YUEN TSZ CHUN (as the administrator of the estate of CHAN CHOI LIN (陳彩蓮), deceased) v. LO CHI KEUNG AND ANOTHER

HCMP 1280/2020

[2021] HKCFI 493

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 1280 OF 2020

_______________________

_______________________

_________________

REASONS

_________________

Introduction

1.  The present application is taken out by the plaintiff in his capacity as the administrator of the Deceased’s estate (“Administrator”) under Order 85 rule 2 of the Rules of the High Court, for the Court’s determination as to the correct interpretation of section 8A(2) of the Intestates’ Estates Ordinance, Cap 73 (“IEO”).

2.  The question posed by the plaintiff is:

“Which parts of the Deceased’s residuary estate to which the defendants are entitled under section 4 of IEO will be diminished by the value at the date of death of the foreign beneficial interests referred to in section 8A of IEO, and in particular, which par (s) of [D1’s] entitlement under section 4(4) are liable to be diminished against foreign beneficial interests under section 8A(2):

(i)  only the sum of HKD 1,000,000 (“Interpretation 1”); or

(ii)  the sum of HKD 1,000,000 (with accrued interest) and D1’s absolute entitlement to half of the residuary estate (“Interpretation 2”).”

3.  The Deceased died on 12 February 2015 domiciled in Hong Kong, leaving her spouse (“D1”), and also her father.  Her father later passed away in 2016 and Mr Chan Chi Wai (“D2”), namely the Deceased’s brother, is the executor of father’s estate.

4.  Originally, D1 was granted the letters of administration of Deceased’s estate.  Subsequently, under the Order of Chung J on 17 January 2019, D1 was removed as administrator under HCMP 188/2018, and the Administrator was appointed in his place.  Since then, the Administrator has been administering the Deceased’s estate.

5.  The Deceased died leaving assets in Hong Kong, Singapore and Isle of Man.

6.  In the present application, Counsel Mr Val Chow appeared for the Administrator at the hearing before this Court.  D2 has through his solicitors indicated that he was not contesting the application and was granted leave to be absent.  D1 turned up at the hearing in person and indicated that he was not opposing the application, and had nothing to say.

7.  At the hearing, this Court has found that on the plain and natural meaning of section 8(2) of the IEO, Interpretation 1 is the correct interpretation.  My reasons are asset out hereinafter.

The statutory provisions

8.  Section 4 (4) of IEO sets out as follows:

“If the intestate leaves no issue but does leave a husband or wife and one or more of the following, namely a parent, a brother or sister of the whole blood, or issue of a brother or sister of the whole blood, the surviving husband or wife shall take the personal chattels absolutely and, in addition, the residuary estate of the intestate shall stand charged with the payment of a net sum of $1,000,000, free of death duties (if any) and costs, to the surviving husband or wife with interest on that sum from the date of death at the rate determined from time to time by the Chief Justice for the purpose of section 49(1)(b) of the High Court Ordinance (Cap. 4) until paid or appropriated and, subject to providing for that sum and interest, the residuary estate shall be held —

(a) as to one half, in trust for the surviving husband or wife absolutely; and

(b) as to the other half —

(i)  where the intestate leaves one parent or both parents (whether or not brothers or sisters of the intestate or their issue also survive), in trust for the parent absolutely or, as the case may be, for the 2 parents in equal shares absolutely; or

(ii)  where the intestate leaves no parent, on the statutory trusts for the brothers and sisters of the whole blood of the intestate.”

(emphasis added)

9.  Section 8A then provides as follows: 

“8A  Application where surviving spouse or other person acquires an interest under foreign law

(1)  Where the intestate leaves a husband or wife who acquires under the law of intestacy or of partial intestacy of a place other than Hong Kong any beneficial interests in the intestate’s estate, subsection (2) applies to that estate.

(2)  The references in this Ordinance to the net sum payable to a surviving husband or wife, and to interest on that sum, shall be taken to be references to the net sum diminished by the value at the date of death of the beneficial interests referred to in subsection (1), and to interest on that sum as so diminished and, accordingly, where the value of those beneficial interests exceeds the net sum, this Ordinance shall have effect as if references to the net sum, and interest on that sum, were omitted.

(3)  Where under this Ordinance the residuary estate of an intestate, or any part thereof, is directed to be held on trust, or on statutory trust, for persons other than the husband or wife of the intestate, the value at the date of death of the beneficial interests specified in subsection (4) that is acquired by any of such persons shall be taken as being paid or settled in or towards satisfaction of the entitlement of that person and shall be brought into account in accordance with the requirements of the personal representatives.

(4)  The beneficial interests for the purpose of subsection (3) are those acquired under the law of intestacy or of partial intestacy of a place other than Hong Kong in the intestate’s estate.

(5)  For the purposes of subsections (2) and (3), the personal representatives shall employ a duly qualified valuer in any case where such employment may be necessary.”

(emphasis added)

10.  The Court’s attention has not been drawn to any other provisions in the IEO which refer to a “net sum to a surviving husband or wife”, apart from the subsections in section 4 of IEO.  It is thus my view that the “net sum” referred to in section 8A(2) clearly refers to the “net sum” in the subsections of section 4 of the IEO and in the present case, the “net sum” is the amount of HKD 1,000,000 in section 4(4) of IEO.

11.  Mr Chow has set out the general principles of interpretation in his skeleton submissions.  It is well established that the Court will adopt a purposive approach to statutory interpretation, whereby the statutory language is construed with regard to its context and purpose.  Words are given their natural and ordinary meaning unless the context or purpose points to a different meaning, and the context and purpose are considered when interpreting the words used and not only when an ambiguity might be thought to arise: HKSAR v Cheung Kwun Yin (2009) 12 HKCFAR 568 at paragraph 12.

12.  Thus, as submitted by Mr Chow, the words of the statute are to be given their “natural and plain meaning” having regard to (i) the context of the enactment and (ii) its purpose.  Further, Mr Chow has submitted that the purpose of a statutory provision may be ascertained from publicly available documentation of its legislative history[1].

13.  Mr Chow has referred this Court to the legislative history as external interpretative aid, assuming what is called the “Pepper v Hart approach” is good law in Hong Kong[2].

14.  In particular, Mr Chow has referred to the Report of The Law Reform Commission of Hong Kong on Law of Wills, Intestate Succession, and Provision for Deceased Persons’ Families and Dependants published in 1990 (“LRC Report”).

15.  The recommendation in relation to where a surviving spouse acquires an interest under foreign law of the LRC Report can be seen in paragraphs 8.27 to 8.28, which state as follows:

“8.27     In In re Collens [1986] 2 WLR 919 it was held that English immovable assets are to be regulated for the purposes of succession by the lex situs (the law of the place where an object is situated) rather than by the law of the domicile (the law of the country that a person treats as his permanent home and to which he has the closest legal attachment). The facts were that an intestate had died domiciled in Trinidad and Tobago. The deceased had estate there, other estate in Barbados and a small estate in England part of which consisted of immovable property. The High Court reluctantly concluded that the intestate's widow was entitled to the full "statutory legacy" under section 46(1) of the Administration of Estates Act 1925 as amended (the Hong Kong equivalent being section 4(3) and (4) of the Ordinance), despite her having already received $1 million out of the deceased's estate in Trinidad and Tobago. We consider that in such circumstances, where estate is left in more than one jurisdiction, it would be fairer to the other members of the deceased's family if the surviving spouse were required to account for moneys received elsewhere against any interest received under the intestacy or partial intestacy in Hong Kong in respect of immovable property. Two situations need to be covered: -

(a) Where a person dies leaving immovable property outside Hong Kong; and

(b) Where a person dies domiciled outside Hong Kong, leaving immovable property in Hong Kong.

8.28     We recommend that a provision be inserted in the Ordinance to negative the effect of the decision in In re Collens and deal with situations (a) and (b) (see clause 8 of the Bill at Annexure 7).”

16.  Clause 8 of the Bill at Annexure 7 sets out the then proposed new section 8A of IEO, which subsequently was enacted in 1995.

17.  I will not set out in detail all the legislative history of section 8A.  

18.  Suffice to say, it would appear to this Court that instead of requiring the surviving spouse to fully account for all moneys received elsewhere against any interest received under the intestacy or partial intestacy in Hong Kong in respect of immovable property, the recommendation in the LRC Report was only that the “net sum” payable to the surviving spouse is to be diminished by the value at date of death of the beneficial interests acquired by the spouse under the law of intestacy or of partial intestacy of a foreign place and where the value of those beneficial interests exceeds the “net sum”, IEO shall have effect as if references to the “net sum” and interest on that sum were omitted.

19.  In my view, the plain and natural meaning of section 8A(2) is that where the value of those beneficial interests acquired by the surviving spouse under foreign law exceeds the “net sum” of HKD 1,000,000 in section 4(4), the references to the “net sum” would be omitted and the residuary estate of the intestate shall be held as provided in 4(4)(a) and (b), as the situation may be.  This interpretation is also consistent with the legislative intent. 

20.  Thus, my determination is that Interpretation 1 is the correct interpretation.

21.  Mr Chow has also set out arguments in favour of Interpretation 2.  As pointed out by him, Interpretation 2 would ensure that the beneficiaries of an estate, be they spouses or other family members are treated equally where they inherit under foreign intestacy law as they would all have to account in full for the foreign interest.  However, I find that Interpretation 2 is not the plain and natural meaning of the wording of section 8A(2).  I also find that it was not the legislative intent.  In my view, the legislative intent was clearly for the operation of the spousal accounting provisions (under section 8A(2) and the non-spousal accounting provisions (under sections 8A(3) and (4)) to be different.

Conclusion

22.  For all the above reasons, as said above, in my view Interpretation 1 is the correct interpretation.

23.  I have ordered that the Administrator’s costs of this application be summarily assessed on trustee basis and paid out of the Deceased’s estate.  Directions have been made for the lodging of statement of costs and lists of objections.  The summary assessment will be dealt with on paper.