HKCFI 1750
IN THE HIGH COURT OF THE
HONG KONG SPECIAL ADMINISTRATIVE REGION
COURT OF FIRST INSTANCE
ACTION NO 1395 OF 2018
||LAU LAI SHAN LISA (劉麗珊)
||ZHANG QI (張岐)
||IC ACCOUNTING LIMITED
||CHUI PUI MAN IDY (徐佩雯)
|Before: Deputy High Court Judge Alexander Stock SC in Chambers
|Date of Hearing: 20 June 2019
|Date of Decision: 20 June 2019
|Date of Reasons for Decision: 19 July 2019
REASONS FOR DECISION
1. On 20 June 2019, two summonses taken out by the Plaintiff (“P”) came before me for hearing, namely:
(1) P’s summons (the “Injunction Summons”) dated 29 November 2018 seeking:
(a) a proprietary injunction against the 2nd Defendant (“D2”) and the 3rd Defendant (“D3”) to restrain them, pending trial or further order, from dealing with certain specified sums which were paid by D1 to D2, or the proceeds of thereof; and
(b) disclosure orders against D2 and D3 in respect of the whereabouts of those sums or their proceeds;
(2) P’s summons (the “Section 21 Summons”) dated 4 December 2018 under section 21 of the Evidence Ordinance (Cap 8) (the “EO”) for inspection of records and documents kept by The Hongkong and Shanghai Banking Corporation Limited (“HSBC”) regarding D2’s account with HSBC.
2. P was represented by Mr Toby Brown. D2 and D3 were represented by Mr Kevin Li and Mr Gilbert Chong.
3. At the conclusion of the hearing I made orders in terms of P’s summonses (subject to certain adjustments). I indicated that I would provide reasons for my decision in due course, which I now do.
4. P claims that she is the victim of a fraud perpetrated by D1, who is her sister-in-law, and in which D2 and D3 also participated. D2 is a Hong Kong company, of which D3 is the sole director and shareholder .
5. The key facts alleged by P include the following:
(1) P formerly owned the sole share in a West Samoan company called Kidbrooke Group Limited (“Kidbrooke”). Kidbrooke held certain real property and funds on trust pursuant to a trust (the “Trust”) which had been established by P’s uncle (“Lau Senior”). Since the establishment of the Trust in 1997, P as sole director and shareholder managed the day-to-day operations of Kidbrooke and the Trust.
(2) From around 2002/2003, when D1 began a relationship with P’s brother (“Alan”), D1 started assisting P with management of the Trust. Over time, D1’s involvement increased and P reposed increasing trust and confidence in D1, to the point where P would sign documents presented to her by D1 without reading them.
(3) Starting from 2015, D1 caused P to sign various documents disposing of certain assets of the Trust and allowing D1 to have access to and operational control over Kidbrooke and its assets.
(4) In May 2017, D1 caused P to sign a written resolution to transfer P’s shareholding in Kidbrooke to D1, which transfer took effect. P was induced by a fraudulent misrepresentation by D1 that the documents she was signing related to insurance for trust assets.
(5) On 23 – 24 May 2018, D1 represented to P that D3 would bring to P a series of documents for signature in respect of Kidbrooke’s tax affairs. Unbeknownst to P, these contained a letter of P’s resignation as Kidbrooke’s director. P was induced to so sign by fraudulent misrepresentations by D1 and D3 as to the nature of the documents she was signing.
(6) On 29 May 2018, a similar incident occurred, wherein P signed a letter of resignation as Kidbrooke’s secretary, induced by fraudulent misrepresentations by D1 and D3 as to the nature of the documents she was signing.
(7) Starting in 2017, D1 had begun the process of selling the share in Kidbrooke, which company still owned a valuable property (the “Fu Hing Property”). On 29 May 2018, completion took place of a transaction by which D1 purportedly sold the share in Kidbrooke to Allied Way International Investment Limited (“Allied Way”) for a purchase price of HK$140,000,000.
(8) P’s pleaded causes of action include deceit, conversion, negligence, breach of fiduciary duty, knowing receipt of trust property, dishonest assistance in a breach of trust, unjust enrichment, proprietary/tracing claims, and conspiracy to injure by unlawful means.
6. D1’s pleaded defence is relevant mainly by way of background. Her position, in essence, is that Kidbrooke was in fact a vehicle used to manage the assets of Alan’s parents (rather than Lau Senior), which would in due course become the property of Alan as their only son. There was never any trust—or D1 knew of no such trust—created by Lau Senior for the benefit of his sons. As Alan’s wife, D1 over time became more involving with the management of Kidbrooke, with the consent of Alan, his parents and P. The various transactions which P now disputes were effected with the knowledge and consent of Alan’s parents, Alan and P; and P knew the nature of the documents she signed. It is apparently D1’s position that the proceedings are aimed at depriving Alan’s parents (and in due course Alan and D1) of assets which rightly belong to them.
7. The substantive position of D2 and D3 is set out in their pleaded defence and D3’s affirmation filed in opposition to P’s summonses. D2 and D3 complain that they are innocent parties who have become unfairly embroiled in a family dispute. Broadly, it is said that:
(1) D3 has been in the business of providing company secretarial, accounting and consultancy services since 2005. In July 2016 she incorporated D2 in for the purpose of such businesses. D2 is currently serving over 283 companies.
(2) Around May 2017, D3 was introduced to Kidbrooke, and D2 began to provide administrative services to Kidbrooke. In August 2017, D1 passed to D2/D3 Kidbrooke’s company kit which included a Certificate of Incumbency describing D1 as Kidbrooke’s sole shareholder.
(3) Around October 2017, D1 engaged D2 to handle accounting, tax and secretarial work for Kidbrooke. D2/D3 were made aware of the intention to sell the share in Kidbrooke, and provided various professional services in respect of that sale.
(4) D2/D3 admit that on 24 May and 30 May 2018, D3 met with P and provided various documents for her...