CHAN KA WAI, THE PERSONAL REPRESENTATIVE OF THE ESTATE OF CHAN HAU KWAN DECEASED v. TANG WAI HUNG

DCCJ 1396/2023

[2024] HKDC 1535

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 1396 OF 2023

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BETWEEN

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DECISION

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1.  This is the Defendant’s appeal from the Order of Master Melinda Chiang dated 27 February 2024.

2.  This action was commenced on 4 April 2023 by the Plaintiff as personal representative of the estate of his late father, Mr Chan Hau Kwan (“Deceased”), who passed away on 3 January 2023.

3.  According to the Defendant, he was the adoptive brother of one Madam Luo Xiaoyan (“Madam Luo”), who passed away on 13 November 2022.

4.  The Plaintiff’s case is that the Deceased came to know Madam Luo in about November 2018 and they soon lived together as an unmarried couple in a public housing unit registered in Madam Luo’s sole name. The Defendant makes no admission to these contentions, save that he accepts that the public housing unit was registered in Madam Luo’s sole name.

5.  A key dispute between the parties is who owned (and owns) the moneys and securities in a savings account and a securities account (“Accounts”) held in the Defendant’s name with the Shanghai Commercial Bank Limited (“Bank”).

6.  It is the Plaintiff’s pleaded case in the Statement of Claim that:

(1) With the Defendant’s consent, Madam Luo had used and operated the Accounts for securities trading and settlement of such trading.

(2) Since about November 2018, the Deceased also used and operated the Accounts for his own securities trading and settlement of such trading.

(3) Since about November 2018, or earlier, all the securities in the securities account and all the moneys in the savings account did not belong to the Defendant, but belonged to the Deceased absolutely.

(4) On 13 November 2022, Madam Luo personally confirmed with the Defendant in the presence of the Deceased, and the Defendant agreed, that all the securities and moneys in the Accounts (which belonged to the Deceased absolutely) ought to be wholly returned to the Deceased.

(5) On about 17 November 2022, the Deceased liquidated all securities in the securities account save and except 10,000 shares in China Evergrande Group. The sale proceeds amounted to HK$232,765.

(6) On about 23 November 2022, the Defendant admitted on the phone that all the securities and moneys in the Accounts ought to be wholly returned to the Deceased.

(7) The Plaintiff claims inter alia for the return of HK$232,765 and the 10,000 shares in China Evergrande Group and a declaration that the Defendant holds the aforesaid on trust for the Deceased and/or the Plaintiff.

7.  In his Amended Defence, the Defendant inter alia:

(1) pleads that in or about 2005 or 2006, Madam Luo intended to make investment in stocks, but was not familiar with the procedures in trading stocks and related matters in Hong Kong. Hence, upon her request, the Defendant opened the Accounts in his name for her, so that he could help deal with Madam Luo’s issues related to her investment and/or make investment decisions on her behalf;

(2) denies that the securities and monies in the Accounts belonged to the Deceased;

(3) avers that they were properties of Madam Luo and now form part of Madam Luo’s estate upon her death;

(4) avers that nothing had been mentioned by Madam Luo to the Defendant that all the securities and moneys in the Accounts belonged to the Deceased and should thus be wholly returned;

(5) does not admit the plea as set out in paragraph 6(6) above and avers that even if the Defendant had made any agreement with the Plaintiff, the same would be “unenforceable and void” as the Defendant was only holding the Accounts on trust for Madam Luo and/or the intended administratrix of Madam Luo’s estate.

8.  By Summons dated 26 September 2023 (“Specific Discovery Summons”), the Plaintiff applied for specific discovery of “bank passbook(s) and/or (monthly) statement(s) issued by the Shanghai Commercial Bank Limited (to the Defendant) in respect of (his) [Accounts] during the period from November 2018 to present”.

9.  By a further Summons dated 1 February 2024 (“Amendment Summons”), the Plaintiff sought leave to amend the Specific Discovery Summons by replacing it with the following specific discovery application:

(1) “bank passbook(s) and/or (monthly) statement(s) issued by the Shanghai Commercial Bank Limited (to the Defendant) in respect of (his) [Accounts] during the period from November 2018 to November 2022” and

(2) “bank passbook(s) and/or (monthly) statement(s) issued by the Shanghai Commercial Bank Limited (to the Defendant) in respect of (his) [Accounts] during the period from December 2022 to present”.

10.  The applications came before Master Melinda Chiang on 27 February 2024. Upon hearing the parties, Master ordered that:

(1) Leave be granted to the Plaintiff to withdraw the Amendment Summons with no order as to costs.

(2) The Defendant do, within 28 days from today, make and file an affidavit stating whether the documents as set out in the Schedule of the Plaintiff’s Summons dated 26 September 2023 limited to the period from November 2018 to November 2022, are or have at any time been in his possession, custody or power, and if the same have at any time been but are no longer in his possession, custody or power, stating when he parted with the same, and what have become thereof.

(3) Costs of the Specific Discovery Summons be paid by the Defendant to the Plaintiff, summarily assessed at HK$37,670.

11.  Master noted in her decision that, on 6 February 2024, the Defendant filed a Supplemental List of Documents disclosing the bank statements from 21 October 2022 up to 28 December 2022 and the whole of the bank passbook in question. Master recorded the Plaintiff’s submission that, upon sight of the documents produced, the Plaintiff only required the discovery of bank documents for the period from November 2018 to November 2022. Master considered the amendment sought under the Amendment Summons a technical amendment, and concluded that there should no order as to costs on the Plaintiff’s withdrawal of the Amendment Summons (see paragraph 10(1) above).

12.  By a Notice of Appeal filed on 11 March 2024, the Defendant asked for inter alia:

(1) the aforesaid Order of Master Melinda Chiang be set aside;

(2) costs of the Amendment Summons be to the Defendant;

(3) execution of Master’s Order be stayed pending the determination of the Defendant’s appeal or further order of the Court;

(4) the Specific Discovery Summons be dismissed.

13.  At the hearing of the appeal, Counsel for the Defendant clarified that the Defendant was not in fact seeking to set aside Master’s order granting leave to the Plaintiff to withdraw the Amendment Summons, and that the Defendant was only appealing Master’s decision to make no order as to costs in respect of the withdrawal.

14.  The Court was also informed at the hearing that no stay of execution of Master’s Order had been obtained so far. Mr Ching for the Plaintiff then confirmed to the Court that the Plaintiff had not been pressing for compliance with Master’s order as set out in paragraph 10(2) above in light of the pending appeal. On this basis, it was unnecessary for the Court to deal with any application for stay.

15.  I turn now to the crux of the appeal, namely whether or not the Court should make an order in terms as set out in paragraph 10(2) above, i.e. to order specific discovery of the bank documents of the Accounts for the period from November 2018 to November 2022.

16.  The applicable principles on specific discovery under O.24, r.7 are trite (see Kwok Wai Fung v China Gas Holdings Ltd [2023] HKCFI 83 at §§9, 11 and 15 (Cheng J)):

(1) The applicant needs to put forward sufficient evidence or a prima facie case that (a) the documents or classes of documents exist which the other party has not disclosed, (b) the documents relate to a matter in issue in the action, and (c) the documents are in the possession, custody or power of the other party.

(2) Once it is established that these three jurisdictional prerequisites exist, the court has a discretion whether or not to order discovery.

(3) The court will not make an order unless the discovery sought is necessary either for disposing fairly of the cause or matter, or for saving costs.

(4) For the purpose of discovery, the pleadings have to be looked at broadly.

(5) The burden lies on an applicant for discovery to show a prima facie case of relevance: see O.24 r.7(3). The burden lies on the respondent to satisfy the court that discovery is not necessary for fairly disposing of the cause or matter or for saving costs: O.24 r.8(1).

(6) A document is relevant if (a) it is reasonable to suppose that it contains information which may, not must, either directly or indirectly enable the party requiring the same either to advance his own case or to damage the case of his adversary; or (b) it is a document which may fairly lead the party to a train of inquiry which may have either of these two consequences.

(7) Fishing arises where what is sought is not evidence but information which may lead to a line of inquiry which would disclose evidence; it is the search for material in the hope of being able to raise allegations of fact, as opposed to the solicitation of evidence to support allegations of fact, which have been raised bona fide with adequate particularisation. It is not the purpose of discovery to give an applicant an opportunity to hunt around the documents in the hope that they will reveal some improprieties on the respondent’s part or will provide more information for him to pursue more enquiries.

17.  The Defendant takes issue with the relevance and necessity of the documents sought. The Defendant also contends that the Plaintiff is fishing for evidence by way of his Specific Discovery Summons.

18.  I am unable to accept the Defendant’s submissions. I agree with the Plaintiff that this is a straightforward application for specific discovery. The key issue in dispute in this action is the beneficial ownership of the securities and moneys in the Accounts. In particular, the Plaintiff has pleaded that since about November 2018, the Deceased had used and operated the Accounts for his own securities trading and settlement of such trading, and that all the securities and moneys in the Accounts belonged to the Deceased absolutely.

19.  These are not accepted by the Defendant, whose case is that he helped deal with Madam Luo’s investment and/or made investment decisions on her behalf, and that the securities and moneys were properties of Madam Luo.

20.  In view of the parties’ respective pleaded cases, the bank passbook(s) and/or statement(s) issued by the Bank for the period from November 2018 to November 2022 are clearly relevant as well as necessary for the fair disposal of the action. The transactions that were conducted on the Accounts during the said period, as would be recorded in the bank passbook(s) and/or statement(s), may at least directly or indirectly enable either or both parties to advance his case or damage that of his adversary as to who was then using and operating the Accounts (i.e. whether it was the Deceased, or the Defendant on behalf of Madam Luo) and who owned the securities and monies therein, and may fairly lead either or both parties to a relevant train of inquiry.

21.  I therefore dismiss the Defendant’s appeal from Master’s order as set out in paragraph 10(2) above.

22.  As to the Defendant’s appeal from Master’s decision to make no order as to costs (see paragraph 13 above), Counsel for the Defendant submitted at the hearing that the applicable principles on an appeal as to costs only are set out in Hong Kong Civil Procedure 2024 commentary 58/1/6, i.e. such appeal “should not be allowed unless it can be shown that the order made by the master was unreasonable or erred in law, i.e., if he either failed to take into account proper matters or took into account matters that should not have been taken into account”.

23.  I have set out in the above the procedural history and specifically the Master’s consideration at paragraph 11. I do not think Master was unreasonable in regarding the amendment sought in the Amendment Summons, which broke down the period in which discovery was sought into two parts, as a technical amendment. Nor do I think the Defendant is able to show how the Amendment Summons or its withdrawal had added to his costs in any material way. The Defendant further complains that Master had not given him the opportunity to make submissions on costs. I do not however think the Defendant’s submissions on the subject would have made a difference, given my view that Master’s decision was not unreasonable.

24.  The Defendant’s appeal is therefore dismissed. I order the Defendant to pay the costs of and occasioned by this appeal (including the costs of the hearing on 19 June 2024) to the Plaintiff, to be taxed if not agreed.