In the estate of PONG CHIN KWAN, deceased v. PONG CHIN KONG (Administrator of the estate of AU YEUNG KEE, deceased)

HCMP 2836/2013

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 2836 OF 2013

____________

____________

_____________

D E C I S I O N

_____________

1.  This is the return day of an ex parte Mareva injunction obtained by the plaintiff on 29 October 2013. There is a summons before me dated 6 November 2013, taken out by the plaintiff for the continuation of that injunction until the determination of the originating summons herein or further order of the court.

2.  The originating summons is dated 24 October 2013 and is issued in the name of the estate of Pong Chin-kwan, deceased, against Pong Chin-kong as administrator of the estate of Au-Yeung Kee, deceased.  Madam Au-Yeung Kee died on 5 October 2010 intestate.  She was survived by her husband, Pong Ping-kuen and three children, Pong Miu-hing, Pong Chin-kwan and the defendant Pong Chin-kong.

3.  Mr Pong Chin-kwan, one of the three children of Madam Au-Yeung, died on 22 February 2011, also intestate.  The defendant is the sole administrator of Madam Au-Yeung’s estate.  The grant of letters of administration was made on 2 December 2011. Miss Pong Shuk-yin is the daughter of Pong Chin-kwan, deceased.  She and her mother, Madam Lui, have applied for letters of administration in respect of the estate of Pong Chin-kwan but have not yet obtained a grant. 

4.  Madam Au-Yeung’s estate consists, inter alia, of a property at Yee Pei Square, Tsuen Wan, Hong Kong.  The defendant, as administrator of the estate, entered into a sale and purchase agreement for the sale of the property dated 22 August 2013.  Completion was fixed on or before 31 October 2013. 

5.  As mentioned earlier, on 24 October 2013, an originating summons was issued in the name of the estate of Pong Chin-kwan.  On 25 October, on an urgent application made to him, Master J Wong granted an order under Order 15 rule 6A for Miss Pong Shuk-yin to be appointed to represent the estate of Pong Chin-kwan.

6.  On 29 October, afternoon, the plaintiff appeared by counsel before a deputy judge and obtained an ex parte Mareva injunction restraining the defendant from removing or disposing of the net proceeds of the sale of the property. 

7.  For my part, I am not sure that the application should have been made ex parte without any notice to the defendant. On the evidence, the plaintiff discovered the existence of the sale and purchase agreement in September 2013.  Her solicitors then wrote two letters dated 30 September 2013 to the defendant’s solicitors, Gilbert Tang & Co, asking for an agreement to stake-hold an amount of approximately HK$2.8 million out of the net proceeds of sale pending the plaintiff’s application for letters of administration of Mr Pong Chin-kwan’s estate.  Gilbert Tang & Co had already replied on 16 October 2013, refusing to stake-hold any sale proceeds on completion.

8.  There were, therefore, more than two weeks before completion in which the plaintiff could have made the relevant application.  Since completion was, in all likelihood, to occur on 31 October, there was no reason, to my mind, why notice, at least short notice, could not be given to the defendant of an application of the nature made.  It seems to me fanciful to suggest that, upon short notice, the defendant could have brought forward the completion date of a sale and purchase of a property which involved an independent third party purchaser to a time before an urgent application could be made by the plaintiff. 

9.  As it is, however, the application was made ex parte contrary, in my view, to the principles enunciated by Rogers VP in Ho Tak Eng v Fame Brilliant Limited [2006] 1 HKLRD 34.  I am not sure that what his Lordship said there has been sufficiently appreciated by practitioners generally and particularly by the plaintiff’s representatives in this case.  There, Rogers VP said, at paragraph 8 onwards: 

“8. …[T]he application before the Deputy District Court Judge, as well as the application in this Court was made ex parte without any notice to the defendant. There was no justification for the application to be made without so much as giving even the shortest notice that the plaintiff’s lawyers would be appearing in front of the Judge. Ex parte applications without notice should only be made where either the delay would cause injustice to the applicant or the defendant would take action which would nullify the effect of the injunction. Apart from anything else, such a procedure is against the principles of natural justice.

9. In view of the importance of this point I would like to quote yet again from the judgments of Hoffmann LJ, as he then was, and Sir Thomas Bingham MR in the case of TRP Ltd v Thorley (unrep., The Times 13 July 1993). They deserve careful consideration by all who may be involved in an ex parte application. The judgments are, regrettably, unreported but the Lexis Transcript records Hoffmann LJ as saying:

‘In my judgment the judge should not have entertained the application ex parte and I venture to repeat what I said in Re First Express Ltd which was reported in [1991] BCC 782 at p.785.

It is a basic principle of justice that an order should not be made against a party without giving him an opportunity to be heard. The only exception is when two conditions are satisfied. First, that giving him such an opportunity appears likely to cause injustice to the applicant, by reason either of the delay involved or the action which it appears likely that the respondent or others would take before the order can be made. Secondly, when the court is satisfied that any damage which the respondent may suffer through having to comply with the order is compensatable under the cross-undertaking or if the risk of uncompensatable loss is clearly outweighed by the risk of injustice to the applicant if the order is not made.

There is, I think, a tendency among applicants to think that a calculation of the balance of advantage and disadvantage in accordance with the second condition is sufficient to justify an ex parte order. In my view, this attitude should be discouraged. One does not reach any balancing of advantage and disadvantage unless the first condition has been satisfied. The principle audi alterem partem does not yield to a mere utilitarian calculation. It can be displaced only by invoking the overriding principle of justice which enables the court to act at once when it appears likely, otherwise injustice will be caused.

The rules require only two clear days’ notice and leave can, if necessary, be obtained for abridgement. Even in cases which are too urgent for formal notice of any kind there is no reason why informal notice of an application should not be given by facsimile or telephone.’

10. Sir Thomas Bingham MR had this to say:

‘So far as the substance of this matter is concerned I agree with the judgments which My Lords have delivered and I agree with the order which they propose. I do, however, wish to endorse and highlight the observations of My Lord, Lord Justice Hoffmann, concerning the procedure which was adopted in this case. Applications for injunctions are governed by O.29 of the Rules of the Supreme Court and in O.29 r.1(2), one finds the following:

(2) Where the applicant is the plaintiff and the case is one of urgency such application may be made ex parte on affidavit but, except as aforesaid, such application must be made by a motion or summons.

That rule is the subject of comment in para.29/1/8 at p.514 in Vol.1 of the current White Book where one finds among other statements, the following:

Though this rule authorises ex parte applications by the plaintiff, such an application for an injunction will not be granted unless it is made promptly, and it must be shown that there are strong grounds to justify its being made ex parte.

Again, ex-parte injunctions are for cases of real urgency where there has been a true impossibility of giving notice of motion.

These statements are unsurprising since it is, on the face of it plainly contrary to the principles of natural justice that any judicial order adversely affecting a party’s interests should be made against him without his being given a reasonable opportunity of being heard. That is the simple overriding rule on which our system of justice depends. The rule is not, however, absolute and unqualified. Derogations are permitted in certain very limited and exceptional circumstances, the most obvious of these so far as the granting of injunctions is concerned being where the situation is one of such extreme urgency that there is literally no time to warn the defendant of what is proposed or where the purpose of the injunction will or may well be frustrated if the defendant is informed of what is proposed or where the defendant simply cannot be found. The exceptional nature of the circumstances must, however, be stressed. They are the exception and not the norm. Even when time does not permit application on full notice it is highly desirable to inform the other party that the application is to be made ex parte so that he can if he wishes attend and make such representations as he wishes.’

11.    I have quoted extensively from these judgments because,  although they contain what is clear and well-established law which has been reiterated in judgments in Hong Kong, it is apparent and confirmed by the submissions made by Counsel that these highly important principles are being disregarded.  An ex parte application is not a convenient alternative to an inter partes application.”

10.  Be that as it may, having made the application ex parte, it is imperative for a party to ensure that he makes full and frank disclosure to the judge hearing the ex parte application.  I regret to say that, in this case, there has been an egregious failure to comply with that obligation.

11.  In the fourth affirmation of the plaintiff, at paragraph 13, she said: “The defendant has been refusing to disclose the accounts of the estate since the death of Madam Au-Yeung and deliberately kept the plaintiff in the dark of the same”.  In paragraph 16(1) of the same affirmation, she said the defendant “kept the plaintiff in the dark all along about the accounts of the estate”. 

12.  In fact, as it has now transpired in the evidence filed by the defendant, there was a set of proceedings in HCMH 84/2012 in which the defendant applied to the court for a declaration of his father, that is Madam Au-Yeung’s husband, Pong Ping-kuen, as a mentally incapacitated person and for an order appointing a committee of estate for Mr Pong.  In those proceedings, the family of the plaintiff herein, that is Madam Lui’s family, were represented by solicitors.  An allegation against the defendant of maladministration of the estate of Madam Au-Yeung was already made by the solicitors for Madam Lui’s family in those proceedings.  In response, the defendant’s solicitors wrote a letter dated 3 January 2013 to explain his position.  More importantly, the defendant filed an affirmation, his fourth affirmation, in those proceedings on 30 January 2013 to counter the allegations made against him.  Exhibited to that affirmation is a set of draft estate accounts.  No complaint regarding that set of accounts had been made until the affirmations of the plaintiff in the present proceedings in October 2013.

13.  None of that, however, was mentioned in any of the four affirmations of the plaintiff filed in these proceedings.  Instead, what the learned deputy judge was faced with was the allegation, which he had to take at face value, that the plaintiff was kept completely in the dark.

14.  At paragraph 16(a) of the plaintiff’s fourth affirmation in these proceedings, she also alleges there is a failure to make distribution of the assets of the estate to the beneficiaries.  That again is a matter that was dealt with by the defendant in his solicitor’s letters and his affirmation in the mental health proceedings.  Irrespective of whether what he said there represented the whole truth, it is plainly material information to which the court’s attention should have been drawn.

15.  At the ex parte application, the plaintiff also alleged that the defendant has, as administrator, failed to pay rates and government rent in respect of the property.  She exhibited two demand notes to her affirmation.  It has since transpired from the defendant’s evidence, which the plaintiff accepts, that one of those demand notes does not in fact relate to the property.  The other demand note relates to a period before any grant of representation was made to the defendant and the rates and rent had in fact been paid on 14 September 2011. 

16.  Furthermore, the result of the mental health proceedings was that an independent solicitor was appointed by the court as committee of estate for Pong Ping-kuen who is, of course, the single largest beneficiary in the estate of Madam Au-Yeung.  The committee has presumably been keeping an eye on the defendant’s administration of the estate of Madam Au-Yeung.  That again was not disclosed by the plaintiff on the ex parte application.

17.  The evidence now is that the committee of estate of Mr Pong is opposed to the continuation of the injunction because he wishes to see an immediate distribution of the estate of Madam Au-Yeung.

18.  Finally, the plaintiff, in her fourth affirmation, at paragraph 16, also relies on what her younger brother is said to have told her about what a relative, Mr Lam Yiu-kee, had told him in turn about what the defendant had told Mr Lam Yiu-kee.  There is now before me an affirmation of Mr Lam Yiu-kee denying what is said in the plaintiff’s affirmation, which is multiple hearsay.

19.  Finally, I should record that the defendant has, through his counsel, Mr Yan, voluntarily offered an undertaking to have his solicitors stake-hold an amount of HK$2,832,316.86 pending the resolution of the main proceedings. 

20.  In these circumstances, I have no hesitation in refusing the summons to continue the injunction.  That summons is therefore dismissed.

(Submissions on costs)

21.  In view of the serious material non-disclosure, I shall order costs forthwith on an indemnity basis against the plaintiff to be taxed if not agreed.