GAO WEI BING v. NANYANG COMMERCIAL BANK TRUSTEE LTD AND OTHERS

HCA 2125/2007

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 2125 OF 2007

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J U D G M E N T

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1.  This action concerns the estate of Mr Ko Chau Shing (“the Deceased”).

A.  BACKGROUND

2.  The Deceased died intestate in the Mainland on 1 December 1944.  He had four children :

(1)  Ko Sai Hong, a son, who died in 1927;

(2)  Ko Pek Yiu, a son, who died in 1998;

(3)  Ko Yue Ngor, a daughter, who died in 1999; and

(4)  Ko Po Kam, a daughter, who died in 2003.

3.  The plaintiff is the only son of Ko Sai Kong. The 2^nd defendant is the personal representative of the estate of Ko Po Kam.  The 3^rd defendant is the only son of Ko Po Kam.  The 4^th defendant is one of the seven children of Ko Yue Ngor.

4.  The only assets in the Deceased’s estate in Hong Kong that concern these proceedings are the 287 shares of The Luk Hoi Tung Company Limited (“the Shares”) registered in the Deceased’s name at all material times and the dividends derived therefrom.

5.  The Deceased’s estate had not been administered for some 60 years since his death.  On 23 January 2003, the 1^st defendant was granted letters of administration.  Later on 2 April 2004, the 1^st defendant was granted letters of administration de bonis non.  On 14 February 2003, the 1^st defendant obtained an order under rule 60A of the Non Contentious Probate Rules for limiting the time for creditors and/or other persons to make their claims within 2 months.  The relevant notices were published on 7 March 2003 but no claim whatsoever had been made.

6.  On 7 May 2003, the 1^st defendant, as the administrator of the Deceased’s estate, caused the Shares to be registered in its sole name and distribute the residue estate of the Deceased to the statutory beneficiaries other than the plaintiff.

7.  Between the Deceased’s death on 1 December 1944 and 2002, the plaintiff and/or his agents had collected and received the dividends derived from the Shares by making use of his dividend passbook and chop.

8.  On 9 October 2007, the plaintiff commenced the present action.  He alleged that in 1941, the Deceased, pursuant to traditional Chinese customs, conducted a division of family at the ancestral hall in the presence of all family members including the plaintiff, Ko Pek Yiu, Ko Yuet Ngor and Ko Po Kam.  According to that division, the Deceased gave and/or distributed the Shares to the plaintiff.  The plaintiff sought a declaration that since 1941, the plaintiff has been the sole beneficial owner of the Shares, a declaration that the 1^st defendant hold the Shares as constructive trustee for the plaintiff; and consequential relief.

9.  In their counterclaim, the 3^rd and 4^th defendants first denied that there was any division of family by the Deceased as alleged.  They further claimed that under the applicable PRC intestacy law, the 3^rd defendant as the only son of Ko Po Kam and the 4^th defendant, as one of the 7 children of Ko Yue Ngor, are entitled to respectively succeed to ¼ (25%) and ¼ (25%) x 1/7=1/28 (3.57%) of the Shares and the dividends since 1 December 1944.  They counterclaimed for a declaration to the effect and an account for the dividends derived from the Shares which had been received by the plaintiff and consequential relief.

10.  In his reply, the plaintiff raised the defence of limitation against the 3^rd and 4^th defendants’ counterclaim for recovery of the dividends.

11.  By a notice of discontinuance dated 26 May 2011, the plaintiff discontinued his action against the 2^nd defendant.

12.  By an order dated 6 December 2012, the master ordered, under Order 25, rule 1C(1) of the Rules of the High Court, that the plaintiff’ claims be provisionally struck out when he, then acting in person, failed to appear at the case management conference.  The plaintiff had since made no application to restore his claims, which were consequently dismissed upon expiry of 3 months on 5 March 2013 pursuant to Order 25, rule 1C(6)(a) of the Rules of the High Court.

13.  What remains to be tried is the counterclaim of the 3^rd and 4^th defendants.

B.  THREE MAIN ISSUES

14.  Three main issues require determination :

(1)  Whether the Deceased had divided the family in 1941 as alleged by the plaintiff pursuant to which he was given the Shares;

(2)  If no division took place, are the 3^rd and 4^th defendants entitled to the respective claims in the Shares and dividends; and

(3)  Whether the defence of limitation is available to the plaintiff in defending the counterclaim for the dividends.

C.  DIVISION

15.  The burden rests squarely on the plaintiff to prove that the Deceased did divide his family in 1941 as alleged.  However, he had not filed and witness statement in support.  Worse still, he was even absent at trial.  There is simply no evidence whatsoever to substantiate his case at all.

16.  The plaintiff’s allegation is flatly contradicted by the evidence of the 3^rd and 4^th defendants, which I accept.  They reiterated that the Deceased had not divided his family property as alleged by the plaintiff.

17.  The plaintiff’s case on the alleged division does not sit well with his conduct either.  Ms Au Yuen Man, a manageress of the 1^st defendant, gave evidence for the 3^rd and 4^th defendants.  She described how the 1^st defendant had dealt with the administration of the Deceased estate in some detail.  For present purposes, it is pertinent to note just one point arising from her evidence, which is this.  The 1^st defendant had been engaging in correspondence with the plaintiff about the Deceased’s estate since 11 August 2003.  It was not until 12 October 2005 when the plaintiff’s solicitors raised for the first time the allegation that the Deceased had distributed the Shares to the plaintiff pursuant to the alleged division in 1941.  I fail to see any reason why, if the plaintiff’s allegation about the division were true, he would have failed to raise it when he was first notified by the 1^st defendant of its intention to distribute the residue estate in August 2003.  He only did so some two years later.

18.  For the above reasons, I find that the Deceased did not divide his family in 1941 as alleged by the plaintiff.

19.  This leads me to the second issue.

D.  ENTITLEMENT TO THE SHARES AND DIVIDENDS

20.  Whether or not the 3^rd and 4^th defendants are entitled to the Shares and the dividends is to be determined by the applicable PRC intestacy law.  On this issue, the 3^rd and 4^th defendants have filed three expert reports.  Two are prepared by Mr Lin Chen Yen, an expert on the law of the Republic of China (“ROC”), dated 30 July 2008 and 1 January 2012.  The third is authored by Mr Hu Chang Qing, an expert on PRC law, dated 29 August 2008.  The plaintiff had filed no expert report to counter them.  Pursuant to my direction dated 13 June 2013, the attendance of the experts at trial had been dispensed with and their reports are to be received as evidence without calling them.

21.  I have duly considered the reports prepared by Mr Lin and Mr Hu and accept their evidence.

22.  The Deceased died in 1941.  The applicable law at the time was ROC law.  Mr Lin first explained how under the applicable ROC law, even if the Deceased did divide his family in 1941 as alleged, that would not be effective as a gift of the Shares to the plaintiff.  In light of my earlier finding that the Deceased did not divide the family in 1941 as alleged, it is not necessary to deal with this part of Mr Lin’s report.  Turning to the more pertinent part of his first report, Mr Lin said :

24.  死者於死亡時，他的居藉為中國大陸（中華民國）。而就本宗法律訴訟案而言，爭議中的死者遺產祇有陸海普通股股份287股（包括及後衍生的股息）。

25.  由1931年（民國二十年）5月5日起在中國大陸施行的民國《民法》第五編「繼承」（第一章「遺產繼承人」）有以下規定：

第1138條：遺產繼承人，除配偶外，依左列順序定
之：

一、直系血親卑親屬。
二、父母。
三、兄弟姐妹。
四、祖父母。

第1139條：前條所定第一順序之繼承人，以親等近者為先。

第1140條：第1138條所定第一順序之繼承人，有於繼承開始前死亡或喪失繼承權者，由其直系血親卑親屬代位繼承其應繼分。

第1141條：同一順序之繼承人有數人時，按人數平均繼承。但法律另有規定者不在此限。

第1144條：配偶有相互繼承遺產之權，其應繼分依左列各款定之：

一、與第1138條所定第一順序之繼承人 同為繼承時，其應繼分與他繼承人平均。

二、與第1138條所定第二順序或第三順序之繼承人同為繼承時，其應繼分為遺產二分之一。

三、與第1138條所定第四順序之繼承人同為繼承時，其應繼分為遺產三分之二。

四、無第1138條所定第一順序至第四順序之繼承人時，其應繼分為遺產全部。

26.     死者於1944年（民國三十三年）死亡時，他的父母和長子高世響均已先於他死亡。根據《民法》第1138條至第1144條的的規定，他的法定遺產繼承人祇有他的妻子聶氏、女兒高月娥、女兒高寶琴、兒子高柏耀和孫子高維炳（以已故高世響的直系卑親屬代位繼承）。

27.     聶氏於1954年死亡時，她的居籍為中國大陸（中華人民共和國）。然而，從死者於1944年（民國三十三年）死亡後，到聶氏於1954年死亡，再到2002年，在這長達60多年的期間內，死者遺產並未被他的上述法定遺產繼承人處理（分割）和繼承。

結論

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29.  本人認為，死者於1944年（民國三十三年）死亡時，死者遺產的法定繼承，根據民國當時的法律，應由他的妻子聶氏、女兒高月娥、女兒高寶琴、兒子高柏耀和孫子高維炳五人共同繼承。

30.  本人認為，由於死者遺產從他於1944年死亡後，到聶氏於1954年死亡之時，再到2002年這長達60多年的期間內，一直未被其法定繼承人處理（分割）和繼承，因此，其法定繼承人在2003年首次辦理繼承時，應根據當時的中華人民共和國有關法律規定辦理。

23.  As to the applicable PRC law, Mr Hu said :

中國內地的相關繼承法律

13.   中國內地現行的繼承法是《中華人民共和國繼承法》（“《繼承法》”）。《繼承法》的草案於1985年4月10日第六屆全國人民代表大會（“人大”）第三次會議通過，並於1985年4月10日以中華人民共和國主席令第24號公布，自1985年10月1日起施行。

14.   對《繼承法》生效以前（即1985年10月1日之前）尚未處理的遺產，時任人大常務委員會秘書長和法制工作委員會主任的王漢斌於1985年4月3日在第六屆人大第三次會議上所做的［關於《中華人民共和國繼承法（草案）》的說明］（“《繼承法》草案說明”）第九點（關於涉外繼承）有以下說明：

“為了保持家庭、財產的穩定，避免發生不必要的動蕩，本法生效以前，遺產已經做了處理的，不再重新處理。本法生效以前尚未處理的，以及本法生效以後發生的繼承關系，適用本法。”

《繼承法》草案說明經審議後，連同《繼承法》草案一併獲得大會通過，成為《繼承法》的立法依據的一部份。

15.     以下是以本案有關的《繼承法》條文：

第十條： “遺產按照下列順序繼承：

第一順序：配偶、子女、父母。

第二順序：兄弟姐妹、祖父母、外祖父  母。繼承開始後，由第一順序繼承人繼承，第 二順序繼承人不繼承。沒有第一順序繼承人的，由第二順序繼承人繼承。…”

第十一條：“被繼承人的子女先於被繼承人死亡的，由被繼承人的子女的晚輩直系血親代位繼承。代位繼承一般祇能繼承他的父親或母親有權繼承的遺產份額。”

第十三條：“同一順序繼承人繼承遺產的份額，一般應當均等。…”

第三十六條：“中國公民繼承在中華人民共和國境外的遺產或者繼承在中華人民共和國境內的外國人的遺產，動產適用被繼承人住所地法律，不動產適用不動產所在地法律。外國人繼承在中華人民共和國境內的遺產或者繼承在中華人民共和國境外的中國公民的遺產，動產適用被繼承人住所地法律，不動產適用不動產所在地法律。…”

16.    為了正確貫徹執行《繼承法》，最高人民法院於1985 年9月11日發布了［關於貫徹執行《中華人民共和國繼承法》若干問題的意見］（“《若干意見》”）。《若干意見》第52條規定：

“繼承開始後，繼承人沒有表示放棄繼承，並於遺產分割前死亡的，其繼承遺產的權利轉移給他的合法繼承人。”

高就勝遺產的繼承

17.   高就勝於1944年死亡後，到聶氏於1954年死亡，一直到2003年的過去60多年間，高就勝遺產並未被其法定繼承人處理（分割）和繼承。

18.   到了2003年，高就勝遺產才首次被其法定繼承人委託的南商信託憑香港高等法院頒發給該司的《遺產管理書》接收和管理。

19.   根據前述的中國內地有關法律，在2003年南商信託首次處理高就勝遺產繼承事宜的時候，由於當時聶氏已死亡，故高就勝遺產應由其女兒高月娥、女兒高寶琴、兒子高柏耀和孫子高維炳四人共同平均繼承（註：他們四人若有已死亡的，則由已歿者的合法繼承人依法轉繼承他們各自的應繼份額）。

結論

20.   高就勝於1944年死亡後，到聶氏於1954年死亡，再到2003年，其間他的遺產一直未被處理（分割）和繼承，因此，其繼承人在2003委託南商信託處理高就勝遺產時，根據當時的中國內地有關法律，應由高就勝的女兒高月娥、女兒高寶琴、兒子高柏耀和孫子高維炳共同平均繼承（註：他們四人若有已死亡的，則由已歿者的合法繼承人依法轉繼承他們各自的應繼份額）。

24.  Based on the experts’ evidence which I accept, I find that the 3^rd and 4^th defendants are entitled to 25% and 3.57% of the Shares together with the corresponding dividends derived therefrom since the Deceased’s death on 1 December 1941.

25.  It must follow that subject to the defence of limitation, the 3^rd and 4^th defendants are entitled to recover their shares of the dividends that the plaintiff had received between 1 December 1944 and 2002.  Mr To, counsel for the 3^rd and 4^th defendants, submitted that as there is no evidence to show the amount of dividends declared on the Shares between 1941 and 1945, the 3^rd and 4^th defendants would only claim for the dividends declared since 1 January 1946.  The particulars of the dividends declared between 1946 and 2002 as provided by the Luk Hoi Tung Company Limited through its solicitors can be found in the Schedule annexed to this judgment.  On the undisputed evidenced before me, which I accept, the sum of dividends per share of the Shares from 1946 up to 2002 amounts to HK$8,400.30.  For the Shares, the total dividends declared would be HK$2,410,866.10. 25% of the total dividends as claimed by 3^rd defendant would be HK$602,721.53 whereas 3.57% of the same as claimed by 4^th defendant would be HK$86,068.63.

26.  To the limitation defence I next turn.

E.   LIMITATION

27.  Section 20(1) of the Limitation Ordinance, Cap 347 provides :

(1) No period of limitation prescribed by this Ordinance shall apply to an action by a beneficiary under a trust, being an action-

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(b)  to recover from the trustee trust property or the proceeds thereof in the possession of the trustee, or previously received by the trustee and converted to his use.

28.  Here, the plaintiff had never been lawfully appointed as administrator of the estate of the Deceased.  But he had intruded upon the affairs of the Deceased by using his dividend passbook and chop to collect the dividends between December 1941 and 2002.  His act of intermeddling of the estate of the Deceased renders him an executor de son tort : see William, Mortimer and Sunnucks (20^th Ed), paras 7-01, 7-05 to 7-06. As the Deceased’s grandson, the plaintiff is a person with a claim to a grant of administration.  As such, the plaintiff is a constructive trustee within the meaning of section 21(1)(b) of the Limitation Ordinance : James v Williams [2000] Ch 1, per Aldous LJ at pp 10F-11A and E.  No limitation period applies.

29.  In the reply, the plaintiff sought to rely on section 4 of the Limitation Ordinance.  Such reliance is misplaced for the simple reason that it does not apply to a claim based on constructive trust.

30.  I hold that the limitation defence is not available to the plaintiff.

F.  ORDER

31.  I enter judgment for the 3^rd and 4^th defendants as follows :

(1) A declaration that the 3^rd defendant and the 4^th defendant are respectively entitled to 25% and 3.57% of Shares in the estate of the Deceased;

(2) A declaration that the 3^rd defendant and the 4^th defendant are respectively entitled to 25% and 3.57% of the dividend derived from the Shares from 1^st January 1946 to 31^st December 2002 in the respective sum of HK$602,721.53 and HK$86,068.63.

(3) The plaintiff do forthwith pay the said sums of HK$602,721.53 and HK$86,068.63 to the 3^rd and 4^th defendants respectively with interest accrued thereon at the judgment rate from date of the writ to date of payment.

32.  I further order that the plaintiff do pay the 3^rd and 4^th defendants costs of the entire action, including any costs reserved, to be taxed if not agreed.  The 3^rd and 4^th defendants’ own costs are to be taxed in accordance with the legal aid regulations.

Schedule

Dividends per share declared on the Shares between 1944 and 2002