Lam Wong Kwan Ying and Another v. Lam Sik Se, Tony

HCA 1885/1987

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 1885 OF 1987

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D E C I S I O N

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Background

1.The 2^nd plaintiff (“Victor”) and the defendant (“Tony”) are half brothers.  Their father Lam Tim (“Father”) died intestate on 6 January 1983.  On 1 April 1987, Victor and his mother commenced these proceedings against Tony (“Action”), seeking (inter alia) a declaration that they are entitled to a grant of letters of administration to the Father’s estate (“Estate”), and for an account of what is due to the Estate from Tony in respect of money received by Tony since January 1983.  It is claimed in the Action that, amongst other things, Tony had intermeddled with the Estate by taking over the Father’s business, and residing at a property which forms part of the Estate.

2.The Action was compromised in 1992, when a Tomlin Order was made by the court on 13 April 1992 (“Order”).  Like the usual form of Tomlin Order, the Order provides that all further proceedings in the Action should be stayed, save and except for the purpose of enforcing the terms and conditions contained in the schedule to the Order (“Schedule”), with liberty to apply for that purpose.

3.It is settled that the terms in the schedule to a Tomlin Order do not form part of the order itself (Luk Por v Chau Kim Hung, HCA 10369/1997, unreported, 8 October 2003; The Incorporated Owners of Hoi To Court v Chinluck Properties Limited, HCA 6171/1997, unreported, 24 August 2006).  The only order made is for the proceedings to be stayed, with liberty to the parties to apply to the court to enforce the terms set out in the schedule itself, and/or to lift the stay.  There is no question of enforcement of an order or judgment of the court.  No separate action is required to seek enforcement of the terms in the schedule, where there is provision for liberty to apply in the order itself.  The terms and conditions set out in the schedule constitute an agreement between the parties for the compromise of the action.

4.Under the terms of the Schedule to the Order, Tony agreed and acknowledged, under paragraph (f) of the Schedule, his responsibility and liability to account to the Estate of all income, receipts, receivables, etc in respect of the Estate, which have come into his hands since the death of the Deceased, and to unreservedly allow the administrators or

5.After the date of the Order, letters of administration to the Estate were granted to Victor and his mother, who died on 7 June 1999.  Victor accordingly is the sole surviving administrator of the Estate.

6.Apart from the Action, there have been other proceedings instituted between Victor and Tony in relation to the Estate and its administration.

The application

7.On 5 November 2012, Victor’s solicitors issued a summons in this Action (“Summons”), to seek an order to carry into effect the terms set out in the Schedule, on the ground of Tony’s default in compliance with the provisions set out in paragraph (f) of the Schedule.  This application is opposed by Tony, on the ground that there has been inordinate and inexcusable delay on Victor’s part, in not seeking to enforce the Order on the ground of his alleged breach until November 2012.  Tony claims that he has been prejudiced as a result of such delay, and that Victor has waived and lost any right to seek compliance with paragraph (f).  He further claims that he has in any event already accounted to the Estate in respect of the income and receipts sought by Victor.

Demands for an account

8.On behalf of Victor, it was argued that Tony is under a continuing obligation to account to the Estate, as he had agreed and acknowledged under paragraph (f) of the Schedule.  It is claimed that Victor’s solicitors had been demanding for an account since February 1983, as evidenced by the letters sent to Tony from 10 February 1983 to 30 May 2003, and that Tony had defaulted in giving a proper and full account.

9.Tony claims that after the making of the Order, he had through his solicitors and by his solicitors’ letter dated 9 October 1992 provided to Victor documents and information relating to the Estate and assets claimed by Victor to form part of the Estate.  According to Tony, it was not until 1 June 1996 that Victor, through his solicitors, had referred to Tony’s supply of information and documents on 9 October 1992, suggested that it was somehow inadequate, and demanded for Tony’s compliance with paragraph (f) of the Schedule.

10.A subsequent letter dated 17 June 1999 from Victor’s solicitors referred to Tony’s confirmation that he would furnish proper accounts after the grant of the letters of administration.  Such grant was issued on 24 March 1999, and in the letter of 17 June 1999, Victor’s solicitors asked for an account to be made by Tony of the income and receipts of the Estate.  However, it was not until 19 November 1999 that Victor’s solicitors followed up on the demand for an account pursuant to paragraph (f) of the Schedule.  No action was thereafter taken for nearly 3 years until Victor’s solicitors made another demand, on 17 June 1999, and then on 5 July 1999, repeating a blanket request for an account under paragraph (f).  Even then, no action was taken in relation to the alleged default on Tony’s part until 3 April 2003, and then 30 May 2003, when Victor’s solicitors wrote yet again to repeat the by then hollow general demand, and the oft mentioned claim of Tony’s failure to provide “full and complete” accounts and records of the Estate.

Any delay?

11.Despite all the demands made, Victor failed to take any action in respect of Tony’s breach or to seek compliance with paragraph (f) of the Schedule, until the Summons was issued in November 2012.  This was more than 20 years after the date of the Order and the letter of 9 October 1992 from Tony’s solicitors, whereby documents and information were furnished by Tony pursuant to paragraph (f) of the Schedule; 16 years after the first demand made by Victor’s solicitors for further accounts on 1 June 1996; over 13 years after the issue of the letters of administration of the Estate on 24 March 1999; and over 9 years from the last demand made by Victor’s solicitors on 30 May 2003.  There is no doubt that this constitutes inordinate delay on Victor’s part in seeking compliance with paragraph (f) for the account sought.

12.Was the delay excusable? I consider not.  The fact that there have been other proceedings ongoing between Victor and Tony cannot constitute any excuse or reason for Victor not to take action in respect of any default or breach on Tony’s part in this Action, whether by way of applying to the court under the liberty to apply provision in the Order, or to seek a lifting of the stay in this Action to pursue Victor’s claims against Tony for an account, or otherwise in respect of Tony’s alleged breach of the agreement of compromise embodied in the Schedule, if there was such breach.  Parties have the duty to conduct and diligently proceed with each and all actions they have chosen to commence or defend.  Unreasonable failure to proceed with, and delay in the progress of, an action may constitute abuse of the court process, and is generally a waste of the court’s time and resources at the expense of other more deserving litigants.

13.The liberty to apply provision is a part of the Order.  There must be finality in any proceedings, and like any other attempt to enforce an order or to carry any part of an order into effect, parties should act with reasonable speed and diligence where it is necessary to apply to the court for any relief under the liberty to apply provision.

14.On the facts and evidence in this case, Victor was fully aware of the extent of disclosure made by Tony since 1992 and pursuant to paragraph (f).  The matters of which Victor now complains with regard to Tony’s failure to furnish proper accounts, relate to matters such as the finances and accounts of Tony’s own company, Tony’s failure to account for the rental received from various properties, and the proceeds of sale of another property, and are matters and failure which were all known to Victor in 1992, and in any event by 2003.  Victor has not identified in his evidence any request for specific information or documents, which had not been made before of Tony in the demands between October 1992 and May 2003, and in respect of which Victor says Tony has failed to provide. I have borne this in mind in the consideration of Victor’s argument that Tony is under a continuous duty to account to him as administrator of the Estate.

15.Since the Civil Justice Reform, with the emphases on dealing with cases as expeditiously as is reasonably practicable, in reasonable proportion and with procedural economy, ensuring the fair distribution of the resources of the court, and ensuring fairness between the parties, delay itself is a ground to refuse relief and is a highly relevant factor to be taken into consideration when the court exercises its powers and discretion in the resolution of disputes.  Even if it can be established in this case that Tony had failed to fully account for the receipts and income of the Estate, as is alleged, in view of the inordinate and inexcusable delay on Victor’s part in coming to court to seek compliance with paragraph (f) of the Schedule, I am not prepared to condone such delay by making any order as sought.

Any breach of terms of Schedule?

16.In any event, on the evidence adduced, I cannot accept that Victor has clearly established that Tony was indeed in breach of any duty to account.  As highlighted by counsel for Tony, Victor has only made partial disclosure of the documents produced by Tony under cover of his solicitors’ letter of 9 October 1992.  There has been a lapse of 20 years from 1992, and Victor has admitted (in the evidence filed in other ongoing proceedings) that he has suffered from memory loss and decline since 2009.  His evidence as to Tony’s breach is unreliable.

Any prejudice?

17.If it is necessary for Tony to establish prejudice suffered as a result of Victor’s delay in seeking compliance with paragraph (f), I am satisfied that he has done so.  Tony claims that relevant documents have been lost.  The business of his own company had ceased in 1992.  It was argued on behalf of Victor that Tony can easily recover from his former solicitors copies of the documents sent to Victor’s solicitors on 9 October 1992, to show that he had given full accounts as required by paragraph (f) of the Schedule.  However, that was over 20 years ago, and by virtue of the delay, any records that may have been retained by Tony’s former solicitors in 1992 would, in all probability, have been destroyed by now.

18.I also accept Tony’s claims, that the witnesses who can give evidence as to whether he had received rental and assets of the Estate have now died, and he is no longer able as a result of the delay to obtain evidence from these witnesses to challenge Victor’s claims of his alleged failure to make all proper accounts.

Time bar

19.Finally, as Counsel for Tony has submitted, any claim by Victor on the basis of Tony’s breach of the compromise agreement set out in the Schedule is time-barred.  Tony’s alleged breach and  failure to furnish the documents and information which (as Victor claims) fall within the ambit of his duty to account under paragraph (f) took place in 1992, and on Victor’s case as to the last demand made, in 2003.  The Summons was not issued until November 2012, more than 6 years from the date of breach.

Conclusion

20.For all the above reasons, I dismiss the Summons, and make an order nisi that Victor should pay to Tony the costs of and occasioned by the Summons, which costs include certificate for counsel.

Mr Kenneth C L Chan and Ms Annie Lai, instructed by Fan Wong & Tso, for the 2nd plaintiff

Mr Adrian Bell SC and Mr Alan C Y Yung, instructed by Hastings & Co, for the defendant