Chan Fuk Tai and Others v. Chan Wai Ming

HCMP 3474/2016

[2020] HKCFI 981

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 3474 OF 2016

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D E C I S I O N

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Introduction

1.There are 2 summonses before the Court, both dated 11 May 2020, taken out by the Defendant:

(1)     For leave to withdraw $350,000 from funds stakeheld by Ching & Co for the purpose of discharging the Defendant’s liability for costs to the Plaintiff; and another sum of $500,000 to discharge his liability towards his solicitor (“Withdrawal of Funds Summons”).

(2)     For leave to rely upon his affirmation filed on 11 May 2020 (“D’s Affirmation”) in opposing the Plaintiff’s application to make a charging order nisi absolute (“Evidence Summons”).

Background

2.The Plaintiffs and Defendant are 6 out of 10 beneficiaries of the estate (“Estate”) of their uncle, Chan To (“Deceased”).  The Defendant is also the sole administrator of the Estate.  The principal assets of the Estate are 3 landed properties abbreviated as the Chung Hing Mansion Property, Westlands Gardens Property and Westlands Garden Carpark.  Those properties have been sold by now.

3.In October 2016, the 1^st Plaintiff discovered that the Defendant as administrator had entered into an agreement for sale and purchase of the Westlands Gardens Property for $10.5 million.  The Plaintiffs took out the originating summons in this case on 14 December 2016 seeking an account and an order that the Defendant do distribute the estate. 

4.The originating summons has progressed to a stage where an Inquiry had been held on 19 December 2019 before Master Benny Lo to decide whether expenses allegedly incurred by the Defendant should be included in his verified accounts.  Master Lo’s decision is pending.

5.In the interim, the Plaintiffs obtained an order dated 16 December 2016 from A Chan J requiring the Defendant to pay the net proceeds of sale of the Westlands Gardens Property (“Sale Proceeds”) into a stakeholder’s account pending determination of an injunction summons.  That order was continued by consent on 9 February 2017 pending final determination of the originating summons (“the Consent Order”).

6.On 11 July 2019, Chung J held that the Plaintiffs should be entitled to costs reserved under A Chan J’s order and summarily assessed those costs on 5 August 2019 to be $229,025.

7.The Defendant has failed to pay the assessed costs.  The Plaintiffs therefore obtained a charging order nisi in respect of the Defendant’s property.  The Defendant objected to making it absolute.

8.Directions were given by Master Kot for filing of affirmations in respect of the Charging Order Application.  The hearing was supposed to be held on 25 February 2020 but was adjourned due to the General Adjournment Period of the Court.

9.Master Sabrina Ho gave directions for the disposal of the Charging Order Application on the papers.  The closing date for filing submissions was 5 May 2020.

10.The Plaintiffs duly filed their written submission but the Defendant did not. 

11.On 11 May 2020, the Defendant issued the 2 summonses now before the Court.  They are all objected to by the Plaintiffs.

Withdrawal of Funds Summons

12.The margin note to this Summons stated that the application is made pursuant to the “liberty to apply” provision under the Consent Order.

13.Although the Consent Order did not include a liberty to apply provision, Mr David Chen, counsel for the Plaintiffs, accepts that such a provision is routinely implied in injunction orders.  However, he points out that such a provision only enables the parties to ask the court to deal with matters in the working out of an order.  It does not confer a right on the parties to ask the court to vary the order: Billion Lead Investment Ltd v Union Joyce Ltd, HCMP 2145/2011, 13 August 2015, §23, Ng J; Re Estate of Shum Kwok Hang (deceased) [2018] 1 HKLRD 434, §14, DHCJ Kenneth Kwok SC.

14.The purpose of the Consent Order is to preserve the Sales Proceeds belonging to the Estate.  That Order did not purport to deal with distribution of the Sale Proceeds to the beneficiaries.

15.The distribution is not yet ready pending the decision of Master Lo on the Inquiry.

16.The Defendant claims that he does not have money to meet the assessed costs.  He says that his share in the Estate is over $1,100,000.  He asks for an order for payment out to meet his liability for the assessed costs and to pay his own solicitors, Ching & Co.

17.The Withdrawal Summons is objectionable because:

(1)     It exceeds the scope of the liberty to apply provision because the order sought is not to work out but to vary the Consent Order.

(2)     Not all the beneficiaries to the Estate are present before the Court and their views on partial distribution were not sought.  TC Foo & Co has already alerted Ching & Co to the fact that the parties in the present case cannot by consent between themselves agree upon a payment out.

(3)     Paragraph 2 of the Consent Order which enables the Defendant to apply to the court at any time for variation or discharge does not assist the Defendant.  As rightly submitted by Mr Chen, the Consent Order concerns safekeeping of funds of the Estate whereas this Summons is to partially distribute it. This application potentially prejudices the interest of other unnamed beneficiaries of the Estate and cannot be applied for under the guise of variation or discharge.

18.For the reasons given in the preceding paragraph, the Withdrawal of Funds Summons is not validly constituted and should be dismissed.

Evidence Summons

19.The Evidence Summons, which seeks to introduce another affirmation for the Charging Order Application, should be dismissed for the following reasons:

(1)     The Defendant had already filed an affirmation out of time once, in breach of Master Kot’s order. Master Sabrina Ho has given him one chance to file out of time, which he had taken.

(2)     Master Sabrina Ho gave directions for paper disposal of the Charging Order Application with a timetable for filing further affirmations and lodging submissions.  The closing date for compliance was 3 weeks ago, ie 5 May 2020. 

(3)     The Defendant only took out the Evidence Summons 6 days later, on 11 May, seeking to file a further affirmation and submissions out of time.  There is no explanation for the delay.  There is no room for this Court to exercise any discretion to allow filing another affirmation.  This is all the more so when the proper forum for the Evidence Summons is before the Master and not a judge.

20.I dismiss the Evidence Summons.  No further directions need to be given by this Court and the Master can simply proceed to dispose of the Charging Order Application on the papers forthwith, if he/she has not already done so.

Conclusion

21.Both Summonses are dismissed, with costs to the Plaintiffs.

22.The Plaintiffs seek costs on higher basis.   This is because their letter before summons has already pointed out the problem with the Defendant seeking partial distribution to himself without notice to other beneficiaries. The Evidence Summons plainly was to delay the resolution of the Charging Order Application.

23.On the other hand, the applications stem from the Defendant’s lack of money to meet the assessed costs and a wish to dispense with the Charging Order Application.   The Defendant’s solicitor had thought these summonses could achieve a saving of costs and time though it turned out to be the contrary. The fact that it was the Plaintiffs who suggested that the Defendant should take out a summons did not mean that the Defendant need not satisfy proper legal requirements to succeed on his summonses.

24.Taking all circumstances into account, I am not satisfied that the Defendant had acted with improper motives to justify costs on indemnity basis.

25.The costs statement shows actual costs incurred by the Plaintiffs.  I see little difference between indemnity and party-and-party costs in the present summonses.  I summarily assess costs for the Plaintiffs in the sum of $40,000.

Mr David Chen, instructed by T. C. Foo & Co., for the Plaintiffs

Mr Ching Ming Yu, of Ching & Co. for the Defendant