NORMAN GUY DONALD AND OTHERS v. LI PAK HUEN in his capacity as executor of the estate of LI PAK WING AND OTHERS

HCMP 1836/2017

[2024] HKCFI 3096

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 1836 OF 2017

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BETWEEN

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DECISION

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1.   Introduction

1.1  This is my decision on Pak Huen’s application for stay of execution pending his appeal (“Present Application”) against the order made by B Chu J (“Trial Judge”) dated 8 March 2024 (“Order”) after trial which took place in August 2023 (“Trial”)[1].

1.2  These proceedings, which were initially commenced by Lynette, Michael and Colleen (“Initial Plaintiffs”), are concerned with the estate of the Deceased and specifically with the Family Property. Following a contested hearing which took place on 19 December 2018 and 18 January 2019, by the Removal Judgment, Daisy was removed as the sole executrix of the Estate. Subsequently, the Plaintiffs were appointed as the Administrators of the Estate and they “replaced” the Initial Plaintiffs as the plaintiffs in the proceedings.

1.3  The Initial Plaintiffs had, in addition to an order to remove Daisy as the executor, also sought an order for the sale of the Family Property, which application was adjourned pending the determination on whether Daisy should be removed, with liberty to restore. Upon the appointment of the Administrators, the application for Order for Sale was restored.

1.4  In the trial which led to the Order for Sale Judgment, the disputed factual issues which required the Trial Judge were those set out at Order for Sale Judgment §§27-28, namely:

(1) Issue 1: Whether the Family Arrangement as alleged by Pak Huen existed and bound the Administrators;

(2) Issue 2: Whether Pak Huen had acquired a possessory title over any part of the Family Property;

(3) Issue 3: Whether Tsang had acquired a possessory title over any part of the Family Property; and

(4) Issue 4: Whether vacant possession of the Family Property should be given to the Administrators and whether the Family Property should be sold and on what terms.

1.5  Issue 3 was further refined and expanded by Tsang, namely:

(1) Issue 3(a): Whether Tsang has acquired a possessory title and/or beneficiary interests over any part of the Family Property; and

(2) Issue 3(b): Whether Pak Wing’s promise (“Promise”) as alleged by Tsang existed and the Promise was made on behalf of the Deceased/Estate, and if so, whether Tsang suffered detriments in reliance on the Promise.

1.6  Issue 3 (and its reformulation by Tsang) does not concern Pak Huen. The Trial Judge decided (1) Issues 1 and 2 against Pak Huen, (2) Issue 3 against Tsang and (3) in favour of the Administrators on Issue 4. Insofar as relevant to the Present Application, by the Order, it was ordered (1) Pak Huen do deliver vacant possession of 2/F East Wing and 1/F West Wing of the Family Property to the Administrators on or before 31 July 2024 and (2) the Family Property be sold with vacant possession at market price in the manner directed in the Order. The Present Application only seeks a stay of the order for possession (ie Order §1).

1.7  The Present Application was to be determined by the Trial Judge and she gave directions for the Present Application to be disposed on the papers. Subsequently, Tsang also lodged an application for stay of execution pending appeal (“D11 Application”) which is to be determined by this court. The parties to the D11 Application agreed that the D11 Application should be dealt with by the same judge who determines the Present Application. After discussion with the Trial Judge, it was decided that I should determine both applications.

1.8  The Present Application is opposed by the Administrators, Michael and Cheryl. In this application, the Administrators are represented by their trial counsel Mr Eugene Fung SC (leading Ms Bonnie YK Cheng) and Cheryl by her trial counsel Mr Anson Wong SC (leading Mr Justin Lam). Michael continues to act in person. At the Trial, Pak Huen was represented by Mr Edward Chan SC (leading Mr Abel Lam). In this application, Pak Huen is represented by Ms Ann Lee.

2.  The Order for Sale Judgment

2.1  As noted at Order for Sale Judgment §21, the parties who opposed the Order for Sale were Pak Huen and Tsang. The issues which were identified by the parties for the Trial Judge’s determination have already been set out at §§1.4 and 1.5 above.

2.2  The Trial Judge made a number of observations on the witnesses. In particular, she recounted, inter alia, that:

(1) Mr Guy Norman (“Mr Norman”) one of the Administrators did attend trial for cross examination (§29);

(2) Michael, who supported the Order for Sale, was present during the Trial but was not required for cross examination (§31);

(3) Pak Huen was scheduled to attend the Trial for cross examination, but after Mr Norman gave his evidence, Mr Chan (trial counsel for Pak Huen) informed the court, to the Trial Judge’s surprise, that Pak Huen would not be called. As a result, Cheryl, who was supposed to give evidence to address Pak Huen’s, was also not called (§§32, 38 and 41);

(4) The Trial Judge especially noted that she had previously made an order on 7 November 2022, to the effect that all deponents should attend the Trial for cross examination, failing which such deponents’ affidavit evidence would not be admitted without the leave of the court (§37); and

(5) No leave or direction was sought to admit any part of Cheryl’s or Pak Huen’s affidavit evidence, and all closing submissions were made on the basis that Pak Huen’s 3 affirmations and Cheryl’s affidavit were not admitted (§42).

2.3  At Order for Sale Judgment section F.2, the Trial Judge set out her reasons for deciding Issue 1 against Pak Huen, which was in any event not pursued by Mr Chan. No appeal arises therefrom.

2.4  Issue 2 is dealt with at Order for Sale Judgment section F.3:

(1) The Trial Judge set out the applicable legal principles on adverse possession, in particular the established principle that the burden is on a claimant to proof (1) factual possession and (2) animus possidendi. In the particular circumstances of the present case and the arguments advanced, she expressly reminded herself that to constitute possession for the purposes of limitation, the claimant must show that he took possession of the land in his own right and not as a licensee or representative of another person, even if that person is not the true owner or an agent acting on behalf of the true owner (§51);

(2) In the light of the fact that Pak Huen did not attend the Trial, the Trial Judge noted at §52 that, without Pak Huen’s affirmations being admitted, there was no evidence from him to support his case for adverse possession (§52);

(3) Although leading counsel for the Administrators (Mr Fung) and Cheryl (Mr Wong) submitted at the Trial that Issue 2 should no longer be an issue and/or Pak Huen’s case should be rejected in limine (§53), on a fair reading, I do not believe the Trial Judge had accepted their proposition. This is because Mr Chan had submitted that there was adequate evidence before the Trial Judge to make a finding on Pak Huen’s case, based on the objective and undisputed evidence, and absent any prima facie case to the contrary, there was no basis for the Trial Judge to resort to the drawing of adverse inferences (§54);

(4) The Trial Judge dealt with what she considered to be the objective and undisputed evidence at §§55 to 64, and found that there was no evidence to support Pak Huen’s case on factual possession in respect of 1/F West Wing;

(5) Conversely, in respect of 2/F East Wing, it was common ground that Madam Chau (Pak Huen’s mother) and Pak Huen were residing in that apartment until her death in 2020, and thereafter Pak Huen has continued until now to occupy the apartment with his family members;

(6) However, for the reasons set out at §§66-70, the Trial Judge concluded at §71 that Pak Huen’s occupation of the Family Property (whether 2/F East Wing and/or 1/F West Wing) was with the knowledge and permission of the executors of the Estate, prior to the appointment of the Administrators; and

(7) Still further, the Trial Judge was of the view that there was no evidence to show that Pak Huen had intended to exclude the world at large including the Estate, namely the owner of the Family Property, whether in relation to 1/F West Wing or 2/F East Wing (§72).

2.5  For the above reasons, the Trial Judge concluded that Pak Huen was not able to demonstrate that he has acquired possessory title over any part of the Family Property and dismissed his claim for adverse possession (§73). .

3.  The Notice of Appeal (“NOA”)

3.1  In Pak Huen’s NOA filed on 10 April 2024, Pak Huen only challenges the Trial Judge’s determinations on Issue 2.  He seeks (1) a declaration that he has been in adverse possession of 2/F East Wing and 1/F West Wing since 2002 and (2) an order that there be no order for sale of the Family Property.  As I understand Pak Huen’s case, the appeal against the order for sale is only consequential upon him succeeding in overturning the Trial Judge’s conclusion on the issue of adverse possession.

3.2  9 appeal grounds are advanced in the NOA. As explained by Ms Lee, Grounds 1 to 3 are directed principally at 1/F West Wing and Grounds 4 to 9 at 2/F East Wing.

3.3  Grounds 1 and 2 complain that the Trial Judge, in her analysis carried out at Order for Sale Judgement §§55-64, had taken into account inadmissible evidence.

3.4  Ground 3 is directed at §60, by which, it is said, the Trial Judge (1) was wrong to have rejected the evidence of Daisy that the keys to 1/F West Wing were with Pak Huen, (2) failed to appreciate that Pak Huen, as someone in adverse possession, could not have been expected to hand over the keys to the Administrators and the fact that the Administrators could not get the keys from Pak Huen was evidence in support of Pak Huen’s adverse possession of 1/F West Wing.

3.5  Ground 4 is directed at §65. It complains that the Trial Judge failed to appreciate adequately or at all that Madam Chau was herself an executor and that under the Will of the Deceased, Madam Chau was entitled to reside in the Family Property for life.

3.6  Grounds 5 and 6 are directed at (§70) and in particular the Trial Judge’s finding that Pak Huen’s occupation of 2/F East Wing was pursuant to a licence granted to him by Madam Chau which did not terminate upon her death automatically.

3.7  Ground 7 is directed at the Trial Judge’s reliance on the fact that the Estate had paid for the government rates, electricity and water bills of all the disputed units since at least 2000 and that the Estate had made payment of HK$200,000 in 2005 to Pak Huen for repairs of 2/F East Wing (§67). It is said that the foregoing do not ipso facto show that there was any licence granted to Pak Huen. In any event, Pak Huen’s undisputed occupation of 2/F East Wing to the exclusion of any other members of the family is strong evidence form which Pak Huen’s animus possidendi may be inferred.

3.8  Ground 8 is directed at §66, against the Trial Judge’s finding that Pak Huen must have received the keys to the gate from the then executors of the Estate, as the Trial Judge had misunderstood the Tsang’s evidence.

3.9  Ground 9 is a catchall ground and does not add to the analysis.

4.  The applicable principles

4.1  The parties agree that the applicable principles are those set out at Star Play Development Ltd v Bess Fashion Management Ltd [2007] 5 HKC 84 §§6-10. In the light of the detailed submissions made by the parties on the merits of the grounds advanced in the NOA, it is perhaps useful to reiterate the observations made in Ming Hsieh v Xu Zhe & Ors[2018] HKCA 390:

“ [8] Five broad grounds are raised in the notice of appeal: there is no evidence of actual damage caused by the injunction (grounds 1 and 2); there is no basis to hold there was loss of opportunities to sell the shares caught by the injunction (ground 3); the 2nd defendant had failed to mitigate her loss (ground 4); and the period for assessing loss is erroneous (ground 5). Ms Chan contended there are strong merits in the appeal. Mr Victor Dawes, SC argued to the contrary that the grounds of appeal do not have a reasonable prospect of success.

[9] We do not propose to set out their arguments. This is not a dry run of the appeal. It is well established that for the purpose of this application, the court only needs to form a preliminary view on the merits. It would be impractical and even undesirable for the court to go deeply into the strengths of the appeal and it should refrain from embarking upon detailed discussion and analysis of the grounds of appeal.

[10] For the grounds of appeal to be regarded as very strong such that the existence of these grounds by themselves would constitute a good reason for stay of execution, it is well established that the requisite strength must be such that the court takes the view that “something has grievously gone wrong with the process of law in the court below”, or in other words, the appellant is “almost bound to succeed” in the appeal. If all that can be demonstrated is that the appeal is arguable or even that good arguments exist, something more needs to be shown by the appellant to obtain a stay of execution.

[11] The grounds of appeal in this instance plainly do not reach that level of requisite strength. We agree with the judge this appeal is arguable. The minimum requirement for considering whether a stay should be granted is met, but additional reasons would need to be provided by the plaintiff why a stay is justified.” (emphasis added)

4.2  See also Smart Edge Limited v HG Property Investment HK Limited[2024] HKCA 744 at §§21 to 25.

5.  Analysis

(i) Merits of the appeal

5.1  In my view, Grounds 1 to 3, which are directed at the Trial Judge’s findings in respect of 1/F West Wing, do not amount to an arguable appeal.

5.2  In respect of Grounds 1 and 2, Ms Lee’s submissions boil down to a criticism that the “analysis of the objective and undisputed evidence turned out to be clouded by unadmitted and inadmissible evidence”: D3’s Reply Skeleton §7 in particular §7(2).

5.3  It is clear that the Trial Judge was acutely aware that Pak Huen’s evidence had not been admitted (Order for Sale Judgement §52). I agree with Mr Wong that Grounds 1 and 2 cannot possibly impugn the Trial Judge’s factual findings in the light of the evidence before her:

(1) Putting aside whether it is appropriate to refer to the content of the Removal Judgment (§§57 and 58), the fact remains that the occupation status of the Family Property in 2017 was reflected in Michael’s 1^st affirmation. In this regard, Ground 2.2, which contends that Michael’s evidence is inadmissible, is plainly wrong. As noted at §2.2(2) above, Michael did attend the Trial but was not required to be cross examined. In other words, Michael’s evidence was not disputed at the Trial;

(2) As set out at §§57 and 58, even disregarding Pak Huen’s evidence which led to the findings in the Removal Judgment, the undisputed evidence of Michael is that the 1/F of the Family Property was previously occupied by the Deceased and Madam Cheung and her children, and Pak Leung and his family later occupied the 1/F, and after Pak Leung’s death, Daisy continued to occupy the 1/F with 2 of her 4 children. The NOA does not assert that Michael’s evidence is not of the foregoing effect;

(3) The Trial Judge was clearly entitled to take into account the questionnaire completed by Pak Huen’s former solicitors sent to the Administrators which stated that he and his son were occupying the 2/F East Wing only (§59); and

(4) The fact that Pak Huen only first claimed that he occupied 1/F West Wing in a letter dated 12 December 2022 from his present solicitors (§61).

5.4  I agree with Mr Wong that the complaints made in Grounds 1 and 2 do not come close to showing that the Trial Judge’s finding that Pak Huen had failed to prove factual possession for the requisite period (which on the authorities is required to be proved by compelling evidence) was plainly wrong.

5.5  In these circumstances, I am unable to see how Ground 3 takes the matter further.

5.6  Conversely, in respect of the appeal relating to 2/F East Wing, although I do not regard the merits to be strong, I am unable to conclude, have conducted a preliminary review, that it is not arguable.

5.7  Very briefly:

(1) It seems to me that Ms Lee’s argument on Ground 6 (directed at §70) cannot be dismissed at this stage;

(2) At §70, the Trial Judge found that any licence granted by Madam Chau would have been granted by her in her capacity as one of the named executors of the Estate, and on behalf of the estate and that such licence would not be automatically terminated. On a fair reading of §70, it seems to me that the Trial Judge had placed reliance on the fact, following the demise of Madam Chau, the remaining executor was Pak Leung followed by Daisy. The Trial Judge then pointed out that Daisy was aware of Pak Huen’s occupation as she had had discussions with Pak Huen and that Pak Huen had indicated to her that he wanted to continue to live in the Family Property, and he was alleging the Family Arrangement at that time;

(3) The parties resisting the Present Application place reliance on §66, on the finding that the executors (except for the Administrators) had been living in the Family Property and were members of the same family. However, as pointed out by Ms Lee, it appears to be the position that, silent passive inactivity on the part of the landowner amounting merely to acquiescence is not enough to stop the limitation period from running. In order to establish a licence, there must be communication, in writing by spoken words or by overt and unequivocal conduct, that was intended to be understood and was understood as a permission to do something that would otherwise be an act of trespass: Chan Wing Tong v Kam Chung Building (Jaffe Road) (IO) [2024] 2 HKLRD 1 §§123-124;

(4) In my view, it is at least arguable that §70 has stopped short of making the necessary findings to support the finding of a licence, in that it only sets out (1) Daisy’s awareness and (2) discussions between Daisy and Pak Huen without making the necessary findings of communication by Daisy that was intended to be understood and was understood by Pak Huen as a permission; and

(5) I am also of the view that I cannot at this stage dismiss the arguability of Ms Lee’s submissions at D3’s Reply Submissions §§9(3) and (4) in respect of Ground 7, namely that in the context involving an apartment, retention of the keys for access and refusal to provide the same to other people and thereby controlling access to it, may be sufficient for satisfying both factual possession and animus possidendi.

5.8  I am therefore of the view that there is an arguable appeal in respect of 2/F East Wing.

6.  Whether appeal rendered nugatory without a stay

6.1  Pak Huen is an elderly gentleman in his 80s and there is no dispute that he has lived in 2/F East since the Deceased’s death (in 1954) and has continued to live there ever since (§44). Given the nature of the Order, it can be readily appreciated that an appeal would be rendered nugatory without a stay of execution. I do not believe it has been seriously suggested otherwise. As I understand the evidence, the intention is to sell the Family Property en bloc with vacant possession for redevelopment.

6.2  In my balancing exercise, it remains necessary for me to focus on the relative prejudice that may be caused to the appellant and to the respondent by a stay of execution. The parties resisting the Present Application point to the following matters:

(1) The beneficiaries have an interest in the due and expeditious administration of the Estate and there is grave prejudice to the beneficiaries of being deprived of their fair share in the value of the Family Property;

(2) Significant costs and expenses which the Estate has been and will be unnecessarily made to bear by reason of the delay in the sale of the Family Property caused by Pak Huen;

(3) At the time of the Order for Sale Judgment, the Trial Judge had then observed that there appeared to be a general decline in property prices in Hong Kong in recent years (§98);

(4) The Deceased died 69 years ago and Madam Chau had passed away for 21 years and the Estate has still not yet been wound up and this could not be fair to other residuary beneficiaries (§99); and

(5) As pointed out by Mr Wong, there is no avenue for Cheryl to obtain any compensation from Pak Huen.

6.3  I agree that the above factors are all valid, but at the end of the day, they are predominantly monetary considerations. In response, Pak Huen has offered to undertake (1) to prosecute his appeal expeditiously and with diligence and (2) pay to the Estate the market rent and utilities (in accordance with the utilities bills in relation to the 1/F West Wing and 2/F East Wing) for his use of 1/F West Wing and 2/F East Wing of the Family Property for the duration of the order of stay in the event that his appeal is unsuccessful, provided that if there is any disagreement on the then prevailing market rent, such market rent shall be determined on the basis of a valuation report prepared by a surveyor to be jointly appointed by Pak Huen, the Administrators and Cheryl at the costs of Pak Huen (“Undertaking”).

6.4  Whilst the Undertaking does not have the effect of compensating any loss (if any) in the delayed sale of the Family Property, as pointed out by Ms Lee, the Present Application only seeks a stay of Order §1 (delivery of vacant possession). I believe I am entitled to take into account that (1) the Trial Judge’s view on the declining property market was simply an observation as at the time of the Order for Sale Judgment and (2) the property market does not remain static. The evidence before me is that since the Order for Sale Judgment, the property market in Hong Kong has not deteriorated further and may be said to be trending mildly upwards.

6.5  It seems to me that the Undertakings should be further modified along the lines suggested by Mr Wong, in that the payments to be made thereunder by Pak Huen should be deducted and paid out by the Administrators from the distribution payable to Pak Huen from the sale of the Family Property (“Modified Undertaking”). I do not understand this is objected by Ms Lee.

7.  Conclusion

7.1  I will therefore grant a conditional stay of Order §1 upon the Modified Undertaking but only in respect of 2/F East Wing. The parties are to submit a draft order for the court’s approval.

7.2  For completeness, even had I found that there was an arguable appeal against 1/F West Wing, I would not have exercised my discretion to grant a stay, given that 1/F West Wing is only used as a storage room.

7.3  I also make a costs order nisi that (1) 70% of the costs of the Present Application be in the cause of the appeal and (2) Pak Huen is to pay to the Administrators, Cheryl and Michael 30% of the costs of the Present Application in any event, to be taxed if not agreed, with a certificate for 2 counsel.

Mr Eugene Fung, SC leading Ms Bonnie Y.K. Cheng, instructed by Stephenson Harwood, for the Plaintiffs

Ms Ann Lee, instructed by Chui & Lau, for the 3rd Defendant

The 8th Defendant, acting in person

Mr Anson Wong, SC leading Mr Justin Lam, instructed by Withers, for the 9th Defendant

HCMP 1836/2017

[2024] HKCFI 2729

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 1836 OF 2017

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DECISION

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1.  This is my decision^[1] on D11’s application for an interim stay (“Present Application”) of paragraphs 2, 4 and 5(d) of the order made by B Chu J on 22 May 2024 (“Order”) pending the determination of his summons dated 3 July 2024 (“D11 Summons”), by which he seeks a stay of execution of Order §§2, 4 and 5(d) pending appeal.

2.  Separately, D3 has applied for a stay of Order §1 pending appeal by his summons dated 22 May 2024 (“D3 Summons”).  Directions were given by B Chu J for paper disposal of D3 Summons.  As I understand the position, no interim stay was sought by D3 pending the determination of the D3 Summons.

3.  Having considered the letter dated 25 July 2024 from the Ps’ solicitors, directions were (by consent) given on 26 July 2024 to determine the D11 Summons by paper disposal (“26/7/24 Directions”).  The outstanding issue then was it was not entirely clear whether D11 would pursue an interim stay pending the determination of the D11 Summons.  As part of the 26/7/24 Directions, I had directed D11 to inform the court by 4:00 pm that day whether the Present Application would be pursued and gave directions for its determination on the papers (if pursued).  Whilst slightly out of time, D11 confirmed at around 6:45 pm that the Present Application would be pursued.

4.  The parties to the D11 Summons had agreed that the D11 Summons should be dealt with by the same judge who determines the D3 Summons.  After discussions with B Chu J, it has been decided that I should determine both summonses.

5.  Essentially, the Order directed, inter alia, that (1) D3 and D11 do leave and vacate the Family Property and deliver up vacant possession of the identified (different) apartments of the Family Property by 31 July 2024 (Order §§1 and 2) and (2) the Family Property be sold on the ordered terms.

6.  The Present Application is opposed by Ps and D9.

7.  As I understand the position, it is envisaged under the Order that the sale of the Family Property is to be conducted en bloc as opposed to be on a piecemeal basis.

8.  I have considered that submissions made by Ps and D9, including (1) D11’s appeal lack merits, (2) D11 has a history of delaying these proceedings, (3) prejudice would be caused to the Estate and (4) the D11 Summons does not seek an interim stay pending its determination.  It does not appear to be disputed by Ps and D9 that the nature of the Order is such that the appeal would be rendered nugatory absent a stay.

9.  As the sale of the Family Property is to be conducted en bloc, the parties have sensibly agreed that the D3 Summons and the D11 Summons should be dealt with by the same judge.  For example, were a stay granted in favour of D3, it seems to me that that is a relevant consideration in respect of the D11 Summons.

10.  Not being the trial judge, the parties would appreciate that some time is required for the court to familiarize with the issues ventilated at trial.  What I propose to adopt the approach set out at Dragonrider Opportunity Fund LP v Lam Fung & Anor, HCA 752/2012, 22 May 2013 §§1 and 7, namely to grant a short interim stay pending the determination of the D11 Summons.

11.  To provide some certainty to the parties, I will hand down my decisions on both the D3 Summons and the D11 Summons on or before 4 November 2024.

12.  I also reserve issue of costs in respect of the Present Application.

HCMP 1836/2017

[2024] HKCFI 645

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 1836 OF 2017

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JUDGMENT

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Table of Contents

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A.  INTRODUCTION

1.  The present application is by the independent professional administrators for an order of sale of a property in the estate of Li Sing Kui, deceased (“Deceased”).

2.  This Court handed down a judgment herein on 26 April 2019 and amongst other things, removed the then executrix of the estate of the Deceased and ordered that independent professional administrators be appointed in her place (“RemovalJudgment”)[1].

3.  I will continue to adopt the abbreviations/nomenclature in the Removal Judgment, save otherwise indicated and in the case of the Deceased’s sons, I will refer to them hereinafter by their Chinese names.

4.  As set out in the Removal Judgment, the Deceased died in Hong Kong on 28 August 1955, leaving a “Tin Fong” wife Madam Leung[2], two concubines Madam Cheung[3] and Madam Chau[4], 15 daughters and 5 sons[5]. The 5 sons (“5 Sons”) named in the Will were:

By Madam Cheung:

(1)  Pak Iu (Francis), who died on 20 June 1992 aged 81, leaving surviving him his wife Madam Wan Yee Mui (who passed away in 2002) and two children, namely Michael and Colleen[6];

By Madam Leung:

(2)  Pak Tat (James) , who died in October 1987 aged 62, leaving surviving him his wife Lynette (who was originally the 1^st plaintiff herein and who passed away on 22 November 2019), a daughter Lee Cheryl Ann (“Cheryl”) and a son Lee Andrew James;

By Madam Chau:

(3)  Pak Leung (Bernard), who died on 6 December 2014 aged 83, leaving surviving him his wife Daisy (who was originally the 1^st defendant herein and who passed away on 11 February 2022) and 4 children;

(4)  Pak Wing, who died in 2016 aged 83, and who left no spouse and no children and whose estate is the 2^nd defendant herein, and represented by Pak Huen;

(5)  Pak Huen, the 3^rd defendant herein.

5.  Under the Will, Madam Chau, Pak Iu and Pak Leung were appointed the executors of the Estate by the Deceased. Pak Leung’s widow Daisy eventually became the sole executrix of the Estate on 16 November 2016, by virtue of a chain of representation.

6.  Pursuant to the Removal Judgment, Daisy was removed as the sole executrix of the Estate. Subsequently, an order was made on 12 July 2019 by consent that the present plaintiffs (“Administrators”) be appointed as joint and several administrators of the Estate. The Administrators were later granted Letters of Administration with Will annexed de bonis non on 3 July 2020[7].

7.  The originating summons herein was initially issued by three plaintiffs who were three of the beneficiaries of the Residuary Estate, namely Lynette, Michael and Colleen. At the heart of the dispute is the Family Property which forms a major part of the Residuary Estate and which has remained unsold.

8.  One of the orders sought in the originating summons, in paragraph 2 thereof, was the Order for Sale, namely an order to sell the Family Property. This application was adjourned sine die by this Court pending the determination on whether Daisy should be removed, with liberty to restore[8]. Upon the appointment of the Administrators, the application for the Order for Sale was restored.

9.  The Family Property was built in 1930s and has been listed as a Grade 2 historic building on 18 December 2009[9]. According to an earlier valuation report, it was valued to be HKD 440,000,000 as at 15 November 2017. Pursuant to an updated valuation report by JLL[10], subject to the assumptions set out therein, as at 30 May 2021, the aggregate existing use value of the unencumbered leasehold property interest was stated to be HKD 233,400,000 and the redevelopment value was stated to be HKD 565,000,000[11].

10.  The Family Property comprises of , amongst others, 4 levels, from Ground Floor to 3^rd Floor and a roof. There is also a basement/garage. There are two apartments on each of the 1^st to 3^rd floors, respectively one on the East Wing and one on the West Wing.

11.  On 15 October 2020, the Administrators had through their solicitors sent a questionnaire to the respective beneficiaries and/or their legal representatives, to, amongst other things, enquire into the state of occupancy of the Family Property and related matters (“Questionnaire”)[12].

12.  Based on the respective answers received from the beneficiaries (“Answers”) and their own inspection visits to the Family Property, the Administrators prepared a table and diagram of their understanding of the state of occupancy of the Family Property, which was later updated in Mr Norman’s 2^nd affidavit of 18 April 2023 (respectively “1^st Occupancy Diagram” and “2^ndOccupancy Diagram”)[13].

13.  On 7 November 2022, upon a summons issued by the Administrators on 14 October 2022[14], leave was given for them to join as plaintiffs herein and for Lynette, Michael and Colleen to cease to be plaintiffs. The 4 children of Pak Leung and Daisy, who are beneficiaries of the Residuary Estate, have been added respectively as the 4^th to 7^th defendant. Michael is now the 8^th defendant in his capacity as executor of the estate of Pak Iu (by chain of representation). Cheryl has been joined as the 9^th defendant being executrix of the estate of Pak Tat (by chain of representation). The 4^th defendant, Bernard Jr, has also been named as the 10^th defendant in his capacity as personal representative of the estate of Pak Leung (by chain of representation). Apart from family members/beneficiaries of the Residuary Estate, the Administrators were also granted leave to join a Mr Tsang Kwok Cheung (“Tsang”) as defendant in his absence.

14.  Tsang claims to be a former cohabitant of Pak Wing and has in his affirmation alleged that under the arrangement of Pak Wing, he moved to reside in Pak Wing’s apartment on 3/F West Wing in around 1979 to live with Pak Wing and that he has continued to occupy the apartment after Pak Wing’s death until today. On 21 March 2023, Tsang commenced a separate action by writ against the Administrators, under HCA 426/2023, to claim, amongst other things, a declaration that he has been in adverse possession of the apartment on 3/F West Wing (“HCA 426”). On 19 July 2023, this action was ordered by consent to be stayed pending the final determination of the Administrators’ present application for the Order for Sale.

15.  Notwithstanding that the stay of HCA 426 was by consent, Tsang appeared to be reneging from his consent for the stay at the commencement of the present trial in that he indicated that he would have no objection to the Order for Sale if such was made subject to the determination of his claim in HCA 426 and that it was more proper to deal with his claim in HCA 426 rather than in these proceedings. He complained about not having enough time for him to seek proper further and better particulars and/or discovery and to prepare his claim in the present proceedings.

16.  There was however no proper application issued by Tsang to withdraw his consent to the stay and/or to set aside the stay. It was in any event too late for him to change his position at the trial as (i) he was served with the Administrators’ summons for joinder but failed to turn up at the hearing on 7 November 2022 when the order for joinder was made against him; (ii) he was then served with the amended originating summons and he had filed an acknowledgment of service on 20 December 2022 through his present solicitors, indicating his intention to contest these proceedings; (iii) he did not apply to set aside the joinder or to seek any directions for extension of time or discovery or other directions in relation to the trial and instead commenced HCA 426; (iv) he had filed an affirmation on 13 February 2023 setting out his case in opposition to the Administrators’ application for the Order for Sale and asking the Court to refuse the Administrators’ application for the Order for Sale, and lastly (v) as mentioned, he had consented to the HCA 426 being stayed.

17.  Apart from Tsang, the Administrators’ application is being opposed by Pak Huen, both in his capacity as executor of the estate of Pak Wing (ie 2^nd defendant) and in his personal capacity as a beneficiary of the Estate/Residuary Estate (ie 3^rd defendant). The disputed units at trial are (i) 1/F, West Wing, (ii) 2/F, East Wing, and (iii) 3/F, West Wing.

18.  The 4^th, 5^th, 6^th and 10^th defendants take a neutral stance to the Administrators’ application (collectively “Neutral Ds”).

19.  The 7^th defendant Lee Pui Yin Irene (“Irene”) and 8^th defendant, Michael, are acting in person. They attended the trial physically and indicated that they do not contest the present application.

20.  It is Cheryl’s position that the grounds of opposition raised by Pak Huen and Tsang should be rejected and that the Court should grant the Order for Sale with vacant possession.

21.  To summarise, the only persons who oppose the Order for Sale are Pak Huen and Tsang.

22.  Counsel Mr Eugene Fung SC and Ms Bonnie Cheng appeared for the Administrators in the present application, Mr Anson Wong SC and Mr Justin Lam appeared for Cheryl, Mr Edward Chan SC and Mr Abel Lam appeared for the 2^nd and 3^rd defendants, namely Pak Huen, Ms Lorinda Lau and Mr Forest Fong appeared for Tsang, and Mr Tommy Cheung appeared for the Neutral Ds.

B.  PAK HUEN’S GROUNDS OF OPPOSITION

23.  It was Pak Huen’s case in his 1^st affirmation and at the time of the removal application that there was an overall understanding and de facto family arrangement among the 5 sons of the Deceased that so long as one of them should be living and residing in the Family Property, the Family Property would not be sold (“Family Arrangement”) and that the then executrix was estopped from selling the Family Property during his lifetime while he was/is living there[15].

24.  In his 3^rd affirmation, Pak Huen maintained that there was the Family Arrangement, and that the Administrators are estopped at law from denying the Family Arrangement. He has however advanced a new alternative case, that he has been in adverse possession of the apartment on 2/F East Wing, and also of the apartment on 1/F West Wing as his own store room, since 2002 (when his mother Madam Chau passed away)[16].

25.  To summarise, Pak Huen’s opposition to the Order for Sale was based on his allegations of:

(1)  Family Arrangement and/or promissory estoppel

(2)  adverse possession

C.  TSANG’S GROUNDS OF OPPOSITION

26.  Tsang in his affirmation alleged that he has been in adverse possession of 3/F West Wing since around 1979, or alternatively the Estate is estopped from denying his alleged beneficial interests in 3/F West Wing[17]. As seen from Tsang’s Opening Submissions[18], his grounds for claiming an interest in 3/F, West Wing are based on, amongst others,

(1)  adverse possession

(2)  constructive trust

(3)  estoppel

(4)  acquiescence/laches

D.  THE AGREED DISPUTED ISSUES

27.  There are 4 agreed disputed factual issues for trial:

(1)  Issue 1 - Whether the Family Arrangement as alleged by Pak Huen exists and binds the Administrators

(2)  Issue 2 - Whether Pak Huen has acquired a possessory title over any part of the Family Property

(3)  Issue 3 - Whether Tsang has acquired a possessory title over any part of the Family Property

(4)  Issue 4 - Whether vacant possession of the Family Property should be given to the Administrators and whether the Family Property should be sold and on what terms

28.  Tsang had proposed a different version of Issue 3 above, which was not agreed by the Administrators. Tsang’s version was:

“3(a) Whether Tsang has acquired a possessory title and/or beneficiary interests over any part of the Family Property

3(b) Whether [Pak Wing’s][19] Promise as alleged by Tsang exists and the said promise was made on behalf of the Deceased/Estate, and if so, whether Tsang suffered detriments in reliance on the said promise

3(c) Whether the Estate knew of and stood by the “Expenses in Maintaining 3/F West Wing” and “My Efforts” as defined in Tsang’s Affirmation, and whether the Estate had waived its right to claim any interest in 3/F West Wing against [Tsang][20] and/or acquiesced to [Tsang’s][21] beneficial interest in 3/F West Wing.

E.  THE WITNESSES

29.  Mr Guy Norman, one of the Administrators, had filed 2 affidavits and had attended the trial for cross examination.

30.  Lynette had filed a total of 4 affidavits in 2017 and 2018, and Daisy had filed a total of 3 affirmations. As set out earlier, both Lynette and Daisy have passed away after the Removal Judgment. The Administrators issued a summons on 2 August 2023 for their respective affidavits/affirmations to be admitted notwithstanding that they had passed away and were unable to attend the trial for cross examination[22]. There was no opposition and this Court made an order in terms on the 1^st day of the trial with costs reserved.

31.  Michael had filed an affidavit in 2017. As said, he supported the application for the Order for Sale. He was present during the 1^st and 2^nd day of the trial but was not required for cross examination.

32.  Pak Huen had filed 3 affirmations and was scheduled to attend the trial for cross examination on the 1^st day of trial after Mr Norman, but, after mid morning break, Mr Chan SC suddenly announced that Pak Huen would not be called as scheduled without any reason being provided to the Court at the time. Following that, Mr Wong SC then indicated that it was no longer necessary for him to call Cheryl who had filed an affidavit essentially to respond to matters raised in Pak Huen’s affirmations.

33.  This left only Tsang who did attend trial to be cross examined on the affirmation filed by him.

F.  PAK HEUN’S CASE

F.1  Generally

34.  The Administrators only came into the picture after their appointment on 12 July 2019. They had no direct and/or first hand knowledge of the family history and circumstances of this case prior to their appointment save from information gleaned from the court documents and/or other documents and information provided to them by the beneficiaries.

35.  Although the Administrators have replaced Lynette, Michael and Colleen as plaintiffs in this action, the dispute is essentially between, on one hand, the beneficiaries of Pak Iu’s and Pak Tat’s respective estates and who are collectively entitled to 2 out of 6 shares of the Residuary Estate and who want the Family Property to be sold with vacant possession, and on the other hand (i) Pak Huen, the youngest of the 5 Sons (in his personal capacity as the only surviving one of the 5 Sons and beneficiary and in his capacity as the executor and beneficiary of Pak Wing’s estate) and (ii) Tsang, a non beneficiary of the Residuary Estate and a non family member.

36.  By the time of the trial, the Deceased had passed away for 68 years, and probate had been granted to the executors of the Estate for some 66 years, and Madam Chau, the last of the surviving spouse/concubines who was entitled to reside in the Family Property for life had passed away for some 21 years. Yet, the Family Property had not been sold and the Estate had not been wound up. In my view, by any standard and on the face of it, there had been a long delay in the winding up of the Estate. As stated in the Removal Judgment, there had been no distributions since 2002 until only in early December 2018, two years after Daisy became the executrix by chain of representation and after the issue of the originating summons herein for her removal. This Court found that although Daisy could not be blamed for any delay prior to her being granted Probate, there had been continuing unjustified delay on her part towards administration and distributions, and this was one of the grounds for her removal.

37.  Insofar as Pak Huen is concerned, he has put forward various grounds set out earlier to oppose the Order for Sale. In this Court’s Order of 7 November 2022, it is stipulated that all deponents shall attend the trial for cross examination, filing which such deponent’s affidavit evidence shall not be admitted unless with the leave of the Court[23] (“November 2022 Order”). Pak Huen’s last 3^rd affirmation was filed on 19 December 2022, after the November 2022 Order and only 8 months before the trial. He should be fully aware of the November 2022 Order.

38.  As pointed out by Mr Wong SC on behalf of Cheryl (9^th defendant), Pak Huen is the only witness with personal knowledge of matters which happened decades ago. Notwithstanding having filed 3 affirmations, and fully aware of the November 2022 Order, yet he failed to attend the trial for cross examination.

39.  Lynette and Daisy could not attend trial as they had passed away and leave had been sought and granted for their evidence to be admitted. Michael was not required for cross examination, and Cheryl only decided not to attend for cross examination as her evidence was mainly in response to Pak Huen’s 3^rd affirmation. Pak Heun did not give any reasons for his absence.

40.  Although Pak Huen was 84 at the time of his 3^rd affirmation, as set out later, he was able to recall various matters which he did not recall or did not disclose in his earlier affirmations, and had further raised a new ground of opposing the Order for Sale, namely adverse possession.

41.  The purpose of cross examination is essentially to test the veracity of the disputed part of a witness’s evidence. Pak Huen’s absence had taken this Court by surprise. In Pak Huen’s Closing Submissions, it was submitted that having assessed the state of the evidence before this Court at the close of the Administrators’ case, it was Pak Huen’s decision that his viva voce evidence was not necessary[24]. However, he is the only surviving one of the 5 Sons and an essential witness, as he had put forward various grounds for opposing the Order for Sale, and the burden was on him to establish his grounds. In my view, the Court is entitled to draw at least an inference from Pak Huen’s absence that he did not wish to be cross examined on the veracity of his evidence.

42.  In the circumstances, there is no reason as to why those parts of Pak Huen’s disputed evidence to oppose the Order for Sale should be admitted. Consequently, it is not necessary to admit that part of Cheryl’s evidence in her affidavit responding to/refuting Pak Huen’s disputed evidence. Although this should not affect the undisputed part of their respective written evidence, no leave/direction was sought to admit any part of their respective affirmations/affidavit, and all Closing Submissions were made on the basis that Pak Huen’s 3 affirmations and Cheryl’s affidavit were not admitted.

F.2  Issue 1 – the alleged Family Arrangement

43.  As seen in Pak Huen’s Closing Submissions, there were no submissions made in relation of Pak Huen’s case of there being the Family Arrangement. It was only submitted on behalf of Pak Huen that “the relevance and importance of Pak Huen’s live evidence to support his case is likely to be very limited, and that it was open to Pak Huen (and was indeed his decision) to rely principally upon the objective factual evidence to found his defence of adverse possession”[25].

44.  This was also confirmed by Mr Chan SC in oral submissions on the final day of the trial, namely his submission was that having seen Lynette’s, Daisy’s and Michael’s affirmations, it was Pak Huen’s decision to rely only on his case of adverse possession. Issue 1 is thus no longer an issue before this Court. In any event, as his written evidence on the Family Arrangement was not admitted, I find no “ objective factual evidence” to support Pak Huen’s alleged Family Arrangement. The fact that Pak Huen lived in the Family Property at the time of the Deceased’s death and has continued to live there since, and that all the 5 Sons had resided in the Family Property would not mean there was the Family Arrangement as alleged by Pak Huen. It was submitted on behalf of Pak Huen that the Estate had permitted members of the Deceased’s family to use and/or occupy various parts of the Family Property and/or that no actions were taken to sell the Family Property since the death of Madam Chau until the present proceedings. However, in my view, this would not necessarily mean that this was because of the existence of the alleged Family Arrangement.

45.  It was Lynette’s written evidence that she did not understand why the Residuary Estate remained unadministered and she was not aware of any legal or practical reasons for this[26]. According to Lynette, she and Pak Tat met in the United States and married in 1954. After their marriage, they returned to Hong Kong from United States (where Pat Tat went to attend university) when the Deceased suffered a stroke. They lived in the Family Property until Pat Tat passed away in October 1987 and she later moved back to United States. It was her written evidence that she had never heard her late husband Pak Tat or Pak Huen mention about the Family Arrangement[27]. It was also Lynette’s written evidence that there was no reason why she and her family should all be kept out of their inheritance and that she had travelled to Hong Kong in April 2014 to meet with Pak Leung (who was then still living) and Daisy[28]. She had also said that Pak Leung did not cooperate and failed to provide her any information and that she had to engage solicitors to formally request for an updated list of assets of the Estate, and that she understood Pak Huen at the time intervened on her behalf and tried to convince the then executors to cooperate. There was no mention by Lynette that anyone had mentioned to her about the alleged Family Arrangement.

46.  Even Daisy, who was the executrix prior to her removal, and whose husband Pak Leung was born by the same mother as Pak Huen, had said that she had “no recollection that during the life time of her husband that he had ever mentioned to her the existence of the Family Arrangement”[29]. As found in the Removal Judgment, it would appear that from Daisy’s written evidence that even Pak Huen did not assert to Daisy at that time that he had any entitlement to continue to live in the Family Property by reason of by Family Arrangement, and that all he did was to express to Daisy that he wanted to continue to live there[30].

47.  As for Michael, the executor of his father Pak Iu’s estate, stated in his answer to the Questionnaire that he was not aware of any arrangement by which any person occupied any part of the Family Property[31].

48.  Pak Huen was the youngest of the 5 Sons, and Pak Iu appeared to be some 27 years older than Pak Huen, and Pak Tat some 13 years older than Pak Huen. At the time of the Deceased’s death, Pak Iu was 44 years old, Pak Tat was about 30 years old and Pak Huen was at that time only 16 years old. There was no sufficient evidence as to their relationship, namely whether Pak Iu and Pak Tat were ever close to their younger half brothers, or to each other. However, considering their respective ages, it did not in my view seem probable that, in particular in the case of Pak Iu, he would agree to an arrangement which was likely to affect his family/estate most, namely a postponement of the sale the Family Property until the death his youngest half brother.

49.  Having considered all the “objective” evidence before this Court, I find no sufficient evidence to support Pak Huen’s allegation of there was an oral agreement between the 5 Sons as to the Family Arrangement.

50.  Insofar as the promissory estoppel, there was no sufficient written evidence as to any promise/assurance made to Pak Huen by any of the 5 Sons and/or by the Estate, nor any evidence of any reliance thereon by Pak Huen and/or any detriment suffered by Pak Huen in reliance thereon.

F.3  Issue 2 - the alleged adverse possession

F.3.1.  General legal principles

51.  There was no dispute over the general legal principles of adverse possession. The burden is on the claimant to prove two basic elements: (1) factual possession and (2) the requisite intention to possess (or animus possidendi)[32]. The burden of proving the lack of licence or consent rests with the squatter who must discharge his burden by adducing compelling evidence[33]. Further, to constitute possession for the purposes of limitation, the claimant must show that he took possession of the land in his own right and not as licensee or representative of another person, even if that other person is not the true owner or an agent acting on behalf of the true owner[34].

F.3.2.  Factual possession and animus possidendi

52.  No one had at any time sought any direction as to whether the present application in the Originating Summons should have been continued as if commenced by writ. There have been no pleadings filed. Without any of Pak Huen’s affirmations being admitted, there was simply no evidence from him, ie the claimant, to support his case for adverse possession.

53.  Both Mr Fung SC, for the Administrators, and Mr Wong SC, for Cheryl have submitted that Issue 2 should no longer be an issue and/or Pak Huen’s case should be rejected in limine.

54.  Mr Chan SC had on the other hand submitted in Pak Huen’s Closing Submissions, that there is adequate evidence before the Court for the Court to make a finding on Pak Huen’s case, based on the objective and undisputed evidence, and absent any prima facie case to the contrary (which was submitted to be none), there is simply no basis for the Court to resort to the drawing of adverse inference[35].

55.  Anyway, even if this Court were to consider only the objective and undisputed evidence, all such evidence in my view in fact supports the Administrators’ case that Pak Huen’s occupation was and is with the knowledge and permission of the executors of the Estate. My reasons are set out hereinafter.

56.  First, as to Pak Huen’s factual possession, according to Pak Huen’s Opening Submissions, he has been residing in the Family Property, specifically in the apartment on 2/F, East Wing and using the apartment on 1/F, West Wing to the exclusion of the world at large[36]. This was in fact not even consistent with his own evidence.

57.  The occupation status of the Family Property in 2017 was set out in paragraphs 105 to 108 of the Removal Judgment[37] which is reproduced below for ease of reference:

“105. According to Pak Huen, no one has the exclusive right to use or occupy the Ground Floor, but there are cubicles for storage. At the moment, Lynette is using 2 of those cubicles, Pak Huen is also using 2 cubicles, Michael is using 1, and Daisy is using 1. There are 3 floors, each with two apartments, one on the east and one on the west.

106. On the 1^st Floor, the Deceased used to occupy the East Wing while Madam Cheung and her children used to occupy the West Wing. Later, Bernard [Pak Leung] and his family occupied those 2 Wings, and after his death, Daisy has continued to occupy those 2 Wings on the 1^st Floor, and at present with 2 of her 4 children.

107. As for 2^nd Floor, Pak Huen and his son are now occupying the East Wing, while Michael and his family are now living in West Wing.

108. As for 3^rd Floor, according to Pak Huen, Lynette and her children occupy the East Wing and the West Wing was occupied by Pak Wing and after his death in March 2016, it has been vacant.”

58.  The above information in relation to the occupation of 1/F, West Wing was reflected in Michael’s 1^st affirmation and also in Pak Huen’s own 1^st affirmation, in particular in a chart “LPH-2” which was produced by Pak Huen[38]. It was this Court’s finding in the Removal Judgment that for the two Wings on 1/F were occupied by Pak Leung and his family and after Pak Leung’s death, Daisy had continued to occupy the two Wings on the 1/F, and at the time with two of her four children[39].

59.  As mentioned earlier, in October 2020, the Administrators had sent the Questionnaire to each of the beneficiaries including seeking information on the occupation status of the Family Property. On 30 November 2022, Pak Huen’s former solicitors Messrs Edmund WH Chow & Co had provided Pak Huen’s Answers, namely, the part of the Family Property then stated to be occupied by Pak Huen (and his son) was 2/F East Wing. There was no mention of Pak Huen’s occupation or use of 1/F West Wing and/or any other parts of the Family Property[40]. On 13 January 2021, the Administrators had sent a letter to all the beneficiaries providing a further progress update on the administration, with a summary of the beneficiaries’ respective Answers[41]. There was no indication from Pak Huen that the Answers provided by him were incorrect.

60.  Further, according to the Administrators’ 1^st Occupation Diagram, Pak Huen’s former solicitors Messrs Edmund WH Chow & Co claimed that Daisy should have the keys to the apartment on 1/F West Wing but Daisy’s solicitors claimed that she did not have such keys [42]. The Administrators were at that time trying to find out, among other things, as to who held the keys to 1/F West Wing in order for them to carry out inspection and/or valuation. The Neutral Ds in their Closing Submissions had also pointed out that the Administrators’ communications with Daisy’s then solicitors in relation to the key(s) to 1/F West Wing were only initiated after the Administrators were appointed and disputes among some family members of the Deceased had already arisen, and that Daisy’s solicitors’ then response, namely she did not have the keys, was a factual one limited to a state of status quo at that point in time[43]. In any event, as Mr Norman had said, he was given the “run around ”, as although he was informed by Daisy’s then solicitors that the keys were with Pak Huen, he was not able to get the keys from Pak Huen.

61.  It appeared that Pak Huen only formally changed his solicitors on 21 October 2022[44]. It was only in a letter dated 12 December 2022 from Pak Huen’s present solicitors (“12.12.22 Letter”) that the Administrators were formally informed that Pak Huen was/is using the 1/F West Wing as a storeroom and that he had placed a lot of his personal belongings and chattels in it (save the Guest Room), and that all the personal belongings and chattels inside 1/F West Wing (other than the belongings of Madam Cheung and/or her daughter) are assets of Pak Huen or his family and not chattels of the Estate[45]. In fact, in this letter, Pak Huen was also claiming that he was occupying/using :

(1)  2/F, East Wing

(2)  1/F, West Wing ( except the Guest Room)

(3)  Room 3 at Basement and his carpark[46]

(4)  all rooms on Ground Floor with his name marked on the Ground Floor Plan

62.  It was after the 12.12.22 Letter that Pak Huen’s 3^rd affirmation was filed on 19 December 2022. In this 3^rd affirmation, Pak Huen claimed that after his mother Madam Chau passed away in 2002, only he and his immediate family had/have the keys and exclusive access to, control and possession of 2/F, East Wing and 1/F, West Wing to the exclusion of others, whether it be other family members or otherwise, and that none of his other family members are permitted to enter without his permission. He had said that he had all along intended and treated 2/F East Wing and 1/F, West Wing as his own and excluded everyone else from entering or otherwise accessing those parts of the Family Property for more than 12 years, and he did intend to possess those parts of the Family Property so that he could live there at least until the end of his days[47].

63.  Thus, notwithstanding his solicitors’ letter a week earlier, in his 3^rd affirmation he was only seeking adverse possession of 2/F East Wing and the entire 1/F, West Wing , which appears now to include the “Guest Room”, without any mention of the other rooms/spaces occupied or used by him. I have to say, even if his affirmations were admitted, his written evidence was confusing and inconsistent.

64.  Having considered all the “objective” and/or “undisputed” evidence, there was simply no evidence to support Pak Huen’s case that he had occupied or was in possession or in control of 1/F West Wing since the death of Pak Iu and Madam Chau, or for more than 12 years prior to his 3^rd affirmation (even if such were admitted). In my view, Pak Huen is not even able to satisfy this Court of the 1^st element of factual possession, for his adverse possession claim in respect of 1/F West Wing.

65.  Second, as for 2/F East Wing, it was not disputed that Madam Chau was residing there until her death in 2002, and she was clearly entitled to reside there under the provisions of the Will, and further it was not disputed that she had resided there with the knowledge and permission of the then executors of the Estate. After her death, Pak Huen has continued to occupy 2/F East Wing with his family members, and currently, he is residing there with his son. However, even though there is no dispute that Pak Huen resides in 2/F, East Wing and has a set of keys, this is not sufficient to establish factual possession under the 1^st element in an adverse possession claim.

66.  The undisputed evidence clearly shows that Pak Huen has been occupying 2/F East Wing with the knowledge and permission of the executors. At all material times, the executors (except for the Administrators) had been living in the Family Property and were/are members of the same family, including Pak Huen’s mother Madam Chau and his full blooded brother Pak Leung and Pak Leung’s wife Daisy. Further, from Tsang’s evidence, there is a gate outside the main entrance to the Family Property, which was changed about 10 odd years ago, and that he had received the keys to 3/F West Wing from Pak Huen. This would mean that Pak Huen must have received his own keys to the new gate from the then executors of the Estate.

67.  In any event, the evidence indicates that the Estate had paid for the government rates, electricity and water bills of all the disputed units since at least 2000[48], and that the Estate had made payment of HKD 200,000 in 2005 to Pak Huen for repairs of 2/F East Wing[49].

68.  Having considered all the “objective” and/or “undisputed” evidence, I find that Pak Huen has not been able to demonstrate that his occupation and possession of 2/F East Wing has been without the knowledge and permission of the Estate.

69.  Third, in Pak Huen’s Closing Submissions, it appears to be accepted by him that it is reasonable to infer that there is a licence for Pak Huen to occupy 2/F East Wing, but he seems to be arguing that the licence was only granted by his father , namely the Deceased, and his mother, namely Madam Chau, and that such licence was revoked or lapsed upon their deaths[50].

70.  The Deceased was the registered owner of the Family Property, and any licence granted by him would have been terminated upon his death. However, any licence granted by Madam Chau would have been granted by her in her capacity as one of the named executors of the Estate, and on behalf of the Estate. I do not agree that upon her death, such licence would automatically be terminated. The fact is that the remaining executor was Pak Leung followed by Daisy. Daisy was fully aware of Pak Huen’s occupation as she had had discussions with Pak Huen and that Pak Huen had indicated to her that he wanted to continue to live in the Family Property[51], and he was alleging the Family Arrangement at that time[52].

71.  Having considered the evidence, I am of the view that all the evidence indicates that Pak Huen’s occupation of whether 2/F East Wing and or 1/F, West Wing or any parts in the Family Property has been with the knowledge and permission of the executors of the Estate, prior to the appointment of the Administrators.

72.  Fourth, as for the requisite intention to possess, animus possidendi, there was simply no evidence of Pak Huen’s intention was to exclude the world at large including the Estate, namely the owner of the Family Property, whether in relation to 1/F West Wing or 2/F East Wing. There was no evidence of Pak Huen having ever made it clear to the Estate that he had the intention to possess 1/F West Wing and/or 2/F East Wing until his 3^rd affirmation.

73.  In the above circumstances, Pak Huen has not been able to demonstrate that he has acquired a possessory title over any part of the Family Property and his claim as to adverse possession must fail.

G.  TSANG’S CASE

G.1  Tsang’s evidence

74.  According to Tsang’s affirmation, his father was an acquaintance of Pak Wing whom Tsang addressed as “Uncle Li”, and that in around 1979, through the recommendation of Tsang’s father, Pak Wing agreed to take Tsang on as his “god-son”. Tsang said as his father hoped he could learn about doing business from Uncle Li by shadowing and assisting Uncle Li with his daily work, Tsang’s initial role was akin to that of Uncle Li’s personal assistant and his office boy. In order to ensure that he would learn well and work hard, his father and Uncle Li arranged for him to move into Uncle Li’s apartment on 3/F, West Wing, in around 1979 since when he had been living there with Uncle Li, and after Uncle Li’s death, he has continued to live there.

75.  It was Tsang’s evidence that as Uncle Li did not have any children, he treated Tsang as his son, and that over the years Uncle Li mentioned that Tsang would have ownership of (有份) 3/F, West Wing (“Promise”)[53].

76.  It was also Tsang’s written evidence that there were different households residing at different wings on different floors of the Family Property but he had never become acquainted with any of them, except Pak Huen. According to Tsang, he and Uncle Li were the only persons who had the keys to 3/F, West Wing, and that no one was free to enter except Uncle Li and him, and that they had exclusive access to, control and possession to 3/F, West Wing. Tsang said he never paid any rent or licence fee nor was he ever expected to pay any rent or licence free and all along he had intended to treat 3/F West Wing as his own and excluded everyone else from entering or otherwise accessing the apartment for more than 20 years.

77.  Further, according to Tsang, relying on the Promise, he had always regarded 3/F West Wing as his own property and that he had paid for repair/maintenance and improvement works of the apartment, and spent time and efforts in addition to money following up on the maintenance and improvement works over the years.

78.  In support of his case, Tsang had produced various documents including photographs (with no dates)[54], and the following:

(1)  Copy of an extract on the Business Register of the registration of Tsang’s business Andy Printing Company at an address in Kwai Chung, with date of commencement of business on 1 December 1996 and with Tsang’s residential address given as “15, Robinson Road, Hong Kong”[55];

(2)  Copy of a Fortress receipt of illegible date issued to Tsang for HKD 638 for the purchase of a household product, with a delivery address at 3/F West Wing of the Family Property and a delivery date 17/05/03[56];

(3)  Copy of a PCCW bill of HKD 120 addressed to Tsang at 3/F West Wing, of issue date 17/08/10[57];

(4)  Copy of a sales invoice dated 23 September 2011 of about HKD 2,000 from Mayfair Medical Supplies Ltd addressed to someone called “Chan Wai Yee” at an address in Sham Shui Po, but with delivery address at 3/F West Wing[58];

(5)  Copy of a Public Bank statement dated 29 November 2014 addressed to Tsang at 3/F, West Wing[59];

(6)  Copy of an AFG Securities Limited Account Opening Declaration dated 31 October 2017 by Tsang, with his residential address stated to be at 3/F, West Wing, but his correspondence address stated to be an address on the 15 floor of an building on Des Voeux Road Central[60];

(7)  Copy of a payment confirmation notice of Manulife dated 26 May 2020 addressed to Tsang at 3/F West Wing[61];

(8)  Copy of a Dah Chong Hong Ltd Delivery Note dated 10 September 2021 addressed to Tsang at the Family Property for some TV equipment (?)[62];

(9)  Copies of 2 Hibachi delivery notes dated 11 March 2022 and 6 January 2023 for household items with Tsang as “contact person” and delivery address “15 Robinson Road, Ground Floor”[63];

(10)  Copy of a delivery order of Shun Hing Group of a microwave oven , to be delivered to Tsang of (illegible address)[64];

(11)  Copy of a Prudential official receipt dated 5 December 2022 addressed to Tsang at 3/F, West Wing[65];

(12)  Copies of 2 Kompass Creative Services Ltd invoices dated 30 September 2009 for cleaning 2 air conditioners and adding refrigerant , and for repairs to windows[66]

79.  During the trial, Tsang confirmed there was no formal adoption although he claimed to be a “god son” of Pak Wing and that he has since 1979 been living in Pak Wing’s apartment on 3/F, West Wing of the Family Property and that he has a key to that apartment, and also a key to the main entrance of the Family Property. He said he did not know Pak Iu or Pak Leung, and had only been to Pak Huen’s apartment and not the others. Tsang said he had met Madam Chau, the mother of Pak Wing and Pak Huen, who was living with Pak Huen before she passed away.

80.  Tsang claimed that he did not know that the Family Property was/is owned by the Estate until he was joined as a defendant herein, and that he claimed that he had understood that Pak Wing owned the apartment 3/F, West Wing, and that Pak Wing had told him that the apartment belonged to Pak Wing and him.

G.2  Analysis of evidence and findings

81.  First, In Tsang’s affirmation, he had referred to paragraph 108 of the Removal Judgment set out earlier, and he said that what was stated that about the apartment on 3/F, West Wing being vacant after Pak Wing’s death was incorrect and that he believed that the Court had not been provided with the correct evidence[67].

82.  As set out earlier, the information set out by this Court in paragraph 108 of the Removal Judgment was based on the then evidence of Michael and Pak Huen.

83.  Having said this, it appeared that by December 2019, the Administrators were aware of Tsang’s alleged occupation of 3/F, West Wing. Mr Norman had mentioned in his 1^st affidavit that the Administrators had written to Tsang on 16 December 2019 and 13 January 2020 to enquire about the basis on which he allegedly occupied the apartment and the details of any monthly rent that he was paying, and that according to Mr Norman, on 15 January 2020, Tsang had telephoned the representatives of the Administrators and confirmed that he had been residing at 3/F, West Wing with Pak Wing since the 1980s and had continued residing there since Pak Wing passed away, and also confirmed that no lease arrangement had been entered into and that he was not paying rent[68].

84.  At the trial, it was put to Mr Norman that it was the Administrators’ staff who telephoned Tsang to request for access to 3/F, West Wing, and that Tsang did not mention anything about whether there was any lease arrangement. Mr Norman had explained that as they did not have Tsang’s telephone number, they could not have contacted him by telephone and that was why they had to send him two letters. It was thereafter that Tsang telephoned their staff to confirm that he had been residing at 3/F, West Wing with Pak Wing since the 1980s and had continued to reside there. It was Mr Norman’s evidence that what was stated in paragraph 47 of his affidavit was from their record of the conversation.

85.  The staff who spoke to Tsang was not called, and in any event, I accept that there was no sufficient evidence from what was stated by Mr Norman in paragraph 47 that Tsang had admitted that he was permitted to reside at 3/F West Wing by any one after Pak Wing’s death.

86.  Second, in Tsang’s affirmation, there was also an allegation that the Administrators had misled the Court by their skeleton submissions dated 2 November 2022 that Tsang said he was permitted by Pak Wing to stay in 3/F, West Wing[69]. Since the actual paragraph 47 of Mr Norman’s affidavit had been referred to the Court, there was no evidence that the Administrators had intended to mislead the Court, nor was there any evidence that the Court had been misled.

87.  Third, Mr Norman had referred to the letter dated 30 November 2020 from Pak Huen’s former solicitors to the Administrators’ solicitors with Pak Huen’s Answers to the Questionnaire[70]. It was stated in Pak Huen’s Answers amongst other things, that 3/F, West Wing was and had been occupied by Tsang for decades with the consent and during the lifetime of Pak Wing and that Tsang had been treated as if he were a family member by both Pak Wing and Pak Huen; and after Pak Wing passed away in 2016, Pak Huen was the sole beneficiary of the residuary estate of Pak Wing and continued to allow Tsang to remain in occupation as before[71].

88.  During cross examination, Tsang did not dispute what was stated in Pak Huen’s above Answers save that he disagreed that Pak Huen had treated him as a family member. What is clear is that even on Tsang’s own evidence, he moved into 3/F West Wing at the invitation of Pak Wing and with Pak Wing’s agreement. Although in Tsang’s Closing Submissions, it appeared to be submitted on his behalf that both Tsang and Pak Wing had excluded the whole world from 3/F, West Wing, this was a new case on Tsang’s part with no supporting evidence. In my view, Pak Wing himself was clearly residing in 3/F West Wing with the permission of the executors of the Estate, and it was not really disputed that Pak Wing had received HKD 200,000 from the Estate in relation to the repairs of 3/F West Wing in November 2005. Tsang’s status would appear to be an invitee of Pak Wing. In any event, Tsang had agreed that upon Pak Wing’s death, he was allowed by Pak Huen to continue to remain in occupation of 3/F West Wing as before. In light of this, Tsang’s adverse possession claim must fail. Further, Pak Wing only died in 2016 and even if Tsang had been in adverse possession since Pak Wing’s death, such fell short of 12 years prior to the commencement of HCA 426.

89.  Fourth, the documentary evidence which Tsang had produced mainly indicated purchases of small household items , and only two invoices of same date in 2009 from Kompass Creative Services Ltd indicated some repair/maintenance/improvement works to 3/F, West Wing which were minor. In my view, such documents are not sufficient to establish factual possession in law for adverse possession.

90.  As for the requisite animus possidendi, on Tsang’s own evidence, he could not have intended to exclude Pak Wing (at the very least) from 3/F West Wing, who only passed away in 2016.

91.  Fifth, as for common intention constructive trust is concerned, the undisputed fact is that Pak Wing was never the owner of 3/F West Wing. Pak Wing must be fully aware that he was only a beneficiary in the Estate, and that 3/F West Wing was not for him to gift to anyone. In fact, Pak Wing had made provisions in his own will for Tsang and had bequeathed to Tsang a property at Sing Ping Street[72]. There was no evidence that Pak Wing had bequeathed or had intended to bequeath 3/F West Wing or any share thereof to Tsang, and this was in fact admitted by Tsang in cross examination.

92.  There was simply no sufficient evidence of the Promise as alleged by Tsang. The words which Tsang said Pak Wing used were “有份” but these words were vague and would not necessarily mean that Tsang was to have ownership of 3/F, West Wing. In any event, in my view whatever common intention Pak Wing and Tsang had, this could not have given rise to any beneficial interest in 3/F West Wing being given to Tsang.

93.  Sixth, on estoppel, acquiescence and/or laches, there was no sufficient evidence that Tsang was under any mistake as to his rights in relation to 3/F, West Wing. He himself admitted that he was invited by Pak Wing to move in and to live there rent free, and after Pak Wing’s death, he had been allowed by Pak Huen to continue to remain there rent free. Tsang clearly knew he was lining there as a guest and in any event clearly not an owner. Pak Wing’s and Pak Huan’s mother was Madam Chan who was one of the executors, so was with Pak Leung and later Daisy. There was no evidence to suggest that any executors had known Tsang to be labouring under any mistaken belief as to his status and/or rights.

94.  Seventh, Tsang’s own oral evidence was also unsatisfactory. As pointed out by Mr Fung, although in his affirmation, Tsang was seeking possessory title and/or beneficial interest of 3/F West Wing , during the trial, he had said he could not actually say he had/has ownership but that he had/has a right to reside in the unit. A “right to reside” does not mean ownership. His oral evidence was confusing and not consistent with his written evidence.

G.3  Conclusion on Issue 3 - Tsang’s case

95.  Having considered all the evidence, including the above, I find that Tsang has not been able to satisfy this Court of any of his claims.

H.  ISSUE 4 : PROPOSED SALE

H.1  Whether the Family Property should be sold

96.  Mr Chan has referred this Court to Foo Jee Seng v Foo Jhee Tuang [2012] SGCA 41, at paragraphs 22-39 and 64[73] which highlights the difference in approaches across jurisdictions when it comes to a trustee exercising its power of sale with the discretion to postpone the same. It is urged upon this Court that the concept of an order for sale should be applied to fit the reality of the situation so that justice is achieved and also giving effect to the testator’s intention. It is submitted by Mr Chan that the intention of the Deceased was to cater for his family, not only his wife and concubines, but also his sons.

97.  However, in the Will, the Deceased only expressly stipulated that the Family Property was to be kept and maintained as a family house for the habitation of Madam Leung, Madam Cheung and Madam Chau only[74]. There was no provision in the Will for the Family Property to be kept and maintained as a family house for the habitation of each of the 5 Sons during their life time. There was no evidence that the Deceased had ever intended that the Family Property had to be kept and maintained as a family house for the habitation of each of the 5 Sons, or that it was not to be sold during the joint lives of the 5 Sons. Having considered the provisions of the Will, I do not find that it was the intention of the Deceased that the Family Property be provided as a family home for the 5 Sons for life, or that it should not be sold with vacant possession during their joint lives.

98.  Realistically, there appears to be a general decline in property prices in Hong Kong in recent years, but this is not a reason to postpone a sale. No one can foretell when, or if ever, prices will improve.

99.  By now, the Deceased died almost 69 years ago, and Madam Chau had passed away for almost 21 years. The Estate has still not yet been wound up. This cannot be fair to other residuary beneficiaries. In my view, there is no reason to further postpone the sale of the Family Property. Nor is there any reason why the Family Property should not be sold with vacant possession.

100.  I will however allow Pak Huen and Tsang more time to vacate the respective units occupied and/or used by them, namely on or before 31 July 2024.

I.  THE ORDER

101.  I grant an order for sale of the Family Property with vacant possession, and directions as sought by the Administrators save as said above. The Administrators are to submit a draft order for the Court’s approval.

102.  Insofar as costs between the Administrators and respectively Michael, Irene, and Cheryl, and the Neutral Ds, I make no order as to costs.

103.  As for costs arising out of Pak Huen’s claims, I order Pak Huen to pay the Administrators’ costs and Cheryl’s costs to be taxed on indemnity basis with certificate for two counsel. I make no order as to costs as between Pak Huen and the Neutral Ds, Michael, and Irene.

104.  As for costs arising out of Tsang’s claims, I order Tsang to pay the Administrators’ costs and Cheryl’s costs to be taxed on party and party basis, with certificate for two counsel. I make no order as to costs as between Tsang and the Neutral Ds, Michael, and Irene.

105.  I will apportion the costs of this application and the trial as to 2/3 being in relation to Pak Huen’s claim and 1/3 being in relation to Tsang’s claim.

106.  Any of the Administrators’ costs not covered by the above shall be paid by the Estate on trustee basis, with certificate for two counsel.

107.  All the costs orders are on nisi basis, and shall be made final after 21 days.

Mr Eugene Fung SC and Ms Bonnie YK Cheng, instructed by Stephenson Harwood, for the Plaintiffs

Mr Edward Chan SC and Mr Abel Lam, instructed by Chui & Lau, for the 2^nd & 3^rd Defendants

Mr Tommy Cheung, instructed by Raymond Tong & Co, for the 4^th, 5^th, 6^th and 10^th Defendants

The 7^th and 8^th Defendants, unrepresented, appeared in person

Mr Anson Wong SC and Mr Justin Lam, instructed by Withers, for the 9^th Defendant

Ms Lorinda Lau and Mr Forest Fong, instructed by C M Chow & Company, for the 11^th Defendant

HCMP 1836/2017

[2019] HKCFI 2414

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 1836 OF 2017

_______________________

______________________

______________________

__________________

DECISION (2)
(On Costs)

__________________

Introduction

1.  On 8 August 2019, this Court handed down its Decision on Costs (“Decision”). 

2.  On 14 August 2019, Ps’ solicitors sent a letter to Court to seek clarification on the following two issues:

1)  That this Court had made no order in respect of the remainder (or 55%) of Ps’ own costs (“1^st Issue”);

2)  There was no ruling as to whether the costs ordered should be paid forthwith or not (“2^nd Issue”).

3.  Solicitors for D1, D4 to D7 replied on 15 August 2019 that they had no objection to Ps’ request for clarification on the above two issues and no further formal submissions had been received from them.

4.  As for D2 and D3, their solicitors sent a letter on 15 August 2019 stating that the two issues raised by Ps should only be adjudged by the Court after consideration of formal submissions from all the parties affected by the 1^st Decision.

5.  Thereafter, on 3 September 2019, further formal submissions were received from Ps on one side, and D2 and D3 on the other.

1^st Issue

6.  I would summarise Ps’ position on costs in relation to the Removal Application as follows:

Originating Summons issued on 29.08.17 (“OS”)	Ps’ costs of and incidental to these proceedings be paid out of the Estate on trustee basis
Ps’ Skeleton Submissions of 11.12.18 (on Removal Application, Sale Application, and Estate Account Application) (“Substantive Submissions”)	(i) if Ps’ applications successful, costs against D1 personally on full indemnity basis; (ii) if Ps’ applications unsuccessful, costs against D1 personally; or alternatively that costs be paid out of the Estate
Ps’ Written Submissions on Costs of 24.05.19 (“Costs Submissions”)	(i) D1 to pay Ps’ costs personally on indemnity basis forthwith to be taxed if not agreed, with certificate for 2 counsel; D1’s own costs be borne by D personally and not paid out of the Estate and to reimburse the Estate for any costs already paid out on her behalf; (ii) D2 to D7 do personally pay Ps’ costs on a party and party basis forthwith to be taxed if not agreed with certificate for 2 counsel, and D2 to D7’s own costs be borne by them personally and without being indemnified by the Estate.
Ps’ Reply Written Submissions on Costs of 14.06.19 (“Reply Submissions”)	(i) Ps fundamentally objected to the proposed orders of D1, D4-D7, (including Ps’ costs be paid out of the Estate), with certificate for 2 counsel, to be taxed on a party and party basis if not agreed; (ii) if costs were to be paid out of the Estate for Ps, they ought to be taxed on the full indemnity basis (emphasis added)
Ps’ Further Formal Submissions on Costs of 03.09.19 (“Further Submissions”)	(i) in light of the Decision, the remainder of 55% of Ps’ costs of and incidental to the Removal Application be paid out of the Estate on an indemnity basis; (ii) Ps’ costs should be ordered to be taxed and payable forthwith.

7.  It would appear from Ps’ above Submissions that although initially Ps were seeking in the OS an order that their costs be paid out of the Estate on trustee basis, their position had changed.  In their Costs Submissions, they were seeking their costs to be paid by D1 personally on indemnity basis, on the basis that the Removal Application fell into the 3^rd class of the Re Buckton categories, and was a hostile litigation.  In their Costs Submissions, they were seeking an order that costs should follow the event and be borne by the losing parties, and that any argument by Ds that costs should be paid out of the Estate should be rejected[1].

8.  Ps now rely on paragraphs 25-26 of their Reply Submissions. However, as set out in the table above, in those paragraphs Ps’ then position was that at the time (i) Ps fundamentally objected to the formulation of the proposed costs orders in the Submissions of D1, D4-D7 and (ii) the proposal of D1, D4-D7 that Ps’ costs be paid out of the Estate but only on a party and party basis was wholly unacceptable for Ps as the successful parties in the application and, if costs were to be paid out of the Estate to Ps, they ought to be taxed on the full indemnity basis.

9.  This Court’s understanding of Ps’ above position was that only if the Court were to order Ps’ costs be paid out of the Estate, then such costs be taxed on the full indemnity basis and not on party and party basis.  However, it remained Ps’ primary submissions that the Removal Application was a hostile litigation and costs should follow the event and be paid by D1 personally on indemnity basis.

10.  As seen in the Decision, costs orders were then made for the Removal Application on the basis of a hostile litigation.  As in any hostile litigation, and notwithstanding Order 62 rule 3 (7) of RHC, the Court is entitled to take into account the special matters in Order 62 rule 5 and costs is in the Court’s discretion.  As pointed out by Mr Chow, for reasons set out in the Decision, there was no order made by this Court that Ps should be reimbursed by the Estate for the remainder of Ps’ costs, whether indemnity or otherwise.  It was not this Court’s intention that the remainder of Ps’ costs in relation to the Removal Application should be paid out of the Estate.

11.  In light of the above, no clarification is necessary in respect of the 1^st Issue.

The 2^nd Issue

12.  On this issue, all along Ps had sought costs to be taxed forthwith, if not agreed, with certificate for 2 counsel.  There were no submissions were made by any of Ds to oppose Ps’ application for costs to be taxed forthwith, if not agreed. 

13.  This Court accepts that this part was inadvertently omitted by the Court, and will make a supplementary order that the costs ordered to be paid by D1, D2/D3 be taxed and payable forthwith.

Costs

14.  I make no order as to costs of the Further Submissions.

HCMP 1836/2017

[2019] HKCFI 1957

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 1836 OF 2017

_______________________

______________________

______________________

_________________

D E C I S I O N
(On Costs)

_________________

Introduction

1.  On 26 April 2019, this Court handed down a judgment in this matter directing that the matter of costs be dealt with on paper and the parties to lodge written submissions in relation thereto (“Judgment”). I shall follow the definitions in the Judgment, save where otherwise indicated. 

2.  As seen in the Judgment, Ps essentially sought 3 orders in the originating summons issued on 29 August 2017 (“Originating Summons”) namely (1) an order to remove the 1^st defendant Daisy as the executrix of the Estate and for an independent professional administrator to be appointed in her place (“Removal Application”), (2) an order for the sale of the Family Property (“Sale Application”) and (3) an order for Daisy to give a full inventory and account of the Estate (“Estate Account Application”).

3.  Briefly, pursuant to the Judgment, this Court ordered that :

(1)  Daisy be removed as executrix and an independent administrator be appointed in her place;

(2)  The Sale Application be adjourned sine die with liberty to restore for a directions hearing after the appointment of the professional administrator;

(3)  As for the Estate Account Application, this was also adjourned sine die with liberty to restore.

4.  The Originating Summons was issued by Ps under Order 85 of RHC.  The costs order Ps had originally sought in the Originating Summons were as follows:

(i)   Ps’ costs of and incidental to these proceedings be raised and paid out of the Estate on the trustee basis in the due course of administration;

(ii)  Such orders as may be appropriate in respect of the costs of Ds of and incidental to these proceedings.

5.  However, in relation to the Removal Application, namely paragraphs 1 and 4 of the Originating Summons, Ps now seek orders as follows :

(1)  Daisy to personally pay Ps’ costs of and incidental to paragraphs 1 and 4 of the Originating Summons on an indemnity basis forthwith to be taxed if not agreed, with certificate for 2 counsel. Daisy’s own costs shall be borne by her personally and without being indemnified for those costs out of the Estate.  Insofar as any funds of the Estate have already been used to pay such of Daisy’s costs, she to personally reimburse the Estate for such costs forthwith.

(2)  D2 to D7 do personally pay Ps’ costs of and incidental to paragraphs 1 and 4 of the Originating Summons on a party and party basis forthwith, to be taxed if not agreed, with certificate for 2 counsel.  D2 to D7’s own costs shall be borne by D2 to D7 personally and without being indemnified for those costs out of the Estate.

6.  The position of Daisy and D4-D7 is that their own costs and P’s costs should all be borne out of the Estate, rather than by Daisy personally; alternatively, there should be at least an apportionment as to costs.

7.  The position of Pak Huen (on behalf of D2 and D3) is that there should be no order as to costs against Pak Huen (ie D2 and D3) in respect of the Removal Application.  Pak Huen does not object to an order that all the parties’ costs be payable out of the Estate. 

8.  So far as the costs of the Sale Application and Estate Account Application, namely paragraphs 2, 3, 5 and 6 of the Originating Summons, as these applications have been adjourned sine die, such costs should be reserved.  I understand that there was no objection to this and I will so order.  This Decision is only in relation to costs of the Removal Application.

The legal principles

9.  As set out in Cheung Pui Yuen v Worldcup Investments Inc (2009) 12 HKCFAR 31, where proceedings have been properly instituted for the benefit of a deceased’s estate, the court may, in an appropriate case, make an order for the costs of the proceedings to be borne by the estate, and the principle was explained by Kekewich J in Re Buckton [1907] 2 Ch 406[1].

10.  There are 3 classes of cases referred to in Re Buckton.  It was not disputed by the parties that Ps’ present claim for costs against Ds was made under the 3^rd class, a class where the application to the court is made by a beneficiary but is, in substance although not in form, an adverse claim made in hostile litigation, and in such a case, the rule applicable to hostile litigation should be applied and the unsuccessful party ordered to pay the costs.

11.  It was however submitted by Mr Lam SC that in exercising its discretion as to costs, the Court shall take into account, as set out under Order 62 rule 5(1) of RHC and amongst other things, (i) the underlying objectives set out in Order 1A rule 1 of RHC, (ii) the conduct of the parties, and (iii) whether a party has succeeded on part of his case, even if he has not been wholly successful.

12.  As set out in Order 62 rule 5 (2) of RHC, the conduct of the parties includes: (i) whether it was reasonable for him or her to raise, pursue or contest a particular allegation or issue; (ii) the manner in which he has pursued or defended his case or a particular allegation or issue; (iii) whether he who has succeeded in his claim, in whole or in part, exaggerated his claim; and (iv) his conduct before, as well as during, the proceeding.

13.  Mr Lam SC further referred to Re Estate of Choi Kim Kwong [2015] HKCFI 870 (HCMP 1997/2014, unrep, 27 May 2015) and submitted that if a plaintiff beneficiary “cast too wide a net and drag in a host of matters” that ought not have been raised, the scope of the proceedings would be extended improperly with much costs to be incurred by both sides unnecessarily. It would be unfair to require the defendant administrator to personally bear his own costs and the costs of the plaintiff, even if the plaintiff is held to be entitled to commence the proceedings in the first place[2].

Ps’ case

14.  Ps seeks costs of the Removal Application against D1 personally on indemnity basis based on this Court’s following findings[3]:

“(1) Even on D1’s own case, the Estate Accounts prior to 2014 were not in the proper format and were not proper estate accounts (Judgment §48).

(2) Notwithstanding D1’s offer at the 1^st hearing, by the time of the 2^nd hearing, D1 still failed to arrange for inspection of documents listed by Ps and, as such, proper Estate Accounts with supporting documents had not yet been rendered at the end of the 2^nd hearing (Judgment §69).

(3) There was unjustified delay on the part of D1 to provide Ps with proper Estate Accounts (Judgment §90).

(4) There was significant delay in the administration and distribution of the Estate. It was only in early December 2018, two years after probate was granted and with the hearing before this Court approaching, that the interim dividends cheques were sent out by D1 and letters were sent to the beneficiaries regarding the shares in publicly listed companies and private companies. There was no reason as to why all these could not have been done earlier (Judgment §103).

(5) For a year after grant of probate and before D2 had raised the issue of the Family Arrangement/Promissory Estoppel, D1 had done little or nothing to bring about a sale of the Family Property and/or otherwise to wind up the Estate (Judgment §118).

(6) Notwithstanding that D1 is fully aware of her duty, apart from collecting in all the assets, she had not taken any pro-active step to try and achieve a final distribution and/or otherwise to wind up the Estate prior to the issue of the present proceedings and it took her over two years after grant of probate to make an interim distribution and to write to the beneficiaries regarding the disposition of shares in listed companies and private companies (Judgment §119).

(7) There has been continuing unjustified delay on D1’s part towards administration and distribution (Judgment §120).

(8) D1 herself and her children did not see an urgent or immediate need to move out of the Family Property. There was no evidence that D1 herself had tried to secure an agreement, at least as between her (and her 4 children) and Ps, in relation to moving out or vacating the Family Property for the purpose of a sale.

(9) Notwithstanding D1’s own statements and her last minute undertaking through Senior Counsel, her inconsistent stance and the lack of positive and/or concrete actions on her part as an executrix in relation to a sale plus her attitude that there is no urgent or immediate need to change the present status quo would result in delay in winding up the Estate and such a delay would in effect mean that she and her children can continue to reside in the Family Property free of rent and with utilities and various expenses paid by the Estate. There is a serious conflict of interest between D1 as executrix and the Estate in relation to the matter of a sale of the Family Property (Judgment §135).”

Daisy’s case

15.  On the other hand, it was submitted on behalf of Daisy that Ps’ own litigation conduct should be taken into account by the Court, such conduct being:

(1)  raising and pursuing initial complaints that did not ground in the removal of Daisy;

(2)  repeated introduction of new complaints that were not made out;

(3)  raising complaints only within the four corners of this litigation.

Discussion

Raising complaints that did not ground in the removal

16.  The Originating Summons was issued on 29 August 2017, about 9½ months after Daisy was granted Probate of the Estate.  This was supported by Lynette’s affidavit of 16 August 2017.  As seen therein, Lynette had said she was told by her solicitors that Clause 5(2) of the Will became operative at the very latest on the death of Madam Chau in 2002 and that by February 2014, Lynette realised that settling of the Estate was an open issue that she needed to address and she first consulted solicitors in April 2014 when she failed to obtain updated information on the Estate from Bernard who was at that time the executor of the Estate.

17.  As pointed out by Mr Lam SC on behalf of Daisy, it would thus appear from Lynette’s 1^st affidavit that there was dissatisfaction with the administration of the Estate since when Bernard became sole executor of the Estate.  However, as pointed out by Mr Lam, there had been no serious complaint or formal request for Estate Accounts or disclosure of documents made by Lynette or Ps during Bernard’s lifetime and further some of Lynette’s complaints were not seriously argued during the hearing, and that Daisy had incurred costs in dealing with those complaints.

18.  As seen in her 1^st affidavit, Lynette had made various complaints against Daisy or her predecessor Bernard, such as lack of proper record/registration of the Estate’s interests in the Family Property after a failed fraudulent transaction by unrelated persons in 1996, missing art and fine china which were removed from the common area of the Family Property, and a lack of upkeep and maintenance of the Family Property. 

19.  However, notwithstanding Lynette had made quite a number of complaints at that time, her main reasons in wanting Daisy replaced by a professional independent administrator were ultimately summarised by her to be (i) Daisy’s failure to communicate with the beneficiaries; (ii) Daisy’s failure to administer the Estate; (iii) Daisy’s inherent conflict of interest given Daisy was residing in the Family Property[4].

20.  Although some of Lynette’s complaints did not ground in Daisy’s removal and notwithstanding Mr Wong describing such submissions as being “nit-picking”, I accept that Daisy had to meet those allegations and costs had been incurred by her in dealing with those allegations.

Ps’ introduction of new complaints

21.  As for Mr Lam’s submissions that Ps had repeatedly introduced new complaints, it was submitted on behalf of Ps that no accounts or any information on the assets of the Estate were provided to Lynette until August 2017 and that had Ps been provided with all the information and accounts at the very outset, Ps would not have to raise their complaints on a piecemeal basis. 

22.  It is true that it was only in August 2017 that the financial statements of the Estate/information on the assets of the Estate were first provided to Ps by Daisy even though Daisy was aware that Lynette had been seeking such information in April 2014 from Bernard, before he passed away.  

23.  As said in the Judgment, Daisy subsequently decided to instruct BDO in October 2017 to prepare the proper Estate Accounts and the draft BDO Estate Accounts were first sent to Ps by D1 in February 2018 and the finalised version in late April 2018.  

24.  As pointed out by Mr Lam at the substantive hearing, after receipt of the BDO Estate Accounts, Ps did not request Daisy to provide the primary supporting documentary evidence to “verify” the truth and accuracy of the BDO Estate Accounts, nor did Lynette complain in her 4^th affidavit (filed on 12 June 2018) about the BDO Estate Accounts being inadequate because of lack of supporting documents.  

25.  In her 4^th affidavit, Lynette’s complaints about Daisy and the BDO Estate Accounts were mainly as follows:

(i)    Excessive accounting costs and no discussion with any of the beneficiaries as to the appropriateness or costs of instructing BDO or the manner in which BDO was to be instructed, and BDO failed to prepare the accounts on an assurance basis and instead included an express disclaimer to the Estate Accounts;

(ii)   There were missing bank accounts at BEA, in particular the account 514-10-409787-1 and that it was suspected that Daisy improperly mingled her assets with those belonging to the Estate;

(iii)  There were missing and delayed dividend deposits;

(iv)  There was undervaluation of assets of the Estate, including the Family Property as well as chattels and antiques not being valued by an expert.

26.  Then after Daisy filed her 3^rd affirmation to explain some of the above matters, Ps raised further complaints shortly before the first day of the substantive hearing including lack of disclosure of supporting documents of the BDO Estate Account.

27.  As seen in paragraph 57 of the Judgment, on the 1^st day of the substantive hearing, this Court had pointed out to Mr Wong that it was not clear exactly what supporting documents Ps were seeking and over what period, and it was only in the afternoon of the 1^st day of the substantive hearing that Mr Wong produced the List of Documents, containing the documents which Ps sought from Daisy.

28.  Having considered the evidence, I accept what was submitted by Mr Lam, that Ps had repeatedly introduced new complaints, and that some of Ps’ complaints were raised shortly before the substantive hearing. 

Raising complaints only within the four corners of this litigation

29.  It was further submitted by Mr Lam that Ps’ complaints were only raised by way of their affidavit evidence or even by way of legal argument instead of raising any enquiries through correspondence or direct communications with Daisy.

30.  Mr Wong however pointed out prior to the issue of the Originating Summons, Lynette had engaged in a lengthy process negotiations and correspondence with Daisy and her solicitors but this was to no avail.  Further after the issue of the Originating Summons, it was Daisy herself who adopted the approach of providing information about the Estate only through the filing of affirmation evidence to oppose the Removal Application, eg (i) it was only in Daisy’s 1^st affirmation that she disclosed the inventory of unadministered assets of the Estate, details and progress of distribution of such assets and various correspondence with banks etc and (ii) it was only in D2’s 2^nd affirmation that the BDO Estate Accounts were provided. 

31.  In any event, from those letters produced during the substantive hearing, Ps’ solicitors did seek further information and update from Daisy after the issue of the Originating Summons and in a letter of 15 March 2018, Daisy’s had said that all the issues raised by Ps in their letters of 26 January 2018 and 20 February 2018 would be covered in Daisy’s 2^nd affirmation which was eventually filed on 2 May 2018.

32.  What is clear is that after the issue of the Originating Summons, there did not appear to be any attempts by Ps on the one side and Ds on the other to try to mediate or to discuss any settlement, and there were continuous complaints from Ps against Daisy.  

Conclusion

Costs Order against Daisy

33.  The grounds for the Removal Application set out in Ps’ Skeleton Arguments of 11 December 2018 were: (1) unjustified delay and refusal to sell the Family Property with conflict of interest; (2) inordinate and inexplicable delay in distribution of cash and shares; (3) unexplained accounting irregularities and failure to provide documentary evidence of a highly complicated estate.

34.  The conflict of interest was not set out as a separate ground by Mr Wong but only in relation to (1) where it was submitted on behalf of Ps that by reason of D1’s ongoing occupation of the Family Property, there was an inherent risk of conflict between her interests and those of the beneficiaries of the Estate.    

35.  During the hearing, there appeared to be a change of emphasis with new complains and Ps’ complaints were then summarised by this Court in paragraph 39 of the Judgment as follows:

(1)  Unjustifiable delay: (i) delay in rendering proper Estate Accounts and (ii) delay in administration and distribution of property, cash and securities of the Estate[5];

(2)  Failure to provide proper accounts of the Estate;

(3)  Accounting irregularities;

(4)  Conflict of interest: (i) D1 herself residing in the Family Property with her family members rent free and (ii) D1 has duty to investigate into conduct of previous executors of the Estate[6];

(5)  D1’s qualifications/suitability to act as executor.

36.  As seen in the Judgment, Ps had essentially failed in their complaints about the BDO Estate Accounts.  I did not find Ps’ complaint about the accounts being not on “assurance” basis was justified, nor were Ps’ complaints of there being inadequacies in the BDO Estate Accounts or there being accounting irregularities made out.

37.  In fact, in relation to Daisy’s failure/delay to provide the Estate Accounts, the detailed BDO Estate Accounts were provided and that Ps only raised the issue that “proper estate accounts” should include the supporting/ underlying documents shortly before or at the substantive hearing.  As said earlier, it was only on the 1^st day of the substantive hearing that the List of Documents was provided to Daisy.  Having said this, Daisy did fail to provide those for inspection by the time of the 2^nd day of the substantive hearing notwithstanding having undertaken to do so.

38.  As for the conflict of interest complaint, it was based on the fact that Daisy and her family continuing to reside in the Family Property.  The other complaint that Daisy has a duty to investigate into conduct of previous executors of the Estate was again only raised at the substantive hearing and this Court found that there was no sufficient evidence that there was any need for investigation into conduct of past executors at this stage.

39.  As for Daisy’s qualification, this was again only raised at the substantive hearing.   Daisy only became the executrix of the Estate by reason of her being executrix of Bernard’s estate, by a chain of representation.  As submitted by Mr Wong, the Estate is a “highly complicated” one, and I have taken this into consideration when coming to the decision that there should be a professional administrator.

40.  Having considered the above and Ps’ own litigation conduct in continuing to raise new issues, I am of the view that Daisy should not be ordered to pay all of Ps’ costs personally. 

41.  Mr Lam has proposed an apportionment of 20% be paid by Daisy.   Having considered all the above, I am of the view that Daisy should pay personally 40% of Ps’ costs of and incidental to the Removal Application up to and including the handing down of the Judgment and the drawing up of the Order with certificate for two Counsel.

42.  As for Daisy’s own costs of and incidental to the Removal Application, such shall be borne by her personally and not be indemnified for such costs out of the Estate, and if paid already, Daisy to reimburse the Estate.  However, Daisy should be indemnified by the Estate for all costs incurred by her in carrying out the administration of the Estate.

43.  As to the basis of taxation of the 40% which Daisy has to pay personally, I am of the view that such costs should be taxed on party and party basis, if not agreed, with certificate for two counsel.  The circumstances in the present case are quite different from those in Mai Cuiting v Mak Chui Fong, unrep, HCMP 2619/2016 4 August 2017.  In that case, this Court had taken into account a number of factors including that the defendants only obtained letters of administration 7 years after the deceased’s death notwithstanding having given an undertaking in a connected Family Court action to do so as soon as practicable,  that there was no full disclosure of all the deceased’s assets in the schedule of assets and liabilities and there was no indication that the defendants agreed to render any estate accounts at all prior to the issue of the originating summons.

44.  Anyway, having considered paragraph 62/App/12 of the Hong Kong Civil Procedure 2019, I am of the view that Daisy’s conduct herein has not been oppressive or egregious or so unreasonable as to attract an order for costs on indemnity basis.  

Costs Order against D4 to D7

45.  As for D4 to D7, they have been joined as necessary parties in the Removal Application, and although they have expressed a view in favour of their mother, they did not put forward any reasons, nor did they express any objection to the orders sought by Ps.  I am of the view that there should be no order as to costs as between Ps and D4-D7.  I am of the view that D4-D7’s own costs should not be paid out of the Estate since all they needed to do if they wished to express a view was simply to write a letter to tell Ps and there was no need for them to instruct any lawyers or to file any affirmations.

Costs order against D2 and D3

46.  Although Pak Huen had filed an affirmation to oppose the Removal Application, his grounds were mainly because he considered Daisy had been doing a good job and that he was concerned over the costs of an independent administrator.  He had also set out in his affirmation the distributions from the Estate in the past.  Pak Huen’s main opposition is towards the Sale Application. 

47.  As costs were incurred by Ps in responding to Pak Huen’s affirmation, I am of the view that Pak Huen should contribute 5% of Ps’ costs of and incidental to the Removal Application up to and including the handing down of the Judgment and the drawing up of the Order on party and party basis with certificate for two Counsel.  Pak Huen’s own costs in relation to the Removal Application should not be paid out of the Estate and if paid already, then he will have to reimburse the Estate.  As to whether there should be a wasted costs order as Ps had insisted in proceeding with the Sale Application at the substantive hearing, this is a matter to be considered later in relation to the Sale Application.  

Costs of the Costs Submissions

48.  As no one has achieved the costs orders they seek as against each other, there should be no order as to costs in relation to the costs submissions.

Apportionment

49.  For the purpose of taxation, I would apportion that the time taken for the Removal Application at the substantive hearing was 80%.

Costs of and incidental to the appointment of the independent administrator

50.  I am of the view that all parties’ costs of and incidental to the appointment of the independent administrator should be part of administration costs and all such costs should come out of the Estate.

HCMP 1836/2017

[2019] HKCFI 1086

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 1836 OF 2017

_______________________

______________________

_________________

J U D G M E N T

_________________

Introduction

1.  The plaintiffs (collectively “Ps”) are beneficiaries of the estate of Li Sing Kui (“Deceased”) who died some 63 years ago but up until the present, his estate has not yet been finally distributed and/or wound up.  Ps issued the originating summons herein in August 2017 under Order 85 of the Rules of the High Court and seeking, amongst other things, (i) an order to remove the executrix of the Deceased’s estate (“Estate”), namely the 1^st defendant, and for an independent professional administrator to be appointed in her place; (ii) an order for the sale of the family property on 15 Robinson Road (“Family Property”); (iii) an order for the executrix to give a full inventory and account of the Estate.

2.  At the heart of the dispute is the Family Property where the Deceased and his family members had resided, some of whom are still residing therein.  The Family Property was built in 1936 and the market value was assessed by  Access Partner Consultancy & Appraisals (“Access Partner”) in a report dated 20 April 2018[1] to be at HK$440,000,000 as at 15 November 2017 (“Valuation Report”).  In paragraph 2 of the originating summons, Ps have sought an order for the sale of the Family Property subject to the terms stated therein (“Order for Sale”).

3.  The removal application was opposed by the executrix and all the other defendants.  The application for the Order for Sale was opposed by the 2^nd and 3^rd defendants, who have alleged that there was a family arrangement among the 5 sons of the Deceased that so long as one of them should be living and residing in the Family Property, the Family Property would not be sold (“Family Arrangement”), and that the executrix is estopped from selling the Family Property during the 2^nd defendant’s lifetime while he remains residing therein (“Promissory Estoppel”).  As for the executrix, her position is said to be neutral.

4.  In relation to the inventory and account of the Estate, the position of the executrix was that proper estate accounts (“Estate Accounts”) had already been provided.

5.  Mr Anson Wong SC and Mr Justin Lam appeared for Ps at the hearing, Mr Douglas Lam SC and Ms Jacqueline Law appeared for the 1^st and 4^th to 7^th defendants.  Mr Andrew Liao SC, Mr Kenneth CK Chow, Ms Grace Tam and Mr William Tse appeared for the 2^nd and 3^rd defendants.

Ps’ application for Order for Sale

6.  At a directions hearing on 27 March 2018, which was attended by Counsel Mr Justin Lam for Ps, Ms Jacqueline Law for 1^st and 4^th to 7^th defendants, and Ms Grace Tam for the 2^nd and 3^rd defendants, Ms Tam had initially sought a direction to have the originating summons to continue as if begun by writ, but both Mr Lam and Ms Law felt it was unnecessary.  Ms Tam pointed out that there was a substantial issue on dispute on facts in relation to the Order for Sale sought in paragraph 2 of the originating summons, due to the allegation of the Family Arrangement/Promissory Estoppel. 

7.  However, the claims by the 2^nd and 3^rd defendants should not affect orders sought by Ps in the other paragraphs of the originating summons.  This Court had made a preliminary observation that the claims by the 2^nd and 3^rd defendants should be by way of a separate action against the Estate.  This Court further indicated that as it would only be the executor who could sell the Family Property, the removal application would have to be dealt with first before the application for the Order for Sale. 

8.  Although Ms Tam was invited by this Court at the hearing on 27 March 2018 to propose directions in relation to Ps’ application for the Order for Sale, she decided not to press on with the issue.

9.  Subsequently, directions, which were unopposed, were then given for the originating summons, and, amongst other things, the substantive hearing was directed to be on affidavit evidence only and to be held in chambers not open to public pursuant to Schedule 2 of practice direction 25.1. 

10.  On the 2^nd day of the substantive hearing, Leading Counsel for all parties agreed to only make submissions on the procedural issues in relation to Ps’ application for the Order for Sale in light of the Family Arrangement/Promissory Estoppel raised by the 2^nd and 3^rd defendants. 

11.  Mr Wong had submitted that under RHC Order 85 rules 2(3)(c) and rule 6, the court has jurisdiction to make an order to direct an executor, administrator or trustee to do or abstain from doing a particular act in his capacity as executor, administrator or trustee and Mr Wong had referred the Court to Ip Cheung- Kwok v Sin Hau Bank Trustee Ltd [1990] 1 HKLR 497, and Chan Yu Hong v Chan Kam Hong, unrep, HCMP 888/2013, 19 July 2017.

12.  Order 85 rule 2 states as follows:

“(1) An action may be brought for the determination of any question or for any relief which could be determined or granted, as the case may be, in an administration action and a claim need not be made in the action for the administration or execution under the direction of the Court of the estate or trust in connection with which the question arises or the relief is sought.

(2) Without prejudice to the generality of paragraph (1), an action may be brought for the determination of any of the following questions—

(a) any question arising in the administration of the estate of a deceased person or in the execution of a trust;

(b) any question as to the composition of any class of persons having a claim against the estate of a deceased person or a beneficial interest in the estate of such a person or in any property subject to a trust;

(c) any question as to the rights or interests of a person claiming to be a creditor of the estate of a deceased person or to be entitled under a will or on the intestacy of a deceased person or to be beneficially entitled under a trust.

(3) Without prejudice to the generality of paragraph (1), an action may be brought for any of the following reliefs—

(a) an order requiring an executor, administrator or trustee to furnish and, if necessary, verify accounts;

(b) an order requiring the payment into court of money held by a person in his capacity as executor, administrator or trustee;

(c) an order directing a person to do or abstain from doing a particular act in his capacity as executor, administrator or trustee;

(d) an order approving any sale, purchase, compromise or other transaction by a person in his capacity as executor, administrator or trustee;

(e) an order directing any act to be done in the administration of the estate of a deceased person or in the execution of a trust which the Court could order to be done if the estate or trust were being administered or executed, as the case may be, under the direction of the Court.”

13.  Order 85 rule 6 then states as follows:

“Where in an administration action an order is made for the sale of any property vested in executors, administrators or trustees, those executors, administrators or trustees, as the case may be, shall have the conduct of the sale unless the Court otherwise directs.”

14.  I accept Mr Wong’s submissions that this Court has power to direct the executor/administrator/trustee to sell a property belonging to a deceased’s estate under Order 85 rule 2 and further the Court has power to direct how the sale is to be effected.  For example, if the property is subject to encumbrances, the court may give directions as to whether the property is to be sold free of encumbrances or subject to the existing encumbrances.  If there are occupiers in the property, then the court may have to give directions as to whether the property is to be sold with or without vacant possession.

15.  In the present proceedings, what Ps are seeking in relation to the Order for Sale is that the Family Property be sold subject to 5 terms, one of which is that the “independent administrator obtains vacant possession”.  In short, Ps are seeking that the Family Property be sold with vacant possession.

16.  There are in fact other “material encumbrances” to the title of the Family Property referred to in the Valuation Report[2] and as seen in the search record in the Land Registry.

17.  Whether eventually this Court is to direct the present executrix or the independent professional administrator to sell, if such an order for sale is directed to be with vacant possession, the executrix/administrator can only proceed to sell after she/he has obtained vacant possession of the entire Family Property.  If any occupier refuses to deliver up vacant possession, this would mean that the executrix/administrator may have to issue proceedings on behalf of the Estate against the occupier/s of the Family Property to seek vacant possession before any sale can take place.  As indicated in the directions hearing, it would in fact be open to the 2^nd and 3^rd defendants to issue a separate action restraining the Estate to sell on the basis of the alleged Family Arrangement/Promissory Estoppel.

18.  Alternatively, as the Court had also pointed out at the substantive hearing, the sale could also be subject to present occupation, but this would obviously affect the sale price.  

19.  In any event, as indicated by this Court at the hearing, a decision will have to be made first on whether the present executrix should be removed before the Court hears Ps’ application for the Order for Sale.  As seen later in this judgment, and for the reasons stated in this judgment, it is this Court’s decision that an independent professional executor should be appointed for the Estate in place of the current executrix.  In light of this Court’s decision on the removal application, Ps’ application for the Order for Sale will be adjourned sine die with liberty to restore after the appointment of the new administrator.

The Deceased’s family

20.  The Deceased died in Hong Kong on 28 August 1955 at the age of 76.  He was said to be a top businessman and a philanthropist in Hong Kong during the early 1920s to 1930s.  The Deceased founded the Hong Nin Savings Bank in 1921 and amongst other things, he was also a shareholder of the Bank of Canton.  He was also said to be one of the financiers to the Chinese Revolution led by Dr Sun Yat-sen.  

21.  After his first wife died, the Deceased had a “Tin Fong” wife or a second wife Li Leung Shi (“Madam Leung”), and a number of concubines including Li Cheung Shi (“Madam Cheung”) and Li Chau Shi (“Madam Chau”). 

22.  After the death of the Deceased, Madam Leung continued to reside in the Family Property until her death in 1972.  Madam Cheung moved to Canada sometime after the Deceased’s death, to live with her children and grand-children until her death in 1989.  Madam Chau continued to reside in the Family Property until her death on 25 September 2002. 

23.  The Deceased left 5 sons and 15 daughters at the time of his death.  Madam Cheung was the mother of Deceased’s eldest son, Francis.  Madam Leung was the mother of the Deceased’s 2^nd son James. Madam Chau was the mother of the Deceased’s 3 other sons.

24.  The Deceased’s 5 sons, in order of their respective ages, were:

(i)  Li Pak Iu (“Francis”), who died on 20 June 1992 aged 81

(ii)  Li Pak Tat (“James”), who died in October 1987 aged 62

(iii)  Li Pak Leung (“Bernard”), who died on 6 December 2014 aged 83

(iv)  Li Pak Wing (also known as Li Sze) (“Pak Wing”), who died in 2016 aged 83

(v)  Li Pak Huen (“Pak Huen”), the 3^rd defendant in these proceedings

25.  Pak Huen is now the only surviving son of the Deceased.  He was born in November 1938 and is now 80 years old.  He has been residing in the Family Property since he was born and he has remained residing there.

26.  James married the 1^st plaintiff herein (“Lynette”) in 1954.  After marriage, they were residing in the Family Property and after James died, Lynette has continued to reside in the Family Property but since early 2001 she has been dividing her time between Hong Kong and the United States and she now spends most of her time with her family in Los Angeles.  Lynette is now 89 years old.  She is the executrix of James’ estate and according to a table set out by her[3], she and her two children are beneficiaries of the Estate through James’ will, each entitled to 1/18 share of the Deceased’s residuary estate (“Residuary Estate”).  Lynette is a plaintiff herein in her personal capacity, as a beneficiary of the Residuary Estate.

27.  Francis married Madam Wan Yee Miu.  They had two children, namely Michael Lee (“Michael”) and Colleen Lee (“Colleen”), who are respectively the 2^nd and 3^rd plaintiff herein. Madam Wan died in 2002.     Michael and Colleen are both said to be beneficiaries of the Residuary Estate through Francis’ will and through Madam Wan’s will.  Michael also is the executor of Francis’ estate through chain of representation of being executor of Madam Wan’s will, although in the present proceedings, Michael is a plaintiff in his personal capacity as a beneficiary of the Residuary Estate.

28.  Bernard married the 1^st defendant herein (“Daisy”) in 1962.  They had 4 children who are the 4^th, 5^th 6^th and 7^th defendants herein, and I shall refer to them respectively as D4, D5, D6 and D7, and they are each entitled to 1/30 share of the Residuary Estate through Bernard’s will.  Daisy is being named as a defendant in her capacity as executrix of the Estate, and not in her capacity as beneficiary of the Residuary Estate.

29.  Pak Wing was said to be very close to Pak Huen and Pak Huen was the sole beneficiary to Pak Wing’s estate.  Pak Huen is entitled to 1/6 share in the Residuary Estate through Pak Wing’s will and 1/6 share directly through the Deceased’s will, totalling 1/3 of the Residuary Estate.

The Deceased’s will and chain of representation

30.  The Deceased executed a will on 15 December 1954 (“Will”). 

31.  The Will contained, amongst other things, the following terms:

(1)  By Clause 1, Francis, Bernard, Madam Chau were appointed as executors and trustees of the Will;

(2)  By Clause 3, the Deceased gave pecuniary legacies to six of his daughters and three of his sons;

(3)  By Clause 4, the Deceased provided lifetime annuities for his wife, Madam Leung and two concubines, Madam Cheung and Madam Chau;

(4)  By Clause 5(1), the Deceased provided for the trustees of the Estate (“Trustees”) to deal with his Residuary Estate as follows:

“(i)  To sell call in and convert the same into money with power in their absolute discretion to postpone such sale calling in and conversion and after payment thereout of my debts funeral and testamentary expenses, legacies and annuities to invest the residue of such moneys in manner hereinafter authorised and to stand possessed of such investments and of all parts of my estate for the time being unsold [ Residuary Estate] during the joint lives of [Madam Leung, Madam Cheung and Madam Chau] and the life of the survivor of them upon the following trusts…”

(ii)  To keep and maintain a family house at No 15 Robinson Road Victoria Hong Kong for the habitation of Madam Leung, Madam Cheung and Madam Chau during their respective lives (Clause 5(1)(a));

(iii)  For the support, maintenance and education of each of the Deceased’s unmarried daughters until the age of 28 or until marriage, whichever is the earlier (Clause 5(1)(b));

(iv)  For the support, maintenance and education of each of the Deceased’s unmarried sons until the age of 28, and if the Trustees think advisable, to continue to pay for the educational expenses of any of the said sons until the age of 30 (Clause 5(1)(c)).

(v)  By Clause 5(2), the Residuary Estate is divided into six equal shares to be held on trust by the Trustees absolutely, one share for each of the Deceased’s five sons absolutely and one share is appropriated for “Ching Sheung” (蒸嘗) for the purpose of ancestral worship (“Ancestral Worship”) subject to a proviso therein.

32.  Probate of the Will was granted to Madam Chau and Francis on 19 June 1956 with power reserved to Bernard.  Double probate was later granted to all the three executors appointed in the Will on 22 May 1957.

33.  After Francis’ death in 1992, Madam Chau and Bernard became the surviving executors.  After Madam Chau’s death in 2002, Bernard became the sole surviving executor.

34.  After Bernard’s death, Daisy, being the sole executrix appointed in Bernard’s will, was granted probate of Bernard’s estate on 16 November 2016 (“Probate”).  It was not disputed that Daisy became the executrix of the Estate when she obtained the grant of the Probate, by virtue of a ‘chain or representation’ under section 34 of the Probate and Administration Ordinance, Cap 10 (“PAO”).  

General legal principles on removal of an executor or administrator

35.  In respect of the removal of an executor or administrator, Section 33(3) of the Probate and Administration Ordinance (“PAO”) provides that:

“The court may, if satisfied that the due and proper administration of the estate and the interests of the persons beneficially entitled thereto so require, suspend or remove an executor or administrator (other than the Official Administrator) and provide for the succession of another person in place of such executor or administrator and for the vesting in that other person of any property belonging to the estate.”

36.  As summarised by Chow J in Lam Mo Chu Susie v Lam Sik Ying Victor (unrep, HCA 1974/2015, 4 September 2017) at paragraph 14:

(1)  When deciding whether to remove an administrator, the proper question to ask is whether the removal is necessary for the due and proper administration of the estate and whether it is in the interests of the beneficiaries for the administrator to be removed.

(2)  It is not necessary to establish specific wrongdoing, misconduct or fault on the part of an administrator before he can be removed, although obviously wrongdoing, misconduct or fault would be relevant considerations (emphasis added).

(3)  When deciding whether to exercise its power to remove an administrator, the court should also have regard to the size of the estate, the nature of the assets to be administered, and the background, education, training and experience of the remaining personal representatives (if any).

37.  There was no dispute to the above general principles.

Grounds for Ps’ application for removal of Dairy as executrix of the Estate

38.  The grounds set out in Ps’ skeleton submissions were as follows:

(i)  Daisy had been delaying and refusing to sell the Family Property, in clear conflict of interest by continuing to reside at the Family Property rent free and personally benefitting from the failure to sell the Family Property;

(ii)  There had been inordinate and inexplicable delay in the distribution of liquid assets of the Estate, including cash and listed securities;

(iii)  There were numerous unexplained accounting irregularities in the unverified and unverifiable accounting reports.

39.  At the hearing, Mr Wong had summarised Ps’ complaints to be under the following heads: -

(i)  Unjustifiable delay

(ii)  Failure to provide proper accounts of the Estate;

(iii)  Accounting irregularities;

(iv)  Conflict of interest;

(v)  Daisy’s qualifications/suitability to act as an executor

40.  I will first consider Ps’ complaints in (ii) and (iii) above in relation to the Estate Accounts, namely the inadequacy of the accounts and alleged accounting irregularities.

Inadequacy of the Estate Accounts and accounting irregularities

The law

41.  In respect of the executor’s duty to provide inventory and account of the assets of a deceased, section 56 of the PAO provides that:

“The personal representative of a deceased person shall, when lawfully required so to do, exhibit, by affidavit filed in the court, a true and perfect inventory and account of the movable and immovable property of the deceased, and the court shall have power as heretofore to require personal representatives to bring in inventories.”

42.  It is also stated in Re Estate of Lee Da Kor [2010] 1 HKLRD 415, at paragraph 17, that it is the duty of an executor to keep clear and accurate accounts, and to be always ready to render such accounts when called upon to do so.

43.  Further, as explained in Chow Chak Kiu v Chow Man Chit (unrep, HCMP 797/2016, 17 January 2017), generally speaking, to render a proper account of the estate of a deceased person, the personal representative is required to: (i) show the opening balance (including capital assets) and closing balance; (ii) give details of movement of assets, incomes and expenditure of the estate; (iii) give details of the whereabouts of all properties (including cash) of the estate which the personal representative is duty bound to administer; and (iv) support the accounts with documentary evidence[4].

The format of the pre 2014 Estate Accounts

44.  Lynette had produced in her 1^st affirmation a copy of the Financial Statements of the Estate for the year ended 31 December 1994 prepared by a firm of professional accountants called Ho & Au Yeung which she had referred to as the last available Estate Accounts.

45.  It would later transpire that there had been Financial Statements of the Estate prepared by a firm of professional accountants called Ho & Chung CPA Limited between 2007 and 2011, and thereafter there were Financial Statements prepared by a firm of professional accountants called Qual-Mark CPA Limited (“Qual-Mark”).  The Financial Statements of the Estate for the year ended 31 December 2012 were only prepared by Qual-Mark a year later, on 31 December 2013, and the 2013 Financial Statements were prepared by Qual-Mark on 4 April 2014.

46.  The pre 2014 Estate Accounts were all prepared in the form of “Financial Statements” or “Balance Sheets”.

47.  Then there was a gap of some 3 years between 2014 -2016 when there appeared to be no Estate Accounts in any form prepared during those years.  Daisy herself had said in her 1^st affirmation that she had been advised that the format of those so called Estate Accounts by way of financial statements was not in line with the usual format of an estate account[5]. She had also said it would be in the interests of the Estate and the beneficiaries as a whole if she were to retain a better resourced and more capable firm of CPAs experienced in the preparation of estate accounts to replace Qual-Mark and she later engaged BDO Financial Services Limited (“BDO”) to prepare the Estate Accounts[6].

48.  Thus, even on Daisy’s own case, those Estate Accounts prior to 2014 were not in the proper format and were not proper estate accounts.

The BDO Estate Accounts

49.  BDO was engaged to prepare the Estate Accounts covering 4 periods, namely (i) the year of 2014, (ii) the year of 2015, (iii) for the period from 1 January 2016 to 15 November 2016 (the date of Probate), and (iv) from 16 November 2016 to 15 November 2017.

50.  The “Assets Schedule” of the 2017 Estate Accounts revealed   total gross assets of at least a sum of almost HK$518m and total net assets of at least about HK$517m.  In particular, there were 3 main categories of assets of the Estate, as follows[7]:

(i)  Property, Plant and Equipment – (a) the Family Property of HK$440m and (b) “Furniture” of HK$56,640;

(ii)  Investment Securities – (a) Shares in listed companies of a total of about HK$24m and (b) Shares in private companies of a total of at least HK$92,777;

(iii)  Cash and Bank Balances – (a) Cash at Hang Seng Bank of about HK$10m and (b) Cash at Bank of East Asia of about HK$44.5m;

51.  Ps’ complaints in relation to the BDO Estate Accounts were essentially as follows[8]:

(1)  The Estate Accounts were wholly inadequate:

(2)  There were clear accounting irregularities:

Inadequacy of the BDO Estate Accounts

52.  The inadequacies alleged consist of :

(1)  Each of the Estate Accounts prepared by BDO contained a fundamental caveat/disclaimer by BDO, that the veracity of the accounts were wholly dependent upon what Daisy was willing to provide to BDO;

(2)  There was failure to provide any documentary evidence in support of the statements in the Estate Accounts;

(3)  There was no breakdown any of the cash outflow items, or of the item of “Furniture”, and there was an unexplained item of “rental income” which appeared in the 2008 Estate Accounts.

53.  Regarding the complaint in (1), insofar as I can see, the authorities do not go so far as to say that there is a duty imposed on an executor/administrator that he/she has to instruct or engage an independent firm of accountants to prepare the estate accounts on an “assurance” basis, or that the estate accounts have to be audited. The duty to render an inventory and account is imposed on the executor/administrator personally.  In the case where an executor/administrator is personally capable of preparing the estate accounts there may not be any reason why a professional accountant has to be engaged, so long as the personal representative is able to set out the information set out in Chow Chak Kiu. In cases involving substantial assets, a personal representative is likely to employ a professional accountant to assist him/her to discharge his/her duty, but it does not mean that the estate accounts will necessarily have to be audited or to be prepared on an “assurance” basis.  I thus do not find Ps’ complaint in this regard justified.

54.  In fact, Daisy’s engagement letter of BDO had set out BDO’s responsibilities was to obtain and review the primary documents, including the relevant bank and securities accounts, statements etc. and the evidence showed that BDO did review the bank statements of the Estate and had raised an issue in relation to the whereabouts of some dividends.

55.  In (2) above, Ps complained that they had not been provided with copies of the primary supporting documents for the statements in the BDO Estate Accounts.

56.  Mr Lam pointed out that after the draft and finalised BDO Estate Accounts were circulated to Ps by Daisy in February 2018 and late April 2018, Ps had never requested Daisy to provide the primary supporting documentary evidence to “verify” the truth and accuracy of the Estate Accounts, nor did Lynette in her 4^th affidavit filed in June 2018 complain of the BDO Estate Accounts being inadequate because of lack of supporting documents.

57.  On the 1^st day of the hearing, the Court pointed out to Mr Wong that it was not clear what supporting documents Ps were seeking and over what period, since there was no mention of this in Lynette’s 4^th affidavit.  Ps were then invited to provide a list of supporting documents which they wished to seek.  In the afternoon of the 1^st day, Mr Wong produced a list to Mr Lam (“List of Documents”)[9].  Mr Lam indicated then and there that there was no objection from Daisy in relation to inspection all those documents and if necessary, copies of the documents in the List of Documents would be provided.  The matter was then left for the parties’ respective solicitors to resolve.

58.  Notwithstanding the above, when the hearing resumed about one month later, it would appear that the matter had still not been resolved and inspection of those requested documents had still not been provided by Daisy.  Daisy’s position appeared to be that her Leading Counsel’s non-objection to inspection was on the premises upon her continuation to be the executrix of the Estate, and further subject to the discretion and order of the court.  Daisy thus indicated that she was only prepared to consider Ps’ request for inspection of the documents upon confirmation that Ps would no long pursue the removal application[10].

59.  Pending this Court’s decision on the removal application, Daisy remains the executrix of the Estate, and is under a continuing duty to provide a proper inventory and account.  There was never any suggestion from Mr Lam on the 1^st day that inspection of the requested documents was on the condition that Ps would withdraw or would not pursue their application for removal order or that the inspection would have to be subject to formal order of the Court.  I therefore find Daisy’s subsequent attitude somewhat surprising.  Anyway, in light of Daisy’s attitude, the matter was still not resolved on the 2^nd day of the hearing.  However, it was not Daisy’s position that Ps were not entitled to those document or any of them, or that she was not obliged to provide them.

60.  Thus, Daisy had failed to provide proper Estate Accounts in that she had failed to provide the supporting documents in the List of Documents after indicating through counsel that she had no objection thereto.

61.  As for the breakdown of any cash outflow items, or the item of “Furniture”, or any suspicious item of “rental income”, these matters were not raised in Lynette’s 4^th affidavit.  The photographs/video of the Family Property showed there were various items of Chinese hard wood furniture and it was not clear what was the basis for the valuation of HK$56,640.  Ps have now asked for an inventory of the furniture in the List of Documents.  In any event, if Lynette wished to challenge any items in the Estate Accounts, she should raise them properly, and then, if there is no satisfactory response, it would be open for Lynette to consider whether to make a proper application for the same. 

Accounting irregularities

62.  The accounting irregularities complained of by Ps were as follows:

(i)  There was a missing account at the Bank of East Asia no 514-10-409787-1 in the 2017 Accounts even though this account appeared in the bank statements in Daisy’s 1^st Affirmation and was also included in BDO’s draft accounts for 2017;

(ii)  There were missing and dividend deposits, as noted by BDO, and that such dividends were in fact paid into Bernard’s personal account;

(iii)  there were significant sums of money in the bank accounts of the Estate which were not generating any income;

(iv)  Daisy was continuing to use bank account numbers 262-159239-001 and 262-159239 as the Estate’s accounts, despite being told by Hang Seng Bank that they could not be re-designated to the name of Daisy and operated normally.

(v)  There were unexplained missing bank statements set out in Note 4(ii) to the 2017 BDO Estate Accounts.

63.  Daisy had explained that after the grant of Probate, she had approached Bank of East Asia (BEA) and also Hang Seng Bank (HSB) to open bank accounts for the Estate in her capacity as the executrix of the Estate.

64.  Daisy had explained that the “Missing Account” was opened at the request of BEA as a “suspense account” to receive dividend income and pending the opening of the Estate’s bank account, and that the whole amount deposited into the said account would be transferred into the Estate’s bank account with BEA when opened.  As pointed out by Mr Lam, which I accept, there was no sufficient evidence at this stage of any mingling of Daisy’ assets with those belonging to the Estate.  Further, BDO in an email dated 21 November 2018 had confirmed what was said by Daisy after reviewing the bank statements covering the period from 19 May 2017 to 18 January 2018.  Although, Mr Wong said that the email from BDO raised more questions than answers, I accept Daisy’s and BDO’s explanation of the Missing Account.  

65.  As for the alleged missing share dividends, such had been credited into the personal accounts of Bernard instead of the Estate bank account.  This was prior to Daisy obtaining Probate, and Daisy had taken steps through her solicitors and Qual-Mark to rectify the issue. Although there was a delay of a few months in 2017 after Probate was granted, I accept that such delay was not inordinate, and there was no sufficient evidence that the Estate had suffered any loss in terms of these missing dividends.

66.  As to the registration of Estate’s listed shareholdings into Daisy’s personal name instead of as executrix of the Estate, Daisy had explained that this was the practice of Computershare, the Share Registrar of some of the listed companies and she had produced the correspondence between her solicitors with Computershare in October and November 2018 in support of her explanation.  There was no suggestion that the registration in the personal name of Daisy was done with any intention of misappropriation or disposal of the shares to the detriment of the beneficiaries, nor was there any such evidence, in particular when Daisy had already accounted for those shares from the very first day.

67.  As for whether the cash in the bank accounts could have generated income, Daisy had pointed out Ps had been making repeated demands for interim distributions and Daisy had at that time agreed to consider this and thus it would not be appropriate for her to proactively invest the funds in alternative investments in the meantime.  This is in any event not an accounting issue.

68.  As for the missing bank statements for the Estate’s BEA account #219-40-00731-8 (formerly under Bernard’s name as executor) for the period from 1 March 2017 – 15 November 2017, Daisy said she had confirmed with BDO that the entire balance in that account was transferred to the Estate’s BEA account #514-10-309788-9, leaving nil balance in the former account as of 15 November 2017.  There was no sufficient of any impropriety.  Daisy’s solicitors had written to BEA after the 1^st day of the hearing on 27 December 2018 to seek copies of the missing bank statements[11]. No statements had yet been received by Daisy at the 2^nd day of the hearing[12].

Conclusion on Ps’ complaints in relation to the Estate Accounts

69.  As said, at the 2^nd hearing, Daisy had still failed to arrange for inspection of all those documents in the List of Documents, and as such, proper Estate Accounts with supporting documents had not yet been rendered at the end of the 2^nd hearing.  Insofar as accounting irregularities were concerned, having considered Daisy’s explanations and also the explanations from BDO, as this stage, I find there was no sufficient evidence of any irregularities.

Unjustifiable delay

70.  The delay complained by Ps was in two aspects, namely (i) delay in rendering proper Estate Accounts, and (ii) delay in administration and distribution of property, cash and securities of the Estate.

71.  Ps also complained that Daisy did not even inform them as to when Probate was eventually granted.

Delay in rendering proper Estate Accounts

72.  According to Lynette, she travelled to Hong Kong in April 2014 to meet with Bernard and Daisy before Bernard passed away.  She had explained to Bernard her desire to better understand the structure of the Estate as she needed to address her personal affairs for estate planning and for US tax purposes and she had specifically requested for a copy of the updated Estate Accounts from Bernard but her request was ignored. Lynette said she then contacted solicitors (“Withers”).  After Bernard’s death, Withers had tried to contact Daisy between December 2014 and April 2015 to find out whether Bernard had left a will and in March 2015, Lynette’s son-in-law had on behalf of Lynette met with Daisy to explain to Daisy the need for financial disclosure in relation to the Estate and had suggested to Daisy that she should consult her own solicitors. 

73.  Daisy admitted meeting with Lynette in April 2014 and said Bernard duly noted Lynette’s request for information in April 2014 and claimed that it was not true that Bernard “ignored” the request[13].  However, Daisy did not mention what steps Bernard took to meet Lynette’s request.  Although Daisy admitted meeting with Lynette’s son-in-law in March 2015, she said she recalled she told him that she had not been appointed as the executor of the Estate and that as soon as she had been, she would carry out her duties and would keep all the beneficiaries informed of the progress.  She denied Lynette’s allegations that she failed to grasp the concept of the gravitas of her obligations as an executor.

74.  Anyway, it was quite clear that at the time, Daisy did not divulge any information on the Estate to Lynette.  It would also appear that Daisy did contact solicitors in February 2015, or at least the name of a firm of solicitors was provided to Lynette’s solicitors.  In February 2015, Withers wrote twice to a firm called YC Lee, Pang, Kwok & Ho (“YC Lee”) to enquire whether they had instructions to act for Bernard’s estate as executor of the Estate.  YC Lee had replied that they had no instructions to act for Bernard’s estate and no instructions to reply to Lynette’s solicitors’ letters.  Having said this, it would appear that subsequently YC Lee did receive instructions to act for Daisy.

75.  It was after receipt of those replies from YC Lee and when Lynette failed to receive a substantive response from Daisy in relation to the assets of the Estate that Lynette then instructed her solicitors to file a caveat in respect of Bernard’s estate[14].

76.  According to Daisy, Bernard did not mention to her during his lifetime much about the affairs relating to the administration of the Estate, nor about his own financial affairs and that when he passed away unexpectedly, it took her a long time to ascertain the position regarding assets of Bernard’s estate and of the assets of the Estate, and that after the funeral, she then sought legal advice on the validity of Bernard’s will from her present solicitors Raymond Tong & Co (“RT”).

77.  Thus, even on Daisy’s evidence, she would seem to have contacted two law firms, RT and YC Lee in early 2015 although according to Daisy, it was only in around May 2015 that she instructed YC Lee to begin applying for probate of Bernard’s estate.  YC Lee eventually wrote to Withers on 11 May 2015 over Wither’s will enquiry and confirming that they were acting for Daisy.  

78.  On 29 May 2015, Withers had written to YC Lee informing them they filed a caveat as Lynette had not received any substantive response from Daisy in relation to the assets and administration of the Estate and (i) seeking confirmation that if Daisy were to apply for a grant , she would step into Bernard’s shoes and become an executor of the Estate; (ii) asking whether any recent Estate Accounts were available; (iii) whether Daisy would agree that the Family Property was an asset of the Estate[15].  In that letter, Withers stated that Lynette’s objective was to obtain “regular and consistent financial accounting and disclosure on the administration” of the Estate[16].

79.  YC Lee only replied on 13 July 2015[17], and stated that Lynette could not receive a substantive response from Daisy in relation to the administration of the Estate when Daisy had not even applied for the grant of probate of Bernard’s estate and that the caveat was premature and without reasonable ground, and further demanded Lynette to withdraw the caveat or otherwise they had standing instruction to take all necessary legal action.  In the letter, it was also stated that Daisy would attend to the administration of the Estate in accordance with the law. 

80.  Withers wrote again on 16 July 2015 seeking information they required regarding the Estate.  It was only on 7 September 2015, YC Lee replied stating that Daisy would deal with the Estate in due course according to the law and the relevant parties would be informed of the assets of the Estate.

81.  According to Lynette, Withers had tried to contact YC Lee on 12 separate occasions with no information forthcoming in relation to the administration and assets of the Estate during 2015 and finally Lynette received a call from Daisy herself in December 2015 during which Lynette alleged Daisy to be aggressive and that Lynette found the call “deeply upsetting”.

82.  Lynette then decided to put the matter on hold to allow Daisy time to grief and to see whether a resolution could be reached amongst family members and on 11 December 2015 Withers wrote to indicate Lynette was willing to withdraw the caveat, and recording Daisy’s confirmation that she would provide information in relation to the Estate upon obtaining grant. 

83.  Pausing here, although Lynette’s filing of the caveat had probably upset Daisy, on the other hand, I do not find Daisy’s attitude and YC Lee’s letters were helpful either in that it did not really address Lynette’s concerns.   Although it was not Daisy’s duty to provide information on the Estate to the beneficiaries of the Estate prior to her obtaining the Probate, in my view, it would have been more helpful if she had indicated to Lynette that she would forward whatever information she had and/or would come across when going through Bernard’s papers, particularly when she had met Lynette as early as April 2014 and knew that Lynette was anxious to obtain updated Estate Accounts. 

84.  After the caveat was withdrawn, in January 2016, instead of instructing YC Lee to proceed, Daisy decided to instruct RT instead to take over the probate application.  Daisy explained her delay in applying for the grant by saying that the handing over of papers from YC Lee to RT took time and also enquiries with various third parties in relation to Bernard’s assets took time.  Eventually, it was not until 21 June 2016, some 6 months after the withdrawal of the caveat, that Daisy finally commenced the probate application process for Bernard’s estate.  

85.  All along, Daisy had in her possession a copy of Bernard’s will and she could have instructed solicitors to conduct enquiries over Bernard’s assets earlier and in 2015 as the caveat should not have affected such enquiries.  There was no reason why her application for probate could not have started sooner or in any event, as soon as Ps caveat was lifted.

86.  Daisy was granted the Probate on 16 November 2016.  Notwithstanding Daisy’s confirmation through YC Lee that she would provide information of the Estate to Ps upon grant of Probate, she did not even inform Ps of the grant.  In fact, according to Ps, they only found out almost 6 months later when conducting a search at the Probate Registry in April 2017.  It appears that it was only on in July 2017 that RT formally informed Withers that Daisy had obtained the Probate and would be acting as executrix of the Estate[18].  No Estate Accounts or any information on the assets of the Estate were provided to Lynette until August 2017.

87.  Lynette had affirmed her 1^st affirmation on 16 August 2017 in the United States and at that time she had not yet received the 2013 Financial Statements prepared by Qual-Mark which Daisy only sent to Withers through RT on 15 August 2017 (Hong Kong time).  In any event, as Ps took the view that those the Financial Statements did not constitute proper Estate Accounts, the originating summons was issued on 29 August 2017.

88.  As can be seen in Daisy’s 1^st affirmation, she met with Qual-Mark on 28 January 2016[19].  There was no explanation as to why the 2013 Financial Statements could not have been sent over to Lynette earlier, say in February 2016.  Daisy had only said that after the grant of the Probate, she decided she should first deal with Bernard’s estate and that the administration of Bernard’s estate was not as simple and that it had taken time and was only more or less completed in or around March 2017.

89.  I do not see that to be an adequate explanation as why Daisy could not simply instruct RT to send the 2013 Financial Statements to Lynette/Withers in 2016, particularly when Daisy herself had said that notwithstanding that she wished to complete administration of her husband’s estate first, she was always cognisant of the Estate, even before the Probate was granted[20].

90.  Further, as mentioned earlier, Daisy herself accepted that she had been advised that the format of the the 2013 Financial Statements by Qual-Mark was not of the usual format.  She should be aware of the format of the 2013 Financial Statements when she met with Qual-Mark in January 2016, or shortly thereafter and yet notwithstanding obtaining the Probate on 16 November 2016, and it was not until almost a year later, at end of October 2017 that she formally instructed BDO to prepare the Estate Accounts.  As said earlier, the supporting documents in the BDO Estate Accounts had not yet been provided by the 2^nd day of the hearing.  I understand that after the hearing, there was inspection arranged on 27 and 28 February 2019, but in any event, having considered the above, I am satisfied that there was unjustified delay on the part of Daisy to provide Ps with proper Estate Accounts.

Delay in administration and distribution

91.  Mr Lam submitted that within a relatively short time, Daisy had actively and diligently acted, with the assistance and advice of professional legal and financial advisors to:

(1)  collect in assets;

(2)  appoint new professional accountants;

(3)  consider the advantage and disadvantages of realising the assets for cash;

(4)  maintain a constructive dialogue with the beneficiaries even after the present proceedings had been commenced;

(5)  made an interim distribution in the total sum of HK$25m to the 5 sons and/or their estate.

92.  As seen in Daisy’s own chronology, items (2) and (5) in fact only took place after Ps had issued the present proceedings.

93.  As seen in Daisy’s chronology, in the period of some 9½ months, between 16 November 2016 (date of grant of Probate) and 29 August 2017 (the issue of the present proceedings by Ps), what Daisy had done in relation to the administration of the Estate was only (i) to instruct her solicitors to conduct land searches; (ii) to arrange to open new bank accounts in her name for the Estate; (iii) to arrange issue of new share certificates of the listed companies and private companies in her name; (iv) to arrange for sale of the Estate’s shares in the Hong Kong Sanatorium Hospital under a general offer by the hospital (which was between May and June 2017).

94.  Thus, most of the administration work during those 9½ months was only in relation to collecting in the assets of the Estate.  According to Daisy’s own chronology, after obtaining the Probate, she instructed RT to conduct land searches on the properties of the Estate at end of November 2016 and thereafter, Daisy approached the banks and share registrars for the listed companies in relation to opening of new bank accounts for the Estate and registering the shares in her names.  However, the Probate was only presented for registration at the Land Registry against the Family Property a year after grant, on 13 November 2017 after the present proceedings had been issued.  Daisy claimed that this was because she believed that the original Probate must be lodged with the Land Registry and would be retained by the Land Registry for 6 to 8 weeks and therefore she decided to deal with collecting in the other assets and opening of Estate bank accounts first.  Eventually, the original Probate was only returned to RT by the Land Registry on 19 April 2018.  The reason why it took such a long time was because after the registration on 21 March 1962 of the probate of the Estate granted on 22 May 1957 to the 3 executors, Daisy’s predecessor had not registered the death certificates of the other two deceased executors.  This should however be apparent to Daisy and/or her solicitors when the land search was conducted in November 2016. 

95.  Anyway, prior to the issue of these proceedings, no information was sent to Ps although Daisy was fully aware of her agreement to provide information upon grant of Probate.  As said earlier, the 2013 Financial Statements prepared by Qual-Mark were only sent on 15 August 2017. Ps were not even informed of the sale of the Estate’s shares in the Hong Kong Sanatorium Hospital.

96.  As further said earlier, it was not until after the issue of these proceedings, in October 2017 that Daisy decided to instruct BDO to prepare Estate Accounts.

97.  As seen in 2017 Estate Accounts, the total balance of the bank accounts of the Estate with BEA was approximately HK$44.6m, and that on 6 November 2018, she had instructed her solicitors to write to the beneficiaries to give an update on the progress of the administration of the Estate and that she would be making an interim distribution of HK$5m to each of the beneficiaries entitled to share in the Estate, and that on 5 December 2018, the dividend cheques for interim distribution were sent out .     

98.  However, in a letter dated 15 December 2017, which was almost over a year earlier, she had already indicated through RT to Withers that she was prepared to consider an interim distribution if such distribution was in the best interest of all the beneficiaries of the Estate and that such distribution would not jeopardize the ongoing funding requirements of the Estate.  By then, Daisy had already sold Deceased’s share in the Hong Kong Sanatorium Hospital for almost $23.4m (net) on 14 August 2016.  Yet, it was not until almost a year later, on 5 December 2018 which was about 14 days before the 1^st day of the hearing, that the cheques for the interim dividends totalling HK$25m were eventually delivered to each of beneficiaries concerned.  According to Daisy, the interim distribution was in fact of HK$30m, with a sum of HK$5m said to be the share for the Ancestral Worship. 

99.  On the issue of the interim distributions, according to Pak Huen, there had been 5 interim distributions between 7 November 1975 and 2002, and that he had received a total of HK$50.7m, the last one being a sum of HK$46m arising out of the sale of a piece of land in Lam Dei in New Territories prior to the death of Madam Chau[21].  It was not clear whether there was any interim distribution for the Ancestral Worship and if so, the whereabouts of the monies.  The Trustees appointed by the Deceased under the Will would appear to have two roles or capacities, one as trustees of the Estate and the other one as trustees of 1/6 shares of the Residuary Estate, bequeathed by the Deceased for Ancestral Worships.  It was not clear whether there was a separate trustee bank account opened for Ancestral Worship.

100.  There seemed to be no further distributions since 2002, and Daisy only made an interim distribution some two years after the grant of Probate even though there seemed to be sufficient liquid assets, consisting of cash and shares in listed companies in the Estate.

101.  As for the shareholding in listed companies, the shares were transferred into Daisy’s name or held in a securities account at HSB opened by Daisy for such purpose by at about end of 2017.  Daisy had said these shares had generated a stream of dividend income every year which had been used in part for the costs of the administration and maintenance of the Family Property.  In Daisy’s 2^nd affirmation of 30 April 2018, she had said as the hearing of these proceedings would take place in December 2018, she would try to formulate a long term proposal on how to deal with those securities and would duly inform the Court and beneficiaries accordingly[22].  There was no explanation from Daisy as to why she had to wait till the hearing to formulate a proposal.  Then in her 3^rd Affirmation of 7 December 2018 filed 12 days before the hearing, Daisy said she considered that it was not the best timing to realise the shares and that a viable option would be to distribute the shares in specie in the requisite proportions.  Daisy had also said that she realised that as some of the beneficiaries do not reside in Hong Kong, it may not be convenient for them to receive the physical shares certificates and that she had instructed her solicitors to write to each beneficiary on 3 December 2018 offering them the option. 

102.  As for the shareholding of private limited companies, on 3 December 2018, Daisy instructed her solicitors to write to the various beneficiaries as to whether he or she was interested to purchase these shares or any part of them and if so, what price he or she was prepared to offer.

103.  To summarise, it was only in early December 2018, two years after the Probate was granted and with the hearing before this Court approaching, that the interim dividends cheques were sent out by Daisy and letters were then sent to the beneficiaries regarding the shares in publicly listed companies and private companies.  There was no reason as to why all these could not have been done earlier. 

104.  The main dispute in this matter is really over the Family Property.  As seen in a “chart” produced by Pak Huen in his 1^st affirmation, the Family Property has 4 levels, namely the Ground Floor, the 1^st Floor, the 2^nd Floor and the 3^rd Floor, with two wings on each floor, namely the East Wing and the West Wing. 

105.  According to Pak Huen, no one has the exclusive right to use or occupy the Ground Floor, but there are cubicles for storage. At the moment, Lynette is using 2 of those cubicles, Pak Huen is also using 2 cubicles, Michael is using 1, and Daisy is using 1.  There are 3 floors, each with two apartments, one on the east and one on the west.

106.  On the 1^st Floor, the Deceased used to occupy the East Wing while Madam Cheung and her children used to occupy the West Wing.  Later, Bernard and his family occupied those 2 Wings, and after his death, Daisy has continued to occupy those 2 Wings on the 1^st Floor, and at present with 2 of her 4 children[23].

107.  As for 2^nd Floor, Pak Huen and his son are now occupying the East Wing, while Michael and his family are now living in West Wing.

108.  As for 3^rd Floor, according to Pak Huen, Lynette and her children occupy the East Wing and the West Wing was occupied by Pak Wing and after his death in March 2016, it has been vacant.

109.  Michael had filed an affirmation in support of the originating summons and Lynette’s case for the Family Property to be sold with vacant possession and he had said that the Family Property poses health and safety concerns and there may be fire hazards as the building does not have a sprinkler system.  Further, even though there had been waterproofing works carried out by Daisy in early 2017, those repairs were not extensive enough.

110.  As for Daisy’s 4 children named as defendants, they had each filed an affirmation in support of their mother to continue to act as the executrix of the Estate but neither of them had expressed any views on the Order for Sale sought by Ps.

111.  In her 1^st Affirmation, Daisy had said that Lynette’s allegation that Daisy had wished to take advantage of her residence in the Property by delaying the sale of the Family Property and the final distribution of the Estate, was “wholly unfounded, untrue and unfair”. Daisy had declared that:

“I fully recognise that it is my duty, as executrix, amongst other things, to realise the [Family Property] and to distribute the proceeds amongst the named beneficiaries in the manner provided in the [Will]. On the other hand, I believe it is also my duty to secure the best terms and conditions for the disposal of the [Family Property] which should be in the best interest of all the beneficiaries[24].”

112.  What Daisy further said in her 1^st affirmation was that from her recent discussions with Pak Huen, he had indicated to her that he wanted to continue to live in the Family Property, but Daisy then said :

“Nevertheless, I still believe that it is my duty and in the best interest of the beneficiaries of the Estate for the [Family Property] to be sold[25].”

113.  There was no mention by Daisy in her 1^st affirmation of any “Family Arrangement” as alleged by Pak Huen.  It would further appear from Daisy’s evidence that even Pak Huen himself did not assert to Daisy at that time that he had any entitlement to continue to live in the Family Property by reason of any Family Arrangement/Promissory Estoppel.  According to Daisy, all Pak Huen did was to express to Daisy that he wanted to continue to live there, and notwithstanding Pak Huen’s wish, Daisy’s then stance was that it was her duty and that it was in the best interest of the beneficiaries to sell the Family Property.

114.  In her 1^st affirmation, Daisy had also said that she was in the process of engaging a reputable firm of professional surveyors on the market value of the Family Property as a house, as well as its potential value if sold to a property developer for redevelopment purposes[26].

115.  It would appear that in her 2^nd affirmation, Daisy seemed to have a change of heart.  As for the valuation mentioned by her in her 1^st Affirmation, she said after obtaining a quotation from CBRE of HK$280,000, due to Pak Huen’s case of the alleged “Family Arrangement”, it was uncertain when the Family Property could be sold with vacant possession, and which mode of sale should be in the best interest of all the beneficiaries and that the sale might have to be deferred until the courts could make a final ruling on this issue in the present proceedings, or if Pak Huen could come to a settlement with Ps[27].  She further pointed out that there could be an appeal from the Court’s decision no matter which side would be successful.  In such circumstances, Daisy said it would be premature to retain a firm such as CBRE to provide a valuation.

116.  Daisy then instructed her solicitors to approach Access Partner to prepare a report at a fee of HK$20,000.  Although a draft of the Valuation Report was prepared by Access Partner in November 2017, Daisy then said it could not be finalized until the registration of the Probate at the Land Registry was complete and thus although the valuation date was at 15 November 2017, the Valuation Report was subsequently issued on 20 April 2018 by Access Partner.

117.  The Valuation Report was stated in the revised engagement letter dated 21 December 2017 to be for accounting reference purpose only[28] and the valuation was based on the redevelopment basis and on the basis that vacant possession of the property would be immediately available upon completion of a sale.  Access Partner did not carry out detailed on-site measurements to verify the site and floor areas of the property and the valuer had assumed that the areas shown on the documents handed to them were correct.  According to the Valuation Report, the valuer had inspected the exterior and where possible the interior of certain property, but no structural survey had been made in respect of the property.  It was not clear which part of the interior was inspected.

118.  Anyway, as seen above, for a year after grant of Probate and before Pak Huen had raised the issue of the Family Arrangement/Promissory Estoppel, Daisy had done little or nothing to bring about a sale of the Family Property and/or otherwise to wind up the Estate.  In fact, she did not even try to deal with those “material encumbrances” mentioned in the Valuation Report.  Although this was not a matter raised by Ps, since it was mentioned by Access Partner, there was no reason as to why Daisy could not have tried to deal with those first.  In fact, Ps’ complaint was that Daisy would only act when a problem was raised by them.

119.  Daisy is clearly fully aware of her duty as an executrix to achieve a final distribution and to wind up the Estate bearing in mind in particular that the Deceased died 63 years ago and there had already been a long lapse of time and all the original executors had already died with the last one, namely Bernard, died over 4 years ago.  However, notwithstanding that Daisy is fully aware of her duty, so far the evidence shows, apart from collecting in all the assets, she had not taken any pro-active step to try and achieve a final distribution and/or otherwise to wind up the Estate prior to the issue of the present proceedings and it took her over two years after grant of Probate to make an interim distribution and to write to the beneficiaries regarding the disposition of shares in listed companies and private companies.

120.  Thus, even though Daisy cannot be blamed for any delay prior to her being granted Probate, it is my view that there has been continuing unjustified delay on her part towards administration and distribution.

Conflict of interest  

121.  There are two aspects of Ps’ complaints in this respect:

(i)  Daisy herself residing in the Family Property with her family members rent free;

(ii)  Daisy has a duty to investigate into conduct of previous executors of the Estate.

122.  So far as (ii) was concerned, this matter was really raised at the hearing.  This issue arose when Ps learnt that some dividends received from shares of the Estate in 2015 and 2016 had been credited into Bernard’s personal bank account after Bernard’s death.  Daisy said this was done without her knowledge and Daisy had arranged for those dividends to be transferred to the Estate’s bank accounts.  Ps had complained that Daisy did not do anything earlier to find out the whereabouts of those dividends even though a “red flag” was raised in the BDO Estate Accounts by end of April 2018 and there was no proper explanation as to how it happened.  It would appear that Daisy only found out on 4 December 2018 after asking Qual-Make to help trace the amounts.

123.  Mr Wong also raised a further issue in that the past dividends could have been automatically or systematically credited into Bernard’s personal account, and that this matter should have alerted Daisy and Daisy should have carried out an investigation into the past history of the deposits of the dividends cheques.

124.  Daisy had said that before she was granted the Probate, all dividends were credited either by autopay or be cheques into the Estate’s bank accounts maintained by Bernard.  At this stage, there was no sufficient evidence of any misconduct or any intermingling of assets between Bernard (or his co-executors) and the Estate, and those dividend cheques deposited into Bernard’s personal account after Bernard’s death had been accounted for.  The records of payment of dividends were in the List of Documents sought by Ps.  At this moment, there is no sufficient evidence that there is a need for investigation into past conduct of Bernard or his co-executors.   

125.  More seriously in my view, as said earlier, it is Ps’ allegation that  Daisy is taking advantage of the fact that Bernard has died and she is now in control of the Estate in order to delay indefinitely the final distribution of the Estate as she (and her children) are residing in the Property free of rent[29].

126.  Mr Lam argued that in fact everybody is still occupying the Family Property or part thereof “rent-free”, which had been the status quo since the 1950s.  Mr Lam pointed out that Madam Chau, who had a life interest in the Family Property and was residing therein, only passed away in 2002, and that since then until the present proceedings, no one had raised any complaint, and in fact, even Ps themselves are still occupying one part of the Family Property.

127.  As earlier mentioned, at the moment, according to Pak Huen[30], and as mentioned earlier, Daisy is residing and occupying two wings, namely both East and West Wing on 1^st Floor with two of her children and further uses one of the cubicles on the Ground Floor for storage.  Thus, Daisy and her family would seem to be occupying more space than the others.

128.  Further, it was not Pak Huen’s case that under the Family Arrangement, the 5 brothers had the right during their respective lifetime to reside in the Family Property free of rent and all utilities and maintenance expenses.  It would also appear from the 2017 BDO Estate Accounts that rates, electricity, telephone and fax, water, cleaning, repairs and insurance charges of about HK$1m a year were all paid by the Estate[31].  All Pak Huen alleged about the Family Arrangement was that there was “an overall understanding and de facto arrangement” that for as long as one of them shall still be living and residing at the Family Property, the Family Property would not be sold, irrespective of whether or not the Deceased’s wife or concubines were still alive and living there[32].

129.  Even though Daisy had claimed that she intended to sell the Family Property, prior to Pak Huen raising the issue of the Family Arrangement/ Promissory Estoppel on 23 November 2017, there had been no positive steps taken by Daisy in relation to seeking or securing vacant possession of the Family Property from the beneficiaries including herself and/or placing the Family Property on the market for sale or placing any part/apartment in the Family Property for rent.  Further, after Pak Huen had raised the issue, Daisy did not herself issue any administration action under Order 85 of RHC, nor sought any orders or directions in the present proceedings, whether for sale subject to vacant possession or sale without vacant possession, or for any part of the Family Property to be rented out.  Nor had she issued a separate action against Pak Huen to seek vacant possession. 

130.  Mr Wong submitted that there had been a change of stance on the part of Daisy.  Mr Lam said this was only in the sense that because there was going to be the substantive hearing before this Court that Daisy decided to take no steps.  Mr Lam then indicated to the Court that if the Court were to allow Daisy to continue to administer the Estate, then Daisy would be prepared to give an undertaking to proceed with a sale but insofar as vacant possession was concerned, if no agreement could be reached, then Daisy might have to take out an application to evict Pak Huen, and further insofar as Daisy was concerned it was not that she was saying that she had to continue living there.  Mr Lam then pointed out that Ps were also living there, but that if everyone would be willing to leave, then so be it.

131.  Mr Lam had also pointed out that although Michael had indicated his wish for the Family Property to be sold, he did not see fit to immediately move out of the Family Property, and that “none of the beneficiaries” saw an urgent or immediate need to change the status quo which had been in place for decades without complaint.

132.  It was thus clear from Mr Lam’s submission as that Daisy herself and her children did not see an urgent or immediate need to move out.  There was no evidence that Daisy herself had tried to secure an agreement, at least as between her (and her 4 children) and Ps, in relation to moving out or vacating the Family Property for the purpose of a sale.

133.  The problem is that Daisy’s stance in relation to the sale has been inconsistent.  First, she said it was her duty and that in the best interest of the beneficiaries to sell the Family Property but took no positive action to procure a sale.  Then when she received Pak Huen’s affirmation, she decided to adopt a neutral position in respect of the Family Arrangement and to do nothing regarding a sale.   There was no evidence that she had sought any legal advice on behalf of the Estate as to the prospects of success on the claim by Pak Huen or what actions she should take on behalf of the Estate in relation to Pak Huen’s claim.  In Mr Lam’s skeleton submissions, Daisy’s position was that if she were to remain as the executrix, she would abide by the orders and directions made by the Court.  However, she herself had not sought any orders or directions in relation to a sale nor had she supported or expressed any views on those 5 terms proposed by Ps for the sale.  Then, at the end of the 1^st day of the hearing, Mr Lam told the Court that he had instructions that Daisy was prepared to give an undertaking to proceed with a sale if she were to be allowed to continue as executrix of the Estate.  The undertaking was vague and there was nothing firm in writing placed before the Court as to what exactly Daisy was undertaking to do to achieve a sale, or the mode of sale proposed by her.

134.  After the 1^st day, on 11 January 2019, Pak Huen’s solicitors wrote to RT to seek clarification on Daisy’s undertaking. There was no reply from RT.   

Conclusion on conflict of interest

135.  Notwithstanding Daisy’s own statements and her last minute undertaking through Mr Lam, her inconsistent stance and the lack of positive and/or concrete actions on her part as an executrix in relation to a sale plus her attitude that there is no urgent or immediate need to change the present status quo would result in delay in winding up the Estate and such a delay would in effect mean that she and her children can continue to reside in the Family Property free of rent and with utilities and various expenses paid by the Estate.  Having considered all the circumstances of this case, I have come to the view there is a serious conflict of interest between Daisy as executrix and the Estate in relation to the matter of a sale of the Family Property.

Other matters

Views of the beneficiaries

136.  Other than Daisy herself and her children, Pak Huen had also opposed the removal of Daisy as executrix.

137.  Pak Huen holds 1/3 share in total in the Residuary Estate (as a direct beneficiary under the Will and further as sole beneficiary under Pak Wing’s will). Daisy and her children hold 1/6 share in total. On the other hand, Ps plus Lynette’s two children together hold 1/3 share of the Residuary Estate and the remaining 1/6 share is for Ancestral Worship.

138.  Pak Huen’s opposition can be summarised as follows:

(i)  Daisy had done a good job and was responsible for carrying out the Ancestral Worship ceremonies;

(ii)  It was not Deceased’s wish to have an outsider to be an executor;

(iii)  High costs of an independent administrator and possible conflict of interest

139.  As for (i) above, Pak Huen had said in his 1^st affirmation that Daisy  had been doing a good job including “maintaining the household of the Family Property as well as expenses incurred for repairing the Family Property” and that she had been responsible for carrying out all the family’s ancestral worship ceremonies as Daisy, being a faithful believer in Buddhism, would regularly replenish the ancestral hall (this was said to be in an exclusive room on the ground floor of the Family Property)[33]. However, as pointed out by Ps and as seen in the video, the room appeared to have a Buddha statue on the altar table for worshipping, rather than ancestral tablets, but in any event, it was not really disputed that ancestral worship would take place there.

140.  Anyway, under clause 5 (2)(f), the remaining 1/6 share for Ancestral Worship is subject to a proviso that the Deceased’s Trustees may in their uncontrolled discretion pay or apply the said share or any part thereof to or for the benefit maintenance and support of some one or moreto the exclusion of the others or other of the Deceased’s sons.  There is at present no information from Daisy as to how this share is to be applied, and further, as said earlier, no information as to how past interim dividends attributable to this share had been applied[34].

141.  As for (ii), according to Pak Huen, Daisy is the only person, other than himself, who is deeply familiar with the family traditions and culture and who would be able to form a balanced judgment without losing sight of the intrinsic values that underline the Deceased’s last wishes[35]. Pak Huen had also said he did not believe that the Deceased would have wanted any outside individual to take charge of the Estate and that a newly appointed independent administrator would not be able to duly satisfy the Deceased’s wishes as contained in the Will[36].  Pak Huen then raised the issue of a real risk that an independent administrator would have at least a commercial desire, if not vested interest, to cater for the wishes of prominent developers who would be potential purchases of the Family Property.

142.  Mr Lam had submitted that Daisy became the sole executrix of the Estate by transmission of executorship in the unbroken chain of representation and that as seen in Williams, Mortimer and Sunnucks on Executors, Administrators and Probate (21^st Ed) what underlines this rule is that the power of an executor is founded upon the special confidence and actual appointment of the deceased; and such executor is therefore allowed to transmit that power to another, in whom he has “equal confidence”[37].

143.  Although this would be a relevant factor for the Court to take into consideration, this is only one of the factors or circumstances the court will have regard and each case depends on its own facts and circumstances.  Ultimately, the Court has to decide whether due and proper administration of the Estate and the interest of the persons beneficially entitled thereto require the replacement of Daisy by an outsider.

144.  As Ps’ proposed mode of sale is by private tender with a reserve price set by an independent surveyor, I see no cause for concern or suspicion that there will be a conflict of interest between an independent administrator and the Estate, in catering for wishes of prominent developers as alleged by Pak Huen.

145.  In relation to costs of administration in (iii), Pak Huen had expressed concern over the high costs involved if an independent administrator were appointed and said this would lead to a “serious wastage against the Estate[38]”. Daisy said she shared Pak Huen’s concerns.

146.  However, even on Daisy’s own evidence, she had to rely a great deal on professionals for assistance in administration of the Estate.  Most of the work involved in bringing in or collecting the assets of the Estate was done through her solicitors and she had to rely on professional accountants to prepare the Estate Accounts.  In any event, it would appear at this stage, that by far the major part of the costs in the administration of the Estate would be in conducting litigation in relation to the Family Property, in particular between the Estate and Pak Huen over the issues of the Family Arrangement/Promissory Estoppel.  Even for the present administration proceedings, when Daisy had claimed to be neutral, she had instructed both Senior and Junior Counsel to appear for her.  I further note that Pak Huen has instructed one Senior Counsel and three Junior Counsel to appear for him in his capacity as executor of Pak Wing and in his personal capacity.  Whether Daisy remains the executrix or be replaced by an independent professional, there is likely to be substantial litigation costs incurred by the Estate in opposing Pak Huen’s claims unless all the beneficiaries are able to reach a settlement in relation to a sale and the terms of the sale.  All in all, Pak Huen’s opposition to the Order for Sale has put him in conflict with Ps and his support for Daisy as executrix has to be seen in the light of possible self-interest in particular when Daisy had taken a neutral stance towards his allegations and no positive step had been taken by Daisy against him.

147.  Apart from Pak Huen and Daisy, there had been no particular concerns raised by D4-D7 over costs of administration if an independent administrator were to be appointed.

148.  In fact, so far as D4-D7 were concerned, their respective affirmations were almost identical and they did not state any particular reasons or grounds to support their views as to why they were in favour of Daisy to continue to act as the executrix of the Estate.

Daisy’s qualifications

149.  Mr Wong submitted that Daisy is in her 70s, being born in 1945 and she has not received much education.  She married Bernard in 1962, when she was 17 and she has been a housewife with no professional career.  Mr Lam pointed out that the first time Mr Wong raised this issue was on the 1^st day of the hearing and that this was an “ambush”.

150.  However, all this was Daisy’s own evidence and she herself had in fact admitted that Bernard did not mention to her too much about his financial affairs.

151.  In the case of Re Estate of Chan Kan Ying, Deceased HCMP 888 of 2013, unreported, 19 July 2017, this Court had referred to what was held in Yu Hong Ping v Kenneth Yuen [2009] 6 HKC 347, namely the court in exercising its discretion under s 33(3) of the PAO, shall be satisfied with the statutory criteria, and should have regard to the size of the estate, the nature of the assets that needed to be administered, the background and the education, training and experience of the remaining and substituted personal representatives and the interest of the beneficiaries, especially if there is minority interest involved.

152.  Even though there is no minority interest in the present case, I am of the view that I am entitled to take into account Daisy’s age, her education background and lack of experience in administering the Estate which consists of substantial assets and involves contested litigation which may be protracted.  As Mr Wong has submitted, the Estate a “highly complicated” one.

Conclusion

153.  Having considered all the above and the circumstances of this case, I am satisfied that due and proper administration of the Estate and the interests of the persons beneficially entitled thereto require the removal of Daisy as executrix and that another independent professional administrator be appointed in her place and that the assets of the Estate be vested in the new administrator.

Order

154.  At this stage, no names have been put forward by Ps who have sought an order that that such independent professional administrator be agreed by the parties within 28 days.  I am prepared to allow the parties 28 days from the date of this judgment to try and agree to a professional administrator to be appointed, failing which they are each to provide to the Court two names of their respective proposed administrator/s, together with the proposed administrator’s charging rate, CV and experience in administration of estates and contested litigation between the estate and a beneficiary.  The Court will decide on paper as to whom to appoint.

155.  As for the application for the Order for Sale, this is to be adjourned sine die with liberty to restore for a direction hearing (estimated length of hearing of one hour) after the professional administrator has been appointed by this Court.

156.  In relation to the Estate Accounts, I am of the view since there is going to be a new administrator appointed, any request for outstanding documents, accounts and inquiries can be sought from the new administrator.  The applications in paragraphs 3, 5 and 6 of the originating summons in relation to the Estate Accounts, as well as such other accounts and inquiries should be adjourned sine die with liberty to restore. 

157.  As for costs, the parties are to lodge their respective written submissions within 21 days.  There be leave for them to lodge written reply submissions within 21 days thereafter.  The matter of costs will be dealt with on paper, unless otherwise directed by the Court.

158.  Ps are to submit a draft order for approval.

159.  Finally, I would like to thank all Counsel for their assistance to the Court.