LI WAI CHU AND ANOTHER v. LI WAI LING

HCAP 6/2012

[2018] HKCFI 65

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

PROBATE ACTION NO 6 OF 2012

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DECISION (COSTS)

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Background

1.  By the judgment dated 20 June 2017 (“the Judgment”), this court dismissed the claim of the plaintiffs and upheld the validity of the second will made by Madam Chung in 2011. In the penultimate paragraph of the Judgment, this court invited written submissions on costs and further indicated that I can make the determination on the costs issue on paper. This I now do.

2.  In this Decision, I shall not repeat my findings and observations in the Judgment and I shall only make references thereto. I also adopt all the abbreviations used in the Judgment.

3.  As stated in the Judgment, on the issue of costs, Nina Kung v Wang Din Shin (No 2) (2006) 9 HKCFAR 800 (“the Authority”) is instructive and both Ms Liu for the defendant and Mr Miu for the plaintiffs refer to the relevant paragraphs of the Authority.

4.  Ms Liu asks this court to follow the general rule of costs following the event and, in view of the allegedly egregious conduct of the plaintiffs, costs should be awarded against them on an indemnity basis or at the very least on a common fund basis. 

5.  Mr Miu, on the other hand, argues that the proper costs order should be that all parties’ costs should be paid out of the Estate by reason of the invocation of the second rule in Barry v Butlin (“the Second Rule”).

Relevant legal principles

6.  The relevant principles which can be distilled from the Authority were neatly summarised by Kwan JA in Cheung Wai Lan v Kwok Chung Chee, unreported, CACV 128/2014, 15.4.2015 at §77 and the summary is as follows,

“The applicable principles are as stated in Nina Kung v Wang Din Shin (No 2) (2006) 9 HKCFAR 800. The starting point and general rule where opposition to a will is unsuccessful is that costs would follow the event. The general rule is subject to two exceptions. The first exception is where the conduct of the testator or the residual beneficiary was the sole or dominant cause of the litigation and the appropriate costs order in this situation is for the costs to come out of the estate. The second exception is where circumstances lead reasonably to an investigation of the will’s validity and in such cases, there would be no order as to costs. However, even if a case fell prima facie within one of the exceptions, if opposition to the will goes beyond putting the proponent to strict proof of its validity and involved fundamentally hostile litigation, such as where the opposing party took it upon himself to establish a positive case of forgery, fraud or undue influence, the general rule is likely to apply, as implicitly recognised in Order 62 rule 6(1)(c) of the Rules of the High Court. Lastly, the operation of the two exceptions is subject to a further qualification that the courts do not approve of ill-considered and precipitous decision to litigate in opposition to a will and the opponents must have taken all proper steps to inform themselves as to the facts of the case before undertaking the proceedings if they are to take themselves out of the general rule of costs following the event.”

Discussion

7.  My determination of the costs issue should be made on the basis of the findings and observations made in the Judgment. There is no argument that the first exception has any application here. The debate is about the second exception.

8.  In §117 of the Judgment, I explained why I concluded that the Second Rule should apply. In the Cheung Wai Lan case, at §79, Kwan JA pointed out that by reason of the application of the Second Rule, the Court of Appeal was inclined to think that the circumstances there did lead reasonably to an investigation of the validity of the subject will.

9.  At trial, Ms Liu did not argue against the applicability of the Second Rule and merely submitted that in the circumstances of the present case it should be on the lightest side of the scale: §85 of the Judgment. Notwithstanding this position, Ms Liu makes an effort to convince this court that the application per se should not trigger the second exception.

10.  Quite rightly, Ms Liu points out that it is a common phenomenon that elderly testators require the assistance of the beneficiary to engage the drafters of their wills and so the Second Rule has a wide application. She submits that all the circumstances and the conduct of litigation should be taken into consideration.

11.  In light of the reasons given in the Judgment concerning the application of the Second Rule, I am satisfied that the present case prima facie falls within the second exception. It should be noted that at the time when Chu and Yee commenced this action, they only knew the contents of the 1998 Will and that of the 2^nd 2011 Will regardless of whether they were aware of the existence of the 1^st 2011 Will. According to the pleaded case of Chu and Yee, their respective 1/3 shares in the residue estate under the 1998 Will were completely deprived under the 2^nd 2011 Will whereas Ling’s 1/3 share was substantially increased to 98% under the 2^nd 2011 Will.

12.  In the circumstances, I believe that it was reasonable for Chu and Ling to embark on an investigation into the validity of the 2^nd 2011 Will. Whether there should be no order as to the costs is of course another matter. The second exception is plainly subject to two qualifications according to the Authority.

13.  Now I proceed to consider the two qualifications, namely, hostile litigation and lack of proper enquiry to see whether the departure of       the general rule is justified by reason of the second exception.

Hostile litigation

14.  Ms Liu refers to my criticisms and observations of the conduct of Chu and Yee in these proceedings and their evidence in the Judgment.[1] She reminds this court that the plaintiffs’ factual and expert evidence was emphatically rejected. She submits that Chu and Yee, albeit without success, basically ran a smear campaign against Ling in this action with a number of unpleaded allegations. Hence, Chu and Yee did not merely put Ling to strict proof of the validity of the 2^nd 2011 Will and their opposition took the form of a hostile litigation.

15.  Mr Miu points out that Chu and Yee did not advance any positive case such as forgery, fraud and undue influence. He relies on the dictum of Ribeiro PJ in the Authority at §§15-17 for the explanation of the meaning of a hostile litigation in the context of costs consideration. He further relies on Re Lai Ho Kai, unreported, HCAP 1/2000, 26.11.2002 in which DHCJ A Cheung (as he then was) applied O.62 r.6(1)(c) to support his submission that the rejection of the opposing evidence, factual or expert, per se, does not turn the failed opposition into a hostile litigation. Mr Miu argues that the opposition against the validity of the 2^nd 2011 Will should still be within the ambit of O.62 r.6(1)(c).

16.  I have reviewed the pleadings and the witness statements for the purpose of this Decision. I accept Mr Miu’s submission that on the pleadings, Chu and Yee did not put forward any positive case but this alone cannot alter the hostile nature of a litigation. One still has to examine the entire approach and conduct of an opposing party taken in the action. 

17.  In the witness statements, both parties were indeed hostile to each other and intended to conduct the litigation without any difference with other adversarial litigations. That was the reason why at the very outset of the trial I expressed my displeasure at such evidence and made it clear to the parties that this court would not allow any investigation of such irrelevant allegations. Both counsel took heed of my indication and conducted the trial with commendable constraints only with occasional digressions and fortunately the trial was completed well within time.

18.  Mr Miu is right in his submissions that the irrelevant allegations against Ling were only made in the supplemental witness statements of the defence in response to the allegations of Ling in her witness statement. In my view, Ling should not have made such allegations in the first place.

19.  Whilst I accept that it is essentially the conduct of the opposing party that the court has to take into account to decide whether they have conducted the litigation as if it were a hostile litigation, I agree that their personal allegations might have been prompted by those made by Ling. Both sides made irrelevant allegations. In all fairness, I should not take the case of Chu and Yee out of the second exception on this ground.

Proper inquiries

20.  That brings me to the last qualification to the second exception and I have to determine whether Chu and Ling had taken proper steps to inform themselves of the facts of the case before undertaking the proceedings.

21.  Ms Liu submits that there is no evidence to the effect that Chu and Yee had ever made any inquiries at all. She submits that Ling would have been forthcoming to them had they approached her before commencing this action.

22.  I do not think that Ling could assist to dispel any suspicion that Chu and Yee had harboured. The mutual mistrust is just too obvious and the Second Rule cannot be satisfied simply by the explanation given by Ling to them however frank she tried to sound.  

23.  On the issue of knowledge and approval, this court relied very much on the evidence of Mr Leung of PTS: see §§128-129 of the Judgment. He was a neutral witness and his professional integrity was not impugned. He may not have been allowed to disclose to Chu and Yee what transpired during the execution of the 1^st 2011 Will and the 2^nd 2011 Will without the approval of Ling but there is no evidence that they had ever sought such an approval.

24.  In any event, after Mr Leung filed his two witness statements (respectively dated 15 January 2014 and 5 November 2014), Chu and Yee should have taken a pragmatic approach and considered his evidence objectively and carefully. His evidence, in the absence of valid grounds of suspicion, should go a long way to show that Madam Chung did know and approve the contents of the 2^nd 2011 Will.

25.  I am aware that on the application of the Second Rule, this court is obliged to look at the entire evidence including matters and circumstances not attending, or even relevant to, the preparation and execution of the will itself, with the appropriate degree of vigilance and jealousy: Re Yip Keung, unreported, HCAP15/204 at §72 per A Cheung J (as he then was).

26.  It may be argued that despite the evidence of Mr Leung, the investigation should be undertaken into all the suspicious circumstances. They have to be looked into on the application of the Second Rule. However, in the Judgment, I have explained sufficiently why I did not find anything suspicious at all.

27.  As pointed out by Ms Liu, it is not uncommon for a beneficiary, being the child of the elderly deceased, to have assisted in the instruction of lawyers to prepare the will in question. The mere application of the Second Rule cannot justify an unreasonable opposition to be raised against the validity of the will and the commencement of an expensive litigation for the purpose of investigating all the irrelevant and unmeritorious allegations. Any opposition should only be made rationally with good grounds.

28.  For completeness, I am alive to the fact that Chu and Yee required the proof of testamentary capacity of Madam Chung. Their pleaded case is that Madam Chung had developed anxiety disorder and adjustment disorder after being diagnosed of lung cancer in 2005.

29.  Even their expert evidence in the first report did not suggest that Madam Chung did not have testamentary capacity. Their subsequent acceptance of the validity of the 1^st 2011 Will and hence her testamentary capacity seven days before the execution of the 2^nd 2011 Will can only show that they had no genuine grounds to cast doubt on the testamentary capacity of Madam Chung when she made the 2^nd 2011 Will. The joint medical expert report dated 11 March 2014 should put to rest any doubt about testamentary capacity.

Conclusion and orders

30.  Thus, I come to the conclusion that Chu and Yee could no longer rely on the protective sphere of O.62 r. 6(1)(c) a reasonable period after the filing of the supplemental witness statement of Mr Leung. They should have halted the litigation thereafter. I believe one month would be the reasonable period. The second exception should cease to be operative and the general rule should start to apply on 4 December 2014.

31.  Given my criticisms of the allegations of Ling as well, I do not find indemnity costs to be appropriate.

32.  For the foregoing reasons, I make an order that there be no order as to costs until 4 December 2014 and thereafter Chu and Yee should pay Ling her costs of the action including the submissions on costs, to be taxed if not agreed. I should also allow Chu and Yee legal aid taxation of their own costs.

33.  Lastly, I should point out that I expressly direct in the Judgment that the parties should file their respective written submissions of not more than 5 pages. Ms Liu’s clear, well-organized and forceful written submissions does not exceed the page limit and this court is grateful for her assistance.

34.  Mr Miu, without giving any explanation, filed his 23-page written submissions in which he explains how this court misunderstood his various submissions and challenges this court’s reasoning and findings in the Judgment with extensive reference to evidence and citations of authorities. I must say that this is neither helpful nor appropriate no matter how disapproving he is of the Judgment.    

35.  The case file had not been with me for a long period of time after the parties lodged with this court their written submissions. This explains the lateness of this Decision, for which I regret.