CHEUNG KAM MUN v. CHEUNG KAM WAI

HCMP 1241/2005

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 1241 OF 2005

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D E C I S I O N

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Application

1. This is an application by the plaintiff for an order to direct the defendant to obtain and provide copies of various bank statements.

Background

2. Mr. Cheung Tat Fai (“Mr. Cheung”) and Madam Chang Shiu Lian (曾昭蘭) (“Madam Chang”) are husband and wife.  They are hardworking and frugal.

3. Out of the marriage, they gave birth to six children, namely:

(a) Cheung Kam Wai (張錦威) (“the Defendant”)

(b) Cheung Pik Fan (張碧芬),

(c) Cheung Pik Fong (張碧芳),

(d) Cheung Pik Hing (張碧馨),

(e) Cheung Kam Tim (張錦添) and

(f) Cheung Kam Mun (張錦滿) (“the Plaintiff”).

4. Mr. Cheung died in 1983 and left his estate to Madam Chang.

5. Madam Chang passed away in 2000.  By her Will dated 16 July 1991, she bequeathed her estate to the six children in equal shares.  The Defendant was appointed as executor in the Will.

6. On 11 May 2001, probate was granted to the Defendant under HCAG003299/2003.  The net value of the estate was sworn to be $102,300.00.

7. In about January 2001, the Defendant distributed and/or apportioned a sum of $73,000 to each of his brothers and sisters.

8. In about 2005, upon queries from the Inland Revenue Department, the Defendant amended the value of her mother’s estate to $540,220.48.  It was explained that:

 “5.  ……The Deceased had been suffering from diabetes since or about 1998.  In view of her deteriorating health, the Deceased had on 12th December 1998 transferred a sum of HK$900,00.00 into a joint fixed deposit account held under the names of myself and my sister, Cheung Pik Fong.  The Deceased further asked us to hold the money on trust for her so that we might settle her medical expenses when she was in hospital.  Since 2000 onwards, the Deceased’s illness had developed into serious kidney problems.  During the period from 2nd June 2000 to 15th December 2000, the Deceased was always staying in and out of the Baptist Hospital, Kowloon, Hong Kong (“the Hospital”) for receiving medical treatments.  As a result, a sum of HK$462,000.00 was incurred, of which HK$460,048.00 was medical expenses and HK$1,952.00 was miscellaneous expenses, leaving a balance of HK$438,000.00 held by me in cash as trustee for the Deceased’s estate ……Due to my ignorance, I did not know that the said balance had to be included in the Affidavit for the Commissioner when clearing estate duty of the Deceased.  This led to the amendment of the Grant of Probate under Grant No. HCAG003299/2001 later on.  The said balance, however, had been divided into 6 named in the  sum of HK$73,000.00 each.  These sums were distributed to the beneficiaries named in the last will of the Deceased dated 16th July 1991 (“the Will”), namely, Cheung Pik Fan, Cheung Pik Fong Cannie, Cheung Pik Hing, Cheung Kam Tim, the Plaintiff and myself.  The respective shares were distributed to all but the Plaintiff by lump sums on 22nd January 2001.  The Plaintiff’s shares was withdrawn by him or applied towards setting off his expenses from time to time in small sums until it was completely depleted in 2002.  Indeed, the Plaintiff had withdrawn the account, leaving a negative balance of HK$5855.00……”

(Affirmation of the Defendant filed on 28 July 2005)

9. The Plaintiff queried and disputed that he had accepted his proper share in the estate.  Despite requests and demands, the Defendant did not provide an account to the Plaintiff.  Further, the Defendant did not reply to three formal letters issued by the Plaintiff’s solicitor firms on 19 July 2003, 5 November 2003 and 8 November 2003.  The said letter of 5 November 2003 was written in Chinese as follows:

“……

根據他的母親曾昭蘭女仕於1991年訂立的遺囑，委託閣下作為遺產執行人，而受益人有以下人仕：

（一）張碧芬女仕；

（二）張碧芳女仕；

（三）張碧馨女仕；

（四）張錦添先生；

（五）張錦滿先生；及

（六）張錦威先生

根據上述提及的遺囑，曾昭蘭女仕的遺產，會均分配上述受益人。而曾昭蘭女仕於2000年12月25日於香港過身，而據閣下填報給香港稅務局遺產稅的資料顯示

（一）	廣東省銀行戶口01961110027916	HK$25,153.90
（二）	香港豐銀行戶口055-0-032536	HK$12,066.58
（三）	Government Land Permit in respect of Demarcation District No.253 Pak Shek Wo	HK$56,000.00
		HK$102,220.48

張錦滿先生就上述的財產明細表，曾多次提出疑問及要求進一步資料，但均為閣下所拒絕，現敝所代表張錦滿先生向閣下發出書信，要求提供及交代以下資料及事項：

（一）曾昭蘭女仕生前擁有一幅土地（即西貢Section A, Lot No. 1085 in D.D. 253），曾於1991年12月17日售出，出售價格為HK$11,500,000.00 [正確金額應為：HK$9,300,000.00]，出售土地收益應已穩妥存於曾昭蘭女仕名下的戶口，銀行為渣打銀行，敝所要求閣下提供曾昭蘭女仕於渣打銀行名下戶口的資料及有關結餘及紀錄；

（二）廣東省銀行及香港豐銀行於曾昭蘭女仕過身前三年的戶口結餘影印本；

（三）該幅位於Demarcation District No.253 Pak Shek Wo 的Crown Land Permit的估價依據的相關文件。

閣下請於此信日期十天內，提供上述各項資料，否則敝所採取相關的法律行動，以保障張錦滿先生的權益及向閣下追討相關的法律責任。

……”

10. On 15 June 2005, the Plaintiff commenced the present proceedings by way of originating summons against the Defendant.  Upon discussion of the matter at the call-over hearing on 8 December 2005, the parties came up with some agreed directions.  By an order dated 25 April 2006, it was agreed, inter alia, that:

“ (1)	full account of the Deceased’s estate by means of affirmation be filed and copy of such account be served to the Plaintiff within 28 days form the date hereof for:
	(i)	all the contents of the Deceased’s personal safe situated at Pak Shek Wo No.84A; and
	(ii)	all the contents of the Deceased’s safe deposit box held jointly with Cheung Pik Fong located at the Sai Kung branch of Hong Kong Standard Chartered Bank.
(2)	the Notice of Appointment to Hear Originating Summons for the application of the Plaintiff against the Defendant for the following relief be adjourned before Master in Chambers (open to public) to a date to be fixed with 3 hours be reserved in the consultation of Counsel’s diary:
	(a)	The Defendant do write to the Hong Kong Standard Chartered Bank to obtain banking statements of all the Deceased’s five accounts from January 1991* (or from the date of opening of accounts if they were opened after 1991*) to the date of closure, i.e.
		(i)    HKD F/D No.329-4-189444-8 (closed on 12 February 1998);
		(ii)   HKD C/A No.329-0-004648-5 (closed on 13 February 1998);
		(iii)  HKD S/A No.329-0-039298-2 (closed on 12 February 1998);
		(iv)  HKD S/A No.329-2-056078-8 (closed on 27 February 1998); and
		(v)   USD S/A No.409-2-020608-5 (jointly with Cheung Pik Fong, Cannie, closed on 13 February 1998)
		and provide such copies to the Plaintiff;
	(b)	the Defendant do provide copy of the fixed deposit account of HK$900,000 held by the Defendant and Madam Cheung Pik Fong holding on trust for the deceased since its opening to its closure; and
	(c)	the matter of costs incidental to and arising from the affirmation stated in paragraph (1)(i) and (ii) herein.
(3)	……”

*1992 was amended to 1991, as per agreement of the parties on 3 August 2006.

11. The above matters were the fixed to be heard before me on 31 July 2006.  Mr. Victor Luk of Counsel acted for the Plaintiff while Ms. Teresa Wu of Counsel represented the Defendant.  Having heard from both Counsel, I reserved my decision to be handed down.  I now do so.

Ruling

12. Upon consideration of all the evidence authorities and submissions from the parties, I have come to the conclusion that the relief sought by the Plaintiff are to be allowed.  My reasons appear as follows.

Law

13. Both learned Counsel led me go through a number of authorities regarding the obligation of personal representative (“PR”) to account to the beneficiaries, including, Schmidt v. Rosewood Trust Ltd, Privy Council [2003] 2 WLR 1442 and the Decision of the Hon. Reyes J. in the estate of Cheung Kung Kai, Deceased under HCMP 3956/2002 dated 29 January 2004.  They indeed did not dispute the applicable legal principles.  For the present purpose, it suffices for me to lay down the following principles:

(1) The PR owes a fiduciary duty towards the beneficiary of the estate.

(2) The PR shall not only administer the estate properly but also prepare to account for his administration.

(3) The power of the Court to order for account is derived from its inherent and fundamental jurisdiction to supervise and, if appropriate, intervene in the administration of trust.

(4) Such power is codified in section 56 Probate and Administration Ordinance (Cap. 10)

“56. Duty of personal representative as to inventory

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.”

(5) In fact, such obligation of the PR is also stated on the Grant issued to him by the Court.  In our case, the Grant under HCAG003299/2001 contained that:

“administration of ……the estate……was granted by the aforesaid Court to CHEUNG KAM WAI (張錦威) [the Defendant] ……he having been first affirmed well and faithfully to administer the same by paying the just debts of the deceased and the legacies contained in the said Will and to exhibit a true and perfect inventory of all and singular the said estate and effects and to render a just and true account thereof whenever required by law so to do.”

(6) The Court has a complete discretion to order or to refuse disclosure of documents sought by the beneficiary.

(7) As a matter of general principle, the beneficiary should be allowed to see the documents in the custody possession or power of the PR relating to the estate unless the PR can show otherwise by special circumstances, for example, personal or commercial confidentiality or interests of the beneficiaries as a whole would be compromised if disclosure were made.

Reasons

14. With these principles in mind, the Defendant fails me in the disputes between the parties.

(a)	The Plaintiff, as one of the beneficiaries to the estate of Madam Chang, is prima facie entitled to the documents relating to the estate.
	(i)	It is indisputable that part of the estate, namely, the sum of HK$438,000 held on trust by the Defendant, was derived from the fixed deposit account of $900,000.
	(ii)	Upon the evidence presented to this Court, in my view, it does raise a doubt as to whether the substantial amount of monies held by Madam Chang, after the disposal of the land for HK$9.3 million, should or should not form part of her estate.
(b)	The conduct of the Defendant is suspicious.
	(i)	He has repeatedly failed to answer the Plaintiff’s enquiries, including the three formal demand letters issued by firms of solicitors, one of which was written in Chinese.  The explanation of “ignorance of the law” is simply unbelievable or unacceptable.
	(ii)	I have no doubt that the Plaintiff’s major concern (i.e. the said HK$9.3 million) was brought to the attention of the Defendant.  He simply avoided the same.  Eventually, after the commencement of the present proceedings, the Defendant, together with some other brothers and sisters, only deposed some time in 2006 that each of them received (ranging from HK$0.5 m to HK$1.38m) from Madam Chang.  However, no particulars were provided as to when and how they were paid.
(c)	The request made by the Plaintiff causes no prejudice to the Defendant to any of the beneficiaries. It is also within easy reach of the Defendant.
	(i)	The Plaintiff himself made enquiries with the Bank.  The record of the accounts sought are available.  Since the Defendant is the executor of the estate, he is the only one who can apply for the record
	(ii)	Instead of writing a letter to the bank to ask for copies of the accounts to clarify the matter, the Defendant has not only avoided such question but also taken tremendous steps to oppose to the same.  It therefore appears to me that he is hiding something from the Plaintiff, or the Commissioner of the Inland Revenue (any gift made by a deceased person within 3 years before his death forms part of his estate for the purpose of estate duty).
(d)	I am not persuaded that any of the reasons advanced by the Defendant amounts to a special one justifying an exercise of the discretion of this Court to refuse an order for discovery.
	(i)	The issue to be decided by this Court is whether an order for discovery should or should not made, not if the assets identified by the Plaintiff do or do not form part of the estate.  The latter question, if applicable, is to be decided later and elsewhere.
	(ii)	The Defendant does not satisfy me that he has duly performed his duty to make “the fullest possible enquiries” to ascertain the value of the estate.  The schedule of property attached to the grant is nothing more than prima facie evidence of the value and size of the estate, which is always subject to amendment or challenge.
	(iii)	There is no evidence that the Plaintiff has consented to a distribution of the estate in the sum of HK$73,000.00 to him in about January 2001.  He only acknowledged receipt of the sum.  Quite to the contrary, he has chased up the Plaintiff for a couple of times for an account, but in vain.  In this respect, the Defendant clearly fails to perform his duty of account.
	(iv)	With respect to Ms. Wu, I do not agree that the parties’ dispute herein cannot be resolved by means of affidavit evidence.  Further, it is indeed the way agreed by the parties.  As such, there is no need to direct the matter to be heard through pleadings, discovery and trial at all.

Order

15. In the circumstances, I order that:

(a)	The Defendant do within 14 days from the date hereof write to the Hong Kong Standard Chartered Bank to obtain banking statements of all the Deceased’s five accounts from January 1991 (or from the date of opening of accounts if they were opened after 1991) to the date of closure, i.e.
	(i)	HKD F/D No.329-4-189444-8 (closed on 12 February 1998);
	(ii)	HKD C/A No.329-0-004648-5 (closed on 13 February 1998);
	(iii)	HKD S/A No.329-0-039298-2 (closed on 12 February 1998);
	(iv)	HKD S/A No.329-2-056078-8 (closed on 27 February 1998); and
	(v)	USD S/A No.409-2-020608-5 (jointly with Cheung Pik Fong, Cannie, closed on 13 February 1998)
		and provide such copies to the Plaintiff within 7 days upon receipt of the same; and
(b)	the Defendant do within 14 days from today provide copy of the fixed deposit account of HK$900,000 held by the Defendant and Madam Cheung Pik Fong holding on trust for the deceased since its opening to its closure.

Costs

16. Finally, as to costs, there be an order nisi that:

(c)	(i)	The Defendant shall pay the Plaintiff costs of this application, including certificate for counsel for the hearing on 31 July 2006, on party-and-party scale, to be taxed if not agreed.
	(ii)	The Defendant shall also pay costs incidental to and arising from the affirmation stated in the order herein dated 25 April 2006, on party-and-party scale, to be taxed if not agreed.
	(iii)	The Plaintiff’s own costs be taxed in accordance with the Legal Aid Regulations (Cap. 91).