KIMBALL WONG v. CYNTHIA FOK SHIN YEE AND OTHERS

Headnote

                Beddoe summons, matters to be considered, necessity to differentiate between the interests of a trustee and beneficiary even where the trustee happends to be a beneficiary herself under the trust. HELD that as the appeal contemplated was primarily for the benefit of the Plaintiff in her capacity as a beneficiary I was not prepared to order that the costs should be borne out of the trust funds.

IN THE SUPREME COURT OF HONG KONG

MISCELLANEOUS PROCEEDINGS

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BETWEEN

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JUDGMENT

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1. The Plaintiff is seeking directions as to whether she should as Trustee prosecute an appeal from the Decision of the Court of Appeal to the Privy Council in this matter. This is a Beddoe summons and the significance of the application is whether the Trustee will be funded in the contemplated litigation out of trust funds. This litigation concerns questions of construction of the home-made will of Mr. FOK Cho-min who died in 1975. Two executors were appointed under the will. Only one of them proved the will. That was Mr. FOK Tso-moon who was the husband of the Plaintiff. Mr. FOK Tso-moon had also died and the Plaintiff represented his estate. There is some controversy whether the Plaintiff also represented the estate of FOK Cho-min. Suffice it to say, that when the Court of Appeal heard the appeal, they proceeded upon the basis that the Plaintiff did so represent the estate.

2. Without going into any detail, it could, I think, be said without unduly distorting the position that when the case was first heard by the late Mr. Justice Zimmern, he held that the residue of the estate, which is very considerable, should go to FOK Tso-moon who had the power to distribute the fund amongst the relatives for the deceased.

3. By a Deed of Appointment the estate was vested in him and he distributed substantial sums to some of the relatives. The Plaintiff's legal advisors did not draw up a court order embody the terms Mr. Justice Zimmern's Judgment. In 1986 an appeal was lodged and again without descending into any detail, the Court of Appeal upset Mr. Justice Zimmern's decision and ordered that the residue of the estate should be treated as an intestate succession.

4. It will be noted from this that the Decision of the Court of Appeal was highly unfavourable to the Plaintiff. Although this application is made by the Plaintiff as personal representative of FOK Cho-min's estate, it is very obvious that the Plaintiff has a considerable interest in her personal capacity as the potential beneficiary under any appeal to the Privy Council.

5. Exhibited to the papers before me were the opinions of two London Silks. They expressed their opinions on the prospects of success for any appeal to the Privy Council. Both Counsels made useful analysis of the position and I do not think it would be unfair to say that both of them appeared to advise that while the appeal is arguable they do not hold out very strong hopes of success.

6. The first and most obvious question which has to be postulated is what benefit is going to be derived or hoped to be derived from the contemplated appeal. It is very difficult to see what benefit the trustee would derive in her capacity as trustee of the estate. If the estate is distributed in accordance with the judgment of the Court of Appeal, the trustee cannot be impugned. She can get valid receipts from all beneficiaries entitled. It is, perhaps, for this basic and fundamental reason that there are very few applications by way of Beddoe summonses which relate to prosecutions of appeals. What is however very clear is that where a trustee persues a claim which in fact is for his own benefit he cannot recover the cost from trust funds. See Henley v. Philips⁽¹⁾ which established the principle and more recently Miller v. Thorton Jones⁽²⁾.

7. It will be seen from the very brief outline I have already given that overwhelmingly it will be in her personal capacity that she would benefit from an appeal to the Privy Council.

8. It would lead to a very unjust result if simply on account of the accident that the Plaintiff happens to be a personal representative or trustee of the estate that she should be given an indemnity for the costs whether or not the appeal was successful whereas the Defendants would find themselves in the position of having to finance the defence of the Court of Appeal judgment without any assurance that they would recover their costs at the end of the day.

9. If it is indeed the position that the Plaintiffs and the 1st Defendant are in an adversary position it might even be argued that if I ordered the costs of the appeal be funded by the estate I might find myself in the position of usurping the function of the Privy Council.

10. Mrs. Clough in the course an able submission put forward a number of grounds in support of my granting the relief the Plaintiff was seeking. One of them was the difficulty in administering the fund having regard to the fact that a number of sizeable payments had been made on the basis of Mr. Justice Zimmern's judgment.

11. In the first place I would have considerable sympathy with Mr. Yu's submission that if difficulties are encountered they are largely self inflicted. They arise as a result of the inordinate delay on the part of the Plaintiff's solicitors in drawing up Mr. Justice Zimmern's order. However, even if that is not right, there are other ways in which these difficulties can be surmounted.

12. The most obvious being the Plaintiff can see directions from the court pursuant to Order 85 of the Supreme Court Rules. Certainly, I can see no reasonable justification for pursuing an appeal to the Privy Council if the main benefit to be derived is to obviate administrative difficulties.

13. Mrs. Clough also referred to the substantial size of the estate and the importance of the points of law involved. I do not think either of these matters persuade me that it would be to the benefit of the trustees to prosecute an appeal. The notes in the White Book (on Order 62/2/29) set out the principles which are usually adopted in determining whether trustees can recover their costs. I accept that the position is correctly stated.

14. In applying these principles to the present case it is impossible in my view to avoid coming to a conclusion that very little benefit would accrue to the trust as such if an appeal is prosecuted to the Privy Council. Certainly the benefits would be insufficient to warrant the likely cost.

15. At the commencement of this judgment, I indicated the directions which had been sought. I am not prepared to order the Plaintiff to prosecute the appeal in her capacity as trustee. Whether she does so at her own expense or at her solicitor's insurers expense is entirely a matter for her. Having come to this conclusion, I do not think that there are any other directions that I can usefully give. I have decided that the fairest order to make on costs is that each party will have their costs and they will be borne out of the estate. So far as the attendances before the Master are concerned I make a similar order and order certificates for counsel where appropriate.

(1)    [1844] 2 Atk 48

(2)    (1954) Ch 16