CHEN CHERYL DEANNA v. CHEN PAK YIN STELLA

HCAP 16/2008

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

PROBATE ACTION NO 16 OF 2008

____________

________________

D E C I S I O N

________________

Introduction

1. On 24 March 2016, the Court of Appeal ordered that the action herein be discontinued (“CA Order”). The CA Order also provided, among other things, the following:

(i) Mr Li Ka Sing, a professional accountant, be appointed as the sole administrator (“Administrator”) of the estate of the Deceased (“Estate”) with powers stated therein[1];

(ii) The Administrator be remunerated on a time-cost basis at the rate of HK$2,800 per hour and his employees Trainee Accountant and Administrative Clerk at the rate of HK$1,200 and HK$800 respectively and the remuneration to be paid out of the assets of the Estate, provided that the total remuneration shall not exceed the scale costs laid down in Section 60(2)(b) of the Probate & Administration Ordinance, Cap 10; 

(iii) The parties and the Administrator be at liberty to apply to a judge of the Court of First Instance for such further orders or directions as may be appropriate or necessary;

(iv) In the event that Mr Li Ka Sing should fail to submit an application for a grant of administration of the Estate within 3 months from the date of the order, D do have liberty to apply to vary the order by substituting another professional accountant or solicitor at act as administrator of the Estate, such application to be made to a single judge of the Court of Appeal or of the Court of First Instance.

2. Section 60 of the Probate & Administration Ordinance, Cap 10 provides that:

“(1) Subject to subsection (2), the court may allow to any executor or administrator, including an administrator appointed pendente lite under section 40 (or to a person acting under a power of attorney as attorney for an executor or administrator in the matter of the sealing of a probate or administration under Part IV or in the matter of the realization and administration of an estate under a probate or administration so sealed) such remuneration out of the estate of the deceased person as the court thinks fit.

(2) (a) No allowance shall be made to any executor or administrator or attorney who neglects to pass his accounts at such time, or to dispose of any moneys, goods, chattels, or securities with which he is chargeable in such manner as may be required by probate rules and orders.

(b) No such remuneration shall exceed five per cent on the first one thousand dollars, two and a half per cent on the next four thousand dollars and one per cent on the balance of the gross value of all property of whatsoever nature administered.

3. It subsequently transpired that Mr Li Ka Sing declined his appointment and/or failed to submit an application for a grant of administration of the Estate within the time stipulated in the CA Order.

4. On 13 March 2017, D issued a summons to, among other things, vary the CA Order and to substitute the appointment of Mr Li Ka Sing by Mr Chin Choon Onn and Mr So Man Chun of PricewaterhouseCoopers Ltd, Hong Kong (“PwCHK”) to act as joint and several administrators of the Estate.

5. D has filed a supporting affirmation on 13 March 2017 to explain the efforts made by her to find an administrator to substitute Mr Li Ka Sing after Mr Li declined the appointment on 20 April 2016.  At the time when the CA Order was made, D was represented by Messrs Li, Chow & Co and it would appear from the email communications that after Mr Li declined to act, D’s then solicitors had sent an email to D on 7 June 2016 indicating that they had no one to recommend and suggested D to write to the Law Society and the Accountants Society to make enquiries.

6. D later filed Notice to Act in Person on 4 August 2016.  D did make several attempts to contact over 10 accountants/solicitors, including contacting a firm of solicitors in October 2016, Messrs Li Myra & Co who then tried to make enquiries with several accounting firms, but with no success.  D has set out all her attempts in her supporting affirmation.

7. There was nothing to contradict D’s above evidence.

8. Eventually, D contacted PwC who have sent to her a proposal dated 8 February 2017 for Messrs Chin Choon Onn and So Man Chun to act as administrators of the Estate (“Proposal”). D has also sought the consent of Margaret, the other sister and one of the 4 equal beneficiaries of the Estate. Their brother Edward, the 4^th beneficiary is a discharged bankrupt.  D has been unable to serve her summons and relevant documents on Edward.  However, seen in the Court of Appeal’s judgment, Edward has indicated a wish not to be bothered or involved in this case. 

9. D’s summons was fixed for hearing before this court on 6 June 2017.  The day before the hearing, on 5 June 2017, P suddenly issued a summons proposing a solicitor Mr Raymond Tam of Messrs Kenneth CC Man & Co to be the administrator.  P filed a short supporting affirmation indicating that Mr Tam is a solicitor well-experienced in probate and administration matters.

10. The court then asked P to produce a letter from Mr Tam as to his consent and his understanding of the scope of work, and the hearing was adjourned to the following day.

11. On 7 June 2017, P produced a letter dated 6 June 2017 from Mr Tam, and from the letter, it would appear that Mr Tam’s understanding was that the Estate consisted of only one property.  He had clearly not been provided with sufficient information by P.

12. This court thus directed that a letter be sent to all the proposed administrators by the court, to invite them to send a written letter of consent to act indicating acceptance of the remuneration as administrators as stated in section 60 (2)(b) of the Probate & Administration Ordinance, Cap 10 (“Statutory Cap”), scope of administration work within the remuneration subject to the Statutory Cap, together with their respective CV.

13. Mr Tam Chi Kin sent a letter dated 16 June 2017 indicating that his consent to act, and that his hourly rate fee is HK$5,000 subject to the Statutory Cap and the scope of work set out by him.

14. For his CV, Mr Tam has set out his years of practice being 16 years, and that his major areas of practice include conveyancing transactions and matters, probate and intestate estate applications made by executors of wills and administrators (inclusive of assisting and acting for executors and administrators in realization and/or collection of the estate of the deceased and as instructed in distribution of the same amongst the beneficiaries) and civil litigation.

15. Messrs Choo and So of PwCHK sent their letter dated 15 June 2017 to the court.  They explained that it would not be commercially viable for them to accept the remuneration of the administrators to include the time-cost of the employees as set out in paragraph (6) of the CA Order. However, they are prepared to consent to act as administrators of the Estate on the basis that the remuneration set out in the Remuneration Provision applies only to the services or work performed by the administrators, namely Messrs Choo and So personally on a time-cost basis.  They consent to be remunerated on a time-cost basis at the rate of HK$6,124 per hour, but subject to the Statutory Cap.

16. In the Proposal, Messrs Choo and So have proposed a fee cap of HK$400,000 per year for the first two years (“Fee Cap”), exclusive of disbursements and expenses.  In their letter of 15 June 2017, they have clarified that this is in fact the  aggregate of their personal remuneration as administrators, plus the fees of PwCHK.

17. As pointed out by Messrs Choo and So, in paragraphs 4(d) and 4(e) of the CA Order, the Court of Appeal has envisaged that the administrator will need to engage third parties, for instance lawyers, accountants, property agents and other relevant professionals to assist him in carrying out his duties and provided discretion to the administrator to determine his expenses and to pay them out of the assets of the Estate accordingly. They further clarified that whilst the administrators have discretion to appoint other professionals to assist in carrying out their duties, it is their normal practice to state specifically in their proposals that the administrators will appoint PwCHK.

My view

18. As Messrs Choo and So pointed out, appointment of an administrator is personal in nature.

19. With respect to Mr Tam, the CV set out by him was brief, and his work experience was only as a solicitor acting for executors and administrators.  He has not set out any experience where he personally was appointed as an administrator.  The scope of work he set out seemed to have left out the legal formalities of applying for grant of letters of administration of the Estate.  Further, it would appear from the scope of work in relation to the Property, this had contemplated sale of the Property, but paragraph (4)(e) of the CA Order specifically provides that the Administrator shall not have power to sell the Property without approval of the Court or consent of all beneficiaries. 

20. I note in paragraph (7) of the CA Order, so far as Mr Li Ka Sing was concerned, provision of security, or surety was exempted upon provision of proof of Professional Indemnity Insurance.  It is not clear whether the Professional Indemnity Insurance of Mr Tam will cover his personal services as administrator.  Mr Tam has not mentioned security or surety and it is not clear whether he is seeking dispensation of provision of security/surety if appointed.

21. Although the hourly rate of Mr Tam is lower than that of Messrs Choo and So, Mr Tam has not made it clear that whether he will be instructing other employees of the firm Kenneth CC Man & Co to carry out any work save for work in connection with handling the sale of the Property, and he has not set out the charging rate of Kenneth CC Man & Co.

22. Anyway, by comparison to Mr Tam’s CV, Mr Choo’s CV reflected Mr Choo’s extensive experience as administrator of estates, and Mr So’s CV indicated that he has had experience as trustee.  The Proposal was also prepared in a comprehensive and detailed manner.  Messrs Choo and So have also indicated that they are happy to respond to any enquiries from the beneficiaries, but pointed out that in the interest of being even-handed and impartial, such enquiries and the responses from the administrators may be made available to all beneficiaries if appropriate.

23. So far as the other beneficiaries are concerned, Margaret has sent a letter dated 9 June 2017 directly to the court indicating her wish for Messrs Choo and So be appointed, and her objections to Mr Tam. 

24. Although the charging rate of Mr Tam is lower than Messrs Choo and So, so far as the remuneration of the administrators, that will in any event be subject to the Statutory Cap.  As for any extra costs under paragraph 4(d), at least Messrs Choo and So indicated they will instruct PwCHK, and their fees will be subject to the Fee Cap, whereas as I have earlier said, Mr Tam has not mentioned anything in this regard.

25. More importantly, having considered the history of this matter and having taken into account Margaret’s views and all the circumstances of this case, I have come to the view that experienced administrator/s should be appointed, subject to certain terms.

26. Messrs Choo and So have submitted proposed terms of the court order. I propose to make certain amendments to the draft, including the following :-

(i) To refer to in the recital and to attach a copy of the Proposal to the draft Order;

(ii) To make it clear that the aggregate remuneration of both Messrs Choo and So shall not exceed the Statutory Cap, otherwise only one of them will be appointed;

(iii) Messrs Choo and So have indicated in their letter of 15 June 2017 that the time-costs of the employees in PwCHK be considered as an expense or disbursement of the administrators, and that the remuneration of the administrators and the fees of PwcHK are subject to the Fee Cap, and thus, under paragraph 2 of Schedule 1, the Fee Cap should include fees of PwcHK subject to those exceptions in paragraph 3 of Schedule 1, and this should be made clear;

(iv) The administrators shall be exempted from the provision of security/surety upon provision of proof of Professional Indemnity Insurance.

27. A copy of the draft order with this court’s amendments will be sent to Messrs Choo and So.  Subject to their acceptance of the terms, I am prepared to vary the CA Order by substituting them in place of Mr Li.

28. Costs of D’s application should be paid out of the Estate on a trustee basis.  There be no order as to costs of P’s application.

[1] B:1-5