Read the full judgment text of HCMP 000779/1987 on BabelCite. This High Court CFI judgment was delivered on 26 April 1988 before Liu, J..
Probate and administration – right of retainer – bankrupt legatee – first interim distribution withheld by administrator of deceased's estate – proceedings under O.85, R.2 of the Rules of the Supreme Court concerning estate of Lau Sui Ling (deceased) – plaintiff Standard Chartered Bank Hong Kong Trustee Limited is administrator of estate – 1st defendant is the Official Receiver as trustee in bankruptcy of Sabrina Au-Yang Lam Lai Ming, a beneficiary of the estate – Sabrina already an undischarged bankrupt at the date of testatrix's death – plaintiff alleges prima facie indebtedness of Sabrina to the estate – question (c) whether administrator should continue to withhold first interim distribution from Official Receiver – resolution involves two limbs, namely whether any right to retain exists and, if so, how it should be exercised – Snell 28th Edn. p.344 definition of right of retainer – principle that beneficiary must account for asset already in his hands – Williams, Mortimer and Sunnucks 16th Edn. p.593-594 statement of Cherry v. Boultbee principle – Snell p.245 statement on legatee bankrupt before testator's death – executor must prove in bankruptcy and rank pari passu with other creditors – right to retain does not arise unless cross-obligations to pay in full existed at some point – if dividend ascertained, set-off of dividend amount may be permitted – Cherry v. Boultbee (1839) 2 Keen 319; 4 My. & Cr. 442 – Master of the Rolls Lord Langdale rejected claim of personal representatives to retain – obiter suggestion that executors might prove and deduct dividends – Hodgson v. For (1879) 9 Ch. D. 673 – Vice-Chancellor Hall's practical guideline that deduction may only be directed where dividend ascertained or readily ascertainable – In re Peruvian Railway Construction Company Ltd. [1915] 2 Ch. 442 – right of retention limited to dividend on ascertained debt – no dividend yet ascertained or declared in Sabrina's bankruptcy – issues contested and parties not wholly co-operative – held that administrator not permitted to exercise right of retainer – question answered in the negative – first interim distribution and accrued interest to be paid over by administrator to Official Receiver as trustee in bankruptcy
Legal issues: Right of retainer against bankrupt legatee who was already bankrupt at date of testatrix's death
Outcome: Question (c) answered in the negative: the Administrator should not continue to withhold the first interim distribution from the Official Receiver as trustee in bankruptcy of Sabrina