YUEN KWOK LEUNG ERIC AND ANOTHER v. MING CHOR PAO by her guardian ad litem CHU KWOK KEE KOOKIE AND ANOTHER

HCA 1637/2015

[2019] HKCFI 3145

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1637 OF 2015

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(By Originating Writ)

AND BETWEEN

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JUDGMENT

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Background

1.  The claim in this Action arises out of the sale and purchase of a property at Flat C, 6^th Floor, No 14 Broadway, Mei Foo Sun Chuen, Kowloon, Hong Kong (“the Property”).  The Property was registered in the name of Madam Ming Chor Pao.

2.  Madam Ming had three children, namely, Mr Chu Kwok Kee Kookie (“KKK Chu”), Mr Chu Kwok Bing (“KB Chu”) and Miss Chu Kwok Mui Camay (the latter not being involved in this trial).  Madam Ming passed away on 21 November 2016.  By an Order granted by Master S Lo on 2 November 2017 (“Master Lo’s Order”), KKK Chu was appointed to represent Madam Ming’s estate (“Madam Ming’s Estate”) in these proceedings and that these proceedings be carried on by KKK Chu.

3.  The plaintiffs were the purchasers of the Property under a Preliminary Sale and Purchase Agreement dated 14 March 2015 (“the PSPA”).  The PSPA was later superseded by a formal Sale and Purchase Agreement dated 27 March 2015 (“the Agreement”). 

4.  The purchase price of the Property was agreed to be $9,800,000. The plaintiffs paid an initial deposit of $300,000 at the time of the PSPA. The sum was paid to the solicitors representing Madam Ming, Messrs Kenneth C C Man & Co (“KCCM”).  A further deposit and part payment in the sum of $680,000 was also paid to KCCM at the time of the Agreement. Receipt of both sums were acknowledged by KCCM.  The Agreement contained the usual provisions requiring the vendor (Madam Ming) to show and give a good title to the Property (clause 8(a)).  Completion was agreed to take place before 5:00 pm on 28 May 2015 (clause 3 and Part III of the Schedule).  It should be noted that the parties have specifically inserted a provision that Madam Ming must before completion cancel the proceedings HCMH 83/2013 (“HCMH 83”) (Memorial No 14010200780016), which at the time was shown on the Land Register as “Registration Withheld”.

5.  Madam Ming did not sign either the PSPA or the Agreement herself.  Both documents were executed by KB Chu on her behalf in exercise of an Enduring Power of Attorney dated 15 January 2014(“the EPA”).  According to the EPA, Madam Ming has authorised KB Chu to act on her behalf, among other things, in respect of the sale of the Property.  However, as will be discussed in more detail later, Madam Ming’s mental capacity in the execution of the EPA is subject to intense dispute between KKK Chu and KB Chu, which has resulted in multiple sets of legal proceedings.  The dispute between the two brothers has affected the present transaction, and in particular, the process of proving title in the conveyance of the Property.

6.  Before I set out the issues in more detail, I should mention that until very recently KKK Chu has been represented by solicitors in this Action.  His solicitors ceased to act for him a few days before the commencement of the trial and he has since acted in person herein.  KB Chu on the other hand has all along been acting in person without legal representation.  I mention this because, as already noted, Madam Ming’s mental capacity surrounding her execution of the EPA (and hence its validity)is the subject of intense dispute between the brothers.  That dispute has dominated much of KB Chu’s argument put forward at this trial and has become the cause of complaint against Master Lo’s Order for representation.  Even though this Court has already indicated that the medical evidence presented in this trial would not be sufficient to enable this Court to come to a definitive view on Madam Ming’s mental capacity at the relevant time, and in any event the resolution of the dispute with the plaintiffs in this Action does not require this Court to make a specific finding as to Madam Ming’s mental capacity, KB Chu has nevertheless persisted in his complaint.

The dispute as pleaded

7.  The plaintiffs contend that because the question over Madam Ming’s mental capacity and the litigations arising over that issue have come to light in the course of the exchange of correspondence between the parties,they have raised a number of requisitions concerning Madam Ming’s ability properly to convey a good title of the Property to them as purchasers.

8.  It is the plaintiffs’ case that their requisitions have not been satisfactorily answered.  Madam Ming has thus failed both to prove as well as to give a good title to the Property.  Such failure amounted to a breach and repudiation of the Agreement, entitling the plaintiffs to terminate the same.  The plaintiffs therefore claim against Madam Ming (now the Estate)for the return of the deposits and part payment in the total sum of $980,000,plus the wasted expenses attending the conveyancing in the sum of $19,903.60. The Plaintiffs claim also an indemnity from the Estate in respect of the estate agent’s commission.

9.  KKK Chu, as representative of the Estate for this Action,defended the plaintiffs’ claim by challenging the validity of the EPA.  He also pointed to the fact that HCMH 83 had already been disclosed on the Land Register although shown only as “Registration Withheld”.  It was pleaded that the plaintiffs should not have entered into the PSPA and the Agreement in the first place.  KKK Chu did not specifically deal with the plaintiffs’ complaint about the inadequacy of the answers to requisitions.  However, it soon became apparent after the commencement of the trial that KKK Chu did not really object to the transaction being rescinded on the basis that issues concerning Madam Ming’s mental capacity and the attending litigation remained outstanding at the time the sale and purchase was due for completion.  KKK Chu did not really take issue with the plaintiffs’ contention that their requisitions had not been satisfactorily answered.

10.  On the other hand, KB Chu was joined as an additional defendant in this Action on his own application.  As far as the plaintiffs’claim against KB Chu is concerned, it will arise only in the event of the Court finding that the PSPA or the Agreement was/were unenforceable.  In such event,the plaintiffs will seek damages against KB Chu for breach of his warranty that he had proper authority to enter into the respective agreements on Madam Ming’s behalf.

11.  KB Chu’s position is that the EPA was valid and he had validly exercised the power to sign the PSAP and the Agreement on Madam Ming’s behalf.  He counterclaims against the plaintiffs that the Agreement should be specifically performed.  He also claims forfeiture of the deposits and damages for loss arising from the plaintiffs’ repudiation of the Agreement.

Settlement between the plaintiffs and KKK Chu

12.  On the second day of the trial, the plaintiffs’ counsel (Miss Astina Au) submitted an application made jointly with KKK Chu seeking judgment to be entered by consent against Madam Ming’s Estate, among other things, for rescission of the Agreement, and that Madam Ming’s Estate should return the deposits and part payment to the plaintiffs, and reimburse the plaintiffs for the expenses incurred in the transaction with interest. 

13.  As a result of the agreement reached between the plaintiffs and KKK Chu, the plaintiffs formally withdrew their claim against KB Chu. However, KB Chu insisted that the transaction was validly entered into by use of the EPA.  He would pursue his counterclaim against the plaintiffs to enforce performance of the Agreement and to compel the plaintiffs to make payment of the balance of the purchase price.  He apparently did not realise that his claim for forfeiture of the deposits would be an impediment to specific performance.  Be that as it may, no issue was taken by the plaintiffs and the hearing proceeded to deal with the merits of his counterclaim for specific performance.  This Court also considers it more appropriate to hear KB Chu’s counterclaim before pronouncing judgment on the Consent Summons between the plaintiffs and KKK Chu in view of the fact certain declaratory reliefs are being sought therein.

14.  As a result of the agreement now having been reached between the plaintiffs and KKK Chu, the remaining issues for determination are as follows:

 (1) Whether KB Chu has any locus to pursue his counterclaim and seek specific performance of the Agreement (“Issue1”);

 (2) In any event, regarding the substantive merits of KB Chu’s counterclaim, whether good title was shown and/or given by Madam Ming under the Agreement (“Issue2”); and

 (3) Whether the reliefs, especially the declaratory reliefs in the Consent Summons between the plaintiffs and KKK Chu should be granted (“Issue3”).

Locus standi

15.  As already noted, KKK Chu has consented to judgment being entered against the Estate, among other things, for rescission of the Agreement and return of the deposits and part payment to the plaintiffs. Effectively, KKK Chu (representing Madam Ming’s Estate) has agreed that the Agreement should not be enforced against the plaintiffs as purchasers. The parties to the Agreement having effectively come to terms as to rescission of the Agreement, I can see no basis for KB Chu (who acted merely as agent under the EPA) to have any locus to insist on the Agreement being performed. 

16.  KB Chu’s response can be summarised into three points:

 (1) Although KKK Chu was appointed to represent Madam Ming’s Estate for the purpose of this Action, his authority is limited to attending this trial and does not extend to binding the Estate in settling this Action in terms of the Consent Summons, which will have the effect of reducing the value of Madam Ming’s Estate.

 (2) KKK Chu is not an appropriate person to represent Madam Ming’s Estate in this Action because he is neither the executor nor beneficiary under Madam Ming’s last will.  In any event,there is also pending probate proceedings in HCAP 8/2018 (“the Probate Action”) in respect of the three wills made by Madam Ming between November 2010 and October 2013.  It is premature to appoint KKK Chu to represent Madam Ming’s Estate herein pending the determination of the Probate Action.  KKK Chu is in any event in a position of conflict.

 (3) KB Chu is the validly appointed attorney under the EPA and should therefore be entitled to insist on performance of the Agreement. 

17.  I agree with plaintiffs’ counsel that none of the three points has any merit.  The first two points essentially amount to an impermissible challenge of Master Lo’s Order and a misunderstanding of the Order.  It should be noted that Master Lo’s Order was in fact subject to an appeal brought by KB Chu but his appeal was rejected by Madam Justice B Chu on 20 March 2018.  There was no further appeal by KB Chu against the decision of the learned judge.

18.  KB Chu repeatedly emphasised his disagreement with the reasoning in §§32 and 33 of Madam Justice B Chu’s decision (the details of which I need not go into here).  He also argued that representation should not have been granted to KKK Chu in this Action because it would pre-empt the determination of the Probate Action.  However, as it has been made clear during the hearing, it is wholly impermissible for this Court to reopen arguments as to the appropriateness of the Order for representation.  Madam Justice B Chu was clearly aware of the pending Probate Action (see the learned judge’s Decision of 20 March 2018, §§25 – 28).  Her Ladyship’s decision must be final on the question of representation.

19.  KB Chu argued that despite his failure to further appeal against Madam Justice B Chu’s decision, he would be entitled to invite this Court to rectify “the error” because Order 14A empowers the Court to determine any question of law arising in any cause or matter at any stage of the proceedings.  KB Chu’s reliance on Order 14A is clearly misconceived.  Order 14A does not empower this Court to “rectify”, vary or revoke the representation order made by Master S Lo which has been affirmed on appeal by Madam Justice B Chu.

20.  Under Master Lo’s Order, KKK Chu was appointed to represent Madam Ming’s Estate for the purpose of these proceedings.  The Order was not a grant of probate in favour of KKK Chu in respect of Madam Ming’s Estate and does not have effect as such.  KKK Chu’s appointment is confined to representing Madam Ming’s Estate for the purpose of these proceedings, the Court no doubt having been satisfied that he was the appropriate person to be so appointed.

21.  On the other hand, I see no basis for reading into the Order the limitation as contended for by KB Chu, namely, that KKK Chu’s authority should be confined only to attending the trial.  The Order clearly confers on KKK Chu the authority to represent Madam Ming’s Estate in the conduct of the trial.  Such authority, in my view, must include the authority to settle the Action with the plaintiffs, as he considers appropriate.

22.  I therefore reject KB Chu’s first two arguments. 

23.  As for the third argument, I do not see the basis for an agent to assert any locus with a view to overriding an agreement reached between the principals (in this case, the settlement agreement as embodied in the Consent Summons).  I agree with the plaintiffs’ Counsel that KB Chu’s agency is in any event already terminated upon the death of Madam Ming: Bowstead & Reynolds on Agency (21^st ed), Article 119, §10-015.  It is clear that he cannot now claim to have any locus to pursue the counterclaim on behalf of Madam Ming’s Estate to insist on performance of the Agreement.

24.  My conclusion on the locus issue is sufficient to dispose of KB Chu’s counterclaim.  I will only briefly deal with Issue 2. 

Good title has not been shown or given

25.  The relevant principles on a vendor’s obligation to show and give good title are well-established. I would adopt the principles summarised by Madam Justice Au-Yeung in Asia Rich Incorporated Ltd vChin Hung[2019] HKCFI 2187, at §19.   

26.  The conveyancing was handled by KCCM on behalf of Madam Ming and Messrs Wong, Hui & Co (“WH”) on behalf of the plaintiffs.  It will be noted that Messrs Charles Yeung Clement Lam Liu & Yip (“CYCLLY”), representing KKK Chu, have intervened in the course of correspondence in the transaction.  I shall set out below the more salient correspondence exchanged between the parties.

27.  On 20 March 2015, KCCM provided the title deeds and documents to WH for perusal. 

28.  On 21 March 2015, WH raised a number of requisitions, in particular, WH requested for a copy of the Power of Attorney Memorial No 14082600060010 (in item 1p.); the sealed copy of the ex parte Originating Summons in HCMH 83 (in item 1o.); and in §2 that the registration of the said exparte OS be withdrawn and/or that the said OS be discharged seven working days before completion. 

29.  On 23 March 2015, KCCM provided WH with a copy of the EPA.

30.  On 8 April 2015, on discovering the registration in the Land Registry of another Originating Summons in HCMP 704/2015 (“HCMP 704”), WH requested KCCM to provide them with a sealed copy of the said OS, and also to provide them an Order to vacate and discharge the said OS in HCMP 704 seven days before completion. 

31.  On the same day, KB Chu issued proceedings by way of HCMP 799/2015 (“HCMP 799”) seeking an order to vacate the registration of the OS in HCMP 704 from the Land Registry.

32.  On 15 April 2015, CYCLLY wrote to WH informing the latter of the two sets of proceedings that had been issued by KKK Chu, namely:

 (1) HCMH 83 commenced on 31 December 2013, seeking an order that a committee be appointed for Madam Ming on the ground of her mental incapacity;

 (2) HCMP 704 commenced on 27 March 2015, seeking an order that the EPA be declared invalid; the vacation of the registration of the EPA on the Land Register; and the removal of KB Chu as an attorney for Madam Ming.

CYCLLY requested WH to confirm that the plaintiffs would not proceed with the purchase of the Property.

33.  On 16 April 2015, WH forwarded CYCLLY’s letter to KCCM, asking for their “immediate action” to deal with the matters therein raised.

34.  On 20 April 2015, CYCCLY further provided WH with Dr C K Wong’s Certificate (dated 28 July 2014) which stated that “judging from [Madam Ming’s] severe state of dementia, her mental incapacity should have lasted at least five years, probably even longer”.

35.  On 21 April 2015, WH forwarded Dr C K Wong’s Certificate to KCCM and requested for a draft Cancellation Agreement.

36.  There was no reply or clarification on the issue of the validity of the EPA from KCCM until 7 May 2915.  In the letter from KCCM, it was stated that the registration of HCMH 83 had been withdrawn, and that Dr C K Wong’s Certificate had “no relevance to our present case”.  With the same letter, KCCM provided WH with copies of the Originating Motion of HCMP 799 and two supporting affirmations from KB Chu.  Three medical certificates were provided with the affirmations, respectively from Dr Shirley Ip (dated 15 January 2014), Dr Chen (dated 10 April 2014) and a Medical Assessment Form from Princess Margaret Hospital (dated 11 October 2013), all opining that Madam Ming was mentally sound on the respective dates.  KCCM reiterated that KB Chu had acted with authority under the EPA and therefore the title of the Property was not affected by the registration of the lis pendens in HCMP 704. 

37.  On the same day, WH replied and requested proof that the proceedings of HCMH 83 had been withdrawn, rather than the mere withdrawal of its registration from the Land Register.  WH expressed concerns over the validity of the EPA given the competing medical evidence.  WH concluded by stating that the plaintiffs should not be forced to accept the title of the Property due to “uncertainty in litigation”.

38.  On 12 May 2015, WH replied to KCCM and raised a list of further requisitions on the issues concerning the mental state of Madam Ming at the time of the execution of the EPA and the suspected irregularity of the execution thereof.

39.  On 14 May 2015, WH made further inquiries on the status of the proceedings in HCMH 83 and HCMP 704:

“ 2. We have been informed by [CYCLLY] … that [HCMH 83] is an application to seek an Order that a Committee be appointed for Madam Ming to handle her estate on the ground that Madam Ming has become mentally incapable. … Please let us know the status of [HCMH 83] as well as the subsequent [HCMP 704] now registered in the Land Office. Are the two actions ongoing andis there a ruling by the Court that Madam Ming is mentally sound and the EPA is valid. If not, good title is not proved. …”

40.  In the letter to KCCM on 16 May 2015, WH again stated that due to the registration of HCMP 704 as lis pendens and the notice of the “mental incapacity” of Madam Ming, no clear title could be given to the plaintiffs.

41.  On 19 May 2015, KCCM responded simply by asserting that “[they] trust all of [WH’s] requisitions have been satisfactorily dealt with by [them]”.  There was no attempt to deal with the status of the proceedings in HCMH 83 and HCMP 704.

42.  On 22 May 2015, WH reiterated that KCCM had failed to answer their requisitions up to that time, including the absence of any response to their inquiry regarding the status of the proceedings in HCMH 83 and HCMP 704.

43.  On 26 May 2015, KCCM repeated their answers that the registration of HCMH 83 had been withdrawn and thus Dr C K Wong’s Certificate need not be considered, and that the EPA was validly executed.

44.  On 27 May 2015, WH restated that KCCM had failed to answer their requisitions and the plaintiffs could not accept a title that was dependent upon the outcome of litigation. 

45.  On 28 May 2015, KCCM again asserted that the EPA “should be taken as validly executed and registered” and that they had replied to the requisitions raised and proved a good title to the Property. 

46.  WH replied on the same day by stating that Madam Ming was in breach of the Agreement by failing to answer requisitions satisfactorily and to give a good title to the Property.  The plaintiffs demanded repayment of the deposits and claimed damages.

47.  From the above survey of the correspondence exchanged between WH and KCCM, this is a clear case that KCCM (representing Madam Ming) have failed to provide satisfactory answers to the requisitions,and in particular, the status regarding the ongoing proceedings relating to the mental capacity of Madam Ming surrounding her execution of the EPA. The repeated assertions by KCCM that Madam Ming had been certified by Dr Ip to have the requisite mental capacity at the relevant time did not remove the doubt arising from the competing medical evidence on the issue.  With the unresolved dispute in HCMP 704, KCCM clearly was unable to demonstrate that KKK Chu’s challenge to the validity of the EPA was doomed to fail.  In fact, KCCM’s 19 May letter was hardly an answer to the inquiry about the status of the proceedings, and their subsequent responses were little more than a re-assertion of the validity of the EPA.

48.  My view, therefore, is that Madam Ming was in breach of her obligation to show a good title, and she had certainly failed to do so within a reasonable time before completion.

49.  I am also of the view that Madam Ming was in breach of the obligation to give a good title at the time of completion.  As at the date of completion, the risk of the EPA being found to be invalid on the ground of want of mental capacity had not been removed. As title to the Property would depend on the validity of the EPA, the unresolved issue arising from the competing medical evidence had clearly given rise to much uncertainty over the title. If it transpired subsequently that the validity of the EPA was successfully challenged, the Agreement would be of no effect.  The plaintiffs would not have acquired any title to the Property at all.

50.  In the premises, as at the date of completion, all that Madam Ming could give was a doubtful title to the Property which carried with it a real risk of being challenged.  This is one of those cases where the Court would not compel the purchasers to complete the transaction which would in effect be forcing them “to buy a lawsuit to resolve the doubt”.

51.  In the course of his closing submissions, KB Chu drew my attention to a remark by Mr Justice L Chan made during the hearing in HCMH 83 on 15 January 2015 that counsel then acting for KB Chu “had all the merits” in his argument that the attempt to register HCMH 83 on the Land Register against the Property was misconceived.  However, even assuming that it was wrong to seek registration of the mental health proceedings against the Property, it would still not detract from my discussion regarding the uncertainty that had arisen from the competing medical evidence and the outstanding litigation which would impact upon the validity of the EPA.  The remark of the learned judge does not assist KB Chu over the issue of showing and giving good title to the Property.

52.  I would, therefore, hold that Madam Ming had failed both to show and give a good title.  The breach of either of those obligations entitled the plaintiffs to terminate the Agreement, demand repayment of moneys paid, and claim compensation for loss suffered.  Therefore, apart from KB Chu’s lack of locus, his counterclaim is also dismissed on its merits.

Consent Summons between the plaintiffs and KKK Chu

53.  As I have noted in paragraph 13 above, I have reserved consideration of the Consent Summon until after I have heard evidence and submissions on KB Chu’s counterclaim, which I have now done.

54.  I am satisfied that the declaratory reliefs sought in the Consent Summons are appropriate reliefs to be granted.  I am prepared to grant an order in terms of the Consent Summons.

Conclusion

55.  I would make the following orders as between the plaintiffs and KKK Chu:

“ BY CONSENT

Judgment be entered against the 1^st Defendant in the following terms:

1. The Agreement dated 27 March 2015 entered into between the Plaintiffs and the 1^st Defendant (‘Agreement’) in respect of the sale and purchase of the property known as Flat C, 6^th Floor, No. 14 Broadway, Mei Foo Sun Chuen, Kowloon, Hong Kong (‘Property’) be declared to have been effectively rescinded by the Plaintiffs;

2. The 1^st Defendant do return to the Plaintiffs:-

a. the deposit of HK$300,000.00 paid under the Preliminary Sale and Purchase Agreement dated 14 March 2015 entered into between the Plaintiffs and the 1^st Defendant; and

b. the further deposit and part payment of HK$680,000.00 paid under the Agreement;

3. The 1^st Defendant do reimburse and/or indemnify the Plaintiffs for the Plaintiffs’ conveyancing legal costs and expenses including the costs and expenses of investigating the 1^st Defendant’s title to the Property, and other expenses incurred by the Plaintiffs in or about the proposed purchase of the Property in the said total sum of HK$19,903.60;

4. The 1^st Defendant do reimburse and/or indemnify the Plaintiffs the estate agent’s commission that shall become payable by the Plaintiffs;

5. The Plaintiffs be entitled to a purchasers’ lien on the Property for the return of the deposit and part payments in the total sum of HK$980,000.00, the sum of HK$19,903.60, as well as interest and costs in favour of the Plaintiffs in this Action;

6. The 1^st Defendant do pay the Plaintiffs interest on the sums of HK$980,000.00 and HK$19,903.60 pursuant to s.48 of the High Court Ordinance (Cap. 4), agreed at HK$50,000.00;

7. The 1^st Defendant do pay the Plaintiffs’ costs of this Action to be taxed if not agreed.

8.   There be a stay of execution of paragraphs 2, 3, 4, 6 and 7 above for a period of 6 months from the date hereof, save that the Plaintiffs shall be entitled to proceed with taxation pursuant to paragraph 7 above forthwith.”

56.  As between the plaintiffs and KB Chu:

 (1) Leave be granted to the plaintiffs to discontinue its claim against the 2^nd defendant;

 (2) The 2^nd defendant’s counterclaim is dismissed:

 (3) An order nisi that there be no order as to costs in respect of the plaintiffs’ claim;

 (4) An order nisi that the plaintiffs’ costs in respect of the 2^nd defendant’s counterclaim be borne by the 2^nd defendant on a party-and-party basis.

HCA 1637/2015

[2018] HKCFI 583

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1637 OF 2015

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(By originating writ and order to carry on made by Master S Lo dated 2^nd November 2017)

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D E C I S I O N

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Introduction

1.  This is the 2^nd defendant’s appeal against an order made by Master S Lo on 2 November 2017 appointing Chu Kwok Kee Kookie (“Kookie”) to represent the estate of the 1^st defendant, deceased (“Madam Ming”), for the purpose of continuing this action. 

2.  On 4 May 2017, the plaintiffs issued a summons under Order 15 rule 7 of the Rules of the High Court, seeking, amongst other things, an order that D2, or Kookie, or alternatively such other person be appointed to represent the estate of Madam Ming for the purpose of this action and that the action be carried on by the person appointed.

3.  Kookie and the 2^nd defendant (“D2”) are brothers they also have a sister Chu Kwok Mui Camay (“Camay”).  Madam Ming was their mother and Chu Tse Wen was their father (“Father”). Father died on 12 February 2013.  Madam Ming died on 21 November 2016. 

4.  The issue before Master S Lo was whether Kookie or D2 should be appointed to represent Madam Ming’s estate for the purpose of this action.

5.  The plaintiffs’ position in the present appeal is neutral.  Although they were present at the 1^st hearing on 19 December 2017, they have been granted leave to be absent at the 2^nd hearing on 26 February 2018. 

Background  

6.  This action was issued by the plaintiffs against both Madam Ming and D2 (in his personal capacity for breach of warranty to represent Madam Ming).  The subject matter of this action relates to a Provisional Agreement dated 14 March 2015 and a Formal Agreement for Sale and Purchase dated 27 March 2015 of a property in Mei Foo Sun Chuen (“Property”) which was registered in the names of Madam Ming and Father as joint tenants.  Madam Ming became the sole owner of the Property after Father’s death.

7.  Both the Provisional Agreement and the Formal Sale and Purchase Agreement were signed by D2 in the alleged capacity as the lawful attorney for Madam Ming as vendor.  D2 relied on an enduring power of attorney dated 15 January 2014 purportedly given by Madam Ming to him (“EPA”).

8.  It was the plaintiffs’ case that without their knowledge :

(i)   On 31 December 2013, Kookie commenced HCMH 83/2013 naming Madam Ming as defendant to seek an order that Kookie be appointed the committee for Madam Ming’s estate on the ground that she was incapable, by reason of mental incapacity, of managing and administering her property and affairs (“MH Action”);

(ii)   On 27 March 2015, Kookie issued an originating summons against Madam Ming and D2 under HCMP 704 of 2015, for an order that the EPA be declared invalid and ineffective and that D2 be removed as an attorney for Madam Ming, in that Madam Ming had become mentally incapacitated prior to 31 December 2013 (“EPA Action”).  Kookie had caused the originating summons be registered in the Land Registry against the Property.

9.  It was the plaintiffs’ case that it was while raising requisitions on the title of the Property they discovered the above proceedings issued by Kookie.  D2 himself then took out a Notice of Motion under HCMP 799/2015 to vacate the originating summons in the EPA Action.

10.  As a result of the above various actions, completion of the sale of the Property did not take place, and the plaintiffs said they accepted Madam Ming’s repudiation of the sale and demanded repayment of the deposit and damages, and when the defendants failed to pay, the plaintiffs issued the writ herein.

11.  In the meantime, an enquiry hearing was held in the MH Action by L Chan J who on 15 June 2015 declared that Madam Ming, who was then 95 years old, was a person incapable, by reason of mental incapacity, of managing and administering her property and affairs and appointed Kookie to be the Committee of Madam Ming (“Appointment Order”).  The Appointment Order was strongly opposed by D2, who had applied to intervene.

12.  It would appear that about two weeks after Father’s death, in fact Camay had commenced an action against Kookie under HCA 361/2013 for misappropriation of their parents’ properties.  Camay’s claim was subsequently struck out and the action dismissed on 31 August 2013. 

13.  In the course of the MH Action, it transpired that Madam Ming had made 3 wills:

(i)   On 22 November 2010, Madam Ming and Father had respectively executed a will in Chinese in the presence of a solicitor and Kookie was the executor under both wills, and all three children were beneficiaries under Madam Ming’s will (“1^st Will”);

(ii)   On 20 March 2013, Madam Ming made a 2^nd will in English and only D2 and Camay were beneficiaries under it (“2^nd Will”);

(iii)   On 24 October 2013, Madam Ming purportedly made a 3^rd will, with D2 as executor and sole beneficiary (“3^rd Will”).

14.  Further, in the course of the MH Action, D2 disclosed another power of attorney dated 28 October 2013, made in English by Madam Ming appointing D2 as her attorney to deal with all her properties (“POA”).

15.  L Chan J had considered, amongst other things, that in light of the 2^nd and 3^rd Wills, the POA and the EPA, D2 was in a position of conflict of interest and it was also inappropriate for D2 to act as the interpreter when Madam Ming was examined by two doctors who had produced medical certificates respectively dated 15 January 2014 and 10 April 2014 as to her mental capacity.  L Chan J had agreed with the views of the Official Solicitor that Kookie was the most appropriate person to be appointed because (i) there was no concrete evidence placed by D2 on the allegation that Kookie had misappropriated Madam Ming’s properties; and (ii) all along Kookie had been taking care of Madam Ming and was well familiar with her needs and financial affairs.

16.  D2 had lodged an appeal against the Appointment Order but his appeal was dismissed by the Court of Appeal which handed down a judgment on 30 September 2016 (“CA Judgment”)[1].  In particular, the Court of Appeal found L Chan J was correct to prefer the opinions of the doctors on Kookie’s side, namely Dr John Wong and Dr CK Wong, than those on D2’s side. 

17.  While Kookie was the Committee of Madam Ming’s estate and prior to Madam Ming’s death on 21 November 2016, Kookie had filed a defence contesting the plaintiffs’ claim herein.

18.  When the plaintiffs’ summons was heard before Master S Lo, Master S Lo accepted the arguments put forward on behalf of Kookie, namely that there is a conflict of interest between D2 and Madam Ming’s estate in this action and that it is in the interest of Madam Ming’s estate for Kookie to be appointed to act for Madam Ming’s estate for the purpose of this action.

19.  D2 issued a summons on 2 November 2017 to appeal against the decision of Master S Lo on the same day.

20.  In the present appeal, Mr Wong appeared for Kookie and D2 acted in person.

21.  Mr Wong submitted that the present action arises due to the wrongful act of the D2 and that the deposits paid by the plaintiffs are being kept by D2.  Further, D2 is sued in his personal capacity for breach of warranty to act for Madam Ming to sell the Property.  Thus, if D2 is to be appointed to handle this action for Madam Ming’s estate, there is a real risk that he would not contest the plaintiffs’ claim to the best interest of Madam Ming’s estate. 

Discussion

22.  It is trite that an appeal from the master to the judge in chambers is dealt with by way of an actual rehearing of the application which led to the order under appeal and the judge treats the matter as though it came before him for the first time[2].

23.  After the MH Action, and prior to Madam Ming’s death, as Committee of Madam Ming’s estate, Kookie had commenced another action on 20 November 2015 under HCA 2728/2015 against both D2 and Camay for declarations that the 2^nd Will and the 3^rd Will were invalid and be set aside (“Set Aside Action”).  

24.  Upon the death of Madam Ming, the Committee was discharged under section 27(4) of the Mental Health Ordinance, Cap 136.   The Set Aside Action was subsequently struck out by Wilson Chan J on 11 September 2017, as Kookie failed to make an application for a substitution order under Order 15 rule 7 of the Rules of the High Court within 3 months as stipulated by the Judge[3].

25.  D2’s main argument in the present appeal was that the Set Aside Action had already been struck out, and as he was appointed the sole executor and beneficiary of Madam Ming’s 3^rd Will, he was entitled to apply for probate of Madam Ming’s estate, which he did on 3 November 2017.  Being executor appointed under Madam Ming’s 3^rd Will, D2 submitted that he should be the proper person to continue defending this action on behalf of Madam Ming’s estate.

26.  However, on 6 November 2017, Kookie has entered a caveat in the Probate Registry against Madam Ming’s estate.

27.  At the 1^st hearing before this Court, D2 sought an adjournment for filing a further affirmation to exhibit new evidence, namely (i) the death certificate of Madam Ming; (ii) confirmation of his application of probate; (iii) the order and decision of Wilson Chan J in the Set Aside Action, which were not placed before this Court at the time of the 1^st hearing.

28.  By the time of the 2^nd hearing, Kookie has issued a probate action, in his own capacity and as an interested person, under HCAP 8/2018, seeking declarations that the 2^nd Will and the 3^rd Will were invalid and be set aside (“Probate Action”).

29.  First of all, the Set Aside Action was struck out due to technicality, and there is nothing this Court can see, and no authority had been referred to by D2, that Kookie is prevented from issuing the Probate Action.

30.  As pointed out by the Official Solicitor in the MH Action and as seen in the CA Judgment, if the Court were to accept the opinions of Dr John Wong and Dr CK Wong, Madam Ming very likely did not have the mental capacity to sign the EPA and the sale of the Property ought to be set aside and further Kookie would be the most appropriate person to be the Committee, in other words to represent Madam Ming in the present action.  This was accepted by L Chan J and confirmed by the Court of Appeal.

31.  At present, the validity of the 2^nd and the 3^rd Wills is being challenged by Kookie and if he succeeds, D2 would not be the executor of Madam Ming’s estate.  Pending the resolution of the validity of the wills, in so far as the present action is concerned, D2 himself is also a defendant being sued in his personal capacity and his case in his defence is that, amongst other things, he had acted under the EPA which was valid and D2 has also counterclaimed for specific performance and/or damages against the plaintiffs.  As for Madam Ming’s estate, the defence filed by Kookie as Committee is based on the EPA being invalid.  There was no counterclaim by the estate. 

32.  Having considered D2’s defence and the defence file on behalf of Madam Ming, I agree with Mr Wong’s submission that there is a conflict of interest between D2 and Madam Ming’s estate in the present action.

33.  There has been no other person put forward to represent Madam Ming’s estate.  Having considered the history of this matter, and that Kookie has been representing Madam Ming since after the Appointment Order in June 2015 in this action and has filed the defence on behalf of her estate, I am of the view that he is the appropriate person for the purpose of this action and for this action to be carried on by him on behalf of Madam Ming’s estate.

Conclusion

34.  In light of the above, I agree with the order made by Master S Lo.

35.  I hereby dismiss D2’s summons issued on 2 November 2017 and order him to pay the 1^st defendant’s and the plaintiffs’ costs of this appeal, such costs to be taxed if not agreed.