HO SIN YING v. CHAN YUI LING AND ANOTHER

HCA 1531/2012

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

HIGH COURT ACTION NO 1531 OF 2012

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D E C I S I O N

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Introduction

1.  There are two summonses taken out by the respective defendants for the same relief, namely, to strike out the amended statement of claim, and to dismiss this action (“the striking out applications”).

2.  There is also a summons taken out by the plaintiff to re-amend her amended statement of claim.

Background

3.  At the heart of the dispute is the amount of $3.9 million paid earlier by the plaintiff to one Dr Tsang, who passed away in December 2001 (“the deceased”). The deceased’s father passed away before 2001; his natural mother (the administratrix of the estate of which is the 1^st defendant) passed away in May 2009.

4.  The chronology below will help one to understand the parties’ relationship:

(a)  the deceased’s father married his natural mother and the deceased was born out of the wedlock in July 1950;

(b)  the plaintiff became the concubine of the deceased’s father in 1953;

(c)  the deceased’s parents divorced in 1958; the plaintiff became the deceased’s stepmother since then.

5.  The 1^st defendant is the deceased’s half sister, being born out of the wedlock between the deceased’s mother and someone else (after her said divorce with the deceased’s father).

6.  In a judgment handed down in August 2013, the court of appeal observed that:

“[the plaintiff] was in fact treated by the deceased as if she were his parent” (para 28.3, CACV 173/2012 (16 August 2013)).

The court of appeal also observed there was evidence to the effect:

“… the deceased had a close and loving relationship with [the plaintiff]” (para 12, CACV 173/2012 (above)).

7.  The 2^nd defendant is a company incorporated by the deceased for holding investment properties.  All except two of those properties have been sold at a profit.  Two shops are still held in the name of the 2^nd defendant (which now seems to be controlled by the 1^st defendant) (the whereabouts of the profits are in dispute in another legal action).

8.  A summary of the plaintiff’s claim can be found at para 12 and 28 to 31 below.

Issues in the striking out applications

9.  The defendants contend that the striking out applications should be granted on the grounds of:

(1)   abuse of the court’s process;

(2)   time limitation.

Abuse of process

10.  The case of abuse of process is premised on an undertaking given on 22 March 2012 by the plaintiff in HCA 1501/2010 (“the earlier trust action”).  The relevant part of the undertaking reads:

“UPON the Plaintiff’s undertaking to [the 1^st defendant] …

The Plaintiff would not commence another action based on the same cause of action …

IT IS BY CONSENT ORDERED that :

… The present proceedings be discontinued forthwith … ” (emphasis supplied).

(“the 2012 consent order”)

11.  It is undisputed the facts averred to (and relied upon in support of) the statement of claim in the earlier trust action and this action are essentially the same.  What has divided the parties is in essence the meaning of the phrase:

“… same cause of action … ”.

12.  On the plaintiff’s part, she has in effect given it a narrow meaning, such that she is not in breach of it if the same set of facts is capable of giving rise to other cause(s) of action.  The causes of action pleaded in this action are:

(a)  agent’s fiduciary duties (the deceased being the alleged agent of the plaintiff);

(b)  breach of contract and negligence (and damages therefor);

(c)  unjust enrichment;

(d)  money had and received.

The cause of action in the earlier trust action was different (namely, breach of trust): para 22, plaintiff’s skeleton argument.

13.  Further, there is a claim against the 1^st defendant for having converted to her own use the 2^nd defendant’s assets.

14.  It is trite a consent order:

“… is generally considered to be contractual in nature … ” (Hong Kong Civil Procedure 2013, Vol 1, para 42/5A/4).

Further, Chitty on Contracts (2012) 31^st Ed states:

“A compromise may by consent be made the subject of a judgment or order of the court. A consent judgment will ordinarily extinguish by merger the contract of compromise, but a consent order will not have this effect. It does not itself constitute a contract, but it is sufficient evidence of the contract of compromise on which it is based, and such contract is no less a contract and subject to the incidents of a contract because there is superadded the command of a judge. … ” (para 22-024).

15.  There is no basis to suggest that the 2012 consent order was other than intended to be contractual in nature.  On the contrary, its terms show that the parties thereto intended it to have legally binding effect (at least insofar as the plaintiff’s undertaking is concerned).

16.  It follows that the legal principles relevant to the construction of contract should be applicable to the construction of the 2012 consent order.  Those legal principles are again trite; the relevant ones are repeated below for convenience:

“… subject to one important exception, to assimilate the way in which such documents are interpreted by judges to the common sense principles by which any serious utterance would be interpreted in ordinary life. Almost all the old intellectual baggage of ‘legal’ interpretation has been discarded. The principles may be summarised as follows.

(1) Interpretation is the ascertainment of the meaning which the document would convey to a reasonable person having all the background knowledge which would reasonably have been available to the parties in the situation in which they were at the time of the contract.

(2) The background was famously referred to by Lord Wilberforce as the ‘matrix of fact’, but this phrase is, if anything, an understated description of what the background may include. Subject to the requirement that it should have been reasonably available to the parties and to the exception to be mentioned next, it includes absolutely anything which would have affected the way in which the language of the document would have been understood by a reasonable man.

(3) The law excludes from the admissible background the previous negotiations of the parties and their declarations of subjective intent. They are admissible only in an action for rectification. The law makes this distinction for reasons of practical policy and, in this respect only, legal interpretation differs from the way we would interpret utterances in ordinary life. The boundaries of this exception are in some respects unclear. But this is not the occasion on which to explore them.

(4) The meaning which a document (or any other utterance) would convey to a reasonable man is not the same thing as the meaning of its words. The meaning of words is a matter of dictionaries and grammars; the meaning of the document is what the parties using those words against the relevant background would reasonably have been understood to mean. The background may not merely enable the reasonable man to choose between the possible meanings of words which are ambiguous but even (as occasionally happens in ordinary life) to conclude that the parties must, for whatever reason, have used the wrong words or syntax (see Mannai Investment Co Ltd v Eagle Star Life Assurance Co Ltd [1997] 3 All ER 352, [1997] 2 WLR 945.

(5) The ‘rule’ that words should be given their ‘natural and ordinary meaning’ reflects the common sense proposition that we do not easily accept that people have made linguistic mistakes, particularly in formal documents. On the other hand, if one would nevertheless conclude from the background that something must have gone wrong with the language, the law does not require judges to attribute to the parties an intention which they plainly could not have had. Lord Diplock made this point more vigorously when he said in Antaios Compania Naviera SA v Salen Rederierna AB, The Antaios [1984] 3 All ER 229 at 233, [1985] AC 191 at 201:

‘... if detailed semantic and syntactical analysis of words in a commercial contract is going to lead to a conclusion that flouts business commonsense, it must be made to yield to business commonsense.’” (emphasis supplied).

(Investors Compensation Scheme Ltd v West Bromwich Building Society [1998] 1 WLR 896, 912-3; and subsequent similar observations in other authorities, such as Jumbo King Ltd v Faithful Properties Ltd and Others (1999) 2 HKCFAR 279, 296.)

17.  More recently, the Court of Final Appeal said in Fully Profit (Asia) Ltd v The Secretary For Justice FACV 17/2012 (13 May 2013):

“We have been referred to the very well-known statement of principle regarding the construction of contracts contained in the speech of Lord Hoffmann in [the Investors Compensation Scheme Ltd decision], to which can be added the judgment also of Lord Hoffmann NPJ in [the Jumbo King Ltd decision]. What emerges from these cases – and other authorities on contractual interpretation – is the overall importance of context when construing contractual terms. The statements of principle in Investors Compensation Scheme and in Jumbo King refer time and again to the relevant background against which the relevant contract and contractual terms must be viewed. It is in my view not particularly helpful in most cases to refer to the ‘ordinary and natural meaning’ of words because, as very often experience tells us, there can be much debate over exactly what is the ordinary or natural meaning of words. The surer guide to interpretation is context. Here, I would just add that in the area of statutory and constitutional interpretation, it is context that is key; context is the starting point (together with purpose) rather than looking at what may be the natural and ordinary meaning of words.

The word ‘house’ is a good example of where there is no ordinary or natural meaning; at least this is open to much debate. The number of authorities referred to in the judgments below and in the parties’ written Cases before us amply demonstrate this point and, for my part, very little assistance can be derived from these authorities. This Court has already stated that a ‘search for a free-standing meaning of the word house, valid for all time in all circumstances, is fruitless.’ Reference was made in Wah Yick to the judgment of Lawrence J in Annicola Investments Ltd v Minister of Housing and Local Government where he said the word had a ‘distinct fluidity of meaning’, and that it is best construed in relation to the context in which it is found, …” (emphasis supplied) (para 15 and 16).

18.  The undisputed background leading to the 2012 consent order can be summarized as follows.

19.  After the deceased passed away (in 2001), both the plaintiff and the deceased’s natural mother claimed to be entitled to his estate in intestacy.  That dispute was ultimately resolved by the Court of Final Appeal in July 2009 (by then, the deceased’s natural mother has also passed away).

20.  Shortly later (in October 2010), the plaintiff commenced the earlier trust action against the 1^st defendant in her capacity as the administratrix of the deceased’s estate.  The plaintiff claimed that parts of the properties held by the estate were held on trust for her. This, however, ended with the 2012 consent order.

21.  Apart from the earlier trust action, the plaintiff also commenced another action (HCA 90/2010) where she claimed for financial provisions under the Inheritance (Provision for Family and Dependants) Ordinance (Cap 481).  In brief, the claim was based on her case that she had been paid regularly by the deceased because he treated her as if she were his mother.  That dispute was ultimately resolved by the court of appeal (where the plaintiff was awarded about $2.6 million).

22.  The 2012 consent order was mentioned by the plaintiff’s counsel in the course of the trial of HCA 90/2010 (in June 2012).  He said:

“… after I took over the proceedings [referring to both actions] and as a result of my advice [the earlier trust action] was dropped and we pursue on this one”.

23.  Such being the context of (or background to) the 2012 consent order, the narrow construction contended for by the plaintiff would:

(1)   not reflect the intention of the 2012 consent order (dropping the earlier trust action and pursuing HCA 90/2010);

(2)   render the undertaking given therein to have no (or at least little) practical meaning.  For example, the undertaking can easily be side-stepped by framing a claim based on other legal grounds (albeit on the same set of facts) (as has happened in this action).

24.  In addition, the terms of the undertaking given in the 2012 consent order were not that the plaintiff would not sue the 1^st defendant, but that she would not commence another action.

25.  Such being the case, I agree with the defendants that this action is caught by the 2012 consent order, and that it would be an abuse of process for the plaintiff to commence, and continue, this action.

Time limitation

26.  Having so concluded, it is strictly unnecessary to consider this aspect.  I shall do so for completeness.

27.  As stated above, four causes of action were pleaded against the defence, and a further cause of action against the 1^st defendant.

28.  But the plank on which all those causes of action rests is the same:

“Since about 1986, the Deceased started his investments in properties.

…

At all material times, the Plaintiff reposed trust and confidence on the Deceased; the Plaintiff had been relying on the Deceased to make investment in properties.

At all material times, the Deceased had been acting, and since the 2^nd Defendant was set up, the 2^nd Defendant together with the Deceased had been acting as agents of the Plaintiff in making investment [between 1987 and 1999]. … (‘the Agency Agreement’)” (para 8 to 11, amended statement of claim).

This remains substantially unchanged in the proposed re-amended statement of claim (“the proposed re-amendment”).

29.  The fiduciary duties (para 12 and 19), proprietary interest (para 16), trust (para 17), implied terms and duty of care (para 18), all have their roots in the above (all paragraph references are to the amended statement of claim).  The basis of these remains unchanged in the proposed re-amendment.

30.  The breach of the above is put forth as follows:

“Prior to the death of the Deceased in December 2001, the Deceased and/or the 2^nd Defendant had wrongfully breached the Agency Agreement and/or their (referring to the defendants’) duties” (emphasis supplied) (para 21, amended statement of claim).

This is followed by an averment of the plaintiff’s loss thus caused.  Again, the proposed re-amendment does not change the above.

31.  It is here the plaintiff’s case becomes unusual.  The deceased’s breach, though pleaded to have taken place before his death, is said in gist to lie in his failing to:

(a) identify the plaintiff’s share of the investment;

(b) provide to the plaintiff records of such demarcation.

On the other hand, the loss caused to the plaintiff is said to be the defendants’ assertion, made after the deceased’s death, that:

(1) no part of the deceased’s estate belonged to the plaintiff;

(2) the plaintiff’s money earlier paid to the deceased for investment purpose was part of the deceased’s estate.

(respectively para 21 and 22, amended statement of claim)

32.  What is more important than being unusual is that the averments regarding the deceased’s breach, and the plaintiff’s loss, are faulty for the following reasons.

33.  Irrespective of whether it is framed as a breach of trust (which the plaintiff will say it is not), or as a breach of contract (or some kind of duty of care), the amended statement of claim will need to plead how the term(s) (or the duty of care) allegedly breached came about.

34.  There is an attempt to do so: para 18(c) to (f) and 19, amended statement of claim.  It is alleged that these duties (the pleading has not specified if they lie in contract, trust or as some kind of duty of care) have been implied by law.

35.  Even in the case of a trust (and in the absence of express provisions in a trust instrument), a trustee’s duty to account is said to be:

“Another duty of a trustee is to keep accounts and produce them to any beneficiary when required. Trustees must also when required give any beneficiary all reasonable information as to the manner in which the trust estate has been dealt with and as to the investments representing it … ” (emphasis supplied) (Snell’s Equity (2010) 32^nd Ed, para 29-021)

(note that the plaintiff says she is not bringing a trust claim).  There is no averment that the plaintiff has requested for accounts or other information from the deceased during his life time.

36.  This action is an attempt to advance the plaintiff’s claim based on other legal grounds, especially in contract and tort.  But I am also unaware contract law or the law of negligence laying down such a general legal requirement that someone akin to a trustee is obliged to do so from time to time (but at some unspecified intervals).

37.  Thus, the amended statement of claim has put forth an invalid (or at least embarrassing) averment as to the alleged breach.

38.  By reason of the above matters, the pleading should be struck out without regard to whether it has already been barred by virtue of the provisions of the Limitation Ordinance (Cap 347): RHC Ord 18 r 19(1)(c) and Hong Kong Civil Procedure 2013, Vol 1, para 18/19/9.  (The same can be said of the proposed re-amendment)

39.  In relation to the deceased’s alleged duty to keep sufficient records of the assets held on trust for the plaintiff, the amended statement of claim (and the proposed re-amendment) is also defective because:

(a) the Agency Agreement is pleaded as one wherein the plaintiff “reposed trust and confidence on the Deceased” (para 10, amended statement of claim);

(b) in a contractual context, this means their relationship must have been one of personal services contract: Chitty, para 23-037 to 23-039 and 27-021 to 27-025, which would have terminated with the death of the deceased;

(c) consequently, any breach which the deceased might have committed would have to take place before his death (see ,for example, Chitty, para 39-188, text to n 1282, citing Harbutt’s “Plasticine” Ltd v Wayne Tank & Pump Co Ltd [1970] 1 QB 447, 471-472).

Thus, the deceased’s breach arising out of his failure to keep sufficient records would, as pleaded in the amended statement of claim, have taken place prior to his death (or upon his death at the latest).

40.  Such being the case, any denial of the plaintiff’s alleged interest in, or assertion of title by the defendants over, the 2^nd defendant’s assets after the deceased’s death, is but a manifestation of the resultant loss flowing from the alleged breach.  It cannot somehow “rejuvenate” the deceased’s breach, and render the accrual of the cause(s) of action relied upon to occur at some later time (such as sometime after the 1^st defendant’s appointment as the administratrix).

41.  Consequently, the claim has also been barred by ss 4(1)(a), 4(2) and 5(1), Cap 347 (insofar as the doctrine of laches is relevant, I would have found that the plaintiff has been guilty of delay, for the same reasons set out above).  It should accordingly be struck out for that reason.

42.  The plaintiff also relies on the decision of In re Loftus, dec’d [2007] 1 WLR 591.  I agree with the defence this decision cannot assist the plaintiff.  In short, it was concerned with a typical claim by the beneficiaries against the trustee for her failure to properly administer the trust.

43.  On the other hand, probably because the plaintiff does not want to expressly fall foul of the 2012 consent order, she contends in this action that her claim is not based on trust, but on contract or in tort.

44.  In relation to the claim based on:

(1) unjust enrichment;

(2) money had and received,

in the present context the same must also be legal consequences flowing from (and hence founded on) contract or in tort (despite the plaintiff’s denial that they are so founded).

45.  I also agree with the defence that, there is no valid reason, whether as a matter of legal principle or legal policy, to treat the plaintiff as if she were a beneficiary under some kind of trust, when the claim is based on contract or in tort.  On the contrary, to do so would unduly dilute the effect of Cap 347.

The application to re-amend

46.  As can be seen from the paragraphs under the previous heading, the parts of the plaintiff’s case relevant to the striking out applications remain the same in the proposed amendment.

47.  It is settled law leave to amend will not be given for immaterial or useless averments.

48.  For this reason, the application for leave to re-amend is refused.

Conclusion

49.  To conclude:

(a) the amended statement of claim is struck out and this action is dismissed;

(b) the plaintiff’s summons is dismissed.

Other matters

50.  The plaintiff also argues that the 1^st defendant’s respondent’s notice given in CACV 173/2012 (para 6 and 21 above) amounts to a written acknowledgement within the meaning of ss 23(3) and 24, Cap 347.  The said respondent notice merely put forth arguments in support of the first instance judgment.  It falls short of the requirements of ss 23(3) and 24, Cap 347.

51.  The parties’ closing submissions also mentioned various other points.  These have not been expressly set out or dealt with in the above headings and sub-headings.  This is so only because of the need to balance between the length of the decision and its comprehension.  It does not mean those other points are thought to be irrelevant (or have been overlooked).  To avoid doubt, those other points have also been considered.

Costs order

52.  The parties agree that costs should follow the event.  There will accordingly be a costs order that the costs of the three summonses be paid by the plaintiff to the respective defendants to be taxed if not agreed.  The plaintiff’s own costs are to be taxed in accordance with the Legal Aid Regulations (Cap 91A).