Hong Kong and Macau Legal Perspectives | Introduction to Hong Kong's Legal System (Part 2) — Exploring Hong Kong's Civil Legal System through Case Law

Preface

The civil law and civil litigation system in Hong Kong is based on common law, combined with localized legislation and judicial practice, forming a rule of law system that is both rigorous and flexible. This article selects several typical cases in Hong Kong courts in recent years and analyzes them from four dimensions: contract law, tort law, marriage and family law (including the case of Zong Qinghou's estate), and civil litigation procedures, revealing the refined characteristics and judicial wisdom of Hong Kong's legal system.

Case Summary: In this case, the plaintiff Ho Lai King (mother) and the first defendant Kwok Fung Ying (daughter) reached a verbal agreement over the phone, agreeing that the daughter and her husband Lau Chun Wai (second defendant) would assist the mother in negotiating to increase the compensation for the acquisition of a certain property. In return, the compensation would be divided equally between the daughter and her brother. The plaintiff claims that the oral agreement is legally binding, but the defendant argues that the internal family agreement lacks the intention to enter into a contract. The original court found that the agreement existed but was not legally binding, and the plaintiff appealed to the Hong Kong Court of Appeal.

Summary of the case: In this case, the plaintiff Ho Lai King (mother) and the first defendant Kwok Fung Ying (daughter) reached a verbal agreement over the phone, agreeing that the daughter and her husband Lau Chun Wai (second defendant) would assist the mother in negotiating to increase the compensation for the acquisition of a certain property. In return, the compensation would be divided equally between the daughter and her brother. The plaintiff claims that the oral agreement is legally binding, but the defendant argues that the internal family agreement lacks the intention to enter into a contract. The original court found that the agreement existed but was not legally binding, and the plaintiff appealed to the Hong Kong Court of Appeal.

Key Points of the Judgment: The appellate court overturned the original judgment and held that the intention to contract within family relationships should be judged based on specific circumstances. In this case, there was a long-term competitive relationship between the daughter and her brother, and the mother showed obvious favoritism towards her son. If the agreement was not binding, the daughter's efforts would only benefit her brother, which is contrary to common sense. Objective evidence showed that both parties had a clear contractual intention. The court emphasized that consideration does not need to be equivalent, only legally valuable. The daughter's assistance in negotiations constituted valid consideration, even if no direct payment was made, meeting the requirements of contract law. Additionally, the plaintiff claimed the agreement implied that "all successful investments must be shared," but the court pointed out that implied terms must meet "commercial necessity" and "obviousness." In this case, the agreement only applied to specific property compensation and could not be extended to other investment projects.

Key points of the judgment: The appellate court overturned the original judgment and believed that the intention of the contract in the family relationship should be judged based on specific circumstances. In this case, there is a long-term competitive relationship between the daughter and her brother, and the mother has obvious favoritism towards her son. If the agreement is not binding, the daughter's efforts will only benefit her brother, which is contrary to common sense. Objective evidence shows that both parties have a clear contractual intention. The court emphasized that the consideration does not need to be equivalent, only has legal value. The daughter's act of assisting in negotiations constitutes effective consideration, and even if no direct payment is made, it still meets the requirements of contract law. In addition, the plaintiff claims that the agreement implies that "all successful investments must be shared", but the court points out that the implied terms must meet "commercial necessity" and "self-evident". In this case, the agreement only applies to specific property compensation payments and cannot be extended to other investment projects.

Institutional Inspiration: Firstly, the prudent review of family agreements. Hong Kong courts hold a strict attitude towards internal family agreements but do not absolutely exclude their legal effect. It is necessary to make a comprehensive judgment based on objective factors such as kinship and interest distribution. Secondly, the broad recognition of consideration: contract law has low requirements for consideration, and non-monetary services or promises can also constitute valid consideration, enhancing transaction flexibility. Finally, the boundary of implied terms: the court only supplements implied terms when necessary, avoiding excessive interference with the parties' autonomy and maintaining contract stability.

Institutional inspiration: Firstly, the prudent review of family agreements. Hong Kong courts hold a strict attitude towards internal family agreements, but do not absolutely exclude their legal validity. It is necessary to make a comprehensive judgment based on objective factors such as family relationships and distribution of interests. The second is the broad recognition of consideration: Contract law has lower requirements for consideration, and non monetary forms of services or commitments can also constitute effective consideration, enhancing transaction flexibility. Finally, there is the boundary of implicit clauses. The court only supplements implicit clauses when necessary to avoid excessive interference with the parties' autonomy of will and maintain contract stability.

Original Judgment Text:

legalref.judiciary.hk/lrs/common/ju/ju_frame.jsp?DIS=129903&currpage=T (All links in this article should be accessed using Google Chrome)

Case Summary: Since 2002, the plaintiff has co-organized the "Hong Kong Computer Festival" with the Sham Shui Po District Council. In 2010, the defendant held the "Sham Shui Po Brain Field Computer Festival." The plaintiff alleges that the defendant's name constitutes counterfeit infringement and claims that its event name has established goodwill, which can easily cause confusion among the public.

Summary of the case: The plaintiff has been co organizing the "Hong Kong Computer Festival" with the Sham Shui Po District Council since 2002, and the defendant held the "Sham Shui Po Brain Field Computer Festival" in 2010. The plaintiff alleges that the defendant's name constitutes counterfeit infringement and claims that its activity name has established goodwill, which can easily cause confusion among the public.

Key Points of the Judgment: The court holds that the name "Hong Kong Computer Festival" lacks distinctiveness, and the plaintiff has not proven that it has become a mark distinguishing the source of services. Although the event has been held multiple times, the name itself is a generic descriptive term and difficult to establish proprietary rights. The defendant's name includes "Brain Field" (a local nickname for the computer city), which differs from the plaintiff's name, and the plaintiff's customers are mainly exhibitors, so the likelihood of confusion among the general public is low. The plaintiff has not proven actual economic loss or damage to reputation caused by the defendant's actions, failing to meet the "damage" requirement for counterfeiting infringement.

Key points of the judgment: The court believes that the name "Hong Kong Computer Festival" lacks distinctiveness, and the plaintiff has not proven that it has become a symbol of distinguishing service sources. Although the event has been held multiple times, the name itself is a generic descriptive term that cannot constitute exclusive rights. The defendant's name includes "Brain Field" (a local computer city nickname), which differs from the plaintiff's name, and the plaintiff's customers are mainly exhibitors, so the possibility of confusion among the general public is low. The plaintiff has not proven that the defendant's actions resulted in actual economic losses or damage to reputation, which does not meet the "damage" requirements for counterfeiting infringement.

Institutional Inspiration: Hong Kong common law requires the plaintiff to prove that their name or mark has established unique goodwill to recognize "counterfeiting"; generic or descriptive terms are difficult to protect. The court considers factors such as name similarity, target customer groups, and market positioning comprehensively to avoid mechanical application of rules. The establishment of infringement liability requires actual damage as a premise, and the plaintiff must provide quantifiable evidence of loss.

Institutional inspiration: The recognition of "counterfeiting" under Hong Kong common law requires the plaintiff to prove that their name or logo has established a unique reputation, and that generic or descriptive names are difficult to protect. The court takes into account factors such as name similarity, target customer group, and market positioning to avoid mechanically applying rules. The establishment of tort liability requires actual damage as a prerequisite, and the plaintiff needs to provide quantifiable evidence of loss.

Original Judgment Text: legalref.judiciary.hk/lrs/common/search/search_result_detail_frame.jsp?DIS=73042&QS=%2B%7C%28HCA%2C621%2F2010%29&TP=JU

Case Summary: The plaintiff, a US technology company, mistakenly transferred two payments to the defendant's Hong Kong company account due to email fraud. The plaintiff sued for the return of unjust enrichment and applied to freeze the account funds.

Summary of the case: The plaintiff, a US technology company, mistakenly transferred two payments to the defendant's Hong Kong company account due to email fraud. The plaintiff sued the defendant for the return of unjust enrichment and applied for the freezing of account funds.

Key Points of the Judgment: Regarding the determination of unjust enrichment, the Hong Kong High Court, based on the common law principle of "restoration to the original state," found that the defendant had no legal basis to receive the payments, constituting unjust enrichment, and should return the full amount. The plaintiff applied for a freezing order before the lawsuit, and the court approved the temporary freezing of the defendant's account funds based on the criteria of "urgency" and "likelihood of success." The case involved the application of laws in Hong Kong and the United States and the collection of evidence. The court obtained foreign evidence through the Hague Evidence Convention procedure to ensure procedural legality.

Key points of the judgment: Regarding the determination of unjust enrichment, the Hong Kong High Court, based on the common law principle of "restoration to the original state", found that the defendant had no legal basis to receive payment, which constituted unjust enrichment and should be fully refunded. The plaintiff applied for a freezing order before the lawsuit, and the court approved the temporary freezing of the defendant's account funds based on the criteria of "urgency" and "likelihood of winning the lawsuit". The case involves the application of laws in Hong Kong and the United States, as well as the retrieval of evidence. The court obtained foreign evidence through the Hague Convention on Evidence to ensure the legality of the procedure.

Institutional Inspiration: Hong Kong tort law's recognition of unjust enrichment is relatively flexible, not requiring proof of the defendant's subjective fault, which lowers the plaintiff's burden of proof. Moreover, the rapid approval of freezing orders by Hong Kong courts provides strong protection for cross-border fund recovery. Additionally, Hong Kong actively participates in international conventions, facilitating evidence acquisition and enforcement in cross-border infringement cases.

Institutional inspiration: The determination of unjust enrichment in Hong Kong's tort law is relatively flexible, without the need to prove the defendant's subjective fault, which reduces the difficulty for the plaintiff to provide evidence. And the rapid approval of freezing orders by Hong Kong courts provides strong protection for cross-border fund recovery. In addition, Hong Kong actively participates in international conventions to facilitate the acquisition and enforcement of evidence in cross-border infringement cases.

Case Summary: The parties married in 1996 and divorced in 2003, with the dispute focusing on property distribution. The District Court ruled that out of the husband's assets of HKD 4.65 million, the wife would receive one-third (HKD 1.55 million). The wife appealed to the Court of Final Appeal, advocating the application of the "equal sharing" principle.

Summary of the case: The two parties got married in 1996 and divorced in 2003, with a dispute over property distribution. The district court ruled that out of the husband's assets of HKD 4.65 million, the wife would receive one-third (HKD 1.55 million). The wife appealed to the final court, advocating the application of the principle of "equal sharing".

Key Points of the Judgment: The Court of Final Appeal overturned the previous "reasonable needs" principle and introduced the UK "fair distribution" standard, emphasizing that marital property should be divided equally unless there are sufficient reasons to deviate. Additionally, the court comprehensively considered both parties' economic contributions, household labor, and child-rearing, determining equal contributions and supporting the wife receiving 50% of the joint assets. If the property source is unrelated to the marriage (such as pre-marital inheritance), the court may adjust the distribution ratio at its discretion but must clearly state the reasons.

Key points of the judgment: The final court overturned the previous principle of "reasonable necessity" and introduced the British standard of "fair distribution", emphasizing that marital property should be divided equally unless there are sufficient reasons to deviate. In addition, the court comprehensively considered the economic contributions, household chores, and child rearing of both parties and determined that their contributions were equal, supporting the wife in obtaining 50% of the common assets. If the source of property is unrelated to marriage (such as pre marital inheritance), the court may adjust the distribution ratio at its discretion, but the reasons must be clearly stated.

Institutional Inspiration: The shift in Hong Kong's principles for spousal property distribution reflects an emphasis on gender equality and family contributions, aligning with international trends. The court not only considers economic contributions but also includes household labor and child education in its assessment, more comprehensively protecting the rights of non-economic contributors. The Court of Final Appeal requires judges to provide full reasoning when deviating from equal distribution to prevent abuse of power.

Institutional inspiration: The transformation of the principle of property distribution between spouses in Hong Kong reflects the emphasis on gender equality and family contributions, and is in line with international trends. The court not only focuses on economic contributions, but also includes household chores and children's education in the evaluation, more comprehensively protecting the rights and interests of non economic contributors. The final court requires judges to fully reason and avoid abuse of power when deviating from equal distribution.

Original Judgment Text:

legalref.judiciary.hk/lrs/common/search/search_result_detail_frame.jsp?

DIS=76131&QS=%2B%7C%28FACV%2C16%2F2008%29&TP=JU

Case Summary: Zong Qinghou planned to establish a trust for his three children before his death, entrusting his eldest daughter Zong Fuli to handle related matters. Due to a dispute over the establishment of the trust, the three children sued to freeze the trust funds. The Hong Kong High Court approved the freezing order, prohibiting the disposal of approximately $1.8 billion in assets in HSBC bank accounts.

Summary of the case: Zong Qinghou planned to establish a trust for his three children before his death, entrusting his eldest daughter Zong Fuli to handle related matters. Due to a dispute over the establishment of a trust, three children filed a lawsuit requesting the freezing of trust funds. The Hong Kong High Court has approved a freezing order prohibiting the disposal of approximately $1.8 billion worth of assets in HSBC bank accounts.

Key Points of the Judgment: The court believes that the trust agreement needs to clarify the rights and obligations of the settlor, trustee, and beneficiary. In this case, the trust documents have not been formally signed, the establishment procedures have not been completed, and the assets still belong to the settlor's estate. Given the possibility of asset transfer, the court approved a freezing order under Order 22A of the High Court Rules to safeguard the enforcement of future judgments. The case involves conflicts between mainland China and Hong Kong laws. The court respects the main judgment from the mainland and ensures coordination of procedures between the two jurisdictions through property preservation orders.

Key points of the judgment: The court believes that the trust agreement needs to clarify the rights and obligations of the settlor, trustee, and beneficiary. In this case, the trust documents have not been formally signed, the establishment procedures have not been completed, and the assets still belong to the trustee's estate. Given the possibility of asset transfer, the court has approved a freezing order in accordance with Order 22A of the High Court Rules to safeguard the enforcement of future judgments. The case involves legal conflicts between mainland China and Hong Kong. The court respects the main judgment of the mainland and ensures procedural coordination between the two places through property preservation orders.

Institutional Inspiration: Hong Kong courts have strict requirements for the form and content of trust agreements, and cross-border trusts must comply with the laws and regulations of both jurisdictions. Hong Kong's freezing orders can effectively prevent asset transfers and buy time for resolving cross-border disputes. It is worth noting that Hong Kong courts emphasize cooperation with mainland judicial institutions in cross-border cases to avoid conflicting rulings.

Institutional inspiration: Hong Kong courts have strict requirements for the form and content of trust agreements, and cross-border trusts must comply with the laws and regulations of both regions. The freezing order in Hong Kong can effectively prevent asset transfer and buy time for cross-border dispute resolution. It is worth mentioning that Hong Kong courts pay attention to cooperation with mainland judicial institutions in cross-border cases to avoid judicial conflicts.

Original Judgment Text:

legalref.judiciary.hk/lrs/common/ju/ju_frame.jsp?DIS=171062&currpage=T

Case Summary: The plaintiff sued the defendant for owing copyright fees for old tracks from 2010 to 2015. The defendant deposited $25 million with the court as a potential compensation guarantee. After the Copyright Tribunal ruled that the defendant must pay the fees, the plaintiff applied to transfer the deposit and interest to themselves.

Summary of the case: The plaintiff sues the defendant for owing copyright fees for old tracks from 2010 to 2015, and the defendant deposits $25 million with the court as potential compensation guarantee. After the Copyright Tribunal ruled that the defendant was required to pay fees, the plaintiff applied to transfer the deposit and interest to themselves.

Key Points of the Judgment: According to Order 22A of the High Court Rules, the court has the authority to order parties to deposit funds with the court and pay them directly to the winning party after judgment. In this case, the court required the defendant to deposit funds early in the litigation to prevent asset transfer, reflecting the deterrent effect of the "litigation preservation" system. Interest on the deposited funds is calculated at the Hong Kong Interbank Offered Rate (HIBOR) and belongs to the plaintiff, protecting the actual interests of the winning party.

Key points of the judgment: According to Order 22A of the High Court Rules, the court has the power to order the parties to deposit funds with the court and pay them directly to the winning party after the judgment. In this case, the court required the defendant to deposit funds at the beginning of the litigation to prevent the transfer of assets, demonstrating the deterrent effect of the "litigation preservation" system. The interest on the deposited funds shall be calculated at the Hong Kong Interbank Offered Rate (HIBOR) and shall belong to the plaintiff, safeguarding the actual interests of the winning party.

Institutional Inspiration: Hong Kong courts may require deposits in large litigation cases to ensure judgment enforcement, especially in cross-border disputes. Besides freezing orders, deposits provide plaintiffs with a more efficient risk control measure. Additionally, clear interest calculation standards prevent losses from litigation delays.

Institutional inspiration: Hong Kong courts may mandate the deposit of funds in large litigation cases to ensure the enforcement of judgments, especially in cross-border disputes. In addition to the freezing order, the deposit of funds provides the plaintiff with a more efficient risk prevention and control measure. In addition, the interest calculation standards are clear to avoid the expansion of losses due to litigation delays.

Original Judgment Text:

legalref.judiciary.hk/lrs/common/search/search_result_detail_frame.jsp?DIS=130590&QS=%24%28Hong%2CKong%2CKaraoke%2CLicensing%2CAlliance%2CLimited%29&TP=JU