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

HCMP 1890/2016

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

MISCELLANEOUS PROCEEDINGS NO 1890OF 2016

(ON AN INTENDED APPEAL FROM HCA NO 59 of 2011)

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JUDGMENT

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Hon Lam VP (giving the Judgment of the Court):

1.  On 30 May 2016, B Chu J [“the Judge”] dismissed three summonses in HCA 59 of 2011, of which the following 2 were issued by the Plaintiffs:

(a)   A summons of 13 October 2014 for leave to file a re-amended statement of claim; and

(b)   A summons of 3 August 2014 for consequential directions upon re-amendment and for leave to serve a psychiatric report of 26 December 2013 regarding the 2^nd Plaintiff.

2.  The Plaintiffs wish to appeal against such decisions.  They applied for leave to appeal and leave was refused by the Judge on 18 July 2016.

3.  By a summons of 22 July 2016, the Plaintiffs renewed their application for leave before us.

4.  The Defendant opposed the application and filed 2 affidavits setting out her reasons for such opposition.

5.  Having considered the submissions of the parties set out in their written materials, we do not see any reasonable prospect of success in overturning the Judge’s decision.

6.  At the forefront, it is necessary to consider whether the Plaintiffs can legitimately advance any claims in this action.

7.  The action concerns a power of attorney executed by Chen Pang Ping Eugene, the father of the 1^st Plaintiff and the Defendant on 24 January 2005.  The power of attorney was prepared by a solicitor firm and executed by the father in front of a medical doctor and a solicitor’s clerk.  The Defendant was appointed as his attorney.  In the action, the Plaintiffs challenged the mental capacity of the father and the validity of the power of attorney.

8.  Though there are allegations in the Amended Statement of Claim in respect of the defects in the power of attorney and lack of mental capacity on the part of the father, the allegations in the pleadings fall short of alleging specifically any wrongful conducts on the part of the Defendant (whether by way of tortious acts or undue influence or duress) in procuring the execution of the power of attorney.  Whilst there is an allegation at paragraphs 22 and 23 that the power of attorney was not executed by the father voluntarily, the mere facts that a finger print was put down and the signature differed from the normal signature are not sufficient to support the claim.  Though paragraph 36 alleged that the Defendant did not exercise the powers honestly and in good faith, no particulars were given to support the same.

9.  In the so-called Re-Amended Statement of Claim of 6 October 2014 (which is only a draft as explained by the Judge since no leave had been granted for the re-amendment), though there are allegations of misuse of the power under the power of attorney, there is no specific allegation against the Defendant in wrongful procurement of the execution of the power of attorney.

10.  The father had since passed away in March 2005.

11.  Prior to the execution of the power of attorney, the father had taken out an insurance policy in the sum of US$400,000.00 naming the Plaintiffs and another person to be the beneficiaries.  On about 8 February 2005, acting as attorney of the father, the Defendant withdrew the cash value of the policy by means of a cheque in the sum of US$369,670.00 in favour of the father.  By reason of that withdrawal, the insurer charged a redemption charge, leaving the proceeds of the policy at US$8.70 as payable to the beneficiaries.

12.  The Plaintiffs said the cheque for the withdrawn sum of US$369,670.00 had not been paid into the father’s bank accounts and the Defendant had not accounted for the same.  The Defendant said she had accounted the same to the other siblings (Margaret and Edward) and the money had been held on trust for the estate of the father.

13.  On 24 February 2005, the Defendant as attorney of the father further altered the identities of the beneficiaries under the policy, deleting the 2^nd Plaintiff as a beneficiary, and reducing the 1^st Plaintiff’s interest from 1/3 to 1/4. 

14.  The Plaintiffs are not the personal representatives of the estate of the father.  In CACV 24 of 2015, the appeal arising from the related probate action, HCAP 16/2008, the court granted letters of administration of the estate of the father in favour of a professional administrator who is an independent professional accountant, see Re Estate of Chen Pang Ping Eugene [2016] 2 HKLRD 813. 

15.  Thus, even if the power of attorney is invalid, the proper person to pursue any claims on behalf of the estate is the administrator and the party to whom the Defendant needs to account for her conducts under the power of attorney is the administrator.  This would include the claims in respect of the withdrawal of the cash value.  The Plaintiffs, though named as beneficiaries in the policy, cannot by that fact alone, acquire any proprietary interest in the properties of the father.  Based on the materials placed before us, we are not satisfied that they have any locus to advance claims on behalf of the father or his estate regarding the insurance proceeds.

16.  Whether the Defendant is willing to account to the administrator in respect of acts she did under the power of attorney and whether the administrator found such account satisfactory are matters between the Defendant and the administrator.  As a beneficiary to the estate of the father, the administrator may owe a duty to the 1^st Plaintiff in properly administering the estate.  But such duty does not give the 1^st Plaintiff any legal right to pursue the present action against the Defendant. 

17.  Until the death of the father, as the terms of the policy permitted the father (and his attorney) to make a withdrawal of the cash value from the policy and to alter the names of the beneficiaries, the Plaintiffs did not have any right to object and they could not contend that they had any proprietary interest in the proceeds before then.  The mere fact that they were named as beneficiaries of the policy do not give rise to any trust of the policy: see Houseman’s Law of Life Assurance, 14^th Edn paragraphs 11.6 to 11.8; MacGillivray on Insurance Law, 13^th Edn paragraphs 26-146 to 26-157.  The Plaintiffs’ position is akin to a volunteer in an uncompleted gift. 

18.  The Plaintiffs’ reference to the position under the Estate Duty Ordinance cannot assist them.  First, the Plaintiffs had not been able to pinpoint a particular section in that ordinance to advance their case nor bring to our attention any authority to support the proposition that the proceeds of insurance constitute a separate estate.  Second, in any event, we are not concerned with the position after death since the withdrawal was made during the lifetime of the father pursuant to the terms of the policy.

19.  Viewed in that light, the claims of the Plaintiffs for damages (whether damages in terms of the diminution in the share of the proceeds or consequential loss or the other loss suffered by the 2^nd Plaintiff) in this action seems to be misconceived. 

20.  These are sufficient reasons for rejecting the application for leave. 

21.  In addition, we agree with the Judge that the order of Master Ho did not give the Plaintiffs leave to amend.  We also agree that the administrator is the proper party to pursue claims concerning the affairs of the father conducted by the Defendant pursuant to the power of attorney. 

22.  We are of the view that the intended appeal does not have any reasonable prospect of success and there is no other reason in the interest of justice for leave to be granted.  We therefore refuse leave accordingly.  The summons of 22 July 2016 is dismissed with an order that the Plaintiffs shall pay the Defendant’s costs in the summons, such costs are fixed by us at $1,000.

23.  Since we only have the application for leave before us, we are not concerned with the future progress of the action. 

24.  We are mindful that notwithstanding the Court having drawn attention to the point on locus, neither party placed before us the insurance policy documents and our analysis is based on what appears in the pleadings and the materials put before us.  We would not pre-empt whatever course the Plaintiffs may take in demonstrating from the insurance documentations or matters not apparent from the pleadings that they could for some other reasons have a good cause of action.  Whether they can succeed in doing so would have to be decided by the Court of First Instance. 

25.  Since the parties are not legally represented, it falls on the shoulder of the judge in the Court of First Instance to consider the appropriate course to take in light of our analysis above, bearing in mind the proper use of court’s time.  We would direct that a copy of this judgment be drawn to the attention of the judge presiding over the case in the court below.