FNG v. BCJ

HCMP 776/2019

[2019] HKCFI 3089

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 776 OF 2019

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DECISION

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1.  The plaintiff (“P”) and defendant (“D”) are the daughters of FSF.  D was the attorney under FSF’s enduring power of attorney dated 14 May 2010 (“EPoA”), which was registered with the High Court on 12 September 2017.

2.  Under the EPoA, D was given the powers to inter alia collect income/capital due to FSF, sell FSF’s moveable property, sell/lease/surrender FSF’s home or immoveable property, and/or spend FSF’s income/capital.

3.  FSF made a will dated 3 September 2013 (“FSF Will”). P and D were, amongst others, beneficiaries under the FSF Will. The named executors of the estate were FSF’s wife, D and a longtime friend of FSF (“Executors”).

4.  P claimed to be an interested party under section 11(1) of the Enduring Powers of Attorney Ordinance Cap 501 (“Ordinance”). Section 11(1)(a) of the Ordinance provides that:

“The court may on the application of an interested party –

(a) require the attorney under an enduring power of attorney to produce records and accounts and make an order for their auditing; ......” (my emphasis)

5.  P had concerns over the administration of the EPoA in respect of properties and affairs under the control and management of D as the attorney of FSF under the EPoA. So on 29 May 2019, P commenced the present proceedings by originating summons under section 11(1) of the Ordinance for the following reliefs:

(a)  an order against D that she shall produce records and accounts, highlighting in particular properties and assets of FSF that are or were under D’s control or management;

(b)  an order against D that she shall produce a full and proper account and inventory as to what D had done thus far up to date on the basis of D being FSF’s attorney “or for or on his behalf, including what has become of properties or assets sold or transferred away and their proceeds”;

(c)  an order that D would render quarterly reports every 3 months consisting of full and proper accounts and inventories to P “akin to that of a Committee’s Reports, including inter alia as to any significant transactions or dealings, movements of properties, assets or investments, and accounting of all movements (including withdrawals, deposits, transfers, investments, etc) in bank, securities, investment and credit card accounts of FSF or accounts in which he is interested directly or indirectly (including those in the names of companies) in Hong Kong or elsewhere”;

(d)  leave for P to produce in the present proceedings the order of Fung J dated 18 April 2019 made in HCMH40/2018 and the transcript of the hearing on 18 April 2019 in those proceedings;

(e)  further or other relief;

(f)  costs of the application be paid out of the estate of FSF.

6.  HCMH40/2018 referred to in (d) above concerned an application for the appointment of a committee in relation to FSF’s property and affairs under Part II of the Mental Health Ordinance Cap 136 (“MHO”).

7.  I pause to note here that the reference to “the estate of FSF” in (f) above referred to the estate, property and assets of FSF as a living individual (“Live Estate”). This must be contrasted to the estate of FSF when, as seen below, he eventually passed away (“Death Estate”). This is a significant difference because the Live Estate comprised FSF’s own property and assets, and if he had mental capacity he would have been able to deal with the Live Estate as he wished. As he did not, his attorney would deal with the Live Estate pursuant to powers of the EPoA with duties owed to FSF as donor as set out in section 12 of the Ordinance. But the Death Estate was different in that it had to be dealt with according to the FSF Will under probate and administration law, and it would be the duties of the executors to collect and administer the Death Estate, to make payments according to probate and administration principles, and to make distributions in accordance with the FSF Will.

8.  Affirmations in support and opposition of the originating summons were filed in the present proceedings pursuant to the order of B Chu J dated 19 June 2019. The substantive hearing of the originating summons came before me on 19 September 2019 (“OS Hearing”). By that time, D provided some information to P, and the parties had opportunity to discuss the matter. It appeared from the parties’ written skeleton submissions that due to developments since the commencement of the present proceedings, the reliefs P actually wished to seek at the OS Hearing were different from the reliefs sought in the originating summons.

9.  At the OS Hearing, I granted leave for P to amend the originating summons. According to the Amended Originating Summons that was re-filed on 23 September 2019, the original reliefs sought as set out in paragraph 5(a)-(c) above were removed, and in their place P sought the following reliefs:

(a)   an order that D do produce and render semi-annual audited accounts prepared by a firm of jointly appointed auditors in Hong Kong (“SJE”) with records and statements consisting of full and proper accounts and inventories, including inter alia as to significant transactions or dealings, movements of properties, assets or investments and accounting of all movements (including withdrawals, deposits, transfers, investments, expenses) in bank, securities, investment and credit card accounts of FSF or accounts in which he was interested directly or indirectly (including those in the names of companies) in Hong Kong and elsewhere, and the 1^st audited report shall cover the period commencing 12 September 2017 which was when the EPoA was registered;

(b)  an order that the following shall apply on the selection of the SJE:

(i)    the parties shall provide and exchange the names and details of 2 auditors that they each propose to be jointly instructed within 3 days after such directions were made into an order;

(ii)   the parties shall agree on the identity of the SJE within 7 days thereafter, failing which the parties shall within 7 days thereafter by letter request the court to select the SJE to be jointly appointed from those identified by the parties (together with CVs and fee structure and proposal);

(iii)  upon the SJE being so selected, P shall prepare a draft joint letter of instructions for D’s consideration within 3 days after the date of the selection by the parties or the court as the case may be;

(iv)  the joint letter of instructions be agreed, finalised and sent to the SJE within 7 days thereafter, failing which the court shall determine the terms of appointment and instructions.

10.  In the course of debate before this court at the OS Hearing, it transpired that the parties were not too far apart as (a) D was prepared to produce audited accounts in some form and for such purpose to have an auditor (who shall owe overriding duty to the court) carry out an independent audit, and (b) P would not insist on a SJE if the independent function of the auditor with sufficient transparency was assured.

11.  The OS Hearing was stood down for the parties to have further discussions, which were eventually fruitful. The parties reached general consensus on the way forward with some refinement by this court. The parties were asked by the court to put forward a draft order based on their general consensus with any disagreements marked up for this court’s consideration and determination.

12.  On 3 October 2019, the parties jointly submitted a draft order with disagreements marked up for consideration by the court. On 11 October 2019, this court granted the order as set out in the schedule to this Decision (“Order”). By written directions of 11 and 14 October 2019 that inter alia enclosed the terms of the Order as determined and approved by this court (“Written Directions”), this court stated as follows:

(a)  in respect of paragraphs 1, 7iii, 7iv and 8 of the Order, the whole purpose of appointing a suitably qualified Auditor to prepare the Accounts as defined in the Order was not just to ensure transparency but to reduce unnecessary engagement over matters that were not controversial or undeserving of costly debate;

(b)  it was inappropriate at that stage to have D produce the Records as defined in the Order and for P to conduct a parallel review of the Records when independent professional Accounts were to be prepared, which hopefully would obviate the need for production of the Records, and if otherwise, any application for the Records or parts thereof after service of the Accounts would have to be made on a considered and focused basis with reasons shown;

(c)  this court did not see any basis for P to preview and make observations on the letter of instructions to the Auditor for the Auditor was expected to understand paragraph 7 of the Order and would be bound by the Code of Conduct as defined in the Order (including the need to give qualified opinion, if any, in respect of the audited Accounts), which should afford protection for P as interested party;

(d)  D “as attorney of FSF is now called upon and has agreed to provide accounts. This, of itself, did not give [P] basis to have oversight of [D’s] letter of instructions to the Auditor”;

(e)  “this court does not see any need to state in the Order that this court is not bound by the observations by [P’s] solicitors [as to the nominations for the Auditor]. It goes without saying that this court is not bound by the views of any party albeit the court will take those views into consideration. The court also does not see why it should be constrained to make a choice between the 2 nominations put forward by [D]. If the court considers both nominations unsuitable, the court will give directions accordingly”.

13.  A number of matters were evident from the Order and Written Directions:

(a)  the Order was made pursuant to section 11(1)(a) of the Ordinance to require D as the attorney of FSF under the EPoA (and not D in her personal capacity) to provide the Accounts in respect of the Live Estate (and not in respect of the Death Estate);

(b)  the Order required D as the attorney of FSF under the EPoA and in such capacity (i) to engage the Auditor and to cause (or instruct) the Auditor to produce the Accounts, (ii) to send letter of instructions and the Records to the Auditor for the purpose of producing the Accounts (see paragraph 7iii of the Order), and (iii) to keep the Records returned to her by the Auditor;

(c)  the Order required D as the attorney of FSF under the EPoA to pay the Auditor’s costs and expenses out of the Live Estate (as opposed to the Death Estate over which D as the attorney of FSF would have no power);

(d)  the Order concerned the Live Estate and not the Death Estate;

(e)  the Order was meant simply to be an order for the production of accounts under section 11(1)(a) of the Ordinance with no adjudication on any disputes between P and D over D’s management of the Live Estate, which explained why (a) the Written Directions provided it was for D as the attorney of FSF under the EPoA to instruct the Auditor and to cause the Accounts to be prepared, and not for P as the interested party to have oversight of D’s letter of instructions to the Auditor, and (b) why at the OS Hearing this court did not agree for P to have a right to participate in choosing the Auditor (ie P could only make observations on D’s nominations for the Auditor which choice would be ultimately determined by the court).

14.  In a nutshell, the whole tenor of the Order was to require the attorney of FSF under the EPoA to produce the Accounts in respect of the Live Estate and for auditing the same under section 11(1)(a) of the EPoA.

15.  On 1 November 2019, D nominated 2 accountants for appointment as the Auditor under the Order. On 8 November 2019, P lodged her observations on D’s proposal.

16.  In the meantime on 5 November 2019, I granted the following costs order (“Costs Order”) by paper disposal:

(a)  D’s costs of and occasioned by the present proceedings (including all costs reserved if any) be taxed on trustee basis if not agreed and paid out of the estate of FSF (which at that time necessarily meant the Live Estate);

(b)  70% of P’s costs of and occasioned by the present proceedings (including all costs reserved if any) be taxed on party-and-party basis if not agreed and paid out of the estate of FSF (which at that time necessarily meant the Live Estate);

(c)  there be no order as to costs for 30% of P’s costs of and occasioned by the present proceedings.

17.  On 11 November 2019, D’s solicitors sent letter to inform the court with copy to P’s solicitors that FSF passed away on 8 November 2019. D had since provided a copy of FSF’s death certificate to confirm such fact.

18.  Pursuant to section 13(1)(f) of the Ordinance, an enduring power of attorney is revoked on the death of the donor. Thus, as of 8 November 2019, the EPoA was revoked, and as a result D was no longer the attorney of FSF. In short, on or after 8 November 2019, D no longer had any authority under the revoked EPoA to act in relation to the Live Estate, which by reason of the death of FSF no longer existed as the Death Estate came into place. The essential residual authority that D as the former attorney of FSF had was to hand over the property and assets of FSF (which had fallen into the Death Estate) to the Executors under the FSF Will upon grant of probate.

19.  Thus on 11 November 2019, this court sent written directions to the parties as follows:

(a)  paragraphs 9-11 of the Order and the matters raised in paragraph 15 above be stayed pending further directions pursuant to (b) below:

(b)  the parties shall constructively confer with each other in relation to the matters raised in the letter dated 11 November 2019 by D’s solicitors, “and where appropriate (if at all) to jointly write to the court within 21 days from the date hereof to propose directions to bring closure to present proceedings upon revocation of the [EPoA] on the death of FSF. Where parties disagree on the terms of the proposed directions, the parties shall mark up their disagreements in the joint letter and give succinct reasons for their respective stance”.

20.  On 28 November 2019, the solicitors for both parties jointly wrote to the court (“Joint Letter”) to propose the following proceedings:

(a)  following the death of FSF on 8 November 2019, the time period to be covered by the Accounts would be 12 September 2017 to 8 November 2019;

(b)  costs to follow the Costs Order dated 5 November 2019;

(c)  liberty to apply for further directions.

21.  On 2 December 2019, this court sent written directions to the solicitors for both parties asking them to attend a hearing on 11 December 2019 (“Hearing”), and adjourned the Joint Letter to the Hearing for consideration and, where appropriate, determination.

22.  At the Hearing, Ms Chow, counsel for P, maintained there was still jurisdiction to implement the Order so long as the Accounts to be prepared and audited were to be made up to the date of FSF’s death and not beyond that. It was said (a) the Order was validly made, (b) the Order was enforceable with liberty to apply, (c) D was the attorney of FSF under the EPoA until FSF passed away, (d) D owed fiduciary duties towards the donor ie FSF (see section 12(1) of the Ordinance) during the period when she was the attorney of FSF before revocation of the EPoA, so in all the circumstances it would be “odd” or “strange” for the Order to lapse on the death of FSF and/or for D not to observe the Order merely because FSF passed away. Ms Chow reminded it must be implicit from the Joint Letter that D accepted she had to observe the Order to produce audited Accounts for the period up to 8 November 2019. Ms Chow added that the rights of P as beneficiary of the Death Estate might not enable her to seek the same reliefs as under the Order in relation to the Live Estate, which would be unfair to P as the then interested party.

23.  First, I am not persuaded that I am bound by the parties’ common stance set out in the Joint Letter. Proper understanding of the legal impact of the death of FSF on the Order and its implementation could not be constrained by any agreement between the parties. Further, upon more mature reconsideration of the matter at the Hearing, Mr Hart, solicitor for D, expressed reservations on the jurisdictional basis to proceed with implementation of the Order.

24.  Secondly, the undoubted starting point was that as a matter of law the EPoA was revoked upon death of FSF, and since 8 November 2019 D was no longer an attorney of FSF. Another legal consequence of FSF’s death was that the Live Estate ceased to exist in respect of FSF’s property and assets (as well as his liabilities) as it had fallen into the Death Estate. Apart from her capacity as a co-Executor and a beneficiary of the FSF Will, D had no powers/rights in her personal capacity vis-à-vis the Death Estate. Indeed, D in her personal capacity (in contra-distinction to her capacity as the attorney of FSF before the EPoA was revoked) also had no further powers in relation to the Live Estate that ceased to exist upon the death of FSF.

25.  Thirdly, the Order was a prospective order for it dealt with future steps to be taken after the making of the Order. The fact that future work to be done pursuant to the Order covered Accounts for a past period would not alter the fact that the ordered consequences of the Order were prospective/future steps that were yet to be taken/implemented.

26.  Fourthly, the Order was undoubtedly made under section 11(1)(a) of the Ordinance, which provides that the court may require “the attorney under an enduring power of attorney” to take certain future steps (ie to produce accounts and to have them audited). There was no suggestion that the Order was made under any other legal provision/principle, whether under the Ordinance or otherwise.

27.  Fifthly, in my view, the revocation of the EPoA as a result of which D ceased to be the attorney of FSF, which occurred as a matter of law and without court order, must necessarily have impact on the Order. The fact that the Order was validly made and was then effective and binding on the parties would not insulate it from the legal effect/ consequences as a result of the subsequent death of FSF.

28.  Following the death of FSF, there was, quite simply, no present attorney under any presently valid enduring power of attorney who could be called upon under the Order made pursuant to section 11(1)(a) of the Ordinance to give letter of instructions and to provide the Records to the Auditor (if nominated, and I will return to this subject below) to prepare the audited Accounts. It is common ground that D in her personal capacity had no capacity or obligation to so instruct the Auditor and to so produce the Accounts (audited or otherwise).

29.  Further, following the death of FSF, the essential residual authority of D as former attorney of FSF under the revoked EPoA was to hand over the property and assets of FSF to the Executors upon grant of probate. D had no right to intermeddle in the Death Estate, and having shed her cloak as attorney she would be personally at risk if she intermeddled in the Death Estate. Thus, D could not take any prospective steps to engage the Auditor by committing to remunerate the Auditor from the Death Estate and to draw funds from the Death Estate to pay the Auditor. At the same time, D in her personal capacity had no obligation to pay the Auditor herself. This difficulty stemmed from the fact that the Order never envisaged payment to be made from the Death Estate or by D in her personal capacity. The Order was premised on there being a properly authorised attorney under a viable enduring power of attorney who would give instructions to the Auditor and remunerate him from the Live Estate that was under the attorney’s management and control. This provides clear illustration of the rationale why the Order could no longer be implemented upon the death of FSF.

30.  Indeed, the Ordinance and section 11(1)(a) thereof that concerned enduring powers of attorney and not probate matters did not empower this court to authorise D to deal with the Death Estate or to take steps that would interfere with the Death Estate.

31.  Sixthly, once FSF passed away and his property and assets fell into the Death Estate, D as the former attorney under the revoked EPoA no longer had power over such estate. Likewise, P no longer had any further right as interested party in respect of the Live Estate, but only had interest as beneficiary in the Death Estate. It is for the Executors to collect in FSF’s property and assets and to administer the Death Estate under grant of probate. It was also for the Executors and not the interested party to take steps to secure/protect the Death Estate and, where appropriate and if justified, to call upon D as the former attorney of FSF under the revoked EPoA to explain and account for her dealings in relation to the Live Estate. If at some point P should consider the Executors had failed to perform their duty in this respect, it was for her to take appropriate action. I accept it was possible that the remedies available to P in such circumstances might be different from the reliefs under the Order, but that would be because of the legal consequences of FSF passing away after the Order was granted.

32.  Seventhly, I agree that notwithstanding the revocation of the EPoA, D did owe fiduciary duties to FSF as donor during the time when she was his attorney under the EPoA before it was revoked. If D failed in her duties as a fiduciary during that time when she was an attorney such that there was viable cause of action against her, the Executors on behalf of the Death Estate could, if they considered appropriate, pursue legal action against D as the former attorney of FSF for breach of duties to FSF as the former donor in order to secure the Death Estate for the benefit of such estate and the beneficiaries. The fact D was a co-Executor and the effect of such fact in probate and administration matters and proceedings would have to be resolved in that arena. But this did not mean that D who had shed her capacity as attorney could still as “the attorney [of FSF] under an enduring power of attorney” take prospective steps to produce Accounts and to have them audited.

33.  Eighthly, it was also said that upon closure of her role as the attorney of FSF upon revocation of the EPoA D should provide final accounts. I am not persuaded this proposition would assist: (a) Ms Chow had not referred me to any provision in the Ordinance that required D as the former attorney under the revoked EPoA to produce final accounts and to whom, (b) the Order was not for final accounts but was made under section 11(1)(a) of the Ordinance upon the premise that D was still an attorney under the EPoA in control and management of the Live Estate, (c) even if final accounts were required of D as former attorney, there was no need for such final accounts to take the form specified in the Order, and there was no basis for saying that final accounts (in contra-distinction to the Accounts to be produced under the Order pursuant to section 11(1)(a) of the Ordinance) were to be provided to any interested party.

34.  This is contrasted to cases of committees of the estates of mentally incapacitated persons (“MIPs”) appointed by the court. In such cases, the powers of a committee of the estate of a MIP in relation to the property and affairs of the MIP are conferred by the order appointing the committee and any subsequent order (see section 11(2) of the MHO), and such orders invariably contain a provision for rendering accounts to the court for approval under the court’s supervisory jurisdiction (see paragraph 10 of the specimen draft order for final reliefs in Annex F of Practice Direction 30.1). But an attorney is appointed by the donor with powers set out in the enduring power of attorney and not by the court, and (except as ordered) the attorney had no duty to render regular and/or final report or accounts to the court.

35.  Ninthly, it is useful to draw a parallel with section 27(4) of the MHO which provides as follows:

“A committee of the estate appointed under [Part II of the MHO] for any [MIP] shall be discharged ...... (without any order) on the death of the [MIP].”

Thus, the discharge of the committee of the estate of a MIP under the MHO and the revocation of the enduring power of attorney under the Ordinance would occur by law without any order, with the result that the committee and the attorney would cease to be such upon the death of the MIP and donor.

36.  By reason of section 27(4) of the MHO, upon the demise of the MIP, the court ceases to have general jurisdiction under Part II of the MHO to deal with the estate of the MIP, and only has residual jurisdiction to deal with residual matters pertaining to or arising from the management or administration of her estate during her lifetime, which would normally include giving directions for final accounts to be lodged/approved, for remuneration of a professional committee to be arranged, for transfer of assets/funds of the estate to the proper authority. These are essentially directions for closing the committeeship, and I have explained about the distinction between a committee and an attorney vis-à-vis final accounts in paragraph 34 above.

37.  In Re IWY,[1] the committee acted as the next friend of IWY in 3 sets of legal proceedings, and a compromise was reached through negotiations. A deed of settlement (which envisaged discontinuance of the 3 sets of legal proceedings by consent with no order as to costs) was executed pursuant to authorisation by the mental health court. But before the discontinuance of such legal proceedings could be effected, IWY passed away. The mental health court took the view that the residual authority required the committee to at least take proper steps to apply to the court as regards the future conduct of the legal proceedings and for the removal of the committee as next friend on the record upon the demise of IWY. In my view, this reflected that the residual authority was for closing the committeeship, hence the committee was not authorised to proceed with an application for discontinuance of the 3 sets of legal proceedings (although previous sanction to so proceed was granted by the mental health court), but was authorised to seek removal of the committee as next friend on the record. Presumably upon such removal, proper applications could be made on behalf of the estate of the MIP/plaintiff under Order 15 of the Rules of the High/District Court for carry on orders to appoint a person to represent such deceased estate for taking out the applications for discontinuance.

38.  However, I pause to note and respectfully agree that there were infinite possibilities as to how a committee appointed under Part II of the MHO may have acted in respect of the administration and management of the property and affairs of a MIP, so whether an act falls within the scope of residual authority turns on the fact of each case rather than on mere precedent. Likewise, whether any order granted under the Ordinance ought to be implemented upon the demise of the donor under residual jurisdiction must also turn on its own facts. It is the matter of principle rather than factual decision in precedent cases that has relevance for other cases.

39.  Tenthly, paragraph 16 of the Order provides that “[there] be liberty to apply for the implementation of this Order”. As at 8 November 2019, although D had made her nominations for the Auditor and P had lodged her observations, this court, who would not be bound by either the nominations or observations, had not yet chosen and/or appointed the Auditor. Thus, it could not be said that the steps to observe the Order were complete. In such circumstances, I doubt whether this court in exercise of the jurisdiction under section 11(1)(a) of the Ordinance could still proceed to choose and/or appoint the Auditor when such statutory provision was limited to requiring “the attorney under an enduring power of attorney to produce ...... accounts and make an order for their auditing”. More importantly, if the Order which required taking prospective steps was implemented and disagreements arose along the way, eg whether or not the Auditor complied with the Code of Conduct, if there was dispute about the Auditor’s fees, whether the Records supplied to the Auditor were complete, Ms Chow did not address on how far this court should wade into the territory of the Death Estate (with no present attorney under the revoked EPoA) to deal with these matters, especially when D as the former attorney was obliged to hand over the property, assets and affairs of FSF (including, say, the Records) to the Executors under the FSF Will rather than to deal with them in her own personal capacity.

40.  For all the above reasons, I am not persuaded the proposed directions in the Joint Letter are appropriate. I am unconvinced that upon the death of FSF the Order for compelling D in her capacity as the attorney of FSF to produce the Accounts (albeit for the period up to 8 November 2019) and to have them audited (whose capacity now is only a personal one) and to pay for such exercise out of the Live Estate can now be implemented. I see nothing “odd” or “strange” about such conclusion once the legal impact of FSF’s death on the Order is properly understood. In the circumstances, the only appropriate order to be granted was for the Order to be stayed by reason of the death of FSF, and I so order.

41.  As for costs, given the parties’ stance in the Joint Letter, save for the matter of the costs of the Hearing, a fair order would be no order as to costs. However, for the Hearing, after having explored with the parties the concerns of the court on matters discussed above, P maintained her stance as set out in paragraph 22 above whilst D conceded there were jurisdictional or legal concerns that would not smile on the proposed directions in the Joint Letter. That being the case, I consider it appropriate that P should pay D half of the costs of the Hearing to be taxed if not agreed. I also take note that some time was spent at the Hearing to deal with HCMH40/2018.

42.  I therefore grant a costs order nisi that (a) save and except for the cost provision in (b) below, there be no order as to costs of and occasioned by the application by way of the Joint Letter, and (b) P shall pay D costs of half of the Hearing to be taxed if not agreed.

Schedule

“UPON the application of [P] by way of Originating Summons filed herein on 29 May 2019 and amended on 19 September 2019

AND UPON READING the Affirmation of [P] filed herein on 31 July 2019 together with the exhibits referred to therein, the Affidavit of [D] filed herein on 1 August 2019 together with the exhibit referred to therein and the 2^nd Affirmation of [P] filed herein on 5 September 2019 together with the exhibits referred to therein

AND UPON HEARING counsel for [P] and counsel for [D]

IT IS ORDERED THAT:-

1.  [D] shall produce or cause to be produced audited accounts with auditor’s report in respect of the estate of FSF (collectively, “Accounts”) by the Auditor referred to in paragraph 7 below (“Auditor”) (i) for the period from 12 September 2017 until 30 June 2019 and (ii) thereafter on a bi-annual basis for the periods ending 31 December and 30 June in each calendar year;

2.  Subject to paragraph 4 below, the Accounts for the period from 12 September 2017 until 30 June 2019 shall be lodged with the Court and served on [P] no later than 21 weeks (or 147 days) from the date of the appointment of the Auditor by the Court;

3.  Subject to paragraph 4 below, the Accounts for the accounting periods thereafter shall be lodged with the Court and served on [P] no later than 19 weeks (or 133 days) after the expiry of each accounting period on 31 December or 30 June (as appropriate) in each calendar year;

4.  The Court may at any time and on its own motion dispense with the lodging of the Accounts with the Court;

5.  [D] shall as soon as practicable provide to the Auditor a copy of this Order together to the Code of Conduct annexed to this Order (“Code of Conduct”);

6.  [D] shall within 7 days of receipt of any Supplementary Report from the Auditor as referred to in paragraph 9 of the Code of Conduct lodge with the Court and serve on [P] such Supplementary Report;

7.  The Auditor for auditing the Accounts (including for issuing the auditor’s report) shall:

i.     be qualified to hold appointment as an auditor within the meaning of Section 29(2)(b) of the Professional Accountants Ordinance Cap 50;

ii.    shall be a member of a substantial corporate practice with offices in Hong Kong and United Kingdom;

iii.  subject to sub-paragraph iv below, shall keep in safe custody and shall not destroy without an order of the Court any letter of instructions he/she receives, any written note made of oral instructions he/she receives, and any records, documents and/or materials supplied to him/er by [P] for the purpose of producing the Accounts (“Records”);

iv.   be at liberty to return the Records or any part thereof to [D] for her duties and functions as attorney under the enduring power of attorney of FSF dated 14 May 2010;

v.    shall declare in each auditor’s report that :

a.  he/she has been provided with and has read the Code of Conduct;

b.  he/she understands his/her duty to the court in his/her preparation of the Accounts pursuant to this Order; and

c.  he/she has complied with and will continue to comply with such duty;

8.  [D] shall keep the Records returned to her by the Auditor under paragraph 6 iv above in safe custody and not to destroy them without an order of the Court;

9.  Within 21 days from the date of this Order, [D] shall write to [P] (a) to give proposal for 2 nominations for appointment as Auditor together with their respective curriculum vitae, relevant experience, charging rates and fee structures, and (b) to state [D’s] preference (if any) and reasons therefor (“Defendant’s Proposal”);

10.  Leave be granted for [P] (if so advised) to write to [D] within 14 days thereafter on their views and observations on [D]’s Proposal (“Plaintiff’s Observation”);

11.  No later than 7 days thereafter (even if no Plaintiff’s Observation is served within the prescribed time), [D] shall lodge with the Court (without any further views, observations or comments) (i) Defendant’s Proposal and (ii) Plaintiff’s Observation for consideration and, where appropriate, determination by the Court by way of paper disposal (unless otherwise directed) on the appointment of the Auditor;

12.  The Auditor’s costs and expenses shall be borne by and paid from out of the estate of FSF;

13.  Within 7 days from the date of this Order, [D] shall lodge with the Court and serve on [P] written submissions (limited to 1 page) in support of her application for [P] to pay [D’s] costs of these proceedings to be taxed on trustee basis if not agreed;

14.  Within 7 days thereafter, [P] shall lodge with Court and serve on [D] written submissions (limited to 1 page) in support of her application for [P’s] costs (on party-and-party basis) and [D’s] costs (on trustee basis) in respect of these proceedings to be borne and paid out from the estate of FSF to be taxed if not agreed;

15.  The issue of costs in respect of these proceedings shall be determined by the Court by way of paper disposal (unless otherwise directed);

16.  There be liberty to apply for the implementation of this Order.

Code of Conduct

1.  The Auditor has an overriding duty to the Court to help the Court impartially and independently on matters relevant to the Auditor’s area of expertise.

2.  The Auditor’s paramount duty is to the Court and not to the person from whom he/she has received instructions or by whom he/she is paid.

3.  The Auditor is not an advocate for a party.

4.  The Auditor shall declare in each auditor’s report that :

i. he has read this Code of Conduct and agrees to be bound by it;

ii. he understands his duty to the Court; and

iii. he has complied with and will continue to comply with that duty.

5.  The Auditor shall verify each auditor’s report by the following statement of truth:

“I believe that the facts stated in the auditor’s report are true and (if applicable) the opinion expressed in it is honestly held.”

6.  The Accounts shall specify:

i. the facts, matters and assumptions on which the opinions in the auditor’s reports are based (a letter of instructions may be annexed);

ii. the reasons for each opinion expressed;

iii. if applicable, that a particular question or issue falls outside the Auditor’s field of expertise;

iv. any materials utilised in support of the opinions;

v. any investigations on which the Auditor has relied, and the identity and details of the qualifications of the person who carried them out.

7.  If the Auditor in preparing the Accounts (including the auditor’s reports) believes that they may be incomplete or inaccurate without some qualification, that qualification must be stated in the Accounts (or in auditor’s report).

8.  If the Auditor considers that his/her views are not concluded views because of insufficient data, information, document or research or for any other reason, this must be stated in the Accounts (or auditor’s report).

9.  If the Auditor after sending the Accounts to the party instructing him (or that party’s legal representative) changes his opinion on a material matter, he/she shall forthwith provide the party (or that party’s legal representative) with a supplementary report which must contain such of the information in paragraph 6(i)-(v) as is appropriate (“Supplementary Report”).

10.  The Auditor shall exercise his/her independent, professional judgment, and shall not act on any instruction to withhold/avoid any fact, question, issue, qualification or opinion that should be addressed in the Accounts.”