Han Yi v. Ngan Shun Wah and Others
Read the full judgment text of HCAP 8/2008 on BabelCite. This High Court CFI judgment was delivered on 21 July 2009.
1. At a hearing held on 21 July 2009, upon the application by Summons taken out by the 1 st to 4 th defendants (“Summons”), I made an Order (“Order”) appointing the 1 st defendant, Madam Ngan Shun Wah, as the sole Administratrix pendente lite (“Administratrix”) of the Estate (“the Estate”) of Yien Chi Ren, deceased (“Deceased”), limited to the purpose (“Purpose”) of protecting and preserving the interest of the Estate in the business (“Business”) registered in the Business Registration Office in
Cited by 7 cases · Cites 2 cases
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HCAP 8/2008 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE PROBATE ACTION NO. 8 OF 2008 ---------------------
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---------------------- Before : Deputy High Court Judge H. Wong, SC in Chambers Date of Hearing : 21 July 2009 Date of Decision : 21 July 2009 Date of handing down Reasons for Decision : 2 September 2009 ----------------------------------------------------- REASONS FOR DECISION ----------------------------------------------------- Introduction 1.At a hearing held on 21 July 2009, upon the application by Summons taken out by the 1st to 4th defendants (“Summons”), I made an Order (“Order”) appointing the 1st defendant, Madam Ngan Shun Wah, as the sole Administratrix pendente lite (“Administratrix”) of the Estate (“the Estate”) of Yien Chi Ren, deceased (“Deceased”), limited to the purpose (“Purpose”) of protecting and preserving the interest of the Estate in the business (“Business”) registered in the Business Registration Office in the name of “Lin Heung Tea House & Bakery” (BR No. 00419495) (“the Firm”) pending the determination of the claim in the present Probate Action. 2.The Order authorizes the Administratrix, inter alia, to bring and defend legal proceedings in the name of the Deceased or the Estate with the view to getting in, protecting, and preserving the Estate limited to the Purpose. 3.I made the Order upon the 1st to 4th defendants’ undertaking (“Undertaking”) to indemnify the Estate of the Deceased against any damages and/or costs which may be awarded against the Estate, expenses and legal costs incurred by the Estate as a result of any steps they have taken or will take for the purpose of protecting and preserving the interest of the Estate in the Business and the acts which the Administratrix is authorized to do under the Order. 4.The following are my reasons for making the Order. Background 5.Prior to his death on 4 March 2008, the Deceased was the owner of the Firm, which carried on the Business of restaurant and bakery in Hong Kong, including the well-known restaurant “Lin Heung Lau” (蓮香樓) in Central District. The Deceased has 6 children, being the 1st to 6th defendants; and a common law wife, being the plaintiff. According to the plaintiff, she had cohabited with the Deceased for some 24 years before his death. 6.The plaintiff is one of the co-executrices and beneficiaries named in a Will dated 10 March 2003 purportedly made by the Deceased (the “disputed Will”). The 1st defendant is named as the other co-executrix in the disputed Will. She and the 2nd and 5th defendants are also beneficiaries under the disputed Will. 7.In the present probate action, the plaintiff seeks to propound the disputed Will. This is opposed by the 3rd to 6th defendants, who allege, inter alia, that the disputed Will had been revoked by destruction. The 1st and 2nd defendants purportedly take a “neutral stance” in this action, although I note from the pleadings that they are being represented by the same solicitors and counsel representing the 3rd and 4th defendants. 8.In the matter before me I am not concerned with the details of the underlying disputes between the parties in this probate action. It is not necessary, indeed inappropriate, for me to volunteer any comments on the merits of the case advanced by the respective parties to the present action. Although Mr Anson Wong, representing the plaintiff, complains that “the way in which the [1st and 2nd defendants] have conducted the probate action is far from candid”, I do not consider that such complaint (whether justified or not) is in any way relevant to my consideration of the Summons. 9.While the parties are locked in legal battle in the present action, it was discovered that a restaurant purportedly bearing the name “Lin Heung Kui” (蓮香居) was set up in about May 2009 and was allegedly held out to the public as a “branch restaurant” of restaurant “Lin Heung Lau” (蓮香樓). 10.The 1st to 4th defendants took out legal action (“Passing Off Action”) against one Tim Heung Tea House Limited (添香茶樓有限公司), hereinafter referred as the “Tim Heung Corporation”, one Ngan Chuen Fai (“CF Ngan”) and one Wong Pak Wing (“PW Wong”) in HCA 1319/2009. The Estate is also named as one of the plaintiffs in the Passing Off Action. The General Indorsement of Claim (which, I pause to observe, looks more like a Statement of Claim than a General Indorsement) alleged, inter alia :
11.In response to the Passing Off Action, CF Ngan produced a Chinese agreement dated 13 January 2007 purportedly signed between him and the Deceased, bearing the title “關於蓮香茶樓及餅家業務經營股權轉讓合同書” (“Transfer Agreement”). On the face of the Transfer Agreement, the Deceased had agreed to transfer his 100% interest in the Firm to CF Ngan at the consideration of HK$20 million. 12.CF Ngan has alleged through his solicitors that he has already paid a total sum of HK$17 million to the Deceased by 4 instalments and that he would also be willing to pay the final instalment of HK$3 million. The reason why the final instalment was not paid was allegedly because by the time when payment became due, the Deceased had already passed away and no personal representative could give valid receipt of the payment as a result of the disputes in the present probate action. 13.CF Ngan further produced another Chinese agreement entitled “解除聘任及授權管理協議合同書” (“Termination Agreement”) dated 13 January 2007. The Termination Agreement was purportedly signed by the Deceased on behalf of one Tien Heung Restaurant Limited (天香大酒樓有限公司, hereinafter referred to as “THRL”), and CF Ngan purportedly on behalf of the Firm. THRL is a company in which the Deceased, his siblings and one Lin Heung Bakery & Restaurant Limited (“LHBRL”) are major shareholders. CF Ngan himself is a 2% shareholder of THRL. THRL used to be the manager of the Business of the Firm under a Chinese Management Agreement dated 10 April 2006 signed between it and the Firm. Under the Management Agreement, in consideration of THRL providing the management services to the Firm, THRL would be paid a monthly management fee of HK$30,000 and an annual bonus representing 50% of the pre-tax profits of the Firm. The effect of the Termination Agreement is to terminate the Management Agreement by mutual consent. 14.If the Transfer Agreement and the Termination Agreement are valid agreements, it would appear that CF Ngan and the other defendants in the Passing Off Action would be able to say that they have the legal right to carry on the business of “Lin Heung Kui”, and to hold it out as related to the restaurant business of “Lin Heung Lau” — CF Ngan having bought out the Deceased’s interest in the Firm, and the management rights of THRL having been terminated by the Termination Agreement. The 1st to 6th defendants in the present action do not accept, however, that the Transfer Agreement and the Termination Agreement are valid agreements. The appointment of the Administratrix 15.The court does not appoint an administrator pendente lite automatically merely because pending resolution of a probate dispute, there is no personal representative empowered to administer the estate. In the case of an intestacy, s. 10 of the Probate and Administration Ordinance (Cap. 10) provides that where any person dies leaving estate in Hong Kong in respect of which he dies intestate, such estate shall vest in the Official Administrator who may, if he thinks fit, receive and take possession of the same until administration is granted in respect thereof. 16.The court only appoints administrators pendente lite when it is necessary or expedient to do so : Hung Jin Mui v Tang Chui Yuk Angela, HCAP7/1997, unreported, 11 February 1998. Whether one uses the term “necessity” or “expediency”, the court would only make an order of appointment having regard to the actual circumstances of the case. Obviously the actual circumstances of each case vary—in some cases the principal concern may be that pending resolution of the probate dispute, it is necessary to protect the estate by collecting, managing or safeguarding the assets; in other cases there may be other concerns, for example, the necessity of taking legal action against third parties in order to protect the estate while the probate dispute awaits its resolution. 17.There is a well-established distinction between the validity of the acts of the executor and administrator before grant of probate or administration. An executor derives his title from the will and the grant of probate merely confirms his authority, whereas a grant of letters of administration confers authority on an administrator : see Parry v Kerridge on the Law of Succession (12th ed.) at paras. 18-22. Accordingly, where a person dies intestate, or allegedly intestate, difficulties may arise when legal proceedings are required to be taken on behalf of the estate before letters of administration are obtained. Some academics take the view that in exceptional cases where urgent actions are required to protect the estate, beneficiaries who are potentially entitled to apply for grant of administration may take proceedings before grant. For example, in Sherrin & Bonehill, The Law and Practice of Intestate Succession (3rd ed.) (2004), the statement was made that the “powers of an administrator to act before grant are exceptional and limited in effect to essential actions to preserve and protect the deceased’s estate”. No authority, however, was cited by the authors in support of this statement. 18.Recently, in the case of Caudle v LD Law Ltd [2008] 1 WLR 1542, Wyn Williams J gave judicial approval to the views of Sherrin & Bonehill, when the learned judge held at paras. 32 and 36 of his judgment :
19.However, the judicial approval bestowed by Wyn Williams J on the statement in Sherrin & Bonehill does not extend the scope of the statement. It is only in exceptional circumstances that beneficiaries potentially entitled to a grant of letters of administration may assert right of possession over assets of the estate, or to take proceedings to enforce that right. As Wyn Williams J held at para. 38 of his judgment :
20.Mr Albert Yau, counsel for the 1st to 4th defendants, submitted that at the time when the Passing Off Action was issued, there were exceptional circumstances which justified the taking out of urgent legal proceedings in order to safeguard the interest of the Estate. Whether that is so I do not need to decide. 21.What is important, in my judgment, is that upon the production of the Transfer Agreement and the Termination Agreement and the emergence of the allegations made by CF Ngan to the effect that the Deceased had transferred the Business and his entire interest in the Firm to him, the Passing Off Action now takes on quite a different colour. The battlelines in the Passing Off Action are now drawn out around the Transfer Agreement and the Termination Agreement, and the proceedings in that action would have to be resolved in the light of allegations made by CF Ngan. It is doubtful whether the continued prosecution of the Passing Off Action can be justified on ground of urgency or exceptional circumstances, and as there is a distinct possibility that the Passing Off Action may become protracted and new claims may be added to that action, it is certainly not sufficient for the 1st to 4th defendants to rely on the very limited rule which allows beneficiaries to take legal proceedings before grant. The 1st to 4th defendants would require a much more solid basis for the continued prosecution of the Passing Off Action. The application for an appointment of an administrator pendente lite provides a way for resolving the problem facing the 1st to 4th defendants. 22.Although the 5th and 6th defendants have not joined in as parties to the application, they have indicated that they support the Summons and the appointment of the 1st defendant as the Administratrix. 23.The plaintiff, represented by Mr Anson Wong, does not support the Passing Off Action, but indicates that she does not oppose the appointment of the 1st defendant as the Administratrix so long as the appointment is limited to the Purpose mentioned above. However, in order to assist the court, Mr Wong has very properly made submissions to this court on certain matters which he submits I should take into account in deciding whether to accede to the application made by the 1st to 4th defendants. 24.Mr Wong submits firstly that there is little prospect of the Passing Off Action succeeding in the light of the Transfer Agreement and the Termination Agreement. As the Passing Off Action will in due course be tried and the merits of the claims in that action will be investigated upon by a different court, the less I say about the merits of that action, the better. I do not therefore propose to make any specific comments of the merits of that case save to say that my attention has been drawn by Mr Yau to various documents, including the documents which have been sealed in an envelope and produced in the affirmation of Lai Oi Yan (a consultant of the 1st to 4th defendants’ solicitors) described as the “Bedside Documents”, and I cannot agree with Mr Wong’s submission that the Passing Off Action is doomed to fail. The Business appears to be of very substantial value, and Mr Yau submits that it far exceeds the HK$20 million which the Deceased had allegedly agreed as the consideration for selling his interest to CF Ngan. Mr Yau submits that it did not make sense for the Deceased to have agreed to enter into the Transfer Agreement and Termination Agreement, and he has drawn my attention to the circumstances and documents which cast doubt on the validity of those agreements. I do not think that it is wise for me to go into the details at this stage, but I am persuaded by Mr Yau there are good reasons for the 1st to 4th defendants to take the view that the continued prosecution of the Passing Off Action is in the interest of the Estate. It is therefore necessary to ensure that the Passing Off Action is properly constituted and does not fail merely on the ground that no letters of administration have been granted because of the disputes in the present probate action. 25.The second submission of Mr Wong is that the 1st to 4th defendants should have applied for a representation order under O. 15 r. 6A or O. 15 r. 15, and there is no need for them to apply for an appointment of an administrator pendente lite. As far as O. 15 r. 6A is concerned, I share the doubt of Mr Yau regarding its application to the present case. O. 15 r. 6A(3) provides that an action purporting to have been commenced by or against a person shall be treated, if he was dead at its commencement, and the cause of action survives as having been commenced by his estate or against it, whether or not a grant of probate or administration was made before the commencement. On its face this sub-rule applies to the situation where an action has been purportedly commenced by or against a person who was already dead at the time when the action is commenced, and the action is treated as having been commenced by or against his estate if the cause of action survives. Sub-rule (4) goes on to provide as follows :
26.As can be seen from sub-rule (4) quoted above, the order to be obtained under that sub-rule is “an order that the proceedings be carried on against the person so appointed”. In the case where an action is commenced by, or treated as commenced by, the estate of a deceased person, it is not easy to see how an order that the proceedings be carried on against the person appointed to represent the estate would enable the proceedings to be effectually prosecuted by the estate. It is doubtful how sub-rule (4), on its wordings, could apply to facilitate the prosecution of actions commenced by, rather than against, the estate of a deceased person. It is not necessary for me to resolve these doubts in the context of the present Summons. I am satisfied, however, that if the Passing Off Action is to be continued, it would be most undesirable to require the 1st to 4th defendants to prosecute that action with one hand tied behind their back— given the doubts I have in regard to O. 15 r. 6A in its application to the actions commenced (or treated as having been commenced) by the estate of a deceased person, I do not accept Mr Wong’s submission that the 1st to 4th defendants should have applied for a representation order under O. 15 r. 6A instead of applying for the appointment of a grant of administration pendente lite. 27.As regards O. 15 r. 15, Mr Wong refers me to the case of Re Estate of Luk Kim Ying [2008] 5 HKLRD 743. In that case, Poon J held that while a party could not purport to sue on behalf of an intestate estate until and unless he was granted letters of administration, as a beneficiary of an unadministered estate, he may sue in his personal capacity if his claim is connected with the proper administration of the estate. Where the person has such locus to sue, it is incumbent upon him to join the personal representative of the estate to represent the estate, and if there is no such personal representative, the court may cure the irregularity that may otherwise arise by invoking O. 15 r. 15(1) to make a representation order to appoint a person as the representative of the estate. In the case before him, the learned judge was of the view that parts of the plaintiff’s claims in that case were connected with the proper administration of the estate in question, and a representation order was made under O. 15 r. 15(1) to appoint the plaintiff as the representative of the estate. The learned judge rejected the argument that O. 15 r. 15 only applied to ongoing proceedings to which the deceased person, when living, was made a party, had died. That argument was rejected as too narrow. 28.I am of the view that the decision in Luk Wing Ying must be read against its own facts. In that case Poon J invoked O. 15 r. 15 merely to cure the irregularity arising from the non-joinder of the personal representative of the estate. However, the invocation of O. 15 r. 15 was only made after the learned judge had arrived at the conclusion that the plaintiff had the locus to commence the action in his personal capacity to the extent that part of his claims were held by the learned judge to be connected with the proper administration of the estate. In other words, the learned judge did not hold that O. 15 r. 15 could be invoked to cure the lack of locus, but only to cure a procedural irregularity after the locus question had been resolved in favour of the plaintiff in the case before him. 29.The present case is concerned with a wholly different situation. The Passing Off Action is not an administration action and the claims made therein are not claims connected with the proper administration of the Estate. The lack of locus on the part of the 1st to 4th defendants to prosecute the Passing Off Action before the grant of letters of administration is a substantive issue and not merely a procedural irregularity. It is doubtful that O. 15 r. 15 could be effectively invoked to cure the problem arising from a lack of locus. As said, I do not think that it is desirable to ask the 1st to 4th defendants to proceed under O. 15 r. 15 for a representation order with such doubts hanging over their heads. A much more effective and neater way of resolving the problem is to make a grant of administration pendente lite limited to the Purpose set out above. 30.For these reasons, I considered that my discretion should be exercised in favour of the making of a limited grant by appointing the 1st defendant as the Administratrix pendente lite. 31.I will add, for completeness’ sake, that in the Summons, the 1st to 4th defendants seek appointment of the 1st defendant as the Administratrix also for the purpose of “protecting and preserving the interest of the Estate in the business and shareholding …… in [THRL] and [LHBRL]” (the “additional Purpose”). It will be recalled that THRL used to be the manager of the Firm and LHBRL is a company holding shares (indeed it is a major shareholder) in THRL. Mr Wong has made some very powerful arguments against the grant of administration pendente lite extended to the additional Purpose. Recognising the force of Mr Wong’s arguments, and with a view to avoiding the risk of an adverse ruling against him, Mr Yau in his reply indicated to the court that he would withdraw that part of the Summons relating to the additional Purpose but would reserve his clients’ position to apply for extension of the Purpose in the future to include the additional Purpose. In these circumstances, I would make no ruling on that part of the Summons which has been withdrawn by Mr Yau. Suffice to say that if Mr Yau had persisted with that part of the Summons, on the present evidence he would have great difficulty in persuading me to accede to the same. I am however prepared to give the 1st to 4th defendants liberty to apply in this regard. Costs 32.On the question of costs, Mr Wong seeks to persuade me to order costs to be paid by the 1st to 4th defendants to the plaintiff on an indemnity basis. Mr Yau submits that the costs of the parties should be paid out of the Estate, as the grant of administration pendente lite was made ultimately for the benefit of the Estate. 33.I do not see any basis to order indemnity costs at all. Although the making of an indemnity costs order is not confined to situations where proceedings are scandalous or vexatious, or have been initiated or prosecuted maliciously, or for an ulterior motive or in an oppressive manner, or in circumstances that constitute an affront to the court (see, Town Planning Board v Society for Protection of the Harbour Limited (No. 2) [2004] 7 HKCFAR 114), indemnity costs order should only be made in “appropriate” cases. I do not see anything in this case which makes it appropriate to order indemnity costs. Although at the time when the Summons was taken out on 15 June 2009, the 1st to 4th defendants did not indicate that they would be prepared to give the Undertaking, the Undertaking was offered by them (through their solicitors) on 3 July 2009 and I do not consider that as coming too late. In any event, even without the Undertaking, it is not necessarily the case that this court would not be prepared to order the grant of administration pendente lite. 34.I consider that costs of both parties should be paid out of the Estate. I accept that the application for the grant is made for the benefit of the Estate and I do not see why the 1st to 4th defendants should be made to bear the costs of the application. As far as the plaintiff is concerned, she is in fact in a privileged position in that if the Passing Off Action succeeds, she will get the benefit of the fruits of that success as a beneficiary of the Estate (if the disputed Will is admitted to probate, as she contends it should be). Even if the action fails, the plaintiff would be protected from any costs exposure as a result of the Undertaking. 35.However, the 1st to 4th defendants have partly failed in their application. By withdrawing that part of the Summons relating to the additional Purpose at the last minute, they should be deprived of part of their costs. I have decided, on that score, to reduce their costs by 30%. 36.In the end, the costs order that I made is as follows :
Mr Anson Wong, instructed by Messrs Simon S.M. Kwok & Co., for the Plaintiff Mr Albert Yau, instructed by Messrs Hobson & Ma, for the 1st to 4th Defendants Messrs Fairbairn Catley Low & Kong, for the 5th and 6th Defendants, attendance excused |
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