Thian Sum v. Yung Shui Tong

HCMP 1390/2018

[2019] HKCFI 2867

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 1390 OF 2018

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JUDGMENT

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Application

1.By an originating summons dated 4 September 2018 (“the Originating Summons”), the Plaintiff applied for the following relief:

“ (1) the Defendant do within 14 days provide the Plaintiff with a true and perfect inventory and account of the estate of THIAN HON THONG (‘Deceased’ and ‘Estate’ respectively) as verified by affidavit;

(2) there be an inspection of all supporting documents in relation to the said account of the Estate within 14 days thereafter;

(3) the Defendant do sell the property known as Flat E on 17^thFloorof Block No.2, No.23 Wharf Road, Provident Centre, Hong Kong(‘the Premises’), within 3 months at market value;

(4) the Defendant be required to pay all rents arising from or in connection with the occupation of the Premises;

(5)     the Defendant be removed as the administratrix of the Estate and the Plaintiff and/or other suitable persons as the Court thinks fit and proper be appointed in her place.”

Material facts

2.The Plaintiff is the daughter of Thian Hon Thong (“the Deceased”) who passed away from a sudden heartattack on 3 April 2016.

3.On 12 March 1984, the Deceased purchased Flat E, 17/F, Block 2, 23 Wharf Road, Provident Centre, Hong Kong (“the Property”).

4.On 6 May 1996, the Deceased married the Defendant who thenbecomes the Plaintiff’s step mother.  The Plaintiff and the Defendanthave always had a strained, and sometimes, acrimonious, relationship.  ThisCourt needs not recite the allegations and cross allegations of the Plaintiffand the Defendant.

5.On 22July 2016, the Defendant obtained letters of administration. The Plaintiff’s case is that the Defendant qua administratrix was and is not willingto distribute the estate of the Deceased.  She told her so in around September2016.  It is the Plaintiff’s case that the Defendant told her that she was onlyentitled to an arbitrary sum of HK$100,000 at most.

6.On the other hand, the Defendant has already distributed a sum of HK$500,000 for her own use from the estate of the Deceased.  The Plaintiff says that she is entitled to half of the Deceased’s residuary estate.

7.After making various failed attempts to persuade the Defendant to administrate the estate of the Deceased, the Plaintiff took out the Originating Summons on 4 September 2018.

8.There is no dispute between Mr Chu for the Plaintiff and Ms Tsau for the Defendant that the Plaintiff is entitled to inherit from the estate of the Deceased under section 4(3) of the Intestates’ Estates Ordinance, Cap 73 (“the Ordinance”).

9.On 5 August 2019, nine days before this hearing, the Plaintiff made an open offer by letter which stated, inter alia, that:

“ 2. Our client makes the following open offer in view of all costs implications.

3. Our client’s proposal is that the parties enter into the following arrangement immediately:-

(a) The Defendant be removed as the administratrix and the Plaintiff be appointed in her place;

(b) There be no order as to costs (including all costs reserved)save that the Defendant do pay the client’s costs from 2 July 2019 onwards.

4. For the avoidance of doubt, our client has already made the reasonable concession that it will not require your client to sellFlat E, 17^thFloor, Block 2, No.23 Wharf Road, Provident Centre,Hong Kong (‘the Property’).  Given our client shall be appointed asadministratrix, our client shall take all necessary actions to effectthe sale of the Property.  Our client will provide for a reasonableperiod of time for your client to relocate.  Further, our client willnot require your client to pay all rents arising from or in connectionwith the occupation of to date.  Our client shall be affording suchconcession up to and including the hearing on 14 August 2019.”

10.The open offer was not accepted by the Defendant.  In the Plaintiff’s Skeleton Submissions, Mr Chu for the Plaintiff made it clear that the Plaintiff was only pursuing paragraph 5 of the Originating Summons.

Applicable legal principles

11.Section 33(3) of the Probate and Administration Ordinance,Cap 10 provides:

“ The court may, if satisfied that the due and proper administration of the estate and the interests of the persons beneficially entitled thereto so required, suspend or remove an executor or administrator (other than the Official Administrator)and provide for the succession of another person in place of such executor or administrator and for the vesting in that other personof any property belonging to the estate.”

12.In Tsang Wing Kwai v Tsang Wing Fai (No 2) [2019] 1 HKLRD 1300, Lam VP at §§26 – 27 said:

“ 26. In our judgment, the criteria for removal of executor is set out in s.33(3) of the Probate and Administration Ordinance (Cap.10). The Judge alluded to the same at [27] of the judgment:

[27] Turning to the basis for the removal of a personal representative, it is well established that the Court’s discretion under section 33(3) of the PAO is wide. The exercise of the discretion is not necessarily premised on a finding of misconduct on the part of the personal representative. The statutory criteria provided for an exercise of the discretion to suspend/remove are:

… the due and proper administration of the estate and the interests of the persons beneficially entitled thereto so require [for a suspension or removal].

27. Whilst there are cases referring to the relevance of the choice of a testator and that the court should be cautious and sparing in the exercise of the power of removal (discussed by Deputy High Court Judge Bebe Chu, as she then was, in Wong Tat Lun Eddie v Wong Chi Ho Jimmy (HCMP 2391/2013,[2014] HKEC 1731, 21 October 2014) based on the Western Australian case of Estate of Erminia Agnes Rogers v Rogers [2009] WASC 358), it would be going too far to regard these as principles of law supplanting the statutory criteria. Ultimately,it is an assessment by the court having regard to all the relevantcircumstances of the case if removal is required for the due and proper administration of the estate and the interests of the personsbeneficially entitled. Each case must be decided on its own factsand the assessment involves an element of value judgment on thepart of the first instance judge.” (emphasis added)

Analysis

13.Mr Chu for the Plaintiff relied on a number of grounds.  First,it was submitted that the Defendant simply refused to administer the estateof the Deceased save and except distribute assets to herself. 

14.Secondly, the Defendant has relied on a number of erroneous grounds to refuse making distributions:

(1) the Defendant believes that the Plaintiff is not entitled to inherit the estate of the Deceased because she is a female descendant.

(2) the Defendant queries whether the Plaintiff is the daughter of the Deceased;

(3) the parties have been (and are) in an acrimonious relationship.

(4) the Plaintiff has received HK$1 million from an uncle already;and

(5) The Plaintiff asserts a life interest in the Property, and thereforethere is no need to sell the Property and distribute the proceeds.

15.Ms Tsau for the Defendant, both in her Skeleton Submissionsand her oral submission, mainly focused on the Defendant’s claim of a life interest in the Property.  Ms Tsau invited this Court to determine the issue “of whether the Defendant is entitled to reside at the Property until she dies,or whether the Plaintiff can successfully prove her case that the Defendant has no such entitlement on a balance of probabilities.”

16.I am of the view that it is not appropriate for this Court to determine the Defendant’s claim for a life interest in the Property in these proceedings.  If the Defendant wishes to make such a claim, she should formally issue a writ of summons, her case should be properly pleaded andtried.  This Court cannot and should not at this hearing summarily determinewhether she is entitled to a life interest in the Property on the grounds of constructive trust and/or proprietary estoppel.

17.However, the fact that she makes such a claim clearly puts her in a position of conflict.  She cannot on the one hand make a claim against the estate of the Deceased but on the other hand continues to be the administratrix of the estate of the Deceased.  In the circumstances, it is clear to this Court that on this ground alone the Defendant should step down as the administratrix of the estate of the Deceased.

18.Ms Tsau for the Defendant submitted that even if the Defendant were to be removed, the Plaintiff, nevertheless, should not be appointed as the administratrix of the estate of the Deceased because she is biased and will harm the interests of the persons beneficially entitled. There is no doubt that the Plaintiff and the Defendant’s relationship is strained or even acrimonious.  However, on the facts of the present case,it does not mean that the Plaintiff is not a proper person to be appointed as the administratrix.  First, the major asset of the estate of the Deceased is the Property.  The administration of the estate of the Deceased is relativelysimple.  The Plaintiff has, on oath, made it clear that she intends to sell the Property and distribute the sale proceeds to all the beneficiaries.  It is up to the Defendant to make good her claim of a life interest in the Property against the estate of the Deceased.

19.Secondly, Mr Chu for the Plaintiff referred this Court to the case of Re Estate of Loo Che Chin [2013] 2 HKLRD 739 where Poon J (as he then was) at §13 said:

“ Now, it is well-established that friction or hostility between an executor and a beneficiary alone, without more, is of itself not a good reason for removing the executor. No corrupt or improper motive is to be imputed to the executor even if mutual hostility,without more, is established: Earl of Portsmouth v Fellows. However, if the hostility is grounded on the mode of administration,then it is a factor that cannot be ignored: Letterstedt v Broers, Hunter v Hunter, Kershaw v Micklethwaite. This is a relevant factor because the expeditious and economical administration ofthe estate is always one of the objects that the Court keeps in mind:Chang Man v Ma Shou Yung. Thus, if by reason of the hostility,the executor is rendered unfit to perform his duties as executor,he may be removed: Lefkowitz v Bank of New York. Such inability to perform his duties as executor may be proved if it can be demonstrated that he would, say, by reason of the hostility,(a) administer the estate in a manner not in accordance with the law: Re Estate of Chan Hung Mou; or (b) obstruct the due administration of the estate: Kershaw. The Court may also pass over the executor if the breakdown of relations has caused or hasthe potential to cause difficulty in the administration of the estate:Kershaw.” (emphasis added)

20.I have stated above that the Defendant’s personal claim of a life interest over the major asset of the estate of the Deceased,namely, the Property, has rendered her unsuitable to continue to be the administratrix of the estate of the Deceased.  However, on the fact,I do not think that hostility between the Plaintiff and the Defendant alone is by itself a good enough reason not to appoint the Plaintiff as the new administratrix.  

21.Thirdly, there is no application by the Defendant to nominate any independent third party as the administrator of the estate of the Deceased. During the hearing, it was proposed that the Defendant’s son, Karl Thian could be appointed as co-administrator of the estate of the Deceased.  The Plaintiff in paragraphs 53 and 54 of her affidavit stated:

“ 53. I have discussed with Karl and he supported my applicationto the Court. In particular, Karl and I share the same view that we should enjoy our freedom to manage our own shares of my Father’s estate. Further, Karl also considers that I am more suitable than the Defendant to be the administrator.

54. I would also support the Court to appoint both Karl and I to be the administrators in place of the Defendant if the Court thinks fit.”

22.However, Mr Chu for the Plaintiff submitted that as there was no consent to act filed by Mr Karl Thian and the proper course is for him to take out an application if he prefers to be appointed as an administrator. As Mr Karl Thian is not a party to these proceedings,on balance, I agree that the proper course is for Mr Karl Thian to take out an application and the parties can then deal with it by way of a consent summons.

23.Fourthly, substantial delay in the administration of the estate of the Deceased is a ground for removal.  Expeditious and economical administration is one of the key concerns of the Court.  It is a fact that the Defendant, qua administratrix of the estate of the Deceased,has not performed her duties to administer the estate of the Deceased for over three years.  No distribution was made to the beneficiaries save and except that she has distributed a sum of HK$500,000 to herself.  Further,she has indicated that she is not going to sell the Property and distribute the sale proceeds to the beneficiaries.

24.Ms Tsau for the Defendant very sensibly did not pursue othergrounds of opposition to the Plaintiff’s application, although Mr Chu for thePlaintiff rightly pointed out to this Court that the Defendant unnecessarilyadvanced unmeritorious grounds and intensified the hostility between the parties.  For example:

(1) In a letter dated 29May 2018, the Defendant’s solicitors wroteto the Plaintiff’s solicitors and stated , inter alia, that:

“ Further to our letter to you on the even date, we are also instructedto request documentary evidence from your client in proving themarriage (if any) between her mother and Mr. Thian Hon Thong;and also proof of her birth.” (emphasis added)

(2) On 2 August 2018, the Plaintiff’s solicitors further wrote to the Plaintiff’s solicitors and stated, inter alia, that:

“ It is also instructed that our client, as the administrix for the Estate, is under duty to verify Ms. Thian’s legal right to receive parts of the assets of the Estate; and therefore, she demands Ms. Thian to provide proof such as her birth certificate, and also marriage certificate of her natural mother and Mr. Thian Hon Thong to prove herself as an heir under the law.”

( emphasis added)

(3) On 15 August 2018, the Plaintiff’s solicitors further wrote to the Plaintiff’s solicitors and stated, inter alia, that:

“ 4. Our client notes that if your client is minded to litigate on the matter, it is inevitable that your client’s legitimacy to inherit would be one of the issues.”

25.For all the reasons stated above, I am of the view that the Defendant should be removed as the administratrix of the estate of the Deceased and to be replaced by the Plaintiff.

Costs

26.Ms Tsau for the Defendant submitted that save and except theapplication to remove the Defendant as the administratrix of the estate of theDeceased, the Plaintiff has abandoned all other relief under the Originating Summons on 9 August 2019, the Defendant should be entitled to the costs incurred in relation to those relief prior to 9 August 2019.

27.Mr Chu for the Plaintiff submitted all the evidence filed by the parties were related to the issue of removal of the Defendant as the administratrix of the estate of the Deceased.  Hence, the Plaintiff’s decision not to pursue the other relief does not increase the parties’ costs.  In fact,it made the application more focused.  Instead, it was the Defendant who unnecessarily complicated the matter by raising the issue of a constructive trust in these proceedings and at a late stage.  Accordingly, the Plaintiff sought costs against the Defendant on an indemnity basis.

28.I am of the view that:

(1) For the costs incurred after 5 August 2019, the Plaintiff is entitled to have her costs to be paid by the Defendant personally, on full indemnity basis, to be taxed if not agreed. In the present case, not only has the Defendant failed to defend the removal application, the Defendant has unreasonably advanced very unmeritorious arguments which inevitably resulted in an escalation of costs.  Had the Defendant sensibly accepted the Plaintiff’s open offer, all the costs incurred after 5 August 2019 could be avoided.  I also agree with Mr Chu for the Plaintiff that the beneficiaries of the Estate should not be prejudiced by the Defendant’s unreasonable conduct, hence,it is only just and equitable that she bears the costs personally.

(2) For the costs incurred before 5 August 2019, although the Plaintiff abandoned some of the relief, I agree with Mr Chu for the Plaintiff that, in essence, there was an overlapping of issues and the affirmation evidence filed prior to 5 August 2019 were also deployed for the removal application.  In any event, I take into account the fact that the Defendant qua administratrix carried out her duty to provide the Plaintiff with an account and allowed an inspection of all supporting documents of the said account of the estate of the Deceased (Relief 1 and 2).  Further, as the Plaintiff is now appointed by the Court to be the new administratrix of the estate of the Deceased, the Plaintiff is entitled to sell the Property and to claim for rental payments from the Defendant (Relief 3 and 4).  Accordingly,on balance, I am of the view that a proper and just costs order is that the Plaintiff is entitled to costs of and occasioned by the Originating Summons prior to 5 August 2019 against the Defendant personally, on a party to party basis, to be taxed if not agreed.

Disposition

29.For all the reasons stated above, I make the following orders:

(1) The Defendant be removed as the administratrix of the estate of the Deceased;

(2) The Plaintiff be appointed as the administratrix of the estate of the Deceased;

(3) The Plaintiff is entitled to costs of and occasioned by the Originating Summons after 5 August 2019 and the said costs are to be paid by the Defendant personally, on a full indemnitybasis, to be taxed if not agreed.

(4) The Plaintiff is entitled to costs of and occasioned by the Originating Summons on and before 5 August 2019 and the said costs are to be paid by the Defendant personally, on a party to party basis, to be taxed if not agreed.

30.Finally, it remains for me to thank Mr Chu for the Plaintiff and Ms Tsau for the Defendant for their assistance to this Court.

Mr Raymond Chu, instructed by Deacons, for the plaintiff

Ms Margaret Tsau, instructed by Choy Yung & Co, for the defendant