WAN PO JUN MARY PAULINE v. AU-YEUNG YEE WAN REPRESENTATIVE OF THE ESTATE OF AU-YEUNG WING HONG

HCA 1478/2009

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1478 of 2009

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D E C I S I O N

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Introduction

1. This is the defendant’s appeal against a decision of Master J Wong, dated 4 December 2015, dismissing the defendant’s application, dated 8 January 2015:

(1)  To strike out the plaintiff’s Defence to Counterclaim; and

(2)  For summary judgment on the Counterclaim for vacant possession of Flat A, 42/F., Tower 1, Harbourfront Landmark, 11 Wan Hoi Street, Kowloon (“the Property”).

2. Under Order 58 of the Rules of the High Court this appeal is a rehearing and I shall treat the matter as though it came before me for the first time.

Background

3. Mr Au‑yeung Wing Hong (the “Deceased”) died on 11 April 2008.  In his will he left his estate to his son and daughter.  The Property is one of the assets included in the Schedule of Assets.  Probate was granted to the defendant, his daughter, the sole executor.

4. The plaintiff claims she was the co‑habitee of the Deceased and had been living with the Deceased’s family in the Property since 2003.  The plaintiff was aggrieved by the will and a series of litigation between the parties ensued.  In this action, commenced on 25 June 2009, by Writ and Statement of Claim drafted by the plaintiff, the plaintiff claims a half share in the Deceased’s estate, including an entitlement to use and occupy the Property, in which she currently resides.

5. As a result of the series of litigation the plaintiff incurred liabilities to pay the defendant’s costs.  She failed to pay and, on 11 April 2011, she was made a bankrupt and her present action was stayed.

6. The defendant commenced action DCCJ 3315/2011 against the plaintiff to recover possession of the Property.  His Honour Judge Leung stayed that action so that the defendant could bring her claim for possession as a counterclaim in this action.  The defendant then obtained leave in HCB 144/2011 (the bankruptcy petition regarding the plaintiff) to proceed with her Counterclaim and, subsequently, amended her Defence in this action to include her Counterclaim.  The trustee in bankruptcy took a neutral position regarding the leave application.

7. The leave was subject to the following conditions:

(1)  No judgment or order obtained by the Applicant in said Action (other than judgment or order for possession of the Property) shall be enforced against the Bankrupt without leave of the Court; and

(2)  The Applicant shall not apply for any order for costs personally against the Official Receiver or the trustee in bankruptcy in the said Action.

8. By her Amended Defence, dated 14 May 2014, the defendant denies that the plaintiff has any interest in the estate, including the Property.  By her Counterclaim the defendant asserts that the Plaintiff resided in the Property under licence from the Deceased, which was revoked by the Deceased and the defendant and, in any event, was revoked automatically upon the Deceased’s death.  The defendant seeks vacant possession of the Property.

9. In an Amended Reply, dated 14 July 2014, drafted by counsel, the plaintiff denies that she resided in the Property under licence and claims to be a beneficial owner of the estate’s assets.  She claims her beneficial interest through a resulting trust and by constructive trust.  In her Defence to Counterclaim, the plaintiff, relying on her beneficial interest, denies that the defendant is entitled to vacant possession.

10. With the plaintiff’s action stayed and with the leave given in HCB 144/2011, the court has before it only the Counterclaim and Defence to Counterclaim.  As a counterclaim is, in effect, a separate action, I am able to deal with it without regard to the plaintiff’s claim.

11. The plaintiff’s bankruptcy was discharged on 11 April 2015.

12. The hearing before the Master was on 19 October 2015.  The Master reserved judgment.  On 30 October 2015, the Master wrote to the parties seeking further assistance and clarification.  In particular, the Master wanted to find out from the trustees in bankruptcy whether the trustees would consent to the plaintiff using the rights vested in the trustees to defend the Counterclaim because, notwithstanding the discharge from bankruptcy, all the rights of the plaintiff in the present proceedings still vested in the trustees.  The Master wrote:

“… this Court hereby respectfully asks for clarification from the OR/trustee‑in‑bankruptcy … as to whether they allow and consent (sic) the plaintiff to use the rights still vested in OR/trustees to defend for (sic) the counterclaim … .”

13. By letter, dated 2 November 2015, the trustees advised:

“… we allow and consent (sic) the Bankrupt to use the rights vested in us, if any, to defend for (sic) the counterclaim in HCA 1478 of 2009.”

14. By letter, dated 5 November 2015, the defendant’s solicitors wrote to the trustees:

“We note that ‘the rights still vested in OR/trustees to defend for (sic) the Counterclaim’ as mentioned in the letter from the Court dated 30^th October 2015 could include 2 distinct rights:‑

(1) litigation right to defend the Counterclaim (‘Litigation Right’); and

(2) property rights (including, in particular, the Bankrupt’s alleged beneficial ownership in [the Property] (‘Property Rights’).

We take it from your letters … that you have consented to allow the Plaintiff … to use the Litigation Right to defend the Counterclaim …, as distinct from the Property Rights.

We would be grateful if you could specify whether you also consent to allow the Plaintiff to use the Property Rights to defend the Counterclaim (e.g. by re‑assigning/re‑vesting the same to the Plaintiff or howsoever).”

15. The trustees replied by letter, dated 6 November 2015:

“We are of the view that all property of the Bankrupt (the Plaintiff) acquired before the date of the bankruptcy order shall be vested upon us as trustee‑in‑bankruptcy including those mentioned in the pleadings of the present proceedings … . However, for various reasons and as we have repeatedly mentioned, we have decided not to take up the main claim of the present proceedings and we do not agree to release or assign the relevant right of action regarding those properties to the Bankrupt.”

16. To which the defendant’s solicitors replied by letter, dated 6 November 2015:

“In the said paragraph of your letter, it is stated, inter alia, that you ‘do not agree to release or assign the relevant right of action regarding those properties to the Bankrupt’ (underline added). By using the words ‘right of action’, it seems that you might be referring to the Litigation Right … .

We would be grateful if you could specify whether you consent to allow the Plaintiff to use the Property Rights to defend the Counterclaim (e.g. by re‑assigning/re‑vesting the same to the Plaintiff or howsoever).”

17. The trustees replied by letter, dated 6 November 2015:

“We regret that we are unable to assist you on the specify (sic) question raised by you which is based on your classification of rights into Litigation Right and Property Right.

However, we can confirm that we have not assigned or released any property including those mentioned in the pleadings of the present proceedings … to the Bankrupt.”

18. It is reasonably clear from the exchange of letters that:

(1)  The trustees allow the plaintiff and consent to her using the rights vested in them to defend the Counterclaim;

(2)  The trustees have decided not to proceed with the plaintiff’s claim and will not release or assign that right of action regarding the Property to the plaintiff; and

(3)  The trustee has not assigned or released any property to the plaintiff, such that the trustees have not assigned or released the beneficial interest in the Property to the plaintiff.

The striking out application

19. The grounds for striking out under Order 18, rule 19 include that the pleading discloses no reasonable defence.

20. It is only in plain and obvious cases that the court should exercise its summary powers to strike out a pleading.  The court should not decide difficult points of law in striking out proceedings.  If the court does not think the matter to be clear beyond doubt, there should be no striking out. Disputed facts are to be taken in favour of the party whose pleading is sought to be struck out.  Where the court comes to the conclusion after full argument that the case is plainly and obviously one for striking out, it should not decline to do so on the ground that the issues are difficult or complicated. It is for the party seeking to strike out to demonstrate that the case is a plain and obvious one in which the other party’s claim is bound to fail.  A reasonable defence means a defence with some chance of success when only the allegations in the pleading are considered.  See: Hong Kong Civil Procedure 2016 Vol 1, paras 18/19/4, 18/19/6.

21. The defendant’s submission is:

(1)  Taking the disputed facts in favour of the plaintiff, even if one accepts that the plaintiff had a beneficial interest in the Property, that interest now vests in the trustees;

(2)  The plaintiff’s defence rests upon her having a beneficial interest in the Property;

(3)  Given that the plaintiff’s beneficial interest in the Property now vests in the trustees, she has no defence.

22. In support of the defendant’s submission her counsel, Mr Paul Leung, relies on the principle that upon the making of a bankruptcy order, the bankrupt’s property will vest in the Official Receiver, who holds the property first as provisional trustee and then as trustee in bankruptcy.  If a person other than the Official Receiver is appointed as provisional trustee or trustee, the property shall forthwith pass to and vest in the person so appointed.  The property vested in the trustee in bankruptcy is not returned to the bankrupt upon the automatic discharge of the bankruptcy order.  All of this is the effect of s.12, s.32 and s.58 of the Bankruptcy Ordinance, Cap 6.  See: Cheung Wing Kwan Tommy v Hong Kong Export Credit Insurance Corp [2012] 2 HKLRD 1255, paras 21, 22.

23. In Cheung Wing Kwan Tommy supra, the plaintiff commenced proceedings but the defendants applied to strike out the claim on the ground that the plaintiff did not have locus standi, which rendered the proceedings frivolous, vexatious or an abuse of process. The main ground of the defendants’ application was that the plaintiff did not have a right to sue because such right vested in the Official Receiver as trustee in bankruptcy.  The judge at first instance allowed the defendants’ application and struck out the claim.  The Court of Appeal refused leave to appeal, agreeing that the right of action vested in the Official Receiver.

24. In the present case, the court is not concerned with the plaintiff’s right to sue (the plaintiff’s claim has been stayed) but with her right to defend the Counterclaim.  Nevertheless, the position of a bankrupt as defendant is no different to that of the bankrupt as plaintiff.  In Heath v Tang [1993] 1 WLR 1421, Hoffmann LJ (as he then was), delivering the judgment of the court, stated, at p 1424E–G:

“In cases in which the bankrupt is defendant, there is of course usually no question of the cause of action having vested in the trustee. Unless the defence is set‑off … the bankrupt will not be asserting by way of defence any cause of action of his own. But in cases in which the plaintiff is claiming an interest in some property of the bankrupt, that property will have vested in the trustee. And in claims for debt or damages, the only assets out of which the claim can be satisfied will have likewise vested. It will therefore be equally true to say that the bankrupt has no interest in the proceedings. …”

25. In response, Ms Dora Chan, the plaintiff’s counsel, argued that the Counterclaim is a claim concerning a personal right to occupy the Property and she relied on an exception to the principle set out in Cheung Wing Kwan Tommy supra, which exception is that a bankrupt retains the right to continue any proceedings relating to claims which are personal to him.  See: Chung Kau v Hong Kong Housing Authority & ors [2004] 2 HKLRD 650, para 8, applying Heath v Tang at p1423.

26. Claims which are “personal” are claims which relate to the bankrupt’s body, mind or character without immediate reference to his rights of property: Chung Kau v Hong Kong Housing Authority & ors supra, para 8.  Examples provided in Chung Kau v Hong Kong Housing Authority & orssupra, are claims for damages for personal injuries and defamation and an appeal against an injunction against a bankrupt to curtail a nuisance said to have been committed by him.  In Chung Kau v Hong Kong Housing Authority & ors supra, Ma CJHC (as he then was) observed, at para 9:

“I recognize there may of course be many situations in which it may not always be easy to draw the distinction [between personal claims and those involving a bankrupt’s property]. Equally difficult are those hybrid claims involving both a bankrupt’s person and his property … .”

27. In support of her submission that the defendant’s claim for vacant possession concerns the plaintiff’s personal right to occupy the Property, Ms Chan relied on Kemmis v Kemmis [1988] 1 WLR 1307.

28. In Kemmis v Kemmis supra, a bank held a mortgage over a property called “no 59”.  The judge at first instance set aside the mortgage and dismissed the bank’s claim for possession of no 59.  The bank successfully appealed, the Court of Appeal deciding that the judge was not entitled to set aside the mortgage but the Court of Appeal refused the bank’s consequential relief of possession.  Purchas LJ stated, at p 1325C–E:

“For the reasons set out in this judgment I have come to the conclusion that the judge was not entitled to set the mortgage aside … . Accordingly, it becomes necessary to consider what, if any, consequential relief the bank is entitled to in the presence of the beneficial interest in no. 59 enjoyed by Mrs. Welland. This is an overriding interest falling within section 70(1)(g) of the Land Registration Act 1925. Moreover, this is an interest which gives her personal right to the occupation of the whole of no. 59. Although an order for possession could be made against the wife in whom, it has been held by the judge, there is no proprietary interest in no. 59, this would be of no avail to the bank during the lifetime of Mrs. Welland.” (emphasis added)

29. Mr Leung countered Ms Chan’s submission by submitting that the plaintiff’s personal right to occupy derives from a beneficial interest, such that, if there is no beneficial interest, then there is no personal right to occupy.

30. I agree with Mr Leung.  As Purchas LJ stated, the beneficial interest gave Mrs Welland a personal right to occupy.  It must follow that, if there is no beneficial interest, there is no personal right to occupy.  To put the point in another way, adopting Chung Kau v Hong Kong Housing Authority & ors supra, the plaintiff’s personal right to occupy the Property is achieved only by immediate reference to her beneficial interest in the Property.  I add that, as such, the plaintiff’s claim is not a hybrid claim, in which a personal claim stands together with a property claim but without immediate reference to the rights to property.

31. In order to defend the Counterclaim successfully, the plaintiff must establish that she has a beneficial interest in the Property but she cannot establish such an interest because any such interest she may have had is vested in the trustee.  Hence, she has no defence.

32. Ms Chan referred to the trustees’ letter, dated 30 January 2015, advising the plaintiff’s solicitors:

“Since leave has been granted to the Defendant to proceed with the counterclaim in HCA 1478 of 2009 against the Bankrupt, we are of the view that the Bankrupt has the right to defense (sic) the counterclaim by herself. We are not in a position to comment on matters relating to the counterclaim.”

33. Ms Chan submitted that that letter indicates that the trustees take the view that the plaintiff’s defence to the Counterclaim is based on a personal right.  However, whatever might be the trustees’ view, it is for the Court to determine this application.

34. A further point taken by Ms Chan was that the trustees’ consent is all that is required for the plaintiff to continue with her defence.  Ms Chan referred to Cheung Wing Kwan Tommy supra, at para 15, in which Kwan JA referred to the Official Receiver’s consent to a claim or assignment of a right of action:

“… the Official Receiver’s Office wrote to the Court, clearly stating its position that the Official Receiver would not consent to Mr Cheung’s claim or assign the relevant right of action to Mr Cheung unless the Office was satisfied that the claim was meritorious and that there was sufficient security to pay all necessary costs of the claim and to indemnify the liability to pay the defendants’ costs should the claim fail .”

35. The Court of Appeal considered that the Official Receiver had every reason not to consent to Mr Cheung’s claim or to assign the right of action to Mr Cheung.

36. The trustees have consented to the plaintiff using “the rights vested in us, if any,” to defend the Counterclaim.  It is unclear what rights the trustees consider the plaintiff may use, but it is not any interest in the Property because the trustees have stated expressly that they have not assigned or released the Property to the plaintiff.

37. Putting the uncertainty to one side, I do not consider that the consent given by the trustees assists the plaintiff in any event because the issue is whether the plaintiff has a defence, not whether she has locus standi.  As I have concluded above, unless the trustees have assigned the beneficial interest in the Property (which is the basis of the defence to the Counterclaim), the plaintiff does not have a defence.

Disposition regarding the strike out application

38. I have had the benefit of full argument.  The law is clear and it is settled.  I consider this is plainly and obviously a case for striking out.

39. For the reasons given above, my conclusion is that, because the plaintiff’s beneficial interest in the Property (assuming she had such an interest) vests in the trustees in bankruptcy, which interest the trustees have not assigned to the plaintiff, she has no defence.  Accordingly, I order that the appeal be allowed, the plaintiff’s Defence to Counterclaim be struck out and judgment be entered for the defendant on the Counterclaim.

Summary judgment

40. Turning to the defendant’s application for summary judgment on the Counterclaim.  Mr Leung characterized this as the defendant’s fall‑back position.

41. For this application, different considerations apply.  One does not proceed on the assumption that disputed facts are taken in favour of the plaintiff.  Rather, once the defendant has established a prima facie case for possession on the evidence, the burden is on the plaintiff to adduce credible evidence in support of her defence; she must condescend to particulars, she must show that there are triable issues and a real or bona fide defence to the Counterclaim.

42. As the defendant is the executrix of the estate owning the Property she has established a prima facie case for possession.

43. The defendant submitted that the plaintiff has failed to overcome her threshold.  The defendant refers to inconsistencies between the Statement of Claim, the Amended Defence to Counterclaim and the Reply before it was amended.  However, the Statement of Claim and the original version of the Reply were drafted by the plaintiff, whereas the Amended Defence to Counterclaim was drafted by counsel.  The Statement of Claim cannot be amended because the action has been stayed.  I do not consider that, in these circumstances, any inconsistencies are such as to warrant summary judgment; the reasons for the inconsistencies, which may be revealed at trial, should be considered.

44. The defendant also submitted that the plaintiff’s case regarding resulting trust and common intention constructive trust is not supported by any credible evidence.

45. The plaintiff’s case is that she lent money to rescue the Deceased’s failing business when they were a couple.  The purchase price for the Property came from joint assets of the Deceased and the plaintiff and it was their common intention that the Property be beneficially co‑owned by the couple.

46. In my view, the plaintiff’s affirmation has dealt specifically with the plaintiff’s claim for vacant possession and she has stated clearly and concisely what her defence is and the facts relied on to support it.  Whether the defence is supported by any credible evidence is a matter for trial.

47. However, given my conclusion above that the plaintiff has no interest in the Counterclaim proceedings and no defence to the Counterclaim, it follows that summary judgment could be ordered but it is unnecessary to do so because I have ordered that judgment be entered in the strike out application.

Costs

48. As the defendant has been successful, I make an order nisi that the plaintiff pay the defendant’s costs of and occasioned by the defendant’s summons and the appeal, to be taxed if not agreed.  The plaintiff’s own costs to be taxed in accordance with the Legal Aid Regulations (Cap 91A).

HCA 1478/2009

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

HIGH COURT ACTION NO 1478 OF 2009

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D E C I S I O N

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Application

1.  This is an application by the defendant to strike out the Defence to Counterclaim of the plaintiff and thereafter obtain judgment accordingly.

Background

2.  Mr Au-Yeung Wong Hong (歐陽永康) (the “Deceased”) passed away on 11 April 2008.

3.  The Deceased died testate.  By his will, he left his estate to his son and daughter.  He also appointed the daughter Au Yeung Yee Man (歐陽綺雯) (the “Daughter”) the sole executor.

4.  The plaintiff, Madam Wan Po Jun Mary Pauline (溫寶珍) (“Madam Wan”) was the co-habitee of the Deceased and had since 2003 been living with the Deceased’s family at Flat A, 42^nd Floor, Tower 1, Harbourfront Landmark, Kowloon (the “Property”). Madam Wan was aggrieved by the said will and it followed by a series of litigations between the parties.

5.  The Daughter started a probate action (HCAP 19/2008) against Madam Wan who had entered a caveat preventing the granting of probate. Madam Wan lost in the proceedings, including further appeals[1], because she would not be entitled to a grant irrespective of whether the Deceased died with or without a will.

6.  On the other hand, Madam Wan also commenced some other proceedings against the Daughter, including:

(a) By the present action, she claimed, inter alia, her half share in the estate, damages for the Deceased’s breach of promise to marry her, repayment of money and so forth.

(b) In HCA 10/2010, she asked for an injunction so that the Daughter could not issue a notice to quit upon her to vacate the Property.

(c) By HCMP 1919/2010, she pursued her claim for maintenance under Inheritance (Provision for Family and Dependants) Ordinance (Cap. 481). 

7.  As a result of the above, Madam Wan incurred liability to pay costs to the Daughter.  There was no payment and it further led to a bankruptcy petition by the Daughter against Madam Wan in HCB 144/2011.  Despite objection and appeals[2], Madam Wan lost and she was made a bankrupt from 11 April 2011.

8.  Madam Wan further had disputes with her trustees-in-bankruptcy (the “Trustees”) as to the conduct of the other pending proceedings with the Daughter.  The Trustees neither took up them nor consented to the carrying on by Madam Wan herself.  She sought to remove the Trustees or that conduct of the proceedings was to be released to her.  The application failed before both a Judge and Court of Appeal[3].

9.  In the meantime, the Daughter also commenced DCCJ 3315/2011 against Madam Wan to recover, inter alia, possession of the Property.  His Hon Judge Leung stayed the action for the Daughter to put such claim as counterclaim herein.  Madam Wan appealed to Court of Appeal[4] who also dismissed it later.

10.  The Daughter thereafter sought leave under HCB 144/2011 for leave to proceed with the present action for, inter alia, possession of the Property.  On 4 April 2014, Master M Wong allowed the application. Madam Wan later appealed but it was dismissed by Deputy High Court Judge Lok (as he then was).

11.  With the said leave, the Daughter went ahead to amend her pleadings herein to add the counterclaim to seek recovery of vacant possession of the Property.  Madam Wan defended for it reiterating, inter alia, of her beneficial interest therein.

12.  On 8 January 2015, the plaintiff took out the present application. In the supporting affirmation, the Daughter led the court through Madam Wan’s defences to her counterclaim.  She said that, among others, Madam Wan was a bankrupt and as such, all property existing at the time of the order vested in the Official Receiver and later, the Trustees.  Upon enquired, the latter orally responded that they would not participate in the present proceedings and were not in a position to give any comment.

13.  Madam Wan prepared and filed her affirmation in opposition on 23 January 2015.  She explained, inter alia, that she was the de-facto wife of the Deceased.  She reiterated her cases against the Daughter and maintained her beneficial interest in the Property.

14.  On 26 January 2015, having heard from solicitors for both parties (Madam Wan herself being absent), Master Lai gave usual directions for affidavit evidence.  Parties later by consent agreed to extend the time to comply with the directions.

15.  On 8 April 2015, Madam Wan through her solicitors filed her further affirmation in opposition.  She spent some time explaining her relationship with the Deceased and his family.  She argued that she had the right and locus to defend for the counterclaim.

16.  No reply affirmation was filed by the Daughter.

17.  Parties appeared before me on 19 October 2015 for the substantive argument.  Both parties were represented by Counsel, Mr Paul Leung for the Daughter and Ms Dora Chan, for Madam Wan. Having heard from them, I reserved my decision to be handed down.

Assistance sought

18.  On 30 October 2015, I wrote to the parties asking for further assistance.

“After the hearing on 19.10.2015, and before the handing down of the decision, I shall be obliged to receive further assistance from both parties as well as the OR/trustee-in-bankruptcy. For the present purpose, I set out the following facts.

(a) On 20.11.2008, the plaintiff commenced the present proceedings against the defendant.

(b) However, the plaintiff was later made a bankrupt on 11.4.2011 under HCB 144/2011.

(c) As a result of the bankruptcy, all the rights of the plaintiff in the present proceedings vested in the OR/trustee-in-bankruptcy who did not agree to continue the conduct of the present proceedings for her or to release the same to her.

(d) On 4.4.2014, leave was granted under HCB 144/2011 to the defendant to proceed with the present proceedings for, inter alia, recovery of possession of the property known as Flat A on 42^nd floor of Tower 1, Harbourfront Landmark, No.11 Wan Hoi Street, Kowloon, Hong Kong.

(e) On14.5.2014, the defendant amended her defence and added a counterclaim in the present proceedings to seek recovery of possession of the said property from the plaintiff.

(f) Then, on 14.7,2014, the plaintiff prepared her defence to counterclaim.

(g) On 11.4.2015, the bankruptcy of the plaintiff was discharged.

(h) Notwithstanding the discharge, all the rights of the plaintiff in the present proceedings still vested in the OR/trustee-in-bankruptcy.

The question then arises as to whether the plaintiff is in a position to defend the counterclaim or not. By the letter of 30.1.2015, the trustee-in-bankruptcy indicated that:

“…we are of the view that the Bankrupt [the plaintiff] has the right to defense the counterclaim by herself…”

Upon further enquired, the trustee-in-bankruptcy further said on 5.10.2015 that

“…We also confirm that we would allow [emphasis added] the Bankrupt to defend the counterclaim against her …”

Without prejudice to any of the parties’ right and the decision to be handed down, this Court hereby respectfully asks for clarification from the OR/trustee-in-bankruptcy within 14 days as to whether they allow and consent the plaintiff to use the rights still vested in OR/trustees to defend for the counterclaim to seek recovery of possession of the said property in the present proceedings.”

19.  The solicitors acting for the Daughter replied on 10 November 2015 enclosing correspondence with the Trustees.

20.  On 2 November 2015, the Trustees confirmed that:

“We write to confirm that we allow and consent the Bankrupt to use the rights vested in us, if any, to defend for the counterclaim in HCA 1478 of 2009.”

21.  The solicitors for the Daughter further corresponded with the Trustees in the followings.

(a) Solicitors’ letter of 5 November 2015:

“We note that “the rights still vested in OR/trustees to defend for the Counterclaim” as mentioned in the letter from the Court dated 30^th October 2015 could include 2 distinct rights: -

(1) litigation right to defend the Counterclaim (“Litigation Right”); and

(2) property rights (including, in particular, the Bankrupt’s alleged beneficial ownership in the property in question, namely, Flat A on 42^nd Floor of Tower 1, Harbourfront Landmark, No. 11 Wan Hoi Street, Kowloon, Hong Kong) (“Property Rights”).

We take it from your letters dated 30^th January 2015 and 5^th October 2015 as mentioned by the Court in its said letter dated 30^th October 2015 that you have consented to allow the Plaintiff (i.e. the Bankrupt in HCB 144 of 2011) to use the Litigation Right to defend the Counterclaim in HCA 1478 of 2009, as distinct from the Property Rights.

We would be grateful if you could specify whether you also consent to allow the Plaintiff to use the Property Rights to defend the Counterclaim (e.g. by re-assigning/re-vesting the same to the Plaintiff or howsoever).”

(b) Trustees’ reply dated 6 November 2015:

“We are of the view that all property of the Bankrupt (the Plaintiff) acquired before the date of the bankruptcy order shall be vested upon us as trustee-in-bankruptcy including those mentioned in the pleadings of the present proceedings (assuming that they really subsist). However, for various reasons and as we have repeatedly mentioned, we have decided not to take up the main claim of the present proceedings and we do not agree to release or assign the relevant right of action regarding those properties to the Bankrupt.”

(c) Solicitor’s letter of 6 November 2015:

“In the said paragraph of your letter, it is stated, inter alia, that you “do not agree to release or assign the relevant right of action regarding those properties to the Bankrupt” (underline added). By using the words “right of action”, it seems that you might be referring to the Litigation Right as described in our letter to you dated 5^th November 2015.

We would be grateful if you could specify whether you consent to allow the Plaintiff to use the Property Rights to defend the Counterclaim (e.g. by re-assigning/re-vesting the same to the Plaintiff or howsoever).”

(d) Trustee’s further reply on 6 November 2015:

“We regret that we are unable to assist you on the specify question raised by you which is based on your classification of rights into Litigation Right and Property Right.

However, we can confirm that we have not assigned or released any property including those mentioned in the pleadings of the present proceedings (assuming that they really subsist) to the Bankrupt.”

Decision and reasons

22.  Here is my decision.

23.  I start to deal with the evidence before me, namely, whether this court should take into account of the letter[5] of the Trustees dated 5 October 2015 (which came only as an appendix in the skeleton of Ms Chan) and the subsequent assistance and/or clarification sought by the court as revealed by the subsequent correspondence.

24.  Upon thought, with reluctance, I agree to grant leave to consider them within the hearing before me.

(a) They do have a bearing at the argument before me.

(b) This court cannot turn a blind eye to facts underneath parties’ argument.

(c) The problem could have been avoided.

(d) Appropriate costs order could be made by the court, having taken into account of the circumstances of the case and conduct of the parties.

25.  With the above clarification from the Trustees, it is clear that the striking out application cannot be maintained.  The Daughter applied to strike out the defence to counterclaim because Madam Wan did not have the locus to defend at all.  All rights (if any) vest with the Trustees.  However, with the written consent from the Trustees to do so, all other factual disputes between the parties will have to be resolved at trial.

26.  Further, I am not persuaded by the argument of the “litigation right” and “property right” put by the solicitor acting for the Daughter in their correspondence with the Trustees.  No authority was cited to support the proposition. In any event, it is trite law that it is only in plain and obvious case that the court should exercise its summary power of striking out.  Such legal argument, if any, should not be resolved here.

Costs

27.  It remains for me to say something on costs although I do not have the benefit of submissions for the parties.  Under the present circumstances, I see fit to order that costs should be in the cause, including costs reserved and certificate for counsel for hearing on 19 October 2015.

(a) But for the said letter of the Trustees dated 5 October 2015 (and the subsequent correspondence triggered), the Daughter’s application could have succeeded.

(b) The said letter of the Trustees dated 5 October 2015 was not made known to the Daughter’s solicitors and the court until the lodging of counsel’s skeleton shortly before the hearing.

(c) Further time and costs was spent to seek clarification from the Trustees.

Conclusion

28.  To conclude, I make the following orders.

(a) The summons is dismissed.

(b) There is an order nisi that costs of the summons are in the cause, including all costs reserved and certificate for counsel for hearing on 19 October 2015, to be taxed if not agreed. The plaintiff’s own costs are taxed in accordance with Legal Aid Regulations.

HCA 1478/2009

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 1478 OF 2009

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D E C I S I O N

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1.  This is an appeal against an order of Master Lung refusing to strike out the defence.

2.  The defendant is the executor of the estate of one Au-Yeung, deceased.  She was the daughter of Au-Yeung.

3.  The plaintiff claims that she had been in cohabitation with Au-Yeung since June 1982 and that continued for years and she had been accepted as a member of Au-Yeung’s family and the defendant’s stepmother.  She claims that Au-Yeung had broken his promise to marry her when under the influence of the defendant and medicine.  Au-Yeung had made a will, but she was not named a beneficiary.  She claims that Au-Yeung made the will under the influence of the defendant and medicine.  She also claims to have lent no less than $3.5 million to Au-Yeung. 

4.  She prays for a half share of Au-Yeung’s estate plus the right to occupy a property in Hung Hom which, she said, had been bought by Au-Yeung as the matrimonial home.

5.  She also claims repayment of the alleged debt of $3.5 million, financial provision under the Inheritance (Provision for Family and Dependents) Ordinance, Cap. 481, damages for breach of promise of marriage, account of the monies held by Au-Yeung in his bank accounts, injunction to restrain the defendant from disposing of the estate, appointment of receiver to handle the estate pending the outcome of this action and interim monthly payment from the estate pending the outcome of this action.

6.  The defendant filed a defence on 9 September 2009.  The plaintiff also filed a Reply on 22 September 2009.  The plaintiff sought some further and better particulars of the defence.  The defendant provided the answers on 4 November 2009.  On 17 November 2009, the plaintiff issued a summons for striking out the defence and for payment on the grounds that the defendant had failed to comply with her request for further and better particulars of the defence and there is no defence.  She also produced a large bundle of photographs depicting her and Au-Yeung appearing as a couple in many family, social and business occasions and also a number of letters from friends and acquaintances stating their understanding of the relationship between Au-Yeung and her.

7.  Master Lung heard the summons on 8 February 2010 and dismissed it.  The plaintiff filed a notice of appeal.  She said in the notice that she had answered the defendant’s request for further and better particulars of the statement of claim but the defendant has not answered all her requests for further and better particulars of the defence.  She said it was wrong for the defendant not to provide all the particulars.  She also said that Master Lung was wrong in dismissing her summons or to force her to withdraw the same, which deprived her of the right to have full disclosure of the defence and thus caused her difficulty in preparing her witness statements for the trial of this action.

8.  I think this last ground is illogical and wrong.  If Master Lung should have allowed the summons, dismissed the defence and granted her judgment in the action, there would not be any trial to follow.  There would also be no further need for disclosure by the defendant on the defence and she would also have no need to prepare any witness statement for use at the trial.  This ground is therefore wrong.

9.  Regarding her first ground that she had complied with the defendant’s request for further and better particulars of the statement of claim, that again cannot justify the striking out of the defence because that in itself does not show that the defence has no merit.

10.  Regarding those of her requests for particulars of the defence that the defendant had not answered, the defendant said that the particulars requested for were immaterial, matters of evidence and matters of law and hence need not be provided. 

11.  If the plaintiff is not satisfied with these grounds for not providing the particulars sought by her, the proper course is for her to issue a summons seeking these particulars.  She should not have issued a summons to strike out the defence.  Striking out is a drastic remedy and is only exercised in the plain and obvious cases.  It is not the appropriate remedy here.  The plaintiff has no ground to issue the summons to strike out the defence.

12.  I, therefore, dismiss her appeal.  I also order her to pay costs to the defendant for the appeal.

(Discussion re costs)

13.  I have considered the draft bill presented by the defendant for the purpose of gross assessment of the costs of the appeal.  I have scrutinised each and every item with care, and I find that they are all reasonable and the total sum of $20,845 claimed is a reasonable sum.  I therefore allow it.  I assess the amount of costs that the plaintiff has to pay the defendant for the appeal at $20,845.