SETO WAI LEUNG BENNY v. SE TO SHUK YEE AND OTHERS

HCAP 18/2015

[2018] HKCFI 2673

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

PROBATE ACTION NO 18 OF 2015

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JUDGMENT

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Background

1.  This is a rather extraordinary case.  The Plaintiff is one of the children of Madam Law Sau Ying, also known as Sau Ying Seto Law who died on 6 August 2007 at the age of 69 year as a result of a fatal car accident (“the Deceased”).  The Deceased had a total of five children.  In term of seniority, they are:

(1)	2nd Defendant	Eldest daughter
(2)	Plaintiff	Eldest son
(3)	1st Defendant	Second daughter
(4)	3rd Defendant	Third daughter
(5)	4th Defendant	Second son

2.  It was their late father who purchased the property situated at Flat B3 on 8^th Floor and Car Parking Space No 67 on Ground Floor of Arts Mansion, No 31 Conduit Road, Hong Kong (“the Arts Mansion Property”) in around 1990 as joint tenant with the Deceased.  Their father died in 1992.

3.  The Deceased executed her last Will and Testament in 2001 (“the Will”). The evidence from the Plaintiff, the 2^nd to 4^th Defendants are that it is commonly understood and known amongst the siblings and family relatives that the Deceased had made a Will and she had bequeathed the Arts Mansion Property to the Plaintiff, as the eldest son.

4.  The Will states:

“ 1. I APPOINT SE-TO SHUK PUI FANNY to be my Sole Executrix of this my Will.

2. After payment of my debts, funeral and testamentary expenses (if any) I GIVE DEVISE AND BEQUEATH my landed property known as All Those 3 equal undivided 338^th parts or shares of and in All That piece or parcel of ground registered in the Land Registry as The Remaining Portion of Inland Lot No.1546 And of and in the messuages erections and buildings thereon known as ARTS MANSION, NO.31 CONDUIT ROAD (‘the Building’) Together with the full right and privilege to hold use occupy and enjoy All Those Flat B3 on 8^th Floor and Car Parking Space No.67 on Ground Floor of the Building, Hong Kong unto SETO WAI LEUNG BENNY absolutely.

3. I DEVISE AND BEQUEATH all my residuary estate both real and personal whatsoever and wheresoever not hereinbefore devised and bequeathed unto the said SETO SHUK PUI FANNY, the said SETO WAI LEUNG BENNY, SE-TO SHUK YEE, SETO SHUK FUN CHRISTINE AND SETO WAI YIP as tenants in common in equal shares.”

5.  The Will was also duly witnessed by a practising solicitor, Ms Maggie Chan Man Ki and a clerk of the law firm Messrs Lau, Chan & Ko, namely, Ng Wai Ngai.

6.  In about April 2008, the Plaintiff noticed a copy of the Will on the desk of the 1^st Defendant’s room.  It follows that the 1^stDefendant must have knowledge of the Will.

7.  As the 3^rd Defendant was named as the sole executrix of the Will, the Plaintiff left the administration of the estate of the Deceased to the 3^rdDefendant.  The 3^rdDefendant’s evidence to which this court accepts is that as there was no pressing need for distribution of assets, she did not proceed expeditiously with the administration of the estate of the Deceased.

8.  Yet, sometime around March 2012, the firm of solicitors engaged by the 3^rd Defendant for the administration of the estate of the Deceased informed her that the 1^stDefendant had unilaterally and successfully applied for a grant of Letters of Administration on 9 July 2011 on the basis that the Deceased died wholly intestate (“the Grant”).  The 1^stDefendant was also appointed as the administratrix pursuant to the Grant on 19 October 2011.  

9.  It was also discovered that the 1^st Defendant actually sold the Arts Mansion Property for a consideration of HK$16,380,000.  She signed the Provisional Agreement for Sale and Purchase of the Arts Mansion Property on 16 November 2011 and the Deed of Assignment on 22 December 2011.

10.  There is no dispute that the 1^st Defendant then pocketed the entire sales proceeds of HK$16,380,000 and used part of the said money topurchase a semi-detached house at 57 – 81, 228^th Street, Bayside, New York 11364, USA (the “Bayside Property”) for US$783,888 on 9 October 2012, that is about 10 months after she received the sales proceeds for the Arts Mansion Property, with one Mr Ho who is the 1^stDefendant’s husband.  The balance of the sales proceeds is still with the 1^stDefendant.

11.  This court was told that it appears from the New York City Register that the Bayside Property was bought without a mortgage, which means that the 1^stDefendant and her husband would likely have bought the Bayside Property with cash.  It was recently discovered that on 14 July 2018, the 1^stDefendant mortgaged the Bayside Property for a loan in the sum of US$147,500 without informing her siblings.  This does not sit well with her case that the Bayside Property was purchased for the benefit of the whole family including her siblings.

12.  The Plaintiff’s evidence is that although the 1^st Defendant and her husband jointly purchased the Bayside Property in October 2012, she has kept it as a secret from the siblings and family relatives.  The 1^stDefendant has up till Christmas 2014 still told a relative, her aunt, in New York that she did not own any property.

13.  It was against such background that the Plaintiff commenced legal proceedings against the 1^stDefendant in the Supreme Court of the Stateof New York, County of New York in October 2012 (the “US Proceedings”).  In early 2015, the judge in the US Proceedings directed that the issues in the present proceedings should be resolved by a Hong Kong court and ordered that the US Proceedings be stayed.

The Plaintiff’s claims

14.  The Plaintiff’s claims are simple and straightforward.  He asks for:

 (1) the Grant to be revoked;

 (2) the 1^st Defendant do hold all the property which devolves upon her or which she administers in her capacity as the purported administratrix of the Deceased’s estate by reason of the Letters of Administration thereof issued to her in trust for the Deceased’s estate absolutely;

 (3) an order vesting all the properties including all traceable proceeds, the sale proceeds of the Arts Mansion Property, the Bayside Property in the estate of the Deceased;

 (4) the 1^st Defendant do furnish and verify the proper particulars and accounts of the Deceased’s estate;

 (5) the 1^st Defendant do deliver up all assets and monies of the Deceased’s estate which had come into her hands and of her dealings therewith, including but not limited to the net proceeds to the sale of the Arts Mansion Property into court until further directions;

 (6) the court do pronounce for the force and validity of the Will in solemn form of law; and

 (7) a grant of Letters of Administration with the Will in respect ofthe Deceased’s estate be issued to the Plaintiff upon compliance of all and any requisition which may be raised by the Probate Registry.

15.  It is to be noted that on 15 January 2018, Master J Wong made an order that the 1^stDefendant do pay into the court the sales proceeds of the Arts Mansion Property and to furnish an update account of the estate of the Deceased but the 1^stDefendant has up to the date of the trial failed to comply with Master J Wong’s said order.

The 1^st Defendant’s defence

16.  The 1^stDefendant’s case is that when she applied for the Grantshe had no knowledge of the Will. She had indeed informed and consulted all her siblings before applying for the Grant.  It was under her siblings’ request that she agreed to handle the estate of the Deceased.

17.  She further said that she sold the Arts Mansion Property after having consulted her siblings.  In about end of April 2012, the Plaintiff told her that he did not want the Arts Mansion Property or its sales proceeds and preferred to gift it to her and also to the 4^th Defendant. Accordingly, on 17 August 2012, she used the majority of the sales proceeds of the Arts Mansion Property to purchase the Bayside Property so that it could be used for the whole family including her siblings.

The trial

18.  One day before the trial, namely 2 December 2018 (Sunday), the 1^st Defendant faxed a one-page document to this court which stated thatshe could not attend the trial fixed from 3 to 7 December 2018 because she was ill. There was no medical certificate attached to the said fax and there was no explanation as to what illness she was suffering from.

19.  Mr Chong, for the Plaintiff, submitted that there is no reason why this trial should be adjourned or aborted due to the alleged inability of the 1^stDefendant to attend this trial.  I agree.  There are no legitimate grounds to adjourn the present trial.  The 1^stDefendant has not produced any medical evidence as to her inability to attend trial.  In the circumstances, I ordered that this trial to proceed in the absence of the 1^stDefendant.

20.  The Plaintiff, the 2^nd Defendant, the 3^rdDefendant and the 4^thDefendant all gave evidence in court. It is to be noted that the 2^ndDefendant, the 3^rdDefendant and the 4^thDefendant all gave oral testimony in support of the Plaintiff’s case.

21.  Having heard their evidence, I am of the view that they are all very credible and reliable witnesses.  First, they are all in agreement that prior to 2008, there was a common understanding and/or knowledge amongst the siblings that the Deceased had made the Will and had bequeathed the Arts Mansion Property to the Plaintiff. This is significant because I found that there was no reason why the 1^stDefendant was not aware of the Will. Indeed, if the 1^stDefendant had ever discussed the administration of the estate of the Deceased with her siblings as she alleged, her siblings would have told her about the Will. Hence, it is incredible that when she applied for the Grant she had no knowledge of the Will.

22.  Secondly, all the siblings confirmed on oath in court that the 1^stDefendant had never discussed with them about her intention and act of applying for the Grant and the sale of the Arts Mansion Property.  This is again significant.  I do not find that there is any motive on the part of the 2^nd, 3^rd and 4^th Defendants not to tell the truth to the court.  I find their evidence credible.  It shows that the 1^stDefendant wrongfully and indeed fraudulently went behind the back of her siblings and secretly applied for the Grant with full knowledge about the existence of the Will.  This is very wrong.  It is a fraud on her siblings.

23.  Thirdly, if indeed the Bayside Property was purchased for thebenefit of the whole family including her siblings as she alleged, there is noreason why the Bayside Property was purchased jointly with her husband. Her siblings, in particular, the 2^nd, 3^rd and 4^th Defendants positively confirmedin court that they were not informed by the 1^stDefendant about the purchase of the Bayside Property and that they have a right to use the said property.

24.  Fourthly, the 1^st Defendant alleged that she was told by the 3^rdDefendant that in order to deal with the Arts Mansion Property which formed part of the estate of the Deceased, they had to obtain the Grant and she was told by the 3^rdDefendant that the Plaintiff and the 2^ndDefendant did not want to deal with the administration of the estate of the Deceased as they were both residing in the USA and she herself did not have time to handle the administration of the estate of the Deceased.  She and the 3^rdDefendant further did not want to burden the 4^thDefendant with the administration of the estate of the Deceased as his health condition was not very good.  The 3^rd Defendant categorically denied the 1^st Defendant’s said allegations.  Insofar as there are conflict of evidence between the 1^stDefendant and the 3^rdDefendant, I have no hesitation in preferring and believing the evidence of the 3^rd Defendant.  The 3^rd Defendant was simply telling the truth to the court honestly.

25.  Fifthly, insofar as the 1^st Defendant’s allegation that the Plaintiff had told her that he did not want the Arts Mansion Property or its sales proceeds is concerned, I find the same totally unbelievable.  It is denied by the Plaintiff.  The Plaintiff was then a houseman earning very limited income.  Further, he then still had unpaid student loans.  It does not make any sense that the Plaintiff would have given up the Arts Mansion Property and/or its sales proceeds.  The Plaintiff is a now a medical doctor.  

26.  Sixthly, indeed up to the present trial, the 1^st Defendant has not accounted for the balance of the sales proceeds of the Arts Mansion Property.  On her case, by March 2012, she would have known about the Will.  There was no reason why she should not have distributed the balance of the sales proceeds to the Plaintiff.  Indeed, there are a lot of correspondence between the parties’ legal representative which shows that the 1^stDefendant basically adopted a delaying tactic in answering direct questions raised by the Plaintiff.

27.  Further, this court is told that the cash in the estate of the Deceased, namely HK$16,678.21 and US$4,900.05, had been dissipated by the 1^stDefendant.  She has not even accounted the same to her siblings.  Such conduct is wrong and unacceptable.

28.  Still further, it appears that after obtaining the sales proceeds of the Arts Mansion Property, the 1^st Defendant did not perform her duties as an administratrix of the estate of the Deceased and had not made any distribution to the beneficiaries at all.

29.  Finally, Mr Chong, for the Plaintiff, rightly reminded this courtthat as the 1^st Defendant chose not to give evidence and testify in court, allher witness statement and affirmation should not be admissible as evidence.  I agree.

30.  In any event, even if her evidence were admissible, I do not find them credible at all.  Obviously she lied to this court.  There was no agreement amongst the siblings that she should apply for the Grant and the Plaintiff had never said or agreed that he would give up his entitlement to the Arts Mansion Property and its sales proceeds.

31.  In the circumstances, I have no hesitation in revoking the Grant which she wrongfully obtained with full knowledge of the existence of the Will.  She also has to account to the estate of the Deceased all the properties that she has misappropriated, whether in her capacity of the purported administratrix or not.  That will include but not limited to the cash under the estate of the Deceased, the entire sales proceeds of the Arts Mansion Property, the Bayside Property, the loan of US$147,500 obtained by the 1^st Defendant and secured on the Bayside Property.

Propound the Will in solemn form

32.  I also have no hesitation to propound the Will in solemn form.  First, the Will was witnessed by a practicing solicitor, Ms Maggie Chan.  She testified in paragraph 8 of her affirmation that she recognised that the signature to be hers.  She confirmed that in the normal course of her practice she “would verify the testator by checking his/her identity card.  Such testator would execute the will by signing his/her name at the foot or end thereof in the presence of me and the other subscribing witness to the will being present at the same time.  I and the other subscribing witness would then sign, attest and subscribe that will in the presence of the testator.”  The fact that she has no recollection of the Deceased and the Will, as Mr Chong submitted, probably due to the fact that she witnessed a larger number of wills in the course of her professional career, is not material.  In Williams, Mortimer and Sunnucks on Executors, Administrators and Probate (21^sted) at para 9-35, the learned editors stated:

“ The court will not allow defective memory alone to overturn a will which is upon the face of it duly executed. If the witnesses are forgetful of the facts, the presumption of due execution will prevail.”

33.  The 3^rd Defendant also confirmed that the signature on the Will is similar to the signature usually adopted by the Deceased.

34.  Secondly, when the Plaintiff came back to Hong Kong in May 2008, the 3^rd Defendant showed the Plaintiff the original Will after it was taken out from the Deceased’s safe deposit box.

35.  Thirdly, indeed the 1^st Defendant is not contesting the Will’s authenticity.  She was merely alleging that when she applied for the Grant, she had no knowledge of the existence of the Will.

36.  In Nina Kung v Wong Din Shin (2005) 8 HKCFAR 387, Ribeiro PJ at paras 171 – 173 said:

“ 171. A person who propounds a will has the legal or persuasive burden of satisfying the court that it is the will of the deceased: Barry v Butlin (1838) 2 Moo PC 480; Robins v National Trust Co Ltd & Others [1927] AC 515; Wintle v Nye [1959] 1 WLR 284 (HL).

172. The standard of proof is the balance of probabilities. The proponent of the will must show on a preponderance of theevidence that it is the will of the deceased: Worth v Clasohm & Another (1952) 86 CLR 439 at p.453; Fuller v Strum [2002] 1 WLR 1097 at p.1120.

173. This means that the proponent of the will has the persuasive burden of proving on a balance of probabilities that:

(a) there was due execution of the will;

(b) the testator was of testamentary capacity; and,

(c) the testator knew and approved of the contents of the will.  (Barry v Butlin (1838) 2 Moo PC 840; Re Harmes Estate[1946] 3 DLR 497 (PC))”

37.  In the present case, I am satisfied that, on a balance of probabilities, all three conditions are satisfied and the Will be propounded in solemn form.

Appointment of the Plaintiff as the administrator

38.  This court also has no hesitation to appoint the Plaintiff as theadministrator of the estate of the Deceased.  Section 35(1)(f) of the Probateand Administration Ordinance, Cap 10 provides that if the executors do not apply for probate, letters of administration with the will annexed may be granted to such person or persons as the court thinks fit.

39.  In the present case, the 3^rd Defendant, the named executrix under the Will does not want to take up the role and has filed a renunciation to that effect.  Similarly, the 2^nd and the 4^th Defendants have also filed a renunciation of administration.  The remaining candidates are the Plaintiff and the 1^stDefendant.  It is obvious to the court that in view of the 1^st Defendant’s fraudulent conduct and that she will mostly likely be a defendant as far as asset tracing is concerned, she is not suitable to be the administratrix of the estate of the Deceased.

40.  Accordingly, this court appoints the Plaintiff to be the administrator of the estate of the Deceased.

41.  Mr Chong for the Plaintiff also asked for dispensation of guarantee under section 46 of the Probate and Administration Ordinance, Cap 10. I am convinced that on the facts of the present case, given that the Plaintiff is the major beneficiary and the rest of the beneficiaries save and except the 1^st Defendant all consented to the dispensation, no conditions should be imposed on the appointment of the Plaintiff as the administrator of the estate of the Deceased.

Disposition

42.  For all the reasons stated above, I will make the following orders:

 (1) The grant of Letters of Administration to the estate of the Deceased (Grant No HCAG007934/2011) issued to the 1^stDefendant be revoked;

 (2) The 1^st Defendant do hold all the assets and/or properties which devolve upon her or which she administers in her capacity as the purported administratrix of the Deceased’s estate by reason of the Letters of Administration thereof issuedto her, including but not limited to all cash, the sales proceeds of the Arts Mansion Property, the Bayside Property and the sum of US$147,500, in trust for the Deceased’s estate absolutely;

 (3) All asset and properties held on trust by the 1^st Defendant for Deceased’s estate including but not limited to all cash, the sales proceeds of the Arts Mansion property space, the Bayside property and the sum of US$147,500 do vest with the Plaintiff being the administrator of the estate of the Deceased appointed pursuant to paragraph 7 below;

 (4) The 1^stDefendant do furnish and verify the proper particulars and accounts of the Deceased’s estate within 14 days hereof;

 (5) The 1^st Defendant do forthwith deliver up, transfer and pay to the Plaintiff all assets and monies of the Deceased’s estate which had come into her hands and of her dealings therewith, including but not limited to, all cash, the sale proceeds of the Arts Mansion Property in the sum of HK$16,380,000, the Bayside Property and the sum of US$147,500 within 14 days hereof;

(6) It is pronounced in solemn form for the force and validity of the Will;

 (7) A grant of Letters of Administration with the Will annexed in respect of the estate of the Deceased’s be issued to the Plaintiff uponcompliance of all and any requisition which may be raised by the Probate Registry;

(8) Leave be given to the Plaintiff to serve this order and the judgment herein and the 1^st Defendant at 57-81, 228^th Street, Bayside, New York, NY11364, the United States of America or elsewhere in the United States of America;

 (9) The Plaintiff’s costs of this action shall be paid by the 1^stDefendant personally on an indemnity basis, to be faxed if not agreed; and

 (10) There be no order as to costs as between the Plaintiff and the 2^nd, 3^rd and 4^th Defendants.

43.  The Plaintiff, as administrator of the estate of the Deceased, is also entitled to take appropriate legal actions to trace for the misappropriated assets by the 1^stDefendant for the benefit of the estate of the Deceased provided that there is no double recovery.

44.  I am also of the view that costs should be ordered against the 1^st Defendant on an indemnity basis because she has basically committed a fraud against the estate of the Deceased and all her siblings. Worse, the 1^stDefendant wrongly dragged on this case and then chose not to appear in court to testify her case.

45.  Finally, it remains for me to thank Mr Chong for his very able and helpful assistance rendered to this court.