CHAN LAI FONG v. CHAN KAM SHUN AND ANOTHER

HCAP 8/2005

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

PROBATE ACTION NO. 8 OF 2005

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D E C I S I O N

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Application

1. This is an application for amendment of the Defence and Counterclaim by the Defendants.

Background

2. Mr. Chan Kai (“the Deceased”) died on 15 January 2005, leaving a property known as Flat A, 12/F, Tower 3, Ocean Court, No.3 Aberdeen Praya Road, Hong Kong (“the Aberdeen Property”) at a gross value of  $1,380,000.00.  Having taken into account of the mortgage due to the bank in the sum of $1,200,431.00, the net value of the Estate became $179,569.00. A grant of probate (“the Probate”) was issued to the Defendants as joint executors on 7 April 2005 under HCAG 1860/2005.  The Defendants were and are husband and wife.  The Probate was premised on a Will dated 10 April 1999 (“the 1999 Will”).  By the 1999 Will, the Deceased devised, among others, the Aberdeen Property to the Defendants as joint tenants.

3. On 25 July 2005, the Plaintiff commenced the present probate action against the Defendants.  She sought to set aside the Probate because it was said that the Deceased had revoked the 1999 Will by executing another Will on 9 January 2004 (“the 2004 Will”).  The Plaintiff was named as the sole executrix in the 2004 Will.  Under the 2004 Will, the Aberdeen Property was devised to 1st Defendant and his brother in equal shares.

4. The Defendants contested the proceedings.  The Defence and Counterclaim was filed on 28 September 2005.  In short, they asked the Plaintiff to prove the 2004 Will in solemn form.  Further or in the alternative, they said that the Aberdeen Property was acquired in the name of the Deceased because he was a public housing tenant.  However, all finance was provided by Defendants and as such, they sought, inter alia, a declaration that they were the beneficial owners of the Aberdeen Property.

5. Both parties filed their respective lists of documents in December 2005.  Then, on 20 December 2006, the Defendants issued the present summons seeking leave to amend, in substance, their Counterclaim.

6. On 10 January 2007, the parties appeared before Master Au-Yeung for the call-over hearing of the summons.  The Plaintiff’s solicitor indicated that he opposed to certain parts of the proposed amendments. They amounted to withdrawal of admissions.  It was also said that paragraph 27/3/9 HKCP 2007 would be relied upon.  In the circumstances, the learned Master adjourned the matter for argument with one hour reserved.  Usual directions as to filing of affidavit evidence were not made as they were not asked by the parties.

7. On 22 February 2007, the parties appeared before me for the substantive argument of the matter.  Mr. Eric Yao of Counsel acted for Defendants and Mr. S.C. Chan of Messrs. S.C. Chan & Co. represented the Plaintiff.  A housekeeping matter was raised because Mr. Chan sought to rely on his affirmation dated 15 February 2007 at the hearing. By the affirmation, Mr. Chan desired to produce a land search record to show that the Defendants owned another landed property in Hong Kong at the material time when they “purchased” the Aberdeen Property. Such conduct might amount to a criminal offence.  Mr. Yao objected to it because it was late and unfair.  At that juncture, I allowed the reliance of the affirmation on a de bene esse basis in order not to waste time on the argument.  After thoughts now, I will decline Mr. Chan’s application because I agree with Mr. Yao’s submission.

(a)       Representation was made to the Court that no affidavit evidence would be relied upon.  No cogent reason has been given as to why this representation should not be held good.

(b)       Taking into account of the intervening Chinese New Year holidays, Mr. Chan effectively gave only 2 days to Mr. Yao to deal with the affidavit evidence.

(c)       In any event, I do not consider Mr. Chan’s affirmation would affect the outcome of the Defendants’ summons.

Ruling

8. Having heard from the parties, I reserved my decision to be handed down.  I now do so.

9. The applicable principles relating to amendment of pleadings are not disputed.  They can be conveniently found in paragraphs 20/8/6 and 27/3/9 HKCP 2007 at page 364 and page 506 respectively.  Briefly, amendment should be allowed if it serves to determine the real controversy or correcting defects, unless the other party will suffer prejudice that cannot be compensated by costs.  Leave to withdraw admission is normally given where:

(a)    no injustice is done to the other party,

(b)    there is no question of bad faith, and

(c)     a triable issue with reasonable prospects of success is raised.

10. Applying the above principles in the present case, I am of the view that the Defendants’ application is to be allowed.

(a)       There is no evidence before me as the prejudice that the Plaintiff will suffer by the amendments.  It is a fatal point.  At the hearing, Mr. Chan only told me that the Plaintiff might have difficulty in locating the relevant conveyancing documents relating to the purchase of the Aberdeen Property by the Deceased.  However, it is trite law that prejudice has to be specifically established to the satisfaction of the Court, not to mention a mere assertion of possibility by way of submission.

(b)       I agree with Mr. Yao that his proposed amendments do not change the Defendants’ case in substance.  The Defendants still sought a declaration that they were the beneficial owners of the Aberdeen Property.  They simply sought to “retract” the following pleaded case:

“ 11.         The Deceased was at all material times until 2000 a public housing tenant who rented from the Hong Kong Housing Authority a flat in a public housing development known as Ngau Tau Kok Upper Estate, Ngau Tau Kok, Kowloon.  As a public housing tenant, the Deceased was entitled to apply to the Housing Authority to purchase a flat developed either by the Housing Authority or a duly authorized private developer under the Hone Ownership Scheme (“HOS”) which aimed to assist lower-income families to acquire home ownership.

12.         In or about 1998, the 1st Defendant wanted to make use of the Deceased’s entitlement to purchase a flat from the Housing Authority under the HOS.  He set his eyes on Ocean Court in Aberdeen, which was on sale for the first time as an uncompleted development under the HOS.

13.         ……

14.         …… the Deceased applied in his capacity as a public housing tenant to the Housing Authority to purchase a unit at Ocean Court ……”

However, the followings are noted:

(i)        Strictly speaking, if one looks at the Reply herein, the Plaintiff only admitted paragraph 11 of the Counterclaim, but denied and/or did not admit paragraphs 12 and 14 thereof.  I cannot see how the Plaintiff is able to stop the Defendants from changing their case (paragraphs 12 and 14) when the same has not been “agreed” by the parties.

(ii)       The above facts stated in the “retraction” are either hardly denied or can easily be established with reference to the purchase of the Aberdeen Property by the Deceased.  After all, I have heard nothing from the Defendants to the effect that they were wrongly pleaded by mistake and/or misunderstanding between them and their legal advisers.  Hence, in my view, in substance, it does not matter whether such case is kept in the pleadings or not.  In deciding whether this Court will make the declaration sought by the Defendants, legality of the underlying conveyancing transaction has to be considered by the Court.  And as agreed by both Mr. Yao and Mr. Chan, such issue is not to be resolved within this interlocutory application, but the trial to be held.

(c)       There has been no complaint that the application for amendment was made late.  The parties are still largely in the discovery stage.  I see no reason why the Plaintiff cannot be compensated by way of costs.

(d)       The question of bad faith on the part of the Defendants in relation to the proposed amendments has never been raised and/or established.

(e)       Although there is also no evidence before me to explain why the Defendants sought the amendments.  I again only had submissions from Mr. Yao that it was for the purpose of improving clarity and reflecting better instructions on the Defendants’ case.  However, such “failure” is less fatal than that of the Plaintiff in (a) above and amounts to only one factor that I have taken into consideration.

(f)        In balancing carefully all the above matters, including the prejudice suffered by the Defendants if being deprived of their right to amend against any prejudice specifically established to be suffered by the Plaintiff if the amendments would be allowed, including whether it can be compensated by an order of costs, I believe that discretion ought to be exercised in favour of the Defendants in the circumstances.

Directions and Costs

11.  In the circumstances, I will order that:

(a)    The Defendants do have leave to amend their Defence and    Counterclaim in red as per the copy annexed to the summons filed herein on 20 December 2006 and file the same within 7 days from the date hereof.

(b)   Service of the Amended Defence and Counterclaim be dispensed with.

(c)    The Plaintiff do also have leave to amend and file her Reply and Defence to Counterclaim within 14 days from today.

12.            I see no reason to depart from the general principle that costs should follow the event.  There will be an order nisi that, apart from the affirmation of Mr. S.C. Chan dated 15 February 2007, costs of and incidental to the application shall be borne by the Defendants to the Plaintiff, including costs reserved on 10 January 2007, to be taxed if not agreed, in any event.