Wang Din Shin v. Nina Kung

CACV 275/2004

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 275 OF 2004

(ON APPEAL FROM HCAP NO. 8 OF 1999)

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BETWEEN

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Before : Hon Stock JA, Yuen JA and Sakhrani J in Court

Dates of Hearing and Judgment : 11 and 12 January 2005

Date of Handing Down Reasons for Judgment : 21 January 2005

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REASONS  FOR  JUDGMENT

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Hon Stock JA (giving the Reasons of the Court):

Introduction

1.These appeals arise out of the administration pendente lite of the estate of the late Wang Teh Huei (the deceased), and ongoing litigation between the deceased’s father Wang Din Shin (Mr Wang) on the one hand and the deceased’s widow, Nina Kung otherwise known as Nina T H Wang, (Mrs Wang) on the other. The first appeal (the adjournment appeal) is against the order of Chu J on 20 August 2004 to adjourn, until after the determination of a probate action and any appeals therefrom, an application by Mrs Wang for the removal of the administrators.  There is also an appeal against a costs order made upon that adjournment determination.  On 12 January 2005, we dismissed the adjournment appeal and we allowed the costs appeal in part.  We said we would give reasons later, and this we now do.

2.The litigation commenced in September 1999, when Mr Wang initiated proceedings to propound a will of the deceased under which Mr Wang was named sole beneficiary of the deceased’s estate.  By her counterclaim, Mrs Wang sought to propound a later will under which she was named as the sole beneficiary.  In November 2002, judgment was given in probate proceedings in the Court of First Instance in favour of Mr Wang.  Mrs Wang’s probate appeal has, by a majority, been dismissed by the Court of Appeal and leave has been granted to appeal to the Court of Final Appeal.  That appeal is due for hearing on 11 July 2005.

3.By an order dated 15 March 2000, joint administrators pendente lite of the estate were appointed.  Those administrators were Mr Christopher Barlow of PricewaterhouseCoopers, and Mr Tan Man Kou of Deloitte Touche Tohmatsu.  Mr Barlow has retired, and his place has been taken by Mr Cheng Yat Ming.  The order of 15 March authorised the administrators to take such steps as they were by law entitled to take for the purpose of getting in and preserving the estate, to exercise if necessary all the powers of general administrators pursuant to section 40 of the Probate and Administration Ordinance, Cap 10 (other than distribution), and to report on a regular basis to the court and to each party on the progress and conduct of the administration.  The administrators were also at liberty to apply to a judge of the Court of First Instance for directions concerning the conduct of the administration.  Letters of Administration were granted on 17 July 2000.  After the First Instance judgment of 21 November 2002 in the probate action, an ex parte order was made extending the appointment of the joint administrators pending further order.

The removal application

4.The genesis of the current appeals is a summons issued on 25 September 2003 by which Mrs Wang seeks an order that the joint administrators "be removed with immediate effect in the interests of the estate and by reason of their conduct in the administration thereof, and be replaced by such other person(s) as the Court may deem fit”.  The same summons also sought an order that that application for the removal of the administrators be heard by a judge other than either Madam Justice Chu and Mr Justice Chung, who have been the two judges in the administration court before whom applications in relation to this administration have been made.  That recusal application came before Madam Justice Chu on 22 December 2003, and was refused.

The allegations of maladministration

5.In her affirmation in support of the removal application, Mrs Wang describes in considerable detail the use, for over twenty years, of a treasury company which since 1987 has been Chinachem Agencies Ltd (“CAL”), to serve the financial needs of companies within the Chinachem Group; the treasury company being itself a member of that Group, and which she says is a company of which she is the beneficial owner.  The company operates as a repository of funds and for interest-free inter-company financing.  The essence of her complaint in that affirmation is that "the joint administrators have made plain that they wished to put a stop to [treasury company operations of the group].  They wish to reverse the inter-company lending and borrowing that has accrued during the last 20 years.”  She asserts that that would cause very significant damage to the interests of the Group as a whole and that the conduct of the administrators to effect this change is an abuse.  She asserts that the damage and dislocation that will be caused by the proposed step is not justified by the need to protect the interests of the estate pending the outcome of the probate litigation.   

6.The affirmation contains a detailed account of the complexity of the companies and Mrs Wang’s role in their historical development and success.  She complains that the administrators have to a considerable extent succeeded in having themselves appointed to the boards of Chinachem Group companies.  She says that she does not believe that they are competent to run the business of the Chinachem Group, and they do not have the experience to perform the duty of directors to manage the Group’s companies.  She complains as well that the joint administrators have not merely gained control of her late husband’s shares, but have intervened in the management and conduct of the business when not competent do so, and thereby antagonised management and staff and, further, that the joint administrators are deeply hostile to her.  She points out that the administrators were appointed to preserve the assets of the estate, and not to take over the management of the companies, so that in the event they are exceeding the purpose of their appointment.  They are, she says, acting either as executors or as liquidators, and not as administrators to preserve assets pending the completion of litigation.  They have, she asserts, failed to appreciate the role of CAL, so that their attempts to secure the repayment of loans to that company threaten to undermine and unravel the security and workings of the Chinachem Group.  They have, she further says, conducted themselves in a dictatorial, offensive and adversarial manner, and have wasted management time and resources.  The appointment of themselves as directors of various companies has resulted in a conflict of interest between a director’s duty to all the shareholders, on the one hand, and, on the other, their duty as administrators to act in the best interests of a single shareholder, namely, the estate.  They are not sufficiently experienced to manage substantial real property development business.  They have falsely suggested that there is a risk of dissipation of assets, and in doing so have not drawn to the court’s attention the comprehensive regime, through the mechanism of undertakings and court orders, that exists to safeguard those assets and they have initiated unnecessary litigation.  They have incurred enormous expenditure in pursuing their task, and by so doing the liquid assets of the estate have been exhausted.  Their overenthusiastic behaviour in digging for events and records of many years ago has been overly time-consuming and diverting.  They have unfairly assumed that Mr Wang is the beneficiary of the estate, and this before appeals have been exhausted.  They are, in short, she asserts, not fit to continue in office. The charges are serious, and Mr Carr QC, who appears for her, says that as contingent beneficiary she is entitled to seek to preclude receipt by her of assets in a dismembered form.  He argues that the matter is urgent, for so long as the removal application does not proceed, irreparable damage continues to be caused.

The application for recusal

7.By a decision dated 31 December 2003, Madam Justice Chu dismissed the recusal application.  An appeal from that dismissal came before this Court, differently constituted, on 30 November 2004, but we took the view, and in the event counsel agreed, that the cart had been put before the horse; that it made sense to hear the present appeal first.

The application to adjourn the removal application

8.The summons to which the adjournment appeal is directed is dated 7 November 2003, and was issued by the administrators. By that summons, they applied for an order that the application to remove the administrators be adjourned until final determination of the probate action and of all appeals therefrom; and, further, for directions as to the capacity in which Mrs Wang was entitled to make the application for removal, the contention of the administrators being that Mrs Wang could only properly bring the removal application in her capacity as a potential beneficiary of the estate, and not in any other capacity, for instance as a shareholder in companies with which the estate is connected.

9.In a lengthy affidavit in support of the adjournment application the following primary points were made:

(a)	that the removal application, a very substantial one and made very late in the day, was unlikely to be determined before the appointment of the joint administrators came to an end as a result of the final disposal of the probate action; and therefore, regardless of the merits of the application (which were in any event challenged) the relief sought by the removal application was never likely to be granted;
(b)	that the application was primarily brought by Mrs Wang to satisfy her interests not in her capacity as a potential beneficiary of the estate but rather to further her quite separate interests, principally those as a defendant to various claims brought against her by the estate;
(c)	that the effect, if not the purpose, of the removal application if fought to its (impractical) conclusion, would be to divert the time of the administrators and the resources of the estate from litigation mounted in the interests of the estate against Mrs Wang; and at the same time place the administrators in an wholly invidious position because of the need, in defending the removal application, to disclose confidential material placed before the courts when seeking sanction for the institution of those proceedings; and
(d)	that a stay of the removal application would not preclude Mrs Wang from relief were her assertions against the administrators well based, for there remained at her disposal her remedies as a shareholder, in company law.

The judge’s decision

10.These applications (as to adjournment and capacity) were heard in April 2004.  In relation to the capacity in which the removal application was pursued by Mrs Wang, the question canvassed before Chu J was whether the applicant for removal could pray in aid her separate interest in respect of her shareholdings in the Group’s companies, as opposed, that is, to her interest as a potential beneficiary of the estate; the two being different in so far as there are Group companies in which the estate has no interest.  Given her decision in favour of the adjournment application, the judge found it unnecessary to make any direction in this regard though she determined that Mrs Wang did not have any legitimate interest in her capacity as shareholder or partner of connected companies in seeking the removal of the administrators and that, accordingly, her interest in the removal application was in her capacity only as potential beneficiary of the estate.  In deciding to adjourn the removal application, she noted that the paramount consideration had to be the interests of the estate; that even were Mrs Wang’s claim to be the beneficiary of the estate ultimately upheld, she nonetheless had potential remedies in law against the administrators; and that the removal application, which was complex, would take some time before it was ready for hearing and would in any event be likely to be the subject of the appeal process, and that if the probate action were to conclude before the final determination of the removal application, the costs and effort incurred in the removal application would have proved wasted. In the course of her judgment, dated 20 August 2004, Chu J said (para 44):

“ … the paramount consideration in deciding whether the removal application should be heard now or be adjourned must be the interests of the estate.  The defendant’s interests, to the extent that it does not coincide with or is adverse to the interests of the estate, will have to be disregarded.  In addition, unlike the authorities cited by the defendant, this is not a case where the defendant is suing to enforce a legal right or a cause of action.  This is also not a case that the defendant will be deprived of her due remedies under the law.  If in the end, her claim to be the beneficiary of the estate is upheld, and if she considers that the administrators have failed in their duties and/or that the estate has not been properly administered, she has a remedy in law against the administrators.  She will not be deprived, let alone permanently deprived, of the right of access to court.”

11.The judge noted that:

(a)	the removal application would take some time before it was ready for hearing;
(b)	it was very likely that the appeal in the probate action would be determined before the removal application had run its course through the courts;
(c)	whilst Mrs Wang had complained of procedural delay by the administrators in bringing the adjournment application, this had not been supported by the evidence;
(d)	the possibility of a retrial of the probate action was speculative but that should that course be ordered, it would be open to Mrs Wang to seek an order lifting the adjournment;
(e)	a great deal of time would have to be devoted by the administrators to meet the contentions raised in the removal application, the judge noting that Mrs Wang's affirmation in support ran to 155 pages, plus fifteen lever-arch files of exhibits;
(f)	the administration of the estate pendite lite was at an advanced stage;
(g)	the resources of the estate were not unlimited and that answering the removal application would be costly;
(h)	it was not in the interests of the estate to divert the administrators from the primary task of collecting and preserving assets of the estate;
(i)	there was some substance in the assertion that Mrs Wang stood to benefit from a diversion of the administrators’ task;
(j)	Mrs Wang's beneficial entitlement to the estate had yet to be established;
(k)	litigation brought by the administrators of which Mrs Wang complains had been brought with leave of the court;
(l)	there had been delay in launching the removal application, given that most of the matters of complaint had occurred more than a year before the application was instituted;
(m)	the main threat perceived by Mrs Wang were to her personal interests, not to her interests in her capacity as a potential beneficiary of the estate but to her other interests in the Chinachem group.  As a beneficiary, her complaints were directed at the fees and expenses of the administration; but the judge took the view that it was doubtful whether the complaint of excessive cost by itself would warrant the removal of the administrators at such an advanced stage of the administration.

12.She concluded (paragraph 55):

"Having regard to the substantial costs required to deal with the removal application, the likely disruption to the ongoing administration, the delay and the lack of urgency in bringing the removal application, the problems associated with the confidential materials, it will not be in the interest of the estate for the removal application to proceed.  At the same time, it would appear that the removal application is more for the purpose of promoting the defendant's separate personal interest than for advancing the interest of the estate.  In the circumstances, and weighing the prejudice that may occasion to the defendant as a result of adjourning the removal application, which is minimal, I am of the view that it is just to adjourn the removal application on the terms sought in paragraph 1 of the administrators’ summons.”

13.Accordingly, the judge ordered that Mrs Wang's removal application "be adjourned, and no further directions be given in relation to the hearing thereof, until the final determination of the probate action and all appeals therefrom (such that the entitlement to the Estate has been finally established)".

14.Further, she made an order nisi for Mrs Wang to pay the costs of the plaintiff, namely, Mr Wang and of the administrators, in the case of the administrators on an indemnity basis, to be taxed if not agreed.  That order nisi for costs was also the subject of appeal before us; but has been overtaken by events in that there has now been a determination of an application to vary the order nisi.  By her decision handed down on 11 January 2005, the judge made absolute the orders nisi.  It was agreed that we should hear the appeal against the costs order absolute and we did so. To that appeal we shall presently return.

The Adjournment Appeal

The application for an adjournment of the appeal

15.The hearing of this appeal was opened by Mr Carr with a rehearsal of the difficulties to which Mrs Wang attested in her thirteenth affirmation, with particular emphasis on the assertion that the risk of dissipation of assets which seems, he says, to have motivated the administrators to institute no fewer than seven sets of proceedings was an illusory risk not least because there was in place a comprehensive regime of orders and undertakings to counteract such a risk, and further that there has been a finding by Kwan J in a judgment delivered in June 2003 that the evidence does not demonstrate such a risk.  Our attention was drawn to two recent developments:

(1)

On 13 December 2004, the Court of Final Appeal determined an issue arising from a petition presented by the administrators under section 168A of Companies Ordinance.  That petition complained of unfair prejudice in the conduct of the affairs of Chime Corporation Ltd, a company within the Chinachem Group.  The original petition sought the setting aside of an allotment of shares in Chime to Mrs Wang.  The appeal concerned amendments to the petition, amendments refused at First Instance but permitted by the Court of Appeal, namely, to allege the improper procurement of loans from Chime to CAL, and, by way of relief, an order that Mrs Wang procure CAL to repay the loans.  The issue in the appeal to the Court of Final Appeal, as formulated by Lord Scott, was whether the court could on a section 168A petition deal with or dispose of a cause of action for damages or restitution that is vested in the company and, if as a matter of jurisdiction it could do so, in what circumstances it should do so.  The Court held that it could do so but that in the circumstances of this case, it should not do so.  The allegations were of misconduct and about proprietary rights rather than mismanagement, for which reason the appropriate course was a derivative action.  It was pointed out that if in the current probate proceedings ownership of the beneficial estate was held to be vested in Mrs Wang, the section 168A petition will have proved a "pointless and inexcusable waste of money, time and the judicial resources of Hong Kong." (para 55).  It was held that the petitioners were in effect using the petition in order to prosecute derivative actions allegedly vested in Chime.  "They are doing so without any apparent regard to the damage that the litigation and its huge complexity may cause Chime and its business." (para 59).  Lord Scott also said, at paras 66-68:

“This petition cries out for firm and effective case management.  For the reasons I have given, sensible case management decisions cannot be come to until it is known to whom the estate of Mr Wang [the deceased] belongs.  … Moreover, the prosecution of the complaint relating to the CAL loan, whether done via a derivative action or in the petition, would involve an expenditure in time and resources for the parties, including Chime, of a quite exorbitant extent.  It also make demands on the judicial resources of Hong Kong that it would be unreasonable for any litigant to expect to be met unless it were plainly necessary in the interests of justice for that to be done.  In these circumstances, in my opinion, there is everything to be said for a stay of the petition until the probate proceedings have reached a conclusion.  At that point, and not until that point, sensible conclusions about the progress of the petition can be reached."

	These comments by Lord Scott about "pointless and inexcusable waste of money" and use of the petition "without any apparent regard to the damage that the litigation and its huge complexity may cause Chime and its business" are prayed in aid by Mr Carr as vindicating Mrs Wang’s contention that the administrators have already significantly abused their position by incurring the estate in gross expense directed, it is said, at paying the mountainous fees resulting from burgeoning litigation unnecessarily instituted by them.  None of this litigation, it is said, is consonant with the role of administrators pendente lite.
(2)	The second development to which we were taken was triggered by the comments of the Court of Final Appeal.  A number of applications have now been made by Mrs Wang for a stay of the actions instituted by the administrators.  Orders have been made for interim stay of five of the seven pieces of litigation and the return date for the substantive applications is 8 March. However, appeals have now been lodged against the orders for interim stay.

16.Against this background Mr Carr suggested that the hearing of this (adjournment) appeal be itself adjourned until determination of the applications to stay the pending litigation.  That suggestion came as something of a surprise, made as it was without notice in advance of the hearing and well into the oral submissions.  Be that as it may, the application was made and we had the benefit of a full backdrop to it.  In advancing the application for an adjournment of this appeal, Mr Carr pointed out that Mrs Wang's proclaimed objective of stopping the dismemberment of the Chinachem Group by the administrators would be achieved were her applications for stay of the pending litigation to succeed.  That being so, there was for the moment, he said, no practical point in pursuing the removal application.  There was however a further practical hurdle, so it seemed to us, which he was bound to and did recognize as a real problem: it was that at this stage there appeared to be little utility in the present pursuit of the removal application, given the likely determination of the probate action in or shortly after July this year, when the Court of Final Appeal is to hear the probate action appeal.  The application for an adjournment of this appeal was opposed by Mr Moger QC for the administrators, and by Mr Tsang for Mr Wang. 

17.We did not grant the adjournment sought.  It seemed to us that the adjournment of the (adjournment) appeal would be but a temporary and pointless palliative which would do nothing but add to the already unwieldy mass of unresolved satellite litigation, and that the question of the adjournment of the removal application was an issue that could readily be determined now, and that there was no point, costs already having been incurred in this appeal, in not deciding it.  We failed to see that the resolution, one way or the other, of the applications to stay the litigation was likely to have a real impact upon the sensible disposition of the removal application.

The merits of the adjournment appeal

18.The key fact from which there can be no escape and which, in our judgment was of itself determinative of this appeal, was that by the time this factually highly complex issue of alleged maladministration would be determined, the appointment of the administrators will inevitably have been brought to an end through another route, namely the determination of the lis which by definition constitutes the life span of the administrators’ appointment.  This is of course not an invariable consequence of an appointment pendente lite; but rather a consequence of the history of this particular litigation, the fact that the removal application comes (as a matter of fact) far into the administration (three and a half years after the original appointments, and almost a year after judgment at first instance in the probate action), and the fact that the allegations made against the administrators are complex: any reasonable preparation of a response to these wide-ranging allegations of maladministration over some years, and the determination of the issues thus joined, will take a long time.  Mr Carr estimates that the hearing of the removal application would take some eight to ten days.  The hearing of the appeal before the Court of Final Appeal is now set for July this year, and we see no prospect whatsoever of a determination of the removal application, and of the inevitable appeals therefrom, before that Court delivers itself of a decision.  That being so, one has then to recognise that the remedy that is sought by the removal application will be meaningless by the time the removal application is finally determined.  Against that hard fact, there is really no answer and it avails little to talk of delays which it is suggested the administrators placed in the way of allowing this application to proceed expeditiously; although we note in that particular regard that Chu J, who has had the practical management of the removal application, does not agree that there has been undue delay.

19.Mr Carr conceded that the utility of pursuing the removal application at this stage was questionable, but that concession appeared to be based upon the relief offered to Mrs Wang by the stay of pending litigation.  However, that protection was, he said, somewhat fragile in that appeals against the interim stays have now been lodged.  He suggested, therefore, that there was a middle course which this Court should dictate, namely a requirement that if the stays upon the litigation were lifted, the administrators should by mid-April this year file their evidence in reply to the allegations of maladministration, and that the court should also order that the hearing of the removal application be heard before the summer vacation.  This proposal was, however, riddled, so it seemed to us, with difficulty.  It did not change the immovable fact that in July this year the Court of Final Appeal will hear the probate appeal.  The holding proposal suggested would if implemented be expensive and time-consuming.  It assumed, unrealistically, we think, that a hearing date for a ten–day hearing before the vacation could be secured.  It presupposed that there would be such a delay in the delivery of the judgment of the Court of Final Appeal that the gap between the hoped for July removal hearing and that judgment would permit the appointment of new administrators who would in the meantime prevent continuing harm; but that in turn ignored any delay between the hearing of the removal application and the judgment in that application, and it ignored the certainty of appeals from any decision to replace these administrators.  It did not, with respect, seem to us to be a practical proposal.

20.Section 33(3) of the Probate and Administration Ordinance, Cap. 10 provides that:

“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 ... 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."

The application made by Mrs Wang is to the court in the exercise of its powers and duties under that section in circumstances in which very substantial resources and time would indeed be diverted from the administration proper – over which administration the court has some supervision – when the person thus far successful in the probate litigation takes no point adverse to the administrators, and where the practical point of the application is, in truth, illusory.  It is therefore small wonder that the judge, acting in the interests of the estate, made the decision she did.  In so far as it is correctly said that the courts should be most hesitant indeed before precluding a litigant from enforcing his or her rights, we do not perceive the adjournment order as tantamount to that preclusion.  It is merely, in the result, preclusion by this particular route, for Mrs Wang is not shut out from the other remedial avenues to which the judge alluded, whether in her capacity as a beneficiary – if that is proved – or in respect of her interests as a shareholder.  And in addition to those suggested avenues, we have now the applications to stay the litigation which litigation is said to be the prime harbinger of the groups dismantlement.  Should it transpire that the Court of the Final Appeal orders a retrial of the probate action – a prospect held out by Mr Carr as a possibility – then the adjournment and the future of the removal application can, as the judge recognised, be revisited.  The point is made that recourse to law includes a right to choose one’s form of legal remedy or to rely on a particular cause of action out of those that are available.  That is generally so, but entitlement to choose an avenue means that one cannot then divorce the destination to which that avenue leads from its setting, or framework: in other words, if an applicant chooses the section 33 route, the destination’s setting is the finite nature of the administrators’ appointment, and the guiding consideration provided by section 33 which is the interests of the estate and of those beneficially entitled to it.

21.Whilst we determined to hear argument on all the reasons given by the judge in support of the decision to order the adjournment of the removal application, it has not in the event transpired to be necessary to determine the validity of her reasons on points other than the utility point.  The utility point, namely the point that by the time the removal application will have been determined, the remedy sought by that application will have been rendered otiose, suffices to dispose of the appeal.

22.For these reasons, we dismissed the appeal against the order of Chu J by which she adjourned the removal application.  

The Costs Appeal

23.The order as to costs (of the adjournment application) made by the judge was as follows:

"The defendant pays the plaintiff and the administrators the costs of the application, to be taxed in the case of the administrators on an indemnity basis, if not agreed, and the administrators’ own costs be paid out of the estate on a trustee basis."

24.The application by the defendant to vary the order nisi was an application to substitute the costs order nisi by the following:

"The costs of the administrators’ application be in the cause of the removal application.  The administrators’ own costs are to be reserved."

25.In deciding not to vary the order nisi, the judge took the view that Mrs Wang had opposed the administrators’ application and failed, so that regardless of the outcome of the removal application, the administrators were in principle entitled to the costs of the adjournment application.  As for indemnity costs, the judge put forward the proposition that indemnity costs were not restricted to scandalous or vexatious circumstances or to oppression, or malicious initiation of proceedings; and that the discretion was not, she said, “to be fettered or circumscribed beyond the requirement that taxation on an indemnity basis must be appropriate” citing the recent decision of the Court of Final Appeal in Town Planning Board v Society for Protection of the Harbour Ltd (No 2) (2004) 7 HKCFAR 114.  The proposition thus recited by the judge was correct as far as it went. But the judgment of the Court of Final Appeal did not resile from the principle that although the discretion conferred by O.62 r28(3) was a broad discretion, nonetheless, “some special and unusual features must be shown to justify an indemnity costs award rather than an order for costs on a party and party basis.” (page 121H).

26.The circumstances which the judge said justified an order on an indemnity basis were:

(1)	that the defendant was not entitled to protect her separate personal interest in the administration proceedings by way of an application to remove the administrators;
(2)	that the adjournment application was driven by a legitimate concern on the part of the administrators to avoid serious diversion of attention and resources from the ongoing administration;
(3)	that there had been no need for Mrs Wang to invoke her separate interests as a shareholder in making the application, and in making it, so she held, “so late in the day”;
(4)	that the adjournment application was brought in the interests of and to protect the estate; and
(5)	that if the order were made on a party and party basis, the estate would have to suffer the shortfall.

27.Given our disposition of the adjournment appeal, Mr Carr did not maintain the stance that the judge ought to have ordered costs in the cause of the removal application.  We were concerned therefore only with that aspect of the costs order that they be paid on an indemnity basis.

28.We intimated to counsel that we nursed preliminary reservations about some of the judge’s reasoning; for example, whether it mattered that Mrs Wang sought, in addition to her interests as a contingent beneficiary, to protect separate interests as well. Mr Moger’s position was that the judge’s reasoning was in all respects correct but that given the time constraints with which we were faced he was content, for the purposes only of this particular appeal, to restrict himself to arguing that the nature of the proceedings, the circumstances of the parties to them, and the interests of the estate, warranted the order for indemnity costs made by the judge below, emphasising that an appellate court should be slow to overturn the exercise of a discretion as to costs.

29.A number of matters concerned us about the indemnity order.  Important to the judge's decision, so it appears from the judgment, was the fact, as she expressed it, that “if the administrators’ costs were to be on a party and party basis, the estate will have to suffer the payment of costs not recovered under taxation and will become smaller than what it would be.”  This however is a recipe for indemnity costs in all administration applications.  We note incidentally that the order made goes against the form of other costs orders made in other applications in the context of this particular administration, and we look therefore for some peculiarity in this application that warrants a departure from that history.  There has in this case been no determination on the merits of the removal application itself; and it was accepted that Mrs Wang was at the date of the application a contingent beneficiary and to that end was entitled to pursue the application.  We are also disturbed by the judge’s reference to the removal application being “late in the day”, when Stone J had refused a stay in the Mighty action only in July 2003.  The judge also appeared to have assumed that apart from the issues of conflict of interest and the complaint on the costs of the administration, all other grounds in support of the removal application were made exclusively in Mrs Wang’s other capacity as a shareholder.  However, as a contingent beneficiary, she has asserted that she has a right to see that administrators do not deplete the assets of the estate, e.g. by dismemberment of the treasury system.  If and when the removal application is heard, these contentions would have to be determined.  At the stage of an adjournment of the application, we did not think that there is demonstrated some special feature which warranted an order on an indemnity basis and accordingly we allowed the costs appeal.  We ordered that in place of the order made by the judge, there be substituted an order that the defendant pays the costs of the application to be taxed in the case of the administrators on a party and party basis, if not agreed, and that the administrators’ own costs be paid out of the estate on a trustee basis.

Miscellany

30.We made the following further orders:

(1)	that the costs of the adjournment appeal, including the application for an adjournment of the appeal, be to the administrators and the plaintiff on a party and party basis, the administrators’ costs to be paid out of the estate on a trustee basis;
(2)	that the costs of the costs appeal be paid by the administrators to the defendant out of the estate on a trustee basis;
(3)	by consent, that the hearing date of 17 March 2005 for the recusal appeal be vacated and that that appeal be adjourned sine die;
(4)	by consent, that the defendant be granted leave to appeal the order for costs in the recusal application; and we directed that the notice of appeal, if not already filed and served, and the defendant’s written submissions in support of that appeal be filed and served within 21 days of delivery of these reasons for judgment; written submissions in reply to be served within 21 days thereafter; and
(5)	by consent, that the application for costs of the recusal appeal and written submissions in support of that application be filed and served within 21 days of deliver of these reasons for judgment, and that written submissions in reply be served within 21 days thereafter.
	It was agreed that the Court would determine the application for costs in the recusal appeals on the basis of the written submissions to be submitted without the need for oral submissions.

Mr Albert Tsang and Mr Victor Luk (instructed by Messrs K M Chan & Co.) appeared on behalf of the Plaintiff

Mr Christopher Carr QC, Mr Winston Poon SC and Ms Linda Chan (instructed by Baker & McKenzie) appeared on behalf of the Defendant

Mr Christopher Moger QC and Mr Jeremy Bartlett (instructed by Messrs Clifford Chance) appeared on behalf of the Joint Administrators