CHANG MAN v. MA SHOU YUNG

HCAP9/2001

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

PROBATE ACTION NO.9 OF 2001

----------------------

-----------------------

--------------------

D E C I S I O N

--------------------

1. This is the plaintiff's application for an order that the grant of Letters of Administration made to the defendant be revoked and for a senior solicitor be appointed as the administrator. The application is made pursuant to Order 14, rule 1 of Rules of High Court and section 36 of Probate and Administration Ordinance, Cap.10 ("the Ordinance").

Background

2. The plaintiff is the adopted daughter of Mr Chang Han Ling ("the Deceased") and his first wife, Madam Kan Siu Mee. Madam Kan died in February 1969. The Deceased married the defendant on 7 January 1970. The Deceased died in Hong Kong on 15 February 1995 intestate. By a judgment dated 16 June 2000 given in HCPA4 of 1996, the plaintiff was declared a child of the Deceased within the meaning of section 2(2) of the Intestates Estates Ordinance, Cap. 73 and entitled to share in the estate of the Deceased.

3. On 9 October 2000, the defendant applied for a grant of Letters of Administration. Previously on 21 September 2000, the plaintiff had lodged a caveat against the estate. The caveat was eventually withdrawn. Letters of Administration of the Deceased's estate was granted to the defendant on 4 June 2001.

The Present Action

4. The plaintiff commenced this action by writ filed on 2 August 2001. In the Statement of Claim, the plaintiff claims that as at the death of the Deceased, six batches of shares were registered in the name of the Deceased. The shares were however sold by the defendant in March 1995 and the proceeds of sale, totalling some HK$3 million, were paid to the defendant. The plaintiff says that the defendant has failed to make a full and frank disclosure of the assets of the estate and/or has misappropriated the assets of the estate. The primary relief claimed by the plaintiff in the Statement of Claim is an order revoking the grant of Letters of Administration and an order appointing herself as the administratrix. Alternatively, the plaintiff seeks an account from the defendant.

5. In the Defence filed on 3 September 2001, the defendant denied that the shares form part of the Deceased's asset and further denied that she has failed to make full and frank disclosure of the assets of the Deceased and/or has misappropriated the assets of the Deceased's estate.

6. On 23 October 2001, the plaintiff applied for mareva injunction against the defendant. The application was dismissed by Chung J on 9 November 2001 on the basis that the necessary element of risk of dissipation of assets had not been made out. It was pointed out in the judgment that as early as 1995, the plaintiff was aware of the sale of the shares.

7. On 7 November 2001, the defendant applied for security of costs against the plaintiff on the basis that the plaintiff is resident outside Hong Kong. The application is pending.

The Application

8. The plaintiff on 14 November 2001 took out the present application. The plaintiff seeks to enter summary judgment for the revocation of the grant of Letters of Administration to the defendant and also for the appointment of one of the two proposed solicitors as the administrator to obtain the grant and to administer the estate of the Deceased. This relief is plainly different from that sought in the Statement of Claim, a matter that I will come on later. As to the alternative relief of account pleaded in the Statement of Claim, it is not pursued in this application. The application is also made pursuant to section 36 of the Ordinance.

9. In opposition to the application, the defendant filed an affirmation on 30 November 2001. Apart from dealing with the relationship between her and the Deceased, on the one hand, and between the plaintiff and the Deceased and her, on the other hand, the affirmation gives an account of how the shares in question came to be sold. In brief, the defendant's account is that shares had been given to her in exchange for the proceeds of sale of her property in Repulse Bay. It is also said that the Deceased had before his death signed the necessary documentation for the transfer of the shares to her, that the intention was to sell the shares when the price was right and that the share certificates were already lodged with the broker's offices with the signed transfer forms before the Deceased's death. The shares are said to belong to the defendant in equity and in fact. The defendant therefore says that there are issues of fact that ought to be resolved at a trial so that she ought to be given unconditional leave to defend.

Application for summary judgment

10. Insofar as the plaintiff seeks an order revoking the grant of Letters of Administration to the defendant, section 33(1) and (2) of the Ordinance are relevant. They read :

"(1) Where it appears to the court that a probate or administration either ought not to have been granted or contains an error, the court may call in the probate or administration and if satisfied that it would be revoked at the instance of a party interested, may revoke it.

(2) A probate or administration may be revoked under subsection (1) without being called in if it cannot be called in."

11. It is clear that the court's jurisdiction is to be involved where it can be shown that the grant ought not to have been granted or that it contains an error. The plaintiff's complaint here is that the defendant had failed to make full and frank disclosure of the assets of the estate in applying for the grant. This does not fall within either of the two situations contemplated by section 33(1).

12. As common law, a grant may be revoked where it was obtained upon a false suggestion as to the entitlement of the grant, or upon the discovery of a subsequent will or due to the unwillingness or inability of the administrator to act : Halsbury's Laws of England (4th edition Reissue) vol. 17(2) paragraphs 257 - 259. None of these situations apply here.

13. It is, in my view, plain that the plaintiff has not made out a case for revocation of grant. Mr Miu, however, submits that the plaintiff's real concern is to have another administrator appointed to investigate whether the estate has other assets that had not been disclosed by the defendant in her application for grant. He is therefore not insisting on an order revoking the grant, but will merely ask for the appointment of a new administrator. He submits that the action can be regarded as one for the removal of the defendant as administrator.

14. The difficulty with this submission is that the plaintiff's claim as appeared by her Statement of Claim is not for the removal of the defendant as administrator and no relief to that effect has been sought. The plaintiff's claim all along has been for the revocation of the grant. It is trite law that the court can only give summary judgment on the claim as appeared by the Statement of Claim. If the plaintiff now wishes to proceed for a removal of the defendant as administrator, she will have to amend her Statement of Claim to properly plead her case.

15. Secondly, the test for the exercise of the court's jurisdiction to remove administrator is set out in section 33(3) of the Ordinance, which reads :

"(3) The court may, if satisfied that the due and proper administration of the estate and the interests of the persons beneficially entitled thereto so require, suspend or remove an executor or administrator (other than the Official Administration) and provide for the succession of another person in place of such executor or administrator and for the vesting in that other person of any property belonging to the estate."

The court's jurisdiction will be invoked for the due and proper administration of the estate and the interests of the beneficiaries. The complaint here, being the concealment of assets, relates to the application for the grant of Letters of Administration. Any misappropriation of assets of the estate did not take place in the course of administration. No allegation of misconduct or default has been made with regard to the administration of the estate. It may be said that with the allegation of concealment now made by the plaintiff, the defendant stands in a position of conflict of interest, such that she is no longer a fit and proper person to continue with the administration of the estate. But that is not the pleaded case of the plaintiff. I therefore refrain from coming to a view on this.

16. In short, for the defects identified above, the plaintiff's application for summary judgment must fail and should be dismissed. I wish also to add that no summary judgment can be entered for the appointment of a third party as the administrator in the place of the defendant, since this is not part of the relief sought in the Statement of Claim. I do not accept the submission that the phrase "further or other relief" is good enough to enable the court to make the order of appointment. The order now sought is a specific remedy that needs to be separately and specifically pleaded.

Application under section 36 of the Probate and Administration Ordinance

17. The relevant part of section 36 of the Ordinance provides :

"Where a person dies wholly intestate as to his estate ...... or where it appears to the court to be necessary or convenient to appoint some person to be the administrator of the estate of the deceased person or of any part of such estate, other than the person who, if this Ordinance had not been passed, would by law have been entitled to a grant of administration of such estate, the court may, subject to section 25, appoint such person as the court thinks fit to be such administrator, on his giving such security, if any, as may be required under this Part or as the court may direct, and every such administration may be limited in such manner as the court thinks fit."

18. The present application, insofar as it is said to be made pursuant to section 36 of the Ordinance, must be interlocutory in nature. For my part, I have considerable reservations whether such an interlocutory application is open to the plaintiff. Section 36 deals with the court's discretionary power to pass over a person otherwise entitled to a grant and to appoint other person it thinks expedient. In my view, the section has no application to a situation like the present, where a grant had already been made to a person entitled to the grant.

19. That aside and assuming that the application can be properly made under section 36, it is for the plaintiff to show that there are special circumstances that make it "necessary or convenient" to pass over the defendant. There is no broad rule of law on what constitutes special circumstances, but the expeditious and economical administration of the estate is one of the objects that the court will keep in mind: Halsbury's Laws of England (4th edition Reissue) vol. 17(2) para.181. In the present case, there are two considerations which I consider render it inappropriate for the court to invoke its jurisdiction under section 36. Firstly, it is as yet unclear as to the basis of the plaintiff's claim, having regard to the discussions in the preceding part of this decision. The plaintiff ought to put her house in order and put her claim in the proper perspective before asking for an interlocutory relief, which may be seen as effectively disposing of the issue in this action. In this regard, it is to be noted that the defendant has gone on oath to state that the beneficial interest of the shares did not lie with the Deceased nor his estate. This is a matter that the court has to consider and may have to form a tentative view on in deciding to make an order under section 36.

20. Secondly, it is undisputed that the plaintiff knew of the sale of the shares in March 1995 shortly thereafter it happened. As a matter of fact, all the relevant information, including the fact that the defendant had received all the proceeds of sale, had been obtained around the time. If the plaintiff's contention that the shares form part of the Deceased's estate is right, the defendant's act of selling them and pocketing the proceeds is a clear act of intermeddling with the estate. The defendant has however done nothing until the commencement of this action to redress the wrong. Significantly, she did not challenge the defendant's act of selling the shares even after her interest in the estate had been confirmed by the judgment in HCPA4/1996. Furthermore, she had not reminded or asked the defendant to include the shares as part of the estate in the defendant's application for grant of Letters of Administration. All these not only demonstrate that there is no urgency in a section 36 appointment, but also that the plaintiff did not deem it necessary to keep the defendant away from the administration of the estate. In the circumstances, it is inappropriate to consider and invoke section 36 when clearly the plaintiff's claim, as it now stands, is faulty.

Conclusion

21. For the reasons indicated above, the plaintiff's application by summons filed on 14 November 2001 is dismissed with costs to the defendant in any event, to be taxed if not agreed.