CHIK KWONG SUN AND ANOTHER v. PAU LAN YING (in her own capacity and in the capacity as the sole Administratrix of the estate of CHIK SIU, deceased)

HCMP 1612/2018

[2020] HKCFI 1815

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 1612 OF 2018

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JUDGMENT

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1.  The plaintiffs (“P1” and “P2”, collectively “Ps”) seeks the following reliefs in these proceedings:

(1)  the defendant (“D”) do within 14 days render a proper account of the estate of the late Chik Shiu, the Deceased (“the Estate”), and allow inspection of the supporting documents thereof within 14 days thereafter;

(2)  the Letters of Administration granted to D on 26 October 2005 (“the Grant”) be revoked; alternatively, D be removed as the administratrix of the Estate and P2 be appointed in her place; and

(3)  the assent dated 30 November 2005 (“the Assent”) in respect of the landed property known as Flat 1803, 18th Floor, Block K, Allway Gardens, No. 14 On Yat Street, Tsuen Wan, New Territories (“the Property”) in favour of D be declared void, with its registration at the Land Registry be vacated.

2.  I am satisfied that proper notice of this substantive hearing has been given to D.

The Facts

3.  The facts are undisputed, which are as follows:

(1)  The late Chik Shiu died intestate on 22 January 1991.

(2)  The deceased had 3 children with his first wife Madam Pang Kwan, who predeceased him in 1966:

(a)  Chik Kwong Sun, P1;

(b)  Chik Siu Fan (“Siu Fan”); and

(c)  Chik Kwong Hung, P2.

(3)  The deceased married D in 1985, but they had no children.

(4)  P1, Siu Fan (who passed away in September 2015), P2 and D are the only beneficiaries of the Estate under his intestacy.

(5)  Since the death of the Deceased, Ps and Siu Fan had been negotiating with D on how to administer and distribute the Estate.  Their negotiations however were not fruitful. Ps and Siu Fan were all along under a mistaken belief that the Estate had remained unadministered.

(6)  Unbeknown to Ps, D applied for and obtained the Grant in respect of the Estate on 26 October 2005.  According to the schedule of properties attached to the Grant, the Estate comprised of cash/shares totaling HK$789,921.2 and the Property.

(7)  On 30 November 2005, D further executed the Assent vesting the Property to herself.

(8)  Ps only learned about the existence of the Grant in July 2018. Soon after, they commenced the present proceedings on 4 October 2018.

4.  D was initially legally represented in these proceedings. In her affirmation filed on 30 May 2019 (“the affirmation”), she said the following:

(1)  When she applied for the Grant in 2005, she did not include Ps as the beneficiaries in her then supporting affirmation.

(2)  She had already realized the cash/shares of the Estate as enumerated in the schedule of properties and spent them all.

(3)  As to the Property, it had been occupied by her since 2005. She agreed to have it sold at market value.  She acknowledged that Ps and the estate of Siu Fan should be entitled to have shares in the Estate, including the proceeds of sale of the Property.  She accepted that she should be liable to repay to the Estate half of the market rental of the Property since 2005.  However, at the same time, she took the view that the Government rent, rates, management fees, and maintenance expenses since 2005 should be shared among her, Ps and the estate of Siu Fan.

(4)  She took the view that for the purpose of minimizing legal and administrative expenses, she should not be removed from the position of administratrix.

5.  Later on 6 June 2019, D vacated the Property. On 6 August 2019, D handed over a set of keys to the Property to Ps for the latter to market the same.

6.  At the subsequent direction hearing on 19 September 2019, D, through her solicitors, provided an undertaking to the court that D would prepare a valuation report of the Property.  She was granted leave to do so by way of a supplemental affirmation on or before 7 November 2019.

7.  However, D has not produced a valuation report of the Property at any time after the said hearing.  D filed a notice to act in person on 7 November 2019, and has not taken any step in these proceedings since then.

Duty to render a proper account of the Estate

8.  A personal representative, after a grant has been made to him, owes a duty to collect and get in the real and personal estate of the deceased, and to administer it according to the law.  It is also the duty of the representative to keep a proper account of the administration of the estate and be ready to produce the account when called upon to do so: Williams, Mortimer and Sunnucks on Executors Administrators and Probate (21^st edn, 2018, §§ 42-20 to 42-21).

9.  In Chow Chak Kiu v Chow Man Chi (HCMP 797/2016, 17 January 2017), Chow J said:

“40. Generally speaking, to render a proper account of the estate of a deceased person, the personal representative is required to: -

(1) show the opening balance (including capital assets) and closing balance;

(2) give details of movement of assets, incomes and expenditure of the estate;

(3) give details of the whereabouts of all properties (including cash) of the estate which the personal representative is duty bound to administer; and

(4) support the account with documentary evidence.

See Re Estate of Lee Da Kor [2010] 1 HKLRD 415, at paragraphs 17 and 26 per Jeremy Poon J (as he then was); Charles Yu Chiu Kwan v Edna Yu Chan Shek Yin, HCMP 965/1980 (22 April 1982) per Rhind J (quoted by B Chu J in Leung Wing Hong v Leung Yiu Cho, HCMP 1473/2014 (11 August 2016), at paragraph 104).

41. Moreover, it is not acceptable for the personal representative merely to give to the beneficiary a bundle of documents relating to the estate and leave it to the beneficiary to sort out the documents himself (Re Estate of Lee Da Kor,at paragraph 37).”

10.  In the affirmation, D claimed that she had made “full disclosure” concerning the Estate.  In my view, the information revealed by D in the affirmation is clearly insufficient as measured by the standard mentioned by Chow J in Chow Chak Kiu.  D has provided no detail of when the shares in the Estate were liquidated and how much was realized as a result.  No bank statement has been produced.  No valuation or market rental of the Property, be it formal or oral, has ever been provided.  A proper inventory, which is necessary for the subsequent due administration of the Estate, must be prepared by D.

11.  Under the current public health situation in Hong Kong, I would give D more time to prepare the account.  I would require D to render a proper account of the Estate within 42 days after the service of the order and allow Ps to inspect the supporting documents thereof within 14 days thereafter. 

Revocation or Removal

12.  Probate and Administration Ordinance, s.33 provides:

“(1) Where it appears to the court that a probate or administration either ought not to have been granted or contains an error, the court may call in the probate or administration and if satisfied that it would be revoked at the instance of a party interested, may revoke it.

(2) A probate or administration may be revoked under subsection (1) without being called in if it cannot be called in.

(3) The court may, if satisfied that the due and proper administration of the estate and the interests of the persons beneficially entitled thereto so require, suspend or remove an executor or administrator (other than the Official Administrator) and provide for the succession of another person in place of such executor or administrator and for the vesting in that other person of any property belonging to the estate.”

13.  While s.33(1) and (2) relate to revocation of grant, s.33(3) concerns removal of a personal representative.

14.  In Chan Sau Heung v Kwan Siu Fai [2013] 6 HKC 29, Poon J (as he then was) said:

“22. In my view, section 33 serves two principal purposes.

23. First, sections 33(1) and (2), modeled on its English equivalent, expressly set out the statutory grounds upon which the court may order revocation. This creates certainty in the law and ensures that the English case law on revocation continues to apply in Hong Kong.

24. Second, section 33(3) plugged the loophole in the then common law. As seen, absent any statutory provision, removal of an executor or administration could only be effected by way of revocation or an administration action. But plainly, there are circumstances where although removal of the executor or administration is necessary, revocation of the grant is not. What section 33(3), modeled on the Tanzanian Ordinance, does is to give an applicant the appropriate remedy of and the court the necessary power to order removal without revocation.

25. Based on this legislative intent, the proper approach to section 33 is clear. When there is a supervening defect after grant, the applicant should consider :

(1) Whether removal of the grantee without revocation of the grant is sufficient. If yes, then he should proceed under section 33(3).

(2) Whether there are additional special circumstances that require revocation of the grant as well. If such circumstances exist, then he should proceed under section 33(1).

26. What constitute the requisite circumstances justifying revocation in addition to removal must depend on the actual facts of the case.  While it is impossible to define the circumstances exhaustively, some examples can be gleaned from the authorities.  They include mental incapacity of the grantee; disappearance of the grantee who had not administered the estate; and exceptionally, the grantee wishing to be relieved of his duties.  The court will duly consider the circumstances relied on to see if they really warrant revocation of the grant in addition to removal.”

15.  In that case, the learned judge considered that merely removing the defendant would not be sufficient but the grant should be revoked.  His lordship said:

“34. Returning to the present case, I think it is beyond doubt that the defendant has shown himself to be an unfit person to administer the estate. He has not taken any step to administer the estate. He has inexplicably refused to accept the very attractive offer made in respect of the Property. His conduct is detrimental to the due and proper administration of the estate and the interests of the beneficiaries. Removing him is plainly justified. However, removal alone is not enough. For upon removal, the defendant has to lodge with the court the Grant so that the order for removing him and appointing the plaintiff as administrator can be endorsed on it. Given his uncooperative attitude so far and his failure to participate in these proceedings despite service, there is a real and substantial risk that the defendant will not lodge the Grant with the court even if so directed. It will surely cause further unwarranted delay to the due and proper administration of the estate. The Grant should in the circumstances be revoked.”

16.  In this case, it is clear that D shall no longer remain as the administratrix of the Estate.  By not mentioning all the other beneficiaries in her application for the Grant, and by converting the entire Estate to her own use to the exclusion of the other beneficiaries, D has shown herself to be an unfit person to administer the Estate.  D has breached the undertaking provided to the court and has taken no step in these proceedings after being acting in person.  In these circumstances, there is a real risk that she would not lodge the Grant with the court even if being ordered to do so.  For the purpose of avoiding further delay to the due and proper administration of the Estate, I would order that the Grant be revoked and a fresh grant be issued to P2.

The Property

17.  Probate and Administration Ordinance (“PAO”), s.67 provides:

“(1) An assent, transfer or conveyance by a personal representative to a person other than a purchaser does not prejudice the rights of any person to follow the property to which the assent, transfer or conveyance relates, or any property representing the same, into the hands of the person in whom it is vested by the assent, transfer or conveyance, nor of any other person (not being a purchaser) who may have received the same or in whom it may be vested.

(2) Notwithstanding any such assent, transfer or conveyance the court may, on the application of any creditor or other person interested -

(a) order a sale, exchange, mortgage, charge, lease, payment, transfer or other transaction to be carried out which the court considers requisite for the purpose of giving effect to the rights of the persons interested;

(b) declare that the person, not being a purchaser, in whom the property is vested is a trustee for those purposes;

(c) give directions respecting the preparation and execution of any conveyance or other instrument, or as to any other matter required for giving effect to the order;

(d) make any vesting order or appoint a person to convey in accordance with provisions of the Trustee Ordinance (Cap 29).

(3) This section does not prejudice the rights of a purchaser or a person deriving title under him, but applies whether the testator or intestate died before or after the commencement of this Ordinance.”

18.  It is common ground that the Property should be sold and the sale proceeds be distributed to the beneficiaries of the Estate. Counsel for Ps submit that I should declare the Assent void, for it was improperly executed by D.  After the Assent being declared void, the Property would be brought back to the Estate and the new administrator may then duly administer the Estate.

19.  Having considered counsel’s submissions, I agree that the sale of the Property and the distribution of the sale proceeds should be entrusted to the new administrator of the Estate.  However, I am not sure whether I have the jurisdiction to make an order declaring the Assent void under PAO s.67.  For the purpose of returning the Property to the Estate, I would make a vesting order to vest the title to the Property in the new administrator of the Estate, ie P2.  In my view, a vesting order is clearly within the scope of PAO s.67.

Disposition

20.  I make the order as set out in [11], [16] and [19] above.  There be liberty to apply.

21.  In my view, these proceedings are occasioned by the misconduct of D in administering the Estate.  Costs of these proceedings should be borne by D personally.  I make a costs order nisi that costs of these proceedings (including all costs reserved, if any) be paid by D personally to Ps, to be taxed if not agreed.

22.  I thank counsel for the assistance rendered to the court.