ANMOL KUMAR SAWLANI AND OTHERS v. YESHMA GOBINDRAM SAWLANI AND OTHERS

HCAP 13/2014

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

PROBATE ACTION NO 13 OF 2014

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JUDGMENT

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Introduction

1.  This is about the administration of the estate of the late Mr Gobindram Atoomal Sawlani (“the Deceased”), a successful businessman in Hong Kong, who died on 22 March 2008, leaving the following survivors:

Anmol  (“P1”):  son of the Deceased and P2

Violeta  (“P2”):  last wife of the Deceased and widow

Mira   (“P3”):  daughter of the Deceased and P2

Yeshma  (“D1”):  son of the Deceased and his 1^st wife

Nramda  (“D2”):  daughter of the Deceased

Indira   (“D3”):  daughter of the Deceased, twin sister of D2

Amrata   (“D4”):  daughter of the Deceased[1]

2.  The Deceased has left behind a sizeable estate which, according to P1, is worth over $100 million including three properties, interests in a number of business/companies in Hong Kong, one of the two shares in a company holding a property at Tregunter,[2] some shares in local listed companies, bank balances held in Hong Kong and in Malaysia, the entitlement of an estate of the Deceased’s mother in India, jewellery and gold.  It is noted, however, that there are disputes between the plaintiffs and D1 regarding the beneficial ownership of some of the aforesaid assets. 

3.  Based on the evidence before this court, and there is no dispute, that:

(a)  the Deceased had made and signed two homemade wills, one in 1996[3] and the other in 1997[4]. The 1996 Will was witnessed only by one Steven Wai Ming Lo (who was the Deceased’s banker) and that the 1997 Will was witnessed only by P2.  As such, neither of the two wills comply with the formal requirement of s 5(1)(c) of the Wills Ordinance, Cap 30 which requires 2 or more attesting witnesses to be present at the same time when a will was signed by the testator.  There is another problem with the 1997 Will regarding the attestation by P2 which I will come to in due course; 

(b)   as regards the named beneficiaries, whether in the 1996 Will or the 1997 Will, P2, P3 and the defendants are clearly included.  However, in the 1996 Will reference was also made to a son of the Deceased called “Anmol Gobindram Sawlani (Son)” and in the 1997 Will reference was made to the children of the Deceased including one “Anmol G. Sawlani of 10 Chun Fai terrace [sic] Block 3 Gd Floor”.  However, the Deceased did not have a son who bears the name of “Anmol Gobindram Sawlani” or “Anmol G. Sawlani”, the middle name of P1 being “Kumar”.  The address at Chun Fai Terrace was the home of the Deceased where P1 also resides.  Clearly, the aforesaid references to “Anmol Gobindram Sawlani” or “Anmol G. Sawlani” are clerical errors and the Deceased in fact meant P1 in either of the two wills; and

(c)  in the 1997 Will, the Deceased wrote that “I hereby Remove all wills and testamentary dispositions heretofore made by me”. The Deceased also clearly expressed that D1 was to be appointed as the sole executor of his will. 

4.  Although shortly after the passing away of the Deceased, P1 and D1 were granted Letters of Administration Ad Colligenda Bona,[5]  there have been serious disputes between the two as regards the ownership of beneficial interests in some of assets, resulting in a deadlock in the administration so that no distribution can be made to the beneficiaries.  The plaintiffs argue that those disputes would give rise to serious conflict of interests on D1’s part which make him unsuitable to act as executor.  As such, they ask that D1 be passed over and replaced as executor under s 36 of the Probate and Administration Ordinance and/or the inherent jurisdiction of the court. That application is supported in principle by D2 and D3. 

5.  By the present action, the plaintiffs seek the following reliefs:

(1) a declaration that the 1997 Will be deemed to be duly executed and embodied the testamentary intentions of the Deceased under s 5(2) of the Wills Ordinance;

(2) the 1997 Will be pronounced in solemn form;

(3) alternative to (1) above, a declaration that the 1996 Will be deemed to be duly executed and embodied the testamentary intentions of the Deceased under s 5(2) of the Wills Ordinance;

(4) alternative to (2) above, the 1996 Will be pronounced in solemn form;

(4A) a declaration that whichever of the 1996 Will or the 1997 Will is deemed to be duly executed under s 5(2) of the Wills Ordinance ought to be rectified and read and construed as if it contained and had at the time of its execution contained P1’s real middle name of “Kumar” in place of “Gobindram”;[6]

(5) an order that P1 be authorized to apply for a grant of letters of administration of the Estate of the Deceased in priority to D1;

(6) alternative to (5) above, an order that an independent solicitors or such other fit and proper person as the Court deems fit be appointed to act as administrator of the Estate and to apply for a grant of Letters of Administration;

(7) costs; and

(8) further or other relief.

Issues

6.  For the present purpose, despite all the potential disputes between the parties regarding the scope of the Deceased’s estate and any gifts which might have been made by the Deceased inter vivos, based on the pleadings and the respective stances of the parties, the major questions for this court to decide are in fact within a very narrow compass, namely:

(1) whether any of the 1996 Will or the 1997 Will is to be deemed duly executed and if so, which one;

(2) if either one of the two wills is to be deemed duly executed, whether there should be a rectification of P1’s name;

(3) whether D1 should be passed over as executor; and

(4) if so, who should be appointed as administrator.

As to (1): which will, if any

7.  Notwithstanding that a will does not conform with the formal requirements stipulated in s 5(1) of the Wills Ordinance, it may still be deemed as dully executed.  This is because of s 5(2) of the Wills Ordinance which says: 

“ (2) A document purporting to embody the testamentary intentions of a deceased person shall, notwithstanding that it has not been executed in accordance with the requirements under subsection (1), be deemed to be duly executed if, upon application, the court is satisfied that there can be no reasonable doubt that the document embodies the testamentary intentions of the deceased person.”

8.  Although the Deceased had also signed some other wills, described as “blank wills” by the parties, one dated 7 April 2004 and the other four undated[7], none of the parties suggest that any of those other wills is valid.  Whilst it is the case of D2 and D3 that the Deceased may have intended to make a will in around 2006, they are not certain about that.  The situation is that none of D1, D2 or D3 has put up a positive case that there is in existence a will of the Deceased other than the 1996 Will and the 1997 Will.  They just put the plaintiffs to straight proof of either of those two.  However, as aforesaid, there is in fact no dispute that both of the two wills were made and signed by the Deceased. 

9.  As between the 1996 Will and the 1997 Will, their purported effects are in the main similar in that there was an apparent intention of the Deceased that his estate be equally shared among all the named beneficiaries consisting of his wife (P2) and the five children.  However, only one of the Wills, not both, could represent the “last will” of the Deceased, as the 1997 Will on the face of it would have the effect of revoking the 1996 Will. 

10.  Based on the evidence before me and in view of the stances taken by the parties, I have no doubt whatsoever that the 1997 Will embodies the Deceased testamentary intentions at the time of execution: Re Estate of Ho Chi Yin[8].  Moreover, I am also satisfied beyond reasonable doubt that none of the other “wills” signed by the Deceased, whether dated or undated, is a valid will or a written revocation and they do not have the effect of revoking the 1997 Will as the Deceased’s “last will”: s 13(1), the Wills Ordinance. 

11.  As the plaintiffs accept, since the 1997 Will was only attested by P2 who is a named beneficiary under that will, by the operation of s 10(1), the Wills Ordinance, any disposition of property to her under that will is void:

“ 10. Avoidance of gifts to attesting witnesses and their spouses

(1)   If a person attests the execution of a will, and any disposition of or affecting any property (other than charges and directions for the payment of any debt) is given or made by the will to that person or his spouse, that disposition shall, so far only as concerns the person attesting the execution of the will, or the spouse of that person, or any person claiming under that person or spouse, be void.”

12.  As to whether P2 would have any redress under the provisions of the Inheritance (Provision for Family and Dependents) Ordinance, Cap 481 or any other law, this is not a matter before this court and I express no opinion on it.  

As to (2): rectification

13.  As aforesaid, there is no dispute that the Deceased meant P1 when he referred to “Anmol G. Sawlani” in the 1997 Will.  As such, the application for rectification is unopposed.

14.  Rectification of wills is governed by s 23A, the Wills Ordinance which says:

“ (1) If a court is satisfied that a will is so expressed that it fails to carry out the testator’s intentions, in consequence—

(a) of a clerical error; or

(b) of a failure to understand his instructions,

it may order that the will shall be rectified so as to carry out his intentions.”

15.  In Re Estate of Ho Nai Chew (No 2)[9], Lam J (as he then was) said that:

“ 38. Section 23A of the Wills Ordinance gives the court the power to rectify a will so as to carry out the testator’s intentions if it is satisfied that the will is so expressed that it fails to carry out such intentions in consequence of clerical error. Clerical error refers to the nature of the error instead of the person who made it and the expression encompasses errors made by the testator in writing out his own homemade will, see Re Williams (Deceased) [1985] 1 WLR 905, 911–912.”

16.  In the present case, I am satisfied that at the time when the Deceased wrote the 1997 Will, he made a clerical error about the middle name of P1.  In order to carry out the intention of the Deceased, the 1997 Will should be rectified accordingly.

As to (3): Passing over

17.  In the 1997 Will, which was all handwritten by the Deceased, there was an expressed clear intention that D1 be appointed as the sole executor.  However, it is the case of the plaintiffs, with the support of D2 and D3, that D1 is not a suitable person to be appointed executor or administrator and that it is necessary and/or convenient that he should be passed over. 

18.  It is provided in s 36 of the Probate and Administration Ordinance (Cap 10) that:

“ 36. Appointment of administrator of intestate’s estate

Where a person dies wholly intestate as to his estate or leaving a will affecting estate but without having appointed an executor thereof willing and competent to take probate, or where the executor is, at the time of the death of such person, resident out of Hong Kong, 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.”

19.  Whilst s 36 does not expressly provided for the passing over of an executor appointed under a will who is willing and competent to take probate, as observed by Poon J (as he then was) in Re Haque Shaquil,[10] the weight of authority demonstrates clearly that even if the will appoints an executor who is willing and competent to take probate and who is within the jurisdiction, the court will nevertheless pass him over if the circumstances so justify.  In Re Haque Shaquil, Poon J also said:[11]

“ 10. The words ‘necessary or convenient’ in situation (4) give the court a broad discretion, to be exercised in the best interests of the estate: Lefkowitz v Bank of New York [1996] 3 HKC 591, per Litton V-P at p.594D. Whether or not the court will exercise the discretion depends on the actual circumstances of the case. The circumstances are not limited to those in connection with the estate itself or its administration, but can extend to any other circumstances which the court thinks are relevant, which lead the court to think that it is necessary or convenient to pass over the executor: see Re Clore (Deceased) [1982] Fam 113, per Ewbank Jat p.117H. The burden rests with the applicant to satisfy the court that such circumstances exist: Chang Man v Ma Shou Yung [2002] 2 HKC 213, pp.218I–219A (para.19) per Carlye Chu J (as she then was).”

20.  In any event, I agree with the submission of Mr Lynn, counsel for the plaintiffs, that the court has an inherent jurisdiction to order passing over of named executors.  That proposition is supported by the dictum of Poon J in Re Haque Shaquil[12]and that of A Cheung J (as he then was) in Re Ho Wai Man[13].  I also draw comfort from the fact that the proposition is strongly supported by case authorities from England and Wales: see Re Biggs[14], citing with approval In the Estate of Leguia^[15]where Lord Merriman P said:

“ None of the prescribed statutory conditions to divest him of his rights exist nor has he been cited to appear and show cause why heshould not be held either unwilling or incompetent to take probate. Nevertheless I am satisfied that apart from the statute there is a power inherent in the Court to grant administration notwithstanding the non-citation of the executor …. I am on the whole satisfied that the general jurisdiction of the Court, as I have said, enables me to make the order asked for.”

21.  That said, it is only in the most extreme cases that the court would interference with a testator's choice of his executor and therefore the decision to pass over a named executor is not something that should be lightly undertaken by the court: cf AB v Dobbs.[16]See also Williams, Mortimer and Sunnucks on Executors, Administrators and Probate, 20^th ed, at §26-05.

22.  In the present case, Mr Lynn has helped listed out the following on-going disputes between the plaintiffs and D1, as evident by the affirmations filed by the parties, which concerns the administration of the Deceased’s estate:

(1) beneficial ownership of Cornerstone (HK) Ltd (one share held subject to a Declaration of Trust in favour of the Deceased and the other subject to a Declaration of Trust in favour of D1; P1 said the company is 100% held by the estate by way of resulting trust, whilst D1 said his share belongs beneficially to himself);

(2) beneficial ownership of Treasurepoint International Ltd and its property at the Tregunter (the plaintiffs say that the Tregunter property was a gift to P2 inter vivos by the Deceased, whilst D1 said that it forms part of the estate);

(3) beneficial ownership of Smartnet Limited and its property located at Flat C, 19^th Floor, Tower A, Hollywood Terrace, 268 Queen’s Road Central (one share held subject to a Declaration of Trust in favour of P2 and the other alleged to be subject to a Declaration of Trust in favour of D1—the plaintiffs said that both shares belong to the estate, whilst D1 says the Hollywood Terrace property belongs to him);

(4) ownership of funds kept in the joint accounts of the Deceased with Citibank Private (the plaintiffs say the funds are the assets of the estate, whilst D1 that the funds belong to him); and

(5) beneficial ownership of Savalani Insurance Services Limited and the commissions received from the insurance company Metropolitan Life Insurance (“MetLife”).

In view of what was said in the parties in their respective affirmations, I am unable to accept D1’s evidence in court that there were in fact no disputes between the plaintiffs and him in relation to most of the items listed above.

23.  Moreover, in the cross-examination of D1 by D2, it was shown that D1 had failed to reveal to his siblings of his intention to seek the transfer of the entitlement of an estate of the Deceased’s mother in India to D1’s sole name and it also appears that D1 had caused a misleading letter to be written on his behalf to effect the said transfer.[17]

24.  As aforesaid, the present proceedings are not the occasion to determine who is in the rights and who is in the wrongs in relation to the aforesaid disputes.  However, it is clear to this court that the aforesaid highlights a complete lack of trust between the plaintiffs and D1 which has resulted in a deadlock of the administration of the Deceased’s estate, so that even though the Deceased has passed away for over 9 years, no distribution of his estate can be made.  

25.  It has been held that hostility and breakdown of relationship between executor and beneficiaries when grounded on the mode of administration is a factor that cannot be ignored, and the court may also pass over the executor if the breakdown of relations has caused or has the potential to cause difficulty in the administration of the estate.  This is because the expeditious and economical administration of the estate is always one of the objects that the court keeps in mind.  Thus, if by reason of the hostility, the executor is rendered unfit to perform his duties as executor, he may be removed: see Re Estate of Loo Che Chin and the case authorities cited in that case.[18]  In the present case, I am satisfied that a complete breakdown in relationship and hostility does exist between the plaintiffs and D1 which renders the latter unfit to be an executor.

26.  Moreover, even D1 agreed in his evidence that if he were to be appointed as executor, that would make him as a judge of his own case regarding the issues about the beneficial ownership of various assets.  Needless to say, in which case D1 would be enmeshed in a series of conflict of interests.  The situation is such that even D1 in his evidence said that he did not object to having an independent person appointed as executor.  This provides yet another powerful reason why D1 should be not be an executor: see Monty Financial Services Ltd v Delmo[19].

27.  In all the circumstances, I find that the circumstances of the present case justify this court to exercise its power, whether on the “necessary or convenient”ground under in s 36 of the Probate and Administration Ordinance or pursuant to its inherent jurisdiction, to pass D1 over as executor and to appoint an independent party to administer the estate of the Deceased.

As to (4): The candidate for appointment

28.  Several candidates are nominated by the parties.  The plaintiffs nominate PWC and two firms of solicitors.D1 nominates two other firms of accountants and also Hastings (the firm used to be the Deceased’s solicitors).  D2 and D3 do not agree with the nominations of the others.  However, they do not provide any nominations of their own and leave the matter to the court.

29.  Based on the information provided by the parties, I am of the view that the realistic choice is between PWC and Hastings.  However, in view of the potential disputes between the parties, there is a possibility that staff members of Hastings would be required as witnesses in future litigations between the parties.  Besides, there are reasons to believe that the administration of the Deceased’s estate would involve substantial amount of accounting and valuation work which would better be handled by a firm of accountants.

30.  The proposal of PWC is Exhibit B.  I am satisfied that PWC possesses the necessary expertise and experience to administer the Deceased’s estate.  I note the concern of the defendants about the level of fees quoted by PWC.  I note also the submissions of D2 and D3 that the administration of the Deceased’s estate should be handled by one partner, rather than two as suggested by PWC.  However, I am of the view that having regard to the substantial size (over HK$100 million) of the estate and the possible level of complexity of its administration, the fees to be charged by PWC, which is capped at HK$850,000 per year for the first two years, are proportionate and not unreasonable to the work required of them.  Moreover, the request for two partners to handle the administration is also not reasonable and it could also provide some flexibility in case of any change of personnel in PWC.  I therefore agree that two partners of PWC nominated, namely Mr Chin Choon Onn, Chris and Mr Ted Osborn, be appointed to administer the Deceased’s estate.

Conclusion

31.  Based on the above, I make the following order in favour of the plaintiffs:

(1) a declaration that the 1997 Will be deemed to be duly executed and embodied the testamentary intentions of the Deceased under s 5(2) of the Wills Ordinance;

(2) the 1997 Will be pronounced in solemn form;

(3) a declaration that the 1997 Will ought to be rectified and read and construed as if it contained and had at the time of its execution contained P1’s real middle name of “Kumar” in place of “Gobindram”;

(4) an order that Mr Chin Choon Onn, Chris and Mr Ted Osborn, both of them partners of PWC, be appointed to act as administrators of the Estate and to apply for a grant of Letters of Administration; and

(5) there be liberty to apply for directions regarding the administration of the Estate.

32.  The administration and distribution of the estate would be a matter for the administrators.  However, the parties and the persons who are going to administer the Deceased’s estate will note my comments about the operation of s 10(1) of the Wills Ordinance regarding any disposition of property to P2.

Costs

33.  I note that the defendants do not actively oppose the deem execution of the 1997 will and the rectification of P1’s name in that will.  On the other hand, they have not given their consent either.  There is therefore a necessity to have a hearing on those issues.  D1 in effect objects to the passing over, although he says in court that he does not object to the appointment of independent person as administrator to administer the Deceased estate together with him.  D2 and D3 support the plaintiff’s application for passing over.  The issue of passing over occupied much of the court’s time spent.  Having regards to the issues in dispute, the respective stances taken by the parties and the result of the case, I make an order nisi that D1 is to pay three-fourth of the plaintiffs’ costs and D2 and D3 are jointly to pay one‑fourth of the plaintiff’s costs, to be taxed if not agreed, with counsel’s certificate.