Ng Jack Fong, The Sole Executor of the Estate of Ng Li Man Kuen, The Deceased v. Ng Chan Ning

DCCJ2830/2005

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 2830 OF 2005

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BETWEEN 

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Coram:  H H Judge Marlene Ng in Chambers (Open to the Public)

Date of Hearing:   1^st February, 2007

Date of Decision:  2^nd February, 2007

Date of Handing Down Reasons for Decision:  7^th February, 2007

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REASONS FOR DECISION

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I.   Introduction

1.The Plaintiff is an elderly gentleman of 83 years who suffers from diabetes mellitus, severe peripheral vascular disease, coronary heart disease and renal failure. He has been hospitalised since November 2006, is currently on haemodialysis 3 times a week and recently had his left leg amputated.

2.The Defendant is his eldest son. In September 2004, the Defendant suffered a stroke that resulted in speech disability. He is not legally represented and requires his wife’s assistance in making submissions.

3.The present litigation (amongst others) is spawned by a protracted family feud between the Defendant and his siblings (“Other Children”) (in particular the Defendant’s younger brother Ng Chan Sing Charles (“Charles Ng”)) who sided with the Plaintiff. Their disputes extended to inter alia the operation and management of the family business.

4.The wife of the Plaintiff and mother of the Defendant/Other Children Madam Ng Li Man Kuen (“Deceased”) passed away on 14^th November 1995. She was the registered owner of premises known as Flat C, 14^th Floor, Win Field Garden, Nos.34-40 Shan Kwong Road, Hong Kong (“Premises”).

5.This is the Defendant’s inter partes application by summons dated 20^th December 2006 (“Summons”) for an injunction to restrain the Plaintiff’s sale of the Premises (“Injunction Application”). The Plaintiff, on the other hand, asked this court to dismiss such application and to vacate the pending registration of the Summons by the Defendant with the Land Registry in respect of the Premises so that he could proceed with sale of the Premises.

6.After hearing submissions at the hearing on 1^st February 2007 (“Third Hearing”), on the following day (“Fourth Hearing”) I granted interlocutory injunctive relief in favour of the Defendant on terms as set out below but reserved the question of costs to be dealt with on a nisi basis. I informed the parties I would hand down my reasons for decision and this I now do.

II.  Background

7.A brief history of this matter can be found in the Judgment of Deputy District Judge Thomas Au dated 3^rd October 2006 (“Order 14 Judgment”). It does no harm to repeat some of the salient facts. In fact, my reasons for decision will benefit from a proper understanding of the developments in this matter.

8.Since 1967 the Plaintiff and the Deceased (collectively, “Parents’”) lived at the Premises with the Defendant and the Other Children. Later (about 1994/1995) the Other Children moved out of the Premises and still later (about 2003) the Plaintiff moved to live with Charles Ng. The Defendant and his family continued to reside there until 17^th December 2006.

9.On 17^th July 1995, the Parents executed almost identical wills under a mutual wills arrangement. The terms of the Deceased’s will (“Mother’s Will”) have been set out in full in the Order 14 Judgment. The Plaintiff’s Will (“Father’s Will”) had identical terms except references to “my husband” and “my said husband” were substituted by references to “my wife” and “my said wife”.

10.The combined effect of clauses 5 and 8 of the Mother’s and Father’s Wills (“Mutual Wills”) was for the Plaintiff to inherit the Premises under the Mother’s Will, but the Defendant as sole beneficiary of the Plaintiff’s estate under the Father’s Will (“Father’s Estate”) to inherit the Premises upon the Plaintiff’s death. It appears from the Defendant’s affirmation dated 20^th December 2006 filed in support of the Injunction Application (“Support Affirmation”) that he does not take a different view even though he and the Plaintiff differ on the floating obligations vis-à-vis the Premises during the Plaintiff’s lifetime and when such obligations will “crystallise” (see below).

11.On 23^rd September 1998, the Plaintiff as sole executor under the Mother’s Will was granted probate of the Deceased’s estate (“Mother’s Estate”).

12.In/about January 1999, the Defendant executed a deed which he appeared on its face to have (a) expressly declared and agreed to renounce all his interests in respect of the Father’s Estate under the Father’s Will (“Deed of Renunciation”), and (b) signed before a “KWOK WAI HUNG, DENNIS” who was said to be clerk to Messrs Karbhari & Cham. Although the Plaintiff claimed the Deed of Renunciation was signed on/about 14^th January 1999, the exact date was not shown on the document.

13.The Plaintiff executed a document dated 14^th January 1999 (“Revocation Document”) which he appeared on its face to have (a) revoked the Father’s Will and (b) signed before a “Mr Kwok Wai Hung”.

14.There was a further Deed of Acknowledgment and Irrevocable Deed of Disclaimer which appeared on its face to be (a) signed, sealed and delivered by the Defendant on 21^st August 2000, and (b) interpreted and witnessed by a Ho Ching Ho (“Mr Ho”) who was said to be a solicitor of Messrs Edmund W H Chow & Co (“2000 Deed”). The 2000 Deed stated inter alia that the Defendant (i) acknowledged and admitted the Deed of Renunciation was legally effective and binding on him, (ii) irrevocably renounced disclaimed or otherwise waived his rights, powers, interests, benefits and entitlements whatsoever under the Father’s Will absolutely, and (iii) acknowledged and admitted the Plaintiff’s revocation of the Father’s Will under the Revocation Document. 

15.On 6^th May 2004, the Plaintiff’s solicitors gave 7-day notice to the Defendant (“Notice”) to revoke/terminate his licence to stay at the Premises and he was required to deliver vacant possession of the Premises to the Plaintiff upon expiry of the notice period. The Defendant failed to do so.

III.  Present proceedings

(a) Plaintiff’s case

16.On 16^th June 2005, the Plaintiff commenced the present proceedings against the Defendant as trespasser for inter alia delivery up of vacant possession of the Premises to the Plaintiff and damages for the Defendant’s use of the Premises from 13^th May 2004 up to the date of delivery up of vacant possession.

17.The Plaintiff claimed the Defendant’s licence to reside at the Premises ceased upon the death of the Deceased and thereafter he lived at the Premises under a licence revocable at will by the Plaintiff as executor of the Mother’s Estate, which licence was lawfully revoked upon expiry of the notice period in the Notice. The Plaintiff denied the Defendant was a beneficiary of the Mother’s Estate because pursuant to the Mother’s Will the Plaintiff became entitled to the Premises as part of the Mother’s Estate absolutely and without any sort of trust or obligation.

18.The Plaintiff claimed he started the family business 40 years ago and gradually brought his children into the business. When the business was incorporated in 1986, the Plaintiff gave shares to the Defendant, appointed him as director and relied more and more on him. But the Defendant and his wife had quarrels with the Other Children, who gradually moved out of the Premises.

19.The Defendant asked the Plaintiff to retire from the family business, and promised the Parents he would as eldest son (a) try his best to improve the relationship with the Other Children in order to achieve family reunion and (b) make proper/fair distribution of the family assets amongst the children. The Parents agreed because (i) they were perceived to favour Charles Ng over their daughters, (ii) the Plaintiff relied more and more on the Defendant to make decisions for the family business since the Other Children left the family company (“Family Company”) and the Premises without giving any reason, and (c) the Defendant said he needed to be seen to have the support of the Parents.

20.In/about 1995, the Parents agreed to set up a family trust to benefit their children so that upon their death the Defendant as eldest son would be appointed as trustee to manage their family assets including the Premises and make equal distribution of such assets amongst the Defendant and the Other Children (“Family Trust”). When the Plaintiff informed the Defendant about the operation of the Family Trust, the Defendant suggested/asked the Parents to prepare/execute mutual wills to the effect that the estate of the last survivor should go to the Defendant. The Parents executed the Mutual Wills in reliance of the Defendant’s representation and/or assurance that he would faithfully administer the Family Trust (“Assurance”).

21.It was only after the death of the Deceased that the Plaintiff was able to have full and frank discussions with the Other Children, who explained that they respected the Deceased’s desire for family harmony so they left the Family Company and the Premises to avoid further disputes with the Defendant. Thereafter the Plaintiff moved out of the Premises to live with Charles Ng.

22.When the Plaintiff discovered the Defendant had mismanaged the Family Company, he attempted to retake control with the help of Charles Ng and the Other Children. Matters then came to a head with the Defendant. The Defendant agreed to and signed the Deed of Renunciation and later the 2000 Deed when the Plaintiff lost the Deed of Renunciation, but retaliated by commencing winding-up proceedings (HCCW224/2004, “Winding-Up Proceedings”) on 17^th February 2004 to petition for the winding-up of the Family Company and to seek unfair prejudice relief.

23.The Plaintiff claimed that by virtue of the matters set out in paragraph 17 above, the Defendant had been acting or purporting to act contrary to the Family Trust and/or Assurance so the doctrine of mutual wills was inapplicable or the Plaintiff was no longer bound by the mutual wills arrangement. In the circumstances the Plaintiff was entitled to revoke the Father’s Will and by virtue of the Deed of Renunciation, the Revocation Document and/or the 2000 Deed, the Defendant renounced all his rights and interests under the Father’s Will “and any trust howsoever arising from or as a result of the [Mother’s Will], the death of the Deceased, the [Father’s Will] and/or the [Mutual Wills]” (ie all rights, powers, interests, benefits and entitlements to and in the Premises).

(b) Defendant’s case

24.The Defendant claimed he had a close relationship with the Deceased whilst the Plaintiff had a closer relationship with Charles Ng. He denied the Other Children moved out of the Premises because of him and his wife, and claimed the Plaintiff left the Premises in 2003 to live with Charles Ng because they had a quarrel over the family business.

25.At the Plaintiff’s request, the Defendant joined the family business in 1978 for low pay and hard work on the understanding that he as eldest son would inherit the whole family business when the Plaintiff retired. He persuaded the Plaintiff to reform the family business, which reform was successful and resulted in increased turnover. When the family business was incorporated at the end of 1985, he was allotted shares. Later Charles Ng was allotted shares as well. Although the Other Children also worked for the Family Company, the Defendant believed that according to Chiu Chow heritage the family properties would pass to the male line.

26.When the Plaintiff immigrated to Australia, the Defendant became the key decision maker of the Family Company. The Family Company purchased Units 508 and 509, Tower 1, Harbour Centre, No.1 Hok Cheung Street, Hung Hom, Kowloon (“Units 508 and 509”) and grew from strength to strength. In mid-1991 Charles Ng even suggested going public and an accountancy firm and financial controller were engaged for such purpose.

27.In mid-1993 Charles Ng became arrogant as a result of alleged substantial winnings from horseracing and his relationship with the Defendant soured. In 1994, the Plaintiff and the Family Company came under tax investigation and the Defendant had to deal with the tax authority. The tax shortfall was eventually paid from loans and sale of the Family Company’s properties.

28.At about the same time, Charles Ng claimed the Family Company owed him over HK$30 million. He demanded repayment from the Family Company and when the Family Company was unable to do so he pressed the Plaintiff for payment. The Deceased found the alleged debt questionable and commissioned an accounting audit. In mid-1995 it was discovered that the Family Company did not owe Charles Ng any money and instead he was indebted to the Family Company. Charles Ng eventually resigned and acknowledged in writing he owed the Family Company over HK$10.5 million.

29.The Defendant felt aggrieved because Charles Ng’s conduct hurt the interests of the Family Company as well as his own shareholder interests and eventual entitlement to the family business.  In such circumstances (and in view of the family’s Chiu Chow heritage) the Parents took steps to protect the Defendant’s interests and to compensate him for his loss. In/about August 1995, the Plaintiff assigned his loan to the Family Company of over HK$1.67 million to the Defendant and the Deceased told him she would devise/bequeath inter alia the Premises to him upon her death and “[he] could own the [Premises] forever.  The Plaintiff also agreed to the intention of the [Deceased]”.

30.The Parents’ mutual wills arrangement was to give/devise all their assets to the Defendant after their death and the Mutual Wills shall not be revoked/altered either during their joint lives or by the survivor after the death of either of them. Consequently the Defendant and his family continued to live at the Premises after the death of the Deceased and the Plaintiff did not demand delivery up of vacant possession of the Premises until mid-2004.

31.On the other hand, the Plaintiff’s conduct in revoking the Father’s Will and/or issuing legal proceedings to claim for vacant possession of the Premises amounted to a breach of the Parents’ mutual wills arrangement, so the Defendant’s interest as beneficial owner in the Premises became “crystallised” and the Plaintiff held the Premises as trustee for his benefit. The Defendant therefore counterclaimed for an order that the Plaintiff do vest the Premises to him by way of a Deed of Assent.

32.The Defendant further claimed the Deed of Renunciation and the 2000 Deed were not binding on him because he signed such documents under misrepresentation and undue influence. In/about early 1998 the protracted disputes over the family business again came to a head when the Plaintiff sided with Charles Ng and the Defendant was ousted from the management. On several occasions in the heat of argument the Defendant told the Plaintiff he did not want the Plaintiff’s personal assets and he only cherished what the Deceased gave him. The Defendant claimed he was put under “enormous stress” to sign some documents given to him by the Plaintiff at the office of the Family Company with Charles Ng monitoring developments in the wings. The Plaintiff represented to the Defendant that the documents were purportedly for him to renounce interest in the Plaintiff’s personal assets (which the Defendant understood to mean as being exclusive of the Premises that belonged to the Deceased).

33.The Defendant could not remember whether and when he signed the Deed of Renunciation, but he was certain he did not sign it before “KWOK WAI HUNG, DENNIS”. He wondered why the Deed of Renunciation was not dated. As regards the 2000 Deed, he said he signed at the office of the Family Company but denied he did so before Mr Ho. The Defendant claimed he was only shown the last signature page and told to sign the same.

(c) Order 14 application

34.On 22^nd November 2005, the Plaintiff issued an inter partes summons against the Defendant for (a) summary judgment for delivery up of vacant possession of the Premises and (b) interlocutory judgment for damages to be assessed for the Defendant’s use of the Premises from 13^th May 2004 until delivery up of vacant possession of the Premises to the Plaintiff.

(d) Affirmation evidence for the Order 14 application

35.The Plaintiff and the Defendant respectively filed 2 affirmations in support of and in opposition to the Order 14 application. Additionally, the Plaintiff filed 2 affirmations from a Kwok Wai Hung (“Mr Kwok”) who said he was clerk to Messrs Karbhari & Cham at the material time. Mr Kwok claimed that on the Plaintiff’s instructions he prepared the Deed of Renunciation, which he brought to the office of the Family Company. There he met the Defendant whom he had known for a couple of years. He interpreted the contents of the Deed of Renunciation to the Defendant and witnessed his signature. Then he witnessed the Plaintiff’s signature on the Revocation Document. He believed that both the Revocation Document and the Deed of Renunciation were executed on 14^th January 1999. The Plaintiff retained the original Deed of Revocation and Renunciation Document, but Mr Kwok could not remember whether he retained copies for his file reference.

36.The Plaintiff’s 2^nd affirmation exhibited a letter from Messrs Edmund W H Chow & Co dated 23^rd January 2006, which stated that their firm still retained the original of the 2000 Deed they prepared on the Plaintiff’s instructions. They claimed the Defendant attended their offices to execute the 2000 Deed on 21^st August 2000 in the presence of Mr Ho.

(e) Order 14 Judgment

37.Deputy District Judge Thomas Au granted summary judgment in favour of the Plaintiff in the terms as set out in paragraph 34 above. The learned Deputy District Judge held that under law the Defendant had no arguable right to remain at the Premises under the Mutual Wills and the Plaintiff was entitled to the full benefit/use and absolute enjoyment of the Premises during his lifetime subject to the caveat he could not dispose of the Premises in a manner calculated to defeat the intention under the mutual wills arrangement or to breach his fiduciary obligation under the terms of the Mutual Wills in a manner inconsistent thereto.

38.However, the learned Deputy District Judge accepted for the purpose of the Order 14 application that it was arguable the Deed of Renunciation and the 2000 Deed were signed under misrepresentation and/or undue influence which called for investigation by way of cross-examination at trial. It followed therefore there would be triable issues as to (a) whether the revocation of the Father’s Will pursuant to the alleged renunciation of interest in the Father’s Estate by the Defendant amounted to an act inconsistent with the mutual wills arrangement and (b) if the Deed of Renunciation and/or the 2000 Deed were arguably not binding on the Defendant, whether the Plaintiff had since 14^th January 1999 been holding the Premises on constructive trust for the benefit of the Defendant in the terms set out in the Father’s Will.

39.But the learned Deputy District Judge came to the view that such triable issues were insufficient to support the Defendant’s contention that he had a right to remain in possession of the Premises since by virtue of the matters referred to in paragraph 37 above the Plaintiff was entitled to full use of the Premises during his lifetime.

(f) Leave to appeal

40.The Defendant sought leave to appeal against the Order 14 Judgment. The application was heard on 28^th November and 4^th December 2006. On 14^th December 2006, Deputy District Judge Thomas Au handed down his decision to grant leave to the Defendant to appeal to the Court of Appeal (“Leave to Appeal Decision”).

41.At the hearing on 28^th November 2006, the learned Deputy Judge directed the Plaintiff’s solicitors to file/serve written submissions on certain questions of law and granted leave to the Defendant to file/serve affirmation in reply by 4^th December 2006. There was a stay of execution of the summary judgment for delivery up of vacant possession of the Premises until the adjourned hearing on 5^th December 2006.

42.On 30^th November 2006, the Plaintiff’s lodged with the court the written submissions of Mr Lee, counsel for the Plaintiff, who also appeared before me at the Third Hearing. The Defendant filed an affirmation in reply on 4^th December 2006, but the contents thereof were more in the nature of submissions in reply.  The Defendant argued in such affirmation as follows : “提及關於互惠遺囑第五絛之解釋，已清楚提及[the Plaintiff]其責任是[the Plaintiff]不可以在生時，任意處置[the Premises]並無條件給予第三者，而其目的是要破壞有關之信託。亦需要在其死後根據互惠遺囑之物業交給受益人。 ……”

43.In reply to Mr Lee’s written submission that the legal authorities suggested the Plaintiff could even sell the Premises and spend the proceeds so generated for personal enjoyment, the Defendant replied by the abovementioned affirmation as follows :

“ ……所提及[the Plaintiff]可以將[the Premises]賣掉及享用有關賣掉後之款項作為個人之享用，就是這一點完全違背互惠遺囑中先母的遺願，亦都很明顯揭露了[the Plaintiff]背後的真正目的。[The Plaintiff]不單止不可以在世時[the Premises]轉送給第三者及其他用途，因為[the Plaintiff]只是執行人身份，[the Plaintiff’s]之代表律師，完全歪曲先母在遺囑中之遺願 ……”

and raised the following query :

“ 基於[the Plaintiff]想賣掉[the Premises]之意圖，而本人又被迫搬走。怎樣可以保留[the Premises]?甚至怎樣保留這筆金錢當被人成功賣掉[the Premises]?怎樣保障本人是[the Premises’]受益人的權益?”

There is no direct evidence placed before the court at that stage of the Plaintiff’s intention to sell the Premises. However, the Defendant has no doubt been worried about the Plaintiff’s intention in this regard since an early stage (see also the Defendant’s written submissions handed to the court and to the Plaintiff’s legal representatives at the hearing for the Order 14 application on 21^st July 2006).

44.Having heard the parties’ submissions, the learned Deputy District Judge concluded it was at least arguable there were triable issues as to whether the Plaintiff’s conduct in evicting the Defendant from the Premises amounted to breach of the mutual wills arrangement and whether the Plaintiff should be bound by the constructive trust not to do so. The learned Deputy District Judge said at paragraph 11 of the Leave to Appeal Decision as follows :

“…… In these circumstances, I believe it is at least arguable that the matter should be explored at trial as to whether, for example, the eviction of the Defendant is part of an intended arrangement (thus calculated) to dispose of the Premises with an intention to defeat the objective of the mutual will agreement, i.e., to give the Premises beneficially to the Defendant upon the Plaintiff’s death.”

45.The learned Deputy District Judge noted there was no evidence from the Plaintiff as to why he suddenly wanted to evict the Defendant and his family from the Premises when the Defendant and his family had been living there since 1967 and continued to live there for another 10 years after the death of the Deceased before the Plaintiff commenced the present proceedings. The learned Deputy District Judge considered it would be part of the court’s consideration as to why the Plaintiff was entitled to seek vacant possession of the Premises under the mutual wills arrangement. He held that the unexplained doubts in the Plaintiff’s own case suggested it was arguable summary judgment should not have been given (“Possession Arguable Case”).

46.The learned Deputy District Judge further said that given it was at least arguable summary judgment should not be granted for the delivery up of vacant possession of the Premises, it had to follow it was similarly arguable interlocutory judgment for damages for trespass should not have been given. Further, it was also arguable the 7-day notice period was too short in all the circumstances and there was a triable issue as to what amounted to reasonable notice, so that even if the Defendant should deliver up vacant possession of the Premises, he should not be liable for trespass from 13^th May 2004 but from a later date (“Damages Arguable Case”).

IV.   Injunction Application

(a) Plaintiff’s prior intimation as to the use/disposal of the Premises

47.The Plaintiff did not intimate in his Statement of Claim or in his 2 affirmations filed in support of the Order 14 application as to how he would use/deal with the Premises if and when he recovered vacant possession thereof. However, whilst the Defendant’s application for leave to appeal was adjourned part-heard, the Plaintiff’s solicitors lodged Mr Lee’s written submissions under cover of their letter dated 30^th November 2006 (“30/11/06 Letter”) which stated inter alia as follows :

“[The Plaintiff’s] position is that given his health condition and his age, anything could happen to him in the very near future and it is and has always been our client’s intention to repossess the [Premises] for his own use ……”

(b) Plaintiff’s recovery of vacant possession of the Premises

48.Pursuant to the Order 14 Judgment and upon the Plaintiff’s application, a Writ of Possession was issued on 14^th November 2006. At the adjourned hearing on 5^th December 2006 in respect of the Defendant’s application for leave to appeal against the Order 14 Judgment, Mr Lee on behalf of the Plaintiff agreed not to obtain “actual” possession of the Premises pending handing down of the Leave to Appeal Decision.

49.The Leave to Appeal Decision was handed down on 14^th December 2006. It ended with the following remark by Deputy District Judge Thomas Au :

“ Given my decisions above, it is of course now up to the Defendant to decide whether or not to apply for a stay of execution of the summary judgment and the interlocutory judgment pending the intended appeal.”

50.The Plaintiff’s solicitors collected a copy of the Leave to Appeal Decision on 14^th December 2006. The Defendant did not do so and the Leave to Appeal Decision was posted to him. But prior to receiving the same, the Defendant received a Final Notice to Occupier dated 8^th December 2006 from the Bailiff demanding the occupiers to deliver vacant possession of the Premises pursuant to the Writ of Possession before 18^th December 2006. Mr Lee confirmed at the first hearing of the Injunction Application on 22^nd December 2006 (“First Hearing”) that the Plaintiff caused such notice to be given by the Bailiff, which was in line with the Plaintiff’s limited agreement not to seek “actual or physical” possession of the Premises pending the Leave to Appeal Decision. The Defendant claimed he and his family “無可奈何下” moved out of the Premises on 17^th December 2006. The Plaintiff recovered possession of the Premises on 18^th December 2006. The Defendant became aware of the Leave to Appeal Decision at the First Hearing.

51.The Defendant in paragraph 48 of his affirmation in reply filed in support of the Injunction Application on 23^rd January 2007 (“Reply Affirmation”) stated that “但是，本人已撤離[the Premises]。再者，我亦承擔不起昂貴的律師費及精神壓力。因此，我最終亦沒有上訴”. It will be a regrettable matter if a litigant who has been given leave to appeal is forced to abandon the appeal due to inability to afford legal representation. I bear in mind the Defendant has speech difficulty, which may understandably add to the strain of conducting an appeal to the Court of Appeal himself. So at the Third Hearing I advised the Defendant he might consider applying for legal aid or free legal assistance from the 2 branches of the legal profession. I also referred him to the judiciary’s Resource Centre for Unrepresented Litigants. If the Defendant does apply for and is granted such legal aid or free legal assistance, it may relieve some if not all of the legal costs and mental strain of conducting the appeal.

52.It is useful to pause here and make the following observations :

(a) The Defendant in not pursuing the appeal to date appears to have been affected by the fact he and his family have moved out of the Premises. However, the Order 14 Judgment also includes interlocutory judgment for damages for the Defendant’s use of the Premises between 13^th May 2004 and 17^th December 2006 to be assessed. The Defendant should note that either or both the Possession and Damages Arguable Cases for which Deputy District Judge Thomas Au granted leave to appeal will have impact on whether he is liable for such damages at all or if so the extent of such liability. Further, bearing in mind that the court below cannot restrict the grounds that can be argued on appeal (see King Royal Limited v Lam Kwan Yuk HCMP448/2005, Rogers VP (unreported, 27^th April 2005)), the matters set out in paragraphs 90-91 below may also be relevant to an appeal against the Order 14 Judgment.

(b) Even though the Defendant has not lodged his appeal to date, it is clear from his Support and Reply Affirmations and from his submissions at the Third Hearing that he does not accept the Plaintiff’s contentions and that he maintains the Plaintiff should not be entitled to recover vacant possession of the Premises and/or do acts vis-à-vis the Premises calculated to defeat the intention under the mutual wills arrangement (see also his counterclaim referred to in paragraph 31 above).

(c)         At the Third Hearing, the Defendant confirmed he would seriously reconsider his personal circumstances and would not abandon the appeal as yet. In such circumstances, I bear in mind that by the Leave to Appeal Decision the learned Deputy District Judge has concluded there are realistic prospects of success in relation to inter alia the Possession Arguable Case.

( c) Injunction Application

53.The Defendant in his Support Affirmation claimed that when his wife telephoned the Happy Valley branch of Centaline Property Agency Limited on 20^th December 2006 to make enquiries, she was told the Premises had been put on the market for sale (放盤) on 18^th December 2006 at the asking price of HK$10,880,000.00. The Defendant further claimed that the Plaintiff as executor/trustee of the Mother’s Estate had a duty to “保管” the Mother’s Estate including the Premises, “在合理使用後，完好無缺”. He sought a declaration that “a) [the Plaintiff]可以享用[the Premises]直至身故; b) [the Defendant]是[the Premises]的最終受益人; 及 c) 在合理使用下，[the Plaintiff]有責任保管[the Premises]直至身故後交與[the Defendant [sic]]承繼”. The Defendant therefore applied to restrain the Plaintiff from selling the Premises.

54.There is no dispute the Plaintiff now intended to sell the Premises. After the Defendant issued the Injunction Application and after the First Hearing on 20^th and 22^nd December 2006 respectively, the Plaintiff entered into a provisional agreement for sale and purchase on 6^th January 2007 (“PASP”) for the sale of the Premises to a purchaser (“Purchaser”). 

55.The Defendant’s Reply Affirmation reiterated it was Charles Ng who drove a wedge between the Plaintiff and the Defendant by gaining the Plaintiff’s trust, turning the Plaintiff against the Defendant and ousting the Defendant from the Family Company. The Defendant further claimed Charles Ng instigated the Plaintiff to recover possession of the Premises on the basis that the Premises were for the Plaintiff’s own use, but upon recovery of vacant possession thereof “蓄意利用[the need to pay the Plaintiff’s medical fees (see below)]這個藉口來變賣[the Premises]” to defeat the intention under the mutual wills arrangement (see paragraphs 54 and 68 of the Reply Affirmation).

56.In short, the Defendant’s case was that the Plaintiff’s sale of the Premises was an act calculated to defeat the intention under the mutual wills arrangement, which was not permissible and therefore ought to be restrained.

(d) First Hearing

57.At the First Hearing, Mr Lee submitted that the Plaintiff’s legal representatives required time to take instructions and file affirmation in response to the Injunction Application. Mr Lee in his submissions did not resile from the assertion in the 30/11/06 Letter that the Plaintiff intended to have the Premises for his own use, but I note in fairness that Mr Lee made clear he did not have detailed instructions at that stage and there was of course no affirmation evidence from the Plaintiff as yet.

58.Mr Lee submitted on a preliminary basis that since the mortgagee bank DBS Bank (Hong Kong) Limited (“DBS”) issued legal proceedings for recovery of possession of inter alia the Premises (HCMP1372/2006, “Mortgage Action”), the Plaintiff wanted to know what would happen if DBS successfully recovered possession of the Premises and was in position to deal with the same, so property agencies had been approached for the purpose of “問價” but not for putting the Premises up for sale.

59.I pause to say that subsequently the Plaintiff continued to maintain such stance, namely that as at 18^th December 2006he “had not decided to sell the [Premises]” and “still wanted it as his residence and to have it passed on after his death ……”

60.Coming back to the First Hearing, in the absence of affirmation evidence or clear confirmation from the Plaintiff as to the status of the Premises, Deputy District Judge Thomas Au expressed concern over the disposal of the sale proceeds if the Premises had been sold or the Plaintiff had entered into a binding sale and purchase agreement. To address such concern the Plaintiff was prepared not to dispose of such sale proceeds. So pursuant to the Defendant’s undertaking as to damages (“Defendant’s Undertaking”) and to the following undertaking by the Plaintiff (“Plaintiff’s Undertaking”) :

“ 直至本法庭就[the Defendant]於2006年12月20日存檔的傳票所作的申請作出裁決，除非得到法庭的批准外，如果[the Plaintiff]把[the Premises]出售，售價所得的所有款項將存放於一個由律師行監管有利息收的戶口內，不可作出任何用途”,

the learned Deputy District Judge granted leave to the Plaintiff to file/serve his affirmation in opposition within 14 days and leave to the Defendant to file/serve his affirmation in reply within 7 days thereafter (“Interim Order”).

61.The Plaintiff filed his second supplemental affirmation in opposition on 9^th January 2007 (“Opposition Affirmation”). The Plaintiff claimed in paragraph 31 therein that “…… based on the previous court’s direction by Deputy Judge Thomas Au, [the Plaintiff] could enter into Sale and Purchase Agreement for the sale of the [Premises] provided that all the proceeds should be placed with a solicitors firm on a stakehold basis at an interest bearing account”. I do not see the Interim Order as an open licence for the Plaintiff to prospectively sell the Premises when the substantive hearing of the Injunction Application was still pending and the entirety of the evidence in relation to the application was not yet fully placed before the court. The concern at the First Hearing (bearing in mind there were no confirmed instructions or affirmation evidence from the Plaintiff as to the status of the Premises) was interim preservation of the sale proceeds had the Premises been sold, so much so that the learned Deputy District Judge was not even prepared to countenance deduction for repayment to DBS from any such sale proceeds without court order.

(e) Second hearing

62.The Plaintiff should have filed his affirmation in opposition pursuant to the Interim Order by 5^th January 2007. However, he only affirmed the Opposition Affirmation on 8^th January 2007 and the same was served in the late evening of the same day with the original filed on 9^th January 2007. At the adjourned hearing before me on 16^th January 2007 (“Second Hearing”), the Defendant applied for an adjournment which was not opposed. Mr Lee explained that the delay was due to the Plaintiff’s unstable medical condition following renal dialysis so the Plaintiff’s doctor considered he was only fit to deal with the Opposition Affirmation on 8^th January 2007. But such explanation did not appear in the Opposition Affirmation even though such affirmation dealt with events after 5^th January 2007, eg the execution of the PASP on the following day 6^th January 2007.

63.Upon continuation of the Plaintiff’s and Defendant’s Undertakings, I adjourned the Injunction Application to be heard before me on 1^st February 2007 at the Third Hearing. I also granted extension of time for the Defendant to file/serve his affirmation in reply on/before 24^th January 2007. He did so on 23^rd January 2007.

(f) Jurisdiction

64.At first the Plaintiff took issue on whether the District Court had jurisdiction to hear the Injunction Application, but such challenge was abandoned at the Second Hearing.

(g) Formal agreement for sale and purchase (“FASP”)

65.The PASP provided inter alia that the Plaintiff and the Purchaser were due to sign the FASP on 19^th January 2007 and that the sale and purchase of the Premises was due for completion on 14^th February 2007. The Plaintiff’s solicitors in these proceedings also represented the Plaintiff in the conveyancing transaction.

66.Mr Lee submitted at the Second Hearing that the Plaintiff (upon legal advice) intended to execute the FASP, but such step was not intended to create a state of affairsto fetter the court’s discretion in relation to the Injunction Application. After hearing submissions, I made no order in relation to the execution of the FASP on the following basis :

(a) it was up to the Plaintiff to decide upon his own legal advice and bearing in mind the court had not made any decision in relation to the Injunction Application whether to enter into the FASP;

(b) the execution of the FASP would not be a fait accompli that would fetter the court’s discretion in relation to the Injunction Application;

(c) should the Plaintiff decide to enter into the FASP and the court in due course decide to grant injunctive relief to restrain sale of the Premises, the Plaintiff should be aware he might have to bear the consequences of unravelling the FASP including possible breach of contract.

( h) Initial deposit paid under the PASP

67.Mr Lee informed me at the Second Hearing that the Purchaser had paid an initial deposit of HK$421,900.00 (“Initial Deposit”) which sum was stakeheld by the Plaintiff’s solicitors pursuant to the Plaintiff’s Undertaking. He sought leave to release the Initial Deposit from the Plaintiff’s Undertaking in order to use such monies to partially settle the Plaintiff’s outstanding medical bills.

68.I pause here to say that according to the affirmations of Charles Ng and Chan King Yee (associate solicitor of the Plaintiff’s solicitors handling the sale of the Premises, “Ms Chan”) both dated 31^st January 2007 (“Charles Ng’s Affirmation” and “Ms Chan’s Affirmation”), it transpired that although the Plaintiff’s solicitors received the cheque for the Initial Deposit on 10^th January 2007, they had not presented such cheque for payment even on 16^th January 2007 when Mr Lee made the aforesaid application before me. Such cheque was only presented for payment on 16^th January 2007 after the Second Hearing, and on the following day (ie 17^th January 2007) the bank advised that it had been countermanded. In short, there were no available Initial Deposit monies at all to sustain the aforesaid application at the Second Hearing. At the Third Hearing before me, Mr Lee explained from the Bar table that it was a case of the Plaintiff’s solicitors’ left hand (litigation department) not knowing what their right hand (conveyancing department) was doing, but anyway the Plaintiff’s solicitors had custody of the cheque for the Initial Deposit. The court takes a dim view of any application made by an applicant who fails to place full and accurate facts before the court, especially when the information is not only easily obtainable but solely within the applicant’s (and not the respondent’s) knowledge. The court also expects solicitors being its officers to act with appropriate candour and openness.

69.So coming back to the aforesaid application at the Second Hearing, the Defendant opposed such application on the basis that (a) the Plaintiff had medical insurance and (b) if the premises known as Godown Units Nos.01 and 06, Basement Floor (“Godown Units”) and Car Parking Space No.L19 on the Ground Floor (“Carpark”) of Harbour Centre, Tower 1, No.1 Hok Cheung Street, Hung Hom, Kowloon mortgaged by the Family Company to DBS were sold, the remaining proceeds after repayment to the bank would be sufficient to pay the Plaintiff’s medical bills. Mr Lee submitted that (i) his instructions were the Plaintiff did not have medical insurance and (ii) sale of the Godown Units/Carpark would require validation orders and therefore too time-consuming to meet the Plaintiff’s urgent needs. 

70.As seen below, the Initial Deposit would be insufficient to settle the whole of the Plaintiff’s incurred medical bills let alone future medical expenses. Yet despite substantial outstanding medical bills, the Hong Kong Sanatorium & Hospital (ie where the Plaintiff was hospitalised for medical care and treatment, “Hospital”) had not evicted the Plaintiff and there was no evidence before me at that stage that the Hospital had any imminent intention of evicting him. On the other hand, if such risk of eviction were real, there was also no assurance that upon payment of the Initial Deposit monies instead of the whole of the outstanding (and also future) medical bills the Plaintiff could remain at the Hospital.

71.Pending the substantive hearing of the Injunction Application (ie when the affirmation evidence has not been fully placed before the court and when the court has not yet heard legal submissions on whether there is a serious question to be tried), to disburse the Initial Deposit in the manner suggested by the Plaintiff would necessarily fetter the court’s discretion. After all, should the court in due course consider it appropriate to grant interlocutory injunctive relief to restrain sale of the Premises, using up the Initial Deposit would mean (on the Plaintiff’s case that he had no financial resources) there would be no available money to repay the Purchaser and unravel the sale.

72.I note also the Plaintiff could not be unaware of the general enormity of his medical bills if not the actual dollars and cents since he had stayed at the Hospital for almost 2 months, been in the ICU and undergone amputation surgery. Yet as at the First Hearing, the Plaintiff was quite prepared to give the Plaintiff’s Undertaking.

73.Taking into account all the circumstances, I concluded at the Second Hearing that the status quo should be preserved and declined to accede to the Plaintiff’s application.

(i) Third Hearing

74.At the Third Hearing, the Plaintiff applied for leave to file/serve Charles Ng’s and Ms Chan’s Affirmations. After hearing submissions from both parties, I granted leave for the Plaintiff to file (a) Charles Ng’s Affirmation with paragraph 2, 2^nd to 5^th sentences of paragraph 4 (ie from “I have only been able to talk to the Plaintiff …… to meet his financial obligations”), paragraph 5 and paragraph 7 expurgated, and (b) Ms Chan’s affirmation. I also directed that the Plaintiff do file/serve the expurgated affirmation of Charles Ng within 7 days.

75.In the exercise of my discretion I allowed the Plaintiff to rely on the further evidence because they deal with developments after the filing of the Opposition Affirmation. In respect of the matters raised in the expurgated passages of Charles Ng’s Affirmation, they relate to matters that could have been dealt with at the time when the Opposition Affirmation was filed and there was no suggestion Charles Ng was then unavailable. Given the deadline for completion in the PASP (ie 14^th February 2007), the substantive hearing for the Injunction Application at the Third Hearing should proceed. I therefore concluded it would not be just in all the circumstances for the Plaintiff to have a second bite of the cherry by loading further evidence against the Defendant (which evidence the Defendant disputed) when he had been given reasonable opportunity to do so pursuant to the Interim Order and when the Defendant had no opportunity for further reply since the Third Hearing was to proceed.

(j) Mental status of the Plaintiff

76.The Plaintiff was hospitalised since November 2006. He delegated handling of certain affairs to Charles Ng. The Defendant queried whether the Plaintiff was mentally fit to grant the power of attorney dated 6^th October 2006 to Charles Ng (“General PA”) or to give instructions to the Plaintiff’s solicitors in respect of the present proceedings, and further suggested that if Charles Ng were duly authorised, he should formally act as attorney for the Plaintiff in these proceedings and not “在幕後指指點點”. However, whilst the Plaintiff suffered from myriad illnesses, there is no sufficient evidence before me to show he is mentally unfit or is a person under disability within the meaning of Order 80 of the Rules of the District Court. Dr Chan Man Kam (“Dr Chan”) certified the Plaintiff to be mentally alert at the time he made the Opposition Affirmation. I note also that in the Special Power of Attorney and the Confirmatory Deed both dated and executed by the Plaintiff on 23^rd January 2007 and exhibited to Ms Chan’s Affirmation (“Special PA” and “Confirmatory Deed”), Dr Chan also certified that the Plaintiff was fully conscious, had the faculty of understanding and was fit for signing legal and contractual documents. Obviously I am not in a position to predict the Plaintiff’s future mental condition and I say no further on this.

V.   Law on interlocutory injunctions

(a) Cause of action

77.The court in its auxillary jurisdiction can grant an interlocutory injunction to support legal rights, but recognises that by nature it is a temporary measure designed to secure what the court may achieve permanently in its final order or to render the final order otherwise more effective. Thus an interlocutory injunction (not being a cause of action) cannot exist in isolation, and a serious question to be tried cannot exist in vacuo without showing it is incidental to and dependent on a cause of action or the infringement or threatened infringement of a substantive right. However, an interlocutory injunction may be issued before issuance of the writ or before the cause of action was added by amendment to existing pleadings (see The Siskina [1979] AC 210, 256 per Lord Diplock).

(b) Principles for interlocutory injunctive relief

78.The Injunction Application brings into play the trite principles set out in American Cyanamid Co v Ethicon Ltd [1975] AC 396. Mr Lee in his written submissions in respect of the Injunction Application (“Written Submissions”) suggested that basically the court would consider :

(a) whether the applicant had “a serious question to be tried” and “a real prospect of success” in his claim;

(b) whether the balance of convenience lied in favour of granting the interlocutory injunction in all the circumstances of the case.

For (b), the question of adequacy of damages is also relevant.

VI.  Serious question to be tried

(a) Renunciation of interest in the Father’s Estate

79.Mr Lee in his Written Submissions confirmed that the Plaintiff would not rely on the Defendant’s renunciation of interest in the Father’s Estate as a separate ground for opposing the Injunction Application.

(b) Background

80.There is extensive narration in the Opposition Affirmation on inter alia (a) the Plaintiff’s version of the family feud and his protracted disputes with the Defendant throughout the years, and (b) the circumstances of the execution of the Mutual Wills. The Plaintiff essentially repeated and gave further particulars of his case set out in paragraphs 16 to 23 above. Although I have not set them out in full in these Reasons for Decision, I have carefully considered such further evidence given by the Plaintiff.

81.The Defendant did not consider such background matters to be directly pertinent to the Injunction Application, but felt constrained to respond to the Plaintiff’s assertions most of which he disagreed. So apart from his case set out in paragraphs 24 to 33 above, the Defendant described inter alia (a) Charles Ng’s untrustworthy character by citing various examples, (b) how the Parents let Charles Ng into the family business on a trial basis, (c) how Charles Ng persuaded the Other Children to go against the Defendant, (d) how Charles Ng schemed to withdraw money from the Family Company, (e) how the Family Company had to repay on behalf of Charles Ng the debts he owed to his siblings, (e) how the Deceased doubted Charles Ng’s claims of large winnings from horseracing and of his substantial loans to the Family Company, and (f) how the falsity of such claims was exposed by the auditing accountant engaged on the Deceased’s instructions. The Defendant claimed that as a result Charles Ng left the Family Company under a cloud (and not due to clashes with him), and when the Deceased pressed Charles Ngfor repayment he kicked up a dust at the office of the Family Company. 

82.The Defendant claimed the Other Children left the Premises on their marriage and not because of disputes with him. In respect of the Defendant’s female siblings who received dowries on their marriage, the Parents never intended them to have any interest in the family business. Since they sided with Charles Ng in his misdeeds, the Deceased did not want them to remain with (and they therefore left) the Family Company. But the Deceased had always intended the Defendant to have the Premises. She had purchased a property for Charles Ng in Hung Hom, which he later sold. The proceeds were lost in property speculation but Charles Ng claimed he spent them on the Family Company, so the Plaintiff transferred an equivalent sum from his account with the Family Company to Charles Ng.

83.In a nutshell, the Defendant believed Charles Ng by careful design insinuated himself back into the Plaintiff’s good books, turned the Plaintiff against the Defendant, and persuaded the Plaintiff to recover possession of and to sell the Premises with a view to defeat the intention under the mutual wills arrangement (see also paragraphs 55 and 56 above).

84.These background matters are not the focus of the Injunction Application, but they are relevant in the sense that they colour the other more pertinent assertions by the parties. I note that the parties’ versions of events are diametrically different, and propose to follow the guidance in Hong Kong Civil Procedure 2007 Vol.1 para.29/1/9 at p.521 as follows :

“(2) The evidence available to the court at the hearing of the application for an interlocutory injunction is incomplete. It is given on affidavit and has not been tested by oral cross-examination.

(3) It is no part of the court’s function at this stage of the litigation to try to resolve conflicts of evidence on affidavit as to facts on which the claims of either party may ultimately depend or to decide difficult questions of law which call for detailed argument and mature considerations. These are matters to be dealt with at the trial.

(4) When an application for an interlocutory injunction to restrain a defendant from doing acts alleged to be in violation of the plaintiff’s right is made upon contested facts, the decision whether or not to grant an interlocutory injunction has to be taken at a time when ex hypothesi the existence of the right or the violation of it, or both, is uncertain and will remain uncertain until final judgment is given in the action.

(5) It was to mitigate the risk of injustice to the plaintiff during the period before that uncertainty could be resolved that the practice arose of granting him relief by way of interlocutory injunction.”

(c) Law on mutual wills

85.I refer to the statement of the law by Deputy District Judge Thomas Au in paragraphs 17 to 29 of the Order 14 Judgment. But instead of repeating extracts from the legal authorities quoted by the learned Deputy District Judge, I propose summarise the relevant legal propositions below.

86.Where parties execute mutual wills pursuant to an agreement on a common depositive plan in respect of their assets on their deaths and such wills are not revoked beforehand, such agreement becomes irrevocable upon the death of the first party and the court will give effect to such agreement by recognising a floating obligation or constructive trust over both the estate of the deceased party and the assets of the surviving party for the intended beneficiaries. Such floating trust does not prevent the surviving party from dealing with the assets received from the estate of the deceased party and the surviving party’s own assets during his lifetime, but it prevents the surviving party from doing so in a manner that is inconsistent with the mutual wills arrangement. On the death of the surviving party, the floating trust “crystallises” in favour of the beneficiaries named in his own will. Mr Lee accepted that upon “crystallisation” of a floating obligation or constructive trust the “trustee” (ie the surviving party in the case of mutual wills) would lose the right to use the property for his own benefit because the property would from that moment be taken out of the ambit of the floating obligation and be affected by the “crystallised” trust in favour of the beneficiary.

87.Mr Lee agreed with David Donaldson QC’s views in Healey v Brown Ch D, 25^th April 2002, paragraphs 13-14 as follows :

“13.        This subject was discussed by Dixon J in Birmingham v Renfrew (1937) 57 CLR 666 at 689-690 in a passage quoted by Nourse J in Re Cleaver [1981] 2 All ER 1018, [1981] 1 WLR 939 at 946-7 of the latter report :

“the purpose of an arrangement for corresponding wills must often be, as in this case, to enable the survivor during his life to deal as absolute owner with the property passing under the will of the party first dying. That is to say, the object of the transaction is to put the survivor in a position to enjoy for his own benefit the full ownership so that, for instance, he may convert it and expend the proceeds if he choose. But when he dies he is to bequeath what is left in the manner agreed upon. It is only by the special doctrines of equity that such a floating obligation, suspended, so to speak, during the lifetime of the survivor can descend upon the assets at his death and crystallise into a trust. No doubt gifts and settlements, inter vivos, if calculated to defeat the intention of the compact, could not be made by the survivor and his right of disposition, inter vivos, is, therefore, not unqualified. But, substantially, the purpose of the arrangement will often to be to allow full enjoyment for the survivor’s on benefit and advantage upon condition that at his death the residue shall pass as arranged …

In re Oldham [1925] Ch. 75 Astbury J. pointed out, dealing with the question whether an agreement should be inferred, that in Dufour v, Pereira, 1 Dick. 419 the compact was that the survivor would take a life estate only in the combined property. It was, therefore, easy to fix the corpus with a trust as from the death of the survivor. But I do not see any difficulty in modern equity in attaching to the assets a constructive trust which allowed the survivor to enjoy the property subject to a fiduciary duty which, so to speak, crystallised on his death and disabled him only from voluntary dispositions inter vivos.”

Though not developed by Dixon J, and perhaps unimportant on the facts of the present case, it would seem that where the fiduciary duty is breached by such a voluntary disposition inter vivos of the property in question, the “crystallisation” of the floating obligation must occur at the moment of that disposition.

14.         I would, in line with the observations of Dixon J, have had little difficulty in concluding that a sale at arm’s length or market price by the survivor, Mr Brown, to permit personal enjoyment of the proceeds was not precluded by the agreement of the parties. But “gifts and settlements, inter vivos, if calculated to defeat the intention of the compact” would plainly be in breach of it. Had Mr Brown sold the flat and used the proceeds to fund a place in a nursing home, there would have been no basis for complaint. But to give away the flat to his son – with immediate effect as to a 50% undivided share, and with effect on death as to the remainder by operation of the doctrine of survivorship could scarcely run directly and fully counter to the intention of the mutual will compact that the flat should pass to his deceased’s wife niece on his own death.” (my emphasis)

88.It appears from the judgment of David Donaldson QC that if the surviving party disposes of the assets of the deceased party he received during his lifetime with a view to defeat the mutual wills arrangement or acts in a way that is intended to defeat the common depositive plan, equity will intervene and the floating trust will “crystallise” on the assets at the moment of their disposition instead of upon death. This suggests and it is plainly arguable with real prospect of success that (i) such assets will fall outside the floating obligation by such “crystallisation” and will from the moment of the disposition or other offending act be affected by the “crystallised” trust in favour of the beneficiaries named in the surviving party’s will and/or (ii) the beneficiaries will have a right to take action to unravel the unauthorised or wrongful disposition/act in breach of the mutual wills arrangement. In either or both cases, the “crystallisation” confers on the beneficiaries the locus to protect their rights and sue the surviving party for breach of such trust.

89.I note that for present purpose I need not form a final view on the law, but my provisional views above will be relevant in determining whether there is a serious question to be tried and/or whether the balance of justice favours the granting of the injunctive relief sought by the Defendant.

(d) Revocation of the Father’s Will and Possession Arguable Case

90.Deputy District Judge Thomas Au found there was a triable issue as to (a) whether the revocation of the Father’s Will pursuant to the alleged renunciation of interest in the Father’s Estate by the Defendant amounted to an act inconsistent with the mutual wills arrangement, and (b) if so whether the Plaintiff had since 14^th January 1999 been holding the Premises on constructive trust for the benefit of the Defendant in the terms set out in the Father’s Will. Although the learned Deputy District Judge held in the Order 14 Judgment that such triable issue could not overcome the Plaintiff’s right to demand for vacant possession of the Premises, he subsequently decided under the test in Smith v Cosworth Casting Processes Limited [1997] 1 WLR 1538 that the Possession Arguable Case had a realistic prospect of success in the sense that the Defendant had at least an arguable case in the intended appeal. I also bear in mind that the Plaintiff does not rely on the Defendant’s alleged renunciation of interest in the Father’s Will to oppose the Injunction Application.

91.In such circumstances, there must be a serious question to be tried as to whether the Plaintiff’s conduct in (a) seeking vacant possession of the Premises and/or (b) revoking the Father’s Will (if the Deed of Renunciation and/or the 2000 Deed were arguably not binding on the Defendant by reason of misrepresentation or undue influence) were arguably part of an intended arrangement (thus calculated) to dispose of the Premises with an intention to defeat the objective of the mutual wills agreement, so that pursuant to the principles in Healey’s case (which Mr Lee accepted as correct) the “crystallisation” of the Plaintiff’s floating obligation or constructive trust “must occur” at the moment of such wrongful acts (and not on the Plaintiff’s death) and the Plaintiff was thereafter no longer free to use or deal with the Premises for his own benefit (“First Issue”). Such contention coincides with the Defendant’s counterclaim that the Plaintiff has been holding the Premises “as a trustee for the benefit of the Defendant”, which arguably disallows subsequent sale of the Premises by the Plaintiff for his own benefit. 

(e) Sale of the Premises calculated to defeat the Mutual Wills?

92.The next issue is whether there is a further serious question to be tried that the Plaintiff’s intention/attempt to sell the Premises and/or his attorney’s execution of the PASP on 6^th January 2007 were themselves acts calculated to defeat the intention of the mutual wills arrangement and therefore impermissible (“Second Issue”).

93.According to Mr Lee’s Written Submissions, he understood the Defendant’s contention or basis for the Injunction Application to be “essentially that under the Mutual Wills [the Plaintiff] would not be entitled to sell the [Premises] during his life and must leave the [Premises] as part of the [Plaintiff’s] estate for the benefit of [the Defendant]”.Mr Lee might have gained such impression from the Support Affirmation (see paragraph 53 above). But upon further understanding of the Defendant’s case (see paragraphs 55, 56 and 83 above) and bearing in mind the Defendant may not be able to frame his case with the eloquence of counsel, the other “issue to be tried” should be the Second Issue described above. I disagree the legal principles show that the Defendant has no real prospect of success on the Second Issue.

94.It is unclear from the Written Submissions whether Mr Lee contended that only “voluntary disposition” and “gift or settlement” inter vivos (in contra-distinction to disposition by sale) calculated to defeat the mutual wills arrangement were debarred. I will deal with this briefly.

95.Whilst I do not disagree the surviving party is entitled to absolute enjoyment of the assets during his lifetime if he does not act in a way calculated to defeat the mutual wills arrangement and I accept voluntary dispositions or gifts/settlements made with such calculated intent may be obvious examples of offending conduct, the ratio of the legal authorities turn fundamentally not on the nature of the disposition/act but on whether it is calculated to defeat the mutual wills arrangement. After all, the underlying basis of such arrangement is the parties’ mutual undertaking that upon the death of the first party the surviving party will act according to the common plan for disposition of their assets. This is clearly reflected in In re Cleaver [1981] 1 WLR 939, 947 where Nourse J said as follows :

“It is also clear from Birmingham v. Renfrew, 57 C.L.R. 666 that these cases of mutual wills are only one example of a wider category of cases, for example, secret trusts, in which a court of equity will intervene to impose a constructive trust …… the principle of all these cases is that a court of equity will not permit a person to whom property is transferred by way of gift, but on the faith of an agreement or clear understanding that it is to be dealt with in a particular way for the benefit of a third person, to deal with that property inconsistently with that agreement or understanding. If he attempts to do so after having received the benefit of the gift equity will intervene by imposing a constructive trust on the property which is the subject matter of the agreement or understanding ……”

96.Hence, an unauthorised act if made with a view to defeat the mutual wills arrangement need not be a disposition at all (eg the surviving party revoking his mutual will and making a new will inconsistent with the mutual arrangement after the death of the first party). Likewise an unauthorised disposition need not be confined to voluntary gift or settlement (eg the surviving party deliberately removing an asset from his estate through sale at undervalue or even for value with the intention to spite the beneficiary). This is also supported by Lewis v Cotton [2001] 2 NZLR 21, 32 where Blanchard J in delivering the judgment of the New Zealand Court of Appeal said at paragraph 51 as follows :

“Where the survivor is given the use of property under the mutual will of what in some early cases is quaintly called the first dier, it may be implicit that the survivor, though bound to bequeath the property in terms of the mutual will, may be taken to have agreed only to pass on what he or she has not sold, expended or consumed, provided that he or she does not act so as deliberately to defeat the purposes of the arrangement. This has been described in Birmingham by Dixon J as a “floating obligation” which crystallises on the death of the survivor.” (my emphasis)

Mr Lee agreed with the above proposition in Lewis’ case, which plainly contemplates that a sale of property by the surviving party “deliberately to defeat the purposes of the arrangement” is not permissible.

97.I now turn to the evidence to see whether there is a serious question to be tried on the Second Issue.

( f) Consideration of the evidence on the Second Issue

98.I agree with Deputy District Judge Thomas Au’s views as stated in paragraph 9 of the Leave to Appeal Decision as follows :

“ The authorities suggest that whether the surviving spouse’s act in disposing of a property (which is subject to the mutual will agreement) amounts to an act calculated to defeat the intention of the mutual agreement could depend on the reason why he wants to dispose of the property in such a particular manner.”

In considering why the Plaintiff wanted to dispose of the Premises by way of sale, the court is not bound to accept his asserted reasons but must consider all the circumstances and the inherent probabilities /improbabilities of the matter to assess whether there is sufficient evidence before the court to support at least an arguable case with real prospect of success for an inference to be drawn on the balance of probabilities that the Plaintiff’s sale of the Premises is calculated to defeat the intention under the mutual wills arrangement.

99.Mr Lee did not disagree with such approach, but submitted that the Defendant failed to adduce evidence to refute the Plaintiff’s assertions. In fairness, the Defendant can hardly be expected to adduce direct evidence on the current or up-to-date status of (a) the debt obligations or financial resources of the Family Company, (b) the sale/occupancy status of the Premises, (c) the financial resources of the Plaintiff and/or the Other Children, and (d) the affairs and personal circumstances of the Plaintiff. After all, the Defendant no longer lived or had contact with the Plaintiff since 2003, and he had left the Family Company even earlier and vacated the Premises on 17^th December 2006. But that does not mean the court will not assess the evidence in the manner described above to see if there is a serious question to be tried on the Second Issue. Whether an inference will be drawn at the end of the day that the sale of the Premises was calculated to defeat or was part of an intended arrangement (thus calculated) to defeat the intention of the mutual wills arrangement will be a matter for trial, by which time there will be more evidence before the court. 

100.The Plaintiff claimed he did not have a firm intention to sell the Premises as at 18^th December 2006, and “[up] till very recently” or before “the new year” (ie 2007) it was his intention to repossess the Premises for his own residential purpose. But as a result of financial pressure on him and the Other Children “to raise sufficient cash to pay the medical fees, [his] legal fees and the claim from DBS”, he was forced by such circumstances to reluctantly give up the Premises (which had been the Parents’ matrimonial home) as a last resort. He claimed he only had meagre savings and no significant stocks or other realisable real properties, and the Other Children had big problems in meeting his hospital bills and were desperately looking for money. The Plaintiff claimed “what is left behind which can be realised to repay DBS and to meet [his] medical bills and also the legal fees” was the Premises, and if he did not sell it, chances were DBS would do so under the mortgage probably at a lower price and with less money left behind for him. So “by the new year [he] decided to sell the [Premises], and so informed [his] solicitors”, who advised he had a right to do so.

101.I pause here to say there is no evidence before me that DBS as mortgagee will probably sell the Premises at a lower price with less money left behind for the Plaintiff. The relevant mortgage deed is not before me, but there is no evidence that DBS is bound to make a forced sale or auction sale or that it will sell the Premises below market value. Not only is DBS bound by its obligations as mortgagee to sell the Premises at the best price obtainable in the circumstances (see China and South Sea Bank Ltd v Tan Soon Gin (alias George Tan) [1990] 1 AC 536, 545), the ease with which Charles Ng secured the sale of the Premises to the Purchaser in less than a week (according to the Plaintiff) suggests that the Plaintiff’s fears are unlikely.

102.On the other hand, the Defendant claimed the Plaintiff’s reasons for the sale of the Premises were excuses put forward when he was caught putting the Premises up for sale in order to camouflage his intention to defeat the mutual wills arrangement and to steal a march on the Defendant by recovering vacant possession of the Premises on the basis of own use, then putting the Premises up for sale on the basis of an abrupt change of heart and finally entering into the PASP even after the issuance of the Injunction Application to sell the Premises and disburse the sale proceeds to defeat the mutual wills arrangement.

103.Mr Lee submitted that the matters set out in paragraph 100 above went to the balance of convenience, which I should only consider after a serious question to be tried was established. I have found the First Issue amounts to a serious question to be tried, but I disagree with Mr Lee’s proposition in any event and prefer the principles stated in Hong Kong Civil Procedure 2007 Vol.1, para.29/1/9 at pp.251-252 as follows :

“ (9) There is no rule of law or practice to the effect that the court is not entitled to take any account of the balance of convenience unless it has first been satisfied that upon the evidence adduced by both parties on the hearing of the applicant the applicant had satisfied the court that on the balance of probabilities the acts of the other party sought to be enjoined would, if committed, violate the applicant’s legal rights. The purpose sought to be achieved by giving the court discretion to grant interlocutory injunctions would be stultified if the discretion were clogged by such technical rule.”

104.Since the Plaintiff asserted the sale of the Premises was motivated by the need to (a) repay DBS, (b) pay his legal fees and (c) pay his medical expenses, I will consider them in turn. The Plaintiff further claimed he only decided to sell the Premises in the “new year” for the reasons given above, so there is a further question as to whether such given reasons triggered the decision to sell only in 2007.

105.Background   The Plaintiff’s given reasons for the decision to sell the Premises must be considered in the context of the relevant factual matrix. The affirmation evidence plainly shows strong discord between the Defendant and Charles Ng whohas undoubtedly gained the Plaintiff’s trust over the last few years and been handling the Plaintiff’s affairs. Indeed, the Opposition Affirmation is peppered with information Charles Ng gave to the Plaintiff who verily believed what he was told. Charles Ng’s role was enhanced when on 6^th October 2006 (ie just 3 days after the Order 14 Judgment was handed down) the Plaintiff due to “health condition” granted the General PA in his favour. The Plaintiff also confirmed the General PA was to enable Charles Ng to deal with “[the Plaintiff’s] business affairs including …… the [Premises] as well as the court proceedings in connection therewith” (my emphasis). 

106.There is also no dispute that the Defendant left the management of the Family Company in about 1998 (or in any event by February 2004) and the Plaintiff has regained control with the assistance of the Other Children (especially Charles Ng). This is evidenced by, say, the Plaintiff’s claimed knowledge as to the financial status and business volume of the Family Company, his access to the Family Company’s bank statements, his assertion that Charles Ng was struggling to meet the Family Company’s debt obligations and Charles Ng’s instructions to the auditor of the Family Company to carry out forensic audit.

107.Winding-Up Proceedings   In February 2004 the Defendant commenced the Winding-Up Proceedings against the Plaintiff, Charles Ng and the Family Company to inter alia petition for the winding-up of the Family Company. Such proceedings have been inactive for 2 years until a recent directions hearing and a further one to be heard on 27^th February 2007.

108.The Plaintiff claimed no monies could be withdrawn from the Family Company to pay his medical bills because the Winding-Up Proceedings led to withdrawal of bank support and reduced business volume that adversely affected the Family Company’s operation and finances. He referred to the November/December 2006 bank statements of the Family Company’s current account with Chong Hing Bank Limited (said to be theonly active bank account) showing a balance sum of HK$66,215.53 at the end of December 2006.

109.These assertions have to be considered against Barma J’s judgment dated 19^th April 2004 in respect of the Winding-Up Proceedings (“Validation Judgment”) which reveals that although Dah Sing Bank and Citibank called in their banking facilities, the Family Company was at that time still solvent and trading at a modest profit “and there is evidence to indicate that there are orders in hand which are expected to generate further profits for the [Family Company] in the months to come”. The judgment went on to say the Family Company’s adjusted management accounts showed it had net assets of some HK$4.7 million with no need to make provision for receivables of HK$7 million. Barma J also granted validation orders to enable the Family Company to carry on business. 

110.A few observations can be made. First, there is no evidence whether the Family Company is presently still trading or not although the multiple withdrawal/deposit entries in its bank statements seem to suggest it is. Secondly, the Plaintiff has not placed before the court the Family Company’s audited/management accounts to show the full financial picture although he/ Charles Ng must have access to the financial information of the Family Company. Thirdly, there is no evidence as to the current receivables of the Family Company and/or what has happened to the receivables of HK$7 million referred to above. Fourthly, there is no evidence whether Charles Ng has repaid or will/can repay his indebtedness to the Family Company standing at over HK$10.5 million as at 31^st March 1997 (which he has acknowledged in writing and which he/the Plaintiff have not specifically denied) or if otherwise why such debt cannot be called in.

111.Further, the Plaintiff claimed that in early 2002 he agreed to Charles Ng’s proposal to set up a company in Shenzhen to help dispose of slow moving materials that were of little use to the Family Company. So in/about June 2002 and early 2003, Charles Ng set up 2 companies in Shenzhen (“PRC Companies”) and thereafter concentrated on the PRC business. The Plaintiff let Charles Ng use the Family Company’s name for the PRC Companies on his promise that he could do better than the Defendant, and at first the Family Company helped Charles Ng by granting credit terms for goods supplied.

112.On the other hand, the Defendant in his Reply Affirmation claimed Charles Ng transferred substantial assets/funds out of the Family Company to the PRC Companies that were owned by Charles Ng and his wife. The Defendant argued that with the strong economy in the PRC, the PRC Companies should be doing well, so Charles Ng should re-transfer the funds back to the Family Company to repay the Plaintiff in order to pay his medical bills. Although such payment to the Plaintiff may require a validation order, I note the Defendant does not object to such course of action and the outstanding overdraft indebtedness due to the Family Company’s principal banker DBS (“DBS Indebtedness”) has more than sufficient security.

113.Despite the Defendant’s aforesaid deposition in the Reply Affirmation, Mr Lee submitted there was no “evidence” to suggest the PRC Companies had funds. But likewise the assertions in the Opposition and Charles Ng’s Affirmations that Charles Ng was struggling hard to meet the Family Company’s debt obligations and the Plaintiff’s medical fees are also unsupported by other “evidence”. Although the Opposition Affirmation refers to the PRC Companies in some detail, there is not a word in the Opposition and Charles Ng’s Affirmations about (a) how the PRC Companies were faring, (b) Charles Ng’s remuneration and/or ability as owner to obtain/utilise funds from the PRC Companies or (c) the Family Company’s income from commercial dealings with the PRC Companies. But the Plaintiff’s own evidence was that Charles Ng expected the PRC Companies to do well.

114.In my view, it is arguable with real prospect of success that the Winding-Up Proceedings might not have led to such deleterious financial consequences for the Family Company as alleged by the Plaintiff. Further, even if the Family Company’s coffers are sadly depleted, the Plaintiff admitted the downhill slide in its fortunes started with the Winding-Up Proceedings (which commenced in 2004), so there must be a serious question whether such circumstance as claimed by the Plaintiff truly led to his change of heart only in the “new year” (ie 2007) to sell the Premises.

115.Mortgage Action   It should be made clear at the outset that the Family Company is the principal debtor and the Plaintiff and the Defendant are the guarantors in respect of the DBS Indebtedness. The Plaintiff claimed that due to the Winding-Up Proceedings the Family Company was unable to repay the DBS Indebtedness, which was secured by inter alia the Premises and the Godown Units/Carpark under 2 all-monies mortgages (collectively, “Mortgaged Properties”). DBS issued formal solicitors’ demand letters in June 2006 and commenced the Mortgage Action on 10^th July 2006.

116.According to the Order of Master Lung dated 7^th November 2006, DBS obtained judgment against inter alia the Family Company (as borrower/mortgagor of the Godown Units/Carpark) and the Plaintiff and the Defendant (as guarantors) for the sum of HK$4,995,827.12 with further interest accruing thereafter at HK$2,355.96 per day or 17.25% pa until payment. The Plaintiff claimed Charles Ng told him no further repayment was made to DBS after commencement of the Mortgage Action, so the amount due to DBS would be in the region of HK$5.28 million.

117.Master Lung also granted possession orders in respect of the Godown Units/Carpark in favour of DBS, but adjourned DBS’ application for possession of the Premises sine die. The Plaintiff claimed DBS still wanted to recover possession of the Premises, but had to amend the title of the Mortgage Action to reflect that the Deceased had passed away. But the Defendant claimed DBS’ legal representative only requested possession of the Godown Units/Carpark because (without resorting to the Premises) their market value of about HK$11 million would already be sufficient to repay the DBS Indebtedness with monies left over for the Plaintiff’s medical fees.

118.There is paucity of information in the Opposition and Charles Ng’s Affirmations as to any steps taken to utilise the Godown Units/Carpark to repay DBS. The evidence before the court paints a picture of anxiety on the part of the Plaintiff to urgently sell the Premises and use the sale proceeds to inter alia repay DBS (and indeed the Plaintiff claimed “what is left behind which can be realised to repay DBS …… is the [Premises]”), butthere is no evidence of what the principal debtor (ie the Family Company managed/controlled by the Plaintiff/Charles Ng) has done with the Godown Units/Carpark for repayment to DBS whilst letting the Mortgage Action run its course with consequent escalation in legal costs and interest charges. These unexplained doubts in the Plaintiff’s case arguably raise questions as to his intentions in respect of the sale of the Premises.

119.It is not easy to understand (and there is no explanation) why the Family Company has adopted such attitude. I cannot discern any viable defence to the Mortgage Action, but ever since April 2004 the Family Company has not sought any validation order to sell the Godown Units/Carpark to repay DBS and has not delivered up possession (whether vacant or legal) of these properties to DBS to facilitate mortgagee sale to repay the DBS Indebtedness.

120.The Plaintiff claimed Charles Ng told him the court had refused a previous application for a validation order to sell the Godown Units/Carpark to repay DBS. But the Validation Judgment shows that Barma Jwas quite prepared to grant a validation order to enable disposal of Unit 508 (also mortgaged to DBS) together with Unit 509 (mortgaged to Citibank), and he only refused a validation order for disposal of the other mortgaged properties because at that time DBS had not yet demanded repayment of the facilities advanced. The Plaintiff did not give any explanation why the validation application (as an obvious alternative to a sale of the Premises to repay DBS) was not renewed when the Family Company could no longer make repayments to DBS or when DBS formally demanded repayment in June 2006.

121.Yet the Plaintiff recognised that the Godown Units/Carpark could have been realised for repayment of the DBS Indebtedness.Headmitted as much when he claimed that since service of originating process in the Mortgage Action issued in July 2006, he asked Charles Ng to check the market value of the Mortgaged Properties from time to time “as [the Plaintiff] need to find out the position what would happen in the worst scenario, i.e. if the bank is going to obtain repossession of the mortgaged properties, how much they could be realised, and if necessary to sell some or all of them privately before forced sale by the bank auction because sale of such properties by us would often yield more than the auction sale by the bank” (my emphasis). But there is no evidence that the Plaintiff/Charles Ng negotiated with DBS to let the bank take possession of the Godown Units/Carpark or to let the Family Company sell such properties to repay DBS subject to the court granting a validation order. The Plaintiff also said that “[given the Mortgage Action] and the necessity of settling [his] medical bills [see below], [the Plaintiff] would have to restructure [his] finance with DBS or other bankers, and that may require the sale of the [Premises]” (my emphasis). Again there is no evidence that the Plaintiff attempted any restructuring negotiations with DBS or that any such restructuring comprised a definite need to sell the Premises.

122.Also, the Opposition and Charles Ng’s Affirmations are conspicuously silent on the market value of the Godown Units/Carpark and whether it will be sufficient to repay the DBS Indebtedness despite (a) the Defendant’s claim that it will be more than sufficient for such purpose and (b) Charles Ng’s enquiries “from time to time” as to the market value of the Mortgaged Properties (so that such information was available and could have been provided to the court). There is therefore no countervailing evidence to challenge the Defendant’s suggestion that the value of the Godown Units/Carpark exceeded the DBS Indebtedness. In this respect, I have not given any regard to the valuation report by C S Surveyors Limited dated 24^th March 2006 (given by the Defendant to the court and to the Plaintiff’s legal representatives at the hearing of the Plaintiff’s application for summary judgment on 21^st July 2006) which assessed the market value of the Godown Units/Carpark on vacant possession basis at HK$6 million and their marketability as reasonable.

123.In any event, DBS has obtained the aforesaid money and possession orders in the Mortgage Action in early November 2006. It is now almost 3 months afterwards and in the normal course of events DBS should have recovered or will soon recover vacant possession of the Godown Units/Carpark for mortgagee sale. In light of the Plaintiff’s claim that he wished all along to retain the Premises for his own use, his insistence (without ascertaining the occupancy status of the Godown Units/Carpark) on an immediate sale of the Premises to inter alia repay the DBS Indebtedness now standing at about HK$5.28 million plainly raises questions as to his intentions.

124.I note with further interest that although the Plaintiff insisted on an urgent sale of the Premises to inter alia repay DBS from the sale proceeds, he did not say he intends to seek recourse by way of subrogation against other securities held by DBS or indemnity from the Family Company to recoup the repayment to be made to DBS. He just asserted that the Family Company’s finances were in a bad way and could not afford repayment. This raises a serious question as to whether the Plaintiff by selling the Premises and repaying DBS out of the sale proceeds intends to confer a voluntary benefit in favour of the Family Company now in his/Charles Ng’s hands. Such observation made solely on the basis of the evidence before me in fact echoes the Defendant’s fears expressed as early as in his written submissions for the hearing of the Order 14 application on 21^st July 2006 that “依家[the Family Company]全部由[Charles Ng]話事，[Charles Ng]就想賣[the Premises]來還錢，[the Family Company’s]嘅錢就歸佢所有，亦都係[Charles Ng]點解咁心急，攞番[the Premises]的目的，表面上就教[the Plaintiff]攞嚟住，其實就係要賣[the Premises]嚟還錢俾[DBS]”.

125.The Plaintiff further claimed Charles Ng said DBS informed him that “under normal circumstances” if the DBS Indebtedness were not settled by the time DBS recovered possession of the Godown Units/Carpark and the Premises, the bank would sell them. But given that (according to the PASP executed by the Plaintiff’s attorney) the Premises areat least worth HK$8.458 million and (according to the Defendant) the Godown Units/Carpark are worth about HK$11 million whilst the DBS Indebtedness is only about HK$5.28 million, it is difficult to understand why DBS will want to or indeed should sell all of the Mortgaged Properties. This lends strength to the Defendant’s suggestion that DBS would first attempt sale of the Godown Units/Carpark in respect of which it had secured possession orders. I also bear in mind there is factual dispute/serious issue as to whether DBS intends to recover possession of the Premises when it has already secured possession orders vis-a-vis the Godown Units/Carpark.

126.The above matters also raise issue as to whether the pressing nature of the repayment to DBS is of the Family Company’s and the Plaintiff’s own making by not seeking earlier validation to sell the Godown Units/Carpark and/or not arranging delivery up of possession of such properties to DBS at an earlier stage. Further, the Plaintiff has known about the DBS Indebtedness all along or at the latest by June 2006, and he further claimed the Family Company’s and his finances suffered (with consequent inability to repay DBS) since the Winding-Up Proceedings commenced in 2004. So he has been aware of these matters forquite some time, which raises a question as to the triggering impact of such factors on his change of heart to sell the Premises only in the “new year” (ie 2007).

127.Looking at the total picture, there is a serious issue to be tried as to whether the Plaintiff’s sale of the Premises was motivated by an immediate need to inter alia repay DBS or whether it was part of an intended arrangement (thus calculated) to defeat the intention of the mutual wills arrangement.

128.Legal fees   The Plaintiff being a party to the Winding-Up Proceedings, the Mortgage Action and the present proceedings claimed he had already incurred legal fees of about HK$1.2-1.3 million and accountant’s fees of about HK$600,000.00. The Opposition Affirmation describes such fees as “incurred” but does not make clear whether they are as yet unpaid. If they have been paid, they will not justify any urgent need to sell the Premises. But since the Plaintiff claimed in the Opposition Affirmation that he had to sell the Premises “to raise sufficient cash to pay for …… my legal fees ……”, I am prepared to assume for present purpose such legal and accountant’s fees are unpaid.

129.Perhaps because of the assertion that such fees were “incurred”, the Defendant questioned why the Plaintiff would be able to incur such substantial sums and yet be unable to meet his medical bills. The Defendant further claimed it was futile for the Plaintiff to defend the Mortgage Action, so legal costs incurred for those proceedings would have been better spent onthe Plaintiff’s medical bills.

130.The Plaintiff did not apportion the “incurred” legal costs of HK$1.2-1.3 million amongst the 3 sets of legal proceedingsthat spanned almost 3 years of legal services. Such legal costs, if unpaid, amply demonstrate the tolerant attitude of the Plaintiff’s legal representatives. There is no suggestion that they have demanded payment or threatened to cease to act. Indeed, even as recent asJanuary 2007, the Plaintiff’s solicitors accepted fresh instructions to represent the Plaintiff in the sale of the Premises despite the outstanding “incurred” legal costs, their awareness of the Plaintiff’s financial constraints and the uncertainty arising from pending adjudication of the Injunction Application.

131.In my view, given the tolerant attitude of the Plaintiff’s solicitors and the history of the “incurred” legal fees, there is a serious issue to be tried as to whether such “incurred” costs/expenses over an extended period had any triggering impact on the Plaintiff’s change of heart to sell the Premises only in the “new year” or whether the sale was motivated by an intention to defeat the objective under the Mutual Wills.

132.Medical fees   The Plaintiff was admitted to the Hospital in September 2006 for 10 odd days. He was admitted again in November 2006 and required ICU care on various occasions culminating in amputation surgery for his left leg on 5^th December 2006. Thereafter he remained in ICU until his condition was sufficiently stabilised for transfer to the ordinary ward at the end of December 2006. He also had to have long-term haemodialysis 3 times each week due to his renal failure.

133.The Plaintiff claimed that because of his poor medical condition the Other Children did not tell him about the huge medical bills until about 18^th/19^th December 2006 (ie 2 weeks after the amputation of his left leg). He said it was only then thathe realised (a) his hospitalisation charges (particularly his stay at the ICU) were so staggering even though he expected the fees to be high and (b) his continued medical care would be so expensive.

134.The Plaintiff claimed the Hospital’s medical bills from 3^rd November 2006 to 4^th January 2007 were about HK$1,183,697.50 of which HK$758,522.50 was still outstanding. The Hospital’s demand notes showed the outstanding medical bills climbed to about HK$1,126,672.50 by 29^th January 2007. The Other Children (particularly Charles Ng who handled the legal proceedings in connection with the Premises on behalf of the Plaintiff) were obviously aware of the Hospital’s bills that were issued every few days. Charles Ng claimed he and his sister had struggled hard in the past to make partial settlement of about HK$540,000.00 (of which about HK$100,000.00 was paid in January 2007).

135.Although there is no evidence of the relevant hospital charges for 10 days of hospitalisation in September 2006, the Other Children must have already paid the same, so they have paid more than HK$540,000.00 over the last few months.

136.The Hospital stated that “according to [their] policy, [they] may charge interest at 1% per month on overdue accounts” and “unless the outstanding balance is settled or an acceptable arrangement is made within seven days of this letter, we may no longer provide hospitalization service to [the Plaintiff]” (my emphasis). However, such prospect is not as fearsome as it appears for the Plaintiff stated in the Opposition Affirmation he hoped to be discharged “in a few weeks’ time” (and by now about 3 weeks have elapsed). Indeed, Charles Ng’s Affirmation confirmed it was not anticipated the Plaintiff would have to stay at the Hospital for a lengthy period. In respect of the Plaintiff’s prospective medical care/treatment, it seems the crux of the concern was the need for continued medical treatment by Dr Chan who was well familiar with the Plaintiff’s medical background and history. 

137.On the other hand, the Defendant doubted that the Plaintiff/Charles Ng would have allowed the medical bills to balloon to these proportions if they had no means to pay. He further claimed they must have known the Plaintiff’s medical care (particularly future medical care) should be what the Plaintiff and his children could afford and not what was beyond their means. In such context the Defendant queried whether the Plaintiff must seek medical treatment from the Hospital. The Defendant extolled the quality of public medical service that saved him from near death when he suffered a stroke in early September 2004. He believed Charles Ng deliberately used the Plaintiff’s medial bills as an excuse to sell the Premises and defeat the mutual wills arrangement.

138.Several matters are not in dispute. The Plaintiff has been a businessman for over 40 years and must have good commercial sense despite his illness and age. The Hospital is a well-known hospital and its charges are certainly not inexpensive. The Plaintiff suffers from various chronic illnesses that must have required regular medical treatment all along. With such background and given that he has been hospitalised since 3^rd November 2006, stayed in a semi-private room, been in and out of the ICU and received limb amputation surgery, the Plaintiff cannot be unaware that the Hospital’s charges/rates would be very substantial(even though he might not know the exact dollars and cents) and definitely much more than his claimed meagre savings and the alleged depleted cash resources of the Family Company could afford. Whilst I applaud filial feelings for quality medical welfare for the Plaintiff, it is at least questionable whether the Plaintiff or the Other Children would have allowed his medical bills to escalate so steeply without provision for the same or consideration of alternatives.

139.More importantly, even on the Plaintiff’s case, the evidence before me does not explain how the sale of the Premises will secure continued future care by Dr Chan and long-term haemodialysis at the Hospital after discharge at Dr Chan’s estimated medical expenses of about HK$50,000.00 per month. The Plaintiff said he intended to use the sale proceeds to repay the DBS Indebtedness (HK$5.28 million), his medical bills (HK$1.13 million) and his legal/accountant’s fees (HK$1.8-HK$1.9 million) totalling about HK$8.21-HK$8.31 million. There will be little left from the sale price of HK$8.458 million under the PASP for future medical expenses. Yet the degree of comfort expressed by the Plaintiff/Charles Ng about the Plaintiff receiving long term haemodialysis at the Hospital (so much so that the Plaintiff intended to move his residence to a place near the Hospital) and continued treatment by Dr Chan after discharge plainly raises questions as to the Plaintiff’s or the Other Children’s intentions and financial planning/resources.

140.In view of the above matters, I consider there is a serious question as to whether these matters triggered the Plaintiff’s decision only in the “new year” to sell the Premises. However, I attach little weight to the Defendant’s recollection of an available insurance policy since the Defendant was unable to say whether such policy covered the Plaintiff’s Hospital bills.

141.Sale of the Premises   The Plaintiff claimed he was informed by Charles Ng that when he contacted some estate agents about the likely price for the Premises, the estate agents approached him from time to time to say they had interested buyers who could offer a good price. The Plaintiff said Charles Ng told him the estate agents said the market price of the Premises was about HK$8 million.

142.It is evident from the above that Charles Ng had been in contact with estate agents over the Premises, but the Plaintiff/Charles Ng did not in the Opposition and Charles Ng’s Affirmations respond directly on whether Charles Ng had contacted the Happy Valley Branch of Centaline Property Agency Limited. In my view, whether he only asked about the likely price or actually put the Premises up for sale with an asking price is a factual dispute that can only be resolved at trial.

143.Summary   The aforesaid matters should not be considered in isolation. Looking at the entirety of the evidence and the inherent probabilities/improbabilities against the background of the family feud and the strained relationship between the Plaintiff/Charles Ng and the Defendant, there is, in my view,ample basis for saying there is a serious question to be tried as to whether in effecting the sale of the Premises the Plaintiff was motivated by a genuine/immediate necessity to utilise the sale proceeds for his pressing liabilities to DBS, his solicitors/accountant and the Hospital (according to the Plaintiff) or by a calculated intention to defeat the mutual wills arrangement as a result of manipulation by Charles Ng who orchestrated the recovery of possession and sale of the Premises (according to the Defendant).

144.Even on his own case, the Plaintiff must have already known for some time about the DBS Indebtedness, his high medical fees (if not the exact dollars and cents), his “incurred” legal fees over 3 years as well as his inability to pay the same. Yet the Plaintiff flatly denied any intention to sell the Premises prior to the “new year” (ie 2007) and insisted he all along wanted to use the Premises for his own purpose. There must be a serious question as to whether the Plaintiff’s efforts in seeking recovery of vacant possession of the Premises, actively liaising with estate agents through Charles Ng over the value/price of the Premises (although the Defendant claimed it was to put the Premises up for sale), claiming to have decided to sell the Premises only in the “new year” (ie after the issuance of the Injunction Application and the First Hearing), and speedily entering into the PASPin less than a week with a view to disburse the sale proceeds stemmed from a calculated intent to defeat the mutual wills arrangement. The aforesaid analysis shows the Defendant has a prima facie case of succeeding in drawing such inference/conclusion at trial.

VII.   Irreparable loss

145.Mr Lee submitted the circumstances were clear that if an injunction were granted, damages would not be adequate or effective remedy for the Plaintiff. However, I should first consider whether, if the Defendant succeeds at trial on the serious questions to be tried, he would be adequately compensated by damages for any loss caused by the refusal to grant an interlocutory injunction. The answer must be a clear no. If the injunction were refused, it is the Plaintiff’s stated intention to sell the Premises and utilise the sale proceeds. In such circumstances, the Defendant’s future success at trial (if any) will be futile since the Premises will be lost, the proceeds disbursed and on his own admission the Plaintiff has little means.

146.Since damages are not an adequate remedy, the court will have to consider whether, if the injunction were granted, the Defendant’s Undertaking sufficiently compensates the Plaintiff. The answer is again no since the Defendant frankly admitted in the Reply Affirmation he had limited financial resources. In the circumstances, I consider this issue to be quite even between the parties.

147.Deputy Judge Neoh QC in Hang Cheong Mould Fty (a firm) v Rodopi Limited HCA912/1992 (unreported, 10^th March 1992) held it was not an invariable rule to disclose means, but the better practice was to do so and, where the applicant is low on or devoid of means, to give information as to such circumstances as would in the interest of justice require that the injunction should nonetheless be issued. This conveniently brings me to the consideration of the balance of convenience or balance of justice between the parties.

VIII.  Balance of convenience

148.As the relief sought is an equitable relief, the court in the exercise of its discretion will in the interest of justice consider all the relevant circumstances. Justice of the case turns upon the evidence before the court and also the comparative disadvantages, hardship or inconvenience that may arise from granting or refusing the interlocutory injunction. As explained above, the extent to which each party suffers prejudice or injury that cannot be compensated if he should succeed at trial is always a significant factor. However, it is unwise to attempt even to list all the various matters that may need to be taken into consideration in deciding where the balance lies let alone the relative weight to be attached to them since they change from case to case.

149.But where other factors appear to be evenly balanced it is a counsel of prudence to take such measures as are calculated to preserve the status quo. If the extent of the uncompensatable disadvantage that may be suffered by the parties does not differ widely, it may not be improper to take into account in tipping the balance the relative strength of each party’s case as revealed by the evidence adduced on the hearing of the application for injunction, but this should only be done where it is apparent upon the facts disclosed by evidence to which there is no credible dispute that the strength of one party’s case is disproportionate to that of the other (Fellowes & Son v Fisher [1976] 1 QB 122, 137 reproduced in Hong Kong Civil Procedure 2007 Vol.1, para.29/1/11 at pp.522-523).

150.I note at the outset that Mr Lee in his submissions did not rely on and there is no direct evidence of any hardship/inconvenience that may be suffered by third parties (eg the Purchaser). However, I have reminded myself that an interlocutory injunction to restrain sale of the Premises will necessarily abort the sale to the Purchaser under the PASP.

151.Mr Lee submitted that the Plaintiff had heavy and pressing present liabilities (ie the accrued DBS Indebtedness, legal/accountant’s fees and Hospital bills) as well as substantial future expenses which had to be immediately met out of the sale proceeds of the Premises since (a) he had no other resources, (b) the Other Children had difficulties in finding money to pay his medical bills and other liabilities, and (c) he could not afford to wait until the trial of the Defendant’s counterclaim.

152.The Defendant in his Reply Affirmation queried whether the Plaintiff must receive medical treatment at the Hospital and whether the Plaintiff through his attorney could have handled the litigation in person. Whilst there can be no doubt that the public hospital system offers a safety net that ensures the Plaintiff will not be left without medical care and treatment and/or the legal aid scheme may offer legal assistance to persons of limited means, I cannot agree these matters show there is no hardship or convenience. But hardship is no more than a discretionary consideration that has more or less weight in light of the other circumstances. 

153.I refer to (but do not repeat here) the above discussions (when considering whether there were serious questions to be tried) on the Plaintiff’s asserted reasons for the sale of the Premises since they are also relevant to the Plaintiff’s claims of hardship and inconvenience and of the urgency to meet the aforesaid liabilities. Further, as explained above, in respect of future medical expenses, although the Plaintiff expects to be discharged from the Hospital shortly, on the Plaintiff’s stated intentions to use the sale proceeds to pay for his “pressing” liabilities (ie the DBS Indebtedness, his legal/accountant’s fees and his medical fees), there will be little money left to pay for continued medical care by Dr Chan and for long-term haemodialysis at the Hospital in any event.

154.In tandem with the Plaintiff’s case on his future medical care, the Plaintiff claimed that after his discharge from the Hospital, he preferred to leave his current residence (ie a 600 sq ft flat rented by Charles Ng in Hung Hom) to live close by the Hospital (since he would need daily 4-hour haemodialysis at the Hospital) with Charles Ng to take care of him. He said Charles Ng could terminate his tenancy for the flat in Hung Hom and save the rental to pay for part of his future medical expenses. However, it is difficult to understand how there will be savings. If the Premises (which fortuitously are situated in Happy Valley close to the Hospital and which layout the Plaintiff must be well familiar having lived there for over 35 years) are to be sold, there will be no residence for the Plaintiff near to the Hospital and plainly a new flat will to be rented if he is to proceed with his plan.

155.Insofar as it is proper to take into account the relative strength of the parties’ cases, I do not find the Defendant’s case to be any less strong than the Plaintiff’s. But I am not persuaded “there is no credible dispute” upon the facts disclosed by the evidence so that the strength of the Plaintiff’s or the Defendant’s case will plainly tip the balance of convenience.

156.In relation to the sale of the Premises to the Purchaser, the up-to-date information shows that the transaction is on shaky legs. Mr Lee frankly described the situation and whether completion would take place as “不明朗”.

157.The Plaintiff claimed that on 6^th January 2007 Charles Ng told him a buyer was prepared to pay above the market price to purchase the Premises, ie at/about HK$8.3 million. He told Charles Ng to proceed with all necessary arrangement provided the Premises should be sold at no less than HK$8.3 million. The PASP was executed on the same day. Clause 2 of the PASP provided that the Initial Deposit shall be paid upon signing of the PASP, further deposit of HK$421,900.00 shall be paid on/about 19^th January 2007 (“Further Deposit”) and the balance of the purchase price of HK$7,594,200.00 shall be paid upon completion on/before 14^th February 2007.

158.As explained above, the cheque for the Initial Deposit was countermanded and Ms Chan reported this fact to Charles Ng. On 17^th January 2007, the Purchaser’s solicitors wrote to the Plaintiff’s solicitors to challenge Charles Ng’s authority under the General PA to sell the Premises and/or to enter into the PASP since section 7 of the Power of Attorney Ordinance Cap.31 did not apply to functions which the donor had as a trustee or personal representative. The Purchaser’s solicitors claimed the Purchaser countermanded the cheque for the Initial Deposit because of total failure of consideration (ie there was no agreement between the parties in respect of the sale and purchase of the Premises which was capable to be performed) and demanded the return of the cheque.

159.Consequently, Ms Chan prepared the Special PA and the Confirmatory Deedwhen was executed by the Plaintiff at the Hospital before an independent solicitor and Dr Chan to regularise Charles Ng’s authority. Ms Chan said she was satisfied the Plaintiff was committed to sell the Premises notwithstanding her explanation of the risks and consequences. So on 25^th January 2007 the Plaintiff’s solicitors wrote to the Purchaser’s solicitors to put on record that the Purchaser failed to pay the Initial and Further Deposits, reminded the Purchaser’s solicitors that (a) the PASP was legally binding, (b) the Plaintiff was only required to prove good title upon completion and (c) the deposits would be stakeheld pending the outcome of the Injunction Application, and demanded payment of the Initial and Further Deposits before 5:00pm on 29^th January 2007. But the Plaintiff did not make such payment even as at 31^st January 2007. No FASP was signed although clause 3 of the PASP provided that it shall be signed on/before 19^th January 2007 if the terms thereof shall have been agreed to by both the Plaintiff and the Purchaser.

160.Charles Ng claimed he understood from a discussion with the Purchaser after the cheque for the Initial Deposit was dishonoured that the Purchaser had reservation about completing the deal because of the Injunction Application. However, I have reservations about Charles Ng’s optimism that the Purchaser’s concern could be overcome if the Injunction Application was resolved in the Plaintiff’s favour.

161.Since the Purchaser has been told of the Injunction Application by the estate agent and of the Plaintiff’s Undertaking (ie the deposit monies would be stakeheld) by the Plaintiff’s solicitors, the Purchaser should have no qualms about paying the Initial and Further Deposits if the Purchaser intends to proceed with the purchase of the Premises. After all, such monies will be preserved pending the outcome of the Injunction Application. I bear in mind that under the PASP the payment of the Initial and Further Deposits is not conditional on the signing of the FASP and (as Ms Chan pointed out) that good title is to be proved upon completion of the sale and purchase. Strangely, if the Purchaser were truly concerned about the Injunction Application, there was no prior intimation of such concern or prior communication for seeking reassurance before the cheque for the Initial Deposit was countermanded. The evidence shows that it was only after the cheque was dishonoured that the Purchaser’s solicitors questioned Charles Ng’s authority. I am doubtful whether completion is likely to take place, and this is also a factor to be considered in the balance of convenience.

162.I also remind myself that it was after the issuance of the Injunction Application and the First Hearing that the Plaintiff prospectively courted a sale of the Premises and entered into the PASP with the benefit of legal advice and doubtless with eyes wide open as to the possibility that the court may grant interlocutory injunctive relief in favour of the Defendant. However, I make clear it is unnecessary for me to find (and my conclusion is not premised on the basis) that the Plaintiff and his attorney hurried on with such sale in the hope of presenting a fait accompli to persuade the court to withhold the injunction.

163.Bearing in mind the hardship to the Defendant that a refusal of the injunction will bring (ie the Premises and the proceeds will both be lost or used up before the serious questions to be tried will be determined at trial) and balancing all the factors discussed above (including the hardship and inconvenience to the Plaintiff) and the risk of doing an injustice, it seems to me that to grant the injunctive relief sought will be to preserve the status quo or something quite close to it, but to withhold the injunction will open the way to something that is quite different and something that will risk injustice.

IX.   Conclusion

164.I have no doubt that the injunction sought should be granted. I have therefore made the following orders at the Fourth Hearing :

(a) upon the Defendant giving the Defendant’s Undertaking, an injunction be granted restraining the Plaintiff until judgment in the Defendant’s counterclaim or further order, whether by himself or his servant or agent or any of them or otherwise howsoever, from selling the Premises or any part thereof to Lau Yiu Wah and Chan Po Shan being the Purchaser named in the PASP or to any other party;

(b) the Plaintiff do forthwith and not later than 1:00pm on Saturday 3^rd February 2007 notify (i) the Purchaser through Messrs Fong Yin Cheung & Co or solicitors currently representing the Purchaser and (ii) Ricacorp Properties Ltd (“Ricacorp”) being the estate agent named in the PASP in writing of this Order;

(c) the Plaintiff do forthwith and not later than 1:00pm on Saturday 3^rd January 2007 notify DBS being the mortgagee bank of the Premises in writing of this Order;

(d) the Plaintiff or his solicitors do within 7 days from the date of the Fourth Hearing file an affidavit of service of the written notifications referred to in (b) and (c) above and exhibit copies of the said written notifications thereto;

(e) the Plaintiff do forthwith draw up (in English with Chinese translation), file and serve sealed copies of this Order on the Purchaser through their solicitors, Ricacorp, DBS and the Defendant;

(f) upon service of the written notifications referred to in (b) and (c) above, the Plaintiff be released from the Plaintiff’s Undertaking;

(g) leave to the Defendant’s wife Madam Hui Lai Fong to collect these Reasons for Decision on behalf of the Defendant;

(h) leave to the Defendant himself or through his wife Madam Hui Lai Fong to liaise with my clerk within 7 days upon collection/receipt of these Reasons for Decision to arrange for English/punti interpretation of the same by court translator at the District Court;

(i) not before 21 days but within 35 days of the date of the Fourth Hearing, the Plaintiff and the Defendant do jointly fix or failing joint application the Plaintiff do fix a hearing for further directions for the conduct of these proceedings pursuant to Order 29 rule 7 of the Rules of the District Court to be heard before me in chambers (open to the public) with half hour reserved (“Directions Hearing”);

(j) there be liberty to apply.

165.Since the Defendant acts in person, I consider it more appropriate to have a directions hearing to deal with all necessary directions to progress this matter. If the Defendant wishes to seek legal aid or free legal assistance whether for the appeal for which Deputy District Judge Thomas Au granted leave to appeal or for the present proceedings, he should do so quickly.

166.Since the injunction granted is not just ancillary to the Defendant’s existing counterclaim in that the Defendant asserted the Plaintiff’s sale of the Premises was itself conduct calculated to defeat the mutual wills arrangement, such claim and the material facts thereof should be properly featured in the Defendant’s counterclaim (see paragraph 77 above). There is no difficulty in pleading matters that arose after the issue of the writ (see Order 18 rule 9 of the Rules of the District Court). However, since the Defendant acts in person, I informed the parties at the Fourth Hearing that I propose to make formal orders for amendments of pleadings at the Directions Hearing.

167.I turn to the matter of registration of documents at the Land Registry in respect of the Premises. Since I have already granted the injunction to restrain sale of the Premises on terms set out above, it is up to the Defendant to consider(and not for this court to say) whether to register a sealed copy of this Order at the Land Registry against the Premises. However, the Plaintiff only sought to vacate the registration at the Land Registry of the Summons if I withheld the injunction, but as I have granted the injunction, I have at the Fourth Hearing reserved this issue for consideration at the Directions Hearing.

X.   Costs

168.At the Third/Fourth Hearings, I have reserved the question of costs to be dealt with on a nisi basis. I now make a costs order nisi that costs of the Injunction Application (including al1 costs reserved, if any) be costs in the cause of the counterclaim in these proceedings with certificate for counsel.

Representation:

Mr Lee Tung Ming instructed by Messrs Deacons for the Plaintiff.

The Defendant present and in person.