Re Chan Hung Mou

HCCA 2740/2007

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CAVEAT NO. 2740 OF 2007

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Before:  Hon Lam J in Chambers

Date of Hearing:  3 February 2009

Date of Judgment:  12 February 2009

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J U D G M E N T

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1.The Deceased died intestate on 18 September 2005.  His surviving widow [“the Widow”] applied for grant but a daughter born out of wedlock [“the Daughter”] contended that in her stead a professional accountant should be appointed.

2.In a decision handed down on 11 November 2008, Master J Wong ruled that Letters of Administration in respect of the estate of the Deceased is to be granted to the Widow, if entitled to.

3.The Daughter now appeals against that decision.

4.Although reference was made to Order 58 in the Notice of Appeal, since this is a non-contentious probate matter the appeal should be considered under Rule 62 of the Non-Contentious Probate Rules, see Order 1 Rule 2(2) of the Rules of the High Court.

5.Counsel did not research on whether the approach of the court in dealing with an appeal from a master under Rule 62 should be different from that in ordinary civil proceedings under Order 58.  Halsbury’s Laws of England 4^th Edn Reissue (2000) Vol 17(2) para.101 said the following as regards appeals in non-contentious probate business,

“Where a discretionary jurisdiction is given to the court, the judge is in no way fettered by the previous exercise of the district judge’s or registrar’s discretion.  The judge is entitled to exercise his discretion as though the matter came before him for the first time.”

This is confirmed by a Practice Note at [1949] WN 475.

6.In other words, the approach is similar to an appeal under Order 58.

7.The Master set out the relevant legal principles at paragraph 9 of his judgment.  Counsel does not seek to challenge the same.  Section 36 of the Probate and Administration Ordinance gives the court a wide discretion in the appointment of an administrator having regard to the interest of the estate as a whole.  Rule 21 of the Non-contentious Probate Rules gives priority to the Widow.  But that priority can be displaced if the Daughter can persuade this court that the interest of the estate requires the Widow to be passed over.

8.Although the Daughter relies on a number of matters, Mr Thomson told this court that the Daughter is not saying that the Widow deliberately concealed assets of the estate or took steps to reduce the size of the estate to the detriment of the beneficiaries.  Counsel based his submissions on a case of neglect of duties on the part of the Widow when she prepared the schedule of properties for estate duty purposes.

9.The Widow had omitted reference to the share held by the Deceased in Ting Chong Transportation Company Limited in the first schedule of property filed with the Estate Duty Office.  It was only after the solicitors for the Daughter raised query in that respect that the share was included by way of an amendment.  The value of the share was stated to be $2,503,797.63 and dividends accrued were $3,559,773.28.  They represented a very significant part of the assets of the estate since apart from these assets, the estate only has a value of $1,461,407.87 plus 1/3 share in the matrimonial home valued at $6,000,000.

10.The Widow explained she had previously thought that the share in Ting Chong was included in an exercise of transferring the major assets of the Deceased to a Panamanian Company between 1988 and 1993.  Upon query raised by the solicitors for the Daughter, the Widow realized that her belief was mistaken and she made the amendment accordingly.

11.Mr Thomson submitted that it would be naive to accept that explanation.  The Master obviously disagreed.  For my part, I see nothing inherently implausible in the Widow’s explanation.  In my experience, it is not uncommon that personal representative found it necessary to amend the schedule of properties due to omissions.  It can of course be said that the Widow should have done better.  A company search would reveal that the share had not been transferred.  But I do not regard such failure as so serious that the Widow should be passed over in the appointment of administratrix.

12.Mr Thomson also suggested that the dividends accrued might not be accurately reflected in the schedule of properties.  But it is sheer speculation.  Given that the figure had been accepted by the Estate Duty Office, it can be taken that there had been some verifications by those in that office.

13.The same can be said with regard to Mr Thomson’s skepticism in respect of the liability to the Widow concerning medical expenses incurred for the treatment of the Deceased.

14.Mr Thomson urged this court to bear in mind the previous conflicts between the Widow (and her own children) and the Daughter in the exercise of discretion.  I take the relationship between the parties into account.  But as correctly said by the Master, hostility between family members per se should not be a reason for passing over a person who has priority in appointment unless it can be demonstrated it is likely that by reason of such hostility the person would administer the estate in a manner not in accordance with the law.

15.A further caveat is that one must focus on the issue at hand.  As observed by Litton V-P (as he then was) in Lefkowitz v The Bank of New York [1996] 3 HKC 591 at p.599D, the issue is essentially an administrative matter.  Further, at p.594D, it was emphasized that the court is not called upon to determine the parties’ rights and liabilities and no resolution of disputes of fact is called for.  Thus, the evidence on past hostilities should be circumscribed.

16.In the present case, the Widow had included the Daughter as one of the children of the Deceased in her affirmation in support of her application for grant.  Though she had mistakenly stated that she was the sole beneficiary (a mistake she had duly corrected), it was probably a slip on the part of those preparing the affirmation.

17.Having considered all the evidence before me on past conflicts (and it is not necessary to set them out in details in this judgment) I do not think the Daughter had made out a case that such conflicts should lead this court to infer that the Widow would administer the estate in a manner not in accordance with the law to the prejudice of the Daughter.

18.It is also said that there is a conflict of interest because of (a) the Widow’s claim for reimbursement of medical expenses paid by her for the treatment of the Deceased; and (b) the potential challenge to the gift of the bearer share in the Panamanian company to her son.

19.On (a), as mentioned, the Estate Duty Office had checked the medical expenses.  In this connection, one would expect checking not only in terms of the receipts for such expenses but also that they were paid by the person named as the creditor, viz. the Widow.  In any event, the Administratrix is obliged to account for the same in the account of the estate.  If the Daughter as a beneficiary found anything amiss in this regard, she can come to court to seek relief by way of administration proceedings if she deems fit.

20.On (b), the Daughter has not produced any evidence to show that a challenge to the gift to Philip has any real basis.  Until she is able to do so, this matter should be left out of the equation.

21.Lastly, Mr Thomson submitted that a professional accountant may be able to trace some assets of the Deceased which have not been revealed so far.  With respect, that is a very far-fetched suggestion.  Given that the Daughter is not suggesting that the Widow has deliberately concealed assets, and there is no evidence whatsoever to identify or suggest that the Deceased might have other assets that had to be traced, it is equally possible (if not more probable) that an accountant cannot trace more assets.

22.If a professional accountant were to be appointed, he would have to be remunerated.  And it is not disputed by the Daughter that the accountant who has given a quote of his fees might have to charge for more than what has been quoted.  Given the size of the estate, it should not be unnecessarily burdened with substantial professional expenses without a good justification.

23.In this connection, I also take note of the wishes of the other beneficiaries.  Out of the eight children (four born out of wedlock), the Daughter appears to be the only person opposing the grant to the Widow.

24.According to the evidence, the net estate is not that big, particularly when the deduction for the medical expenses is taken into account.  I do not see any reason to suggest that the Widow is not capable of administering the same properly.

25.Taking all the matters into account, I am of the view that the Master came to the right decision.  The appeal is therefore dismissed.  Parties agreed that costs should follow event.  I order that the Daughter shall pay the costs of the Widow in this appeal, such costs to be taxed if not agreed.

Mr James Thomson, instructed by Messrs Mallesons Stephen Jaques, for the Caveator

Mr Erik Shum, instructed by Messrs King & Company, for the Person Warning