LO LI LI LILY v. LUI FUNG HE

HCAP 3/2010

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

PROBATE ACTION NO 3 OF 2010

________________________

________________________

________________________

______________

D E C I S I O N

______________

Introduction

1. There are 3 summonses before me within the 2 probate proceedings, namely, striking out, stay of proceedings and discovery.

2. Madam Ng Wai Jing (“the Deceased”) passed away on 20 December 2000, intestate.  The value of the estate (“the Estate”) of the Deceased has yet to be ascertained, but some time ago, the Estate Duty Office provisionally estimated a sum of not less than $45 million regarding the shareholdings of the Deceased in a group of 11 companies, collectively called the Chartersince Group (which was owned by the Deceased and the plaintiff (“Lily”) in equal shares).

3. The Deceased is a spinster and has no issue. Her father died before her. Hence, according to section 4 (7) the Intestates’ Estates Ordinance (Cap 73), the Estate is to be inherited solely by her mother, the defendant (“the Mother”).

4. The Mother said that she did not know the demise of the Deceased because other family members, including the eldest sister Madam Ng Wai Kwan (“the Eldest Sister”), had not informed her.  It was only until early 2007 the Mother then leant about it.

5. On 15 October 2008, the Mother obtained on an urgent basis  a letters of administration Ad Colligenda Bona (“the ACB grant”) to protect part of the Estate.  She then commenced 9 High Court miscellaneous proceedings (collectively called “the MP proceedings”) in 2009 and 2010 against the Chartersince Group, seeking court orders, inter alia, for registration to be shareholders thereof as well as account and inquiry.

6. Lily not only defended for the Chartersince Group in the MP proceedings but also commenced HCAP 3/2010 (“the 2010 Probate Action”) against the Mother. Lily said, among others, that the Deceased had made her shareholdings in the Chartersince Group a gift to her. By way of the principles of donation mortis causa, she became the beneficial owner of them.

7. Later, by consent, parties agreed that the MP proceedings were to be stayed pending the determination of the 2010 Probate Action and the findings thereof should also be binding on the MP proceedings.

8. In the 2010 Probate Action, parties went into the stage of discovery and exchange of witness statements.  As the Mother is a very senior citizen (aged 90), before the commencement of the trial, she went into the box for 3 days in November 2013 to have her evidence obtained, including being cross-examined by the legal representative of Lily.

9. After the examination of the Mother, Lily’s legal representative took the view that there had been contradiction within the evidence and/or case of the Mother, namely whether the Deceased died in PRC or in Hong Kong.  To cut short the long story, the Deceased was certified dead in Hong Kong and a death certificate was issued locally and accordingly.  The Mother relied on it in her application for the ACB grant. However, the (original pleading) of the Mother in the 2010 Probate Action stated said that the Deceased died in PRC (based on the information (or opinion) of the Eldest Sister who helped the Deceased to travel and/or be delivered to Hong Kong at the material times.

10. Lily’s solicitors asked the Mother to take necessary steps to rectify the place of death of the Deceased and to obtain new or amended grant.  The Mother’s legal representative disagreed.

11. Lily therefore on 24 December 2013 commenced a further probate action HCAP 24/2013 (“the 2013 Probate Action”).  She pleaded that doubts had been arisen as to the validity or effectiveness of the ACB grant because the Deceased might die in PRC or in HK.

12. The Mother filed her defence in the 2013 Probate Action without prejudice for a striking out application.

13. In the meantime, in the 2010 Probate Action, Lily issued a summons asking for stay of it pending determination of the 2013 Probate Action.  On the other hand, the Mother amended her Defence and Counterclaim therein to the effect that the Deceased did die in Hong Kong. She also sought discovery against Lily before setting down of the same for trial. Regarding the stay application, the Mother opposed it and further took out the striking out summons to put an end to the 2013 Probate Action.

14. All 3 summonses went before me for substantive argument.  Mr Li Chau Yuen SC acted for the Mother and Mr. Joseph Lee of Messrs Joseph C T Lee & Co represented for Lily in both proceedings.  Having heard from them for one day, I reserved my decision to be delivered.  I now do so.

Rulings and reasons

15. I start to deal with the striking out application.  If it is successful, the stay application will collapse automatically.

16. As I discussed with the parties at the hearing, it was important to bear in mind the nature of grant having been issued to the Mother. It is an ACB grant only. Paragraph 268 of the Guide to Non-Contentious Probate Practice (“the Guide to NCPP”) states that:

“When an estate (or any part thereof) of a deceased person is endangered by delay in administering it, the Registrar may order an ad colligenda bona grant to be granted for the purpose of preserving the same (akin in function to a provisional liquidator in liquidation proceedings).”

17. An ACB grant is also “limited” until further representation, and ceases completely on the issue of a general grant (paragraph 272 of the Guide to NCPP).

18. In the present case, the Mother has not applied for a general grant as she cannot afford to pay the estate duty.  Hence, at all times, she was and is still a “limited” administratrix as such.

19. With the above in mind, the case of Lily in the 2013 Probate Action can be easily deposed of.  It is bound to lose.  I take the view that it is not necessary to go through all the arguments between the parties, including the basis of the application, the locus and/or bona fideness of Lily, my decision remains the same even if I would agree with Mr Lee on all of these matters.

(a) Lily’s case is that there is doubt (as reviewed in the evidence of the Mother as a whole) to whether the Deceased died in PRC or in HK, albeit that she has no personal knowledge on the issue.

(b) However, the place of death is insignificant in deciding if an ACB grant is to be issued or not.

(c) In other words, even if the Deceased did die in PRC (or on her way from PRC to HK when she was in critical condition), the ACB grant is still to be issued to the Mother for an interim protection (without any administration or distribution) on part of the Estate.

20. The stay application has become academic after the 2013 Probate Action having been struck out.

21. I move to the discovery application.

22. Mr Li SC said that, apart from donation mortis causa, Lily also pleaded a further and/or alternative case, namely, “…there was proprietary estoppel in that, [she] has, with the encouragement of the Deceased … spent time, money and effort in managing and funding the Chartersince Group … since June 2000 … in reliance of the representations of the Deceased… in the belief and/or expectation that the legal and beneficial interest of the Deceased’s Shares shall be vested in [her]…”.

23. Lily did not produce any documents to support her aforesaid alternative case in the first and second list of documents.  The Mother therefore issued the discovery summons to ask for 2 types of documents: (a) correspondence among all relevant parties to show if Lily had treated herself as the sole owner of the Chartersince Group, and (b) all books of accounts of Chartersince Group.

24. Lily disagreed and prepared her affirmation in opposition.  However, later by her 3^rd list of documents, she indeed produced a few documents of those having been requested.

25. The Mother therefore still needed to pursue the application.  She was willing to accept a further affirmation from Lily confirming if there would be further documents.  The scope under paragraph 22(b) above was reduced to those relevant parts only.

26. Mr Lee, in his skeleton, argued that Lily had produced the documents.  There was no sufficient evidence to show that other documents did exist.  The discovery amounted to a fishing expedition.  At the hearing, he reminded the court of the oppositions of Lily as per her affirmation.  It included, among others, that the discovery sought was oppressive, premature and unnecessary.  Nonetheless, Mr Lee added that Lily was willing to check again to prepare a further affirmation to clarify the position.

27. Having considered all the evidence authorities and submissions from the parties, I have decided to allow the discovery in the way suggested by Mr Li SC.

(a) The principles governing discovery under O24 r2 RHC are well-known. Very briefly, the applicant has to establish existence, relevancy and possession (custody or power).  Upon satisfaction of these 3 elements, the court will see if he should exercise the discretion to order the discovery in the circumstances.  However, no order shall be made unless he opines that it is necessary either for disposing fairly of the cause or matter or for saving costs. 

(b) With these in mind, to start with, the correspondence and accounting documents sought by the Mother do prima facie exist because it is indeed the case of Lily.  They are relevant because they would help the court to decide on the issue of proprietary estoppel raised by Lily and how far she had spent effort (in monetary terms) regarding the Chartersince Group.  There is no argument on the question of possession custody or power.  Lily has produced some of them.  She has not deposed otherwise and at the hearing, Mr Lee only asked for 28 days for her to clarify the matter.

(c) That takes me to the question of discretion.  The discovery is necessary because it put everyone clear to understand (objectively) the case of Lily as aforesaid.  Costs will be also be saved because it shortens the time for cross-examination of Lily at trial and further avoids any hiccup if documents would come before the court late or even only at trial.

(d) Last but not least, I am not persuaded by the other arguments raised by Lily, including the bare assertion that the discovery is fishing, oppressive and too wide (with the concession of the scope on accounting documents).

28. Parties only spent little time on the question of costs but I see no reason why costs should not follow event.  I also see fit to grant counsel certificate in the circumstances.

29. To conclude, I make the following orders.

HCAP 24/2013: Summons filed on 24 May 2014 (striking out)

(a) The Statement of Claim and proceedings herein be struck out.

(b) There be an order nisi that the plaintiff do pay costs of the application and proceedings, including Certificate for Counsel for hearing on 10 November 2014 and costs reserved, to be taxed if not agreed.  Defendant’s own costs are to be taxed in accordance with the Legal Aid Regulations (Cap.91A).

HCAP 3/2010: Summons filed on 13 May 2014 (stay of proceedings)

(a) The application is dismissed.

(b) There be an order nisi that the plaintiff do pay costs of the application, including Certificate for Counsel for hearing on 10 November 2014 and costs reserved, to be taxed if not agreed.  Defendant’s own costs are to be taxed in accordance with the Legal Aid Regulations (Cap.91A).

HCAP 3/2010: Summons filed on 23 May 2014 (discovery)

(a) Within 28 days, the plaintiff do file and serve an affidavit stating whether any document under Item 1 and Item 2 hereto is or has been at any time in her possession, custody or power and if not then in her possession, custody or power when she parted with it and what has become of it.

(b) There be an order nisi that the plaintiff do pay costs of the application, including Certificate for Counsel for hearing on 10 November 2014 and costs reserved, to be taxed if not agreed.  Defendant’s own costs are to be taxed in accordance with the Legal Aid Regulation (Cap.91A).

Item 1

All correspondence in relation to the Deceased’s shares and/or dividends declared by the Chartersince Group as from December 2000 onwards between the plaintiff, the Inland Revenue Department, the Chartersince Group, Messrs Joseph W P Fan & Co, and representatives or agents of the plaintiff and/or Chatersince Group.

Item 2

All audited reports and profit/loss accounts of the Chartersince Group since the financial year of 1999 and the relevant books and ledgers of Chartersince Group showing the plaintiff’s (alleged) contribution towards the Chartersince Group and the income and dealing with the Deceased’s shares.