Ip Kin Wa v. Ip, J. D. A. and Willis, A. P. t/a Ip and Willis

HCA003683/1996

1996, No.A3683

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

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Coram : Hon Gall, J. in Chambers

Date of Hearing : 2 October 1996

Date of Handing Down Judgment : 30 October 1996

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J U D G M E N T

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1. This is an appeal against a decision by Master Cannon made on the 16th September 1996 ordering that :

(1) This action be dismissed or struck out on the ground that any action for each of the reliefs claimed herein is statute-barred under s.4(1) and s.4(2)of the Limitation Ordinance, Cap.437; and

(2) The costs of the defendants' application be taxed and paid by the plaintiff.

2. On this appeal the appellant, who was the plaintiff before the Master, seeks an order that :

(1) The decision of Master Cannon be set aside;

(2) The summons dated 18th June 1996 be dismissed with costs; and

(3) The cost of the appeal and of the application before Master Cannon be to the plaintiff and the plaintiff's own costs to be taxed in accordance with Legal Aid Regulations.

3. The facts of the matter are simple. The defendants acted for the plaintiff in a District Court criminal matter in 1989 and on the conclusion of the trial, H.H. Judge Downey, as he then was, made an order for costs in favour of the plaintiff against the Crown. Subsequently, and pursuant to that order, the defendants received an agreed sum of $250,000 on or about 29th November 1989 from the Crown as those costs. In the plaintiff's Statement of Claim, he claims that sum as being held as trustees by the defendants on his behalf and sought judgment for that sum.

4. The defendants argue that the action by the plaintiff is statute-barred. The plaintiff's Statement of Claim was dated and filed on 1st April 1996 which is a period in excess of six years from 29th November 1989 upon which date the sum of $250,000 was paid by the Crown to the defendants.

5. Mr Lam for the plaintiff (the appellant herein) argues that the sum of money received by the defendants was received on trust by them and is accountable to the plaintiff and thereby falls outside the provisions of s.4 of the Limitation Ordinance but within the provisions of s.20 of that Ordinance which reads :

"(1) No period of limitation prescribed by this ordinance shall apply to an action by a beneficiary under a trust being in action-

(a) in respect of any fraud or fraudulent breach of trust to which the trustee was a party or privy; or

(b) to recover from the trustee trust property or the proceeds thereof in the possession of the trustee or previously received by the trustee and converted to his use."

6. Mr Ismail for the defendants argues that it has been established by the case of In re Hindmarsh (1860) 1 Drew & Sm 129 that a solicitor, firm or other agent who receives money merely for transmission to his principal is not a trustee of it. To become such, he must have duties to perform in the disposition of the property such as to invest it or manage it in some way. In the matter before me, he argues that the relationship between the plaintiff and the defendants was one of principal and agent and that the defendants had no role as trustee in respect of the money in dispute and merely received it for transmission to the principal and by agreement with the principal, the money was used to satisfy the outstanding account of the plaintiff with the defendants.

7. In the case of In re Hindmarsh the Vice-Chancellor said :

"It is insisted that a solicitor generally stands, in a certain sense, in a fiduciary character towards his client, so that there is a sort of relation of trustee and cestui que trust between them, and that, as between a trustee and cestui que trust, the statute does not apply; and it is contended that for that reason it does not apply in this case. But I do not think that any such character of trustee and cestui que trust existed in this case as will exclude the application of the statute. It appears that Addinell became the client of Hindmarsh & Evans, and that these monies were received by them in winding up the estate of John Addinell in the ordinary character of agents, and whether they were the solicitors of the Petitioner or not does not affect the question, and does not constitute the relation of trustee and cestui que trust, or place the parties in any other position than that of ordinary principal and agents."

8. I was further referred to the case of Burdick v. Garrick (1870) 5 Ch.App.233 where Lord Hatherley said :

" The case of In re Hindmarsh depends upon the special facts disclosed in the report, and in my opinion the demurrer could not be justified if it had been a simple case of a person holding funds expressly for a particular purpose, and having the duty cast upon him of holding them for the benefit of the person who intrusted him with them. In such a case of agency I apprehend it could not be said that the Statute of Limitations was applicable."

I was further referred by Mr Ismail to the case of Watson v. Woodman (1875) LR 20 Eq.721 where the Vice-Chancellor Sir Charles Hall said at 731 :

" It was attempted to get rid of the effect of the Statute of Limitation by saying that they do not apply to cases like the present, there being, it is said, a fiduciary relation amounting to a trust. Burdick v. Garrick was cited as to this, but that case, I think, depended on the special nature of the deed under which moneys were to be received and invested, and the case of In re Hindmarsh is an authority that the relation of trustee and cestui que trust does not ordinarily exist between solicitor and client, although the solicitor may have received moneys from or for the client."

9. In the case of Soar v. Ashwell 1893 2 QB 390 Lord Esher Master of the Rolls set out at page 394 what appears to me to be the appropriate test as to what is and what is not trust monies. He said:

"The cases seem to me to decide that, where a person has assumed, either with or without consent, to act as a trustee of money or other property, i.e., to act in a fiduciary relation with regard to it, and has been in possession of or has exercised command or control over such money or property, a Court of Equity will impose upon him all the liabilities of an express trustee, and will class him with and will call him an express trustee of an express trust. The principal liability of such a trustee is that he must discharge himself by accounting to his cestui que trusts for all such money or property without regard to lapse of time."

10. Clearly in the matter before me the monies were paid to the defendants by the Crown for payment to the plaintiff. I must decide whether, on the facts, the defendants acted in a fiduciary relationship in respect of those monies or whether they were no more than a conduit passing the monies from one party to another. I find that the defendants did no more than receive the monies on behalf of the plaintiff for transmission to him and that at no time did they deal with those monies on his behalf in a fiduciary relationship.

11. I have had the benefit of argument from both counsel on this point, but having considered all the cases placed before me, I am satisfied that the law as was set out in the case of In re Hindmarsh, notwithstanding that it was passed in the last century, is still the law. And I am satisfied that when monies are paid to a solicitor for onward remission to his client with no duty on the part of the solicitor to handle or invest or in any other way deal with those monies other than to remit it to his principal, that is a situation of principal and agent and not one of trust. I can find no fault with the decision of Master Cannon and the appeal is dismissed.

12. The costs of this appeal are to be to the defendants.

(T.M. Gall)

Judge of the High Court

Representation:

Mr Johnson Lam (M/s Liu, Chan & Lam) for Plaintiff

Mr A. Ismail (M/s John Ip & Co.) for Defendants