Chiu Kwok Yin Wendy and Chiu Kang Huen Kenneth As the Executors of the Estate of Chiu Wan Yin Vernessa Deceased v. Lo Wai Hung Peter and Another

HCMP 1115/2021

[2022] HKCFI 655

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 1115 OF 2021

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BETWEEN

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DECISION

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INTRODUCTION

1.By the present application, the Plaintiffs sought determination of a number of questions arising in the administration of the Estate of Chiu Wan Yin Vernessa (“the Deceased”)  pursuant to Order 85 Rule 2 of the Rules of the High Court (“RHC”).

2.The questions concern the Property known as Apartment No. 12E on 12th Floor of Block E, Hilltop, 60 Cloud View Road, Hong Kong (the "Property"); specifically, the issues revolve around whether the joint tenancy under which the Property was held by the 1^st Defendant and the Deceased prior to her death was severed as a result of the circumstances surrounding the execution of her Will (defined below).

3.Following a hearing on 25 February 2022, I indicated that I would reserve my decision, which would be rendered shortly thereafter. This is my decision.

BACKGROUND

4.The Deceased was married to the 1^st Defendant ("Peter")  and gave birth to 2 children, namely, the 2^nd Defendant ("Emma")  and the 3^rd Defendant (“Cornelius”).

5.The Deceased was the sister of the Plaintiffs.

6.The Property was purchased and assigned to the Deceased and Peter as joint tenants on 4 May 2011.

7.The Deceased died of cancer at Hong Kong Sanatorium Hospital (the “Hospital”)  on 7 February 2020. Before her death, she made a Will on 6 December 2019 (the “Will”)  in which Peter and the Plaintiffs were named as the executors (the “Executors”).

8.Clause 5..2 of the Will ("Clause 5.2")  expressly provides, inter alia, as follows:

"I give, devise and bequeath of the property I have ownership at the time of my death situated at 12E, 60 Cloudview Road, Hilltop, North Point, Hong Kong to my children Lo Sze Yu Emma and Lo Milton Cornelius absolutely and entirely in equal share.”

9.The Will was made in the following circumstances.

10.While the Deceased was hospitalised for treating her cancer in the Hospital, she sent a WhatsApp message on 6 December 2019 to her friend, Ms Ip Wing Law Julie ("Julie"), who works as an in-house legal counsel seeking Julie's help to draft a will for her with a view to leaving the Property to her son and daughter.

11.When Julie met the Deceased at the Hospital on that afternoon, the Deceased revealed her intention in the presence of Peter to make a will to leave everything including the Property to her 2 children in equal shares. Peter also indicated his wish to make a similar will.

12.After Julie noted down how the Deceased intended to deal with her assets, she went back to her office to prepare the will. She returned to the Hospital that evening with a draft will for the Deceased and a mirror one for Peter. She handed the 2 draft wills to the Deceased and Peter respectively. Peter put aside his draft Will, and they then focused on the Deceased's draft will.

13.After they finished reading the draft will, both the Deceased and Peter confirmed that they were satisfied with and agreed to the contents of the Will including Clause 5.2. Then the Deceased signed the Will in front of Julie and Peter. After she signed it, Peter and Julie also signed the Will as witnesses. The Will was then left to be kept by Peter.

14.Julie has confirmed that at the time when she prepared the Will, she did not know and it did not cross her mind that the Property was held by the Deceased and Peter under joint tenancy.

15.On 19 August 2020, Probate of the Will was granted under Grant No. HCAG006621/2020 to the 1^st Defendant with power reserved to the Plaintiffs, the other executors named in the Will to apply for and obtain double probate of the Will. On 10 December 2020 Double Probate of the Will was granted under Grant No. HCAG013167/2020 to the Plaintiffs.

QUESTIONS

16.The following questions arise for determination under Order 85 Rule 2 of the RHC in this matter.

(1)  Question 1: Whether the joint tenancy under which the Property was held by the 1^st Defendant and the Deceased prior to her death was severed by the Deceased and the 1^st Defendant by her execution of the Will which was executed in the presence of and signed by the 1^st Defendant as one of the witnesses to the Will and which contained a provision that she gave, devised and bequeathed her ownership in the Property to the 2^nd and 3^rd Defendants absolutely and in equal shares upon her death, and a tenancy in common in equal shares was thereby created;

(2)  Question 2: Whether the circumstances in which the Will was executed by the Deceased and witnessed by the 1^st Defendant constituted a common intention or a course of dealing to treat the joint tenancy in the Property as severed; and

(3)  Question 2: Whether the Deceased's half share in the Property should be distributed by the Executors of the Will to the 2^nd and 3^rd Defendants in equal shares to be held by the Executors on trust for them until they reach their majority in accordance with the Will.

ANALYSIS

17.The 1^st Defendant and the 2^nd and 3^rd Defendants have properly been made parties to the present proceedings (as to which see Hong Kong Civil Procedure 2022, §85/3/1). They have all indicated that they wish to be excused from the hearing, and the 1^st Defendant has filed an affirmation confirming that he is not disputing the contents of the affirmation of Julie dated 9 August 2021, and takes a neutral stance.

18.A joint tenancy can be severed at law or in equity: see Conveyancing and Property Ordinance ("CPO")  (Cap 219)  s. 8.

19.At law, a joint tenancy in land may be severed only by either (a)  a notice of severance or (b)  an instrument: see CPO s. 8(1). A will is not an "instrument" for the purpose of severance: CPO s. 2. Therefore, the Will per se did not sever the interests of the Deceased and Peter in the Property held as joint tenants.

20.In equity, a joint tenancy can be severed “by any other method that is effective in equity”: CPO s. 8(2). In this regard, it is well-established that a joint tenancy can be severed by three methods, namely:

(1)  an act of any joint tenant "operating upon his own share";

(2)  by mutual agreement between the joint tenants; and

(3)  any "course of dealing" sufficient to intimate that the interests of all were mutually treated as constituting a tenancy in common.

(Williams v Hensman (1861)  I John & H 546, 70 ER 862 at 867, as per Page Wood V-C (later Lord Hatherley LC)  and Wong Anita Shu Ting v. Yuen Yiu Chung [2022] HKCFI 209 at §37).

21.An equitable severance by way of mutual agreement is flexible. It was held that an equitable severance by way of mutual agreement does not require any of the following elements:

(1)  any evidence in writing of such agreement: Chadda v The Commissioners for Her Majesty’s Revenue & Customs [2014] UKFTT 1061 (TC)  at 5146;

(2)  any kind of requisite formality of such agreement: Chadda at §88 and Burgess v Rawnsley [1975] Ch. 429 at p.440E-F; and

(3)  any express act of severance: Szabo v Boros et al [1967] BCJ No. 149 at p.2.

22.An equitable severance can also occur by “mutual course of dealing" of the joint tenants sufficient to intimate that the interests of all were mutually treated as constituting a tenancy in common. It is sufficient to effectuate an equitable severance if the joint tenants entered on a course of dealing which evinces an intention by both of them that their shares shall henceforth be held in common and not jointly (see Burgess (supra)  at p.444A-B and 446C-D).

23.Reference may be made to Marley v Salga [2019] ONSC 3527 (upheld on appeal in [2020] ONCA 104). In that case, a married couple, Mr Salga and Ms Marley lived in a house they owned as joint tenants, until his death in 2015.  Mr Salga had three children from a previous marriage. Despite the property being registered as joint tenants, Mr Salga's will referenced his interest in their property as an "undivided one-half interest". One question at trial was whether the wording in his Will severed the joint tenancy and thus created a tenancy in common upon his death.

24.In his Judgment, Reid J noted that a testamentary disposition cannot of itself sever a joint tenancy. However, it is “a piece of evidence that can be used to help discern whether there was a common intention to treat the joint tenancy as severed, particularly if the provision in the will was known to the other party”.  Having explored inter alia the circumstances in which the will was executed and how the parties were in agreement as to how the property was to be handled on Mr Salga’s death, Reid J found that “there was a course of dealing on the part of Mr Salga in which Ms Marley shared sufficient to intimate that the interests of all were mutually treated as constituting a tenancy in common. I come to that conclusion based on the totality of the evidence, including both the positive evidence offered by the Salga applicants and the equivocal denials made by Ms Marley to which I have referred.”

25.The present case is similar to the situation in Marley (supra)  in terms of the following:

(1)  The relevant parties (viz. the Deceased and the 1^st Defendant)  were ad idem on how they wished to distribute her ownership in the Property to the children. The 1^st Defendant confirmed such intent and indicated his wish to make a similar will.

(2)  Clause 5.2 of the Will expressly bequeathed her share to the children.

(3)  The Will was witnessed and signed by the 1^st Defendant and Julie. There was no objection all along to this proposed method of dealing with the Property.

(4)  The parties’ conduct is consistent with and sufficient to demonstrate a course of dealing and mutual agreement between the Deceased and the 1^st Defendant that their interests in the Property were mutually treated as constituting a tenancy in common.

26.The factual scenario in the present case (and also in Marley)  is to be distinguished from Carr v Isard [2006] EWHC 2095 (Ch), where there was scant evidence as to what communication had passed between the joint tenants prior to the execution of the will. There was no evidential basis, aside from the will itself, upon which to find that there had been a course of dealing or any such agreement to treat the joint tenancy as a tenancy in common.

27.The factual scenario in the present case (and also in Marley) is to be distinguished from Carr v Isard [2006] EWHC 2095 (Ch), where there was scant evidence as to what communication had passed between the joint tenants prior to the execution of the will. There was no evidential basis, aside from the will itself, upon which to find that there had been a course of dealing or any such agreement to treat the joint tenancy as a tenancy in common.

28.Having considered the relevant authorities and the particular circumstances of this case, in relation to the Questions I find and declare that:

(1)  The joint tenancy under which the Property was held by the 1^st Defendant and the Deceased prior to her death was severed by the Deceased and the 1^st Defendant by her execution of the Will which was executed in the presence of and signed by the 1^st Defendant as one of the witnesses to the Will and which contained a provision that she gave, devised and bequeathed her ownership in the Property to the 2^nd and 3^rd Defendants absolutely and in equal shares upon her death, and a tenancy in common in equal shares was thereby created;

(2)  The circumstances in which the Will was executed by the Deceased and witnessed by the 1^st Defendant constituted a common intention or a course of dealing to treat the joint tenancy in the Property as severed; and

(3)  The Deceased's half share in the Property should be distributed by the Executors of the Will to the 2^nd and 3^rd Defendants in equal shares to be held by the Executors on trust for them until they reach their majority in accordance with the Will.

29.As to costs:

(1)  There is no order as to costs as between the Plaintiffs and the Defendants; and

(2)  The Plaintiffs’ own costs shall be paid out of the estate of the Deceased to be assessed on a trustee basis.

Mr Kenny LIN, instructed by Gloria Chan & Co, for the Plaintiff

1^st Defendant is being excused

Messrs Chiu & Co. for 2^nd and 3^rd Defendants is being excused