HUI KIT KEUNG AND ANOTHER v. HSUI KWOK KEUNG AND ANOTHER

HCA 808/2015

[2018] HKCFI 1782

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

HIGH COURT ACTION NO 808 OF 2015

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DECISION

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INTRODUCTION

1.  This is the Plaintiffs’ application, with the consent of the Defendants, for a vesting order of a property known as Flat A, 16^th Floor, Fairview Court, 15-17 King Kwong Street, Hong Kong (“the Property”) in favour of the Plaintiffs as executors and trustees of the last will of Madam Leung Sheik Ying (梁雪影 ), deceased (“the Deceased”). At the conclusion of the hearing on 26 July 2018, I dismissed the application with reasons to be given later, which I now do.

BASIC FACTS

2.  The Deceased had five children, namely:-

(1) the 1^st Plaintiff, a son;

(2) the 2^nd Plaintiff, a daughter;

(3) the 1^st Defendant, a son;

(4) the 2^nd Defendant, a daughter; and

(5) Madam Hui Lai Chun (“Madam Hui”), who is not a party to this action.

3.  The Deceased used to be the sole registered owner of the Property.

4.  On 14 September 1999, the Deceased assigned the Property to herself and the 1^st and 2^nd Defendants as joint tenants, with each holding a 1/3 undivided part or share of and in the Property.  According to the Plaintiffs, the assignment was for no consideration, although a consideration of HK$1.8 million was stated on the face of the assignment.  It is further the case of the Plaintiffs that the 1^st and 2^nd Defendants held their respective shares in the Property upon a resulting or constructive trust for the Deceased absolutely.

5.  On 25 February 2003, the Deceased executed a Notice of Severance of Joint Tenants in respect of the Property.  On the same date, she assigned her 1/3 share in the Property to herself, the 1^st and 2^nd Plaintiffs and Madam Hui as tenants in common for the apparent consideration of HK$500,000.

6.  Accordingly, the following persons have, since 25 February 2003, been the registered owner of the Property in the following shares:-

(1) the Deceased (1/12);

(2) the 1^st Plaintiff (1/12);

(3) the 2^nd Plaintiff (1/12);

(4) the 1^st Defendant (1/3);

(5) the 2^nd Defendant (1/3); and

(6) Madam Hui (1/12).

7.  The Deceased passed away on 17 September 2005 at the age of 82, leaving a will dated 25 February 2003 (“the Will”).  Probate of the Will was granted to the 1^st and 2^nd Plaintiffs as the named executors and trustees on 16 July 2009 in HCAG 5865/2009.

8.  By this action, commenced by the Plaintiffs on 16 April 2015 against the Defendants, the Plaintiffs (as executors and trustees of the Will) seek, inter alia, (i) a declaration that the Defendants hold portions of the Property upon a resulting or constructive trust for the Deceased absolutely, and (ii) an order that they do transfer to the Plaintiffs their respective shares in the Property.  In passing, I should mention that there is also a claim raised against the 2^nd Defendant in the Statement of Claim concerning some monies in various bank accounts in which the Deceased allegedly had an interest.  That claim is not relevant for the present purpose.

9.  In their respective Defences, the Defendants deny that they hold their shares in the Property on trust for the Deceased.

10.  Following a successful mediation, the Plaintiffs, the Defendants and Madam Hui entered into a settlement agreement dated 9 May 2018 (“the Settlement Agreement”).  Under the Settlement Agreement, the parties agree that the Property forms part of the estate of the Deceased and that it should be sold, with the proceeds of sale being distributed to them in accordance with the provisions in Clause 2 thereof.

11.  On 17 July 2018, the Plaintiffs issued a summons (“the Summons”) pursuant to Section 45 of the Trustee Ordinance, Cap 29, and Order 85, rule 2 of the Rules of the High Court, Cap 4A, seeking, inter alia, the following order by consent:-

“The land and premises known as … (‘the Property’) do vest in the 1^st and 2^nd Plaintiffs as Executors of LEUNG SHEIK YING, deceased.”

DISCUSSION

12.  The present application is, in my view, procedurally wrong, improperly constituted and/or misconceived for the following reasons.

13.  First, the application is made by way of an inter-partes summons in a writ action in which the Plaintiffs seek, in so far as the Property is concerned, an order for, inter alia, (i) a declaration that the Defendants hold their shares in the Property on trust for the Deceased, and (ii) a transfer of their shares in the Property to the Plaintiffs as executors and trustees of the Will of the Deceased.  The application is purported to be made pursuant to Order 85, rule 2 of the Rules of the High Court, which, as stated in Hong Kong Civil Procedure 2018, at paragraph 85/0/2, deals generally with actions brought for the administration of the estate of a deceased person, for the execution of a trust, or for the determination of any question arising in the course of administration or in connection with a trust and cognate matters.  That rule envisages that the relevant application would be made by way of an originating process for the determination of questions or for relief arising in the course of the administration of an estate or execution of a trust, and not by way of an inter-partes summons in an existing action.  The normal practice, so far as this court is aware, is that proceedings under Order 85, rule 2 of the Rules of the High Court are commenced by way of originating summonses.  This is not to say that the court has, strictly speaking, no jurisdiction in an ordinary writ action to entertain an application for the sort of relief which may be granted in an administration action under Order 85, rule 2.  There seems to me, however, no good reason or basis in the present case to permit the Plaintiffs to suddenly change the nature of this ordinary action to recover trust property into an administration action.

14.  Second, the Plaintiffs are asking the court to make an order to vest the whole Property in themselves as executors of the Will.  However, as earlier mentioned, Madam Hui is one of the registered owners of the Property, but she has not been made a party to this action.  If the Plaintiffs wish to apply for an order which has the effect of divesting Madam Hui of her share in the Property, Madam Hui ought, I consider, to be made a party to the action and to the application.  Mr Yip (for the Plaintiffs) argued that it was not necessary to join Madam Hui as a party because she had given her written consent to the vesting order sought by the Plaintiffs.  While I would not rule out completely the possibility that the court may, in some exceptional circumstances, make an order dealing with the property of a non-party, I cannot see any good reason in the present case for doing so without Madam Hui being brought in as a party to the action.

15.  Third, the relief sought in the present application, namely, a vesting order of the whole Property, is outside the scope of the relief sought in the Writ dated 16 April 2015 or the prayer for relief in the Statement of Claim dated 28 April 2016.

16.  Fourth, since all registered owners of the Property are apparently agreed that the Property should be vested in the Plaintiffs as executors of the Will, I see no reason why they cannot execute an assignment, or confirmatory assignment, of the Property in favour of the Plaintiffs, and why a vesting order of the court is required.  Mr Yip argued that a vesting order was needed because the parties intended to sell the Property and the purchaser might raise requisitions on title.  Mr Yip was, however, unable to identify what sort of requisitions might be raised by the purchaser which could, or could only, be answered by the production of a vesting order of the court.  In any event, it needs to be emphasized that it is no part of the court’s function to make a vesting order merely for the sake of assisting a vendor to prove title or answer requisitions, or facilitating the conveyancing process.

17.  Fifth, Mr Yip stated at the hearing that the Plaintiffs’ application was based only on sub-paragraph (g) of Section 45 of the Trustee Ordinance, which states as follows -

“In any of the following cases, namely –

(g) where land or any interest therein is vested in a trustee whether by way of mortgage or otherwise, and it appears to the court to be expedient,

the court may make an order (in this Ordinance called a vesting order) vesting the land or interest therein in any such person in any such manner and for any such estate or interest as the court may direct, or releasing or disposing of the contingent right to such person as the court may direct”.

18.  Mr Yip further stated, in answer to the court’s query, that in the application of Section 45(g) to the present case, the “trustee” referred to therein would be the Plaintiffs.  However, it seems clear that Section 45(g) envisages the situation where land or any interest therein is vested in a trustee and an order is sought to vest such land or interest in a third person (other than the trustee).  In the present case, the Plaintiffs, as executors and trustees of the Will, are vested with the 1/12 share in the Property formerly held in the name of the Deceased, but it is not the Plaintiffs’ application that such 1/12 share in the Property should be vested in any other party.  It may be argued that the respective shares in the Property held in the names of the Defendants and Madam Hui are held by them as “trustee” and an order ought to be made to vest those shares in the Plaintiffs in their capacity as executors and trustees of the Will in view of the agreement of the Defendants and Madam Hui that the Property forms part of the estate of the Deceased.  However, I do not see why it would be “expedient” for the court to make a vesting order when, as earlier mentioned, the same result can be achieved by the parties themselves without any court order.

DISPOSITION

19.  For the foregoing reasons, the Plaintiffs’ Summons dated 17 July 2018 is dismissed.  The Plaintiffs and the Defendants are agreed that there should be no order as to costs.