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Yu Man Fung Alice v Chiau Sing Chi Stephen And Another

Judgment Cited authorities 1 Cited in Precedent Map Related
Vincent
Judgment Date07 February 2013
Year2013
Judgement NumberHCA1584/2012
Subject MatterCivil Action
CourtHigh Court (Hong Kong)
HCA1584/2012 YU MAN FUNG ALICE v. CHIAU SING CHI STEPHEN AND ANOTHER

HCA 1584/2012

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

HIGH COURT ACTION NO. 1584 OF 2012

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BETWEEN

YU MAN FUNG ALICE (于文鳳) Plaintiff

and
CHIAU SING CHI STEPHEN (周星馳) 1st Defendant
THE STAR ROYALE LIMTIED 2nd Defendant
(星揚海外有限公司)

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Before: Deputy High Court Judge Burrell in Chambers
Date of Hearing: 23 January 2013
Date of Decision: 7 February 2013

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D E C I S I O N

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1. This is an application by the 2nd defendant (“Star Royale”) to strike out the plaintiff’s (“Ms Yu”) claim against it. The 1st defendant (“Mr Chiau”) has also issued a strike out summons. The plaintiff, on 10 January 2013, invited the 2nd defendant to consent to the two summonses being consolidated and heard together when Mr Chiau’s application is listed, on 19 March 2013, but the 2nd defendant declined because the suggestion had come too late and the issues in the two strike out summonses were very different.

2. Ms Yu was Mr Chiau’s girlfriend between 1997 and 2010. It is Ms Yu’s case (as against Mr Chiau) that early in their relationship they entered into an agreement (which for the purpose of these proceedings is called the “Commission Agreement”) whereby Ms Yu would provide investment advice to Mr Chiau. For this service she would receive a monthly remuneration plus, according to the Statement of Claim, 10% of the after-tax profits resulting from any successful investment. It is her case that under this agreement she was paid various sums over the years totalling about $19 million.

3. By far the most successful investment has been the Skyhigh Project. It is this project which is at the centre of this litigation and both summonses.

4. In a nutshell the Skyhigh Project was a 50-50 joint venture between Ryoden Development Ltd and Mr Chiau “through the 2nd defendant” (Star Royale) (Statement of Claim paragraph 7). It concerned the purchase (for $320 million) and development of a site at Pollock’s Path on the Peak. Four houses were built on the site. It is Ms Yu’s case that after the sale of two of the four houses she was paid nearly $15 million pursuant to the Commission Agreement. This payment is therefore the lion’s share of the $19 million she has received since the agreement commenced.

5. It was decided to account for 100% of the purchase and development costs after the sale of the first two houses before calculating Ms Yu’s 10% of the after-tax profits earned by Star Royale’s 50% of the joint venture. Thus, after deducting from 50% of the proceeds of sale, all purchase costs, all development costs and all tax liabilities, 10% of the remaining profit equalled $15 million. That meant that the remaining two houses (numbers 10 and 12 Pollock’s Path) when sold would be all profit to the joint venture. Number 10, the property of the other 50% joint venture partner, Royden, was sold in 2011 for $800 million.

6. No.12 remains unsold and is occupied by Mr Chiau. Ms Yu submits that his occupation of No.12 represents a sale of it to him and therefore she has a valid claim under the agreement to her 10% ‘commission’ as against Mr Chiau. The registered owner of No.12 is Star Royale. Her claim against Star Royale is for:

(1) A declaration that the plaintiff holds an equitable interest in House No.12 Pollock’s Path, The Peak equivalent to the balance remaining of the House commission as has not been paid to her free from all encumbrances.

(2) Further and in the alternative, a declaration that the plaintiff is entitled to at least 8.75% of the value of House No. 12.

(The reference to 8.75% is based on her claim that she is entitled to “at least” $80 million under the agreement, of which she has already received $10 million which reduces her 10% down by 1/8th to 8.75%).

7. The basis of her claim against Star Royale is (i) that Mr Chiau is now the entire beneficial owner of House No.12 “though his beneficial interest in Star Royale” and (ii) that Mr Chiau’s occupation of No.12 and treating it as his own created a constructive trust of the proceeds of sale of No.12 in favour of Ms Yu by “Mr Chiau as the beneficial owner of (No.12) through Star Royale”. The argument continues that Ms Yu holds an equitable interest in No.12 equivalent to the amount she is owed and that Mr Chiau’s failure to pay amounts to a breach of trust.

8. Mr Sarony, SC leading Ms Angel Lau, counsel for Ms Yu, accepts that his only claim for damages or other financial relief lies against Mr Chiau pursuant to the agreement. It is not contended that Star Royale is a party to that agreement. Ms Yu’s claim against Star Royale is purely declaratory in nature. In practical terms it seeks to put a charge on the property in Ms Yu’s favour equivalent to the amount she claims to be owed. If she loses her case against Mr Chiau there can be no declaration against Star Royale, because the declaration sought depends on the existence of the agreement. If she wins against Mr Chiau, the declaration against Star Royale is not, in practical terms required. Thus, again acknowledged by Mr Sarony, the real purpose of keeping Star Royale in the litigation is to register a lis pendens charge on the property to secure the plaintiff’s claim and thereby protect her interest pending and post trial.

9. The plaintiff, at trial, would invite the court to consider who directs and controls the activities of Star Royale so as to determine that the corporate structure, upon which Ms Lisa Wong, SC leading Mr Wilson Leung, counsel for the 2nd defendant relies in support of the submission that House No.12 is immune from any declaratory interest by the plaintiff, is a façade.


10. The corporate structure, which is not in dispute is as follows:

11. Star Royale is the legal registered owner of House No.12. Star Royale is 100% owned by Create Magic which is also the one and only shareholder. Mr Chiau’s only interest in this corporate structure is through “Whiskey...

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