LEUNG WING HONG v. LEUNG YIU CHO, the administrator of the Estate of Leung Kam Wah, the Deceased

HCMP 1473/2014

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 1473 OF 2014

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J U D G M E N T

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Introduction

1. The plaintiff (“P”) issued these proceedings against the defendant (“D”), the sole administrator of the estate of the deceased Mr Leung Kam Wah (“Deceased”), seeking, among various things, an order for an inventory and account of the Deceased’s estate (“Estate”), or alternatively, D be removed as administrator.  

2. P and D are beneficiaries of the Estate. 

3. There are 5 other beneficiaries of the Estate who are D’s siblings, or P’s uncles and aunts. When the matter first came before this court for directions, I directed that all the other beneficiaries should be served with the originating summons. Thereafter, the other 5 beneficiaries applied to intervene (“Interveners”), and leave was so granted on 3 February 2015. 

Background

4. The Deceased and his wife Madam Tam So (or Soi) Nui (“Madam Tam”) had 7 children, in order of their ages, the oldest first, as follows:

(i) D

(ii) Mr Leung Yiu Man

(iii) Ms Leung Lai Kuen

(iv) Ms Leung Lai Chun

(v) Mr Leung Yiu Tak

(vi) Mr Leung Yiu Wai, deceased, father of P (“LYW”)

(vii) Mr Leung Yiu Fat

5. The Deceased died intestate on 18 February 2008.  Madam Tam died intestate on 14 May 2013.  

6. P’s father, LYW married Ms Chan Sing Yin (“Ms Chan”) on 20 July 1979, and P is their only son.  P’s father predeceased his parents on 18 September 2003[1].  P has beneficial interest in the Estate under s 5(1) of the Intestates’ Estates Ordinance, Cap 73. 

7. D obtained the grant of letters of administration in respect of the Estate on 17 September 2009 (“Letters of Administration”)[2]. There was a schedule of assets and liabilities dated 11 July 2009 and an additional schedule dated 17 August 2009 attached to the Letters of Administration (“Schedules”)[3]. According to the Schedules, the Estate held the following:

(1) 3 landed properties, namely:

(i) a flat at Mei Foo Sun Chuen (“Mei Foo Flat”);

(ii) a car parking space at Mei Foo Sun Chuen (“Car Parking Space”); and

(iii) a flat at Tai Nan Street (“Tai Nan Street Flat”);

(2) Cash at bank totaling about HK$1,227,771.18;

(3) Shares publicly listed companies in Hong Kong, namely:

(i) 11, 534 HSBC shares;

(ii) 1,675 MTR shares;

(iii) 2,400 San Miguel shares;

(iv) 2,000 shares in 英皇國際集團有限公司;

(v) 400 shares in 英皇國際集團有限公司;

(vi) 1,000 shares in 奮發證券集團有限公司;

(vii) 1,000 shares in 中國奥園地產集團有限公司.

8. The Mei Foo Flat was in fact held by the Deceased, Madam Tam, LYW and Ms Chan as joint tenants.  LYW, the Deceased, and Madam Tam having all passed away, Ms Chan became the sole survivor/beneficial owner of the Mei Foo Flat on about 3 June 2013 upon registering a copy of Madam Tam’s death certificate.  About three months later, on 24 September 2013, Madam Chan entered into an agreement to sell the Mei Foo Flat for HK$5m, which sale was completed on 11 November 2013[4].

9. According to valuations carried out by RHL Appraisal Limited, as at 9 June 2015, the Tai Nan Street Flat was valued at HK$3,400,000, and the Car Parking Space valued at HK$900,000.  

10. It was D’s claim that the Deceased had chattels at the Mei Foo Flat and that Ms Chan had failed to return those chattels to D after the sale of the Mei Foo Flat. 

11. This led to D issuing a writ against Ms Chan on 18 February 2014 under DCCJ No 606 of 2014 (“DC Action”) seeking, among other things, delivery up of the Deceased’s chattels, including in particular a portable safe (“Safe”).  It was alleged by D in the statement of claim in the DC Action that inside the Safe there were 2 gold coins and a purchase receipt, the title deeds of the Tai Nan Street Flat and the Car Parking Space, a columbarium contract, share investment receipts and other receipts[5].

12. This was followed not long thereafter by P issuing the originating summons herein on 17 June 2014.  The orders sought by P in the originating summons were, among others, the following:

(i) A true and perfect inventory and account of the Estate verified by affidavit;

(ii) An order that D do further within 14 days thereafter allow P and his legal representatives to inspect all supporting documents in relation to the said account:

(iii) A copy of D’s Form L1.3b/ Affirmation by Administrator or a copy of his affirmation in support of his application for the grant of the Letters of Administration (“Form L1.3b”);

(iv) Further or alternatively, an order that D be removed from his position as the administrator of the Estate;

(v) An order that P and/or other suitable person(s) be appointed as the administrator(s) of the Estate.  

13. Thereafter D had in his 1^st affirmation filed in opposition to P’s application provided a one-page schedule of expenses in his 1^st affirmation[6] (“Schedule of Expenses”).  Madam Tam’s expenses were stated to be HK$1,923,075 and the other expenses were stated to be HK$1,259,976.  The total expenses amounted to HK$3,183,051. 

14. At the 1^st hearing before this court on 22 December 2014, upon this Court’s indication that D had a duty to provide a proper inventory and account, D undertook to file and serve on P and other beneficiaries a true and perfect inventory and account of the Estate verified by affidavit within a month, and further to provide P with a copy of his Form L1.3b within 7 days upon receipt of the same from the Probate Registry[7]. 

15. Pursuant to his undertaking, D had provided a copy of the Form L1.3b to P.  D further filed his 2^nd affirmation on 20 January 2015 exhibiting a copy of an inventory and account (“Account”). 

16. It was P’s complaint that the Account was still not a true and perfect account of the Estate. 

17. The parties had attended mediation, but unfortunately the mediation was not successful, and the matter came back before this court for determination.  All parties consented to the matter be dealt with on affidavit evidence, with no oral examination of deponents. 

18. Counsel Ms May Chung appeared for P at the hearing, and Counsel Mr Jason Wong appeared for D and the Interveners.  

The parties’ respective case

19. P’s case for removal was based mainly on the following grounds:

(i)  D’s inactivity and delay in distributing the Estate for about 5 years from the date of the grant of the Letters of Administration to the commencement of the action, or up until now about 7 years; 

(ii)  D’s failure in administering the Estate properly, fairly and impartially, including making unreasonable and/or excessive expenses from the Estate and acting in conflict of interest;

(iii)  D’s failure to keep a proper and accurate account of the Estate;

20. D’s case was based mainly on his allegation that P had ceased to have any interest in the Estate as a result of two oral agreements, the first one allegedly made in 1993 (“1993 Agreement”) and the second one, a family agreement allegedly made in 2009 (“2009 Agreement”).

21. P and Ms Chan denied the existence of these two agreements.  

Main Issues

22. To summarise, the main issues were:

(i) Whether the 1993 Agreement and the 2009 Agreement existed;

(ii) Whether there was absolute inactivity and/or delay in distributing the Estate on the part of D;

(iii) Whether there was any failure in administering the Estate properly, fairly and impartially, on the part of D;

(iv) Whether the Account was a true and perfect inventory and account within section 56 of the Probate and Administration Ordinance, Cap 10 (“PAO”).  

Evidence

23. There were altogether 4 affirmations filed on behalf of P, three by P himself and one by Ms Chan.  

24. D had filed 2 affirmations, and the 5 Interveners had each filed one affirmation in support of D’s evidence, but their affirmations were almost identical affirmations.  

25. Ms Chung submitted that no weight should be given to the Interveners’ affirmations, as they added nothing to D’s evidence.  In this respect, Ms Chung had referred the court to a New South Wales Supreme Court case In the matter of Colorado Products Pty Ltd (in prov liq) [2014] NSWSC 789. In this case, the plaintiffs had relied on the affidavit evidence of two witnesses, and Black J had noted that large parts of the affidavits of the two witnesses had been copied, generally word for word, from each other and the copied passages included many of the critical disputed conversations. Black J considered that the high degree of similarity substantially devalued the weight to be given to the affidavit evidence of the two witnesses, to the point that neither affidavit evidence could be treated as reflecting a genuine individual recollection of events as distinct from a collective reconstruction of them[8].

26. Ms Chung also referred to HKSAR v Subramaniam Navarajan, CACV 480/2006 unreported, 1 August 2007.  Burrell J had said in this case that as the witness statements taken by the same police officer from two witnesses were to all intents and purposes identical, common sense dictated that that many pieces of evidence could not have come from both witnesses, and that it was clear that certain expressions must have come from one or the other and if they came from one, they did not come from the other[9].  

27. In Ho Sing Yin v Chan Yiu Ling, HCA 90/2010, unrep, 13 July 2012, DHCJ Saunders, as he then was, had also said that where witness statements were presented to the court which were substantially identical, it would often be unlikely that the court would be able to place any weight at all on either witness[10].  

28. The contents of the Interveners’ affirmations were clearly mostly “copied and pasted” from the same version.  There was no explanation as to their similarity.  The affirmations were probably drafted by their solicitors, as the Interveners had required interpretation before signing, and would not have given the instructions to their solicitors in English.  In their affirmations, they had all confirmed what D had said were accurate and in this respect, they had not really given any independent evidence as to their own recollection or version of events, in particular in relation to the disputed 1993 Agreement and the 2009 Agreement.  I therefore accept that the Interveners’ affirmations, in so far as they purported to confirm what D had said about the two agreements should not be given any weight. 

The alleged 1993 Agreement and 2009 Agreement

1993 Agreement

29. According to D, the 1993 Agreement was that LYW and Ms Chan agreed to take care of the Deceased and Madam Tam, and therefore the Deceased and Madam Tam agreed to add the names of LYW and Ms Chan as joint owners of the Mei Foo Flat in 1973, and further LYW and Ms Chan had agreed at that time that they would not be entitled to further distributions from the Estate and the estate of Madam Tam. D alleged that it was pursuant to the 1993 Agreement that the Mei Foo Flat became jointly owned by the Deceased, Madam Tam, LYW, and Ms Chan since around 16 September 1993[11].  

The 2009 Agreement

30. After the Deceased passed away in February 2008, D said it should be Madam Tam who should be the one to apply for letters of administration of the Estate, but given Madam Tam’s old age, she and D’s siblings agreed that D should apply instead.  Further, according to D, it was Madam Tam who took the lead in administering the Estate and insisted that the status quo of the Estate should be maintained as far as possible[12]. 

31. Madam Tam then used certain cash from the Estate to purchase 10 Canadian maple gold coins, and, in memory of the Deceased, she gave D and the 5 Interveners one each, and one was also given to P through Ms Chan. 

32. Further, according to D, there were 8,142 HSBC shares in the Estate, and as HSBC was raising capital through rights issue at the time, D said he used cash from the Estate to purchase another 3,392 shares in HSBC, making a total of 11,534 and that he had distributed 1,600 shares in HSBC to P through Ms Chan, and that all beneficiaries agreed that the remaining odd lot of 344 shares would be given to D[13].

33. At the time when the gold coin and the 1,600 HSBC shares were given to P through Ms Chan, according to D, Madam Tam had told Ms Chan as Ms Chan would get the Mei Foo Flat, Ms Chan and P would in effect get a larger share of the Estate than other family members, and that in accordance with the 1993 Agreement, Madam Tam reiterated to Ms Chan that Ms Chan and P would not be distributed other assets from the Estate, while D and the 5 Interveners would not ask for the Mei Foo Flat. 

34. It was D’s case, that Ms Chan agreed on behalf of P, and D and the 5 Interveners had also agreed to this family arrangement, and this was the 2009 Agreement.  

Discussion

35. According to the land registry record, the Deceased and Madam Tam bought the Mei Foo Flat in joint names on 11 September 1973 for HK$90,000, and on 16 September 1993, it was transferred into the joint names of the Deceased and Madam Tam, LYW and Ms Chan at a consideration of HK$500,000.  

36. In Ms Chan’s affirmation, she married LYW in 1979 and at the time, the Mei Foo Flat was rented out.  In 1980, when P was born, the Deceased and Madam Tam decided to move into the Mei Foo Flat when their tenant moved out, and they requested LYW and Ms Chan to move in to live with them, in order that LYW and Ms Chan could help to take care of them.  LYW and Ms Chan agreed, and thereafter, LYW and Ms Chan had paid all of the rates, government rents, utility bills and household expenses of Mei Foo Flat until LYW’s death in 2003. 

37. According to Ms Chan, in around 1993, when P was about 13 years old, she and LYW had discussed about buying their own property, so that they and P could move out to their own property.  However, the Deceased and Madam Tam wanted the 3 of them to continue living in the Mei Foo Flat to take care of them and pleaded with LYW and Ms Chan to stay.  This then led to the arrangement that LYW’s and Ms Chan’s names would be added to the Mei Foo Flat.  It was Ms Chan’s case that LYW had paid the consideration of HK$500,000 to his parents as recorded in the Assignment dated 16 September 1993.  

38. In short, Ms Chan had denied D’s allegations that her name and LYW’s name were added on the condition that they were to take care of the Deceased and Madam Tam, and instead, there was monetary consideration paid.  Ms Chan further denied that as a result of her and LYW being added as joint owners, they had agreed that they would not be entitled to any further distribution from the Estate. 

39. Ms Chan also explained that in March 2003, LYW was discovered to have intestinal cancer in the terminal stage in March 2003, and that he was only given 3 weeks to live.  Ms Chan said she and LYW decided to try traditional Chinese treatment and they travelled to Guangzhou for such treatment from March to September 2003, which was of no use, and they returned.  Later LYW died in a hospital in Hong Kong.  During the 6 month period when Ms Chan and LYW were in Guangzhou, there was no one to look after the Deceased and Madam Tam, and it was decided that a foreign domestic helper would be employed to take care of the elderly couple. 

40. Ms Chan complained of ill treatment by D and the Interveners after the death of LYW, and that they did not want her to stay in the Mei Foo Flat.  P was at that time in Australia.  Although she had remained in the Mei Foo Flat initially due to pleas from the Deceased and Madam Tam, she and P eventually moved out in about March 2006.  Ms Chan said notwithstanding having moved out, she had visited the Deceased and Madam Tam regularly until the Deceased’s death in 2008.  Thereafter, due to the increasing hostility of D and the Interveners, she visited Madam Tam less often. 

41. D had not given any particulars at all of how, where, when and under what circumstances or from whom he came to know of the alleged 1993 Agreement.  

42. It was not D’s case that the transfer by the Deceased and Madam Tam to LYW and Ms Chan was a gift.  Although his case was that neither LYW nor Ms Chan had paid for the purchase price for the half share of Mei Foo Flat, he had said there was consideration for the transfer, which was that LYW and Ms Chan had agreed to take care of Madam Tam and the Deceased.  

43. On the Assignment dated 16 September 1993 of the Mei Foo Flat (“Assignment”), there was clearly a monetary consideration of HK$500,000 stated.  Paragraph (2) of the Recital thereof[14] stated that the Vendor (ie Madam Leung and the Deceased) agreed to sell to the Purchaser (LYW and Ms Chan) one equal undivided half share of the Mei Foo Flat at the consideration of HK$500,000 and it had been agreed between the Vendor and the Purchaser that they should hold the Mei Foo Flat as joint tenants.  Further, paragraph 1 of the Assignment stated that the receipt of the consideration of HK$500,000 was acknowledged by the Vendor (ie Madam Tam and the Deceased). 

44. There was no sufficient evidence from D to contradict what was stated in the Assignment. 

45. The alleged 1993 Agreement was between 4 persons, 3 of which are now dead.  There was no sufficient evidence that D was present when the alleged agreement was made, or that his evidence was based on any first hand knowledge.  There was also no sufficient evidence that any of the Interveners was present, and in any event, as I said earlier, in so far as those parts of their affirmations which purported to support what D said about the two agreements, such evidence would not be given any weight. 

46. Ms Chan is now the only survivor among the 4 parties to the alleged 1993 Agreement. Ms Chan was not required to attend any cross-examination. There was little evidence from D to challenge what Ms Chan had said about why the Mei Foo Flat was transferred into 4 joint names.  

47. The Deceased was 88 when he died in February 2008 and Madam Tam was also of about that age in 2008[15], which would make both of them about 73 in 1993.  There was no sufficient evidence that the Deceased and Madam Tam were in bad health in September 1993 when the transfer was made, or that they would at that time be contemplating any planning of their estate/s.  They had in fact gone to a solicitors’ office to sign the Assignment.  Had there been the alleged 1993 Agreement, they could have instructed solicitors to prepare a written agreement to record the terms and signed then and there. 

48. Further, had it been the intention of the Deceased and Madam Tam under the alleged 1993 Agreement, that the Mei Foo Flat would upon their death go to LYW and Ms Chan, and that the rest of their assets upon their death should go to D and the Intervenors, they could also have made a will to this effect.  In fact, adding LYW and Ms Chan as joint owners would not necessarily mean that LYW and Ms Chan would get the flat as they could both predecease the Deceased and/or Madam Tam.  As it turned out, LYW did. 

49. Moreover, if there had been the 1993 Agreement, then there was no reason why Madam Tam would then want to give P/Ms Chan the gold coin, and there was no reason why D would want to distribute or give to P/Ms Chan 1,600 HSBC shares out of the Estate, as according to him, under the 1993 Agreement, P/Ms Chan would have no beneficial interest/no entitlement to any distribution in the Estate. 

50. Anyway, according to D, Madam Tam had reiterated in 2009, and Ms Chan had agreed on behalf of P, that P and Ms Chan would not be distributed other assets from the Estate while D and his siblings would not ask for the Mei Foo Flat and D said he and his siblings agreed to this arrangement[16].  

51. First of all, based on D’s case of the 1993 Agreement, P was not a party to the 1993 Agreement. P’s name was not added to the Mei Foo Flat.  There was no benefit to be received by P.  P could not have been bound by the 1993 Agreement. 

52. As for the 2009 Agreement, according to D, the parties would be Madam Tam, Ms Chan on behalf of P, D and the Interveners.  P was by then about 30 years old.  There was no reason as to why P himself could not himself be a party to the agreement, and Ms Chan had to agree on his behalf.  In any event, Ms Chan denied she had agreed on behalf of P, and in fact she denied the existence of both agreements.  There was also no sufficient evidence of any benefit to P for giving up his interest in the Estate since P was not a joint owner of the Mei Foo Flat, and thus there was no consideration.  

53. In 2009, Madam Tam and Ms Chan were the only two surviving joint owners of the Mei Foo Flat.  No one could tell in 2009 whether Madam Tam or P would be the last survivor.  It was not quite clear how the 2009 Agreement was to be effected in the event if Ms Chan were to predecease Madam Tam.

54. Notwithstanding D’s case about the two agreements, he had clearly himself regarded P as continuing to be a beneficiary of the Estate, as P’s name was so included in the Form L1.3b.  

55. P’s solicitors first wrote to D on 3 April 2014 seeking a copy of the Form L1.3b, information about the leasing out of the Car Parking Space and the Tai Nan Street Flat, and an inventory and account of the Estate.  In their reply letter of 16 April 2014, D’s solicitors did not mention anything about the 1993 Agreement or the 2009 Agreement, nor did they state that P had no beneficial interest in the Estate, but instead D’s solicitors merely pointed out that what P was seeking was rather an academic exercise as all that remained in the Estate were the 2 properties[17]. 

56. Thereafter, there had been another round of correspondence, with D’s solicitors replying in a letter (dated 13 April 2014, but should in fact be 13 May 2014) that D would arrange a meeting with all the beneficiaries to discuss the matter, and that P was invited to attend[18]. Again, in this letter, there was no mention that P had no beneficial interest, or that he was not entitled to any distribution, in light of any 1993 Agreement or 2009 Agreement. 

57. It was only in D’s 1^st affirmation that he seemed to have first raised the allegations about the two agreements. D had referred to the fact that P and Madam Chan had kept quiet after the death of the Deceased and did not seek any distribution for some 4 years 8 months, and that this was consistent with D’s case of the existence of the two agreements. 

58. P explained that he had kept quiet only out of his respect and love for his grandparents that he did not take action during his grandmother’s lifetime against D and that he also gave D benefit of the doubt and tried to give him time to perform his duties as administrator.  P had however admitted that it was the DC Action that had triggered him to obtain legal advice with regards to his rights as a beneficiary of the Estate when he accompanied his mother to solicitors’ offices for the purposes of the DC Case.  

59. The burden was on D to satisfy this court the existence of the 1993 Agreement and the 2009 Agreement.  Having considered all the above, I am not satisfied that such burden has been discharged.  There was no sufficient evidence to support the existence of the two alleged agreements, and in any event, P could not have been bound by the alleged agreements. 

60. I will now consider P’s grounds for his application. 

Legal Principles

61. First of all, section 56 of PAO provides as follows:

“The personal representative of a deceased person shall, when lawfully required so to do, exhibit, by affidavit filed in the court, a true and perfect inventory and account of the movable and immovable property of the deceased, and the court shall have power as heretofore to require personal representatives to bring in inventories.”

62. This court has the power to remove an administrator under section 33(3) of PAO, which states that:

“(3) 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 (other than the Official 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.”

63. On removal of executor, it is stated in paragraph 85/2/15 of the Hong Kong Civil Procedure 2016 Vol 1 as follows[19]:

“The court can only make an order under s 33(3) of the Probate and Administration Ordinance for removal of an executor upon being satisfied that the due and proper administration of the estate and the interest of the beneficiaries so require… Executors should be removed if they (a) failed to render full and proper account despite repeated requests from the beneficiaries, and (b) were unjustifiably dilatory in distributing estates to the beneficiaries pursuant to the deed entered among them. The executors were further held personally liable for costs of such hostile litigations (Re Estate of Lee Da Kor [2010] 1 H.K.L.R.D. 415–423, Jeremy Poon J.)”

64. That the terms of section 33(3) are wide and the establishment of specific guilt or misconduct in administering the estate is not a pre-requisite to the exercise of discretions , as seen in Cheng Tang Kam Yung v Tang Kam Cheung & anor, HCMP 147/2008, unrep, 26 August 2013[20].  

65. There was no dispute on the above broad principles, and with such principles in mind, I turn to consider the present case.  

Inactivity and/or delay in distributing the Estate

66. It was not disputed that Ms Chan and P had moved out of the Mei Foo Flat in about March 2006, and that the Deceased and Madam Tam had continued to live in the Mei Foo Flat, the Deceased until his death in February 2008, and Madam Tam until her death in May 2013.  

67. D had obtained the Letters of Administration in respect of the Estate in September 2009. It was not clear whether D had proceeded to apply for grant in respect of Madam Tam’s estate.  

68. What seemed also to be not disputed was that Ms Chan acquired physical possession of the Mei Foo Flat on about 7 August 2013. 

69. It was Ms Chan’s case in her defence in the DC Action that she entered an agreement to sell the Mei Foo Flat on 24 September 2013 and delivered vacant possession to the new purchaser the following day, on 25 September 2013[21], although the completion of the sale was scheduled on 15 November 2013.  

70. It was further Ms Chan’s case in her defence in the DC Action that if those chattels listed by D in his statement of claim, with the exception of the Safe, were indeed kept in the Mei Foo Flat (which was denied by Ms Chan), those items had already been collected by D prior to her gaining physical possession on 7 August 2013, or on or about 15 October 2013 when D and/or his representatives had gone to Mei Foo Flat to collect items after the new purchaser had taken possession.  This was denied by D.  

71. Upon the death of the Deceased, under section 4 of the Intestates’ Estate Ordinance, Madam Tam, being the surviving spouse, was entitled to:

(i)  The Deceased’s personal chattels absolutely;

(ii)  A payment of a net sum of HK$500,000 with interest from the date of the Deceased’s death;

(iii)  Subject to payment of the above sum and interest, the residuary of the Estate (“Residuary Estate”) would then be held one half for Madam Tam, and one half for the Deceased’s issues in equal shares.  

72. So far, there was no information from D as to whether Madam Tam was distributed any of her above entitlements in (ii) and (iii), or whether her maintenance expenses were paid out of her entitlements.  It would appear from what was said by D in his 1^st affirmation that Madam Tam could have retained 3 out of the 10 Canadian gold coins purchased[22], but there was no evidence that Madam Tam had received any HSBC shares.  

73. Further, apart from each receiving a gold coin and 1,600 HSBC shares, there was no evidence of any distribution of any assets in the Estate to the other beneficiaries.  In particular, other than Ms Chan was said to have received a gold coin and 1,600 HSBC shares on behalf of P, there was no evidence of any other distribution of any assets in the Estate to P. 

74. Thus, on D’s own case, there did not seem to have been any distribution to D, the Interveners or P, other than the gold coins and HSBC shares.  

75. D had given a reason for this, namely that Madam Tam, he and his siblings/Interveners all agreed that the Estate, after the purchase of the gold coins and the payment of the HSBC shares, the remaining assets of the Estate (“Remaining Assets”) would be used to maintain the living of Madam Tam (“Maintenance Agreement”)[23].

76. The Maintenance Agreement appeared to be a separate agreement from the alleged 2009 Family Agreement since the parties to the Maintenance Agreement were said to be Madam Tam, D and the Interveners. 

77. Neither Ms Chan nor P was said to be a party to the Maintenance Agreement.  It did not, however, appear from what P had said that he was disputing the existence of such agreement between Madam Tam, D and the Interveners[24]. P’s main issue was that his views or agreement were never sought and that it was D’s duty as administrator to act in the interest of the Estate and for the benefit of all beneficiaries.  

78. P had in fact said that he had great respect and affection for Madam Tam and that he agreed that she should have been taken care of by her children and grandchildren in her old age[25].  It was, however, not quite clear as to whether he, as a grandson, was prepared to share in the expenses incurred in maintaining Madam Tam, whether out of his own money or out of his entitlement to the Estate. 

79. As mentioned earlier, P himself had also said he had kept quiet out of his respect and love that he did not take action during his grandmother’s lifetime and tried to give D time.  The fact was there had been no request from either P and/or Ms Chan on his behalf for any distribution of the Estate after the Deceased’s death, and the request was only made in April 2014. 

80. In any event, even if there was the Maintenance Agreement in 2009, this would not have meant there be no distribution at all.  In fact, Madam Tam could have been distributed her entitlement of the Remaining Assets, or at least a part of the cash, to cover her living expenses.  

81. Madam Tam died in May 2013.  It would then appear that the relationship between P/Ms Chan and D further deteriorated culminating in the issue of the DC Action.  As I have mentioned earlier, among the chattels there was the Safe which was said to contain, among other things, the title deeds of the 2 landed properties.  The Safe was in the Mei Foo Flat and it seemed to have come into Ms Chan’s possession in August 2013 when she took possession of the flat, and she eventually returned it to D only in about October 2015. 

82. Ms Chan’s case was that all along she had no objection to deliver the Safe to D and for the Safe to be opened in the presence of D and/or his representatives so that inventory of the contents taken and to allow the missing title deeds of the Mei Foo Flat if found inside the Safe to be returned to her[26].  It seemed to be her then case that the title deeds of the Mei Foo Flat were also in the Safe, of which she had no key.

83. For some reasons, D alleged that Ms Chan’s above request was “wrongful and illegitimate”[27].  I would have thought even if Ms Chan did not have any locus to request for the Safe to be opened in the presence of her and/or her representative, bearing in mind his duties as administrator, D should perhaps have adopted a more practical approach to the matter.  Anyway, all this was the subject matter of the DC Action.

84. Suffice to say, after the return of the Safe with the title deeds, P had then caused the originating summons herein to be registered in the Land Registry as lis pendens against the two landed properties.  As a result of which, D then issued another action in the High Court to vacate the registration, namely HCMP 155/2016.  The originating summons in this new action was fixed before this court for 1^st appointment on the same day as the present matter.  It was adjourned to be dealt with after this court’s determination in this matter. 

85. All these actions could not have been conducive to any early winding up of the Estate or distribution.

86. Having said this, there was no sufficient evidence that the 2 landed properties could not have been sold without the original title deeds.  Even if the sale of two landed properties had been held up by the missing title deeds, and now the registration, D could at least try to rent out the properties to bring in some income for partial distributions, however minimal such rental income was said to be. 

87. Having considered all the above, I find that there had been inactivity on D’s part in effecting distribution of the Estate.  

Failure in administering the Estate properly

88. It was P’s complaint that D had failed to administer the Estate properly, fairly and impartially, and had made unreasonable and/or excessive expenses from the Estate and acting in conflict of interest. 

89. D did not deny that he had adopted a less formal manner in administering the Estate as he said, the Estate was relatively small and the beneficiaries are all family members. 

90. He had also said that it was Madam Tam who took the lead in administering the Estate through consultation with the beneficiaries and that Madam Tam insisted that as far as possible to maintain the status quo in relation to the Estate[28].

91. There was no evidence that P was involved in such consultation. 

92. The fact was Madam Tam was already 88 in 2009, and as D himself had said, he applied for the grant due to Madam Tam’s old age.  Further, from D’s evidence in his 1^st affirmation and the Schedule of Expenses, it would appear that Madam Tam had needed to be taken care of since 2008[29].

93. In any event, apart from the alleged purchase of gold coins, there was little evidence that Madam Tam had actually taken the lead, or indeed any part/role, in the administration of the Estate. 

94. It was also not clear as to what status quo of the Estate had been maintained, apart from the fact that the 2 landed properties had not been sold.  In fact, any insistence said to be on Madam Tam’s part to maintain the status quo would seem inconsistent with the Maintenance Agreement, pursuant to which she was alleged to have agreed that the Remaining Assets would be used to maintain her.  It was in any event not clear whether the cash and the stocks and shares, or any part thereof of the Estate had remained intact or not.

95. As pointed out by Ms Chung, D’s paramount duty as administrator was/is to protect the assets of the Estate and to act in the interest of the Estate for the benefit of all the beneficiaries and to do so impartially among the beneficiaries. 

96. Even on D’s own case, it would appear that apart from maintaining Madam Tam’s living expenses pursuant to the Maintenance Agreement, nothing else had been done.  

97. The Car Parking Space had not been rented out, and was said to be used by D and the Interveners when they went to take care of Madam Tam or drove her to see doctors and to family gatherings.  Even so, there was no reason as to why the Tai Nan Street Flat could not have been rented out throughout, instead of being used for storage and only rented out occasionally.  It was not clear as to who was using the Tai Nan Street Flat for storage, and there was no information on any rental value.  

98. Having considered the above, I accept that there had been failure in proper administration of the Estate on the part of D.  

Failure to keep/render account

99. D had in fact admitted that he had failed to keep proper accounts and receipts in his 1^st affirmation[30].  D had been legally represented by his present firm of solicitors since the issue of the DC Action, and throughout the present proceedings, and notwithstanding this, D did not seem to understand what would amount to a proper account, as in his 1^st affirmation he produced only a one-page Schedule of Expenses.  

100. As mentioned earlier, he later filed his 2^nd affirmation exhibiting the Account, which contained a bundle of numerous receipts[31]. Ms Chung complained that the Account was still not a true and perfect account of the Estate.  

101. Ms Chung referred to the case of Re Estate of Lee Da Kor [2010] 1 HKLRD 415, where Poon J, as he then was, said: “… In order to provide a true and perfect account, the executor must provide details of the whereabouts of all properties (including cash) which he is bound to administer…” [32] (emphasis added) 

102. In the above case, the executor had already provided the plaintiff with all the bank statements, ledgers and receipts.  However, Poon J found that the executors had still not fulfilled their duty as they had not accounted for discrepancies, including a drop in the balances in the bank accounts after the deceased’s death, and that further they seemed to adopt the attitude that the plaintiff was to sort out the documents provided by them. 

103. Ms Chung further referred this court to Cheng Tang Kam Yungwhere even though the administrator gave a summary of the expense and produced tables of calculations of outstanding indebtedness/ expenses, DHCJ Leung found that “it was difficult, if at all possible, to tally the terms of expenses recorded in the tables with those summarized by [the administrator]…”[33].  In the end, in light of the history of how the administrator had administered the estate for the previous 9 years and the aforesaid failure to keep and provide an account, DHCJ Leung ordered that the administrators be removed and replaced by a professional accountant.  

104. In the earlier case of Charles Yu Chiu Kwan v Edna Yu Chan Shek Yin, HCMP 965/1980 unreported, 22 April 1982, Rhind J had said of the account provided that:

“The so-called ‘cash account’, together with the purported explanations in the defendant’s solicitors’ letter of the 24^th July, 1980, comprised the only accounts which the defendant has ever supplied to the plaintiff. To my mind, those accounts came nowhere near to complying with the duty required of an executrix to supply a proper account to a beneficiary. What the defendant supplied to the defendant [sic]was little better than a sizable, yet woefully incomplete, quantity of undigested material. An executrix is a species of trustee. Like any other trustee an executrix must at all reasonable times be ready to render a clear and accurate statement of accounts to a beneficiary, so that the beneficiary is able to see his entitlement under the trust[34].”

105. The Learned Judge then went on to say: “… it is essential for any accounting system to show at least the opening capital assets, details of the movements of capital assets, the present capital assets, details of income earned, and details of expenditure.  … the defendant’s accounts fall short of those basic requirements[35].”  

106. D’s Counsel, Mr Wong, did not dispute the general legal principles set out above. 

107. Turning to the Account, the 1^st page was titled the “Basic Living Expenses of Madam Tam (2008-2013)[36] (“Table 1”), and the 2^nd page was titled “The Assets of the Deceased in 2008”[37] (“Table 2”). 

108. The relevant date should in fact be the date of death of the Deceased, and not simply the year of 2008 as stated in Table 2, which was vague. 

109. As said by Rhind J in Charles Yu Chiu Kwan, and which I agree, what the Account should first set out were the opening capital assets, namely all the assets of the Deceased at the date of his death, with valuations of all such assets at the date of death, as well as liabilities (which appeared to be none at the date of death according to the Schedules). 

110. There were no valuations of the 2 landed properties at the date of death provided in Table 2.  There were also no valuations of the stocks and shares at date of death and it was not exactly clear whether the balances of the bank accounts provided were at date of death in Table 2.  No bank statements had been provided.  

111. 3 of the bank accounts were said to be closed on either 29 or 30 July 2009, but the whereabouts of the balances were unknown. 

112. Table 2 was thus in my view quite inadequate in so far as setting out the “opening capital assets” of the Deceased was concerned.  After setting out the “opening capital assets”, D should then set out the movements of the capital assets. 

113. Based on D’s case of the Maintenance Agreement, then the valuations of the Remaining Assets as at the date of Madam Tam’s death should perhaps also be set out.  In any event, the valuations of the capital assets and liabilities should be set out as at the date of the account.  It was not clear why the cash balance in Table 2 was given at 21 April 2014 only. 

114. Looking at Table 2, it is not clear as to whether any of the shares had been sold, as the prices were stated to be the “present estimated market value”. 

115. Apart from assets and liabilities, Table 2 should also set out the details of the income, including any rental income earned and/or could have been earned, and expenses of the Estate, from the date of the death of the Deceased to the date of the account.  The only income disclosed was dividend income of HK$7,710.95 from stocks and shares from 1 August 2009 to 30 October 2014.  It was not quite clear how this was arrived at.  Not even the minimal income from occasional renting out of the Tai Nan Street Flat had been set out. 

116. As mentioned earlier, according to D, the Car Parking Space had not been let out for rental income, and the Tai Nan Street Flat had been used as storage and had only been rented out occasionally. It was not clear what minimal income had been received.  It was further not clear what rental income could have been achieved from the two properties from the date of Deceased’s death until the present.  There was no information from any professional valuer on the rental income, and one would have thought D could have at least provided the rateable value of the 2 landed properties, as this might shed some light on the annual rental upon which rates were assessed. 

117. Table 1 purported to set out the expenses of Madam Tam and other expenses of the Estate.  Ms Chung submitted that Madam Tam’s expenses, even if they were indeed incurred, could not be proper expenses that an administrator could deduct from the Estate. 

118. Ms Chung relied on what was said by DHCJ Leung in Cheng Tang Kam Yung, namely that the medical/nursing expenses paid out of the estate for the widow of the deceased, whether before or after the grant, were hardly “debt of the estate”[38]. 

119. The estate in Cheng Tang Kam Yung was substantial.  The 2 major items of expenses that the administrator claimed that he had to deal with, pending the realization of the properties in the estate, were namely, the estate duty and the medical/nursing expenses of the widow of the deceased, who prior to her death was also one of the co-administrators.  The administrator claimed that he managed to meet such expenses only by way of personal loans from friends at an extraordinarily high interest rate.  It would appear that the administrator had utilized the fund of the estate to repay his loans, some of which was before the grant. 

120. It was in the above context that the Learned Judge had said the expenses of the widow, whether before or after the grant, were hardly debt of the estate. 

121. In the present case, it was not clear whether the expenses of Madam Tam, or any part thereof, were paid out by the Estate out of Madam Tam’s entitlement of the Estate or not.  Nor was it clear as to whether D and/or the Interveners were seeking reimbursement from the Estate for the amounts allegedly paid by them as a debt of the Estate.  In his 1^st affirmation, all D had said was that the liquid assets in the Estate were not sufficient to pay the amount of about HK$3.2m to maintain Madam Tam, and that he and his siblings had to pay of Madam Tam’s expenses out of their own pockets[39].  However, it appeared from the Schedule of Expenses provided by D at that time that Madam Tam’s living expenses were only about HK$1.9m. 

122. In Table 1, Madam Tam’s basic living expenses were then listed at about HK$2.2m.  There was another table headed “Other Special Expenses” of about HK$765,553, of which Ms Chung submitted that only less than HK$230,000 were “proper expenses” of the Estate.  

123. Whether Madam Tam’s expenses or the other expenses were deductible as “proper expenses” of the Estate, or amounts paid by D and/or the Interveners for Madam Tam’s expenses were loans to the Estate from D and/or the Interveners, are disputed issues and may be subject to further litigation.  At this moment, without the full picture of the opening capital position, Madam Tam’s entitlement and also the entitlement of each of the beneficiaries had the Estate been properly distributed in 2009 is not known.  Further, whether Madam Tam’s living expenses could have been met from her own entitlement of the Estate is also not known.  D seems to be still under a misconception of what a proper account should include.  

124. Having considered all the above, I accept Ms Chung’s submissions that notwithstanding D’s undertaking, the Account is still inadequate, and still not a true and perfect inventory and account of the Estate.  

Exercise of Discretion

125. D’s Counsel Mr Wong had referred to an earlier decision of this court Wong Tat Lun Eddie and others and Wong Chi Ho Jimmy and others, HCMP 2391/2013, unreported, 21 October 2014, where the general legal principles in considering an application under section 33(3) of PAO had been set out therein.  The court has a wide discretion under section 33(3), but will need to be satisfied that the removal or suspension is required for (i) due and proper administration of the estate and for (ii) the interests of the persons beneficially entitled to the estate, or interests of the beneficiaries; to be so satisfied, the court has to consider all the circumstances of each case and each case will depend on its own facts, and matters the court may have regard include size of the estate, nature of the assets ,the background, education, training and experience of the remaining and substituted personal representative[40].  

126. Although there had been delay in distribution and also failure in administration, in my view, the more serious complaint from P was D’s failure in providing a proper inventory and account.  

127. The question is should D be given a further chance to provide a proper account, or should he be removed now. 

128. In the present case, there had been no allegations of any misconduct on the part of D, other than failure to administer and distribute the Estate and failure to provide proper account.  I accept that misconduct is not a prerequisite.  So far, there had also been no sufficient evidence that there had been any inexplicable diminution of assets.  In fact, although there have no proper valuations of the 2 landed properties at the date of the Deceased’s death, the 2 landed properties may have increased in value, compared to 2008/2009. 

129. In any event, D’s action, or rather non-action, is now only being complained of by P, who is entitled to less than  of the Residuary Estate ( x  of the value of the Residuary Estate at date of death, after the payment of HK$500,000 and interest to Madam Tam).

130. By all accounts, the Estate was of small value.  Even at today’s value of the 2 landed properties, and without taking into account any chattels, or any interest payable on the HK$500,000, the Estate was said to be about HK$6.8m gross, and P’s share was said to be around HK$450,000[41]. This is on the basis that net rental income (gross rent less all expenses, rates , property taxes etc) is not to be accounted for.  Even if net rental income is to be accounted for, on present valuations of the properties, P’s share of such net rental income would not appear to be of a substantial amount.  

131. D’s Counsel, Mr Wong, submitted that D did not shy away from that the administration had not been perfect, but one had to consider the size of the cake, and that there was no suggestion that the cake was bigger than that disclosed so far, and further that D would not be able to produce any other documentations and that there was no point ordering him to do so, in that any further order for D to provide inventory or account would be “oppressive and disproportionate in terms of time and costs having regard to the relatively small size of the Estate”.[42]  Mr Wong submitted that the only matter left in administration would be to sell the two landed properties. 

132. The matter may not be so simple as Mr Wong seems to think.  P’s solicitors had already pointed out in their letter of 26 November 2015 to D’s solicitors that there could be a breach of duty on part of D in relation to the Car Parking Space and the Tai Nan Street Flat, in that D had possibly placed himself in a conflict of interest position by improperly and wrongfully converting the Estate’s assets to his own use to the exclusion of the other beneficiaries[43]. 

133. When D said he would not be able to provide any further documents, he seemed to be referring to mainly invoices of expenses, of which probably all those were available or could be found had been provided.  There was no explanation given by him why he could not provide bank statements or valuations of the landed properties and shares as at date of death of the Deceased, since these should be within his power to obtain from the banks or valuers, even if he no long has these in his physical possession.  If bank statements are expensive, an alternative could be the bank’s microfilm of transactions, which may cost less.  There was no sufficient evidence that any further order for D to provide inventory or account would be oppressive and disproportionate in terms of time and costs.  In any event, if new administrator/s are appointed, they will still require such information to render a true and perfect inventory. 

134. As said in Wong Tat Lun Eddie, in considering whether the removal is required for due and proper administration of the estate and for the interests of the beneficiaries, the court has to consider all the circumstances of each case and such matters the court may have regard include size of the estate, nature of the assets, the background, education, training and experience of the remaining and substituted personal representative.  

135. So far, the parties have not provided this court with any information of their background, education, training and experience in administering an estate for this court to consider properly a removal order. 

136. During the hearing, this court indicated that if the court were minded to grant an order to remove D, in view of the personal animosity between P and D[44], the court would consider appointing an independent/professional person such as an accountant.  Ms Chung indicated that P had no objection to this, but no information, in particular, the costs thereof, had been placed before this court for consideration. 

137. P had himself initially said his 1^st affirmation that given the relatively small size of the Estate, it would not be financially sound to nominate a professional administrator, and he had at that time proposed that he be appointed co-administrator along with one other beneficiary of the Estate in place of D. 

138. Appointing any professional accountant was opposed by D since no doubt the cost will be high and will diminish the share of each beneficiary.  On reflection, I accept that appointing a professional accountant may not be feasible, unless it is really the last resort.  

139. Each of the Interveners had in his/her affirmation offered himself/herself as administrator if this court should remove D. 

140. P’s latest position at the hearing was that given the Interveners’ stance supporting D’s case, he had changed his mind and he was of the view that the Interveners would not administer the Estate properly or fairly if appointed as administrator(s) in place of D, and therefore he asked the court to appoint him as sole administrator of the Estate in place of D.  

141. The fact that the Interveners had supported D in their affirmations does not necessarily mean that they will not administer the Estate properly or fairly if appointed as administrator.  There was also no sufficient evidence of any personal animosity between P and the Interveners.  There was also no sufficient evidence that they would not carry out their duties as an administrator, whether acting jointly or singly. 

142. As I have said, neither P nor any of the Interveners, nor D, had given this court any information about their personal background, education, or what training or experience they had in administering estate, if any.  Even if I am minded to order D’s immediate removal at this stage, there has been no sufficient information as to the qualifications of the proposed new administrator/s. 

Conclusion

143. In the originating summons, the removal order sought is an alternative to the order for D to provide a proper inventory and account.  Having considered all the circumstances of this case, I have decided to give D one final chance to produce a true and perfect inventory and account of the Estate, and will order him to do so within three months.  

144. As for the removal order and other consequential orders sought by P, I will adjourn them sine die with liberty to restore in the event of D’s failure to comply with this order. 

145. I have found against D on the existence of the two alleged agreements, and I have found that there had been inactivity in distribution and failure in proper administration on the part of D, and in particular, D had failed to render a true and perfect inventory and account.  In the circumstances, I am of the view that D should personally pay the costs of and occasioned by P’s application incurred up to date, including costs reserved, and D has to bear his own costs.  This is an order nisi, which shall be made final after 21 days. 

146. Finally, I would add that I am of the view that the parties should resume their mediation efforts to achieve an overall settlement, in light of the small size of the Estate and high cost of litigation. 

147. Lastly, I wish to thank both Counsel for their assistance to the court. 

[1] B1:243

[2] B1:246-256

[3] B1:247-256

[4] See land registry record, B1:258-261

[5] Para 4(1), B1:129

[6] B:364

[7] A:21-22

[8] At para 18

[9] At para 19, pg 5-6

[10] At para 61

[11] See paras 7 and 8, A:128

[12] See para 10, A:129

[13] See para 11(2), 11(3) of D’s 1^st affirmation, A:129; however, the remaining odd lot would seem to be 334 shares, rather than the 344 shares stated by D.

[14] Exhibit “CSY-1”, B1:284-290

[15] B1:294

[16] Para 11(5), A:130

[17] B1:109

[18] B1:113

[19] At pg 1481

[20] At para 62

[21] See para 7, B1:377; NB:the date of 25 September 2014 in para 7 appeared to be a typing error

[22] 2 were said by D to be in the Safe in his statement of claim in the DC Action

[23] Para 21, D’s 1^st affirmation, A:132

[24] Para 24, P’s 2^nd affirmation, A:108

[25] Para 24, A:52

[26] See para 11(a), B1:380

[27] See para 8(3) & (4), B1:387

[28] See para 10 A:129

[29] See paras 21-23, A:64-65; and also LYC-1, B1:364

[30] Para 21, D’s 1^st affirmation, A:132

[31] B2:393-436

[32] At para 17, pg 419

[33] At para 58, pg 16

[34] At pg 3

[35] At pg 5

[36] B2:396

[37] B2:397

[38] At para 43, pg 11

[39] See para 22, A:133

[40] See para 83, pg 25

[41] A:230

[42] See para 32, pg 5 D’s Submissions,

[43] B1:279

[44] See the last paragraph of each of the Intervener’s affirmation