Aga Information Ltd and Others v. Wan Hok Wai Henry and Others

DCCJ 3966/2021

[2026] HKDC 1909

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 3966 OF 2021

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DECISION

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A.  Introduction

1.By their Summons dated 6 July 2026, Ps seek leave to appeal against my judgment dated 9 June 2026 (“Judgment”) to the Court of Appeal, which dismissed their claims against Ds entirely.

2.The background leading to this dispute has been set out in the Judgment. Essentially, Ps’ underlying claim concerned the recovery of HK$2,797,276.50, calculated by deducting the refunded sum and the costs allowed on taxation from (1) costs on account previously paid by them to the Firm and (2) costs recovered for them in earlier proceedings conducted by the Firm. Unless otherwise stated, I adopt the abbreviations and defined terms used in the Judgment.

3.Ds oppose the application. Their central submission is that the proposed grounds of appeal advance a materially different case from that pleaded and run by Ps at trial.

4.In this application, Ps are represented by Mr Douglas Lam SC, leading Mr Cyrus Chua and Ms Regina Yip (not Ps’ trial Counsel). D1 is represented by Mr Tasman Tam and Mr Donald Ting. D2 is represented by Mr Simon Chiu.

B.  The Relevant Legal Principles

5.The legal principles governing this application are trite. Under section 63A(2) of the District Court Ordinance (Cap 336), leave to appeal may be granted if the appeal has a “reasonable prospect of success”. Such prospects must be more than fanciful but need not be probable: SMSE v KL [2009] 4 HKLRD 125.

C.  Ground 1

6.Ps submit that this Court mischaracterised their claim as a proprietary claim to assert a trust over unidentified or dissipated property, whereas it was in truth a personal claim against D1 and D2, as solicitor-trustees, to restore an existing “Client Account Trust”. They contend that this Court should have addressed the personal consequences of the trust relationship notwithstanding that the relevant monies had been spent.

7.I am unable to accept Ps’ submissions. The case pleaded in SoC was that Ds were holding the Remaining Balance on trust for Ps. Ps sought a declaration of trust as their primary relief in the SoC. The alternative claim for money had and received was also pleaded as a claim for the same global sum. No personal duty to reconstitute a trust fund or claim for an account was pleaded. Nor did Ps’ pleaded case identify any unauthorised debits, or seek their falsification.

8.At trial, Ps relied upon a constructive or Quistclose trust and, alternatively, a restitutionary claim based on alleged overcharging or unjust enrichment. They sought to establish that the Remaining Balance was presently held by Ds and was recoverable as a single sum from Ds “jointly and severally”.

9.Specifically, in respect of Ps’ money had and received claim, this Court raised with Ps’ trial Counsel during her closing submissions as to the very basis of this claim. It was confirmed that Ps were only relying upon total failure of consideration as the basis. This is markedly different from the new case now sought to be put before the Court of Appeal by Ps that “the claim for money had and received was not a free-standing unjust-enrichment claim. It was the common-law form of recovery for an accrued trust obligation” (see paragraph 1.9 of the draft Notice of Appeal).

10.Ps at trial did not advance a claim based upon an existing express client-account trust which survived dissipation, with a consequential personal obligation to restore a deficit. Nor did Ps invite the Court to order an account or any other process for identifying transactions and liability by reference to the respective periods for which D1 and D2 were alleged to be responsible.

11.The scope of Ps’ case was a matter thoroughly discussed during the trial and, after the confirmation from Ps’ trial counsel that the Ps’ claim should be so limited, the trial and the Judgment proceeded on the basis as set out in paragraph 12 of the Judgment.

12.The Judgment thus addressed the case which Ps chose to plead and advance. In particular, my conclusion that a proprietary declaration could not be made in the absence of identifiable property in the Ds’ hands was directed to the trust claim which had been pursued and argued by Ps.

13.In my view, Ps are now seeking to run an entirely new case on appeal. For instance, Ps not only suggest that there was an express trust, but also that after the Costs on Account were all spent, that express trust remained subsisting until a condition subsequent, tied to taxation, was invoked. It is Ps’ new case that the said condition subsequent operated when Master Hui issued the Allocatur on 5 February 2021. None of these matters was raised at trial.

14.While it is unnecessary to plead every legal consequence of the facts relied upon, where a plaintiff has pleaded only one legal consequence, it cannot advance on appeal an alternative and inconsistent consequence which would take the opposing party and the Court by surprise: Lo Yuk Sui v Fubon Bank (Hong Kong) Ltd (2020) 23 HKCFAR 138, §§9–10, discussing Mui So Bing v Wan Chi Shing [2019] HKCA 1341, §§22.1–24.3.

15.In my view, the proposed appeal materially recasts Ps’ case after trial and therefore also engages the principle in Flywin Co Ltd v Strong & Associates Ltd (2002) 5 HKCFAR 356. A new point cannot ordinarily be raised on appeal where it would involve factual issues not explored at trial, evidence which might have been adduced, or arguments which might have affected the conduct of the trial. The point is barred unless there is no reasonable possibility that the relevant evidence would have been materially more favourable to the opposing party had the point been raised at trial.

16.Ps submit that the Flywin principle does not apply here because their proposed arguments are purely legal and do not depend on further evidence. They contend that there is no reasonable possibility that the evidence would have been materially more favourable to Ds if those arguments had been raised at trial.

17.I disagree. The existence of the alleged condition subsequent assumes that the authority on Ds to spend the Costs on Account to fund the Actions and to pay for the expenses of the Firm including disbursements is defeasible. Further, an authority to withdraw trust property is a term of the alleged express trust. For instance, in the case of an oral declaration of trust, the questions of what was said and what was intended by the settlor are both questions of fact, and evidence as to the settlor's intentions and subsequent conduct are admissible. Therefore, this new case raises new factual issues on the scope of the authority, which was not explored at trial. Had this new case been raised at trial, the evidence of P3 could have been tested on the scope and conditions of the alleged authority. This would have impacted the course of the evidence and arguments at trial. Ds are thus prejudiced by the change of case.

18.Insofar as it is suggested that the condition subsequent is imposed by law, it still had to be properly raised at trial and argued. Ps have failed to do so.

19.Thus, Ps are barred under the Flywin principle from raising the new points on appeal. I also do not accept that there was any mischaracterisation of Ps’ case as pleaded and pursued. I find that Ground 1 has no reasonable prospect of success on appeal.

D.  Grounds 1.1 and 1.2

20.Under these grounds, Ps submit that:-

(a)  the absence of a surviving fund in the hands of D1 or D2 was not fatal because a trustee may remain personally liable to make good a deficit after trust property has been dissipated;

(b)  once it was accepted that the Costs on Account and Recovered Costs were client monies held in a fiduciary capacity, D1 and D2, as alleged solicitor-trustees, bore the burden of justifying every debit made during their respective periods of responsibility; and

(c)  this Court erred in requiring Ps to prove how the global sum was attributable to the particular configurations of the Firm in which D1 and D2 participated.

21.I do not accept Ps’ submissions. The pleaded trust claim was that Ds were then holding the Remaining Balance on trust. The relief sought was a declaration to that effect and payment of the same global balance. It was not a claim that an express client-account trust had been depleted by unauthorised debits, such that D1 and D2 were personally obliged to restore a resulting deficit.

22.The Court was not determining a claim for an account, or a claim to falsify identified disbursements from an existing trust fund. Ps sought to hold D1 and D2 jointly and severally liable for a global sum. The essential question was therefore whether Ps had established a legal and factual basis on which either D was personally liable for that sum.

23.This Court held that they had not done so. Based on the arguments presented to me at trial, I held that Ps had failed to plead and prove the necessary nexus between the sum claimed and the specific partnership or sole-proprietorship configuration of which D1 or D2 was a partner or sole proprietor.

24.These grounds are accordingly attempts to replace, after trial, a failed proprietary claim with a personal trust-accounting claim. That course is procedurally impermissible for the reasons already given above under Ground 1.

25.These grounds have no reasonable prospect of success.

26.Before leaving these grounds, I also note that in the draft Notice of Appeal, Ps are now asking for “Judgment be entered for Ps against D1 and D2 in the sum of HK$2,797,276.50, or alternatively such part thereof as this Court finds to be attributable to unauthorised debits made from the Client Account Trust during D1's and D2's periods of trusteeship, together with interest thereon at such rate and for such period as the Court thinks fit.”

27.Leaving aside that this alternative order is different from what Ps asked for at trial, namely that D1 and D2 be jointly and severally liable for the whole sum, in my view, there is a further difficulty as to this alternative order now being sought by Ps.

28.As pleaded in the SoC, two payments described as Costs on Account ie HK$800,000 on 13 June 2016 and HK$60,000 on 8 February 2017 were received by the Firm. HK$105,010 of the Recovered Costs was received by the Firm on 10 December 2015. These payments were made only after D1 had ceased to be a partner of the Firm on 2 April 2015. On Ps’ own analysis, D1 was not a solicitor-trustee when those later payments were received. He could not therefore be liable, as trustee, for any alleged unauthorised debit from those particular sums.

29.Master Hui’s Allocatur determined the aggregate costs allowed on taxation, namely HK$2,768,237.50. Ps have not identified any particular bills, payments or debits from which the alleged Taxation Excess arose, or allocate that excess between the successive configurations of the Firm. No evidence or analysis was placed before this Court at trial to show what part, if any, of the alleged unauthorised debits was made during D1’s period of trusteeship, as opposed to the periods after his retirement. There is accordingly no evidential basis on which D1’s alleged liability could be apportioned.

E.  Ground 1.3

30.Under Ground 1.3, Ps contend that the Court erred in treating their money had and received claim as a free-standing claim in unjust enrichment which required the pleading of an unjust factor. They now submit that the claim was, in substance, a common-law means of enforcing an accrued obligation to repay the trust deficit, so that no independent unjust factor was required.

31.This ground can be disposed of quickly. As mentioned above, the basis of this claim was a matter discussed and raised with Ps’ then trial counsel when she was making Ps’ oral closing submissions. It was confirmed to the Court that Ps relied solely upon total failure of consideration as the basis of this claim.

32.Accordingly, Ps cannot now rely upon the presence of the words “money had and received” in the pleadings to transform the case into one for payment of an accrued trust obligation.

33.Ground 1.3 is therefore barred by the same procedural objection under the Flywin principle and has no reasonable prospect of success.

F.  Ground 1.4

34.Under Ground 1.4, Ps submit that the Court erred in treating their authority to use the Costs on Account as unconditional. They contend that any authority to debit client monies for fees and disbursements was defeasible upon taxation. On their case, when the Allocatur was issued on 5 February 2021, it fixed the amount properly chargeable and caused the Firm’s authority to retain the alleged Taxation Excess to fall away.

35.Ps’ formulation does not accurately reflect the Court’s findings. This Court recorded P3’s evidence that Ps expected the funds to be used for the Actions and for general expenses, while also wishing to review, verify or challenge charges made. Having considered the evidence as a whole, I found that the arrangement and understanding were that Costs on Account would be used to fund the Actions and pay the Firm’s expenses, including disbursements. I held that the Funds had been used with authority and that Ps had not established a subsisting fund on the case pleaded.

36.As to whether such authority was defeasible upon taxation, that issue was simply not raised by Ps at all. Ps did not plead an express or implied term of the retainer under which the authority to apply or retain client monies was conditional upon a future taxation. Nor did they plead or raise that the Legal Practitioners Ordinance imposed such a condition as a matter of law. In my view, Ps’ contention would have raised factual issues concerning the terms of the retainer, the parties’ intentions and the scope of the authority granted to the Firm. It would also have required proper argument on the legal effect of taxation under the Hong Kong statutory scheme. Those points should have been raised at trial. It is now too late for them to be re-opened on appeal.

37.Even if Ps are allowed to re-open this matter, in my view, Ps’ reliance on Gray v Lavan (2025) 99 ALJR 1535 does not assist. The reasoning in that case was shaped by the particular retainers and the statutory regime under consideration, including a provision which expressly provided for the recovery of an excess shown on taxation, namely section 243 of Legal Practice Act 2003, which reads as follows:-

“If a bill of costs is taxed under this Division and, as a result of that taxation, the amount which has been paid or deducted in respect of that bill is more than the amount authorised by the taxation, to the extent of the excess, the person charged has a claim for repayment which may be certified and enforced under section 240 as though allowed under that section”

38.Ps have not identified an equivalent provision in the Legal Practitioners Ordinance or a pleaded contractual term which produces the result for which they contend.

39.Ps refer this Court to sections 67 and 69 of the Legal Practitioners Ordinance, these provisions, however, do not create an equivalent of the statutory repayment mechanism under the Legal Practice Act 2003, nor establish that a taxation automatically converts previously authorised historic applications of client money into unauthorised trust debits.

40.Finally, Ps’ separate contention concerning Recovered Costs does not improve their position. The Court noted that Ps had not run a distinct alternative case concerning those sums. They advanced a global claim for the Remaining Balance. It would be unfair to permit Ps now to isolate the Recovered Costs and assert a new case that there was no authority to apply them. Such a case would likewise require factual inquiry which was not undertaken at trial.

41.For these reasons, I conclude that Ground 1.4 has no reasonable prospect of success.

G.  Ground 2

42.Under Ground 2, Ps submit that, even if the Court was not prepared to enter judgment for the whole of the claimed sum, it should have ordered D1 and D2 to account for receipts into and debits from the alleged Client Account Trust during their respective periods of responsibility. They contend that the uncertainty which the Court identified in relation to the allocation of the alleged Taxation Excess was precisely the uncertainty which an account ought to have resolved.

43.In my view, Ground 2 depends upon the success of Ground 1. It assumes that Ps had pleaded and established an express trust, that D1 and D2 remained accounting trustees notwithstanding the use of the monies, and that there were debits which required to be justified, falsified or attributed between successive configurations of the Firm. For the reasons already given, that was not the case pleaded or pursued by Ps at trial.

44.Ps also did not seek an account as an alternative means of identifying liability.

45.The absence of an account was apparent from the SoC and was expressly recorded in the judgment. Ps did not seek to amend their pleadings. They instead elected to seek judgment for the whole of the Remaining Balance against D1 and D2 jointly and severally. The Court was entitled to determine that case on the basis on which it was presented.

46.I also take the view that whether an account should be ordered when a fiduciary relationship is shown also depends on the pleadings, the relief sought, the issues tried and the fairness of directing such an inquiry. An account is not a device by which a party may, after failing to prove its pleaded claim at trial, obtain a further opportunity to formulate and investigate a different case.

47.Ps’ reliance on Libertarian Investments Ltd v Hall (2013) 16 HKCFAR 681 and section 48 of the District Court Ordinance does not assist them. Libertarian explains the nature and consequences of the accounting obligation owed by trustees and other fiduciaries once an account is properly in issue. It does not concern a case in which a claimant, having pleaded and pursued a liquidated claim on one basis, seeks only after trial to recast the claim as one for an account on a different factual and legal basis. Nor does it displace the ordinary requirements of pleading and procedural fairness. Section 48, which requires the Court so far as practicable to determine the matters in controversy finally, is likewise not a licence for the Court to reformulate a party’s case or devise an unrequested accounting exercise. In my view, it does not oblige a trial judge, asked to determine a liquidated claim on the case advanced by the parties, to order an account which was neither pleaded nor sought and which would require the investigation of factual issues not tried.

48.Nor do Wong Kam Wing v Cheng Pui Lun (unreported, CACV 21/2003, 11 July 2003) or Post Office v Castleton [2007] EWHC 5 (QB) establish the broad proposition for which Ps contend. In Wong Kam Wing, the Court of Appeal considered that, on the particular case and record before it, an account was necessary to resolve the dispute between the parties. The case does not hold that an account may always be ordered notwithstanding that it falls outside the pleaded case and was not sought at trial. In Post Office, the reference to an agent’s “duty to account” was made in the context of the agent’s obligation to repay monies received on behalf of the principal. It was not authority that a formal account need not be pleaded or sought.

49.I also agree with Mr Tam that whether to order an account is a discretion. Had Ps sought an account at trial, Ds could have investigated and addressed the feasibility, utility and fairness of taking an account, including the availability of records and witnesses. None of those issues were raised or canvassed because of the way Ps chose to plead and run their case. It is therefore unfair for this point to be raised now only on appeal.

50.Accordingly, I find that Ground 2 has no reasonable prospect of success.

H.  Disposition and Costs

51.Thus, none of the grounds advanced by Ps has any reasonable prospect of success. Ps’ application for leave to appeal is thus dismissed.

52.Costs should follow the event. I make a costs order nisi that Ps do pay the costs of this application to D1 and D2 with certificate for counsel, the amount of which to be summarily assessed and to be paid forthwith.

53.D1 and D2 are directed to file and serve a statement of costs within 7 days. Ps should within 7 days thereafter lodge and serve their summary of objections of not more than 3 pages in response. The summary assessment of costs will be by paper disposal without a hearing.

54.Finally, I wish to express my gratitude for the assistance rendered by all Counsel to this Court in this matter.

Mr Douglas Lam SC leading Mr Cyrus Chua and Ms Regina Yip, instructed by Simon Ho & Co Solicitors, for the 1^st, 2^nd and 3^rd Plaintiffs

Mr Tasman Tam and Mr Donald Ting, instructed by Kelvin Cheung & Co, for the 1^st defendant

Mr Simon Chiu, instructed by Victor Yeung & Co, for the 2^nd defendant