VIDHYA NATIVIVAT AND OTHERS v. VITOON NATIVIVAT

CACV 23/2013

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 23 OF 2013

(ON APPEAL FROM HCA NO. 1376 OF 2011)

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JUDGMENT

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Hon Lam VP (giving the Judgment of the Court):

1.  On 21 June 2012, Deputy Judge Lok [“the Judge”] refused to strike out the Plaintiffs’ claim pursuant to a summons of 16 March 2012 taken out by the Defendant. The Judge also refused to determine the question whether the Plaintiffs have any locus standi, capacity or authority to commence the present action by way of Order 14A relief under a summons of 10 May 2012 taken out by the Defendant. Instead the Judge stayed all proceedings in the action until probate has been taken out by the Plaintiffs and a reasonable time has elapsed after the grant has been submitted to the Defendant for inspection.

2.  This is the Defendant’s appeal against that decision.

3.  Some salient facts for the purpose of this appeal, which are not disputed, are set out in the summons of 10 May 2012:

“a) …

i. The Plaintiffs are suing in these proceedings in their capacity purportedly as the executors of the Deceased pursuant to a will allegedly made by the Deceased on 24 December 2010 (the “2010 Will”);

ii. The Deceased was a foreign national ordinarily residing in Thailand before her death and died domiciled in Thailand on 9 June 2011;

iii. The 2010 Will is a foreign will made in the Thai language in Thailand;

iv. The probate of the 2010 Will has not been granted to the Plaintiffs for the estate of the Deceased by the Thai Court; and

v. The Plaintiffs have not obtained any grant of probate or letters of administration from the Probate Registry of the High Court of Hong Kong for them to administer the estate of the Deceased in respect of the 2010 Will.” 

4.  In addition, since the decision of the Judge, the following developments (as evidenced in the 3^rd affirmation of Vidhya Nativivat, which we granted leave for it to be referred to in the appeal) are relevant,

(a) The probate action in Thailand had been tried and in a judgment of 21 January 2013 the court pronounced in favour of the validity of the 2010 Will;

(b) On 3 April 2013, the Defendant lodged an appeal against that Thai judgment.  The appeal is pending; and

(c) Because of the appeal, the Plaintiffs are still unable to obtain probate in Thailand.  On 18 March 2013, the probate application was ordered to be stayed until final judgment in the appeal. 

5.  As set out in the Statement of Claim filed in this action on 10 February 2012, the Plaintiffs’ claims are in respect of the interest of the estate of their mother [“the Deceased’] in respect of a property in Hong Kong [“the Property”].  The Defendant was also a son of the Deceased. The Deceased acquired the Property in 1979 with her husband, who was the father of the Plaintiffs and the Defendant.  It is the Plaintiffs’ case that after the death of their father, the Deceased became the sole owner of the Property.  By a Deed dated 26 April 2004, the Deceased assigned her interest in the Property to the Defendant by way of gift.  The Plaintiffs averred that the Deed was procured by fraudulent misrepresentations made by the Defendant.  In the prayers, the Plaintiffs sought a declaration that the Deed was void and/or of no legal effect and a declaration that the Defendant held the Property on trust for the Deceased and her estate.

6.  In view of the summonses taken out by the Defendant and the stay ordered by the Judge, no defence has yet been filed.

7.  Before we consider the submissions of counsel, several points are to be noted.  First, since we are dealing with claims concerning landed property in Hong Kong, the devolution of title and right to succession are governed by lex situs, viz Hong Kong law.  So are questions relating to formal validity and essential validity of a will disposing of landed property. In terms of administration of estate, insofar as Hong Kong landed property belonging to an estate or claims in respect of the same is concerned, the title of an executor must be proved by a grant issued by the Probate Registry in Hong Kong and the administration of such property would be governed by Hong Kong law.  These propositions are not in dispute.

8.  Second, as we have seen, the Plaintiffs derived title from the 2010 Will.  Thus we are concerned with their right to proceed with the claims as executors of the estate of the Deceased.  We are not concerned with the situation of an intestate estate.

9.  Third, as the Plaintiffs have yet to obtain a grant in Thailand, they are not relying on any Thai grant to advance their claims in this action. Instead, they are relying on their capacity as executors appointed under the 2010 Will.

10.  Fourth, as a matter of Hong Kong law, the Plaintiffs could obtain a grant in Hong Kong based on the 2010 Will notwithstanding that no grant has been issued in Thailand.  There may be a dispute between the Thai law experts engaged by the parties as to whether an executor could commence legal action in Thailand without a grant of probate.  But as to the validity of the 2010 Will, this has been litigated in the Thai probate proceedings and the dispute is whether that will was forged or made by the Deceased with full capacity.  As mentioned, in respect of such disputes, the Thai court had found for the Plaintiffs in first instance. The Defendant is appealing against such findings.  Since, as discussed above, the present claims should be governed by Hong Kong law, the dispute of the experts on Thai law has no relevance for present purposes.

11.  Fifth, if a grant were to be obtained in Hong Kong, it would probably be a special grant restricted to the administration of the properties of the estate in Hong Kong.  As the Plaintiffs are not residents in Hong Kong, the Registrar may require sureties to be produced as a condition for the issue of a grant.  Further, the Defendant may wish to put in a caveat disputing the validity of the 2010 Will on grounds similar to those advanced by him in Thailand and challenge the Plaintiffs’ entitlement to a grant in Hong Kong.  In that event, the application for a grant in Hong Kong would become contentious.  Instead of having another probate action in Hong Kong, one option is to stay the application pending the final resolution of that dispute in Thailand bearing in mind that the Thai proceedings have already resulted in a judgment (albeit that an appeal is pending).  This would mean that a grant in Hong Kong cannot be issued right away.

12.  In the meantime, what is to happen to the claims?  Mr Chua Guan-Hock SC (appearing together with Mr Jason Yu) for the Defendant submitted that the court should strike out the action. On the other hand, Mr Alfred Liang (appearing together with Mr Kerby Lau) submitted that the Judge was correct in granting a stay of the action pending a grant being obtained in Hong Kong.  Though a Respondent’s Notice has been filed and amended, the Plaintiffs only seek to support the Judge’s decision on alternative grounds rather than to seek an order for the action to be allowed to proceed.

13.  Mr Chua submitted there is a general rule that a foreign personal representative cannot sue in Hong Kong in his capacity as such.  A grant of representation in a foreign country confers no authority to sue within the jurisdiction.  Whilst he acknowledged that there is also a rule that an executor derives title from a will rather than the grant of probate and as such he can generally institute legal proceedings before obtaining a grant, Mr Chua submitted that such rule only applies in respect of a local executor. Counsel submitted that the latter rule does not apply if an executor is appointed in respect of an estate of a deceased who was domiciled abroad before his death.

14.  On the other hand, Mr Liang submitted that the second rule is not limited to a local executor.  It applies, counsel said, equally to an executor in respect of the will of a person who was domiciled out of this jurisdiction at the time of death.

15.  As mentioned above, the Plaintiffs are not relying on any foreign grant to support the present claims.  Though counsel referred us to several authorities on the position of a plaintiff holding a foreign grant, we do not think we need to refer to them in this judgment.  It suffices to state that we accept that a foreign grant does not prove the title of a plaintiff in the courts in Hong Kong and it is necessary to obtain a Hong Kong grant to do so.

16.  The real bone of contention in this appeal is the applicability of the second rule, whether it is applicable to a “foreign executor” (meaning an executor for an estate of a deceased who was domiciled abroad at the time of his death) as much as a local executor?

17.  Though Mr Chua had referred to a number of authorities in the United States, in respect of this issue we would start by referring to some English and Hong Kong authorities.  Chetty v Chetty [1916] AC 603 was a decision of the Privy Council on appeal from the Supreme Court at Singapore.  As we shall see, it was a decision based on principles derived from English law.  It has since been applied in English cases and in Hong Kong as well.

18.  In that case, the testator was a native of and domiciled in India. He made a will appointing an executor.  The disputed interest was a partnership business in Singapore in which the testator had been a partner. After his death in 1904, because of a dispute on the will, the executor only obtained a grant in India in 1912. In the meantime, in Singapore, a grant of letters of administration pendente lite was issued in 1910 in favour of a representative of the widow of the deceased.  Based on that grant, the administrator commenced action in Singapore seeking relief in terms of the partnership business.  After the issue of a grant in favour of the executor in India, he obtained a grant in the Straits Settlements and then had himself substituted as the plaintiff in the Singapore action.  The defendant in the Singapore action pleaded that the action was time-barred.  The issue turned on whether there was any legal representative capable of instituting an action after the death of deceased.  At first instance, the court held the action was not time barred. On appeal, that decision was reversed.  On further appeal to the Privy Council, it was held that the action was time barred: because the title and authority of the executor were derived from the will and not from any grant of probate, he was capable of instituting a suit immediately after the death of the testator.

19.  The judgment of the Privy Council was delivered by Lord Parker of Waddington and he said at p.608-9:

“… It is quite clear that an executor derives his title and authority from the will of his testator and not from any grant of probate. The personal property of the testator, including all rights of action, vests in him upon the testator’s death, and the consequence is that he can institute an action in the character of executor before he proves the will.  He cannot, it is true obtain a decree before probate, but this not because his title depends on probate, but because the production of probate is the only way in which, by the rules of the Court, he is allowed to prove his title. An administrator, on the other hand, derives title solely under his grant, and cannot, therefore, institute an action as administrator before he gets his grant.  The law on the point is well settled: see Comyn’s Digest, “Administration” B 9 and 10; Thompson v Reynolds; Woolley v Clark.”

20.  Pausing here, it should be noted that the principle that the title of an executor stemmed from the will as opposed to the grant is of great antiquity.  Thompson v Reynolds 3 C & P 123 was a decision in 1827 and some earlier authorities for the principle were cited at p.126: Wankford v Wankford 1 Salk 299 and Duncomb v Walter 3 Lev 57were decided in early 18^th century.  Likewise, Comyn’s Digest also cited authorities in the 18^th century.

21.  Coming back to Chetty, at p.610, His Lordship explained the implications of the rule in the context of limitation defence,

“In the case of a cause of action arising in favour of the estate of a deceased person at or after his death time will at once begin to run, if there be an executor, even though probate has not been obtained: Knox v Gye ...”

22.  Thus, it is a decision based on principles of English law derived from well established English authorities.  Mr Chua submitted that the Privy Council did not need to distinguish between local and foreign representatives in that case because letters of administration had already been granted in the Straits Settlements to both the original and substituted Plaintiffs.  With respect, that submission missed the real point.  Though letters of administration had been granted when the action was commenced, the relevant point in time was the earlier period after the death of the deceased. Between 1904 and 1910, no grant had been issued.  Despite that, the court held that the executor could have started an action in Singapore and it was precisely due to that the court held that time started to run from 1904.  The position in 1904 was as follows: there was an executor appointed under the will who had not obtained any grant, whether in India or in the Straits Settlements.  The deceased was not domiciled in Singapore when he died.  Hence, the executor was a foreign executor.  Viewed thus, Chetty v Chetty is an authority directly against Mr Chua’s submission on the confinement of applicability of the second rule to local executor.

23.  Mr Chua further submitted that the Privy Council failed to take into account of AG v New York Breweries Co [1899] AC 62 which was not cited before it.  With respect, the issue in New York Breweries was quite different.  It concerned the right of a foreign executor in the administration of assets in England. The House of Lords held that such foreign executor could not do so without first obtaining a grant there.  In that case, an English company paid dividends to a New York executor of the estate of a deceased shareholder at the latter’s request.  The executor did not apply for any grant in England and had no intention to do so.  It would appear that the executor did not wish to be liable for probate duty in England.  The company was held to be an executor de son tort and as such liable to pay penalty and such duty as would have been payable if probate had been obtained in England.  The case did not address any questions with regard to a foreign executor’s right to commence legal proceedings. 

24.  We do not see any conflict between New York Breweries and Chetty.  As said above, we accept that an executor, whether local or foreign, needs to obtain a Hong Kong grant before he can collect and distribute properties belonging to the estate in Hong Kong. However, the mere commencement of legal proceedings (as opposed to the prosecution of the proceedings to its fruition in terms of judgment being entered) would not result in assets of a deceased coming into the hands of an executor.  So long as a Hong Kong grant is obtained before trial, there would not be any infringement of the rule in New York Breweries. 

25.  It is noteworthy that none of those earlier English cases on the rule in Chetty had been cited and considered in New York Breweries.  This is not surprising as the issue before the court in the latter case was whether the company was liable as executor de son tort and it could not be disputed that it had intermeddled given that the New York executor did not obtain English probate before the dividends were paid to them and had no intention to obtain such grant.

26.  Mr Chua placed considerable reliance on the dicta of A L Smith LJ in the Court of Appeal in New York Breweries [1898] 1 QB 205 at p.217:

“But in the present case the American will as regards these English assets had no validity whatever in this country, nor had the American executors any right under it to receive the testator’s assets here. Until they had taken out representation to their testator in this country, they were pure strangers to the English assets.”

27.  But His Lordship continued to set out the context in which these statements were made:

“This American will, to the knowledge of all parties, was never to come into operation as a will in this country; the American executors were never to become executors in this country, it being the express intention of all parties that they should not. This is not the case, as put in argument, of a debtor of a testator paying a debt, due from him to that testator, to the executor named in his English will before that executor has proved the will, but it is a case in which the payment is made to a person who has no legal right to receive it, with knowledge that that person would never become legally entitled to receive it.”

28.  It was in the same context in which the Lord Chancellor said at [1899] AC 62 at p.68, 70 and 72 that property in England could only properly be taken possession of or administered by an English executor or English administrator.

29.  That is a very different scenario from the case we are dealing with. As far as we are aware, the Plaintiffs have every intention of applying for probate in Hong Kong after the Thai proceedings have been finally determined.  With the stay of the action, there is no question of the Plaintiffs getting their hands on the assets in Hong Kong before any Hong Kong grant. 

30.  Chetty has since been applied in England and other common law jurisdictions.  It is not necessary for us to refer to such cases at length though Mr Liang referred to cases in England, Australia, Canada as well as Singapore.  It is cited in leading textbooks as the authority for the proposition that an executor can commence action before the grant of probate and continue with it up to the time when the production of the probate becomes necessary: see Williams, Mortimer & Sunnucks on Executors, Administrators and Probate 20^th Edn para 5-07.  In Hong Kong, this principle was applied in Chao Yue Wah v Mo & Company (HK) Ltd HCA  2326 of 2001, 5 Aug 2003; Yeung Yuk Yin v Chiu Tat Si [2006] 2 HKC 142 and Re Honeycool Refrigeration & Engineering Co Ltd  [2009] 1 HKLRD 447.

31.  Though in many instances the principle was applied in the context of an executor within the jurisdiction, there are cases where it was applied to plaintiffs who were executors outside the jurisdiction.  Chao Yue Wah was a case in which probate application by the executrix was pending in New York.  It was held that the correct course in respect of the Hong Kong action in which the executrix sued in that capacity (amongst others) was to stay the action until probate has been taken out and a reasonable time has elapsed after its inspection by the defendant.

32.  Further, as Mr Liang pointed out, the common law rule that title of an executor stems from the will but not the probate which is only evidence of title has been consistently applied to “foreign executors” as much as local executors: see Re Green and Flatt (1919) 13 DLR 547; National Trust Co Ltd v Mendelson [1942] 1 DLR 438.

33.  As a matter of principle, we are unable to see why this principle should be confined in its application to an executor in respect of the estate of a deceased who died with a local domicile.  In accordance with Chetty, time would continue to run for limitation purposes in respect of claims belonging to a deceased if he had appointed an executor by will.  There was no suggestion that this rule does not apply to a “foreign executor” and there is no principled basis for exempting claims belonging to a foreign testator from this rule.  As we have seen, Chetty was a case about a foreign executor.  In other words, the law expects a foreign executor (as much as a local executor) to commence proceedings within time irrespective of the time taken for application for probate in Hong Kong.

34.  To overcome the difficulty with limitation as illustrated by Chetty, Mr Chua’s submitted that s 16 of the Limitation Ordinance (which extends the limitation period for administrator in action for recovery of land by stopping time from running between date of death and grant of letters of administration) should be construed as including foreign executor in the expression “administrator”.  Counsel did not cite any authority for this construction. We cannot accept this submission.  If the legislature had intended to change the rule in Chetty, there is no reason why it did not do so in clearer language.

35.  Despite his diligence and resourcefulness, Mr Chua has not been able to show us any authority which held that time would run differently for the purpose of limitation defence in respect of a claim by a foreign executor.  It is difficult to justify such a distinction as a matter of principle. By the same token, it is difficult to justify a similar distinction (between “foreign” and local executors) in respect of the right of an executor to commence action.

36.  Mr Chua attempted to justify this distinction on the following grounds,

(a) The authority of an executor is restricted to the territory of the state in which probate has been granted; and

(b) The need to protect local creditors of the estate.

37.  With respect, we cannot accept these as sufficient grounds justifying the distinction. On the first ground, whilst it may be correct to say that an executor cannot collect and distribute assets in this jurisdiction without first obtaining a Hong Kong grant, it does not follow that he has no authority to commence an action before such grant has been issued.  The common law rule, as set out in the English cases, which has been followed in Hong Kong, is that an executor does have the right and authority to commence an action before any grant of probate, see the judgment of Lord Parker cited at para 19 above.

38.  On the second ground, as the commencement of legal proceedings per se (as opposed to the obtaining of judgment in it) would not lead to assets of the estate falling within the hands of the foreign executor and given that there will be a stay pending a Hong Kong grant being obtained, there is no question of the interest of local creditors being adversely affected.

39.  Mr Chua referred us to Degazon v Barclays Bank International Ltd [1988] 1 FTLR 17.  In that case, the English Court of Appeal held that a foreign executor who had not obtained a grant in England could not be sued in respect of the assets of the estate in England. Essentially, the same proposition is set out in Dicey & Morris on Conflict of Laws (15^th Edn) Rule 145.  Counsel submitted that the converse must also be true: a foreign executor cannot sue as plaintiff until a grant has been issued in this jurisdiction.  We were also referred to dicta by Kerr LJ at p.23 in which His Lordship did not draw any distinction between instituting proceedings and defending the same.

40.  With respect, we do not believe Kerr LJ had in mind the rule of Chetty in that judgment.  The court in Degazon was not concerned with the right to commence legal proceedings.  And there is a very material distinction between the position of a plaintiff and that of a defendant.  Since a plaintiff executor should be anxious to proceed with his claims, a stay pending grant would have the effect of motivating such plaintiff to obtain the necessary grant with due diligence.  But it could not have such effect on a defendant executor.

41.  Further, a plaintiff executor will have to be concerned about limitation period and there could be injustice if he is not allowed to sue within time.  No such consideration arises in respect of a defendant executor.  A person who wishes to sue an estate of a deceased person before any personal representative takes out a grant can proceed under Order 15 Rule 6A. 

42.  Mr Chua also cited a number of cases decided in the United States to support his contention. In particular, in his oral submissions he referred us to Dixon’s Executors v Ramsay’s Executors (1806) 7 US 319 and Smith v Cimmet (2011) 199 Cal App 4^th 1381.  It appears to us that in the United States, common law has developed differently from that in England insofar as no distinction was drawn in the United States between the commencement of action and the maintenance of the same thereafter.  In Hong Kong, the common law that had been applied before 1997 was the common law in England.  And it is the common law previously applied in Hong Kong prior to 1 July 1997 that Article 8 of the Basic Law provides for its continued application in Hong Kong.  Given the divergence of U.S. common law from the English common law, we do not derive much assistance from the U.S. cases in respect of the issues we have to decide in this appeal.

43.  We hold that as a matter of Hong Kong law, the second rule is not confined in its application to local executors.  A “foreign executor” may also pray in aid of it in commencing action in Hong Kong.  At the same time, an executor (whether local or foreign) must obtain a grant in Hong Kong before he can prove his title in our courts.

44.  Therefore, the Judge was correct in refusing to strike out the Plaintiffs’ claim and granting a stay pending a Hong Kong grant is obtained. In so holding, we do not rule out there could be cases (e.g. where an executor has no prospect of obtaining a grant in Hong Kong or where an executor has been dilatory in obtaining a grant in Hong Kong without reasonable excuse) where a claim by an executor without a grant should be struck out instead of being stayed.  However, in the circumstances of the present case, we agree with the Judge that the proper course is to have the action stayed pending a grant to be obtained by the Plaintiffs in Hong Kong.

45.  Once we reach this conclusion, there is little justification for having the dispute on Thai law as set out in the expert evidence to be determined as a preliminary issue.  Mr Chua quite properly accepted that that dispute could have little bearing on the real issues in this action as the matter is governed by lex situs.  We cannot see any reason why it is necessary for such dispute to be resolved at this stage.

46.  For these reasons, the appeal is dismissed with an order that the Defendant shall pay the Plaintiffs’ costs of the appeal, such costs to be taxed if not agreed, with certificate for two counsel.