CHUNG SUET WAN v. CHUNG SUET HAN AND ANOTHER

DCCJ 5534/2020

[2023] HKDC 808

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 5534 OF 2020

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DECISION

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Background

1.  The trial of this action was scheduled to be tried and heard by me today with 6 days reserved.

2.  This is the hearing of an application to adjourn the trial on the ground that the Plaintiff (“P”)  is not fit to attend the trial due to her current medical condition.

3.  On 1 June 2023, a letter was first sent by Counsel for P, Mr Chong, to the Registrar of the District Court, copied to the Solicitors for P and Solicitors and Counsel for the 1^st Defendant and the 2^nd Defendant (“Counsel’s Letter”)  seeking to refix the trial of this action with the following directions:

(1)  P’s application to adjourn the trial scheduled for 12 June 2023, with 6 days reserved be granted;

(2)  The trial be refixed in consultation with counsel’s diary;

(3)  The costs of and occasioned by the adjournment be reserved and be dealt with at the trial.

4.  A letter dated 31 May 2023 from Dr Fung Tat Chow Berry (“Dr Fung”), a consultant urologist at Union Hospital, was attached to Counsel’s Letter.  It is stated therein that P had haematuria and recent cystoscopy on 11 May 2023. After the operation, she had dysuria, fever and bilateral loin pain.  Her infection was not resolved with oral antibiotics from her family doctor.  She then was admitted as an emergency to Union Hospital on 29 May 2023.  CT was performed on 30 May 2023 and stones were found.  It is said that P had life threatening severe infection of bilateral kidneys and bladder and is an in-patient at Union Hospital under close monitoring and intravenous antibiotics which could not be stopped.  Dr Fung opined that she is not fit for discharge as she needs to stay in Union Hospital to treat her life threatening severe infection. He also opined that P is not fit to attend the hearing on 12 June 2023.

5.  In Counsel’s Letter, he accepted that the trial date of the present action is a milestone date which will not be moveable save in exceptional circumstances.  He submitted that given P is now in critical medical condition, this is the kind of exceptional circumstances justifying an adjournment.  He pointed out that P is the key witness to prove her own case and it would be unfair if the trial was conducted in her absence due to her unexpected medical condition.  Furthermore, it was said there was no imminent urgency in resolving the parties’ dispute and no prejudice will be caused to the 1^st Defendant (“D1”)  and/or 2^nd Defendant (“D2”)  by the adjournment.

6.  On 5 June 2023, a Consent Summons dated 5 June 2023 (“Consent Summons”)  signed by solicitors for P and solicitors for D1 and D2 was filed, seeking an order by consent that:

(1)  The trial fixed to commence on 12 June 2023 be adjourned and refixed for 6 days in consultation with counsel’s diary;

(2)  D1 and D2 do file and serve their opening submissions and list of authorities 7 days before the refixed trial; and

(3)  Costs of and occasioned by the adjournment of the trial be reserved and be dealt with at trial.

7.  Counsel’s Letter and the Consent Summons were placed before me on 6 June 2023.  I then caused my clerk to relay my observations to the parties that the trial date being a milestone date cannot be varied by the parties by agreement and that a party who wish to vary a milestone date must apply to the court showing exceptional circumstances. 

8.  Pausing here, a letter dated 11 May 2023 was recently written by the Hon Madam Justice Queeny Au-Yeung to the President of the Law Society, copying the Hong Kong Bar Association.  In the letter, mention is made of the Court receiving lots of applications from solicitors by letters (or faxes)  and reminds practitioners of the case of AXA China Region Insurance Co Ltd, CACV 113/2016, 28 October 2016, §§44-45 wherein Lam VP (as he then was)  referred to the situation of solicitors in writing to the Court without regard to the proper procedure that should be followed.   Relevant to the present case, is the reminder that where there is an application to make it should not be done by letter but should be done properly by a summons, supported by an affidavit (where needed)  filed at the same time.  The letter was brought to the attention of all members of the Bar very recently by way of Circular No. 078/23 dated 23 May 2023.

9.  On 7 June 2023, solicitors for P took out a Summons under O.25 r.3 of the Rules of the District Court, Cap. 336H (“RDC”)  dated 7 June 2023 (“the Summons”)  for an order that:

(1)  The trial fixed to commence on 12 June 2023 be adjourned and refixed for 6 days in consultation with counsel’s diary;

(2)  D1 and D2 do file and serve their opening submissions and list of authorities 7 days before the refixed trial;

(3)  Costs of and occasioned by the adjournment of the trial be reserved and be dealt with at the trial;

(4)  Leave for the P and D1 and D2 to withdraw the consent summons filed on 5 June 2023.

10.  A supporting Affirmation has been filed by P’s solicitors in support of the Summons.  Dr Fung’s letter dated 31 May 2023 was exhibited in the Affirmation.  The content of the Affirmation repeats the matters in Counsel’s Letter (which has also been exhibited).  P’s solicitors also affirmed that on 1 June 2023 he talked to P by phone and her voice sounded weak.  She was not able to give instructions in relation to the trial except to seek an adjournment.

11.  On 7 June 2023, P’s Counsel lodged Skeleton Submissions and List of Authorities in support of the adjournment.

12.  At today’s hearing, Mr Chong for P and Mr Chan Chung for D1 and D2 appear before me.

13.  At the beginning of today’s hearing, I ascertained the position of D1 and D2 from Mr Chan. He does not object to the adjournment and directions sought by P.

14.  I now set out in gist the nature of this action, the issues arising in it and the anticipated evidence of the witnesses necessary to consider this application.

The Action

15.  This action concerns a dispute as to the beneficial ownership of the property situated at Flat D on 2^nd Floor of Block 4 (Fu Sun Building), No.36 Tit Shu Street, Fu Tor Loy Sun Chuen Stage 2, Kowloon (“the Property”). 

16.  The Property was purchased on 16 May 1997 and assigned to P, D1 and D2 as joint tenants.

17.  P is the elder sister of D1.

18.  D1 and D2 are now married.

Gist of P’s Case

19.  It is P’s case that there was an oral agreement (“Initial Oral Agreement”)  that:

(1)  P, D1 and D2 would jointly make financial contributions towards the initial 30% of the purchase price of the Property and the fees and expenses to be incurred in connection with the purchase (“Miscellaneous Expenses”)  in equal shares;

(2)  The remaining 70% of the purchase price would be funded by way of a mortgage secured on the Property to be advanced by a bank;

(3)  After the Property is purchased, the parties would be registered as legal joint tenants in recognition of their respective financial contributions;

(4)  The Property was purchased for investment purpose and unless it was sold in the short term, it would be rented out after the acquisition and the rental income would be used to settle the monthly mortgage repayment; and

(5)  The parties would be entitled to share in the Property proportionate to their respective financial contribution as and when the Property is sold.

20.  P’s case is that the following are implied terms of the Initial Oral Agreement:

(1)  Each of the parties would be entitled to share in the net rental income to be collected in respect of the Property proportionate to their respective financial contribution after the monthly repayment of the mortgage; and

(2)  Each of the parties would be responsible to bear all the necessary expenditure to be incurred in respect of the Property in such share proportionate to their respective financial contribution.

21.  It is P’s case that shortly before signing the formal sale and purchase agreement, when P asked D1 for her monetary share of the initial and further deposit pursuant to the Initial Oral Agreement, D1 told P that she had no money to invest in the Property but persuaded P to let her name remain as a registered owner allegedly for the purpose of monitoring D2’s dealings in the Property and to prevent P’s interest from surviving to D2 alone.

22.  In reliance upon what D1 said and in view of the then close relationship with her as a sister, it is P’s case that P expressly agreed to let D1’s name stay as a registered owner but:

(1)  D1 would not hold any beneficial interest in the Property as she had not contributed to any part of the purchase price;

(2)  D1’s role as registered owner of the Property was purely to look after P’s interest in the Property;

(3)  As P would need to travel frequently, D1 would assist in handling the logistics of renting out the Property and other chores such as payment of management fees and collection of rent; and

(4)  In return, P would at her discretion pay D1 a bonus if and when the Property is sold at a profit.

(“the Further Agreement”)

23.  It is P’s case that despite the Initial Oral Agreement, the parties had by the time of the acquisition of the Property reached a common intention that D1’s interest in the Property shall be limited to that of a trustee holding the same for the sole benefit of P and would hold no beneficial interest of her own (“the Common Intention”).

24.  In reliance upon the Common Intention, D2 contributed HK$120,000 towards the initial purchase price and approximately one-third of the Miscellaneous Expenses and P made up the shortfall.   The remaining 70% of the purchase price (HK$805,000)  was funded by a mortgage.  As for the mortgage repayment, P’s case is that she contributed a sum of HK$200,000.

25.  According to P, relationship between P and D1 (and D2)  later deteriorated.  P alleges that despite P’s demands in or around January 2006 for the sale of the Property and by letter from P’s solicitors in December 2008 to render a full account of all incomes and expenses in relation to the Property, D1 and D2 failed or refused to agree to the sale and render to P an account.

26.  In the premises, P seeks inter alia:

(1)  A declaration that the Property has since 16 May 1997 been held by P, D1 and D2 on trust for the benefit of P (as to two-third)  and D2 (as to one-third);

(2)  An order that the Property be sold pursuant to section 6 of the Partition Ordinance, Cap. 352; and

(3)  An order that D1 and D2 do render a true and complete account in respect of all incomes generated and expenses incurred in respect of the Property from 16 May 1997 and pay such sums due to P upon the taking of such account.

Gist of D1 and D2’s case

27.  D1 and D2 deny the Initial Oral Agreement and the pleaded implied terms as well as the Further Agreement.  They deny the Common Intention as alleged by P. 

28.  D1 and D2’s case is that in or about late December 1996, P approached them to invite them to make a joint investment together in the property market.  It was orally agreed that they would jointly purchase a property which would been held by them as joint tenants and be entitled to income and liable to expenses equally despite all along D1 had indicated that she did not have sufficient fund.  This is the “Collective and Shared Intention” pleaded by D1 and D2. 

29.  It is D1 and D2’s case that P agreed to lend D1 her share towards the initial purchase price (being HK$115,000)  and her share of the Miscellaneous Expenses to be repaid either: (i)  by installments if the Property was not resold in the short-run or (ii)  in one go from D1’s share of the profit from the resale. (“the Agreement”)

30.  Acting in reliance of the Agreement, D1 agreed to proceed with the purchase of the Property together with P and D2.

31.  D1 and D2’s case is that after the acquisition of the Property, the parties further agreed that the Property would be let out and since D1 had not contributed to the initial purchase price and Miscellaneous Expenses, P would not be responsible for her share of the mortgage repayment and other expenses in respect of the Property.  Any surplus from the rental income after deducting the mortgage repayment and maintenance expenses would be properly kept and recorded and after the sale of the Property would be distributed to the parties as profit subject to the Agreement (“the Arrangement”).

32.  D1 and D2’s case is that they had made all repayments of the mortgage partly from their own money and partly from the rental income. The deficit from the rental income which they paid was HK$264,770.85 (“the Alleged Deficit”). Save for the sum of HK$66,667.00, it is D1 and D2’s case that P made no contribution towards the repayment of the mortgage. They say that true and complete account in respect of all incomes and expenses in relation to the Property has been provided.

33.  D1 and D2 aver that if the court is minded to make an order for sale of the Property, any distribution of the proceeds of the sale should be on the basis that the parties are registered and beneficial owners of the Property in equal one-third share and subject to the reimbursement by P to D1 and D2 of one-third of the Alleged Deficit.

The Issues arising

34.  The following issues are set out in the List of Agreed Issues:

(1)  Who are the beneficial owners of the Property by considering:

(i)  Whether there was any Initial Oral Agreement as pleaded by P;

(ii)  Whether there was any implied term(s)  under the Initial Oral Agreement as pleaded by P;

(iii)  Whether there was any Further Agreement as pleaded by P;

(iv)  Whether there was any Common Intention as pleaded by P;

(v)  Whether there was any Collective and Shared Intention as pleaded by D1 and D2;

(vi)  Whether there was any Agreement as pleaded by D1 and D2;

(vii)  Whether there was any Arrangement as pleaded by D1 and D2;

(viii)  The payment and method of payment of the mortgage installments and expenses in relation to the Property throughout the years;

(ix)  How the HK$200,000 repayment under the mortgage be attributed amongst the parties, and whether there was any repayment agreement as pleaded by D1 and D2;

(x)  What were the nature and source of the two cheques in the sum of HK$128,333;

(xi)  Whether there was any deficit in the amount of HK$264,770.85 as pleaded by D1 and D2 and whether D1 and D2 have jointly made up the deficit;

(xii)  Whether D1 and/or D2 have informed P of the tenants’ identities or the applicable rent before the relevant tenancy agreements were entered into;

(xiii)  Whether D1 and/or D2 have paid P any part of her share of the rent collected from tenants, after deduction of repayments of the mortgage and other expenses incurred;

(2)  Whether D1 and/or D2 have failed and/or refused to agree to P’s proposal for the sale of the Property;

(3)  Whether D1 and/or D2 have failed to render to P a true and complete account of all incomes generated and expenses incurred in respect of the Property;

(4)  If the court rules in favour of P:

(i)  What relief shall be granted;

(ii)  Whether the order for sale under the Partition Ordinance shall be granted.

35.  As can be seen from the Agreed List of Issues, one of the main issue to be determined at trial is the parties’ beneficial interest in the Property. 

The anticipated evidence of P

36.  In P’s Opening Submissions, P accepts that she has the burden to show that the beneficial ownership is different from the legal ownership.  P relies on a common intention constructive trust. 

37.  It would appear that P relies on the Initial Oral Agreement and the Further Agreement to support the Common Intention as pleaded.  On the other hand, D1 and D2 rely on the Collective and Shared Intention, based on the Agreement and Arrangement. 

38.  P has filed 2 witness statements made by herself on 7 January 2020 and 25 January 2021. There are a further 2 witness statements made by her staff and her friend respectively. However, their evidence is limited to their accompanying P to inspect the Property and making enquiries with the tenants then living there on two separate occasions in 2014 and 2016. Plainly only P can give evidence on what was agreed and intended by the parties at the time of the purchase of the Property based on the conversations they had at the time.

39.  I note that by the Order of Judge MK Liu dated 12 April 2023, the witness statements exchanged by the parties were ordered to stand as evidence in chief provided the maker thereof attends the trial, confirms the truth of the witness statement under oath and be subject to cross-examination, failing which the evidence of the maker’s witness statement shall not be admitted unless with the leave of the court.

Applicable principles

40.  I now turn to the applicable principles.

41.  O.25 r.3 of RDC provides: -

“3. Variation of case management timetable (O. 25, r. 3)

(1)  The Court may, either of its own motion or on the application of a party, give further directions relating to the management of the case or vary any timetable fixed by it under rule 2.

(2)  A party may apply to the Court if he wishes to vary a milestone date.

(3)  The Court shall not grant an application under paragraph (2)  unless there are exceptional circumstances justifying the variation.

…

(8)  In this rule—

milestone date (進度指標日期)  means—

(a)  a date which the Court has fixed for—

(i)  a case management conference;

(ii)  a pre-trial review; or

(iii)  the trial; or

(b)  a period fixed by the Court in which a trial is to take place; …”

42.  Practice Direction 5.2, §42 also emphasizes that milestone dates will be immovable save in the most exceptional circumstances.

43.  Mr Chong has referred in his Skeleton Submissions to Law Yin Pok Bosco v Chan Yee Shing (unreported, HCMP 2256/2012, 2 November 2012)  §§9 and 11, per Fok JA (as he then was):

“9. In the ordinary course of events, milestone dates such as the dates fixed for the trial of an action must, on occasion, yield to the vicissitudes of life. The illness of a party or a necessary and important witness may, depending on the circumstances of the case, justify vacating and re-fixing the trial dates. This is simply a manifestation of the principle recognised in Dick v Piller [1943] 1 KB 497, the headnote of which reads:

‘When a witness in, or a fortiori a party to, an action in a county court is alleged to be prevented by illness from attending the court for a hearing of the case and the judge is satisfied of the fact of his illness and of the materiality and importance of his evidence and that the granting of an adjournment will not cause an injustice to the other party which cannot be reduced by costs, it is the duty of the judge to grant an adjournment, it may be on terms, and failure on his part to do so constitutes a miscarriage of justice which necessarily involves an error of law on which an appeal may be founded.’

…

11.  However, in order for an adjournment to be granted on this basis, the court is entitled to be satisfied that the inability of the litigant to be present is genuine and the onus is on the applicant for an adjournment to prove the need for such an adjournment: Teinaz v Wandsworth London Borough Council at §21.”

44.  I do bear in mind what has been stated by the Court of Appeal in Law Yin Pok Bosco.  

45.  I also bear in mind the approach of Godfrey Lam J in Arko Ship Leasing Ltd v Winsmart International Shipping Ltd [2013] 2 HKLRD 121 (a case which was not cited to me by Mr Chong). 

46.  In that case, the plaintiff applied to have the trial refixed on the ground that four out of the five witnesses they wished to call will not be available.  The learned judge at §14 held that a number of matters need to be considered in approaching an application to vary a milestone date:

(1)  What is the nature of the proceedings? What is at stake to the parties, in particular to the plaintiffs who seek the adjournment?

(2)  Would the relevant witnesses definitely not be available to give evidence in any manner – for example, if a witness is unable to come to Hong Kong, is it possible nevertheless to receive his evidence via videolink?

(3)  What is the nature of the difficulty preventing the witnesses from attending, and is the applicant responsible for creating that difficulty and if so to what extent?

(4)  What is the nature of the evidence each relevant witness is intended to be called to give? Is he the only possible source of such evidence?

(5)  Has the party seeking the adjournment made efforts to locate other persons who may be able to stand in to give similar evidence?

(6)  Will the adjournment be likely to address the problem faced by the applicant?

(7)  What is the risk of prejudice or other disadvantages to other parties if the adjournment is granted?

(8)  The application must also be viewed in terms of the wider implications on the administration of justice.  In particular, the public interest in the efficient dispatch of the Court’s business, and the effect on the interests of future litigants of vacating a hearing close to the date and possibly leaving the Court empty.  In this context, the court should take into account the timing of the application for adjournment.

47.  In Arko Ship Leasing Ltd, after balancing the above factors, the learned judge granted the adjournment “albeit with reluctance”. He was satisfied that exceptional circumstances existed.  The learned judge said ultimately a balancing exercise was involved, “a choice between unattractive options and a balance between the underlying objective”.  See §§31-32.

48.  With all these considerations in mind, I turn to the present application.

Analysis

49.  Firstly, as mentioned above, the nature of these proceedings are such that the court will need to make a finding as to what the parties had orally agreed and their common intention based on what was expressed or to be inferred at the time of the purchase of the Property.  Given the parties’ respective cases are so factually different, determination of those issues would turn on the assessment of their credibility and demeanour when giving oral evidence and being cross-examined in court. 

50.  Plainly P’s other witnesses are not able to give the evidence necessary to support her claim as to what was agreed between her and D1 and D2.  Without P’s evidence, she will not be able to establish her claim based on common intention constructive trust so there is everything at stake for P.

51.  Secondly, I have critically examined the medical evidence adduced by P and am satisfied that P is currently hospitalized, requires close monitoring and intravenous antibiotics which cannot be stopped.  I am satisfied that the inability of P to attend the trial is genuine.  Further, given her current medical condition she would not be fit to give evidence or be cross-examined in any manner such as by videolink.

52.  Thirdly, P’s current medical condition appears to have followed from her having haematuria and cystoscopy recently.  The difficulty preventing P from attending, being a physical ailment, is not one which P can be responsible for creating and lies beyond her control.

53.  I made enquiry with Mr Chong at today’s hearing as to what is the most up to date situation of P and when it is likely P would not need to be treated with antibiotics at the hospital and can be discharged.  Although there is no certainty whether P’s medical conditions would further prevent her from appearing at the adjourned trial, if the trial is not adjourned now, it is certain that P will not be able to give evidence to this court.

54.  As for the prejudice and disadvantages to the other parties, as pointed out by the Court of Appeal in Law Yin Pok Bosco at §20, the defendant has an interest and entitlement to the proceedings being brought to a conclusion as soon as reasonably and fairly practicable. The present action was commenced in 2017, concerning the purchase of the Property in 1997 and what was orally agreed prior to the purchase and what was further agreed thereafter. Although I do not know the present age and health of D1 and D2, but there is no doubt that memories will fade and an adjournment may increase the burden of anxiety on them.  But I also bear in mind there is no suggestion that D1 and D2 (who have respectively made 2 witness statements)  may become unwilling or unavailable to give evidence at the adjourned trial.  Nor has Mr Chan Chung, counsel for D1 and D2, submitted that they would be prejudiced by the adjournment.

55.  Finally, in vacating a trial date when this application was made so close to the start of the trial inevitably adversely affects the efficient discharge of the court’s duties with the real possibility of leaving the court empty and unable to provide service to other litigants. 

56.  Like Arko Ship Leasing Ltd,I find myself making a choice between unattractive options and needing to make a balance between the underlying objectives.  To allow the application would result in vacating and refixing dates which means D1 and D2 would have to wait longer for trial and for a final outcome. Yet to refuse the adjournment would deny P the opportunity to testify about a main issue at trial which she alone can give evidence in order to establish her claim. The underlying objectives of our procedural rules are to ensure that a case is dealt with as expeditiously as is reasonably practical and also to ensure the resources of the Court are distributed fairly: see O.1A, r.1(b)  and (f)  RDC.  However, O.1A, r.2(2)  requires the court in giving effect to the underlying objectives to recognize the primary aim in exercising the powers of the Court is to secure the just resolution of disputes in accordance with the substantive rights of the parties. On balance, I am of the view that exceptional circumstances exist to grant the adjournment.

Disposition

57.  I therefore will order that the trial fixed to commence on 12 June 2023 (with 6 days reserved)  be vacated and adjourned. 

58.  Both counsel is confident that if the trial is refixed now in consultation with counsel’s diary, P would be discharged from hospital and fit to attend the adjourned trial.

59.  The parties agreed that costs should be reserved.  I therefore direct that the costs of and occasioned by the adjournment (including today’s hearing)  be reserved.

60.  I order that D1 and D2 do lodge and serve their Opening Submissions and List of Authorities 7 days before the trial (which will be refixed in consultation with counsel’s diary).

61.  I grant leave for P1 and D1 and D2 to withdraw the Consent Summons. I make no order as to the costs of the Consent Summons.