DARACH E. HAUGHEY AND ANOTHER v. LAM MUI AND OTHERSDARACH E. HAUGHEY AND ANOTHER v. LAM MUI AND OTHERS

CACV 157/2017

[2020] HKCA 591

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 157 OF 2017

(ON APPEAL FROM HCMP NO. 1593 of 2014)

__________________

___________________

___________________

________________

JUDGMENT

________________

Hon Chu JA giving the Judgment of the Court of Appeal:

1.  This is the 4^th to 6^th defendants’ appeal against the judgment of Au Yeung J (“the Judge”) given on 8 June 2017 ordering, inter alia, the 2^nd defendant to put back to the estate (“the Estate”) of Chiu Keung, deceased (“the Deceased”) the sum of $1,470,600, and that the money in the hands of the plaintiffs, as administrators of the Estate, be distributed to the 2^nd defendant solely.

2.  The appeal is opposed by the 2^nd defendant.  The plaintiffs adopt a neutral stance, and the other defendants have not taken part in the appeal.

The facts

3.  The Deceased died 62 years ago on 17 April 1955 in Hong Kong.  He was survived by a wife, three concubines, five sons and eight daughters.[1]  

4.  The wife (“Lee Ng”) was the mother of the eldest son, who predeceased the Deceased, and the 2^nd son.  She died in 1986.

5.  The 1^st concubine (“Chan Mui”) was the mother of the 3^rd son and the 5^th son.  She died in 1970.  The 3^rd son died in 1998.  The 2^nd defendant is his daughter and the administratrix of his estate.  The 5^th son is the 3^rd defendant.

6.  The 2^nd concubine (“Leung Yuet Chun”) was the mother of the 4^th son, and the 1^st, 5^th, 7^th and 8^th daughters. She died in 2003.  

7.  The 3^rd concubine (“Lam Mui”) is the mother of the 6^th son, and the 2^nd, 3^rd, 4^th and 6^th daughters.  She is the 1^st defendant, acting for herself and as administratrix of the estate of the 2^nd daughter.  The 6^th son, the 4^th daughter and the 6^th daughter are respectively the 4^th, 5^th and 6^th defendants and the appellants in this appeal.

8.  The plaintiffs are the administrators of the Estate appointed by the Court. 

9.  The Deceased made his last will on 28 August 1953 (“the Will”).  His last child, the 4^th defendant, was born in 1954 after the Will was made.  

10.  The Deceased was a successful businessman in Vietnam.  He left behind a very sizable estate that included drugstore businesses in Hanoi and Cholon, and properties in Vietnam, Hong Kong, Mainland China and France.  Among his properties was House No. 4, Derby Road, Hong Kong (“the Derby Road Property”).  

11.  After the Deceased’s death, a Deed of Partition (Amicable) (“the 1956 Deed”) was executed in Saigon, Vietnam among the following parties:

(1) The 2^nd son acting for himself and his mother, Lee Ng, pursuant to a power of attorney;

(2) Chan Mui acting for herself and on behalf of the 3^rd son;

(3) The 3^rd defendant;

(4) Leung Yuet Chun acting for herself and as guardian and legal trustee of her five children, namely, the 4^th son, the 1^st, 5^th, 7^th and 8^th daughters; and

(5) Lam Mui acting for herself and as guardian and legal trustee of her five children, namely, the 2^nd and 3^rd daughters and the 4^th to 6^th defendants.

12.  Under the 1956 Deed, the parties agreed to a partition of the Deceased’s properties in Hong Kong, South Vietnam and France, but not those in Canton, Caoyue in Mainland China and Hanoi in North Vietnam.  Lee Ng, who was not given any share in the real properties of the Estate under the Will, was assigned the Derby Road Property.  The 2^nd son was given one million piastres from the Estate.  The other 15 beneficiaries[2] under the Will were jointly assigned various real and personal properties of the Estate situated in Hong Kong, South Vietnam and France.  Lee Ng, the 2^nd son and the other 15 beneficiaries accepted the terms in full and final satisfaction of their respective rights against the Estate.  The 15 beneficiaries also renounced all claims against Lee Ng and the 2^nd son in respect of the Estate, and vice versa.

13.  Later on 4 April 1957, the same parties executed a Chinese Agreement (“the 1957 Agreement”) in Saigon, Vietnam.  The first part of the agreement was signed by the three concubines and the 3^rd defendant.  The second and third parts of the agreement were executed by Lam Mui and the 3^rd defendant.  The 1957 Agreement dealt with the division of the remaining assets of the Estate, including the shares in the drugstore businesses.  Under the agreement, Lee Ng and the 2^nd son gave up their rights against the Estate, and acknowledged receipt of the Derby Road Property and the one million piastres.

14.  At the time the 1956 Deed and the 1957 Agreement were executed, the 3^rd son had attained majority and was residing in Mainland China.  His mother, Chan Mui, stated in the two documents that she was confident she could represent him and would be able to obtain his consent to it.  It is, however, the 2^nd defendant’s case, which the Judge accepted, that the 3^rd son had no notice of the execution of the two documents, and that he had received nothing from the Estate.

15.  On 7 September 1966, letters of administration with the Will annexed was granted to Lee Ng and the 4^th son as co-administrators. 

HCMP 1846/1982

16.  In 1982, the 4^th son commenced HCMP 1846/1982 against Lee Ng for an account of incomes and profits from the Estate, including the incomes and profits of the Derby Road Property, and a declaration that the 1956 Deed was null and void. 

17.  On 27 March 1985, Rhind J made a declaration declaring the 1956 Deed null and void.  He also ordered the sale of the Derby Road Property and the proceeds of sale to be distributed in accordance with the terms of the Will, with a stay of the sale until the death of Lee Ng or upon her moving out of the property.  It was further ordered that the income and profits from the property be collected, and the tenancies of the property be administered, by a trustee company.

HCA 6123/1995

18.  In 1995, the 4^th son as administrator of the Estate commenced HCA 6123/1995 against the 3^rd son seeking delivery up of the Deceased’s properties in Canton, government bonds, share certificates, rent books and accounting books and records on the ground of wrongful interference with the Estate.  The 3^rd son disputed the claim and counterclaimed for an order removing the 4^th son as the administrator, an account and inquiry of the assets of the Estate in the 4^th son’s hands and an order for the administration of the Estate.  The Defence and Counterclaim was registered as a lis pendens against the Derby Road Property.  After the death of the 3^rd son, the 2^nd defendant, as the administratrix of his estate, was substituted as the defendant in 1999.

19.  On 24 September 2001, upon the joint application of the 4^th son and the 2^nd defendant, an order was made by consent to vacate the registration of the lis pendens, and for the sale of the Derby Road Property.  The order further provided that, without prejudice to the 2^nd defendant’s dispute as to the entitlement of the beneficiaries under the Will to any further distribution out of the Estate, the net proceeds of the sale of the property be divided into 17 shares, being the total number of shares provided under the Will, and be paid into several stakeholder’s accounts.

20.  The Derby Road Property was eventually sold on 16 May 2003 for $45 million.

21.  Pursuant to two orders dated 25 September 2003 and 19 January 2009, two interim distributions in the respective sums of $3,000,000 and $1,470,600 were made out of the Estate to the 2^nd defendant, as administratrix of the 3^rd son’s estate on 25 September 2003 and 20 January 2009. [3]

22.  Meanwhile on 27 October 2003, Yam J removed the 4^th son as the administrator of the Estate and appointed the plaintiffs as the joint and several administrators of the Estate, and further ordered the 4^th son to render an account of the Estate.  By then, the 4^th son had disappeared and could not be contacted.  He remained uncontactable as at the hearing before the Judge.  He never gave the account ordered. 

23.  On 6 January 2006, letters of administration with the Will annexed were granted to the plaintiffs.

HCMP 1593/2014

24.  On about 18 August 2009, the plaintiffs provided a report to all the beneficiaries under the Will based on their investigations into the assets of the Estate.[4] The assets identified consisted mainly of cash of about HK$39 million and landed properties in Paris, Mainland China and Vietnam.  The cash in the plaintiffs’ hands represented the balance of the proceeds of sale of the Derby Road Property, proceeds of sale of shares and bank balances from Mainland China and Hong Kong.[5]

25.  In June 2014, the plaintiffs commenced the proceedings below pursuant to Order 85 rule 2 of the Rules of the High Court, Cap. 4A seeking directions on, inter alia, the distribution of the Estate.  In respect of the assets held by them, the plaintiffs proposed that they be distributed as follows:

(1)     The cash formerly distributed to the 3^rd son/2^nd defendant be regarded as interim distribution and be added back to the assets of the Estate;

(2)     The plaintiffs’ costs and expenses be deducted from the Estate;

(3)     The net Estate be divided into 17 shares, with two shares for each of the 3^rd to 6^th sons, one share for the 2^nd son and one share for each of the 1^st to 8^th daughters in accordance with the Will; and

(4)     The two shares of the 4^th son (who has gone missing) be distributed pro rata to the other beneficiaries.

26.  The plaintiffs had issued notice to all persons who might wish to claim against the Estate under section 29 of the Trustee Ordinance, Cap. 29.  Those beneficiaries who wished to be heard had been joined as defendants. 

27.  The 1^st, 3^rd to 6^th defendants had no objection to the plaintiffs’ proposed distribution.  The 2^nd defendant, however, contended that the whole of the remaining Estate should be distributed to her father, the 3^rd son, because there had been prior distribution of the Estate to the other beneficiaries to his exclusion when he was living in Mainland China. She also contended that married daughters were not entitled to share in the proceeds of the sale of landed properties.[6]

28.  The 8^th daughter had appeared at the hearing before the Judge.  She did not oppose the distribution proposed by the plaintiffs.  

The Judge’s decision

29.  The Judge identified eight issues to be resolved as follows:[7]

(1)     Whether an apartment in Paris should form part of the Estate;

(2)     How are the properties in Vietnam to be dealt with;

(3)     How are the properties in Mainland China to be dealt with;

(4)     Whether other properties should be treated as part of the Estate;

(5)     Whether married daughters are entitled to a share in the real properties;

(6)     Whether the cash previously distributed to the 3^rd son/2^nd defendant should be put back to the pool of the Estate;

(7)     Whether there had been prior distribution of the Estate to the exclusion of the 3^rd son; and

(8)     How the assets in the hands of the plaintiffs should be distributed.

30.  Issues (1) to (5) are not engaged in this appeal.  On issue (1), the Judge considered that the apartment in Paris should not form part of the Estate and it was not in the best interests of the Estate to carry out further investigations.  On issues (2) and (3), the Judge held that any beneficiary who wanted the plaintiffs to pursue investigations into the properties in Vietnam and Mainland China should inform the plaintiffs.  If no notice about the properties in Vietnam was received, the plaintiffs shall cease investigation of them.  As for the properties in Mainland China, any beneficiary who failed to give notice to the plaintiffs would be regarded as giving up his rights and claims to the properties.  On issue (4), the Judge rejected the 2^nd defendant’s claim that two properties bought by Chan Mui and Lam Mui should form part of the Estate.  On issue (5), the Judge also rejected the 2^nd defendant’s construction of the Will and held that married daughters are entitled to share in the real properties under the Will.  

31.  Issues (6) to (8) are relevant to this appeal.  On issue (6), the Judge, after examining the Administrators’ report, the two court orders in HCA 6123/1995 and the correspondence between the plaintiffs’ solicitors and the 2^nd defendant’s solicitors,[8] concluded that (at [39]):

“Taking such evidence together, I find that HK$1,470,600 was interim distribution to the 3^rd son (D2) which should be put back to the pool of the Estate. The rest of the payments were all for Hiu Hung’s costs. It seems that HK$3,000,000 had not been paid to the 3^rd son (D2); but if it had been, it should form part of the Estate.”

32.  On issue (7), the Judge considered this a dispute of fact, the resolution of which hinged upon the validity of the 1956 Deed and the 1957 Agreement, and what happened after their execution.

33.  The 2^nd defendant’s case is that pursuant to the 1956 Deed and the 1957 Agreement, distribution of the Estate had been made at a time when her father, the 3^rd son, was residing in Mainland China, and he never received his share under the two documents.  She accordingly contended that the whole of the net remaining Estate should be distributed to the estate of her father, which is represented by her.

34.  The only defendants who had signed the two documents were Lam Mui and the 3^rd defendant.  Lam Mui signed for herself and as the guardian and legal trustee of her five children, including the 4^th to 6^th defendants.  She had not filed any evidence in the proceedings.  The 3^rd defendant’s evidence was that he was told by his mother, Chan Mui, to sign on a document in French which he did without reading through it.  He also disclaimed the Chinese characters 趙善權 was his signature.  The Judge, however, found that the 1956 Deed and the 1957 Agreement were signed by him.

35.  The Judge held that Rhind J’s order in HCMP 1846/1982 did not nullify the entire 1956 Deed, and that the nullity only extended to Lee Ng’s interest in the Derby Road Property without affecting the other appropriations made under the 1956 Deed.  As to the 1957 Agreement, the Judge noted that it was never declared void.  The Judge also considered that there was no dispute from any of the defendants or beneficiaries as to their mother’s authority to represent them in 1956 or 1957.  The Judge took the view that the burden was thus on the defendants to show that the 1956 Deed and the 1957 Agreement were of no effect and they had not received distribution under the two documents.

36.  After considering the evidence of the 2^nd defendant and the evidence filed by the 3^rd to 6^th defendants and the other beneficiaries, the Judge concluded in [84] to [86] of the Judgment that:

“84. In my view, even if I were to ignore the evidence from [the 2^nd defendant] (except the land search results), the evidence of the defendants could hardly rebut the fact of prior distribution. The fact that just the 5^th son or just Chan Mui had appropriated assets of the Estate or each fong just appropriated some of the assets could not affect the validity of the 2 Documents or rebut the fact that there had been prior distribution. The position was consistent with their own intention stated in the 1956 Deed, ie that the beneficiaries would be free to maintain joint possession or divide among themselves. See §17(d) above.

85. The subsequent misfortune of confiscation could not have invalidated the 2 Documents and what was already distributed thereunder. Rhind J’s order only applied to the distribution to the wife and in any case not the 1957 Agreement.

86.  The issue can be disposed of summarily without a trial. I find that there had been prior distribution under the 2 Documents to the exclusion of the 3^rd son (D2).”

37.  As for issue (8), the Judge had regard to her findings on issue (7) and the fact that, under the 1956 Deed and the 1957 Agreement, the various fongs have given up their rights and claims against the Estate in relation to the assets in Hong Kong, France and South Vietnam.  The Judge held that the only beneficiary remaining who could claim the funds in the hands of the plaintiffs was the 3^rd son, and ordered that they be distributed to the 2^nd defendant accordingly. 

38.  The Judge further ordered that the costs of the plaintiffs be paid out of the Estate before distribution, the 2^nd defendant’s costs be indemnified by the Estate, and the other defendants’ costs be paid out of the Estate on common fund basis.  The 4^th son was ordered to indemnify the Estate on costs as his failure to render a proper account had made the administration more difficult as it should be.

The 4^th to 6^th defendants’ appeal

39.  The 4^th to 6^th defendants have advanced six grounds of appeal as follows:

(1)     The Judge erred in failing to find that the 1956 Deed was null and void and of no legal effect, having regard to: (a) the order of Rhind J, and (b) the 24 September 2001 order for sale.

(2)     The Judge erred in failing to find that the 1956 Deed and the 1957 Agreement were null and void and of no legal effect in that (a) the two documents were not executed by all the beneficiaries who had attained majority at the time of execution, and/or not all the beneficiaries had executed the two documents or were properly represented by the parties who executed the two documents; (b) the Judge should have directed the plaintiffs to adduce evidence on the validity and effects of the two documents under the Vietnamese law; and (c) the Judge should have found that, subject to such evidence, the 1956 Deed did not represent the full and final satisfaction of the beneficiaries’ rights against the Estate. 

(3)     The Judge erred in according inappropriate weight or relevance to the question of whether there was prior distribution of the Estate to the beneficiaries in that (a) the question was irrelevant had it been found that the 1956 Deed and the 1957 Agreement were null and void or of no legal effect; (b) alternatively, any prior distribution pursuant to the two documents or otherwise was only relevant to whether, and if so the extent to which, adjustments should be made to the distribution of the Estate to each beneficiary; and (c) the Judge should not have adopted an all-or-nothing approach with regard to the beneficiaries’ entitlement to the remaining Estate.

(4)     The Judge erred in finding that the issue of whether there was any prior distribution of the Estate to any of the beneficiaries could be disposed of summarily without a trial.

(5)     The Judge erred in finding that only HK$1,470,600 was made to the 2^nd defendant/3^rd son by way of interim distribution in that there was another interim distribution to the 2^nd defendant/3^rd son of HK$3 million.

(6)     The Judge’s approach to an Order 85 application was flawed in that (a) she should have directed the plaintiffs to produce all the materials necessary to enable the court to give fully and properly informed directions to the plaintiffs; (b) she should have directed the parties to adduce further evidence as to the validity and effect of the 1956 Deed and the 1957 Agreement under the Vietnamese law, and expert evidence on the valuation of the current value of the prior distribution of the Estate; (c) she should not have held that the burden was on the defendants to show that the two documents were of no effect and to explain why they had not received distribution of the Estate; and (d) she should have either adjourned the case with further directions for the proper resolution of the questions or reliefs sought by the plaintiffs, or dismissed the application.    

Application to adduce new evidence

40.  One day before the hearing of the appeal, the 4^th to 6^th defendants put in a summons to apply for leave to file an affidavit made by their solicitor (“Leung’s affidavit”) containing new evidence.  For the reasons set out below, we had dismissed the summons at the hearing of the appeal.

41.  Leung’s affidavit was directed at the issue of whether the 3^rd son had been provided with a property in Man Ying Building.  In the proceedings below, the 3^rd daughter had asserted that Chan Mui had purchased a property in Man Ying Building in the name of Ho Shuet, who was a maid, with the rent from the property used to provide for the 3^rd son’s living expenses when he was in Mainland China, and when he came to live in Hong Kong, the property would provide him with a home.[9]  The 8^th daughter also claimed that the 3^rd son had been provided with a property in Ferry Street.[10]  These assertions were denied by the 2^nd defendant.  Her case was that after her father came to Hong Kong, he had lived at Flat 19 (No. 5 Man Yuen Street) on 9^th floor of Man Ying Building (“Flat 19”) but he was not the owner of it.  She produced a land search record of Flat 19 to show that her father never owned the property.[11]  The Judge decided the issue in favour of the 2^nd defendant.[12]

42.  Leung’s affidavit exhibited a land search record of another property in Man Ying Building, Flat 5 (No. 19 Man Yuen Street) on 9^th floor of Man Ying Building (“Flat 5”).  It showed that this property was assigned by Ho Shuet to the 3^rd son in September 1976 and he remained the owner of it until his death.  The 4^th to 6^th defendants sought leave to adduce the new land search record as evidence in the appeal.   

43.  This Court had in a number of cases emphasized the undesirability of late interlocutory application in an appeal by reference to Order 1A rule 3 of the Rules of the High Court: see, for example, To Pui Kui v Ng Kwok Piu [2014] 5 HKLRD 103 at [16] to [18]; and PW v PPTW (unreported) CACV 224/2013, 16 December 2014 at [9] to [12].  The rule requires parties and their legal representatives to assist the court to further the underlying objectives of the Rules, which include ensuring cases are dealt with as expeditiously as is reasonably practicable and the resources of the court are distributed fairly.  This Court had further held that late application for admission of new evidence with no satisfactory explanation of the delay would be refused on the ground of lateness only, without regard to whether the requirements in Ladd v Marshall [1954] 1 WLR 1489 have been satisfied: see for, example, Law Kwok Fai Paul & Ors v Wellmei (HK) Plastics & Electronics Industrial Ltd & Anor (unreported) CACV 45/2014, 31 October 2014 at [18] and PW v PPTW, supra.

44.  The 4^th to 6^th defendants’ application was a very late application.  Leung’s affidavit stated that the land search was carried out after the solicitor received a telephone call from the 8^th daughter one day before the appeal.  Mr Liang, who appeared for the 4^th to 6^th defendants, pointed out that the 8^th daughter was an elderly homeless lady and there was no means of contacting her.  He submitted that there were real difficulties for the 4^th to 6^th defendants or their solicitors to grasp the problem and come up with the land search record for the correct property at an earlier stage. 

45.  However, the 4^th to 6^th defendants had not explained why it did not occur to them or their legal representatives to do land search on other properties in Man Ying Building earlier on, given that the issue of whether the 3^rd son ever owned a property in Man Ying Building was raised well before the hearing before the Judge and in light of the Judge’s finding, based on the basis of the land search record produced by the 2^nd defendant, that the 3^rd daughter had failed to produce sufficient evidence to substantiate her contention.  The 4^th to 6^th defendants had also not explained what had prompted them or their solicitors to conduct a land search on Flat 5.  In short, we did not find the 4^th to 6^th defendants had satisfactorily explained the lateness of their application. 

46.  We further had regard to the fact that if the 4^th to 6^th defendants’ application was acceded to, the 2^nd defendant would have to be afforded an opportunity to respond to Leung’s Affidavit and the new evidence.  The appeal would most probably have to be adjourned with the consequence that time, costs and judicial resources would be wasted.  Having regard to the underlying objectives under Order 1A, we had exercised our discretion against the application.  We had accordingly dismissed the 4^th to 6^th defendants’ summons with costs to the plaintiffs and the 2^nd defendant.          

The approach of the Judge (nature of O 85 proceedings)

47.  Turning to the appeal itself, there are broadly four aspects.  They are: (1) the Judge’s approach to the Order 85 application: (2) the validity and effects of the 1956 Deed and the 1957 Agreement; (3) the Judge’s finding of prior distributions from the Estate to the exclusion of the 3^rd son; and (4) the quantum of the interim distributions received by the 2^nd defendant or the 3^rd son. 

48.  On the first aspect of the Judge’s approach to the Order 85 application, this is a major plank of the 4^th to 6^th defendants’ appeal.  The arguments are contained principally in the fourth and sixth grounds of appeal (see [39(4)] and [39(6)] above). 

49.  The 4^th to 6^th defendants’ first complaint is that the Judge should have directed the plaintiffs, who are professional administrators, to produce all the material necessary to enable the Court to give fully and properly informed directions on the administration of the Estate.  It is also said that the Judge should have directed the parties to adduce evidence on the validity and effects of the 1956 Deed and 1957 Agreement under Vietnamese law as well as the current value of the prior distribution made from the Estate, including the one million piastres paid to the 2^nd son.

50.  There is no disagreement among counsel that in an Order 85 procedure, the court should be put into possession of all the material necessary to enable it to give the guidance and approval sought by the trustee, and that a trustee seeking guidance from the court, is under a duty to obtain and place before the court full and proper information, including relevant expert evidence: Marley v Mutual Security Merchant Bank and Trust Co Ltd [1991] 3 All ER 198 at 201e-g and 202a-b; and Wu Shuk Chun v Kwong Oi Lin & Ors [2010] 4 HKLRD 604 at [17].  

51.  The arguments of the 4^th to 6^th defendants are, however, misplaced.  In the first place, the validity or effect of the 1956 Deed and the 1957 Agreement under Vietnamese law was never an issue in the proceedings below.  The challenge to the validity of the 1956 Deed was confined to the effect of the declaration made by Rhind J in 1985 and the order for the sale of the Derby Road Property made in 2001.  Further, if such evidence was considered to be relevant and material to the determination of the Order 85 application, the 4^th to 6^th defendants or any other parties could have sought directions on the filing of expert evidence on Vietnamese law and/or the value of prior distributions from the Estate.  It should be noted that there had been no less than three direction hearings[13] prior to the substantive hearing before the Judge, and the 4^th to 6^th defendants were legally represented throughout these proceedings.  The 4^th to 6^th defendants, in fact, did not attend these direction hearings and had not sought any direction on the filing of expert evidence.   

52.  Mr Liang referred to the Judge’s comments[14] that the preparation of the case was deficient due to the lack of French legal opinion, Vietnamese legal opinion and PRC legal opinion and argued that the Judge ought to have directed the parties to adduce further evidence before deciding on the application.  But these comments of the Judge have no relevance to the issues in this appeal.  They were made in the context of discussing the investigations and attempts made by the plaintiffs to identify and locate assets of the Estate in Paris, Vietnam and Mainland China.

53.  Moreover, with respect to expert evidence on the current value of the one million piastres received by the 2^nd son in 1956, it is of marginal relevance to the relief sought in the application before the Judge, having regard to the issues engaged between the parties.  The costs involved would probably be costly and disproportionate, considering that piastre is a currency that has been decommissioned for a very long time and, as the plaintiffs observed, the prospect of restitution against the 2^nd son, who cannot be located, is practically impossible.       

54.  The 4^th to 6^th defendants also complained the Judge’s holding that the burden was on the defendants (other than the 2^nd defendant) to show that the 1956 Deed and the 1957 Agreement were of no effect and that they had not received distribution from the Estate.  The 4^th to 6^th defendants argued that the purpose of an Order 85 application is inquisitorial rather than adversarial in nature and there is no or no sufficient legal basis to shift the legal burden to the other defendants. We do not agree.

55.  The Judge made the holding complained of after taking into account a number of matters.  At [71] to [75] of the judgment, the Judge observed that the 1956 Deed and 1957 Agreement were formal documents containing detailed provisions on the distribution of the Estate, Lee Ng and the 2^nd son had respectively received and acknowledged receipt of the Derby Road Property and one million piastres, and all the parties to the two documents accepted the assets allocated to them and agreed that the arrangements would be in full and final settlement of their rights and claims against the Estate.  The Judge also pointed out that the parties to the 1956 Deed treated it serious enough to arrange for the deed to be certified by the Vice President of the Court of First Instance in Saigon, and neither the 4^th to 6^th defendants nor the other beneficiaries had in the past 60 years challenged their respective mother’s authority to represent them in the execution of the 1956 Deed and the 1957 Agreement. 

56.  It was against these factual circumstances, which were not disputed, that the Judge held in [76] of the judgment that the burden fell on the defendants to show that the 1956 Deed and the 1957 Agreement were of no effect and that they had not received distribution from the Estate.  Reading it in context, what the Judge was referring to is the evidential burden, not the legal burden.  

57.  The final aspect of the 4^th to 6^th defendants’ complaint against the Judge’s dealing of the Order 85 application concerns both the fourth and sixth grounds of appeal.  They argued that in light of the factual disputes between the parties, the Judge should have ordered the proceedings to continue as if they had been begun by writ, or should have at least given directions for cross-examination of the deponents on their affidavits. 

58.  Under Order 28, rule 4(1) of the Rules of the High Court, the court has a wide discretion to dispose of the originating summons summarily where it is satisfied that there are no triable issues.  Where there are genuine, substantial factual disputes that cannot be resolved on affidavit evidence, the court may either give direction under rule 4(3) for evidence to be taken orally, including cross-examination of deponents of the affidavits, or order under rule 8 that the proceedings be continued as if the cause or matter had been begun by writ.  

59.  Counsel have referred us to a number of authorities: Bank of China (Hong Kong) Limited v Keen Lloyd Resources Limited CACV 1787/2001, 26 February 2002 at [18] to [22]; Ye Hong Ying v Chan Lup Ying [1996] 1 HKLR 255 at 258F-J; Shum Wah Ming v The Estate of Chen King Ngo, deceased & Anor CACV 21/1996, 10 July 1996 at [25], [50] to [53]; Cheney Communications Pte Ltd v Christopher Charles Cheney HCMP 2942/1992, 2 August 1993.  In summary, these cases establish that there is no hard and fast rule as to what cases can properly be dealt with by the originating summons procedure.  It is not the case that the existence of factual disputes will invariably render the originating summons procedure inappropriate, although it is a factor to be taken into account when exercising the discretion.  Other relevant considerations include whether the procedural advantages of an action begun by writ, such as delivery of pleadings and discovery, justify the exercise of the power under Order 28 rule 8 and whether in so ordering the ultimate resolution of the dispute would be significantly delayed.  If the issues of fact have been identified and can be properly resolved or the disputes of fact are not central to the court’s determination, the court is entitled to proceed to determine the action without converting it into a writ action.  With regard to whether to hear the summons on oral evidence, what the court has to consider, as stipulated in Order 28 rule 4(3), is what is required for the just, expeditious or economical disposal of the proceedings.

60.  In the context of an Order 85 application, it has also to be borne in mind that the court is essentially engaged solely in determining what ought to be done in the best interests of the trust estate and not in determining the rights of adversarial parties: Marley v Mutual Security Merchant Bank & Trust Co Ltd, supra, at 201.  Further, as the plaintiffs submitted, Order 85 proceedings are meant to be conducted with economy of time and costs: Re Man Sham Chung Wui [2011] 1 HKLRD 427 at [69].  

61.  In the present case, the core question that engaged the Judge is what directions should be given to the plaintiffs that would be in the best interests of the Estate and the beneficiaries.  In respect of the specific question of how to distribute the assets in the plaintiffs’ hands, the main dispute between the 2^nd defendant, on the one hand, and the other defendants and beneficiaries, on the other hand, is whether there had been prior distributions from the Estate to the beneficiaries to the exclusion of the 3^rd son.  The Judge rightly pointed out that this is an issue of fact, the resolution of which depended on the validity of the 1956 Deed and the 1957 Agreement and the events that happened after their execution.[15] 

62.  The Judge approached this dispute by first identifying the facts that were either not disputed or indisputable, and which gave rise to an inference that the two documents were validly executed and there had been prior distributions from the Estate.[16] She then analyzed the contentions of the 3^rd to 6^th defendants and the other beneficiaries and their evidence against the objective facts.  These include the fact that after the Deceased’s death, his wife and concubines were left to raise young families, the children had continued to receive education, with some studying and living in different countries, and the 3^rd defendant and the 1^st daughter admittedly received financial support from the profits of the drugstore business and from Chan Mui.[17]  The Judge concluded that, even disregarding the 2^nd defendant’s evidence, the evidence of the 3^rd to 6^th defendants and the other beneficiaries could hardly rebut the fact of prior distributions.[18]  

63.  It would appear the Judge had taken a broad brush approach to the resolution of the dispute.  Given that the Deceased died more than six decades ago, and the matters relating to the dispute happened a long time ago, the Judge cannot be said to be plainly wrong in adopting an approach that would bring about an expeditious and economical disposal of the Order 85 application.  We are also of the view that the Judge had adequately considered and analyzed the relevant evidence in resolving the dispute.  We see no proper basis to interfere with her conclusion that on the evidence of the 3^rd to 6^th defendants and the other beneficiaries alone, there must have been prior distributions from the Estate.  This being the case, there is no need, and no useful purpose is served, to have a trial or to hear the summons on oral evidence.  In the circumstances of the case, the Judge did not err in her case management decision of not converting the proceedings into a writ action, or ordering the cross-examination of the deponents of the affidavits.   

64.  For the reasons above, we are of the view that the Judge did not err in her approach to the plaintiffs’ application.  The fourth and sixth grounds of appeal fail.

The validity and effects of the 1956 Deed and the 1957 Agreement

65.  The second aspect of the appeal concerns the validity and effects of the 1956 Deed and the 1957 Agreement.  It is contained in the first and second grounds of appeal (see [39(1)] and [39(2)]).  The first ground argues that the 1956 Deed is null and void by reason of the declaration made by Rhind J in 1985 and the order for sale of the Derby Road Property made in 2001. 

66.  In respect of the declaration of nullity made by Rhind J, the 4^th to 6^th defendants argued that the Judge was wrong to hold that it only extended to Lee Ng’s interest in the Derby Road Property, with all other appropriations under the 1956 Deed undisturbed.[19]  It was argued that Rhind J’s declaration had invalidated the entire 1956 Deed.  

67.  In ascertaining the meaning and scope of an order, the words of the order are to be given their natural and ordinary meaning and are to be construed in their context and with regard to the object of the order.

68.  The relevant context to the construction of Rhind J’s order includes: (1) The 1956 Deed gave the Derby Road Property to Lee Ng, despite this was not her entitlement under the Will, and she received nothing else under the deed.  It also gave the 2^nd son one million piastres while the other beneficiaries were jointly assigned various properties; (2) Lee Ng and the 2^nd son gave up claims in respect of the Estate against the other 15 beneficiaries and vice versa; (3) In 1966, Lee Ng and the 4^th son were appointed the administrators of the Estate; and (4) In 1982, the 4^th son, in his capacity as co-administrator, commenced proceedings under HCMP 1846/1982 against Lee Ng in her capacity as co-administrator. 

69.  On the scope of HCMP 1846/1982, the relief sought in the amended originating summons include: (1) an order for an account, and payment into a trust account, by Lee Ng of all the incomes and profits derived from the Estate, and in particular the Derby Road Property, (2) a declaration that the 1956 Deed was null and void and a direction that Lee Ng ceased to act in pursuance of the terms of the 1956 Deed in receiving incomes and profits from the Estate, and in particular the Derby Road Property, for her private use and benefit, and (3) an order for the sale of the Derby Road Property with the proceeds of the sale and the incomes and profits from the property to be dealt with in accordance with the terms of the Will.  It can be seen from the amended originating summons that the 4^th son’s claim against Lee Ng, while also concerned her rights and duties under the Estate as a co-administrator, was directed specifically at her interests in the Derby Road Property.  The declaration sought was focused on Lee Ng’s entitlements under the 1956 Deed.

70.  As to the terms of the order made by Rhind J,[20] the recital  set out several undertakings given by Lee Ng on the use of, and tenancies created over, the Derby Road Property, and a waiver by the 4^th son of an account by Lee Ng of incomes and profits derived from the property.  On the basis of these undertakings and waiver, Rhind J granted a declaration declaring the 1956 Deed null and void, and an order directing Lee Ng to cease to act in pursuance of the terms of the deed in receiving incomes and profits from the Estate, with particular reference to the Derby Road Property, for her private use and benefit.  Rhind J also ordered the sale of the Derby Road Property upon the death of Lee Ng or upon her moving out of the property, with the proceeds of sale to be distributed in accordance with the terms of the Will, and the incomes and profits from the Derby Road Property pending sale to be collected, and the tenancies to be administered, by a trustee company.  There was additionally an order giving Lee Ng an ex gratia monthly payment.     

71.  Reading the entirety of Rhind J’s order in the relevant context and with regard to the scope of the claim in HCMP 1846/1982, it is clear that its primary focus was on the Derby Road Property and Lee Ng’s interest in it.  The several undertakings and waiver in the recital referred solely to the Derby Road Property.  Although the declaration of nullity referred generally to the 1956 Deed, there was no provision for the restitution of the money received by the 2^nd son or the properties received by the other beneficiaries.  And while the direction to Lee Ng to cease to act in pursuance of the deed referred to incomes and profits from the Estate, this was followed by a specific reference to incomes and profits from the Derby Road Property.  It should also be noted that under the 1956 Deed, Lee Ng was only given the Derby Road Property and she had no entitlement to other assets of the Estate.  The reference to incomes and profits from the Estate in pursuance of the 1956 Deed is therefore superfluous.  Having regard to the terms of Rhind J’s order as a whole, we agree with the Judge that the declaration of nullity was directed at Lee Ng’s interest in the Derby Road Property and did not affect the rights or interests of the other beneficiaries under the 1956 Deed.   

72.  With regard to the order for sale made in 2001 in HCA 6123/1995, it was made upon the joint application of the 4^th son as administrator of the Estate and the 2^nd defendant representing the estate of the 3^rd son.  The 4^th son’s claim in the action was for wrongful interference with the assets of the Estate in Mainland China while the 3^rd son counterclaimed for his removal as administrator of the Estate, and an account and inquiry into the assets of the Estate that had come into his hands.  The 3^rd son registered his Defence and Counterclaim as a lis pendens against the Derby Road Property.  After the 3^rd son’s death, in 1999 the 2^nd defendant as administratrix of his estate, was substituted as a defendant.  It is against such background that the 2001 order was made.

73.  Under the 2001 order, the Derby Road Property was to be sold, with the net proceeds of the sale to be divided into 17 shares in accordance with the Will and to be paid into several stakeholder’s accounts, pending administration or distribution to the beneficiaries under the Will.   

74.  Mr Liang submitted that the effect of the 2001 order was that the 1956 Deed was null and void.  We do not agree.  Neither the terms of the order nor the context or subject matter of the dispute in the action support such a contention. The order made no reference at all to the 1956 Deed.  Importantly, the order expressly stated that the division of the net proceeds of sale was pending the conclusion of the action or further order of the court, and without prejudice to the 2^nd defendant’s dispute as to the other beneficiaries’ entitlement to any further distribution out of the Estate under the Will.

75.  For the reasons above, the first ground of appeal is not made out.

76.  The second ground of appeal contends that the 1956 Deed and the 1957 Agreement had no legal effect because they were not executed by all the beneficiaries who had attained majority at the time of execution, and not all the beneficiaries had executed the deed or were properly represented by the parties who executed the two documents.  It was also contended that the Judge should have sought expert evidence on the validity of the two documents as executed.  

77.  Mr Liang advanced three submissions.  First, he submitted that while Leung Yuet Chun represented three of her children (the 4^th son, the 1^st and 5^th daughters) who were over 18 years of age, she did not hold any power of attorney, and it is not known whether this was permitted under the law in Vietnam.  Second, he submitted it is not known whether Leung Yuet Chun and the 1^st defendant were entitled to represent their respective minor children.  Third, he queried whether the 3^rd defendant, who was under 18 at the execution of the 1956 Deed and the 1957 Agreement, could validly execute the two documents. 

78.  As pointed out by Mr Chang, who together with Miss Wong appeared for the 2^nd defendant, these were new points that had not been raised and argued before the Judge.  Although the 3^rd defendant’s affirmation stated that he signed the two documents at his mother’s instruction without reading the contents, and the contents were not explained to him, this is not the same as positively asserting that he did not have capacity under the law of Vietnam to execute the two documents.  Likewise, although the 4^th to 6^th defendants and other beneficiaries stated in their affirmations that they had no knowledge of the execution of the two documents in 1956 and 1957 and were not aware of the division of the Estate under the two documents, this is different from asserting that their respective mothers did not have authority to represent them in the execution of the two documents.     

79.  At the hearing before the Judge, the parties proceeded on the basis that the two documents were validly executed.  The challenge to the validity of the 1956 Deed was only based on the declaration made by Rhind J in 1985 and the order for the sale of the Derby Road Property in 2001 (i.e. the first ground of appeal).  That no issue was taken on the validity of the execution of the two documents is reflected by the fact that no party had sought to adduce expert evidence on Vietnamese law, notwithstanding To J had directed the parties to file evidence on the execution of the two documents. 

80.  In any event, the arguments advanced by Mr Liang have no merits.  The 4^th to 6^th defendants and the other beneficiaries who were minors in 1956 and 1957 were represented by their respective mothers.  Throughout these years, they had never disputed their mothers’ authority to execute the two documents on their behalf.  In addition, the 4^th to 6^th defendants’ mother, Lam Mui, is also a party in these proceedings and was represented by the same firm of solicitors who represented the 4^th to 6^th defendants in the court below.  She had not filed any evidence in support of the 4^th to 6^th defendants’ case in this regard.  She had not said that she lacked the authority to represent her children in the execution of the two documents.  

81.  As to whether Leung Yuet Chun could properly represent her children who had attained 18 years of age at the execution of the 1956 Deed and 1957 Agreement without power of attorney, it is relevant to note that her children (i.e. the 4^th son, 1^st and 5^th daughters) had not joined in these proceedings or sought to challenge the validity of the execution of the two documents.  Similarly, the 3^rd defendant did not argue before the Judge that he lacked the capacity to execute the two documents in 1956 and 1957.

82.  With regard to the complaint that the Judge should have called for expert evidence on the validity of the execution of the two documents, the 4^th to 6^th defendants could have applied for directions to adduce expert evidence on Vietnamese law, but they had not seen the need to do so.  For the reasons discussed in [51] above, it is now too late to complain about the lack of expert evidence and to use this to mount a new challenge to the validity of the two documents.

83.  We further agree with the plaintiffs that even if the 1956 Deed and the 1957 Agreement were null and void, it does not mean that acts done by the beneficiaries who had participated in the distribution of the Estate pursuant to the two documents did not happen.   

84.  For the above reasons, the second ground of appeal also fails.

The Judge’s finding of prior distributions from the Estate to the exclusion of the 3^rd son

85.  The third aspect of the appeal challenges the Judge’s finding that there had been prior distributions of the Estate.  This is set out in the third ground of appeal (see [39(3)]), which says that the Judge had given inappropriate weight or relevance to the issue of prior distribution to the beneficiaries.  Three arguments were raised.  The first is that this issue would become irrelevant in the event the 1956 Deed and the 1957 Agreement were found to be null and void and of no legal effect.  Given our rejection of the arguments that the two documents are null and void and of no legal effect, this argument falls away.

86.  The second argument is that any prior distribution, whether pursuant to the 1956 Deed and the 1957 Agreement or otherwise, was only relevant to whether, and, if so, the extent to which adjustments should be made to the distribution of the Estate to each beneficiary.  Thirdly, it was argued that the Judge should not have adopted an all-or-nothing approach, namely, there would be distribution in accordance with the Will if there was no prior distribution, and there would be sole distribution to the 2^nd defendant if there was prior distribution to the exclusion of the 3^rd son.

87.  The second and third arguments effectively suggest that even if there had been prior distributions from the Estate, the Judge should still distribute the remaining Estate to all the beneficiaries but with appropriate adjustments having regard to the prior distributions.  This is a new point, which had not been raised before the Judge.  In any event, it is not viable to make adjustments as suggested. 

88.  The prior distributions would have taken place well over half a century ago.  The investigations carried out by the plaintiffs did not yield much useful information about the distributions, such as the date of distribution, the kind of assets involved and their value.  This is hardly surprising, considering the long lapse of time, the assets of the Estate being situated in different countries, and most of the beneficiaries were of young age at the relevant time while Lee Ng, Chan Mui and Leung Yuet Chun had since passed away and the 2^nd and 4^th sons could not be contacted.  At the same time, all the beneficiaries who had filed evidence said they had not received any prior distributions.  There are thus real difficulties in identifying the exact assets that had been distributed and establishing their current value, even with the engagement of expert.  Without such information, it would not have been possible to make appropriate adjustments to the distribution of the remaining Estate, if it were to be distributed to all the beneficiaries as suggested by the 4^th to 6^th defendants.   

89.  The finding that there had been prior distributions of the Estate to the exclusion of the 3^rd son is a relevant matter to be taken into account by the Judge when deciding how her discretion under Order 85 rule 2 should be exercised.  When exercising her discretion, the Judge was required to act as a reasonable trustee would be expected to act having regard to all the material circumstances, doing what is just and equitable: see Lewin on Trusts, 19^th ed., at 27-83; Thrells v Lomas [1993] 1 WLR 456, 467B.  As noted above (see [59]), the Judge had adopted a broad brush approach.  In the circumstances of the case, including the difficulties in identifying and tracing the assets involved in the prior distributions and establishing their current value, the Judge cannot be faulted for taking such an approach.  The Judge was entitled to conclude that making a sole distribution of the net remaining Estate to the 3^rd son was the most appropriate order that produced a just and equitable outcome, and was in the best interests of the Estate.   

90.  In his written reply submission, Mr Liang sought to make a further challenge to the Judge’s finding of prior distributions.  He submitted that there was no evidence of specific distribution of the properties of the Estate to the beneficiaries, other than the one million piastres to the 2^nd son and a monthly allowance to the 3^rd defendant.  The 2^nd defendant’s case was criticized as being based on broad, self-serving assertions and opaque references, and too flimsy and simplistic to be given much weight.  Mr Liang also submitted that the Judge was wrong to infer from the fact that the widows had to raise young children that they must have received distributions from the Estate for it was possible that Chan Mui and Lam Mui had savings of their own and the evidence suggested that Chan Mui owned some properties in Vietnam.  

91.  The Judge’s finding that there had been prior distributions is a finding of fact.  The arguments in the reply submission is in effect an attempt to challenge the Judge’s assessment of the evidence and finding of fact.  In the first place, this is a new ground not covered by the Notice of Appeal.  Secondly, despite the lengthy and meticulous comments Mr Liang made on the evidence of the 2^nd defendant on the one hand, and those filed by the other defendants and beneficiaries on the other hand, we are not convinced that it has been shown that the Judge’s conclusion on this issue is plainly wrong and should be disturbed.  We would additionally point out that a number of the points made are speculative, such as Chan Mui and Lam Mui might have personal savings before the Deceased passed away, and the financial support Chan Mui gave to the 3^rd defendant and the 1^st daughter could have come out of her own resources.  In fact, the evidence filed by some of the beneficiaries is that the Deceased had purchased residential properties and shops in Vietnam in Chan Mui’s name, but these properties were not all gifted to Chan Mui.[21] 

92.  We are satisfied that the Judge had properly considered and analyzed the relevant evidence filed by the parties and the other beneficiaries.  On the evidence before her, she is entitled to come to the conclusion that there had been prior distributions to the exclusion of the 3^rd son.  There is no proper basis to interfere with her finding that there had been prior distributions from the Estate to the exclusion of the 3^rd son. 

93.  For the above reasons, this aspect of the appeal also fails.

The amount of interim distribution made to the 2^nd defendant/3^rd son

94.  The final aspect of the appeal, which is contained in the fifth ground of appeal, concerns the amount of interim distribution received by the 3^rd son or his estate (see [39(5)] above).  The 2^nd defendant accepts that the total amount should be HK$4,470,600, and not HK$1,470,600 as the Judge mistakenly thought[22]. The 2^nd defendant also accepts that this total sum should form part of the pool of the assets of the Estate.  This, however, has no practical impact on the order made by the Judge given that the net remaining Estate is to be distributed solely to the 2^nd defendant.

Conclusion

95.  For the reasons given above, we would allow the appeal limited to substituting “HK$4,470,600” for “HK$1,470,600” in paragraph 8 of the order made by the Judge.  The rest of the appeal is dismissed.

96.  We would also make a costs order nisi that the 4^th to 6^th defendants pay the plaintiffs and the 2^nd defendant the costs of the appeal, to be taxed if not agreed, and the plaintiffs’ own costs be paid out of the Estate on trustee basis.