LEE KWAI TAI (李桂娣) also known as LI KWAI TAI v. CHAN TSUI SHAN (陳翠珊) representing the estate of LEE KWAI TAI (李桂娣) also known as LI KWAI TAI, Deceased

Press Summary (English)

Press Summary (Chinese)

FACV No. 7 of 2019

[2020] HKCFA 4

IN THE COURT OF FINAL APPEAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

FINAL APPEAL NO. 7 OF 2019 (CIVIL)

(ON APPEAL FROM CACV NO. 346 OF 2018 AND CAMP NO. 65 OF 2018)

_________________________

(By order of the Honourable Mr. Justice Cheung, Permanent Judge of

the Court of Final Appeal dated 21^st October 2019)

_________________________

________________________

REASONS FOR JUDGMENT

________________________

Mr Justice Ribeiro PJ:

1.  I agree with the judgment of Mr Justice Fok PJ.

Mr Justice Fok PJ:

Introduction

2.  As will be explained in more detail below, this appeal arises from the exercise of discretion by a judge to permit the appellant to acknowledge service in a probate action out of time and to apply to set aside the judgment he had earlier entered in that action.[1] The Court of Appeal held that the judge had erred in the exercise of his discretion and that it was therefore necessary for that court to exercise the discretion afresh.[2]  In the re-exercise of that discretion, the Court of Appeal refused to permit the late acknowledgment of service by the appellant and therefore set aside the judge’s order.

3.  This appeal raises a short point, namely whether there were grounds for the Court of Appeal to interfere with the exercise of discretion by the Deputy High Court Judge and to exercise that discretion afresh as it did.

4.  At the hearing of the appeal, having heard counsel for the appellant, we dismissed the appeal without calling on counsel for the respondent.  We indicated that we would provide our reasons for dismissing the appeal at a later date.  These are my reasons for doing so.

The limited ambit of the appeal

5.  It is rightly accepted by the parties that there are limited grounds on which an appellate court can interfere with a lower court’s exercise of discretion. Those principles are set out in the decision of the House of Lords in Hadmor Productions Ltd and Others v Hamilton and Another,[3] which have been consistently applied in Hong Kong courts: see, e.g. the decision of this Court in SPH v SA.[4]

6.  The appellant, the intended intervener in the probate action, also accepts that, if the Court of Appeal were entitled to exercise the discretion afresh, there is no ground on which this Court could interfere with the Court of Appeal’s exercise of that discretion to decline to permit the acknowledgment of service out of time.[5]

7.  Therefore, the sole issue on the appeal is whether the Court of Appeal was right to conclude that the judge’s exercise of discretion miscarried.

The interlocutory procedural history of the probate action

8.  By writ dated 12 December 2012, the plaintiff, Li Cheong, commenced a probate action (“the 2012 Action”)[6] in respect of Sang Lee, also known as Li Tin Sang (“the deceased”), who had died in England on 22 February 1985.  The plaintiff asserted that the deceased died leaving no wife, no issue and no surviving parents and that he was the lawful and natural nephew of the deceased and entitled to share in his estate on intestacy.

9.  The defendant to that action (who was respondent to this appeal) was Lee Kwai Tai, also known as Li Kwai Tai (“LKT”), who claimed to be the only issue of the deceased and his only beneficiary.[7] In her Defence and Counterclaim dated 14 January 2013, LKT asserted that she was the sole surviving issue of the deceased and sought the grant of letters of administration in respect of the deceased’s estate.  The plaintiff joined issue with the Defence and Counterclaim in his Reply and Defence to Counterclaim dated 18 March 2013.

10.  On 22 September 2015, the 2012 Action came on for trial but was adjourned by Deputy High Court Judge Yee (“the Deputy Judge”) so that the parties could obtain DNA samples and prepare a report.

11.  Two days after that, on 24 September 2015, Messrs Kelvin Cheung & Co. (“KCC”), acting on behalf of the appellant (“DL”), entered a Caveat in respect of the deceased’s estate.  The Caveat was issued[8] in accordance with Rule 44 of the Non-Contentious Probate Rules (Cap.10A) which enables a party “who wishes to ensure that no grant is sealed without notice to himself”.  The letter enclosing the Caveat, dated 25 September 2015, included the action number of the probate action in the heading, indicating that KCC were aware of the 2012 Action.

12.  On 7 December 2015, LKT issued a Warning to Caveator and, on 18 December 2015, DL issued an Appearance to Warning.  With that Appearance to Warning, DL’s solicitor filed an affirmation stating that DL was resident in Singapore and exhibiting photocopies of a Singapore birth certificate showing her birth in 1946 and her father’s name as “Li Sang” and a registration document of “Lee Sang” issued by the Consulate General of the Republic of China in Singapore in 1948, stating that he was the father of the appellant and also a son, Lee Tung Ngoh.  DL’s solicitor asserted in his affirmation that DL claimed to be the sole beneficiary of the estate of the deceased.

13.  Having been alerted to DL’s interest in the estate, LKT’s solicitors served a notice of the 2012 Action on KCC on 12 January 2016.  Leave to do so had not been obtained, so on 14 January 2016 LKT’s solicitors wrote to KCC to indicate that LKT would first seek leave to serve this notice as required under the Rules of the High Court (“RHC”).

14.  The relevant rule is O.15 r.13A, which, so far as material, provides as follows:

“(1) At any stage in an action to which this rule applies, the Court may, on the application of any party or of its own motion, direct that notice of the action be served on any person who is not a party thereto but who will or may be affected by any judgment given therein.

(2) An application under this rule may be made ex parte and shall be supported by an affidavit stating the grounds of the application.

(3) …

(4) A person may, within 14 days of service on him of a notice under this rule, acknowledge service of the writ or originating summons and shall thereupon become a party to the action, but in default of such acknowledgment … he shall be bound by any judgment given in the action as if he was a party thereto.

(5) …

(6) This rule applies to any action relating to –

(a) the estate of a deceased person; …”.

15.  On 1 February 2016, LKT’s solicitors wrote to the court informing it of DL’s Caveat and, on 22 February 2016, leave was granted to her to file and serve notice of the 2012 Action on DL pursuant to O.15 r.13A.  A Notice of Action in respect of the 2012 Action was duly filed on 18 March 2016 and, on 21 March 2016, LKT’s solicitors served the notice, together with copies of all the pleadings in the action, on KCC.  A receipt chop was affixed by KCC on a copy of the Notice of Action retained by LKT’s solicitors.

16.  Notwithstanding service of the Notice of Action, no acknowledgment of service was filed by DL. As will be seen, this was to have significant consequences for DL when judgment was entered for LKT in the 2012 Action.

The separate proceedings commenced by the appellant

17.  For reasons unexplained, on 26 May 2016, DL commenced another action in respect of the deceased’s estate.  That action was HCAP 10 of 2016 (“the 2016 Action”) in which DL was plaintiff and the defendants were Li Cheong (plaintiff in the 2012 Action) and LKT.  The Statement of Claim in the 2016 Action referred to the 2012 Action as a pending action, denied that LKT was the natural or lawful daughter of the deceased and claimed that DL is the only surviving issue of the deceased.

18.  The Statement of Claim was not verified by a statement of truth from DL and, as Yuen JA noted below, [9] was therefore liable to be struck out under O.41A r.6 of the RHC.[10]  Moreover, the action was wholly redundant, since DL could, and should, have asserted her claim to the deceased’s estate by joining in the 2012 Action, as she had been invited to do.

Trial of the 2012 Action

19.  Be that as it may, the trial of the 2012 Action resumed before the Deputy Judge on 8 June 2016.  The plaintiff, Li Cheong, did not attend.  On 1 June 2016, LKT’s solicitors wrote to the court to inform it of the 2016 Action, enclosing correspondence relevant to that action indicating that, although they had informed DL’s solicitors that they were authorised to accept service, the writ in the 2016 Action had not been served on them.

20.  The Deputy Judge proceeded with the trial of the 2012 Action on 8 June 2016.  In the absence of the plaintiff, the Deputy Judge dismissed his claim and, after hearing the evidence in support of LKT’s counterclaim,[11] declared that the deceased had died intestate and that LKT was “the only surviving issue of the deceased”, and made a grant of letters of administration in favour of LKT (“the Judgment in the 2012 Action”).

21.  In the course of the trial, LKT’s then counsel, Mr Kevin Poon, informed the Deputy Judge of the 2016 Action and of the contents of DL’s claim.  However, when the Deputy Judge suggested that a declaration in the 2012 Action would only be binding on the parties, Mr Poon agreed.  This was, as Yuen JA pointed out in the Court of Appeal,[12] incorrect as a matter of law by reason of O.15 r.13A(4) and DL’s failure to acknowledge service.

Belated application to set aside the Judgment in the 2012 Action

22.  After judgment was entered in the 2012 Action, on 20 October 2016, solicitors for LKT and DL respectively appeared before a master on an interlocutory application in the 2016 Action.  At that time, LKT’s solicitors informed the master about the Judgment in the 2012 Action but this did not prompt DL to take any action in respect of it.

23.  On 1 November 2016, LKT applied to strike out the 2016 Action based on the binding effect of the Judgment in the 2012 Action.  Only then did DL’s solicitors write to the solicitors for LKT asking for a supporting affirmation and for the Judgment in the 2012 Action.  On 17 November 2016, LKT’s solicitor filed an affirmation, stating that Notice of Action in respect of the 2012 Action had been served on KCC.

24.  As Yuen JA observed below, “By now DL’s solicitors KCC were clearly made aware of the Judgment and the Notice of Action in respect of the 2012 Action but again significantly, this evoked no action from DL.”[13]

25.  In the meantime, on 16 November 2016, the plaintiff in the 2012 Action applied to appeal the Judgment in the 2012 Action out of time on the basis that he was not aware of the resumed hearing of the trial on 8 June 2016.  On 11 April 2017, the Court of Appeal (Lam VP and Chow J) dismissed that application, rejecting the plaintiff’s contention.[14]

26.  On 10 April 2017, one day before the hearing of the plaintiff’s application to the Court of Appeal, DL issued a notice of application seeking orders that: (1) DL be granted an extension of time to acknowledge service in the 2012 Action; (2) DL be granted an extension of time to apply to set aside the Judgment in the 2012 Action under O.35 r.2(1) of the RHC;[15] and (3) directions be given in relation to the further conduct of the 2012 Action.

27.  The application was heard before the Deputy Judge on 7 February 2018.  By his Decision dated 5 March 2018, the Deputy Judge acceded to DL’s application for an extension of time to file her acknowledgment of service in the 2012 Action. He also ordered that, upon the filing of the Acknowledgment of Service, the Judgment in the 2012 Action should cease to be binding on her and that the application to set aside that judgment should “be heard together with or after the conclusion of the trial of [the 2016 Action] by the same judge, preferably [before the Deputy Judge]”.[16]

The Deputy Judge’s reasons

28.  The Deputy Judge acknowledged that he had “a difficult decision” to make.[17]  This was an accurate comment since he had to decide between the finality of the Judgment in the 2012 Action and the procedural fairness of permitting DL to put forward her claim to be entitled to claim in respect of the deceased’s estate.[18]

29.  Importantly, the Deputy Judge found that LKT’s solicitors did validly and properly serve Notice of Action in respect of the 2012 Action on DL through KCC.  Thus, he correctly held:

“Regardless of what has happened to the Notice inside the office of KCC, my conclusion that the Notice has been validly served on [DL], coupled with the fact that no acknowledgment of service of the Writ filed herein for whatever reasons, pursuant to Order 15 r.13A(4), means that [DL] shall be bound by the Judgement given in the action as if she was a party thereto. This court has no discretion to remove the binding effect at all.

Thus, it can be seen that the CFI Judgement became binding on [DL] as a matter of law irrespective of whether or not this court was aware of such a binding effect at trial.”[19]

30.  The Deputy Judge rejected any suggestion that LKT had deliberately misled the court into making the declaration on her counterclaim in the 2012 Action to the effect that she is the sole surviving issue of the deceased or had misled the court by failing to disclose the existence of the 2016 Action.[20]

31.  The Deputy Judge was not persuaded that there was an acceptable explanation for the delay even if DL was ignorant of the Notice of Action in respect of the 2012 Action since, even then, she waited until April 2017 to take any step to remedy the situation.[21] He accepted the evidence that LKT would, due to her advanced age and medical condition, be prejudiced if DL were allowed to re-open the issues in the 2012 Action.[22]

32.  Despite these matters, which might have suggested he was going to decline to exercise his discretion in favour of DL, the Deputy Judge stated his reasons for coming to a contrary conclusion as follows:

“However, the overriding concern of this court is that this court expressly indicated that the relevant declaration in the CFI Judgment was not intended to be binding on [DL] and that the documentary evidence presently placed before this court shows that [DL’s] allegation in the New Action that she is the natural daughter of the Deceased is indeed bona fide. Mr Poon cannot argue otherwise. This court is unwilling to disallow a bona fide claim to be pursued and instead insist that [DL] should be bound by the relevant declaration by reason of her default in filing her acknowledgement of service in the absence of her knowledge of the Notice in the first place.”[23]

33.  He therefore held:

“In view of all the circumstances, I believe that the fairest order is that [DL] should be given 7 days from the date of this Decision to file her acknowledgement of service thereby becoming a party to this action. The CFI Judgment should then cease to be binding on her. Her application to set aside the CFI Judgment as against her albeit out of time should be heard together with or after the conclusion of the trial of the New Action by the same judge, preferably this court, to avoid duplication or repetition. Little further delay is caused as far as the present action is concerned. The defendant has to deal with the New Action anyway.”[24]

The Court of Appeal’s judgment

34.  Yuen JA, with whom Lam VP agreed, held that the Deputy Judge’s exercise of discretion in DL’s favour was in error in the following two respects:

“First, the judge’s intention when he made the declaration in the 2012 Action was an irrelevant consideration. The issue of who is bound by a judgment is a matter of law, not of an individual judge’s intention, and as the judge noted, as a matter of law, the Judgment in the 2012 Action was indeed binding on DL. In any event, even if LKT’s counsel had specifically informed the judge at the hearing that Notice of the 2012 Action had been served on DL through her solicitors and no acknowledgment of service had been filed, that should have made no difference to the way in which the judge dealt with the trial. DL was legally represented and it was not the function of the judge to be her legal adviser.

Second, the judge was in error when he said DL’s default lay in failing to file the acknowledgement of service. With respect, that was not her only failure. The judge did not take into account the incorrect approach she had adopted throughout in asserting her claim, as discussed below.”[25]

35.  Her Ladyship held that, since the Deputy Judge had taken into account an irrelevant consideration and had failed to take relevant considerations into account, the exercise of his discretion must be set aside and she proceeded to exercise the discretion afresh, concluding that DL’s application to extend time to file her acknowledgment of service so as to join the 2012 Action and to apply to set aside the Judgment in the 2012 Action must be rejected.[26]

Leave to appeal to this Court

36.  The Court of Appeal dismissed DL’s application for leave to appeal to this Court.[27]  On DL’s renewed application, the Appeal Committee granted her leave to appeal on the “or otherwise” limb of section 22(1)(b) of the Court’s ordinance,[28] on the basis that it was reasonably arguable there were no grounds for the Court of Appeal to set aside the Deputy Judge’s exercise of discretion.[29]

The decision for this Court

37.  As noted above, the sole issue before us is whether the Court of Appeal was justified in concluding that the Deputy Judge’s exercise of discretion was vitiated by error so that it was entitled to exercise the discretion afresh. There was no dispute between the parties as to the applicable principles, nor did DL dispute that, if the Court of Appeal was entitled to exercise the discretion afresh, its exercise of discretion was not susceptible to criticism. 

38.  The first error of the Deputy Judge identified by the Court of Appeal concerned the Deputy Judge’s intention when he made the declaration in the 2012 Action.  The actual effect of the Judgment in the 2012 Action and who was bound by that judgment was a matter of law.  Therefore, and with respect to him, the Deputy Judge’s intention is and was irrelevant and he should not have taken that into account.  In particular, by describing this factor as his “overriding concern”, the Deputy Judge appears to have elevated this to a factor of paramount importance and, in so doing, appears to have erroneously restricted his discretion.  Even if the Deputy Judge was to be understood as saying that, had he been aware of that legal effect of the Judgment in the 2012 Action and not mistaken in law as to its binding effect on LKT, he would not have been minded to enter judgment in the 2012 Action in the first place, or would have entered judgment in some other form that did not preclude LKT from asserting her claim in respect of the deceased’s estate, the fact remains that he did enter that judgment and his subjective intention could not alter its legal effect.[30]

39.  I am also satisfied that the Court of Appeal was entirely correct to hold that the second error identified by Yuen JA as vitiating the Deputy Judge’s exercise of discretion entitled it to exercise the discretion afresh.  I agree with Yuen JA that the Deputy Judge was wrong to hold that DL’s only failure was her default in filing her acknowledgment of service in the absence of her knowledge of the Notice of Action.  DL was not in the position of a party who simply omitted to acknowledge service “in the absence of her knowledge of the Notice of Action in the first place”.

40.  With respect to him, that description by the Deputy Judge fundamentally mischaracterises DL and the true extent of her default and its prejudicial effect on LKT, since:

(1)  DL was represented by solicitors, and, through them, she was well aware of the existence of the 2012 Action since at least 25 September 2015, when her Caveat in respect of the deceased was served on the solicitors for LKT. Notwithstanding such knowledge of the 2012 Action, DL did not seek to join as a party to the action.

(2)  That inactivity is to be seen in the light of the fact that DL was interested in the estate of the deceased and, as shown by her Appearance to Warning, wished to assert that she was the only surviving child of the deceased and sole beneficiary to his estate, a stance wholly contrary to that of LKT in the 2012 Action.

(3)  In January 2016, DL’s solicitors were served with notice of the 2012 Action. Whilst this was not served in accordance with O.15 r.13A, because leave to do so had not yet been obtained, it further provided DL with constructive knowledge, through KCC, of the existence of the proceedings.

(4)  Formal service of the Notice of Action was effected on KCC on 21 March 2016 and, as from that date, time started to run for DL to acknowledge service.  No explanation has been proffered by or on behalf of DL as to why she did not then acknowledge service of the 2012 Action.  All that has been said on her behalf is an explanation accurately described by Yuen JA as “an ill-conceived attempt to avoid the consequences of service of the Notice of Action”.[31]

(5)  Far from taking the correct and obvious course of acknowledging service in the 2012 Action, DL commenced a redundant separate action, the 2016 Action, and filed a Statement of Claim which itself referred to the fact that the 2012 Action was on foot.

(6)  Even after DL’s solicitors were informed by LKT’s solicitors of the Judgment in the 2012 Action, during an appearance in October 2016 before a master in an interlocutory matter in the 2016 Action, DL did not take any action.

(7)  Moreover, even after November 2016, when DL’s solicitors were provided with an affirmation supporting LKT’s strike out application in the 2016 Action and which stated that Notice of the 2012 Action had been served on them, DL took no action for another 5 months.

(8)  All this is to be seen in the light of the Deputy Judge’s recognition that the delay was “inordinate and inexcusable” and that LKT was in poor physical condition.  As the Deputy Judge specifically noted, “She was in a noticeably poor medical condition at trial and this court clearly remembers her difficulties in giving evidence.”[32]

41.  Taking this fuller and more accurate factual background into account, it is obvious that DL’s failure was more than simply a default in filing her acknowledgment of service.  Although the Deputy Judge had set out the background in his Decision, he has, with respect, overlooked it in his characterisation of DL’s default.  The two errors identified by Yuen JA justified the conclusion that the Deputy Judge’s exercise of discretion was vitiated by an error of law so that the Court of Appeal was entitled to interfere and to exercise the discretion afresh.

42.  I am in full agreement with Yuen JA’s analysis of the true nature of DL’s default, namely:

“It is well-established that a judgment in a probate action is by nature in rem. It is thus incumbent on all those who have rival claims (say, as issue of a deceased person) to advance their claims simultaneously, so that the probate court could adjudicate on them in a judgment which would bind all rival claimants once and for all, with the legal consequence that probate of a will or letters of administration of the deceased person’s estate could be granted by the court properly. The rationale of the procedure of giving notice of action under O.15 r.13A RHC is precisely to inform those who may not otherwise know that a probate action is in progress. Thus, even if no notice of action had been served on him, a rival claimant who stands by with knowledge that a probate action is being adjudicated may well find that if he institutes a separate action in respect of the same estate later, that may be struck out as an abuse of the process.

When DL became aware of LC’s and LKT’s pleadings in the 2012 Action, she would have realized that neither side was fighting her case for her. Whichever way the judgment went, she would lose out. That being so, it was incumbent on her to apply immediately to join the 2012 Action as a party even if no Notice of the 2012 Action had been served on her. She failed to do that, and failed to acknowledge service when the Notice of the 2012 Action was served on her, and failed to apply to intervene in the 5 months after becoming aware of the Judgment.

It was argued on DL’s behalf that despite the above, the court should nevertheless exercise its discretion in her favour as she had ‘incontrovertible’ official documents proving that she is a natural daughter of the Deceased. However, it would appear that the exhibited documents are not originals. More importantly, if DL is the Deceased’s daughter, there is no evidence explaining why, in the 30 years after the Deceased’s death, she has not applied for letters of administration to his estate. And more importantly, there is no verification of DL’s claim. DL did not make an affirmation when she filed a caveat in September 2015, she did not sign a statement of truth to verify the Statement of Claim in the 2016 Action, and she has not made any affirmation in the 2017 application to join the 2012 Action as intervener. Her counsel said she resides in Singapore, but with ease of air travel and the availability of courier services, residence overseas cannot provide an excuse for her failure to verify her claim personally in the nearly 3 years since she first asserted it. In any event, however bona fide a person’s claim may be, it does her no good unless she asserts it promptly and in accordance with correct legal procedure.

These failures, together with the prejudice found by the judge to be suffered by LKT, led to the conclusion that the summons of 10 April 2017 should be dismissed with costs.”[33]

43.  I would add, in addition, that there was at least one further error in the Deputy Judge’s exercise of discretion that would have justified interference by an appellate court.  That is the Deputy Judge’s view that “[l]ittle further delay” would be caused to LKT as far as the 2012 Action was concerned if he acceded to DL’s application for an extension of time to acknowledge service.  This view seems to have been based on his belief that there would have to be a trial in the 2016 Action and that LKT would have to deal with this in any event.  This was, with respect, erroneous since the 2016 Action was one which stood to be disposed of summarily as an abuse of process and could be dealt with expeditiously and without any delay.  Hence, contrary to the Deputy Judge’s view, there would be further delay to LKT by reason of an exercise of discretion in favour of DL to permit her to acknowledge service in the 2012 Action out of time and then to apply to set aside the Judgment in the 2012 Action.  Moreover, given LKT’s advanced age and poor physical condition, this additional delay was a matter entitled to some weight.

44.  Be that as it may, the appeal stands to be dismissed in any event.

Conclusion and disposition

45.  These are the reasons that led to my conclusion that the appeal should be dismissed. I would further make an order nisi that the appellant pay the respondent the costs of the appeal, to be taxed if not agreed.

Mr Justice Cheung PJ:

46.  I agree with the judgment of Mr Justice Fok PJ.  I can understand the hesitation that one may have with the reasons given by the Court of Appeal for interfering with the Deputy Judge's exercise of discretion.  To a large extent, it depends on how one reads paragraph 45 of his judgment.  However, with respect, the error that the Deputy Judge made in paragraph 46 of his judgment, as is pointed out in both Mr Justice Fok's judgment and that of Mr Justice Tang NPJ, was such that the Court of Appeal was fully entitled to disturb his exercise of discretion.

Mr Justice Tang NPJ:

Background

47.  This appeal concerns the estate of Sang Lee also known as Li Tin Sang, who died intestate on 22 February 1985.[34]  The Respondent was Lee Kwai Tai (“LKT”)[35], a natural daughter of the deceased.  The Appellant also claims to be a natural daughter of the deceased.  Presumably, whether they were sisters could be easily and inexpensively resolved by examining their DNA.[36]  Unfortunately, as a result of various procedural missteps, the matter has come before us.[37]  In gist, what we have to decide is whether the Court of Appeal[38] was entitled to set aside the Trial Judge’s exercise of discretion which permitted the Appellant to challenge the determination[39] which was made in the Appellant’s absence that the Respondent was the only surviving daughter of the deceased. 

48.  I will deal with the events which led to this appeal as briefly as I can, adopting with gratitude Yuen JA’s narration of these events.

The 2012 Action

49.  In a Probate Action, HCAP 32 of 2012 (the 2012 Action),[40] the Plaintiff, Li Cheong (“LC”), a nephew of the deceased, sought declarations that he was entitled to a grant of Letters of Administration of the estate of the deceased, that the deceased had died intestate and left no issue.  LKT was the Defendant in the 2012 Action.

50.  In the 2012 Action, LKT counterclaimed for:

(a)     a declaration that she is the only surviving issue of the deceased; and

(b)     a grant to her of Letters of Administration of the deceased’s estate.

51.  The 2012 Action came on trial before DHCJ Yee on 22 September 2015.  LKT’s case was that the deceased was a seaman, that she was brought up in Hong Kong by the deceased’s mother and that the deceased had kept up with her throughout his life.  DHCJ Yee adjourned the hearing for DNA samples to be obtained and a report made.

52.  Two days after the hearing, on 24 September 2015, Messrs. Kelvin Cheung & Co. (KCC) entered a Caveat in respect of the deceased’s estate on behalf of Li Soo Tan also known as Lee Soo Tan Doreen (“DL”).  She is the Appellant in this appeal.

53.  On 7 December 2015, LKT’s solicitors filed a Warning to Caveator directed at DL and DL filed a Caveator’s Appearance to warning the next day.  Her solicitors also affirmed that, DL is a Singaporean resident, not then residing in Hong Kong and “will file an affirmation of her own as and when appropriate”, and exhibited photocopies of a Singapore Birth Certificate showing her birth in 1946 and her father’s name as Lee Sang and a registration document of “Lee Sang” issued by the Consulate General of the Republic of China in Singapore in 1948, which  stated he was the father of DL and a son Lee Tung Ngoh[41] and as well as stating that DL claims to be the sole beneficiary of the estate of the deceased.

54.  On 18 March 2016, Notice of the 2012 Action together with all the pleadings were served by hand on KCC after the Judge had given leave to LKT pursuant to O.15 r.13A to file and serve a notice of the 2012 Action.

55.  The consequence of such service is that “(4) A person may, within 14 days of service on him of a notice under this rule, acknowledge service of the writ…and shall thereupon become a party to the action, but in default of such acknowledgement…he shall be bound by any judgment given in the action as if he was a party thereto.” 

The 2016 Action

56.  For unexplained reasons, on 26 May 2016, instead of applying to be joined as a party to the 2012 Action, DL commenced HCAP 10 of 2016 (the 2016 Action).  The Defendants were LC and LKT.  The Statement of Claim referred to the contents of the pleadings in the 2012 Action, denied that LKT was a natural or lawful daughter of the deceased and claimed that DL is the only surviving issue of the deceased.

57.  As Yuen JA noted the Statement of Claim was not verified by a statement of truth from DL, and was thus liable to be struck out under O.41A r.6, RHC.

58.  Be that as it may, the trial of the 2012 Action resumed before DHCJ Yee on 8 June 2016, after notice of the hearing had been served on KCC.  On 1 June 2016, LKT’s solicitors informed the court that on 27 May 2016, 10 days after the notice of trial was issued, they had received a letter from KCC informing them that they had commenced the 2016 Action and that although they had informed KCC they had instructions to accept service, the writ of summons in the 2016 Action had not been served on them.

59.  At the hearing, Counsel for LKT, Mr. Kevin Poon, informed the Judge of the 2016 Action and the contents of DL’s claim therein, but as Yuen JA pointed out “when the judge suggested that a declaration in the 2012 Action would only be binding between the parties ( i.e. LC and LKT), Mr Poon agreed.  That was incorrect as a matter of law …. under O.15r.13A(4) the judgment would be binding on DL as if she was a party.”

60.  DHCJ Yee dismissed LC’s claim in his absence and after hearing the evidence in support of LKT’s case[42], declared that the deceased had died intestate, LKT “is the only surviving issue of the Deceased”[43] and made a grant of letters of administration in LKT’s favour (the 2016 Judgment).

61.  This appeal is concerned with DL’s application to set aside the 2016 Judgment. 

Application to set aside the 2016 Judgment

62.  The 2016 Judgment could be set aside under O.35 r.2, if an application had been made within 7 days after trial, although because she had never acknowledged service within 14 days of service of  the Notice of the 2012 Action, she would also need an extension of time to do so.[44] In both cases, an extension of time could be granted under O.3 r.5.

63.  An application was made in the 2012 Action on DL’s behalf by Notice of Application dated 10 April 2017 for orders that

(1)  DL be allowed to acknowledge service of the Writ of Summons, notwithstanding the expiry of the time permitted under O.15 r.13A(4);

(2)  That DL be allowed to make this application under O.35 r.2(1) (namely, to set aside the Judgment of the 2012 Action), notwithstanding the expiry of the time permitted under O.35 r.2(2);

(3)  The Judgment given in favour of the defendant upon her counterclaim in the 2012 Action be set aside, and that execution thereon be stayed; and

(4)  Directions be given in relation to the further conduct of the action.

64.  The application was heard before DHCJ Yee on 7 February 2018.  In his Decision dated 5 March 2018, the Learned Deputy Judge said

“46. In view of all the circumstances, I believe that the fairest order is that (DL) should be given 7 days from the date of this Decision to file her acknowledgement of service thereby becoming a party to this action. The CFI Judgment should then cease to be binding on her. Her application to set aside the CFI Judgment as against her albeit out of time should be heard together with or after the conclusion of the trial of (the 2016 Action) by the same Judge, preferably this Court, to avoid duplication or repetition. Little further delay is caused as far as the present action is concerned. (LKT) has to deal with the (2016 Action) anyway.”[45]

Court of Appeal

65.  On appeal by LKT, the Court of Appeal reversed the 2018 Order  because in accordance with the principle in Hadmor[46] Yuen JA considered [47] “44… the judge had taken into account an irrelevant consideration and had failed to take relevant considerations into account…”.

66.  The irrelevant consideration was that the Learned Judge had never intended the 2016 Judgment to be binding on DL and the relevant consideration which the Judge had failed to take into account was “the incorrect approach she had adopted throughout in asserting her claim …” and was in error “when he said DL’s default lay in failing to file the acknowledgement of service.”

67.  With respect, I think when DHCJ Yee said he never intended the 2016 Judgment to be binding on DL, he was making the point that had he realized otherwise, he would not have made the Order[48] at all because, there was at least prima facie evidence that LKT was not the only surviving daughter.  If so, that was not irrelevant.

68.  As for failure to take into account relevant considerations, Yuen JA mentioned the inordinate and inexcusable delay on the part of DL and prejudice to LKT.  But earlier, at para.43 of his Judgment, DCHJ Yee described her delay as “inordinate and inexcusable in all the circumstances” and at para.44 his Lordship acknowledged the prejudice to LKT “in light of her advanced age and medical condition …”.

69.  With respect, I do not believe the Learned Judge had overlooked these matters, rather I believe the Judge exercised his discretion in favour of DL because he thought they had been counter-balanced by “45. … the documentary evidence presently placed before this court shows that (DL’s) allegation in the (2016 Action) that she is the natural daughter of the Deceased is indeed bona fide. Mr. Poon (Counsel for LKT) cannot argue otherwise.  This Court is unwilling to disallow a bona fide claim to be pursued and instead insist that (DL) should be bound by the relevant declaration by reason of her default in filing her acknowledgement of service in the absence of her knowledge of the Notice in the first place”.  I can well understand the Judge’s reluctance to allow a bona fide claim to be barred.

70.  However, even if the reasons highlighted by Yuen JA could be faulted, there was at least one important error on which the Court of Appeal could rely.

71.  The Judge said that the 2018 Order would cause little further delay because “46. … (LKT) has to deal with the (2016 Action) anyway.” [49] With respect, the 2016 Action would cause little delay because it could be struck out because of the 2016 Judgment.  The extension of time granted by the Judge would unavoidably cause and had indeed caused substantial further delay, an obviously relevant consideration. 

Disposition

72.  It follows that in my view, the Judge’s exercise of discretion was flawed and the Court of Appeal was entitled to set aside the Judge’s exercise of discretion, and exercise the discretion afresh.  That being the case, I agree the appeal should be dismissed and will make a costs order nisi in favour of the Respondent.  

Mr Justice Spigelman NPJ:

73.  I agree with the judgment of Mr Justice Fok PJ.

Mr Justice Ribeiro PJ:

74.  The Court unanimously dismisses the appeal.