XCHRX THE PRUDENTIAL ENTERPRISE, LTD. v. LEE TAK YAN AND OTHERS

HCMP299/99

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO.299 OF 1999

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J U D G M E N T

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1. The Court today has before it a Master's appeal pursuant to a Notice of Appeal dated 19th April 1999. This appeal concerns a purely procedural matter, and in the particular circumstances, which I shall shortly describe, I am driven to wonder whether the time and effort involved on behalf of all parties is worth it.

2. On 13th April 1999, Registrar Chu made an Order that :

(1) The date fixed for hearing of the 1st and 2nd Claimants' appeal from Master Kwan's decision fixed for hearing before Mrs Justice Le Pichon on 16th November 1999 be brought forward to a date to be fixed to be heard by any judge with one hour reserved.

(2) The call-over hearing (with half an hour reserved) for the giving of directions concerning the 200 shares registered in the name of "Lee Wai Loy" (ruled by Master Kwan to be determined summarily) be heard immediately after that appeal.

(3) Costs of the hearing of 13th April be costs in the appeal.

3. I have set the Order out in extenso but in truth, absent explanation, it is meaningless. It is, therefore, necessary to provide some brief background to the present dispute between these parties.

4. This appeal is in High Court Miscellaneous Proceedings No.299/99. These proceedings had been issued by the Prudential Enterprise Limited ("the Applicant") by way of Originating Summons dated 15th January 1999, and seek interpleader relief. In short, the Applicant asked the Court to resolve the competing claims to 400 shares in that company of the three Claimants thereto (Mr Lee Tak Yan, Ms May Lee, otherwise known as Lee Wing Kim, and Mr Samuel Tak Lee). These three Claimants are siblings. They are the progeny of Mr Lee Man Wa, of whose estate the 1st and 2nd Claimants are executors. The dispute over the shares in this case, therefore, is between the 1st and 2nd Claimants on the one hand, namely Mr Samuel Tak Lee's brother and sister, and Mr Samuel Tak Lee himself, whom I understand is the younger son.

5. At this stage it is also worth noting the broad background to this litigation. This case is but one of a number of fights between and/or involving these three parties. I do not know the precise position, but a perusal of the affidavits filed both in these proceedings and in allied proceedings HCMP457/99 (of which more later), indicates that there are some nine or ten sets of outstanding proceedings currently on foot. I believe there are five High Court actions, one Probate action, two contested Winding-up actions and two Miscellaneous Proceedings actions, of which one is the present interpleader and the other is the action I have just mentioned, HCMP457/99.

6. But to return to the present case. The Order of Master Kwan as referred to in the Order of Registrar Chu, (the latter, of course being the Order the subject of the instant appeal), in effect made two sets of directions. Paragraph 1 of Master Kwan's Order dated 10th March 1999 reads as follows :

"The question as to whether the 200 Shares the 3rd Claimant will ultimately be entitled to can be transferred to the 3rd Claimant before the determination of whether estate duty is payable thereon is to be decided summarily by a Judge in chambers for a 1/2 hour hearing."

7. The other 200 shares, it seems to be agreed by the parties, are the subject of paragraph 12 of Master Kwan's Order, which reads :

"The competing claims of the Claimants in relation to the remaining 200 Shares to proceed to trial on the issue of determining the person or persons entitled to those shares."

8. The position, therefore, is broadly as follows, and I am grateful to both Counsel for helping me to sort it out. At bottom, of the total of 400 shares there is no dispute as to the ultimate beneficial ownership of 200 of those shares, which appear to have devolved upon the 3rd Claimant via the will of his mother. The only doubt here is whether the 3rd Claimant, Mr Samuel Tak Lee, is able to obtain those shares now, or whether he has to wait until the determination of whether estate duty is payable thereon. And whether estate duty is payable thereon appears to depend (and here I warn myself I know very little about the substance of the case) upon whether this block of 200 shares can fairly have been said to be part of his mother's estate, or part of his father's estate.

9. In any event, the aspect of which Mr Miu, on behalf of the 1st and 2nd Claimants, the brother and sister executors, now complains in terms of Master Kwan's Order is her decision that this issue of 'prior transfer', if I may so term it, should be decided summarily. Mr Miu's clients take objection to this, and say that the matter should not be subject to a summary determination, but should be decided at trial together with the decision as to the ultimate disposition of the other block of 200 shares, the entitlement to which is, and has always been, disputed. Thus, an appeal against Master Kwan's Order was launched by his clients.

10. When the Notice of Appeal, dated 16th March, was filed and a date fixed, it was, I understand, the view of those instructing Mr Miu, not perhaps unreasonably, that this appeal should be fixed before Mrs Justice Le Pichon for 16th November 1999 at 10 o'clock. There was good reason for this, says Mr Miu. Because on that day, Mrs Justice Le Pichon is scheduled to hear a striking out application in HCMP457/99. Which conveniently brings me to this allied case. By an Originating Summons dated 22nd January 1999, the like two Claimants in the instant proceedings sought in this other Miscellaneous Proceedings the determination of the Court of a number of questions. Question 2 reads as follows :

"Whether the following shares registered in the name of 'Lee Wai Loy' and referred to in the mother's will dated 22nd November 1989 form part of the estate of the father :

(a) 400 shares in the Prudential Enterprise Limited

...."

11. Question 3 then goes on to ask that if the answer to Question 2 is in the affirmative, whether the directions contained in a secret trust document executed by the mother dated 22nd November 1989 directing the 2nd Claimant to distribute, inter alia, 200 shares in the Prudential Enterprise created a valid secret trust or amounted to a fraud on the power of appointment conferred on the mother by the father.

12. It should be noted that the 200 shares there referred to in Question 3 of this latter Originating Summons represent the block of 200 shares the ultimate entitlement to which is in dispute in the present case, as to which the right thereto will have to be decided at trial, as envisaged by paragraph 12 of Master Kwan's Order.

13. However, Mrs Justice Le Pichon is to deal, on 16th November 1999, not with this Originating Summons as such, but with an application to strike out that Originating Summons issued by the 3rd Claimant herein, Mr Samuel Tak Lee, on 23rd February 1999, it being said in that summons that the Originating Summons in question is frivolous, vexatious and/or an abuse of process.

14. How then did Registrar Chu become involved in this procedural maze?

15. As I understand the situation, after the Notice of Appeal against Master Kwan's Order had been issued by the 1st and 2nd Claimants on 16th March 1999, the 3rd Claimant, through his solicitors, complained that the appeal should not be heard so late and suggested that it be heard by any available Judge on an earlier date. There was no consensus, and accordingly, on 31st March 1999, the 3rd Claimant took out a summons seeking to have the November hearing date vacated and the appeal heard by any Judge that was available. This is how, therefore, that Registrar Chu came to be dealing with this matter on 13th April 1999, on which day the learned Registrar made the Order now under appeal, the terms of which are set out in full at the outset of this judgment.

16. I agree with Counsel for the 3rd Claimant, Mr Chua, that at bottom this whole matter is 'a storm in a tea cup' and I really wonder why the time of a High Court Judge should be spent apparently indulging the whims of the parties. Be that as it may.

17. Mr Miu contends that against this somewhat curious procedural background, it makes eminent sense for the appeal against Master Kwan's Order (it will be recalled that it is the element of summary determination that is primarily objected to) should be heard by Mrs Justice Le Pichon when she deals with the strike out in the other action. Not only are the 200 shares the subject of Master Kwan's Order part of the 400 shares which are the subject of the Originating Summons in HCMP457/99, but the learned Judge has (I think this is common ground) already on her list two contested winding-ups between the same protagonists and will be generally familiar with the broad factual background. I think, on analysis, Mr Miu's case comes down to wishing to achieve a sensible saving in terms of time and costs, albeit at one stage in his skeleton argument Mr Miu was concerned to press the spectre of inconsistent findings. But I think now he agrees that this potential problem does not necessarily arise in this case because even if Mr Justice Cheung were to hear the appeal from Master Kwan on 21st September, all that would then be before Mr Justice Cheung would be to decide whether or not the matter was susceptible to summary determination, and thus whether Master Kwan's Order should stand. So Mr Miu now puts his case squarely on the basis of a saving in time and costs, although I am not sure that costs necessarily loom large in this case, since the litigants in themselves seems to be providing a benevolent fund for the Hong Kong Bar. But that perhaps is a matter which has nothing to do with me.

18. For his part, Mr Chua says, in his usual persuasive style, that there is really no point in waiting. He points out that the hearing scheduled before Mrs Justice Le Pichon is a further seven weeks down the line after the date now fixed before Cheung J., and that there is no good reason to wait in the circumstances. So far as this is concerned, I am not particularly susceptible to the delay argument, since again it is common ground that the dividends accruing from these shares have been and are being paid into Court, and that the situation with regard to these shares has prevailed since 1991. So it might be said against him, I suppose, that in this regard that he doth protest too much.

19. Mr Chua makes the further point that, as a matter of procedure, no application has been made to consolidate or otherwise obtain an order for HCMP299/99 and HCMP457/99 to be heard together, but I note that reference is made to this eventuality in the affidavits in HCMP299/99 sworn on behalf of the 1st and 2nd Claimants. It is quite clear to me that these matters should be dealt with in tandem, and I see no reason why this should not occur at the stage of the strike out application and of the appeal against Master Kwan with regard to whether or not the issue of prior transfer of the undisputed 200 shares should be heard summarily.

20. All of which has been a long recitation of the background facts to arrive at no particular destination, and I revert to the query made at the outset about whether this whole 'spat' is worth powder and shot. I cannot get excited about the decision I have to make because, in truth, I do not think a great deal turns on it.

21. At the end of the day, however, it will be clear that I am of the view, in the circumstances prevailing, and given the existence of these two Miscellaneous Proceeding actions dealing with these two Originating Summonses dealing with the same block of 400 shares, and particularly in light of the possibility that it may be decided that Master Kwan was wrong in ordering summary determination of the 'prior transfer' issue, that the whole matter should be placed before Mrs Justice Le Pichon. I am sorry so to encumber her List, but it does seem to me, in fairness to the parties, that if the learned Judge refuses the strike out which is being mounted by the 3rd Claimant, the relief sought in that Originating Summons will be further pursued, and that that will involve precisely the same block of shares in Prudential Enterprise Limited are involved as in the present proceedings. So that if the matter of prior transfer is not in fact decided summarily but is sent to trial, it is clear that such trial should involve all the 400 shares in this company.

22. This decision is perhaps not one where there is a clear pointer one way or another. But as I have said I can see no downside whatever to either party in having this matter fixed before the same judge. In terms of delay I do not think another seven weeks is here or there in the context of this case, whilst to the contrary I can see some problems possibly arising if the same judicial mind is not attached to the problem at the same time. As I say, such problems are a possibility only, but this has been sufficient in the circumstances to incline me this way on this appeal.

23. As to costs, I feel like saying 'a plague on both your houses'. But as a matter of courtesy to Counsel, I will now hear anything they have to say on the point.

[Submissions from Counsel]

24. Mr Miu, entirely appropriately in my view, asks for the costs of this appeal to be the costs in the appeal against Master Kwan's Order. Mr Chua agrees with this. I confess that that was the Order I had in mind.

25. Accordingly, my Order on this appeal is as follows :

1. The appeal of the 1st and 2nd Claimants by Notice of Appeal dated 19th April 1999 is allowed.

2. The Order of Registrar Chu is set aside, and the date fixed for the hearing of the appeal, namely 21st September 1999 before Mr Justice Cheung is hereby vacated.

3. The appeal from Master Kwan's decision pursuant to the Notice of Appeal dated 16th March 1999 be listed for hearing before Mrs Justice Le Pichon on 16th November 1999.

4. The costs of and occasioned by this appeal are to be the costs in the appeal against the Order of Master Kwan.

26. I thank Counsel for their assistance.