HO CHI MEI v. HO CHE YING AND ANOTHER

HCA 1002/2008

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 1002 OF 2008

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BETWEEN

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JUDGMENT ON COSTS

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1.  In this matter, the Plaintiff (as a beneficiary to the estate of her late mother) claimed relief against the Defendants (as the co-administratrix of the estate) in respect of the administration of the estate. The parties reached a settlement on 31 December 2009. The terms of the settlement were set out in a Consent Order made on that date. The only outstanding issue that this court needs to determine is costs.

2.  Having considered the nature of the dispute and the facts of the case, and having heard submissions from the parties on costs, I am of the view that this is a case where the court can properly determine costs without adjudicating on the merits of the case. This is in essence an administration action (even though the Plaintiff proceeded by way of writ instead of originating summons). The estate is not very big and if the case goes to trial (and a 4 days trial is scheduled to start in April 2010), having regard to the personal circumstances of the parties, it is likely that from a practical point of view a sizeable portion of the estate would be spent on legal costs of the action.

3.  Even though several issues were raised by the Plaintiff, her actual concern is about the apparent lack of progress in the distribution of the estate. The mother died in 1996 and the Letters of Administration was granted to the Defendants on 25 September 1998. In her Statement of Claim, she sought the removal of the Defendants as co-administratrix and accounts in respect of the estate. She also sought equitable compensation.

4.  The Defendants were initially legally represented. However, as the action progressed, they found that they could not afford legal representation. They acted in person. But they have been co-operative and sincere at the hearings before this court which ultimately led to the settlement.

5.  The Defendants had set out in their defence and witness statements explanations why the estate was not distributed. According to them, there were two agreements between all the beneficiaries as to how the estate shall be dealt with. The Plaintiff disputed one of the agreements. Since the matter has been settled, I have no basis to adjudicate on the merits of this claim about the agreements.

6.  In settling the case, the parties adopted a forward-looking approach, focusing on how the administration of the estate should be completed in the near future as opposed to the rights and wrongs in the past. This is a highly commendable approach and I pay tribute to the parties for taking such a stance. Under the terms of the settlement, the main asset of the estate, a shop premises in the New Territories, would be auctioned with a reserve price. If the auction were successful, the proceeds would be distributed in the agreed manner. If it were unsuccessful, the property would be transferred to the joint names of the 4 beneficiaries. From then on, their rights and obligations would be governed by their relationship as co-owners rather than one of administrator and beneficiary. There are also provisions in the settlement terms to deal with payment to the Plaintiff for the use of the property by another beneficiary in the past.

7.  As to costs, the Plaintiff submitted that the Defendants had been at fault in the administration of the estate in the past. Counsel for the Plaintiff further submitted that they were in a position of conflict of interests by reason of the fact that they were working for the other beneficiary who had the use of the property in the past. The Plaintiff sought a costs order against the Defendants personally and counsel told the court that the costs incurred up to 31 December 2009 was about $300,000.

8.  But these submissions had to be considered against the background that before the death of the mother, a family business was operated there. After the death of the mother, all the beneficiaries agreed to transfer their interest in the business to one beneficiary. Based on the material available, the business did not seem to be particularly profitable. And according to the Defendants, it was due to financial difficulty that the beneficiary could not pay rent for the occupation of the property as previously agreed.

9.  The Defendants further said that they only worked for the beneficiary running the business at $30 per hour and so far in the action they had incurred $75,000 legal costs, $5,000 surveyor’s expenses, $1,000 for legal aid application and $10,000 on a mediation which was unsuccessful. They said they acted as the co-administratrix of the estate without any remuneration as they were the elder sisters in the family. The Defendants are contented with costs of the action being borne by the estate. As far as the conduct of the action and efforts in settlement is concerned, on the information and material available, I find that the Defendants had acted responsibly and sincerely.

10.  Whilst I see the force of the submission of Mr Pang (counsel for the Plaintiff) that but for the action the administration of the estate would not be completed in the near future, I do not think the Defendants had been acting so unreasonably that the court should order them to pay costs personally. It is perhaps unfortunate that the matter has been taken so long (after so much costs had been incurred) before it reached a settlement. To an extent, this is contributed by the Plaintiff choosing to proceed by way of writ instead of the usual mode of proceeding by originating summons under Order 85. Further, it may have been more conducive to the effective resolution of the matter if the Plaintiff had focused on seeking specific directions from the court as to the administration of the estate as opposed to the rather draconian relief of removal of the Defendants. As I canvassed with Mr Pang at a hearing, the removal of the Defendants (and the Plaintiff had not sought the agreement of the Official Administrator to act as administrator in place of the Defendants, as prayed for in the Statement of Claim) does not seem to offer a solution to the problem.

11.  Taking into account the conducts of the parties in the action, the merits of the claims and the final outcome as embodied in the settlement agreement, I think it is fair and just that the costs of both parties shall be borne by the estate. To avoid the costs of taxation, pursuant to Order 62 Rule 9(4)(b) I will fix the costs of the Plaintiff at $300,000 and the costs of the Defendants at $91,000.