AU CHEUK WEI WILSON v. HANG SENG BANK (TRUSTEE) LTD AND OTHERS

CACV 213/2011

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 213 OF 2011

(ON APPEAL FROM HCMP NO. 2408 OF 2010)

____________

____________

BETWEEN

____________

_____________________________

REASONS FOR JUDGMENT

_____________________________

Hon Yuen JA:

1.  This is an appeal from a decision of Chung J dismissing the plaintiff’s Originating Summons for an order that the 1^st defendant, the administrator pendente lite of the estate of his grandfather Au Kong Tim (“the deceased”), pay him a part of the estate’s net income or a lump sum for his advancement, pending the determination of two probate actions (HCAP7/2010 and HCAP 9/2010).

2.  At the conclusion of the hearing, we dismissed the appeal with costs.  My reasons appear below.

3.  However I must first say a word about the judge’s way of disposing of the case. 

3.1  The Originating Summons was issued in November 2010 against the 1^st defendant only and amended in March 2011 to add other defendants.  A number of affirmations were filed. 

3.2  On 16 September 2011 the first hearing of the Originating Summons was attended by counsel for the 2^nd and 3^rd defendants (the deceased’s widow and another grandson respectively) and solicitors for the other parties.

3.3  At the conclusion of the hearing, the judge dismissed the Originating Summons with costs.  According to correspondence from the judge’s clerk, the judge said in an extemporary judgment only that he agreed with the arguments of the 2^nd and 3^rd defendants and disagreed with those of the plaintiff. 

4.  A judge is of course entitled to dismiss an Originating Summons summarily at the first hearing if he is satisfied that there are no triable issues.  However it remains the judge’s duty to give a reasoned judgment, particularly in a case (such as this one) involving arguments on legal principles.  It is not enough for a judge to say only that he agrees with one party’s submissions, as the other party (and the appellate courts) are entitled to know why the judge agrees with them, and the provision of a reasoned judgment lies at the heart of the due administration of justice by the courts. 

Background

5.  Coming back to the facts of this case, briefly, the deceased died in July 2009 at the age of 93.  He was survived by his widow, 2 sons William and Anthony, and a daughter Gloria.  William has a son (the plaintiff Wilson) and a daughter.  Anthony has a son Chadwick and 3 daughters.

The 2 Wills

6.  There are 2 ongoing probate actions concerning 2 wills alleged to have been made by the deceased, one in July 2002 when he was 86 (“the 2002 Will”) and one (in Chinese) in September 2008 when he was 92 (“the 2008 Will”). 

6.1  In the 2002 Will, the executors were Chadwick, his mother Choy Po Chun (“CPC”) and one of his sisters. The residuary estate was divided into 6 equal shares, 1 for each of the deceased’s 6 grandchildren.  There was no provision for any of his children.

6.2  In the 2008 Will, the executors were William and Anthony.  The residuary estate was divided into 4 equal shares, 1 for each of the deceased’s sons (William and Anthony) and the deceased’s grandsons (Wilson and Chadwick).  There was no provision for the deceased’s daughter Gloria or any of his female grandchildren. 

The 2 Probate Actions

7.  Coming straight to the probate actions, HCAP7/2010 was commenced in March 2010.  The plaintiffs are CPC and Chadwick, 2 of the executors named in the 2002 Will, and they seek (amongst other things) probate of the 2002 Will and an order pronouncing against the validity of the 2008 Will.

8.  HCAP9/2010 was commenced a month later.  The plaintiff is William and the defendants are CPC and Chadwick.  In the statement of claim, the 2002 Will is referred to as “the alleged will” and it is pleaded that it is invalid as it preceded and was revoked by the 2008 Will.  However in addition, it should also be noted, in respect of the 2002 Will, that in William’s affirmation filed in HCPA7/2010 and exhibited to Wilson’s affirmation in the Originating Summons, William has also alleged the following (para. 17):

“I discussed with my parents from time to time concerning the wills they made in 2002. My father constantly expressed that he had no intention to give any share of his estate to his female grandchildren. He said that he would change his will, but later on. I would further mention that around 1976, my father made an earlier will by which he bequeathed and devised all his real and personal properties to me and my brother as beneficiaries in equal shares. My sister [Gloria] was not given anything in that will. My father was a traditional Chinese man, he did not make provisions for even his own daughter when he made his will in around 1976. The above reflects that my father had never intended the will dated 19 July 2002 alleged by [Chadwick and CPC], by which all properties are devised to his six grandchildren (four of whom are female) to be his last will”. (Emphasis added).

9.  It would be seen from the above that William’s challenge to the validity of the 2002 Will is not confined to its revocation by the 2008 Will which he seeks to propound.

10.  It should also be mentioned in passing that Gloria had also filed a caveat (which the court was told was withdrawn on 16 February 2012). 

11.  It was in the context of these circumstances that Wilson issued the Originating Summons against the administrator pendente lite for payment of 1/6th share of the estate’s net income or a lump sum for his advancement, pending the determination of the 2 probate actions.

Discussion

12.  I do not wish to comment on Wilson’s personal or financial circumstances, or his entitlement (if any) to payment from the deceased’s estate under the Inheritance (Provision for Family and Dependants) Ordinance Cap. 481 as there are no such proceedings before this court.

13.  This appeal is concerned with Wilson’s argument that he is entitled to payment of a share from the net income or a lump sum for his advancement, which he says the administrator pendente lite is empowered to make under s.34 Trustee Ordinance, Cap. 29 and/or s.40(3) Probate and Administration Ordinance, Cap. 10.    

14.  The relevant part of s.34(1) Trustee Ordinance (“TO”) provides:

“(1) Trustees may at any time or times pay or apply any capital money subject to a trust, for the advancement or benefit in such manner as they may, in their absolute discretion, think fit, of any persons entitled to the capital of the trust property or of any share thereof, whether absolutely or contingently on his attaining any specified age or on the occurrence of any other event, or subject to a gift over on his death under any specified age or on the occurrence of any other event, and whether in possession or in remainder or reversion, and such payment or application may be made notwithstanding that the interest of such person is liable to be defeated by the exercise of a power of appointment or revocation, or to be diminished by the increase in the class to which he belongs:

[proviso, etc]” 

15.  Section 40 Probate and Administration Ordinance (“PAO”) which deals with the appointment of administrator pendente lite, provides:

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

(2) An administrator so appointed shall have all the rights and powers of a general administrator, other than the right of distributing the residue of the estate.

(3) Every such administrator shall be subject to the immediate control of the court and act under its direction”. (Emphasis added).

16.  Counsel for Wilson has argued that s.34 TO applies to the present situation because the definitions of “trust” and “trustee” in s.2 provide (where material):

“... ‘trust’ and ‘trustee’ extend to ... the duties incident to the office of a personal representative, and ‘trustee’ where the context admits includes a personal representative ...”, (emphasis added)

and the definition of ‘personal representative’ provides:

“‘personal representative’ means the ... administrator for the time being of a deceased person”.

17.  I do not agree that these words in the definition section provide a foundation in law for Wilson’s claim.  The well-established principle in law is that a personal representative generally becomes a trustee of the net residue for the persons beneficially interested to it at the time when the administration is complete and the net residue is ready for distribution (Williams, Mortimer and Sunnucks, Executors, Administrators and Probate, 19^th ed. pp.1151-2, para. 78-02).  In contrast, the function of the administrator pendente lite is not to complete the administration, but to ensure that the estate of the deceased is managed and preserved pending the probate actions (Williams, Mortimer and Sunnucks, para. 24-49).  That is why the powers and duties of an administrator pendente lite end automatically with the final order in the probate actions (subject to appeal). 

18.  Further, I do not agree with counsel’s argument that Wilson’s position can be compared with persons referred to in s.34 TO who are beneficially entitled contingently to property held on trust. Those persons were intended by the settlor to be beneficiaries, although their entitlement may be contingent or defeasible upon their reaching a certain age or upon the occurrence of any other event.  However if neither the 2002 Will nor the 2008 Will survives the challenges to its validity (as to which see para. 9 above), Wilson would simply not be in the position of a beneficiary of the estate at all.

19.  Finally, as to the argument under s.40(3) PAO, it is in my view clear that s.40(2) PAO prohibits an administrator pendente lite from making distributions, and any directions a court might make under s.40(3) must be subject to that statutory prohibition. 

19.1  I agree with the views of this court (Yang CJ, Macdougall VP and Liu J) in Adrienne Marsh Lefkowitz v The Bank of New York [1995] 1 HKLR 11 that s.40(2) prohibits distribution, even though the members of the court were divided on the question whether the reimbursement of taxes and duties paid by overseas administrators should be considered a distribution. 

19.2  It is notable that s.40(2) followed s.163(1) Administration of Estates Act 1925.  In 1981, the English section was repealed by s.117 of the Supreme Court Act 1981, and s.117(2) provides:

“An administrator pending suit shall be subject to the immediate control of the court and act under its direction; and except in such circumstances as may be prescribed, no distribution of the estate, or any part of the estate, of the deceased person in question shall be made by such an administrator without the leave of the court” (Emphasis added).

19.3  It can thus be seen that whilst the legislature in the UK has given the court more flexible powers to give directions to an administrator pendente lite for distribution, the legislature in Hong Kong has declined to follow suit.  It is therefore simply not within the court’s powers to give the direction Wilson seeks.       

 Order

20.  For these reasons, I dismissed the appeal with costs to the 1^st defendant on a trustee basis, and to the other defendants on a party and party basis, to be taxed if not agreed.

Hon Lam JA:

21.  I agree and have nothing to add.

Hon Barma JA:

22.  I agree with the Reasons for Judgment of Yuen JA.