CHUI OI YING, suing by her next friend and son CHEUNG SAI MAN v. CHEUNG SHUNG PING AND ANOTHER

HCMP 1229/2023

[2024] HKCFI 2728

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 1229 OF 2023

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J U D G M E N T

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DHCJ Yuen:

1.1.  On 2 August 2023, an Originating Summons was issued in HCMP1229/2023 (OS).  The plaintiff is Chui Oi Ying (Madam Chui)  suing by her next friend and son Cheung Sai Man (CSM).

1.2.  Madam Chui is in her 90's.  In October 2017 she was certified as a mentally incapacitated person.  She has five children, including:

-  CSM;

-  Cheung Shung Ping (CSP), the 1^st defendant in the OS; and

-   Cheung Sau Fong Catherine (CSF).

CSP and CSF were defendants in HCA1710/2016 (Previous Proceedings).  I shall refer to these proceedings later in this Judgment. 

2.1.  The following relief (among other things)  was sought in the OS (emphasis added):

(1)  a declaration that CSP is liable to account to the plaintiff for all the funds (together with any interest thereon)  kept in the New Joint Account[1] as constructive trustee and/or resulting trustee;

(2)  all the funds together with any interest thereon kept in the New Joint Account be forthwith transferred and returned by CSP to the plaintiff;

(3)  alternative to paragraph (2)  above, all the funds together with any interest thereon kept in the New Joint Account be forthwith released and returned to the plaintiff by the Bank of China (BOC)[2].

2.2.  On 3 January 2024, CSP issued a summons for an order that the OS be struck out on the grounds that the claim is an abuse of process, and is frivolous and/or vexatious, and/or the court should exercise its inherent jurisdiction to strike out the same.  

2.3.  Both matters were fixed to be heard on 21 August 2024. 

Background

3.  The following background facts, including events in the Previous Proceedings, are relevant to this Judgment.

4.1.  Madam Chui’s assets include some flats and bank deposits.

4.2.  On 6 October 2015, joint accounts at BOC and Standard Chartered Bank (SCB)  were opened by Madam Chui, CSP and CSF.  The banks’ terms and conditions under which the funds in these joint accounts were held were not in the evidence before me.  These accounts are referred to for convenience as the “Old Joint Accounts”. 

4.3.  On 8 October 2015, Madam Chui gave an enduring power of attorney (EPOA)  to CSM, and around this time, she started to stay with him. 

HCA1710/2016 (Previous Proceedings)

5.1.  In 2016, Madam Chui issued a writ in the Previous Proceedings against CSP and CSF.  

5.2.  It was pleaded in the Statement of Claim (SOC)  filed on 29 June 2016 that in or around 2015, Madam Chui “started to suffer from dementia” [§3]. 

5.3.  The SOC referred to transactions concerning two flats, as well as the transfer of funds into the Old Joint Accounts (referred to in the SOC as “BOC Transactions” and “SCB Transactions”).

5.4.  In relation to these bank transactions, it was alleged in the SOC that:

-  “By reason of the BOC Transactions and the SCB Transactions, the Plaintiff has suffered a loss of two-thirds of her interest in the money deposited into the [Old Joint Accounts], which are owned jointly by the 3 account holders (namely, the Plaintiff, the 1^st Defendant and the 2^nd Defendant)” [§17];

-  Madam Chui was induced to enter into the BOC and SCB Transactions by the misrepresentation and/or undue influence of CSP and CSF, and the “transfers of the Plaintiff’s monies to the [Old] Joint Accounts were or became null and void, and the Plaintiff is and becomes entitled to repayment of the said moneys” [§22];

-  “alternatively, the Defendants (and the Plaintiff)  hold the said moneys as trustees for and on behalf of the Plaintiff” [§23] (emphasis added).

5.5.  In addition to claims against CSP relating to two flats, the relief claimed against CSP and CSF included:

(1)  a declaration that Madam Chui was induced to enter into the BOC Transactions and SCB Transactions by the misrepresentation and/or undue influence of CSP and CSF and that the transfers of Madam Chui’s money to the Old Joint Accounts are null and void;

(2)  “alternatively, a Declaration that [CSP] and [CSF] hold and have held the [Old] Joint Accounts as trustees for and on behalf of [Madam Chui]” (emphasis added).

6.1.  In CSP’s Defence filed on 26 September 2016, she pleaded (among other things)  that:

-  she had been Madam Chui’s primary carer [§3];

-  Madam Chui had all along maintained trust and confidence in her by reason of their mother-daughter relationship and the years of care extended by CSP to Madam Chui [§5];

-  on 5 October 2015, Madam Chui:

-  discovered that two joint accounts of herself and CSM had been set up without her being aware of them [§10(iii)-(iv)];

-  requested CSP and CSF to open joint accounts with her the next day in respect of her other bank accounts, in order to protect herself against CSM [§10(vi)];  

-  told CSP and CSF that since they “helped her earn much of her assets by way of proper and gainful investment, [CSP and CSF] were entitled to utilize the funds in the joint accounts to be opened” [§10(vii)];

-  on 6 October 2015,

-  a joint account was set up at BOC, which could only be operated with the joint signatures of Madam Chui, CSP and CSF [§11(iv)];

-  a joint account was set up at SCB, “in such a way that its operation required any two signatures of [CSP and CSF and Madam Chui].  Such arrangement was put in place such that [CSP and CSF] would be free to utilize the funds in the SCB joint account, whether for the purpose of taking care of [Madam Chui] in case [Madam Chui] is unable to do so due to health problems or otherwise.  Furthermore, such arrangement was consistent with the sentiment intimated by [Madam Chui] as referred to in paragraph 10(vii)  above” [§14]

  -  para. 23 of the SOC[3] was denied.

6.2.  On the same day, CSF filed a defence, which was similar, but not identical, to that of CSP[4].  

7.1.  As mentioned above, Madam Chui was certified as a mentally incapacitated person in October 2017. 

7.2.  On 28 September 2019, a master appointed CSM as Madam Chui’s next friend for the purposes of Order 80 rule 3(5)  Rules of the High Court (RHC), on the basis that Madam Chui has since action[5] brought become a mentally incapacitated person incapable of managing and administering her affairs, and ordered that the Previous Proceedings may be continued by CSM as next friend of Madam Chui.

7.3.  On 4 December 2019, the application for registration of the EPOA was granted, and registration was effected on the same date.

8.1.  On 21 May 2020, a Re-Amended SOC with CSM as Madam Chui’s next friend was filed, which retained the allegations and relief summarized in §§5.4-5.5 above.

8.2.  On 22 May 2020, an Amended Defence of CSP was filed, which retained the allegations and defences summarized in §6.1 above.

8.3.  CSF did not file an amended defence.

Consent Orders in Previous Proceedings

9.  Of significance in these matters before me are two Consent Orders made in the Previous Proceedings.

1^st Consent Order (22.10.2020)

10.1.  First, on 22 October 2020, an order (“1^st Consent Order”)  was made by a master pursuant to a consent summons filed by all the parties (ie Madam Chui suing by her next friend CSM as plaintiff, and the 1^st defendant CSP and the 2^nd defendant CSF)  on 21 September 2020.

10.2.  The 1^st Consent Order stated:  

“BY CONSENT, IT IS ORDERED THAT:-

1. The Plaintiff via her next friend and son CSM, the 1^st Defendant and the 2^nd Defendant shall close all the accounts held under the joint names of Madam Chui, the 1^st Defendant and the 2^nd Defendant with BOC and SCB all opened on 6 October 2015 (“the Old Joint Accounts”)  within 28 days from the date hereof;

2. All funds in the Old Joint Accounts before their closing shall be transferred to a new bank account to be opened in the joint names of the Plaintiff and 1^st Defendant (“the New Joint Account”)  and neither of the account holders shall deal with the funds in the New Joint Account without written joint consent or court order;

3. The Plaintiff do withdraw this action against the 2^nd Defendant;

4. There be no order as to costs between the Plaintiff and the 2^nd Defendant; and

5. Costs of this application between the plaintiff and the 1^st Defendant be in the cause”. (Emphasis added).

10.3.  Pausing there, it is clear that the 1^st Consent Order was made in contemplation that the Previous Proceedings would continue, and that if CSM (as Madam Chui’s next friend)  and CSP could not jointly consent on any dealing with the funds in the New Joint Account, an application could be made to the court.  

10.4.  On 25 June 2021, the New Joint Account was opened at BOC.  The bank’s terms and conditions under which the funds in this joint account were held were not in the evidence before me.  

2^nd Consent Order

11.  On 6 December 2021, another consent order was made in the Previous Proceedings.  A joint application was made by the Plaintiff and the 1^st Defendant by way of consent summons filed on 3 December 2021.  This order stated:

“IT IS BY CONSENT ORDERED that:-

1. Leave to the Plaintiff to withdraw this action against the 1^st Defendant on condition that the Plaintiff be barred from claiming against the 1^st Defendant in respect of the same subject matter;

2.  [Return of title deeds of one of the flats].

3.  The Trial scheduled for 14-17 February 2022 be vacated;

4.  Costs of this action and of this application be paid by the Plaintiff to the 1^st Defendant, to be taxed if not agreed”.  (Emphasis added).

Costs in the Previous Proceedings

12.  Subsequently, a master taxed the costs payable by the plaintiff to CSP at $533,608.

Events before HCMP1229/2023

13.1.  CSM wished to pay the said costs from the New Joint Account, but CSP objected on the basis that she was entitled to half the funds therein before any payments could be made from it[6].

13.2.  On 4 January 2023, solicitors acting for Madam Chui “whose financial affairs were managed by [CSM] under the [EPOA]” wrote to solicitors for CSP.  They said:

“It was your client’s pleaded case in HCA1710/2016, inter alia, that:

(i)  The funds in the [Old Joint Accounts] actually sourced from Madam Chui Oi Ying; and

(ii)  On the basis of your client’s own admissions and her pleaded case (and were corroborated by the 2^nd Defendant therein), the purpose of opening the [Old Joint Accounts] were to protect the interest of the plaintiff and not for a transfer of interest.

As such, Madam Chui Oi Ying was and is the sole beneficial owner of all the funds in the [New Joint Account] and the [Old Joint Accounts]. You client was and is a trustee (and no more than a trustee)  of those funds.

Therefore, we hereby request you, as a trustee, to co-operate with [CSM] and to make transfer of all the funds in the [New Joint Account] to [CSM’s] bank account for settlement of Madam Chui’s monthly living expenses”. (Emphasis added).

13.3.  As CSP did not comply, the OS was filed on 2 August 2023.  As mentioned above, on 3 January 2024, CSP issued a summons to strike out the OS on the primary basis that the plaintiff’s claim was in respect of the same subject matter as the Previous Proceedings and thus was in breach of §1 of the 2^nd Consent Order, and an abuse of the process of the court.  

Legal Principles

14.1.  It is not disputed that the Court in the Previous Proceedings had power to impose a condition barring re-litigation of the same subject matter in subsequent proceedings.  Order 21 rule 3 RHC provides:

“... a party may not discontinue an action ... without the leave of the Court, and the Court hearing an application for the grant of such leave may order the action ... to be discontinued ... as against any or all of the parties against whom it is brought ... on such terms as to costs, the bringing of a subsequent action or otherwise as it thinks fit” (emphasis added).

14.2.  In Fong Meng Sung John v Luk Man Lok Rocky and others[7], Recorder Lisa KY Wong SC (as she then was)  traced the legislative history of Order 21 and concluded [§39]:

“In summary, the statutory code of discontinuance was restrictive, rather than relaxing, in effect in origin. It was enacted and revised over the years to fetter the otherwise unqualified option of a plaintiff in a common law action to discontinue the action at any time without prejudice to his right to bring a fresh action on the same subject matter and to leave it to the Court to decide whether a plaintiff can still discontinue after his action has reached a certain stage and, if so, whether he should be allowed to do so only on terms” (emphasis added).

14.3.  It is clear from the 2^nd Consent Order that the plaintiff was only allowed to discontinue[8] the Previous Proceedings on terms that no subsequent proceedings on the same subject matter may be brought.  It is not an answer for the plaintiff to say simply that the Previous Proceedings did not result in a judgment or ruling on any issue.  As was well-established by the Henderson v Henderson principle, abuse of process lies in vexing the other party twice in the same matter, as there is an underlying public interest in finality in litigation[9], quite apart from the underlying objective of the rules of court that proceedings should be dealt with as expeditiously as is reasonably practicable (Order 1A rule 1(b)  RHC).

Plaintiff’s submissions

15.  In the present case, the plaintiff submitted that “on 6 December 2021, since the Plaintiff was no longer able to give evidence in court or by any other ways, upon consent, she was granted leave to withdraw the whole HCA1710/2016, with costs to the 1^st Defendant”[10].  It is then submitted that Madam Chui is the sole beneficial owner of the New Joint Account because CSP and CSF had pleaded in the Previous Proceedings that Madam Chui was the source of the funds, and that CSP was only “free to utilize the funds whether for the purpose of taking care of Mother or otherwise”, and a right of utilization did not prove beneficial ownership.  It is submitted that as the plaintiff is still one of the legal owners of the New Joint Account, she (through CSM)  is entitled to utilize them.

Discussion

16.  In my view, the crux of the case is that in the Previous Proceedings, the plaintiff had consented to the condition that she be barred from claiming against CSP in respect of the same subject matter.  There is no suggestion that she is entitled to renege from that condition. 

17.  Clearly, the Previous Proceedings and the OS are in respect of the same subject matter.  It is common ground that the funds in the New Joint Account are the same as those in the Old Joint Accounts.  

-  In the Previous Proceedings, the plaintiff pleaded in §23 RASOC that “the Defendants (and the Plaintiff)  hold the said moneys as trustees for and on behalf of the Plaintiff” and the relief included a declaration that CSP and CSF hold and have held the Old Joint Accounts as trustees for and on behalf of Madam Chui. 

-  In the OS, the plaintiff is now claiming against CSP a declaration that CSP is liable to account to the plaintiff for all the funds (together with interest thereon)  kept in the New Joint Account as constructive trustee and/or resulting trustee, and for the return of all the funds together with any interest thereon kept in the New Joint Account.

18.  Counsel for the plaintiff submitted that the Previous Proceedings had been brought on the basis of misrepresentation and/or undue influence, and that those proceedings had to be discontinued because Madam Chui was not in a condition to give evidence.  He submitted that the OS is now brought on the basis of CSP’s own pleadings and/or witness statement in the Previous Proceedings in which she admitted that Madam Chui was the source of the funds.

19.1.  I do not accept that submission. CSP’s pleadings were filed in the Previous Proceedings.  If, as counsel for the plaintiff now submits, CSP had made any admission in the pleadings and/or witness statement, the plaintiff could have applied for judgment on the trust claim in the Previous Proceedings on that basis.  That was not done.

19.2.  In any event, it is not correct for counsel for the plaintiff to submit that CSP had admitted that Madam Chui was the sole beneficial owner of the funds in the New Joint Account.  Paragraph 23 of the RASOC (pleading that CSP held the funds as trustee for and on behalf of Madam Chui)  was denied in §22 and reference was specifically made to §10(vii)  of the Amended Defence.

19.3.  It is well-established that the beneficial ownership of funds in a joint account is a question of intention of the joint account holders.  Apart from the fact that the banks’ terms and conditions under which the funds were held were not before me, in the Amended Defence, CSP had pleaded that Madam Chui had told her that since she and CSF “helped her earn much of her assets by way of proper and gainful investment”, they were entitled to utilize the funds in the joint accounts to be opened” [§10(vii)].  At §75 of CSP’s witness statement in the Previous Proceedings, she said that Madam Chui told her that she was entitled to her assets as she had helped her earn them.

19.4.  The fact that Madam Chui was the source of funds in the first place is not conclusive.  It is well-established that presumptions of resulting trust and advancement arise as a matter of default, where there is otherwise insufficient evidence of the actual subjective intention of the parties at the time of the transactions[11]. 

20.  As for the plaintiff’s submission that either party could utilize the funds, quite apart from the fact that the terms and conditions under which the funds are held are not before me, there is the added provision of the 1^st Consent Order in the Previous Proceedings which provided that neither account holder should deal with the funds without written joint consent or court order[12].

21.  Finally, it was also submitted on behalf of the plaintiff as a “fallback position” that even if there is no trust, the plaintiff is entitled to “at least” half the funds as one of the two legal owners of the New Joint Account.   This was not sought in the OS, and as mentioned, BOC’s terms and conditions under which the funds are held were not before me.  Accordingly, it is not appropriate for me to make any ruling on this new submission.  

22.  For the above reasons, it is clear that the OS is an abuse of the process of the court as it is a claim in respect of the same subject matter as the Previous Proceedings.  I would give an order in terms of §1 of the summons filed on 3 January 2024 and dismiss the OS with costs.

Costs

23.  There are two additional matters in respect of costs.  First, CSP has asked that costs should be taxed on the indemnity basis on the ground (among others)  that the proceedings are entirely devoid of merit and should never have been brought[13].  Secondly, CSP has asked that CSM be ordered to pay the costs under Order 62 r.6A RHC[14]. 

24.  As for the first matter, in light of the possibility that CSM may be ordered to pay costs under Order 62 rule 6A RHC, I would reserve my decision on the basis of costs. 

25.1.  As for the second matter, prior to the hearing, I had made inquiries of the parties as to whether a committee had been appointed for Madam Chui under Part II of the Mental Health Ordinance Cap. 136, and if so, whether the committee had received authorisation to commence the OS. 

25.2.  The reply from the plaintiff’s solicitors was that no committee had been appointed, and the OS was brought on the basis that the EPOA authorised CSM to “collect any capital” due to the plaintiff. 

26.  At the hearing, I drew the parties’ attention to the judgment in C v B (Mrs A) where it was held that a Part II committee may co-exist with an EPOA[15].  If a Part II committee is appointed, it may apply to the court for authorisation to issue proceedings, and the court then would consider a number of factors (including the merits of the intended claim, and the exposure of the estate of the mentally incapacitated person to liability for costs in case the proceedings failed)[16].  In contrast, an attorney under an EPOA does not have a general power to act on behalf of the donor[17].  I do not think the EPOA provision for “collecting any capital” provided the same sort of authorisation to CSM to issue the OS as an authorisation from the court to a Part II committee.  CSM as next friend does not therefore have the same protection against costs liability as a Part II committee.  

27.  For the purposes of joining CSM as a party for the purpose of costs, I consider that the first stage in Sun Focus Investment Ltd v Tang Shing Bor and another[18]has been satisfied.  For the second stage, I would give the following directions:

-  the defendant in the OS (CSP)  may file an affirmation within 14 days from the date of this Judgment in support of her application for costs to be paid by CSM;

-  CSM may file an affirmation within 14 days thereafter in opposition;

-  CSP may file an affirmation within 7 days thereafter in reply.

The matter will then be fixed for hearing.