MAK MEI KI ANGELA v. CHAN WAI FONG AND ANOTHER

HCMP 1894/2016

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO1894 OF 2016

____________

_____________

_____________

_______________

J U D G M E N T

_______________

Introduction

1.  This is an application for (a) revocation of the grant of letters of administration (“the LA”), (b) removal of the existing administrators; (c) furnishing of accounts, and (d) appointment of professional administrators to substitute for the outgoing ones.

Background

2.  Mr Mak Fu Keung (“the deceased”) died intestate on 10 November 2005.  He was survived by his wife (the 1^st defendant) and 4 natural children, ie Mak Chi Tat (the 2^nd defendant), Jenny, Angela (the plaintiff) and Alex.  Letters of administration were granted to the wife and Mak Chi Tat respectively (collectively “the administrators”) on 6 September 2006. 

3.  Angela’s case is that apart from a partial distribution, the administrators have failed to fully administer the estate in the past 10 years since the grant was first made.

4.  The administrators and Jenny have been served with the originating summons.  None of them have filed acknowledgement of service.  I am satisfied that it is appropriate to proceed in their absence.

5.  Alex supports the application.

Revocation of grant and removal of administrator

6.  Section 33 of the Probate and Administration Ordinance, Cap 10 (“PAO”) applies to the present application:

“(1) Where it appears to the court that a probate or administration either ought not to have been granted or contains an error, the court may call in the probate or administration and if satisfied that it would be revoked at the instance of a party interested, may revoke it.

(2) A probate or administration may be revoked under subsection (1) without being called in if it cannot be called in.

(3) The court may, if satisfied that the due and proper administration of the estate and the interests of the persons beneficially entitled thereto so require, suspend or remove an executor or administrator (other than the Official Administrator) and provide for the succession of another person in place of such executor or administrator and for the vesting in that other person of any property belonging to the estate.”

7.  Section 33(1) applies to revocation of grant.  Section 33(3) applies to removal of an administrator.  The proper approach to the application of these 2 sub-sections have been set out in Re Estate of Kwan Chung [2013] 6 HKC 29, Poon J (as he then was):

“25. ... Where there is a supervening defect after grant, the applicant should consider:

(1) Whether removal of the grantee without revocation of the grant is sufficient. If yes, then he should proceed under section 33(3).

(2) Whether there are additional special circumstances that require revocation of the grant as well. If such circumstances exist, then he should proceed under section 33(1).

26. What constitute the requisite circumstances justifying revocation in addition to removal must depend on the actual facts of the case ...  They include ... disappearance of the grantee who had not administered the estate ...”

8.  A supervening defect after grant occurs “where a grant has been properly made, but has subsequently become ineffective and useless; or which, if allowed to subsist, would prevent the proper administration of the estate.”  (Tristram and Coote’s Probate Practice, 13^th edition, at §17.09)

9.  The court can revoke a grant if the grant has turned out abortive or if the persons appointed will not administer:

“[The] real object which the Court must always keep in view is the due and proper administration of the estate and the interests of the parties beneficially entitled thereto; and I can see no good reason why the Court should not take fresh action in regard to an estate where it is made clear that its previous grant has turned out abortive or inefficient. If the Court has in certain circumstances made a grant in the belief and hope that the person appointed will properly and fully administer the estate, and if it turns out that the person so appointed will not or cannot administer, I do not see why the Court should not revoke an inoperative grant and make a fresh grant.” Re Estate of Kwan Chung, at §12

10.  The grant was properly issued in the first place.  According to Angela, the net value of the deceased’s estate was sworn to be about $52,000,000. However, she had been informed by the administrators that the estate had a value of not less than $55,000,000.  Angela should be entitled to not less than $6,800,000.

11.  Apart from distributing $3,000,000 to Angela, and about $3,500,000 worth of assets to Alex, the administrators have, for 10 years, failed to fully administer the estate of the deceased.  The administrators have also failed to furnish accounts despite repeated requests of Angela, and to answer the present proceedings.  Their conduct is detrimental to the due and proper administration of the estate and the interest of the beneficiaries.  They ought to be removed.

12.  However, removal is not enough.  Given their complete failure to participate in these proceedings, there is a real and substantial risk that they would continue to be uncooperative and refuse to lodge the grant of LA with the court upon removal.  That would just cause further delay to the due administration of the estate.  See Re Estate of Kwan Chung, at §34.

13.  Accordingly, this is an appropriate case to revoke the grant as well and dispense with the lodging of the LA with the Probate Registry.

Furnishing of accounts

14.  Under section 56 of PAO:

“The personal representative of a deceased person shall, when lawfully required so to do, exhibit, by affidavit filed in the court, a true and perfect inventory and account of the movable and immovable property of the deceased, and the court shall have power as heretofore to require personal representatives to bring in inventories.”

15.  It has been 10 years since the grant.  There had been interim distribution.  The administrators ought to give a full and proper account of the estate and I so order.   This will enable incoming administrators to know what still needs to administer and whether it is necessary to take recovery action.

Appointment of new administrators

16.  Under section 36 of PAO, where it appears to the court to be necessary or convenient to appoint some person to be the administrator of the estate of the deceased, the court may appoint such person as the court thinks fit to be such administrator.

17.  In the exercise of such discretion, the court will act in the best interests of the estate and apply common sense to the facts of the case: Re Estate of Loo Che Chin [2013] 6 HKC 303, §10, Poon J (as he then was).

18.  The size of the estate, even after distribution to Angela and Alex, can be great.  Since no accounts have been rendered, the new administrators may have to do some investigation and tracing to ascertain the current value of the estate.  It is necessary and convenient to appoint someone to replace the outgoing administrators.  As Mr Hau suggests, an independent third party will avoid dispute between family members.

19.  The proposed accountants have given their consent to act.  Alex supports the appointment.  I do not see why it is necessary to have 2 accountants and so I only appoint one – Mr Kong Chi How Johnson, to save costs.  That is on the basis of his reduced fee scale.

Costs

20.  This application is wholly necessitated by the inaction of the administrators.  They have failed to respond to Angela’s reasonable requests over pre-action correspondence and in these proceedings.  I make an order nisi that the administrators do personally bear the costs of Angela on an indemnity basis.  I summarily assess such costs at $130,000.

Order

21.  The application is made out.  I make an order that:

(a)  The grant of letters of administration in respect of the estate of Mak Fu Keung to the defendants be revoked;

(b)  Lodging of the letters of administration by the defendants with the Probate Registry be dispensed with.

(c)  The defendants be removed as administrators of the estate;

(d)  Within 2 months from the date of this judgment, the defendants do furnish, by way of affidavit, just and true account of the estate;

(e)  A fresh grant of letters of administration of the deceased be issued to Mr Kong Chi How Johnson as administrator upon compliance with all the usual formal and procedural requirements of the Probate Registry; and

(f)  On a nisi basis, the defendants do personally bear costs of the plaintiff on indemnity basis in the sum of $130,000.

22.  I thank Mr Hau for his assistance.