RE MK

HCMP 851/2005

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 851 OF 2005

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D E C I S I O N

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1.  By an order of this court made on 6 May 2005, a Committee was appointed for an elderly lady, whom I shall call MK in this Decision, on account of her being incapable, by reason of mental incapacity, of managing and administering her property and affairs.

2.  A daughter of MK passed away in 2002.  The daughter left a large estate.  There were disputes regarding MK’s entitlement to part of that estate.  I need not go into details.  Through mediation, parties concerned were able to reach a settlement before any substantive contentious proceedings have been commenced.

3.  The settlement was approved by this court on 9 January 2009 and the Committee was authorized to enter into the Settlement Agreement.

4.  The Committee seeks authorization of this court, in the exercise of its Part II jurisdiction, to commence proceedings under Order 80 Rule 11 to have the approval of the court for the settlement.  The Committee’s solicitors consider such course to be necessary because the settlement involves a compromise of MK’s claims in the deceased daughter’s estate in Hong Kong and as such a claim for money on behalf of a person under disability.

5.  Rule 11 provides a mechanism for seeking the approval of the court when a claim of a person under disability is settled.  That would be desirable in ensuring that the settlement is in the interest of that person and binding on the estate of the person under disability when there is no Part II proceedings on foot.  However, in the present case, a Committee has been appointed and the court has given approval under Part II of the MHO.  In such circumstances, by reason of Sections 10A and 10B of the MHO, there cannot be any doubt that the settlement will be binding on the estate of MK.  Is there any reason why it is still necessary to commence a fresh set of proceedings under Order 80 Rule11?

6.  It has to be borne in mind that Rule 11 only provides for one avenue to obtain the court’s approval.  Thus, it only facilitates such an application to be made “when it is desired to obtain the Court’s approval to the settlement”.  Rule 11 is not a provision mandating that such an application must be made.

7.  Though the wordings of Order 80 Rule 10 may suggest that the approval of the court is necessary in order to have a valid settlement involving person under disability, three points have to be made.  First, Rule 10 only refers to cases where proceedings have already been begun.  Second, approval of the court under Rule 10 can be construed to include approval of the court in the exercise of its Part II jurisdiction.  Unlike the position in England, Part II jurisdiction is exercised by the same court in Hong Kong as opposed to a separate court of protection.  Third, Rule 10, as subsidiary legislation, cannot override the clear authority conferred upon the court and the committee under Sections 10A and 10B of the MHO.

8.  If one were to examine the history leading to Order 80 Rules 10 and 11, it can be demonstrated that they were not meant to cut down the authority of a judicial officer in lunacy jurisdiction to approve a settlement.  The rules were taken from the English rules.  As at 1953, as one can gather from the Annual Practice 1953, the relevant English rules was Order 22 Rule 14 with the relevant practice set out at p.402 and 265 of the Annual Practice.  The following was said regarding cases where the person under disability was already subject to the lunacy jurisdiction,

“Where an action is brought by a committee … under the sanction of an order in Lunacy, no compromise should be effected without the sanction of the Master in Lunacy; and any money or property recovered is usually directed to be brought into the account in Lunacy.”

9.  In those days, it was only in cases other than those already subject to lunacy jurisdiction that sanction of the judges is required.

10.  By amendments in 1956, the relevant English rule became Order 16B Rule 11 (similar to our current Order 80 Rule 10, but there was no equivalent for Rule 11).  The commentary at p.414 of the Annual Practice 1962 stated that the rule did not affect the validity of a settlement, as such settlement would be governed by the ordinary law of contract.  However, without a sanction from the court, the settlement would be made entirely at the risk of the other party.

11.  After another revision in 1962, the relevant English rules were set out in Order 80 Rules 10 and 11 which were basically the same as our current rules.  Although the commentary in the English White Books suggested that two tiers of approval were required, that should be read in the light of the fact that the English Court of Protection was a separate institution from the Royal Courts of Justice exercising its judicial power.

12.  Coming back to the Hong Kong rules, the commentary at Para.80/11/1 in Hong Kong Civil Procedure 2009 identifies several objectives of our Rules 10 and 11.  In the context of claims settled before proceedings are commenced, all the objectives can be satisfied by an approval given by the court under Part II to the committee to enter into the settlement.

13.  In the light of this analysis, I am of the view that a settlement sanctioned by the court under Part II is valid and binding and it would only duplicate efforts and costs if another set of proceedings under Order 80 Rule 11 were to be commenced for achieving the same purposes.

14.  Therefore, I do not deem it appropriate to authorize a further application for approval under Order 80.  There is no justification for legal costs to be incurred on an unnecessary application. 

15.  I leave open the question whether a second tier approval under Order 80 is required after the dispute has already been subject to a set of legal proceedings and a committee then compromised with the sanction of the court under Part II.  In that scenario, the court may need to make an order for the final disposal of the proceedings and Rule 10 is thereby triggered.  In any event, I have suggested a simple mechanism to streamline the process in Re CK HCMP 1150 of 2006, 4 August 2006.

16.  For the avoidance of doubt, because of the different nature of applications for approval of settlement in matrimonial proceedings, what I said above is not applicable to such approval and my comments in Re L HCMP 1120 of 2003, 12 May 2006, shall continue to govern those applications.

17.  I shall release this judgment for public circulation.