HARRISON LIU v. PERSONAL REPRESENTATIVE OF THE ESTATE OF LI (OR LEE) KWOK MI (OR MEI)(OR MEE), DECEASED AND OTHERS

HCMP 146/2019

[2022] HKCFI 29

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 146 OF 2019

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DECISION ON COSTS

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1.  In §121 of my Judgment dated 30 August 2021, I made a costs order nisi that the Plaintiff (“P”) shall pay the 4^th Defendant (“D4”) the costs of these proceedings (including all costs reserved) to be taxed on a party-to-party basis if not agreed.

2.  By a summons dated 10 September 2021, P seeks an order that the costs order nisi by varied to:

(a)  P’s costs and D4’s costs of these proceedings (including all costs reserved) be paid by the estate of LI (or LEE) KWOK MI (or MEI) (or MEE), deceased (李幗眉);

(b)  Further or alternatively, there be no order as to costs, and P and D4 shall bear their own costs of these proceedings (including all costs reserved).

3.  I have read P’s skeleton argument dated 11 October 2021, D4’s submissions dated 1 November 2021 and P’s reply skeleton argument dated 22 November 2021.  It is unnecessary to repeat their submissions in detail.

4.  P relies mainly on the Court of Final Appeal’s judgment in Cheung Pui Yuen v Worldcup Investments Inc (2009) 12 HKCFAR 31:

“56. The case on costs, as explained by Mr Thomas, is based on the principle that where proceedings have been properly instituted for the benefit of a trust fund, or a deceased’s estate, the court may, in an appropriate case, make an order for the costs of the proceedings to be borne by the fund or estate, as the case may be. The principle was explained by Kekewich J in In re Buckton [1907] 2 Ch 406 at 414/415. He referred, first, to cases in which trustees ask the court to determine some question which has arisen in the administration of the trust. In such cases, said Kekewich J, the general rule would be that the costs of all necessary parties would be taxed as between solicitor and client and paid out of the estate. He then referred to a second class of case in which the question for determination by the court is raised not by the trustees but by some of the beneficiaries. In such a case, if the question raised would have justified an application by the trustees but for some reason or other the application has been made by beneficiaries, the same costs consequences, he said, should follow:

“The application is necessary for the administration of the trust, and the costs of all parties are necessarily incurred for the benefit of the estate as a whole.” (p.415)

Kekewich J distinguished, however, the first and second classes of case from the third class, a class where the application to the court is made by a beneficiary but is, in substance although not in form, an adverse claim made in hostile litigation. In such a case, said the judge, the rule applicable to hostile litigation should be applied and the unsuccessful party ordered to pay the costs.

57. Kekewich J pointed out, at 415, the difficulty in many cases in deciding whether the particular case falls within the second class or the third class he had described but, subject to that difficulty, the distinction is a legitimate and well recognized one. It is relied on by Mr Thomas. He is entitled, in my opinion, to do so. The events regarding the gift of the Worldcup and Profit-taking shares in 1985 were known at first hand only to the deceased and Madam Chin and the probative weight proper to be given to the 1996 declarations, critical to the success of Four Pillars and Megabest, was a matter that cried out for judicial evaluation and determination. The executors’ conflict of interest (see para.49 above) made it reasonable for beneficiaries to initiate the proceedings.

58. There is, moreover, a further principle regarding litigation to resolve questions arising in the administration of a deceased’s estate that needs to be borne in mind. If it is the deceased who is responsible for the creation of the doubts that have necessitated an application to the court for the doubts to be resolved, it is the deceased’s estate on which the costs of the application should fall. The principle is a well known one: “where the difficulty is occasioned by the … conduct of the testator … the costs are costs of administration” (Williams, Mortimer & Sunnucks’ Executors, Administrator & Probate 19th Ed. at para.66 – 25; see also In re Hall-Dare [1916] 1 Ch 272 at 277 and, in Hong Kong, Nina Kung v. Wang Din Shin (No.2) (2006) 9 HKCFAR 800 at 811).

59. But these principles do not constitute rules.  They provide a guide as to how, in probate or administration proceedings, judicial discretion regarding the costs of litigation should be exercised.  The answer to that may depend not only on the principles referred to but also upon the particular circumstances in which the litigation has been commenced and prosecuted.  So I must turn now to the litigation that has led to this appeal.”

5.  P also relies on Theoblad on Wills (19^th ed., 2021), §15-008, p 308, which provides that:

“Where circumstances lead reasonably to investigation into the validity of a will, the unsuccessful party to a probate claim in respect of that will, though not usually granted his costs out of the estate, will not be condemned in costs…”

6.  P’s submissions may be summarised as follows:

(a) These proceedings were properly instituted for the administration of the Grandmother’s estate, in particular, the Property; and falls within the second class of cases referred to in Re Buckton.

(b) The Grandmother, deceased, was responsible for the doubt in the Will.

(c) There were reasonable grounds for investigation into D4’s claim that he was an adopted son of Lau Hing Yiu.

7.  First, I have serious reservations whether the principles set out in Cheung Pui Yuen are applicable.  P is simply not a “beneficiary” properly-so-called of the Grandmother’s estate.  But even assuming that these principles are applicable or may be applicable by analogy, the question is whether this case falls within the second class or the third class as defined in Re Buckton.  To determine this question, one must look at the substance, not the form.  Having regard to the remedies sought by P, there cannot be any doubt that P’s ultimate objective of bringing these proceedings was to become the beneficial owner of the Property.  For all practical purposes, this was a dispute between P and D4 over the beneficial ownership of the Property.  I am inclined to the view that this was, in substance, an adverse claim made in hostile litigation so that, generally speaking, the unsuccessful party should pay the costs.

8.  Second, I do not agree that the Grandmother was responsible for the creation of the doubts that had necessitated an application to the court for the doubts to be resolved.  This principle is concerned with the conduct of the deceased.  In this case, one of the main issues was whether the word “grandsons” in the Will included paternal grandsons only.  I do not think the mere fact that, the language used in a will is, arguably, capable of giving rise to rival meanings, is by itself a sufficient reason to trigger off the application of the said principle. 

9.  Third, the principle set out in Theoblad on Wills relates to circumstances which lead reasonably to an investigation into the “validity” of a will.  Here, the issues did not concern the validity of the Grandmother’s Will at all.  I do not think P’s desire to investigate into D4’s claim that he was an adopted son of Lau Hing Yiu is caught by the principle. 

10.  I appreciate that P’s belief that he should be the beneficial owner of the Property was probably a genuine one, which was at least partly prompted and encouraged by senior members of his family.  Nevertheless, it remained his own independent judgment, with the benefit of legal advice, to commence this litigation.  He should take the consequence in case his judgment turned out to be wrong.

11.  In P’s reply skeleton argument, P also refers to D4’s refusal to mediate on the ground that P was unable to attend in person due to the travel restrictions imposed by Covid-19.  It is regrettable that no mediation was held because of this reason.  That said, in the solicitors’ correspondence, D4’s solicitors stated that, although D4 would not attend any mediation unless P was physically present, he welcomed any reasonable offer from P.  There is no evidence whether, and if so, what offer P had in fact made. 

12.  After all, both parties agree that, at the end of the day, costs is a matter of discretion for the court to decide in accordance with the particular circumstances of each individual case; and the principles set out in the authorities provide general guidance only.  Having considered all relevant circumstances of this case including all the submissions made by the parties, I am not convinced that I should depart from the general rule that costs should follow the event because of any of the reasons put forward by P.

13.  For the above reasons, P’s summons to vary the costs order nisi is dismissed.  It follows that the costs order nisi shall become an order absolute.  I also order that the costs of this summons be costs of this action (to be taxed if not agreed).