WONG YAT WAI, administrator of the estate of WONG CHING YIN, Deceased v. LIN FEI ZHU, administratrix of the estate of WONG CHING YIN, Deceased

HCMP 543/2020 &
HCMP 1034/2021
(Heard Together)

[2023] HKCFI 253

HCMP543/2020

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 543 OF 2020

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HCMP1034/2021

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 1034 OF 2021

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(Heard Together)

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DECISION ON COSTS

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1.  The substantive hearing of HCMP 543/2020 and HCMP 1034/2021 (“the 543 Proceedings” and “the 1034 Proceedings”, collectively “these proceedings”) took place before me on 30 November 2022. In that hearing, the parties were able to reach an agreement (“the Settlement Agreement”) to settle the disputes between them in these proceedings save and except costs. This is the decision on the costs of these proceedings.

2.  The disputes in these proceedings are the disputes between Mr Wong Yat Wai (“Wong”) and Madam Lin Fei Zhu (“Lin”).  In the 543 Proceedings, Wong is the plaintiff, while Lin is the defendant.  In the 1034 Proceedings, Lin is the plaintiff, and Wong is the defendant.  These proceedings concern the administration of the estate (“the Estate”) of Mr Wong Ching Yin, deceased (“the Deceased”).  Wong is the father of the Deceased, while Lin is the wife of the Deceased.

3.  In these proceedings, Mr Norman Hui represents Wong, and Mr HY Wong represents Lin.

Background

4.  I would first set out the background facts which are not in dispute or recorded in the documents.

5.  Wong married Madam Tse Shuk Chong (“Tse”) in 1981.  Madam Tse gave birth to the Deceased in Hong Kong in 1982. Wong and Tse divorced in 1987, and Wong obtained the custody of the Deceased. Since 1988, Wong have been cohabiting with Madam Wong Yuet Wah (“YW Wong”).

6.  Lin was born in Mainland China in 1986.  The Deceased and Lin married in Hong Kong in 2008.  Lin gave birth to a boy (“WJ”) on 25 April 2015.

7.  On 12 November 2016, the Deceased was assaulted by a person (“the assailant”) in Shenzhen.  As a result of the assault, the Deceased died on 14 November 2016.  The Deceased did not make any will during his lifetime and died intestate.

8.  Only Lin and WJ are the beneficiaries of the Estate.  Lin is entitled to take the personal chattels in the Estate absolutely.  In addition, the residuary estate (other than the personal chattels) shall stand charged with the payment of a net sum of HK$500,000 to Lin with interest. Subject to providing for that sum and interest, the residuary estate (other than the personal chattels) would be divided between Lin and WJ, each of them would be entitled to have half of the residuary estate.^[1] In other words, Lin would be entitled to have more than half of the entire Estate, and WJ would be entitled to have the remaining part.

9.  Since WJ is a minor, the Letters of Administration has to be granted to a trust corporation or to not less than two individuals.^[2]

10.  On 21 June 2017, Letters of Administration of the Estate was granted to Wong and Lin.  As per the Schedule of Assets and Liabilities (affirmed by both Lin and Wong) annexed to the Letters of Administration, as at 2 June 2017, the Estate did not have any liability and had the following assets:

(1)  Deposits in various bank accounts, the total of which were about HK$1.45 million

(2)  A residential unit known as Flat H, 42/F, Service Apartment Tower II, The Apex, No.33 Wo Yi Hop Road, Kwai Chung, New Territories, Hong Kong (“the Apex Property”)

(3)  Two insurance policies

(4)  Benefit in a MPF account

(5)  A key deposit of HK$420 for a safe deposit box

11.  In respect of the death of the Deceased, Lin, WJ, Wong and Tse have commenced civil proceedings in Mainland China as plaintiffs against the assailant and another person (“the Mainland Case”).  On 8 July 2019, the Mainland Court entered judgment in favour of the plaintiffs and ordered the two defendants to pay damages to the plaintiffs (“the Mainland Judgment”).  The total of damages as ordered by the Mainland Court is around RMB1.57 million.  Some further steps would need to be taken in the Mainland to enforce the judgment against the defendants.

12.  On 26 November 2019, Messrs Cheung & Choy (“CC”), the solicitors representing Wong, wrote an open letter to Lin.  In that letter, CC said, inter alia, the following:

(1)  During the Deceased’s lifetime, the Deceased, Lin, WJ, Wong and YW Wong lived in the Apex Property.  Further, the Deceased gave HK$4,000 to Wong each month to support Wong’s life.

(2)  After the death of the Deceased, Wong and YW Wong continued to live in the Apex Property until 28 August 2019. On 28 August 2019, Lin changed the lock to the Apex Property and refused to allow Wong and YW Wong to continue to reside therein.

(3)  Wong has been advised to make a claim for financial provision from the Estate (“the IPFDO Claim”) under the Inheritance (Provision for Family and Dependants) Ordinance (“the IPFDO”).

(4)  Wong’s position is that the Estate ought to pay HK$1,140,000 to him as financial provision under the IPFDO.

(5)  Wong demands Lin to disclose documents concerning the administration of the Estate.

(6)  Wong asks Lin whether she has received the damages as stated in the Mainland Judgment, and whether Lin has any proposal to divide the damages among the successful plaintiffs in that case.

13.  On the same date, CC also wrote a “without prejudice save as to costs” letter to Lin.  In that letter, CC repeated the demands as stated in the open letter.  CC also made the following settlement proposal to Lin:

(1)  While Wong and YW Wong are alive, Lin would not sell the Apex Property, and would allow Wong and YW Wong to live therein without requiring them to pay any expenses.

(2)  Wong would abandon the IPFDO Claim, and would only request for a lump sum of HK$480,000 as financial provision.

(3)  Wong would agree to take only RMB100,000 from the damages ordered by the Mainland Court in the Mainland Judgment.

(4)  The legal costs incurred by Wong (not more than HK$30,000) would be paid by the Estate.  If the amount cannot be agreed, costs would be taxed by the court.

14.  On 8 December 2019, CC wrote an open letter to Lin, asking Lin to give a reply within 7 days.

15.  On 18 February 2020, CC wrote another open letter to Lin to ask Lin to give a reply within 7 days.

16.  On 11 May 2020, Wong issued the Originating Summons (“the 543 OS”) in the 543 Proceedings to seek the following reliefs:

(1)  an order that Lin be removed as the administratrix of the Estate and be replaced by Mr Wong Chun Pang (“CP Wong”, Wong’ younger brother) as the administrator of the Estate;

(2)  an order that Lin do give a full and proper account by way of oath/affirmation of all her dealings, payments and/or distributions incidental to the administration of the Estate from the date of the Deceased’s death up to the present;

(3)  an order that, on taking of the said account, Lin do pay to the Estate all sums found due to the Estate;

(4)  such further or other orders, accounts, inquiries and directions as may be necessary; and

(5)  costs.

17.  On the same date, Wong filed his 1^st affirmation in the 543 Proceedings in support of his claim.  In that affirmation, Wong mentioned, inter alia, the following:

(1)  Since he is not a beneficiary of the Estate, he had only taken a passive role in the administration of the Estate.  Lin kept all the records concerning the administration of the Estate. Wong would simply enquire with Lin from time to time the state of the Estate, out of the concern to see if Lin and WJ were well provided for and had enough to live on.

(2)  In August 2019, Lin evicted Wong and YW Wong from the Apex Property.  Thereafter, Wong made enquiries with Lin on the state of the Estate and asked for provision of bank statements concerning the administration of the Estate.  However, notwithstanding his repeated requests, no document was provided to Wong.

(3)  Wong’s solicitors had obtained the statements from the bank and discovered that about HK$2.3 million had been withdrawn from the bank account.  Lin had never discussed or consulted Wong in respect of these withdrawals.

(4)  Lin had also failed to tell Wong whether there was any payment from the insurance policies owned by the Estate and whether any damages ordered by the Mainland Court had been recovered.

(5)  At §23 of the affirmation, Wong said:

“It appears to me that [Lin] is simply treating all the money in the Estate as hers, in dire neglect to [WJ]’s substantial interest in the Estate and my duties as co-administrator.”

(6)  Wong believe that he has a claim under IPFDO against the Estate.  Wong would cease to be an administrator if he proceeds with the said claim.

18.  On 25 September 2020, Lin filed her 1^st affirmation in the 543 Proceedings.  In her affirmation, Lin said, inter alia, that:

(1)  During his lifetime, the Deceased did not have a close relationship with Wong and YW Wong.

(2)  The Apex Property was the matrimonial home of the Deceased and Lin.  Out of respect for Wong and YW Wong, Lin invited them to come and stay at the Apex Property during weekends, so that they could spend some time with WJ.  Wong and YW Wong would only stay in the Apex Property during weekends.  They did not live therein at all times.

(3)  After the death of the Deceased, in applying for the grant of Letters of Administration, Lin was told that it would be necessary to have two administrators.  To please Wong and considering that Wong is the grandfather of WJ, Lin invited Wong to be a co-administrator. Wong agreed.

(4)  After obtaining the Letters of Administration, at the time of opening the administration account, Wong told Lin that there would be a lot of outgoing expenses for herself and WJ, and keeping a substantial sum in the administration account might affect Wong’s application for a pace maker and medicine subsidies.  Wong proposed to Lin that (a) withdrawals from the administration account could be made by either Lin or Wong; and (b) a substantial amount in the administration account should be transferred to Lin’s personal account as soon as possible, and only a minimal balance should be kept in the administration account.  Lin agreed to the proposal.

(5)  Lin has given accounts as to some substantial withdrawals from the administration account.  Lin denied the allegation made by Wong in §23 of his 1^st affirmation and gave particulars of the money movements in §§60 to 64 of her affirmation.  Lin also said that she did notify Wong whenever significant amounts of expenses was incurred and had to be paid out of the Estate.

(6)  Wong should not be entitled to have any financial provision under the IPFDO.  There factual basis alleged by Wong in support of the claim is not true or correct.

(7)  On 28 August 2019, after Lin and WJ having being repeatedly mistreated by Wong, Lin decided not to allow Wong and YW Wong to enter the Apex Property again.

(8)  The 543 Proceedings are made by Wong with the ulterior purpose of obtaining benefit for himself and YW Wong to the detriment of WJ and Lin.  Wong has not come with clean hands himself and has not given full and frank disclosure.

19.  On 30 November 2020, Wong filed his 2^nd affirmation in the 543 Proceedings.  Suffice to say that Wong strenuously refuted that matters alleged by Lin in her affirmation.  In this affirmation, Wong said at §73 that “…… I intend to give whatever amount I may be able to get from My Intended Cap.481 Claim and ultimately save up to [WJ].”

20.  On 2 February 2021, the 543 OS was heard by K Yeung J.  The learned judge gave directions for the filing of further evidence and ordered, inter alia, that there would be cross-examination of witnesses in the substantive hearing.

21.  On 23 February 2021, Lin filed her 2^nd affirmation in the 543 Proceedings.  In this affirmation, Lin said further regarding the factual matters which are disputed by Wong.  Lin also gave further details regarding the movement of the money from the administration account.  Lin also said that Wong should be removed as the administrator of the Estate, for it would be impossible for Lin to work together with Wong, and also Wong has a serious conflict of interest in the administration of the Estate.

22.  On 23 March 2021, Wong filed his 3^rd affirmation in the 543 Proceedings.  In this affirmation, Wong alleged, inter alia, that Lin had dissipated the money in the administration account and misappropriated WJ’s share of the Estate.  Wong also said that he would oppose any application made by Lin for removing him as the administrator of the Estate.

23.  On 20 April 2021, Sun Lawyers LLP (“SL”), solicitors for Lin, wrote to CC.  SL proposed that given the distrust between Lin and Wong, both of them should be replaced by professional administrator(s).  SL also stated that they had made enquiries, and Lin proposed to appoint Mr Alfred Ip and Mr Geraint Ho of Messrs. Hugill and Ip (“HIP”) as the substituted administrators.  Information concerning the two solicitors was enclosed with that letter.

24.  On 3 May 2021, CC replied.  Wong refused to accept Lin’s proposal, for the costs involved would be disproportionate to the size of the Estate.  Wong also denied that there is any valid and/or proper ground for removing him as the co-administrator.  In paragraph 6 of this letter, CC on behalf of Wong said:

“In paragraphs 24 to 27 of our client’s Affirmation affirmed on 11^th May 2020, he has already clearly indicated his position not to claim against the [Estate] under [the IPFDO] whilst he is still acting as the co-administrator. For the avoidance of any inconceivable doubt, to enable our client to fully and properly discharge his duties as the co-administrator so as to protect [WJ]’s interest in [the Estate], our client has decided to abandon any claim he may have against [the Estate] under [IPFDO] …”

25.  On 23 July 2021, Lin issued the Originating Summons (“the 1034 OS”) in the 1034 Proceedings.  In the 1034 Proceedings, Lin seeks an order that both Wong and herself be replaced by Mr Alfred Ip and Mr Geraint Ho of HIP as the administrators of the Estate and consequential directions.

26.  On the same date, Lin filed her affirmation in the 1034 Proceedings in support of her case.  In that affirmation, apart from mentioning the factual matters in the 543 Proceedings, Lin also said that she had tried but was unable to find alternative lay administrators.  In the circumstances, she could only propose to appoint professionals as the new administrators of the Estate.

27.  On 4 August 2021, there was a hearing before B Chu J in the 543 Proceedings.  The learned judge directed that the 543 Proceedings be heard together with the 1034 Proceedings.  The learned judge further ordered that Lin shall file an affirmation exhibiting a true and perfect inventory and account of the movable and immovable property of the Deceased.

28.  On 30 August 2021, SL wrote to CC on a “without prejudice save as to costs” basis.  SL requested Wong to consider that both himself and Lin would step down, and two professionals (or the Official Solicitor) be appointed as the new administrators in substitution.

29.  On 3 September 2021, CC replied, also on a “without prejudice save as to costs” basis.  As per this letter, Wong is open to the idea that both himself and Lin be replaced by two new administrators.  However, since engaging professionals (including the Official Solicitor) would be an expensive exercise, Wong prefers that the two new administrators be lay administrators.

30.  On 8 October 2021, Lin filed her 3^rd affirmation in the 543 Proceedings, giving an inventory and account of the movable and immovable property of the Estate.

31.  On 11 October 2021, there was another direction hearing before B Chu J.  The learned judge gave leave to Lin to file and serve a revised inventory and account for the Estate and some other directions for the further conduct of these proceedings.

32.  On 22 November 2021, Lin filed her 4^th affirmation in the 543 Proceedings, giving a revised inventory and account of the movable and immovable property of the Estate.

33.  On 30 June 2022, CC wrote to SL on a “without prejudice save as to costs” basis.  In this letter, CC proposed a global settlement to SL, which includes:

(1)  Lin should make updated disclosure of the cash balance in the Estate, the outcome of the legal proceedings in Mainland China, monthly expenses of WJ, Lin’s employment status and income.

(2)  Lin and WJ should continue to reside in the Apex Property which shall not be sold until WJ attains 18.

(3)  The two insurance policies in the Estate should be maintained.

(4)  WJ’s expenses shall be maintained and paid from the cash balance of the Estate and Lin’s income.

(5)  The proceedings in Mainland China should be continued in a cost-effective manner with due regard to the issue of proportionality and the likelihood of recovery.

(6)  Both Lin and Wong be removed and be replaced by two new administrators.  Each party shall nominate a replacement which has to be agreed by the other side.  Wong nominates CP Wong.  If Lin would consent to the appointment of CP Wong, Wong would also agree to the replacement proposed by Lin in a previous mediation conference, ie the Deceased’s stepfather, a Mr Chan.

(7)  There be no further claim as between Wong and Lin or otherwise in relation to the administration of the Estate.

(8)  There be no order as to costs save that Wong’s own costs be taxed in accordance with the Legal Aid Regulations.

(9)  Lin should agree to Wong having regular meetings with WJ.  There should be a meeting at least once every month.  The meeting would be subject to the criteria set out in the letter.

34.  On 18 July 2022, SL replied, also on a “without prejudice save as to costs” basis.  SL has given substantial replies to some matters mentioned in CC’s letter dated 30 June 2022.  SL also stated that some matters suggested by CC are agreeable. However, SL said that Mr Chan had refused to work together with CP Wong, and Lin was unable to find another lay administrator.  Lin counter-proposed that she herself could work together with CP Wong as the administrators of the Estate. With the presence of CP Wong, there would be check and balance in the administration of the Estate.  SL also stated that Lin did not agree to the following:

(1)  Lin would not agree that there be no order as to costs in these proceedings.  Costs incurred in these proceedings should be borne by Wong.

(2)  Lin would not agree to the access to WJ proposed by Wong.  Lin would only agree that there be meeting between Wong and WJ twice a year, one during the Mid-Autumn Festival, and the other during the Chinese New Year.  Further, if there is any agreement concerning Wong’s access to WJ, the access arrangement should not be part of the order made in these proceedings.  Regarding the access matter, Lin’s proposal as set out in the SL’s letter is non-negotiable.

35.  In the same letter, SL also requested Wong to endorse some documents for the purpose of applying for enforcement of the Mainland Judgment.  Since Wong is one of the plaintiffs in the Mainland Case, it would be necessary to have Wong’s endorsement in the application for enforcement in the Mainland.

36.  On 25 July 2022, these cases were before B Chu J again for directions.  In that hearing, the learned judge gave directions for the preparation of the substantive hearing in these proceedings.  In Wong’s written submissions provided to the court before the hearing^[3], it is stated:

“12. After the filing of [Lin’s 4^th affirmation], since [Wong] has finally been compelled to comply under [the 543 OS] and by virtue of Your Ladyship’s orders, [Wong] will no longer seek relief under paragraphs 2 and 3 of [the 543 OS] but [Wong] maintains that [Lin] should be removed and replaced by [CP Wong].

13.   [Wong] is only opposing [the 1034 OS] in so far as it is seeking to remove [Wong] (with its related consequential orders) and costs.”

37.  On 19 October 2022, SL wrote to CC.  SL said that Wong had told the Mainland lawyer that he would not endorse the enforcement documents, unless Lin would agree that he could meet WJ on a regular basis.  SL urged Wong to endorse the documents.

38.  On 30 November 2022, in the hearing before me, the parties asked for time to have some discussion.  I acceded to the request.  Eventually, the parties told me that they have reached the Settlement Agreement.  The parties agreed that both Wong and Lin be replaced by CP Wong and Mr Alfred Ip of HIP as administrators of the Estate. The parties have also agreed that while each party are claiming costs against the other personally, they would not claim costs or any reimbursement against the Estate.  That being the case, any costs order made by this court would only affect Wong and/or Lin personally but would not affect the Estate.  In other words, WJ’s interest in the Estate would not be affected by any costs order made in these proceedings.  The parties have further agreed that for the purpose of determining costs, no witness would give live evidence in the hearing.

The principles

39.  It is trite that while a case has been settled save and except costs, the court has a wide discretion regarding costs, and the discretion has to be exercised in accordance with established principles.  Those principles have been summarized by Au-Yeung J in Famous Marvel Co Ltd and Others v Conversant Group Ltd and Others^[4], in which the learned judge said:

“22.   There is no dispute that even if a case is settled except as to costs, the Court still has power to determine which party should be liable for costs.  There is no tradition for there to be “no order as to costs” in such a scenario.  I am guided by the following principles in deciding costs:

(i)     The Court is to decide if the party seeking costs has substantially obtained the reliefs sought in the litigation: Re Chinese United Establishment Ltd, HCCW 291/1994, 5 October 1995, Rogers J (as he then was), approved in CACV 214/1995; Lai Yuet Chun v Super Deluxe International Limited & ors, HCCW 186/2001, 3 June 2003 Kwan J (as she then was).

(ii)    At each end of the spectrum there will be cases where it is obvious which side would have won had the substantive issues been fought to a conclusion.  In between, the position will, in differing degrees, be less clear.  How far the Court will be prepared to look into the previously unresolved substantive issues will depend on the circumstances of the particular case, not least the amount of costs at stake and the conduct of the parties.  Brawley v Marcynski (No.1) [2003] 1 WLR 813.

(iii)   The Court will first consider if it is in a position to say what the likely outcome after trial would have been.  If it is not in a position to do so, the order may well be no order as to costs: Brawley v Marcynski (No.1),at para 18, Longmore LJ; followed in BCT Software Solutions Ltd v C Brewer & Sons Ltd [2004] FSR 150.

(iv)   The Court may permit parties to adduce evidence on the question of costs: Ta Tung China & Arts Ltd v Fontana Restaurant Ltd [1999] 1 HKLRD 404; Lai Yuet Chun v Super Deluxe International Limited & ors, at para 12.  However, to say that the parties must go to trial in order to resolve any outstanding questions of costs would be contrary to the underlying objectives enshrined in RHC Order 1A rules 1 and 2: Graham M Morley v Kwan Wo Wan & others, HCA 4366/2003, 30 December 2009, Recorder Jat SC.

(v)    A broad brush can be taken by referring to all matters already laid before the Court, eg pleadings, correspondence, witness statements, transcripts of evidence and the terms of the settlement order: c.f. BCT Software Solutions Ltd v C Brewer & Sons Ltd, at para 9; Graham M Morley v Kwan Wo Wan & others.

(vi)   The objective is to do justice between the parties without incurring unnecessary Court time and consequently additional cost: Brawley v Marcynski (No.1).”

40.  Similarly, in Glory Empire Global Ltd v Bateson Investment Ltd^[5], Chow J (as Chow JA then was) said:

“44. …… I consider the following principles to be applicable where a judge is asked to determine the issue of costs in a situation where the issue of liability has become academic:-

(1) The judge has a wide discretion not only as to the manner by which the issue of costs is to be determined, but also what evidence should be received and what findings to make.

(2) In a simple case where the issue of liability is clear on the face of the pleadings or existing affidavit evidence already filed, it would be open to the judge to determine the issue of costs without receiving any further evidence.

(3) Where the issue of liability is not so clear, the judge may direct evidence to be filed and the witnesses to be cross examined. The judge may also confine the evidence to be filed, and cross examination of the witnesses, to a particular issue or some particular issues.

(4) In determining the issue of liability for the purpose of deciding costs, the court may adopt a broad brush approach and does not necessarily have to conduct a trial to determine the substantive issues.

(5) Where it is impossible for the court, on the existing materials, to say what the likely outcome would be, the court may, in appropriate circumstances, decide to make no order as to costs.

(6) Ultimately, the objective is to do justice between the parties without incurring unnecessary court time and consequently additional costs.”

The parties’ respective positions

41.  As said in the above, each party claims that costs of these proceedings should be borne by the other side personally.

42.  Mr Hui for Wong submits that:

(1)  Wong is the successful party in these proceedings.  He has succeeded in obtaining an order replacing Lin by CP Wong as an administrator of the Estate.  The suitability of CP Wong as an administrator has never been challenged.

(2)  Lin is not successful in the 1034 Proceedings as only one of the professional administrators proposed by her has been appointed as the administrator.

(3)  The grounds for removing Lin would have been made out should the trial proceeded.

(4)  The allegation of “bad faith” against Wong (i.e. Wong’s ulterior motive is to deprive or diminish Lin’s entitlement in the Estate by this litigation) is irrelevant in the 543 Proceedings and has caused general waste of costs.

43.  Mr HY Wong for Lin submits that:

(1)  Lin is the successful party in these proceedings.  By the 1034 Proceedings, Lin is claiming that the current administrators of the Estate should be replaced by new administrators in the best interest of the beneficiaries.  Given the highly unsatisfactory relationship between Lin and Wong, it would not be possible for them to continue to work together to administer the Estate.  Lin appreciates that in the light of the size of the Estate, appointment of professional administrators should always be reserved as a last resort.  Lin has tried her best but is unable to find suitable lay persons who are willing to be the new administrators.  In the circumstances, it is reasonable for Lin to propose appointing professional administrators.

(2)  Lin has tried to settle these proceedings by having amicable discussion with Wong. However, the negotiation is unsuccessful due to the unreasonable stance adopted by Wong.  On 20 April 2021, Lin has proposed that both herself and Wong should step down and be replaced by two professional administrators.  On 3 May 2021, Wong refused to accept the proposal and did not suggest a reasonable alternative.

(3)  Further, the unmeritorious IPFDO Claim shows that Wong’s ulterior motive in these proceedings is to deprive Lin’s entitlement in the Estate.  The ulterior motive is evidenced by what Wong has said in §73 of his 2^nd affirmation filed in the 543 Proceedings, i.e. whatever amount he may be able to get from the IDFPO Claim would be given to WJ.

(4)  Wong has been acting unreasonably in these proceedings.  In the “without prejudice save as to costs” letter dated 26 November 2019, Wong asked Lin to confer a “life interest” on him and YW Wong to allow them to live in the Apex Property for life, to concede to his IPFDO Claim and to give him HK$480,000, to allow him to recover his legal costs from the Estate.  All these are unreasonable requests. Further, in the negotiation process, Wong’s stance is that his access to WJ should be part of the settlement package.  This is also an unreasonable request.

(5)  When Lin refused to accept Wong’s settlement proposal, Wong tried to force Lin to concede by refusing to endorse the court documents for the purpose of applying for enforcement of the Mainland Judgment. This also demonstrates the unreasonableness of Wong.

Discussion

44.  In my view, each party has succeeded to a limited extent, but no party is entirely successful in these proceedings.  There should be no order as to costs in these proceedings.

45.  In the 543 Proceedings, Wong seeks an order that Lin be removed and replaced by CP Wong as an administrator of the Estate.  Wong himself would stay as the other administrator of the Estate.  In other words, what Wong intends to achieve by the 543 Proceedings is to have himself and CP Wong being the administrators of the Estate.  As a result of the Settlement Agreement, CP Wong has been appointed as an administrator of the Estate, but Wong would no longer be the other administrator of the Estate.

46.  In the 1034 Proceedings, Lin seeks an order that both herself and Wong be replaced by two professional administrators appointed by the court.  As a result of the Settlement Agreement, Lin has succeeded in having one professional being appointed as an administrator of the Estate.  However, Lin has to accept that the other administrator would be the candidate nominated by Wong, i.e. CP Wong.

47.  Mr Hui relies heavily on the fact that in the 543 Proceedings, on 4 August 2021, B Chu J has ordered Lin to file an affirmation exhibiting a true and perfect inventory and account of the movable and immovable property of the Deceased.  Mr Hui submits that this disclosure obligation has only been generally complied with after 4 affirmations filed by Lin.  Lin’s tardiness in honouring the disclosure obligation makes it clear that it is necessary to seek an order to compel Lin to give a full and proper account, and Wong in fact has succeeded in obtaining the relief as set out in [2] of the 543 OS.  Lin has failed to render a full and proper account of the Estate despite repeated demands from Wong.  In the circumstances, had the substantive hearing of these proceedings been conducted, Wong would have succeeded in obtaining an order removing Lin as an administrator of the Estate.

48.  With respect, I am unable to accept Mr Hui’s submission.

(1)  A personal representative of a deceased person has a duty to provide a true and perfect inventory and account of the movable and immovable property of the deceased when lawfully required to do so.^[6] However, as submitted by Mr HY Wong, a delay in doing so does not automatically call for a removal.  Whether the personal representative should be removed would depend upon the circumstances of the case.  As said by Wilson Chan J in Chu Wing Chuen Paul and Others v Chu Oi Yan Irene^[7]:

“39. The duty to render accounts of the estate has been explained by this court in Ho Tung Ming Oscar v Ho Fook Shing [2021] HKCFI 1046 at §9:

“9. To render proper account of the estate of a deceased person, the personal representative is required to:

(1) Show the opening balance, including capital assets, and the closing balance;

(2) Give details of movement of assets, income and expenditure of the estate;

(3) Give details of the whereabouts of all properties (including cash) of the estate which the personal representative is duty bound to administer; and

(4) Support the accounts with documentary evidence.

(Chow Chak Kiu v Chow Man Chit, HCMP 797/2016 (Decision dated 17/01/2017))”

40.  Although it is the duty of the administratrix to provide an account of the Estate upon request, I agree that a delay in doing so does not automatically calls for a removal, but may depend upon the circumstances of the case.

41.  The circumstances in the present case begs for exercise of the discretion by the court not to order the removal of the defendant.  As explained below, the plaintiffs have largely contributed to the delay or difficulty in preparing such accounts.

42.  Further, in Chang Wing Ka John v Chang Wing Dee …^[8], at §186, the court explained that sincerity and intention of the administrator in performing his obligations would be taken into account by the court.” (Underline in original)

(2)  Lin’s case is that at the time of opening the administration account, Wong asked Lin to transfer a substantial sum from the administration account to Lin’s personal account. Further, Lin has given accounts to Wong as to some substantial withdrawals from the administration account.  See [18(4)] above.  Without having a substantive hearing and without hearing the evidence from the witnesses, it cannot be said that Lin’s case is true or not true.  If Lin’s case is true, that would mean that the substantive withdrawals by Lin from the administration account are within Wong’s knowledge and with Wong’s consent.  That would certainly have an impact on the genuineness on Wong’s intent in seeking [2] of the 543 OS.  This is also a factor which the court would bear in mind in considering whether Lin should be removed as an administrator.

(3)  In the hearing before B Chu J on 25 July 2022, Wong informed the court that he would not pursue the reliefs as set out in [2] and [3] of the 543 OS.  The relief sought in [3] of the 543 OS is an order to require Lin, on taking of the account, to pay all sums found due to the Estate.  By 25 July 2022, Wong would have considered the accounts given by Lin in her 4affirmations.  Wong’s decision not to pursue [3] of the 543 OS would mean that Wong could not find anything in those affirmations suggesting that Lin has misapplied the funds in the Estate in any way.

(4)  There is no complaint by Wong in the evidence or in the correspondence (including the “without prejudice save as to costs” correspondence) alleging that Lin has misused any particular fund.

(5)  In considering whether an administrator should be removed, the fact that administration of the estate could have been done better is not of itself sufficient ground for removal.^[9] Thus, mere delay on Lin’s part in producing the account would not be a sufficient ground for removing Lin.

(6)  The view of the majority beneficiary is also a factor which the court needs to take into account.^[10] Lin is the beneficiary of more than half of the whole Estate and is the majority beneficiary.  Her view is that the two administrators of the Estate cannot be Wong together with his brother, CP Wong.

(7)  In view of all the above, notwithstanding that Lin has been ordered to provide a true and perfect inventory and account of the properties in the Estate, I am of the view that there is no sufficient reason in support of a costs order against Lin.

49.  Mr Hui submits that Lin the allegation of “bad faith” raised by Lin against Wong is irrelevant and has caused wastage on costs.  Mr Hui argues that the alleged “bad faith” against Wong cannot be raised in the 543 Proceedings.  Mr Hui further argues that Wong does not have any “bad faith”, and Wong only wants to protect WJ’s interest in the Estate.  Lin would remain as a beneficiary of the Estate.

50.  With respect, I am unable to accept this submission.  By the Order made by B Chu J on 4 August 2021, the 543 Proceedings and the 1034 Proceedings would be heard together. The reality is that in these proceedings, the core issue is who should be the administrators of the Estate, given the very unsatisfactory relationship between Wong and Lin.  Lin’s stance is that no matter how, Wong should not be allowed to continue to be an administrator of the Estate.  Honesty and fidelity of an administrator are matters which the court would need to look into in considering whether the administrator should be removed.^[11]  The “bad faith” allegation against Wong is a relevant matter in these proceedings. Further, there is force in Mr HY Wong’s submission as summarized in [43(3)] above.  In my view, the “bad faith” allegation is an arguable issue.  Without having a substantive hearing and without hearing the evidence from the witnesses, I would not say that the allegation has been or has not been proved.  However, costs incurred on this issue cannot be said as wasted costs.

51.  In the hearing, Mr Hui has drawn my attention to one matter.  As shown in the evidence, Lin has used about HK$120,000 in the Estate to purchase an insurance policy at China Life Insurance (Overseas). The insurance policy was purchased on 12 September 2017, and at that time the beneficiary of the policy was Lin.  Lin only changed the beneficiary of the policy to WJ on 19 October 2021.  This is after the filing of her 3^rd affirmation in the 543 Proceedings and the disclosure orders made by B Chu J.  Mr Hui submits that Lin has been forced to make the change as a result of the disclosure orders made by the court.

52.  The point as stated in the aforesaid paragraph has been mentioned in Mr Hui’s written opening submissions for the substantive hearing on 30 November 2022.  Had there been no settlement, Lin would give oral evidence in the substantive hearing.  Mr Hui would need to put the point to Lin during cross-examination, so that Lin would have an opportunity to respond to the point.  However, as a result of the Settlement Agreement, I have not heard oral evidence from any witnesses, and Lin has not been given an opportunity to respond to the allegation as mentioned in Mr Hui’s submission.  If Lin has been given an opportunity to answer the allegation, she may or may not be able to give a satisfactory answer.  One point which would need to be borne in mind is that Lin is a beneficiary of the Estate.  More than half of the Estate would eventually go to Lin.  At the time of the grant of the Letters of Administration, the cash in the Estate was about HK$1.45 million. 

53.  Without hearing the evidence, in my view, it would not be appropriate to take the allegation mentioned in [51] above as a point against Lin in considering costs of these proceedings.

54.  Regarding the submissions made by Mr HY Wong, as explained in the above, with respect, I am unable to agree that Lin is the party who is entirely successful in these proceedings.  As to the conduct of Wong in the negotiation process, in my view, Wong has adjusted his position from time to time and has tried to achieve a compromise.  It is true that Wong has proposed some matters which are not the subject matters in these proceedings in the negotiation process, for example, his access to WJ.  However, it is not unusual that a party in a negotiation may propose something to the other side which cannot be the subject matter of an order made by the court in the relevant legal proceedings.  Having considered the “without prejudice save as to costs” correspondence, I am of the view that both Lin and Wong have genuinely tried to reach a compromise, but unfortunately they were not able to reach any agreement until 30 November 2022.  As to whether Wong has any ulterior motive in these proceedings, and whether Wong has tried to force Lin to concede by refusing to endorse the enforcement documents for the Mainland Case, without having a substantive hearing and without hearing the evidence from the witnesses, I would not make any finding on these matters.

55.  I am aware that before 3 May 2021, Wong was considering to make the IPFDO Claim against the Estate. Wong only notified Lin that he abandoned that claim by CC’s letter dated 3 May 2021.  I have considered whether I should order Wong to bear the costs incurred in the 543 Proceedings up to 3 May 2021.

(1)  If the only relief claimed by Wong in the 543 Proceedings is an order removing Lin and appointing CP Wong as an administrator of the Estate, I may order Wong to bear the costs in the 543 Proceedings up to 3 May 2021.  While Wong was considering to make the IPFDO Claim against the Estate, it would be virtually impossible for Wong to obtain an order replacing Lin (who is the majority beneficiary of the Estate) by CP Wong (who is Wong’s younger brother).  The court would certainly not allow the Estate to be administered and by Wong together with his brother in that scenario.

(2)  However, Wong is not only claiming an order replacing Lin by CP Wong, but also an order requiring Lin to give a full and proper account of the Estate.  As said in [48(2)] above, the genuineness of this claim would depend upon whether Lin’s case concerning the matters at the opening of the administration account and the withdrawals from the administration account are true.  Without going through a substantive hearing and without hearing the evidence from the witnesses, I make no finding on these matters.  In the event that Wong’s claim for the relief as set out in [2] of the 543 OS is a genuine claim, that would mean that it would be necessary for Wong to commence the 543 Proceedings.  In this scenario, the impossibility of obtaining an order as per [1] of the 543 OS would not negate the necessity of having the 543 Proceedings.

(3)  With all these in mind, I am of the view that regarding the costs incurred in the 543 Proceedings up to 3 May 2021, there should still be no order as to costs.

56.  I have also carefully considered the “without prejudice save as to costs” correspondence placed before me.  In the negotiation process, no party has put forward a proposal which is same as or substantially similar to the Settlement Agreement.  I appreciate that on 30 June 2022, CC has made a settlement offer to SL.  At that time, CC proposed that both Wong and Lin would be replaced by two new administrators, one nominated by each side, and there be no order as to costs in these proceedings.  However, there are further matters in that settlement offer, including Wong’s access to WJ.  That settlement offer cannot be said be same or substantially similar to the Settlement Agreement.  In my view, no party can say that by the Settlement Agreement, he or she has made an achievement which is better than any previous offer made by him or her to the other side.

57.  By reason of the above, I am of the view that there should be no order as to costs in these proceedings.

58.  In view of the outcome of this hearing, as to the costs of this hearing, there should also be no order as to costs.

Disposition

59.  For the reasons above, I order that:

(1)  In the 543 Proceedings, there be no order as to costs.  Wong’s own costs be taxed in accordance with the Legal Aid Regulations.

(2)  In the 1034 Proceedings, there be no order as to costs.  Wong’s own costs be taxed in accordance with the Legal Aid Regulations.

60.  As to the costs of this hearing, there be a costs order nisi that there be no order as to costs.  Wong’s own costs be taxed in accordance with the Legal Aid Regulations.  Unless an application to vary the costs order nisi is made within 14 days, the order will become absolute.

61.  Lastly, it remains for me to thank Mr Hui and Mr HY Wong for the assistance rendered to the court.