NG HONG KI v. LEUNG FONG KIU

CACV 94/2011

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 94 OF 2011

(ON APPEAL FROM DCCJ NO. 2776 OF 2010)

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REASONS FOR JUDGMENT

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Hon Tang VP:

1.  I have had the advantage of reading Kwan JA's judgment in draft. I respectfully agree with it and have nothing to add.

Hon Kwan JA:

2.  This is the defendant’s appeal against an order for summary judgment made by Master K.K. Pang of the District Court on 29 October 2010 and upheld by Deputy District Judge J Wong on 26 January 2011. By the summary judgment granted to the plaintiff, the defendant was ordered to deliver up vacant possession to the plaintiff of the premises at 12^th Floor, Siu On Mansion, No. 185 Hennessy Road, Hong Kong (“the Premises”) and to pay mesne profits at the rate of $6,600 per month from 1 November 2010 until the delivery up of vacant possession. The judge further ordered that Leung Fong Keung (“Mr F K Leung”), a brother of the defendant, be appointed as the defendant’s guardian ad litem in handling all matters related to the legal proceedings in this action.

3.  The defendant brings this appeal with leave granted by a single judge of the Court of Appeal. The plaintiff has filed a Respondent’s Notice by way of cross-appeal to set aside the order for appointment of a guardian ad litem for the defendant.

4.  We dismissed the appeal at the end of the hearing and ordered the defendant to pay 70% of the plaintiff’s costs on appeal. Although the Respondent’s Notice was not pursued upon our indication of dismissing the appeal, we heard arguments on this as the merits of the Respondent’s Notice would have a bearing on the appropriate order to make on the costs of the appeal. These are the reasons for judgment.

5.  I will first set out the relevant background matters.

The background

6.  By a tenancy agreement dated 1 November 1965 made between Ng Kuen Cheung (represented by his agent Mei Sun Cheong) as the landlord and Leung Sun as the tenant, the former let the Premises to the latter for domestic use from 1 November 1965 at the monthly rent of $420. It was provided in the agreement that the tenancy was determinable by the tenant giving one month’s notice to the landlord or by the landlord giving two months’ notice to the tenant. Ng Kuen Cheung was the registered owner of the Premises.

7.  Leung Sun passed away on 2 February 1988. Members of his family continued to reside in the Premises and paid rent to the landlord. The defendant in this action, Leung Fong Kiu (“the defendant”), is a son of Leung Sun and has resided in the Premises at all times.

8.  Ng Kuen Cheung died testate in May 1989 bequeathing his estate to his wife Madam Ho Sin Char. She passed away in January 1991. In her will, she left her estate to her husband’s concubine Madam Chan Mo Ging (“Madam Chan”). Madam Chan became the registered owner of the Premises by an assent dated 16 February 1995. She was the plaintiff in this action. She passed away after judgment was granted and an order was made on 17 May 2011 by which her son and the personal representative of her estate, Ng Hong Ki (“Mr Ng”), was substituted as the plaintiff of this action.

9.  According to the affirmation of Madam Chan filed in support of her application for summary judgment, it was only in April 2002 that the defendant orally informed her son Mr Ng that Leung Sun had passed away. She had no objection to letting the defendant continue to occupy the Premises on condition that he would pay rent and comply with the other terms of the tenancy agreement. The defendant had been paying rent to her ever since. She averred that the defendant had taken over as the tenant of the Premises.

10.  On 28 July 2009, Madam Chan served a transitional notice of termination on the defendant personally, pursuant to section 5(2) of the Landlord and Tenant (Consolidation) (Amendment) Ordinance 2004, to terminate the tenancy on 31 July 2010. The defendant acknowledged receipt of the notice of termination by signing his name on a copy of the notice.

11.  As vacant possession was not delivered on 31 July 2010, the writ in this action was issued on 13 August 2010. The defendant filed an acknowledgment of service stating that he intended to contest the proceedings and that he was applying for Legal Aid. After the statutory stay for the Legal Aid application had expired, Madam Chan issued a summons for summary judgment on 12 October 2010.

12.  On 28 October 2010, Leung Fong Chee (“Mr F C Leung”), the defendant’s eldest brother, filed an affirmation on his behalf. Mr F C Leung stated that the defendant has been suffering from schizophrenia, that he has been a patient under the care of the Department of Psychiatry at the Pamela Youde Nethersole Eastern Hospital since 1998, and that he is still receiving treatment regularly from that hospital. He produced a letter of Dr Chan Ka Po of the hospital on 15 September 2010 confirming the above matters and stating that the defendant had onset of mental illness since 1978. Mr F C Leung requested the court to adjourn the proceedings for at least three months or until such time that legal representation would be granted to the defendant by Legal Aid, as the application for Legal Aid was still being processed and the defendant would need time and assistance to prepare his defence properly. As the judge had remarked, no substantive defence was disclosed in this affirmation.

13.  The defendant and Mr F C Leung both attended the hearing before the Master on 29 October 2010. Mr F C Leung was allowed to make oral submission for the defendant. When the Master asked them what the defence to the claim was, they did not say anything apart from repeating that the defendant has mental illness. The defendant acknowledged he had received the notice of termination. The Master refused to adjourn and granted summary judgment to Madam Chan.

14.  Legal Aid was granted to the defendant on 10 November 2010. On 20 December 2010, he filed a Notice of Appeal to a judge to appeal the summary judgment, and three further affirmations were filed in support of this appeal, made by Mr F C Leung, his niece Chow Mee Yee Millie, and Mr F K Leung. In these affirmations, a defence was raised for the first time that the defendant was not the tenant of the Premises and that it was his mother, Madam Chow Kwok Hoi, now aged 99, who had taken over as the tenant since Leung Sun passed away in 1988. Thus, it was alleged that the requisite notice to terminate the tenancy had not been served on the proper tenant. There was also exhibited a medical report of Dr Chan Ka Po on the defendant addressed to the Director of Legal Aid dated 15 October 2010 (“the Medical Report”).

The decision below

15.  The appeal was heard by the judge on 6 January 2011. He referred to Order 58 rule 1(4) of the Rules of the District Court (“RDC”) and refused to admit the new evidence filed by the defendant after the hearing before the Master, holding that there was no reason why the new evidence could not have been obtained with reasonable diligence for use at the earlier hearing, and in any event the new evidence was incredible so there was no point of admitting it. Having considered the new evidence de bene esse, he came to the view there was no triable issue. He upheld the Master’s decision for summary judgment.

16.  The judge granted the application for the appointment of a guardian ad litem for the defendant. He was satisfied on the Medical Report that the defendant came within the definition of a “mentally incapacitated person” (“MIP”) in Order 80 rule 1 of the RDC, namely, that he is “a mentally disordered person … (within the meaning of the Mental Health Ordinance (Cap. 136)) who, by reason of mental disorder …, is incapable of managing and administering his property and affairs.” The judge was of the view that the appointment would be for the benefit of the MIP as although judgment was entered against the defendant, it was possible that the matter could be taken further such as an application for extension of time for execution.

The issues on appeal and cross appeal

17.  Two broad grounds were raised by the defendant on appeal and are as follows:

(1) Having held that the defendant was an MIP, the judge should have set aside the Master’s order for summary judgment as the proceedings were conducted without a guardian ad litem to protect the interest of the defendant and were in breach of the provision in Order 80 rule 2(1) of the RDC. The substantive steps taken before the appointment of the guardian were nullities.

(2) The judge was wrong in holding that no triable issue was raised in defence.

18.  For the cross appeal, Mr Erik Shum, who appeared for the defendant, raised a preliminary point that the Respondent’s Notice by way of cross-appeal is invalid,  as no leave was granted to bring this cross-appeal and it should not be entertained by this court. The plaintiff’s counsel, Mr Herbert Au-Yeung, argued to the contrary and took a fallback position in his written submission seeking leave from this court to bring his cross-appeal out of time if leave to appeal were required. The substantive point raised on the cross-appeal is whether the judge was correct in holding that the defendant was an MIP within the meaning of Order 80 rule 1.

19.  It would be convenient to consider first the preliminary and substantive issues in the Respondent’s Notice before dealing with the two broad issues in the Notice of Appeal.

If leave is required for filing a respondent’s notice by way of cross-appeal

20.  I will first set out the relevant statutory provisions.

21.  Section 63(1) of the District Court Ordinance, Cap. 336 provides that an appeal can, “with leave of a judge or the Court of Appeal, be made to the Court of Appeal from every judgment, order or decision of a judge in any civil cause or matter.”

22.  Where leave to appeal has been obtained in an appeal from the District Court, Order 59 rule 4(4) of the Rules of the High Court (“RHC”) makes this provision regarding the service of a notice of appeal:

“4. Time for appealing

(4) In relation to an appeal from the District Court, a notice of appeal must be served under rule 3(5) within –

(a)        in the case where leave to appeal to the Court of Appeal is required under section 63(1) … of the District Court Ordinance (Cap. 336), 7 days after the date on which leave to appeal is granted.”

23.  The relevant provisions concerning a respondent’s notice found in Order 59 rule 6 of the RHC read as follows:

“6. Respondent’s notice

(1) A respondent who, having been served with a notice of appeal, desires –

(a) to contend on the appeal that the decision of the court below should be varied, either in any event or in the event of the appeal being allowed in whole or in part, or

…

(c) to contend by way of cross-appeal that the decision of the court below was wrong in whole or in part,

must give notice to that effect, specifying the grounds of his contention and, in a case to which sub-paragraph (a) or (c) relates, the precise form of the order which he proposes to ask the Court to make.

…

(3) Any notice given by a respondent under this rule (in this Order referred to as a “respondent’s notice”) must be served on the appellant, and on all parties to the proceedings in the court below who are directly affected by the contentions of the respondent, and must be served –

(a) where the notice of appeal related to an interlocutory order, within 14 days, and

(b) in any other case, within 21 days,

after the service of the notice of appeal on the respondent.”

24.  Mr Shum’s argument that leave is required for the service of the Respondent’s Notice may be stated as follows. The cross-appeal brought by the Respondent’s Notice in this instance is a species of appeal and a party who seeks to bring a cross-appeal assumes the obligations of a would-be appellant and then an appellant (Thanakharn Kasikorn Thai Chamkat (Mahachon) v. Akai Holdings Ltd. (No. 1) (2010) 13 HKCFAR 283, para. 4). Where leave is required for an appeal to be brought, the respondent seeking to bring a cross-appeal may not rely on the appeal as affording him a right to come before the appellate court without first obtaining leave, as a cross-appeal given by a respondent’s notice is still a separate appeal, and a respondent’s notice is “mere machinery” (Rogg v. Gething (trading as “Spacemaker” and Spacemaker Home Improvements Ltd., English Court of Appeal, Lexis transcript, 15 September 1988, per Balcombe LJ, citing Jones v. Stott [1919] KB 893). As in the case of an appellant in an appeal from the District Court, a respondent who wishes to bring a cross-appeal would need leave under section 63(1) of the District Court Ordinance. He cannot ride on the back of the appeal to embark on his own separate appeal without leave.

25.  Mr Au-Yeung recognised the force of the above authorities but contended that Order 59 r 6(3) of the RHC should be contrasted with Order 59 rule 4(4). Unlike the latter, rule 6(3) does not provide that a respondent’s notice by way of cross-appeal may only be served within a specified period of leave granted by the court. He submitted further that section 63(1) of the District Court Ordinance only governs “an appeal from the District Court”, not a “cross-appeal”. He sought to distinguish the cases mentioned above on the basis that these cases were not concerned with a provision equivalent to Order 59 r 6(3), which is peculiar to proceedings in the Hong Kong Court of Appeal.

26.  I am not persuaded by Mr Au-Yeung’s arguments. I think one should look at the substance of the matter. The authorities have established clearly that a cross-appeal given by a respondent’s notice is a separate appeal and the respondent in that situation assumes the obligations of a would-be appellant and then an appellant. Order 59 rule 6(3) is “mere machinery”, and it does not override the requirement of leave provided in section 63(1) of the District Court Ordinance. I hold that leave was required before the plaintiff served the Respondent’s Notice.

27.  In his written submission Mr Au-Yeung took a fallback position and invited this court to grant leave in that situation out of time. Mr Shum opposed the application for leave on a number of grounds – the lengthy delay after the order for appointment was made in January 2011; that no application for leave was made first to the District Court as required by Order 58 rules 2(4) and (4A) of the RDC; and the lack of merits in the intended cross-appeal.

28.  The Court of Appeal may allow an application for leave to be made directly to it where appropriate, see Order 58 rules 2(5) and (6) of the RDC. Although the existence of prejudice to a would-be respondent is a ground for refusing an extension of time for appealing, the absence of prejudice to a would-be respondent is not a ground for extending time. Considering the length of the delay and that the failure to appeal in time was apparently due to the mistake of the legal adviser, the plaintiff would need to show a real prospect of success on merits in the intended cross-appeal (Secretary for Justice v. Hong Kong & Yaumatei Ferry Co. Ltd. [2001] 1 HKC 125).

29.  I turn to consider the merits relating to the issue whether a guardian ad litem should be appointed.

If a guardian ad litem should be appointed

30.  The argument for the plaintiff is that the Judge was in error in holding that the defendant was an MIP on the basis of the Medical Report and hence the guardian ad litem should not have been appointed.

31.  Two component elements are required to be established for this purpose. Firstly, that the defendant was a mentally disordered person within the meaning of the Mental Health Ordinance. “Mental disorder” is defined in that Ordinance to mean, among other things, “mental illness”. I do not think there is dispute that this component was satisfied on the basis of the Medical Report. Secondly, the court must be satisfied that by reason of the mental disorder, the defendant was “incapable of managing and administering his property and affairs”. Mr Au-Yeung contended that the second component was not established on the Medical Report.

32.  Dr Chan Ka Po is an approved doctor for the purpose of section 2(2) of the Mental Health Ordinance as having special experience in the diagnosis or treatment of mental disorder. The relevant part of the Medical Report, which was quoted in the judgment of the court below, read as follows:

“Mr Leung has been suffering from Schizophrenia for more than 30 years, and he has been unemployed since 1992. Despite his reporting of no active psychotic symptoms for years, he is likely to have impairment in occupational functioning, and gradual decline in cognitive functions, e.g. memory and judgment. Mr Leung is still able to maintain basic self-care, however, when he encounters unexpected events or complicated issues, he might not be able to handle and assistance and guidance would be needed. He has limited capacity of managing and administering his property and affairs, especially when the issue is complicated and he would need clear explanation and guidance. He is mentally not fit to give instructions in legal proceedings.” (Emphasis and underlining as per the judgment.)

33.  The judge considered he should look at the substance of the matter, and was satisfied on the totality of the medical evidence that the defendant did come within the statutory requirements for the appointment of a guardian ad litem. Mr Au-Yeung emphasised that Dr Chan had only mentioned “limited incapacity” and only “especially when the issue is complicated”. He contended that this would not satisfy the statutory requirement.

34.  For the purpose of an appointment of a guardian ad litem under Order 80, the test of mental incapacity is “issue specific” and the test has to be applied is “whether the party to legal proceedings is capable of understanding, with the assistance of such proper explanation from legal advisers … the issues on which his consent or decision is likely to be necessary in the course of the proceedings”. The focus of the enquiry is on the litigation under consideration rather than the whole of that person’s property and affairs. Complete incapacity is not required to be established (Masterman-Lister v. Brutton & Co. [2003] 3 All ER 162 at paras. [18], [27], [62], [75]). These features were identified in a person that would lead the court to conclude that he was a person under disability for the purpose of Order 80: “… he had no insight at all into his own mental state. He was not capable of instructing a solicitor properly. He certainly was not capable of exercising any reasonable judgment on a possible settlement.” (Kirby v. Leather [1965] 2 QB 367 at 384; see also Tang Kam Sheung v. Tang Kit Yee, HCA No. 677/2007, 25 September 2009, Chu J, para. 16).

35.  Although Dr Chan stated that the defendant had “limited capacity” of managing and administering his property and affairs, the doctor also stated categorically that the defendant was “mentally not fit to give instructions in legal proceedings”. Applying the test to the immediate problem at hand, namely, whether the defendant had the mental capacity to understand the problem in respect of which he needed advice, to give instructions to his legal adviser for the latter to advise him properly, and to understand and make decisions based on the advice he was given, the judge was fully entitled to come to the view that the defendant was, by reason of his mental illness, incapable of managing and administering his property and affairs for the purpose of Order 80. The medical evidence, although scanty, was sufficient for present purpose and there is no room for this court to disturb the judge’s finding.

36.  There is no real prospect of success on the merits of the intended cross-appeal. We would have refused to grant leave to cross appeal out of time if the Respondent’s Notice had been pursued. I go to the issues raised in the Notice of Appeal.

If the proceedings before the appointment of the guardian should be set aside

37.  Mr Shum contended that as the proceedings before the appointment of the guardian were a nullity for failure to comply with Order 80 rule 2(1) of the RDC, the appeal should be allowed on this ground alone. Order 80 rule 2(1) provides that “a person under disability … may not acknowledge service, defend, make a counterclaim or intervene in any proceedings, or appear in any proceedings under a judgment or order notice of which has been served on him, except by his guardian ad litem.”

38.  Mr Shum pointed out that as the judge has held that the defendant was a person under disability, and has appointed a guardian ad litem for the defendant, the judge should have set aside the summary judgment against the defendant without considering the merits of the defence on the evidence filed. Counsel submitted that the writ would have to be amended and served on the guardian and the latter would file a fresh acknowledgment of service.

39.  I do not accept the above submissions, for two reasons.

40.  Firstly, where steps in proceedings were taken before lack of capacity due to disability under Order 80 was raised, I do not think the court is powerless to act and must direct the parties to start all over again. Provided everyone has acted in good faith and there has been no manifest disadvantage to the person subsequently found to be under disability, the court has power to regularise the position retrospectively (Kirby v. Leather, supra. at 371 to 372 and 384 (the relevant provision in the UK at the time being Order 80 of the Rules of the Supreme Court is similar to the provision in Hong Kong); and Masterman-Lister v. Brutton & Co., supra., para. [31] (decided under the Civil Procedure Rules)). The failure to comply with Order 80 rule 2(1) would be treated as an irregularity under Order 2 rule 1(1) of the RDC and proceedings shall not be nullified by reason of the non-compliance. The District Court has power under rule 1(2) to make such order dealing with the proceedings generally as it thinks fit. 

41.  Secondly, where there is an application to appoint a next friend or guardian ad litem, it does not mean the court is bound to make the appointment if it is satisfied that the person is under disability. The court would still need to consider if the appointment is beneficial to that person. If the claim to be brought is obviously vexatious, no purpose would be served by appointing a next friend and the court would strike out the claim instead (Ho Po Chu v. Tung Chee Wah & Ors. [2006] 3 HKLRD 553 para. 63). Likewise, if the defence to be advanced is obviously without merit, the court may not appoint a guardian for the purpose of defending the proceedings. Mr Shum contended that the situation of a defendant should be treated differently from that of a plaintiff in this situation. I do not agree.

42.  I agree with the judge that in the particular circumstances, as full evidence had been filed on the defendant’s behalf to oppose the application for summary judgment, it would be appropriate to consider if the defence to be advanced did raise a triable issue before deciding whether a guardian should be appointed to defend the proceedings. I would reject the first broad grounds of appeal. 

If there was a triable issue

43.  The judge considered whether there was a triable issue taking into account the new evidence filed de bene esse. I will do so on the same basis.

44.  It was submitted for the defendant that the judge rejected the defence that the mother was the tenant as incredible on the ground that this defence was raised for the first time on appeal and was not raised before the Master. Mr Au-Yeung submitted the judge had failed to have regard to the fact that the defendant was suffering from mental illness, and that he was not legally represented and properly advised when he appeared before the Master.

45.  That the defence sought to be advanced was not raised before the Master when the Master asked the defendant and Mr F C Leung what was their defence to the claim was only one of the matters taken into account by the judge. Other matters were mentioned succinctly in paragraphs 20 (a) to (c) of the judgment. As the judge had pointed out, apart from bare assertions, there is no evidence to support the allegation that the mother was the tenant, not even a word from the mother herself. As against that assertion, there was contemporaneous documentary evidence pointing to the defendant as the tenant accepted by the landlord.

46.  It was the defendant who had paid rent by drawing cheques on his own bank account. I note that Mr F C Leung had said in his 2^nd affirmation that all personal expenses of the defendant, including rent of the Premises, had been provided by his mother after Leung Sun’s death, that the mother (who had no bank account) had regularly paid cash to the defendant and that the defendant would issue cheques to pay rent from his account. In the affirmation of the defendant’s niece Chow Mee Yee Millie, she said instead that the defendant’s mother and Mr F C Leung “have been financially supporting the Defendant all along”. However, Mr F C Leung did not draw any cheque from his bank account to pay rent.

47.  The defendant, not his mother, had signed three prescribed forms dated 5 August 1990, 10 September 1996 and 28 September 1998 to signify the tenant’s agreement to the proposed increase of rent by the landlord. There was no suggestion that he was not the proper tenant.

48.  The plaintiff’s son Mr Ng had issued a letter to the defendant dated 18 March 2002, following a verbal discussion between Mr Ng and Mr F C Leung, to confirm the reduction of rental to $6,600 a month. The defendant counter-signed on a copy of the letter as requested to confirm his agreement with the terms. There was no suggestion from the mother or Mr F C Leung that the tenant was not the defendant or that matters relating to the tenancy of the Premises should be addressed to the mother or Mr F C Leung.

49.  In April 2003, Mr Ng sent a letter to the defendant to confirm his discussion with the defendant that Madam Chan would contribute $200 being half of the cost of refurbishment of the toilet on an ex gratia basis, and stating that all repairs and maintenance of the flat should be carried out as and when required and should be borne by the defendant, “the tenant, as stated in the rental receipt”. Mr Ng received a letter in reply written and signed in the defendant’s name disputing the condition in the rental receipt after taking legal advice and alleging that the landlord was liable to pay the entire cost of the refurbishment. Mr Ng wrote a letter to the defendant in reply dated 9 May 2003 stating that “the tenant should be responsible for the repair and maintenance of the flat” and reserving the right to take action to enforce payment of $200 which was deducted from the rental by the defendant. In all the above correspondence, in which the defendant was addressed as the tenant, there was no suggestion from the defendant, his mother or any of his family members that he was not the tenant.

50.  The allegation that Ng Kuen Cheung and his successors raised no objection to the defendant’s mother succeeding Leung Sun as the tenant was made without condescending to particulars, as noted by the judge, and was contrary to contemporaneous documentary evidence.

51.  The judge was correct in holding that no triable issue was raised in the new evidence sought to be adduced in that such evidence was incredible. He was correct to exercise his discretion to refuse leave to adduce such new evidence on appeal and to refuse to set aside the judgment merely because a guardian ad litem was not appointed earlier.

52.  For the above reasons, we have dismissed the appeal with cost to the plaintiff. We disallowed 30% of the costs to the plaintiff on account of the unsuccessful arguments advanced in respect of the proposed cross-appeal. We made an order that the defendant’s own costs are to be taxed in accordance with the Legal Aid Regulations. On the defendant’s application (which was not opposed), we ordered that there be a stay of execution of the judgment for two months.

Hon Fok JA:

53.  I agree.