CHOI LAM FAT LUKE v. CHOI SAU YING JENNY AND ANOTHER

HCMP 161/2025

[2026] HKCFI 3999

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 161 OF 2025

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D E C I S I O N

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Introduction and Background

1.  By an Originating Summons dated 28 January 2025 (“OS”), the Plaintiff (“P”) seeks inter alia an order to remove the 1^st Defendant (“D1”) and the 2^nd Defendant (“D2”) as administrators of the estate of Choi Chau Chung, deceased (“the Deceased”) (“the Estate”).

2.  The Deceased died without a will on 8 March 2023. He is survived by six children, all of whom are equal beneficiaries of the Estate under the laws of intestacy. Three of the Deceased’s children are parties to the OS: P (the eldest son); D1 (the eldest daughter); and D2 (the second eldest son). The other three beneficiaries (three daughters), although not parties to these proceedings, support P’s application.

3.  D1 and D2 (collectively, “Ds”) obtained the Grant of Letters of Administration on 8 August 2023.

4.  According to the Schedule of Assets and Liabilities in the Letters of Administration dated 31 October 2023 (“the Schedule”), the assets of the Estate consist of:

(1)  Cash in bank accounts in the sums of: (a) HK$25,811.24 in Shanghai Commercial Bank Limited, Account No. 331‑82‑05940-4 (“the 404 Account”); (b) HK$1,978.90 in Shanghai Commercial Bank Limited, Account No. 343‑14‑37533-8; and (c) HK$4,070 in Bank of Communications (Hong Kong) Limited, Account No. 382543103385501[1];

(2)  Shares: (a) 200,000 shares in Flash Lake Development Limited (“the Company”)[2] which has no business other than holding a shop known as Shop H on G/F including cockloft, Shui Wo House, Nos. 35-47 & 51 Ka Lok Street, Nos. 91-93 Shui Wo Street, Kowloon (“Shui Wo House Property”)[3]; and (b) 112,500 shares in Wah Sing Electronic Dyeing Company Limited (“Wah Sing”)[4];

(3)  Flat No. 4 on 29^th Floor of Block B, Hong Pak Court, No. 139 Pik Wan Road, Kowloon (“the Property”)[5];

(4)  Chose in action: (a) HK$110,400 being the costs awarded pursuant to the Order dated 25 September 2020 under HCA 1566/2015 (“HCA”); and (b) HK$1,400,000 being the costs awarded pursuant to the Judgment dated 21 May 2021 under HCA; and

(5)  Liability of HK$1,876,543 owed by the Estate to D2 (“the Alleged Loan”) which is disputed by P.

5.  Notwithstanding the grant of administration on 8 August 2023, as at the substantive hearing of the OS, distribution of the Estate to the beneficiaries has not been completed. Whilst there is agreement that the 200,000 shares in the Company shall be distributed in specie (this was not agreed prior to the issuance of the OS and this has not been done) and the Property shall be sold (again, not before the issuance of the OS and this has not been done), the other assets of the Estate, including mesne profits that should be paid by D2 to the Estate for D2’s occupation since the demise of the Deceased (but the amount is not resolved), have not been distributed. There is also the outstanding dispute concerning the Alleged Loan: whether it is due to D2 and if so, the amount. By a Consent Summons dated 30 December 2025, for which an order in terms has been obtained and sealed on 21 April 2026, after the sale of the Property out of the proceeds of the sale, the sum of HK$1,876,543 on behalf of Ds shall to be paid into court.

6.  Mr Ross MY Yuen and Miss Hannah Tang, counsel, appeared for P and Miss Cyndi Ho, counsel, appeared for Ds at the substantive hearing of the OS.

Applicable Principles

7.  Section 33(3) of Probate and Administration Ordinance, Cap. 10 (“PAO”), provides:

“The court may, if satisfied that the due and proper administration of the estate and the interests of the persons beneficially entitled thereto so required, suspend or remove an executor or administrator and provide for the succession of another person in place of such executor or administrator and for the vesting in that other person of any property belonging to the estate.”

8.  The applicable principles for the removal and replacement of an executor or administrator under s.33(3) of PAO had been helpfully distilled from the cases by DHCJ Ng Jern Fei KC recently in Re Estate of Poon Siu Chun (Deceased) [2026] 1 HKLRD 1069 at §20 as follows (with the footnotes therein omitted):

(1)  The overriding consideration is the interest and welfare of the beneficiaries, and the question is what is necessary or required for the due and proper administration of the estate.

(2)  The exercise of the power to remove is a discretionary exercise that involves an assessment and value judgment, taking all relevant circumstances into account. Such circumstances include the size of the estate and the nature of the assets that are being administered.

(3)  It is not every mistake or neglect of duty, or inaccuracy or misconduct, which will induce a court to remove an administrator. The acts or omission must be such as to endanger the trust property or to show a want of proper capacity to execute the duties, or a want of reasonable fidelity.

(4)  Where allegations of misconduct were raised but were held not to have been made out, or were greatly exaggerated, such that the administrator was justified in resisting them (and the court might consider that in its decision on costs), the administrator might yet be removed if the court were satisfied that the continuance of the administrator would prevent the administration being properly carried out.

(5)  It is not necessary to establish specific wrongdoing, misconduct or fault, but obviously they are relevant considerations if established. The fact that the administration could have been done better is not of itself a sufficient ground for removal. The sincerity and intention of the administrator in performing his obligations would be taken into account by the court.

(6)  The duty to render a full and proper account when called upon to do so is a fundamental and important duty, and a failure to do so may, in appropriate circumstances, be a good reason to justify removal. Delay in providing an account does not automatically call for removal and whether or not removal is to be ordered depends on the circumstances of the case.

(7)  For the purposes of rendering a full and proper account of the estate, an administrator is required to:

(a)  show the opening balance (including capital assets) and closing balance;

(b)  give details of movement of assets, incomes and expenditure of the estate;

(c)  give details of the whereabouts of all properties (including cash) of the estate which the administrator is duty bound to administer; and

(d)  support the account with documentary evidence.

(8)  It is the administrator’s duty to gather and distribute assets of the estate to the beneficiaries. One of the key objectives of an administration is for the assets of the estate to be distributed as expeditiously and economically as is possible. It thus follows that substantial delay in the completion of the administration may constitute a ground for removal.

(9)  Hostility between the administrator and the beneficiaries is not a ground for removal, unless the breakdown of relations between them is such as to lead to the administration coming to a standstill, or makes it difficult or impossible for the administration to be carried out or completed. Where the hostility or friction is grounded on the mode or way the estate has been administered, it is certainly not to be disregarded.

Discussion

9.  Whilst numerous matters were raised by the parties in the affirmations filed in support of and to contest the OS[6], at the substantive hearing of the OS, P primarily relied on: (1) the conflict of interest between Ds and the beneficiaries of the Estate arising from the dispute over: (a) whether the Estate owed the Alleged Loan to D2; and (b) the amount of mesne profits owed by D2 for his occupation of the Property since the demise of the Deceased; (2) the failure of Ds to provide proper account supported by documents despite the beneficiaries’ demands; and (3) the mistrust between Ds and the other beneficiaries arising from Ds’ administration of the Estate both before and after these proceedings were commenced; as grounds for removal of Ds as administrators and replacement by P or alternatively, a professional administrator.

10.  Firstly, in relation to the conflict of interest arising from the disputed liability of the Estate for the Alleged Loan, Ds claimed in the Schedule that the Estate owes D2 a total of HK$1,876,543. In D1’s Affirmation, she explained that D2 lent money to the Deceased to fund his defence of the loan-sharks’ (“Dynamic”) claim that the Deceased had defaulted in relation to a loan entered in May 2015 between the Deceased and Dynamic. Dynamic claimed for the principle and interests in the sum of HK$1,588,027.40 in HCA which ultimately was dismissed with costs in favour of the Deceased when Dynamic failed to appear for trial. She exhibited various copies of cheques issued by D2 to Messrs Henry Lam & Associates (“HL”) and the official receipts issued by HL.

11.  However, P submitted that there are many questions raised about the Alleged Loan. These include: (a) that the Alleged Loan was entered into at a time when according to a psychiatric report dated 7 August 2015, the Deceased was known to have cognitive impairment since 2011 and was certified as permanently incapable by reason of mental incapacity of managing and administrating his property and affairs; (b) when an application was made by Ds for an inquiry and they be appointed committee of the Deceased under the Mental Health Ordinance, Cap. 136, in the Certificate of Family Property filed on 4 July 2022 (after HCA had been dismissed and costs assessed in May 2021) the legal costs under HCA was stated to be HK$1,510,400 and was said to have been paid by both Ds; (c) for some of HL’s receipts produced by D1 they merely stated the sum was received or were for “legal costs” with no particulars to show they were incurred in relation to HCA; (d) D2 has not produced his own bank statements or records to show his financial means to lend the Alleged Loan and that the funds came from him, and even if he could not obtain bank statements beyond 7 years, he did not produce the bank statements from 2020 onwards; and (e) from the Deceased’s bank account statements that had been produced by Ds, it would appear at least two of the expenses claimed by D2 had been settled by funds from the 404 Account (contrary to D2’s assertion in D2’s Affirmation that he had not used the funds in the Deceased’s accounts to settle the legal fees in HCA).

12.  It was accepted by the parties whether the Alleged Loan exists is not an issue that can and needs to be resolved summarily in this application for removal of administrator. Where D2 is claiming in his personal capacity as creditor against the Estate of which he is an administrator, I am of the view that he is in a position of serious conflict of interest. He is wearing two hats, with conflicting interests in the capacity of administrator (requiring him to investigate whether the Alleged Loan is due and owing by the Estate and if not, to defend any legal action taken by himself) and as creditor (where it is in his personal interest to be paid the Alleged Loan and to take legal action to do so when it is being disputed by the Estate). Where there are good reasons to closely scrutinize the Alleged Loan and carry out further investigation in the due and proper administration of the Estate, which is my view there are given the questions raised and lack of documentary support for the Alleged Loan, there is a serious conflict of interest. See Li Choi Ping & Anor v Xie Yanxian [2022] HKCFI 3042 per Wilson Chan J at §§10-14; Thian Sum v Yung Shui Tong [2019] HKCFI 2867 at §§16-17 per DHCJ William Wong SC and Tsao Chi Ching v Tsao Lung May [2013] 2 HKLRD 301 per Master Levy at §§47-50.

13.  Ds suggested that any conflict of interest is resolved by the payment into court and D2 has not placed his personal interest before and on top of his entitlement to the residuary estate as he has not paid HK$1,876,543 out of the Estate to himself. However, the payment of the sum into court out of the proceeds from the sale of the Property does not mean that Ds no longer maintain that the Alleged Loan is due and owing from the Estate but merely preserves the status quo pending resolution of whether the Alleged Loan is due and the amount. D2 is still claiming HK$1,876,543 is due to him and that it should be paid out of the Estate before the residual is distributed.

14.  Ds also relied on Kwok Wing Yan v Kwok Kam Wing [2023] HKCFI 2510 at §§110-113 that the conflict of interest principle would not be engaged where the executor was put in the position of conflict by the testator and where family members act as executors potential conflict of interest would not be such as to require their removal because the deceased can be expected to have known of the relationships and circumstances during his lifetime which might create or lead to any expectation of any such conflict. However, it is clear that it has also been held that this approach cannot be taken in relation to conduct or circumstances which have arisen since the death of the testator or about matters which the testator could not have been expected to have had knowledge. See Tsaknis v Lilburne [2010] WASC 152 at §61 and Williams, Mortimer and Sunnucks on Executors, Administrators and Probate, 22^nd Edn, §53-20.

15.  In the present case, given the undisputed fact that the Deceased was mentally incapacitated when the Alleged Loan was entered into and he could not have known which of his children would take out administration (as he did not make a will nor appoint D2 as his executor), and the events that took place since his death in the administration of the Estate which P relies upon as having created mistrust between Ds and the other beneficiaries could not have been known to the Deceased, the case of Kwok Wing Yan does not assist Ds.

16.  In any event, whilst the learned judge in Kwok Wing Yan held that the conflict of interest does not by itself require the removal of the defendant as an executor, when it comes to verifying the extent of the estate’s liability under the alleged loan which the defendant does not appear to have fully investigated the matter or has not been entirely forthcoming about the results of his investigation, this was a factor which should be taken into account in the removal application (see §§112-113). Accordingly, given my view on the apparent conflict of interest but Ds have not fully investigated the matter or been entirely forthcoming or produced sufficient documents to support the Alleged Loan is due and owing by the Estate, it is a factor that should be taken into account.

17.  Moreover, there is also D2’s conflict of interest in determining the amount of mesne profits to be charged by the Estate for his occupation of the Property. Whilst previously P has proposed D2 should pay $8,000/month as mesne profits as part of the global settlement of these proceedings this was stated as a concessionary rate[7], as other issues have not been resolved, the amount of mesne profits remain disputed. To date, no valuation of the rental value of the Property had been obtained by Ds to properly account for D2’s occupation of the Property. Even if D2 is willing to pay mesne profits in the amount of HK$8,000, as stated in D2’s Affirmation filed just one month before the substantive hearing of the OS, this has not been paid nor reflected in D’s Inventory or any updated inventory. Again, there is a clear serious conflict of interest in his capacity as administrator that he should ensure that any use of the Property (which after the demise of the Deceased belong to all beneficiaries equally) is properly compensated by D2 but as occupier of the Property, it is in his personal interest not to have to pay any or pay reduced mesne profits. Even though it was submitted that D2 had been living in the Property since 2005, it does not necessarily follow that the Deceased would have known that D2 would remain living there after his demise without paying any rent to the beneficiaries who are the beneficial owners of the Property.

18.  Secondly, in relation to the failure to provide a proper account of the Estate, I disagree with Ds’ assertion that the “bank accounts have been accounted for” and P’s complaint is confined to the Alleged Loan[8]. Ds’ Inventory was provided only after the commencement of these proceedings, notwithstanding P’s demand by letter dated 30 August 2024. The balance in two of the Deceased’s accounts have been reduced by withdrawals which should be accounted for and explained by proper documentary evidence. These movements of funds have not been supported by documentary evidence but were only explained in a piecemeal manner in the affirmations filed in these proceedings or from the Bar table.  The bank statements of the Deceased were only provided up to 31 March 2023 but there were further movements in and out of the 404 Account after that date. In the Skeleton Submissions for P, it also referred to the changing accounting records or explanation for the movements of funds from the 404 Account[9]. The fact only in the last affirmation filed by Ds (D2’s Affirmation) D2 offered to “personally top up the difference” in the 404 Account and Company’s bank account must be an admission there were improper withdrawals and/or the Ds’ Inventory is inaccurate. Furthermore, as already mentioned, no updated inventory was provided to account for the mesne profits. Nor has there been proper accounting for the sale of shares in Wah Sing which were sold without informing the other beneficiaries and only in D1’s Affirmation the circumstances of the sale was explained. In all, I am of the view that Ds have failed to render a true and perfect account of the Estate when they have been called upon to do so.

19.  Thirdly, it was submitted that due to Ds’ failure to acknowledge the interests of the beneficiaries prior to the commencement of the present proceedings and despite given numerous opportunities to repair or remedy its defects in the administration of the Estate they have not done so which led to the deep-rooted distrust between Ds and the beneficiaries leading to a standstill in the administration of the Estate. P relied on the contemporaneous correspondence which demonstrates the denial of the other beneficiaries’ interest including:

(1)  Ds’ letter dated 29 July 2024 to P and two other beneficiaries (Choi Sau Lee and Choi Sau Kam): “…Firstly, I hope that everyone can respect our father’s wishes during his lifetime. Our father had given clear instructions to entrust the management of the property rights and other assets to [Ds]. We should abide by our father’s wishes instead of demanding an equal distribution…”; and

(2)  Ds’ letter to P and Choi Sau Lee dated 3 October 2024: “最後，我們不厭其煩地向你們說明：你父親生前曾有明確指示，待湖光發展有限公司所屬地舖業權出售後，首先結清之前訴訟的律師費用，餘額再按股權分配，爸爸自己那一份由蔡林雄和蔡秀英處理，其他資產，你們無需過問，爸爸已說得很清楚，此等指示均已在高等法院頒佈的遺產承辦書中清楚注明，如不滿意，可向高等法院上訴…”

20.  In D1’s Affirmation, she has now admitted that at the time she was labouring under a mistaken belief about the Deceased’s wishes but now with legal advice, Ds will distribute the Estate to all beneficiaries in equal shares. However, P pointed out that Ds were legally advised even back in May 2024 when their then solicitors issued a letter to P dated 21 May 2024 demanding the transfer of the 200,000 shares in the Company to Ds as administrators. According to P, that was the first time when he was informed that Ds had applied for and were appointed as joint administrators of the Estate.

21.  P also submitted that the purported explanation for not selling the Property and allowing D2 to stay in it because it would be in the best interest of all beneficiaries is also disingenuous when from the correspondence above, they plainly considered the beneficiaries had no interest in the Property. I agree that the stance taken by Ds has created mistrust and a breakdown in trust and confidence in Ds’ ability to administer the Estate.

22.  Ds submitted that as administrators they did not need to account for the assets of the Company including the rental income from the Shui Wo House Property (over HK$800,000) and D1’s handling of those rental income and placing them in her personal account was because upon the demise of the Deceased the Company’s account has been frozen given the Deceased was the sole authorized signature of the Company bank account during his lifetime, and P and D1 as remaining directors of the Company were not able to resolve the deadlock over the signatory arrangement. Whilst these are matters concerning the Company which all the beneficiaries as shareholders may have other remedies for which this court does not need to resolve the rights and wrongs, this further demonstrates the deep-rooted mistrust between P and Ds, and the possible deadlock and administration coming to a standstill if Ds remain as administrators. See Li Choi Ping & Anor, §21 and Ang Jimmy Tjun Min v Ang Eileen & Anor [2023] HKCFI 3120, §32.

23.  Apart from the deadlock concerning the Company’s bank accounts and appointment of new directors, there was also a dispute over whether to distribute the 200,000 shares of the Company in specie or for the Shui Wo House Property be sold and the proceeds then distributed. On 21 May 2024, Ds (through their then solicitors) purportedly as administrators, demanded P to transfer the Deceased’s shares to Ds for the administration of the Estate. When all the beneficiaries except Ds wanted an in specie distribution of their shares and made this clear on 5 June 2025 through solicitors correspondence, at the Company’s board meeting of 17 June 2025, D1 said that she did not want to distribute the shares and said that she wanted to sell the Shui Wo House Property and then to wind-up the Company. She even proposed the other beneficiaries should buy out Ds’ 50% as if the 200,000 shares belonged to Ds. As already mentioned, only after these proceedings were commenced was it agreed for the 200,000 shares be distributed in specie.

24.  The ultimate consideration is whether the due and proper administration of the Estate and the interests of the beneficiaries require the replacement of Ds as administrators. Given the serious conflict of interest, coupled with the failure to provide a true and perfect account of the Estate as a result of which there is a loss of confidence in their ability to duly administer the Estate which no doubt will lead to further challenges to any decision taken by Ds and delay to the administration of the Estate, considering all the circumstances of this case including the views of the beneficiaries, I am of the view that it is necessary to remove Ds as the administrators. I disagree with Ds that considering the size of the Estate and what remains to be administered does not justify the costs (which would be capped at 1% of the size of the Estate[10] under s.60(2)(b) of PAO) to have Ds removed and replaced by a professional administrator.

25.  As it was confirmed that, apart from the costs, Ds have no objection to the proprietary or suitability of P’s proposed professional administrator nor put forward other candidates, Mr Lin Siu Leung David should be appointed in place of Ds.

Orders

26.  I will therefore order Ds be removed as the joint administrators of the Estate and be replaced by Mr Lin Siu Leung David.

27.  I also give the parties liberty to apply for such further or other directions if necessary.

28.  I see no reason why costs should not follow the event. Accordingly, I will make a costs order nisi that Ds should jointly and severally pay to P the costs of and occasioned by the OS (including all reserved costs, if any) to be taxed if not agreed.

29.  The above costs order nisi shall become absolute in the absence of any application within 14 days to vary the same.