RE CSY

HCMP 899/2005

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 899 OF 2005

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RE :  CSY

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REASONS   FOR   DECISION

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1.  Madam CSY has eight children.  Her husband passed away in 1992.  Since 2002, she suffered from progressive memory deterioration and she was diagnosed as having Alzheimer’s dementia.  On 9 December 2005, at an inquiry under Part II of the Mental Health Ordinance, this court found CSY to be incapable, by reason of mental incapacity of managing and administering her property and affairs.  The Official Solicitor was appointed as Committee of the estate of CSY.

2.  She is now about 89 years old and living in Bradbury Home of Loving Kindness, an old aged centre operated by the Salvation Army.  Since the death of her husband, CSY had been living on the monies in the estate of her late husband.  By about August 2004, that fund had been exhausted.

3.  Up to June 2003, CSY lived at a flat held in the joint name of hers and her husband.  Due to her deteriorating condition and the need for constant care, the flat was sold.  The net proceeds of about $860,000 were deposited into an account held in the joint names of five of the children.  They acknowledged to this court that they held the money on trust for CSY.  The fourth child of the family, LHW, was not one of the account holders.

4.  After the exhaustion of the funds in the estate of the father, the children had a family meeting and decided to use the sale proceeds in that account for the maintenance of CSY.  LHW did not attend the meeting.  He had been estranged from the family for some time.

5.  Prior to the inquiry in December 2005, the court had directed the Official Solicitor to file a report regarding the affairs of CSY and such report was filed on 17 November 2005.  Upon reading such report, this court considered that immediate steps should be taken to secure certain assets of CSY and the Official Solicitor was appointed as interim receiver pursuant to Section 10D.

6.  A Mareva injunction was granted on the same date against LHW, up to the limit of $586,807.33.  That was granted in the circumstances set out below.

7.  At the direction hearing on 21 October 2005, this court was informed by solicitor acting for three of the children (who were holders of the trust account and the applicants in the present proceedings) that LHW had obtained monies from the account by means of a garnishee order in a District Court action.  The District Court action was conducted without their knowledge and notice although they were named as defendants.  Default judgment had been obtained and garnishee order was secured without proper service on them.

8.  LHW was present at that hearing.  He indicated that he wished to consult lawyers.  He said he was following the instructions of CSY in handling her money.  Given the dissension amongst the children, this court considered that it would be in the interest of CSY to have a report from the Official Solicitor before the inquiry.

9.  It appears from the report of the Official Solicitor that although he acknowledged the $586,807.33 belonged to CSY, LHW was not forthcoming as regards the whereabout of this sum.  He did not disclose where he lived and the Official Solicitor had difficulties in contacting him.

10.  He had also commenced action against CSY in the District Court but he did not give the particulars of the same.  He said it was for a sum of $270,000.  He had obtained a judgment in his favour.  It was subsequently revealed that he acted in person in suing CSY regarding his alleged interest in the flat based on his alleged contribution to the purchase price.  This claim is disputed by the other children.  The committee is looking into this aspect and I will not comment on it at this stage.  In an affirmation of 11 February 2004, LHW deposed to personal service of that writ on CSY.  He did not mention anything about the ill-health of CSY in that affirmation.  Default judgment was obtained on 12 February 2004.  Thereafter he tried to use the default judgment to obtain a garnishee order regarding the joint names account.  That was unsuccessful because the Master raised queries about the viability of such course in view of the fact that CSY was not the account holder.

11.  LHW then commenced the second set of District Court proceedings mentioned above.  By means of the garnishee order obtained in the second set of proceedings, he got all the monies from the joint names account.  Thus, CSY lost her means of support and there were defaults in payment of the fees of the old aged centre.

12.  The Mareva injunction required LHW to disclose forthwith the whereabout of the $586,807.33.  Despite his knowledge of the order, he failed to comply with it.  On 9 December 2005, LHW attended the inquiry.  After some evasive attempts, LHW told this court that the money had been remitted to Australia and was held in an account in his own name.  He said he had not got the particulars of the account with him.  This court extended the deadline for disclosure to 12 December 2005.  The injunction was continued.

13.  On 12 December 2005, LHW wrote to the court about the particulars of the bank account.  Based on that disclosure, the Official Solicitor made enquiries with the bank concerned.  On 5 January 2006, the bank informed the Official Solicitor that the account number provided by LHW was incorrect or incomplete.  Upon being notified, this court directed the Official Solicitor to file a report by 12 January 2006 to facilitate consideration as to whether the Official Solicitor should be directed to institute committal proceedings against LHW.

14.  On 11 January 2006, LHW paid $586,807.33 into court.  He still retained the balance of the money he obtained from the garnishee order since they were not the subject matter of the Mareva injunction.

15.  On 13 January 2006, this court released the said sum of $586,807.33 to the Official Solicitor as committee for the maintenance of CSY.  The question of committal proceedings and costs of the injunction proceedings were adjourned as LHW did not attend that hearing.

16.  LHW again failed to attend the hearing on 10 February 2006.  Given the background of the case, this court decided to give LHW another chance to explain his apparent failure to comply with the order for disclosure before reaching a conclusion on whether committal proceedings are warranted.  However, there is no reason why this court should not deal with the costs relating to the injunction proceedings since LHW had been given adequate notice of the matter.

17.  From the history of the proceedings, it is quite obvious that LHW had acted unreasonably in withholding information about the $586,807.33.  Irrespective of his concern about the management of CSY’s monies in the joint names account by his siblings, there is no justification for him to hide the fund from the Official Solicitor.  Had he been more forthcoming, the costs of the injunction proceedings could have been avoided.

18.  He acknowledged that he was holding the money for CSY.  As a fiduciary, he had a duty to account to CSY.  At the direction hearing of 21 October 2005, the mental incapacity of CSY was not disputed.  This court has a duty to protect the interest of CSY and under Part II of the Mental Health Ordinance, it has the power to administer and manage the affairs of CSY.  It follows that LHW had a duty to account to this court and the interim receiver and committee appointed by this court the whereabout of the money.  His failure to observe such duty led to costs being incurred in the injunction proceedings.

19.  The estate of CSY should not be required to bear such costs occasioned by the wrong committed by LHW.  LHW should be liable for such costs.  I therefore ordered on 10 February 2006 that LHW shall pay the costs of the Official Solicitor relating to the injunction proceedings and such costs was fixed pursuant to Order 62 Rule 9(4)(b) at $65,567.

20.  I intend to authorize the publication of this judgment.  Any parties who wish to comment on publication shall do so in writing within 5 days.