Kimball Wong v. Cynthia Fok Shin Yee and Others

IN THE COURT OF APPEAL

No. 143 of 1987
(Civil)

BETWEEN

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Coram: Hon. Silke, V.-P., Barker & Hunter, JJ.A.

Date of hearing: 23^rd December, 1987

Date of delivery: 23^rd December, 1987

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JUDGMENT

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Hunter, J.A.:

1.  This is an appeal from two orders of Mayo J. made on 15^th October last in relation to costs on two applications. The first was an application for discovery, which he allowed. The second was an application made on “Re Beddoe” principles upon which he made no order. In respect of both those summonses he directed that the costs of all parties should come out of the estate.

2.  One of the defendant to that summons, the 1^st defendant, has come to this court with leave of the trial judge, asking us to upset those costs orders and seeking an order that the costs of both applications should be ordered to be paid by the plaintiff. So it is an unusual appeal in that sense of being as to costs only, but when I add that it arises in a family dispute which unhappily has split the Fok family it is perhaps not altogether surprising.

3.  The background in brief is this. On 19^th August 1975 Fok Cho Nin died having made a will dated the 15^th June that same year. He wrote out the will himself in the course of the night of 14^th/15^th June. He invited two of his brothers to act as executors of his will. The eldest of those two was Fok Tso Moon. He was the only brother who took up the job. He in fact proved the will and acted as sole executor. A problem arose on the construction of the will in respect of the distribution of the residue. The executor, Fok Tso Moon, applied to the court for directions on a construction summons. That matter came before Zimmern J. He made an order pronouncing upon the true construction of the will, and holding that in respect of the residue the will creat a power of appointment in the executors to distribute the residue amongst the members of the family named in the will. I should add that the residue now runs to several million dollars, so that there is a large sum of money involved.

4.  The members of the family named in the will were largely the deceased’s own family, his brothers and sisters as well as his mother and stepmother. In other words, the power to appoint covered that generation. That might he said now to be the branch of the Fok family represented by this plaintiff. She is in fact the widow of Fok Tso Moon and his sole executrix. She is now concerned in this matter, as I understand it, as the executor by succession of the first estate, sole executrix of the second estate and personally interested in the result.

5.  Between 12^th December 1979 the date of the decision of the Zimmern J. and 1982, and during his life time, Fok Tso Moon distributed no less than HK$8 million amongst the family as defined by that judgment. In order as he said to put an end to any argument, he in fact executed a deed of appointment in his own favour in respect the rest of the residuary estate. But, notwithstanding that, he went on making distributions in accordance with the scheme he had himself devised. In accordance with the will it extended to the branch of the family of the same generation as the deceased. Unfortunately the solicitors then acting for the estate failed to draw up the order made by Zimmern J., and that event did not in fact occur until 2^nd May 1983.

6.  That was the first time that the 1^st defendant heard about this order. She represented the other half of the family namely the children of the testator. They were the persons who were most likely to benefit on an intestacy. She obtained leave from this court to appeal the order of Zimmern J. That appeal came on eventually on 25^th March 1986 and succeeded. In the meantime I should say Mr. Fok Tso Moon had died, and the present plaintiff was then before the court in her various capacities.

7.  After the court pronounced its decision, the plaintiff obtained leave to appeal to the Privy Council. That is when things started to become confused. There were anumber of people who were interested or potentially interested in these two decisions of the Hong Kong Court and in this projected appeal to the Privy Council.

8.  First there were those persons who had in fact received money under the first distribution made by Mr. Fok Tso Moon in his life time. None of these, as far as I can see, were remotely entitled on an intestacy, which was the result of the Court of Appeal decision. They were therefore on risk of having claims made against them for the recovery of that money. The 1^st defendant in the course of the appeal gave an undertaking not to disturb “honest and bona fide” distributions. I cannot see how that could in fact bind the present executrix or any future executors of the testator’s estate. So that those persons as a group were interested in this appeal as potential beneficiaries under the will on one view, potential losers on another view.

9.  The second group of people who were interested or potentially interested in this appeal were those who might have continued to receive distributions inter vivos by Mr. Fok Tso Moon and by the widow, the present plaintiff, if the original proposals had continued to be implemented, which was the position until the Court of Appeal intervened. They had an interest in the result.

10.  Thirdly the lady herself plainly had an interest in result, as executrix by representation of the original estate, as executrix of her deceased husband’s estate, and in her personal capacity.

11.  Last the solicitors who had failed to draw the original order in time had an interest. What happened after the hearing before this court was that the plaintiff’s then solicitors made a claim on those earlier solicitors in negligence for having failed to draw the order. The precise capacity in which that claim was made does not emerge, whether it was made as executrix as one or other of the estates or in her personal capacity, or perhaps in all three. That claim having been made the solicitors consulted their insurers. Pressure was brought to bear upon those solicitors by the plaintiff’s solicitors to indemnify her against the costs of the appeal on the basis that they were interested in this appeal. This jockeying for position succeeded. The solicitors went to their insurers. Insurers appointed other solicitors, who from that moment on represented the present plaintiff. That was the direct result of her original solicitors pressure. The conduct of the action was taken over by the solicitor’s nominated by the insurers, but the solicitors were still in the ordinary way continuing to act for the lady as executrix.

12.  It was in fact those solicitors who applied their minds to the question of the appeal and whether it should continue or not. They took advice from a distinguished Chancery Q.C., Mr. Lyndon-Stanford. In the light of what has been said, I think it is right to read the 2^nd and 3^rd paragraphs of his opinion under the side heading “Introductory”. The first paragraph simply recorded the order of the Court of Appeal.

“2. The plaintiff executrix has leave to appeal to Her Majesty’s Privy Council and my advice is that in order to be protected as to costs she should apply to the court in Hong Kong (at first instance) for directions whether she should pursue that appeal pursuant to the “Re Beddoe” procedure which is referred to in the learned editor’s notes at paragraph 85/2/2 of the English Supreme Court Practice.

3. I am asked to give my opinion whether the executrix should prosecute the appeal. Of course the final decision whether to give that direction is a matter for the court hearing the “Re Beddoe” application, and anything that I say is not intended to impinge on the court’s jurisdiction.”

13.  In the course of that opinion particularly at paragraph 7, he made reference to a number of the complicated interests which are concerned in this matter. He says this:

“The executrix has of course a personal interest by virtue of her deceased husband’s possible interest in the estate and by virtue of the complaints made about his administration. But there are of course a number of beneficiaries who are interested in the outcome and her duty is to consider the position of all possible beneficiaries.”

Then he refers to the mental health of one of the brothers whose position was specifically referred to by the testator in the will.

14.  The opinion concludes with these words, and this is the author’s opinion:

“On the whole it seems to me that this is a proper case in which the court could authorize the executrix to pursue the appeal to Her Majesty’s Privy Council.”

15.  As a result of that this “Re Beddoe” application was made and came before the judge on 15^th and 16^th October last. The whole basis of this appeal is the judge was quite wrong in making the order as to costs that he made, because it was in effect misconduct on the part of this lady to come to the court in this way. Much play was made of the fact that the opinion from Mr. Lyndon-Stanford, and in fact the application itself, was made by solicitors retained by insurers in this matter in the way that I have already indicated. This it is said meant that the lady was simply a puppet of the insurers and was not acting in her own capacity or representative capacity at all.

16.  I regret that I cannot start to accept that as a proposition. Where somebody successfully obtains an indemnity as to costs from solicitors or insurers or whatever, it is common form for the indemnifier to take over the conduct of the action and to conduct the action thereafter in the name of the person successfully claiming the indemnity, but at the cost of the insurers. That is all that has happened in this case.

17.  There were certainly all sorts of competing interests in this appeal. Four of them I have already mentioned. The last category are those represented by the 1^st defendant; those who benefit from the order of Court of Appeal and would benefit on an intestacy. They all had different interests and they all had competing interests. But the real question here is when an executrix is faced with that situation, with competing interests, conflicting interest and conflicting interest of her own because of her several capacities, is she or is she not entitled to come to the court. My personal answer to that is that if ever there was the case when she is entitled to come to court this is just that case. Because the very conflicts in her own position makes it the more difficult for her to exercise any independent judgment at all.

18.  This is precisely the sort of case in my view where a person in that position can say: “I am sorry I am in a difficulty. There are all sorts of competing interests. I have also got an indemnity for costs from solicitors’ insurers. Please tell me whether or not I should pursue this appeal.” That was exactly what she did here, and received the answer “No” from Mayo J. But it seems to me quite impossible to assert that what she did was misconduct, or an abuse of the process of the court, and that the advice that she received from Mr. Lyndon-Stanford, in a matter with which he is exceedingly familiar, was hundred and eighty degree out of line in that he was in fact advising a trustee to commit a positive act of misconduct. So that speaking for myself I have no doubt whatever that the judge had every justification in ordering the costs of the “Re Beddoe” application to be paid out of this estate.

19.  Complaint is also made about the costs order he made on discovery which was something of subsidiary issue. What had happened there was this. The estate solicitors had followed the ordinary “Re Beddoe” type procedures in respect of two categories of documents. One was a second opinion from leading counsel in London obtained in fact by the plaintiff’s own initial solicitors. The second was correspondence between the two firms of solicitors relating to the disclosed indemnity as to costs. They took the line in respect of those documents, that they should be disclosed to the judge, but they need not necessarily disclose them to their adversary, the 1^st defendant. She, I should add, had also stirred up the pot by issuing a writ seeking administration of the estate upon the basis of willful default. The judge held that that view was wrong, and that the documents should be disclosed to the 1^st defendant. That is what happened. Again the attitude that the plaintiff’s solicitors adopted was not something which can be said to amount to misconduct or was wildly wrong. I can see no reason forcriticising that order of the judge as the costs either. For my part therefore I would dismiss this appeal.

Silke, V.-P.:

20.  The question at issue, and bearing in mind her several capacities, was did the plaintiff qua trustee act improperly in seeking the direction of the court by using the “Re Beddoe” procedure. My Lord Mr. Justice Hunter has detailed the history of the matter and given his reasons why he thinks the answer to that question should be a resounding negative. The fact that the opinion of Mr. Lyndon-Stanford was sought by the solicitors for the insured in this case, and that they themselves had an interest, in my view matters not. The executrix was in my judgment virtually compelled in the light of the background complexities of this matter, not the least that minors existed, to make the application she did. I am content to follow that which my lord had said as to both these application, that is the application on “Re Beddoe” costs and the costs on the discovery. I too would dismiss the appeal.

Barker, J.A.:

21.  I agree with both judgments which have been delivered and do not wish to add anything to them.

Benjamin Yu (M/s Therese P.F. Chow & Co.) for 1^st Defendant / Appellant

Mrs. Margaret Clough (M/s Lovell, White & King) for Plaintiff / Respondent