Unhappy Beneficiaries? Three key ways to remove an unfit executor in Hong Kong.

A lot of care and effort normally goes into choosing the right person to act as the executor of a will.

Being an executor isn’t an easy task, but it’s vital they do the job properly or the very people the deceased wanted to provide for in their Wills can end up getting nothing or facing complications and delays.

There is a long list of duties involved which can include identifying and collecting the assets of the estate, keeping careful records, safeguarding those assets, paying any debts or liabilities owed by the estate, and filing tax returns for the deceased and the estate.

Then of course, they need to keep careful records and ensure the assets are distributed to the beneficiaries in accordance with the terms of the Will.

While most executors carry out their duties fairly and promptly, there can be occasions when this doesn’t happen and confusion, delay and even financial lose occurs.

So, what can the beneficiaries do?

This article looks at three key grounds used by Hong Kong courts to help beneficiaries remove an executor when things aren’t going as planned.

Three Key Grounds Used by Courts.

1. Failure to perform the duties of an executor.
2. Conflict of interest.
3. Necessity or convenience.

Under the Probate and Administration Ordinance, Hong Kong courts have the power to order the removal of an executor and can also exercise wide discretionary powers to appoint an individual as an independent administrator.

The usual grounds given to support an application to remove an executor include the following:

1. Failure to perform the duties of an executor.

The main duty of an executor is to manage and administer the Will of a deceased person with care. This involves two important obligations:

• distribution of assets
• keeping clear records.

Failure to perform these duties would provide grounds for applying to remove an executor.

In the case of Lau Tung Hoi Kent v Lau Tung Kuen [2022] HKCFI 1921, there had been no distribution from the estate despite the fact the executor’s year-long term expired on 1 January 2019.

In justifying the delay, the executor attempted to argue the assets should “stay put” as all beneficiaries and the executor had entered into a “Family Agreement” following two family meetings.

However, there was no contemporaneous documentation regarding any sort of agreement, and the executor provided different versions of events.

The court held the executor had no compelling reason to justify his failure to distribute the deceased’s assets.

The court also stated it was an established principle an executor is under an obligation to maintain clear and accurate accounts. These should be available on request.

Failing to do so would constitute grounds for dismissing an executor regardless of whether there was any intentional dishonesty, or whether there was any loss to the estate.

In this case, the executor failed to keep the deceased’s estate in a separate bank account. The court even found that multiple rental payments which had nothing to do with the estate had been paid into a bank account supposedly held on behalf of the estate.

The poor accounting records and the muddled bank accounts were held to be a good cause for justifying the removal of the executor.

2. Conflict of interest.

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 over a property where the deceased and his family had resided.

Although the deceased had died some 63 years previously, some of the family members, including the executors, were still living in the family property for free.

The executors’ attitude was that there is no immediate need or any urgency to change the present status, which would in effect mean they and their children could continue to live there for free.

The court took a different view and decided there was a clear conflict of interest between the executors’ attitude and the best interests of the estate’s management.

The executors were ordered to be removed.

A similar conflict of interest argument was put forward in the case of Lau Tung Hoi Kent v Lau Tung Kuen [2022] HKCFI 1921.

The applicant claimed the executor was in a position where the executor’s own interests or those of his immediate family members, conflicted with the proper performance of his duties as an executor.

In this case, however, the court determined that the limited evidence of any conflict provided by the applicant together with the executor’s assertion the property had already been put up for sale, meant the claims amounted to mere allegation which would not be a sufficient basis for an order to remove the executor.

This demonstrates that any conflict of interest claim must be supported by clear evidence that such a conflict exists before the court will act.

If successful, the court may remove the executor and appoint an administrator to better manage the estate.

3. Necessity or convenience.

The general approach to “necessity or convenience” as a ground for removal was stated in Re Estate of Haque Shaquil [2012] 1 HKLRD 689.

It was held that the Court would determine whether to exercise its discretion to remove an executor based on the actual circumstances of each case.

The circumstances to be taken into consideration would not be limited to those connected with the estate itself or its administration but would extend to any other circumstance the Court felt was relevant.

The burden of proof would fall on the applicant for the removal order.

The leading case which demonstrates the application of this approach is Re Estate of Loo Che Chin [2013] HKEC 377.

Here the court said the paramount consideration would be whether removal of the executor would be in the best interests of the estate’s management.

Hostility between an executor and a beneficiary would not in itself be a good reason to remove the executor.

However, if it could be shown that any such hostility would make it impossible or difficult for the executor to perform their duties in administering the estate, then it would be relevant.

In this case the court found that given the size of the estate, and clear evidence of mistrust and a breakdown in relations between the parties involved, removing the executor would be a better than allowing a simple administrative exercise from turning into lengthy and expensive litigation.

The same principle was also affirmed in Lau Tung Hoi Kent v Lau Tung Kuen [2022] HKCFI 1921, where the Court found there had been an irretrievable breakdown in the relationship between the parties.