Land Law — Court allows mentally incapacitated person’s next friend to obtain order for sale under the Partition Ordinance without making prior application under the Mental Health Ordinance
The Court accepted that the question of whether a party is required to act through a next friend should ordinarily be determined by the party himself or by those caring for him (perhaps with the advice of a solicitor), without the need for inquiry by the Court.
Chin Ling Wah by her son and next friend Shum Lui v Shum Chau
| Reference: | [2022] HKCFI 1800; [2022] 3 HKLRD 372 |
| Court: | Court of First Instance |
| Before: | Deputy High Court Judge Jonathan Chang SC in Court |
| Appearance: | Ross Yuen, instructed by Kwok Ng & Chan assigned by the Director of Legal Aid, acted for the successful Plaintiff |
| Date of Judgment: | 24 June 2022 |
Overview
To deal with the property and affairs of a mentally incapacitated person (“MIP”), it is conventional to apply under the Mental Health Ordinance (Cap 136) (“MHO”). In a special situation where such application is yet to be made, can a next friend apply to the Court for an order for sale of the MIP’s property under the Partition Ordinance (Cap 352) to raise funds for maintenance and support of the MIP?
In this case, the Court answered the question in the affirmative and gave guidance on the procedural steps. More importantly, in the present case where the property was held in joint tenancy, the Court held that an order for sale must be in the obvious benefit of the MIP, even though obvious benefit is not usually featured as a consideration in applications under the Partition Ordinance.
Factual Background
The subject property is co-owned as joint tenants by the plaintiff and her daughter, the defendant. In 2015, the Director of Social Welfare was appointed as the guardian of the plaintiff on the basis that she was an MIP in need of protection.
In 2017, the guardianship order was not renewed because the Director was satisfied that the plaintiff’s best interest and welfare needs could be met by leaving her under the care of her son.
In 2018, the son as the next friend of the plaintiff commenced the action under the Partition Ordinance for an order for sale of the plaintiff’s jointly-owned property with the defendant. The purpose is to raise funds for the maintenance of the plaintiff.
The Court’s Analysis
Standing of the next friend without an order under the Mental Health Ordinance
The Court found that there is no pre-requisite to appoint a committee under the MHO to manage an MIP’s financial affairs before a next friend of the MIP can commence legal proceedings.
The starting point is Order 80 rule 2(1) of the Rules of the High Court (Cap 4A) which provides that a person under disability may not bring or make a claim in any proceedings except by his next friend. Under Order 80 rule 1, a person under disability includes an MIP within the meaning of the MHO who, by reason of mental disorder or mental handicap (as the case may be), is incapable of managing and administering his property and affairs.
The Court however accepted that although Order 80 refers to the MHO, it operates separately from the MHO; hence, an inquiry under Part II of the MHO is not required to establish the mental incapacity of the person under disability. In general, a person can sue, without leave, as a next friend for a person under disability by filing the documents listed under Order 80 rule 3(8).
Therefore, the Court accepted that the question of whether a party is required to act through a next friend should, in the ordinary case, be determined by the party himself or by those caring for him, perhaps with the advice of a solicitor (who has to file a certificate under Order 80 rule 3(8)(c) to certify that he knows or believes the party is one under disability with supporting grounds), without the need for inquiry by the Court.
Nonetheless, the Court noted that the opposite party is entitled to challenge the next friend’s authority by applying for a stay or dismissal of the proceedings. Such dispute of authority should not be raised only in defence let alone at trial, but should first be resolved before the action is allowed to proceed. This is to avoid a total waste of time and resources on the substantive issues at trial if the point on lack of authority should be upheld at the end of the day.
Sale in the “obvious benefit” of the mentally incapacitated person
In considering whether an order for sale is appropriate, it is well established that a co-owner has a basic right to rid him/herself of the shackles of co-ownership. However, it was less straightforward here in that the subject property is held in joint tenancy and it involved dealing with the MIP’s assets when the application under the MHO is yet to be made.
The Court considered where the co-owners are joint tenants (as in the present case), the sale of the property has the effect of limiting a joint tenant’s share to half (or such other portion as the Court may determine), and the joint tenant is effectively forgoing the chance of becoming a sole owner by operation of the doctrine of survivorship in the event of being pre-deceased by the other co-owner. This potential loss, so to speak, might be something against the interest of the MIP as the Court was unable to ascertain the MIP’s wish.
The Court held that a sale in such circumstances has to be in the obvious benefit of the MIP in the overall circumstances by adopting the observation of Bowen LJ in Porter v Porter (1888) LR 37 Ch D 420 at 430:
“It is obvious that, in the absence of the principal person who is concerned, his property ought to be left as far as possible, and so far as his interest does not render the opposite thing necessary to be done – in the condition in which it was, quieta non movere. But still if it is for his protection and for his obvious benefit then the Court ought to interfere to give him, while his senses are sleeping, the same sort of protection to which he would be entitled if his senses were awake, and he could act for himself.”
The Court was satisfied that an order for sale is in the plaintiff’s obvious benefit. In particular, the Court has taken the following factors into consideration: –
1. The current financial status of the MIP: The Court found that the plaintiff has no other meaningful assets available for free disposal apart from her interest in the subject property.
2. The financial need of the MIP: The Court accepted the evidence that the next friend has to pay about RMB 8,000 monthly to an elderly home in Shenzhen for the plaintiff.
3. Other alternative source of funds: The Court found that there is no guarantee that the next friend can, and certainly no legal obligation that he should, financially support the plaintiff permanently; and given the plaintiff’s physical condition, it is unrealistic to relocate her back to Hong Kong to enjoy the social welfare.
The Court found that liquidating the subject property is the only certain and feasible way to provide the plaintiff with funds to maintain her well-being. In balancing the expense of her losing out her half share in the subject property, the Court was satisfied that the plaintiff’s present needs outweigh the mere hope of a future benefit.
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Takeaways 1. A claim can be brought for an MIP without filing medical evidence to prove the his/her disability under Order 80. Nonetheless, under Order 80 rule 3(8)(c), the solicitor is required to file a certificate stating the grounds of knowledge or belief that the party is a MIP. It is therefore prudent for the solicitor acting for an MIP to have sight of at least certain medical evidence in this regard and to make sufficient enquiries. 2. If a defendant desires to challenge the standing of the next friend or the medical condition of the MIP, he/she should apply for a stay or dismissal of the proceedings and should not raise the challenge only by defence let alone at trial. 3. The simple procedures of Order 80 allow a next friend to kick-start an action for an MIP. It is particularly apt in a case where the cause of action may soon be time barred, or where the MIP is not in Hong Kong and cannot access the medical officers recognized under the MHO. 4. It is advisable to make the application for setting up a committee to manage the property and affairs of the MIP under the MHO as soon as practicable. Without the committee, the sale proceeds pursuant to the order for sale cannot be applied to the maintenance of the plaintiff. 5. The requirement of “obvious benefit” is relevant not only in a case of joint tenancy but also tenancy in common. Porter (supra) in fact involved the partition of a property held in tenancy in common. It would however appear that the consideration is less complicated in a case of tenancy in common. |
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Ross Yuen
Called to the Bar in 2008, Ross has developed a general civil practice with particular emphasis on land and commercial law. • Lead Harvest Group Ltd & Ors v Cheong Wing Electric Limited & Ors LDCS 6000/2018 [2022], HKLdT 8, 7 Feb 2022 (the Tribunal set record breaking reserve price of over HK$5 Billion in compulsory sale application) • Hung Yip (HK) Engineering Co Ltd v. Kinli Civil Engineering Ltd[2021] 1 HKLRD 860 (applicant of injunction to restrain presentation of winding-up petition to demonstrate presentation would be abuse of process which is not the same as demonstrating bona fide defence on substantial grounds) • Gain Wealth Global Credit & Investment Ltd v Chan Suk Fong [2020] 4 HKLRD 831 (calculation of effective rate of interest to determine if maximum permitted under Money Lenders Ordinance had been exceeded and exercise of discretion under s.25(1), (2)(b) of the Ordinance) • Monat Investment Ltd v. All Person(s) in Occupation of Part of the Remaining Portion of Lot No 591 in Mui Wo D.D. 4 No.16 Ma Po Tsuen, Mui Wo, Lantau Island and Another [2020] 4 HKLRD 330, [2020] HKCFI 1970 (whether a squatter’s unlawful actions preclude his adverse possession claim from succeeding). Visit Ross’ profile for more details.
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This article was first published on 9 August 2022.
Disclaimer: This article does not constitute legal advice and seeks to set out the general principles of the law. Detailed advice should therefore be sought from a legal professional relating to the individual merits and facts of a particular case. The photograph which appears in this article is included for decorative purposes only and should not be taken as a depiction of any matter to which the case is related.