CHAN FOK YI v. CHAN KAM WAH

HCMP 2437/2015

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 2437 OF 2015

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REASONS FOR DECISION

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INTRODUCTION

1. By the defendant’s summons filed on 31 August 2016, the defendant seeks leave to appeal against an order made by this court on 21 July 2016 that the costs of this action, including all costs reserved, are to be paid by the defendant personally to the plaintiff, to be taxed if not agreed, and the defendant is not entitled to recoup such costs and his own costs of this action out of the estate (“Estate”) of the Chan Li Mui, deceased (“the Deceased”).

2. At the conclusion of the hearing of the defendant’s summons on 22 September 2016, I dismissed the summons with costs, with reasons to be given later.  This I now do.

BACKGROUND

3. The Deceased passed away on 19 April 2007.  In her last will dated 13 March 2006 (“the Will”), the Deceased left half of her estate to the plaintiff absolutely, and directed that her residuary estate was to be distributed in accordance with the provisions of the Intestates’ Estates Ordinance, Cap 73.  The plaintiff and the defendant were named as executors and trustees of the Will.

4. Probate of the Will was granted to the defendant on 30 November 2007, with power being reserved to the plaintiff to apply for and obtain a double probate of the Will.  As can be seen from the schedule of assets and liabilities attached to the grant of probate, the Estate comprised, inter alia, 26 landed properties in Hong Kong.

5. According to the plaintiff, he was initially unaware of the contents of the Will and was not informed by the defendant that he was a named executor and trustee of the Will and the beneficiary of half of the Estate.  He only found out about his entitlements under the Will at a meeting with the defendant in 2013.

6. The plaintiff then demanded the defendant to transfer half of the Estate to him by letter dated 19 February 2014. This was refused by the defendant by letter dated 3 March 20914, unless the plaintiff agreed to pay the legal costs and expenses for (i) obtaining the grant of probate, and (ii) vesting half of the Estate to the plaintiff.  The plaintiff also demanded the defendant to provide a full account of the assets of the Estate by letters dated 25 March 2014 and 24 August 2014 respectively, but the defendant failed to comply with that demand.  By another letter dated 24 August 2014, the plaintiff sought the defendant’s consent for a certified copy of the Will to be provided for the purpose of applying for a double probate of the Will. The defendant’s consent was not forthcoming.

7. Eventually, the plaintiff took out the originating summons herein on 29 September 2015. By the originating summons, as amended on 19 October 2015, the plaintiff sought, inter alia, an order for the removal of the defendant, and the appointment of the plaintiff, as executor of the Estate, and other consequential relief.

8. On 26 February 2016, double probate of the Will was granted to the plaintiff.  As a result, the plaintiff’s application for his appointment as executor of the Estate was no longer needed or pursued.  The rest of the plaintiff’s claims against the defendant continued. 

9. The plaintiff’s amended originating summons came before this court on 21 July 2016. As can be seen from the skeleton submissions filed on behalf of the plaintiff dated 18 July 2016, the plaintiff pressed for an order to remove the defendant as executor of the Estate on the following grounds:

(1) irregular administration of the Estate;

(2) failure and/or refusal to provide a proper and full account, notwithstanding a consent order made on 3 February 2016 requiring the defendant to give an account of the properties and monies of the Estate which had come to his hands and of his dealings therewith and an extension of time granted to him on 21 May 2016 to give the account;

(3) mismanagement of the properties of the Estate;

(4) misappropriation from the Estate; and

(5) unfitness to continue to act as executor of the Estate.

10. In the skeleton submission dated 19 July 2016 filed on behalf of the defendant, he indicated for the first time that he did not resist the plaintiff’s application for his removal as executor of the Estate on the ground that his medical condition made him unfit to continue to administer the Estate.  The defendant, however, continued to dispute the plaintiff’s allegations of fault, misconduct and breach of duties.

11. At the hearing on 21 July 2016, I made an order removing the defendant as executor of the Estate and granted other consequential relief without opposition by the defendant.  On the question of costs, having heard submissions from the parties, I made the order mentioned at the beginning of these reasons.  I did so on the basis that, even if one were to disregard various allegations of misconduct against the defendant (such as the allegation of misappropriation from the Estate), the defendant’s failure to properly administer the Estate since November 2007 (including the ascertainment of the beneficiaries of the Estate), his failure to render a proper account in respect of his dealings with the properties of the Estate since the date of the grant, and his allowing the Estate’s lands to be managed by the village heads of Ping Yeung Village, would be sufficient for the court to make an order to remove him as executor for the Estate.  These were in addition to his late indication that he did not resist the plaintiff’s application for his removal as executor of the Estate.

PROPOSED GROUNDS OF APPEAL

12. In the draft notice of appeal attached to the defendant’s summons, 5 grounds of appeal are raised.

13. In respect of grounds 1, 3 and 4, Mr Lawrence Lam (on behalf of the defendant) confirmed, at the hearing of the leave application, that they all related to the same point, namely, that the plaintiff did not require the defendant’s consent to obtain double probate of the Will and hence his application to be appointed as executor of the Estate was misconceived.  It is also contended that the defendant assisted the plaintiff to obtain the double probate and this ought to be taken into account in the court’s exercise of discretion on the issue of costs.  As earlier mentioned, the consent that the plaintiff sought from the defendant was for a certified copy of the Will, not his consent for the plaintiff’s appointment as executor of the Estate.  In any event, the additional costs incurred in these proceedings in relation to the plaintiff’s application for his appointment as executor of the Estate, which was not pursued after the double grant issued on 26 February 2016, would be relatively insignificant.  The main battle in this case was the removal of the defendant as executor of the Estate, which the defendant only conceded shortly before the substantive hearing of the plaintiff’s amended originating summons.

14. Ground 2 in the draft notice of appeal contends that the court failed to consider or sufficiently consider the following matters, namely (1) the plaintiff’s omission for over 7 years after the death of the Deceased to apply for a grant of probate, (2) the services rendered by the defendant in administering the Estate by letting out lands to earn rental income for the benefit of the plaintiff and other beneficiaries of the Estate, and (3) the defendant was not a beneficiary entitled to share the Estate but spent time and resources in administering the Estate for the benefit of the plaintiff and other beneficiaries of the Estate.  In respect of (1), the plaintiff has explained that he only found out about his entitlements under the Will in 2013.  In respect of (2), the defendant has, it seems to me, failed to properly manage the landed properties belonging to the Estate but left them to be managed by the village heads of Ping Yeung Village.  In respect of (3), the fact that an executor is not a beneficiary and is not paid for his services for administrating an estate is not an excuse for his breach of duty.

15. Lastly, ground 5 in the draft notice of appeal contends that the present application by the plaintiff was not a “hostile” litigation in that the proceedings were instituted to ascertain the interests of the beneficiaries and have some questions determined which had arisen in the course of the administration of the Estate.  According to the defendant, the present case falls within the 2^nd category of cases referred to in Re Buckton [1907] 2 Ch 406, such that the costs should be paid out of the Estate.  In my view, ^this ground is completely misconceived.  The present application has nothing to do with the ascertainment of any interests of the beneficiaries or determination of any question arising out of the administration of the Estate.  The principal issue remaining to be determined at the substantive hearing of the plaintiff’s amended originating summons was the removal of the defendant as executor of the Estate on the ground of misconduct and/or breach of duties.  I failed to see how this case can fall within the 2^nd category of cases referred to in Re Buckton.

CONCLUSION

16. In all, I am not satisfied that the defendant’s proposed appeal againstthe court’s exercise of discretion on a matter of costs has any reasonable prospect of success.  Accordingly, the defendant’s summons filed on 31 August 2016 is dismissed with costs to the plaintiff, to be taxed if not agreed and to be borne by the defendant personally.

 Mr Tony Chow, instructed by Fu & Cheng, for the plaintiff

Mr Lawrence Law, instructed by Jim & Co, for the defendant