MARK HO YIN v. LEUNG SEK LUN ALLEN

HCMP 87/2015

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 87 OF 2015

____________

_____________

_____________

________________________________

D E C I S I O N

________________________________

Introduction

1.  Mr Mark commenced these proceedings by way of an Originating Summons dated 13 January 2015 (“the OS”) issued under Order 85 r.2, Rules of the High Court to raise certain requisitions in the course of the administration of the estate of his late lawful and natural mother Madam Chan (“the Deceased”) by Mr Leung.

2.  Mr Leung married the Deceased after her divorce with the natural father of Mr Mark. The Deceased passed away on 17 January 2012. Mr Leung obtained the Letters of Administration of the estate of the Deceased on or about 15 May 2013.  He is the defendant in this action in the capacity of the administrator of the estate of the Deceased.

3.  A week before the substantive hearing of the OS, Mr Mark took out a summons to amend the OS to raise an additional requisition. His application is not opposed and hence I grant the amendment application.

4.  Before I deal with the requisitions, a brief background is helpful. The Deceased was domiciled in Hong Kong throughout. Mr Mark was her only child out of her two marriages. She died intestate. Accordingly, Mr Leung being her surviving husband and Mr Mark are the only beneficiaries of her estate in Hong Kong.

5.  The estate of the Deceased consists of properties in both Hong Kong and Australia. Mr Leung has also obtained the Letters of Administration of the estate of the Deceased issued by the Supreme Court of Australia.

Requisition 1

6.  In the Amended OS, Mr Mark first raises a requisition relating to a motor vehicle jointly owned by Mr Leung and the Deceased. It was a Mercedes Benz car and was sold at HK$18,000 purportedly on 27 December 2013. Mr Leung deducted from the sale proceeds a sum of HK$62,305 being miscellaneous expenses albeit incurred after the death of the Deceased.

7.  Mr Ma abandons this requisition in view of the modest amount involved. He however asks me to take into account the unreasonableness of Mr Leung in his dealing with the car.

8.  I refuse to do so. Any observation about this allegation cannot be helpful to my analysis of the merits of each of the following requisitions, which should be undertaken independently.

Requisition 2

9.  In the Amended OS, this requisition consists of four issues arising from the administration of the Deceased’s estate in Australia. The first issue is whether there should be separate and independent administrations of the Deceased’s estate in Hong Kong and Australia, given the two separate Letters of Administration granted by two different jurisdictions.

10.  The answer is clearly in the positive. The estate of the Deceased in Australia can only be administered with the Australian Letters of Administration in accordance with the Australian law. Mr Ho, counsel for Mr Leung, does not argue otherwise.

11.  The second issue is whether Mr Leung should be entitled to claim and/or deduct from the Hong Kong estate his legal fee of HK$281,513.61 (“the Sum”) purportedly incurred in the course of his administration of the Deceased’s Australian estate.[1]

12.  My view is that Mr Leung is not entitled to do so. I agree with Mr Ma that the administration of the Australian estate including its costs should be independent of the administration of the Hong Kong estate. They are two distinct and separate administrations. It follows that the costs incurred in the administration of the Australian estate should be deducted from the Australian estate only.

13.  Mr Mark further asks this court to order Mr Leung to provide copies of all of the relevant legal documents, supporting papers and accounts in respect of the administration of the Australian estate and make a verifying affirmation in relation thereto.

14.  The jurisdiction of this court under Order 85 r. 2 is confined to determination of questions which could be determined in an administration action. An administration action is defined to be an action for the administration under the direction of the Hong Kong court of the estate of the deceased person: Order 85 r. 1.  Order 85 r.2(3)(a) allows this court to make an order requiring an administrator to furnish and, if necessary, verify accounts. This power should in my view be exercised in respect of the administration of an estate in Hong Kong only.

15.  Mr Ma submits that this court has the jurisdiction to and should compel Mr Leung to give an account of the administration of the Australian estate. He first submits that the administration of the Australian estate is merely ancillary to the administration of the Hong Kong estate. He further submits that Mr Leung is now within the jurisdiction and he is in his hands the assets of the Australian estate. As a result, his administration of the Australian estate is subject to the supervision of this court.

16.  Mr Ma prays in aid the rule set out in Dicey, Morris & Collins on the Conflict of Laws, 15^th Edition, Vol.2, §26R-026 which is stated in the following terms:

“Rule 142 – An English personal representative may legitimately take such steps as are open to him to recover any property of the deceased wherever situate and he is accountable in England for all property received by him in his capacity as such”.

17.  I do not think this rule assists Mr Ma as we have a different situation here. The commentary thereunder is more relevant:

“A personal representative will be liable to account for assets under an English grant only if he received them in his character as English personal representative. If he also has a grant from a foreign court he is not accountable in England qua personal representative for assets received in this capacity. Thus, if the deceased dies domiciled in England and his English administrator obtains a grant in Victoria and there recovers debts due to the deceased, the amount recovered comes into his hands as a Victorian administrator; he must administer it according to the law of Victoria and the only portion for which he is accountable under the English grant is the balance, if any, which after his Victorian administration is complete remains or comes into his hands in his capacity as English administrator. It follows from the Rule that an order for the judicial administration of the estate will not ordinarily be confined to English assets, although the court may of course be unable to exercise effective control over assets situate elsewhere. If the English administrator also holds assets in his capacity as a foreign administrator, the administration order cannot affect his duty to administer those assets according to the foreign law. But once the foreign assets have been duly administered, the court may compel the administrator to carry out the trusts (e.g. of the testator’s will) upon which the surplus is held. The court’s power to enforce trusts exists whenever the trustee is personally within the jurisdiction, irrespective of where the assets are situate or whether they are movable or immovable.”

18.  It can be seen that the starting point is that Mr Leung having the Australian grant is not accountable in Hong Kong qua personal representative for assets received in that capacity. The exception above is not available here too. First, there is no evidence that the Australian assets have been duly administered. Second, even if they have, the Deceased died without a will here and there is no trust to enforce against Mr Leung in Hong Kong.

19.  Mr Ma further draws to my attention to Ewing v Orr-Ewing (1883) 9 App. Cas.34 to support his contention that a local administrator can obtain an order in Hong Kong for the judicial administration of an estate which is applicable to both the local and foreign assets in his hands.

20.  I maintain my view nevertheless. It is pertinent to note that in Ewing v Orr-Ewing, the court dealt with the administration of the trusts of the will. My view is fortified by the following passage in Williams, Mortimer and Sunnucks on Executors, Administrators and Probate (19^th Edition) at §53-08:

“The general position is that the English court will not make any order as to foreign assets, unless the foreign court itself expects the English court to act. Thus, an English representative’s claim to recover possession of foreign assets must normally be enforced in the local courts. This general position is subject to two qualifications. Both are instances of the court exercising its powers in personam so as to control assets outside the jurisdiction. First, if the court has made an order for judicial administration of the estate, it may also make an order against creditors within the jurisdiction to prevent them from taking or continuing proceedings against the estate in foreign courts. Secondly, where the same person has vested in him English and foreign assets and is within the jurisdiction, then the English court may, if called upon so to do by a person entitled to claim in the administration, judicially administer all of those assets.

… Further, it may be that this exception only extends to the execution of the trusts of a will, and that the court acts not against a person as a representative but rather as trustee of the will. Undoubtedly, this was the course pursued in Ewing v Orr-Ewing.”

21.  In the circumstances, I cannot accede to this request of Mr Mark. I should also add that all such legal costs are indeed evidenced by documents provided by Mr Leung and I am not really in a position to determine the reasonableness of such charges.

22.  The last issue under Requisition 2 is whether Mr Leung should be ordered that his entitlement to the Australian property known as 32/3 Victoria Park Parade, Zetland including all interests derived from the sale thereof as acquired under the Deceased’s Australian estate under the Australian law be taken to exclude or diminish the net sum payable to him under the Deceased’s Hong Kong estate pursuant to sections 8A(1) and (2) of the Intestates’ Estates Ordinance, Cap. 73.

23.  To facilitate discussion, I set out the two provisions as follows:

Section 8A(1): Where the intestate leaves a husband or wife who acquires under the law of intestacy or of partial intestacy of a place other than Hong Kong any beneficial interests in the intestate’s estate, subsection (2) applies to that estate.

Section 8A(2): The references in this Ordinance to the net sum payable to a surviving husband or wife, and to interest on that sum, shall be taken to be references to the net sum diminished by the value at the date of death of the beneficial interests referred to in subsection (1), and to interest on that sum as so diminished and, accordingly, where the value of those beneficial interests exceeds the net sum, this Ordinance shall have effect as if references to the net sum, and interest on that sum, were omitted.  

24.  Both Mr Ma and Mr Ho helpfully refer to the relevant commentary in Butterworths Hong Kong on Probate, Administration and Trustee Handbook (3^rd Edition) pp.53-55, which explains the history of these provisions.  They derived from the recommendations of the Law Reform Commission of Hong Kong’s “Report on Law of Wills, Intestate Succession and Provision for Deceased Persons’ Family and Dependents” (September 1989). These provisions seek to avoid any double benefit when a surviving spouse could be entitled to two statutory legacies (fixed net sums): one under Hong Kong law and another under the foreign law.

25.  The meaning and effect of these two provisions are very clear to me, particularly in light of their history.  I agree with Mr Ma that by virtue of these provisions, Mr Leung should bring his entitlement to the Australian estate under the Australian law into account to exclude or diminish the Hong Kong net sum payable to him under the intestacy law in Hong Kong.

26.  Mr Ho is unable to give a different interpretation of these provisions. He merely highlights to me that the adverse comment on these provisions made by the learned editors of Butterworths Hong Kong on Probate, Administration and Trustee Handbook (3^rd Edition) and the fact that the position in England is different and no similar provisions can be found to rectify the so-called “double benefit” problem.

27.  I am not convinced that the application of these provisions to the present case can in any way be affected by the position in England, however different it is. As regards the adverse comments, though these provisions are characterised as an unwelcome complication into the Hong Kong law of intestacy, there is no further explanation of its undesirable effect. In any event, this court can only apply the present law as it stands.

28.  In the premises, I agree that paragraph 4A in the Amended OS should be answered in favour of Mr Mark.

Requisition 3

29.  Mr Mark asks this court to determine whether Mr Leung should be entitled to relocate the Deceased’s ashes and burial site to Australia and hence whether Mr Leung can claim or deduct the purported expenses incurred in doing so in the total sum of HK$430,971.24 against the Deceased’s estate. If not, Mr Mark asks for an injunction to enjoin Mr Leung from relocating the Deceased’s ashes and burial site out of Hong Kong.

30.  The evidence of Mr Mark is that Mr Leung already incurred HK$523,060 for the payments of the Deceased’s funeral and burial expenses in Hong Kong in 2012. It was not only until 29 September 2014 that Mr Leung through his solicitors raised for the very first time that the said sum had to be incurred to relocate the burial site to Australia in accordance with the alleged wish of the Deceased. Mr Mark is unable to believe that the Deceased had such a wish given the fact that she had all along rooted in Hong Kong and that he and his aunt Madam Cecilia Chan had never heard about the alleged wish.

31.  Mr Leung says that the Deceased did in her lifetime tell him that she wanted to have her burial done in Australia. He explains that he could only have her funeral and burial done in Hong Kong as a temporary measure after her sudden and unexpected death.   He was unable to have them done in Australia at that time and now he wants to materialise her wish.

32.  I accept Mr Leung’s explanation. Whilst I accept Mr Ma’s submission that as a matter of law, any direction by will or otherwise by the deceased on burial cannot be enforced and is void, it is also not in dispute that the right of the surviving spouse would generally be preferred to the right of the children: see Re Estate of Lu Han Lung [2010] 3 HKLRD 651 at §32(c) per Au J following Williams v Williams (1881-82) LR 20 Ch D 664 and Smith v Tamworth City Council (1997) 41 NSWLR 680.

33.  I am prepared to brush aside all the allegations of Mr Leung about Mr Mark and take into account Mr Leung’s wish to pay regular visit to her burial sites for present purposes. Nevertheless, I am still of the view that the right of Mr Leung should prevail in light of the established principles.  Thus, I answer the Requisition 3 in favour of Mr Leung. I refuse to grant the injunction sought accordingly.

Requisition 4

34.  This requisition arose from an intended beddoe application to be made preceding an intended action against Madam Cecilia Chan, the lawful sister of the Deceased. Madam Cecilia Chan held 1% share in Blooming Hill Investment Limited (“the Company”) whereas the Deceased held all the remaining shares. The Company was used as a vehicle to hold a property in Hong Kong (“the HK Property”). The contention of Mr Leung and Mr Mark is that Madam Cecilia Chan merely held the 1 share as the nominee of the Deceased.

35.  Mr Leung intended to commence an action to compel Madam Cecilia Chan to transfer her share in the Company back to the estate of the Deceased. A beddoe application was also intended to protect the costs position of Mr Leung.

36.  Mr Mark’s solicitors finally on 30 September 2014 wrote to Mr Leung to inform him that Madam Chan was willing to give up the 1 share in the Company and do the transfer as required. Thus, Mr Mark thinks neither the beddoe application nor the intended action was necessary. He was surprised to be informed by the bill of costs issued by Messrs King & Company dated 15 December 2014 (“the Bill”) that a sum of HK$76,300 had been incurred because of the intended beddoe application. 

37.  Mr Ma asks this court to disallow the legal costs under the Bill and order that Mr Leung should personally bear such costs. Alternatively he asks the Bill to be taxed.

38.  In his evidence, Mr Leung explained that all the legal expenses including counsel fee had already been incurred prior to the receipt of the said letter of Mr Mark.  I have perused the Bill and I accept his explanation despite some descriptions of minor legal service apparently rendered after the said letter. Mr Ma is unable to persuade me that any particular items were excessive.

39.  Given the previous position of Mr Mark and Madam Cecilia Chan on the beneficial ownership of the 1 share held by Madam Cecilia Chan as highlighted to me by Mr Ho, both the intended action and the beddoe application were appropriate. Further, the Bill appears to be very much reasonable.  In my view, the legal costs were properly incurred. There is no reason why Mr Leung cannot claim such expenses out of the estate. I also find no reason to order taxation, either.

Requisition 5

40.  This requisition is referred to as Requisition 8 in the Amended OS and it consists of two parts. First, Mr Mark asks for the distribution of the sum of HK$400,000 which has been earmarked for the intended action against Madam Cecilia Chan.

41.  Since the intended action is no longer necessary, there is no reason why the said sum should still be withheld from distribution. Mr Ho agrees that it should be made available for distribution as indicated by the letters of Messrs King & Company dated 6 November 2014 and 4 December 2014.

42.  The second issue relates to a sum of HK$1,680,358.01 (“the said Sum”) representing a portion of the sale proceeds of the HK Property. The HK Property was sold at HK$26 million on 30 September 2014. Mr Mark wants the said Sum to be stakeheld by his solicitors or alternatively to be paid into court pending the determination of the present application. Mr Leung disagrees.

43.  In light of my determinations of the requisitions above, there is no need for the said Sum to be stakeheld or paid into court. I trust the legal advisors of both parties would act sensibly.

Costs

44.  I do not think I need to summarise my determinations. Though Mr Mark has failed in some of his requisitions, overall speaking it was necessary for him to take out this application. On the other hand, I do not find Mr Leung’s unsuccessful opposition to be unreasonable.

45.  In the circumstances, I make an order nisi that both parties’ costs of the Amended OS including the amendment application be paid out of the estate of the Deceased, to be taxed if not agreed. Mr Mark’s costs are to be taxed on common fund basis whereas Mr Leung’s costs are to be taxed on trustee basis.

46.  I thank both counsel for their helpful assistance.