Chan Yat on v. Tsang Wai Kwan and Another

HCA 1407/2026 [2026] HKCFI 4708 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE ACTION NO 1407 OF 2026 _________________ BETWEEN   CHAN YAT ON Plaintiff   and     TSANG WAI KWAN (曾偉鈞律師) 1st Defendant   MESSRS TSANG & LEE (A FIRM) (曾偉鈞李麗玲律師行) 2nd Defendant

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DECISION

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1.This is an interim-interim application by the Plaintiff by summons issued on 11 August 2026 for an order for payment into court and/or injunctive relief against the 1^st Defendant, his solicitor. The 1^st Defendant is the sole proprietor of the 2^nd Defendant firm.

2.There are before me a draft affirmation of the Plaintiff (who lives in the UK) and an affirmation of the 1^st Defendant.  The Plaintiff’s affirmation shows that he together with others had sold certain properties in Hong Kong in 2022-2023.  This is supported by Land Registry exhibits.  The Plaintiff’s share of the proceeds amounted to about HKD35.5 million.  For various reasons given in his affirmation, he did not ask for the balance of the proceeds of about HKD29 million to be transferred to him at the time.  It remained with the Defendant firm. 

3.On 12 March 2026, on the Plaintiff’s request, the 1^st Defendant signed a document confirming that the Defendant was holding HKD29,050,447 (“the Sum”) in the firm’s client account and that this Sum, together with other amounts in the client account, was currently invested in a fixed deposit.  The 1^st Defendant acknowledged that on maturity of the fixed deposit on 23 April 2026, the Sum would be transferred to a specified bank account of the Plaintiff in Hong Kong.  

4.However, that was not done.  Instead by a WhatsApp message of 26 April 2026, the 1^st Defendant informed the Plaintiff that the Sum would be transferred as soon as possible to the specified bank account when “relevant internal and external regulatory requirements are completed” (English translation).

5.The Plaintiff instructed another firm of solicitors to write a letter before action to the Defendants on 23 July 2026.  After a lengthy narrative of the events, as well as reference to breaches of professional conduct, fiduciary duty and solicitors accounts rules, the Plaintiff’s new solicitors demanded (among other things) the immediate release of the Sum.

6.No reply to that letter before action was forthcoming from the Defendants.

7.In his affirmation in opposition to the Plaintiff’s application, the 1^st Defendant says that the Sum is sitting in a client account of the firm.  He has exhibited bank statements of the client account for the months of April to July 2026.  His counsel has also handed up a print-out of the bank’s statement of the same account showing that as of 9:00 am this morning, there is a credit amount which is larger than the Sum.  However, I note that the 1^st Defendant’s counsel says that this client account is not held only for the Plaintiff.  In other words, there are sums (unknown) which are held for other clients.  No ledgers have been exhibited.

8.The position therefore is that the 1^st Defendant accepts that he is in control of the Sum, and he does not allege that he has any right to it.  His opposition to the application is that “there are specific regulatory circumstances governing the retention of the Sum and the reasons why it presently cannot be dealt with”.  He says he will place the explanation in a sealed envelope at some stage in the future.

9.I note however that he has not alluded to the relevant regulation, or who has contravened it, or how, or even when he first became aware of its applicability.  His excuse is that he has not had enough time since the summons was served to prepare this explanation (whether in an affirmation or sealed envelope), but I note that he had referred to some unspecified regulation in April, some 4 months ago, and it has been nearly a month since the letter before action, to which he did not even reply.  It is not adequate even for the purpose of today’s application to say that he will at some time in the future provide an explanation for not releasing a client’s money.

10.I do not consider that the 1^st Defendant’s offer of an undertaking to the court (“not to transfer, dispose of, deal with or exercise any power or rights attached to, or cause or procure the transfer, disposal, dealing and/or exercise of rights attached to, the Sum, pending the substantive hearing of the summons”) to be adequate.  It is of course correct that breach of an undertaking to the court may lead to imprisonment, but I note that substantial consequences were threatened against him in the letter before action, but they were ignored.  I have also enquired if the undertaking can be fortified, but no fortification was forthcoming.  

11.In view of the 1^st Defendant’s conduct in April to July 2026 referred to above, the absence of any authority presented to me as to why payment into court would be prohibited under any ordinance (which remains unidentified), and in view of the fact that the 1^st Defendant has admitted in his affirmation that he has control of the Sum (Lewin on Trusts, paragraph 40-018, Gee on Commercial Injunctions paragraph 4-019) which he holds as solicitor for the Plaintiff, I would in the exercise of my discretion make an order that the Sum be paid into court by 4 pm today (until further order).  Pending payment in, there will be a proprietary injunction in terms of paragraph 2 of the draft Order.

12.I will now hear counsel in relation to any other parts of the draft Order. 

Mr Patrick Chong, instructed by Messrs Winnie Leung & Co, for the Plaintiff

Mr Lai Chun Ho and Ms Stephy Lo, instructed by Tsang & Lee, for the 1^st and 2^nd Defendants