RE LYO

HCMP 961/2004

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 961 OF 2004

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D E C I S I O N

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1.  On 15 April 2004, the eldest son of LYO applied by originating summons for an inquiry be held and a committee to be appointed regarding the estate of LYO under Part II of the Mental Health Ordinance.  The application was supported by an affirmation of the son filed on 28 April 2004 and an affirmation of a daughter of LYO.  The first wife of LYO, viz. the mother of these children, died in 1995. In 1998 LYO remarried and he moved to live in Kaiping, Guangdong, mainland China since August 2002.

2.  Guardianship proceedings were also commenced by the Applicant under Part IVB of the Mental Health Ordinance.  A social enquiry report had been prepared by on behalf of the Director of Social Welfare on 14 February 2004.

3.  By a letter dated 28 April 2004, solicitors for the Applicant asked for interim relief.  This court accordingly listed the matter for hearing on 5 May 2004 and directed notice of hearing be given to the solicitors acting for LYO and his wife as well as the Official Solicitor.

4.  On 30 April 2004, a firm of solicitors filed a notice to act for LYO.  On 4 May 2004, that solicitor sent a letter to the court together with a statement of LYO.  One item included therein was a medical report disputing the medical opinions put forward by the Applicant.  At the hearing of 5 May 2004, a solicitor appear on behalf of LYO to seek an adjournment of the application.

5.  Given the fact that LYO was not physically within the jurisdiction, this court raised query about the jurisdiction of the court in such circumstances.  Counsel for the Applicant was unable to assist the court. Nor did the solicitor for LYO.  The matter was therefore adjourned with directions for the filing of evidence.

6.  On 19 July 2004, the matter came back before me on, inter alias, an application by LYO for the funding of his legal costs. In the light of the dispute as to the mental capacity of LYO, the bank in which he held an account applied for leave to pay the monies standing to his credit into court.  I acceded to the application of the bank at that hearing and also directed payment out of $150,000 to the solicitors for LYO to cover his legal expenses in these proceedings.  The bank paid into court the sum of $1,513,850.70 on 31 July 2004.

7.  Counsel for LYO informed the court that request had been made for certain sale proceeds held by a daughter in respect of a property in which LYO had an interest be accounted for and paid into court.  In response, counsel for the Applicant undertook on behalf of his client to cause an affirmation to be filed to account for the same.

8.  Further, at the hearing of 19 July 2004, counsel for LYO indicated given that there were assets within the jurisdiction, he did not consider it viable to challenge the jurisdiction of the court under Part II.  The court was therefore invited to give directions for inquiry.  I fixed a call-over appointment for setting down the matter for inquiry.  The assistance of the Official Solicitor was enlisted to ascertain the stances of the parties.

9.  The call-over took place on 27 August 2004.  Pursuant to the undertaking given on 19 July 2004, an affirmation was filed by the daughter handling the proceeds on 30 July 2004 rendering an account for the same.  On 3 August 2004, the Applicant also took out a summons seeking leave to pay the balance of the sale proceeds into court.  On 25 August 2004, solicitors for LYO took out a cross summons seeking payment out of $23,000 per month for the maintenance of LYO and his wife.  

10.  The Official Solicitor helpfully met the parties in the interim and compiled a report on 26 August 2004.  In the report, the Official Solicitor recommended a psychometric assessment of LYO by a clinical psychologist to be conducted.

11.  On 27 August 2004, I granted orders in terms of the Applicant’s summons for payment into court as well as LYO’s cross summons for payment out for maintenance.  The amount paid into court by the Applicant on 30 August 2004 was $6,247,611.98.

12.  As regards the recommendation of the Official Solicitor, neither party had substantial objection to the same.  Accordingly, this court directed on 27 August 2004 pursuant to Section 9 of the Mental Health Ordinance for medical examination of LYO by two independent specialists arranged by the Official Solicitor.

13.  The Official Solicitor instructed Dr Brian Choa (a neurologist) and Dr Calais Chan (clinical psychologist) to assess the mental capacity of LYO.  LYO was examined by Dr Choa on 13 September 2004 and by Dr Chan on 6 and 7 September 2004.  They produced their reports on 13 and 27 September 2004 respectively.

14.  When the matter came back to the court for directions on 5 November 2004, counsel for LYO requested for an adjournment to enable LYO to have a further meeting with the Official Solicitor to explore the possibility of resolving the matter otherwise than by litigation.

15.  Another adjournment was sought on behalf of LYO and was granted on 16 December 2004.  At the same time, this court suggested a meeting of experts to narrow down their disputes.

16.  Formal direction for the meeting of experts was given on 7 January 2005.  The meeting took place on 19 January 2005 and the Official Solicitor filed a record of the same on 19 February 2005.

17.  On 3 March 2005, LYO instructed another firm of solicitors to act in place of the firm that had been acting for him.

18.  The matter came before Cheung J on 4 March 2005.  Mr Raffell took over the case and appeared as counsel for LYO.  Counsel informed the court that the new team of lawyers took a different view from that taken by their predecessors.  He submitted that as jurisdiction cannot be conceded, LYO wished to argue the point and invited Cheung J to set down the jurisdiction issue for argument as a preliminary point.  Cheung J directed accordingly and the preliminary point was argued before me on 6 July 2005.

19.  Mr Raffell’s basic contention was that by reason of LYO’s being resident in Kaiping, this court has no jurisdiction to make any order under Part II of the Mental Health Ordinance regarding the estate of LYO notwithstanding that some of his assets are situate here.  Counsel gave three reasons for this conclusion,

(a)	Section 23 of the Ordinance;
(b)	The common law rule as to the territorial limit of the court’s jurisdiction; and
(c)	Hong Kong is not the most convenient forum.

20.  In my judgment, the last point (viz.(c) above) is not a challenge to the existence of the jurisdiction.  Rather, it is a question of whether the jurisdiction should be exercised.  On the other hand, Mr Raffell is not making an application for stay of a civil suit on the ground of forum non conveniens and he therefore had not addressed this court by reference to the test in Spiliada Maritime Corporation v Cansulex Ltd [1987] 1 AC 460.  If I understand him correctly, counsel urged this court not to exercise the jurisdiction as a matter of discretion.  Mr Raffell referred to the following practical considerations to support his contention that this court should not exercise its jurisdiction under Part II even if the court does have jurisdiction as a matter of law,

(a)	the evidence of the two experts relied on by the Applicant were unsatisfactory or even inadmissible;
(b)	the court cannot compel LYO to come to Hong Kong;
(c)	the social welfare officer preparing the Social Inquiry Report perceived practical difficulties for a guardian to exercise the powers conferred under Guardianship proceedings given LYO’s objection to coming back to Hong Kong;
(d)	the court will encounter the same difficulties for the purpose of these proceedings;
(e)	the court cannot provide for the care and welfare of LYO nor supervise the same;
(f)	the exercise of the jurisdiction will interfere with the jurisdiction of the mainland authorities and contrary to international comity.

21.  For reasons to be given below, I do not think these are valid factors to justify a decline of jurisdiction.  Before I allude to them, I like to make some observations about the timing of the application.  It can readily be seen from what I had said above as regards the history of these proceedings that a lot of steps have been taken by all the parties since its commencement.  In fact, LYO himself had evoked the jurisdiction of this court which, albeit indirectly, led to the payment into court by his children the sale proceeds and orders for payment out to him for payment of his legal expenses and monthly maintenance.  He had also submitted to the jurisdiction of this court by complying with the directions under Section 9 for his assessment by Dr Choa and Dr Chan.  He arranged for his experts to attend the meeting on 19 January 2005.     

22.  Further, the jurisdictional point had been flagged by this court at the very beginning and counsel for LYO had expressly informed the court that the point would not be pursued.  After such indication, the Applicant had changed his position.  The sale proceeds were paid into court voluntarily.

23.  Mr Raffell’s factors (a) and (b) have no significance in the present circumstance because,

(a)	LYO had submitted to examination by Dr Choa and Dr Chan;
(b)	LYO could and apparently would call his own experts at the inquiry;
(c)	The weight or admissibility of the evidence of the Applicant’s experts are matters for argument at the inquiry.  That should not pre-empt the court from exercising its jurisdiction.

24.  For reasons given later concerning the distinction between proceedings under Part II and guardianship proceedings and the dichotomy between control over the person and control over the property of that person, Mr Raffell’s factors (c), (d) and (e) are not factors of great weight in determining whether Hong Kong court is the appropriate forum.

25.  Once the aforesaid distinctions are appreciated, there should not be any concern on the ground of international comity.  There is no reason why the court could not limit the territorial effect of its order under Part II to properties situate within Hong Kong by a suitable proviso as in the case of a worldwide Mareva with a Babanaft proviso (see Babanaft International v Bassatne [1990] Ch 13).  In fact the exercise of such a jurisdiction is perfectly in keeping with international perception as to the proper territorial limit of judicial power, see Articles 5 to 12 of the Hague Convention on the International Protection of Adults.  I only need to quote from Article 9,

“The authorities of a Contracting State where property of the adult is situated have jurisdiction to take measures of protection concerning that property, to the extent that such measures are compatible with those taken by the authorities having jurisdiction under Articles 5 to 8.”

26.  Other common law jurisdictions also quite consistently accept that a court could exercise its protective jurisdiction over properties situated within its jurisdiction even though the person alleged to be a patient is residing out of its jurisdiction, see Cheshire & North’s Private International Law, 13^th  Edn., p.915; Sykes & Pryles, Australian Private International Law, 3^rd Edn. p.378; Castel, Canadian Conflict of Laws, 4^th Edn. p.454.  Mr Raffell contended the relevant authorities were old English cases.  There are in fact modern authorities applying the same rule.  In MS v ES [1983] 3 NSWLR 199, Powell J held that the court has protective jurisdiction to appoint a manager of such of the property of a foreign patient as is within the jurisdiction.  At p.203B, the learned judge further said,

“The fact that this Court has jurisdiction in the matter does not, however, mean that it will inevitably exercise it: the court will exercise its jurisdiction only if it is in the [patient’s] interests that it do so.”

27.  In the present case, there are strong factors in favour of the exercise of the jurisdiction (if it exists as a matter of law) notwithstanding that LYO is resident in Kaiping and has expressed reluctance to come back to Hong Kong.  Firstly, in view of the respective stance taken by the parties, the issue as to the mental capacity of LYO has to be resolved sooner or later.  Although LYO also had some properties in mainland China (as revealed in his Affirmation of 27 June 2005), he also has substantial assets in Hong Kong.  As mentioned, substantial sums had been paid into this court.  Before any payment out is ordered, this court would need to ascertain that LYO has the mental capacity to give a valid discharge.  Also, he owns real property in Hong Kong and LYO’s mental capacity could affect the validity of any disposition of that property.  Secondly, there is no suggestion whatsoever that the issue of mental capacity of LYO will be considered in any inquiry in mainland China.  The current proceedings are therefore the only suit in which a court of law would examine the issue.  In fact, LYO did not file any evidence from any mainland lawyer as to the potential proceedings that could be filed in mainland China and the nature of relief that the mainland court could grant to protect the assets of person who are incapable of managing or administering his property or affairs by reason of mental incapacity.  Thirdly, the absence of LYO from the inquiry does not present any evidential difficulties since we already have reports from 6 doctors, two of them were independently engaged by the Official Solicitor.  Fourthly, the proceedings have progressed to a stage where the matter can be set down for inquiry.  Fifthly, given the preparations that have been done so far, it would be a substantial waste of costs to decline jurisdiction at this late stage.  That would not be in the interest of LYO as such costs might be deducted from money held in court.             

28.  I do not think the matters relied on by Mr Raffell could outweigh these factors.  I am of the clear view that it is in the interest of LYO that the question as to his mental incapacity be resolved in the context of the present proceedings.

29.  The above observations, in particular those in Paragraphs 25 and 26, also deal with the submissions of Mr Raffell as to the presumption of territorial limits of a court order.  The only outstanding issue is whether the court has jurisdiction to entertain a Part II application in respect of a person resident outside jurisdiction.

30.  The relevant sections under Part II are Sections 7 and 23.  Section 7(1) reads,

“(1)    The Court may, on application under this section, make an order directing an inquiry whether any person subject to the jurisdiction of the Court who is alleged to be mentally incapacitated is incapable, by reason of mental incapacity, of managing and administering his property and affairs.”

For present purposes, the issue is whether a person who resides elsewhere but has assets in Hong Kong is a person subject to the jurisdiction of the court.  Although other parts of this sub-section were amended in 1997, the reference to “person subject to the jurisdiction of the Court” had not been changed.  It had been in the Mental Health Bill 1960.  

31.  Section 23 is another provision which had been there since 1960 and its current form is as follows,

“Where any property situate in Hong Kong is standing in the name of or vested in any person residing out of Hong Kong, the Court, upon being satisfied that such person has been declared to be mentally incapacitated and that his personal estate has been vested in a committee, curator or manager according to the laws of the place where he is residing, may order some fit person to make such transfer of the property, or of any part thereof, to such committee, curator or manager or otherwise, and also to receive and pay over any proceeds or profits thereof as the Court may think fit; and any act done in pursuance of such order shall be valid and effectual for all purposes.”

32.  These provisions were taken from similar provisions in the Singapore Mental Disorders and Treatment Ordinance 1952 (see the Table of Comparison annexed to the Mental Health Bill 1960 at Supplement No.3 of the Hong Kong Government Gazette 1960 at p.393).  Although the drafting was adopted from the Singaporean legislation, the remarks in that table shows that reference was also made to Part VIII of the English Mental Health Act 1959 when our Bill was prepared.

33.  The history relating to the mental health law in Hong Kong was examined by Blair-Kerr J in Re Shang Kiang-yuen [1968] HKLR 192.  Prior to the enactment of the Mental Health Ordinance in 1962, English legislations were applied in Hong Kong by reason of Section 8(2) of the Supreme Court Ordinance.  With the repeal of the earlier English legislation by the Mental Health Act 1959, Blair-Kerr J held the provisions in the 1959 Act became applicable by way of substitution pursuant to the then Section 77 of the Interpretation and General Clauses Ordinance.  Further, by reason of the apparently narrower definition of the expression “mentally disordered person” under the Mental Health Ordinance (as compared with the definition for “mental disorder” under the 1959 Act and the retention of Section 8(2) after the enactment of the 1962 Ordinance, His Lordship concluded that Hong Kong court could still exercise the power under the 1959 Act in parallel with those under the 1962 Ordinance.  The 1959 Act was subsequently replaced by the Mental Health Act 1983.  This was the dual jurisdiction referred to by the Secretary for Health and Welfare in 1997 when she moved for the 1997 amendments to the Ordinance.

34.  The English authorities clearly established that under the English legislations, the court had the power to appoint receiver for the estate of an overseas patient if he had assets within the jurisdiction, see Re Scott (1874) 22 WR 784; Ex p Southcot (1751) 2 Ves Sen 401.  Admittedly, these were old cases.  But they were cited in modern textbooks as good law.  Thus, prior to the 1997 amendments, a judge sitting here in the High Court had similar power.

35.  However, the 1997 amendments aimed at doing away with the dual jurisdiction.  Wider definitions were adopted for “mental incapacity” and “mentally incapacitated person”.  Section 12(4) of the High Court Ordinance (the equivalent of old Section 8(2) of the Supreme Court Ordinance) was repealed.  Hence, the Mental Health Act 1983 ceased to be applicable here and a committee can only be appointed after an inquiry held under Part II of the Mental Health Ordinance, see Chan Sai Lun Henry v Chan Wai Wah Lily-Ann [2000] 1 HKC 453.

36.  In the Explanatory Memorandum for the 1997 amendment, it was said that the purpose of the Bill was to provide for a revised court supervised system relating to the management of the property and affairs of mentally incapacitated persons by improving the present provisions and amending them by incorporating some of the provisions contained in Part VII of the Mental Health Act 1983.  There was absolutely no suggestion that one of the objectives were to remove jurisdiction in respect of mentally incapacitated person who resides elsewhere.  The question is whether the legislature had done that inadvertently.

37.  It had been well recognized that the custody, care and treatment of mentally incapacitated person was a separate question from the management of his properties and affairs.  Hence, one finds such a distinction under Section 108(3) of the Lunacy Act 1890,

“Where upon the inquisition it is specially found or certified that the person to whom the inquisition relates is of unsound mind so as to be incapable of managing his affairs, but that he is capable of managing himself, and is not dangerous to himself or to others, the Judge in Lunacy may make such orders as he thinks fit for the commitment of the estate of the lunatic and its management, but it shall not be necessary, unless in the discretion of the Judge it appears proper to do so, to make any order as to the custody or commitment of the person of the lunatic.”

This also accounts for Section 96 of the same Act which envisaged that an inquisition could still be held even though the lunatic was not within jurisdiction.

38.  This distinction is maintained in the statutory scheme of the Mental Health Ordinance.  Under Section 2, two different definitions are given for “mentally incapacitated person”, one for the purposes of Part II, another one for the other parts of the Ordinance.  Reading as a whole, Part II is confined to the administration and management of the estate of a mentally incapacitated person, see Re F [1990] 2 AC 1 at p.59E to H.  Mr Raffell placed emphasis on the long title of the Ordinance and its reference to the care and treatment of mentally incapacitated persons.  Since there are other parts in the ordinance which deal with these matters, I do not think one could derive any help from these references in the long title to determine the scope of Part II.  To my mind, the heading of Part II (“Management of property and affairs of Mentally Incapacitated Persons”) is of greater relevance. 

39.  Mr Raffell submitted that given the physical impossibility of the court to make effective provisions for the custody, care and treatment of a person who is out of Hong Kong and unwilling to come back, the jurisdiction under Part II could not be evoked.  Given the above distinction, I do not think the point made by Mr Raffell sheds any light on the correct interpretation as to the limits of the court’s jurisdiction under Part II.

40.  Coming back to the expression “any person subject to the jurisdiction of the Court” in Section 7(1), I am of the view that this expression could cover a person who does not reside here but only has assets within Hong Kong.  In ordinary civil litigation, the court always has jurisdiction to deal with such a person if the subject matters of the suit are properties within the jurisdiction.  Leave to serve proceedings outside jurisdiction can be granted pursuant to Order 11 Rule 1 (c), (g), (h) or (i).  Although proceedings under Part II of the Mental Health Ordinance may be regarded as sui generis as the outcome of the proceedings would affect the status of a person, it is necessary to have regard to the historical background leading to the legislation.  As mentioned, under the relevant principle of private international law, the jurisdiction over the person and that over the estate of a mentally incapacitated person were dealt with on different footings.  Such a distinction is also reflected in the scheme of the ordinance.  Hence, I conclude that such expression alone does not rule out the court’s jurisdiction in the present circumstances.      

41.  The matter could be tested by asking what would happen if, instead of litigating in the context of a Part II application, a relative chooses to dispute in an ordinary civil action the mental capacity of the alleged mentally incapacitated person and the legal effect of certain transactions concerning properties situated here.  In fact, that would probably happen in this case if instead of paying the sum into court, his children chose to litigate with LYO or to the disposal of the proceeds of sale of one of the properties.  It is difficult to see why leave for service out of jurisdiction should not be granted.  It follows that Hong Kong court must have jurisdiction even if such person is resident elsewhere.  If the children raised the question of mental capacity of LYO in such an action, the court will have to determine exactly the same issue that it has to consider in a Part II inquiry.

42.  Mr Raffell placed great reliance on Section 23 of the Mental Health Ordinance.  He submitted that that section should be construed as the sole and exclusive procedure by which the assets of a non-resident mentally incapacitated person could be dealt with.  I do not agree.  There were similar provisions in the English legislations: Section 134 of the Lunacy Act 1890; Section 100 of the Mental Health Act 1983.  Although they referred to transfer of stocks as opposed to property in general, it should not make any difference in view of what I said below as regards the limits of Section 23.  As a matter of law, such order is not necessary for dealing with movable property, see Didisheim v London and Westminster Bank [1900] 2 Ch 15, Heywood & Massey, Court of Protection Practice (2005) Para.1-040.  The availability of these alternatives has never been read as cutting down the jurisdiction of the court to appoint receivers for non-resident patients.

43.  Further, that section can only be evoked when a committee, curator or manager has been properly appointed according to the law of the place where the mentally incapacitated person resides.  It has no application when no such appointment has been made.

44.  Another limitation is that a foreign committee or curator has no authority to deal with immovable properties held in the name of the patient situate here, see Grimwood v Bartels (1877) 46 LJ Ch 788; Re Forrest (1962) 30 DLR 2d 397; Re Piper [1927] 4 DLR 924; Re Hickson [1927] 4 DLR 607; Cheshire & North’s Private International Law, 13^th  Edn., p.917; Sykes & Pryles, Australian Private International Law, 3^rd Edn. p.379; Castel, Canadian Conflict of Laws, 4^th Edn. p.455.  The lex situs rule governs the transfer of immovables, including question of capacity to take and transfer immovables, see Cheshire & North’s Private International Law, 11^th Edn. Chapter 29.  Further, the authority of a foreign curator over Hong Kong assets may be challenged if the mentally incapacitated person is domiciled in Hong Kong, see New York Security & Trust v Keyer [1901] 1 Ch 666; Cheshire & North, ibid. p.918; Heywood & Massey, ibid.  Para.1-040; Sykes & Pryles, ibid. p.379; Castel, ibid. p.455.

45.  The order that a court may make under Section 23 is limited to,

(a)	directing some fit person to make such transfer of the property to the foreign committee or curator;
(b)	directing some fit person to receive and pay over any proceeds or profits of the property to the foreign committee or curator.

It does not provide for the conveyance of title.  Such a conveyance is not necessary for movable properties by reason of the rule in Didisheim.  And by reason of the private international law rule set out in Paragraph 44 above, the court could not direct a conveyance of immovable to the foreign curator or committee without conducting its own inquiry.  Instead what it envisages is to facilitate the transfer of movable property or to collect and pay over the proceeds or profits derived from such property to the foreign committee or curator.

46.  In my judgment, Section 23 only empowers the court in Hong Kong to make a supplementary order to facilitate the administration of movable assets within the jurisdiction by a foreign committee, curator or manager.  It should not be construed as the sole and exclusive procedure to deal with the assets of non-resident mentally incapacitated person.  There can be many instances where actions have to be taken here to deal with assets belonging to such person even though there had not been any appointment of committee, curator or manager at the place of residence.  

47.  I therefore conclude that neither Section 7(1) nor Section 23 of the Mental Health Ordinance limits the jurisdiction of this court so that it ceased have jurisdiction to hold inquiry in respect of non-resident mentally incapacitated person after 1997.  In other words, the legislature did not cut down the power of the court unwittingly by the 1997 amendments.  Whether such power should be exercised is a matter of discretion and I have already explained above why in the present circumstances it is appropriate for this court to hold an inquiry under Part II despite LYO’s reluctance to come back to Hong Kong.

48.  I therefore decide the preliminary issue against LYO and I shall give directions for setting down the matter for inquiry on 15 July 2005.