ANG JIMMY TJUN MIN, executor of the Estate of ANG TIONG LOI, deceased v. ANG EILEEN AND ANOTHER

HCMP 598/2021

[2023] HKCFI 1138

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 598 OF 2021

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DECISION

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BACKGROUND OF THE FAMILY

1.  Ang Tiong Loi (“the Deceased”)  passed away on 4 February 2008. 

2.  The Deceased and Madam Tjiang Giok Moy (“Mother”)  had two children, namely, Ang Jimmy Tjun Min (i.e. the plaintiff)  (“Jimmy”)  and Ang Eileen (i.e. the 1^st defendant)  (“Eileen”).  Eileen’s husband is Khoo Chun Kim (“Jeffrey”).

3.  By the Deceased’s will dated 30 January 2008 (“the Will”), Jimmy and Eileen were appointed executors and trustees of his estate (“the Estate”).  Under the Will, Mother was bequeathed 50% of the Estate, whereas Jimmy and Eileen were bequeathed 25% of the Estate respectively.

4.  Jimmy obtained probate on 14 May 2008 with power reserved to Eileen to apply for and obtain double probate.

5.  On 12 July 2021, Eileen applied to the High Court of Hong Kong for double probate of the Will.

THIS ACTION

6.  By Originating Summons filed on 29 April 2021, Jimmy applied for a Beddoe Order in the following terms:

(1)  The plaintiff as an executor of the Estate be at liberty to commence an action against Eileen, Banner (China)  Investment Company Limited (“Banner Limited”)  and Leebury Investments Limited (“Leebury Limited”)  on behalf of the Estate to recover the shares of East West Bankcorp (or their value)  (“the Intended Action”);

(2)  The plaintiff be indemnified out of the Estate in respect of all costs and liabilities incurred in connection with the said action irrespective of the outcome of the action; and

(3)  The costs of the plaintiff in this application be paid out of the Estate on a trustee basis.

7.  When this action was started, Jimmy only named Eileen as a defendant, and he only sought leave to sue Eileen, Banner Limited and Leebury Limited. 

8.  Mother was subsequently ordered to be joined as the 2^nd defendant herein pursuant to the order of Deputy High Court Judge Winnie Tsui on 19 August 2021.

9.  When Jimmy filed his 5^th Affirmation in reply on 13 January 2022 for the purpose of this application for Beddoe order, he stated that:

“In view of the 2^nd Defendant’s clear stance in seeking to join and oppose the Beddoe application, I have now come to realise that she has aligned herself firmly with the 1^st Defendant in these proceedings despite my most sincere conciliatory attempt in not naming her as a defendant to preserve our relationship. As a result, I now intend to add the 2^nd Defendant as one of the defendants in the Intended Action […]”[1]

10.  On 16 February 2023, the plaintiff took out a summons and asked for leave to amend the Originating Summons so as to give effect to the aforesaid order for joinder and his intention to sue Mother as well in the Intended Action.

11.  I hereby give leave to the plaintiff to amend the Originating Summons and make an order in terms of the summons filed on 16 February 2023.

THE INTENDED ACTION

12.  The subject matters of the Intended Action relate to certain shares in East West Bankcorp (“EWB Shares”).

13.  The EWB Shares were originated from 96,498 shares in MetroCorp Bancshares, Inc. (“the MetroCorp Shares”)  which were purchased under the name of Gaumnitz Inc. (“Gaumnitz”)  in 1991.

14.  Gaumnitz is wholly owned by Dynasty Plaza Inc. (“Dynasty Plaza”), which in turn is wholly owned by Fentham Corporation (“Fentham”).

15.  There is no dispute, at least on papers, that Fentham was owned by Mother and the Deceased as joint tenants.

16.  By a bill of sale dated 31 July 1997, the MetroCorp Shares were transferred by Gaumnitz to Leslie Looi Meng (“Leslie Looi”), who since then held the MetroCorp Shares as a nominee.

17.  As a result of various share splits and re-investment of dividends, the MetroCorp Shares were increased from 96,498 to 644,745.236 shares (“the Increased MetroCorp Shares”)  in quantity.

18.  On 23 December 2013, Leslie Looi transferred the Increased MetroCorp Shares to Banner Limited, which, upon the Deceased’s passing, was owned by Mother, Jimmy and Eileen in the proportion of 75%, 12.5% and 12.5% respectively.

19.  On 14 January 2014, MetroCorp Bancshares, Inc. merged with East West Bankcorp (“the Merger”).  Pursuant to the Merger, the Increased MetroCorp Shares were exchanged into 192,456.45 EWB Shares and a cash payment of around USD3.1 million (“the Cash Payment”).  The 192,456.45 EWB Shares were then registered under the name of Banner Limited and the Cash Payment was paid to Banner Limited.

20.  Since 2014, various tranches of dividends had been declared over the 192,456.45 EWB Shares and paid to Banner Limited.

21.  Between 2016 and 2017, Banner Limited sold a total of 25,000 EWB Shares for a sum of USD1,415,461.28.

22.  During the same period of time, Banner Limited transferred a total of 63,000 EWB Shares to the joint bank account of Eileen and Mother for nil consideration.  Eileen and Mother subsequently sold those shares for a total sum of USD3,199,733.

23.  In May 2017, Banner Limited transferred 15,000 EWB Shares to Leebury Limited for nil consideration in return.  Leebury Limited subsequently sold those shares for a total sum of USD837,342.  Leebury Limited is also a company owned by the Ang family.  Upon the Deceased’s death, it was owned by Ang’s Holdings Limited (“Ang’s Holdings”)  (92.5%), Mother (5%), Jimmy (1.25%)  and Eileen (1.25%)  respectively.  Ang’s Holdings is also owned by Mother, Jimmy and Eileen.

24.  It is Jimmy’s case that when the MetroCorp Shares were transferred by Gaumnitz to Leslie Looi, it was done pursuant to the bill of sale dated 31 July 1997, and that it was the Deceased who had fully paid the consideration therefor.  He therefore alleged that the MetroCorp Shares were beneficially owned by the Deceased (hence, the Estate).  Therefore, it is said (and will be claimed in the Intended Action)  that Banner Limited held the remaining EWB Shares, the dividend derived therefrom, the sale proceeds of the sale of part of the EWB Shares and the Cash Payment for the sole benefit of the Estate.

25.  By reason of the aforesaid sale and transfer of EWB Shares, it will be further alleged by Jimmy as executor of the Estate in the Intended Action that Mother, Eileen and Leebury Limited had misappropriated, inter alia, 78,000 EWB Shares from Banner Limited.

26.  On the other hand, it is Mother and Eileen’s case that Mother was a joint beneficial owner of the MetroCorp Shares, and that upon the passing of the Deceased in 2008, she has become the sole beneficial owner thereof by reason of her sole ownership of Fentham.  It is also their case that when the MetroCorp Shares were transferred by Gaumnitz to Leslie Looi, no consideration had been paid.  Hence, Leslie Looi has since then been holding those shares (and the Increased MetroCorp Shares)  for the benefit of Mother.  After the Increased MetroCorp Shares were transferred to Banner Limited, Banner Limited held those shares (and subsequently the EWB Shares), the sale proceeds, dividend and the Cash Payment for Mother beneficially. 

OTHER LITIGATIONS BETWEEN THE PARTIES

27.  The Intended Action is not going to be the only court action between the parties.  There are other existing court proceedings between the parties as follows:

HCA 16/2020 (“the HCA 16 Action”)

(1)  This is a derivative action commenced by Jimmy on 6 January 2021, in which he sued Jeffrey, Eileen and Mother[2] on behalf of Banner Limited and alleged, inter alia, that Jeffrey and/or Mother had caused, procured, or permitted funds in the total value of USD4,125,125.30 and 63,000 EWB shares to be transferred away from Banner Limited’s bank account to the joint bank account of Eileen and Mother for no consideration in return, and that Eileen and Mother had received the same knowing that the said assets had been misappropriated by Jeffrey and/or Mother from Banner Limited in breach of their fiduciary duties owed to Banner Limited.

HCA 17/2021 (“the HCA 17 Action”)

(2)  This is a derivative action commenced by Jimmy on 6 January 2021, in which he sued Jeffrey, Eileen and Mother[3] on behalf of Leebury Limited and alleged, inter alia, that Eileen and Mother had caused, procured, or permitted various funds to be transferred away from Leebury Limited’s bank account to Jeffrey, Eileen and Mother in breach of their fiduciary duties owed to Leebury Limited.

HCMP 94/2022

(3)  This action was commenced by Jimmy on 20 January 2022, by which he sought to remove Eileen as co-executrix of the Estate.

HCMP 322/2022 (“the Removal Application”)

(4)  On 12 April 2022, Mother commenced HCMP 322/2022 and sought various orders including:

(i)  Jimmy be removed as executor of the Will of the Deceased;

(ii)  In the event the Court considers that it is not suitable for Eileen to act as an executor of the Estate, an order that Mr Cheng Tsz Ying of Messrs. TC Foo & Co be appointed as the sole administrator of the Estate.

THE APPROPRIATE WAY AHEAD

28.  Having been informed by the parties that there is in fact a pending application made by Mother to remove Jimmy as an executor of the Estate, this Court raised a query with the parties as to whether this Beddoe application should be adjourned, pending the determination of the Removal Application.

29.  While Mr To who acted on behalf of Jimmy accepted that the Court is entitled to take the Removal Application into account when deciding whether the application should be proceeded with at the hearing on 21 February 2023, he objected to any adjournment, and submitted in a gist that:

(1)  Mother is a crucial witness in the Intended Action.  As she is in advanced age, the Intended Action should be proceeded with as soon as possible;

(2)  A Beddoe order is not a “personal” order as such and it should not be dependent on who the executor is.  It is an “objective” order;

(3)  The Beddoe order should be granted as soon as possible so as to protect the Estate’s assets.

30.  On the other hand, both Eileen and Mother submitted that the present application should not be proceeded with at this stage, for the following reasons:

(1)  As Jimmy’s executorship is being challenged, and Mother has also applied, alternatively, for the appointment of an independent Hong Kong solicitor as executor of the Estate, the granting of Beddoe order at this stage may be challenged later on if Jimmy is removed as an executor, and this may lead to a vicious cycle;

(2)  The Court should bear in mind, in the particular circumstances of this case, that the only person who stands to benefit from the Intended Action is Jimmy himself;

(3)  The issues in the HCA 16 Action overlap with those in the Intended Action.  Hence, if necessary, Mother’s evidence can be taken by deposition in the HCA 16 Action which can be used in the Intended Action.

31.  In reply, Mr To argued that the issues relating to the cash claims in the Intended Action are not covered by the HCA 16 Action, and that the HCA 16 Action should be consolidated with the Intended Action and the HCA 17 Action.  He further told the Court that any application to take deposition from Mother would be opposed.

32.  In my view, as a matter of case management, the Beddoe application herein should be adjourned pending the determination of the Removal Application.

33.  My reasons are as follows.

34.  In the circumstances where Jimmy’s executorship is under challenge, it will no doubt be more prudent to wait until the result of the challenge (i.e. the Removal Application)  is known.  Otherwise, in the event Jimmy is removed and the new executor considers that the Intended Action should not have been commenced at all, the interest of the Estate would be prejudiced. 

35.  The said prudent approach would of course delay the commencement of the Intended Action (assuming it should be commenced).  The question is whether such a delay would prejudice the Estate’s interest.  Jimmy argued that this delay is undesirable because of Mother’s old age.  However, as Ms Ho (together with Mr Fan)  who acted for Mother pointed out, if necessary, Mother would be agreeable to the taking of her evidence by deposition in the HCA 16 Action.

36.  However, curiously, Mr To said that any application for the taking of Mother’s deposition in the HCA 16 Action would be opposed.  With respect, it is difficult to understand why that stance would be adopted by Jimmy if his real concern is that he might not be able to cross-examine Mother for the purpose of the determination of the issue relating to the beneficial ownership of the EWB Shares.

37.  In any event, as I will explain further below, even if Mother’s evidence should not be taken by deposition in the HCA 16 Action, I do not think the Estate’s interest would be prejudiced by an adjournment of this application for Beddoe order.

38.  As aforesaid, Mr To submitted on Jimmy’s behalf that the HCA 16 Action, the HCA 17 Action and the Intended Action should be consolidated.  It was therefore contended that the Intended Action should be commenced as soon as possible so that the consolidation could be done sooner rather than later.

39.  If the present application for Beddoe order is adjourned, that means the intended consolidation (assuming that this is an appropriate procedure to be adopted)  cannot be done in the near future.  Would that prejudice the Estate’s interest?

40.  I am of the view that the answer must be “No”.

41.  This is because it is clear that the issue about the beneficial interest of the MetroCorp Shares would be covered by the HCA 16 Action, in which one of the claims of Jimmy was in relation to 63,000 EWB Shares, and the resolution of which would require the Court’s determination of the very question which has to be resolved in the Intended Action, namely, whether Mother had any beneficial interest in the EWB Shares. This analysis is still correct despite the fact that the reliefs claimed in the HCA 16 Action only related to 63,000 EWB Shares.  

42.  Mr To argued that issues concerning cash in the Intended Action are not covered in the HCA 16 Action.  With respect, I disagree.  All issues concerning “cash”, no matter whether they were about the sale proceeds of EWB Shares, the Cash Payment or dividends derived from the EWB Shares, could be resolved once the Court has decided on whether Mother had any beneficial interest in the 63,000 EWB Shares, because both the EWB Shares in the Intended Action and the 63,000 EWB Shares in the HCA 16 Action stemmed from the same source, namely, the MetroCorp Shares. 

43.  In other words, if Jimmy is so eager to have the disputes on the EWB Shares resolved, he should not wait but proceed with the HCA 16 Action as soon as possible.  That is totally within his power to do so in his personal capacity.

44.  Another argument relied on by Mr To was that Beddoe order is not a “personal order” as such, and therefore the determination of whether such an order should be made should not be dependent on who the executor is.  I agree that he is correct theoretically.  However, this submission was made on the assumption that Jimmy was really totally objective in his handling of this application.  Regrettably, having regard to the followings, I am unable to say at this stage that that was indeed the case:

(1)  By letter issued by Mother’s solicitors dated 26 January 2021, Mother asked Jimmy to discontinue both the HCA 16 Action and the HCA 17 Action (“the Suits”), and to resolve all disputes by mediation, and threatened that failing which Mother might consider not including Jimmy or his children as beneficiaries in her will.

(2)  On 8 March 2021, Mother’s solicitors issued another letter to Jimmy, and informed him that Mother had executed her will in which Jimmy and his children were not included as beneficiaries.  Mother also made it clear in this letter that the allegations made by Jimmy against her in the Suits were baseless, and that she “has decided to support all efforts to contest the Suits”.

(3)  On 17 March 2021, Jimmy’s solicitors wrote to Mother’s solicitors.  Having set out the alleged circumstances under which the EWB Shares were said to have been misappropriated, his solicitors stated:

“In light of the above, we are instructed to obtain your client’s consent, as a beneficiary of the estate of the Deceased, to [Jimmy]’s commencing the Intended Legal Proceedings in his capacity as the executor of the estate of the Deceased and being fully reimbursed by the assets of the estate for all costs incurred in connection with and arising from the Intended Legal Proceedings. We are instructed to inform your client that should we fail to obtain her consent to the commencement of the Intended Legal Proceedings, [Jimmy] intends to take out an application for a Beddoe order to protect his costs incurred as the executor of the Deceased’s estate in the Intended Legal Proceedings.

Please take instruction from your client and let us have her response in writing as soon as possible, and in any event within 14 days of the date of this letter.”

(4)  In another letter issued to Mother’s solicitors on the same day, Jimmy’s solicitors, having referred to the aforesaid letters sent by Mother’s solicitors dated 26 January 2021 and 8 March 2021, reiterated that Jimmy’s commencement of the Suits was not motivated by personal gain as alleged by Mother.  He also emphasised that the Suits were only commenced against Eileen and Jeffrey but not Mother and that Mother should not be under any misapprehension that he was turning against her by suing her.  He invited Mother “not to support any of Eileen or Jeffrey’s efforts to resist the [Suits]”.

(5)  Mother’s solicitors then replied on 31 March 2021 as follows:

“1. We refer to your letter dated 17 March 2021.

2. Our instructions are that our client will only respond to your letter after your client has substantively and fully responded to our earlier correspondence.

[…]”

(6)  Jimmy did not answer the said letter dated 31 March 2021.

(7)  On 29 April 2021, Jimmy commenced these proceedings.  He only named Eileen as a defendant at that time. In his supporting affirmation which was filed on the same day, he stated:

“On 17 March 2021, upon my instruction, my solicitors Messrs. Hon & Co., Solicitors wrote to Messrs. Lee & Lee, the Singapore solicitors of Mother, in relation to the intended commencement of these proceedings. After a lapse of more than 21 days, I have not received any objection from her as to the taking out of this Beddoe application. She has also not indicated that she would like to join in as a co-defendant […]”

45.  Paragraph 4 of Practice Direction 20.3 stipulates that:

“Normally, all beneficiaries of the Trust should be made parties to the Beddoe proceedings. However, under some circumstances (for example, when an ex parte Mareva injunction application against some beneficiaries is anticipated in the Main Action), the inclusion of those beneficiaries in the Beddoe proceedings may be inappropriate. In such cases, those beneficiaries may be omitted as parties.”

46.  It is clear from the above Practice Direction that Mother should have been included as a defendant in this application at the outset.  As Jimmy has all along been legally represented, it can be reasonably assumed that he knew about this requirement[4].

47.  However, he did not include Mother as a defendant initially.

48.  Worse still, in his supporting affirmation which was quoted above, he stated that:

“[…] After a lapse of more than 21 days, I have not received any objection from [Mother] as to the taking out of this Beddoe application. She has also not indicated that she would like to join in as a co-defendant.”[5]

49.  In my view, Jimmy has apparently chosen his wordings very carefully in the above quoted passage in that while it cannot be said that he had lied, it is clear that he did not inform the Court the whole truth of the matter:  He had endeavoured to give the Court an impression that Mother did not raise any objection against his proposed application for Beddoe order, but he had very conveniently omitted to mention Mother’s reply (by letter dated 31 March 2021)  that she would only respond to Jimmy’s letter on the proposed Beddoe order application after Jimmy has responded to her earlier correspondence (i.e. her solicitors’ letters dated 26 January 2021 and 8 March 2021). 

50.  More importantly, Mother has in fact made it clear by solicitors’ letter dated 8 March 2021 that she considered that Jimmy’s allegations made in the HCA 16 Action were baseless.  To recap, that action includes an allegation that the EWB Shares did not belong to Mother beneficially at all but belong to the Estate.  In these circumstances, it is difficult to understand how come Jimmy could assume that Mother would not object against the Beddoe application (not to mention that he should have joined Mother as a defendant even if he could make such an assumption).

51.  Furthermore, it may be recalled that Mother was not included as a defendant in the original draft Statement of Claim to be filed in the Intended Action.  She was only added as a defendant in the revised version of the Statement of Claim which was exhibited to Jimmy’s 5^th Affirmation filed on 13 January 2022.  Jimmy explained in the said 5^th Affirmation that he initially did not intend to sue Mother as a defendant in the Intended Action because he wanted to preserve his relationship with her (see paragraph 9 above).  While this may well be a respectable reason, this demonstrates that Jimmy was not as “objective” as he alleged.  It should be borne in mind that the allegations made in the original draft Statement of Claim were actually as same as those which were made in the revised Statement of Claim – Mother was also alleged to be one of the wrongdoers.

52.  Having considered the above circumstances and the indisputable fact that, as a matter of reality, only Jimmy would stand to benefit from the Intended Action, I consider that this Court should be more prudent in that the Beddoe application should only be further considered upon the disposal of the Removal Application. 

ORDER

53.  By reasons of the aforesaid, I order that:

(1)  There be an order in terms of the summons filed on 16 February 2023;

(2)  Jimmy’s application for Beddoe order should be adjourned sine die with liberty to restore, pending the disposal of the Removal Application.

COSTS

54.  I make a costs order nisi that the costs of the hearing be reserved, with certificate for two counsel. 

55.  The above order nisi shall become absolute in the absence of application to vary (which, if any, shall be made by letter, and will be disposed of on paper)  within 14 days hereof.