CHAN SAU HEUNG v. KWAN SIU FAI

HCMP2620 of 2012

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 2620 OF 2012

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J U D G M E N T

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A. INTRODUCTION

1.  The Deceased died intestate on 19 September 2010.  He was survived by his widow, the plaintiff herein, two sons and a daughter.  The plaintiff renounced the administration of estate on 4 January 2011.  Subsequently, the letters of administration were granted to one of the sons, the defendant, on 24 November 2011 (“the Grant”).

2.  The estate principally comprises of a property situated at 2/F, 210 Nam Cheong Street, Kowloon (“the Property”) with an estimated market value of HK$3.5 million.  A potential purchaser has recently offered to buy the Property at HK$7 million.  That is a very attractive offer indeed.  However, despite repeated requests by the plaintiff and other beneficiaries of the estate, the defendant has adamantly refused to accept the offer without giving any explanation.  Worse still, he has done nothing to administer the estate at all, not even taking the simple step of registering the Grant with the Land Registry in respect of the Property.

3.  On 16 November 2012, the plaintiff commenced the present proceedings, seeking, among other things, to revoke the Grant under section 33(1) of the Probate and Administration Ordinance (“the Ordinance”);[1] to retract her renunciation of administration of the estate; and a grant of letters of administration de bonis non be issued to her upon her retraction of renunciation.  She also sought indemnity costs against the defendant personally.  The defendant has not filed any acknowledgement of service despite proper service and has been absent in the entire proceedings.

4.  The matter first came before the Probate Master, Master Levy, on 24 January 2013.  The learned Master took the view that there are important matters with respect to general probate practice, which require guidance from the Probate Judge.  She therefore directed that the case be placed before me for paper disposal.  The plaintiff’s solicitors have already lodged two sets of written submissions, which I have duly considered. I do not need to trouble them with any further submissions or an oral hearing. 

B. TWO MAIN ISSUES

5.  There are two main issues arising from the present application.  The first issue concerns the application of section 33 of the Ordinance, which provides :

“(1) Where it appears to the court that a probate or administration either ought not to have been granted or contains an error, the court may call in the probate or administration and if satisfied that it would be revoked at the instance of a party interested, may revoke it.

(2) A probate or administration may be revoked under subsection (1) without being called in if it cannot be called in.

(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.”

6.  The issue is this.  When a grant has been properly made but it has subsequently become ineffective in the sense that the grantee has refused or is unwilling to administer the estate or has not administered the estate satisfactorily.  According to authorities, it may constitute a supervening defect after grant, which is a ground for revoking the grant under section 33(1).  Upon revocation, the grantee will of course be removed. The same circumstances may also afford a valid reason for removing the grantee under section 33(3) because the due and proper administration of the estate and the interests of the beneficiaries plainly require the removal of the non-performing grantee.  Removal however does not require revocation of the grant.  In such circumstances, should the applicant apply for revocation or removal?  And how would the court exercise its discretion?  Would it order revocation or removal?

7.  The second issue is that if the court orders revocation, should a fresh grant or a grant de bonis non be issued?

8.  I respectfully agree with the learned Master that these are matters of considerable importance to general probate practice, which calls for guidance from me as the Probate Judge.

C. FIRST ISSUE - REVOCATION OR REMOVAL

9.  The court’s power to revoke a grant and to remove an executor or administration is derived from statute.  As will be seen below, in both England and Hong Kong, while the statutory power to order revocation has long existed, the power to order removal was only created much later.

C1. The position in England

C1.1 Revocation

10.  In England, the convenient starting point is section 17 of the Administration of Justice Act 1956.  Briefly, it empowered the court to revoke a grant if it appeared to the court that a probate or administration either ought not to have been granted or contained an error. The grant might be revoked without calling it in if it could not be called in. The 1956 Act was later repealed by the Supreme Court Act 1981.  The provision of section 17 of the 1956 Act is substantially reproduced as sections 121(1) and (2) of the 1981 Act.

11.  The case law in England before 1985 on revocation was well summarized in Tristram & Coote’s Probate Practice, 26^th Edition,[2] published in 1983.  The main grounds for revocation were :

(1) False statement – where a grant has been made to a person who was not entitled thereto, either where he has acted in ignorance of the true facts or where he has acted fraudulently, e.g., by making a false statement or by concealing some material fact from the court.

(2) Supervening defect in grant – where a grant has been properly made, but has subsequently become ineffective and useless; or which, if allowed to subsist, would prevent the proper administration of the estate.

(3) Other cases – where a grant should not have been made; eg, because of the entry of a caveat, or because it was made before the effluxion of the necessary time; or where the grantee had died before its issue.

Examples of revocation under each of the three main grounds were then given.

12.  Here, we are only concerned with the second main ground.  The rationale for the court exercising the discretion to revoke the grant where there is supervening defect after grant, thereby removing the executor or the administrator, is based on the general considerations as stated by Jeune P in Re Loveday :[3]

“[The] real object which the Court must always keep in view is the due and proper administration of the estate and the interests of the parties beneficially entitled thereto; and I can see no good reason why the Court should not take fresh action in regard to an estate where it is made clear that its previous grant has turned out abortive or inefficient. If the Court has in certain circumstances made a grant in the belief and hope that the person appointed will properly and fully administer the estate, and if it turns out that the person so appointed will not or cannot administer, I do not see why the Court should not revoke an inoperative grant and make a fresh grant.”

C1.2. Removal

13.  Before 1985, there was no statutory provision for removing an executor or administrator without revoking a grant.  What a beneficiary might do was to institute an administration action under Order 85 of the then Rules of the Supreme Court; or apply to revoke the grant.

14.  The power of removal without revocation was first introduced by way of section 50 of the Administration of Justice Act 1985 in these terms :

“(1) Where an application relating to the estate of a deceased person is made to the High Court under this subsection by or on behalf of a personal representative of the deceased or a beneficiary of the estate, the court may in its discretion-

(a) appoint a person (in this section called a substituted personal representative) to act personal representative of the deceased in place of the existing personal representative or representatives of the deceased or any of them; or

(b) if there are two or more existing personal representatives of the deceased, terminate the appointment of one or more, but not all, of those persons.

(2) Where the court appoints a person to act as substituted personal representative of a deceased person, then-

(a) if that person is appointed to act with an executor or executors the appointment shall (except for the purpose of including him in any chain of representation) constitute him executor of the deceased as from the date of the appointment; and

(b) in any other case the appointment shall constitute that person administrator of the deceased’s estate as from the date of the appointment.”

15.  It is not necessary to establish wrongdoing or fault by the personal representative in order to obtain his removal under section 50 of the 1985 Act.  The court may order a removal if, for example, the breakdown of relations between the personal representatives (such as clash of personalities, or the lack of confidence in the personal representative by the beneficiaries) leads to the administration coming to a standstill, or makes it difficult or impossible for the administration to be completed by an existing personal representative : see generally Williams, Mortimer and Sunnucks, Executors, Administrators and Probate, 20^th Edition.[4]

16.  Although section 50 of the 1985 Act now enables the court to remove an executor or administrator without revoking the grant, the case law on how the courts would exercise the discretion to revoke a grant when there is supervening defect after the grant remains good law, as evidenced by the treatise on the subject in Tristram & Coote’s Probate Practice, 30^th Edition.[5]

C2. The position in Hong Kong

17.  Before 7 October 1971, under section 3(1) of the old Probate and Administration Ordinance, the court had the general power to grant and revoke the grant of probate of wills and of letters of administration.  The court, however, did not have the power to remove an executor or administrator without revocation.  The position was changed when the Ordinance[6] came into force on 7 October 1971, introducing when the new section 33.

C2.1. Revocation

18.  Sections 33(1) and (2) are modeled on section 17 of the 1956 Act.[7]  To recap, it deals with the power of revocation in these terms :

“(1) Where it appears to the court that a probate or administration either ought not to have been granted or contains an error, the court may call in the probate or administration and if satisfied that it would be revoked at the instance of a party interested, may revoke it.

(2) A probate or administration may be revoked under subsection (1) without being called in if it cannot be called in.”

19.  In exercising the power to revoke under section 33(1), our courts have since its enactment consistently applied the English case law on revocation.  A recent example is Re Lam Choi Hing.[8] There, A Cheung J (as he then was) revoked the grant when the executor, a bankrupt, had failed to do anything to administer the estate for some 6 years since the grant was issued and had long disappeared, thereby showing himself to be an unsuitable person to carry on with the administration of the estate.

C2.2. Removal

20.  Section 33(3) is modeled on section 49(2) of the then Probate and Administration Ordinance of Tanzania.[9]  It does not have an English origin for the simple reason that there was no equivalent provision in England at the time.  To recap, section 33(3) confers on the court the power to remove an executor or administrator thus :

“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 nay property belonging to the estate.”

21.  As later confirmed judicially, the power to remove the grantee may be exercised without revoking the grant : see Re Lau Yik Yam.[10]

C2.3. Proper approach

22.  In my view, section 33 serves two principal purposes.

23.  First, sections 33(1) and (2), modeled on its English equivalent, expressly set out the statutory grounds upon which the court may order revocation.  This creates certainty in the law and ensures that the English case law on revocation continues to apply in Hong Kong.

24.  Second, section 33(3) plugged the loophole in the then common law.  As seen, absent any statutory provision, removal of an executor or administration could only be effected by way of revocation or an administration action.  But plainly, there are circumstances where although removal of the executor or administration is necessary, revocation of the grant is not.  What section 33(3), modeled on the Tanzanian Ordinance, does is to give an applicant the appropriate remedy of and the court the necessary power to order removal without revocation.

25.  Based on this legislative intent, the proper approach to section 33 is clear.  When there is a supervening defect after grant, the applicant should consider :

(1) Whether removal of the grantee without revocation of the grant is sufficient.[11]  If yes, then he should proceed under section 33(3).

(2) Whether there are additional special circumstances that require revocation of the grant as well.  If such circumstances exist, then he should proceed under section 33(1).

26.  What constitute the requisite circumstances justifying revocation in addition to removal must depend on the actual facts of the case.  While it is impossible to define the circumstances exhaustively, some examples can be gleaned from the authorities.  They include mental incapacity of the grantee;[12] disappearance of the grantee who had not administered the estate;[13] and exceptionally, the grantee wishing to be relieved of his duties.[14]  The court will duly consider the circumstances relied on to see if they really warrant revocation of the grant in addition to removal.

D. SECOND ISSUE – FRESH GRANT OR GRANT DE BONIS NON

27.  When the court orders revocation of a grant under section 33(1) of the Ordinance, it must have been satisfied that the grant ought not to have been issued or contains an error.  In my view, as a matter of principle, a fresh grant has to be issued to enable the new grantee to administer the estate.  Further, when a grant of letters of administration is revoked upon the discovery of a subsequent will, a new grant of probate or grant of letters of administration (with will annexed) is in order.

28.  In Chan Luen Ping,[15] A Cheung J (as he then was), after revoking the grant, ordered a new grant de bonis non be issued to the applicant.  His Lordship had not explained why a grant de bonis non was appropriate, although it would appear that such a grant is consistent with the practice in England.

29.  A grant de bonis non is a special grant. It can be a general grant, but where appropriate may also be limited.  It usually arises when the grantee himself has died without fully administering the estate of the deceased.  Unless there is a chain of executorship, a further or a new grant, commonly known as grant de bonis non, is required to appoint a personal representative in respect of the unadministered estate.[16]  It does not require the revocation of the original grant.

30.  In England, a grant de bonis non may also arise where a sole grantee, or sole surviving grantee, becomes incapable of managing his affairs.  In such situation, a new grant may be made without revocation of the existing grant.  The new grant, whether made to a person equally entitled or, in accordance with rule 35 of the English Non-Contentious Probate Rules, to some other person, will be a grant de bonis non and for the use and benefit of the incapable grantee.[17]  It would appear that treating the new grant as a grant de bonis non is by way of their practice and does not have any statutory underpinning.

31.  Our Probate Registry has also followed the above English practice.  Thus, where a sole grantee who has become incapable of managing his affairs, a limited grant of de bonis non for the use and benefit of the said incapable grantee during his/her incapacity can be issued without the need of revoking the original grant.

32.  As for situations other than the incapacity of the sole grantee, there are some old cases in England which support the view that a grant de bonis non could be issued upon revocation of the original grant in situations where the grantee had disappeared[18] or a creditor who took on the administration subsequently wished to retire from the administration of the state.[19]

33.  Thus analyzed, it is tolerably clear that a grant de bonis non is an exception rather than the norm.  In most situations, a fresh grant is more appropriate.  I now direct that in the future, practitioners should generally apply for a fresh grant upon revocation. If, however, they wish to apply for a grant de bonis non instead, they should set out the special circumstances and reasons in support.

E. THE PRESENT CASE

34.  Returning to the present case, I think it is beyond doubt that the defendant has shown himself to be an unfit person to administer the estate.  He has not taken any step to administer the estate.  He has inexplicably refused to accept the very attractive offer made in respect of the Property.  His conduct is detrimental to the due and proper administration of the estate and the interests of the beneficiaries.  Removing him is plainly justified.  However, removal alone is not enough.  For upon removal, the defendant has to lodge with the court the Grant so that the order for removing him and appointing the plaintiff as administrator can be endorsed on it.  Given his uncooperative attitude so far and his failure to participate in these proceedings despite service, there is a real and substantial risk that the defendant will not lodge the Grant with the court even if so directed.  It will surely cause further unwarranted delay to the due and proper administration of the estate.  The Grant should in the circumstances be revoked.

35.  For these reasons, I make the following order :

(1) The Grant be revoked;

(2) The plaintiff do have leave to retract her renunciation of administration of the deceased’s estate dated 4 January 2011; and

(3) A fresh grant of letters of administration be issued to the plaintiff upon her retraction of the aforesaid renunciation and her compliance with all the usual formal and procedural requirements of the Probate Registry.

36.  I further order the defendant to pay the costs of these proceedings personally on a full indemnity basis.