HCMP2772/2024 JACKY ZONG AND OTHERS v. KELLY FULI ZONG AND ANOTHER - LawHero
HCMP2772/2024
高等法院（雜項）Deputy High Court Judge Gary CC Lam31/7/2025[2025] HKCFI 3355
HCMP2772/2024
A A
HCMP 2772/2024
[2025] HKCFI 3355
B B
IN THE HIGH COURT OF THE
HONG KONG SPECIAL ADMINISTRATIVE REGION
C C
COURT OF FIRST INSTANCE
MISCELLANEOUS PROCEEDINGS NO 2772 OF 2024
D D
________________
E IN THE MATTER of section 21M of E
the High Court Ordinance (Cap. 4) in
F aid of a claim before the Hangzhou F
Intermediate People's Court
G
________________ G
BETWEEN
H H
JACKY ZONG (宗继昌) 1st Plaintiff
I I
JESSIE JIELI ZONG (宗婕莉) 2nd Plaintiff
J JERRY JISHENG ZONG (宗继盛) 3rd Plaintiff J
K and K
L KELLY FULI ZONG (宗馥莉) 1st Defendant L
JIAN HAO VENTURES LIMITED 2nd Defendant
M M
________________
N N
Before: Deputy High Court Judge Gary CC Lam in Chambers (Open to public)
O O
Date of Hearing: 11 July 2025
P Date of Decision: 1 August 2025 P
Q Q
DECISION
R R
S S
I. INTRODUCTION
T T
U U
V V
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A A
1. Before me are:-
B B
C (1) the Originating Summons (the “Originating Summons”) C
filed by the 1st to 3rd Plaintiffs (the “Plaintiffs”) on 30
D D
December 2024 seeking an order under section 21M of the
E High Court Ordinance (Cap.4) (the “HCO”) restraining the 1st E
and 2nd Defendants (the “Defendants”) from disposing of or
F F
dealing with certain assets in a Hong Kong bank account in
G G
aid of proceedings commenced or to be commenced in
H
Hangzhou, PRC; and H
I I
(2) an inter-partes Summons (the “Interlocutory Summons”)
J
filed by the Plaintiffs on 30 December 2024 seeking an J
interlocutory injunction pending the substantive disposal of
K K
the Originating Summons.
L L
2. At the hearing of the Interlocutory Summons on 3 January
M M
2025 before DHCJ Grace Chow, the Defendants offered an undertaking not
N
to withdraw or encumber the assets in question until the substantive N
determination of the Interlocutory Summons, upon the acceptance of which
O O
no interim injunction was ordered.
P P
3. For the present purpose, the disposal of the Originating
Q Q
Summons herein will dispose of the Interlocutory Summons as well.
R R
II. PARTIES
S S
4. The parties essentially are from two families under the same
T T
father, the late Zong Qinghou (“Zong Senior”), who passed away on 25
U U
V V
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A A
February 2024. Zong Senior was the founding chairman and CEO of
B B
Hangzhou Wahaha Group Co Ltd (“Wahaha Group”), a beverage
C C
producer in China.
D D
st nd rd
5. The 1 , 2 and 3 Plaintiffs (“Jacky”, “Jessie” and “Jerry”
E respectively) are the three children Zong Senior had with Madam Du E
Jianying (“Madam Du”).
F F
G 6. The 1st Defendant (“Kelly”) is the daughter Zong Senior had G
with Madam Shi Youzhen (“Madam Shi”). She is the chairman of
H H
nd
Wahaha Group. The 2 Defendant (“Jian Hao”) is a BVI company,
I I
whose sole registered shareholder has since 2 February 2024 been Kelly,
J
and whose sole director was Zong Senior prior to his demise on 25 J
February 2024, thereafter replaced by Kelly.
K K
7. Jian Hao holds various assets in Hong Kong, among which is
L L
the net assets of US$1,799,062,412.25 as at 31 May 2024 held in its
M M
account maintained with HSBC (the “HSBC Account”), consisting mainly
N
of bonds and other fixed income assets and some cash and time deposits. N
The subject assets for the preservation order now the Plaintiffs seek are
O O
these assets in the HSBC Account (the “HSBC Account Assets”). For
P convenience, I shall refer to the other assets held by Jian Hao than the P
HSBC Account Assets as the “Other Assets”.
Q Q
R 8. Zong Senior left two wills executed on 2 February 2024 (the R
“Wills”), one of which concerned his specific offshore assets but did not
S S
cover Jian Hao and its assets, and the other of which concerned his onshore
T assets in Mainland China. The Wills did not name any of the Plaintiffs or T
U U
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A A
Madam Du, but named, among others, Kelly, Madam Shi and Zong
B B
Senior’s mother Wang Shuzhen (“Madam Wang”), as beneficiaries. The
C C
executors named by both Wills are Chen Han 陳漢 (a lawyer of Han Kun
D Law Offices) and Guo Hong 郭虹. I hasten to add that the present D
proceedings do not in any aspect concern the administration of the estate
E E
of Zong Senior. This just provides the background to understand the
F agreements between the parties mentioned below, which refer to the Wills. F
G G
III. PLAINTIFFS’ EVIDENCE
H H
9. The Plaintiffs’ case relies primarily on three documents. The
I I
first is an undated handwritten document (the “Handwritten
J Instructions”) which, according to the Plaintiffs, was handwritten by Zong J
Senior himself in about late January 2024. The Handwritten Instructions
K K
was addressed to Guo Hong.
L L
10. The Handwritten Instructions stated:-
M M
“郭虹
N N
准备去香港办理三个人的信托，在汇丰办，每人七亿美金，
O
需办理下列工作： O
1、我的信托就是拿利息，要求汇丰银行给予较优惠的利息，
P 我们长期不动，仅能收取利息使用。 P
Q
2、按香港法律要求，签订信托合同，并请香港公证处公证。 Q
3、受益人仅是其本人与子孙，与配偶没有关系，系婚前财
R 产。 R
S
4、汇丰账目美金尚不够，请把人民币换成美金。 S
5、先办理继昌/婕莉的，若美金募足了，请继盛请假回来办
T 理好。 T
U U
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A A
宗庆后” (emphasis added)
B B
C 11. On about 2 February 2024, Zong Senior executed a document C
entitled “委托書” dated 2 February 2024 (the “Letter of Entrustment”).
D D
This is the second document the Plaintiffs rely on. It stated that:-
E E
“委托书
F F
甲方：宗庆后（ “委托人” ）
G … G
乙方：宗馥莉（Zong, Kelly Fuli）（ “受托人” ）
H H
…
I I
鉴于：
J 1. Jian Hao Ventured Limit （建浩創投有限公司）为一家根 J
据 BVI 法律注册成立的公司…公司经登记的股东为乙方，
甲方为唯一董事；
K K
2. Jian Hao Ventured Limit 持有两部份资产，包括 (1) 于香
L 港上海汇丰银行有限公司（HSBC Hongkong）开设的账号下 L
的资产（下称 “标的财产” ）；(2) 在高盛、渣打、瑞银、工
M 银、中银等其他银行开设的账户内的资产（下称 “其他银行 M
的财产”）；
N 3. 双方确认乙方为替甲方代持上述资产，包括公司股权及 N
资产；
O O
现甲方和乙方本着自愿、诚信的原则，经充分协商，就甲方
委托乙方运用上述标的财产设立境外信托的相关事宜达成
P P
如下协议，以资共同遵守。
Q 一、甲方委托乙方以乙方作为设立人分别设立三个境外信托 Q
（三个信托单独简称为 ‘信托 A’ ‘信托 B’‘信托 C’，合称为
R 宗氏境外家族信托），信托 A 以宗继昌 [Jacky] 及其子女作 R
为信托受益人；信托 B 以宗婕莉 [Jessie] 及其子女作为信
托受益人；信托 C 以宗继盛 [Jerry] 及其子女作为信托受益
S S
人。
T T
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A A
二、本协议第一条所约定之宗氏家族信托受益人仅包括宗继
B B
昌、宗婕莉、宗继盛及其子女，信托利益为他们的婚前个人
财产，受益人不包括该等人士的配偶。
C C
三、甲方委托乙方设立的宗氏家族信托为不动本信托，即信
D
托资产继续在 HSBC Hongkong 进行固定收益投资，只就利 D
息收益进行分配，任何人士不得主张动用信托财产本金向受
益人作分配。
E E
四、在完成上述 “三” 项之后，对于其他银行存放的财产，
F 甲方确定将所有资产利益归属于乙方，由乙方自行处理。” F
(original emphasis)
G G
H 12. Also on 2 February 2024, Kelly signed a Chinese H
confirmation letter (the “Confirmation Letter”) confirming her
I I
agreement to the Letter of Entrustment. It is also on this day when Kelly
J became the sole shareholder of Jian Hao. J
K K
13. On 25 February 2024, Zong Senior passed away.
L L
14. On 14 March 2024, Kelly, Jacky, Jessie and Jerry entered into
M M
an agreement titled “協議” (the “Agreement”) in relation to the matters
N arising from Zong Senior’s demise. This is the third document the N
Plaintiffs rely on. It provided that:-
O O
“协议
P P
甲方：宗馥莉
…
Q Q
乙方一：宗继昌
R … R
乙方二：宗婕莉
S … S
T 乙方三：宗继盛 T
U U
V V
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A A
…
B B
三位乙方合称 “乙方”，甲方、乙方合称 “各方”。
C C
2024 年 2 月 25 日，宗庆后先生…因病逝世…现各方就宗庆
后先生之遗产处置事宜，经协商达成一致约定如下：
D D
1. 各方确认，宗庆后先生于 2024 年 2 月 2 日订立的遗嘱合
E 法有效，各方认可宗庆后先生在公证遗嘱中的所有安排。 E
F 2. 乙方确认，宗馥莉、施幼珍、王树珍三位继承人具有办理 F
宗庆后先生继承权公证及其他资产承继相关程序的全部权
限，乙方承认前述继承人完成的相关遗产继承程序合法有效，
G G
承诺不以任何形式挑战相关程序之效力。
H 3. 甲方承诺，将以 Jian Hao Ventures Limited (建浩創投有限 H
公司) 在汇丰银行香港特别行政区开立的账户内的资产之
I 权益，依据本协议第 4 条的内容为三位乙方设立一个信托 I
（共设三个信托）。甲方已聘请适格的律师事务所及相关专
业人士开展相关信托的设立工作。
J J
4. 根据宗庆后先生的意愿，上述信托初始规模为每个信托
K 美金柒亿元整（总金额为二十一亿美金整），为不可撤销的 K
不动本信托，即信托资产继续在 HSBC Hong Kong 进行固定
L 收益投资，只就利息收益进行分配，任何人士不得主张动用 L
信托财产本金向受益人作分配。
M M
5. 信托设立预计以一个 PTC（Private Trust Company）模式
过渡到专业受托人阶段，在 PTC 过渡阶段，甲方担任受托
N 人的股东，信托架构中的其他角色由郭虹女士及陈汉先生根 N
据实际情况并咨询相关专业意见后担任；在过渡期结束后，
O 则由乙方指定的人士来担任。 O
6. 信托过渡期结束之后（即进入专业受托人阶段），甲方不
P P
再参与信托的任何管理，全部由乙方来管理。初始信托财产
完整交付之后，甲方解除其责任。
Q Q
7. 甲方应当按照本协议约定完成 Jian Hao Ventures Limited
R （建浩創投有限公司）资产的信托设立工作，甲方不得以作 R
为或不作为的方式阻碍信托的设立工作或资产交付。
S S
8. 乙方应当按照本协议约定配合完成遗产继承、分割、分配
等环节相关手续，乙方不得以作为或不作为方式妨碍遗嘱的
T 执行或公司经营。 T
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A A
B 9… B
C 10. 凡因本协议所发生的或与本协议有关的一切争议，本协 C
议各方可通过友好协商解决。在协商不能解决或一方不愿通
过协商解决时，任何一方应向浙江省杭州市有管辖权的人民
D D
法院提起诉讼。” (emphasis added)
E E
15. It is clear that there was quid pro quo under the Agreement,
F namely, the Plaintiff shall recgonise the Wills and shall not hinder the F
G
administration thereunder, and Kelly shall set up offshore trusts for the G
Plaintiffs.
H H
16. Further, from the Handwritten Instructions, the Letter of
I I
Entrustment and the Agreement (collectively, the “Documents”), it is
J J
reasonably clear that the HSBC Account Assets shall be for offshore trusts
K
for the Plaintiffs, while the Other Assets shall be for Kelly. K
L 17. In the Plaintiffs’ supporting affirmation, Jacky mentions the L
M
following matters in respect of how Kelly has handled Zong Senior’s assets. M
First, he mentions that there have been unauthorised withdrawals by Kelly
N N
from the HSBC Account without the Plaintiffs’ knowledge and consent.
O
He explains that they have received only two monthly bank statements in O
respect of the HSBC Account. One is as at 31 January 2024 (the
P P
“January 2024 Statement”) and the other is as at 31 May 2024 (the “May
Q 2024 Statement”). The former was provided to Madam Du by Guo Hong Q
in around May 2024, and the latter was provided to Madam Du by Hong
R R
Chanchan (“Hong”) (who was a director of Wahaha Group and a
S subordinate of Kelly) in around July 2024. By comparison, they observe S
some unauthorised withdrawals. They refer to the following as
T T
“examples”:-
U U
V V
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A A
(1) The value of the assets held in USD, CAD, AUD, GBP, EUR
B B
and JPY all decreased, and the value of assets in HKD and
C C
CNY increased;
D D
(2) US$5,244,600.17 was withdrawn between 1 January 2024
E and 30 April 2024; and E
F F
(3) US$1,085,120 had since 30 April 2024 been withdrawn.
G G
18. Second, Jacky mentions that Kelly has failed or refused to
H H
sign the relevant documents to set up the three offshore trusts (the
I “Offshore Trusts”) as instructed by the Letter of Entrustment and agreed I
under the Agreement.
J J
K 19. It is the Plaintiffs’ understanding from Madam Du that Zong K
Senior had, prior to his demise, indicated orally that Trident Trust
L L
Company (HK) Limited (“Trident Trust”) should be engaged as the trust
M company for the Offshore Trust. On 18 June 2024, Chen Han emailed M
Kelly, her PRC lawyer Sun Shiqi (“Sun”) of Jingtian & Gongcheng
N N
(“JTGC”) and Madam Du informing that Chen Han’s team had prepared
O O
the documents necessary for setting up the Offshore Trusts and suggesting
P
that Kelly should (1) first set up the trust structure; (2) open a bank account P
with HSBC; and (3) transfer the property into the trusts. However, on the
Q Q
same day, Sun replied on behalf of Kelly, saying that the parties had not
R agreed on these points. Sun stated that the first step to take would be to R
determine trust property and for the parties to agree to the value of the
S S
HSBC Account Assets. Sun also warned Chen Han not to interfere with
T the trust work and that he should stay as a neutral estate administrator. T
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A A
20. On 25 June 2024, Yan Wensheng (“Yan”) of Trident Trust
B B
emailed draft trust deeds for the Offshore Trusts and other documents to
C C
Sun for Kelly’s signature. Further, on 22 and 23 July 2024, Yan sent a
D
transfer instruction form from HSBC for the transfer of assets into the D
Offshore Trusts to Sun for Kelly signing. However, Kelly failed or
E E
refused to sign the documents. On 13 August 2024, in an email reply to
F Madam Du’s email of 7 August 2024 enquiring about the progress of F
setting up the trusts, Sun stated that Kelly had engaged TMF Group
G G
(“TMF”) for setting up the trusts and attached to the reply email the fee
H proposal, and explained that the engagement of TMF to replace Trident H
Trust was due to the unsatisfactory quality of its service. Sun also
I I
indicated in the email that she would contact the beneficiaries as soon as
J possible for documents and sending them documents for execution. J
K K
21. Dispute then followed between Sun (on behalf of Kelly) and
L Madam Du in relation to the choice between Trident Trust and TMF. L
Eventually, in September 2024, Jacky, Jessie and Jerry decided not to
M M
object to Kelly’s insistence on TMF for the avoidance of incurring time
N and dispute. As a result, from late September to early November 2024, N
the representatives of the parties (including Yelu Xu (“Xu”) and Chen Li
O O
(“Li”) of the Plaintiffs’ lawyers Beijing Dacheng Law Offices, LLP
P (Shanghai) (“Dacheng”)) and the representative of TMF, Cindy Huang P
(“Cindy”), engaged in various discussions via WeChat and an online
Q Q
conference on 12 November 2024. Various draft documents (including
R draft Deed of Trust) were circulated for signing, but Kelly refused to sign. R
The Plaintiffs’ case is that from the discussions, it is reasonably clear that
S S
Kelly “continued to drag her feet in signing the relevant documentation”,
T T
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A A
B
or evinced no intention to be bound by the Agreement, or took inaction (不 B
作为) in breach of Clause 7 of the Agreement.
C C
D 22. As not much progress had been made, on 30 November 2024, D
Sun relayed Kelly’s confirmation that the assets remained there and the
E E
Plaintiffs had nothing to be concerned about.
F F
23. Further communication continued and revised draft trust
G G
deeds circulated. In the email sent on 14 December 2024, another lawyer
H of JTGC, Zhang Congcong (“Zhang”), on Kelly’s behalf, stated that:- H
I (1) Kelly did not recognise the validity of the Handwritten I
Instructions;
J J
(2) Kelly would not agree to any further changes to the draft trust
K K
deed;
L L
(3) Kelly would continue to set up the Offshore Trust at an
M appropriate pace; M
N (4) Kelly had no obligation to respond to Dacheng’s information N
requests other than regarding the contents of the trust
O O
document; and
P P
(5) If the Plaintiffs would harm Kelly’s interests such as
Q commencing litigation, Kelly had the right to immediately Q
R
stop setting up the Offshore Trusts. R
S S
24. The Plaintiffs also highlight the evidence that:-
T T
(1) While Clause 5 of the Agreement provides that:-
U U
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A A
“信托设立预计以一个 PTC (Private Trust Company) 模式过
B B
渡到专业受托人阶段，在 PTC 过渡阶段，[Kelly]担任受托
人的股东，信托架构中的其他角色由郭虹女士及陈汉先生根
C 据实际情况并咨询相关专业意见后担任；在过渡期结束后， C
则由[Plaintiffs]指定的人士来担任。”
D D
Kelly insisted upon a provision (Clause 5 of the draft) in the
E E
draft Deed of Trust appointing her to be the protector of the
F trust with the power to determine the trust period (Clause 11 F
of the draft); and
G G
(2) While Clauses 1 and 2 of the Letter of Entrustment provide
H H
clearly that only the Plaintiffs and the Plaintiffs’ issues would
I be the beneficiaries of the Offshore Trusts, Kelly proposed I
provisions in the draft Deed of Trust (Clause 9 of the draft)
J J
that Kelly’s issue may also be the beneficiaries.
K K
L
25. Third, based on the above, the Plaintiffs make the following L
complaints at §55 of Jacky’s Affirmation filed on 30 December 2024:-
M M
“In short, despite many months of negotiation, Kelly (i) still has
N not set up the three Offshore Trusts or the private trust company; N
(ii) has refused to recognise the validity of the Handwritten
Instructions; (iii) has refused to provide any information relating
O to the HSBC Account (save for the January 2024 Statement and O
the May 2024 Statement) to us; and (iv) on the contrary, has
caused funds (of at least US$1,085,120) to be transferred away
P P
from the HSBC Account for unknown purposes (and apparently
not for the purposes of the Offshore Trust).”
Q Q
26. Fourth, in Jacky’s 2nd Affirmation filed on 16 June 2025,
R R
being a reply Affirmation, the Plaintiffs raised for the first time that Kelly
S bears “serious animosity” towards the Plaintiffs’ side of the family and has S
been engaged in a systematic battle for control over the family assets
T T
U U
V V
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A A
against the Plaintiffs’ side of the family, including 10 factory companies
B B
under Wahaha Group and stripping Wahaha Group of its assets in her own
C C
favour. While I can see the point made by Mr William Wong SC (leading
D
Ms Sharon Yuen and Mr Charlie Liu) for the Plaintiffs that such D
particularised evidence is still evidence in reply to the Defendants’
E E
allegation in Kelly’s opposing evidence (as alluded to below) that she
F always honours Zong Senior’s wishes, the Defendants should, as a matter F
of fairness, be afforded opportunity to respond to such particulars raised
G G
for the first time. This was the reason why at the outset of the hearing, I
H granted leave for the Defendants to rely on Kelly’s 2nd Affirmation. All H
that said, in the overall scheme of things, these particularised evidence does
I I
not play any determinative role in my judgment.
J J
IV. DEFENDANTS’ EVIDENCE
K K
L 27. In respect of the Plaintiffs’ complaint of unauthorised L
withdrawals, Kelly explains that the withdrawals were all legitimate
M M
transactions:-
N (1) As to the decrease in the foreign currencies and increase in N
HKD and CNY, these resulted from currency fluctuations and
O O
portfolio shifts.
P P
(2) The net change of approximately US$5.24 million primarily
Q resulted from repayments in March and April 2024 of loans Q
and interests due and owing by Jian Hao to HSBC. The
R R
loans were incurred in the following manner:-
S S
(a) On 27 December 2023 (prior to the Letter of
T Entrustment and the Agreement), Jian Hao (Zong T
U U
V V
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A A
Senior still the sole director) borrowed a fixed loan
B B
from HSBC in the amount of HK$318,491,601.59 (the
C C
“1st Loan”) to finance its investment in “certain
D
financial products”; D
E
(b) On 27 February 2024 (subsequent to the Letter of E
Entrustment and prior to the Agreement), to refinance
F F
the 1st Loan and the interest accrued thereon, Jian Hao
G drew a second loan of HK$321,681,875.25 (the “2nd G
Loan”);
H H
(c) On 5 April 2024 (subsequent to the Letter of
I I
Entrustment and the Agreement), to refinance the
J outstanding principal of the 2nd Loan and the interest, J
Jian Hao drew a third loan of HK$233,778,513.60 (the
K K
“3rd Loan”); and
L L
(d) On 12 April 2024 (subsequent to the Letter of
M Entrustment and the Agreement), Jian Hao drew a M
fourth loan of HK$233,681,657.69 (the “4th Loan”) to
N N
discharge the outstanding of the 3rd Loan and the
O interest accrued thereon as at 12 April 2024; and O
P (3) The withdrawal of US$1,085,120 was used to settle capital P
calls issued by the funds named New Era Capital Partners, L.P.
Q Q
and New Era Capital Partners II, L.P. (collectively, the
R “Funds”) (“which is not part of the HSBC Account” on the R
Defendants’ own evidence: see §31 of Kelly’s 1st Affirmation)
S S
on 22 January 2024 and 14 March 2024 respectively. Jian
T T
U U
V V
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A A
Hao (Zong Senior being the sole director) invested in the
B B
Funds in August 2017 and early 2022 respectively.
C C
28. I pause to note that while by the time of the 2 nd Loan and the
D D
second withdrawal to settle the calls issued by the Funds, the HSBC
E Account Assets had arguably been designated for the Offshore Trusts to be E
set up for fixed-income investments, such withdrawals were still made.
F F
In particular, in relation to the calls issued by the Funds, the Funds are “not
G G
part of the HSBC Account”. In other words, the HSBC Account Assets
H
were used for an investment not related to the Plaintiffs at all. Kelly’s H
response, in essence, is that this had been the practice in the past when
I I
Zong Senior was still the director of Jian Hao.
J J
29. Kelly also gives answers to the Plaintiffs’ complaint that she
K K
has dragged on her feet in setting up the Offshore Trusts. She states that
L her discussions or negotiations with the Plaintiffs on the terms of the draft L
documents were genuine.
M M
N
30. First, Kelly contends that Clause 3 of the Letter of N
Entrustment (quoted in §11 above) means that only the interest on the fixed
O O
capital would be the trust assets, but not the capital itself. She highlights
P this because it appears to her that the Plaintiffs have been labouring under P
an impression which she thinks is wrong that the capital should also be part
Q Q
of the trust assets.
R R
31. Secondly, relatedly, Kelly contends that she should not be
S S
treated by the Plaintiffs as a mere entrustee as if she had no say in the terms
T of the documents setting up the Offshore Trusts. She refers to Clauses 5 T
U U
V V
- 16 -
A A
and 6 of the Agreement (quoted in §14 above). In particular, Clause 5
B B
states that in the transition of the Offshore Trusts to the private trust
C C
company, Kelly would be “受托人的股東”.
D D
32. Third, in relation to her insistence on the valuation of the
E E
assets, she refers to Clause 4 of the Agreement (quoted in §14 above). In
F gist, Kelly contends that the value of the assets in the HSBC Account has F
never attained US$2.1 billion and thus there is no basis for the Plaintiffs to
G G
assert their respective entitlement to an offshore trust of US$700 million
H each before the parties could find a way to make up a shortfall. Kelly H
further contends that the figure of US$700 million for each was
I I
aspirational only, and in any event, she does not recognise the validity of
J the Handwritten Instructions. Therefore, the Plaintiffs’ insistence that J
cash of US$700 million shall be injected into each of the Offshore Trusts
K K
is unrealistic and infeasible.
L L
33. Fourth, in relation to her proposal to include her issue to be
M M
the beneficiaries of the Offshore Trusts, Mr Benjamin Yu SC (leading Mr
N Bernard Mak), counsel for the Defendants, seems to contend that her issues N
would be excluded by the definition of “Excluded Persons” in the draft
O O
Deed of Trust. With respect, such contention cannot be maintained,
P because “Excluded Persons” was defined as the spouse of Kelly, or any P
spouse of any children or remoter issue of Kelly; in other words, Kelly’s
Q Q
issues would not be excluded. Further, during his oral submissions, Mr
R Yu suggested that the inclusion of Kelly’s issue and appointment of Kelly R
as protector with power to terminate the trust period might be due to the
S S
lawyers’ template. I rejected this suggestion outright because I cannot
T take judicial notice in this regard, and there is no evidence from the T
U U
V V
- 17 -
A A
Defendants to explain that such terms were included because Kelly’s
B B
lawyers blindly used a template as if this would be fit-for-all without
C C
exercising any professional judgment to their client’s needs.
D D
34. The differences between the two camps, according to Kelly,
E became sources of disagreement in the discussions and negotiations that E
have prevented execution of documents necessary to set up the Offshore
F F
Trusts. In other words, Kelly is saying that she has evinced no intention
G G
not to be bound by the Letter of Entrustment and the Agreement, that she
H
was not taking any action or inaction (in breach of Clause 7 of the H
Agreement) to prevent the establishment of the Offshore Trusts, and that
I I
the Plaintiffs are simply jumping the gun.
J J
35. Kelly emphasises that she always honours Zong Senior’s
K K
wishes. In response to the Plaintiffs’ accusation that she does not, Kelly
L gives explanation in her 2nd Affirmation the details of which I do not need L
to delve into for the present purposes.
M M
N
V. PLAINTIFFS’ CASE N
O O
36. The Plaintiffs’ case is that:-
P P
(1) The Agreement is governed by Hong Kong law (which the
Q Defendants do not have evidence to dispute for the present Q
purpose, though Mr Yu expressly reserves the position for any
R R
subsequent proceedings, whether in Hong Kong or the PRC);
S S
T T
U U
V V
- 18 -
A A
(2) Kelly has breached the Agreement by failing to set up the
B B
Offshore Trusts, and breached the Agreement by her “inaction”
C C
contrary to Clause 7 of the Agreement; and
D D
(3) Kelly is a constructive trustee and/or fiduciary in relation to
E the HSBC Account Assets. E
F F
VI. HANGZHOU PROCEEDINGS
G G
37. Although the Plaintiffs’ case is that the Agreement is governed
H H
by Hong Kong law, because of the jurisdictional clause in the Agreement
I (namely, Clause 10), the Plaintiffs have to commence proceedings in the I
Hangzhou Court. Accordingly, on 27 December 2024, the Plaintiffs
J J
submitted an application with a Statement of Complaint (民事起訴狀) to
K K
the Hangzhou Intermediate People’s Court (the “Hangzhou Court”) (the
L “Application to Hangzhou Court”) for the case filing and registration (立 L
案 ) so as to commence proceedings against Kelly (the “Hangzhou
M M
Proceedings”) and Jian Hao as the third party. In the Hangzhou
N Proceedings, the Plaintiffs would seek, among others, the following relief:- N
O “1. 判决确认 Jian Hao Ventures Limited 建浩創投有限公司 O
（下称「建浩公司」）名下在香港上海汇丰银行有限公司…
P 的银行账户中的资产是三位原告享有受益权的信托财产（下 P
称「信托财产」）;
Q Q
2. 请求确认被告就信托财产对原告负有受信责任，需就信
托财产的去向作出解释;
R R
3. 请求判令被告在 28 天或法院认为合适的任何其他期限内，
根 据 [Handwritten Instructions] 、 [Letter of Entrustment] 、
S S
[Agreement]，履行 [Agreement] 第 3、4、5、6、7 条约定的
义务;
T T
U U
V V
- 19 -
A A
4. 请求判令被告支付原告利息收益，以 21 亿美元为基数…
B B
5. 请求判令被告向原告赔偿擅自转移的信托财产损失（暂
C 计为 1,085,120 美元）…” C
D D
38. Mr Wong, for the Plaintiffs, underscores that the Hangzhou
E Proceedings claim that the HSBC Account Assets, not just the income E
generated therefrom, are the subject assets in the proceedings.
F F
G 39. On 28 February 2025, upon Hangzhou Court’s request, the G
Plaintiffs submitted a revised Statement of Complaint to the Hangzhou
H H
Court (the “Revised Statement of Complaint”). As at 16 June 2025,
I when the Jacky’s 2nd Affirmation was filed on behalf of the Plaintiffs, the I
Application to Hangzhou Court was still being processed, yet to be “filed
J J
and registered” (立案). At that point of time, there seemed to be dispute
K on the evidence between the parties whether the Hangzhou Proceedings K
could have been regarded as existent for the purpose of section 21M of the
L L
HCO, although Mr Yu fairly pointed out during the oral submissions that
M M
section 21M of the HCO covers also proceedings “to be commenced”, and
N
therefore, he would not take this point. In any event, just a few days prior N
to the hearing, on 8 July 2025, the Higher People’s Court of Zhejiang
O O
Province informed the Plaintiffs by a Notice of Acceptance（受理案件通
P 知書）that the Hangzhou Proceedings have been “filed and registered”. P
Mr Yu made a complaint that the case number in the exhibited copy of the
Q Q
Notice of Acceptance was redacted and thus the evidence is not clear
R whether this Notice of Acceptance is in respect of the Hangzhou R
Proceedings, given that the Hangzhou Proceedings were lodged with the
S S
Hangzhou Court but not the Zhejiang Higher People’s Court. The
T Plaintiffs explain that the redaction was made upon the request of the T
U U
V V
- 20 -
A A
Hangzhou Court to minimise public attention. Irrespective of the reason
B B
for the redaction, looking at the content of the Notice of Acceptance
C C
referring to the Plaintiffs as the claimants therein, Kelly as the Defendant
D
therein and Jian Hao as the third party therein, it is clear to me that the D
Notice of Acceptance is in relation to the Hangzhou Proceedings. Further,
E E
for convenience, whichever PRC Court is now seized of the Hangzhou
F Proceedings, I shall refer to the relevant PRC Court as the “PRC Court”. F
G G
VII. TWO-STAGE APPROACH IN SECTION 21M APPLICATION
H H
40. The approach towards section 21M is well-settled by the
I I
Court of Final Appeal in Compania Sud Americana de Vapores SA v Hin-
J
Pro International Logistics Ltd (2016) 19 HKCFAR 586 at §§47-54 per J
Lord Phillips NPJ. I only need to refer to the following legal principles
K K
by summarised by Lisa Wong J at §48 of Jiang Xi An Fa Da Wine Co. Ltd
L v Zhan King [2019] HKCFI 2411:- L
“(1) In the first stage, the court firstly asks whether, if the
M M
proceedings that have been or are to be commenced in the
foreign court result in a judgment, that judgment is one that the
N Hong Kong court may enforce. If the judgment resulting from N
the foreign proceedings may be enforced by the Hong Kong
court, then the court asks the same questions as it would if the
O O
interim relief were sought in support of a Hong Kong action,
save that the strength of the plaintiff’s substantive claim against
P the defendant (if material) should be considered from the P
standpoint of the foreign court, and not under the law of Hong
Kong.
Q Q
(2) In the second stage, as required by s 21M(4), the court should
consider whether the fact that the court has no jurisdiction apart
R R
from s 21M in relation to the subject matter of the proceedings
concerned makes it unjust or inconvenient for the court to grant
S the application.” S
T T
VIII. FIRST STAGE
U U
V V
- 21 -
A A
41. For the first stage, Mr Yu, for the Defendants, rightly does not
B B
take issue on the enforceability of the judgment that may be given in the
C C
Hangzhou Proceedings. However, Mr Yu submits that whether the
D
injunction being sought in aid is a Mareva injunction or a proprietary D
injunction or a preservation order, the threshold must be a good arguable
E E
case. He refers me to Hin-Pro, supra, itself. He points out that the
F threshold there for the first stage was also a good arguable case. In F
addition, he submitted one more case during the hearing, namely, Convoy
G G
Collateral Ltd v Broad Idea International Ltd [2023] AC 389 a Privy
H Council’s appeal from BVI, in reliance on §101 of which Mr Yu H
emphasises that the Court’s equitable or statutory jurisdiction to grant
I I
injunction can be exercised only upon the threshold of a good arguable case.
J J
42. With respect, I cannot see how those cases assist Mr Yu’s
K K
proposition on threshold. Those cases were cases of Mareva Injunction
L or freezing injunction, the threshold for which is a good arguable case even L
domestically. As pointed out by DHCJ Queeny Au-Yeung (as she then
M M
was) in Narian Samtani v Chandersen Tikamdas Samtani [2012] 4 HKLRD
N 872 at §76, there exists an essential distinction between a preservation N
order and a Mareva injunction, namely:-
O O
“[Mareva injunction] goes well beyond [a proprietary injunction
P or preservation order] and enables the court to grant the plaintiff P
an interlocutory injunction restraining the defendant from
disposing of or even dealing with his assets, being assets over
Q Q
which the plaintiff asserts no proprietary claim but which after
judgment may be attached to satisfy a money judgment…”
R R
43. It is this distinction (a Mareva injunction having a more
S S
extensive effect) that warrants an enhanced threshold for Mareva
T injunction. T
U U
V V
- 22 -
A A
44. In my view, the purpose of the first stage is clear – if the Hong
B B
Kong Court would not have granted the order, there would be no point in
C C
considering whether to grant such an order in aid of foreign proceedings,
D
since granting an order which the Hong Kong Court would not have D
granted to aid foreign proceedings seems to be lacking in comity. I tend
E E
to think that it would also be lacking in comity if the Hong Kong Court
F would have granted the order but refused to grant it in aid simply because F
it presumptuously thought that the threshold should be enhanced. During
G G
my oral exchange with Mr Yu, I made enquiry of the reason why for the
H first stage, the threshold should be enhanced. Mr Yu’s answer was, in H
essence, that because it is a statutory jurisdiction (in reliance on Convoy,
I I
supra) and because the parties chose the foreign forum to resolve their
J disputes, the Hong Kong Court should be very cautious to exercise such J
jurisdiction. I agree that I should be very cautious to exercise such
K K
jurisdiction, and as to how to exercise such jurisdiction cautiously, I should
L turn to the authorities binding upon me for guidance. As regards the L
parties’ choice of forum, while it may be a reason for the cautious approach,
M M
it is, in my view, more a factor in a forum non conveniens consideration,
N with which I am not concerned here. An application under section 21M, N
by its very nature, means that the applicant recognises that the Hong Kong
O O
Court is not an appropriate forum to resolve the substantive dispute, but
P takes the view that the Hong Kong Court may grant certain relief in aid P
only.
Q Q
R 45. Further, if statutory jurisdiction and/or parties’ choice of R
foreign forum should or would lead to an enhanced threshold, then in all
S S
the cases cited by Mr Yu on this threshold point, all in relation to Mareva
T or freezing injunctions in aid of foreign proceedings, a threshold higher T
U U
V V
- 23 -
A A
than a good arguable case should or would have been adopted. However,
B B
on the contrary, those cases only show that the same threshold adopted
C C
domestically for Mareva injunction were applied at the first stage. With
D
respect, I see no reason why, if Mr Yu’s reason were right, no enhanced D
threshold was applied for Mareva injunction but for other interlocutory
E E
injunctions, an enhanced threshold should be applied as submitted by Mr
F Yu. F
G G
46. In gist, I cannot see how the parties’ choice of forum and/or
H
the cautious approach can be translated into an enhanced threshold for the H
first stage. In my view, the Hong Kong Court’s caution and any “foreign”
I I
or comity consideration are operative in the second stage, but not in the
J first stage. J
K K
47. It remains for me to add that the suggestion, that the threshold
L for an injunction or a preservation order, if considered in the context of L
section 21M of the HCO, should be elevated to good arguable case,
M M
conflates the first and the second stage. It is, in my view, the second stage
N which would take care of this foreign element by reference to “unjust” N
and/or “inconvenient”. Therefore, I find that the threshold for the present
O O
purpose of determining whether a preservation order should be granted
P should be serious issues to be tried. P
Q Q
48. In the same vein, Mr Yu suggests that whatever kind of
R injunction or preservation order is being sought in aid of foreign R
proceedings, a real risk of dissipation should be a necessary requirement.
S S
It is not entirely clear to me whether Mr Yu suggests that the real risk of
T dissipation is a requirement for the first stage or the second stage. He T
U U
V V
- 24 -
A A
seems to suggest both, or seems to suggest that it does not really matter
B B
whether it should be for the first stage or the second stage. Insofar as he
C C
suggests that it is a requirement for the first stage, for the same reason on
D
which I reject his proposition on an enhanced threshold, I also reject such D
suggestion.
E E
49. From the evidence and the parties’ respective cases set out
F F
above, it is clear to me that there are serious issues to be tried in relation to
G G
the Plaintiffs’ claim on breach of contract. Mr Yu also fairly accepts this.
H
In any event, I take the view that the Plaintiffs have also established a good H
arguable case on their claim on breach of contract.
I I
J
50. In relation to the constructive trust and/or fiduciary J
relationship over the HSBC Account Assets, Mr Wong reasons as follows:-
K K
(1) The Letter of Entrustment itself creates an express trust for
L L
Kelly to hold the shares in Jian Hao and the assets of Jian Hao
M M
for Zong Senior. Mr Wong submits that this means that
N
Kelly and Jian Hao do not hold any beneficial interest in the N
HSBC Account Assets.
O O
P
(2) The Agreement gives rise to a constructive trust. By the P
Agreement, Kelly agrees to set up the Offshore Trusts with
Q Q
the HSBC Account Assets and in consideration, the Plaintiffs
R agree not to contest the validity of the Wills in favour of Kelly R
(Recital 2 of the Agreement).
S S
T T
U U
V V
- 25 -
A A
(3) As Kelly does not have any interest in the HSBC Account
B B
Assets but has control over them and shall deliver (交付) the
C C
same for setting up the Offshore Trusts (Clause 6 of the
D Agreement), she is subject to fiduciary duty of agency type to D
those who have interest in them: see Libertarian Investments
E E
Ltd v Hall (2013) 16 HKCFAR 681 at §§64-65 per Ribeiro PJ.
F F
(4) Therefore, while the Letter of Entrustment and the Agreement
G G
may confer upon Kelly and Jian Hao a power to create a new
H trust, it does not follow that no trust has been set up by the H
same documents: see Lewin on Trusts (20th ed), §§3-054.
I I
J (5) While the legal owner of the HSBC Account Assets is Jian J
Hao, in circumstances where the corporate vehicle is solely
K K
controlled by a person, “it is possible for the court to infer a
L declaration of trust in circumstances where the directors of a L
company create a settlement and then treat the company as a
M M
corporate trustee carrying on the business formerly carried on
N by the company for the benefit of a constituted settlement”: N
see Lewin on Trusts, supra, §3-004. It is, in my view, a
O O
mixed question of fact and law.
P P
51. Built upon the above, Mr Wong further submits that the
Q Q
Plaintiffs have proprietary interest in the HSBC Account Assets and the
R income generated therefrom. R
S S
52. Mr Yu disagrees. He submits that the Plaintiffs do not have
T any proprietary interest in the entirety of the HSBC Account Assets, but at T
U U
V V
- 26 -
A A
most Kelly may have fiduciary duties in respect of the income generated
B B
on the HSBC Account Assets. He reasons that the HSBC Account still
C C
runs short of sufficient fund up to US$2.1 billion, trusts have yet to be set
D
up, and the HSBC Account Assets are maintained for investment, while the D
decision as to how to make investment rests with Jian Hao, the legal owner
E E
of the HSBC Account Assets. He even goes as far as to suggest that there
F is issue over the enforceability of the Agreement itself to set up any trusts. F
G G
53. Mr Yu also seems to submit that there can be no trust until the
H
value of the assets in the HSBC Account would reach US$2.1 billion, or he H
submits that there is one of such questions that have to be resolved.
I I
However, that has to be construed against Clause 5 of the Handwritten
J Instructions, which provided that:- J
K “先办理继昌/婕莉的，若美金募足了，请继盛请假回来办理 K
好。”
L L
54. While the Defendants do not admit the authenticity and/or
M M
validity of the Handwritten Instructions, it is fair to say that this still
N constitutes at least a serious issue to be tried, and therefore, there is also a N
serious issue to be tried over whether the Agreement would have to be read
O O
with the Handwritten Instructions for proper contractual construction as to
P when to set up the Offshore Trusts. I also add that while there is no direct P
evidence to say that Kelly had knowledge of the Handwritten Instructions,
Q Q
which were addressed to Guo Hong rather than her, there is a serious issue
R to be tried that in the circumstances, the Handwritten Instructions was R
brought to Kelly’s attention upon Jacky’s belief (which is, in my view,
S S
inherently probable) that Guo Hong conveyed the Handwritten Instructions
T T
U U
V V
- 27 -
A A
to Kelly, given that Kely was Zong Senior’s nominee shareholder in respect
B B
of Jian Hao (see Recital 3 of the Letter of Entrustment).
C C
55. In any event, it is not necessary for me to express any
D D
definitive view on the merits of the parties’ respective submissions on this
E trust-and-fiduciary issue. Suffice to say that it is a serious issue to be tried. E
F F
56. Further and in any event, if the threshold were a good arguable
G case, on the strength of the Documents and the evidence as well as the G
arguments put before me, I am of the view that there is also a good arguable
H H
case on this trust-and-fiduciary issue.
I I
57. As to the balance of convenience, I must point out that the
J J
preservation order now being sought by the Plaintiffs is not a Mareva
K injunction. Therefore, the existence of a real risk of dissipation is not a K
necessary condition, though still relevant. Instead, the test is whether
L L
there is a need for security, and where damages would be adequate, the
M M
Court may refuse to grant any preservation order: see Narian Samtani v
N
Chandersen Tikamdas Samtani, supra at §§78-79 per DHCJ Queeny Au- N
Yeung (as she then was). In my view, for the following reasons, I see such
O O
a need:-
P P
(1) As explained by Coleman J in Sky Motion Holdings Ltd v
Q Q
China Create Capital Ltd [2019] HKCFI 2408 at §79:-
R R
“[W]here there is at least a serious issue to be tried on the
proprietary claim, the balance of convenience would normally
S favour the preservation of the subject matter of the action at an S
interlocutory stage. Into the mix might be added that the
subject matter are tradeable assets, hence the risk of
T dissipation…” T
U U
V V
- 28 -
A A
As I have found above, there is a serious issue to be tried over
B B
the trust-and-fiduciary issue, and thus on the Plaintiffs’
C C
proprietary claim.
D D
(2) Despite the Plaintiffs’ entitlement to the income generated on
E
the HSBC Account Assets, no distribution has been made yet, E
and no trusts have been set up. While Kelly has proffered
F F
explanation for why the trusts have not been set up, her
G explanation hinges upon her understanding of the Agreement G
and as I have mentioned above, there are serious issues to be
H H
tried in this regard.
I (3) Whether Kelly truly believes that she has any fiduciary duty I
or not, given that the Plaintiffs are entitled to the income
J J
generated on the HSBC Account Assets, and one would have
K thought that if Kelly is true to her responsibility, even if she K
really believes that she has no legal responsibility, she would
L L
have been more willing than she has appeared (if at all) to
M provide information to the Plaintiffs in relation to the HSBC M
Account. However, on the contrary, she has all along
N N
maintained that she has no legal obligation to do so and has
O not provided any such information to the Plaintiffs. A O
fortiori, where the trust-and-fiduciary issue is a serious issue
P P
to be tried, there is also a serious issue to be tried over whether
Q the Defendants have legal obligation to provide such Q
information to the Plaintiffs concerning the trust assets or the
R R
assets subject to the fiduciary’s management or control: see
S Libertarian Investments Ltd v Hall, supra at §167 per Lord S
Millett NPJ; Lewin on Trusts, supra §21-035. All these beg
T T
U U
V V
- 29 -
A A
for the question why the Defendants have appeared reluctant
B B
to provide the information.
C C
(4) Kelly’s proposal for a provision in the draft Deed of Trust to
D D
include her own issue contrary to the Agreement, coupled
E
with her arguable breach of the Agreement and inexplicable E
reluctance to provide information to the Plaintiffs, points to
F F
some risk (though not necessarily a real risk) of dissipation.
G G
(5) The value of the HSBC Account Assets run up to US$1.8
H billion as at 31 May 2024. It is inherently probable, in the H
absence of any evidence to the contrary, that the Defendants
I I
would not be able to make good any order for compensation
J in the light of this substantial amount, and there is no evidence J
to suggest the contrary.
K K
L L
58. In the circumstances, I would grant the preservation order if
M the application would be made to Hong Kong Court, subject to one M
modification.
N N
O 59. The HSBC Account is an investment account. Even by the O
Agreement, the HSBC Account Assets are for fixed-income investments.
P P
Therefore, I agree with Mr Yu that it is inappropriate to prohibit “disposing
Q of” or “dealing with”. Further, the investments fluctuate in value. Q
Therefore, I also agree with Mr Yu that it is also inappropriate to prohibit
R R
any diminution of value. What then should be the terms of the injunction?
S S
60. During the oral exchange between the bench and the bar,
T T
exploration was made into whether certain mechanism could be put in
U U
V V
- 30 -
A A
place so that only fixed-income investments envisaged in the Agreement
B B
could be made. However, upon consideration, I think providing only for
C C
fixed-income investments would be in a sense recognising the Agreement
D
the enforceability of which is in dispute and an issue for the Hangzhou D
Court to decide. Bearing in mind that the preservation order is to preserve
E E
the HSBC Account Assets for the Hangzhou Court’s determination, the
F order should be to maintain the status quo. Since the HSBC Account is F
by nature an investment account, the status quo of the HSBC Account
G G
Assets must be for investment. Nevertheless, to only allow fixed-income
H investment may not be feasible. The bank may simply not allow any kind H
of investment to avoid being accused of allowing non fixed-income
I I
investments unless both parties would agree the same to be fixed-income
J investments. This would effectively give a veto power to the Plaintiffs J
which they do not have even under the Agreement. All in all, I think a
K K
prohibition of “withdrawal” and “encumbrance” strikes the right balance
L between the preservation of the HSBC Account Assets and avoidance of L
interference with the case management of the PRC Court (which is a
M M
consideration I have to bear in mind in the second stage as explained
N below). N
O O
61. In conclusion, the first stage is passed.
P P
IX. SECOND STAGE
Q Q
R 62. While in Hin-Pro, supra, the Court of Final Appeal at §54 said R
that “it does not seem to me to be very helpful to try to formulate a list of
S S
circumstances where it will be unjust or inconvenient to grant” the relief in
T aid, I was referred to the five considerations set out in Motorala Credit T
U U
V V
- 31 -
A A
Corporation v Uzan (No 2) [2004] 1 WLR 113 at §115 (a case referred to
B B
in Hin-Pro §54 as well):-
C C
“[(1)] whether the making of the order will interfere with the
management of the case in the primary court, e.g. where the
D D
order is inconsistent with an order in the primary court or
overlaps with it;
E E
[(2)] whether it is the policy in the primary jurisdiction not itself
to make worldwide freezing/disclosure orders;
F F
[(3)] whether there is a danger that the orders made will give rise
to disharmony or confusion and/or risk of conflicting
G G
inconsistent or overlapping orders in other jurisdictions, in
particular the courts of the state where the person enjoined
H resides or where the assets affected are located. If so, then H
respect for territorial jurisdiction of that state should discourage
the English court from using its unusually wide powers against
I I
a foreign defendant;
J [(4)] whether at the time the order is sought there is likely to be J
a potential conflict as to jurisdiction rendering it inappropriate
and inexpedient to make a worldwide order; and
K K
[(5)] whether, in a case where jurisdiction is resisted and
disobedience to be expected, the Court will be making an order
L L
which it cannot enforce.”
M M
63. This list is not exhaustive, and cannot be regarded as a
N checklist as if more (or less) ticks means more (or less) unjust or N
inconvenient. Each case depends on its own fact and context.
O O
P 64. Despite its non-exhaustiveness, I refer to this list for one P
reason. Mr Yu seems to submit that a real risk of dissipation should be a
Q Q
requirement for this second stage. It seems to me that the reason he
R advanced is the same as that he advanced for an enhanced threshold for the R
first stage, namely, it is the parties’ choice of forum and thus the Court
S S
should be cautious. However, even from this concrete list I cannot distil
T any principle or guidance for a proposition that a real risk of dissipation T
U U
V V
- 32 -
A A
would be required for the second stage. The test, in my view, must be that
B B
made clear by the Court of Final Appeal in Hin-Pro, namely, whether it
C C
would be unjust or inconvenient to grant the order in aid. Therefore, with
D
respect, I do not accept Mr Yu’s submissions that a real risk of dissipation D
should be a requirement for the second stage.
E E
65. The Hangzhou Proceedings are, as Mr Yu rightly points out,
F F
mainly concerned with the declaratory relief that there has existed the trust
G G
over the HSBC Account Assets. If I were to grant the preservation order,
H
I see no reason why there would be any inconsistency with the Hangzhou H
jurisdiction or interference with the case management of the Hangzhou
I I
Proceedings. Such a preservation order would clearly assist the PRC
J Court by making sure that the subject asset would still be available so that J
the Hangzhou Proceedings would not be rendered redundant. Such a
K K
preservation order, in my view, would also clearly mean comity to the PRC
L Court – by ensuring that the assets located in Hong Kong would still be L
available for the disposition of the PRC Court.
M M
N 66. Mr Yu submits that the Hong Kong Court should not be left to N
speculate what the PRC Court would think. His submissions are that if
O O
an application is made to the PRC Court, the Hong Kong Court would then
P know what order to grant (or what not) would be unjust and/or P
inconvenient. He submits, attractively, that the Plaintiffs should not ask
Q Q
me to speculate; instead, the Plaintiffs should make the application to the
R PRC Court; and the Plaintiffs have put me into an unenviable situation by R
not making such an application to the PRC Court on the one hand but
S S
coming direct to the Hong Kong Court on the other hand saying, without
T even trying, that the PRC Court would not grant an injunction in respect of T
U U
V V
- 33 -
A A
overseas assets (see the expert opinion below), thereby forcing me to
B B
speculate. He further submits, in reliance on Motorola Credit
C C
Corporation v Uzan (No 2), supra, at §119, that in general, only in
D
international fraud cases, no application would need to be made to the D
foreign court.
E E
67. In my view, Mr Yu almost puts forward a proposition that an
F F
application to the foreign court is a precondition for the exercise of the
G G
jurisdiction under section 21M of the HCO. In response, Mr Wong
H
underscores, and I agree, that those cases which seem to suggest such a H
precondition were cases of ex parte applications where the applicant would
I I
be expected, in discharging their duty of full and frank disclosure, to apply
J to the foreign court or if not, to explain why not. More fundamentally, J
such a precondition would be inconsistent with the wording of the statutory
K K
provision properly construed. For this, I only need to refer to The Export-
L Import Bank of China v Liu Qingpin [2018] HKCFI 1840, where Lisa L
Wong J said at §113 that the purpose of section 21M is to facilitate “the
M M
process of execution or enforcement of the foreign judgment, which may
N potentially have to move to Hong Kong because of the location of the N
judgement debtor’s assets in Hong Kong”. Bearing this purpose in mind,
O O
an application to the foreign court, though a relevant factor, should not be
P a precondition. P
Q Q
68. To put rest any fleeting suggestion that an application to the
R foreign court is or virtually a precondition, Mr Wong refers me to a few R
examples.
S S
T T
U U
V V
- 34 -
A A
69. First, in Chow Steel Industries Public Co Ltd v Ko Sung [2020]
B B
HKCFI 483, no application for a freezing order had been made to the Thai
C C
Court, and K Yeung J, accepting the evidence that it was not the Thai
D
Court’s policy or practice to grant any extra-territorial freezing orders, held D
that a grant of Mareva injunction in Hong Kong in aid would not be
E E
inexpedient. Eventually, he did grant the Mareva injunction.
F F
70. Second, in JSC VTB Bank v Pavel Skurikhin [2014] WEHC
G G
2254 (QB), Eder J accepted at §15 that “the Russian courts very rarely
H
issue freezing injunctions in respect of assets located outside of Russian H
Federation, although they can and sometimes do grant freezing injunctions
I I
against defendant’s assets outside of the Russian jurisdictions which are
J subject to international agreement with Russia” (emphasis added). No J
application had been made to the Russian Court for any freezing order.
K K
Eder J still granted a worldwide freezing order except for those
L jurisdictions “which are subject to international agreement with Russia”. L
Mr Yu cautions me that in this case, the respondent was not legally
M M
represented and there was no contrary expert evidence filed. Be that as it
N may, this case still stands an example of exercise of similar section 21M N
jurisdiction in the absence of any application to the foreign court.
O O
P 71. Third, in Anan Kasei Co Ltd v Molycorp Chemicals & Oxides P
(Europe) Ltd [2017] FSR 13, the Court’s opinion on the expediency to
Q Q
grant an injunction in aid of foreign proceedings was obiter only (§§43-
R 49), in case that the matter would go further (§42). In the obiter at §§48- R
49, Arnold J dismissed an argument that an application should have been
S S
made to the foreign court before an application can be made to the domestic
T court for an interim order in aid of the foreign court. While Mr Yu T
U U
V V
- 35 -
A A
eloquently argues that this case is materially distinguishable on the specific
B B
European patent regime in that case not applicable in Hong Kong, I think
C C
the general principle in this obiter is still of some referential value as
D
consistent with the broad test of “just” and “convenient”. D
E 72. To sum up, these examples do show that an application to the E
foreign court is not a precondition. Further, “practice and policy” not to
F F
grant, or “very rare” to grant, as demonstrated by these examples, is a
G G
significant indicator of no injustice and no inconvenience.
H H
73. All that said, I agree that whether the applicant has made an
I I
application to the foreign court, and if not, the explanation for why not, are
J
important considerations. J
K 74. The explanation has been given in the Plaintiffs’ reply K
affirmation. At §38 of Jacky’s 2nd Affirmation, he explained that:-
L L
“I wish to make clear that we did not apply in the first instance
M M
to the Hangzhou Court, because we were advised by our PRC
lawyers [named to be Beijing Dacheng Law Offices, LLP at §28]
N that we would not be able to obtain such orders from the N
Hangzhou Court due to practical limitations (in particular the
fact that the subject matter assets are located outside of Mainland
O China, i.e. situated in Hong Kong), and also, for that reason such O
orders (even if they could be obtained) could not be enforced
P against Kelly or Jian Hao.” (emphasis added) P
Q 75. In this regard, Mr Yu submits that at the time of the Q
commencement of the present proceedings and the issuance of the
R R
Summons, the Plaintiffs simply did not give any thought to whether the
S PRC Courts would or would not grant a preservation order on the HSBC S
Account Assets, as a matter of law, practice or policy, or otherwise. He
T T
points out that there was no explanation offered at the first hearing of the
U U
V V
- 36 -
A A
Summons on 3 January 2025 before DHCJ Grace Chow, and that the above
B B
explanation only came as an afterthought. Mr Yu submits, therefore, that
C C
first, the Plaintiffs did not put their application in proper order in the first
D
place, and second, the Plaintiffs was forum-shopping for the preservation D
order. He urges me not to allow the Hong Kong Court to be utilised or
E E
abused in such way. With respect, although the Plaintiffs could have done
F better by giving the explanation in their supporting affirmation, however, F
on the affirmation evidence put before me, I cannot reject the above
G G
explanation as an afterthought. To do so would almost (if not virtually)
H amount to a finding that Jacky did not tell the truth on oath. There is no H
sufficient evidence to sustain such finding.
I I
J 76. Consistent with this advice by the Plaintiffs’ PRC lawyers, Mr J
Wong submits, in reliance on the expert opinion adduced by the Plaintiffs
K K
as an independent expert opinion, that while PRC Courts have jurisdiction
L to grant the preservation order even in respect of the assets outside L
jurisdiction, as a matter of practice and policy, they very rarely grant such
M M
order. The Plaintiffs expert asserts that he is not aware of any such
N preservation order and having checked the cases accessible by the public, N
he cannot find any such cases either.
O O
P 77. As a policy and practice, there almost always are exceptions. P
In this regard, the Defendants’ expert refers to one case where such
Q Q
preservation order was apparently granted. According to the Defendants’
R expert, it is a confidential case not accessible by the public, but a case R
which the Defendants’ expert himself handled in the past, although he did
S S
not specify the date or even give any idea of the year of the case. He
T exhibited the case report to his expert report, but the case report is heavily T
U U
V V
- 37 -
A A
redacted. The main body of the case report is only 3.5 pages, with page
B B
5 being an annexure setting out the relevant statutory provisions. The
C C
name of the Court is redacted. The date is redacted. Out of 3.5 pages,
D
pages 1 and 2 are almost wholly redacted. No reason can be ascertained D
from the case report. It is not even clear from the case report whether the
E E
asset in question was situated outside the PRC, although in the expert report
F itself, the Defendants’ expert himself supplements that the asset was. For F
all this, the Plaintiffs simply have no way to verify. In my view, the value
G G
of such case report is little, if any. If I would have to make a ruling, I
H would prefer the Plaintiffs’ expert opinion. H
I I
78. Mr Yu submits further that the Defendants’ expert relies on
J article 103 of the Civil Procedure Law of the PRC amended in 2023, and J
therefore (1) the Plaintiffs’ expert’s reliance on the Civil Procedure Law
K K
pre-2023 is not appropriate; and (2) it is not fair to say that under the 2023
L amendment, the grant of such order has been rare, given that it has only L
been two years since the amendment. With respect, the Defendants’
M M
expert has not taken this timing point and therefore, the Plaintiffs’ expert
N simply has not had any chance to reply on this timing issue. I should N
record that in Mr Wong’s oral reply submissions, he seemed to invite me
O O
to search the Internet to check whether there was any material amendment
P in 2023. I rejected his such invitation outright. P
Q Q
79. In any event, put to the highest for the Defendants, the fact
R that the Defendants’ expert has to resort to such a confidential, heavily R
redacted case report, only reinforces the Plaintiffs’ expert opinion that it is
S S
a matter of practice and policy not to grant such preservation order, with
T T
U U
V V
- 38 -
A A
exception which it is fair for me to say is very rare, even assuming that the
B B
relevant time period started in 2023 but not earlier.
C C
80. In the circumstances, I see it just and convenient to grant the
D D
preservation order in favour of the Plaintiff, with the modification of the
E terms mentioned in §60 above. E
F F
81. It remains for me to make it clear that if there are material
G changes of circumstances like some decisions made by the PRC Court G
touching on the merits of the parties’ respective cases that would render the
H H
preservation no longer just or convenient, the parties should promptly
I I
inform the Hong Kong Court and there and then for the Hong Kong Court
J
to consider how to proceed with the preservation order. J
K X. DISCLSOURE ORDER K
L L
82. The Plaintiffs seek a disclosure order disclosing the following
M information:- M
N “a. The latest balance of the HSBC Account; N
b. If assets in the HSBC Account have been disposed of or
O O
transferred to third party/ies on or after 2 February 2024, what
has become of such assets and the location of such assets or their
P substitute/traceable proceeds, and to whom, to where, and under P
what circumstances such assets were disposed of or transferred
out of the HSBC Account;
Q Q
c. In respect of the sum of US$1,085,120 (“Sum”) which was
R
shown to have been transferred out of the HSBC Account in the R
bank statement as at 31 May 2024, what has become of the said
Sum or its substitute/traceable proceeds, and to whom, to where,
S and under what circumstances the Sum was disposed of or S
transferred out of the HSBC Account; and
T T
U U
V V
- 39 -
A A
d. A full account of the movement of assets, income and
B expenditure in respect of the assets in the HSBC Account from 2 B
February 2024 until the date of service of the Order on the
C relevant Defendant.” C
D 83. Before I proceed to substantive analysis, I point out that (c) is D
unnecessary now, given that as mentioned above, the Defendants have
E E
already explained in affirmation that the US$1,085,120 was used to satisfy
F the calls issued by the Funds. F
G G
84. For the application for the disclosure order, I have two main
H considerations. My first consideration arises from Relief 2 sought in the H
Hangzhou Proceedings, as quoted in §37 above:-
I I
“请求确认被告就信托财产对原告负有受信责任，需就信托
J J
财产的去向作出解释”
K K
85. There must be the disclosure before any explanation can be
L made. Therefore, I have concern that if I am to make the disclosure order L
now being sought by the Plaintiffs from me, the disclosure order may
M M
constitute, or may be regarded as, interference with the case management
N of the Hangzhou Proceedings or may even be regarded as a decision on N
merits on Relief 2.
O O
P 86. My second consideration is that a disclosure order is usually P
made hand-in-hand with a preservation order or proprietary injunction as a
Q Q
policing device to ensure that the preservation order or the proprietary
R injunction is effective: see Carmon Reestrutura-engenharia E Servicos R
S
Tecnicos Especiais (Su) Limitada v Carmon Restrutura Ltd [2024] HKCFI S
435 at §18 per DHCJ Le Pichon. The reason is clear: at the time of the
T T
preservation order or the proprietary injunction, the subject property or part
U U
V V
- 40 -
A A
of it may have already been removed to somewhere else. If the
B B
preservation order or the proprietary injunction is to serve its purpose,
C C
namely, to preserve the subject property, the applicant has to know the
D
whereabouts of the subject property, hence the necessity for the disclosure D
order.
E E
87. My two considerations above, in my view, can be reconciled.
F F
I make the disclosure order as sought by the Plaintiffs and at the same time,
G G
as I now do, make it clear that:-
H H
(1) The disclosure order is made here solely for the purpose of
I I
ensuring that the preservation order I make is effective, and
J
by this, the subject asset can still be preserved for the PRC J
Court to conduct the Hangzhou Proceedings meaningfully.
K K
The order is thus in this sense reflective of the Hong Kong
L Court’s comity to the PRC Court, as in the grant of the L
preservation order. If I grant the preservation order but its
M M
effectiveness cannot be ensured by an ancillary disclosure
N order, this would seem to be a mockery of the aid the Hong N
Kong Court intends to provide to the PRC Court and
O O
ultimately non-comity to the PRC Court.
P P
(2) The disclosure order is by no means made upon any
Q Q
consideration of the merits of the parties’ respective cases
R (save and except for the purpose of finding serious issues to R
be tried or a good arguable case at the first stage), and is by
S S
no means related to the merits for seeking Relief 2 in the
T Hangzhou Proceedings whatsoever. The PRC Court can and T
U U
V V
- 41 -
A A
should by no means be affected by this disclosure order in
B B
determination of whether to grant Relief 2 and any other relief,
C C
final or interlocutory in nature.
D D
XI. CONCLUSION
E E
88. In the circumstances, I make an order in terms of the draft
F F
order at Hearing Bundle A pages 4-12 with the following modifications:-
G G
(1) The phrase in §§1 and 2 of the draft order “dispose of or deal
H with or diminish the value of” should be replaced by H
“withdraw or encumber”;
I I
J
(2) §3(c) of the draft order is deleted; J
K
(3) §5 of the draft order shall become, as proposed by the K
Plaintiffs’ revised draft order submitted during the hearing:-
L L
“This Order will remain in force until the final disposal of the
M claim by the Plaintiffs against the 1 st Defendant (with the 2 nd M
Defendant named as a third party) as applied to be commenced
in the Hangzhou Intermediate People’s Court (and accepted and
N registered by the Zhejiang Higher People’s Court on 4 July N
2025)”;
O O
P and I add “or until further order of the Court”; P
Q (4) §10 (for service out) shall be deleted, as proposed by the Q
Plaintiffs’ revised draft order submitted during the hearing;
R R
S
(5) There shall be liberty to apply; and S
T T
U U
V V
- 42 -
A A
(6) Schedule 1 of the draft order shall be updated to include all
B B
the affirmations duly filed in the proceedings and should make
C C
it clear that I have not read the parts of §§32 and 37 of Jacky’s
D
2nd Affirmation which I struck out at the outset of the hearing D
upon My Yu’s application.
E E
F 89. Since I have granted the relief sought in the Originating F
Summons, it is unnecessary for me to make any order on the Interlocutory
G G
Summons. I therefore make no order on the Interlocutory Summons.
H H
90. As regards costs of the Originating Summons and the
I I
Interlocutory Summons, I make a costs order nisi that the Defendants shall
J pay the Plaintiffs the costs (including all costs reserved), to be summarily J
assessed on paper, with certificate for two counsel. For the summary
K K
assessment, the Plaintiffs shall lodge and serve their statement of costs
L within 3 days upon the costs order nisi becoming absolute, and the L
Defendants shall lodge and serve their list of objection within 7 days
M M
thereafter.
N N
91. Lastly, I thank the Plaintiffs’ counsel (Mr Wong, Ms Yuen and
O O
Mr Liu) and the Defendants’ counsel (Mr Yu and Mr Mak) for their
P thorough and able assistance. P
Q Q
R R
S S
(Gary CC Lam)
T Deputy High Court Judge T
U U
V V
- 43 -
A A
Mr William Wong SC, leading Ms Sharon Yuen and Mr Charlie Liu,
B B
instructed by Karas So LLP, for the 1st – 3rd Plaintiffs
C Mr Benjamin Yu SC, leading Mr Bernard Mak, instructed by Anthony Siu C
& Co., for the 1st – 2nd Defendants
D D
E E
F F
G G
H H
I I
J J
K K
L L
M M
N N
O O
P P
Q Q
R R
S S
T T
U U
V V
JACKY ZONG AND OTHERS v. KELLY FULI ZONG AND ANOTHER
A A
HCMP 2772/2024
[2025] HKCFI 3355
B B
IN THE HIGH COURT OF THE
HONG KONG SPECIAL ADMINISTRATIVE REGION
C C
COURT OF FIRST INSTANCE
MISCELLANEOUS PROCEEDINGS NO 2772 OF 2024
D D
________________
E IN THE MATTER of section 21M of E
the High Court Ordinance (Cap. 4) in
F aid of a claim before the Hangzhou F
Intermediate People's Court
G
________________ G
BETWEEN
H H
JACKY ZONG (宗继昌) 1st Plaintiff
I I
JESSIE JIELI ZONG (宗婕莉) 2nd Plaintiff
J JERRY JISHENG ZONG (宗继盛) 3rd Plaintiff J
K and K
L KELLY FULI ZONG (宗馥莉) 1st Defendant L
JIAN HAO VENTURES LIMITED 2nd Defendant
M M
________________
N N
Before: Deputy High Court Judge Gary CC Lam in Chambers (Open to public)
O O
Date of Hearing: 11 July 2025
P Date of Decision: 1 August 2025 P
Q Q
DECISION
R R
S S
I. INTRODUCTION
T T
U U
V V
- 2 -
A A
1. Before me are:-
B B
C (1) the Originating Summons (the “Originating Summons”) C
filed by the 1st to 3rd Plaintiffs (the “Plaintiffs”) on 30
D D
December 2024 seeking an order under section 21M of the
E High Court Ordinance (Cap.4) (the “HCO”) restraining the 1st E
and 2nd Defendants (the “Defendants”) from disposing of or
F F
dealing with certain assets in a Hong Kong bank account in
G G
aid of proceedings commenced or to be commenced in
H
Hangzhou, PRC; and H
I I
(2) an inter-partes Summons (the “Interlocutory Summons”)
J
filed by the Plaintiffs on 30 December 2024 seeking an J
interlocutory injunction pending the substantive disposal of
K K
the Originating Summons.
L L
2. At the hearing of the Interlocutory Summons on 3 January
M M
2025 before DHCJ Grace Chow, the Defendants offered an undertaking not
N
to withdraw or encumber the assets in question until the substantive N
determination of the Interlocutory Summons, upon the acceptance of which
O O
no interim injunction was ordered.
P P
3. For the present purpose, the disposal of the Originating
Q Q
Summons herein will dispose of the Interlocutory Summons as well.
R R
II. PARTIES
S S
4. The parties essentially are from two families under the same
T T
father, the late Zong Qinghou (“Zong Senior”), who passed away on 25
U U
V V
- 3 -
A A
February 2024. Zong Senior was the founding chairman and CEO of
B B
Hangzhou Wahaha Group Co Ltd (“Wahaha Group”), a beverage
C C
producer in China.
D D
st nd rd
5. The 1 , 2 and 3 Plaintiffs (“Jacky”, “Jessie” and “Jerry”
E respectively) are the three children Zong Senior had with Madam Du E
Jianying (“Madam Du”).
F F
G 6. The 1st Defendant (“Kelly”) is the daughter Zong Senior had G
with Madam Shi Youzhen (“Madam Shi”). She is the chairman of
H H
nd
Wahaha Group. The 2 Defendant (“Jian Hao”) is a BVI company,
I I
whose sole registered shareholder has since 2 February 2024 been Kelly,
J
and whose sole director was Zong Senior prior to his demise on 25 J
February 2024, thereafter replaced by Kelly.
K K
7. Jian Hao holds various assets in Hong Kong, among which is
L L
the net assets of US$1,799,062,412.25 as at 31 May 2024 held in its
M M
account maintained with HSBC (the “HSBC Account”), consisting mainly
N
of bonds and other fixed income assets and some cash and time deposits. N
The subject assets for the preservation order now the Plaintiffs seek are
O O
these assets in the HSBC Account (the “HSBC Account Assets”). For
P convenience, I shall refer to the other assets held by Jian Hao than the P
HSBC Account Assets as the “Other Assets”.
Q Q
R 8. Zong Senior left two wills executed on 2 February 2024 (the R
“Wills”), one of which concerned his specific offshore assets but did not
S S
cover Jian Hao and its assets, and the other of which concerned his onshore
T assets in Mainland China. The Wills did not name any of the Plaintiffs or T
U U
V V
- 4 -
A A
Madam Du, but named, among others, Kelly, Madam Shi and Zong
B B
Senior’s mother Wang Shuzhen (“Madam Wang”), as beneficiaries. The
C C
executors named by both Wills are Chen Han 陳漢 (a lawyer of Han Kun
D Law Offices) and Guo Hong 郭虹. I hasten to add that the present D
proceedings do not in any aspect concern the administration of the estate
E E
of Zong Senior. This just provides the background to understand the
F agreements between the parties mentioned below, which refer to the Wills. F
G G
III. PLAINTIFFS’ EVIDENCE
H H
9. The Plaintiffs’ case relies primarily on three documents. The
I I
first is an undated handwritten document (the “Handwritten
J Instructions”) which, according to the Plaintiffs, was handwritten by Zong J
Senior himself in about late January 2024. The Handwritten Instructions
K K
was addressed to Guo Hong.
L L
10. The Handwritten Instructions stated:-
M M
“郭虹
N N
准备去香港办理三个人的信托，在汇丰办，每人七亿美金，
O
需办理下列工作： O
1、我的信托就是拿利息，要求汇丰银行给予较优惠的利息，
P 我们长期不动，仅能收取利息使用。 P
Q
2、按香港法律要求，签订信托合同，并请香港公证处公证。 Q
3、受益人仅是其本人与子孙，与配偶没有关系，系婚前财
R 产。 R
S
4、汇丰账目美金尚不够，请把人民币换成美金。 S
5、先办理继昌/婕莉的，若美金募足了，请继盛请假回来办
T 理好。 T
U U
V V
- 5 -
A A
宗庆后” (emphasis added)
B B
C 11. On about 2 February 2024, Zong Senior executed a document C
entitled “委托書” dated 2 February 2024 (the “Letter of Entrustment”).
D D
This is the second document the Plaintiffs rely on. It stated that:-
E E
“委托书
F F
甲方：宗庆后（ “委托人” ）
G … G
乙方：宗馥莉（Zong, Kelly Fuli）（ “受托人” ）
H H
…
I I
鉴于：
J 1. Jian Hao Ventured Limit （建浩創投有限公司）为一家根 J
据 BVI 法律注册成立的公司…公司经登记的股东为乙方，
甲方为唯一董事；
K K
2. Jian Hao Ventured Limit 持有两部份资产，包括 (1) 于香
L 港上海汇丰银行有限公司（HSBC Hongkong）开设的账号下 L
的资产（下称 “标的财产” ）；(2) 在高盛、渣打、瑞银、工
M 银、中银等其他银行开设的账户内的资产（下称 “其他银行 M
的财产”）；
N 3. 双方确认乙方为替甲方代持上述资产，包括公司股权及 N
资产；
O O
现甲方和乙方本着自愿、诚信的原则，经充分协商，就甲方
委托乙方运用上述标的财产设立境外信托的相关事宜达成
P P
如下协议，以资共同遵守。
Q 一、甲方委托乙方以乙方作为设立人分别设立三个境外信托 Q
（三个信托单独简称为 ‘信托 A’ ‘信托 B’‘信托 C’，合称为
R 宗氏境外家族信托），信托 A 以宗继昌 [Jacky] 及其子女作 R
为信托受益人；信托 B 以宗婕莉 [Jessie] 及其子女作为信
托受益人；信托 C 以宗继盛 [Jerry] 及其子女作为信托受益
S S
人。
T T
U U
V V
- 6 -
A A
二、本协议第一条所约定之宗氏家族信托受益人仅包括宗继
B B
昌、宗婕莉、宗继盛及其子女，信托利益为他们的婚前个人
财产，受益人不包括该等人士的配偶。
C C
三、甲方委托乙方设立的宗氏家族信托为不动本信托，即信
D
托资产继续在 HSBC Hongkong 进行固定收益投资，只就利 D
息收益进行分配，任何人士不得主张动用信托财产本金向受
益人作分配。
E E
四、在完成上述 “三” 项之后，对于其他银行存放的财产，
F 甲方确定将所有资产利益归属于乙方，由乙方自行处理。” F
(original emphasis)
G G
H 12. Also on 2 February 2024, Kelly signed a Chinese H
confirmation letter (the “Confirmation Letter”) confirming her
I I
agreement to the Letter of Entrustment. It is also on this day when Kelly
J became the sole shareholder of Jian Hao. J
K K
13. On 25 February 2024, Zong Senior passed away.
L L
14. On 14 March 2024, Kelly, Jacky, Jessie and Jerry entered into
M M
an agreement titled “協議” (the “Agreement”) in relation to the matters
N arising from Zong Senior’s demise. This is the third document the N
Plaintiffs rely on. It provided that:-
O O
“协议
P P
甲方：宗馥莉
…
Q Q
乙方一：宗继昌
R … R
乙方二：宗婕莉
S … S
T 乙方三：宗继盛 T
U U
V V
- 7 -
A A
…
B B
三位乙方合称 “乙方”，甲方、乙方合称 “各方”。
C C
2024 年 2 月 25 日，宗庆后先生…因病逝世…现各方就宗庆
后先生之遗产处置事宜，经协商达成一致约定如下：
D D
1. 各方确认，宗庆后先生于 2024 年 2 月 2 日订立的遗嘱合
E 法有效，各方认可宗庆后先生在公证遗嘱中的所有安排。 E
F 2. 乙方确认，宗馥莉、施幼珍、王树珍三位继承人具有办理 F
宗庆后先生继承权公证及其他资产承继相关程序的全部权
限，乙方承认前述继承人完成的相关遗产继承程序合法有效，
G G
承诺不以任何形式挑战相关程序之效力。
H 3. 甲方承诺，将以 Jian Hao Ventures Limited (建浩創投有限 H
公司) 在汇丰银行香港特别行政区开立的账户内的资产之
I 权益，依据本协议第 4 条的内容为三位乙方设立一个信托 I
（共设三个信托）。甲方已聘请适格的律师事务所及相关专
业人士开展相关信托的设立工作。
J J
4. 根据宗庆后先生的意愿，上述信托初始规模为每个信托
K 美金柒亿元整（总金额为二十一亿美金整），为不可撤销的 K
不动本信托，即信托资产继续在 HSBC Hong Kong 进行固定
L 收益投资，只就利息收益进行分配，任何人士不得主张动用 L
信托财产本金向受益人作分配。
M M
5. 信托设立预计以一个 PTC（Private Trust Company）模式
过渡到专业受托人阶段，在 PTC 过渡阶段，甲方担任受托
N 人的股东，信托架构中的其他角色由郭虹女士及陈汉先生根 N
据实际情况并咨询相关专业意见后担任；在过渡期结束后，
O 则由乙方指定的人士来担任。 O
6. 信托过渡期结束之后（即进入专业受托人阶段），甲方不
P P
再参与信托的任何管理，全部由乙方来管理。初始信托财产
完整交付之后，甲方解除其责任。
Q Q
7. 甲方应当按照本协议约定完成 Jian Hao Ventures Limited
R （建浩創投有限公司）资产的信托设立工作，甲方不得以作 R
为或不作为的方式阻碍信托的设立工作或资产交付。
S S
8. 乙方应当按照本协议约定配合完成遗产继承、分割、分配
等环节相关手续，乙方不得以作为或不作为方式妨碍遗嘱的
T 执行或公司经营。 T
U U
V V
- 8 -
A A
B 9… B
C 10. 凡因本协议所发生的或与本协议有关的一切争议，本协 C
议各方可通过友好协商解决。在协商不能解决或一方不愿通
过协商解决时，任何一方应向浙江省杭州市有管辖权的人民
D D
法院提起诉讼。” (emphasis added)
E E
15. It is clear that there was quid pro quo under the Agreement,
F namely, the Plaintiff shall recgonise the Wills and shall not hinder the F
G
administration thereunder, and Kelly shall set up offshore trusts for the G
Plaintiffs.
H H
16. Further, from the Handwritten Instructions, the Letter of
I I
Entrustment and the Agreement (collectively, the “Documents”), it is
J J
reasonably clear that the HSBC Account Assets shall be for offshore trusts
K
for the Plaintiffs, while the Other Assets shall be for Kelly. K
L 17. In the Plaintiffs’ supporting affirmation, Jacky mentions the L
M
following matters in respect of how Kelly has handled Zong Senior’s assets. M
First, he mentions that there have been unauthorised withdrawals by Kelly
N N
from the HSBC Account without the Plaintiffs’ knowledge and consent.
O
He explains that they have received only two monthly bank statements in O
respect of the HSBC Account. One is as at 31 January 2024 (the
P P
“January 2024 Statement”) and the other is as at 31 May 2024 (the “May
Q 2024 Statement”). The former was provided to Madam Du by Guo Hong Q
in around May 2024, and the latter was provided to Madam Du by Hong
R R
Chanchan (“Hong”) (who was a director of Wahaha Group and a
S subordinate of Kelly) in around July 2024. By comparison, they observe S
some unauthorised withdrawals. They refer to the following as
T T
“examples”:-
U U
V V
- 9 -
A A
(1) The value of the assets held in USD, CAD, AUD, GBP, EUR
B B
and JPY all decreased, and the value of assets in HKD and
C C
CNY increased;
D D
(2) US$5,244,600.17 was withdrawn between 1 January 2024
E and 30 April 2024; and E
F F
(3) US$1,085,120 had since 30 April 2024 been withdrawn.
G G
18. Second, Jacky mentions that Kelly has failed or refused to
H H
sign the relevant documents to set up the three offshore trusts (the
I “Offshore Trusts”) as instructed by the Letter of Entrustment and agreed I
under the Agreement.
J J
K 19. It is the Plaintiffs’ understanding from Madam Du that Zong K
Senior had, prior to his demise, indicated orally that Trident Trust
L L
Company (HK) Limited (“Trident Trust”) should be engaged as the trust
M company for the Offshore Trust. On 18 June 2024, Chen Han emailed M
Kelly, her PRC lawyer Sun Shiqi (“Sun”) of Jingtian & Gongcheng
N N
(“JTGC”) and Madam Du informing that Chen Han’s team had prepared
O O
the documents necessary for setting up the Offshore Trusts and suggesting
P
that Kelly should (1) first set up the trust structure; (2) open a bank account P
with HSBC; and (3) transfer the property into the trusts. However, on the
Q Q
same day, Sun replied on behalf of Kelly, saying that the parties had not
R agreed on these points. Sun stated that the first step to take would be to R
determine trust property and for the parties to agree to the value of the
S S
HSBC Account Assets. Sun also warned Chen Han not to interfere with
T the trust work and that he should stay as a neutral estate administrator. T
U U
V V
- 10 -
A A
20. On 25 June 2024, Yan Wensheng (“Yan”) of Trident Trust
B B
emailed draft trust deeds for the Offshore Trusts and other documents to
C C
Sun for Kelly’s signature. Further, on 22 and 23 July 2024, Yan sent a
D
transfer instruction form from HSBC for the transfer of assets into the D
Offshore Trusts to Sun for Kelly signing. However, Kelly failed or
E E
refused to sign the documents. On 13 August 2024, in an email reply to
F Madam Du’s email of 7 August 2024 enquiring about the progress of F
setting up the trusts, Sun stated that Kelly had engaged TMF Group
G G
(“TMF”) for setting up the trusts and attached to the reply email the fee
H proposal, and explained that the engagement of TMF to replace Trident H
Trust was due to the unsatisfactory quality of its service. Sun also
I I
indicated in the email that she would contact the beneficiaries as soon as
J possible for documents and sending them documents for execution. J
K K
21. Dispute then followed between Sun (on behalf of Kelly) and
L Madam Du in relation to the choice between Trident Trust and TMF. L
Eventually, in September 2024, Jacky, Jessie and Jerry decided not to
M M
object to Kelly’s insistence on TMF for the avoidance of incurring time
N and dispute. As a result, from late September to early November 2024, N
the representatives of the parties (including Yelu Xu (“Xu”) and Chen Li
O O
(“Li”) of the Plaintiffs’ lawyers Beijing Dacheng Law Offices, LLP
P (Shanghai) (“Dacheng”)) and the representative of TMF, Cindy Huang P
(“Cindy”), engaged in various discussions via WeChat and an online
Q Q
conference on 12 November 2024. Various draft documents (including
R draft Deed of Trust) were circulated for signing, but Kelly refused to sign. R
The Plaintiffs’ case is that from the discussions, it is reasonably clear that
S S
Kelly “continued to drag her feet in signing the relevant documentation”,
T T
U U
V V
- 11 -
A A
B
or evinced no intention to be bound by the Agreement, or took inaction (不 B
作为) in breach of Clause 7 of the Agreement.
C C
D 22. As not much progress had been made, on 30 November 2024, D
Sun relayed Kelly’s confirmation that the assets remained there and the
E E
Plaintiffs had nothing to be concerned about.
F F
23. Further communication continued and revised draft trust
G G
deeds circulated. In the email sent on 14 December 2024, another lawyer
H of JTGC, Zhang Congcong (“Zhang”), on Kelly’s behalf, stated that:- H
I (1) Kelly did not recognise the validity of the Handwritten I
Instructions;
J J
(2) Kelly would not agree to any further changes to the draft trust
K K
deed;
L L
(3) Kelly would continue to set up the Offshore Trust at an
M appropriate pace; M
N (4) Kelly had no obligation to respond to Dacheng’s information N
requests other than regarding the contents of the trust
O O
document; and
P P
(5) If the Plaintiffs would harm Kelly’s interests such as
Q commencing litigation, Kelly had the right to immediately Q
R
stop setting up the Offshore Trusts. R
S S
24. The Plaintiffs also highlight the evidence that:-
T T
(1) While Clause 5 of the Agreement provides that:-
U U
V V
- 12 -
A A
“信托设立预计以一个 PTC (Private Trust Company) 模式过
B B
渡到专业受托人阶段，在 PTC 过渡阶段，[Kelly]担任受托
人的股东，信托架构中的其他角色由郭虹女士及陈汉先生根
C 据实际情况并咨询相关专业意见后担任；在过渡期结束后， C
则由[Plaintiffs]指定的人士来担任。”
D D
Kelly insisted upon a provision (Clause 5 of the draft) in the
E E
draft Deed of Trust appointing her to be the protector of the
F trust with the power to determine the trust period (Clause 11 F
of the draft); and
G G
(2) While Clauses 1 and 2 of the Letter of Entrustment provide
H H
clearly that only the Plaintiffs and the Plaintiffs’ issues would
I be the beneficiaries of the Offshore Trusts, Kelly proposed I
provisions in the draft Deed of Trust (Clause 9 of the draft)
J J
that Kelly’s issue may also be the beneficiaries.
K K
L
25. Third, based on the above, the Plaintiffs make the following L
complaints at §55 of Jacky’s Affirmation filed on 30 December 2024:-
M M
“In short, despite many months of negotiation, Kelly (i) still has
N not set up the three Offshore Trusts or the private trust company; N
(ii) has refused to recognise the validity of the Handwritten
Instructions; (iii) has refused to provide any information relating
O to the HSBC Account (save for the January 2024 Statement and O
the May 2024 Statement) to us; and (iv) on the contrary, has
caused funds (of at least US$1,085,120) to be transferred away
P P
from the HSBC Account for unknown purposes (and apparently
not for the purposes of the Offshore Trust).”
Q Q
26. Fourth, in Jacky’s 2nd Affirmation filed on 16 June 2025,
R R
being a reply Affirmation, the Plaintiffs raised for the first time that Kelly
S bears “serious animosity” towards the Plaintiffs’ side of the family and has S
been engaged in a systematic battle for control over the family assets
T T
U U
V V
- 13 -
A A
against the Plaintiffs’ side of the family, including 10 factory companies
B B
under Wahaha Group and stripping Wahaha Group of its assets in her own
C C
favour. While I can see the point made by Mr William Wong SC (leading
D
Ms Sharon Yuen and Mr Charlie Liu) for the Plaintiffs that such D
particularised evidence is still evidence in reply to the Defendants’
E E
allegation in Kelly’s opposing evidence (as alluded to below) that she
F always honours Zong Senior’s wishes, the Defendants should, as a matter F
of fairness, be afforded opportunity to respond to such particulars raised
G G
for the first time. This was the reason why at the outset of the hearing, I
H granted leave for the Defendants to rely on Kelly’s 2nd Affirmation. All H
that said, in the overall scheme of things, these particularised evidence does
I I
not play any determinative role in my judgment.
J J
IV. DEFENDANTS’ EVIDENCE
K K
L 27. In respect of the Plaintiffs’ complaint of unauthorised L
withdrawals, Kelly explains that the withdrawals were all legitimate
M M
transactions:-
N (1) As to the decrease in the foreign currencies and increase in N
HKD and CNY, these resulted from currency fluctuations and
O O
portfolio shifts.
P P
(2) The net change of approximately US$5.24 million primarily
Q resulted from repayments in March and April 2024 of loans Q
and interests due and owing by Jian Hao to HSBC. The
R R
loans were incurred in the following manner:-
S S
(a) On 27 December 2023 (prior to the Letter of
T Entrustment and the Agreement), Jian Hao (Zong T
U U
V V
- 14 -
A A
Senior still the sole director) borrowed a fixed loan
B B
from HSBC in the amount of HK$318,491,601.59 (the
C C
“1st Loan”) to finance its investment in “certain
D
financial products”; D
E
(b) On 27 February 2024 (subsequent to the Letter of E
Entrustment and prior to the Agreement), to refinance
F F
the 1st Loan and the interest accrued thereon, Jian Hao
G drew a second loan of HK$321,681,875.25 (the “2nd G
Loan”);
H H
(c) On 5 April 2024 (subsequent to the Letter of
I I
Entrustment and the Agreement), to refinance the
J outstanding principal of the 2nd Loan and the interest, J
Jian Hao drew a third loan of HK$233,778,513.60 (the
K K
“3rd Loan”); and
L L
(d) On 12 April 2024 (subsequent to the Letter of
M Entrustment and the Agreement), Jian Hao drew a M
fourth loan of HK$233,681,657.69 (the “4th Loan”) to
N N
discharge the outstanding of the 3rd Loan and the
O interest accrued thereon as at 12 April 2024; and O
P (3) The withdrawal of US$1,085,120 was used to settle capital P
calls issued by the funds named New Era Capital Partners, L.P.
Q Q
and New Era Capital Partners II, L.P. (collectively, the
R “Funds”) (“which is not part of the HSBC Account” on the R
Defendants’ own evidence: see §31 of Kelly’s 1st Affirmation)
S S
on 22 January 2024 and 14 March 2024 respectively. Jian
T T
U U
V V
- 15 -
A A
Hao (Zong Senior being the sole director) invested in the
B B
Funds in August 2017 and early 2022 respectively.
C C
28. I pause to note that while by the time of the 2 nd Loan and the
D D
second withdrawal to settle the calls issued by the Funds, the HSBC
E Account Assets had arguably been designated for the Offshore Trusts to be E
set up for fixed-income investments, such withdrawals were still made.
F F
In particular, in relation to the calls issued by the Funds, the Funds are “not
G G
part of the HSBC Account”. In other words, the HSBC Account Assets
H
were used for an investment not related to the Plaintiffs at all. Kelly’s H
response, in essence, is that this had been the practice in the past when
I I
Zong Senior was still the director of Jian Hao.
J J
29. Kelly also gives answers to the Plaintiffs’ complaint that she
K K
has dragged on her feet in setting up the Offshore Trusts. She states that
L her discussions or negotiations with the Plaintiffs on the terms of the draft L
documents were genuine.
M M
N
30. First, Kelly contends that Clause 3 of the Letter of N
Entrustment (quoted in §11 above) means that only the interest on the fixed
O O
capital would be the trust assets, but not the capital itself. She highlights
P this because it appears to her that the Plaintiffs have been labouring under P
an impression which she thinks is wrong that the capital should also be part
Q Q
of the trust assets.
R R
31. Secondly, relatedly, Kelly contends that she should not be
S S
treated by the Plaintiffs as a mere entrustee as if she had no say in the terms
T of the documents setting up the Offshore Trusts. She refers to Clauses 5 T
U U
V V
- 16 -
A A
and 6 of the Agreement (quoted in §14 above). In particular, Clause 5
B B
states that in the transition of the Offshore Trusts to the private trust
C C
company, Kelly would be “受托人的股東”.
D D
32. Third, in relation to her insistence on the valuation of the
E E
assets, she refers to Clause 4 of the Agreement (quoted in §14 above). In
F gist, Kelly contends that the value of the assets in the HSBC Account has F
never attained US$2.1 billion and thus there is no basis for the Plaintiffs to
G G
assert their respective entitlement to an offshore trust of US$700 million
H each before the parties could find a way to make up a shortfall. Kelly H
further contends that the figure of US$700 million for each was
I I
aspirational only, and in any event, she does not recognise the validity of
J the Handwritten Instructions. Therefore, the Plaintiffs’ insistence that J
cash of US$700 million shall be injected into each of the Offshore Trusts
K K
is unrealistic and infeasible.
L L
33. Fourth, in relation to her proposal to include her issue to be
M M
the beneficiaries of the Offshore Trusts, Mr Benjamin Yu SC (leading Mr
N Bernard Mak), counsel for the Defendants, seems to contend that her issues N
would be excluded by the definition of “Excluded Persons” in the draft
O O
Deed of Trust. With respect, such contention cannot be maintained,
P because “Excluded Persons” was defined as the spouse of Kelly, or any P
spouse of any children or remoter issue of Kelly; in other words, Kelly’s
Q Q
issues would not be excluded. Further, during his oral submissions, Mr
R Yu suggested that the inclusion of Kelly’s issue and appointment of Kelly R
as protector with power to terminate the trust period might be due to the
S S
lawyers’ template. I rejected this suggestion outright because I cannot
T take judicial notice in this regard, and there is no evidence from the T
U U
V V
- 17 -
A A
Defendants to explain that such terms were included because Kelly’s
B B
lawyers blindly used a template as if this would be fit-for-all without
C C
exercising any professional judgment to their client’s needs.
D D
34. The differences between the two camps, according to Kelly,
E became sources of disagreement in the discussions and negotiations that E
have prevented execution of documents necessary to set up the Offshore
F F
Trusts. In other words, Kelly is saying that she has evinced no intention
G G
not to be bound by the Letter of Entrustment and the Agreement, that she
H
was not taking any action or inaction (in breach of Clause 7 of the H
Agreement) to prevent the establishment of the Offshore Trusts, and that
I I
the Plaintiffs are simply jumping the gun.
J J
35. Kelly emphasises that she always honours Zong Senior’s
K K
wishes. In response to the Plaintiffs’ accusation that she does not, Kelly
L gives explanation in her 2nd Affirmation the details of which I do not need L
to delve into for the present purposes.
M M
N
V. PLAINTIFFS’ CASE N
O O
36. The Plaintiffs’ case is that:-
P P
(1) The Agreement is governed by Hong Kong law (which the
Q Defendants do not have evidence to dispute for the present Q
purpose, though Mr Yu expressly reserves the position for any
R R
subsequent proceedings, whether in Hong Kong or the PRC);
S S
T T
U U
V V
- 18 -
A A
(2) Kelly has breached the Agreement by failing to set up the
B B
Offshore Trusts, and breached the Agreement by her “inaction”
C C
contrary to Clause 7 of the Agreement; and
D D
(3) Kelly is a constructive trustee and/or fiduciary in relation to
E the HSBC Account Assets. E
F F
VI. HANGZHOU PROCEEDINGS
G G
37. Although the Plaintiffs’ case is that the Agreement is governed
H H
by Hong Kong law, because of the jurisdictional clause in the Agreement
I (namely, Clause 10), the Plaintiffs have to commence proceedings in the I
Hangzhou Court. Accordingly, on 27 December 2024, the Plaintiffs
J J
submitted an application with a Statement of Complaint (民事起訴狀) to
K K
the Hangzhou Intermediate People’s Court (the “Hangzhou Court”) (the
L “Application to Hangzhou Court”) for the case filing and registration (立 L
案 ) so as to commence proceedings against Kelly (the “Hangzhou
M M
Proceedings”) and Jian Hao as the third party. In the Hangzhou
N Proceedings, the Plaintiffs would seek, among others, the following relief:- N
O “1. 判决确认 Jian Hao Ventures Limited 建浩創投有限公司 O
（下称「建浩公司」）名下在香港上海汇丰银行有限公司…
P 的银行账户中的资产是三位原告享有受益权的信托财产（下 P
称「信托财产」）;
Q Q
2. 请求确认被告就信托财产对原告负有受信责任，需就信
托财产的去向作出解释;
R R
3. 请求判令被告在 28 天或法院认为合适的任何其他期限内，
根 据 [Handwritten Instructions] 、 [Letter of Entrustment] 、
S S
[Agreement]，履行 [Agreement] 第 3、4、5、6、7 条约定的
义务;
T T
U U
V V
- 19 -
A A
4. 请求判令被告支付原告利息收益，以 21 亿美元为基数…
B B
5. 请求判令被告向原告赔偿擅自转移的信托财产损失（暂
C 计为 1,085,120 美元）…” C
D D
38. Mr Wong, for the Plaintiffs, underscores that the Hangzhou
E Proceedings claim that the HSBC Account Assets, not just the income E
generated therefrom, are the subject assets in the proceedings.
F F
G 39. On 28 February 2025, upon Hangzhou Court’s request, the G
Plaintiffs submitted a revised Statement of Complaint to the Hangzhou
H H
Court (the “Revised Statement of Complaint”). As at 16 June 2025,
I when the Jacky’s 2nd Affirmation was filed on behalf of the Plaintiffs, the I
Application to Hangzhou Court was still being processed, yet to be “filed
J J
and registered” (立案). At that point of time, there seemed to be dispute
K on the evidence between the parties whether the Hangzhou Proceedings K
could have been regarded as existent for the purpose of section 21M of the
L L
HCO, although Mr Yu fairly pointed out during the oral submissions that
M M
section 21M of the HCO covers also proceedings “to be commenced”, and
N
therefore, he would not take this point. In any event, just a few days prior N
to the hearing, on 8 July 2025, the Higher People’s Court of Zhejiang
O O
Province informed the Plaintiffs by a Notice of Acceptance（受理案件通
P 知書）that the Hangzhou Proceedings have been “filed and registered”. P
Mr Yu made a complaint that the case number in the exhibited copy of the
Q Q
Notice of Acceptance was redacted and thus the evidence is not clear
R whether this Notice of Acceptance is in respect of the Hangzhou R
Proceedings, given that the Hangzhou Proceedings were lodged with the
S S
Hangzhou Court but not the Zhejiang Higher People’s Court. The
T Plaintiffs explain that the redaction was made upon the request of the T
U U
V V
- 20 -
A A
Hangzhou Court to minimise public attention. Irrespective of the reason
B B
for the redaction, looking at the content of the Notice of Acceptance
C C
referring to the Plaintiffs as the claimants therein, Kelly as the Defendant
D
therein and Jian Hao as the third party therein, it is clear to me that the D
Notice of Acceptance is in relation to the Hangzhou Proceedings. Further,
E E
for convenience, whichever PRC Court is now seized of the Hangzhou
F Proceedings, I shall refer to the relevant PRC Court as the “PRC Court”. F
G G
VII. TWO-STAGE APPROACH IN SECTION 21M APPLICATION
H H
40. The approach towards section 21M is well-settled by the
I I
Court of Final Appeal in Compania Sud Americana de Vapores SA v Hin-
J
Pro International Logistics Ltd (2016) 19 HKCFAR 586 at §§47-54 per J
Lord Phillips NPJ. I only need to refer to the following legal principles
K K
by summarised by Lisa Wong J at §48 of Jiang Xi An Fa Da Wine Co. Ltd
L v Zhan King [2019] HKCFI 2411:- L
“(1) In the first stage, the court firstly asks whether, if the
M M
proceedings that have been or are to be commenced in the
foreign court result in a judgment, that judgment is one that the
N Hong Kong court may enforce. If the judgment resulting from N
the foreign proceedings may be enforced by the Hong Kong
court, then the court asks the same questions as it would if the
O O
interim relief were sought in support of a Hong Kong action,
save that the strength of the plaintiff’s substantive claim against
P the defendant (if material) should be considered from the P
standpoint of the foreign court, and not under the law of Hong
Kong.
Q Q
(2) In the second stage, as required by s 21M(4), the court should
consider whether the fact that the court has no jurisdiction apart
R R
from s 21M in relation to the subject matter of the proceedings
concerned makes it unjust or inconvenient for the court to grant
S the application.” S
T T
VIII. FIRST STAGE
U U
V V
- 21 -
A A
41. For the first stage, Mr Yu, for the Defendants, rightly does not
B B
take issue on the enforceability of the judgment that may be given in the
C C
Hangzhou Proceedings. However, Mr Yu submits that whether the
D
injunction being sought in aid is a Mareva injunction or a proprietary D
injunction or a preservation order, the threshold must be a good arguable
E E
case. He refers me to Hin-Pro, supra, itself. He points out that the
F threshold there for the first stage was also a good arguable case. In F
addition, he submitted one more case during the hearing, namely, Convoy
G G
Collateral Ltd v Broad Idea International Ltd [2023] AC 389 a Privy
H Council’s appeal from BVI, in reliance on §101 of which Mr Yu H
emphasises that the Court’s equitable or statutory jurisdiction to grant
I I
injunction can be exercised only upon the threshold of a good arguable case.
J J
42. With respect, I cannot see how those cases assist Mr Yu’s
K K
proposition on threshold. Those cases were cases of Mareva Injunction
L or freezing injunction, the threshold for which is a good arguable case even L
domestically. As pointed out by DHCJ Queeny Au-Yeung (as she then
M M
was) in Narian Samtani v Chandersen Tikamdas Samtani [2012] 4 HKLRD
N 872 at §76, there exists an essential distinction between a preservation N
order and a Mareva injunction, namely:-
O O
“[Mareva injunction] goes well beyond [a proprietary injunction
P or preservation order] and enables the court to grant the plaintiff P
an interlocutory injunction restraining the defendant from
disposing of or even dealing with his assets, being assets over
Q Q
which the plaintiff asserts no proprietary claim but which after
judgment may be attached to satisfy a money judgment…”
R R
43. It is this distinction (a Mareva injunction having a more
S S
extensive effect) that warrants an enhanced threshold for Mareva
T injunction. T
U U
V V
- 22 -
A A
44. In my view, the purpose of the first stage is clear – if the Hong
B B
Kong Court would not have granted the order, there would be no point in
C C
considering whether to grant such an order in aid of foreign proceedings,
D
since granting an order which the Hong Kong Court would not have D
granted to aid foreign proceedings seems to be lacking in comity. I tend
E E
to think that it would also be lacking in comity if the Hong Kong Court
F would have granted the order but refused to grant it in aid simply because F
it presumptuously thought that the threshold should be enhanced. During
G G
my oral exchange with Mr Yu, I made enquiry of the reason why for the
H first stage, the threshold should be enhanced. Mr Yu’s answer was, in H
essence, that because it is a statutory jurisdiction (in reliance on Convoy,
I I
supra) and because the parties chose the foreign forum to resolve their
J disputes, the Hong Kong Court should be very cautious to exercise such J
jurisdiction. I agree that I should be very cautious to exercise such
K K
jurisdiction, and as to how to exercise such jurisdiction cautiously, I should
L turn to the authorities binding upon me for guidance. As regards the L
parties’ choice of forum, while it may be a reason for the cautious approach,
M M
it is, in my view, more a factor in a forum non conveniens consideration,
N with which I am not concerned here. An application under section 21M, N
by its very nature, means that the applicant recognises that the Hong Kong
O O
Court is not an appropriate forum to resolve the substantive dispute, but
P takes the view that the Hong Kong Court may grant certain relief in aid P
only.
Q Q
R 45. Further, if statutory jurisdiction and/or parties’ choice of R
foreign forum should or would lead to an enhanced threshold, then in all
S S
the cases cited by Mr Yu on this threshold point, all in relation to Mareva
T or freezing injunctions in aid of foreign proceedings, a threshold higher T
U U
V V
- 23 -
A A
than a good arguable case should or would have been adopted. However,
B B
on the contrary, those cases only show that the same threshold adopted
C C
domestically for Mareva injunction were applied at the first stage. With
D
respect, I see no reason why, if Mr Yu’s reason were right, no enhanced D
threshold was applied for Mareva injunction but for other interlocutory
E E
injunctions, an enhanced threshold should be applied as submitted by Mr
F Yu. F
G G
46. In gist, I cannot see how the parties’ choice of forum and/or
H
the cautious approach can be translated into an enhanced threshold for the H
first stage. In my view, the Hong Kong Court’s caution and any “foreign”
I I
or comity consideration are operative in the second stage, but not in the
J first stage. J
K K
47. It remains for me to add that the suggestion, that the threshold
L for an injunction or a preservation order, if considered in the context of L
section 21M of the HCO, should be elevated to good arguable case,
M M
conflates the first and the second stage. It is, in my view, the second stage
N which would take care of this foreign element by reference to “unjust” N
and/or “inconvenient”. Therefore, I find that the threshold for the present
O O
purpose of determining whether a preservation order should be granted
P should be serious issues to be tried. P
Q Q
48. In the same vein, Mr Yu suggests that whatever kind of
R injunction or preservation order is being sought in aid of foreign R
proceedings, a real risk of dissipation should be a necessary requirement.
S S
It is not entirely clear to me whether Mr Yu suggests that the real risk of
T dissipation is a requirement for the first stage or the second stage. He T
U U
V V
- 24 -
A A
seems to suggest both, or seems to suggest that it does not really matter
B B
whether it should be for the first stage or the second stage. Insofar as he
C C
suggests that it is a requirement for the first stage, for the same reason on
D
which I reject his proposition on an enhanced threshold, I also reject such D
suggestion.
E E
49. From the evidence and the parties’ respective cases set out
F F
above, it is clear to me that there are serious issues to be tried in relation to
G G
the Plaintiffs’ claim on breach of contract. Mr Yu also fairly accepts this.
H
In any event, I take the view that the Plaintiffs have also established a good H
arguable case on their claim on breach of contract.
I I
J
50. In relation to the constructive trust and/or fiduciary J
relationship over the HSBC Account Assets, Mr Wong reasons as follows:-
K K
(1) The Letter of Entrustment itself creates an express trust for
L L
Kelly to hold the shares in Jian Hao and the assets of Jian Hao
M M
for Zong Senior. Mr Wong submits that this means that
N
Kelly and Jian Hao do not hold any beneficial interest in the N
HSBC Account Assets.
O O
P
(2) The Agreement gives rise to a constructive trust. By the P
Agreement, Kelly agrees to set up the Offshore Trusts with
Q Q
the HSBC Account Assets and in consideration, the Plaintiffs
R agree not to contest the validity of the Wills in favour of Kelly R
(Recital 2 of the Agreement).
S S
T T
U U
V V
- 25 -
A A
(3) As Kelly does not have any interest in the HSBC Account
B B
Assets but has control over them and shall deliver (交付) the
C C
same for setting up the Offshore Trusts (Clause 6 of the
D Agreement), she is subject to fiduciary duty of agency type to D
those who have interest in them: see Libertarian Investments
E E
Ltd v Hall (2013) 16 HKCFAR 681 at §§64-65 per Ribeiro PJ.
F F
(4) Therefore, while the Letter of Entrustment and the Agreement
G G
may confer upon Kelly and Jian Hao a power to create a new
H trust, it does not follow that no trust has been set up by the H
same documents: see Lewin on Trusts (20th ed), §§3-054.
I I
J (5) While the legal owner of the HSBC Account Assets is Jian J
Hao, in circumstances where the corporate vehicle is solely
K K
controlled by a person, “it is possible for the court to infer a
L declaration of trust in circumstances where the directors of a L
company create a settlement and then treat the company as a
M M
corporate trustee carrying on the business formerly carried on
N by the company for the benefit of a constituted settlement”: N
see Lewin on Trusts, supra, §3-004. It is, in my view, a
O O
mixed question of fact and law.
P P
51. Built upon the above, Mr Wong further submits that the
Q Q
Plaintiffs have proprietary interest in the HSBC Account Assets and the
R income generated therefrom. R
S S
52. Mr Yu disagrees. He submits that the Plaintiffs do not have
T any proprietary interest in the entirety of the HSBC Account Assets, but at T
U U
V V
- 26 -
A A
most Kelly may have fiduciary duties in respect of the income generated
B B
on the HSBC Account Assets. He reasons that the HSBC Account still
C C
runs short of sufficient fund up to US$2.1 billion, trusts have yet to be set
D
up, and the HSBC Account Assets are maintained for investment, while the D
decision as to how to make investment rests with Jian Hao, the legal owner
E E
of the HSBC Account Assets. He even goes as far as to suggest that there
F is issue over the enforceability of the Agreement itself to set up any trusts. F
G G
53. Mr Yu also seems to submit that there can be no trust until the
H
value of the assets in the HSBC Account would reach US$2.1 billion, or he H
submits that there is one of such questions that have to be resolved.
I I
However, that has to be construed against Clause 5 of the Handwritten
J Instructions, which provided that:- J
K “先办理继昌/婕莉的，若美金募足了，请继盛请假回来办理 K
好。”
L L
54. While the Defendants do not admit the authenticity and/or
M M
validity of the Handwritten Instructions, it is fair to say that this still
N constitutes at least a serious issue to be tried, and therefore, there is also a N
serious issue to be tried over whether the Agreement would have to be read
O O
with the Handwritten Instructions for proper contractual construction as to
P when to set up the Offshore Trusts. I also add that while there is no direct P
evidence to say that Kelly had knowledge of the Handwritten Instructions,
Q Q
which were addressed to Guo Hong rather than her, there is a serious issue
R to be tried that in the circumstances, the Handwritten Instructions was R
brought to Kelly’s attention upon Jacky’s belief (which is, in my view,
S S
inherently probable) that Guo Hong conveyed the Handwritten Instructions
T T
U U
V V
- 27 -
A A
to Kelly, given that Kely was Zong Senior’s nominee shareholder in respect
B B
of Jian Hao (see Recital 3 of the Letter of Entrustment).
C C
55. In any event, it is not necessary for me to express any
D D
definitive view on the merits of the parties’ respective submissions on this
E trust-and-fiduciary issue. Suffice to say that it is a serious issue to be tried. E
F F
56. Further and in any event, if the threshold were a good arguable
G case, on the strength of the Documents and the evidence as well as the G
arguments put before me, I am of the view that there is also a good arguable
H H
case on this trust-and-fiduciary issue.
I I
57. As to the balance of convenience, I must point out that the
J J
preservation order now being sought by the Plaintiffs is not a Mareva
K injunction. Therefore, the existence of a real risk of dissipation is not a K
necessary condition, though still relevant. Instead, the test is whether
L L
there is a need for security, and where damages would be adequate, the
M M
Court may refuse to grant any preservation order: see Narian Samtani v
N
Chandersen Tikamdas Samtani, supra at §§78-79 per DHCJ Queeny Au- N
Yeung (as she then was). In my view, for the following reasons, I see such
O O
a need:-
P P
(1) As explained by Coleman J in Sky Motion Holdings Ltd v
Q Q
China Create Capital Ltd [2019] HKCFI 2408 at §79:-
R R
“[W]here there is at least a serious issue to be tried on the
proprietary claim, the balance of convenience would normally
S favour the preservation of the subject matter of the action at an S
interlocutory stage. Into the mix might be added that the
subject matter are tradeable assets, hence the risk of
T dissipation…” T
U U
V V
- 28 -
A A
As I have found above, there is a serious issue to be tried over
B B
the trust-and-fiduciary issue, and thus on the Plaintiffs’
C C
proprietary claim.
D D
(2) Despite the Plaintiffs’ entitlement to the income generated on
E
the HSBC Account Assets, no distribution has been made yet, E
and no trusts have been set up. While Kelly has proffered
F F
explanation for why the trusts have not been set up, her
G explanation hinges upon her understanding of the Agreement G
and as I have mentioned above, there are serious issues to be
H H
tried in this regard.
I (3) Whether Kelly truly believes that she has any fiduciary duty I
or not, given that the Plaintiffs are entitled to the income
J J
generated on the HSBC Account Assets, and one would have
K thought that if Kelly is true to her responsibility, even if she K
really believes that she has no legal responsibility, she would
L L
have been more willing than she has appeared (if at all) to
M provide information to the Plaintiffs in relation to the HSBC M
Account. However, on the contrary, she has all along
N N
maintained that she has no legal obligation to do so and has
O not provided any such information to the Plaintiffs. A O
fortiori, where the trust-and-fiduciary issue is a serious issue
P P
to be tried, there is also a serious issue to be tried over whether
Q the Defendants have legal obligation to provide such Q
information to the Plaintiffs concerning the trust assets or the
R R
assets subject to the fiduciary’s management or control: see
S Libertarian Investments Ltd v Hall, supra at §167 per Lord S
Millett NPJ; Lewin on Trusts, supra §21-035. All these beg
T T
U U
V V
- 29 -
A A
for the question why the Defendants have appeared reluctant
B B
to provide the information.
C C
(4) Kelly’s proposal for a provision in the draft Deed of Trust to
D D
include her own issue contrary to the Agreement, coupled
E
with her arguable breach of the Agreement and inexplicable E
reluctance to provide information to the Plaintiffs, points to
F F
some risk (though not necessarily a real risk) of dissipation.
G G
(5) The value of the HSBC Account Assets run up to US$1.8
H billion as at 31 May 2024. It is inherently probable, in the H
absence of any evidence to the contrary, that the Defendants
I I
would not be able to make good any order for compensation
J in the light of this substantial amount, and there is no evidence J
to suggest the contrary.
K K
L L
58. In the circumstances, I would grant the preservation order if
M the application would be made to Hong Kong Court, subject to one M
modification.
N N
O 59. The HSBC Account is an investment account. Even by the O
Agreement, the HSBC Account Assets are for fixed-income investments.
P P
Therefore, I agree with Mr Yu that it is inappropriate to prohibit “disposing
Q of” or “dealing with”. Further, the investments fluctuate in value. Q
Therefore, I also agree with Mr Yu that it is also inappropriate to prohibit
R R
any diminution of value. What then should be the terms of the injunction?
S S
60. During the oral exchange between the bench and the bar,
T T
exploration was made into whether certain mechanism could be put in
U U
V V
- 30 -
A A
place so that only fixed-income investments envisaged in the Agreement
B B
could be made. However, upon consideration, I think providing only for
C C
fixed-income investments would be in a sense recognising the Agreement
D
the enforceability of which is in dispute and an issue for the Hangzhou D
Court to decide. Bearing in mind that the preservation order is to preserve
E E
the HSBC Account Assets for the Hangzhou Court’s determination, the
F order should be to maintain the status quo. Since the HSBC Account is F
by nature an investment account, the status quo of the HSBC Account
G G
Assets must be for investment. Nevertheless, to only allow fixed-income
H investment may not be feasible. The bank may simply not allow any kind H
of investment to avoid being accused of allowing non fixed-income
I I
investments unless both parties would agree the same to be fixed-income
J investments. This would effectively give a veto power to the Plaintiffs J
which they do not have even under the Agreement. All in all, I think a
K K
prohibition of “withdrawal” and “encumbrance” strikes the right balance
L between the preservation of the HSBC Account Assets and avoidance of L
interference with the case management of the PRC Court (which is a
M M
consideration I have to bear in mind in the second stage as explained
N below). N
O O
61. In conclusion, the first stage is passed.
P P
IX. SECOND STAGE
Q Q
R 62. While in Hin-Pro, supra, the Court of Final Appeal at §54 said R
that “it does not seem to me to be very helpful to try to formulate a list of
S S
circumstances where it will be unjust or inconvenient to grant” the relief in
T aid, I was referred to the five considerations set out in Motorala Credit T
U U
V V
- 31 -
A A
Corporation v Uzan (No 2) [2004] 1 WLR 113 at §115 (a case referred to
B B
in Hin-Pro §54 as well):-
C C
“[(1)] whether the making of the order will interfere with the
management of the case in the primary court, e.g. where the
D D
order is inconsistent with an order in the primary court or
overlaps with it;
E E
[(2)] whether it is the policy in the primary jurisdiction not itself
to make worldwide freezing/disclosure orders;
F F
[(3)] whether there is a danger that the orders made will give rise
to disharmony or confusion and/or risk of conflicting
G G
inconsistent or overlapping orders in other jurisdictions, in
particular the courts of the state where the person enjoined
H resides or where the assets affected are located. If so, then H
respect for territorial jurisdiction of that state should discourage
the English court from using its unusually wide powers against
I I
a foreign defendant;
J [(4)] whether at the time the order is sought there is likely to be J
a potential conflict as to jurisdiction rendering it inappropriate
and inexpedient to make a worldwide order; and
K K
[(5)] whether, in a case where jurisdiction is resisted and
disobedience to be expected, the Court will be making an order
L L
which it cannot enforce.”
M M
63. This list is not exhaustive, and cannot be regarded as a
N checklist as if more (or less) ticks means more (or less) unjust or N
inconvenient. Each case depends on its own fact and context.
O O
P 64. Despite its non-exhaustiveness, I refer to this list for one P
reason. Mr Yu seems to submit that a real risk of dissipation should be a
Q Q
requirement for this second stage. It seems to me that the reason he
R advanced is the same as that he advanced for an enhanced threshold for the R
first stage, namely, it is the parties’ choice of forum and thus the Court
S S
should be cautious. However, even from this concrete list I cannot distil
T any principle or guidance for a proposition that a real risk of dissipation T
U U
V V
- 32 -
A A
would be required for the second stage. The test, in my view, must be that
B B
made clear by the Court of Final Appeal in Hin-Pro, namely, whether it
C C
would be unjust or inconvenient to grant the order in aid. Therefore, with
D
respect, I do not accept Mr Yu’s submissions that a real risk of dissipation D
should be a requirement for the second stage.
E E
65. The Hangzhou Proceedings are, as Mr Yu rightly points out,
F F
mainly concerned with the declaratory relief that there has existed the trust
G G
over the HSBC Account Assets. If I were to grant the preservation order,
H
I see no reason why there would be any inconsistency with the Hangzhou H
jurisdiction or interference with the case management of the Hangzhou
I I
Proceedings. Such a preservation order would clearly assist the PRC
J Court by making sure that the subject asset would still be available so that J
the Hangzhou Proceedings would not be rendered redundant. Such a
K K
preservation order, in my view, would also clearly mean comity to the PRC
L Court – by ensuring that the assets located in Hong Kong would still be L
available for the disposition of the PRC Court.
M M
N 66. Mr Yu submits that the Hong Kong Court should not be left to N
speculate what the PRC Court would think. His submissions are that if
O O
an application is made to the PRC Court, the Hong Kong Court would then
P know what order to grant (or what not) would be unjust and/or P
inconvenient. He submits, attractively, that the Plaintiffs should not ask
Q Q
me to speculate; instead, the Plaintiffs should make the application to the
R PRC Court; and the Plaintiffs have put me into an unenviable situation by R
not making such an application to the PRC Court on the one hand but
S S
coming direct to the Hong Kong Court on the other hand saying, without
T even trying, that the PRC Court would not grant an injunction in respect of T
U U
V V
- 33 -
A A
overseas assets (see the expert opinion below), thereby forcing me to
B B
speculate. He further submits, in reliance on Motorola Credit
C C
Corporation v Uzan (No 2), supra, at §119, that in general, only in
D
international fraud cases, no application would need to be made to the D
foreign court.
E E
67. In my view, Mr Yu almost puts forward a proposition that an
F F
application to the foreign court is a precondition for the exercise of the
G G
jurisdiction under section 21M of the HCO. In response, Mr Wong
H
underscores, and I agree, that those cases which seem to suggest such a H
precondition were cases of ex parte applications where the applicant would
I I
be expected, in discharging their duty of full and frank disclosure, to apply
J to the foreign court or if not, to explain why not. More fundamentally, J
such a precondition would be inconsistent with the wording of the statutory
K K
provision properly construed. For this, I only need to refer to The Export-
L Import Bank of China v Liu Qingpin [2018] HKCFI 1840, where Lisa L
Wong J said at §113 that the purpose of section 21M is to facilitate “the
M M
process of execution or enforcement of the foreign judgment, which may
N potentially have to move to Hong Kong because of the location of the N
judgement debtor’s assets in Hong Kong”. Bearing this purpose in mind,
O O
an application to the foreign court, though a relevant factor, should not be
P a precondition. P
Q Q
68. To put rest any fleeting suggestion that an application to the
R foreign court is or virtually a precondition, Mr Wong refers me to a few R
examples.
S S
T T
U U
V V
- 34 -
A A
69. First, in Chow Steel Industries Public Co Ltd v Ko Sung [2020]
B B
HKCFI 483, no application for a freezing order had been made to the Thai
C C
Court, and K Yeung J, accepting the evidence that it was not the Thai
D
Court’s policy or practice to grant any extra-territorial freezing orders, held D
that a grant of Mareva injunction in Hong Kong in aid would not be
E E
inexpedient. Eventually, he did grant the Mareva injunction.
F F
70. Second, in JSC VTB Bank v Pavel Skurikhin [2014] WEHC
G G
2254 (QB), Eder J accepted at §15 that “the Russian courts very rarely
H
issue freezing injunctions in respect of assets located outside of Russian H
Federation, although they can and sometimes do grant freezing injunctions
I I
against defendant’s assets outside of the Russian jurisdictions which are
J subject to international agreement with Russia” (emphasis added). No J
application had been made to the Russian Court for any freezing order.
K K
Eder J still granted a worldwide freezing order except for those
L jurisdictions “which are subject to international agreement with Russia”. L
Mr Yu cautions me that in this case, the respondent was not legally
M M
represented and there was no contrary expert evidence filed. Be that as it
N may, this case still stands an example of exercise of similar section 21M N
jurisdiction in the absence of any application to the foreign court.
O O
P 71. Third, in Anan Kasei Co Ltd v Molycorp Chemicals & Oxides P
(Europe) Ltd [2017] FSR 13, the Court’s opinion on the expediency to
Q Q
grant an injunction in aid of foreign proceedings was obiter only (§§43-
R 49), in case that the matter would go further (§42). In the obiter at §§48- R
49, Arnold J dismissed an argument that an application should have been
S S
made to the foreign court before an application can be made to the domestic
T court for an interim order in aid of the foreign court. While Mr Yu T
U U
V V
- 35 -
A A
eloquently argues that this case is materially distinguishable on the specific
B B
European patent regime in that case not applicable in Hong Kong, I think
C C
the general principle in this obiter is still of some referential value as
D
consistent with the broad test of “just” and “convenient”. D
E 72. To sum up, these examples do show that an application to the E
foreign court is not a precondition. Further, “practice and policy” not to
F F
grant, or “very rare” to grant, as demonstrated by these examples, is a
G G
significant indicator of no injustice and no inconvenience.
H H
73. All that said, I agree that whether the applicant has made an
I I
application to the foreign court, and if not, the explanation for why not, are
J
important considerations. J
K 74. The explanation has been given in the Plaintiffs’ reply K
affirmation. At §38 of Jacky’s 2nd Affirmation, he explained that:-
L L
“I wish to make clear that we did not apply in the first instance
M M
to the Hangzhou Court, because we were advised by our PRC
lawyers [named to be Beijing Dacheng Law Offices, LLP at §28]
N that we would not be able to obtain such orders from the N
Hangzhou Court due to practical limitations (in particular the
fact that the subject matter assets are located outside of Mainland
O China, i.e. situated in Hong Kong), and also, for that reason such O
orders (even if they could be obtained) could not be enforced
P against Kelly or Jian Hao.” (emphasis added) P
Q 75. In this regard, Mr Yu submits that at the time of the Q
commencement of the present proceedings and the issuance of the
R R
Summons, the Plaintiffs simply did not give any thought to whether the
S PRC Courts would or would not grant a preservation order on the HSBC S
Account Assets, as a matter of law, practice or policy, or otherwise. He
T T
points out that there was no explanation offered at the first hearing of the
U U
V V
- 36 -
A A
Summons on 3 January 2025 before DHCJ Grace Chow, and that the above
B B
explanation only came as an afterthought. Mr Yu submits, therefore, that
C C
first, the Plaintiffs did not put their application in proper order in the first
D
place, and second, the Plaintiffs was forum-shopping for the preservation D
order. He urges me not to allow the Hong Kong Court to be utilised or
E E
abused in such way. With respect, although the Plaintiffs could have done
F better by giving the explanation in their supporting affirmation, however, F
on the affirmation evidence put before me, I cannot reject the above
G G
explanation as an afterthought. To do so would almost (if not virtually)
H amount to a finding that Jacky did not tell the truth on oath. There is no H
sufficient evidence to sustain such finding.
I I
J 76. Consistent with this advice by the Plaintiffs’ PRC lawyers, Mr J
Wong submits, in reliance on the expert opinion adduced by the Plaintiffs
K K
as an independent expert opinion, that while PRC Courts have jurisdiction
L to grant the preservation order even in respect of the assets outside L
jurisdiction, as a matter of practice and policy, they very rarely grant such
M M
order. The Plaintiffs expert asserts that he is not aware of any such
N preservation order and having checked the cases accessible by the public, N
he cannot find any such cases either.
O O
P 77. As a policy and practice, there almost always are exceptions. P
In this regard, the Defendants’ expert refers to one case where such
Q Q
preservation order was apparently granted. According to the Defendants’
R expert, it is a confidential case not accessible by the public, but a case R
which the Defendants’ expert himself handled in the past, although he did
S S
not specify the date or even give any idea of the year of the case. He
T exhibited the case report to his expert report, but the case report is heavily T
U U
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A A
redacted. The main body of the case report is only 3.5 pages, with page
B B
5 being an annexure setting out the relevant statutory provisions. The
C C
name of the Court is redacted. The date is redacted. Out of 3.5 pages,
D
pages 1 and 2 are almost wholly redacted. No reason can be ascertained D
from the case report. It is not even clear from the case report whether the
E E
asset in question was situated outside the PRC, although in the expert report
F itself, the Defendants’ expert himself supplements that the asset was. For F
all this, the Plaintiffs simply have no way to verify. In my view, the value
G G
of such case report is little, if any. If I would have to make a ruling, I
H would prefer the Plaintiffs’ expert opinion. H
I I
78. Mr Yu submits further that the Defendants’ expert relies on
J article 103 of the Civil Procedure Law of the PRC amended in 2023, and J
therefore (1) the Plaintiffs’ expert’s reliance on the Civil Procedure Law
K K
pre-2023 is not appropriate; and (2) it is not fair to say that under the 2023
L amendment, the grant of such order has been rare, given that it has only L
been two years since the amendment. With respect, the Defendants’
M M
expert has not taken this timing point and therefore, the Plaintiffs’ expert
N simply has not had any chance to reply on this timing issue. I should N
record that in Mr Wong’s oral reply submissions, he seemed to invite me
O O
to search the Internet to check whether there was any material amendment
P in 2023. I rejected his such invitation outright. P
Q Q
79. In any event, put to the highest for the Defendants, the fact
R that the Defendants’ expert has to resort to such a confidential, heavily R
redacted case report, only reinforces the Plaintiffs’ expert opinion that it is
S S
a matter of practice and policy not to grant such preservation order, with
T T
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A A
exception which it is fair for me to say is very rare, even assuming that the
B B
relevant time period started in 2023 but not earlier.
C C
80. In the circumstances, I see it just and convenient to grant the
D D
preservation order in favour of the Plaintiff, with the modification of the
E terms mentioned in §60 above. E
F F
81. It remains for me to make it clear that if there are material
G changes of circumstances like some decisions made by the PRC Court G
touching on the merits of the parties’ respective cases that would render the
H H
preservation no longer just or convenient, the parties should promptly
I I
inform the Hong Kong Court and there and then for the Hong Kong Court
J
to consider how to proceed with the preservation order. J
K X. DISCLSOURE ORDER K
L L
82. The Plaintiffs seek a disclosure order disclosing the following
M information:- M
N “a. The latest balance of the HSBC Account; N
b. If assets in the HSBC Account have been disposed of or
O O
transferred to third party/ies on or after 2 February 2024, what
has become of such assets and the location of such assets or their
P substitute/traceable proceeds, and to whom, to where, and under P
what circumstances such assets were disposed of or transferred
out of the HSBC Account;
Q Q
c. In respect of the sum of US$1,085,120 (“Sum”) which was
R
shown to have been transferred out of the HSBC Account in the R
bank statement as at 31 May 2024, what has become of the said
Sum or its substitute/traceable proceeds, and to whom, to where,
S and under what circumstances the Sum was disposed of or S
transferred out of the HSBC Account; and
T T
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A A
d. A full account of the movement of assets, income and
B expenditure in respect of the assets in the HSBC Account from 2 B
February 2024 until the date of service of the Order on the
C relevant Defendant.” C
D 83. Before I proceed to substantive analysis, I point out that (c) is D
unnecessary now, given that as mentioned above, the Defendants have
E E
already explained in affirmation that the US$1,085,120 was used to satisfy
F the calls issued by the Funds. F
G G
84. For the application for the disclosure order, I have two main
H considerations. My first consideration arises from Relief 2 sought in the H
Hangzhou Proceedings, as quoted in §37 above:-
I I
“请求确认被告就信托财产对原告负有受信责任，需就信托
J J
财产的去向作出解释”
K K
85. There must be the disclosure before any explanation can be
L made. Therefore, I have concern that if I am to make the disclosure order L
now being sought by the Plaintiffs from me, the disclosure order may
M M
constitute, or may be regarded as, interference with the case management
N of the Hangzhou Proceedings or may even be regarded as a decision on N
merits on Relief 2.
O O
P 86. My second consideration is that a disclosure order is usually P
made hand-in-hand with a preservation order or proprietary injunction as a
Q Q
policing device to ensure that the preservation order or the proprietary
R injunction is effective: see Carmon Reestrutura-engenharia E Servicos R
S
Tecnicos Especiais (Su) Limitada v Carmon Restrutura Ltd [2024] HKCFI S
435 at §18 per DHCJ Le Pichon. The reason is clear: at the time of the
T T
preservation order or the proprietary injunction, the subject property or part
U U
V V
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A A
of it may have already been removed to somewhere else. If the
B B
preservation order or the proprietary injunction is to serve its purpose,
C C
namely, to preserve the subject property, the applicant has to know the
D
whereabouts of the subject property, hence the necessity for the disclosure D
order.
E E
87. My two considerations above, in my view, can be reconciled.
F F
I make the disclosure order as sought by the Plaintiffs and at the same time,
G G
as I now do, make it clear that:-
H H
(1) The disclosure order is made here solely for the purpose of
I I
ensuring that the preservation order I make is effective, and
J
by this, the subject asset can still be preserved for the PRC J
Court to conduct the Hangzhou Proceedings meaningfully.
K K
The order is thus in this sense reflective of the Hong Kong
L Court’s comity to the PRC Court, as in the grant of the L
preservation order. If I grant the preservation order but its
M M
effectiveness cannot be ensured by an ancillary disclosure
N order, this would seem to be a mockery of the aid the Hong N
Kong Court intends to provide to the PRC Court and
O O
ultimately non-comity to the PRC Court.
P P
(2) The disclosure order is by no means made upon any
Q Q
consideration of the merits of the parties’ respective cases
R (save and except for the purpose of finding serious issues to R
be tried or a good arguable case at the first stage), and is by
S S
no means related to the merits for seeking Relief 2 in the
T Hangzhou Proceedings whatsoever. The PRC Court can and T
U U
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A A
should by no means be affected by this disclosure order in
B B
determination of whether to grant Relief 2 and any other relief,
C C
final or interlocutory in nature.
D D
XI. CONCLUSION
E E
88. In the circumstances, I make an order in terms of the draft
F F
order at Hearing Bundle A pages 4-12 with the following modifications:-
G G
(1) The phrase in §§1 and 2 of the draft order “dispose of or deal
H with or diminish the value of” should be replaced by H
“withdraw or encumber”;
I I
J
(2) §3(c) of the draft order is deleted; J
K
(3) §5 of the draft order shall become, as proposed by the K
Plaintiffs’ revised draft order submitted during the hearing:-
L L
“This Order will remain in force until the final disposal of the
M claim by the Plaintiffs against the 1 st Defendant (with the 2 nd M
Defendant named as a third party) as applied to be commenced
in the Hangzhou Intermediate People’s Court (and accepted and
N registered by the Zhejiang Higher People’s Court on 4 July N
2025)”;
O O
P and I add “or until further order of the Court”; P
Q (4) §10 (for service out) shall be deleted, as proposed by the Q
Plaintiffs’ revised draft order submitted during the hearing;
R R
S
(5) There shall be liberty to apply; and S
T T
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A A
(6) Schedule 1 of the draft order shall be updated to include all
B B
the affirmations duly filed in the proceedings and should make
C C
it clear that I have not read the parts of §§32 and 37 of Jacky’s
D
2nd Affirmation which I struck out at the outset of the hearing D
upon My Yu’s application.
E E
F 89. Since I have granted the relief sought in the Originating F
Summons, it is unnecessary for me to make any order on the Interlocutory
G G
Summons. I therefore make no order on the Interlocutory Summons.
H H
90. As regards costs of the Originating Summons and the
I I
Interlocutory Summons, I make a costs order nisi that the Defendants shall
J pay the Plaintiffs the costs (including all costs reserved), to be summarily J
assessed on paper, with certificate for two counsel. For the summary
K K
assessment, the Plaintiffs shall lodge and serve their statement of costs
L within 3 days upon the costs order nisi becoming absolute, and the L
Defendants shall lodge and serve their list of objection within 7 days
M M
thereafter.
N N
91. Lastly, I thank the Plaintiffs’ counsel (Mr Wong, Ms Yuen and
O O
Mr Liu) and the Defendants’ counsel (Mr Yu and Mr Mak) for their
P thorough and able assistance. P
Q Q
R R
S S
(Gary CC Lam)
T Deputy High Court Judge T
U U
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A A
Mr William Wong SC, leading Ms Sharon Yuen and Mr Charlie Liu,
B B
instructed by Karas So LLP, for the 1st – 3rd Plaintiffs
C Mr Benjamin Yu SC, leading Mr Bernard Mak, instructed by Anthony Siu C
& Co., for the 1st – 2nd Defendants
D D
E E
F F
G G
H H
I I
J J
K K
L L
M M
N N
O O
P P
Q Q
R R
S S
T T
U U
V V