KWOK SHUK KUEN MARIA AND ANOTHER v. LI WUN AND ANOTHER

HCAP 8/2011

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

PROBATE ACTION NO 8 OF 2011

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D E C I S I O N   O N   C O S T S

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INTRODUCTION

1.  In a judgment handed down on 17 June 2014, judgment was entered in the plaintiffs’ favour; further, the defendants’ counterclaim was dismissed.  The abbreviations used in the judgment are also used below.

2.  The parties wished the costs to be dealt with after they had sight of the judgment.  Directions for dealing with costs were given in the judgment.  Written submissions were later lodged with court concerning the subject.

3.  In relation to the costs of the action:

(a) the plaintiffs seek those cost against the defendants, to be taxed on indemnity (alternatively, common fund) basis;

(b) the defendants ask that those costs be paid out of the dec’d’s estate; alternatively, they ask for no order as to those costs; alternatively, that they pay only half of those costs, to be taxed on party‑and‑party basis.

4.  There was also a summons taken out by the defendants on 16 March 2012 for the administration of the dec’d’s estate to be “passed over” to them (“the passing over summons”).  At the beginning of the trial of this action, the plaintiffs indicated they had no objection to the dec’d’s estate being continued to be administered by the administrators pendent lite.  In relation to the costs of the passing over summons:

(1) the plaintiffs also seek those costs against the defendants, to be taxed on party‑and‑party basis;

(2) the defendants ask for those costs be paid by the plaintiffs, to be taxed on party‑and‑party basis.

COSTS OF THIS ACTION

(a) Liability for costs

5.  While the parties do not dispute:

(a) the plaintiffs have in effect been the successful party in this action;

(b) the general practice is that costs should follow the event,

they disagree as regards whether the defendants should fall within either or both of the two exceptions mentioned in Nina Kung v Wang Din Shin (No 2) (2006) 9 HKCFAR 800:

(1) where the litigation has been caused by testator’s conduct or the residual beneficiary, costs should come out of the estate (“the doubtful conduct ground”);

(2) where the circumstances reasonably lead to an investigation of the will’s validity, there should be no order as to costs (“the reasonable investigation ground”).

6.  In relation to the doubtful conduct ground, in gist the defendants place the origin of this action on the conduct of the dec’d and P2.  In relation to the former:

(a) the dec’d’s failure to tell them about (1) the Mainland properties, (2) the Mainland will and undated will, or (3) the subject will;

(b) the important of sub-para (a)(2) above is said to be “. . . doubts as to whether [the dec’d] ever intended to revoke [the Mainland will and the undated will] by execution of [the subject will]” (para 10, defendants’ written submissions on costs);

(c) the dec’d kept the defendants away from the events leading to the execution of the subject will;

(d) shortly before the execution of the subject will, the dec’d executed the business transfer agreement (in effect “giving” the dec’d’s business to P2);

(e) because of sub‑para (c) and (d) above, the defendants were unaware of the contents of those documents.

The above are said to “. . . ignite and incite a row after his death . . . ” (para 11, defendants’ written submissions on costs).

7.  First, these complaints conveniently ignore the general tenure of the judgment; that is, despite the defendants’ contentions to the contrary, there were no suspicious circumstances to speak of (see, in particular, para 28 to 31, 33, and 76 to 82 thereof).

8.  Secondly, even the defendants themselves were, on record, not holding any suspicion after the subject will was announced in late‑June 2010 (see the contents of the 3 September 2010 letter; partly quoted at para 46, judgment).  D2’s purported explanation as to why the said letter was so expressed has been rejected.

9.  Reliance is then placed on clause 5(1) of the subject will (providing for $8 million for keeping good “fungshui” and ancestral grave maintenance).  This is an unmeritorious point for the simple reason that it was a point which:

(1) has not been found in the judgment to properly ground any complaint (let alone a complaint of “doubtful conduct”) (see, for example, para 39, 40 and 42, judgment);

(2) cannot properly be (and has not been) determined in the context of this action.

10.  Further to para 6(a) to (e) above, in relation to P2:

(a) P2 was the one who “procured” the execution of the subject will (by finding Lau, and acting as the go‑between during the process leading to the subject will);

(b) Lau was originally P2’s conveyancing solicitor;

(c) P2 paid for the expenses of the subject will;

(d) P2 substantially benefitted from the subject will and business transfer agreement.

11.  Again, the defendants erroneously do not seem to think findings already made on these matters in the judgment should hamper these points.  It is thus unnecessary for them to be revisited here.

12.  The reasonable investigation ground essentially relies on the above matters (that is, para 5(1), 6 and 9 to 10 above) (para 16, defendants’ written submissions on costs).  Reasons similar to those which appear in para 7 to 8 and 11 above also apply here.

13.  Other matters are raised:

(1) the subject will does not deal with the dec’d’s express instructions that the Sheung Wan property should not be sold;

(2) the subject will represents a change of the dec’d’s mind regarding the Mainland properties;

(3) the matters summarized in para 37(5) and (6), judgment.

14.  Two of the above matters have already been dealt with, and rejected by, the judgment:

(a) para 13(1) above: para 78(b), judgment;

(b) para 13(3) above: para 41, judgment.

15.  As regards para 13(2) above, there could well have been a change of mind.  But this has to be considered in the proper context of this action.  First, this point was never put during trial (for the simple reason that a contrary stance has been taken: see para 37(5) and (6), judgment).  Secondly, in any event, the relative importance of this, when considered with (1) the other matters discussed above, and (2) the Hok Lo instructions defence and undue influence defence (see also below), is practically negligible (for completeness, I observe that the same also applies to para 13(3) above).

16.  In addition, it is quite wrong to describe the defendants’ primary stance in this action as:

“. . . simply to put Ps to strict proof” (para 19, defendants’ written submissions on costs.

This description completely ignores the pre‑trial resources put into the defendants’ case concerning:

(1) the Hok Lo instructions (the contents of which have been summarized in para 45(a) to (f), judgment);

(2) alleged undue influence on the dec’d by P2 (para 2(c) and (e), 22 and 28 to 30, and 67(2) to 68 and 76(d), judgment).

It also ignores the trial time spent on the same.

17.  The defendants choose to call their case about the Hok Lo instructions nothing more than:

(a) “circumstantial evidence”;

(b) “suspicious circumstances calling for a full investigation”,

(para 20, defendants’ written submissions on costs).  They can pick whatever labels that may sound as neutral as they can, but the fact remains that the case has been put forth, and must be resolved.

18.  For the Hok Lo instructions aspect to amount to some kind of “circumstance”, its contents (and the truth of those contents) must be examined, assessed and determined.  And if (and when) the contents of the Hok Lo instructions have been accepted, then they would amount to a piece of evidence, which goes beyond merely putting the plaintiffs to proof.  I therefore do not see how one can properly say no “positive case” has been put forth without straining the meaning of that phrase.  The fact that it has ultimately been rejected as evidence does not mean it was initially not a positive case.

19.  The defendants’ case on undue influence has been summarized, and examined in some length, in the judgment (see para 16(2) above).  Again, this aspect cannot properly be regarded as only putting the plaintiffs to proof.

20.  Finally, insofar as it may be necessary to rely on the same, the kind of untruth advanced in D2’s testimony falls within the category described in Yu Jiang and Another v Cheng Wai Lin Rosalind and Others, HCA 2562/2005 (27 August 2014), para 9 and 14.  Thus, apart from the above matters, this also justifies costs to be awarded against the defendants.

21.  The defendants’ argument that the costs for their case based on the Hok Lo instructions and undue influence should be apportioned is equally unmeritorious.  Here, in agreeing with the plaintiffs, I do not consider it necessary to elaborate on the reasons for so concluding other than saying that the observations in the Nina Kung decision, para 16 apply here.

(b) Basis of taxation

22.  Five grounds have been relied upon in support of the plaintiffs’ case for indemnity costs to be awarded:

(1) D2’s untruthful evidence;

(2) wide allegations and voluminously cumbersome documentary evidence;

(3) serious but groundless allegations;

(4) persistence in a hopeless defence;

(5) ulterior motive for resisting this action.

I consider grounds (3) and (4) can be grouped together.

23.  In relation to ground (1) above, the defendants argue that there is no finding the untruthful testimony was given deliberately.  This argument conflicts with para 17, judgment, especially when that is read together with various passages in the judgment: for example, para 44, 46, 48 to 51, and 53 to 56 thereof.  They show that the untruthful testimony was but the result of deliberate lies.

24.  In relation to ground (2) above, besides the overall case put forth for the defendants, there were individual matters which can only be categorized as excessive (especially taking into account RHC Ord 1A).  Their unjustified allegations extend equally to the dec’d’s daughters.  The mildest interpretation of this part of their case is that the daughters/sisters turned a blind eye to P2’s misdeeds; but the claim that the daughters gave false testimony remained part of the defence case: para 34, judgment.  Many of the documents included in the trial bundles are also unnecessary.  The repeated attempts to refer to P2’s conduct after the dec’d’s death were unwarranted either.

25.  In relation to grounds (3) and (4) above, allegations of:

(a) the plaintiffs having made dishonest misrepresentations to the dec’d;

(b) P2 having abused the trust the dec’d placed in him,

were advanced by the defence (either during testimony or submissions).  This was done when, at the same time, the defence claims it has no knowledge of the circumstances leading to the subject will.

26.  I consider ground (5) to be no more than the conclusion to be drawn, having found against the defendants as regards grounds (1) to (4) above.

27.  By virtue of the above matters, I consider it appropriate to order that the costs of this action should be payable on indemnity basis.

COSTS OF THE PASSING OVER SUMMONS

28.  It is common ground the basis for the passing over summons was that P2 has been “intermeddling” with the dec’d’s estate, with P1’s connivance.

29.  It is trite law the right and title of an executor of a will to administer the estate stems from the will since the testator’s death: Williams, Mortimer and Sunnucks on Executors, Administrators and Probate (2013) 20^th Ed, para 5‑02.

30.  Further, up to at least 3 September 2010 (see the letter of 3 September 2010: para 46, judgment), there was no indication the subject will was under challenge.  Indeed, apparently the earliest document which showed a possible challenge was the caveat dated 17 December 2010: para 51(a), judgment.

31.  Viewed in such light, complaints against P2’s conduct (at least the conduct before December 2010) were not entirely justified.

32.  Further, whether it was appropriate to take out the passing over summons has to be considered together with the following:

(1) this action was at the time still awaiting trial, with the result that it was uncertain whether the plaintiffs could legitimately rely on the subject will;

(2) further, the administrators pendent lite were already put in place.

33.  With these in mind, I agree with the plaintiffs there was no proper need for the passing over summons.

34.  Accordingly, I agree with the plaintiffs the costs should be borne by the defendants on party-and-party basis.

OTHER MATTERS

35.  The parties’ written submissions also mentioned various other points.  These have not been expressly set out or dealt with above.  This is so only because of the need to balance between the length of the decision on costs and its comprehension.  It does not mean those other points are thought to be irrelevant (or have been overlooked).  To avoid doubt, those other points have also been considered.

COSTS ORDER NISI

36.  There is no apparent reason to depart from the usual rule that costs should follow the event.  To avoid doubt, there will be a costs order nisi pursuant to Ord 42 r 5B(6) that the costs of and incidental to this decision on costs be part of the costs of this action, but are to be taxed if not agreed on party‑and‑party basis.