WONG WAI HON, SIMON v. WONG WAI MAN, DOMINIC

HCMP 301/2020

[2021] HKCFI 2332

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 301 OF 2020

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DECISION
(On Costs)

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Introduction

1.  The plaintiff (“P”) issued the originating summons herein on 17 March 2020 under section 33 of the Probate and Administration Ordinance, Cap 10 (“PAO”) for, amongst other things, (i) the defendant (“D”) be removed as the administrator of the estate of their deceased father (“Father”), (ii) P to be appointed as the administrator of the estate of the Father; (iii) an account of Father’s estate to be furnished by D. 

Brief Background

2.  P and D are brothers and the only siblings of Father and their mother (“Mother”).  Father died intestate on 3 September 2009, leaving Mother, P and D surviving him.  According to the schedule of assets and liabilities attached to letters of administration of Father’s estate granted to D on 16 July 2014 (“Schedule”), at date of death Father held no other assets save a property situate in Wah Lai Court in Wah Yuen Chuen (“Property”) and he had no liabilities.

3.  After Father’s death, Mother did not apply for letters of administration of Father’s estate.  Later, Mother died on 23 July 2013.  She left a will appointing D as the sole executor and sole beneficiary of her estate.  On 16 July 2014, the same day D was granted the letters of administration of Father’s estate, D was also granted probate of Mother’s estate.  Mother’s estate appeared to consist of only a small amount of cash in a bank account and her interest in the Property.

4.  According to P, Father started residing at the Property as rental housing for civil servants and later purchased the Property in March 1996.  The Property was the family home for P and D until they respectively moved out.  According to P, he moved out in about 1991 and D moved out in about 1989.

5.  According to D, he only moved out in 1995 and further after P moved out from home in or about 1991, P never showed up at any family gatherings.  It was also D’s allegations that in about mid 1997, P’s business failed and there were creditors and debt collecting agents looking for him.  D produced copies of notices in newspapers inserted by their parents on 11 and 13 January 1998, looking for P.  The Father became very stressed and on 18 February 1998, Father made a declaration to cut off his relationship with P and on 19 February 1998, Father published a notice in Oriental Daily newspapers to declare that father and son relationship had been severed as from 17 February 1998. 

6.  It was D’s allegation that he did not see P again until D’s wedding day in July 2007, when their parents asked P to attend. Thereafter, D did not see P again until the week before Father died. According to D, one day before Father died, Mother had opened a joint account with P at Hang Seng Bank and deposited therein an aggregate sum of some HKD 1.59m, which was said to be part of Father’s estate.  However, later, the sum was transferred by P out of the joint account into his own account, which resulted in Mother instructing a firm of solicitors to write to P on 14 December 2009 attempting to recover the sum.

7.  Thereafter, according to D, P disappeared and that it was only recently that P re-surfaced.

8.  P denied that the sum of HKD 1.59m was part of Father’s estate and pointed out that notwithstanding Mother’s solicitors’ letter, Mother never commence any civil or criminal legal action against P.

9.  Notwithstanding the allegations/accusations made by D, what is clear is that on 22 November 2018, P instructed solicitors to write to D to enquire after the progress of the administration of Father’s estate, in particular the Property (“22.11.18 Letter”).  There was no reply by D.  P’s solicitors sent reminder/ follow up letters respectively on 17 December 2018, 2 January 2019 and on 8 November 2019.  Again those letters were ignored.

10.  Eventually on 17 March 2020, P issued the originating summons herein.  Although D was served, he did not file any acknowledgment of service to the originating summons and he was absent at the first hearing before Master J Wong on 27 August 2020.

11.  On 27 August 2020, Master J Wong ordered D to submit an account of Father’s estate and adjourned the matter to a further hearing on 15 October 2020.

12.  It was only on 8 October 2020 that D’s present solicitors came on record to act for D and D finally filed an acknowledgment of service on 16 October 2020 indicating his intention to defend through his solicitors. 

13.  However, in D’s affirmation in opposition, all he said was the P’s claim disclosed no reasonable cause of action, and that P knew of Father’s death and he could have made an application for letters of administration at the time but chose to disappear and waived his right to apply to apply for the letters of administration.  D then complained that P had gone for over 10 years without leaving any contact details and it was not fair and that it was unreasonable for P to now accuse D of failing to administer the estate.  D then denied P’s allegations.

14.  As D seemed to have ignored the order of Master J Wong of 27 August 2020 and no estate account was submitted by him, on 21 January 2021, time was extended for him to comply with that order.

15.  Subsequently, on 17 February 2021, D filed an affirmation providing an annual “Property Management Report” in relation to the expenses and income of the Property (“Property Management Reports”).

16.  Anyway, a substantive hearing was later fixed on 16 June 2021 for the hearing of the originating summons.  At that hearing, the parties were able to reach an agreement (save on costs) (“Consent Order”).

17.  Pursuant to the Consent Order, D undertakes to (i) file within 42 days of the order to furnish an account of the Father’s estate, and (ii) within 6 months from the date of the determination of the premium to be payable upon sale of the Property, and/or approval to alienate the Property by the Lands Department, to sell the property at a gross selling price of no less than HKD 6.5m and (iii) to distribute the net sale proceeds of sale after taking into account the income and expenses of the Property and costs of and incidental to the administration of Father’s estate.

18.  Subject to the D’s above undertakings, the Consent Order provides amongst other things that the originating summons be withdrawn, and for directions regarding sale of the Property and the stakeholding of the net sale proceeds and the distribution thereof.  Directions were given for the submissions for costs argument.

The parties’ respective positions

19.  P seeks an order that D should be personally responsible for the costs of the present proceedings.

20.  On the other hand, D proposes that there be no order as to costs.

Discussion

21.  First of all, D seemed to be completely misconceived as to the nature of these proceedings, and that he did not seem to understand that as the administrator and trustee of Father’s estate, he owed and continues to owe a duty to the beneficiaries to duly administer and to wind up the estate, and under section 56 of the PAO, to render an account and inventory when required.

22.  Secondly, as I have pointed out at the hearing, the Property Management Reports are not in fact a proper account or an inventory of Father’s estate.

23.  Even if D had no means to contact P, latest when he received the 22.11.18 Letter from P’s solicitors, he should have responded. Complaining that the originating summons was only served on him on 27 May 2020 would not assist him, since it was only by issuing the originating summons that P achieved a resolution of the matter.  There have been no reasonable explanations from D as to why he ignored P’s solicitors’ letters and the originating summons even after being served and that no proper account was rendered by him even at the time of the hearing before this Court.

24.  Even though D’s solicitors sent a letter dated 20 May 2021 marked “without prejudice save as to costs” to P’s solicitors, there were no proposals made by D to wind up the estate or for sale of the Property, and instead he was accusing P of disappearing.  It was only in an open letter dated 10 June 2021 that D’s solicitors proposed to hold the Property with P as tenants in common as to 75% to D and 25% to P in accordance with the intestacy laws in Hong Kong, or alternatively, D could liquidate the asset by selling the Property subject to payment of premium.  D had also indicated that premium assessment could take approximately 6 to 9 months.

25.  By a letter of 15 June 2021, P then proposed that D to transfer 25% of the ownership of the Property to P within 28 days and D to sell the Property and distribute the sale proceeds and the respective income and expenses immediately after D obtained the approval from Lands Department and costs of these proceedings to be borne personally by D.  On such basis, P agreed not to request D to furnish a detailed and updated account of Father’s estate.

26.  There seemed to be no further response from D.

27.  Counsel for D, Ms Leung, accepted that there had been delay and inaction on D’s part in administering the estate and provision of account upon request, but submitted that such administration was hampered to a large extent of P’s own absence from the family.  However, as seen above, P had surfaced and instructed solicitors to send the 22.11.18 Letter.  Had D taken action as soon as practicable thereafter, then the matter would not need to have to come to the Court.

28.  Ms Leung has also argued that P’s application was flawed and that he would not have succeeded to have D replaced by him as administrator, as there was no evidence before the Court at all on P’s suitability or competency to administer the estate. 

29.  I accept that in light of D’s allegations and P’s disappearance, there was no sufficient evidence to support P’s application to replace D as administrator.  It would appear that P’s main ground for removal of D as administrator was delay.  Further, as indicated in P’s solicitors letter of 15 June 2021, it would appear that all P wanted is really the sale of the Property, and his share of the net sale proceeds and any net income from the Property, and he was prepared to forego his request for an account of the estate.  In fact, as seen in the Consent Order, upon achieving an agreement from D to sell the Property and to distribute the net sale proceeds, P was willing to withdraw the originating summons.

Conclusion and Order

30.  Costs are in the discretion of the Court.

31.  Having considered the circumstances of the case, I find that it was due to D’s lack of response to P’s letters that P had no choice but to issue the originating summons.  Even after being served with the originating summons, D did not immediately take steps to proceed with administration of the estate and instead to raise irrelevant matters.  I am therefore of the view that D should pay P’s costs personally.  Having said this, however, D’s proposals in D’s solicitors open letter of 10 June 2021 were reasonable, and that D’s solicitors had again explained why their proposals were on alternative basis in their letter of 15 June 2021.  Had P decided to engage in constructive discussion with D thereafter, the hearing could have been avoided.  As there seemed to be further response, this led to the hearing and further costs.  Having considered that D did try to settle the matter prior to the hearing, and his proposals were reasonable, D should only pay P’s costs of and incidental to the issue of the originating summons but only up to 15 June 2021.  As for costs thereafter, as it was only at the hearing that the terms of the Consent Order were finally reached, I am of the view there should be no order as to costs from 15 June 2021 onwards save as provided in the Consent Order.

32.  In light of my above order, I direct P to re-lodge a statement of costs on the above basis for summary assessment within 14 days, and D to lodge a list of objections within 14 days thereafter.  D shall pay P’s costs within 21 days of summary assessment.