De Wong Au Edith v. Kho Sin Tek Henry and Another

HCAP12/2000

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

PROBATE ACTION NO.12 OF 2000

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BETWEEN

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AND BETWEEN

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Before : Hon Yam J in Court

Date of Hearing : 8 November 2004

Date of Judgment : 8 November 2004

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J U D G M E N T  (NO. 2)

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1.There are several applications to vary several orders nisi on costs before me.

The 1^st application by Lisa

2.The first one is made by Oscar Wong’s estate in respect of paragraph 9 of my order nisi as follows :

(1)	that Lisa’s costs (Lisa is the personal representative for Oscar) against Henry be paid out of Edith’s share of the estate initially (subject to reasonable steps to be taken by Lisa to recover such costs from Henry and refund the estate if any amounts (after deductions of costs of taxation and recovery) are recovered from Henry);
(2)	alternatively, payment of Lisa’s costs against Henry be paid out of the whole of the estate initially (subject to reasonable steps to be taken by Lisa to recover such costs from Henry and refund the estate if any amounts (after deductions of costs of taxation and recovery), are recovered from Henry).

3.The original order nisi was that there be no order as to costs of this action (by original action and by counterclaim) as between (1) Oscar (by counterclaim) and (2) Edith (by original action and counterclaim).

4.In this respect, I agree with Mr Horace Wong, SC for Edith that my original order nisi should stand.  In effect Lisa is now seeking her costs to be paid by Edith if she cannot recover the same from Henry after reasonable efforts made.  At the trial Lisa ran a similar case as that of Edith.  The case is basically a case between Edith and Oscar on one camp and Henry on the other over the issue as to whether Henry was the adopted son of Lucien.  There was no dispute or lis between Edith and Lisa and they were not adverse parties.  The trial was conducted in such manner as though Edith and Lisa were co-plaintiffs and that was why Edith and Oscar’s case was on one side and Henry’s case was on the other side.  Thus the costs of this action were not incurred to resolve any controversy or lis between Edith and Lisa.

5.Lisa in seeking her costs against Henry in the way that they should be paid out of Edith’s share in the estate would in effect made Edith an insurer of Henry for Lisa’s costs.  That should not be allowed and, in the end, I rejected the application of Lisa and paragraph 9 of my order nisi is now made absolute.

The 2^nd application of Lisa

6.The 2^nd application by Lisa is in respect of paragraph 10 of my order nisi.  Lisa applied for an order that Lisa’s costs in the original action and by the counterclaim should be paid by Henry on indemnity basis.  Henry in this respect applied that what he has to pay should be restricted to the counterclaim but not the original action.  (He also applied that his costs and Lisa’s costs should be paid out of the estate of Lucien.)

7.I accept the submissions of Mr Lee Tung Ming, counsel for Lisa, that the costs should be taxed on indemnity basis for the following reasons as stated in the submissions of Mr Lee namely, as follows :

(1)	Henry was the one who drafted the joint Oath by Administrators, the Affirmation of Identity by Yu Pui Man and Edith’s letter the Probate Registry;
(2)	Henry signed the joint Oath by Administrators;
(3)	he procured Edith to sign the joint Oath by Administrators and the letter to the Probate Registry and he procured Ms Yu to sign the Affirmation of Identity; and
(4)	he had all those documents submitted to the Probate Registry for the purpose of obtaining a grant for himself and Edith on the basis that he was the adopted son of Lucien.

8.The court at the trial found that Henry was not the adopted son and it was doubtful whether the adoption ceremony as described by him took place back in 1968.  Henry was found by the court to be acting dishonestly, unprofessionally and deliberately by misleading Oscar in order to prevent him from gaining knowledge of Henry’s application as a co-administrator of the estate of Lucien.  His evidence given at the trial was found to be incredible and dishonest.  What he described to be the adoption ceremony was rejected by the court.

9.Further, the way Henry conducted the action had also caused the trial to lengthen in the following manner :

(1)	In his defence to Edith’s Statement of Claim, he did not admit Oscar was the full blood brother of Lucien and in his Further and Better Particulars he stated that Lucien had no whole blood brother.  It was only belatedly, during the trial, that he admitted to the court he had always been told by his own mother that Oscar and Lucien were full blood brothers.
(2)	He waited for all others to put in their witness statements before he put in his, and, as a solicitor, he must have appreciated form the outset that, given the nature of the case and his claim as the adopted son, he would have to give evidence in the trial.

10.The authorities cited to me by Mr Lee, namely : Wang Din Shin v. Nina Kung, HCAP8/1999; Sung Foo Kee Ltd v. Pak Lik Co. (a firm) [1996] 3 HKC 570; and in particular Choy Yee Chun v. Bond Star Development Ltd [1997] HKLRD 1327, decided that pre-action conduct of the litigant is also relevant to the consideration whether indemnity costs should be imposed.  I accept the submission of Mr Lee that in this case indemnity costs should be imposed against Henry.

11.My original order nisi in paragraph 10 included both the original action and the counterclaim.  Clearly, Lisa succeeded both in the original action and the counterclaim and Henry lost both in the original action and counterclaim.  The nature of the issues involved in the original action and the counterclaim basically mirrored each other and, that is, the core issue was whether Henry was an adopted son of Lucien.  Lisa contended that Henry was not an adopted son whereas Henry contended that he was, but he lost both in the original action and the counterclaim.  Accordingly, Henry should pay Lisa the costs of the original action and the counterclaim on indemnity basis.  Thus paragraph 10 of my order nisi is now made absolute by an amendment that after the phrase “by original and by counterclaim”, it is followed by “on indemnity basis, to be taxed if not agreed, with certificate for two counsel”.

The 3^rd application

12.Paragraph 11 of the order nisi is basically made to the effect that Henry in the original action and counterclaim and Edith in the original action and counterclaim should indemnify the estate for the costs of HSBC Trustee (Hong Kong) Limited for their search for testamentary scripts and the costs of the appointment of HSBC Trustee (Hong Kong) Limited.  Edith applied to amend that the aforesaid two sets of costs and submitted that they should be borne by the estate on trustee basis.  There was not any decision on these two sets of costs in my original judgment.  In the first place, I want to point out that the sealed copy to include paragraph 11 is wrong.  The question now is what order should I make in respect of these two sets of costs.

13.In this respect, I agree with Mr Wong for Edith in that the appointment of HSBC as the administrator and to make a search of testamentary scripts are basically matters for the benefit of the estate.  Both Edith and Lisa opposed the order for search of testamentary scripts although Henry supported the idea.  The fact that certain shares were found by the administrator in the search does not mean that Edith would have to bear the costs of such a search.  Accordingly, paragraph 11 should be amended and read as follows :

“The costs of HKSB Trustee (Hong Kong) Limited in respect of the search for testamentary scripts and the costs of their appointment as the administrator of Lucien Wong’s estate shall be borne by the estate on trustee basis.”

Lisa’s and Henry’s further claims

14.Further, Lisa claims in the alternative that her costs against Henry be paid out of the estate initially subject to refund to the estate if any of the costs in the question is recovered from Henry.  Henry also claims that he should not pay anybody’s costs and his own costs should be paid out of the estate.

15.In this respect I entirely agreed with Mr Wong for Edith.  This is a piece of hostile litigation.  The authority cited by Mr Wong points to the fact that the unsuccessful party should pay the costs and, as in the words of Kekewich J in Re Buckton [1907] 2 CH 406, at page 415 :

“… when once convinced that I am determining rights between adverse litigants I apply the rule which ought, I think, to be rigidly enforced in adverse litigation and order the unsuccessful party to pay the costs.”

This is confirmed in the substantial cases : Critchell v. Critchell (1863) 3 Sw & Tr 41, Cross v. Cross (1864) 3 Sw & Tr 292, Dean v. Bulmer [1905] P.1.  There is no basis, in my view, that Lisa’s costs or Henry’s costs should be paid out of the estate of Lucien Wong.

Directions on distribution

16.That left me with a few directions concerning distribution.  Mr Wong asked for distribution for the estate.  The administrator put forward certain calculations and contended that $30 million should be reserved for the outstanding liability of the estate.  Mr Wong’s side calculated the liability and came to little bit less than $15 million.

17.Basically it was the misconception of the administrator as submitted by Mr Wong that Lisa’s costs come up to $7.6 million and therefore they conceded that the estate may be liable to the extent of two times $7.6 million and that is $15.2 million.  I accept Mr Wong’s submission that that was a misconception and I also accept the calculations of Mr Wong coming up to be a little bit less than $15 million.

18.But there may be other unknown contingencies.  On the safe side, I think the reserved amount should be $20 million and so the administrator is directed that subject to a reservation of $20 million for the possible liabilities of the estate, the estate should been distributed to Edith and Oscar.

19.In respect of Oscar’s share, it had always been into a separate account pending the grant of administration under Oscar’s estate.  In this respect, Mr Lee asked for the distribution into the account in the name of Oscar in another bank.  I do not consider that should be done.  I do not see why and in what way it will benefit Oscar’s estate.

Two further applications of Lisa

20.First Lisa applied that her own costs in representing Oscar Wong’s estate in these proceedings shall be paid out of the share of Oscar Wong in Lucien Wong’s estate.  I cannot see why that should not be done.  Lisa was conducting the proceedings for the benefit of Oscar’s share in Lucien’s estate.

21.Lisa’s second application concerned with Oscar Wong’s liability to estate duty for his share in Lucien Wong’s estate.  Lisa wanted that to be paid out of Oscar Wong’s share in Lucien Wong’s estate.  Since Oscar Wong’s own estate would also attract estate duty and that has not been paid, I do not find any urgency in ordering that liability to be paid out right away from Lucien Wong’s estate in respect of Oscar Wong’s share therein.  So I make no further direction in that respect.

22.I think I have covered everything except the costs for this hearing and the application.  I make the following order of costs for this application :

(1) Edith’s cost in this application and the hearing today be borne by Lisa.

(2) One-third of Lisa’s costs in this application shall be borne by Henry on indemnity basis.

(3) Lisa’s own costs and her liability to pay costs shall be paid out of Oscar’s share in Lucien Wong’s estate.

(4) All orders for costs shall be taxed if not agreed.

Mr Horace Wong, instructed by Messrs Chaine, Chow & Barbara Hung, for the Plaintiff

1^st Defendant, in person

Mr Lee Tung Ming, instructed by Messrs Stephenson Harwood & Lo, for the 2^nd Defendant