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

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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 (“17.05.17 Summons”) 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 attorney for 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.