XCHRX SHOU CHEE WONG v. BERMUDA TRUST (HONG KONG) LTD.

1998 No. A10631

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

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J U D G M E N T

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The facts

1. Wong Shi Shing died intestate in 1983. He left a widow and four children - William, Jack, David and Mary. Before her father died, Mary had agreed to transfer any interest she may have had in her father's estate to William and David in equal shares. After her husband died, the widow's interest in her husband's estate was transferred to William and David, and they settled the interests in the estate upon trust by a settlement named the T'zu Te Trust.

2. In 1996, Jack's sons, Alexander and Charles, were appointed as a committee of Jack's estate under the Mental Health Ordinance (Cap. 136). Later in 1996, a court in Hawaii directed that Jack's interest in his father's estate be settled upon trust. Pursuant to that direction, Jack settled his interest in his father's estate upon trust by a settlement named the Shou Chee Wong Living Trust ("the Hawaiian Settlement"). As a result of these transfers and settlements, and as a consequence of the provisions of the Intestates' Estates Ordinance (Cap. 73), the beneficial interests in Wong Shi Shing's estate (ignoring the widow's statutory legacy) are now as follows:

The trustees of the T'zu Te Trust	50%
William	18.75%
David	18.75%
The trustees of the Hawaiian Settlement	12.5%.

3. The various interlocutory summonses now before the court have been issued in proceedings which were commenced in June 1998. In those proceedings, Jack is the Plaintiff, though he is suing by Charles who is his next friend in the proceedings. The Defendant is a trust company which was granted letters of administration in connection with Wong Shi Shing's estate in 1986. In the proceedings, Jack makes a number of claims about the Defendant's administration of his father's estate. He claims damages for breach of trust and ancillary relief. The facts which I have summarised have been taken from the Statement of Claim in those proceedings.

The additional Plaintiffs

4. The first question which I have to decide is whether Alexander, Charles and the First Hawaiian Bank, who are collectively the trustees of the Hawaiian Settlement, should be added as plaintiffs in the proceedings. It is not disputed that they would be proper plaintiffs. The only problem is that Ord. 15 r. 6(4) provides:

"No person shall be added as a plaintiff without his consent signified in writing or in such other manner as may be authorized."

The trustees of the Hawaiian Settlement have purported to signify their consent in writing to being added, but by facsimile only, and so far as the First Hawaiian Bank is concerned, its consent is undated and it does not state that the official who signed the consent is duly authorised by the Bank to signify the Bank's consent.

5. However, the Supreme Court Practice 1999, Vol. 1, para. 15/6/5 reveals that the practice in England (where Ord. 15 r. 6(4) is in identical terms) is that an order adding a plaintiff may be made even though no signed consent is produced on the hearing, the order being that the proposed plaintiff be added as a plaintiff on production of his consent in writing at the Central Office. I can think of no compelling reason why such a practice should not be adopted in Hong Kong. Subject, therefore, to what I am about to say about the validity of the consent, I order that Alexander, Charles and the First Hawaiian Bank be added as plaintiffs in the proceedings, on production of their original consents in writing at the Registry, and on condition that the consent of the First Hawaiian Bank is dated and signed by an official who himself or herself states that he or she is duly authorised to signify the Bank's consent. Such consents must be produced at the Registry within 14 days of today.

6. The point, though, is taken that the consent required by Ord. 15 r. 6(4) has to be a valid consent, and that the consent produced by the trustees of the Hawaiian Settlement in the present case was invalid. The reasoning is that although the trust deed gave the trustees the power to take legal action in Hong Kong if the trustees thought that such action was in Jack's best interests, they were required to take Jack's wishes into account before coming to that decision. It is said that there is no evidence that Jack's wishes were taken into account. I do not think that Ord. 15 r. 6(4) contemplates in normal circumstances an inquiry by the court into the validity of the consent. Nor do I think that the court should in normal circumstances refuse to exercise its discretion to join a party until the validity of its consent has been established. Although there are some unusual features about the present case, I do not think it right to depart from what I believe the general rule to be. If it is said that the circumstances giving rise to the power in the trustees to bring these proceedings have not been triggered because Jack's wishes have not been taken into account, that can be explored in the action rather than in satellite litigation at the present stage. Accordingly, the order which I have made is not affected by any argument relating to the validity of the Bank's consent.

Is Jack a proper plaintiff?

7. The next question is whether Jack is properly named as a plaintiff. Ord. 15 r. 6(2)(a) enables the court to "order any person who has been improperly or unnecessarily made a party ... to cease to be a party". It is said that Jack was improperly or unnecessarily made a party because his interest in his father's estate is now vested in the trustees of the Hawaiian Settlement. Since his interest in his father's estate is vested in the trustees, only the trustees are vested with the cause of action entitling them to sue the Defendant for breach of trust and ancillary relief.

8. For my part, I know of no principle which permits a person in whom a cause of action is not vested to be named as a plaintiff in proceedings relating to such a cause of action. The concern, though, of Mr. Gordon Fisher for Jack and for the trustees of the Hawaiian Settlement is that the Defendant's solicitors' have said in correspondence that the Defendant does not necessarily accept that the trustees of the Hawaiian Settlement were validly appointed. If that point is eventually taken in the Defence, and if the consequence of the appointment of the trustees being held to be invalid would be that the Hawaiian Settlement would be set aside, the cause of action would then have been vested in Jack all along. Mr. Fisher wishes to avoid the possibility of the current claim being dismissed because of Jack not being joined as a plaintiff.

9. In my view, this concern is premature. It may be that it will not be alleged that the trustees of the Hawaiian Settlement were not validly appointed. It may be that it will not be alleged that any invalidity in their appointment would affect the Hawaiian Settlement. At present, the Defendant's position is that the trustees of the Hawaiian Settlement are the proper plaintiffs. It is only if that stance changes that a question mark will arise over whom the cause of action actually vests in.

10. However, it is said that, even if no cause of action vests or could vest in Jack, there is no point in Jack being ordered under Ord. 15 r. 6(2)(a) to cease to be a party because he will then have to be added as a party under Ord. 15 r. 6(2)(b)(i), which provides for the joinder as a party of any person "whose presence before the Court is necessary to ensure that all matters in dispute in the cause or matter may be effectually and completely determined and adjudicated upon". Two arguments are advanced by Mr. Fisher in support of his contention that Jack's presence before the court is necessary for that purpose, and I take those arguments from his skeleton argument. First,

"... insofar as the Hawaiian Settlement involved, inter alia, an assignment of a right to sue for damages, the legal right thereto remains vested in the assignor [Jack]. Accordingly, the assignees [the trustees] who themselves hold the assigned right on trust for the assignor [Jack] are entitled to perfect their position by insisting that the assignor [Jack] be a party to the action wherein the right to sue is being exercised."

I reject this argument. There was no assignment of a right to sue for damages. There was a transfer by Jack of his interest in his father's estate. His interest in his father's estate has been converted into an interest under the Hawaiian Settlement. Since there is no question of him having retained an interest in his father's estate, he has no right to sue on the basis of a cause of action vested in the estate.

11. The second argument in Mr. Fisher's skeleton argument reads as follows:

"... there is a substantial pragmatic reason why [Jack] ought to remain a party when the Trustees are added. This is that the Hong Kong Court of Protection is already seized of [Jack's] affairs and, in such circumstances, it is submitted that it would be prudent - both for [Jack's] own position and that of his Committee - for an action in the Hong Kong courts [to] be brought only with the court's authority to sue, that is, by having [Jack] as a party to any such action in the Hong Kong courts."

This argument proceeds on a false assumption. It proceeds on the assumption that Jack has the right to sue in respect of a cause of action vested in the estate. Since he does not have that right, there is nothing for the court to protect.

12. For these reasons, therefore, I order that Jack ceases to be a party to the proceedings.

Para. 21.8 of the Statement of Claim

13. The final question which I have to decide relates to para. 21.8 of the Statement of Claim. Paras. 19 and 20 of the Statement of Claim plead various breaches of duty on the part of the Defendant. Para. 21 purports to plead the loss sustained by the Plaintiff as a result of these breaches. There are then pleaded the particulars of those breaches of duty which are said to have given rise to that loss. Included in those particulars is para. 21.8 which merely reads:

"Correspondence between the Plaintiff and the Defendant and between the Defendant and [various third parties] with regard to the Plaintiff's beneficial entitlement and various other correspondence without considering independently the Plaintiff's position."

The 46 letters which make up that correspondence are then listed.

14. It is contended that para. 21.8 should be struck out on the ground that it may prejudice or embarrass the fair trial of the action. It is said that para. 21.8 is not sufficiently comprehensible, and in any event it pleads evidence, not facts. I have some sympathy with those arguments, because without wishing to be judgmental I do not think that para. 21.8 is all that clear. However, I am not prepared to strike it out. What is being said in para. 21.8 is that the mere sending of these letters constituted the breaches of duty which resulted in loss. Mr. Fisher has expressly confirmed that it is not the contents of the letters on which reliance is placed. It may be difficult to see how the mere sending of these letters would have constituted breaches of the particular duties alleged, and it may be very difficult to see how they could have caused loss, but that is a matter for evidence at the trial. And since the sending of the 46 letters which are identified in the particulars constituted the facts which are alleged to amount to the breaches of duty, the letters cannot be said to constitute simply the evidence to be called to prove those facts. For these reasons, I decline to strike out para. 21.8 of the Statement of Claim.

Paras. 24 and 25 of the Statement of Claim

15. Finally, the Defendant sought the striking out of paras. 24 and 25 of the Statement of Claim. It is accepted that there are deficiencies in the drafting of those paragraphs. Mr. Fisher wishes to have an opportunity to consider how they might be redrafted. He seeks an adjournment of that part of the Defendant's summons for that purpose. Mr. Michael Bunting for the Defendant does not oppose that application. I therefore adjourn the hearing of that part of the Defendant's summons sine die with liberty to restore upon 14 days' notice after a copy of the proposed Amended Statement of Claim has been served on the Defendant's solicitors.