Tong Soo Chin Dora v. Tong Ying Yuen, Administrator De Bonis Non of the Estate of Tong Chun Bong and Executor of the Estate of Chiu Iut Ngo and in His Personal Capacity and Others

HCMP 652/2022

[2026] HKCFI 5882

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 652 OF 2022

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DECISION

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A.   INTRODUCTION

1.This Decision deals with the costs of this action, which was settled around 3 weeks before the trial date on 18 May 2026.

2.As a matter of background:

(1)  this action concerns the estates of the late Tong Chun Bong (“Father”) and the late Chiu Iut Ngo (“Mother”).  Father and Mother had 5 children, namely, Tong Ying Kit (“the Eldest Son”) and the 4 defendants – Tong Ying Yuen (i.e. the 1^st defendant), Tong Sau Chun (“the Elder Daughter”), Tong Ying Yue (“Tony”) and Tong Sau Fong (i.e. the 4^th defendant);

(2)  Father passed away intestate on 13 September 2015.  On 11 December 2015, Mother obtained Letters of Administration in respect of Father’s estate.  Father’s estate included, inter alia, cash of about $775,000 and shares in various listed companies.  The matrimonial home in Mei Foo Sun Chuen (“the Mei Foo Property”), which was held by Father and Mother by way of joint tenancy, was passed to Mother upon Father’s death by the operation of the doctrine of survivorship;

(3)  Mother passed away on 17 July 2020.  She had made a will dated 21 October 2017 (“Mother’s Will”), in which she appointed the 1^st defendant as the executor of her estate.  Her estate included, inter alia, cash of around $3 million, shares in various listed companies and the Mei Foo Property.  According to Mother’s Will:

(a)  the Mei Foo Property should be sold and the net sale proceeds shall be distributed among the 5 children (with the Eldest Son getting 3 out of 7 shares, and the other 4 children getting 1 out of 7 shares each);

(b)  her personal chattels shall be given to Tony; and

(c)  the residuary estate shall be distributed among her 4 children (i.e. excluding the 4^th defendant) in equal shares.

(4)  The 1^st defendant obtained Grant of Probate of Mother’s estate on 12 November 2020.  As Father’s estate had not been fully administered by the time of Mother’s passing, The 1^st defendant also obtained Letters of Administration de bonis non in respect of Father’s estate on 30 October 2020.

3.On the strength of 2 Deeds of Assignment both dated 1 September 2021 (pursuant to which the Eldest Son’s rights, benefits and entitlements in Father’s estate and Mother’s estate respectively were assigned to the plaintiff (the Eldest Son’s daughter)), the plaintiff commenced this action by Originating Summons (“the Originating Summons”) on 26 May 2022 against all siblings of the Eldest Son, for, inter alia, an order that the 1^st defendant be removed as administrator of Father’s estate and executor of Mother’s estate, and be replaced by the plaintiff or alternatively professional administrators.

4.In her supporting affirmation, the plaintiff relied on the following grounds:

(1)  There was unreasonable delay in the administration of the estates by the 1^st defendant;

(2)  There was conflict of interest on the part of the 1^st defendant;

(3)  The 1^st defendant was in breach of his fiduciary duties;

(4)  There was hostility between the 1^st defendant and other beneficiaries, rendering him unfit to perform his duties as administrator/executor.

5.The Elder Daughter and Tony did not enter appearance at all even though they had indicated by emails that they objected against the plaintiff’s application.  On the other hand, the 4^th defendant filed an acknowledgment of service and indicated that she did not intend to contest these proceedings.

6.By consent, leave was granted by this Court on 5 May 2026 to the plaintiff to discontinue these proceedings.

7.However, the parties could not agree on the costs order to be made.

8.Upon the consent of the parties, the matter on costs would be dealt with by way of paper disposal.

B.   PARTIES’ RESPECTIVE STANCES

9.The plaintiff contended that the 1^st defendant should bear costs personally on indemnity basis.  This stance was supported by the 4^th defendant. 

10.On the other hand, the 1^st defendant submitted that:

(1)  As far as his costs incurred before 15 September 2023 (i.e. the date of the 1^st defendant’s “without prejudice” letter) is concerned, it should be borne by the plaintiff, the 4^th defendant and the two estates (as one entity) in equal shares, or such other proportion as the Court thinks fit;

(2)  For his costs incurred thereafter, it should be borne solely by the plaintiff; and

(3)  In any event, he should be indemnified out of the two estates in equal shares on trustee basis.

C.   LEGAL PRINCIPLES

C1.  Costs order to be made where the case is settled

11.As this Court explained in Re Yeung Woon Ping [2024] HKCFI 2513, when a case is settled save as to costs, the court has a wide discretion regarding costs.  The established principles have been summarized by Au-Yeung J in Famous Marvel Co Ltd and Others v Conversant Group Ltd and Others (HCA 2153/2009, unreported, 29 October 2012) as follows:

“22. There is no dispute that even if a case is settled except as to costs, the Court still has power to determine which party should be liable for costs.  There is no tradition for there to be ‘no order as to costs’ in such a scenario.  I am guided by the following principles in deciding costs:

(i) The Court is to decide if the party seeking costs has substantially obtained the reliefs sought in the litigation: Re Chinese United Establishment Ltd, HCCW 291/1994, 5 October 1995, Rogers J (as he then was), approved in CACV 214/1995; Lai Yuet Chun v Super Deluxe International Limited & ors, HCCW 186/2001, 3 June 2003 Kwan J (as she then was).

(ii) At each end of the spectrum there will be cases where it is obvious which side would have won had the substantive issues been fought to a conclusion.  In between, the position will, in differing degrees, be less clear.  How far the Court will be prepared to look into the previously unresolved substantive issues will depend on the circumstances of the particular case, not least the amount of costs at stake and the conduct of the parties.  Brawley v Marcynski (No.1) [2003] 1 WLR 813.

(iii) The Court will first consider if it is in a position to say what the likely outcome after trial would have been.  If it is not in a position to do so, the order may well be no order as to costs: Brawley v Marcynski (No.1), at para 18, Longmore LJ; followed in BCT Software Solutions Ltd v C Brewer & Sons Ltd [2004] FSR 150.

(iv) The Court may permit parties to adduce evidence on the question of costs: Ta Tung China & Arts Ltd v Fontana Restaurant Ltd [1999] 1 HKLRD 404; Lai Yuet Chun v Super Deluxe International Limited & ors, at para 12.  However, to say that the parties must go to trial in order to resolve any outstanding questions of costs would be contrary to the underlying objectives enshrined in RHC Order 1A rules 1 and 2: Graham M Morley v Kwan Wo Wan & others, HCA 4366/2003, 30 December 2009, Recorder Jat SC.

(v) A broad brush can be taken by referring to all matters already laid before the Court, eg pleadings, correspondence, witness statements, transcripts of evidence and the terms of the settlement order: c.f. BCT Software Solutions Ltd v C Brewer & Sons Ltd, at para 9; Graham M Morley v Kwan Wo Wan & others.

(vi)  The objective is to do justice between the parties without incurring unnecessary Court time and consequently additional cost: Brawley v Marcynski (No.1).”

12.In Glory Empire Global Ltd v Bateson Investment Ltd (HCA 866/2017, unreported, 17 August 2017), Chow J (as Chow JA then was) also explained that:

“44. […] I consider the following principles to be applicable where a judge is asked to determine the issue of costs in a situation where the issue of liability has become academic:-

(1) The judge has a wide discretion not only as to the manner by which the issue of costs is to be determined, but also what evidence should be received and what findings to make.

(2) In a simple case where the issue of liability is clear on the face of the pleadings or existing affidavit evidence already filed, it would be open to the judge to determine the issue of costs without receiving any further evidence.

(3) Where the issue of liability is not so clear, the judge may direct evidence to be filed and the witnesses to be cross examined.  The judge may also confine the evidence to be filed, and cross examination of the witnesses, to a particular issue or some particular issues.

(4) In determining the issue of liability for the purpose of deciding costs, the court may adopt a broad brush approach and does not necessarily have to conduct a trial to determine the substantive issues.

(5) Where it is impossible for the court, on the existing materials, to say what the likely outcome would be, the court may, in appropriate circumstances, decide to make no order as to costs.

(6)  Ultimately, the objective is to do justice between the parties without incurring unnecessary court time and consequently additional costs.”

C2.  Discontinuance of action

13.In the case where an action has been discontinued, the applicable legal principles are also well established. 

14.In China Baoli Technologies Holdings Limited (formerly known as Rex Global Entertainment Holdings Limited) v Orient Equal International Group Limited & Others [2021] HKCA 1609, Barma JA explained at [17] that:

“It is, of course, trite that costs and the basis of taxation are in the discretion of the court.  Generally speaking, upon an application for leave to discontinue, the discontinuing party will be required to pay the costs of the other party, unless exceptional circumstances can be shown to justify a different order.  The fact that the discontinuance was caused by the issues becoming academic does not of itself justify departure from this starting point as a matter of discretion: Anmol Kumar Sawlani v Yeshma Gobindram Sawlani (unreported, HCA 2231/2011, 9 May 2013, [10]-[15], per Recorder Shieh SC).”

15.Barma JA then referred to the following principles at [18]:

“(1) It has been said that the starting point above may be departed from where the withdrawing/discontinuing party can show, for example, that the proceedings have become academic: Trend Publishing (HK) Ltd v Vivien Chan & Co (a firm) [1996] 2 HKLR 227, at 230H-J, per Keith J.

(2) If the withdrawal/discontinuation was due to something done by the defendant, after the issuance of proceedings, which rendered it unnecessary or academic for the plaintiff to proceed with the proceedings, this may justify awarding costs to the plaintiff: Re Peaktop Technologies (USA) Hong Kong Ltd [2007] 4 HKLRD 207, [8], per Barma J (as he then was).

(3)  One may also depart from the starting point where the withdrawing/discontinuing party shows that he will succeed on the substantive issue: Re Fook Lam Moon Restaurant Ltd (unreported, HCMP 438/2010, 8 December 2015), [40], per To J.  How far the court will be prepared to look into the substantive issues will depend on the circumstances of each case, such as the amount of costs at stake, the conduct of the parties, and whether evidence needs to be adduced.  The court may take a broad brush approach on the basis of the available materials: Re Fook Lam Moon (supra), [41], [45], [50].”

16.It has also been held that, to persuade the court to depart from the general rule, the minimum a plaintiff has to do is to show that the discontinuance is for reasons other than an acknowledgment of defeat or likely defeat: Coqueen Company Limited v Chui Wai Kwan & Others (HCMP 438/2010, unreported, 8 December 2015), at [40].

C3.  Indemnity costs

17.The general principles as to when the court may order costs on an indemnity basis are also trite.  In Overseas Trust Bank Ltd v Coopers & Lybrand (a firm) and Others [1991] 1 HKLR 177, Godfrey J (as his Lordship then was) explained that:

“ […] In order to justify a taxation on the indemnity basis, the successful party has to show, either that the case is one of a type already recognised in the practice of the court as warranting a taxation on that basis (such as, for example, the contempt cases to which I have already referred) or that there is some feature in the case even more special or unusual than one which would justify a taxation on the common fund basis.  A case in which the successful party has demonstrated that the proceedings were initiated or prosecuted by the unsuccessful party in a manner which constitutes that party’s proceedings an abuse of the process of the court might well be a candidate for an award of taxation of costs on an indemnity basis.  A taxation of the successful party’s costs on an indemnity basis could properly be ordered, in my opinion, where the proceedings were scandalous or vexatious, or had been initiated or prosecuted maliciously, or for an ulterior motive, or in an oppressive manner.  Any proceedings instituted or prosecuted in such circumstances as to constitute an affront to the court could properly be the subject of a direction for taxation of the successful party’s costs on an indemnity basis.” (at 182G – 183C)

18.In Choy Yee Chun (The representative of the estate of Chan Pui Yiu) v Bond Star Development Ltd [1997] HKLRD 1327, Stock J (as he then was), having referred to the Judgment quoted above, stated:

“It has since been held that, though there must still be shown special and unusual features, even the circumstances particularised by Godfrey J. are not to be taken as exhaustive of the conditions in which it might be appropriate to make such an award, and that the power to award taxation on an indemnity basis is not confined to cases which have been brought with an ulterior motive or for an improper purpose.  (See Macmillan Inc. v. Bishopsgate Investment Trust Ltd., 10 December 1993 (unreported) cited in Sung Foo Kee Ltd. v. Pak Lik Co. [1996]3 HKC 570).

In Sung Foo Kee Ltd a litigant had been repeatedly in contempt of court orders and the trial judge had found that the defendant had deployed defences which he termed “hocus pocus” and had used the legal process to prevent the plaintiff obtaining its just payment.  The Court of Appeal said that it would have awarded costs on an indemnity basis.  It remarked (at page 575) that the circumstances in which an indemnity award might properly be made were not restricted to circumstances such as those described by Godfrey J. in Overseas Trust Bank (supra).  At p.575B - E of Sung Foo Kee Ltd. (supra), Godfrey J.A. said -

‘Here, as in England and Wales, the judge has a discretion, in a case which does fall outside the general rule, to direct the taxation of the receiving party’s costs on the basis which he considers to be appropriate to that case.  This is not a discretion limited by indications in previous cases, such as, eg the observations of Godfrey J in Overseas Trust Bank Ltd v Coopers & Lybrand [1991] 1 HKLR 177 (in which he declined to order the successful party’s costs to be taxed on the indemnity basis), as to the sort of special or unusual feature (there does have to be some special or unusual feature) which could justify an award of indemnity costs.  Although the examples given in the judgment of Godfrey J at 182J‑183C may be of assistance in other cases in which indemnity costs are claimed, his judgment does not purport to be and is not to be taken as determinative of the sort of case in which indemnity costs may be ordered.’

The Court of Appeal endorsed the view of the English courts that :

‘The power to order taxation on an indemnity basis is not confined to cases which have been brought with an ulterior motive or for an improper purpose.  Litigants who conduct their cases in bad faith, or as a personal vendetta, or in an improper or oppressive manner, or who cause costs to be incurred irrationally or out of all proportion as to what is at stake, may also expect to be ordered to pay costs on an indemnity basis if they lose, and have part of their costs disallowed if they win.  Nor are these necessarily the only situations where the jurisdiction may be exercised; the discretion is not to be fettered or circumscribed beyond the requirement that taxation on an indemnity basis must be ‘appropriate’.’ (see Macmillan Inc. v. Bishopsgate Investment Trust Ltd. supra)

Further at p.576 -

‘… it is a pity that various courts have attempted to define in exactly what circumstances indemnity costs may be ordered.’ (see Munkenbeck & Marshall v. McAlpine (1995) 44 Con LR 30 per Hollis J, at page 33)

The Court of Appeal in Sung Foo Kee Ltd at page 576F added :

‘… Our rules do now expressly provide for the taxation of costs on an indemnity basis and when they consider it appropriate judges should not be slow to make orders for the receiving party’s costs to be taxed on that basis.’ ”

(at 1334G – 1335G)

19.In Cheung Wei Man Vivien and Chan Kim Thiam v Centaline Property Agency Ltd & Others (HCA 286/2000, unreported, 15 December 2006), Lam J (as Lam PJ then was) also had the following to say:

“It is also useful to remind ourselves what Simon Brown LJ said in Liam v MGN Ltd (No.2) [2002] 1 WLR 2810 at Paras.11 and 12 in considering whether the conduct of a losing party is so unreasonable so as to warrant an award of indemnity costs. In particular, at Para.12, His Lordship observed,

‘I for my part understand the court there to have been deciding no more than that conduct, albeit falling short of misconduct deserving of moral condemnation, can be so unreasonable as to justify an order for indemnity costs.  With that I respectfully agree.  To my mind, however, such conduct would need to be unreasonable to a high degree; unreasonable in this context certainly does not mean merely wrong or misguided in hindsight.’ ”

D.   DISCUSSION

D1.  The successful party

20.Mr Wong and Ms Lau submitted on behalf of the 1^st defendant that he, rather than the plaintiff, should be regarded as the successful party of this action at the end of the day, because:

(1)  it was the plaintiff who suddenly (one month before the trial) offered to discontinue these proceedings unconditionally;

(2)  the plaintiff has failed to obtain any relief sought in the Originating Summons.

21.While making the above submissions, they have specifically reminded this Court that “distribution of assets” was not amongst the reliefs sought.

22.Relying on the plaintiff’s submission that “the main aim of the Originating Summons was to secure distribution of the two estates”, counsel for the 1^st defendant went as far as submitting that this was in fact a concession that in truth the plaintiff did not intend to pursue the removal of the 1^st defendant as personal representative, and that:

“Where a plaintiff commences proceedings ostensibly seeking a particular form of relief, but without any genuine intention to obtain that relief and with the ulterior motive of using the proceedings to achieve some other, undisclosed objective, such conduct is properly characterised as an abuse of process and the proceedings as vexatious.” (counsel’s emphasis)

23.With greatest respect, the above submissions are misconceived and must be rejected. 

24.When the Court considers who should be regarded as the “winner”, it does not necessarily confine itself to the order obtained by the plaintiff.  The Court should take a holistic view of the matter.  In a way, this exercise coincides with the legal principles applicable to the situation where an action is discontinued, in the sense that the Court would have to consider the whole situation and decide whether the discontinuance is for reasons other than acknowledgment of defeat or likely defeat.

25.When the above questions are considered in the present case, it is important to bear the following matters in mind:

(1)  On 23 July 2021, the 1^st defendant informed all siblings that he shall charge the Eldest Son (i.e. the plaintiff’s father) and the 4^th defendant (but not the other 2 siblings) an administration and estate management fees at the rates of $2,000 and $1,000 per month respectively from 1 July 2021, and that the said fees would be deducted from their respective entitlements in the estates;

(2)  On 8 December 2021, the 1^st defendant further informed all siblings that he shall charge administration and estate management fees at the rate of $8,000 per month from each of the estates with effect from August 2020 until the administration of the estates was completed;

(3)  On 10 April 2022, the 1^st defendant informed all siblings that administration and estate management fees in the total sum of $160,000 had been incurred in the period between August 2020 and March 2022 (a total of 20 months), and that as a result, the 4^th defendant and the Eldest Son should bear $16,000 and $36,000 respectively;

(4)  On the same day, the 1^st defendant also proposed that the legal costs incurred by Mother in a court case (HCMP 2020/2017) brought by the 4^th defendant against Mother in relation to the administration of Father’s estate (“the HCMP Action”) be partly borne by the Eldest Son (despite the fact that he was not a party thereto);

(5)  On 20 April 2022, the 1^st defendant stated in an email that while the Eldest Son was entitled to a distribution of $600,000 from Mother’s estate (apart from the Mei Foo Property), only a sum of $580,000 would be paid to the Eldest Son because $20,000 would be deducted as estate management fee;

(6)  The Originating Summons was filed on 26 May 2022;

(7)  In his affirmation in opposition, the 1^st defendant confirmed that he was not going to charge any administration and estate management fees as announced;

(8)  In relation to the costs of the HCMP Action, the 1^st defendant stated in the said affirmation that the matter had been settled;

(9)  The Mei Foo Property was sold on 27 February 2023 and the sale and purchase transaction was completed on 31 May 2023;

(10)  On 29 July 2024, the 1^st defendant made a distribution of dividends in the total sum of $22,469.26 to the plaintiff’s solicitors;

(11)  On 5 September 2024, the 1^st defendant distributed $937,864.62 to the plaintiff’s solicitors.  The sum represented the net proceeds of the sale of stocks;

(12)  On 15 January 2025, the 1^st defendant distributed a sum of $96,145.08 to each of the 5 siblings, being their respective entitlements to the remaining residuary estate of Father.  Father’s estate was fully administered upon this payment;

(13)  On the same day, the 1^st defendant sent the plaintiff’s solicitors certain calculations, which show that:

(a)  Each of the 4 siblings (excluding the 4^th defendant) would be entitled to $783,703.04 cash of Mother’s estate;

(b)  The net proceed from the sale of the Mei Foo Property was in the total sum of $10,453,829.12.  Each of the 7 shares therefore amounts to $1,493,404.16;

(14)  On 15 January 2025, the 1^st defendant also sent the plaintiff’s solicitors 2 post-dated cheques:

(a)  The first cheque was dated 21 February 2025, which was for the payment of $250,000 being the plaintiff’s 25% entitlement to Mother’s residuary estate.  The other 75% entitlement ($533,703) was withheld by the 1^st defendant as provision for legal costs and other expenses of Mother’s estate;

(b)  The other cheque was dated 12 March 2025, in the sum of $2,986,808.32.  It represented 2 out of 7 shares of the sale proceeds which the plaintiff was entitled.  The remaining share together with the shares to which the other 4 siblings were entitled were withheld by the 1^st defendant as provision for legal costs and other expenses of Mother’s estate.

26.One can immediately see from the above chronology the following problems in the 1^st defendant’s administration of the estates which arose before the commencement of these proceedings:

(1)  The 1^st defendant’s declaration that he would charge administration and estate management fees which would be deducted from the plaintiff’s entitlements to the estates;

(2)  the 1^st defendant’s proposal that the legal costs incurred by Mother in her litigation with the 4^th defendant be partly borne by the Eldest Son despite the fact that he was not a party thereto.

27.However, the first problem identified above was resolved soon after the commencement of these proceedings, as the 1^st defendant retreated from his long-held decision to charge administration and estate management fees.  In his Affirmation filed on 24 August 2022, he stated that:

“It is admitted that I did at some points of time saying that I needed to charge management fee/remuneration.  I did that out of anger and in the course of negotiation because the [Eldest Son] and [the 4^th defendant] always picked on me and criticized what I had done, sometimes in a rude manner.  Moreover, they demanded me to do this and that like I work for them.  Therefore, I told them I would charge management fee/remuneration. I did not intend to and in fact did not charge any fee for all my work during the past few years.  After I had said I would charge management fee, the Solicitors for [the 4^th defendant] arranged for collection of the physical script of shares from me shortly.”

28.While the 1^st defendant alleged that he only stated what he did out of anger and that he did not intend to carry that into action, I do not accept that that was the truth, as it could be seen from the chronology above that he had repeatedly mentioned about such an idea.

29.The 1^st defendant’s counsel submitted that there is no evidence that their lay client had as a matter of fact pocketed any unauthorised remuneration as such.  That may be so.  But in my view that was only because the plaintiff had issued a letter before action timely on 27 April 2022 upon receipt of the 1^st defendant’s email dated 20 April 2022 by which the plaintiff was requested to collect a cheque in the sum of $580,000 – this amount was arrived at after an estate management fee of $20,000 had been deducted.  It is thus apparent that the 1^st defendant had actually put what he threatened to do into action.

30.Concession was also made in relation to the 1^st defendant’s stance that the Eldest Son should bear part of the legal costs of the estate in the HCMP Action against Mother, as it was not pressed on by the 1^st defendant any further.  Insofar as it was said that Tony, the Elder Daughter and the 1^st defendant all took the view that the 4^th defendant was in fact instructed by the Eldest Son to commence the HCMP Action against Mother, no concrete evidence had been produced in this action to support the aforesaid allegation.  In any event, there is simply no legal basis for the 1^st defendant to suggest that the Eldest Son should be held responsible for any of the costs incurred in the HCMP Action, when the latter was not even a party thereto.  No application had been made in that case in relation to this anyway.

31.The above show that, by commencing this action, the plaintiff had apparently achieved the purpose of stopping the 1^st defendant from breaching his duty as administrator/executor.

32.As far as the 1^st defendant’s misconceived argument on the “main aim” of this action is concerned, I do not understand why it was said that the plaintiff had an “ulterior motive” of getting distribution of the estate, for this purpose had been expressly stated in the very first affirmation filed in support of the Originating Summons.  Paragraph 52 of the plaintiff’s Affirmation states that:

“By the reasons aforesaid, I verily believe that the 1^st Defendant should be removed in order to protect the Two Estates and the interests of beneficiaries, as well as to ensure a timely and proper administration of the Two Estates and distribution of the assets comprised therein to the beneficiaries.”

(emphasis added)

33.It can therefore be seen that the proposed removal of the 1^st defendant is just the means to achieve the ultimate purpose – timely and proper administration of the estates.  There was nothing “ulterior” about it.

34.Turning to the question of discontinuance of the action, the plaintiff submitted that the core substantive reliefs sought in the Originating Summons have been spent because the entirety of Father’s estate and most of Mother’s estate have since the commencement of this action been distributed.  I agree with the plaintiff in this regard.  Since the administration of Mother’s estate is also coming to an end, I do not think it still worth the money for the plaintiff to insist that the matter should go to trial for the purpose of removing the 1^st defendant. 

35.Putting the matter in another way, I do not think that the plaintiff’s discontinuance of this action represents her acknowledgment of defeat or likely defeat.  In fact, I would say very far from it.  In the event the matter has proceeded to trial, I would have thought, putting aside the argument that the administration of the estates is coming to the end,  it was likely that she would be able to get an order to remove the 1^st defendant, which is totally justified by his demand to charge estate administration fee and for the Eldest Son to bear part of the costs of the HCMP Action.  The charge of monthly fees (in respect of which more likely than not the 1^st defendant would have gone ahead but for the commencement of this action) would amount to a conflict with the 1^st defendant’s duty to administer the estate as soon as possible because the longer the administration process took, the higher amount of fees he would be able to charge.  Moreover, the 1^st defendant’s admitted bad relationships with the Eldest Son and the 4^th defendant had apparently made it impossible for him to discharge his duty as administrator/executor properly and fairly.

36.I have not lost sight of the fact that some of the grounds relied on by the plaintiff might probably not be able to be made out had the trial been proceeded with.  For example, while there was a complaint of delay in the sale of the Mei Foo Property, it can be said that that was at least partly caused by the HCMP Action and the registration of a Declaration of Trust by the 4^th defendant.  Be that as it may, the “failed grounds” would not affect the end result of the action should the matter have gone on to trial.  Furthermore, the inclusion of such complaints, which in my view were not unreasonable in the circumstances of the present case (if assessed without any benefit of hindsight), did not cause a significant increase in the costs of the proceedings.

37.Neither have I forgotten the fact that the plaintiff’s proposal to discontinue this action was only made in April 2026, around 1 year after the last payment to the plaintiff was made in March 2025.  However, I do not think that would have an impact on the final costs order to be made, as there was not much costs incurred after the trial date was fixed on 6 May 2025.

38.Hence, adopting a broad-brush approach, I hold that the plaintiff should be regarded as the successfully party in this action for the purpose of costs.

D2.  The 1^st defendant’s offers to settle

39.In the course of his argument, the 1^st defendant has relied heavily on a written offer which was contained in a letter issued by his solicitors dated 15 September 2023 (“the September Letter”), so much so that his counsel had used the date of 15 September 2023 as a dividing line and argued that his costs incurred thereafter should be borne solely by the plaintiff, on the ground that it was unreasonable for the plaintiff not to accept the offer contained therein.

40.The 1^st defendant’s counsel seem to be relying on another letter dated 31 July 2023 (“the July Letter”) as well.  They submitted that, if the plaintiff had accepted the proposal therein, she would have received about $4.85 million, which is more than what she had actually received in January 2025.

41.A preliminary point which should be considered is the admissibility of those letters.

42.Both letters were marked with “without prejudice” rather than “without prejudice save as to costs”.

43.It has been held in The National Commercial Bank Limited, Hong Kong Branch v Kanishi (Far East) Limited & Another [2005] 2 HKC 81 by Ma J (as Ma CJ then was) that:

(1)  The general rule is that without prejudice correspondence is inadmissible and cannot be used in proceedings before the court. The main reason for this general rule is one of policy: parties should be encouraged to try to resolve their differences by compromise without fear that such attempts will somehow be used in the future against them: at [12];

(2)  The protection afforded by without prejudice correspondence is not just to the author of the relevant document but also extends to the recipient: at [13];

(3)  The general rule as stated above is subject to well-recognised exceptions, one of which is where an offer is made in correspondence to settle “without prejudice except as to costs”: at [14] – [15];

(4)  It has been confirmed in Cutts v. Head [1984] 1 Ch. 290 the conditions necessary to be fulfilled before a letter could be regarded as a Calderbank letter or where the contents of a without prejudice offer are sought to be referred to for the purposes of costs. Where a party seeks to alert the court to the fact that an offer to settle had been made at an earlier stage of the proceedings in without prejudice correspondence or negotiations, it is imperative it is made clear that the correspondence or negotiations (as the case may be) were without prejudice save as to the question of costs. This can be achieved either by a simple statement that the correspondence or negotiations are without prejudice save as to costs or an express reservation is made of the fact that the contents of any offer may be brought to the attention of the court on the question of costs: at [19];

(5)  It is a matter of construction as to whether in any given case, an offer has been made in Calderbank terms: at [22];

(6)  If an offer is only expressed to be “without prejudice”, and it has not been expressed as an offer on Calderbank terms, it should not be presumed as such: at [22];

(7)  If a letter is intended to be a Calderbank letter, it is important that this intention is made clear: at [24].

44.I now come back to the 2 letters sent on behalf of the 1^st defendant. 

45.In the July Letter, it was marked “without prejudice” at the top.  Enclosed with the letter were 2 tables, which showed the updated account of Father’s estate and Mother’s estate respectively.  It was said that those tables were provided without prejudice to the 1^st defendant’s position in the proceedings herein. The 1^st defendant also reserved his rights to make adjustments to the tables if errors or omissions were found.  The plaintiff was demanded to raise any objection to those accounts within 21 days, failing which she would be deemed to have accepted the accounts.  The 1^st defendant also stated that he had reserved a sum of $1 million for the purpose of paying off legal costs incurred in this action, and that he reserved his right to increase the reserve if necessary.

46.In the September Letter, again, only the label of “without prejudice” was given at the top thereof.  It was sent in response to the “without prejudice” letter dated 9 August 2023 issued by the plaintiff’s solicitors (“the August Letter”), which in turn was a reply to the July Letter.  It is noteworthy to highlight the fact that the August Letter was ended with the following remarks:

“[…]

We note that [the July Letter] was marked ‘Without Prejudice’.  As such, it will not be produced to court, unless the matters stated therein have been accepted by us and an agreement or settlement is constituted.  Now, we say that we do not agree with you on the matters stated in your said letter so that there is no agreement or settlement or acceptance of the such matters stated in your said letter.

It is totally wrong and there is no basis for you to say that if no objection is received from all beneficiaries within the next 21 days, the accounts are deemed to be accepted, bearing in mind of the fact that your said letter was issued on a Without Prejudice basis.  You may need to consider what the term ‘Without Prejudice’ means and the effect it may have.”

(emphasis added)

47.By virtue of the September Letter, the 1^st defendant suggested, among other things, that the plaintiff, the 4^th defendant and the estate shall each bear 1/3 of the 1^st defendant’s costs herein.  At the end of the letter, there was a section which was put under the sub-heading of “Without prejudice letter”, which reads:

“Our letter dated 31 July 2023 was marked without prejudice because our client has issue on the validity of the two Deed of Assignments.  Having said that, he has no objection to let the Court know by way of an open letter two further tables were prepared by our client.

[…]”

48.Have considered the contents of the aforesaid letters, I am of the view that:

(1)  The July Letter was not a letter of negotiation at all.  There was nothing in the July Letter which the plaintiff could accept, as there was no offer contained.  In the said letter, the 1^st defendant simply asserted his case, and quite wrongfully imposed upon the plaintiff a “deemed acceptance” of his accounts if she did not reply within 21 days.  Therefore, it does not assist the 1^st defendant;

(2)  Even if the July Letter is a letter of negotiation, it, together with the September Letter, seem to me to be inadmissible for the purpose of argument on costs for the following reasons:

(a)  As the labels of those letters suggest, those letters are entirely “without prejudice”, rather than “without prejudice save as to costs”;

(b)  There was nothing in the content of the said letters which expressed any intention on the part of the 1^st defendant that he would produce those letters to the court for the purpose of costs;

(c)  Even after the plaintiff’s solicitors had reminded the 1^st defendant’s solicitors by virtue of the August Letter about the effect of the label of “without prejudice”, the 1^st defendant did not clarify his intention in the September Letter;

(d)  Worse still, in the September Letter, the 1^st defendant had expressly explained why he had put the label of “without prejudice” in the July Letter, and “for the purpose of costs” or words to that effect were not mentioned;

(e)  Further, as shown by the September Letter, it is clear that the only content of his letters which the 1^st defendant was minded to let the Court know was the “two further tables”, and for that purpose, it was said that that would be done “by way of an open letter”;

(f)  From the above, it is clear that the 1^st defendant did not intend to show anything in the July Letter / September Letter to the Court.

49.However, the plaintiff did not argue on the admissibility of the said letters at all, even though she had been given an opportunity to do so.  I therefore do not think I should base this decision on the admissibility of the said letters.

50.In any event, even if those letters are admissible, they would not assist the 1^st defendant:

(1)  It was argued that if the plaintiff agreed not to proceed with the action by 31 July 2023, she would have received more because much legal costs could have been saved by the 1^st defendant.  With greatest respect, such an argument is misconceived, because it was somehow wrongly assumed that the plaintiff or the estate should be held liable to pay the costs incurred by the 1^st defendant.  Furthermore, as aforesaid, there was nothing in the July Letter which the plaintiff could accept anyway, as there was no offer contained.  

(2)  It was proposed in the September Letter, inter alia, that the plaintiff should bear 1/3 of the 1^st defendant’s costs in this action.  Given this Court’s finding that the plaintiff should be regarded as the successful party, with the benefit of hindsight, there was no reason why the plaintiff should have accepted the said proposal.

D3.  Who should bear costs

51.As aforesaid, I am of the view that the plaintiff should be regarded as the successful party in this action, and the discontinuance of the action is not due to her acknowledgement of defeat or likely defeat. 

52.Hence, the plaintiff should be entitled to have her costs paid.  The question is whether such costs should ultimately be borne by the 1^st defendant or the estates.

53.Order 62 rule 6(2) of the Rules of the High Court (Cap.4A, Laws of Hong Kong) provides that:

“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”

54.In my view, the 1^st defendant has acted unreasonably in the administration of the estates.  But for the commencement of this action, he would have charged estate management fees against his siblings.  He also arbitrarily fixed the rates of such fees.  Further, he initially attempted to hold the plaintiff liable for costs of the HCMP Action in which the Eldest Son was not even a party.  His hostility against the Eldest Son has obviously rendered it impossible to carry out his tasks properly, which led to the commencement of this action.  In these circumstances, there is no reason why the estate should be responsible for the costs incurred.  Nor is there any reason why the 1^st defendant should not be held personally liable for the costs incurred in this action.

D4.  Indemnity costs order against the 1^st defendant

55.The final question is whether the plaintiff should be awarded indemnity costs against the 1^st defendant.

56.As explained in various authorities, while the Court’s discretion to award indemnity is unfettered, there have to be some special or unusual features in the case before the Court would make such an order.

57.In the present case, while I am of the view that the 1^st defendant’s conduct was so unreasonable that it would justify a personal costs order against himself, I do not think there is any special or unusual feature which makes it appropriate to make an indemnity costs order. 

58.In this regard, while there have been numerous past occasions in which removed administrators have been ordered by the court to bear indemnity costs personally, it should not be assumed that the Court would make such an order invariably whenever it is considered that the administrator concerned has acted unreasonably.  Each application of this nature has to be considered on a case-by-case basis.

E.   ORDER

59.By reasons of the aforesaid, I make a costs order that the 1^st defendant shall bear the plaintiff’s costs of the Originating Summons (including all costs reserved) personally, and such costs shall be taxed on party and party basis if not agreed. 

60.The 1^st defendant shall not be permitted to claim his own costs incurred in this action from Father’s estate or Mother’s estate.

61.For the avoidance of doubt, I make no order as to the costs of the 2^nd, 3^rd and 4^th defendants.

62.I also make a costs order nisi that the 1^st defendant shall personally bear the plaintiff’s costs of and incidental to the arguments on costs, which should be assessed summarily.

63.The above order nisi shall become absolute in the absence of application to vary within 14 days hereof.

64.Unless any application for variation of the aforesaid costs order nisi is made within time, the plaintiff shall lodge and serve her statement of costs within 7 days after the expiry of the said 14-day period.  The 1^st defendant shall lodge and serve his statement of objection within 7 days thereafter.  Summary assessment of the costs on argument on costs will be conducted on paper (no matter whether any statement of objection is lodged by the 1^st defendant within time) thereafter.  The costs assessed shall be paid by the 1^st defendant within 14 days after assessment.

Ms Jennifer A. Tse, instructed by Lo, Wong & Tsui, for the plaintiff

Mr Damian Wong and Ms Sabrina Lau, instructed by Hampton, Winter & Glynn, for the 1^st defendant

The 2^nd and 3^rd defendants did not lodge written submissions

The 4^th defendant acted in person