Kung Kwok Wai David, The Executor of the Last Will of Kung Wong Sau Hin,Deceased v. The Commissioner of Estate Duty

HCED 1/2011

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ESTATE DUTY APPEAL NO 1 OF 2011

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Before:  Hon Chow J in Chambers (Open to Public)

Date of Hearing:  10 November 2017

Date of Decision:  10 November 2017

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D E C I S I O N
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1.By a summons dated 19 September 2017, the plaintiff seeks leave to file his 5^th affidavit (“the plaintiff’s 5^th affidavit”) with exhibits sworn on 11 July 2017 in reply to the 2^nd affirmation of Ip Mei Ching (“Ip’s 2^nd affirmation”) filed on behalf of the Commissioner on 10 April 2017. The Commissioner opposes the filing of the plaintiff’s 5^th affidavit, in particular paragraphs 11 to 28 thereof. This is my decision on the plaintiff’s summons after hearing the parties this morning.

2.One of the issues raised for determination in this estate duty appeal is whether various debts allegedly owed by the Deceased to (inter alia) four companies under the control of the plaintiff, being the sole executor of the Deceased, are deductible from the value of the estate pursuant to section 13 of the Estate Duty Ordinance (Cap 111).

3.It is clear, on the evidence, that the Commissioner has all along questioned the genuineness of the relevant loans, and whether the loans were actually for the use and benefit of the Deceased.  It is, however, by no means clear that the Commissioner had previously questioned the financial ability of the creditor companies to make the loans in question.  It may be argued that questioning whether the loans were actually made or provided to the Deceased could, or should, be taken as also raising the question of whether the creditor companies had the means to make the loans in the first place.  However, I do not think it can, objectively, be said that the point was so clearly raised or made that the plaintiff ought reasonably to have appreciated it and therefore produced evidence regarding the ability of the creditor companies to make the loans.

4.The first time that I believe the point was so clearly made was in paragraph 13 of Ip’s 2^nd affirmation.  On behalf of the Commissioner, Ms Cheng SC informed the court that the Commissioner cannot confirm, at this stage, whether he will make the point at the trial of this action that the loans could not have been made because the companies had no funds or means to make them.  Neither can the Commissioner confirm, if he should eventually decide to make this point at the trial, that he will, or will not, rely (amongst other things) on paragraph 13 of Ip’s 2^nd affirmation in support thereof.  Since these questions were raised by the court in the course of the hearing, it is understandable that the Commissioner is unable to confirm the position one way or another at the hearing.  However, I must proceed on the basis that this is a potential point which may be raised by the Commissioner at the trial and that paragraph 13 of Ip’s 2^nd affirmation may be used in support thereof.  That being so, I do not consider the matters raised in paragraphs 11 to 28 of the plaintiff’s 5^th affidavit (which give details about the ownership and/or sale of certain lands owned by the creditors companies) to be irrelevant.

5.I accept there has been delay in the production of the plaintiff’s 5^th affidavit, but the delay should, for the above reason, be counted from a reasonable time after the filing of Ip’s 2^nd affirmation on 10 April 2017, say 2 to 3 weeks from that date.  Such delay is a relevant, but not conclusive, consideration in deciding whether to grant leave to the plaintiff to file the plaintiff’s 5^th affidavit.

6.I take into account the underlying objectives of the CJR in light of the facts of this case and background of these proceedings as urged upon me by Ms Cheng.  I also take into account the fact that this action has not yet been set down for trial.  The filing of the plaintiff’s 5^th affidavit should not therefore have any material impact on the trial date.  Ultimately, in giving effect to the objectives of the CJR, the court shall always recognize that the primary aim is to secure the just resolution of the dispute in accordance with the substantive rights of the parties.

7.Balancing all these considerations, I am persuaded that I ought to exercise my discretion to grant leave to the plaintiff to file his 5^th affidavit in terms of the paragraph 1 of the plaintiff’s summons dated 19 September 2017.  I shall hear the parties on consequential matters and on the issue of costs.

[The court heard further submissions from the parties.]

8.I grant leave to the Commissioner to file evidence in reply to the plaintiff’s 5^th affidavit (if so advised) within 3 weeks from the date hereof.  The costs of the plaintiff’s summons, including the costs of today’s hearing, shall be in the cause.

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

Ms Yvonne Cheng, SC, instructed by Department of Justice, for the defendant