TAM WING CHIU WAYNE v. TAM WING MING AND ANOTHER

HCA 4822/2001

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 4822 OF 2001

____________

____________

_______________

J U D G M E N T

_______________

1. There are two applications before me. The first is by the defendants to strike out the statement of claim because it discloses no cause of action and to dismiss the action with costs. The second is by the plaintiff for leave to file an amended statement of claim as per a draft submitted with consequential amendments to the pleadings with costs to be provided for.

2. It is appropriate to summarize a history of events and to make reference to other related proceedings.

3. The plaintiff, 1st defendant and 2nd defendant are brothers. They have a sister called Helen Chan (formerly Miss Tam). Their father was named Tam Po Sum. In 1995 he made a will. He appointed his sons the three brothers to be his executors and left his residuary estate (which is all his estate less expenses) to his four children in equal shares. Tam Po Sum was born in 1996. By 1997 he was a widower and 91 years old. In June of that year he suffered a stroke and was admitted to St. Paul's Hospital where he was to remain until his discharge in August. Thereafter he required constant medical care which included re-admission to hospital from time to time. He died of pneumonia in March 2001.

4. At the time of his admission to hospital in June 1997 Mr Tam's primary assets comprised shares worth about $176 million and bank accounts of about $31 million. In addition there was a family trust settled by him on the family worth about $23 million.

5. On 23 July 1997 whilst Mr Tam senior was in hospital, he executed a number of documents in the presence of a solicitor, called Ms Sue Tang of Johnson Stokes and Master (JSM). He did so by way of impression of his thumb print. Also present was a doctor called Dr Ip Kwok Tung who added his chop and signature to the various documents. Mr Tam's mental and physical capacity at the time are material issues that will need to be resolved at trial. But it seems he was in the course of his time in hospital seriously incapacitated and was not expected to live; the family had gathered from the USA and Canada.

6. Amongst the documents signed by him on 23 July was a power of attorney in favour of his four children. In exercise of the power vested in them the attorneys sold Mr Tam's shares through the offices of Miss Tang and JSM. Following that Miss Tang distributed the proceeds to each of them equally - a total of about $44 million per child. It is apparent that the exercise was undertaken to anticipate Mr Tam's demise and the disposition of that part of his wealth in terms of his will.

7. There was also a winding up of the trust and division of the proceeds of that to the four children amounting to about US$750,000 per share.

8. But there were other documents signed by Mr Tam at the same time and in the same manner as the power of attorney - that is with a thumb impression witnessed by Miss Tang - that did not achieve equality and which gave rise to these proceedings. They were a deed of gift in favour of the 1st defendant and 2nd defendant by which he gave to them all sums standing to his credit in the Bank of East Asia and a "Time Deposit Withdrawal Instruction" directing early closure of the various accounts named therein. Forthwith thereafter the 1st and 2nd defendants put into effect the instructions and shared the proceeds between them, a total of about $26.8 million.

9. On the plaintiff's account he knew nothing of the gift so-called and subsequent disposal of the time deposits until after his father's death in March 2001. The plaintiff claimed to be entitled to one quarter of these proceeds and looked to his brothers for this amount being the sum of $6.7 million. When nothing was forthcoming he issued a writ, which was dated November 2001. The statement of claim was also filed and served at the same time.

10. By these proceedings the plaintiff in his personal capacity sued the 1st and 2nd defendants in their personal capacity for a one quarter share of the proceeds of withdrawals made by them from the accounts of their late father. His claim was based on his being a named residual beneficiary as to a one quarter share of his father's estate which by virtue of the withdrawals made by the 1st and 2nd defendants "did not compose of the time deposits", causing him loss and damage in the amount claimed as one of the beneficiaries and, somewhat curiously, as an executor. In a statement of defence dated 4 July 2002 the defendants reveal a joint defence in which they referred to the deed of gift as entitling them to an equal share of the time deposit proceeds to the exclusion of all others.

11. In September 2002 there was an order for filing, service and inspection of documents. In May 2003 there was an order to set down for trial conditional upon the exchange of witness statements.

12. But in the same month the defendants made application to strike out; this is the first in time of the two matters before me. The second, being the summons for amendment, was filed in September 2003, some 11 days before the hearing.

13. First, the grounds upon which the defendants have brought their application to strike out.

14. The defendant's case that the statement of claim discloses no cause of action rests on the way in which the plaintiff's case has been pleaded and legal principles.

15. What is not pleaded is that the withdrawal or transfer of the money from the father's account which ended up with the defendants was wrongful. But even if it was, the appropriate claimant would have to have been Mr Tam senior and, after his demise, his estate. The plaintiff suing in his personal capacity, as a beneficiary named in the will, has no locus. I need not quote authority to support this proposition because it was conceded before me by Mr Kwok for the plaintiff. The plaintiff's position is not improved by his stating that he was a named executor in his father's will, nor that in his capacity as executor he has thereby suffered loss. The first does not overcome the fact that he is suing in his personal capacity. The second is as I have said a curious proposition. An executor is charged with winding up an estate, not to participate in it; qua executor the plaintiff could not be said to suffer loss.

16. The statement of claim in its present form is bad; the defendants' application would seem to be well-founded.

17. But then came the plaintiff's application for amendment. The changes sought are as follows:

(1)	The plaintiff having in the meantime applied for and been granted probate of his father's estate, is now applying to sue as executor.
(2)	It is alleged that the deed of gift and consequential withdrawal of funds from the assets of Mr Tam senior were procured when he did not have the necessary mental capacity to know what was going on.
(3)	What is now claimed for is a setting aside of the deed of gift and withdrawal and repayment of all moneys to the estate.

18. The objection to the amendments sought principally derives from developments in July 2003. In that month the plaintiff applied for and was granted leave to sue as administrator pending suit of the estate and to issue proceedings against the intended named defendants. He issued the proceedings accordingly. By this writ he is suing in conversion his brothers, the 1st and 2nd defendants herein and, under various heads, in addition, the solicitor present at the bedside Miss Tang, her employer JSM, the doctor present Dr Ip, St. Paul's Hospital and the banks from where the moneys were uplifted, Bank of East Asia and Bank of East Asia Singapore Branch. The claims are thus extended to include all those involved and potentially liable. In addition, as against the 1st and 2nd defendants, in this (subsequent) action the claims are much more widely framed. But in all respects the proceedings derive from the same factual matrix.

19. Mr Chow for the defendants submits that with these proceedings under way, to allow the plaintiff's application to amend his statement of claim would amount to a duplication of proceedings. This would or could give rise to an unwarranted duplication of trials and inconsistent rulings. In any event it offends the rule that where proceedings are in existence based upon a particular cause of action it is an abuse to bring a second action based on the same cause. Why not, he argues, let this action lapse and allow the expanded proceedings to be pursued; by this means there is no abuse, there is no duplication and no prejudice.

20. Mr Kwok concedes that the statement of claim in these proceedings is bad; hence the application to amend. Accepting that the proceedings brought with leave include the same cause of action and the same parties, he nevertheless seeks to resist the striking down of these proceedings for the following reasons:

(a)	the amended statement of claim, if permitted, will repair the existing shortcomings;
(b)	this action started life first, and has advanced to the extent of conditional leave to set down having been granted, and witness statements having been exchanged;
(c)	leave to bring the July proceedings was sought and obtained in case the application before me to strike out was to succeed. The timing was critical; if the subsequent proceedings were withheld pending my ruling on the striking out of these proceedings the estate's rights to sue might be time barred. The subsequent proceedings were for belt and braces protection of the estate;
(d)	in order to avoid procedural conduct which could arguably be an abuse the subsequent proceedings have not been served on the 1st and 2nd defendants. The intentions were and remain not to do so unless the application to strike out these proceedings succeeds;
(e)	the estate will be prejudiced if denied the right to proceed in this action. Not only is it well advanced, it will allow the plaintiff the option of suing only the 1st and 2nd defendants if that course is deemed appropriate.

21. Before me and on enquiry from me Mr Kwok sought instructions and was able to give an undertaking that if his application to amend succeeds and the defendants' to strike out fails, the plaintiff will forthwith file a discontinuance in the subsequent proceedings, whilst reserving his right to seek leave to amend further his statement of claim in these proceedings.

22. In my view with this undertaking aboard the material grounds raised by the defendants fall away. There remains the prospect of two trials involving the same facts and the same claimant. This can be resolved by an order for consolidation in the event that the plaintiff elects to go after the other named defendants as well. It seems on the facts that leave to consolidate would be hard to resist.

23. With the undertaking Mr Kwok has given me to be embodied in the order, I grant the plaintiff's application in terms, save for new clauses 4A and 4B, no longer sought, and dismiss the defendants' to strike out. The writ is to be similarly amended.

24. As to costs; this order is nisi at first instance. Subject to that; this is an application for an indulgence. The statement of claim was bad. The defendants were entitled to apply to strike out. This brought the amendment to repair the statement of claim; the indulgence. Up to and inclusive of the filing of these applications costs are to the defendants. Thereafter the dispute should have been settled in the terms now ordered. Costs of the hearing are to the plaintiff. All costs are in any event.