Hanson Jay Wang Kit v. Ernest Jay Wang Ko and Others

HCMP003473/1984

BETWEEN

Coram:    The Honourable Mr. Justice Jones in Chambers

Dates of hearing:    20th-22nd May 1985

Date of delivery of judgment:     22nd May 1985

Date of delivery of reasons for judgment:     30th May 1985

1. On the 22nd May 1985 I made various orders on the plaintiff's originating summons including a Beddoe's order see Re Beddoe (1893).1 Ch. 55, after refusing an application made on behalf of the 2nd and 3rd defendants to adjourn or stay the hearing of the originating summons. I said that I would give my reasons later and I shall now do so.

2. K.C. Jay ("the deceased") died on the 6th October 1982. He was a prominent businessman in Hong Kong and during his lifetime formed several private companies called the Jayson Group of Companies. Although the deceased retained overriding control of all the companies various members of his family were appointed to be directors and were also shareholders.

3. The plaintiff (Hanson) is the deceased's youngest son by his first wife, Wong Kwan-yee. The 1st defendant (Ernest) is another son of the deceased by his first wife. He has been joined as a party in order to represent the other beneficiaries under the deceased's will. The 2nd defendant (Edna) was the deceased's principal concubine or second wife and the 3rd defendant (Irene) was the deceased's third concubine or fourth wife.

4. By his will the deceased appointed Hanson, Edna and Irene to be his executors. However, Edna and Irene have since renounced their rights to probate with the result that a grant of probate was made to Hanson alone on the 9th May 1984. After making some specific legacies the deceased divided the residuary estate into 58 shares amongst members of his family.

5. Hanson is on very bad terms with Edna and Irene and there have been some unpleasant incidents between them since the death of the deceased.

6. Jayson Finance Company Limited was formed by the deceased as an investment company. The deceased, Ernest, Edna and Irene were the directors. In April 1980 the deceased decided to purchase some office premises on the 23rd floor of Tower II in Admiralty Centre. The property was acquired by Helmond Limited a shelf company with interest free advances amounting to $17,250,000.00 from Jayson Finance Company Limited. Edna and Irene were the only directors and shareholders of Helmond Limited. Hanson was appointed to be a director of Jayson Finance Company Limited after the death of the deceased. On the 21st February 1984 a writ was issued on behalf of Jayson Finance Company Limited against Helmond Limited, Edna and Irene claiming repayment of the above amount on the grounds that the advances were ultra vires and in breach of the Articles of Association. Third party proceedings were subsequently instituted by Edna and Irene against Hanson as executor of the estate for an indemnity on the grounds that they were only nominees of the deceased so that the deceased was wholly responsible for any breach of duty that may have occurred.In these proceedings Hanson on an ex parte application was granted a Mareva injunction on the 21st February 1984 against Edna and Irene. However, after a contested hearing on the inter partes summons I discharged the injunction on the 5th April 1984 for the reasons set out in my judgment.

7. The present originating summons was filed on the 17th December 1984 and came before me on the lst March 1985 when directions were given with regard to the filing of evidence, and the hearing was adjourned to a date to be fixed.

8. On the 10th May 1985 a writ was issued against Hanson by Edna, Irene and Irene's two infant children in which inter alia, orders are sought for Hanson to be removed as the deceased's executor, for revocation of the grant of probate and for the estate to be administered by the court. A summons was also issued on the same date in the present proceedings by Edna and Irene that subject to certain directions being given the hearing of the originating summons be adjourned or stayed until after the determination of this action. The grounds of opposition to the originating summons are basically the same as the allegations made in the action.

9. The statement of claim alleges that Hanson as executor has failed to distribute the assets of the residuary estate to the beneficiaries or to render any accounts notwithstanding the expiration of the executor's year,that he has failed to realise or preserve the assets with the result that they have depreciated in value,that he has abused his position by making a highly selective use of his power to institute proceedings for the recovery of different loans, by making an oppressive request for particulars of the third party statement of claim and by causing certain incidents at 50 Island Road in March and April 1984.

10. The estate is worth several millions of dollars and will take some time before it is fully administered. Quite clearly it is not feasible for Hanson to make a distribution at the present time. The complaint with regard to the accounts is without foundation for the executor's year had not even expired when it was made on the 14th February 1985. In any event I am told that the accounts will be ready at the end of May 1985.

11. Edna and Irene complain that Hanson has failed to dispose of the following assets: first, the deceased's thoroughbred racehorse "Top Champ" which he has continued to enter in races at the expense of the estate with the result that it has depreciated in value. In fact the horse was raced with the consent of Edna and Irene.and has performed quite successfully without loss to the estate. Second, three motor cars that belonged to the deceased have also depreciated in value because they have been used by him and his own family. Third, the deceased's.collection of bonsai trees kept at 50 Island Road. I am not in a position to determine the truth or otherwise of the allegations upon the affidavit evidence, but even if the allegations are accepted they relate to assets which are valued in tens of thousands of dollars whereas the estate is valued in millions. The allegations can only be described as trivial. They do not justify the removal of Hanson as executor.

12. A number of loans are claimed to;be due to the estate from companies in the Jayson Group and proceedings have been instituted against three companies, Kay Investment Limited for $4,373,638.98, Craditon Limited for $2,164,064.20 and Helmond Limited for $8,006,585.00 in which companies Edna and Irene have substantial interests and are the only directors. On the other hand no proceedings have been commenced against other companies in the Group in which Hanson, his brothers, sister and mother have the controlling interests. Edna and Irene therefore contend that Hanson has been highly selective in instituting proceedings against them. It is significant to observe that the claims are based on the affidavit sworn by Irene for the purposes of estate duty in which she stated that the loans were due to the estate. I was informed that the loans due from the companies controlled by Hanson have almost been fully paid. In my view Hanson has acted quite properly on behalf of the estate with regard to the action that he has taken.against Edna and Irene and I do not agree with the contention that there has been a high degree of selectivity as claimed.

13. It was also submitted that a request for further and better particulars of Edna and Irene's statement of claim in the third party proceedings was oppressive. I found no merit in this submission for the particulars were delivered voluntarily and there was also an agreement by Edna and Irene to pay the costs of the summons that had been issued. Again the incidents of harassment that took place at 50 Island Road even if they are accepted do not in my opinion advance the case for Edna and Irene.

14. In his submission Mr. Ferris counsel for Edna and Irene prayed in aid Section 33(3) of the Probate and Administration Ordinance which provides :-

"The court may, if satisfied that the due and proper administration of the estate and the interests of the persons beneficially entitled thereto so require, suspend or remove an executor or administrator (other than the Official Administrator) and provide for the succession of another person in place of such executor or administrator and for the vesting in that other person of any property belonging to the estate."

It is clear that even if there has been misconduct by an executor it will not justify his removal for the beneficiaries will be protected by other remedies such as by obtaining An order for accounts, see the Law of Succession by Anthony R. Mellows, 4th Ed. p. 270. On the assumption that all the complaints made by Edna and Irene are true I consider that it is most improbable that the action commenced by them to remove Hanson as executor will succeed. Accordingly I refused the application to adjourn or stay the originating summons with costs.

15. Upon the hearing of the originating summons Mr. Ferris conceded that Hanson should be granted an indemnity for the costs relenting to the future conduct of the various actions, but that he should not be indemnified for costs already incurred. I rejected this submission.

16. Mr. Morritt, counsel for Hanson took me through the opinion of Mr. Andrew Li, his junior counsel with regard to the various actions which was done in the absence of Edna and Irene. I am satisfied that in the interests of the estate orders should be made for Hanson to proceed with the actions and to defend the proceedings taken by Edna and Irene. I then made orders on the originating summons for the appointment of Ernest to represent the beneficiaries to date in the proceedings, and for Hanson to prosecute the actions already commenced and to defend the proceedings taken by Edna and Irene up to completion of discovery and the administration of interrogatories. An order was also made for the infant beneficiaries to be joined as defendants upon an undertaking by Hanson to apply for the appointment of a guardian ad litem.

17. I apportion the costs of the hearing as to two thirds to the summons dated the 10th May 1985 and the balance to the originating summons.

Representation:

Mr. A Morritt, Q.C. and Mr. A. Li (Deacons) for Plaintiff. Mr. Edward Chan (Lo, Wong & Tsui) for lst Defendant.

Mr. F. Ferris, Q.C., Mr. A. Sakhrani, Q.C. and Mr. D. Fung (Tang & So) for 2nd and 3rd Defendants.