LAM KA WAI REBECCA AND ANOTHER v. LAM JENNY, THE ADMINISTRATOR OF THE ESTATE OF LAM KAM WAI AND OTHERS

HCMP 1014/2021 [2023] HKCFI 530 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE MISCELLANEOUS PROCEEDINGS NO 1014 OF 2021 ____________________ IN THE ESTATE OF LAM KAM WAI (林金威), late of Flat E, 43rd Floor, Block 3, Royal Ascot, Fo Tan, Shatin, New Territories, Hong Kong, deceased (the “Deceased”) and IN THE MATTER of Order 85 of the Rules of the High Court (Cap 4A) and the Probate and Administration Ordinance (Cap 10) (in particular but without limitation, section 33) and/or inherent jurisdiction of the Court ____________________ BETWEEN LAM KA WAI REBECCA 1st Plaintiff LAM KAI CHEUNG 2nd Plaintiff and LAM JENNY, THE ADMINISTRATOR OF THE 1st Defendant ESTATE OF LAM KAM WAI CHUI PAK MING NORMAN, THE ADMINISTRATOR 2nd Defendant OF THE ESTATE OF LAM KAM WAI LAM CALINA KA LING 3rd Defendant LAM KA KEI ANNIE 4th Defendant LAM PHILIP KAI TAK 5th Defendant ____________________ Before: Deputy High Court Judge Le Pichon in Chambers (by paper disposal) Date of the Plaintiffs’ Written Submissions: 15 December 2022 Date of the 1st Defendant’s Written Submissions: 5 January 2023 Date of the 3rd to 5th Defendants’ Written Submissions: 5 January 2023 Date of the Plaintiffs’ Written Reply Submissions: 16 January 2023 Date of Decision: 22 February 2023 ________________ Decision _________________ The Plaintiffs (who are 2 of 6 beneficiaries in the estate of the Deceased) were granted substantive relief in administration proceedings pursuant to section 33 of the Probate and Administration Ordinance, Cap 10. The parties were directed to lodge their respective submissions for paper disposal with regard to the Plaintiffs’ application that costs be awarded on an indemnity basis: see the Decision dated 5 December 2022 (“the Decision”). Reference should be made to the Decision for the relevant background, the nature of the Plaintiffs’ application and its disposition. I do not propose to repeat those matters in this Decision on Costs which adopts the nomenclature used in the Decision. The Plaintiffs’ application to replace the current administrators D1 and D2 (Jenny and Norman) by Derek Lai and Guy Norman of Deloitte was opposed by Jenny, D3, D4 and D5 (the 3 siblings) (collectively “the Defendants”) who are the remaining 4 beneficiaries of the Deceased’s estate. Where an application is made by a beneficiary but is in substance an adverse claim made in hostile litigation, the rule applicable to hostile litigation should be applied and the unsuccessful party should be ordered to pay the costs: see Re Estate of Leung Lit [2021] HKCFI 630 at §§92-96. The dispute as to who should be appointed as the personal representative falls within this class of administration proceedings: see Re Estate of Leung Lit at §94. It follows that the Plaintiffs are entitled to have the costs of their application and the Defendants’ submissions that their costs should come out of the estate must be rejected. That the court has power to order indemnity costs is not disputed. The question is whether the circumstances justify such an award. It is the Plaintiffs’ case that indemnity costs are warranted. Jenny As noted in §17 of the Decision, the Deceased’s shareholdings in GTE and Rainbow Rich (the Subject Assets) are of substantial value. While the Plaintiffs maintained that there are reasonable grounds for an investigation in relation to the Subject Assets, Jenny (a director of GTE since 2007 and believed to be managing GTE) did not agree. Jenny’s stance (shared by the 3 siblings) that there was nothing to investigate was based on her assertion that the Deceased was not the source of the GTE Sum Part 2 as there was a round robin fund arrangement and that the Rainbow Rich loan ceased to be owing to the estate because of a ‘unique’ practice of Rainbow Rich and of GTE described in §51 of the Decision. The evidence (or lack thereof) in support of Jenny’s case has been found to be woefully inadequate: see §§21, 29-46, 51and 55-57 of the Decision. Given the evidence Jenny was able to adduce, there was no rational basis for Jenny to have opposed the Plaintiffs’ application. If anything, it made the need for investigation more glaring. In my view Jenny’s conduct in that regard was unreasonable and seriously obstructed and delayed the proper administration of the estate. In the Decision, I had singled out (at §38) an instance of Jenny’s conduct that merits disapproval. To that, one should add her evolving stances on various issues without providing good reason: see, for example, §§21, 23, 29-30 of the Decision. Jenny adopted a similar approach in relation to potential candidates for appointment as administrator. Suffice it to say that such flip-flopping was singularly unhelpful, confusing, and wasteful of time and resources. No responsible administrator or beneficiary should engage in such conduct, absent good reason. In so far as it was argued that Jenny should be given credit for conceding that she should step down as administrator, I accept the Plaintiffs’ submission that the “concession” was meaningless. The issue was whether a professional administrator should be appointed to investigate the Subject Assets. As a result of the Defendants’ opposition, the Plaintiffs had to prove that there were reasonable grounds for such an appointment: the “concession” make no difference and did not save time and resources. Moreover, I agree that such concession appears to have been made to pave the way for advancing unreasonable proposals for the new administrators. Mr KM Chong submitted on Jenny’s behalf that as the appointment of an investigator is not a resolution of the ultimate issues between the parties (thereby rendering the proceedings interlocutory in nature), it would be wrong in principle to order Jenny to bear the costs when she may be correct at the end of the day in the way how she administers the estate. With respect, that submission is misconceived. The issue before the court was not the ultimate resolution of the disputes between the parties but whether a case has been made out for the appointment of an investigator as professional administrator. (b) The 3 siblings Mr Alvin Chong submitted on behalf of 3 siblings that the cases cited by the Plaintiffs where indemnity costs have been ordered all bear some “special or unique features” warranting indemnity costs. It was said that there were no such “special or unique features” as regards the 3 siblings in that it could hardly be said that they were uncooperative since they did not object to the application for the removal of Jenny and Norman as administrators of the estate and the only question was who should be appointed as the new administrators. But the crux of the Plaintiffs’ application is that a professional administrator should be appointed to investigate the Subject Assets to which the 3 siblings did not agree. Their stance was that there was nothing worth investigating, that Annie should be the new administrator or that there should be one administrator from each camp. The 3 siblings now advance 2 seemingly inconsistent submissions: (i) they should not have been joined in these proceedings, citing O 85 r 3 (2) of the PAO; and (ii) while the court considered that reasonable grounds been shown for investigation and appointed a professional administrator, the 3 siblings should not be penalised for expressing their views. Those submissions appear to be a case of the 3 siblings having their cake and eating it. If the 3 siblings genuinely thought they should not have been joined and their participation unwarranted, they should have indicated that they would not contest the proceedings as was the case with Norman. In reality, they adopted Jenny’s position and resisted the Plaintiffs’ application. In substance, their position is distinguishable from that of Jenny’s. Conclusion For all the reasons set out above, I consider that the Defendants’ conduct in this matter deserves serious deprecation. Accordingly, I have no hesitation in concluding that costs should be awarded to the Plaintiffs on an indemnity basis. (Doreen Le Pichon) Deputy High Court Judge Mr Danny Tang, instructed by Karas So LLP, for the 1st to 2nd Plaintiffs Mr K. M. Chong and Ms Vivian Li, instructed by Yuen & Partners, for the 1st Defendant Mr Alvin Chong, instructed by Mike So, Joseph Lau & Co., for the 3rd to 5th Defendants