Darach E. Haughey and Another v. Lam Mui and Others

HCMP 1593/2014

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO1593 OF 2014

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Before: Hon Au-Yeung J in Chambers

Date of Hearing: 24 January 2017

Date of Judgment: 8 June 2017

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J U D G M E N T

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INTRODUCTION

1.The plaintiffs are Administrators of the Estate of Chiu Keung (“the Deceased”) appointed by the court.  They seek directions on distribution of the Estate pursuant to Order 85 of the Rules of the High Court.

2.The Deceased died 62 years ago on 17 April 1955, leaving behind an enormous estate (“the Estate”).  He was survived by 17 family members, ie the wife, 3 concubines, 5 sons and 8 daughters.  The names of the family members and their status as parties are set out in Table 1 annexed to this judgment.  I shall refer to each fong (房) by the respective names of the concubines.

3.The Administrators propose (“the Proposal”) to distribute the HK$39 million in their hands in the following manner:

(a) The cash formerly distributed to the 3^rd son (D2) be regarded as interim distribution and be added back to the pool of assets of the Estate;

(b) The Administrators’ costs and expenses be deducted from the Estate.

(c) The net Estate be divided into 17 shares with 2 shares for each of the 3^rd to 6^th sons, 1 share for the 2^nd son and 1 share for each of the 1^st to 8^th daughters in accordance with the Will.

(d) The 2 shares of a missing beneficiary (the 4^th son) be distributed pro rata to the other beneficiaries;

4.All the beneficiaries who wished to be heard have been joined as defendants. Some have just filed affirmations or made representation.

5.D1, D4, D5 and D6 (the Lam Mui fong)are represented.  So is the 5^th son (D3).  They have no objection to the Proposal.

6.The 3^rd son (D2)’s Estate is represented by his daughter (“Hiu Hung”).  She opposes the Proposal.  She claims that the 3^rd son (D2) should be entitled to the whole Estate now remaining because there had been prior distribution of the Estate to other beneficiaries to the exclusion of the 3^rd son (D2) whilst he was residing in Mainland China.  She also claims that married daughters are not entitled to share in the proceeds of sale of real properties.  

7.The Administrators have given notice under section 29 of the Trustee Ordinance, Cap 29 on 15 November 2013 to all persons who might wish to claim against the Estate.  Despite that, the Administrators have not heard from the 4^th son at all.

8.The 8^th daughter appeared in person and appeared not to oppose the Proposal.

9.For convenience, when I refer to “the defendants” below, I shall exclude Hiu Hung.

LEGAL PRINCIPLES

10.The court has discretion under Order 85 of the Rules of the High Court to give directions on the administration of the estate of a deceased person. The court will have regard to the best interests of the estate instead of the rights of adversarial parties: Marley v Mutual Security Merchant Bank [1991] 3 All ER 198, at 201g-j:

“… In exercising its jurisdiction to give directions on a trustee’s application the court is essentially engaged solely in determining what ought to be done in the best interests of the trust Estate and not in determining the rights of adversarial parties… Where beneficiaries oppose a proposal of a trustee with a host of objections of more or less weight, the court is, of course, inevitably concerned to see whether these objections are or are not well founded, but that must not be permitted to obscure the real questions at issue which are what directions ought to be given in the interests of the beneficiaries and whether the court has before it all the material appropriate to enable it to give those directions.”

BACKGROUND

11.The Deceased was a businessman in his lifetime.  He operated drug stores in Cholon and Hanoi.  He held properties in North and South Vietnam, Canton, Hong Kong and Paris before his death. 

12.The Deceased made his last will on 28 August 1953 (“the Will”). At that time, he had a wife, 3 concubines, 4 sons and 8 daughters. 

13.On 6 November 1954, the last son (the 6^th son) was born.

14.Five months later, on 17 April 1955, the Deceased died in Hong Kong, survived by a wife, 3 concubines, 5 sons and 8 daughters.  The 1^st son had pre-deceased him in the war.

15.The Estate of the Deceased included a property at House No. 4, Derby Road, Hong Kong (“the Derby Property”).

16.On 9 October 1956, a Deed of Partition (Amicable) (“the 1956 Deed”) was executed in Saigon, Vietnam, among the following persons:

(a) The 2nd son acting for himself and on behalf of the Lee Ng (the wife and his mother) pursuant to a power of attorney dated 8 August 1956;

(b) Chan Mui acting for herself and purportedly on behalf of the 3^rd son (D2);

(c) The 5^th son (D3);

(d) Leung Yuet Chun acting for herself and as guardian and legal trustee of her 5 children, the 4^th son, the 1^st, 5^th, 7^th and 8^th daughters;

(e) Lam Mui acting for herself and as guardian and legal trustee of her children, ie the 2^nd, 3^rd, 4^th, 6^th daughters and 6^th son.

17.Under the 1956 Deed, amongst others:

(a) The parties agreed to a partition of the Deceased’s properties, both real and personal in Hong Kong, South Vietnam and France, but not Canton, Caoyue in China and Hanoi in North Vietnam.

(b) The wife (not entitled to real estate under the Will) was “assigned” sole ownership of the Derby Property (clause 2);

(c) The 2^nd son (an unfavoured son who should only receive 1share out of the real properties) received 1 million piastres from the Estate (clause 3); receipt and discharge were acknowledged in the 1956 Deed.

(d) The other 15 beneficiaries were jointly assigned all other real and personal property of the Estate that were situated in Hong Kong, South Vietnam and France, including but not limited to:

(i) Cash and ready money, bank balances in Hong Kong;

(ii) The real properties situated in South Vietnam that are the subjects of the title deeds No. 219 of Cholon Pha-Lam;

(iii) The business interest in Societe Hop Tao whose head office was in Cholon No.63 and 65 Boulevard Tong Doc Phuong.

(iv) Bank balances in banks in Saigon and Cholon;

(v) Rice plantations in Nga Bay;

(vi) Motor vehicles;

(vii) The property in Paris (“the Paris Apartment”);

(viii) The accounts deposited with the banks in Paris.

The beneficiaries would be free to maintain joint possession the properties or divide the same amongst themselves.

(e) The wife, the son and the 15 beneficiaries accepted the terms in full and final satisfaction of their respective rights against the Estate. The 15 beneficiaries renounced all claims against the wife and the 2^nd son in respect of the Estate, and vice versa.

18.Six months later, on 4 April 1957, a Chinese Agreement (“the 1957 Agreement”) was executed in Saigon, Vietnam, among the same persons.  It was agreed, amongst others, that:

(a) The drugstore business of “Dai Guang Duoc Phong” at 27 Boulevard Tong Doc Phuong, Cholon, South Vietnam, should be incorporated with shares allotted to the parties to the 1957 Agreement in the shares provided for in the Will (clause 1);

(b) Leung Yuet Chun fong and Lam Mui fong would receive the Deceased’s 340 shares of and in the business of “Societe Hop Tac” at 63-65 Boulevard Tong Doc Phuong; the 2 fongs were at liberty to distribute them in accordance with the shares stated in the Will; Chan Mui’s fong gave up rights in relation to this asset (clause 2);

(c) Other than the 27 Boulevard Tong Doc Phuong (whilst the drug store was in operation), all other remaining assets of the Deceased (whether real or personal in South Vietnam, Hong Kong and France) should be distributed in rem or sold and the proceeds distributed to the parties to the 1957 Agreement (clause 5);

(d) The wife and 2^nd son gave up all rights against the Estate and acknowledged having received the Derby Property and 1 million piastres respectively.

(e) The shares of the Dai Guang Duoc Phong were divided into 19 shares worth 3,800,000 piastres; each concubine, daughter and 2^nd son would have one share; each other son would have 2 shares.

The 1957 Agreement was signed by the 3 concubines and the 5^th son (D3).

19.The 1956 Deed and 1957 Agreement (collectively “the 2 Documents”) were formal documents signed by the 2^nd son, 5^th son (D3) and the 3 concubines.  Adults who were not present had given powers of attorney (eg the wife and the 1^st daughter).  However, the 3^rd son (D2) was not a party to the Documents and he had not given a power of attorney, although he had attained majority (born in 1930).  He was then residing in Mainland China, under the Communist government.  His mother Chan Mui purported to have stated that she was confident that she could represent him and would be able to obtain his consent.  He claimed not having been given prior notice or opportunity to attend the meeting before the 2 Documents were executed and had received nothing from the Estate.

20.On 7 September 1966, letters of administration with the Will annexed was granted to the wife and the 4^th son as administrators.

21.About 16 years after the grant, a dispute arose between the co-administrators.  The 4^th son sought an order against the wife for an account of incomes and profits of the Estate, in particular as regards the Derby Property; and a declaration that the 1956 Deed was null and void.

22.On 27 March 1985, in HCMP 1845/1982, Rhind J declared the 1956 Deed null and void and ordered that the Derby Property be sold once the Wife ceased to live therein or died.  The proceeds of sale were to be distributed in accordance with the terms of the Will.  Until sale of the Derby Property, the tenancies and incomes should be administered by an international trustee company.  The wife died in the following year. 

23.In 1995, the 4^th son as sole surviving administrator commenced HCA 6123/1995 against the 3^rd son (D2) alleging wrongful interference with the Estate (including collection of rent), and seeking orders for delivery up of the Deceased’s properties in Canton, government bonds, share certificates, rents books, chops and accounting records. 

24.The 3^rd son (D2) denied the claim.  He counterclaimed for an order for removal of the 4^th son as administrator, an account and inquiry of assets of the Estate that have come into the hands of the 4^th son, delivery up of assets and an order for administration of the Estate.

25.On 24 September 2001, in HCA 6123/1995, Chu J (as she then was) again ordered that the Derby Property be sold.  Without prejudice to the 3rd son (D2)’s dispute as to entitlement of the beneficiaries under the Will, Chu J ordered that the proceeds be divided into 17 shares as set out in the Will.

26.On 16 May 2003 (18 years after Rhind J’s order), the Derby Property was finally sold for HK$45 million.

27.On Hiu Hung’s application, there had been 2 orders for interim payment to the 3^rd son (D2) a total of HK$4,470,600 (“the Sum”) out of the proceeds of sale.

28.On 27 October 2003, HCA 6123/1995 was tried. By then, the 4^th son had absconded. Yam J appointed the Administrators to replace the 4^th son.  The letters of administration issued in 1966 were revoked.  The 4^th son was ordered to give an account of the Estate on oath.  Yam J also ordered that Hiu Hung’s costs be paid out of the Estate on indemnity basis.

29.The 4^th son had never given any account.  The Administrators had to obtain documents in relation to the Estate from his solicitors.

30.On 6 January 2006, new letters of administration with the Will annexed were granted to the Administrators.

IDENTIFIED ASSETS OF THE ESTATE

31.There are cash of about HK$39 million, the Paris Apartment, and properties in Mainland China (“the PRC properties”), North Vietnam and South Vietnam.  Hiu Hung alleges that there are other properties that may form part of the Estate. There might be a bank account in Paris but the Administrators have no information as to the particulars of the bank account. The 5^th son (D3) has denied existence of this bank account.

32.On 30 June 2014, the Administrators made the present application seeking the reliefs set out in paragraph 3 above.

ISSUES

33.The issues in this case are summarized as follows:

A． On scope of the Estate:

A1. Whether the Sum should be put back to the pool of the Estate;

A2. Whether the Paris Apartment formed part of the Estate;

A3. How the properties in Vietnam are to be dealt with;

A4. How the properties in Mainland China are to be dealt with;

A5. Whether other properties should be treated as part of the Estate;

B． Whether married daughters are entitled to a share in the real properties;

C. Whether there had been prior distribution of the Estate to the exclusion of the 3^rd son (D2);

D. How the assets in the hands of the Administrators should be distributed.

A.  Scope of the Estate

A1.  Whether the Sum should be put back to the pool of the Estate

34.By orders dated 25 September 2003 and 19 January 2009 respectively, Yam J ordered, in HCA 6123/1995, that there be payment to the 3^rd son (D2) the sum of HK$3,000,000 and HK$1,470,600 respectively out of the sale proceeds of the Derby Property.  The Administrators also had to pay Hiu Hung HK$100,000 as costs in respect of the 2^nd payment.  See letter of Sit, Fung, Kwong & Shum dated 20 January 2009. 

35.There is dispute over the purpose of the Sum.  The Administrators say that it was interim distribution of the Estate to the 3^rd son (D2).  Hiu Hung says that it was for her costs in HCA 6123/1995.

36.The Administrators had produced court orders but not the reasons for decision or transcript of proceedings. From the evidence before me, it appears that Yam J’s orders were made pursuant to a summons in HCA 6123/1995 taken out by Hiu Hung for interim payment of the 3^rd son (D2)’s share of the Estate after the Derby Property was sold.  At that time, she claimed that the 3^rd son (D2) was entitled to 2/21 shares in the business and 2/17 over the real properties. 

37.On the other hand, there was a letter from JSM (then acting for Hiu Hung) dated 23 February 2006 and 20 December 2006 chasing for interim payment of costs in HCA 6123/1995 under §14 of the order dated 27 October 2003 for “about HK$3.2 million” and another HK$150,000 whilst Hiu Hung engaged BC Chow & Co (later taken over by Or, Ng & Chan).

38.The Administrators’ Report stated as follows:

“Payments under Orders of Yam, J dated 27 October 2003 and 19 January 2009:

- Settlement of bill of costs to Ms Chiu Hiu Hung 2,850,000

- Payment re counterclaim of Ms Chiu 1,570,600

-   ... ”

39.Taking such evidence together, I find that HK$1,470,600 was interim distribution to the 3^rd son (D2) which should be put back to the pool of the Estate.  The rest of the payments were all for Hiu Hung’s costs.  It seems that HK$3,000,000 had not been paid to the 3^rd son (D2); but if it had been, it should form part of the Estate.

A2.  Whether the Paris Apartment formed part of the Estate

40.There was no dispute that the Deceased had purchased the Paris Apartment in the joint names of himself and a person in 1953.

41.The 5^th son (D3) claimed that he was the other joint owner.  However, the name of that joint owner was not spelt in the same way as that of the 5^th son (D3)’s.  Moreover, the ownership record (obtained by Deloitte France) showed that the joint owner was born on 10 September 1934 and was aged 19 by the time of the acquisition of the Paris Apartment. However, the 5^th son (D3) asserted that he was born on 10 October 1939 and was aged 14 at the time of the acquisition.  The 5^th son (D3) could not explain the discrepancies and why he could, as a minor, be a joint owner of a property.  Hiu Hung disputed that he was the joint owner.

42.The Administrators were advised that the ground floor and cellar of the Paris Apartment were bought on terms that the title passed to the 5^th son (D3) upon the death of the Deceased in 1955 under French law. 

43.The 5^th son (D3) claimed that the Deceased had told him on more than one occasion after the purchase that the Paris Apartment belonged to him, the 5^th son (D3).  The 5^th son (D3) and siblings studying in France had lived there.  Hiu Hung disputed these.

44.The 1^st daughter admitted receiving rent for the Paris Apartment but it was on behalf of the 5^th son (D3) (see Cheng, Yeung & Co’s letter dated 6 June 2012).  However, the 5^th son (D3) disputed ever receiving rental income. 

45.The 5^th son (D3) said that Chan Mui told him that the 1^st daughter, had “taken” the Paris Apartment and told him not to run into dispute with her. He claimed to have engaged an agent in France to investigate the current status of the Paris Apartment and was told that he had been dispossessed for being “missing” for 30 years.  He had no knowledge as to the present legal status of the Paris Apartment. 

46.According to the Administrators’ land search in 2011, the Paris Apartment was no longer under the name of the 5^th son (D3) or the 1^st daughter.  The Administrators had no idea how the Paris Apartment ended up with the present owner. 

47.The Administrators raised the issue as to whether or not it is just to exclude the 5^th son (D3) from further distribution of the Estate or to make the necessary adjustments to the shares he is entitled to under the Will. The court is also invited to draw adverse inference against the 5^th son (D3) for failing to adduce evidence in the preceding paragraph.

48.The Paris Apartment was referred to in the 1956 Deed but not the Will.  Hiu Hung submits that if the Paris Apartment had belonged to the 5^th son (D3), that property would not have been included in the 1956 Deed. 

49.There is dispute of facts.  Neither the Administrators nor the 5^th son (D3) have produced French legal opinions to assist the court.

50.There was no direct evidence as to the true intention of the Deceased at the time of the acquisition of the Paris Apartment. However, from the Will, it could be seen that the Deceased was a person who encouraged his children to go for higher education; a child who would take up higher education after the age of 20 could get monthly allowance double that of the minors.

51.The Deceased considered that the 5^th son (D3) would have attained majority in 1955, so the year of 1934 could well be the year of birth of the 5^th son (D3).  The Deceased owned various properties. The Paris Apartment appeared to be the only one in joint names with a child. Since the 5^th son (D3) was studying in Paris at the time of the purchase, it may be that the Deceased really wanted to make a gift (upon his death) of the Paris Apartment to the 5^th son (D3); and I so find.

52.In any case, it is impossible now to place a value on the Paris Apartment or any rental collected thereunder.  Hiu Hung agreed that at this stage there was not much to be gained from further investigating the Paris Apartment.

53.Taking all circumstances into account, I am not satisfied that the Paris Apartment should be regarded as part of the Estate or that further investigation is in the best interests of the Estate.  I will come back to exclusion of the 5^th son (D3)’s interests under Section C below.

A3.  How properties in Vietnam are to be dealt with

54.According to the 1956 Deed and 1957 Agreement, there should be 7 properties in Vietnam.  Based on property searches carried out by the Administrators, it would appear that in relation to 3 of the properties, there would be difficulties for claims to be made if the purported owner was a foreigner. It would also be difficult to make a claim to the 4^th property if the owner was a foreigner and the claim had not been filed before 1996.  The 5^th property could not be located.  The 6^th property was managed by Cinema Company but the operation had stopped since October 2003. No information could be obtained in relation to the 7^th property.

55.The Administrators have been advised by a Vietnamese lawyer that in order to assess whether recovery of the properties was possible, documents evidencing ownership of the Deceased, such as title deeds, would be required. However, as the whereabouts of the 4^th son was unknown, no information or title deeds could be obtained from him. The Administrators’ attempt to obtain further information from other beneficiaries of the Estate met with no success.

56.There is no legal opinion in support of §§54-55.

57.According to the 5^th son (D3) and 8^th daughter, the properties in Vietnam had not been distributed to the beneficiaries but were confiscated by the governments.  That was why the properties are still registered in the name of the Deceased.

58.In my view, there should be a difference in treatment between the properties in South Vietnam and North Vietnam.  The former should be governed by the 2 Documents and the latter by the Will.  Anyway, after lapse of 62 years, I consider that if any beneficiary still wants the Administrators to pursue investigation, he or she should inform the Administrators within 2 calendar months of the handing down of this judgment, provide further information regarding any or all of the Vietnamese properties and fund the investigation (or seek funding directions from the court).  In the absence of such steps of the beneficiaries, the Administrators shall cease investigation of the properties in North Vietnam and South Vietnam, unless otherwise directed.

A4.  How the PRC properties should be dealt with

59.The 5 PRC properties had been demolished or redeveloped by third parties.  PRC lawyers have, on behalf of the Estate, successfully taken possession of several domestic units and a shop in exchange for one of the 5 landed properties.  The remaining 4 of the 5 landed properties are, after redevelopment, now being controlled and managed by the Chinese government. The PRC lawyers would only be able to advise on the merits on claims by the beneficiaries in those 4 properties and/or related compensation after further transaction history information could be obtained. That was the position in 2012.

60.According to the Administrators, they were unable to have the apartments and shops registered in their names because PRC did not recognize the legal status of administrators appointed by the Hong Kong court.  The PRC lawyers advised that all the beneficiaries of an Estate should join together to carry out administration of and succession to an Estate in PRC.  They should make a collective application to the PRC government.  At present, it is beyond the powers of the Administrators to administer the properties in Mainland China. Again, there is no legal opinion in support.

61.The properties in Mainland China are not covered by the 2 Documents. I direct thatany beneficiary who is still interested in pursuing the administration of these properties should inform the Administrator within 2 calendar months of the handing down of this judgment. Any beneficiary who fails to do so should be regarded as giving up his rights and claims to those properties.  The Administrators shall assist the beneficiaries who are interested to make a collective application to the PRC government to get back the properties in Mainland China as soon as possible.

A5.   Other properties to be taken into account

62.In the course of her submission, Hiu Hung suggests that a property in Hillwood Road and Happy Valley (presumably those bought by Lam Mui and Chan Mui in Blue Pool Road) should form part of the Estate.  She asserts that the administrators have failed to carry out sufficient investigation into assets falling within the Estate.

63.I am unable to accept these new assertions by Hiu Hung.  The address of the Hillwood Road property was not even identified in any of her affirmations. Even on her own case, the Blue Pool Road properties were purchased after the death of the Deceased and could well be part of the previous distribution to the relevant fong.  These properties should not form part of the Estate. Subject to what I had said about the PRC properties, the North Vietnam and South Vietnam properties, there is nothing to warrant further enquiry by the court.

B.  Whether married daughters are entitled to a share in the real properties

64.The material parts of the Will are as follows:

“When all my sons and daughters have come of age and want to divide the Estate, only the real Estate under my name shall be allotted (to them) according to the ratio of two shares for each son and one share for each daughter and for Sin Man. (Fifteen shares in all.)

My properties may be divided, but the shops doing business shall never be divided. My wives and sons and daughters shall not open and establish two “Chiu Tai Kwong” drugstores in the same city, so as not to ruin (their) own business. Warning may be taken from the previous examples of Leung Choi Shun and Leung Kwok Ying. [I] hope my sons and daughters will do good.

‘Chiu Tai Kwong’ drugstore(s) shall permanently remain a company organization and shall not be divided. The allocation of shares shall be made in the same (proportion) as the allotment of the division of properties. (The shares) shall not be transferable to outsiders.

As soon as (any one of) my daughters is married, the share(s) belonging to her name shall be transferred to, and regarded as (part of), the Common Share…….

If after the will is made I should have some more children, (they) should also be entitled to two shares (of the Estate) in the case of males and to one share in the case of females.  All (their) other rights shall be the same as those enjoyed by their brothers and sisters.” 

(all italics added)

65.I agree with the Administrators that the Deceased plainly intended that his real Estate be divided after his children had come of age and by allotting to his sons (except the 2^nd son) 2 shares each, and his daughters and the 2^nd son one share each.  He was survived by 5 sons and 8 daughters, hence there should be 17 shares altogether.

66.Hiu Hung contends that once the daughters became married, their shares should be regarded as the common share.  I am unable to agree. Reading the Chinese version in context, the phrase “share(s) belonging to her name” clearly referred to the shares (股) in the business entity operating the drugstores, not the shares (分) in the real Estate. 

67.I find that married daughters are entitled to a share in the real properties under the Will.

C.  Whether there had been prior distribution of the Estate to the exclusion of the 3^rd son (D2)

68.Hiu Hung contends that since there had been prior distribution to the exclusion of her father, the remaining Estate in hands of the Administrators should be paid out to her father’s Estate solely. The defendants denied receipt of any part of the estate directly or indirectly.  They (except the 5^th son (D3)) denied knowledge of the 2 Documents.

69.This is a factual dispute.  Resolution of it depended on the validity of the 2 Documents and what happened after their execution.

70.The 2 Documents were signed by adults. It is not clear what the age of majority was in Vietnam.  For Hong Kong, it would have been 21 then.  If the 5^th son (D3) was born in 1939, he was aged 17 at the time the 1956 Deed was executed. The Will stated that by 1 January 1955, Sin Kuen (5^th son (D3)) would attain majority and that must have been the Deceased’s intention.  The 5^th son (D3) could vaguely remember being asked by his mother Chan Mui to sign a document in French.  She told him that it was in relation to his brother (the 2^nd son). The 5^th son (D3) signed without reading through the contents. He disclaimed the Chinese characters 趙善權 as his signature but he did not say who signed on his behalf.  In all probabilities, the 2 Documents were validly signed by the 5^th son (D3).

71.There was prior allocation of specific assets to the wife and the 2^nd son for which they acknowledged receipt in the 2 Documents. 

72.The 2^nd son received 1 million piastres (and Chiu So told the court at the hearing on 28 April 2016 before To J that it was after the death of the Deceased).  The Administrators could no longer ascertain the value of this amount.  However, a glimpse of the enormity of this amount could be made in the 2 Documents themselves:

(a) The Will provided that each of the wives, sons and daughters shall be paid 1,000 piastres per month in cash for board, lodgings, clothing, school fees and miscellaneous expenses.  One million piastres could support one person for over 83 years.

(b) The Will stated that, “if the yearly business profits exceeded 100,000 piastres, 30% should be donated to the Estate or charity organizations”;

(c) The 1957 Agreement stated that the shares that the Deceased had in the drugstore were worth 3,800,000 piastres.  The 1 million piastres was about 26% of the value of those shares.

73.Parties to the 2 Documents accepted the assets allocated to them, in return giving up the others.  The arrangements were in full and final settlement of rights and claims to the Estate in Hong Kong, France and South Vietnam.

74.The parties to the 1956 Deed treated it seriously enough as to have it signed by the Vice President of the Court of First Instance of Saigon.

75.The 1956 Deed had stood for about 30 years before it was nullified.  The nullity only extended to the wife’s interest in the Derby Property.  All other appropriations under the 1956 Deed were not disturbed.  The 2^nd son did not return the 1 million piastres.  Restitution is not possible now since it is not possible to convert into current value.  The 2^nd son is not claiming anything now.  The 1957 Agreement was never declared void.  None of the defendants or those who have filed affirmations disputed their mother’s authority to represent them in 1956/57.

76.Given such circumstances, the burden is on the defendants to show that the 2 Documents were of no effect and explain why they had not received distribution as alleged.

77.The defendants’ evidence can be summarized as follows:

(a) According to the 3^rd and 5^th daughters, before the Deceased’s death, there were lots of houses and shops in Vietnam in the name of Chan Mui.  The Deceased had always told the 5^th daughter that those were temporarily under the name of Chan Mui and were not given to her entirely.  Chan Mui gave full power to the nephew of the Deceased (Chiu Ming) to handle.

(b) According to the 3^rd daughter Chiu Shuet Nung, after the death of the Deceased, the 2^nd son went to Vietnam and threatened the 3 wives (probably referring to the 3 concubines) to distribute the estate. Under security concerns, Chiu Ming (then executor) caused the 2 Documents to be signed.  The 2^nd son took 1 million piastres and Derby Property and left Vietnam.  Thereafter, each fong maintained the status quo, lived their own lives and did not really divide up the assets under the name of the Deceased.  The fact that Deloitte found that properties in Vietnam remained in the name of the Deceased was strong proof that there had been no distribution.

(c) According to the 3^rd daughter, if there had been distribution, then the Chan Mui fong already had over 50 shops and residential properties, the 5^th son had the Paris Apartment, Leung Yuet Chun fong and Lam Mui fong only had a cinema. According to the 8^th daughter, Chan Mui had taken all the assets. 

(d) Lam Mui recalled that Chiu Sin Ming (son of the Deceased’s brother) told her that the 2^nd son had forced Leung Yuet Chun to open the safe at the business premises and took an unknown amount of cash away. 

(e) The properties in Vietnam and Canton had remained in the name of the Deceased, indicating that there was no prior distribution. 

(f) According to the 5^th daughter, the drugstores in North Vietnam and South Vietnam had been confiscated.

(g) The defendants (and those siblings who had filed affirmations) struggled on their own without support from the Chiu family.

(h) According to the 8^th daughter, the Deceased had bought a property for the 3^rd son (D2) at Ferry Street.

(i) According to the 8^th daughter,“自南越解放後，南越的產業已被政府沒收，而解放後的工人當家作主，要求以年資計算補償，每一年補償三個月，工人工作年資由40年至60年不等，無奈我母親衹好用私人金錢作補償給他（她）們，致使我們陷入困境，一無所有。”

78.When assessing such evidence, I had regard to the reality  that the widows had to raise their young families.  The children continued to receive education; some of them had lived in different countries (eg the 5^th son (D3)).  Where did the 3 fongs obtain financial support if not from the income of the businesses and other assets not distributed to the wife and the 2^nd son?

79.The 5^th son (D3) and 3^rd daughter’s evidence in fact contradicted the defendants’ version.  The 5^th son (D3) confirmed that following the death of the Deceased, his livelihood was supported by monthly allowance derived from the profit of the family drugstore, pursuant to the terms of the Will. The 3^rd daughter confirmed that it was Chan Mui who supported the 1^st daughter who was studying in Paris, after the death of the Deceased. Such support would probably be appropriation, at least under the 1957 Agreement.

80.Some of the workers must have been hired after the death of the Deceased to be able to accrue 40-60 years of service.   The business must have run on.

81.The defendants have not been specific about the dates of confiscation of properties by the North and South Vietnamese governments but the irresistible inference was that the confiscation had come after the execution of the 2 Documents.  Otherwise, the family members would not have bothered to agree upon the terms therein.  

82.On the other hand, Hiu Hung has put forth some evidence as to distribution:

(a) On a number of locations when the 1^st daughter visited the 3^rd son (D2) in Canton, the 1^st daughter had expressly acknowledged to him that the Deceased’s wives and other children including herself had entered into the 1956 Deed without his knowledge and had further divided up the Estate.

(b) The 1^st daughter had also admitted to the 3^rd son (D2) whilst the latter had moved to Hong Kong that the Estate had been divided amongst the Deceased’s wives and other children to the exclusion of the 3^rd son (D2); and that the 5^th son (D3)had received his share.

(c) Lam Mui and her daughter Chiu Hing Sheung also acknowledged to the 3^rd son (D2) and Hiu Hung that the Estate had been divided up among the Deceased’s wives and other children and that Lam Mui fong had already received their respective shares.

(d) JSM pointed out to the Administrators by a letter dated 20 December 2006 that the 4^th son had “admitted, in the course of [the HCA 6123/1995] proceedings, that certain division of the properties of the Estate, including properties in Vietnam, were effected.” At that time HCA 6123/1995 was still extant.  The Administrators could have verified JSM’s assertion and yet had not denied that there was such admission from the 4^th son.

(e) The 5^th son (D3) who had never worked (according to Hiu Hung’s father) was financially able to rent accommodation for the 3^rd son (D2)’s family when the 3^rd son (D2) first came to Hong Kong. 

(f) Chan Mui acquired No.38 Blue Pool Road (as admitted by the 5^th son (D3) and verified by land search) in 1957 in cash. That was soon after execution of the 2 Documents.

(g) Lam Mui did not work but she purchased No.40 Blue Pool Road (next to Chan Mui’s property) also in 1957 in cash.  It was more than just a coincidence with the preceding sub-paragraph.  It was later assigned to the 4^th daughter. These are verified by land search.

(h) In respect of the Lam Mui fong, the 3^rd daughter had leisurely life: residing in Vietnam in 1956-57; in Taiwan in 1957-59; 1960-1975 in Hong Kong and had been to Vietnam many times in the interim.  The 4^th daughter set up a beauty company with the support of her mother; then took up the property in Blue Pool Road.  Chiu Sin Ka studied in Canada, and returned to Hong Kong every summer to visit his family members.  I place little weight on this for lack of documentary proof, except in relation to the Blue Pool Road property.

(i) When the 5^th son (D3) went to Vietnam in 1973-74, he resided at No. 27, Boulevard Tong Doc Phuong, Cholon, Vietnam, indicating that the property had not been nationalized or confiscated then.

(j) The 5^th son (D3) had not worked, lived in Hong Kong, Paris, Taiwan, Japan (on 5^th son (D3)’s own evidence) and went to Switzerland and US.  His mother sold No. 38 Blue Pool Road on 22 January 1970 and a property was purchased by the 5^th son (D3) at Victoria Park Mansion in Causeway Bay 2 days later. However, I place little weight on such evidence as there is no independent proof of the source of money except in relation to the date of sale of the Blue Pool Road property.

83.Hiu Hung claims that her father had never received his share.  The 3^rd daughter however asserted that his mother Chan Mui had purchased a property in the name of Ho Shuet in Kowloon Man Ying Building for the benefit of the 3^rd son (D2).  She claimed that Ho Shuet had returned the property to the 3^rd son (D2).  Hiu Hung denied, explaining that the unit in Man Ying Building was where her father resided when he first came to Hong Kong.  It never belonged to the 3^rd son (D2) and he never received rent.  The 3^rd daughter has not produced independent proof to contradict Hiu Hung and I do not accept the 3^rd daughter’s version.

84.In my view, even if I were to ignore the evidence from Hiu Hung (except the land search results), the evidence of the defendants could hardly rebut the fact of prior distribution.  The fact that just the 5^th son or just Chan Mui had appropriated assets of the Estate or each fong just appropriated some of the assets could not affect the validity of the 2 Documents or rebut the fact that there had been prior distribution.  The position was consistent with their own intention stated in the 1956 Deed, ie that the beneficiaries would be free to maintain joint possession or divide among themselves.  See §17(d) above.

85.The subsequent misfortune of confiscation could not have invalidated the 2 Documents and what was already distributed thereunder.   Rhind J’s order only applied to the distribution to the wife and in any case not the 1957 Agreement.

86.The issue can be disposed of summarily without a trial. I find that there had been prior distribution under the 2 Documents to the exclusion of the 3^rd son (D2).

D.  How the assets in the hands of the Administrators should be distributed

87.Given my findings in Section C, the various fongs (including the 5^th son (D3)) have given up their rights and claims against the Estate insofar as assets in Hong Kong, France and South Vietnam were concerned.  The only beneficiary remaining who can claim the funds in the hands of the Administrators would be the 3^rd son (D2). 

88.The assets in North Vietnam and Mainland China were not covered by the 2 Documents and they should be allocated in accordance with the Will.

89.The money in the Administrators’ hands comprised

(i) largely of real property, being proceeds of sale of the Derby Property, including the HK$1,470,600 that Hiu Hung had to put back to the pool of the Estate; and

(ii) a small portion of residual personal property (about HK$400,000), being proceeds of sale of shares and bank balances from Mainland China and Hong Kong; it is not covered by the Will but by the 2 Documents.

90.Both items shall be distributed to the 3^rd son (D2) solely.

91.For completeness sake, if I am wrong and paragraphs 3(c) and (d) should be adopted, I have taken into account the following.  The 4^th son is missing.  He has not reimbursed the Estate for Hiu Hung’s costs under Yam J’s order dated 27 October 2003.  Further, he had not kept proper accounts and records whilst he was an administrator.  There had been possible misappropriation of rental income from the Derby Property to the tune of HK$13 million, which the 4^th son used for his own purpose.  The supporting documents did not support the entire amount claimed by the 4^th son for legal and professional fees and entertainment expenses.

92.Therefore, I direct that anything that the 4^th son can receive from the Estate (including properties in PRC, North Vietnam and South Vietnam) shall be applied in the following order of priority:

(a) Towards payment of costs in HCA 6123/1995;

(b) Towards payment of costs in the present proceedings; and

(c) Any residue shall be distributed to the other 16 beneficiaries equally.

Conclusion

93.The amount of $1,470,600 but not the Paris Apartment should be put back into the pool of the Estate.  I make an order that the cash (about HK$39 million) now in the hands of the Administrators should be distributed to the 3rd son (D2) solely (§90 above).

94.In respect of the properties in North Vietnam, South Vietnam and Mainland China, I give directions in accordance with §§58 and 61 above.

95.I find that under the Will, married daughters are entitled to a share in the real properties.

96.The Administrators shall have their costs out of the Estate before distribution.  The defendants have conducted themselves properly in putting forth facts for the court’s consideration.  Their costs on common fund basis should be borne out of the Estate.  Hiu Hung’s costs should be indemnified by the Estate as her pursuit of the claim was proper and assistance to the court useful.   All costs should first be paid out of item (ii) in §89 and then item (i).  The 4^th son shall indemnify the Estate on costs as his abscondment without proper accounts has made administration of the Estate more difficult than it should be.  I make an order nisi in accordance with this paragraph.

97.There shall be liberty to apply.  Any further directions sought as regards the PRC properties, the North Vietnam and South Vietnam properties must be fixed for hearing no later than 31 December 2017.

OTHER MATTERS

98.The preparation of this case was deficient due to the lack of legal opinions on the status of foreign properties.

99.Where there are many beneficiaries, those representing the Administrators should have prepared a dramatis personae setting out their names and relationships and in this case, the Vietnamese names as well (for easy reference to the 2 Documents). With so many affirmations filed, the lawyers should have summarized the competing versions, if anything, to assist the court in deciding whether to summarily dispose of the dispute or give directions, and to facilitate judgment writing.

100.On preparation of hearing bundles, an index of documents that only stated the exhibit numbers without description of documents is useless.  It does not facilitate the finding of exhibits or verification of facts.

101.Bundles A to C should each start from page one.  Pagination like page 101-83, etc is clumsy.  Care must be taken to ensure that the bundles are well copied. Blur copies (especially handwritten ones) should be replaced or typed up. There are missing pages of important documents in the bundles and the court has to write to ask for them.

Mr Steven Kwan, instructed by Sit, Fung, Kwong & Shum, for the plaintiffs

Mr Leung Yan Wing of Cheng, Yeung & Co, for the 1^st, 4^th to 6^th defendants

The 2^nd defendant appeared in person

Mr Jeffrey Sze, instructed by Tai, Tang & Chong, for the 3^rd defendant

Trieu Tuyet Anh 趙雪瑛, present

Table 1: Names of family members and their status as parties