Chen Chin Chiang v. Chen Chi Lung, The Administrator of the Estate of Wang Mu Tan, Deceased

HCAP 25/2014

[2018] HKCFI 924

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

PROBATE ACTION NO 25 OF 2014

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Before: Hon B Chu J in Chambers

Date of Hearing: 16 April 2018

Date of Decision: 17 May 2018

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DECISION ON COSTS

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Introduction

1.The plaintiff in this action, Chen Chin Chiang (“P”) is one of 6 siblings.

2.P issued the writ in this probate action in 2014 to claim, amongst other things, that the will made on 23 December 2002 (“Will”) by their deceased mother be pronounced in solemn form and that he be granted probate of their mother’s estate (“Estate”).

3.P further sought an order that the letters of administration (“Letters of Administration”) granted on 16 May 2014 to the defendant Chen Chi Lung (“D”) be revoked.   P also sought orders for the registration of the Letters of Administration and a provisional sale and purchase agreement (“PSPA”) entered into by D in respect of Mother’s share in a piece of land (“Land”) in the Land Registry be vacated.

4.In September 2017, P issued a summons for judgment to be entered against D pursuant to Order 27, rule 3 of the Rules of the High Court for the orders sought by him. 

5.At the substantive hearing of P’s summons, and with the consent of D, judgment was entered for the various orders.  The matter of costs of the action was then adjourned to a further hearing for argument as D wished to file further evidence.

6.Counsel Ms Pauline Leung appeared for P and Ms Candy Tang appeared for D.

Brief Background

7.The Land was bought by the parties’ father (“Father”) in February 1985 with the Father holding 4/8 share, and their mother (“Mother”) and the 3 older sons each holding 1/8 of the remaining 4/8 share, as tenants in common. 

8.It was D’s case that it was the Father’s intention that the Land was to be divided into 8 shares and each of the 8 family members would be entitled to 1/8 share.  As D and his two younger siblings were minors at the time, the Father therefore held their shares as trust on behalf of them and the Father had executed a declaration of trust on 9 February 1985 (“Declaration of Trust”), but the existence of the Declaration was not known to the Mother or the siblings, save P, at the time.

9.Father died in September 1988 and letters of administration of the Father’s estate were granted to P.

10.According to D, subsequently they discovered from P’s solicitors that the Declaration of Trust was in their possession. This resulted in D and 3 of his siblings instituting HCA 3756/2001 against the Mother, their eldest brother, P and P’s wife. 

11.According to D, the Mother was upset over the family being involved in litigation, and she approached D and the 3 siblings asking them to withhold the action, and further promised to give her share equally to the 3 of them (“Promise”). 

12.Mother then passed away on 8 February 2008.  The Will was made by her on 23 December 2002, appointing P as sole executor and she bequeathed the Estate including 1/8 share of the Land to P.

13.D claimed that at the time of the Mother’s death, P had never told the siblings about the contents of the Will. 

14.D claimed no action was taken by P for probate and in 2013 he was in need of money, and he thought of Mother’s share of the Land which he thought he was supposed to inherit 1/6 share, based on the Promise, and he then sent a letter to his siblings on 22 June 2013 (“22.06.13 Letter”) in relation to his intention to apply for the letters of administration.  As he did not receive any objection from his siblings, he then went ahead and obtained the Letters of Administration on 16 May 2014.

15.On 27 December 2012, P’s 5/24 share of the Land was sold in a public action.  D then started to look for a purchaser for the Mother’s share of the Land when he obtained the Letters of Administration. Eventually a purchaser was found and the PSPA was signed, and the completion was supposed to be 29 August 2014, which was later postponed to 29 September 2014.

16.P’s case was that he never knew about the Declaration of Trust nor had he concealed the existence of the same from his siblings.  P denied there was the Promise.

17.P admitted that he and his wife had attended the solicitors firm with the Mother on 23 December 2002 for the preparation of the Will.  P admitted that he did not inform his siblings at the time that Mother had made a will, since Mother was then still alive.  However, P said on the day of the Mother’s death, he and some of his siblings including D went to the hospital to retrieve her body and thereafter they all went to have a meal at a restaurant during which he did inform all his siblings that the Mother had bequeathed everything to him.  P further said he told the other siblings that he would be solely responsible for Mother’s funeral expenses, and that apart from D, the others did not object.  According to P, D said morally, all the siblings should share Mother’s funeral expenses.

18.Thereafter, on 7 November 2008, D’s then solicitors had written to P stating that notwithstanding that in late 2007,  P had informed the parties’ eldest brother Chan Chi Ming of the possession of an alleged will made by the Mother, and notwithstanding D’s repeated demands, P had failed and/or refused to produce a copy of the same to D, and D gave P notice that unless a copy of the alleged will was furnished to him within 7 days, D would proceed to apply for grant of letters of administration on the basis that no will had ever been made by the Mother (“07.11.08 Letter”).

19.According to P, upon receipt of the letter, he did provide a copy of the Will to D’s solicitors.  However, this was denied by D.

20.It was also P’s pleaded case that in about August 2013, he had a dispute with D over an iron gate installed on the Land and the police was called to D’s home and that in the presence of the police, a copy of the Will was shown to D.  This was again denied by D.

21.P’s explanation as to why he did not immediately apply for probate was because he was in debts in 2003 due to SARs and had to close his restaurant business in 2012.  Further, he said as his brothers all knew about the Will, he did not see the need to apply for probate immediately.   Also, D himself did not immediately apply for the Letter of Administration anyway, and only did so in 2014. 

22.According to P, it was only on 28 July 2014 when his wife was told by the 3^rd sibling Chi Chung that D was building a hut next to Chi Chung’s village house, out of which an argument arose, and D then asked Chi Chung to do a land search.  P’s wife then went to carry out a land search and found out that the Letters of Administration was registered against the Mother’s share of the Land and also the PSPA.  This then led to issue of the present action.

29.11.17 Order

23.Since there was no dispute as to the validity of the Will, at the hearing, the 29.11.17 Order was made.  As mentioned earlier, the only argument was over costs.

The parties’ respective position

24.P’s position is simple.  He has succeeded in the whole of his claim and there is no reason why he should be deprived of costs or that the costs of this action be paid out of the Mother’s estate.

25.D’s position is that there should be no order as to costs, in that it was D’s case that his application for the Letters of Administration was solely caused by P’s wilful concealment of the Will and had P disclosed the same when he was asked on 22 June 2013 (sic)[1], D would not and could not have proceeded to apply for the Letters of Administration.

26.After the commencement of these proceedings, correspondence between the parties in relation to a settlement only commenced in July 2017 by D’s solicitors sending an open offer to P’s solicitors on 28 July 2017 to settle the whole action (“28.07.17 Letter”).  This then led to various letters between the solicitors but regrettably there was no settlement.  There were two main issues, namely (i) whether D should pay for P’s costs of this application and (ii) whether D could provide an undertaking to cause a cancellation agreement in relation to the PSPA be entered into with the intended purchaser and the registration of the cancellation agreement.  

Discussion

27.Since there was no trial during which there would be an opportunity to cross examine P and D, there had been no finding as to when P sent a copy of the Will to D or when D learnt of the existence and the contents of the Will. 

28.There were different versions in P’s evidence as to when he gave a copy of the Will to D.  P in his 1^st affirmation had mentioned it was soon after the Mother’s death that the contents of the Will were made known to his brothers.  He had also said in his 1^st affirmation that 3 days after receipt of D’s solicitors’ 07.11.08 Letter, he had personally taken a copy to D’s solicitors’ office and handed to D’s solicitors.  However, in his own solicitors’ letter of 2 August 2014, it was said that P gave a copy to all relatives and his siblings in about 2009.  

29.There was an affirmation by the 3^rd sibling Chi Chung to support P’s application for an injunction restraining D from completing the sale of the Mother’s share of the Land.  Chi Chung also made a witness statement to support P’s case.  It was Chi Chung’s evidence that after Mother’s death, and after the siblings had been to the hospital to claim her body, they all went and had a meal in a nearby restaurant to discuss about the Mother’s funeral.  He said P had told all of them that Mother had bequeathed all her assets to him and therefore he would be responsible for Mother’s funeral expenses.  Chi Chung said he did not agree as morally all the siblings should share in the Mother’s funeral expenses and he had suggested that they would share on equal basis, and that in the end, the suggestion was followed.  Further, later in about November 2008 D had told him that he had obtained a copy of the Will from P and had further given him a Chinese translation of the Will at the time. 

30.As said earlier, D denied that he was provided with a copy of the Will in 2008 or in 2009 and that it was his case that it was only after receipt of the letter of 2 August 2014 from P’s solicitors that D was provided a copy of the  Will[2]. Further, he had said had he known, he would not have agreed to share the Mother’s funeral expenses.

31.In this respect, two other siblings, namely Chi Ming the eldest, and also Chi Wei the youngest had provided affirmation and/or witness statements in support of D’s case, namely that at the restaurant meeting after the Mother’s death, P did not tell them about the Will, and that was why the siblings agreed to share Mother’s funeral expenses.  They both denied that P had provided them with a copy of the Will in 2008/2009.

32.Further, D had produced an authorization signed by 3 siblings, namely Chi Ming, Chin Min and Chi Wei on 3 September 2008 authorising D to administer  the Mother’s Estate on their behalves[3].

33.It was not disputed that the 6 siblings had shared in the Mother’s funeral expenses.  D had said that he would not have agreed to this had he been informed of the Will and the contents at the time, as it was provided in the Will that the Mother’s funeral expenses were to be paid out of her estate.  This was supported by the evidence of both Chi Ming and Chi Wei.

34.In any event, I agree that according to the provisions of the Will, it was clearly the duty of the executor to pay for the Mother’s funeral expenses out of the Estate, and it seemed unlikely that had D, Chi Ming and Chi Wei if known about the provisions of the Will they would have agreed to pay.

35.There was a long delay in P applying for probate.  The Mother died in February 2008, and no steps had been taken by P to apply for probate, and it would appear that he only started this action after he became aware of the registration of the Letters of Administration and the SPSA at the Land Registry.

36.P’s explanation for the delay was that he had been running into debts and had to work very hard and that he did not want the Mother’s share of the Land to fall into the hands of his creditors.

37.As I have pointed out to Ms Leung during the hearing, since P was appointed the executor, there were been duties imposed on him as an executor.  

38.In fact, if an executor appointed by a will fails to apply for probate of the will, the court may grant letters of administration with the will annexed to such person or person as the court may think fit under section 35 of the Probate and Administration Ordinance, Cap 10 (“Ordinance”). Further, even if the executor is the sole beneficiary of the estate, as executor, there are statutory duties under section 62 of the Ordinance, and in particular, an executor should pay all such funeral testamentary and administration expenses, debts and other liabilities of the deceased as are properly payable out of the deceased’s estate, subject to the provisions in a will. 

39.From P’s evidence, it would appear that P’s delay was only due to consideration of his own debts and/or situation and his own benefit, and not whether it was for the benefit of the Estate.  It was, however, not clear whether there were liabilities of the Estate and whether the delay had caused the Estate any detriment.

40.Section 57 of the Ordinance provides that every person making or permitting to be made any payment or disposition in good faith under a representation shall be indemnified and protected in so doing, notwithstanding any defect or circumstance whatsoever affecting the validity of the representation.

41.The issue was whether D had acted in good faith in obtaining the Letters of Administration and in signing the PSPA.  Further, it was P’s pleaded case that D had obtained the Letters of Administration by fraud and that D’s purported sale of the Mother’s share of the Land by signing the PSPA was a breach of trust /fiduciary duty to P in that the purported sale was at an undervalue.  The purported sale was said to be based on a draft valuation report dated 11 November 2009 and that the sale was by public auction.

42.As said earlier, since there was no trial, the evidence of the parties and their witnesses could not be tested by cross examination.

43.The burden was on P to prove that D was fraudulent or was in breach of trust.  P’s allegations were serious allegations. Purely from considering the affirmations and the witness statements, I am not able to say that P would have been able to discharge the burden on him.   

44.Ms Tang had submitted a chronology of how this action had progressed.  After pleadings were closed in early 2015, there appeared to be mediation followed by a period of inaction.  On 8 January 2016, P filed a notice to act in person, and thereafter D had also filed a notice to act in person.   Anyway, it appeared that it was only in early 2017 that the action gathered momentum again and witness statements were then exchanged in early 2017.

45.Ms Tang further pointed out that the inspection of the original of the Will only took place on 22 June 2017 after D’s present solicitors came into the picture, and that shortly thereafter, D’s solicitors sent the 28.07.17 Letter.

46.However,  even on D’s own case, he should be fully aware of the contents of the Will shortly after 2 August 2014, after he had been  provided with a copy by P’s solicitors in their letter of that date (“02.08.14 Letter”)[4]. D had instructed his solicitors to reply on 20 August 2014 (“20.08.14 Letter”)[5].

47.The 02.08.14 Letter was a letter before action from P, and at the time, D’s position was that he would challenge the validity of the Will, and further that as administrator of the Estate, and in the course of administration, his act of signing the PSPA to sell the Land was protected under section 57 of the Ordinance.  D suggested that the sale should proceed and that the net sale proceeds be held by solicitors or paid into Court pending the determination of the matter.

48.In so far as the validity of the Will was concerned, there was no reason why D and/or his solicitors could not have arranged for inspection earlier.  In any event, in the Defence, D did not set out any grounds to challenge the validity of the Will and merely put P to strict proof thereof.  It was further D’s case that as he had sent the 22.06.13 Letter to all the siblings informing them of D’s intention to apply for grant of administration, no objection was received from P or any of the siblings and that the failure of P in applying for probate had given reasons to believe that the oral allegation P made that he had in his possession the Will was false.  D further pleaded that by not objecting to D applying for grant of administration, P had acquiesced in D taking out the application for grant and was barred by laches from obtaining probate and/or estopped from obtaining the grant of probate.

49.As pointed out by Ms Leung, even though there were allegations of lack of good faith/fraud and/or breach of trust, the ultimate question in this action was whether the Letters of Administration should be revoked by reason of the Will and also whether the PSPA should be cancelled.  Further, at the earlier hearing on 29 November 2017, D did not inform the Court that the cancellation agreement in relation to the PSPA or the purported sale was in fact signed on 3 November 2018. 

50.Ms Leung submitted that such conduct should attract costs on indemnity basis and P sought costs the costs of the hearing on 29 November 2017 on this issue and the costs incurred by P’s enquiry with the solicitors for the intended purchaser on indemnity basis.  According to Ms Leung, about 6 minutes of the hearing on 29 November 2017 was spent on the vacating of the PSPA and the cancellation agreement. 

51.Since the PSPA was between D and the intended purchaser, at the hearing on 29 November 2017, this Court took the view that any vacating of the registration would need the consent of the intended purchaser.  This Court was not informed at that hearing that the cancellation agreement had in fact already been signed.  In fact, Ms Tang was not aware of this either.  In any event, upon the registration of the cancellation agreement, there would be no need for the vacating of the registration of the PSPA. 

52.D did not give any satisfactory explanation as to why this Court or P was not informed of the cancellation agreement during the hearing on 29 November 2017 and I agree he should pay that part of the hearing attributable to this issue (about 6 minutes) and the letter of the enquiry with Messes Ko & Chow, solicitors for the intended purchaser, on indemnity basis.

53.As for the rest of the action, having considered the parties’ submissions, I accept that the matter of revocation of the Letters of Administration should have been resolved earlier and that the main issue was the revocation and also the cancellation of the PSPA.  P had clearly succeeded in these orders sought by him.   However, I am also of the view that P’s delay in applying for grant did contribute to D thinking P’s oral representation that he had in his possession the Will was false.  Further, P had also made serious allegations against D on which he was entitled to defend.

Conclusion

54.The question of costs is governed by s 52A of the High Court Ordinance and in the exercise of discretion, the Court shall also take into account of those matters set out in O 62 r 5 of the Rules of the High Court, and amongst other things,  (aa) the underlying objectives set out in O 1A r 1; (e) the conduct of all the parties; (f) whether a party has succeeded on part of his case, even if he has not been wholly successful; (g) any admissible offer to settle made by a party which is drawn to the Court’s attention.

55.Having considered all the circumstances of this case, I have come to the view that P should be entitled to only 80 % of his costs of this action, including the costs argument to be taxed if not agreed on party and party basis, save and except the costs over the issue of the cancellation agreement should be paid by D to P on indemnity basis, as stated above. P’s costs to be taxed under Legal Aid Regulations, if applicable.

Ms Leung Pauline Po Lam, instructed by Fairbairn Catley Low & Kong, for the plaintiff

Ms Candy Tang, instructed by C K Charles Ho & Co, for the defendant