ATHENA RESOURCES LTD v. YUNG SHU WU, EXECUTOR OF THE ESTATE OF WU KWANG SHU (DECEASED) AND ANOTHER

HCA 1447/2008

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION no. 1447 of 2008

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J U D G M E N T

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1.  This is an appeal from the decision of the Master given on 26 May of this year whereby the Master dismissed the first defendant’s summons under Order 12 Rule 8.

2.  At the outset, I would say that the bringing of this case at this stage causes me some concern.  The litigation arises out of the estate of the deceased, Mr Kwang Shu Wu.  There has already been substantial litigation about this, and it was before the Court of Appeal, in which I gave the judgment on 16 June this year in CACV 258 of 2008.  I do not need to go into the background of the relationship between the deceased’s second wife and the daughter from the first marriage and what happened to the deceased as he was dying of cancer in 2002.  Unfortunately, the deceased died at the end of that year, but the litigation lives on and shows all the signs of continuing as long as the money holds out.

3.  Mr Miu, who is acting for the deceased’s brother, who has applied for executorship in Hong Kong, is full of foreboding that the second wife will eventually manage to secure all the assets to herself.  That is vehemently denied by Miss Wong, who appears for the plaintiff in this matter, effectively instructed by the second wife.  She says that although the second wife is instigating this action in the name of the plaintiff, which is a company, the second wife is only claiming through a company called Vacha Limited, which was the 7th Defendant in the previous action, and the second wife will only seek her share of Vacha’s entitlement, which is 50 per cent of the shareholding in the plaintiff.

4.  How matters will work out in the outcome remains to be seen.  I have to say though that this litigation started in the nick of time, as it were, in relation to the limitation period, and this second round of litigation about the deceased’s estate is something which I view with some degree of lack of enthusiasm to the extent that had it been possible, I would have been disposed to stop this litigation; but I do not consider it is possible.

5.  The matter is quite simple.  What is said is that in the summer of the year in which he died, the deceased arranged for the sale of shares which ultimately held the First Sino Bank Limited, and he had originally borrowed US$5 million in order to invest in that bank so that of the sale proceeds, only US$4 million were free of his borrowing.  It is said that the deceased wrongfully arranged for that money to be put into an account of the second defendant, that account being an account in Hong Kong.

6.  The grounds of the application for service of the writ on the first defendant outside the jurisdiction were multiple.  It seems to me that it is sufficient to consider simply one of them, that is under Order 11(1)(a), and that is simply that “Relief is sought against a person domiciled or ordinarily resident within the jurisdiction”.

7.  The plaintiff relies on both grounds.  It is said that the deceased was ordinarily resident in Hong Kong despite the fact that he had moved to Shanghai for treatment and was disposed to stay there.  In reliance on that, the plaintiff relies upon the tax returns, the last of which was signed by the deceased almost at the same time that he arranged the sale of the shares which is the subject of the complaint in this case.  It is clear that in that tax return the deceased is saying that he is resident in Hong Kong.

8.  Mr Miu, who has appeared on behalf of the first defendant, says, well, what is stated in tax returns is sometimes open to question.  People are liable to fill them in in a manner which suits their fiscal needs best.  Be that as it may, it does seem that until the deceased moved to Shanghai for treatment, he was ordinarily resident in Hong Kong.

9.  It is perfectly true, as Mr Miu says, that the deceased and his second wife then had an unfortunate period, and it may be right to say that the deceased probably did not intend to return to live in the South Bay property in which he previously lived.  Whether or not he would have returned to Hong Kong if he had recovered from his illness is a matter that I consider speculative, nevertheless, until some step were taken his ordinary residence would remain, as it seems to have been for quite some years, in Hong Kong.

10.  This case, however, seems to me to turn on what is referred to as the stipulation that was filed in the Surrogate’s Court in the State of New York.  What has happened is that the first defendant had applied for admission of probate in that court on the basis that the deceased had been domiciled in New York.

11.  The matter of domicile was objected to both by the second wife and by the daughter of the first marriage, and the upshot of the matter was that the stipulation was filed, and I shall read the first part of it:

“IT IS HEREBY stipulated and agreed by and between the undersigned attorneys for Yung Shu Wu as preliminary executor of the Last Will and Testament dated October 26, 2002 (‘the Will’) of Kwang Shu Wu (the “decedent”) and Geraldine Amber Wu, daughter of the decedent, and Vivienne Sung Wu, surviving spouse of the decedent, and M. Anne O’Connell Esquire, Guardian Ad Litem for Christopher Charles Wu and Sean Edward Wu, infant sons of the decedent, who are all parties to this proceeding, that:

1. The decedent was a domiciliary of Hong Kong at the time of his death.

2. The Will shall be offered to the Registrar of the Probate Registry, High Court of Hong Kong, for original probate in Hong Kong.

3. The parties will co-operate and hereby consent to the transfer of the decedent’s original Will from the New York County Surrogate’s Court to the High Court of Hong Kong for original probate.

4. Until the admission of the decedent’s Will to original probate in Hong Kong, and appointment of Yung Shu Wu as ancillary executor in New York, Yung Shu Wu shall continue to act as preliminary executor of the decedent’s estate in New York.”

12.  And I think the only other part of this that should be referred to is paragraph 6, which says:

“The Executor shall file all estate tax returns and all income tax returns on the basis of decedent being a Hong Kong domiciliary and shall provide copies thereof to counsel herein upon filing.”

13.  There may be not an issue estoppel, but it seems to me to be impossible, in the light of that and in the light of the fact that application has been made to the Hong Kong court, for this court to come to any other conclusion than that the deceased was domiciled in Hong Kong.

14.  That being the case, and the first defendant having applied for executorship in Hong Kong, it seems to me that it covers both aspects of the case with which I am concerned today.  First of all, the matter must come within Order 11(1)(a).  Secondly, when one considers the position under Order Rule 11(4)(ii) as to whether no such leave shall be granted unless it has been made sufficiently to appear to the court that the case is a proper case for service outside the jurisdiction, it seems to me that if the executor has agreed to executorship in Hong Kong, the court really has little option but to allow service of the proceedings on the executor, and if he is overseas, it has to be overseas.  That appears to me to be the end of the matter.

(Submissions on costs)

15.  Yes, I don’t think you can resist that, can you?

(Submissions on leave to appeal and certificate for counsel)

16.  I will give you leave to appeal and I will give him certificate for two counsel.