LO LI LI LILY v. LUI FUNG HE

HCAP 3/2010

PROBATE ACTION NO 3 OF 2010

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REASONS FOR DECISION

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Introduction

1.  At the hearing on 8 December 2015, as sought by the plaintiff (“P”), I granted her leave to discontinue her claim against the defendant (“D”) upon the following terms:

(a) P to pay D all costs in and arising out of P’s claim, on party and party basis, to be taxed if not agreed; and

(b) P to undertake not to commence proceedings for the same subject matter.

2.  D had on 24 November 2015 applied for judgment on her counterclaim against P, based on P’s admissions in a letter.  At the end of the hearing on 8 December 2015, I made an order that judgment be entered against P in respect of the counterclaims of D in this action, and an order in terms of a draft order submitted by D, with costs of the entire action, including all costs arising out of P’s claim and D’s counterclaim, and all costs reserved, to be paid by P to D, to be taxed if not agreed, on party and party basis.

3.  I now reduce my reasons into writing.

The present probate action

4.  D is the lawful and natural mother of Madam Ng Wai Jing also known as Regina Ng who died on 30 December 2000 (“Deceased”).  P and the Deceased held equal shares in a total of 11 companies in a real estate agency business which I shall simply call Chartersince Group (“Group”).  D had obtained a Grant of Administration Ad Colligenda Bona on 15 October 2008 to collect the Deceased’s estate, and had instituted a set out of 9 HCMP actions against various companies in the Group (“HCMP Actions”) to recover the shares held by the Deceased and for account and inquiry on dividends and interest on those shares since the death of the Deceased.

5.  P was in charge of the Group after Deceased’s death.  After commencement by D of the HCMP Actions, P commenced the present action on 4 February 2010 claiming that the Deceased had prior to her death made a gift of her shares in the companies in the Group to P and that P is the legal and beneficial owner of Deceased’s shares by way of donatio mortis causa or otherwise.

6.  D denied P’s claims and had counterclaimed against P for injunctive relief from intermeddling and misappropriating the Deceased’s estate, including Deceased’s jewellery, watches, certain diamond ornaments and share certificates of the Deceased’s shares.  D sought delivery up of these assets and damages for misappropriation and conversion, and also an account for dividends, profits and earnings arising out of the Deceased’s shares.

Chronology of Events

7.  On 13 May 2015, the Registrar of the High Court sent a letter to the parties requesting them to attend court on 23 June 2015 for the purpose of fixing dates. The first attempt to fix trial dates failed for reasons I do not need to go into, and eventually, on 14 July 2015, trial dates and also the pre-trial review hearing date were fixed.  The trial was fixed for 10 days to commence from 11 May 2016, notwithstanding D had indicated that her counsel was not available for 2 out of those 10 days. D’s solicitors then wrote to the court to ask for those 2 days to be refixed.

8.  In response to D’s above letter, P had written on 20 July 2015 to inform the court indicating that she had sued D only because of one reason, namely to claim for 50% of the Deceased’s shareholding of the companies in the Group, but as the Group would be liquidated, she would not proceed with her claim against D.  She wrote again on 27 July 2015 to inform the Listing Officer that she would not proceed with the present action, and that as there would be no trial, there was no need to fix any dates for trial.

9.  However, D’s solicitors replied on 29 July 2015 and insisted on refixing the remaining 2 dates, pointing out that D had a very substantial counterclaim against P.  This resulted in P sending a further letter indicating that a one day trial would be required instead of 10 days.

10.  In view of the continuous correspondence sent to this court, I directed a 15 minute directions hearing to clarify the dispute between the parties.  This was fixed on 17 August 2015 (“1^st Direction Hearing”).

11.  P was unrepresented at the 1^st Direction Hearing.  At the 1^st Direction Hearing, D’s solicitor Mr Kwan had pointed out to P that D’s counterclaim not only included claims for the delivery up of the Deceased’s personal items, and also for delivery up of share certificate of  the Deceased’s shares in the Group and an account of profits since Deceased’s death.  At this hearing, P said she abandoned her claim, and indicated she would hand over the share certificates/shares.  This court had explained to P the details of the counterclaim, which would include an account of income and expenses of the Group for 15 years since Deceased’s death on 30 December 2000.  P had said she understood and that the amounts of the personal items were small but as the account was for 15 years, she asked for two months to consult lawyers.

12.  It was under the above circumstances that the court adjourned the matter for two month to another 30 minute direction hearing on 26 October 2015 but allowed D to refix the 2 days.  Notwithstanding the direction hearing being fixed in the presence of P, 3 days later, on 20 August 2015, P wrote and said she had to be out of town at the end of October 2015. 

13.  Eventually, on 1 September 2015, I directed that the direction hearing be refixed to 1 December 2015, and further directed that P to inform the court on or before 16 November 2015 as to the following:

(a) Whether P would withdraw/discontinue any of her claims against D, and if so, to clearly identify the claims that would be withdrawn/discontinued by reference to the reliefs sought in the statement of claim;

(b) Whether P would admit any of the counterclaims and agree to any of the reliefs sought by D, and if so, to identify clearly the counterclaims that would be admitted and the reliefs that P would consent to.

14.  In response, P wrote to the court on 11 November 2015 to confirm that she would discontinue and withdraw this action against D, and she also agreed all the counterclaims of D as stated in the amended defence and counterclaim filed on 30 May 2014, and that there would be no trial, and no issue regarding length of trial at the hearing on 1 December 2015 (“1^st Admission Letter”).

15.  Upon receiving the 1^st Admission Letter, D took out the summons on 24 November 2015 for judgment on the counterclaim.  The summons was fixed for hearing on 1 December 2015.

16.  P sent a further letter on 24 November 2015 to the court to confirm and to seek the court’s direction for the cancellation of the hearing on 1 December 2015.  She reiterated in this letter that she would discontinue and withdraw this action against D, and that she agreed to all the counterclaims of D as as stated in the amended defence and counterclaim filed on 30 May 2014, and asked that the hearing on 1 December 2015 be cancelled (“2^nd Admission Letter”).

17.  D had served the summons for judgment on Messrs Joseph CT Lee & Co, solicitors acting for the various companies in the Group in the HCMP Actions.

18.  However, on 25 November 2015, upon being served with D’s summons, P write a further letter to D’s solicitors indicating that she would need 14 days to inform D as to whether she would oppose D’s summons. D’s solicitors replied the next day that P should let the court know her stance at the hearing on 1 December 2015.

19.  On 27 November 2015, P responded denying that she had sought any legal advice before she sent out her letter of 11 November 2015.

20.  At the hearing on 1 December 2015 (“2^nd Direction Hearing”), Mr CY Li, Senior Counsel, was instructed to appear for D and Mr Li had lodged detailed written skeleton arguments.  Mr Joseph Lee turned up representing the companies in the HCMP Actions, but claimed that he had no particular instructions from P/the companies as to how to deal with the HCMP Actions.  P simply failed to turn up at the 2^nd Directions Hearing.

21.  In light of P’s letters of 25 and 27 November 2015, I decided to allow P further time to take appropriate steps, and adjourned the direction hearing to 8 December 2015 (“3^rd Direction Hearing”).

22.  P’s solicitors came on record the day before the 3^rd Direction Hearing, namely on 7 December 2015, and Counsel Mr Richard Sham turned up at the 3^rd Direction Hearing.  Although Mr Sham confirmed that P sought leave to discontinue her claim against D, he submitted that P should be allowed to defend D’s counterclaim.  His submission was based on :

(i) What P said in the 1^st Admission Letter was unclear as to her true intention;

(ii) The true intention was that P was applying for leave to discontinue the action and to defend D’s counterclaim;

(iii) The 1^st Admission Letter fairly construed should not amount to an admission;

(iv) If the court were to find that the 1^st Admission Letter amounted to an admission, it would be fair to allow P to resile from the admission as there was no evidence that D would suffer any prejudice if P was permitted to resile from the admission.

Reasons

23.  As Mr CY Li was unable to attend the 3^rd Direction Hearing, Counsel Mr But appeared for D. Mr But had lodged further skeleton submissions.

24.  Mr But relied on both the 1^st Admission Letter and the 2^nd Admission Letter.  He had referred the court to Order 27 rule 3 of the Rules of the High Court and paragraph 27/3/3 of the Hong Kong Civil Procedures 2016, Vol 1, and I accept it is clear thereform admissions can be made by a letter in writing signed by a party, whether in person or through his solicitors.

25.  As I had pointed out to P’s Counsel Mr Sham, P had written two letters which were quite clear as to what they said, and she further clearly indicated that there would not be any issue at the next hearing (she was then referring to the 2^nd Direction Hearing) and that the hearing should be cancelled.  In my view, those two letters clearly amounted to admissions on P’s part.

26.  Mr Sham submitted that D would not be prejudiced nor would there be injustice to D as the trial was about six months away.  I was, however, of the view that any delay in obtaining judgment would be prejudice to D.

27.  I had pointed out to Mr Sham that there was no summons issued by P nor any affidavit filed by her to withdraw her admissions, notwithstanding P had been given further time, and that P should have issued a proper summons, and filed an affidavit to explain why she had sent the 1^st Admission Letter and the 2^nd Admission Letter and/or reasons for withdrawing her admissions.  P had had almost 3 months since the 1^st Direction Hearing to seek proper legal advice before sending her 1^st Admission Letter, and by the time of the 3^rd Direction Hearing, almost another month had elapsed since the 1^st Admission Letter and she had further sent the 2^nd Admission Letter reiterating her position.  In light of the history of the matter, I was not prepared to give her any further time.  I was of the view that the 1^st Admission Letter and the 2^nd Admission Letter were made in response to my directions on 1 September 2015 and contained clear admissions and agreement by P to the counterclaims.  P had discontinued her claim that the shares held by the Deceased in the companies in the Group were gifted to P before the Deceased’s death and there was no serious triable issues.   I saw no reason as to why D should not be entitled to judgment on the counterclaim.

28.  For all the above reasons, D was given liberty to enter judgment against P on the counterclaim at the 3^rd Direction Hearing and I made the order I did.

HCAP 3/2010

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

PROBATE ACTION NO 3 OF 2010

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D E C I S I O N

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Introduction

1. There are 3 summonses before me within the 2 probate proceedings, namely, striking out, stay of proceedings and discovery.

2. Madam Ng Wai Jing (“the Deceased”) passed away on 20 December 2000, intestate.  The value of the estate (“the Estate”) of the Deceased has yet to be ascertained, but some time ago, the Estate Duty Office provisionally estimated a sum of not less than $45 million regarding the shareholdings of the Deceased in a group of 11 companies, collectively called the Chartersince Group (which was owned by the Deceased and the plaintiff (“Lily”) in equal shares).

3. The Deceased is a spinster and has no issue. Her father died before her. Hence, according to section 4 (7) the Intestates’ Estates Ordinance (Cap 73), the Estate is to be inherited solely by her mother, the defendant (“the Mother”).

4. The Mother said that she did not know the demise of the Deceased because other family members, including the eldest sister Madam Ng Wai Kwan (“the Eldest Sister”), had not informed her.  It was only until early 2007 the Mother then leant about it.

5. On 15 October 2008, the Mother obtained on an urgent basis  a letters of administration Ad Colligenda Bona (“the ACB grant”) to protect part of the Estate.  She then commenced 9 High Court miscellaneous proceedings (collectively called “the MP proceedings”) in 2009 and 2010 against the Chartersince Group, seeking court orders, inter alia, for registration to be shareholders thereof as well as account and inquiry.

6. Lily not only defended for the Chartersince Group in the MP proceedings but also commenced HCAP 3/2010 (“the 2010 Probate Action”) against the Mother. Lily said, among others, that the Deceased had made her shareholdings in the Chartersince Group a gift to her. By way of the principles of donation mortis causa, she became the beneficial owner of them.

7. Later, by consent, parties agreed that the MP proceedings were to be stayed pending the determination of the 2010 Probate Action and the findings thereof should also be binding on the MP proceedings.

8. In the 2010 Probate Action, parties went into the stage of discovery and exchange of witness statements.  As the Mother is a very senior citizen (aged 90), before the commencement of the trial, she went into the box for 3 days in November 2013 to have her evidence obtained, including being cross-examined by the legal representative of Lily.

9. After the examination of the Mother, Lily’s legal representative took the view that there had been contradiction within the evidence and/or case of the Mother, namely whether the Deceased died in PRC or in Hong Kong.  To cut short the long story, the Deceased was certified dead in Hong Kong and a death certificate was issued locally and accordingly.  The Mother relied on it in her application for the ACB grant. However, the (original pleading) of the Mother in the 2010 Probate Action stated said that the Deceased died in PRC (based on the information (or opinion) of the Eldest Sister who helped the Deceased to travel and/or be delivered to Hong Kong at the material times.

10. Lily’s solicitors asked the Mother to take necessary steps to rectify the place of death of the Deceased and to obtain new or amended grant.  The Mother’s legal representative disagreed.

11. Lily therefore on 24 December 2013 commenced a further probate action HCAP 24/2013 (“the 2013 Probate Action”).  She pleaded that doubts had been arisen as to the validity or effectiveness of the ACB grant because the Deceased might die in PRC or in HK.

12. The Mother filed her defence in the 2013 Probate Action without prejudice for a striking out application.

13. In the meantime, in the 2010 Probate Action, Lily issued a summons asking for stay of it pending determination of the 2013 Probate Action.  On the other hand, the Mother amended her Defence and Counterclaim therein to the effect that the Deceased did die in Hong Kong. She also sought discovery against Lily before setting down of the same for trial. Regarding the stay application, the Mother opposed it and further took out the striking out summons to put an end to the 2013 Probate Action.

14. All 3 summonses went before me for substantive argument.  Mr Li Chau Yuen SC acted for the Mother and Mr. Joseph Lee of Messrs Joseph C T Lee & Co represented for Lily in both proceedings.  Having heard from them for one day, I reserved my decision to be delivered.  I now do so.

Rulings and reasons

15. I start to deal with the striking out application.  If it is successful, the stay application will collapse automatically.

16. As I discussed with the parties at the hearing, it was important to bear in mind the nature of grant having been issued to the Mother. It is an ACB grant only. Paragraph 268 of the Guide to Non-Contentious Probate Practice (“the Guide to NCPP”) states that:

“When an estate (or any part thereof) of a deceased person is endangered by delay in administering it, the Registrar may order an ad colligenda bona grant to be granted for the purpose of preserving the same (akin in function to a provisional liquidator in liquidation proceedings).”

17. An ACB grant is also “limited” until further representation, and ceases completely on the issue of a general grant (paragraph 272 of the Guide to NCPP).

18. In the present case, the Mother has not applied for a general grant as she cannot afford to pay the estate duty.  Hence, at all times, she was and is still a “limited” administratrix as such.

19. With the above in mind, the case of Lily in the 2013 Probate Action can be easily deposed of.  It is bound to lose.  I take the view that it is not necessary to go through all the arguments between the parties, including the basis of the application, the locus and/or bona fideness of Lily, my decision remains the same even if I would agree with Mr Lee on all of these matters.

(a) Lily’s case is that there is doubt (as reviewed in the evidence of the Mother as a whole) to whether the Deceased died in PRC or in HK, albeit that she has no personal knowledge on the issue.

(b) However, the place of death is insignificant in deciding if an ACB grant is to be issued or not.

(c) In other words, even if the Deceased did die in PRC (or on her way from PRC to HK when she was in critical condition), the ACB grant is still to be issued to the Mother for an interim protection (without any administration or distribution) on part of the Estate.

20. The stay application has become academic after the 2013 Probate Action having been struck out.

21. I move to the discovery application.

22. Mr Li SC said that, apart from donation mortis causa, Lily also pleaded a further and/or alternative case, namely, “…there was proprietary estoppel in that, [she] has, with the encouragement of the Deceased … spent time, money and effort in managing and funding the Chartersince Group … since June 2000 … in reliance of the representations of the Deceased… in the belief and/or expectation that the legal and beneficial interest of the Deceased’s Shares shall be vested in [her]…”.

23. Lily did not produce any documents to support her aforesaid alternative case in the first and second list of documents.  The Mother therefore issued the discovery summons to ask for 2 types of documents: (a) correspondence among all relevant parties to show if Lily had treated herself as the sole owner of the Chartersince Group, and (b) all books of accounts of Chartersince Group.

24. Lily disagreed and prepared her affirmation in opposition.  However, later by her 3^rd list of documents, she indeed produced a few documents of those having been requested.

25. The Mother therefore still needed to pursue the application.  She was willing to accept a further affirmation from Lily confirming if there would be further documents.  The scope under paragraph 22(b) above was reduced to those relevant parts only.

26. Mr Lee, in his skeleton, argued that Lily had produced the documents.  There was no sufficient evidence to show that other documents did exist.  The discovery amounted to a fishing expedition.  At the hearing, he reminded the court of the oppositions of Lily as per her affirmation.  It included, among others, that the discovery sought was oppressive, premature and unnecessary.  Nonetheless, Mr Lee added that Lily was willing to check again to prepare a further affirmation to clarify the position.

27. Having considered all the evidence authorities and submissions from the parties, I have decided to allow the discovery in the way suggested by Mr Li SC.

(a) The principles governing discovery under O24 r2 RHC are well-known. Very briefly, the applicant has to establish existence, relevancy and possession (custody or power).  Upon satisfaction of these 3 elements, the court will see if he should exercise the discretion to order the discovery in the circumstances.  However, no order shall be made unless he opines that it is necessary either for disposing fairly of the cause or matter or for saving costs. 

(b) With these in mind, to start with, the correspondence and accounting documents sought by the Mother do prima facie exist because it is indeed the case of Lily.  They are relevant because they would help the court to decide on the issue of proprietary estoppel raised by Lily and how far she had spent effort (in monetary terms) regarding the Chartersince Group.  There is no argument on the question of possession custody or power.  Lily has produced some of them.  She has not deposed otherwise and at the hearing, Mr Lee only asked for 28 days for her to clarify the matter.

(c) That takes me to the question of discretion.  The discovery is necessary because it put everyone clear to understand (objectively) the case of Lily as aforesaid.  Costs will be also be saved because it shortens the time for cross-examination of Lily at trial and further avoids any hiccup if documents would come before the court late or even only at trial.

(d) Last but not least, I am not persuaded by the other arguments raised by Lily, including the bare assertion that the discovery is fishing, oppressive and too wide (with the concession of the scope on accounting documents).

28. Parties only spent little time on the question of costs but I see no reason why costs should not follow event.  I also see fit to grant counsel certificate in the circumstances.

29. To conclude, I make the following orders.

HCAP 24/2013: Summons filed on 24 May 2014 (striking out)

(a) The Statement of Claim and proceedings herein be struck out.

(b) There be an order nisi that the plaintiff do pay costs of the application and proceedings, including Certificate for Counsel for hearing on 10 November 2014 and costs reserved, to be taxed if not agreed.  Defendant’s own costs are to be taxed in accordance with the Legal Aid Regulations (Cap.91A).

HCAP 3/2010: Summons filed on 13 May 2014 (stay of proceedings)

(a) The application is dismissed.

(b) There be an order nisi that the plaintiff do pay costs of the application, including Certificate for Counsel for hearing on 10 November 2014 and costs reserved, to be taxed if not agreed.  Defendant’s own costs are to be taxed in accordance with the Legal Aid Regulations (Cap.91A).

HCAP 3/2010: Summons filed on 23 May 2014 (discovery)

(a) Within 28 days, the plaintiff do file and serve an affidavit stating whether any document under Item 1 and Item 2 hereto is or has been at any time in her possession, custody or power and if not then in her possession, custody or power when she parted with it and what has become of it.

(b) There be an order nisi that the plaintiff do pay costs of the application, including Certificate for Counsel for hearing on 10 November 2014 and costs reserved, to be taxed if not agreed.  Defendant’s own costs are to be taxed in accordance with the Legal Aid Regulation (Cap.91A).

Item 1

All correspondence in relation to the Deceased’s shares and/or dividends declared by the Chartersince Group as from December 2000 onwards between the plaintiff, the Inland Revenue Department, the Chartersince Group, Messrs Joseph W P Fan & Co, and representatives or agents of the plaintiff and/or Chatersince Group.

Item 2

All audited reports and profit/loss accounts of the Chartersince Group since the financial year of 1999 and the relevant books and ledgers of Chartersince Group showing the plaintiff’s (alleged) contribution towards the Chartersince Group and the income and dealing with the Deceased’s shares.