YUEN LING HOI v. YUEN KWAI CHUN, the Executrix of the estate of WONG LAI CHING, deceased AND ANOTHER

HCMP 95/2022

[2023] HKCFI 3182

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 95 OF 2022

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BETWEEN

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DECISION ON COSTS

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1.  The parties resolved the dispute by consent but persisted in their disagreement on costs. The costs issue has been directed to be determined by this court on paper only.

These proceedings

2.  The plaintiff is a retiree over 80 years old and the father of the two defendants. The 1^st defendant, one of his two daughters, was the executrix of the estate of her late mother, wife of the plaintiff (“the Deceased”), under the latter’s will dated 3 April 2014 (“the Will”). The Deceased passed away on 28 March 2020.

3.  By the Will, the Deceased bequeathed (i) the residential flat, namely Room 2409, Cheung Lok House, Cheung Wah Estate, Fanling, New Territories (“the Flat”) to the 1^st defendant; (ii) all the residual estate to the plaintiff, the 2^nd defendant and the other daughter as tenants in common in equal shares absolutely.

4.  On 21 May 2020, probate in respect of the Will was granted to the 1^st defendant with the power to apply for double probate reserved to the 2^nd defendant.

5.  The estate of the Deceased is said to consist of the following properties:

(1) the Flat;

(2) a village type house at Fanling, New Territories (“the House”), which was partly occupied by the 2^nd defendant and partly let out;

(3) cash in banks;

(4) rental income from the part of the House let out.

6.  There is no dispute that there has been no distribution to the beneficiaries pursuant to the Will since the grant.

7.  Through his former solicitors, the plaintiff issued a letter of demand to the 1^st defendant in late January 2021. Legally aided, the plaintiff through his current solicitors issued another letter dated 30 September 2021 to the 1^st defendant demanding her administration of the estate of the Deceased.

8.  On 20 January 2022, the plaintiff commenced these proceedings naming the 1^st defendant as the sole defendant. The plaintiff sought the following relief:

(1) The 1^st defendant do (i) within 14 days furnish to the plaintiff an account of the estate of the Deceased by affidavit and its dealings since the date of the latter’s death; (ii) within 1 month from the end of every 3 months an updated account until conclusion of the administration of the estate;

(2) The 1^st defendant do take all necessary steps for the distribution of the estate;

(3) In default of the above:

(a) the 1^st defendant be removed as the executrix;

(b) the plaintiff or such other person as the court may direct be appointed as the administrator;

(c) the 1^st defendant delivers to and vest in the newly appointed administrator any property belonging to the estate.

9.  The plaintiff has the support of the other daughter, who also filed her affirmation agreeing with the content of her father’s affirmations.

10.  The matter came before this court on 28 June 2022. The 1^st defendant was absent. This court granted an order (“the Order”) essentially in terms of §8(1) and (2) above, and adjourned (3) (“the Default Relief”) sine dine with liberty to restore in the event of default in compliance with the terms under §8(1) and (2) on the part of the 1^st defendant. Costs of the application in respect of the relief in terms under §8(1) and (2) above were awarded to the plaintiff by the 1^st defendant personally, and the plaintiff’s own costs were ordered to be taxed in accordance with legal aid regulations.

11.  In view of lack of compliance with the mandatory part of the Order, the plaintiff sought to restore these proceedings for the Default Relief. With leave of the master in October 2022, the plaintiff also joined the 2^nd defendant while all the other documents, including the Order, were ordered to stand and be deemed to be accordingly amended.

12.  Through their solicitors, the defendants acknowledged service with indication of intention to defend. Directions in respect of affidavit evidence for such purpose were subsequently given.

13.  By his affirmation on his own behalf and of the 1^st defendant, the 2^nd defendant made, amongst others, the following points:

(1) The 1^st defendant has been working in Canada for about 10 years, and returned to Hong Kong in April 2020 after the passing of the Deceased.

(2) The 1^st defendant obtained the grant of probate but returned to Canada in June 2020 for work reason.

(3) The plaintiff was aware that the 1^st defendant was in Toronto, Canada.

(4) The plaintiff had not complained about the administration of the estate of the Deceased before the commencement of these proceedings.

(5) The 1^st defendant had not received any of the documents from the solicitors for the plaintiff as she was in Canada. The 2^nd defendant became aware of the present proceedings upon service on him in October 2022. Upon that, he returned to the Flat and discovered the documents sent and served by the plaintiff to the 1^st defendant. He then informed the 1^st defendant of the same.

(6) The service was bad, and the defendants reserved the right to apply to have that set aside.

(7) The estate of the Deceased was yet to be administered for the reason that the 1^st defendant was in Canada for work.

14.  The 2^nd defendant also made the point that both he and the 1^st defendant had no objection to the removal of the 1^st defendant as the executrix and the appointment of the plaintiff or any other person as the court may direct as the administrator of the estate of the Deceased. Had the plaintiff made such request before commencing these proceedings, the 1^st defendant would have been more than happy to further discuss with the plaintiff.

15.  In reply, the plaintiff clarified that he did not say that the 1^st defendant was physically residing at the Flat. However, the fact was that the lock to the Flat had been changed after the grant of probate to the 1^st defendant, and therefore the 1^st defendant had possession and control of the same to the exclusion of others. He knew the 1^st defendant was travelling between Hong Kong and Canada. That said, the Flat was the correspondence address of the 1^st defendant in Hong Kong provided by her and, as the 2^nd defendant deposed, the 2^nd defendant was in a position to check the letterbox at that address for the 1^st defendant. The other daughter also deposed to that effect, including reference to her own experience, in support of the plaintiff.

16.  The plaintiff also denied lack of complaint about the delay in administration of the estate of the Deceased. He and the other daughter, as well as through relatives, had chased the 1^st defendant for that matter. In any event, the defendants never disputed that there had been no administration or distribution of the estate since the grant of probate. It was in these circumstances that he commenced these proceedings for report and account, and only in default of that, the removal of the 1^st defendant.

17.  The restored proceedings for the Default Relief were scheduled to be before this court in early July 2023. By way of consent summons, the parties essentially agreed to the Default Relief but costs were adjourned to be argued and determined on paper only.

The costs issue

18.  In view of the Order, which already disposed of the costs of these proceedings in respect of the relief mentioned in §8(1) and (2) above, the outstanding issue of costs is that in respect of the proceedings for the Default Relief mentioned in §8(3) above (“the Outstanding Costs”).

19.  The plaintiff seeks the Outstanding Costs to be paid by the 1^st defendant personally whereas the defendants argue that there should be no order as to costs or that such costs should be paid out of the estate of the Deceased.

Discussion

20.  The parties place different emphasis on the applicable principles. All of them in my view are relevant in the circumstances of this case.

21.  There is of course O62, r3 of the Rules of the High Court, Cap 4A. Essentially, costs is a matter of discretion of the court. As the starting point, discretion is expected to be exercised so that costs follow the event. The court may make any other order as to entitlement of costs or any part of it in view of the circumstances of the case. O62, r5 sets out the special matters to be taken into account in exercising discretion as to costs, including the extent of success or failure as well as the conduct of the parties in the proceedings.

22.  There is also the special consideration in the context of a trustee or a personal representative of the estate of a deceased. O62, r6(2) provides that a party to any proceedings in the capacity of trustee or personal representative shall be entitled to his costs out of the fund held by him, unless the court otherwise orders on the ground that such trustee or personal representative has acted unreasonably or acted for his own benefit.

23.  All circumstances, including the follows, considered, I take the view that the plaintiff should be entitled to the Outstanding Costs to be paid by the 1^st defendant personally without recourse to the estate of the Deceased.

24.  First, the 1^st defendant was undeniably under the duty both to the estate of the Deceased and the beneficiaries named in the Will to duly administer the estate. The 2^nd defendant’s mere words aside, there is no evidence of any concrete step taken or plan in the administration of the estate proposed by her. Nor is there evidence to refute the fact that there has not been distribution of the estate or any form of account by the 1^st defendant since the grant. Admittedly, she simply left Hong Kong and “returned to” Canada for work reason after obtaining the grant.

25.  Second, putting aside whether the plaintiff has communicated his discontent to the 1^st defendant by himself or through other family members or relatives as alleged, the plaintiff was entitled as a beneficiary to expect and to demand the 1^st defendant to act. Worth noting is the fact that the plaintiff never sought to demand outright removal of the 1^st defendant. Removal was only the Default Relief.

26.  Third, on the one hand, the defendants asserted that had the plaintiff complained, the 1^st defendant would have been willing to “further discuss” with him. On the other hand, there was no suggestion that the plaintiff knew or expected that the 1^st defendant would simply “return to” Canada right after obtaining the grant. The question to ask would be what if it was known by the beneficiaries that the 1^st defendant would leave Hong Kong without any concrete plan in administration of the estate after obtaining the grant. If she had no intention or plan in this respect, it was in fact not mandatory for her to accept the named executorship in the first place and then to conduct the way she did.

27.  Fourth, contrary to the affirmation of her position to accept her appointment by obtaining the grant, the 1^st defendant has remained out of Hong Kong ever since. Even for the present purpose, she had to have the 2^nd defendant deposed on her behalf. There is no evidence of any plan of hers to come to Hong Kong for the purpose of administration of the estate, let alone communication of such plan to the plaintiff. Instead, she indicated that she would not oppose to her removal. The question to ask would be whether one could have expected anything to happen in discharge of her duties as the executrix, had the plaintiff not taken the initiative by commencing these proceedings.

28.  Fifth, in view of the stance adequately reflected by the circumstances mentioned above, it can hardly be argued that what the 1^st defendant advanced in answering these proceedings was her performance of the role or discharge of her duties as the executrix of the estate of the Deceased. She was quite prepared to renounce such role and duties.

29.  Sixth, despite the argument in respect of the service of the pre-action demands and these proceedings on the 1^st defendant, there has in fact been no application to impeach the validity of the service. In any event, the evidence does not suffice in doing so. There is no evidence to refute the plaintiff’s contention that the lock to the Flat had been changed after the grant of probate to the 1^st defendant. Nor is the evidence from the defendants sufficient to refute the understanding of the plaintiff at the relevant time that the Flat was the correspondence address of the 1^st defendant last known to him. It was provided as her address in the grant. The own evidence of the 2^nd defendant was also that he was in a position of checking the mails sent to the Flat including those addressed to the 1^st defendant. Whilst the plaintiff admittedly knew that the 1^st defendant travelled between Hong Kong and Canada, there is no evidence to suggest that the plaintiff actually knew the address of the 1^st defendant in Canada (when the 2^nd defendant merely suggested that the plaintiff knew the 1^st defendant was in Toronto). The submission on her behalf that the plaintiff should have tried to contact her must be viewed in the light of that.

30.  In view of how the parties have chosen to act, this court does not need to guess much about the kind of relationship between the plaintiff as the father and the defendants as the children. This is irrelevant. These proceedings were legitimately premised on the plaintiff’s right as a beneficiary under the Will and the 1^st defendant’s fiduciary duty as the executrix. Upon effective concession of the defendants and applying the principles to the circumstances discussed above, I see no good basis for acceding to the costs order proposed by the 1^st defendant in respect of the restored application for the Default Relief in these proceedings.

31.  Last, there was without prejudice negotiation between the parties after the defendants’ acknowledgement of service. Whilst the 1^st defendant made her complaint about the commencement and service of these proceedings, she offered to settle the matter on terms as to costs. Not only was it proposed that there should be no order as to costs of these restored proceedings for the Default Relief but it was also proposed that the plaintiff waived the costs already ordered under the Order. Those acting for the plaintiff, in my view, adequately stated his position as a legally aided party. Accepting such terms would effectively mean that the Director of Legal Aid would have to seek recourse to the plaintiff’s share of the estate for all his costs incurred. In view of the circumstances explained above, the plaintiff should not be to blame for commencing these proceedings or rejecting the terms proposed by the 1^st defendant. Hence the present argument.

Order

32.  I order that the costs of these proceedings in respect of the application for the Default Relief (§3 of the Originating Summons) be to the plaintiff and to be paid by the 1^st defendant personally. No order as to costs of these proceedings between the plaintiff and the 2^nd defendant.

33.  Further costs were incurred mainly because of the 1^st defendant’s opposition in respect of costs whilst the 2^nd defendant remains neutral. Failing in the opposition, and for the reasons explained above, there is no reason why the 1^st defendant should not personally pay to the plaintiff his costs occasioned by the argument in respect of costs of these proceedings.

34.  All costs shall be taxed, if not agreed. The plaintiff’s own costs shall be taxed in accordance with legal aid regulations.