CHAN CHI WAH v. LO CHI KEUNG (as the administrator of the estate of the Deceased)

HCMP 188/2018

[2019] HKCFI 233

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 188 OF 2018

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DECISION ON COSTS

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INTRODUCTION

1.  This decision on costs is related to an originating summons wherein the plaintiff sought the following principal relief:

(a)   the defendant be removed as the administrator of the estate of his late wife (“the dec’d”), and be replaced by a professionally qualified person (“new administrator”);

(b)   the defendant was to deliver up the assets of the dec’d’s estate to the new administrator;

(c)   as an alternative to sub-para (b) above, the defendant was to file a verified just and true account of the dec’d’s estate, to call in two insurance policies and to distribute the dec’d’s estate (including selling a residential unit at Tseung Kwan O (“the Tseung Kwan O flat”)).

2.  At the end of the hearing on 17 January 2019, the following order was made by consent:

(1)   the defendant be removed as the administrator of the dec’d’s estate, and be replaced by a new administrator (who filed his consent to so act on 14 June 2018);

(2)   title to the Tseung Kwan O flat be vested in the new administrator (for such purpose, the plaintiff is to deliver up the title deeds to him);

(3)   the defendant is to provide the new administrator with a full, true and accurate inventory of the dec’d’s estate;

(4)   the defendant is to lodge the original grant of letters of administration for the defendant’s removal and his replacement by the new administrator to be so indorsed.

(“the consent order”)

BACKGROUND

3.  The plaintiff is one of the 6 siblings of the dec’d, who passed away intestate in February 2015.  The defendant was the dec’d’s husband.

4.  The dec’d’s father later passed away in late 2016 (“the late father”).  Consequently, (as is common ground between the parties) the late father’s estate and the defendant are the only two beneficiaries of the dec’d’s estate.  Under the late father’s will, each of his 5 surviving children (including the plaintiff) is to inherit one-fifth of the late father’s estate.

5.  Letters of Administration of the dec’d’s estate were granted in May 2016.

6.  Upon the late father’s request for a statement of account (by letter dated 6 September 2016), the defendant provided a set of accounts in July 2017 (by letter dated 13 July 2017) (“the 2017 accounts”). The plaintiff was dissatisfied with the 2017 accounts.

7.  Dispute also erupted regarding the sale of the Tseung Kwan O flat since about October 2017, and regarding the calling in of the two insurance policies since about August 2017.

8.  Finally, the parties also disagreed over whether there should be distribution of the dec’d’s estate before the sale of the Tseung Kwan O flat.

DEFENDANT’S ARGUMENTS ON COSTS

9.  Based on the following reasons, the defendant argues that he should be awarded the costs of this application; alternatively, the court should make no order as to those costs:

(a)   the plaintiff’s pre-action conduct was unreasonable in that the defendant has all along actively administered the dec’d’s estate (including providing the 2017 accounts), and that the plaintiff has not asked for the defendant’s removal as an administrator in the pre-action correspondence;

(b)   after the defendant has agreed to his removal as an administrator (by way of his 3^rd affidavit dated 31 July 2018), the plaintiff has in effect given up on all the relief sought by the originating summons herein.  Apart from the removal of the defendant as an administrator, the relief granted by the consent order is not the relief originally sought;

(c)   the hearing on 26 April 2018 was wasted because the plaintiff failed to comply with Practice Direction 20.2 in that the supporting affirmations did not include the name, address and occupation of the person proposed to be appointed (it subsequently became known that the person proposed actually refused to act).

These will be discussed below in turn.

(a)   The plaintiff’s pre-action conduct

10.  In short, for the reasons given below, I disagree with the defendant that the plaintiff has acted unreasonably:

(1)   before this action;

(2)   in commencing this action.

11.  Although the defendant has provided the 2017 accounts, it cannot be disputed (and defence counsel did not persist in contending otherwise) the 2017 accounts were far from self-explanatory or complete.  It raises as many questions as it attempts to answer.

12.  Secondly, although the defendant attempted to sell the Tseung Kwan O flat in October 2017 (about 1 year 5 months after he became the administrator), the sale fell through (followed by another attempted sale at an apparently lower price).  The defendant also has not given the plaintiff all the details of the attempted sales so as to remove any uneasy feeling on the plaintiff’s part.

13.  With the above (and other matters such as the plaintiff’s request for calling in the insurance policies (where there has been little progress)) in mind, the plaintiff cannot be faulted for commencing this action some 21 months after the defendant became the administrator.

(b)   Relief granted by the consent order

14.  The parties’ discussion which led to the consent order was commenced in August 2018 (letter from the plaintiff’s solicitors dated 27 August 2018) (about 6 months after the commencement of this action).

15.  By then, the only substantial relief which the plaintiff still pursued was the replacement of the defendant by a new administrator.

16.  Based on the above change, the defendant argues that he should be awarded the costs of this action after 27 August 2018; alternatively, there should be no order as to those costs since that date.

17.  Once a new administrator has been put into place, he would have the powers (and duties) to call in and collect, and to distribute in due course, the assets of an estate which he administers.  Looked at from such perspective, the main relief which the plaintiff sought herein is in truth the order for the defendant’s replacement as an administrator (the relief which sought the defendant to provide an account (or an inventory), or to call in or collect the estate and so on, was “ancillary” in that this could have been undertaken by the new administrator subsequently) (see also para 2, plaintiff’s reply submissions).  The plaintiff has been successful in obtaining such main relief.

18.  Such being the case, I do not agree with the defendant’s contention that he should be awarded the costs (or that there should be no order as to costs).

(c)   26 April 2018 hearing

19.  By reason of the matters set out as para 9(c) above (which resulted in an adjournment of this action), it cannot sensibly be argued that this action has made any real progress at the end of the hearing on 26 April 2018.

20.  On the other hand:

(a)   as the defendant fairly (and correctly) admits, the submission concerning the plaintiff’s non-compliance with the Practice Direction was only put forth at the last moment;

(b)   further to sub-para (a) above, the defendant sought, and was granted, time to file and serve an additional affidavit at that hearing (which he did afterwards).

21.  In such circumstance, I am inclined to think that the most appropriate costs order would be for the parties to bear their own costs of that hearing.

CONCLUSION

22.  To conclude:

(1)   there should be no order as to the costs of the hearing on 26 April 2018;

(2)   subject to sub-para (1) above, the plaintiff should be awarded the costs of this action up to, and including, 27 August 2018.  The plaintiff should not be entitled to the costs after that date because in effect he has engaged in a dispute concerning the “ancillary” relief which either can sufficiently be dealt with by the new administrator, or was a disagreement which was (i) trivial, and/or (ii) in truth semantic difference.

23.  The plaintiff also seeks the costs awarded against the defendant to be taxed on indemnity basis.  The reason given for seeking such basis is:  “This would achieve a fairer result by reducing the amount of costs that has to come out from the late father’s estate for the purposes of removing the Defendant as the administrator” (para 87, plaintiff’s skeleton argument).

24.  With respect, I do not consider this to be a sufficient reason for awarding indemnity costs.  Further, the plaintiff is in effect one of the beneficiaries entitled to share in the dec’d’s estate (through his entitlement to part of the late father’s estate) (see para 4 above).  Looked at this way, this action is in essence not much more than a civil claim between rivalry beneficiaries.

25.  Taking the above into account, the costs awarded to the plaintiff should be taxed if not agreed on party-and-party basis.

OTHER MATTERS

26.  The parties’ written submissions also mentioned various other points.  These have not been expressly set out or dealt with above.  This is so only because of the need to balance between the length of the decision on costs and its easier comprehension.  It does not mean those other points are thought to be irrelevant (or have been overlooked).  To avoid doubt, those other points have also been considered.