QI MIN LIANG AND OTHERS v. NANYANG COMMERCIAL BANK TRUSTEE LTD

HCMP2508/2003

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 2508 OF 2003

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REASONS  FOR  JUDGMENT

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The dismissal

1. I have dismissed the defendant’s two summonses for :

(i)  the dismissal of the plaintiffs’ case for want of prosecution; and

(ii)  security of costs from the foreign plaintiffs. 

I shall set out the chronology of events as a background to the defendant’s applications. 

Background

2. In HCAP13/1997 I have delivered a judgment in respect of the estate of Mr Choy Ching Ming who died on 28 August 1996.  Part of his estate was intestate. 

3. The matter was settled in the Court of Appeal under CACV826/2001 by a consent order dated 28 May 2002.  

4. One of the beneficiaries entitled under the intestate of Mr Choy was his niece Madam Zhang Wen Jing. 

5. On 27 April 1998 Madam Zhang died intestate leaving behind her husband and six children who are the plaintiffs in the present case. 

6. In June 2002 the defendant was appointed as the 1^st named plaintiff’s attorney to apply for a grant of letters of administration in respect of Madam Zhang’s estate in Hong Kong.  Consequently on 24 January 2003 the letters of administration was granted to the defendant. 

7. The present proceedings were commenced by the plaintiffs seeking from the defendant’s, inter alia, verified accounts of the administration, payment into court of money received/to be received, etc.  At the 1^st hearing of the originating summons before me on 16 July 2003, the defendant was directed to furnish and verify accounts and produce for inspection of all original documents in support of those accounts.  The defendant was further directed to release to the plaintiffs the net amount not in dispute after the plaintiffs’ execution of the Deed of Release and Indemnity. 

8. On 17 December 2003 I have made an order by consent :

“1.   Upon Mr. Qi Lian Hua executing the Deed of Release and Indemnity (a copy of which has been submitted to the court with the riders), paragraph 5 of the Order of the Honourable Mr. Justice Yam dated 15^th July 2003 be deemed to be complied with and the Defendant shall within 5 days thereof release to the Plaintiffs as beneficiaries the Net Amount in the sum of $1,003,100.38 to the account of Qi Lian Hua maintained with the Bank of China, Shanghai Branch, A/C No.4563510800003087235 pursuant to paragraph 1 of the Summons dated 15 September 2003.

2.    The disputed claims of HK$1,253,703.02 and HK$1,804,957.54 by the claimants set out at pages (1) and (3) of the Statement of Account (Interim) of the Defendant dated 30^th July 2003 respectively shall be dealt with in separate proceedings.”

9. It was further ordered that paragraphs 2 to 7 of the aforesaid summons dated 15 September 2003 be adjourned sine die with liberty to restore.  These paragraphs compiled the following three substantive reliefs :

(1) In respect of the Statement of Account (Interim), the defendant should file an affidavit within 7 days to furnish the names of claimants to the estate, nature of each claim and the amount of each claim, and to exhibit all relevant documents, papers or invoices as maintained by each claimant in support of their claims; and there shall be an order for inspection of original documents as submitted by claimants within 14 days.

(2) The plaintiffs should have 14 days to serve notice of objections to the defendant; on receipt of such notice of objections, the defendant be directed to notify the relevant claimants and at the same time requiring the claimants to apply to the court for admission of their claims within 20 days of the plaintiffs’ notice of objection.

(3) Upon receiving no application by claimants as aforesaid, the balance of the estate monies be deemed undisputed and releasable within 5 days after the execution of the Deed of Release and Indemnity.  

10. On 22 December 2003 Qi Lian Hua executed the Deed of Release and Indemnity in favour of the defendant who then released the aforesaid undisputed sum to the plaintiffs on the same day. 

The present dispute

11. It has not been provided in my order as to who should bear the burden of bringing separate proceedings to deal with disputed claims.  However, as the plaintiffs are the only beneficiaries under the estate, they do not have an interest in the assets of the estate until the residue of their estate is ascertained.  They have the right to compel proper administration of the estate.

12. On the other hand, the defendant, as an administrator of the estate, has the right and duty to protect and distribute the estate in its administration.  Accordingly it is the duty of the administrator to deal with each and every claim and if in doubt, the administrator should either refuse the claim or invite the claimants to bring separate proceedings to claim against the estate. 

13. However in this respect the defendant has several different capacity apart from being an administrator of the estate.  It itself is a claimant, and on top of that it is also the attorney for the Notary Public in the PRC to claim against the estate for an amount of notarial fees which the plaintiffs described as very excessive.

14. Further it is against a number of disputed claims that the plaintiffs have tried to make discovery of their nature and supporting documents but the end result has not been very fruitful.

15. Further, the administrator may negotiate with the claimants for a settlement or to obtain consent from the beneficiaries or direction of the court to effect payment of any of these disputed claims. None of this has been done by the administrator.  By now most of the claims have already been time barred and it is the duty of the administrator to obtain direction from the court either to entertain such a claim or to settle the same according to the direction of the court and the wishes of the beneficiaries. 

16. Instead of dealing with all the claims against the estate, the defendant as administrator took out the present summons to strike out the plaintiffs’ claim.  In fact the defendant has not been diligent enough in administrating the estate. 

17. For the aforesaid reasons this court cannot entertain such an application when the in-action was on the part of the defendant itself. 

Conclusion on the 1^st summons

18. The defendant should bear the burden of dealing with the claims against the estate and should bear the burden of taking out separate proceedings for direction of the court in respect of those claims. 

19. The defendant as administrator is in severe conflict of interest in the discharge of its fiduciary duty to the beneficiary when it itself is one of the claimants and also acts as the attorney for another claimants. 

20. Apart from dismissing the defendant’s application herein, it is high time in my view, to appoint a neutral and independent administrator to administer the estate in order to deal with any other outstanding claims against the estate including those of the administrator and the Notary Public of the PRC who is being acted through the defendant itself. 

21. Accordingly apart from dismissing the defendant’s application to strike out the plaintiff’s claims herein for want of prosecution, I will adjourn the present proceedings for further direction for the appointment of a new administrator to a date to be fixed before me.  Both parties should file affidavit to propose or agree on a new administrator within 21 days from the date of handing down this judgment with an early date to be given for the next hearing. 

Security for costs

22. By the same token, it goes without saying that the defendant’s application to ask for security for costs is also dismissed since the defendant is in possession of two substantial sums of money as aforesaid, and these two sums form part of the estate of which the defendant can levy its claims of costs.  There is no reason why the plaintiffs in this case should provide security for costs. 

23. The defendant itself should pay for the costs of these applications personally.