Ching Chung Yin Secina v. Ching Chung Kam Andrew in His Capacity As the Executor of the Estate of Ching Chi Sau, Deceased

HCA 1643/2021

[2024] HKCFI 527

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1643 OF 2021

______________

______________

_______________

J U D G M E N T

_______________

I.  INTRODUCTION

1.The judgment debtor (Secina) appeals against the garnishee order absolute (the Order Absolute) made by Master Ho on 19 October 2022. By the Order Absolute, the garnishee (the Bank) was directed to pay the judgment debt of HK$168,500 and costs of HK$5,200 (together, the Sum) to the judgment debtor (Andrew) forthwith.

2.Andrew and Secina are brother and sister. Along with their brother Edward and their mother, Andrew and Secina are beneficiaries under their late father’s will (the Will). Andrew and Secina are also the executors of their father’s estate (the Estate). In this appeal, Secina is acting in her personal capacity, while Andrew acts in his capacity as executor.

3.The monies of the Estate have been deposited into an account (the Account) with the Bank, pending eventual distribution among the beneficiaries of the Will. Andrew and Secina are the joint signatories of the Account. Administration of the Estate remains to be completed. However, by order dated 17 August 2021 (Wilson Chan J’s Order), Wilson Chan J declared in paragraph 1 that Secina was entitled to withdraw up to HK$1,638,000 (the Amount) from the Account in her personal capacity. Despite Wilson Chan J’s Order, when Secina sought to withdraw the Amount from the Bank, Andrew refused to sign a release authorising the Bank to allow her to do so. Andrew says that the “main reason” for his refusal to sign was that, on 10 September 2021, Secina appealed against Wilson Chan J’s Order.

4.Secina’s appeal was solely in relation to paragraph 4 of Wilson Chan J’s Order. That paragraph held that Secina should distribute Andrew’s entitlement under the Will in accordance with the instructions found there, without the deductions which Secina claimed should be made. The Court of Appeal heard Secina’s appeal on 20 September 2022 and dismissed it with costs against Secina on 18 October 2022. Nonetheless, to date, Secina has been unable to withdraw any part of the Amount from the Account. It is against the Amount in the Account that Andrew intends to enforce the Order Absolute.

5.Ms Karen Wong (appearing for Secina) submits that the Order Absolute should not have been made for the following reasons:

(1)  The Bank’s debt arising from the monies in the Account is owed to Andrew and Secina jointly, not to Secina alone.

(2)  The monies in the Account are trust monies held by Andrew and Secina as executors and trustees of the Estate.

(3)  Pending completion of the administration of the Estate, Secina only has an inchoate interest (a mere spes) in the Amount.

(4)  There would be circularity. If Andrew was to enforce the Order Absolute against the Amount, he would be doing so in his capacity as executor. He would consequently have to pay the proceeds from enforcing the Order Absolute back into the Account.

(5)  Andrew does not come with “clean hands” and only has himself to blame for Secina’s inability to pay the judgment debt. Secina has no funds with which to discharge the judgment debt, apart from the Amount in the Account. But Andrew has prevented Secina from withdrawing any part of the Amount.

6.There was a preliminary matter with which I dealt before hearing the appeal. That was the submission by Ms Abigail Liu (appearing for Andrew) that I should ignore (1) Secina’s 4^th Affidavit dated 28 October 2022 and (2) the Court of Appeal’s judgment of 18 October 2022, both of which Secina sought to introduce in support of this appeal. According to Ms Liu, neither the affidavit, nor the Court of Appeal judgment was adduced before Master Ho when hearing whether the Order Absolute should be granted, and no good reason has been given for the omission.

7.In my view, the 4^th Affidavit does not adduce substantially new material. The matters deposed to there would have been self-evident at the time of the hearing before Master Ho. There is a bald allegation in paragraph 4 of the affidavit that, instead of complying with Wilson Chan J’s Order, Andrew “used various invalid excuses” to justify non-compliance. But such assertion would not by itself add to Secina’s already available arguments. As for the Court of Appeal’s judgment, it was in fact considered by Master Ho and, in any event, it would be odd if a first instance judge could not have regard to a Court of Appeal judgment, especially one delivered more than a year ago in a case involving Andrew and Secina. In the round, there would be no real prejudice to Andrew in allowing Secina to rely on the two documents. Accordingly, albeit skeptical as to the utility of the 4^th Affidavit, I allowed both documents to be referred to in the appeal before me.

II.  DISCUSSION

8.I do not think that the grounds raised by Ms Wong justify allowing Secina’s appeal.

9.On ground (1), as a result of Wilson Chan J’s Order, while the Bank may be indebted to Andrew and Secina for the monies in the Account, HK$1,638,000 of that debt has been earmarked as beneficially held on Secina’s behalf. In those premises, the Bank can be regarded as holding the Amount on Secina’s behalf. The Order Absolute in effect imposes an enforceable equitable charge over the Amount to secure payment of the Sum.

10.On ground (2), by reason of Wilson Chan J’s Order, Andrew and Secina hold the Amount on trust for Secina. There is no reason why an enforceable equitable charge to secure payment of the Sum cannot be placed over the Amount as so held.

11.On ground (3), because of Wilson Chan J’s Order, as far as the Amount is concerned, Secina must have more than an inchoate interest.

12.On ground (4), it is not apparent why the circularity highlighted constitutes an impediment to the making of the Order Absolute. It may be that Andrew in his capacity as executor will have to “pay back” the Sum into the Account. But, as far as Secina’s overall position is concerned, once the Order Absolute is enforced, only the Amount less the Sum will be held for her personally in the Account. Once the Order Absolute is enforced, the Sum will accrue to the benefit of the Estate. It is conceivable (I do not rule this out) that in the future, during a final distribution of the Estate among the beneficiaries of the Will, Secina may become entitled to a proportionate share of the Sum which will by then have become part of the Estate’s funds. But that is not an argument against the making of the Order Absolute in the first place.

13.I confess that ground (5) has caused me much concern.

14.There is obviously much ill feeling between Secina and Andrew. Secina’s appeal against paragraph 4 of Wilson Chan J’s Order would, if it had succeeded, have led to significant deductions being made to Andrew’s share of the funds in the Account, possibly reducing his share to zero or even a negative value. Secina’s appeal having been dismissed over a year ago, it is unclear why Andrew still refuses to authorise the Bank to release the Amount to Secina. This is despite Andrew acknowledging in his affidavit for this appeal:

“No doubt that [Secina] knows that the sum of HK$1,638,000.00 held by the [Bank] is owned by her. This is her available fund which can be used without restrictions.”

15.Secina claims that she has no funds with which to pay the judgment debt, apart from the Amount in the Account. If so, by preventing Secina from withdrawing the Amount to which she is entitled by Wilson Chan J’s Order, Andrew has made it impossible for her to pay the judgment debt to the Estate.

16.Since a garnishee order gives rise to an equitable charge, Ms Wong submits that equitable principles must apply when determining whether the Order Absolute should have been made. Specifically, Ms Wong stresses the equitable principle of “clean hands”. A person who seeks equity in a matter must not have acted in an inequitable or unconscionable manner in connection with such matter. Ms Wong argues that, in preventing Secina from withdrawing the Amount, Andrew has acted inequitably or unconscionably, so that the Order Absolute should not have been made.

17.Given my concern that paragraph 1 of Wilson Chan J’s Order has not been followed, I asked Ms Liu what the reasons for the hold up in releasing the Amount (minus the Sum) to Secina were. I noted that the Court of Appeal had long since dismissed Secina’s appeal. In response and on instructions from Andrew, Ms Liu assured the court that Andrew would endeavour to take all necessary steps to enable the Amount (minus the Sum) to be released to Secina within 14 days from today.

18.Thus, while having every sympathy with Secina’s plight, in light of Andrew’s assurance today as conveyed to the court by Ms Liu and recorded in the previous paragraph, I do not think Andrew’s conduct on the whole means that affirming the Order Absolute would be inequitable or unconscionable to Secina. She does not dispute that the Sum is due and payable. Had the Amount been released to her, she says that she would have paid the Sum. The present appeal is not an appropriate forum for indirectly compelling or pressuring Andrew, by setting aside the Order Absolute, to comply with Wilson Chan J’s Order. Secina is not without suitable avenues of legal redress, if Andrew on behalf of the Estate does not fulfil the assurance conveyed to the court today and fails to cause the Amount (minus the Sum) to be released to Secina.

19.In summary, the present proceedings are limited to determining whether the Order Absolute, which was granted to enforce an undisputed judgment debt, should be set aside. On the facts and considering the assurance to the court today, there is no good reason to set aside the Order.

III.  CONCLUSION

20.The appeal is dismissed. I shall now hear the parties on costs and consequential orders.

Ms Karen WL Wong, instructed by Benny Kong & Tsai LLP, for the plaintiff

Ms Abigail YY Liu, instructed by Hau, Lau, Li & Yeung, for the defendant