KYHI AND ANOTHER v. THE PERSONAL REPRESENTATIVE OF THE ESTATE OF KKY formerly known as KKH

FCMP 67 / 2015

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MISCELLANEOUS PROCEEDINGS NO. 67 OF 2015

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D E C I S I O N

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Background

1.  These proceedings concern the 1^st and 2^nd Applicants’ claim for maintenance pursuant to Section 4 of the Inheritance (Provision for Family and Dependants) Ordinance, Cap.481 (“IO”) taken out by Madam T, the mother of the Applicants and the former wife of the late Mr. K, with whom the marriage was dissolved on 17 June 2013 by the Family Court.

2.  By a Court Order granted upon dissolution of the said marriage, Madam T who is the Petitioner in the divorce suit, was granted custody, care and control of the two Applicants. Under the said Court Order which was granted by consent, the late Mr. K (as Respondent in the divorce suit) was to make monthly periodical payment of maintenance at the rate of HK$8,000 and HK$7,000 to the 1^st and 2^nd Applicants respectively.  For the sake of completeness, it is worth to mention that Madam T was granted a nominal maintenance of HK$1.00 per annum.

3.  On 18 October 2013, the late Mr. K filed a bankruptcy petition upon himself under HCB No.7563/2013.  In his Statement of Affairs which was produced as an exhibit to the Affirmation of Madam T, the debts accrued was in the region around HK$2.25 million owed to various financial institutions.  The dependants stated under List D of the Statement of Affairs was Mr. K’s mother, the 1^st and 2^nd Applicants.  Under List E of such Statement, reference was made to the maintenance order granted under the said divorce proceedings with Madam T as the creditor.  The late Mr. K was adjudged bankrupt on 17 December 2013.

4.  Around late January 2014, Mr. K committed suicide in his home by intentionally exposing himself to carbon monoxide.  His body was found on 28 January 2014.   

5.  Amongst the personal belongings of the late Mr. K, there was found 2 documents which triggered the present application for transfer of these proceedings to the High Court for determination.

6.  The first document is a handwritten note in Chinese with the title “遺書” dated 22 January 2014.  It was believed that this was written by the late Mr. K and signed by him where, apart from stating the reason for suicide was because of the substantial debts, he also expressed his wish that his death gratuity be paid to Madam T for the living and educational expenses of the 1^st and 2^nd Applicants. I will refer to this document as “Suicidal Note”.

7.  The second document is also a handwritten note in Chinese with the title “婚後協議書” dated 24 October 2013. This was signed by the late Mr. K and one Madam Y (“Madam Y”). 

8.  Besides, there is also a Certificate (proof of registration of marriage) in Chinese dated 22 October 2013 signed by a Chinese attesting notarial/Hong Kong lawyer Mr. Kong Tak Yuen as witness for registration of the marriage between the late Mr. K and Madam Y in Hong Kong on 15 October 2013.  

9.  The late Mr. K was a civil servant with the Correctional Services Department prior to his death.  As evidenced by a letter dated 26 May 2014 issued by the Correctional Services Department and addressed to Madam Y, there is a death gratuity in the sum of HK$1,206,305.38 payable to whoever entitled to receive Mr. K’s estate.  This letter was produced as an exhibit to Madam T’s 1^st Affirmation dated 25 March 2015.

10.  In the 2^nd Affirmation of Madam T dated 14 December 2015, she produced a screen shot of search at the Probate Registry where it was found that Madam Y applied for Letters of Administration to the estate of the late Mr. K.  On 26 September 2014, Madam T through her lawyers entered a Caveat at the Probate Registry to prevent any grant being made without notice to her.

11.  As at the date of this hearing, this Court was told that no Letters of Administration was granted by the Probate Registry.  No renewal of the Caveat was made.

Service of these proceedings

12.  By an Order of Deputy Judge A. Yim dated 25 August 2015, the Official Solicitor was appointed to represent the estate of the late Mr. K for the limited purpose of accepting service of the Originating Summons filed herein.

13.  Service of these proceedings was duly accepted by the Official Solicitor.

The transfer application

14.  On 14 June 2016, the 1^st and 2^nd Applicants’ issued an Ex Parte Summons seeking transfer of these proceedings to the Court of First Instance.  The reason for transfer is that there are complicated legal issues involved which are beyond the jurisdiction of the Family Court.  There are 3 legal issues are set forth in the Affirmation of Ip Woon Shun dated 13 June 2016 (“Mr. Ip’s Affirmation”) under the following headings :-

(a)  Issue of Priority;

(b)  The Suicidal Note; and

(c)  The grant to Madam T and her fiancée.

15.  At one stage prior to the present transfer application, there was an application before this Court seeking leave to amend the Originating Summons by adding a prayer that Madam T and her fiancée be appointed as joint administrator of the estate of the late Mr. K. Such application for amendment was then rightly withdrawn at the hearing on 18 January 2016 for the fact that any such appointment of administrator would have to be made under Section 36 of the Probate and Administration Ordinance, Cap.10 and the venue would be the High Court.                  

The Statutory Provisions

16.  First of all, the matters to which the Court is to have regard to when exercising powers to make maintenance orders under the IO are contained in Section 5 of the Ordinance which provides, inter alia :-

“(1) Where an application is made for an order under section 4, the

court shall, in determining whether the disposition of the deceased’s

estate effected by his will or the law relating to intestacy, or the

combination of his will and that law, is such as to make reasonable

financial provision for the applicant and, if the court considers that

reasonable financial provision has not been made, in determining

whether and in what manner it shall exercise its powers under that

section, have regard to the following matters –

(a) the financial resources and financial needs which the applicant has or is likely to have in the foreseeable future;

(b) the financial resources and financial needs which any other applicant for an order under section 4 has or is likely to have in the foreseeable future;

(c) the financial resources and financial needs which any beneficiary of the estate of the deceased has or is likely to have in the foreseeable future;

(d) any obligations and responsibilities which the deceased had towards any applicant for an order under section 4 or towards any beneficiary of the estate of the deceased;

(e) the size and nature of the net estate of the deceased;

(f) any physical or mental disability of any applicant for an order under section 4 or any beneficiary of the estate of the deceased;

(g) any other matter, including the conduct of the applicant or any other person, which in the circumstances of the case the court may consider relevant.

………

………

(7) In considering the matters to which the court is required to have   regard under this section, the court shall take into account the facts as known to the court at the date of the hearing.”

17.  The Applicants’ solicitors referred to the case of Re Estate of Chow Nai Chee [2010] 6 HKC 515 where Lam J (as he then was) at the footnote of the Judgment had said :

“In England, both the High Court and the county court have unlimited

jurisdiction to grant relief under the Inheritance (Provision for Family

and Dependants) Act 1975. CPR 30.3(2) set out the relevant factors

for deciding whether a case should be transferred from one court to

another. Financial value of the claim is only of the factors. Other

factors are : whether it would be more convenient or fair for hearings to

be held in some other court; the availability of a judge specializing in

the type of claim; whether the facts, legal issues, remedies or

procedures involved are simple or complex; the importance of the

outcome of the claim to the public in general etc. We do not have

similar statutory provision in Hong Kong. But as this judgment shows,

similar factors should be taken into account in the exercise of the

discretion on transfer of cases.”

18.  It is fair to say that ultimately the Re Estate of Chow Nai Chee case was transferred back to the Family Court for determination for just resolution of the dispute between the parties, proper case management and fair deployment of judicial resources. 

The Court’s views on the 3 legal issues

Issue of Priority

19.  The late Mr. K was adjudged bankrupt and trustees-in-bankruptcy (“TIB”) were appointed.  The letters exchanged between the Applicants’ lawyers and the TIB were produced as exhibit “IWS-1” to Mr. Ip’s Affirmation.  There are altogether 5 letters of various dates.

20.  On 30 January 2015, the TIB was informed of the present application (which had yet to commence at the time of the letter) with an invitation to confirm whether there is any claim over the deceased’s estate within 14 days and; failing any reply, it would be assumed that the TIB waives the right to do so and have no claim over the estate. 

21.  On 12 February 2015, the TIB replied.  They first disagreed that as TIB of the deceased bankrupt’s estate, the right and entitlement to the bankruptcy estate including property which may comprise part of the death estate, could be waived and indeed would not be waived by them. Secondly, they took the view that as TIB for the bankruptcy estate, they owed a duty towards creditors.  It would not be appropriate for them to be both the TIB for the bankruptcy estate and the death estate at the same time.  Finally, they are of the view that the property of the death estate should first be applied to pay the funeral expenses and debts of the deceased in priority to the entitlement of the beneficiaries of the estate.  Thus the financial provisions of the Applicants should be subject to full repayment of the bankruptcy debts and expenses.  They would have no further interest over any residuary amount after the repayments.

22.  On 31 March 2015, the Applicants’ lawyers wrote and sent over the Originating Summons issued herein and accompanying documents to the TIB.  There was an invitation for necessary action to be taken if the TIB would defend the application.

23.  On 10 April 2015, the TIB replied and, amongst other things, said as follows :-

“In our letter dated 12^th February 2015, we have stated the position of the trustee-in-bankruptcy for these proceedings. In our respectful view, you have failed to appreciate the difference between the death estate and the bankruptcy estate. We are the trustee for the bankruptcy estate of the Deceased Bankrupt whereas you are issuing proceedings against the personal representatives of the Deceased Bankrupt. In other words, your clients’ claim is against the death estate only.

We would reiterate that under the law of intestacy, the debts of the Deceased Bankrupt have priority over the entitlement of the beneficiaries. In other words, the proceeds from the death estate should be first applied to repay the bankruptcy debts of the Deceased Bankrupt and the bankruptcy estate has priority. If your clients are not seeking to overreach the priority of the bankruptcy estate, we have no interest in your proceedings. If such is not the case, your clients are still obliged to give the Court notice of the interest of the bankruptcy estate and present a proper legal and factual basis to support such a claim. If the latter is your clients’ intention, please let us know as soon as possible so that we can reconsider our course of action.”

24.  On 13 May 2015, the Applicants’ lawyers replied :-

“Our claim is against the deceased’s estate. If you believe that our client’s claim is irrelevant to you after reading those documents sent to you in our previous letter dated 31^st March 2015, please ignore the same.”

25.  At this hearing, the Applicants’ lawyers confirmed there are no further correspondence exchanged with the TIB afterwards.  They are of the view that since the IO does not provide whether a claim for reasonable financial provision of the dependants has priority over creditors claim in respect of a bankrupt deceased, it requires an in-depth analysis on

the law in relation to intestacy which is beyond the jurisdiction of the Family Court.

26.  From reading the correspondence, TIB’s position and their views over the present proceedings have been clearly stated.  Had TIB’s asserted position and views as to priority not being accepted or agreed, the Applicants’ lawyers are entitled to seek assistance from the Court but if that happens, TIB should be given a chance to take part in these proceedings to argue on such issue.  As rightly stated in TIB’s letter dated 10 April 2015, the present proceedings were brought against the personal representative of the deceased estate only (my emphasis). 

27.  Since the TIB had clearly and positively asserted their stance and views on priority, there are no reasons for the TIB to have to incur costs (which apparently at the expense of the creditors) to apply for joining in these proceedings as a party simply to argue and to prove that they are correct.  The proceedings as it now stands does not afford TIB with such an option for argument.  Given the TIBs’ stance and views, to seek a transfer to the High Court and to obtain a determination on priority without giving the affected party, namely the TIB, a chance to be heard is procedurally unfair and incorrect.   

28.  Besides, I fail to understand why no answer or confirmation was given to the TIB when the Applicants, with the knowledge of the bankruptcy of the deceased and nonetheless pursing the present proceedings, are actually seeking to overreach the priority of the bankruptcy estate.  Oddly enough, the answer given by the Applicants’

lawyers in their last letter dated 13 May 2015 was that the TIB should ignore the same if TIB believed the present claim is irrelevant.  With respect, I believe the Applicants’ lawyers might have misconstrued TIB’s letter.

29.  In my view, the conflicting views between the Applicants’ lawyers and the TIB would have to be resolved by the Court one way or the other.  Given the fact that the law on intestacy is well settled under the Intestates’ Estates Ordinance, Cap.73, I am not persuaded that any such resolution involves complicated legal issues to warrant a transfer order of these proceedings.

30.  This follows that I do not accept the Issue of Priority to be a sufficient ground for transfer of these proceedings to the High Court, leaving aside any issue as to TIBs’ right to be heard on such transfer application.

The Suicidal Note

31.  In the Applicants’ written submissions, such issue concerns whether the Suicidal Note constitutes a document that embodies the testamentary intention of the late Mr. K.  Further, whether it shall be deemed to have been duly executed under Section 5(2) of the Wills Ordinance, Cap.30.  Determination of such issue falls out of the jurisdiction of the Family Court.

32.  Moreover, it was said that had the Suicidal Note been found to be validly executed, the same issue of priorities between beneficiaries under the deceased estate and creditors under the bankrupt estate arises.

33.  One of the factors which the Court in exercising its powers under Section 4 of the IO has to consider is the financial needs which any beneficiary of the deceased’s estate has or is likely to have in the foreseeable future (see s.5(1)(c) of the IO).  From reading the contents of the Suicidal Note and considering the Certificate (proof of registration of marriage), the issue that might arise is the competing financial needs of the Applicants (both are dependants and under age) and that of Madam Y (as the Wife and beneficiary of the estate of the late Mr. K). 

34.  Nonetheless, unless there is an actual claim from Madam Y or a Probate Action being brought by her over the deceased’s estate when the competing financial interests of the Applicants and Madam Y would then become a live issue, the mere fact that Madam Y had applied for Letters of Administration but had not been successful, in my view, does not require any consideration of the Suicidal Note as to whether it constitutes any testamentary wishes of the deceased or raises any issue as to validity of execution under the Wills Ordinance Cap.30 now suggested by the Applicants as one of the reasons for transfer.  

35.  At present, there is no “challenge” by anybody on the contents and execution of the Suicidal Note and thus posing an issue for determination by the Court before making any order under Section 4 of the IO.  At this stage, the Court is only bound to take into account the

existence of such Suicidal Note as facts known to the Court (see s.7 of the IO) and no further than that.   

36.  Hence, I am not convinced that the mere existence of the Suicidal Note can be taken as a ground for transfer of these proceedings to the High Court on the premise that findings on validity of the contents and due execution of Wills would have to be made before the Court could consider making an Order under Section 4 of the IO.

37.  I do not accept the Suicidal Note issue to be a legitimate ground for making any transfer order.

The Grant to Madam T and her fiancée

38.  It was submitted that in the event the Applicants’ claim was found to have priority over that of the creditors, the grant of Letters of Administration of the estate to Madam T and her fiancée would be required.  Although such submission might seem to be correct when it comes to the stage of receiving the fruits of litigation under the IO, I fail to see why and how this could now (my emphasis) be taken as a ground for transferring these proceedings to the High Court.   

39.  Moreover, as said earlier, any application for appointment of administrator would have to be made to the High Court under the Probate and Administration Ordinance, Cap.10.  Application for the grant of Letters of Administration would likewise have to be made under the

provisions of the same Ordinance and subsidiary rules although to the Probate Registry. 

40.  I completely fail to see any “link” between application for the grant of Letters of Administration at the Probate Registry and the making of an Order under Section 4 of the IO whether by this Court or the High Court.  These proceedings are commenced by the Applicants with their mother Madam T as their next friend. There is nothing wrong in practice and procedure.   

Conclusion

41.  For all the above reasons, I find there are no legitimate reasons or there exist any complicated legal issues to justify transfer of these proceedings to the High Court. 

42.  Therefore, I decided that the Ex Parte Summons dated 13 June 2016 should be dismissed.

43.  Given the fact the application being ex parte, there will be no Order as to costs; save and except the Applicants’ own costs be taxed in accordance with Legal Aid Regulations.