LAW SIU YIN ADA v. LO HUNG KWAN

HCAP11/1999

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

PROBATE ACTION NO.11 OF 1999

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J U D G M E N T

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1. This is an appeal against an order by Master Ho striking out the plaintiff's Amended Statement of Claim on the ground that it is frivolous, or vexatious, or otherwise an abuse of the process of the court and dismissing the action with costs against the plaintiff.

Background

2. Lo Yau Yung died intestate in Mainland China in 1936. His widow, Madam Lo Yu Shi, "the Deceased" died intestate in Mainland China in 1946. The couple had one son, Lo Chung Man, who died in Mainland China in 1941. He was legally married to Madam Cheung Shui Bing, and he had a concubine, Madam Wong Luk Mui, who in 1921 and 1922 bore him two children. They are respectively the plaintiff and the defendant in this action.

3. The Lo family had a jewellery business in Canton before the Second World War and they also set up a company in Hong Kong called Wang Yuen Ltd. When the Deceased died, her estate in Hong Kong consisted of 20 shares in that company. The defendant applied for Letters of Administration of the estate. In applying for them, he affirmed that he was "the only natural and lawful grandson and the only next-of-kin surviving" of the Deceased.

4. On 9 October 1947, Letters of Administration No. 915 of 1947 were granted to the defendant by the Supreme Court. The shares were sold in 1971 and the net proceeds of sale were paid to the defendant as sole beneficiary of the estate.

5. The defendant married the daughter of one of the founders of the Hang Seng Bank, and himself became a successful businessman. The plaintiff lived with her fiancé, Mr Law Po Sang, whom, according to her, she never married, until his death in Australia in 1989. According to her, before he died, Mr Law told her something which caused her to suspect that there had been some irregularity relating to the disposal of the Deceased's estate. She herself fell ill, but after her recovery in 1993, she contacted the defendant and came to realize from what he told her that she was entitled to a share in the estate.

6. The defendant accordingly demanded a share in the Hong Kong estate and in other properties owned by the family in Guangdong Province. She originally made these claims in person and the defendant made some payments to her in 1993. Then starting from 23 August 1995, she made further claims through her solicitors, Messrs James Chong & Co., of Perth, Western Australia. Following protracted negotiations, the parties executed a Deed of Settlement ("the Deed") dated 7 February 1996. Pursuant to the terms of the Deed, the defendant paid the plaintiff a total sum in Australian currency, equivalent to HK$8,000,000. Subsequently the plaintiff sought to reassert her claims for a share in the Deceased's estate and instituted the present action in October 1999.

The plaintiff's case

7. The plaintiff's case is that the defendant falsely affirmed that he was the only surviving next-of-kin of the Deceased, and that therefore the Letters of Administration should be revoked and fresh Letters of Administration granted to her. In the alternative, she says that the defendant has failed to administer the estate fully or at all, in that the Deceased died domiciled on the Mainland, which was then the Republic of China; the applicable law of succession is the law of the Republic of China and under that law she is entitled to half of the estate; and she now seeks an order for an account of the assets.

8. With regard to the Deed, it is the plaintiff's case that the defendant, through his solicitors, misrepresented to her and her solicitors that the succession was governed by Chinese law and custom known as "Tsing Law", by virtue of which her entitlement was limited to an unmarried woman's claim for maintenance and dowry. She was accordingly induced by such misrepresentation to execute the Deed and she claims rescission on this ground. Alternatively, she says that both parties executed the Deed on the common mistake as to the applicable law of succession, and she claims rescission on this ground also.

The defendant's case

9. The defendant's case is that the Deceased died domiciled in Hong Kong. She had acquired such domicile as a dependant of her husband Lo Yau Yung, who had himself acquired a domicile of choice in Hong Kong. The applicable law of succession was Chinese law and custom. In applying for the Letters of Administration, he relied on his solicitor, Mr Seen Wan Ts'o, who prepared the affirmation for him and who himself affirmed that, according to Chinese law and custom, the defendant as petitioner was the only person entitled to administer the estate. He believed that, as a matter of law, he was the only next of kin of the Deceased surviving. He also believed that the plaintiff was married to Law Po Sang.

10. As to the Deed, it is the defendant's case that there was no misrepresentation and no mistake; in any event, the plaintiff had or must have taken legal advice and did not rely on any representation made by the defendant. The plaintiff entered into the Deed in full and final settlement of all her claims or potential claims, whether good, arguable or bad, relating to family inheritance. She is bound by the Deed and not entitled to re-open the issues. The defendant also relies on a limitation defence.

The Issue

11. For the purpose of the application for strike-out, the defendant relied on the Deed as barring totally the plaintiff's claim. That was the only issue before the Master and it is the only issue before me. The application was made under Order 18, rule 19(1)(b) and (d), and under the inherent jurisdiction of the court.

12. It is only in plain and obvious cases that recourse should be had to the summary process under this rule; per Lindley MR in Hubbuck v. Wilkinson [1899] 1 QB 86 at 91. "Frivolous or vexatious" means cases which are obviously frivolous or vexatious or obviously unsustainable; per Lindley LJ in A.G. of Duchy of Lancaster v L. & N. W. Railway [1892] 3 Ch. 274 at 277.

13. If the claim is barred by the Deed, then it is obviously unsustainable. The question is therefore whether it is plain and obvious that this is so.

14. It is of course well settled that the maker of a deed is estopped by it unless he can establish non est factum. There is no question of non est factum here.

The Deed

15. After identifying the parties the Deed continues as follows :

"(1) The natural and lawful grandmother of the Parties, namely LO YU SHI (老余氏) died in China.

(2) The natural and lawful grandfather of the Parties, namely LO YAU YUNG (老有容) died in China.

(3) The natural and lawful father of the Parties, namely LO CHUNG MAN (老仲民) died in China.

(4) The lawful widow of the said LO CHUNG MAN, namely CHEUNG SHUI BING (張瑞冰) died in China.

(5) The late LO YU SHI, LO YAU YUNG, LO CHUNG MAN and CHEUNG SHUI BING are hereinafter individually and collectively referred to as 'the Deceased'.

(6) Letters of Administration (Grant No 915 of 1947) zone ('the said Letters of Administration') in respect of the estate of the late LO YU SHI in Hong Kong, namely 20 shares in Wang Yuen Ltd ('the said Estate') were granted to the Brother on 9th October 1947.

(7) By various letters, the Sister has alleged that she is entitled to share in and the Brother is liable to account to her for the following properties of the Deceased ('the Properties') :-

(a) shares in Wang Yuen Limited, the subject matter of the said Estate;

(b) the property namely No 6, Yuk Kwai Tau Hong (玉桂頭巷) in Canton, Kwong Tung, the Republic of China;

(c) the said proceeds in Yu Tung Wo (余同和醬院), a soya sauce manufacturer, in Canton, Kwong Tung, the Republic of China; and

(d) the sale proceeds in the property in Sha Kei Road (沙基路), Canton, Kwong Tung, the Republic of China.

(8) The Brother has denied that he is liable to account to the Sister for the Properties as alleged or at all.

(9) The Parties have agreed to enter into this Deed on the terms and conditions hereinafter appearing.

NOW THIS DEED WITNESSETH AS FOLLOWS: -

In pursuance to the said agreement and for the consideration hereinafter appearing the Parties hereby covenant and agree with each other as follows : -

1. The Brother agrees to pay the Sister of following sums on or before the respective dates hereinafter specified ...

2. The Sister hereby covenants, warrants and undertakes that, in respect of the Properties and the Deceased's other properties (including but not limited to investments of any kind), if any, whether real or personal and wherever situated : -

(a) she has no claim, right or demand in whatever nature against the Brother, his personal representatives and the members of the Brother's family;

(b) she waives all her claim, right or demand, if any, against the Brother, his personal representatives and the members of the Brother's family;

(c) she, her personal representatives or persons claiming under or through her shall not make any claim or demand against the Brother, his personal representatives or the members of the Brother's family.

3. The Sister declares that in entering into this Deed of Settlement and making the covenants, warranties and undertakings in Clause 2 aforesaid she has taken proper legal advice. The Sister further accepts that the Brother is entitled to the said Letters of Administration.

4. The Sister shall keep confidential the terms of this Deed save and except for the purpose of enforcing payment herein.

5. Each of the Parties hereby acknowledges that they have taken separate and independent legal advice on the matters referred to in this Deed and that this Deed has been entered into of their own volition with full knowledge of the facts and consequences thereto and that they believe this Deed to be reasonable under the circumstances.

6. This Deed constitutes the entire agreement between the parties with respect to this subject matter. Neither party has relied on any representation or warranty made by the other parties which is not contained in this Deed.

7. Each party herein shall bear his/her own legal costs for the preparation and execution of this Deed.

8. This Deed shall be binding on the personal representatives of the Parties.

9. All the provisions hereof are severable and distinct from one another and the invalidity, illegality or unenforceability of any provision shall not affect or impair the validity, legality and enforceability of any of the remaining provisions hereof.

10. This Deed shall be governed by and construed in accordance with the Laws of Hong Kong for the time being in force, and each party hereby submits to the non-exclusive jurisdiction of the Courts of Hong Kong as regards any claim or matter arising under this Deed."

16. The effect of the Deed is clear. By Clause 7(a) of the Recital, it covers the plaintiff's alleged entitlement to the Deceased's estate in Hong Kong. By Clause 2 of the Covenants, the plaintiff declares that she has no claim against the defendant; she waives all claims against him; and she undertakes not to make any claims against him. By Clauses 3 and 5 of the Covenants, she declares that she has taken proper legal advice and that she has entered into the Deed of her own volition with full knowledge of the facts and consequences thereto. By Clause 6, she declares that the Deed constitutes the entire agreement between the parties, and that she has not relied on any representation or warranty made by the other party which is not contained in the Deed.

17. It is to be noted that the terms of the Deed were arrived at after considerable correspondence between the parties, through their respective solicitors. The plaintiff started out claiming half of the family property, both in China and in Hong Kong. At one stage she envisaged, according to her solicitors, that the figure of $5,000,000 then on the table would be accepted only in respect of her claim under Chinese law and custom and not necessarily a full and final settlement; but at the end of the day, it was a full and final settlement which both parties had in mind and for which both parties executed the Deed.

18. The parties compromised the plaintiff's claim. In consideration of receiving payments equivalent to $8,000,000, the plaintiff declared that she had no claim against the defendant; waived all claims against him; and undertook not to make any claims against him. Unless the compromise can be impeached, that is the end of the matter; the court will not permit the parties to raise the issues again.

19. The only question is whether the compromise can be impeached on the grounds of misrepresentation or mistake.

20. The question of domicile is a mixed question of law and fact. Prior to the coming into force of the Intestates' Estates Ordinance, Cap.73, in 1971 the legal position was as set out by Scholes J in the case of Wong Pun Ying [1963] HKLR 37 :

"The next question is whether or not the first plaintiff is entitled to dowry, and on that question, in the circumstances of this case, I am satisfied that the matter is governed by the Ta Tsing Lu Li, commonly known as Tsing Law, as it existed in 1843. There are a number of cases in Hong Kong to show that Tsing Law applies in such cases, a few of which I will quote, and although it has been held that grants of Letters of Administration and the machinery of administration are governed according to the principles of English Law, the manner of the distribution of the estate of a person of Chinese race domiciled in Hong Kong dying intestate is governed by Tsing Law. Cases inter alia dealing with these matters are as follows: - Ho Tsz Tsun v. Ho Au Shi, Yeung Siu Chi, Ho Hong Chung, Ho Cheung Shi and Chan Ho Shi ,Ho Cheng Shi v. Ho Sau Lam(2), In the Estate of Chak Chiu Hang, deceased, Chan Shun Cho v. Chak Hok Ping, In the Goods of Chan Toe Shi, deceased and Wong Yu Shi and others v. Wong Ying Kuen.

From these cases, it is clear that in the case of persons of Chinese race domiciled in Hong Kong dying intestate, succession depends on Chinese Law and Custom and the appropriate law is the Tsing Law."

21. If Lo Yu Shi died domiciled in Hong Kong, there would be no question that the defendant was entitled to administer the estate and entitled to succession according to Tsing Law.

22. However, the succession to the moveables of an intestate is governed by the law of his domicile at the time of his death; Dicey & Morris, Conflict of Laws, 13th Edition, Rule 132. So, although the defendant may have been entitled to administer the estate, which consisted entirely of shares in a Hong Kong company, it seems that if the Deceased did indeed die domiciled in the Republic of China, the plaintiff would have been entitled to the share to which the laws of that country then entitled her.

23. No one on either side seems to have thought of the question of domicile before the Deed was executed. There is no mention in the correspondence about domicile and certainly there are no representations about it.

24. The representations complained of are set out in paragraph 23 of the Statement of Claim as follows :

(1) By letter dated 17 October 1995, it was represented that :

"Letters of Administration were granted to our client according to Chinese laws and customs. Our Client was also the only person entitled to the benefit of the estate of Lo Yu Shi."

(2) By letter dated 9 November 1995, it was represented that :

"under customary law a Chinese married woman was not entitled to maintenance and dowry ....

... in the circumstances of the case, our client is the only person entitled to share in the estate of the deceased."

(3) By letter dated 17 November 1995, it was represented that :

"Our client's entitlement to the deceased's estate was under Chinese customary law."

In paragraph 24, the plaintiff avers that the representations were made in order to induce her to :

"(1) believe that intestate succession to the estate of the Deceased was governed by Chinese law and custom (namely 'Ta Tsing Lu Li', commonly known as 'Tsing Law'), by virtue of which the Plaintiff's entitlement was limited to only one of an unmarried woman's claim for maintenance and dowry: and/or

(2) forbear in claiming a share to the said estate to the full extent of her legal entitlement or at all."

25. The plaintiff goes on to aver that she was induced by the representations to execute the Deed, but that the representations were untrue, in that the intestate succession to the estate was governed by the law of the Republic of China. Alternatively, she says that the parties mistakenly believed that the applicable law of the intestate succession was Chinese law and custom. By virtue of this mistake, she believed that the defendant, as sole male descendant, was entitled to the whole of the estate subject to her claim limited to dowry and maintenance.

Misrepresentation

26. I do not see how the plaintiff can succeed on the point of misrepresentation because of the terms of Clause 6 of the Covenants which I have set out above. If the representations complained of were misrepresentations, the contract between the parties could only be rescinded if they induced the plaintiff to enter into it; and by Clause 6, she specifically covenants that she has not relied on any representation made by the other party and not contained in the Deed. She therefore cannot rely on any representation, true or false, by the defendant, as having induced her to enter into this agreement.

Mistake

27. The plaintiff seeks the equitable remedy of rescission on the ground of mutual mistake. In Solle v Butcher [1949] 2 All ER 1107, Denning LJ enunciated the principle as follows, at pages 1118-1119 :

" It is now clear that a contract will be set aside if the mistake of the one party has been induced by a material misrepresentation of the other, even though it was not fraudulent or fundamental, or if one party, knowing that the other is mistaken about the terms of an offer, or the identity of the person by whom it is made, lets him remain under his delusion and conclude a contract on the mistaken terms instead of pointing out the mistake... A contract is also liable in equity to be set aside if the parties were under a common misapprehension either as to facts or as to their relative and respective rights, provided that the misapprehension was fundamental and that the party seeking to set it aside was not himself at fault."

28. In effect, the plaintiff says that her mistake was induced by a material misrepresentation by the defendant, through his solicitors. It seems to me that once again Clause 6 comes into play and she cannot say that her mistake was induced by any representation of the defendant.

29. In any event, I do not see how the plaintiff can seek to rely on common or mutual mistake because, according to her, she was all along in possession of facts which would produce the legal result that the true domicile of the Deceased was the Republic of China.

30. The plaintiff affirmed in her 4th Affirmation that to the best of her knowledge and belief, the Deceased:-

"(1) having been born in China, was at all material times a Chinese national;

(2) apart from the said summer visits and the said brief period during the war when she sought refuge in Hong Kong, lived all of her life in the then Republic of China;

(3) had never expressed, whether by words or conduct or otherwise, any intention to reside permanently in Hong Kong, either before or after the war;

(4) died in, being at the time of her death a resident of, Kwong Tung Province in the then Republic of China; and

(5) upon her death was buried, together with my Grandfather, at 'Cho Hai Leng Shan' in what was then Canton, the Republic of China."

31. If she knew these facts when she made the affirmation, she must have known them all along. The mistake, if there was one, could not have been mutual because the plaintiff knew all along the facts which would negate it. Alternatively, she, or her legal advisors, were at fault in not raising the question of domicile then and she cannot now rely on mistake.

The Misrepresentation Ordinance

32. The question of the applicability of section 4 of the Misrepresentation Ordinance, Cap.284 to Clause 6 was not raised, but for completeness I will touch on it here. Section 4 provides :

"If a contract contains a term which would exclude or restrict -

(a) any liability to which a party to a contract may be subject by reason of any misrepresentation made by him before the contract was made; or

(b) any remedy available to another party to the contract by reason of such a misrepresentation,

that term shall be of no effect except in so far as it satisfies the requirement of reasonableness as stated in section 3(1) of the Control of Exemption Clauses Ordinance (Cap 71); and it is for the person claiming that the term satisfies that requirement to show that it does."

33. Section 3 (1) of the Control of Exemption Clauses Ordinance (Cap 71) provides :

"(1) In relation to a contract term, the requirement of reasonableness for the purposes of this Ordinance and section 4 of the Misrepresentation Ordinance (Cap 284) is satisfied only if the court or arbitrator determines that the term was a fair and reasonable one to be included having regard to the circumstances which were, or ought reasonably to have been, known to or in the contemplation of the parties when the contract was made."

Guidelines for the application of the "reasonableness test" are set out in the Second Schedule. It is not necessary to reproduce them here as they are intended to apply to commercial contracts rather than to contracts such as the present one.

34. The point is that, if these statutory provisions did apply to Clause 6, the plaintiff knew the facts which might have produced the legal result that she was entitled to a half share in the estate, and she had legal advice throughout the negotiations which led to the execution of the Deed. It could not be said that in the circumstances it was not fair and reasonable to include Clause 6.

Conclusion

35. I conclude that the compromise cannot be impeached on the grounds of misrepresentation or mistake. The plaintiff's case is therefore obviously unsustainable. The learned master was right to strike out the Amended Statement of Claim and dismiss the action.

36. The plaintiff's appeal against the order of Master Ho dated 12 September 2000 is dismissed with costs to the defendant, to be taxed if not agreed.