NG KIN YUEN, Administrator of the estate of LAM TIM STAN also known as LAM TIM alias STAN LAM TIM, deceased v. LAM SIK YING VICTOR AND OTHERS

HCMP 1924/2020

[2023] HKCFI 1575

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 1924 OF 2020

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D E C I S I O N

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The litigation stance issue in relation to HCA 4713/2001

1.  This is my ruling on the litigation stance issue in relation to the action in HCA 4713/2001. 

2.  The plaintiff seeks a direction that he should adopt a neutral position in this action which was commenced by Victor as the former administrator of the estate. 

3.  The 1^st defendant, the 2^nd defendant, the 4^th defendant and the 5^th defendant all take a neutral stance on this issue, whereas the 6^th defendant submits that no direction is required for this action. 

4.  I agree with the 6^th defendant’s submission.  The action was dismissed altogether by an order made on 25 January 2021.  There has been no appeal against that decision.  As things stand, there is nothing else that is left to be done in this action.  Therefore, I see no reason for giving any direction as to what position the plaintiff should take.

5.  I therefore make no direction in relation to the litigation stance issue insofar as the action HCA 4713/2001 is concerned. 

The litigation stance issue in relation to HCA 894/2011 and HCA 1974/2015

6.  This is my ruling on the litigation stance issue in relation to the actions in HCA 894/2011 and HCA 1974/2015. 

7.  Under this issue, the plaintiff seeks a direction from the court that he should adopt a neutral position in those two actions, which were commenced by Tony and Susie respectively against Victor as the former administrator of the estate. 

8.  In those two actions, Mr Justice Chow entered judgment against APH, a company owned by Mo Lin and his son, and against Victor.  He first ordered that APH do give an account of the rent and other income received from the Sharp Street East property from 8 February 2007, less deductions and the purchase money paid by APH for the property.  The judge also granted liberty to Tony and Susie to apply for further relief against Victor in the event that the estate should suffer any loss arising from APH’s failure to fully comply with the judgment entered against it. 

9.  Victor’s stance is that the administrator should go after APH to enforce the judgment.  As to whether the administrator should go after Victor, counsel for Victor does not know the position of Victor and is therefore not able to tell the court what his position is. 

10.  Mary and Mo Ching’s stance is neutral on this issue. 

11.  Susie’s stance is the same as Tony.  They both contend that the administrator should take active step to enforce the judgment granted in those two actions.  All that is left to be done is the enforcement of Mr Justice Chow’s judgment in those two actions. 

12.  On the face of the judgment, the estate should be able to recover rental income received by APH during the relevant accounting period, that is, from February 2007 up to about late 2015 when vacant possession was delivered by APH to the estate.  On one estimate, the rental income over the years may amount to $20,000,000.  That is a substantial amount and it belongs to the estate.  Prima facie, it is in the interests of the estate to recover those rental proceeds and it is the duty of the administrator to take steps to collect the assets. 

13.  Counsel for the administrator relies on the Court of Appeal decision in Re Estate of Chan Lap Pan [2018] 2 HKC 335 where it says that where there are hostile action between adult beneficiaries, the administrator should take a neutral role and let the beneficiaries fight out the case.  In the present case, it was, indeed, Tony and Susie who took out those two actions in the first place and it is now their choice whether to pursue the judgment entered in those two actions. 

14.  But I think, in my view, this case stands apart from Chan Lap Pan.  Here the hostilities between the family members have basically been resolved as against Victor.  The judge found that Victor was in serious breach of fiduciary duties owed to the estate.  Hence, it is now a matter of enforcing the judgment against APH and, if necessary, against Victor.  It seems to be only fair for the administrator to take up the role to pursue it. 

15.  Tony does not agree to take the lead in pursuing the judgment.  He raises a number of concerns, including the fact that he is now of advanced age and it is not fair to impose the burden on him to pursue the judgment. 

16.  As for Susie, she is agreeable to pursue the action, but that is premised on the condition that legal aid is granted to her to pursue the judgment.  It is not clear at this stage whether legal aid will be granted to Susie to pursue the judgment for the benefit of the estate. 

17.  Counsel for Tony also refers me to para 152 of Mr Justice Chow’s judgment[1] where he found that Victor was in breach of the fiduciary duties and if it had been necessary for him to do so, he would also have had no difficulty in finding that APH had knowledge of the breach and had assisted in those breaches.  And he further said that if the estate is able to recover from APH the full amount found due upon the taking of account, there should not be any additional loss or damage payable by Victor to the estate. 

18.  I accept Tony’s submission that when read that way, the relief that may be obtained from Victor would essentially be the same as the relief as obtained from APH.  That will be the prima facie view of one interpretation of Mr Justice Chow’s judgment. 

19.  In the circumstances, I decline to grant a direction that the administrator should take a neutral stance in those two actions and, in fact, it is the duty of the administrator to further pursue the judgment so that the rental proceeds could be recovered for the benefit of the estate. 

20.  [The following orders were granted at the hearing: 

(1)  The plaintiff, being the administrator of the estate, shall use all reasonable endeavours to take further active steps to bring, conduct, continue or take part in and/or in relation to the proceedings in HCA 1605/2004 and HCA 894/2011, and/or any ancillary proceedings (including any appeals), proceedings pursuant to liberty to apply or proceedings to enforce any orders or judgments therein. 

(2)  The plaintiff shall be at liberty to engage Messrs Liu, Chan and Lam and/or the firm of solicitors which the plaintiff nominates, insofar as the plaintiff shall participate in, conduct and handle, and/or has already participated in, conducted and handled, HCA 1605/2004 and HCA 894/2011, and/or any ancillary proceedings (including any appeals), proceedings pursuant to liberty to apply or proceedings to enforce any orders or judgments therein, and/or any other legal proceedings by, relating to, or against the estate or its administrator or executor (collectively, “the Outstanding Actions”), whose fees shall be charged at the prevailing solicitor’s hourly rates for party and party taxations, such fees to be paid out of the estate as disbursements without being subject to section 60 of the Probate and Administration Ordinance, Cap 10. 

(3)  The plaintiff be indemnified by and paid out of the estate on a trustee basis for any costs (including time costs and remuneration), liabilities, disbursements and expenses incurred, sustained and/or paid by the plaintiff for participating in the Outstanding Actions, insofar as such costs, liabilities, disbursements and expenses are not paid by any other parties.] 

The incurred costs issue

21.  This is my ruling on the incurred costs issue. 

22.  Under this issue, the administrator seeks orders in relation to costs orders made against Victor in a number of actions involving the family members and also costs incurred by Victor in those proceedings.  The question is whether those costs should be borne by the estate or whether those costs should be borne by Victor personally. 

23.  The administrator’s stance is that the costs should all be borne by Victor personally because he failed to make an application for a Beddoe order before taking out those actions. 

24.  Mo Ching and Susie have no comment on this issue. 

25.  For Tony, as far as the proceedings in relation to HCA 4713/2001 is concerned, Tony says that Victor should not get the costs because that action should not have been commenced by him in the first place. As for the costs incurred by Victor in HCMP 1464/2004, Tony says that Victor should bear those costs himself because he failed to make a Beddoe application.  That is the same stance taken by the administrator.

26.  Having heard submissions from parties, I make an order in terms of paras 6 and 7 of the draft order handed up to me with the following changes. 

27.  [The following orders were made at the hearing:

(1)  Subject to sub-para (2), the costs, expenses, disbursements, liabilities and/or payments incurred, discharged, settled or paid by the 1^st defendant personally or on behalf of the estate in the Estate Actions including but not limited to costs, expenses, disbursements and/or liabilities relating to or arising out of the Adverse Costs Orders shall be paid, discharged, settled and borne by the 1^st defendant directly and personally without recourse to the estate, and the estate shall be fully reimbursed, indemnified and paid back by the 1^st defendant insofar as any such costs, expenses, disbursements, liabilities and/or payments were paid or borne by the estate. 

(2)  The costs of the 1^st defendant incurred in HCMP 1464/2004 to the extent not recovered from the 6^th defendant be reimbursed by the estate to be taxed on a solicitor-and-client basis if not agreed.] 

28.  My brief reasons are as follows. 

29.  For costs orders made against Victor in those actions, it has been accepted by Victor that he should bear those costs. 

30.  As for the costs incurred by him in the actions, Victor says that the costs in the following three actions be borne by the estate, namely:  

(1)  The HCA 4713/2001 costs granted by Mr Recorder Benjamin Yu, SC, in the mareva injunction application, as varied by Deputy High Court Judge Lok.  And also the costs ordered in relation to Tony’s striking out application. 

(2)  Secondly, the costs incurred by Victor in HCMP 938/2003.  The Court of Appeal gave judgment with costs in favour of Victor. 

(3)  And number three, the costs in HCMP 1464/2004. Victor’s application to strike out the originating summons was refused, but costs were awarded in his favour. 

31.  For HCA 4713/2001 and HCMP 938/2003, I accept Tony’s submissions that those applications were in relation to claims which ought not to have been taken out by Victor in the first place on the basis that it was a re-litigation of the action in HCA 1885/1987.  Going back to those two actions, and hence, Victor should bear those costs personally. 

32.  For HCMP 1464/2004, there is not much information before me as to what, in fact, had happened.  But given that ultimately the master awarded costs in Victor’s favour, and to the extent that those costs were not recovered from Tony, I think Victor in his capacity as the administrator should have the costs reimbursed now. 

The D5 entitlement issue

33.  [The following orders were made at the hearing: 

(1)  The plaintiff shall pay, by way of advancement, the sum of $1,400,000 out of the net beneficial entitlement and/or interest of the 5^th defendant in the estate (after deduction and set-off) to FLCC within 7 days from today, the said sum be first deducted from the net beneficial entitlement and/or interest of the 5^th defendant in the estate (after deduction and set-off). 

(2)  The plaintiff shall not incur any liability to the estate, any of its beneficiaries (whether actual, potential or contingent) or any of the defendants for making the payment to FLCC as stated in sub-para (1) hereinabove.] 

Interim distribution

34.  [The following orders were made at the hearing.

35.  Interim distributions and/or advancements shall be made to the 4^th and 6^th defendants as follows:

(1)  The plaintiff shall pay by way of advancement a sum of $5,000,000 out of the net beneficial entitlement and/or interest of the 4^th defendant in the estate within 14 days from today.

(2)  The plaintiff shall pay by way of advancement a sum of $5,000,000 out of the net beneficial entitlement and/or interest of the 6^th defendant in the estate within 14 days from today.

(3)  The plaintiff shall first deduct the said sums of $5,000,000 in sub-paras (1) and (2) respectively from the net beneficial entitlement and/or interest of the 4^th defendant and the 6^th defendant in the estate respectively whenever he is making a distribution of the estate thereof.]

Further directions

36.  So the hearing of the originating summons and the 1^st defendant’s summons be adjourned part-heard and the hearing be scheduled for 30 August 2023 at 10 o’clock am, with 31 August also reserved.  I would ask the plaintiff to draw up the orders which have already been made today. 

37.  The plaintiff do notify the 3^rd defendant of today’s order and the adjourned hearing date. 

38.  Costs of today’s hearing be reserved. 

39.  And I shall call a transcript of today’s hearing and, if necessary, I will reduce the relevant parts of my ruling and the reasons into writing just for the record.