Lcjwy v. Lcks

FCMC 16239/2013

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MATRIMONIAL CAUSES NO.16239 OF 2013

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JUDGMENT
(PRELIMINARY ISSUE ON BENEFICIAL OWNERSHIP)

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1.On 12^th November 2013 the Petitioner Wife filed for divorce in these proceedings against the Respondent Husband for the dissolution of their 11 odd years marriage and for custody of their 2 daughters and general ancillary relief. Upon exchanging their Form E for the purpose of FDR, preliminary issues were raised over the beneficial ownership of certain assets including companies shares, a landed property and certain funds (“Disputed Assets) held under the name of the Husband which he claims are on trust for either or both of his parents who were subsequently given leave to intervene in these proceedings, but which the Wife believes to beneficially belong to the Husband and should be regarded as part of the marital assets or his financial resources for the purpose of her ancillary relief application, hence it was agreed that these issues should first be resolved before the FDR hearing, and which is the matter now before me.   

2.It is not disputed that the Husband had never paid for any of these Disputed Assets, and that the Wife’s case is that they were all given to him by either of his parents essentially either as gifts or advancement, or as part of his father’s estate planning due to his deteriorating health as a result of a debilitating neurodegenerative decease since the late 1980s, of which no doubt I will have more to say later in this judgment.

3.Both the Husband and his parents deny they were gifts or part of estate planning of the Father who is undisputedly a man of very substantial wealth, but rather that the Husband was made the legal owner only of those assets, as was his sister S (“Sister”) of some of them, at various times and for various reasons but essentially for him and his sister to be involved in their father’s financial affairs in order to learn to manage them and to help to preserve and grow his wealth in view of his incapacity.

4.It is however common ground that there is no express declaration of trust in respect of any of the Disputed Assets, and that it is also noteworthy that the vesting of legal title of most, but not all, of the Disputed Assets on the Husband and the creation of such alleged trusts took place prior to his marriage to the Wife in 2002, and hence the latter has had no direct or personal knowledge of any details of such transactions, and that she has admittedly based her case essentially on information acquired during the marriage including her own impressions and what she had allegedly heard from the Husband and/or his mother the 1^st Intervener (“the Mother”).

5.It would also be helpful to set out here particulars of those Disputed Assets so that they can be read together with the background facts and relevant chronology of events which are to follow below:

(a) A flat in Lincoln House, Knightsbridge, London, UK (“Lincoln House Property”) allegedly on trust for the Father;

(b) 1 of 3 shares in GW Investment Ltd which holds a 16A Po Garden, Brewin Path, Hong Kong (“Po Garden Property”) allegedly on trust for the Father;

(c) 2 of 4 shares in HF Consultants Ltd which currently holds a property at The Merton, Kennedy Town, Hong Kong (“The Merton Property”) allegedly on trust for the Father;

(d) 1 of 60,000 shares in WS Ltd allegedly on trust for the Mother;

(e) 1 of 2 shares in GC Ltd that owns various lots of agricultural land in Yuen Long, New Territories allegedly on trust for the Father.

(f)  Various bank accounts and securities accounts of total value in excess of HK$10 million allegedly on trust for either of the parents.   

Background

6.The Husband is now aged 39, and the Wife 38. Both came from wealthy local banking families and were married on 30^th November 2002 with 2 daughters now aged 9 and 8. The Husband is a solicitor and a consultant of a law firm but works mainly in his family’s business, while the Wife is a housewife and had been so throughout the marriage.

7.As for the other background facts relevant to the Disputed Assets, I propose to adopt the Chronology of Events attached as Appendix 2 to the Wife’s Closing Submission as the basis for a more relevantly shorter version below, of which there is little dispute as to matters of primary fact and in particular relating to the time and means of acquisition of these assets:

Date	Event
1973	Husband’s parents were married
26 Jun 1975	Husband was born
15 Sep 1976	Wife was born
1978	Sister was born
Sept 1979	GC Ltd was incorporated with Husband’s parents each held 1 share for purchasing agricultural and grassland in the New Territories
1980	WS Ltd was incorporated with 59,000 shares held by a nominee for the Father and 1 share held by a company owned by the parents
1980s	I-Trust was established with Husband and Sister as beneficiaries and Mother as protector
1986/1987	Father was diagnosed with neurodegenerative disease
1988	Father appointed Mother as attorney to deal with his financial and personal affairs
January 1991	Parents’ separation according to their subsequent separation agreement
Jul 1993	WS Ltd purchased 25B Po Garden
Aug 1993	Father’s nominee transferred 30,000 shares in WS Ltd to Husband and 29,999 shares to Mother
Oct 1995	Lincoln House Property was purchased in Husband’s name when he was a year 2 student at Oxford
Jan 1997	Mother and her brother were each allotted 1 share of GW Investment and were appointed directors
Mar 1997	Husband’s parents signed deed of separation
June 1997	Husband finished studies and returned from England
Sept 1997	Husband transferred all his shares except 1 in WS Ltd to Mother
1999	Husband’s parents filed for divorce
24 May 1999	Husband was appointed a director of GW Investment and was transferred 1 share from Mother’s brother who also resigned as director
Oct 1999	Sister completed her studies in law at King’s College in London and returned to Hong Kong
8 Nov 1999	GW Investment purchased 16A Po Garden Property and rented it out
17 Nov 1999	1 share in GW Investment was allotted to Husband’s Sister
21 Jan 2000	HF Consultants Ltd was incorporated
9 July 2001	Mother resigned as director and transferred her 1 share in GC Ltd to Husband who was also appointed the director
2001	Mother remarried
Jan 2002	HF Consultants allotted 2 shares to Husband and 1 share to Father
Feb 2002	HF Consultants purchased Regent on the Park Property
30 Nov 2002	Parties married in Hong Kong
Early 2003	Parties moved into Regent on the Park Property as their 1st matrimonial home
13 July 2005	Elder daughter was born
Sep 2005	Parties moved into 16A Po Garden Property as their 2nd matrimonial home
9 Mar 2007	Younger daughter was born
Aug 2007	Regent on the Park Property was sold with sale proceeds used to pay off 16A Po Garden Property’s mortgage, HK$1 million to the Husband and for the purchase of another property known as The Merton
18 Mar 2008	1 additional share in HF Consultants was allotted to Father
Oct 2011	WS Ltd sold 25B Po Garden
Mar 2012	Husband moved out of 16A Po Garden Property for 3 months after domestic disputes with Wife and returned in May 2012
18 Dec 2012	Father transferred his 2 shares in HF Consultants to Sister

8.It is against this background of the Husband’s family and the parties’ marriage that now brings me to their divorce proceedings which as noted above were commenced on 12^th November 2013 when the Wife filed for divorce against the Husband based on his unreasonable behaviour and sought custody of both daughters and general ancillary relief for herself the daughters, with a 1^st Appointment for both CDR and FDR fixed for hearing on 7^th April 2014.

9.Meanwhile the parties were directed to file and exchange their Form E which then triggered off what can be described as a whole series of extensive and very often contentious discovery applications with one of which led to a judgment delivered by this court earlier on 30^th June 2015. 

10.In his Form E filed on 27^th February 2014 [A1/50] the Husband disclosed a monthly income in excess of HK$280,000 and a net value of his assets of about HK$32 million, but he also revealed holding those Disputed Assets on trust for either of his parents and hence they were not included as part of his assets nor their net value which he placed in excess of HK$77 million.

11.With these Disputed Assets valued as much and possibly more taking into account of those lots of land held by GC Ltd, and in the absence of any express declaration of trust for any of them, it is not surprising that the Wife took issue with their alleged trusts, and as a result the Husband’s parents were subsequently given leave to intervene on 11^th December 2014, with directions for this dispute to be first tried as preliminary issues before FDR when it was also agreed amongst the parties with a view to save time by setting out their respective case and evidence by way of affidavits instead of formal pleadings which would otherwise be the case.

12.It was also agreed that in view of the Father’s health condition which has prevented him from any court’s attendances or filing any affidavits, only the Mother was to file her evidence and to attend the trial during which she and the Father were represented by Mr Abraham Chan with Ms Bonnie Chan, while the Husband was represented by Mr Jeremy Chan, and the Wife by Mr David Pilbrow SC with Ms Corinne Remedios.

13.As expected the case of both the Husband and Parents is essentially the same which can be summarised as follows:

(a) the Father established I-Trust for the Husband and Sister as beneficiaries with the Mother as the protector of the trust with certain assets held under a trust company known as I-Investment Ltd to secure for their education expenses, and upon their graduation from university the trust was subsequently wound up with the legal and beneficial interests in the trust company vested in the Husband and Sister equally, which are the only assets given to them by their parents;

(b) the Father developed a neurodegenerative disease in about 1986/1987 which has since left him completely bedridden and to lose his speech and requires round-the-clock respirator assistance and nursing care, but otherwise his mental faculties have remained intact and unaffected;

(c) the Parents divorced in 1999 with an amicable financial settlement, and the Mother remarried in 2001;

(d) the Lincoln House Property was purchased by the Father but put in the name of the Husband as he was then studying in UK and that it was for the family’s use;

(e) the Regent on the Park Property was purchased with a sitting tenant by the Mother as an investment for the Father through HF Consultants, and that the Husband was later made a shareholder of HC Consultants only for the purpose of learning to manage properties under the Mother’s supervision;

(f)  upon the parties’ marriage and when the Regent on the Park Property became vacant and the parties were looking for a place to move, they were allowed to reside in that property by paying a monthly sum of HK$12,500 for its use and to pay for its renovation and other maintenance expenses;

(g) upon the sale of the Regent on the Park Property by the Father the Husband was paid HK$1 million out of the sale proceeds as reimbursement of his renovation expenses, with the rest for the Father’s own use including paying off the mortgage of the 16A Po Garden Property and for the purchase of the Merton Property;

(h) the 16A Po Garden Property was purchased as an investment for the Father through GW Investment with the Husband and Sister being made shareholders of the company to learn to manage properties, and when the Husband needed a bigger home for his family upon the birth of his elder daughter, the parties were allowed to move into this property on similar conditions as before for the Husband to be responsible for all outgoing expenses;

(i) GC Ltd was formed by the Parents for purchasing agricultural and grassland in the New Territories as long term investments in anticipation of future government’s development in those rural areas, and the Mother’s transfer of her shareholding to the Husband on trust for her to explore into development potentials and the feasibility of purchasing further neighbouring land, but the company has never generated any income;

(j) the Mother had from time to time over the years asked the Husband to manage and invest her own monies in various joint bank accounts with him including a fund management contract in which she had contributed an initial sum of HK$10 million for him to manage and invest for her.     

14.As noted above the Wife’s case is that over the years the Father had funded the purchase of the various landed properties of the Disputed Assets in the name of the Husband direct or through companies, whose shareholding had been vested in the names of both the Husband and the Sister, and hence such assets as were registered in the Husband’s name were gifted by the Father to him with the intention at the time of transfer of conveying the beneficial interest as well as the legal title in these assets to him, and that if there is any doubt in this regard, she argues that the presumption of advancement should prevail and confirm that to be the position.

15.The salient feature of all these transactions, the Wife further notes, is that they all took place after the Father’s diagnosis in about 1986 of his motor neuron disease which rendered him virtually completely incapacitated and with a short life expectancy, and were made to the Husband as their only son of a traditional Chinese family during a time when there was liability for inheritance tax in England and estate duty in Hong Kong, of which the court must bear in mind when considering the real intention of the Father and/or the Parents behind each of the transactions.

16.It is also submitted by the Wife that the absence of declaration of trust in relation to any of the disputed assets is all the more significant because both the Husband and Sister are lawyers, while the Father was also familiar with the purpose and workings of a trust, having set up the I-Trust for the Husband and Sister with the Mother as the Protector thereof. As the beneficial interest and legal title go hand in hand, the Wife submits that the Husband and his parents bear the burden of proof that their intention at the time of the transactions did not coincide with the transfer of legal title.

17.Alternatively, the Wife prays in aid the presumption of advancement that the Father, in a very traditional Chinese family, and who was ill but very wealthy and worth an estimated HK$700 million, intended to and did at relevant times make outright gifts to his only son, and she submits that in the circumstances of the case and the contemporary evidence that exist, the Husband and the Parents have not discharged the burden of proving a contrary intention nor rebutted the presumption of advancement.

18.It is further the Wife’s case that as the Husband was aligning himself with a construction that he was not gifted the various beneficial interests and purporting to shelter behind alleged trusts, it was to avoid his matrimonial obligations in his divorce with the Wife, and hence his subsequent acts and declarations should not be admissible or of little weight at his instance in proof of the alleged trusts.

19.It is submitted by the Wife that the special circumstances of this case point to no trust having been set up at the time of the original transactions albeit that there may have been consensual agreement of a family to distribute or deal with assets after the event, particularly in the aftermath of the Parents’ divorce.

20.While consensual re-arrangements occur in traditional families, the Wife submits, even more so where there has been a divorce, as assets are re-distributed, one or the other party makes provision, or cause provision to be made for the children, in addition to or instead of ancillary relief, or simply to ensure the wealth is kept within the family, as in the case of the Father here, the special circumstances being his frail health and uncertain life-expectancy, which makes it perfectly foreseeable, the Wife submits, that the Father would wish to ensure that his children and grandchildren have a comfortable life within his own uncertain lifetime, particularly so when he has already discharged his financial responsibilities to his ex-wife who has since remarried.

21.It is further submitted by the Wife, while it is the case of both the Husband and Parents, as put by the latter’s Counsel “that those disputed assets were acquired on an ad hoc basis driven by a number of readily explicable pragmatic considerations, and that the court in ascertaining the Father’s intention should look at the objective circumstances at the time of the acquisition or transfer”, she does not accept that those transactions were in fact “ad hoc”, and submits that each of the transactions was linked to key dates which are the “objective circumstances”, and that the court should draw inference from the circumstantial evidence that each of the transactions was intended by the Father as a gift.       

22.Before proceeding to consider the evidence of the parties’ respective case including those referred to above by the Wife as objective circumstantial evidence prevailing at the date of the respective transactions, it would of course be relevant to first set out the law and principles applicable to the disputes now before me.

Applicable Legal Principles

23.It is settled law that any ownership dispute between divorcing couple and third parties falls squarely within the Chancery realm: TL v ML & Ors (Ancillary Relief: Claim Against Assets of Extended Family) [2006] 1 FLR 1236, endorsed by the Court of Appeal in LWYA v KYW & Anor CACV 151 & 152/2013, unreported, and as such there is no room for discretionary consideration of the kind that might normally apply in general matrimonial proceedings.

24.The legal principles concerning such a ownership dispute as stated by the UK Supreme Court in Jones v Kernott [2011] UKSC 53, [2012] 1 AC 776 have been helpfully summarised by Mostyn J in Bhura v Bhura & Others [2014] EWHC 727 at §8:

“The applicable legal principles concerning a property dispute such as this are tolerably clear and have most recently been re-stated by the Supreme Court in Jones v Kernott [2011] UKSC 53, [2012] 1 AC 776. In summary I think they are as follows:

i) If there is an express declaration of beneficial interests then that is, almost invariably, the end of the matter. Such an express declaration can only be displaced if it has been procured by fraudulent conduct …

ii) If there is no express agreement about the beneficial interests then there is likely to be (at least) a tacit understanding. This is hardly surprising as one would expect that when people enter into what may very well be the most important economic transaction in their lives – buying a home – they would have a pretty clear understanding of who owned what share of it. In determining whether there was such a tacit understanding, and if so what it was, the court will look at all the evidence holistically and will examine the whole course of the parties’ conduct in relation to the property.

iii) In the rare case where the evidence does not reveal a tacit understanding about ownership the court can reach for the presumptions. An obvious presumption is that beneficial ownership is the same as legal title (see Jones v Kernott at paras 17 and 51(1)).

iv) Another is the presumption of resulting trust. In Pettitt v Pettitt [1970] AC 777 at 824 Lord Diplock doubted that it was of much relevance in the modern era …

v) A further presumption is the presumption of advancement but this can be regarded as being on the death-bed …

vi) But presumptions are only presumptions

vii) “Actual facts” are those which suggest that a result steered by a presumption is unfair. Although there are different degrees of emphasis and nuance all of the Justices in Jones v Kernott accepted that where a tacit agreement could not be found by a process of inference the court could impute to the parties a fair agreement which they never in fact made but which they should “be taken” as having made (see paras 45, 60, 72, 85(2)). Of course, as Woodhouse J pointed out, this involves a “fictional attribution of intention”, but the process has a long pedigree. One only needs to remind oneself of Lord Denning MR’s statement in Appleton v Appleton [1965] 1 WLR 25 at 28 to see how the wheel has turned full circle. There he said “A judge can only do what is fair and reasonable in the circumstances. Sometimes this test has been put in the cases: What term is to be implied? What would the parties have stipulated had they thought about it? That is one way of putting it. But, as they never did think about it at all, I prefer to take the simple test: What is reasonable and fair in the circumstances as they have developed, seeing that they are circumstances which no one contemplated before?” I cannot see any difference between that statement and that of Lord Wilson in para 87 where he rhetorically asked “where equity is driven to impute the common intention, how can it do so other than by search for the result which the court itself considers fair?”

25.Henceforth and with these principles in mind, I shall now turn to consider the parties’ evidence as to each of the Disputed Assets in chronological order relevant to the creation of the alleged trust, but before doing so it would be relevant to first set out the Mother’s evidence about her own marriage with the Father in particularly his neurodegenerative disease which she says was central to the various decisions that he had made over the years for the acquisition of those Disputed Assets and the subsequent arrangements with their children the Husband and Sister as set out in her 2^nd Affidavit [B/293, 295-297]:

“8. (Father) and I were childhood and family friends. We both came from big families and our respective families knew each other very well. (Father)’s brothers were my father’s friends and I first met (the Father) when I was around 13 or 14 years old. We were engaged when I was around 15 years old and (Father) around 19. (Father) and I practically grew up together. We got married in 1973 when I was still attending university in London. After graduation from university, I did not apply for any jobs and remained a housewife, devoting my time to taking care of (Father) and my children aside from making investments. Unfortunately, in around 1986 or 1987, (Father) was diagnosed with motor neuron disease (also known as A.L.S., being a neuro-degenerative disease similarly suffered by the internationally well-known Professor Stephen Hawking) which has gradually affected his physical movements but fortunately without affecting his mind.

9. It was a sad and difficult time for our family since (Father) being a medical doctor knew what exactly was to happen and since our children were only aged 11 and 8 respectively at that time. All of a sudden, I had to shoulder all responsibilities of the family. It was particularly painful for me as I had to stay strong to give both mental and physical support to (Father) and to bring up our children almost single-handedly.

10. It turns out that (Father)’s condition is one of the rare exceptions (similar to Professor Stephen Hawking’s) and, with his determination, he outruns the normal life expectancy of around 3 to 5 years of patients with similar conditions. Within 2 years since he was diagnosed with motor neuron disease, the disease had left him completely bedridden and caused him to lose the ability to speak and swallow as well as difficulties in breathing. Having tried different means of communication, (Father) finds it more effective to go back to the most basic form of communication – spelling sentences by way of choosing the correct alphabet using his eye movements with the assistance of his caretakers. The process may take longer but it has proved to be effective. (Father) now relies on liquid diet via tube-feeding as well as round-the-clock respirator assistance and nursing care. Despite such physical challenges, (Father) has retained an impeccable memory. Before he suffered a minor stroke in February 2010, he was able to keep himself occupied with horse-racing (including doing his “homework” on his horse-race betting), soccer matches, securities investments and daily news (the last of which remains his present daily activity). Nonetheless, he was and is still able to give instructions to his family members, carers, solicitors and his secretary, Ms CL, who has been serving him till now for over 30 years.

11. Soon after the diagnosis of motor neuron disease and knowing exactly what would eventually happen to his health, (Father) instructed his solicitors, Messrs. Woo, Kwan, Lee & Lo, to give me a general power of attorney in accordance with section 7 of the Powers of Attorney Ordinance, Cap. 31 of the Laws of Hong Kong (the “Power of Attorney”). The reason for executing the Power of Attorney was to enable me to assist with dealing with (Father)’s financial and personal affairs. The Powers of Attorney was executed on 11 October 1988 in the presence of a solicitor. There is now produced … a copy of the Power of Attorney. I am advised by my lawyers and verily believe that this Power of Attorney remains valid to this date, giving me the authority to (including without limitation) save and invest (Father)’s money, enter into transactions and conduct litigation on his behalf. Albeit so, to keep his mind active, I have always with the assistance of his caretakers consulted and discussed with (Father) before I made major investment decisions, and discussed with him what vehicle I should use to hold such investments.

12. In 1999, (Father) and I divorced. Despite our divorce and my re-marriage in 2001, I still regard (Father) as my dear family member and I have continued to look after the family’s affairs, as well as his personal and financial affairs. There has remained a high level of mutual trust between us. Ever since the onset of (Father)’s illness, the resultant round-the-clock medical care has meant substantial recurring medical expenses. However, while relying on dividend income, (Father) became very fond of gambling which occasionally resulted in heavy losses even up to a few million Hong Kong dollars in some years. Out of a deep concern for his welfare, I have endeavoured to preserve and grow his wealth as much as possible and have up till now paid him regular weekly visits to check on his condition and manage his household matters such as supervising his helpers, secretary and medical support team. Throughout the years, I have been managing (Father)’s helpers, including (but not limited to ) arranging for the payment of their salaries, making arrangements to their daily roster and the timing of their holidays, renewing their contracts and looking for replacement helpers when necessary. I have also continued to monitor his health condition. His helpers would ask me for instructions whenever there is any issue with matters relating to (Father), whether it be health issues or practical issues like the need for a replacement wheelchair. I have never abandoned him but have looked after him continually in spite of the change in our relationship and after my children have become grown-ups, as after all, (Father) has been and is still my childhood, family and trusted friends for over 40 years.

13. As the years went by and as my children became of age, I felt that they should learn and eventually take up the responsibility of looking after their father and managing his assets. While I have continued to manage (and am still managing) (Father)’s wealth on his behalf, (Father) and I decided to gradually involve the children in the management of his affairs (as explained further below), both in the hope that they would one day take up full responsibility for managing their father’s affairs on his behalf and learn about investment and property management for their own benefit. By no means, however, was such arrangement any indication of (Father)’s assets being passed to them as gifts at all. As things stand, my children as much as I am are merely administrators of (Father)’s wealth and assets on his behalf.

14.  I note that in paragraph 5 of the 3^rd Affirmation of the Petitioner dated 21 July 2014, the Petitioner claimed that I am not on good terms with (Father) … Given the circumstances and reason for my managing (Father)’s affairs on his behalf as explained in the foregoing paragraphs, I feel offended that the Petitioner could have made such groundless and inappropriate comments which come from nowhere. At the time of my divorce in 1999, my son, the respondent, had not even met the Petitioner. Also, during their marriage, the petitioner had merely lived with (Father) for no more than 2 months, which certainly does not enable or entitle her to give a fair account of the relationship between (Father) and me. Moreover, as explained above, since (Father) remains capable of giving instructions independently with the assistance of caretakers, I have always sought his approval before making major decisions notwithstanding the power of Attorney. In particular, all property investments described in this Affidavit were sourced by me, proposed to (Father) and subsequently approved by him. I have always endeavoured to act in his best interests for reasons already explained.”       

26.I should also note that as part of my order for discovery against the Husband and the Parents prior to the trial of the matter now before me, the Parents did produce to the Wife’s legal advisers a list of their assets at the time of their divorce and their ancillary relief settlement and order in 1999 made pursuant to their Deed of Separation made earlier on 6^th March 1997, and while they were not, for reasons not necessary to go into here, included in the trial bundles, their terms and effects did form part of the Parents’ case and upon which the Mother was cross-examined during the trial.   

27.The Wife as noted above takes issue with the Mother’s case and it would likewise be relevant to refer to the main crux of her evidence when she responded in her 3^rd Affirmation as follows [B/237, 238]:

“4. In the Respondent’s mother’s affirmation … she gave accounts of how the Respondent are holding some property interests, shares in companies and bank accounts on trust for her ex-husband, the Respondent’s father, who is now bedridden and incapacitated. She also indicated that she maintains a good relationship with her ex-husband and helps him manage his financial affairs and companies although they were divorced many years back and she is now married to a wealthy Malaysian tycoon. However, from what I have observed, this is not the case. I recall the Respondent’s father was not in good terms with the Respondent’s mother when she met her current husband and divorced the Respondent’s father. When the Respondent and I were married, the Respondent’s father did not want his ex-wife to bring her new husband to attend our wedding but she ignored him.

5. In my view, it is not the case of the Respondent’s mother having a good relationship with his father, but rather that his father’s health has deteriorated so significantly over the past years that he no longer has the capacity to make his own financial decisions and the respondent’s mother has simply taken it upon herself to manage his financial affairs. I have witnessed the Respondent’s mother holding his father’s hand to sign documents on a weekly basis without the presence of a nurse or a doctor. Although the Respondent’s father’s mind is still functioning, he is incapable of signing anything and has difficulty communicating to people. A maid who worked for the family in the past helped him dictate singular words. It is clear that all the father’s assets are currently controlled by the Respondent and his sister S while the mother oversees and abets.

6. The Respondent’s father’s net worth is reportedly to be in the range of HK$500 to 700 million based on his shareholding in the LCH Holdings, in addition to his direct holdings in various properties in Grenville House. There is no reason why he needed the respondent to hold any assets for him especially when those assets in question are not worth a significant value compared to what he has. It makes better sense that he had simply gifted those assets to his son as fathers do.

7.  Even though the Respondent relied on and referred to his mother’s affirmation in his Answers relating to assets he claims are held on trust for his father or mother, the Respondent’s mother’s affirmation is purely narrative and contains not a single piece of documentary evidence, contemporaneous or otherwise, to support the claims. One would have thought that multi-million businessmen like his father and mother would have the knowledge and experience and be advised of the importance of documenting trust interests by way of a trust deed.” 

28.It is against these respective pleaded case of the parties that I shall now consider the evidence of how and why the Husband was made the legal or registered holder of each of those Disputed Assets, then ask myself this question of whether there was any tacit understanding between him and his parents over the beneficial interests of these assets at the time of the vesting of their legal title on him, and if so what they were by looking at all the evidence holistically including the whole course of the parties’ conduct in relation to the assets which had admittedly spread over almost 20 years, starting with the Lincoln House Property in chronological order, where appropriate, of the vesting of legal title in the Husband.

29.I should also note here that upon the close of evidence and in her closing submission, the Wife confirmed that she no longer takes issue with the Husband’s case that he has been holding the last item of the  Disputed Assets namely the HK$10 million investment funds on trust for the Mother.    

Lincoln House Property

30.The Mother’s case is that this property was purchased in 1995 for £250,000 by the Father as a base for her visits to their children and for them to stay while attending school there, and with the Husband then a 20 year old student at Oxford, while the Sister was then only 16 year old and an upper 6^th year student at Roedean School, it was decided that the property be put under the Husband’s name for easier management as the Mother herself already owned another property in London [B/224, 228], and that she had been told by her elder sister who was then an estate agent that if a person owned more than one property in England and sold the second one, the profits from that sale would be subject to taxation, hence in the circumstances the Husband became the natural candidate to hold Lincoln House for the Father.

31.According to the Mother, it was expressly understood by the entire family that the property was a family asset held by the Husband as nominal registered owner only on trust for the Father, with all its purchase cost and expenses paid for by the Father who has continued to do so up to date from his funds or hers, as evidenced by all the invoices and receipts as well as correspondence with their London lawyers produced by her in the proceedings and very helpfully summarised by her counsel Mr Abraham Chan in Appendix B of his Opening Submission.

32.The Mother’s evidence is corroborated by the Husband when he provided further details as to the arrangements for the property in his 3^rd Affidavit [B/255, 256-258]:

“3. … My parents had explained to me that the London Flat was to serve as our family’s base in London and that my sister and I were to stay there for our then upcoming studies at the College of Law (London) and the University of London (King’s College) respectively.

4. My parents had also explained to me that the London Flat was purchased under my name as my father was sick and my mother was unsuitable to hold the property for tax reasons. I was told that they would pay for everything relating to the purchase (obviously, since I was still a student living on monthly allowances provided by my parents). With my parents having the need to stay in Hong Kong, I was chosen to handle day-to-day administration of the London Flat for the obvious reason that I was the only one of legal age physically residing there (while my sister was still in secondary school). My parents had, however, made it clear to me that the London Flat was not my personal asset and I was not permitted to do anything with it without their permission. I was not involved in the purchase negotiations and never even saw the title deeds but simply signed the relevant papers as requested.

5. After I finished my studies at the College of Law (London) in or about June 1997, I left England for good and never took part in the maintenance of the London Flat (save for perhaps certain correspondence with the local authorities concerning council tax and freehold issues as I was the registered owner on paper). My sister continued to stay at the London Flat for the remainder of her university studies. When she left England for good in or around 1999, the London Flat was left empty. Thereafter, my family (specifically my mother, my sister and I) would stay at the London Flat whenever we visited London for holidays. The Petitioner and I had stayed at the London Flat a couple of times when we visited London, but we had to borrow the keys from my mother as she was the key-holder. Indeed, throughout the years, it was my mother who dealt with the London Flat (including its decoration, cleaning, plumbing repairs, purchase of freehold title and so forth). To this day, I would pass all letters and invoices relating the London Flat to my mother.

6. My parents have, to date, continued to pay for all expenses relating to the London Flat. My mother told me that they have been paying such expenses using their joint checking account at Lloyds Bank (“Parents’ Lloyds Account”). For this purpose, my parents had initially drawn on a designated savings fund {“Parents’ Fund”} under their joint savings account at Halifax. In or around 2001, my mother transferred the Parents’ Fund to a new tri-party joint account at Halifax (with my sister and I) such that we could become back-up signatories. Given the cumbersome UK banking process, the Parents’ Fund was in or around 2006 transferred to a Hong Kong designed savings account under I-Investments Limited (with the same 3 parties being signatories) for easier administration. I understand that the Parents’ Fund has now been depleted but my parents continue to pay for such expenses using the Parents’ Lloyds Account. I do not pay for anything in relation to the London Flat and do not see any current reason to do so given that I do not have beneficial ownership of it nor reside in it.”

33.This evidence of the Husband is also supported by the Sister, also a solicitor but is now working in-house for a property developer, who confirmed in her affidavit [B/249, 252-253] as follows:

“10. In relation to Lincoln House, to the best of my knowledge and belief, despite it being held in my brother’s name, it was always my family’s understanding that the property was not his and instead it was my father’s asset. Lincoln House was purchased on my father’s behalf and held in my brother’s name at a time when he was already of age and I was still below 18 years old. I stayed at Lincoln House when I attended university in London and whenever I am in London for work or for holiday subsequently. As far as I am aware, all expenses and outgoings in respect of Lincoln House were paid for using my parents’ funds. To the best of my knowledge and belief, my brother does not possess the keys or the title documents to Lincoln House. Consistent with my family’s understanding that the property was not my brother’s, I would never ask my brother for permission before staying at the property. Neither did I need to inform him if I stayed there. My mother holds the keys to the property on my father’s behalf and whenever l am in London on holiday or for work and wanted to stay at Lincoln House, I would have to ask my mother for the keys and would have to return them to her after use. To the best of my knowledge and belief, major decisions in respect of Lincoln House were and continue to be made by my mother on my father’s behalf after consultation with him and would be executed by my brother.”

34.It is as noted above the Wife’s case that the Lincoln House was an outright gift to the Husband as there was a need for him for London accommodation in 1995 when he started at the College of Law there, while the Sister was then still in Brighton, and as the Mother had already separated and was living in 25B Po Garden with her own London property which could have been used as a London base if she so chose.

35.The Wife therefore submits that as the Father must have known his life expectancy was compromised by his illness and that he could not expect to outlive the 7-year rule for UK Inheritance Tax at the prevailing rate should he later give away a UK asset, hence her argument that his purchase of the property in the Husband’s name as an outright gift was consistent with sound estate planning to avoid the UK Inheritance Tax, while the Father’s subsequent acts of payment of the outgoings on Lincoln House do not advance his or the Husband’s case as they are self-serving and/or are equally consistent with wealthy parents continuing to provide for their children. 

36.The Wife also takes issue with the Husband’s evidence that he has not paid for anything in relation with this property, of which she describes as evasive if not dishonest, as one of the documents from the bundle of invoices, receipts and other relevant documents relating to various payments for the property, namely LCKS3-1(d) [D/930 - 972] in which a letter from Salim Bhimji dated 25^th September 2008 addressed to the Husband stating that the freehold price of the property has been agreed at GBP180,448 and that the 10% deposit was to be paid by 31^st October 2008 [D/970]. Immediately thereafter, according to the Wife, is a copy of the Lloyds Bank cheque dated 20^th October 2008 drawn from the joint account of the Husband and Mother in the sum of GBP18,044.80 for the 10% deposit.

37.Read together, Mr Pilbrow submits for the Wife, the clear impression is that in addition to the maintenance, the parents also paid for the freehold purchase of the property, but on closer examination of the second page of the Salim Bhimji letter [D/971], a faint handwritten annotation just legible states “21 Oct 2008. Funds £18,044.80 from I-Trust Multi-Currency A/C… To Lloyds Bank # …”. It therefore appears, he argues, that the 10% deposit, ostensibly paid by the parents, was refunded by the I-Investment which leads to the Wife’s suspicion that I-Trust may have been refunding the Mother for her or the parents’ payments in respect of Lincoln House, and which was further fuelled by the subsequent evidence during cross-examination of the Sister when she confirmed that not only was the 10% deposit refunded, the whole cost of the freehold was paid with the I-Trust account.

38.It is therefore submitted for the Wife that the Husband could not have overlooked paying over HK$2 million for the purchase of the freehold of a property in his own name, as he as a lawyer would have realized the significance that a clear inference could be drawn that he paid for the freehold because he owned the leasehold and wished to enhance the value of his own asset, and which is what the Wife is now asking the court to draw as regard Lincoln House.

39.Furthermore, it is submitted for the Wife that when the freehold for Lincoln House was purchased in around late September 2008, which were from the Husband’s share in I-Trust and not from the Father, but yet it was within a year of the sale of Regent on the Park for HK$16 million in October 2007, and hence if what the Husband and the Mother were saying is true about ownership, the Father should have been flushed with cash, and would not have needed his children’s help to pay through their I-Trust account. 

40.Mr Jeremy Chan for the Husband however argues that the fact that money from I-Trust was transferred to the joint account of the parents, with the consensus of both Husband and Sister, and then used to pay for the freehold, actually underlines the fact that Lincoln House does not belong to the Husband at all, as clearly demonstrated by the Sister’s evidence that she agreed to use money from I-Trust in equal share with the Husband because Lincoln House belongs to her father, but if it were to belong to her brother, she certainly would not have agreed to use her share of the money in I-Trust to fund his property.

41.Mr J Chan further submits that, by contrast, there is in fact another property in UK at Oxford Square of which there is no dispute that it was funded by I-Trust because that property belongs to both Husband and Sister in equal share. Hence he submits that Lincoln House could not belong to the Husband as the Sister would not have agreed to use her share in the I-Trust to fund its purchase.

42.At any rate, Mr J Chan submits that the Wife has never put such a case to any of the witnesses during the trial and therefore should not be allowed to do so in her closing submission.

43.Similarly Mr Abraham Chan for the Parents submits that properly considered, the use of funds from I-Trust actually lends further credence to their case, as otherwise if Lincoln House were the Husband’s property, why would the Sister feel obliged to assist in his acquisition of the freehold by contributing funds from I-Trust, and why would such funds have had to go through a convoluted route of being first transferred into the joint account of the Parents at Lloyds?

44.Mr A Chan also argues that the gifting of Lincoln House to their son alone at age 20 is in fact contrary to both parents’ practice of no favouritism in the family and their parenting philosophy to not spoil their children with extravagant gifts.

45.Furthermore, Mr A Chan notes that the following matters are telling that the Husband could not be the beneficial owner of Lincoln House:

(a) when the property was renovated, the Mother only consulted the Husband and Sister about the colour scheme they each preferred for their respective bedrooms;

(b) while both siblings stayed in the property during their studies in London, the Sister had stayed for a longer period (3 years versus 1 year of the Husband) and much more frequently thereafter when she travelled to London;

(c) when the Husband wanted to stay in the property during his visits to London, he has had to ask for the keys from the Mother;

(d) the Husband was not consulted before his parents allowed one of his cousins to stay in the property, which he only learnt of when the cousin was about to fly off to England;

(e) as evidenced by the produced documents, many of the correspondence with regard to the purchase of Lincoln House and related matters were addressed to the Mother direct or on behalf of the Husband;

(f)  the outgoings of the property such as service charges have continued to be settled by funds from the Parents’ joint account at Lloyds over all these years and not from the Husband notwithstanding that he has since had his own income and means to do so if he were indeed the beneficial owner.      

46.As for the Wife’s suggestion that Lincoln House was placed under the Husband’s name so that upon the demise of the Father, his estate could evade inheritance tax, Mr A Chan argues that since both Mother and Husband have categorically denied this to be the case and said on oath in unequivocal terms that the Father’s ownership of Lincoln House would be reported to the UK Inland Revenue Department for estate duty purpose, there is simply no basis whatsoever for the Wife to construct an “illegality” argument with such a suggestion, and that this most serious assertion was in any event never properly or fairly put to the witnesses and should therefore not be allowed to run her case on this basis.

47.I agree with Mr A Chan on this point, but even if that assertion had been properly put to the witnesses and that their response were a bare denial, that argument of the Wife would in my judgment still be fraught with difficulties, as according to her case, Lincoln House was purchased by the Father for the purpose of providing accommodation to the Husband in London while he was studying there, but decided to put it in the Husband’s name to avoid UK Inheritance Tax in the event of his own surmise from his illness within 7 years, does it not mean that the Father should still retain the beneficial ownership because it was just an family arrangement to avoid UK Tax?

48.Furthermore, the “holistic” dealings of Lincoln House subsequent to its purchase such as its utilisation by other members of the family including cousins over the years, the fact that the Sister had stayed there longer during her studies in London and more frequently thereafter but no similar purchase of accommodation for her by the Father, and that all decisions concerning the property were made by the Mother who has always retained its door keys are in my judgment simply not consistent with the Wife’s case that the Husband is the beneficial owner.

49.As for the subsequent payment for the freehold interest of Lincoln House through the siblings’ I-Trust account, as rightly pointed out by Mr A Chan, if it were the Husband’s property, why would the Sister be willing to contribute towards its payment? Surely by then the Husband would have been financially well capable of doing so on his own if it were indeed his own property. The fact that the payment came from the sibling’s I-Trust account seems to me entirely consistent with their evidence that they were merely assisting their father with that payment as he was then having cash flow problem, which the Wife disputes because he had earlier sold Regent on the Park and was flushed with cash in my view simply ignores the fact that he had used those sale proceeds to pay off the mortgage of 16A Po Garden and to purchase the Merton Property.

50.For all these reasons I accept the case of both the Mother and Husband that Lincoln House was purchased by the Father for use by the family members during their stay or visits in London in particularly for the accommodation of both the Husband and Sister during their studies there, that as the Husband was then at age and studying in London, it was convenient for him to hold the property with the clear understanding as a trustee or nominee for the Father, and that he has no beneficial interests at all in the property.

51.I shall next consider the disputes over the Husband’s interests in various companies which held/hold landed properties, all of which according to the Wife were outrights to him with a common theme or purpose, i.e. as part of the Father’s estate planning or consensual family arrangements to distribute his assets due to the Father’s debilitating illness.

1 of 60,000 Shares in WS Ltd

52.This company was originally held by the Parents with 59,999 shares by the Father’s nominee and 1 share by another company jointly owned by him with the Mother. In July 1993 the company purchased 25B Po Garden for HK$10.8 million with a mortgage for HK$6.5 million, and shortly thereafter the Father’s nominee transferred 30,000 shares to the Husband and 29,999 shares to the Mother, and both were also appointed directors of WS Ltd together with the Father’s personal secretary.

53.On 6^th March 1997 the Parents formally entered into separation by signing the said Deed of Separation in which the Father agreed, inter alia, to continue to pay for the mortgage of 25B Po Garden and declared to have no interest, right or claim in that property. According to that deed, the parents had been living apart since about 1991 and that the Mother had all along been residing in 25B Po Garden after its purchase in 1993.

54.In about September 1997 the Husband transferred all his shares in WS Ltd except one to the Mother but retained his directorship. The Mother explained this transfer in her 2^nd Affidavit [B/293, 316]:

“57. … (The Father) agreed to transfer all the Respondent’s shares to me, so I asked the Respondent to stay on as a director but transfer all the shares he held in his name to me, save that he still held 1 share in order to satisfy the then legal requirement in Hong Kong for there to be two shareholders and two directors for any Hong Kong incorporated company. I have all along made clear to the Respondent that he is holding the 1 share on trust for me. All along, the management of all affairs relating to the company and the funding for this company have rested with me solely. The Respondent is only involved in signing the annual audited accounts and annual meeting records. He has never received any income or dividend from this company, as it is expressly understood that he is not entitled to any of these …”

55.While it is not disputed that 25B Po Garden had all along been used by the Mother as her home until it was sold in December 2011 for HK$43 million, and that there is no evidence to suggest that the Husband had been given any payment thereof, the Wife says that there is a nexus in time that links his successive beneficial interest in the two Po Garden flats, held respectively through WS Ltd and GW Investment, 16A being a replacement for 25B as below, and which arrangements she submits should be considered together so as to understand the real intention of the parents behind these transactions to convey the beneficial interests to the Husband.

56.The Wife submits, the fact that the Husband held only 1 out of 60,000 shares does not paint the full picture because it was only later, pursuant to the Deed of Separation made between the Parents on 6^th March 1997 as part of their divorce settlement reached in February 1999 that the Husband’s shareholding was altered within 3 months when he was transferred 50% shareholding in GW Investment on 25^th May 1999, and shortly thereafter in October 1999 GW Investment purchased 16A Po Garden which was to become the 2^nd matrimonial home of the Husband and the Wife, while at about the same time the Sister was also allotted a share in GW Investment.

57.The clear inference, the Wife submits, is that all these were part of a consensual family arrangement upon the parties’ divorce in February 1999, and in return for giving up his then 50% share in WS Ltd and hence 25B Po Garden, the Husband was gifted a share in GW Investment which purchased 16A Po Garden.

58.Whether that was the case or not, it would of course be necessary to first consider the evidence in more details of those arrangements during the relevant periods in respect of GW Investment before returning to this issue.   

1 of 3 Shares in GW Investments

59.The chronology of events in relation to this company can be found in Appendix C to Mr Abraham Chan’s Opening Submission and again is generally non-controversial. This company was initially incorporated and owned by the Mother and her brother with each holding 1 share and as directors in about January 1997 intended as an investment vehicle, but it was not until October 1999 when it made its first investment in the purchase of 16A Po Garden Property, of which the Mother explained in her 2^nd Affidavit that it was for and on behalf of the Father for the purpose of preserving his assets and preventing him from gambling away all his money [B/302-306]:

“23. As mentioned above, (Father) was very fond of gambling … There had been times when his losses were heavy, even up to a few million Hong Kong dollars in some years. To preserve his assets and to prevent him from gambling away all his funds, I came to realize that the best way to preserve his funds was to assist him in investing his cash in real properties. I raised my idea to invest in real properties in Hong Kong to (Father) some time prior to May 1999. He agreed that it would be a good idea to buy real properties and borrow some money to finance the purchase. Our idea was that the rental income from the properties would be able to pay off part or all of the mortgages obtained for the purpose of financing the purchases and the properties would increase in value over time. (Father) also expressed his wish that the Respondent should begin to learn how to manage properties under my supervision and to shoulder the responsibility of managing his assets.

24. Coincidentally at that time, my brother … and I had been directors and equal shareholders (each holding 1 share) of a Hong Kong –incorporated company, i.e. GW, through which we meant to (but did not eventually) make some investments. It therefore occurred to me that I could use this company (instead of incorporating a new one) as the vehicle to purchase real property for (Father). Given (Father)’s wish as stated in the preceding paragraph and upon obtaining his approval, I asked my brother to resign as director of GW to enable the Respondent to take his place and to transfer his 1 share to the Respondent on or about 24 May 1999 such that the Respondent, as one of the shareholders, could take up the joint responsibility of giving a personal guarantee for the mortgage of his father’s property to be purchased. Prior to the transfer of the 1 share to the Respondent, I told the Respondent that GW would be used to acquire real property for his father. I told the Respondent that he would be holding the 1 share for his father, that he was only the nominal registered owner of the share. After the transfer of the 1 share to the Respondent, I found a property that was a promising investment for (Father), i.e. 16A Po Garden, Brewin Path, Hong Kong (“Po Garden”). I relayed this potential investment opportunity to (Father) and he agreed to use his funds together with a mortgage to invest in Po Garden. The Po Garden purchase was completed on or about 8 November 1999. After the signing of the sale and purchase agreement and after S returned to Hong Kong in about October 1999, (Father) asked me to involve S in relation to GW so that she too could start learning how to manage properties under my supervision and to shoulder the responsibility of managing her father’s assets. After the completion of the purchase of Po Garden, I share in GW was allotted to S with (Father)’s permission on or about 17 November 1999…

25. Prior to the signing of the provisional sale and purchase agreement for Po Garden, I made it clear to the Respondent again that he and I were holding the respective shareholdings in GW on trust for (Father) since Po Garden, being the only asset of GW, was to be fully funded by (Father). I also reiterated the same to S on behalf of (Father) before the 1 share was allotted to her. It was expressly understood by our children that for this reason they were not allowed to deal with the property except upon (Father)’s instructions…

26. Eventually, Po Garden was purchased under GW’s name in October 1999 as an investment for (Father) using his funds and a bank mortgage…

27. As agreed with (Father), I arranged for Po Garden to be rented out in order that the rental income could be used to pay off the monthly mortgage instalments, various maintenance fees and other outgoings related to Po Garden. Eventually, the property was rented out until around 2005 for monthly rental, which were deposited directly into the account of GW. Any shortfalls not covered by the rental income were fully financed by (Father)…

28. Out of the desire for my children to learn to manage their father’s assets, I had in the beginning wanted the respondent and S to help with the management of Po Garden under my supervision. However, as my children were both too busy with their professional career in leading law firms, I made decisions on investments and tenancy matters on (Father)’s behalf, including finding tenants and negotiating tenancy terms. The Respondent would simply sign the relevant papers as a director of GW when he was available, but he was never involved in the purchase negotiations for Po Garden and had never possessed the title deeds. Meanwhile, (Father)’s secretary, Ms CL, would assist me in follow-up work such as chasing for rental payments in arrears…

29.  Throughout all these years, neither the Respondent not S nor I have ever received any share in the rental income of Po Garden. We simply have no right to do so since we have been holding our shares in GW on trust for (Father).”      

60.That was according to the Mother how the 1 share in GW Investment became vested in the Husband on trust for the Father, which occurred well before the Wife was to marry him in 2002 and hence were information which she would not have been privy to, but for the fact that 16A Po Garden subsequently became the parties’ matrimonial home during their marriage and has remained so for the Wife and the 2 daughters, of which the Wife argues will go to support her case that the Husband is a beneficial owner, something which she claims that he had admitted to her before, as she stated in her 4^th Affirmation [B/286, 288-289]:

“13.  The Po Garden is our matrimonial home property. The Respondent and I have lived in the Po Garden property for the majority of our marriage from 2005 and I am still currently living in this property with our daughters. For the past 8-9 years we have been living in this apartment, I have never heard the Respondent mention that his father has anything to do with this property. When the Respondent and I agreed to divorce and he volunteered to move out in November 2013, we had a discussion in our bedroom where he was telling me that he was narrowing the choices of places he was considering to move to such as Regent on the Park or Valverde, where he is now living. We talked about post-divorce financial arrangements and I told him I would not ask for any spousal maintenance but I would like him to pay for the girls and transfer the Po Garden property to me as this has always been our home and I would like our two daughters to have a secure place to live for the rest of their lives. The Respondent’s response to my request was, “the problem is I only own 1/3 of this flat, so I cannot make the decision. If it is 100% owned by me, the I can give it to you”. He did not mention anything about the apartment actually being held on trust for his father, and that he does not even have a 1/3 share in it.

14.  I also recall that, about 4 years ago, our friend and neighbour JC who used to live in 15A Po Garden was interested to buy our apartment so that he could connect the two apartments together. The Respondent declined their offer and explained that he only has a share in the property. Later, the Respondent was upset to find out from other friends that JC’s wife has been gossiping to many of our common friends that she was surprised to find out that the Respondent does not solely own our apartment. Again, the Respondent did not mention anything about the property being held on trust for his father. Ironically, when JC moved out of his 15A flat, the Respondent’s mother bought the flat and moved into it.”

61.Unlike the case with Lincoln House, and as pointed out by the Wife, 16A Po Garden has been used by the Husband exclusively as a home for his family since 2005, and on his own admission rent-free save for its outgoings and maintenance, which seems contrary to the Mother’s evidence of the original intention of renting it out for income to meet its mortgage payments as an investment for the Father who has instead ended up paying the mortgage instalments out of his own pocket even up to date, which just fuels the Wife’s suspicion that it was not his investment but rather a gift to the Husband, and as he had earlier done so similarly with the 1^st matrimonial home at Regent on the Park held by HF Consultants in which the Husband was also allotted its 50% shares with exclusive use of that property for his family, it is therefore submitted by the Wife that it would also be relevant for that arrangements in HF Consultant to be considered together in view of the apparent similar circumstances in which the Husband became involved.      

2 of 4 Shares in HF Consultants

62.According to the Mother, HF Consultants was acquired in 2002 for the same purpose of investing in real properties for the Father initially for the Regent on the Park property and later the Merton, the chronology of events of which can be found in Appendix D of Mr Abraham Chan’s Opening Submission.

63.The arrangement for the shareholding in HF Consultants was however somewhat different from that for GW Investments, of which the Mother explained in her 2^nd Affidavit as follows:

“35. As explained above, (Father) had wanted our children to learn how to manage properties under my supervision and shoulder the responsibility of managing their father’s assets. As a result, the following arrangements were put into place for the purchase of Regent on the Park by HF. Firstly, the Respondent and I were appointed directors of HF. Secondly, in anticipation of the bank’s likely requirement for a controlling shareholder of HF to give a personal guarantee for the mortgage, (Father) arranged to have 1 share in the company allotted to himself and 2 shares transferred to the Respondent for the Respondent to hold those shares on trust for him. (Father) felt that he was unsuitable to be the personal guarantor himself due to his health condition. The Respondent had by then established his own professional career and was in a position to share my burden of taking care of (Father)’s affairs. Therefore, unlike the shareholding arrangement in GW, (Father) took the view that there was no need for me to be added as a nominee shareholder of HF for the purpose of providing a personal guarantee, and that my directorship in HF should suffice to supervise the Respondent’s activities in the company. Eventually, when Regent on the Park was sold (as will be explained in sub-section II below), (Father) arranged to have 1 more share in HF allotted to himself. As (Father)’s health deteriorated after his minor stroke in 2010, I proposed to (Father) that he could transfer his 2 shares in the company to S for her to hold them on trust for him. He agreed to my proposal in the presence of S and the transfer was effected on 18^th December 2012…

36. All along, I made it expressly clear to the Respondent and also to S before she became a shareholder of HF that (Father) wanted them to hold the shareholding in HF on trust for him. However, despite (Father)’s and my desire for the respondent and S to take up the affairs of their father, the Respondent and S were too busy with their respective work as a lawyer and I remained heavily involved in the management of the properties under HF.

37. The mortgage instalments and outgoings for Regent on the Park were financed by the monthly rental income generated from the existing tenancy mentioned above until October 2002, when the tenant terminated the tenancy early. From October 2002 onwards, the shortfalls were financed by (Father), who had arranged for approximately HK$20,000 every month to be deposited into the bank account of HF to settle the mortgage instalments.

38. The Petitioner and the Respondent were wedded on 30 November 2002. Prior to that, the respondent had been looking for a place to stay with the Petitioner after their wedding. However, the Respondent was not able to find a desirable yet affordable place to rent. When it became clear that the tenant at Regent on the Park would be vacating the property, the Respondent asked (Father) and me if he could stay in Regent on the Park first.

39. In view of the Respondent’s monthly salary of only approximately HK$60,000 at that time, (Father) compromised and permitted the Respondent and Petitioner to move into Regent on the Park on the condition that the Respondent would pay a monthly sum of HK$12,500 as contribution towards the running costs of the property and be responsible for any renovation costs. Meanwhile, (Father) continued to finance the mortgage instalments and other outgoings. There was not, however, any agreement or mutual understanding whatsoever that the respondent would acquire any interest in the property, and that he and the Petitioner were to stay in the property as mere licensees. This could be substantiated by the fact that (Father) had subsequently returned the Respondent HK$1,000,000 being the renovation costs paid out from the Respondent’s own savings. The payment was made despite the fact that the Respondent had agreed to bear the renovation costs. What happened was that, after Regent on the Park was sold, the Respondent told the (Father) that his renovation had enhanced the value of the property and facilitated its sale at a good price. He therefore requested his father to pay him back the renovation costs, to which request (Father) agreed.”    

64.As a result the parties moved into Regent on the Park in early 2003 until 2005 when the Wife became pregnant with the younger daughter and the family then moved into 16A Po Garden, and Regent on the Park was then rented out for HK$44,000 per month until August 2007 when it was sold, of which the Mother explained in her said affidavit as follows [B/309-310]:

“42. By around August 2007 … (Father), after discussion with me, decided that it was good time to realize this investment property. He then gave me the permission to sell it in order that the sale proceeds could be used to pay off primarily (i) the outstanding bank mortgage of this property and (ii) the outstanding mortgage of Po Garden. The proceeds were also used to pay the respondent for his contribution towards the renovation of Regent on the Park … and for purchasing another investment property … The Merton … The remaining balance of the sale proceeds was paid back to (Father) at his request.

43. To complete the picture, I set out below how the net proceeds from the sale of the Regent on the Park were dealt with:

(i) The initial deposit, further deposit and the amount receivable on completion (altogether the “Net Proceeds”) were first deposited into HF’s bank account.

(ii) As HF did not have any savings account, the Net Proceeds of amount HK$11,070,000 were placed into an existing but relatively inactive joint savings account of the Respondent and S (“Fixed Deposit Account”) as temporary fixed deposits to earn deposit interest.

(iii) Thereafter, around HK$7,652,000 was used to release the mortgage of Po Garden held under GW.

(iv) Approximately HK$1,350,000 was used for the purchase of The Merton held under HF and for paying incidental expenses of the purchase including stamp duty and legal fees …

(v) Approximately HK$1,000,000 was deposited into my account and later transferred to the Respondent as a reimbursement as explained … above; and

(vi) The residual balance was returned to (Father).” 

65.To complete the picture, the residual balance said to be returned to the Father, on the basis of the above figures, amounted to HK$1,068,000.

66.The Mother then went on to provide further details as to the purchase of The Merton in the same affidavit as follows:

“46. For the same reasons as explained … The Merton was bought under the name of HF as an investment property on behalf of (Father). As can be seen in the exhibit … the purchase involved the following payments utilizing funds from the Fixed Deposit Account, a mortgage, and the funds in HF’s bank account:

(i) An initial deposit of HK$200,000 which I paid. I was subsequently reimbursed from the Fixed Deposit Account;

(ii) A further deposit of HK$213,000 and stamp duty of HK$103,100 (i.e. a total of HK$316,100) drawn from the Fixed Deposit Account which was then transferred to HF’s bank account for payment;

(iii) Agent commission fee of HK$20,650 paid from HF’s bank account;

(iv) Legal fee of HK$7,000 drawn from the Fixed Deposit Account which was then transferred to HF’s bank account for payment; and

(v) The balance of the purchase in the sum of HK$827,000 which was settled in part by a bank mortgage and in part by funds from the Fixed Deposit Account (which was transferred to HF’s bank account for payment).

67.Similarly it is the Wife’s case that there is a nexus in time between the acquisition of Regent on the Park and the parties’ marriage, as it was on 19^th January 2001, which was about 6 months after the parties’ engagement in July 2001 and within the same year of their subsequent marriage in November 2002, when 2 out of 3 shares of HF Consultants were transferred to the Husband, and 3 days later HF Consultants entered into a sale and purchase agreement for Regent on the Park which was completed on 15^th March 2002 with the assistance of a mortgage, and that the Husband was named as the sole guarantor of the mortgage.

68.While the property was tenanted when purchased, as pointed out by the Wife, early vacant possession of the premises was obtained and after renovations were carried out which were paid for by her parents, the parties were able to move in and occupied it as their first matrimonial home until their first child was born.

69.The clear inference, the Wife therefore submits, is that this was a wedding gift and/or in any event a contribution to the purchase of the parties’ first home by giving the Husband a shareholding of its holding company, and consistently with beneficial ownership being held by him as a 2/3 owner of HF Consultants, upon sale of Regent on the Park, the proceeds of sale were paid into his savings account held with his sister.

70.The Wife further submits that consistent with the Husband’s beneficial ownership, part of the proceeds were then utilised for the repayment of the mortgage on their 2^nd matrimonial home at 16A Po Garden owned by GW Investments in which the Husband and Sister held 2/3 shares, and while the Father was allotted an additional share after Regent on the Park was sold, 4 years later in December 2012 he transferred all his 50% shareholding in HF Investments to the Sister, all of which were part of his family arrangements to distribute assets to his 2 children.

71.There is no question, as noted above, that some of the transactions relating to the Husband’s shareholdings in various companies and the acquisition of landed properties took place well before the parties’ marriage or even their acquaintance, such as the purchase of 25B Po Garden by WS Ltd and its transfer of 30,000 shares to the Husband in 1993, or the allotment of 1 share in CW Investment to him and the company’s acquisition of 16A Po Garden in 1999, which were therefore beyond the Wife’s first hand or personal knowledge and hence her case is admittedly in effect based on her subsequent observations and information including hearsay, aided no doubt by being able to now look back at the entire history of those transactions relevant to the particular and objective circumstances of the Husband’s family in order to build and frame a case of a traditional Chinese family where a very wealthy father intended to make outright gifts to his only son as part of his estate planning as a result of his own incurable illness. On the face of it I cannot say there is no merits in such case of the Wife against the Husband and his parents.

72.However, upon close scrutiny of the evidence before the court, such case of the Wife is in fact fraught with all sorts of difficulties and inconsistencies, and is at the end in my judgment highly unlikely to be the true intention of the Father when those company shares were allotted to the Husband. There are amply reasons.

73.Firstly, on the basis of the Wife’s case, the first of such alleged estate planning of the Father to make outright gifts to the Husband would be the transfer of the 30,000 shares in WS Ltd in August 1993 shortly after WS Ltd’s purchase of 25B Po Garden in July 1993. As WS Ltd was first formed and owned by the Parents in equal shares in 1980 for their investments, hence if the Father in 1993 were to make a gift to the Husband as part of his estate planning, it begs the obvious question of why would he want to do it through a company jointly owned by the Mother and when its only asset, i.e. 25B Po Garden was purchased as her home upon their separation and hence was not even his own property to give?

74.The evidence before the court in particularly the Parents’ Deed of Separation and their subsequent divorce settlement/order reveal that the Parents agreed to live apart in 1991, and as a result 25B Po Garden was eventually purchased to be her future residence, for which the Father agreed to pay for its purchase including its mortgage instalments, which were all substantiated and verified by the relevant terms of their said Deed of Separation signed in 1997 and their subsequent divorce settlement/order granted in 1999, and in which the Father confirmed to have no interest in that property or its holding company and agreed to continue to be responsible for its mortgage repayments as part of his financial provisions for the Mother.

75.Therefore it seems clear to me that although the Father was then an equal shareholder of WS Ltd when 25B Po Garden was purchased in 1993, the property was intended to be the Mother’s home upon their separation, while his payments for its mortgage instalments were part of his financial provisions for her during their separation and subsequent divorce. Under those circumstances I have great difficulty accepting the argument that the Father would find it necessary to gift his son, who was then still a student in UK, in effect half of what he had just purchased for his wife as her home, when he could have easily done so with his other assets whether it was part of his estate planning to distribute his assets or just an outright gift to his son in view of his great wealth. It just does not make any sense to me for him to do that instead with his shareholding in WS Ltd or with the property at 25B Po Garden.

76.The fact that the Husband later in September 1997 transferred all his shareholding save for 1 share in WS Ltd to the Mother in my view further cements the Parents’ case that it was done pursuant to their intention to proceed to divorce and to facilitate the implementation of the terms of their earlier deed of separation which included the Father’s declaration of no interest in WS Ltd and hence the transfer of his shares held by the Husband to the Mother to complete the formality save for 1 share to comply with company regulations, which they did in May 1998 when the Father issued his petition for consensus divorce.   

77.Above all, that the Husband was never paid anything, let alone a half share based on his shareholding, of the sale proceeds of the HK$46 million after 25B Po Garden was sold by WS Ltd in 2011 to which he would certainly be entitled if he was indeed the beneficial owner of his shares in WS Ltd, which just goes to support the Mother’s case that he was merely a trustee or nominee for the Father.

78.Which bring me back to the Wife’s earlier argument that the Husband was instead compensated by 16A Po Garden as a replacement for 25B, of which Mr Pilbrow made the following submission in his Closing Submission:

“43. W says that there is a nexus in time that links H’s successive beneficial interest in the 2 Po Garden flats, held respectively through WS Ltd and GW Investment, 16A being a replacement for 25B.

44. After (Father) and (Mother)’s marriage broke down and they separated on 1^st January 1991, 25B Po Garden was acquired. On 23^rd August 1993, WS Ltd was acquired as a holding vehicle: shares were transferred so (Mother) held 50% and H held the balance of 50%. Both (Mother) and H were appointed as directors. (Father) funded the purchase of 25B po Garden on 16^th August 1993, which was registered in the name of WS Ltd. The property at 25B was used by (Mother) as a home until it was sold on 20^th December 2011.

45. In the course of the discovery application, much was made of the fact that H hold only 1 out of 60,000 shares. This does not paint the full picture because it was only later, pursuant to the separation agreement dated 6^th march 1997 and/or as part of the divorce settlement recorded in the Ancillary relief Order dated 1^st February 1999, that H’s shareholding was altered. Moreover, he was provided with an interest in another Po Garden flat shortly thereafter.

46. It was within 3 months of the parents’ ancillary relief order, that (Mother) had arranged for her brother to transfer to H his (ie the brother’s) 50% shareholding in GW Investment. The transfer was effected on 25^th May 1999. On 5^th October 1999, a Provisional Sales and Purchase Agreement, signed by H on behalf of GW Investment, was entered into for the purchase of another flat, namely 16A. That sale was completed on 8^th November 1999. This was the premises later used by H and W as their 2^nd matrimonial home.

47. After purchase of the flat, (Sister) was allotted a share in GW Investment as well, thereby effectively reducing H’s share to 1/3 as (Mother) retained the share she was holding.

48. During the Discovery hearing on 4^th June 2015, the Court remarked on the time nexus and it is submitted that this was not a mere coincidence …

49. The clear inference is that as part of a consensual family arrangement upon the parents’ divorce on 1^st February 1999, in return for giving up his then 50% share in (Mother)’s home on 25B Po Garden, H was gifted a share in GW Investment, which purchased the replacement 16A Po Garden flat.”   

79.I have already dealt with above how inherently improbable for the Father to gift the Husband a share in the property purchased solely for the Mother, hence this argument of the Wife that there is a nexus in time that links the Husband’s interests in the 2 Po Garden flats and that 16A Po Garden was a replacement or compensation for him in my view can no longer stand on any ground, let alone a firm one. As submitted by Mr A Chan for the Parents, it is one thing for parties to invite the court to draw inference based on established facts, it is quite another for them to approach their closing submission with propositions which were never put to any witness at trial and which should not be allowed.

80.Furthermore, the fact that 16A was purchased some 2 years later in November 1999 by a different company GW Investments begs another obvious question: If indeed it was to replace or compensate the Husband for 25B, why waited all that time to do so, and what if the Father were to die from his illness in between which would surely have defeated the whole purpose of estate planning in the first place? And certainly in 1997 when the Husband transferred his 29,999 shares to the Mother, nobody and particularly the Father in his condition could have foreseen that 2 years later in 1999 16A Po Garden would be purchased as a replacement for 25B, or at least there is no evidence before the court for that suggestion, and it all seems to me a post-mortem speculation to fit the pieces to the Wife’s case.  

81.Above all, if 16A was indeed an outright gift to the Husband, replacement or not, why did he not move into this property upon its purchase in 1999 or use it for his 1^st matrimonial home when he married the Wife in 2002 when instead they moved into the smaller Regent on the Park which was purchased more than 9 months earlier with a sitting tenant and that they had had to wait for the tenant to vacate it and then to renovate it?

82.Mush has also been said about the Husband’s response when he was approached by his neighbour friend for the purchase of 16A and replied that he was not the sole owner and had to discuss with the others, of which the Wife argues that it was an disputable admission of his beneficial interest in that property, but which I find to be neither here nor there, as there could be other reasons why he said that, such as not wishing to reveal his family arrangements, or that it was his polite way to reject his friend’s proposal.       

83.On the other hand, I have great difficulty accepting the Wife’s case that Regent on the Park was a wedding gift for the Husband, which was never properly put to him or any of the witnesses at the trial, but at any rate it appears to me a very unusual mean for the Father to make something as significant as a wedding gift to his only son when it was also to be co-owned by him, when he could well afford to gift the entire property to the Husband instead, and even more unusual that some 10 years later in 2012 when he would see fit to make his daughter a co-owner of his son’s wedding gift by transferring his shares to her, which just does not make any sense to me if it were indeed a wedding gift for his son after all.

84.Mr J Chan for the Husband further submits that as there was no challenge to the evidence that it was the Father who took money out of HF Consultants and/or GW Investment but not the other shareholders, such “free transfer of money” between the Father’s various companies is telling, since these companies all have different shareholders, and if they were real and beneficial owners, then the free flowing of money makes no sense whatsoever, and similarly in the case of the sale of Regent on the Park when HK$7.6 million went to GW Investment for paying off the mortgage on 16A Po Garden, some money went to the purchase of the Merton Property, HK$1 million to the Husband to reimburse his earlier renovation expenses, with the balance all went back to the Father, which evidence were never challenged by the Wife and I agree are wholly inconsistent with her case that Regent on the Park was the Father’s wedding gift to the Husband.

85.I agree and as pointed out by M A Chan for the Parents, that the objective facts of the case do show that the two Po Garden properties came about in completely different and unrelated sets of circumstances which are much more consistent with the case that they were not gifts to the Husband but rather the Father’s own assets and investments which explains why the latter could use those funds in the ways he did as the sole beneficial owner.

86.I shall now come to consider the remaining Disputed Asset which seems to be unrelated to any estate planning on the part of the Father according to the Wife but rather more to do with the Mother’s own reason or purpose  

1 of 2 Shares in GC Ltd

87.This company was incorporated in about late 1970 and used by the Father for purchasing various lots of agricultural land and/or grasslands in the New Territories for long term investments in anticipation of monetary compensations if and when resumed by the government for development. It was initially held by the parents with 1 share each.

88.It was on 9^th July 2001 when the Mother resigned as a director and transferred her 1 share to the Husband allegedly on trust for her so that he could explore the development potentials of acquiring neighbouring plots of land for possible enhancement of the existing value, and that it would be better for a male representative of the company to deal with the villagers in meetings and negotiating with them, but as it turned out, according to the Mother, the Husband had been too busy with his own career that he had not been able to carry out any further investment for GC Ltd, nor has there been any government resumption of the company’s lands, as a result there has never been any profit or income generated by the company.

89.The Wife however submits that it is another significant nexus in time that the share in this company was transferred to the Husband, as it was only a few days later when the Mother re-married, which is a clear inference that upon her re-marriage, the Mother wanted to divest herself of her remaining ties with the Father as her ex-husband, which is consistent with the fact that when she was ordered by this court to give discovery of this company, she stated that all the relevant documents had already been handed to the Husband and referred the matter to his solicitors. Hence it is submitted that the court should draw inference that the transfer of the share to the Husband was an outright gift to him.  

90.This argument that the Mother wanted to divest herself of her remaining ties with her ex-husband upon her re-marriage is, submitted by Mr A Chan for the parents, inconsistent with the facts that notwithstanding their divorce years ago which was an amicable one, the parents have co-owned other assets up to the presence including joint accounts at Lloyds, and that the Mother has continued to be closely involved in the management of the Father’s affairs in accordance with his wish, particularly so when it was also specifically provided in their Deed of  Separation of 1997 which was later incorporated in their divorce settlement order the following clause which in my view not only goes to refute the Wife’s argument but also support the Mother’s case of her continued involvements in the Father’s personal affairs notwithstanding their divorce :

“(7)  Notwithstanding that the Parties have since the 1^st day of January, 1991 lived separate and apart, the Husband acknowledges with thanks that in view of the Husband’s health condition, the Wife had continued to visit the Husband and look after the Husband and his household affairs (hereinafter referred to as “the Wife’s said visits”). The Wife agrees that the Wife’s said visits may continue as circumstances permit on the express understanding that the Wife is under no contractual or legal obligations of any sort in making the Wife’s said visits. For the avoidance of doubt, the Husband declares that all the Wife’s rights and entitlements under this Deed are not subject to the Wife making the Wife’s said visits.”   

91.If indeed the Mother had wanted to divest herself of her remaining ties with the Father, she could have easily and conveniently done so at the time of their divorce by making it part of their financial settlement to transfer her share in GC Ltd to him or his nominee and to resign her directorship at the same time. The fact that it was not done at that time and that she transferred her share to the Husband instead several years later just goes to support the Mother’s case that she just wanted him to help her deal with that investment upon her re-marriage as her husband is a Malaysian and she may not be able to spend as much time in Hong Kong as before. I am simply unable to see any reason why she would want to make such a gift to the Husband, as it certainly cannot be said to have anything to do with estate planning.

Funds held for Parents

92.While as noted above that the Wife now no longer disputes the Husband’s case that he has held investment funds for both of his parents, with those for his mother in much bigger amounts as much as HK$10 million at one time and in various deposits and securities accounts under an express agreement, while those for his father were much smaller and only in RMB currency, it would nevertheless be relevant to go into evidence in some details to see if they may shed any light one way or the other on the parties’ respective case generally and/or in relation to those other Disputed Assets.

93.The Mother’s evidence is that initially it was for convenience purpose so that the Husband could handle her investments in Hong Kong due to her frequent travels abroad, as she elaborated in her 2^nd Affidavit [B/293, 316]:

“58. From time to time over the years, due to my frequent travels to places of different time zones which made it rather difficult, if not entirely impossible, for me to give investment instructions within banks’ or brokers’ office hours in Hong Kong. I had previously asked the Respondent to effect certain Malaysian securities transactions on my behalf using my funds and holding those securities on trust for me. The Respondent would deposit my funds into his DBS Vickers account to purchase the securities. The balance after the stock purchase and the dividends earned would then be accumulated in that account in Ringgits. On one occasion on or around 12 June 2007, the balance in the DBS Vickers was first converted into US dollars and then transferred to my account with DBS Vickers. Given that DBS Vickers did not allow the automatic transfer of the dividends from the Respondent’s account to my HSBC (Kuala Lumpur) account, but the Kim Eng Bank did, the Malaysian securities which were originally held by the Respondent in his DBS Vickers account were later transferred to the Respondent’s Kim Eng (HK) Account with s standing instruction that all dividends received are to be transferred to my account held with HSBC (Kuala Lumpur). However, to avoid incurring exchange rate losses, the dividends before these securities were transferred to Kim Eng (HK) still remain in the Respondent’s DBS Vickers account. On 9 March 2012, I instructed the respondent to sell the Malaysian securities and transfer the proceeds of sale to my account with Kim Eng Singapore. Up until 25 May 2012, all dividends accumulated in the Respondent’s Kim Eng (Hong Kong) Account were transferred to my account on three occasions. As at 31 January 2014, there was a residual cash balance of MYR637,496.48 in the DBS Vickers account which the Respondent continues to hold on trust for me pending my further instructions. I told the Respondent that I expect him to repay such monies to me when the Ringgits currency should appreciate back to the Asian currencies crisis level, and I trust that he will do so given our mutual understanding that he is simply holding those monies on trust for me …”

94.The Mother went on to explain in her same affidavit the purpose for setting up more formal investment funds under an investment agreement with the Husband in order to help him to build up his investment funds management profile:

“60. In around 2013, the Respondent expressed to me his interest in setting up his own investment fund should he leave his current employment, but was concerned about his lack of capital, investment and fund management experience as well as track records which would be needed to convince others of his abilities. To help him to build up his management profile to attract potential clients in the event that he shall pursue an investment or fund management career in the future, I entered into a fund management agreement with him (the “Investment Agreement”) on 25 April 2013. Under the Investment Agreement, the Respondent is to manage and invest my funds (the ”Investment Funds”) on my behalf. The initial principal sum was HK$10,000,000.”

95.In support of her case the Mother has also provided movement details of those Investment Funds in 2014 and produced a copy of the said Investment Agreement and the latest ledger account of the Funds [B/318-319].

96.As for the funds said to be held on trust for the Father, which as noted above were all in RMB and just slightly more than the equivalence of HK$400,000, the Husband’s evidence in his 3^rd Affidavit is simple:

“37. During about 2006 to 2008, my father had wanted to invest in Renminbi but due to relevant regulations, only a maximum of RMB20,000 could be bought by an individual each day. He therefore asked me to establish a standing instruction with Chong Hing Bank Limited over a period of time to purchase and accumulate Renminbi for and on his behalf, using funds provided by him.

38. A total of approximately HK$417,000 was provided by my father for the purpose of purchasing Renminbi for and on his behalf and in return a total of RMB400,000 was bought…

39. My father subsequently gave me RMB100,000 out of such RMB400,000 as a gift but the rest (being RMB300,000) was continued to be held on trust for him. I recall that in one subsequent year, my father withdrew RMB30,000 from his RMB300,000 and gave RMB10,000 to each of my sister, the Petitioner and me as “lai see”. The residual balances have been kept in fixed deposit to date…”

97.While none of these evidence, even when unchallenged, may go so much to firmly support or refute either case of the parties in respect of those remaining Disputed assets, they do in my view show the Parents’ readiness to involve their children especially the Husband in assisting and managing their own investments, which is in the circumstances of their family not at all unusual and given the fact that both of their children are lawyers.

Conclusion

98.In her closing submission the Wife alternatively prays in aid the presumption of advancement that the Father, in a very traditional Chinese family, intended to and did make outright gifts to his only son the Husband, as he was ill but very wealthy, worth an estimated HK$700 million based on his known publicly listed shareholdings alone and his Granville House property.

99.The underlying principles are clear and well established when there is a gratuitous transfer containing no express or inferred provisions determining beneficial ownership, the starting point is that there is a rebuttable presumption of resulting trust: that is that the transferor did not intend to make a gift, which may be rebutted either by extraneous evidence that the transferor did intend to make a gift, or by a counter rebuttable presumption of advancement that the transferor did intend to do so in view of the father-son relationship.

100.That presumption however will only apply in the absence of direct evidence of intention, and such evidence of intention must, as already noted above, apply to the time of the transfer or purchase, and by reference to the circumstances at that time only: see Overseas Trust Bank Ltd v Lee See Ching John [1999] 3 HKC 197; The Oxley v Hiscox [2005] 1 Fam 211; Stack v Dowden [2007] AC 432; Jones v Kernott [2011] 3 WLR 112.

101.For the reasons articulated above, I have no difficulty coming to the view that this presumption does not apply to any of the Disputed Assets when their legal title became vested in the Husband, as I am satisfied that he and the Parents have discharged their burden of proof that those Disputed Assets were not gifts from the Father and/or Mother, wedding or otherwise, nor were they distributed to him as part of the Father’s estate planning, and that he is holding them on trust for either of his parents for the various purposes stated above.

102.While I agree with the Wife’s argument that in the norm when a person suffering from a debilitating illness with a very limited life expectancy as the Father’s, and with the kind of wealth that he has, as submitted by Mr Pilbrow, it is perfectly foreseeable that he would wish to ensure that his children and grandchildren have a comfortable life within his own uncertain lifetime, and that upon his demise they would not be burdened by any liability for inheritance tax in England or estate duty in Hong Kong or otherwise, and hence all the reasons in the world to carry out some serious estate planning, of which I agree that it is not only normal but in fact prudent to do so, but whether or not the Father did do so with his other assets such as his Granville House property or his shareholding in his family business is not clear and was never put to him or any of the witnesses, what is clear to me however is that there is simply no logic or reason for him to do so with those Disputed Assets in the ways as suggested by the Wife in dribs and drabs and at different times which span over an unreasonably lengthy period of more than 10 years between the first and the last alleged distribution given his highly uncertain condition, and certainly not, as pointed out by both Counsel for the Husband and the Parents, in such convoluted ways as set out above.

103.As a matter of fact, having already set up the I-Trust for his 2 children in the 1980s, had the Father really intended to distribute his assets to them as estate planning after his illness, it would have been logical for him to do so around the time in 1988, when he appointed the Mother as his attorney to deal with his financial affairs, or thereafter by simply injecting those assets intended for his children into their I-Trust, or even to consult an expert to create an all-encompassing trust for that purpose, which would in my view be the easiest and most straightforward way to do.

104.Secondly, the whole point of estate planning, I would have thought, was to distribute one’s existing assets rather than to go about looking and acquiring more assets on different occasions and then distributing them but leaving the bulk of the existing assets untouched, as in the present case. It just does not make any sense in particularly in the circumstances of the Father’s illness, and would certainly not serve any purpose of saving or avoiding tax or estate duty on the bulk of the assets still under his name.

105.While it may be argued that purchasing those landed properties with funds from the Father and then putting them in the Husband’s name can achieve the same purpose, however as such funding were fairly limited mainly just for down-payments as all the properties were purchased with substantial bank mortgages, the savings on tax or estate duty would certainly be minimal and the whole exercises would just seem pointless when the bulk of the Father’s assets, of which the Wife has estimated at HK$700 million, were to remain liable to those charges.

106.Whether at HK$700 million or less, and it seems that the Mother or the Husband did take issue with that estimate, by comparison the total value of the Disputed Assets even at their highest seems to me a mere fraction of the Father’s assets, which begs the obvious question of why bother with them and, as pointed above, why on such piecemeal basis and in such convoluted ways? As already discussed above, even if they were merely gifts which the Father may want to make from time to time to his son, and for that matter his daughter as well, the same question can still be asked, and either way I am unable to find any logical answer.

107.All these seem rather to me a case, and using the Wife’s words, of a very traditional Chinese family where a wealthy father would from time to time purchase various properties for his own investments and benefits, mainly through the mother as a result of his own incapacity, but also involved his children in their management given that both were lawyers by making them one of legal owners with the intention that upon his demise, and subject to his final wish and desire and provided that those assets would still exist, then the children may stand to inherit them without incurring any liability for tax or estate duty, but until then the father was to retain all beneficial interests and rights over those assets including selling them and utilizing their proceeds as he wished to the exclusion of their children, as amply evidenced by the ways he had dealt with those assets and their sale proceeds freely and unrestrictedly, and without any say from the children at all material times. Henceforth yes It may be common in traditional Chinese family for wealthy parents to make arrangements to vest the legal title of their assets to their children prior to their death, but it does not follow that they would necessarily give up on their beneficial rights and interests, and I believe most of the time they would not, as I have found in the present case.

108.I say this because having heard the Mother, Husband and Sister in evidence, all of whom I find to be honest and credible witnesses whose testimonies were in the main spontaneous, straightforward and consistent, especially those of the Mother with so much details of her management of the Father’s financial affairs that not only clearly reveal and reflect her devotion and dedication to her former husband notwithstanding their separation and divorce all these years which is both remarkable and admirable, but also render her case that those Deputed Assets were investments carried out by her for the Father to protect and preserve his wealth all the more convincing and credible.

109.Much has been said by the Wife about the Mother’s resistant to disclose any details or particulars of her own divorce settlement with the Father as basis for asking this court to draw inference against her for making a concerted effort with the Husband to mislead about his true financial means, as well as the criticism of the Sister for making untrue statements while being an officer of the court, none of which I find to be substantiated or justified, and when in fact, as noted above, the subsequent disclosure of the Parents’ Deed of Separation and divorce settlement turned out to actually strengthen and substantiate their case.

110.As pointed out in my discovery order, there is no question that the Wife was perfectly entitled to challenge the case of the Husband and the Parents and that the burden was on them to satisfy the court that the Husband has no beneficial interests in those Disputed Assets in which he was held out as the legal owner but was in fact a trustee or nominee for the Father and/or Mother, but as noted at the beginning of this judgment, since most of the vesting of those assets on the Husband took place well before the parties’ marriage and were therefore not within the Wife’s personal or firsthand knowledge or information, and that she had admittedly relied essentially on her own observations and impression obtained during the marriage, however there must be more than mere suspicion, conjecture or speculation for the Wife to make that kind of allegations against the Husband and his family for conspiring to mislead the court and to assist him to defeat her ancillary relief claim, which are indeed serious allegations that require much stronger evidential basis. As such and in the premises I reject these allegations of the Wife as totally unfounded and unwarranted, and were in my view unfair and unjustified to both the Husband and his family.

111.In conclusion and for all the reasons set out above, I am satisfied on balance of probability that the Husband has rightly and properly discharged the burden of proof that he has no beneficial interests in any of those Disputed Assets, as he was/is merely holding them on trust or as a nominee for his father and/or mother.

112.Thus bring me to the question of costs of the trial. As already noted above and in my decision on her discovery application, while the Wife was entitled, in the absence of any expressed trust, to require the Husband and Parents to prove their case in respect of the Husband’s interests in the Disputed Assets, surely by the time when all the evidence in particularly those disclosed pursuant to my discovery order were before the court, it clearly encumbered on her and those advising her to properly re-consider or re-assess her case before proceeding to trial, so as not to run any risk of being held liable for the costs not only of the Husband but also the Parents, instead of so aggressively and stubbornly pursuing what has now proved to be a false hope, which is in fact quite surprising to me as it seems wholly disproportionate to her claims which were at the time essentially only for appropriate accommodation and financial provision for her 2 daughters upon divorce with no claim for herself. In the premises I see no reason why she should not have to face the inevitable consequence: That she is to bear the costs of both the Husband and Parents for the trial of the preliminary issue with certificate for Counsel to be taxed if not agreed, which is an order nisi to be made absolute at the expiration of 14 days.

113.As for the costs of the Wife’s discovery application which have earlier been reserved, I propose to deal with them separately.

114.What remains is my gratitude to Counsel for all parties for their most valuable assistance provided to the court throughout the trial.

Mr David Pilbrow SC and Ms Corinne Remedios instructed by M/S Withers for the Petitioner.

Mr Jeremy Chan instructed by M/S Chaine, Chow & Barbara Hung for the Respondent.

Mr Abraham Chan and Ms Bonnie Cheng instructed by M/S Sit, Fung, Kwong & Shum for the 1^st and 2^nd Interveners.