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HCMP 2142/2006
IN THE HIGH COURT OF THE
HONG KONG SPECIAL ADMINISTRATIVE REGION
COURT OF FIRST INSTANCE
MISCELLANEOUS PROCEEDINGS NO. 2142 OF 2006
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BETWEEN
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LIU HON WONG |
Plaintiff |
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and |
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TANG YIN, also known as
TANG SHEUNG YIN (administratrix of the
estate of Liu Hon Yin, deceased)
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1st Defendant |
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LIU CHEE KWAN |
2nd Defendant |
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Before: Hon Fung J in Chambers (open to public)
Date of Hearing: 3 May 2007
Date of Decision: 3 May 2007
Date of Handing down Reasons for Decision: 14 May 2007
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REASONS FOR DECISION
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1. The 1st and 2nd defendants applied by summons dated 6 February 2007 to strike out the Originating Summons and to dismiss the action. In response, the plaintiff has proposed amendments, effectively abandoning the existing claims and to replace them with new ones.
2. At the hearing, I ordered that the relief sought in the Originating Summons be struck out, and granted leave to amend the Originating Summons, ordered the action to proceed as if begun by Writ with directions on filing of pleadings, and ordered the plaintiff to bear the costs of and occasioned by the amendment, and part of the costs of the action (including the summons) up to the date of the order. I now give my reasons.
Background
3. The late Mr. Liu Hon Fan died in 1955. He had 5 sons including Hon-yin and the plaintiff. The 1st defendant is the widow of Hon-yin, and is sued as the administratrix of the estate of Hon-yin; and the 2nd defendant is the son of Hon-yin and the 1st plaintiff.
4. The late Mr. Liu used to own various lots of land in the New Territories. Shortly before his death in 1955, Mr. Liu executed 3 instruments of Conveyance on Sale with stated consideration and registered in the then New Territories District Administration, transferring some of his land to Hon-yin. Such land has devolved to the 2nd defendant and others upon Hon-yin’s death.
5. Mr. Liu did not leave any will and there was no grant of representation for his estate. In 1956, by an instrument of Succession registered in the NT District Administration, the 5 sons became tenants-in-common of Mr. Liu’s other land.
6. Hon-yin used to act as helper in collecting the rents from the land held in tenancy-in-common and distributing the income less expenses to the other “Fongs” or branches of the family. The helper would retain 10% of the income as remuneration (though entitlement is now disputed). Hon-yin died in 1990. The 2nd defendant acted as helper since 1992. Accounts for the income and outgoings were rendered under the name of Liu Hon Fan Tso (廖瀚芬祖), but there is no formal settling of the land on trust and the term Liu Hon Fun Tso is a loose description of the land held under the tenancy-in-common. It is not disputed that the 2nd defendant withheld distribution of the plaintiff’s share of the distribution for 2004, 2005 and 2006 amounting to about $300,000.
7. In answer to the claim for the 2004 to 2006 distribution, the 2nd defendant filed an affirmation on 6 February 2007 and for the first time alleged that the distribution was withheld as set off against a loan of $3.2 million made to the plaintiff. In reply, the plaintiff alleged that he had always understood the $3.2 million was his share of the compensation for resumption of the land subject of the Conveyance on Sale in 1955 which Hon-yin, and after his death, the 2nd defendant were holding as trustees for the 5 sons. The plaintiff alleged suspicious circumstances and lack of consideration in the Conveyance on Sale in 1955. It is common ground that there is a triable issue on these allegations.
8. Mr. Liu was also member of two Tongs: Liu Wan Sing Tong (廖允升堂) and Liu I Mau Tong(廖怡懋堂). Generally speaking, a “Tong” or “Tso” holds land communally for the male descendants of a common ancestor under customary law recognized under the New Territories Ordinance (Cap.97). The land held under these two Tongs are distinct from Mr. Liu’s own land. The 2nd defendant is one of the registered managers of Liu I Mau Tong since 1988, and of Liu Wan Sing Tong since 1992. It is common ground that Mr. Liu’s membership and entitlement to distribution under the two Tongs ceased upon his death (see Tang Yau Yi Tong & anor v. Tang Mau Shan Tso & ors [1995] 2 HKC 245 at 253 C-D).
9. Mr. Liu was also a member of Kau Ngo Tso (九我祖) which held some land in Lok Nga Yeung（落鴉洋）. The original claim did not touch on this, but it featured in the amendments proposed by the plaintiff in response to the striking out summons, where it was alleged that the 2nd defendant had received the late Mr. Liu’s share of proceeds of sale of the land under Kau Ngo Tso.
The plaintiff’s original claim
10. In the Originating Summons, the plaintiff sought the relief that:
(1) the defendants furnish an account as from July 1955 of their administration of the estate of the late Mr. Liu including the assets in Liu Wan Sing Tong, Liu I Mau Tong and Liu Hon Fan Tso;
(2) the defendants pay the plaintiff his share in the estate and/or the two Tongs and the Tso and in particular such amount the defendants have paid the other beneficiaries of the estate and/or the Tongs and Tso but not the plaintiff since 2004.
As part of the claim for an account, plaintiff had alleged, inter alia, unauthorized and extravagant spending on the tombstone of Mr. Liu.
Grounds for striking out
11. The defendants applied to have the Originating summons struck out and the action dismissed on the ground of disclosing no reasonable cause of action; scandalous, frivolous or vexatious; prejudice, embarrassing or delaying fair trial; and abuse of the process of the court.
12. Mr. Chan SC, for the defendants, submitted that the factual bases of the Originating Summons were seriously wrong:
(1) there was no grant of administration of the estate of the late Mr. Liu and neither the 1st or 2nd defendant was or was properly alleged to be the administrators of Mr. Liu’s estate;
(2) the subject land under the so called Liu Hon Fun Tso as to which distribution was claimed was in fact land held under the tenancy-in-common and not part of the estate of Mr. Liu or any Tso as such;
(3) the assets of Liu Wan Sing Tong and Liu I Mau Tong are simply not part of the estate of Mr. Liu.
Mr. Chan submitted that the claim against the estate of Mr. Liu and in respect of the two Tongs are bound to fail.
The plaintiff’s 2nd version claim
13. After the striking out summons was taken out, the plaintiff’s solicitors proposed amendments to the Originating Summons on 24 April 2007:
(1) to abandon the claim against the 1st defendant as administratrix of the estate of Hon-yin;
(2) to add a claim against the 1st defendant personally in receiving income from certain land of Mr. Liu;
(3) to seek a declaration that the 2nd defendant was holding the land subject to the Conveyance on Sale in 1955 on trust as to 1/5 thereof in favour of the plaintiff;
(4) payment of all monies representing the 10% of the income received by the 2nd defendant as helper in collecting the rent;
(5) proper account and payment of 1/5 for the sale proceeds of Lok Nga Yeung under Kau Ngo Tso received by the 2nd defendant;
(6) an account for fund reserved for repair of Mr. Liu’s properties in the 2003 account;
(7) payment of the plaintiff’s share of income in the estate or Tongs and in particular the sum the 2nd defendant has paid the other beneficiaries but not the plaintiff since 2004.
14. The issue as to the repair of tomb stone was withdrawn as it was found out that the spending was done by another brother and not the 2nd defendant.
15. Mr. Chan submitted that items (2) to (5) above are fresh claims.
16. Mr. Chan also raised in his skeleton argument served before the hearing that the issue of whether the sale from Mr. Liu to Hon-yin was not genuine and Hon-yin remained a trustee for Mr. Liu’s sold land should be a lis between the estate of Mr. Liu and the estate of Hon-yin and not between the plaintiff and the 2nd defendant.
The plaintiff’s 3rd version claim
17. Improving on the 2nd version, Mr. Chain, for the plaintiff, proposed further amendments to the 2nd version claim in that:
(1) the plaintiff abandoned any claim against the Liu Wan Sing Tong and Liu I Mau Tong, and substituting a claim of entitlement to the share of income of the land held under tenancy-in-common as well as the land subject of the Conveyance on Sale in 1955;
(2) reviving the claim against the 1st defendant as administratrix for the estate of Hon-yin for a declaration that Hon-yin and the 2nd defendant held the land subject of the Conveyance on Sale in 1955 on trust as to 1/5 for the plaintiff.
Striking out
18. Mr. Chan did not object to the latest version of amendments, and fairly conceded that there might be triable issues as to distribution and trust. Mr. Chain accepted that the plaintiff is liable for the costs of and occasioned by the amendment.
19. I ordered that the existing relief in the Originating Summons be struck out, and allowed the amendments in line with the 3rd version claim, and directed that the action proceed as if begun by writ with pleadings. The parties disagreed on the costs of the striking out summons and the action pro tanto.
Costs
20. Mr. Chan submitted that the claim as originally formulated was embarrassing as it was founded on wholly erroneous bases, and is liable to be struck out. Even if the court had allowed the amendments, the defendants should be entitled to costs as if the striking out had succeded, as the amendments had put in entirely fresh claims and/or causes of action. As a concession, Mr. Chan proposed that in relation to the 2nd defendant’s costs, he should be entitled to 1/3 of the costs of the action up to the date of the order (excluding the summons) and ½ of the costs of the summons (including the hearing) in any event, to be taxed if not agreed, and the respective 2/3 and ½ balance be the 2nd defendant’s costs in the cause. As to the 1st defendant’s costs, she should be entitled to the costs of the action (including the summons and hearing) up to the date of the order, as the 3rd version amendments reviving the claim against the estate of Hon-yin only surfaced in Mr. Chain’s skeleton argument served in the afternoon before the hearing, and it was simply too late.
21. Mr. Chain resisted the costs of the action and the summons. He submitted that the defendants applied to strike out the entire action and had failed, and the amendments were allowed. It must have been clear to the defendants by March 2007 that the battle line was drawn as to the withheld 2004 to 2006 distribution and $3.2 million loan. The original pleadings might have been inapt but there were triable issues. Generally speaking, it is implicit in an amendment that the existing pleadings are wrong. It is not the normal course to order the amending party to pay the costs of the action pro tanto upon leave to amend being granted.
22. Mr. Chain referred to Joyce v. Sengupta & anor [1993] 1 WLR 337. There, the plaintiff was the lady’s maid to HRH the Princess Royal. The 1st defendant wrote an article in the newspaper published by the 2nd defendant that the plaintiff was dismissed on account of theft from the employer. The article was grossly defamatory. The plaintiff did not have means to pursue her claim but legal aid was not available for defamation proceedings. Legal aid was granted and the claim of malicious falsehood was filed. The defendants applied to strike out the action as an abuse of the process of the court, and the Deputy Judge held that the plaintiff had improperly pleaded a case of defamation as one of malicious falsehood. The plaintiff appealed, and sought an opportunity to amend her statement of claim. The English Court of Appeal allowed the appeal. Mr. Chain referred to the notes at the end of the report stating “Appeal allowed with costs on appeal and below.”
23. Mr. Chain submitted that the plaintiff in Joyce v. Sengupta was successful in resisting the striking out of the action, and was given leave to amend, and she was also allowed the costs before the judge who should have allowed the amendment.
24. With respect, I cannot see how Joyce v. Sengupta can assist the plaintiff here, especially when the report did not refer to any argument on cost. Costs are in the discretion of the court and must be determined in the circumstances of each case. In Joyce v. Sengupta, the plaintiff succeeded on appeal against the striking out, and quite naturally was entitled to the costs on appeal and below. Further, the English Court of Appeal went through the ingredients of defamation and malicious falsehood, and found that the statement of claim did disclose the essentials of a cause of action for malicious falsehood, although open to criticism and request for further and better particulars.
25. Here, the plaintiff virtually abandoned ship on the relief sought in the Originating Summons, and even on the distribution point which has survived, the bases are wholly different from the original claim. The errors could have been avoided or at least ameliorated by due investigation before action, such as by land search to discover the Succession in 1956, and enquiries with the registered managers of the two Tongs to ascertain their status. Ever since the plaintiff had proposed the amendment, the defendants were not really looking at striking out the action, but rather the embarrassing pleadings and their suitable substitution and costs. I have no doubt that the revision of the versions of amendments have been prompted by the comments and queries by the lawyers of the defendants. Granted that the amendments are allowed, they are occasioned by the striking out, which is successful in respect of the original relief sought. Hence, I regard Mr. Chan’s proposed order on costs for the 2nd defendant as eminently sensible and justified, and I shall accordingly endorse it.
26. As to the 1st defendant, the earlier indicated abandonment of claim against the estate of Hon-yin was only revived at the eleventh hour, and on wholly different basis from the Originating Summons. Hence, the 1st defendant should be entitled to the costs of the action pro tanto.
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(B. Fung)
Judge of the Court of First Instance
High Court |
Mr Benjamin Chain, instructed by Messrs Wong, Hui & Co., for Plaintiff
Mr Chan Chi Hung, S.C., instructed by Messrs Ko & Chow, for both Defendants
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