CHAN KING WAN AND OTHERS v. HONEST SCAFFOLD GENERAL CONTRACTOR CO LTD AND ANOTHER

1996, Nos. PI 1267 & 1269

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

PERSONAL INJURY LIST

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J U D G M E N T

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The Appeal

1. The 1st Defendant applied under O.15, r.6 of the Rules of High Court to strike out Yip Siu Yin ("Yip") of the 1st Plaintiffs as a party to the action on the basis that she was not a proper or necessary party. Master Jones granted the order. The 1st Plaintiffs now appeal.

Background

2. Yip together with Leung Hoi Sung and Leung Kit Chuen ("the two deceased") were the shareholders and directors of the 1st Defendant at the time of an industrial accident on 13th December 1993 in which the two deceased were killed. The writ was issued on 22nd November 1996 and Yip resigned as a director on 22nd April 1997. Chan King Wan is the widow of Leung Hoi Sung ("Leung"). She together with Yip are the administratrices of the estate of Leung. The proceedings were conducted on behalf of the 1st Defendant by its insurer AXA Insurance (Hong Kong) Limited.

Yip is a necessary and proper party

3. I must say that the application by the 1st Defendant is a bold one, and in the final analysis, one which is bound to fail.

4. Order 15, r.6 provides that at any stage of the proceedings the Court may order any person who has been improperly or unnecessarily made a party or who has for any reason ceased to be a proper or necessary party to cease to be a party.

5. Yip is not suing in her personal capacity or simply as the next friend or guardian of someone under disability. She is one of the administratrices of the estate of Leung appointed by the Supreme Court (now the High Court) of Hong Kong under its probate jurisdiction. The 1st Plaintiffs bring this action for damages for the death of Leung on behalf of the estate under s.20 (1) of the Law Amendment and Reform (Consolidation) Ordinance and also on behalf of Leung's dependants under the Fatal Accidents Ordinance. The Statement of Claim pleaded that Leung was an employee of the 1st Defendant. The cause of action under the Law Amendment and Reform (Consolidation) Ordinance is vested in the estate. Only the administratrices can represent the estate. Further, under s.5 (1) of the Fatal Accidents Ordinance, an action under that Ordinance "shall be brought by and in the name of the executor or administrator of the deceased."

6. The office of the administratrices consists of two persons, namely Chan and Yip. In an action by administrators, all should be joined as plaintiffs and if one refuses or is unable to do so, he should be added as defendant : Atkin's Court Forms Vol. 30, para. 4.6, Odgers on Civil Court Actions 24th Ed, para. 2.23, (citing Latch v. Latch [1875] LR 10 Ch. App. 464) and also Williams, Mortimer and Sunnucks on Executors, Administrators and Probate, 1993 Ed, pp.880-888. There is no difference in this regard between an administrative action and an ordinary litigation.

7. The present action cannot be carried on by one of the administratrices alone. Yip's office as an administratrix is still valid. There is no application to revoke her office. Until and unless Yip is removed from the office, she has to be one of the Plaintiffs in order for the 1st Plaintiffs' action to be properly carried on.

Wish of the beneficiaries

8. The 1st Defendant argued that it is unnecessary for Yip to become an administratrix because all the beneficiaries under the estate of Leung have by now reached the age of majority. Under s.25 (1) of the Probate and Administration Ordinance, two administrators are only required where there is a minority interest. At the time when the Letters of Administration was granted, Leung had three other children who were minors. When the 1st Defendant's summons was issued, the youngest child was still a minor.

9. Yip may not have the highest priority to take up the office, but if the beneficiaries of the estate of Leung are contented to let Yip carry on the administration, the question of priority simply does not arise. In any event, under s.25 of the Probate and Administration Ordinance, the maximum number of administrators is four. It must be up to the beneficiaries to decide how many personal representatives they need and who they want as their personal representatives.

10. According to the witness statement of Yip, she had known Leung since 1982 and from 1986, she was responsible for the daily administration and accounts of the 1st Defendant whereas Leung carried out the physical work of erecting scaffoldings which the 1st Defendant was engaged in. With this background, and without deciding on this matter, the fact that Yip became an administratrix is not something that is so unnatural that one would necessarily attribute some ulterior motive to her becoming a personal representative. But more importantly, the beneficiaries who are entitled to take up the Letters of Administration are prepared to let her take up the post.

Real complaint of the 1st Defendant

11. The real complaint of the 1st Defendant is that it was not able to take instructions from Yip because para. 11.02 of the Hong Kong Solicitors' Guide to Professional Conduct (Vol 1) prevents its solicitors from contacting Yip except through the Plaintiffs' solicitors, who have effectively refused to assist.

12. The 1st Defendant argued that Yip, as a director, owed a fiduciary duty to the 1st Defendant. The 1st Defendant owed a duty of full disclosure and assistance to the insurer and the only person who can reasonably discharge this duty is Yip. There is a conflict of interest between Yip's role as a director of the 1st Defendant and as a personal representative of the estate of Leung.

13. The 1st Defendant relied on Note 80/3/1 of the Supreme Court Practice where citing In Re Burgess (1884) 25 Ch D 243, it was stated that a co-defendant should not be a next friend of an infant. In Re Burgess is a case where the Court stepped in because of the risk of collusion. In this case the insurer has taken over the defence of the 1st Defendant. There is no question of collusion between the Plaintiffs and the 1st Defendant on the face of the documents I have seen. The insurer relied on her statement given to the loss adjuster in the employees' compensation proceedings.

14. Furthermore, as Yip had ceased to be a director of the 1st Defendant she could not continue to owe any fiduciary duty towards the 1st Defendant. If there is any breach of fiduciary duty that might occur between the time of the accident and the date of her resignation, the only one who could complain is the 1st Defendant and not its insurer. The right of an insurer exercising its right of subrogation only arises on payment, (MacGillivray on Insurance Law, 9th Ed, paras. 22-24) and in connection with claims against third parties to diminish his loss (paras. 22-36), but it cannot be subrogated to rights which have no connection with the subject matter of the insurance (paras. 22-38). Yip does not owe any contractual duty to supply information and render all necessary assistance to the insurer.

15. I have no doubt that the insurer faces practical difficulties without the assistance of Yip because she is the only surviving officer of the 1st Defendant who could give any useful information about the company. But we are not living in a perfect world which would provide a remedy for every problem. The problem is not unique in insurance claims : very often the insured disappeared or is a close friend or is related to the plaintiff. In Pang Wai Chung v. Hoi Tat Rubber Factory [1992] 2 HKC 447, the Court, although recognising the difficulties of the insurer obtaining proof of evidence from the insured who were often opposite parties, refused to intervene on an application by the insurer to join the action in its name. In any event, in this case, Yip is prepared to provide answers to the insurer if written questionnaires are submitted. This is, of course, not a solution that the 1st Defendant would wish.

Conclusion

16. No doubt the Court has a wide discretion to strike out an unnecessary or improper party, it also has a duty to ensure that only necessary and proper parties are before it : Halsbury's Laws of England, 4th Ed, Vol. 23, para. 223 and Note 15/6/5 of the Supreme Court Practice.

17. This is clearly a case where Yip is a necessary and proper party to the proceedings. Accordingly the appeal is allowed and the order of the Master is set aside. The 1st Plaintiffs are to have the costs below and of the appeal in any event.