Ye Hong Ying v Chan Lup Ying

HCMP3459/95

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 3459 OF 1995

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J U D G M E N T

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History

1. Mr Fung Chi-fong ("Mr Fung") died on 25th January 1993 in Macau. Mr Fung had two wives. He married Ye Hong-ying, the Plaintiff, in Shanghai in 1938. He married Chan Lup-ying, the Defendant, in Shanghai in 1945. The Plaintiff bore Mr Fung six children, one of whom died when he was an infant. The Defendant bore Mr Fung four children. All the children are now adults.

2. Mr Fung left Shanghai for Hong Kong in 1957. He was joined by the Defendant in Hong Kong in 1962. Their children, namely, Fung Wai-chuen (also known as Peter Fung), Fung Wai-tung, Fung Wai-leung and Fung Wai-kam, all came to Hong Kong. The Plaintiff remained in Shanghai until 1987 when she left to join her daughter in England. Since then she has been living with her daughter and is now living in Ontario, Canada.

The application

3. In 1987, Mr Fung made a will leaving the entirety of his estate to the Defendant. The Plaintiff seeks financial provisions for herself under the Deceased's Family Maintenance Ordinance ("DFMO") and the Inheritance (Provision for Family and Dependants) Ordinance, Cap.481 ("IPFDO").

Dependant

4. Section 4 of DFMO enables the Court to make reasonable provision for the maintenance of the dependant of a deceased person if no reasonable provision was made by the deceased having regard to the disposition of the deceased's estate effected by his will or the law relating to intestacy or a combination of both matters. 'Dependant' is defined as the surviving spouse of the deceased by a valid marriage. 'Valid marriage' includes a marriage celebrated or contracted outside Hong Kong in accordance with the laws in force at the time and in the place where the marriage was performed. The DFMO was repealed by the IPFDO which came into operation on 3rd November 1995. The IPFDO applies to person who died after the commencement of that Ordinance (s.3(1)), but it specifically preserves the continued operation of DFMO where the deceased died before 3rd November 1995 (s.33).

Marriage

5. The Plaintiff produced a Notarial Certificate issued by the City of Shanghai Notary Office which states that according to the Dossier Record of Shanghai in 1950, the Plaintiff is the wife of Mr Fung. While it was initially disputed by the Defendant whether the Plaintiff is in fact the wife of Mr Fung, this was not pursued at the hearing of this application. I find that the Plaintiff is Mr Fung's wife and a dependant within DFMO. I also have no doubt whatsoever, that both the Plaintiff and the Defendant know Mr Fung had two wives during his lifetime. They know of the existence of each other and their respective families have recognised and accepted each other as the other families of Mr Fung. The real dispute in this application is what financial provisions should be made for the Plaintiff.

The two Ordinances

6. In this case, there are two applications by the Plaintiff. The first is an application for maintenance under the DFMO. The second is an application under the IPFDO to vary the order that may be made under the DFMO. This approach was adopted in accordance with the judgment of Patrick Chan J. (as he then was) in Kung Lok Ping v. Ngai Fook Sang and Ngai Fook Ying, Deborah (HCMP No.158/1995) where the Plaintiff made an application under the DFMO, but before the hearing, the DFMO was repealed by the IPFDO. The learned Judge analysed the differences between the two Ordinances which include, among other things, that under the DFMO, the aim is to ensure the widow can have a reasonable living while under the IPFDO, the aim is to ensure the widow can have a reasonable share in the estate. The analysis of the differences and the approach adopted by the learned Judge are not challenged by the parties in this case, although Mr Lam, Counsel for the Defendant, reserves his view on the correctness of the approach. I will respectfully adopt the same approach in this application as well.

Date of valuation

7. Under s.4 of the DFMO, the Court is to order payment out of the net estate of the deceased. The issue is on which day the net estate should be valued. Mr Ismail, Counsel for the Plaintiff, submits that the valuation must be done at the time of the deceased's death on 25th January 1993. Accordingly, any increase or decrease in the value of the estate assets after that day must be excluded. His arguments are based on

(i) definition of 'net estate' in s.2(2) of DFMO and in particular the words "payable out of his estate on his death";

(ii) the definition of 'death duties' in s.2(1);

(iii) s.8 and in particular "have effect as from the day of the deceased's death";

(iv) s.9 and in particular "deceased at the time of his death had been domiciled in the Colony".

He further submits that under the IPFDO, the net estate must also be valued at the time of the deceased's death. He referred to the definition of 'net estate' in s.2(1), s.10, s.11(1), s.12(4) and s.21.

8. Mr Lam, on the other hand submits that the concern is how the Court should exercise its discretion, and that being the case, the Court must have regard to the present value of the estate. He refers to the wordings of the Ordinances and a number of authorities in support of his submission :

R. v. Shanahan[1971] 3 All ER 873;

Lusternik v. Lusternik[1972] 2 WLR 203 at 208;

Re. Borthwick[1948] 1 Ch.645 at 651;

Re. Coventry [1960] 1 Ch.461 at 465C;

White v. Barron [1980] 144 CLR 431;

Anthony Dickey's Family Provision after Death (1992) at pages 139 to 140.

9. In Kung Lok Ping, Patrick Chan J. did not adopt the value of the estate at the time of hearing for the purpose of the calculation. He, however, did not expressly decide on this issue.

My view

10. In my view, in applications under the Ordinances, it is essential to establish, as a starting point, the value of the net estate at the time of the death of the deceased. The value of the estate after death may fluctuate from time to time due to change of circumstances, for example, fluctuation in the price of shares or real estate of the deceased. Hence, it is necessary to establish a benchmark of the value of the deceased's net estate first. However, having established this benchmark, the Court must take into account the current value of the net estate in making the financial provisions. Even in the absence of authorities, this must be clear enough. For example, if a property of the deceased has been destroyed since his death, the Court must consider this and cannot possibly make financial provisions without taking this matter into account. In any event, this is clear from both Ordinances. Under s.7(1)(d) of DFMO, the Court shall have regard to any other matters or things which, in the circumstances of the case, the Court may consider relevant or material in relation to that dependant or to persons interested in the estate of the deceased or otherwise. In s.5(1)(g) of IPFDO, the Court shall have regard to any other matter, including the conduct of the applicant or any other person, which in the circumstances of the case the Court may consider relevant. Section 5(7) further provides that :

"In considering the matters to which the Court is required to have regard under this section, the Court shall take into account the facts as known to the Court at the day of the hearing."

In my view, in an application under the Ordinances, the current value of the net estate may well be treated as a relevant consideration although it has to be recognised that the question ultimately depends on the circumstances of the case.

Business of Mr Fung

11. During his lifetime, Mr Fung was the sole proprietor of a firm called New Carrier Plastic Works ("New Carrier"). When the Plaintiff and her children came to Hong Kong, they assisted Mr Fung in the running of New Carrier. In the 1980s, the factory of New Carrier was moved from Hong Kong to Shenzhen. According to the Defendant, by 1987 Mr Fung had effectively retired from the business activities, since then New Carrier had been operated by Fung Wai-chuen, the Defendant's eldest son. Mr Fung also had interest in two companies, namely, New Kingly Plastic and Metal Manufactory Limited ("New Kingly") and Carley Plastic Enterprises Limited ("Carley"). New Kingly was established in 1982. According to the Defendant, it remained a dormant company until 1993. According to the business registration, New Carrier carried on business as a branch of New Kingly on 2nd January 1993. Carley was incorporated on 31st October 1991, it was founded by Mr Fung and Ho Hsiung Hsu ("Mr Hsu"). The shares of Carley were held by Mr Hsu, Chen Hsiu-feng, Mr Fung, Fung Wai-kam and Fung Wai-chuen. Carley supplied material to New Carrier for manufacturing plastic Christmas trees which was its line of business.

12. New Kingly purchased the stock-in-trade and the fixed assets, including machinery of New Carrier after the death of Mr Fung. According to Fung Wai-chuen, the business of New Kingly was not profitable save that he and his family members, namely the Defendant, his brother and sister were...