CHOW LILY v. CHOW WAI WAI VIOLET AND OTHERS

CAMP 202/2021

[2023] HKCA 1230

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

MISCELLANEOUS PROCEEDINGS NO 202 OF 2021

(ON AN INTENDED APPEAL FROM HCAP NO 22 OF 2019)

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D E C I S I O N

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1.  This was the Plaintiff’s appeal from the Order of Master Dick Ho dated 9 June 2023 discharging the Garnishee Order nisi made by Master Rita So on 27 April 2023. Developments between 28 September 2023 and the hearing on 10 October 2023 resulted in the lodging of the Plaintiff’s Reply Submissions and a supplemental bundle but which failed to reach the court prior to the hearing itself. Accordingly, the decision had to be reserved which I now give.

Background facts

(A)  Pre-28 September 2023

2.  The procedural history prior to 28 September 2023 may be summarized as follows:

(a)  On 30 July 2020, DHCJ Leung dismissed the Plaintiff’s application for the appointment of administrators pendente lite for her late father’s estate in HCAP 22/2019 (“the APL order”).

(b)  The Plaintiff applied to the Court of Appeal (“CA”) for leave to appeal from the APL order in CAMP 202/2021.

(c)  Before ruling on that application, the CA raised on its own initiative the preliminary issue as to whether the Plaintiff had renounced her right to executorship (“the Issue”).

(d)  On 16 May 2022, the CA handed down its judgment on the Issue with a costs order nisi that the Defendants pay the Plaintiff’s costs of the Issue.

(e)  On the Defendants’ application to vary the costs order nisi, on 26 July 2022, the CA ordered (“the 2022 costs order”), inter alia, that:

“2. The costs of the Renunciation Issue be the Plaintiff’s costs in the cause of the application for leave to appeal.

3. The Plaintiff’s costs be summarily assessed at HK $510,000.”

(f)  On 8 February 2023 the CA handed down its judgment in the “rolled-up” hearing of the application for leave to appeal and the appeal (“the 2023 CA Judgment”), granting the Plaintiff leave to appeal from the APL order but dismissed the appeal. It further made a costs order nisi that the Plaintiff pay the Defendants 50% of their costs of the appeal, including costs for the application for leave to appeal, with certificate for 2 counsel (“the 2023 costs order nisi”).

(g)  On 22 February 2023, the Plaintiff applied to vary the 2023 costs order nisi (“the variation summons”), seeking an order that:

“the Plaintiff/Appellant do have 50% of the costs of the appeal (including 50% of the Plaintiff’s/Appellant’s costs for the application for leave) with certificate for 2 counsel or alternatively that there be no order as to costs of the appeal including costs for application for leave.”

(h)  On 27 April 2023, the Plaintiff, on an ex parte application, obtained a garnishee order nisi.

(i)  Master Dick Ho discharged the garnishee order nisi on 9 June 2023 (“the Master’s order”).

(j)  On 21 July 2023, Master Dick Ho dismissed the Plaintiff’s application dated 6 July 2023 for a stay of execution of the Master’s order (“the stay application order”).

(k)  Following the dismissal of the stay application and prior to 15 September 2023, the Garnishee released the fund withheld upon service of the garnishee order nisi.

(B)  Post 27 September 2023

3.  On 28 September 2023, the CA handed down its judgment (“the CA costs judgment”), dismissing the Plaintiff’s summons for variation of the 2023 costs order nisi which became absolute (“the 2023 costs order”).

4.  §8 of the CA costs judgment read as follows:

“For the reasons above, we would dismiss the summons for variation of the costs order nisi which order is now absolute. The costs of the [Plaintiff’s] application to vary the 2023 Costs Order nisi] are to be treated as part of the costs of the appeal. For the avoidance of doubt, since we have given leave to appeal, the plaintiff is entitled to the summarily assessed costs of $510,000 she incurred for the Renunciation Issue which was discrete from the issues to the “rolled-up” hearing of the application for leave to appeal and the appeal. In other words, the plaintiff is entitled to the said $510,000 incurred for the Renunciation Issue, but she is to pay the defendants 50% of their costs of the rolled-up” application for leave to appeal and the appeal, with certificate for two counsel.” (Emphasis added)

5.  The day after the 2023 costs order, on 29 September 2023, the Defendants’ solicitors, (“PCW”) wrote to the Plaintiff’s solicitors (“LFP”) requesting that the present hearing be vacated on the terms set forth in that letter.

6.  The Schedule attached to that letter set out the various costs orders awarded to date in CAMP 202/2021 and HCAP 22/2019 (respectively “CAMP 202” and “HCAP 22”) as well as a calculation of interest payable in respect of each of the orders made. After netting off the amounts payable by the parties inter se, a net amount of $34,073.13 was found due to the Plaintiff. PCW therefore enclosed a cheque for that amount with the letter.

7.  On 3 October 2023, a week prior to the present hearing, LFP wrote to PCW but not in response to PCW’s letter of 29 September 2023. In fact, LFP’s letter made no mention of PCW’s letter nor of the cheque that had been sent. Rather, it put forward its reading of an extract[1] from §8 of the CA costs judgment, maintaining that the Plaintiff is entitled to payment of the $510,000 from the Defendants (being the 2022 costs order), that the Master had misinterpreted that order and that the Defendants should pay the Plaintiff the costs of the 2 hearings[2] before the Master.

8.  LFP enclosed a draft Consent Summons to that effect, proposing that the hearing be vacated.

9.  PCW replied the same day inviting attention to the omission of the words shown in italics in §4 above from the extract LFP relied on for LFP’s understanding of the order made in the CA costs judgment. PCW also put on record that LFP had returned their cheque with a bare allegation that the calculation of the costs payable was not agreeable to them but without providing their revised calculation.

10.  PCW explained that as their calculations had already taken into account the $510,000 payable to the Plaintiff, the appeal had become academic and proposed to LFP that the hearing be vacated with costs of the appeal to be paid by the Plaintiff to the Defendants, to be summarily assessed by the court.

11.  As no agreement was reached, the hearing took place as scheduled. However, as the additional papers did not reach the court prior to the hearing, this Decision was reserved.

12.  On 12 October 2023 which was 2 days after the hearing, LFP provided the court with a copy of the 2^nd letter dated 10 October 2023 to PCW setting out the Plaintiff’s calculation of the liquidated amounts due and owing to her by the Defendants in the 2 sets of proceedings mentioned in PCW’s letter of 29 September 2023. It showed a sum of $90,000 payable by the Defendants to the Plaintiff in respect of costs orders awarded, and a net amount of $18,966.10 due from the Plaintiff to the Defendants in respect of interest.

13.  10 October 2023 was the date of the hearing itself. Although the time the 2^nd letter was provided to PCW is not apparent, it is unlikely to have been prior to the hearing as it was not produced in answer to Mr Simon Tang (of PCW)’s observation[3] to the court that while LFP disagreed with PCW’s calculation of interest on costs, they did not provide a revised calculation.

The Plaintiff’s appeal

14.  Mr Nelson Shum of LFP submitted that the Plaintiff was entitled to a garnishee order absolute when the matter came before the Master on 9 June 2023. His submission is premised on the 2022 costs order being a totally separate and freestanding matter.

15.  The Plaintiff’s position may be summarised as follows:

(a)  her entitlement to the costs of the Issue became absolute upon the CA granting leave to appeal on 8 February 2023, that being the only condition that had to be satisfied;

(b)  on that basis, on 9 June 2023 (the date of the Master’s hearing), the garnishee order nisi should have been made absolute;

(c)  had that been done, the Plaintiff would not have had to incur costs for the stay application made in July 2023 nor would this appeal have been necessary;

(d)  since the fund subject to the garnishee order nisi has been released, there is no longer any possibility for the garnishee order to be made absolute;

(e)  as regards the Defendants’ proposal made in PCW’s letter of 29 September 2023, it was rejected because prior to that date, the Defendants never recognised the Plaintiff’s entitlement to the costs of the Issue.

16.  To substantiate the Defendants’ refusal to recognise the Plaintiff’s entitlement to the costs of the Issue, Mr Shum referred to LFP’s offer made on 20 March 2023 to set off the $510,000 due to the Plaintiff against outstanding costs payable to the Defendants in HCAP 22 which the Defendants rejected.

17.  Mr Simon Tang submitted that the Plaintiff has slightly simplified the situation about the Defendants not agreeing or accepting the renunciation costs as such. As is apparent from PCW’s reply letter of 30 March 2023, one of the reasons put forward was that the 2023 costs order has not been made absolute because of the Plaintiff’s variation summons. Pending determination of that application, whether the Plaintiff will be entitled to any costs of the application for leave to appeal remains unknown. On that basis it was said that no liability on the part of the Defendants had arisen to pay the Plaintiff any costs of the application for leave to appeal.

18.  By 28 September 2023, the 2023 costs order had become absolute. PCW’s acknowledgement of the Plaintiff’s entitlement to the costs of the Issue is evident from the Schedule to their letter of 29 September 2023 which plainly took that amount into account.

19.  Mr Tang submitted that before the Plaintiff can apply for the various costs being sought, she must first succeed in this appeal by showing that a garnishee order absolute would have been made on 9 June 2023.

20.  It would be appropriate at this juncture to consider whether this court would have made the garnishee order absolute on the basis of matters prevailing on 9 June 2023.

21.  Proceeding on the basis that the Plaintiff’s entitlement to costs of the Issue became absolute when the CA granted leave to appeal from the APL order on 8 February 2023, the effect of the 2023 costs order nisi meant that the Plaintiff was liable to pay the Defendants 50% of their costs of the appeal, including costs for the application for leave to appeal.

22.  The fact that the Plaintiff is able to show that she is absolutely entitled to an amount of costs under a particular costs order does not does not automatically translate into her having an absolute right to have the garnishee order nisi made absolute. Order 49, rule 1 (1) of the RHC in pertinent part, provides as follows:

“…the Court may, subject to the provisions of this Order and of any written law, order the garnishee to pay the judgment creditor the amount of any debt due or accruing due to the judgment debtor from the garnishee, or so much thereof as is sufficient to satisfy that judgment or order and the costs of the garnishee proceedings.” (emphasis added)

23.  As stated in 2023 HKCP at §49/1/5, the word “may” imports a discretion, though of course a judicial one. A garnishee order nisi will be made absolute unless the garnishee is able to show “reasonable ground” to the contrary. The order will be refused where it would be inequitable.

24.  The costs awarded to the Defendants under the 2023 costs order are unliquidated and would remain so pending determination of the Plaintiff’s variation summons. In my view, having regard to the 2023 CA Judgment, the likelihood of the CA acceding to the variation sought or depriving the Defendants (who were the successful parties) of all their costs is nothing short of wishful thinking.

25.  At the hearing, the Plaintiff submitted that as those costs are unliquidated, there can be no set off. While that may be true as regards a legal set-off, equitable set-off is permissible for unliquidated claims but requires that the cross-claim to be between the same parties and to be sufficiently connected: Qiyang Ltd & Ors v Mei Li New Energy Ltd & Ors,HCA 420/2011, 5 March 2013, at §§ 20, 22 and 53. The cross-claim should flow from the dealings and transactions which gave rise to the subject matter of the claim: Townearn and Industrial Limited v Golden Globe Holdings Limited [2003] 1 HKC 186. Set-off depends upon showing some equitable reason for protection against the plaintiff’s demand: Hanak v Green [1958] 2 QB 9. See generally 2023 HKCP at §18/17/2.

26.  In the present case, the costs of the Issue and the costs awarded to the Defendants by the 2023 costs order nisi arise out of the same set of proceedings. Mr Tang submitted that the amount of costs awarded to the Defendants on a nisi basis (which encompasses both the costs of the appeal as well as the costs of the application for leave to appeal) would far exceed the costs of the Issue. I agree.

27.  In those circumstances, I do not consider it either just or equitable if the court were to exercise its discretion to make absolute the garnishee order nisi on 9 June 2023.

Conclusion

28.  For the reasons set out above, I would dismiss the appeal.

29.  It follows that the Plaintiff is not entitled to any of the costs that it seeks. In any event, in so far as the costs of the stay application are concerned, the Plaintiff, not having appealed the stay application order, is in no position to seek costs.

Order

30.  Accordingly, the Plaintiff’s appeal is dismissed.

31.  There is to be an order nisi of costs of the appeal in favour of the Defendants, such costs to be summarily assessed and payable forthwith.

32.  It is directed that (a) the Defendants’ statement of costs be lodged within 14 days of this order; (b) the Plaintiff’s statement of objections (limited to 3 pages) be lodged within 14 days thereafter; and (c) Defendants’ reply (limited to 2 pages) be lodged within 7 days thereafter.

Mr Nelson Shum of Lily Fenn & Partners for the Plaintiff

Mr Simon Tang of P C Woo & Co for the 1^st and 2^nd Defendants

Chow, Griffiths & Chan for Garnishee, attendance was excused

CAMP 202/2021

[2023] HKCA 1117

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

MISCELLANEOUS PROCEEDINGS NO 202 OF 2021

(ON AN INTENDED APPEAL FROM HCAP NO 22 OF 2019)

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J U D G M E N T

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Hon Yuen JA (giving the Judgment of the Court):

1.  On 8 February 2023, we gave Judgment (“the Judgment”)[1] after a “rolled-up” hearing of the plaintiff’s application for leave to appeal the Decision of DHCJ Leung (“the Judge”)  given on 30 July 2020 (“the APL Decision”)  dismissing her application for the appointment of administrators pendente lite in the probate action concerning the estate of Chow Yei Ching (“the Deceased”).

Background

2.1.  The background of the case and the reasons for our decision have been set out in the Judgment and we will not repeat them here. We gave the plaintiff leave to appeal[2]. However, we dismissed the appeal upon an undertaking given by Oscar Chow (“the Undertaking”)  [Judgment §34] that:

(1)  he would agree to the plaintiff being appointed as a member of the Investment Committee[3] with immediate effect subject to her consent, and shall procure PCH[4] to take all necessary administrative steps as required to give effect to the proposed appointment; and

(2)  he shall procure PCH to give reasonable notice to the Deceased’s widow and the Chow siblings (including the plaintiff)  in advance of any investment or disposal of the funds in the PIP exceeding $1 million or such other sum to be agreed.

2.2.  With the plaintiff being a member of the Investment Committee and with such prior information being given to her, we were satisfied that any concerns of any dissipation of the PIP in the run-up to the Probate Action would be adequately addressed [Judgment §36].

3.  In our Judgment, we made a costs order nisi, holding [Judgment §38.2]:

“As far as costs are concerned, the appeal has failed on the new ground and the other grounds regarding Hidden Shares and TLL. As far as the PIP is concerned, we are mindful that a new undertaking has been provided. Accordingly, we would make a costs order nisi that the appellant [the plaintiff] is to pay the respondents [the current executrices] 50% of their costs of the appeal including costs for the application for leave, with certificate for two counsel”.

4.1.  On 22 February 2023, the plaintiff applied by summons to vary the costs order nisi to one where she would have 50% of the costs of the appeal (including 50% of her costs for the application for leave)  with certificate for two counsel, or alternatively, there be no order as to the costs of the appeal including costs for the application for leave.

4.2.  This was opposed by the defendants and directions were given for the summons to be disposed of on paper.

Discussion

5.  The parties have filed written submissions, which we have considered.

6.1.  We see no ground to vary the costs order nisi.  It is well-established that the award of costs is in the court’s discretion taking into account all the circumstances.

6.2.  In the present case, apart from the other grounds of appeal which were dismissed, the appeal was concerned with two matters:

(1)  whether it was arguable that (contrary to the defendants’ position), the PIP belonged to the Deceased’s estate; and

(2)  if yes, whether there was a risk of dissipation of the assets therein to justify the appointment of administrators pendente lite of the estate.

6.3.  In respect of (1), we noted that the plaintiff only referred to the PIP for the first time in her 6^th affirmation[5], at the eleventh hour before the CFI hearing.  This was despite the fact that she was well aware of its existence for at least 2 years[6] before then, and was actually a member of the Investment Committee at the time of that affirmation.  In other words, for more than a year after the Deceased’s death (in July 2018), she was content to treat the PIP as not being part of the Deceased’s estate, which stand was identical to that of the defendants. 

6.4.  In respect of (2), it followed that for the period of more than a year, the plaintiff raised no allegation that there would be a risk of dissipation of the assets in the PIP to justify the appointment of administrators pendente lite of the estate.  We note further that there was no evidence that anyone has paid out any PIP assets of which the plaintiff was not given notice or for an improper purpose.  Therefore, it cannot be said that but for the Undertaking, she would have succeeded in her appeal.

7.  Having said that, we noted that the plaintiff had been a member of the Investment Committee and would thus have been involved in the discussion of investments and would have received portfolio reports monthly. However, when the matter came before this court, she was no longer a member[7] (although we note that she has not said when and why she ceased to be a member, nor did she raise the cessation of her membership as a ground for the appointment of administrators pendent lite).  It was as a result of this new situation and to pre-empt any new allegations of impropriety and dissipation in the run-up to the trial that this court sought the Undertaking which was offered without demur. 

Order

8.  For the reasons above, we would dismiss the summons for variation of the costs order nisi which order is now absolute.  The costs of the summons are to be treated as part of the costs of the appeal.  For the avoidance of doubt, since we have given leave to appeal, the plaintiff is entitled to the summarily assessed costs of $510,000 she incurred for the Renunciation Issue which was discrete from the issues in the “rolled-up” hearing of the application for leave to appeal and the appeal.  In other words, the plaintiff is entitled to the said $510,000 incurred for the Renunciation Issue, but she is to pay the defendants 50% of their costs of the “rolled-up” application for leave to appeal and the appeal, with certificate for two counsel.  

Mr Edward Chan SC and Mr Abel Lam, instructed by Lily Fenn & Partners, for the plaintiff

Mr Benjamin Yu SC, Ms Teresa Wu and Ms Jacqueline Law, instructed by P C Woo & Co, for the 1^st & 2^nd defendants

CAMP 202/2021

[2023] HKCA 167

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

MISCELLANEOUS PROCEEDINGS NO 202 OF 2021

(ON AN INTENDED APPEAL FROM HCAP NO 22 OF 2019)

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JUDGMENT

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Hon Yuen JA (giving the Judgment of the Court):

Background

1.1.  This is the “rolled-up” hearing of the plaintiff’s application for leave to appeal the decision of DHCJ Leung given on 30 July 2020 dismissing her application for the appointment of administrators pendente lite (“the APL Decision”) in the probate action concerning the estate of Chow Yei Ching (“the Deceased”).

1.2.  The background of the case has been set out in the Judgment of this court given on 16 May 2022 in which we concluded that the stand taken by the plaintiff (“Lily”) in her pleadings did not amount to a renunciation of executorship (“Judgment on the Renunciation Issue”)¹.

2.  As for the facts material to the present judgment, they are listed chronologically below:

(1)     1935	The Deceased was born.  He founded Chevalier International Holdings Ltd, a substantial listed company, and held 62% of its shares.
(2)     1962-1974	The Deceased and his wife (“the Mother”) have 7 children, viz. Lily, Wai Lee, Lina (no longer a party), Lisa, the 1st defendant (“Violet”), the 2nd defendant (“Vivi”), and Oscar (“the Siblings”).
(3)     27.4.2009	Date of “2009 Will”2.
(4)  (2014)	The Deceased’s undated note of different sums of money transferred or loaned to 6 of the Siblings from 1996 to 20143.
(5)     29.10.2015	Date of “2015 Will”4.
(6)     8.1.2016	The Deceased suffered a stroke and became bedridden5. According to Lily, this left him mentally incapacitated6.
(7)     End 2016	Investment Committee (“Inv Comm”) formed by the Siblings for assets in what Lily alleges was “the Deceased’s private investment pool”7 (“PIP”).
(8)     1.1.2017	Administration and Consultancy Agreement for Oscar’s company Polaris Capital Holdings Ltd (“PCH”) to provide services for (part8 of the) PIP9.
(9)     29.3.2017	Management Agreement for PCH to manage the PIP10.
(10)  6.12.2017	Oscar’s email to Lily and Lisa regarding distribution of funds from the PIP to Wai Lee11.
(11)  29.7.2018	The Deceased died.
(12)  6.9.2018	Violet’s Disclosure Notice to Hong Kong Exchanges and Clearing Ltd stating she held 104,607 shares of Chevalier as beneficial owner, and 14,446,555 shares as “interest of corporation controlled by [her]”12 (“Disclosure Notice”).
(13)  31.10.2018	The Mother, Violet and Vi Vi applied for probate as executrices of the 2015 Will.
(14)  16.11.2018	Investment Pool Restructuring Plan and Subscription and Redemption Policies showing 15 companies (“the Restruct Plan”)13 was circulated by Oscar to the Siblings.
(15)  19.11.2018	Lily filed a caveat.
(16)  10.5.2019	Lily commenced Probate Action HCAP22/2019.
(17)  15.7.2019	Lily’s summons for appointment of two accountants as joint and several administrators pendente lite (“APL”), supported by her 3rd aff.
(18)  29.7.2019	Vi Vi’s 2nd aff.
(19)  19.8.2019	Violet’s 1st aff.
(20)  17.10.2019	Lily’s 6th aff.
(21)  24.10.2019	Vi Vi’s 6th aff.
(22)  24.10.2019	Violet’s 3rd aff.
(23)  29.10.2019	Lily’s 7th aff.
(24)  30.10.2019	Hearing of the summons for appointment of APL.
(25)  3.7.2020	The Mother renounced probate.  Lina was substituted as executrix in the second degree under the 2015 Will.
(26)  30.7.2020	APL Decision14.
(27)  13.8.2020	Lily’s summons for leave to appeal the APL Decision.
(28)  27.4.2021	Lina renounced probate.  Lily was substituted as executrix in the third degree under the 2015 Will.
(29)  14.5.2021	The judge refused leave to appeal the APL Decision (“the CFI Leave Decision”)15.
(30)  18.5.2021 -27.7.2021	Corresp between Lily’s solicitors (“LFP”) and Deceased’s banks16.
(31)  28.5.2021	Lily made a renewed application to Court of Appeal for leave to appeal the APL Decision.
(32)  29.6.2021	Re-Re-Amended Statement of Claim filed.
(33)  27.7.2021	Re-Re-Amended Defence and Counterclaim filed.
(34)  23.8.2021	Re-Amended Reply and Defence to Counterclaim filed.
(35)  25.10.2021	Loan from Ironwood (a PIP company) to Wai Lee17.
(36)  25.10.2021	LFP letter to Violet and Vivi’s solicitors (“PCW”) proposing a joint request to banks to produce the Deceased’s bank statements to preserve evidence and to enable the estate to recover “substantial amounts of money (presumably loans) to outsiders”18.
(37)  28.10.2021	Loan from Ironwood to the parties’ cousins19.
(38)  28.10.2021	Guarantee from Lily to Ironwood for cousins’ loan20.
(39)  29.10.2021	PCW reply to LFP’s letter rejecting LFP’s proposed joint request, and requesting information from Lily of the payments21.
(40)  12.1.2022	LFP’s letter to PCW informing them of 12 payments in total sum of $20.5 million between 5 August 2014 and 7 December 201522.
(41)  16.5.2022	Judgment on the Renunciation Issue.
(42)  19.5.2022	Lily’s letter to Violet and Vi Vi requesting information of (i) source of funds of the companies in the PIP, in particular whether it was from the Deceased, and (ii) underlying assets currently held by the companies in the PIP23.
(43)  30.5.2022	Lily’s 1st aff in CAMP202.
(44)  30.5.2022	Violet’s 1st aff in CAMP202.

2015 Will   

3.  In the 2015 Will, all the Deceased’s shares in Chevalier (“the Chevalier Shares”) were gifted to Violet.  The residuary estate was divided into 100 parts or shares, with 30 parts or shares to the Mother, 20 to Violet, and 10 each to the other siblings except for Oscar, who was not given anything.

Probate Action

4.  In the Probate Action, Lily seeks a declaration that the 2015 Will is invalid as it had been executed by the Deceased without knowledge or approval of its contents, or testamentary capacity, or animus testandi.

Application for appointment of APL- evidence

5.  In support of her summons²⁴ for the appointment of APL filed two months after the Probate Action, Lily deposed in her 3^rd aff to the following, among other things:

(a)  in the Disclosure Notice²⁵, Violet stated that²⁶ she held a total of 14,551,162 shares (4.82%) of Chevalier of which:

-  0.04% was held by herself, and

-  4.78% (“the Winful Shares”) was held through Winful Investments Ltd (“Winful”), a company which Violet controlled through Owton Investments Ltd (“Owton”). 

Lily referred to all the above shares (i.e. 4.82%) as “the Hidden Shares”, the value of which she estimated at more than $172 million.

Lily said that Owton is “one of the corporate vehicles holding assets acquired with funding provided by the Deceased for the benefit of immediate Chow Family members, including me” (§27).  However, Lily did not refer at that stage to the PIP or any of the other companies in the pool.

Lily said she believed that Violet did not have the means to acquire the Hidden Shares, and that it was likely that the source of funds was the Deceased, with Violet having been asked by the Deceased to hold these shares on trust for himself (§29).

(b)  Violet was unsuitable to be an executrix due to (among other things) a conflict of interests as “one of the major tasks of the APL ... is to ascertain the extent of the assets of the estate, including whether the Hidden Shares is part of the Deceased’s estate” (§47).

6.1.  Violet opposed the application.  Violet deposed in her 1^st aff (§7):

“neither My Shares (0.04%) nor the Winful Shares are or were ever held on trust for the Deceased”.

6.2.  However, she did not object to Lily’s assertion that she (Violet) did not have the resources to acquire those shares. 

6.3.  More importantly, she did not:

-  explain the means by which she acquired them (eg by gift), or

-  say that she held them on trust for anyone.

6.4.  She said however that she was prepared to undertake that she “will transfer” the Winful Shares into a trust to be shared equally and beneficially amongst the Siblings (§8). 

6.5.  Pausing there, we note that the beneficial interests under this proposed transfer would differ substantially from the situation that would result if the shares belong to the estate, as:

(1)  under the 2009 Will, the beneficiaries are the Mother and all the Deceased’s children and descendants of all degrees born before the Vesting Day²⁷ (but excluding illegitimate descendants and their spouses, and divorced spouses);

(2)  under the 2015 Will, clause 3 provided that all shares in Chevalier of which the Deceased may be possessed or to which he may be entitled at his death are bequeathed to Violet;

(3)  under an intestacy, the Mother would get 50% of the estate, and all the Siblings would share in the remaining 50% equally²⁸.

6.6.  Violet also said alternatively, that she was willing to undertake not to dispose of the Hidden Shares pending the resolution of the Probate Action or other order of the court (§9).

7.1.  As for Vi Vi, she deposed in her 2^nd aff (§4) that:

“the alleged Hidden Shares ... are not shares held by [Violet] for the Estate”.

7.2.  However, there was no disclosure of the source of her information or belief.

8.1.  In reply, Lily filed her 6^th aff in which she pointed out that Violet has failed to provide any particulars of the source of funds for the acquisition of the Hidden Shares (§14).

8.2.  In addition, Lily drew attention for the first time to the PIP, alleging that she was “recently provided” with the Restruct Plan, in which the “Current Structure” showed (§15):

-  Violet, Oscar, Lisa, the Deceased and the Mother are the ultimate shareholders of one or other of the 15 companies (mostly incorporated in the BVI);

-  Violet held 100% of Owton, with a number of companies listed as its subsidiaries, but Winful was not included as its subsidiary and does not appear in the Restruct Plan.

8.3.  Lily said that:

-  every immediate Chow family member knew that the companies in the PIP (including Owton) were part of the Deceased’s private investment and that the Winful Shares were held by Violet on trust for the Deceased (§16);

-  the company structure was designed to hold the Deceased’s private investments, and this constituted a constructive and/or resulting trust in favour of his estate (§17);

-  the Deceased had been mentally incapacitated since his stroke in January 2016, and the family had discussed applying for the appointment of a committee under the Mental Health Ordinance (“MHO”) to handle his financial affairs (§38);

-  it was necessary to appoint the APL to take over the BVI companies (§19), and to impartially investigate the true beneficial ownership of the Hidden Shares (§20) and perform other duties for the preservation and protection of the estate (§§82 - 83).

9.1.  Vi Vi filed a 6^th aff in which she deposed (§§7 - 8):

“7. ... Lily ... [is] aware that those [15] companies are not private investment of the Deceased.

8. The Siblings generally refer to those companies, and all the investment projects and assets under these companies, as the ‘Investment Pool’, and none of them belongs to the Deceased”. (Emphasis added).

9.2.  However, she did not explain the means by which the Siblings had acquired the assets (eg by gift), and she did not say what were their respective interests therein.  Nor did she say what was the arrangement under which the Deceased and the Mother held one of the companies in the PIP.   

9.3.  Vi Vi also said:

-  Violet, Lisa and Oscar had set up the Inv Comm which “provides a platform for discussion of active investments, with the purpose of looking for active investment ideas for the Investment Pool”; Lily was invited to join it in late 2016/early 2017 and was a current member (§9)²⁹;

-  Inv Comm members receive investment portfolio reports from PCH monthly, and the other Siblings receive such reports quarterly (§10);

-  funds in the PIP have been applied, inter alia, to support the needs of the Siblings and the Mother from time to time (§12);

-  Lily had been on the Inv Comm since 2016/2017 and “must have full knowledge of the ownership and operation of the Investment Pool” (§13) (emphasis added);

-  Lily had suggested donations to charities to be paid out of the pool (§§14 - 15);

-  the Restruct Plan had been circulated to all the Siblings in November 2018, with the purpose of restructuring the pool “to be held by a holding company with the Siblings being made shareholders, and the respective shareholdings to represent their stakes or interest in the same” (§21);

-  “there is thus no private investment of the Deceasedwhich require any investigation or preservation” and “no evidence or basis to show any risk of dissipation of the Investment Pool to justify appointment of APLs ...” (§§26 - 27) (emphasis added).

9.4.  Regarding the Deceased’s mental capacity, Vi Vi did not deny Lily’s assertion that he had become mentally incapacitated after his stroke in January 2016, and explained that the Mother and Siblings “did not proceed” to make an application for appointment of a committee under the MHO in order to avoid or minimize speculation and publicity (§36).   

10.1.  Violet filed her 3^rd aff in which she simply confirmed Vi Vi’s 6^th aff and said (§8):

“I wish to emphasize that the Siblings, including Lily ..., generally refer to those companies and the investment projects and assets held thereunder as the ‘Investment Pool’, and it is to all our common knowledge that they do not belong to the Deceased”.

10.2.  We note that even though Violet controlled Owton which held the Winful Shares, she did not explain the means by which she acquired them, nor did she say what interests (if any) the Siblings had in Owton or other companies in the PIP, or what were the interests (if any) the Deceased and the Mother had in the company within the PIP of which they were the shareholders.  Nor was there any evidence that before the Deceased was incapacitated, the assets in the PIP were administered or managed by PCH, or were controlled by anyone other than the Deceased.

11.  In Lily’s 7^th aff, made a day before the hearing before the judge, she said:

-  the Inv Comm had only been set up after the Deceased had suffered the stroke that left him mentally incapacitated and unable to manage his private investments, which he had hitherto managed independently (§6) and from which he had distributed money to the Siblings and the Mother at his sole discretion (§8);

-  there was no evidence (documentary or otherwise) from the defendants that any of the Siblings were capable of amassing such significant wealth as $850 million (§7);

-  there was no documentary or other information about how the Investment Pool would be shared among the Siblings and the Mother (§7).

12.1.  The above was the state of the evidence regarding the PIP at the hearing before the judge.

12.2.  Significantly however, the judge recorded in the APL Decision that (§81):

“the answer of the defendants to this allegation³⁰ is that whilst funded from the outset by the Deceased, the investments through these corporate vehicles belong to the children”.

12.3.  This appears to be the first time that Violet and Vi Vi, who had both categorically denied that the PIP belongs to the Deceased’s estate³¹, have acknowledged that the assets were funded by the Deceased. 

12.4.  What the judge recorded in §81 was not contained in any of the defendants’ affirmations.  There was no evidence from Violet or Vi Vi as to when the Deceased had divested himself (wholly or partly) of the beneficial interests in the assets, and if so, to whom (and if more than one, in what proportions), and how.

The judge’s APL Decision

13.  Section 40 Probate and Administration Ordinance Cap. 10 (“PAO”) provides:

“(1) Where any legal proceedings touching the validity of the will of a deceased person ... are pending the court may ... appoint an administrator of the estate of the deceased.

(2) An administrator so appointed shall have all the rights and powers of a general administrator, other than the right of distributing the residue of the estate.

(3) Every such administrator shall be subject to the immediate control of the court and act under its direction”.

14.1.  In §§29 - 31 of the APL Decision, the judge set out the principles governing the exercise of the discretion to appoint an APL, as follows:

“29. The principles governing the court’s exercise of the discretion to appoint an APL were summarised by Recorder Lisa Wong SC (as she then was) in Mak Ngun Tai & Orsv Fung Ming Ip & Ors HCAP 37/2015 (14 October 2016) at §36:

(1) The court does not automatically appoint an APL whenever there is a pending probate dispute.

(2) The court only appoints an APL when it is necessary or expedient to do so.

(3) Necessity or expediency has to be assessed with reference to the actual circumstances of the case, which obviously vary from case to case so that the situations in which the court would appoint an APL cannot be stated exhaustively.

(4) Relevant considerations would include the condition of the estate, the nature of the assets comprised in the estate, whether there is a likelihood of dissipation or jeopardy of assets and whether there is a need to collect the “fruits of the estate”.

(5) An appointment would be necessary or expedient if, for example, it is required to protect the estate by collecting, managing or safeguarding the assets or to enable legal action to be taken against third parties pending the resolution of the probate dispute.

30. The burden is on the applicant to establish the need for doing something to protect and preserve the estate and, for that purpose, APL should be appointed: see Lai Wai Pang v Kwok Li Shuk Han HCAP 13/2000 (16 May 2003) at §9 per A Cheung J (as he then was).

31. Mere assertions (if disputed) are of little or no weight, and a party’s suspicion is not sufficient to found the court’s exercise of discretion: see Chinachem Charitable Foundation Limited v Chan Chun Chuen & Ors HCAP 8/2007 (10 December 2007); Lai Wai Pang v Kwok Shuk Han HCAP 13/2000 (above) at §9.”.

14.2.  Pausing here, it is common ground that the judge had correctly set out the relevant principles above.  But Lily contends that the judge had departed from those principles by, among other things, failing to appreciate the risk of dissipation, and the need to manage, collect and secure the Deceased’s estate pending the Probate Action.   

15.1.  In the APL Decision, the judge held in respect of the Hidden Shares that Lily had not substantiated by concrete evidence the alleged risk of dissipation³², and that the following undertakings (“the Undertakings”) were sufficient to maintain the status quo:

(1)  Violet would not dispose of the shares and would not seek to change the current composition of the board of Chevalier;

(2)  she would not exercise the voting rights for those shares without Lily’s consent or the court’s direction;

(3)  “if no appointment of APL is made, these [the Hidden] shares will also be transferred into the trust for the equal benefit of all the Siblings” (§49(3)).

15.2.  We note that:

-  although the above Undertakings were set out in §49 of the APL Decision, they did not appear as undertakings in the sealed order³³;

-  although Violet’s undertaking in §8 of her 1^st aff was in respect of the Winful Shares only, §96 of the APL Decision referred to “the undertaking in respect of the transfer of the so-called hidden shares into a trust for the benefit of all the children pending the resolution of the dispute in the present action” (emphasis added).  The shares in Violet’s own name were thus included in the undertaking given to the judge.

16.1.  As for the PIP, the judge discussed this issue in §§80 - 87 of the APL Decision.  After setting out both parties’ submissions, he held:

“86. ... in the absence of dissipation, whatever extent of beneficial interest the Deceased is said to retain in the Investment Pool would have become part of the residuary estate. The respective entitlements of the beneficiaries to that, be those according to the 2015 Will or the 2009 Will or upon intestacy, would not materially change.

87. The above instances, both before³⁴ and after the Deceased’s death³⁵, tend to suggest that the funds in the Investment Pool were managed and utilized by the children as their joint assets. Had this been otherwise, so that the funds form part of the Deceased’s estate, one wonders how the children would have utilized such funds after the stroke of the Deceased in the absence of a committee appointed under Part II of the [MHO] and after the death of the Deceased in the absence of grant. It was not that the family was ignorant of that. According to Vi Vi, two law firms have been consulted on the issue of the appointment of a committee to manage the estate of the Deceased after his stroke in 2016. Lily and Wai Lee did not take any contrary stance in this respect. In any event, Lily and Wai Lee could not distance themselves from the use of such funds. The last attempt by Lily to adduce affirmation evidence did not specifically address this”. (Emphasis added).

16.2.  Having said that, however, the judge held:

“92. What perhaps causes this court some concern is the fact that the properties and affairs of the Deceased after he has suffered the stroke in January 2016 until his death have been managed without the appointment of a committee under the MHO. As mentioned, the defendants did not hide away in this respect, and deposed to the effect that the decision not to proceed with that was made after considering legal advice. The impact of such decision, if any, will now have to take the form of an account by not only Violet but also the other family members, Lily included, after the grant of probate one way or the other”.

17.  The judge also declined to accept Lily’s query about dividends from the Deceased’s Chevalier shares, some of which were applied to acquire Talent Luck Ltd (“TLL”), a company in the Chevalier Group which held the property in which the Deceased and the Mother resided.

18.  Eventually, upon the undertakings given, the judge dismissed the APL application.

Application for leave to appeal

19.  On 13 August 2020, Lily applied for leave to appeal, which application was dismissed by the judge on 14 May 2021, for reasons set out in his decision of that date. 

20.  On 28 May 2021, Lily renewed her application for leave to appeal in this court.

21.  After this court’s Judgment on the Renunciation Issue, the parties were given leave to file further evidence.  Both Lily and Violet filed affirmations on 30 May 2022. 

22.  In Lily’s affirmation, she alleged (among other things):

-  there has been a breakdown in communication between herself and Violet and Vi Vi (§§7 - 10);

-  they have denied her position/power as executrix (§§11 - 14);

-  there is no prospect of co-operation with them (§§15 - 17); 

-  the Deceased’s banks have indicated that documents and information pertaining to his accounts will not be released unless with the consent of all the executrices or pursuant to a court order; as banking records are kept for 7 years only, more bank records will be lost as time goes by (§§18 - 22);   

-  as for the PIP, on 19 May 2022, her solicitors wrote to the defendants’ solicitors to obtain the list of the underlying assets and the source of funds of the investments of the 15 companies, with a net asset value estimated at US$110 million (as at 16 November 2018) but the defendants have not replied.  Lily alleges she “[has] been left completely in the dark about how the funds are being managed, how the dividends are being distributed, what are the underlying assets within this structure and how the special purpose vehicles are being run” (§§29 - 30). 

23.  In Violet’s affirmation, she alleged (among other things):

-  Lily has indicated that she would not, and does not intend to, accept the office of executrix under the 2015 Will pending the Probate Action (§§6 - 10);

-  even if Lily were to accept executorship, should there be any dispute, Clause 6 of the 2015 Will provided that her (Violet’s) decision in all matters shall be final (§11);

-  the Hidden Shares are preserved by the undertakings she had given (§§16 - 17);

-  “throughout, all the funds and investments in the Investment Pool have been treated as belonging to the Siblings, and accordingly the Investment Pool has been managed and utilized by the Siblings as our joint assets” (§18) (emphasis added);

-  currently, Wai Lee, Lina, Lisa and Oscar were members of the Inv Comm (§19) and four meetings of the Inv Comm have been held after the APL Decision (§20);                  

-  after the APL Decision,

-  from May 2021, Lily has requested funding from the PIP on five occasions in the total sum of $5.15 million for the Mother’s expenses³⁶;

-  on 25 October 2021, a loan of $25 million from the PIP was made to Wai Lee with Lily’s consent;³⁷

-  on 28 October 2021, a loan of $15 million from the PIP was made to the parties’ cousins on Lily’s initiation, for which she gave a personal guarantee³⁸;

-  Lily has caused difficulties to Vi Vi and Violet in discharging their duties as executrices as:

-  several banks have withheld documents and information in light of the correspondence from LFP, and

-  she (Lily) has not provided any further information regarding the payments totaling $20.5 million³⁹.

Discussion

Ground (2)

24.  We shall deal first with the ground⁴⁰ that APL should be appointed due to “hostility between executrices” i.e. between Lily of the one part and Violet and Vi Vi of the other.  It is not disputed that animosity and distrust between executors may be a ground for appointment of APL⁴¹. 

25.  The defendants have objected to this ground on the basis that this is a new ground which was not before the judge either at the hearing of the summons for appointment of APL or in the summons for leave to appeal.

26.1.  It is clear that on the facts of this case, this is not a valid objection.  This ground could not have been raised before the judge at the hearing of the summons for appointment of APL (30 October 2019), as it was not until 27 April 2021 that Lina renounced executorship and Lily was substituted as executrix in the third degree. 

26.2.  This event also occurred well after submissions were filed (on 29 December 2020, 5 January 2021 and 6 January 2021) for leave to appeal, and less than three weeks before the judge gave his decision refusing leave (14 May 2021).  There is no evidence of any hostility during those three weeks.     

27.1.  However, we reject this ground because in §20B of her Re-Re Amd SOC (verified and filed on 29 June 2021), Lily has stated that she does “not intend to accept the office of executrixship of the 2015 Purported Will pending judgment of the Court in this action”.  Although this court has found that such a statement did not amount to a renunciation at law, and whatever reservations she may seek to make, the fact remains that she has verified that she would not act in that office or capacity of executrix pending judgment in the Probate Action.  Accordingly, any representation to third parties after the date of the Re-Re Amd SOC that she is acting in the capacity as executrix would not be correct. 

27.2.  In any event, although we have of course not heard third parties (eg the banks) on the point, the general law is that executors do not have to act together, except in dealings with immoveable property⁴².  No doubt, in view of the concerns expressed by Lily regarding the possibility of limitation defences, the defendants should be alert to their duty to act with due diligence and without delay in taking all necessary actions for the purpose of collection of the estate.

Other grounds

28.  In the other grounds, Lily contends essentially that the judge has failed to appreciate the risk of dissipation, and the need for APL to manage, collect and secure the Deceased’s estate.  Mr Edward Chan SC appearing for Lily⁴³, criticized the defendants for categorically denying any interest of the Deceased in the PIP and only admitting that he was in fact the source of the funds at the hearing before the judge⁴⁴, and when there was no evidence how the Deceased had divested himself of his interests in the assets.

29.1.  In our view, that criticism is well-made.  It is the duty of executors to collect and get in the estate of the deceased and administer it according to law.  The first step involves an examination of the deceased’s financial affairs so as to ascertain what his estate comprises.  It is incumbent on executors to approach this exercise having regard to all the available evidence.  

29.2.  If an asset acquired with funds belonging to the deceased has been transferred to another person or entity without consideration, the executors should consider the circumstances of the transfer to see if the deceased had validly and fully divested himself of his interest therein. 

30.1.  The defendants have simply deposed that the assets in the PIP did not belong to the Deceased.  If the Deceased had transferred any or all of the assets by way of gift, one would have expected such a statement from the defendants at the forefront of their evidence.  However, they simply denied that the Deceased had any interest in the assets, without evidence as to when he had divested himself (wholly or partly) of the beneficial interests therein, and to whom (and if more than one, in what proportions), and how, and his intention(s) at the time of transfer. 

30.2.  Insofar as there may be reliance on the presumption of advancement (which has not been argued), that is no more than that, a presumption to be considered against evidence⁴⁵ showing that the Deceased had during his lifetime transferred various funds to one or other of his children by way of loan.

30.3.  The fact that, against the backdrop set out above, the defendants have readily denied the Deceased’s interest in the PIP (in which they have both asserted personal interests) is a matter which a court should take into account when considering whether there is a need to appoint APL to (among other things) collect the estate.  With respect to the judge, he had failed to take into account the significance of the defendants’ eventual admission that the assets had been acquired with funds of the Deceased and that there was no evidence that consideration had been given for disposition, when he held that “Lily ... should establish the basis for contending that the pool is held on trust for the benefit of the Deceased ...”⁴⁶ , but she “did not adduce evidence of the creation of such trust (apart from the admitted fact of funding)”⁴⁷.  

31.1.  We now come to the defendants’ reliance on the conduct of the Siblings (including Lily) regarding the PIP to justify their (the defendants’) denial of the Deceased’s interest therein.  This was emphasized by the judge. 

31.2.  In §§82 - 83, he referred to instances before the Deceased’s death when one or other of the Siblings and the Mother have received, or suggested the use of, funds from the pool.  However, with respect to the judge, these instances were after the Deceased had suffered a serious stroke, and even on the defendants’ evidence, the family considered making an application for appointment of a committee under the MHO to take charge of his affairs, although they eventually did not do so due to a wish to avoid publicity and speculation. 

31.3.  In §84, the judge referred to instances after the Deceased’s death.

31.4.  Then in §87, the judge found that if the PIP forms part of the Deceased’s estate,

“one wonders how the children would have utilized such funds after the stroke of the Deceased in the absence of a committee appointed under ... MHO and after the death of the Deceased in the absence of grant”. (Emphasis added).

32.1.  With respect, that is approaching the issue from the wrong premise.  Instead of seeing if the defendants had evidence to exclude the PIP from the Deceased’s estate even though he had funded it, the judge seems to have held that because the Siblings had utilized the funds after the Deceased’s incapacity and death, it followed that they could legitimately do so, and therefore the funds could not have belonged to the Deceased.   

32.2.  The reference to the family consulting two legal firms (§87) is not understood.  There was no evidence that the family was advised that they could “help themselves” to the PIP.  The advice referred to in the evidence was on making an application for the appointment of a committee, evidence which shows that the Deceased was mentally incapable.  Indeed, in §92, the judge expressed his “concern ... that the properties and affairs of the Deceased after he has suffered the stroke in January 2016 until his death have been managed without the appointment of a committee under the MHO”. 

32.3.  Further, that Lily did not take a contrary stand from the other siblings at first, and as the judge found, could not distance herself from the use of funds from the PIP, do not create some sort of estoppel (although the judge was certainly entitled to criticize her litigation conduct in advancing the PIP issue at only the eleventh hour before the hearing). 

32.4.  The fact that the Siblings (including Lily) have treated the PIP as their own after the Deceased’s incapacity and death is only one factor to be taken into account when investigating whether the PIP or part thereof is part of the Deceased’s estate, a duty of the executors.  Whatever the Siblings subjectively assumed or believed (however innocently), the issue whether the Deceased has beneficial interests in the PIP is a matter of title, to which property and trust law must be applied.  

32.5.  In any event, Lily is only one beneficiary among many. Insofar as the Chevalier shares held through Owton (a PIP company) are concerned, the difference between a scenario where the PIP belongs to the Siblings and a scenario where they belong to the estate has been set out in §6.5 above⁴⁸. Insofar as other assets in the PIP are concerned, it should also be noted that under the 2015 Will, the Mother would get 30/100 parts of the residuary estate, and Oscar would not get any part or share.  As executrices, the defendants have a duty to the estate, the beneficiaries of which may not be confined to the Siblings and may include minors, depending on the judgment in the Probate Action.     

33.1.  We have noted above our concern regarding the defendants’ readiness to deny any interest of the Deceased in the PIP, apparently in the absence of investigation into the Deceased’s intentions when arranging for assets he funded to be held by the 15 companies.  If the matter had ended there, we would have been inclined to overturn the judge’s exercise of discretion for the reasons set out in the preceding paragraphs, as APL would be expected to investigate the Deceased’s affairs with a more open mind, and take steps to collect and protect the estate. 

33.2.  Nevertheless, the matter did not end there.  As mentioned above, relevant considerations governing the court’s exercise of the discretion to appoint APL include the likelihood of dissipation, an aspect of protection of the estate.

33.3.  In this regard, undertakings were obtained from Violet regarding the Hidden Shares⁴⁹. We are satisfied that the terms of the undertakings are adequate to protect them against risk of dissipation pending the Probate Action.  This is especially since at the hearing before us, we were informed that witness statements in the Probate Action have been filed, a Case Management Conference will be held in April this year, and the trial is likely to take place within the next year.

33.4.  However, no undertaking was offered regarding the rest of the PIP (i.e. other than the Winful Shares held by Owton, a PIP company).  The judge did not extract an undertaking even when he assumed that the Deceased had some beneficial interest in the PIP⁵⁰.  The reasoning was that “absent dissipation”, any interest of the Deceased in the PIP would fall into the residuary estate.

33.5.  If that was the sole reasoning, the judge would also have dismissed the summons vis-a-vis the Hidden Shares without the need for the undertakings.  The fact that he did not require an undertaking for the rest of the PIP may have been due to Lily’s membership of the Inv Comm, which enabled her to be aware of intentions regarding the assets’ movements.

34.  However, Lily was no longer a member by the time the matter came before us. After we expressed our concern regarding the PIP at the hearing, Mr Benjamin Yu SC appearing for the defendants⁵¹ took instructions and offered an undertaking which was then reduced to writing in a letter dated 20 January 2023 from Minter Ellison (“ME”) as solicitors for Oscar, in the following terms (“Oscar’s PCH undertaking”):

“... [Oscar] undertakes, pending the determination of [the Probate Action] or such other order of the Court, as follows:

(i) Our client shall agree to a proposed appointment of [Lily] the plaintiff in [the Probate Action] to be a member of the Investment Committee (as defined in these proceedings) with immediate effect subject to her consent, and shall procure [PCH] to take all necessary administrative steps as required to give effect to the proposed appointment; and

(ii) [Oscar] shall procure [PCH] to give reasonable notice to [the Mother] and all her children, including [Lily], in advance of any investment or disposal of the funds in the PIP exceeding HK$1,000,000 (or such other sum to be agreed between the relevant parties in this sub-paragraph)”.

35.1.  Subsequent to the court’s receipt of the ME letter, the court received a letter dated 26 January 2023 from LFP enclosing (1) their letter to Oscar dated 20 January 2023; (2) a Hong Kong company search and (3) a Hong Kong BR search.  LFP alleged that the name “Polaris Capital Holdings Ltd” was “never mentioned” in the evidence filed in the proceedings before this court or in the CFI.

35.2.  LFP’s allegation is clearly wrong.  “Polaris Capital Holdings Ltd”, expressly stated to be incorporated in the BVI, was one of the contracting parties in Administration and Consultancy Agreement⁵² and the Management Agreement⁵³, both of which documents had been exhibited and referred to.

35.3.  After this was pointed out by PCW in their letter to the Court dated 27 January 2023 (copied to LFP), LFP did not even write to the court to correct or withdraw their allegation which was at best, careless and at worst, misleading.  Either way, such conduct is unsatisfactory. 

36.  Coming back to Oscar’s PCH undertaking, with prior information given of disposals and with Lily’s membership on the Inv Comm, we are satisfied that it would be adequate to protect the estate from risk of dissipation of the PIP in the run-up to the Probate Action. 

37.1.  Finally, in Mr Chan’s submissions, he referred to the transaction whereby, after the Deceased’s stroke, dividends from his Chevalier shares were applied for the Mother to acquire TLL from the Group. 

37.2.  Lily alleged that she did not know about the whereabouts of the dividends.  The judge held that contemporaneous emails tended to suggest the contrary.  It has not been argued before us that there was no evidence which entitled the judge to arrive at that finding. 

37.3.  In any event, there is no suggestion that there is a risk of dissipation of the shares of TLL, or the residential property, its underlying asset.

Order

38.1.  For reasons set out above, we would give leave to appeal but upon Oscar’s PCH undertaking above, dismiss the appeal. 

38.2.  As far as costs are concerned, the appeal has failed on the new ground and the other grounds regarding the Hidden Shares and TLL.  As far as the PIP is concerned, we are mindful that a new undertaking has been provided.  Accordingly, we would make a costs order nisi that the appellant is to pay the respondents 50% of their costs of the appeal including costs for the application for leave, with certificate for two counsel.

CAMP 202/2021

[2022] HKCA 1101

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

MISCELLANEOUS PROCEEDINGS NO 202 OF 2021

(ON AN INTENDED APPEAL FROM HCAP NO 22 OF 2019)

________________________

________________________

________________________

________________________

RENUNCIATION ISSUE
JUDGMENT ON COSTS

________________________

Hon Yuen JA (giving the Judgment of the Court):

1.1.  On 16 May 2022, this court gave Judgment on the Renunciation Issue (“the Issue”)[1]. For the reasons set out in that Judgment, it was held that the plaintiff’s position pleaded in §20B of the Re-Re-Amended Statement of Claim should not be regarded in law as a renunciation of executorship.

1.2.  Two matters of costs arose from that judgment.

Costs Order nisi

2.1.  First, an order nisi was made in the judgment that the defendants pay the plaintiff’s costs of the Issue.  Pursuant to Order 42 Rule 5B(6)  Rules of the High Court, the order would become absolute 14 days after the judgment unless an application is made to vary that order.

2.2.  On 26 May 2022, the defendants filed a summons (with an amendment sought by summons filed on 9 June 2022, for which we give leave)  to vary the order nisi to an order that the parties’ costs of the Issue be:

-  reserved, or alternatively,

-  in the cause of the plaintiff’s application to this court for leave to appeal the Decision of DHCJ Leung (“the judge”)  given on 30 July 2020[2] or, if such leave is granted, the intended appeal.

Summary Assessment of costs for the Renunciation Issue

3.1.  Second, in the judgment, we noted that although the parties had provided statements of costs for summary assessment, they were not expressed to relate to the discrete Issue.  Accordingly we directed that the plaintiff be at liberty to file and serve a statement of costs relating to only that Issue within 14 days. 

3.2.  On 26 May 2022, the plaintiff filed a statement of costs for summary assessment (exclusively on the Issue).  On 9 June 2022, the defendants filed a list of objections to that statement.

4.  It would be convenient to deal with the application to vary the costs order nisi first.

4.1.  On behalf of the defendants, it was submitted that:

-  the plaintiff’s application for leave to appeal the APL Decision has not yet been determined, and if that application were to fail, it would not be fair for the defendants to have to pay part of the costs incurred in the course of that application;

-  the defendants had not pursued the Issue in order to challenge the plaintiff’s application, as she had not relied on her appointment as executor and had expressed her intention that she would not accept it pending the probate action;

-  the plaintiff’s appointment as executor does not per se dispose of the application for leave to appeal the APL Decision.

4.2.  On behalf of the plaintiff, it was submitted that:

-  the Issue was a stand-alone and isolated issue which had arisen when the Mother and Lina renounced executorship, after the hearing of the APL application before the judge;

-  when that Issue arose, the defendants actively advanced the argument that the plaintiff had renounced executorship either expressly or impliedly, instead of adopting a neutral stand.

Discussion

5.  The Issue arose when:

-  the Mother and Lina renounced executorship, and under the 2005 Will, the plaintiff became the substitute executor, events which were beyond the control of both the plaintiff and the defendants; and

-  the court considered that the identity of the executors and their working relationship with one another would be relevant to the application for leave to appeal the APL Decision, as their ability to co-operate in the administration of the estate would be affected.  The fact that the plaintiff had pleaded that she did not intend to accept the appointment pending the probate action is neither here nor there, as such a statement of intention is not binding.  It is clearly relevant to the court which has to deal with the application to know who are the current executors, and in their submissions on the Issue, neither party suggested otherwise.

6.1.  We do not accept the defendants’ submission that “but for”[3] the plaintiff’s application for leave to appeal the APL Decision, the Issue would not have arisen and so the costs of the Issue should be considered only at the conclusion of the application or as part of the costs in the cause.

6.2.  However, we note that the Issue arose out of events caused by third parties (i.e. the renunciations of the Mother and Lina), and the Issue having been raised by the court, it cannot be said that the defendants had acted unreasonably or improperly in advancing the submissions which they did, even though they turned out to be unsuccessful.

6.3.  Accordingly, we would vary the costs order nisi as follows:

“The costs of the Renunciation Issue be the plaintiff’s costs in the cause of the application for leave to appeal”.

7.  As for the statement of costs on the discrete Issue, having considered the bill and the list of objections, we agree with the objections and would summarily assess the costs at $510,000.  We make no separate order for the costs of the application to vary the costs order nisi because at a physical hearing, arguments on costs would be treated as part of the costs of the substantive hearing.

Written Submissions by Mr Edward Chan SC and Mr Abel Lam, instructed by Lily Fenn & Partners, for the Plaintiff

Written Submissions by Mr Benjamin Yu SC, Ms Teresa Wu and Ms Jacqueline Law, instructed by P C Woo & Co, for the 1^st & 2^nd Defendants

CHOW LINA deleted as 3^rd Defendant after 29 June 2021

CAMP 202/2021

[2022] HKCA 669

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

MISCELLANEOUS PROCEEDINGS NO 202 OF 2021

(ON AN INTENDED APPEAL FROM HCAP NO 22 OF 2019)

________________

________________

________________

________________________

JUDGMENT

(ON THE RENUNCIATION ISSUE)

________________________

Hon Kwan VP:

1.  I agree with the judgment of Yuen JA.

Hon Yuen JA:

2.1  This judgment deals with a preliminary issue (“the Renunciation Issue”) which requires determination before this court can deal with the Plaintiff’s application for leave to appeal the Decision of DHCJ Leung (“the Judge”) made on 30 July 2020 dismissing her application for the appointment of administrators pendente lite (“the APL Decision”).

2.2  The issue arose due to events that have occurred after the APL Decision, but as the issue is one of law, it would save time and costs for this court to determine it instead of sending it to the Court of First Instance for decision.

Background

3.  On 29 October 2015, Chow Yei Ching (“the Deceased”) signed a document which was, on its face, his Will (“the 2015 Will”)¹.  In January 2016, he suffered a stroke.  On 29 July 2018, he died leaving his wife and 7 children.

4.1  The 2015 Will is challenged in HCAP 22/2019 (“the Probate Action”) by the Deceased’s eldest daughter Lily, who alleges that the Deceased had executed it without knowledge and approval of its contents, and/or without the requisite testamentary capacity, and/or without the requisite animus testandi.  She is seeking an order to admit to probate a copy of a document which was on its face, a Will dated 27 April 2009 but on which copy the Deceased’s signature does not appear (“the 2009 Will”)², alternatively for a declaration that the Deceased died intestate. 

4.2  It would appear from the court file that the Probate Action is being actively pursued, but no date has yet been fixed for trial. 

Executrixes and substitutions named in the 2015 Will

5.1  In Clause 2 of the 2015 Will, the Deceased appointed (i) his wife (referred to in the APL Decision as “the Mother”), (ii) his daughter Violet, and (iii) his daughter Vi Vi to be the executrixes and trustees of his Will. 

5.2  Clause 2 went on to say as follows:

“in case any one or more of them shall ... renounce probate or refuse ... to act in the office of executrix or trustee then I appoint by substitution my daughter CHOW, LINA ..., my daughter CHOW, LILY ... and my daughter CHOW, LISA ... strictly in the order named aforesaid to fill any vacancy in the office of executrix or trustee hereof that may occur thereby”.

6.  On 30 October 2018, the Mother, Violet and Vi Vi applied for probate³.

Probate Action

7.  However, on 10 May 2019, Lily commenced the Probate Action, with Violet, Vi Vi and the Mother as 1^st, 2^nd and 3^rd defendants respectively. 

Summons to appoint administrators pendente lite

8.1  On 15 July 2019, Lily filed a summons for an order to appoint two accountants as joint and several administrators pendente lite (“the APL summons”)⁴. The summons was opposed by the defendants.

8.2  The summons was heard by the Judge on 30 October 2019. Judgment was reserved.

Renunciation by the Mother

9.  During this period, on 2 July 2020, the Mother renounced her right and title to probate and execution of the 2015 Will⁵.  Under Clause 2 of the 2015 Will, Lina became the substituted executrix in the second degree⁶.

The APL Decision

10.  On 30 July 2020, the Judge dismissed the APL summons.  It would appear from the Decision that the Judge had not been made aware of the Mother’s renunciation.

Lily’s summons in CFI for leave to appeal

11.  On 13 August 2020, Lily filed a summons in the Court of First Instance for leave to appeal the APL Decision.  Directions were given for written submissions.

Renunciation by Lina

12.1  In the meantime, on 19 November 2020, a master granted leave to Lily to discontinue her claim against the Mother on the ground of the latter’s renunciation, and to substitute Lina as the 3^rd defendant.

12.2  However, subsequently on 27 April 2021, Lina also renounced her right and title to probate and execution of the 2015 Will⁷.  Under Clause 2 of the 2015 Will, Lily then became the substituted executrix in the third degree.

The Judge’s refusal of leaveto appeal the APL Decision

13.  On 14 May 2021, the Judge refused leave to appeal the APL Decision.  In §3 of this decision, the Judge referred to the Mother’s renunciation and Lina’s joinder as the 3^rd defendant, but did not refer to Lina’s renunciation.  Presumably, the Judge had not been made aware of this renunciation either⁸.

Lily’s summons to CA for leave to appeal

14.  On 28 May 2021, Lily filed a summons in this court for leave to appeal the APL Decision.  Written submissions were filed on 28 May 2021 and 11 June 2021.

Amendments to pleadings after Lina’s renunciation

15.  On 24 June 2021, a master gave leave to Lily to discontinue her claim against Lina after the latter’s renunciation. Amendments were then made to the parties’ respective pleadings which gave rise to the issue of renunciation.

16.  On 29 June 2021, Lily filed a Re-Re-Amended Statement of Claim (“Re-Re AmSOC”)⁹ adding the following new paragraphs.

“20A. On 27 April 2021, by way of a Renunciation of Probate of even date, Lina renounced her right and title to probate and execution of the Will (being the 2015 Purported Will) of the Deceased. Consequently, without in any way accepting or admitting the validity of the 2015 Purported Will, Lina has since been substituted by Lily as executrix of the 2015 Purported Will pursuant to Clause 2 thereof.

20B. For the reasons pleaded hereinbelow, Lily does not admit the validity of the 2015 Purported Will, and for that reason Lily would not, and does not, intend to accept the office of executrixship of the 2015 Purported Will pending judgment of the Court in this Action. However, if, contrary to the contention of Lily, it is held by the Court in this Action that the 2015 Purported Will is a valid will of the Deceased, and the Court pronounces the same in solemn form for its force and validity, Lily expressly reserves her right to accept the appointment as executrix in accordance with Clause 2 of the 2015 Purported Will”. (Emphasis added).

17.  On 27 July 2021, Violet and Vi Vi filed a Re-Amended Defence and Counterclaim (“Re-AmD&CC”)¹⁰ in which the following were pleaded in defence to §§20A-B of the Re-Re AmSOC:

“44A. Save and except that Lina renounced her right and title to probate and execution of the Last 2015 Will on 27 April 2021 and Clause 2 of the 2015 Will provides for substitution of the executrixes and trustees of the Estate and the Plaintiff comes after Lina in the order of substitution set out therein, paragraphs 20A and 20B are denied. The 1^st and 2^nd Defendants further repeat paragraph 95 below”.

“95. The 1^st and 2^nd Defendants further aver that the Court should not exercise its power to appoint, and accordingly seek an order, that Lily should not be appointed an executrix or trustee of the Estate, whether under the Last 2015 Will, or alternatively, the Handwritten Note¹¹ in any event, by reason of (i) her conduct in acting contrary to the testamentary intentions of the Deceased and the interest of the Estate in disputing or challenging the validity of the Last 2015 Will and seeking the Declaration that the copy of the 2009 Purported Will be admitted to probate or that the Deceased had died intestate, notwithstanding that the Last 2015 Will had clearly been duly executed by the Deceased with testamentary capacity and knowledge and approval of the contents and further with the Handwritten Note as evidence; and (ii) that it is otherwise necessary or convenient that Lily should not be appointed as an executrix or personal representative of the Estate; and accordingly that only the 1^st and 2^nd Defendants be appointed and constituted executrices and trustees of the Estate”.

18.  On 23 August 2021, Lily filed a Re-Amended Reply and Defence to Counterclaim (“Re-AmR&DCC”)¹².  There was no specific denial of §44A of the Re-AmD&CC but the following was pleaded in reply to §95:

“27A. As to paragraph 95:

(a) It is denied that Lily’s conduct in these proceedings amounts to acting contrary to the testamentary intentions of the Deceased and/or the interest of the Estate and/or it is otherwise necessary or convenient to pass Lily over as executrix of the Estate.

(b) The present action seeks the Court’s determination of the validity of the 2015 Purported Will as the last and valid Will of the Deceased. The 1^st and 2^nd Defendants have the legal burden to prove that the same had been executed by the Deceased with full knowledge and approval of its contents and/or with the requisite testamentary capacity in any event. The plaintiff is entitled to require the 1^st and 2^nd Defendant[s] to discharge their burden to prove the 2015 Purported Will as the last and valid Will of the Deceased before the same is admitted to probate.

(c) In asking for the 2015 Purported Will to be properly proved in this action, the plaintiff in no way acts contrary to the testamentary intentions of the Deceased and/or the interest of the Estate. To the contrary, it is in the interest of the Estate to have the testamentary intention of the Deceased properly ascertained and proved to ensure that his estate would be properly administered and distributed in accordance with his testamentary intention”.

The Renunciation Issue

19.1  Subsequent to the Mother’s and Lina’s renunciations, I gave directions to the parties to agree, and failing agreement, to file evidence, on the state of the executrixship.  The parties were unable to agree, and on 4 February 2022, Lily’s solicitor filed an affirmation on her behalf, and Vi Vi filed an affirmation on behalf of herself and Violet.

19.2  In the solicitor’s affirmation, it is said (among other things) that “it is the Plaintiff’s position since the renunciation of Lina that, in the event the Court in HCAP 22/2019 pronounces the 2015 Purported Will in solemn form for its force and validity, the Plaintiff has a strong intention to accept the appointment as executrix”.  That was opposed in Vi Vi’s affirmation.

19.3  Consequently, on 7 February 2022, I gave directions to the parties to file written submissions on the Renunciation Issue:

“Whether the plaintiff’s position pleaded in para.20B of the [Re-Re ASOC] ... should be regarded in law as a renunciation”.

19.4  Following the parties’ submissions filed on 21 February 2022, I gave further directions on 8 April 2022 for submissions in reply which were filed on 14 and 25 April 2022 respectively. 

19.5  It is obvious why the Renunciation Issue should be decided before the application for leave to appeal the APL Decision can be determined.  In any application for appointment of administrators pendente lite, the identity of the executors and their working relationship with one another would obviously be considered by the court as affecting their ability to co-operate in the administration of the estate.  Further, if Lily has renounced executrixship, then the 2015 Will provided that Lisa would become the substituted executrix in the fourth degree.

Submissions on the Renunciation Issue

20.1  It was submitted on Lily’s behalf that:

(1)  she did not and continues not to have an intention to renounce;

(2)  she has not expresslyrenounced her right and title to probate of the 2015 Will and there is no principle of implied renunciation; and

(3)  even if it were suggested that she had renounced, she “hereby clarifies” that she has no intention of renouncing if the 2015 Will was proved in solemn form.

20.2  It was submitted on behalf of Violet and Vi Vi that:

(1)  Lily’s position as set out in §20B of the Re-Re ASOC is absolute and not conditional, and constitutes an express renunciation in law;

(2)  in any event, Lily’s conduct amounts to an implied renunciation, relying on Banyard v Duirs [2013] WASC 146, a judgment in the Supreme Court of Western Australia; and

(3)  the Probate Action is hostile probate litigation, in which Lily has taken it upon herself to establish a positive case challenging the validity of the 2015 Will.  That position is repugnant to the recognition of the office of executrix, and is inconsistent with a reservation of a right to take up that office. 

Discussion

21.  The following law is well-established:

(a)  at common law (as confirmed by the Court of Appeal in Nativivat v Nativivat [2013] 4 HKLRD 340 at §32), an executor’s right and title to probate and execution derives, not from the grant of probate by the court, but from the will; the grant of probate is simply the evidence of that right and title;

(b)  thus, an executor (so long as he has not intermeddled) can renounce the office of executorship as soon as the testator dies (Williams, Mortimer & Sunnucks §6-53);

(c)  an executor may expressly renounce executorship under s.29(2) PAO which provides “such renunciation may be made orally on the hearing of any petition or probate action by the person renouncing or by counsel on his behalf, or in writing signed by the person so renouncing and attested by a solicitor or by any person before whom an affidavit may be sworn”;

(d)  an executor may also be deemed under s.30 PAO to have constructively renounced executorship if (i) he has neither applied for probate nor renounced executorship; (ii) he has been issued with a citation by any person claiming any interest in the estate calling upon him to accept or renounce executorship; and (iii)(1) he defaults in appearance to the citation, or (2) having appeared, he does not proceed to apply for probate or does not prosecute his application with reasonable diligence and further fails to apply for and obtain probate within the time limited by an order obtained by the person citing him;

(e)  where 2 or more persons are named as executors in a will, they do not need to apply for probate together; one alone may apply for probate, the court reserving the power to make a double grant to the other(s) if they apply later.  Although there is no express provision for this power in the PAO, it is recognized in s.27(1) and s.54(2) of the Ordinance;

(f)  under s.3 PAO, the ultimate power whether (or not) to grant probate to a person named as executor in a will lies with the court.

Express renunciation?

22.1  The first question in the present case is whether Lily’s pleadings in §20B of the Re-Re ASOC amount to an express renunciation.  This question is not answered by an assertion of her subjective intention, but by an objective consideration of the requirements for an express renunciation. 

22.2  Section 29(2) PAO provides that an express renunciation may be made either orally in a specific circumstance (which does not apply to this case), or “in writing signed by the person so renouncing and attested by a solicitor or by any person before whom an affidavit may be sworn”.  In the present case, Lily has signed the Statement of Truth (“I believe that the facts stated in this [Re-Re ASOC] are true”) but it was not attested by a solicitor or by any person before whom an affidavit may be sworn.  The defendants seek to rely on her solicitors’ signature on the pleadings, but it is clear that they signed at the end of the pleadings to fulfill the procedural requirement of Order 18 rule 6(5) Rules of the High Court (“every pleading must be signed by counsel if settled by him, and if not, by the party’s solicitor …”), and not to attest Lily’s signature.

22.3  Accordingly, I do not consider that Lily’s pleadings in §20B of the Re-Re ASOC amount to an express renunciation.

Constructive renunciation?

23.  As Lily has not been issued with a citation under s.30 PAO, no issue of constructive renunciation has arisen.  It is noteworthy that (as observed by the annotators of the PAO in the Annotated Ordinances of Hong Kong at [29.01]) there is no legislation in England which corresponds exactly to this section, at least not under the term “constructive renunciation”. However, the English legislation similarly provides that a person may call upon an executor to take action by issuing a citation to him.  The executor may then renounce (Tristram and Coote’s Probate Practice 32^nd ed §24.78), or enter an appearance and apply for probate with reasonable diligence failing which the citor may apply for a grant to be made to himself (§24.86).  See also Williams, Mortimer & Sunnucks, §6-47. 

“Implied renunciation”?

24.  That leaves us with the question whether in Hong Kong, the principle of implied renunciation exists, and if so, whether Lily’s conduct amounts to implied renunciation.  The defendants have referred this court to Banyard, which is a judgment of Heenan J in the Supreme Court of Western Australia.

25.1  In Banyard, the deceased had natural, adopted and foster children.  She made a will appointing an adopted child Anne and a foster child Eric as joint executors.  Anne applied for grant of probate in solemn form.  Eric, asserting that the deceased lacked testamentary capacity at the time the will was made, declined to apply for probate and in fact, opposed grant of probate.  He ceased his opposition shortly before the hearing, leaving the action undefended, but he did not make a formal renunciation, nor had he been cited to prove or renounce.

25.2  Heenan J referred to his earlier judgment in Scarpuzza v Scarpuzza [2011] WASC 65, and held that “… where [Eric] has declined to take any step to join in with [Anne] or to apply on his own behalf to seek probate of this will and where he has opposed a grant of probate in the non-contentious jurisdiction, I consider the only inference to draw is that he has indicated an unwillingness ever to act as executor and that this amounts to implied renunciation” (emphasis added).

26.1  In Scarpuzza, the deceased named 3 executors in his will, including a Mr Dyson who was a former accountant, family friend and adviser.  The judge found on the facts that the will was validly executed by the deceased. 

26.2  Prior to trial, Mr Dyson, who had entered an appearance to the action in person, sent an email to the plaintiffs’ solicitor saying that he (Mr Dyson) agreed to accept the decision of the court.  The solicitor then sent a form of renunciation to Mr Dyson for execution, but it was not returned.  Instead, in a subsequent email, Mr Dyson wrote “Will sign and send in (must admit I thought I had already done so)”.  Despite this, no form of renunciation or other signed document or communication was received from him. 

26.3  The judge posed the question whether or not “the inaction of [Mr Dyson] coupled with his notification of a willingness to abide by the order of the court amounts to a waiver or abandonment of his right to seek a grant”.  He then considered a number of cases (discussed below) and concluded that “it [renunciation] may be implied by conduct which sufficiently indicates a refusal to accept” [§47].  He then decided that the “only conclusion” which should be drawn from Mr Dyson’s inaction in applying for a grant and his failure to file a defence or counterclaim jointly with the other executors “should be an implied renunciation of his right to obtain probate as a co-executor” (emphasis added) [§49].

Disclaimer of trusteeship

27.  The cases Heenan J referred to were Re Gordon (1877) LR 6 Ch D 531, Re Clout & Frewer’s Contract [1924] 2 Ch 230, and Re Schar [1951] Ch 280.  It will be seen below that they all dealt with situations of disclaimer of trusteeship.

28.  In Re Gordon, B was named as executor and trustee under the will of the deceased who died in 1867.  B renounced probate but did not disclaim trusteeship.  However, he did not act as trustee at all and died in 1871.  It was held that there was sufficient evidence of disclaimer of trusteeship (p.534).

29.1  In Re Clout, the testator died in 1872 after having made a will appointing his wife E and two other persons H and C as executors and trustees.  A legacy was given in the will to H and C as compensation for their troubles.  Probate was granted to E, power being reserved to make the like grant to H and C.  In 1890 and 1901 respectively, H and C died without having renounced or disclaimed, but never having applied for probate or acted as trustees. 

29.2  The will was made the root of title in a sale of the testator’s land, and the purchaser required evidence that C had disclaimed the trust, for new trustees had been appointed while C was still alive.

29.3  After considering Re Gordon and Re Birchall 40 Ch D 436, it was held (p.236) that as C had “survived the testator for nearly thirty years without proving, acting, or applying for or receiving his official legacy”, that was “sufficient evidence that he never intended to act, and disclaimed the trusts” (emphasis added).

30.  Re Schar was a case involving the true construction of a poorly drafted deed executed by a bank which had been appointed one of the executors and trustees of a will.  It was referred to in Scarpuzza only for the proposition that “a disclaimer is best made in writing by deed poll because that places the intention of the disclaiming trustee beyond doubt” [§47].    

31.  It is clear from the above cases that they were concerned, and concerned only, with disclaimer of trusteeship.  This is a very different concept from that of renunciation of executorship, for common law has long recognized the right of a person named as trustee to disclaim the office and the estate (as long as it is done before acceptance), and the disclaimer may be by deed or by conduct (eg by conduct inconsistent with acceptance, or by inaction over a long period) (Underhill and Hayton, Law of Trusts and Trustees 19^th ed. Article 34). 

32.  Notably, there is no statutory provision for disclaimer of trusteeship.  That is in stark contrast with renunciation of executorship. As seen above, the PAO contains express provisions for express renunciation in s.29, and constructive renunciation in s.30 through the procedure of citation, which has no equivalent in the administration of trusts.  If it had been the intention of the legislature to include a common law concept of “implied renunciation” (if such exists) or to allow room for such development, one would have expected s.28(c) PAO to say “renounces probate of the will, including by express renunciation or constructive renunciation”.

33.  For the above reasons, I am not persuaded that the concept of disclaimer of trusteeship through conduct can be applied to create a new form of “implied” renunciation of executorship, or that “implied renunciation” is part of Hong Kong common law.

34.1  However, even if “implied renunciation” were to be regarded as part of Hong Kong law, Lily’s pleadings in §§20A-B of the Re-Re AmSOC do not indicate a waiver or abandonment of her right (Tristram and Coote, §15.1) ever to apply for probate as executrix, which is the crux of a renunciation (subject to the court’s power to allow a retraction of a renunciation under s.31 PAO). 

34.2  The crucial words are “Lily would not, and does not, intend to accept the office of executrixship of the 2015 Purported Will pending judgment of the Court in this Action” (emphasis added).  At most, that is a conditional renunciation, which is not an effective renunciation (Williams, Mortimer & Sunnucks, §6-50; Tristram and Coote, §15.1). 

35.1  Further, when construing the words “accept the office of executrixship”, it should be noted that (absent any intermeddling or acts showing acceptance of office: Williams, Mortimer & Sunnucks, §6-35-6-39) there is no procedural requirement that an executor must “accept” the office by doing a particular act within a particular period of time.  He may choose to do nothing, unless and until the s.30 citation procedure is invoked, or he is summoned by the court under s.8 PAO to prove or renounce probate of the will. 

35.2  In the present case, the s.30 citation procedure has not occurred.  Nor would it be necessary for the s.8 step to be taken by the court, as the other executors may prove the will without Lily’s consent or renunciation (Tristram and Coote, §4.55).  Except perhaps forensically, there is nothing to “reserve”.       

36.  This leads me to the argument advanced on behalf of Violet and Vi Vi that Lily’s position, in which she positively challenges the validity of the 2015 Will, is repugnant to the recognition of the office of executrix.  There is strength in the argument that Lily is not merely putting the defendants to proof, but is positively pursuing hostile probate litigation.  This can be seen in her Re-AmR&DCC, §27.  However, I do not think it is necessary at this stage of the proceedings for the court to consider whether this disentitles Lily from applying for probate of the 2015 Will.  The defendants have foreshadowed their opposition in §95 of the Re-AmD&CC (see §17 above).  If and when she does make such an application, it would be up to the court at that stage, after consideration of all the circumstances of the case, to exercise its power whether or not to grant her probate which evidences her right and title.

Order

37.  For the reasons set out above, I hold that the plaintiff’s position pleaded in para.20B of the Re-Re ASOC should not be regarded in law as a renunciation.  I would make an order nisi that the defendants pay the plaintiff’s costs of the Renunciation Issue.  Although the parties have provided statements of costs for summary assessment, they were not expressed to relate to this discrete issue.  Accordingly, I would direct that the plaintiff be at liberty to file and serve a statement of costs relating to only this discrete issue within 14 days.  The defendants are at liberty to respond within 14 days thereafter.  The court will then summarily assess the costs on paper.

Hon G Lam JA:

38.  I agree with the judgment of Yuen JA.