CHAN CHU WA AND ANOTHER v. CHAN CHAU FUNG, the administratrix of the estate of POON SIU CHUN, deceased AND OTHERS

HCMP 247/2025

[2026] HKCFI 3613

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 247 OF 2025

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D E C I S I O N

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A.  Introduction

1.  This decision concerns the Plaintiffs’ application to vary the costs order nisi (the “Variation Application”) I made in the judgment handed down on 12 November 2025 [2025] HKCFI 5493 (the “Judgment”). The abbreviations and definitions used in the Judgment are adopted herein.

2.  By way of recap, the Plaintiffs took out an originating summons on 14 February 2025 that principally sought the removal or termination of the 1^st Defendant’s appointment as the administratrix of the Estate and for a new administratrix to be appointed in her stead. The Plaintiffs were successful on their summons and I made the following orders in their favour (Judgment at [91]):

(1)  The 1^st Defendant shall be removed as the administratrix of the Estate;

(2)  Ms Tse Man Shan, Anna[1] of HOF Advisory and Consulting Limited shall be appointed as the new administratrix of the Estate; and

(3)  The 1^st Defendant shall, within 21 days from the date of this judgment, render (with supporting documents) to the Plaintiffs and Ms Tse:

(a)  a true and perfect inventory and account of the Estate from the date of the death of the Deceased to the present; and

(b)  a full and proper account of the 1^st Defendant’s dealings, payments and distributions in relation to the Estate.

3.  So far as costs are concerned, I made the following costs order nisi (Judgment at [92]):

(1)  The 1^st Defendant shall personally pay the 1^st and 2^nd Plaintiffs’ costs of these proceedings, to be taxed if not agreed.

(2)  No order for costs is to be made against the 2^nd and 3^rd Defendants.

4.  By way of an application made on 12 December 2025, the Plaintiffs applied to vary the first limb of my costs order nisi, so as to seek an order for indemnity costs against the 1^st Defendant. No variation is sought in relation to the part of the costs order dealing with the 2^nd and 3^rd Defendants.

B.  Applicable Legal Principles

5.  The court can make an order for costs to be assessed on the indemnity basis in so far that it is appropriate to do so in the circumstances: Town Planning Board v Society for Protection of the Harbour Ltd (No. 2) (2004) 7 HKCFAR 114 at [16]-[17].

6.  The question as to what is appropriate in the circumstances is a fact-sensitive inquiry, in respect of which the conduct of the party against whom indemnity costs are sought (i.e. the paying party) is highly relevant: Huge Dragon Corp Ltd v Lung Mun Oasis (IO) [2014] 3 HKLRD 286 at [12]-[13] (CA).

7.  For completeness, I should make clear that it does not assist an applicant to point to another instance in which indemnity costs had been ordered by a different court and to seek to draw parallels between that and the case in relation to which an order for indemnity costs is being sought.[2] The determination of whether an order for indemnity costs is justified must be based on a holistic assessment of all of the relevant circumstances of the specific case in relation to which such an order is sought.

8.  The reason the focus is on the conduct of the paying party is because, where an order for indemnity costs is made, the burden of proof shifts to the paying party to show that the receiving party’s costs were unreasonably incurred or unreasonable in amount, with any doubts resolved in favour of the receiving party. This stands in contrast to the standard position, in respect of which the burden is on the receiving party to show that its costs were reasonably incurred and reasonable in amount, with any doubts resolved in favour of the paying party.

9.  The conduct of the party against whom indemnity costs is sought must be unreasonable to a high degree for such an order to be warranted. Unreasonable in this context does not mean merely wrong or misguided in hindsight: Cheung Wei Man Vivien and Chan Kim Thiam v Centaline Property Agency Ltd and others (HCA 286/2000, unreported, 15 December 2006), per Lam J (as he then was) at [6], citing Simon Brown LJ in Liam v MGN Ltd (No. 2) [2002] 1 WLR 2810 at [12]. See also Holinail HK Ltd v Matthias Pou and others [2025] HKCFI 1157, per H Au-Yeung J at [45]-[46].

10.  There has to be some feature in the case that makes it special and unusual so as to justify a departure from the standard basis of assessment. What matters is whether, looking at all the circumstances of the case as a whole, there is some conduct or some circumstance that takes it out of the norm so as to make it appropriate for costs to be ordered on the indemnity basis: Excelsior Commercial & Industrial Holdings Ltd v Salisbury Hammer Aspden & Johnson [2002] EWCA 879, per Lord Woolf CJ at [32].

C.  Whether the Variation Application Has Already Been Determined

11.  There is an anterior issue that arises for consideration before I turn to the substance of the Variation Application, namely whether the application itself had already been dismissed by Au-Yeung J at an earlier hearing before that took place on 17 December 2025. The 1^st Defendant’s erstwhile solicitors, Messrs Zebra HY Kwan & Partners (who attended that hearing) say it had, whilst the Plaintiffs (who were represented at that hearing by Messrs Victor Yeung & Co) say it had not.

12.  This led to the parties applying for a transcript of the audio recording of the hearing before Hon Au-Yeung J, which was granted by her Ladyship. Having reviewed the transcript (a copy of which was provided to me), I am satisfied that the Variation Application was not determined at that hearing. The hearing before her Ladyship was solely concerned with the 1^st Defendant’s summons for an extension of time. It thus follows that it remains open to me to determine the Variation Application.

13.  I pause here to note that the Plaintiffs had asked for the costs of the correspondence on whether the Variation Application had already been decided to be ordered against the 1^st Defendant’s solicitors, on the basis that they were wrong in suggesting that the Variation Application had been determined at the hearing before Hon Au-Yeung J. I am not prepared to accede to that request. It is clear from my reading of the transcript of the earlier hearing that the discussion about other applications (i.e. other than the 1^st Defendant’s summons for an extension of time) was brief and I consider the more likely explanation is that the 1^st Defendant’s solicitors either misheard or misunderstood what her Ladyship had said about what was to become of those other applications.

D.  Whether Indemnity Costs Should be Ordered

14.  Turning next to the Variation Application itself, I do not consider the 1^st Defendant’s conduct to have been so exceptional as to take it out of the norm, so as to warrant an order for indemnity costs. I therefore dismiss the Variation Application. The reasons for my decision are set out below.

15.  The grounds on which the Plaintiffs ask for indemnity costs against the 1^st Defendant are, in essence, cleaved into two halves, the first of which pertains to the Plaintiffs’ conduct that led to the underlying summons and the second of which relates to the manner in which she sought to comply (or not comply, as the case may be) with the orders that were made consequent upon the Judgment.

(1)  The conduct of the 1^st Defendant which gave rise to the dispute

16.  Dealing with the first of these, it is apparent from the Judgment that I found the 1^st Defendant’s conduct to be unsatisfactory to warrant her removal as administratrix. However, I do not consider that her conduct, regrettable though it may have been, to reach the threshold of being unreasonable to a high degree so as to take it out of the norm, thus meriting an order for indemnity costs.

17.  To recap, the four grounds on which I relied in ordering the 1^st Defendant’s removal as administratrix relate to: (a) the failure to render a full and proper account when called upon to do so (Judgment at [30]-[42]); (b) the circumstances surrounding the acquisition of a so-called ancestral home (Judgment at [43]-[59]); (c) the circumstances surrounding the placement of monies in time deposits (Judgment at [60]-[66])); and (d) the hostility between the 1^st Defendant and the majority beneficiaries (Judgment at [72]-[75]).

18.  Of the four aforementioned grounds, the conduct I had considered most serious related to the second and third grounds (i.e. Grounds (b) and (c)):

(1)  So far as Ground (b) is concerned, the 1^st Defendant had acquired a so-called ancestral home which was occupied by the 1^st and 3^rd Defendants alone. However, as I made clear in the Judgment at [48], I did not accept the contention that the purchase of the so-called ancestral home constituted a misappropriation, not least because (as the 1^st Defendant readily accepted in her affirmation) the property was ultimately beneficially owned by the Estate.

(2)  As for Ground (c) is concerned, I had likewise declined to find that the placement of monies in time deposits amounted to misappropriation or conversion of assets belonging to the Estate, as the monies continued to be available to the Estate (Judgment at [66]).

19.  Turning to the two remaining grounds – Grounds (a) and (d) (viz. failure to render a full and proper account and hostility with the majority beneficiaries) – neither of these constitutes conduct that reach the high threshold necessary to warrant an order for indemnity costs.

20.  In all the circumstances, none of the matters giving rise to the four grounds on which I had ordered the 1^st Defendant’s removal as administratrix justifies an order for indemnity costs, whether considered individually or collectively. Although the 1^st Defendant’s conduct was sufficiently serious to warrant removal as administratrix and to attract a costs order being made against her, I do not consider the conduct that gave rise to the dispute to be so unreasonable as to have reached the high threshold which needs to be surmounted to attract an order for indemnity costs. It is thus not exceptional so as to take it out of the norm. It bears repetition and emphasis that I had rejected the serious allegations of misappropriation which were made against the 1^st Defendant.

(2)  The conduct of the 1^st Defendant post-Judgment

21.  The Plaintiffs’ complaint here essentially turns on: (a) the defective manner in which an account of the Estate was said to have been rendered post-Judgment; (b) the delay in paying over the monies belonging to the Estate to the new administratrix; (c) habitual breaches of court orders by the 1^st Defendant; and (d) failure to transfer all assets and documents belonging to the Estate to the new administratrix, Ms Tse.

22.  As to the first of these, I have not seen anything in the materials placed before me which indicates that the 1^st Defendant was being recalcitrant in her preparation of an account post-Judgment. Rather, the manner in which an account was prepared post-Judgment seemed to me be similar to, and derivative of, the unsatisfactory way in which the 1^st Defendant had rendered an account all along, which ultimately contributed to her removal as administratrix. I consider it to be reflective of her inability to properly discharge her duties as an administratrix, rather than an intentionally recalcitrant behaviour which justifies an order for indemnity costs.

23.  As for the second of the Plaintiffs’ complaint, the delay by the 1^st Defendant in paying over monies belonging to the Estate is, to my mind, not conduct that scales the heights of what is required to justify an order for indemnity costs. There is a separate but related complaint that the 1^st Defendant had not properly accounted for all the monies belonging to the Estate but this, in essence, is similar in substance to the complaint about the account that had been prepared post-Judgment, with which I have already dealt in paragraph 22 above.

24.  Turning to the Plaintiffs’ third complaint, this is no more than a general assertion that the 1^st Defendant was habitually in breach of court orders. This added little if anything of material import to the other complaints on which the Plaintiffs rely.

25.  The fourth complaint by the Plaintiffs (pertaining to deficiencies in handing over the assets and documents of the Estate) is of a similar genre to the complaint about the state of the account post-Judgment. As before, it is, in my view, reflective of the sub-standard manner in which the 1^st Defendant had discharged her duties as an administratrix, rather than an intentionally recalcitrant behaviour which justifies an order for indemnity costs.

26.  Taking all the relevant circumstances into account and given the findings I have made above, I do not consider an order for indemnity costs to be warranted, on either of the two bases on which the Variation Application is predicated.

E.  Conclusion

27.  For the reasons set out above, I hereby order as follows:

(1)  The Variation Application is dismissed.

(2)  The Plaintiffs and the 1^st Defendant shall bear their own costs of the Variation Application.

F.  Postscript

28.  As I had observed in the opening paragraph of my Judgment, this is, in truth, a sad case that has torn the Deceased’s family apart. This is made worse by the fact that the Estate to which the dispute relates is “not humongous” (Judgment at [4]) and the Father is already some 90 years of age. I had hoped that my Judgment would serve to draw a line under this dispute and perhaps to allow the parties to turn the page on this sad chapter of their lives. It was unfortunate that the rowing continued unabated even after my Judgment was handed down but, given the circumstances, I very much hope that this decision will serve as a final bookend to this dispute.