HO WAI KIT, the person appointed to represent the estate of SHIU LUN HO, deceased (by Carry Out Order dated 20th February 2018) AND ANOTHER v. HO FU CHUNG the executor of the estate of HO WAN KI, deceased, being the sole administrator of the estate of HO SANG, deceased

HCMP 197/2018

[2018] HKCFI 1638

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 197 OF 2018

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J U D G M E N T

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1.  This is an application by the two applicants against the respondent for delivery of an account of the estate of Ho Sang also known as Ho Shui Sang, deceased (“the Estate”) and payment of all sums due to the applicants. The applicants are two of the beneficiaries of the Estate.

2.  Mr Ho Wai Kit, who has been appointed to represent the Estate of the 1st applicant, is also the attorney of the 2nd applicant in the commencement and conduct of these proceedings.

3.  Ho Sang passed away intestate on 29 August 1986.  Letters of Administration of the Estate were granted to Ho Wan Ki, one of the sons of Ho Sang, on 26 November 1999.  The grant shows that the Estate comprised of various lots in DDs 220 and 221 in the New Territories.

4.  Ho Wan Ki passed away on 11 July 2017.  Grant of probate for his estate was granted to the respondent, one of his sons and the executor named in his will, on 28 November 2017.

5.  Before the grant of probate of Ho Wan Ki’s estate was granted to the respondent, the applicants had already alleged to the respondent that Ho Wan Ki had not provided any account of the administration of the Estate since November 2013, and they asked the respondent for an account of the administration of the Estate on 21 August 2017. 

6.  The respondent’s solicitors only replied that Ho Wan Ki had all along made known and accounted to the beneficiaries of the Estate the sale of certain lots registered in Ho Sang’s name.

7.  When the solicitors for the applicants made a repeated demand on 17 January 2018 for a copy of the account allegedly given by Ho Wan Ki to the beneficiaries of the Estate, the solicitors for the respondent merely took notice of the demand but did not supply any copy account or make any promise to provide the same at any time.

8.  The applicants started these proceedings on 12 February 2018 and served the affirmation in support on the respondent on 28 March 2018 and 10 April 2018.  The respondent did not file any affidavit within 28 days thereafter to oppose the application.  The applicants then issued a notice of appointment on 24 May 2018 to have the Originating Summons heard today.

9.  Mr Lam, counsel for the applicants relied on section 56 of the Probate and Administration Ordinance, Cap 10 which provides:

“56. The personal representative of a deceased person shall, when lawfully required so to do, exhibit, by affidavit filed in the court, a true and perfect inventory and account of the movable and immovable property of the deceased, and the court shall have power as heretofore to require personal representatives to bring in inventories.”

10.  Mr Lam also referred me to the following authorities. On the personal representative’s duty to render account, he referred to Wu Wing Ching & Anor v Ding Yufang, HCMP 2471/2012, a decision of Recorder Pow, SC given on 16 July 2014.  §21 of the judgement said:

“21. … The general legal principle governing the duty on the part of a personal representative to furnish account has been summarized in §969 of the 3^rd edition of Halsbury’s Laws of England (1956) which had been cited with approval in Leung Chi Man v Mok Sau Lim, HCMP 1599/2003 at §107. The learned author said:

‘General duty to keep accounts. It is the duty of executors and administrators to keep clean clear and accurate accounts, and to be always ready to render such accounts when called upon to do so. It is no excuse that they are inexperienced in keeping accounts, for in such case it would be their duty to employ a competent account to keep them. Where they are required by the beneficiaries to furnish accounts, they may demand to have the costs of doing so paid or guaranteed before complying with the request. A legatee is not entitled to a copy of the accounts at the expense of the estate, but he is entitled to inspect the accounts kept by the representative.

A personal representative is liable to be ordered by the court to account either generally in proceedings for general administration of the estate or under the jurisdiction of the court to order specific accounts.’” (Emphasis added)

11.  The next case that Mr Lam relied on is Tsang Wing Kwai v Tsang Wing Fai, HCMP 3186/2016, a decision of Wilson Chan J given on 21 May 2018.  The learned Judge said in §§18 to 21:

“18. The duty of an executor to keep and render proper accounts is of paramount importance. Generally speaking, it is the duty of a personal representative, after a grant has been made to him, to collect and get in the real and personal estate of the deceased, and to administer it according to law. He must act with due diligence in the discharge of his duties: Williams, Mortimer and Sunnucks on Executors Administrators and Probate (20^th edn, 2013, paragraph 48-18).

19. In Cheng Tang Kam Yung v Tang Kam Cheung, HCMP 147/2008 (Judgment dated 26/08/2013), DHCJ Leung said, at paragraph 52:

‘… the administrator might have formed his view on how the estate should be administered. Nevertheless proper account must be kept and the beneficiaries of the estate kept informed. The account kept must be clear and accurate; the executor or administrator must always be ready to render such account when called upon to do so: see In Re Estate of Lee Da Kor [2010] 1 HKLRD 415 (at §§16-17).’

20. In Re Estate of Lee Da Kor [2010] 1 HKLRD 415, at paragraph 17, Poon J (as he then was) said:

‘It is the duty of an executor to keep clear and accurate accounts, and to be always ready to render such accounts when called upon to do so …… In order to provide a true and perfect account, the executor must provide details of the whereabouts of all properties (including cash) which he is bound to administer …’

21. In Chow Chak Kiu v Chow Man Chi, HCMP 797/2016 (Decision dated 17/01/2017), Chow J said, at paragraph 40, that 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.’”

12.  Wilson Chan J then ordered the executor to provide the plaintiff an account of the estate to be verified on affirmation and to allow the plaintiff to inspect the supporting documents in relation to the account.  That order is similar to the order to render account and order to inspect sought in the present proceedings.

13.  The importance of the duty to account of the personal representative can be reflected by the fact that failure to do so can justify the removal of an administrator.

14.  The respondent opposed the application.  He issued a summons on 27 June 2018 for an order that the application be continued as if begun by writ with consequential directions.

15.  He also made an affirmation in support of the summons.  He said in the affirmation that he understood from his father Ho Wan Ki that the matters relating to the Estate were taken care of by his father in consultation with his father’s siblings.  The respondent himself had never heard of any complaint or query on how the Estate was administered.  He was therefore surprised when he came to notice of the letter from the solicitors of the applicants dated 21 August 2017 alleging that there was no account of the administration of the Estate given since November 2013 and demanding an account.

16.  Since this matter was never raised until shortly after the death of Ho Wan Ki, the respondent therefore suspected that the applicants had an ulterior motive in making this application.  He also raised the question of why the 2nd applicant herself had not made any affidavit in support of the application.  But I think this is a non-point as Mr Ho Wai Kit, the representative of the 1st applicant who made the affirmation in support of the application, is the attorney for the 2nd applicant in commencing and conducting the application.  The suspicion of respondent that there might be an ulterior motive in this application is also neither here nor there.  This application is to be judged on its merits.

17.  The respondent then said in §11 of his affirmation that he had no intention to drag on the matter and would not object to provide an account if ordered to do so.  But he needed time to do it. 

18.  He also learnt from his aunts, who were siblings of Ho Sang that his father had made distributions to each of the living siblings of Ho Sang including the 1st applicant.

19.  He then asserted that there were factual disputes as to the practice and custom of administering the Estate, the distribution or application of the income and proceeds over the years and whether accounts of the Estate had been rendered.  But he did not produce any copy account to buttress his assertion that accounts might have been rendered.  He also did not identify or give particulars of any factual dispute as to the practice and custom of administering the Estate and the distribution or application of the income or proceeds.

20.  The respondent then tried to justify his failure to file any affirmation in opposition by saying that he hoped the matter could be resolved amicably instead of going through litigation as Ho Sang would not want to see the Estate to become the subject of litigation amongst his descendants.  But I observe that to order the application to continue as if begun by writ is contrary to this good intent of the respondent.

21.  Ms Chan, counsel for the respondent referred to Hong Kong Civil Procedure 2018, Vol 1, §28/4/3 and submitted that the application can only be disposed of summarily if the court is satisfied that there is no triable issue.  If there are serious issues regarding whether certain assets should be part of the Estate and particularly when complicated factual issues are raised and examination of witnesses is necessary, the application has to be proceeded with as if begun by writ (see Li Lim Chi Dorothy v Lin Fung Industrial Co [2017] 2 HKLRD 746 and Hong Kong Civil Procedure 2018, Vol 1, §85/2/17).

22.  Ms Chan then referred to the fact that the Estate comprised of lands in the New Territories and Ho Sang had passed away before the enactment of the New Territories Land (Exemption) Ordinance, Cap 452, hence section 13 of the New Territories Ordinance, Cap 97 shall apply and the court shall have power to recognize and apply Chinese custom or customary right affecting land in the New Territories. However, Ms Chan did not set out any implication that the application of section 13 on the lands in the Estate would give rise to.

23.  Ms Chan then asserted that there are clearly factual disputes as well as the extent of application of Chinese customary law in the entitlement of the issues of Ho Sang, which would relate to how the account should be taken, and who would be the beneficiaries and their respective entitlements of the Estate.  The disputes would include whether there had been any agreement to change or vary the distribution and entitlement of the Estate amongst the beneficiaries thereof as the respondent had deposed to distributions having been made to Ho Sang’s daughters notwithstanding the usual Chinese custom. 

24.  Ms Chan also questioned whether there had been any agreement amongst the beneficiaries of the Estate in respect of the application of income/proceeds to the ancestor worship and maintenance as the 1st applicant has alleged that the beneficiaries had paid such expenses out of their own pockets but the respondent takes a different view.

25.  However, the respondent has not mentioned in his affirmation of any factual dispute or any dispute that has arisen by the application of section 13 of the New Territories Ordinance or the distribution to Ho Sang’s daughters notwithstanding the Chinese custom. Such are merely Ms Chan’s surmise.  Regarding who had paid for ancestral worship, that has nothing to do with the respondent’s liability to furnish account to the beneficiaries.

26.  Ms Chan then referred to what she described as the peculiar features of the application.  She referred to the applicants’ query that there was no distribution from 2013 to 2015 despite sales of land.  She submitted that the applicants did not say that they were unaware of the sales of land by Ho Wan Ki and they made no query before Ho’s death but only did so shortly thereafter.

27.  Ms Chan also referred to the query by the applicants that some of the lands were sold to another son of the Ho Wan Ki and suggested that there might be wrongdoing.  She further submitted this morning that if there was any allegation of breach of trust, such should be dealt with at one go rather than in a piece meal basis. However, she accepted that breach of trust is not part of this application which is for the delivery of account of the administration of the Estate by the respondent.

28.  Mr Lam in his submissions referred to Hong Kong Civil Procedure 2018, Vol 1, §28/8/2 which states:

“Factual dispute – Order 28, r.8 confers a flexible case management power on the court. It is a discretionary power and does not specify or limit the possible reasons for the court to exercise its discretion to order the proceedings to continue as if begun by writ (IO of Foo Hoo Centre v. HK Alliance in Support of Patriotic Democratic Movements of China (2016) 1 H.K.C. 517 at [7]-[9]), although the usual reason for an originating summons proceedings to be continued as if begun by writ is that there can be shown on the available evidence genuine or substantial issues of fact which require to be adjudicated.” (emphasis added)

29.  Having considered the affirmation of the respondent and the submissions by Ms Chan on his behalf, I cannot detect any dispute between the parties the resolution of which may relieve the respondent from his liability to furnish an account of the administration of the Estate to the applicants.  The applicants have asked for the supply of the account since August 2017.  I can see no reason why the originating summons should not be disposed of today but should continue as if begun by writ. 

30.  In the premises, I order that the respondent do within 48 days from the date hereof render to the 1st and 2nd applicants a complete and accurate account of the Estate giving details of movement of assets, incomes and expenditure of the Estate, including the proceeds of sale of the real properties of the Estate and that such account be:

(a)  prepared in accordance with accepted Hong Kong accounting standard and practice;

(b)  supported by documents if possible; and

(c)  verified by an affirmation of the respondent.

31.  I also order that the 1st and 2nd applicants be at liberty to inspect all the relevant documents in the possession or power of the respondent in respect of the account. 

32.  Since, Mr Lam has indicated that he is not pressing for payment upon rendering of account, I therefore adjourn the relief of payment upon the taking of account and the question of interest sine die with liberty to restore.

33.  I also order that there be a liberty to apply. 

34.  Finally, I make a costs order nisi that the costs of the application up to now and including the costs of today be paid by the respondent to the applicants to be taxed.