In Lam Man Cheung v. Lam Man Yin and Anor [2022] HKCFI 866, Hon K Yeung J was dealing with 2 Originating Summons in relation to the estate of a deceased (the “Deceased”), and in particular his residence which was purchased under the Home Ownership Scheme (the “Property”).

Factual Background

2. The Deceased died in September 2017, leaving his last will dated 2016 (the “Will”). By clause 3 of the Will, the Deceased divided all interest of the Property into 100 shares and devised 40 shares therein to the Plaintiff and 60 shares therein to one of the Defendants, who are the named executors of the estate (the “Executors”).

3. The Property had been residence of the Deceased’s family since 1990.At the time of the Deceased’s death, only the Deceased, the Plaintiff and the first-named Defendant were residing at the Property.  While the first-named Defendant moved out shortly after the Deceased’s death, the Plaintiff moved out in July 2018, renovated the Property in December 2019, and moved back in together with his wife since July 2020.

4. By HCMP 375/2021, the Plaintiff took out an application against the Executors for an Order, inter alia, that the Executors do execute an assent in favour of the Plaintiff in respect of 40% interest of the Property. By HCMP 739/2021, the Executors took out a cross-application for an Order, inter alia, that the Plaintiff (and his wife) do deliver vacant possession of the Property, title deeds of the Property, and an Order for Sale in respect of the Property under specific directions.

Applicable Legal Principles

5. The issue to be decided by his Lordship, in gist, is how should the Executors give effect to clause 3 of the Will – whether the Executor do have power to, instead of executing an assent in the Plaintiff’s favour as insisted by the Plaintiff, have the Property sold and then distribute the proceeds of sale thereof to the relevant beneficiaries.

6. His Lordship has succinctly recited the legal principles: —

• • The rights of persons entitled under a will or intestacy are subsidiary to the rights of the executor or administrator for the purpose of administration. Thus, a beneficiary cannot, in the absence of maladministration force the representative to exercise a power (such as, for instance, the power to assent subject to mortgage): see Williams, Mortimer and Sunnucks on Executors, Administrators and Probate (21^st) at §35-05; Williams v. Holland [1965] 1 WLR 739 (CA) per Lord Upjohn;

• • The powers of personal representatives (“PRs”) are regulated by section 54 of the PAO, which stipulates that: —

“(1)     No conveyance of immovable property of a deceased person dying after the commencement of this Ordinance shall be made without the concurrence of all the personal representatives of the deceased or an order of the court;

[…]

(4)     A personal representative may charge, mortgage, or otherwise dispose of any property vested in him, as he may think proper, subject to any restriction which may be imposed in this behalf by the will of the deceased and to the provisions of this section:

Provided that an executor may dispose of any property notwithstanding any restriction so imposed if he does so in accordance with an order of the court.

(5)     The disposal of property by a personal representative in contravention of the provisions of this section shall be voidable at the instance of any other person interested in the property.”

• • While s 54(4) & (5) PAO preserved the right of a beneficiary to object as an excess of power to any disposition by a PR otherwise than for the purpose of administration, it does not in any way restrict or limit the absolute power of the PR to sell the property for the purposes of administration: Chun Hon Wai & Anor v. Junichi Takashima [2000] 2 HKLRD 482 at 484I to 485C, 487G to I per Godfrey VP.

Should Executors Bound to give Assent?

7. It was submitted by the Plaintiff that: —

• • clause 3 of the Will devises to the Plaintiff 40% interest in the Property as a specific gift. The legal consequence of the above construction is that the Executors should carry into effect clause 3 of the Will; and

• • having the right to have the Estate properly administered, the Plaintiff is entitled to seek an assent to be executed in his favour. The Executors are not justified in insisting upon a sale.

8. In deciding whether the Plaintiff is a specific legatee insofar as the Property is concerned, it is necessary to examine the proper construction of the Will.As restated by Ribeiro PJ in Tan Cheng Gay v. Tan Choo Suan (2015) 18 HKCFAR 430, one adopts the same approach to interpreting wills as one does to interpreting contracts and other documents to identify the intention of the party or parties to the document, i.e., by looking at the natural and ordinary meaning of the words with regard to facts known or assumed by parties when the document was executed, but ignoring subjective evidence of any party’s intentions.

9. Clause 3 of the Will reads: —

“本人將本人於死亡時擁有 [the Property] 之物業的一切權益及份額分成壹佰 (100) 等份，作以下分配:-

• • • 陸拾份 (60) 遺贈予 [the first-named Defendant] 繼承及享用；及
    • 肆拾份 (40) 遺贈予 [the Plaintiff] 繼承及享用。”

10. In rejecting the Plaintiff’s submissions and dismissing HCMP 375/2021, his Lordship held that: —

• • properly construed, clause 3 of the Will divides the Property into 100 shares (分成壹佰(100)等份) before those shares are to be distributed (分配) to the devisees “for their inheritance and use” (繼承及享用);

• • clause 3 of Will does not say that the Property in specie is to be distributed to the parties in the stated portion. Objectively, devising 40 shares of the interest of the Property does not require or imply that the Property has to be left in specie when the Executors administer the Estate.  Reliance of the words “繼承及享用” does not assist the Plaintiff;

• • refusal on the part of the Executors to give an assent as requested by the Plaintiff does not per se constitutes any maladministration. In fact, the Executors’ refusal to give the assent and decision to administer the Property by obtaining possession and selling the same to collect the proceeds are within their duty to carry into effect the provision of the Will; and

• • in absence of any maladministration by the Executors, the Plaintiff cannot force the Executors to give the assent which he has demanded them to make.

Should Order for Sale be Granted Under s.54 PAO?

11. The Executors submitted that section 54 of the PAO entitles the Court to grant an Order for Sale, despite the PRs have reached concurrence in disposing an immovable property.It was one suggested by the Executors that in considering whether an Order for Sale should be made, the same principles in considering an Order for Sale under Partition Ordinance (Cap.352), e.g., Wong Chun Kei v. Poon Vai Ching  [2007] 1 HKLRD 825, should apply.

12. In allowing the Executor’s cross-application in HCMP 739/2021 and granting an Order for Sale, his Lordship expressed reservations on the applicability of Wong Chun Kei, as the parties are at the moment not co-owners of the Property and they will not be until administration of the Estate. However, his Lordship granted an Order for Sale under section 54 PAO on the ground that such order would “enable the Executors to complete the administration of the Estate”. 

Conclusion and Takeaway

13. This judgment has several significances: —

• • First, this judgment serves as a sound reminder that being a named beneficiary has no legal or beneficial interest in any of the assets in the deceased’s estate until administration and distribution. This includes occupying in a real property being part of the estate;

• • Second, it is after all a matter of true construction of the Will to determine whether (i) a beneficiary is a specific legatee; and (ii) whether the Will imposes any restrictions as against the PR, e.g., that any asset has to be kept in specie; and

• • Third, in considering whether an Order for Sale should be made under section 54 PAO, the court is not concerned with potential co-owners seeking to rid himself from shackles of co-ownership, nor it is concerned with hardship as contended by opposing parties – the court is only concerned with whether an Order for Sale would enable PRs to complete the administration of the Estate.

Wong Hok Yan represented the successful Executors (the Defendants in HCMP 375/2021 and the 1^st and 2^nd Plaintiffs in HCMP 739/2021)