HO SUM KEUNG v. DIRECTOR OF LANDS

HCAL 67/2007

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTITUTIONAL AND ADMINISTRATIVE LAW LIST

NO. 67 OF 2007

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J U D G M E N T

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I.       INTRODUCTION

1.  Tsang Fuk Lin died intestate in the New Hebrides (now Vauuatu) in April 1961.  He died leaving substantial landholdings in the New Territories. 

2.  Tsang was survived by his 4th wife (Madam Vong) and 9 children.  The 9 children were Tsang Koon Ying and Tsang Kam Wah (deceased) by his 1st wife (Chan Yau); Alice Tsang Suk Fong, Lucie Tsang Wai Fong, François Tsang Kam Ki (François), Angele Tsang Kin Fong, Louise Senling Tsang Lan Fong and Raymond Tsang Kam Fai by his 2nd wife (Tsang Yon Tai Chong Lin); and Edouard Tsang (Edouard) by Madam Vong.  There were no children by Tsang’s 3rd marriage (later dissolved) with Mo Kam Tai.

3.  Tsang spent a substantial part of his life in Tahiti.  Of his children, those by his 1st marriage lived or live in Hong Kong.  The others live in Tahiti.  Madam Vong is herself a French national residing in Tahiti.

4.  Ho was appointed administrator of Tsang’s real and personal estate by a Hong Kong grant dated 5 June 1997.  Ho became Tsang’s administrator as attorney for Madam Vong.

5.  In December 2003 Ho as administrator challenged the Director’s refusal to offer cash compensation in respect of Tsang’s landholdings in the New Territories. The cash was supposed to redeem land exchange entitlements (Letters B) held by the estate as a result of Government’s resumption of those landholdings.  The proceedings were by way of judicial review.

6.  In May 2005 Andrew Cheung J decided the judicial review in Ho’s favour. The judge quashed the Director’s refusal and ordered him to reconsider the estate’s entitlement to compensation for certain lots of land.  There was no appeal against the judgment.

7.  In September 2006 the Director conceded Ho’s application in respect of the lots identified in Andrew Cheung J’s Judgment.

8.  But in November 2006 and subsequently the Director raised “requisitions” relating to the estate’s title to the relevant lots of resumed land.  Protracted correspondence ensured with the Director requesting that Ho provide more and more information, not just in respect of title, but also in connection with the administration of Tsang’s estate.

9.  Finally, by letter dated 10 April 2007 Ho’s solicitors wrote to the Director that many of the questions being raised were irrelevant to the application for compensation.  Ho’s solicitors threatened to bring further legal proceedings should there be any more delay in the payment of compensation.

10.  On 10 May 2007 the Director replied that there would be “no further consideration of the claim for compensation pending a comprehensive response ... on the issues raised [by the Director]”.  That letter is now challenged by this present judicial review.

11.  Ho says that in effect the Director’s May 2007 letter constitutes a wrongful refusal to pay compensation.  He asks that such decision be quashed.  He also asks for mandamus and declarations. 

12.  The latter declarations are to the effect that:-

(1)     A written receipt by Ho acknowledging payment by the Director of compensation constitutes a valid discharge of Government’s obligation to pay Tsang’s estate.

(2)     Ho is entitled as administrator of Tsang’s estate to receive compensation for the relevant lots notwithstanding the questions so far raised by the Director.

13.  The compensation payable, amounting to more than $280 million, is by any measure a substantial sum.

II.      DISCUSSION

A.      The Director’s case

14.  The Director argues that the May 2007 letter does not amount to a substantive determination.  For this reason, the Director denies that the letter is amenable to judicial review.

15.  In any event, the Director contends that in May 2007 he was entitled to be concerned by a risk of further claims from beneficiaries following any payment to Ho.  The Director says that he was entitled to raise queries in correspondence to assure himself that there was no risk of adverse claims against the Government following payment to Ho.

16.  Finally, the Director suggests that his queries are one which Ho must be able to answer.

B.      Argument 1: May 2007 letter not amenable to review

17.  Mr. Benjamin Yu SC (appearing for the Director) submits that the May 2007 letter is not a determination.  It merely reflected the Director’s “considerable concern” that the substantial compensation involved would be paid to someone who was not entitled to the sum.  A wrongful payment (Mr. Yu suggests) might expose the Director to the risk of future claims by other persons in relation to the same compensation money.

18.  Mr. Yu suggests that the May 2007 letter is akin to a decision in interlocutory proceedings.  It is not (Mr. Yu says) substantive and the Court should therefore not interfere until there is a final decision on whether to pay Ho and (if so) what amount.

19.  I am not persuaded by Mr. Yu’s submission.

20.  Ho’s solicitors have indicated that they are not prepared to answer the Director’s questions (which Ho regards as irrelevant).  Then, in effect, the Director’s response that there will be “no further consideration” of Ho’s application is tantamount to a decision refusing compensation.  In this context, not to decide is to decide.  In light of the impasse between the parties, not to process the application inexorably means that there will be no compensation.

21.  The issue is accordingly not whether there has been a decision.  There has been one.  The question is whether the Director has rightly decided not to proceed further unless his questions are answered to his satisfaction. 

22.  If, for instance, the Director’s questions are irrelevant, it must be unreasonable in law to refuse to process Ho’s application until the irrelevant questions are answered.  The Director would not be performing his duty to consider the application (as ordered by Andrew Cheung J). 

23.  For this reason, the May 2007 letter embodies a determination (namely, that nothing needs to be paid or done in the absence of the information) which is susceptible to judicial review.

C.      Argument 2: Concern at risk of further claims

C.1    General considerations

24.  Mr. Yu refers to Probate and Administration Ordinance (Cap. 10) (PAO) s.57:-

“(1)    Every person making or permitting to be made any payment or disposition in good faith under a representation shall be indemnified and protected in so doing, notwithstanding any defect or circumstance whatsoever affecting the validity of the representation.

(2)     Where a representation is revoked, all payments and dispositions made in good faith to a personal representative under the representation before the revocation thereof are a valid discharge to the person making the representation; and the personal representative who acted under the revoked representation may retain and reimburse himself in respect of any payments or dispositions made by him which the person to whom representation is afterwards granted might have properly made.

             ....”

25.  Mr. Yu suggests that the Director has been put on notice of matters casting doubt on the correctness of the grant of administration to Ho.  The Director cannot then (Mr. Yu submits) take advantage of the discharge in PAO s.57.  Were the Director to make a payment to Ho without receiving adequate answers to his questions, the Director might “arguably” be said to have paid in “bad faith” and so fall outside the terms of PAO s.57.

26.  Mr. Yu identifies 12 matters which he says have put the Director on notice of potential irregularity in Ho’s appointment as administrator.  All the questions in the May 2007 are relevant (Mr. Yu contends) because they relate to one or more of the 12 matters.

27.  I am not persuaded by Mr. Yu’s argument.

28.  On the contrary, I think that Mr. Edward Chan SC (appearing for Ho) rightly submits that there is a straightforward answer to the Director’s concerns.

29.  The Government has acknowledged that it is a debtor in relation to Tsang’s estate.  The Government has conceded that compensation is due.

30.  There can be no doubt that, as matters stand, Ho is (and remains) the administrator of Tsang’s estate.  Despite letters of administration having been granted to Ho way back in 1997, no one from Tsang’s surviving family has applied to have that grant revoked.  This is even though the reality of Ho’s administration must have been known to the surviving children, either because of the previous judicial review before Andrew Cheung J or because, as a result of one of my interlocutory orders here, there has been an attempt to notify all surviving children of these proceedings.

31.  It will be for Ho as administrator to decide how to discharge his duties in relation to the distribution of compensation monies paid to him.  How he discharges his duties cannot be relevant to the Government’s simple obligation to pay him as representative of Tsang’s estate.  The due administration of Tsang’s estate is purely a matter of concern between Ho and those beneficially entitled to some share in the estate.

32.  I do not think that Mr. Yu’s 12 matters vitiate Mr. Chan’s analysis.  Let me briefly consider those matters from the standpoint of relevance to the Director’s obligation to pay compensation.

C.2    1^st matter

33.  First, there is a family schism.  Not all surviving members of Tsang’s family have agreed to Ho’s appointment as administrator.  Some lodged caveats or themselves applied for a grant.

34.  I do not see the relevance of this 1st matter. 

35.  It often happens that warring factions within an extended family disagree over who should act as administrator for an intestate.  But such disagreement would not render a grant invalid. 

36.  No one is saying that, as Tsang’s sole surviving wife, Madam Vong (or her attorney) was incapable of being appointed as administrator under Hong Kong law, regardless of whether some faction or other would have preferred another person to be appointed.

37.  As for the caveats filed between 1978 and 1982, those warn the Probate Registry that no grant should be sealed in relation to Tsang’s estate without notice being given to specified persons (in this case Madam Vong, Edouard, Tsang Kam Wah and Tsang Koon Ying).  Long after those caveats were filed, Ho was appointed administrator in 1997. No one has seen fit in the 11 years between then and now to apply to revoke that appointment.

38.  Mr. Yu suggests that there is always a risk that someone will apply to revoke in the future.  Of course, one never knows what the future might bring.  In theory, anything is possible.  But in light of the fact that no one has applied in all these years for the administration to be revoked, that risk strikes me as purely theoretical.  It is certainly insufficient in practical terms to make payment by the Government to Ho an act of bad faith.

C.3    2^nd matter

39.  Second, Ho became Madam Vong’s attorney as a result of an agreement in September 1994 among Madam Vong, Edouard and Bona Basis Company (acting through Ho).  That agreement has not been produced.

40.  I do not see how this 2nd matter is relevant.

41.  The 1994 Bona Basis Agreement predates the grant of letters of administration. It presumably involves some arrangement whereby Ho (through Bona Basis) would enjoy a commission for his efforts to secure any compensation paid by the Government to the Tsang estate.  The agreement would only bind the parties to that contract (whoever they might be) and could only concern them.

42.  It is difficult to see how the terms of the 1994 Bona Basis Agreement could affect the present validity of Ho’s appointment as administrator.

C.4    3^rd matter

43.  Third, a further agreement dated 25 July 1996 made among Madam Vong, Edouard and Bona Basis (again acting through Ho) has been produced instead. 

44.  This 1996 Agreement contains a term as follows:-

“In the event that cash compensation is given instead of Letter B whether partly or in whole, [Bona Basis] shall be entitled to service charge and expenses equal to 28% of the total amount of cash compensation paid by the Hong Kong Government provided that the cash compensation paid by the Hong Kong Government must be not less than US$256.40 per square foot for the Land resumed.  If it is less than US$256.40 per square foot, the Company shall not be entitled to any service charge and expenses.”

45.  For the reason stated in relation to the 2nd matter, I do not think that this 3^rd matter is relevant.

C.5    4th matter

46.  Fourth, by a letter to the District Lands Office dated 6 January 2000, François (referring to himself as “The oldest and the only one son of the deceased living in HK”) stated the following:-

“(1)    The alleged administrator HO SUM KEUNG is not one as he is only acting as the exclusive attorney of a woman named Vong Thai U Sang who is not entitled to share my father’s indigenous Shatin estate.  I do not accept, and I oppose Ho Sum Keung as administrator.

(2)     Vong Thai U Sang is not herself so far an administrator of my father Tsang Fuk Lin estate.  Most probably she will never be for obvious reasons as of qualifications of honest ethical profile or built-in preventions.

(3)     The supposed ‘Agreement’ dated 25/7/1996 signed between Vong Tai U Sang and her son Edouard Tsang with Bona Basis is only a reflection of their simple mindness.  I can never accept this kind of ‘sale,’ nor any kind of payment of commissions to Mr. Ho or anyone else.

(4)     I still have no knowledge of the details of the HK$11 million (exactly HK$11,298,064.56) paid by the Lands Dept. to Ho, nor do I receive a single dollar so far.  My claim in one quarter of any amount obtained.  There are signs of money laundering overseas.”

47.  Attempts have been made to inform François of the 2003 judicial review and these proceedings. His position on the present judicial review application is unknown, because nothing has been heard from him. But the fact is that he has never applied to revoke the grant of administration to Ho. 

48.  The allegations in his letter remain bare and unsubstantiated.  For instance, it is unclear precisely on what basis (other than dislike) François says Madam Vong is dishonest or unethical. 

49.  Further, it may well be that the July 1996 Bona Basis Agreement does not bind François who was not a party to it.  But the reference in François’ letter to that Agreement confuses how the estate may be administered by Ho with the current validity of Ho’s appointment as administrator (absent any application for revocation by anyone).

50.  François may or may not have legitimate grievances against Ho in respect of the distribution of any compensation received from Government.  But I do not think that logically renders Ho’s appointment invalid for present purposes such that payment to Ho would not discharge Government of its obligation.

C.6    5^th matter

51.  Fifth, both 1994 and 1996 Bona Basis Agreements pre-dated the grant of letters of administration.  At the time, Madam Vong had no power to bind Tsang’s estate.

52.  This matter has been discussed in connection with the 2^nd and 3^rd matters.

C.7    6^th matter

53.  Sixth, by reason of the 1994 and 1996 Bona Basis Agreements, Ho has a financial interest in the outcome of the administration.  Mr. Yu says that this interest ought to have been (but was not) disclosed when Ho applied for letters of administration.

54.  There are in fact numerous other agreements (made after the grant of administration) involving Bona Basis and sundry members of Tsang’s surviving family.  Thus, there are these contracts:-

(1)     By an Agreement dated 31 October 1997, Madam Vong and Edouard purported “on behalf of themselves and all members of the family in Tahiti” to agree that Ho was to challenge the Letter B compensation then being offered by the Government.  Bona Basis was to be entitled to 28% of any additional compensation attained.

(2)     By an Agreement dated 12 February 2003, this time among Madam Vong (as “the widow of the late Tsang Fuk Lin deceased and the Administratrix of the estate of the said deceased, of Papeete, Tahiti”), Ho and Crown Plan International Ltd. (a Hong Kong company), Crown agreed to assist Bona Basis’ efforts to recover more compensation. Any additional compensation was to be shared as follows: Tsang’s estate 43.2%, Bona Basis 16.8% and Crown 40%.  The Agreement also purported to set out how any compensation would be shared among Tsang’s estate, Tsang Kam Wah’s estate, and Tsang Koon Ying.

(3)     By a Deed of Confirmation and Ratification (made in 2007 and signed by Madam Vong, Ho, Lucie Tsang, Angele Tsang, Louise Senlis Tsang, Edouard, Bona Basis and Crown) the October 1997 and February 2003 Agreements were confirmed as “for all intents and purposes ... binding and fully enforceable against the estate of the Deceased on and as from [their] respective dates”.

55.  It is commonplace for an administrator to have an interest as beneficiary of a deceased’s estate.  For instance, a wife may be an administrator even though she is a substantial beneficiary of her husband’s estate.  The mere fact that a person has a financial interest in the outcome of an administration cannot be an objection to that person’s appointment as administrator.

56.  Accordingly, I do not see how the failure here to disclose a financial interest arising out of the 1994 or 1996 Bona Basis Agreements amounts to a material non-disclosure.

C.8    7^th matter

57.  Seventh, Ho was in a position of conflict of interest.  It was in his interest (Mr. Yu argues) to rely on the Bona Basis Agreements, whereas it was in the interests of the beneficiaries to contend that it did not bind the estate.  This conflict of interest ought to have been (but was not) disclosed at the time when Ho applied for letters of administration.

58.  This is effectively the same as the 6th matter. 

59.  How Ho actually distributes any compensation money accruing to the estate cannot be the Director’s concern, given the continuing validity of Ho’s appointment as administrator.

60.  The Bona Basis Agreements may or may not be binding on some or all of Tsang’s surviving family.  But Ho’s intentions in relation to such agreements cannot be relevant to the Government such that any payment to Ho might somehow be construed as being in bad faith.  It is not for the Government to second guess how Ho might administer Tsang’s estate and query the rights and wrongs of Ho’s conduct.  That is a matter for the beneficiaries of the estate.

C.9    8^th matter

61.  Eighth, there is a question whether the proper law governing the devolution of the relevant land is Chinese customary (or Qing) law or Tahitian law.  It is unlikely that the Probate Registry was provided with then existing legal opinions suggesting the relevant proper law was Chinese customary (or Qing) law when Ho applied for letters of administration.  One such legal opinion was from Mr. Brook Bernacchi QC.

62.  This does not seem to me relevant. 

63.  The proper law governing the distribution of the resumption compensation for Tsang’s New Territories landholdings will be something which Ho must consider when distributing any monies received from Government.  I do not see how the existence of legal opinions one way or another could have been relevant to Ho’s appointment as administrator.

64.  Ho was appointed as administrator as Madam Vong’s attorney.  Even on the assumption that Chinese customary (or perhaps Qing) law applied, Madam Vong would still be eligible for appointment as administrator under Hong Kong law.  The fact that under Chinese law she may only be entitled to maintenance in relation to the resumption compensation would not affect her eligibility for appointment as administrator.

65.  Mr. Yu also suggests that, at the time of applying for administration, Ho ought to have disclosed to the Probate Registry that in Mr. Bernacchi’s opinion, because of the “considerable value” of the estate, joint administrators might be appointed.  I do not think that the failure to disclose counsel’s opinion on the possibility (no more) of a joint administration could conceivably amount here to a material non-disclosure.  I observe that to date no faction of Tsang’s surviving family has suggested that a further person be appointed as joint administrator.

C.10  9^th matter

66.  Ninth, in 1998 the Government paid $11.298 million to Ho. That sum was paid as resumption compensation for some of Tsang’s land. 

67.  After withholding Bona Basis’ commission of 28% and 1/3 of the amount as representing the share of the Hong Kong branch of the family, Ho remitted the balance of the monies to an account effectively administered by the Tahiti Court. 

68.  The disposition of that payment-in has been the subject of protracted litigation among Madam Vong’s faction, François, and Raymond Tsang.  The latter have also attempted to obtain payment of Bona Basis’ 28% commission and the 1/3 share just mentioned above into the Tahiti Court account. 

69.  The Tahiti Court sanctioned the making of interim payments (about French Pacific Francs 2 million) from the account to François and Raymond Tsang.

70.  In May 2006 the Tahiti Court of First Instance determined that the monies deposited in the Court account should be distributed to Edouard, Tsang’s 4 daughters residing in Tahiti, François and Raymond Tsang in equal 1/7 shares.  It ruled that Madam Vong could not claim a usufruct in excess of the share of a legitimate child.  Raymond Tsang has appealed against the determination.

71.  At the time of the May 2007 letter, the Director was unaware of the proceedings relating to the funds paid into the Tahiti Court fund.

72.  Nonetheless, the disposition of the $11.298 million concerns a distribution by Ho as administrator.  He may or may not have administered the amount properly.  But his actions or omissions would not vitiate his appointment as administrator so that he could not give a valid receipt for any payment received by him from Government.

C.11  10^th matter

73.  Tenth, in January 1999, in resisting a claim by Tsang Koon Ying, Ho affirmed that he had received legal advice to the effect that Tang Koon Ying was not entitled to a share of any compensation from Tsang’s land.  This advice was given on the basis that Chinese customary (or Qing) law was applicable. 

74.  The Director complains that, when applying for letters of administration, Ho deposed that Tsang had died domiciled in Tahiti and relied on an affirmation by a Tahiti lawyer in support of the position that Madam Vong was entitled to a share in Tsang’s estate.  This (the Director says) is contradictory.

75.  I find no contradiction.  Tsang may well have died domiciled in Tahiti.  But that would not preclude the devolution of Tsang’s New Territories land from following Chinese customary (or Qing law) as the lex situs.

76.  Insofar as the Tahiti lawyer’s affirmation is concerned, I read that as deposing to nothing more than Madam Vong’s position as surviving spouse under Tahitian law.  The affirmation nowhere expressly states that the New Territories land is supposed to devolve in accordance with Tahitian law.

77.  Ho’a application for administration does suggest that Tsang’s surviving family members, whether male or female, are entitled to share in his estate.  Mr. Yu complains that this would have been misleading as, under Chinese customary law, New Territories land devolves only upon male descendants.

78.  Again, I do not see anything in this point.  Fairly read, Ho’s affirmation in support of his application for administration simply appears to be referring to a general fact: that Tsang’s surviving family are broadly to be regarded as the successors to Tsang’s estate, whether real or personal and whether situated in Tahiti, Hong Kong or elsewhere. The affirmation does not explicitly state, nor does it necessarily imply, that in specific cases (such as New Territories land) the surviving children and widow are legally entitled to identical beneficial shares. 

79.  Mr. Yu makes much of the fact that Tsang’s New Territories landholdings are particularised in the Schedule to Ho’s application.  But the Schedule is described as only relating to Tsang’s properties on which Hong Kong estate duty is payable.  Nothing untoward can be deduced from the Schedule.

C.12  11^th matter

80.  Eleventh, in December 1999 François wrote to the Districts Lands Office alleging fraud, stating that the information that there was compensation money was “important news” for him.

81.  This is largely the same as the 4th matter.

C.13  12^th matter

82.  Last, in January 2000 François again wrote to the Districts Lands Office stating that he was opposed to Ho as administrator as the latter was “an impostor and usurper”.

83.  This has been canvassed in connection with the 4^th matter.

C.14  Assessment of Argument 2

84.  For the reasons given, it does not seem to me that any of the 12 matters raised by Mr. Yu are relevant considerations.

85.  Consequently, in referring to the 12 matters, when determining whether to process Ho’s application, the Director took account of irrelevant considerations.  His May 2007 determination not to proceed in the absence of further information in relation to the 12 matters was accordingly unreasonable.

86.  More pertinently, I do not think that the 12 matters raise any doubt as to the validity of Ho’s appointment as administrator.  In the circumstances, on the assumption that the Director’s only concerns are the 12 matters, by PAO s.57 payment to Ho of the relevant compensation would nonetheless lead to a valid discharge of the Government’s obligation.

D.      Argument 3: Ho able to answer questions

87.  The 12 matters being irrelevant considerations, it cannot matter that Ho is (or is not) in a position to answer the Director’s questions relating to the 12 matters.  It being unreasonable to have raised the queries in the first place, the fact that Ho can answer the same would not render the queries reasonable.

III.     CONCLUSION

88.  This judicial review application succeeds.

89.  The decision (evidenced by the May 2007 letter) not to proceed with Ho’s application for compensation is quashed.  There will be an order of mandamus requiring the Director further to consider and determine Ho’s claim.

90.  There will be a declaration that Ho’s written receipt for compensation monies payable by the Director to Tsang’s estate is sufficient discharge to the Director.

91.  I do not think that it is necessary to make the 2^nd declaration sought by Ho.  It is implicit from this Judgment that the questions posed by the Director culminating in his May 2007 letter are not relevant to the further determination of Ho’s entitlement to cash compensation.

92.  There will be an order nisi that the Director pay Ho’s costs, such costs to be taxed if not agreed with certificate for 2 counsel.