LYYC v. CHL & CSMS, THE EXECUTRICES OF THE ESTATE OF CGSK ALSO KNOWN AS CSKG, DECEASED

CAMP 31/2019

[2019] HKCA 521

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

MISCELLANEOUS PROCEEDINGS NO 31 OF 2019

(ON AN INTENDED APPEAL FROM FCMP 223/2017)

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JUDGMENT

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Hon Lam VP (giving the Judgment of the Court):

Introduction

1.  By a summons dated 21 February 2019 (“the Summons”), the Respondents renewed the application for leave to appeal against the decision of HH Judge Melloy (“the Judge”) dated 8 January 2019 ([2019] HKFC 7; “the Striking Out Decision”).

2.  By the Striking Out Decision, the Judge dismissed the Respondents’ application for striking out the Applicant’s originating summons made under the Inheritance (Provisions for Family and Dependents) Ordinance (Cap 481) (“the Ordinance”).  On 15 February 2019, the Judge refused to grant the Respondents leave to appeal against the said decision ([2019] HKFC 39; “the Leave Decision”).

3.  Together with the Summons, the Respondents lodged a written statement in support of the application in pursuance of the Practice Directions 4.1.

4.  The Applicant lodged a statement in opposition on 7 March 2018.

5.  Having considered the documents placed before us together with the parties’ written statements, we are of the view that the matter is suitable for determination without any oral hearing.

Background

6.  The Respondents are the executrices of the estate of the Deceased, a wealthy businessman who passed away on 20 July 2016.  The Applicant was the Deceased’s secretary and personal assistant.

7.  It is the Applicant’s case that she and the Deceased had developed an intimate relationship and the Deceased had financially supported her and her family.  According to the Applicant, the Deceased had made various inter vivos gifts to her during his life time. He also made financial arrangement for her and her family after his death.

8.  The Respondents vigorously dispute that there was any romantic relationship between the Applicant and the Deceased.  Furthermore, the Respondents seek to strike out the Applicant’s claim for maintenance on the ground that the Applicant does not fall within the category of “any person … who immediately before the death of the deceased was being maintained, either wholly or substantially, by the deceased” under s.3(1)(ix) of the Ordinance.

9.  The Judge heard the striking out application on 19 September 2018.  In her decision, the Judge took the view that, in light of the factual dispute between the parties, it would not be appropriate for the court to come to a decision based on affidavit evidence.  The Judge did not find it appropriate to resolve if there should be a wide or narrow construction of the phrase “immediately before his death” in the section.

Grounds of Appeal

10.  According to the draft notice of appeal annexed to the Summons, the grounds of appeal on which the Respondents seek to rely may be summarized as follows:

(1)  The Judge erred in failing to have regard to the undisputed facts and evidence that payments ceased to be advanced to the Applicant since September 2013, i.e., almost 3 years before the death of the Deceased;

(2)  The Judge erred in failing to hold the Applicant was neither wholly nor substantially maintained by the Deceased; and

(3)  The Judge erred in failing to consider that the legal argument concerning the construction of the phrase “immediately before his death” did not necessitate a full trial.

Legal principles

11.  The legal principles for granting leave to appeal are well established.  Leave would not be granted unless the court is satisfied that the intended appeal has a reasonable prospect of success, or there is some other reason in the interests of justice that the intended appeal should be heard by the Court of Appeal: see s.14AA of the High Court Ordinance (Cap. 4).

12.  Equally well established are the legal principles for the exercise of the court’s summary power to strike out.  There should be no trial upon affidavit. Disputed facts were to be taken in favour of the party sought to be struck out. Nor should the court decide difficult points of law in striking out proceedings. The claim must be obviously unsustainable, the pleadings unarguably bad and it must be impossible, not just improbable, for the claim to succeed before the court will strike it out. If the court does not think the matter to be clear beyond doubt or if it fails to be satisfied that there is no reasonable cause of action or that the proceedings are frivolous or vexatious, then, there should be no striking out: see Hong Kong Civil Procedure 2019, vol. 1, §18/19/4.

13.  Further, the refusal to strike out a pleading was an exercise of discretion of the court.   The Court of Appeal will only interfere with an exercise of discretion unless the judge erred as a matter of law, misunderstood the evidence, took into account irrelevant factors, failed to take into account relevant factors or had acted blatantly outside the scope of the discretion that no reasonable tribunal would have done: see Hadmor Productions Ltd v Hamilton [1983] 1 AC 191 at p.220B-F, see also SPH v SA [2014] 3 HKLRD 497 at [65], and CCMJ v SSM (Appeals; Bundles; Case management) [2016] 1 HKFLR 22 at [16].

14.  With these principles in mind, we now turn to consider the Respondents’ application for leave to appeal.

Discussion

15.  We are of a clear view that the Applicant’s originating summons should not be struck out.  In our judgment, the decision of the Judge is plainly correct.

16.  It is the Applicant’s case that, since the early to mid-1990’s, the Applicant and the Deceased developed a romantic relationship, and the Deceased had financially supported her and her family since then.  The Respondents deny that.  They say that the relationship between the Applicant and the Deceased was purely professional. The payments received by the Applicant throughout the years were payments in return of her services rendered under her employment.  According to the Respondents, given the salary from her employment and the financial support of her eldest daughter, the Applicant cannot be said to be either wholly or substantially maintained by the Deceased.

17.  Clearly, there are factual disputes that cannot be resolved by affidavit evidence alone.

18.  The Deceased was unable to make payment to the Applicant since December 2010 after he suffered his second stroke. He was bedridden and could not speak or write. A Committee in respect of his estate was appointed in November 2012.  After such appointment, monthly payment was made by Perm Finance Company Limited [“PFCL”]to the Applicant for the period from January 2011 to September 2013.  The Respondents say that the payment was made in return of the Applicant’s services on the instructions of the Committee.

19.  It is argued that, due to the discontinuity of payments from the Deceased, the Applicant was not “maintained by the deceased immediately before his death”.

20.  On the other hand, quite apart from the monthly payments made to her by PFCL, the Applicant relied on the following provisions given to her by the Deceased as her means of support up to the demise of the latter,

(a)  A lump sum of $5 million paid to her in 2010 originally intended as a bridging financial relief between the death of the Deceased and the grant of probate;

(b)  The payment (including mortgage payments and provisions in a codicil of the Deceased for a payment to discharge the outstanding mortgage for that property) for a residential property in Happy Valley held by Sunny Gain (in which the Applicant is 98% shareholder with her two daughters each holding 1%).  The property was and still is the residence of the Applicant.

21.  According to the Respondent, the mortgage of the Happy Valley property had been fully paid off by the Committee in June 2015.

22.  As the Judge pointed out in [10] of the Striking Out Decision, there is a dispute on the law as to whether the phrase “immediately before his death” should be construed widely or narrowly.  Counsel for both parties have referred to various English cases including Jelley v Iliffe [1981] Fam 128 and Re Beaumont (deceased) [1980] 1 All ER 266.

23.  We do not think that the determination of the question whether the Applicant comes within section 3(1)(ix) is a pure question of law that can be resolved in the abstract. In light of the history of the relationship between the Applicant and the deceased and the alleged provisions given to her, it is at least arguable that one should not simply single out the fact that she received nothing more since 2013 to rule her out as a potential candidate under section 3(1)(ix) of the Ordinance. The Judge was correct in holding that this question should be dealt with at trial.

24.  Counsel for the Respondent relied on the judgment of Lewison J in Baynes v Hedger [2008] EWHC 1587 at [154]. The proposition seems to be that a contribution is made when the gift was made. In the present context, the Respondent contended that those gifts by the Deceased were made in 2010 (the $5 million) and at the latest in June 2015 (when the mortgage payment for the Happy Valley property was paid off).

25.  We accept that it is a respectable argument but we do not think it is appropriate to determine if the approach of Lewison J is too narrow in the context of a striking out application.

26.  In such circumstances, we cannot see any reasonably arguable basis to challenge the Judge’s exercise of discretion in refusing to strike out the claim.  We do not find any reasonable prospect of success in the intended appeal.

27.  Contrary to what was stated in the Respondents’ statement, we cannot see any reason in the interests of justice that the intended appeal should be heard.

Conclusion

28.  For the above reasons, we refuse to grant leave for the Respondents to appeal against the Judge’s decision.  We dismiss the Summons accordingly.

29.  We can see no reason why costs should not follow the event.  We order that the Respondents should pay the Applicant’s costs of this application.  Having considered the Applicant’s statement of costs, we fix the sum at $65,000.

30.  As we are of the view that this application is totally devoid of merit, pursuant to Order 59, rule 2A(8) of the Rules of the High Court (Cap 4A), we further order that no party may under rule 2A(7) request the determination to be reconsidered at an oral hearing inter partes.