CHEN CHERYL DEANNA AND ANOTHER v. CHEN PAK-YIN STELLA also known as STELLA LEE

HCA 59/2011

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 59 OF 2011

________________________

_________________

J U D G M E N T

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Introduction

1. There has been protracted litigation between these two sisters, the 1^st plaintiff and the defendant.  The 1^st plaintiff is the mother of the 2^nd plaintiff.  The present application before the court is the defendant’s application to dismiss this action.

2. This court last handed down a decision on 30 May 2016 (“Decision”) and unless otherwise indicated, I shall adopt the abbreviations in the Decision.  The background to the dispute between the parties has been set out in the Decision and the 19.11.14 Judgment referred to in the Decision, which I shall not repeat here.

3. Ps’ application for leave to appeal against the Decision was subsequently refused by this court.  Ps renewed their application for leave before the Court of Appeal.  The Court of Appeal dismissed Ps’ application and handed down a judgment on 11 November 2016 (“CA Judgment”).

4. In the CA Judgment, the Court of Appeal raised the issue on whether Ps can legitimately advance any claims in this action.  It was in light of this that D issued a summons on 21 November 2016 seeking an order for this action be dismissed/discontinued forthwith (“Dismissal Summons”).

5. P2 made an application for legal aid on 29 November 2016 and on 28 December 2016, a legal aid certificate was issued for Messrs KM Tang & Co to act for P2 in this action, but limited to negotiation on settlement and mediation (if necessary).

6. It was not clear what attempts took place.

7. However, on 17 May 2017, P1 and P2 issued a summons (“17.05.17Summons”) seeking leave to file a so called 3^rd draft re-amended statement of claim dated 16 May 2017 (“3^rd RASOC”).  It was not issued by P2’s solicitors on his behalf, nor did it appear that P2 had issued the summons under legal aid.

8. On 6 June 2017, the day before the present hearing before this court, the legal aid granted to P2 was discharged.  At the hearing, P2 sought an adjournment on the ground that he had lodged an appeal against the decision of the Director of Legal Aid in discharging his legal aid certificate and his appeal was fixed for hearing on 27 October 2017.

9. P2’s application for adjournment was refused, He had made a number of applications for legal aid previously.  In any event, his latest legal aid certificate was only for the purpose of negotiation for a settlement and/or mediation.  Since this was clearly unsuccessful as seen from his issuing the 17.05.17 Summons with P1, there was no point nor was there any reason to further delay the hearing of the Dismissal Summons, which was issued over 6 months ago and there had already been a delay due to his application for legal aid.  P2 had had plenty of time to prepare for the Dismissal Summons and to seek legal advice.

10. I now turn to consider the Dismissal Summons.

Dismissal Summons

11. On 23 November 2016, this court had given leave to the Ps to file and serve their affirmation/s in opposition to D’s affirmation in support of the Dismissal Summons. 

12. Ps filed an affirmation on 20 December 2016, merely stating that they would reserve their legal rights to present their argument at the hearing and indicated their strong opposition to D’s application.  In short, no evidence was filed by Ps, nor did they lodge any written submissions.

13. D’s written submissions were mainly based on the CA Judgment.

14. In the amended statement of claim filed on 30 May 2011 (“ASOC”), Ps claims against D were for, among other things :

(i) A declaration that the Enduring P/A was invalid;

(ii) A declaration that the Deceased did not have the mental capacity required for creating an enduring power of attorney and/or any power of attorney on 24 January 2005;

(iii) A declaration that the acts performed by D relying on the Enduring P/A were invalid;

(iv) Any relief under section 11 under the Enduring Powers of Attorney Ordinance, Cap 510 (“Ordinance”);

(v) Damages.

15. A pointed out by Lam VP in the CA Judgment, the action concerns a power of attorney executed on 24 January 2005 by the Deceased who was the father of P1 and D.  Ps challenged the Deceased’s mental capacity and the validity of the power of attorney.

16. The purported Enduring P/A was prepared by a firm of solicitors and executed by the Deceased by affixing his mark and finger print in the presence of a medical doctor Dr Au Yeong Chi Keung, the Deceased’s then attending doctor, and a solicitor’s clerk Mr Lai Po Dik.  D was appointed as the attorney.

17. It was Ps’ pleaded case that unbeknown to them, D procured or caused the Deceased to execute the purported Enduring P/A and that this first came to Ps’ knowledge in about the 2^nd week of March 2005. 

18. About 7 months before his death, the Deceased had taken out an insurance policy with Sun Life in the sum of US$400,000 on 24 August 2004, and the beneficiaries were as follows:

(i) Edward Chen Chak Man, the Deceased’s son – 34%

(ii) P1 – 33%

(iii) P2 – 33%

19. The acts P pleaded that D had carried out relying on the purported Enduring P/A were (i) withdrawal of the available value of the Insurance Policy; (ii) alteration of the beneficiaries under the Insurance Policy; and (iii) termination of the Insurance Policy.

20. On 23 November 2016, this court directed Sun Life to produce copies of all insurance policy documents in the possession of Sun Life in relation to the Deceased.  A bundle of documents was later received by the court from Sun Life (“Insurance Documents”).

21. As seen in the Insurance Documents, the cash value of the Insurance Policy was withdrawn by D signing on a “Request for Withdrawal Form” as the Deceased’s attorney.  A cheque in the sum of US$ 369,670 was later issued by Sun Life on 8 February 2005 in favour of the Deceased. There was a redemption charge by Sun Life.

22. After the withdrawal, the amount of the value left in the Insurance Policy was US$8.74.  There was a dispute between D and Sun Life as to the amount of balance.  There was no change of beneficiaries at the time of the withdrawal, nor termination of the Insurance Policy.

23. It was only on 24 February 2005 that D sent a “Request for Beneficiary Change Form”, signed by her as the Deceased’s attorney, to Sun Life to change the beneficiaries to D, P, their brother Edward and their sister Margaret in equal shares.  According to Sun Life, this signed Request was received by Sun Life only on 17 March 2005, 5 days prior to the Deceased’s death, and it was only on 1 April 2005 that Sun Life sent a letter to D to confirm that the change of beneficiaries had been made in the policy record.

24. In any event, according to Sun Life, the fund value of the Insurance Policy at the date of the Deceased’s death on 22 March 2005 had remained at US$ 8.73.  There did not appear to have been any surrender or termination of the Insurance Policy.

25. The result of the change was that P2 was deleted as a beneficiary of the Insurance Policy, and P1’s interest reduced from ⅓ to ¼.

26. There was nothing in the Insurance Documents to indicate that the Deceased (or his attorney) could not make a cash withdrawal from the Insurance Policy subject to a redemption charge by Sun Life, or to alter the names of the beneficiaries.

27. According to Ps’ Reply, P1 was informed by D of the existence of the purported Enduring P/A in early March 2005, prior to the death of the Deceased, when the Deceased was transferred from his residence to the Hong Kong Adventist Hospital[1].

28. As noted in the CA Judgment, Ps had complained that the cheque for US$ 369,670 had not been paid into the Deceased’s bank accounts, and that D had not accounted for the same.  D said she had accounted the same to the other siblings and the money had been held on trust for the estate of the Deceased.

29. Anyway, the defects of the purported Enduring P/A pleaded by P were in relation to form, execution and scope, in that the document did not comply with the requirements of the Ordinance.  There was no challenge in relation the document’s validity as an ordinary general/special power of attorney.

30. As pointed by Lam VP, although there were allegations in the ASOC in respect of the defects in the purported Enduring P/A and lack of mental capacity on the part of the Deceased, the allegations in the pleadings fell short of alleging specifically any wrongful conduct on the part of D (whether by way of tortious acts or undue influence or duress) in procuring the execution of the power of attorney.

31. Further, as pointed out by Lam VP, whilst there was an allegation in paragraphs 22 and 23 of the ASOC that the purported Enduring P/A was not executed by the Deceased voluntarily, the mere fact that a finger print was put down and the signature differed from the normal signature were not sufficient to support the claim, and that although paragraph 36 alleged that D did not exercise the powers honestly and in good faith, no particulars were given to support the same.

32. Indeed, the Insurance Documents showed that on 23 August 2004, the documents for the purchase of the Insurance Policy was also executed by the Deceased affixing his finger print.  In particular, the confirmation declaration of the investment analysis was executed by the Deceased affixing only his finger print without any signature.

33. Lam VP had remarked that even if the power of attorney is invalid, the proper person to pursue any claims on behalf of the estate should be the administrator and the party to whom D needs to account for her conducts under the power of attorney will be the administrator.  This will include any claims in respect of the withdrawal of the cash value.

34. Lam VP point out that Ps, though named as beneficiaries in the Insurance Policy, cannot by that fact alone, acquire any proprietary interest in the properties of the Deceased.  The mere fact that Ps were named as beneficiaries did not give rise to any trust of the policy, and that their position was akin to a volunteer in an uncompleted gift.  As stated by Lam VP, Ps’ claims for damages in this action appeared to be misconceived. 

35. The analysis by Lam VP was on the basis of what appeared in the pleadings and the materials put before the Court of Appeal.  There was nothing in the Insurance Documents or anything else in so far I could see, which would indicate that the basis as set out in the CA Judgment was incorrect.  Lam VP’s analysis was also agreed by Kwan JA.  In the circumstances, I have no reason to depart from their views.  I agree Ps had/have no locus standi to advance claims on behalf of the Deceased or his estate and/or to seek those declarations set out in the ASOC.

The 17.05.17 Summons

36. Ps issued the 17.05.17 Summons for leave to file and serve her draft 3^rd RASOC.  I am of the view that the summons should be dismissed for the reasons set out hereinafter. 

37. First of all, as pointed by D, the present draft 3^rd RASOC was similar to Ps’ draft 2^nd RASOC referred to in the Decision, which this court did not grant Ps leave to appeal, and Lam VP had said in the CA Judgment that Ps’ intended appeal did not have any reasonable prospect of success.

38. In the draft 3^rd RASOC, under the heading “Law of Negligence”, Ps made allegations of various acts carried out by D prior to the Deceased’s death under the purported Enduring P/A, in relation to the Insurance Policy, the Deceased’s Stocks and Shares, Deceased’s health care, and the Property.  These were all previously set out under the 2^nd Group of Ps’ proposed amendments in their draft 2^nd RASOC. 

39. Ps also made allegations in the draft 3^rd RASOC in relation to the acts which D failed to perform as the Deceased’s purported attorney.  Again these were previously set out under the 3^rd Group of Ps’ proposed amendments in the draft 2^nd RASOC.

40. The allegations in relation to P2’s psychiatric illness and reference to Dr Cheung Hung-Kin’s psychiatric report of 23 December 2013 had again been previously set out under the 5^th Group of Ps’ proposed amendments in the draft 2^nd RASOC.

41. Thus, Ps were to a very large extent repeating the contents of their draft 2^nd RASOC for which leave had already been refused. 

42. Ps had in the draft 3^rd RASOC alleged negligence on the part of D, and pleaded generally that D had a duty of care as “recognized by law as the attorneyfor the Donor” and Ps set out again D’s alleged acts and that D had breached her duty of care, but there were no particulars as to exactly what duty of care D owed towards Ps.  Anyway, Ps appeared to be trying again to introduce new tortious claims as they were trying to do in their draft 2^nd RASOC for which leave had not been given.

43. Some of Ps’ allegations concerned D’s acts after the Deceased’s death, and Ps seemed to be also alleging D was negligent in administering the estate, or had failed to administer the estate properly.  Ps had alleged that there had been no distribution or interim payment out of the estate. 

44. If there had been any intermeddling of the estate or improper administration on the part of D, in my view, it will be the administrator’s duty to take action of the estate against D.

45. P1 had issued the Probate Action to challenge the validity of the will, and D’s appointment under the will as executor.  This led to the D issuing an application for appointment of an independent administrator and have the Probate Action dismissed.  On 23 March 2016 the Court of Appeal ordered the Probate Action be discontinued and appointed Mr Li Ka Sing to be the Administrator.

46. It subsequently turned out that Mr Li was not willing to act.  D has now issued an application for two accountants from PwC to replace Mr Li, which was opposed by P1 who proposed a solicitor to replace Mr Li. This matter will be resolved shortly so that administration of the Deceased’s estate can proceed as soon as possible, as more than 12 years have already elapsed since the Deceased’s death.

Conclusion

47. Having regard to all the above and that Ps have no locus to bring the claims in this action, I have come to the conclusion that this action should be dismissed forthwith.  I also dismiss Ps’ 17.05.17 Summons. 

48. D was legally represented since the commencement of this action until D filed her Notice to Act in Person on 1 October 2014. 

49. Regarding costs, I order Ps to jointly and severally pay D’s costs of this action from the date of the commencement of this action on 12 January 2011 including any costs reserved or costs in the cause, except for costs already ordered.  I further order Ps to jointly and severally pay D’s costs of the 17.05.17 Summons.  All D’s costs are to be taxed on party and party basis.  This costs order is an order nisi, which shall be made final after 14 days.

HCA 59/2011

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 59 OF 2011

________________________

________________________

_________________

D E C I S I O N
(Leave to Appeal)

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Introduction

1.  I made an order on 30 May 2016 dismissing Ps’ summons for leave to file a re-amended statement of claim, and their summons on consequential directions and leave to serve a psychiatric report on P2 (“Order”).  I handed down a decision on the same day setting out the background and the reasons for the Order (“Decision”).

2.  For ease of reference, in the present ruling, I am adopting the same abbreviations in the Decision.

3.  Ps have now issued 2 summonses, the 1^st Summons issued on 10 June 2016 seeking leave to appeal against the Order (“1^st Summons”). 

4.  The 2^nd Summons was issued on 29 June 2016 which states “the 1^st plaintiff legal status in the 2^nd Draft Re-Amended Statement of Claim dated 06 October 2014 to be remained as in previous and further related summonses before the court” (sic) (“2^nd Summons”).

5.  It was not clear what Ps were seeking in their 2^nd Summons and in any event, at the hearing on 8 July, Ps have sought leave to withdraw, and leave is hereby granted.  For avoidance of doubt, in the Decision, I have set out my reasons for dismissing P1’s application for leave to file the draft 2^nd RASOC due to her absence as well as on merits.

Reasons for the intended appeal

6.  Ps have filed an affirmation on 10 June 2016 in support of their 1^st Summons, setting out reasons for seeking leave to appeal (“Reasons”)[1]. No draft grounds or notice of appeal had been attached. The Reasons, in so far I can make out, are briefly as follows:

(I) Ps alleged or maintained that Master Ho had granted leave for them to amend the ASOC as per the draft 2^nd RASOC;

(II) This court erred in stating that if leave was granted to Ps to amend the ASOC, there would be prejudice to D as there had already been a considerable delay in fixing dates for the Trial for over 2 years;

(III) This court erred in paragraphs 26 – 30 inclusive of the Decision, on the merits of the proposed amendments, in stating that the administrator could investigate/recover any assets if necessary; and accepting what D said about D’s experts were going to retire;

(IV) This court erred in paragraphs 25 and 31 of the Decision in that P2 has the right of hearing on his claims on “consequential damages and personal injuries when he reached the age of 18 and before he reached the age of 21 on 26 October 2014”;

(V) This court erred in dismissing paragraphs 1 and 4 of the Leave Summons.

Reason (I)

7.  Ps alleged and appeared to maintain that leave had in fact been granted by Master Ho for her to re-amend the ASOC on 26 November 2014[2].  This court found that this was not correct after reading and checking the transcript of the hearing before Master Ho, and the order of 26 November 2014 was accordingly amended and re-filed on 18 February 2015[3]. No leave for re-amendment was ever given by Master Ho, as pointed out by D.

8.  It had been pointed out and explained to Ps/P1 at a number of previous hearings that what Master Ho had ordered was only that Ps had leave to replace a copy of thier original 1^st draft of the re-amended statement of claim attached to the summons for leave to amend, by the so-called 2^nd draft, namely the draft 2^nd RASOC dated 6 October 2014. Master Ho had not granted Ps any leave to re-amend the ASOC.  In fact, Master Ho had adjourned Ps’ summons for leave to re-amend the ASOC to be heard before the designated Judge[4].

9.  There had already been considerable delay in this action, caused by Ps’ allegations and their application/s to re-amend, and the substantive hearing of the Amendment Summons eventually only took place before this court on 19 May 2016, over 2 years after Ps issued an earlier summons in March 2014 to re-amend.

10.  Ps’ continued reference to Master Ho’s order of 26 November 2014 and arguing that leave had already been granted to them, and that they were only seeking “an extension of time” to file the draft 2^nd RASOC, is in my view deliberately misleading. 

11.  This is more so when a copy of the draft 2^nd RASOC attached to Ps’ present supporting affirmation for the 1^st Summons appears to be yet another different draft, with an additional page 30 attached, as pointed out by D. 

Reason (II)

12.  In paragraph 26 of the Decision, D’s grounds of opposition to Ps’ Amendment Summons had been set out, which had included prejudice to D and delay.

13.  Whether D already had notice of Ps’ intention to re-amend the ASOC as early as March 2014 when a copy of Ps’ 1^st draft re-amended statement of claim was served on D together with their summons, or whether by 6 October 2014, D already had notice and a copy of the draft 2^nd RASOC or the psychiatric report on P2, does not mean if leave were to be granted by this court, D would not be given further time to amend her defence, and time to file further witness statements and/or further list of documents.  What is clear to this court is that there will be further round of pleadings and filing of witness statements and/or expert evidence, as D may challenge P2’s psychiatric report.  As I have said, there will inevitably be further delay.

14.  As I have further stated in the Decision, the proposed amendments do not really affect the key issues in this action, namely the Validity Issue and the Capacity Issue.  Ps alleged that D had at the direction hearing on 4 July 2016 accepted that the Enduring P/A might not be valid as an enduring power of attorney.  I understand D’s case to be that if the enduring power of attorney was not valid as an enduring power of attorney due to non registration, it would still be valid as an ordinary power of attorney, and that D’s acts under the power of attorney would still be valid. The validity of the enduring power of attorney/power of attorney mainly depends on the mental capacity of the Deceased at the time of execution.  Thus, as I have said, the key issues in the present action are the Capacity Issue and the Validity Issue.

15.  In any event, in my view, there should be no prejudice to Ps on the Capacity Issue or the Validity Issue if the proposed amendments were not allowed.  Any further delay in this matter will not assist Ps’ own case, bearing in mind the Deceased died in March 2005, over 11 years ago and it is Ps who are seeking reliefs in this action.  In any event, Ps are merely repeating their previous arguments.

Reason (III)

16.  Ps referred to, among others, Order 18 rule 8 of the Rules of the High Court and argued that they should be allowed to plead specifically issues of facts not arising out of the preceding pleading, that a claim for exemplary damages must be specifically pleaded, and that interest under s 48 of the Ordinance must be specifically pleaded.  

17.  There was no claim for exemplary damages, in so far as I can see in the draft 2^nd RASOC, and the purported claim for interest under s 48 of the Ordinance was only in relation to the proposed new claim for “consequential damages”.  Ps had tried to add in the draft 2^nd RASOC a  pleading that the total benefit payable under the Insurance Policy to the beneficiaries had included a guaranteed rate of interest[5].  Under the current paragraphs 28 – 30 of the ASOC, it has already been pleaded that Ps were totally deprived of their entitlements under the Insurance Policy by D’s acts. 

18.  In the present form of the ASOC, the reliefs claimed are declaratory reliefs, and the damages claimed were caused by D’s acts pursuant to the Enduring P/A.  Ps claim in the draft 2^nd RASOC that there were other acts of D pursuant to the Enduring P/A.  Again the key issues are the Capacity Issue and the Validity Issue, and once these issues have been determined, other issues will fall into place and if necessary, directions can be given by this court for Ps to provide further particulars of alleged acts at that stage. 

Reason (IV)

19.  In the draft 2^nd RASOC, Ps now claim that P2 had/has suffered psychiatric and physical damages during his childhood and development as a result of D’s alleged acts under the Enduring P/A, and that P2 has a right of hearing on his claims on “consequential damages”. 

20.  The present claim for damages do not contain any specific pleading as to whether it is for general or special damages, and there has not been any statement of special damages filed.  There were no particulars of any special damages pleaded in the draft 2^nd RASOC either.

21.  In any event, even though at the time of the commencement of this action about 5 years ago, P2 was still a minor, he was suing in this action by his mother and next friend, namely P1, and the first time he was taken to see a psychiatrist Dr Cheung 29 August 2013, over 8 years after D’s alleged acts in about 2005.  As I have indicated in the Decision, there was no evidence when Ps found out about P2’s alleged psychiatric illness, if any. Further, this is not relevant to the Capacity Issue or Validity Issue.

Reason (V)

22.  This is only repeating generally Ps’ arguments.

Conclusion on the 1^st Summon

23.  For reasons set out in the Decision, I did not allow the amendments.  The amendments were not in my view necessary for disposing of fairly the cause of the action, the main issues of which are the Capacity Issue and the Validity Issue. 

24.  Ps have not demonstrated that I was plainly wrong in coming to my decision.  In any event, I am of the view that this is a case management decision.

25.  As stated in the Decision, this court had fixed a hearing for directions on 4 July 2016, and at this direction hearing, this court had indicated that the court was considering a preliminary hearing on the Capacity Issue and/or the Validity Issue which involve expert evidence, and once these matters have been determined, the other outstanding issues will be clear.  The direction hearing had been adjourned to a further hearing for the parties to indicate to the court the number of witnesses in particular on the Capacity Issue, including the 3 doctors and the length of oral examination/cross examination/re-examination. 

26.  Under s 14 AA(4):

“Leave to appeal for the purpose of subsection (1) shall not be granted unless the court hearing the application for leave is satisfied that—

(a) the appeal has a reasonable prospect of success; or

(b) there is some other reason in the interests of justice why the appeal should be heard.”

27.  Having considered the circumstances of this case, I am not satisfied that the intended appeal has a reasonable prospect of success or there is some other reason in the interests of justice why the appeal should be heard.

28.  I therefore dismiss the 1^st Summons.

29.  I order costs of both the 1^st Summons and the 2^nd Summons to be paid by Ps, jointly and severally, to be taxed if not agreed.