CHOW CHAK KIU v. CHOW MAN CHIT AND OTHERS

HCMP 797/2016

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 797 OF 2016

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D E C I S I O N

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INTRODUCTION

1.  Chak Kiu (the plaintiff) and Chung Woon (the 3^rd defendant) are the sons of the Madam Chow (mother, the 1^st defendant) and the late Chow Kwok Leung (father, “the Deceased”)), who died intestate in 1992.  Madam Chow, Chak Kiu and Chung Woon were (and are) the only beneficiaries of the Estate of the Deceased under his intestacy.  Letters of Administration of the Estate of the Deceased was granted to Madam Chow and Madam Chau (the Deceased’s elder sister, the 2^nd defendant) in 2000.  However, the administration of the Estate has not yet been completed even up to now.

2.  By this application, Chak Kiu seeks an order for (inter alia):-

(1) the removal of Madam Chow and Madam Chau as the Administratrices of the Estate of the Deceased; and

(2) the appointment of a practising solicitor or some other fit and proper person(s) as new administrator(s) in place of Madam Chow and Madam Chau.

3.  In support of his application, Chak Kiu has raised the following complaints against Madam Chow (with emphasis on the first 3 complaints):-

(1) misappropriation and conversion of the Estate to the use of herself and Chung Woon;

(2) repeated breaches of court orders and undertaking relating to the administration and distribution of the Estate;

(3) failure to render a proper and accurate account of the Estate;

(4) conflict of interest; and

(5) dilatoriness in distributing the Estate to the beneficiaries.

4.  Chak Kiu’s application is opposed by Madam Chow and Chung Woon.  Madam Chau has not entered any appearance in this application.  She also did not appear at the substantive hearing on 23 August 2016, or the further hearing on 24 October 2016 in relation to Madam Chow’s summons dated 17 September 2016 for leave to (i) adduce new evidence, and (ii) cross-examine Chak Kiu on his affirmations filed in this application and in a related application in HCMP 332/2015 (more particularly described below).

5.  The main issue that I have to decide is whether Madam Chow ought to be removed as an administratrix of the Estate of the Deceased, there being no dispute that Madam Chau ought to be removed.  In addition, I have to decide whether to grant leave to Madam Chow to adduce new evidence and to cross-examine Chak Kiu on his affirmations.

BACKGROUND FACTS

6.  The Deceased (the late Chow Kwok Leung) died intestate on 18 March 1992, leaving him surviving the following persons being entitled to share in his Estate:-

(1) Madam Chow, his lawful widow;

(2) Chak Kiu, his natural and lawful son; and

(3) Chung Woon, his natural and lawful son.

7.  By Letters of Administration dated 19 October 2000, administration of the Estate was granted to the Administratrices, in view of the fact that Chak Kiu and Chung Woon were minors at that time.

8.  It is not in dispute that over the years since the grant of the Letters of Administration, Madam Chow has been in charge of the administration of the Estate, and Madam Chau has not taken any active part in relation to the administration of the Estate.

9.  The Estate was a sizable one.  As can be seen from the schedules attached to the Letters of Administration, as at the date of death of the Deceased, the Estate comprised, inter alia, 11 landed properties in Hong Kong with a value of about HK$39 million, and cash/receivables of more than HK$4.5 million. The net principal value of the Estate, taking into account relevant deductions, came to about HK$13.46 million.

10.  After the grant of the Letters of Administration, all the landed properties of the Estate were sold in around 2001, with the exception of a property known as Shop No N44B, being Portion of Shop No 44 on Ground Floor of 34A Nassau Street, Stage VIB1, Mei Foo Sun Chuen, Kowloon (“the Mei Foo Shop”), which is currently still held by Madam Chow and Madam Chau in their capacity as the Administratrices of the Estate of the Deceased.

11.  Madam Chow used the proceeds of sale of the landed properties of the Estate to purchase other properties through Million Ease Limited (the 4^th defendant, “MEL”), a company incorporated in Hong Kong on 25 February 2000.  Madam Chow, Chak Kiu and Chung Woon are directors and shareholders of MEL, holding 80%, 10% and 10% respectively of the issued share capital thereof.

12.  As at the date of commencement of this application on 5 April 2016, MEL held the following properties for and on behalf of the Estate:-

(1) Flat D, 22/F, Tower 4, Rhine Garden, 38 Castle Peak Road, Sham Tseng, Tsuen Wan, New Territories (“Flat D”);

(2) Flat E, 22/F, Tower 4, Rhine Garden, 38 Castle Peak Road, Sham Tseng, Tsuen Wan, New Territories (“Flat E”);

(3) Flat F, 22/F, Tower 4, Rhine Garden, 38 Castle Peak Road, Sham Tseng, Tsuen Wan, New Territories (“Flat F”); and

(4) Shop No 101, G/F, Podium A, Riviera Gardens, 1-7 Yi Hong Street, Tsuen Wan, New Territories (“the Riviera Gardens Shop”),

(collectively “the Properties”).

13.  Apparently, the income generated from the properties belonging to the Estate was used by Madam Chow to (inter alia) support the living and education expenses of herself, Chak Kiu and Chung Woon.

14.  Chak Kiu and Chung Woon attained full age in 2003 and 2007 respectively.  It is not in dispute, however, that the Administratrices have not distributed, or fully distributed, to Chak Kiu and Chung Woon their respective shares of or in the Estate.

15.  According to Chak Kiu, in about 2010 and 2011, he became concerned about whether Madam Chow had been administering the Estate properly.  After repeated attempts to make enquires with Madam Chow about the status of the Estate but to no avail, in December 2014, he instructed solicitors to make a formal demand on the Administratrices for an account and distribution of the Estate.

16.  The disputes between Chak Kiu on one side and Madam Chow and Chung Woon on the other have generated a number of legal actions in Hong Kong, including the following:-

(1) HCMP 332/2015, commenced by Chak Kiu against the Administratrices on 9 February 2015 seeking an order for general administration of the Estate, as well as a full and proper inventory and account of the Estate;

(2) HCA 1024/2015, commenced by Chak Kiu against MEL on 8 May 2015 seeking a declaration that MEL holds 1/4^th of the Properties or the proceeds of sale thereof as constructive trustee for him (this action was, apparently, prompted by Chak Kiu’s discovery that MEL had entered into two written agreements both dated 20 March 2015 to sell Flat D and Flat E for HK$5.1 million and HK$5.7 million respectively shortly after the commencement of HCMP 332/2015); and

(3) HCMP 797/2016 (ie the present application), commenced by Chak Kiu against Madam Chow, Madam Chau, Chung Woon and MEL on 5 April 2016 seeking an order for the removal of Madam Chow and Madam Chau as the Administratrices, and the appointment of new administrator(s), of the Estate.

MISAPPROPRIATION AND CONVERSION OF THE ESTATE

17.  As earlier mentioned, shortly after the commencement of HCMP 332/2015, MEL entered into two sale and purchase agreements both dated 20 March 2015 to sell Flat D and Flat E for HK$5.1 million and HK$5.7 million respectively (totalling HK$10.8 million).  Under those agreements, completion of the sale of the properties was to take place on or before 7 May 2015.

18.  According to Chung Woon, the proceeds of sale were first paid into MEL’s account. Afterwards, HK$9 million was withdrawn from MEL’s account and paid into Chung Woon’s personal account with Hang Seng Bank.  He then used the HK$9 million plus a mortgage loan of HK$5 million to fund (i) the purchase of a new house (namely, Block 23B, Hillwood, No 688 Shui Tsiu San Tsuen, Shap Pat Heung, Yuen Long, New Territories, “the Hillwood Property”) as residence for Madam Chow, himself and his grandmother at the price of HK$12.3 million, and (ii) the costs (of about HK$1 million) for alteration and renovation of that house (see paragraph 9.02 of Chung Woon’s affidavit filed on 20 July 2016).

19.  According to the relevant land registration records, Chung Woon entered into an agreement for the purchase of the Hillwood Property on 22 July 2015 and completed the purchase on 24 August 2015 with the assistance of a mortgage loan from Hang Seng Bank.

20.  Chak Kiu complains that the agreements to sell Flat D and Flat E were entered into by MEL without his prior knowledge or consent, notwithstanding the fact that he was a director of MEL.

21.  On the other hand:-

(1) Madam Chow and Chung Woon allege, without particulars, that they did send notice of the relevant board meeting and the minutes of the meeting to Chak Kiu.  Madam Chow and Chung Woon have not, however, produced any relevant notice, resolution or minutes as evidence in the present application (see paragraph 6.03 of Madam Chow’s affidavit filed on 20 July 2016 and paragraph 3.04 of Chung Woon’s affidavit filed on 20 July 2016).

(2) Chung Woon further alleges, also without particulars, that he told Chak Kiu that Flats D, E and F would be sold, that a new house would be purchased in his name, and he would apply for a mortgage loan from a bank to assist in the purchase of the new house (see paragraph 8 of Chung Woon’s affidavit filed on 20 July 2016).

22.  There is no suggestion by Madam Chow or Chung Woon that Chak Kiu consented to the sale of the two properties.  Indeed, Madam Chow, in paragraph 6.05 of her affidavit filed on 20 July 2016, accepted that she did not sought, or obtain, the consent of Chak Kiu to the sale of the two properties because, in her words, “I do not believe he would have consented to the sale, and he would have obstructed the sale”.

23.  When Chak Kiu first complained, in his 2^nd affirmation filed in HCMP 332/2015 on 19 May 2015, about MEL’s sale of Flat D and Flat E, Chung Woon’s response, in paragraph 14 of his affidavit filed on 2 July 2015 in those proceedings, was not that Chak Kiu had knowledge or consented to the sale of those properties. Instead, his response was:

“After [Chak Kiu] has issued the current application [ie HCMP 332/2015], [Madam Chow] decided and [Chung Woon] agreed to distribute to [Chak Kiu] his share of the current inventory of the Estate according to his entitlement of 16.67% after a payment of net sum of HK$500,000 to [Madam Chow] under section 4 of the IEO. The sale of Rhine Garden Flat D and Rhine Garden Flat E in May 2015 was for the purpose of such distribution.”

24.  In view of what Chung Woon now says in paragraphs 8 and 9.02 of his affidavit filed on 20 July 2016 (mentioned above), it seems clear that his previous assertion that the sale of Flat D and Flat E was for the purpose of making a distribution to Chak Kiu of his share of the Estate cannot be correct.

25.  In addition, Madam Chow used a portion of the proceeds of sale of Flat D and Flat E to pay off a personal loan of HK$500,000 owed to her brother (see letter dated 21 August 2015 from Madam Chow’s former solicitors, WT Law Offices, to Chak Kiu’s former solicitors, Messrs Tony Kan & Co).

26.  In my view, it is clear that Madam Chow, by using, or allowing or permitting the use of, the proceeds of sale of two properties belonging to the Estate to (i) pay off her personal loan owed to her brother, and (ii) enable Chung Woon to purchase a new property (intended to be used as residence for herself and Chung Woon and in fact so used), has misappropriated or converted funds belonging to the Estate to the use of herself and Chung Woon.

REPEATED BREACHES OF COURT ORDERS AND UNDERTAKING IN HCMP 332/2015

27.  On 9 September 2015, Chak Kiu made an application, in HCMP 332/2015, for (inter alia) an interim distribution of HK$2.7 million, being one-fourth of the sale proceeds of Flat D and Flat E corresponding to his one-fourth interest in the Estate.

28.  On 16 September 2015, Lok J made an order (“the Interim Distribution Order”) requiring Madam Chow to pay to Chak Kiu:-

(1) a sum of HK$2.7 million within 6 months; and

(2) a monthly sum of HK$32,643.30 (equivalent to one-fourth of the rental income derived from the Mei Foo Shop and the Riviera Gardens Shop) commencing on the 1^st day of October 2015 until further order of the court.

29.  On 8 March 2016, MEL entered into a provisional agreement to sell Flat F at the price of HK$3,983,800, completion to take place on or before 30 June 2016.

30.  On 9 March 2016, Madam Chow applied for an extension of time to pay HK$2.7 million to Chak Kiu (which she was required to do on or before 15 March 2016) under the Interim Distribution Order on the ground that she had to raise funds by selling Flat F.  On 24 June 2016, Master J Wong made an order extending the time of payment to 7 July 2016 (“the Time Extension Order”).

31.  Also on 24 June 2016, Master J Wong made an order vacating the registration of the writ in HCA 1024/2015 in the Land Registry against Flat F upon:-

(1) MEL’s undertaking to release the net sale proceeds of Flat F to Chak Ku’s solicitors within 7 days after completion;

(2) Madam Chow’s undertaking to pay the shortfall of Chak Kiu’s 25% interest in the net sale proceeds of Flat F and the aforesaid interim distribution of HK$2.7 million within 28 days thereafter to Chak Kiu’s solicitors.

32.  Completion of the sale of Flat F took place on 30 June 2016.

33.  On 7 July 2016, MEL’s solicitors paid the net proceeds of sale of Flat F, in the amount of HK$2,655,099.12, to Chak Kiu’s solicitors pursuant to its undertaking given to Master J Wong.

34.  Under the Time Extension Order, Madam Chow was required to pay the sum of HK$2.7 million to Chak Kiu on or before 7 July 2016.  Taking into account the net proceeds of sale of Flat F in the amount of HK$2,655,099.12 paid on 7 July 2016, there was still a balance of HK$44,900.88 which remained outstanding as at the date of the substantive hearing on 23 August 2016.

35.  Madam Chow was also required, pursuant to her own undertaking given to Master J Wong, to pay the shortfall of Chak Kiu’s 25% interest in the net sale proceeds of Flat F to Chak Kiu’s solicitors on or before 4 August 2016.  The shortfall remained outstanding as at the date of the substantive hearing on 23 August 2016.

36.  Further, under the Interim Distribution Order, Madam Chow was required to pay to Chak Kiu a monthly sum of HK$32,643.30 commencing on the 1^st day of October 2015 until further order of the court.  She failed to make full payment of the monthly sum for the months of April to July 2016, and failed to make payment of the monthly sum due on 1 August 2016 (as at the date of the substantive hearing on 23 August 2016).  Madam Chow’s explanation for these breaches of the Interim Distribution Order is that, in around April 2016, there was an agreement reached with the tenant, a property agency, of the Mei Foo Shop to renew the tenancy at a reduced monthly rent (in view of the fact that the property market was then in decline), and a partial refund of the rental deposit had to be made to the tenant.  Whilst what Madam Chow says may justify an application to the court to vary the amount of the monthly payment to Chak Kiu, there is, it seems to me, no justification for her to unilaterally reduce the amount of the monthly payment without the sanction of any court order.

37.  In all, Chak Kiu’s complaint that Madam Chow has repeatedly breached court orders and undertaking is, in my view, justified.

FAILURE TO RENDER A PROPER AND ACCURATE ACCOUNT OF THE ESTATE

38.  On 16 September 2015, Lok J made a further order (“the Order for Account”) in HCMP 332/2015 against the Administratrices, in the following terms:-

“1 The following accounts be taken that is to say:-

(1) an Account of the property of the Deceased come to the hands of [Madam Chow and Madam Chau] the administratrices of the estate of the Deceased or either of them or to the hands of any other person or persons by order or for the use of the [Madam Chow and Madam Chau] or either of them; and

(2) an Account of the dealings of [Madam Chow and Madam Chau] with such property;

2 [Madam Chow and Madam Chau] do within 42 days from the date hereof render and exhibit upon oath filed by affirmation in the Court, true, full and proper inventory of the whole of the estate of the Deceased, including without prejudice and/or limitation to the generality of the foregoing inter alia full details and particulars including without limitation, as appropriate, descriptions, quantities, values, location, whereabouts, state, dates, received or held by whom and how, of:-

(1) all properties of the estate of the Deceased and/or the Deceased known to [Madam Chow and Madam Chau] at any time whatsoever;

(2) all properties of the estate of the Deceased and/or the Deceased received and/or held by [Madam Chow and Madam Chau] at any time whatsoever, and/or the properties that have come into [Madam Chow and Madam Chau]’s hands in the course of the administration of the estate of the Deceased;

(3) all profits, dividends, interests, incomes, proceeds and/or any traceable properties arising and/or derived from the matters disclosed above; and

(4) all present properties of the estate of the Deceased;

3 [Madam Chow and Madam Chau] do within 42 days from the date hereof render and exhibit upon oath filed by affirmation in the Court, true, full and proper account of the whole of the estate of the Deceased, including without prejudice and/or limitation to the generality of the foregoing inter alia:-

(1) what has become of each of the matters disclosed in paragraph 2 above, including without limitation, all disposals, transactions, charges, mortgages, transfers and/or exchanges in relation to the same;

(2)  full details and particulars of all payments and/or distributions from the estate of the Deceased, including payment of any expenses, debts and/or liabilities and/or distributions to any beneficiaries or other persons, stating inter alia without limitation to the generality of the foregoing, identity of payer, payee, transferor, transferee, date, method, purpose, mode and nature of the same.”

39.  Paragraph 5 of the Order for Account provides that the Administratrices shall give access to Chak Kiu on demand to “all books, vouchers and other documents in their respective possession or power relating to the Accounts under paragraphs 2 and 3 above”.

40.  Generally speaking, to render a proper account of the estate of a deceased person, the personal representative is required to:-

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

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

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

(4) support the account with documentary evidence.

See Re Estate of Lee Da Kor [2010] 1 HKLRD 415, at paragraphs 17 and 26 per Jeremy Poon J (as he then was); Charles Yu Chiu Kwan v Edna Yu Chan Shek Yin, HCMP 965/1980 (22 April 1982) per Rhind J (quoted by B Chu J in Leung Wing Hong v Leung Yiu Cho, HCMP 1473/2014 (11 August 2016), at paragraph 104).

41.  Moreover, it is not acceptable for the personal representative merely to give to the beneficiary a bundle of documents relating to the estate and leave it to the beneficiary to sort out the documents himself (Re Estate of Lee Da Kor,at paragraph 37).

42.  In the present case, Madam Chow produced an inventory and account of the Estate of the Deceased (“the Account”) dated 14 December 2015 in purported compliance with the Order for Account.  The Account produced by Madam Chow is plainly deficient.  Details of Chak Kiu’s objections to the Account are set out in a “Notice of Objection” dated 26 January 2016.  In particular, the following objections seem to me to be justified:-

(1) There is no opening or closing balance, or any detail of movement of assets.  The present value of the Estate cannot be ascertained from the Account.

(2) No documents were provided to support the information contained in the Account. When Chak Kiu requested for production of the supporting documents, he was told by Madam Chow’s solicitors that they had received bundles of documents which Chak Kiu could inspect at the solicitors’ office, but they would not list the documents or photocopy them for Chak Kiu unless he was willing to pay the relevant costs on an indemnity basis, on the ground that substantial costs would have to be incurred to re-organize and list the documents (see Wong & Co’s letter dated 11 July 2016).

(3) Approximately HK$10 million (in cash) was allegedly paid to Chak Kiu between 1992 to 2014 for the purchase of approximately “10,000 bottles/cans of Coca Cola collection”.  No further detail is given of the alleged payments of HK$10 million.

(4) There were many alleged payments to Chak Kiu for “unknown” purpose.

(5) There was an alleged personal loan of HK$700,000 made by Chung Woon to Chak Kiu in 2010.  This loan is said to have been made in connection with the purchase of Flat F which, however, is a property belonging to the Estate and not Chak Kiu personally (see paragraphs 39 to 41 of Chak Kiu’s 1^st affirmation filed on 5 April 2016).

(6) Medical and other expenses of HK$1,092,000 and HK$2,910,170.76 were incurred by the Estate (as disbursements) for the mother-in-law and father-in-law of the Deceased respectively.  The mother-in-law and father-in-law of the Deceased are not, however, beneficiaries of the Estate of the Deceased.

43.  In all, I consider it to be clear that Madam Chow has failed to render a proper and sufficient account as required by the Order for Account.

OTHER COMPLAINTS

44.  In view of the conclusions that I have reached on the above matters, it is not necessary for me to consider the other two complaints raised by Chak Kiu, namely, (i) conflict of interest, and (ii) dilatoriness in distributing the Estate to the beneficiaries.

APPLICATIONS FOR LEAVE TO ADDUCE NEW EVIDENCE AND TO CROSS-EXAMINE CHAK KIU ON HIS AFFIRMATIONS

45.  The Deceased also left some real properties in Vancourver, Canada on his death. According to Chak Kiu, he only found out from Madam Chau in or around 2014 that (i) the Deceased had purchased various properties in Canada in around 1990 to 1992, and (ii) Madam Chow had sold 5 Canadian properties in about 2004 and received the sale proceeds through a solicitors’ firm in Hong Kong (see paragraph 18 of his 2^nd affirmation filed on 30 May 2016). He then asked his former solicitors, Messrs Tony Kan & Co, to issue a letter dated 14 August 2015 to Madam Chow’s former solicitors, WT Law Offices, to ask her to account for the sale proceeds.

46.  Madam Chow’s initial response was that she had never sold any properties in Vancourver held by the Deceased and had no knowledge of any particular properties owned by the Deceased in Vancouver (see WT Law Offices’ letter to Messrs Tony Kan & Co dated 21 August 2015).  However, Madam Chow later said that she had sold some Canadian properties belonging to the Estate of the Deceased, that Madam Chow, Chak Kiu and Chung Woon were each entitled to one-third of the proceeds of sale of those properties, and that when Chak Kiu and Chung Woon attained majority they agreed that their respective shares of the proceeds of sale (then held by the Public Trustee in Calgary) should be paid to Madam Chow on account of the school fees and other expenses which had been incurred or were to be incurred by Madam Chow on their behalf (see Wong & Co’s letter to Wilkinson & Grist dated 11 July 2016). These allegations were confirmed by Madam Chow in her affidavit filed on 20 July 2016.  Amongst the exhibits to her affidavit is a letter dated 12 October 2004 from Messrs Fung, Wong, Ng & Lam to the Administratrices in which it was stated that Chak Kiu had given a written consent dated 31 August 2004 for his share of the proceeds of sale of 4 Canadian properties to be paid to Madam Chow.

47.  On the other hand, Chak Kiu denied, in paragraph 33 of his 3^rd affirmation filed on 16 August 2016, that he had ever given any consent for his share of the proceeds of sale of the Canadian properties to be paid or transferred to Madam Chow.

48.  At the hearing on 23 August 2016, Mr Pirie on behalf of Madam Chow made an oral application for leave to cross-examine Chak Kiu on his affirmations on the above matters.  The application was opposed by Mr Man on behalf of Chak Kiu. After hearing submissions from the parties, I indicated that I would deal with Madam Chow’s application in my written decision on Chak Kiu’s application.

49.  As earlier mentioned, after the hearing on 23 August 2016, Madam Chow took out a summons on 17 September 2016 seeking leave to:-

(1) adduce new evidence, including in particular a copy of a Chinese letter dated 31 August 2004 to Messrs Fung, Wong, Ng & Lam purportedly signed by Chak Kiu, in which he authorized Madam Chow to deal with his share of the proceeds of sale of 4 Canadian properties (in the amount of HK$791,864.07); and

(2) cross-examine Chak Kiu on his affirmations.

50.  Madam Chow’s summons, opposed by Chak Kiu, was heard on 24 October 2016.  At the conclusion of the hearing, I reserved my decision on the summons and indicated that it would be dealt with in the written decision on Chak Kiu’s application.

51.  As made clear by Mr Man at the hearing on 23 August 2016, he did not rely upon Chak Kiu’s allegations against Madam Chow in relation to the Canadian properties in support of the application for the removal of Madam Chow as an administratrix of the Estate of the Deceased.  There are certainly materials presently before the court which can support an argument that Chak Kiu’s assertions that (i) he had no knowledge about the Canadian properties until 2014, and (ii) he never gave any consent for his share of the proceeds of sale of the Canadian properties to be paid or transferred to Madam Chow are incorrect, or even untruthful.  However, Chak Kiu’s application to remove Madam Chow is not to be resolved by comparing their truthfulness as deponents of affirmations. Even if, for the sake of argument, Chak Kiu can be shown to have lied in his affirmations in relation to his state of knowledge about the Canadian properties and his consent as regards the use of his share of the proceeds of sale of the Canadian properties, I do not consider that those matters would affect my decision on whether to remove Madam Chow as an administratrix of the Estate of the Deceased.  I am not therefore minded to accede to Madam Chow’s applications for leave to adduce new evidence and/or to cross-examine Chak Kiu on his affirmations.

WHETHER THE ADMINISTRATRICES SHOULD BE REMOVED AND A NEW ADMINISTRATOR APPOINTED?

52.  Section 33(3) of the Probate and Administration Ordinance, Cap 10, states as follows:-

“The court may, if satisfied that the due and proper administration of the estate and the interests of the persons beneficially entitled thereto so require, suspend or remove an executor or administrator (other than the Official 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.”

53.  When deciding whether to remove an administrator, the proper question to ask is whether the removal is necessary for the due and proper administration of the estate and whether it is in the interests of the beneficiaries for the administrator to be removed.

54.  It is not necessary to establish specific wrongdoing, misconduct or fault on the part of an administrator before he can be removed, although obviously wrongdoing, misconduct or fault would be relevant considerations (see Re Estate of Kwan Chung [2013] 6 HKC 29, at paragraph 15 per Poon J (as he then was); Cheng Tang Kam Yung v Tang Kam Cheung, HCMP 147/2008 (26 August 2013), at paragraph 62 per DHCJ Leung; Leung Wing Hong v Leung Yiu Cho, HCMP 1473/2014 (11 August 2016), at paragraph 64 per B Chu J) .

55.  When deciding whether to exercise its power under Section 33(3) to remove an administrator, the court should also have regard to the size of the estate, the nature of the assets to be administered, and the background, education, training and experience of the remaining personal representatives (if any) (see Cheng Tang Kam Yung, at paragraph 22; Leung Wing Hong, at paragraph 134).

56.  It is important to emphasise that the duty of an administrator to render a full and proper account when called upon to do so is a fundamental and important duty.  The failure to do so may, in appropriate circumstances, be a good reason to justify the removal of an administrator (see Re Estate of Lee Da Kor, at paragraph 37; Cheng Tang Kam Yung, at paragraph 63).

57.  In the present case, in so far as the application to remove Madam Chow is concerned, I have come to the conclusion that she has been guilty of misappropriation and conversion of monies belonging to the Estate to the use of herself and Chung Woon, repeated breaches of court orders and undertaking relating to the administration and distribution of the Estate, and failure to render a proper and accurate account of the Estate when ordered by the court to do so.  This is, I believe, an obvious case to remove Madam Chow as an administratrix of the Estate of the Deceased.

58.  In so far as the application to remove Madam Chau is concerned, it appears that she has not, in fact, taken any active step in the administration of the Estate since her appointment.  Her apparent disinterest in the administration of the Estate is reflected by the fact that she has not entered any appearance in this application and has not sought to resist the application.  This is, again, a clear case for the removal of Madam Chau as an administratrix of the Estate of the Deceased.

59.  In so far as the application for the appointment of a new administrator is concerned, Chak Kiu has put forward Mr Ip Woon Shun of Messrs Oldham, Li & Nie, a practising solicitor and full member of the Society of Trust and Estate Practitioners.  His hourly rate for the purpose of this appointment would be HK$4,000.  Further, Mr Man confirmed at the hearing that that Mr Ip had agreed to cap his fees at 0.5% of the total value of the Estate of the Deceased as at the date of the Grant (HK$13.46 million), save and except fees which may be incurred in possible future legal proceedings.  There has not been any submission on behalf of Madam Chow or Chung Woon that Mr Ip is not a fit or proper person to act as administrator of the Estate of the Deceased.   On the above bases, I would approve the appointment of Mr Ip as new administrator to act in place of Madam Chow and Madam Chau.

DISPOSITION

60.  I make an order in terms of paragraphs 1, 2 and 3 of Amended Originating Summons, save that in relation to paragraph 2 it shall be specified that Mr Ip Woon Shun of Messrs Oldham, Li & Nie shall be appointed as new administrator of the Estate of the Deceased, and his fees shall be calculated at the rate of HK$4,000 per hourly subject to a cap of HK$67,300 (subject to any further order of the court).

61.  It is not necessary to make any order for an account under paragraph 4 of the Amended Originating Summons in view of the fact that Madam Chow and Madam Chau have already been ordered to render full and proper accounts in HCMP 332/2015.

62.  Mr Man did not ask the court to grant any injunction in terms of paragraph 5 of the Amended Originating Summons, and no order is made in respect of that paragraph.

63.  I give the parties liberty to apply for such further or other directions as may be necessary to give effect to this decision.

64.  I dismiss Madam Chow’s summons dated 17 September 2016, as well as the oral application made on her behalf at the hearing on 23 August 2016 for leave to cross-examine Chak Kiu on his affirmations.

65.  Lastly, I make an order nisi that Madam Chow and Chung Woon shall pay Chak Kiu the costs of his application by the Originating Summons herein (as subsequently amended), and Madam Chow shall pay Chak Kiu his costs of resisting her summons dated 17 September 2016, including the costs of the hearings on 23 August 2016 and 24 October 2016 respectively, to be taxed if not agreed.