Flora Shiu and Others v. Shiu Yuen Chit

HCMP002276/1999

HCMP No. 2276/1999

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MICELLANEOUS PROCEEDINGS NO. 2276 OF 1999

____________

____________

Coram: Deputy Judge Z.E. Li in Chambers

Dates of Hearing: 28, 30 June 1999 and 24 August 1999

Date of Handing Down Reasons for Decision: 1 September 1999

_________________________________

REASONS FOR DECISION

_________________________________

On 10th March 1998, Mr. Shiu Pak Nin ("Mr. Shiu senior"), aged 85, set up two trusts ("the Trusts") whereby he placed almost all his wealth upon trust for himself and all his children. HSBC International Trustee Limited ("HSBC trustees") was appointed trustees to administer the Trusts. There is no dispute that Madam Flora Shiu ("Madam Shiu") arranged for Mr. Shiu senior to see a medical practitioner, one Dr. Fung, and a solicitor, one Miss Lee, of Messrs. Johnson, Stokes and Master before documentation for setting up the Trusts was executed by Mr. Shiu senior. The purpose of consultations with Dr. Fung and Miss Lee, obviously, was to verify that Mr. Shiu senior had the mental capacity and full understanding of the legal implications of setting up the Trusts. According to professional opinion at the time, Mr. Shiu senior was apparently of sound mind.

2.On 6th July 1998, HCA 11070 of 1998 was instituted by Mr. Shiu senior by his next friend against HSBC trustees, Madam Shiu and Pantol Limited seeking to set aside the Trusts and other related instruments executed by Mr. Shiu senior on the ground of want of knowledge, lack of requisite mental capacity and under influence. The next friend Shiu Yuen Chit ("Mr. Shiu" in the context of HCA 11070 of 1998) is a son of Mr. Shiu senior. In issuing proceedings under HCA 11070 of 1998, Mr. Shiu filed medical evidence by one Dr. Wong and a certificate by solicitors to the effect that Mr. Shiu senior has to sue by a next friend due to his mental incapacity. Things became even more complicated when on 19th April 1999 Madam Shiu, Shiu Yuen Lim and Shiu Yuen Chi Larry ("the Applicants") took out an Originating Summons under HCMP 2276 of 1999 dated 19th April 1999 under the Mental Health Ordinance, Cap. 136 against Mr. Shiu ("the Respondent" in the context of HCMP 2276 of 1999) seeking an inquiry as to whether the subject of the proceedings Mr. Shiu senior is of unsound mind and incapable of managing himself and his affairs. Now, the mind boggles as Mr. Shiu, the next friend in HCA 11070 of 1998 who relies on the mental incapacity of Mr. Shiu senior, responded in this HCMP 2276 of 1999 that Mr. Shiu senior is after all not of unsound mind.

3.On 28th May 1999 the parties appeared before me by appointment for 15 minutes on two mirror image summonses for directions: one for this HCMP 2276 of 1999 and the other for HCA No. 11070 of 1998. There were batteries of lawyers led by eminent counsel ready for what might be a tense session. The matters had to be adjourned to another date. On 17th June 1999 the Respondent issued a summons in this HCMP 2276 of 1999 to strike out the Originating Summons on the grounds of lack of jurisdiction and abuse of process. On 28th June 1999, all three summonses were adjourned upon my orders that papers in this HCMP 2276 of 1999 and in HCA 11070 of 1993 were to be served upon the Official Solicitor and the Official Solicitor or his designate was to appear at 11:30 a.m. on 30th June 1999 to show cause why the Official Solicitor should not intervene in the interest of Mr. Shiu senior pursuant to Schedule 1 of the Official Solicitor Ordinance, Cap. 416.

4.On 30th June 1999 I ordered that, in the interim, the Official Solicitor do act as guardian ad litem for Mr. Shiu senior under HCMP 2276 of 1999. The Official Solicitor was directed to interview Mr. Shiu senior to ascertain his wishes in these proceedings within the next four weeks and to report back to the Court. The Official Solicitor was also asked to serve the papers in HCMP 2276 of 1999 and HCA No. 11070 of 1998 already received by the Official Solicitor on Mr. Shiu senior within 14 days and to explain the two sets of proceedings to Mr. Shiu senior in order to obtain his informed views. Meanwhile, I further ordered that all issues under HCA 11070 of 1998 be adjourned to another judge. On 24th July 1999, the Official Solicitor filed his report. At the hearing on 24th August 1999, on the basis of the Official Solicitor's report and with the support of all parties concerned, I directed the Official Solicitor to make arrangements for Mr. Shiu senior to be medically examined at an out-patient facility by the Superintendent of Castle Peak Hospital (or a medical practitioner in the field of psychiatry to be designated by the Superintendent) pursuant to the Mental Health Ordinance, Cap. 136 and Order 40 of the Rules of High Court, Cap. 4.

5.Although I understood from the Official Solicitor that Mr. Shiu senior does not object to medical examination by a court appointed expert, I think it is only fair and proper that I should set out the reasons for the steps I have taken so far.

6.It is immediately apparent from the papers before the court that the children of Mr. Shiu senior are split into at least two groups by blood and on law. There are the so-called reputed children including Madam Shiu. There are also the legitimate children including Mr. Shiu. The reputed children or some of them somehow persuaded Mr. Shiu senior to set up the Trusts. Roughly speaking, all the children, reputed or legitimate, will benefit equally under the Trusts. The legitimate children, however, are not happy with the scheme under the Trusts. Mr. Shiu senior himself has also recently told Mrs. Williams from the Official Solicitor's Office that he never intended to place his entire wealth under the Trusts and he wants his properties and monies back under his control. Hence HCA 11070 of 1998 was instituted.

7.It is important to note from the Official Solicitor's report prepared by Mrs. Williams after two personal interviews with Mr. Shiu senior that Mr. Shiu senior loves all his children, that he does not like to sue his daughter Madam Shiu, and that he does not like to cite the HSBC trustees as defendant in HCA 11070 of 1998. But the elderly gentleman also told Mrs. Williams that he had no recollection of how he executed the documents setting up the Trusts. Pending advice resulting from medical examination to be carried out as ordered, I can only surmise at this stage that the aging process is taking its toll on Mr. Shiu senior whose faculties are not always working fully.

8.As I see it, matters will become very messy. If medical advice says that Mr. Shiu senior is still of sound mind, obviously this HCMP 2276 of 1999 will fold although technically it would not be disposed of by striking out the Originating Summons; but question will then arise as to whether Mr. Shiu would still be able to prosecute the claim as next friend under HCA 11070 of 1998 to set aside the Trusts. On the other hand, if indeed Mr. Shiu senior is mentally incapacitated, the court may well be obliged to appoint a receiver or committee to manage the affairs of Mr. Shiu senior, Mr. Shiu would be justified in assuming the position of next friend when starting HCA 11070 of 1998; but then his suitability to continue to act as next friend may be questioned by the Applicants because the affairs of Mr. Shiu senior, including lis pendens, should be managed by the receiver or committee. In a nutshell, all sorts of complications may ensue depending on how the fortunes of the cases before the court flip - flop. Bearing in mind these problems, I decided on 30th June 1999 to hive off all issues in HCA 11070 of 1998 to another judge. I hope all parties will accept that should I be obliged to place Mr. Shiu senior under the court's protection and thus taking a judicial interest in the elderly gentleman's affairs, the other judge will be able to decide HCA 11070 of 1998 with complete objectivity although that action may have to proceed on instructions or directions from me exercising the jurisdiction of a court of protection.

9.Quite frankly, this is one of those rare cases in which a judge may with some justification oice aloud his thoughts hoping that these thoughts may catch the attention of Mr. Shiu senior. Should the court in this HCMP 2276 of 1999 receive reliable expert opinion that Mr. Shiu senior is capable of managing his own affairs, no order will be made that would in the least interfere with him in the current management of his affairs. However, in that event, I would like to hear representation from him concerning contribution towards costs incurred by the Official Solicitor's Office.

10.In the event that the court in this HCMP 2276 of 1999 finds it necessary to appoint a receiver or committee to manage the affairs of Mr. Shiu senior, Mr. Shiu senior should not feel that such appointment bears any adverse reflection on him. I hereby assure Mr. Shiu senior that such appointment would be made only if deemed necessary to protect his interests. To the extent that the court can ascertain his informed views, I will take into careful consideration the wishes of Mr. Shiu senior before making any decision, including that on the choice of receiver or receivers, on how his properties and monies may be managed and on the conduct of his case in HCA 11070 of 1998. I should state, however, that a judge has to take into account all relevant factors and it may not be possible for me to accommodate all the wishes of just one party or one person.

11.The other case, HCA 11070 of 1998, involves a lot of legal problems and the costs of litigation will not be a small sum. I have passed that case to a wiser and more experienced judge. So, even if Mr. Shiu senior is not happy with the way I have handled this HCMP 2276 of 1999, he may be assured that the learned judge will deal with HCA 11070 fairly. Although I will not make decisions on the validity of the Trusts, I may have to consider how best to serve the interests of Mr. Shiu senior in the conduct of his case in HCA 11070 of 1999. This is how I see things in that regard. The wealth accumulated by Mr. Shiu senior is truly the fruits of his labour and enterprise over many years. Even if for arguments sake Mr. Shiu senior has set up valid trusts for the benefit of all his children, I do not see how equity and decency on the part of his children can resist his wish to regain control of all the trust property. I have only a cursory understanding of the instruments setting up the Trusts, but I have a feeling that the HSBC trustees do have absolute discretion under the instruments to vest all the trust property in Mr. Shiu senior absolutely without risk of claim against them from any beneficiary for unfair preference or breach of trust. It does not matter whether the trust property will be vested in Mr. Shiu senior as his own free agent or in his estate to be managed by a receiver or committee. The vesting of all the trust property in Mr. Shiu senior or his estate will have substantially the same effect as if the Trusts have never been created in the first place. Once this is done, I do not see any need for the HSBC trustees to continue to be involved in any dispute between Mr. Shiu senior and his children. Matters will then be much simplified if not completely resolved. If a settlement along these lines is desired, the HSBC trustees may take out a summons for approval by the court. When that happens, I would advise Mr. Shiu senior to give his consent.

12.Will the children really lose out after the wealth has been vested back in Mr. Shiu senior or his estate? Mr. Shiu senior has made it clear that he loves all his children. He has noted that Madam Shiu assisted him in his business. His children may therefore feel assured and should know better that in the fullness of time their father will make a fair distribution. In the event that Mr. Shiu senior cannot himself distribute through testamentary disposition, his estate will devolve through intestacy which will happen anyway if Mr. Shiu senior is placed under the court's protection. At present, Mr. Shiu senior states that he needs his money back for his own upkeep and for support and medical expenses for his wife of 60 years. I think it is safe to say that every judge in my position in view of all the circumstances in these cases will take care to see that Mr. Shiu senior and his wife are adequately cared for.

13.I trust that the Official Solicitor will endeavour to arrange for the views I have expressed here to be explained to Mr. Shiu senior. I will be very interested to know the responses, if any, from Mr. Shiu senior for they may assist the court in determining the mental capacity of the elderly gentleman.

Representation:

Mr. Denis Chang, S.C. and Ms. Isabella Chu, instructed by Messrs. Philip Chan & Co., for Mr. Shiu

Mr. Patrick Fung, S.C. and Mr. Chan Chi Hung, instructed by Messrs. Hastings & Co., for the Applicants

Mr. Adrian Huggins, S.C., Mr. Alexander Wong and Ms. Isabella Chu, instructed by Messrs. Philip Chan & Co., for the Respondent

Ms. Annie Williams of the Official Solicitor's Office

Ms. Susan Kendall of Messrs. Baker & McKenzie on watching brief for HSBC International Trustee Limited