Lau Tung Hoi Kent v. Lau Tung Kuen

HCMP 1684/2020

[2022] HKCFI 2561

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 1684 OF 2020

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Before:  Mr. Recorder Jin Pao, SC in Chambers

Dates of Written Submissions on Costs: 12 and 26 July 2022

Date of Decision:  22 August 2022

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DECISION ON COST

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1.This is my decision on costs.

2.By judgment dated 30 June 2022, I ordered that the Defendant be removed as the executor of the Estate (“Judgment”).  As agreed by the parties, the question of costs was reserved until after judgment was handed down.  At §89 of the Judgment, I directed a determination of the matter by way of paper disposal.  I have now received written submissions from both parties on costs. 

3.The Plaintiff submits that (i) the Defendant should be personally liable for the costs of these proceedings on an indemnity basis, or alternatively, (ii) an order that the Plaintiff’s costs should be paid out of the Estate on an indemnity basis, and that the Defendant shall bear his own costs. 

4.The Plaintiff relies on the findings made in the Judgment against the Defendant which justified his removal as an executor.  These included the finding that the Family Arrangement did not exist, there was no satisfactory reason for the significant delay in administration, the failure to keep clear and accurate accounts, the existence of a potential conflict of interest, and that there was an irretrievable breakdown in the relationship between both sides.

5.The Plaintiff refers to the general principles on costs in administration proceedings set out in Re Buckton [1907] 2 Ch 406.  These principles were cited with approval by Poon J (as he then was) in Re Estate of Lee Da Kor [2010] 1 HKLRD 415 at §39.  The Plaintiff submits that this is a case which falls within the third category referred to in Re Buckton, namely, where an application was made by a beneficiary but was in substance an adverse claim in hostile litigation.  In those circumstances, it was submitted that the normal rule that the unsuccessful party will be ordered to pay the costs of the successful party. 

6.The Defendant submitted that I should exercise my discretion to spare the Defendant personal liability for costs given that there was no ill-will on his part and in view of his good faith (though belated) attempts to discharge his duties as an executor.  The Defendant relied on my findings that he was neither a dishonest witness nor conducted himself as an executor dishonestly.

7.The Defendant also referred to Lord Scott NPJ’s observations in Cheung Pui Yuen v Worldcup Investments Inc (2009) 12 HKCFAR 31at §59 that the principles set out in Re Buckton were not rules, but meant to provide guidance as to how judicial discretion as to costs in probate or administration proceedings should be exercised.  The answer to that may depend not only on the principles referred to but also on the particular circumstances in which the litigation has been commenced and prosecuted.

8.Both parties made submissions on previous local cases where various costs orders were made in administration proceedings.  I do not find it necessary to refer to these decisions since they do not set out any new point of principle and they are inevitably fact-sensitive.

9.In my view, and having regard to the applicable legal principles, this is a case which squarely falls within the third category identified in Re Buckton. This was a classic instance of an adverse claim in hostile litigation brought by a beneficiary against the executor.  I do not see any valid reason to depart from the starting point that the unsuccessful party should pay the costs of the successful party.  Although I have not made a finding of dishonesty against the Defendant, the absence of dishonesty is not, in my judgment, sufficient to take this case outside the general principle.  I bear in mind that the conduct of the Defendant as an executor was unsatisfactory, and the Plaintiff had to commence these proceedings in order to obtain a removal order.  The Plaintiff’s complaints were, to a large extent, opposed but vindicated at the end of the day.

10.I made a finding at §79 of the Judgment that neither camp can be said to be wholly without fault in terms of the irretrievable breakdown in relationship.  While I do not consider that this is sufficient to displace the general rule stated above, in the exercise of my discretion, I am prepared to reflect this in terms of the percentage of costs that the Plaintiff is entitled to recover.

11.I do not agree with the Plaintiff that this case warrants taxation on an indemnity basis.  The position might have been otherwise had I made a finding of dishonesty against the Defendant, but I do not consider the Defendant’s conduct was so unreasonable as to attract an enhanced basis of taxation.  For the benefit of taxation, and with due respect, I agree with the Defendant that this case was not sufficiently complex to warrant the instruction of two counsel.

12.For all the above reasons, I make an order that the Defendant pay the Plaintiff 80% of the costs of these proceedings, including all costs reserved, on a party and party basis, to be taxed if not agreed.

Mr. Au Lut Chi and Mr. Griffith Cheng instructed by BF&Co. for the Plaintiff

Ms. Helen Au instructed by Leung Ki Hin & Co. for the Defendant