MORAL LUCK FINANCE LTD v. LAW KIN LEUNG

DCCJ 736/2011

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 736 OF 2011

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R U L I N G

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1.  There are two summonses before me, one issued in each of these actions. Before I go to the details of these summonses, in general, one Madam Cheung Kwai Yin (“Madam Cheung”), the wife of the Defendant in both actions contends that the Defendant is a mentally incapacitated person as defined under Order 80 of the Rules of District Court. She now seeks, among other matters to be appointed as the guardian ad litem of the Defendant in both actions. Mentally incapacitated person is defined in Order 80 as –

"mentally incapacitated person" (精神上無行為能力的人) means a mentally disordered person or a mentally handicapped person (within the meaning of the Mental Health Ordinance (Cap 136)) who, by reason of mental disorder or mental handicap, as the case may be, is incapable of managing and administering his property and affairs;

2.  And in this case, the evidence adduced for the Defendant suggests that he has an IQ of 62 and is a mentally handicapped person rather than a mentally disordered person.  A mentally handicapped person is defined in Mental Health Ordinance as –

"mental handicap" (弱智) means sub-average general intellectual functioning with deficiencies in adaptive behaviour, and "mentally handicapped" shall be construed accordingly;

3.  The issue before me is whether the Defendant is incapable of managing and administering his property and affairs, and to give instruction to legal advisors.  In order to better understand the applications, I need to set out some background history.  I will start with the civil action issued by the Plaintiff against the Defendant in DCCJ 736 of 2011.  The Plaintiff is a licensed money lender.  According to their pleaded case, they have lent a sum of money to the Defendant of $30,000.  The Defendant failed to repay according to the terms of the loan agreement.  The said civil action has been taken out by the Plaintiff to recover the balance of the debt and all interest accrued.  No acknowledgement of service has been filed.  The Plaintiff applied for default judgment under Order 83A of the Rules of District Court and judgment was granted in favour of the Plaintiff on 14 April 2011.  As the Defendant has not paid the judgment, the Plaintiff has on 6 July 2011 obtained a charging order absolute against the property of the Defendant situated at Flat 17, 29^th Floor Choi Tin House, Block 3, Hing Tin Estate, No 8 Lin Tak Road Kowloon (“the said property”).

4.  Notwithstanding the judgment and the subsequent charging order being imposed, the Defendant has failed to settle the judgment debt.  The Plaintiff issued an originating summons in the District Court in DCMP 2062 of 2011 for, inter alia, order of possession of the said property and an order of sale of the said property.  The Defendant has again failed to file any acknowledgement of service or affirmation of opposition.  Judgment was granted on 18 October 2011 for the Plaintiff to recover possession of the said property, and to have it sold at the reserved price of $1,000,000 at the secondary market.  Other consequential directions have been given.

5.  In early January 2012, the Plaintiff proceeded to obtain possession of the said property.  On or about 27 January 2012, Messrs Chiu Szeto & Cheng issued a summons in DCCJ 736 of 2011.  According to the record, Messrs Chiu Szeto & Cheng took out the summons as “solicitors for the Defendant”.  The summons applied for the appointment of Madam Cheung as the guardian ad litem of the Defendant, and for the judgment given on 14 April 2012 be set aside, and that the said charging order be discharged.

6.  Another summons was taken out in DCMP 2062 of 2011 by Messrs Chiu Szeto & Cheng, again acting as solicitors for the Defendant.  The summons applied for the appointment of Madam Cheung as the guardian ad litem of the Defendant and the execution of the said order for sale be stayed.

7.  Both summonses first come before me for an urgent hearing on 2 February 2012.  By then, the Plaintiff has obtained vacant possession of the said property and entered into a provisional sales and purchase agreement to sell the said property.  Counsel then appearing for “the Defendant” applied for an interlocutory injunction to restrain the Plaintiff from disposing of the interest in the said property.  At the first hearing, and by consent, the Plaintiff undertook not to proceed with the sales and the summonses were adjourned for argument.  Leave was also granted to the Plaintiff to put in affirmation in opposition.

8.  As claimed in the affirmations of Madam Cheung, the Defendant is a mentally handicapped person and cannot handle litigation matter.  She also claims that the Defendant does not understand the loan transaction.  In support, Madam Cheung exhibits a psychiatric expert’s report by Dr Ng Fung Shing dated 4 May 2009 and a further report by a clinical psychologist Dr Ng Kee On dated 25 April 2009.

9.  It is the opinion of Dr Ng Fung Shing that the Defendant has a full scale IQ score of 62 which indicates he is a mild grade mentally handicapped person.  He has been a slow learner since birth and has studied in special school before.  Because of his impaired intelligence, he has poor ability in comprehension.  He cannot do even simply calculation.  He fails to tell the nature of a contract even in broad terms.  Dr Ng is of the opinion that the Defendant failed to understand the exact nature of a loan agreement and lack the mental capacity to enter into any contract in the form of loan agreements.  The psychologist Dr Ng Kee On also commented that the Defendant is suffering from a significant intellectual dysfunction, functioning in the mildly handicapped spectrum of intellectual ability.  The Defendant is likely to encounter difficulty in his daily activity including the handling of simple financial transaction.

10.  I was given to understand that the two reports had been adduced in another District Court Action, DCCJ 5291/2007, involving another money lender. Leave had been granted for Madam Cheung to be the guardian ad litem for the Defendant and the case was subsequently settled.  I shall come back to this case later.

11.  It is the case of the Plaintiff that the Defendant is not a mentally incapacitated person as provided under Order 80 rule 1.  At the first hearing, I was also given to understand that there were video tape conversation between the Defendant with officer/agent of the Plaintiff and the Plaintiff would rely on these to show that the Defendant could understand the loan arrangement.  They also ask for leave to medically examine the Defendant by a psychiatrist expert to be nominated by the Plaintiff.  This was not agreed to by the Defendant at that stage. 

12.  The parties having failed to reach any agreement on medical examination of the Defendant by nominated psychiatrist, the Plaintiff came back with an application.  But the issue has been resolved before me amicably as the parties agreed for the Defendant to be examined by two psychiatrists, one to be nominated by each party.  A joint psychiatric report prepared by Dr Chung See Yuen (nominated by the Plaintiff) and the said Dr Ng Fung Shing (nominated by Madam Cheung) has been produced.  I shall come back to this joint report in greater details later. 

13.  In essence, both doctors agreed that the Defendant has a full scale intelligence score of 62 and the Defendant has been functioning in the mild grade mentally retarded range.  Dr Ng maintains his opinion that the Defendant is incapable of instructing lawyers in relation to the present proceedings because of his mental incapacity.  Dr Chung opines that the Defendant is not incapable of managing and administering his property and affairs.  Dr Chung believes the Defendant would understand the nature of the loan agreement and he is capable of instructing lawyers now in relation to the present proceedings.

14.  Some times after the 1^st or 2^nd appearance before me, Madam Cheung obtained Legal Aid to pursuit the case.  On 6 August 2012, Counsel appearing for Madam Cheung applied for an adjournment and leave to arrange for a third psychiatrist to medically examine the Defendant.  I am then told that Messrs Chiu Szeto & Cheng had made a mistake in taking out the summons for the Defendant as all along they only have instruction from Madam Cheung.  Counsel then confirms that these two summonses are indeed taken out by Madam Cheung.  It now becomes clear that the summonses should be divided into two separate parts.  If I rule in favour of Madam Cheung that the Defendant is a mentally incapacitated person and that Madam Cheung should be appointed as the guardian ad litem, then I should proceed to consider the rest of the application on setting aside judgment and charging order, which Madam Cheung took out in anticipation that she would be so appointed.  If I rule against Madam Cheung, there is no application by the Defendant before me and accordingly both summonses should be dismissed.

15.  On the application for adjournment and leave to have the Defendant to be examined by a third psychiatric medical expert, the Plaintiff objected and submitted that Madam Cheung was fishing for evidence.  There was no draft report prepared for my consideration if further psychiatric evidence was required.  Counsel for Madam Cheung failed to persuade me that this is an appropriate case for adducing additional evidence and for adjournment. 

16.  And when the matters come back to me for the substantive hearing on 10 August 2012, Legal Aid has been discharged and Madam Cheung act in person.  Messrs Chiu Szeto & Cheng has also applied under Order 67 rule 6 to cease to be the solicitor for Madam Cheung, which I thought is not strictly necessary. Under the Legal Aid Ordinance the solicitors ceased acting once the certificate is discharged.  Mr Chiu submitted that he wants to put on record that they only act for Madam Cheung in these proceedings.  This may be a matter I might have to revisit in future on the question of cost.

17.  This is a case which turns on a difficult area of law and interpretation of medical evidence.  Madam Cheung could offer little assistance.  Fortunately, she had had legal representation in a number of appearances before me and I bear in mind the submission and written submission made by her counsel in dealing with this application.  I would first consider the nature of this application.

18.  For both summonses the solicitors made reference to Order 80 rule 6. When a plaintiff brings an action against a defendant who is a mentally disabled person, the plaintiff must make an application to the court to appoint a guardian ad litem.  Failing such appointment, the plaintiff cannot proceed with the case.  It is trite law that if the plaintiff proceeds and obtains default judgment, it is an irregularity and judgment is due to be set aside.

19.  The burden rest on the Madam Cheung to first satisfy this Court that the Defendant is a mentally handicapped person under the Mental Health Ordinance. There has to be evidence of “sub-average general intellectual functioning with deficiencies in adaptive behavior”.  And Madam Cheung has to further prove that the Defendant cannot administer his own property and affair before he come within the definition of “mentally incapacitated person” under Order 80. 

20.  And if the Defendant is a mentally incapacitated person, he would not be in the position to bring proceedings to have the judgment set aside on the ground obvious own disability.  It must be right for someone he trusts to apply to the Court for the appointment as guardian ad litem.  If the appointment is granted, the appointment must be related back to the time when the application was first taken out and be then deemed to be the application of the Defendant to set aside the judgment.  As rightly observed by Mr Cheung, counsel for the Plaintiff, the prime issue before me is whether there is sufficient evidence to support the claim by the Defendant through his wife Madam Cheung that he is a mentally incapacitated person.

21.  In the joint expert report that I would come to shortly, the experts are specifically referred to the judgment of the Court Appeal given in Ng Hong Ki v Leung Fong Kiu [2012] on the test of mental incapacity.  According to Ng Hong Ki:

“For the purpose of the appointment of a guardian ad litem under Order 80, the test of mental incapacity is “issue-specify” and the test it has to be applied “whether the party to legal proceedings is capable of understanding, with the assistance of such proper explanation from legal advisers………. The issue on which his consent or decision is likely to be necessary in the course of the proceedings.” The focus of the enquiry was on the litigation under consideration rather than the whole of the person’s property and affairs. Complete incapacity is not required to be established ………… This features were identified in a person that would lead the court to conclude that he was a person under disability for the purpose of Order 80 …………… he had no insight at all into his own mental state. He was not capable of instructing a solicitor properly. He certainly was capable of exercising any reasonable judgment on a possible settlement”. [my emphasis]

22.  I believe there is no disagreement between the parties that this is the appropriate test to be adopted by this Court to determine if a person is mentally incapacitated and cannot handle his affairs.  When instruction was given to the experts, Madam Cheung was on Legal Aid.  I would adopt the test in this ruling.

23.  On the evidence required to be satisfied that a person is a mentally incapacitated person, usually medical expert evidence would be adduced.  Mr Cheung referred to the Court of Appeal decision given in Ho Po Chu v Tung Chee Wah & others CACV 206 of 2005.  I bear in mind that Ho Po Chu is an appeal against a debarring order which prevented the plaintiff Madam Ho from having direct access to the Court.  It is stated in the judgment that where a debarring order was sought, “given the effect on the person’s direct access to the court and the stigma involved,…the court should require medical evidence of the same quality [as an inquiry under the Mental Health Ordinance] (even if not with the same formality) before it would make a debarring order.”  And for the purpose of an inquiry under the Ordinance as per section 2(2), 7(5) and 7(6), 2 medical certificates with at least one from a medical practitioner approved as having special experience in mentally disorder is required.  Ho Po Chu also ruled that, when action was started by the next friend, or defended by the guardian ad litem, of a person said to be suffering mental incapacity and the act was obviously for person’s benefit, the court would not initially require formal medical evidence, although it would be prudent for the next friend or guardian ad litem to have the medical evidence available in case of challenge.

24.  It is submission of Mr Cheung that the purpose of Madam Cheung’s summonses is to set aside the default judgment and various consequential orders on the ground of the defendant’s mental disability and to prevent the sale of the said property.  The practical consequence is a serious one.  He submitted that the evidence required for the present case should be akin to an application for a debarring order under Order 80 rule 2(1) when the court would expect clear medical evidence to prove the mental incapacity.  The medical evidence required should be of a comparable quality to the requirement for the purposes of a Part II inquiry under the Mental Health Ordinance, namely two medical certificates with at least one from a medical practitioner approved as having special experience in mental disorder.

25.  As said, I do not have the assistance from Madam Cheung on this point of legal issue.  However, counsel appearing for Madam Cheung on the application for the third psychiatrist submitted that there ought to be two medical certificates in support of the claim that the Defendant is a mentally incapacitated person.  In that, he agreed with Mr Cheung’s submission.

26.  I also refer to the judgment of Yuen JA in Ho Po Chu at paragraph 37 to 39 of the judgment.  Yuen JA accepted that the person subjected to a debarring order would have his access to court restricted to a certain extent only, namely, pending the appointment of next friend and solicitors are instructed, but that is not a power that the court should exercise lightly.  Reference was made to section 10 of the Mental Health Ordinance on a Part II enquiry for the appointment of a committee to manage the property of a mentally incapacitated person who cannot manage his property and affairs.  Two medical certificates including at least one from a practitioner approved by the Hospital Authority as having special experience in the diagnosis treatment and mentally disorder or having special experience in the assessment of mental handicap is required.  Yuen JA goes on to say that the debarring order is less draconian than a section 10 decision.  But the court should require medical evidence of the same quality before it would make a debarring order.

27.  In this particular case, the finding that the Defendant is a mentally incapacitated person is a bar to the Plaintiff from pursuing this action against the Defendant until the appointment of guardian ad litem and appointment of solicitors.  I agree with Mr Cheung that the medical evidence that should be adduced before such a finding should be made should be of the same quality as for a debarring order.

28.  Alternatively, if I adopt the flexible approach, it is duty bound upon this court to find on the medical evidence and all available evidence before me to rule if the Defendant is not capable at this moment to instruct his solicitor. 

29.  Before I move on to consider the medical evidence, I would also quote the judgment of Lam J (as he then was) given in Ho Po Chu.  Lam J said in the situation where the court is faced the situation when a litigant is not represented by a next friend and there is suggestion that he or she is suffered from mental incapacity, the following options are open:-

(a)  strike out the claims if it is obviously vexatious;

(b)  if mental incapacity is clearly established by way of medical evidence and there is no dispute by litigant as to his mental incapacity, and if the action is not vexatious, the court may stay the action pending either appointment of next friend under Order 80 or an inquiry and appointment of committee under Part II;

(c)  if mental incapacity is disputed, the litigant must be given a fair chance to defend his or her case on that issue.  The matter as to capacity can still be solved within the context of Order 80 (see Atkins’s Court Forms Vol 26, 1996 issue, paragraph 20 and 23.)  Alternatively, the court may stay the action pending the holding of a Part II inquiry;

(d)  if the evidence as to mental incapacity is inadequate, the court may allow the action to be proceeded on the basis that the challenge based on disability is unsubstantiated.

30.  With these guidance in mind, I now turn to consider first the medical evidence.  Though there is a joint expert report, I believe I should also consider the first report of Dr. Ng.  Dr Ng first came to examine the Defendant upon instruction of Messrs Chiu Szeto & Cheng on 22 April 2009.

31.  According to the personal history, the Defendant has suffered from suspected hypoxic (lack of oxygen) injury to the brain during delivery.  He has delayed development as compared with his brothers.  He was a slow learner and he studied in Yau Tong Morning Hill School which is a special school for children with mild grade mental handicap.  After graduation in 1986, he has worked briefly as cleaning worker in a private company.  However, he has never sustained the open employment for long because of poor ability in comprehension, as well as failure to read written instructions.  In the past few years, the Defendant helped in the cleaning company which is owned by his father.  He participated in some casual work but he still needs to work under supervision.  He is married at the age of 36 and his wife aged 32 come from Mainland China.  They have a one year old daughter.  The Defendant has no significant past physical illness except for the said suspected hypoxic brain damage during delivery.

32.  According to Dr Ng’s 2009 report, the Defendant is new to mental health service.  And in the list of documents sent to Dr Ng and Dr Chung in 2012 for the joint examination, there is no record of medical/psychiatric treatment received by the Defendant in Hospital Authority or private hospital/clinics.

33.  According to his wife, she discovered that the Defendant could not read when they first acquainted.  He could not read the short text messages that she sent him.  The Defendant is unable to do even simple calculation.  He also has poor ability in money management.  As an example, Madam Cheung gave him a $500 note to pay for a telephone bill of $280.  He was unaware of the need to have a change of $220.  He just casually said that $500 was good enough to settle the bill.

34.  Dr Ng carried out mental state examination.  In conclusion, Dr Ng found that the defendant has a full scale IQ score of 62 which indicates he is a mild grade mentally handicapped person.  He has been a slow learner since birth and he has studied in special school before.  He indicates his impaired intelligence has been presence since birth and it is not acquired recently. And because of his impaired intelligence, he has poor ability in comprehension.  He cannot do even simple calculation.  He was unable to tell in broad term what is a contract or interest of a loan.  Dr Ng opined that because of his impaired intelligence, the Defendant failed to understand the exact nature of the loan agreement and its consequence.

35.  Dr Ng examined the Defendant again with Dr Chung on 14 June 2012.  For record, I should note that specific instruction has been given to the two experts to comment on 5 different areas.  First, they are to assess the IQ of the Defendant and I believe there is no disagreement between the experts that his score is 62.  Secondly, the experts are required to comment whether the Defendant is incapable of managing and administering his property and affairs.  Thirdly, they are to assess whether the Defendant is capable of instructing lawyers now in relation to the present proceedings because of his alleged mental incapacity with specific reference to the test set out in the said judgment of the Court Appeal given in Ng Hong Ki.

36.  The experts were also asked to opine whether there would have been changes in the Defendant’s medical condition during 2008 to 2012.  And lastly, the experts were to comment on whether the Defendant would have understanding of the nature of the loan agreement that he had entered into in 2008 and whether the Defendant’s alleged mental incapacity would be apparent to the plaintiff (or its agents) in dealing with the defendant in relation to such loan transactions in 2008.

37.  According to the joint report by Dr Ng and Dr. Chung, the Defendant told the experts that he had studied in a special school for mentally handicapped. He cannot tell clearly the number of years he has studied nor the year he graduated.  He could not recall what subjects he had studied.

38.  He said he worked mainly in his father’s cleaning company after leaving school.  His working hours were from 7 am to 5 pm.  He did not know how to go to the work place initially.  He had to ask people and after one to three times, he would go to the work place by bus.  The experts have also made enquiry with his borrowing from finance company.

39.  On current condition, the Defendant is still working at his father’s company.  His salary is more than $7,000 a month.  He receives a cheque for his salary.  He has a bank account.  He deposits the cheque into the bank account. He withdraws the money the next day.  He gives $7,000 to his wife.  He used his ATM card at times as he had been taught by a bank staff to use the card.  He withdraws $100 $200 or $300 on each occasion, he sometimes press the button wrongly and the card was taken by the machine.

40.  At the mental state examination by the experts, the Defendant readily said one had to pay interest when one borrowed money.  However he cannot tell clearly the meaning of interest or the difference between simple interest and compound interest.  When asked the meaning of a contract he said he was not clear.  When asked about the nature of a court, he answered that when someone committed a crime like fighting or killing, one needed to attend the court.  He was requested to perform the colored progressive matrices (one of the tests for intellectual function).  He failed to complete the test as he was unable to read the Chinese written instruction.

41.  Mini mental state examination was administered and he scored 13 out of a total 30.  He was unable to do simple calculation (example 100 - 7 = ? and 20 - 3 = ?).  He was unable to read and perform simple Chinese instruction “拍手”.  He was asked to perform simple arithmetic.  He said he did not know when he was asked to do 8 + 15.  He said 1 + 1 = 5.  When he was asked to do it again, he said 1 + 1 = 3 and then 4.  He was asked about the change when he paid $10 for an item costing $2.  He said he did not know the change.  He did not look at the change and would not care about it.

42.  In conclusion Dr Ng said the Defendant scored a full scale IQ of 62. This places him in the category of mild mental retardation.  Dr Ng is

of the opinion Mr Law is a mentally incapacitated person as he is a mentally handicapped person within the meaning of the Mental Health Ordinance.  He further said that the Defendant failed to understand and tell even in broad terms, the legal process.  Dr Ng opined that the Defendant is not able to instruct lawyer because of his mental incapacity.

43.  Dr Ng also opined that the mild mental retardation is a permanent disability and there would not have been any change in the condition during 2008 to 2012.  Dr Ng also opined that the Defendant would not have the understanding of the nature of the loan agreement that he had entered into in 2008, given that he was unable to do simple calculation and failed to tell even in simple terms the meaning of a contract or the concept of interest.

44.  Dr Ng also said that the Defendant could maintain a short and unsophisticated conversation just like ordinary people.  However, if the conversation continue longer, for example over 5 minutes, it is not difficult to notice that his answers are often very simple and repetitive.  With his inability to read and write Chinese, Dr Ng believed he would raise the suspicion of the people who were dealing with him in relation to loan transaction about his possible mental incapacity.

45.  Dr Chung agreed that the IQ of the Defendant is 62 and he has been functioning in the mild grade mentally retarded range since young.  But he opines that mentally retarded patient may or may not be a mentally incapacitated person.  Dr Chung has doubt on the genuineness of the performance of the Defendant in the examination.

46.  Dr Chung quoted from “Diagnostic and Statistical Manual of Mental Disorder” 4^th edition -

“As a group, people with mild grade mentally retardation typically develop social and communications skill during the pre-school years (ages 0-5 years), have minimal impairment in sensor motor areas, and often are not distinguishable for children without mental retardation. By their late teens, they can acquire academic skill up to approximately the 6^th grade level. During the adult years, they usually achieve social a vocational skill adequate for minimum self support but may need supervision, guardians and assistance, especially when under unusual social or economic stress. With appropriate support, individuals with mild grade mentally retardation can usually live successfully in the community, either independently or supervising setting.”

47.  Dr Chung observed that the Defendant has worked for 10 years or more as a cleaner.  He became acquainted with his wife when they met within a coach. He had courtship with her and married.  He now has a 4 years old daughter.  It indicates that he is functioning very satisfactorily in the community.  His level of functioning is comparable with a person with mild grade mentally retardation, and according to the said passage, during the adult years, they usually achieved social and vocational skill adequate for minimum self support but may need supervision, guardians and assistance, especially when under unusual social or economic stress.  Dr Chung believes the Defendant is mentally fit to perform all activities of daily living.  Any impairment by the mild grade mental retardation is mild and is compatible with most usual functioning.

48.  Dr Chung also noted that a person with mild grade mental

retardation can acquire academic skill up to approximately primary 5 or 6.  It is unlikely that a mild grade mental retarded person could not do 1 + 1 or 10 – 7.  Inability to perform such simple arithmetic is not commensurate with the defendant’s level of functioning: he has a job, has a bank account, and is able to withdraw money with an ATM card, has a wife and daughter and he can live fairly independently in the community.

49.  Mini mental state examination has been carried out and the defendant scored 13 out of 30.  It suggested that he is suffering from moderate dementia.  Dr Chung opines that patient with mild dementia tends to score 20 to 24.  It is likely that the Defendant has portrayed a worse picture of his mental functioning in the present examination.

50.  Dr Chung also observed the Defendant says he did not know or cannot remember something when he knows said that interviewers are testing his ability.  As an example, when the interviewers are testing his mental function, the Defendant cannot tell the day, the season.  He gives history which would indicate mental functioning when he does not know the interviewers are testing his ability.  For example he says he has a bank account, he knows how to deposit his money into his bank account, he can use an ATM card to withdraw money, he knows his salary, and he goes to work alone.  The discrepancy in the performance suggests that his mental ability should be better than he has presented.

51.  The Defendant said in the interview that he cannot remember

on many occasions.  Dr Chung opines that intellectual impairment is found in people with mental retardation, but significant memory impairment is not a feature of mild grade mentally retarded person.

52.  Dr Chung also made reference to video recording which I shall come to later on the conversation between the Defendant with a staff of the Plaintiff’s agent.

53.  The Defendant told the experts that he does not know the amount of money he has borrowed, the monthly installments and interest rate.  However, according to the video, the Defendant is able to tell one Mr Wong about the amount he borrowed and the approximate monthly installments.  He even asked Mr Wong for a decrease in interest rate which indicates he should know the difference between high and low interest rate.  The recorded interview indicates that he has a satisfactory understanding about borrowing money.  He knows that he has to repay the loan and interest is incurred.  He also asked Mr Wong in the recorded interview not to let people take possession of his flat.  That suggests the Defendant knows the consequence of failure to repay the loan.  He said he would repay the loan in exchange for not surrendering the possession of the flat.

54.  Further, with assistance of the video, Dr Chung also concluded that the Defendant would give the impression to a lay person that he has received low education and is not a bright person.  He does not have abnormal faces and does not appear to be a mentally abnormal person in the recorded interview.

55.  Dr Chung agreed that mild mental retardation is a permanent disability and his mental functioning has been seen since early adult hood.  He would be able to acquire more knowledge and skill as a result of life experience from time.  He believed his mental capacity has not shown any change from 2008 to 2012.

56.  It is the opinion of Dr Chung that the Defendant is not incapable, by reason of mental incapacity, as defined in the Mental Health Ordinance, of managing and administering his property and affair.  Dr Chung believed the Defendant would have understanding of the nature of the loan agreement that he had entered into in 2008.  The Defendant’s alleged mentally incapacity would not be apparent to the plaintiff or its agent.

57.  I have viewed the 2 video produced.  They are taken by Mr. Wong Wai Kit of Intell Finance and Mortgage Company.  According to his affirmation filed herein on 16 February 2012, his company is a referral agent for banks and finance companies.  They have referred the Defendant to borrow a loan of $15,000 from the Plaintiff on 14 July 2008, and subsequently for another loan on 12 August 2008 for $30,000.  The Defendant paid back the Plaintiff for the 1^st loan and interest thereon at $660.  That also explains why on borrowing, the Defendant immediately paid back $15,660 to the Plaintiff.  So in effect, the Defendant has borrowed $30,000 from the Plaintiff by 2 loans.

58.  In March 2011, the Defendant called Mr. Wong and met him in the afternoon of 9 March 2011.  The conversation was video taped and produced in the Affirmation.  The Plaintiff has produced a transcript of the video tape. 

59.  In the meeting, the Defendant told Mr. Wong that he was being sued by the Plaintiff for his default in payment of the 2^nd Loan.  The Defendant explained that he had lost his wallet and documents including his identity card a fortnight ago.  The Defendant asked Mr. Wong to convey to the Plaintiff that he did not want litigation, and would continue with the installments.  The Defendant proposed to pay $1500 a month, and to repay the loan by installment.

60.  This conversation last for about 25 minutes.  And they also have talk or discussion on other matter.  The Defendant has informed Mr. Wong about his loan from State China Finance Limited (及時雨財務有限公司). He can relate to Mr. Wong that there was litigation with State China and subsequently the proceedings were settled and he did not need to repay the loan.

61.  On 10 December 2011, the Defendant visited Mr. Wong again and the meeting is again video taped.  He told Mr. Wong that the Plaintiff is taking action to obtain possession of his flat.  He asked Mr. Wong to request the Plaintiff not to do so.  He explained that he had not paid the installments since May 2011 because he had to help his friend’s relative with funeral expenses. 

62.  There is no dispute on the truthfulness of these video records.

63.  As set out above, the Applicant has to prove the claims that the Defendant is a mentally incapacitated person by the medical evidence.

64.  Given that I have the joint medical report from Dr. Ng and Dr. Chung, I pay little weight to the earlier report of Dr. Ng which has been referred to by the expert in the join report.  The report is prepared 3 years ago.  And more importantly, the video tapes are not available to Dr Ng then.  The report only assists me with the medical history and personal history of the Defendant.  I would consider the psychologist’s report by Dr. Ng Kee On separately. 

65.  From the joint report of the 2 doctors, Dr. Chung is of the view that the Defendant is not mentally incapacitated.  He has clearly analysed the reaction of the Defendant during examination and concludes that the Defendant has exaggerated on his memory power and mathematic power.  Dr. Ng has not commented on these matters.

66.  Dr. Chung has commented on the adaptive behavior of the Defendant. While it does not go as far as to suggest the Defendant is not a mentally handicapped person under the Mental Health Ordinance, it is clear that it has a bearing on his conclusion that the Defendant is not a mentally incapacitated person.  Dr Ng has made no reference to this important issue.

67.  Dr Ng has not commented on the surveillance video in the report.  But Dr Ng said in his opinion that the Defendant can only have short and uncomplicated conversation with others.  But his observation cannot sit on well with the vision in these 2 video tapes, when the Defendant has clear discussion with Mr. Wong on re-financing and giving proposals on installment payment, and both conversation last some time. 

As commented by Dr. Chung, he discuss a lower interest rate which indicates that he understand high and low interest, and understand about borrowing money, and the consequence.

68.  On the balance, I found that the opinion of Dr. Chung should be preferred. He gives a more detailed analysis, and has carried out appropriate test during examination to support his conclusion.  I do not rely on the opinion of Dr. Ng.

69.  As for the report of Dr. Ng Kee On, the clinical psychologist, he is not a medical doctor.  According to his resume, he is an adjunct Associate Professor of the Department of Psychiatry in the Chinese University of Hong Kong, holding a doctor degree of clinical psychology.  He opines that the Defendant has an IQ score of 62 which is adopted by both experts.  He comments that the Defendant may have difficulty in his daily activity.  There is no detail on how he comes to this conclusion.  The duty is on this Court to determine if the opinion is reliable and the only way I could do so is for the expert to provide the reasoning for any conclusion, especial a significant conclusion on the mental capacity of the Defendant.  I do not accept his conclusion that the Defendant has difficulty in his daily activity.

70.  I should also refer to the 2^nd Affirmation of Chau Sai Hong filed herein on 24 April 2012.  The Plaintiff has located a name card in the said property that the Defendant is a manager of Law’s Cleaning Service Ltd. They also find an updated employment contract which states that the Defendant is a foreman.  And Mr. Chau confirms that the Defendant filled up the loan application form in front of him.

71.  Madam Cheung denies that the application is filled up by the Defendant. And one Chung Wai Ming, a director of Law’s Cleaning Services Ltd give an affirmation filed herein on 22 May 2012.  He denies that the Defendant is a manager of the companies, and there is no such position in the company.  They never issue the name card to the Defendant.  The Defendant only worked as a cleaning worker. He said the Defendant could not do mathematic.  As an example, he said the Defendant insisted that his wage should be $300 per day and they told him that he would be paid at that rate.  But they on paid him at the rate of $100 per day and the Defendant did not complain about the discrepancy in wages.

72.  One Lam Mei Ling filed an affirmation dated 18 May 2012 in support of the Defendant’s application.  She said that she was the manager of one Long Yue Shanghai Food in Kwun Tong.  The Defendant worked as a part time casual worker around 2 years ago.  He has no fixed working hours.  Ms. Lam agrees that the Defendant looked normal when she first met him.  But after a conversation, she notice that he has lower intelligence quotient due to his incoherent speech.

73.  Ms. Lam said the Defendant does not read or write Chinese words.  He could not take orders from customers.  He could not remember table numbers and could not work as a waiter.  He can only perform simple basic manual tasks.

74.  I remind myself that the test whether a person is mentally incapacitated and cannot handle his affairs is “whether the party to legal

proceedings is capable of understanding, with the assistance of such proper explanation from legal advisers………. The issue on which his consent or decision is likely to be necessary in the course of the proceedings.”  There is only one medical expert, Dr. Ng who supports the assertion of Madam Cheung, which I do not rely on for reason above.  And I do not find the evidence of Dr. Ng Kee On helpful.  Strictly in compliance with the rule in Ho Po Chu, there is insufficient evidence to support Madam Cheung’s assertion. 

75.  Even if I am to use a flexible approach, there is not sufficient evidence before me to show that the Defendant is a mentally incapacitated person, as I find earlier that the opinion of Dr. Ng is not reliable.  I am left with the evidence from Madam Cheung and the co-workers of the Defendant in favour of the claim that the Defendant is mentally incapacitated.  What Mr. Chung said is that he is cheating the Defendant of his salary.  I have great reservation with his evidence.  And for Ms. Lam, it is clear that the Defendant has been working as a part time for 2 years.  He may not be able to be a waiter.  But there is not suggestion that he cannot, and indeed he has been working as a casual worker.  It tally with the opinion of Dr. Chung that patient with mild retardation could achieve social or vocation skill adequate for self support.  They may show that the Defendant is handicapped in some extent, but I am not convinced by their evidence that the Defendant cannot manage his property and affairs, or that he cannot give instructions to legal advisors.  

76.  Madam Cheung has been given more than a fair chance to prove her case.  I do not consider it necessary to adjourn the application pending Part II enquiry.  And there is not such application.

77.  Though Madam Cheung has been appointed as guardian ad litem in DCCJ 5291/2007, my discretion is not fettered.  That is a different case.  And more importantly, I now have more evidence before me, including the joint experts report, and the surveillance tapes which are not available to HH Judge Wong.

78.  Mr. Cheung has kindly taken care of whether the judgment has been entered for too much.  He prepared a reference table in paragraph 60 of his closing submission, which I adopt.  Strictly, I do not have to go to the merit.  I am satisfied that there is no evidence to show that this is an illegal contract, or judgment entered for too much.

79.  In conclusion, I see no reason to allow the application by Madam Cheung to act as guardian ad litem of the Defendant and her application should be dismissed as she cannot prove that the Defendant is a mentally incapacitated person as defined under Order 80.  Since there is no application by the Defendant to set aside the judgment, such application in the summonses as taken out by Madam Cheung in both actions for the Defendant in anticipation that she would be appointed must be dismissed.

80.  Finally, I come to consider the issue on costs.  I see no reason why the Plaintiff should not be entitled to their cost of this application, including a related application for further expert evidence which I dismissed on 6 August 2012.  The difficult part is who should pay their costs.

81.  As set out above, Madam Cheung is the applicant.  As such, I see no reason why she should not bear the costs.  Mr. Cheung refers me to Order 62 rule 6A and invited this Court to join Madam Cheung as a party for costs purpose.  I do not think rule 6A applies, for Madam Cheung as an applicant must be a party to the proceedings.  I only need to refer to section 2 of the District Court Ordinance, and “party” is defined as “includes every person served with notice of or attending any proceedings, although not named in the record.”

82.  I also note that Madam Cheung is Legal Aided until shortly before the hearing.  And I give an order nisi on costs as follows –

a. The applicant Madam Cheung do pay the costs of the Plaintiff in the Summonses taken out these 2 actions with certificate for counsel (including any reserved costs) and to be taxed if not agreed;

b. The applicant’s own costs be taxed according to Legal Aid Regulations;

c. This order on costs be an order nisi to become absolute within 14 days;

d. Plaintiff do serve a copy of my judgment on the Director of Legal Aid within 3 working days who may address this Court on the issue of costs if necessary.

83.  I am not minded to order costs to be borne by the Defendant.  I do not think there is evidence to suggest that he knows or approves of the application. But I am open to further submission and hence order, as an order nisi (to become absolute within 14 days), that there be no order of costs against the Defendant.