This opinion article by Gordon Oldham was originally published in the South China Morning Post on 28 December 2020. 

In November, President Xi Jinping reiterated his call for “staying on the path of socialist rule of law with Chinese characteristics” and that all members of China’s legal community must “ensure loyalty to the party, the country, the people and the law”.

These comments further fuelled debate in Hong Kong about the integrity of its judicial independence. Yet Hong Kong’s extensive legal community is watching how the situation evolves while totally ignoring the elephant in the courtroom. Hong Kong’s court system is broken. The time it takes to get a civil matter in front of the courts, including matrimonial proceedings, is ridiculous. Justice delayed is justice denied.

Our court system resembles a much-admired vintage Rolls-Royce which still leads with its iconic lady, the rule of law. But, unfortunately, the leather is shabby, the paintwork hasn’t been touched up for decades, the engine needs a complete overhaul and the electronics are sub-par, to say the least.

On top of all this, the courts are chronically ill-equipped to cope with Covid-19. The closure of Hong Kong courts from February-April during the first wave of infection affected nearly 20 per cent of the annual caseload, an estimated 90,000 cases. The courts resumed but with intermittent restrictions until this fourth wave. The courts remain open but with enhanced social-distancing measures, which will once again reduce the number of hearings and tribunals.

The human cost of these extended court delays and logjams to our society is extraordinary. Consider divorcing couples: before the pandemic, they were waiting up to nine months for a hearing due to the serious backlog in the family courts. Now, with court closures and social-distancing measures, there are additional delays, causing further suffering for these families, especially children, in the already painful process of divorce. 

Jarndyce versus Jarndyce, a fictional court case created by Charles Dickens in Bleak House, concerned a High Court matter over a sizeable inheritance, which went on for so long that it survived through three generations. It eventually concluded in favour of the plaintiffs, but as the whole estate had, by then, been entirely devoured in legal fees, the exercise proved futile. This was Dickens’ criticism of the long drawn-out and expensive nature of the court, in which he advises any would-be plaintiffs: “Suffer any wrong that can be done you rather than come here!”

These are wise words in any jurisdiction – avoid court if you can and settle the matter. But it is especially pertinent if we look at Hong Kong’s broken court system. A plaintiff bringing a claim to the High Court today may have to wait for up to 18 months for a hearing. Even with a successful judgment, the enforcement of the ruling is far from certain.

The High Court in Admiralty. Hong Kong is not only among the top 10 per cent most expensive jurisdictions for litigation, but also among the slowest 20 per cent. 

This isn’t just the case for plaintiffs. There are many defendants with claims against them which transpire to be without merit, but only after they have spent significant amounts on legal fees and waited forever to defend against them. For plaintiffs, it is distressing to learn that, despite a meritorious case, they will come before the court only after the defendant has had the time to dispose of any assets or otherwise plead poverty.

Even with a successful judgment, the enforcement is far from certain and may well double the time the whole process takes. Throw into the mix the appeal process, which can double once again the time a party is in court and it’s hardly surprising that the legal system in Hong Kong is a source of much angst and exasperation for both lawyers and the general public.

This state of affairs has nothing to do with the impressive quality of our judges. Our judiciary does a wonderful job and we owe them our full support. It is simply a result of the lack of support staff and judges, and the prevailing ingrained, anachronistic ways of doing things. Examples of these include the lack of e-filing and the centuries-old habit of coming to court with a multitude of box files where an iPad would suffice.

To obtain a wider perspective, OLN Oldham, Li & Nie recently undertook a survey of litigation processes in 54 jurisdictions across the globe through Globalaw, an international network of law firms that it helped create.

Of these 54, it was found that Hong Kong was not only among the top 10 per cent most expensive jurisdictions for litigation, but also among the slowest 20 per cent. Hong Kong is rightly proud of its legal system, but like a lovely old Rolls-Royce, we are very expensive, slow and in desperate need of an overhaul.

Other jurisdictions have shown a willingness to adopt technology to strengthen the efficacy of their court systems and this has served them well through the pandemic. For example, England has been using videoconferencing and telepresence solutions in their court systems for years. Singapore has had paperless courts since 2000, enabling them to operate throughout the pandemic with the use of the e-filing system.

In Hong Kong, we urgently need to double down on our efforts and sharpen our focus to undertake the repairs necessary for the court system. We must completely renovate the infrastructure of our legal system to stop it from continuing to impede the efficacy of our courts so they work for the benefit of members of the public, not lawyers.

If we want to be proud of our legal system, let’s start with overhauling the court system. We live in the 21st century, not alongside Dickens.

Gordon Oldham is senior partner at OLN Oldham, Li & Nie – Solicitors. He is a veteran Hong Kong lawyer and businessman.

(This article was published in the January 2021 Issue of Localhood: https://www.localhood.org/single-post/preparing-for-our-loved-ones-estate-planning-the-untold-insights)

To most people, what matters is not their own wellbeing but their loved ones’. Whilst it may not be difficult to provide for that during one’s lifetime, it may be virtually impossible to do so when one is gone. It is therefore important to plan ahead to make sure that the loved ones are well taken care of in case of an eventuality.

The law generally states the default position in the absence of any estate planning (e.g. the Intestates’ Estates Ordinance in Hong Kong stipulates that the primary heirs are one’s spouse and children), but it is increasingly common for people to tailor-make their own contingency arrangements. Different tools and devices may be deployed to that end, and a general understanding of the features of different devices is essential to finding the most suitable solution in the circumstance.

1. The various devices

(1) By Will

If you have ideas on how to distribute your assets, you may make a will and set out your preference. You may designate the inheritee(s) of your estate and the executor(s) who will be handling the distribution of your assets (which will only take effect upon eventuality). Two witnesses are needed to witness your signature of your will and the witnesses cannot be the beneficiary of your estate. 

(2) By Trust

You may set up a trust by transferring the legal ownership of your assets to a “trustee” who will manage the assets on your behalf for the benefit of the designated persons as “beneficiaries”. Different types of trust can be set up for different purposes, and the powers of trustee may vary depending on the types of trust. Generally, a trustee may decide how and when the trust assets are managed or distributed. 

Trusts are becoming increasingly popular among wealthy families to protect their wealth and pass it on to the next generation. They are often used where the beneficiary may not be in a position to make good use of the gift (e.g. minor/disabled children). 

(3) By transfer during lifetime (also known as “Inter-Vivos Transfer”) 

If you have already made up your mind on how your assets should be distributed, the most straightforward way is to make the transfer during your lifetime. The transfer may simply be done by way of gifts.

2. Which device is the best?

There is no one-size-fits-all solution when it comes to estate planning. The above devices come with their own advantages and disadvantages. For example: 

(1) It usually takes a few months (at least) to obtain a probate grant to administer one’s estate, whilst generally, a trustee may at his discretion vest trust assets in a beneficiary. 

(2) Expenses in administration of trusts are generally higher than in administration of estate.

(3) Inter-vivos gifts are binding and may not be revoked once delivered with intention to make gifts.

It should also be borne in mind that these devices are not mutually exclusive – you may mix and match them as you please to achieve your objectives. 

3. Dispute risks

Whatever device(s) to use, no one wants his/her plan to be derailed. Any risks of challenge to the validity of the device(s) in place by disgruntled dependants need to be managed.

As a general rule, the longer a device has taken effect during one’s lifetime, the less likely it will be successfully challenged when one is gone. Therefore, inter-vivos gifts are relatively least challenged, followed by trusts and then wills. Probably with this in mind, the ultra-rich have recently demonstrated strong preference to divide up their assets among families during their lifetime, even though “abdication” is the consequence.

Estate planning not only gives you peace of mind that your loved ones are protected during a time of extreme stress and grief, but also provides an opportunity for you to reflect upon your priorities. Bespoke estate planning involves a deep understanding of one’s wishes and family situation. It is recommended that guidance and advice from experienced professionals be sought, especially where assets across multiple jurisdictions are involved. 

January 2021