Ng Dok Sing and Another v. Yao Jack and Another

HCA004039/1980

BETWEEN

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Coram: Hon. Liu, J.

Date: 9 July 1982

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JUDGMENT

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1. This is a sad case for as well the plaintiff as the 2nd defendant. As for the 1st defendant, however, he had misconducted himself in the past. He claims to be impecunious, and whatever benefit he gained by way of misappropriation of trust funds has certainly not led him into prosperity.

2. This Action concerns the estate of Ngai Yuet Sing, deceased who died on the 23rd February, 1974. Prior to her death, the deceased met the 1st defendant in 1966. From 1966 to the date of her death in 1974, suffice it to say, the deceased cohabited with one Mr. Ng and one Mr. Hung, but merely for an aggregate of about six months, the deceased cohabited with one Mr. Ng and one Mr. Hung, but merely for an aggregate of about six months, the deceased cohabited with the 1st defendant. Out of this six months' cohabitation, the deceased spent her last two months with the 1st defendant before her death.

3. It is now common ground that the 1st defendant was not a lawful husband of the deceased; nor is he the natural father of the plaintiff. The plaintiff was born on the 20th January, 1962 out of a union between the deceased and one Mr. Ng Men Ming. There was a newspaper advertisement relating to the separation or divorce between Mr. Ng and the deceased published in one of the Chinese newspapers in this territory on the 18th November, 1967. The plaintiff has vague recollection of the cohabitation between Mr. Ng, her natural father and the deceased, her natural mother.

4. After the death of the deceased in 1974, the 1st defendant decently had the deceased buried and informed the 2nd defendant of one of her subsequent funeral rites. The 2nd defendant came to know the deceased as early as 1961 when the deceased was in charge of distributing wool for cottage industry. The 2nd defendant lost touch with the deceased for some years, and they met by chance in 1968 when the 2nd defendant was a teacher in a school at which the plaintiff attended. At the request of the deceased, the plaintiff stayed with the 2nd defendant, who cared for the plaintiff for less than a year. Thereafter, the deceased and the plaintiff again were not in contact with the 2nd defendant until 1970 where the deceased allegedly communicated with the 2nd defendant with a view to soliciting for a loan which the 2nd defendant allegedly obliged. The loan was repaid by four monthly instalments.

5. The next episode came in 1972 when the deceased visited the 2nd defendant and complained of the plaintiff's juvenile unmanageability, on which the deceased, according to the 2nd defendant, sought assistance from the 2nd defendant.

6. The Man Wai Building flat was on the 1st August, 1972 let by the deceased to the 2nd defendant at the rental of $700. According to the 2nd defendant, $10,000 was lent to the deceased by the 2nd defendant and it was agree that so long as the $10,000 loan remained unpaid, rental was not to be increased. The 1st defendant gave evidence and, in substance, corroborated the version given by the 2nd defendant. He told the Court that the deceased asked the 2nd defendant for a loan of $10,000, which "could also b termed a deposit". The 1st defendant further elaborated that as stipulated in the Tenancy Agreement drafted by himself, the sum of $10,000 was repayable within a year and that upon repayment, rental of the premises let by the decease to the 2nd defendant would be increased by $200 from $700 to $900 a month. It was the 1st defendant who took the initiative of returning this $10,000 to the 2nd defendant with a subsequent accrual of the benefit of an additional $200 a month by way of rent. There is not shadow of doubt that the deceased had much confidence in the 2nd defendant if only judged by the signed blank rental receipts with the 2nd defendant.

7. The deceased died on the 23rd February, 1974. The 1st defendant in his capacity of a cohabitant, qua common-law husband, laboured under the misconception that he was entitled to Letters of Administration. It is now common ground that the 1st defendant wrongly held himself out as the lawful widower of the deceased and the natural father of the plaintiff.

8. The plaintiff is today a minor. She will attain majority some time next year. Because of the plaintiff's infancy, and additional personal representative had to be appointed. The 2nd defendant was nominated by the 1st defendant to be a co-administratrix. At the request of the 1st defendant and as a close and trusted friend of the deceased, the 2nd defendant willingly rendered her assistance.

9. At the date of her death the deceased left assats enumerated in items (1) to (7) in the Schedule to the Letters of Administration granted to the 1st and the 2nd defendants, Exhibit P5. The most substantial item is item (6), which is an amount described as being held by the 1st defendant as trustee for the deceased in the sum of $61,221. In addition to these assets specified in the Schedule to the Letters of Administration, there were, at the date of her death, two flats. I will refer to them as the Man Wai Building flat is left to-day in addition to $10 in the joint account of the 1st and 2nd defendants as personal representatives. I am told by counsel for the plaintiff that by way of admission the 1st defendant has paid into Court $22,000, being part of the assets of the estate of the deceased. Hence, this Action was commenced by the plaintiff against both defendants. The 1st defendant is unrepresented. At the commencement of the proceedings, difficulty was experienced in deciphering the true purport of the parties' pleadings, and it was decided with general consensus that framed issues were to be agreed for determination by this Court. Consequently, an Order was made in the following terms on the 30th June, 1982 including orders for disposing of matters which were not in dispute:

10. Both defendants and the plaintiff, all testified before this Court. Apart from some trivial allegations and counter-allegations more of emotional than evidential value, the facts ultimately turned out to be almost common to all. The 1st defendant initially claimed to be entitled to 50% of the estate, not so much by virtue of his alleged capacity of a lawful husband of the deceased or natural father of the plaintiff for the grant of the Letters of Administration, but by reason of reimbursement for maintenance which he had allegedly given to the plaintiff throughout all her formative years. The 1st defendant was unable to particularize the alleged maintenance. However, it must be accepted that the 1st defendant did take the plaintiff under his roof after the death of the deceased in February, 1974 to early part of 1977. The maintenance for the plaintiff during this period must therefore be taken into consideration.

11. The plaintiff moved in with the 2nd defendant in 1977 and except for about, I think, two years when she was in Singapore, she resided with the 2nd defendant and she still resides with the 2nd defendant today. During her period of stay with the 2nd defendant and her study abroad in Singapore, the 2nd defendant was principally, if not entirely, supported out of the rental of the Man Wai Building flat paid by the 2nd defendant as tenant. Such maintenance has, no doubt, to be also taken into account.

12. Estate Duty and funeral expenses had to be paid. With $61,221 no longer available, for these if not other reasons, the Leighton Road flat was sold and the proceeds of sale came, I am told, to about $160,000. The solicitor in charge of the sale advised the 2nd defendant that half of the proceeds of sale was to go to the 1st defendant as a matter of right, and the remaining moiety of such proceeds was to go the plaintiff. Accoridng to the solicitor, these half proceeds of sale would have to be deposited in the joint names of the 1st and 2nd defendants in their capacity as personal representatives. That was done. Up to that time, the 2nd defendant had no idea if the 1st defendant was entitled to share in estate of the deceased. When she was so advised by the solicitor in charge of the sale of the Leighton Road flat, there was no reason why she should doubt his analysis. It is true to say that in the Letters of Administration and her nomination paper as a co-administratrix, it could readily be seen that the 1st defendant was described as the lawful husband of the deceased and the natural father of the plaintiff. But those are legal documents couched in unfamiliar language, and the 2nd defendant can, and should be forgiven for placing little reliance on legal documents and the terminologies, particularly in the light of the advice given to her upon the sale of the Leighton Road flat by a solicitor. Besides, the 1st defendant herself was no English scholar.

13. The 1st defendant told the Court that the entire $61,221 was no longer available. Apart from the $22,000 lodged in Court, the 1st defendant's then claimed share of the Leighton Road flat proceeds in the region of $80,000 was also lost to the estate. The Man Wai Building flat rental was almost wholly misappropriated. Thus, save for the $22,000 paid into Court on an admission, $10 in the joint account and the presently unencumbranced Man Wai Building flat, every asset belonging to the estate of the deceased that has passed through the hands of the 1st defendant, is irretrievable.

14. The 1st defendant further admitted that he had obtained the loan of $30, 000 from the 2nd defendant, $5,000 in November/October 1976, another $5,000 soon afterwards and $20,000 in December 1976. According to the 2nd defendant, the 1st defendant's first approach was for a personal loan of $5,000, then he came for another $5,000 under the pretext of meeting rates and tax, and in December 1976, when the last $20,000 was sought, according to the 2nd defendant, the 1st defendant armed with an explanation that he intended to improve the standard of living of the plaintiff and himself by venturing into some business. In March 1977, the 1st defendant sought a further loan from the 2nd defendant, and the 2nd defendant hereself granted him $3,000 on the agreement that the amount was to be repaid out of the forthcoming rental payable by the 2nd defendant for the Man Wai Building flat.

15. The 2nd defendant further disclosed to the Court that, in fact, the 1st defendant had, without her knowledge, sought and obtained yet another loan of $2, 000 from her husband.

16. As for the $30,000, it was lent to the 1st defendant by the 2nd defendant out of the sum of about $80,000 representing the half portion proceeds of sale deposited in the joint names of the 1st and 2nd defendants as advised by the solicitor in charge of the sale, and that loan, according to the 2nd defendant, was also agreed to be repaid out of the forthcoming rental from the Man Wai Building flat. The $50,000 balance left of this half portion of sale proceeds was together with some $4,000 of the 2nd defendant, used in the redemption of the then bank mortgage of the Man Wai Building flat.

17. The 2nd defendant never sought or saw fit to seek legal or proper advice on the desirability of the loans demanded by the 1st defendant. The 2nd defendant never even told the Court that she consulted her husband or anyone with a sound commercial or legal background. The only explanation advanced for consideration of this Court was that the 2nd defendant was anxious to foster or maintain good relationship between the plaintiff and the 1st defendant, which might possibly be strained by any refusal of his requests for loans.

18. Shortly before the commencement of these proceeding in 1980, the plaintiff was getting increasingly frustrated and feeling more and more aggrievd, so much so that the relationship between the plaintiff and the 2nd defendant was showing sign of disharmony. The plaintiff took upon herself to approach Mrs. Elsie Elliott, and her action came to be known by the 2nd defendant. Up to then, the plaintiff had not been given a full account of her entitlement in the estate. Ultimately, the 2nd defendant suggested to consult the District Office. Hence, they were directed to the Director of Legal Aid, and that resulted in the institution of the present action.

19. At the end of the day, counsel for the 2nd defendant quite fairly conceded that the 1st defendant obtained or caused to be obtained a grant of Letters of Administration to the estate of the deceased on misrepresentations, that the misrepresentations were the allegations of the 1st defendant being the surviving lawful husband of the deceased and of the 1st defendant being the natural father of the plaintiff and that the 1st defendant was not, in effect, legally entitled to the grant of the Letters of Administration. The 1st defendant did not seem to seriously dispute these matters, and I so hold and find in accordance with the concessions made by counsel for the 2nd defendant. I also hold, as it was further conceded by counsel for the 2nd defendant and not now really disputed by the 1st defendant, that the 1st defendant was and is not beneficially entitled to the estate of the deceased.

20. Mr. Lee further agreed that in law, the 2nd defendant should account to the plaintiff items (1) to (7) assets in the Schedule to the Letters of Administration-and that her failure to do so constituted a breach of trust. It was further admitted that it was a breach of trust on the part of the 2nd defendant to allow the 1st defendant to have half of the proceeds of sale of the Leighton Road flat, that it was a breach of trust to pay rental to the 1st defendant, that it was a breach of trust to lend $30,000 to the 1st defendant, that it was a breach of trust to allow the 1st defendant to repay the $30,000 or any part thereof from rental of the Man Wai Building flat and that it was a breach of trust to allow the 1st defendant to repay her personal loan of $3,000 to him from the same rental.

21. As far as the 1st defendant is concerned, it was a breach of trust in every action taken by him touching upon the asset of the estate of the deceased. He should never have been granted Letters of Administration. For all his subsequent action, even if bone fide, without negligence, and not prejudicial to the interest of the plaintiff, he can claim no relief. Furthermore, the 1st defendant has clearly been shown to have misappropriated most of the assets of the estate that had passed through his hands on the force of his misrepresentations.

22. Generally, the 1st defendant's liability for breaches of trust can be summarized as follows :

23. The 1st defendant should be given credit for $22,000, $10 and all proper expenses incurred including funeral expenses, estate duty, legal fees and maintenance for the plaintiff.

24. The 2nd defendant told the Court that she held no high opinion of the 1st defendant's character and that she had much reservation of him as a man and a father. In view of that these observations, it would ?? in the mouth of the 2nd defendant to claim any relief under ?? for half of the losses caused by the 1st defendant and half sale proceeds of the Leighton Road flat. She made no effort to gain any or any proper control of items (1) to (7) in the Schedule to the Letters of Administration, and in such her failrue I find that she had caused loss to the estate. Without justification, she had left practically everything to the 1st defendant, and she failed to take proper steps to preserve the estate. There was, I find, an attempt to keep the plaintiff in the dark until the very end.

25. For the 2nd defendant, counsel submitted that she had acted honestly and reasonably and ought in the circumstances fairly to be excused. As for half of the proceeds of sale in Leighton Road flat, she was advised by solicitor in charge of the sale that the 1st defendant was entitled to half of it. She was unconversant with the English language, having no commercial background and uneducated in legal matters. There was, as I have said, no reason why she should not accept the advice and comment, cum observation from the solicitor without any reservation. She ought to be fairly excused, as I believe she acted honestly and reasonably in half of the proceeds of sale from the sale of the Leighton Road flat. The same analysis could be extended to the assets listed out in items (1) to (7) in the Schedule to the Letters of Administration and half of the Man Wai Building flat rental. To all intents and purposes, 2nd defendant erroneously believed that the 1st defendant and the plaintiff had an equal share in the estate, and, therefore, except for the $30,000 loan, whatever was misappropriated by the 1st defendant, the 2nd defendant in these circumstances ought to be fairly excused from being responsible for half of it. The asset preserved, viz. the presently unencumbranced Man Wai Building flat had never been called in question, and the 2nd defendant's erroneous belief on the basis of a 50/50 entitlement has not been shown to be associated with the value or half of the value of this property, then mortgaged, to which the 2nd defendant had simply no opportunity to address herself.

26. It was criticized by counsel for the plaintiff, that firstly, being a co-administratrix, she ought to have the rental of the Man Wai Building flat constantly brought up to a realistic level. Monthly rental was $900 in 1977, $1,000 in 1979 and $1,500 in 1982. There was no evidence as to what lawful or permissible rental was at various times. Therefore, I cannot condemn the original $700 backed by a loan of $10,000 and any of the subsequent increases up to $1,500 as unreasonable rental. It was further submitted by Mr. Wei on behalf of the plaintiff, that qua personal representative, the 2nd defendant ought to have created a most beneficial sub-tenancy after the cessation of the then sitting sub-tenant. The 2nd defendant became a tenant of the Man Wai Building flat in 1972. Her tenancy right had accrued, as it were, and when she became or agreed to become a co-administratrix, her capacity and position of a personal representative would not, in any way, impair her right as a lawful tenant to the Man Wai Building flat. Thus, I cannot find any real substance in counsel's contention.

27. The 2nd defendant withheld information from the plaintiff until well into 1977, and no reasonable excuse was given. The explanation sought to be offered is, I find, unconvincing. The 2nd defendant had deliberately, I find, withheld full information from the plaintiff. The information supplied to the plaintiff came to be known virtually piecemeal.

28. In the circumstances, having decided the issues in favour of the plaintiff, I order by way of consequential relief, which has in substance been agreed to by the 1st and 2nd defendants, an account in terms of paragraph 6 of the Order made on the 30th June, 1982 to be taken by the Registrar. I would also grant liberty to apply. It has been urged upon me that I should revoke the grant of the Letters of Administration. The revocation of a grant of Letters of Administration are governed by the Contentious Probate Rules and Order 76 of the Rules of Supreme Court. Specific procedure has been laid down and prescribed and must be obediently followed. only to ensure that no third party interest may be affected or otherwise prejudiced. The 1st defendant has agreed, prior to the commencement of the trial of the agreed issues, to surrender the grant of the Letters of Administration for revocation and to have the Official Administrator or such other fit person or persons to be granted Letters of Administration of the estate of the deceased. The administration year has long passed, and there doe not seem to be any more creditors to be dealt with. Administration of the estate of the deceased seems to have come to an end. If I am correct, there would be no point to appoint any further administrator, but obviously Letters of Administration of the estate of the deceased will have to be first sought and re-granted after the Letters of Administration to the defendants have been surrendered to the Registrar. The Letters of Administration has been produced in Court and Marked as P5. I order that the same be lodged with the Registrar so as to facilitate further steps to be taken with a view to revoking the same and granting fresh Letters of Administration to fit and proper persons to be proposed by or on behalf of the plaintiff.

29. These proceedings have taken an unusual turn. The parties did agree to settle their respective disputes in mid stream. I have not placed any reliance on any terms of their proposed settlement nor the conduct of the parties, one way or the other, in the retraction of or consent to the abandonment of the proposed settlement. The 1st defendant has been arrested under Order 44(A). Subject to what Mr. Wei has to say, I propose to have him released firstly upon his surrendering all his travelling documents, secondly, upon his undertaking not to leave Hong Kong within a period of three months and thirdly, upon he agreeing to have his name put on the Stop List for a like period of three months and fourthly, upon he agreeing to have the safe deposit box of his opened in the presence of a legal representative of the plaintiff.

(All concurring.)

30. Very well, I order accordingly, and the agreed issues be determined in terms of my oral judgment, and this Action is accordingly disposed of between the plaintiff and the 1st and the 2nd defendants. I order accordingly.

Representation:

Mr. Paul Wei instructed by Messrs. Fairbairn & Kwok assigned by Director of Legal Aid for Plaintiff.

Mr. John Lee instructed by Messrs. Jenkins, Oliver & Au assigned by Director of Legal Aid for 2nd Defendant.

1st Defendant in person.