NGAI WING KAN v. NGAI CHAU LAN, The administratrix of the estate of LEE YIN SUM, deceased

HCMP 2508/2016

[2021] HKCFI 1082

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 2508 OF 2016

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BETWEEN

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DECISION

(On Costs)

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Introduction

1.  The plaintiff Ngai Wing Kan (“P”) and Ngai Chau Lan (“D”) are 2 out of 5 siblings.  There are 3 sisters and in 2014, they were respectively about 59, 57, and 55 years old with D being the oldest and there are 2 brothers, who were then respectively 53 and 48 years old, with P being the younger.  Their mother (“Mother”) passed away, intestate, on 10 November 2011 and their father (“Father”) passed away, intestate, on 31 December 2013.  On 1 August 2014, D obtained the letters of administration to Mother’s estate (“Mother’s Estate”), and on 4 September 2014 obtained letters of administration to Father’s estate (“Father’s Estate”).

2.  There were disputes over the administration of Mother’s Estate.

3.  P commenced the present proceedings on 20 September 2016, seeking, amongst other things:

(1) a just and true account to be provided by D;

(2) interim distribution of the residuary assets of the Mother’s Estate;

(3) an order that D to handover all the shares, funds of Mother and if any of them sole, to disclose details of the moneys received from the sale thereof;

(4) further and/or alternatively, an order that D do transfer a property which was registered in Mother’s name (“Property”) by way of assent in accordance with the shares in the beneficiaries entitled under the Intestates’ Estates Ordinance, Cap 73;

(5) D be removed as the administratrix of Mother’s Estate, to be replaced by P and/or other beneficiaries, and the letters of administration granted to D be revoked.

Brief Background leading to the issue of these proceedings

4.  There was no dispute that the siblings had agreed for D to apply for the letters of administration of Mother’s Estate and they had agreed that D was to apply only after Father’s death.

5.  It would appear from the what’s app group chat among the siblings (“Group Chat”)[1] that at one stage, there was a proposal from D that the Property was to be transferred to D’s personal name solely, and that the remaining assets in the Mother’s Estate, ie cash and stocks etc were to be distributed to and shared by all siblings[2].  This had later led to D instructing solicitors to prepare a draft deed of family arrangement (“Deed”) whereby the other 4 siblings were to renounce, abandon or otherwise waive in favour of D their interests in the Property[3].  However, the Deed only dealt with the Property and there was no mention as to the distribution of the other assets of Mother’s Estate.   

6.  Although it appeared that the other siblings did agree to D’s above proposal, disputes then arose as to what the rest of Mother’s Estate consisted of.

7.  What could be seen from the Group Chat was that P’s elder brother Ngai Siu Kun (“NSK”) had asked D to account for Mother’s Estate as early as 3 January 2015[4].

8.  What could also be seen from the Group Chat was that D had sold the shares and unit trusts of Mother’s Estate by 10 April 2015[5].  According to NSK’s calculations, each of the 4 siblings[6] should be entitled to HKD 1,319,222[7] and that he had pressed D for a distribution around 14 April 2015. 

9.  However, as seen in the Group Chat, D insisted that any distribution of the monies/sale proceeds of shares and unit trusts had to take place upon the transfer of the Property to her, and that as the transfer of the Property had to be subject to the consent of the Hong Kong Housing Authority (“HA”), it would not be until middle of May 2015 that D’s solicitors would hear from HA.  NSK had informed D on 14 April 2015 that the siblings should discuss and that the other siblings were entitled to know the whereabouts of the monies/sale proceeds, which should have been placed on fixed deposit for interests, and that without further discussions, the transfer of the Property would have to be stopped[8]. It was further made clear to D by NSK on 29 April 2015 that the other siblings wanted to see the bank statements showing the whereabouts of all funds since the sale of the stocks and unit trusts on 9 April 2015.  P had also sent chats to D on 29 April 2015 and 30 April 2015 and it was clear his stance was the same as NSK’s and he had agreed with NSK’s proposal.  On 5 May 2015, NSK sent a chat to D to give her a final chance to meet with the siblings to discuss and to account for the whereabouts of all funds.  This was agreed by P.

10.  By then, D’s case appeared to be that she should be entitled to not only the Property but also Mother’s funds in the Hang Seng Bank of about HKD 2m transferred out to a joint account with D at the Hang Seng Bank before Mother’s death[9].

11.  The last chat sent by D to the Group Chat appeared to be 11 February 2016 in which she said until and unless the siblings agreed that the Property be transferred to D, there would be no distribution of the funds or other assets of Mother’s Estate[10].  D then exited the Group Chat on 13 February 2016.

12.  The above later led to P applying for legal aid and issuing the present proceedings.

13.  Eventually, P and D obtained from this Court a consent order on 22 April 2020 for these proceedings to be stayed except for the purpose of carrying out the matters set out in the schedule attached, save for argument on costs (“Tomlin Order”).

14.  The schedule to the Tomlin Order (“Schedule”) states, amongst other things, as follows:

(1) Subject to the First Charge of the Director of Legal Aid, a sum of HKD 700,000 be paid to P out of Mother’s Estate on or before 8 May 2020;

(2) Subject to the consent to be issued by the HA, D was to transfer 1/5 part or share of the Property to P by way of a Deed of Assent (“Assent”), to be executed within 6 months from the date of the consent issued by the HA;

(3) P to solely bear all the legal costs and disbursements in connection with the Assent including but not limited to all fees charged by the HA or any other Government authorities for the Assent, stamp duty, registration fee and any other necessary expenses incurred thereof;

(4) the lis pendens registered against the Property be vacated at P’s own costs with the time stipulated;

(5) the question of costs in relation to P’s application and the proceedings herein be adjourned for paper disposal; and

(6) upon compliance of paragraphs 1 to 5 above, D be discharged from all further liabilities in respect of all claims of P in these proceedings and any other claim P may have against D.

15.  Subsequently, on 14 December 2020, this Court further directed, by consent, amongst other things, for the lodging of paginated bundles and for the parties to exchange their skeleton arguments on costs before the stipulated deadlines therein.

The parties’ respective evidence

16.  According to P, Father was working for Kowloon Bus Company and Mother was working for a Hong Kong Government hospital before their respective retirement, and that both were in receipt of a lump sum pension upon retirement.  Mother was in addition receiving a monthly fixed pension from the Government, and further Father had handed over his monies to Mother for investments.  This, according to P, explained why Mother's Estate consisted of (i) foreign currency savings; (ii) unit trusts investments; (iii) shares listed in Hong Kong and Mainland stock exchanges; and (iv) HKD savings, and further according to P, Mother’s Estate should not be less than HKD 10m at the time of her death.

17.  In paragraph 8 of P’s 1^st affirmation, he had complained that although the siblings had requested D on many occasions for an estimated amount as to what the siblings’ respective entitlement was of Mother’s Estate, such requests were ignored by D.

18.  Further, according to P’s 1^st affirmation, there were in particular the following disputes relating to Mother’s Estate:-

(1) a sum of HKD 2m withdrawn from Mother’s integrated bank account/s at the Hang Seng Bank (“Hang Seng Bank Account”)[11];

(2) D had requested the other 4 siblings to surrender their respective interest in the Property pursuant to the Deed and that unless and until all the beneficiaries had agreed to sign the Deed, she would not give a full account of Mother’s Estate and/or make any distributions[12].

19.  Apparently, although it was not stated in P’s affirmations, it was stated in P’s solicitors letter dated 7 April 2020 that the Property had in fact all along been occupied by D’s family members rent free.  

20.  In his 2^nd affirmation, P clarified in paragraphs 2 and 3 thereof that the above mentioned alleged sum of HKD 2m in fact came from Mother’s stocks and unit trusts and not from the cash balances. P then said on 31 October 2011, when Mother was seriously ill, D had forced Mother to sell her shares and unit trusts and then later after sale, D had arranged for the net sale proceeds to be transferred to D’s personal account or her joint account with Mother and D had failed to account for the whereabouts of the funds.  P then said the unit trusts in Mother’s investment account at Hang Seng Bank should be not less than HKD 1,430,000.  Later in paragraph 5 of his 2^nd affirmation, P said that the shares held by Mother in her investment account should have been HKD 655,002 but these were sold on 27 October 2011, when Mother was seriously ill.  Again, D had failed to account for such funds.

21.  In his 3^rd affirmation, P said according to his solicitor’s enquiries, Mother’s securities account at the Chong Hing Bank was closed on 26 August 2014, the day after the letters of administration were granted to D in respect of Mother’s Estate, and that all the shares therein were withdrawn by D and deposited into D’s own securities account, and thereafter, D then sold all the shares between 26 August 2014 and 13 April 2015, and deposited the total amount of sale proceeds of HKD 394, 052.93 into her personal account at the Chong Hing Bank.

22.  NSK had made an affirmation supporting P’s case. In particular, in paragraph 5 thereof, NSK had referred to the Deed, which he said would reflect D’s then demands and NSK had further said in paragraphs 7 and 8 thereof, that he had requested D and his other sister to go to the Hang Seng Bank to make enquiry in relation to the monies and balances in the Hang Seng Bank Account, but D later failed to turn up at the appointment, and further D had refused all his requests for meetings with the other siblings for them to find out their respective entitlement to Mother’s Estate.

23.  D had filed an affirmation in opposition to P’s application and her explanations were briefly:

(1) she denied all the allegations from P and NSK;

(2) according to D, all the other siblings, apart from one sister who was in Australia, all attended the Probate Registry when D went to apply for the letters of administration, and that they should all know the details of Mother’s Estate;

(3) D had in the Group Chat in January 2015, and also at the Ching Ming Festival in 2015 explained the details in relation to Mother’s Estate, and save the siblings had a disagreement about what D said was given to her by Mother in their joint account, there was no dispute as to the other assets;

(4) D denied there was a sum of HKD 2m missing from Mother’s Hang Seng Bank Account, and said that there was a balance of only HKD 164,810.40 therein at Mother’s date of death;

(5) D further said P and the other siblings knew and did not object to D selling all Mother’s unit trusts and shares on 9 April 2015, which could be seen in the siblings’ Group Chat;

(6) D did not withdraw HKD 2m from Mother’s Hang Seng Bank Accounts and that that was a gift to D from Mother;

(7) D then alleged that the DSK had withdrawn a sum of HKD 2.36m between 19 October 2011 and 14 November 2011 from Mother’s bank accounts at HSBC.

24.  D had further explained in paragraph 11 of her affirmation that on 22 October 2011, it was Mother who had asked her and another sibling to attend the Hang Seng Bank and that Mother had explained that she wanted to open a joint account with D, so that the amounts in that joint account would be gifted to D upon Mother’s death.  D had explained that in all past years, she had cared for Mother, and that it was understandable that Mother had wanted to gift to her some monies and at the time, although Mother was suffering from cancer, she was alert mentally, and that the bank officer had clarified Mother’s wishes and that the conversation was recorded.  She further said although she was invited by NSK to attend the Hang Seng Bank to clarify the transfer of HKD 2m out from the Hang Seng Bank Account, she did not think it was necessary as there was no such issue.  

25.  It was D’s case that her other siblings had originally agreed to give up their share in the Property and to let D to have the entire share of the Property.  According to D, what caused disharmony among the siblings was that D was alleged to have taken away about HKD 2m worth of stocks and shares and this was disputed by D who alleged that they were inter vivos gifts from Mother.

26.  D then in her affirmation proceeded to set out the account of Mother’s Estate in paragraphs 14(A) – (F) (“Account”).

Discussion

27.  First, it is the duty of the personal representative of a deceased person’s estate to bring in and collect the assets of the deceased, to pay the expenses/debts of the deceased and to distribute and wind up the estate as soon as practicable.  The fact is that until the Tomlin Order, there had not been any distribution.

28.  Second, under section 56 of the Probate and Administration Ordinance, Cap 10, the personal representative of a deceased person shall, when lawfully required so to do, exhibit, by affidavit filed in the court, a true and perfect inventory and account of the movable and immovable property of the deceased, and the court shall have power as heretofore to require personal representatives to bring in inventories.

29.  Thus, whether D’s other siblings were aware of what assets Mother had was irrelevant, as it was/is the duty of D, as the administratrix to provide a proper account and an inventory[13] of Mother’s Estate to the other beneficiaries (ie her siblings) and to distribute and wind up Mother’s Estate as soon as practicable.  As seen earlier in the Group Chat, NSK had requested D to account for Mother’s Estate as early as 3 January 2015. Further later, NSK had requested D to attend meetings with the siblings and to explain what each sibling’s entitlement was.  All D had said was she did not see that there was anything to discuss.  Although D had provided the sale price of the shares and unit trusts, and some information, this was not a proper account or inventory.  There was no sufficient evidence provided by D that she had at any time rendered a proper account and inventory of Mother’s Estate prior to P issuing the originating summons in September 2016 (amended on 19 December 2016).  Even though there was no letter before action, as seen in the Group Chat, D had been asked for an account by her siblings since January 2015, and the evidence showed that it was not until 2 May 2018 that D filed her affirmation with the Account. 

30.  D obtained the grant on 1 August 2014, and D had said after she obtained the grant, she then discovered there were omissions in the schedule of property and that the schedule had to be amended respectively on 23 September 2014 and 31 October 2014, and the schedule was only completed in November 2014.  Even so, until May 2018 for over 3 years, there was no proper account rendered by D nor had she made any interim distribution to the other beneficiaries.

31.  Although there was no mention of provision of account by D in the Tomlin Order, the fact was that by then D’s affirmation had been filed and D had set out the Account, which was presumably accepted by P by entering into the settlement with D.

32.  Third, as pointed out on behalf of P, there was conflict of interests on D’s part in her proposal that the other beneficiaries should sign the Deed and to allow her to have the Property first before she was to make any distribution to them.  As mentioned earlier, the Deed only referred to the transfer of the Property to D, there was no reference as to what distributions the others were to receive.  In my view, it was unreasonable for D to set such a condition prior to rendering an account and/or to make distributions. 

33.  Fourth, although there was no information as to how the sum of HKD 700,000 was arrived at in the Tomlin Order, the total current value  of the assets in Mother’s Estate according to the Account appeared to be net of about HKD 3.5 m excluding the Property (valued at HKD 1m by D).  1/5 of the amount (excluding the Property) would seem to be about HKD 700,000.

34.  Fifth, whether D and NSK had any personal grudges or not, this should not affect D in carrying out her duty as the administratrix of Mother’s Estate.  As said earlier, it is her duty to collect and bring in the assets of Mother’s Estate, to pay for the expenses/debts and to make distribution to all the beneficiaries, and to wind up the administration as soon practicable, and she had clearly failed to do.

35.  Although the originating summons was issued under Order 85 of RHC, it was opposed by D and it was a hostile litigation. The Tomlin Order was arrived at some 3 ½ years after the issue of the originating summons.  It is clear that P has been the successful party in these proceedings and he has achieved to receive his own share of the Mother’s Estate by bringing these proceedings.

Conclusion

36.  Having considered the above, I have come to the view that D’s conduct has not been reasonable and she should be personally liable for P’s costs of and incidental to these proceedings, to be taxed under Legal Aid Regulations, if not agreed.  Further, D is not allowed to claim her own costs from Mother’s Estate.