CHOW SHAUK YIN AND OTHERS v. CHAU HAU TUNG

HCMP 2139/2006

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 2139 OF 2006

____________

____________

BETWEEN

______________________

DECISION ON COSTS

______________________

1.  This administration action, commenced in 2006, was brought to an end by the order of this court made on 4 November 2010. That order was made by consent. Though para.3 of that order (as sealed) stated that there be no order as to costs, the intention of the court (and I believe also the intention of the parties) was that such costs order only related to the costs of the hearing on 4 November 2010. The other costs in the present action are subject of debate between the parties and written submissions were filed.

2.  Insofar as necessary, I grant leave for amending paragraph 3 of the sealed order to clarify the position. I turn next to deal with the outstanding dispute on costs.

3.  The outstanding dispute is about costs incurred between 9 May 2007 and 3 November 2010.  The order of Master J Wong on 8 May 2007 had already dealt with costs incurred prior to 9 May 2007.

4.  Each party argued that costs should be borne by the other party.  Having considered the written submissions of the parties, I am of the view that for the reasons given below the proper order to make is that the Defendant shall pay the Plaintiffs’ costs up to and including the hearing of 20 September 2010 personally on a party to party basis and he should not be indemnified from the estate as to such costs and his own costs up to 20 September.  After 20 September, the costs of both parties shall be paid out of the estate.

5.  The action was brought by the Plaintiffs as the beneficiaries to the estate of their late father against the Defendant as administrator. The parties are siblings. It is alleged by the Plaintiffs that the Defendant had failed to fulfil his duty as administrator. In particular, the Plaintiffs said the Defendant had been dilatory in accounting to them as to the accounts of the estate, not keeping them informed as to the settlement in High Court Action 2082 of 2004 and the progress as to recovery of certain shares from Yiu Hon.

6.  At the same time, the Defendant said the Plaintiffs had been holding matters to their chest as to whether the estate should pursue claims for recovery of the shares from Yiu Hon and the Plaintiffs claims that a property at Fa Po Street and money in a time deposit joint account should be included in the estate. The Defendant said that those matters were holding up the further administration of the estate by way of distribution. The Plaintiffs only made clear their stance on these matters at the hearings on 20 September and 4 November 2010 respectively.

7.  I should mention that though the relief originally prayed for when the proceedings were restored in February 2010 (after a hiatus of 2 odd years since the decision of Master J Wong) was for accounts, the nature of the Plaintiffs’ claim changed in the course of the proceedings. By 20 September 2010, it was recognized by all concerned that the parties should work towards completion of administration by way of distribution. This objective was partly achieved by the consent order of 4 November 2010.

8.  Though an administrator is generally entitled to seek indemnity from the estate in respect of costs incurred in the administration of the estate, the court can refuse to grant him such indemnity if he acted unreasonably.

9.  I have read the inter partes correspondence. There were repeated demands by the Plaintiffs during the hiatus in 2008 and 2009 for up-dated position in respect of the estate, in particular the progress of HCA 2082 of 2004. The failure of the Defendant to respond positively to such requests constituted, in my judgment, unreasonable conduct on his part. And it was such failure which occasioned the Plaintiffs to restore the matter before the court.

10.  Even though the Defendant might need to know the stance of the Plaintiffs regarding other outstanding issues regarding the administration of the estate before a distribution can be made, there was no reason why he could not inform the Plaintiffs as to the progress in HCA 2082 of 2004. Further, as administrator, the Defendant has a duty to administer the estate diligently. He should have taken the initiative in seeking the views of the Plaintiffs instead of waiting for suggestions from them. It was all the more unacceptable that, as shown in the relevant correspondence, the Defendant simply neglected to deal with the demands from the Plaintiffs.

11.  After two rounds of evidence, the Defendant produced interim account on 13 August 2010. He requested the Plaintiffs to consider vacating the hearing on 20 September 2010.  The Plaintiffs came back with a request for costs and interim distribution in a letter of 17 August 2010. In a letter of 25 August 2010, solicitor for the Plaintiffs also indicated to the Defendant that it was not worthwhile to pursue against Yiu Hon.

12.  The Defendant responded through his solicitor on 1 September 2010 that there are outstanding issues which have to be resolved before distribution can be made. Claim against Yiu Hon was one issue, and the other issue was whether some assets should form part of the estate. The Defendant invited the Plaintiffs to deliberate together on the outstanding issues and suggested again the vacation of hearing of 20 September.

13.  A meeting was held on 6 September 2010. According to a letter of 8 September 2010, the Defendant proposed to make distribution on condition that the Plaintiffs would waive all claims against the Defendant in respect of the affairs of the estate. The Plaintiffs refused to give such waiver in the letter of 8 September. In the letter, their solicitor maintained that distribution should be unconditional. At the same time, it was said that the other outstanding issues involved “tremendous amount of money”. 

14.  With respect, I do not see how the Plaintiffs could demand unconditional distribution if there were still outstanding disputes involving substantial amount.

15.  Costs remain an issue between the parties. The Defendant, in a letter of 15 September 2010, indicated that he would not consider costs unless there was global settlement. Thus, to say the least, the Plaintiffs needed to come to court on 20 September to get their costs.

16.  In the circumstances, I am of the view that the Defendant should personally pay the Plaintiffs’ costs up to and including the hearing on 20 September 2010 on party to party basis.

17.  At the hearing of 20 September, this court gave some directions to assist the parties in mapping the way forward for the purpose of completing the administration. It was agreed that the estate should not pursue against Yiu Hon. Pursuant to such directions, the Defendant served draft final account on 4 October. The Defendants made two objections to the account in a letter of 15 October 2010. Those objections did not relate to the question regarding the Fa Po Street property and the time deposit account.

18.  The matter came back to court again on 27 October. The objections to the account were resolved. However, there was still no agreement on the Fa Po Street property and the time deposit account. Those issues were finally resolved at the hearing of 4 November.

19.  Though the Plaintiffs could have been more forthcoming in terms of the resolution of the dispute on the Fa Po Street property and the time deposit account, I do not think they have acted so unreasonably to warrant any costs sanction against them. In my view, all the parties have acted within bounds in trying to reach a solution though each of them could have been more collaborative.  Bearing in mind the history of the matter, it is understandable that there was some mutual distrust which needed to be iron out.  In the circumstances, I consider it appropriate and proper that the costs incurred by both the Plaintiffs and the Defendant between 21 September and 3 November shall be paid out of the estate, to be taxed on indemnity basis if not agreed.

20.  I order accordingly.