Wong Cheong Ming v. Wong Chak Ming

HCMP 2189/2020

[2022] HKCFI 2425

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 2189 OF 2020

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BETWEEN

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J U D G M E N T

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A.  INTRODUCTION

1.This is the hearing of the plaintiff’s summons taken out on 22 February 2022 (“Summons”)  applying for directions for the purpose of enforcing the Consent Order herein dated 15 October 2021 (“Consent Order”).

2.At the hearing, the plaintiff’s counsel clarified that the order sought by the plaintiff against the defendant is as follows:

“The Defendant do carry out the effect of the Order dated 15 October 2021 by taking all reasonable and necessary steps and/or acts to assist in the formal appointment of Mr Wong Tak Shing (“Mr Wong”), a solicitor of Messrs Wong Shum & Co, Solicitors as the Independent Professional Administrator of the estate of the Deceased in place of the Plaintiff and the Defendant, including inter alia accepting the service terms and conditions in respect of Mr Wong’s appointment proposed by Mr Wong in paragraphs 4 to 13 and 15 to 18 of the email dated 6 October 2021 sent from Mr Wong to the parties’ solicitors.”

B.  BACKGROUND FACTS AND PROCEDURAL HISTORY

3.The Deceased died in June 2016 leaving a will (the “Will”)  naming the plaintiff and the defendant as executors.

4.Since about December 2016, the plaintiff and the defendant have been appointed as the two co-executors of the Estate of the Deceased (the “Estate”).

5.As per the Will, there are 5 beneficiaries to the Estate (collectively, the “Five Beneficiaries”), namely:

(1)  the plaintiff;

(2)  the defendant;

(3)  Mei Lee (“Mei Lee”);

(4)  Madam Li (“Madam Li”); and

(5)  Ka Ming (“Ka Ming”).

6.The Deceased had two marriages and a total of 4 children.

(1)  The plaintiff, Mei Lee and the defendant were the 3 children born out of the Deceased’s first marriage with his first wife, who died in about 1980;

(2)  Ka Ming was the only son born out of the Deceased’s second marriage with Madam Li.

7.The Estate consisted of mainly the following assets:

(1)  4/5 shares in a shop on Castle Peak Road, Kowloon, Hong Kong (the “Shop”);

(2)  a residential flat in Tsuen Wan, New Territories (“Cheong Tai Property”), which has been and is still being occupied by Ka Ming and Madam Li as their residence;

(3)  2 houses in Luchuan County, Guangxi Province, the PRC, which has been let out to others for rental income.

8.By the Will, all the assets in the Estate (save the Cheong Tai Property[1])  are given to the Five Beneficiaries in equal shares.

9.The 4/5 shares in the Shop, being the most valuable asset of the Estate, has an additional redevelopment value, such that:

(1)  The defendant had received an offer to purchase the Shop at HK$68 million in 2018.

(2)  The developer has offered about HK$44.3 million for the 4/5 shares in the Shop.

10.It is the plaintiff’s case that the plaintiff and the defendant, in their joint administration of the Estate, had faced serious difficulties, problems, and disagreements, the details of which are not relevant to the present application.

11.As a result, there had been little progress in respect of the administration of the Estate since grant of probate.

12.Accordingly, with the view to enabling due and proper administration of the Estate without further delay, the plaintiff took out the Originating Summons herein (“OS”)  in November 2020.

13.By the OS, the plaintiff, as one of the 2 co-executors of the Estate, applied under section 33(3)  of the Probate and Administration Ordinance, Cap 10 (“PAO”)  for inter alia:

(1)  an order that the defendant, being the other co-executor of the Estate, be removed from being the co-executor of the Estate; or

(2)  alternatively, if the court deems appropriate, an order that both the defendant and the plaintiff be removed as co-executors of the Estate with an independent professional administrator (“IPA”)  be appointed in their places.

14.Subsequently, the plaintiff and the defendant, as well as all the Beneficiaries, agreed that:

(1)  both the plaintiff and the defendant be removed as co-executors of the Estate;

(2)  Mr Wong Tak Shing (“WTS”)  of Messrs Wong Shum & Co, who was nominated by the defendant, be appointed as an IPA of the Estate.

15.Then, the plaintiff and the defendant together with all the Beneficiaries signed the Consent of Appointment of Administrator (the “Consent”)  confirming their respective consents to appoint WTS as the IPA of the Estate.

16.The Consent recited that: “AND WHEREAS Mr Wong Tak Shing, solicitor, of Messrs Wong Shum and Co, Solicitors, have consented to be appointed as the administrator and trustee of the Estate of the Deceased in place and stead of [the plaintiff and the defendant] and his fees in the application for grant and administration be paid out of the estate at time costs at HK$4,000.00 per hour subject to any further order of the court”. Significantly, no cap in the fees was mentioned in the recital.

17.The Consent went on to provide that: “NOW, I, the undersigned, agree to the appointment of Mr Wong Tak Shing as the administrator in terms above mentioned and that Letters of Administration with the Will annexed relating to the Estate of the Deceased be issued to Mr Wong Tak Shing of Messrs Wong Shum & Co, Solicitors, if entitled to”. (Emphasis supplied)

18.With the intent to fully settle the OS save on the issue of costs, the parties signed the Consent Summons on 11 October 2021 (“Consent Summons”).

19.Importantly, the Consent by the Five Beneficiaries were exhibited to the 3^rd Affirmation of the plaintiff dated 11 October 2021, which was filed in support of the Consent Summons. This form an important part of the factual context in which the Consent Summons was taken out.

20.On 15 October 2021, the court granted the subject matter of the present application, namely the Consent Order, pursuant to the Consent Summons.  In the Consent Order, the said 3^rd Affirmation of the plaintiff was expressly recited.

C.  THE CONSENT ORDER

21.The Consent Order expressly provides inter alia that:

(1)  Both the plaintiff and the defendant be removed as co-executors of the Estate;

(2)  Leave be granted for WTS to be appointed as the IPA of the Estate in place of the plaintiff and the defendant under section 33(3)  of the PAO “subject to IPA’s service terms and conditions to be accepted by the parties”;

(3)  Costs of these proceedings (being the only remaining issue of these proceedings)  be dealt with on paper submissions.

D.  PROPER CONSTRUCTION OF THE CONSENT ORDER

22.It is trite law that in construing the Consent Order, which is a consensual agreement between the parties, the court has to determine the common intention of the parties by reference to the Consent Order itself having regard to the relevant factual context in which the agreement was made.  [see: Minda Consultancy Limited v China Outdoor Media Group Limited, HCA 1972/2004 (unrep, 1/09/2010), §§12 & 13]

23.The relevant factual context in which the Consent Order was granted has been set out in paragraphs 3 to 20 above.

24.According to the Consent Order as a whole, it is clear and plain that the parties had the common intention:

(1)  first, to have a full and final settlement of the proceedings, save the issue on costs (being expressly stated to be the only remaining issue);

(2)  secondly, to remove both the plaintiff and the defendant as co-executors of the Estate, and WTS (nominated by the defendant)  is to be appointed as the IPA of the Estate, save that the appointment of WTS is “subject to IPA’s service terms and conditions to be accepted by the parties”.

25.According to the words used, “subject to IPA’s service terms and conditions to be accepted by the parties” (which is different from “subject to the acceptance of IPA’s service terms and condition by the parties”), the parties did not intend the appointment of WTS to be subject to parties’ acceptance of the service terms and conditions.

26.It is clear from the ordinary meaning of the words used that WTS’s appointment would only be “subject to”, ie “governed by”, the service terms and conditions, which are going to be accepted by the parties.

27.I agree that by virtue of the undisputed intention of both the plaintiff and the defendant to have a full and final settlement of the proceedings (save as to the issue on costs)  and to replace themselves with an IPA, it is illogical for the parties to have intended the appointment of WTS in their places to be “subject to” a pre-condition which is in turn “subject to” to either party’s complete discretion whether to accept the service terms, and thus rendering no final settlement at all.

28.Further or alternatively, as stated by the Court of Final Appeal in Ying Ho Co Ltd v Secretary for Justice [2005] 1 HKLRD 135 at 177B-G, the court is often willing to imply a term that the parties shall co-operate to ensure the performance of their bargain.

“128. As is pointed out in Chitty on Contracts (29^th ed, 2004)  Vol 1 at §13-011, the court is often willing to imply a term that the parties shall co-operate to ensure the performance of their bargain. Mackay v Dick (1881)  6 App Cas 251 is often cited in this context for Lord Blackburn’s statement as follows:

‘I think I may safely say, as a general rule, that where in a written contract it appears that both parties have agreed that something shall be done, which cannot effectually be done unless both concur in doing it, the construction of the contract is that each agrees to do all that is necessary to be done on his part for the carrying out of that thing, though there may be no express words to that effect.  What is the part of each must depend on circumstances. (at p 263)’”

29.In addition, a term may be implied into an agreement to give “business efficacy”.  [see: Chitty on Contracts (33^rd Ed)  at §14-007]

30.Accordingly, in respect of the service terms and conditions which are to be accepted by the parties, there ought to be implied a term that both parties shall have the duty to accept WTS’s service terms and conditions (unless the terms are unreasonable)  so as to give business efficacy to the Consent Order.

31.If no such term were implied, either party would be permitted to unilaterally withhold their acceptance of the service terms and conditions for no good reason, thus rendering the agreement ineffective.

32.Therefore, upon having been granted the Consent Order, which removed the plaintiff and the defendant as executors of the Estate, the plaintiff and the defendant have a duty to take all reasonable and necessary steps to facilitate the formal appointment of WTS as the IPA of the Estate, including inter alia to accept WTS’s service terms and conditions, unless the terms are unreasonable.

E.  DEFENDANT’S REFUSAL TO ACCEPT THE SERVICE TERMS AND CONDITIONS IS UNREASONABLE

33.First, WTS set out his service terms and conditions in his email dated 6 October 2021.

34.On the same day, the defendant’s solicitor (Mr C L Wong of Messrs Hobson & Ma)  raised various comments on WTS’s service terms and conditions.

35.Upon that, WTS made explanatory replies to each and every comment of the defendant on the next day (7 October 2021).

36.I agree that as shown by WTS’s explanatory replies, WTS’s service terms and conditions are not unreasonable.

37.However, on 20 October 2021, the defendant responded and made further comments on WTS’s replies.

38.On 21 October 2021, the plaintiff through his solicitor (Mr Alan Shum of Messrs Simon C W Yung & Co)  informed the defendant that they found the defendant’s comments unreasonable, and thus the plaintiff declined to make joint comments together with the defendant.

39.Nonetheless, on 26 October 2021, the defendant insisted on his proposed terms and comments, upon that WTS responded that he would leave the matter to be determined by the court.

40.Subsequently, on 8 November 2021, upon the defendant’s enquires, WTS made further explanatory replies to the defendant’s comments.

41.Thereafter, by the letter dated 14 December 2021, the plaintiff requested the defendant to act reasonably to accept WTS’s terms and conditions, so that an application for a new grant to appoint WTS as the IPA could be made.

42.However, by the letter dated 5 January 2022, the defendant rejected the plaintiff’s request, and denied that he had unreasonably refused to accept WTS’s service terms and conditions.

43.Bearing in mind the specific circumstances and the entire factual context of the present case, the defendant’s insistence of his comments is plainly unreasonable.  In particular:

(1)  The defendant insisted that (i) the IPA had to obtain consent from (instead of consult)the plaintiff and the defendant concerning selling of properties; and (ii) there should be a termination clause in WTS’s appointment whereby the Beneficiaries could terminate his appointment immediately at any time without a court order.

(2)  Given the historical background, in particular, having regard to the hostility and disagreements between the plaintiff and the defendant and amongst the Beneficiaries, such insistence by the defendant would defeat the purpose of appointing an IPA replacing the plaintiff and the defendant (to enable due and proper administration of the Estate without further delay), and render WTS’s administration in the hands of “backseat drivers”, usurping his proper discharge of duty as an IPA.

(3)  The defendant also insisted that there should be (i) a cap (1% of the value of the Estate)  on the professional fee to be charged by WTS; and (ii) a deadline (no later than the end of 2022)  for WTS to complete the administration.

(4)  These are also unreasonable and not feasible.  The insistence by the defendant of a cap on fees is plainly inconsistent with the Consent signed by the Five Beneficiaries (see: paragraphs 16 to 20 above).  Further, as advised by WTS, putting a cap in place would not reduce the total costs and expenses, on the contrary it may increase the same in the form of disbursements for instructing new solicitors and counsel.

(5)  Due to the complexity of the present matter involving inter alia various serious disputes amongst the Beneficiaries, a shop now under a compulsory sale of property proceedings and two properties in Mainland China, it defies common sense to impose such as a strict deadline of no later than the end of 2022.

44.In all, there is no good reason for the defendant to have withheld his approval to WTS’s service terms and conditions.

45.In these circumstances, the plaintiff, being one of the two removed executors of the Estate pursuant to the Consent Order, has no other alternative apart from praying upon the court for an order to compel the defendant (the other removed executor)  to perform his part in accordance with their agreement (ie the Consent Order).

F.   CONCLUSION

46.By reason of the matters stated above, I grant the order as sought by the plaintiff which is set out at paragraph 2 above.

47.I see no reason why costs should not follow the event.  Accordingly, I order that the costs of and occasioned by the Summons be paid by the defendant to the plaintiff, such costs are to be taxed if not agreed.

48.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.

49.I further order that the plaintiff’s own costs be taxed in accordance with the Legal Aid Regulations.

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

Mr Ernest Koo, instructed by Messrs Simon C W Yung & Co, for the plaintiff

Mr Kam Cheung, instructed by Messrs Chiu, Szeto & Cheng, for the defendant