RE NCS

HCAG 1036/2008

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

APPLICATION FOR GRANT NO. 1036 OF 2008

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J U D G M E N T

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1.  In this application for grant, the deceased died on 16 December 1990. He had made a will on 29 May 1972 in which he named his wife as the sole beneficiary to his estate. He also appointed her to be the sole executor.

2.  For some reasons not known to me, there had been a long lapse of time before an application for grant was made.

3.  On 6 February 2008, an application was made by the son of the Deceased and the wife for grant of Letters of Administration with Will annexed under Section 36 of the Probate and Administration Ordinance [“PAO”].

4.  In an affirmation of 5 February 2008, the son deposed that the wife was suffering from dementia and she was unfit to make a statement.  A medical certificate of a Dr Cheung Sai Chun of 10 July 2007 was produced.  The certificate stated that the wife was suffering from dementia and cerebral palsy.  It also certified that she was in poor general condition, unable to walk and sign document.

5.  In March 2008, the probate registry requested the Applicant to provide surety guarantee.

6.  The estate of the deceased, according to estate duty papers, was worth about $3.7 million.  The present value of the estate, as per information supplied on behalf of the Applicant, is about $31 million.

7.  On 7 July 2009, solicitors for the Applicant indicated to the probate registry that the Applicant was unable to procure surety guarantee.  From the correspondence produced, it seems that the main difficulty is the size of the estate and the lack of means on the part of the Applicant.

8.  The Applicant requested the probate master to waive or otherwise dispense with the requirement of surety guarantee.

9.  The matter was referred to this court.  This court directed a hearing and submissions were invited on whether a Part II application under the Mental Health Ordinance [“MHO”] should be made.

10.  In circumstances where the named executor is incompetent to act and that person is also the sole beneficiary, the court can appoint such person as the court thinks fit to be the administrator under Section 36.

11.  Rule 33 of the Non-Contentious Probate Rules [“NCPR”] does not refer to a grant to a committee or a person appointed by the court under Part II of the MHO in case of mental incapacity.  Instead it provides that a grant for the use and benefit of a mentally incapacitated person may be issued,

“(i) if the person incapable is entitled as executor, to the person entitled to the residuary estate of the deceased;

(ii) if the person incapable is entitled otherwise than as an executor, to the person who would be entitled to a grant in respect of his estate if he had died intestate.”

12.  Rule 33 cannot be regarded as exhaustive or mandatory in respect of the person whom the court may appoint under Section 36.  Section 36 is in general terms as regards the person the court may think fit to appoint.  I do not think Rule 33 should be read as cutting down the discretion conferred upon the court in Section 36.  The use of the word “may” in Rule 33 indicates that the rule is permissive instead of mandatory.  In England, the corresponding rule is not regarded as exhaustive in terms of the person that could be appointed by the court, see Williams, Mortimer & Sunnucks, Executors, Administrators and Probate (2008), para. 24-30; Tristram & Coote’s Probate Practice, 13^th Edn, para. 11.274.

13.  Further, the rule making power under Section 72 of the PAO only provides for rules regulating the practice and procedure of the court and the Registry and the better carrying out of the provisions of the PAO[1].  It is doubtful whether the NCPR as subsidiary legislation can curtail the general substantive power conferred upon the court in the PAO.

14.  In England, the relevant provision is Rule 35 of the Non-contentious Probate Rules 1987.  That rule provides that the first priority in case of mental incapacity on the part of the person entitled to grant is to direct a grant in favour of “the person authorized by the Court of Protection to apply for a grant”.  It is only upon the default of such person and a lawful attorney under an enduring power of attorney then a grant may be issued to the person entitled to the residuary estate of the deceased.

15.  The earlier version of the English rules, viz. Rule 33 of the Non-contentious Probate Rules 1954 also provided for priority of such grant to the person authorized by the Court of Protection.  It was only where no such person was so authorized that Rule 33 made similar provision as those found in our Rule 33.

16.  The English rules (both the 1954 version and the current one) provide for notification of intended application to be given to the Court of Protection[2].

17.  Our PAO and NCPR were enacted in 1971.  It may well be that in view of the fact that there was no court of protection in Hong Kong, those responsible for drafting our Rule 33 decided to drop the first limb of Rule 33 in the English 1954 Probate Rules.  But we have moved forward in terms of the emphasis placed upon protection for mentally incapacitated person and the need for proper supervision over those authorized by the court to manage the properties and affairs of such person.  In recent years, the court has become more vigilant in evoking its Part II jurisdiction under the MHO, and sometimes with the assistance of the Official Solicitor.  Committee appointed under the MHO is required to furnish periodic accounts to the court and there are measures in place to ensure that the properties of a mentally incapacitated person are utilized for proper purposes.

18.  Further, with procedural streamlining brought about by Practice Direction 30.1 and the setting up of a Mental Health List in the High Court, a Part II application can be dealt with expeditiously and efficiently without too much costs involved.  Even though we do not have a Court of Protection in Hong Kong, our courts exercising the Part II jurisdiction under the MHO is providing a similar protection to mentally incapacitated persons.

19.  It is now a standard practice to require applications to be made under Part II of the MHO at some stage when personal injuries claims are brought on behalf of mentally incapacitated person where substantial awards are expected.

20.  I see no reason why the court in the exercise of its probate jurisdiction should lose sight of these developments.  Surely mentally incapacitated persons in Hong Kong are equally entitled to be protected in probate matters as in personal injuries litigation.  In the exercise of its discretion under Section 36 of the PAO, it is high time that the court should have regard to the possibility of a committee being appointed under Part II of the MHO in deciding to whom a grant should be issued for the use and benefit of a mentally incapacitated person.  The appointment of a committee with its correspondent accounting requirements and supervision by the court in the management of the estate of a mentally incapacitated person gives much better protection than a simple grant for the use and benefit of such person.  In my view there must be good justification for not requiring a Part II application to be made when the estate involved is substantial.

21.  Bearing in mind the size of the estate (which plainly justify the costs of a Part II application) and the inability on the part of the Applicant to provide a surety guarantee as required by the Registrar, this court should require the Applicant to make a Part II application as a condition for grant.  Depending on the outcome of that application, in particular the safeguard in place in the order appointing the committee and authorizing the application for grant, the court may view the application for waiver of surety guarantee in a more favourable light than it presently stands.

22.  At the hearing, Mr Fu informed this court that the Applicant is willing to make an application under Part II of the MHO and in addition, he is willing to pay $1 million into court as security.  Mr Fu agreed that Part II application has to be made by way of fresh proceedings and he needed time to prepare the same.  He however invited this court to order a grant on undertakings to such effect offered by the Applicant.

23.  As I said in the course of the hearing, this court should not pre-empt the exercise of the Part II jurisdiction.  It is up to the judge hearing the Part II application to decide whether to appoint the Applicant as committee and if he were so appointed, whether to authorize him to apply for Letters of Administration and the terms and conditions of such authorization.  To order a grant to be made here and now merely on the undertakings of the Applicant to apply under Part II will be putting the cart before the horse.  I do not think it is appropriate.

24.  I therefore adjourned the application sine die with liberty to restore after the intended Part II proceedings have been concluded.  The Applicant is given two months to file the Part II application.

25.  I will circulate this judgment to the professions as guidance on how similar applications should be dealt with in the future.