Wan Po Jun Mary Pauline v. Au-yeung Yee Wan Representative of the Estate of Au-yeung Wing Hong

HCA 1478/2009

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

HIGH COURT ACTION NO 1478 OF 2009

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D E C I S I O N

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Application

1.This is an application by the defendant to strike out the Defence to Counterclaim of the plaintiff and thereafter obtain judgment accordingly.

Background

2.Mr Au-Yeung Wong Hong (歐陽永康) (the “Deceased”) passed away on 11 April 2008.

3.The Deceased died testate.  By his will, he left his estate to his son and daughter.  He also appointed the daughter Au Yeung Yee Man (歐陽綺雯) (the “Daughter”) the sole executor.

4.The plaintiff, Madam Wan Po Jun Mary Pauline (溫寶珍) (“Madam Wan”) was the co-habitee of the Deceased and had since 2003 been living with the Deceased’s family at Flat A, 42^nd Floor, Tower 1, Harbourfront Landmark, Kowloon (the “Property”). Madam Wan was aggrieved by the said will and it followed by a series of litigations between the parties.

5.The Daughter started a probate action (HCAP 19/2008) against Madam Wan who had entered a caveat preventing the granting of probate. Madam Wan lost in the proceedings, including further appeals[1], because she would not be entitled to a grant irrespective of whether the Deceased died with or without a will.

6.On the other hand, Madam Wan also commenced some other proceedings against the Daughter, including:

(a) By the present action, she claimed, inter alia, her half share in the estate, damages for the Deceased’s breach of promise to marry her, repayment of money and so forth.

(b) In HCA 10/2010, she asked for an injunction so that the Daughter could not issue a notice to quit upon her to vacate the Property.

(c) By HCMP 1919/2010, she pursued her claim for maintenance under Inheritance (Provision for Family and Dependants) Ordinance (Cap. 481). 

7.As a result of the above, Madam Wan incurred liability to pay costs to the Daughter.  There was no payment and it further led to a bankruptcy petition by the Daughter against Madam Wan in HCB 144/2011.  Despite objection and appeals[2], Madam Wan lost and she was made a bankrupt from 11 April 2011.

8.Madam Wan further had disputes with her trustees-in-bankruptcy (the “Trustees”) as to the conduct of the other pending proceedings with the Daughter.  The Trustees neither took up them nor consented to the carrying on by Madam Wan herself.  She sought to remove the Trustees or that conduct of the proceedings was to be released to her.  The application failed before both a Judge and Court of Appeal[3].

9.In the meantime, the Daughter also commenced DCCJ 3315/2011 against Madam Wan to recover, inter alia, possession of the Property.  His Hon Judge Leung stayed the action for the Daughter to put such claim as counterclaim herein.  Madam Wan appealed to Court of Appeal[4] who also dismissed it later.

10.The Daughter thereafter sought leave under HCB 144/2011 for leave to proceed with the present action for, inter alia, possession of the Property.  On 4 April 2014, Master M Wong allowed the application. Madam Wan later appealed but it was dismissed by Deputy High Court Judge Lok (as he then was).

11.With the said leave, the Daughter went ahead to amend her pleadings herein to add the counterclaim to seek recovery of vacant possession of the Property.  Madam Wan defended for it reiterating, inter alia, of her beneficial interest therein.

12.On 8 January 2015, the plaintiff took out the present application. In the supporting affirmation, the Daughter led the court through Madam Wan’s defences to her counterclaim.  She said that, among others, Madam Wan was a bankrupt and as such, all property existing at the time of the order vested in the Official Receiver and later, the Trustees.  Upon enquired, the latter orally responded that they would not participate in the present proceedings and were not in a position to give any comment.

13.Madam Wan prepared and filed her affirmation in opposition on 23 January 2015.  She explained, inter alia, that she was the de-facto wife of the Deceased.  She reiterated her cases against the Daughter and maintained her beneficial interest in the Property.

14.On 26 January 2015, having heard from solicitors for both parties (Madam Wan herself being absent), Master Lai gave usual directions for affidavit evidence.  Parties later by consent agreed to extend the time to comply with the directions.

15.On 8 April 2015, Madam Wan through her solicitors filed her further affirmation in opposition.  She spent some time explaining her relationship with the Deceased and his family.  She argued that she had the right and locus to defend for the counterclaim.

16.No reply affirmation was filed by the Daughter.

17.Parties appeared before me on 19 October 2015 for the substantive argument.  Both parties were represented by Counsel, Mr Paul Leung for the Daughter and Ms Dora Chan, for Madam Wan. Having heard from them, I reserved my decision to be handed down.

Assistance sought

18.On 30 October 2015, I wrote to the parties asking for further assistance.

“After the hearing on 19.10.2015, and before the handing down of the decision, I shall be obliged to receive further assistance from both parties as well as the OR/trustee-in-bankruptcy. For the present purpose, I set out the following facts.

(a) On 20.11.2008, the plaintiff commenced the present proceedings against the defendant.

(b) However, the plaintiff was later made a bankrupt on 11.4.2011 under HCB 144/2011.

(c) As a result of the bankruptcy, all the rights of the plaintiff in the present proceedings vested in the OR/trustee-in-bankruptcy who did not agree to continue the conduct of the present proceedings for her or to release the same to her.

(d) On 4.4.2014, leave was granted under HCB 144/2011 to the defendant to proceed with the present proceedings for, inter alia, recovery of possession of the property known as Flat A on 42^nd floor of Tower 1, Harbourfront Landmark, No.11 Wan Hoi Street, Kowloon, Hong Kong.

(e) On14.5.2014, the defendant amended her defence and added a counterclaim in the present proceedings to seek recovery of possession of the said property from the plaintiff.

(f) Then, on 14.7,2014, the plaintiff prepared her defence to counterclaim.

(g) On 11.4.2015, the bankruptcy of the plaintiff was discharged.

(h) Notwithstanding the discharge, all the rights of the plaintiff in the present proceedings still vested in the OR/trustee-in-bankruptcy.

The question then arises as to whether the plaintiff is in a position to defend the counterclaim or not. By the letter of 30.1.2015, the trustee-in-bankruptcy indicated that:

“…we are of the view that the Bankrupt [the plaintiff] has the right to defense the counterclaim by herself…”

Upon further enquired, the trustee-in-bankruptcy further said on 5.10.2015 that

“…We also confirm that we would allow [emphasis added] the Bankrupt to defend the counterclaim against her …”

Without prejudice to any of the parties’ right and the decision to be handed down, this Court hereby respectfully asks for clarification from the OR/trustee-in-bankruptcy within 14 days as to whether they allow and consent the plaintiff to use the rights still vested in OR/trustees to defend for the counterclaim to seek recovery of possession of the said property in the present proceedings.”

19.The solicitors acting for the Daughter replied on 10 November 2015 enclosing correspondence with the Trustees.

20.On 2 November 2015, the Trustees confirmed that:

“We write to confirm that we allow and consent the Bankrupt to use the rights vested in us, if any, to defend for the counterclaim in HCA 1478 of 2009.”

21.The solicitors for the Daughter further corresponded with the Trustees in the followings.

(a) Solicitors’ letter of 5 November 2015:

“We note that “the rights still vested in OR/trustees to defend for the Counterclaim” as mentioned in the letter from the Court dated 30^th October 2015 could include 2 distinct rights: -

(1) litigation right to defend the Counterclaim (“Litigation Right”); and

(2) property rights (including, in particular, the Bankrupt’s alleged beneficial ownership in the property in question, namely, Flat A on 42^nd Floor of Tower 1, Harbourfront Landmark, No. 11 Wan Hoi Street, Kowloon, Hong Kong) (“Property Rights”).

We take it from your letters dated 30^th January 2015 and 5^th October 2015 as mentioned by the Court in its said letter dated 30^th October 2015 that you have consented to allow the Plaintiff (i.e. the Bankrupt in HCB 144 of 2011) to use the Litigation Right to defend the Counterclaim in HCA 1478 of 2009, as distinct from the Property Rights.

We would be grateful if you could specify whether you also consent to allow the Plaintiff to use the Property Rights to defend the Counterclaim (e.g. by re-assigning/re-vesting the same to the Plaintiff or howsoever).”

(b) Trustees’ reply dated 6 November 2015:

“We are of the view that all property of the Bankrupt (the Plaintiff) acquired before the date of the bankruptcy order shall be vested upon us as trustee-in-bankruptcy including those mentioned in the pleadings of the present proceedings (assuming that they really subsist). However, for various reasons and as we have repeatedly mentioned, we have decided not to take up the main claim of the present proceedings and we do not agree to release or assign the relevant right of action regarding those properties to the Bankrupt.”

(c) Solicitor’s letter of 6 November 2015:

“In the said paragraph of your letter, it is stated, inter alia, that you “do not agree to release or assign the relevant right of action regarding those properties to the Bankrupt” (underline added). By using the words “right of action”, it seems that you might be referring to the Litigation Right as described in our letter to you dated 5^th November 2015.

We would be grateful if you could specify whether you consent to allow the Plaintiff to use the Property Rights to defend the Counterclaim (e.g. by re-assigning/re-vesting the same to the Plaintiff or howsoever).”

(d) Trustee’s further reply on 6 November 2015:

“We regret that we are unable to assist you on the specify question raised by you which is based on your classification of rights into Litigation Right and Property Right.

However, we can confirm that we have not assigned or released any property including those mentioned in the pleadings of the present proceedings (assuming that they really subsist) to the Bankrupt.”

Decision and reasons

22.Here is my decision.

23.I start to deal with the evidence before me, namely, whether this court should take into account of the letter[5] of the Trustees dated 5 October 2015 (which came only as an appendix in the skeleton of Ms Chan) and the subsequent assistance and/or clarification sought by the court as revealed by the subsequent correspondence.

24.Upon thought, with reluctance, I agree to grant leave to consider them within the hearing before me.

(a) They do have a bearing at the argument before me.

(b) This court cannot turn a blind eye to facts underneath parties’ argument.

(c) The problem could have been avoided.

(d) Appropriate costs order could be made by the court, having taken into account of the circumstances of the case and conduct of the parties.

25.With the above clarification from the Trustees, it is clear that the striking out application cannot be maintained.  The Daughter applied to strike out the defence to counterclaim because Madam Wan did not have the locus to defend at all.  All rights (if any) vest with the Trustees.  However, with the written consent from the Trustees to do so, all other factual disputes between the parties will have to be resolved at trial.

26.Further, I am not persuaded by the argument of the “litigation right” and “property right” put by the solicitor acting for the Daughter in their correspondence with the Trustees.  No authority was cited to support the proposition. In any event, it is trite law that it is only in plain and obvious case that the court should exercise its summary power of striking out.  Such legal argument, if any, should not be resolved here.

Costs

27.It remains for me to say something on costs although I do not have the benefit of submissions for the parties.  Under the present circumstances, I see fit to order that costs should be in the cause, including costs reserved and certificate for counsel for hearing on 19 October 2015.

(a) But for the said letter of the Trustees dated 5 October 2015 (and the subsequent correspondence triggered), the Daughter’s application could have succeeded.

(b) The said letter of the Trustees dated 5 October 2015 was not made known to the Daughter’s solicitors and the court until the lodging of counsel’s skeleton shortly before the hearing.

(c) Further time and costs was spent to seek clarification from the Trustees.

Conclusion

28.To conclude, I make the following orders.

(a) The summons is dismissed.

(b) There is an order nisi that costs of the summons are in the cause, including all costs reserved and certificate for counsel for hearing on 19 October 2015, to be taxed if not agreed. The plaintiff’s own costs are taxed in accordance with Legal Aid Regulations.

Ms Dora Chan, instructed by Pauline Wong & Co, for the plaintiff.

Mr Paul Leung, instructed by Liu, Chan & Lam, for the defendant.