TSANG IU HUNG v. TSANG TAK WAH AND ANOTHER

1988, No.A7599

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

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[The court will refuse to enforce terms of compromise scheduled to an order in the Tomlin form only if it would be unconscionable for the party seeking to enforce the compromise to insist on enforcing it]

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J U D G M E N T

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1. The plaintiff in this action, Tsang Iu Hung, is the father of the 1st defendant, Tsang Tak Wah. I shall refer to them respectively as "the father" and "the elder son". The elder son has a younger brother, Tsang Tak Keung ("the younger son") and two sisters, Tsang Wai Ying and Tsang Wai Ming. All of these were children of the father by his wife Poon Tsui Ling, who died before the action was commenced; after the death of his first wife, the father re-married. The 2nd defendant ("Produn") is a company the shares in which are held by the elder son and the younger son.

2. The father is now 67. After his first wife, the mother of the four children, died in 1985, he made transfers of assets representing a substantial fortune in favour of the elder son, the younger son and Produn; by the statement of claim in this action, the father alleged that he had been induced to enter into these arrangements, or some of them, by fraudulent representations made to him by the elder son. The assets the subject of the action were three flats, Flat B, 18/F, Block 4, Pokfulam Gardens, Hong Kong; Flat B, 13/F., Hong Kong Mansion, Hong Kong; and Flat 20, 4/F., Man Yuen Building, 6 Man Yuen Street, Kowloon; and the benefit of three substantial foreign currency accounts with Wardley Limited. The defendants denied the allegations made.

3. The action was called on before Mr Robert Kotewall QC, sitting as a Deputy Judge of the High Court, on 21st January 1991. No one was present save the solicitors for the defendants. The judge adjourned the case to 10 a.m. the next day, 22nd January 1991. On that day, the father attended at Court (accompanied initially by his second wife); he was not represented. The elder son also attended at Court; the defendants were represented by solicitors and counsel.

4. The defendant's solicitor, Mr S. Ng, made an attendance note at the time from which it appears that he had held a conference with his own clients from 9:15 - 9.45 a.m; that his clients had put forward certain proposals for settlement; that terms of settlement had been agreed with the father; and that a detailed Tomlin order had been prepared and drafted. The attendance note further recorded that counsel for the defendants, Mr Andrew Cheung, asked the judge for an order in terms of the Tomlin order. There followed an exchange which I set out in full from the attendance note :

"AC : Ask for an order in terms of Tomlin order.

J : Terms have been interpreted, do you understand them, do you agree them, any question.

Tsang : Yes, yes, yes, no question.

J : O.I.T.

I have recorded that the Pf understands and agrees to the terms of the Tomlin order. He has no more question. I signify this agreement by signing the document. And I am making an order in terms of the Tomlin order signed by the Pf and Andrew Cheung".

The judge's own note reads as follows :

"Terms interpreted to plaintiff by court interpreter.

He understands and agrees to the terms in the Tomlin order. No more question. And he has signified his agreement by signing the document. OIT of the consent order in the Tomlin form agreed by the P and by Mr Andrew Cheung counsel for the defendant".

5. Under the terms set out in the schedule to the order of 22nd January 1991, the father was obliged to execute a number of instruments to give effect to the terms. But when called on to do so, he defaulted, and the defendants now apply, pursuant to the liberty so to do granted to them by the order of 22nd January 1991, to enforce the said terms.

6. The defendants' application came before me on 18th December 1992; but it was pre-empted by a summons returnable the same date and issued on behalf of the father for an order that the order of 22nd January 1991 be set aside.

7. During the hearing on 18th December 1992, Counsel for the father accepted that the order of 22nd January 1991 could be set aside only in a fresh action commenced for that purpose. However, she expressly disclaimed any intention to do this. Instead, she resisted the defendants' claim to enforce the terms contained in the schedule to the order of 22nd January 1991 on the ground that it would be inequitable in all the circumstances of the case to allow the defendants to enforce the order. I shall deal shortly with the facts on which this contention was founded; so far as the law was concerned I was satisfied that there might be exceptional cases in which the court would take such a course; see, for example, Mullins v. Howell [1879] 11 Ch.763, and Purcell v. F. C. Trigell [1971] 1 QB 358. I said however that I was far from satisfied on the affirmation evidence before me, which disclosed conflicts of fact concerning the circumstances under which the order came to be made, that I could or should attempt to decide the matter without hearing the deponents cross-examined on their affirmations. I rejected the submission of the defendants that on the father's evidence alone it was to be concluded that no case had been shown for the equitable relief sought by him. I said that the father's case for such relief might be (as the defendants submitted) a weak one, open to serious doubt as to its genuineness; but that that was not a matter to be resolved merely by reading the affirmations. I therefore asked each side to offer the usual undertakings to tender its witnesses for cross-examination on their affirmations and I adjourned the matter to a date to be fixed. I retained it to myself.

8. The case came before me again on 20th and 21st May 1993, when I heard evidence from the father; the defendants' solicitor Mr Ng; and the defendants' former counsel, Mr Andrew Cheung.

9. It became painfully apparent, at an early stage of the father's evidence, that he was a confused, angry and bitter man. He clearly feels that he has been swindled by his sons. As to what took place on 22nd January 1991, he told me that he did not feel well on that day; he had a high fever; and did not have a clear mind. He had taken some Chinese medicine the day before. He arrived at Court some time after 9.00 a.m. The elder son and his legal representives were at Court. He said that counsel had told his wife, who had accompanied him to the Court, that the case had nothing to do with her and that she could not come into Court. Anyway, she had to go to work. She left at about 9.45 or 9.50 a.m. He said that an offer of $700,000 was made to him but he that should give some shares to his sons. He asked about the three flats, but got no answer. He told me he could do nothing about it and he had no chance to consult anyone before he signed the original draft Tomlin order. He said that he did not want to sign but that counsel forced him to do so. Counsel told him that if he did not sign he could not leave the Court. He said that the other lawyer present told him that document was only a draft; it did not matter. He told the father to sign. A fair copy was made by counsel who said : "Be quick; we have to go to lunch". The Court interpreter interpreted the document to the father but he did not catch the contents. He was not aware of the legal effect of the documents. He had never previously attended Court and was very frightened. He was anxious to go as soon as possible because he did not feel well. The judge came into Court. He asked the interpreter to interpret the document to him and the interpreter did so. But he was not feeling well and did not understand.

10. He adhered to this story in cross-examination; but, having heard Mr Ng and Mr Cheung give evidence, I am quite unable to accept it. Their evidence (which I do accept) was to the effect that the father appeared to them to know perfectly well what he was doing.

11. I have no doubt that the occasion was a frightening one for the father. And I have no doubt that he did not feel well on the day. But I do not accept that his condition was such that the solicitor and counsel for the defendants should be held to have taken unfair advantage of him, so as to render it inequitable to enforce against him the compromise into which he entered. The case leaves a nasty taste in the mouth; but it comes nowhere near the sort of case in which the Court should be prepared to refuse to enforce the compromise. In my judgment the Court will so act only if it would be unconscionable conduct on the part of the party seeking to enforce the compromise to insist on enforcing it; for example, if an unfair advantage has been taken of one party by the other party (in the sense of domination or victimisation or unfair pressure) leading him into a manifestly disadvantageous transaction. No evidence was led from which I am able to discern whether or not this compromise was manifestly disadvantageous to the father. Such evidence would have to include evidence as to the father's chances of success in the action itself, as well as proper valuation evidence as to the amount at stake.

12. For these reasons I reject the father's contention that it would, in all the circumstances of the case, be inequitable to enforce against him the terms contained in the schedule to the order of 22nd January 1991.

13. The case will now have to be restored to the list for further consideration of the defendants' summons dated 2nd April 1992 seeking to enforce those terms. As to the costs of the hearing before me on 18th December 1992, and 20th and 21st May 1993, I propose to order that the costs of the defendants of the hearing on those dates be taxed and paid by the plaintiff to defendants.