XCHRX LEE CHAIO SHING v. THE LUK HOI TONG CO. LTD.

HCA1348/2000

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO.1348 OF 1996

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J U D G M E N T

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1. This is an appeal from the order of the master whereby he granted unconditional leave to the defendant to defend the action. The claim is made here by the plaintiff Lee Chaio Shing as administrator of the estate of Lee Sing Hon ("the deceased") against the Luk Hoi Tong Company Limited ("the Company") for the restoration to the Register of some shares, formerly belonging to and registered in the name of the deceased, which was transferred in 1985 to Madam Lee Wong Siu Tsing (李黃少貞潔) ("Madam Lee") and the action by the plaintiff in this action was for the restoration of the plaintiff to the Register and for the payment of the appropriate dividend to the plaintiff.

2. The history of this matter is a little bit complex and I would try to describe it as briefly as possible.

3. The deceased was the owner of certain shares in the Company. He had a kit-fat wife Madam Chan Yeuk Lan (陳若蘭) and a second wife, Madam Chow Fung Yin (周鳳賢). They had an adopted son Lee Hang Wing (李杏榮) and the deceased himself had two brothers. The second brother Lee Do Kwok (李道覺) had two sons, one is called Lee Yat Sun (李一新) and the other is the plaintiff. Madam Lee is the wife of Lee Yat Sun and they have a son by the name of Harvey Lee. All these can be seen in the family tree at page 55 of the Bundle. The cause of the trouble was the question of the entitlement to these shares.

4. The deceased died in 1940 and Madam Chow died in 1960. According to the evidence coming from the defendant, Madam Lee's case is that the share certificates and the chop of the deceased, together with the dividend book, were given to Madam Chow upon the death of the deceased. Then in turn when Madam Chow passed away, Madam Chow had given to Madam Lee the share certificates, the chop of the deceased and the chop of Madam Chow as well as the dividend book. Madam Lee, thereafter, according to her case, was in receipt of the dividends from the Company and in 1985, with the instrument of transfer (at page 41 of the Bundle) which shows the chop of the deceased as the transferor, the chop of Madam Lee as the transferee and the chop of Madam Chan as the witness, the shares that were formerly registered in the name of the deceased were transferred to Madam Lee and thereafter was registered in the name of Madam Lee, and she continued to receive dividends from the Company.

5. In late 1996/1997, things started to happen leading firstly to the plaintiff making enquiries with the Company, and secondly demanding from the Company that he be restored to the Register which was to be corrected. What the plaintiff did was to take out an application and obtain a grant to be the administrator of the estate of the deceased. The application made by the plaintiff was on the basis that he was the only surviving son of the deceased. He said he was the only adopted son since the other adopted son had gone missing, and therefore he was the only one wholly entitled to the estate. On that basis he was given the grant.

6. But that grant was challenged by Harvey Lee, the son of Madam Lee on the basis that it was fraudulently obtained. Appropriate action has been taken out and is now pending in the High Court under Probate Action No.4 of 2000 whereby Harvey Lee sought the revocation of the grant and extensive pleadings had been exchanged. Part of the contention of Harvey Lee in that probate action is that the plaintiff was not the adopted son of the deceased and that the grant was obtained fraudulently. Parallel proceedings is also going on in San Francisco, more or less to the same effect, that is to say for the court's assistance in holding that the plaintiff is not entitled to any of the property of the deceased.

7. The plaintiff is not resident in Hong Kong but in San Francisco. He is 82 years old. Though in his advanced age, the plaintiff is not weakening, he is very aggressive, not only did he sue in Hong Kong against the defendant for restoration of the Register as administrator of the estate, but he wanted summary judgment. In the court below, the master took the view, quite rightly in my view, that unconditional leave to defend should be granted. The plaintiff is not satisfied with that decision and has come to this court and asked for summary judgment to be given.

8. A large number of issues have been canvassed in the course of the argument. I will identify the issues first before I discuss them. The first issue is whether the plaintiff has any right to sue in the circumstances when there was evidence that he was not the adopted son, and when there was current proceedings to revoke the grant. The second issue is whether the beneficial interest in the shares was not in the estate but had gone to Madam Lee, and that therefore the plaintiff, on behalf of the estate, should really have no complaint to make about the loss of the shares to the estate. The third issue is whether the obligations of the defendant was fulfilled upon what was apparently a regular document of a transfer form being put forward with the appropriate chops, and that the Company could not be held liable for not knowing about the death of the deceased. The fourth issue is the need to investigate about the state of affairs from the death of Madam Chow in 1960 until 1996. Finally the last issue is the question of limitation as to whether, in any event, the plaintiff's claim could be said to be time-barred.

9. For the purpose of this judgment, since I have come to the view that the appeal should be dismissed, I would try to limit myself by saying as little about the merits of the case as possible. But I think at least on three basis there should be no summary judgment.

10. The first is the present position when there was the application of pending proceedings to revoke the grant and when it is part of the defendant's defence, adopting Harvey Lee's position, that in fact the plaintiff was not the adopted son, had no legal right to the grant or to inherit the whole of the estate of the deceased, and the grant was fraudulently obtained. It seems to me that, at the least, unconditional leave to defend should be granted to the defendant so that that point can be tried at the same time as the probate action. If it turns out that Harvey Lee and the defendant are correct and the grant is revoked, then the plaintiff plainly has no right to sue, then the action therefore must fail.

11. Secondly, it seems to me that this is a very unusual situation and much investigation need to be done as to what exactly happened between 1960 and 1997. Whether the giving of the three important documents, namely, the share certificate, the appropriate chops and the dividend book to Madam Lee, with the knowledge of the plaintiff, is confirmation that between Madam Lee and the plaintiff, Mr Lee acknowledged the entitlement of Madam Lee to the shares and in fact acted upon that basis, including possibly also knowing about the transfer of shares to Madam Lee and acquiesced in it, or whether the facts are somewhat different because all this would have impact as to the right of the plaintiff to complain about the wrongful transfer of shares out of the deceased name, or out of the estate, to someone else.

12. Thirdly, I think the limitation point will also have some role to play. The limitation point's role is whether the cause of action accrued from the time either of the breach of contract by the defendant or from the time when the breach was known to the plaintiff, or could have been know to the plaintiff, rather than as from the date of the demand of the plaintiff against the defendant for the restoration to the Register. Many cases had been cited to me to suggest that the law seems to be that the limitation runs from the time of demand. I have my considerable doubt as to whether that is the true position and I would have thought that it is at least arguable in law that the position should be otherwise.

13. So for the limitation point and for the grant point, and on the basis of some other reasons for trial, following Miles v. Bull [1969] 1 QB 258 and Talent Wise Limited v. Cheung Shui Ching [1998] 2 HKLRD 744, and upon the basis that possible fraud of the plaintiff should be investigated, I have no doubt that in this case unconditional leave should have been granted.

14. Put another way, I have no doubt that summary judgment should not be granted. This would be wholly wrong in a case such as this where the plaintiff, resident out of Hong Kong, is seeking relief in a summary judgment form without trial, to be restored to the Register and to be paid the dividends. It seems to me that it is wholly wrong for summary judgment to be granted and I think the appeal must be dismissed with costs.