YEUNG LAI SZE RITZ (also known as YEUNG LAI SZE) v. CHEUNG YIN LING ELLIE AND OTHERS

HCAP 19/2022

[2025] HKCFI 2894

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

PROBATE ACTION NO 19 OF 2022

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BETWEEN

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D E C I S I O N

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1.  The subject matter before me is the application (“the Application”) made by the administrator (“the Administrator”) of the estate (“the Estate”) of the late Mr Yeung Kam (“the Deceased”) by the summons (“the Summons”) issued by the Administrator on 30 July 2024 for the following:

“1. Directions be given to the Administrator, who was appointed as administrator ad colligenda bona and pendente lite of the estate of the Deceased (the "Estate") pursuant to the Order of the Deputy High Court Judge Winnie Tsui dated 12 June 2023 in the proceedings herein, regarding the following matters:

(1) That the Administrator may participate in the proceedings FCMP 40/2024 and any appeals in connection with those proceedings on behalf of the Deceased and/or her Estate (the “Family Provision Application”), and that the Administrator shall adopt a neutral stance, which need not mean a passive stance, in the Family Provision Application.

(2) Whether the Administrator should procure Elsan Limited, a company which the Estate wholly owns, to apply for an order to remove itself as a party in the Family Provision Application.

2. An order that the Administrator’s costs of, associated with or incidental to, or occasioned by, and all and any expenses and disbursements arising from, associated with or incidental to, the Family Provision Application shall be raised and paid out of the Estate on the trustee basis.”

2.  In this decision, the Plaintiff is referred to as “P”, and the Defendants are referred to as “D1” to “D8” respectively. Based upon the evidence adduced by the Administrator, I am satisfied that all the parties have been given notice of this hearing and served with the relevant papers.

3.  In the hearing before me, the Administrator, P and D6 are represented by counsel. The Administrator is represented by Mr Kerby Lau and Mr Paul Law. P is represented by Mr Martin Ho and Mr Sik Chee Ching. D6 is represented by Mr Terrence Tai and Mr Raphael Leung. D1 to D3 are represented by Mr H Kwok of Kwok Hei Law Office. The Application is opposed by P and D6. D1 to D3 adopt a neutral stance.

Background

4.  The Administrator is Mr Ip Woon Shun of Messrs Hugill & Ip (“HIP”), who is the court-appointed independent administrator pendente lite and ad colligenda bona of the Estate pursuant to the order of the DHCJ Winnie Tsui (as she then was) made herein on 12 June 2023 (“the Appointment Order”). Grant was issued to the Administrator on 18 June 2024.

5.  The background facts have been set out in the Decision (“the May 2023 Decision”) of DHCJ Winnie Tsui (as she then was) dated 4 May 2023[1]. In gist:

(1) The Deceased passed away on 16 January 2022 at the age of 78.

(2) The Estate is substantial in size, the total worth is about HK$500 million.

(3) In 1973, the Deceased was married to D4, who later gave birth to P, D5 and D6. This is the first fong.

(4) In the 1980’s, the Deceased began an extramarital relationship with D1, who later gave birth to D2 and D3. This is the second fong.

(5) In about 2000, the Deceased began another extramarital relationship with D7, who later gave birth to D8. This is the third fong.

(6) P, D1 to D8 are all beneficiaries (“Beneficiaries”) under the 2013 Will (which is being propounded by P), and all of them are also beneficiaries under the 2021 Will (which is being propounded by D1 to D3). However, the amounts of distributions under the two wills are different.

(7) In the May 2023 Decision, the learned judge held that there is clearly a degree of friction and hostility between P and D1 in the handling of the assets of the Estate, and it is unrealistic to expect any smooth or meaningful cooperation between the two of them when it comes to the administration of the estate.[2]

(8) P proposed to appoint herself and D1 as the administrators pending resolution of the present action, whereas D1 to D3 proposed the appointment of an independent professional administrator. In the May 2023 Decision, the learned judge adopted D1 to D3’s proposal. On 12 June 2023, the learned judge made the Appointment Order.

6.  On P’s own case, P, D4-D6, and D7 and D8 are in the same camp (“P’s Camp”).[3] In other words, D1 to D3 are in the other camp (“Cheung’s Camp).

7.  The background of the Family Provision Application (“FPA”)[4] mentioned in the Summons is as follows:

(1) On 13 March 2024, D4 made an application for family provision under the Inheritance (Provision for Family and Dependents) Ordinance (“IPFDO”) in the Family Court. D4 named the Administrator and Elsan Limited (a company which the Deceased solely owned and the Administrator was a director therein) (“Elsan”) as the 12^th and 13^th Respondents in that application.

(2) In the FPA, apart from the usual reliefs for family provision, D4 is also seeking:

(a) an order under s.11 of IPFDO that the Deceased’s severable one half share in Flat D, 11/F, Skyscraper, 132-142 Tin Hau Temple Road, Hong Kong (“Skyscraper Property”), or such share of the Skyscraper Property as appeared to the Court to be just, be treated as part of the net estate of the Deceased; and

(b) if and insofar as necessary and/or appropriate, an order under s. 12 of IPFDO that D3 do provide to D4 the shares in Yuk Sing Garment Development Limited, or such sum of money or other property as the Court thinks fit, for the purpose of financial provision under s. 4 of IPFDO.

(3) By the Order of Master GT Lung dated 2 May 2024 made in the FPA, that application was adjourned sine die, but the deadlines for various parties, including the Administrator and Elsan, to file affirmations in the FPA still stand. Further, the Administrator and Elsan were also required to file progress reports in the FPA.

8.  On 26 June 2024, HIP wrote to P’s then solicitors (who had been speaking for P’s Camp), saying that D4 might have improperly joined Elsan as a party in the FPA. HIP asked D4 to withdraw her claim against Elsan. There has not been any reply from P’s Camp to this request.

9.  On the same date, HIP wrote to all the Beneficiaries, informing them that the Administrator intended to take a neutral stance in the FPA and proposed to make an application in the FPA that Elsan shall cease to be a party in that case (“the Proposed Misjoinder Application”). Prior to the commencement of these proceedings, there was no response to this letter, save and except a holding reply from D1 to D3’s solicitors on 15 July 2024, and a holding response from P’s then solicitors on 23 July 2024.

10.  On 30 July 2024, the Administrator took out the Summons.

11.  On 11 September 2024, P filed her 9^th Affirmation, in which P said at §40 that she “do not have any principled objection to the Administrator being joined in the Family Provision Application as a nominal party with a neutral stance”, but she objected to the Proposed Misjoinder Application. P also expressed concerns about the costs estimate provided by the Administrator in respect of the FPA.

12.  On 28 November 2024, D6 filed her 2^nd Affirmation, in which she asked the Court to dismiss §§1(2) and 2 of the Summons. D6 had no objection to the Administrator participating in the FPA with a neutral stance, but she objected to the Proposed Misjoinder Application on the basis that there was “no risk in the foreseeable future that the continued participation of Elsan in the Family Provision Application would cause any prejudice to the assets of the Estate”.[5]

13.  On 8 January 2025, the Administrator wrote to the Beneficiaries and proposed the following to allay P’s and D6’s concerns:

(1) The Administrator would (a) invite the Family Court to excuse his personal attendance; and (b) invite the Family Court to excuse and/or dispense with counsel’s attendance in future hearings of the FPA (including the Proposed Misjoinder Application).

(2) The Administrator and/or Elsan shall issue a summons in the FPA for a determination as to the removal of Elsan as a party in the Family Provision Application.

(3) Based on the above, approximately HK$1.4 million could be saved. The costs estimate would decrease from HK$2.5 million to around HK$1.1 million.

14.  On 14 January 2025, P’s solicitors refused to agree to the above proposed course of conduct. No other Beneficiaries replied to the Administrator’s letter dated 8 January 2025.

§1(1) of the Summons

15.  After considering the written and oral submissions made on behalf of P and D6, it is now clear that neither P nor D6 is opposing §1(1) of the Summons.

(1) P’s position is that there can be no doubt that the Administrator should stay neutral in the FPA. None of the Beneficiaries is suggesting otherwise. It would be the Administrator’s duty to stay neutral in the FPA. There is no need for the Court to sanction a course of action that is his duty to pursue.

(2) D6’s position is that the Administrator should maintain a genuinely[6] neutral stance in the FPA.

16.  It is trite that executors or administrators “are always entitled to the guidance of the court for their own protection when difficulties arise in the administration or the distribution of an estate or trust assets.”[7] In Marley v Mutual Security Merchant Bank & Trust Co Ltd [1991] 3 All ER 198, Lord Oliver of Aylmerton delivered the opinion of the Privy Council and said[8]:

“A trustee who is in genuine doubt about the propriety of any contemplated course of action in the exercise of his fiduciary duties and discretions is always entitled to seek proper professional advice and, if so advised, to protect his position by seeking the guidance of the court.”

17.  As to the course proposed in §1(1) of the Summons, as a matter of fact, apart from P and D6, no other Beneficiaries have expressly endorsed the proposal. Given the serious friction and hostility between P’s Camp and Cheung’s camp, and given the fact that the FPA is made by D4 in P’s Camp, as a matter of prudence, there is nothing wrong for the Administrator to seek guidance from the Court in terms of §1(1) of the Summons. It is perfectly understandable that the Administrator would like to seek protection from the Court for the course taken by him in terms of §1(1) of the Summons in the FPA.

18.  In my view, it is correct for the Administrator to stay neutral in the FPA, including any appeals in connection with those proceedings. However, staying neutral does not mean that the Administrator would do nothing in those proceedings. The Administrator would need to comply with the directions given by the Court, for example, filing affirmations and progress reports, and making all the necessary discoveries. The Administrator or his representative would also need to peruse papers and to attend hearings to monitor the progress of the proceedings in the FPA. Further, the Administrator would also need to render the necessary assistance to the Court if and when necessary. Thus, the neutral stance adopted by the Administrator in the FPA does not necessarily mean a passive stance.

19.  With respect, I am unable to agree with P that it would not be necessary for the Administrator to obtain an order in terms of §1(1) of the Summons. For the reasons set out in §17 above, I am of the view that an order in terms of §1(1) of the Summons is necessary. I would grant that order.

20.  D6’s concern would not be a reason for refusing an order in terms of §1(1) of the Summons. The Administrator would have the protection given by the order if he acts within the scope of the order in the FPA. For the sake of discussion and to state the obvious, if the Administrator takes any step in the FPA which cannot be classified as a step that a party adopting a neutral stance should take, that move would not be within the protection conferred by the Court.

§1(2) of the Summons

21.  By §1(2) of the Summons, the Administrator wants to have an answer from this Court, ie whether the Proposed Misjoinder Application should be taken out, so that the Administrator would be protected by the answer given by this Court.

22.  The Administrator is of the view that D4 has improperly named Elsan as a respondent in the FPA. If Elsan remains as a party in the FPA, costs would be incurred by Elsan, and in turn this would have an adverse financial impact on the Estate. Thus the Administrator is considering whether the Proposed Misjoinder Application should be taken out.

23.  The Administrator submits that the Proposed Misjoinder Application is a meritorious application. On the other hand, P submits that there are respectable arguments against the Proposed Misjoinder Application. In my view, the Proposed Misjoinder Application, if taken out, would be adjudicated by the Family Court, not by this Court. That being the case, I would not set out the arguments for and the arguments against the Proposed Misjoinder Application in this decision, and I would not comment on the merits of these arguments.

24.  If Elsan improperly or unnecessarily remains as a party in the FPA, the loss suffered by Elsan would be the costs incurred by Elsan in the FPA, and in turn this would have an adverse financial impact on the Estate. Ultimately, the interests of the Beneficiaries would be adversely affected. However, as a matter of fact, although the Administrator has brought the Proposed Misjoinder Application to the attention of all the Beneficiaries, none of them has come forward and say that he or she would support taking out the Proposed Misjoinder Application. Both P’s Camp and Cheung’s Camp are legally represented. The stance taken by each camp must be their informed choice made by them after having legal advice. Since all those who may be adversely affected by the joinder of Elsan in the FPA (ie the Beneficiaries) are not interested in the Proposed Misjoinder Application or do not consider the application as necessary, I am of the view that the answer to the question in §1(2) of the Summons should be “No”.

§2 of the Summons

25.  Since the answer to §1(2) of the Summons is “No”, the question in §2 of the Summons should be in relation to the costs and disbursements incurred by the Administrator as a result of §1(1) of the Summons, whether those costs and disbursements should be paid out from the Estate to the Administrator on trustee basis.

26.  Both P and D6 submit that the Administrator is seeking a Beddoe order, but the Administrator has failed to comply with the requirements in PD20.3.

27.  In relation to the matters in §1(1) of the Summons, I am satisfied that the matters in §7 of PD20.3 have been covered in substance by the evidence filed by the Administrator. Being a party in the FPA is not the Administrator’s own choice. He has been named by D4 as a respondent in the FPA. The Administrator only intends to stay neutral and to comply with the directions given by the Family Court in the FPA. As said in the above, this is a reasonable course. None of the Beneficiaries has said that the Administrator should adopt any other course.

28.  As to the estimated costs and disbursements likely to be incurred by the Administrator in the FPA, the Administrator has explained why he estimated that the total (including the costs and disbursements in the Proposed Misjoinder Application) would be around HK$2.5 million in §§19 to 30 of his 6^th Affirmation. In HIP’s letter dated 8 January 2025, the Administrator has also explained that he could try to reduce the total of the costs and disbursements (including the costs and disbursements in the Proposed Misjoinder Application) to around HK$1.1 million. In my view, giving the hostility between the parties in this case, it can be expected many matters would probably need to be resolved by the Family Court in the FPA. Bearing in mind that the Administrator should act with prudence in giving the estimates, and bearing in mind that matters set out in §18 above, I am of the view that the estimates given by the Administrator as indicated in the above cannot be said as unreasonable.

29.  One must not confuse the Administrator’s entitlement to costs and disbursements with the quantum of costs and disbursements. Since this Court is prepared to sanction the course taken by the Administrator in the FPA in terms of §1(1) of the Summons, the costs and disbursements incurred by the Administrator in taking that course should be reimbursed by the Estate. This is the Administrator’s entitlement. As to the exact quantum of the costs and disbursements, that would be subject to taxation by a master.[9]

30.  P and D6 also submits that by engaging HIP (in which the Administrator is a partner) as the law firm representing the Administrator in the FPA, the Administrator is in a position of conflict of interest. As submitted by the Administrator, this objection cannot stand. By §§5 and 12 of the Appointment Order, leave has already been given allowing the Administrator to engage HIP in discharge of his duties and dealing with claims. That being the case, there can be no criticism against the Administrator for engaging the firm expressly allowed and sanctioned by the Court.

31.  There is no valid objection to the application for an order in terms of §2 of the Summons. I would grant that application. For avoidance of doubt, I would put down a remark that the following matters should be taken care of in the taxation (if any) in future:

(1) Since the answer to the question in §1(2) of the Summons is “No”, only the costs and disbursements within the scope of §1(1) of the Summons should be allowed.

(2) If the actual costs and disbursements claimed by the Administrator are significantly greater than the estimates provided by the Administrator in §§19 to 30 of his 6^th Affirmation and revised in HIP’s letter dated 8 January 2025, justification from the Administrator is required.

Costs

32.  All parties are in agreement that in the absence of any improper conduct, costs incurred by the parties in this application should be paid out of the Estate.[10]

33.  In my view, although I answered the question in §1(2) of the Summons in the negative, there is nothing improper on the Administrator’s part for seeking an answer from the Court on that question. Being aware of reasons in support of the Proposed Misjoinder Application, it is proper for the Administrator to seek a direction from the Court on whether the Proposed Misjoinder Application should be taken out, so that the Administrator would be protected by a direction given by the Court. Equally, although I do not accept some submissions made on behalf of P and D6, I would not say that there is any improper conduct on their part. In my view, P and D6 are only expressing their concerns on whether some unnecessary legal costs might be incurred by the Administrator in the FPA, and thereby their interests might be prejudiced.

34.  I order that costs of the Application, including costs of and pertaining to this hearing and all costs reserved (if any), be borne by the Estate, in the case of the Administrator on trustee basis and in the case of the parties appeared in this hearing (ie P, D1-D3, and D6) on common fund basis.[11] There be a certificate for 2 counsel. All costs are to be taxed by a master if not agreed.

Disposition

35.  The Application is disposed of in the way as indicated in the above.

36.  Lastly, it remains for me to thank all counsel and solicitor for the very helpful assistance rendered to the Court.