LAI WAI PANG v. KWOK LI SHUK HAN

HCAP 13/2000

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

PROBATE ACTION NO. 13 OF 2000

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J U D G M E N T

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1. This is an application by the Defendant for an order that the Plaintiff pay into court three sums of money, pursuant to O. 29 r. 2 (3) of the Rules of the High Court (Cap. 4), or alternatively, that an administrator pendente lite be appointed pursuant to section 40 of the Probate and Administration Ordinance (Cap. 10) and O. 76 r. 14 of the Rules of the High Court. Originally, the alternative application for the appointment of an administrator pendente lite was not limited in scope to the three sums of money. During the course of hearing, Miss Wu, appearing for the Defendant, made the concession by restricting the scope of the intended administration pending suit to the three sums only.

2. The deceased person in the present case, Madam Kwok Shiu Woon, passed away intestate in May 1997. She is survived by her husband (the Plaintiff) and her mother (the Defendant) only. The Plaintiff and the Defendant are therefore the only beneficiaries under the intestate estate of the deceased. Moreover, as the widower, the Plaintiff enjoys first priority for appointment as administrator of the estate. However, the Defendant makes various allegations against the Plaintiff regarding his handling of assets and monies belonging or said to be belonging to the deceased prior to and after her death, and contends that he is therefore not suitable and fit to be appointed as administrator. She seeks the appointment of an independent person as administrator of the estate.

3. The trial of this probate action commenced in early February this year. But because of a late application to amend pleading, the trial was adjourned. It has since been refixed to November this year. The present application was taken out by the Defendant on 7 April 2003.

4. As mentioned above, this application is based on O. 29 r. 2 (3) of the Rules of the High Court, as well as section 40 of the Probate and Administration Ordinance. O. 29 r. 2 reads as follows:

"2. (1) On the application of any party to a cause or matter the Court may make an order for the detention, custody or preservation of any property which is the subject-matter of the cause or matter, or as to which any question may arise therein, or for the inspection of any such property in the possession of a party to the cause or matter.

(2) For the purpose of enabling any order under paragraph (1) to be carried out the Court may by the order authorize any person to enter upon any land or building in the possession of any party to the cause or matter.

(3) Where the right of any party to a specific fund is in dispute in a cause or matter, the Court may, on the application of a party to the cause or matter, order the fund to be paid into court or otherwise secured.

(4) An order under this rule may be made on such terms, if any, as the Court thinks just."

5. As I indicated during counsel's submission, I have difficulties regarding the application of the Defendant insofar as it is based on O. 29 r. 2 (3). The three sums of money in question are said by the Defendant to be trust monies belonging to the estate. The Plaintiff accepts that the first sum ($487,817.28) is trust money belonging to the estate beneficially. It forms part of an "emergency fund" allegedly established by the deceased during her hospitalisation. The money was held by the Plaintiff for the deceased's use during her lifetime, and remains with him after her demise. The Plaintiff denies that the second sum ($709,561.50) is trust money belonging to the estate. According to the Plaintiff, the money actually represented the return of his contribution to the purchase of a property in the name of the Defendant. The Plaintiff says the money belongs to him beneficially. In relation to the third sum ($97,000.00), the Plaintiff says that it represented ATM withdrawals of money from the deceased's account by the deceased herself. The money never went into his hands, and he therefore does not hold such money on trust for the estate.

6. My difficulties with the Defendant's reliance on O. 29 r. 2 (3) are two-folded. First, the rule cannot possibly apply to the first sum because the right to the first sum is not in dispute. Both sides agree that the sum of money is held on trust by the Plaintiff for the estate. The right of the estate to the sum of money in question is not in dispute. As for the third sum, there is a dispute as to whether the money is with the Plaintiff. It cannot be resolved before trial. Secondly and more generally, I have doubt whether the sums of money are "in dispute in a cause or matter". It must be remembered that the present action is a probate action, not an administration action. What is in issue is whether letters of administration should be granted to the Plaintiff as prayed for by the Plaintiff in his statement of claim, or whether someone else should be appointed the administrator as counterclaimed by the Defendant. The right or entitlement to the sums of money in question is relevant in this action only because the Defendant argues that the Plaintiff has failed to fully disclose these sums of money before, and is in potential conflict of interest with the estate insofar as he asserts that the monies belong to him beneficially (or that he has not received the money). The court may or may not, at the end of the day, need to decide all these matters in order to decide whether letters of administration should be granted to the Plaintiff or to someone else. No direct relief is sought by either party in relation to any of these three sums of money in the action or counterclaim.

7. But given my conclusion below, I need not express any definite view on the proper construction of the provisions, particularly when counsel has not been able to cite to me any direct authority on the question that I have identified above. (But c.f. "property which is the subject-matter, etc." in O. 29 r. 2(1): see Hong Kong Civil Procedure 2002 vol. 1 para. 29/8/6; Scott v Mercantile Accident Insurance Co. (1892) 8 T.L.R. 320; Re Saxton (deceased) [1962] 1 W.L.R. 859.)

8. As regards section 40 of the Probate and Administration Ordinance, there can be no dispute that this court does have the jurisdiction to appoint an administrator pending suit in situations of the present type. But appointment is not automatic: Hung Jin Mui v Tang Chui Yuk Angela, No. P4 of 1997, Le Pichon J (as she then was), 11 February 1998, pp. 3-5, explaining the relevant English authorities (Re Bevan [1948] 1 All E.R. 271; Bellew v Bellew (1865) 4 Sw. & Tr. 58, 13 L.T. 247). The court has a discretion to exercise.

9. Regardless of whether the application is considered from the angle of O. 29 r. 2 (3) or section 40 of the Probate and Administration Ordinance, there are common considerations to be taken into account. The tests and considerations are, of course, not entirely identical. (For the exercise of the court's discretion in relation to the appointment of an administrator pendente lite, see for instance, Hung Jin Mui, supra.) I take into account specifically the following matters:

(1) There is no or insufficient evidence of any risk of dissipation of the three sums by the Plaintiff. The burden is certainly on the Defendant to establish the need for doing something to protect and preserve the three sums of money. A real risk of dissipation of assets is, of course, a good reason to consider exercising the court's discretion to appoint an administrator pendente lite or make an order under O. 29 r. 2 (3) (if applicable).

(2) The size of the estate is such that even if one were to assume that the Plaintiff would dissipate the three sums in their entirety, there would still be sufficient money and assets left for distribution to the Defendant as per her entitlement under the intestacy rules, the Plaintiff and the Defendant being the only two beneficiaries of the intestate estate.

(3) Of the three sums, two are not accepted as trust monies. In relation to one of them, the Plaintiff actually says that he never received the money. In those circumstances, before the trial of action, and before any findings are made in relation to the true nature of these sums of money (whether in the present probate action or in any subsequent action), ordering the Plaintiff to pay over the sums of money into court or to an administrator pendente lite could be quite unfair to the Plaintiff. This, of course, cannot be a conclusive factor against making the order sought, but is nonetheless a relevant factor to be taken into account.

(4) I do not consider that the Defendant's suspicions regarding the character and conduct of the Plaintiff, as raised in the defence and counterclaim, are of themselves sufficient to found the court's exercise of discretion under O. 29 r. (3) or section 40 of the Probate and Administration Ordinance. These are allegations which have yet to be tested and decided at trial. But nonetheless this is a relevant factor that I take into account.

(5) I bear in mind the delay involved in the present case. The deceased passed away in 1997. The present application was only made in April this year, whereas the trial of the action has been refixed to commence in November this year. The Defendant has not put in evidence to suggest any recent change of circumstances calling for the present application.

(6) There are no special features relating to the assets, i.e. the three sums in question, that call for special preservation, protection, handling or management. Contrast the situation of a stock option, public listed shares of volatile prices, or rental incomes.

(7) The potential costs of the administrator pendente lite must be taken into account, which is a burden on the estate (assuming that the estate has to bear the costs eventually).

10. Apart from the above specific matters, of course I bear in mind the facts and the general circumstances of the present case.

11. Having done so, I am of the view that in the exercise of my discretion no order should be made under O. 29 r. 2 (3) (assuming that it is applicable), or under section 40 of the Probate and Administration Ordinance. I am of the view that the factors favouring the making of some form of order relating to the three sums of money are heavily out-weighed by those that do not.

12. In conclusion, I dismiss the present application. Having heard counsel's submissions on costs on a provisional basis, I am of the opinion that costs should follow the event. I therefore order that the costs of the present application be paid by the Defendant to the Plaintiff in any event, such costs to be taxed if not agreed.

Representation:

Mr Herbert Au Yeung, instructed by Messrs Cheung, Chan & Chung, for the Plaintiff

Miss Teresa Wu, instructed by Messrs Tai, Tang & Chong, for the Defendant

HCAP 13/2000

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

PROBATE ACTION NO. 13 OF 2000

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____________

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J U D G M E N T

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1. This is an application to amend the defence. The majority of the proposed amendments are not in dispute. What is really in dispute is the intended amendment to paragraph 5 of the defence, pleading for the first time that the Plaintiff was and is in a position of conflict of interests or potential conflict of interests if he is to be appointed administrator of the estate in question, which is the very issue that the Court has to decide in this probate action.

2. This is not an ordinary piece of civil litigation. The deceased died intestate. The Court is charged with the duty to appoint somebody as the estate's administrator or administratrix to duly and properly administer the estate according to law. Such a person will stand in a fiduciary relationship to the estate as well as the beneficiaries of the intestate estate of the deceased. The Court will have to have confidence in such a person before it can or will entrust the administration of the estate to him or her. Moreover, the Court's jurisdiction under section 36 of the Probate and Administration Ordinance (Cap. 10) is sought to be invoked by the Defendant. There is no dispute that the Court has a broad and unfettered discretion under the section to choose the best and most suitable person to be the administrator to administer the estate in question.

3. In the pleadings, various allegations and complaints have been raised against the Plaintiff who no doubt has the first priority under the Non-contentious Probate Rules (Cap. 10) to obtain letters of administration of the estate. It is also pleaded in paragraph 6 of the original defence that in view of the various complaints against the Plaintiff which the Plaintiff denies, the Plaintiff is "not capable of or will not fairly trace, collect and distribute the assets of the estate".

4. In my judgment, on a fair reading of the pleadings, the question of whether the Plaintiff stands or will stand in a position of potential conflict of interests, if he is to be appointed administrator, has always been lurking at the background of this case. Indeed, when I first read the papers, I had no difficulty in discerning that such was the situation. Coupled with paragraph 6, in my judgment, this latest intended amendment by the Defendant should not have come as a complete surprise to the Plaintiff.

5. Moreover as I said, the Court is here concerned with finding the most appropriate person to administer the estate, whilst proper regard must of course be had to the normal priority rules in the Non-contentious Probate Rules. It would be artificial to ask the Court to exclude from its consideration the possible existence of a conflict of interests or potential conflict of interests on the part of the Plaintiff, when the Court is being asked to consider whether the Plaintiff should be granted letters of administration to administer the estate.

6. As I said, the person to be chosen must be somebody whom the Court has confidence in regarding the due and proper administration of the estate. I am not here for one moment suggesting that the appointment of the Plaintiff to be the administrator of the estate will be inappropriate; that is the issue to be tried between the parties. All that I am concerned with here is whether I should allow the Defendant to raise the question of a conflict of interests before me, in the light of the various complaints that have already been raised against the Plaintiff. Put another way, in my judgment, for the sake of justice and fairness and in order for the Court to properly exercise its discretion - if it deems fit to do so - in a real way, artificial blinkers should not be put round the eyes of the Court, so that the Court is prevented from considering this question of a conflict of interests or potential conflict of interests because of the state of the existing pleadings.

7. So for all these reasons, notwithstanding the complaint of a new case being put forward and potential prejudice to the Plaintiff, all of which I fully take into account in the balancing exercise, I am of the view that on balance the proposed amendment should be allowed. If the Plaintiff really faces any genuine prejudice in terms of the proper preparation of this case, I will certainly listen most sympathetically to any submissions coming from the side of the Plaintiff.

8. I should add that I have, of course, in reaching my conclusion, borne in mind that this application was only made on the 1st day of the trial, but as I said, having put everything on the scales, I have come down on the side of allowing the amendment.

9. The Plaintiff also opposes the proposed amendment to paragraph 5(f) of the defence, i.e. the non-admission of the alleged gifts of two lots of shares by the deceased to the Plaintiff prior to her demise. Looking at the pleadings as a whole and the Defendant's case as a whole, I can really see no real objection to the proposed amendment. The Defendant has always been asking for details and explanations relating to the alleged gifts in question. The express plea of non-admission of the alleged gifts simply follows logically from what the Defendant has been doing. There can be no real prejudice to the Plaintiff by the inclusion of the proposed amendment. So for those reasons, I also allow the amendment in relation to paragraph 5(f).

[Submissions on adjournment of the trial]

10. As anticipated, the Plaintiff asks for an adjournment of the trial in order to have an opportunity to consider the latest and indeed late amendments and their implications. As I see it, there is really no serious dispute as to whether the Plaintiff should be afforded, for the sake of fairness, a decent opportunity to consider the latest position and review his general position in the present litigation. The dispute is really in relation to the amount of time that the Plaintiff should be afforded, and that is reflected in the question of whether the case has to be adjourned generally to a new date to be fixed or that a short adjournment, such as an adjournment this afternoon with the resumption of the trial tomorrow morning, would sufficiently and adequately accommodate the need of the Plaintiff.

11. For my part, I can see the importance or the significance of the latest amendments, particularly in relation to paragraph 5, i.e. the allegation of a conflict of interests or potential conflict of interests and its potential implications to the Plaintiff's case. The Plaintiff is certainly entitled to proper and sufficient time to consider his position. It is true that given the nature of the latest allegation of a potential conflict of interests, the Plaintiff may most likely not require to adduce further evidence, documentary or oral (whether by himself or by some other persons), in order to answer this allegation. Yet this is just one of the many things that the Plaintiff might like to consider doing in response to the latest amendments.

12. To take an extreme situation and I emphasis that this is only mentioned by way of hypothesis, the Plaintiff might like to consider, given the latest allegation, conceding the Defendant's claim, given the undeniable disputes relating to some of the subject matters of complaint raised by the Defendant in the present case. No doubt in such a hypothetical scenario, such a decision would be a very important one to make and warrant mature and careful consideration. In my judgment, this illustrates firstly the potential importance of the latest amendment and secondly, the amount of time that the Plaintiff might reasonably require.

13. Further, how much time the Plaintiff might reasonably require has a built-in subjective element to it. The Plaintiff has through counsel submitted to this Court that simply adjourning the trial to tomorrow would not give the Plaintiff sufficient time to receive and consider proper legal advice. Common experience tells us that in matters of this sort, the time required for one to receive and digest proper advice and to make up one's mind does vary from person to person, and there is nothing before me to cast any doubt on the genuineness of the Plaintiff's claim through counsel that he really needs more time than the adjournment of an afternoon in order to properly consider his position.

14. Another factor that I take into account is this. Even if I were to adjourn the case to tomorrow morning, given that the trial estimate is only three days and I have yet to hear any factual evidence from the three intending witnesses including the Plaintiff himself, who is expected to face detailed cross-examination in relation to the subject matters of complaint in question, I doubt very much whether the case could be completed within the time allotted if the giving of evidence were only to start tomorrow. Having familiarised myself further with the papers, I have great reservations regarding the accuracy of the original estimate of three days for the trial; so that, in my judgment, is also a very practical matter that I should take into account.

15. Further, this amendment was applied for only on the 1st day of the trial by the Defendant; it was not the fault of the Plaintiff. So if anything, I should be as lenient and as accommodating as possible towards the Plaintiff in relation to his need for time.

16. So for all these reasons and bearing in mind the general circumstances of the case, I am prepared to accede to the Plaintiff's request for a general adjournment of the trial to new dates to be fixed.

17. I will further hear the parties on costs, but I should make this clear. Part of my above decision is affected by the trial length and the remaining time available. That factor has little to do with the amendment per se, or I should say that that factor has more to do with the original estimate than the amendment itself.

18. Another matter that I should emphasize before I hear the parties on the question of costs is that I have specifically given due consideration to the subjective need of the Plaintiff for more time to review his position. That subjective need varies from person to person and that may or may not be relevant to the question of costs.

[Submissions on costs]

19. Having heard the parties on costs and the Plaintiff having indicated to me through counsel that he is only asking for the costs thrown away today because of the adjournment, I am of the view that there can be no serious dispute that at the very least the Plaintiff should be entitled to an adjournment of today's hearing, in order to consider properly his position, if not an adjournment for a longer period of time as I have already ruled. So I am of the view that the Defendant should pay for the costs thrown away today, and I so order.

Representation:

Mr Herbert Au Yeung, instructed by Messrs Cheung, Chan & Chung, for the Plaintiff

Mr John Mullick and Ms Teresa Wu, instructed by Messrs Tai, Tang & Chong, for the Defendant