CHARLES TSU YEW WONG AND ANOTHER v. HSBC PRIVATE TRUSTEE (HONG KONG) LTD

HCA 10631/1998

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 10631 OF 1998

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REASONS  FOR  DECISION

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1.  The defendant took out a summons pursuant to RHC Ord 33 rr 3 and 4(2) seeking the trial of a preliminary issue.  At the end of the hearing on 16 July 2008, I granted the application, indicating that reasons for doing so would be given later.  They are as follows.

2.  The plaintiffs commenced this action in June 1998.  They claim damages allegedly based on the defendant’s wilful default arising out of breach of trust in administering the estate of the late Wong Shih Sing who passed away in February 1983.  The plaintiffs are the 12.5% beneficiaries of the said estate (see para. 5 below).

3.  The breach averred to in the plaintiffs’ pleadings which was said to have resulted in delays and losses to the plaintiffs allegedly took place in November 1986 (para. 14, re-amended statement of claim).  The plaintiffs also allege that the defendant breached its duty in distributing the assets and money other than authorized (para. 22.1 thereof).

4.  The claim is denied by the defendant.  Among the various lines of defence, the defendant relies on the provisions in the Limitation Ordinance (Cap. 347) and asserts that the plaintiffs’ claim has been time-barred (para. 3 to 5, defence).

5.  The plaintiffs’ reply consists of one paragraph:-

“At the time of the accruing of the Plaintiff’s [sic] causes of action in respect of breach of trust and for an account, the said SC Wong was of unsound mind within the meaning of Section 22 of the Limitation Ordinance and from those times was never of sane memory or understanding in which condition he continues at the date hereof”.

In the plaintiffs’ pleadings, SC Wong is said to be the settlor of a trust agreement dated 11 September 1996 granting to the plaintiffs the properties described therein.  Those properties included SC Wong’s right title and interest in the said estate.

6.  The questions sought to be tried as preliminary issues are in short:-

(a) whether SC Wong was under a disability as being of unsound mind at the time of accrual of action;

(b)    if so, whether he subsequently ceased to be so, and if the disability ceased, when it ceased.

7.  The law relating to whether a trial of preliminary issue should be ordered is trite and can be summarized as follows:-

(1) an order for the separate trial of separate issues is a departure from the general rule that all disputes should be tried together, and therefore generally speaking, such an order should only be made in exceptional circumstances or on special grounds;

(2) such an order will be made where it is just and convenient to do so (instances where it is appropriate or inappropriate to make the order are given below by way of examples);

(3) where costs can be saved by obtaining a ruling on a point of law which requires serious argument and consideration being disposed of before trial, the point should be raised in the pleading and application should be made under Ord 33 rr 3 and 4(2) for the trial of this point as a preliminary issue;

(4) the order, as a rule, will only be made if the objection raises a serious question of law which, if decided in favour of the party objecting, would dispense with any further trial, or at any rate with the trial of some substantial issue in the action;

(5) the order should not be made in respect of matters to which, by reason of the obscurity either of the facts or the law, ought to be decided at the trial;

(6) the order for the trial of a preliminary point of law should not be made where there are facts in dispute, and if made may be set aside at the hearing;

(7) an “issue” which involves dealing with the whole subject matter of the action without any evidence is not a preliminary point and should not be ordered to be tried as such;

(8) where the issues of fact are interwoven with the legal issues raised, it will be undesirable for the court to split the legal and factual determination, for to do so would in effect be to give legal rulings in vacuo or on a hypothetical ruling, which the court will not do.

Lee Yiu Kwan v. Ting Yin Wah and Another [2004] HKEC 1222; Hong Kong Civil Procedure 2008, Vol. 1, para. 33/4/9A; Telford Development Ltd. v. Shui On Construction Co. Ltd.  [1999] 2 HKC 110.

8.  Hong Kong Civil Procedure 2008, Vol. 1, para. 33/4/10 has identified two matters (and recognized that there may be others) arising out of Cap. 347 which could be appropriate circumstances usually to be made the subject of an order for the trial of a preliminary issue.  But it cautions:-

“… great care and discretion should be exercised before ordering the trial of a preliminary issue, particularly so as to avoid the duplication of such a trial and the trial of the action itself, with the consequent increase in costs, delay and effort”.

9.  Similarly, in Chan Jak Tung (t/a Forward & Co.) v. Baltrans Ltd. and Others [1997] 1 HKC 89, Waung J, in refusing a similar application, cited (among other authorities) Allen v. Gulf Oil [1981] AC 1001.  Lord Roskill said in Allen:-

“The preliminary point procedure can in certain classes of case be invoked to achieve the desirable aim both of economy and simplicity.  But cases in which such invocation is desirable are few.  Sometimes a single issue of law can be isolated from the other issues in particular case whether of fact or of law, and its decision may be finally determinative of the case as a whole … ” (p. 1022A).

10.  Where it is appropriate to make an order for the trial of preliminary issues, the question of law or construction to be determined by the court under the order still needs to be stated or formulated in clear, careful and precise terms, so that there should be no difficulty or obscurity, still less any ambiguity, about what is the question that has to be determined: Lee Yiu Kwan, above; Hong Kong Civil Procedure 2008, Vol. 1, para. 33/4/9A.

11.  In this application, the preliminary issue involved is whether s. 22, Cap. 347 applies.  The relevant provisions of s. 22 are:-

“(1) If on the date when any right of action accrued for which a period of limitation is prescribed by this Ordinance, the person to whom it accrued was under a disability, the action may be brought at any time before the expiration of 6 years from the date when the person ceased to be under a disability … , whichever event first occurred, notwithstanding that the period of limitation had expired … ” (emphasis supplied);

“(3) For the purposes of this section and section 22A, a person shall be deemed to be under a disability while he is … of unsound mind … ” (emphasis supplied).

12.  Whether SC Wong was of sound mind at any time prior to the commencement of this action is an issue sufficiently distinct from the other issues raised by the pleadings herein.

13.  The evidence which is required to establish SC Wong’s mental condition is therefore also sufficiently “self-contained”.  It comes from two sources: medical expert evidence and evidence from person(s) who can testify to that matter (for example, person(s) who may testify as to his mental condition by reason of their contacts with him).

14.  The trial of this action has been placed in the “long case list”.  The defendant contends that the trial may last for months.  Whether this is an accurate time estimate, the length of trial is likely to be substantial.  The facts which are in dispute also appear to be involved and spanned over many years.

15.  The determination of the above preliminary issue will probably take much less time, and if it is resolved in the defendant’s favour, will finally dispose of this action.

16.  Accordingly, I agree with the defendant that this application falls within the exceptional circumstances referred to above.