LIU YU WEI v. LEE WAI HING

[English Translation – 英譯本]

HCAP 1/2006

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

PROBATE ACTION NO. 1 OF 2006

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BETWEEN

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JUDGMENT

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1. On 15 May 2006, the Plaintiff applied by summons for an order striking out the Defendant’s Defence and Counterclaim and entering judgment in favour of the Plaintiff. The application was dismissed by a Master on 9 February 2007. The Plaintiff lodged the present appeal against the dismissal on 15 February 2007.

Factual background

2. The Plaintiff is the wife of Lee Kar Kwong. They were married in Mainland China on 24 May 2004. The Plaintiff is a Mainlander.

3. Lee Kar Kwong had previously cohabited with Tam Wan Yee (hereinafter “Madam Tam”) in Hong Kong. They had a daughter, who is the Defendant herein. Madam Tam died on 20 January 1994.

4. Lee Kar Kwong had two brothers, namely Lee Kwok Kwong and Lee (or Li) Po Kwong. Lee Kwok Kwong died intestate on 21 February 1999. On 23 December 2004, the court granted to Lee Kar Kwong letters of administration of Lee Kwok Kwong’s estate.

5. Lee Kar Kwong died intestate in Hong Kong on 11 January 2005.

6. On 3 June 1964, Lee Kwok Kwong and Lee Kar Kwong became tenants in common of a property at Front Block, 8^th Floor, 58 Percival Street, Causeway Bay, Hong Kong (hereinafter “the Property”) and, as such, each held 50% interest in the Property.

7. As Lee Kwok Kwong was single and his parents had passed away, his 50% interest in the Property was to be equally distributed between Lee Kar Kwong and Lee Po Kwong pursuant to the Intestates’ Estates Ordinance.

8. Apart from the interest in the Property, Lee Kar Kwong’s estate also included a bank account with a credit balance of $115,602.23.

The present proceedings

9. On 14 April 2005, the Plaintiff by a power of attorney instructed and authorized Mr Gordon Chan (hereinafter “Mr Chan”), a solicitor at Messrs. Edward C T Wong & Co, as her agent in applying to the Hong Kong court for a grant of letters of administration of Lee Kwok Kwong’s estate.

10. On 3 June 2005, Mr Chan, as the Plaintiff’s agent, applied to the High Court for a grant of letters of administration of Lee Kwok Kwong’s estate (case number: HCAG 3608/2005). On 29 June 2005, the Defendant through her solicitors filed a Caveat with the court (number: HCCA 1538/2005).

11. On 3 January 2006, the Plaintiff commenced the present proceedings, seeking an order vacating the Defendant’s Caveat and granting letters of administration to her or her agent.

12. On 20 February 2006, the Defendant filed a Defence and Counterclaim and sought to be appointed as administrator of Lee Kwok Kwong’s estate pursuant to section 36 of the Probate and Administration Ordinance.

13. On 3 March 2006, the Plaintiff filed a Reply and Defence to Counterclaim.

14. Since 22 May 2006, the Defendant has not been legally represented in these proceedings.

Legal principles on striking-out of pleadings

15. Pursuant to Order 18 Rule 19 of the Rules of the High Court, the court may strike out a pleading on the ground that it discloses no reasonable cause of action or defence. The court also has inherent jurisdiction to strike out pleadings in cases of abuse of process or other appropriate cases. However, the court will exercise the discretion only when a claim or defence is plainly and obviously without any legal or factual basis.

Basis of the Plaintiff’s claim

16. The Plaintiff is the widow of Lee Kar Kwong, the deceased. Under section 4(3) of the Intestates’ Estates Ordinance, she is entitled to the first $500,000 from the estate and enjoys equal share with the Defendant in the net assets of the estate after deducting expenses and debts.

17. Furthermore, under Rule 21(1)(i) of the Non-Contentious Probate Rules, the Plaintiff enjoys top priority in the list of persons who can be granted letters of administration.

18. For these reasons, the Plaintiff seeks a court order granting letters of administration to her or her designated agent.

The Defendant’s grounds of defence and counterclaim

19. The Defendant puts forward the following four grounds of defence and counterclaim:

(1)   The Defendant has a life interest in the Property. She alleges that Lee Kar Kwong had prior to his death promised to allow her to reside in the Property until she died, on condition that she provided for him and Lee Kwok Kwong and paid the expenses and outgoings regarding the Property. On this basis, the Defendant had all along been responsible for the expenses regarding the Property and also provided for Lee Kwok Kwong and Lee Kar Kwong. In the circumstances, the Defendant alleges that she is entitled to reside in the Property until she dies.

(2)   The Defendant also alleges that in 1999 Lee Kar Kwong promised to transfer the Property to her and in 2004 he promised to leave all his assets to her, and that he had indicated that, once he became the administrator of Lee Kwok Kwong’s estate, the Property would belong to the Defendant. Subsequently, on 11 January 2005, when Lee Kar Kwong was critically ill, he indicated that he would impliedly make a gift of the Property to the Defendant.

(3)   The amount in Lee Kar Kwong’s bank account was held by him on trust for the Defendant.

(4)   The Plaintiff is not a fit and proper person to be appointed as administrator of the estate.

Order 76 Rule 1 of the Rules of the High Court

20. The present action is a probate action which has been initiated pursuant to Order 76 Rule 1 of the Rules of the High Court. “Probate action” is defined in Order 76 Rule 1(2) as:

… 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.

21. In light of the provisions of Order 76 Rule 1, the issues which a court may deal with in a probate action are confined to who should be granted letters of administration of the estate. As regards issues such as to whom and how the estate should be distributed, they are issues arising from the administration of the estate and should be dealt with by way of an administration action in accordance with Order 85 of the Rules of the High Court.

The Defendant’s Grounds (1) to (3)

22. The Defendant’s first three grounds of defence and counterclaim mainly point out that she has a beneficial interest in Lee Kar Kwong’s estate, which means that the estate should not be distributed in accordance with the Intestates’ Estates Ordinance. The issue raised by the Defendant clearly involves the distribution and administration of the estate. As regards her allegations that she has a life interest in the Property and that she is the beneficiary of the money in the bank account, these are quite distinct from the question of who should be granted letters of administration and, by themselves, do not affect the Plaintiff’s priority under the Non-Contentious Probate Rules in applying for letters of administration or for appointment as administrator.

23. Turning to the Defendant’s allegation that Lee Kar Kwong made a gift of the Property to her when he was critically ill, Mr Chong, Counsel for the Plaintiff, submits that, judging from the contents of the Defence and Counterclaim and her affirmation, the alleged gift is not one that can be recognized as valid by common law or equity. As stated above, the issue in the present probate action relates to the application for letters of administration. It is in my view not desirable in the present action to hear and adjudge on the issue of the validity (or otherwise) of the alleged gift at law as that issue goes to the distribution of the estate. However, even assuming the alleged gift is valid at law, this will not serve to deprive the Plaintiff of her priority in seeking administration of the estate.

The Defendant’s Ground (4)

24. The Defendant’s fourth ground of defence and counterclaim is that the Plaintiff is not a fit and proper person to be appointed as administrator of the estate and therefore the court should appoint the Defendant rather than the Plaintiff as administrator pursuant to section 36 of the Probate and Administration Ordinance.

25. Paragraph 27 of the Defence and Counterclaim pleads that, by reason of the matters set out in paragraphs 22 and 23 therein, the Plaintiff is not a fit and proper person to administer the estate. However, paragraph 22 has nothing to do whatsoever with this allegation. Paragraph 23 pleads that the Plaintiff has deliberately concealed and denied the Defendant’s interest in the Property. In her affirmation filed in opposition to the striking-out application, the Defendant deposes that, at the initial stage of the application in HCAG 3608/2005, Mr Chan made no mention at all in his affirmation that the Defendant is Lee Kar Kwong’s daughter. The Defendant also alleges that the Plaintiff, with the intention to diminish the value of the estate, stated in an affirmation prepared for estate duty purposes that the value of the Property was merely $100,000. The Defendant further points out that the Plaintiff was previously sentenced to imprisonment because she entered Hong Kong using a false document. For these reasons, the Defendant claims that the Plaintiff is not trustworthy or reliable.

26. The Plaintiff’s criminal record does not necessarily take away her right to administer the estate: see Tristram and Coote’s Probate Practice (29^th edition) para. 11.261. And Mr Chan promised in his affirmation that he would fairly and impartially administer the estate and provide the relevant accounts. Furthermore, if Mr Chan is to be granted letters of administration, he will have to pay a sum as security. In view of these, whether the Plaintiff herself is a fit and proper person to administer the estate is not a significant factor.

27. It is true that, under section 36 of the Probate and Administration Ordinance, the court is entitled to appoint as administrator someone other than a person who would otherwise be statutorily entitled to administer the estate. However, the court will exercise the right under section 36 only where, due to exceptional circumstances, the court considers it necessary or convenient to appoint some other person as administrator: see Chang Man v. Ma Shou Yung [2002] 2 HKC 213, at 218 para. 19.

28. Section 36 originates from section 73 of the English Court of Probate Act 1857. The English case law and authorities submitted by Mr Chong show that, in exercising its right under section 73, the court will only take into account exceptional circumstances relating to the administration of the estate: Halsbury’s Laws of Hong Kong (2004 Re-Issue) Volume 27 p. 510 para. 425.597, In the Goods of Ardern [1898] P 147.

29. Having considered the reasons put forward by the Defendant in the pleadings and affirmation, and taking into account the fact that the application for letters of administration was made by Mr Chan as an agent at law, which helps reduce the risk of the estate being unfairly administered, I am of the view that the Defendant has failed to show exceptional circumstances that require the court to exercise its discretion under section 36 to grant letters of administration to her rather than the Plaintiff.

Conclusions

30. On the above analysis and for the above reasons, none of the grounds set out in the Defendant’s pleadings constitute a valid defence to the Plaintiff’s claim. The Defence and Counterclaim should accordingly be struck out and judgment entered for the Plaintiff.

31. I therefore allow the Plaintiff’s appeal and set aside the Master’s order. I order that the Defence and Counterclaim herein be struck out and the following orders be made in favour of the Plaintiff:

(1)   that the Defendant’s Caveat be vacated;

(2)   that the Plaintiff or her authorized agent be granted letters of administration upon satisfying the requirements of the Probate Registry; and

(3)   that the Plaintiff’s costs in this action be paid by the Defendant.

32. In respect of costs of the striking-out application and this appeal, the parties have agreed to follow the usual practice of costs in the cause. I therefore order the Defendant to pay to the Plaintiff costs of the application by summons of 15 May 2006 and costs of this appeal, such costs to be taxed if not agreed.