Poon Lo Wah Laura v Poon Yuet Wah [2024] 3 HKLRD 604, [2024] HKCFI 1541
Vincent Kee represented the 1st and 2nd plaintiffs in Poon Lo Wah Laura v Poon Yuet Wah [2024] 3 HKLRD 604, [2024] HKCFI 1541.
P1-2 (Ps) and D1 were sisters. A flat (the Property) was bequeathed by their mother to her children. D1 was the sole executrix of the mother’s estate. In that capacity, D1 sold the Property to her daughter, D2, for $3.3 million. Ps, complaining that the sale was at such an undervalue as to constitute a breach of D1’s fiduciary duty as administratrix, and contending that D2 had dishonestly assisted in such breach, sued, claiming for the setting-aside of the sale and the delivery of vacant possession of the Property. Ps’ claim was resisted by Ds. Both Ds contended, while Ps disputed, that the sale was a genuine transaction at market price. It was alleged by D1, and denied by Ps, that she had obtained the beneficiaries’ consent to the sale of the Property to D2 for $3.3 million. D2 contended, and Ps disputed, that she was a bona fide purchaser for value.
Held, entering judgment for Ps, that:
- (1) On the evidence, the sale at $3.3 million was below the agreed market value of $3,960,000. And on the evidence, the beneficiaries did not agree to a sale of the Property to D2 for $3.3 million. (See paras.20-36.)
- (2) But even if they had so agreed, D1 still had the onus to prove that a sale at $3.3 million was at market price and was in the interests of all the beneficiaries, because, as a matter of law, an administratrix selling the estate was under a duty to sell it under every possible advantage to the beneficiaries (Killearn v Killearn [2011] EWHC 3775 (Ch), Lam Sik Shi v Lam Sik Ying (HCA 1605/2004 and HCA 894/2011, [2016] HKEC 2145) applied). (See paras.37-39.)
- (3) On the evidence, D1 advanced the own particular purposes and interests of herself and her daughter, D2, at the expense of the other beneficiaries; and that was a breach of her fiduciary duty as an administratrix. (See para.45.)
- (4) D1, as administratrix, was bound in law to keep proper accounts and to account to the beneficiaries for the assets, monies and expenses of the estate. On the evidence, she failed to do so (Chow Chak Kiu v Chow Man Chit (HCMP 797/2016, [2017] HKEC 64) applied). (See paras.46-52.)
- (5) As to D2’s liability for assisting in D1’s breach of fiduciary duty, the Court had: (i) to ascertain D2’s subjective knowledge of the facts; and (ii) decide whether she was dishonest by the objective standards of ordinary and decent people. On the Court’s findings as to what D2 knew and/or suspected, ordinary, decent people in her position would have questioned the propriety of the sale of the Property to her for $3.3 million. If she had behaved as such a person, D2 would have questioned D1 as to whether all the beneficiaries had consented to: (i) the sale of the Property; (ii) the sale to her; (iii) the sale at $3.3 million; and (iv) the delayed completion of the sale. Not having made such inquiries, D2 could be considered to have had “blind-eye” knowledge of D1’s breach of fiduciary duty, to have dishonestly assisted in such breach and not to be a bona fide purchaser (Barlow Clowes International Ltd v Eurotrust International Ltd [2006] 1 WLR 1476, Ivey v Genting Casinos (UK) Ltd [2018] AC 391, Group Seven Ltd v Nasir [2020] Ch 129, Bilta (UK) Ltd v Natwest Markets Plc [2020] EWHC 546 (Ch) applied). (See paras.56-68.)
[The above is excerpted from the headnote to the report in HKLRD.]
