XCHRX YUE LING CHI, DORIS v. YU KIN SHIU and Others

1986, No. A2704

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

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JUDGMENT

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The Background

1. These actions have been consolidated. The plaintiff is the daughter of the defendant Madam Yu Pai Yuk (Madam Yu), and is the sister of the other defendants (the sons). Madame Yu is the adminstratrix of the estate of her late husband. The parties, and two other daughters, are entitled to share in the deceased's intestate estate. The plaintiff is unhappy with dealings by the sons with some of the assets of the estate. In the matter before me, the plaintiff is seeking discovery and inspection of certain specified documents. She is also seeking further particulars from Madam Yu.

The Statement of Claim

2. In her consolidated statement of claim, the plaintiff alleges that, before the deceased's death, shares in four private companies owned by the deceased were transferred to the sons without the authority of the deceased and at a substantial undervalue. It is alleged that the sons hold the shares upon trust for the estate. The plaintiff further alleges that, after the deceased's death, KS Yu obtained the release to himself of certain other shares held as security by banks, discharging the overdrafts in order to do so. It is alleged that KS Yu is liable to account to the estate for these shares as an executor de son tort, and has failed to account for some of them, which he sold, and others, which were transferred to him. The plaintiff goes on to allege that Madam Yu has failed to administer the estate properly. The plaintiff claims an order that the sons account to Madam Yu, or to the plaintiff for her share, and other relief.

The Defence by the Sons

3. In their defence, the sons say that the shares in the private companies were transferred with the authority of the deceased. If there was an undervalue, the difference between the market value and the price at which the transfers were made has "been made duly made good . . . to and accepted by" Madam Yu. The sons "paid and/or satisfied the estate by way of set-off". The sons say they cannot recall the precise manner in which the differences were made good, but said they would "disclose the relevant documentation by way of discovery". Regarding the other shares, the sons say that the deceased instructed KS Yu "to sell some of his shares" and to repay the overdrafts. KS Yu sold these shares and bought them at market prices. The invoices regarding these sales, insofar as they are in possession of the sons, would be produced on discovery. Payments in respect of these shares "were duly made to the Deceased". Thereafter, KS Yu redeemed the other shares, and he was authorised by all the beneficiaries to sell "such part of the unsold shares portfolio as he deemed fit" and use the proceeds to meet expenses of the estate. He did this and accounted to Madam Yu, who accepted this. He also accounted to a firm of certified public accountants. These accountants can provide further information. The sons say that the plaintiff is thereby estopped from making claims against KS Yu. As for the shares said to have been transferred to KS Yu, the sons say these were part of the shares sold, and payment has been effected "by a reduction of the liabilities owed by the Deceased to KS Yu in a current account maintained between the two". If any of the sons were liable to account, they say, they have so accounted and this has been accepted by Madam Yu.

Madam Yu's Defence

4. In her defence, Madam Yu says that the shares in the private companies were transferred to the sons as book value and the market value was subsequently paid or made good by them. The book value was assessed by the deceased. KY and KC Yu jointly paid $6,627,862 for the shares transferred to them. KS Yu paid $400,000 by set-off and a further sum of $2,203,300 into the estate account. Some of the shares obtained by KS Yu from the banks belonged to him. The deceased held the shares on trust for him. Some other shares belonged to her. She was the registered holder of these. The proceeds of the sale of these shares were paid into the deceased's account or accounted for by KS Yu.

The Lists of Documents

5. In their list of documents, the sons disclose no documents that go to the root of the settlements with the estate that they say they effected. They do say that they had, but have not now, certain documents in their possession. These are unhelpfully described as "The originals of other documents and papers which have been delivered to the persons intended to receive them" and "The originals of documents which have been lost or mislaid", without any further attempt to identify these documents.

6. Madam Yu has disclosed a long list of documents, but none of the nature sought by the plaintiff.

The Summons against Madam Yu

7. The summons against Madam Yu refers to, amongst other things, "All documents relating to the alleged payments and set off allegedly made by the Defendants in H.C. Action No. A5643 of 1991 . . ." and refers specifically to "any receipts(s) for such payment(s) issued by the Plaintiff". The last word "Plaintiff" is obviously a error for "Defendant." Mr Fung made some attempt to argue that the words "in H.C. Action No. A5643 of 1991" referred to payments and set off alleged in that action, and not as a description of "the Defendants". Bearing in mind that Madam Yu makes allegations of payment and set-off by the sons, it is totally unreasonable to construe the plaintiff's statement as relating to allegations by the sons of payment and set-off, rather than allegations by her. If this were not clear from the summons itself, it is certainly made so by the affirmation filed in support of the summons by Mr Bennett and by his letters in April and May 1995.

8. This is really the only point of substance made by Mr Fung. He does not argue that the documents are irrelevant or not necessary. Indeed, Mr Fung intimates that, but for the "misunderstanding" as to what the plaintiff was seeking, Madam Yu would have complied.

The Summons against the Sons

9. The plaintiff's summons against the sons is for an order that they file and serve a further and better list of documents, verified by affidavit, to include documents described in a schedule. The documents described are such that would be relevant to the allegations made by the sons in their defence. There is no need to describe them in detail. Mr Lam does not suggest that the documents in respect to which discovery is sought from his clients are irrelevant or not necessary, except to the extent that he argues that "a main defence" of the sons is that accounts between them and the estate have been settled, and, by implication, the documents are not necessary for the determination of this issue. Whether or not discovery is necessary in relation to this defence, the fact of the matter is that the sons have not rested on this point, but have said that, not only has the estate accepted that the accounts have been settled, but, in fact, they have made due satisfaction, by way of payment or set-off, to the estate, and, indeed, they promised disclosure of the relevant documents on discovery. On this basis, if not on the basis of the alleged settled account, the plaintiff is entitled to discovery of the relevant documents.

10. Mr Lam also argues, as I understand him, that, because the plaintiff is seeking discovery from Madam Yu, she should not also be entitled to discovery from the sons. I do not accept this. Discovery seeks documents that are, or have been, in the possession or control of the parties. Those documents fitting that description sought from Madam Yu may be quite different from those fitting the description sought from the sons. In any event, I know of no reason why a plaintiff may not seek the same discovery from different defendants who plead much the same defence. A single document may have been in the possession of one defendant, and is now in the possession of another. A plaintiff is entitled to discovery in relation to this document from both defendants.

The Request for Particulars

11. The plaintiff has also issued a summons seeking further particulars from Madam Yu. These seem to me to be perfectly straightforward particulars of the usual kind. Mr Fung's only point here is that the plaintiff is administering disguised interrogatories, or is seeking evidence. I do not agree. The particulars are seeking details of what Madam Yu alleges, not what evidence she has to prove that. I think the particulars should be supplied.

The Result

12. In the result, I am satisfied that the plaintiff has made out her case, and that she is entitled to orders in terms of the three summonses, save that the particulars are to be supplied within 14 days, and as to costs. As to costs, there appears to be no reason why these should not follow the event, and, accordingly, I make an order nisi that the defendants pay the plaintiff's costs in any event. I grant a certificate for counsel.

JK FINDLAY

Judge of the High Court