Henry Shing Him Chow v Ling Kam Tong Victor (No 2) [2026] 2 HKC 813; [2026] HKCA 72 (Richard Todd KC)
Richard Todd KC (England & Wales) represented the 1st and 2nd defendants in Henry Shing Him Chow v Ling Kam Tong Victor (No 2) [2026] 2 HKC 813; [2026] HKCA 72.
A family trust (Trust) was established under a deed of settlement (Settlement Deed) made in 2009. The plaintiffs were beneficiaries of the Trust. The plaintiffs’ case was that in July 2021 it was discovered a substantial part of the assets held under the Trust, namely 99.95% of the shares of a company (Shares) was transferred to C, a stranger to the Trust. The plaintiffs commenced HCMP 1305/2021 (Action 1) against the 1st and 2nd defendants, trustees appointed under the Trust (Trustees) for disclosure of documents relating to the transfer of Shares and an account of the Trust. The plaintiffs commenced HCA 1521/2021 (Action 2) against the Trustees and C, alleging that the Trustees had fraudulently or recklessly or negligently misappropriated the Shares at no consideration or at gross undervalue ,without any authorization of the beneficiaries in breach of trust or their fiduciary duties, and that C received the Shares without paying any or any sufficient consideration, and for a declaration that C held the Shares on trust for the beneficiaries. The defendants raised a jurisdiction challenge, contending that Clause 17 of the Settlement Deed was an exclusive jurisdiction clause (EJC) which conferred exclusive jurisdiction on the BVI courts over the subject matters of the Actions which should therefore be stayed. In response to the plaintiffs’ summary judgment application in Action 1, the Trustees only relied on their jurisdiction challenge without adducing any evidence on substantive merits. A judge of the Court of First Instance dismissed the defendants’ jurisdiction challenge (see [2025] 1 HKC 937, [2024] HKCFI 2737) (Decision). The defendants applied for leave to appeal against the Decision and for interim stay pending determination of the leave application and appeal. Essentially, the defendants contended the judge erred in adopting the wrong questions or approach: that the EJC should have been determinative; that the claims against C were not a basis for departing from the EJC; that the defendants were not sued as of right; that the judge gave insufficient weight to the EJC, and that the claims against C and the Trustees were not separate and distinct.
Held, unanimously, dismissing the applications, that:
Per Anthony Chan JA
(1) The determination of the appropriateness of competing fora involved an evaluative or balancing exercise, closely analogous to the exercise of a discretion. An appeal should be rare and the appellate court should be slow to interfere, and the decision may only be interfered with on appeal where the judge had misdirected himself on the principles that governed the discretion, or had taken into account irrelevant matters or failed to take into account relevant matters, or where his decision was plainly wrong. The jurisdiction to stay was liable to be perverted if parties litigated the issue at different levels of the judicial hierarchy in the hope of persuading a higher court to strike a different balance in the factors pointing for and against a foreign forum. China Medical Technologies Inc v Paul, Weiss, Rifkind, Wharton & Garrison LLP [2020] HKCFI 567, [2020] HKCU 636; and Bright Shipping Ltd v Changhong Group (HK) Ltd (No 2) [2019] 5 HKLRD 30, [2019] HKCA 1062, [2019] HKCU 3588 followed (para 26).
(2) The court was not bound by an EJC but had a discretion to decide whether or not to grant a stay of proceedings. The weight to be given to an EJC in a trust deed was less than that given to such a clause in a contract. In the balancing exercise, the strength of the argument needed to outweigh its effect was less than that required where a contracting party sought to avoid it. In considering whether to enforce an EJC in a dispute which involved both the parties to the EJC and a party not subject to the clause but also sued on the same or similar facts, the issue of multiplicity of proceedings should lie at the forefront of the court’s mind, and great weight should generally be given to it. In most cases, the interests of justice were best served by the submission of the whole dispute to a single tribunal which was best fitted to make a reliable, comprehensive judgment on all the matters in issue. Accordingly, there was no merit in any blanket assertion in the present case that Clause 17 of the Settlement Deed was determinative of the stay application. Donohue v Armco Inc & Anor [2001] UKHL 64; Crociani v Crociani [2014] UKPC 40; and A v B [2022] HKCFI 1031, [2022] HKCU 1700 applied (paras 30, 31).
(3) The judge below had not erred in considering that C was a stranger to the trust. C was not a trustee de son tort and there was no allegation that C had intermeddled with the Trust or did any act characteristic of a trustee vis-à-vis the Trust. Any duty imposed on C as a constructive trustee would be a matter of law, which would not make him a trustee of the Trust. Mara v Browne [1896] 1 Ch 199; Timmerton Co Inc v Equity Trustee Ltd [2015] 1 HKLRD 247, [2014] HKCU 2688; and Paragon Finance Plc v DB Thakerar & Co [1999] 1 All ER 400 considered (paras 42-44).
(4) The judge below had not erred in the exercise of discretion in deciding whether there were sufficiently good reasons to depart from the EJC, which forum was better placed to hear the proceedings, and that Hong Kong court should exercise supervisory power over the Trust which was governed by BVI law. Lammas Global Corporation v Barclays Bank (Suisse) SA [2011] HKCU 724; (HCA 2411/2009, Saunders J, 13 April 2011, unreported) considered (paras 33-35, 37, 46-48).
[The above is excerpted from the headnote to the report in HKC.]
