Tsang Tai Tai Ivy and Others v. Tsoi Kwai Ying

HCMP 671/2019

[2021] HKCFI 626

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 671 OF 2019

________________________

________________________

BETWEEN

________________________

Before:  Deputy High Court Judge MK Liu in Court

Date of Hearing:  10 March 2021

Date of Judgment:  12 March 2021

________________________

J U D G M E N T

________________________

1.By the Letters of Administration under Grant No. HCAG005345/1999 (“the Grant”), the 1^st plaintiff (“Tsang”) and the defendant (“Tsoi”) are the joint administratrixes of the estate (“the Estate”) of Wu Tai Wai David (“David”), the deceased.

2.In these proceedings, Tsang, together with the 2^nd and the 3^rd plaintiffs (collectively “Ps”), are seeking an order to remove Tsoi as an administratrix of the Estate, and an order to compel Tsoi to render a true and perfect inventory and account of the assets of the Deceased.

BACKGROUND

3.On 22 January 1987, David and Tsang married. Their first daughter, the 2^nd plaintiff, was born on 24 February 1993.  Their second daughter, the 3^rd plaintiff, was born on 9 May 1994.

4.Tsoi is David’s mother.

5.On 5 February 1998, David died intestate.

6.The assets in the Estate include a property known as Lot No.1398 in DD106 (“the Lot”) and a three-storey house built thereon (“the Property”).

7.On 5 September 1998, a Chinese written agreement (“the Agreement”) was signed by Tsang and Choi and other persons.  According to Ps, the Agreement was entered into as a result of a suggestion made by Wu Man Sun, an uncle of David.  In her affirmation dated 6 May 2019, Tsang said that in about August 1998, Wu Man Sun told Tsang and Tsoi that David was one of the beneficiaries of the estate of the Grandfather, together with David’s three uncles and Wu Man Sun.  The Grandfather predeceased David, so David should be entitled to have a share in the estate of the Grandfather. However, since David did not have any son, he could not be named as one of the beneficiaries in the application for succession of the lands owned by the Grandfather. Wu Man Sun suggested that if Tsang agreed to the deletion of David’s name in the application, Wu Man Sun together with the other three uncles would hold one fifth of the estate of the Grandfather on trust for Tsoi and Ps, and the interest arising from the Property would be distributed in the same manner.

8.On 27 July 2011, the Grant was made to Tsang and Tsoi as the joint administratrixes of the Estate.

9.On 6 May 2019, Ps commenced these proceedings against Tsoi.

10.On 11 October 2019, Tsoi commenced HCA 1879/2019 (“the HC Action”) against Tsang.  Tsang was sued in her personal capacity and in her capacity as the administratrix of the Estate.  In other words, Tsoi has sued the Estate in the HC Action.  In the HC Action, Tsoi is relying upon the Agreement to claim that she is entitled to have 25% of assets in the Estate. Alternatively, Tsoi claims that she has made contributions to the construction costs of the house on the Lot, and as a result she is a 71% beneficial owner of the Property.  Tsoi claims that the Estate is holding the said interest on trust for her.

11.On 21 November 2019, by an order by consent made in these proceedings, these proceedings were stayed until the final determination of the HC Action or a further order. 

12.On 20 April 2020, by an order made in the HC Action, Tsoi was required to provide security for the defendant’s costs in the HC Action, failing which P’s claim in the HC Action would be dismissed with costs.  According to Ps, that order has been served on Tsoi in May 2020.  This is not denied by Tsoi.

13.Tsoi is legally represented in these proceedings.  On 22 January 2020, Tsoi filed a notice to act in person in these proceedings, in which Tsoi provided an address in Sweden for service of documents on her.  On 26 August 2020, the court made an order striking out that notice to act in person, for the address provided therein is not a Hong Kong address.  At the same time, the court uplifted the stay of these proceedings.

14.On 23 February 2021, Tsoi’s solicitors wrote to this court and sought leave that they be excused from attending the substantive hearing on 10 March 2021, for they had not received any instructions from Tsoi.  They have made an application for an order to cease to act for Tsoi, but that application would only be heard on 15 March 2021.  On 25 February 2021, I refused to give leave to the solicitors, for they are the solicitors representing Tsoi in these proceedings on record and therefore should attend the substantive hearing.

15.In the hearing on 10 March 2021, Mr Shek (instructed by Tsoi’s solicitors) informed me that he had no instruction to make any submissions on behalf of Tsoi.

16.Giving no instruction to those representing her in these proceedings is a matter of Tsoi’s own choice.  Not filing a proper notice to act in person with a Hong Kong address therein is also a matter of her own choice.  There is no reason why the substantive hearing should not proceed as scheduled because of these choices made by Tsoi.

Ps’ CASE

17.Ps contend that Tsoi should be removed from acting as the administratrix of the Estate of the Deceased on the following ground:

(1)  failure to provide an inventory and account of the Estate;

(2)  conflict of interest if Tsoi continues to act as one of the administratrixes;

(3)  substantial delay in administering the Estate; and

(4)  loss of mutual trust and confidence.

18.Ps’ case is that in about December 1998, Tsoi told Tsang that Tsoi would handle the tenancy in respect of the Ground Floor and First Floor of the Property.  Since then, Tsoi had been receiving most of the rental incomes from tenancy of the Ground Floor up to at least August 2014. As to the rental incomes from tenancy of the First Floor, Tsoi has been receiving the same since December 1998 and is still receiving the same.  Despite repeated requests, Tsoi still fails to render a true and perfect inventory and account of the Estate and distribute the Estate including but not limited to transferring the legal title of the Property to Ps, on the pretext that she had paid the construction costs of the Property and should be entitled to have beneficial interest of the Property.

19.Ps say that there is conflict of interest for Tsoi to continue to act as an administratrix of the Estate.

Tsoi’s CASE

20.Tsoi has filed an affirmation on 19 July 2019 in opposition to Ps’ application.  In that affirmation, Tsoi said:

(1)  She paid the construction costs of the Property and therefore she should be entitled to have beneficial interest of the Property.  However, for the purpose of avoiding litigation and according to David’s testamentary wishes, she entered into the Agreement and agreed the interest of the Property to be shared equally among Ps and her, each entitled to 25% of the Property.

(2)  She is willing and prepared to produce an account of the Estate with all supporting documents to Ps.  Tsang is also obliged to provide an account of the Estate.  She also alleges that she had been handling the maintenance and repairing matters of the Property over 16 years and it was Tsang who had failed to administer the Estate.  She therefore opposes to be removed from acting as an administratrix of the Estate and seeks costs to be paid by Ps on indemnity basis.

ANALYSIS

21.The principles concerning removing an administrator are trite and have been recently summarized by DHCJ To in Chang Wing Ka John v Chang Wing Dee an Another[1].  In that case, the learned judge said (footnotes omitted):

“157.  The applicable legal principles on removal of administrators are not in dispute. Section 33(3) of the Probate and Administration Ordinance (Cap 10) gives the court power to remove administrators. The section 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 require, 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 person of any property belonging to the estate.’

158.  The overriding consideration for the court is the welfare of the beneficiaries. In deciding whether to remove a personal representative, the proper question to ask is whether for that end the removal is necessary for the due and proper administration of the estate: see Chow Chak Kiu v Chow Man Chit. It is not every mistake or neglect of duty, or inaccuracy of conduct of trustees, which will induce the court to remove the office of a personal representative. The acts or omissions must be such as to endanger the trust property or to show a want of honesty, or want of proper capacity to execute the duties, or a want of reasonable fidelity: see Thomas and Agnes Carvel Foundation v Carvel.

159.  In exercising its discretion, the court should have regard to the size of the estate, the nature of the assets that need to be administered, the background and education, training and experience of the remaining and substituted personal representatives and the interests of the beneficiaries: see Wong Tat Lun Eddie & Ors v Wong Chi Ho Jimmy & Ors.  The view of the majority beneficiaries is a relevant factor:  see Chan Yu Hong v Chan Kam Hong.  The discretion is to be exercised with great caution and sparingly. In general, removal of a representative is not to be preferred unless the administration is still far from completion: Chan Yu Hong.  The courts are reluctant to exercise the discretion where the incumbent executor or administrator wishes to carry on, without allowing that incumbent an opportunity to repair or remedy any defects and progress promptly with due administration.  The fact that administration of the estate could have been done better is not of itself sufficient ground: Wong Tat Lun Eddie & Ors.  Hostility between the trustee and beneficiaries as such is not a ground for removal of the trustee, unless the breakdown of relations between them is such as to lead to the administration coming to a standstill, or makes it difficult or impossible for the administration to be completed by an existing personal representative: Chan Sau Heung v Kwan Siu Fai; Re Estate of Kwan Chung; Jones v Firkin-Flood.”

22.In respect of requiring an administrator to render a full and proper account, the court has the jurisdiction to do so pursuant to s.56 of the Probate and Administration Ordinance, which provides:

“The personal representative of a deceased person shall, when lawfully required so to do, exhibit, by affidavit filed in the court, a true and perfect inventory and account of the movable and immovable property of the deceased, and the court shall have power as heretofore to require personal representatives to bring in inventories.”

23.As to an administrator’s duty on rendering a full and proper account, in Chang Wing Ka John, the learned judge said:

“179. An administrator’s duty on rendering accounts is well settled. His duty is to keep clean, clear and accurate account and to be always ready to render such account when called upon to do so. Lack of experience is no excuse as in such cases it would be their duty to employ a competent accountant to keep them. To discharge the duty properly, there must be production of the relevant supporting documents and receipts, as well as proper breakdown of items: see Chan Yu Hong[2]. An administrator must at all reasonable times be ready to render a clear and accurate statement of account to a beneficiary, so that the beneficiary is able to see his entitlement under the trust: see Re Estate of Lee Da Kor and Re Leung Kam Wah.” (Emphasis added)

24.In Charles Yu Chiu Kwan v Edna Yu Chan Shek Yin, Rhind J said[3]:

“An executrix is a species of trustee. Like any other trustee an executrix must at all reasonable times be ready to render a clear and accurate statement of accounts to a beneficiary, so that the beneficiary is able to see his entitlement under the trust.” (Emphasis added)

Tsoi having no entitlement in the Estate

25.Before considering the grounds relied upon by Ps in support of their application, I would first examine whether Tsoi has any entitlement in the Estate.

26.In my judgment, Tsoi cannot rely upon the Agreement to claim any entitlement in the Estate.  Reasons are as follows:

(1)  The title of an administrator springs from the grant of the administration.  At the time of the Agreement, there was no grant of the letters of administration of the Estate to anyone.  That being the case, although Tsang and Tsoi have signed the Agreement purportedly in the capacity of administratrixes of the Estate, the Agreement cannot bind the Estate as a matter of law.[4]

(2)  At the time of the Agreement, the 2^nd and the 3^rd plaintiffs were minors.  The 2^nd and the 3^rd plaintiffs have not signed the Agreement.  No one has ever been properly authorised to sign the Agreement on behalf of the 2^nd and the 3^rd plaintiffs.  The interests of the 2^nd and the 3^rd plaintiffs cannot be affected by the Agreement. 

27.As to Tsoi’s claim that she is a beneficial owner of the Property by reason of the contribution to the construction costs of the house of the Lot as alleged by her, she has made that claim in the HC Action but the HC Action has been dismissed.  Based upon the materials now before the court, Tsoi cannot claim any beneficial interest in the Property.

28.In my judgment, Tsoi does not have any entitlement in the Estate.  In accordance with s.4(3) of the Intestates’ Estates Ordinance, Tsang, the 2^nd plaintiff, and the 3^rd plaintiff are the only beneficiaries of the Estate.

Tsoi’s failure to render a full and proper account

29.In her affirmation, Tsoi admitted all the rental incomes generated from the Property were received by her before August 2014. Tsang only began to receive part of the rental incomes from August 2014.

30.Tsoi alleges that before the commencement of these proceedings, Tsang has never required her to render an account of the rental incomes.  Tsang claims that she began to ask Tsoi to render an account of the rental incomes in late 2018.  Even taking Tsoi’s case at its highest, Tsoi is aware of Ps’ claim for an account of the rental incomes since the commencement of these proceedings, ie since 6 May 2019.  Nearly two years have elapsed, and yet there is still no account produced by Tsoi.  In my judgment, Tsoi has failed to render a full and proper account of the assets in the Estate.  I would compel her to do so.  I would allow Tsoi to have 56 days to prepare the account.

31.As to Tsoi’s claim that Tsang shall also render an account, Tsang’s stance is that she is prepared to do so if this is ordered by the court.  However, since Ps are the only beneficiaries of the Estate and none of them requires Tsang to prepare an account, such an account may not be necessary.  I agree.  As discussed in the authorities set out in the above, the purpose of having an account by an administrator is to enable a beneficiary to see his or her entitlement in the estate.  In the absence of any request made by a beneficiary for an account from Tsang, I am of the view that it would be necessary to require Tsang to prepare an account.

32.None of the beneficiaries of the Estate has complained that Tsang has not administered the Estate properly.  That being the case, it would not be necessary for me to consider whether the Estate has been properly administered by Tsang in the past. 

Conflict of interest

33.In my judgment, it is plain and obvious that there would be conflict of interest if Tsoi is allowed to continue to act as one of the administratrixes of the Estate.  She has sued the Estate in the HC Action.  Even if her affirmation filed in these proceedings, she maintained the stance that the Agreement is binding upon the Estate, and alternatively the Estate is holding the Property on trust for her.  Clearly, these are claims against the Estate.  Her own interest and the Estate’s interest conflict with each other.

Substantial delay in administering the Estate

34.By 2013, the youngest daughter of the Deceased, ie the 3^rd plaintiff, has attained the age of 18.  However, Tsoi has taken no step to distribute the assets in the Estate to Ps, including transferring the Property to Ps.  The delay is substantial and cannot be justified.  In my judgement, there has been inordinate and unjustifiable delay on the part of Tsoi in distributing the assets in the Estate to Ps.

Loss of mutual trust and confidence

35.By reason of the disputes in the HC Action and in these proceedings, obviously, Ps have lost trust and confidence on Tsoi. There is no longer any mutual trust and confidence between Ps and Tsoi.

Removing Tsoi from the office of administratrix

36.All of the grounds relied upon by Ps are established.  Based upon those grounds, in my judgment, Tsoi should be removed from the office of administratrix.

DISPOSITION

37.I allow Ps’ claim.  There be an order that:

(1)  the status of Tsoi as one of the two administratrixes in the Letters of Administration under the Grant be removed;

(2)  Tsang be remained as the remaining administratrix entitled to the same rights and being subject to the same liabilities and being accountable in like manner as if she were the only administratrix of the Deceased; and

(3)  Tsoi do render to Ps a true and perfect inventory and account of the assets of the Estate and Tsoi’s dealing of such assets since the date of the Grant up to the date of this judgment with all supporting documents by way of an affirmation within 56 days.

38.There be liberty to apply.

39.Costs should follow the event.  There be a costs order nisi that costs of these proceedings (including all costs reserved, if any) be paid by Tsoi to Ps, to be taxed if not agreed.

40.I thank counsel for the assistance rendered to the court.

Mr Victor Chiu, instructed by Chan Ching Man & Co, for the 1^st, 2^nd and 3^rd plaintiffs

Mr Conan Shek, instructed by Tony Kan & Co, for the defendant