HON KWOK WAI, the administrator of the Estate of LAI SHU KUEN, deceased v. HON MAN WAI ANGELA, the administrator of the Estate of LAI SHU KUEN, deceased

HCMP 1916/2022

[2023] HKCFI 2330

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 1916 OF 2022

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DECISION ON COSTS

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A.  Introduction

1.  This is my decision on the costs of the matter.

B.  The Originating Summons

2.  The plaintiff (“P”)  and the defendant (“D”)  are the 2 co-administrators of the estate (the “Estate”)  of Lai Shu Kuen (黎少群, the “Deceased”).  They are suing and being sue in that capacity. 

3.  By Originating Summons of 22 November 2022, P seeks against D an Order for (1)  D’s removal as a co-administrator of the Estate, (2) D to furnish accounts of the sum of HK$731,058 (the “Subject Sum”)  (3) D to deliver vacant possession of the property known as Flat H, 7^th Floor, Southern Mansion, 1 Luard Road, Hong Kong (the “Property”), (4) D to deliver up all asset, monies and documents of the Estate, (5) D to indemnify the Estate for her period of occupation of the Property, (6) all assets of the Estate to vest solely in P, and (7) indemnity costs against D personally.

4.  During the hearing on 26 June 2023, this Court invited parties to consider whether all interest would be better served if an independent and professional administrator be appointed. In the end, parties in principle agreed that it would be, leaving open at that stage only the identity of the professional administrator for further discussion.  Ultimately, even that issue was resolved.  On 8 August 2023, this Court by consent of parties appointed a solicitor as the administrator. 

5.  Despite the appointment, the question of costs of the Originating Summons remains in dispute.  Further directions with the view of disposing of the question on costs on paper were then given. Submissions have since been filed pursuant to those directions (2 sets each Mr Isaac Yung and Mr Tony Ko, Counsel for P and D respectively), which I have considered.  Below are my decision and the reason therefor.

C.  Parties’ stances in respect of the Originating Summons

6.  In support of the Originating Summons, P has filed 2 affirmations, one in support (dated 22 November 2022, “P/Aff1”)  and one in reply (dated 19 June 2023, “P/Aff2”).

7.  In P/Aff1, P sets out and relies on 6 express grounds for his application, namely (1)  serious conflict of interest, (2)  delay in administering the Estate, (3)  want of honesty and propriety in D’s administration of the Estate, (4)  D not acting in the best interest of the Estate, (5)  breakdown of trust and confidence between the majority of the beneficiaries and (6)  respect of the intent of the majority of the beneficiaries. 

8.  Whilst 6 express grounds have been set out, as P has himself said[1], the main issue in the application concerns the Property, or more specifically, D’s occupation of the same.

9.  D has filed 1 affirmation in opposition (dated 24 May 2023, “D/Aff”).  In gist, she says that she has diligently and faithfully performed her duties as administratrix.  She says, on a further and alternative basis, that P is in any event not suitable to be an administrator of the Estate, or at least not as the sole administrator.  She asks the Originating Summons be dismissed.    

D.  Background facts

10.  The Deceased died intestate in January 2016, at the age of 95.

11.  The Deceased’s husband predeceased her.

12.  The Deceased had 4 children.  Two had predeceased her.  Her 4 children were:

(a)  P, son, who was born on 1939.  P has a son.  He is Hon Ka Fai;

(b)  Hon Kwok Hung, son, who had predeceased the Deceased.  Hon Kwok Hung was survived by his wife (Hau Kwei Choi, “Madam Hau”)  and their 2 daughters, namely D and Hon Wai Sum Anna (“Anna”);

(c)  Hon Suk Yee, daughter, who has 3 daughters; and

(d)  Hon Sook Ching, daughter, who predeceased the Deceased.  Hon Sook Ching was survived by one daughter (Tong Yin Fong)  and one son (Tong Wai Man).

13.  According to s 5 of the Intestates’ Estates Ordinance Cap 73, as Hon Kwok Hung and Hon Suk Ching predeceased the Deceased, their respective issues become beneficiaries of the Estate.

14.  The Estate therefore has 6 beneficiaries, they being P, D and Anna (being Hon Kwok Hung’s surviving children), Hong Suk Yee, and Tong Yin Fong and Tong Wai Man (being Hon Sook Ching’s children).

15.  Letters of Administration of the Estate were granted to P and D on 13 December 2018.  The Schedule of Assets and Liabilities of the Deceased annexed thereto (the “Schedule of Assets”)  was settled jointly between P and D.

16.  According to the Schedule of Assets, the Estate comprises the Property, the Subject Sum (stated in the Schedule of Assets to be “held by [Madam Hau] for the [Estate]”), and another sum of HK$2,959,925.48 (also stated in the Schedule of Assets to be “held by [P] for the [Estate]”.  P says that other sum presently stands at HK$2,877,520.78 after deduction of certain fees and expenses that he says have been incurred for the Estate.

17.  The value of the Property is estimated to be about HK$5,700,000.

18.  The immediate cause leading to the Originating Summons is D and Madam Hau’s occupation of the Property.

19.  According to P, he in late 2017 and early 2018 discovered that there had been unauthorized entrance into and occupation of the Property.  He posted outside the main entrance a notice warning against such activities.  He also chained the iron gate of the main entrance with a padlock.  D was aware of the existence of the padlock.  Parties’ respective legal advisers (Messrs Au-Yeung, Cheng, Ho & Tin (“AYCHT”)  for acting D and Messrs Ng and Fang (“NF”))  were involved, and in particular on the question of retention of the keys to the padlock. 

20.  A land search on the Property was conducted on 23 August 2022. It showed that there was a “經核證[擬繼續進行]附屬濟助申請通知書真實副本” under FCMC 11111/2021 (the “Form A Encumbrance”)  registered against the Property.  It was caused to be registered by D’s ex-husband.

21.  In early September 2022, P’s son Hon Ka Fai told P that he notices lights inside the Property.  The Property was suspected to be occupied.  An inspection of the same was arranged.  It took place on 28 September 2022. Attending inter alios were Hon Ka Fai, Tong Yin Fong and Tong Wai Man. It was discovered that the notice and the padlock had been removed.  The locks to both the mailbox and the main door had been changed.  When the door bell was pressed, it was D who ultimately answered the door.  D and Madam Hau had been in occupation of the same.  The Property had been decorated and fitted out as a residence.

22.  Whilst there are other relevant facts, it is principally from D’s occupation of the Property which the grounds for the Originating Summons flow – delay in the selling and ultimately occupation of the same, hence putting herself in a position of conflict, the want of honesty and propriety evinced thereby, therefore not acting in the best interest of the Estate, leading to breakdown of trust and confidence, as a result of which the majority of the beneficiaries want D’s removal, which wishes should be respected.

E.  Applicable principles

23.  The relevant principles governing the award of costs in administration proceedings, described as “well-established” by Deputy Judge Dawes SC in Cheuk Lai Mau v Cheuk Lai Sheung [2020] HKCFI 2813, were set out therein at §8.

24.  The relevant principles and considerations applicable to costs in settled cases save as to costs have been summarized by Au-Yeung J in Famous Marvel Co Ltd and Others v Conversant Group Ltd and Others (HCA 2153/2009, 29 October 2012)  at §22.

25.  I apply the above.

F.  Discussion

26.  I have set out the reliefs which P originally sought by way of the Originating Summons.  I accept Mr Yung’s submissions that the main relief sought was the removal of D.  The rest of the reliefs sought are consequential.

27.  I note that the effect of the Originating Summons, if proceeded to hearing and with P emerged as the winner, would have left P the sole administrator.  In the end, he was not, as both P and D have been removed.

28.  Whilst that is relevant, it does not alter the fact that P has obtained what he set out to obtain, namely the removal of D as an administrator.

29.  I am of the view that P has substantially obtained the principal relief he set out to seek via the Originating Summons.

30.  Mr Ko takes the point, with reference to BCT Software Solutions Ltd v C Brewer & Sons Ltd [2004] FSR 9 at §23 per Chadwick LJ, that due to the settlement between the parties, there lacks any proper basis of agreed or determined facts for any costs order to be decided, so that this Court is in no position to do so. 

31.  I do not agree.  D’s occupation of the Property cannot be subject to any serious dispute.  And as I have summarized and observed above, it is principally from D’s occupation of the Property which the grounds for the Originating Summons flow.

32.  D’s occupation of the Property could hardly have been justified.  When discovered, and in her conduct of the action prior to the settlement, she principally simply sought to attack P to, paraphrasing what Mr Yung has submitted, deflect and blame P.

33.  But for the settlement, I would have removed D.  The consideration of removing also P and the appointment of a professional administrator had become necessary only because of the breakdown of trust confidence and relationship between D (herself a beneficiary), P and the other beneficiaries.  It is noted that the other beneficiary, except Anna, have expressed consent to D’s removal.

34.  The Originating Summons was in substance an adverse claim made in hostile litigation.  

35.  I am of the view that D’s conduct has been unreasonable, acted for her own benefit, but not for the benefit of the Estate.

36.  I am also of the view that P commenced the present proceedings in the discharge of his duties as a co-administrator of the Estate.

37.  However, I am of the view that some discount has to be given to reflect the fact that P has also been removed, distinct from what the Originating Summons would have achieved if P were entirely successful.

F.  Disposition

38.  For the above reasons, adopting a broad brush approach as explained by Au-Yeung J in Famous Marvel, and having considered the alternative proposed order submitted by Mr Yung, I make the following order:

(a)  D do personally pay to P 70% of his costs of and occasioned by the Originating Summons (including the 26 June 2023 Hearing and these written submissions on costs)  on an indemnity basis;

(b)  The Estate do indemnify P’s costs if not recovered from D;

(c)  Save as ordered by the Court, D’s costs in this action shall not be indemnified or recoverable from the Estate.

(d)  D’s own costs to be taxed in accordance with Legal Aid Regulations.

G.  Summary Assessment

39.  I have considered P’s Revised Statement of Costs for Summary Assessment.  I have also considered D’s objections thereto.

40.  I agree that C1, C2, C3 are too high and clearly unreasonable.  I allow only half of the claimed time and amount, in the total sum of $165,300.

41.  I agree also that D1 and D3 are, with counsel involved and charging also drafting, too high and clearly unreasonable.  I allow only half of those 2 items.

42.  Adopting a broad brush approach, I summarily assess P’s costs at HK$450,000.