Cwhw v. Kshd and Another

FCMP 82 /2018

[2019] HKFC 70

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MISCELLANEOUS PROCEEDINGS NO. 82 OF 2018

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D E C I S I O N
(Setting Aside Consent Order)

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Background

1.The Applicant and the 2^nd Respondent in these proceedings are parties to a pending divorce proceedings under FCMC No.11358 of 2013 (“divorce suit”).  The Applicant being the Husband (as Respondent in the divorce suit).  The 2^nd Respondent being the Wife (as Petitioner in the divorce suit).  The 1^st Respondent is the father of the 2^nd Respondent who was joined in the divorce suit as the 1^st Intervener.

2.Purely for the sake of convenience, I will refer to the parties in these proceedings by their then status and relationship, namely, the Applicant as “H”; the 1^st Respondent as “W’s Father” and the 2^nd Respondent as “W”.

3.By a Consent Summons in Chinese dated 29 November 2016 prepared by W’s Father’s lawyers in the divorce suit, namely, Messrs. Cheung & Liu, and duly signed by H, W, W’s Father and his lawyers, where both H and W consented to an Order being made to the effect that the Sheung Shui property (which is the property cited in the preamble of these proceedings) was beneficially owned by W’s Father and that W was holding the same on trust for her father.  Further, an Order to be made to the effect that the Sheung Shui property does not fall within the pool of family assets in the divorce suit and thus not to be dealt with in the divorce proceedings.

4.Besides, there are express acknowledgements by both H and W in the preamble to the Consent Summons that they each have separately sought independent legal advice prior to the signing of the Consent Summons.  Both H and W further expressly acknowledged and agreed that all the down payments, legal fees, stamp duties, mortgage payments and all related and incidental expenses for the purchase of the Sheung Shui property was made by W’s Father without any payments made by W.

5.The Consent Summons was endorsed by this Court on 1 December 2016 (“the Consent Order”).

6.With these proceedings, H is now seeking to set aside the Consent Order in the divorce suit under the principles set forth in de Lasala v. de Lasala[1].  The factual background relied upon was that H was under duress and/or undue influence and/or being misrepresented into signing the Consent Summons.  The alleged duress and/or undue influence and/or misrepresentation was exerted upon him by one Miss Liu Sin Kwan, Carina (“Miss Liu”) of Messrs. Cheung & Liu, Solicitors, acting in her capacity as the solicitors for W’s Father in the divorce suit[2].

7.Directions were granted for the parties to file and exchange affirmations in opposition and in reply. An affirmation was also filed by Miss Liu on 24 September 2018.  In these proceedings, H was legally represented and engaged Counsel Mr. Chris Ng throughout, W’s Father obtained legal aid and was represented by Mr. Ip Ka Lun Wesley of Messrs. Simon C.W. Yung & Co., and W was acting in person.

8.Oddly, at the last hearing on 23 October 2018, all parties came to a consensus and confirmed in writing that no witnesses including all the parties in these proceedings would be called upon to testify at today’s trial and subject to cross examination.  Parties also consented to a video clip in the form of a DVD produced as exhibit “KSHD-1” need not be played at this hearing.  Such consensus was then recorded and embodied as acknowledgement in the preamble of the Order duly perfected and sealed.  Thus, the trial today was proceeded upon consideration of the parties’ affirmation evidence and exhibits with oral submissions made by the parties. 

The Originating Summons (“O/S”)

9.The O/S in these proceedings was issued on 4 May 2018 and returnable for the first call over hearing on 27 August 2018 at 9:30 a.m.

10.At the first call over hearing, clarification was sought with H’s Counsel Mr Chris Ng as to whether the reliefs sought also include tortious claims against the alleged tortfeasor Miss Liu for exerting the alleged duress and/or undue influence and/or misrepresentation. It was confirmed that H was not pursuing any reliefs against Miss Liu and merely seeking to set aside the Consent Order under the de Lasala principle, supra.

11.Besides, this Court also raised a question on procedure with H’s Counsel as to the appropriateness of using an O/S.  It appears from H’s supporting Affirmation dated 23 April 2018 that there are likely to be substantial disputes on facts as to what had happened between Miss Liu and H prior to and at the time of signing the Consent Summons.  However, I was assured by H’s Counsel Mr Chris Ng that using an O/S would be the correct and proper mode of commencement of proceedings for the reliefs sought.

H’s (the Applicant’s) case

12.In H’s supporting affirmation dated 23 April 2018, he sets out the particulars of the alleged duress and/or undue influence and/or misrepresentation[3] exerted upon him by Miss Liu, who was the solicitors acting for W’s Father in the divorce suit.  H verily believed that Miss Liu was acting under the instructions and/or suggestions of both W’s Father and W when the alleged misrepresentation was made and that both W’s Father and W knew or ought to have known that he reposed certain degree of trust and confidence in Miss Liu as a competent and prudent professional[4]. He then deposed about his financial stress, again allegedly that both W’s Father and W and also Miss Liu knew or ought to have known before the alleged misrepresentation was made[5]. Finally, he deposed that both W’s Father

and W knew or ought to have known that he signed the Consent Summons because he had relied on the alleged misrepresentation by Miss Liu and also because he was suffering from grave economic difficulty at the material time[6].

The alleged misrepresentation

13.The alleged misrepresentation exerted by Miss Liu includes :-

-   That he would be bound to lose over the Sheung Shui property to form part of the family assets;

-   That W’s Father being legally aided would be protected against costs even if he lost; however, he would be facing a legal bill of approximately HK$1,000,000 of costs to W’s Father if he loses;

-   Even if he wins the case against W’s Father, he would only be able to recover several hundred thousand dollars as the Sheung Shui property was a public housing;

-   If he signs the Consent Summons to give up fighting for the Sheung Shui property, his liability for costs would drop from HK$1,000,000 to just HK$50,000.

W’s Father’s (1^st Respondent’s) contention

14.W’s Father in his affirmation in opposition denied having instructed his lawyer Miss Liu to make any of the alleged misrepresentation[7]. Whilst refuting H’s allegation, W’s Father sets forth both the academic and professional achievements of H in no less than 4 pages in his Affirmation[8] supported by various newspaper clippings and magazine cuttings and a video clip produced as exhibits showing the level of sophistication of H. 

W’s (2^nd Respondent’s) contention

15.W in her affirmation in opposition first adopted what she had said in her 8^th to 10^th affirmations filed in the divorce suit.  She then deposed that Miss Liu contacted her sometime in November 2016 telling her that H no longer maintained his claim over the Sheung Shui property.  If she agrees to the Sheung Shui property was held on trust by her for the benefit of her father, then she need to sign a Consent Summons.

16.She attended Miss Liu’s office on 28 November 2016 for signing the Consent Summons.  Prior to signing, Miss Liu allowed her to read it herself and then explained to her the contents and asked her to seek

independent legal advice before signing it. Having read and understood the contents, she then signed on it.

Miss Liu’s Affirmation dated 21 September 2018

17.W’s Father’s solicitors arranged an affirmation to be filed by Miss Liu to set out what was said by her to H at the material time leading up to the signing of the Consent Summons.  In a gist, Miss Liu denied H’s allegation of all the 4 areas of misrepresentation and also refuted having exerted any duress and/or undue influence at any time upon H for signing the Consent Summons.

The Court’s Views

18.Neither W’s Father nor W took issue on the appropriateness of starting fresh proceedings to set aside the Consent Order granted in the divorce suit.  This is in line with the de Lasala principles and is correct.  However, I have reservation and concern as to the appropriateness of using an O/S with affirmations exchanged for resolving the substantive factual disputes as to whether or not H as a matter of fact (my emphasis) had been so misrepresented as alleged or subjected to duress or undue influence as alleged into signing the Consent Summons.  As a matter of procedure, it is trite that originating summons for commencement of proceedings are normally used when there are unlikely to have any substantial dispute of facts.  A person had or had not been misrepresented, had or had not been subjected to duress or undue influence are all questions of fact.

19.Order 5 rule 4 of the District Court Rules, Cap.336H (“RDC”) provides :-

“4 Proceedings which may be begun by writ or originating

summons (O.5, r.4)

(1) Except in the case of proceedings which under any written law are required or authorized to be begun by a specific form of originating process, proceedings may be begun either by writ or by originating summons as the plaintiff considers appropriate.

(2) Proceedings –

(a) in which the sole or principal question at issue is or is likely to be, one of the construction of any written law or of any instrument made under any written law or of any deed, will, contract or other document, or some other question of law; or

(b) in which there is unlikely to be any substantial dispute of fact (my emphasis),

are appropriate to be begun by originating summons unless the plaintiff intends in those proceedings to apply for judgment under Order 14 or Order 86 or for any other reason considers the proceedings more appropriate to be begun by writ.”

20.Further, Order 28 rule 8 of the RDC provides :-

“8. Continuation of proceedings as if cause or matter begun by

writ (O.28, r.8)

(1) Where, in the case of a cause or matter begun by originating summons, it appears to the Court at any stage of the proceedings that the proceedings should for any reason be continued as if the cause or matter had been begun by writ, it may order the proceedings to continue as if the cause or matter had been so begun and may, in particular, order that any affidavits shall stand as pleadings, with or without liberty to any of the parties to add thereto or to apply for particulars thereof.

(2) ………..

(3) This rule applies notwithstanding that the cause or matter in question could not have been begun by writ.

(4)   Any reference in these Rules to an action begun by writ shall, unless the context otherwise requires, be construed as including a reference to a cause or matter proceedings in which are ordered under this rule to continue as if the cause or matter had been so begun.”

21.At today’s trial, I again confirmed with H’s Counsel Mr Chris Ng who agreed that there are disputes of facts which need to be resolved by this Court at the trial but nonetheless he sought only to read into the affirmations and exhibits filed by H and his submissions today to substantiate H’s case of duress and/or undue influence and/or misrepresentation.  It was also accepted and agreed by H’s Counsel Mr Chris Ng that in the present case, it is H who bears the burden of proving his case of duress and/or undue influence and/or misrepresentation. 

22.Apart from the appropriateness of issuing an O/S may be an issue, whether it should be by way of a writ of summons or, having started with an O/S and then seek directions for continuation of the O/S as if it was by writ under Order 28 rule 8 of the RDC to the extent that the affirmations filed to stand as pleadings, it is far more surprising to see that H’s legal team saw fit not to call upon H to testify at this trial for the Court to assess his credentials.  At the very least, H had not been arranged to come along and adopt his affirmation to be his evidence in chief for this trial.  Likewise, Miss Liu was also not arranged to testify who should have been called as a witness to be cross examined under oath on her affirmation for assessing her credentials.  Without such process of cross examination on the respective affirmation, which is vital in this type of cases and indeed this trial, how

could the Court determine the factual disputes, even on the standard of balance of probabilities, whether H had or had not been misrepresented or subjected to duress and/or undue influence at the material time ? 

23.My observation and concern had already been made known to H’s Counsel Mr Chris Ng at the last hearing on 23 October 2018 and as early

as at the very first call over hearing on 27 August 2018.  I again repeated my observation and concern abundantly clear to H’s Counsel Mr Chris Ng at today’s trial that the Court could not simply “throw the dice” and then make findings of fact on allegations of duress and/or undue influence and/or misrepresentation by simply reading into the respective affirmations and exhibits to see whose drafting or description of the events that had happened are more credible.

24.To my dismay and surprise, I still received no assistance whatsoever from H’s Counsel Mr Chris Ng this morning save and except inviting me again to accept what H said in his affirmations are true.  With respect, this is ludicrous.  This is not a proper case for “trial on paper” like those of maintenance pending suit applications.  H is now making serious allegations of “facts” with the intent to overturn a Consent Order.  Credibility being a live issue which could only be explored or tested through cross examination of the deponent rather than just reading into their affirmations and exhibits on paper.  Indeed, I was amazed that such basic and important procedural and evidential rules not being apprehended by H’s entire legal team.  

25.Having said, I wish to add that W’s Father and W on the other hand could not be blamed for entering into the written consensus at the last hearing on 23 October 2018 that neither of them would be testifying at this trial, that is to say, adopting the same position as H.  W’s Father could not be blamed either for not arranging Miss Liu to give evidence whose affirmation was filed by his solicitors.  Reason being that the burden of proving duress and/or undue influence and/or misrepresentation always rests with H throughout, which H’s Counsel Mr Chris Ng rightly conceded.  There is no obligation whatsoever on W’s Father or W to bring in evidence, whether by their own testimonies or otherwise, to support H’s case.  W’s Father and W are perfectly entitled to wait and see whether to bring in evidence in rebuttal after (my emphasis) H had discharged his burden of proving the alleged case.  Unless and until this happens, W’s Father and W are perfectly entitled to adopt a somewhat passive role in the litigation process although they may run the risk of any implication or inference being drawn against them by the Court.  Given the fact that H decided not to call any witness (including himself) as per the written consensus on 23 October 2018, it is not surprising for W’s Father and W to do likewise.

Conclusion

26.Since this Court cannot simply accept H’s “words of the mouth” by reading into his affirmations and exhibits to be sufficient to discharge the burden of proving more probable than not that his alleged case to be the truth, namely, that he was subject to duress and/or undue influence and/or misrepresented by Miss Liu into signing the Consent Summons, his

application for setting aside the Consent Order must fail and the Originating Summons must be dismissed.

27.Having arrived at such conclusion, I decided not to venture into those cases and authorities produced by the legal representatives as to the

law on duress and/or undue influence and/or misrepresentation, all of which would only call for consideration when H can successfully prove his case.

28.Likewise, W’s Father’s reference to H’s academic and professional achievements for determining whether H did apprehend the contents of the Consent Summons when he signed on it would only call for

consideration when the alleged case of duress and/or undue influence and/or misrepresentation had been substantiated by H.

Litigation Conduct

29.These proceedings were commenced on 4 May 2018, which is approximately 17 months after the Consent Order was granted.  The divorce suit between H and W is still on going at the stage of preliminary issue over ownership of another property which undisputedly is the matrimonial home. 

30.In an attempt to explain the inactivity period of 17 months, H said he had engaged the law firm Littlewoods to protest the validity of the Consent Order as early as 22 December 2016 and requested to have it set aside.  However, H provided no legitimate reasons as to why he did not take out the present proceedings for setting aside the Consent Order once his

request for setting aside the Consent Order was turned down on 30 December 2016.  The only reason given was that he had been legally advised that such application would be costly and he was in financial difficulties at that time.  If that is really the reason, why did he not apply for legal aid or simply handle the application by himself but chose to wait for another 16 months until 4 May 2018 and then suddenly seek for setting aside the Consent Order. 

31.More importantly, according to the Court records, these proceedings started on 4 May 2018 which is well after the trial of the preliminary issue over the matrimonial home in the divorce suit had started in November 2017.  However, on 7 November 2017, H instructed the present law firm Messrs. S.H. Chan & Co. to represent him in the divorce suit and also engaged the same Counsel Mr Chris Ng to defend vigorously the preliminary issue trial over the matrimonial home.  Had H’s case that the Consent Order ought to be set aside due to duress and/or undue influence and/or misrepresentation been a genuine and legitimate one, it is difficult to understand why it takes another 6 months (counting from 7 November 2017 which is the date of the Notice to Act filed in the divorce suit to 4 May 2018 which is the date of the Originating Summons in these proceedings) for H’s same legal team to suddenly realise the need to file the present application for setting aside the Consent Order and not at any time earlier soon after they filed the Notice to Act for H on 7 November 2017 in the divorce suit ?  I believe by the time around 7 November 2017, H’s alleged financial difficulties were no longer an issue to him since he was financially capable to obtain private legal representation including Counsel in the divorce suit. 

32.In my view, the motive and intent of H to start these proceedings are ill-founded and unscrupulous, it is much worse than just creating chaos as W’s Father’s solicitors had been so humble to submit in his written Skeleton Submissions. 

33.Had H been successful in the present application for setting aside the Consent Order (which apparently he had not), he would then be able to secure a further and separate trial on preliminary issue of ownership, this time would be the Sheung Shui property, which would then have the devastating effect of further prolonging the divorce suit and also have his chance of reducing W’s entitlement on ancillary reliefs.

34.Taking into account that H had not offered himself to give oral testimonies and subject to cross examination in this trial, which is odd and unusual in particular when he has been legally advised, coupled with the reasons and my analysis above on the overall position of the divorce suit, I find H’s litigation conduct disgraceful and contumelious which warrant the attention of the Court.      

Costs

35.I was invited by W’s Father’s lawyers to award costs on an indemnity basis if this Court dismisses H’s application.  W was acting in person and had not made any submission on costs.

36.In the unreported case of LYE v. CWW and HWL (FCMC No.14787 of 2002) (Date of Ruling : 6 May 2005) where Her Honour Judge

B Chu (as she then was) sets out the legal principles on awarding indemnity costs which I find very useful and now recite as follows :-

“LEGAL PRINCIPLES

3. According to Rule 3 of the Matrimonial Causes Rules, the Rules of the High Court (RHC) shall apply with the necessary modifications to the commencement of matrimonial proceedings in, and to the practice and procedure in matrimonial proceedings pending in the Court of First Instance or in the District Court.

4. Rule 91A of the Matrimonial Causes Rules provides that where the costs of an incidental to any matrimonial proceedings are directed to be taxed, R.H.C. Order 62 shall have effect in relation to the costs of proceedings in the Court of First Instance, and R.D.C. Order 62 shall have effect in relation to the costs of proceedings in the District Court.

5. Order 62 Rule 28(3) in both R.D.C. and in R.H.C. provides that the Court in awarding costs payable to one party by another may in any case in which it thinks fit to do so order or direct that the costs shall be taxed on the common fund basis or on the indemnity basis.

6. Any order for costs is in the discretion of the Court. (see Headnote of Re Engindata Ltd (No. 2) 1993 1 All ER 232).

7. Section 53 of District Court Ordinance Cap. 336 (equivalent to Section 52A of High Court Ordinance Cap. 4) provides that the Court shall have full power to determine by

whom and to what extent the costs are to be paid. See also Hong Kong Civil Procedure, 62/2/5:-

“The Court of Appeal in Choy Yee Chun (The Representative of the state of Chan Pui Yiu) v. Bond Star Development Ltd [1997] H.K.L.R.D. 1327, CA reviewed the cases and summarised the law as follows. A taxation of the successful party’s costs on an indemnity basis could properly be ordered where the proceedings were scandalous or vexatious, or had been initiated or prosecuted maliciously, or for an ulterior motive, or in an oppressive manner. Any proceedings instituted or prosecuted in such circumstances as to constitute an affront to the court could properly be the subject of a direction for the taxation of the successful party’s cost on the indemnity basis. However, the circumstancesinwhich an indemnity award might properly be made were not restricted to circumstances beyond the requirement that taxation on an indemnity basis must be “appropriate”. The principle for the award of an order of costs on an indemnity basis applied equally to those who not only instituted proceedings but who defended them. If a plaintiff had been forced to institute proceedings by the defendant whose conduct had been not only hostile in the normal litigious sense, but oppressive and with base ulterior motive, and if the pursuit of a defence constituted conduct which was part of an oppressive game plan, then invocation of the power to award costs on an indemnity basis might well be justified”.

37.Given the conclusion on litigation conduct which I have reached as set out in paragraphs 29 to 34 above, I find this is a proper case for granting indemnity costs against H.

38.And I will so order.

Orders

39.I now make the following Orders :-

(a)  The Originating Summons dated 4 May 2018 be dismissed;

(b)The Applicant (H) do pay to 1^st Respondent’s (W’s Father’s) costs, including all costs reserved, on an indemnity basis to be taxed if not agreed;

(c)  The Applicant (H) do pay to 2^nd Respondent’s (W’s) costs, including all costs reserved, on an indemnity basis, to be taxed if not agreed; and

(d)1^st Respondent’s (W’s Father’s) own costs be taxed in accordance with Legal Aid Regulations.

40.This is a Costs Order Nisi which would become absolute if no application to vary the same is made within 14 days from the date of this Decision.

Mr Chris Ng instructed by Messrs. S.H. Chan & Co., Solicitors for the Applicant

Mr Ip Ka Lun Wesley of Messrs. Simon C.W. Yung & Co, Solicitors for the 1^st Respondent acting on the instructions of the Director of Legal Aid

The 2^nd Respondent acting in person