Hanna Chung Ming Leung v. Leung Leung and Another

HCAP 19/2016

[2021] HKCFI 630

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

PROBATE ACTION NO 19 OF 2016

________________________

________________________

________________________

Before: Hon Wilson Chan J in Court

Dates of Hearing: 19-21, 23 October 2020

Date of Judgment: 15 March 2021

________________________

J U D G M E N T

________________________

A. INTRODUCTION

1.This is the trial of the probate action in relation to the estate of Leung Lit (the “Deceased”).  In summary, the plaintiff seeks the revocation of the Letters of Administration granted to the 1^st defendant in Hong Kong on 17 March 2011 in relation to the estate of the Deceased (the “Letters of Administration”) and consequentially for a new grant.

B1.    FACTUAL BACKGROUND - REVOCATION

2.The Deceased passed away on 22 April 2010. On 17 March 2011, the 1^st defendant was granted the Letters of Administration.  As recited in the Letters of Administration, the grant was made on the basis inter alia that the Deceased passed away intestate and that the Deceased was domiciled in Hong Kong at the time of death.

3.However, on 20 April 2016 the plaintiff was informed by a letter from the 2^nd defendant’s lawyers that it was discovered that the Deceased had in fact executed a Will dated 2 March 2001 in relation to his Hong Kong assets (the “Will”).

B2.    PARTIES AND THEIR POSITION

4.The Deceased is survived by his 7 children. The 1^st defendant and Leung Tung were born by the Deceased’s first wife whilst the plaintiff, the 2^nd defendant, Dorinda Leung, Evan Leung and Stella Ko were born by the Deceased’s second wife.

5.The beneficiaries under the Will are the 7 children of the Deceased (and the Deceased’s second wife who pre-deceased him).

6.It is trite that a probate action is in the nature of an action in rem and generally all persons who may be affected (for example, beneficiaries) should either be joined as parties or served with notice of the proceedings under Order 15, rule 13A of the Rules of the High Court (“RHC”).

7.The plaintiff had served notices under Order 15, rule 13A, RHC, to the other 4 children of the Deceased (ie the remaining children except for the plaintiff and the 1^st and 2^nd defendants).

8.Initially, 2 of the remaining children filed acknowledgements of service.  However, pursuant to the Order dated 17 October 2017, they were granted leave to withdraw their acknowledgements of service.

9.The upshot is that pursuant to Order 15, rule 13A(4), RHC, all the remaining 4 children are not parties to the action but will nonetheless be bound by any judgment given as if they were a party thereto.

10.As to the 1^st defendant, pursuant to leave granted by the Order dated 12 June 2018 the 1^st defendant has amended his acknowledgement of service such that he is no longer contesting these proceedings.

11.Nonetheless, the 1^st defendant remains a nominal party in this action as it is the 1^st defendant who was granted the Letters of Administration in 2011.

C1.    APPLICABLE LAW - REVOCATION

12.Section 33(1) of the Probate and Administration Ordinance, Cap 10 provides:

“Where it appears to the court that a probate or administration either ought not to have been granted or contains an error, the court may call in the probate or administration and if satisfied that it would be revoked at the instance of a party interested, may revoke it”.

13.In the present situation, as seen from the above background, the Letters of Administration ought not to have been granted and/or contains an error in that the Deceased did not pass away intestate but had in fact executed the Will.

14.Further, it is also the plaintiff’s case that the Letters of Administration contains a further error in that the Deceased was domiciled in Canada (and not Hong Kong) at the time of death.  However, since the parties are all agreed that the Letters of Administration ought to be revoked in any event due to the subsequent discovery of the Will, it does not appear necessary to determine the issue of domicile.

15.As to the Will, section 5 of the Wills Ordinance, Cap 30 stipulates certain formalities as to the signing and witnessing of valid wills (such as being in writing and signed in the presence of 2 attesting witnesses etc).

16.Further, it is trite that a person who propounds a will has the legal and persuasive burden of proving on a balance of probabilities that (i) there was due execution of the will; (ii) the testator was of testamentary capacity and (iii) the testator knew and approved of the contents of the will [see: Nina Kung v Wong Din Shin (2005) 8 HKCFRA 387 at paragraphs 171-173].

C2.    DISCUSSION - REVOCATION

17.In the present case, the Will on its face was professionally prepared by a firm of solicitors, Messrs Joseph Li & Co and was witnessed by 2 solicitors, namely Joseph Li and Belinda Lee.  It was also recited in the Will that it was interpreted to the Deceased in the Cantonese dialect by Joseph Li.

18.There is also a letter from Messrs Joseph Li & Co to the Deceased dated the same day as the execution of the Will (ie 2 March 2001).  In the letter, it is noted that the Will had been executed at the solicitors’ office on that day and a copy of the Will was enclosed for reference whilst the original of the Will would be retained at the solicitors’ office as instructed.  It was advised that the executors should be informed of the Will and a bill from the solicitors was also enclosed for settlement.

19.In the solicitors’ bill, there were itemised charges for taking instructions, giving general legal advice and for drafting and preparing the Will.

20.The parties all agree that the Will is valid.  However, as explained in Chow Siu Po v Wong Ming Fung [2004] 1 HKC 10 at paragraphs 4 to 8, the proof of a will in a probate action cannot be waived by the parties.  Furthermore, as highlighted at paragraphs 5 to 7, the court will normally require evidence from at least one attesting witness to prove the due execution of the will.

21.In response to a subpoena, the attesting witness Mr Joseph Li has testified as to the circumstances surrounding the execution of the Will.  It is clear that the formalities under section 5 of the Wills Ordinance, Cap 30 have been satisfied.

22.The Will (i) is in writing and signed by the Deceased; (ii) the Deceased intended by his signature to give effect to the Will; (iii) the signature was made by the Deceased in the presence of 2 or more witnesses present at the same time; and (iv) each witness attested and signed the Will in the presence of the Deceased.

23.It is also clear that the substantial requirements for the validity of the Will have been satisfied.  Mr Joseph Li has confirmed that there was (i) due execution of the Will; (ii) there were no concerns regarding the Deceased’s testamentary capacity; and (iii) the Deceased knew and approved of the contents of the Will.

24.Insofar as is necessary, it is also clear that the Deceased was domiciled in Canada at the time of his death.  It is common ground that the Deceased emigrated to Canada with his family in around 1973 and as confirmed by the 2^nd defendant in cross-examination the Deceased continued to live in Canada up until his death.  The Deceased was in Hong Kong only for limited periods for purposes such as grieving for his second wife, handling the administration of her estate and visiting.

25.It is common ground that the Will is valid and this has now been confirmed by the evidence of Mr Joseph Li.

26.Accordingly, I hold that the Letters of Administration ought to be revoked and consequently a new grant of administration should be made based upon the Will.

D1.    APPLICABLE LAW - PERSONAL REPRESENTATIVE

27.Under the Will, the 2^nd defendant is the only surviving named executor (the other executor being the Deceased’s wife).  However, as provided in section 36 of the Probate and Administration Ordinance, Cap 10:

“...where it appears to the court to be necessary or convenient to appoint some person to be the administrator of the estate of the deceased person or any part of such estate, other than the person who, if this Ordinance had not been passed, would by law have been entitled to a grant of administration of such estate, the court may, subject to section 25, appoint such person as the court thinks fit to be such administrator...”

28.It is trite that the court has a wide discretion under section 36 of the Probate and Administration Ordinance, Cap 10 in the appointment of an administrator having regard to the interest of the estate as a whole [see: for example, Re Estate of Chan Hung Mou, unreported, HCCA 2740/2007, 12 February 2009 at paragraph 7].

29.As expressed in Re Estate of Loo Che Chin [2013] 2 HKLRD 739, at paragraphs 9, 11 & 13:

“The words ‘necessary or convenient’ in situation (4) give the court a broad discretion, to be exercised in the best interests of the estate: Lefkowitz v Bank of New York [1996] 3 HKC 591, per Litton V-P at p 594D. Whether or not the Court will exercise the discretion depends on the actual circumstances of the case. The circumstances are not limited to those in connection with the estate itself or its administration, but can extend to any other circumstances which the Court thinks are relevant, which lead the Court to think that it is necessary or convenient to pass over the executor: see Re Clore (Deceased) [1982] Fam 113, per Ewbank J at p 117H. The burden rests with the applicant to satisfy the court that such circumstances exist: Chang Man v Ma Shou Yung [2002] 2 HKC 213, pp 218I - 219A (para 19) per Carlye Chu J (as she then was).

…

Further, as an executor has priority in appointment, the burden rests squarely on the applicant to show that there are special circumstances that make it necessary or convenient to pass him over: Chang Man v Man Shou Yung.

…

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 against 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 & Ors. This is a relevant factor because the expeditious and economical administration of the estate is always one of the objects that the court keeps in mind: Chang Man v Man 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 The Bank of New York & Ors. 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: In the 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 relation has caused or has the potential to cause difficulty in the administration of the estate: Kershaw.” (emphasis supplied)

D2.    THE PLAINTIFF’S FACTUAL CASE – PERSONAL REPRESENTATIVE

30.The Deceased passed away in 2010 and at the time of death he was the sole registered owner of 841/843 Granville Street, Vancouver, British Columbia, Canada (the “Granville Property”).

31.Since the death of the Deceased in 2010, the 2^nd defendant had de facto been managing the Granville Property and receiving rent from the tenant thereof.

32.Solus Trust Company Limited (“Solus Trust”), an independent trusts services company, was granted administration of the Deceased’s Canadian estate on 17 July 2014.  As expected, Solus Trust sought an account from the 2^nd defendant as to his receipt of rental income in relation to the Granville Property.

33.The 2^nd defendant provided Solus Trust with a written lease dated 1 November 2005 (the “2005 Lease”) in relation to the Granville Property and provided an account by way of letter from his lawyers dated 14 August 2014.

34.In the letter dated 14 August 2014, the 2^nd defendant’s accounting for the period from 2010 to 2014 was based upon the rent stated in the 2005 Lease.  Furthermore, the 2^nd defendant offered to purchase the Granville Property from the Deceased’s estate based upon the average price between two independent commercial valuations.

35.After the appointment of Solus Trust as administrator of the Deceased’s Canadian estate, control over the Granville Property transitioned from the 2^nd defendant to Solus Trust.  Starting in July 2014, Solus Trust began to seek to collect rent from the tenant of the Granville Property directly.

36.However, in or around early 2015, Solus Trust discovered that the tenant had since July 2014 been continuing to make payments to Gold Star Management Ltd (“Gold Star”) in relation to the Granville Property.  According to the company summary from the British Columbia registry, the directors of Gold Star are the 2^nd defendant and his wife.

37.The tenant disclosed that these payments were made pursuant to directions by the 2^nd defendant and based upon a written lease dated 1 November 2010 (the “2010 Lease”), which provided for a higher rent than the 2005 Lease.  The 2010 Lease was signed by the 2^nd defendant on behalf of Gold Star.

38.The tenant produced to Solus Trust a written bill from “Gold Star c/o 2^nd defendant” and entitled “Billing for Additional Rent - Jan 2014 to Dec 2014”.  The tenant also produced to Solus Trust copies of cheque stubs showing payments made to Gold Star.  The tenant’s lawyers further wrote to Solus Trust on 2 March 2015 recording further payments made to Gold Star in December 2014.

39.After application to the Canadian court, Solus Trust was granted leave and amended its Notice of Civil Claim adding a claim for an account as to the rental income diverted from the Deceased’s Canadian estate to Gold Star.

40.In his Counterclaim in the Canadian proceedings, the 2^nd defendant claimed that the Granville Property was to be inherited by him upon the Deceased’s death.

41.Ultimately, the Canadian legal proceedings were settled just before trial on 2 June 2019, which settlement was subsequently reduced into writing (the “Settlement Agreement”).

42.Under the Settlement Agreement, Solus Trust agreed to inter alia the dismissal of the above claim against the 2^nd defendant, his wife and Gold Star, whilst the 2^nd defendant agreed to the dismissal of his Counterclaim and to pay CAD775,000 to the Deceased’s Canadian estate [see: clauses 18-26].

43.It was expressly provided in the Settlement Agreement that nothing therein shall be construed as or constitute an admission of liability by any of the parties, each of whom expressly deny liability [see: clause 54].

44.In the premises, the plaintiff seeks for the grant of administration (with the Will annexed) to an independent and neutral third party, namely Lutea (Hong Kong) Limited.  

45.The plaintiff is of the view that the 2^nd defendant’s conduct in relation to the Deceased’s Canadian estate has generally been unsatisfactory, including substantial delays in responding to the requests for information by Solus Trust; failure to rent out a real property of the estate under his de facto control and allowing the foreclosure of another real property of the estate under his de facto control; and failure to inform other beneficiaries of his handling of assets of the Canadian estate.

46.However, as mentioned, the plaintiff relies primarily upon the misconduct of the 2^nd defendant in his de facto handling of the Granville Property after the Deceased’s death.

47.As can be seen from the above, the plaintiff’s case is primarily based upon contemporaneous documentary evidence such as written leases, correspondence between lawyers, cheque stubs, company registry summaries etc.

48.As approved by the Court of Final Appeal, “in looking at what may occur in the foreseeable future, past conduct is often a useful guide” [see: KEWS v NCHC (2013) 16 HKCFAR 1 at paragraph 38].

49.The plaintiff submits that, clearly, the 2^nd defendant’s past conduct whilst de facto handling the Granville Property belonging to the Deceased’s Canadian estate demonstrates a significant risk that the 2^nd defendant would in future administer the Hong Kong estate in a manner not in accordance with the law; or obstruct the due administration of the estate; or there is potential to cause difficulty in the administration of the estate.

D3.    THE 2^ND DEFENDANT’S CASE – PERSONAL REPRESENTATIVE

50.The 2^nd defendant is the only surviving executor named under the Will and denies that there was ever any misconduct on his part.

51.The 2^nd defendant repeatedly emphasizes in his pleadings filed in this action that the Granville Property was to be inherited by him and that this is proved by an Affidavit of Mr Tsang Ting Wai (who was the Deceased’s long-time lawyer).  This is also repeated in his Supplemental Witness Statement.  

52.As such, so the argument goes, since the Granville Property was to be inherited and owned by the 2^nd defendant after the Deceased’s death, there was never any duty to account to the estate and there can be no question of wrongfully diverting rental income.

53.However, one can see plainly from reading the Affidavit of Tsang Ting Wai that the only mention therein is that the Granville Property was left to the 2^nd defendant in a Canadian will executed in 2005.  However, this Canadian will was subsequently revoked and has no legal effect.  This is not disputed by the 2^nd defendant.

54.As recited in the Order of the Canadian court, it is beyond doubt that the Deceased died intestate in Canada without any valid will.

55.Further, in his pleadings and his Supplemental Witness Statement, the 2^nd defendant also relies on a note exhibited to the Affidavit of Tsang Ting Wai.  However, once again, simply from reading the affidavit and the note, it can be seen that this note was simply a written instruction regarding the Canadian will executed in 2005.  As mentioned, this Canadian will was subsequently revoked and has no legal effect.

56.Lastly, the 2^nd defendant refers in his Supplemental Witness Statement to a draft “Family Agreement” as evidence that the Granville Property was to be inherited by him.  However, again, simply from reading the draft Family Agreement it can be seen that not only was the draft never agreed to or signed by anyone, it is in fact merely a draft agreement for distribution of the Deceased’s estate to the children.  It does not suggest that the Deceased left the Granville Property to the 2^nd defendant.

57.Furthermore, the 2^nd defendant himself had offered to purchase the Granville Property from the Deceased’s Canadian estate in his letter sent via his lawyers dated 14 August 2014. I agree this directly contradicts any suggestion that the 2^nd defendant had inherited the Granville Property from the Deceased.

D4.    DISCUSSION – PERSONAL REPRESENTATIVE

58.The 2^nd defendant relies only upon the fact that he is the only surviving executor named in the Will.  As such, he insists that he should be appointed as the executor of the Deceased’s Hong Kong estate.

59.The plaintiff accepts that a testator’s choice of executor is capable of being relevant in the sense that the testator may be expected to have had knowledge of the characters, attitudes and relationships involved which a court will lack.  However, this factor is not significant where circumstances have changed radically since the testator’s death [see: Kershaw v Micklethwaite [2010] EWHC 506 (Ch), at paragraphs 12 to 14].

60.In the present case, the Will was made in 2001 and the Deceased passed away in 2010.

61.The plaintiff’s case is based upon the conduct of the 2^nd defendant since the death of the Deceased and are matters which the Deceased could not have known of before his death.  Thus, I agree the fact that the 2^nd defendant was named as executor in the Will pales into insignificance.

62.The most substantial complaint of the plaintiff is the manner in which the 2^nd defendant acted in relation to the Granville Property.

63.It is common ground that the Granville Property was registered in the sole name of the Deceased at the time of his death.

64.However, in 2018 the 2^nd defendant filed a legal counterclaim in Canada claiming ownership of the Granville Property.  This claim was eventually abandoned by the 2^nd defendant in the Settlement Agreement of 2 June 2019.  The 2^nd defendant stated that he abandoned the counterclaim because the Granville Property had been sold by Solus Trust and there was no point in maintaining the counterclaim as it was not possible to honour the Deceased’s wish to keep the Granville Property in the family.  But this cannot be true bearing in mind that the Granville Property had been sold in March 2015, and the counterclaim was filed only in August 2018.  Moreover, the counterclaim involved a claim by the 2^nd defendant for the proceeds of sale.

65.According to the 2^nd defendant’s evidence in cross-examination, he believes that he should own the Granville Property because the Deceased, during his lifetime, told him verbally that the Granville Property belonged to him.

66.However, as a matter of fact and law, there could not have been any inter vivos gift of the Granville Property.  According to the 2^nd defendant’s own evidence in cross-examination, even on his own understanding he could not sell the Granville Property as he wished during the Deceased’s lifetime and any rental income received would belong to the Deceased during his lifetime.

67.It is common ground that the Deceased made a Canadian will on 14 June 2005 wherein the Granville Property was left to the 2^nd defendant [see: Affidavit of Tsang Wing Wai at paragraphs 34 to 41 and the Note].

68.This shows that the Deceased regarded that he himself still owned the Granville Property in 2005.

69.More importantly, it is also common ground that the Canadian will was revoked on 28 September 2005.

70.Indeed, according to the 2^nd defendant’s own evidence in cross-examination:

(1)  About a year after the death of the Deceased, he tried to obtain probate in Canada based upon the Canadian will.  At this point, he found out that the Canadian will had been revoked;

(2)  He knewwellthat if the Canadian will was revoked, his choice was either to challenge the revocation of the Canadian will or to get agreement from his siblings to arrive at a family agreement so that he would get exactly the same treatment as regards the Granville Property (ie he would inherit the Granville Property);

(3)  However, he never took any steps to challenge the revocation of the Canadian will and, for whatever reason, there was never any agreement signed with his siblings;

(4)  And yet, he continued to still act as if he was the owner of the Granville Property;

(5)  He now admits that this was a mistake but that was what had happened.

71.It is incredible that it was only on the third day of trial during cross-examination that the 2^nd defendant admitted his mistake.  It is not an acceptable excuse that the 2^nd defendant feels in his mind that he should own the Granville Property.

72.As stated in the case-law, an executor would be passed over if it can be demonstrated that he would administer the estate in a manner not in accordance with the law.  Further, it is simple logic that “in looking at what may occur in the foreseeable future, past conduct is often a useful guide”.

73.Given his above past conduct, it can be demonstrated that the 2^nd defendant would administer the estate in a manner not in accordance with the law.

74.Furthermore, it is common ground that there is a real property in Hong Kong at Ground Floor, No 66 Hong Ning Road, Kwun Tong, Kowloon, Hong Kong (the “Kwun Tong Shop”) registered in the sole name of the Deceased at the time of his death.  Since the grant of the Letters of Administration, it has been registered in the name of the 1^st defendant in his capacity as the administrator of the Deceased’s Hong Kong estate.

75.However, according to the 2^nd defendant’s evidence in cross-examination, in his mind he regards the Kwun Tong Shop as belonging to the 1^st defendant and Leung Tung.

76.This further bolsters the claim that the 2^nd defendant would administer the Deceased’s Hong Kong estate in a manner not in accordance with the law.  It is clear that under the Will, all the Deceased’s assets in Hong Kong are to be divided equally between the 7 children.

77.Another matter in relation to the Granville Property is the 2^nd defendant’s accounting of the rental income he received therefrom after the Deceased’s death in 2010 up to around June 2014. It is common ground that the 2^nd defendant received rental income from the Granville Property from 2010 up to around June 2014.

78.However, the 2^nd defendant had only ever disclosed the 2005 Lease in relation to the Granville Property.

79.The 2^nd defendant’s accounting of the rental income was also based upon the 2005 Lease.

80.However, it was subsequently discovered from the tenant of the Granville Property that there was in fact the 2010 Lease, which stipulated a higher rent.

81.In other words, the 2^nd defendant failed to disclose the 2010 Lease and represented that there was only the 2005 Lease.  Further, the 2^nd defendant provided an untruthful and inaccurate accounting of the rental income.

82.According to the 2^nd defendant’s evidence in cross-examination, the reason he did not disclose the 2010 Lease was because he thought the matter would be settled fast and there was no point or no need in confusing the administrator, Solus Trust.  He now admits that he should have disclosed the 2010 Lease and provided an accurate and complete picture.

83.Again, it is incredible that it has taken until the third day of this trial for the 2^nd defendant to admit his mistake.  That a settlement might be reached soon is clearly not an acceptable excuse for not disclosing the 2010 Lease and for understating the rental income received in his accounts.  Once again, this demonstrates that the 2^nd defendant would administer the Hong Kong estate in a manner not in accordance with the law and/or in a manner contrary to the expeditious and economical administration of the estate.

84.It is obvious from observing the interaction between the 2^nd defendant and the plaintiff’s witnesses during oral evidence that there has been a complete breakdown of trust between them such that it is often difficult for them to even communicate effectively.

85.In the premises, the appointment of the 2^nd defendant as executor certainly has the potential to cause difficulty in the administration of the Hong Kong estate and/or is contrary to the expeditious and economical administration of the Hong Kong estate.

86.As submitted in the plaintiff’s Opening Submissions, the plaintiff’s case is largely based upon undisputed documentary evidence.  After hearing oral evidence, it has now been further bolstered and confirmed by the 2^nd defendant’s own evidence.  Nothing really turns on the credibility of the plaintiff’s witnesses.

87.In the premises, I agree it is necessary and convenient for the 2^nd defendant to be passed over as executor.  The plaintiff seeks the appointment of a neutral and independent third party ie Lutea (Hong Kong) Limited as administrator of the Deceased’s Hong Kong estate.

88.Lutea (Hong Kong) Limited has filed its consent to be appointed as the administrator of the Deceased’s Hong Kong estate.

89.It has also provided brief curriculum vitae, proposed hourly rates and a cap on fees in its e-mails dated 14 and 19 October 2020.  In short, the hourly rate of a director is HK$3,500, that of a senior administrator is HK$2,000 and that of an administrator is HK$1,500 with a cap of 20 hours for the Hong Kong estate of the Deceased and 10 hours for the Hong Kong estate of the second wife (by chain of representation).  I regard these fees as reasonable.

E.     CONCLUSION

90.For the reasons stated above, I make an order: (i) revoking the Letters of Administration; (ii) pronouncing for the force and validity of the Will in solemn form; and (iii) granting letters of administration with the Will annexed to Lutea (Hong Kong) Limited as the administrator of the estate of the Deceased.

91.I further order that the 2^nd defendant’s counterclaim be dismissed.

F.     COSTS

92.For costs in relation to litigation regarding estates, there are generally 3 classes of cases.  Firstly, where trustees ask the court to determine some question.  Secondly, where the question for determination is raised by some of the beneficiaries but was a question that would have justified an application by the trustees.  Thirdly, where the application was made by a beneficiary but was in substance an adverse claim made in hostile litigation [see: Cheung Pui Yuen v Worldcup Investments Inc (2009) 12 HKCFAR 31].

93.In this third class, the rule applicable to hostile litigation should be applied and the unsuccessful party ordered to pay costs.

94.In the present case, the dispute as to who should be appointed as the personal representative should fall within the third class and insofar as the 2^nd defendant is unsuccessful, the 2^nd defendant ought to be ordered to pay costs.

95.Further, insofar as the 2^nd defendant is unsuccessful, the plaintiff seeks costs on an indemnity basis.

96.An award of indemnity costs is not confined to cases brought with an ulterior motive, for an improper purpose, or where there was some deception or underhand conduct on the part of the losing party.  It is undesirable to attempt to define the circumstances in which such order would be made, and the discretion was not to be fettered beyond the requirement that indemnity costs must be “appropriate”.  The attributes of the parties and the character of the proceedings were not irrelevant to the exercise of the discretion to award indemnity costs.  The grounds for making such an order must be connected with the case and might extend to any matter relating to the litigation and the parties’ conduct in it, and also to the circumstances leading to the litigation, but no further [see: Town Planning Board v Society for Protection of the Harbour Ltd (No 2) (2004) 7 HKCFAR 114].

97.In the present case, the whole dispute could have been avoided if the 2^nd defendant had admitted his mistakes early on and agreed that he should not be appointed as executor.  On such a completely unsustainable case, there is no reason why the 2^nd defendant should have waited until the third day of trial to admit his mistakes.  Indeed, up to now the 2^nd defendant still insists on being appointed as executor.

98.As to the propounding of the Will, this was not disputed by the parties.  Where a legatee propounds a will and establishes it, thereby fulfilling the duty of an executor, he is entitled to have his expenses paid out of the residuary estate.  Where a legatee himself is not entitled to such a grant he should apply for costs out of the estate.  Such costs should be asked for on an indemnity basis [see: Williams, Mortimer and Sunnucks on Executors, Administrators and Probate, 21^st Edition at §33-13 & footnote 90].

99.In the premises, the plaintiff should be paid the costs of propounding the Will out of the residuary Hong Kong estate of the Deceased on an indemnity basis.

100.As this court is familiar with the case, it would be convenient for costs to be apportioned.  Accordingly, I order that: (i) the 2^nd defendant do pay 95% of the plaintiff’s costs of and incidental to this action (including all costs reserved, if any) on an indemnity basis; and (ii) 5% of the plaintiff’s costs of and incidental to this action (including all costs reserved, if any) be paid out of the residuary Hong Kong estate of the Deceased on an indemnity basis (all to be taxed if not agreed).

Mr Julian Chan, instructed by Messrs Boase, Cohen & Collins, for the plaintiff

The 1^st and 2^nd defendants acted in person