WANG DIN SHIN v. NINA KUNG

CACV300 /2003

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL 300 of 2003

(ON APPEAL FROM HCAP8/1999)

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JUDGMENT

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Hon.  Cheung JA:

1.  I agree with the judgment of Yuen JA and the orders she proposes to make.

Hon. Yuen JA:

2.  The Plaintiff is the father and the Defendant is the widow of Wang Teh Huei ("the Deceased").  The Plaintiff ("the Father") is the executor and sole beneficiary of the Deceased’s estate under a Will made in 1968.  The authenticity of that will is no longer disputed.  The Defendant ("the Wife") however contends that the 1968 Will has been revoked by a later Will comprising documents purportedly signed by the Deceased in 1990 in which she was appointed the executrix and sole beneficiary.  The authenticity of the 1990 documents is the subject of a probate action in which the parties have been locked since 1999.

Appointment of Administrators pendente lite

3.  Administrators pendente lite of the estate of the Deceased ("the Joint Administrators") were appointed on 15 March 2000 (the order being subsequently varied by an order made on 11 April 2000).

4.  Section 40 of the Probate and Administration Ordinance ("PAO") Cap. 10 provides:

"	(1)	Where any legal proceedings touching the validity of a will of a deceased person ... are pending, the court may, ... appoint an administrator of the estate of the deceased.
	(2)	An administrator so appointed shall have all the rights and powers of a general administrator, other than the right of distributing the residue of the estate".

Section 41 of the PAO provides:

"All the provisions of section 40 relating to grants of administration pending action shall be deemed to apply to the case of an appeal to the Hong Kong Court of Final Appeal from any decision of the court".     

Section 42 of the PAO provides:

"Where administration has been granted in respect of any estate of a deceased person, no person shall have power ... to act as executor of the deceased person in respect of the estate comprised in or affected by the grant, until the grant has been recalled or revoked".

Yam J’s judgment in probate action

5.  On 21 November 2002, Yam J gave judgment in the probate action in favour of the Father, granting probate in solemn form of the 1968 Will and dismissing the Wife’s counterclaim propounding the 1990 documents as the Deceased’s will.

Chu J’s order of 21/11/02 continuing appointment of Joint Administrators

6.  On the same day that Yam J’s judgment was given, Chu J gave an order, on the ex parte application of the Joint Administrators, that notwithstanding Yam J’s judgment, the appointment of the Joint Administrators as administrators pendente lite, and the grant of letters of administration pending suit to them, continue on the same terms "pending further order of the court".

7.  Shortly after, on 26 November 2002, the Joint Administrators, the Father and the Wife went back before Chu J for various directions. It appeared to be understood by all concerned that the Wife would be launching an appeal against Yam J’s judgment (as in fact she did).   There was no application to set aside Chu J’s order of 21 November 2002.

8.  The grant to the Joint Administrators has not been recalled or revoked.

Appeal against Yam J’s judgment

9.  The Wife’s appeal against Yam J’s judgment was dismissed in a majority decision of the Court of Appeal on 28 June 2004.

Appeal to Court of Final Appeal

10.  On 17 November 2004, the Court of Appeal gave leave to the Wife to appeal to the Court of Final Appeal.  The appeal is scheduled to be heard in July 2005.

Application for information and documents in List of Topics

11.  On 19 June 2003, i.e. after Yam J’s judgment but before the hearing of the appeal, the Joint Administrators applied to Chu J for directions whether they should be at liberty, at their discretion,  to disclose information and documents to the Father.

12.  The classes of information and documents have been set out in a document entitled "List of Topics".  Briefly, they can be summarized as follows:

(1):	information and documents derived by the Joint Administrators from legal proceedings;
(2):	ancillary to (1);
(3):	information and documents derived as directors of companies;
(4):	information and documents derived as shareholders of companies;
(5):	ancillary to (3) and (4);
(6):	information and documents obtained from other parties;
(7):	information and documents concerning possible assets of the estate;
(8):	information concerning the "legal and strategic position" of the estate.

13.  Counsel for the Joint Administrators informed the court that the scope of the List of Topics was dictated by the Father’s request to the Joint Administrators, rather than by the Joint Administrators’ own considerations.

14.  It is obvious on a reading of the List of Topics that the classes of information and documents sought are wide-ranging.  It is also common sense that the tasks of sorting information and replicating documents would also be burdensome in terms of time and costs.  The Deceased had registered interests in 113 companies and the Joint Administrators are on the board of 82 of those companies.  The Joint Administrators have commenced 6 actions for the estate and 3 other actions for companies wholly owned by the estate.

15.  The Father has said that he should be allowed access to the information and documents because:

(1)	subject to final determination on appeal, he is the executor and sole beneficiary of the Estate (respectively "the executor ground" and "the beneficiary ground"); and
(2)	he could assist the Joint Administrators in the administration of the Estate ("the assistance ground").

16.  The Wife has objected to the application on the grounds, first, that her claim to be the executrix and sole beneficiary of the Deceased’s estate has yet to be finally determined by the Court of Final Appeal; secondly , she has provided personal and confidential information to the Joint Administrators about her own assets on the basis of privilege which she has not waived; thirdly, that in any event, as far as documents provided by third parties in legal proceedings are concerned, those third parties should be heard before any order for disclosure to the Father should be made.

17.  The Joint Administrators’ position is similar to that of the Father, save that they are mindful of the need to keep an open mind about whether the Father or the Wife will succeed on appeal.

Chu J’s order on application for information and documents

18.  On 19 September 2003, Chu J gave liberty to the Joint Administrators to disclose to the Father at the Joint Administrators’ discretion the information and documents set out in the List of Topics.  Her decision was based on the executor ground and the beneficiary ground, as the assistance ground was not canvassed in detail before her.

Consent order for stay of Chu J’s order

19.  The order has however not been implemented.  Although Chu J refused the Wife’s application for a stay of the order, she ordered that the Joint Administrators give notice to the Wife if they intend to act upon the order.  No notice has been given. 

20.  Subsequently,  on 27 November 2003, I made an order by consent of all parties staying Chu J’s order pending determination of this appeal which was launched by a Notice of Appeal filed on behalf of the Wife in October 2003.

Hearing of appeal

21.  This appeal was first heard on 5 May 2004.  The parties could not finish their oral submissions and the hearing had to be adjourned part-heard to a date to be fixed in consultation with counsel’s diaries. 

22.  The hearing of the appeal concluded on 25 November 2004.  Judgment was reserved.  Subsequently however, on 13 December 2004, the Court of Final Appeal delivered judgment in Re Chime Corp Ltd FACV 6/2004 [2004] 3 HKLRD 922.  The parties asked this court to receive further written submissions as a result of that judgment, which we did.   

Re Chime Corp Ltd

23.  Re Chime Corp Ltd was concerned with a company ("the Company") in which the Deceased and the Wife were interested.  The Joint Administrators considered that an allotment of shares to the Wife after the Deceased’s disappearance constituted conduct which was unfairly prejudicial to the estate, and presented a petition under s.168A Companies Ordinance.  Subsequently, the Joint Administrators also considered that the Wife had improperly procured the Company to advance loans to a company in which she was beneficially interested.  They then sought to amend the s.168A petition to seek repayment of the loan to the Company. 

24.  The companies judge Kwan J refused the Joint Administrators’ application for leave to amend the s.168A petition.  The Court of Appeal however allowed the Joint Administrators’ appeal.  The Court of Final Appeal in turn allowed the Wife’s appeal from the Court of Appeal’s order. 

25.  Although the matter before the Court of Final Appeal was an interlocutory appeal concerned with the propriety or otherwise of including in a s.168A petition a claim by the company for damages or restitution, Lord Scott NPJ ended his judgment with the following remarks (§66-68):

"	66.	This petition cries out for firm and effective case management.  For the reasons I have given, sensible case management decisions cannot be come to until it is known to whom the estate of Mr Wang belongs.  If it turns out that it belongs to Mr Wang Snr, Mrs Wang will have to take a decision as to whether she can resist a demand by Mr Wang Snr to be placed in the same shareholding position relative to Mrs Wang as Mr Wang was in prior to his being kidnapped.  Mr Wang Snr will have to take a decision whether he wants to reverse the additional capitalisation of Chime that the allotment of the ‘B’ shares represented.  He will not wish, I imagine, to adopt a course which would be damaging to Chime.  And he must realise that if he presses for the allotment to be reversed Chime will have to repay the $1.5 billion allotment consideration that was paid by Mrs Wang.
	67.	Moreover, the prosecution of the complaint relating to the CAL loan, whether done via a derivative action or in the petition, would involve an expenditure in time and resources for the parties, including Chime, of quite an exorbitant extent.  It would also make demands on the judicial resources of Hong Kong that it would be unreasonable for any litigant to expect to be met unless it were plainly necessary in the interests of justice for that to be done.
	68.	In these circumstances, in my opinion, there is everything to be said for a stay of the petition until the probate proceedings have reached a conclusion.  At that point, and not until that point, sensible conclusions about the progress of the petition can be reached" (emphasis added).

26.  Coming back then to the present appeal, I shall first consider the "assistance" ground before dealing with the "executor" ground and the "beneficiary" ground.

The "assistance" ground

27.  There is little substantial evidence as to what assistance the Joint Administrators need from the Father, or why disclosure of the magnitude indicated in the List of Topics was necessary for that purpose.  In Mr Tan Man Kou’s affidavit in support of the summons, he has simply said that the Joint Administrators consider that assistance from the Father would help in the administration of the Estate, but apart from some information on historical matters or personalities which the Father had given to the Joint Administrators, there is little indication of the nature of further assistance that is expected from him (as he has not been involved in the running of the businesses for some considerable time).

28.  Further, it is to be noted that the List of Topics was compiled, not  by reference to the Joint Administrators’ requirements for assistance, but by reference to the Father’s requests for disclosure.  It is also to be noted that in the submissions of leading counsel for the Father, it is said that the assistance ground provides "further justification" for disclosure under the executor ground and the beneficiary ground.  The clear impression is that the assistance ground is at best only a makeweight.

29.  In any event, if there was any particular matter on which the Joint Administrators actually needed the Father’s assistance, there is no impediment to them approaching him for it, and if disclosure of any confidential document is necessary for that purpose, an application limited for that purpose could then be made.

The "executor" ground

30.  As for the "executor" ground, I think it is clear that the Father is not entitled to disclosure simply on the basis that he was named as executor in the 1968 Will.  The grant to the Joint Administrators has not been recalled or revoked, and until that is done, the Father has no power to act as executor of the estate (s.42 PAO).  

The "beneficiary" ground

31.  In written submissions sent to this court after the CFA judgment in Re Chime Corp Ltd, leading counsel for the Wife submitted that Lord Scott’s observations reinforce his submissions that the issue of succession to the Deceased’s estate is "still at large", and that Chu J erred in the exercise of her discretion in treating as "irrelevant" the Wife’s submission that the Joint Administrators owed her a duty of confidence by virtue of her interest in the estate. 

32.  In her decision, Chu J had said:

"As I understand it, the main objection on behalf of the  defendant is that such disclosure will result in a breach of confidence on the administrators’ part.  It is submitted that the administrators owe a duty of confidence to the defendant and the duty is said to involve two aspects.  Firstly, it is said that a fiduciary is under a duty not to impart information to a third party to a trust arrangement.  This aspect, in my view, is irrelevant because as it now stands, based on Yam J’s judgment, the plaintiff is not a third party and neither is the defendant a beneficiary.  What it means is that the administrators, in fact, owe no duty to the defendant in so far as the estate is concerned" (emphasis added). 

33.  Leading counsel for the Father submitted that Lord Scott’s observations were not applicable as the subject-matter of the Chime proceedings was different.  He submitted that as there has not been a stay of Yam J’s judgment, disclosure on the "beneficiary" ground is simply a necessary consequence of the judgment.

34.  In my view, it would be unrealistic to cast aside Lord Scott’s remarks in Chime on the ground that the subject-matter of that appeal was a corporate dispute.  As Lord Scott said (§55):

"Firstly, this dispute between the petitioners and Mrs Wang is not, in my judgment, a dispute, primarily, if at all, about management of Chime’s affairs.  It is primarily a dispute about proprietary rights.  The petition itself is topsy-turvy.  It is based on the proposition that the various things that have happened and that are complained about were unfairly prejudicial to Mr Wang’s estate.  Mrs Wang, it is said, was concerned to ‘advance her own interests at the expense of the Estate’ (para. 26 of the re-amended petition).  But what is ‘the Estate’? ... The current probate proceedings will in due course decide to whom ‘the Estate’ belongs.  There are two, and as I understand it, only two, possible results of those proceedings.  One possible result is that Mrs Wang will be established as the beneficial owner of the estate.  In that event, the proposition that she was concerned to advance her own interest at the expense of the estate will become meaningless.  The s.168A petition will be pointless and an inexcusable waste of money, time and the judicial resources of Hong Kong.  The other possibility is that Mr Wang Snr will be established as the beneficial owner of the estate. ..." (emphasis added). 

35.  Similarly in my view, in the present application, the Wife’s claim to be the sole beneficiary of the estate - a claim that has been rejected by the trial judge (and subsequent to Chu J’s decision, by the majority of the Court or Appeal) but which remains to be determined in the Court of Final Appeal - cannot be regarded as being entirely irrelevant.  Although the weight of the claim would have diminished with Yam J’s judgment (and the majority decision of the Court of Appeal), it remains a factor that has to be put into the balance, together with the other factors advanced by the Wife, such as the risk of detriment that she would suffer by the dissemination of confidential information before her claim to the estate has been finally determined.

Stay of application

36.  It therefore falls to this court to consider the application in the exercise of the court’s discretion.

37.  In particular, I take into account (a) the fact that the Father has been content for the Joint Administrators to remain as administrators of the estate, (b) the lack of any urgency shown for the Father to obtain disclosure of the information and documents, (c) the existence of legitimate disputes over the entitlement and scope of the various classes of information and documents sought, in view of the Wife’s own interests and also in view of third parties’ rights, (d) the time and costs that would have to be expended in the task of categorizing the information and replicating the documents sought, for which the Joint Administrators would no doubt have to charge fees, and (e) the imminence of the determination of the probate appeal by the Court of Final Appeal, when compared to the time that will be taken in the courts (this court and possibly the Court of Final Appeal) in disputes on the entitlement and scope of disclosure.  In my view, there is everything to be gained and nothing to be lost by adopting the observations of Lord Scott in ordering a stay of this application for disclosure pending the determination of the probate appeal. 

Order

38.  In view of the above, I think the proper order would be for this court to allow the appeal and to set aside Chu J’s order, but to stay the application pending the determination of the probate appeal in the Court of Final Appeal.  As for costs, I would give an order nisi that the costs of this appeal and of the application before Chu J be in the costs of the appeal in the probate action and that the Joint Administrators’ own costs be taxed on the trustee basis and to be paid out of the estate.