Chan Shu-gar and Others v. Chan Bo-hing

Case No.HCA 1219/1966

Court

High Court CFI

Date16 Jun 1969

Judge—

Case Document

100%Judiciary

HCA001219/1966

IN THE SUPREME COURT OF HONG KONG

ORIGINAL JURISDICTION

ACTION NO. 1219 OF 1966

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BETWEEN
	Chan Shu-gar	Plaintiffs
	Chan Shu-park
	Chan Shu-yau
	AND
	Chan Bo-hing	Defendant

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Coram: Blair-Kerr, J., in Chambers.

Date of Judgment: 16 June 1969

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JUDGMENT

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1. The plaintiffs' claim as endorsed on the writ, which was issued on 29th June 1966, is for:

	"1.	Moneys and properties had and received by the defendant to the plaintiffs' use and moneys and properties received by the defendant as trustee or agent for the plaintiffs and retained by her and wrongfully converted to her own use.
	2.	An account of all such moneys and properties as aforesaid and of the manner in which the defendant has applied the same.
	3.	All necessary inquiries.
	4.	Payment and/or transfer by the defendant to the plaintiffs of all such sums as may be found due and all properties as may still be held by the defendant as trustee or agent for the plaintiffs upon taking the said account and making the said enquiries including such interest as the Court may think fit.
	5.	Damages for wrongful conversion."

2. The plaintiffs now apply under o.14 r.1, o.27 r.3, and o.43 r.1 for judgment against the defendant for:

	(1)	$1.6 million being moneys and properties had and received by the defendant to the plaintiffs' use etc. as claimed in para.1 of the statement of claim.
	(2)	An account as claimed in para.2 of the statement of claim.
	(3)	Payment and/or transfer as claimed in para.3 of the statement of claim.

In support of their claim for summary judgment for $4.6 million the plaintiffs have exhibited copies of certain correspondence between the parties' solicitors commencing with a "without prejudice" letter addressed by the plaintiffs' solicitors to the defendant's solicitors dated 4th August 1966. This letter begins thus:

"We understand from ......... the 2nd plaintiff ....... that ........... the following terms of settlement have been arrived at:-

Your client will consent to judgment for the sum of $1.6 million"

The letter goes on to refer to other alleged terms of settlement; and it ends thus:

"..... these terms of settlement have to be confirmed by our client Mr. Chan Shu Gar ........"

On 8th August, the defendant's solicitors replied by "open" letter saying that their instruotions were that the defendant had not agreed to any terms of settlement.

3. On 8th September 1966 the plaintiffs' solicitors wrote to the defendant's solicitors another "without prejudice" letter saying they understood that the defendant would consent to judgment for the sum of $1.6 million payable by instalments. Paragraphs 5 and 6 of the letter read:-

	"5. As security for the due payment of the judgment debt and interest as aforesaid, your client will deposit with our clients share certificates in respect of her entire holdings in Tak Ming Co. Ltd. with duly executed transfer deeds.
	6. In the event of your client failing to pay any one instalment or interest, the whole of the balance shall become payable."

On 12th September 1966, the defendant's solicitors wrote to the plaintiffs' solicitors a "without prejudice" letter in which they stated that the defendant

"..... agrees to the terms of settlement under paras.2,3, 4 and 7 only and it has been mutually agreed that the abovementioned action is to be withdrawn by your clients whereupon an agreement will be entered into between the parties containing the said terms of settlement."

The letter went on to say that the terms in paras. 5 and 6 of the letter of 8th September were not acceptable to the defendant; and the last para. reads:

"As to the terms under para.1, as the action is to be withdrawn there will be no necessity to consent to judgment but our client will admit the claim of $1.6 million in the said agreement to be entered into."

4. On 15th February, 1967 the defendant's solicitors wrote to the plaintiffs' solicitors an "open" letter in which they alleged that, as a result of further discussions between the parties, they understood that the first plaintiff agreed to the terms as set out in their letter of 12th September.

5. On 17th March, 1967 the plaintiffs' solicitors wrote an "open" letter stating that the plaintiffs had agreed to delete the terms in paras.5 and 6 of their letter of 8th September, and the letter continues thus:-

	"The only term upon which our clients would like to see unaltered is that stated in para.1 .... which provides that the terms of settlement will be recorded as a judgment.
	In our view, since all the terms have been agreed, we can only assume that your client intends to abide by them, and that being so, we can see no objection to an agreed judgment being entered."

The defendant's solicitors replied on 3rd April 1967 by "open" letter, thus:-

"..... our client does not agree to have the terms of settlement recorded as a judgment but instead, as stated in our letter dated 12th September 1966, to have the same recorded in an agreement to be entered into between the parties."

On 17th June 1967, the plaintiffs' solicitors wrote a further "open" letter in which they said:-

	"With reference to the previous correspondence herein ending with your letter dated 3rd April 1967, we are instructed to say that our clients accept the terms of settlement herein as finally amended by your letter of 3rd April 1967.
	We have accordingly prepared a draft agreement intended to be signed between our respective clients and enclose 2 copies for your approval ......."

On 26th June 1967, the defendant's solicitors wrote an "open" letter stating that:-

"Our client informs us that she agrees to the amount payable by her and the terms of payment thereof as stated in your draft agreement. However, she does not agree to the insertion therein of certain parts of the recital ....... as the facts recited are not correct ......."

On 30th June 1967, the defendant's solicitors wrote a further "open" letter stating that after receiving the defendant's further instructions:-

"..... we are of the opinion that the facts recited on page 1 of the draft agreement in question are not wrong and the same are therefore not demanded ................."

On 2nd November 1967 the defendant's solicitors wrote a further "open" letter stating:-

"..... our client's present financial condition is such that she is not in a position to make any payment to your clients until some time in 1968 or 1969 ................."

The draft agreement was never executed.

6. The plaintiffs are brothers; and the defendant is their sister. There are other members of the family, including an elder son (Chan Shu-woon) who was resident in Hong Kong for a number of years subsequent to November 1954; but he and the plaintiffs now reside in the United States. It is common ground that the plaintiffs appointed the defendant as their attorney to deal with their share of their father's property upon his death in November 1954. She has now filed a lengthy affidavit in which she alleges that she does not owe the plaintiffs any money or property, that the eldest son (Chan Shu Woon) defrauded the plaintiffs, that she felt "morally responsible for the plaintiffs' losses because of the trust which had been reposed in Chan Shu Woon"; and she concludes thus:

"While I have felt it my moral responsibility to get back for the plaintiffs the sums they have lost because this is a family matter and I have acted on their behalf in Hong Kong while they were in the United States I have the strongest objection to being sued and to having a judgment registered against me when I have throughout attempted to act in the best interests of the plaintiffs and not taken personally a cent of their money."

7. Order 27 r.3 reads:-

"Where admissions of fact are made by a party to a cause or matter, either by his pleadings or otherwise, any other party to the cause or matter may apply to the court for such judgment or order as upon those admissions he may be entitled to, without waiting for the determination of any other question between the parties, and the court may give such judgment, or may make such order on the application as it thinks just."

Mr. Ching submits that the correspondence discloses that the partieshad agreed to settle on the basis of the defendant admitting liability to the plaintiffs in respect of $1.6 million; that it makes no difference that she ultimately refused to approve the draft written agreement on the ground that she was short of money; and that the plaintiffs are entitled to judgment now upon her admissions in the correspondence.

8. Mr. Mills-Owens, counsel for the defendant, submits that as the correspondence began "without prejudice" it is not open to the court to look at any of it because the subsequent "open" letters merely continue what was always intended by the parties to be without prejudice negotiations for settlement; that there never was a concluded agreement; that, in any event, even although it could be said that there was a concluded agreement to settle, the defendant never agreed to having a judgment registered against her; that all she ever agreed to was that the terms of settlement should be embodied in a written agreement; and that a condition precedent to any such final agreement was the withdrawal of this action by the plaintiffs; and that it is therefore not open to them to use any admissions by her for the purpose of obtaining a judgment of the court under o.27 r.3.

9. I think it is clear from the correspondence that at one stage in the negotiations the defendant agreed that she was liable to the plaintiffs for $1.6 million; and, if that had been the whole agreement, this court would not have been precluded from acting upon her admission although the negotiations had been initiated by letters written "without prejudice". But I do not think that the defendant's admission of liability for the sum of $1.6 million can be looked at in isolation. From the beginning she made it perfectly clear that any admissions by her could not be used for any purpose in this action. What she agreed to was that the terms of settlement should be embodied in a written agreement and that this action should be withdrawn. I do not think that this is a case in which I should give judgment to the plaintiffs for the specific sum of $1.6 million.

o.43 reads:-

	"(1)	When a writ is endorsed with a claim for an account or a claim which necessarily involves an account, the plaintiff may, at any time after the defendant has entered an appearance ....... apply for an order under this rule.
	(2)	.......
	(3)	On the hearing of the application, the court may, unless satisfied by the defendant by affidavit or otherwise that there is some preliminary question to be tried, order that an account be taken and may also order that any amount certified on taking the account to be due to either party be paid to him within a term specified in the order."

10. It seems to be common ground that there has been no revocation of the defendant's power of attorney; and the parties appeared to be in agreement that the court should make an order for accounts to be taken. There will therefore be an order under o.43 for accounts to be taken.

11. The parties will have liberty to apply in case they are unable to settle the terms of the order. They may also argue the question of costs.

	(W.A. Blair-Kerr)
	Puisne Judge
	16th June, 1969.

Representation:

Charles Ching (Lau, Chan & Ko) for Plaintiffs.

Mills-Owens (Kho & Lo) for Defendant.