JEN KIT JOSEPHINE, THE ADMINISTRATRIX FOR THE ESTATE OF JEN FRANK CHIA HSIANG, DECEASED v. CHAN SAU WAI SHIRLEY

HCA 346/2014

[2018] HKCFI 429

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 346 OF 2014

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HCMP 106/2017

[2018] HKCFI 429

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 106 OF 2017

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(Heard Together)

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D E C I S I O N

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Introduction

1.  The hearing before me concerns what can be shortly described, if not entirely accurately, as competing summonses in competing actions.  The position of the parties is for the most part diametrically opposed, I infer, because each perceives some (real or imagined) tactical advantage and/or because, as is all too common with disputes of this nature, the parties rarely agree on anything.

2.  For convenience and in an effort to minimise confusion I shall refer to the parties by their given names.  Jen Kit Josephine (“Josephine”), as Administratrix of the estate of Jen Frank Chia Hsiang (“the Father”), her father, is the plaintiff in High Court Action 346 of 2014 (“the High Court Action”), the defendant to which is Chan Sau Wai Shirley (“Shirley”) (who, though the legitimacy is now one of the key items in dispute, was previously married to the Father, following the passing away of his first wife, Josephine’s mother).  In shorthand terms, Shirley is Josephine’s stepmother.

3.  However, the roles are reversed in High Court Miscellaneous Proceedings No. 106 of 2017 (“the HCMP Action”), where Shirley is the plaintiff and Josephine is the first defendant. The second defendant in the proceedings, Franklin Yuen Yuen Jen (“Franklin”) is Josephine’s brother. Therefore, again, Shirley is Franklin’s stepmother.

High Court Action

4.  The High Court Action was commenced by Josephine against Shirley by Writ of Summons in February 2014.  It is not necessary for the matters presently before me that I set out detailed particulars of the action.  It is sufficient to note that the proceedings involve a number of allegations as regards Shirley’s involvement with the affairs of the Father during his life, in particular claims regarding her dealings with his assets.   Amongst the claims made is that:

(a) from a certain date the Father lacked the, or sufficient, mental capacity to act on his own behalf and/or by reason of the same matters was susceptible to suggestion and influence as regards his affairs and assets;

(b) by virtue of the aforesaid situation, Shirley was able to wrongfully acquire substantial assets in her own name before the Father passed away; and

(c) the marriage between the father and Shirley was not legitimate, because of his lack of capacity, and should be declared void.

5.  The action is being defended by Shirley who denies Jennifer’s claims.  As it bears on the matters before me, I observe that in Shirley’s first (there have since been two amendments) Defence in the High Court Action which was dated and filed on 6 August 2014, it is pleaded that:

(a) it is filed without prejudice to her right to apply for the revocation of the letters of administration of the estate of the Father granted to Josephine (in paragraph 1);

(b) she does not admit the validity of the letters of administration obtained by Josephine and further or alternatively states that Josephine was and is no longer suitable to be the administratrix (paragraph 3 (c)).

6.  At the same time as commencing the High Court Action, Josephine sought and obtained an ex parte Mareva injunction against Shirley in a substantial sum.  Again, it is not necessary for the matters presently before me that I do more than note that this injunction was later set aside and further on a renewed application it was ordered that a new injunction not be granted.  In respect of both matters, the Honourable Mr Justice A. Chow ordered that Josephine pay Shirley’s costs.

HCMP Action

7.  A little more than three years after the commencement of the High Court Action, Shirley commenced by originating summons the HCMP Action against Josephine and Franklin.  Again, it is not necessary for the matters presently before me that I set out detailed particulars of the action.  It is sufficient to note that the principle relief sought is the revocation of Josephine’s letters of administration in respect of the estate of the Father.  Amongst the claims made is that:

(a) Shirley, as the wife of the Father, has a higher priority for the grant of letters of administration in relation to his estate and that Josephine failed to take the necessary steps to give notice to Shirley of the intention to apply for a grant or to inform the court as regards matters relevant to the service of the application on Shirley;

(b) if, as now appears to be the case, Josephine denies the legitimacy of Shirley’s marriage to the Father alleging a lack of capacity, a grant should not have been obtained but a probate action commenced; and

(c) Josephine has failed to properly administer the estate of the Father, including by commencing the High Court Action against Shirley, not least because of what are alleged to be her conflicts of interest.

There are significant disputes of fact and law

8.  While the short summary I have given may not entirely do justice to the claims and issues as they are seen by either set of parties, it should already be abundantly clear that the High Court Action and the HCMP Action are closely interlinked.  With the exception of Franklin, against whom it does not appear that any relief (or, at least, relief of a form that the court could order) is sought, the parties to the actions are the same. Furthermore, many of the factual and legal issues are common to the two actions, and as such any ultimate decision of the court as regards a matter in one action may well have a bearing on the other action.

The present applications

9.  The parties appeared before me in respect of three summonses, one issued by Shirley dated 30 March 2017 and two issued by Josephine dated 21 April 2017.  In short:

(a) Shirley seeks the stay of Josephine’s action against her until her action against Josephine is determined; and

(b) Josephine seeks the stay of Shirley’s action against her until her action against Shirley is determined.

10.  To be fair to Josephine her applications do not solely seek a stay but refer in the alternative to:

(a) the High Court Action and the HCMP Action being consolidated; or

(b) the HCMP action being tried immediately after the High Court Action before the same judge with the High Court Action (her action) being the lead action, and the evidence adduced in both proceedings shall be mutually admissible.

11.  However, for Jennifer to simply largely recite the different alternatives provided for by the rules does not substantially advance matters.  If not earlier, by the time the matter came to court her preferred alternative should have been clearly identified and the necessary directions to give effect to it put forward.

12.  Josephine’s counsel was also not able to justify to my satisfaction why it was thought necessary to issue two summonses, the second of which, somewhat unusually, is referred to as being “without prejudice” to the first.  The terms of the two summonses appear in large part identical, in any event, as a matter of drafting, could easily have been combined in a single summons and in the case of the second summons, in part, simply recite the directions desired at the first hearing which are matters of case management for submission at the hearing.

The need for the HCMP action

13.  I have previously referred to the pleas made by Shirley in her defence to the High Court Action which was filed as early as August 2014 and which appear to raise very much the same issues as regards the revocation of the grant obtained by Jennifer that are the subject of the HCMP Action she filed three years later.

14.  At the hearing I pressed counsel for Shirley regarding the need for the separate HCMP Action.  I queried why the same claims were not brought by way of counterclaim in the High Court Action pursuant to Order 15 Rule 2(1) of the RHC, the terms of which are clearly wider enough to allow this.

Order 76 Contentious Probate Proceedings (“Probate Action”)

15.  Counsel’s response was to refer to and rely on Order 76 of the RHC both as justification for the commencement of a separate action and for doing so by way of an originating summons.

16.  However, Order 76 rule 15(1) of the RHC specifically provides for the bringing by way of a counterclaim in any action the same relief that might otherwise be claimed in a separate action begun as a Probate Action.  It is clear that the objective of the rule is to avoid an unnecessary multiplicity of proceedings.  There follow specific provisions dealing with the procedure to be followed in respect of what is termed a “probate counterclaim”.

Writ of summons or originating summons

17.  Further, each of Order 76, High Court Practice Direction 20.2 and the commentary in Hong Kong Civil Procedure 2018 all make it abundantly clear that a Probate Action may be begun by writ of summons, and indeed should be brought by writ of summons where the proceedings are likely to be opposed and will involve substantial disputes of fact on which oral witness testimony is likely to be required.  With the High Court Action having been on-going and hard fought on both sides for some 3 years, it surely must have been obvious to Shirley’s legal team that her attempt to have Jennifer removed as administratrix would be opposed.

18.  That proceeding by way of an originating summons was very likely not the appropriate procedure also seems not to have occurred to or at least been raised on behalf of Jennifer’s legal team.  Indeed, the submissions of counsel for Jennifer for the hearing before me, in part echo the submissions of counsel for Shirley at the hearing.  He observed that two actions may not be appropriate for consolidation where the result would be that the plaintiff in one action would be the defendant in the other (as would be the case here), that is, unless the claim of the defendant in one action can be ordered to stand as a counterclaim in the action.  This statement I agree with.  However, he goes on to observe that in the present case the types of relief sought are very different and are not complimentary as a counterclaim. Here, with respect, I disagree.  In my view, the challenge by Shirley by way of the HCMP Action to the position of Jennifer as the plaintiff in the High Court Action is inextricably interlinked with the claims by Jennifer against Shirley in the High Court Action.  In a very large part common factual and legal arise and the outcome in one action will very likely bear on the outcome in the other.  I therefore consider that combining the two actions together will likely result in a significant saving of overall time and costs.

19.  That counsel for Jennifer originally maintained a position to the contrary may have been because it was thought to bolster the argument that her action should take precedence over that of Shirley and thus for tactical reasons only.

20.  The submissions of counsel for Jennifer also make the point that the parties to the HCMP Action are not identical in that they include Franklin, Jennifer’s brother.  However, as I have already observed, a simple reading of the originating summons reveals that no relief is sought against Franklin (or, at least, no relief that the court has jurisdiction to grant).  This was acknowledged by counsel for Shirley during submissions before me.  That Franklin, as a person potentially entitled to a grant were Jennifer’s grant revoked, might be required to be served with any “probate counterclaim”, of itself, does not require that he be made a party.  Again, this is clear from the commentary to Order 76 in Hong Kong Civil Procedure 2018 (see note 76/2/2).

21.  In short, it appears that prior to the hearing both Jennifer and Shirley’s legal teams largely shared the same misconceptions that the High Court Action and the HCMP Action were not suitable for consolidation, that the claims made in the HCMP Action could not have been made the subject of a counterclaim in the High Court Action and that the originating summons procedure was appropriate to deal with the claims made in the HCMP Action.

22.  As the size of the court file amply demonstrates, with this misconception, since the commencement of the HCMP Action the parties have filed and served voluminous further affirmation evidence, adding to the already substantial volume filed in respect of the previous interlocutory injunction proceedings in the High Court Action.  In my view, a large part of this time and what must have been significant legal costs has likely been wasted (on both sides) or, at the very least, could have been better utilised on preparing full and properly particularised pleadings in a consolidated single action.

The affirmation evidence contains substantial argument and submissions

23.  While I have not read all of the affirmation evidence of the parties in the HCMP Action, I would observe that much of that which I have read (again on both sides) is not confined to setting out the facts but in a large part is made up of argument and submissions (often repetitive of the parties evidence in the High Court Action, which again, based on that which I have read, is also full of argument and submissions).  This further illustrates why the two actions require that the issues be framed by pleadings.

24.  I also observe that the same criticisms could be levied at the submissions of the parties’ respective counsel for the hearing before me which, at some considerable length, spend much of the time rehearsing the substantive issues in the two actions and insufficient time addressing the immediate issues, which I view as essentially matters of case management.

25.  Overall, it is hard to avoid the conclusion that throughout the course of the two actions the parties (and their legal teams) have largely been focused on trying to secure every possible perceived tactical advantage over the other and not on how best to resolve the issues in a cost effective and timely way.  Each sides initial insistence before me that their claims must be addressed first before the claims of the other clearly point to this.

Consolidation

26.  O 4 r 9(1) of the RHC, provides that where two or more causes or matters are pending and if it appears to the court:

(a) that some common question of law or fact arises in both or all of them, or

(b) that the rights to relief claimed therein are in respect of or arise out of the same transaction or series of transactions, or

(c) that for some other reason it is desirable to make an order under this rule

the court may order those causes or matters to be consolidated on such terms as it thinks just or may order them to be tried at the same time, or one immediately after another, or may order any of them to be stayed until after the determination of any other of them.

27.  As the commentary to the rule makes clear, the main purpose of consolidation is to save costs and time.  Whether or not to order consolidation is a matter in the courts discretion and involves a balancing exercise and regard to the facts of each case.  The aim is to achieve convenience and economy in case management. Consolidation does not change a party’s substantive’s rights.  Having all related issues, factual or legal, before one judge, allows that judge to decide how each should be addressed, including which, if any, should be dealt with first having regard to their significance or potential impact on secondary issues. I refer in particular to the reference in the commentary at 4/9/2 of the RHC as follows:

“in making case management decisions, the court is primarily concerned with savings in time and costs and also with the avoidance of unnecessary delay, complexity, overloading of issues the inconvenience of having experts and witnesses repeating their evidence.”.

28.  Having regard to the respective issues, factual and legal, in the High Court Action and the HCMP Action I am of the view that consolidation is desirable.

The agreed order

29.  Having given an indication of my views as set out in this decision to counsel for the parties during the course of the hearing I invited them to endeavour to agree the appropriate order during a short adjournment.

30.  On the hearing resuming, the court was provided with an agreed draft order which has substantially formed the basis for the order I now make which I set out below:

(a) the HCMP Action be continued as if begun by Writ of Summons;

(b) the High Court Action and the HCMP action be consolidated to heard together as a single action with Jennifer as plaintiff and Shirley as defendant;

(c) the Amended Statement of Claim of Jennifer in the High Court Action dated and filed on 22 March 2017 do stand as her consolidated Points of Claim in the consolidated action;

(d) the Re-Amended Defence of Shirley in the High Court Action dated and filed on 8 June 2017 do stand as consolidated Points of Defence in the consolidated action;

(e) Shirley, the defendant in the consolidated action do have leave to file and serve an amended consolidated Points of Defence and Counterclaim, if any, within 28 days;

(f) the Re-Amended Reply of Jennifer in the High Court Action dated and filed on 4 September 2017 do stand as her consolidated Points of Reply in the consolidated action and she do have leave to file and serve an amended consolidated Points of Reply and Defence to Counterclaim, if any, within 28 days thereafter

(g) Shirley, the defendant in the consolidated action do have leave to file and serve a consolidated Points of Reply to Defence to Counterclaim, if any, within 28 days thereafter;

(h) the case management conference in the High Court Action listed for 20 March 2018 at 10:30 a.m. be vacated;

(i) a case management conference for the consolidated action be fixed in consultation with counsel’s diaries with an estimated length of one hour not before 1 June 2018.

The position of Franklin

31.  I have previously observed that the inclusion of Franklin as the second defendant to the HCMP Action appears to have served no purpose.  However, it is for Shirley, as the defendant to the consolidated action, to make any ‘probate counterclaim’ or other counterclaim as she is advised. In any event, for the avoidance of doubt, the procedure provided for under Order 76 in relation to any such ‘probate counterclaim’ should be followed, in particular the provisions of order 76 rule 15(4), and, if appropriate, consideration will need to be given as to whether notice of any such counterclaim should be given to Franklin if he is not a party to it.

Costs

32.  While the parties respective counsel were largely able to agree a proposed draft of the order required to achieve consolidation and providing for the filing and service of amended pleadings, as perhaps was inevitable, they were not able to agree as regards costs.

33.  Counsel for Jennifer submitted that she should be entitled to the costs both of Shirley’s summons and her two summonses, as she had achieved substantially what she wanted by her summonses.  Counsel further submitted that Shirley’s counsel’s concession regarding the appropriateness of consolidation had only been made belatedly at the hearing.

34.  Counsel for Shirley submitted that the normal costs order when consolidation is ordered would either be costs in the consolidated cause or costs reserved.  Counsel further submitted that whatever the wording of Jennifer’s two summonses, which, as I have said, simply listed in the alternative various options without indicating any clear preference, at the outset of the hearing her primary position remained that her action should take precedence.

35.  As will be apparent from my observations during the course of this decision, I am of the view that at times both parties and their legal teams have lost sight of their duty to cooperate and seek to agree matters to promote time and cost efficiency (their own and that of the court) in the conduct of the two actions.  As a result, substantial time and costs have been expended on both sides that in my view might otherwise have been avoided or, at the very least, better utilised.

36.  I am of the view that Shirley both delayed and did not follow the appropriate procedure as regards bringing forward the challenge to Jennifer’s appointment and her conduct of the administration of the Father’s estate.  However, the HCMP Action having been issued, Jennifer does not appear to have made substantial efforts to seek Shirley’s agreement that the action should proceed as if begun by writ or that it be consolidated with the High Court Action.  As regards procedural matters, it would appear that both parties were labouring under the same misconceptions.

37.  Therefore, I do not consider that there is any clear ‘winner’ as regards the three summonses before me.  Accordingly, I make an order nisi that the costs of the three summonses, including the hearing before me, and the costs of the HCMP Action up to date of consolidation be reserved. On the assumption that, by way of a ‘probate counterclaim’, Shirley renews her claim regarding the revocation of Jennifer’s appointment, such costs will likely fall to be decided by the outcome of that claim but this will be a matter for the judge who ultimately decides that issue.  I give leave to any party who seeks a varied costs order to apply in writing with reasons within 14 days failing which the order will become absolute.

Case management conference

38.  As appears from my decision, the issue between Jennifer and Shirley underlying the hearing before me was which of their respective claims should be dealt with first at a trial. Seemingly each of them, guided no doubt by their respective legal teams, had previously seen the sequencing in which their completing claims are dealt with as a matter potentially giving one or the other significant tactical advantage. However, in the circumstances of this matter, I view any perceived tactical advantage as largely illusory.  But, in any event, as I made clear to Jennifer and Shirley’s respective counsel, I do not consider that this issue of sequencing is one the court can and should decide far in advance of even properly particularised pleadings being filed and served.  In due course, the two having been consolidated, after consolidated pleadings have been filed and served, after witness statements have been filed and served, and thereby the issues, factual and legal, have been clearly identified, the court will be far better placed to form a view as to how the issues should be addressed at trial.