Re Wong Bill Wai Wo Aka Bill Wong and Bill Wai Wo Wong, Deceased

HCCA 5077/2018

[2023] HKCFI 1364

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CAVEAT NO 5077 OF 2018

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JUDGMENT

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1.In this judgment, unless otherwise stated, all references to numbered sections and subsections are to sections and subsections of the Probate and Administration Ordinance (Cap 10).

Matters before the court

2.There are before the court:

(1) the appeal (“Appeal”) of Madam Wong-Martin Angie Sie Ying (“Angie”), the person warning, against the order made by Master Hui on 26 September 2019 (“Master’s Order”), ordering, inter alia, that:

(a) Angie be passed over as executrix of the estate of her late father, Mr Wong Bill Wai Wo (“Deceased”), in Hong Kong (“HK Estate”); and

(b) Madam Esther Mak Wong (“Esther”), Angie’s mother and the caveator, be appointed the administratrix of the HK Estate, if she is so entitled to; and

(2) Angie’s application, by summons dated 8 September 2020, for leave to adduce further evidence (which were her draft 4^th affirmation and the documents exhibited thereto) in support of the Appeal (“Further Evidence Application”).

3.I dismissed the Further Evidence Application at the hearing on 22 September 2020 for reasons reserved, which I will give hereunder.

Background

4.The Deceased and his wife, Esther, have 4 children (collectively “Children”) in the following order of seniority: (1) Angie, (2) Mr Wong Alan Chi Hang (“Alan”), (3) Madam Wong Wendy Hoi Ying (“Wendy”) and (4) Mr Wong Michael Kin Hang (“Michael”).

5.By his last will and testament dated 26 October 2007 (“Will”), the Deceased bequeathed 50% of his estate to Esther and the remaining 50% to the Children to be shared equally (i.e. 12.5% or ¹/_8th share each). Angie, the eldest child, was named executrix of the Will.

6.The Deceased passed away on 7 September 2014 in the USA, leaving an estate comprising properties in both New York and Hong Kong with an estimated total value of more than US$15 million (“Estate”). He was survived by Esther and the Children (collectively “Wong Family”).

7.The Will was admitted to probate with letters testamentary and administration c.t.a. dated 2 March 2015 issued by the Surrogate’s Court at Queens County of the State of New York (“NY Court”), by which Angie was appointed as the executrix, and Esther the administratrix c.t.a., of the Estate in accordance with the laws of the State of New York.

8.According to Esther, her appointment as administratrix alongside Angie was made with consensus within the Wong Family for the practical purpose of enabling Esther to oversee the Estate in New York (“NY Estate”) as she resides in New York while Angie, who was primarily resident in Hong Kong at that time, can take care of the HK Estate.

9.Angie disputes having consented to such arrangement. She only conceded to administer the Estate with Esther upon the advice of Ms Pauline Yeung Ha (“Madam Yeung”), a partner of Grimaldi & Yeung LLP (“G&Y”), a law firm in New York, that given her residence in Hong Kong, she would not be appointed the sole executrix in the US and that she should be a co-executrix with Esther.

10.In around March 2015, the Children (including Angie) executed qualified disclaimers and renunciations (“Renunciations”) to irrevocably and unqualifiedly renounce and disclaim their interests in the Estate. The effect of the Renunciations was to make Esther the sole beneficiary of the Estate. Esther’s case is that this arrangement was adopted, upon G&Y’s advice, to pass the Estate tax-free to Esther as the Deceased’s spouse, which would eliminate and defer any estate tax that would otherwise be owed, which was estimated to be a 7-digit figure in US dollars.

11.Unfortunately, Angie soon fell out with the rest of the Wong Family in about November 2015. Esther’s account of the fallout is that Angie evicted Michael from her apartment in downtown Manhattan. The Deceased had, prior to his death, shouldered the mortgage repayments and outgoings of the apartment. After the Deceased’s death, Esther continued to bear such expenses. In response to Angie’s treatment of Michael (which Esther disapproved), Esther stopped making these payments.

12.Following this rift were multiple legal proceedings in the US between Angie and the other members of the Wong Family.

13.First, in about January 2017, Angie commenced proceedings in the US against Esther and all her siblings, seeking to set aside the Renunciations on the grounds of fraud and misappropriation. This lawsuit was subsequently withdrawn for procedural impropriety.

14.Second, Angie petitioned for an account by Esther as a co-fiduciary. In around June 2017, Angie brought an interim accounting proceeding, in the course of which she provided, on affidavit dated 26 June 2017, what purported to be an intermediate account of the Estate (“Angie’s Interim Account”) for the period from 7 September 2014 to 31 May 2017 (“Accounting Period”). Esther surmises that the production of such account was likely to be a pre-requisite to compelling Esther to account. Both Angie and Esther had been examined under oath under this proceeding.

15.Third, on about 15 March 2018, Angie started another lawsuit in the Supreme Court of the State of New York at Kings’ County against (1) the rest of the Wong Family for breach of fiduciary duty, breach of constructive trust, conversion, fraud and unjust enrichment and (2) G&Y and Madam Yeung for legal malpractice.

16.On the other hand, by a verified petition dated 25 January 2019 filed with the NY Court, Esther petitioned against Angie for production of information of the rental income from some of the landed properties of the HK Estate and for delivery up of such income.

17.Meanwhile, in Hong Kong, Esther had filed a caveat on 3 October 2018 against the sealing of any grant of probate of the Estate without notice to her solicitors in Hong Kong.

18.On 27 March 2019, Esther filed the summons upon which the Master’s Order was made (“Summons”), seeking an order that Angie be passed over as executrix of the HK Estate; that no grant of probate of the HK Estate be sealed in Angie’s favour; and that Esther be appointed the administratrix of the HK Estate under ss 33(3) and 36, or alternatively, that Angie be removed as executrix of the HK Estate.

Legal principles

19.Esther’s application was made under s 33(3) and/or s 36, which provide as follows:

(1) s 33 (3):

“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.” (emphasis added)

(2) s 36:

“Where a person dies wholly intestate as to his estate or leaving a will affecting estate but without having appointed an executor thereof willing and competent to take probate, or where the executor is, at the time of the death of such person, resident out of Hong Kong, or 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 of 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, on his giving such security, if any, as may be required under this Part or as the court may direct, and every such administration may be limited in such manner as the court thinks fit.” (emphasis added)

20.The court has power under s 33(3) to remove an executor named in a will even before a grant has been issued: Lam Chung Wai v Lam Hi Way, HCAP 29/2015, unreported, 15 December 2017 at [49].

21.The court has been very cautious and sparing in the exercise of the power to remove an executor, especially an incumbent executor who wishes to carry on without allowing that incumbent an opportunity to repair or remedy any defects and progress promptly with due administration: see Wong Tat Lun Eddie v Wong Chi Ho Jimmy, HCMP 2391/2013, unreported, 21 October 2014, at [85].

22.In determining whether the requirements under s 33(3) are satisfied, the court has to consider all the circumstances of the case and each case will depend on its own facts: Wong Tat Lun Eddie v Wong Chi Ho Jimmy, supra, at [83].

23.The words ‘necessary or convenient’ in s 36 give the court a broad discretion to be exercised in the best interests of the estate. It is not necessary for the court to determine the parties’ rights and liabilities, nor is it necessary to resolve disputed issues of fact: Re Estate of Chan Hung Mou [2009] 3 HKC 390 at [15] and Re Estate of Loo Che Chin [2013] 2 HKLRD 739 at [32].

24.Hence, the burden lies on Esther to show that there are special circumstances that make it necessary or convenient to pass over Angie who, as the executrix nominated by the Will, has priority in appointment: Re Estate of Loo Che Chin, supra, at [11].

Discussion

25.Esther applies on 6 grounds:

(1) Angie’s failure to account;

(2) Angie’s conflict of interest;

(3) Angie’s hostility to the administratrix c.t.a. and beneficiary of the Estate, i.e. Esther;

(4) Angie’s bad character;

(5) excessive administration expenses incurred by Angie; and

(6) majority beneficiary’s support for Angie’s removal.

26.The parties have made numerous disputed allegations and cross-allegations against each other, some involving dishonesty or otherwise of a very serious nature. For the purpose of the Appeal (and, to a limited extent, the Further Evidence Application), it is unnecessary, and I do not propose, to resolve all factual disputes between Angie and the rest of the Wong Family, though I have given them (what I believe to be) due consideration.

27.The following undisputed and/or indisputable matters, which in my view support or tend to support the abovementioned first, second, fourth and sixth grounds raised by Esther in support of the Summons, should be sufficient for the determination of the Appeal.

Angie’s failure to keep and/or furnish clear and accurate estate accounts

28.It is trite that a personal representative has the duty to keep clear and accurate accounts of the estate and to render such accounts when called upon to do so (Re Estate of Lee Da Kor [2010] 1 HKLRD 415 at [17]).

29.On the evidence, the only account produced by Angie prior to the issuance of the Summons was Angie’s Interim Account.

30.Taking a closer look at such account, it is divided into 14 schedules. Insofar as it is material, first, schedule A, (entitled “STATEMENT OF PRINCIPAL RECEIVED”) discloses only 4 landed properties in the HK Estate[1] (“Disclosed Properties”). Yet, on the evidence before me, the HK Estate is also consisted of at least 4 other landed properties[2] (“Omitted Properties”).

31.The Estate’s ownership of the Omitted Properties is indisputable. It is not suggested, for example, that Angie was unaware of their existence. And, notwithstanding the complaint made on behalf of Esther in Alan’s first affirmation dated 25 March 2019, there is no or no credible explanation from Angie for the non-disclosure of the Omitted Properties.

32.Second, Angie’s Interim Account also purports to report on the income of the Estate received by Angie as one of the 14 schedules, i.e. schedule A-2, is entitled “STATEMENT OF ALL INCOME COLLECTED”. However, the only entry of this schedule is “No transactions to report”.

33.This is false and deliberately so. In support, Esther has made inquiries with the tenants of the HK Estate, which reveals that Angie had instructed Ken Chiu & Co, a Hong Kong firm of solicitors, to direct the tenant of the Peninsula Centre Unit (one of the Reported Properties) to, and the tenant (one Jet Link Manufacturing Limited (“Jet Link”)) did, pay rent (HK$37,000 per month) into Angie’s personal account with The Hong Kong and Shanghai Banking Corporation Limited (“HSBC”). According to Jet Link, the sum involved is HK$994,925 from 1 August 2016 up to 24 July 2018 (which is the date of Jet Link’s letter in response to Alan’s inquiries on behalf of Esther).

34.The said period within which Jet Link paid rent to Angie partly overlaps with the Accounting Period. Angie should therefore have disclosed the rental income from the Peninsula Centre Unit in schedule A-2 of Angie’s Interim Account.

35.To say the least, I find it disturbing that Angie saw fit to give an account on oath that she knew or must have known to be incomplete and/or untrue.

36.In her deposition in the US, Angie had tried to deflect questions about her collection of the rental income of the HK Estate by claiming to be unsure if she had retained Ken Chiu & Co or whether she had an account with HSBC.

37.Again, notwithstanding the complaint made on behalf of Esther in Alan’s 1^st affirmation, Angie has not explained or attempted to explain why she had kept quiet about the rental income of the HK Estate or the manner in which she had received such income.

38.Although the other tenants of the HK Estate were not forthcoming like Jet Link, I find it not unreasonable for Esther to suspect that Angie has been collecting undisclosed rental income from other disclosed or undisclosed landed properties of the HK Estate. Angie’s evidence in opposition to the Summons does not suggest that the other landed properties of the HK Estate are not tenanted so that Angie has not received any further rental income of the HK Estate.

39.For the avoidance of doubt, I have not overlooked Angie’s cross allegations of misconducts by other members of the Wong Family, particularly Alan. However, such alleged misbehaviours by others, even if true, do not excuse Angie’s aforesaid breach of the duty to account. To the contrary, Angie’s strategy of blaming others only casts Angie in a worse light.

40.Lastly, I see no expectation on the evidence before me that Angie would voluntarily remedy her failure to keep or give a proper account of her dealings with the Estate, whether in New York or Hong Kong, within a reasonable time. I am therefore not persuaded that I should afford Angie an opportunity to remedy her breach of the accounting duty.

Angie’s conflict of interests

41.The personal representative of the HK Estate, if properly advised, should and would consider taking action on Angie’s persistent failure to provide a true account of the properties and income of the HK Estate.

42.However, if Angie’s capacity as the executrix of the HK Estate should be affirmed by the resealing of probate in Hong Kong, I seriously doubt if Angie would take action against herself on behalf of the Estate or Esther (as the beneficiary of the Estate) to recover the said assets of the HK Estate.

Bad character

43.It is trite that an executor may be passed over on account of his bad character: Re Haque Shaquil [2012] 1 HKLRD 689 at [27]. There must, however, be a nexus between the alleged bad character and the executor’s suitability to administer the estate: Tsao Chi Ching v Tsao Lung Mary [2013] 2 HKLRD 301 at [22].

44.In light of the above discussion of Angie’s failure to account and to acknowledge such failure even when presented with clear evidence of the same, it is understandable why Esther should have doubts of Angie’s suitability to administer the HK Estate.

Support from the majority beneficiary

45.Esther has since become the sole beneficiary of the Estate by the operation of the Renunciations.

46.Even if Angie should eventually succeed in setting aside her own renunciation, she would be entitled to only 12.5% of the residuary Estate while Esther would be entitled to 87.5%. I consider this a factor tilting the balance in favour of Esther as the overwhelming majority beneficiary whose interest the court is entitled to take into account in the present application.

47.I am mindful that the court should take into consideration the fact that the Deceased chose Angie to be the executrix of the Will. However, this is not a conclusive factor: See Re Estate of Loo Che Chin, supra, at [15].

48.I am, however, also mindful that the dynamics and relationships within the Wong Family have drastically changed since the date of the Will, which constitutes a countervailing consideration. See Williams, Mortimer and Sunnucks on Executors, Administrators and Probate (21^st edition, 2018) at §57-20.

Whether Esther is a fit and proper person to act as administratrix

49.According to Angie’s deposition in the US proceedings, Esther was the personal bookkeeper of the Deceased, travelled with him to all the properties including those abroad and knew of all the assets of the Estate. She also claimed to believe that Esther had more knowledge about the properties of the Estate than she did.

50.In disputing Esther’s suitability to administer the Estate, Angie relied on Esther’s old age[3] and alleged poor health[4].

51.In rebuttal, a medical certificate dated 15 July 2019 was produced on behalf of Esther confirming that Esther is mentally fit to give instructions to lawyers to handle the probate matters. There is no evidence from Angie that rebuts this certification.

52.Apart from Esther’s old age and alleged poor health condition, Angie also alleges that her siblings have complete control over Esther. In support, Angie has produced a copy of a power of attorney signed by Esther in favour of Wendy and Michael on 7 November 2014 (“Power”). She further accuses Michael of embezzlement of estate funds for his personal use in the course of administering the NY Estate purportedly on behalf of Esther.

53.I accept Alan’s explanation of the circumstances in which Esther executed the Power. According to Alan, the Deceased passed away in 2014 following a lengthy period of coma, which caused some chaos to the financial affairs of the family. Esther did not want to bother the Children in case she should come under a coma one day so she decided to sign the Power in favour of Wendy and Michael who were the only two immediate family members residing in New York at that time. Esther was and still is in control of the bank accounts and the properties of the NY Estate, which remain under her oversight although she entrusted Michael and sometimes Wendy with the more mundane chores such as the collection of rent or the arrangement of repairs and maintenance.

54.The above account by Alan is consistent with the fact that Esther did sign an affidavit in 2017 setting out all the assets, income, liabilities and expenses of the Estate.

55.There is simply no evidence from Angie, apart from her bare assertions, that either Michael or Wendy has not acted according to Esther’s instructions or that Esther cannot administer the Estate or, where necessary, give proper instructions to her agents to administer the Estate. In particular, insofar as the HK Estate is concerned, although Esther currently resides in New York, she is able to come back to Hong Kong to take care of the HK Estate.

56.For these reasons, I find Esther a fit and proper person to act as administratrix.

57.In light of my above findings, I am satisfied that it is necessary and convenient to pass Angie over as executrix, and to appoint Esther as administratrix, of the HK Estate.

Disposition of the Appeal

58.Accordingly, I dismiss the Appeal.

59.I also make an order nisi that Angie should personally bear, with no recourse against the Estate, Esther’s costs of the Appeal (including the Further Evidence Application), to be taxed on a trustee basis, if not agreed, with certificate for counsel for the hearing on 22 September 2020.

Reasons for dismissing the Further Evidence Application

60.Angie’s 4^th affirmation was made to adduce further evidence for the purposes of showing:

(1) why the properties and rental income of the HK Estate were not or could not have been listed in Angie’s Interim Account;

(2) why the rental income of the HK Estate was not accounted for in the affirmations previously filed by Angie;

(3) why Angie incurred the allegedly excessive administration expenses; and

(4) why Esther is not a fit and proper person to administer the Estate.

61.Order 58 rule 1(5) of the Rules of the High Court (Cap 4A) provides that no further evidence (other than evidence as to matters which have occurred after the date on which the judgment, order or decision was given or made) may be received on the hearing of an appeal under Order 58, except on special grounds.

62.The phrase “special grounds” requires the following 3 conditions laid down in Ladd v Marshall [1954] 1 WLR 1489 to be satisfied (Fortis Insurance Company (Asia) Limited v Lam Hau Wah Inneo, HCA 1840/2009, unreported, 30 March 2010, at [16]):

(1) that the evidence could not have been obtained at the trial with reasonable diligence;

(2) the evidence must be such that, if given, it would probably have an important influence on the result of the case, though it need not be decisive; and

(3) the evidence must be such as is presumably to be believed.

Evidence allegedly showing why the properties and rental income of the HK Estate was not or could not have been listed in Angie’s Interim Account

63.The new evidence in question are the transcript of Esther’s deposition in the US Proceedings; the US tax return form filed in 2015 and the legal advice from Angie’s US attorney.

64.All such evidence was in Angie’s possession and/or knowledge before the hearing before the Master on 22 September 2020.

65.The first Ladd v Marshall condition is thus not satisfied and Angie should not be allowed to refer to such evidence on this ground alone.

Evidence allegedly explaining why the rental income of the HK Estate was not accounted for in Angie’s previous affirmations

66.The evidence sought to be adduced are certain documents (being tenancy agreements, demand notes and receipts for management fees and Government rates and rents, receipts for construction works done, deposit slips recording rent payments) (“Kwoon Documents”) supplied by one Katen Kwoon to Angie’s former solicitors in these proceedings, Chu & Lau (“C&L”), on about 17 May 2018 and then passed on by C&L to Angie upon Angie’s termination of C&L’s retainer.

67.Angie has confirmed in paragraph 26 of her 4^th affirmation that she was finally able to peruse and examined the full contents of the Kwoon Document in late April 2020, which was before the hearing below on 22 September 2020.

68.The first Ladd v Marshall condition is again not satisfied and Angie should not be allowed to refer to the evidence sought to be adduced under this heading or how she came to obtain the same on this ground alone.

Evidence allegedly justifying administration expenses

69.The administration expenses allegedly incurred by Angie has been specifically mentioned in Alan’s 1^st affirmation, which was filed on 27 March 2019. Counsel for Angie argued that it was not specifically complained that the administration expenses were excessive in Alan’s affirmation. However, in view of the fact that Alan’s 1^st affirmation was filed in support of the application for removal of Angie as executrix of the HK Estate and that such administration expenses have been specifically mentioned therein, it should be an obvious implication that it is complained against the excessiveness of the claimed administration expenses.

70.Even if Angie were really not aware of such complaint until it was explicitly spelt out in Esther’s skeleton submissions, she could have applied for leave to adduce evidence in response to the complaint before the hearing or at least sought to adjourn the hearing to apply for leave to adduce evidence to justify the administration expenses.

71.Angie failed to show that she has exercised reasonable diligence for the purpose of the first Ladd v Marshall condition.

72.In any event, I find it unnecessary to evaluate the administration expenses claimed by Angie.

Evidence sought to be adduced to show that Esther is not a fit and proper person to administer the Estate

73.The new evidence in question is again the transcript of Esther’s deposition in the US Proceedings, which was already in Angie’s possession and/or knowledge before the hearing before the Master on 22 September 2020.

74.As concluded in [65] above, the first Ladd v Marshall condition is not satisfied in respect of Esther’s US deposition so that Angie should not be allowed to refer to such evidence on this ground alone.

75.The issue of whether Esther is a fit and proper person to administer the Estate arose at an early stage. In fact, it was raised by Angie. However, Angie has failed to provide any reason why she could not have produced Esther’s US deposition before Master if she believes that it can help to show that Esther is not a fit and proper person to act as the administratrix.

Whether the application of Ladd v Marshall may give rise to injustice

76.Counsel for Angie contends that this is a case involving a party who deliberately misled the court in a material manner or where a strong prima facie case of wilful deception is disclosed as Esther tried to paint an untrue picture of Angie being unsuitable to act as the executrix. Under these circumstances, the new evidence may be adduced if the application of Ladd v Marshall may give rise to injustice: Mok Hing Chung v Wong Kwong Yiu [2018] HKCA 713 at §6.

77.With respect, I am unable to discern from the evidence or submissions before me any wilful attempt by Esther to mislead the court or to otherwise wilfully deceive.

78.For the foregoing reasons, I dismissed the Further Evidence Application.

Mr Raymond WN Tsui, instructed by C. Y. Tsang & Co for the caveator

Mr Moses Park and Mr Billy Mok, instructed by Ravenscroft & Schmierer for the person warning