YEUNG LAI SZE RITZ (also known as YEUNG LAI SZE) v. CHEUNG YIN LING ELLIE AND OTHERS

HCAP 19/2022

[2023] HKCFI 1515

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

PROBATE ACTION NO 19 OF 2022

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D E C I S I O N

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INTRODUCTION

1.  There are two summonses before me this morning. The first in time is the plaintiff’s summons dated 17 June 2022. The second one is the summons taken out by the 1^st to 3^rd defendants dated 14 September 2022.

2.  The 4^th defendant’s stance on these two summonses is neutral. She has earlier been excused from attending today’s hearing.

3.  The 5^th to 8^th defendants act in person in this action. They are absent today.

4.  The court sent out notices of today’s hearing to all parties in November 2022. The one sent to the 8^th defendant has since been returned as undelivered. However, according to some email exchange in December 2022, the 8^th defendant was in fact informed of the date of today’s hearing. Based on the above, I am satisfied that all these defendants who act in person have had notice of today’s hearing. And the hearing has proceeded in their absence.

5.  It is now common ground between the plaintiff and the 1^st to 3^rd defendants that, first, an administrator ad colligenda bona and pendente lite should be appointed in respect of the estate of the late Mr Yeung Kam (“the deceased”). Further, the scope of the powers and duties of the administrator is not subject to dispute. The only question which I need to resolve today is who should be appointed to be the administrator in the meantime.

6.  The plaintiff’s position is that she and the 1^st defendant should be appointed as joint and several administrators of the estate. On the other hand, the 1^st to 3^rd defendants take the view that an independent professional administrator should be appointed instead. They have put forward Mr Alfred Ip of Messrs Hugill & Ip to be the candidate.

BACKGROUND FACTS

7.  It is clearly in the interests of the estate that the identity of the administrator ad colligenda bona and administrator pendente lite be resolved promptly and speedily. I shall therefore proceed to state my ruling and brief reasons now without setting out in full the background facts save as is necessary.

8.  The deceased passed away on 16 January 2022 when he was 78 years old.

9.  During his lifetime, he executed two wills dealing with his assets in Hong Kong. They are dated 19 September 2013 and 20 November 2021 respectively. I shall refer to the two wills as “the 2013 will” and “the 2021 will” below. In addition, it appears that the deceased also executed two further wills dealing with some of his assets in mainland China. Those wills are both dated 17 November 2021. However, the mainland China wills do not form the subject-matter of the present probate action.

10.  As for the parties of this action, they fall into three families, or “fongs”, of the deceased. In 1973, the deceased was married to the 4^th defendant, who later gave birth to the plaintiff, the 5^th and 6^th defendants. This is the first fong. In the 1980’s, the deceased began an extramarital relationship with the 1^st defendant, who later gave birth to the 2^nd and 3^rd defendants. This is the second fong. In about 2000, the deceased began another extramarital relationship with the 7^th defendant, who later gave birth to the 8^th defendant. This is the third fong.

11.  As disclosed by the pleadings served so far in this probate action, the plaintiff seeks to propound the 2013 will whereas the 1^st to 3^rd defendants seek to propound the 2021 will. The 4^th defendant takes a neutral stance in this action, but she expressly reserves her right to make a claim under the Inheritance (Provision for Family and Dependants) Ordinance, Cap 481. The rest of the parties have indicated in their acknowledgments of service that they do not intend to contest the proceedings, but they would support the 2013 will.

12.  What is presently relevant about the two wills are, first, that under both wills, the plaintiff and the 1^st defendant were named as the joint executrices of the estate. And, secondly, under the 2021 will, the 3^rd defendant would be bequeathed a much larger share and a vast majority of the deceased’s assets in Hong Kong than under the 2013 will. The 3^rd defendant is the only son of the second fong.

13.  The estate itself is substantial in size. It is estimated that the assets in Hong Kong are worth about HK$500 million. The assets in Hong Kong mainly comprise the following:

(1)  cash in bank accounts totalling around HK$90 million;

(2)  insurance policies and securities; and

(3)  15 residential and industrial properties in Hong Kong. Most of them are held through Hong Kong incorporated companies, which were in turn owned or controlled by the deceased.

14.  Most of these Hong Kong properties have been rented out to generate rental income for the estate. The deceased also had one active business in Hong Kong, which is referred to as “the Kamfaith storage business”. It is a mini-storage business located in Chai Wan.

15.  By way of introduction, I should also refer to this allegation as disclosed in the pleadings in relation to a transfer which took place in November 2021, under which the deceased transferred his shares in a company referred to as “Yuk Sing” in this hearing to the 3^rd defendant for no consideration. The validity of this transfer is being challenged by the plaintiff as disclosed by the pleadings.

16.  In the meantime, pending the resolution of the present probate litigation, the plaintiff says that she and the 1^st defendant should be appointed as the administrators. Primarily this is because both of them were specifically named by the deceased as the joint executrices, whether under the 2013 will or under the 2021 will. The plaintiff’s contention today is also that given the nature of the estate, the administration would involve the conducting of fairly routine exercises such as the collection of rent and attending to tenancy matters, etc. And that does not justify spending money on engaging a professional administrator.

17.  On the other hand, the 1^st to 3^rd defendants submit that it is suitable to appoint an independent administrator because of potential conflict of interests between the plaintiff and the 1^st defendant, friction and hostility between the two of them on the administration of estate, and also the nature of the estate.

LEGAL PRINCIPLES

18.  The principles governing the appointment of administrators ad colligenda bona and administrators pendente lite are not in dispute between the parties.

19.  The court’s power to appoint them stems from sections 36 and 40 of the Probate and Administration Ordinance, Cap 10, respectively. The court does not automatically appoint such administrators whenever there is a pending probate dispute. The court only does so when it is necessary or expedient to do so. An appointment would be necessary or expedient if, for example, it is required to protect the estate by collecting, managing or safeguarding the assets or to enable legal action to be taken against third parties, pending the resolution of the probate dispute. See, in general, the principles cited recently by the Court of Appeal in Chow Lily v Chow Wai Wai Violet [2023] HKCA 167 at para 14.1.

20.  In the present case, the rival contentions are as to which candidate the court should appoint. I think the question to ask is – which candidate is better placed to discharge the duty for the administration of the estate given the circumstances.

DISCUSSION

21.  Having reviewed the evidence before me, I am of the view that an independent professional administrator should be appointed in respect of the estate. I have taken into account the following matters which I consider to be material factors which should weigh in the deliberation.

First, the deceased’s wish

22.  First, it is the plain wish of the deceased that the plaintiff and the 1^st defendant should jointly administer the estate. The two of them were named as the joint executrices in both the 2013 will and the 2021 will.

23.  A testator’s choice of a designated person to be an executor is relevant. It implies that the deceased at least reposed trust in that person and considered him to have been suitable and capable of performing the duties required.

24.  In the present case, I accept the plaintiff’s submission that based on the 2013 will and the 2021 will, it was the deceased’s express choice to have the plaintiff and the 1^st defendant jointly administer the estate. This factor goes to support the plaintiff’s position in today’s applications.

Second, the beneficiaries’ wishes

25.  The second matter that I have taken into account is the wishes of the beneficiaries as to whether an independent administrator should be appointed.

26.  The beneficiaries’ wishes are split. Apart from the second fong, there is no support for an independent administrator from the other two fongs. More specifically, the 4^th defendant takes a neutral stance on the appointment, but the 5^th to 8^th defendants have expressly stated that they would oppose the appointment of a professional administrator. They have not given any detailed reason for this position, but it has been said by some of them that such an appointment would cause depletion of the assets of the estate and is not justified.

27.  Similarly, this factor goes to support the plaintiff’s position.

28.  And based on these two factors, I think the starting point for me today is to take the view that the plaintiff and the 1^st defendant should be appointed as the administrators unless there is any reason for justifying otherwise.

Third, friction and hostility

29.  This takes me to the third matter which I consider to be material. As revealed by the evidence, there is clearly a degree of friction and hostility between the plaintiff and the 1^st defendant in the handling of assets of the estate to date. This friction and hostility can readily and palpably be felt.

30.  Upon a review of the evidence adduced so far in this action, such friction and hostility are serious and according to the plaintiff’s own evidence, it has already had the effect of impeding the administration of the assets so far. In the circumstances, I take the view that it is unrealistic to expect any smooth or meaningful cooperation between the two of them when it comes to the administration of the estate.

31.  On the finding of friction and hostility, I draw support from the following matters.

32.  First, the backdrop of course is the rival claims made by the different fongs in this probate action. The plaintiff is from the first fong. The 1^st defendant is from the second fong. These two fongs are asking the court to propound two different wills. Under the 2021 will, the 3^rd defendant would receive a much larger share of the estate than under the 2013 will. Now, of course, this factor alone is not evidence of actual hostility or friction. But I think it does set the scene when it comes to an evaluation of the relationship between the plaintiff and the 1^st defendant.

33.  Related to this point is an incident in Huizhou which took place in March 2022. According to the evidence, on that day, the plaintiff attended the deceased’s office in Huizhou, mainland China, and took away the business licence and seals of a PRC company referred to as “Yuk Sing PRC”. During the same incident, the 3^rd defendant also sent two lawyers to attend the office who suggested joint custody and management of the licence and seals. I will not go into any further detail of this Huizhou incident. But on the face of it, it is clearly a conflict and confrontation between the plaintiff and the 3^rd defendant. In fact, a few days after the incident, the 3^rd defendant sent a letter to the plaintiff and the 5^th defendant making very strong complaints about the action of the plaintiff.

34.  While this is a confrontation between the plaintiff and the 3^rd defendant, the 3^rd defendant being the son of the 1^st defendant and of a relatively young age of 25 years old, I think it may be said that this is on the whole a conflict and confrontation between the first fong and the second fong. Again, this factor alone is not direct actual evidence of conflict, friction or hostility between the plaintiff and the 1^st defendant when it comes to the administration of the estate. But again it sets the scene against which the relationship is to be evaluated.

35.  More vitally, secondly, the evidence of friction and hostility in fact comes from the plaintiff’s own evidence. In these applications, she has filed a number of affirmations. Most notable is her fifth affirmation. It runs to 66 pages long. In the affirmation, she sets out at great length and in great detail what she had been trying to do in order to handle the assets of the estate so far. In the process, she says that she has come across a lot of difficulties because of the action or inaction of the 1^st defendant. I need only to quote a few examples.

36.  In respect of a property called Yee Tsui Court, the plaintiff describes the 1^st defendant’s conduct as “plainly obstructive to the effective management of Yee Tsui Court”. The plaintiff in fact emphasises that this is not a single incident. She says that the 1^st defendant has been “wholly irresponsive to the affairs concerning the administration of the estate in many other instances”.

37.  In relation to the management of the Beverly Hills properties, the plaintiff describes the 1^st defendant’s attitude when dealing with the tenant as “utterly hostile”. Also, in relation to the management of the Beverly Hills properties, the plaintiff complains that her requests to the 1^st defendant have remained unanswered, like many of the queries she had raised concerning the administration of the estate.

38.  In respect of the management of the Kamfaith storage business, the plaintiff complains that the 1^st defendant has simply ignored her requests for accounting and ledger information of the business.

39.  In fact, in the fifth affirmation, there is a section entitled “Hostility of 1^st Defendant”. In this section, the plaintiff has described some allegations previously made by the 1^st defendant as “either short of truth or factually misleading”.

40.  Today is of course not an occasion to resolve or to make any factual findings as to who is in the right and who is in the wrong up to now. But what is clear from the evidence filed by the plaintiff herself is that there is serious friction and hostility and absence of trust between her and the 1^st defendant, and such friction and hostility had so far seriously affected her ability (or the 1^st defendant’s ability) to handle fairly routine matters, such as negotiation of new leases with tenants, settlement of management fees of real properties, staff salary, and their MPF contributions.

41.  In this hearing, the plaintiff is at pains to emphasise that the administration of this estate would be a straightforward exercise. This is because the estate comprises primarily real properties in Hong Kong and the administration would involve performing routine matters, such as settling expenditures, managing tenancies, etc. But the evidence filed by the plaintiff herself shows that even when it comes to such routine matters, because of the friction and hostility between the two individuals, these aspects of the administration of the estate had so far not been proceeded with smoothly and reasonably.

42.  There is also another matter which I will take into account, namely, the administrator would be given the power to investigate the Yuk Sing transfer referred to in the pleadings. In fact, very recently, the plaintiff commenced an action in HCA 235/2023. She sues as plaintiff in her capacity of an intended personal representative of the estate, seeking to nullify the Yuk Sing transfer. The defendants in that action, as I understand, are the 1^st to 3^rd defendants in the present probate action. There is clearly potential room for conflicts arising from such investigation and from such High Court action.

43.  To sum up, it is clearly the case that the friction and hostility between the two individuals have adversely affected their ability to manage or handle the assets of the estate so far.

44.  In view of such friction and hostility, nonetheless the plaintiff wants the court to appoint herself and the 1^st defendant as the provisional administrators because she takes the view that such an appointment by the court would formalise the arrangements for administering the estate, allowing the two individuals to proceed and cooperate in a clearer and more orderly manner. This is because if they are appointed, they will have the incentive to iron out their differences and only seek the court’s directions as a last resort. I do not think I can accept that submission. In light of the serious friction and hostility so far displayed between the two individuals, I find it unrealistic to expect that just because the court proceeds to make an order appointing them, that would prompt a change in the conduct of the two individuals.

Fourth, costs

45.  The fourth matter that I should take into account in the deliberation process is the costs that will be incurred if an independent professional administrator is appointed. It follows from my view that due to the friction and hostility between the plaintiff and the 1^st defendant that has had an adverse impact on the administration of the estate, it would seem justifiable for a professional administrator to be appointed.

46.  The next question to consider is the costs issue. No doubt such an appointment would come at a cost. I think the question is whether such costs would be disproportionate. Given the substantial size of the estate, I am of the view that the costs factor should not detract from the need of the court to appoint a professional administrator.

CONCLUSION

47.  For the above reasons, I consider that an independent administrator should be appointed in the meantime.

48.  The plaintiff suggests that if that is the view taken by the court, then she would ask for 14 days to come up with an alternative professional administrator who would be more economical.

49.  I was and am still reluctant to give more time to the plaintiff. If that is her fall-back position, this fall-back position should have been sorted out and worked out before today’s hearing. However, the 1^st to 3^rd defendants in fact agree to give some time to the plaintiff to explore the alternative option.

50.  In light of the agreement of the 1^st to 3^rd defendants, I would agree that the parties should be given 14 days to try to agree on an alternative professional administrator – so they will have 14 days not only to nominate an alternative but also to agree on one. If no agreement can be reached, then I think that is the end of the fall-back position, and the court will proceed to appoint Mr Ip to be the administrator.

51.  I will therefore direct the parties to report to the court within 14 days from today whether an agreement is reached as to an alternative professional administrator and, if so, his credentials and his fee proposal. At the same time the parties should jointly lodge a draft order in respect of such appointment. If no agreement is reached between the parties within the timeframe, then the court shall proceed to appoint Mr Ip to be the professional administrator. I would direct the 1^st to 3^rd defendants to submit a revised draft order for approval. The revised draft should deal with the fee proposal of Mr Ip. So that would be my decision.

(Discussion re costs)

52.  So this is my order on costs. I order that 70% of the costs of the plaintiff and the full costs of the 1^st to 3^rd defendants incurred on the two summonses be paid out from the estate. In my view, the plaintiff should bear a portion of her costs as she has filed lengthy affirmations which in part contained matters which are not relevant to the summonses, and that has the effect of prolonging the applications and escalating costs unnecessarily.