CHENG TANG KAM YUNG v. TANG KAM CHEUNG AND ANOTHERR

HCMP 147/2008

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 147 OF 2008

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REASONS FOR DECISION AND FURTHER ORDER

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1.  In January 2008, the plaintiff commenced these originating proceedings pursuant to O.85 of the Rules of the High Court (“RHC”) against the 1^st and the 2^nd defendants in their capacity as the joint administrators of the intestate estate of late Tang Chung Sau (“the Estate”). By the order of the court, the 1^st defendant also represents the estate of the 2^nd defendant, who passed away after the commencement of these proceedings.

2.  On 21 November 2012, the plaintiff took out the summons for the replacement of the defendants as the administrators of the estate.  After hearing in open court, I handed down the written judgment on 26 August 2013 (“the Judgment”); and made the following order:

(1) The 1^st defendant (for himself and as representative of the estate of the 2^nd defendant) shall be removed as the administrator of the Estate;

(2) There be leave to the plaintiff to rely on her 4^th affirmation attached to her summons dated 25 June 2013;

(3) There be leave to the 1^st defendant to submit in writing within 14 days his nominations of professional accountants, if any, for appointment as the administrator of the Estate by the court;

(4) Paragraph (1) above shall take effect upon the actual appointment of the new administrator by the court, which shall be made on paper; and until then, the 1^st defendant (for himself and as representative of the estate of the 2^nd defendant) shall continue to be bound by the undertaking as recorded in the order of the court dated 6 March 2013;

(5) The 1^st defendant shall personally pay the costs of and occasioned by the plaintiff’s application (including any costs reserved), which shall be taxed, if not agreed.

3.  The 1^st defendant did not respond to the above directions.

4.  Following his notice to act in person, the 1^st defendant filed a notice of appeal against the Judgment on 9 September 2013.

5.  On the same day, the 1^st defendant filed a summons seeking stay of execution of the Judgment until the final disposal of the appeal.  This was supported by his 3^rd affirmation in these proceedings.

6.  On 15 September 2013, the 1^st defendant filed another summons seeking an order that he and the 2^nd defendant be allowed to have ‘interim capacity’ as the administrator of the Estate to conduct certain sets of litigation until the final disposal of the appeal; and to be reimbursed for the reasonable costs and disbursements of the litigation by the Estate.  This was supported by his 4^th affirmation.

7.  After hearing, I dismissed both summonses and ordered the appointment of the professional administrators.  I said I would give my reasons in writing, which I now do.

8.  I also find it necessary to revisit the order made at the end of the hearing in respect of the appointment of the professional administrator.  I shall deal with that at the end.

DISCUSSION

9.  I shall not repeat here the background of and the reasons for the Judgment.

10.  The order to remove the defendants as the administrators would take effect only upon actual appointment of the professional administrator in their places.  I so ordered mainly because the plaintiff provided his nomination for professional administrator only on the day before the hearing; and only one nominee was put forward.  I decided to give the 1^st defendant the opportunity to submit his nomination, if he so desired.  I made that clear in the Judgment.

11.  In other words, until the actual appointment of the professional administrator, the 1^st defendant (himself and as representative of the estate of the 2^nd defendant) remained the administrator of the Estate.  That in fact remained the position when he took out his present summonses.

12.  In the circumstances, I could only understand the defendants to be applying for the stay of the order to appoint the professional administrator pending the appeal.  That was how I proceeded to consider the applications.

13.  Mr Tse for the plaintiff submitted that the appeal against my order dated 28 August 2013 is an interlocutory appeal, and therefore leave to appeal would be necessary.  I doubt that.

14.  Mr Tse submitted that in any event, the 1^st defendant had the burden of justifying the stay.  That was right.  O.59, r.13(1) of the RHC provides that:

“Except so far as the court below or the Court of Appeal or a single judge may otherwise direct –

(a) an appeal shall not operate as a stay of execution or of proceedings under the decision of the court below;

(b)no intermediate act or proceeding shall be invalidated by an appeal.”

15.  It is the burden of the applying party to justify a stay of execution pending appeal. The practice of the court is that justification could be demonstrated only if good reasons exist.  That would commonly entail the consideration of factors such as whether the absence of the stay would render the appeal nugatory.  Where it is demonstrated that an appeal would be rendered nugatory in the absence of a stay, the court may require no more than the existence of an arguable appeal.  Where it cannot be shown that the appeal would be rendered nugatory in the absence of a stay, the court will require (in the absence of other factors) to see strong grounds of appeal or likelihood of success.  But if the grounds of appeal are simply not arguable, no stay would be granted.  Each case turns on its own circumstances.  See Star Play Development Ltd v Bess Fashion Management Co Ltd, HCA 4726/2001 (7 June 2002), per Ma J (as he then was).

16.  The 1^st defendant stated in both summonses that the order made by this court should not be enforced because of special circumstances.  In his 3^rd and 4^th affirmations, the 1^st defendant referred to a couple of legal actions already commenced in relation to some of the lands belonging to the Estate that were being trespassed.  Some of the related documents now exhibited in support, though dated well before the last hearing, were not adduced at the last hearing.

17.  The main argument of the 1^st defendant was that the Judgment took away his capacity as the administrator and therefore he had to suspend all the legal proceedings that he has commenced to recover the lands from trespassers.  The legal costs and work done by him were wasted as a result.

18.  In view of the effect of the order last made, as explained above, the 1^st defendant’s argument was wrong.  There was no vacuum; and the 1^st defendant was indeed still under the duty as the administrator until removed only now.

19.  The 1^st defendant at the same time deposed that he had ‘currently’ appointed ‘staff’ to take care of the lands; and he produced photographs in support of what were done after the Judgment.  So the 1^st defendant indeed purported to act as the administrator even after the Judgment.

20.  The 1^st defendant then argued that appointing professional administrator would be costly, ineffective and inefficient.  He suggested that action often needed to be taken promptly to attend to the lands belonging to the Estate; and the professional administrator would be unable to do so either at all or without incurring expenses on hiring third party help.  The 1^st defendant, on the contrary, has been and would be willing to do so for free and full time.

21.  The 1^st defendant also argued that the professional administrator would instruct another firm of solicitors to recover the lands being trespassed.  All the legal costs already incurred in this respect would be wasted; and further legal costs would be incurred unnecessarily.

22.  I do not share the 1^st defendant’s speculation or make assumption before the professional administrator has the chance of taking stock and considering the concrete steps in the administration of the Estate.  Suffice it that the proposal submitted by the professional administrator nominated by the plaintiff reflected sufficient understanding of the situation of the Estate.

23.  More importantly, the 1^st defendant simply failed to focus on the relevant question for the present purpose, namely, whether his appeal would be rendered nugatory if the professional administrator was now appointed to take over the administration of the Estate.  The answer to the question, in my view, is no.

24.  The 1^st defendant suggested that even during the lifetime of his late father, he was designated to administer the lands and to take care of the ancestral tombs.  In court, he basically claimed that there was and would be no other person who was supposed to be or would be capable of carrying out the duties.

25.  During the last hearing, all that the 1^st defendant said was his belief that being the eldest child of the family, he was supposed to shoulder up the responsibility of administration of the Estate.  In any event, it was incorrect for the 1^st defendant to assume that he would be excluded from all aspects of the administration of the Estate once the same was taken over the professional administrator.

26.  Mr Tse for the plaintiff submitted that the 1^st defendant’ applications should be dismissed also because there is no merit in the appeal.

27.  In his notice of appeal, the 1^st defendant suggests that I erred on (i) the evidence; and (ii) the procedure.

28.  It is said that I erred on the evidence in the following manner:

(1) erred in admitting the plaintiff’s evidence;

(2) wrongly expressed the opinion that the interest rate charged by his lenders on his loan for the Estate was excessive;

(3) failed to consider sufficiently the facts of the case;

(4) failed to take or take proper account of the following:

(a) the defendants’ best endeavour to provide the accounts for the period between 1998 and 2008;

(b) only 3 sales of land in the Estate during the period between 2008 and 2012;

(c) the defendants’ having informed the plaintiff not only of the loans but also the interest at the rate of 48-52% per annum; and the plaintiff never objected to that;

(d) the defendants’ best endeavour to take care of the lands in the Estate, including issuing 2 writs of summonses and warning letters to trespassers as well as reporting to the police.

29.  I shall not repeat my discussion of the relevant evidence in the Judgment. Suffice it that the appellate court would not lightly disturb the court’s decision if it was one that the court was entitled to make on the basis of the evidence before it.

30.  I should however mention his ground of appeal that the court failed to take into account his best endeavour to render the accounts of the administration of the estate (up to 2008).  On that, I specifically asked the 1^st defendant about the further and outstanding account, which he represented during the last hearing that it would be available by the end of July 2013.  In fact, his counsel then argued that the removal of the defendants as administrators would be premature as the further and outstanding account would be available soon.

31.  The answer the 1^st defendant gave was that the accountant somehow needed the court’s decision or direction as to the reasonable amount of interest repayment on the loans before finalising the further account.  In short, the account was not available.

32.  The 1^st defendant’s answer defied common sense and credibility.  This only reinforced the court’s doubt (already expressed in the Judgment) about how genuine he was in his so-called best endeavour in complying with his duty to render true account as and when required.

33.  In the appeal, the 1^st defendant also complains that his solicitors have adduced insufficient evidence by way of his 2^nd affirmation dated 19 March 2013.  This is hardly attributable to the court, let alone an error, even assuming such assertion is justified as a matter of fact.

34.  As to the procedure, the 1^st defendant complains that there was insufficient enquiry.  There was said to be no opportunity for witness to testify in court.  Nor was there direction for the plaintiff’s application to proceed as if it were begun by way of writ.

35.  None of these procedural points has ever been taken by the defendants’ legal representatives at any stage.

36.  Further, the sole basis for this ground of appeal is that there is factual dispute in respect of the interest rate on the loans taken out by the 1^st defendant.  However, for the purpose of her application, the plaintiff was not disputing but in fact relying on, among other things, the 1^st defendant’s case that he has utilised much of the proceeds of the Estate to repay the high interest on loans.

37.  As explained in the Judgment, the history of the 1^st defendant’s administration of the Estate, even on his own case, cried out for the court’s intervention under section 33(3) of Cap 10.

38.  In short, I am sceptical about the chance of success of the appeal.

39.  Before the hearing was concluded, the 1^st defendant also attempted to retract from his undertaking given to the court recorded in the order of Au-Yeung J dated 6 March 2013.  That was his undertaking not to dispose of any landed properties and buildings by way of sale, charges or otherwise of the Estate without giving at least 14 days’ written notice to the plaintiff.

40.  Now the 1^st defendant alleged that the undertaking was extracted from him as a result of his then solicitors having been misled by the plaintiff’s solicitors; and the undertaking was given without his consent.  Such assertion was wild and astonishing.

41.  Had what the 1^st defendant said during this hearing been put forward when the plaintiff’s application was last heard, it would only have reinforced the need to order his removal and replacement for the due and proper administration of the Estate (though that was already the conclusion on the basis of the materials actually before this court then).

42.  For the above reasons, I made the following orders at the end of the hearing:

(1) The defendants’ application by summons filed on 9 September 2013 and 17 September 2013 be dismissed.

(2) In place of the 1^st defendant, for himself and representing the estate of the 2^nd defendant, Stephen Liu Yiu Cheung and David Yen Ching Wai of Ernest & Young Transactions Limited be appointed as the joint and several administrators of the Estate on the professional fee scheme as set out at pages 15-16 of the written proposal exhibited to the 4^th affirmation of the plaintiff filed on 25 June 2013, and now annexed to this order.

(3) Costs of and occasioned by the defendants’ applications be paid by the 1^st defendant personally, to be taxed, if not agreed, with certificate for counsel.

FURTHER ORDER

43.  Post-hearing thought has caused me to believe that a single professional administrator suffices, taking into account the scale and value of the remainder of the Estate and the expenses and hence interest of the beneficiaries.  This is also not a case where section 25(1) of Cap 10 would have required the appointment of not less than 2 administrators.

44.  Therefore I set aside the above order made at the end of the hearing to the extent that instead of 2 administrators, only David Yen Ching Wai (of Ernest & Young Transactions Limited) shall be appointed as the administrator of the Estate on the terms as ordered.

45.  The plaintiff should note that application for further and consequential directions is expected to be forthcoming.