WONG KIM MING AND ANOTHER v. CHONG YUK PIU AND ANOTHER

HCMP 2439/2016

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 2439 OF 2016

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D E C I S I O N

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INTRODUCTION

1.  This is the application of the plaintiffs (“Kim Ming” and “Ling Mei”), the two executrices named in the alleged last will of Wong Bik Kay, deceased (“the Deceased”) dated 20 August 2013 (“the Will”), for a Beddoe Order, as follows:-

(1) they be indemnified against and paid all costs incurred in High Court Probate Action HCAP 9/2014 (“the Probate Action”), including all past costs incurred therein, out of the Estate of the Deceased; and

(2) alternatively, they be indemnified against and paid all costs incurred in the Probate Action, including all past costs incurred therein, out of the proceeds of four insurance policies (more particularly described below) regardless of the final determination of the Probate Action.

BASIC FACTS

2.  The 1^st named defendant (“Yuk Piu”) and the Deceased were husband and wife, and they had a daughter, 鍾澄 (“Ching”), who was born in 2006.

3.  Ching is currently a minor, and all parties before me submit that it is not necessary to join Ching as a party to the present application.  In the circumstances of this case, I agree that it is not necessary to do so.

4.  Kim Ming and Ling Mei were two sisters of the Deceased.

5.  Towards the end of 2011, the Deceased became ill and was diagnosed to be suffering from cancer.  She was admitted to Queen Elizabeth Hospital in May 2013.  According to the Kim Ming, the Deceased herself requested to be discharged from the hospital on 20 August 2013.  After her discharge from hospital, the Deceased apparently went to her parents’ home where she executed the Will.  The Deceased’s execution of the Will was witnessed by two other sisters of the Deceased.

6.  As earlier mentioned, Kim Ming and Ling Mei are the only executrices named in the Will.  The Will, so far as material, states as follows:-

“2 本人委任黃劍明…及黃凌美…為本人之遺囑執行人。

3. 本人將一切遺產，不論是動產或不動產，在香港、中國或外國之財產，在扣除本人之辦理本人遺產之一切費用包括律師費後，遺贈予鍾澄…。

4. 本人指示，若本人身故時，上述鍾澄尚未年滿三十歲，處理方式如下：本人將一切之遺產，不論動產或不動產之遺產由執行人黃劍明及黃凌美託管，直至鍾澄年滿三十歲。

5.   假如鍾澄未滿三十歲時，如遇意外或人為導致身體任何殘缺或身故時，處理方式如下：本人將一切之遺產，不論動產或不動產之遺產由執行人黃劍明及黃凌美平均分配。”

7.  There is before the court a short medical certificate signed by Dr Luk Lai Yin, Associate Consultant, Department of Surgery, Queen Elizabeth Hospital, dated 20 August 2013, stating as follows:-

“It is to certify that [the Deceased] is fully conscious and mentally fit for signing documents after clinical assessment today.”

8.  On the same day that the Deceased executed the Will, she also changed the names of the beneficiaries under four insurance policies maintained by her, two with BOC Group Life Assurance Company Ltd and two with China Life Insurance (Overseas) Company Limited:-

(1) In respect of the two BOC Group Life Assurance Company Ltd polices (Nos 2171859988 and 2182380988 respectively), the name of the beneficiary was changed from Yuk Piu to Kim Ming.

(2) In respect of one of the China Life Insurance (Overseas) Company Limited polices (namely, No 8100219453), the name of the beneficiary was changed from Yuk Piu to Kim Ming and Ling Mei.

(3) In respect of the remaining China Life Insurance (Overseas) Company Limited policy (No 8100238127), the name of the beneficiary was changed from Ching to Kim Ming and Ling Mei.

9.  The Deceased passed away on 3 September 2013 at the age of 42.

10.  On 15 November 2013, letters of administration of the estate of the Deceased (“the Letters of Administration”) were granted to Yuk Piu and his sister (Chong Sok I, the 2^nd named defendant).  According to Yuk Piu, prior to applying for the Letters of Administration, he had inquired with Kim Ming whether she knew the Deceased had made any will, but Kim Ming was evasive and gave him some obscure answers.  On the other hand, Kim Ming says that she expressly told Yuk Piu that the Deceased had executed a will.  This is a factual issue which can only be determined at the trial of the Probate Action.

11.  Between January and March 2014, Kim Ming and Yuk Piu received HK$153,000, CNY612,000 and HK$265,515.27 respectively under three of the aforesaid insurance policies.

12.  In March 2014, Kim Ming and Ling Mei commenced the Probate Action seeking, inter alia, a revocation of the Letters of Administration, probate of the Will in solemn form, and a grant of probate of the Will to them.

13.  By their Defence and Counterclaim dated 23 July 2014, Yuk Piu and Sok I:-

(1) disputed the validity of the Will on the grounds that the Deceased (i) did not have sufficient mental capacity to make the Will, and/or (ii) did not know and approve of the contents of the Will (relying on the Deceased’s serious illness and the irrationality of the provisions in the Will);

(2) disputed the validity of the change of names of the beneficiaries of the four insurance policies on the ground of lack of mental capacity; and

(3) counterclaimed for the return of all monies received by Kim Ming and Ling Mei under the said insurance policies.

14.  The parties attempted mediation in January 2016, but it was not successful. Apparently, some further “without prejudice” discussion took place, but no settlement was eventually reached.  It would seem, therefore, that the Probate Action will have to proceed to trial.

15.  On 14 September 2016, Kim Ming and Ling Mei made the present application by way of originating summons.

MERITS OF THE CASE

16.  There are obviously issues to be tried as regards the mental capacity of the Deceased, including the weight that can properly be given to Dr’s Luk medical certificate and the rationality of the provisions in the Will.  It is not necessary for me to examine the merits of the case in any great detail because both parties agree, as I understand it, that Kim Ming and Ling Mei’s claim has a reasonable prospect of success (in other words, they have a reasonably arguable case on the merits), and neither Mr Ma nor Mr Cheung has suggested that the merits of his clients’ case is so strong, or the other side’s case so weak, that this factor alone would be determinative of the outcome of the present application.

SIZE OF THE ESTATE

17.  I have been informed by Mr Ma (for Kim Ming and Ling Mei) that the estate of the Deceased comprises (i) the total sum of about HK$5.1 million in cash in various bank accounts in Hong Kong, and (ii) a further sum of about CNY 1 million in a bank account in the Mainland.

18.  If Kim Ming and Ling Mei should succeed in proving the Will in solemn form, the whole of the Estate of the Deceased will go to Ching, or to themselves in the event that the scenario mentioned in clause 5 of the Will should materialise.

19.  On the other hand, if they should fail to prove the Will in solemn form, the Estate of the Deceased will, subject to a payment of HK$500,000 to Yuk Pui, go to Yuk Pui and Ching in equal shares in accordance with the Intestates’ Estates Ordinance, Cap 73.

COSTS INCURRED AND TO BE INCURRED IN THE PROBATE ACTION

20.  There is before the court a brief statement of the costs already incurred and the estimated future costs to be incurred by Kim Ming and Ling Mei in the Probate Action (including the counterclaim).  The costs already incurred come to HK$174,775, and the estimate future costs to be incurred come to about HK$610,000.  These costs seem to me to be reasonable, having regard to the nature of the issues raised on the pleadings and the number of witnesses whom I have been told will be or may be called to give evidence at the trial.

21.  In her second affirmation, Kim Ming suggested that the costs on Yuk Piu and Sok I’s side should be more or less the same, save that counsel’s fees may be higher having regard to the seniority of counsel engaged by them.  Mr Cheung (for Yuk Piu and Sok I) has not suggested otherwise.

OTHER CONSIDERATIONS

22.  It is, I consider, an important feature in the present case that Kim Ming and Sok I have a direct personal interest in the outcome of the litigation with Yuk Pui and Sok I, namely, in relation to the validity of the change of names of the beneficiaries under the four insurance policies.  Although the requisite mental capacity to make a will and to effect a change of name of a beneficiary under an insurance policy may not necessarily be the same as a matter of law, in the circumstances of this case it is likely that the same conclusion will be reached as regards the Deceased’s mental capacity to make the Will and her mental capacity to change the names of the beneficiaries under the four insurance policies.

23.  If Kim Ming and Ling Mei should succeed in upholding the validity of the change of names of the beneficiaries under the four insurance policies, they would be entitled to retain the proceeds of the policies, to the detriment of Ching, who would otherwise be entitled to a half-share of the proceeds of the policies in the scenario that her mother died intestate.  To this extent, the interests of Kim Ming/Ling Mei and Ching are in conflict.

24.  Also, Kim Ming and Ling Mei have a personal, financial, interest to uphold the validity of the Will, because they are potential beneficiaries of the entire Estate of the Deceased in the event that the scenario mentioned in clause 5 of the Will should materialise.

25.  The fact that a trustee (or personal representative) has a personal stake in the outcome of the underlying litigation is a relevant consideration in a Beddoe application.  See Re the Estate of Chan Lap Pan, Deceased, CACV 29/2017, 13 September 2017, at paragraph 4.18 per Cheung JA (with whom Yuen JA and Kwan JA agreed):-

“In my view a substantial financial interest must clearly be a relevant consideration.”

26.  So also is the fact that the opposing party to the underlying action is a major beneficiary of the trust estate, because if a Beddoe order is made but the trustee fails in the underlying action, the costs incurred by the trustee will fall on the estate.  In other words, those costs (or part of them) will have to be borne by the successful beneficiary.  See Re the Estate of Chan Lap Pan, Deceased, ante, at paragraph 4.8:-

“It is important to bear in mind that Chan has two capacities in this dispute. First, he is the executor of the will of the deceased and, second, he is the major beneficiary under the will. In reality the High Court Action is hostile litigation between Chan and Fu as to who is beneficially entitled to the assets in the deceased’s name. There will be serious implications on the estate for Chan to defend the High Court Action in his role as the executor with protection on costs by the Beddoe order. In the event Chan succeeds in the High Court Action, he will be expected, on behalf of the estate, to seek to recover the costs from Fu. However, if he fails, irrespective of what Fu may recover, the costs of the proceedings incurred by Chan in defending the action will fall on the estate itself. In other words, the entitlement of Fu, even if she is successful, will be reduced. In such circumstances, the Court should not only consider the merits and strengths of Fu’s claim against the estate and the benefit of defending the claim from the perspective of Chan as an executor but should also consider the injustice to Fu in suing the estate at her own risk as to costs whatever the outcome.”

27.  These having been said, Kim Ming and Ling Mei have only a contingent interest in the Estate of the Deceased which may never materialise, depending on the future health conditions of Ching up to her 30^th birthday.

28.  In all the circumstances of the present case, I consider that justice will be done by giving Kim Ming and Ling Mei costs protection limited to 50% of their own costs in the Probate Action (to be assessed on a trustee basis but subject to a cap of HK$392,388), and 50% of their liability (if any) for Yuk Pui and Sok I’s costs of that action (subject to a cap of HK$392,388), up to and including the trial thereof.

DISPOSITION

29.  I order that the plaintiffs as the named executrices in the will of the Deceased dated 20 August 2013 be indemnified out of the Estate of the Deceased in respect of:-

(1) 50% of their own costs incurred or to be incurred in HCAP 9/2014 to be assessed on a trustee basis, provided that such indemnity should not in any event exceed HK$392,388; and

(2) 50% of their liability (if any) for the defendants’ costs of that action, provided that such indemnity should not in any event exceed HK$392,388,

up to and including the trial thereof.

30.  The costs of all parties to the present application, assessed on a trustee basis, shall be paid out of the estate of the Deceased.