Clemencia Manansala Gallagher v. Mark Edward Kirkham
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HCMP1850/2009 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE MISCELLANEOUS PROCEEDINGS NO. 1850 OF 2009 ------------------------------
Before : Hon Yam J in Chambers Date of Handing Down Reasons for Judgment : 19 August 2010 Date of Hearing in respect of Costs : 17 November 2010 Date of Handing Down Judgment on Costs : 10 December 2010 ---------------------------------------------- JUDGMENT ON COSTS ----------------------------------------------- 1.The facts of this case have already been stated in my Reasons for Judgment handed down on 19 August 2010. I shall not repeat them here. Suffice it for me to say that I have concluded that the plaintiff is entitled to the whole estate of her husband. That is against all the submissions by the 2nd defendant that the estate should be transferred to the said Minotaur Trust under which the 2nd defendant is the trustee and it has the discretion to distribute the income of the trust to the plaintiff for her life only. 2.The plaintiff asked for costs of the whole proceedings from the 2nd defendant on indemnity basis. The 2nd defendant asked for costs to be paid to all parties including itself from the estate. The 1st defendant, being the Executor of the Estate, remained neutral throughout the proceedings but, being the executor, he has the duty to protect the assets of the estate from unnecessary depredations. Hence he submitted that costs should follow the event in this case in the usual way and he shared the same stance as the plaintiff’s. 3.It is common ground between the parties that in respect of a trustee, under Order 62, rule 6(2), the general rule is that the trustee shall, in the ordinary course of event, be entitled to be paid out of the fund held by the trustee unless the court otherwise orders on the ground that he has acted unreasonably or has in substance acted for his own benefit rather than for the benefit of the fund. 4.The 2nd defendant has never sought advance protection in defending these proceedings either by seeking the beneficiary’s consent or a Beddoe order under Order 85. Both the plaintiff and the 1st defendant submitted that the 2nd defendant’s conduct before and after the commencement of these proceedings is unreasonable and the 2nd defendant was defending the plaintiff’s application for its own benefit. 5.Although the 2nd defendant professed that it was adopting a neutral position, it was as early as 7 October 2009 that it stated that it intended to have the proceedings struck out. There and then and thereafter it was warned by the plaintiff’s solicitor that it would be at the risk of losing its rights to an indemnity from the Trust. The 2nd defendant did not take heed of this warning. 6.The 2nd defendant stated that it was motivated out of its obligation towards Mr Gallagher’s wishes. However those wishes were never documented either formally by Mr Gallagher, or in any contemporaneous file note. As I have held in my judgment, these supposed wishes were never communicated by the late Mr Gallagher to the 2nd defendant. 7.As stated in my previous judgment the construction of the Minotaur Trust is so clear that there is no doubt the plaintiff should be given the whole of the estate of the deceased. The Secondary Beneficiary would only come into play when the plaintiff predeceased the deceased. 8.However, the 2nd defendant insisted and defended these proceedings by submitting that the plaintiff only had a life interest, which position cannot be supported from the Minotaur Trust which was actually drafted by the 2nd defendant itself. 9.On 29 January 2009 the 2nd defendant even claimed that the deceased had specifically instructed them that the residuary estate be left to the Second Beneficiary and his brother Martin Gallagher. However Martin Gallagher was never mentioned in the Minotaur Trust. In any event Martin Gallagher executed a deed of renunciation and disclaimer on 20 March 2009. The other 2 named Secondary Beneficiaries, Nora Gallagher and John Hand, also executed the similar deed of renunciation and disclaimer in April 2009. 10.Then the 2nd defendant claimed that the default beneficiary should be Chanel College itself, a position taken well after the Contingent Secondary Beneficiary, John Hand, principal of Chanel College, had disclaimed any personal interest in the Minotaur Trust. That was 7 July 2009. This position in any event is in conflict with the provisions of Clause 3.13 in which the International Red Cross is named. 11.On 23 June 2009, i.e. three months prior to the commencement of the proceedings, the plaintiff made a “without prejudice offer save as to costs” to the 2nd defendant, inviting renouncement under the Will and a cash payment in lieu of trustee fees. Such offer was immediately rejected by the 2nd defendant on 29 June 2009. 12.Then on 28 July 2009 the 2nd defendant suddenly alleged that the plaintiff’s position appear to have been driven by apparent hostility to her late husband. It then drew attention to provisions of the Minotaur Trust in respect of “hostile beneficiaries”. 13.This allegation is unsupported by any foundation. It was made only to prevent the plaintiff from enforcing the terms of Minotaur Trust since that was the only possible ground of refusing a beneficiary to have her entitlement. It was groundless and hurtful. 14.The 2nd defendant’s defence was, in the words of counsel for the plaintiff, vexatious and oppressive. This was echoed by the Gallagher family in Ireland. This view can be found in a letter from the 1st defendant’s solicitors dated 3 November 2009:
15.On 4 December 2009 there was a without prejudice meeting trying to resolve the matter. However the 2nd defendant’s ongoing fees were listed as agenda item 2 whereas the plaintiff’s needs did not feature on the agenda at all. There was repeated reference by the 2nd defendant all along in respect of protecting the prospect of future fees. Thus I accept the plaintiff’s submission that the 2nd defendant’s position in maintaining the Minotaur Trust or any resettlement thereof for the duration of the plaintiff’s life was motivated not out of any obligation towards Mr Gallagher’s wishes but by its own benefit of having its interest in the annual fees. 16.At the eve of the hearing last time, the 2nd defendant applied to have the proceedings stayed. That was in the first place a misconceived application. The 2nd defendant being a trustee of the Minotaur Trust should be motivated to have the matter resolved by a construction of the Minotaur Trust and it should maintain a neutral attitude. However the 2nd defendant adopted a very hostile position and put forward a number of arguments which were groundless and cannot be supported by the wordings of the Minotaur Trust. This is very prominent in my previous judgment. Thus the application to stay the proceedings was probably motivated by its interest that there were insufficient assets in the Minotaur Trust beyond the GBP10 settled sum. In order to recover its fees, the 2nd defendant wanted to defer any consideration of the issues until such time as the 1st defendant has collected in a substantial part of the residual estate. 17.Further after the plaintiff filed and served his submissions on 23 July 2010 as directed by the court, the 2nd defendant alleged that the plaintiff had disclosed without prejudice a letter and it objected to the court to peruse those submissions. The court did not know the content of the dispute and therefore at the eve of delivering the previous judgment, informed parties that those submissions would not be read by the court until and unless this dispute is resolved. The 2nd defendant was also notified that it should make proper application raising such an issue. However its contention was withdrawn by the 2nd defendant shortly before the last hearing. The quotation of the plaintiff was from without prejudice letter but it stated clearly that it was without prejudice saved as to costs. The 2nd defendant on the other hand replied by an open letter. The allegation of the 2nd defendant was groundless, unreasonable, and therefore delayed the due process of the law by such an objection which was raised in a carefree manner. This I must say is deplorable. 18.Finally the 2nd defendant, on the eve of the present hearing on 17 November 2010, took out another summons for the stay of the order I made last time. Mr Pirie, counsel for the 2nd defendant, explained that since the 2nd defendant only had GPB10 which is insufficient to pay costs of the 2nd defendant’s own costs, it wanted a stay so that all the assets of the deceased would be collected and handed over to the Minotaur Trust or in any event sufficient to pay the 2nd defendant’s own costs from the trust fund. This is totally misconceived. The order should not be stayed, the residual estate collected by the 1st defendant would of course await the decision on costs before the executor started to distribute the estate according to my decision. 19.For the aforesaid reasons I came to a firm conclusion that the 2nd defendant defended proceedings unreasonably and for its own benefit. 20.Thus the 2nd defendant should pay the plaintiff and the 1st defendant’s costs on indemnity basis, and such costs to be paid by the 2nd defendant personally and would not recoverable from the trust estate. Those costs shall include the 2nd defendant’s 2 aforesaid summonses.
Mr John Brewer, instructed by Messrs Fairbairn Catley Low & Kong, for the Plaintiff Mr Eric John Davison, of Messrs Kao, Lee & Yip, for the 1st Defendant Mr Nicholas Pirie, instructed by Messrs Philip W.I. Li & Co, for the 2nd Defendant 2nd Defendant's two applications to Court of Appeal refused. Please refer to HCMP83/2011 and HCMP315/2011 dated 14 March 2011 | ||||||||||||||||||||||||||||||||
Further hearings and rulings under HCMP 1850/2009