Wu Wing Ching and Another v. Ding Yufang
Read the full judgment text of HCMP 2471/2012 on BabelCite. This High Court CFI judgment was delivered on 16 July 2014.
1. This is the hearing of an Originating Summons issued pursuant to Order 85 of the Rules of the High court. The defendant is the Administratrix of the estate of the late Mr Wu Po Chow (“the Deceased”). She was the second wife of the Deceased who passed away on 23 August 2009. The 1 st and 2 nd plaintiffs were the two surviving children of the Deceased. Letters of Administration was granted to the defendant on 8 December 2010.
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HCMP 2471/2012 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE MISCELLANEOUS PROCEEDINGS NO 2471 OF 2012 ________________________
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______________________________ REASONS FOR JUDGMENT ___________________________ 1.This is the hearing of an Originating Summons issued pursuant to Order 85 of the Rules of the High court. The defendant is the Administratrix of the estate of the late Mr Wu Po Chow (“the Deceased”). She was the second wife of the Deceased who passed away on 23 August 2009. The 1st and 2nd plaintiffs were the two surviving children of the Deceased. Letters of Administration was granted to the defendant on 8 December 2010. 2.By the Originating Summons, the two plaintiffs sought, inter alia, the following relief from the defendant:
3.It is the plaintiffs’ case that despite repeated demands and requests, the defendant has not carried out her duties as administratrix to properly administer the estate of the Deceased and to make distributions. The plaintiffs seek to compel the defendant to observe and carry out her duties in accordance with the relevant provisions in the Probate and Administration Ordinance, Cap 10 (“the PAO”) and Intestates’ Estates Ordinance, Cap 73 (“the IEO”). There is however no application to remove the defendant. Order for account 4.Pursuant to the Schedule of Assets and Liabilities annexed to the Letters of Administration, the estate consisted of the following assets:
5.The said Schedule also set out the liabilities of the estate owed to banks, telephone company and the Government totalling HK$10,917.39. This Schedule of Assets and Liabilities was, of course, verified by the defendant. It is not in dispute that the 1st plaintiff obtained a copy of the Letters of Administration (albeit in photo-format) on 14 July 2011. The plaintiffs had thus been provided with an inventory of the Deceased’s assets. 6.It is the plaintiffs’ case that the 1st plaintiff had incurred HK$78,301.10 of testamentary expenses on behalf of the estate as of 28 March 2010. She had provided a summary to the defendant through her solicitors’ letter dated 26 August 2010. In another letter dated 13 January 2011 from the 1st plaintiff’s solicitors to the defendant, the 1st plaintiff complained that the defendant had refused to answer her inquiries concerning the administration of the estate and its progress. The 1st plaintiff also complained that the defendant had failed to settle the funeral expenses despite the former’s repeated requests. The defendant did not reply to this letter. Follow up calls were made without success. 7.At a meeting on 14 July 2011 between the 1st plaintiff and the defendant, the latter stated that money in the Deceased’s bank accounts had been withdrawn and put into an account in her name with the Bank of East Asia Ltd for the purpose of administration (“BEA A/C”). The 1st plaintiff took a picture of the inside cover and first page of the passbook showing the account number and five deposits made between 20 January 2011 and 14 April 2011 totalling HK$302,306.17. 8.By another solicitors’ letter dated 31 August 2011, the 1st plaintiff again requested for settlement of funeral expenses which had by them accumulated to over HK$80,000. The defendant was also requested to provide, within 14 days, details regarding the whereabouts of the money obtained from the Deceased’s bank accounts, MPF accounts, and the realization of stocks/shares held by the Deceased. The defendant did not provide any reply. 9.At a meeting on 18 July 2012 between the plaintiffs and the defendant, the defendant stated that some of the shares held by the Deceased through an account at the Bank of China (HK) Ltd had been sold and the proceeds were paid into the BEA A/C. The defendant showed the 1st plaintiff the transaction sale orders and she took pictures of them. The 1st plaintiff also took a photograph of the updated bank passbook of the BEA A/C showing five further deposits made between 26 April 2011 and 8 August 2011. The total deposits reached HK$556,523.70. There was then one withdrawal of HK$100,000 on 8 September 2011. The balance as of 8 September 2011 became HK$456,523.70. These were the limited information provided and there was no comprehensive rendering of accounts as earlier demanded by the plaintiffs. 10.This Originating Summons was issued on 2 November 2012 claiming, inter alia, the relief of rendering a just and true account. The defendant must have known that the plaintiffs were not satisfied with the hitherto limited and rather piecemeal rendering of information. In fact, the 1st plaintiff particularized her dissatisfaction in her 1st affirmation filed on 2 November 2012. 11.In the 1st affirmation filed by the defendant on 27 December 2012, she did not however exhibit any statement of account. She admitted that she had cancelled the Deceased’s bank accounts and transferred all money to the newly opened BEA A/C. She also sold some of the stocks/shares and deposited the proceeds into the BEA A/C. The defendant claimed that the plaintiffs had been duly informed and were allowed to take photograph of the bank passbook. There was no further elaboration as to what had happened to the other assets set out in the Schedule of Assets and Liabilities annexed to the Letters of Administration. 12.Nothing further was done by the defendant in relation to rendering a wholesome and truthful account. Then a Notice of Appointment to Hear Originating Summons was filed by the plaintiffs on 13 March 2014. At a direction hearing on 26 March 2014, DHCJ Eugene Fung SC ordered, inter alia, that the substantive hearing be conducted on the basis of affirmation evidence only. 13.On 18 April 2014, in the process of mediation, the defendant provided the plaintiffs with a handwritten note purporting to provide some further information concerning some of the assets of the estate. Again, it was at most a piecemeal provision of information. Furthermore, when compared to the later versions of rendering by the defendant, this document included various inconsistent items or figures. Hence, it could not be considered as a “clean clear and accurate account” which the defendant is indisputably obliged to keep and render upon request. 14.On 30 May 2014, the defendant applied for leave to file her 2nd affirmation. Leave was granted on 10 June 2014 with consequential leave to file reply affirmations by the plaintiffs. 15.On 12 June 2014, the defendant filed her 2nd affirmation. In this affirmation, she exhibited a letter dated 19 May 2014 from her solicitors to the plaintiffs’ solicitors. Attached to that letter was a “Statement of Accounts for Distribution (as of 19 May 2014)”. The defendant then said that she had duly accounted to the plaintiffs and it was no longer necessary for the court to make an order. This was the first attempt on the part of the defendant to produce a comprehensive account. 16.In the Skeleton Submissions filed by the plaintiffs on 27 June 2014, counsel for the plaintiffs raised the following complaints on the deficiency of the said statement of account:
These complaints had largely been set out in the 4th affirmation of the 1st plaintiff filed on 23 June 2014 in response to the stance taken by the defendant in her 2nd affirmation. 17.In the Skeleton Submissions filed by the defendant on 30 June 2014, counsel for the defendant referred me to a letter dated 27 June 2014 from the defendant’s solicitors to the plaintiffs’ solicitors. Annexed to this letter was another “Statement of Account for Distribution (as at 26 June 2014)”. I can see that this updated version demonstrated a serious attempt to address the plaintiffs’ aforesaid concerns. More importantly, relevant supporting documents have been disclosed and attached to this set of statement of account. 18.At the hearing, counsel for the plaintiffs agreed that his concerns were reduced to just the followings:
19.Counsel for the defendant replied that the defendant can provide undertakings to this court to:
20.The issue of the jewelleries would be determined at this hearing. As to the remaining accounting concerns, I am of the view that it is unnecessary make a formal order of account at this stage. When the above undertakings are complied with and subject to receiving the various written confirmations/documents, the defendant would have eventually rendered a “clean clear and accurate account”. I will simply give liberty to apply should there be any hiccups. 21.Counsel for the defendant submitted that all along the defendant had attempted to keep the plaintiffs fully informed and has made genuine attempts to answer plaintiffs’ queries. The process is inherently continuous and requires constant updating. The fact that no statement of accounts was given to the plaintiffs earlier was because the defendant had not prepared it yet. As administratrix, the defendant had tried her best to reduce unnecessary costs. It was understandable that she did not seek professional help in compiling and presenting a statement of accounts at an earlier stage. I do not agree. The general legal principle governing the duty on the part of a personal representative to furnish account has been summarized in §969 of the 3rd edition of Halsbury’s Laws of England (1956) which had been cited with approval in Leung Chi Man v Mok Sau Lim, HCMP 1599/2003 at §107. The learned author said:
22.It is clear from the above chronology that it was through pursuing these proceedings that the defendant eventually came up, very close to the hearing date, with a wholesome statement of account backed by supporting documents. I cannot accept the submission that the defendant had acted reasonably. This will be a relevant factor on the incidence of costs which I shall hereinafter deal with. Deceased’s Jewelleries 23.On the outstanding issue of the alleged inter vivos gift of certain jewelleries of the Deceased to the 2nd plaintiff, the 2nd plaintiff’s evidence was as follows:
It is then the plaintiffs’ case that subsequent to the death of the Deceased, they located and removed the hidden jewelleries from the Properties. After the defendant claimed that some of the jewelleries belonged to her, the plaintiffs returned all except a gold chain with jade pendant and a gold ring which they were sure that they belonged to the Deceased. 24.Counsel for the defendant referred to Cheung Cho Kam Sindy and another v Cheung Yuet Ying Rose, HCA 885/2005 (unreported, 13 July 2007) in which DHCJ Muttrie commented (after referring to a number of English authorities) at §17:
He also relied on the principle that in order to constitute the gift of a chattel there must be a voluntary transfer from the donor to the donee with the full intention that the chattel would not return to the donor. In the case of gifts inter vivos, some form of delivery of possession is necessary. The donor must intend there and then to give the chattel to the donee. Words of instruction would not be enough. Nor would words indicating an intention to give in future, whether by will or otherwise. I was referred to the case of Young Tin Kin Kenneth v Lau Lan Fong Nancy, HCA 1545/2004 (unreported, 9 September 2006) in which DHCJ Muttrie dealt with a vexed question of whether there was in law “delivery of possession” when there was no actual handing over of anything. After examining a number of English authorities, his Lordship said:
25.In the present case, I conclude that on the plaintiffs’ evidence, the Deceased had not made a gift inter vivos to the 2nd plaintiff for two reasons. First, the Deceased said that the 2nd plaintiff could look for and keep the jewelleries for her use after his death. There was thus no intention to make an immediate gift. It was conditional upon his death. Second, there was no action in which one can point to as the Deceased manifesting his intention to make a gift there and then other than mere words of intention. In my judgment, the gold chain with jade pendant and the gold ring form part of the estate of the Deceased. I will give directions on how to handle with these chattels in my order. Order for sale of the Property 26.The Property is a flat bought under the Home Ownership Scheme and registered in the sole name of the Deceased. The Deceased remained as registered owner until 10 April 2014 when the defendant became the registered owner (in her capacity as administratrix). It is not in dispute that the Property is held by the defendant on a statutory trust for sale pursuant to section 62 of PAO which provides that:
27.The defendant agrees that the Property should be sold. She is not exercising any right of postponement. In her 2nd affirmation, she claimed to have taken various actions towards that end since obtaining the Letters of Administration on 21 October 2010. She alleged that it was difficult to sell the Property because of: (i) the registration of this Originating Summons against the Property; and (ii) the “unmarketable” nature of the Property in the prevailing market conditions. These were of course disputed by the plaintiffs. Counsel for the defendant submitted that it is not meaningful to dwell on past events. He submitted that the Property has already been offered for sale in the market and with the plaintiffs’ cooperation, the process could be expedited. It would not be necessary to make an order for sale. 28.Counsel for the plaintiffs questioned the genuineness of the defendant’s assertions. He referred me to the 1st affirmation of the defendant in which she initially asserted a right to stay in the Property (獨立居住權). She also stated that the plaintiffs could not ask her to move out or to pay rent for her occupation. He submitted that more than 3½ years had lapsed since the obtainment of Letters of Administration and it is plainly incredible that the Property could not be sold within such a long period. He also pointed to the very substantial delay in registering the Letters of Administration (only on 10 April 2014) and applying for Housing Authority’s “permission for sale” (only in March 2014). 29.Even on her own evidence, the defendant knew as early as June 2011 that she needed to apply for a “permission for sale” (出售証) from the Housing Authority in order to market the Property for sale. This should have been the logical first step. The defendant only approached the Housing Authority in or about March 2014. She was able to obtain a Certificate of Availability for Sale fairly swiftly on 22 April 2014. I agree with counsel for the plaintiffs that there is certainly a considerable degree of tardiness on the part of the defendant. She had every motive to be lax as she has been occupying the Property. Such motive was readily apparent from the stance she originally took in her 1st affirmation. Neither would I accept the evidence and argument that the registration of the lis pendens was the real culprit of delay in selling the Property. If there were genuine difficulties in attracting potential purchasers, the lack of “permission for sale” from the Housing Authority would more likely to have been a source of deterrence. 30.On the other hand, it is my view that both parties should take a pragmatic approach and should not dwell on unnecessary arguments. The most important thing is to move forward in the administration of this estate. It is thus crucial to effect a sale of the Property as soon as practicable. In my view, it is pointless to argue whether or not the lis pendens should or should not be vacated. If I make an order for sale and give directions for sale under this Originating Summons, my order can be registered with the Land Registry and potential purchaser would not view these proceedings as a blot on title. Both counsel agreed with my suggestion. Similarly, even though I am of the view that the defendant was previously not sufficiently vigilant, she is now under supervision of this court. I can give detail directions governing the process of the intended sale abiding both parties. I will also give general liberty to apply if any hiccup arises. The defendant is the lawful administratrix and is now the registered owner of the Property. Eventually, it is the defendant who has to delivery vacant possession of the Property upon sale. It will be convenient to let her have the conduct of the sale albeit under supervision of this court through the directions. This is also the default position stipulated in Order 85, rule 6. I will therefore make an order of sale of the Property. I will hear counsel further on an agreed list of directions that I should make to safeguard the interest of all parties. Funeral expenses 31.The 1st plaintiff’s case is that as the eldest son of the Deceased, he was responsible for arranging the funeral. Up to 28 March 2010, he had incurred a total sum of HK$78,301.10 as funeral expenses. By a solicitors’ letter dated 26 August 2010, he had provided a detailed breakdown to the defendant with accompanying receipts. Further demands were made in subsequent solicitors’ letters of 4 September 2010 and 31 August 2011. The most updated figure reached HK$94,191.10 which he now claims. The updated breakdown was exhibited in the 1st affirmation of the 1st plaintiff without the supporting receipts for the additional sum of HK$15,890.00 incurred since 28 March 2010. They have now been exhibited in the 4th affirmation of the 1st plaintiff. 32.Counsel for the defendant made the following queries in his Skeleton Submissions:
Having said that, counsel for the defendant stated that the defendant would act upon the court’s determination as to which items should be allowed as funeral expenses. 33.At the hearing, counsel for the plaintiffs fairly conceded that the HK$5,000 should be deducted from the 1st plaintiff’s claim. Counsel for the defendant also fairly withdrew his complaint about illegible receipts. The remaining dispute is on the “food and meals to mourners”. 34.These expenses for food and meals added up to slightly over HK$5,400. Counsel for the defendant referred me to Wong Sau Wah and others v Leung Kam Cheuk and another [1982] HKC 333, at [19] to [20] and Wan Dan Nei and another v Dragages Et Travaux Publics and Penta‑Ocean Construction Co Ltd [2000] 4 HKC 116 at 136. These are personal injury cases in which the court had to consider whether, in assessing the amount of damages that a tortfeasor should compensate the victim, expenses for funeral meals should be allowed. Obviously, different considerations apply when a third party is required to pay for such meals as an item of damages. In the present situation, the sole question is whether the expenses for such meals, which are commonly arranged by the bereaved family for mourners, are properly incidental to the funeral rites such that it should be regarded as having been incurred on behalf of the estate of the Deceased. In my view, these expenses should be borne by the estate. There is no reason why an individual family member, who cared to observe such common cultural etiquette at a ceremony honouring a deceased, should somehow be asked to bear the costs personally. I would therefore order the defendant to pay a sum of HK$ 89,191.10 to the 1st plaintiff. Other relief 35.I would further note that in the course of the hearing, the parties agreed that: (i) the sum of HK$89,101.10 should be paid out of the BEA A/C to the 1st plaintiff; (ii) a sum of HK$200,000 should be paid out to the defendant as interim distribution; and (iii) that I should make detail directions controlling the payment‑out of funds from the BEA A/C. In the light of the orders and directions that I would give, counsel for the plaintiff agreed that it is not necessary to make an order of general administration or distribution of the estate. Costs 36.I should first deal with the costs of preparing and rendering a just and proper account for the administration of the estate. Both counsel agreed that a reasonable amount should be allowed to be charged by the defendant and payable out of the estate. Counsel for the defendant informed me that the defendant has been assisted by her solicitors and so far, a sum of HK$25,000 has been incurred. There would also be some further costs to be incurred in carrying out the undertakings and to prepare a final distribution account after the completed sale of the Property. Counsel for the plaintiffs reminded me that the defendant had attempted to draw up three sets of accounts and only the last set resembles what the law requires. He argued that costs wasted on sub‑standard efforts should be discounted. Both counsel fairly accepted that this court can only adopt a ballpark approach and deferred to my personal assessment. In my view, this is a relatively simple estate. If proper steps had been undertaken from the beginning, the costs of preparing a statement of account should be a relatively insubstantial with the assistance of professionals. Bearing in mind the further steps and updating that would be required to end up with a final distribution account, I would allow the defendant to charge HK$20,000 which would be paid out of the estate. 37.In respect of the costs of the Originating Summons, both counsel agree that in relation to the plaintiffs’ costs, they should be paid out of the estate. The only disagreement is on whether the defendant’s costs should also be allowed to be paid out of the estate. Both counsel agreed that this issue depends on whether I find that the defendant has been acting reasonably in defending the Originating Summons. 38.I have already expressed my dissatisfactions over the defendant’s piecemeal and unwholesome preparation and rendering of the accounts. The plaintiffs were effectively compelled to institute legal proceedings. Even after proceedings were instituted, the defendant did not meet with her obligation to render “clean clear and accurate” account until the eve of the hearing. As for the sale of the Property, I have also expressed my view that there was considerable laxity on the part of the defendant. I do not accept the excuse put forward by her for the delay in securing the sale of the Property. The plaintiffs were justified in seeking the court’s intervention. Even after proceedings were instituted, the defendant (in her 1st affirmation) unreasonably asserted an independent right to occupy and stay in the Property. Such stance was formally changed only in June 2014 when she filed her 2nd affirmation. Still then, she maintained that no order for sale would be necessary. I have been shown certain without prejudice (save as to costs) correspondences. As early as 23 April 2014, solicitors for the plaintiffs had provided the defendant with draft proposed directions for an order of sale. There were then negotiations on the proposed directions. In the end, no settlement could be reached because the defendant refused to commit to a definite time table for the sale of the Property. In my view, the time‑table proposed (ie six months from the date of reaching settlement) was not unreasonable in the light of the hitherto delays (more than 3½ years after grant of administration) and the plaintiffs’ justifiable scepticism over the genuineness of the defendant’s intention to efficiently conduct the sale. Having failed to reach settlement, the defendant maintained her position at the hearing that it is not necessary for the court to make an order for sale. In the end, I rejected her submissions and order a sale of the Property. 39.All in all, I conclude that the defendant has not acted reasonably in opposing this Originating Summons. I decline to allow her costs to be paid out of the estate. Conclusion 40.After hearing counsel further, I had made various orders and directions at the conclusion of the hearing on 3 July 2014. These orders and directions had been made with the contribution and agreement of Counsel for the plaintiffs and counsel for the defendant for which I am grateful.
Mr Kent Lee, instructed by Yau & Co, for the 1st and 2nd plaintiffs Mr Kerby Lau, instructed by Jimmie KS Wong & Partners, for the defendant | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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