RE YPC

HCMP 1174/2006

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 1174 OF 2006

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REASONS FOR DECISION

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1.   On 18 August 2006 a committee was appointed by this court in respect of the properties and affairs of YPC, a mentally incapacitated person. This is an application by the Committee for leave to pursue a personal injury claim on behalf of YPC. I have granted leave with some directions as regards the future conduct of the matter on 13 December 2007. Since it may be useful to provide some guidance to the profession as to the practice to be adopted in similar applications, I set out my reasons in writing.

2.   At the time of the appointment of the Committee, it was intimated to this court that there was no intention to pursue any personal injury claim. Thus, there was no provision for commencing and prosecuting such a claim by the Committee on behalf of YPC in the order of 18 August 2006.

3.   In the meantime, the Committee was advised by another solicitors firm about the personal injury claim. That firm advised that YPC should have a good claim. Without coming back to this court for leave, the Committee issued a High Court Personal Injuries action on 23 February 2007 as next friend of YPC. The solicitors firm acting for the plaintiff in that action was not aware of the Part II proceedings and the appointment of the Committee. There was no reference to the Committee acting in the capacity as committee in the writ.

4.   The solicitors only found out about the Part II proceedings in August 2007. By then there had been some settlement negotiations with the defendant in the PI action. In fact, an agreement was reached on the question of liability and the solicitor considered making an application to court for approval under Order 80.  Counsel advised on the setting up of a committee. 

5.   The Committee then took out the present application.

6.   I do not find this to be satisfactory. First, even though Order 80 permits a person to act as next friend without being appointed as a committee under Part II, it does not follow that once a committee has been appointed he or she could choose to pursue a claim as next friend without any reference to the appointment. After an appointment of committee, the property and affairs of the mentally incapacitated person should be managed by the committee under the supervision of the court. 

7.   Thus, Order 80 Rule 3(3) prescribes that in cases where there is a person authorized to conduct legal proceedings under Part II on behalf of a mentally incapacitated person, that person (usually the committee) shall be the next friend. Reading that together with Rule 3(4), that means nobody else should be permitted to act as the next friend.

8.   Order 80 Rule 3(8)(b) requires the Part II order to be filed in the PI action.

9.   A committee should not be permitted to escape the supervision of this court in the exercise of the Part II jurisdiction regarding the conduct of any litigation on behalf of the mentally incapacitated person by choosing to proceed as if no committee has been appointed.

10.   Second, the court has an important role to play in sanctioning intended litigation on behalf of the mentally incapacitated person. In Re L HCMP 1120 of 2003, 12 May 2006, Para. 7, I identified some matters that the court will take into account in considering whether to sanction a course of conduct in relation to a piece of litigation. Whilst in general the court will pay proper regard to the managerial discretion of the committee (see Re M HCMP 25 of 2005, 1 November 2005), there can be occasions where the court may find it in the best interest of the mentally incapacitated person to direct the committee to consider or even adopt another course that the latter might have overlooked (as it happened in Re L HCMP 1120 of 2003, 12 May 2006).

11.   It follows that in an application for the sanction of a particular course of conduct, the court will require proper evidence and materials to be placed before it. It is the duty of the Committee to produce these to support the application since without such evidence and materials the court cannot properly carry out its function under Part II.

12.   Usually, an application for authorization to commence legal proceedings should be supported by,

(a)	Evidence as to the merits of the intended claim;
(b)	Evidence as to the benefit that the mentally incapacitated person might derive from the intended claim;
(c)	Evidence as to the estimate costs of prosecuting the claim;
(d)	Evidence as to the resource available to meet such costs;
(e)	Evidence as to the alternative options including alternative modes of dispute resolution that may achieve similar benefit for the mentally incapacitated person;
(f)	Evidence as to the exposure of the estate of the mentally incapacitated person to costs liability of the opposite party in case the action fails.

13.   The above list is not meant to be exhaustive and in an individual case, the court may require evidence on other matters which the court consider relevant for its exercise of discretion.

14.   In the present case, the solicitor previously acted for the applicant in the Part II application had unwittingly failed to provide the court with accurate information as regards the intention of the applicant to pursue legal proceedings. In addition, the solicitor who acted for the committee in commencing the PI action had failed to ascertain whether a committee had been appointed before the issue of the writ. I am prepared to accept these as instances of miscommunications between the solicitors and the applicant. Even so, the solicitors involved must bear responsibility for the mistakes.

15.   At the risk of repetition, I take the opportunity to remind the legal professions of the following. For those who act for an applicant under Part II, they must appreciate that they have a duty to give proper advice to the committee upon the grant of a Part II order. After the court appointed his client as a committee, a solicitor should explain clearly to their client the terms of the order. In addition, he should explain to the client the duty of a committee, how a committee should conduct himself or herself in handling the affairs and properties of the mentally incapacitated person, his or her accountability to the court and the need to apply to the court for directions regarding matters not yet authorized under the initial Part II order. There is a Guidance Note to Persons appointed as Committee (in Chinese as well as English) which is available for downloading from the judiciary website. It can be used as a tool by a solicitor in the discharge of this duty to advise a committee.

16.   For those who act for a next friend of a mentally incapacitated person, they must alert themselves to the possibility of making a Part II application at some stage. I have explained the usual procedure to be adopted in Re CK HCMP 1150 of 2006, 4 August 2006. But there can be instances where it may be desirable for a Part II application to be made in advance of the final outcome of a PI action.  One example is where the family needs to raise loans for interim maintenance with a view to use the compensation money for repayment, see Re C HCMP 15 of 2002, 14 March 2007; Re YWK HCMP 2467 of 2006, 21 November 2007. A solicitor should be alerted to the potential conflict of interest in that sort of situation and he must bear in mind that his primary duty is owed to the mentally incapacitated person. He should explain to the next friend at the very beginning the need for a Part II order and should enquire whether any such order has been made. I also wish to reiterate what I said in para. 13 of my judgment in Re YCK HCMP 2878 of 2004, 9 February 2006.

17.   It is part of the duty of a solicitor acting for a mentally incapacitated person through a next friend to ascertain whether a committee has been appointed under Part II before commencing an action. If such a committee has been appointed, he should apply for authorization under Part II before the issue of the writ.

18.   Though a writ issued before a proper authorization under Part II is an irregularity, it can be cured by an authorization from this court. In the present context, having heard submissions from counsel and in the light of the evidence placed before the court, I was satisfied that the Committee should be authorized to commence and continue with the prosecution of the claim.  I therefore gave directions to such effect on 13 December 2007.

19.   In general, when this court authorizes legal proceedings to be conducted on behalf of a mentally incapacitated person, it would also provide for the engagement of solicitor and counsel. Further, the court will usually require a report on the progress of the action by a certain stage of the litigation and review the possible options upon the receipt of such report. As mentioned, the court may also direct the committee to attempt mediation, negotiation or other forms of alternative dispute resolution. I have also provided for these matters in my directions of 13 December 2007.

20.   By way of postscript, an interlocutory judgment was entered in the PI action on 25 January 2008 and a sum of $1 million would be paid by way of interim payment in favour of YPC by 22 February 2008. The solicitors sought directions on the disposal of the $1 million.

21.   Pending proposal from the Committee as regards the use of the $1 million, the $1 million should be paid into court in the Part II proceedings. I direct accordingly.

22.   I intend to release this Reason for Decision for publication.  If the Committee has any comment on that, she should lodge the same in writing within 5 days.