LAU KWOK HUNG (AS THE ADMINISTRATOR OF THE ESTATE OF LAU WO alias LAU YICK WO, THE DECEASED) v. WH AH JEE AND ANOTHER

HCA 1071/2022

[2024] HKCFI 2733

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1071 OF 2022

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BETWEEN

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DECISION

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1.  Introduction

1.1  By a Notice of Appeal dated 3 April 2024, the 1^st and 2^nd Defendants (by original action and the 1^st and 2^nd Plaintiffs (by counterclaim) (respectively “D1” and D2” and collectively “Ds”) seek to appeal against the decision of Master KW Wong dated 20 March 2024 (“Decision”). Before the learned Master were (1) the Plaintiff (“Administrator”[1])’s summons dated 4 December 2023 to strike out various paragraphs and prayers of the Defence and Counterclaim (“D&C”) and (2) Ds’ amended summons (amended by an order dated 11 March 2024) to amend the D&C.

1.2  By the Decision, the learned Master made the following orders (“Order”):

(1) The 2^nd sentence of paragraph 24 of the D&C be struck out for lack of particularity and relief in the prayer;

(2) Paragraph 24A of the draft amended Defence and Counterclaim (“Proposed AD&C”) as per the draft attached to Ds’ amended summons be disallowed as it relates to theft and adds nothing to better the theft claim;

(3) All other amendments in the Proposed AD&C be allowed and Ds do file and serve the Amended Defence and Counterclaim within 14 days;

(4) Leave be granted to the Administrator to file and serve the Amended Reply and Defence to Counterclaim within 28 days thereafter;

(5) Costs of and occasioned by the amendment be to the Administrator in any event;

(6) 50% of the costs of the Administrator’s strike-out summons including the costs of the hearing on 20 March 2024 with certificate for counsel be paid by Ds to the Administrator, summarily assessed at HK$75,000 payable forthwith.

1.3  By the present appeal, Ds seek an order that they be allowed to amend in full the Defence and Counterclaim as shown in Proposed AD&C. In other words, Ds seek to overturn Order §§1 and 2, in that:

(1) They seek to “reinstate” the 2^nd sentence of D&C §24;

(2) They say that leave should be granted to them to include Proposed AD&C §24A (collectively “Expunged Parts”).

1.4  D&C §24 (which is part of the counterclaim) reads as follows:

“It was discovered that the G/F of the Property was also unlawfully occupied by [the Administrator][2] and his accomplices since June 2020. During the period of unlawful occupation, [the Administrator] had stolen some of the personal belongings and money belonged to [Ds] kept in the Property, amounting to not less than HK$325,800.” (emphasis added)

The bolded words were struck out by Order §1 for lack of particularity and lack of relief in the prayer of the D&C.

1.5  AD&C §24A reads as follows:

“On 10 October 2021, in the light of the matters stated in paragraph 24 hereinabove, [D1] reported the matter to Ma On Shan Police Station where the police opened a case with the report number MOSDIV21017088.”

1.6   As is clear from the above, the Expunged Parts are Ds’ claim for theft purportedly committed by LKH (“Theft Claim”).

1.7  It is also relevant to refer to other parts of the Proposed AD&C (which were allowed by the Decision):

(1) §25: “Ds do have the right to claim mesne profits and damages for trespass as a result and arising out of the unlawful occupation of the Property since June 2020”;

(2) Relief (7) of the counterclaim: “Damages for trespass (to be assessed)”.

1.8  At the hearing, Ds were represented by Ms Lilian Ip (with Mr Zavier To) and the Administrator by Mr Martin Lau.

2.  Background

2.1  The Deceased passed away in December 2020. During his lifetime, he had 2 “partners”, respectively Madam Fong Kam Lin (“Madam Fong”) and D1.

2.2  The Deceased and Madam Fong had 3 children, including LKH. The Deceased and D1 had 4 children, including D2.

2.3  At issue between the parties are the following specific assets:

(1) The Property as defined in the pleadings, namely a property known as Lot No 483 in DD 207 (No 4 Tai Tung Wo Liu), Tai Po, New Territories, Hong Kong held under Ds’ names;

(2) The sum of HK$5,172,549.46 previously held in a bank account maintained at the Standard Chartered Bank (HK) Limited (“SCB”) under the joint names of the Deceased and D1 (“SC Account Balance”). The SC Account Balance is now held in the Administrator’s bank account also maintained at SCB.

2.4  In these proceedings, the Administrator contends that the Property and the SC Account Balance are assets belonging to the Deceased’s estate. The foregoing is denied by Ds. In the D&C, D1 counterclaims that the SC Account Balance belongs to her and Ds counterclaim that they were the joint legal and beneficial owners of the Property. As noted above, the D&C also raises the Theft Claim.

3.  Issues to be decided

3.1  As I understand Mr Lau, the position originally taken by the Administrator’s position may be summarized as follows:

(1) The primary contention is that the Theft Claim is irrelevant to the pleaded issues (“Irrelevance Ground”)[3]. It is said that the Theft Claim is irrelevant to (a) the rival claims on the ownership of the Property and the SC Account Balance (“Ownership Issues”) and (b) Ds’ own counterclaim by reference to D&C §25 and Counterclaim Relief (7);

(2) Secondly, the Theft Claim is devoid of particulars (“Lack of Particulars Ground”)[4];

(3) Thirdly, the Theft Claim is not backed with proper evidential basis (“Lack of Evidence Ground”)[5].

3.2  In respect of the Irrelevance Ground, Mr Lau at the hearing fairly acknowledged that whilst the Theft Claim is not germane to the resolution of the Ownership Issues, that fact per se does not render it irrelevant. The key issue is whether the Theft Claim is relevant to Ds’ pleaded counterclaim. Despite having so intimated in her Skeleton Submissions, Ms Ip did not offer any proposed further amendments in respect of the Theft Claim.

3.3  The applicable principles are largely not in dispute between counsel. I gratefully adopt the summary set out in Mr Lau’s Skeleton Submissions:

(1) It is only in plain and obvious cases that the court should exercise its summary powers to strike out a pleading. However, plain is not the same as simple; and obvious is not the same as short. If on a careful reading, it can be seen that there is no cause of action, the Court can strike out the pleading: Hong Kong Civil Procedure 2024 (“HKCP”) §18/19/4;

(2) Where an amendment is sought so as to avoid a strike out, the Court will scrutinize such applications on strike out principles: HKCP §18/19/5. In a similar vein, leave to amend should be refused if the proposed amendments are bound to fail, and hence liable to be stuck out: Natamon Protpakorn v Citibank NA [2009] 1 HKLRD 455 at §25;

(3) Irrelevant materials may be struck out even if not scandalous. If degrading, indecent, or offensive charges are made which are irrelevant or are for the sole purposes of abusing or prejudicing the other party, the pleading becomes scandalous and liable to be struck out: HKCP §18/19/6;

(4) If a party introduces a pleading which is unnecessary, and it tends to prejudice, embarrass and delay the trial of the action, it then becomes a pleading which is beyond his right: HKCP §18/19/8;

(5) The processes of the court must also be used bona fide and property and must not be abused. It is an abuse of process to start a case without solid foundation, hoping that something will turn up in the course of the proceedings: HKCP §18/19/9;

(6) In overall, the categories of conduct rendering a claim frivolous, vexatious or an abuse of process are not closed but depend on all the relevant circumstances, including considerations of public policy and the interest of justice: HKCP §18/19/9.

3.4  It is pertinent to note that the Expunged Parts consist of two components. First, the 2^nd sentence of D&C §24 was struck out, and secondly, leave was refused to include Proposed AD&C §24A. Counsel agreed that the court’s focus should be on whether the 2^nd sentence of D&C §24 (the factual averment of the alleged theft) should be struck out. Were the answer in the affirmative, then it must follow that no leave should be granted to include Proposed AD&C §24A, it being a factual averment on D1 reporting the alleged theft to the police. Conversely, were the answer in the negative, Mr Lau has not suggested that there are independent reasons for Proposed AD&C §24A to be disallowed.

4.  Analysis

(i) The Irrelevance Ground

4.1  As clarified by Mr Lau at the hearing, the Irrelevance Ground is premised on RHC Order 18, rules 19(1)(a)-(d), namely all of the strike out grounds. The difference between counsel is whether the Theft Claim is relevant to Ds’ counterclaim as formulated in the Proposed AD&C. I have already set out the relevant paragraphs at §§1.4 to 1.7 above.

4.2  Mr Lau submits that the only relief which is capable of being relevant to the Theft Claim is Counterclaim Relief (7) which is a claim for damages for trespass (to be assessed). However, Mr Lau submits that one has to read Counterclaim Relief (7) together with Proposed AD&C §25, which is a claim for damages for trespass as a result and arising out of the unlawful occupation of the Property since June 2020. He reasons that, on any fair reading, the damages claim is based on the alleged unlawful occupation of the Property and is not a claim in respect of the Theft Claim. He further submits that the Proposed AD&C does not advance a case on conversion.

4.3  Conversely, Ms Ip submits that Proposed AD&C §25 must be read together with §24. The 1^st sentence of §24 pleads that Lau and his accomplices had since June 2020 unlawfully occupied the ground floor of the Property. Thus, where §25 refers to “as a result and arising out of the unlawful occupation”, the averment encompasses a plea that the alleged theft took place during the unlawful occupation and the reference to damages for trespass includes both trespass to land and trespass to goods.

4.4  In relation to a claim premised on trespass to goods, Ms Ip relies on Bullen & Leake & Jacob’s Precedents of Pleadings, 18^th Ed. The learned author observed:

“[26-15] The overlapping nature of torts relating to goods many have largely deprived the tort of trespass to goods of an independent existence. The fact, however, that the circumstances giving rise to a claim in conversion of goods by destruction or taking also give rise to a claim in trespass, should not blur the essential difference s in the two claims… A deliberate taking away out of possession of the claimant is the most obvious form of trespass to goods, as is any unpermitted contact or damage to another’s goods. The defendant’s conduct must be blameworthy so that in the absence of negligence, accidental damage will not amount to trespass…

[26-17] One of the principal objectives in bringing the various torts under the single umbrella of unlawful interference with goods was to provide a uniform system of relief and damages. The remedies available are the same as for conversion.”

4.5  Ms Ip further relies on the pleading precedent at [26-F12] as follows:

“[1] The Defendant is a county court bailiff.

[2] On [date], the Defendant, purporting to levy execution upon the Defendant’s property, attended the premises of the Claimant and seized goods to the value of…

[3] The only amount in respect of which the bailiff was entitled to levy execution was the sum of…. In the premises, the execution was wrongful and the taking of the Claimant’s goods was a trespass.

[4] By reason of the trespass, the Claimant has suffered loss and damage in the differences between the value of the goods and the value of the execution debt namely…

[5] … The Claimant therefore claims … (1) An order for the delivery up of the goods and damages; (2) Alternatively, damages.”

4.6  The Theft Claim in the Proposed AD&C (not settled by counsel), in its existing formulation, may legitimately be criticized as a pleading which is not very clear or well-particularized. Under the Irrelevance Ground, the primary issue is whether D&C §24 should be struck out as being irrelevant to the pleaded counterclaim.

4.7  As I understand Mr Lau, he does not suggest that Counterclaim Relief (7), which is couched in very general terms, is not capable of including damages for trespass to goods. The high watermark of his submission is, when read together with Proposed AD&C §25, Counterclaim Relief (7) is only a claim for damages for trespass to land.

4.8  As ventilated at the hearing, the issue for determination is whether the word “trespass” at Proposed AD&C §25 is limited to trespass to land (by reason of the alleged unlawful occupation).

4.9  In my view, whatever lack of clarity in Proposed AD&C may be cured by, for example, by the provision of voluntary particulars. Ds may simply clarify that the phrase “damages for trespass” at Proposed AD&C §25 includes “both trespass to land and trespass to goods as pleaded at §§23 to 24C above”.

4.10  In my view, that the Counterclaim can be more clearly pleaded is not a reason to strike out the 2^nd sentence of D&C §24. I therefore do not agree with Mr Lau that the 2^nd sentence of D&C §24 should be struck out on the Irrelevance Ground.

(ii) Lack of Particulars Ground

4.11  As pointed out above, Mr Lau’s primary ground is premised on the Irrelevance Grounds. The Lack of Particulars Ground and Lack of Evidence Ground were not pursued with a strong degree with enthusiasm, no doubt (fairly) recognizing the applicable principles.

4.12  In relation to the Lack of Particulars Ground, it is trite that where a pleading is defective only in not containing particulars to which the other side is entitled, application should be made for particulars under RHC Order 18, rule 12 and not for an order to strike out the pleading: HKCP §18/19/5.

4.13  At his Skeleton Submissions §29, Mr Lau complains that the following matters are not stated in the Proposed A&DC:

(1) What chattels constituted “some of the personal belongings” (the subject matter of their complaint);

(2) When the theft was alleged to have taken place (other than saying that such took place “during the period of unlawful occupation”);

(3) How the Plaintiff was said to have “stolen” those belongings with the necessary state of mind;

(4) What loss, if any, was caused to the 1^st and 2^nd Defendants.

4.14  On the present material:

(1) In relation to (1) at the preceding paragraph, there is a police report which itemizes the properties allegedly stolen. In so far as necessary, voluntary particulars may be provided based on the information set out in the police report, and in so far as necessary, more precise locations at which the allegedly stolen items were placed at the Property;

(2) In relation to (2) at the preceding paragraph, the evidence is that Ds were away from Hong Kong at the material time and only returned to Hong Kong in September 2021. The pleaded unlawful occupation commenced in June 2020 and the police report was made on 10 October 2021;

(3) In relation to (3) at the preceding paragraph, the allegation of stolen goods, unlike a pleading for a complicated fraudulent scheme, can be advanced in relatively simple terms. The 2^nd paragraph of D&C §24 already asserts that personal belongings of Ds and money belonging to Ds were stolen by Lau. In my view, there is nothing equivocal about the nature of the Theft Claim;

(4) In relation to (4) at the preceding paragraph, Ds have pleaded that their loss is not less than HK$325,800. Whether that quantum can be substantiated is a matter for trial.

4.15  For the above reasons, I do not agree with Mr Lau that the 2^nd sentence of D&C §24 should be struck out on the Lack of Particulars Ground.

(iii) Lack of Evidence Grounds

4.16  Mr Lau takes 2 points.

4.17  First, it is said that D2’s draft affirmation (affirmed in London but produced as an exhibit) was never formally filed into court. Previously, all of the affirmation evidence was made by Ds’ solicitors, on the basis that Ds are residing in England.

4.18  Whilst I accept Mr Lau’s criticisms and do not endorse the matters stated in the preceding paragraph, one must not overlook the fact that the police report, which is a contemporaneous document, has been adduced into evidence. Mr Lau does not suggest that the police report is forged.

4.19  Secondly, and relatedly, Mr Lau says that the only evidence in support of the Theft Claim is the police report. One has to bear in mind that this is essentially a family dispute and the nature of the Theft Claim is such that it is unlikely to be heavily documented.

4.20  There are rival contentions made by counsel. On the one hand, Mr Lau submits that no arrest has ever been made and no criminal charge has ever been laid. Conversely, Ms Ip points to the fact that the police has not concluded the investigation and the inherent probabilities that D1 would make a false police report.

4.21  It seems to me that, whilst the matters raised by Mr Lau are legitimate matters of comment when the matter comes to trial, I do not believe that they are so conclusive as to drive Ds from the judgment seat.

4.22  For the above reasons, I do not agree with Mr Lau that D&C §24 should be struck out on the Lack of Evidence Ground.

5.  Conclusion

5.1  As I am not prepared to strike out the 2^nd sentence of D&C §24, it follows that leave should be granted to the Defendants to include Proposed AD&C §25.

5.2  I therefore allow the appeal and set aside Order §§ 1 and 2. Leave is granted to Ds to amend the D&C as per the Proposed AD&C in its entirety. The parties are to submit a draft order (in particular dealing with the timetable for the filing and serving of the amended pleadings) within 7 days hereof for my approval.

5.3  As to costs, on a nisi basis:

(1) I am not minded to disturb Order §§5 and 6. Order §5 is the costs order usually made in respect of amendment. As to Order §6, it appears the Decision was made in part upon Ds’ undertaking to discontinue DCCJ 1364/2022 and that was the reason why the Administrator’s summons to strike out did not succeed in full. But more importantly, it appears to me that the arguments on the Irrelevance Grounds (which is the primary disagreement between counsel) ventilated at the hearing before me were different from those advanced before the learned Master, as evidenced by the fact that a number of authorities were only provided to the court at the hearing of the present appeal.

(2) In relation to the costs of the present appeal, the Administrator is to pay to Ds the costs of the appeal, to be summarily assessed. Ds are to lodge and serve their Statement of Costs within 3 days hereof. The Administrator is to lodge and serve his objection within 3 days thereafter. I will thereafter conduct the summary assessment on the papers.