KAN YUK SUM v. KAN YUK SHING (in his personal capacity and as the executor of the estate of TAM LEE YAU)

CAMP 127/2025, [2026] HKCA 363

On Appeal From [2025] HKCFI 1999

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

MISCELLANEOUS PROCEEDINGS NO. 127 OF 2025

(ON AN INTENDED APPEAL FROM HCMP 268 OF 2023)

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DECISION

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Hon Cheung JA (giving the Decision of the Court) :

I.  Introduction

1.  The plaintiff (‘Sum’) and the defendant (‘Shing’) are brothers. Shing is the executor of the estate of their late mother (‘Mother’). Sum and Shing are the only beneficiaries of the Mother’s estate.

2.  This is the renewed application by Shing for leave to appeal to this Court against the decision of Deputy High Court Judge MK Liu (‘the Judge’) dated 14 May 2025 (‘the Decision’). The Judge, upon Sum’s summons dated 3 January 2025 (‘the summons’), granted him leave to discontinue his application by Originating Summons dated 21 February 2023 seeking disclosure of documents from Shing (‘the proceedings’) and ordered 80% of costs of the proceedings (including the costs of the summons and costs reserved if any) to be paid by Shing to Sum personally on a party-to-party basis to be summarily assessed. He further ordered the costs incurred by Shing in preparing the disclosed documents to be paid by the estate to Shing on trustee basis. The Judge had previously refused to grant leave to appeal to Shing. He ordered the costs of Shing’s application for leave to appeal to be paid to Sum by Shing personally at $50,000.

3.  Having considered the documents filed and lodged by the parties, we are of the view that it is appropriate to determine the present application on paper without an oral hearing.

II.  Background

4.  The Mother’s estate was divided into three equal shares, with two shares to Sum and one share to Shing. The only asset of the estate was a Hong Kong landed property. The landed property was sold as agreed by the parties. On 22 November 2022, Shing transferred to Sum his share of the proceeds of sale. On 24 November 2022, Sum received from Shing the statement of account (‘Annex I’) and a document titled ‘Inventory and Account of the [Mother]’ (‘Annex II’). On 5 December 2022, Sum’s solicitors wrote to Shing’s solicitors asking for the supporting documents of all the costs and expenses stated in Annex I and Annex II (‘the Supporting Documents’). On 13 December 2022, Sum’s solicitors repeated their request of 5 December 2022. On 3 January 2023, Sum’s solicitors issued a final notice to Shing repeating the request. For the rest of January 2023, Shing acted in person. On 7 January 2023, Shing requested Sum to provide the Chinese translation of the 3 January 2023 letter, which was provided to Shing on 13 January 2023. On 20 January 2023, Shing wrote to Sum and asked for a Chinese translation of the letter of 13 December 2022.

5.  On 21 February 2023, Sum issued the Originating Summons. Shing then re‑engaged his lawyer. On 17 March 2023, Shing’s solicitors provided the Supporting Documents and invited Sum to discontinue the Originating Summons with no order as to costs (‘Shing’s 1^st Offer’). On 3 April 2023, Sum’s solicitors wrote to Shing’s solicitors, asking for the justification and proof of some of the matters in the Supporting Documents. On 11 April 2023, Shing’s solicitors provided the answers to the request.

6.  Between 11 April 2023 and 3 January 2025, neither party has taken any steps in the proceedings. On 3 January 2025, Sum issued the summons and provided his 2^nd affirmation explaining that he sought to discontinue the proceedings since Shing had produced the Supporting Documents. On 10 January 2025, Shing invited Sum to discontinue the proceedings with no order as to costs (‘Shing’s 2^nd Offer’). On 24 March 2025, Sum provided a 3^rd affirmation explaining that while the Supporting Documents were provided on 17 March 2023, there were outstanding matters which were only provided on 11 April 2023.

III.  The Judge’s decision

7.  The Judge applied the legal principles as enunciated by the Court of Final Appeal in Cheng Pui Yuen v Worldcup Investments Inc (2009) 12 HKCFAR 31 per Lord Scott of Foscote NPJ at [56]‑[59], which applied the English case of Re Buckton [1907] 2 Ch 406.

8.  The principle is 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 Re Buckton at pages 414 and 415. He referred to three classes of cases relevant to the issue of costs. The first class are those that the trustee of the estate asks the Court to determine questions in the administration. The general rule is that the costs of all the necessary parties would be taxed as between solicitor and client and paid out of the estate. The second class are those that the beneficiary asks the Court to determine questions in the administration of the estate. The same consequence will apply if such question to be determined was necessary and the costs of all parties are necessarily incurred for the benefit of the estate as a whole. The third class of case are those that the beneficiary asks the Court to determine questions, but in substance although not in form, an adverse claim made in hostile litigation. Costs in such cases are borne by the losing party. These principles, however, do not constitute absolute rules. They are merely guidance as to how judicial discretion regarding costs in probate or administration proceedings should be exercised. The answer would depend upon particular circumstances in which the litigation has been commenced and prosecuted. Overall, it is a matter of judicial discretion, and each case would depend on its own facts.

9.  The Judge held that the costs of Sum in issuing the Originating Summons up to the clarification provided by Shing’s solicitors on 11 April 2023 should be borne by Shing to Sum personally. Shing’s action fell within the third class of cases in Re Buckton: he had defaulted in discharging his duty as executor by failing to provide the Supporting Documents upon request. The proceedings were caused by the inexcusable delay by Shing in producing the Supporting Documents to Sum. It was indisputable that Sum first raised the request for Supporting Document on 5 December 2022, and there was no allegation that Shing was not aware of this on 5 December 2022. From the time of Sum’s first request to the time when Sum took out the Originating Summons, two and a half months had lapsed. During this period, there was no provision of the Supporting Documents, nor did Shing request for extra time to prepare the Supporting Documents. The Judge was of the view that there was communication by Sum, and Sum’s action was reasonable. Although the Supporting Documents were provided on 17 March 2023, there were outstanding clarification issues which were not resolved until 11 April 2023. He held that Sum’s refusal to accept Shing’s two offers to discontinue the proceedings was not unreasonable. The 20% costs not allowed by the Judge was to account for the fact that Sum had also raised a partnership matter which was irrelevant and had increased the cost.

10.  The Judge held that for the time between 11 April 2023 and 3 January 2025, no steps were taken by either party. He held that Sum is to have the costs of summons since he succeeded in his arguments for costs.

IV.  Applicable principles

11.  The relevant approach to determine an application for leave to appeal is well established, namely, whether the applicant can show that he has an arguable case with reasonable chances of success on appeal.

12.  As Shing is challenging the Judge’s exercise of discretion, he must show that the decision is plainly wrong in accordance with the well‑established principles before this Court would intervene.

V.  Grounds of appeal

13.  The eight draft grounds of appeal advanced by Shing can be summarised as follows :

1)  The Judge wrongly found the proceedings are hostile in nature. It should fall within the second category of Re Buckton;

2)  The costs orders are inherently contradictory;

3)  The Judge wrongly considered the irrelevant factor that Sum was reasonable in commencing the proceedings;

4)  The Judge wrongly failed to consider Shing’s motive and intention;

5)  The Judge erred in distinguishing Chang Wing Ka John v Chang Wing Dee [2021] HKCFI 147 in respect of Shing’s efforts to furnish the accounts;

6)  The Judge erred in holding Sum’s rejection of Shing’s two offers was not unreasonable;

7)  The Judge failed to take into account relevant factors; and

8)  The Judge erred to hold that the proceedings would be unnecessary if the Supporting Documents were supplied earlier.

14.  These grounds are grouped into three areas by his counsel Mr Pang in the Statement lodged in support of the renewed application for leave to appeal which we will address in turn :

1)  Mistake of law : Grounds (1), (2) and (5)

(1)  Mr Pang’s arguments

15.  Mr Pang referred to the summary of principles on costs in the course of estate administration in Chiu Pak Wo v Chiu Yim Kam [2019] HKCFI 2517 at [5]‑[12]. A personal representative is entitled to indemnity unless it can be shown that he has acted unreasonably. Even in cases of misconduct, the Court may (not must) deprive him of such indemnity, and mere errors of judgment are insufficient. Any doubt should be resolved in favour of the personal representative. As to Grounds (1) and (2), Blades v Isaac [2016] 2 P. & C.R. DG10 is a prime example of an action for accounts which was held to fall within ‘Buckton 2’. Most importantly, the Court further held that even if the case was indeed ‘Buckton 3’, the trustee should still be able to recuperate the costs ordered against him from the estate. If the Judge is of the opinion that the present case fell into ‘Buckton 3’, there should be no room to uphold the indemnity principle, but the Judge still applied the principle by allowing Shing to recover his costs of providing the Supporting Documents to Sum. The following cases further show that the present case falls within ‘Buckton 2’ instead of ‘Buckton 3’. Proceedings brought by a beneficiary (even if he stands to benefit) should not automatically be placed in ‘Buckton 3’ (Re JP Morgan 1998 Employee Trust (2013) 2 JLR 239 per Nugee JA at [44]) and the way an action is conducted is relevant but not determinative when deciding to put the case in ‘Buckton 2’ or ‘Buckton 3’ categories: Re Erinvale PTC Ltd [2022] JRC 076 at [34]. As to Ground (5), the Judge erred in saying Shing’s motive and intention are irrelevant. The personal representative’s intention is clearly relevant as ‘intention and sincerity’ was raised and considered in Chang Wing Ka John v Chang Wing Dee [2021] HKCFI 47 at [186].

(2)  Our view

16.  In our view, this issue is not reasonably arguable. The Judge’s decision is that Shing was acting unreasonably when he failed to disclose the Supporting Documents which necessitated the proceedings being brought. The position is governed by Order 62, rule 6(2) of the High Court Rules :

‘ Where a person is or has been a party to any proceedings in the capacity of trustee, personal representative or mortgagee, he shall, unless the Court otherwise orders, be entitled to the costs of those proceedings, in so far as they are not recovered from or paid by any other person, out of the fund held by the trustee or personal representative or the mortgaged property, as the case may be; and the Court may otherwise order only on the ground that the trustee, personal representative or mortgagee has acted unreasonably or, in the case of a trustee or personal representative, has in substance acted for his own benefit rather than for the benefit of the fund.’

17.  As explained by Lewin on Trusts (19^th ed) at [27‑112] and [27‑113] (cited in Chiu Pak Wo) dealing with the situation of a trustee being deprived of his right to indemnity,

‘ ....The word ‘misconduct’ is a strong one, yet it is clear that conduct that might be characterised by milder terms such as caprice and obstinacy, or neglect, negligence or carelessness, suffice to deprive a trustee of the right of indemnity, or justify an order for costs against him. While the mere fact that the trustee has made a mistake is not enough, it is equally clear that dishonesty is not requisite. Consequently, either ‘misconduct’ should be widely construed so as to cover unreasonable conduct, or in the alternative the ‘inequitable conduct’ on the part of a trustee which causes his right of indemnity to be lost or curtailed includes both misconduct in the sense of dishonesty and unreasonable conduct.’

18.  Having found that Shing was acting unreasonably, the Judge was entitled to exercise the discretion against him.

19.  The costs order made against Shing is not in conflict with the order that he is entitled to the costs of providing the Supporting Documents to Sum. The first order was due to Shing’s unreasonable conduct in failing to provide the documents which necessitated the proceedings to be instituted. The second order was in respect of his work as a trustee in preparing and supplying the documents. The factors considered by the Judge at [9] above clearly show that the Judge understood the law when he made the costs order against Shing. The cases relied upon by Mr Pang are all distinguishable on their facts. The Judge’s view that motive or intention is irrelevant has to be considered in the context that dishonesty is not a requisite when dealing with the issue of misconduct.

2)  Misapprehension of Facts ‑ Grounds (4), (6), (7) and (8)

(1)  Mr Pang’s arguments

20.  Ground (4) overlaps with Ground (5) in that a trustee’s motive and/or intention is certainly relevant when considering costs. In the case of Turner v Hancock (1882) 20 ChD 303, a trustee committed an innocent breach of trust and sought legal costs out of the estate after unsuccessful litigation, and the UK Court of Appeal (with Lindley LJ presiding) found that there was no ground for depriving him of costs.

21.  As to Ground (6), in finding that the refusal of the 1^st and 2^nd Without Prejudice Offers by the plaintiff was not unreasonable, the Judge failed to consider the practical effect of the offer, the first of which was raised by Shing back in 2023, over two years ago, along with the provision of the documents. When the Without Prejudice Offer was made, the costs incurred by Sum were only the Originating Summons and the Supporting Affirmation, which totalled thirteen pages including backsheets. By contrast, the documents produced by Shing spanned 199 pages. Given that it is not in dispute that Shing is entitled to recuperate from the trust fund the costs in compiling the accounts, the offer of no order as to costs is clearly more than reasonable. As such, Sum’s refusal of the offers is therefore hostile and inexplicable.

22.  As to Ground (7), the facts duly considered paint Shing’s conduct in a much more favourable light. There are further facts to be taken into account, such as i) The failure to properly summarise B Chu J’s judgment in HCMP 1150/2021 [2022] 2 HKLRD 1218; [2022] HKCFI 1532, where the paragraph cited was not a finding against Shing, and instead Sum was ultimately penalised on costs; ii) Final distribution of the estate was completed on 22 November 2022; iii) Shing couriered accounts as requested directly to Sum in Canada to save costs, before the current proceedings commenced. However, it is accepted that the documents couriered were not as detailed as the subsequent documents provided after the commencement of the action, as the subsequent documents were compiled with legal assistance; and iv) Shing was forced to re‑engage solicitors subsequent to the issuance of the Originating Summons, and less than one month later provided all receipts and documents since their mother’s death in 2011.

23.  As to Ground (8), the Judge was wrong in finding that the current proceedings could have been avoided if the documents were provided earlier. The substantive relief sought includes both estate accounts and supporting documents to be exhibited under oath.

(2)  Our view

24.  Again, this issue is not reasonably arguable. Turner is an old case. The discussion on the lack of dishonesty by the trustee was too brief to be helpful. It is not reasonably arguable that the Judge had miscomprehended any material or relevant facts.

3)  Grounds (3) – Taking into account irrelevant matters

(1)  Mr Pang’s argument

25.  It should not be in dispute that the costs ordered against Shing hinge on whether Shing acted so unreasonably that his indemnity should be stripped. As such, consideration of Sum’s actions to this end is improper and irrelevant regardless of the Re Buckton category.

(2)  Our view

26.  This issue is also not reasonably arguable. The Judge held that ‘[12(2)] In the circumstances it could not be said that Sum was acting unreasonably by commencing these proceedings on 21 February 2023.’ Plainly, the Judge was simply saying why Sum was justified in issuing the Originating Summons after Shing repeatedly failed to provide the documents. He had not taken into account irrelevant matters in the exercise of his discretion.

VI.  Conclusion

27.  For the reasons set out above, we will dismiss Shing’s renewed application.

28.  As this application is totally without merit, pursuant to Order 59, rule 2A(8) of the Rules of the High Court, we will make an order that no party may request our determination to be reconsidered at an oral hearing inter partes.

VII.  Costs

29.  We order Shing personally to pay Sum the costs of this application to be summarily assessed. Shing is to file within seven days his statement in opposition to Sum’s statement of costs for summary assessment which was already filed and served on 24 July 2025.