WANG DIN SHIN v. NINA KUNG

CACV 76/2003

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 76 OF 2003

(ON APPEAL FROM HCAP NO. 8 OF 1999)

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REASONS FOR JUDGMENT

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Hon Rogers VP:

1. I agree with the reasons given by Le Pichon JA.

Hon Le Pichon JA:

2. This is an appeal by the defendant, the widow of the late Wang Teh Huei ("the deceased"), from the order made by Madam Justice Chu on 19 March 2003 upon the hearing of (1) a summons dated 13 March 2002 ("the defendant's summons") and (2) the summons dated 25 February 2002 ("the administrators' summons"). The judge:

(a) dismissed paragraph 3 of the defendant's summons which sought disclosure of "all the materials and information which were placed before [her] at the ex parte hearing on 14 November 2002" with consequential costs orders; and

(b) ordered that the hearing of paragraphs 1 and 2 of the defendant's summons (which sought to set aside an ex parte order made by her on 14 November 2002 ("the ex parte order") insofar as it related to 15 Bluff Path, The Peak ("the property")) and the administrators' summons (for directions for access to the property and removal of the chattels therefrom) scheduled for 28 March 2003 be adjourned to an early date to be fixed, but not earlier than five weeks from the date of the order, upon the defendant, by her counsel, undertaking to indemnify the estate of the deceased for costs thrown away caused by the withdrawal of the tender for sale of the property on 8 April 2003.

Directions were also given for the filing of evidence by the parties. At the conclusion of the hearing, this court dismissed the appeal save that the defendant was released from her undertaking in damages given to the court on 19 March 2003 and indicated that written reasons would be handed down later which we now do.

Background

3. The administrators are joint administrators pendente lite of the estate of the deceased. Their appointment was made by court order dated 15 March 2000, subsequently amended on 11 April 2000 (collectively "the appointment order") upon the administrators, by leading counsel, undertaking not to distribute or dispose of any of the property comprised in the estate without the consent of the Commissioner of Estate Duty or leave of the court with savings for necessary payments and the costs and charges of administration.

4. Pursuant to paragraph 3(1) of the appointment order, by letter dated 26 April 2000, the defendant's solicitors sent to the administrators a list of "all properties, known to our client, in the estate of [the deceased]" as of 26 April 2000. The property was one of the items set out on that list. On 3 July 2000, the solicitors for the administrators requested the delivery up of the title deeds and keys of, inter alia, the property. The defendant's solicitors Johnson, Stokes & Master ("JSM") replied on 18 July 2000 asserting that the property was the matrimonial home of the defendant and that she was entitled to reside in it because

* she may be the sole beneficiary under the deceased's will

* she has a claim under the Deceased's Family Maintenance Ordinance, Cap. 129 or the Inheritance (Provision for Family and Dependants) Ordinance, Cap. 481 ("the Inheritance Ordinance")

* she may have a right to elect to acquire the property under section 7 of the Intestates' Estates Ordinance, Cap. 73

5. The administrators then applied for and obtained leave to begin possession proceedings in relation to the property. That application came before the Deputy High Court Judge Muttrie on 21 May 2001 who made an order ("the Muttrie order"), the relevant part of which read:

"(a) The Defendant shall deliver up vacant possession of the property at 15 Bluff Path, the Peak, to the Administrators not later than 19 June 2001, provided that any chattels of the Defendant in the property and contained in a list to be delivered by the Defendant to the Administrators on or before 19 June 2001 be allowed to remain there undisturbed until further order or agreement reached between the Administrators and the Defendant;

(b) The Defendant shall retain a right of access to the property and shall retain one set of keys to the property. She may visit the property on giving reasonable notice to the Administrators. She shall execute a full indemnity in favour of the Administrators against any losses, claims or other liabilities incurred by them as a result of her presence on, or right of access to, the property;

..."

On 14 November 2002, the administrators made an ex parte application to Madam Justice Chu culminating in the ex parte order which, in pertinent part, read:

"1. the Administrators have leave to take such steps as they consider necessary:

(a) ...

(b) ... to sell or otherwise dispose of the property..."

The recital to that order referred to the court having read a privileged and confidential report of the administrators dated 29 August 2002 as well as letters dated 23 October 2002 and 12 November 2002.

6. A week after the ex parte order, on 21 November 2002, Yam J granted a decree of probate of the will dated 15 March 1968 of the deceased in solemn form. On the same day the administrators obtained leave to issue an inter partes summons returnable on 26 November 2002 for directions as to the further conduct of the administration. The administrators were directed to serve on the plaintiff and the defendant an updated report concerning the administration of the estate for the purpose of that inter partes hearing. Pursuant to that direction, the administrators prepared a report dated 25 November 2002 ("the November report") which was served on the parties specifically inviting them to notify the administrators of

" ... any specific interest they claim in the relevant properties and provide supporting material within 2 weeks. In particular, the Administrators wish to ascertain the extent (if any) to which the parties claim that the properties belong to them personally, as opposed to forming part of the Estate. If no satisfactory response is received within this time, the Administrators will proceed on the basis that neither party has a relevant interest."

The property was one of the "relevant properties". The November report made reference to the ex parte order.

7. JSM responded on behalf of the defendant on 9 December 2002 reiterating the defendant's right to make a claim under either the Deceased's Family Maintenance Ordinance or the Inheritance Ordinance depending on the date of presumed death of the deceased. The former applies to deaths occurring before 3 November 1995 and the latter to deaths occurring on or after that date. It was said that this claim had a particular relevance to the property which was the matrimonial home. It was also said and that the defendant objected to the sale of the property. By this date, the defendant could no longer maintain a claim as sole beneficiary under the will given Yam J's judgment unless she were to succeed in her appeal which is pending.

8. By summons dated 25 February 2003 and returnable two days later (on 27 February), the administrators applied for directions in respect of (i) access to and (ii) the removal of all chattels from the property. On 27 February 2003, Madam Justice Chu adjourned the summons with liberty to restore and directed that the administrators and the defendant endeavour to reach an agreement on the summons within 7 days failing which the defendant was ordered to inform the court and the administrators in writing within 7 days thereafter of the broad grounds of objection or differences between the administrators and the defendant. The administrators and the defendant failed to reach agreement and on 13 March 2003, the defendant filed a document pursuant to the order of 27 February 2003 (hereafter referred to as "Broad Grounds of Objection") and for the first time claimed a proprietary interest in the property based on a constructive and/or resulting trust and/or under the doctrine of proprietary estoppel. At the same time, the defendant took out the defendant's summons seeking orders (1) to set aside paragraph 1(b) of the ex parte order (which gave leave to the administrators to take such steps as they considered necessary to sell or otherwise dispose of the property), (2) that no further steps be taken by the administrators pursuant to the ex parte order relating to the property pending a determination of the application under paragraph 1 of the defendant's summons and (3) that the defendant be provided with all the materials and information ("the confidential materials") placed before Madam Justice Chu on 14 November 2002. At the hearing on 13 March 2002, Madam Justice Chu made the order set out in paragraph 2 above, dismissing the defendant's claim for disclosure of the confidential materials and rescheduling the substantive hearing of the defendant's application to set aside paragraph 1(b) of the ex parte order and the administrators' application for directions for access to the property and removal of the chattels.

This appeal

9. The main purpose of the defendant's appeal is to obtain disclosure of the confidential materials. Her 'entitlement' was put in this way: the ex parte order amounted to an outright order for sale. At the date it was made the defendant had rights in and over the property which had been made known to the administrators. Therefore they must have known that the defendant would be affected by the ex parte order. Mr Fok SC who appeared for the defendant submitted that in those circumstances the defendant should have been given notice of the November application and as an interested party, the defendant would have been entitled to see what had been placed before the court. Mr Fok suggested that there was some halfway house open to this court: either the administrators should disclose the confidential materials and proceed to act upon the ex parte order or, if they wish to maintain the confidentiality of those materials, they should issue a summons for leave to sell. In other words, the ex parte application made in November should be treated as or deemed to have been a leave application. It was further submitted that the substantive hearing of the defendant's application to set aside the ex parte order fixed for 15 May 2003 is different from an application for an order for sale because it would have to proceed on the footing of a valid subsisting order for sale, with the onus on the defendant to show why it should be set aside. Were it to be an application for leave to sell the property, the defendant would not be so disadvantaged inasmuch as the burden would then be upon the administrators to justify an order for sale.

The defendant's claims

10. As at the date of the ex parte order, the only known claims asserted by the defendant were (1) as sole beneficiary under the will of the deceased and (2) in the event of her not being a beneficiary, as applicant under the Deceased's Family Maintenance Ordinance or the Inheritance Ordinance depending on whether the death took place before 3 November 1995 or on or after that date. Pausing here, it is to be noted that the court's power under the former is to make "reasonable provision for the maintenance" for the applicant, whereas the powers of the court under the Inheritance Ordinance become exercisable where reasonable financial provision for the applicant has not been made. "Reasonable financial provision" for the purposes of the Inheritance Ordinance means such financial provision as it would be reasonable in all the circumstances of the case for such a person to receive, whether or not that provision is required for that applicant's maintenance. The court's power under the Inheritance Ordinance extends to the making of an order for the transfer to the applicant of such property comprised in the estate as it may specify. See section 4(1)(c).

11. As at the date of the ex parte order, the claims asserted by the defendant were in personam claims against the estate and not proprietary claims against the property. A claim for maintenance or reasonable financial provision from the estate does not, it seems to me, confer any proprietary interest to any specific property comprised in the estate. Whilst section 4(1)(c) of the Inheritance Ordinance empowers the court to order the transfer of property in specie, the applicant has no "right" as such to any specific property comprised in the estate. Rather, the applicant's entitlement is dependant upon the exercise of the court's discretion. It was only when the Broad Grounds of Objection were filed which was several months after the ex parte order and 2 years and 8 months after her initial claims against the estate had been made that it became known that the defendant was asserting a proprietary claim to the property which was adverse to that of the estate.

The ex parte order

12. It is the defendant's case that the ex parte order was an outright order for sale. But it is apparent on the face of the order that what the administrators were authorised to do was "to take such steps as they consider necessary" to sell or otherwise dispose of the property. One of the steps that the administrators considered necessary to take was to issue the administrators' summons on 25 February 2003 seeking directions, effectively to deal with the matters left outstanding by the Muttrie order relating to the defendant's access to the property and permission to the defendant to leave chattels in the property "until further order or agreement". It would appear, however, that on the day the administrators issued the administrators' summons, they also placed an advertisement for the sale of the property by open tender in the Hong Kong Economic Times. The tender was to close at 12 noon on 8 April 2003.

13. Mr Fok sought to suggest that the Muttrie order was made on the basis that it was an interim arrangement pending the outcome of the probate action. That, it was said, had been the common approach or understanding of the parties. This court was referred to various passages in the transcript said to support this. But those italicised words are nowhere to be found in the Muttrie order. Nor was any application made by the defendant to correct the order as drawn on the basis that it did not reflect what the deputy judge had intended to order. Insofar as it was suggested that that was the "common intention" of the parties, it will be noted that the order was not a consent order. The deputy judge dealt with the application before him which was for vacant possession and after hearing argument, gave a ruling. That ruling appears at pages 23-24 of the transcript. How the deputy judge saw the matter is apparent from the following passages from the ruling:

"... The defendant's main, if not her only objection to giving up vacant possession, seems to be her desire to place and maintain some possessions in the master bedroom because of her belief in Feng Shui ...

So far as the defendant is concerned, it seems that she has not resided in the property for many years. If she requires to visit the property for the purpose of carrying out actions advised by her Feng Shui master, it seems reasonable enough that she should do so by arrangement with the administrators if this can be arranged in such a way that there is no interference with their duty to maintain the property. She can give any necessary indemnity ..."

14. To come back to the ex parte order, it was the understanding of Madam Justice Chu that the ex parte application culminating in the ex parte order was an application by the administrators for directions from the court as part of the administration. It was necessary because of the undertaking of the administrators contained in the appointment order. It was dealt with as a paper application. That aside, a fair reading of the words "to take such steps as they consider necessary" which prefaced the power to sell or otherwise dispose of the property militate against the interpretation the defendant seeks to put on that order.

15. I do not therefore consider that the defendant's interpretation of the Muttrie order is correct. Nor do I agree that the ex parte order amounted to an outright order for sale. Indeed, the issuance of the administrators' summons recognized the need to deal with the outstanding matters prior to the property being so. Still less did the ex parte order deal with, or purport to deal with, any proprietary claim. Indeed, it was only by the time of the hearing which lead to the order under appeal, that there was a proprietary claim being asserted by the defendant for the first time which is adverse to the estate.

The substantive hearing

16. At the substantive hearing fixed for 15 May before Waung J, the matters to be decided include:

(1) whether the defendant has a proprietary claim to the property; and if not,

(2) whether she has any other claim which would interfere with or impinge upon the administrators' power to sell.

The question which arises is whether in order to establish her proprietary or other adverse claim, the defendant needs the confidential materials sought. I do not see that there is such a need since those materials cannot, on any view, impact upon or improve any claim that the defendant may have. Put another way, whether or not the defendant is able to substantiate the claims asserted is in no way dependent upon the availability of the confidential information. Certainly, the need for such information has not been shown. Moreover, the judge who will be hearing the substantive application will not have seen the confidential materials. In all the circumstances, in the absence of any showing that unfairness would result from being denied access to the confidential materials for the purposes of the hearing on 15 May, the dismissal of the defendant's claim for disclosure of the confidential materials was plainly correct.

17. Mr Fok also suggested that his client is disadvantaged by the reversal of the burden of proof at the substantive hearing. Leaving aside the fact that I would not myself have characterized a right to open the case with an opportunity to reply as a 'disadvantage', the defendant's assertion of a proprietary claim to the property is a new claim recently advanced. In those circumstances, it would not seem unfair that she should have the burden of establishing that claim.

The directions given on 19 March

18. Madam Justice Chu gave directions as to when the substantive hearing should take place. The administrators wanted to retain the original date of 28 March. It is clear from the transcript that leading counsel for the defendant sought a later hearing on the basis that time was required for the proper preparation of the case. In the event, the directions given meant that the hearing should not take place prior to 28 April. In fact, as noted above, the date now fixed is for mid-May. In the circumstances, I do not see that there is any basis for any complaint that the defendant has in any way being prejudiced by the directions given or that Madam Justice Chu should have disqualified herself from giving directions at all.

Release from the undertaking

19. The direction given on 19 March 2003 as to the scheduling of the substantive hearing was given upon the undertaking by the defendant to indemnify the estate for costs thrown away due to the withdrawal of the tender for sale, the closing date of which was 8 April 2003. As noted above, the administrators' summons (seeking directions to deal with the outstanding matters from the Muttrie order) and the advertisement for the sale of the property by tender took place contemporaneously. In my view, the administrators ought not to have advertised the sale until the outstanding matters had been resolved. They were precipitous in placing the advertisement when they did. That being so, the defendant should be released from her undertaking which would not have been required but for the administrators' haste in advertising the sale by tender.

Costs

20. At the conclusion of the hearing, after the court had announced its decision, it heard submissions from counsel on the issue of costs. Mr Fok SC submitted that the defendant would not have been released from her undertaking had she not come to court. However, that was not the relief that she was seeking. That relief was granted by the court for the reasons set out above. The defendant's position had always been that the order of Madam Justice Chu dismissing the defendant's claim for disclosure of the confidential materials was wrong. The defendant did not appeal to this court for the purpose of being released from her undertaking. In the circumstances, I see no reason to depart from the normal rule that costs should follow the event. I would order that the defendant pay the administrators the costs of this appeal.