Chan Hin Cheung v. Kwan Yat Hung

HCMP 1861/2022

[2023] HKCFI 2788

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 1861 OF 2022

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JUDGMENT

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Application

1.Before the court is the amended originating summons dated 14 November 2022 (“OS”) taken out by the plaintiff, one of the executors of the estate (“Estate”) of the late Madam Wong Siu Pik (王少碧) (“Madam Wong”), seeking orders for the defendant (i.e. the plaintiff’s co-executor) to:

(1)  furnish a true and perfect inventory and account of the Estate, to be verified by affidavit and supported by documents, within 14 days from the date of this judgment with liberty to the plaintiff to inspect the supporting documents within 14 days thereafter;

(2)  take all necessary and reasonable steps to facilitate the sale of Ground Floor, 17 Cooke Street, Hung Hom, Kowloon, Hong Kong (“Property”), including the delivery up of vacant possession within 14 days from the date hereof and the execution of all requisite documents for the sale of the Property, failing which the Registrar of the High Court or such other person as may be authorised by the court shall do so on the defendant’s behalf; and

(3)  to be removed as executor of the Estate.

2.If the application for the removal of the defendant prevails, the only other relief that the Estate will require are vacant possession of the Property and account of the Estate.  I shall therefore deal with the removal application first.

Undisputed Background

3.Madam Wong passed away on 16 October 2020, leaving a will dated 5 August 2020 (“Madam Wong’s Will”), under which the plaintiff and the defendant are named as executors as well as beneficiaries in equal shares of the Estate.  Probate of Madam Wong’s Will was granted to the plaintiff and the defendant[1] on 22 April 2022 under Grant No.HCAG004652/2021. 

4.Prior to Madam Wong’s death, she had on 27 August 2018 obtained probate of the last will and testament dated 21 March 2014 (“Mr Lau’s Will”) of a Mr Lau Ming (劉明), deceased (“Mr Lau”), under which, in addition to her appointment as the sole executrix of Mr Lau’s Will, Madam Wong was also bequeathed 90% of Mr Lau’s Estate (“Lau Estate”).  The remaining 10% was divided equally between two individuals named 曾麗華 and 余惠良.  Clauses 4 and 5 of Mr Lau’s Will specifically made no provision for his wife (謝綺媚) (“Madam Tse”) and their children, Lau Ka Yau (劉家佑) and Lau Ka Man (劉家汶) (“Son” and “Daughter” respectively and “Children” collectively).

5.Mr Lau passed away on 6 October 2014.

6.Prior to his death, Mr Lau was the proprietor of a funeral related business known as Cheung Fat Funeral (祥發殯儀) (“Business”) carried on at the Property, of which Mr Lau was the sole owner.  In addition, Mr Lau also owned the light goods vehicle bearing registration mark KF7008, which Mr Lau used for the Business (“Vehicle”).

7.After Mr Lau’s death, Madam Wong carried on the Business at the Property and using the Vehicle.  The business registration of the Business was transferred into Madam Wong’s sole name on 16 October 2014.

8.As a result of the lack of provision in Mr Lau’s Will for them, Madam Tse and the Children commenced proceedings in the District Court under FCMP 309/2014 (“FCMP 309/2014”) against (1) Madam Wong as the intended executrix of the Lau Estate and (2) one Kei On Trading Limited (“Kei On”)[2], seeking provisions under the Inheritance (Provision for Family and Dependents) Ordinance (Cap 481).

9.FCMP 309/2014 and another related action in the District Court under DCCJ 4379/2017[3] (which was between Madam Wong as executrix of the Lau Estate and in her personal capacity as plaintiff and Madam Tse[4] as defendant) were eventually settled on 2 May 2018 on, inter alia, the following terms which were embodied in a consent order of the same date (“Consent Order”):

(1)  that Madam Wong should apply for the grant of probate of the Lau Estate within 14 days from being notified of the withdrawal of the caveat entered by Madam Tse;

(2)  that Madam Wong should, within 14 days from the grant of probate of the the Lau Estate, sell the Property (with vacant possession if required by the purchaser), the Business and the Vehicle[5] together in the open market, whether by auction or private treaty, at open market value or at a sum of not less than $17 million, whichever is the higher;

(3)  that the proceeds of sale, after deducting (a) certain agreed liabilities of the Lau Estate, (b) legal costs not exceeding $30,000 and (c) reasonable expenses incidental to the sale of the Property, the Business and the Vehicle, together with the proceeds of realisation of the other assets of the Lau Estate (“Monies in Court” collectively), shall be paid into court;

(4)  that subject to the Director of Legal Aid’s first charge, the following distributions shall be made out of the Monies in Court:

(a)  $650,000 to the Son;

(b)  $800,000 to the Daughter;

(c)  to Madam Tse:

(i)    a sum equivalent to 40% of the balance of the Monies in Court after the said distributions to the Children;

(ii)   $630,000;

(iii)  $500,000; and

(d)  what remains to Madam Wong as executrix of the Lau Estate.

10.Save for obtaining the grant of probate of the Lau Estate on 27 August 2018, Madam Wong had not, during her lifetime, completed the administration of the Lau Estate, including performance of her obligations under the Consent Order.

11.By virtue of s 34 of the Probate and Administration Ordinance (Cap 10) (“PAO”), as executors of the estate of the sole executrix of the Lau Estate (i.e. Madam Wong), the plaintiff and the defendant are also executors of the Lau Estate, to which the Estate is a 90% beneficiary, subject to the distributions due to Madam Tse and the Children under the Consent Order.

12.To avoid repetition, I will go into the events prompting these proceedings under the heading “discussion” below.

Statutory Provisions and Legal Principles on Removal

13.The plaintiff’s application for the removal of the defendant as an executor of the Estate was made under ss 33(3) and 36 of the PAO 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)

14.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].

15.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 at [83].

16.Mr Justice Wilson Chan summarised the principles governing the exercise of the court’s powers under s 33(3) in Chu Wing Chuen Paul v Chu Oi Yan Irene [2022] HKCFI 804 as follows at [21]-[23]:

“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.”

17.As for s 36, the words ‘necessary or convenient’ 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].

18.The burden lies on the plaintiff to show that there are special circumstances that make it necessary or convenient to remove the defendant, an executor chosen by Madam Wong.

Discussion

19.Following these principles, I have no doubt that the defendant, though nominated by Madam Wong, should be removed as executor of the Estate for the due and proper administration of the Estate and in the interest of the beneficiaries.  My reasons are as follows.

20.First, there is, or can be, no dispute that since Madam Wong’s passing, the defendant has taken over the Business, entered into occupation of the Property and made use of the Vehicle for the purpose of the Business.  Indeed, after the grant of probate to the Estate to the plaintiff and the defendant on 22 April 2022, the defendant saw fit to register in his sole name (without qualifying his capacity as an executor of the Lau Estate or the Estate) a funeral business with the same name and address as the Business on 10 May 2022.  He then proceeds to run such business like it is his own enterprise without reference to the plaintiff.

21.I find the defendant’s explanation that he was merely trying to keep the Business as a going concern in order to maintain its value in a sale disingenuous.  Where there is more than one personal representative, they should act jointly.  However, not only has he excluded the plaintiff from the operation of the Business, the defendant has, despite the plaintiff’s repeated protests and demands since July 2022, refused to account for, or give the plaintiff access to the books and accounts of, the Business.

22.Second, after the grant of probate of the Estate to the plaintiff and the defendant in April 2022, Madam Tse and the Children and the plaintiff are understandably anxious to carry out the much-delayed sale of assets and distributions of proceeds mandated by the Consent Order.  The defendant is regrettably unco-operative especially over his vacation of the Property, which is by far the most valuable asset of the Lau Estate and which the defendant has been using exclusively for well over a year without having to pay any rent or mesne profit to the Lau Estate.  The relevant letters from Cheung Wong & Associates (“CWA”) for Madam Tse and the Children and SSW & Associates (“SSW”) for the plaintiff to Tse Yuen Ting Wong (“TYTW”) for the defendant since May 2022 were met with either holding replies or promises to move out that were not honoured.

23.In this connection, I have not overlooked the ashes (whether stored in urns or otherwise) kept at the Property and the issue of what constitutes vacant possession raised thereby by the defendant in an attempt to justify his continuous occupation of the Property.  The defendant does not have my sympathy. He did not raise this question until TYTW’s letter dated 16 August 2022 to CWA and SSW, months after he took it upon himself to enter into exclusive possession of the Property.  While the permanent disposal of the ashes on a cessation of business is governed by the guidelines published by the Food and Environmental Hygiene Department, the compliance with which would take time, had this been a genuine concern, there is no reason why the defendant could not have begun the process at the latest in August 2022 when he raised the matter with the plaintiff, Madam Tse and the Children.

24.Third, it is trite that a personal representative is duty bound to keep a proper account of the administration of the estate and be ready to produce the account when called upon to do so.  See, for instance, William, Mortimer & Sunnucks on Executors, Administrators and Probate, 21^st Edition (2018), paragraphs 42-20 to 42-21. 

25.Yet, in wholesale disregard of the relentless demands by CWA for the plaintiff culminating in these proceedings, the defendant has not produced any account even by the hearing on 14 July 2023.  The first prayer in the OS is one for an account of the Estate.  There is no way the defendant could have missed it. 

26.No explanation has been proffered by the defendant for this egregious breach of duty. 

27.And I do not think a belated offer or undertaking to account in an affirmation in opposition after the commencement of legal proceedings is good enough.  The defendant has throughout had the benefit of legal advice and would have all along been apprised of a personal representative’s duty to account.  Indeed, it was claimed in TYTW’s letter dated 23 August 2022 to SSW that the defendant had retained accountants/auditors to prepare the accounts of the Business, which would be provided to the plaintiff when ready.  We have not had sight of any such accounts.

28.Fourth, I strongly disapprove of the defendant’s dilatory response to these proceedings, brought against him in his capacity as an executor.  Despite the service of multiple court documents on the defendant, as at the hearing on 13 June 2023, the defendant has not acknowledged service or filed any notice of intention to defend.  Nor did he or his legal representative appear at the first hearing of the OS before Master Jack Wong on 16 March 2023.  The adjourned hearing before me was originally fixed before me on 13 June 2023.  The defendant turned up in person and totally unprepared, which resulted in yet another adjournment.

29.Last but not least, there is now such a breakdown of trust, caused largely by the defendant’s breaches of duty in the administration of the Estate, that renders it unrealistic to expect co-operation between the plaintiff and the defendant as co-executors of the Estate.  See Re Estate of Loo Che Chin [2013] 2 HKLRD 739.

Disposition

30.For the above reasons, I remove the defendant as an executor of the Estate. 

31.I further order the defendant to: (1) deliver possession and control of the Property to the plaintiff in the state and condition he found it when he entered into possession of the same[6] and (2) furnish a true and perfect inventory and account of the Estate, to be verified by affirmation by the defendant and supported by documents, both within 28 days from the date of this judgment.  The plaintiff shall have liberty to inspect the originals of the documents produced by the defendant as supporting the account within 14 days thereafter.

32.With regard to the second-mentioned obligation, in the hope of avoiding any more dispute, the defendant is reminded of what Chow J (as Chow JA then was) said in Chow Chak Kiu v Chow Man Chi, HCMP 797/2016, unreported, 17 January 2017, at [40] and [41]:

“40. Generally speaking, to render a proper account of the estate of a deceased person, the personal representative is required to:-

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

(2) give details of movement of assets, incomes 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 account with documentary evidence.

See Re Estate of Lee Da Kor [2010] 1 HKLRD 415, at paragraphs 17 and 26 per Jeremy Poon J (as he then was); Charles Yu Chiu Kwan v Edna Yu Chan Shek Yin, HCMP 965/1980 (22 April 1982) per Rhind J (quoted by B Chu J in Leung Wing Hong v Leung Yiu Cho, HCMP 1473/2014 (11 August 2016), at paragraph 104).

41. Moreover, it is not acceptable for the personal representative merely to give to the beneficiary a bundle of documents relating to the estate and leave it to the beneficiary to sort out the documents himself (Re Estate of Lee Da Kor,at paragraph 37).”

33.I also make an order nisi that the defendant should personally bear, with no recourse against the Estate, the plaintiff’s costs in these proceedings, to be taxed on a trustee basis, if not agreed, with certificate for counsel for the hearings on 13 June 2023 and 14 July 2023.

34.I also give the parties liberty to apply.

Mr Derek Hu, instructed by SSW & Associates, for the plaintiff

Mr Jeffrey Lai and Mr Victor Yuen, instructed by Littlewoods, for the defendant