WONG LUI v. A, XIABUZHA AND ANOTHER

HCAP 18/2021

[2023] HKCFI 1008

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

PROBATE ACTION NO 18 OF 2021

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DECISION

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A. Introduction

1.  This is the substantive hearing of the summons of 13 January 2022 (the “Summons”) taken out by the plaintiff (“P”) for an order that she be granted letters of administration pendente lite over the estate of Wong Long Ming (the “Deceased”, and the “Estate”).

2.  The defendants (“D1”, “D2”, and collectively “Ds”) originally resisted the Summons both on the question of grant and the identity of the administrators (if the application is allowed).  They have since modified their stance.  By letter of 2 March 2023[1] (the “2/3/23 Letter”) from their legal advisers (Messrs Cheng & Co (“Cheng & Co”)) to P’s legal advisers (Messrs Fan & Co (“Fan & Co”)), Ds proposed directions for the appointment of an independent professional administrator.  That stance has been confirmed during the hearing.

3.  On the facts of this case before me, the core of which I will set out below, I agree that it would be necessary and expedient to appoint administrators pendente lite. 

4.  On the question of identity, P requests that she be appointed.  Ds do not agree, and request the appointment of an independent professional administrator. 

5.  The sole live issue before this court is who should be so appointed.

6.  Mr Eric Leung with Ms Lilian Ip appeared for P.  Mr Jeremy Chan and Ms Flora Lam appeared for Ds.

B.  The affirmatory evidence

7.  In support and reply, P has filed her 2^nd and 3^rd affirmations dated respectively 9 December 2021 and 8 June 2022 (“P/Aff 2” and “P/Aff 3”).  There is also the affirmation date 10 January 2022 of Wong Siu Lai (“Ms Wong”, and “Wong/Aff”), who P puts forward as a disinterested person.

8.  In opposition, D1 has filed an affirmation of 8 April 2022 (“D1/Aff”).

C.  Background facts

9.  The Deceased was born in 1941.

10.  The Deceased had had 2 marriages.  His first wife was Madam Chow Lai (“Madam Chow”).  They had one son (Wong Ho) and two daughters (P and Wong Shan).  They are all of age now.  They each have their families, and reside overseas.

11.  The Deceased and Madam Chow divorced in 2002.

12.  The Deceased married D1 in 2009 in Hong Kong.  One son was born out of the marriage.  He is D2.  He is now an early teen.

13.  In January 2019, when he was 77, the Deceased had an acute massive stroke, resulting in left hemiplegia and vascular dementia.

14.  On 31 January 2020, the Deceased was examined by 2 specialist psychiatrists, Dr Poon Yuan Ling Yvette Larissa and Dr Chang Chi Lok[2]. Both doctors formed the view that the Deceased had vascular dementia, had severe cognitive impairment, and was a Mentally Incapacitated Person as defined in the Mental Health Ordinance.  They both opined that the Deceased’s mental incapacity had lasted for around 1 years after the acute massive stroke on in January 2019.  In particular, according to the medical certificate dated 31 January 2020 of Dr Poon[3]:

“In view of his vascular dementia after stroke, [the Deceased] has severe and irreversible cognitive impairment since January 2019. It is unlikely for his mental incapacity to have significant recovery. He will be dependent in all aspects of daily living in long term.”

15.  On 10 March 2020, P issued an ex parte originating summons for inquiry under s 7 of the Mental Health Ordinance Cap 136 (“MHO”) and to appoint her as the Deceased’s committee (the “MHO Proceedings”).

16.  D1 was subsequently allowed to intervene in the MHO Proceedings.  She herself in October 2020 issued a summons for inquiry under s 7 of the MHO and for her appointment as the Deceased’s committee.

17.  A hearing for P’s and D1’s applications for inquiry had been set, and scheduled to take place on 2 June 2021.

18.  Shortly before that scheduled hearing, on 14 May 2021, the Deceased passed away.  He was 79 at the time of death.

19.  Despite the death of the Deceased, the hearing of 2 June 2021 proceeded before Marlene Ng J.  But due to the Deceased’s death, only costs and other consequential matters could be dealt with.  On 14 July 2021, the learned Judge handed down her Decision on Costs[4] (the “Decision on Costs”).  That Decision is not for search, inspection or publication without leave.  Leave was on 9 March 2023 granted by Deputy Judge Simon Leung for a copy of the same to be included in the hearing bundle for this application.  Counsel have made reference to its contents.  I will also do so when appropriate (and with redaction if necessary).

20.  The present action was subsequently commenced on 21 July 2021. The Statement of Claim (the “SOC”) bears the same date.  The validity of the Will is the subject matter of the present probate proceedings.  P seeks thereby a pronouncement against the Will, a declaration that the Deceased died intestate, and that letters of administration be granted to her.

21.  P’s factual case, as gleaned from her affirmations, the SOC and the contents of the Decision of Costs, is that in the course of the MHO Proceedings, 3 major matters of concern were revealed, that:

(a)  on 19 August 2019, he Deceased executed a will bequeathing his entire Estate to D2, and named D1 as the sole executrix (the “Will”);

(b)  shortly after the Deceased’s stroke, D1 obtained bank authorizations from the Deceased.  With such authorizations, monies were withdrawn or transferred out from the Deceased’s various bank accounts in Hong Kong (the “Cash Transfers”).  The Cash Transfers took place between 5 March 2019 and 15 February 2020, on 13 separate occasions, and were in the total amount of HK$10,551,409.50; and

(c)  D1 arranged the Deceased to dispose of a property used to be owned by him in Shenzhen (the “Shenzhen Property”, and the “Shenzhen Property Disposition”, and together with the Cash Transfers the “Impugned Transactions”).  The disposition took place sometime in June 2019.  The relevant documents were signed by the Deceased.  The transferee was the biological sister of D1.  The consideration was RMB5,000,000, said to be far lower than the then market value of approximately RMB8,000,000.

D.  The appointment of administrators pendente lite

22.  The application is made under s 40 of the Probate and Administration Ordinance Cap 10 (“PAO”).

23.  S 40 of the PAO provides that:

“Appointment of administrator pendente lite

(1)  Where any legal proceedings touching the validity of the will of a deceased person, or for obtaining, recalling, or revoking any grant are pending the court may, subject to section 25, appoint an administrator of the estate of the deceased.”

24.  The present action is pending.  Its nature is within the scope as specified.  The power under s 40 of the PAO is engaged.

25.  When considering whether to grant an administrator pendente lite, the principal consideration is whether it is necessary or expedient to do so – see Re Estate of Lo Siu Fung (HCAP 37/2015, 14 October 2016) per Madam Recorder Lisa Wong SC (as Her Ladyship then was) at §36 and the cases cited therein.

26.  From the facts outlined above, given the Deceased’s stroke and his mental capacity as found by the specialist psychiatrists thereafter, when considered together with the timing and circumstances in which the Will was executed and in which the Impugned Transactions were effected, I agree that it would be necessary and expedient to appoint administrators pendente lite.  I would have done so even if the appointment has not become common ground between the parties. 

E.  The number of administrators pendente lite to be appointed

27.  Before decided who to be appointed, I need to decide the number of administrators pendente lite who are required to be appointed.

28.  I have set out above s 40(1) of the PAO.

29.  S 25 of the PAO provides, with emphasis added, that:

“Number of personal representatives

(1) Probate or administration shall not be granted to more than four persons in respect of the same property, and administration shall, if there is a minority or if a life interest arises under the will or intestacy, be granted either to a trust corporation, with or without an individual, or to not less than two individuals:

Provided that the court in granting administration may act on such prima facie evidence, furnished by the applicant or any other person, as to whether or not there is a minority or life interest, in accordance with probate rules and orders.

(2) If there is only one personal representative (not being a trust corporation) then, during the minority of a beneficiary or the subsistence of a life interest and until the estate is fully administered, the court may, on the application of any person interested or of the guardian, committee or receiver of any such person, appoint one or more personal representatives in addition to the original personal representative in accordance with probate rules and orders.

(3) This section applies to grants of representation made after the commencement of this Ordinance whether the testator or intestate died before or after such commencement.”

30.  The wording of s 25(1) is clear.  If there is a minority interest, administration shall be granted either to a trust corporation or to not less than two individuals.

31.  The application of s 25 to the appointment of administrators pendente lite is also clear, as the application of s 40 is expressly made subject to s 25. 

32.  Mr Leung submits that this is a grey area, and it is not entirely clearly whether s 25 applies to an appointment pendente lite.  He refers to s 25(2) of the PAO. 

33.  I have considered s 25(2).  I do not accept that that sub-section means, as Mr Leung submitted during the hearing, that even if minority interest is involved, appointments may come in stages, eg initially only one but then later to be increased. In my view, s 25(2) may cater for specific situations an exhaustive list of which I will not venture into in the absence of full submissions, though one example of such situations I can immediately think of is the unexpected discovery of minority interest after the initial appointment.  But in my view, s 25(2) cannot have the effect of overriding the clear wording of s 40 when read together with s 25(1).

34.  Mr Leung also relies on [40.07] of The Annotated Ordinances of Hong Kong – Probate and Administration Ordinance (Cap. 10) (2012 Reissue), Re Estate of Lindley [1953] 2 All ER 319 and Re Estate of Haslip [1958] 2 All ER 275.

35.  In Re Estate of Lindley and Re Estate of Haslip, the appointments were sought under s 163 of the Supreme Court of Judicature (Consolidation) Act, 1925 (the “1925 Act”).  S 160(1) of the 1925 Act is materially the same as our s 25(1).  Whilst s 163 of the 1925 Act was similar to s 40 of our PAO, they are not the same.  Materially, s 163 of the 1925 Act was not made subject to s 160(1) of the 1925 Act.

36.  At [40.07] of The Annotated Ordinances of Hong Kong, the Supreme Court Act 1981 (the “1981 Act”) is addressed.  S 117 of the 1981 Act (the modern version of s 163 of the 1925 Act) remains not subject to s 114 of the same (the modern version of s 160 of the 1925 Act).  It is in that context that the learned editors suggest that the English position is “more logical”.

37.  If anything, those authorities reinforce my view that under the provisions of PAO in Hong Kong, when minority interest is involved, the statutory requirement is that either a trust corporation or at least 2 administrators have to be appointed, even in the case of appointment administrators pendente lite.

F.  Who to be appointed

38.  For the following reasons, I am of the view that independent professional administrators should be appointed:

(a)  The necessity for and expediency in the appointment of administrators pendente lite in the present case flow from the Will and the Impugned Transactions. The principal reasons in support of their appointment are so that the mental capacity of the Deceased at the relevant time, and the validity of the Will and the Impugned Transactions can be investigated, and so that the Estate can be collected in and protected;

(b)  Their investigations will affect the course and further conduct of the present proceedings.  Further proceedings may also flow, both in Hong Kong and in the Mainland;

(c)  The persons who are going to control the directions of the investigations, to interpret the results, and ultimately to decide what to do would affect not only the propriety and impartiality of the outcome, but also the perceived propriety and impartiality of the same;

(d)  Depending on the investigations, the Impugned Transactions may be challenged, and if successfully challenged, the related monies and Shenzhen Property might be brought back into the Estate (the “Rectified Estate”);

(e)  If the mental capacity of the Deceased had been such that the Impugned Transactions are subject to challenge, so would the validity of the Will be;

(f)  P’s interests (and those of her brother and sister), and those of Ds will all be affected;

(g)  To what extent their interests would be affected cannot be told at this stage.  But the theoretic arithmetic is clear:

(i)    If the Will is valid (and the Impugned Transactions would hence also likely to be), D2, D1’s minor son, will have the entirety of the Estate as it is.  P and her siblings would have nothing.  Whoever that have benefited from the Impugned Transactions would continue to be so benefited;

(ii)   If the Will and the Impugned Transactions are to be challenged, allegations are likely to be levied against D1 and her sister.  They may face legal actions;

(iii)  If the challenges are ultimately successful and that intestacy is declared, and despite the allegations she might have faced, D1 will have HK$500,000 and 50% of the residuary Rectified Estate.  D2, P and her siblings would share the other 50%, hence 12.5% each.  In that scenario, the positions of P and her siblings would be from having nothing to having together 37.5% of the residuary Rectified Estate;

(h)  In P/Aff 2 at §16[5], P gives this reason in support of her suitability to be appointed:

“… my suitability is demonstrated by the lack of conflict of interest in the present proceedings. Unlike [D1] who has a direct conflict of interest in the matter, if the validity of the [Will] is pronounced by the Court, I would receive nothing from the Estate of my father. On the other hand, there is nothing bar me from investigating into the suspicious dispositions of funds and/or assets from my father’s account. Therefore, I would only diligently and conscientiously to investigate into the matter without reservation.”

(i)  However, what P has not gone into there is the reverse side, i.e. the interest that she and her siblings will have if the Will is pronounced against and the Impugned Transactions successfully challenged, as explained above;

(j)  P’s interest in the matter, and her potential conflict, are in my view obvious;

(k)  In P/Aff 2 at §13[6], P gives also the following reason in support of her suitability:

“… my suitability is demonstrated by the fact that I have been acting all along in good faith, in the best interests of my father and other family members.”

(l)  For the present purpose, I am prepared to accept that.  P’s love to her late Father is evident.  But as submitted by Mr Chan, such love may on the other hand affect her objectivity crucial to the proper discharge of duties by the administrators pendente lite to be appointed.  In this regards, Mr Chan has highlighted for my consideration §§21 and 22 of P/Aff 2, wherein she talks about inter alia doing the “final task on behalf of my father, i.e. to recover all the dissipated funds from his Estate”, and her belief that “only in that way he would be relieved in the heaven”.  To similar effects is §5 of Wong/Aff where Ms Wong refers to P’s “strong hope to do the final task of her father”;

(m)  I have also been referred by Mr Chan to §§31, 42, and 99 to 102 of the Decision on Costs.  I will not recite them in full here.  Whilst Marlene Ng J was not persuaded that the evidence established any mala fide on the part of P, the learned Judge did observe, in the context of costs, and in respect of certain of P’s conduct in the MHO Proceedings despite concerns having been expressed, that:

“…[P] took a blinkered view by shrugging aside these concerns, and by seeking orders from the mental health court with a view to bolster her armoury in anticipated future legal battle with [D1] (eg investigating into and procuring accounts of [the Estate], challenging the will and probate, seeking to administer the estate, getting [D1] to repay monies to [the Estate]). This is not proper use of the mental health jurisdiction, which ambit has been explained …”

(n)  Importantly also, apart from emphasizing her urge to pursue that final task on behalf of the Deceased, P has not stated how the interest of a minor in the form of D2 as the sole beneficiary of the Will will be taken care of.

(o)  There is a further perspective to the whole matter.  As submitted by Mr Chan in the course of the hearing, the facts of this case cry out for negotiations and settlement.  As he has submitted[7], which I see good sense:

“ ‘Settlement’ and ‘without prejudice negotiations’ involving the Estate, are best carried out by independent administrators who can dispassionately consider settlement proposals, weighing up the risks, costs, etc … This is an important exercise, and no doubt responsible and careful independent administrators will either ensure that there is unanimous consent or would likely obtain Beddoe Directions to sanction proposed settlements. These are all matters best carried out by independent administrators.”

A dispassionate and objective investigation report by independent administrators pendente lite can serve as the good basis for such negotiations.  One prepared by P will hardly be perceived by Ds to be objective, and will not be able to serve such a purpose. 

39.  In the 2/3/23 Letter, Cheng & Co put forward 2 sets of candidate.  I have considered them.  The first one is Mr Chui Pak Ming Norman.  He is a solicitor.  The other is a proposal from PricewaterhouseCoopers Hong Kong (“PwC HK”, and the “PwC Proposal”).  Two of their partners (Mr Chin Choon Onn and Mr Jong Yat Kit) are proposed, with scope of work, fee structures and fee caps (and with s 60 of the PAO considered) all set out.

40.  Mr Chui is not unsuitable.  But I have concluded that at least 2 administrators pendente lite have to be appointed.  The appointments as suggested by PwC HK, on top of they being well qualified for such, also satisfy the requirement in number.

41.  The main objections from Mr Leung concern the level of costs involved. However, the worth of the Estate is, whilst not huge, still substantial.  As it is, there are still 3 landed properties, which are, exclusive of the one in Pak Sha (Tai Shan, China) which is to be assessed, assessed to worth upwards of HK$10 million.  The Shenzhen Property, said to worth RMB 8 million has not yet been included.  There is also cash of about HK$2.7 million, not to mention potentially those involved in the Cash Transfers.

42.  In any event, even if P were to be appointed, she would need to engage professionals herself.  There is no indication as to who she would engage and the fees that would be involved.  Whilst the PwC Proposal also does not contain details as to what other services of PwC HK or other professionals they would engage if appointed, at least the Court has the comfort of knowing that those engagements would be done through professional independent administrators.

G.  Disposition

43.  Proposed directions are set out in the 2/3/23 Letter.  Mr Leung has not made submissions on them either way. 

44.  I have considered those terms.  I find them to be reasonable.

45.  Modelling on those proposed directions, I order and direct that:

(a)  Mr Chin Choon Onn and Mr Jong Yat Kit of PwC HK be granted letters of administration pendente lite over the Estate of the Deceased and accordingly be appointed as administrators pendente lite of the Estate of the Deceased (the “Administrators Pendente Lite”);

(b)  The Administrators Pendente Lite be directed and authorised to collect in and protect the Estate of the Deceased;

(c)  Costs in relation to and incidental to the appointment of the Administrators Pendente Lite be paid out of the Estate in the first instance, but shall be reserved as to whether any party(ies) shall bear some or all of the costs of or incidental to such appointment;

(d)  The Administrators Pendente Lite do report to the Honourable Court on a twice-annual basis;

(e)  The Administrators Pendente Lite are directed to consider and report on the following matters:

(i)    The Deceased’s mental capacity: (i) after his stroke in January 2019; and (ii) at the time of signing the Will on 19 August 2019;

(ii)   Whether or not there are reasonably likely causes of action available for the Estate to pursue including consideration of those alleged by the parties;

(iii)  If so, whether or not the Estate ought to pursue such causes of action and to consider obtaining Beddoe directions from the Court as may be appropriate, including but not limited to how such action ought to be pursued and by whom; and

(f)  Liberty to apply for the purpose of effecting the above.

46.  In respect of costs of this application, I make a costs order nisi that save the costs of the hearing of 16 March 2023 which should be borne by P, balance of the costs be dealt with in accordance with the directions at §45(c) above, to be summarily assessed, with certificate for one counsel.  Any application for variation shall be made within 7 days from the date of this Decision by letter to this Court, upon receipt of which further directions will be given.  Unless the costs order nisi has been varied, and for the purpose of assessment, Ds are directed to file their Statements of Costs within 14 days from the date of this Decision, P to file her Statement of Objection 14 days upon receipt, and Ds to file their reply 7 days thereafter, with the view of the assessment being conducted on the papers.

47.  Although reference has been made to the Decision on Costs which is not for search, inspection or publication without leave, I do not believe that any redaction is required for this Decision.  I nonetheless direct (the “Non-publication Direction”) that this Decision is not for search, inspection, publication or uploading for 7 days from the date of handdown, during which time any party who invites any redaction may write in, in which case the Non-publication Direction will continue until further order; but in the absence of any suggestion for redaction the Non-publication Direction will lapse after 7 days from the date of handdown, and the Decision will be uploaded onto the Judiciary website.