Tong Wing Kin and Another v. Hurst, Tong Tze Ming Ophelia and Others

Read the full judgment text of HCMP 2379/2014 on BabelCite. This High Court CFI judgment was delivered on 21 December 2015.

1. These proceedings concern an administration action issued under Order 85 rule 2 of the RHC by the plaintiffs (“ Ps ”) seeking orders for distribution of certain assets of the estate of their father, the late Mr Tong Biu (唐標) (“ Father ”).

Cites 6 cases

Case No.HCMP 2379/2014
Court
High Court CFI
Date21 Dec 2015
Judge
Case Document
100%Judiciary

HCMP 2379/2014

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 2379 OF 2014

______________________

  IN THE MATTER OF the Estate of
TONG BIU (唐標) of Flat C, 15th
Floor, One Carmen’s Garden,
Carmen’s Garden, No. 9 Cox’s Road,
Kowloon, Hong Kong, deceased
  and
  IN THE MATTER OF Order 85, rule 2
of the Rules of the High Court, Cap 4A

______________________

BETWEEN    
  TONG WING KIN (唐榮健) 1st Plaintiff
  TONG WING YIU STEVEN (唐榮耀) 2nd Plaintiff
  and
  HURST, TONG TZE MING OPHELIA (許唐梓明), in her personal capacity and as the Executrix of the Estate of TONG BIU, Deceased 1st Defendant
  FUNG TONG TZE MIN PATRICIA (馮唐梓棉) 2nd Defendant
  CHAN TONG TZE MEI (陳唐梓薇) 3rd Defendant
  YIU TONG TZE MUI BELINDA (饒唐梓梅) 4th Defendant
  HO TONG TZE SHEUNG ROVENA (何唐梓嫦) 5th Defendant
  TONG TZE MAY ABBE (唐梓美) 6th Defendant
  CHAN TONG TZE YIN PANSY (陳唐梓燕) 7th Defendant
  TONG WING BUN (唐榮斌), Executor of the
Estate of CHENG KIT YU, Deceased
8th Defendant

______________________

Before: Hon B Chu J in Chambers
Date of Hearing: 3 November 2015
Date of Judgment: 21 December 2015

________________

J U D G M E N T

________________

Introduction

1.These proceedings concern an administration action issued under Order 85 rule 2 of the RHC by the plaintiffs (“Ps”) seeking orders for distribution of certain assets of the estate of their father, the late Mr Tong Biu (唐標) (“Father”).  

2.Ps issued two summonses for specific discovery against the executrix of Father’s estate, namely the 1st defendant, respectively in March and October this year, and these will simply be referred to as the March Summons and the October Summons.

3.Both summonses were issued under Order 24 rules 3 and 9 of the Rules of the High Court (“RHC”).  Briefly, the March Summons sought drafting papers etc of the Father’s will and the October Summons sought counsel’s advice obtained by the executrix and her instructions on the construction of Father’s will and/or distribution thereunder.

Background

4.Father passed away on 6 April 2011.  His widow Madam Cheng Kit Yu (“Mother”) passed away the following year, on 31 December 2012.

5.Father and Mother had 11 children, 3 sons namely the 1st plaintiff, 2nd plaintiff (respectively “P1” and “P2”) and the 8th defendant (“D8”), and 8 daughters.  One daughter, Tong Tze Yung, predeceased her parents in 1976.  The other 7 daughters are the 7 defendants named in this action (“collectively Ds”).  The 7th defendant passed away in April earlier this year.  

6.Father made a will on 24 December 2010 in Chinese language (“Will”) at a solicitors firm Messrs Waller Ma Huang & Young (“WMHY”), and he appointed 3 of his children as executors of his estate, namely P1, D1 and another daughter.  Probate of the Will was granted to the 1st defendant (“D1”), with power being reserved to the others to apply for double probate of the Will.

7.As seen later in this judgment, Ps and Mother are specific legatees under the Will, while Ds and also Mother are the beneficiaries of the residuary estate.    

8.D8 has been cut off from the Will, and is thus not a beneficiary in the Father’s estate.  D8 is one of two executors appointed by Mother in her will and one of the beneficiaries thereunder.  Probate has been granted to D8 with power being reserved to the other to apply for double probate.  D8 is named as a defendant only in his capacity of being Mother’s executor and adopts a neutral position on behalf of Mother’s estate in these proceedings.  D8 has so far acted in person.

9.Clauses 3, 4 and 5 of the Will state, that:

(三)  我獨資經營的唐錫記 [TONG SEK KEE],一切權益分為一百份,並分配如下﹕

(甲)  十份給我的妻子鄭潔如 [CHENG, KIT YU] [香港身份證號碼 B353377 (3)] 承受及享用; 

(乙)   五十一份給我的兒子唐榮健 [TONG, WING KIN] [香港身份號碼 E455452 (7)] 承受及享用;及

(丙)  三十九份給我兒子唐榮耀 [TONG, STEVEN WING YIU] [香港身份證號碼 D162667 (2)] 承受及享用。

(四)  我將其他剩餘在各地所有的動產及不動產產業 [包括繼承的財產],交由遺囑執行人保管,遺囑執行人有權將產業出售或延遲出售,如果因此而導致產業貶值,遺囑執行人無須作出賠償。

(五)  遺囑執行人先要支付我的喪葬費、債項、遺產稅 [如適用者] 及辦理遺產費用,再將剩餘的金錢及產業,平均分配給我的妻子鄭潔如 [CHENG, KIT YU] 和在立這份遺囑時在世的七名婚生女兒承受及享用。

10.Prior to his death, Father was the sole proprietor of a business of marine service and building construction called Tong Sek Kee (唐錫記) which commenced in April 1957[1] (“Tong Sek Kee”).  After Father died, Ps, with the consent of D1, incorporated Tong Sek Kee Limited on 5 July 2011 to continue the business of Tong Sek Kee.  The business registration of Tong Sek Kee was eventually cancelled on 22 February 2012 and the sole proprietorship of Tong Sek Kee ceased business as of that date.

11.According to Ps, Father had asked his 3 sons, namely P1, P2 and D8 to assist in the business of Tong Sek Kee as early as about 1972.  Thereafter, it appeared that the Father and the 3 sons took turns to move to Canada, whether for studying or immigration purposes, and those of them in Hong Kong would carry on the business.  So far as the Father was concerned, he and Mother moved to Canada in about 1993, and in 1994, P1 also moved there.  It was at about that time, D8 who was in Canada was requested by Father to move back to Hong Kong to carry on the business of Tong Sek Kee.

12.Ps had made some allegations against D8 in respect of the running of the business which, according to Ps, resulted in D8 ceasing to be involved in  Tong Sek Kee in 1996 and further  Father disinherited D8, making no provision for D8 in the Will.

13.D8 admitted that he took over the business of Tong Sek Kee in August 1994 when P1 and Father were living in Canada, but denied the allegations made by Ps against him.  Anyway, it was not disputed that D8 handed the business of Tong Sek Kee to Father and P1 when they returned to Hong Kong in about August 1996.

14.It was Ps’ case that since 1996, they became heavily involved and assumed pivotal roles in the running of Tong Sek Kee, and that it had always been Father’s intention that Ps should inherit and carry on the business of Tong Sek Kee.

Events after Father’s death

15.After Father died, D1 applied for probate through the WMHY.  Probate was granted to D1 on 31 July 2013.  On 16 October 2013, Ps’ solicitors Clifford Chance (“CC”) wrote to WMHY on behalf of P1 stating that certain assets of the Father’s estate did not form part of the residuary estate under Clause 5, and that those assets had all along been treated by the Father to be assets of Tong Sek Kee which should be distributed to Ps under Clause 3 (“CC’s 1st Letter”).

16.The assets which Ps alleged did not form part of the estate residuary estate (“Disputed Assets”) consisted of:

(i) Two fixed deposits held in the name of Father at the Nanyang Commercial Bank totalling HK$4m (“Fixed Deposits”);

(ii) A private car manufactured in 2002 with registration mark DX 7128 (“Private Car”);

(iii) 4 real properties, which I shall simply call “Kowloon Property”, “Yuen Long Property”, “Fortune Court Property”, and “Tsuen Wan Property” (“collectively “Landed Properties”);

17.In reply to CC’s 1st Letter, WMHY had asked Ps to provide all books and accounts, with all supporting documents showing all the assets and liabilities of Tong Sek Kee for 3 years preceding the Father’s death, which could have bearing on the issue of what comprised the business assets of Tong Sek Kee.

18.Ps later supplied D1 with various documents on 9 December 2013[2], including profit and loss statement, and the balance sheet of Tong Sek Kee from 1 April 2008 to 31 March 2009, a summary of the income and expenses for 1 April 2009 to 31 March 2010, 2 summaries of rates and government rent for some of the Landed Properties, and/or demand notes and records of payment of the same, and also bills and records of payment for utilities for the period 01/08/08 until 06/04/11.

19.Ps and D1 were not able to agree to the distribution of the Disputed Assets.  Eventually, Ps issued the originating summons herein on 24 September 2014, seeking orders that, among other things, D1 be directed to distribute the Disputed Assets to Ps under Clause 3 as specific legacies. 

20.According to affirmations filed by Ps in support of their originating summons, very briefly:

(i) The Fixed Deposits had been treated by Father as assets of Tong Sek Kee, and  since about 1997 the Fixed Deposits had been used as a security for the banking facilities by Tong Sek Kee ;

(ii) The Kowloon Property was purchased by Father in December 1970 as an office of Tong Sek Kee and as correspondence address for the business, although at one stage it was the family home as well;

(iii) The Yuen Long Property was purchased by Father in  February 1982 and since purchase had been used by Father as the warehouse and workshop for the business of Tong Sek Kee;

(iv) The Fortune Court Property was purchased by Father in about April 1985, and since 2008 Father had been using the property to provide accommodation for a staff of Tong Sek Kee, Tong Yat Chun Billy, who is the son of Tong Tze Yung, the sister who predeceased the Father and the Mother.

(v) The Tsuen Wan Property was purchased by Father about December 2009 and had been used as another warehouse and workshop for Tong Sek Kee since about early 2010;

(vi) As for the Private Car, this was purchased in about 2002 to replace the one which had been used for Tong Sek Kee, and the Private Car was solely used for the business of Tong Sek Kee, to transport construction materials and equipments, to deliver products to customers and to provide transportation to staff of Tong Sek Kee to perform work for the business.

21.In support of their case, Ps had relied on, in particular, a copy of a note, which was said to be handwritten and signed by Father and dated 2 August 2010, and contained in an envelope found in a drawer of the desk used solely by the Father before he passed away (“Note”)[3].  It was Ps’ case that the Note was found on about 30 January 2013 by P1’s wife, when P1, his wife Yeung Yin Mui and daughter Janice Tong and P2 went to tidy up Father’s belongings in the Kowloon Property.  In the Note, the Father had stated that the Kowloon Property, the Tsuen Wan Property and Yuen Long Property were the assets of Tong Sek Kee.

22.D1, the 5th, 6th and 7th defendants had each filed an affirmation to oppose the originating summons.  D1 had, among other things, denied that the Disputed Assets were assets of Tong Sek Kee and/ or were used for the purpose and/or operation of the business of Tong Sek Kee and had set out her evidence as to the acquisition of the Disputed Assets.  According to D1, the business of Tong Sek Kee operated at places other than the Landed Properties which were Father’s personal properties, and also the Private Car was for the Father’s private use and his personal property.  

23.D1 also challenged the authenticity of the Note as the original had not been found[4]

24.After Ps issued originating summons, D1 had issued Beddoe proceedings namely HCMP 3110/2014 (“Beddoe Proceedings”).  This was followed by the March Summons, and about 2 weeks before the hearing of the March Summons, Ps issued the October Summons.

General Legal Principles on Discovery

25.The general principles on discovery are trite. Order 24 rule 3 of RHC empowers the court to make an order for discovery with respect to documents “which are or have been in a party’s possession, custody or power relating to any matter in question in the cause or matter”.

26.Mr Dawes had referred the court to Melvin Waxman v Li Fei Yu & Ors, HCA 1973/2012, 30.01.2015 where DHCJ M Ng had set out the general principles[5]. On the question of relevance, the Learned Deputy Judge had preferred to follow the Peruvian Guano test, that a document which relates to the matters in question in the action is that which not only would be evidence on any issue, but also which, it is reasonable to suppose, contains information which may either directly or indirectly enable the party requiring the disclosure of that document either to advance his own case or to damage the case of his adversary.

27.Mr Fung had, also, referred to an earlier decision of DHCJ M Ng in Wong Hon Wai and The Secretary of Justice, HCPI 664/2009, unreported, 24 February 2011, where the Learned Deputy Judge pointed out, among other things, that if the Court is satisfied that discovery is not necessary, or not necessary at that stage of the cause or matter, it may dismiss or adjourn the application, and shall in any case refuse to make such an order if and so far as it is of opinion that discovery is not necessary either for disposing fairly of the cause or matter or for saving costs[6]

28.With these general principles in mind, I turn to the two summonses.

March Summons

29.Ps issued the March Summons to seek an order for discovery against D1 in respect of all documents relating to the drafting, preparation and/or execution of the Will, including (among others) any drafts of the Will and any relevant instructions and advice between the Deceased and his solicitors.

30.D1 had indicated at end of March 2015 through her solicitors that she would not object to the March Summons if the admissibility of the documents sought under s 23 B of the Wills Ordinance (“Ordinance”) could be established[7].

31.About 10 days before the hearing before this court, on 23 October 2015, D1’ solicitors wrote and indicated to Ps’ solicitors that D1 would take a “neutral stance” with regards to the March Summons.

32.However, notwithstanding this letter, Mr Fung SC, appearing for Ds, drew the Court’s attention to s 23B of the Ordinance and submitted that s 23B should not be triggered at all, in so far as both summonses were concerned, as there was no ambiguity in the language of the Will.

33.S 23B states:

“(1) This section applies to a will-

(a) in so far as any part of it is meaningless;

(b) in so far as the language used in any part of it is ambiguous on the face of it;

(c) in so far as evidence, other than evidence of the testator's intention, shows that the language used in any part of it is ambiguous in the light of surrounding circumstances.

(2) In so far as this section applies to a will extrinsic evidence, including evidence of the testator's intention, may be admitted to assist in its interpretation.”

34.Mr Fung had referred the court to Tan Cheng Gay and Others v Tan Choo Suan & Another, CACV 200/2013, unreported, 23.05.14 in which the Court of Appeal had set out the general principles for construing a will.  Such principles were not disturbed by the Court of Final Appeal.

35.As stated by the Court of Appeal, under section 23B(1) of the Wills Ordinance, Cap 30, if there is ambiguity, either arising from the language used in the will or the surrounding circumstances, extrinsic evidence, including evidence of the testator’s intention, may be admitted to assist in its interpretation.  However, if the words in a will fall to be construed are clear and unambiguous, no reference to extrinsic evidence in aid of construction is permissible under s 23B(1).

36.Mr Dawes referred to this court’s earlier decision in Re Estate of Mo Wan Yiu Philip, HCMP 2436/2001, unreported, 21.01.14 and submitted that the Will was ambiguous in the light of surrounding circumstances in that:

(i) The Will contained only 6 brief clauses.  The Disputed Assets were not mentioned in the Will and did not readily fit within any of the clauses;

(ii) Insofar as Clause 3 purported to bequeath Father’s sole proprietorship to the specified legatees, it was not immediately apparent from those words that they included the Disputed Assets;

(iii) This was particularly so given that, according to Ps, the Disputed Assets had been utilized by the Father for business purpose;

(iv) The ambiguity was self-evident as Clause 3 was being interpreted differently by D1 and Ps.

37.On the other hand, Mr Fung argued that there was nothing ambiguous in Clause 3 and that it would be a matter of evidence as to whether the Disputed Assets belonged to Tong Sek Kee.

38.Clause 3 referred to “一切權益” or in English, “all rights and benefits” of Tong Sek Kee, and not “properties” (財産), or “assets” (資産).

39.In my view, there are two issues:

(i) What do the words “一切權益” in Clause 3 mean?  Does Clause 3 include assets which belonged to Tong Sek Kee and/or assets held in the name of Father but “treated” by the Father as assets of Tong Sek Kee and/or assets utilized by the Father for the purpose of the business of Tong Sek Kee?

(ii) If so included, then whether any of the Disputed Assets in fact belonged to Tong Sek Kee, or had in fact been “treated” by the Father as assets of Tong Sek Kee and/or utilized by the Father for the business of Tong Sek Kee.

40.Having considered the above, I am unable to agree with Mr Fung that Clause 3 is as clear and unambiguous as he submitted.  In my view, there is ambiguity on the face of the language used, or alternatively, in so far as evidence shows, the language used in Clause 3 is ambiguous in the light of surrounding circumstances.

41.In the above circumstances, I am of the view the documents sought in the March Summons would be admissible under s 23B (2) of the Ordinance.  Further, the documents relate to the matter in question in this action namely the construction of the Will and the distribution of the Disputed Assets and are relevant and also necessary for disposing fairly of the matter or for saving costs.  I am prepared to grant an order in terms of the March Summons.

October Summons

42.P issued the October Summons to seek an order for discovery against D1 in respect of (i) all legal advice obtained by D1 as executrix on the construction of the Will and (ii) the instructions given by D1 to obtain such legal advice.

43.It was not disputed that the documents sought in the October Summons exist and that D1 has in her possession the said documents.

44.After D1 received a copy of CC’s 1st Letter, she had sought advice from counsel.  It would appear that the first advice was prepared on 7 January 2014 (“1st Counsel Advice”).  It would further appear that in the Beddoe Proceedings, D1 had obtained a further advice from another Counsel (“2nd Counsel Advice”).

45.D1 had opposed  the October Summons on 5 grounds[8]:

(i) The documents, ie the two Counsel Advices and instructions to counsel are not necessary either for disposing fairly of the cause or matter or for saving costs, and in particular, the evidential materiality of these documents is negligible if not zero;

(ii) D1 is entitled to rely on legal professional privilege to refuse production of the documents;

(iii) The other defendants are also entitled to rely on the same legal professional privilege;

(iv) Ps have no proprietary right in the documents sought;

(v) In any event, the court should exercise its discretion against production of the documents.

46.On the above issue (i) of necessity, as pointed out by Mr Dawes, the burden was on D1 to show that the October Summons would not be necessary for disposing fairly of the matter or for saving costs[9].

47.Mr Fung argued that the two Counsel Advices contained Counsel’s views on the primary documents and the primary documents had already been disclosed to the court, and thus Counsel Advices would not be extrinsic evidence admissible for the construction of the Will under s 23B of the Ordinance.

48.Mr Dawes, however, submitted that as the two Counsel Advices had been paid for by Father’s estate, it would be a trust document which Ps (as beneficiaries of the estate) had a right to inspect, and that Ps should be entitled to it under trusts law.

49.I accept Mr Dawes’ submission.  If the Counsel Advices had been obtained for the purpose of administration and for the benefit of Father’s estate and had already been paid for by Father’s estate, then it would relate to the matter in question in these proceedings and are relevant and also necessary for disposing fairly of the cause or matter or for saving costs.  Ps and their legal representatives should be entitled to consider such advice, and indeed if they were to accept the advice, then the cause or matter could be disposed of or at least issues could be narrowed down, and substantial costs could be saved. In any event, in my view, D1 has not been able to discharge the burden to show that the documents sought in October Summons are not relevant to the matters in issue in there proceedings, or that they are not necessary for disposing fairly of the matter or for saving costs.

50.The main issue in relation to the October Summons is whether D1 is entitled to rely on legal professional privilege to refuse production of the documents.

51.Mr Dawes had referred this court to a number of authorities and in particular a more recent case from the Supreme Court of Western Australia (Court of Appeal) Schreuder v Murray (No 2) [2009] WASCA 145.  He accepted that counsel advice would be privileged as against Ps if it were created at a time when there was no “joint interest” between the parties. 

52.Mr Fung had pointed out that it was said in Shreuder that :

“(e) The joint interest of the trustee will derive from his or her duties to the beneficiaries or in respect of the trust fund, and the joint interest of the beneficiary will derive from his or her vested interest in the trust fund, in combination with the nature and character of the relevant communications, information or documents.

(f) The beneficiary will not be entitled to a joint privilege with the trustee if the confidential communications, information or documents, relate to legal services obtained for the benefit of the trustee personally (for example, if the trustee seeks legal advice as to his or her personal rights of liabilities in connection with alleged breach of trust of threatened legal proceedings against him or her personally.”[10]

53.Mr Fung had also referred the Court to a number of foreign authorities including Clay v Karlson [1999] WASC 152, Wood v Wood [2014] WASC 387,  Gray v BNY Trust Company of Australia Ltd [2009] 76 NSWLR 586, and Chang v Lai Estate [2014] BCSC 128.  These authorities are not really inconsistent with what was said in Shreuder.

54.I do not think that there was any real dispute between the parties on the general principles.  As summarised by Mr Dawes, the question is this whether the 1st Counsel Advice and the 2nd Counsel Advice were rendered to D1 for her personal benefit.  As submitted by Mr Dawes, D1 must show that the purpose of the two Counsel Advices was not to guide her in the administration of Father’s estate, but to advise her how to defeat Ps’ possible claim in breach of trust.

55.Mr Dawes had prepared a chronology of letters between the parties’ receptive solicitors which led to the issue of the October Summons (“Chronology”).

56.As seen in the Chronology, CC wrote to WMHY on 4 March 2014, and had asked that if D1 had obtained counsel’s opinion on the disputed matters, namely distribution of the Disputed Assets, and Ps asked for a copy of the advice[11].  In reply on this issue, WMHY simply said counsel opinion was a privileged document and that D1 was not obliged to disclose the same.  CC then followed up with a letter on 3 April 2014 indicating that they assumed counsel opinion was obtained by D1 for the benefit of the estate and the costs incurred were paid out of the funds of the estate, and that as beneficiaries of the estate, Ps would be entitled to have access to the same[12].  There seemed to be no reply from WMHY.  As pointed out by Mr Dawes, D1 did not at that time refute Ps’ assumption that counsel’s opinion had been obtained by D1 for the benefit of the estate, or that the costs were paid out of funds of the estate.

57.After the commencement of the present action, CC had written on 23 January 2015 and repeated Ps’ request for a copy of the counsel’s opinion obtained in relation to the distribution of the assets of the estate[13].  In this letter, Ps had complained of D1’s refusal to provide Ps with a copy of the counsel’s opinion obtained for the benefit of the estate and also D1’s her inaction to apply to the court for directions or otherwise to resolve the issues relating to the interpretation of the Will despite her knowledge of Ps’ position at least since October 2013, and stating that it was D1’s attitude which had compelled Ps to initiate the present action.

58.In reply, on the issue of the counsel’s opinion, WMHY said that D1 would provide a copy of counsel’s opinion to the court in the Beddoe Proceedings, and that it was a privileged document and that D1 was not obliged to provide Ps with a copy of the same.  Ps were then referred to PD 20.3 on Beddoe Proceedings.

59.The Beddoe Proceedings later took place before Queeny Au-Yeung J, who handed down a decision on 20 August 2015 (“Beddoe Decision”).

60.Ds had by then appointed the present firm of solicitors Hobson & Ma (“H&M”) to represent her.  In a letter on 21 August 2015, the day after the Beddoe Decision, H&M had written to the clerk to Au-Yeung J, to clarify that, in response to enquiries made by the Learned Judge at the hearing in the Beddoe Proceedings, there were in fact two Counsel Advices, namely one dated 7 January 2014 which was incorporated in the 2nd Counsel Advice which was produced by D1 in the Beddoe Proceedings[14].

61.The Beddoe Proceedings were not open to public. The Beddoe Decision was not disclosed to this court.  However, although there was initial objection from D1 to the production of those letters referred to by Ps which had touched on the Beddoe Proceedings, during the hearing before this court, such objection was not maintained by Ds.

62.The letter of 21 August 2015 appeared to be written by H&M with a view to clarify the matter of D1’s costs with the Learned Judge, and whether D1 would be allowed costs from the estate on trustee basis, and it was in such context that H&M was trying to clarify what was informed to the court in relation counsel’s advice.

63.H&M’s letter prompted a letter written by CC to the clerk to the Learned Judge on 25 August 2015 to apply for a copy of counsel’s advice, and in response, the Learned Judge had asked D1 to give reasons why she refused to produce the same.

64.This then resulted in another letter of 18 September 2015 from H&M to the Learned Judge stating that as the Learned Judge did not order D1 to produce the 2nd Counsel Advice to Ps during the Beddoe Proceedings, she should not be directing D1 to produce the 1st Counsel Advice after the Decision, as the court in the Beddoe Proceedings was by then functus offficio.  The Learned Judge thereafter directed that the correspondence with the court should cease and if any one wanted to pursue the matter further, he/she should take out appropriate application.

65.CC had pointed out in their letter of 23 September 2015 to H&M that the production of counsel opinion was not a subject matter in the Beddoe Proceedings and re-iterated Ps request for copies of the counsel opinion. 

66.It was only then in a letter dated 6 October 2015 from H&M to CC that D1 said that it was in light of Ps’ allegation of breach of fiduciary duty and threat of legal proceedings in CC’s 1st Letter which resulted in D1 seeking advice from her legal advisors and counsel opinion was accordingly prepared. D1 further stated explained that notwithstanding what was said in the Beddoe Decision in relation to D1 being entitled to costs in the administration from the estate, D1 had not paid and had not intended to pay the fees for the preparation of counsel opinion from the assets under Clause 3 and in the circumstances Ps’ entitlement was not in any way diminished or affected by payment of legal fees for the preparation of counsel opinion.

67.This was followed by Ps issuing the October Summons.

68.It was not until D1’s 3rd Affirmation which was filed on 29 October 2015 that D1 had given further explanation.  According to her, WMHY had assisted her with administration of the estate, and to the best of her knowledge, Mr Lincoln Huang, the handling solicitor would usually and automatically debit all such payments against the residuary assets of the estate, ie assets under Clause 5.  She said she had sent emails to Mr Huang in February 2015 enquiring how the legal fees including counsel fees were paid and that on about 2 March 2015, she had gone to Mr Huang’s office to ask him the same question.  D1 further said that in reliance on Mr Huang’s opinion that any accounting adjustment on the estate account could be retrospective, she did not take any further action at that time, but because of the current dispute, she had been advised by her present legal advisors that it would be more appropriate for her to expressly instruct Mr Huang that she would personally pay for the costs of the counsel advice and all incidental expenses.

69.D1 had produced two debit notes from WMHY, both dated 31 December 2014, one in respect of the present action and one in respect of the Beddoe Proceedings.   Both bore the reference “Estate of the late Mr Tong Biu” and were addressed to D1 in her capacity of executrix to Father’s estate. 

70.Mr Fung had submitted that Ps would only be entitled to assets under Clause 3, and that D1 had not instructed solicitors for the estate to debit fees paid for the two counsel advices against funds under the estate account, and further to avoid any misunderstanding or unnecessary arguments, D1 would instruct solicitors for the estate to take all necessary accounting steps to ensure that funds under Clause 5 would not be used to pay for expenses of the counsel advice.  Thus, assets of the estate would not be depleted and that there was no basis for Ps to assert any proprietary right to the counsel advice.

71.It was clear from D1’s evidence that she had not personally paid for the costs of the two Counsel Advices, and that she had not yet reimbursed the estate and counsel’s fees were charged to the estate.

72.Even though D1 had given her explanations, what D1 said about instructing solicitors for the estate to take all necessary accounting steps to ensure that funds under Clause 5 would not be used to pay for expenses of the two Counsel Advices, and any proposed reimbursement by her personally, was clearly an afterthought.

73.However, whether the two Counsel Advices were paid by the estate or by D1 in her personal capacity, the main issue is really whether the 1st Counsel Advice and the 2nd Counsel Advice were respectively rendered at a time when there was no “joint interest” between the parties and/or whether the Counsel Advices were rendered to D1 for her personal benefit. As submitted by Mr Dawes, which I accept, in order to displace the “joint interest” it would not be enough to simply show that the parties are in an adversarial or hostile relationship.

74.Mr Dawes had argued that D1 must show that the purpose of the two Counsel Advices was not to guide her in the administration of the estate, but to advise her how to defeat Ps’ possible claim in breach of trust, and that the fact that the two Counsel Advices were obtained because of Ps’ threat to sue her did not mean that such advices were obtained for D1’s personal benefit.

75.The present action is an administration action only.  It is not a claim by Ps against D for breach of fiduciary duties and the debit note from WMHY in relation to the present action only showed that counsel advice was sought on the merits and future conduct of the present administration action.

76.The debit note from WMHY relating to the Beddoe Proceedings appeared to be for drafting and settling papers only for the Beddoe Proceedings.

77.In any event, the threat in CC’s 1st Letter of legal action for breach of fiduciary duties was only based on D1’s failure, if any, to distribute the Disputed Assets under Clause 3.  So far as I can see, Ps had not made any other allegations of breach of fiduciary duties on D1’s part.  Thus, essentially the main dispute between Ps and D1 was over whether the Disputed Assets should be distributed under Clause 3 or Clause 5.  In my view, there would be “joint interest” between Ps and D1 on how the Disputed Assets should be distributed and the present evidence indicated that the two Counsel’s Advices were sought for the benefit of the estate, rather than for D1’s personal benefit. 

78.To make it clear, I am of the view the present evidence did not really show clearly that the 1st Counsel Advice and the 2nd Counsel Advice were obtained for D1’s personal benefit.  I am therefore come to the view that D1 is not entitled to rely on legal professional privilege to oppose production.

79.As for whether the other Ds can rely on the same legal professional privilege, there were no further submissions put forward by Mr Fung on this matter during the hearing.  The October Summons was taken out against D1.  As I have accepted the evidence indicated the two Counsel’s Advices were rendered to D1 as executrix, I am unable to see how the other Ds could claim legal professional privilege.

80.As pointed out by Mr Dawes, D1 had never denied that the other beneficiaries to the estate, namely the 2nd to the 7th defendants had already seen the two Counsel Advices, and that it would only be fair for Ps to be allowed to see the same.

81.Having considered all the circumstances, I see no sufficient reason at this stage as to why the two Counsel Advices should be withheld from Ps.

Conclusion     

82.In light of what was said above, I make an order in terms of paragraphs 1 and 2 March Summons and also paragraphs 1 and 2 of the October 2015 Summons.

Costs

83.Ps have sought costs against D1 personally for both summonses.

84.So far as the March Summons was concerned, although D1 only indicated that she took a neutral stance on 23 October 2015, D1 made it clear as early as end of March 2015 that she would not object to the March Summons if admissibility of the documents under 23B of the Ordinance could be established.

85.I am not satisfied that D1 had acted unreasonably or for her own benefit, in relation to the March Summons under O 62 r 6(2) of RHC.  Even if she had consented from the outset, the court would still retain a discretion to disallow any unnecessary or irrelevant discovery.  I therefore order costs of an occasioned by the March Summon be paid by D1 to Ps out of the estate.

86.As for the October Summons, it was only on 6 October 2015 that D1 had made it clear that it was her case that counsel’s advice was obtained because of Ps’ allegation of breach of fiduciary duties and threat of legal action.  As submitted by Mr Dawes, there was a shift of goal posts on D1’s part.  D1’s 3rd Affirmation was filed or served after Ps’ 1st skeleton submissions had been prepared/lodged.  In my view, D1 has not behaved reasonably prior to 6 October 2015 by making clear her case.  I order D1 to pay personally Ps’ costs, up to 6 October 2015, and thereafter, such costs to be paid out of the estate, including costs of and occasioned by the October Summons.

87.These are costs order nisi which may be made final after 21 days.

Setting Down

88.As for setting down of the originating summons, I will fix a direction hearing on 29 January 2016 at 9:30 am in relation to setting the matter down for trial.

89.Lastly, I would like to thank all Counsel for their very helpful submissions.

(Bebe Pui Ying Chu)
Judge of the Court of First Instance
High Court

Mr Victor Dawes SC, instructed by Clifford Chance, for the 1st and 2nd plaintiffs

Mr Patrick Fung SC and Mr Leon Ho, instructed by Hobson & Ma, for the 1st to 7th defendants

The 8th defendant appeared in person


[1] See Business Registration Record, C1:13-14

[2] C1:164-165

[3] C1:106-107

[4] See para 39-40,

[5] At paras 49-54

[6] At para 23

[7] C3:700

[8] See para 33, pg 16, Ds’ skeleton arguments.

[9] Hong Kong Civil Procedure 2016, 24/8/2

[10] At para 94 (e) and (f), pg 194

[11] C4:730-731

[12] C4:744

[13] C4:737

[14] C4:741