JEN KIT JOSEPHINE, the Administratrix of the Estate of JEN FRANK CHIA HSIANG, deceased v. CHAN SAU WAI SHIRLEY

HCA 346/2014 and
HCMP 106/2017
(Consolidated)
[2019] HKCFI 879

HCA 346/2014

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 346 OF 2014

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AND

HCMP 106/2017

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 106 OF 2017

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(Consolidated pursuant to the Order of
DHCJ N Francis dated 28 February 2018)

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REASONS FOR DECISION

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1.  This matter came before me on 28 March 2019. At the end ofthe hearing, I gave my Decision orally and said that I would hand down my Reasons for Decision in due course. These are my Reasons for Decision.

THE CONSOLIDATED ACTION

2.  These are two sets of proceedings, HCA 346/2014 (“the HCA”) and HCMP 106/2017 (“the HCMP”), which were ordered to be consolidated by the Order of DHCJ N Francis dated 28 February 2018.  By that Order, the learned Deputy Judge also ordered that the HCMP be continued as if begun by writ and that the plaintiff in the HCA (“Madam Jen”) be treated as the plaintiff and the plaintiff in the HCMP (“Madam Chan”) be treated as the defendant in the Consolidated Action.

3.  I was informed by counsel on both sides that they actually consented to the consolidation of the two sets of proceedings.  Speaking for myself, I have serious doubts as to whether it is appropriate or expedient for that to be done.  I shall say more about this below.

THE FACTUAL BACKGROUND

4.  Jen Frank Chia Hsiang (“the Deceased”) died intestate in Shanghai on 25 January 2010.  His first wife was a Madam Chou who predeceased him on 21 May 1998.  They had two children, Madam Jen and a son by the name of Franklin (“Franklin”), the 2^nd defendant in the HCMP.

5.  The Deceased subsequently married Madam Chan in Canada on 2 September 1999.  They had no children.

6.  As is obvious from the evidence filed and from the number of court proceedings between Madam Jen and Franklin on the one side and Madam Chan on the other side in Hong Kong and Canada and in Shanghai, the relationship between them is extremely acrimonious.

7.  Soon after the death of the Deceased in 2010, Madam Jen and Franklin already started proceedings against Madam Chan in Shanghai where Madam Chan was living and claimed a right of inheritance to assets which allegedly belonged to the Deceased.

8.  In March 2011, Madam Jen attempted to apply for a grant of Letters of Administration of the estate of the Deceased by seeking an order for substituted service of the Citation on Madam Chan.  The Probate Registry refused to make the order for substituted service sought.

9.  In February 2012, Madam Jen tried again and this time successfully obtained from the Probate Registry an order for substituted service of the Citation on Madam Chan.  She then caused the Citation to be published in a local newspaper.  There was no response from Madam Chan.

10.  Subsequently, on 28 September 2012, Madam Jen was granted the Letters of Administration to the estate of the Deceased (“the LA”) making her the sole administratrix of the estate of the Deceased.

11.  At this juncture, it is worthy of note that, as shown by the Schedule of Assets and Liabilities of the Deceased attached to the LA, therewas nothing substantial in the estate, just a few thousand dollars in cash plus 900 shares in a company by the name of Ziang Kong Co, Ltd (“ZKCL”) and 90,000 shares in another company called Cartegena Industrial Co, Ltd (“Cartegena”).  These were companies which practically belonged to the Deceased.  I shall say more about them below.

12.  According to Madam Chan, she had no notice of the said Citation.  She has further alleged that Madam Jen had deliberately misled and was guilty of material non-disclosure towards the Probate Registry regarding the address for service on Madam Chan which resulted in her being granted an order for substituted service of the Citation and eventually in Madam Chan being bypassed and in Madam Jen being granted the LA.

THE RELEVANT LITIGATION

13.  As mentioned above, there were the legal proceedings instituted by Madam Jen and Franklin against Madam Chan in Shanghai in 2011.

14.  By its Judgment dated 5 September 2012, the local People’s Court in Shanghai ruled partly in favour of Madam Jen and Franklin and partly in favour of Madam Chan in relation to some properties in Shanghai inthe estate of the Deceased.  It does not appear that the properties in question were of any great value.

15.  By another Judgment dated 26 March 2013, the said People’s Court found against Madam Jen and Franklin and dismissed their claim in relation to the proceeds of sale of another property in Shanghai which had been registered under the name of Madam Chan.

16.  On 28 February 2014, Madam Jen in her capacity as the administratrix of the estate of the Deceased instituted the HCA.  The Amended Statement of Claim is 52 pages long.  In it, a number of allegations are made against Madam Chan, including the following:

   (i)   The marriage between her and the Deceased is not valid because the Deceased was mentally incapacitated at the material time.  There are legal proceedings started by Madam Jen through Franklin as her attorney in Canada challenging the validity of the marriage.

   (ii)   Misappropriation and intermeddling of the assets in the estate of the Deceased by Madam Chan.

   (iii)   Undue influence exercised by Madam Chan on the Deceased.

The reliefs claimed in the prayer are also numerous, including in summary the following:

   (i)   Declarations, including a declaration that the Deceased did not have the mental capacity to enter into the said marriage.

   (ii)   Delivery up and restitution of assets.

   (iii)   An account and inquiry.

It should be noted that the original Statement of Claim in the HCA was very substantially amended in March 2017 resulting in the present Amended Statement of Claim.

17.  There were also applications at the end of 2014 and the beginning of 2015 made by Madam Jen against Madam Chan in the HCA for Mareva and freezing injunctions which were unsuccessful before Chow J.

18.  In January 2017, Madam Chan issued the originating summonsin the HCMP.  This has now become the points of defence and counterclaim in the Consolidated Action.  In summary, Madam Chan claims, inter alia, the following reliefs:

   (i)   An order that the grant of the LA to Madam Jen be revoked.

   (ii)   An order that a fresh grant of Letters of Administration to the estate of the Deceased be made to an independent administrator. 

   (iii)   An order that (subject to the consent of Madam Jen and Franklin)the fees of the independent administrator be paid initially by Madam Chan as to 50%, Madam Jen as to 25% and Franklin as to 25%, subject to reimbursement by the estate in due course.

   (iv)   An order that Madam Jen do file and serve on Madam Chan a signed true and just account of the assets and properties in the estate of the Deceased.

19.  Needless to say, there are many cross-allegations between Madam Jen and Madam Chan in the affirmations filed.

20.  I am told by counsel for the parties that the proceedings in Canada challenging the validity of the marriage between the Deceased and Madam Chan have still not been resolved since their commencement in 2014. Mr D’Souza, counsel for Madam Jen, told me that the reason was that both sides’ lawyers had agreed to hang fire pending the determination of the issue of the validity of the marriage by the Hong Kong court. Mr Tang, counsel for Madam Chan, said that there was no such agreement.  No matter who isright, speaking for myself, I find it strange that the determination by the court in Canada on the question of the validity of a marriage which took place in Canada should have to await a decision on the same question by the Hong Kong court.  It does not sound very logical.

21.  At this juncture, I should refer to the three companies which were operated and managed by the Deceased and/or Madam Chan in whichthe Deceased had shares.  They are: ZKCL, Cartegena and another company called Kwai Chung Enterprises Limited (“KCEL”).

22.  Since early 2018, Madam Jen has been trying to take control of those three companies.  According to Madam Chan, Madam Jen sought to do that by unlawfully calling extraordinary general meetings and invalidly appointing herself as a director of those companies. Madam Jen has also started proceedings on the companies front in her capacity as the administratrix of the estate of the Deceased.

23.  One of those proceedings is HCMP 1151/2018 (“HCMP 1151”) the originating summons in which is scheduled to be heard before DHCJ R Ismail SC on 3 April 2019.

THE PRESENT APPLICATION

24.  The summons presently before me was issued by Madam Chan on 19 October 2018.  She claimed an order that:

   (i)   Madam Jen do forthwith lodge in the Registry the LA pending the final determination of the HCMP pursuant to Order 76, rule 4 of the Rules of the High Court (“RHC”);

   (ii)   Madam Jen be suspended from the office of administratrix until further order pursuant to section 33 of the Probate and Administration Ordinance, Cap 10 (“the PAO”);

   (iii)   Madam Jen be restrained from acting as the administratrix of theestate of the Deceased until further order, except for the limited purpose of agreeing to an order for the stay of proceedings in HCMP 1151 before DHCJ R Ismail SC on 3 April 2019.

25.  I granted to Madam Chan an order basically under items (i) and (iii) set out in paragraph 24 above upon the undertaking by Madam Chan through her counsel that she would not dissipate the assets of or destroy the records of the said three companies and would use her best endeavours to represent ZCKL in dealing with the prosecution by the Inland Revenue Department against that company for failure to file a tax return.  I did not think that an order under item (ii) in paragraph 24 above would be necessary in all the circumstances.

THE REASONS FOR MY DECISION

26.  I set out below my reasoning.

27.  To begin with, I should point out that the originating summonsin the HCMP, although not issued as a writ out of the Probate Registry under a case number prefixed by “HCAP”, can be treated as a probate action to which RHC Order 76 applies.  The old rule that a probate action must havebeen endorsed with the leave of the Probate Registrar before issue has ceased to be effective.  See footnote 1 to PD20.2/2 in Hong Kong Civil Procedure 2019 Vol 1 page 2117.  It is a claim for the revocation of a grant of letters of administration and it has been ordered by DHCJ N Francis to be treated as having been begun by writ.

28.  Order 76, rules 1 and 4 provide as follows:

“ 1. Application and interpretation (O. 76, r. 1)

(1) This Order applies to probate causes and matters, and the other provisions of these rules apply to those causes and matters including applications for the rectification of a will subject to the provisions of this Order.

(2) In these rules probate action(遺囑認證訴訟) means an action for the grant of probate of the will, or letters of administration of the estate, of a deceased person or for the revocation of such a grant or for a decree pronouncing for or against the validity of an alleged will, not being an action which is non-contentious or common form probate business.

(3)   In this Order, will(遺囑) includes a codicil.”

“ 4. Lodgment of grant in action for revocation (O. 76, r. 4)

(1) Where, at the commencement of an action for the revocation of a grant of probate of the will or letters of administration of the estate of a deceased person, the probate or letters of administration, as the case may be, have not been lodged in court, then—

(a) if the action is commenced by a person to whom the grant was made, he shall lodge the probate or letters of administration in the Registry within 7 days after the issue of the writ;

(b) if any defendant to the action has the probate or lettersof administration in his possession or under his control,he shall lodge it or them in the Registry within 14 days after the service of the writ upon him.

(2)   Any person who fails to comply with paragraph (1) may, on the application of any party to the action, be ordered by the Court to lodge the probate or letters of administration in the Registry within a specified time; and any person against whom such an order is made shall not be entitled to take any step in the action without the leave of the Court until he has complied with the order.”

29.  The HCMP being a probate action within the meaning of Order 76, rule 1, the defendant therein (Madam Jen), being the grantee of theLA, would be obliged to lodge the LA in the Probate Registry within 14 days after the service of the proceedings on her.  In view of the fact that she did not do so, the court could make an order requiring her to do so.

30.  Mr D’Souza argued that under Order 76, rule 4(2), the court might exercise its discretion to order or not to order a lodgment and that in the circumstances of this case, applying the ordinary principles in injunction cases, the court should not so order.

31.  I was not sure that Mr D’Souza’s argument about the applicability of ordinary principles in injunction cases in such a situation was right.  Without deciding the point, however, I was prepared to go alongwith it and considered the case on that basis.  My conclusion was still against Mr D’Souza’s client.

32.  The injunction principles are well-known.  There is no need for me to set them out here.

Serious questions to be tried

33.  It is clear to me that so far as the HCMP is concerned there are a number of serious questions which the court cannot determine on affirmation evidence now and which must be tried.

34.  First, there is the question of the mental capacity of the Deceased as at the date of his marriage with Madam Chan in Canada.  In evidence are a number of medical certificates by medical practitioners who attended to the Deceased in Hong Kong and on the Mainland and an expert report by a Dr Wong in Hong Kong.  It is not possible for the court to make a finding on this question now.

35.  Secondly, there is the question of the validity of the said marriage under Canadian law in light of the mental capacity of the Deceased on the day of the marriage as may be found by the relevant court, be it a Canadian court or a Hong Kong court.  In this regard, I should make it clear that I am not making any finding as to how and where the question of the validity of the marriage should be resolved, since there was not really any argument on the point.

36.  Thirdly, there is also the question as to whether Madam Jen had deliberately misled the Probate Registry or been guilty of material non-disclosure in seeking the order for substituted service of the Citation on Madam Chan.

37.  Section 33 of the PAO reads as follows:

“ 33. Revocation of grants and removal of executors

(1) Where it appears to the court that a probate or administrationeither ought not to have been granted or contains an error, thecourt 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.

(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 anexecutor or administrator (other than the Official Administrator)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.”

38.  Subsection (1) of section 33 would be relevant in the context of the point set out in paragraph 36 above.

39.  Finally, the question also arises as to whether the court should remove Madam Jen in any event and replace her by an independent administrator under section 33(3) of the PAO on the ground that “the due and proper administration of the estate and the interests of the persons beneficially entitled thereto so require” as suggested by Madam Chan in light of her allegations that Madam Jen had failed or refused to give an account of the estate and that Madam Jen is seriously biased and has been using her position as administratrix to take revenge on Madam Chan.  For the duty of a personal representative to give an account, see the case of Re Estate of Lee Da Kor [2010] 1 HKLRD 415 at 419 paras 16 – 18.

Balance of convenience

40.  On the question of balance of convenience, I also find that the balance is tipped in favour of Madam Chan.

41.  First, as has been noted above, the Schedule of Assets and Liabilities attached to the LA shows that there are no substantial assets left by the Deceased on his estate.  Mr D’Souza plainly admitted in court that the main assets in the estate were the causes of action against Madam Chan.  Furthermore, it is also accepted that the three companies are not trading and are not really going concerns.

42.  In such circumstances, I do not see how some delay pending the determination of the question of the validity of the marriage would cause irreparable damage to Madam Jen.

43.  On the other hand, if Madam Jen is allowed to continue the litigation against Madam Chan on the basis of the LA and eventually the LA is revoked, then an injustice would have been done against Madam Chan.  Furthermore, Madam Chan may not be able to recover costs from the estate of the Deceased because there are not enough assets.

44.  In this regard, it is relevant to take into account the fact that Madam Chan has submitted that an independent administrator should be appointed in place of Madam Jen. As mentioned above, Madam Chan is willing to pay 50% of the costs and has suggested that Madam Jen and Franklin should pay the remaining 50%, all subject to reimbursement by the estate later.  This offer has been rejected by Madam Jen and Franklin.

45.  Madam Jen accuses Madam Chan of delay in taking out the present application.  On the other hand, it also appears that Madam Jen hasnot been very expeditious in progressing with the HCA either.  Furthermore,Madam Jen does not appear to be very keen to move forward with the Canadian proceedings for the challenge against the validity of the marriage. 

46.  In all the circumstances, I take the view that any delay by Madam Chan in taking out the present application is not serious enough to disentitle her to relief.

47.  I should also mention that there is authority to the effect that once an original grant of representation is lodged in the Probate Registry, the personal representative should not and cannot act further in such capacity.  See the case of Ho Wai Yin v Cheng Suet Yee HCAP 18/2003 (13 February 2004) where Lam J (as he then was) said at para 22 as follows:

“ 22. I do not accept this submission. Order 76 Rule 4(1) requires the lodgment of the grant in court after the commencement of an action for revocation. This is to ensure that nothing could be done on the strength of the grant in the meantime. It does not however mean that in every case where there is a claim for revocation of the grant, the assets of a defendant have to be frozen. If the administration of the estate has not been completed, the personal representative would not be able to continue to administer the same pending the determination of the action. …”

Thus, the injunction under paragraph 24(iii) above would just be one step forward from the natural consequence of the lodgment of a grant in the Probate Registry.

THE WAY FORWARD

48.  I have been informed by counsel that the Case Management Conference in the Consolidated Action went before Madam Justice MimmieChan on 12 March 2019 and that she refused to give directions pending thisapplication before me and the hearing before DHCJ R Ismail SC on 3 April 2019.

49.  As I have observed above, I am of the view that the issues in the HCMP should be resolved first before the HCA should proceed.  The result in the HCMP must affect the further conduct of the HCA.

50.  For the avoidance of doubt, the injunction I have granted in thepresent application does not affect the right of Madam Jen to defend against Madam Chan in her claim for the revocation of the grant of the LA in the HCMP.

51.  As to the further conduct of the Consolidated Action, having expressed my view above, I shall leave it to Madam Justice Mimmie Chan to give directions at the adjourned Case Management Conference.

52.  I should mention that I also made an order that costs of and incidental to the summons issued by Madam Chan on 19 October 2019 be in the cause of the HCMP (being part of the Consolidated Action herein).