Darach E. Haughey and Another v. Lam Mui and Others

HCMP 1593/2014

[2024] HKCFI 924

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 1593 OF 2014

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D E C I S I O N

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A.  INTRODUCTION

1.Before this Court is a summons dated 9 February 2023 taken out by the 2^nd Defendant (“D2”) for directions on the following matters:

(1)  Whether the fees of the staff of Deloitte Touche Tohmatsu (“DTT” and “DTT’s Costs”) should be regarded as part of the costs of the Plaintiffs, Administrators of the estate of Chiu Keung, deceased (“the Estate”), under the Order of Yam J on 27 October 2003 in HCA 6123/1995 (“Yam J’s Order”) (“Issue 1”);

(2)  Whether the net proceeds of the sale of a property situated at No. 4 Derby Road, Kowloon Tong, Hong Kong (“Property”) should be adopted in calculating the gross value of the Estate for the purpose of section 60 of the Probate and Administration Ordinance (Cap. 10) (“PAO”) (“Issue 2”);

(3)  In relation to the costs of the appeal under CACV 157/2017 (“the Appeal”) and the stay application under HCMP 1593/2014 (“Stay Application’), whether there are any over-recovered costs by the Administrators and its legal representatives, Messrs. Sit, Fung, Kwong & Shum (“SFKS”) that should be reimbursed to the Estate, namely, the difference between the amount the Administrators and SFKS had been paid from out of the Estate and the amount found due by the Estate to them in Master Rita So’s Consent Orders dated 27 January 2022 (“Master So’s Orders”) (“Issue 3”); and

(4)  As to the costs of the new evidence application under CACV 157/2017 (“New Evidence Application”), whether the Estate should be reimbursed for costs already paid from the Estate as D4-D6 had been ordered to bear the Administrators’ costs (“Issue 4”).

2.The professional Administrators seek the Court’s guidance under Order 85, rule 2 of the Rules of the High Court. They adopt a neutral approach whilst making submission to assist the Court.

B.  FACTUAL BACKGROUND

3.The Administrators were appointed pursuant to Yam J’s Order and were granted the Letters of Administration on 6 January 2006. By now, D2 has become the sole beneficiary of the Estate. On 8 June 2017, this Court gave judgment on distribution of the Estate. D4-D6 lodged an appeal.

4.By an order dated 9 October 2018 (“New Evidence Order”), the Court of Appeal dismissed D4 to D6’s application to adduce new evidence and ordered them to pay the costs of the Administrators and D2.

5.By an order dated 17 July 2020 (“Appeal Order”), the Court of Appeal ordered that the costs of the Administrators and D2 be borne by D4 to D6, and that the Administrators’ own costs be paid out of the Estate on trustee basis.

6.By an order dated 17 August 2020 (“Stay Application Order”), this Court allowed D4 to D6 to withdraw their application for stay of execution and ordered the costs of the Administrators and D2 to be borne by D4 to D6, with the Administrators’ own costs to be paid out of the Estate on trustee basis.

7.Taxation proceedings were commenced. The Administrators were able to agree on a global settlement of costs, as recorded in Master So’s Orders both dated 27 January 2022:

(1)  The Administrators have leave to accept D4 to D6’s sanctioned payments of HK$250,000 and HK$75,000 in full and final settlement of the Administrators’ costs in the Appeal and the Stay Application respectively (i.e. HK$325,000 in total) (§§1 of Master So’s Orders);

(2)  D4-D6 do pay HK$20,000 to the Administrators in full and final settlement of each of the whole of the two Administrators’ Bill of Costs filed on 4 August 2021 (i.e. in relation to the Appeal Order and the Stay Application Order) as between the Administrators and D4-D6 (i.e. HK$40,000 in total) (§§4 of Master So’s Orders); and

(3)  The Administrators’ own costs of HK$14,632 and HK$28,388 for the Appeal and the Stay Application respectively be paid out of the Estate (i.e. HK$43,020 in total) (§§5 of Master So’s Orders).

8.There is no dispute that the sums totalling HK$365,000 in sub-paragraphs (1) and (2) covered all 3 Orders. This sum has been returned to the Estate.

9.The Estate had already paid for the Administrators’ costs under the Appeal Order and Stay Order. D2 claims that the Administrators should repay what they recovered from D4-D6 to the Estate. As for the New Evidence Order, D2 claims that costs should be borne by D4-D6 and the Estate is not liable to indemnify the Administrators as the Order does not say that the Administrators’ own costs be paid out of the Estate. The Administrators seek the Court’s guidance on the 4 Issues.

C.  LEGAL PRINCIPLES

10.Section 60 of PAO provides for a “Statutory Cap” on an administrator’s remuneration:

“60. Allowance of remuneration to executor, administrator or attorney

(1) Subject to subsection (2), the court may allow to any executor or administrator … such remuneration out of the estate of the deceased person as the court thinks fit.

(2) (a) …

(b) No such remuneration shall exceed five per cent on the first $1,000, two and a half per cent on the next $4,000 and one per cent on the balance of the gross value of all property of whatsoever nature administered.”

11.Order 62 rule 6(2) of the Rules of High Court (Cap. 4A) (“RHC”) provides for an administrator’s legal costs as follows:

“Where a person is or has been a party to any proceedings in the capacity of trustee, personal representative or mortgagee, he shall, unless the Court otherwise orders, be entitled to the costs of those proceedings, in so far as they are not recovered from or paid by any other person, out of the fund held by the trustee or personal representative or the mortgaged property, as the case may be; and the Court may otherwise order only on the ground that the trustee, personal representative or mortgagee has acted unreasonably or, in the case of a trustee or personal representative, has in substance acted for his own benefit rather than for the benefit of the fund.”

D.  ISSUE 1 – WHETHER DTT’s COSTS SHOULD BE REGARDED AS PART OF THE ADMINISTRATORS’ COSTS

12.To decide this issue, the starting point must be Yam J’s Order.

13.As held by Chow J (as he then was) in Cosimo Borrelli v Allen Tak Yuen Chan (unrep., HCMP 2174/2014, 12 November 2015) at §11, the correct approach when construing a court order is as follows:

“… the starting point is the natural and ordinary meaning of the words in light of the syntax, context and background in which those words are used. What additional principles and factors come into play as part of the court’s exercise of interpretation will depend on the nature of the writing to be interpreted and will be highly dependent on the facts of the specific case.”

14.The relevant parts of Yam J’s Order are as follows:

“4. that the Administrators be authorized:

…

(4) to retain independent legal and other professional advisers both inside and outside Hong Kong to assist them in the fulfillment of their duties;

(5) to retain the services of DTT, Certified Public Accountants, including overseas offices, for like purpose;

…

(7) to make such payments as are necessary to preserve and get in the property comprised in the Estate and to pay their reasonable remuneration at rates as per their letter to Messrs. Or, Ng & Chan (“ONC”) dated 16^th October 2003 [“ONC Letter”] and disbursements, costs, charges and expenses (including legal fees) incurred in administering the Estate;

…

6. that the Administrators be indemnified out of the assets to which their appointments extend in respect of their proper and reasonable remuneration (at rates as per their letter to ONC dated 16^th October 2003) and disbursements, including the costs of DTT and any legal advisers retained by the Administrators subject to the provisions of the Ordinance and the Rules of the High Court (Cap. 4) by reference to the time properly given by the Administrators and their staff in attending to matters arising in the administration which if not agreed, should be subject to taxation and/or assessment by the Court;

…” (underline added)

15.The ONC Letter provides as follows

“Thank you for inviting us to provide a fee quotation to act as the Administrators of the Estate. We are pleased to advise that Mr Darach E Haughey and the undersigned [ie Mr Lau] would be willing to act as the Joint and Several Administrators of the Estate in place of the existing Administrators, if so appointed by the Court (“the proposed engagement”).

… our fees in relation to the proposed engagement will be based upon the time spent by the individuals to be assigned to the proposed engagement to complete the work, together with reimbursement of actual disbursements incurred (including legal fees). Individual hourly rates vary according to the degree of responsibility involved and the level of experience and skill required.

Kindly be advised that the following personnel of our firm will be assigned to the proposed engagement:

1.  As mentioned above, Mr Darach E Haughey and [Mr Lau] will act as the Joint and Several Administrators of the Estate, if so appointed. The new Administrators will be in charge of the engagement and assume a supervisory role in this regard; and

2.  Ms Jacinte See will be responsible for controlling the engagement on a day to day basis and she is expected to be assisted by a Senior Staff and a Trainee. A RSG Manager from the [PRC] … will assist Ms See in handling the PRC issues.” (underline added)

Points 1 and 2 are about division of responsibilities, all under “the proposed engagement” of the 2 named Administrators.

16.What followed ONC’s Letter was a list of discounted hourly rates “for the proposed engagement”, ie for the Administrators appointed. As they were partners at the material time, they were entitled to charge the partner/principal’s rate. There were also manager or senior staff rates.

17.There is no dispute that the Administrators’ appointment was personal. There are only 2 Administrators, whose remuneration is governed by the Statutory Cap.

18.The Administrators’ case is they were authorized to engage DTT “as a professional adviser” to assist in the administration of the Estate. Fees were therefore incurred by the staff of DTT for that propose. The DTT Costs, being time costs of the DTT staff, are not subject to the Statutory Cap. However, D2 contends that DTT’s Costs is part of the Administrators own remuneration and not “disbursement” under Yam J’s Order.

19.On a proper interpretation of Yam J's Order, the Administrators can engage other people to assist them:

(1)  §4(4) authorizes the Administrators to retain “independent legal and other professional advisers”; and

(2)  §4(5) authorizes the Administrators to retain DTT as certified public accountant; the phrase “for like purpose” should mean “in the fulfillment of [Administrators’] duties.

20.What §§4(4) and 4(5) contemplate is the need for professional services (eg legal, accounting or others) and not, eg clerical service. There is no limit to the number of professionals engaged and their expenses would be “disbursements” recoverable from the Estate pursuant to §6 of Yam J’s Order. These disbursements would not be subject to the Statutory Cap. However, if, eg clerical service is obtained, even if it is provided by DTT or to fulfill the duties of the Administrators, the Estate is not obliged to pay for the expenses beyond the Statutory Cap.

21.Mr To accepts that the original bills issued by DTT did not provide any separate breakdown as to time costs of the Administrators and DTT’s staff. I also note that none of the billed items purport to be for professional services and hence cannot be regarded as disbursements under §6 of Yam J’s Order either. This is in contrast to the services of DTT France’s staff provided overseas, which were separately billed and hence formed disbursements. (See B34, 38.)

22.Mr To, however, submits that throughout the administration of the Estate, a total of 8 staff members of DTT have assisted in the administration (albeit at different stages). If they are all regarded as administrators of the Estate, it would breach the ceiling of having more than 4 persons to be issued the Letters of Administration: section 25(1) of PAO. Moreover, the context as to why DTT was engaged is important to the question of interpretation of ONC’s Letter. The Administrators were appointed in their personal capacity without staff. The administration of this Estate had taken 16 years with numerous litigation. How could the Administrators have committed to a “package” limited to the Statutory Cap?

23.With respect, I am unable to agree. No one has ever suggested that there were/are other administrators. The Administrators were personal appointments and they had no staff. Even if their staff was used, their remuneration fell under the Administrators’ umbrella and is subject to the Statutory Cap. The staff, in truth, belongs to DTT. Whether DTT’s staff could charge the Estate was a matter of construction of ONC’s Letter and I have given my ruling in §§ 20 and 21 above.

24.One cannot use subsequent events of litigation as aids to interpretation. If the Administrators have made a bad deal under the ONC Letter, that is not a justification for remuneration beyond the Statutory Cap.

25.The Statutory Cap does not distinguish between contentious and non-contentious work of the Administrators. It exists to protect the Estate, to give reasonable remuneration to Administrators which will not over burden the Estate and to encourage expeditious administration so that an administrator cannot benefit from his own dilatoriness.

26.If the Administrators had wanted to charge for DTT staff costs separately or charge for contentious work beyond the Statutory Cap, they could have those included in the terms of the appointment, as was done in Chen Cheryl Deanna, HCAP 16/2008. In that case, PwCHK gave a written proposal (§8). After another potential administrator was proposed, the Court directed that a letter be sent to the proposed administrators inviting them to send a letter of consent to act indicating acceptance of the remuneration as administrators, subject to the Statutory Cap (§12). PwCHK wrote back to the Court stating that “it would not be commercially viable” for them to accept the remuneration to include the time-cost of their employees but were prepared to consent to act on the basis that their remuneration applies only to the services or work performed by the administrators personally on a time-cost basis at a specified hourly rate but subject to the statutory cap (§15). After some negotiations, the Court eventually ordered that: (i) the aggregate remuneration of the administrators shall not exceed the statutory cap; and (ii) the time costs of the employees of PwCHK be considered an expense or disbursements of the administrators; and (iii) the administrators’ remuneration and fees of PwCHK are subject to the statutory cap (§26). The terms of appointment there were distinguishable from the present case.

27.In the light of the above, the answer to Issue 1 is Yes. DTT’s Costs should be regarded as part of the Administrators’ costs.

28.The Estate has paid 3 bills of the Administrators totalling $2,234, 851.04, whereas the Statutory Cap is $443,265.46. The 4^th bill has not yet been paid. Upon this ruling on Issue 1, anything that the Administrator had received above the Statutory Cap has to be returned to the Estate.

E.  ISSUE 2 – GROSS VALUE OF THE PROPERTY

29.There is no more dispute that the gross value of the Property for the purpose of section 60(2)(b) of PAO is HK$44,326,546.27.

F.  ISSUE 3 – WERE THERE ANY OVER-RECOVERED COSTS IN RESPECT OF THE APPEAL AND THE STAY APLICATION WHICH SHOULD BE REIMBURSED TO THE ESTATE?

30.By the Appeal Order and the Stay Application Order, D4-D6 were ordered to pay the Administrators and D2’s costs of the Appeal, to be taxed if not agreed, and the Administrators’ own costs be paid out of the Estate on a trustee basis.

31.The Estate had paid the Administrators for their costs in respect of the Appeal and Stay Application. Subsequently, the Administrators, D4-D6 and D2 (all legally represented) reached agreements on costs, as reflected in Master So’s Orders. There is no dispute that the total settlement sum of HK$365,000 (ie HK$250,000 + HK$75,000 + HK$40,000) covered all 3 costs Orders subject to what is discussed in Section G below.

32.The question boils down to whether the Administrators are required to repay the Estate for the difference (if any) between the amount paid by the Estate for the Administrators’ costs, and the amount found due by the Estate to them for the same purpose in Master So’s Orders. The Administrators say no, because SFKS’ costs have not been included in the settlement; the amount agreed under Master Rita So’s Orders only covered the Administrators’ remuneration. D2 objects.

33.Order 62 rule 6(2) of RHC (set out in §11 above) provides that a personal representative is entitled to costs out of the Estate “insofar as any costs are not recovered from or paid by any other person”.

34.§6 of Yam J’s Order also provides that “the Administrators be indemnified out of the assets… including the costs of… any legal advisors retained…”

35.Despite the right to be indemnified, the personal representatives may submit their costs for assessment, and they would only be “entitled to their costs as so assessed and nothing more”: Williams, Mortimer and Sunnucks on Executors, Administrators and Probate (22^nd ed) at §59-15.

36.I have taken into account the following matters:

37.Firstly, a taxation is to tax “costs” under an order. “Costs” include fees, charges, disbursements, expenses and remuneration: Order 62, rule 1(1) RHC definition. The Administrators had submitted bills for party and party taxation, the propose of which was to recover as much costs as possible from D4-D6. D4-D6 had filed list of objections. The Administrators/SFKS could not expect one taxation to deal with only part of the costs and another to tax SFKS’s costs under the same Orders. Their (and SFKS’) misunderstanding of the effect of taxation and settlement could not become the liability of the Estate.

38.Secondly, it is a question of construction, in the light of circumstances known to the parties and Master So, as to whether the relevant sums in Master So’s Orders were intended by the parties to be agreed costs such that the Administrators are only entitled to the costs provided therein and nothing more.

39.In determining the intention behind these Orders, the Court is entitled to consider the pre-compromise negotiations to see if they contain any implied terms: see Wong Hung Kar Kee Mimi v Severn Villa Ltd [2014] 1 HKLRD 1088 at §§46-49, per Au-Yeung J.

40.I see no ambiguity in the intention behind Master So's Orders:

(1)  §§1-4 governed the party-and-party costs between D4-D6 and the Administrators. §§5 governed the Administrators’ “own costs” payable out of the Estate insofar as they could not be recovered from D4-D6. There was no inconsistency or duplication between §§1 and 5.

(2)  The discontinuance of the taxation and the term “in full and final settlement” made it clear that none of the 3 parties should come back for taxation under any of the 3 Orders. If the Administrators/SFKS had left out SFKS’ own costs and Master So was not alerted, the Administrators/SFKS have to bear the consequence.

(3)  None of the parties rely on §§9 of Master So's Orders, which must be regarded as irrelevant for present purposes.

41.Thirdly, it is a wrong approach to ascertain the intention behind Master So's Orders from the correspondence in this case because, as conceded by Mr To, the correspondence was not placed before Master So.

42.Fourthly, assuming the correspondence is relevant to the interpretation exercise, Master So's Orders were entirely consistent with the sentiments expressed in the following correspondence:

(1)  By a letter dated 28 October 2021 from SFKS to CLW, SFKS stated that “in view of the aforesaid offer from [Messrs. Cheng, Yeung, “CY”] and your position (as we understand it) that any of the Administrators’ costs not recovered from D4 to D6 would be payable out of the Estate, our client’s settlement proposal… has been superseded” (underline added).

(2)  By a letter dated 25 November 2021 from SFKS to CLW (not cited by Mr To), SFKS stated that “[as] we have made it clear in our previous letters, our clients are entitled to payment out of the Estate for their own costs incurred (including our costs and disbursements)”. (underline added)

(3)  By a letter dated 16 December 2021 from SFKS to CLW, SFKS stated that “[our] clients’ acceptance of the offers of 4^th to 6^th Defendants is without prejudice to our clients’ claim for reimbursements of the balance of the Administrators’ fees and our legal costs from the Estate” (emphasis added).

(4)  CLW never made any objections in this regard until they suggested, by a letter dated 28 December 2021, that the Administrators should first enter into agreement with D4-D6, leaving further settlement to be dealt with subsequently.

(5)  In view of CLW’s suggestion, by a letter dated 31 December 2021 to the Court, copied to D2 and D4-D6, SFKS stated that “(3) … the Administrators will consider to revise the terms of the draft Consent Summonses to conclude a settlement with [CY] first… (4) The Administrator will continue to negotiate with CLW to try to agree on the amount payable out of the Estate for settlement of the balance of costs payable to us and the Administrators. In the event that such amounts cannot be agreed with CLW, the Administrators may have to proceed with taxation thereof”. (underline added)

(6)  In a reply letter from SFKS to CLW dated 4 January 2022, SFKS stated that “[the Administrators] are agreeable to such approach and adopted the same in our report letter to Court dated 31 December 2021”.

43.The Administrators have thus made it clear a number of times in the above correspondence that, for the costs which are not recovered from D4-D6, they considered that they would be indemnified by the Estate.

44.By a letter dated 7 January 2022, CLW proposed to SFKS:

“[with] the above in mind, D2 proposes … that [the Administrators’] costs pursuant to [the Stay Application Order] and [the Appeal Order] can be fully and finally settled once and for all.

In this regard, we enclose herewith a copy of your draft consent summons wherein we have added our amendments, namely, the addition of two paragraphs. We will not, and have no intention to, comment on the other provisions which relate to the settlement as between [the Administrators] and D4-D6.” (underline added)

It was plain by then that D2 wanted a full and final settlement of the costs between the Administrators and the Estate and have the amount quantified.

45.One added paragraph was accepted by the Administrators and reflected in §§5 of 2 consent summonses such that: the Plaintiffs’ costs ordered to be paid out of the Estate of Chiu Keung,” pursuant to the Stay Application Order, and Appeal Order shall be the sum of HK$28,388.00 and HK$7,244.00, respectively, in full and final settlement of such costs, inclusive of interest.

46.The other added paragraph proposing that the Administrators shall not be entitled to be indemnified from out of the Estate in respect of any other or further costs of and incidental to this application and the taxation proceedings was not accepted by the Administrators. It ended up in the form of §§9 in Master So’s Order.

47.Master So did not rubber stamp those terms but made amendments, including specifying in §§5 of the 2 consent summonses “the Plaintiff’s own costs”. Upon sealing of her Orders, the tripartite settlement was complete. Mr To concedes that, in the light of the correspondence, §§5 could only mean that the amounts to be paid out of the Estate to cover the Administrators’ own costs were assessed by agreement.

48.Fifthly, it is thus wholly surprising that at this hearing, Mr To produces a one-page submission referring to Administrators’ “remuneration” (“Remuneration Statement”) to support his argument that the settlement did not cover SFKS’ costs.

49.Mr To explains that the breakdown for Administrators’ remuneration was reflected in §§4 and 5 of Master So's Orders. The sums added together exactly matched the remuneration claimed by the Administrators in the 3 bills.

50.Again, the Remuneration Statement was not before Master So. Obviously, the Administrators thought that their “own costs” meant their “remuneration”. However, even if they could seek remuneration in a party and party taxation, they should also claim for solicitors’ costs incurred by them, or else they would have been in breach of their duties to protect the Estate.

51.To all objective intent and purposes, the Administrators’ party-and-party and own costs have been fully billed for taxation purpose, settled by 3 parties and endorsed by Master So. The Administrators are estopped from claiming for further costs of SFKS.

52.In respect of Issue 3, the Administrators have to repay over-recovered costs to the Estate, i.e. HK$132,955.34 (being HK$540,975.34 paid by the Estate for the Appeal and Stay Application, less HK$365,000 settlement sum, less the own costs of HK$43,020 quantified by Master So).

G.  ISSUE 4 – SHOULD THE ESTATE BE REIMBURSED FOR COSTS OF THE NEW EVIDENCE APPLICATION ALREADY PAID FROM OUT OF THE ESTATE?

53.In respect of the New Evidence Order, the party and party obligation between the Administrators and D4 to D6 has been met by the HK$365,000 settlement sum paid under §§1 of Master So’s Orders.

54.The Estate had already paid the Administrators for costs (HK$16,321) in respect of the New Evidence Application. The New Evidence Order was silent as to whether the Plaintiff’s own costs should be paid out of the Estate.

55.D2’s position is that the costs of that Application should be borne by D4-D6, not the Estate. The costs previously paid by the Estate in respect of the New Evidence Application must be repaid by the Administrators to the Estate.

56.I am unable to agree as a matter of principle for the following reasons:

(1)  The New Evidence Order only governed party-and-party costs.

(2)  §§4(4) and 6 of Yam J's Order did not require the Administrators to obtain a court order before they could be indemnified by the Estate. Having something similar to §§5 of Master So's Orders only enables taxation on trustee basis to be done together with party-and-party costs.

(3)  I agree with Mr To that to deprive an administrator of his costs is a high hurdle and D2 has not justified the same.

57.However, according to the Remuneration Statement, the Administrators have claimed for HK$7,388 remuneration against D4-D6. That part of the costs has been covered by the HK$365,000 settlement sum. Accordingly, the Estate is only liable to indemnify the Administrators for the balance of HK$8,933 (ie HK$16,321 – HK$7,388).

58.The answer to Issue 4 is “Yes”. The Administrators need to pay back HK$7,388 for the New Evidence Application to the Estate.

H.  CONCLUSION AND Costs

59.In view of the above, my answers to the questions posed by the Summons are as follows:

(1)  Issue 1: Yes, DTT’s Costs should be regarded as part of the Administrators’ costs. To the extent that the Administrators have received remuneration beyond the Statutory Cap, the excess has to be repaid to the Estate.

(2)  Issue 2: The gross value of the Property for the purpose of section 60(2)(b) of PAO is HK$44,326,546.27.

(3)  Issue 3: Yes, the Administrators shall be required to reimburse the Estate for the difference (HK$132,955.34) between the amount the Administrators were paid by the Estate for their own costs, and the amounts quantified as their own costs in Master So’s Orders. Insofar as SFKS’s costs are concerned, they are no longer recoverable.

(4)  Issue 4: Yes, the Estate should be reimbursed for the amount of HK$7,388 already paid from out of the Estate for the New Evidence Application and covered by the settlement sum.

60.D2 is effectively the true winner.

61.On the authority of Buckton v Buckton [1907] 2 Ch 406,414, Kekewich J, costs of the Administrators should still be borne by the Estate, as it is an application by the Administrators for guidance concerning administration of the Estate.

62.The amount involved in this Summons is about HK$1.94 million, being:

(a).  HK$1,791,585.58 (ie HK$ 2,234,851.04 less HK$443,265.46) under Issue 1;

(b).  HK$132,955.34 under Issue 3; and

(c).  HK$16,321 under Issue 4.

63.And yet the costs claimed for this Summons are enormous:

(1)  The Administrators’ “own costs”[1] in the amount of HK$220,750 (11.38% of the amount involved); and

(2)  Legal costs in the amount of HK$604,150 for SFKS and Mr To (31.14%).

64.Item (1) is not recoverable in view of my ruling on Issue 1.

65.Item (2), whether viewed alone or together with Item (1) is wholly unreasonable in view of the Issues and amount involved. (This comment does not apply to Mr To.) Whilst acknowledging the efforts of SFKS in negotiating a tripartite settlement on costs, the level of costs spent on those negotiations and this Summons is totally disproportionate. Authorizing the incurring of such costs was simply not in the best interests of the Estate, but was more for the benefit of the Administrators and SFKS.

66.This is not the first time this Court gives adverse comments on the manner of administration resulting in costs sanction against the Administrator and SFKS: [2021] HKCFI 1843, 25 June 2021, §§12, 27-39, 41-42; [2021] HKCFI 441, 22 February 2021, §§23-25, 29-30, 34(6).

67.On the other hand, equally shocking is the level of costs incurred by D2 in this Summons, being HK$600,085. SFKS’s grounds of opposition to D2’s statement of costs suggest allowing a total of not more than HK$223,757.33, representing a deduction of HK$376,327.67.

68.In my view, a similar scale of deduction should be applied to SFKS’ costs, especially since Issue 3 arose out of their / the Administrators’ own misconception in taxation.

69.Taking a broad brush approach, I allow a sum of HK$400,000 for costs (in its true and ordinary sense under Order 62, rule (1)) of the Administrators to be paid by the Estate. I make an order nisi accordingly.

70.I thank Mr To and Mr Sousa for their assistance.

Mr Ken To, instructed by Sit, Fung, Kwong & Shum, for the Plaintiffs

Mr Richard Alvaro Sousa of Messrs Chan, Lau & Wai, for the 2^nd Defendant