Orient First Capital Ltd v. Yau Fook Sum and Another

HCMP 1337/2019

[2021] HKCFI 1074

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 1337 OF 2019

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BETWEEN

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Before:  Mr Recorder Stewart Wong SC in Chambers

Date of Hearing:  14 April 2021

Date of Decision:  14 April 2021

Date of Reasons for Decision:  20 April 2021

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REASONS FOR DECISION

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A.  INTRODUCTION

1.On 14 April 2021, after hearing counsel for the plaintiff at a telephone hearing and the 2^nd defendant being absent, I made an order appointing the 2^nd defendant, the executor of the estate of the 1^st defendant (“the Estate”), to represent the Estate, for the purpose of carrying on these proceedings, and that these proceedings be carried on between the plaintiff and the 2^nd defendant in his personal capacity and as the executor of the Estate, with costs in the cause.

2.These are my reasons for proceeding with the hearing in the absence of the 2^nd defendant and for making the said orders.

B.  PROCEDURAL HISTORY

3.It is necessary to recount the procedural history of these proceedings.  The following account is taken from documents in the Court file as well as the affirmations of Mr Ko Kok Fai, the sole proprietor of Messrs Ko & Chow (“K&C”), solicitors acting for the plaintiff, and correspondence produced before me.

4.The 1^st defendant was the father of the 2^nd defendant. 

5.By a Mortgage dated 12 October 2016 (“the Mortgage”), made between the 1^st and 2^nd defendants as “the Mortgagor”, the 2^nd defendant and a corporation as “the Borrower”, and the plaintiff as “the Lender”, the property referred to at the title of these proceedings (“the Mortgaged Property”) was mortgaged by the 1^st and the 2^nd defendants to the Lender to secure the due payments of sums which might be or might become payable to the Lender by the Borrower or the Mortgagor.

6.By Originating Summons dated 27 August 2019, the plaintiff seeks the payment by the 1^st and the 2^nd defendants of various sums said to be owing to it, and the delivery up of vacant possession of the Mortgaged Property.[1] 

7.Both defendants acknowledged service of the Originating Summons in September 2019, stating their intention to contest the proceedings.  At that time, they were represented by the same firm of solicitors, Messrs Collin Ng & Co (“CNC”).

8.On 8 January 2020, the 1^st defendant passed away.  Before he passed away, the 1^st defendant resided at the Mortgaged Property with his wife and two sons.  The 2^nd defendant was (and is) residing in Tin Shui Wai in the New Territories.  However, the 1^st and the 2^nd defendants were co-owners of the Mortgaged Property of which the latter became the sole owner by survivorship upon the death of the former.

9.On 18 June 2020, the plaintiff took out a Summons, returnable before DHCJ Maurellet SC on 22 June 2020, seeking an order that the 2^nd defendant be appointed to represent the Estate and for these proceedings to carry on as between the plaintiff and the 2^nd defendant as the person appointed to represent the Estate and in his personal capacity.

10.At the hearing on 22 June 2020, counsel appeared for the plaintiff and the 2^nd defendant but the 1^st defendant (or more correctly the Estate) was not represented.  Counsel for the 2^nd defendant informed the Court that the 2^nd defendant had applied for letters of administration of the Estate but the application was still being processed.  CNC did not have instructions to act for the Estate.  DHCJ Maurellet SC did not make any order regarding representation of the Estate but directed the parties to resolve the issue of representation.  The learned deputy judge also adjourned the hearing of the Amended Originating Summons to a date to be fixed.

11.On 19 August 2020, the 2^nd defendant, who was named as the sole executor in the Will of the 1^st defendant, was granted probate of the Estate.

12.On 20 August 2020, the plaintiff took out another Summons, returnable before Master Chow on 12 October 2020, seeking the same orders as were asked for in the 18 June 2020 Summons.  I shall call this August Summons “the Summons” herein.

13.At the hearing on 12 October 2020, both the plaintiff and the 2^nd defendant were represented by solicitors and the Estate was not represented.  The 2^nd defendant was also present.

14.Before the hearing took place, the 2^nd defendant informed K&C that he had been granted probate and agreed to represent the Estate.  As a result, Master Chow did not make any order regarding representation of the Estate, but ordered the parties to discuss and consider filing a consent summons to deal with the application by the plaintiff.  The Summons was adjourned to be heard by the judge who was going to hear the Amended Originating Summons. 

15.Correspondence between K&C and CNC ensued until 3 November 2020, when CNC informed K&C that they had no further instructions to act for the 2^nd defendant.

16.The adjourned hearing of the Summons and of the Amended Originating Summons took place before Anthony Chan J on 9 November 2020, and his Lordship further adjourned the hearing of both the Summons and the Amended Originating Summons.  At that hearing, the plaintiff was represented by counsel, the 2^nd defendant was absent and not represented, and the Estate was also not represented.

17.The non-appearance of the 2^nd defendant at the hearing on 9 November 2020 was foreshadowed by a letter from him on 5 November 2020, in which he said inter alia:

(1)  He would not attend the hearing on 9 November 2020 because he had a fever, sore throat and coughing.

(2)  He would not act for the Estate because the widow of the 1^st defendant and her sons claimed to have a right to live in the Mortgaged Property during their lives and he had a conflict of interest with the widow and her sons.

18.The reference to the conflict of interest was apparently first raised by Master Chow at the hearing on 12 October 2020.

19.No consent summons regarding the representation of the Estate was signed.

20.On 29 January 2021, K&C wrote to the 2^nd defendant stating that they would attend the office of the Clerk of Court on 5 February 2021 to fix a date for the hearing of the Amended Originating Summons.

21.By letter dated 4 February 2021 to the Clerk of Court, the 2^nd defendant pointed out that the proceedings could not be carried on after the death of the 1^st defendant without a Court order, and the plaintiff could not fix a date to hear the Amended Originating Summons without “settling all house keeping matters”.

22.In the meantime, the Amended Originating Summons was fixed to be heard on 10 am on 14 April 2021.

23.The letter of 4 February 2021 from the 2^nd defendant only came to the attention of Au-Yeung J as the Listing Judge (Civil) on 23 February 2021.  On that date her Ladyship directed K&C to address the issue of the death of the 1^st defendant and the lack of a “carry on” order.

24.After K&C replied on 1 March 2021 setting out the procedural history, Au-Yeung J directed as follows on 3 March 2021:

“The fact that a judge gave leave to set down the amended OS & August Summons for hearing does not mean that the issue on representation has been resolved without a proper party being served, any decision /judgment will be futile. Please have the matter remedied well before the hearing date on 14 April 2021, or else the hearing date will be vacated. Please report to the Listing Judge on or before 24 March 2021”.

25.The Summons was then fixed for 9:30 am on 1 April 2021.

26.On 18 March 2021, the 2^nd defendant wrote to the Registrar of the High Court and said that he could not attend the hearing on 1 April 2021 because he had a medical appointment that day.

27.On 26 March 2021, Au-Yeung J directed that the hearing on 1 April 2021 be vacated and re-fixed for 9:30 am on 14 April 2021.  On the same date, her Ladyship also vacated the hearing of the Amended Originating Summons fixed for 10 am on 14 April 2021 and adjourned the same sine die with liberty to restore.

28.On 12 April 2021, i.e. two days before the hearing fixed for 9:30 am on 14 April 2021 before me to deal with the Summons, the 2^nd defendant sent in a three-page handwritten letter in Chinese.  In it, he said inter alia that he could not attend the hearing because he had low fever, dizziness and coughing for the past two weeks, and he was medically advised to stay at home and self-quarantine.  He also reiterated that he had a conflict of interest with the widow and the two sons left behind by the 1^st defendant, and they had been living at the Mortgaged Property but had not been joined as parties herein.  He also made various complaints on the way the plaintiff had conducted the matter and the failure to join various other parties. He asked that the hearing of 14 April 2021 be vacated.

C.  PROCEEDING WITH THE HEARING

29.This is the third time the 2^nd defendant said he could not attend a hearing on medical grounds.  He was certainly well enough to write a detailed, three-page letter in Chinese to me on 12 April 2021.  The letter was not faxed in but was hand-delivered to the Court, but it is not clear whether it was the 2^nd defendant who delivered the letter in person. 

30.Even though the 2^nd defendant’s claim that he was unwell and could not attend the hearing on 14 April 2021 before me was not supported by any objective evidence whatsoever, to accommodate the 2^nd defendant but also to avoid any further delay in resolving the question of representation of the Estate, on 13 April 2021, I directed that the hearing on 14 April 2021 be conducted by telephone.

31.My Clerk attempted to contact the 2^nd defendant to relay my directions by calling his mobile telephone (the number of which he provided in previous correspondence with the Court) on the whole of 13 April 2021 but the calls were not answered.  My Clerk tried again at about 9 am on 14 April 2021 but he was directed to a recorded message asking him to leave a voicemail immediately.   K&C also sent my directions to the 2^nd defendant by WhatsApp, by which method K&C had successfully served documents on the 2^nd defendant before.

32.The 2^nd defendant did not turn up in Court on 14 April 2021, nor did he call in.

33.In the premises, the first issue I had to decide was whether I should proceed to deal with the Summons in the absence of the 2^nd defendant.  I decided that I should and proceeded to hear counsel for the plaintiff by telephone on 14 April 2021, for the following reasons.

34.The letter dated 12 April 2021 from the 2^nd defendant shows that the 2^nd defendant all along knew about this hearing on 14 April 2021.  Despite what he said in his said letter, I did not make any direction or order vacating the hearing or dispensing with his attendance.

35.The 2^nd defendant had a right to attend the hearing because the matter concerned him directly, but it was up to him whether he wanted to exercise that right. 

36.If the 2^nd defendant did not receive my directions yesterday, which given the relaying thereof by WhatsApp by K&C appears to me to be unlikely, that would mean that he had received nothing from me about the hearing in response to his letter.  He should therefore proceed on the basis that the hearing would go ahead.  If he elected not to be present, then it was he who was waiving his right.  If his medical condition was such that he could not attend in person (on which there is no objective evidence at all), he ought to have taken steps to follow up with my Clerk on 13 or 14 April 2021. He did not. 

37.On the other hand, if he did receive my directions yesterday via WhatsApp then he must also have known that I did not vacate the hearing.  He was given the liberty and right to attend by telephone which he had failed to take advantage of.  So again, he was waiving his own right to attend.

38.In the premises, I did not see any basis not to proceed with the hearing.

39.I must stress that the proper conduct of proceedings in Court cannot be frustrated by the clearly obstructive attitude and behaviour of the 2^nd defendant.

D.    REPRESENTATION OF THE ESTATE 

40.Moving on to the merits of the plaintiff’s application, I allowed the same for the following reasons.

41.In my judgment, the 2^nd defendant is clearly the most appropriate person to be appointed to represent the Estate:

(1)  He is not a stranger to the 1^st defendant as he was his son.

(2)  He is not a stranger to the Estate as he is the executor.

(3)  He is not a stranger to the Mortgaged Property as he was a co-owner thereof with the 1^st defendant and now the sole owner.

(4)  He is not a stranger to the Mortgage or the relevant loans, or the dispute with the plaintiff, as he is a Mortgagor and Borrower.

(5)  He is not a stranger to these proceedings as he is a defendant.

42.The reason given by the 2^nd defendant for not agreeing to be appointed to represent the Estate is not some general unsuitability or reluctance, but solely because of the so-called conflict of interest.  I would therefore consider the application in the specific context of his reason.

43.Counsel for the plaintiff submitted that there was not any conflict of interest.  I agree.

44.Both defendants were represented by the same firm of solicitors and in defence to the Amended Originating Summons, it was the 2^nd defendant who on 9 October 2019 made an affirmation on behalf of both defendants.  The 1^st defendant did not make any affirmation.  This shows, counsel said and I agree, that neither the defendants nor the solicitors considered that there was any conflict of interest between them, and that the 2^nd defendant is clearly familiar with the dispute in the present case and is in a position to defend on behalf of the 1^st defendant (or now his Estate).

45.Regarding the widow and the sons, as I said the question of a possible conflict of interest with them was apparently first raised by Master Chow at the hearing on 12 October 2020 which the 2^nd defendant then relied upon.  However, K&C had taken the following steps, as relayed in the second affirmation of Mr Ko:

“On 12^th November 2020, we wrote to Madam Deng Yuchun (the widow, ‘Madam Deng’), son(s) of the Deceased and the occupiers of the Mortgaged Property by post, by insertion into letter box and by posting up to ask if they would wish to join in this Action on behalf of the Deceased …

At about 10.00 a.m. on Saturday, 21^st November 2020, I received a phone call from Madam Deng enquiring what was the matter in respect of our letters issued to her recently. I explained to her the contents of the letters and she left her phone no. […] for contact. The telephone conversation last for about 15 minutes.

At about 10.20 a.m. on Saturday, 21^st November 2020, I received a phone call from a Mr. Yau Pak Ho (‘YPH’), another son of the Deceased, to further enquire on the issue raised by our letters. The telephone conversation last for about 30 minutes …

In the telephone conversations with Madam Deng and YPH, the followings were revealed:-

(a)  Initially, Madam Deng and YPH said that they would oppose the Plaintiff’s application.

(b)  After further discussion, it was revealed that Madam Deng and her son(s) had quitted the Mortgaged Property by eviction of [the 2^nd defendant] (by solicitors’ letter(s)).

(c)  The Mortgaged Property wad then in the name of [the 2^nd defendant] by virtue of the law of survivorship and in the possession of [the 2^nd defendant].

(d)  However, the Deceased had bequest another land property to Madam Deng. [The 2^nd defendant] had another property in Tin Shui Wai. [The 2^nd defendant] was the executor under the Will of the Deceased and Probate of the estate of the Deceased had been granted to [the 2^nd defendant]. Madam Deng had asked [the 2^nd defendant] to attend her solicitors’ office for execution an assignment to assign the other property to Madam Deng under the Will but [the 2^nd defendant] failed to attend.

(e)  Madam Deng and YPH understood that it might not be worth for them to object the Plaintiff’s application because the Mortgaged Property was then belonged to [the 2^nd defendant] and was barely sufficient to pay off the mortgaged loan and interest etc.

(f)  However, Madam Deng and YPH were afraid that if the Mortgaged Property should be sold by the Plaintiff and the selling price was not sufficient to cover the mortgage loans, interest, costs and disbursements etc., the Plaintiff might claim against the estate of the Deceased, in which event, there would be a risk for them to suffer a loss …

The Mortgaged Property is now in the actual possession of [the 2^nd defendant] after the eviction of Madam Deng and YPH. It appears that the Mortgaged Property is now vacant and [the 2^nd defendant] is living in his other flat in Tin Shui Wai. Therefore, there is no conflict of interest as between [the 2^nd defendant] on one part and Madam Deng and YPH on the other part. I verily believe that Madam Deng and YPH were fully aware of the present proceedings and their right to join in, but chose not to do so”.

46.In the light of the evidence from Mr Ko, which has not been disputed by the 2^nd defendant and which I have no reason not to believe, it is clear to me that there would be no occupier’s claim to the Mortgaged Property by the widow or her sons.  While I note that apart from the 2^nd defendant, the 1^st defendant left behind two sons and it appears that only one of them (YPH) has stated his position, according to a letter dated 17 June 2020 from CNC, the other son was 17 as at that date and so it would be extremely unlikely that he would have or would assert a separate claim of his own to the Mortgaged Property.  The alleged conflict of interest in my judgment does not exist.

47.The 2^nd defendant does not agree to represent the Estate specifically for one particular reason, the alleged conflict of interest, which in fact does not exist.  On the other hand, for reasons stated at [41] above, the 2^nd defendant is clearly the most appropriate person to represent the Estate.  Given that he is involved personally in this case already and that his own interest in defending the plaintiff’s claim is the same as the Estate’s, I see no reason why the 2^nd defendant would not act in the best interest of the Estate as its representative.

48.I therefore made the orders referred to in [1] above.

49.I thank counsel for his assistance.

Mr Leon Ho, instructed by Ko & Chow, for the Plaintiff

The 2^nd Defendant in person, absent