King Wong Development Ltd v. Chau Fung Yee
Read the full judgment text of HCMP 2779/2016 on BabelCite. This High Court CFI judgment was delivered on 25 March 2019.
1. The plaintiff (“King Wong”) commenced this administration action pursuant to Order 85 of the Rules of the High Court as the assignee of the interest and right of two sisters in the estate of their deceased father. The defendant (“Fung Yee”) is the other sister and the administratrix of the estate.
Cites 2 cases
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HCMP 2779/2016 [2019] HKCFI 756 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE MISCELLANEOUS PROCEEDINGS NO 2779 OF 2016 ________________
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________________ J U D G M E N T ________________ 1.The plaintiff (“King Wong”) commenced this administration action pursuant to Order 85 of the Rules of the High Court as the assignee of the interest and right of two sisters in the estate of their deceased father. The defendant (“Fung Yee”) is the other sister and the administratrix of the estate. Background 2.Chau Kwun Sang (“the Deceased”) was the registered and beneficial co-owner of various lots of land on Lamma Island. The other registered co-owners are Chau Sai Yau (“Chau”) and his brother. The Chau brothers are the Deceased’s nephews, their father being the Deceased’s brother. The Deceased owned ½ share while the 2 Chau brothers, succeeding to their father, own the other ½ share of the lots of land in question. Save that there has been surrender and exchange of a certain lot, the lots of land in question have been held this way since the latter half of the 1960s. 3.The Deceased died intestate on 8 November 1975. Surviving him were:
4.So Tai passed away on 25 August 1976, ie, less than a year after the passing of the Deceased. Madam Lam passed away on 9 March 1998. 5.Letters of Administration in respect of the Deceased’s estate was granted to Fung Yee in 2004. At the time, the assets in the estate were reported to only consist of the Deceased’s interest in the various lots of land in question. Fung Yee is also the administrator of the estate of Madam Lam. 6.In 2006, the Chau brothers assigned their interest in the land to King Wong, which further assigned the same to their current owner in 2010. The Land Registry record shows a substantial increment in the prices of the lots of land between these 2 transactions over 4 years. 7.In 2014, by an assignment dated 23 July, King Wong was also assignedabsolutely the right and entitlement of So Tai and Yuk Tai to the estate of the Deceased (“the 2014 Assignment”). The 2014 Assignment was executed on the assignor’ side by Yuk Tai and Yiu Yuet Wing (“Yiu”) as the administrator of the estate of So Tai. Yiu is son of So Tai, and obtained Letters of Administration in respect her estate on 4 March 2014. 8.At the time of the 2014 Assignment, the position of King Wongwas that Madam Lam, as the widow, was entitled to ½ share and the 3 daughters to the other ½ share of the Deceased’s interest in the lots of land in question pursuant to the then Intestates’ Estate Ordinance, Cap 73 (“IEO”). King Wong requested Fung Yee, as the administratrix of the estate of the Deceased, to distribute the estate to it that would represent the interest of So Tai and Yuk Tai in the land in question. This led to its commencement of the first administration action HCMP 2162/2015 against Fung Yee. Fung Yee opposed the claim. 9.HCMP 2162/2015 was eventually discontinued by consent in May 2016. According to King Wong, it was advised by counsel in early 2016 that the estate of the Deceased should be distributed in accordance with Chinese customary law. As such, Madam Lam had only a life interest and therefore each of the three daughters should be entitled to ⅓ share of the estate of the Deceased. King Wong should have obtained from So Tai and Yuk Tai the assignment of ⅔ of the interest in the estate and thus the lots of land in question. Hence the discontinuance of those proceedings. 10.After the cancellation of the 2014 Assignment, another assignment dated 26 April 2016 was executed by the same parties (“the 2016 Assignment”). This assignment provided that So Tai and Yuk Tai were assigning to King Wong their interest and entitlement to the estate of the Deceased whether under Chinese customary law and/or the IEO. 11.On the basis of its assigned entitlement pursuant to the 2016 Assignment, King Wong commenced the present proceedings for the following relief:
12.By her affirmation, Fung Yee, amongst others, made the following points:
13.By the time of the hearing of this action on 23 August 2017, the following additional issues have been raised on behalf of Fung Yee, apparently on the basis that Chinese law and custom apply to the succession of the Deceased’s estate:
14.The hearing has since been further adjourned[1], and further evidence has been filed. 15.As to the question of potential competition with the daughters to succeed, there is now the affirmation evidence of Chau. Chau explained that his grandfather died in the 1930s and survived byfour sons. Of them, two were adopted by other families, leaving his father and the Deceased being the only 2 sons entitled to succeed in equal shares to the estate of the grandfather. As mentioned, he and his brother succeeded to their father’s ½ share in the lots of land in question, while the Deceased held the other ½ . Chau confirmed that both he and his brother would not compete with the daughters in succeeding to the estate of the Deceased or the other ½ share of the land in question. The Chau brothers relinquish any right in that respect. As mentioned, the Chau brother have already sold their interest in the land to King Wong in 2006. 16.As to So Tai’s right to succeed to the Deceased’s estate, and the question arising out of the purported assignment of such right of hers, if any, and that of Yuk Tai to King Wong, there is the expert evidence of Professor Hugh Baker (“Professor Baker”) for King Wong and Professor Cheung Sui Wai (“Professor Cheung”) for Fung Yee. Applicability of Chinese law and custom 17.Essentially, by virtue of sections 7 and 8 of the New TerritoriesLand (Exemption) Ordinance, Cap 452, in respect of deaths prior to 24 June1994 (effective date of the Ordinance), lands of an estate in the New Territoriesremain not exempted under Part II of the New Territories Ordinance, Cap 97, and therefore by virtue of section 13 of that Ordinance, Chinese custom or customary right affecting such land applies. As the Deceased passed away prior to the above relevant date, his interest in the various lots of land in question, situated on Lamma Island, is governed by Chinese law and custom. During the hearing, not much was argued about such background. 18.Against such background, and considering counsel’s submissions, it should be uncontroversial that while Fung Yee became the administratrix of the estate of the Deceased by virtue of her position under the then IEO, she has to administer the estate in accordance with the Chinese law and custom insofar as and to the extent that they apply to the succession to the Deceased’s interest in the land in question. By Chinese law, one refers to the Qing Code, the relevant articles of which are cited below. The daughters’ right to succeed 19.Article 88(1) spells out the norm, namely, the agnatic path of succession to male descendants:
Jamieson, Chinese Family and Commercial Law, translated this article as follows:
20.In case there is no son born to a marriage, article 78(1) provides:
Therefore, if no son is born to a marriage, the line of family may be preserved by formal adoption (inter vivos or posthumous) of a male of the next lower generation of the nearest agnatic collateral branch of the family, or failing which, a male from a distant branch, and if there were still no eligible male candidate, any male with the same surname as the adopting family. 21.Pending such contingency that may continue the family line, article 78(2) provides for the widow’s right during the interim:
Jamieson translated this as follows:
22.Where the line of family is faced with extinction for want of eligible male successor, then notwithstanding the operation of article 78(2), article 88(2) provides:
Jamieson (above) translated this article as follows:
Professor Baker in his report provides the following translation of article 88(2), which is similar to the working translation adopted by the trial judge in Liu Ying Lan v Liu Tung Yiu & Anor [2][2003] 3 HKLRD 249 at §22:
23.The combined effect of the above articles on the right of a daughter to inherit her deceased father under Chinese law and custom is summarized in Kathryn Bernhardt,Women and Property in China, 960–1949 (1999 ed) at pp 44 – 45 [3]:
24.The Deceased was survived by no son but three natural daughters. So Tai passed away a year later. Madam Lam then passed away, and was survived by Yuk Tai and Fung Yee. With the confirmation of Chau on oath mentioned above, there is on the balance of probabilities no one other than the daughters who may claim entitlement to succeed to the estate of the Deceased under Chinese law and custom upon the death of Madam Lam. 25.Among the daughters, the right of Yuk Tai and Fung Yee to succeed to the estate of the Deceased is uncontroversial. However, their respective shares in succeeding to the estate of the Deceased will depend on whether or not So Tai was also entitled to succeed to the estate, notwithstanding her predeceasing Madam Lam and the extinction of the Deceased’s family line. 26.There is also the question as to whether King Wong managed to obtainby way of the 2016 Assignment such interest and rights as well as to step into the shoes of Yuk Tai (and, if she was also entitled, So Tai) to commence this administration action against Fung Yee. The expert evidence 27.Professor Baker and Professor Cheung produced the following expert reports:
28.The experts are ad idem in the following respects pursuant to the operation of the Qing Code cited above and Chinese custom:
29.The experts differ in the following respects:
Issue (1) – So Tai 30.Professor Baker admits that he has no experience of encountering a situation giving rise to this issue. However, he doubts the validity of the question. He has the following reasons:
31.Professor Cheung opines that natural daughterswho are entitled to succeed to the deceased father’s estate pursuant to article 88(2) should be those there and alive to succeed when the line of the family becomes extinct upon the widow’s death. He has the following reasons:
32.Professor Baker disagrees, and gives the following explanation:
33.I have reservation about the opinion of Professor Baker in this respect. 34.I see force in Professor Cheung’s opinion that the concept of a dead daughter inheriting her deceased father’s estate was inconceivable under Chinese custom. Professor Baker’s answer to that rests on how such inheritance could still proceed practically, namely, it would be the son of the deceased daughter who would become entitled to do so. He observes that this would be what happens in case of a son predeceasing the father, and the son of the predeceased son, ie, the grandson of the father, would come to inherit when the father passes away. He sees no logic in treating the case of predeceased daughter differently. 35.Contrary to Professor Baker’s view, it appears to me that there is a fundamental difference between the scenario of a daughter and that of a son predeceasing the father. In the latter case, both the predeceased son, and the son of the predeceased son, would have been within the agnatic line of male descendants in the household. In the case of a son predeceasing his father, where the son of the deceased son would succeed when the father dies, the issue of extinction of the line of the family simply does not arise and article 88(2) does not operate in the first place. 36.Considering the expert evidence as a whole, I also disagree that it is illogical to treat the case of a predeceased daughter differently from that of predeceased son in inheriting the father’s estate. There is, it seems, all the logic, when one bears in mind the differential treatment of sons and daughters that underlies succession under Chinese law and custom. The norm is that a daughter is not entitled at all to inherit her father. She comes to be so entitled only as a last resort when the family line becomes extinct for the lack of the last possible eligible male candidate, be he a close or distant one in the deceased father’s clan, to continue it. 37.According to Chinese custom, a married daughter might have her dowry upon marriage and continuous gifts after marriage from her maiden family, but her property would merge with that of her husband so that the same would become the property of the conjugal unit controlled by her husband (though not his family), particularly when she dies. Professor Baker cited Jamieson (at p 52) [4]:
This would apply to what a daughter inherits from her deceased father pursuant to article 88(2). However, I do not think this therefore provides a practical answer to the question by entitling the husband or son of a married daughter who predeceased the extinction of her father’s family line to succeed to her father’s estate. 38.Where the married daughter has passed away prior to the extinction of the line of her maiden family, and therefore never gets to actually inherit her father’s estate, it does not seem to follow from the custom mentioned in the preceding paragraph that her surviving husband (on behalf of his own household unit) or their son, of another surname, would be in a position to claim the right to her father’s estate on the basis that such would have become the daughter’s property had she survived the extinction of her deceased father’s family line so as to inherit that. 39.Professor Baker queriesthat if what is mentioned in the preceding paragraph has ever been a concern at the time, that could not have escaped the attention of the Qing lawmakers indrafting article 88(2). Yet they set up nothing in the provision to prevent that from happening. Professor Baker is drawing inference as to the legislative intent. 40.I do not agree that Professor Baker’s inference is the only or the only reasonable one. The materials available and before me do not afford the necessary certainty of Professor Baker’s reading and application of article 88(2) being the only reasonable one. The article, in the light of its actual wording and the fundamental differential treatment of the two sexes that underlies succession under the Chinese law and custom mentioned above, seem to me to suggest otherwise. 41.In terms of the wording of the article, the extinction of the family line in the absence of eligible male successor to the deceased father contemplated by article 88(2) is a state of affairs that could not be said to arise until the passing of the widow. Until then, the contingency of the family line being continued remains, and it is difficult to see how one, let alone a daughter, even gets to consider or claim the entitlement of a daughter to the estate of the father in terms of right to succeed. I acknowledge that as far as the circumstances of this case are concerned, the change in the adoption law in Hong Kong in 1973 might have rendered the notion of posthumus adoption by Madam Lam by Chinese custom academic even before the Deceased passed away[5]. Yet even so, Professor Baker is not saying that the daughters’ right to succeed to the Deceased’s estate arose and became locked upon the death of the Deceased. Professor Baker maintains that the line of the Deceased’s family became extinct only upon the death of Madam Lam, and when she died, the “focus of inheritance reverts” to the time of the Deceased’s death. 42.The experts agree that article 88(2) was applied in a way to prevent forfeiture of the estate of the deceased by allowing inheritance by daughters as the last resort. The purpose of the article would be served, so long as there is a surviving daughter who could inherit at the time when the family line became extinct. In terms of what underlies the Chinese law and custom governing succession mentioned above, I am not convinced that there was any further concern such as whether or not a daughter who predeceased that relevant moment should also be entitled to share in the succession. However, this seems to be the effect of what Professor Baker proposes. 43.Attempting also to draw inference, as Professor Baker does, one is equally entitled to query why the Qing lawmakers would have failed to provide (further) for the case where the deceased had a married daughter but she did not survive the extinction of the family line to succeed. After all, however much one might have intended to prevent it, the ultimate fate of forfeiture of the estate could indeed fall, in the absence of inheritance by a daughter even as the last resort. 44.In the context of what happened to the daughter’s inheritance afterwards, Professor Baker acknowledges that it cannot be assumed that the right of a daughter to inherit in exceptional circumstances was granted in order to benefit the recipient directly[6]. This adds to my skepticism about the entitlement of a daughter who predeceased the extinction of her father’s family line. 45.Therefore, I do not see sufficient basis for the construction or application of article 88(2) or the existence of the custom for a daughter who predeceased the extinction of the family line to inherit her deceased father’s estate. 46.Mr Lam, appearing for King Wong, submitted that Professor Cheung’s opinion should be rejected because he simply ignores the purpose of the custom, namely to allow for the possibility of posthumous adoption or appointment of male successor during the lifetime of the widow. I do not agree, considering that he and Professor Cheung share the same opinion on when the family line would be said to become extinct exactly because of that custom. 47.I find that when the family line of the Deceased became extinct when Madam Lam died, only the daughters surviving that are entitled to succeed pursuant to article 88(2). Therefore, Yuk Tai and Fung Yee are entitled to inherit the estate of the Deceased in equal shares. So Tai or her estate has no interest in the estate to assign to King Wong. Issue (2) – Yiu 48.Whilst acknowledging that he has not encountered any case of inheritance by a (deceased) daughter and what happened after such inheritance, Professor Baker resorts to the custom that the property of the married daughter merged with that of her husband’s household unit for deducing what would happen to So Tai’s share of the inheritance of the Deceased’s estate as discussed above[7]. In view of my discussion and finding in respect of issue (1) above, I need say no more about Yiu in the case of So Tai. Issue (3) – King Wong 49.This concerns the disposition of the entitlement of the daughters to the estate of the Deceased in favour of King Wong by way of the 2016 Assignment. 50.Insofar as Chinese law and custom also apply to the disposition, the parties differ in respect of whether such disposition to a stranger was allowed, in the absence of consent of the family elders. Regarding this, the experts also gave their respective opinion. 51.In his opinion, Professor Cheung refers to the situation where the junior members of the family seek to split and dispose of family assets in the absence of consent of the father or, if the father has passed away,the widow. Such conduct, he opines, would contravene specific provisions of the Qing Code[8]. My impression is that the experts do not actually differ in their understanding of the relevant Chinese law and custom. Both refer to the following provision:
Jamieson provided the following translation:
52.It is unclear whether the above provision primarily applies to normal succession, namely, by male. But the circumstances peculiar to succession by daughters as the last resort upon extinction of the family line are not irrelevant to the application of the above provision of the Code. 53.First, as the daughters’ succession came about only upon the passing of both the father and his widow, the daughters’ mother, no question of parental consent should ever arise. 54.Second, Chau in his affirmation focused on the lack of intention on his part and his brother to compete with the daughters in inheriting the estate of the Deceased. However, by filing his affirmation on behalf of King Wong, Chau, for himself and his brother as the co-owners of the land in question, could only be taken to have no adverse observation about the disposition of the Deceased’s share in favour of King Wong. As mentioned, the Chau brothers themselves have sold their interest in the land in question to King Wong back in 2006. Chau was born in 1940. There is no suggestion or evidence of the existence of other family elders whose consent would have been required and could have sought for the disposition. 55.Third, what a married daughter is inheriting would prima facie not be for her to dispose of as she wishes, as the property would have merged into that of her husband’s household unit (in accordance with the Chinese custom as mentioned above). On this basis, there is lack of suggestion of any objection by Yuk Tai’s husband. Insofar as So Tai’s share, if any, is concerned, whilst Professor Baker feels unable to say whether Yiu’s authority as the eldest son of So Tai would be sufficient to makesuch important decision without securing his siblings’ consent, he opines that Yiu would be regarded as effectively the family head in undertaking family responsibility in accordance with the custom. Whether or not that is the case, it should be noted that Yiu is indeed the administrator of the estate of her mother appointed in accordance with the general law without objection from his siblings being potential beneficiaries of her estate. However, as mentioned, I need say no more about So Tai or Yiu. 56.It follows that in reality, the daughters have become their own masters in deciding how to deal with the property in the estate of the Deceased in the circumstances of this case. 57.Both experts notice that the disposition by Yuk Tai of her entitlement to the Deceased’s estate was made without the consent of Fung Yee. Professor Cheung opined[9], and Professor Baker agrees[10], that there was the expectation under Chinese custom that there should be consensus among those who have inherited the estate, before any significant decision in respect of the estate is made. Disposition of the properties in the estate must be one of those significant decisions. 58.Professor Baker opines that arbitrary action by those of superior powers or selfish motivation was commonplace, and particularly, when there is no parent or elder available to monitor, advise or control. 59.Professor Cheung opines that the disposition by Yuk Tai (and purportedly by So Tai) in the present case without the consent of Fung Yee and in favour of a corporate third party would be contrary to Chinese law and custom. He refers to the Qing Code on the theft and disposition of landed properties (or〈盜賣田宅〉) which forbids a person from dealing, as his own, with landed property in which there was dispute as to whether others were also interested in it. In the context of ancestral landed property, he refers to the annotation provided by 沈之奇 in〈戶律、田宅、盜賣田宅、例止註〉which said:
Literally, this means dealing with ancestral land may not be dictated by a single descendant. 60.Professor Cheung also considers that disposition in favour of corporate third party so that it steps into the shoes of Yuk Tai (and So Tai) with a view to sharing the estate of the Deceased would have been most inappropriate. In support, he refers to a Qing publication《鹿州公案》which contained the report of a dispute arising out of two brothers’ fight over the estate of their deceased father and its resolution before the court. Essentially, the court went the extra mile to mediate and managed to have the brothers accept share of the estate equally between them. His opinion is that in view of the manner in which the court would expect to handle such dispute, resolution of the dispute would have been impossible if either of them was not present. The appearance of a third party purportedly in the shoes of either of them would not have worked. 61.The references that Professor Cheung made do not appeal to me to actually lend weight to his conclusion in the circumstances of the present case. 62.The 2016 Assignment is worded so that King Wong would obtain whatever interest and entitlement that the two sisters might have in the estate of the Deceased according to the applicable law. That So Tai, as I find, was not entitled to succeed means the assignment only manages to convey to King Wong what Yuk Tai is entitled to, and that would become ½ share in the estate of the Deceased. Fung Yee is entitled to the other ½ share, which is what Fung Yee contends, and what King Wong, through Mr Lam’s submissions, proposes as the alternative result[11]. 63.The kind of dispute over the entitlement to the estate, and the kind of resolution involved, in the case reported in the Qing publication that Professor Cheung refers to has no relevance in the circumstances of the present case. The concern arising out of what is expected to be the mode of a Qing court in handling dispute between siblings over their entitlement to the estate of their deceased father, and thus the apparently inconceivable acceptance by the court of the appearance of a stranger to represent either contesting sibling, has no relevance in the circumstances of the present case either. I also see no significance in emphasizing the relevance of the stranger being a corporate body, as it is unclear whether the notion existed at the time when the Qing Code or custom then came into existence. 64.Insofar as it is the general law that governs other matters in relation to the estate inherited, such as disposition of what is being inherited, Mr Lam submitted that a beneficiary’s right in an estate is capable of transmission, citing Williams, Mortimer and Sunnucks on Executors, Administrators and Probate at §81-03. However, what that paragraph says relates to transmission, by operation of law, of the inchoate right of a person interested in the estate whether under the will or intestacy to that person’s personal representative, presumably upon that person’s death. The present case involves an assignment of such right by contract. 65.Mr Lam also relied on Wu Koon Tai v Wu Yau Loi [1996] 2 HKLR 477 at 483B–C, where Lord Browne-Wilkinson stated the dictum in the context of whether a beneficiary under awill or intestacy has an assignable interest in the estate under administration. The English law is that no beneficiary in such situation has such interest: Lord Sudeley v AG [1897] AC 11. His Lordship assumed (without deciding) that the same law applied in the case before him, notwithstanding that succession was regulated by Chinese law. On this basis, his Lordship considered that in principle, there is no reason why a devisee of land comprised in an un-administered estate cannot validly contract to sell the land at a time when his interest is a mere chose in action or expectancy. 66.In other words, insofar as the general law applies to the disposition of the entitlement to inherit the estate, which is governed by Chinese law and custom, there is basis for recognizing the effectiveness of the disposition of such right by the daughters. 67.All considered, I find that the disposition of Yuk Tai’s entitlement to the estate of the Deceased, which is in the nature of a chose in action, by way of the 2016 Assignment is not invalid or ineffective. Administration of the Deceased’s estate 68.Fung Yee takes the stance that she has discretion to hold onto the assets in the Deceased’s estate pending disposition at the suitable time and value. Mr Lam submits that such discretion of the administrator is not supposed to be exercised arbitrarily, but in good faith and within a reasonable time for the interest all the beneficiaries: see Foo Jee Seng v Foo Jhee Tuang [2012] SGCA 41 at §§27-28; 32-36; 52; 59. 69.No real factual basis of bad faith is suggested. But the decade taken since Fung Yee has assumed her role and duties as the administratrix in 2004 calls for explanation, which she did give some in her affirmation. As the materials available now stand, the estate consists only of the various lots of land, which seem to have their value. As mentioned, I note the record of the sale prices of the Chau brothers’ interest between 2006 and 2010. The disposition by Yuk Tai (and So Tai) to King Wong was presumably premised on this. The order for administration sought compels Fung Yee to recognize the right and entitlement of King Wong to the lots of land in question, but it remains for her to decide how she intends to deal with her interest in the estate (and the lots of land in question). Fung Yee points to nothing in principle that would prevent an order for administration of the estate of the Deceased on the basis of the findings made above. 70.Amongst others, King Wong asks for settlement of all the liabilities of the estate, if any, by assets other than the lots of land in question. As the lots of land in question were reported to be the only assets in the estate, I do not see for the time being how such order sought may be made. The picture should be clearer to the parties when an up-to-date account of the estate of the estate is provided. Disposition 71.Hence the following order of this court:
Costs 72.On behalf of Fung Yee, Mr Chan asks that her costs should be borne by King Wong, which Mr Lam disagrees. Alternatively, Mr Chan asks that Fung Yee’s costs to be paid out of the estate. 73.This was what happened. The first hearing was fixed to be held on 2 March 2017. On 27 February 2017, by consent, these proceedings were adjourned for substantive argument with the usual directions in respect of affidavit evidence, and the hearing date of 2 March 2017 was vacated. Costs were reserved. 74.The parties’ affidavit evidence was filed by late April 2017. 75.The substantive hearing was fixed to be held on 23 August 2017. The materials show that the court would have heard the parties’ following arguments on that day:
76.However, the hearing on 23 August 2017 was interrupted by typhoon, and re-fixed to 24 November 2017. 77.Prompted by the above argument, King Wong filed further evidence, including the expert report of Professor Baker, with leave obtained in October 2017. Direction was given to Fung Yee to file evidence in response. The hearing on 24 November 2017 was vacated and re-fixed to 8 February 2018 with 3 hours reserved. The court directed the parties to report the situation by letter before the hearing, and reserved the consideration in respect of costs. 78.On 1 February 2018, upon considering the parties’ reports by letter, the court then vacated the hearing date of 8 February 2017, and further adjourned the substantive hearing to another date with 1 day reserved. Hence the hearing before this court. Again, costs were reserved. 79.Joint expert reports were filed pursuant to the direction of this court upon joint written application prior to the hearing, with costs in the cause. 80.Mr Chan submitted that the court should be feel displeased by the manner in which King Wong proceeded with this case, in view of its approach in respect of the evidence that necessitated the various postponement of the substantive hearing. 81.In my view, the adjournments in February and August 2017 involved fault of neither side. Nor did the adjournment in February 2018, as this was partly occasioned by the court also taking the view that more time should be reserved for the substantive argument. 82.However, as the matter stood by the time of the original hearing fixed on 23 August 2017 and even after it was re-fixed to 24 November 2017 because of the typhoon interruption, it was up to King Wong to decide how to prosecute its claim without regard to what Fung Yee raised in defence. If it decided, as it so did, that it was not prepared to proceed without the further factual evidence and the introduction of expert evidence, it had to accept the responsibility for the consequence of an application for leave to do so and the adjournment so occasioned by the further consequential directions of the court then. I do not agree that it could attribute such approach to the arguments raised by Fung Yee for the purpose of the hearing on 23 August 2017, which was aborted. It was King Wong’s judgment call. 83.Further, Fung Yee was not without basis in raising issues as to, as least, So Tai’s entitlement to succeed to the Deceased’s estate, which has impact on the sisters’ shares and her administration of the estate. The evidence, including expert evidence, filed by both sides since August 2017 proves to be relevant and necessary for the resolution of the issues in disagreement between the parties. 84.All adjournments were made prior to the scheduled hearing dates. However, I think it is in principle still appropriate to order that costs of the adjournment of 24 November 2017 hearing and occasioned to Fung Yee should be borne by King Wong, to be taxed on an indemnity basis, if not agreed. 85.Subject to the above, the next question is the appropriate costs order, in view of the outcome of these proceedings. 86.King Wong fails to substantiate the right of So Tai, and the dispute as to Yiu’s capacity falls away. However, that does not affect its proceeding to substantiate its rights pursuant to the 2016 Assignment to obtain the administration order. Fung Yee is proved right in respect of So Tai’s alleged entitlement, which has bearing on her administration of the Deceased’s estate. Adopting a broad brush approach and considering the mutual set-off, I think it is fair that Fung Yee should pay 50% of King Wong’s costs of these proceedings, to be taxed, if not agreed. I do not consider that it was wholly unreasonable for Fung Yee to have raised the dispute for the purpose of her administration. In the circumstances, Fung Yee’s costs, including those payable to King Wong, shall come out of the estate of the Deceased. 87.In the event that the parties are still minded to apply to vary the costs order, the application must be taken out within 14 days or else the costs order shall become absolute without further order.
Mr Lam Chin Ching Gary, instructed by Terry Yeung & Lai, for the plaintiff Mr Kenneth C L Chan, instructed by Kelvin Cheung & Co, for the defendant [1] Including once occasioned by the interruption by typhoon. [2] Where Professor Baker also served as expert in this respect. [3] Cited in Professor Baker’s supplementary expert report dated 15 January 2018. [4] Joint expert report at §5. [5] See Liu Ying Lan. [6] Professor Baker’s supplemental report, §6. [7] His supplementary report at §§3 – 9. [8] Professor Cheung’s report at §§11; 20(5)(a) – (c). [9] Professor Cheung’s report at §20(5)(d). [10] In the joint report at §9. [11] Mr Lam’s written submissions, §49. | |||||||||||||||||||||||||||||||