LEUNG KAM YIN, JOYCE v. LEE SAI WAI

HCMP 4859/2001

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 4859 of 2001

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Judgment

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Introduction:

1. In these proceedings the plaintiff has successfully claimed provision from the estate of the deceased under the Inheritance (Provision for Family and Dependants) Ordinance (IPFDO). I delivered judgement on 21 June 2002 and made an order nisi as to costs in the plaintiff's favour. The parties now come before me on the issue of costs. The case for the plaintiff is that the order for costs should be that made nisi, namely the usual order that costs should follow the event and that the plaintiff should have her costs paid by the defendant. The defendant says that this is a case where each party should pay its own costs.

2. The defendant also says that an appeal is to be mounted and seeks a stay of execution of the judgement.

The law as to costs in litigation under IPFDO:

3. There are no reported decisions of the courts in Hong Kong on proceedings under the IPFDO, and accordingly no guidance as to where the incidence of costs orders should fall. In a book entitled Inheritance Act Claims and Practice 2 ed. 2000, S. Ross, it is suggested at p 281 that despite the general principles in O. 62 r. 3 the English courts had not developed a consistent approach to costs awards under the 1975 English Act, which is in the same terms as the Hong Kong legislation. However in Graham v Murphy & Anor [1997] 1 FLR 860, Robert Walker J held that the usual order, in the absence of a Calderbank offer or other special circumstances, is to allow an applicant his costs out of the estate. That would be consistent with the general rule in O. 62 r. 3(2).

4. In this case the executrix of the estate is one of the beneficiaries. She has conducted the defence of the proceedings on her own behalf, in her capacity as a beneficiary, and on behalf of her brothers. She has however worn two hats during the proceedings for, in her role as executrix, she is obliged to put before the court all relevant information as to the corpus of the estate. The usual procedure would be that, unless there are special reasons why an executor or administrator would seek to preserve the estate, he would simply put before the court the required information as to the estate, and then seek leave to withdraw, abiding the result. The claimant would then fight his battle with the beneficiaries from whose interests in the estate any further provision might come.

5. In the capacity of executor, the defendant is entitled to her costs, on a solicitor and client basis from the estate. In his particular estate she and her brothers are the only beneficiaries. In the capacity in which they fight the proceedings, seeking to maintain their bequest, they must be subject to whatever costs orders the court considers right at the end of the day.

6. I bear all these matters in mind when considering the issue of costs.

The defendant's arguments:

7. Mr Surman for the defendant makes two arguments against an order for costs. First he says that a costs order will mean that the defendant and her brothers will have to dip into their own resources to meet the order, and that ought not to happen. Second, he says that the plaintiff has been unreasonable in the way in which pre-trial negotiations were conducted and that accordingly she ought to be deprived of her costs.

8. As to the first, it must first be noted that in fact the whole of the defendant's costs have already effectively been met from the estate. At the beginning of the trial Mr Surman put in a document setting out the amount available in the estate. Mr Surman has now rightly pointed out to me that I was in error in stating that the value of the home was $2,900,000 (judgment para 2). It was in fact $2,700,000 at the time of trial, as noted in Mr Surman's document. Accordingly the assessment made by me as to the net value of the estate (see judgment para 34) was overstated by $130,000, as I have applied the ration of 1/3 to the family, 2/3 to the deceased to the wrong figure.

9. But in so far as para 34 referred to the net available cash of $1,485,000, the figure is correct. That figure is arrived at after first deducting a sum of $450,000 for the costs of administration of the estate and what was stated to be the defendant's costs of the litigation, including the trial.

10. No authority was cited to me in support of the proposition that the fact that an unsuccessful litigant will have to dip into her own pocket to meet a costs order is a factor that ought to be taken into account in determining whether or not there should be a costs order. It is simply a consequence of the stand taken by the defendant in resisting the claim that a costs order is likely to follow if that stand is unsuccessful. It is of no consequence that she must have recourse to resources other than the estate to meet those costs. In any event she and her brothers have benefited from the estate by the sum of some $1,500,000 between them and so have ample resources to meet any costs order. It is right that the sum is comprised in the home and not in cash, but that does not in any way lessen the advantage they have received from the state.

11. The defendant argues that she is unable to afford to pay the costs. But she has a debt free residential property which is not tenanted. It is readily able to be mortgaged and tenanted, with the rent meeting any mortgage payments. With the grant of probate she and her brothers will be the sole owners of the home the subject of the proceedings, again a property that is debt free. They have ample resources from which to meet a costs order.

12. The brothers took no formal part in the proceedings and their case was presented to me by their sister. As they took no part I cannot make orders against them but it would only be right that they should share equally in the incident of costs with their sister.

13. Mr Surman put in correspondence to show the Calderbank negotiations that had taken place prior to the trial. This began with a offer by the defendant in February 2001 of $300,000. That was promptly rejected and a counter offer was made of $3,500,000 plus costs. That was rejected and the defendant's offer was increased to $500,000, with no contribution to costs. That offer was rejected and there was no counter offer. The plaintiff pressed on towards trial and the defendant, in January 2002, with the trial looming asked the plaintiff to quantify her claim showing a breakdown of how the sum of $3,500,000 was determined. The plaintiff was told that a claim "for reasonable provision" was vague and lacked particulars. The only response was that counsel's advice was being sought. No particulars were ever given and the matter proceeded to trial.

14. The amount sought by the wife in the negotiations was $3,500,000, or 80% of the estate prior to the partial success of the defendant's contention that the estate was in fact held on trust for the sister and brothers and did not fall for consideration under the provisions of the IPFDO. I am unable to say that that was so wrong a position for a wife to take, when she has been left nothing at all by her husband. The offer made has been beaten handsomely, by a sum in excess of 3 times, and so if the plaintiff was being unreasonable, then arguably so was the defendant by making such a small offer. There is nothing in the way in which the negotiations went that persuades me that the successful claimant should not have her costs.

15. Proceedings under the IPFDO are undertaken by way of Originating Summons and the order sought followed the provisions of the legislation and is expressed simply in terms of a request for "reasonable provision". While it is helpful in these proceedings, as in proceedings under the Matrimonial Proceedings and Property Ordinance Cap 192, for a claimant to specify in the papers, in terms, just what sort of order is sought, there is no obligation to do so. It may well be that on an appropriate application for particulars a court would require a claimant to be specific as to the terms of the order sought, but no such application was made in this case. Consequently I do not find the lack of a response to the defendant's request for particularisation of the claim to be a bar to an order for costs.

16. In my view this is a case where the plaintiff's costs should come from the estate, and not from the award. This is a case where I have found it appropriate to quantify the plaintiff's award in terms of a lump sum. As there are no other beneficiaries than the defendant and her brothers the effect of the order is that they will share equally in the incidence of the costs order. That is a just result and in accordance with O. 62 r. 3(2).

17. There will accordingly be an order that the plaintiff's costs, taxed on a party and party basis, and on Legal Aid Regulations, must be paid from the estate remaining after payment of the lump sum award.

Stay of execution:

18. The defendant by her counsel has given an undertaking to promptly file a notice of appeal and to prosecute the appeal. On that basis she seeks an order staying execution of the judgement.

19. The jurisdiction to order a stay of execution is in O. 59 r. 13. The lodging of a notice of appeal does not act as a stay. The usual rule is that where the appeal is against an award of damages a stay will normally be granted only where the appellant satisfies the court that, if the damages are paid, then there will be no reasonable prospect of his recovering them in the event of the appeal succeeding: Hong Kong Civil Procedure, 2002, Vol 1, 59/13/1. There is nothing in the affidavit of the defendant that leads me to believe that she would not be able to recover any sum paid to the plaintiff. But I have found that the plaintiff has been evasive as to her assets. That leads me to say that if the whole of the judgment was paid there is a real risk that the sum may not be able to be recovered.

20. Mr Surman relied upon O. 47 r.1(b) and said that the defendant was unable to pay the money due. I have already rejected the proposition that she is unable to pay. She and her brothers have ample resources when regard is had to the bounty they have received from the estate.

21. However there is a different aspect in this litigation for the defendant concedes that the plaintiff is entitled to an award. It is quite proper, within the wide discretion the court has, to order that part of the sum be paid: see Bloor v Liverpool Derricking and Carrying Co [1936] 3 All ER 399. The plaintiff is in a most difficult position at the present time. She is plainly unwelcome in her former husband's home yet seeks the award to provide for herself. The defendant takes the extraordinary position of saying that the plaintiff should vacate the home but at the same time not receive the benefits of the judgment in her favour. There is a substantial sum of cash in the estate, enough to meet most of the award that has been made.

22. Weighing all matters I am satisfied that there should be a stay except as to the sum of $1,000,000 which must be paid to the plaintiff within 3 months of the date of this ruling. That will give the plaintiff sufficient time to instruct her solicitors on the estate and to obtain probate. The whole of the award shall carry interest at judgement date from 21 June 2002. It follows that the plaintiff must give prompt instructions to her solicitors to remove the caveat and that on payment to her of the sum of $1,000,000 she must remove her personal belongings from, and vacate any occupation she has of the home.

The grant of probate:

23. I was concerned to learn during the argument on these matters that probate in the estate has not yet been granted, although it is now more than 2 years since the deceased's death. The defendant now apparently acts for herself in probate matters. In an affidavit filed in opposition to the order for costs she says:

"The probate is not yet available due to the blunder of my former solicitors, Siao Wen & Leung and unnecessarily complicated and delayed by the registration of a caveat by the Plaintiff. I cannot afford to have new solicitors in the probate proceedings when Siao Wen & Leung ceased to act for me."

She does not say what the "blunders" were. She estimates the cost of completing probate at some $54,000 which includes court fees. In the absence of any explanation as to "blunders" I cannot put any weight on this factor.

24. She offers no explanation as to why she has not instructed her current solicitors to remedy the "blunders" and to tidy up the estate. The estate is perfectly simple, and undutiable. The caveat is not a complication, but an protection for the plaintiff, and will plainly be removed by the plaintiff in order to allow payment to her of any sum awarded by the court. The complaint of insufficient funds I simply reject for reasons already given. There are ample cash funds in the estate from which any expenses incurred by her would be recovered.

25. There is no reason at all why the defendant should not instruct her present solicitors to complete the administration of the estate. There is equally no reason why the caveat ought not to be removed to allow the grant of probate and the payment of the sum I have ordered.

26. I would view with great concern any further delay in the administration of the estate. Leave is reserved for the plaintiff to apply should the sum ordered to be paid not be paid at the expiration of the 3 month period I have allowed for the defendant to secure the release of the probate. If there is to be any extension of time very clear explanations will have to be given in justification.

27. It follows that the plaintiff shall have her cost on the argument on costs and stay, those costs to be taxed on a party and party basis and upon Legal Aid Regulations.