FUNG YING CHEUNG AND OTHERS v. YIP WOON YUNG

HCAP 26/2014

PROBATE ACTION NO 26 OF 2014

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D E C I S I O N
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Introduction

1.  This is an application for striking out of certain paragraphs in the Defence.

Background

2.  On 13 January 2010, Mr Fung Yat Wan (馮一雲) (the “deceased”) died intestate and domiciled in Hong Kong at the age of 71.

3.  In the following few years, a number of caveats were filed in the probate registry against the estate (the “estate”) of the deceased.

4.  On 13 January 2014, under HCAG 521/2014, Madam Yip Woon Yung (葉煥榕) applied in person, in the capacity of the lawful widow and relict of the deceased, for letters of administration for the estate.  She deposed, inter alia, that seven (7) persons were entitled to share in the estate.  They are:

(a) herself ,

(b) Wai Lam (偉霖),

(c) Kong Ling (港玲),

(d) Wai Tat (偉達),

(e) Ying Cheung (英祥),

(f) Shao Ling (少玲), and

(g) Yee Chun (綺珍)[1].

5.  Madam Yip also said in her supporting affirmation that the estate consisted of a landed property at 1^st Floor, No. 153 Apliu Street and No. 256 Tai Nan Street, Kowloon, $6,000 at bank accounts, one bank safe deposit box, copy right in a book called “馮一雲法集”.  On the other hand, the liabilities included “凡在香港的遺產” owing to偉霖, 偉達 and港玲.

6.  The application could not be processed because of caveat having been entered.

7.  On 21 August 2014, under HCCA 227/2014, upon hearing from the parties thereto, I directed, inter alia, the caveators[2] to issue a probate action to resolve the parties’ disputes.

Statement of Claim

8.  On 10 September 2014, the said caveators (herein after called “the claimants”) commenced the present proceedings against Madam葉煥榕 (hereinafter called the “defendant”).  The claimants said that their mother, Madam 梁容秀 (“Madam Leung”) married to the deceased on 28 January 1950 in accordance with Chinese customary rites and ceremonies in China and they were borne out of the marriage.

9.  Though the deceased later married the defendant on 3 May 1977 in Hong Kong and had 3 children born, 偉霖, 港玲 and 偉達, such marriage was void.

10.  The defendant applied for the letters of administration under HCAG 521/2014 to administer the estate.  However, she had no right to do so. Only the claimants and the said偉霖, 港玲 and 偉達were issues of the deceased, and they were entitled to the letters of administration regarding the estate.

11.  By the present proceedings, the claimants sought a declaration that the “marriage” between the deceased and the defendant was void.  HCAG 521/2014 should be dismissed and letters of administration regarding the estate was to be issued to one of the claimants.

Defence

12.  The defendant contested the proceedings.

13.  With the assistance of legal aid, she filed her Defence.  She denied the marriage between the deceased and Madam Leung.  The status of the claimants was not admitted.  She said that she was duly married to the deceased.  偉霖, 港玲 and 偉達were their lawful and natural children.

14.  The defendant did apply under HCAG 521/2014 in the capacity as lawful widow and relict of the deceased.

15.  Further or in the alternative, the deceased and the defendant entered into a written contract on 28 February 2003 (the “2003 contract”).  Under the 2003 contract, among others:

(a) They would share equally the sale proceeds of a landed property known as Rego Park Property.

(b) Six thousand ($6,000) would be paid each month to the defendant by a company operated by the deceased and the defendant.

(c) They held in equal shares a piece of land in New Territories to be acquired from one Mr Leung Fung.

(d) All the estate of the deceased in Hong Kong and China would belong to 偉霖, 港玲 and 偉達.

Under the 2003 contract, none of the claimants would have any beneficial interest in the estate.

Reply

16.  The claimants filed their Reply.  They gave more details on the family background of the deceased, including that he came to Hong Kong in or around mid 60s.  He continued to look after Madam Leung and the family. From 1996 to 1999, he migrated to USA with the defendant.  After 1999, he spent more time with Madam Leung and the family here.  The relationship between the deceased and the defendant was not good.

17.  As to the 2003 contract, it was said to be void or have no legal effect for a number of reasons, including lack of consideration, no intention to create contractual relation, uncertainty and undue influence.

Striking out application

18.  The 3^rd named claimant also obtained legal aid from 9 April 2015.

19.  On 31 July, 2015, the claimants’ solicitors wrote to the defendant’s solicitors, suggesting that paragraphs 11 to 20 of the Defence should be struck out.

“……

In compliance with Practice Directions 19.1(5), our clients hereby inform yours (and her counsel through you) that they intend to apply to strike our paragraphs 11 to 20 (inclusive and in their entirety) of the Defence filed herein on 27 January 2015, under Order 18 rule 19(1)(a) and (c) and Order 76 rule 9(2) of the Rules of the High Court, on the grounds that (a) they disclose no reasonable cause of defence, (b) they may prejudice, embarrass or delay the fair trial of this action, and/or (c) they, even if proved, would not thereby give your client an interest in the Estate entitling her to a grant of Letters of Administration.

The said offending paragraphs plead “the Contract” which even if proved as alleged, which is totally and absolutely denied, at best gives an alleged personam and contractual claim against the Deceased (and therefore, against the Estate) (a) in respect of certain properties of the Estate for your client’s 3 children (but not for your client), and (b) a monthly sum of $6,000 to be paid by certain company to your client. Such claim, if later pursued, should and could be defended by the Estate after representation is granted. The present Probate Action is clearly not the appropriate proceedings to litigate the issues relating to the alleged contract. The offending paragraphs therefore should be struck out.

……”

20.  The defendant’s solicitors replied on 8 August 2015.

“……

Your clients commenced the Action for, inter alia, a grant of letters of administration to the Deceased’s estate to be issued to one of them.

The Contract has been pleaded by our client in her Defence (as defined at paragraph 11 thereof) because it is relevant to the issue of whether or not a grant should be issued to one of your clients.

Under paragraph 10 of the Statement of Claim, your clients claim priority to a grant under Rule 21 of the Non-Contentious Probate Rules as issues of the Deceased and having a beneficial interest in his estate.

Rule 21 provides as follows:

“(1) Where a person dies wholly intestate, the persons having a beneficial interest in the estate shall be entitled to a grant of administration in the following order of priority, namely-…”

One express statutory requirement is that the person wanting to claim priority must have a beneficial interest in the estate.

Para 5.060 at page 186 of “A Guide to Wills and Probate in Hong Kong” by Associate Professor Rebecca Ong (Sweet & Maxwell/Thomson Reuters) confirms such requirement:

“The order below follows the order of entitlement to an estate on intestacy and requires the person seeking the grant to have a beneficial interest in the estate.”

It is our client’s consideration that your clients do not have a beneficial interest in the Deceased’s estate as a result of the Contract.

Your clients are entitled to deny the legal impact of such Contract and/or even its existence.

In fact, your clients have already pleaded many challenges against the Contract (e.g. undue influence or non-compliance with the Wills Ordinance) in their Reply dated 31^st March, 2015.

They have through your Firm filed their Reply into Court and effected service thereof on our client. Parties’ conflicting contentions over the Contract would have to be resolved at trial together with other issues.

It appears that your clients now have second thoughts. However, they have not explained why they now suddenly see fit to strike out pleadings concerning a relevant issue to prevent it from being adjudicated on at trial.

We would therefore urge your clients to re-consider their position. If they persist in commencing a satellite litigation for striking out, our client will reserve all rights to hold your clients responsible for her costs and expenses in resisting such litigation.

……”

21.  The matter could not be resolved and the claimants issued the present striking out application.  By consent, parties agreed to adjourn the application for argument.  They did not seek to rely on any affidavit evidence.

Discussions

22.  Parties appeared before me in the morning on 12 February 2016 for the substantive argument.  Both sides were appeared by Counsel, Mr K C Chan for the claimants and Mr Jonathan Chang, for the defendant.  Upon hearing from them, I reserved my decision to be handed down.

23.  Here it is.

24.  As a starting point, it is important to remember that the trial judge will decide on the following issues in the present probate proceedings.

(a) What is the relationship between the deceased and Madam Leung, i.e. is the “marriage” on 28 January 1950 in PRC valid?

(b) Subject to it, how would it affect the “marriage” between the deceased and the defendant in Hong Kong as shown in the marriage certificate dated 3 May 1977?

(c) Subject to the above and other evidence, what are the status of the claimants and 偉霖, 港玲 and 偉達, including if they are the “lawful or natural children” or only “natural” children of the deceased?

(d) At the end, to whom the letters of administration regarding the estate should be issued to?

25.  The defendant has made no counterclaim herein and no such application has been made before the court.  The validity of the 2003 contract is not and will not be an issue before the trial judge.

26.  With the above in mind, I turn to the 3 grounds raised by Mr Chan.

27.  First, does the “2003 contract” disclose no reasonable cause of defence?

28.  One of course immediately recalls that validity of the 2003 contract is not an issue in the present proceedings.

29.  Why it was raised then?  It can be understood from the aforesaid letter of 8 August 2015 written by the solicitors acting for the defendant.  She raised it for the purpose of showing that the estate would only go to偉霖, 港玲 and 偉達, but not others.  Hence, from a “literal” reading of the relevant rule governing priority of grant in rule 21 of the Non-Contentious Probate Rules (Cap 10A), all the claimants (notwithstanding their status of being the children of the deceased) would be unable to inherit anything from the Deceased, and as such, they do not have the right to obtain the grant regarding the estate due to lack of beneficial interest therein.

“……

(1) Where a person dies wholly intestate, the persons having a beneficial interest (emphasis added) in the estate shall be entitled to a grant of administration in the following order of priority, namely-

(i) the surviving spouse or the surviving partner or partners to a union of concubinage entered into before 7 October 1971;

(ii) the children of the deceased including any children born of a union of concubinage entered into before 7 October 1971, or the issue of any such child who has died during the lifetime of the deceased;

(iii) the father or mother of the deceased;

(iv) brothers and sisters of the deceased or the issue of any deceased brother or sister of the deceased who has died during the lifetime of the deceased.”

30.  In this respect, I agree to accept the understanding on the rule by Mr Chan.

“It is respectfully submitted that the phrase “persons having a beneficial interest in the estate” in Rule 21(1) means:

a. Persons having a beneficial interest in the estate under the laws governing intestacy;

b. Persons having any beneficial interest under the laws governing intestacy, however small an interest;

c. Persons having a beneficial interest in the estate under the laws governing intestacy at the time of death of the Deceased.”

(Paragraph 26 of Mr Chan’s skeleton)

31.  Putting the highest case to the defendant, i.e. even if the 2003 contract was a valid one and binding on the estate, it does not take away the beneficial interest of the claimants in the estate.

32.  Hence, I agree with Mr Chan that the 2003 contract does not show any reasonable cause of defence.

33.  Should those parts of the defence be retained as suggested by Mr Chang who argued that it was a strong piece of evidence tending to show that Madam Leung was not married to the deceased and that none of the claimants was his issues because he did not direct his mind to them at all.  Even if the trial judge might hold a contrary view, “the mere fact that the case is weak and not likely to succeed is no ground for striking it out”.  Lastly, in any event, it sets out background information to the present action.

34.  Upon thought, I decline to accept these arguments because it would tend to prejudice embarrass and delay the fair trial of the action herein, i.e. the 2^nd ground advanced by Mr Chan.

35.  There is no doubt that the 2003 contract will be put before the trial judge.  It has been included in the defendant’s list.  It will be referred to in the witness statements.

36.  However, with the 2003 contract as it now pleads in the Defence, it goes beyond such scope.  It has already “invited’ or ’“triggered” the corresponding plead of lack of consideration, no intention to create contractual relation, uncertainty and undue influence in the Reply.  When it does not affect the beneficial interest of the claimants in the estate, its validity not being as issue herein, the retention of those pleadings will no doubt unnecessarily divert the attention of the court and parties towards the issues to be decided. Time and costs will also be spent and wasted.

37.  Having decided in favour of the claimants regarding the aforesaid 2 grounds, it suffices to dispose of the present application.  Regarding the other ground under O.76 r.9 Rules of the High Court (Cap. 4) (“RHC”), I note that both learned counsel has not adduced any authority. It is therefore better to leave their argument towards the rule to be decided in future appropriate case.

Costs

38.  There appears to be no reason why costs should not follow the event.  Assistance from both counsel are useful.  Having further that both the 3^rd named claimant and the defendant are legally aided as well as O.62 r.9C(1)(b) RHC, I will make an order nisi that the defendant do bear costs of the claimants of the application, including costs reserved and certificate of counsel for hearing on 12 February 2016, to be taxed if not agreed, in any event.  The own costs of both the 3^rd named claimant and the defendant are to be taxed in accordance with Legal Aid Regulations.

Conclusion

39.  To conclude, I will make the following orders.

(a) Paragraphs 11 to 20 of the Defence filed herein on 27 January 2015 are struck out.

(b) There is an order nisi (to be made absolute within 14 days from the date hereof) that:

(i) The defendant do bear costs of the claimants of the application, including cots reserved and certificate of counsel for hearing on 12 February 2016, to be taxed if not agreed, in any event.

(ii) The own costs of the 3^rd named claimant are to be taxed in accordance with Legal Aid Regulations.

(iii) The own costs of the defendant are to be taxed in accordance with Legal Aid Regulations.