HCMP 703/2019
[2022] HKCFI 3649
IN THE HIGH COURT OF THE
HONG KONG SPECIAL ADMINISTRATIVE REGION
COURT OF FIRST INSTANCE
MISCELLANEOUS PROCEEDINGS NO 703 OF 2019
________________________
| | IN THE MATTER of the Estate of MAN FOR-TAI, WILLIAM (文伙泰) (“the Deceased”), late of House B3 and carpark, Flamingo Garden, 8 Fei Wan Road, Sai Kung, New Territories |
| | and |
| | IN THE MATTER of Order 85 of the Rules of High Court (Cap. 4A) |
| | and |
| | IN THE MATTER of sections 33 and 36 of the Probate and Administration Ordinance (Cap. 10) |
________________________
BETWEEN
| | MAN KAI-KWONG, DAVID | Plaintiff |
| | and | |
| | MAK YING-MUI as the administratrix of the | 1st Defendant |
| | estate of the Deceased | |
| | MAN KAI-SAU, PETER | 2nd Defendant |
| | MAN KAI-FUNG | 3rd Defendant |
| | MAN KAI-SUNG, SUSAN | 4th Defendant |
________________________
| Before: | Deputy High Court Judge MK Liu in Court |
| Date of Hearing: | 1 December 2022 |
| Date of Judgment: | 7 December 2022 |
________________________
J U D G M E N T
________________________
A. INTRODUCTION
1. These proceedings concern the administration of the estate (“the Estate”) of the late Mr Man For Tai William (“the Deceased”). The plaintiff (“David”) is the eldest son of the Deceased. The 1st defendant (“the Mother”) is the surviving spouse of the Deceased. The Deceased and the Mother have 4 children, namely (from the oldest to the youngest), David, the 2nd defendant (“Peter”), the 3rd defendant (“Kai”), and the 4th defendant (“Susan”).
2. The Deceased passed away intestate on 19 June 2014. On 30 March 2016, Letters of Administration was granted by the Hong Kong Court to the Mother (“the Hong Kong Grant”), by which the Mother was appointed as the administratrix of the Estate. A schedule of assets and liabilities of the Deceased in Hong Kong as at the date of death (“the Schedule”) was annexed to the Hong Kong Grant.
3. On 19 May 2019, David commenced these proceedings and sought the reliefs set out in the Originating Summons (“OS”). The reliefs sought in the OS are as follows:
“1. Whether [David] either singly or together with [Peter], [Kai] and/or [Susan], his siblings, be appointed as co-administrator(s) (“Co-Administrators”) of [the Estate] together with [the Mother], the existing administratrix of the Estate;
2. Further or in the alternative:
(1) In aid of the determination of the beneficial interests in Super Tycoon Investments Limited (“Super Tycoon”), and in particular, whether the Estate is the sole beneficiary thereof or a beneficiary together with [Peter] in equal shares, a direction that:
(a) [Peter] do instruct, or otherwise [David] as a Co-Administrator be entitled to instruct, the registered agent of Super Tycoon in the British Virgin Islands, to furnish all records of the composition of, and shares held by, all shareholders of Super Tycoon, from the date of incorporation to the date of the said instruction;
(b) [David] be entitled to demand Yvonne Pang, Shenciti’s certified accountant and auditor, to furnish him copies of all papers and electronic records in her possession relating to Shenciti Investments Co Ltd (“Shenciti”), the Deceased, and/or [Peter], and in particular, the documents which were prepared for the execution of the Deceased and/or [Peter] on 9 Jun 2007 relating to the transfer of the beneficial interests of Super Tycoon from the Deceased and [Peter] in equal shares to the Deceased holding them absolutely;
(2) In aid of the determination as to the amount to which [David] and his son Miles MAN are respectively entitled from the proceeds of sale of the properties disposed of by Man Mou Hei Tso [文戊喜祖] prior to the death of the Deceased on 19 Jun 2014, and held by the Deceased in trust for [David] and Miles MAN, an order that:
[Peter] and/or Shenciti do furnish [David] all papers and electronic records in the possession of himself and/or Shenciti relating to the books and electronic records of Man Mou Rei Tso of which [David] is the legal custodian;
(3) In aid of the determination as to the amount of indebtedness Shenciti owes to the Estate out of its receipts of dividends from Shenzhen New Fukong Transport Development Co Ltd (“New Fukong”) (a Mainland bus company in which Shenciti has a 65% holding therein), an order that:
[Peter] and/or Shenciti do furnish [David] all papers and electronic records relating to New Fukong, and in particular, all such documents relating to the said receipts;
(4) In aid of the determination as to the amount of indebtedness Shenciti owes to the Estate out of its receipts of dividends from Shenzhen Fu Kong Commercial Services Co Ltd (“Fukong”) (a Mainland property development company in which Shenciti has a 100% holding therein), an order that:
[Peter] and/or Shenciti do furnish [David] all papers and electronic records relating to Fukong, and in particular, an such documents relating to the said receipts;
(5) In aid of the determination as to Shenciti’s indebtedness to the Estate arising from a Mainland judgment of the Weizhou Intermediate People’s Court dated 11 Feb 2014 in favour of Fukong against Jiayin in the sum of RMB 10 million, an order that:
[Peter] and/or Shenciti do furnish [David] all papers and electronic records relating to Fukong, and in particular, all such documents relating to the said receipts;
(6) A direction that any Co-Administrator be entitled to demand Shenciti a sum of $20,774,806, being the amount of Shenciti’s indebtedness to HSBC (“Indebtedness”) having been discharged by the Estate on 10 Jun 2014, arising out of the Deceased’s guarantee of an HSBC loan to Shenciti dated 5 Jun 2013, and that any Co-Administrator be entitled to institute legal proceedings against Shenciti to recover such a sum for the Estate;
(7) A direction that [David] as Co-Administrator be entitled to:
(a) apply for letters of administration from the Eastern Caribbean Supreme Court or the relevant probate registry of the British Virgin Islands, and
(b) to conduct a valuation of New Fukong for the purposes of compiling a Schedule of Assets and Liabilities in connection with such an application;
(8) A direction that [David] as Co-Administrator be at liberty to defend, set off and/or counterclaim Shenciti’s claim against the Estate for the sum of $57,450,462.71 instituted by a writ of summons issued on 20 Sep 2018, being the amount claimed to be outstanding in Shenciti’s director’s account with the Deceased;
(9) In aid of 2(8) above, a direction that [David] be entitled to demand Yvonne Pang to furnish him with all papers and electronic records in her possession relating to Shenciti, the Deceased and/or [Peter];
(10) In aid of the proper management of the Estate’s beneficial interest in Shenciti:
(a) A declaration that the self-appointment of [Peter] as a director of Shenciti and his removal of the Deceased as a director of Shenciti are unlawful;
(b) a direction that any of the Co-Administrators who consent to act as Shenciti’s director, be so appointed.”
4. On 5 September 2019, Peter issued a summons (“D2’s Striking Out Summons”) for an order to strike out [2(1)] to [2(5)], and [2(9)] and [2(10)] of the OS, on the grounds that these paragraphs (a) disclose no reasonable cause of action, (b) are scandalous, frivolous or vexatious, and/or (c) are otherwise an abuse of the process of the court.
5. On 17 September 2019, B Chu J directed, inter alia, that [1] of the OS be argued on a date to be fixed, and [2] of the OS and D2’s Striking Out Summons be adjourned sine die with liberty to restore.
6. On 16 December 2020, the substantive hearing on [1] of the OS took place before me. At the end of the hearing, I dismissed [1] of the OS with costs to the defendants. Given the irreconcilable differences between David on the one hand and the defendants on the other hand, the Co-Administrators proposal as set out in [1] of the OS (“the Co-Administrators Proposal”) is simply unworkable. For this reason, I dismissed [1] of the OS.
7. On 15 July 2021, David amended the OS and inserted [1A] into the OS. [1A] of the Amended Originated Summons (“AOS”) is as follows:
“1A. [The Mother] should be removed and replaced by an independent and professional administrator regarding [the Estate].”
8. This is the substantive hearing of [1A] (“Relief 1A”) and [2] of the AOS, and D2’s Striking Out Summons.
9. At the beginning of the hearing, I asked Mr Maurice Chan for David to clarify David’ position on the parts of [2] of the AOS concerning Co-administration. Since the Co-Administrators Proposal has been dismissed, these parts do not appear to be relevant in these proceedings. Initially, Mr Chan said that he would seek leave to amend [2] of the AOS, and Mr Chan had asked for a break to enable him to have time to prepare the proposed amendments. After the break, Mr Chan handed up a draft containing the proposed amendments. The amendment application made by David was opposed by all the defendants. After taking further instructions, Mr Chan told me that he would withdraw the amendment application, and he would not pursue [2] of the AOS. Mr Chan agreed that in these circumstances, Peter’s striking out application should be allowed.
10. In view of the latest development, the only issue in the substantive hearing is whether Relief 1A should be granted. David’s application for Relief 1A is opposed by all the defendants.
B. THE PARTIES’ RESPECTIVE CASES
11. I would first set out the parties’ respective stances.
B1. David
12. Mr Chan submits that “the live key issue” relating to Relief 1A is as follows:[1]
Whether the Mother should be removed as an administratrix and that an independent administrator should be appointed in her stead; and if so, whether his administration be limited to “Super Tycoon Related Properties” (“STRP”), ie properties held by Super Tycoon, which includes:
(1) Shenciti, Border Shuttle (“BS”), New Harbourway (“NHW”), and Wardon (“the HK companies”); and
(2) New Fukong and Fukong (“the Mainland companies”).
13. Mr Chan submits that the Mother should be removed because so far she has failed to give the draft BVI Schedule of Assets and Liabilities to David so as to enable David to ascertain the extent of the Estate’s interest in Super Tycoon, a holding company which holds a string of valuable subsidiaries.
14. Mr Chan suggests that the Mother should be replaced by an independent and professional administrator. Mr Chan submits that David has grievance towards Peter and the Mother. Mr Chan submits that David’s grievance is mainly towards Peter, but also towards the Mother, for the Mother has tolerated Peter’s misfeasance, escapades and ruinous abuse of the HK companies and the Mainland companies.
15. Mr Chan also submits that while there should be an independent and professional administrator looking after the administration of the STRP in the Estate, the new administrator should also be authorized to deal with the non-STRP in the Estate as well. Mr Chan submits that there should not be two different administrators looking after different parts of the Estate, for this would lead to conflicts between the two administrators and hinder the administration of the Estate.
B2. The Mother
16. Regarding Relief 1A, Mr Martin Ho for the Mother submits that:
(1) As a matter of law, the Hong Kong Grant is only confined to the assets of the Estate which are situated in Hong Kong (“the Hong Kong Estate”), ie the assets set out in the Schedule annexed to the Hong Kong Grant. The STRP are not covered by the Hong Kong Grant.
(2) The Mother has been diligently administering the Hong Kong Estate since being appointed as the administratrix by the Hong Kong Court, with the assistance of her lawyers. There is no basis to question the competence and performance of the Mother in her diligent administration of the Hong Kong Estate.
(3) David’s motive in perusing [1A] of the AOS is highly questionable. At the beginning of these proceedings, P did not say that the Mother is unfit to remain as an administratrix of the Estate. At that time, David was in fact saying that he himself, and perhaps the other siblings, be appointed as co-administrators in addition to the Mother. However, after the dismissal of [1] of the OS, David changed his stance and lodged his complaint against the Mother.
(4) The view of the Mother (being the single majority beneficiary of the Estate) and the views of Peter, Kai and Susan (collectively with the Mother being the majority beneficiaries of the Estate) should be given weight. All of them prefer the Mother to remain as the sole administratrix of the Hong Kong Estate.
(5) Regarding the STRP, since Super Tycoon is a company limited incorporated in BVI, the STRP in fact are assets situated in BVI (“the BVI Estate”). The Mother is open to the possibility that an independent administrator be brought in to collect and administer the BVI Estate.
(6) The fact that Mother remains as the administratrix of the Hong Kong Estate does not prevent the BVI Court from appointing some other suitable person (including independent professional administrator) for the BVI Estate. The investigation of the affairs of Super Tycoon is hence not a proper basis to remove the Mother as the Hong Kong administratrix, in respect of the Hong Kong-based assets of the Hong Kong Estate.
B3. Peter
17. Mr Tommy Cheung for Peter submits that Relief 1A should be refused. Mr Cheung submits that:
(1) The Mother obtained the Hong Kong Grant on 30 March 2016. Since then, she has administered the Hong Kong Estate dutifully with the assistance of lawyers and other professionals. The Mother has made substantial progress in the administration of the Hong Kong Estate, and such administration has already entered a mature stage and the Mother is also willing and able to complete the remaining parts of the administration. Peter, Kai and Susan all support that the Mother should continue to be the administratrix of the Hong Kong Estate and do not agree to the proposal as set out in [1A] of the AOS.
(2) David is a minority beneficiary of the Estate. He is only entitled to 12.5% of the Estate. No or no sufficient ground has been put forward by David justifying removing the Mother and replacing her by a professional administrator.
(3) Professional administrators are expensive. It is not justified to have a professional administrator in the circumstances of this case.
B4. Kai and Susan
18. Mr Victor C.I. Lui for Kai and Susan submits that [1A] of the AOS should be refused, and the Mother should continue to be the administratrix of the Hong Kong Estate. Mr Lui submits that the Mother has all along been conscientiously discharging her duties as the administratrix of the Hong Kong Estate. David’s criticisms of the Mother’s administration are not supported by objective evidence and are unfounded. It would be beneficial to the proper administration of the Estate that the Mother continues her role as administratrix.
C. THE PRINCIPLES
C1. Principles concerning removal and appointment of personal representative(s)
19. Probate and Administration Ordinance (“PAO”), s.33(3) provides:
“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.”
20. Recently, the principles concerning the exercise of the powers under s.33(3) of the PAO have been summarized by Wilson Chan J in Chu Wing Chuen Paul v Chu Oi Yan Irene[2]. Those principles are as follows:
(1) The discretion to remove an executor or an administrator under section 33 of the PAO involves an assessment and a value judgement in all the relevant circumstances of whether removal is required for the due and proper administration of the estate and the interests of the beneficiaries.
(2) Not every mistake or neglect of duty, or inaccuracy of conduct of trustees would induce the court to remove the executor or the administrator.
(3) The acts or omissions must be such as to endanger the trust property or to show a want of honesty, or want of proper capacity to execute the duties, or a want of reasonable fidelity.
(4) Hostility between the executor/administrator and the beneficiary is not a ground for removal, unless the breakdown of the relations between them is such as to lead to the administration coming to a standstill, or makes it difficult or impossible for the administration to be completed by an existing personal representative.
(5) In exercising its discretion, the court should have regard to the size of the estate, the nature of the assets that need to be administered, the background and education, training and experience of the remaining and substituted personal representatives and the interests of the beneficiaries. The view of the majority beneficiaries is a relevant factor.
(6) The discretion to remove an executor or an administrator is to be exercised with great caution and sparingly. In general, removal is not to be preferred unless the administration is still far from completion. The courts are reluctant to exercise the discretion where the incumbent executor or administrator wishes to carry on, without allowing that incumbent an opportunity to repair or remedy any defects and progress promptly with due administration. The fact that administration of the estate could have been done better is not of itself sufficient ground.
21. Any proposed removal of an administrator from office would need to be justified by evidence, showing that his or her continuation in office is likely to be detrimental to the interests of the beneficiaries. As said by Patten LJ in Re Savile’s Estate[3]:
“83. … direct intervention by the Court in the administration of a trust or an estate by the removal of the trustee or personal representative has, for the most part, to be justified by evidence that their continuation in office is likely to prove detrimental to the interests of the beneficiaries. A lack of confidence or feelings of mistrust are not therefore sufficient in themselves to justify removal unless the breakdown in relations is likely to jeopardise the proper administration of the trust or estate. This is something which requires to be objectively demonstrated and considered on a case-to-case basis having regard to the particular circumstances.” (Emphasis added)
C2. Scope of the Grant made by the Hong Kong Court
22. An important issue in this case is that the scope of the Hong Kong Grant made by this court is in fact only concerned with the assets and liabilities in Hong Kong.
23. As stipulated in s.24A(1) of the PAO, the affidavit in support of an application for a grant shall set out “assets” and “liabilities” of the deceased in Hong Kong. In this case, the Schedule annexed to the Grant has expressly shown that the schedule relates only to the assets and the liabilities “of the Deceased in Hong Kong as at the date of death”.
24. In respect of foreign assets in the Estate, a separate grant of letters of administration under the foreign jurisdiction would need to be applied for. See Wong Tat Lun Eddie v Wong Chi Ho Jimmy[4], in which B Chu J said:
“114. The Rialto Property did not appear in the Schedules. It is an asset of the Deceased outside Hong Kong. As pointed out by [counsel], the Probate granted by the Hong Kong Court would not give D1 any authority to collect foreign assets. D1 would have to apply for an ancillary grant or a separate grant in the US…” (Emphasis added)
25. See also Williams, Mortimer and Sunnucks on Executors, Administrators and Probate (21st edn) §§43-30, 43-32, 49-02, 49-03.
26. The legal position has been clearly set out in Dicey, Morris & Collins on the Conflict of Laws (16th edn) at §27-026:
“Usually he or she will be unable to recover any assets situate in a foreign country unless he or she first obtains a grant of representation from the foreign court. If he or she attempts to deal with foreign assets without a grant he or she may find himself or herself liable as an executor de son tort under the foreign law…”
D. RELIEF 1A
D1. STRP – Assets not in Hong Kong
27. Super Tycoon is a company limited incorporated in BVI. Before the death of the Deceased, the Deceased was a 50% registered shareholder of Super Tycoon. Peter was and is the other registered shareholder of Super Tycoon, with 50% of the shares registered under his name. There is a dispute between David and Peter as to whether the 50% shares registered under Peter’s name were in fact beneficially owned by the Deceased during the Deceased’s lifetime (“the Shareholding Dispute”). David says that the answer is in the affirmative, and the Estate is now the beneficial owner of all the shares of Super Tycoon. Peter’s position is that the 50% shares registered under his name are beneficially owned by him. Be that as it may, it is clear that:
(1) The Estate beneficially owns either 50% or 100% of the shares of Super Tycoon.
(2) Since Super Tycoon is a company limited incorporated in BVI, the shares in Super Tycoon are foreign assets, and are not assets in Hong Kong.
28. It is not in dispute that Super Tycoon is the company holding various valuable assets:
(1) Super Tycoon wholly-owns Shenciti, and Shenciti in turn wholly-owns Fu Kong. Shenciti also owns 65% shares in New Fu Kong.
(2) New Fu Kong owns almost all the shares in NHW, and NHW owns almost all the shares in Wardon.
(3) Shenciti also owns almost all the shares in BS.
29. By virtue of the shares beneficially owned by the Estate in Super Tycoon (no matter 50% or 100%), the Estate indirectly has interests in the companies set out in the aforesaid paragraph. However, one cannot forget that as a matter of law, the assets directly owned by the Estate are the shares in Super Tycoon. Since Super Tycoon is a company limited incorporated in BVI, those shares are not assets in Hong Kong, but are foreign assets. In accordance with the principles set out in [24] to [26] above, the Hong Kong Court cannot make any grant in respect of these shares.
30. The Mother has produced expert evidence on BVI law. The expert evidence is unchallenged and I accept the same. The expert evidence shows that:
(1) The BVI Court enjoys a wide discretion to appoint a person who is not the personal representative in the home jurisdiction to take up the BVI Grant, and the BVI Grant can be tailor made to cover, for instance, the Deceased’s shareholding in Super Tycoon specifically.
(2) The BVI Court can confer powers on the BVI administrator to exercise the shareholding rights enjoyed by the Deceased in Super Tycoon.
31. It is plain and obvious that any grant made by this court cannot confer powers on the administrator to exercise the rights stemmed from the shares owned by the Deceased in Super Tycoon. For the sake of discussion, even if this court accedes to David’s request and grants Relief 1A to him, the new administrator appointed by the Hong Kong Court would still have no authority to deal with the shares in Super Tycoon, and the new administrator would still not be able to exercise the powers conferred by those shareholding. Without those powers, it would not be possible for the new administrator to deal with the STRP matters. The STRP matters cannot be addressed by Relief 1A at all.
32. According to the Mother, the Mother is unable to obtain a grant from the BVI Court due to the caveats entered by David in the BVI. The Mother is open to the option of an independent third party be brought in for the BVI Grant to deal with the BVI Estate. As to who should be appointed as the administrator taking care of the BVI Estate, this is a matter to be considered and determined by the BVI Court. This is not a matter to be determined by me. I make no comment on this issue. Suffice for me to say that the STRP matters (ie the matters in the BVI Estate) would not be a reason in support of Relief 1A sought by David.
33. For the sake of completeness, in relation to the BVI Estate, I would also mention the following.
34. In respect of the Shareholding Dispute raised by David, the Mother has tried to investigate the matter. The Mother has obtained an affirmation (“Ding’s Affirmation”) from the restructuring lawyer retained by the Deceased (ie Mr Ding Zhenyu (“Ding”), then of Messrs Simmons & Simmons), who testified that the Deceased and Peter were intended by the Deceased to be equal beneficial shareholders of Super Tycoon. The Mother is unable to go any further, for without a BVI Grant, the Mother simply does not have any locus to commence any proceedings in the BVI Court to try to resolve the issue(s) in relation to the legal and beneficial ownership of the shareholding in Super Tycoon.
35. Mr Chan criticizes the Mother in relation to 2 emails mentioned by David in [24.3(4)] of his 1st Affirmation dated 20 May 2019. According to David, there are 2 emails from Ms Yvonne Pang (“Pang”, Shenciti’s certified accountant and auditor) dated 8 June 2007 to Peter and Ding. The emails could show that the Deceased had issued express instructions to Pang and Ding to re-restructure Super Tycoon so that the Deceased would be its sole shareholder. The Deceased was prepared to attend the office of Ding to sign the papers on 9 June 2007. Mr Chan submits that the Mother has never intended to make enquiries with Pang in respect of these 2 emails.
36. As stated in the above, in fact the Mother has made enquiries regarding the Shareholding Dispute. The Mother has contacted Ding and obtained Ding’s Affirmation. It cannot be said that the Mother has done nothing to investigate the matter. The Mother is unable to obtain a grant from the BVI Court due to the caveats entered by David in the BVI. The Mother is open to the option of an independent third party be brought in for the BVI Grant to deal with the matters in the BVI Estate, including investigating the legal and beneficial shareholding of Super Tycoon.
37. Mr Chan also submits that the Mother should be removed because she has failed to give a draft BVI schedule of assets and liabilities to David so as to enable David to ascertain the extent of the Estate’s interest in Super Tycoon. With respect, this is not a valid criticism.
(1) Regarding the BVI assets, the Mother has invited David to have discussion on these a long time ago. However, David has refused to discuss these matters with the Mother. In 2015, the Mother’s solicitors already indicated that the Mother “is not in a position to be involved in [the Super Tycoon related companies] until she has obtained the grant from the relevant authority in BVI” and that “[g]iven the shares of Super Tycoon (i.e. shares of a BVI company) are foreign assets, they are not allowed to be included in the Schedule of Assets and Liabilities of the Deceased in Hong Kong.”[5]
(2) The Mother has been trying to address David’s concerns by inviting him to have face-to-face meetings, but was refused by David. After David entered the caveats in BVI, the Mother repeatedly invited David for a meeting to address any concern he may have. However, David has refused to engage in any talks.
(3) In any event, as a matter of law, a personal representative appointed by the Hong Kong Court does not have the obligation to prepare a draft schedule of assets and liabilities not situated in Hong Kong to the beneficiaries of the estate.
38. Mr Chan has also made the following points:
(1) It would not be desirable to have two administrators, one taking care of the Hong Kong Estate and the other dealing with the BVI Estate. It would be more desirable to have one administrator to deal with everything in the entire Estate.
(2) If it is necessary to have two administrators, the Mother should make an application to the BVI Court, asking the BVI Court to appoint an administrator to take care of the BVI Estate. However, the Mother has failed to do so.
(3) If an independent administrator of the Hong Kong Estate is appointed, that administrator can make an application to the BVI Court, asking the BVI Court to appoint an administrator dealing with the BVI Estate.
39. With respect, I am not persuaded by these submissions.
(1) It is not in dispute that the Mother has properly administered the Hong Kong Estate, and the administration of the Hong Kong Estate is nearly completed. In the circumstances, there is no reason and no need to remove the Mother from office.
(2) While the administration of the Hong Kong Estate is almost finished, I do not see any reason why having another administrator to administer the BVI Estate would be undesirable at this stage. I also do not see any reason why there would be conflict between the Mother and the BVI administrator.
(3) The Mother has already said that she could not obtain the BVI Grant because of the caveats entered by David in BVI.
(4) There is no evidence showing that an application for the BVI Grant must be made by the administrator appointed by the Hong Kong Court. David has not explained by evidence why he himself, as a family member of the Deceased, has not taken any step to try to make an application for a BVI Grant conferring authorities on an independent professional to deal with the BVI Estate.
40. In my judgment, the Mother cannot be criticized in respect of anything related to the BVI Estate, including the Shareholding Dispute.
D2. Hong Kong Estate
41. As shown by the evidence, after the Hong Kong Grant was made, the Mother has been undertaking the administration of the Hong Kong Estate diligently. The steps taken by the Mother in administering the Hong Kong Estate include the following:
(1) The Mother had paid off the various costs and expenses associated with the Deceased.
(2) The Mother has arranged interim partial distributions to the beneficiaries on 11 August 2016, 13 March 2017, 23 July 2020, 21 June 2021, 28 June 2021, 20 December 2021 and 4 July 2022 for a total amount in excess of HK$40m.
(3) The Mother has defended a legal action issued by a third party (including successfully defending a summary judgment application with costs obtained) for loans purportedly advanced to the Deceased prior to his passing away. In light of David’s refusal to consent to an order of indemnification, the Mother was forced to take out a Beddoe application, which Beddoe Order was granted to her in May 2018.
(4) The Mother has instructed valuers to formally value the various pieces of land which the Deceased owned or had interest in.
(5) The Mother has issued legal proceedings against a company limited, ie Manbro Investments Ltd, for sums owed to the Deceased.
(6) The Mother has issued proceedings against the squatters occupying the land owned by the Deceased.
(7) The Mother has also issued legal proceedings against Shenciti in respect of certain debts owed by Shenciti to the Deceased.
(8) The Mother has arranged for the sale and leasing out of certain pieces of land owned by the Estate.
(9) The Mother has also directly distributed certain pieces of land owned by the Estate to the beneficiaries.
42. Substantial and significant works have been done by the Mother in administering the Hong Kong Estate. There is no dispute that the administration of the Hong Kong Estate has been almost completed.
43. There is no evidence showing that the Mother has done anything improper or has neglected to do anything to discharge her duties in administering the Hong Kong Estate. In fact, Mr Chan has acknowledged that “[David] does not have any serious grievance about how [the Mother] administered the non STRPs.”[6]
D3. Other allegations against the Mother
44. David has made some other allegations against the Mother. I agree with Mr Ho that these allegations are unsubstantiated.
45. There is a general theme put forward by David that the Mother has colluded with Peter, Kai and Susan, and they are all in Peter’s camp. David also alleges that the Mother has been controlled by Peter. In my view, these allegations are unsupported by the evidence. There is nothing in the evidence showing that the Mother has not properly administered the Hong Kong Estate, in an independent and impartial manner. There is also no evidence showing that the Mother is being controlled by Peter.
46. According to David, there was a disagreement between him on the one hand and the Mother, Peter, Kai and Susan on the other hand as to what medical treatment should be given to the Deceased after the Deceased fell into coma on 12 August 2013. David was of the view that the Deceased should be kept alive by the machine so long as there was a faint hope that he might regain consciousness. The Mother and the siblings took the view that it would be too costly to maintain the life of the Deceased by the life supporting machine.[7] In my view, this episode is something happened before the death of the Deceased, and is completely irrelevant as to whether the Mother has administered the Hong Kong Estate independently and impartially.
47. David also alleges that the Mother has made a false allegation against him, and that is “indicative of her lack of the intellectual honesty that befits a proper administrator”[8]. However, the Mother simply said that it would be misleading for David to characterise the Super Tycoon-related companies as being the Estate’s properties, as the Estate only enjoys an interest in those companies through Super Tycoon, the BVI entity, and that no BVI Grant could be obtained due to the caveats entered by David.[9] The response was to David’s factual contention that the Estate’s properties comprise the various underlying operating companies for the Mainland businesses[10], and hence the Mother could or should have directly intervened in those businesses. In my view, the Mother’s response is a fair description and cannot be said as bearing any intellectual dishonesty.
48. In the latest affirmation in reply filed by David (ie David’s 11th Affirmation), David made a serious allegation against the Mother, ie the Mother had previously tried to “bribe” the staff of New Fukong in a banquet held some time in or after October 2013. Mr Ho submits that no weight should be given to this part of David’s evidence. I agree with Mr Ho.
(1) No satisfactory reason has been given as to why this serious allegation is only raised for the first time in David’s 11th Affirmation (which is an affirmation in reply) filed in November 2022, while the matters in this episode occurred in 2013 or 2014. Mr Chan has tried to explain that this episode is based upon the statement made by one Mr Shi Xin (the board secretary of New Fukong) signed on 25 October 2022, and David only obtained this statement a few days before the filing of his 11th Affirmation. However, there is no evidence showing that David had made reasonable effort to try to obtain this statement, and he could not obtain the statement at an earlier time notwithstanding the reasonable effort made by him.
(2) The raising of such a serious allegation in the reply evidence shortly before the substantive hearing is grossly unfair to the Mother and constitutes an abuse of process. Ambushing the Mother in this way is impermissible.[11]
(3) Even taking David’s allegation at face value, David is in fact only relying on hearsay evidence based on a short statement made by one Mr Shi Xin (the board secretary of New Fukong) signed on 25 October 2022. However, the statement of Mr Shi only says that in the Lunar New Year of 2014, after the Deceased was comatose, the Mother and Peter chaired a lunar new year celebration event of New Fukong, and distributed red packets contain RMB 1,000 to each of the staff member present (more than 100 staff members participated in that celebration event). Mr Shi himself does not say that Mother did or intended to “bribe” any staff. With the lunar new year context of the episode in mind (which David has omitted in his affirmation), this episode can hardly be cogent and sufficient evidence showing that the Mother did or intended to “bribe” any staff of New Fukong.
(4) Allegations of fraud or dishonesty have to be supported by cogent evidence, and a legal representative should only allow such allegations to be advanced when there is sufficient evidence to do so.[12] For the reason stated in the above, the allegation that the Mother had tried to “bribe” the staff of New Fukong in fact should not be put forward at all.
(5) Further, the allegation has no relevance in these proceedings. The relevant event took place in 2013 or 2014, before the Deceased passed away in June 2014, and before the Mother obtained the Hong Kong Grant in March 2016. The allegation is not relevant to the performance of the Mother’s administration of the Hong Kong Estate.
(6) For all these reasons, no weight is attached to this allegation.
49. David criticizes the Mother, Peter and Kai for “straining Shenciti’s income”.[13] However, the basis for saying so is that, according to David, the Deceased at one time told him that the Mother, Peter and Kai had extravagant lifestyles and the Deceased had to make provisions to them from time to time, and as a result Shenciti’s income had been strained.[14] As submitted by Mr Ho, even assuming that this episode is true, this matter is irrelevant as to whether the Mother has properly discharged her duties as the administratrix of the Hong Kong Estate.
50. In [19.4] of his 1st Affirmation, David has also said that the Mother’s solicitors have used “all sorts of excuse to delay, deflect, evade and frustrate … legitimate enquiries for information”. The subject matter in that part of his affirmation is an alleged indebtedness of HK$6 million owed by the Estate to him as a result a promise made by the Deceased to him in relation to the distributions from Man Mou Hei Tso. Facing a claim against the Estate, there is nothing wrong for the Mother’s solicitors to adopt a stance to safeguard the Estate’s interest, and not to accede to David’s claim unless satisfactory proof is provided by David.
D4. Refusing Relief 1A
51. With all the aforesaid in mind, there is no valid reason for removing the Mother from the administratrix’s office.
52. There are further reasons in support of keeping the Mother as the administratrix of the Hong Kong Estate.
(1) The Mother intends to continue to be the administratrix of the Hong Kong Estate and to complete the administration.
(2) The majority of the beneficiaries (ie the Mother, Peter, Kai and Susan) supports the Mother to continue to be the administratrix of the Hong Kong Estate.
(3) There has already been significant progress in the administration of the Hong Kong Estate. In fact, the administration of the Hong Kong Estate is on its way to completion. Even David does not have serious grievance against the Mother in relation to her administration of the Hong Kong Estate.
(4) Costs would be incurred and borne by the Estate if a professional is appointed to replace the Mother as the administrator of the Hong Kong Estate. In the absence of a valid reason for removing the Mother as the administratrix, there is no justification to require the Estate to pay costs to retain a professional administrator for the Hong Kong Estate.
(5) The Deceased was a well-known and respected businessman and village head. Removing the Mother (being the lawful widow of the Deceased) as the administratrix and replacing her with an outsider would cause irreparable damage to the Mother’s reputation and cause her to suffer stigma among the relatives. In the absence of any reliable evidence showing a compelling reason for removing the Mother from the office, the court should not adopt this course.
53. For all these reasons, in my judgment, the court’s discretion should be exercise against granting Relief 1A.
E. DISPOSITION
54. I dismiss [1A] and strike out [2] of the AOS.
55. As a result of this judgment, all the claims made by David in these proceedings have been either dismissed or struck out. Costs should follow the event. There be a costs order nisi that costs of these proceedings (including costs of D2’s Striking Out Summons and all costs reserved) by paid by David to all the defendants herein. Those costs are to be taxed if not agreed.
56. Lastly, it remains for me to thank all counsel for the assistance rendered to the court.
| (MK Liu) |
| Deputy High Court Judge |
Mr Maurice J Chan instructed by Fan Wong & Tso, for the Plaintiff
Mr Martin Ho instructed by Kwok, Ng & Chan, for the 1st Defendant
Mr Tommy Cheung instructed by J Chan, Yip, So & Partners, for the 2nd Defendant
Mr Victor Lui instructed by Hon & Co., for the 3rd & 4th Defendants
[1] David’s written submissions dated 17 November 2022, [2.1]
[2] [2022] HKCFI 804, [21] – [22]
[3] [2014] EWCA Civ 1632
[4] HCMP 2391/2013, 21 October 2014
[5] See the Mother’s solicitors’ letters dated 18 September 2015 and 15 December 2015 respectively.
[6] David’s written reply submissions dated 24 November 2022, [2.4]
[7] David’s 1st Affirmation dated 20 May 2019, [9]
[8] David’s 6th Affirmation dated 11 April 2022, [5.1]
[9] The Mother’s 4th Affirmation dated 27 January 2022, [38]
[10] David’s 5th Affirmation dated 29 September 2021, [2.1]
[11] Szeto Chak Mei v Chan Lam Shan (HCMP 836/2012, 3 November 2015) per G Lam J (as G Lam JA then was) at [9] – [11]; Sze Ching Lok v China Resources Power Holdings Co Ltd (HCMP 1655/2013, 31 December 2013) per Poon J (as Poon CJHC then was) at [29]
[12] Multifor Enterprise Development Ltd v Ho Chow Ping Danny[2022] HKCFI 737, per Recorder Rachel Lam SC at [15]
[13] David’s Reply Submissions dated 24 November 2022, [2.1(1)]
[14] David’s 1st Affirmation dated 20 May 2019, [4.3(1)]