REN MICKY v. FUNG KUNG KUEN AND OTHERS

HCAP 17/2017

[2022] HKCFI 2385

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

PROBATE ACTION NO 17 OF 2017

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DECISION

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Introduction

1.  As a result of caveats entered by the 3^rd defendant, the plaintiff commenced the present probate action on 5 September 2017 seeking an order that letters of administration of the Estate be granted to him.

2.  The plaintiff (“P”) was the lawful husband of the Deceased. The defendants (respectively “D1”, “D2”, and “D3” and collectively “Ds”) were respectively Deceased’s father, mother, and elder brother.

3.  The parties were legally represented on and off throughout these proceedings.

4.  The matter first came before this Court on 27 April 2022, being the pre trial review hearing (“PTR”) and it was indicated to the Court by the parties that they would agree to an independent third party to be appointed by the Court as the administrator of the Estate but there was dispute as to who the administrator should be.

5.  The Court then ordered that each side to provide the Court with not more than 3 names for candidates for this Court’s determination at the trial which had previously been fixed on 20 July 2022 (“Trial”).

6.  The parties were acting in person during the Trial. Although the Trial was conducted in Chinese, in light of the pleadings in this action being all in English, and also all the information concerning each candidate was provided in English, this Court will give this decision in English.

Relevant Events

7.  The background leading to this action has been set out in the pleadings.

8.  Briefly, P moved to the United States with his family when he was young. He and the Deceased met in 2009 and they later married in October 2011 in Hong Kong. Thereafter, P quit his job in the United States in April 2012 and moved to live with the Deceased in Hong Kong. They had no children.

9.  Sadly, the Deceased was diagnosed with cancer in October 2015 and she died intestate on 7 December 2015, aged only 42.

10.  When P made an application at the Probate Registry in Hong Kong for letters of administration of the Estate, he discovered that D3 had entered a caveat. Upon a warning being issued by P, D3 entered an appearance.

11.  It transpired that a major asset of the Estate is a property in Tsing Yi (“Tsing Yi Property”) which was purchased in the sole name of the Deceased in about 1998. It is Ds’ claim that they had contributed towards the purchase price of the Tsing Yi Property and that the Deceased held the property in trust for each of the Ds and the Deceased in equal shares.

12.  After D3 entered an appearance, P commenced the probate action herein on 5 September 2017 against Ds seeking an order that the letters of administration of the Estate be granted to him.

13.  On 23 October 2017, Ds filed a defence and counterclaim. They pleaded, amongst other things, that because of the hostility and wrongful acts of P, P should not be entitled to be the sole administrator of the Estate. Ds counterclaimed for the Tsing Yi Property and rental income therefrom be declared to be held by Deceased on trust for herself and Ds in equal shares, namely 25% each, and that Ds were entitled to mesne profits from P for his wrongful occupation of the Property since December 2015. Ds further counterclaimed for an order that D2 be appointed as a joint administratrix of the Estate.

14.  In his reply and defence to counterclaim filed on 12 December 2017, P denied Ds’ allegations and pleaded that D2 had a serious conflict of interests with the Estate and was therefore not a suitable candidate to be an administrator of the Estate. In his defence to the counterclaim, P denied Ds’ allegation of a trust in respect of the Tsing Yi Property and further relied on presumption of advancement.

15.  On 18 December 2018, the action was stayed for 60 days for the parties to attempt mediation, which was unsuccessful.

16.  Thereafter, Ds commenced an action in the Distract Court DCCJ 4067/2019 against the Estate concerning the beneficial ownership of the Tsing Yi Property (“DC Action”). The issue of service and representation for the Estate then came up in the DC Action.

17.  On 5 September 2019, upon obtaining leave, Ds amended defence and counterclaim was filed (“AD&C”) in which Ds essentially deleted their counterclaim in relation to the relief for a declaration regarding the Tsing Yi Property but maintained there be an order for D2 to be appointed as joint administratrix and to administer the Estate jointly but not severally.

18.  Eventually, on 6 November 2020, P’s writ and statement was amended to seek an order that a legal professional independent administrator appointed by the Court, if so entitled to as deemed by the Probate Registry of the High Court (“ASOC”).

19.  On 14 January 2021, Ds’ AD&C was also amended (“RAD&C”) and Ds counterclaimed that a CPA Accountant be appointed as a third party independent administrator of the Estate.

20.  On 11 February 2021, Ds respectively filed a notice to act in person.

21.  On 30 June 2021, P filed a notice to act in person.

22.  On 19 July 2021, Master Hui in a case management hearing ordered the parties to inform the Court within 21 days the names of P’s candidates and names of Ds’ candidates, for the Court to make further directions regarding an independent administrator. As no agreement was reached, on 8 September 2021, the case was allowed to be set down by P for trial.

23.  On 29 October 2021, a firm of solicitors came on record to act for Ds, but on 12 April 2022, shortly before the PTR, Ds again respectively filed a notice to act.

24.  At the PTR, before this Court, it became clear that it had been pointed out to the parties that the present action is a probate action and the dispute over the ownership of the Tsing Yi Property could not be resolved in the present action and that although Ds appeared to have accepted at one stage that a solicitor be nominated by P as the administrator of the Estate, at the PTR, Ds had raised objection to a solicitor being appointed.

25.  In any event, at the PTR, it was clear that parties accepted that none of them should be appointed as the administrator of the Estate and that the only dispute between P on one side and Ds on the other was whether a solicitor or a Certified Public Accountant (CPA) should be appointed. As mentioned earlier, this Court directed that prior to the Trial, each side should submit to the court names of not more than 3 candidates. They were directed to set out the candidates’ respective CV, experience in administration of disputed estates, their charges and whether there is any conflict of interest, and that at the Trial, the Court would hear submissions as to who should be appointed.

Discussion

26.  Ds have nominated a Mr Kam and a Mr Lai, both CPAs. P has nominated 3 solicitors, a Mr Ip, a Ms Chan, and a Mr Ng.

27.  Although a CPA may have more experience in preparing accounts and in audit generally, in the present action, the Estate appears to consist of mainly the Tsing Yi Property and there should not be great difficulty for an administrator, who is not a CPA, to prepare an inventory and account of the Estate.

28.  In relation to Ds’ 2 proposed candidates, although Mr Kam stated that he had experience in handling estates and that he was at end of April this year acting as executor of an estate in a High Court action, there was no indication as to the size of the estate or whether the estate involved any disputes or litigation. As for Ds’ other candidate Mr Lai, his court related experience was only in relation to providing advice on assets valuation to a lawyer is a divorce case, and to provide assets valuation reports in a lawsuit case between shareholders of a private company.

29.  As for P’s 3 proposed candidates, Mr Ip has set out his experience of having acted or being appointed as the administrator in about 7 estates, 3 of which he was appointed by the High Court. Although it appeared that most of the estates were of higher value than the Estate in the present case, one of the estates was of similar size. As for Ms Chan, although she has stated in her CV that she has extensive experience in estate administration and has been involved in contentious probate actions and advising independent administration appointed by the court, she has not mentioned any specific cases in which she was actually appointed the independent administrator by the High Court. The 3^rd candidate Mr Ng’s experience was only as an advocate and not really in relation to administration.

30.  Comparing the experience set out respectively by each of the 5 candidates, it would appear that Mr Ip has more experience than the others in having been appointed as administrator by the High Court and in estates involving litigation.

31.  As for the charges, insofar as Ds’ proposed candidates, although Mr Kam stated his estimated fees were HKD 100,000 exclusive of disbursements, such fees were on the basis that all assets of the Estate must be agreed by both P and Ds before the appointment of the administrator. Mr Lai, proposed his fees to be HKD 3,000 per hour but again this was on the basis that all assets of the Estate must be agreed by both P and Ds before the appointment of the administrator.

32.  Thus Ds’ proposed candidates have only provided their estimated fees on the basis that all assets be agreed prior to appointment. Bearing in mind that there have already been litigations and that the present action has taken some 5 years to come to the present stage, and that there is major dispute over the Tsing Yi Property, and also disputes and uncertainty as to other assets of the Estate, it seems unlikely that the assets can be agreed prior to the appointment.

33.  On P’s side, Mr Ip’s fees appeared to be capped at about HKD 100,000, or 1 % of the total value of the Estate, where agreement can be reached between the beneficiaries, except where there needs to be legal proceedings to recover assets belonging to the Estate, whereas Ms Chan’s estimate of HKD 91,880 is on the basis that administration to be on a non-contentious basis. Mr Ng’s fees where litigations are involved are charged on an hourly rate of HKD 5,800, as he states that he will represent himself in interlocutory proceedings and will engage counsel only at full hearings.

34.  The role of an administrator is different from the role of a solicitor. An administrator owes a duty to the Estate and/or all the beneficiaries to recover all assets belonging to the estate and it matters not which camp’s candidate he/she is. An administrator may act in person in any litigation. Whether he/she needs to instruct a separate solicitor and counsel will depend on the complexity of the subject matter of the litigation and the size and available assets of the Estate. No doubt, an administrator who is a solicitor may have more experience of attending in person at a hearing before the Court. Having said all this, I accept that at this stage, it is not easy for any candidate to provide a realistic estimate of their charges if litigation between the parties should persist.

35.  Doing the best one can, and having weighed up the pros and cons of each candidate, it is the Court’s view that it will be in the interests of the Estate for Mr Alfred Ip to be appointed, subject to his remuneration for acting in the capacity of an administrator of the Estate to be as indicated by him and in any event not exceeding the limit stated in section 60 (2)(b) of the Probate and Administration Ordinance, Cap 10. For avoidance of doubt, such remuneration shall exclude disbursements and other professional charges.

Costs

36.  First of all, it is common ground that the Deceased died intestate.

37.  Under section 4(4) of the Intestates Estate Ordinance, Cap 73, P being the surviving spouse shall take all Deceased’s personal chattels absolutely and in addition, a net sum of HKD 1m with interest from date of death and one half of the residuary estate of the Deceased, and the other half will be for the Deceased’s parents, namely D1 and D2.

38.  Further, according to Rule 21 of the Non-Contentious Probate Rules, Cap 10A, P has priority over the Deceased’s parents, who in turn have the priority over D3 in applying for a grant of administration of the Estate.

39.  “Probate action” is defined in Order 76 rule 1(2) of the Rules of the High Court to mean an action for the grant of probate of the will, or letters of administration of the estate, of a deceased person or for the revocation of such a grant or for a decree pronouncing for or against the validity of an alleged will, not being an action which is non- contentious or common form probate business.

40.  Although Ds were legally represented at the time, from their pleadings it was clear that they were side-tracked by their allegations as to the beneficial ownership of the Property. In any event, as mentioned earlier, it was pointed out by P in his reply and defence to counterclaim that there was a conflict of interest on the part of D2 to be appointed as an administrator, whether joint or not. It should also be clear that due to the conflict and mistrust between P and Ds and the allegations made by Ds against P, it would not have been practical for D2 to be appointed as a joint administrator with P. Further, upon issuing the DC Action, Ds should have realized that without the Estate being represented and/or without an administrator, they could not proceed with their claim in the DC Action.

41.  It was not until 27 April 2020 when Ds respectively filed their witness statements that they stated that because of the complete breakdown of relationship and the lack of trust between the two sides, seeking that D2 be appointed as a joint administrator with P was not practicable and that Ds believed that the better way was to appoint an independent professional as the administrator to deal with the Estate as soon as possible.

42.  Upon receiving Ds’ respective witness statements, P had on 5 May 2020 informed Ds that he agreed to appoint an independent third party to be appointed and on 4 June 2020 P had further indicated his agreement on record. Thereafter, on 22 June 2020, P through his solicitors wrote to Ds’ solicitors inviting Ds to agree to certain directions including that both sides should try to agree to appoint a single joint third party as administrator on or before 24 July 2020. This was followed by a letter from P’s solicitors that P proposed to appoint Mr Ip as independent administrator of the Estate, but there was no response from Ds. Then on 18 August 2020, P’s solicitors wrote again that they would nominate one more independent third party, namely Ms Chan to be the administrator for Ds’ consideration.

43.  At the case management hearing on 3 September 2020, Master A Ho indicated that the parties should try and reach agreement on the appointment of an independent administrator, and failing agreement either side could write to the Court to seek case directions prior to 11 March 2021.

44.  It was only on 28 October 2020[1] that Ds came up with names of 3 CPAs for P’s consideration. As there was no agreement, as mentioned earlier, P’s ASOC was filed on 6 November 2020 in which he sought an order that the letters of administration of the Estate be granted to a legal professional independent administrator appointed by the Court.

45.  Having considered the above, in my view, up until 28 October 2020 when Ds came up with their candidates, I find their conduct has not been reasonable nor conducive to an early settlement of this action. Thereafter, although this Court has now accepted P’s candidate, in my view it was not unreasonable for Ds to want to put forward names of CPAs as their candidates for this Court’s consideration since according to Ds, they offered lower charges.

46.  In light of the above and having considered all the circumstances of this case, I have come to the view that Ds shall personally pay P’s costs in this action jointly and severally, save any costs already ordered and including any reserved costs up to 28 October 2020 on a party and party basis, to be taxed if not agreed. P’s costs not ordered to be paid by Ds are to be paid out of the Estate to be taxed if not agreed on trustee basis. Any of Ds’ costs after 28 October 2020 are to be paid out of the Estate to be taxed if not agreed on trustee basis.

Ds’ summonses for interim payments

47.  D1 and D2 have each issued a summons for interim maintenance from the Estate. Such applications should be made against the Estate and not against P personally in this action. The summonses are misconceived. They are hereby dismissed with costs to P, to be taxed on party and party basis if not agreed.

48.  A Chinese translation of this decision will be made available to any party upon request.