(A)
Introduction
Beijing Songxianghu Architectural
Decoration Engineering Co., Ltd. v. Kitty Kam also known as Wang Yuzhi [2025] HKCA 1134, date
of judgment: 17 December 2025, [1] concerned the Defendant’s appeal against an
“unless order” and the partial judgment entered in the action against her for
non‑compliance. Pursuant to the said unless order, the Defendant should
repatriate a sum of money to Hong Kong, failing which her defence would be
struck out and judgment entered on part of the claim. Ultimately, the Court of
Appeal dismissed the appeal.
This case provides significant
clarifications on the appeal mechanism for unless orders, in particular,
whether leave to appeal is required and on what grounds such an order may be
challenged.
(B)
Facts
The Plaintiff alleged that it
transferred substantial sums (“Sum A” and “Sum B”) to Sunshine Success Global
Inc (“SSGI”) and Sunshine Success International LP (“SSILP”) associated with
the Defendant, Ms. Kitty Kam (“Kam”), in reliance on false representations
concerning an investment fund. [2]
On 5 October 2022, the Plaintiff
commenced the action against Kam (HCA 1289/2022) (the “Action”) and another set
of proceedings by originating summons (in the HCCT list) against SSGI for a
proprietary injunction to restrain it from disposing of Sum A. [3]
After that, the
Plaintiff obtained a Mareva injunction over Kam’s assets in Hong Kong
and a separate proprietary injunction against SSGI concerning Sum A in aid of
arbitration (the “HCCT Proprietary Injunction”). [4]
Kam disclosed that HK$170,962,682
of Sum A was held in her personal account with Standard Chartered Bank in
Singapore (“SCB Account”). [5] Given that the existing injunctions were
insufficient to secure these overseas funds, the Plaintiff applied for an order
to repatriate the money to Hong Kong. [6] The High Court was not persuaded that the existing Mareva injunction (covering only Hong Kong assets) or the HCCT Proprietary Injunction provided effective security. It found that Kam had shown “full scale resistance” and there was sufficient evidence questioning her willingness to preserve the funds. [7] As a result, the High Court made, inter
alia, the following orders: [8]
(1) a
“Proprietary Injunction” restraining Kam from dealing with the HK$170,962,682
in the SCB Account.
(2) a
“Repatriation Order” requiring Kam to pay the sum of HK$170,962,682 held in Kam’s
SCB Account into the High Court within 14 days.
(3) a
“Renewed Disclosure Order” concerning another portion of Sum A (HK$49,586,000).
Kam did not comply with the
Repatriation Order. On the final day for compliance (23 August 2024), she applied
for leave to appeal and a stay of execution pending appeal. However, she
withdrew those applications a month later without pursuing them. The High Court
later found that those applications were not made in good faith but were merely
“ploys to buy time”. [9]
Following Kam’s non-compliance, the
Plaintiff applied for an Unless Order. [10] On 27 September 2024, the High Court
granted the order: unless Kam paid HK$170,962,682 into court by 25 October
2024, her defence regarding Sum A would be struck out and judgment would be
entered against her for that sum (the “Unless Order”). [11]
In the Judge’s Reasons for Decision
dated 1 November 2024, the Judge concluded “Kam had consciously decided not
to comply with the Repatriation Order” and that “her breach was
flagrant, inexcusable, contumelious, and her litigation conducts were abusive
and evident of litigation gamesmanship”. He highlighted the following
matters: [12]
(1) Kam
had repeatedly given the court and the plaintiff express assurances that (a)
the sums of HK$170,962,682 and US$6,300,000 remained and would remain in Kam’s
SCB Account pending the outcome of the Arbitration and the Action, and (b) she
was already subject to the Mareva Injunction and the HCCT Proprietary
Injunction not to remove the money from Kam’s SCB Account. By way of example,
the judge referred to Kam’s statements in her 10th affirmation and similar assurances given by her through counsel at the hearings on 9 and 29
August 2024.
(2) Despite
being afforded ample opportunity to explain her failure, Kam did not file any
evidence, but only on the last day put forward a draft 11th
affirmation, the form and content of which was “appalling”. It was only a draft
exhibited to her solicitor’s affirmation, and inexplicably it was not even
signed. Seen against the background of Kam’s frequent changes of representation
(4 different firms of solicitors and 5 different teams of counsel in the
hearings since 30 May 2024), it was of particular importance that factual
matters relied on by Kam are properly affirmed by her.
(3) The
draft 11th affirmation not only did not offer any explanation for
non-compliance with the Repatriation Order, but stated that the money had been
dissipated from Kam’s SCB Account.
(4) Such
dissipation of the money was contrary to the assurances Kam gave and, on its
face, a direct breach of the Proprietary Injunction and a potential breach of
the HCCT Proprietary Injunction. It clearly called for a detailed and full
explanation.
(5) Yet
what was said in paragraph 4 of the draft 11th affirmation was
“disingenuous and hardly believable, and clearly not a full or even meaningful
disclosure”. Given the account was in Kam’s name, the bank could not have
transferred money away without her authority. It was “completely disingenuous
and unbelievable” for her to claim she was “unable to trace the whereabouts of
the sum” (本人無法了解該筆款項的去向). There were no details
given of the date the account was closed and how, or when and to whom the money
was sent. There must have been relevant documentation but none was produced,
the only possible inference being that Kam suppressed it, even though she must
have been apprised of the need and importance to produce documentary proof. Kam
claimed the account was closed because the plaintiff raised enquiries with the
bank, but those enquiries were made in 2023. There was no explanation why Kam
felt compelled to return the money to SSILP.
(6) Kam
had complained in her draft Notice of Appeal against the Repatriation Order
that the court erred in failing “to consider the less oppressive option of
transferring the sum into the Defendant’s own bank account within the
jurisdiction”, which implied that such option was open as at 23 August 2024
when her summons for leave to appeal was filed. This is wholly inconsistent
with the stance in her draft 11th affirmation that the money had
been transferred away beyond her control before she could have complied with
the Repatriation Order.
(7) Similarly,
Kam counsel’s indication on 29 August 2024 that Kam was prepared to file an
affirmation confirming that HK$170,962,682 still remained in Kam’s SCB Account
suggested that the money was then still there, and therefore that Kam had
intentionally flouted the Repatriation Order (and breached the Proprietary
Injunction) and that what was stated in the draft 11th affirmation
was simply a feeble excuse she made up.
(8) Despite
being given time to file evidence in support of her summonses for leave to
appeal and stay of execution pending appeal, Kam never filed any, and withdrew
the summonses at a late stage. Taken together with her other conduct, it showed
that those summonses were not taken out in good faith but were merely ploys to
buy time. Such conduct was abusive.
The
Judge referred to the importance of having effective powers and sanctions to
ensure compliance with court orders. [13] Ultimately, the Judge held that the Unless
Order, limited to Sum A, was “just, appropriate and proportionate” given Kam’s
contumelious and flagrant breach and the manner in which the Plaintiff’s substantive
rights were thereby affected. [14]
The
Unless Order was eventually flouted and the sanction took effect automatically
upon default. As such, her defence to the Sum A claim was struck out and
judgment was automatically entered against her for HK$220,548,682 (the full Sum
A) on 25 October 2024 (the “Judgment”). [15]
Subsequently,
Kam applied for an order that the Unless Order and the Judgment be set aside
and the Plaintiff’s summons for unless order be dismissed. Alternatively, Kam
proposed an unless order with a lesser sanction: unless she complies with the
Repatriation Order, she be debarred from giving factual evidence at trial
either in respect of Sum A only or altogether, and shall pay 50% of the
costs of the Action in any event. [16]
(C) Grounds
of the Appeal
Kam raised the following grounds
for the appeal: [17]
(1) It
was wrong in principle for the Judge to make the Unless Order which only served
to punish Kam for her inability to comply with the Repatriation Order, rather
than to secure her compliance with it.
(2) It
was wrong in principle and in law for the Judge to make the Unless Order for
the purposes of protecting the Plaintiff’s interests in enforcing any eventual
judgment that it might obtain, rather than for the purposes of securing a fair
trial with due process.
(3) In
any event, the Unless Order was disproportionate, illogical and inimical to the
interests of justice, having regard to the fact that there were alternatives
available; the Judgment sum far exceeds any conceivable penalty for contempt;
the Unless Order resulted in deemed admissions of fraud when the Action remains
on foot in relation to Sum B; the Judgment would not improve the Plaintiff’s
prospects of recovery; and the Judgment was for the entire Sum A (HK$220,548,682)
when the Repatriation Order was only for HK$170,962,682.
(D)
Decision
Issue 1: Whether leave
is required to appeal against the Unless Order
The
Court of Appeal held that Kam was entitled to appeal as of right against both
the Judgment and the Unless Order on the following grounds:
(1) The substance of the
Unless Order was to enforce the Repatriation Order, so that the money in
question could be brought into the jurisdiction pending the determination of
the Action. As such, the Unless Order was an interlocutory order. [18]
(2) Generally, under Section
14AA(1) and (2) of the High Court Ordinance (Cap. 4), leave to appeal for
interlocutory orders is required unless an exception under rules of court
applies. [19] The Court of Appeal rejected
Kam’s argument that under Order 59 rule 21(1)(a) of the Rules of the High Court
(Cap. 4A) (“RHC”), [20] she could appeal as of right from the Unless Order because
it was an “order determining in a summary way the substantive rights of a party
to an action”. [21] Viewed in isolation, the Court of Appeal found that the Unless
Order did not finally determine rights and it was a conditional sanction that
would only take effect upon default. As such, the Unless Order did not fall
within Order 59 rule 21(1)(a) of the RHC. [22]
(3) The critical point was
the automatic entry of the Judgment upon Kam’s default. Under Order 59 rule
21(2)(g) of the RHC, a “judgment obtained pursuant to an ‘unless’ order” is
expressly deemed to determine substantive rights summarily. [23] Therefore, an
appeal against the Judgment lies as of right. [24]
(4) There had been no
determination by the Court of Appeal of an application for leave to appeal
against the Unless Order alone. As such, the Court of Appeal was entitled to
hear arguments against the Judgment and the Unless Order and to set aside both
if proper grounds were made out. [25] Hence, Kam’s separate application for leave to
appeal the Unless Order was unnecessary. [26]
Issue 2: Whether Kam’s appeal was allowed?
The Court of Appeal dismissed Kim’s appeal on the following grounds:
Ground 1: Whether the Unless
Order was wrong in principle for being made for punishing Kam
The
Court of Appeal rejected Ground 1 on the following grounds:
(1) The Court of Appeal held
that the Judge imposed the Unless Order for enforcing compliance with the
Repatriation Order. The Judge considered the Unless Order to be the best way to
exert on Kam all the pressure that could appropriately be exerted, with a view
to persuading her to comply with the Repatriation Order. [27]
(2) The Court of Appeal upheld
the Judge’s dismissal of Kam’s claim that she could not comply because she lost
control and knowledge of the funds. Such claim rested solely on a late-filed,
unsworn and unsigned draft 11th affirmation, which the Judge found to be “disingenuous
and hardly believable, and clearly not a full or even meaningful disclosure”. [28] The
Court of Appeal noted that there was no real challenge against the Judge’s
rejection of the draft 11th affirmation. [29]
(3) The Court of Appeal
found that the Judge was not bound to think that Kam would prefer to suffer the
sanction under the Unless Order than to contradict her unsigned draft
affirmation. Given the Judge considered Kam’s assertions in the draft 11th
affirmation to be incredible and there was no appeal against this conclusion,
there was no error in refusing her request for cross-examination of Kam who was
in any event outside the jurisdiction. [30]
Ground 2: Whether the Unless Order was wrong in
principle for not being for securing a fair trial
The
Court of Appeal rejected Ground 2 on the following grounds: [31]
(1) The Court of Appeal affirmed
the distinction between (a) orders whose breach is a contempt of court and (b) orders
or rules whose breach merely give rise to a default, where a party may elect to
suffer the procedural consequence. However, the Court of Appeal held that this
distinction did not preclude the use of an unless order to enforce a breach
that could also be treated as contempt.
(2) The Court of Appeal affirmed
that in an appropriate case, it is within the Court’s discretion to impose the
potential consequence of a party’s case being struck out upon default of
compliance, instead of leaving enforcement entirely to contempt proceedings.
Ground 3: Whether the Unless
Order was disproportionate, illogical or inimical to the interests of justice
The
Court of Appeal rejected Ground 3 on the following grounds:
(1) The Court of Appeal
found that there was no reviewable error for the Judge to conclude that an
application for contempt against Kam would be likely to be of little value. Given
Kam’s persistent residence outside the jurisdiction, such proceedings were
viewed as an inefficient and likely fruitless enforcement mechanism. [32]
(2) The Court of Appeal noted
that the Plaintiff’s previous attempts to enforce a costs order against a Hong
Kong residential property held in Kam’s name had been opposed by Kam’s mother,
who claimed that she was its sole beneficial owner. Further, a mere list of 10
Mainland properties, which appeared for the first time in the draft 11th affirmation
with no supporting documentation, could hardly provide any comfort that any of
those properties had sufficient equity actually belonging to Kam or would
remain available to satisfy any eventual judgment obtained by the Plaintiff. Besides,
Kam had not offered to pay into court any funds raised from these properties
and applied for relief from sanction on that basis. [33]
(3) The Court of Appeal observed
that the Action regarding Sum B remained live and hence Kam could still seek to
refute that part of the Plaintiff’s claim with evidence to show that she
committed no fraud. This fact mitigated any potential injustice from the
default judgment on Sum A. [34]
(4) The Court of Appeal affirmed
the logical chain between the orders. The Repatriation Order was intended to
protect the Plaintiff from the risk of empty judgment and in particular to
secure the very funds to which the Plaintiff makes a proprietary claim,
avoiding the need to hunt for assets for execution if the Plaintiff obtains
judgment at the end. The Unless Order was intended to procure compliance with
the Repatriation Order. When it is disobeyed, the sanction, in the form of the
Judgment, saved the Plaintiff from having to prosecute the proceedings in the
ordinary course at great expense and length. [35]
(5) The Court of Appeal held
that the Judge was not wrong in principle for the sanction to cover the
entirety of Sum (HK$220,548,682), not just the portion subject to the
Repatriation Order. The 2 sums (HK$170,962,682 and HK$49,586,000) formed part
of the same proprietary cause of action, unlike Sum B which arose from a
separate alleged tort. Kam failed to make disclosure relating to the sum of HK$49,586,000.
As such, extending the sanction to the full Sum A was a proportionate response
to her breach. [36]
Issue 3: Who should bear the costs of the appeal
against the Unless Order?
The
Court of Appeal held that the costs of the appeal should be paid by the
Defendant to the Plaintiff on an indemnity basis on two grounds: [37]
(1) The appeal was found to be
entirely without merit.
(2) The appeal arose
directly from Kam’s breach of the requirement under court order for her to repatriate
the money, which, as found by the Judge and not challenged before the Court of
Appeal, was flagrant, intentional and contumelious. Kam had remained in breach
of the Under Order.
Given
that the Court of Appeal made no order on the leave application, the costs attributable
to the leave application should be deducted from its overall costs. Accepting
the Plaintiff’s estimate that this represented 20% of the total costs, the
Court of Appeal held that the Defendant should pay 80% of the Plaintiff’s costs
to be taxed on the indemnity basis if not agreed. [38]
(E)
Key
Takeaways
This case is significant on the
following grounds:
(1) Appeal
Route for Judgments under Unless Orders: This case clarifies that a
judgment entered automatically under an unless order could be appealed as of
right under Order 59 rule 21(2)(g) of the RHC. It is not necessary to make a
separate application for leave to appeal such an order.
(2) Serious
Sanctions Justified by Contumelious Conduct: A party’s pattern of
obstructive and deceitful conduct, including giving false assurances to the
court, flouting orders, and engaging in tactical delays, can justify the
imposition of the draconian sanction of striking out a defence and entering
judgment. The Court will consider the overall conduct of litigation when
assessing the proportionality of an unless order.
(3) Costs
Consequences for Unmeritorious Appeals: This case serves as a timely
reminder that appeals which are devoid of merit and which stem from a party’s
own contumelious breach of court orders are likely to attract an award of
indemnity costs.
[1] https://legalref.judiciary.hk/lrs/common/ju/ju_frame.jsp?DIS=175525
[2] Beijing Songxianghu Architectural Decoration Engineering Co., Ltd. v. Kitty Kam also known as Wang Yuzhi [2025] HKCA 1134, date of judgment: 17 December 2025, §7
[3] Ibid, §12
[4] Ibid, §16-§17
[5] Ibid, §18
[6] Ibid, §21
[7] Ibid, §24
[8] Ibid, §25
[9] Ibid, §26
[10] Ibid, §27
[11] Ibid, §32
[12] Ibid, §36
[13] Ibid, §37
[14] Ibid, §38
[15] Ibid, §33
[16] Ibid, §49
[17] Ibid, §48
[18] Ibid, §40
[19] Sections 14AA(1) and (2) of the High Court Ordinance (Cap. 4) provide that:-
(1)Except as provided by rules of court, no appeal lies to the Court of Appeal from an interlocutory judgment or order of the Court of First Instance in any civil cause or matter unless leave to appeal has been granted by the Court of First Instance or the Court of Appeal.
(2)Rules of court may specify a judgment or order of any prescribed description to which subsection (1) does not apply and accordingly an appeal lies as of right from the judgment or order.
[20] Order 59 rule 21(1)(a) of the Rules of the High Court (Cap. 4A) provides that:-
(1) Judgments and orders to which section 14AA(1) of the Ordinance (leave to appeal required for interlocutory appeals) does not apply and accordingly an appeal lies as of right from them are the following—
(a) judgment or order determining in a summary way the substantive rights of a party to an action...
[21] Beijing Songxianghu Architectural Decoration Engineering Co., Ltd. v. Kitty Kam also known as Wang Yuzhi [2025] HKCA 1134, date of judgment: 17 December 2025, §41-§42
[22] Ibid, §43
[23] Ibid, §44
[24] Ibid, §45
[25] Ibid
[26] Beijing Songxianghu Architectural Decoration Engineering Co., Ltd. v. Kitty Kam also known as Wang Yuzhi [2025] HKCA 1134, date of judgment: 17 December 2025, §47
[27] Ibid, §53
[28] Ibid, §55
[29] Ibid, §56
[30] Ibid, §57
[31] Ibid, §65
[32] Ibid, §67
[33] Ibid, §70
[34] Ibid, §73
[35] Ibid, §75
[36] Ibid, §77
[37] Ibid, §79
[38] Ibid, §80
No comments:
Post a Comment