the acquisition of the [Houses], and Johnson only needed to comply and act in accordance with their directions.

Commencement of the HCA and the HCMP

15.By Writ dated 7 November 2022 (subsequently amended on 10 March 2023), Johnson, Vivian and Harmony commenced the HCA against Best Plan and the Chan Family Trustee.  The core of their case is the existence of the Common Understanding.  In their Statement of Claim filed on 17 March 2023:

(a)  They plead inter alia but principally the Chan Family, the Chan Family Trust, the facts and circumstances in which the Advancement was made which they say support and reflect the existence of the Common Understanding, that the Term Sheet and Mortgage Deed not being arms-length commercial transactions, that the Advancement not intended to take effect as a loan, and the disputes that had subsequently arisen between Johnson and Anson which they say led to attempts to seek repayment of the Advancement.  They plead that the Advancement was an advancement from the Chan Family Trust in favour of Johnson, was not a loan, and that in any event, even if the Advancement were repayable as a loan, on the true and proper construction of the Term Sheet and Mortgage Deed, the term of the Advancement would be renewed and the Advancement not repayable until appropriate distributions from the Chan Family Trust.  They plead mistake and seek rectification.  They also plead contravention of the Money Lenders Ordinance.  They plead breach of fiduciary duties by the Chan Family Trustee, in that they procured, allowed, acquiesced in and/or caused the demand for repayment to be made.  They plead also estoppel and unconscionable bargain;

(b)  They seek, inter alia:

(1)  A declaration that the Advancement constituted an advancement by the Chan Family Trust to [Johnson] through [Best Plan], which (together with any alleged costs, expenses, interest or liabilities payable)  shall be accounted for by [Best Plan] [sic.] out of his existing, contingent or prospective share and/or interest in the distributions from the Chan Family Trust, whether directly or indirectly held, and was and is not a loan or debt to be repaid;

(2)  Further or alternatively, a declaration that on the true and proper construction of the purported Term Sheet, the term of the Advancement would be renewed until, and the Advancement and/or any alleged interest and/or any liability under the Term Sheet was not repayable until and unless, distributions and/or dividends are paid to [Johnson] out of the Chan Family Trust and/or the Bonds Group after the Advancement was made, of an amount equivalent to and/or exceeding the Advancement and/or any alleged interest and/or any liability arising under the Term Sheet or otherwise;

(3)  Alternatively, and insofar as necessary, rectification …;

(4)  Further or in the alternative …, a declaration that it is otherwise inequitable or unconscionable for [Best Plan] to seek repayment of the Advancement … at all or at least prior to distributions …;

(5)  Still further or in the alternative, a declaration that any alleged obligation for the repayment of the Advancement and/or any interest thereunder as a loan is invalid and/or unenforceable …;

(6)  Still further or in the alternative, a declaration that the [Chan Family Trustee] has acted in breach of trust, fiduciary duties and/or mortgagee duties (as the case may be);

(7)  Still further or in the alternative, a declaration that that [sic.] [Best Plan] is estopped from enforcing the Term Sheet …;

16.Best Plan has filed its Defence and Counterclaim.  Principally, it denies the existence of the Common Understanding.  It counterclaims against Johnson and Vivian for, inter alia, repayment of the outstanding principal, interest and delivery up of vacant possession of the Houses.

17.The Chan Family Trustee has also filed its Defence.  Principally, it denies that the Common Understanding has been reached.  It adopts the matters pleaded by Best Plan in that regard.  It denies any breach of duties.   

18.Johnson and Vivian have filed their Replies.  Pleadings have closed.

19.Between April and June 2024, lists of documents were exchanged.

20.In the meantime, on 5 July 2024, Best Plan by originating summons commenced the HCMP.  The sole purpose of commencing the same is to enable Best Plan to seek against Johnson and Vivian summary judgment of its counterclaim pleaded in the HCA, which procedurally it cannot seek under the HCA given O.14 r.1(3).

The Stay Summonses

21.On 2 and 11 September 2024, Best Plan filed 2 summonses, one in the HCA and one in the HCMP, seeking an order that the HCA be stayed pending final disposition of the HCMP, or alternatively that they be heard together with the HCMP as the lead action (the “Best Plan Stay Summonses”).  On 12 November 2024, Johnson and Vivian in turn filed 2 summonses (together with Harmony but only in the HCA), again one in each action.  They request the opposite, that the HCMP be stayed pending the determination of the HCA, or alternatively that they be heard together but with the HCA as the lead action (the “Johnson & Vivian Stay Summonses”, and with the Best Plan Stay Summonses, collectively the Stay Summonses mentioned above).

22.As mentioned above, Vivian acts in person during the hearing for the Stay Summonses.  Her stance aligns with that of Johnson’s.

23.Mr But is also counsel for the Chan Family Trustee.  In his written submissions of 8 April 2026, he points out the fact that the Chan Family Trustee is not a party to the Loan, and that it adopts a neutral stance towards the Stay Summonses.  It subsequently sought leave from this Court to be excused for the hearing, which this Court had granted.  

The nature of the present hearing

24.I highlight the fact that this hearing is for resolution of the Stay Summonses.  It is not for resolution of the HCMP or the application for summary judgment it intends to bring about.  This is the result of not just the nature of the Stay Summonses, but also the specific directions which Master A Ho gave during the direction hearing on 29 November 2024.  During that hearing, Best Plan raised the suggestion that the substantive hearing of the HCMP be “rolled up” and heard together with the Stay Summonses so that everything could be dealt with by a judge in a single hearing.  The learned Master did not accept that suggestion.  He took the view that the Stay Summonses should be heard and argued first, and the substantive application under the HCMP be adjourned pending determination of the Stay Summonses.

25.That decision has its practical and procedural implications.  As a result of that decision, the learned Master only gave directions for the filing of evidence in relation to the Stay Summonses. 

26.Whilst parties have indeed filed evidence (and indeed extensive evidence)  in support and opposition of the Stay Summonses, given the directed scope of the evidence, I cannot say that parties have indeed filed all the evidence they otherwise would have if this were a “rolled up” hearing.  Depending on the result of this hearing, if the HCMP is to be proceeded with further, in whatever order, directions on evidence will have to be given.

27.The upshot of the above is that this Court at this stage does not have parties’ full evidence on the HCMP.

28.Echoing what I have said in the first paragraph of this Decision, I repeat that these are cross applications for case management directions on the issue of stay so as to decide on the sequence in which the HCA and HCMP are to be conducted.

29.This Court has previously in Lam Cheuk Ting v Ho Kwan Yiu [2025] 4 HKC 249 at §§15-17 summarised the legal principles relevant to the courts’ approach in exercising case management powers with respect to an application for a temporary stay.  Counsel accept their application here.  I will not repeat them.

30.Mr Nip acknowledges the case management nature of this hearing.  The courts have wide discretion in hearings of this nature.  Mr Nip reminds this Court that the discretion nonetheless has to be exercised judicially, and cannot be exercised in a vacuum.  I heed the reminder.

Discussion

31.Counsel have filed very detailed written submissions on the matters (Mr Wong 46 pages in total, and Mr Nip 63, excluding annexes and chronology).  A total of 71 authorities have also been placed before me (Mr Wong 34 and Mr Nip 37).  I have considered them.  I have also considered counsel’s oral submissions.  Given the case management nature of the applications, I may be forgiven for not reciting and addressing specifically all the points raised.  I focus upon the following matters, for the reason of which I refuse the Best Plan Stay Summonses and allow the Johnson & Vivian Stay Summonses.

32.Mr Nip’s position is that Best Plan’s case is simple and straightforward – one for the enforcement of a mortgage loan.  That may be true on the face of the documents before this Court.  But whether the documents give the full picture is a question which cannot be answered without regard to the factual case raised by Johnson and Vivian.

33.I have summarised their pleaded case above.  The facts are in serious dispute.

34.In respect of Johnson and Vivian’s factual case, Mr Nip is not saying that even upon acceptance of their factual allegations, they have in law no arguable defence to the HCMP.  He is saying rather that their factual allegations should not be accepted.  He highlights the facts that Johnson and Vivian are “capable and well-educated adults”.  He submits that their contentions based on advancement “are wholly without merit”, that the “so-called ‘Common Understanding’ (of ‘gift’)  is wholly fabricated”, their “scattered-gun approach by relying on, inter alia, ‘rectification’ ‘mistake’, estoppel and unconscionability is wholly untenable and has no substance”, their repayments having “decisively acknowledged and affirmed the binding effect of the Mortgage Loan”, and their case otherwise “hopelessly misconceived”.  

35.At the end of the day, whether any summary judgment should be entered will be dependent upon an assessment of the factual evidence.  Questions like whether any factual allegations are capable of being believed will need to be asked and answered.

36.There can be cases in which such questions can be answered on affirmations without cross-examination.  The courts deal with such matters I dare say every day.  Contemporaneous documents and conduct are important.  It is particularly so in commercial transactions.

37.But the present case did not arise in a commercial setting.  The immediate parties are members of the same family.  They are the beneficiaries of the same trust.  There has been, in Mr Wong’s words, a complex family feud. Whilst parties in a commercial setting is expected to work off documents and records, parties in a domestic setting may not.

38.There is one example which Mr Wong has highlighted.  As I have summarised above, the “Term” of the Loan according to the Facility Letter was “One year from drawdown, renewable annually, subject to the satisfactory annual review of borrowers’ financial status by the Lender”.  But what is the meaning of “satisfactory annual review”?  Has any been carried out?  In this regard, all Mr Nip could point to was §54 of Anson’s 2^nd affirmation, where he claims that:

As to ‘review’, while there was no formal ‘annual review’ as carried out by Best Plan, I and Lily (as directors of Best Plan), through our staff, had always kept the Mortgage Loan and Johnson and Vivian’s financial conditions and repayment status (most importantly, the value of the Properties as secured under the Mortgage)  under constant and ongoing review and monitoring to see if further action is required.

But beyond that assertion, no further detail is available as to what informal annual review had been carried out, whether by Best Plan, or Anson, or Lily, or their staff, or otherwise. The matter should further be considered in the context of Johnson’s evidence that he simply did not have the financial means to purchase the Houses, that interest had apparently been outstanding, but that the Written Demand was not issued until some 3 years after the last interest payment.   

39.The above is only an example.  On the evidence before me, I simply cannot reach any conclusion agreeing with Mr Nip’s submissions on Johnson and Vivian’s factual case.  Indeed, if I am required to form any preliminary view, my view is that their factual case is not incapable of being believed.

40.The fact that any granting of summary judgment in the present case involves assessment and valuation of contested facts impacts upon the questions at this stage before this Court.  2 options are open as to how best to proceed from here – (1)  proceed with the HCMP first so as to investigate further (“Option 1”), or (2)  proceed with the HCA first into which the HCMP will be subsumed (“Option 2”).  I say immediately at this stage that the option of having the 2 actions heard together (parties’ alternative position)  is to me not a viable one.  It makes little sense to me to have an application for summary judgment heard together with the full trial.

41.In respect of Option 1, I say immediately that Best Plan is entitled to commence the HCMP as of right.  This should be acknowledged. 

42.But beyond that, all other factors in my view point towards the adoption of Option 2:

(a)  If the HCMP is to be proceeded with first, further rounds of evidence will have to be directed.  I have pointed this out above;

(b)  Given the disputes on facts which I have summarised above, there is the fundamental concern as to whether originating summons is the appropriate procedure for the resolution of parties’ disputes;

(c)  Following on from the above, if Option 1 is to be adopted, there is the distinct possibility of Johnson and Vivian seeking order permitting cross-examination. Mr Wong has in fact in the course of submission specifically flagged up this possibility;

(d)  On the other hand, the HCA is on foot.  Pleadings have closed. Discovery has been done.  The next step is the filing of witness statements.  The obvious point is this.  As I have pointed out, if the HCMP is to be proceeded with further, further rounds of evidence will have to be directed.  I see no reason at all why the time costs and efforts that otherwise would need to be spent and incurred on the preparation of affirmations under the HCMP should not be spent and incurred rather on the preparation of witness statements under the HCA so as to get the HCA ready for trial.  To do otherwise would in my view be quite inconsistent with the underlying objectives;

(e)  There is also this.  The parties in the HCA and HCMP do not entirely overlap.  The Chan Family Trustee is not a party to the latter.  Any disposition of the HCMP will not dispose of all issues pleaded in the HCA, and in particular, I point out the obvious, Johnson and Vivian’s claim against it of breach of fiduciary duties;

(f)  Mr Nip in the course of submission suggested that any substantive hearing of the HCMP will only take 3 hours.  He suggested that that would be time well spent for the possible narrowing down of issues in the HCA.  I do not find those submissions convincing.  They ignore the factual disputes that need to be properly dealt with, ignore the time and resources required for getting the HCMP ready for substantive hearing, ignore the further resource required from the court, speculative as to the outcome, and in any event highly optimistic as to the time estimate of 3 hours.

Disposition

43.For the broad reasons set out above, I dismiss the Best Plan Stay Summonses. 

44.In respect of the Johnson & Vivian Stay Summonses:

(a)  In respect of the one filed in the HCA, I allow §1 thereof; and

(b)  In respect of the one filed in the HCMP:

(i)  I allow §1 thereof;

(ii)  §3 thereof concerns directions for further evidence under the HCMP. Given my order for its stay, no further direction in that regard is called for.

45.The preparation of the HCA must have been put on hold due to the Stay Summonses.  Whilst I am not prepared to order any speedy trial, as that would in effect be allowing the parties to jump queue, I am prepared to give directions on the filing of witness statements to get things moving.  I give parties leave to do so with 56 days from the date of this Decision, and further leave for them to file supplemental witness statements in effect in reply within 35 days thereafter.  The Rules of the High Court otherwise apply.  I give parties liberty to apply in this regard.   

46.I order, on a nisi basis, that Best Plan is to bear the costs of and occasioned by the Stay Summonses of Johnson, Vivian, Harmony and the Chan Family Trustee (if any for the trustee), with certificate for 2 counsel when 2 are engaged, to be assessed summarily.  Subject to any application to vary, the claiming parties shall file statements of costs within 21 days from the date of this Decision, the paying party statements of objections 14 days thereafter, and the claiming parties replies 7 days thereafter.

Mr William Wong SC leading Mr Joshua Yeung, instructed by CLKW Lawyers LLP, for the 1^st and 3^rd Plaintiffs in HCA 1492/2022 and the 1^st Defendant in HCMP 1149/2024

The 2^nd Plaintiff in HCA 1492/2022 and the 2^nd Defendant in HCMP 1149/2024, appeared in person

Mr Norman Nip SC leading Mr Adrian But, instructed by Gallant, for the 1^st Defendant in HCA 1492/2022 and the Plaintiff in HCMP 1149/2024

Mr Adrian But, instructed by Sidney Lee & Co, for the 2^nd Defendant in HCA 1492/2022, attendance excused