Court will not lightly invoke its discretion to remove administrator especially when plaintiff is non-cooperative
Introduction
In the recent case of Chu Wing Chuen Paul v Chu Oi Yan Irene [2022] HKCFI 804, the
Court of First Instance (the “CFI”) clarified that the court’s
discretion in removing administrator under section 33 of the Probate and
Administration Ordinance (Cap 10) (the “PAO”) involves an assessment and
value judgment of all circumstances of the case. The crux depends on whether
removal is necessary for due and proper administration of the estate and the
interest of the beneficiaries.
The Court’s discretion of removal will not be lightly invoked, in
particular in this case when the plaintiff beneficiaries had refused to
cooperate with the administrator and the administrator had acted in accordance
with wishes of other major beneficiaries.
Background
The Plaintiffs and the Defendant are 4 out of the 9 children (the “Siblings”)
of their late mother (the “Deceased”). The Deceased passed away in
February 2020 and left a relatively simple estate (the “Estate”) which
included cash balances in bank accounts and some gold and jewellery items (the “Chattels”).
The Plaintiffs alleged that shortly after the Deceased’s funeral, the
Siblings had agreed not to deal with the Estate for a minimum of two years (the
“Alleged Agreement”). It was allegedly agreed that the jewellery
belonging to the Deceased should be taken out of the safe deposit box and be placed
with the 1st and 2nd Plaintiffs for safe keeping until
its distribution. The Plaintiffs accused the Defendant for breaking the Alleged
Agreement by applying for letters of administration of the Estate less than one
year upon the Deceased’s death.
On the other hand, the Defendant alleged that she had repeatedly
requested for return of the Chattels from the 1st Plaintiff for
proper administration and distribution of the Estate. However, the 1st
Plaintiff had failed to do so and corresponded with the Defendant through his
then solicitors instead. In October 2020, the Defendant invited the Siblings
and 5 out of the 9 Siblings agreed for, mostly, equal distribution of the
Estate (the “Proposed Arrangements”).
The Plaintiffs claimed in Court that the Defendant failed to discharge
her duty as the administratrix of the Estate by failing to provide adequate
accounts of the Estate and failed to act in the Plaintiffs’ interests and
taking into account the Plaintiffs’ wishes. In particular, the Plaintiffs
contended that that Defendant should not have applied for the Letters of
Administration less than one month after the Alleged Agreement.
Accordingly, the Plaintiffs sought removal of the Defendant as the
administratrix of the Estate and requested the Defendant to furnish proper
particulars in the form of an inventory and accounts of the Estate.
The law
The CFI confirmed and restated the principles on the removal of an
administrator or executor as follows:
1.
The court’s discretion to remove an administrator under section 33(3) of
the PAO involves an assessment and a value judgment in all relevant
circumstances of whether removal is required for the due and proper
administration of the estate and the interests of the beneficiaries.
2.
Not every mistake or neglect of duty by the administrator
will lead to a removal. The acts or omissions must be such as to endanger the
trust property or to show a want of honesty, want of proper capacity to execute
the duties, or a want of reasonable fidelity.
3.
Hostility between the administrator and
the beneficiary is not a ground for removal unless it makes the administration
difficult or impossible.
4.
In exercising its discretion, the court
will take into account the size of the estate, the nature of the assets to be
administered, the background and education, training and experience of the
remaining and substituted personal representatives, the interests of
beneficiaries, and the view of the majority beneficiaries.
5.
Generally, removal of a representative
will not be lightly invoked unless the administration is still far from
completion. The fact that administration could have been done better is not in
itself a sufficient ground.
6.
A delay in rendering accounts of the
estate does not automatically call for removal of administrator.
Application
Upon reviewing the law, the CFI had no sympathy for the Plaintiffs.
The CFI was of the view that it is the Defendant’s fundamental duty to
gather and distribute the Estate to the Siblings. The administration of the
Estate might well have been concluded if the Plaintiffs had delivered up the
Chattels and it was the Plaintiffs’ non-cooperation that largely contributed to
the delay and substantially obstructed the preparation of the accounts of the
Estate.
In relation to the expenses incurred, the CFI accepted that the Deceased’s
funeral expenses arose out of the agreed funeral arrangement as decided by the
Siblings and in accordance with the Deceased’s wishes as conveyed to the
Defendant personally during her lifetime.
As for litigation costs, the CFI found that the Defendant’s previous
legal action commenced against the Plaintiffs was the last resort upon
reporting the matter to the police but to no avail and the Defendant had
already attempted to save time and costs for the Estate by applying for summary
application. Therefore, the CFI held that “it therefore lies ill in the
mouth of the plaintiffs to complain of litigation costs”.
Regarding the joint bank account of the 2nd Plaintiff and the
Deceased (the “Joint Account”), the 2nd Plaintiff had refused
to disclose information and alleged that the funds in the Joint Account belonged
to the 2nd Plaintiff pursuant to a survivorship clause in the Bank
of China’s Conditions of Service. The CFI did not accept the 2nd
Plaintiff’s argument and clarified that a survivorship clause in a joint bank
account is not conclusive in deciding whether the surviving account holder is
beneficially entitled to the funds therein. Instead, the common intention of
the joint account holders is the ultimate determining factor of ownership of
the funds. In this case, the CFI was convinced the joint account was only
created for the sake of mere convenience in case of emergencies and thus held
that the monies in the Joint Account was part of the Estate.
Accordingly, the CFI refused to remove the Defendant as the
administratrix. The Plaintiffs’ claims were dismissed.
Takeaway
This case is an example of another typical dispute in relation to
distribution and administration of an estate, regardless of how simple the
estate is. The CFI helpfully summarized relevant principles in relation to
removal of administrator, proper administration of estate, rendering of
accounts and deciding ownership of monies in a joint bank account. The CFI
emphasized that discretion of removing administrator involves an assessment and
a value judgment in all circumstances of the case and such discretion would not
be lightly invoked.
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Important: The law and procedure on
this subject are very specialised and
complicated. This article is just a very general outline for reference and
cannot be relied upon as legal advice in any individual case. If any advice
or assistance is needed, please contact our solicitors. |
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Published by ONC Lawyers © 2023 |
