YIP WAI FAN (MINOR), BY HER MOTHER AND NEXT FRIEND HE XIANNA v. YIP TSZ BUN AND YIP WAI KEI, THE PERSONAL REPRESENTATIVES OF THE ESTATE OF YIP YAN CHOI, DECEASED

DCCJ 301/2015

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 301 OF 2015

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JUDGMENT

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Introduction

1.  The plaintiff applies by summons dated 13 May 2015 for summary judgment (the “O 14 Application”) against the defendants.

2.  The defendants apply by summons dated 11 May 2015 for security for costs from the plaintiff (the “Security Application”). 

Factual background

3.  The plaintiff is the Deceased’s daughter.  She is currently 15 years old.

4.  The Deceased was the ‘Insured Member’ of a ‘Group Life Insurance Policy’, Policy No.GL-88000268 (the “Policy”, issued on 12 November 2007 by Assicurazioni Generali SpA (“Generali”).  The policyholder was Cheung Kong (Holdings) Limited and other subsidiaries (“Cheung Kong”). 

5.  The Deceased nominated the plaintiff as a beneficiary of 20% of the Deceased’s entitlement under the Policy in the event of his death.

6.  The Deceased died on 11 November 2009.  Letters of Administration were granted to the defendants on 14 June 2010.

7.  On 24 July 2010, the defendants received HK$1,831,680.00 (the “Insurance Money”) from Generali, and signed Generali’s Dischagre form.  The Discharge stated:-

“Received from [Generali] the sum of [HK$1,831,680.00] being in full of all claims on Policy No.: GL-88000268 with Policyholder: Cheung Kong (Holdings) Limited on the life of Mr. Yip Yan Choi (the Deceased) which said the full benefits had been paid out and no further claim should arise from any party against [Generali].”

8.  The plaintiff’s 20% entitlement of the HK$1,831,680.00 amounted to HK$366,336.00.  The defendants had made various payments on behalf of the Deceased’s estate and sought to deduct a sum of HK$122,375.80 from the Insurance Money payable to the plaintiff as her contribution towards those payments.

9.  On or around 23 February 2013, the plaintiff received HK$250,000 from the defendants, which included HK$243,960.20, representing part of the plaintiff’s entitlement from the Policy and HK$6,039.80, being the plaintiff’s share of the Deceased’s MPF.

10.  The remaining amount of HK$122,375.80 is the subject of the plaintiff’s claim.  As regards interests, Mr Lam for the plaintiff indicated that the plaintiff was content with interest at judgment rate from the date of judgment until payment.

Relevant legal principles for O.14

11.  Unless the defendants satisfy the court that there is an issue or question in dispute which ought to be tried or that there ought for some other reason to be a trial of the plaintiff’s claim, the court may give judgment for the plaintiff: RDC O 14, r 3.

12.  The relevant principles are summarised eg in Polykote Coatings Manufacturing Co Ltd v Grace Rehabilitation Centre Ltd (HCA 1477/2013, 24 August 2015), §§12-20 per To J.

(1) The underlying policy of the summary procedure is to prevent a defendant from delaying the plaintiff from obtaining judgment in a case in which the defendant clearly has no defence to the plaintiff’s claim.

(2) The plaintiff has to show that his case comes within the Order by affidavit verifying the facts on which the claim or the part of the claim to which the application relates is based and stating that in the deponent’s belief there is no defence to that claim or part of it or no defence except as to the amount of any damages claimed.  Once the hurdle is passed, the burden, as it were, is shifted to the defendant to satisfy the court why judgment should not be given against him.

(3) The defendant may show cause against the plaintiff’s application by raising technical objections, for example, that the case is not within the Order or that the preliminary requirements are not satisfied.  He may also show cause on the merits, for example, that he has a good defence to the claim, that a difficult point of law is involved, or a dispute as to the facts which ought to be tried, or a real dispute as to the amount due which requires the taking of an account to determine, or any other circumstances showing reasonable grounds of a bona fide defence.

(4) Order 14 is for clear cases, i.e. cases in which there is no serious material factual dispute and, if there is a legal issue, then no more than a crisp legal question as well decided summarily as otherwise.  The procedure is entirely inappropriate where the plaintiff’s entitlement to recover any sum is the subject of serious dispute whether of law or fact

(5) Unless it is obvious that the defence put forward by the defendant is frivolous and practically moonshine, summary judgment ought not to be applied. 

13.  Where the court is satisfied that there are no issues of fact between the parties, it would be pointless to give leave to defend on the basis that there is triable issue of law, and this is so even if the issue of law is  complex and highly arguable, but it is otherwise if the issue of law is not decisive of all the issues between the parties or if the issue is of such character as would not justify its being determined as a preliminary issue or if the answer to the question of law is in any way dependent on undecided issues of fact: Hong Kong Civil Procedure (2015), §14/4/12, citing R G Carter Ltd v Clarke [1990] 1 WLR 578, 584F per Lord Donaldson MR. 

Whether the Insurance Money was held on Trust

14.  There are no issues of fact arising.  The only issue is whether the Insurance Money was held by the defendants on trust for them to pay 20% of the money to the plaintiff.

15.  If the Insurance Money was held on trust, it would not form part of the Deceased’s estate: Williams, Mortimer and Sunnucks on Executors, Administrators and Probate (20^th ed, 2013), §49-03; section 61 of the Probate and Administration Ordinance (Cap 10) (“PAO”).  Instead, the defendants would be obliged to pay the entire sum of the plaintiff’s entitlement to the plaintiff.

16.  The plaintiff’s case is that the Insurance Money was held on trust by virtue of section 13 of the MPSO.

Section 13 of the Married Persons Status Ordinance (Cap 182)

17.  Section 13 of the MPSO provides:-

“(1) This section applies to a policy of assurance or endowment expressed to be for the benefit of, or by its express terms purporting to confer a benefit upon, the wife, husband or child of the insured.

(2) The policy shall create a trust in favour of the object therein named.

(3) The moneys payable under the policy shall not, so long as any part of the trust remains unperformed, form part of the estate of the insured or be subject to his or her debts.

(4) If it is proved that the policy was effected and the premiums paid with intent to defraud the creditors of the insured, they shall be entitled to receive, out of the moneys payable under the policy, a sum equal to the premiums so paid.

(5) The insured may by the policy, or by any memorandum under his or her hand, appoint a trustee or trustees of the moneys payable under the policy, and from time to time appoint a new trustee or new trustees thereof, and may make provision for the appointment of a new trustee or new trustees thereof, and for the investment of the moneys payable under any such policy.

(6) In default of any such appointment of a trustee, such policy, immediately on its being effected, shall vest in the insured and his or her legal personal representatives, in trust for the purposes aforesaid.”     

18.  The relevant terms of the Policy are as follows:-

(1) Part C Section 1:-

“Immediately upon proof of death of an Insured Member the Amount of Insurance determined in accordance with the Policy Schedule shall be payable by the Company in the manner herein provided.” (emphasis added)

(2) Part C Section 3:-

“(a) All benefits under this Policy shall be made payable to the order of the Insured Member or his designated beneficiary or beneficiaries for disbursement in accordance with the terms of the Policy provided always that the Company may, at the written request of the Policyholder for reasons acceptable to the Company, pay the benefits to the order of the Policyholder.” (emphais added)

(3) Part C Section 4:-

“The Insured Member may designate in writing a beneficiary or beneficiaries to whom the benefits under this Policy shall be payable in the event of death, such designation shall be filed to the office of the Company. If at the death of the Insured Member there is no designated beneficiary or beneficiaries predeceased such Insured Member, or in any doubts, the Company may pay the benefits to the estate of the Insured Member and or reserve the right to pay to the Policy Holder.” (emphasis added)

19.  The Policy also includes:-

(1) A ‘Total Permanent Disability Addendum’, under which an Insured Member who becomes Totally and Permanently Disabled may be paid the amount of insurance; and

(2) An ‘Emergency Assistance Program’ which provides the Insured Member with various services if the Member becomes ill or suffers an accident overseas.

20.  There is no dispute that in the Deceased’s Application for Membership, he nominated the plaintiff as a 20% beneficiary of the Deceased’s entitlement under the Policy in the event of his death.

21.  The defendant contends that the Policy does not fall within section 13 of the MPSO for the following reasons:-

(1) the Policy was not effected by the Deceased; it was a Group Life Insurance Policy effected by Cheung Kong, the deceased’s employer for the benefit of its employees;

(2) the Policy was not a pure life insurance nor a life insurance with saving component; it was a Policy covering 3 aspects: (1) Term Life; (2) Total and Permanent Disability; (3) Unlimited Emergency Assistance.    

(3) the Policy does not meet the criteria:-

(a) The Policy expressed to be for the benefit of the wife, husband or child of the insured; or

(b) The Policy by its express terms purporting to confer a benefit upon the wife, husband or child of the insured.

22.  There is no dispute that section 13 of the MPSO is derived from section 11 of the Married Women’s Property Act of 1882 but the wordings are slightly different.  In section 13 of the MPSO, the phrase “effected by any man on his own life” is missing.  The defendants contend that notwithstanding that the court should still construe section 13 to mean that the Policy has to be effected by the Deceased in the present case and since the Policy was effected by Cheung Kong the Policy does not fall within section 13.

23.  Miss Po relied on the Hong Kong Hansard materials dated 17 May 1906 and 26 May 1971 respectively, and, in particular, the statement made by the Attorney General at the time: In May 1906, the Attorney General moved the first reading of the bill entitled “An Ordinance to amend the law relating to the property of married woman” and stated that the object of which was to accord to married women in the Colony the like protection with regard to their property as is enjoyed by married woman in England.  Miss Po went on to argue that there should not be any difference between s.13 of the MPSO and s.11 of the 1882 Act.

24.  The use of Hansard as an aid to construction is subject to a number of requirements set out in Pepper v Hart [1993] AC 593, the statement must be made by the promoter of the bill, it must disclose the mischief aimed at by the enactment or the legislative intent underlying its words, and above all it must be a clear and unequivocal statement in favour of the interpretation contended for.

25.  It does not appear that there was a clear and unequivocal statement of the legal meaning of section 13 in favour of the interpretation contended for by the defendants. It would not be right to use the Hansard materials as an aid to interpretation in the present circumstances. 

26.  On a proper construction of section 13 of the MPSO, it imposes no such restriction that the Policy has to be effected by the Deceased.  Even though the Policy was effected by Cheung Kong (the Deceased’s employer), the Deceased was the insured and that it was clearly expressed to be for the benefit of the child of the insured.

27.  Similarly, on a proper construction of section 13 of the MPSO, it is not necessary for the Policy to specifically refer to the provisions of the MPSO before it can fall within section 13 of the MPSO.

28.  Miss Po, for the defendants, set out in her Skeleton Argument a number of ‘contingencies which, according to her, negative the creation of a vested interest in favour of the plaintiff relying on Cousins v Sun Life Assurance Society (1933) 1 Ch 126:-

(i) Termination, renewal and/or variation of the Policy by Cheung Kong and Generali;

(ii) Payment of the premium by Cheung Kong;

(iii) Employee of Cheung Kong under the age of 65;

(iv) Nomination and/or change of beneficiary by the Deceased;

(v) The nominated beneficiary surviving the Deceased;

(vi) Payment of a lump sum due to the Deceased suffered from Total and Permanent Disability.

29.  I do not think that Cousins supports the defendants’ contention.

30.  So long as the Policy provides for payment of a sum of money upon the death of the insured, it is a policy of assurance on the insured life.  It is not material that moneys were also payable under the Policy in events other than death: In Re Gladitz [1937] Ch 588; Colinvaux’s Law of Insurance, 10^th ed, 2014 para 18-07.

31.  It is also not material that the benefits provided under the Policy are contingent: Colinvaux’s Law of Insurance 10^th ed, 2014, para 18-017.  In Re Ioakidimis’ Policy Trust [1935], Astbury J. accepted that a policy could be partly within and partly outside s 11 of the 1882 Act according to the event that occurs.  It would create a statutory trust in the event that the contingency occurred (as in the present case).

32.  It is clear that the Policy falls within the terms of section 13:-

(1) The Policy is expressed to be for the benefit of, or by its express terms purporting to confer a benefit upon the child of the insured, namely the plaintiff: Part C of the Policy.

(2) Even though the Policy includes a ‘Total Permanent Disability Addendum’ and ‘Emergency Assistance Program’, the case of In Re Gladitz (above) shows that these do not prevent the Policy from being a policy of assurance.

33.  Accordingly, the Policy creates a trust for the benefit of the plaintiff, specifically, for the purpose of paying 20% of the Insurance Money to the plaintiff. 

34.  I hold that the Policy in question falls within the terms of section 13 of the MPSO and that a statutory trust in favour of the plaintiff has been created.

Security for Costs Application

35.  In view of my decision on the plaintiff’s O 14 Application, it is not necessary to deal with the defendant’s Security Application.  For the avoidance of doubt, since I give final judgment to the plaintiff, I will dismiss the defendants’ Application for security for costs.

Order

(1) There will therefore be a declaration that the defendants hold the Policy Moneys (as defined in the Amended Statement of Claim) on trust to pay 1/5 of the Policy Moneys to the plaintiff.

(2) I order that there be payment by the defendant of HK$122,375,80 to the plaintiff together with interest at judgment rate from date of judgment until payment.

(3) The said sum of HK$122,375.80 shall be paid into court by the defendants within 14 days which shall be paid out to the plaintiff when she attains the age of eighteen with liberty to the plaintiff to apply.

(4) The defendants’ summons for security for costs is dismissed with costs to the plaintiff with certificate for counsel.

(5) I make a costs order nisi that costs of the action and of the defendants’ summons for security for costs, including any costs reserved, be to the plaintiff with certificate for counsel.

(6) The costs order nisi shall be made absolute 14 days from the date of this Judgment.