Kwok Chi Yin v. Kwok Yau Ki Jesse and Another

HCMP 3614/2016

[2019] HKCFI 428

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 3614 OF 2016

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D E C I S I O N
(On Cost)

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Introduction

1.The 2^nd defendant Madam Kwong is the mother of both the plaintiff (“P”) and the 1^st defendant (“D1”). Madam Kwong suffers from dementia.  She has 6 children, P being the 3^rd of the children and the oldest son of the family and D1 being the youngest son and child of the family.  Madam Kwong has on 29 June 2016 granted an Enduring Power of Attorney to D1 as her attorney (“EPA”). 

2.P issued the originating summons herein on 30 December 2016 seeking, amongst other things, a declaration that the EPA be declared null and void or alternatively, that D1 be removed as the attorney, and for D1 to produce records and/or accounts of all sums and properties belonging to Madam Kwong (“OS”).  Although it was P who issued the OS, his other siblings (save for D1) have all filed affirmations in support of P’s case.

3.P had produced a medical certificate dated 8 August 2016 issued by a psychiatrist Dr Chan Sai Yin indicating the Madam Kwong was by then mentally unfit to handle her financial affairs.  It was P’s case that at the date of the EPA, Madam Kwong was either already suffering from mental incapacity or she was under the undue influence of D1 and the execution of the EPA was not of her own free will.  Alternatively, D1 should be removed as her attorney since D1 was, amongst other things, in breach of fiduciary duties in dealing with the estate of Madam Kwong.

4.The OS was fixed before Chow J for directions on 22 November 2017 and Madam Kwong was absent.  I understand that at the hearing, the parties indicated that they would agree to deal with the matter by way of P making an application under Part II of the Mental Health Ordinance (“Part II Application”).  The OS was later adjourned sine die with liberty to restore, pending the obtaining of a second medical certificate on Madam Kwong for the Part II Application.

5.However, due to a lack of communications between P and D1, they were not able to agree to the matter of preparation of medical reports, and subsequently, the OS was restored to a hearing on 10 July 2018 before this Court.

6.The day before the hearing, namely on 9 July 2018, P issued a summons to seek, amongst other things, an injunction restraining D1 in removing from Hong Kong or deal with in any way of his movable assets within Hong Kong, and in particular restraining D1 in dealing with a property held by Madam Kwong (“Property”) and bank accounts held by Madam Kwong (“Injunction Summons”).

7.Madam Kwong turned up at the hearing on 10 July 2018.  When asked by this Court about the EPA and the Property, she did not seem to be able to answer, and instead indicated that she wished to leave the court room.  In the end, the parties were advised to try to resolve the matter in relation to the Part II Application.  The OS and the Injunction Summons were then both adjourned to 23 July 2018 at 9:30 am for directions.  At the subsequent hearing, P’s Counsel, Ms Candy Chan proposed terms to be agreed as per a draft consent summons in respect of both the OS and the Injunction Summons.  D1 indicated that she would like to have more time to consider, and the OS and the Injunction Summons were then again adjourned to 27 July 2018.

8.On 27 July 2018, this Court gave orders in respect of both the OS and the Injunction Summons as per drafts submitted by Ps, subject to various amendments.  Pursuant to the Court’s order, the present proceedings were stayed pending P’s intended Part II Application.  The interlocutory injunction sought by P was granted in terms of the draft order.  P sought costs of the both the OS and also the Injunction Summons.  This Court directed the parties to exchange written submissions on the matter of costs, to be dealt with on paper.

9.P lodged his submissions on costs on 28 November 2018 and only seeks costs against D1.  Notwithstanding the direction given by this Court on 27 July 2018 and the expiration of the deadline, there were no submissions lodged on behalf of D1.

Discussion

10.Costs are a matter in the exercise of the Court’s discretion.

11.P’s evidence indicated that Madam Kwong’s health appeared to start to be affected by the onset of dementia symptoms since around mid 2014, and that in the 2^nd half of 2015, Madam Kwong’s memory deteriorated and she had difficulty in managing her bank accounts which resulted to one of the P’s daughters, Sau Fun, being added as an authorised signatory to Madam Kwong’s BOC Savings Account and Stock Account and that the operating mode of the accounts were changed to by way of Madam Kwong’s name chop instead of her signature. 

12.Thereafter, unbeknown to the other siblings, a number of events which then took place in 2016.  Suffice to say, unbeknown to the other siblings, an application was submitted by D1 to the Hong Kong Housing Authority to propose an assignment by Madam Kwong of her interest in the Property to D1, which was later approved by the Housing Authority around 4 May 2016, and the assignment was duly executed on 11 July 2016.  On 29 June 2016 prior to the execution of the assignment, D1 arranged for the EPA to be executed by Madam Kwong and registered in the High Court.

13.Funds were then transferred from Madam Kwong’s BOC accounts into D1’s own personal BOC account and further D1 sold all the stocks in Madam Kwong’s BOC stock account.  There were later further transfer of funds by D1.

14.In short, the Property was transferred into D1’s name and a total of about HK$1m was transferred into D1’s account/s from Madam Kwong by D1 using the EPA.

15.D1 had filed an affirmation to explain that the transfer of the Property was the wish of Madam Kwong.  Further, Madam Kwong executed the EPA because she had a fall on 2 June 2016, and might have to undergo an operation, and that she was hoping that in the event that anything were to go wrong with the operation, D1 could have the power to deal with her bank accounts/assets. 

16.As submitted by Ms Chan, even assuming the EPA was valid, the undisputed transfers by D1 moving funds from Madam Kwong’s accounts to his own accounts were prima facie evidence of breaches of fiduciary duties.

17.Having considered the affidavit evidence presently available, I am satisfied that in the circumstances of this case, D1 should produce records and accounts in relation to the various transfers he had made in relation to Madam Kwong’s estate, and I am satisfied that as that P is an interested party under section 11(1) of the Enduring Powers of Attorney Ordinance, Cap 501, he should be entitled to an order for D1 to produce records and accounts of Madam Kwong’s estate.

18.As for the Injunction Summons, I am also satisfied on the evidence, that there were risks of dissipation in light of D1’s uncooperative attitude and those transfers already made by him.  This matter could have been dealt with by way of an undertaking from D1, and in light of D1’s earlier consent for P to proceed with the intended Part II Application, and that the OS could have been stayed by consent, instead of there being two further hearings.

19.As submitted by Ms Chan, a substantial portion of the costs incurred in these proceedings were caused by the lack of response and lack of cooperation from D1.  I am of the view that D1 has acted unreasonably.

20.Having considered all the circumstances, I am of the view that D1 should pay P’s costs of the OS incurred so far, and also the costs of the Injunction Summons, such costs to be summarily assessed.  P to submit his statement of costs within 14 days, and D1 to submit his list of objections within 14 days thereafter.  There be no order as to costs as between P and D2, and between D1 and D2.

Ms Candy SH Chan, instructed by M M Wong & Co, for the plaintiff

Mr Wong Ting Chun of C W Chan & Co, for the 1^st defendant

The 2^nd defendant appeared in person on 10 July 2018

The 2^nd defendant was not represented and did not appear on 23 and 27 July 2018