WONG ZHONG LAN-XIANG Nee ZHONG LAN-XIANG & OTHERS v. FRANK WONG & ANOTHER

CACV 242/2002

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

(On appeal from High Court Probate Action No. 900002 of 1995)

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REASONS  FOR  DECISION

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1. On 13 September 2002, there was an application before me for security for costs of an appeal. At the end of the hearing, I dismissed the application and said that I would reduce my reasons into writing to be handed down at a later date. I do so now.

The Action

2. The appeal is from the judgment of Deputy Judge Andrew Cheung in Probate Action No. 900002 of 1995. This action concerned the estate of a person called Wong Yee-man ("the deceased") who was the registered owner of a piece of land known as 64 Tung Choi Street, Kowloon. The deceased died intestate on 14 December 1970.

3. The 1st Plaintiff claimed to have married the deceased in 1939 and the 2nd-5th Plaintiffs (2 sons and 2 daughters) are her children by him. This family lived on the Mainland.

4. It was however found by the judge that the deceased had another name (Wong Wing-song) and another family. He found that the deceased had married Madam Hom Shee in 1921. (Madam Hom Shee died on 11 April 1992 and her son the 5th Defendant is the executor of her estate). According to the 5th Defendant's Power of Attorney exhibited in "HYW-32", Madam Hom Shee had 3 sons (including himself) and 3 daughters by the deceased. This family lived in the United States.

5. After trial, the judge found that the deceased's marriage to Madam Hom Shee was valid, and his "marriage" to the 1st Plaintiff was not valid. Accordingly, letters of administration to the deceased's estate were granted to the 5th Defendant, and the 1st Plaintiff was declared to have no share in the residuary estate.

The Order

6. By reason of that finding, Madam Hom Shee's estate was entitled to claim maintenance from the deceased's estate from the time of the deceased's death to her own death.

7. As for the children, the judge held that

(a) all daughters surviving and unmarried at the time of the deceased's death were entitled to claim maintenance until marriage and to a dowry upon marriage. According to Mr YC Lee (counsel for the Plaintiffs) and Mr Bernard Mak (counsel for the Defendant), there are 2 daughters from each family who fall into this category;

(b) all sons were entitled to an equal share of the deceased's estate.

8. It is against this judgment that the Plaintiffs have lodged an appeal. There has been no cross-appeal.

Application for security for costs - quantum

9. The Defendant applied for security for costs of the appeal. The initial estimate (assuming a 2-day hearing) was $252,600. This seemed not unreasonable.

10. Since then however, a draft itemized bill has been provided doubling the estimate to about $500,000. Additional items were (a) costs for the application for security for costs; (b) an increase in solicitors' attendance from 15 hours to 42 hours, mostly under Part 3 of the draft Bill and (c) briefing Mr Victor Dawes as junior counsel to Mr Mak at the hearing of the appeal, Mr Dawes having previously attended the trial on a complimentary basis.

11. Clearly, there should be added to the original estimate the costs for the application for security for costs. I would therefore add, say $30,000 (including solicitors' attendance) for the costs of the application.

12. Further, in view of the seniority of counsel instructed at trial by the Plaintiffs themselves, and since Mr Dawes had attended the trial for the Defendant albeit on a complimentary basis, it would in my view not be unreasonable for the Defendant to instruct him to assist at the appeal. I would add, say $50,000 to the original estimate.

13. However, I have some difficulty understanding the escalation in costs for solicitors' attendance. On an appeal, the issues have already been crystallized and solicitors' work would be far less extensive than preparation for trial. It would appear to me that the 15 hours pre-hearing and 2 hours post-hearing in the original estimate were far more realistic.

14. In the circumstances, I would have thought an estimate of say, $330,000 ($250,000 + $30,000 + $50,000)would not be unreasonable.

Liability to provide security for costs

15. However, the question is whether the Plaintiffs should have to provide security for costs.

16. The sole basis of the Defendant's application for security for costs is that the Plaintiffs are resident outside the jurisdiction. As set out in 59/10/31 Hong Kong Civil Procedure 2002, there is a presumption that there would be undue delay or expense in enforcing a costs order abroad, and accordingly security would be ordered unless the appellants can prove ease of enforcement.

17. However in this case, the judge has ordered that the 3rd and 5th Plaintiffs (being sons) are entitled to share in the residuary estate and there has been no cross-appeal from this order. The Plaintiffs say that the property at Tung Choi Street is worth $8m. Therefore a costs order of $330,000 can easily be enforced against the proceeds distributed to the 3rd and 5th Plaintiffs without the need to provide security.

18. Although no professional valuation has been provided to support the Plaintiffs' valuation of $8m, the Defendant has, for present purposes, accepted that the value of the property is $7m. The property is not subject to mortgage, and although there are certain rates and property tax demands outstanding, (even according to Mr Mak's instructions) those only amount to $100,000 or so.

19. There are no known creditors of the deceased, and since he died 32 years ago, it is unlikely that there would be any creditor appearing to make any claims against his estate now.

20. That leaves an estate worth at least $7m. Before there is a net residuary estate to be divided amongst the deceased's 5 sons, there would of course have to be deducted (a) the costs of the trial as ordered by the judge, (b) the claims for maintenance for Madam Hom Shee and (c) the daughters' maintenance and dowry. However, as a matter of arithmetic, it would only be if the net residuary estate were depleted to less than $825,000 that the 2 shares of the 3rd and 5th Plaintiffs would be worth less than $330,000.

21. Depletion by as large an amount as $6,175,000 ($7,000,000 - $825,000) would be surprising to say the least. In my view, the Plaintiffs have succeeded in showing that a costs order of $330,000 could be enforced against the 3rd and 5th Plaintiffs when the proceeds of sale are distributed. (I should add that although the 3rd and 5th Plaintiffs have signed a letter saying that they would bear the costs of the 2nd and 4th Plaintiffs and did not include the 1st Plaintiff, the Notice of Appeal has been lodged on behalf of all the plaintiffs, and it has not been disputed by Mr Mak that they would be jointly and severally liable for the costs order).

22. In response to the Plaintiffs' grounds for opposing security for costs, Mr Mak has submitted first, that the estate would have to bear part of the costs of the trial under the judge's order. The order was that the Defendant would have his costs out of the estate on a common fund basis and that the Plaintiffs would have one-third of their costs out of the estate.

23. It is true that those costs have not been estimated, but even if it were to be assumed that a total of say, $2m. were to be paid out of the estate, that would still leave the estate with $5m.

24. From this would have to be deducted the claim of Madam Hom Shee to maintenance and the claims of the 4 daughters to maintenance and dowry. Mr Mak for the Defendant submitted that since this sum was unknown, it cannot be assumed that there would be enough left for the 3rd and 5th Plaintiffs to pay the Defendant the costs of the appeal.

25. I cannot accept that argument, as the Defendant (the administrator) has done nothing to ascertain the possible extent of those claims. Although the judgment was handed down 5 months ago and no stay of execution has been ordered, no steps have been taken by the 5th Defendant as administrator to ascertain the extent of the claims to maintenance and dowry. It seems to me that it would be wrong for a person to rely on his own inactivity to create an uncertainty to the detriment of another.

26. Further, it has been suggested that the appeal has been fixed for hearing in December, when the property may not be sold for some time. However there was no evidence before me that this property was unsaleable for any reason, and when the parties say that they estimate its value to be between $7-8m, it has to be assumed that there is a market for it. The Defendant has the carriage of the administration, so it is up to him to proceed with the sale of the property with due diligence.

27. In the circumstances, for the reasons above, I dismissed the Defendant's application. I further give an order nisi that the costs of the application should follow the event, i.e. that the Defendant bear the costs of the application.