CHEUNG CHU CHAU, by CHEUNG PUI CHUEN his next friend v. WONG WAI HUNG, the Executor of the Will of CHEUNG YU TZU, deceased

HCA 1807/2021

[2023] HKCFI 2966

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1807 OF 2021

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DECISION

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Applications

1.  The following 2 summonses were before the Court:

(1)  the plaintiff’s summons dated 15 February 2023 seeking a direction for a trial of the preliminary issues set out in the schedule of the summons and consequentially, directions on the filing of expert evidence on Chinese law and customs on succession on the preliminary issues (the “Preliminary Issue Summons”); and

(2)  the plaintiff’s summons dated 12 September 2023 to amend the Preliminary Issue Summons (the “Amendment Summons”)

2.  The Amendment Summons sought to insert references to Order 14A rule 1 of the Rules of the High Court (“RHC”) for the determination of issues of law in addition/ as an alternative to the plaintiff’s application for determination of preliminary issues. The 1^st and 2^nd defendants (together, the “defendants”) are neutral on the Amendment Summons save that they would ask for costs. I agree that such amendments do not change or add to the substance of the Preliminary Issue Summons, nor would it prejudice the defendants. I have thus allowed the Amendment Summons, with costs of and occasioned by the amendment to be borne by the plaintiff in any event, agreed at HK$1,040, payable within 14 days.

3.  After the amendment, the effect of the Preliminary Issues Summons is that the plaintiff seeks a direction that certain issues set out in the schedule of the summons be tried as points of law under RHC Order 14A rule 1 or as preliminary issues under RHC Order 33 rule 3 and consequentially, directions on the filing of expert evidence on Chinese law and customs on succession on the preliminary issues questions. The defendants agree (subject to different formulation) to some of the issues being tried on a preliminary basis but object to the rest of the Preliminary Issues Summons.

Background Facts

4.  The Deceased, Cheung Ying Siu, was the grandson of Cheung Chong Fu (“Cheung Senior”). The plaintiff, the Deceased and Cheung Senior shared a common ancestor, Mr Cheung Chap Chun. The plaintiff is a male member of the Cheung Clan in Lok Ma Chau Village (the “Village”) and is a male indigenous villager of the Village. The plaintiff is mentally incapacitated and sues by his next friend, his brother.

5.  The Deceased died intestate on 4 August 1989 without any issue and was survived by his widow Madam Cheung Yu Tzu (‘Madam Cheung’). The Deceased had interests in:

(1)  3 sets of landed properties in the New Territories (1/3 share in Property A, Properties B & Properties C (as defined in the Amended Statement of Claim)) and

(2)  1 business T’ong and 1 business Wui.

6.  The 1/3 share in Property A was never vested in the Deceased but instead stayed under the name of the Deceased’s mother (“Madam Ho”). Madam Ho pre-deceased the Deceased on 17 January 1974.

7.  Madam Cheung obtained a grant of Letter of Administration in relation to the estate of the Deceased on 30 November 1993. Madam Cheung also obtained a grant of Letter of Administration in relation to the estate of Madam Ho on 1 February 1999.

8.  Madam Cheung passed away on 3 February 2019 and the 1^st defendant obtained probate to her last will on 23 October 2019.

The plaintiff’s case

9.  The plaintiff’s case is that as at the time of death of the Deceased in 1989, under section 11 (now repealed) of the 1986 edition of Intestate’s Estates Ordinance (Cap 73) (the “IEO”), Chinese law on succession to Part II of the New Territories Ordinance (Cap 97) (the “NTO”) is preserved. Section 13 of the NTO required the Courts to enforce Chinese law and custom regarding non-exempted New Territories land.

10.  The plaintiff contended that as at the date of the death of the Deceased, the New Territories Land (Exemption) Ordinance (Cap 452) (the “Exemption Ordinance”) had not yet come into effect and did not apply. In any event, even if the Exemption Ordinance did apply, section 12 of the Exemption Ordinance preserved succession under Chinese law for deaths prior to 24 June 1994. Therefore, the applicable law as at the date when the Deceased passed away was Chinese law and customs. Under such Chinese law and customs, as the plaintiff was the male descendant closest in blood to the Deceased upon his death, it is contended that the plaintiff acquired the right of succession to 1/3 interests in Property A, Properties B, Properties C and the interests in the T’ong and the Wui.

11.  The plaintiff argued that as a result, Madam Cheung held such interests on constructive trusts for the plaintiff. However, Madam Cheung had, in breach of her duty as trustee of the Deceased’s estate: i) wrongfully sold Property A, Properties B and Properties C and ii) registered such interests in the T’ong and Wui belonging to the plaintiff under her own name. The 2^nd defendant is the transferee of one of the properties out of Properties B.

12.  The plaintiff thus commenced these proceedings against the 1^st and 2^nd defendants for succession to the 1/3 interests in Property A, Properties B, Properties C and the interests in the T’ong and the Wui.

The defendants’ case

13.  In gist, the stance of the defendants is as follows:

(1)  The Exemption Ordinance came into effect on 24 June 1994. As the assents of the properties in favour of Madam Cheung were made after the Exemption Ordinance came into effect, the Exemption Ordinance was applicable. Under section 3 of the Exemption Ordinance, all New Territories land which had not been exempted are exempted from the NTO from 24 June 1994. At the same time, section 11 of the IEO was repealed and a new section 13(2) was inserted into the NTO to take away the Court’s jurisdiction to enforce Chinese law and custom and section 17 of the NTO was repealed.

(2)  As such, the defendants say that Chinese law and customs do not apply. Instead, the IEO applies. Under the IEO, Madam Cheung was the rightful person entitled to the Deceased’s estate and the plaintiff has no locus to bring the present proceedings.

(3)  In any event, the plaintiff’s claims are time-barred, whether under the Limitation Ordinance or the equitable doctrines of acquiescence, estoppel and laches.

Legal Principles

14.  Parties agreed that the general rule is that all issues should be tried at the same time. In Re Tai Ping Yeung Motors Ltd [2001] 2 HKC 611 at pp 614-5, Le Pichon JA observed at follows:

“ Preliminary Issues - Applicable Principles

The annotation in the Supreme Court Practice 1999 is a useful starting point. At paragraph 33/4/10 it is stated that:

‘ An order for the separate trial of separate issues is a departure from the beneficial object of the law 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 (per Jessel MR in Piercy v Young (1880) 15 Ch D 475 at 479 and 480; per Scrutton LJ in Bottomley v. Hurst and Blackett (1928) 44 TLR 451 at 452.’

This approach was echoed by Lord Wilberforce in his speech in Tilling v Whiteman [1980] AC 1 at 17H-18A:

‘ I, with others of your Lordships, have often protested against the practice of allowing preliminary points to be taken, since this course frequently adds to the difficulties of courts of appeal and tends to increase the cost and time of legal proceedings. If this practice cannot be confined to cases where the facts are complicated and the legal issue short and easily decided, cases outside this guiding principle should at least be exceptional.’

Indeed, as Lord Roskill observed in his speech in Allen v Gulf Oil Refining Ltd [1981] AC 1001 at 1022A:

‘ 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 a particular case whether of fact or of law, and its decision may be finally determinative of the case as a whole. Sometimes facts can be agreed and the sole issue is one of law.’

Lord Roskill went on to urge those whose task it is to decide whether or not the trial of preliminary points should be ordered to be “extremely cautious” before acceding to pleas for the making of such orders as a result of attractively advanced submissions founded upon pleas of supposed economy.” (emphasis added)

15.  The comment by Lord Scarman in Tilling v Whiteman at 25C is also instructive: “Preliminary points of law are too often treacherous short cuts. Their price can be, as here, delay, anxiety, and expense.” I respectfully agree with the observations of Le Pichon JA, Lord Wilberforce, Lord Scarman and Lord Roskill quoted above.

16.  Thus, the party applying for trial of preliminary issues should demonstrate what exceptional or special grounds there are before such an order should be made.

17.  In considering whether there should be a trial of preliminary issues, parties also refer to the often-cited list of questions posed by Neuberger J (as he then was) in Steele v Steele[1]:

(1)  Could the determination of the preliminary issue dispose of the whole case or at least one aspect of the case?

(2)  Could the determination of the preliminary issue significantly cut down the cost and the time involved in pre-trial preparation and in connection with the trial itself?

(3)  If the preliminary issue was an issue of law, how much effort, if any, was involved in identifying the relevant facts for the purpose of the preliminary issue?

(4)  If the preliminary issue was one of law, to what extent was it to be determined on agreed facts?

(5)  Whether the determination of the preliminary issue could unreasonably fetter either or both of the parties or the court in achieving a just result at trial.

(6)  To what extent was there a risk of the determination of the preliminary issue increasing costs and/or delaying the trial? In that regard the court could take into account the possibility that the determination of a preliminary issue might result in a settlement.

(7)  The extent to which the determination of a preliminary issue was relevant. The more likely it was that the issue would have to be determined by the court, the more appropriate it was to have it as a preliminary issue.

(8)  To what extent was there a risk that the determination of the preliminary issue, if apparently helpful in terms of saving costs and time, could lead to an application for the pleadings to be amended to avoid the consequences of the determination?

(9)  Was it just and right to order a preliminary issue?

18.  In relation to an application for a summary determination of a question of law under RHC Order 14A, the question of law must be suitable for determination without a full trial of the action. Such determination will be final as to the entire cause or matter or any claim or any issue. It is also necessary for parties to have been heard or have consented to an order being made on the determination of the question of law[2].

19.  In deciding whether to accede to an application for a determination under Order 14A, the court is able to take an overall view of the matter to discern the context in which the question arises, and where the issue for determination is not merely one of a variety of issues for decision but lies at the very core of the plaintiff’s case, the court may exercise its discretion to determine the question posed in the application[3].

Issues framed by the plaintiff

20.  The questions of law/preliminary issues framed by the plaintiff are:

“ 1 Whether:-

(1) Section 4 of the Intestates' Estates Ordinance (Cap 73) (“the IEO”); or alternatively

(2) Chinese law and customs on succession, by virtue of Section 11 of the IEO being in force when the late Cheung Ying Siu (張英少) ("the Deceased") died on 4^th August 1989,

applies to succession to:-

a) Property A;

b) Properties B;

c) Properties C; and

d) the T’ong/Wui Interests

(as defined respectively in the Statement of Claim filed herein on 17^th February 2022 ("the SOC")) (collectively, "the said Properties and Interests"), upon the Deceased's intestate death in Hong Kong on 4^th August 1989.

2) Whether the New Territories Land (Exemption) Ordinance (Cap 452) ("the Exemption Ordinance"), which came into effect on 24^th June 1994, applied retrospectively to the succession to the said Properties and Interests of the Deceased who died intestate on 4^th August 1989.

3) Whether, should Chinese law and customs on succession apply to the said Properties and Interests of the Deceased, the interest of the successor vested immediately upon the Deceased's death on 4^th August 1989.

4) Whether, should Chinese law and customs on succession apply to the said Properties and Interests, having regard to the genealogical table of the Cheung Clan (張族) of which the Deceased being a member, the Plaintiff, Cheung Chu Chau (張柱秋), is entitled to succeed, under Chinese law and customs on succession, the said Properties and Interests of the Deceased (who died without any male issue), which included:-

a) Property A;

b) Properties B;

c) Properties C; and

d) the T’ong/Wui Interests.

5) Whether, despite the 1993 L/A (as defined in the SOC), granted to her in respect of the estate of the Deceased, Madam Cheung (as defined in the SOC) was obliged to apply Chinese law and customs on succession to the said Properties and Interests of the Deceased.

6) Whether, despite the said Grant (as defined in the SOC), granted to him in respect of the estate of Madam Cheung (which included, inter alia, the said Properties and Interests of the Deceased), the 1^st Defendant, being the grantee, was obliged to apply Chinese law and customs on succession to that part of the estate of Madam Cheung in relation to the said Properties and Interests of the Deceased.

7) Whether, if Chinese law and customs on succession applies to the succession to:-

a) Property A;

b) Properties B;

c) Properties C; and

d) the T’ong/Wui Interests

they would become properties held upon trust, whether under the 1993 L/A or the said Grant, for the benefit of their successor under Chinese law and customs on succession and the Limitation Ordinance (Cap 347) (“the LO”) does not apply by virtue of Section 20 thereof.

8) Whether, if Chinese law and customs on succession applies to the succession to:-

a) Property A;

b) Properties B;

c) Properties C; and

d) the T’ong/Wui Interests,

by reason of the Plaintiff being, at all material times, a mentally incapacitated person within the meaning of the Mental Health Ordinance (Cap 136), Section 22 of the LO applies and that his claims set out in the SOC have not been time barred.”

Issues framed by the defendants

21.  The defendants’ stance is that they agree that the following issues should be tried as preliminary issues (on their formulation), but not others as posed by the plaintiff:

“ 1) Whether:

(i) section 4 of the IEO which commenced on 7 October 1971 and which was in force when the Deceased died intestate on 4 August 1989; or

(ii) Chinese law and custom on succession;

applies to the succession to Property A, Properties B and Properties C and/or the T’ong/Wui Interests of the Deceased on the dates when they were alleged by the plaintiff to have assented to, by and/or in favour of the late Madam Cheung. (i.e. 13 April 2000 for Properties B and C and 6 September 2004 for Property A), taking into account the effect (or lack thereof) of the New Territories Land (Exemption) Ordinance (Cap 452) (the “Exemption Ordinance”);

2) Whether the claims brought by the plaintiff against the defendants in the present action are barred by reason of sections 20 and/or 21 of the Limitation Ordinance (Cap 347) and/or the equitable doctrines of estoppel and/or acquiescence and/or laches and are liable to be dismissed.”

Discussion

22.  At the outset, it seemed attractive for the court to first determine what is the applicable law, as both parties agreed that if the applicable law was the IEO, the plaintiff would have no locus and that would be the end of these proceedings.

23.  However, it needs to be noted at the outset that although parties initially represented to the Court that there was no dispute that the following should be tried as preliminary issues:

(1)  whether Chinese customary law or the IEO applies to the succession of the assets of the Deceased (the “Applicable Law Issue”); and

(2)  issues of limitation/laches (the “Limitation Issue”)

there were disagreements on how these issues were to be framed. As is demonstrated below, in effect there really was no agreement at all.

The Applicable Law Issue

24.  One of the disagreements on the Applicable Law Issue was on the relevant time for consideration – should it be as at the Deceased’s death (August 1989), or when Madam Cheung assented to the various properties (i.e. 13 April 2000 for Properties B and C and 6 September 2004 for Property A)?

25.  The plaintiff’s case is that he became entitled to succeed the Deceased’s various assets and properties upon the death of the Deceased by the operation of Chinese customary law; therefore, the issue of applicable law should be considered as at the time of the Deceased’s death.

26.  On the other hand, the defendants’ contention is that the only possible point in time for consideration was the time of assent by Madam Cheung, as the plaintiff’s complaint was based on Madam Cheung’s actions/breach of trust. Mr Lau, counsel for the defendants went further to suggest that based on pleadings, it was simply not open for the plaintiff to suggest otherwise.

27.  Parties confirmed that the outcome of determination under these two different points in time could be different. However, parties agreed that it was not appropriate (nor were they prepared) to argue at the hearing which point in time should be the correct time for consideration.

28.  Mr Chong, counsel for the plaintiff submitted that this issue could be dealt with by way of submissions by parties at the trial for the preliminary issue. Mr Lau likewise submitted that such question could be left to the Judge hearing the preliminary issues. Parties further suggested that both dates be included in the formulation of the preliminary issue such that the Court would determine the applicable law for both points in time on a preliminary basis.

29.  I disagree with this approach. The approach suggested by counsel was simply to muddle the fact that there is an embedded issue within their formulation of what seemed on the face of it to be one clean distinct issue of law. Further, it was apparent that parties only understood what the other side’s case was during the hearing. If there is a question on what the parties’ respective case is or could be, that ought to be resolved first, before the issue of preliminary issue could be considered. This is especially so if one party suggests that the other party is precluded from taking a particular stance based on pleadings.

30.  Based on the different formulations, I asked parties if the court were to reject the formulation put forward by them and instead adopts the other side’s formulation, would they agree for such preliminary issues to be tried on that basis, or would they object to such issues be tried preliminarily at all. Mr Lau indicated that in that scenario they would object to such issues to be tried as a preliminary issue altogether. Mr Chong, counsel for the plaintiff likewise indicated that they would not agree for the preliminary issues to be tried on the defendants’ formulation. This essentially meant that there was no agreement at all between parties: it is not accepted by either party that the Applicable Law Issue should be tried as a preliminary issue at all unless it is in terms of their own formulation.

31.  Further, there seems to be a dispute as to whether the land in question was non-exempted land. Mr Chong submitted that section 17 of the NTO applied to all New Territories land except when the Chief Executive had exempted it by way of a certificate – since there was no such certificate produced, the land remained non-exempted land. As such, succession under section 17 of the NTO applied. Mr Lau on the other hand submitted that pursuant to the Exemption Ordinance, all New Territories land which had not already been exempted became exempted from the NTO by virtue of section 3 of the Exemption Ordinance. This is yet another embedded issue to be resolved in the seemingly straightforward issue of: whether the IEO or Chinese law and custom is applicable.

32.  These disagreements highlight the risk as pointed out by Lord Scarman in Tilling v Whiteman: despite the initial attraction as presented by parties for such issues to be determined on a preliminary basis, the seemingly simple question of law is intertwined with arguments which will make the determination into a complex exercise.

33.  Bearing in mind the principles set out above in paragraphs 14 – 19, I am of the view that it would be inappropriate to give direction for preliminary trial (either under Order 14A or Order 33 rule 3) on the Applicable Law Issue (based on the formulation of either party) for the following reasons:

(1)  Both parties are of the view that the other party’s formulation was inappropriate and should be rejected. The defendants complained that the plaintiff’s formulation was tilted heavily in favour of his pleaded case and would fetter the defendants’ case. Further, certain issues were said to be premature and determination of such issues would undermine any potential costs savings. I agree with these observations and am further of the view that the issues in relation to the Applicable Law Issue as framed by the plaintiff were clearly too over-encompassing in the sense that determination of those issues would essentially be the determination of the majority of the issues at trial. Whilst the list may be a helpful summary of the issues in dispute, adopting such list of issues to be preliminary issues to be tried would be inappropriate as it is not apparent that any savings in costs can be achieved in determining the entire list of issues.

(2)  On the other hand, I am of the view that the defendant’s formulation likewise was titled in favour of their case in that it ignored the plaintiff’s contention that he acquired the entitlement to succeed the Deceased’s estate on the day he passed away by operation of law.

(3)  As explained above, the Applicable Law Issue is not one single simple issue of law, as several other issues of law need to be determined before the Court can resolve what is the applicable law. It is apparent from parties’ submissions that such issues would involve complex arguments and would in no way be “short” or “easily decided”.

(4)  It is reasonably foreseeable that parties would appeal against the determination of the Applicable Law Issue, should it be held against them. This will detract and delay the trial for the determination of all issues.

The Limitation Issue

34.  Mr Lau submitted that the issue of limitation was a self-contained discreet issue which was different in nature from the substantial dispute, i.e. the Applicable Law Issue. He further submitted that if the Limitation Issue were decided in the defendants’ favour, it would not be necessary to consider the Applicable Law Issue, as the plaintiff’s claim would be time-barred in any event due to limitation or barred by reason of estopped, acquiescence or laches.

35.  Although the plaintiff seemed to have included issues of limitation in issues 7 and 8 of their formulation of preliminary issues, it became apparent in Mr Chong’s oral submissions that he in fact objected to the Limitation Issue being tried as a preliminary issue for the following reasons:

(1)  The fact that the plaintiff is a mentally incapacitated person seems to be disputed by the defendants – this would involve a factual finding by the Court, which might involve experts and witnesses from as far back as 1994.

(2)  In order to determine issues on estoppel, acquiescence and laches, the plaintiff contended that Madam Cheung would need to show prejudice from the delay such that equity should intervene. This exercise would at least involve discovery of documents on how much Madam Cheung had received by way of rental income from the relevant properties throughout the years. An account would likely be required also. This sort of mini-trial would clearly be against saving time and expense.

(3)  Contrary to the Mr Lau’s submission, the Applicable Law Issue would still be relevant: the allegations against Madam Cheung having held the properties as a constructive trustee were based on Chinese law and custom. If her actions amounted to a breach of trust, there would be no limitation for the plaintiff to bring an action based on a breach of trust.

36.  I am of the view that it is also not appropriate to direct that the Limitation Issue be tried as a preliminary issue (either under Order 14A or Order 33 rule 3) for the following reasons:

(1)  The Court should not order trial of preliminary issues involving disputed facts[4]. There are clearly substantial factual disputes involved in the determination of the Limitation Issue, including: whether the plaintiff was mentally-incapacitated, when did the plaintiff or the next friend became aware of the assent or disposition by Madam Cheung, what, if any actions had they taken.

(2)  I reject Mr Lau’s argument that since these factual disputes would need to be determined in any event, no further costs would be incurred and as such a preliminary trial is appropriate for the Limitation Issue. This is not the appropriate test to be adopted. The court, in deciding whether to order for a preliminary issue to be tried, must take into account to what extent (if at all), the determination of such legal issue can be based on agreed facts. In the present case, there are clearly very little agreed facts that could be taken into account for the Limitation Issue.

Conclusion

37.  As such, no exceptional circumstances or special grounds have been demonstrated by either party on why the normal rule of having all issues tried together should be departed from. The Preliminary Issue Summons is dismissed.

Costs

38.  Although the Preliminary Issue Summons was taken out by the plaintiff, the defendants had agreed that the Applicable Law Issue should be tried as a preliminary issue (on their formulation), and at least half the time at the hearing was devoted to arguments on such issue. Further, although the defendants objected to the other “remaining issues” as framed by the plaintiff, the defendants had spent a similar amount of time at the hearing persuading the court to accept the Limitation Issue as a preliminary issue. I therefore make a costs order nisi that there be no order as to costs of the Preliminary Issue Summons.

39.  The above order nisi shall become absolute in the absence of application to vary (which, if any, shall be made by letter, and will be disposed of on paper) within 14 days hereof.

Order

40.  By reasons of the aforesaid, I order that:

(1)  The Preliminary Issue Summons be dismissed;

(2)  There be no order as to costs on the Preliminary Issue Summons.