AU LEUNG SHUET HUNG AND OTHERS v.AU WING LUN AND ANOTHER

HCA 1954/2011

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 1954 OF 2011

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BETWEEN

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J U D G M E N T

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1.  This is an application by the plaintiffs to restrain the defendants from acting for Ms. Sarah Au in the conduct of FCMP270/2010 in the District Court (“the DC Proceedings”).

The DC proceedings and the relationship of the parties

2.  Sarah Au commenced the DC proceedings on 31 December 2010. She seeks in those proceedings maintenance to be paid from the estate of her deceased grandfather to support her university education in England.  The Hang Seng Bank (Trustee) Limited (“HSBT”) has been appointed the administrator pendente lite of the estate of the deceased grandfather and the HSBT is the defendant in the DC proceedings. 

3.  The three plaintiffs here are the 2nd, 3rd and 4th interveners in the DC proceedings.  On 19 July 2011, the trial of these proceedings was fixed on 3rd to 6 January 2012. 

4.  It is necessary to explain the relationship between the plaintiffs, the defendants, Sarah Au and the deceased. 

5.  The deceased Au Kong Tim was a wealthy real property developer.  He passed away on 7 July 2009.  He was survived by his wife Madam Au Leung Shuet-hung (“Madam Au”), two sons, Au Yuk-lun Anthony (“Anthony Au”) and Au Wing-lun William (“William Au”), a daughter, Gloria Seltzer, and six grandchildren as referred to below. 

6.  Anthony Au married Madam Choy Po-chun (Madam Choy”) and they have one son and three daughters.  The son is Au Chadwick and the daughters are Charleen Au, Au Cheuk-mun and Au Cheuk-yin.  William Au has also married and he has one son, Wilson Au, and one daughter, Sarah Au. 

7.  I have mentioned above that the DC proceedings were instituted by Sarah Au against HSBT, the administrator pendente lite of the estate of her deceased grandfather.  She is asking for maintenance from the estate to support her university education in England.  Her uncle Anthony Au, her grandmother Madam Au, her aunt Madam Choy, and her cousin, Au Chadwick, are the 1st, 2nd, 3rd and 4th interveners in those proceedings.  I understand that they oppose the application for maintenance by Sarah Au.

8.  Sarah Au is represented in the DC proceedings by the 2nd defendant herein and her father William Au, the 1st defendant herein.  The 1st defendant is a consultant of the 2nd defendant.  Sarah Au and the 1st and 2nd defendants all admit that the 1st and 2nd defendants are acting for Sarah Au in those proceedings. 

The dispute over the wills

9.  Apart from the DC proceedings, there are two probate actions before this court that are fought amongst some members of the Au family.  They are HCAP7/2010 and HCAP9/2010. 

10.  The dispute in these actions is on the validity of two wills of the deceased grandfather.  The first will was executed by deceased on 19 July 2010 (“the 2002 Will”).  There is no dispute on the proper execution of this will or the testamentary capacity of the deceased in making it.  The dispute is on whether this will has been revoked by the deceased by his purported execution of another will in Chinese on 5 September 2008 (“the 2008 Will”).

11.  Under the 2002 Will, each of the six grandchildren, i.e., the four children of Anthony Au and the two children of William Au, has an equal share of the properties in the estate.  Madam Au, Madam Choy and Miss Charleen Au, a daughter of Anthony Au, are named as the executors and trustees of this will.

12.  Under the 2008 Will, Anthony Au, his son Au Chadwick, William Au and his son Wilson Au are the beneficiaries with each being given an equal share.  The granddaughters are not given any share.  The executors and trustees named in this will are Anthony Au and William Au.

The grounds of this action

13.  On 15 November this year, the grandmother Madam Au, the aunt Madam Choy and the cousin Au Chadwick as the 1st, 2nd and 3rd plaintiffs respectively took out this action against William Au and the 2nd defendant to restrain them from acting for Sarah Au in the DC proceedings.  The plaintiffs rely on the provisions in Chapter 7 and Chapter 10 of the Hong Kong Solicitors Guide to Professional Conduct.  

14.  Para 7.01 of the guide and paras 1 to 3 of the commentary thereunder provide:

“7.01 Conflict of interest between solicitor and client

A solicitor must not act where his own interests, conflict or are likely to conflict with the interests of a client or potential client.

Commentary

This principle applies not only where a solicitor is personally interested in a transaction but equally where a partner of his or a member of the solicitor staff is so interested.

A Solicitor must also consider whether any family or other personal or emotional relationship, office, appointment or shareholding which he has inhibits his ability to advise his client properly and impartially.

Because of the fiduciary relationship which exists between a solicitor and his client, a solicitor must not take advantage of a client nor may he act where there is or there is a likelihood of a conflict of interest between his client and himself.

Example: there will invariably be a potential conflict of interest where a solicitor leases to, sells to or purchases from or lends to or borrows from his own client.  In such circumstances, unless the client takes independent advice the solicitor must not proceed with the transaction.  It should be understood that by independent advice is meant not only legal advice, but where appropriate competent advice from a member of another profession, example, chartered surveyor.”

15.  Paras 10.13 of the guide and paras 1 to 3 of the Commentary thereunder provide:

“10.13 Advocate should not be a Witness

A solicitor must not accept instructions to act for a client as an advocate if it is clear that he or a member of his firm will be called as a witness unless the evidence is purely formal.

Commentary

A solicitor must exercise his judgment whether to cease acting where he has already accepted instructions to act as an advocate and then becomes aware that he or a member of his firm will be called as a witness.

The circumstances in which a solicitor should continue to act must be extremely rare where it is likely that he will be called to give evidence other than that which is purely formal.

In exercising judgement, the solicitor should consider the nature of the evidence to be given, its importance to the case overall and the difficulties faced by the client if the solicitor were to cease to act.  The decision should then be taken in the interests of justice as a whole and not solely in the interests of the client.”

16.  The plaintiffs then plead in the statement of claim that the defendants as officers of the court have conducted themselves in a manner that constitutes an abuse of the court process and should be restrained by the inherent jurisdiction of the court from acting for Sarah Au in the DC proceedings.  The specific grounds they plead are that the 1st defendant will be a witness at the trial of the DC proceedings, the 1st defendant is personally interested in the outcome of the DC proceedings, the 1st defendant position as executor and trustee in the 2008 Will conflicts with the interests of Sarah Au in the DC proceedings.  In the case of the 2nd defendant, the plaintiff relied on the fact that 1st defendant is a member of the firm of the 2nd defendant.

The evidence of the plaintiff and arguments

17.  Au Chadwick filed two affidavits in support of the plaintiffs’ claim.  In his first affidavit, he said the 1st defendant, in seeking to propound the 2008 Will, was preventing Sarah Au from getting her 1/6th share of the deceased estate under the 2002 Will.  Furthermore, the 1st defendant as an executor and trustee of the 2008 Will was under an obligation to preserve the entirety of the estate.  That puts him in a situation of conflict of interest with Sarah Au.  On the other hand, if Sarah Au should succeed in the DC proceedings, the 1st defendant would personally benefit from the success as he has the duty to provide for Sarah Au education.

18.  In his second affidavit, Au Chadwick further said that the plaintiffs have an interest to ensure that the DC proceedings would be conducted in accordance with the rules and practice of law, and more importantly, in a just and fair manner.  The plaintiffs also do not want to see the 1st defendant utilising the court as a channel for advancing his personal interest. 

19.  Counsel for the plaintiffs in his oral submissions made it plain that the application is not made on the basis that the defendants are in possession of any confidential information of the plaintiffs, so that their conduct of the DC proceedings on behalf of Sarah Au would prejudice the plaintiffs’ interest. 

20.  The plaintiffs make this application because of their desire to ensure that the proceedings would be conducted on a just and fair manner.  They do not think that the DC proceedings can be so conducted if the defendants are allowed to represent Sarah Au as that will prejudice Sarah Au interest. 

21.  However, apart from the plaintiffs’ desire to see that the DC proceedings will be conducted in a fair and just manner, the plaintiffs cannot say what interests of theirs will be prejudiced by the defendants’ representation of Sarah Au in the DC proceedings.

22.  Counsel for the plaintiffs also referred to Geveran Trading Company Limited v Skjevesland [2003] 1 WLR 912 at paragraphs 39, 41 and 42.  The Court of Appeal in England made it plain there that if there should be a real risk of the continued participation of an advocate in the case leading to a situation where the order made at the trial would have to be set aside, then the court has the power under its inherent jurisdiction to restrain the advocate from acting.

The defendants’ evidence and arguments

23.  However, if the client has given the informed consent, or consent given to the advocate to act in the knowledge of the conflict that the advocate is in, then the advocate can act for the client despite the conflict (see Nichimatsu – Costain – China Harbour Joint Venture v Ip Kwan & Company, CACV21/2000 at page 13).

24.  Sarah Au has also made an affidavit to oppose this application.  She has read Au Chadwick first affidavit.  She said she trusted her father and the 2nd defendant.  They are aware of the facts of her application in the DC proceedings.  She is aware that her father, the 1st defendant, is an executor, trustee and beneficiary of the 2008 Will, but she is also aware that the HSBT has been appointed administrator pendente lite, therefore section 42 of the Probate and Administration Ordinance, Cap.10 prevents her father from acting as executor of the deceased estate.  There is therefore no conflict of interest. 

25.  Section 42 of the Probate and Administration Ordinance provides: 

“Where administration has been granted in respect of any estate of a deceased person, no person shall have power to bring any action, or otherwise to act as executor of the deceased person in respect of the estate comprised in or affected by the grant until the grant has been recalled or revoked.”

26.  Sarah Au also denied that the DC proceedings were to benefit the 1st defendant.  She said she had been encouraged by the deceased to seek higher education in the UK, and the deceased had promised to support her financially and the DC proceedings are for her benefit as she needed the money from the estate.

Analyses and decision

27.  Since Sarah Au has read the first affidavit of Au Chadwick, she is fully aware of the allegations of conflict between her and her father, 1stdefendant, and the allegations of abuse by her father.  Despite all these allegations, she has gone on affidavit to confirm her desire to engage the 1st and 2nd defendants to act for her in the DC proceedings.  In these circumstances, I must accept that her choice of legal representation in the DC proceedings is an informed one. 

28.  In these circumstances, if she should be defeated in the DC proceedings, I cannot see how she can appeal against the judgment on the ground that she is represented by the 1st defendant and/or 2nd defendant at the first instance trial.  The principle pronounced in paragraphs 38, 41 and 42 of Geveran Trading therefore has no application in the DC proceedings.

29.  Regarding the plaintiffs’ concern that the DC proceedings should be conducted in a just and fair manner so that they did not want the defendants to represent Sarah Au, I do not think such concern has enough weight to secure an order to restrain the defendants from so acting and contrary to Sarah Au wishes.

30.  I would further add that the defendants have made it clear since 2 December that Sarah Au will be represented by an independent counsel at the trial of the DC proceedings.  Para 10.13 of the Solicitors Guide will therefore have no application at all as the 1st defendant will not be acting as an advocate for Sarah Au at the trial of the DC proceedings.

31.  Counsel for the plaintiffs asked me to extend the scope of paragraph 10.13 of the guide from advocates to instructing solicitors on the ground of possibility of prejudice to the administration of justice and to the interest of other parties.  But I cannot see how the administration of justice can be prejudiced if the scope of paragraph 10.13 is not so extended.

32.  I also cannot see what legitimate interest of the other parties can justify the extension of the scope of this paragraph as suggested by counsel.  I also echo the remark of the English Court of Appeal in paragraph 42 of Geveran Trading that the content and enforcement of the Code of Conduct for advocates are not a matter for the court.  The court is of course concerned with the duty of the advocate to the court and the integrity of the proceedings before it and has an inherent power to restrain the advocate from acting in the appropriate case as referred to above. 

Order

33.  For the above reasons, Sarah Au has made an informed choice of her legal representation in the DC proceedings and there is no reason to restrain the defendants from acting for her. 

34.  I therefore dismiss the application and this action with a costs order nisi that the costs of the action including this application shall be paid by the plaintiffs to the defendants. 

35.  I also direct the parties to fix a 9.30 am hearing outside the next 14 days for summary assessment of the amount of costs payable unless there should be an application to vary the costs order nisi to be made within the next 14 days.