An executor is also known as an estate administrator, being responsible for managing and administering the last Will of a deceased person. The appointed executor has a weighty responsibility, and sometimes, a beneficiary may find an executor who underperform his/her duties which make him or her unfit to act.
The Hong Kong Courts have the power to order a removal of an executor and also exercise its wide discretionary power to appoint an individual as an independent administrator of the deceased’s estate pursuant to the Probate and Administration Ordinance.
The Courts would assess each case individually and consider the whole circumstances to form a full picture of the case. The usual grounds for the applicant to support his or her application for removal of an executor include the following:
- Failure to perform the duties of an executor
The main duties of an executor is to manage and administer the Will of the deceased person with care. Such responsibilities would give rise to two important obligations: (a) distribution of assets and (b) keeping of clear records. Failure to perform his or her duties would render a ground for application of removal of an executor.
In the case of Lau Tung Hoi Kent v Lau Tung Kuen [2022] HKCFI 1921, the executor had failed to distribute the deceased’s assets since his appointment in March 2018 (i.e. for 4 years) and the plaintiffs therefore applied to the Court to remove the executor. In justifying the delay, the executor attempted to argue that the assets should “stay put” as all beneficiaries and the executor had agreed entering into a Family Agreement that was prepared after two family gatherings). However, as there was no contemporaneous documentation and that the executor provided different versions of event in relation to the formation of the Family Agreement, the Court held that the executor had no compelling reasons to justify his failure to distribute the deceased’s assets.
Further, the Court held that it is an established principle that the executor is under an obligation to maintain clear and accurate accounts. Those records shall always be available when called upon to do so, failing which would form the basis to remove an executor (regardless whether an intention of dishonesty or loss to the estate exists). In the present case, the executor failed to hold the deceased’s estate in a separate bank account. Upon investigation, the Court even discovered that there were multiple rental payments not belonged to the estate being deposited into a bank account which said to be held on behalf of the estate. The unsatisfactory state of accounting records and mixture of monies were held to be a good cause for justifying the removal of the executor.
- Conflict of interest
It is common that if there is a conflict of interest, the Court can remove an executor.
In the case of Lee Goo Lynette Siu Yin & Ors v Cheung Wai Ming Daisy (Executor of The Estate of Li Sing Kui Deceased) [2019] HKCFI 1086, there was a dispute in a property where the deceased and his family had resided in. Although the deceased had died some 63 years ago, some of the family members, including the executors, were still living in the Family Property for free. It was held that the executors’ attitude was that there is no immediate need or urgency to change the present status quo of the Family Property which would in effect mean that the executors (and their children) could continue to live in the property for free. Therefore, in the best interest of the estate administration, the Court ordered the removal of executors.
Similar situation arise in the case of Lau Tung Hoi Kent v Lau Tung Kuen [2022] HKCFI 1921. In this case, the applicant claimed that the executor was in a position where his own interest or those of his immediate family members, conflicted with the proper performance of his duties as an executor. However, with the limited evidence provided and the executor’s assertion of the property had already been placed for sale, the Court held that a mere allegation would not be a serious ongoing conflict of interest that justifies the removal.
In a nutshell, if there is evidential and well-supported conflict of interest claim between the personal capacity and duties of an executor, the Court may, upon application, remove the executor concerned and appoint an administrator for better management of the estate.
- “Necessity or convenience”
The general approach to “necessary or convenience” as a ground for removal was stated in Re Estate of Haque Shaquil [2012] 1 HKLRD 689. It was held that, under this ground, the Court would determine whether to exercise the discretion to remove an executor based on the actual circumstances of each case. The circumstances to be taken into consideration would not only be limited to those in connection with the estate itself or its administration, but would also extended to any other circumstances that the Court thinks are relevant. The applicant for the removal bears the burden of proof.
The leading case which demonstrates the application of the approach was found in Re Estate of Loo Che Chin [2013] HKEC 377, which the Court stated that the paramount consideration to exercise the discretion is whether such removal would be in the best interests of the estate management. The Court held that a hostility between an executor and beneficiary were not per se a good reason to remove the executor. Yet, a removal could happen if the hostility would lead to the executor’s failure or difficulties to perform his duties in administration. Taking the size of the estate into account, the Court was satisfied by the evidence that there were a distrust and breakdown of relationship between parties and that the removal of executor would be necessary and convenient to avoid a simple administration exercise from turning into a lengthy and expensive litigation.
The above principle is also affirmed again in the case of Lau Tung Hoi Kent v Lau Tung Kuen [2022] HKCFI 1921, where the Court found that there had been an irretrievable breakdown in the relationship and allowed the application of removal of executor to ensure a proper administration of the estate.
The aforesaid are examples for illustration purposes. Our Civil Litigation team at Haldanes has extensive experience in acting for executors and beneficiaries of an estate of a deceased person in an application for or defending an application for removal of executors. If you are in need of such service, please contact our Partner Nathan Wong and our Senior Associate Xenia Lo.
For further information, please contact:
Nathan Wong, Partner, Haldanes
nathan.wong@haldanes.com
