Re Estate of Chiu Keung [2020] 3 HKLRD 779

Steven Kwan appeared for the successful respondents/administrators in the Court of Appeal in Re Estate of Chiu Keung [2020] 3 HKLRD 779.

X died in 1955. The administrators of X’s estate appointed by the Court (Ps) applied for directions on the distribution of that estate under O 85 r 2 of the Rules of the High Court (Cap 4A, Sub Leg) (the RHC). The Judge found and ordered, inter alia, that: (a) a sum previously distributed to D2 be put back to the pool of the estate; (b) there had been prior distribution to the exclusion of D2; and (c) funds in Ps’ hands be distributed to D2 solely, since other beneficiaries had, under two documents, given up their rights against the estate. Issues (b) and (c) hinged on the documents’ validity and events after their execution, respectively in 1956 and 1957, in Vietnam. Three of the other beneficiaries, D4-D6, appealed, arguing inter alia that the Judge erred in her approach to Ps’ application, in that Ps should have been directed to produce all materials necessary to enable the Court to give directions on the administration of the estate; and the parties should have been directed to adduce evidence on the validity and effect of the documents under Vietnamese law, and the current value of the prior distribution, including a sum in piastres paid to another beneficiary, B, from the estate. It was further argued that in light of the factual disputes, the Judge should have ordered that the originating summons (the OS) proceedings continue as if commenced by writ, or should have given directions for cross-examination of deponents on their affidavits. D2 opposed the appeal. Ps took a neutral stance.

Held, allowing the appeal only to the limited extent of substituting a sum for the sum erroneously found by the Judge as the amount of interim distribution received by D2, and dismissing the rest of appeal, that:

(1)        In a procedure under O 85 of the RHC, the Court should be put into possession of all material necessary to enable it to give the guidance and approval sought by the trustee. The trustee was under a duty to obtain and place before the Court full and proper information, including relevant expert evidence. However, the validity or effect of the documents under Vietnamese law was never an issue in the proceedings below. The current value of prior distributions in piastres, which had long been decommissioned, was of marginal relevance. Costs would be disproportionate. Restitution against B, who could not be located, was practically impossible (Marley v Mutual Security Merchant Bank & Trust Co Ltd [1991] 3 All ER 198, Wu Shuk Chun v Kwong Oi Lin [2010] 4 HKLRD 604 applied). (See paras 50-51, 53.)

(2)        Under O 28 r 4(1) of the RHC, the Court had a wide discretion to dispose of the OS summarily where satisfied that there were no triable issues. Where there were genuine, substantial factual disputes that could not be resolved on affidavit evidence, the Court might either direct under r 4(3) that evidence be taken orally, including cross-examination of deponents of the affidavits, or order under r.8 that the proceedings be continued as if begun by writ. (See paras 58-60.)

(a)        There was no hard and fast rule as to what cases could properly be dealt with by the OS procedure. The existence of factual disputes would not invariably render that procedure inappropriate. It was a factor to be taken into account. Other relevant considerations included whether procedural advantages of an action begun by writ, such as delivery of pleadings and discovery, justified the exercise of power under O 28 r 8 and whether in so ordering the ultimate resolution of the dispute would be significantly delayed. If issues of fact had been identified and could be properly resolved or disputes of fact were not central to the Court’s determination, the Court was entitled to proceed to determine the action without converting it into a writ action (Cheney Communications Pte Ltd v Christopher Charles Cheney (HCMP 2942/1992, [1993] HKEC 39), Ye Hong Ying v Chan Lup Ying [1996] 1 HKLR 255, Shum Wah Ming v Estate of Chen King Ngo, deceased (CACV 21/1996, [1996] HKLY 1151), Bank of China (Hong Kong) Ltd v Keen Lloyd Resources Ltd (CACV 1787/2001, [2002] HKEC 237) considered).

(b)       With regard to whether to hear the summons on oral evidence, the Court had to consider, as stipulated in O 28 r 4(3), what was required for the just, expeditious or economical disposal of the proceedings.

(c)        In an application under O 85 of the RHC, the Court was essentially engaged solely in determining what ought to be done in the best interests of the trust estate and not in determining the rights of adversarial parties. Order 85 proceedings were meant to be conducted with economy of time and costs (Marley v Mutual Security Merchant Bank & Trust Co Ltd [1991] 3 All ER 198, Re Man Sham Chung Wui [2011] 1 HKLRD 427 applied).

(3)        The Judge did not err in not converting the proceedings into a writ action or ordering cross-examination of the deponents of the affidavits. The Judge took a broad-brush approach to resolve the dispute. X died more than six decades ago, and matters relating to the dispute happened a long time ago. The Judge was not plainly wrong in adopting an approach that would bring about an expeditious and economical disposal of the O 85 application. (See para 63.)

(4)        The Judge was entitled to conclude that making a sole distribution of the net remaining estate to D2 was the most appropriate order that produced a just and equitable outcome and was in the best interests of the estate. The finding that there had been prior distributions of the estate to the exclusion of D2 was a relevant matter to be taken into account when deciding how the discretion under O 85 r 2 should be exercised. The Judge was required to act as a reasonable trustee would be expected to act having regard to all the material circumstances, doing what was just and equitable. In the circumstances, including difficulties in identifying and tracing the assets involved in prior distributions and establishing their current value, the Judge could not be faulted for taking a broad-brush approach (Thrells Ltd v Lomas[1993] 1 WLR 456 applied). (See para 89.)

[The above is excerpted from the headnote to the report in HKLRD.]


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