SAMUEL TAK LEE v. TSANG, CHIU WING FLORENCE

HCA 566/2010

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 566 OF 2010

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BETWEEN

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REASONS FOR RULING

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1.  The original action in these proceedings was an action in fraud by the plaintiff (the father) against the defendant, (the wife). Those proceedings were compromised by correspondence between the parties on 22 February 2011, which compromise was made subject of a formal order of the Court on 23 February 2011. As a result of the compromise the father’s action in fraud against the wife was discontinued.

2.  The course of the proceedings the wife had counterclaimed against the father, as 1st defendant in the counterclaim, and her husband, as 2nd defendant in the counterclaim, (the husband).  That counterclaim was for the tort of conspiracy to injure. As part of the compromise, judgment on liability in the counterclaim in respect of a specific paragraph  in the prayer for relief was entered against the father and the husband, with damages to be assessed, such assessment to be determined at the wife’s claim for ancillary relief.

3.  On 14 March 2011, I heard an application for directions in respect of the future conduct of both the ancillary relief proceedings and the assessment of damages.  On 30 March 2011, while I was in the course of considering those directions, the wife wrote to the court seeking a direction that the assessment of damages be adjourned until the completion of the ancillary relief hearing which was set down in 2011.  That letter was copied to the solicitors for the father and husband.  They elected at that time not to respond to that letter, either to directly to the wife, or to the court.

4.  I accept that it is not a good practice that submissions or an application should be made in such a manner.  But it has, I regret, become a common practice.  The solicitors for both the husband and father were aware that the wife, although a solicitor herself, and who had formed a firm of solicitors to represent herself in these proceedings, was in reality an unrepresented litigant, whose only experience in litigation was these proceedings.  If they were concerned as to the fact of the letter or its contents, they should have recorded their concern at the time.

5.  On 4 April 2011, I handed down written directions in respect to the future conduct of both the ancillary relief proceedings and the assessment of damages in the tort action.  I had this to say about that matter:

“22. It will be noted that none of the directions relate to the position of the father. I accept the submissions of Mr Whitehead that the father remains properly a party to the proceedings, first, because he is subject to an injunction in (the ancillary relief) proceedings in relation to his rights under the framework agreement, and second, because there is the outstanding issue of damages claimed by the wife against the father in the counterclaim in which she has succeeded, in the fraud action. These issues do not presently require directions but if any directions are required at any stage prior to the trial of the ancillary relief proceedings they may be sought under the leave that will be reserved to apply.

23. For the avoidance of doubt, there will be an order that all issues relating to the damages sought by the wife from the father in the counterclaim in the fraud action are adjourned sine die, pending further orders, which may be sought by either party on 7 days notice.”

6.  The directions that were subsequently given were confined to steps required to be taken in the ancillary relief proceedings, to put those proceedings in order for trial in October 2011.  It was my clear understanding at that time that the effect of the paragraphs set out above was that the trial of the assessment of damages would take place subsequently to, and separately from, the trial of ancillary relief issues.  Unfortunately, when the wife sealed the order reflecting the written directions of 4 April 2007, orders to that effect were not included.

7.  I held a directions hearing in respect of the ancillary relief proceedings on 2 September 2011, at which time the father sought directions that the wife should file a schedule of damages in the tort action within 7 days.  I made an order to that effect.

8.  At a further directions hearing on 7 October 2011 the issue came before me again. The position adopted by the father and husband was, first, that the hearing of the assessment of damages at the same time as hearing of the ancillary relief proceedings was part of the compromise in February 2011. Second, it was argued that any damages the wife might receive constituted a resource which was required to be taken into account in the sharing assessment in ancillary relief.  Reliance was placed upon George v George [2004] 1 FLR 421. 

9.  Following argument I ruled that the assessment of damages should be resolved at the hearing of the ancillary relief, but recognised that the wife might apply to adjourn that assessment.

10.  On 6 October 2011, a summons was filed by the wife seeking leave to amend the counterclaim and to adjourn the assessment of damages.

11.  I was satisfied that the terms of the compromise were such that it was not open to the wife to amend the provisions of the counterclaim, because the compromise, in terms, involved the father and the husband conceding to judgment in respect of specific paragraphs of the counterclaim, and a specific prayer for relief in that counterclaim.  In particular, paragraph 49 of the counterclaim contained parameters as to time.  The father and husband, having conceded to judgment within those parameters, were quite entitled to say that those parameters should not be extended or varied by subsequent amendment.

12.  I heard argument on the question of adjournment, and adjourned the assessment of damages, with reasons to follow.  These are my reasons.

13.  Three arguments were advanced in opposition to the adjournment of the assessment of damages.  They are those set out in paragraph 8 above, together with a further argument that the trial date was a milestone date which, having regard to the provisions of RHC O 25 r 1B, could not be varied, absent exceptional circumstances, which it was said did not exist.

14.  While it is right that reference was made in the exchange of correspondence leading to the compromise to the fact that the assessment of damages would take place at the trial of the ancillary relief proceedings, and that fact was enshrined in the order that was subsequently sealed, I am satisfied that trial at the same time as the ancillary relief proceedings was not an immutable part of the compromise, upon which the compromise might depend.  That that is so is clear from the fact that neither the father nor the husband found it necessary to respond to the wife’s letter of 30 March 2011, which, in plain terms, sought the adjournment of the assessment of damages until the completion of the ancillary relief hearing in October 2011.  The wife’s solicitors had said:

“Accordingly, with a view to avoiding unnecessary expense, Ms Tsang requests his Lordship to direct that the assessment of damages pursuant to the above Order be adjourned until the completion of the ancillary relief hearing in October 2011 by which time the Court will have a much clearer picture as to the extent to which an assessment of damages would require further evidence and can give the appropriate directions.”

15.  In George there was an issue as to whether or not the husband owed a substantial debt to a third-party.  If that debt was owed, the pool of assets available for distribution between the husband and wife would have been substantially reduced.  In such circumstances it is sensible that the existence or otherwise of a debt should be determined prior to the assessment of ancillary relief.  Equally, if a debt is arguably owed to one or other of the parties to the marriage, it would be sensible to determine that issue, as the existence of debt has the potential to increase the pool of assets that is available.

16.  The situation here is quite different.  In the present case a sum of damages, to be assessed, is owed to the wife by her husband and his father, from tortious conduct on their part directly relating to, and arising directly from, the husband’s the conduct of the ancillary relief proceedings.  It cannot be right that that sum, what ever it might be, should be considered a resource available to wife that might reduce any provision that the husband might otherwise have to make for her in ancillary relief. The effect of such an argument is that the wife would effectively receive no damages at all from the husband.

17.  In so far as the assessment of damages against the father is concerned, the question of ancillary relief provision for wife is irrelevant, except to the extent that the amount of the provision of ancillary relief will be a fundamental factor in the assessment of damages against both the husband and the father.  If, as a result of the tort committed by the husband and the father against wife, the pool of assets available to meet her ancillary relief claim is reduced, and she should receive less that she might otherwise receive, there is a basis on which to measure the damages.

18.  On the other hand, as the wife properly concedes, if there is no difference in the provision that would be made for her, then the damages are likely to be nominal, there being no claim for either punitive or exemplary damages.

19.  In those circumstances, it would unnecessarily complicate the trial of the ancillary relief to consider the assessment of damages at the same time.

20.  It is right that a trial date is a milestone date, and that by O 25 r 1B(3), the court shall not grant an application by a party to vary a milestone date unless there are exceptional circumstances justifying the variation.

21.  This is an exceptional case, with extraordinary circumstances, and I am satisfied that the circumstances set out in paragraphs 16-18 are exceptional circumstances which justify the variation of a milestone date.

22.  In any event, the requirement for exceptional circumstances does not exist under O 25 r 1B(1), which entitles the court, of its own motion, to very any timetable fixed by it under O 25 r 1A.  Mr. Todd correctly acknowledged that that power would include the power to adjourn a trial date.

23.  As I have said, this is an exceptional case with extraordinary circumstances.  In particular, it is entirely possible that the award of ancillary relief to the wife will lead to circumstances in which all parties will recognise that the damages to be awarded are likely to be nominal damages only.  Further, even without the amendment sought by the wife, additional valuation evidence would be required to be presented by the wife, as it is the wife’s case in the ancillary relief that she is entitled to 55% of the husband’s available assets.  Such a case would require additional valuation evidence to establish a difference in value between the time of the ancillary award and the time parameters as pleaded in the counterclaim.  Such valuation evidence would add significantly to the length of trial and the cost involved.

24.  Mr. Pointer and Mr. Todd may rightly say that, in this respect, the wife should have put her house in order much earlier.  But having regard to the procedural history of the matter, I am satisfied that the criticism is not such to justify forcing the wife to trial on the assessment of damages at the present time.

25.  For these reasons, I adjourned the trial of the assessment of damages.

26.  The wife failed in the application to amend the pleadings, but succeeded in obtaining the adjournment.  There will be an order nisi that there be no order for costs on the wife’s summons dated 6 October 2011.