CHEUNG TING KAU, VINCENT v. KOO SIU YING AND ANOTHER

HCEA 25/2013

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

EX-PARTE APPLICATION NO. 25 OF 2013

____________

____________

____________

HCAP 4/2011

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

PROBATE ACTION NO. 4 OF 2011

____________

____________

____________

_______________

DECISION

_______________

1.  This is a composite decision whereby I shall dispose of two applications in two separate proceedings arising from the estate (“the Estate”) of the late Mr Lim Por Yen (“the Deceased”) involving the same parties. First, there is an application of Mr Cheung by his summons for a grant of administration ad colligenda bona (“the ACB Summons”). Madam Koo and Madam Ling (“K & L”) oppose this application. The ACB Summons was taken out in the ex-parte proceedings under HCEA 25/2013. Before the substantive hearing of the ACB Summons on 30 July 2015, I handed down a decision in respect of an application of Mr Cheung made in the cause of the ACB Summons on 22 May 2015 (“the Previous Decision”), which is kept confidential to the parties.

2.  The other one is an application of K & L by their summons dated 30 October 2014 amended at the outset of the substantive hearing by consent for the appointment of administrators pendent lite (“the Amended APL Summons”) in the probate proceedings under HCAP 4/2011 commenced by Mr Cheung against K & L.

3.  Mr Cheung is the sole executor named in the alleged last will of the Deceased dated 3 December 2004 (“the 2004 Will”). The ACB Summons was taken out after the probate action was commenced. This court heard the ACB Summons first and I also find it logical to dispose of it before I deal with the Amended APL Summons.

The ACB Summons (HCEA 25/2013)

4.  It is worthy of note that in the beginning, Mr Cheung attempted to make his ACB application on an ex-parte basis in March 2013. It was supported by his first affirmation dated 5 March 2013. By a letter dated 7 March 2013, Deputy Registrar J Wong directed that the ACB application should be made inter-parte. Despite Mr Cheung’s invitation to reconsider the direction by letter dated 7 May 2013, Deputy Registrar insisted that Mr Cheung had to make his ACB application by taking out an inter-parte summons.

5.  The parties then exchanged in some correspondence. At long last, the ACB Summons was issued on 16 January 2014. The ACB Application is confined to certain lots of land (wholly or partially) owned by the Deceased set out in the Schedule to the ACB Summons with the sole purpose of effecting a sale thereof pending the full grant of representation of the Estate. It is expressly stated in the ACB Summons that there be no distribution of the sale proceeds of such properties. There is no detail of the intended sale given.

6.  The properties in question (collectively “the Properties”) comprise the following lots of land in Demarcation District No.185, Pai Tau Hang, Shatin, New Territories:

(i) Lot 57;

(ii) Lot 58 R.P.;

(iii) Lot 318 Section B;

(iv) Lot 320;

(v) Lot 329 Section A;

(vi) Lot 329 Section B Subsection 1;

(vii) Lot 394 R.P.;

(viii) Lot 318 Section A Subsection 1 R.P.; and

(ix) Lot 319 Section A R.P.

7.  With the exception of two pieces of land, namely, Lot 318 Section A Subsection 1 R.P. and Lot 319 Section A R.P. of which the Deceased was the sole beneficial owner, the Deceased held ¾ interest in the Properties with one Mr Cheng Wai Chee (“Mr Cheng”) holding the remaining ¼ interest as tenants in common. The Deceased’s interests in the Properties were the subject of a specific bequest under the 2004 Will to Mr Lam Kin Ngok Peter (“Peter Lam”).

8.  For present purposes, it is not necessary to give a detailed description of the Properties. Suffice it to say that they are agricultural lots situated on a sloping site with wild vegetation to the east of the Ten Thousand Buddhas’ Monastery (“the Monastery”) on the north side of Shatin. It is also close to the Po Fuk Ancestral Hall Columbarium on the west side and the Shatin Station on the East Rail MTR Line is only 5 minutes’ walk away. 

9.  Before I render my analysis of the evidence filed for the ACB Summons, I shall first set out the relevant legal principles. Both parties refer to the same authorities. It suffices for me to refer to two of them.

10.  A grant of ACB is commonly known to be a preservation grant. The following passage[1] in Williams, Mortimer & Sunnucks: Executors, Administrators & Probate (20^th edn.,2013) summaries the nature and purpose of an ACB grant:

“The court has a general power to make a limited grant of administration in order to preserve assets of the deceased within the jurisdiction without waiting until those entitled to a grant have applied. Such grants are grants ad colligenda bona defuncti, usually known as ad colligenda grants.

Such a grant is often useful where the person entitled to a full grant is abroad or temporary incapacitated and where some urgent step needs to be taken (e.g. the removal of valuables from an empty house or more commonly the sale of a house which is in danger of deteriorating or being vandalised and so losing value or stocks and shares). Application may be made for a limited grant to allow the deceased’s business to be run or for any urgent purpose. It is also common where the full facts or details to allow a full grant to issue cannot be immediately ascertained. However, ad colligenda grants should not be viewed as simply an expedient means of achieving a quick sale of property. Their purpose is to preserve the estate. (emphasis added)”

11.  A. Cheung JA (as the Chief Judge then was) in Re Ho Wai Man [2006] 4 HKLRD 421 at §34 had this to say about the nature of an ad colligenda grant:

“Circumstances may be such that the estate of the deceased may suffer in the meantime pending a full grant which may take time, if nothing is done and is allowed to be done to get in and preserve the asset in question. That is the true purpose of a grant ad colligenda bona. It depends on the need of the estate, not on the identity of the applicant.”

12.  In summary, for an order for a grant ad colligenda bona, Mr Cheung has to meet the threshold to satisfy this court that there is a genuine need to preserve the estate of the Deceased and that the preservation grant sought can serve such a purpose.

Evidence in support of the ACB Application

13.  The broad ground of the ACB application is that the Estate is jeopardized by its potential liability arising from the landslide problems affecting the Properties and its vicinity. Mr Cheung reckons that a sale is the complete solution to the landslide problems and the risk of wastage of the Deceased’s interests in the Properties.

14.  Mr Cheung in his affirmation sets out the two questions relevant to his application. First, whether the Properties are dangerous or otherwise may cause risk to property or people, or would otherwise require costly remedial or maintenance works so as to justify their disposal out of the Estate and if so, what the fair market value of the Deceased’s interests in the Properties is and how the sale should be conducted.

15.  The evidence adduced by Mr Cheung purportedly suggestive of the landslide problems can be summarised as follows.

16.  Mr Cheung first produced a letter issued by Philip So & Associates Ltd (“PS”) which is a firm of civil and geotechnical engineers dated 16 June 2011 (“PS Letter”). In the PS Letter, PS disclosed that PS had completed a natural terrain hazard study of the Properties (“the Study”). The major findings in the Study, as summarised in his 1^st affirmation, included:

(1) 472 boulders and/or boulder groups on the Properties have been identified and about 20% of them were found to be unstable and classified to be “High Risk”. They are being supported by unstable mechanisms and their unstable mechanisms and their base soils can be eroded due to heavy rainstorms. Should a landslide occur, the estate will be subject to potential liability.

(2) Mitigation measures are essential to ensure the safety of nearby residents and they can cost up to HK$37.25 million. Annual inspection and maintenance works are necessary and can cost up to about HK$200,000.

17.  On that basis, Mr Cheung is of the view that the Deceased’s interests in the Properties would be devalued and hence a grant of ACB is necessary to preserve the value of the estate for the purpose of a sale of the Properties.

18.  Subsequently, Mr Cheung obtained a valuation report in respect of the Properties compiled by Knight Frank Petty Limited (“Knight Frank”) dated 11 January 2013. The open market value of the Properties was assessed at HK$40 million as at 12 November 2012. In this valuation, Knight Frank gave due allowance for the estimated costs for boulder stabilization works of HK$37,250,000 and the subsequent annual expense of HK$120,000 for the inspection and maintenance cost and the risk factor. Since the Deceased has only ¾ share of the beneficial interests in certain lots of the Properties, only ¾ share of such costs was deducted from the valuation of such lots.   

19.  Mr Cheung alleges that he was approached by JJ Creative Consultant Limited (“JJ Creative”), through its solicitors Messrs. Cheung Tong & Rosa (“CTR”) by a letter dated 21 February 2013 whereby JJ  Creative expressed an interest in the Properties and offered a purchase price of HK$40 million (“the Offer”) to acquire the Properties on an “as is” basis without any mention of the remedial works and related costs.

20.  Mr Cheung contends that being the executor under the 2004 Will, he is the most suitable candidate to take the ACB grant and to conduct a sale of the Properties on behalf of the Estate.

21.  Prior to the Offer, Peter Lam by his letter dated 14 January 2013 indicated his awareness of the advice received by Mr Cheung in regard to landslide hazards and showed his support of this ACB application.

22.  Upon receipt of the expert evidence of K & L by way of an expert report of Mr Hart of GeoRisk Solutions Limited dated 19 August 2014, Mr Cheung attempted to instruct PS to make a reply thereto. Allegedly PS refused to do so over the phone. His reason given was that due to the lapse of time it was difficult for him to handle this matter again. By the letter of his solicitors dated 29 December 2014, Mr Cheung made it clear that he would not rely on the evidence of PS in this application.   

23.  Finally, pursuant to an unless order granted by Master J Wong dated 16 December 2014, Mr Cheung filed an expert report of Mr Henry Chan of Henry Chan & Partners Consultant Engineering Ltd. dated 5 February 2015. He also filed an updated valuation report prepared by Knight Frank.

24.  The expert evidence of Mr Chan in gist is that whilst full scale mitigation measure is not necessary, fatal landslides would still occur if the boulders within the Properties are to be exposed to long-term weathering or in case of hill fire and hence hazard mitigation measures albeit less extensive are warranted. His estimate of such mitigation works stands at HK$13.3 million, substantially less than the estimate of PS.

25.  K & L have not filed any evidence in reply to Mr Chan’s report. Neither Mr Hart nor Mr Chan is required to be cross-examined on their respective reports. Mr Fawls appearing for K & L in this application refers to the 4^th Affirmation of Ling Meng Chu Pearl dated 25 March 2015 for her comments on Mr Chan’s report after hearing from Mr Hart in his written submission. I agree with Ms Wong S.C. (with Mr Lam) appearing for Mr Cheung that I should not take into account her comments. First, the affirmation was filed only for the Amended APL Summons and in addition this is not the proper way to adduce expert evidence of Mr Hart.

26.  Both Ms Wong and Mr Fawls have made an excellent summary of the expert geotechnical evidence of Mr Hart and Mr Chan in their respective written submissions. Mr Fawls has annexed to his written submission a schedule containing an illustrative table of comparison of their evidence and the evidence of PS, on which I place no weight. Ms Wong takes no issue with the contents of the table and I annex the said schedule to this Decision with the objected reference to the 4^th Affirmation of Ling Meng Chu Pearl omitted.

27.  Here I need only highlight the salient findings of the geotechnical experts. Both of them agree that there are boulder groups within the Properties and these boulders alone are not likely to pose major hazards. Mr Chan also accepts that there is no history of landslides within the Properties. However, Mr Chan places heavy reliance on the alleged hillside instability of the surrounding areas of the Properties. This causes the major divergence in their respective conclusions.

28.  Mr Chan has identified 32 previous natural terrain landslides and 13 past recorded landslides within the vicinity of the Properties (none within the Properties). He particularly relies on the fatal landslide near the Monastery in 1997 (“the 1997 Landslide”). The government made an investigation into the 1997 Landslide and a GEO report was produced by the Geotechnical Engineering Office of the Civil Engineering Department. In the GEO report, according to Mr Chan, it was concluded that the 1997 Landslide was due to the collapse of the cut slopes and hillside above. The collapse which was caused by the water pressure built up during heavy rainstorm. Mr Chan concludes that the entire hillside could be susceptible to failure and hazard mitigation measures should be a must. I should add that just a few pages of the GEO report are annexed to the report of Mr Chan and I do not even have its findings and conclusions.

29.  Mr Hart disagrees. Whilst he agrees that 10 landslides including the 1997 Landslide took place in the vicinity of the Properties, most of them in or about 1997, he points out that they took place within areas of anthropogenic disturbance where human intervention such as the modification of a slope could be detected and hence they were not natural terrain landslides. The same applies to the 1997 Landslide.

30.  Mr Hart further draws a distinction between the landslide susceptibility within the Properties and that of its surrounding areas. His assessment is by reference to natural terrain landslides only. His conclusion is that the landslide susceptibility within the Properties to be low or very low according to the Australian Geomechanics Society.

31.  On the other hand, Mr Chan points out that there can be found physical evidence of erosion within the Properties and he has also identified 2 channels outside the Properties which could probably lead to landslides. In such an event, the debris would cause blockages to the vicinity of the Properties and pose a life-endangering risk.

32.  Mr Chan adopts the Design Event Approach and identifies the type of potential natural terrain hazards. He concludes that in terms of susceptibility, the Properties fall within Class C which is defined in the following terms:

“The natural terrain is moderately susceptible to the type of failure under consideration, with a notional annual probability of occurrence within the order of 1/10 to 1/100. For example: there are records of occasional recent failures in the catchment and its relevant vicinity.”

33.  Lastly, Mr Hart highlights the fact that the Building Authority has never issued a dangerous hillside order under section 27A of the Buildings Ordinance, Cap. 123(“the BO”). He opines that this shows there is no natural hazards within the Properties and this supports his conclusion that no hazard mitigation works has to be carried out.

34.  Both sides have filed their valuation evidence in regard to the market price of the Deceased’s interests in the Properties. There is not much difference in their valuation of the gross value of the Properties and it is the necessity of remedial costs that sets the parties apart.  

Analysis

35.  This court has understandable difficulties in making definitive findings on the conflicting evidence of Mr Chan and Mr Hart without their expert evidence being tested by cross-examination. The exercise is rendered more difficult by the non-response to the evidence of Mr Chan on the part of K & L. Ms Wong refers this court to the following passage in Hodgkinson & James: Expert Evidence: Law & Practice (4^th edn., 2015) at §42-006 (p.364):

“Significant difficulties may be presented where the parties put in their own expert reports which are in conflict but then do not call the experts at trial (because, for example, they cannot afford the fees charged by the experts). Such a situation may call for a “careful, balanced analysis” and a legitimate consideration (but not the only consideration) may be the way in which the respective expert reports are argued.”

36.  In addition to her attacks on the analysis and conclusions of Mr Hart, Ms Wong suggests to this court an attractive approach. She submits that analogous to applications for appointment of an interim receiver or provisional liquidator, in this application this court is not obliged to finally resolve any disputes of facts or expert evidence. This court is not concerned with whether Mr Chan or Mr Hart is more credible or reliable. The prime concern should be whether there is a need to preserve the Properties if a prima facie case has been made out. She submits that this court should only refuse a sale if this court can be convinced that there is no real risk whatsoever.

37.  Whilst I should certainly conduct a careful and balanced analysis of the expert evidence and pay attention to the way in which the respective reports of Mr Chan and Mr Harts are argued, I should also bear in mind the primary purpose of their expert evidence in the context of the ACB application.

38.  The burden is on Mr Cheung to satisfy this court on the balance of probabilities that (1) there is a real risk of landslide hazards within the Properties and (2) an urgent sale of the Properties is necessary and able to preserve the value of the Properties and hence the Estate. At the forefront of my mind is whether there is a pressing need to preserve the Estate.

39.  A sale of a property per se has nothing to do with the preservation of the value of the property. This court has to be convinced that there is a genuine need to preserve the value of the Properties on an urgent basis. In other words, the value of the Properties is likely to be diminished soon. Mr Cheung’s case is that the value of the Properties would suffer loss because of their potential liabilities arising from the land hazards.

40.  It should be noted that Mr Hart also accepts that there is a low or very low landslide susceptibility of the Properties. He cannot altogether rule out the risk of landslides.  Mr Chan says the susceptibility is moderate. It is not really necessary for me to make a definite characterisation of the risk. I am simply not satisfied on the evidence that the risk, be it moderate or low, will give rise to immediate or imminent potential liabilities and hence an urgent sale is warranted to preserve the Estate.

41.  In my view, in this application, there should be cogent evidence to persuade this court that the alleged risk is of such a menacing nature and presents an immediate and imminent danger that prompt rectifying measures are called for. 

42.  Nothing in the Mr Chan’s evidence can convince this court that there is such an imminent risk. All the previous landslides in the vicinity of the Properties took place more than a decade ago and were only minor in nature except the 1997 Landslide. 

43.  Unfortunately, Mr Hart has not had the chance to deal with the 1997 Landslide in greater detail as it turned out to be relied upon by Mr Chan subsequently. However, I am inclined to agree with him that human intervention was likely to be one of the main causes though a full copy of the GEO report should shed light on this. According to Mr Chan, the collapse of the cut slopes above the Monastery did lead to the 1997 Landslide.

44.  It is remarkable that there is no history of any landslide within the Property. To persuade this court that there is now a real risk that a landslide would take place in the near future affecting the Properties, there has to be solid evidence of recent changes of circumstances or geotechnical conditions. Mr Chan fails to identify any of such changes.  

45.  I think Mr Hart has made a valid point about the lack of a dangerous hillside order issued in respect of the Properties. Mr Chan only had this to say in the executive summary of his report:

“I also do not agree the hillside can be considered as not dangerous based on no Dangerous Hillside Order has been issued by Buildings Department (BD). Firstly, DH order issued by BD is to Registered Slope Features. This portion of hillside is mainly natural and therefore not registered. Secondly, it is fundamentally wrong to draw a conclusion to a slope feature is not liable to become dangerous based on no DH Order has been given. I cannot see the rationale in this.”

46.  I am unable to accept his explanation without any further elaboration in his report. Section 27A(1) of the BO reads:

“Where in the opinion of the Building Authority any natural, formed or man-made land, or any earth-retaining structure, has due to any cause been rendered so dangerous or liable to become so dangerous that it will collapse, or be likely to collapse, either totally or partially, and thereby will cause, or will be likely to cause, a risk of injury to any person or damage to any property, the Building Authority may by order in writing served on the owner of the land or structure, or on the person who under the terms of a Government lease is under an obligation to maintain the land or structure, declare the land or structure to be dangerous or liable to become dangerous.”

47.  I could find no reference to registered slope features in the BO at all. I am not convinced that a dangerous hillside order can only be issued in respect of registered slope features given the express wide ambit of the provision. I see no reason why the Properties (and its vicinity) being natural hillside cannot be the subject matter of a dangerous hillside order.

48.  Of course, the lack of a dangerous hillside order alone is no conclusive evidence of the safety of the Properties. Yet, it lends support to the expert opinion of Mr Hart in my view.

49.  Ms Wong submits that Mr Hart’s reliance on the lack of a dangerous hillside order is misplaced and based on an erroneous assumption that the relevant authorities are in possession of perfect information. 

50.  I cannot agree to this submission. The authorities should have been made alert to all the alleged land hazards in the district in the course of their investigation into the 1997 Landslide. It is not suggested that there has been any substantial changes of circumstances since the event which would escape the attention of the authorities.

51.  I also see no reason why Mr Cheung has not made any report to the authorities in regard to the alleged land hazards in the vicinity of the Properties. This is particularly so when it is his case that it is the surrounding areas which renders the Properties unsafe. He should have provided all the information including the expert advice he has obtained to the authorities so that dangerous hillside orders would be issued to such owners to ensure completion of mitigation works.  I would have thought that it would be a far more economical and effective way to eradicate any land hazards in the vicinity of the Properties.

52.  Whilst I am not convinced of any imminent land hazards by the evidence of Mr Chan, I should point out that the dilatory approach taken by Mr Cheung in respect of the alleged land hazards in the Properties is alarming and does not sit comfortably with Mr Cheung’s allegation of imminent risk of landslides.

53.  According to Mr Cheung, Peter Lam first raised with him the safety issue of the Properties in early 2011 after the Study was undertaken on the instructions of Peter Lam. Mr Cheung first made the ACB application in March 2013 and waited until January 2014 to issue the ACB Summons. He explained that he required the fund of the beneficiaries including Peter Lam. I do not accept the delay to be reasonable.  

54.  Up till now, no mitigation works whatsoever has been done to minimize the alleged land hazards. Should there be any imminent land hazards endangering life and causing financial loss, it is hard to imagine a responsible landowner can allow such a delay.  

55.  Therefore, I am fortified in my conclusion that there is no immediate or imminent landslide risk jeopardising the safety of the Properties at all. Notwithstanding this Decision, should Mr Cheung and Peter Lam be still of the view that there is, they are surely not precluded from taking immediate steps to mitigate such landslide hazards. 

56.  Even if I am satisfied that there are such landslide risks likely to give rise to liabilities and cause loss to the Estate, I am not persuaded that a sale by auction is effective to preserve the Estate for the following reasons.

57.  The position of Mr Cheung is premised on the assumption that the intending purchasers agree to the scale of landslide hazard mitigation measures to be undertaken and its costs assessed by his experts.  It is clear that there can be no certainty of such an agreement. It is thus difficult for the reserve price to be fixed.

58.  The intending purchasers who have acted knowledgeably and prudently having made proper investigation into the alleged geotechnical issues may share the same view of Mr Hart incidentally. They might be willing to buy the Properties at a price without factoring in any remedial costs. In such an event, the Estate would only suffer loss if the Properties are sold to them at a reserve price which does factor in the substantial remedial costs.

59.  On the other hand, the intending purchasers may have an even dimmer view of the geotechnical conditions of the Properties and expect higher costs of mitigation works. In such an event, the reserve price would not be attractive to them. Of course, the reserve price can be adjusted afterwards but further reduction of the reserve price would only be a loss to the Estate.   

60.  More importantly, I cannot lose sight of the fact that the Deceased only had partial interests in the majority of the Properties. This presents a complication in the proposed sale by auction. There is no evidence that Mr Cheng, the co-owner, is willing to sell his interests together with those of the Deceased by way of the same auction too. There is no basis to assume that those intending purchasers could too succeed in acquiring the interests of Mr Cheng and thereafter carry out the mitigation works in one go. An auction to sell the interests of the Deceased in the Properties alone does not appear to be an effectual exercise. 

61.  I accept the cogent submission of Mr Fawls that another insuperable difficulty of Mr Cheung’s suggestion is that he has provided no details of the proposed auction at all in his evidence. Until and unless this court is sufficiently satisfied that a fair auction with the interests of the Estate fully safeguarded is viable, no order for sale by auction should be lightly granted.

62.  In light of the foregoing analysis, it is not necessary for me to go any further into the parties’ valuation evidence.

63.  I should make it clear that in arriving at the foregoing conclusions, I have not taken into account the written submission of Mr Fawls on the lack of merits of Mr Cheung’s case in the probate action. Mr Fawls himself accepts that this court should not be concerned with the merits of Mr Cheung’s case but nevertheless he wants this court to take note of some obvious weaknesses. I refuse to do so.

64.  I should also mention that Mr Fawls painstakingly conducts a forensic analysis of the evidence of Mr Cheung highlighting its changes and development to suit his purposes. The central theme of his criticisms is that there is bad faith on the part of Mr Cheung in the ACB application, which was funded by, among other beneficiaries of the Estate, Peter Lam on his own admission. Mr Fawls submits that the real purpose of the ACB application is to materialise a collusive sale of the Deceased’s interests in the Properties to JJ Creative at an undervalue. Mr Fawls maintains that JJ Creative is a company related to Peter Lam.

65.  In the Previous Decision, I explained why I refused the application of K & L for cross-examining Mr Cheung for the purpose of this ACB application.  In gist, I was, and still am, of the view that on the established principles, Mr Cheung’s conduct has little bearing on the key issue as to whether this court should order a sale of the Properties by way of auction.  This court is concerned with the need of the Estate and not the applicant and expert evidence is determinative of the issue as to whether the Properties are subject to an imminent risk of land hazards and hence any preservation is required. If the expert evidence is compelling enough to show an imminent risk, whether or not Mr Cheung acts in bad faith is irrelevant.

66.  In arriving at the foregoing conclusions, I do not need to refer to the changes in the evidence adduced by Mr Cheung. I have not considered whether the proposed sale to JJ Creative was a collusive sale as alleged by K & L.  

67.  For completeness and for the sake of the APL application, having studied the relevant evidence and heard the submissions, I would give my view on this serious allegation of collusion.

68.  When Mr Cheung first made the ACB application on an ex-parte basis, he relied on the Offer given by JJ Creative. JJ Creative was found out to be a BVI company and its sole director is one Mr John Tse. Mr John Tse is one of the representatives of Peter Lam. Peter Lam, among other beneficiaries under the 2004 Will funded the Study, the instruction of PS, Knight Frank and indeed the ACB application. K & L are understandably suspicious about the Offer in the circumstances.  

69.  In his affirmation, Mr Cheung explained how he received the Offer from JJ Creative in the following terms:

“(1) Given the partial nature of the Deceased’s interests in most of the Subject Lots, I thought it prudent to make some preliminary inquires in the market to see if there would be any interested buyer(s) for such partial interests.

(2) For this purpose, I sought the assistance of Mr John Tse who was another representative of Mr Peter Lam in dealing with me on various matters of the Estate.

(3) When we received the offer from JJ Creative, I assumed that this was an offer from an independent party prompted by the inquiries made by Mr Tse. Given the limited purpose of this offer as explained above, I did not see the need to and I did not look into who were behind JJ Creative.

(4) However, it turned out that the sole director of JJ Creative, Mr Tse Kin On, was in fact Mr Tse himself. My solicitors and I only came to realise this when the Respondents’ solicitors, Messrs Stephenson Harwood raised the issue in their letter dated 5 February 2014 which also asked whether there is any previous knowledge of or dealing between me and/or Peter Lam and JJ Creative and/or Mr Tse.”  

70.  Mr Cheung further confirmed that he had had no previous dealings with JJ Creative and he came across it for the first time through Mr Tse.

71.  His explanation is not inherently improbable and is not contradicted by contrary evidence. He may appear to be less than prudent in that, among other matters, he did not find out more about the people behind JJ Creative but I cannot accept that he actually knew that Mr Tse was its sole director. There is no evidence that JJ Creative has anything to do with Peter Lam as well.

72.  In the premises, I accept Mr Cheung’s explanation. I do not accept the serious allegation that he himself intended a collusive sale in his ACB application so that the Properties could be sold to a related company of Peter Lam at gross undervalue.

73.  In summary, I conclude that there is no imminent risk of any loss/liabilities befalling the Estate and hence there is no need of preservation. In any event, I do not think a sale of the Properties by auction is the solution. The ACB Summons falls to be dismissed.

The Amended APL Summons (HCAP 4/2011)

Background Facts

74.  The APL application is made by K & L represented by Mr Ho S.C. together with Mr Fawls in the probate action. Mr Cheung represented by Mr Man S.C. together with Mr Lam opposes this application. 

75.  In a nutshell, the complaint of K& L is that Mr Cheung has all along taken a partisan approach in those matters relating to the Estate and obviously sided with the beneficiaries under the 2004 Will, in particular Peter Lam. They have lost all confidence in him to manage the Estate and someone independent should be appointed in his stead. They propose two partners of Deloitte Touche Tohmatsu, namely, Mr Lai Kar Yan Derek and Mr Guy Donald Norman to conduct the administration of the Estate as administrators pendent lite.

76.  Before dealing with their allegations, it is necessary to outline the major issues in the probate action at the outset.

77.  The subject matter of the probate action is the 2004 Will. Mr Cheung being the sole executor thereunder brought the proceedings for an order that the 2004 Will be pronounced in its solemn form. The 2004 Will was made on 3 December 2004 and not long afterwards, the Deceased passed away on 18 February 2005.

78.  Madam Koo, the first defendant, is the Deceased’s second concubine and Madam Ling, the second defendant, is her daughter with the Deceased. Madam Koo had another child, namely, Mr Eric Ling, with the Deceased. 

79.  Madam Koo, Mr Eric Ling Madam Ling are expressly disinherited under the 2004 Will. They used to be the beneficiaries under the earlier wills of the Deceased made in 1967 and 1973.

80.  Madam Koo and Madam Ling are unable to accept the validity of the 2004 Will and their sudden and complete disinheritance thereunder. They defend the probate action on four main grounds:

(1) the Deceased lacked testamentary capacity;

(2) the Deceased was under the undue influence of his first concubine Madam U and her son with the Deceased, namely, Peter Lam;

(3) the Deceased neither knew nor approve the contents of the 2004 Will; 

(4) the 2004 Will was not duly executed and it bore a purported signature of the Deceased which appeared to be markedly different from his usual signatures.

81.  K & L further mount a counterclaim on the basis of a Chinese will of the Deceased dated 2 February 1973, a Chinese codicil dated 20 January 1974 and/or his English will dated 23 September 1967.

82.  The trial of the probate action will be held quite some time away and the parties are still busy with certain interlocutory disputes. Among them are a recent application of K & L to amend their pleadings and their application for specific discovery. I note that additional parties have been joined in the probate proceedings after the hearing of this application. It means that, regrettably, the probate action is likely to be further protracted. 

Relevant Principles

83.  Section 40 of the Probate and Administration Ordinance, Cap.10 provides,

“(1) Where any legal proceedings touching the validity of the will of a deceased person, or for obtaining, recalling, or revoking any grant are pending the court may, subject to section 25, 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.

(3) Every such administrator shall be subject to the immediate control of the court and act under its direction.”

84.  Both Mr Ho and Mr Man agree that this court has the discretion to appoint administrators pendent lite when it is necessary and expedient to do so. Le Pichon J (as she then was) had this to say about the requirements of necessity and expediency in Hung Jin Mui v Tang Chui Yuk Angela and Anor., unreported, HCAP 4/1997, 11.2.1998:

“The leading textbooks on the subject have little to say. Some refer to necessity, others to expediency. In my judgment, whether one uses the term “necessity” or “expediency”, I do not think that the court would make an order without regard to or wholly divorced from the actual circumstances of the case, namely the assets comprised in the estate and whether they warrant the appointment of an administrator pendente lite. It is apparent from a proper reading of the passage quoted from Bellew v. Bellew that an appointment is not an automatic consequence of a bona fide suit pending, regardless of the condition or nature of the estate; rather such an appointment would be made by reference to and if warranted by the particular facts. It follows that the nature of the assets comprised in this estate is of critical importance.”

85.  After considering the assets as disclosed in the evidence, Le Pichon J identified two usual concerns with the principles laid down by Lord Greene in Re Bevan [1948] 1 All ER 271 in mind. First, the court should see whether there is a likelihood of dissipation or jeopardy of assets (which was not a consideration in that case given the undertaking by the defendant) and secondly whether there is a need to collect the “fruit of the estate”.  

86.  Mr Ho impresses upon this court that those two usual concerns in an application for administrators pendent lite are not meant to be exhaustive. I agree and his submission can be supported by the following dictum of DHCJ Mr Horace Wong SC in Re Yien Chi Ren [2009] 5 HKLRD 413 at §16,

“Whether one uses the term “necessity” or “expediency”, the court would only make an order of appointment having regard to the actual circumstances of the case. Obviously the actual circumstances of each case vary—in some cases the principal concern may be that pending resolution of the probate dispute, it is necessary to protect the estate by collecting, managing or safeguarding the assets; in other cases there may be other concerns, for example, the necessity of taking legal action against third parties in order to protect the estate while the probate dispute awaits its resolution.”

87.  Mr Ho goes on to highlight to this court one of the advantages of the appointment of an administrator pendent lite is that, as pointed out by A Cheung J (as the Chief Judge then was) in Chinachem Charitable Foundation Limited v Chan Chun Chuen, unreported, HCAP 8/2007, 10.12.2007 (at §10) when dealing with an uncontested application for an appointment of administrators pendent lite, itcan ensure that controversial decisions are not taken without reference to the administrator pendent lite and conversely, difficult decisions that need to be taken after due consultation with the administrator pendent lit, without fear of subsequent criticisms.Where necessary, directions on these decisions may be sought by the administrator pendent lite from the court.

88.  Mr Man refers to Horrell v Witts (1865-69) LR 1 P & D 103 where Sir J P Wilde refused to appoint an administrator pendente lite to manage a deceased’s partnership business in farming. The facts of that case are very different from the present case. Sir J P Wilde merely said that since there were surviving partners, it was not necessary to make the appointment but if there was an extreme case in which property held in partnership was at risk, the court might interfere.

89.  On the other hand, since there are serious criticisms about the approach and stance thus far taken by Mr Cheung in dealing with matters relating to the Estate, it is imperative to find out what duty he has in his role as the executor under the 2004 Will in the present circumstances.

90.  Mr Ho helpfully refers this court to the decision of Lam J (as he then was) in HSBC International Trustee Limited v Tam Mei Kam, unreported, HCMP 716/2004, 11.10.2004. There, the Judge dealt with an application for a Beddoe order of the plaintiff bank for the purpose of its defence in an action wherein the validity of the will under which the plaintiff bank was appointed to be the executor and the trustee in respect of the estate of the deceased was under challenge. The judge had this to say (at §9),

“The position of executor and trustee under the Will is different. Faced with a challenge to the validity of the Will, the principles set out in Alsop Wilkinson v Neary [1996] 1 WLR 1220 come into play. Lightman J (as he then was) examined the position of a trustee in three different kinds of dispute. In my judgment, insofar as the position of the Applicant in the capacity as executor and trustee under the Will is concerned, the dispute with the Respondent is a trust dispute under the classification of Lightman J, viz. a dispute as to the settlement on which the trustee hold the subject matter of the settlement. His Lordship said the following as regard the duty of a trustee in this sort of dispute,

“I do not think that the view expressed by Kekewich J in the Ideal Bedding case that in a case of trust dispute … a trustee has a duty to defend the trust is correct or in accordance with modern authority. In a case where the dispute is between rival claimants to a beneficial interest in the subject matter of the trust, rather the duty of the trustee is to remain neutral and (in the absence of any court direction to the contrary …) offer to submit to the court’s directions, leaving it to the rivals to fight their battles. If this stance is adopted, in respect of the costs necessarily and properly incurred, for example in serving a defence agreeing to submit to the court’s direction and in making discovery, the trustee will be entitled to an indemnity and lien. If the trustee does actively defend the trust and succeeds, for example in challenging a claim by the settlor to set aside for undue influence, he may be entitled to his costs out of the trust, for he has preserved the interests of the beneficiaries under the trust … But if he fails, then in particular in the case of hostile litigation, although in an exceptional case the court may consider that the trustee should have his costs … ordinarily the trustee will not be entitled to any indemnity, for he has incurred expenditure and liabilities in an unsuccessful effort to prefer one class of beneficiaries (e.g. the express beneficiaries specified in the trust instrument) over another (e.g. the trustees in bankruptcy or creditors) and so has acted unreasonably and otherwise than for the benefit of the trust estate…””

91.  Applying the principles laid down by Lightman J, the judge held (at §11) that the plaintiff bank was in a similar position as the trustee under the settlement in Alsop Wilkinson v Neary [1996] 1 WLR 1220 and should remain neutral and let the rival claimants to fight their own battles. The judge continued to add this (at §29),

“As far as its capacity as executor and trustee under the Will is concerned, the Applicant should abide by the principle of neutrality set out in the judgment of Lightman J. In this connection, I am reinforced by the commentary at Para.62-36 of Williams, Mortimer & Sunnucks, Executors. Administrators and Probate, 18^th Edn.,

“In general an executor has a duty to protect the estate in proceedings adverse to the estate, but where there is dispute between the persons entitled, whether contentious or non-contentious, his duty is to remain neutral.”

See also Lewin on Trusts, 17^th Edn., Para. 21-96.”

92.  The foregoing dictum of Lightman J in Alsop Wilkinson v Neary [1996] 1 WLR 1220 cited by the judge should suffice for present purposes.

93.  Insofar as K & L’s allegations about the conducts of Mr Cheung are concerned, the following observations of A Cheung J (as the Chief Judge then was) in the Chinachem Charitable Foundation Limited v Chan Chun Chuen case is apposite (at §12):

“… I should emphasis that I give little weight to various factual allegations against individual people that are found in the supporting evidence or those allegations that are disputed by the plaintiff in its evidence in response. They remain mere allegations. Many of them are, in any event, either irrelevant or immaterial to my present consideration.”

94.  The Chief Judge made similar observations in Lai Wai Pang v Kwok Li Shuk Han, unreported, HCAP 13/2000, 16.5.2003 where he sat as Deputy High Court Judge and refused to appoint an administrator pendente lite.  He said this (at §9(4)),

“I do not consider that the Defendant’s suspicions regarding the character and conduct of the Plaintiff, as raised in the defence and counterclaim, are of themselves sufficient to found the court’s exercise of discretion under O.29 r.(3) or section 40 of the Probate and Administration Ordinance. These are allegations which have yet to be tested and decided at trial. But nonetheless this is a relevant factor that I take into account.”

95.  With these principles in mind, I now assess the validity of the grounds advanced on behalf of K & L in turn. Before my assessment, I should mention that Mr Cheung made an express offer to undertake in his 4^th Affirmation that he will not dispose of or deal with the assets of the Estate without the approval of the court (“the Undertaking”). K & L are still not happy with the Undertaking. They opine that Mr Cheung’s partisan approach in the administration of the Estate would inevitably cause loss to the Estate despite the Undertaking.

Discussion

The ACB application and Mr Cheung’s failure to protect and control the Estate

96.  K & L relies heavily on the ACB application to show that Mr Cheung acted with a patent lack of neutrality and independence. They allege that Mr Cheung made the application in cohort with Peter Lam so as to effect a collusive sale of the Properties to his nominee. He even had to rely on a new expert in Mr Chan to formulate a different case of landslide hazards in order to succeed in his conspiracy with Peter Lam. The new expert evidence showed that the Properties were worth at least HK$25 million more than he had originally claimed by the use of the PS Letter. They say but for their intervention, the Properties would have already been sold to JJ Creative at an undervalue.

97.  I have already rejected any allegation of bad faith and collusion on the part of Mr Cheung in the ACB application. He is a solicitor by profession and I cannot accept the validity of such a grave allegation against him on paper. He has explained that before the grant he did not want to utilize the assets of the Estate to pay for the application. Therefore, he turned to the beneficiaries under the 2004 Will for financial support in his ACB application. I accept his explanation and find nothing untoward about this. I also do not accept that this is an indication of his inability or difficulty to control the Estate as contended by K & L.

98.  Mr Cheung’s reliance on the beneficiaries for funds does not mean that he has to compromise his independence and follow the instructions of the beneficiaries unquestioningly.

99.  Admittedly, the way he handled the ACB application left much to be desired. For instance, he should have disclosed at the ex-parte stage that, contrary to what he said in his supporting affirmation, the Study was not commissioned by him. He should also have found out more from Mr Tse or otherwise about JJ Creative and the Offer. I should reiterate that there is no evidence that JJ Creative is in any way connected with Peter Lam.

100.  However, despite all the unsatisfactory aspects of his handling of the ACB application, I am unable to accept that he did not work independently and he merely paid heed to the instruction of the beneficiaries. He received the PS Letter and was unsurprisingly persuaded by the expert advice therein. He further received the valuation report of Knight Frank. I can well understand why he accepted the professionalism of the experts and did not doubt the validity of their evidence although these experts were commissioned by Peter Lam. He proceeded with the ACB application originally on an ex parte basis.  Though I think he should have made an inter parte application instead, I do not accept that he deliberately did so to avoid any opposing party so that he could easily mislead the court with the expert evidence to obtain an order for sale.

101.  I see no evidential basis in the allegation that Mr Cheung would side with Peter Lam or any person to dissipate the assets of the Estate. The Undertaking in any event can dispel any such suspicion.

 Potentially invalid inter vivos gift to Madam U and Peter Lam

102.  This complaint of K & L requires some explanations. Under the 2004 Will, the Deceased purportedly bequeathed all of his shares in Wisdoman Limited (“Wisdoman”) to Peter Lam and Madam U.  Wisdoman holds many of the assets of the Deceased. For example, it holds the Deceased’s 480 million shares in Lai Sun Garment (International) Ltd which are of substantial value.

103.  Despite this testamentary disposition, at the same time, the Deceased also gave all his shares in Wisdoman to Peter Lam and Madam U by way of an inter vivos gift. This begs the question as to why the Deceased made such a gift if he had already intended to bequeath all the shares in Wisdoman to them under the 2004 Will.

104.  K & L also complains that whilst Mr Cheung should appreciate the difficulties in proving the testamentary capacity of the Deceased, he should also doubt the validity of the gift for want of the necessary mental capacity. It follows that he should have considered a claim to be made against Peter Lam and Madam U to recover the Wisdoman shares transferred to them as an invalid gift. Now the claim may be time-barred and they say urgent steps are now needed to be taken by administrators pendente lite to preserve such a claim. They also say that the inaction of Mr Cheung in pursuing the claim against Peter Lam and Madam U is indicative of his alliance with them, particularly given his aggressive conduct in some litigations against Highfit Development Company Limited (“Highfit”).

105.  I see no merit in this complaint at all. If Mr Cheung is expected to remain neutral in the probate action, he cannot possibly take the position that the Deceased did not have the testamentary capacity at the material time and hence did not have the mental capacity to make the gift. He could not be expected to make a claim against Peter Lam and Madam U on that basis.

106.  Further, K & L only raised the allegation of lack of testamentary capacity in their defence filed belatedly in this probate action. Any claim to recover the gift of Wisdoman shares on the basis of lack of mental capacity should already be time-barred. I fail to see how Mr Cheung can be blamed for allowing the limitation period of such a claim to expire to the advantage of Peter Lam and Madam U. There is also no reason why K & L did not take steps to set aside the gift themselves when a claim could be made without any limitation issues. Lastly, I do not understand how an administrator pendete lite can overcome the limitation issue.

Outstanding loans due to the Estate from Lai Sun Garment and eSun Holdings

107.  K & L complains that Mr Cheung has done nothing to recover the substantial loans extended to Lai Sun Garment and eSun Holdings (“the Loans”) and again any claim to recover the Loans are liable to be time-barred. His inaction is alleged to be a prime example of his preferential treatment of debtors of the Estate.

108.  According to the most recent annual report of Lai Sum Garment, as at July 2013, a total of HK$226,745,000 was owed to the Deceased. And in regard to the loan to eSun Holdings, as at July 2013, the total indebtedness stood at HK$234,515,000.

109.  It is noteworthy that the Loans are interest bearing and substantial amount of interest has accrued over the years. There is no suggestion whatsoever that the two companies are unable and/or unwilling to repay the Loans. The two companies regularly give written acknowledgements of the Loans and there should be no issue of time bar. In my view, it is merely a commercial decision not to call in the Loans and it makes perfect sense in the circumstances. I cannot understand how the assets of the Estate are dissipated or jeopardized as a result. 

110.  Moreover, as rightly pointed out by Mr Man, the Deceased specifically bequeathed the Loans to Peter Lam under the 2004 Will. There is no basis for Mr Cheung to call in the Loans at all.    

Merits of the defence of K& L in the probate action

111.  On the established principles, it is inappropriate for me to express any view of the merits of the parties’ respective case in this application: Re Yien Chi Ren at §8. Though Mr Ho accepts that this court here is not concerned with the merits of the issues in the probate action, he makes a detailed submission on all the allegations of the defence and their apparent strength with reference to some documentary evidence by way of background.

112.  I should make it clear that I do not take into account the merits of the parties’ allegations in the probate action in this exercise and I refrain from forming any view on such untested affidavit evidence. I can only accept that there are genuine disputes between the parties.

Mr Cheung’s non-neutral role in the probate action

113.  The core complaint of K & L is the lack of neutrality of Mr Cheung. They suspect that in addition to the ACB application, Mr Cheung’s legal costs in respect of the probate action are also funded by the beneficiaries including Peter Lam. As a result, he has failed in his duty to remain neutral in the probate action and he acts only at the bidding of the beneficiaries under the 2004 Will. They say this can sufficiently justify an appointment of administrator pendete lite to replace him in the administration of the Estate. On this issue, they pray in aid the HSBC International Trustee Limited decision.

114.  Mr Cheung does not defend his partisan position in the probate action but he insists on his independent judgment exercised in his conduct of the probate action despite the funding of the beneficiaries. Mr Man submits that the executor is free to take whatever role in a hostile litigation between beneficiaries if he is prepared to take the risk on his position on costs without the protection of an appropriate Beddoe order.

115.  I agree with Mr Man. On a proper analysis of the HSBC International Trustee Limited case and the relevant dictum of Lightman J in Alsop Wilkinson v Neary, Mr Cheung’s duty to remain neutral arises in a dispute between rival claimants to a beneficial interest in the subject matter of the trust such as this probate action wherein the validity of the 2004 Will is under challenge.

116.  However, there are situations where an executor or a trustee understandably feels that he cannot remain neutral. Lam J in HSBC International Trustee Limited also examined the position of a partisan trustee and said this (at §13),

“In this connection, the following observations of Park J in Breadner v Granville-Grossman (unreported) 17 July 2000 in respect of the position of a partisan trustee are apposite,

“…I do not mean to be critical of them for being partisan.  I can entirely understand why they thought it right to be partisan.  My point, however, is that there is another side of the coin.  If the trustees decide that they are going to take a position which is adverse to [one of the beneficiaries] and are going to argue strenously for it, that may be an entirely proper and sensible thing for them to do, but they must surely accept that there might be costs consequences if they are unsuccessful.”

After referring to Alsop Wilkinson v Neary, His Lordship continued,

“It seems to me that the thrust of what Lightman J says is that, if the trustees decide not to be neutral but to take sides in a dispute between beneficiaries, they must accept that, if the side which they support loses, they will be at risk of being subjected to an order for costs.””

117.  In the probate action, I am not aware of any pre-emptive costs order granted to Mr Cheung defining the scope of his participation. Even if Mr Cheung has decided not to abide by his usual duty to remain neutral in the probate action to defend the integrity of the 2004 Will and his own professionalism, he merely exposes himself to the risk of adverse costs consequences. It does not per se reflect badly on his ability to administer the Estate let alone provide justification to replace him with administrators pendete lite. 

Mr Cheung’s conduct in the probate action

118.  K & L have made trenchant criticisms of Mr Cheung’s conduct in the probate action. Some concern the merits of his evidence and some concern the delay in the proceedings.

119.  For the former, I cannot accept any of the allegations on affidavit and/or documentary evidence at this stage. 

120.  With respect to the accusations of causing extraordinary delay in the probate action by Mr Cheung, Mr Cheung in his 4^th Affirmation explained the delay. I agree with him that the Estate is very substantial and it would take a lot of time to deal with the Estate Duty Office. For the probate action, he set out a chronology of events by way of a table.

121.  I am convinced that both parties have contributed to the delay. I agree with Mr Man too that K & L could have taken steps to expedite the commencement of the probate action under the Non-Contentious Probate Rules.  I do not think Mr Cheung has deliberately caused any delay and I see no reason why he did so. In any event, as pointed out by Mr Man, there is no suggestion that the delay has caused any risk of the dissipation of the Estate. I cannot accept that it is a valid ground for the appointment of administrators pendente lite.

122.  I do not find any merit in their complaint of delay at all.

The Highfit proceedings

123.  K & L refer extensively to the legal actions commenced in the name of the Estate against Highfit and Madam Koo under HCA 1700 of 2002, HCA 1942 of 2002 and HCA 1700 of 2006. They say that no independent person seeking to maintain neutrality between the parties to the probate action would have proceeded with these actions with such vigor, particularly in light of Mr Cheung’s inaction against other debtors of the Estate. They even allege that these actions are an improper collateral attack on them and are an abuse of process.

124.  K & L are obviously very much troubled by all these actions against Highfit and Madam Koo personally. They were both shareholders and directors of Highfit. I do not find it necessary to set out what Cheung has done in those proceedings. Suffice it to say that the Deceased himself actively pursued two of those actions in his lifetime against K & L to recover both his person loan extended to Highfit (more than HK$570 million) and his payments made to Hang Seng Bank for the settlement of the indebtedness of Highfit to the bank as its guarantor (more than HK$150 million). The Estate has already become a judgment creditor of Highfit in the action whereby Hang Seng Bank succeeded in its claim against Highfit on a summary judgment application. Hang Seng Bank assigned the benefit of the judgment to the Estate upon its payment of the judgment sum.

125.  The remaining action was started in 2006 to set aside an allegedly dubious sale of Highfit’s entire interest in its valuable property project in Shanghai to Highfit Holding Limited. Mr Cheung explains that it was commenced to avoid limitation issues only.

126.  I am not convinced that these actions are an abuse of process and have anything to do with the probate action. I fails to see the relevance of these actions in the present application at all.

127.  I am not persuaded that Mr Cheung’s allegedly aggressive conduct of these actions can provide any justification for an appointment of administrators pendete lite.

128.  In the first place, it should be noted that Mr Cheung has the duty to remain neutral in the probate action which is a dispute between the beneficiaries under the 2004 Will and K & L qua potential beneficiaries of the Estate under the earlier testamentary scripts or intestacy. It does not mean that Mr Cheung must take a neutral position in recovery actions commenced in the name of the Estate against them qua debtors of the Estate.

129.  Nor Mr Cheung has a duty to deal with all the debtors of the Estate in the same manner. He is entitled to take into account the liquidity of the individual debtors and to treat them differently for the best interest of the Estate.

130.  I again see no merit in this complaint. 

Close connection between Mr Cheung and Peter Lam and Lai Sun Group

131.  K & L point out that Mr Cheung has provided his legal service to the Deceased and Lai Sun Group for many years. Hence, they fear that his professional independence and objectivity would be compromised in his administration of the Estate especially in respect of the Loans.

132.  I see no basis of such a concern. The good working relationship with the Deceased and Lai Sun Group can only assist Mr Cheung in his administration of the Estate. I cannot see any conflict in his dealings with the Loans at all. K & L fail to show how the administration of the Estate by Mr Cheung has ever been hindered because of the close connection.  

Other matters

133.  As explained, I am unable to find any merit in K & L’s major complaints about Mr Cheung. There are other minor complaints about him which I have not expressly dealt with here. I do not think they are valid and relevant.

134.  I should add that even if there is any merit in their complaints, the delay in this application is inexcusable and can strongly influence my exercise of the discretion to refuse this application.

135.  For the reasons given above, I do not find it necessary to consider the costs of the proposed administrators pendete lite. In any event, given the size of the Estate, I do not think it is a significant factor in the balance. 

136.  All in all, I am not satisfied that K & L have shown on the evidence that it is necessary or expedient to appoint administrators pendent lite to administer the Estate. Mr Cheung has never disposed of or distributed any assets of the Estate and he has offered the Undertaking. In all the circumstances, I should not exercise my discretion to accede to their application.

137.  Lastly, for completeness, I should mention that Mr Cheung has also taken out a summons to expunge certain parts of Madam Ling’s evidence in her 4^th affirmation on the ground that they also contain new allegations rather than strictly evidence in reply. Since K & L do not object to the inclusion of the 6^th Affirmation of Mr Cheung made in reply to such new allegations, Mr Cheung did not proceed with his application.

Dispositions and Orders

138.  I dismiss both the ACB Summons and the Amended APL Summons (upon accepting the Undertaking).

139.  Given my findings that the ACB application is not made in bad faith and is intended to protect the Estate albeit on thin evidence, I make an order nisi that the costs of both sides be paid out of the Estate including all costs previously reserved, to be taxed if not agreed, with a certificate for two counsel.

140.  As regards the costs of the Amended APL Summons, there is no reason why it should not follow the event. Indeed, I find the application to be an opportunistic move. I make an order nisi that K & L should pay Mr Cheung his costs of the application including all costs reserved, to be taxed if not agreed, with a certificate for two counsel. 

141.  It remains for me to thank all counsel involved for their quality submissions (both written and oral) and invaluable assistance.

[1] §24-47