WONG PETER MING CHUNG v. LEE ED

HCAP 6/2023 & HCMP 1512/2023

(Heard together)

[2025] HKCFI 3187

HCAP 6/2023

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

PROBATE ACTION NO 6 OF 2023

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BETWEEN

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AND

HCMP 1512/2023

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 1512 OF 2023

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BETWEEN

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(Heard together)

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JUDGMENT

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Introduction

1.  These two actions relate to the administration of the estate of the late Madam Lee (“the Mother”). Mr Ed Lee (“Ed”) who is one of the two executors of the estate of the Mother (“the Estate”) appointed in her last will dated the 27 July 1999 (“the Will”) is the common defendant in these two actions. Pursuant to an order of this court dated 17 December 2024, these two actions were tried at the same time and the evidence filed in one action would be admissible in the other action.

2.  The probate action under HCAP 6/2023 (“the Probate Action”) was commenced by Mr Peter Wong (“Peter”). Peter is the other executor of the estate of the Mother. By the Amended Writ of Summons, Peter only asks for a grant of double probate of the Will to him.

3.  On the other hand, Ms Karen Lee (“Karen”), Peter, Ms Angela Lee (“Angela”) and Mr Friedrich Lung (“Friedrich”) who is the husband of Karen (collectively “Ps”) commenced the action under HCMP 1512/2023 against Ed (“the HCMP Action”) seeking various relief in respect of the administration of the Estate pursuant to Order 85 rule 2 of the Rules of the High Court.

4.  By way of introduction, the Mother had two marriages. Peter is her son in the first marriage. In her second marriage with one late Mr Lee I Fay (“the Father”), she had 4 children, viz, in order of seniority, Ms Esther Lee (“Esther”), Angela, Ed and Karen.

5.  At the trial, Ms Lan appeared for Ps and Ed acted in person. Ed was previously legally represented.

Background facts

6.  At the hearing, the parties indicate to this court their respective latest position and there literally remains one question calling for my determination in these two actions. It is only necessary for me to set out the essential background facts to facilitate an understanding of the sole issue.

7.  The Mother passed away on 26 October 2021. Under the Will, the Mother appointed her two sons, Peter and Ed, to be the executors of the Estate. Her five children, all of them being the parties to the HCMP Action except Esther, are the beneficiaries of the Estate and each of them has an equal share.

8.  Unbeknown to Peter, Ed obtained grant of the probate of the Will in HCAG021407/2022 on 12 Janaury 2023, with power reserved to Peter to apply for and obtain double probate.

9.  In his Defence filed in the Probate Action, Ed confirms that he agrees to a grant of double probate to Peter.

10.  Ed has thus far made three distributions to the beneficiaries. He withholds further distributions purportedly due to a dispute as to the liability of Karen and Friedrich to the Estate.

11.  The dispute arose in the following manner.

12.  In 1997, when Karen and Friedrich were going to get married, the Mother and the Father (collectively “the Parents”) wanted them to reside near their home. They agreed to finance the purchase of their matrimonial home at Pokfulam. The Father lent them HK$1,700,000 and the Mother lent them HK$1,200,000. The Parents did not ask for any interest and did not specify any repayment date.

13.  With these loans, Karen and Friedrich bought a flat next to the Parents’ home in April 1997.

14.  The Father passed away in June 1997. The outstanding loan was set off against Karen’s share of the estate of the Father. The shortfall was HK$262,268.00.

15.  The Mother agreed to further lend Karen a sum of HK$262,000 to discharge her liability to the estate of the Father. Karen’s liability to the Mother was then increased to HK$1,462,000 (“the Loan”).

16.  In early 2000, the Mother requested Karen and Friedrich to prepare a written IOU as a piece of documentary evidence of the Loan. Karen and Friedrich did so and they signed an IOU dated 19 March 2000. The Mother kept the original copy of the IOU (“the 1^st IOU”). Karen and Friedrich have not made or kept any copy.

17.  The Mother asked Karen and Friedrich whether they agreed to pay her interest on the Loan at the prevailing rate of 3% per annum. They agreed and starting from April 2000, Karen and Friedrich deposited a sum of HK$3,700 into the savings account of the Mother with HSBC every month.

18.  On or about 2 June 2000, Karen and Friedrich prepared another IOU in the amount of HK$1,460,000 dated 2 June 2000 and gave it to the Mother (“the 2^nd IOU”).

19.  On the next day after the passing of the Mother, Ed found some IOUs inside her safe at her home. Such IOUs included an IOU signed by Peter, an IOU signed by Ed and the 1^st and 2^nd IOUs.

20.  Karen and Friedrich insist that they only owed the Mother the Loan and the two IOUs evidenced the same Loan. Ed does not accept their explanation and he believes that the the 2^nd IOU evidenced another separate loan (“the Disputed Loan”). Esther shares the same view.

21.  As regards the liability for interest on the Loan, Karen and Friedrich contend that there was an agreement between the Mother and them in 2004 that the Mother would waive such interest. Ed again does not accept their contention.

Issues to be determined

22.  There are many accusations and cross-accusations littered in the parties’ affirmations. Unfortunately voluminous evidence has been filed and most of them turned out to be useless. Ps in the two actions claim a number of relief. At the hearing, Ed expressly agrees that Peter should be granted a double probate and he is happy to administer the Estate with Peter together. With this concession, there is no longer any live issue in the Probate Action.

23.  On the other hand, Ms Lan indicates that in the HCMP Action, Ps would not seek an order for accounts and inquiries and an order for distribution if a double probate is granted to Peter. The controversy between the parties is centred on the two IOUs and the liability of Karen and Friedrich to pay interest on the Loan and/or the Disputed Loan.

24.  The factual issues, therefore, are:

(1) Whether the 2^nd IOU represented the Disputed Loan or it merely evidenced the Loan; and

(2) Whether Karen and Friedrich are liable to pay any interest on the Loan and/or the Disputed Loan from 2004 onwards.

25.  There appears to me a serious limitation issue in regard to the enforcement of the Loan and the Disputed Loan (even if it existed). I should first render my analysis of this issue.

Limitation issue

26.  For the purpose of resolving the limitation issue, it is assumed that the Disputed Loan existed.

27.  Both the 1^st and 2^nd IOUs were made in 2000. There is no repayment date stipulated in the two IOUs.

28.  Only the Mother, Karen and Friedrich had personal knowledge of the formation of the two IOUs. Neither Karen and Friedrich suggests that there was an agreed repayment date. Nor has any other Ps and Ed claimed that there was. Ed has not adduced any such evidence at all.

29.  Karen and Friedrich did not make any repayment of the Loan in the lifetime of the Mother save that they claim to have paid interest thereon until 2004 when the Mother agreed to waive such interest.

30.  This is a well-established common law rule that where a loan has been made without any provision as to the time for repayment or even where the loan is expressed to be repayable on demand, the obligation on the borrower to repay is immediately after the loan is made. In other words, the cause of action against the borrower for the repayment of the loan accrues once the loan is made: Chuang, Eugene Yue Chien v Kevin Ho Yau Kwong, unreported, HCA 1904/2001, 8.11.2002 per Ma J (as the former CJ then was) at §15.

31.  The learned judge went on to observe that this rule was modified by statue in England by sections 5 and 6 of the Limitation Act 1980 but not in Hong Kong. Up till now, there is still no corresponding modification in the Limitation Ordinacne, Cap 347 (“the LO”).

32.  Even if the payment of interest on the Loan until 2014 as contended by Ed is accepted as part payment within the meaning of section 23 of the LO, the cause of action to recover repayment of the Loan was extinguished in 2020 pursuant to section 4 of the LO.

33.  For the Disputed Loan, there is no allegation that Karen and Friedrich have ever paid any interest thereon. The time started to run as soon as the Disputed Loan was made and any claim for repayment should be time-barred after 2006.

34.  In the circumstances, I come to the conclusion that any claim in respect of the Loan and the Disputed Loan has become time-barred. The Estate could not claim against Karen and Friedrich to repay any part of the Loan and the Disputed Loan.

35.  Ms Lan does not argue against this conclusion, which effectively renders the two factual issues academic. Mr Lan points out that Karen and Friedrich are happy to repay the Loan to the Estate nonetheless and in fact they have done so by a set-off of the amount of the Loan against Karen’s entitlement to the Estate. I do not find it necessary to express my view on this.

The Disputed Loan?

36.  Having read all the documentary evidence and having heard the live evidence of Karen, Friedrich and Ed, notwithstanding my conclusion on the the limitation issue, I intend to resolve the factual issues and give brief reasons for my decision.

37.  Both Karen and Friedrich testified and were cross-examined by Ed. In summary, their evidence is as follows.

38.  Karen first explained why Friedrich and she borrowed a total sum of HK$2,900,000 from the Parents in 1997 and how the amount of the Loan ended up being HK$1,462,000 after the Mother settled their outstanding amount due to the Father.

39.  A handwritten record made by Friedrich was produced. In the record, it can be seen how the amount of the Loan was arrived at.

40.  For the 2^nd IOU, Karen gave an account of how it was created. On or about 2 June 2000, while Karen and Friedrich were having dinner at the home of the Mother, the Mother told them that she could not locate the 1^st IOU and requested them to create a replacement IOU for her.

41.  Karen and Friedrich acceded to the request and on the spot created the 2^nd IOU. They merely relied on the figure given by the Mother to be recorded in the 2^nd IOU and they had not verified the same against their own record. The amount stated in the 2^nd IOU was as a result different from 1^st IOU and the difference is HK$2,000 only.

42.  Both Karen and Friedrich insist that the Mother only extended one loan, i.e. the Loan to them. The 2^nd IOU represented no new loan in addition to the Loan and is only a replacement of the 1^st IOU.

43.  Ed frankly admitted that he had no knowledge about the creation of the 2^nd IOU. He could adduce no evidence to suggest the existence of the Disputed Loan other than the 2^nd IOU. There is nothing such as the bank statement of the Mother to show that the Mother had ever paid the amount of the Disputed Loan to Karen and Friedrich.

44.  Karen and Friedrich struck me as honest and truthful witnesses. Their evidence was clear and straightforward. Ed’s cross-examination could not cause me any concern about their evidence.

45.  Their account of the creation of the Loan and the IOUs was very logically and reasonable and there is nothing inherently improbable. It is not contradicted by any evidence.

46.  In the circumstances, I accept their evidence relating to the two IOUs and conclude that the Disputed Loan was never in existence.

Interest?

47.  Karen’s evidence relating to interest payment on the Loan is summarised as follows.

48.  At the time when the 1^st IOU was signed, the Mother told Karen that Esther had once suggested that they should pay interest on the Loan to the Mother. The Mother said that interest at 3% per annum could have been earned if the Loan had stayed in her saving accounts. The Mother then asked Karen to pay HK$3,655 per month to her as interest.

49.  Karen and Friedrich agreed to do so and starting from April 2000, they deposited HK$3,700 to the saving account of the Mother every month.

50.  They did so until 2004. In 2004, Friedrich was seconded to work in Shanghai by his employer. The Mother showed her care and concern about their family including two grandchildren aged 5 and 2. The Mother then told Karen to stop paying interest to her. She also told Karen that Ed did not pay any interest on the loan extended to him at all.

51.  Karen appreciated the kindness of the Mother. She then accepted the Mother’s suggestion and agreed that they should stop paying interest to the Mother. However, out of affection, Karen and Friedrich decided to continue to pay the same amount to the Mother into her saving account as pocket money. Hence, all the subsequent monthly payments were only gratuity payments and it was the mutual understanding between the Mother and Karen and Friedrich.

52.  In 2013, the health of the Mother deteriorated and Esther took control of the financial matters of the Mother. Karen and Friedrich were not sure whether their pocket money would actually contribute to the welfare of the Mother and hence in 2014 they decided to stop such payments and instead they bought things for the Mother and paid bonus to her helpers. The last payment of the pocket money was made in May 2014.

53.  In October 2014, Esther sent an email to Karen asking about the monthly payment of HK$3,700. She asked for an explanation as to why it was stopped for all other siblings.

54.  On this issue, Ed has no personal knowledge and was unable to cast any doubt on the evidence of Karen and Friedrich by his cross-examination. The Excel table given to Esther by Karen was sufficiently explained by Karen and Ed failed to adduce any contrary evidence to rebut her explanation.

55.  I do not have any problem with the evidence of Karen and Friedrich relating to their interest payment and I accept that there was an agreement between them and the Mother that no interest on the Loan was payable starting from 2004. The subsequent monthly payment of the same amount of HK$3,700 were merely pocket money given to the Mother.

Conclusion and order

56.  For the reasons given, I find that there was only the Loan between the Mother and Karen and Friedrich. The Disputed Loan, purportedly evidenced by the 2^nd IOU, did not exist. No interest was payable thereon since 2004. In any event, any enforcement action relating to the Loan and interest payable thereon is time-barred.

57.  For the Probate Action, with the consent of Ed, I make an order that a double probate of the Will be granted to Peter. In the meantime, before such a double probate is granted, Ed should not administer the Estate by disposing of any of the assets of the same unless with the written consents of all the beneficiaries and/or except for the purpose of compliance with the costs orders made herein.

58.  For the HCMP Action, Ms Lan submits that Ps would not seek an order for accounts and inquiries in paragraph 1 of the prayer for relief if double probate is granted to Peter. She further asks this court to defer the determination of this part of the application sine dine with liberty to restore.

59.  I am unable to accept this suggestion. It is unfair to have a personal action hanging over the head of Ed to be prosecuted at the pace and discretion of Ps.

60.  For the declaratory relief sought in respect of the Loan and interest thereon, I have explained why I believe that the issues are academic. I have made my factual findings nevertheless and I refuse to exercise my discretion to make such declarations which serve no purposes.

61.  For the remaining relief, with the grant of a double probate to Peter, I do not think that I should make such orders sought by Ps.

62.  Ms Lan reserves her submissions on costs. I intend to make an order nisi as usual and the parties can always apply for variation.

63.  For the Probate Action, I note that Ed only agreed to the grant of a double probate after the commencement of the proceedings. At the same time, I am aware that the plead case against Ed has been substantially amended and a lot of allegations against Ed have become irrelevant. All things considered, I believe that it would be fair that both parties costs are to be paid out of the Estate, to be taxed if not agreed.

64.  For the HCMP Action, on the one hand, being the executor and upon seeing the two IOUs and given the fact that the doubt is shared by Esther, it is understandable that Ed does not readily accept the contention of Karen and Friedrich and requires the adjudication of the court on the existence of the Disputed Loan. On the other hand, Ed should have been alert to the limitation issue, which would debar the Estate from making a claim for repayment of the Loan in any event.

65.  Though the same can be said about Karen and Friedrich and they should have raised the limitation issue, it is also reasonable for Ps to institute these proceedings so as to solve the impasse between Ed and them.

66.  Again, I believe the fairest order would be that both parties costs are to be paid out of the Estate, to be taxed if not agreed. I shall make it an order nisi.

67.  The two costs orders nisi will become absolute in the absence of any application by summons for variation within 14 days from the date of this Judgment.

68.  Lastly, I thank Ms Lan for her helpful submissions.