CHIN LING WAH by her son and next friend SHUM LUI v. SHUM CHAU

HCA 2130/2018

[2022] HKCFI 1800

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 2130 OF 2018

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JUDGMENT

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A.  INTRODUCTION

1.  Mr Shum Lui (“Mr Shum”) is the son of the plaintiff, Madam Chin Ling Wah (“Madam Chin”).  The defendant, Ms Shum Chau (“Ms Shum”), is the daughter of Madam Chin and younger sister of Mr Shum. The late Mr Shum Lam Sum (“Father”) is the husband of Madam Chin and father of Mr Shum and Ms Shum.

2.  Mr Shum brought this action as next friend of Madam Chin seeking an order for sale of Flat F on the 20^th Floor of Block 18, Park Island, No 8 Pak Lai Road, Ma Wan, New Territories (“Property”) pursuant to section 6 of the Partition Ordinance (Cap 352) (“Ordinance”).

B.   FACTUAL BACKGROUND

3.  The Property is a residential flat.  It was purchased in 2002 and co-owned by Madam Chin and Ms Shum as joint tenants.  After its purchase, it was occupied by Father, Madam Chin and Ms Shum as their home.  After Father passed away, Madam Chin and Ms Shum continued to occupy the Property until Madam Chin was moved to a care and attention home in November 2015 in circumstances detailed below.  Since then and up to the present day, Ms Shum resides in the Property alone. 

4.  On 6 November 2015, on an application made by Madam Chin’s then treating doctor at the Princess Margaret Hospital on suspicion of elderly abuse, the Guardianship Board made an emergency guardianship order over Madam Chin for a period of 3 months under the Mental Health Ordinance (Cap 136) (“MHO”).  This was followed by a guardianship order made on 3 February 2016 for a period of 12 months. 

5.  In short, the Guardianship Board was satisfied that Madam Chin was a mentally incapacitated person (“MIP”) in need of protection.  The medical and social enquiry reports prepared for the Guardianship Board suggested that Madam Chin had been physically abused by Ms Shum.  On this basis, the Director of Social Welfare was appointed as guardian of Madam Chin. 

6.  Pausing here, I should record Ms Shum’s denial in these proceedings of having physically abused Madam Chin.  I shall not make any finding on this, as this is not a matter that has any bearing on my resolution of the present dispute.

7.  On 16 November 2015, Madam Chin was admitted to a care and attention home in Hong Kong under the supervision of the Director of Social Welfare. 

8.  On 26 May 2016, Mr Shum, who has all along been residing and carrying on business in the Mainland, requested that the Guardianship Board cancel the guardianship order over Madam Chin, and he offered to take care of her in the Mainland. 

9.  On 11 December 2016, with the Guardianship Board’s permission for home leave, Madam Chin moved to Shenzhen to live with Mr Shum.  Since then, Mr Shum has been the primary carer of Madam Chin.  They lived in a self-purchased flat in Shenzhen together with Mr Shum’s family. 

10.  The progress social enquiry report prepared by the Social Welfare Department for the Guardianship Board recorded as follows:

(1)  Mr Shum had maintained good care for Madam Chin and attended regular medical follow-ups and interviews with the supervising social welfare officer in Hong Kong.  He had shouldered all the expenses of Madam Chin without asking for any reimbursement.  Thanks to his satisfactory care, Madam Chin’s health condition was improving.

(2)  Madam Chin expressed a clear and persistent view that she would like to continue living with Mr Shum.  She was scared to see Ms Shum who often beat her.  By contrast, she enjoyed living with Mr Shum as he gave her enough food and always stayed with her.  She preferred to live with Mr Shum in the future.

(3)  Whilst Ms Shum objected to Mr Shum’s caring plan for Madam Chin, she did not give any concrete alternatives but focused on monetary matters.  In particular, Ms Shum asked the Director of Social Welfare for reimbursement of her paid expenses for the Property, which requests were not met because Madam Chin’s personal savings had been exhausted. 

(4)  In light of the satisfactory caring condition of Madam Chin, Madam Chin and Mr Shum’s plan for family reunion and living together should be respected and was considered feasible. Further statutory supervision seemed unnecessary, and it was recommended that the guardianship order be discharged. 

11.  On 17 May 2017, the Guardianship Board decided not to renew the guardianship order over Madam Chin.  The Board adopted and accepted the recommendation in the progress social enquiry report and was satisfied that Madam Chin’s best interests and welfare needs could be met by leaving her under the care of Mr Shum.

C.   THE PRESENT PROCEEDINGS

12.  On 12 September 2018, Mr Shum commenced this action.  According to Mr Shum, the purpose for the sale of the Property is to raise funds for the maintenance and support of Madam Chin in Shenzhen by use of her half share of the sale proceeds in circumstances where Madam Chin has no other available assets.

13.  Ms Shum resists the claim on the following main grounds:

(1)  Mr Shum has no standing to bring the action as next friend of Madam Chin.  He was not appointed as the guardian of Madam Chin and has no legal right to deal with her assets.

(2)  Mr Shum brought the action out of his personal interest in having a share in the Property.

(3)  Sale of the Property would cause her grave hardship.  She would have no place to live.  She could not buy a comparable property with her share of the sale proceeds.  She would have to incur expenses to look for new accommodation, when she is not in good health and needs to save up for future medical expenses.  She would also lose the value of half share of the Property which she would take up on the demise of Madam Chin by operation of the doctrine of survivorship.

D.   MR SHUM’S STANDING

14.  I first deal with Mr Shum’s standing to bring the present action as next friend of Madam Chin.

15.  Order 80 rule 2(1) of the Rules of the High Court (Cap 4A) provides that a person under disability may not bring or make a claim in any proceedings except by his next friend. 

16.  Under Order 80 rule 1, a person under disability includes an MIP within the meaning of the MHO who, by reason of mental disorder or mental handicap (as the case may be), is incapable of managing and administering his property and affairs. 

17.  Although Order 80 refers to the MHO, it operates separately from the MHO.  An inquiry under Part II of the MHO is not required to establish the mental incapacity of the person under disability: Ho Po Chu v Tung Chee Wah & Ors [2006] 3 HKLRD 553 at [28]-[30]. 

18.  Nor is a Court order appointing a person as next friend necessary, save in particular cases which have no application to the present facts: Order 80 rule 3(2).  In general, a person can sue, without leave, as a next friend for a person under disability by filing the documents listed under Order 80 rule 3(8).

19.  There is no procedural requirement for the filing or consideration of medical evidence so as to prove disability. The question whether a party is required to act through a next friend should, in the ordinary case, be determined by the party himself or by those caring for him, perhaps with the advice of a solicitor (who has to file a certificate under Order 80 rule 3(8)(c) to certify that he knows or believes the party is one under disability with supporting grounds), without the need for inquiry by the Court: Masterman-Lister v Brutton & Co (Nos 1 and 2) [2003] 1 WLR 1511 at [66].

20.  In short, a person normally has standing to sue for another as a next friend if the Court is satisfied that: (i) the plaintiff is a person under disability, such as an MIP; and (ii) the filing requirements under Order 80 rule 3(8) have been met.

21.  If the opposite party to an action desires to challenge the authority of the next friend, he can apply for a stay or dismissal of the proceedings on the basis of lack of authority of the solicitors to file the action: Ho Po Chu (supra) at [51].  Any dispute of authority to sue should not be raised only in defence let alone at trial, but should first be resolved before the action is allowed to proceed: Tang Kam Sheung v Tang Kit Yee, HCA 677/2007 (unreported, 25 September 2009) at [13].  This is to avoid a total waste of time and resources on the substantive issues at trial if the point on lack of authority should be upheld at the end of the day: Kammy Town Limited v Super Glory Corporation Limited (unreported, 14 January 2005) at [11].  Such a practice has been strictly followed: see e.g. Rich Fine (HK) Investment Limited & Anor v Leung Yiu Chuen [2018] HKCFI 1126 at [37].  Whilst Ms Shum is not legally represented and she did raise the challenge on Mr Shum’s standing in her Defence, this is not a good reason to entertain such a challenge only at trial.

22.  For completeness, Ms Shum’s challenge has no merit.  In the present case, Mr Shum has duly followed the procedures set out in Order 80 and filed the requisite written consent and solicitor’s certificate.  I am also satisfied on the evidence before me that Madam Chin is a person under disability within the meaning of Order 80:

(1)  On 17 May 2017 when the Guardianship Board decided not to renew the guardianship order, it was satisfied that Madam Chin “is still a mentally incapacitated person suffering from vascular dementia, amounting to a mental disorder, within the meaning of section 2 of the [MHO].”

(2)  In the discharge summary issued by the North District Hospital on 17 December 2019, it was recorded that Madam Chin was unable to talk and was completely dependent on others.

(3)  In a letter issued on 18 April 2022 by the elderly home in Shenzhen where Madam Chin has been residing since 18 December 2019, it was recorded that Madam Chin was unable to communicate, confused and completely dependent on others, and was bed ridden and immobile since the beginning of 2020.  These observations tally with the video footage appended to the letter which I have reviewed.

23.  Contrary to Ms Shum’s contention, Mr Shum does not have to be first appointed by the Court as guardian of Madam Chin or authorized to deal with her assets before he can bring this action as next friend of Madam Chin. 

24.  For the above reasons, I am satisfied that Mr Shum has the standing to bring this action as next friend of Madam Chin.

E.   APPROPRIATENESS OF AN ORDER FOR SALE

25.  The next question is whether in the circumstances of the present case I should make an order for sale of the Property.

26.  Where any property in land is held by two or more persons, whether as joint tenants or tenants in common, the Court may: (i) order a partition of the property under section 4 of the Ordinance; (ii) order a sale of the property under section 6 of the Ordinance; or (iii) refuse to make any order.  The Property is a unit in a private residential estate and has only one entrance, so it is impractical to order its partition.  My choices are therefore limited to making an order for sale or no order at all.

27.  I am guided by the following principles set out in Wong Chun Kei v Poon Vai Ching [2007] 1 HKLRD 825 at [18]-[19]:

(1)  A co-owner has a basic right to rid himself of the shackles of co-ownership and, if he has no other remedy, ask for an order for partition or sale.

(2)  When it is impracticable to make an order for partition, the Court should make an order for sale unless it is persuaded (the burden being on the opposing co-owner(s)) that such an order will not be beneficial to all the co-owners or that it will result in very great hardship to one co-owner.

(3)  Whether an order for sale is beneficial to all the co-owners is not determined by the dissent of the opposing co-owners or the assertion by them that it is not beneficial.  It has to be determined by the Court objectively.

28.  On proposition (1) above, Mr Ross Yuen, counsel for the plaintiff, added that prima facie an action for partition is for the benefit of a person who is of unsound mind and who holds an undivided share in the property, since it enables him to obtain the benefit in the property as reflected in his undivided share, citing Porter v Porter (1888) LR 37 Ch D 420 at 427. 

29.  Whilst this may be the case where the co-owners are tenants in common (as in the case of Porter) whose respective shares in the subject property are fixed (albeit undivided), where the co-owners are joint tenants (as in the present case), the analysis is less straightforward, because the sale of the property has the effect of limiting his share to half (or such other portion as the Court may determine) and he is effectively forgoing the chance of becoming a sole owner by operation of the doctrine of survivorship in the event that his co-owner predeceases him.  In simple terms, the sale of the property forces him and his co-owner to give up their respective joint tenancy interests in the property; hence the potential of becoming the sole owner of the property.  In deciding whether an order for sale is beneficial to all co-owners, I will have to take this into account, especially when Madam Chin is an MIP and the Court is unable to ascertain her wishes.  In particular, I should not make an order for sale of the Property (which in effect forces her to abandon a potential interest of sole ownership) unless I am satisfied that this will be to Madam Chin’s obvious benefit in the overall circumstances.  As Bowen LJ remarked in Porter (supra) at 430:

“It is obvious that, in the absence of the principal person who is concerned, his property ought to be left as far as possible, and so far as his interest does not render the opposite thing necessary to be done – in the condition in which it was, quieta non movere. But still if it is for his protection and for his obvious benefit then the Court ought to interfere to give him, while his senses are sleeping, the same sort of protection to which he would be entitled if his senses were awake, and he could act for himself.”

30.  I should also stress that, on proposition (2) set out in [27] above, an order for sale shall not be refused unless: (i) all the co-owners would benefit from its refusal (or, in other words, an order for sale would be detrimental to all the co-owners); or (ii) it will result in very great hardship to at least one co-owner.  In other words, the mere fact that an order for sale would harm the interest of one co-owner is insufficient save where very great hardship is shown.

31.  In the present case, since the purpose of the intended sale is to provide funds for the support and maintenance of Madam Chin, I should first ascertain her financial status by considering the amount of assets that she currently has. 

32.  The evidence before me is that Madam Chin has in her bank accounts (i) HK$16,220.81 of cash, and (ii) stocks in listed companies now worth slightly over HK$200,000. 

33.  There is however a potential dispute over the ownership of the stocks.  In particular, in one of the progress social enquiry reports prepared by the Social Welfare Department for the Guardianship Board, it was recorded that Ms Shum had once told the social worker that Madam Chin had no stocks, and that the stocks in the bank account under Madam Chin’s name in fact belonged to Ms Shum.  Whilst Ms Shum in her evidence before this Court said that she could not recall having so told the social worker and further confirmed that the stocks do belong to Madam Chin, given Ms Shum’s interest in the outcome of this action, I cannot safely proceed on the basis that she will not later dispute the ownership of the stocks in the future.  In any event, as Ms Shum confirmed, no one can operate the bank accounts in Madam Chin’s name given her condition.  The stocks could not be liquidated without a Court order under the MHO, which may be time-consuming and costly. 

34.  I will therefore proceed on the basis that Madam Chin has no other meaningful assets available for free disposal apart from her interest in the Property.

35.  Moving on to Madam Chin’s financial needs and how they are presently being met, I accept Mr Shum’s evidence that:

(1)  Ever since Madam Chin moved to live with him in Shenzhen in December 2016, she has been and is still wholly financially dependent on Mr Shum.  At present he has to pay about RMB 8,000 a month to the elderly home in Shenzhen for a double-bed room for Madam Chin and additional sums for miscellaneous items. 

(2)  His business of selling zisha pots in Shenzhen has not been particularly good in recent years in light of the COVID-19 pandemic.  He has mortgaged his flat in Shenzhen for RMB 2 million (repayable in full in 3 years) for funds to meet his needs and maintain Madam Chin. 

(3)  Whilst he has expressed his wishes to maintain Madam Chin for as long as he can financially manage (which I commend), there is no guarantee that he can, and certainly no legal obligation that he should, financially support Madam Chin permanently.  Given Madam Chin’s physical condition, it is unrealistic to relocate her back to Hong Kong to enjoy the social welfare here.

36.  That being the case, liquidating the Property is the only certain and feasible way to provide Madam Chin with funds to maintain her well-being, even though this is at the expense of her losing out her half share in the Property as joint tenant (and thus the potential of obtaining full ownership thereof).  I am satisfied that Madam Chin’s present needs outweigh the mere hope of a future benefit, and that an order for sale of the Property is in her obvious interest.  This will also meet Ms Shum’s desire that Madam Chin should be properly maintained. 

37.  Whilst an order for sale may incidentally benefit Mr Shum in that he may have a share in Madam Chin’s share of the sale proceeds if she dies intestate, this is remote in that it requires the Court to speculate as to whether Madam Chin has a will (and there is no concrete or reliable evidence before me in this regard), when Madam Chin and Mr Shum will respectively pass away, and how much proceeds would remain in the event that Madam Chin predeceases Mr Shum.  It is far from a sufficiently cogent reason to refuse an order for sale of the Property which is in the obvious, immediate interest of Madam Chin.  I should add that there is no basis on which to suggest the incidental benefit is Mr Shum’s driver behind this action.

38.  Further, Madam Chin’s share of the sale proceeds will not be released to Mr Shum directly but will be paid into Court, such that the possibility that Mr Shum would misappropriate the proceeds for his private gains could be disregarded.  In the event that Mr Shum sits on the money rather than applying it towards maintaining Madam Chin (which I have no reason to believe he would), Ms Shum can always make an application to the Court to appoint a guardian or committee to administer the funds in Court for Madam Chin’s benefit.

39.  On the other hand, I have not lost sight of the fact that an order for sale would mean that Ms Shum can no longer live in the Property in which she is a co-owner.  This is only relevant if it constitutes “very great hardship” to her.  For the following reasons, I am not satisfied that it does:

(1)  If the Property is sold, it is estimated that she would be able to get about HK$3 million for her half share. She is in remunerative employment earning about HK$17,000 a month.  With the money from the sale proceeds, she should not have much difficulty in securing a roof over her head by renting or otherwise.

(2)  Even though the new property may not be of a comparable size as the Property and/or some expenses may be incurred in the process, these are not substantial enough to constitute “very great hardship” on Ms Shum.   

(3)  Her loss of possible future sole ownership of the Property (arising by operation of the doctrine of survivorship after Madam Chin passes away) is speculative and presupposes that Madam Chin predeceases her.  In any event, it is inherent in a joint tenancy that the other joint tenant can destroy the right to survivorship at will by a notice of severance.  Ms Shum cannot complain when an order of sale achieves this very effect.    

F.   DISPOSITION

40.  In all the circumstances, I am satisfied that I should exercise my discretion to order a sale of the Property on the following terms:

(1)  The Property be sold by private treaty in the open market at a price of not less than HK$6,560,000 which may be lowered to HK$6,380,000[1] if a sale at the first minimum price cannot be effected on or before 30 September 2022.

(2)  The time frame for the said sale by private treaty shall be as follows (unless the plaintiff and the defendant should consent in writing to any variation):

(a)  Provisional sale and purchase agreement to be signed on or before 31 March 2023; and

(b)  Completion within 2 months from the date of signing of the provisional sale and purchase agreement.

(3)  In the event that the Property cannot be sold in accordance with the above time frame (or such other varied time frame as the parties may agree), the plaintiff and/or the defendant do apply to the Court for further directions on the conduct of the sale.

(4)  The plaintiff shall appoint an independent solicitors’ firm as the solicitors jointly acting for the plaintiff and the defendant in the sale of the Property (“Conveyancing Solicitors”).

(5)  The Conveyancing Solicitors shall hold any initial deposit and subsequent deposit for the sale of the Property until completion.

(6)  The defendant do:

(a)  deliver all title deeds of the Property to the Conveyancing Solicitors on or before 31 July 2022 (or to the plaintiff’s solicitors if no Conveyancing Solicitors have been appointed by that day);

(b)  use her best endeavours to facilitate the inspection of the Property by the prospective purchasers arranged by the plaintiff or the plaintiff’s agents;

(c)  deliver vacant possession of the Property to the purchaser on or before completion of the sale of the Property.

(7)  The defendant shall not create any or any further encumbrance over the Property from the date of this Order up to completion of the sale of the Property without the prior written consent of the plaintiff or an Order from the Court.

(8)  The defendant shall, upon request by the plaintiff, her solicitors or agent, sign on the provisional sale and purchase agreement for and any other documents incidental to the sale of the Property and return the same to the plaintiff, her solicitors or agent duly signed within 3 days of the request (or such other time as the parties may agree).[2]

(9)  The sale proceeds of the Property be applied in the following order of priority:

(a)  discharging of government rents, rates, taxes, public utility charges and/or any outgoings due and outstanding in respect of and affecting the Property;

(b)  discharging any prior encumbrances affecting the Property (and if such prior encumbrance is due and owing to the plaintiff or the defendant solely (as the case may be), it shall be deducted from the share of the net proceeds to which the plaintiff or the defendant shall respectively be entitled (as the case may be) as provided for below);

(c)  paying all necessary transaction costs including the estate agent’s commission (if any but not exceeding 1% of the sale price of the Property), conveyancing costs, legal costs and disbursements and/or other reasonable and incidental expenses incurred for the purpose of or in connection with the conduct of the sale;

(d)  50% of the remaining net proceeds of sale belonging to the plaintiff be paid into Court and maintained in an interest bearing account pending application for payment out by the trustee of the plaintiff or a committee to be appointed by the Court; and

(e)  the other 50% of the remaining net proceeds of sale be released to the defendant.[3]

(10)  There be liberty to apply for further directions, if necessary, as to the manner of sale of the Property and generally.

41.  The plaintiff’s solicitors shall provide a Chinese translation of the above Orders (which can be an in-house translation rather than a certified one) to Ms Shum within 7 days from the date of Judgment to ensure that she understands what she has been ordered to do.

42.  There is no reason why costs should not follow the event.  I order the defendant to pay the plaintiff’s costs of this action, to be taxed if not agreed.  The plaintiff’s own costs are to be taxed in accordance with the Legal Aid Regulations.  My costs order is made on a nisi basis, and will be made absolute without further Order in the absence of any application by way of inter partes summons to vary the same within 28 days from the date of Judgment.

43.  If Ms Shum requires any assistance on interpretation of this Judgment to her, she may approach the Court clerk for arrangement.