CHOW LILY v. CHOW WAI WAI VIOLET AND OTHERS

HCAP 22/2019

[2021] HKCFI 1274

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

PROBATE ACTION NO 22 OF 2019

________________________

________________________

________________________

________________________

D E C I S I O N

________________________

1.  In this action commenced by the plaintiff to challenge the validity of what is said to be the last will of her father, Chow Yei Ching, deceased, dated 2015, she applied for the appointment of administrators pendente lite (“APL”). By decision handed down on 30 July 2020, this court, upon acceptance of various undertakings by the defendants, dismissed the application with costs against the plaintiff (“the Decision”). The plaintiff now seeks leave to appeal. As directed, the present application is disposed of on paper without oral hearing.

A.  THE APL APPLICATION

2.  The background of the deceased’s family, this action and the APL application as well as the terms of the appointment sought by the plaintiff were set out in the Decision[1], which I will not repeat here.  I adopt the same definitions and abbreviations as those in the Decision for the present purpose.

3.  There has been change of parties to the present action after the present application has been taken out.  Upon her renunciation of her right to probate in respect of the deceased’s estate, and the discontinuance of the present action concerning her, the 3^rd defendant, ie the Mother, has ceased to be a party.  Another sister of Lily, Lina, has been joined as the 3^rd defendant instead.

B.  THE PRINCIPLES

4.  The discretionary nature of the power of the court to appoint APL is clear from the wordings of section 40 of the PAO.  The principles governing the court’s exercise of such discretion were explained in Mak Ngun Tai & Ors v Fung Ming Ip & Ors HCAP 37/2015 (14 October 2016)[2].  The burden was on Lily to satisfy the court that the proposed appointment is necessary or expedient in the circumstances of the case, bearing in mind the nature, size and condition of the assets in the estate.  This court concluded that she failed to do that.

5.  Leave to appeal against the Decision shall not be granted unless the intended appeal has a reasonable prospect of success or there exists some other reason in the interest of justice that the appeal should be heard: see section 14AA of the High Court Ordinance, Cap 4; SMSE v KL [2009] 4 HKLRD 125 at §17.

6.  Lily did not, and still does not, dispute the principles governing the appointment of APL.  Therefore, for the present purpose, she has to demonstrate a reasonable prospect of convincing the appellate court that plainly this court failed to apply, or wrongly applied, those principles by either ignoring relevant circumstances or taking into account irrelevant circumstances as of the time of the hearing of the application in the exercise of the discretion: see Fong Chak Kwan v Ascentic Ltd & Ors [2020] HKCFI 1889 at §8.  That different court may attach different weight to any relevant circumstance in the consideration of exercise of discretion generally will not suffice: see Bright Shipping Ltd v Changhong Group (HK) Ltd [2019] 5 HKLRD 30 at §6.

C.  THE GROUNDS OF APPEAL

7.  The grounds of appeal may be grouped into the following broad categories:

(1)  the approach of this court in applying the principles explained in Mak Ngun Tai (above);

(2)  the consideration of the situation of the Investment Pool; and

(3)  the consideration of the situation of the other assets in the estate of the Deceased.

C1.  Category(1) - §§1 to 5 of the draft notice of appeal

8.  Essentially, the argument is that this court’s approach failed to adhere to the principles in Mak Ngun Tai, albeit correctly stated in the Decision.

9.  What amounts to the required necessity or expediency for the appointment of APL depends on the circumstances of the case.  It is up to the applying party, who has the burden, to demonstrate the existence of situation that would satisfy the criteria of necessity or expediency in the circumstances of the case.  It has been recognized that the likelihood of dissipation or jeopardy of the assets of the estate that calls for protection and preservation is amongst the situations that could justify the appointment.

10.  In the present case, I do not see how it could be said that this court considered solely whether Lily managed to establish necessity on the basis of a risk of dissipation of assets in the Deceased’s estate.  Lily indeed sought to demonstrate such risk to justify the appointment.  She still does, for the purpose of the present application. Therefore, whilst she now argues that this court has failed to appreciate expediency being another reason for appointing APL[3], it is not that she is detaching her case on expediency from the alleged risk of dissipation of assets in the Deceased’s estate as such.  This is obvious from her submission for the present purpose[4].

11.  As to the approach, there is no question of this court venturing to resolve the factual dispute between the parties on affidavits.  It is uncertain yet whether or, if yes, to what extent the factual dispute raised in the APL application would feature in the present action which primarily concerns different issues[5]. Nevertheless, in order to determine whether or not the circumstances of the present case gave rise to situation calling for protection and preservation of the estate of the Deceased, and thus justification for the appointment of APL, this court must form a view of the assertions made and evidence of the circumstances adduced by the parties.  It was really in such context and for such purpose that this court considered whether Lily managed to discharge her burden in the APL application.

12.  It is therefore incorrect to interpret the conclusion of this court in the context and for the purpose mentioned above as findings of fact without full investigation and cross examination of witnesses[6]. It is surprising that the same paragraph of the Decision[7] in which this court made clear this point somehow becomes the very paragraph that is now said to manifest the opposite.  This court certainly formed a view of the assertions and evidence in the context and for the purpose of the APL application, but not made findings that coloured the court’s view of the matter[8].

13.  Mere assertions are of little or no weight, and suspicion does not suffice to found the court’s exercise of discretion[9]. It does not appear that Lily disputes that in principle.  Therefore, this court fails to see how the expectation of concrete evidence in discharge of Lily’s burden of proof mentioned above can be faulted in principle[10].

14.  Lily then argues that this court failed to appreciate the alleged significant information asymmetry and power imbalance in respect of discovery and procurement of evidence between the two sides prior to discovery in the action[11].

15.  First, judging from the evidence and the manner in which the evidence has been tendered by her for the purpose of the APL application, this court got no impression that Lily considered herself to be suffering from the alleged disadvantage in terms of the state and quality of her evidence that could be adduced in support of her application.

16.  Second, such argument does not assist her, when she had the undeniable burden to substantiate the basis for her application by evidence.  The extent of evidence expected from the applying party is not that to prove dissipation but to substantiate the existence of such risk for the purpose of considering the necessity for protection and preservation.

17.  Third, Lily took out the application when she, with legal assistance, considered that the state of the evidence sufficed for such purpose.  The court was therefore called upon to consider the application on the basis of such evidence.  Lily is not prevented to take out another APL application at any time on the ground of change in circumstances such as discovery of new evidence.

18.  Contrary to her argument[12], the suggestion of likely protracted litigation was clearly argued and taken into account in the consideration.  Only that this court does not readily assume the litigation in the main action, in view of its issues, should protract unless the parties choose to conduct it that way.

19.  Hostility and lack of trust are common, if not inherent, features in this kind of probate dispute.  That they were duly noted should be obvious from the Decision.  In the present case, hostility and lack of trust between the two sides probably surfaced when the 2015 Will was revealed (if not earlier).  Notwithstanding that, the Violet Undertakings were given.  The situation probably worsened after the commencement of this action and the APL application.  Notwithstanding that, the various undertakings from Violet and the Mother were given.  These undertakings, which Lily did not get to describe as pretence and valueless even now, are relevant when considering the situation.  On Lily’s behalf, Yung Siu Chee Margaret v Choy Ching Wa Fionee, HCMP 1682/2016 (23 July 2019) was cited to make good her point about the relevance of hostile friction between the parties. However, the circumstances in that case that caused the court there to say what he did (at §109) differ from those of the present case.

20.  Regard by this court to the size of the estate in the Decision should be obvious too.  That included the fact that the bulk of it comprises the Chevalier Shares, which was indeed the primary target of the APL application.  This court also noted the suggestion of what APL, if appointed, may do concerning the affairs of Chevalier.  There was adequate discussion in this respect in the circumstances of Chevalier[13]. However, the grounds of the intended appeal now tend to focus on the situation of the rest of the estate (below).

21.  As to how this court views the suggestion of the need to investigate now what will be matters of execution of the Deceased’s will as propounded or administration, which Lily repeats for the present purpose[14], I am not satisfied that my observation as explained[15] deviates from what is expected under the principles explained in Mak Ngun Tai.

22.  The above, amongst others put forward and argued by the parties, are but relevant factors in the consideration, and have been taken into account.  That the court’s conclusion at the end of the consideration differed from the view of either party to the application does not constitute an error.  Where it is suggested that the court has not paid proper regard to any factor, the view taken by the court is erroneous only if it is one that the court was not entitled to form in respect of such factor.

C2.  Category (2) - §§7 to 10 of the draft notice of appeal

23.  The dispute between the two sides in respect of the right to the Investment Pool held by 15 corporate vehicles was noted and, as others, their respective assertions were set out in the Decision.  This court was expected to form a view of the matter in the context and for the purpose of deciding whether it is necessary or expedient to appoint APL to safeguard the Investment Pool.  Now Lily argued that this court failed to note the genesis, purpose, operation and size of the pool[16].

24.  The defendants actually admitted that the Investment Pool was funded by the Deceased.  This court’s attention was then drawn by the parties to various contemporaneous documentary evidence and the circumstances surrounding the operation of the pool prior to and after the death of the Deceased by the committee of the children including Lily and Wai Lee.  The administration of the pool was entrusted to the company of Oscar pursuant to the resolution of the committee.  There was also evidence of provisions made from the Investment Pool, which were approved by the committee both prior to and after the death of the Deceased.  Some provisions were suggested and approved by Lily while some were made for the benefit or purpose of Wai Lee[17]. Against this background of dealings and knowledge on the part of Lily and Wai Lee, the fact that the issue concerning the status of the Investment Pool somehow did not feature in the grounds of the APL application but came to be raised only by way of reply affidavit[18] was a circumstance that should not be overlooked.  This court put such observation no further than that[19].

25.  The state of knowledge and conduct of the children of Deceased in dealing with the Investment Pool reflected the understanding of the nature of the pool on the part of not only the defendants but also Lily and Wai Lee.  The consideration was never simply that the forming of the committee proved that the Deceased had no beneficial interest in the pool, as Lily now describes as this court’s reasoning[20].

26.  Where the prima facie situation is that the Investment Pool is held in names other than the Deceased, it is incorrect for Lily to suggest that the defendants have failed to adduce evidence of how the pool came to be beneficially owned by the children as they contend[21]. Lily who asserts in the APL application should establish the basis for contending that the pool is held on trust for the benefit of the Deceased, before showing further that the situation surrounding such part of his estate calls for the appointment of APL.

27.  In support of her contention that the Investment Pool was held by the children as mere nominees on trust for the Deceased (be it wholly or partly), Lily did not adduce evidence of the creation of such trust (apart from the admitted fact of funding).  She invited this court to draw inference not from other family trusts so created by the Deceased.  She argued that the fact that the Deceased did not legally hold the pool or that the setting up and working of the children’s committee in managing the pool does not mean the Deceased had no beneficial interest in the pool[22]. However, “double negative” is not evidence of the positive in this respect. She also relied on the episode of the decision of the Takeover and Mergers Panel in April 2015 against the Deceased and Oscar[23]. I can only repeat the difficulty in drawing such inference when that 2015 episode concerned the concerted action of the Deceased and Oscar in furtherance of a particular design instigated by the late Nina Kung in connection with the shares of another listed company[24]. She now repeats these contentions in her grounds of the intended appeal[25].

28.  Contrary to Lily’s argument[26], this court, short of making final finding of fact, had to come to a view on the likelihood of jeopardy and thus necessity for preservation of the Investment Pool on the basis of the probability of its being the asset of the Deceased, and thus his estate, or alternatively the joint assets of the children[27] as respectively asserted by the parties.

29.  For argument’s sake, this court also assumed that the Deceased had beneficial interest in the Investment Pool. However, the same, absent dissipation, would have become part of the residuary estate distributable to the beneficiaries according to the will of the Deceased to be propounded or intestacy[28]. The further issue of the specific share of such possible beneficial interest of the Deceased in the pool raised by Lily for the present purpose[29] is not founded by actual assertion, let alone evidence.

C3.  Category (3) - §§6; 11 to 12 of the draft notice of appeal

30.  It is argued that this court made unwarranted speculation in assessing Lily’s contention in respect of how Violet has handled the Deceased’s cash and household expenses[30].

31.  This is an inaccurate reading of this aspect of the Decision[31].

32.  Insofar as the references to the cash ledger kept by Violet and the query by Lily about the opening balance are concerned, what this court did was to set out the assertions and evidence of the parties before considering the criticism by Lily about the impropriety or apparent lack of formal accountability of Violet’s pattern of handling the Deceased’s funds in the circumstances of the case.  This court was expected to form a view of the circumstances as projected.  Part of such view was the concreteness and specificity of the basis for Lily’s challenge in this respect that one may reasonably expect in the circumstances.  The exercise was an objective assessment, not speculation.

33.  Lily repeats for the purpose of the present application the use of the Deceased’s cash by Violet to invest in shares[32]. As noted in the Decision, that was also admitted by Violet, and the proceeds of sale of the shares were accounted for in the ledger[33]. That a different view may be held about that does not render that held by this court of the matter erroneous as if this court was not entitled to come to such view in the circumstances.

34.  Lily challenges this court’s conclusion in respect of the use of the dividends from the Chevalier Shares to enable the Mother to purchase the corporate vehicle that held the family residence in Jardine’s Lookout in relation to the risk of dissipation of the Deceased’s estate[34]. Beside the amount involved, this court’s view of the contemporaneous evidence, including that of Lily’s involvement and knowledge about that, as explained in the Decision[35], which is not challenged for the present purpose, cannot be described as not, or less, significant in assessing whether that was conceived and implemented in dissipation of the Deceased’s estate.

D.  CONCLUSION AND ORDER

35.  Lily fails to demonstrate a reasonable prospect of the appellate court interfering with the exercise of this court’s discretion in refusing the appointment of APL in the circumstances as of the date of the last hearing.  It is not suggested that there is some other reason why the appeal should be heard.  The application is therefore dismissed.

36.  Following the event, Lily shall pay the defendants’ costs of and occasioned by the present application.  The parties are prepared for summary assessment of costs.  Considering the nature of the application, the reasonable professional work entailed and the involvement of counsel team as reflected by the written submission on the defendants’ side, I summarily assess such costs at HK$180,000.  The costs order is nisi.

37.  I thank counsel for their written submissions.