RE "A"

HCMH 36/2008

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MENTAL HEALTH CASE NO. 36 OF 2008

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REASONS   FOR   DECISION

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1.  On 21 November 2008, after being satisfied that Mr A is incapable by reason of mental incapacity from managing and administering his properties and affairs, this court appointed an accountant Mr Muk to be the Committee of his estate.  The following are the reasons for such appointment.

2.  Mr A is extremely wealthy and his estate mainly comprises of shareholdings in companies which carried on various businesses.  The businesses are run by the boards of directors of the companies.  Whilst he has other assets, the management of those other assets should not be too complicated.

3.  It is common ground that there should at least be one professional accountant in the Committee.  However, there are disagreements on whether one accountant is enough and whether a daughter of Mr A, viz B, should also be in the Committee.  Mr Chan SC, counsel for B, submitted that there should be two accountants plus B in the Committee.  This is supported by Mr Wong, appearing for Mrs A.  On the other hand, Mr Ho SC submitted that it is only necessary to have one accountant and B should not be in the Committee.  The Official Solicitor took a similar view.

4.  The most controversial topic is whether B should be in the Committee and I will deal with it first.

5.  Apart from managing the assets of Mr A, an important task of the Committee is to consider whether some business transactions and certain aspects of the management of the companies call for investigation and if so, to conduct the investigation.  The transactions and aspects of management were specified by Mr Chan in a list handed to this court at the hearing and ultimately incorporated into the order appointing the Committee.  Paragraph 10 of the order empowers the Committee to undertake such investigation as he deems fit.  The background to those matters are set out in the evidence filed on behalf of B in these proceedings.  I do not think it is useful for this court to recite the same in this judgment.  The Committee has a managerial discretion to decide on how this power should be exercised and it would not be right for this court to pre-empt the same, see Re M HCMP 25 of 2005, 1 November 2005.

6.  It suffices to note that in general terms all these matters related to allegations against C in her management of the affairs of the companies.  In the past, B managed Mr A’s business in the United States whilst C played the role of the vice-chairman of his corporate conglomerate in Hong Kong.  The affirmations filed by B and C respectively contained allegations and cross-allegations.  It is obvious to this court that the two siblings, being the only children of Mr A, are (to put it mildly) at odds with each other.

7.  As I have said on several occasions, the court will not embark on any attempts to decide on the merits of allegations of this nature in the context of an inquiry under Part II.  It is a matter for the Committee.  If after due consideration and investigation the Committee shall conclude that there are matters which call for action, he can report to this court and apply for sanction to commence legal proceedings or seek other directions as he deems appropriate.

8.  In the present context, it is clear to me that the exercise of this power of investigation will be a major agenda on the works of the Committee.  It is important that the Committee should be objective and independent although it would operate under the supervision of this court.  Not only does the court depend on the Committee to exercise the power professionally and objectively in coming up with certain preliminary findings, it also relies on the sound and independent judgment of the Committee in assessing whether a particular course of action should be taken.  As I had previously said in Re LLC HCMP 2656 of 2006, 8 June 2007, at para.16,

“… where there is possible future legal proceedings involving the estate of a patient, whether in the context of Part II or otherwise, it is desirable that the court should have the assistance of a neutral and impartial committee in order to decide how the discretion of the court under Sections 10A and 10B should be exercised in relation to the conduct of such proceedings on behalf of the estate.”

9.  The above citation should not be taken as suggestion from this court that legal proceedings should be commenced in the present case.  All I am trying to highlight by quoting the above dicta is to emphasize the importance this court places on the independence of a committee when dealing with affairs of a MIP where there are conflicts amongst family members.

10.  That is the reason why an independent professional accountant having experience in managing the properties and affairs of others should be appointed.

11.  As Mr Ho and Ms Cheung submitted, the relevant question in the present context is whether there is any justification for appointing B as an additional member of the Committee.  With the greatest respect to the submissions of Mr Chan and Mr Wong, there is none.

12.  Mr Chan and Mr Wong placed great emphasis on the two documents written by Mr A and the fact that he told Mrs A to summon B back to Hong Kong to deal with his request for the transfer of the assets back into his company.  It is said this incident shows the trust and confidence placed by Mr A on B concerning his affairs.

13.  That may be so as far as the situation in 2002 is concerned.  However, a lot has happened since then.  More importantly, Mr A was not considering the same question that this court has to consider now: whether B should be appointed as a member of the Committee in addition to the independent professional accountant notwithstanding her trenchant views concerning C and the deterioration of their relationship as demonstrated in the affirmations.

14.  Mr Chan said according to his proposal, B would only be one out of three members in the Committee and therefore B cannot dominate the Committee.  But the presence of B could cause undue complication to the decision making process of the Committee.  Anyway, the question is not whether there are factors disqualifying B but whether the interest of Mr A calls for her appointment as an additional member.

15.  Even though B is not appointed as a member of the Committee, she can continue to supply information which she deems important to the Committee.  It would then be a matter of the managerial discretion of the Committee to consider what use he can make of such information and whether any follow-up inquiries need to be undertaken.  Thus, it is not essential to have B appointed as a member of the Committee in order to enable her to render assistance in the investigation.

16.  Mr Chan said it is desirable to have B on the Committee so that she can be satisfied that everything is right and proper.  With respect, this court cannot endorse such an approach.  The court has to exercise its power under Part II in accordance with Section 10A(2) of the Mental Health Ordinance.  The paramount consideration is the requirements of Mr A.  B’s interest in satisfying herself should not be a weighty consideration in the court’s choice of members for the Committee.

17.  Given the conflicts between B and C, the appointment of B as a member of the Committee will inevitably compromise the independent judgment of the Committee.  The Committee is not set up for the purpose of satisfying B.  It is set up to assist the court as regards steps that should be taken to protect the interest of Mr A.  Apart from questions relating to merits, before the court sanctions a particular course of action in pursuing a particular claim there are other factors to be taken into account, see Re L HCMP 1120 of 2003, 12 May 2006; Re YPC HCMP 1174 of 2006, 15 February 2008.  An objective independent judgment of the Committee on such other factors is important as far as this court is concerned.

18.  Mr Chan referred to the case of LHY HCMP 869 of 2005, 23 December 2005.  The decision to appoint a son who had a conflict with another son in that case was made on the particular circumstances as set out in paras.14 and 16 of the judgment.  It has been made clear in those paragraphs that the appointment was not the best course to take if funding were no problem.  I do not think that decision assists B in the present context.

19.  Reference was also made to the view of Mrs A.  There was a submission based on Mrs A’s interest in the estate as wife of Mr A.  Mr Wong submitted that because of the principles set out in DD v LKW [2008] 2 HKC 134, more weight should be attached to the wife’s view.

20.  I do not think DD v LKW [2008] 2 HKC 134 has any relevance.  There is no suggestion of any divorce between Mr and Mrs A.  The principles in DD v LKW [2008] 2 HKC 134 are guidelines for the exercise of the court’s discretion over ancillary relief under Section 7 of the Matrimonial Proceedings and Property Ordinance and they are not engaged unless there are matrimonial proceedings.  It would be wrong to read that case as rewriting our law of property.  It is precisely because our property law does not espouse any concept of community of property between married persons that one needs statutory power to re-distribute the same upon divorce and rationale for such re-distribution should not be confused with proprietary interest in the absence of any re-distribution, c.f. para.137 of Miller v Miller [2006] 2 WLR 1283.

21.  On the other hand, under Section 10A(1)(b), the court may provide for the maintenance or other benefit of members of a MIP’s family.  But there is no suggestion in the present case that Mrs A requires any particular provision for her maintenance.

22.  As I have said on a number of occasions, the court has an unfettered discretion in the appointment of Committee for a MIP.  Though the court will pay regard to the views of relatives, especially relatives taking care of the MIP, no relative can assert any right to decide on the persons to be appointed.

23.  In the present case, Mrs A supported B’s appointment on the ground that such appointment would introduce an element of check and balance within the Committee conducive to ensuring timely, efficient and cost-effective action to be taken.  With respect, I do not see any need for check and balance within the Committee.  The Committee is a professional person.  He owes fiduciary duty towards the estate and he is accountable to this court.  Further, he would be functioning under the supervision of this court.  In respect of the potential investigation over matters specified, the Committee might consider engaging legal or other professional advisers as he deems necessary and apply to this court for approval of such engagements.  The court expects to be informed and the Committee has to obtain the sanction of this court before commencement of any legal proceedings.

24.  For the reasons already given above, the appointment of B to the Committee would inevitably compromise the independence which is required for the efficient and proper execution of his duty in the present case.  I consider such disadvantage far outweigh the advantage one may have with the appointment of B in terms of her familiarity of the affairs of the companies.

25.  Since I do not decide the appointment on the ground of the allegations raised against B as to her fitness to be appointed, I do not propose to deal with arguments on that ground.

26.  The next question is the number of accountants to be appointed.  The only justification put forward for appointing more than one accountant is check and balance.  Mr Chan also submitted that appointment of two accountants from two different firms implies having two policies for insurance coverage protecting the estate against negligent decisions of the Committee.

27.  For reasons already canvassed, I do not think it is necessary to have any check and balance within the committee.  There are already sufficient measures inherent in the Part II proceedings.  For controversial matters, the court can direct the Committee to seek a second professional opinion.  As far as day to day administration of the estate is concerned, the management of the assets of Mr A is not so complicated.

28.  The advantage of having the protection of two different policies is outweighed by the undue complication in operation and potential duplication of works created by the appointment of two accountants.

29.  Of the two accountants shortlisted, Mr Muk appears to have more experience in handling estate of MIP.

30.  For all these reasons, I appointed Mr Muk as the Committee of Mr A.  I propose to release this judgment for circulation.  Any comments on such a course can be sent to this court in writing within 7 days.