TAM WAI HUNG v. CHOW SIN KIM AND ANOTHER

HCMP 1374/2010

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 1374 OF 2010

(transferred from DCMP 499 of 2010)

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D E C I S I O N

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1.  The Plaintiff in these proceedings seeks relief under the Inheritance (Family Provision and Dependants) Ordinance [“the Ordinance”] Cap.481 against the estate of the late Chow Nai Chee [“the Deceased”]. As required by Section 25 of the Ordinance, the proceedings were commenced in the District Court as DCMP 499 of 2010. It was transferred to the High Court by consent on 5 July 2010. This judgment deals with the question whether the proceedings should be carried on in the High Court or the Family Court.

Case Management considerations

2.  But for two authorities cited by counsel for the Plaintiff (which I shall consider below), it is plain to me that the proceedings should be dealt with in the Family Court for the following reasons. First, the Ordinance itself provides that applications under the Ordinance should be commenced in the District Court. And there is a very good reason for such provision. I believe the reference to District Court in Section 25 should be read as referring to our Family Court. Though administratively the Family Court has its own Registry with a specialist panel of judges hearing family cases, in the statute book and as a matter of law the Family Court is part of our District Court. If one were to examine the provisions in the Ordinance, the judicial task to be exercised under it has a great deal of similarities and affinity with the task to be performed by a judge hearing cases in the Family Court. Judges of the Family Court routinely have to consider questions relating to maintenance and provision for dependants in the context of ancillary relief applications in the exercise of the divorce jurisdiction as well as other statutory applications.

3.  In the context of an application under the Ordinance by a wife of a deceased, Section 5(2) specifically directs the court to have regard to the provision which the wife might reasonably have expected to receive if on the day on which the deceased died the marriage, instead of being terminated by death, had been terminated by a decree of divorce. To that extent, the court must examine the provision that a family judge might make for the wife in a notional divorce on the date of death.  In England, the approach to be adopted under similar legislation was considered by the Court of Appeal in Fielden & Graham v Cunliffe [2006] Ch 361. Thus, one can immediately see the nexus between the divorce jurisdiction and an application under the Ordinance.

4.  The facts of the present case serve as good illustration. The Plaintiff was married to the Deceased in mainland China in 1940. Four children were born. The Deceased came to Hong Kong in 1951 whilst the Plaintiff and the children remained in the mainland. The Deceased registered a marriage with another woman in Hong Kong in 1967 and they had three children. In the 1980s, the Plaintiff and one of her children came to Hong Kong. According to the evidence filed on behalf of the Plaintiff, she and her children had contacts with the Deceased after they arrived in Hong Kong. It is her case that in the 1990s, the second wife and her children left the Deceased except one son who had mental illness. Thereafter the Plaintiff and her children took care of the Deceased and the next friend of the Plaintiff in these proceedings [“ZDL”], one of their children, settled in Hong Kong in 2002. ZDL said he had been looking after the Deceased since he arrived and he lived with the Deceased.  

5.  In 2007, the Plaintiff commenced divorce proceedings against the Deceased in FCMC 3058 of 2007. The Plaintiff claimed ancillary relief in such proceedings. Due to various reasons which I do not find necessary to set out in this judgment, up to the death of the Deceased in 2009 the divorce proceedings had not been concluded.

6.  The major part of the Deceased’s assets comprised of some listed shares. At the hearing on 20 October, I was told by the solicitor representing the Plaintiff that those shares had a market value of above $11 million at the time of the death of the Deceased. By a deed of gift of 21 March 2007, all the shares were transferred to the 1^st Defendant, a daughter of the Deceased by the second marriage. The net result is that there was nothing left in the estate to warrant any application for grant in respect of the estate. Notwithstanding the existence of a Chinese will made by the Deceased in 1986 (under which no provision was made for the Plaintiff or her children) and the naming of an executor in the will, no-one bothered to apply for grant.

7.  In the present proceedings, the Plaintiff relies on Section 12 of the Ordinance to “claw back” those shares in order to discharge the estate’s liability to make provision for her under Section 4 as the court may order.  Though the context is slightly different, the exercise under Section 12 is similar to an application to set aside disposition under Section 17 of the Matrimonial Proceedings and Property Ordinance [“MPPO”] Cap.192 in the context of divorce proceedings.

8.  Section 5 of the Ordinance directs the court to have regard to several matters set out therein in deciding whether reasonable financial provision has been made. If the court concludes that such provision has not been made, it should have regard to those matters in Section 5 in determining how the power under Section 4 shall be exercised.  Those matters are similar, though not exactly the same, as those a family judge has to consider in the context of ancillary relief, see Section 7 of the MPPO.

9.  In my judgment, the legislature clearly had in mind the close affinity of the jurisdiction under the Ordinance with applications for ancillary relief in the divorce jurisdiction when it was enacted in Section 25 that all proceedings under the Ordinance has to be commenced in the District Court. 

10.  The second reason why it is appropriate to have the case heard in the Family Court is that the issues involved are not so complicated that they warrant the transfer of the case to the High Court (putting aside the question of monetary limits which I shall address below). In the Agreed List of Issues, the parties identified the following as issues requiring determination.

“AGREED LIST OF ISSUES

1. The size and nature of the net estate of Mr Chow Nai Chee (“the Deceased”), in particular:-

(a) The property of the Deceased which has transferred to the Defendant within 6 years prior to his death on 21^st July 2009;

(b) Whether the transfer, or any part thereof, was made by the Deceased with an intention of defeating the application for financial provision under the Inheritance (Provision for Family and Dependants) Ordinance, Cap. 481 (“IO”);

(c) Whether an order pursuant to section 12 of the IO ought to be made against the 1^st Defendant in the circumstances of the case; and if so, what should be the amount of money and properties involved.

2. Whether the Deceased had made reasonable financial provision for the Plaintiff prior to his death.

3. The financial resources and financial needs which the Plaintiff has or is likely to have in the foreseeable future.

4. The financial resources and financial needs which beneficiary of the estate of the Deceased, namely the 1^st Defendant, Madam Woo Pao Chi, Mr Chow Sin Kin and Miss Chow Sen Chi (“the Beneficiary”), has or is likely to have in the foreseeable future.

5. The obligations and responsibilities which the Deceased had towards the Plaintiff.

6. The obligations and responsibilities which the Deceased had towards the Beneficiary.

7. The physical and/or mental disabilities (if any) of the Plaintiff, Madam Woo Pao Chi, Mr Chow Sin Kin and Miss Chow Sen Chi.”

11.  These are primarily issues of fact though the determination of the proper relief to be granted if the court were satisfied that an order should be made under Sections 4 and 12 of the Ordinance involves an exercise of judicial discretion. As mentioned, judges in the Family Court are familiar with the performance of such judicial task. Judges in our Family Court often have to deal with assets of value comparable to those of the shares in dispute in the present case. I see no reason why the case cannot be heard by the Family Court as a matter of just resolution of the dispute between the parties, proper case management and fair deployment of judicial resources. In this connection, solicitor for the Plaintiff accepted at the hearing on 20 October that the only concern she had is the limitations set by the two cases cited. Solicitor for the Defendant indicates that her client is quite happy to have the case tried in the Family Court.

12.  If the matter is litigated in the Family Court, the costs will be lower than having it tried in the High Court. Having regard to the underlying objectives in Order 1A Rule 1, if a case can properly be litigated in the District Court, it should not be transferred to the High Court, see my observations in May Fung Co Ltd v Wing Lung Industrial Ltd [2009] 5 HKLRD 590.

13.  Further, I have checked the state of the diaries in the High Court and the Family Court. There are less bilingual judges with expertise in family disputes in the High Court than the Family Court. Thus, with a 5 days estimate length of hearing (as agreed between the parties) if the case is heard by the Family Court, it can be dealt with at least 6 months earlier than it being heard in the High Court. Therefore, a trial in the Family Court is more in line with the expeditious disposal of the case (see Order 1A rule 1(b))[1].

The authorities

14.  I now turn to the two authorities cited on behalf of the Plaintiff. In a nutshell, it was held in those cases that the jurisdiction of the District Court in dealing with application under the Ordinance is circumscribed by the monetary limits set out in sections 32 to 37 of the District Court Ordinance.

15.  The first case is the decision of Judge Lok in Leung Kam Yin, Joyce v Li Oi-lun DCMP 1525 of 2001, 27 July 2001. The plaintiff in that case was a widow claiming provision under the Ordinance from the estate of her late husband. The estate had a value of $5.5 million and she claimed maintenance in the sum of $1.5 million. Judge Lok referred to Section 25(1) of the Ordinance and said,

“Although section 25(1) of the Ordinance provides that such kind of application shall be commenced in the District Court, it is far from saying that the District Court does have unlimited jurisdiction to deal with this sort of application.”

16.  The learned judge then made reference to section 30 of the MPPO which explicitly provides that the District Court can deal with matrimonial cases notwithstanding that the amount claimed in such application goes beyond the jurisdiction the District Court can exercise but for the section. He took the view that a similar section should appear in the Ordinance if the legislature intended the District Court to have unlimited jurisdiction over applications under the Ordinance.

17.  Judge Lok then referred to the situation in the Lands Tribunal and the Labour Tribunal Ordinance and said at para.7,

“In the absence of express provision in the Ordinance which provides that the District Court does have exclusive jurisdiction to deal with the claims under the Ordinance, I do not accept that the District Court has unlimited jurisdiction to deal with such claims. Indeed, section 25(2) of the Ordinance seems to suggest that the District Court should transfer a case to the Court of First Instance if that is necessary.”

18.  With respect, it appears that the learned judge mixed up two different questions: (a) whether the District Court has exclusive jurisdiction; and (b) whether the District Court has unlimited jurisdiction. I agree that the District Court does not have exclusive jurisdiction since there is express provision for the transfer of a case to the Court of First Instance. In the definition section, viz. section 2 of the Ordinance, “court” is defined as the Court of First Instance or the District Court. But it does not follow that the jurisdiction of the District Court is circumscribed by the monetary limits set out in Sections 32 to 37 of the District Court Ordinance. As in the case of matrimonial proceedings, even though there is no monetary limit in the Family Court’s jurisdiction, cases can still be transferred to the Court of First Instance on other good grounds being shown.

19.  It is unfortunate that Section 3 of the District Court Ordinance was not drawn to the attention of Judge Lok.  It provides,

“(1) A court known as the District Court is established.

(2) The Court shall be a court of record and shall have such civil and criminal jurisdiction and powers as are conferred upon it by this ordinance and by any other enactment for the time being in force.

(3) The jurisdiction and powers conferred by any other enactment for the time being in force shall be subject only to such limitations as such enactment may provide or may have provided.”

20.  Hence, for the purpose of ascertaining the limits to the jurisdiction of the District Court, the first question one should ask is whether the jurisdiction in question is conferred by the District Court Ordinance or some other enactments. If the jurisdiction is conferred by the former, one examines the provisions in the District Court Ordinance to ascertain its limit. If the jurisdiction is conferred by another enactment, one needs to refer to that particular statute to ascertain its limit. By reason of Section 3(3), the limits set out in the District Court Ordinance are not applicable to jurisdictions conferred by other enactments.

21.  In the present context, the jurisdiction of the District Court to hear applications under the Ordinance is conferred by the Ordinance. One must examine the provisions of the Ordinance to see whether there is any monetary limit to such jurisdiction. Unless adopted either expressly or impliedly by the provision in the Ordinance, the monetary limits under Sections 32 to 37 of the District Court Ordinance are irrelevant.

22.  In the Ordinance, no monetary limit is set as to the jurisdiction of the District Court. Neither can I find any provision in the Ordinance which incorporates the monetary limits under Sections 32 to 27 by necessary implications. As mentioned, I do not regard the provision for transfer of cases to the Court of First Instance as adoption of such limits by implication.

23.  Neither do I regard the absence of a provision similar to Section 30 of the MPPO as giving rise to such implication. In the light of Section 3(3) of the District Court Ordinance, it is not necessary to have provisions in other enactments to exclude the restriction on jurisdiction set by Sections 32 to 37 of the District Court Ordinance. Section 30 of the MPPO is probably there for abundance of caution. There are in fact other statutes conferring jurisdiction on District Court without any provision similar to Section 30: Stamp Duty Ordinance Cap.117; Antiquities and Monuments Ordinance Cap.53; Telecommunications Ordinance Cap.106. Bearing in mind the potential quantum involved in such cases, it is unlikely to be the legislative intent that the District Court has to exercise such jurisdiction with regard to the limitation imposed by Sections 32 to 37. In Arrowtown Assets Ltd v Collector of stamp Revenue [2002] 1 HKLRD 431 the District Court exercised its jurisdiction under the Stamp Duty Ordinance even though the amount involved exceeded the monetary limits in Sections 32 to 37.

24.  Though it may not be conclusive, it would be strange to prescribe that applications under the Ordinance must be commenced in the District Court even though it does not have the jurisdiction to hear some such cases due to monetary limitations. One may ask rhetorically what is the purpose of requiring the applications to be commenced in the District Court in such cases?

25.  The affinity between an application under the Ordinance and an ancillary relief application was also not drawn to the attention of Judge Lok.

26.  With great respect, I am driven to the conclusion that due to the failure to consider Section 3(3) of the District Court Ordinance, the decision of Judge Lok in Leung Kam Yin, Joyce v Li Oi-lun is per incuriam and should not be followed.

27.  The next authority is the decision of Judge Ng in CMF v The Personal Representative of the estate of CYC DCMP 140 of 2007, 12 October 2007.  Though Judge Ng explained her reasoning at greater length, her conclusion was basically the same as that of Judge Lok.  Again Section 3(3) of the District Court Ordinance was not drawn to the court’s attention in that case. Judge Ng therefore approached the issue by asking whether it can be argued that jurisdiction above the monetary limits under Sections 32 to 37 is conferred upon the District Court by implication in application under the Ordinance notwithstanding the absence of a provision similar to Section 30 of the MPPO (see paras.27 to 31).

28.  With respect, Judge Ng appeared to start from the premise that unless there is a specific statutory provision (either explicitly or by necessary implication) to the effect that the monetary limits in Sections 32 to 37 of the District Court Ordinance are not applicable, the jurisdiction of the District Court is circumscribed by the same. But Section 3(3) actually provides otherwise.  As explained, for jurisdiction arising from statute other than the District Court Ordinance, one should examine the jurisdiction conferring statute to see if there are restrictions similar to those under Sections 32 to 37 of the District Court Ordinance. If there is none, then the District Court is not subject to such limitations in respect of that particular jurisdiction.

29.  In the instant case, the jurisdiction is conferred upon the District Court by section 4 of the Ordinance. There is no restriction on the monetary limits of the jurisdiction of the District Court under the Ordinance, whether express or implied. Once we reach such conclusion, Sections 32 to 37 are irrelevant for the determination of the jurisdiction of the District Court over applications under the Ordinance.

30.  Due to the misconception as to the scope of the restrictions under Sections 32 to 37, Judge Ng had to identify the relevant sub-sections under Section 37(1) as jurisdiction conferring section to empower the District Court to deal with claims under the Ordinance. In her judgment, she identified Section 37(1)(a) and (e) as the relevant provisions.  Having done so, she had to pay regard to the corresponding restrictions to the jurisdiction of the District Court under Section 37(2)(a) and (e).

31.  But as discussed above, the jurisdiction conferring statute in the instant case is the Ordinance. There is no need to refer to Section 37 as the source of the jurisdiction of the District Court and the limitations in Section 37(2) are not applicable.  Since Judge Ng had given some considerations to the interpretation of such limitations, I will take this opportunity to comment briefly on them. 

32.  I do not think Section 37(1)(e) covers an application under the Ordinance even though a claimant is an infant. Reading Section 37(1)(e) together with Section 37(2)(e), I believe the subsection deals with the maintenance or advancement of an infant out of the property belonging to the infant (including property held on trust for the benefit of the infant).

33.  As regards Section 37(1)(a), it should be construed against the types of proceedings that can be brought in connection with the administration of estate. Broadly speaking, there are three types of proceedings. First, there are proceedings for administration of the estate. The relief sought in such proceedings is for an order to the effect that the administration is to be carried out under the direction of the court. Second, there are cases where it is not necessary to seek a general administration order and application is made for determination of questions and relief arising during administration out of court. Third, there are actions brought by or against the personal representatives other than an administration action. See Atkin’s Court Forms 2^nd Edn Vol.2 (2003 Issue).

34.  The wordings used under Section 37(1)(a) is “proceedings relating to or for the administration of the estate”. The latter part of the phrase obviously refers to the first type of proceedings. As for the earlier part, viz. proceedings “relating to the administration of the estate”, it would cover the second type of proceedings. But I do not think it covers the third type of proceedings because that could cover claims in torts or contracts brought by or against the estate which are already governed by Section 32 of the District Court Ordinance. For example, claims by the personal representative of an estate for damages under LARCO and FAO are subject to the jurisdictional limit of Section 32 and I have never heard any suggestion that the size of the estate may set another jurisdictional limit on the District Court by reason of Section 37(2)(a). The same observation can be made regarding a claim by or against the estate based on contracts made by a deceased before his death.

35.  It was argued before Judge Ng that claims under the Ordinance are claims against the estate, see para.38 of the judgment in CMF. At para.44, Judge Ng agreed with that analysis. But she went on to say that such a claim “necessarily ‘relate to’ the administration thereof because the effect of any claim or order for financial provision is to bring about a redistribution of the deceased’s estate between the beneficiaries and the applicant by upsetting the existing administration of such estate pursuant to a requirement to pay monies or transfer/settle/acquire property out of the net estate of the deceased to the applicant”. Thus, the learned judge concluded that such a claim falls within the scope of Section 37(1)(a).

36.  The effect of an order made under the Ordinance is set out in Section 21 of the Ordinance. It is correct that it would affect the distribution of the estate and to that extent it does impact on how the estate should be administered. However a similar impact may be occasioned by a successful claim in contract or tort against the estate resulting in the net estate being diminished. If one were to apply Judge Ng’s criterion in determining whether a claim comes within the scope of the expression “relating to the administration of estate”, one would have to include contract and tort claims for or against the estate.

37.  In my judgment, the better view is that Section 37(1)(a) does not encompass claims for or against the estate. For that reason, a claim under the Ordinance is not within the scope of it. In any event, for reasons already given, Section 37 is irrelevant for the determination of the jurisdiction of the District Court under the Ordinance.

38.  For these reasons, I cannot agree with the decisions in the two authorities cited on behalf of the Plaintiff.

Section 44 of the DCO

39.  As mentioned above, the Defendant consented to the matter to be dealt with in the Family Court. In the Further Skeleton Submission of counsel for the Plaintiff filed on 2 November 2010, it is said that the Plaintiff shall consent to a transfer if the court is of the view that Section 44 of the District Court Ordinance can confer jurisdiction to hear the matter if it does not otherwise have the jurisdiction to do so.

40.  My above conclusion means that the Family Court does have jurisdiction to hear the case and it is not necessary to resort to Section 44.

41.  However, in other cases where the jurisdiction of the District Court is circumscribed by Sections 32 to 37, Section 44 gives the Court of First Instance to transfer the case to the District Court with the consent of the parties. Upon such a transfer, Section 44(3) provides that the District Court shall have jurisdiction to hear the case notwithstanding any enactment to the contrary. In other words, if the parties consent, the monetary limitations in Sections 32 to 37 would not be a problem. The only rider is that the Court of First Instance must consider whether it is an appropriate case to be dealt with in the District Court before it makes the order.

42.  After the implementation of the Civil Justice Reform, the court and the parties together with their lawyers should be more proactive in case management and more sensitive to cost effectiveness. It is necessary to have regards to the underlying objectives under Order 1A in choosing the forum. In my experience, there are civil cases in the High Court that can be justly and efficiently dealt with in the District Court. In many cases, a transfer to the District Court would bring about more expeditious and more cost effective disposal of the case. To evoke Section 44, the parties have to consent. That means a case cannot be transferred to the District Court if one or more parties object. However, a refusal to consent may be taken into account when the court considers the question of costs, particularly when the court has indicated that the case can properly be tried in the District Court and one party has agreed to such a course.

43.  For cases commenced in the District Court, Sections 41(1) mandates the District Court to transfer a claim outside the District Court jurisdiction to the High Court (apart from exercising the power of striking out under Section 41(2) of the DCO). However, it is not so for counterclaim. Section 41(3)(c) gives the District Court the power to report to the High Court that the case should be heard in the District Court. On the receipt of such a report, the High Court can make an order that the whole proceedings shall be heard in the District Court. Once such an order is made, Section 41(6) provides that the District Court shall have jurisdiction notwithstanding any enactment to the contrary. Consent of the parties is not required. I have come across several cases transferred to the High Court on account of the counterclaim exceeding the monetary limitations under the DCO. Some of these involved inflated counterclaims advanced by the defendants.

44.  In my view, consistent with the spirit of the Civil Justice Reform, we should make more use of Section 41(3)(c) and Section 44.

Outcome and future practice

45.  Subject to some directions which I will make below, I shall order the case to be transferred to the Family Court.

46.  In my judgment, an order should be made under Order 15 rule 15 that the proceedings may proceed in the absence of a person representing the estate of the Deceased though its outcome will bind the estate. I order accordingly.

47.  Parties inform me that the case is ready for trial and estimated length of trial is 5 days. I direct that upon the case being transferred to the Family Court, the parties shall write a joint letter to the Chief Family Judge within 7 days to confirm the estimated length of trial and that no further interlocutory directions is necessary. The Chief Family judge can then give directions for trial as she deems fit.

48.  Costs of proceedings in the Court of First Instance shall be costs in the cause, taxable on High Court scale in view of the fact that parties have asked for a transfer to the High Court based on two authorities cited.

49.  In the light of what I said above, it may be more appropriate for future applications under the Ordinance to be issued out of the Family Court Registry.