TAN CHENG GAY AND OTHERS v. TAN CHOO SUAN AND ANOTHER

HCMP 246/2013

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 246 OF 2013

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R U L I N G  ON  C O S T S

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1.  The issue before this court at the hearing was in relation to the proper construction of the Joint Will of the deceased Father of the plaintiffs and the sole executrix 1^st defendant, and this court handed down a judgment on 6 September 2013, against the plaintiffs’ interpretation.

2.  The question of costs was reserved and the plaintiffs, the 1^st defendant, and the Secretary of Justice being the second defendant all lodged written submissions.

3.  It is stated in Williams, Mortimer and Sunnucks on Executors Administrators and Probate, 20^th Ed that where an action is instituted for the direction of the court about the construction of a will or the determination of any question of law in relation to the administration of the estate, the question of costs will be determined under the classification set out in Re Buckton [1907] 2 Ch 406:

“(1) Where the action is reasonably brought by the representative for the guidance of the court, the costs of all parties will usually be treated as necessarily incurred for the benefit of the estate and an order made for payment out of it.

(2) Where such an action is reasonably commenced by a person other than the representative, a similar costs order will usually be made.

(3) Where the action seeks similar relief but is hostile, the usual approach to costs in hostile litigation apply”[1]

4.  In addition to the above, the learned authors also set out a fourth category, where the issue is being pursued by a beneficiary and a third party, in circumstances where, had it not been for the third party, the costs would have fallen into category (2) above, the costs should be shared amongst the parties[2].

5.  The approach in Re Buckton has been confirmed by the Court of Final Appeal in Cheung Pui Yuen v Worldcup Investments Inc (2009) 12 HKCFAR 31[3].

6.  It has further been said by the Court of Final Appeal in the above case of Cheung Pui Yuen that there is a further principle regarding litigation to resolve questions arising in the administration of a deceased’s estate that needs to be borne in mind, which is if it is the deceased who is responsible for the creation of the doubts that have necessitated an application to the court for the doubts to be resolved, it is the deceased’s estate on which the costs of the application should fall[4].

7.  Mr Ho, Senior Counsel for the plaintiffs, has submitted that this is a case which falls within the second category in Re Buckton and that all necessary parties’ costs should be taxed on solicitor and own client basis and paid out of the Father’s estate.

8.  On the other hand, Mr Chow, Senior Counsel for the 1^st defendant, has referred the court to Lewin on Trusts, 18 Ed, where it is stated that the distinction between the third category and the first and second categories in Re Buckton, though not easy to draw in practice, is that the claim in the third category is brought “not in substance for the benefit of the trust fund, but for the benefit of the claimant”[5].

9.  The learned editors further set out the following:

“A case which falls clearly within the third category is where the whole of the trust fund has been distributed to the supposed beneficiary in reliance on some construction of the trust instrument, or view of the law, and another person claiming to be the true beneficiary brings proceedings against the recipient or the trustee in reliance on a rival construction, or rival view of the law. Here the general principles as to costs of hostile litigation apply between the claimant and the party against whom the claim is directed, and so the general rule is that the unsuccessful party will be ordered to pay the costs of the successful party, subject to the general qualifications which apply in ordinance hostile litigation”[6]

10.  The essential question is thus whether the plaintiffs herein brought these proceedings for their own personal benefit, or the benefit of the estate. 

11.  Under the Joint Will, subject to payment of expenses/liabilities and the life interest of the surviving parent as to interest, the beneficiaries are various charities.  None of the plaintiffs is a beneficiary.

12.  Originally, there was a complaint by the plaintiffs that the 1^st defendant had failed to include the Father’s Art Collection in the 1^st Schedule to the Grant, but this was rectified by the 1^st defendant shortly after the plaintiffs issued their originating summons.  There was no issue that the Art Collection were assets held in the name of the Father and would in any event be governed by the Joint Will.  The issue at the heart of the plaintiffs’ application was whether the Joint Will governed only those assets held in the name of the Father, or whether the Joint Will governed also those assets which the Father was beneficially entitled to but held by or in the name of other/s on trust for him.  Had the plaintiffs been successful in their application, they would be entitled to share in those substantial assets beneficially entitled to by the Father and held in name/s of other/s.

13.  Having considered the circumstances of these proceedings, I am of the view that the plaintiffs have brought these proceedings for their own personal benefit, and their interests are adverse to the interests of the charities, which are the beneficiaries under the Joint Will.  If the parties’ costs are all to be paid out of the Father’s Estate, it will be the charities which will suffer.

14.  As to whether it was the Father who was responsible for the creation of the doubts that had necessitated in an application to the court by the plaintiffs for the doubts to be resolved, for the reasons stated in my judgment, I have come to the conclusion that the Father’s intention was clear and that there was no ambiguity.

15.  Having considered all the circumstances of this case, I am of the view that this case falls within the third category of Re Buckton and that the general rule should apply, namely that the unsuccessful party will be ordered to pay the costs of the successful party.  The plaintiffs should therefore pay the 1^st defendant’s costs.

16.  As for the Secretary of Justice, there is no dispute that it is a necessary party.  Mr Chow’s submissions are that the plaintiffs should pay the Secretary’s costs on a party and party, with the shortfall to be paid by the estate.  The Secretary submits that it should be awarded costs incurred in these proceeding and such costs to be paid out of the estate on an indemnity basis.  Having considered their submissions, I am of the view that the Secretary’s costs should be paid out of the estate on an indemnity basis.  The Secretary has attached a statement of costs for summary assessment.  There was no objection to the quantum from the other parties.  I find the amount of HK$76,659 reasonable and will allow this amount in full.

17.  My order is thus:

(i) The plaintiffs shall pay the 1^st defendant’s costs of this action, to be taxed, if not agreed, on party and party basis;

(ii) The 2^nd defendant’s costs summarily assessed at HK$76,659 shall be paid out of the estate.