WAN HOI YAN AND ANOTHER v. HO CHI HUNG AND OTHERS

CACV 468/2019

[2022] HKCA 1900

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO 468 OF 2019

(ON APPEAL FROM HCA NO 2177 OF 2013)

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J U D G M E N T

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Hon Kwan VP (giving the Judgment of the Court):

1.  On 4 September 2019, Deputy High Court Judge M K Liu handed down his judgment (“Judgment”)[1] declaring that the 1^st and 2^nd defendants held and still hold their legal title in the suit property (Flat C, 10/F, Rex House, Nos 648, 640 and 652 Nathan Road; “Flat 10C”) as bare trustees for and on behalf of a religious organisation known as “Bo Wo Temple” (保和壇; “The Temple”), which is a public charitable trust. The judge ordered the defendants to deliver up vacant possession of Flat 10C to the 2^nd plaintiff (incorporated by the members of the Temple on 2 June 2010 to take over all the assets and activities of the Temple)[2] and to execute an assignment and all necessary documents to transfer their legal title in Flat 10C to the 2^nd plaintiff. Further, the defendants were ordered to pay mesne profits and interest to the 2^nd plaintiff as from 5 November 2013 until the delivery of vacant possession. They were also to pay the plaintiffs’ costs of the action.

2.  On 3 October 2019, a notice of appeal settled by counsel was filed on behalf of the 2^nd defendant.

3.  After an application to fix a date for the hearing of the appeal was filed, the 2^nd defendant filed a notice to act in person on 12 October 2020.

4.  A notice of hearing was issued on 23 August 2022 giving notice that the 2^nd defendant’s appeal was to be heard on 13 December 2022, after the 2^nd defendant’s application for legal aid was refused. Directions had been issued by the court on 5 August 2022 regarding the lodging of skeleton submissions for this appeal not less than 28 days before the hearing of the appeal. As the 2^nd defendant did not comply with the directions to lodge submissions by 15 November 2022, the court made an unless order on 16 November 2022 that unless she was to lodge submissions on or before 22 November 2022, she would not be allowed to make submissions at the hearing of the appeal.

5.  To date, the 2^nd defendant has not lodged any submissions in writing.

6.  On 25 November 2022, the plaintiffs lodged their submissions to deal with the grounds of appeal raised by the 2^nd defendant’s former counsel in the notice of appeal.

7.  The 2^nd defendant appeared at the hearing of the appeal. She informed the court she is not conversant with English and is not capable of writing submissions in Chinese[3]. These are not good reasons for relieving her from the consequence of the unless order. As she has been given adequate opportunity to provide written submissions and failed to do so, she was not allowed to make oral submissions.

8.  We would consider the grounds of appeal advanced by the 2^nd defendant’s former counsel and the submissions of the plaintiffs’ counsel in response. As the Judgment and the notice of appeal are in English, our judgment is given in English. The 2^nd defendant may seek an appointment with a court interpreter of the High Court for this judgment to be interpreted to her in the court premises.

The grounds of appeal

9.  The grounds of appeal raised by the 2^nd defendant may be summarised as follows:

(1) The judge was unreasonable, unfair and perverse in refusing to accede to the 2^nd defendant’s application in the middle of the trial to adjourn the trial for at least seven days, causing substantial prejudice to the 2^nd defendant. (Ground 1)

(2) The judge was wrong in ruling that the audio recording of a transcript of the matrimonial proceedings concerning the 1^st defendant (in FCMC 6133/2007; “Audio Recording”) was admissible and in giving considerable weight to the same. (Ground 2)

(3) The judge was wrong in failing to have regard to the starting point that equity follows the law where there is joint legal ownership, that the burden lies on the plaintiffs who sought to divorce the beneficial ownership of Flat 10C from the legal ownership, and that the plaintiffs have not discharged that burden. (Ground 3)

(4) The judge was wrong to find that Flat 10C was subject to a trust for the advancement of religion due to its use. (Ground 4)

Ground 1

10.  This relates to the judge’s exercise of discretion of his case management powers. The relevant background matters may be stated as follows.

11.  The trial was set down for a hearing of 14 days in August 2019. The 1^st and 2^nd defendants were represented by the same legal team at the start of the trial and they ran the same case, namely, that it was at the invitation of Madam Cheung Lok Tan (“Cheung”; the founder of the Temple) that the 2^nd defendant contributed $70,000 and Madam Ho Kwai Ching (“HKC”; the elder sister of the 1^st defendant) contributed $100,000 to the down payment of the purchase price of Flat 10C. To reflect the respective contributions of the 2^nd defendant and HKC to the purchase price, the 2^nd defendant and the 1^st defendant (nominated by HKC to hold his interest for her) were nominated to take up the assignment of Flat 10C as joint tenants with Cheung and Wan Ping Yee (“Wan”)[4].

12.  In discovery, the Form E filed by the 1^st defendant in FCMC 6133/2007 was disclosed (in which he stated that he was only an owner in name for he had not made any contribution to the purchase price and he had no beneficial interest, he also highlighted that Flat 10C was used by a Buddhist organisation). Also disclosed were the minutes of the meetings of the 2^nd plaintiff held on 20 June 2013 and 22 June 2013, attended by 1^st defendant and HKC. The minutes showed that the meeting was told about the maintenance payment of $220,000 the 1^st defendant was ordered by the Family Court to pay his wife, that Flat 10C would likely be sold to pay such maintenance, and the balance of the proceeds of sale would be paid to the Temple. The 1^st defendant told the meeting he had informed the Family Court that Flat 10C belonged to the Temple and he was just an owner in name.

13.  At the beginning of the trial, the judge asked the parties whether any audio recording or transcript of the matrimonial proceedings had been disclosed. On being told in the negative, the judge informed the parties that he would obtain the Audio Recording and the transcript and provide them to the parties, and treat these materials as evidence on de bene esse basis and rule on their admissibility and weight at the end of the trial.

14.  The plaintiffs closed their case on 6 August 2019, after which the judge provided the Audio Recording to the parties and adjourned the trial to 8 August for the parties to listen to the same and for the lawyers to take instructions from the clients.

15.  On 8 August 2019, counsel for the defendants informed the judge that their legal team was unable to continue to act in the best interest of the defendants, that he had obtained written instructions from the defendants allowing him to apply for leave for the legal representatives to cease representing them. The judge granted the application.

16.  After the withdrawal of the defendants’ legal team, the judge asked the defendants whether they would need time to find another legal team to represent them. The defendants then told the judge they would run different cases in the trial. The 1^st defendant did not ask for time to find lawyers but the 2^nd defendant made the request. The judge adjourned the trial to 12 August. He told the parties the trial would resume that day and if the defendants should wish to run a case different from their pleaded case, they would need to apply to amend the pleadings. He also reminded them of the need to seek leave if they wished to adduce new evidence.

17.  On 9 August, a firm of solicitors wrote to the court on behalf of the 2^nd defendant seeking an adjournment of the trial to a date not earlier than 19 August. The judge refused the application and directed the trial to resume on 12 August.

18.  When the trial resumed on 12 August, both defendants were acting in person. The judge informed the parties his reasons[5] for refusing to adjourn to 19 August, having balanced the interests of both parties and possible prejudice to other court users if the trial would not be finished within the allotted time. The 2^nd defendant made another application to adjourn. This was refused by the judge for the same reasons[6].

19.  The defendants did not make any application to amend their pleadings or for leave to adduce new evidence. They informed the judge on 12 August that they would run the following new cases in the trial:

(1) for the 1^st defendant, his new case was that Flat 10C was and is beneficially owned mainly by Cheung and the Temple (where Cheung and the Temple are one entity) and by whoever have made contributions towards the purchase price of Flat 10C;

(2) for the 2^nd defendant, her new case was that since Cheung and Wan have passed away, Flat 10C is beneficially owned by HKC and her in equal shares[7].

20.  The judge did not allow the defendants to run a different case materially different from their pleaded case in the middle of the trial without amending their pleadings.

21.  The complaint of the 2^nd defendant formulated by her former counsel in the notice of appeal is along these lines.

22.  The 1^st and 2^nd defendants decided to run different defences in the trial in light of the Audio Recording. The 2^nd defendant’s new legal team (engaged on 9 August 2019) only had three days to prepare for the trial which was to resume on 12 August. Given the complexity of the legal and factual issues (there were 18 trial bundles of over 3,800 pages), that the plaintiffs had closed their case, that new evidence had been introduced (the Audio Recording had “substantially affected” the 2^nd defendant’s case so she had “no choice” but to run a separate defence from the 1^st defendant), as well as possible application to amend the pleadings, it was unreasonable, perverse and procedurally unfair for the judge to refuse the applications for adjournment made on 9 and 12 August. He failed to consider it would be “impossible” for the 2^nd defendant to engage new solicitors and counsel who could responsibly act for her with only three days of preparation and had effectively forced the 2^nd defendant to act in person, thereby depriving her of the right to legal representation and the opportunity to present her case effectively. It was claimed that the judge had acted in breach of Article 35 of the Basic Law, which provides that Hong Kong residents shall have the right to confidential legal advice, access to the courts, choice of lawyers for timely protection of their lawful rights and interests or for representation in the courts, and to judicial remedies.

23.  As mentioned earlier, this is an appeal against the exercise of discretion in a case management decision. The appellant faces a “very high hurdle” and must show that the judge “has gone clearly wrong and made orders which will clearly involve an injustice or an inability for the trial court to carry out its task”, or if the judge “erred in principle or the order was irrational having regard to the issues that had to be resolved”. Case management decisions are only subject to appeal in rare circumstances and the appeal court will not interfere with the judge’s exercise of discretion unless his decision was plainly wrong such that it was outside the generous ambit within which a reasonable disagreement is possible[8].

24.  We are satisfied this very high hurdle for appellate intervention has not been met.

25.  The judge had clearly appreciated the possible prejudice to the 2^nd defendant and had balanced this against the plaintiffs’ interest in bringing the proceedings, which had been on foot for almost six years, to a final conclusion as soon as possible. It could not be said that his exercise of discretion was so plainly wrong that it was outside the generous ambit within which a reasonable disagreement is possible.

26.  Our attention was also drawn to the fact that the impact of the new evidence being the Audio Recording would appear to be blown out of proportion. From the discovery already given, the defendants and their legal advisers must have been aware for some time that the 1^st defendant had informed the Family Court that Flat 10C belonged to the Temple and he was just an owner in name, and what was lacking was merely confirmation in the court records that he had said so. That the 2^nd defendant chose to run the risk that the court might accept the 1^st defendant had made such an admission against his interest in the Family Court and decided to run the same case as the 1^st defendant until she was driven to run a separate defence (and having had to engage a new legal team in the middle of the trial with all the attendant difficulties) was of her own making. It could hardly be said she was deprived of the opportunity to present her case effectively or that the judge had somehow breached Article 35 of the Basic Law.

Ground 2

27.  The Audio Recording, though admitted in evidence, was not treated by the judge as evidence against the 2^nd defendant[9], as it is an admission against interest made by the 1^st defendant and is evidence against the 1^st defendant and relevant to the 1^st defendant’s ownership in Flat 10C.

28.  There is nothing in the contention that the judge was wrong to give considerable weight to the Audio Recording.

Ground 3

29.  The judge did not misapply the law relating to joint legal ownership. He found on the evidence that Flat 10C is a property beneficially owned by the Temple, as was the case with other properties[10] that had been registered in the joint names of several members of the Temple not related in blood. This was to give effect to Cheung’s intention to ensure that those properties would be continuously used by the Temple. It is beyond doubt Cheung had devoted a considerable part of her life to the Temple and the interest of the Temple would be in the forefront of her mind at any time. The judge referred to the clear evidence that part of the purchase price of Flat 10C was paid by using the special donations from members of the Temple of $101,201, as recorded in its books. He found that it was certainly not Cheung’s intention to make Flat 10C a property partially owned by the Temple and partially owned by some individuals, for this could not ensure that the Temple would continuously enjoy and use Flat 10C without interference from any third party. He rejected the evidence of HKC and the 2^nd defendant that they had contributed $100,000 and $70,000 respectively to the purchase price. Notwithstanding the lack of clear evidence showing the sources of other money in relation to the down payment (apart from the special donations) and the mortgage repayments, the judge inferred and held that Cheung had found money from other sources to pay the down payment and mortgage repayments and it was Cheung’s intention to make the Temple the sole beneficial owner of Flat 10C[11].

30.  The contentions raised in Ground 3 sought to challenge the above findings of fact of the judge. None of them are of substance. It is wholly irrelevant that the 2^nd plaintiff was not incorporated at the time of the purchase of Flat 10C. The judge was entitled to reject the evidence of the 2^nd defendant of her alleged contribution to the purchase price and mortgage repayments, having found her an untruthful witness[12].

Ground 4

31.  The judge did not find that Flat 10C “qualified as a public charity”, as stated in Ground 4, nor was this the plaintiffs’ case. The plaintiffs’ case was that this property was held upon a trust for the advancement of religion and that was the declaration made by the judge.

32.  The judge found that Flat 10C was mainly used as a vegetarian hall for the Temple but believers might also worship there and there was a library displaying some books relating to the religion[13] and that it was agreed Cheung’s son could reside there when he came to visit her in Hong Kong[14]. He applied these legal principles in Cheung Man Yu v Lau Yuen Ching & Ors [2007] 4 HKC 314[15]: (1) to consider whether a trust is a public charity, one looks at the time when it was formed although subsequent conduct might shed light upon the trust’s character when it was formed; (2) the fact that the keeper of an establishment resides at the property of the charitable trust is not inconsistent with the fact that the trust is public in nature where such accommodation is incidental to the purpose of advancement of religion; (3) if the promotion of vegetarianism is auxiliary to the advancement of religion, this would be consistent with a trust being charitable.

33.  Applying the above principles, the judge found that the Temple is an organisation with an aim of promoting the religion as propounded by its founder Cheung, that her residence inside the Temple’s properties[16] was incidental to the purpose of advancement of the religion, that the members of the Temple had agreed her son could live in Flat 10C if he should visit her in Hong Kong, and that subsequent events have not cast doubt on the character of the Temple when it was formed, namely, that the Temple was and is an organisation open to the public for the advancement of the religion[17].

34.  There is no error in the judge’s findings.

Conclusion and costs

35.  For the reasons aforesaid, none of the grounds of appeal are of merit. We therefore dismiss the 2^nd defendant’s appeal.

36.  We have heard submissions from both parties on costs. The 2^nd defendant claimed she has no means to pay costs, she has incurred substantial sums for her legal fees and has to borrow to pay mesne profits to the 2^nd plaintiff which she has not yet repaid.

37.  As in the case of the 1^st defendant, impecuniosity is not a ground to depart from the principle that costs should follow the event. We order the 2^nd defendant to pay the plaintiffs’ costs in this appeal, with a certificate for two counsel.