XCHRX MING SHIU CHUNG and Others v. MING SHIU SUM and Others

1996, No. P16

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATION REGION

COURT OF FIRST INSTANCE

PROBATE JURISDICTION

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J U D G M E N T

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1. This is an application by the Plaintiffs against the 1st Defendant (their brother "Lawrence") for an Order of Inspection by the Plaintiffs' experts of the original of certain share certificates, register of members and directors and minutes of Directors' Meeting of a BVI company called J.F. Ming Inc. The circumstances leading to this application are set out hereinbelow.

2. The testator, Ming John Fook, died on 21 December 1992. He left behind seven children, i.e. the four Plaintiffs and the three Defendants. By his will dated 18 July 1964, he bequeathed and devised the residue of his estate to his children in seven equal shares. Three executors appointed by this will have by now passed away. By a Chinese Memorandum dated 29 September 1992, he said that he had put all his assets into a BVI company, i.e. the aforesaid J.F. Ming Inc., and bequeathed and devised to his children, each of them a one-seventh equal share in the said company. This Chinese Memorandum was duly attested by two witnesses but did not appoint any executors and contained no revocation clause. It is common ground between the parties that this Chinese Memorandum was read out in the presence of all his children, except the 4th Plaintiff, by the 3rd Defendant at a dinner in October 1992, i.e. two months shortly before the testator's death.

3. In this Chinese Memorandum, the testator said :

" In order to solve my future estate duty problems, I have established a company called J.F. Ming Inc. [the literal translation is Ming Cheong Fook Overseas Company but the parties agree that it was referring to the J.F. Ming Inc.] and I have transferred whatever assets under my name to J.F. Ming Inc. Its assets and liability are set out in the Appendix.

Now I have decided to divide shares in J.F. Ming Inc. into seven portions of equal shareholdings and value to be distributed to each of my children (this being bearer shares). [Each of the seven children] will each get one portion."

4. The Appendix to this Chinese Memorandum is in English and it stated that the BVI company was holding six groups of limited companies in Hong Kong and the net assets of these companies amounted to $288.6 million.

5. The aforesaid will and Chinese Memorandum of the testator gave one the impression that all the estates of the testator would be divided into seven equal shares to his seven children. At least that was the understanding of the four Plaintiffs.

6. At that time, the Deceased was the majority shareholder of four Hong Kong companies which were four of those six groups of companies stated in the aforesaid Appendix. Over the next few weeks, the Deceased's shares in these companies, together with shares held by others (including the 1st Defendant) on his behalf - were transferred to the BVI company.

7. In February 1993, i.e. two months after the death of the Deceased, the 1st Defendant gave each of his six siblings one bearer share certificate of the BVI company and he took one himself. The Plaintiffs at that time believed that they were each holding 1,000 shares of a total of 7,000 shares in the BVI company, and they were numbered B001 to B007. The applications therefor were dated 18 September 1992 but they were actually signed by the Plaintiffs at the 1st Defendant's request in or about March or April 1993. These bearer shares are hereinafter called "the September bearer shares".

8. A year later, on 21 February 1994, the Plaintiffs and the 3rd Defendant met as shareholders of the BVI company and passed a resolution, thinking they were the majority shareholders, removing the 1st Defendant as a director and appointing themselves in lieu thereof. When this resolution was shown to the 1st Defendant, he rejected it and produced for the first time another 10,000 shares and claimed to be the holder of 11,000 shares of the company. In other words, he claimed to be the majority shareholder holding 11/17th of the total shares of the company. It was then revealed by him as follows :-

(1) The BVI company was incorporated on 17 April 1991. The Deceased and Lawrence were appointed as directors. No shares in the BVI company were allotted or issued at that time.

(2) On 8 August 1992, share certificates No. 01 to 05, comprising 5,000 shares in the BVI company were purportedly issued ("the registered shares") to Lawrence.

(3) On the same day, the company issued a further 5,000 shares in the form of bearer certificate. They were numbered BSS1 to BSS5 ("the August bearer shares"). The August bearer shares, as the registered shares, were purported to have been issued by the Deceased and by Lawrence as directors.

(4) There are two minutes of meetings of the directors of the BVI company on 8 August 1992. It was resolved in one of the meetings that Lawrence be allotted 5,000 shares. In the other minutes of meeting, it was also resolved that the application for 5,000 shares in the form of bearer shares was approved and the bearer shares be issued accordingly. Further, it was resolved that a copy of the register of members detailing the issue be sent to the registered agent of the company and maintained at the registered office in the BVI. In the said register, Lawrence was reported to be holding the five bearer shares dated 8 August 1992, the other five registered shares of 1,000 shares each, and the additional one bearer share dated 18 September 1992, i.e. B002.

9. Upon discovery and inspection by the Plaintiffs and their solicitors, they contended that the style of the Deceased's signature on the registered shares and that on the August bearer share certificates varied noticeably.

10. The Plaintiffs submitted that the existence of these 10,000 shares were not made known to the Plaintiffs until February 1994 - some 18 months after their purported issue and 14 months after the Deceased's death. Their existence and ownership by the 1st Defendant are, in their view, at odds entirely with the Deceased's intention as set out in the will and in the Chinese Memorandum that his inheritance be divided among his seven children equally. Thus they applied for the inspection of these share certificates and the said minutes and register as their authenticity is in question. It also goes to the credibility of the 1st Defendant as to whether he is a fit and proper person to be the administrator, or one of the administrators of the estate.

11. Counsel for the 1st Defendant opposed to this application of the Plaintiffs. They submitted that the issues in this probate action is whether who should be appointed as the administrator of the estate, i.e. whether the 2nd and 3rd Plaintiffs as put forward by the Plaintiffs or the 1st Defendant as put forward by the Defendants. The other issue is whether the said will and/or the Chinese Memorandum and/or a missing will allegedly made by the Deceased sometime in March 1982 are the valid testamentary documents of the Deceased upon which a pronouncement in solemn form should be made. The Court is not concerned and would not deal with, in this probate action, the question as to what assets may fall within the Deceased's estate.

12. Thus Counsel for the 1st Defendant opposed the Plaintiffs' application on the grounds that the application is irrelevant; there is no foundation at all either on the pleadings or on the evidence; and it is defective in the manner in which it is made.

13. On the ground of irrelevance, Counsel for the 1st Defendant relied heavily on the case ofGeorge Ballantine & Son Ltd. and Others v. F.E.R. Dixon & Son Ltd. and Others [1974] 1 WLR 1125. In that case the Plaintiffs alleged that the Defendants were passing off goods as Scotch whisky by supplying the same to importers in five countries who then diluted the original genuine Scotch whisky with locally produced spirits and sold the resulting admixture under such a get-up as to lead the general public in those countries to believe that the admixture was genuine Scotch whisky. In their defence, the Defendants alleged in effect that they were simply suppliers of Scotch whisky and had no control over the importers concerned. The Plaintiffs alleged that the Defendants were involved in the admixture trade in other countries as well as the five countries in question and stated that they believed that documents in the Defendants' possession relating to their trade in other countries of the world and in relation to other spirits were "most material to the issues". They therefore sought discovery of such documents on the ground that the Defendants' intentions and conduct, honourable or otherwise, in relation to all their business must be relevant to their intentions and honesty or otherwise in connection with their business in the five countries, of which complaint was specifically made in the action. It was held by Walton, J. that an order for discovery of documents would not be made where, as in the present case, the application for discovery was directed solely to credit and, even if the court had a discretion in the matter, the application was neither necessary nor relevant for disposing fairly of the action or for saving costs.

14. In his judgment, he said at p.1132 :-

" From that case I think one extracts the two principles: (i) that discovery which relates solely to credit is not allowed; and (ii) that discovery is confined to matters which are in question in the action. Of course, I entirely accept in relation to (ii) what was said by Brett L.J. in Compagnie Financiere et Commerciale du Pacifique v. Peruvian Guano Co. (1882) 11 Q.B.D. 55, 63 as to this extending to any document containing information which might - not which must - enable the party requiring the discovery either to advance his own case or to damage the case of his adversary. It appears to me, however, that if the present application for discovery is not a pure fishing expedition - as was asserted by Mr. Jeffs but denied by Mr. Nicholls - then it is really one which is directed solely to credit, since it is simply and solely directed towards putting the plaintiffs in a position to say: 'You did a wicked act in Ecuador (or wherever), ergo you are a person who would do a dirty deed in the five countries with which the action is specifically concerned.' In other words, give a dog a bad name and hang him.

I therefore conclude that I ought not to accede to the present application. If, however, I am wrong in my conclusion that as a matter of strict law this proposed discovery ought not to be allowed, then certainly as a matter of discretion I am wholly in favour of disallowing it. I see nothing to displace Group Caption Dixon's oath as to the difficulties which the giving of such discovery would cause to his firm, even if the actual trial of the action were not thereby held up. I am quite clearly of the opinion that the discovery sought is not necessary, even if relevant, which as I have said I do not think it is either for disposing fairly of the action or for saving costs. On the contrary, it will be oppressive and entail additional costs."

15. However to my mind, I think the present probate action before me is distinguishable from the Ballantine's case which was only concerned with credibility. In the present probate action, the 1st Defendant avers in his Defence and Counterclaim that he should be granted Letters of Administration whereas the 2nd and 3rd Plaintiffs aver that the said grant should be made to them. Thus the credibility of the 1st Defendant and, in particular, whether he is a fit and proper person to be the administrator of the estate, is in question. The authenticity of those documents sought to be inspected has a direct bearing on the main issue of the action. It cannot be said that the credit of the 1st Defendant is only a collateral matter. In my view, such an exercise of inspection would enable the party requiring the inspection either to advance his own case or to damage the case of his adversary as held in the Peruvian Guano's case.

16. Counsel for the 1st Defendant also submitted that the Plaintiffs had not alleged any forgery which is a serious allegation. Allegation of forgery cannot be made at this stage as no lawyer is permitted to make this kind of serious allegation without any ground. The surrounding circumstances has only raised a need for enquiry. I shall not say anything more than this as it is not my duty at this stage to consider the evidence put before the Court at this stage in detail. Suffice to say that the Plaintiffs have sufficiently laid down the ground work for such an application. It is neither oppressive nor unnecessary and it would not entail much additional costs on the part of the 1st Defendant. All he is ordered to do is to allow the Plaintiffs' expert to conduct visual inspection of a few documents at his solicitors' office. Thus the present case is also distinguishable from the case of Kennedy v. Dodson [1895] 1 Ch. 334 (which was cited in the Ballantine's case) where in both cases the costs and inconveniences caused to the opposing party would not commensurate with the intended aim sought by the applying party.

17. I also consider the application in light of what will happen at the trial of this probate action. The Plaintiffs, if not given a chance to send in their expert to inspect the documents concerned, will only say, as a layman, as to their suspicion from the background of the case and what appears to be discrepancies as to the signatures of the Deceased on the said documents. The Court will not be assisted by any expert or scientific evidence which may in the end leave the matter in an unsatisfactory state. The trial may have to be adjourned for further investigation and enquiry. That will only delay the matter and consequently more costly to all parties.

18. Further, the 1st Defendant discovered those documents and listed them in the list of documents. In my view, he would not have discovered them in the first place if those documents are not relevant to the present action. In my view, as aforesaid, I consider the authenticity of those documents is relevant and the present application is necessary and the Plaintiffs are entitled under the rules to an Order of Inspection by expert.

19. In the end, I accept that since the fitness and acceptability of the postulant administrators is the issue in these proceedings, the authenticity or otherwise of the 10,000 shares is central to the 1st Defendant's fitness and acceptability.

20. Counsel for the 1st Defendant also submitted that the present application, insofar as it was grounded or stated in the summons that it was made upon O.29, r.2 and r.3, is misconceived as r.2 only applies for detention, preservation or custody of any property which is the subject matter of the cause or matter, or as to which any question may arise therein, whereas r.3 concerns with the power of the Court to order samples to be taken of any property which is the subject matter of the cause or matter. It has been decided and cited in the Whitebook that the property must be bona fide the subject-matter of the action - see 29/2 -3/2. They submitted that the application could conceivably be made under O.24, r.13 or by invoking the inherent jurisdiction of the Court.

21. In my view however, r.2 also stated that the Court may make an order for the inspection of any property in the possession of the party to the cause or matter and r.3 also provided that the Court may order or authorise or require any observation to be made on such property or any experiment to be tried or with such property. No doubt O.24, r.13 in my view is more applicable in the present application in that it provided that the Court shall not make any order for the production of any documents for inspection unless the Court is of the opinion that the order is necessary either for disposing fairly of the cause or matter or for saving costs. The 1st Defendant is fully aware of the substance of the Plaintiffs' application and, if necessary, leave could be granted to amend the margin of the summons.

22. In the end, for the aforesaid reason, I consider that it is necessary either for disposing fairly of the cause or matter or for saving costs, to order the 1st Defendant to allow the Plaintiffs' expert to inspect those documents. Both Counsel for the Plaintiffs and Counsel for the 1st Defendant agreed that costs in this summons should be reserved as the outcome of such an inspection would have some bearing on the order for costs and I so order accordingly.

(D. Yam)

Judge of the Court of First Instance,
High Court