LAU WAI LING WINNIE v. LAU YU MING DAVID AND OTHERS

HCAP 2/2023

[2024] HKCFI 354

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

PROBATE ACTION NO 2 OF 2023

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J U D G M E N T

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A. INTRODUCTION

1.  These proceedings concern the estate (“the Mother’s Estate”)  of the late Madam Ng Mui (“the Mother”).  The plaintiff (“P”)  and the defendants (“D1”, “D2” and “D3” respectively, and “Ds” collectively), together with Ms Lau Kit Ling Kitty (“Kitty”)  and Mr Lau Yue Tim Johnny (“Johnny”), are the lawful and natural children born in the wedlock of the Mother and their late father Mr Lau Siu Tong (“the Father”).  P, Ds, Kitty and Johnny are all adults with no disability.  Ds are now the executors of the Mother’s Estate.  D1 is also known as David or 阿明, D2 is also known as Connie, and D3 is also known as Ricky or 阿昇.

2.  In these proceedings, P is seeking an order that Ds be removed and be replaced by P as executrix and trustee of the Mother’s Estate under s.33 of the Probate and Administration Ordinance (“PAO”); alternatively, an order under s.63 of the Trustee Ordinance (“TO”)  that Ds be replaced by a judicial trustee of the Mother’s Estate on such terms as the court deems fit.  P is also seeking some consequential reliefs.

3.  Having considered the evidence as to service adduced by P, I am satisfied that the writ of summons and the amended writ of summons have been duly served on Ds.  I am also satisfied that the affirmations filed by P in support of her claim have also been duly served on Ds.  Apart from filing a notice of intention to defend in response to the writ of summons and another notice of intention to defend in response to the amended writ of summons, D1 did not take any further step in these proceedings.  D2 and D3 have never filed any acknowledgment of service, and have never taken any step in these proceedings.  In other words, no defendant has filed any defence or adduced any evidence to refute P’s case in these proceedings.

4.  No defendant is present in this trial to put forward anything to resist P’s claim.  By the Order of Master Hui dated 6 April 2023, this trial is conducted by way of affidavit evidence.  In the circumstances, the affirmations filed by P in support of her claim[1] are deemed as evidence in the trial without calling the makers thereof to give any oral evidence.  The facts in those affirmations are treated as undisputed facts.

5.  P is represented by Ms Samantha Lau in the trial.

B.  THE FACTS

6.  P is one of the beneficiaries of the Mother’s Estate.  P is also the administratrix of the Father’s Estate.  The Father’s Estate is a beneficiary of the Mother’s Estate.

7.  On 22 September 1995, the Mother passed away with a will (“the Mother’s Will”).  The Mother had domiciled in Taiwan until the time of her death.  Ds were the executors named in the Mother’s Will.

8.  On 24 February 2002, the Father, who domiciled in Taiwan, passed away intestate.

9.  On 25 February 2010, Ds obtained the probate of the Mother’s Estate (“the Mother’s Probate”).  Since Ds had taken up the office of executors of the Mother’s Estate, they were unwilling to administer the Father’s Estate.  Upon a discussion between Ds and P, Ds gave the original of the Mother’s Probate to P, of which P still retained possession.

10.  On 5 August 2021, P obtained the Letters of Administration of the Father’s Estate.

11.  It is P’s case that Ds have acted in breach of their duties as executors by, amongst other things, failing to distribute the Mother’s Estate pursuant to the Mother’s Will in the 13 years following the grant of the Mother’s Probate.

12.  Since the Mother’s Probate was granted in 2010, P, Johnny and Kitty (“P’s Group”)  had repeatedly requested Ds to perform their duties as executors of the Mother’s estate but to no avail.

13.  A pre-action letter dated 29 November 2022 was sent by P’s Group to Ds. On 8 December 2022, there were email exchanges between Kitty and D2.  Kitty repeatedly urged D2 to make distribution of the Mother’s Estate, or P’s Group would take legal action against Ds.

14.  The difference between Ps’ Group and Ds could not be resolved through these communications.  On 4 January 2023, P commenced these proceedings. Initially, P treated this case as a probate matter.  However, as submitted by Ms Lau, this case in fact is an administration matter.  Ms Lau has helpfully pointed out that this irregularity would not prevent the court from considering P’s claim in this action, as the court has jurisdiction to deal with both probate and administration matters.[2] I agree.

C.  THE PRINCIPLES

15.  I adopt the principles which have been set out by me recently in Cheung Wai Ling Vicki v Cheung Oi Ling Aileen and Others.[3] In my view, those principles are also applicable in this case.  In Cheung Wai Ling Vicki, I said (footnotes omitted):

“C1. Principles concerning appointment and removal of personal representative(s)

35. Probate and Administration Ordinance (“PAO”), s.33(3)  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 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.’

36. Recently, the principles concerning the exercise of the powers under s.33(3)  of the PAO have been summarized by Wilson Chan J in Chu Wing Chuen Paul v Chu Oi Yan Irene. Those principles are as follows:

(1)  The discretion to remove an executor or an administrator under section 33 of the PAO involves an assessment and a value judgement in all the relevant circumstances of whether removal is required for the due and proper administration of the estate and the interests of the beneficiaries.

(2)  Not every mistake or neglect of duty, or inaccuracy of conduct of trustees would induce the court to remove the executor or the administrator.

(3)  The acts or omissions must be such as to endanger the trust property or to show a want of honesty, or want of proper capacity to execute the duties, or a want of reasonable fidelity.

(4)  Hostility between the executor/administrator and the beneficiary is not a ground for removal, unless the breakdown of the 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 completed by an existing personal representative.

(5)  In exercising its discretion, the court should have regard to the size of the estate, the nature of the assets that need to be administered, the background and education, training and experience of the remaining and substituted personal representatives and the interests of the beneficiaries. The view of the majority beneficiaries is a relevant factor.

(6)  The discretion to remove an executor or an administrator is to be exercised with great caution and sparingly. In general, removal is not to be preferred unless the administration is still far from completion. The courts are reluctant to exercise the discretion where the incumbent executor or administrator wishes to carry on, without allowing that incumbent an opportunity to repair or remedy any defects and progress promptly with due administration. The fact that administration of the estate could have been done better is not of itself sufficient ground.

C2. Principles concerning the duty to render a full and proper account

37. In respect of requiring an administrator to render a full and proper account, the court has the jurisdiction to do so pursuant to s.56 of the PAO, which provides:

‘The personal representative of a deceased person shall, when lawfully required so to do, exhibit, by affidavit filed in the court, a true and perfect inventory and account of the movable and immovable property of the deceased, and the court shall have power as heretofore to require personal representatives to bring in inventories.’

38. A personal representative, after a grant has been made to him, owes a duty to collect and get in the real and personal estate of the deceased, and to administer it according to the law. It is also the duty of the representative to keep and to render a proper account of the administration of the estate. In Tsang Wing Kwai v Tsang Wing Fai, Wilson Chan J said:

‘18. The duty of an executor to keep and render proper accounts is of paramount importance. Generally speaking, it is the duty of a personal representative, after a grant has been made to him, to collect and get in the real and personal estate of the deceased, and to administer it according to law. He must act with due diligence in the discharge of his duties: Williams, Mortimer and Sunnucks on Executors Administrators and Probate (20^th edn, 2013, paragraph 48-18).’

39. In Chow Chak Kiu v Chow Man Chi (HCMP 797/2016, 17 January 2017), Chow J (as he then was)  said:

‘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).’”

D.   REMOVING DS FROM EXECUTORSHIP

16.  It is P’s case that Ds should be removed from the executors of the Mother’s Estate for the reasons set out below.

D1.  Failure to give proper account

17.  According to the evidence adduced by P (which is accepted by this court), P’s Group (ie including P)  has repeatedly requested and demanded Ds to provide a proper account of the Mother’s Estate.  These requests have not been acceded to:

(1)  In March 2015, Kitty stated in an email to D2 dated 26 March 2015 that David ought to give a proper account of the Mother’s Estate in accordance with the law.  In the same email, D2 was requested to account for, and obtain valuations of, the Mother’s jewelleries in the Mother’s safe deposit box.  It was said in the email that the jewelleries had been taken away by Connie.  It was further said in the email that the jewelleries should be sold and the sale proceeds could be distributed to the beneficiaries of the Mother’s Estate.  These requests made by Kitty have not been acceded to.  Further, in her reply email to Kitty dated 27 March 2015, D2 did not deny that the jewelleries had been taken away by her (“the Jewelleries Incident”).

(2)  By a letter dated 29 November 2022, P (through her solicitors acting for her at that time)  requested Ds to (a)  deliver the original title deeds of a real property in the Mother’s Estate (“the Property”)  to P, as the Property should be an asset distributed to the Father’s Estate, and (b)  provide an account of and transfer to P’s designated bank account all rental incomes generated from the Property since the date of death of the Mother so that P could fulfil her duties as administratrix of the Father’s Estate and distribute the Father’s Estate.  These requests have also not been acceded to.

(3)  An email was sent by P to D2 on 6 December 2022, drawing D2’s attention to the aforesaid letter. Notwithstanding this reminding email, the requests made by P’s Group remained as unanswered.  On 7 December 2022, D2 emailed Kitty, P and D3 that she contacted D1 who was angry after learning about the said letter from P’s solicitors.  D1 said to D2 that he would only hand over the title deeds when there was a sale of the Mother’s Property.

18.  I agree with Ms Lau that Ds, being the current executors of the Mother’s Estate, have failed to render a true and perfect inventory and account of the Mother’s Estate, notwithstanding the requests made by P’s Group.

D2.  Unjustifiable Dilatoriness

19.  It is worth to note that:

(1)  The Mother passed away in 1995.  However, Ds only obtained the Mother’s Probate in 2010.  There has not been any explanation from Ds as to why it would take 15 years to obtain the Mother’s Probate after her demise.

(2)  For nearly 14 years since the grant of the Mother’s Probate, there has not been any distribution of the Mother’s Estate in accordance with the Mother’s Will.

20.  As submitted by Ms Lau, the dispositions as set out in the Mother’s Will in fact are simple:

(1)  bequeathing the Property to the Father for his own use and benefit absolutely; and

(2)  dividing her residuary estate into twelve equal parts and standing possessed the same upon trust as to six of such parts (ie half)  to Father and one of such parts (ie one twelfth)  to each of her children absolutely.

21.  I agree with Ms Lau that in accordance with the Mother’s Will, the Property and the rental incomes generated therefrom should be distributed to the Father’s Estate after the demise of the Father.

22.  Despite repeated requests and demands made by P’s Group, Ds have thus far failed to administer any part of the Mother’s Estate:

(1)  On 26 March 2015, Kitty emailed D2 to request D2 to distribute the Mother’s Estate by giving the relevant portions to the Father’s Estate.

(2)  Since August 2021, Kitty on behalf of P’s Group by emails repeatedly urged D2 and D3 to sell the Property and deliver up the proceeds of sale.  Emails were sent out in August 2021, in October 2021, in August 2022, in September 2022 and in December 2022.  All these requests have not been dealt with by Ds.

23.  As shown in the email exchanges in 2022, according to D3, the Property had been put on the market for sale for a year but it could not be sold.  I do not regard this as a satisfactory explanation.  There is no evidence from any defendant explaining what steps they have taken to try to sell the Property in the market.  Further, as submitted by Ms Lau, the excuse put forward by D3 could not constitute a justification for not transferring the title and rental proceeds of the Mother’s Property to the Father’s Estate.  That excuse also could not explain why there was no distribution to the Mother’s children after more than a decade since the Mother’s Probate.

24.  In my judgment, based upon the evidence before this court, it is correct for P to say that Ds have adopted a dilatory attitude in administering the Mother’s Estate, and Ds in fact have no intention to administer the Mother’s Estate in accordance with the Mother’s Will.

D3.  Deterioration of the relationship among Ds

25.  In the present case, D2 in fact does not have a satisfactory relationship and D1 and D3.  The poor relationship is evidenced by the following emails:

(1)  In her email to Kitty dated 27 March 2015, D2 expressly said that Kitty should first fix D1 and D3, and D2 herself was not the only executor.  From this email, it is clear that D2 on the one hand, and D1 and D3 on the other hand, did not have a satisfactory relationship.

(2)  In her email to Kitty dated 7 December 2022, D2 said that D1 refused to cooperate by handing over the title deeds of the Property, and D1 would become angry when D2 tried to talk to him about the matter.

(3)  By an email dated 8 December 2022, D2 told Kitty that D1 was extremely emotional when the matter was raised by D2 for discussion, and it was impossible to have a discussion with D1.

26.  I agree that given the poor relationship among Ds, it would not be possible for them to work together to administer the Mother’s Estate.

D4.  D1 having conflict of interests

27.  The evidence adduced by P shows that:

(1)  D1 has suggested to share the rental incomes generated from the Property in the joint bank account of D1 and P exclusively between themselves.  The total of those incomes is HK$376,541, which are the rental incomes from the Property from November 2011 to May 2014.  The proposal clearly contradicts the contents of the Mother’s Will.

(2)  P refused to accede to that proposal.  Thereafter, D1 refused to cooperate with P in withdrawing the money in the said joint account for distribution.

(3)  D1 also refused to place the rental incomes in a fixed-deposit account to earn more interest without any justification, which deprives the Mother’s Estate from the interest it could have readily earned.

28.  Ms Lau has made a point that D1 had proposed to appoint the tenant of the Property as the agent for the sale of the Property despite knowing that the said tenant was interested in purchasing the Property.  In my view, the evidence shows that at one time, there was such a proposal and P’s Group raised objection to the said proposal.  However, there is no clear evidence showing that the proposal was from D1, or that D1 endorsed the said proposal.  With respect to Ms Lau, I would not take this point as a matter against D1.

29.  In my judgment, by reason of the matters set out in [27] above, D1 has put himself in a position where his personal interest conflicts with the due administration of the Mother’s Estate.  This is a valid reason from removing D1 from the executorship.

D5.  D2 not intending to continue to act and the Jewelleries Incident

30.  In her email to P’s Group dated 27 March 2015, D2 has expressly said that she would not be able to continue to be an executor.  D2 said that she was not in Hong Kong.  When she was in Hong Kong, D1 and D3 did not cooperate with her.  In view of this email, coupling with the fact that D2 did not take any step to resist P’s claim for an order to remove her from the executorship, I am satisfied that D2 does not have any intention to continue to act as an executor of the Mother’s Estate.  This is a valid reason in support of removing D2 from the executorship.

31.  Further, by reason of the Jewelleries Incident as mentioned in the above, D2 has taken away assets in the Mother’s Estate without giving any account to the beneficiaries, notwithstanding the request for an account from Kitty.  This is a breach of her duties owed to the Mother’s Estate, and is another reason for removing D2 from the executorship.

D6.  D3 – Misappropriating the rental incomes belonging to the Mother’s Estate

32.  P has produced an email from D2 to Kitty dated 10 December 2022.  In that email, D2 forwarded a WhatsApp message from D3 to Kitty, and D2 also said that D3 had received some rental incomes from the Property, and as a result D3 was unable to get some government subsidies.  D3 has not denied the allegation against him made in that email, and he has not put forward any evidence to explain the matter set out in that email.  In the circumstances, based upon the evidence before me, I conclude that the allegation against D3 made in that email is true.  That would mean that D3 has taken some rental incomes from the Property (which should be assets belonging to the Mother’s Estate)  for his own benefits.  This act is a clear breach of his duties owed to the Mother’s Estate.  This is a valid reason for removing D3 from the executorship.

D7.  Loss of trust

33.  Ms Lau submits that in view of the matters set out in the above, P’s Group does not have trust on Ds and does not think that it would be appropriate for them to continue to be the executors of the Mother’s Estate.  The loss of trust is relevant in considering the removal application made by P.  I agree.

D8.  Removing Ds from the executorship

34.  By reason of the aforesaid, I am of the view that Ds should be removed from the executorship.  I would allow the removal application made by P.

E.  APPOINTING P AS A REPLACEMENT

35.  I am in agreement with Ms Lau that it would be appropriate to appoint P as a replacement.

(1)  The most valuable asset in the Mother’s Estate is the Property, the estimated value of which at present is about HK$8,000,000 – 9,000,000.  The Property, or the proceeds obtained after selling the same, should be distributed to the Father’s Estate. P is now the administratrix of the Father’s Estate.

(2)  Having been the administratrix of the Father’s Estate for some time, P has the experience in handling the affairs of a deceased’s estate.  There has never been any complaint against P concerning her handling of the Father’s Estate.

(3)  P, together with Kitty and Johnny, have persistently urging Ds to duly administer the Mother’s Estate.  This demonstrates that P is eager to see that the Mother’s Estate be managed properly and be distributed in accordance with the Mother’s Will.

(4)  Kitty and Johnny are in support of appointing P as a replacement.  In accordance with the Mother’s Will, the majority of the assets in the Mother’s Estate would be distributed to the Father’s Estate (P being the administratrix of that estate)  and P’s Group.  At the same time, D2 and D3 have never indicated any objection to P being in charge of the administration of the Mother’s Estate.

(5)  Based upon the evidence before me, the works involved in the administration of the Mother’s Estate would not be complicated.  In the circumstances, it would not be proportionate to incur costs to have professional administrator(s)  to administer the Mother’s Estate. 

36.  In view of the conclusion reached by me as set out in the aforesaid paragraph, it would not be necessary for me to consider the alternative application made by P under s.63 of the TO.

37.  I would further order the following:

(1)  Each of Ds do give an account on oath of all the assets of the Mother’s Estate which have come to the hands of him or her and of his or her dealings therewith within 42 days after the service of the order made in this judgment;

(2)  Each of Ds do deliver up to P (as the new administrator of the Mother’s Estate)  the said account and all assets of the Mother’s Estate in his or her hands, including all the monies misappropriate and/or misapplied by that defendant and all properties and benefits or their present equivalent acquired or derived therefrom (if any)  within 21 days thereafter;

(3)  An order that all assets in the Mother’s Estate be vested to P as the new administrator of the Mother’s Estate;

(4)  P do complete the administration of the Mother’s Estate as soon as practicable; and

(5)  There be liberty to apply.

F.  COSTS

38.  In Cheung Wai Ling Vicki at [71], I mentioned the principles concerning costs in proceedings of this kind:

“71. …… Re the Estate of Lee Da Kor[4], in which Poon J (as he then was)  said:

‘39. The general principles regarding costs in administration proceedings can be found in Re Buckton [1907] 2 Ch 406, summarised in Underhill and Hayton, Law Relating to Trusts and Trustees (17^th ed., 2007)  paras.87.30-87.34.  The third category of cases is that when a beneficiary has made a hostile claim against the executors and other beneficiaries, the unsuccessful party will be ordered to pay the successful party costs.  The present case fell within that category.  Further, the first to third defendants had defaulted in discharging their duties as executors.  They should be responsible for the costs of these proceedings personally.  And I so ordered.’”

39.  Ms Lau submits that this case falls within the third category and seeks costs against Ds.  I agree.  As set out in the above, each of Ds have breached his or her duties owed to the Mother’s Estate, and each of them has failed to give an account to the beneficiaries notwithstanding the requests made by P’s Group.  In the circumstances, in my view, it is appropriate to order costs against Ds.

40.  In my judgment, costs of these proceedings (including costs reserved, if any)  should be paid by Ds to P.  Having considered P’s bill of costs, I summarily assessed those costs at HK$240,000.  For avoidance of doubt, Ds are liable to pay those costs jointly and severally.

G.  DISPOSITION

41.  For the reasons above, I give judgment to P, including a costs order against Ds as indicated in the above.  P shall prepare a draft order in accordance with this judgment and submit the same to the court for approval within 21 days.

42.  Lastly, it remains for me to thank Ms Lau for the assistance rendered to the court.