MUI PO CHU v. MOI OAK WAH

IN THE COURT OF APPEAL

1997, No. 103
(Civil)

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J U D G M E N T

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Godfrey, J.A. :

Introduction

1. The plaintiff in this administration action, a beneficiary entitled to a 1/6 share in the estate of the deceased, Chan York Yu, who died intestate on 14 February 1987, is aggrieved by orders of Yeung, J. made on 7 May 1997 and 15 May 1997 and now appeals to this court. She appears before us in person. The defendant, the administrator of the deceased's estate, appears by counsel.

2. There are really four points with which we have to deal.

The four points

3. The first point concerns a sum of $537,048.48 which the plaintiff says ought now to be paid to her under an earlier judgment of the Court of Appeal. The second point is the price at which a property belonging to the estate at Ground Floor, Aldrich House, No. 371 Shaukeiwan Road, Hong Kong, ought to be sold by public auction (now fixed for 18 June 1997); the plaintiff says that the judge was wrong not to fix a reserve price, and that a reserve price of $3.6m ought to be set for the auction. The third point is that the net proceeds of that sale ought to be paid into court, to meet the plaintiff's claim to her 1/6 share in the estate and her costs of the action. The fourth point is that the conduct of the sale ought not to have been entrusted to the defendant; the plaintiff contends that some independent person ought to have been given the conduct of the sale.

4. I deal with these four points as follows.

The first point

5. The first point, concerning the sum of $537,048.48 which I have mentioned, arises in this way. At the trial of the action the judge performed an accounting exercise on the basis of which he found an overpayment to the plaintiff from the estate amounting to that sum. He treated that as a debt owed by the plaintiff to the estate, and gave judgment for the defendant for that sum on his counterclaim against the plaintiff. In a judgment of the Court of Appeal delivered on 11 April 1997, Litton, V-P remarked as follows :-

"That, with respect to the judge, is conceptually wrong. Without a proper accounting it was impossible to say whether the appellant had been overpaid or underpaid - and the sum itself was not ascertained until the judge gave judgment. Moreover, as mentioned earlier, the judge accepted the respondent's contention that he was prepared to meet the appellant's request for money even though she might receive more than her share in the estate because any overpayment could be recouped in the final settlement, when all the properties were sold.

On the judge's own findings the appellant was receiving the proceeds of interim distributions from time to time: overpayment or not, she could have incurred no obligation in the nature of debt to the estate. The judgment on the counterclaim must therefore be set aside."

6. As a result, the order which the judge had made on the defendant's counterclaim relating to this sum was indeed discharged by the Court of Appeal. That court made no further or other order in relation to that sum. The plaintiff now appears to believe, and she contended before us, that she is in some way entitled to an order for payment of that sum to her. But this is completely misconceived. The fact of the matter is that the Court of Appeal made no order for that sum to be paid to the appellant, nor has any other court done so. There is no order which she can enforce for payment to her of that sum, and there is certainly nothing against which she can appeal in relation to it. For all these reasons, we can do nothing to assist her over this matter of the $537,048.48.

The second point

7. The second point is as to the reserve price for the property to be sold at auction on 18 June 1997. Here the plaintiff is on stronger ground. The judge appears to have taken an unusual course in not fixing any reserve price for the property which he had directed to be sold by public auction. The reason for this was apparently that, over the course of time, a number of failed attempts have been made to sell the property. The property has always failed to reach its reserve price. The judge therefore did not on this occasion fix a reserve price at all. For my part, I do not think that is right. I think the plaintiff is entitled to the protection of a reserve price. But that price must be a reasonable one, supported by evidence. In the present case, all the evidence, other than one valuation put in on behalf of the plaintiff, suggested that a reserve price at $3.6m (for which the plaintiff contended) would be much too high, and would result in an aborted sale. Faced with observations of members of this court on this point, counsel for the defendant accepted that a reserve price ought to be fixed, and suggested it be fixed at $2.6m. I would accept that suggestion and fix a reserve price at $2.6m, for the valuation evidence is overwhelmingly in favour of that figure and certainly of a figure much lower than the $3.6m suggested by the plaintiff, which was supported only by one, aberrant, valuation. So the auction can go ahead as planned on 18 June 1997, but with a reserve price at $2.6m.

The third point

8. Should there be a payment into court to cover the 1/6 share of the estate which will eventually become due to the plaintiff, and any order of costs which likely to be made in her favour? I can see no good reason for making such an order. I know that the plaintiff and the defendant are on very bad terms, but there is no material before us sufficient to justify the suggestion made to the judge, and now to us, that the plaintiff needs the protection of this payment into court. If someone who is administering the estate cannot be trusted properly to do so, notwithstanding his obligations at law, the proper course is for the aggrieved beneficiary to apply for him to be removed, not for the court to attempt constantly to supervise him. So I would reject the suggestion that the defendant be obliged to pay the net proceeds of the sale at this property into court.

The fourth point

9. The plaintiff appears to suggest that the defendant cannot be trusted to conduct the sale properly. Again, I do not think the court can proceed on that basis on the material before it. If this defendant is guilty of misconduct in relation to the administration of the estate, then the right course for the court to take would be to remove him and substitute somebody else; not to act on the suspicions expressed by the plaintiff and exercise an exceptional degree of control over the sale which it has ordered.

Conclusion

10. For all these reasons, I would dismiss this appeal, save on the point that, as I have already indicated, a reserve price at $2.6m ought to be set for the auction of the property on 18 June 1997. There is nothing I would wish to add, save as to costs. I would order that the costs of the respondent be taxed and as to one half thereof paid by the appellant to the respondent, and as to the other half to be raised and retained by the respondent in due course of administration of the estate of the deceased.

Rogers J. :

11. I agree. I would only add this in respect of the first matter dealt with: the Court of Appeal in its Decision on 11th April this year did not say that the Defendant had wrongly recouped himself of the sum of $537,048.48. What the Court of Appeal said was that because the nature of the proceedings before the judge at first instance, when correctly considered, was really the taking of an account which the judge had proceeded to do, there was no debt until the judge pronounced his judgment. Therefore when the proceedings were commenced there was no amount due and owing and therefore there was no basis for the order on the counterclaim. The Court of Appeal held that the judge in effect had taken an account. The Judge's finding was that there had been an overpayment of $537,048.48 by the Defendant to the Plaintiff which had to be accounted for. That finding was not disturbed by the Court of Appeal. Therefore, it seems that the Appellant in this Court has been labouring under a misapprehension as to what the Court of Appeal actually said.

Nazareth V-P :

12. I also agree with Godfrey JA and would concur in the order he proposes to make upon the reserve price.

13. I would add this for the benefit of the appellant. At the end of the day, there will be the final settlement which the Court of Appeal in the earlier hearing referred to, and if, as she suggests, money has been withheld from her, that will all come out in that final settlement. I hope therefore that she will spare the courts from unnecessary further applications.