WANG DIN SHIN v. NINA KUNG

HCAP8/1999

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

PROBATE JURISDICTION ACTION NO. 8 OF 1999

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DECISION

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1.  By summons dated24 November 2004, the Joint Administrators pendent lite (“the Administrators”) seek an order requiring the defendant to answer two sets of questionnaires (“the questionnaire summons”).  The summons was returnable on 16 February 2004.

2.  On 8 February 2005, the defendant took out a summons (“the defendant’s adjournment summons”) to adjourn the questionnaire summons pending her appeal to the Court of Final Appeal in the probate proceedings, and for directions be given in respective of the substantive hearing of the defendant’s adjournment summons.  The summons was made returnable on 16 February 2005. 

3.  By letter dated 8 February 2005, the defendant through her solicitors proposed to adjourn both the questionnaire summons and the defendant’s adjournment summons to 8 and 9 March 2005 to be heard by Kwan J, the Companies Judge, together with eight other applications for stay in proceedings involving the Administrators and the defendant and entities in which she is interested.

4.   At the hearing, Miss Chan for the defendant asked the defendant’s adjournment summons be adjourned for argument either before Kwan J or before any judge other than me and Chung J.  At my request for clarification, Miss Chan confirmed that the defendant’s position was that I should recuse myself from dealing with both the questionnaire summons and the defendant’s adjournment summons.  Miss Chan proceeded to make a recusal application. 

5.  After hearing submissions, I refused the defendant’s recusal application with costs on indemnity basis.  I also dismissed the defendant’s adjournment summons with costs.  On Miss Chan’s indication that she was not ready to deal with the questionnaire summons and the defendant required time to file evidence in opposition, I adjourned the questionnaire summons with costs against the defendant.  I now reduce my oral reasons into writing.    

Recusal application

6.  On the recusal application, I begin by noting that it is a grave matter and should not be made lightly.  This is because underlying such application is the suggestion that there is a risk of failure or miscarriage of justice.  Hence, litigants, especially when represented, will not make such an application lightly.   Secondly, the court is cautious to discourage any attempt at forum shopping under the guise of an application for recusal.  Accordingly, it is unusual for a recusal application to be made orally, impromptu and without supporting evidence where the application is not premised on actual bias on account of events that happened in a court room or during a series of court hearings, but is based upon apprehension or fear of prejudice.

7.   In the present case, there is no explanation as to why the defendant cannot or did not take out a proper application before the hearing and that the application had to be made in a roundabout way or in the manner described above.  The questionnaire summons was served as long ago as 25 November 2004, some 2-1/2 months before the hearing.  If it is felt that there is a risk of injustice, then there is no reason why the defendant could not have made a proper application.  At the very least, it should have been included in the defendant’s adjournment summons.  I note that although the defendant’s affirmation was filed as recently as 8 February 2005, there was no mention of any apprehension of injustice or a need or desire for recusal. 

8.  It was said that the defendant’s solicitors’ letter dated 8 February 2005 had already raised the matter of recusal.  Three points need to be made on this submission.  Firstly, even if the matter had been raised in solicitors’ correspondence, it does not dispense with the need to make a proper application.  Secondly, the letter in fact raised no more than a suggestion that the summonses be heard by some other judges.   Thirdly, the letter was admittedly met with no reply from the Administrators.  Notwithstanding that, the defendant did not see fit to make a proper application until in the course of counsel submission at the hearing. At any rate, there is no reason why this letter of 8 February 2005 could not have been sent much earlier on, instead of just before the Chinese New Year holidays, which was only 2 clear days before the hearing. 

9.  It was submitted that the defendant or her legal advisers thought the hearing was going to be a direction hearing and they considered it was convenient and appropriate for “these preliminary matters” to be raised at the hearing.  Quite apart from the fact that recusal application is not a minor or procedural preliminary matter that can be raised casually, there is no indication on the questionnaire summons or in the evidence filed by the Administrators or in the correspondence exchanged, to suggest that the Administrators had set out to intend the hearing to be a direction hearing.  On the contrary, the Administrators had indicated in correspondence that they would proceed with the summons at the hearing.

10.  In short, there is no proper application and no proper foundation for the recusal application before the court.   There is also no evidence to support the perception or fear of injustice that the defendant was said to have.  On this basis alone, the application ought to be dismissed.  But since I had heard substantive arguments on the application, I will also deal with them briefly. 

11.   In so far as the application relates to the questionnaire summons, it is on the ground that in the past four years dealing with the administration of the Estate, I had read confidential materials, which the defendant does not have access to.   In Miss Chan’s submission, the situation was similar to that in 2001 when both the Administrators and the court accepted that Chung J and I should not deal with the substantive application of the Administrators. 

12.  In my view, the present situation is different from that in 2001.  The Administrators’ previous summons dated 23 January 2001 requiring the defendant to answer questions and provide documents was preceded by an ex parte application for leave to administer the questionnaire.  In support of the leave application, the Administrators had placed before me materials that were not provided to the defendant.   The materials were reviewed by Chung J in connection with the defendant’s unsuccessful application to have access to the materials.   As a result, the Administrators took no issue with the defendant’s contention that neither Chung J nor I should hear the summons. 

13.  The present questionnaire summons is not preceded by any ex parte leave application.  No confidential materials are involved.   It is not the defendant’s case that I had been provided with confidential materials relating to the questionnaire summons.  She is merely making a general statement that I had seen confidential materials in my capacity as administration judge.  By that, she means materials that she was not privy to.  She is referring to an unspecified category of materials.  It is therefore rather different from the position in 2001.  Furthermore, if the argument is taken to its logical conclusion, it will effectively mean that the administration judge cannot preside over or deal with all contested applications or matters in the administration proceedings. 

14.  Miss Chan also argues that I should confine myself to a supervisory role and should refrain from being embroiled in any form of contentious applications involving the Administrators and defendant.  I am unable to accept this.  The effect of the submission is that, although acting as the administration judge, I can only act as a case manager and must stay away from hearing arguments and resolving disputes arising out of the administration.  Such a position is far from logical or satisfactory.  It defeats the purpose of having an administration judge. 

15.   It should also be noted that in 2001, the Administrators were in agreement that because Chung J and I had seen materials relating specifically to the pending applications, which were not provided to the defendant, the applications should be listed before another judge.  It was in those circumstances that the applications went before Deputy Judge Muttrie.  The matter was not argued and there was no adjudication over the point. 

16.  I turn to deal with the recusal application in so far as it relates to the defendant’s adjournment summons.  There is no reason to believe that the court has to resort to any confidential information or material in order to decide whether to adjourn the questionnaire summons.  The reference to the 2001 situation is simply irrelevant.

17.  As a matter of fact, the defendant had chosen to issue the defendant’s adjournment summons and have it fixed before me.  In addition, the defendant seeks under paragraph 2 directions on filing of evidence.  Notwithstanding that, Miss Chan argues that the defendant’s adjournment summons is ancillary to the administrators’ summons, such that I should also refrain from dealing with it.   Reliance is placed on the case of Fester Corp Ltd v. Cheung Donald [1986] HKC 458. I fail to see how it is that the defendant can, on the one hand, say that I should recuse myself from hearing the summons when, on the other hand, she is content with me dealing with paragraph 2 of the summons.  The inconsistent stance suggests that the recusal application is very much an afterthought and a belated attempt to put off the hearing of the questionnaire summons. 

18.  For the reasons indicated above, I refuse the defendant’s recusal application.  Given that the application was not properly made and made without proper foundation, I consider that an indemnity costs order should be made to mark the court’s disapproval of the cavalier approach and of the time wasted.  I therefore order that the costs of the recusal application, which lasted between 9:30am and 11:15 am, be paid by the defendant to the plaintiff and the Administrators on indemnity basis, to be taxed if not agreed.   The Administrators’ own costs be paid out of the Estate on trustee basis.

The defendant’s adjournment summons

19.  As to the defendant’s adjournment summons, it is effectively seeking a stay of the questionnaire summons.  This is because upon the delivery of the Court of Final Appeal judgment in the probate proceedings, the probate proceedings will come to a conclusion and the Administrators’ office will also come to an end.  A natural consequence that follows is that the summons will fall away. 

20.  There are two main planks in the defendant’s arguments in support of her summons.  The first relates to the utility of the questionnaire summons.  The second concerns the damages or prejudice to the Estate occasioned by the questionnaire summons.       In short, the defendant says that since the appeal to the Court of Final Appeal will be heard in July, the questionnaire summons is a waste of time and costs and will only cause harm and prejudice to the defendant and the Chinachem group in addition to subject the Estate to costs liability.  Heavy reliance is placed on the observations of Lord Scott of Foscote NPJ on case management in Re Chime Corp Ltd [2004] 3 HKLRD 922 at paras.66-68.

21.  On the argument of whether the questionnaire summons is a waste of time and costs in view of the pending probate appeal in the Court of Final Appeal, the starting point is to inquire the purposes of the questionnaires.  Prima facie, the questions are for the purpose of identifying or ascertaining the assets of the Estate.  The Administrators say there are two reasons for doing this.  The first is the preservation of the Estate.  Secondly, it is in connection with the determination of the estate duty.

22.   Miss Chan argues that the point about estate duty was nowhere mentioned in the Administrators’ affirmation and suggests that this may well be a matter recently conjured up by the Administrators.  However, from my dealing with the administration of the Estate, the determination of the estate duty has, right from the beginning, been a pressing issue.  Although the Commissioner is prepared to defer the final determination, it does not mean that the question does not have to be addressed.  The ascertainment of the size of the Estate is crucial to the determination of the estate duty.  It is an issue that, in any event, will have to be addressed irrespective of who becomes the beneficiary of the estate. 

23.  The identification and preservation of assets that form the estate is the primary task of the Administrators.  In fact, that is the very purpose of their appointment.  They were appointed pending the determination of the probate proceedings.  Their fundamental duties are to get in and to preserve the assets of the estate. 

24.  This brings me to the arguments relating to the observations of Lord Scott in the appeal arising out of the section 168A petition of Chime Corporation.  There can be no doubt that the observations, especially those on case management, were made in the context of the section 168A Chime petition.  The Petition was the very subject matter before the Court of Final Appeal.  The evidence and submissions made to the Court of Final Appeal also related specifically to the Petition. 

25.  In my view, it cannot be that Lord Scott intended his observations to be of general application to the wide-ranging activities of the Administrators undertaken for the administration of the Estate.  To give his Lordship’s judgment that construction would be to defeat the very purpose of the appointment of the Administrators.      As said before, the Administrators’ appointment will cease upon the handing down of the Court of Final Appeal judgment.  If the observations were taken to apply across the board to all the activities of the Administrators, then the Administrators should, from now on, undertake no further activity, including administering the Estate.  This will be the scenario on the defendant’s argument.  Since with the resolution of the appeal, the whole matter will come to a natural end, then there is no need to incur any more costs in this period leading up to the delivery of judgment in the Court of Final Appeal.  But then this runs completely against the purpose and objective of the appointment of the Administrators.

26.  The two sets of questionnaires in question, on the face of them, are not for the purpose of determining the ownership or proprietary right to the assets of the Estate.  They are for ascertaining what assets comprise the Estate and, according to the Administrators, are important for the purposes of preserving the Estate and for the determination of estate duty.   In this connection, it is important to note that the Administrators were appointed for the purpose of preserving the Estate pending the resolution of the probate dispute, and that in discharging their function, they must proceed without making any assumption as to who will ultimately succeed in the probate action.  This is not to say that one can conveniently ignore the fact that at the moment, there is the judgment Yam J and also the judgment of the Court of Appeal in favour of the plaintiff.  But fundamentally, the administrators cannot proceed on the assumption that the defendant will succeed in the appeal before the Court of Final Appeal or vice versa.   This also makes it inappropriate to read Lord Scott’s observations as indicating that the Administrators should do nothing further until the Court of Final Appeal decides the probate appeal. 

27.  Miss Chan argues that in light of Lord Scott’s observations, it is no longer the case that the Administrators should not assume who will succeed in the probate proceedings and that the Administrators ought to bear in mind that the defendant may well succeed in the appeal and the probate proceedings.  I do not agree.  It seems to me that the very essence of Lord Scott’s observations is to the contrary.  In fact, it is Miss Chan’ s argument at one stage that Lord Scott disapproved the assumption that the defendant will fail in the appeal before the Court of Final Appeal.  On this basis, it would not have been Lord Scott’s intention that the Administrators should act on the consideration that the defendant will succeed in the probate proceedings.  It remains the position, be it now and before, that the Administrators will simply have to work on no assumption as to who will ultimately succeed to the Estate. 

28.  Once the purpose of the questionnaires is properly understood and understood also in the context of the primary duties and functions of the Administrators and their appointment, then the criticism that there had been delay in pursuing the questionnaires and there had been inaction for about 15 months after 28 January 2003 is irrelevant.  The delay in issuing the questionnaire’s summons, which was preceded by request by correspondence, per se cannot be a ground for adjourning the questionnaire summons.

29.  On the second argument relating to the damages to the Estate and the possible costs implication of the questionnaire summons, I have already pointed out that the questionnaires, on the face of them are for the purpose of identifying the assets that comprise the Estate.  If the defendant says that the questions are unnecessary or not legitimate, or that the defendant had, in her previous affirmations and answers to the 2001 questionnaires, comprehensively dealt with all these matters, she may oppose the questionnaire summons on those bases.  

30.  Likewise, if the defendant’s position is that 14 days is insufficient for her to answer the questionnaires, she can at the hearing of the questionnaire summons, ask for more time.   But it would be a different thing to seek to adjourn the questionnaire summons, which had the effect of staying it, by referring to these matters. 

31.  As to the costs implication, I am in agreement with the Administrators’ submissions that if the activities of the Administrators are for a proper and good purpose, then incurring costs will be inevitable and that should not be a matter standing in the way of the Administrators’ discharging their proper functions and duties.  I note also that this is not a case where it is said that the costs for the activities undertaken are disproportionate to the size of the Estate or as to the interests at stake.  The fact that the defendant will have to be put to expenses and time, which the defendant says is unjustified or not legitimate, is also a matter to be argued at the hearing of the questionnaire summons.

32.  The matters presently raised by the defendant are not reasons for adjourning or staying the questionnaire summons.  The defendant’s adjournment summons seems to me to be an attempt to avoid the questionnaire summons. 

33.  For the reasons stated above, the defendant’s adjournment summons is dismissed.  Costs should follow event.  I order that the costs of the defendant’s adjournment summons be to the plaintiff and the Administrators against the defendant, to be taxed if not agreed.   The Administrators’ own costs to be paid out of the Estate on trustee basis.

The questionnaire summons

34.  Having regard to the fact that the recusal application and the defendant’s adjournment summons had taken the hearing well into the afternoon, much beyond the initial allotted time of 30 minutes, and in view of Miss Chan’s indications that the defendant would like to have time to consider the questionnaire summons and to file evidence in opposition, I adjourn the questionnaire summons to an early date to be fixed.  With agreement of counsel, half a day is reserved for hearing.  The defendant is given leave to file and serve affidavit in opposition within 21 days from the date of the hearing.  The Administrators also have leave to file and serve evidence in reply, if any, within 21 days thereafter. 

35.  Since the adjournment is occasioned by the defendant’s applications and to accommodate her position, and that she could have before the hearing, indicated to the Administrators her need to have time to file evidence, the defendant should pay the costs of the hearing on the questionnaire summons.  I therefore order that the costs of the questionnaire summons on 16 February 2005 be to the Administrators and the plaintiff to be taxed if not agreed.  The Administrators’ own costs be paid out of the Estate on trustee basis.