KING WONG DEVELOPMENT LTD v. CHAU FUNG YEE

HCMP 2779/2016

[2019] HKCFI 756

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 2779 OF 2016

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J U D G M E N T

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1.  The plaintiff (“King Wong”) commenced this administration action pursuant to Order 85 of the Rules of the High Court as the assignee of the interest and right of two sisters in the estate of their deceased father. The defendant (“Fung Yee”) is the other sister and the administratrix of the estate.

Background

2.  Chau Kwun Sang (“the Deceased”) was the registered and beneficial co-owner of various lots of land on Lamma Island.  The other registered co-owners are Chau Sai Yau (“Chau”) and his brother.  The Chau brothers are the Deceased’s nephews, their father being the Deceased’s brother.  The Deceased owned ½ share while the 2 Chau brothers, succeeding to their father, own the other ½ share of the lots of land in question.  Save that there has been surrender and exchange of a certain lot, the lots of land in question have been held this way since the latter half of the 1960s.

3.  The Deceased died intestate on 8 November 1975.  Surviving him were:

(1)  Chau So Tai (“So Tai”), daughter of the Deceased from his first marriage;

(2)  Chow Yuk Tai (“Yuk Tai”), daughter of the Deceased from his first marriage;

(3)  Lam King (“Madam Lam”), second wife (tin-fong widow and relict) of the Deceased; and

(4)  Fung Yee, daughter of the Deceased and Madam Lam.

4.  So Tai passed away on 25 August 1976, ie, less than a year after the passing of the Deceased.  Madam Lam passed away on 9 March 1998.

5.  Letters of Administration in respect of the Deceased’s estate was granted to Fung Yee in 2004.  At the time, the assets in the estate were reported to only consist of the Deceased’s interest in the various lots of land in question.  Fung Yee is also the administrator of the estate of Madam Lam.

6.  In 2006, the Chau brothers assigned their interest in the land to King Wong, which further assigned the same to their current owner in 2010.  The Land Registry record shows a substantial increment in the prices of the lots of land between these 2 transactions over 4 years.

7.  In 2014, by an assignment dated 23 July, King Wong was also assignedabsolutely the right and entitlement of So Tai and Yuk Tai to the estate of the Deceased (“the 2014 Assignment”).  The 2014 Assignment was executed on the assignor’ side by Yuk Tai and Yiu Yuet Wing (“Yiu”) as the administrator of the estate of So Tai.  Yiu is son of So Tai, and obtained Letters of Administration in respect her estate on 4 March 2014.

8.  At the time of the 2014 Assignment, the position of King Wongwas that Madam Lam, as the widow, was entitled to ½ share and the 3 daughters to the other ½ share of the Deceased’s interest in the lots of land in question pursuant to the then Intestates’ Estate Ordinance, Cap 73 (“IEO”).  King Wong requested Fung Yee, as the administratrix of the estate of the Deceased, to distribute the estate to it that would represent the interest of So Tai and Yuk Tai in the land in question.  This led to its commencement of the first administration action HCMP 2162/2015 against Fung Yee.  Fung Yee opposed the claim.

9.  HCMP 2162/2015 was eventually discontinued by consent in May 2016.  According to King Wong, it was advised by counsel in early 2016 that the estate of the Deceased should be distributed in accordance with Chinese customary law.  As such, Madam Lam had only a life interest and therefore each of the three daughters should be entitled to ⅓ share of the estate of the Deceased.  King Wong should have obtained from So Tai and Yuk Tai the assignment of ⅔ of the interest in the estate and thus the lots of land in question.  Hence the discontinuance of those proceedings.

10.  After the cancellation of the 2014 Assignment, another assignment dated 26 April 2016 was executed by the same parties (“the 2016 Assignment”).  This assignment provided that So Tai and Yuk Tai were assigning to King Wong their interest and entitlement to the estate of the Deceased whether under Chinese customary law and/or the IEO.

11.  On the basis of its assigned entitlement pursuant to the 2016 Assignment, King Wong commenced the present proceedings for the following relief:

(1)  An order for the administration of the estate of the Deceased comprising the interest in the various lots of land in question with all necessary and proper accounts, directions and enquiries;

(2)  Fung Yee, as the administratrix, do distribute the assigned share in the estate to it or in such manner as the court may direct;

(3)  Further or other relief; and costs.

12.  By her affirmation, Fung Yee, amongst others, made the following points:

(1)  So Tai (if she is entitled) and Yuk Tai do not have proprietary interest in the Deceased’s estate, but only the right to require her to duly administer the same.

(2)  Insofar as the IEO in 1976 when So Tai passed away applies to the transmission of her estate, her estate should passto her surviving spouse, Yiu Tsau Sang.  Yiu Tsau Sang passed away in September 2003, but there is no evidence of grant of administration of his estate.  Instead, Yiu only obtained Letters of Administration in respect of So Tai’s estate prior to his execution of the 2014 Assignment.

(3)  Insofar as Chinese law and custom applies, King Wong is a stranger and not a person who would be entitled to succeed to the estate and to enforce such right.

(4)  As the administratrix, it is within her power to hold onto the estate of the Deceased, comprising his interests in the various lots of land in question, and to await opportunity to realise them in the market at a fair value in case of acquisition by developer or government resumption.  In any event, any sale would require the blessing of the other co-owners of the land.

13.  By the time of the hearing of this action on 23 August 2017, the following additional issues have been raised on behalf of Fung Yee, apparently on the basis that Chinese law and custom apply to the succession of the Deceased’s estate:

(1)  It is unclear if the Deceased has any surviving siblings or nephews, who would be in a position under Chinese law and custom to compete with the daughters in succeeding to the estate of the Deceased.

(2)  According to Chinese law and custom, the line of the Deceased’s family became extinct not upon his death but the death of Madam Lam.  When that happened, So Tai has already passed away.  Therefore, there is no question of So Tai succeeding to the estate of the Deceased,and it follows that Yiu, as the administrator of her estate, had no right in or entitlement to the Deceased’s estate to assign to King Wong.

14.  The hearing has since been further adjourned[1], and further evidence has been filed.

15.  As to the question of potential competition with the daughters to succeed, there is now the affirmation evidence of Chau.  Chau explained that his grandfather died in the 1930s and survived byfour sons. Of them, two were adopted by other families, leaving his father and the Deceased being the only 2 sons entitled to succeed in equal shares to the estate of the grandfather. As mentioned, he and his brother succeeded to their father’s ½ share in the lots of land in question, while the Deceased held the other ½ .  Chau confirmed that both he and his brother would not compete with the daughters in succeeding to the estate of the Deceased or the other ½ share of the land in question. The Chau brothers relinquish any right in that respect.  As mentioned, the Chau brother have already sold their interest in the land to King Wong in 2006.

16.  As to So Tai’s right to succeed to the Deceased’s estate, and the question arising out of the purported assignment of such right of hers, if any, and that of Yuk Tai to King Wong, there is the expert evidence of Professor Hugh Baker (“Professor Baker”) for King Wong and Professor Cheung Sui Wai (“Professor Cheung”) for Fung Yee.

Applicability of Chinese law and custom

17.  Essentially, by virtue of sections 7 and 8 of the New TerritoriesLand (Exemption) Ordinance, Cap 452, in respect of deaths prior to 24 June1994 (effective date of the Ordinance), lands of an estate in the New Territoriesremain not exempted under Part II of the New Territories Ordinance, Cap 97, and therefore by virtue of section 13 of that Ordinance, Chinese custom or customary right affecting such land applies.  As the Deceased passed away prior to the above relevant date, his interest in the various lots of land in question, situated on Lamma Island, is governed by Chinese law and custom.  During the hearing, not much was argued about such background.

18.  Against such background, and considering counsel’s submissions, it should be uncontroversial that while Fung Yee became the administratrix of the estate of the Deceased by virtue of her position under the then IEO, she has to administer the estate in accordance with the Chinese law and custom insofar as and to the extent that they apply to the succession to the Deceased’s interest in the land in question.  By Chinese law, one refers to the Qing Code, the relevant articles of which are cited below.

The daughters’ right to succeed

19.  Article 88(1) spells out the norm, namely, the agnatic path of succession to male descendants:

「其分析家財田產不問妻妾婢生止以子數均分。」

Jamieson, Chinese Family and Commercial Law, translated this article as follows:

“ … all family property moveable or immovable must be divided equally between all male children whether born of the principal wife or of a concubine or domestic slave.”

20.  In case there is no son born to a marriage, article 78(1) provides:

「無子者許令同宗昭穆相當之姪承繼先儘同父周親次及大功小功緦麻如俱無方許擇立遠房及同姓為嗣。」

Therefore, if no son is born to a marriage, the line of family may be preserved by formal adoption (inter vivos or posthumous) of a male of the next lower generation of the nearest agnatic collateral branch of the family, or failing which, a male from a distant branch, and if there were still no eligible male candidate, any male with the same surname as the adopting family.

21.  Pending such contingency that may continue the family line, article 78(2) provides for the widow’s right during the interim:

「婦人夫亡無子守志者合承夫分須憑族長擇昭穆相當之人繼嗣……」

Jamieson translated this as follows:

“ A widow left without a son and not remarrying shall be entitled to her husband’s share of the family property, and it shall rest with the elders of the Family to select the proper relative, and appoint him to succession ….”

22.  Where the line of family is faced with extinction for want of eligible male successor, then notwithstanding the operation of article 78(2), article 88(2) provides:

「戶絕財產果無同宗應繼之人所有親女承受。無女者，聽地方官詳明上司酌拔充公。」

Jamieson (above) translated this article as follows:

“ In the event of a family becoming extinct for want of legal successors, the daughters shall be entitled to the property,and if there are no daughters the property shall be forfeited to Government.”

Professor Baker in his report provides the following translation of article 88(2), which is similar to the working translation adopted by the trial judge in Liu Ying Lan v Liu Tung Yiu & Anor [2][2003] 3 HKLRD 249 at §22:

“ If a line of the family becomes extinct and there is no-one in the clan entitled to succeed to the property, natural daughters may take it. If there are no daughters, the local official shall make a detailed report to his superiors and at their discretion the property shall be forfeited to the state.”

23.  The combined effect of the above articles on the right of a daughter to inherit her deceased father under Chinese law and custom is summarized in Kathryn Bernhardt,Women and Property in China, 960–1949 (1999 ed) at pp 44 – 45 [3]:

“ For daughters, the consolidation of mandatory nephew succession meant a contraction in their claims to juehu [絕戶] property. Ming (and then Qing) law explicitly stipulated that in the event a household died out, an heir was to be appointed from among the suitable candidates within the lineage. Only if there was no suitable male could daughters inherit …. A daughter’s legal rights to extinct household property thus took second place to those of all of her agnatic male cousins out to fourth cousins (zu xiongdi[族兄弟]).

To work, the new succession law required an enlarged pool of possible heirs. This was accomplished, first of all, by pushing the range of potential candidates out beyond the boundaries of the five degrees of mourning. Where Tang and Song law had restricted legal heirs to male agnates of the proper generational order within the ‘same lineage’ (tongzong[同宗]), as defined by the five degrees of mourning …, Ming and Qing law accepted not only male relatives outside of the five degrees as heirs, but even males who merely bore the same surname as the adopting father .…

The effects of these changes on daughters’ legal inheritance rights should be obvious.  The more necessary and the easier it became to find an heir, the less likely it became for daughters to inherit by default.”

24.  The Deceased was survived by no son but three natural daughters. So Tai passed away a year later.  Madam Lam then passed away, and was survived by Yuk Tai and Fung Yee.  With the confirmation of Chau on oath mentioned above, there is on the balance of probabilities no one other than the daughters who may claim entitlement to succeed to the estate of the Deceased under Chinese law and custom upon the death of Madam Lam.

25.  Among the daughters, the right of Yuk Tai and Fung Yee to succeed to the estate of the Deceased is uncontroversial.  However, their respective shares in succeeding to the estate of the Deceased will depend on whether or not So Tai was also entitled to succeed to the estate, notwithstanding her predeceasing Madam Lam and the extinction of the Deceased’s family line.

26.  There is also the question as to whether King Wong managed to obtainby way of the 2016 Assignment such interest and rights as well as to step into the shoes of Yuk Tai (and, if she was also entitled, So Tai) to commence this administration action against Fung Yee.

The expert evidence

27.  Professor Baker and Professor Cheung produced the following expert reports:

(1)  Professor Baker’s report dated 4 October 2017 and supplementary report dated 15 January 2018;

(2)  Professor Cheung’s report dated 7 February 2018; and

(3)  their joint reports dated 17 July 2018 and 18 July 2018.

28.  The experts are ad idem in the following respects pursuant to the operation of the Qing Code cited above and Chinese custom:

(1)  A household becomes extinct when both husband and wife have died without any natural or adopted or appointed son.

(2)  When the husband has died without a son, a widow can take control of the management of her late husband’s estate pending the contingency of continuation of the family line by an adopted or appointed son, but is not herself capable of inheriting the property or of succeeding to the family sacra.

(3)  The normal pattern of succession and inheritance in traditionalChinese culture is from father to son (or to sons in equal shares).  While unmarried daughters have an expectation of maintenance and a dowry upon marriage, they normally have no right of inheritance from their natal family and are not eligible to succeed to the family sacra nor to continue the natal family line.

(4)  Natural daughters may take the property of their father only if they have no natural, adopted or appointed brothers and if there is no eligible male available in a collateral line of the family and clan.  ‘Natural daughters’ (親女) refers to married and unmarried natural daughters alike.

(5)  The purpose of article 88(2) is to make provision against the eventuality of there being no eligible male heir to a family estate. Given that, after the mid-18^th century, forfeiture of property to the State seems to have been imposed only as punishment for criminal activity, it is clear that inheritance by daughters was in practice a last resort, the preferred solution was inheritance by a male of the appropriate generation of a close collateral branch.

(6)  Upon the confirmation of Chau on behalf of himself and his brother mentioned above, these only two known eligible collateral agnatic males have waived their right to succeed.  The line of the Deceased, which became extinct with the death of his widow Madam Lam, could not be revived, and his estate should therefore pass to his natural daughters in equal shares.

29.  The experts differ in the following respects:

(1)  Relevant to the issue of the entitlement of So Tai, whether a natural daughter who predeceased the extinction of the family line is nevertheless entitled to succeed to the estate of her father.

(2)  Relevant to the issue of the capacity of Yiu, whether the husband or the son of a deceased daughter, if she is entitled, becomes entitled to succeed to her deceased father’s estate under Chinese law and custom.

(3)  Relevant to the position of King Wong, whether the assignment of the right of Yuk Tai and So Tai, if any, to succeed to the estate of the Deceased recognized and valid under the Chinese law and custom.

Issue (1) – So Tai

30.  Professor Baker admits that he has no experience of encountering a situation giving rise to this issue.  However, he doubts the validity of the question.  He has the following reasons:

(1)  Under article 78(2), Madam Lam had to look after the estate of the Deceased during her lifetime, while having the use of the properties in the estate for her support and maintenance.  That however was not inheritance, and therefore had no effect on the daughters’ right under article 88(2).  Whilst the line of the family did not become extinct until the passing of Madam Lam, the relevant time from which inheritance should date would seem to be the time of the Deceased’s death.  In his words, the focus for inheritance “reverts” to the time of the Deceased’s death when family line becomes extinct upon the death of Madam Lam.

(2)  Posthumous adoption was no longer possible as a result of the Adoption Ordinance, which came into effect on 1 January 1973.  In the circumstances, whilst the line of the family was not extinct until the passing of Madam Lam, it was more theoretical than real to expect the line to be continued during the lifetime of Madam Lam.

(3)  In inheriting, the daughters were effectively treated as substitute sons, and their inheritance should date from the Deceased’s death.  He describes that as a matter of logic.

31.  Professor Cheung opines that natural daughterswho are entitled to succeed to the deceased father’s estate pursuant to article 88(2) should be those there and alive to succeed when the line of the family becomes extinct upon the widow’s death.  He has the following reasons:

(1)  Allowing a deceased daughter to succeed would be inconceivable under Chinese law or custom.  If one tries to resolve the anomaly by allowing the husband or son of the deceased daughter to step into her shoes to inherit the estate of her deceased father,this would amount to inheritance by someone outside the Deceased’s family with a different surname, namely, that of the daughter’s husband, which was equally not the custom.

(2)  If a daughter were entitled to succeed to the deceased father’s estate, notwithstanding her predeceasing the extinction of the line of the father’s family, all the predeceased daughters (or at least those surviving the father but predeceasing the mother, when the family line also became extinct) and their respective descendants would have to be traced for the purpose of the succession.  There is no evidence of such practice then.  In the only court case happening in Shaanxi province during the Jia Xing (嘉慶) period (1797) which the professor managed to find, the court official did not do that when directing inheritance by the surviving daughter of the family.  No enquiry was made about the existence of any daughter who might have deceased by then.

(3)  With the right to succeed upon the extinction of the line of the family comes the obligation in respect of the funeral matters.  The obligation would not and could not be assumed by the daughter already deceased or her surviving husband or son, who were of the another family.  In the Qing court case mentioned above, it was the surviving daughter who undertook the funeral arrangement of her parents.

32.  Professor Baker disagrees, and gives the following explanation:

(1)  It is not unknown for a son to predecease his father,but when the father eventually died, his estate passed to the son’s proper heir or heirs as it would in due course have done if the son had not predeceased his father.  Therefore, it is illogical that a predeceased daughter should be treated differently from a predeceased son.

(2)  Article 88(2) does not contain any condition that the daughter has to be alive to succeed.  Further, in the case of a married daughter, the custom is that her property would merge with that of her husband so that the same would become the property of her husband’s household unit, though not his family.  The inheritance of a married daughter pursuant to article 88(2) would have led to such result.  It is unlikely that such reality could have escaped the attention of the Qing lawmakers.  If the Qing lawmakers were minded to prevent such state of affairs, they would have made provision to that effect.

(3)  In any event, article 88(2) governs the extinction of a household, which by itself is an exceptional situation, and which would call for exceptional practices.

33.  I have reservation about the opinion of Professor Baker in this respect.

34.  I see force in Professor Cheung’s opinion that the concept of a dead daughter inheriting her deceased father’s estate was inconceivable under Chinese custom. Professor Baker’s answer to that rests on how such inheritance could still proceed practically, namely, it would be the son of the deceased daughter who would become entitled to do so.  He observes that this would be what happens in case of a son predeceasing the father, and the son of the predeceased son, ie, the grandson of the father, would come to inherit when the father passes away.  He sees no logic in treating the case of predeceased daughter differently.

35.  Contrary to Professor Baker’s view, it appears to me that there is a fundamental difference between the scenario of a daughter and that of a son predeceasing the father.  In the latter case, both the predeceased son, and the son of the predeceased son, would have been within the agnatic line of male descendants in the household.  In the case of a son predeceasing his father, where the son of the deceased son would succeed when the father dies, the issue of extinction of the line of the family simply does not arise and article 88(2) does not operate in the first place.

36.  Considering the expert evidence as a whole, I also disagree that it is illogical to treat the case of a predeceased daughter differently from that of predeceased son in inheriting the father’s estate.  There is, it seems, all the logic, when one bears in mind the differential treatment of sons and daughters that underlies succession under Chinese law and custom.  The norm is that a daughter is not entitled at all to inherit her father.  She comes to be so entitled only as a last resort when the family line becomes extinct for the lack of the last possible eligible male candidate, be he a close or distant one in the deceased father’s clan, to continue it.

37.  According to Chinese custom, a married daughter might have her dowry upon marriage and continuous gifts after marriage from her maiden family, but her property would merge with that of her husband so that the same would become the property of the conjugal unit controlled by her husband (though not his family), particularly when she dies. Professor Baker cited Jamieson (at p 52) [4]:

“ … all she brings or receives vests in her husband’s family. She cannot dispose of it or leave it by will; in short she has no separate estate and is incapable of having any.”

This would apply to what a daughter inherits from her deceased father pursuant to article 88(2).  However, I do not think this therefore provides a practical answer to the question by entitling the husband or son of a married daughter who predeceased the extinction of her father’s family line to succeed to her father’s estate.

38.  Where the married daughter has passed away prior to the extinction of the line of her maiden family, and therefore never gets to actually inherit her father’s estate, it does not seem to follow from the custom mentioned in the preceding paragraph that her surviving husband (on behalf of his own household unit) or their son, of another surname, would be in a position to claim the right to her father’s estate on the basis that such would have become the daughter’s property had she survived the extinction of her deceased father’s family line so as to inherit that.

39.  Professor Baker queriesthat if what is mentioned in the preceding paragraph has ever been a concern at the time, that could not have escaped the attention of the Qing lawmakers indrafting article 88(2).  Yet they set up nothing in the provision to prevent that from happening.  Professor Baker is drawing inference as to the legislative intent.

40.  I do not agree that Professor Baker’s inference is the only or the only reasonable one.  The materials available and before me do not afford the necessary certainty of Professor Baker’s reading and application of article 88(2) being the only reasonable one.  The article, in the light of its actual wording and the fundamental differential treatment of the two sexes that underlies succession under the Chinese law and custom mentioned above, seem to me to suggest otherwise.

41.  In terms of the wording of the article, the extinction of the family line in the absence of eligible male successor to the deceased father contemplated by article 88(2) is a state of affairs that could not be said to arise until the passing of the widow.  Until then, the contingency of the family line being continued remains, and it is difficult to see how one, let alone a daughter, even gets to consider or claim the entitlement of a daughter to the estate of the father in terms of right to succeed.  I acknowledge that as far as the circumstances of this case are concerned, the change in the adoption law in Hong Kong in 1973 might have rendered the notion of posthumus adoption by Madam Lam by Chinese custom academic even before the Deceased passed away[5]. Yet even so, Professor Baker is not saying that the daughters’ right to succeed to the Deceased’s estate arose and became locked upon the death of the Deceased.  Professor Baker maintains that the line of the Deceased’s family became extinct only upon the death of Madam Lam, and when she died, the “focus of inheritance reverts” to the time of the Deceased’s death.

42.  The experts agree that article 88(2) was applied in a way to prevent forfeiture of the estate of the deceased by allowing inheritance by daughters as the last resort.  The purpose of the article would be served, so long as there is a surviving daughter who could inherit at the time when the family line became extinct.  In terms of what underlies the Chinese law and custom governing succession mentioned above, I am not convinced that there was any further concern such as whether or not a daughter who predeceased that relevant moment should also be entitled to share in the succession.  However, this seems to be the effect of what Professor Baker proposes.

43.  Attempting also to draw inference, as Professor Baker does, one is equally entitled to query why the Qing lawmakers would have failed to provide (further) for the case where the deceased had a married daughter but she did not survive the extinction of the family line to succeed.  After all, however much one might have intended to prevent it, the ultimate fate of forfeiture of the estate could indeed fall, in the absence of inheritance by a daughter even as the last resort.

44.  In the context of what happened to the daughter’s inheritance afterwards, Professor Baker acknowledges that it cannot be assumed that the right of a daughter to inherit in exceptional circumstances was granted in order to benefit the recipient directly[6].  This adds to my skepticism about the entitlement of a daughter who predeceased the extinction of her father’s family line.

45.  Therefore, I do not see sufficient basis for the construction or application of article 88(2) or the existence of the custom for a daughter who predeceased the extinction of the family line to inherit her deceased father’s estate.

46.  Mr Lam, appearing for King Wong, submitted that Professor Cheung’s opinion should be rejected because he simply ignores the purpose of the custom, namely to allow for the possibility of posthumous adoption or appointment of male successor during the lifetime of the widow.  I do not agree, considering that he and Professor Cheung share the same opinion on when the family line would be said to become extinct exactly because of that custom.

47.  I find that when the family line of the Deceased became extinct when Madam Lam died, only the daughters surviving that are entitled to succeed pursuant to article 88(2).  Therefore, Yuk Tai and Fung Yee are entitled to inherit the estate of the Deceased in equal shares.  So Tai or her estate has no interest in the estate to assign to King Wong.

Issue (2) – Yiu

48.  Whilst acknowledging that he has not encountered any case of inheritance by a (deceased) daughter and what happened after such inheritance, Professor Baker resorts to the custom that the property of the married daughter merged with that of her husband’s household unit for deducing what would happen to So Tai’s share of the inheritance of the Deceased’s estate as discussed above[7]. In view of my discussion and finding in respect of issue (1) above, I need say no more about Yiu in the case of So Tai.

Issue (3) – King Wong

49.  This concerns the disposition of the entitlement of the daughters to the estate of the Deceased in favour of King Wong by way of the 2016 Assignment.

50.  Insofar as Chinese law and custom also apply to the disposition, the parties differ in respect of whether such disposition to a stranger was allowed, in the absence of consent of the family elders.  Regarding this, the experts also gave their respective opinion.

51.  In his opinion, Professor Cheung refers to the situation where the junior members of the family seek to split and dispose of family assets in the absence of consent of the father or, if the father has passed away,the widow.  Such conduct, he opines, would contravene specific provisions of the Qing Code[8].     My impression is that the experts do not actually differ in their understanding of the relevant Chinese law and custom.  Both refer to the following provision:

「凡同居卑幼不由尊長私擅用本家財物者，十兩笞二十，每十兩加一等，罪止杖一百。」

Jamieson provided the following translation:

“ If any of the junior members of a family living under the same roof appropriate without leave of the seniors any part of the family property, he shall be liable to punishment at the rate of twenty blows for every ten taels value so appropriated, and one degree more for every additional ten, not exceeding one hundred blows in all.”

52.  It is unclear whether the above provision primarily applies to normal succession, namely, by male.  But the circumstances peculiar to succession by daughters as the last resort upon extinction of the family line are not irrelevant to the application of the above provision of the Code.

53.  First, as the daughters’ succession came about only upon the passing of both the father and his widow, the daughters’ mother, no question of parental consent should ever arise.

54.  Second, Chau in his affirmation focused on the lack of intention on his part and his brother to compete with the daughters in inheriting the estate of the Deceased.  However, by filing his affirmation on behalf of King Wong, Chau, for himself and his brother as the co-owners of the land in question, could only be taken to have no adverse observation about the disposition of the Deceased’s share in favour of King Wong.  As mentioned, the Chau brothers themselves have sold their interest in the land in question to King Wong back in 2006.  Chau was born in 1940.  There is no suggestion or evidence of the existence of other family elders whose consent would have been required and could have sought for the disposition.

55.  Third, what a married daughter is inheriting would prima facie not be for her to dispose of as she wishes, as the property would have merged into that of her husband’s household unit (in accordance with the Chinese custom as mentioned above).  On this basis, there is lack of suggestion of any objection by Yuk Tai’s husband.  Insofar as So Tai’s share, if any, is concerned, whilst Professor Baker feels unable to say whether Yiu’s authority as the eldest son of So Tai would be sufficient to makesuch important decision without securing his siblings’ consent, he opines that Yiu would be regarded as effectively the family head in undertaking family responsibility in accordance with the custom.  Whether or not that is the case, it should be noted that Yiu is indeed the administrator of the estate of her mother appointed in accordance with the general law without objection from his siblings being potential beneficiaries of her estate.  However, as mentioned, I need say no more about So Tai or Yiu.

56.  It follows that in reality, the daughters have become their own masters in deciding how to deal with the property in the estate of the Deceased in the circumstances of this case.

57.  Both experts notice that the disposition by Yuk Tai of her entitlement to the Deceased’s estate was made without the consent of Fung Yee.  Professor Cheung opined[9], and Professor Baker agrees[10], that there was the expectation under Chinese custom that there should be consensus among those who have inherited the estate, before any significant decision in respect of the estate is made.  Disposition of the properties in the estate must be one of those significant decisions.

58.  Professor Baker opines that arbitrary action by those of superior powers or selfish motivation was commonplace, and particularly, when there is no parent or elder available to monitor, advise or control.

59.  Professor Cheung opines that the disposition by Yuk Tai (and purportedly by So Tai) in the present case without the consent of Fung Yee and in favour of a corporate third party would be contrary to Chinese law and custom.  He refers to the Qing Code on the theft and disposition of landed properties (or〈盜賣田宅〉) which forbids a person from dealing, as his own, with landed property in which there was dispute as to whether others were also interested in it.  In the context of ancestral landed property, he refers to the annotation provided by 沈之奇 in〈戶律、田宅、盜賣田宅、例止註〉which said:

「祖墳山地，非子孫一人可專者」

Literally, this means dealing with ancestral land may not be dictated by a single descendant.

60.  Professor Cheung also considers that disposition in favour of corporate third party so that it steps into the shoes of Yuk Tai (and So Tai) with a view to sharing the estate of the Deceased would have been most inappropriate.  In support, he refers to a Qing publication《鹿州公案》which contained the report of a dispute arising out of two brothers’ fight over the estate of their deceased father and its resolution before the court.  Essentially, the court went the extra mile to mediate and managed to have the brothers accept share of the estate equally between them.  His opinion is that in view of the manner in which the court would expect to handle such dispute, resolution of the dispute would have been impossible if either of them was not present.  The appearance of a third party purportedly in the shoes of either of them would not have worked.

61.  The references that Professor Cheung made do not appeal to me to actually lend weight to his conclusion in the circumstances of the present case.

62.  The 2016 Assignment is worded so that King Wong would obtain whatever interest and entitlement that the two sisters might have in the estate of the Deceased according to the applicable law.  That So Tai, as I find, was not entitled to succeed means the assignment only manages to convey to King Wong what Yuk Tai is entitled to, and that would become ½ share in the estate of the Deceased.  Fung Yee is entitled to the other ½ share, which is what Fung Yee contends, and what King Wong, through Mr Lam’s submissions, proposes as the alternative result[11].

63.  The kind of dispute over the entitlement to the estate, and the kind of resolution involved, in the case reported in the Qing publication that Professor Cheung refers to has no relevance in the circumstances of the present case.  The concern arising out of what is expected to be the mode of a Qing court in handling dispute between siblings over their entitlement to the estate of their deceased father, and thus the apparently inconceivable acceptance by the court of the appearance of a stranger to represent either contesting sibling, has no relevance in the circumstances of the present case either.  I also see no significance in emphasizing the relevance of the stranger being a corporate body, as it is unclear whether the notion existed at the time when the Qing Code or custom then came into existence.

64.  Insofar as it is the general law that governs other matters in relation to the estate inherited, such as disposition of what is being inherited, Mr Lam submitted that a beneficiary’s right in an estate is capable of transmission, citing Williams, Mortimer and Sunnucks on Executors, Administrators and Probate at §81-03.  However, what that paragraph says relates to transmission, by operation of law, of the inchoate right of a person interested in the estate whether under the will or intestacy to that person’s personal representative, presumably upon that person’s death.  The present case involves an assignment of such right by contract.

65.  Mr Lam also relied on Wu Koon Tai v Wu Yau Loi [1996] 2 HKLR 477 at 483B–C, where Lord Browne-Wilkinson stated the dictum in the context of whether a beneficiary under awill or intestacy has an assignable interest in the estate under administration.  The English law is that no beneficiary in such situation has such interest: Lord Sudeley v AG [1897] AC 11.  His Lordship assumed (without deciding) that the same law applied in the case before him, notwithstanding that succession was regulated by Chinese law.  On this basis, his Lordship considered that in principle, there is no reason why a devisee of land comprised in an un-administered estate cannot validly contract to sell the land at a time when his interest is a mere chose in action or expectancy.

66.  In other words, insofar as the general law applies to the disposition of the entitlement to inherit the estate, which is governed by Chinese law and custom, there is basis for recognizing the effectiveness of the disposition of such right by the daughters.

67.  All considered, I find that the disposition of Yuk Tai’s entitlement to the estate of the Deceased, which is in the nature of a chose in action, by way of the 2016 Assignment is not invalid or ineffective.

Administration of the Deceased’s estate

68.  Fung Yee takes the stance that she has discretion to hold onto the assets in the Deceased’s estate pending disposition at the suitable time and value.  Mr Lam submits that such discretion of the administrator is not supposed to be exercised arbitrarily, but in good faith and within a reasonable time for the interest all the beneficiaries: see Foo Jee Seng v Foo Jhee Tuang [2012] SGCA 41 at §§27-28; 32-36; 52; 59.

69.  No real factual basis of bad faith is suggested.  But the decade taken since Fung Yee has assumed her role and duties as the administratrix in 2004 calls for explanation, which she did give some in her affirmation.  As the materials available now stand, the estate consists only of the various lots of land, which seem to have their value.  As mentioned, I note the record of the sale prices of the Chau brothers’ interest between 2006 and 2010.  The disposition by Yuk Tai (and So Tai) to King Wong was presumably premised on this.  The order for administration sought compels Fung Yee to recognize the right and entitlement of King Wong to the lots of land in question, but it remains for her to decide how she intends to deal with her interest in the estate (and the lots of land in question).  Fung Yee points to nothing in principle that would prevent an order for administration of the estate of the Deceased on the basis of the findings made above.

70.  Amongst others, King Wong asks for settlement of all the liabilities of the estate, if any, by assets other than the lots of land in question.  As the lots of land in question were reported to be the only assets in the estate, I do not see for the time being how such order sought may be made.  The picture should be clearer to the parties when an up-to-date account of the estate of the estate is provided.

Disposition

71.  Hence the following order of this court:

(1)  Fung Yee do furnish to King Wong an up-to-date account of the assets and liabilities as well as her administration of the Deceased’s estate so far within 28 days;

(2)  The estate of the Deceased shall be administered and distributed (including the lots of land in question) in accordance with shares of Yuk Tai and Fung Yee therein being equal shares;

(3)  The administration of the estate shall be completed as soon as possible;

(4)  Liberty to apply in respect of the above.

Costs

72.  On behalf of Fung Yee, Mr Chan asks that her costs should be borne by King Wong, which Mr Lam disagrees.  Alternatively, Mr Chan asks that Fung Yee’s costs to be paid out of the estate.

73.  This was what happened.  The first hearing was fixed to be held on 2 March 2017.  On 27 February 2017, by consent, these proceedings were adjourned for substantive argument with the usual directions in respect of affidavit evidence, and the hearing date of 2 March 2017 was vacated.  Costs were reserved.

74.  The parties’ affidavit evidence was filed by late April 2017.

75.  The substantive hearing was fixed to be held on 23 August 2017.  The materials show that the court would have heard the parties’ following arguments on that day:

(1)  Mr Lam argued that the succession was governed by Chinese law and custom, and King Wong should be entitled to the administration order sought.

(2)  Mr Chan argued that notwithstanding King Wong’s position and basis of its claim, no expert evidence in respect of the applicable Chinese law and custom has been adduced.  Assuming that Chinese law and custom applied, not all the relevant materials were before the court, and these proceedings were premature and misconceived.

(3)  Mr Lam replied that despite his client’s position, it was not necessary to adduce expert evidence, especially when there have been decided cases on the relevant areas.  He was referring to Liu Ying Lan (above).

(4)  Mr Chan disagreed, and further submitted that it was King Wong’s duty to adduce expert evidence in respect of the relevant Chinese law and custom.  What was decided in Liu Ying Lan would not provide the answer to all the issues involved in this case.  The application was premature, as So Tai’s right to succeed, and thus the actual shares of the sisters in the estate, was also uncertain.

76.  However, the hearing on 23 August 2017 was interrupted by typhoon, and re-fixed to 24 November 2017.

77.  Prompted by the above argument, King Wong filed further evidence, including the expert report of Professor Baker, with leave obtained in October 2017.  Direction was given to Fung Yee to file evidence in response.  The hearing on 24 November 2017 was vacated and re-fixed to 8 February 2018 with 3 hours reserved.  The court directed the parties to report the situation by letter before the hearing, and reserved the consideration in respect of costs.

78.  On 1 February 2018, upon considering the parties’ reports by letter, the court then vacated the hearing date of 8 February 2017, and further adjourned the substantive hearing to another date with 1 day reserved.  Hence the hearing before this court.  Again, costs were reserved.

79.  Joint expert reports were filed pursuant to the direction of this court upon joint written application prior to the hearing, with costs in the cause.

80.  Mr Chan submitted that the court should be feel displeased by the manner in which King Wong proceeded with this case, in view of its approach in respect of the evidence that necessitated the various postponement of the substantive hearing.

81.  In my view, the adjournments in February and August 2017 involved fault of neither side.  Nor did the adjournment in February 2018, as this was partly occasioned by the court also taking the view that more time should be reserved for the substantive argument.

82.  However, as the matter stood by the time of the original hearing fixed on 23 August 2017 and even after it was re-fixed to 24 November 2017 because of the typhoon interruption, it was up to King Wong to decide how to prosecute its claim without regard to what Fung Yee raised in defence.  If it decided, as it so did, that it was not prepared to proceed without the further factual evidence and the introduction of expert evidence, it had to accept the responsibility for the consequence of an application for leave to do so and the adjournment so occasioned by the further consequential directions of the court then.  I do not agree that it could attribute such approach to the arguments raised by Fung Yee for the purpose of the hearing on 23 August 2017, which was aborted.  It was King Wong’s judgment call.

83.  Further, Fung Yee was not without basis in raising issues as to, as least, So Tai’s entitlement to succeed to the Deceased’s estate, which has impact on the sisters’ shares and her administration of the estate.  The evidence, including expert evidence, filed by both sides since August 2017 proves to be relevant and necessary for the resolution of the issues in disagreement between the parties.

84.  All adjournments were made prior to the scheduled hearing dates.  However, I think it is in principle still appropriate to order that costs of the adjournment of 24 November 2017 hearing and occasioned to Fung Yee should be borne by King Wong, to be taxed on an indemnity basis, if not agreed.

85.  Subject to the above, the next question is the appropriate costs order, in view of the outcome of these proceedings.

86.  King Wong fails to substantiate the right of So Tai, and the dispute as to Yiu’s capacity falls away.  However, that does not affect its proceeding to substantiate its rights pursuant to the 2016 Assignment to obtain the administration order. Fung Yee is proved right in respect of So Tai’s alleged entitlement, which has bearing on her administration of the Deceased’s estate.  Adopting a broad brush approach and considering the mutual set-off, I think it is fair that Fung Yee should pay 50% of King Wong’s costs of these proceedings, to be taxed, if not agreed.  I do not consider that it was wholly unreasonable for Fung Yee to have raised the dispute for the purpose of her administration.  In the circumstances, Fung Yee’s costs, including those payable to King Wong, shall come out of the estate of the Deceased.

87.  In the event that the parties are still minded to apply to vary the costs order, the application must be taken out within 14 days or else the costs order shall become absolute without further order.