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Chiu Pak Wo v Chiu Yim Kam, The Administratrix Of The Estate Of Chiu Sin Kow Also Known As Chiu Kau, Deceased And Others

Judgment Cited authorities 9 Cited in Precedent Map Related
Vincent
Judgment Date16 October 2019
Neutral Citation[2019] HKCFI 2517
Judgement NumberHCMP1967/2018
Subject MatterMiscellaneous Proceedings
CourtCourt of First Instance (Hong Kong)
HCMP1967/2018 CHIU PAK WO v. CHIU YIM KAM, the Administratrix of the Estate of Chiu Sin Kow also known as Chiu Kau, deceased AND OTHERS

HCMP 1967/2018

[2019] HKCFI 2517

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 1967 OF 2018

______________

BETWEEN

CHIU PAK WO Plaintiff

and
CHIU YIM KAM, the Administratrix of the Estate of 1st Defendant
CHIU SIN KOW also known as CHIU KAU, deceased
YIP LIN HEUNG 2nd Defendant
CHIU YEE KEUNG 3rd Defendant
CHIU LAI KUEN 4th Defendant
CHIU YIM SUNG 5th Defendant
CHIU PAK FU 6th Defendant

______________

Before: Deputy High Court Judge William Wong SC in Chambers
Date of Plaintiff’s Written Submission on Costs: 17 June 2019
Date of 1st Defendant’s Written Submission on Costs: 10 July 2019
Date of Plaintiff’s Written Submission on Costs in Reply: 19 July 2019
Date of Decision on Costs: 16 October 2019

________________________

DECISION ON COSTS

________________________

1. On 5 June 2019, I made substantial orders in favour of the Plaintiff in the present action. The 1st Defendant basically did not object to the orders made therein. However, the parties have disagreements on the issue of costs. I therefore directed that written submissions to be filed and the issue of costs would be determined on paper without further oral submissions.

2. Parties have since filed detailed written submissions and I have carefully considered the same. Having reviewed the evidence and the submissions, I now make the following costs order:

“ The Plaintiff’s costs in this action including the costs of the hearing on 5 June 2019 and the costs relating to written submissions on costs, to be paid by the 1st Defendant personally to the Plaintiff (and not be to be borne out of the Estate of Chiu Sin Kow also known as Chiu Kau, Deceased (‘the Estate’), on a party to party basis, to be taxed if not agreed.”

3. I consider the above costs order to be just and reasonable because first, the 1st Defendant has not properly administered the Estate for about 12 years which is, by any standard, a very substantial delay. Further, after the Originating Summons in the present proceedings was issued on 8 November 2018, the 1st Defendant chose not to consent to the terms of the Originating Summons sensibly. Instead, by reason of the 1st Defendant’s conduct, the parties spent substantial legal resource including instructing counsel to appear before this Court on 5 June 2019. I also agree with Ms Law for the Plaintiff that the Plaintiff has substantially prevailed in his application and there is no good reason to depart from the general rule that costs should follow the event.

4. Additionally, I also agree that the present proceedings are necessitated by the 1st Defendant’s default in discharging her duties as the administratrix of the Estate. As a matter of general principle, it would not be right and fair that other beneficiaries, including the Plaintiff, would have had to shoulder the costs occasioned and incurred by reason of the 1st Defendant’s conduct in resisting the Plaintiff’s application.

Applicable legal principles

5. The starting point is the relevant rules of the High Court which governs this area of the law. Order 62, rule 3(2) provides:

“ If the Court in the exercise of its discretion sees fit to make any order as to the costs of or incidental to any proceedings …, the Court shall … order the costs to follow the event, except when it appears to the Court that in the circumstances of the case some other order should be made as to the whole or any part of the costs.”

6. Order 62, rule 6(2) provides:

“ Where a person is or has been a party to any proceedings in the capacity of trustee, personal representative or mortgagee, he shall, unless the Court otherwise orders, be entitled to the costs of those proceedings, in so far as they are not recovered from or paid by any other person, out of the fund held by the trustee or personal representative or the mortgaged property, as the case may be; and the Court may otherwise order only on the ground that the trustee, personal representative or mortgagee has acted unreasonably or, in the case of a trustee or personal representative, has in substance acted for his own benefit rather than for the benefit of the fund.”

(emphasis added)

7. The normal rule is that, absent improper conduct, the costs of the trustee and of the beneficiary defendants should be paid out of the trust fund. (See Davies v Watkins [2013] CP Rep 10; [2012] EWCA Civ 1570 at §26 per Lloyd LJ.)

8. This test can be traced back as far as Re Beddoe [1893] 1 Ch 547. Lindley LJ at p 558 said:

“ I entirely agree that a trustee is entitled as of right to full indemnity out of his trust estate against all his costs, charges, and expenses properly incurred: such an indemnity is the price paid by cestuis que trust for the gratuitous and onerous services of trustees; and in all cases of doubt, costs incurred by a trustee ought to be borne by the trust estate and not by him personally. The words ‘properly incurred’ in the ordinary form of order are equivalent to ‘not improperly incurred.’”

(emphasis added)

9. Relevantly, Bowen LJ at p 562 said:

“ The principle of law to be applied appears unmistakeably clear. A trustee can only be indemnified out of the pockets of his cestuis que trust against costs, charges, and expenses properly incurred for the benefit of a trust—a proposition in which the word ‘properly’ means reasonably as well as honestly incurred. While I agree that trustees ought not to be visited with personal loss on account of mere errors in judgment which fall short of negligence or unreasonableness, it is on the other hand essential to recollect that mere bona fides is not the test, and that it is no answer in the mouth of a trustee who has embarked in idle litigation to say that he honestly believed what his solicitor told him, if his solicitor has been wrong-headed and perverse. Costs, charges, and expenses which in fact have been unreasonably incurred, do not assume in the eye of the law the character of reasonableness simply because the solicitor is the person who was in fault. No more disastrous or delusive doctrine could be invented in a Court of Equity than the dangerous idea that a trustee himself might recover over from his own cestuis que trust costs which his own solicitor has unreasonably and perversely incurred merely because he had acted as his solicitors told him.”

(emphasis added)

10. In Re the Estate of Jimmy Savile [2015] BPIR 450, Patten LJ, after discussing the general rule that a trustee or personal representative is entitled to an indemnity out of trust fund or estate for costs properly incurred as described in Re Buckton, at §§109 and 110 said:

“ 109. There can, of course, be exceptions to this general rule. Even in the context of an application which is necessary for the proper administration of the estate, the court retains the power to disallow particular items of costs where the party in question has, for example, launched an unjustified personal attack on one of the other parties or has raised issued which make its conduct of the litigation deserving of moral condemnation: see Grender v Dresden [2009] EWHC 500 (Ch). The...

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