Lai Mei Chun Swana v. Lai & Son Co Ltd
|
HCA 401/2009 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE ACTION NO. 401 OF 2009 ____________ BETWEEN
____________ Before: Mr Recorder Patrick Fung, SC in Court Dates of Hearing: 18 to 21 October 2011 Date of Handing Down Judgment: 23 November 2011 ______________ J U D G M E N T ______________ Introduction 1.This is a sad and unhappy case. It involves a dispute between siblings over a relatively small amount of money which forms part of the expenditure incurred by way of medical fees for the care of a brother suffering from ill-health. The case should never have reached the doors of the court, let alone resulted in a 4-day trial with two Counsel on each side. The Claim 2.By her Statement of Claim the Plaintiff claims against the Defendant the sum of $2,021,317.50 plus interest and costs on the basis of an oral agreement allegedly entered into between the Plaintiff and the Defendant on 20 September 2005 at Flat D, 9th Floor, Earl Gardens, No. 1, Earl Street, Kowloon Tong, Hong Kong (“Earl Gardens”). In the course of his opening, Mr. Paul Lam, Counsel for the Plaintiff, made it plain that the Plaintiff would limit her claim to a lesser sum, namely, the sum of $2,015,707.30, as a result of a minor arithmetic deviation in calculation involving a sum of $5,611.20. Background 3.The case involves various members of the same family. The father in the family was Mr. Lai Fook (“the Father”) who died on 4 February 1995. The Father had two ladies in his life. The first lady was his wife, Madam Wong Ying (“the Mother”). She died on 22 March 1989. She had the following children by the Father: -
The second lady in the Father’s life was a Madam Wong Kiu. She bore three children for him who do not really feature in this case. The status of Madam Wong Kiu and her three children is not important for the purpose of this case. 4.The Defendant company was established by the Father in 1976. It has been an investment company holding real properties and other assets. It collects very substantial rental income from its real properties. It was intended by the Father to be a source of income for himself and his sons by his wife, the Mother. At all material times, the issued shares of the Defendant consisted of 80,000 ordinary shares of $100 each. The shareholders were: -
The directors were and are : -
The secretary was and is Fai. 5.According to the Will of the Father, his 10,000 shares were to be distributed equally amongst Kong, Fai, Fat, Kwan and Hei, although the relevant formalities regarding probate have not been completed. 6.The Father also started another company by the name of Kwong Tak Investment Limited in which his sons and daughters have shares. That company does not feature in this case. 7.The Plaintiff is a stock broker and carries on business together with her husband through a company by the name of Full Win Securities Limited (“Full Win”). 8.Kwan received his tertiary education in England. In about the early 1990’s, he returned to Hong Kong and began to work in Full Win as a compliance officer when he was about 30 years old. His relationship with his elder sister, the Plaintiff, had always been very good. 9.The other sons by the Mother, namely, Kong, Fai, Fat and Hei, have always been in the fruit business. Kong emigrated to Los Angeles in the United States in 1994 and has been carrying on a fruit export business. Fai, Fat and Hei have been carrying on the fruit import business in Hong Kong. 10.On 25 March 2005, Kwan suffered a stroke and was admitted to St. Teresa’s Hospital. He was left partially paralysed and had other problems such as diabetes and kidney disease. He went in and out of various hospitals and had to have constant nursing care both at home and in hospital until his death in the Hong Kong Baptist Hospital on 11 December 2008. During the 3½ years before his death, he had incurred medical expenses of just below $6 million. We are concerned with part of those medical expenses in this case. The Plaintiff’s Case 11.It is the Plaintiff’s case that at a meeting (“the Meeting”) at Earl Gardens in the morning of 20 September 2005 between her and Kong in the presence of Fai and Kwan, an oral agreement was arrived at between her and Kong representing and acting on behalf of the Defendant in relation to the medical expenses incurred and to be incurred for Kwan on the following terms: -
(See Statement of Claim paragraph 10) 12.The Plaintiff alleges that, in reliance on and pursuant to the alleged agreement, she continued to pay the expenses for medical treatments of Kwan. “Such payments, and the payments of the expenses for medical treatments of Kwan that the Plaintiff made prior to the Agreement, were made by the Plaintiff either by way of cash or by way of cheques drawn by Full Win.” She made payments in the total sum of $5,793,686.30. The Defendant has only reimbursed her to the extent of $3,772,368.80, thus leaving a balance of $2,021,317.50 (reduced to $2,015,707.30 as referred to in paragraph 2 above) which she claims. (See Statement of Claim paragraphs 11–14) The Defence Case 13.The case of the defence is that the Meeting was merely an informal family gathering which was held at the request of Kwan for the purpose of discussing how his medical expenses could be defrayed and that no agreement of any sort was arrived at. The sums which were paid by the Defendant towards the medical expenses of Kwan were merely loans by the Defendant to Kwan. The Defendant is under no legal obligation to pay anything to the Plaintiff. The Issue 14.The only main issue in the case is what happened at the Meeting, whether any agreement was arrived at between the Plaintiff and the Defendant on that occasion and, if so, what the terms of the agreement were. My Finding 15.Having reviewed all the oral and documentary evidence, I have no difficulty in rejecting the Plaintiff’s claim. I find as a fact that no agreement was arrived at between the Plaintiff and the Defendant at the Meeting as alleged by the Plaintiff or at all. I shall set out my main reasons below. The Events Leading Up To The Meeting 16.In the morning of 5 March 2005, the Plaintiff was notified by the maid working at Earl Gardens where Kwan was living with Fai and another sister that Kwan was not feeling well. She immediately telephoned Fat and Fai to ask them to go to see Kwan. Eventually, Kwan was admitted to St. Teresa’s Hospital. 17.There seems to be some dispute as to who decided that Kwan should be taken to St. Teresa’s Hospital. On the Plaintiff’s own evidence, she was well acquainted with some of the doctors at that hospital including the Superintendent. She telephoned and spoke to Dr. Wong Chi Ming, the Superintendent. I find as a fact that it was her idea and on her instruction that Kwan was sent to that hospital. 18.After Kwan was admitted to the hospital, Fai was asked to sign a form to act as guarantor for Kwan’s hospital fees. Kwan had to undergo surgery after which he was admitted to the Intensive Care Unit. Kwan was not discharged from hospital until September 2005. 19.According to Fat’s evidence, during the early part of Kwan’s stay in hospital, the Plaintiff insisted that Kwan should stay in a 1st class private room, be treated by a number of specialists and have 24-hour nursing care. 20.Because of the closeness of the family, the brothers decided to help Kwan by causing the Defendant to make an ex gratia payment in the sum of $157,761.00 to Kwan so as to help settle the medical expenses incurred between 5 and 16 March 2005. 21.By the end of April 2005, Kwan had already incurred medical expenses to the tune of about $1 million and they were continuing at the rate of $15,000.00 per day. The brothers became increasingly concerned about Kwan’s ability to afford the high medical fees, given the expectation that he would require treatment for quite a long time. The Plaintiff, however, insisted that Kwan should maintain the same level of treatment and care. There ensued a dispute between the Plaintiff and the brothers. The brothers then decided that they would not support Kwan’s incurring such high medical fees. 22.On 18 May 2005, Fat issued a letter in Chinese (“the Open Letter”) addressed to all the children by the Mother (and their respective spouses) referring to the illnesses of Kwan, his high level treatments and high expenditure and asking whether any sibling was willing to help Kwan and shoulder such expenditure. He further said that if by 21 May 2005 no sibling was willing to shoulder such expenses, then, as a result of a discussion with Kwan on 12 May, the only course would be for the Defendant to make a loan to Kwan to defray the expenditure. No sibling gave any response. 23.It is to be noted that the Plaintiff has admitted seeing a copy of the Open Letter on the table at the hospital on 18 May 2005. She however says that she had forgotten about the same until this was brought up by the defence. In any event, she says that, because she and her husband were busy taking care of Kwan in 2005, she did not care to find out about the contents of the Open Letter. I do not find that answer credible. 24.On 17 June 2005, Fai signed a form with the hospital to terminate his guarantee for the hospital fees of Kwan. 25.On about 18 June 2005, the Plaintiff arranged for Kwan to be moved to a 3rd class room where he stayed until his discharge on 17 September 2005. The medical expenses for period between 17 June and 17 September 2005 were paid by the Plaintiff or her company, Full Win. 26.According to the Plaintiff, she never insisted that Kwan should stay in a 1st class room or that he should receive the highest level of treatment and care. In cross-examination, she says she did not know the reason why the Defendant suddenly refused to continue payment of Kwan’s medical expenses nor did she explore the same. She says that even in the witness-box she still did not know the reason. Again, I do not accept the Plaintiff’s evidence in this regard. I find her to be an evasive witness. I take the view that she was fully aware of the reason why the brothers decided not to support Kwan by helping him to pay his medical expenses. 27.According to Fat, at the request of Kwan, the Defendant held an EGM at St. Teresa’s Hospital on 10 August 2005 during which a resolution was passed for the Defendant to lend the sum of $1,567,645.00 to Kwan to settle his medical expenses incurred from the date of his first admission to hospital until 17 June 2005. The resolution has been produced in evidence. It bears the signatures of all the attendees, namely, Fat, Kong (as represented by Fat), Fai, Hei and Kwan himself. It has annexed to it the details of the medical expenditure incurred by Kwan. It also records the fact that Kwan had indicated to the board of directors of the Defendant that he agreed to repay the loan by setting off the future salaries, bonuses and dividends due from the Defendant to him. 28.There is also produced in evidence a copy of a loan agreement dated 10 August 2005 for the said sum of $1,567,645.00 which sets out the method of repayment referred to in paragraph 27 above signed between Fat representing the Defendant and Kwan and witnessed by Hei. 29.The Plaintiff challenges the authenticity of the said resolution and loan agreement and Fat’s evidence about the same. With a view to supporting her challenge, the Plaintiff said, inter alia, the following in her Supplemental Witness Statement dated 19 October 2010: -
30.Fat replies to such allegations by the Plaintiff in his evidence. He says that the brothers were aware of the changed room numbers of Kwan. He referred to an incident which occurred in the middle of the night on 30 June 2005. When he was sleeping at home, the Plaintiff rang him. The Plaintiff told him that Kwan was in trouble because he had kicked the night shift private nurse who then reported the matter to the police. The Plaintiff told him to go to Room 813 in the hospital to see Kwan. Fat then went to the hospital to see Kwan and then to the Kowloon City Police Station to see the nurse. He managed to pacify the nurse who then withdrew the complaint. There has been produced in evidence newspaper clippings about this incident. 31.Fat says he then went back to the hospital to tell Kwan about the outcome. Kwan was very grateful and asked Fat to visit him more often. Thereafter, Fat visited Kwan about twice a week. Whenever there was a change of room, either Kwan would ring to tell him about the new room number or the maid who visited Kwan everyday would tell Fai (who was also living at Earl Gardens) about the same. 32.As regards the allegation by the Plaintiff that Fai had gone to the United States since July 2005 and did not return to Hong Kong until July 2006, there is in fact produced evidence obtained from the Immigration Department regarding the travel records of Fai. It shows clearly that in the year 2005 Fai did not travel out of Hong Kong until 14 November 2005. The Plaintiff therefore had to amend the part of her Supplemental Witness Statement set out in paragraph 29 above and withdraw her allegation that the said resolution and loan agreement could not have been genuine because Fai who was supposed to have taken part was not in Hong Kong on 10 August 2005. 33.In the above circumstances, I reject the evidence and allegations of the Plaintiff. I find as a fact that the said resolution was passed as recorded in the document and that Kwan did enter into the loan agreement with the Defendant on 10 August 2005. The Meeting 34.I next deal with the Meeting. 35.The Plaintiff gives evidence about the Meeting in her Witness Statement dated 12 January 2010 as follows: -
36.No doubt, in giving the minute details of her efforts in trying to fix an appointment with Kong in paragraph 26 of her Witness Statement as set out in paragraph 35 above, the Plaintiff was trying to lend credence to her evidence overall. 37.The defence has produced copies of the air ticket and boarding pass regarding the trip of Kong from Los Angeles to Hong Kong which show clearly that he only arrived back in Hong Kong on about 25 September 2005. That, coupled with the fact that Kwan was discharged from hospital only on 17 September 2005, shows that what was said in paragraph 26 of the Plaintiff’s Witness Statement cannot be true. 38.Once again, the Plaintiff was forced to change her evidence at the beginning of her examination-in-chief, despite the fact that she had condescended to such minute details. Such conduct on the part of the Plaintiff must necessarily cast doubt on her veracity and general credibility. 39.Both Kong and Fat have given evidence about the Meeting. They say that it was an informal meeting of family members held at the request of Kwan for the purpose of discussing how his medical expenses could be met. Fat was present throughout but Fai walked in and out and did not take part in the discussion. They firmly deny that any agreement of any sort was arrived at between the persons present. 40.On the Plaintiff’s own case, the only persons who took part in arriving at the alleged agreement were herself, Kwan and Kong, because Fat only arrived much later. 41.I find it highly improbable that Kong, being a person who normally resided in Los Angeles, would commit the Defendant to entering into the alleged agreement just like that, without having had any discussion with his brothers, the other shareholders and directors, especially Fat who was obviously in charge of the management of the Defendant. He would have been committing the Defendant in respect of what was described as a “black hole” or “bottomless pit” and would be equivalent to signing a blank cheque on behalf of the Defendant. 42.I find Kong and Fat to be straightforward and credible witnesses and I accept their evidence of what happened at the Meeting. On the other hand, I find the Plaintiff to be an evasive and unreliable witness. I reject most of her evidence regarding the Meeting. 43.In all the above circumstances, I find as a fact that no agreement of any sort was arrived between the Plaintiff and the Defendant as alleged or at all. 44.Such conclusion is consistent with and supported by the evidence regarding the attitude of the brothers towards the high level of treatment received by Kwan and the resultant high expenditure, the Open Letter, the withdrawal by Fai as a guarantor for the hospital fees and the said resolution and loan agreement which I have dealt with above. Events After The Meeting 45.I shall also refer to some events after the date of the Meeting which are more consistent with the Defendant’s version of what happened than with the Plaintiff’s allegation about the alleged oral agreement. 46.There has been produced in evidence a copy of the minutes of an EGM of the Defendant held on 31 March 2006 at which Fat, Fai, Kwan and Hei were present. A resolution was passed whereby the Defendant ratified and confirmed a loan to Kwan in the sum of $1,913,527.00. 47.There has also been produced in evidence a bundle of monthly breakdowns of medical fees for Kwan starting from October 2005 to July 2008. Each monthly breakdown had attached to it the supporting invoices. Most of the monthly breakdowns were signed by the Plaintiff as well as Kwan. The monthly breakdowns represent the payments of medical fees by the Plaintiff with cheques issued by Win Full. 48.It is common ground that after the receipt of each monthly breakdown, the Defendant would issue a cheque drawn in favour not of the Plaintiff but of Kwan. It is also common ground that the Plaintiff would pay such cheques into a joint account in the names of herself and Kwan. 49.Furthermore, there is produced in evidence an audit confirmation signed by Kwan on 16 September 2008 whereby he acknowledged for audit purposes his indebtedness to the Defendant in the sum of $3,551,284.80 as at 31 March 2008. 50.All such events and documents are consistent with the Defendant’s allegation that the Defendant was lending money to Kwan to defray his medical expenses rather than the Plaintiff’s allegation that the Defendant had agreed to reimburse her for medical expenses which she had paid and would pay on behalf of Kwan. 51.Furthermore, it does not appear that the Plaintiff had ever demanded from the Defendant payment of the medical expenses which she had paid for Kwan for the period between June and September 2005 until the letter before action dated 6 February 2009 by her then solicitors to the Defendant. 52.For the month of October 2005, the breakdown presented to the Defendant was for the sum of $52,313.00. The Defendant duly drew a cheque dated 14 December 2005 in favour of Kwan in the same amount. 53.If there had been the oral agreement as alleged by the Plaintiff, there would have been no reason why she did not demand for payment of the medical expenses for the period between June and September 2005 on the same occasion. 54.When questioned about this in cross-examination, the Plaintiff said that she had handed the breakdown for the month of June 2005 together with the breakdown for October 2005 to Fat on the same occasion. It is to be noted that she never said so in any of her pleadings or witness statements. Furthermore, there would have been no reason why the Defendant would only pay according to the breakdown for October 2005 but not that for June 2005. 55.The Plaintiff was further cross-examined about the breakdowns for July, August and September 2005. She just said that she could not remember when they were handed to the Defendant. 56.It is also to be noted that the font and appearance of the breakdowns for June, July, August and September 2005 are different from those of the breakdowns for October 2005 onwards. The former also do not bear any signature by the Plaintiff and Kwan. 57.I do not accept the Plaintiff’s explanation. I suspect that the breakdowns for June, July, August and September 2005 were produced much later and not presented to the Defendant as alleged by the Plaintiff. 58.This again militates against the Plaintiff’s allegation that an oral agreement was arrived at during the Meeting. 59.The total medical expenses for the period between November and January 2007 amounted to $1,400,279.00. According to Fat, the Defendant thought that the amount was too large. He had a discussion with Kwan who agreed to defray part of that in the sum of $460,000.00 with his own resources. Thus, the Defendant only issued a cheque to Kwan in the sum of $940,279.00 instead of the full amount of $1,400,279.00. 60.I accept the evidence of Fat in this regard. This again militates against the Plaintiff’s story. Conclusion 61.As I have mentioned earlier, I have given the main reasons why I find against the Plaintiff. Such reasons are by no means exhaustive. 62.Near the end of the hearing, a copy of the reply dated 16 February 2009 by Messrs. Chui and Lau, the solicitors for the Defendant, to the letter before action dated 9 February 2009 from Messrs. Mayer-Brown JSM, the then solicitors for the Plaintiff, was produced in court. After having set out the defence case, Messrs. Chui and Lau continued as follows: -
63.I do not know whether there was any response by the Plaintiff or her solicitors to this letter. On the same date of the letter, i.e. 16 February 2009, however, the Writ of Summons in this action was issued. The Statement of Claim was then filed on 30 March 2009. As I see it, the dispute here could have been solved without much difficulty if the Plaintiff had proceeded along the lines suggested by Messrs. Chui and Lau rather than resorting to litigation. 64.In all the circumstances set out above, I dismiss the Plaintiff’s claim. I make an order nisi that the Plaintiff should pay the costs of the action to the Defendant such costs to be taxed if not agreed. I certify the case fit for two Counsel.
Mr. Paul Lam and Mr. Vincent Lung, instructed by Messrs. Myra Li & Co., for the Plaintiff Mr. Ronald Tang and Mr. Gary C.C. Lam, instructed by Messrs. Chui and Lau, for the Defendant | |||||||||||