Chu Wing Chuen Paul and Others v. Chu Oi Yan Irene

HCMP 50/2021

[2022] HKCFI 804

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 50 OF 2021

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Before: Hon Wilson Chan J in Court

Date of Hearing: 18 November 2021

Date of Judgment: 18 March 2022

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J U D G M E N T

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A. INTRODUCTION

1.By Originating Summons (“OS”) dated 13 January 2021, the plaintiffs seek, inter alia, the following relief:

(1)  An order for the defendant to furnish proper particulars in the form of an inventory and accounts of the Estate;

(2)  An order for the defendant to be removed as the administratrix of the Estate, and the 2^nd and 3^rd plaintiffs be appointed as co-administratrices in her place, or in the alternative, an order to jointly appoint the 2^nd and 3^rd plaintiffs as co-administratrices with the defendant to administer the Estate; and

(3)  An order for the defendant to discontinue and/or withdraw the proceedings entitled DCCJ 6202/2020.

B.     BACKGROUND

2.Both the present proceedings and DCCJ 6202/2020 (the “Writ Action”) concern the Estate of the late Madam Tsui Shuk Ching (the “Deceased”).

3.The parties in these proceedings are 4 out of the 9 children (“Siblings”) of the Deceased and the Deceased’s late husband, Chu Chee Cheung (朱智翔) (“Father”).

4.According to the defendant, before Father passed away on 19 July 2010, the 1^st plaintiff had caused the Deceased and Father to sell their property (the “Old Property”) in 2010 despite Father’s very ill health at the time.  As a condition for sale of the Old Property, the 1^st plaintiff promised Father and the Deceased that he would take care of their accommodation needs and related expenses for the rest of their lives.

5.The Deceased passed away intestate on 25 February 2020, with her funeral being held shortly thereafter on 18 and 19 March 2020.

6.According to the plaintiffs (and disputed by the defendant), shortly after the Deceased’s funeral, the children of the Deceased came to an agreement, inter alia, not to deal with the Estate for a minimum of 2 years (the “Alleged Family Agreement”) so as to allow all parties to properly mourn.  During the 2-year period, it was allegedly agreed that the jewellery belonging to the Deceased should be taken out of the safe deposit box and placed with the 1^st and 2^nd plaintiffs for safe keeping until its distribution.

7.In April 2020, the defendant applied for the letters of administration (“Letters of Administration”) of the Deceased’s Estate and was granted the same on 2 July 2020.

8.The Estate is a relatively simple one, assets of which include (i) cash balances in bank accounts and (ii) 37 gold and jewellery items (“Chattels”).  The only beneficiaries to the Estate are the 9 Siblings.

9.Since 12 August 2020, the defendant had requested the 1^st plaintiff to handover the Chattels for proper administration and distribution of assets under the Estate.  However, the 1^st plaintiff has failed to do so despite numerous requests of the defendant.  Since September 2020, the 1^st plaintiff began to correspond with the defendant on the matter via his then solicitors, Messrs A Lee & Partners (“ALP”).

10.Despite having agreed to deliver the Chattels (or part thereof) via a letter from ALP to the defendant in September 2020, the 1^st plaintiff failed to do so.

11.To consult the wishes of other Siblings, on 15 October 2020, the defendant made proposals to the Siblings on how to deal with the Estate.  The defendant invited the other 8 Siblings to indicate whether they would agree to the Proposed Arrangements (as referred to below).  Five out of the 9 Siblings agreed to the Proposed Arrangements.

12.Even after the voting, the 1^st plaintiff still would not deliver up the Chattels.  Further, on 17 November 2020, the 1^st plaintiff informed all other Siblings that he had passed the Chattels to the 2^nd plaintiff. The 2^nd plaintiff in turn informed the Siblings that she would sell some of the gold items from the Chattels, despite warnings by the defendant and other Siblings, including a solicitors’ letter.  The matter was also reported to the Police.

13.On 20 November 2020, the defendant commenced the Writ Action (DCCJ 6202/2020) to claim for the return of the Chattels belonging to the Estate.  For the avoidance of doubt, this was originally erroneously referred to as “probate action” on the Statement of Account.

14.On 13 January 2021, the plaintiffs issued the OS under the present proceedings.

15.As to the Writ Action,

(1)  The 1^st and 2^nd plaintiffs (as the defendants in the Writ Action) filed a summons on 1 February 2021 for the Writ Action to be stayed pending the outcome of the present proceedings (“Stay Application”).

(2)  The defendant (as the plaintiff in the Writ Action) made an application for summary judgment (“O14 Application”) on 5 February 2021.

16.The plaintiffs complain that the defendant has failed to discharge her duty as administratrix of the Estate by failing to provide adequate estate accounts.

17.Further, the plaintiffs contend that the defendant has failed to execute or discharge her duties as the Administratrix of the Estate, by not acting in the plaintiffs’ interests and not taking into account the plaintiffs’ wishes.  In contrast, she continues to act on her own agenda with no clear direction of how she will distribute the Estate.

18.In particular, the plaintiffs complain that the defendant made an application on around 9 April 2020 for the Letters of Administration.  This was less than a month after the Alleged Family Agreement.

C.     RELEVANT LEGAL PRINCIPLES

19.Section 33(3) of the Probate and Administration Ordinance, Cap 10 (“PAO”) provides that:

“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.”

20.Section 56 of the PAO provides that:

“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.”

21.The court’s discretion under section 33(3) of the PAO has been summarised in Law Wai Hay v Law Po Chong Priscilla [2021] HKCFI 3017 at §28:

“28.  The court has a discretion under section 33(3) of the PAO to remove an administratrix:

(1)   The discretion to remove an administratrix under section 33 of the PAO involves an assessment and a value judgement in all the relevant circumstances of whether removal is required for the due and proper administration of the estate and the interests of the beneficiaries.

(2)   Not every mistake or neglect of duty, or inaccuracy of conduct of trustees will induce the court to remove the administratrix.

(3)   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.

(4)   Hostility between the administratrix and the beneficiary is not a ground for removal, unless the breakdown of the 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.”

22.In Chang Wing Ka John v Chang Wing Dee [2021] HKCFI 47, DHCJ To further explained the legal principles on the removal of administrators under section 33:

“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.” (Emphasis added)

23.It is the defendant’s fundamental duty to gather and distribute assets of the Estate to the beneficiaries (ie the Siblings).  The defendant contends that the 1^st and 2^nd plaintiffs refused the defendant’s request for them to furnish information of, or to handover the Chattels.  And in an attempt to delay and avoid doing so, the plaintiffs brought about the present proceedings.

D.     DISCUSSION

D1.    The Proposed Arrangements

24.While the plaintiffs go to great lengths to argue otherwise, the defendant has been proceeding or acting in accordance with the majority wishes of the beneficiaries.

25.The Proposed Arrangements were made by the defendant on 15 October 2020 to deal with Estate in the following manner:

(1)  Equal distribution of the balance in the Deceased’s HSBC account no 050585231833 amongst the Siblings;

(2)  Sale of the 8 gold coins under the Estate and equal distribution of the sale proceeds amongst the Siblings;

(3)  Sale of the Deceased’s gold jewellery and equal distribution of the sale proceeds amongst the Siblings;

(4)  Sale by auction to the highest bidder amongst the Siblings of the Deceased's other remaining jewellery and equal distribution of the net proceeds amongst the Siblings; and

(5)  Division of the remaining items (which would be of little value) under the Estate by drawing lots.

26.The Proposed Arrangements would allow for equal distribution of proceeds between the Siblings, while at the same time allow for some of the items (ie items under (4) and (5)) to be retained for keepsake purposes by the Siblings.

27.The defendant invited the other 8 Siblings to indicate whether they would agree to the Proposed Arrangements.  Five out of the 9 Siblings, including the defendant, agreed to the Proposed Arrangements.  The Siblings were advised of the voting results on 22 October 2020, and of the defendant’s intention to proceed with the majority wishes of the Siblings as beneficiaries under the Estate.

D2.    Alleged depletion and expenses

28.As can be seen from the statement of funeral expenses prepared by the 1^st plaintiff and/or the 2^nd plaintiff, the distribution of the cash ($17,350 per Sibling) was instigated by the said plaintiffs. There can be no ground to accuse the defendant of pre-mature distribution.

29.In relation to the Deceased’s funeral expenses, I accept that the plaintiffs’ complaint is unwarranted.  It was all along known by the Siblings that the Deceased wished to be buried together with Father at Father’s grave or burial site.  The defendant had been asked by the Deceased personally during the latter’s lifetime to take care of the arrangements as the defendant was the only family member in the position to make such arrangements.

30.To be buried together at the Father’s grave, mandatory protocols required by the Food and Environmental Hygiene Department had to be adhered to, items which accounted for over 90% of the funeral expenses.  There had been no complaints previously from any of the Siblings as they all respected the Deceased’s wishes.

31.As to litigation costs, it is clear that the administration of the Estate might well have been concluded if the 1^st plaintiff and/or the 2^nd plaintiff had deliver up the Chattels as assets under the Estate.

32.The 1^st plaintiff alleges that he was reluctant to house the Chattels but yet had gone to great lengths to resist handing over the same.  The 1^st plaintiff was the one who started to engage a solicitors’ firm since September 2020 to correspond with the defendant in relation to the simple matter.

33.Upon the 1^st plaintiff and/or the 2^nd plaintiff’s attempt to sell or convert part of the Chattels in November 2020, the defendant commenced the Writ Action against the 1^st plaintiff and the 2^nd plaintiff after they ignored her protests and requests.  Commencing legal action was the last resort after the defendant reported the matter to the Police but to no avail.  The defendant’s O14 Application has been an attempt to save time and costs for the Estate.

34.It therefore lies ill in the mouth of the plaintiffs to complain of litigation costs.

D3.    The defendant’s application for grant of the Letters of Administration

35.The 1^st plaintiff alleges that the Siblings had discussed and agreed not to deal with the Deceased’s Estate for two years.  This is disputed by the defendant.  In any event, this is contradicted by the partial distribution of the Estate (see paragraph 28 above).

36.Further, Rule 21(1) of the Non-Contentious Probate Rules, Cap 10A provides for the order of priority for the grant of letters of administration in the case of intestacy as follows:

“(1) Where a person dies wholly intestate, the persons having a beneficial interest in the estate shall be entitled to a grant to administration in the following order of priority, namely-

(i) the surviving spouse or the surviving partner or partners to a union of concubinage entered into before 7 October 1971;

(ii) the children of the deceased including any children born of a union of concubinage entered into before 7 October 1971, or the issue of any such child who has died during the lifetime of the deceased;

(iii) the father or mother of the deceased;

(iv) brothers and sisters of the deceased or the issue of any deceased brother or sister of the deceased who has died during the lifetime of the deceased.” (Emphasis added)

37.Father passed away in July 2010.  The defendant therefore as one of the children of the Deceased ranks the same in priority for a grant of letters of administration for the Deceased’s Estate as any other of the Siblings.

38.There is no rule under the law that requires an applicant for grant to obtain the consent of other potential applicants of equal standing or priority.

D4.    Inventory and accounts of the Estate

39.The duty to render accounts of the estate has been explained by this court in Ho Tung Ming Oscar v Ho Fook Shing [2021] HKCFI 1046 at §9:

“9. To render proper account of the estate of a deceased person, the personal representative is required to:

(1) Show the opening balance, including capital assets, and the closing balance;

(2) Give details of movement of assets, income and expenditure of the estate;

(3) Give details of the whereabouts of all properties (including cash) of the estate which the personal representative is duty bound to administer; and

(4) Support the accounts with documentary evidence.

(Chow Chak Kiu v Chow Man Chit, HCMP 797/2016 (Decision dated 17/01/2017))”

40.Although it is the duty of the administratrix to provide an account of the Estate upon request, I agree that a delay in doing so does not automatically calls for a removal, but may depend upon the circumstances of the case.

41.The circumstances in the present case begs for exercise of the discretion by the court not to order the removal of the defendant.  As explained below, the plaintiffs have largely contributed to the delay or difficulty in preparing such accounts.

42.Further, in Chang Wing Ka John v Chang Wing Dee (supra), at §186, the court explained that sincerity and intention of the administrator in performing his obligations would be taken into account by the court.

43.As noted above, the assets under the Estate are simple, and include cash balances in various bank accounts and the Chattels.

44.However, the plaintiffs have substantially obstructed the defendant in preparing the Inventory and Accounts of the Estate by, inter alia:

(1)  refusing to disclose information of bank account(s) held in the joint name of the Deceased and the 1^st plaintiff/2^nd plaintiff, where the 1^st plaintiff/2^nd plaintiff’s names have been added to the Deceased’s account(s) as joint account holders for mere conveniences only; and

(2)  wrongfully retaining the Chattels and refusing to deliver the same.

45.Regarding bank accounts, to the best of the defendant’s knowledge, the Deceased had the following accounts at the time of her death:

Bank	Account no	Account Holder
HSBC	050-585231-833	Deceased	“HSBC Account”
Hang Seng Bank	285-1-000741	Deceased	“HSB Account”
Bank of China	012-681-0-003801-4	Deceased	“BOC 8014 Account”
Bank of China	012-681-9-206517-2	Deceased	“BOC Multi Account”
Bank of China	033-643-1-055656-2	Deceased	“BOC Current Account”
Bank of China	012-681-2-000929-6	Deceased and the 2nd plaintiff	“BOC 9296 Account”

46.Not only had the plaintiffs refused to disclose information on the accounts held under the sole name of the Deceased, the 2^nd plaintiff had also made improper withdrawals from the Deceased’s HSB Account and BOC Current Account between 25 February 2020 (ie the day the Deceased passed away) and early March 2020.

47.As to the BOC 9296 Account, the 2^nd plaintiff had refused to disclose information of the bank account and/or to account for the funds therein.

48.In the latest affidavit evidence filed by the plaintiffs, the 2^nd plaintiff alleges that the funds in the BOC 9296 Account belongs to the 2^nd plaintiff by reason that (i) the account had been held in the joint names of the Deceased and the 2^nd plaintiff, and that (ii) condition 8.1(g) of BOC’s Conditions of Service includes a survivorship clause in the event of death of one of the joint account holders.  This is a new argument advanced by the plaintiffs.

49.It is well settled principle that a survivorship clause in a joint bank account is not conclusive in deciding whether the surviving account holder is beneficially entitled to the funds therein.  The ultimate determining factor of ownership of such funds would be the common intention of the joint account holders.

50.In Nanyang Commercial Bank Ltd v Personal Representative of Vannee Nativivat [2013] 2 HKLRD 749, Anthony To J held that:

“29. Thus, the general principle is that beneficial entitlement of funds in a joint account is to be determined by the common intention of the account holders. A survivorship clause, without more, is just a contractual arrangement between the bank and the joint account holders as to how to deal with the money in the joint account. It is not conclusive evidence of the parties’ intention as to ownership of the money in the joint account. The parties’ intention overrides the survivorship clause. In drawing inference of common intention, greater weight is to be given to the source of the funds in the joint account and the presumption of resulting trust in favour of the joint account holder who provided the funds than to the survivorship clause. At the highest, survivorship clauses indicate a prima facie intention only, which is by no means conclusive and can be easily displaced by the circumstances.

…

40. Thus, the ultimate determining factor of ownership in funds in a joint account is common intention of the joint account holders. In the absence of evidence of this common intention or where the evidence available as to actual intention is evenly balanced, one may turn to presumptions, whether of advancement or resulting trust. A presumption is nothing more than an evidential tool; its weight varies with the circumstances of the case. On the one hand, the presumption of resulting trust may be raised in favour of the person providing the funds in the joint account. On the other hand, the presumption of advancement applies to the relationship between a parent and his adult child. Whether the presumption is raised depends on all the circumstances. These include the age of the parents, any reason or the lack of it for making a gift, the age of the child, his means and extent of financial dependence on the parent, the closeness of the parent-child relationship, the parent’s moral and equitable obligations to the child and others, etc. Where funds are placed into the joint account of an aging parent and an adult child, an inference may be drawn that the arrangement is one of administrative convenience for the child to manage the financial affairs of the parent rather than a gift by the parent to the adult child.

…

42. Ownership of the Monies in the joint Account is to be decided according to the intention of the joint account holders. … The thrust of the 2^nd defendant’s claim is that he is entitled to the Monies under the survivorship clause and the presumption of advancement. As discussed above, a survivorship clause has little significance on the issue of intention. … The key issue in this case is the Mother’s intention and the evidence pointing to that intention.” (Emphasis added)

51.The 1^st plaintiff himself admitted that the 1^st plaintiff/2^nd plaintiff’s names had been added to the Deceased’s bank accounts for the sake of mere convenience in case of emergencies.

52.It is obvious that (i) the funds in the joint account belonged to the Deceased and (ii) it was never the Deceased’s intention for the 1^st plaintiff or the 2^nd plaintiff to have beneficial interest in the funds or any part thereof in the account.  The funds in the BOC 9296 Account therefore belong to the Estate and not to the 2^nd plaintiff.  The standard survivorship clause under BOC’s Conditions of Service cannot carry the plaintiffs’ argument far.

53.Regarding the Chattels, they have been in the hands of the 1^st and 2^nd plaintiffs since the Deceased passed away.  Even after the defendant was granted the Letters of Administration of the Estate, the 1^st and 2^nd plaintiffs have wrongfully refused to deliver up the Chattels or let the defendant inspect the same.  It was only since August 2020 that photographs of the Chattels were obtained by the defendant through the collective efforts of the Siblings.

54.The 1^st plaintiff never denied that he has been in possession of the Chattels (or at least Items 1 to 28 of the Chattels), and at one stage admitted to his possession of the same and even agreed to deliver them up to the defendant, but has thereafter simply failed and/or refused to deliver them to the defendant as administratrix of the Estate despite repeated requests.

55.In the premises, the defendant could only prepare an account of the Estate to the best of her knowledge.

56.I agree that it is wholly unjustified for the plaintiffs to rely on the imperfect inventory and account to their advantage, when the 1^st plaintiff and the 2^nd plaintiff’s conduct has been a substantial factor in preventing the defendant from preparing a proper inventory and account.

D5.    Due administration with no improper conduct

57.In conclusion, I accept that in discharging her duty as the administratrix, the defendant had consulted the other beneficiaries (ie the Siblings) on how to deal with the Estate, and was proceeding in accordance with the majority wishes.  There was no improper conduct on her part.

58.Further, the Estate is of a simple nature and relatively small size.  In the interest of all the beneficiaries and the due and proper administration of the Estate, the defendant should not be removed as the administratrix.

59.On the other hand, if the plaintiffs’ application were to be allowed, further delays can be expected on the administration of the Estate.

E.     CONCLUSION AND DISPOSITION

60.For the reasons set out above, I am of the view that the plaintiffs’ claims in these proceedings should be dismissed, and I so order.

61.I further order that the costs of these proceedings (including all costs reserved, if any) be paid by the plaintiffs to the defendant, such costs are to be taxed on the party and party basis if not agreed.

62.The above order as to costs is nisi and shall become absolute in the absence of any application within 14 days to vary the same.

63.Lastly, I express my gratitude to counsel on both sides for their helpful assistance in this matter.

Mr Ronald Pang and Mr Edward Chin, instructed by Messrs S C Ho & Co, for the 1^st to 3^rd plaintiffs

Ms Vivian Chan, instructed by Messrs Kenneth Poon & Co, for the defendant