LAU MUK ON AND OTHERS v. LAU YAM HEI

HCMP 1746/2006

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 1746 OF 2006

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D E C I S I O N

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1.  The present proceedings were commenced in 2006 as an application by the beneficiaries to the estate for account, injunction and removal of the Defendant as the surviving administrator of the estate of Lau Yik Yam.  By a Deed of Family Arrangement of 30 September 2009, parties have agreed to settle the matter.  The Defendant agreed to step down as administrator and two other persons, who are respectively the sons of two other beneficiaries, were to apply to be appointed jointly as administrators in place.

2.  To implement the agreement of the parties, a consent summons was filed on 2October 2009 seeking,

(a) the revocation of the original grant and the issue of a new grant in favour of the two designated persons;

(b)    the dismissal of the proceedings;

(c) each party shall bear his/their own costs.

3.  After some correspondence with the solicitors, the matter was referred by the Master to this court.

4.  In the correspondence, solicitor for the Plaintiff accepted that the case does not fall within Section 33(1) of the Probate and Administration Ordinance [“PAO”] Cap. 10.  There is therefore no basis for the making of an order for revocation.

5.  The parties actually want to proceed under Section 33(3) of the PAO seeking to have the Defendant removed and substituted by the appointment of the two designated persons as co-administrators.  That sub-section provides,

“The court may, if satisfied that the due and proper administration of the estate and the interests of the persons beneficially entitled thereto so require, suspend or remove an executor or administrator … and provide for the succession of another person in place of such executor or administrator and for the vesting in that other person of any property belonging to the estate.”

6.  There is nothing in that subsection which prescribes that the original grant must be revoked before the power of removal and substitution of administrators can be exercised.

7.  In England, the statutory power of the court to remove and appoint substituted personal representative is found in Section 50 of the Administration of Justice Act 1985 whilst the power to revoke a grant is contained in Section 121 of the Supreme Court Act 1981.  The exercise of the former power does not depend on the latter.  It should also be noted that on the face of the wordings of the legislative provisions, the power under Section 50 appears to be wider than that under our Section 33(3).  In the English provision the court is given a general unfettered discretion whilst Section 33(3) requires the court to be satisfied that the due and proper administration of the estate and the interests of the persons beneficially entitled thereto so require before the power can be exercised.

8.  The English practice is set out at Tristram & Coote’s Probate Practice 30^th Edn p. 883 and Williams Mortimer & Sunnucks, Executors, Administrators & Probate (2008), para. 60-14.  Though the original grant has to be lodged at the Registry of the Family Division, it is not revoked.  Rather, a memorandum of the order for substitution would be endorsed on or permanently annexed to the grant.  Given the need for a vesting order to be made in Hong Kong as explained below, I think the Section 33(3) order should be annexed to the original grant.

9.  To carry out the agreement of the parties, I do not think it is necessary to have the original grant revoked.  Given the history of the matter and the wish of the Defendant to step down on account of his age, I am satisfied that the due and proper administration of the estate and the interests of the beneficiaries to the estate requires the court to exercise its power under Section 33(3).

10.  As regards the appointment of the substituted administrators, I do not think it is necessary for them to show that they are entitled to a fresh grant by reference to their interest in the estate under the Non-contentious Probate Rules.  The court has an unfettered discretion as regards the choice of substituted administrators under Section 33(3).  There can be many instances where all the existing beneficiaries find it more conducive to the proper administration of the estate to have persons other than themselves to be the substituted administrators.  Provided that the court is satisfied as to the fitness of that other persons and their consents to be so appointed, I see no reason why the power cannot be exercised in their favour.

11.  In the present case, one of the designated persons, Lau Kam Wah Paul, has made an affirmation on 8 February 2010 in support of the application.  Even though he has not said so explicitly, the tenor of his whole affirmation shows that he consented to be appointed.  As for the other designated person Lau King Chiu, his consent is indicated by his signature of the Deed of Family Arrangement.

12.  Having regard to the wishes of the beneficiaries as set out in the Deed of Family Arrangement, the nature and value of the unadministered estate, the background and qualifications of the designated persons, I am satisfied that, subject to the filing of affirmations as directed below, I should appoint them to be the substituted co-administrators.  Though Lau King Chiu is resident out of the jurisdiction, Lau Kam Wah Paul is residing within the jurisdiction.  I do not think it is necessary to require security in such circumstances.

13.  Though it is not a fresh grant, in line with the practice for the appointment of other personal representatives, I am of the view that the proposed substituted co-administrators should be required to file affirmations similar to Form No. S3.1b used by the Probate Registry with the necessary modifications[1].  Whilst the affirmation of 8 February 2010 of Lau Kam Wah Paul has provided this court with most of the information, that affirmation does not depose to matters set out in paragraphs 7 and 8[2] of the specified form.  In the circumstances, I give liberty to the parties to file supplemental affirmations by Lau Kam Wah Paul and Lau King Chiu covering such matters within 14 days.

14.  In England, no vesting order is necessary when the court appoints a substitute personal representative (see Atkin’s Court Forms, 2^nd Edn, Vol 2 (2003 Issue), p. 21).  Section 50(2) of the Administration of Justice Act 1985 provides that the appointment of the substituted personal representative constitutes the person as executor or administrator of the estate as from the date of appointment.

15.  In contrast, our Section 33(3) gives the court the power to provide for the vesting in the substituted personal representative of any property belonging to the estate by way of succession. 

16.  Thus, unlike the position in England, when the court appoints substituted personal representative under Section 33(3) in Hong Kong, it is necessary to make a vesting order at the same time.  Lau Kam Wah Paul has set out the properties remained to be administered at paragraph 4 of his affirmation.  There will be a vesting order in favour of the substituted co-administrators regarding such properties.

17.  I will therefore make an order accordingly.  But the grant shall not be annexed with the order until the designated persons have both filed the supplemental affirmations as directed.

18.  The other relief sought in the Originating Summons is dismissed.  Each party shall pay his or their own costs.

[1] E.g. Para.11 has to be modified in the light of the nature of this application (not being an application for grant de bonis non) and what I have said above regarding their lack of interest in the estate.

[2] Those paragraphs deal with estate duty liability of the estate and the undertaking by the proposed personal representatives to administer the estate according to the law and to account.