Chan Yuk Pui v. Chan Yui Chi and Others
Read the full judgment text of HCA 1222/2013 on BabelCite. This High Court CFI judgment was delivered on 31 August 2016.
1. At the age of 86, the Plaintiff executed 4 Deeds of Gift to assign his half interest in 4 properties to the Defendants. He seeks to set them aside on the basis of actual undue influence. The Defendants contend that the Plaintiff was able to comprehend the significance and effects of his decisions and the legal documents which he signed. They assert that he had taken proper legal advice before execution of the documents.
Cited by 1 case · Cites 8 cases
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HCA 1222/2013 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE ACTION NO 1222 OF 2013 ____________
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____________ J U D G M E N T ____________ A. THE CLAIM 1.At the age of 86, the Plaintiff executed 4 Deeds of Gift to assign his half interest in 4 properties to the Defendants. He seeks to set them aside on the basis of actual undue influence. The Defendants contend that the Plaintiff was able to comprehend the significance and effects of his decisions and the legal documents which he signed. They assert that he had taken proper legal advice before execution of the documents. B. THE LAW 2.There was no dispute on principles. The burden rested on the Plaintiff to prove actual undue influence on a balance of probabilities. He had to show that:
Bank of Credit and Commerce International SA v Aboody & anor [1990] 1 QB 923, at p 967 E-F; Bank of China (Hong Kong) Ltd v Wong King Sing & ors [2002] 1 HKLRD 358, at §38 and Chitty on Contracts (32nd edition) Vol 1 §§8-057, 8-072; Enonchong, Duress, Undue Influence and Unconscionable Dealing (2nd Edition, 2012), §§8-022 to 8‑023. 3.To make out a case of undue influence, the complainant must show some underlying impropriety, eg his being forced, tricked or misled in any way by others into entering into the transaction. In Bank of China (Hong Kong) Ltd v China Hong Kong Textile Co Ltd [2011] 4 HKLRD 457 (CA), Lam J (as he then was) held, at §16:
4.A failure to point out to the claimant that the transaction was not to her advantage and ensuring that she took proper independent advice may cause the gift to be set aside if unconscionability is shown: Chitty on Contracts, Vol 1, at §§8-060, 8-068; Bank of China v Wong King Sing, §53. 5.Unconscionability, being a serious allegation, is not to be lightly found. There must be a proper foundation of primary facts to provide a reasonable basis for a definite conclusion of such serious misconduct to be inferred and that inference is not to be reached by conjecture. Whilst inference can be drawn from circumstantial evidence, the court must guard against conjecture under the disguise of drawing an inference where the primary evidence does not logically and reasonably justify the inference in question. 星展銀行（香港）有限公司對黎永培及另三人, HCMP 1465/2009, 2012年11月21日, 第35段，陳美蘭法官。 6.The Plaintiff no longer relied on the plea of Class 2B presumed undue influence, but was content to rest his case on whether the evidence justified the inference that, on a balance of probabilities, the impugned transaction was procured by an abuse by the allegedly dominant party of the trust and confidence reposed in him by the allegedly subservient party: Li Sau Ying v Bank of China (Hong Kong) Ltd (2004) 7 HKCFAR 579, Lord Scott NPJ at §§29, 30, 33-34. C. UNDISPUTED FACTS 7.The Plaintiff was born in about 1926 and is a widower. He has lived on rental income for 20 years. The Defendants are respectively his 1st, 2nd and 4th sons and 2 daughters. He has a 3rd son (“Kuen”) who is not a party to these proceedings. The Defendants are married, working and financially independent. Chi (D1)’s wife (“Siu Ling”) was a full-time housewife. 8.In 1985, the Plaintiff bought a unit in Queen’s Road West (“the QRW Property”), then his only property. It was assigned to Kuen by way of gift in 2009 and sold in 2010. 9.In 2010, the 4 subject properties were purchased in the names of the Plaintiff and Kuen as joint tenants. They are abbreviated as the Dragon Glory Property, Man Po Property, Po Fat Property and Wah Kay Property (collectively “the 4 half-properties”). The purchases were partly funded by the sale proceeds of the QRW Property and the Plaintiff’s own savings. 10.In addition, also in 2010, 2 other properties (abbreviated as the “Ka Wah Property” and “Chuk Yuen Property”) were purchased in the names of the Plaintiff, Kuen and Kee (D3) as joint tenants. 11.On 20 November 2010, the Plaintiff made a will under which, apart from bequeathing to Sau Yung (D5) a sum of HK$380,000, he bequeathed and devised to Kuen his entire estate. 12.In 2011, the Ka Wah Property and Chuk Yuen Property were sold. Out of the proceeds of sale, the Plaintiff made cash gifts of $1.8 million to the Defendants. 13.The Plaintiff lived at the Wah Kay Property with Kuen and leased out the others. At the time of execution of the Deeds of Gift, the rental was about $20,000 per month. It was his only source of income. 14.By 2012, the Plaintiff was 86 years old and his health was not good. He had a history of ischaemic stroke, and was suffering from hearing impairment, oedema, chronic renal impairment, chronic ischaemic heart disease. He was hospitalized twice in January and October 2012 for stroke. He became fearful of death. Kuen quitted his job and provided full time care to the Plaintiff. 15.On 18 October 2012, at the cemetery in Diamond Hill, the Plaintiff announced that would give the 4 half-properties to the Defendants (“the Cemetery Incident”). Kuen left in anger. He attempted to withdraw money in the joint account he held with the Plaintiff. The account was closed and the money was split so that Kuen got $400,000 and the Plaintiff $300,000. The Plaintiff put his share into a joint account with Chi (D1) but the Plaintiff solely managed it. 16.On the same day, the Defendants moved the Plaintiff away to live with Chi (D1) at Tuen Mun. He later spent about a month at Kee (D3)’s home in November before returning to Chi (D1)’s home. 17.On 19 October 2012, Sau King (D4) and Siu Ling took the Plaintiff to a law firm, CK Chan & Co (“CKC”). There, he executed 4 Notices of Severance to sever the joint tenancies over the 4 half-properties. He made a will (“the Will”), giving his entire estate to the Defendants in equal shares. 18.On the same day, CKC was instructed to issue a letter to Kuen, demanding him to return the 4 half-properties and make restitution of the rental income to the Plaintiff. The demand letter was later issued on 26 October 2012, together with the Notices of Severance. No action was taken against Kuen eventually. 19.On 7 November 2012, the Plaintiff and Kuen saw CK Chan, rescinding the instructions to sue Kuen. They asserted that there was a settlement agreement between them so that one whole property would be given to the Defendants and the other 3 to Kuen when the Plaintiff died (“the settlement”). This was followed by a letter 3 days later from Chung & Kwan acting for Kuen. CKC never replied. 20.On 13 November 2012, accompanied by Sau King (D4) and Siu Ling, the Plaintiff executed the 4 Deeds of Gift at CKC, making inter vivos gifts of the 4 half-properties as follows:
21.The Plaintiff had not been advised to seek independent legal advice in respect of the Deeds of Gift and had not received such advice. 22.On 18 February 2013, Siu Ling sent the Plaintiff back to the Wah Kay property, where he had lived with Kuen since. Since October 2013, they had been living at the Man Po property. 23.On 2 March 2013, the Plaintiff travelled alone from Kuen’s home to Tuen Mun to look for Chi (D1). On his way, passers-by mistook him for attempting to commit suicide. He was sent to the Tuen Mun hospital. He was nearly admitted to the Castle Peak Hospital in view of his depressive mood and high suicidal risk. 24.After discharge from hospital, the Plaintiff, accompanied by Kuen, went to the workplaces of Sau King (D4) and Kee (D3) demanding for return of their properties but to no avail. 25.On 15 May 2013, the Plaintiff, through his solicitors, demanded the Defendants to return the 4 half-properties to him, stating that they were gifted to the Defendants upon their promise to take care of him and live with him until his death (“the Promise”). 26.On about 27 December 2013, all the Defendants (except Sing (D2)), through Chak & Associates, demanded Kuen to reject or terminate tenancies; and sought to recover the Dragon Glory Property and Wah Kay Property for self-occupation. 27.Ultimately, except for a short period in respect of the Dragon Glory property, 3 properties have in fact been let out. The Plaintiff and Kuen have been collecting rent without interference from the Defendants. 28.On 5 July 2013, the Plaintiff commenced the present action. He only sought to set aside the Deeds of Gift but not the Notices of Severance and the Will (which was superseded by yet another will). D. THE PLAINTIFF’S PLEADED CASE 29.It is the Plaintiff’s case that after the Defendants found out about the joint tenancies in respect of the 4 properties, they complained relentlessly about the unfairness of the whole arrangement. Upon the Promise, the Plaintiff made the gifts. The material particulars of undue influence are pleaded in §13 of the statement of claim. The issues are:
30.The Plaintiff no longer relied on the averment that he was unaware that the Deeds of Gift vested all his interests in the 4 half-properties in the respective Defendants absolutely. Nor did he rely on the breach of Promise. 31.Pleadings are not mere formalities. They impose a necessary discipline and are fundamental to enabling every procedural facet of the adversarial system to operate fairly: Kwok Chin Wing v 21 Holdings Ltd (2013) 16 HKCFAR 663, Ma CJ, at §26, following Sinoearn International Ltd v Hyundai-CCECC Joint Venture. New and unpleaded matters will therefore not be taken into account. 32.The Plaintiff is bound by what he signed. To disown a legal document, facts constituting the particular vitiating factor relied on must be pleaded and established by the evidence: Ming Shiu Chung & ors v Ming Shiu Sum & ors (2006) 9 HKCFAR 334, per Ribeiro PJ at §87. E. THE EVIDENCE 33.The Plaintiff gave evidence on behalf of himself. Kuen was not a witness. On the Defendants’ side, Mr Wong Ying Wai (legal executive of CKC), all Defendants and Sau Yung (D5)’s husband (“the son-in-law”) gave evidence. In addition, 3 sets of recordings (Exhibits P1-3) and a set of video recording (Exhibit P4) together with the respective transcripts were produced by consent. F. CREDIBILITY OF WITNESSES F1. Credibility of the Plaintiff 34.The Plaintiff was aged 90 at the time of trial. If his hearing aid was slightly out of place, his response was slow. Otherwise, he had no difficulty in understanding questions. When he was not clear about a question, he would ask for it to be repeated. He could narrate coherently. He knew the updated background of each of the Defendants. He was literate and could read out the contents of witness statements/documents audibly and clearly. Despite the fact that he could not remember details such as dates, he could remember major matters quite well, dating as far back as when he purchased the QRW Property. 35.I am sure that 4 years ago when the relevant events happened, he was in an even better state of comprehension and response. Therefore, I disbelieve him when he denied, wholesale, that anyone had interpreted any documents to him, including the Will, the Deeds of Gift, Notices of Severance (collectively “the Legal Documents”) and his solicitors’ letters before action. He would have known their contents and effect, if not at CKC, then at the time he went to see Dr Mok (Exhibit P1). 36.The Plaintiff has come up with new evidence as he went along. For example, he stated that he signed the Legal Documents without really understanding the contents, which contradicted his case (paragraph 30 above). 37.He also said that he had told his children at home that 2 out of the 4 half-properties would be given to the Defendants, whereas the other 2 would be given wholly to Kuen (四層分兩層); it was up to the 5 Defendants to divide up the 2 properties among themselves. Such evidence never appeared in his original or amended statement of claim, his solicitors’ letters before action or his witness statements. I reject such evidence as unpleaded case and new invention. 38.I am alert to the possibility that this litigation was under the influence of Kuen. His reaction at the cemetery was drastic. He purported to withdraw all monies from the joint account. From that day onwards, he had collected the rent but had not handed it over to the Plaintiff, at least before the Plaintiff returned to the Wah Kay Property. His tone was aggressive and dominating when talking to his siblings about the gifts (Exhibits P3 and P4). The “settlement” sought to sabotage the gifts to the Defendants. He felt aggrieved by the Plaintiff not making a cash gift to him, when he already had the 4 half-properties. The Will was quickly superseded by another after the Plaintiff returned to Kuen’s home. 39.The medical report dated 3 March 2013 stated that the Plaintiff had grudges towards his children and he felt being “tricked” into signing “the contracts”. Read in context, that appeared to be Kuen’s perception instead of the Plaintiff’s own complaint. On that day, when he was discharged, Kuen was in his company but not the Defendants. Despite the assertion of being tricked, the Plaintiff told the doctor that he would not demand for return of his assets. He changed his mind but being tricked was not part of his pleaded case. 40.The Plaintiff told the doctor at the Tuen Mun Hospital that he could not resolve the conflict among his children. I find this to be true and that Kuen contributed in part to the conflict. 41.The Plaintiff was protective of Kuen in saying that the latter had not forced him to litigate. He said that Kuen did not have any right to get back the properties but only the Plaintiff had. 42.The Plaintiff asserted that the amended statement of claim was explained to Kuen and the Plaintiff did not confirm that he himself understood the contents. He could not tell whose idea it was that he should prepare the supplemental witness statement. Kuen partly funded this litigation. In my view, he clearly had interest and may have influenced the Plaintiff in this litigation. 43.The Plaintiff was not entirely reliable. I accept his evidence on his personal background and how he dealt with his assets up to the time before the Cemetery Incident. Save where otherwise specified I do not accept his evidence. F2. Credibility of the defence witnesses 44.Wong Ying Wai, was an independent witness in the sense that he had no interest in this litigation. He was prompt and frank in answering questions. However, there was a new matter that emerged in his oral evidence, eg the stamp duty issue (explained at paragraph 88 below). His oral evidence was also not entirely consistent with CKC’s office file. I approach his evidence with some caution. 45.The Defendants lacked independent memory and their witness statements were virtually the same. Some of the matters therein were inaccurate hearsay. For example, only Siu Ling and Sau King (D4) were at CKC when the Plaintiff executed the Will. The Will showed that it was Wong Ying Wai who interpreted the Will to the Plaintiff and yet all the Defendants said that it was the solicitor who did so. 46.Another example was that the witness statements of the Defendants had to be amended after Wong Ying Wai gave evidence to add in the stamp duty issue. 47.I do not find the 5 Defendants entirely reliable. I shall analyze their credibility further when I come to individual issues. 48.The son-in-law was not entirely reliable either. He referred to a family meeting after the Plaintiff’s second hospitalisation in 2012 but no other Defendants mentioned it (§5 of his witness statement). In any case, his evidence was not of much assistance. G. PROBATIVE VALUE OF THE RECORDINGS 49.Authenticity of all the audio and video recordings (Exhibits P1-4 respectively) were not disputed. 50.In Exhibit P1, Dr Mok kept asking leading questions, and purported to explain the legal effect of the Legal Documents. He interrupted the Plaintiff many times. Such manner hardly helped in ascertaining the mental ability of the Plaintiff in making those documents. Perhaps it was because Dr Mok’s expertise was not geriatrics. Save where otherwise stated, I place little weight on Exhibit P1 and the medical report (M7-10) which was based on it. H. RESOLUTION OF FACTUAL ISSUES Issue 1: Whether the Defendants had repeatedly made the Promise? 51.Kuen’s name appeared in all of the Plaintiff’s properties, including the 3 that had been sold. I find that the Plaintiff’s favour towards Kuen aroused the Defendants’ complaint of unfairness and their conflicts with Kuen when they discovered the joint tenancies. Judging from Sau Yung (D5)’s evidence, the Defendants’ perception was that Kuen was not a beneficial owner of the QRW Property but that the sale proceeds belonged to the Plaintiff. 52.The Plaintiff apparently knew of the conflicts. He made cash gifts, which neither pacified the Defendants (as many properties were still in Kuen’s joint name) nor Kuen (who did not receive a cash gift). 53.The Plaintiff was impressed by the Defendants’ care during his hospitalization for stroke. Chi (D1) and Sing (D2) admitted that the Plaintiff had requested for Siu Ling to take care of him. 54.I accept the Plaintiff’s evidence that being close to 90, he did not care to whom the properties were given, so long as there was someone to take care of him. He only needed 2 meals and a residence. That he had fallen out with Kuen was not a relevant consideration as Kuen left in anger only after the gifts were announced. 55.The Plaintiff admitted at least 3 times under cross-examination and I find that, at the cemetery, it was he who initiated the gifts to the Defendants. 56.I find that the Defendants did repeatedly make the Promise. Because of that and that the Plaintiff wanted to be taken care of especially by Siu Ling, the gifts were made. This was consistent with the Plaintiff’s stance in his pre-action letters in May 2013. Issue 2: Did the Plaintiff repose trust and confidence in the Defendants? 57.Before the Cemetery Incident, the Plaintiff had occasionally stayed for a day or two with the Defendants, except Sau King (D4) whose flat was small. That kind of stay was of course unlike the long-term residence with Kuen. The care during his hospitalization would be numbered in days. Any long-term residence and care that the Defendants rendered to the Plaintiff only arose after the gifts were announced. 58.Further, in the eyes of the Defendants, the Plaintiff was a miser. He would not even distribute his wife’s estate until after he died. As admitted by Sau King (D4), the Plaintiff believed that what was his would remain his and that properties made by way of gift to his children would remain his and he could take them back at any time. This could explain the Plaintiff’s subsequent attempt to collect rent after the Deeds of Gift were executed. 59.The Plaintiff had autonomy over his assets, save that Kuen would collect rental income for his use. The Plaintiff purchased properties, decided who should own them, operated joint bank accounts and invested. He was never financially dependent on the Defendants. 60.I am not satisfied that the Plaintiff reposed trust and confidence in the Defendants. Issue 3: Was the Plaintiff exclusively dependent on the Defendants? 61.I find that the Plaintiff had expected to be exclusively dependent on the Defendants for provision of residence and care. It did happen that way for less than 4 months until February 2013. 62.I do not agree with Mr Lai, counsel for the Defendants, that the Plaintiff’s dependence on the Defendants no longer existed by 7 November 2012 when he reached the settlement. That settlement was not implemented and the Plaintiff had continued to live with Chi (D1)/Kee (D3) for some time. Issue 4: Were the Defendants acting in concert in their endeavours to acquire for themselves all the interests of the Plaintiff in the 4 half-properties during his lifetime? 63.Mr Mak, counsel for the Plaintiff, queries why the Plaintiff needed to execute the Deeds of Gift when there was already the Will. He relies on the slip of tongue of Sau King (D4) and Sing (D2), ie that a will could be changed but not a deed of gift, to show that the Defendants had exercised undue influence over the Plaintiff. 64.First of all, I note that although the pleaded case said that the gifts would be made after the Plaintiff died (amended statement of claim, §§5C(3) & (5)), this was not supported by either of his witness statements. In other words, the form of the gifts was left open. 65.Secondly, I find that at the Plaintiff’s first visit to CKC, Wong Ying Wai advised the Plaintiff to do 4 things: prepare Notices of Severance, make a will (because it would take time to sue Kuen), make Deeds of Gift and issue a demand letter to Kuen. The Deeds of Gift could not be prepared on that day because of the need to get the title deeds and prepare documents. 66.Under cross-examination, the Plaintiff admitted that he was told that for fear that he suddenly died and the Deeds of Gift could not be prepared in time, the Will should be prepared. This tallied with Wong Ying Wai’s evidence on why a will should be executed. 67.Thirdly, the plaintiff had admitted once that he signed the Deeds of Gift voluntarily (心甘情願), that he understood the contents thereof, that the gifts were his idea and nobody influenced him. 68.Fourthly, I have considered a number of strange matters at CKC relied on by Mr Mak:
69.With regard to the 1st strange matter, Wong Ying Wai and all the Defendants made the same mistake in their witness statements, that the Plaintiff’s first visit to CKC was 18th October, when it was the 19th. 70.The Cemetery Incident and closing of the joint account would have taken up the whole afternoon of 18th October. I find that the first visit to CKC was on the 19th. I place little weight on the mistake. 71.I also accept Wong Ying Wai’s evidence that it was a solicitor Wong Hak Man who introduced CKC to the parties. I find that none of the Defendants had prior dealings with CKC or Wong Ying Wai. 72.With regard to the 2nd strange matter, the ID card copies were needed for preparation of the Will. They were (according to Wong Ying Wai and Sau King (D4)) supplied to Wong Ying Wai in the afternoon of 19th October. Sau King (D4)’s testimony was that from the time the Plaintiff requested her to bring him to a law firm that morning to the time when they went up to CKC for the second time, she had had no contact with the other Defendants. Yet the ID card copies of Sing (D2), Kee (D3) and Sau Yung (D5) were photocopied on one sheet. Sau King (D4) could not explain why. 73.According to Sau Yung (D5), it was not surprising that Sau King (D4) (who worked in a bank) had the ID card copies of other siblings. However, it was not Sau King (D4)’s evidence that she obtained those ID card copies from her bank record. Neither Sau Yung (D5) nor Kee (D3) could say how their ID card copies ended up with CKC. 74.Anyway, the first 2 strange matters were not sufficient to enable me to draw any inference of impropriety on the part of the Defendants. I place no weight on them. 75.With regard to the 3rd strange matter, Mr Mak queries whether or not those land searches were made on the instructions of the Defendants, to ascertain if the Plaintiff still owned other properties available for distribution to the 5 Defendants. 76.I accept the evidence of Wong Ying Wai instead. The Plaintiff had wanted to show that he had given some properties to Kuen before, but could not give the exact address. Wong Ying Wai thus searched the properties above and below in the same building to verify. This strange matter has no weight. 77.With regard to the 4th strange matter, making of the Will was no secret to the Defendants. Sau King (D4) and Siu Ling were at CKC’s office at the time of execution of the Will. Wong Ying Wai told Sau King (D4) that the bill included the costs of preparation of the Will. The Defendants shared the costs. 78.Moreover, Kee (D3)’s wife took the Plaintiff to see Dr Mok. Kee (D3) also testified that his wife brought home the Will. 79.Wong Ying Wai confirmed that the file was opened for the preparation of a will. However, all bills and receipts from his firm did not mention the fees for the Will. 80.On 18 April 2013, the Plaintiff’s solicitors specifically asked CKC for copies of all documents signed by the Plaintiff other than the Notices of Severance and Deeds of Gift. CKC firmly replied in the negative. It was about a year later, on 24 March 2014, that CKC sent a copy of the Will as part of its full office file to the Plaintiff’s solicitors. 81.It was incredible that 9 months later, the Defendants still denied knowledge of the Will in their amended defence. 82.The amended statement of claim described the Defendants’ conduct as “concerted and strenuous efforts to conceal the existence or knowledge of the Will”. I agree. Probably the Defendants wanted to prevent the Plaintiff from relying on the Will to assert an intention to make gifts after death, to be divided between them equally. 83.With regard to the 5th strange matter, CKC’s letter dated 15 May 2013 stated that instructions to prepare the Deeds of Gift were given in early November 2012. Despite being shown this letter, Wong Ying Wai’s oral evidence was that instructions were given on 19th October. 84.There were no costs on account obtained for preparing the Deeds of Gift. It took an incredibly long time of about 4 weeks from 19th October to prepare the Deeds of Gift, even considering the need to obtain the title deeds and do land searches. 85.Wong Ying Wai testified that he met the Plaintiff on 9 November 2012 but there was not any deed of gift drafted on that day. What was the meeting for? He positively testified that he first met Chi (D1), Sing (D2), Kee (D3) and Sau Yung (D5) on 13 November. It contradicted the assertions of Chi (D1), Sing (D2) and Sau Yung (D5) that they had been to CKC to execute the first set of deeds of gift on 9 November. 86.Further, according to CKC and Wong Ying Wai, which I accept, there was a draft set of Deeds of Gift (“the Drafts”) which were probably not signed by all the Defendants and destroyed. 87.It was quite clear from the evidence of Wong Ying Wai, Sing (D2) and Kee (D3) that the Plaintiff’s original intention was to divide the 4 half-properties among the Defendants equally (“the original intention”). However, Wong Ying Wai advised that holding properties in this manner might create difficulty in management in future. The Defendants stated in their witness statements that it was Wong Ying Wai who suggested how to allocate the half-properties to individual Defendants. The suggestion was accepted by the Plaintiff and Defendants. 88.New evidence came up in the oral evidence:
89.About 2 to 3 days before 13 November 2012, Sau King (D4) told Wong Ying Wai over the phone about the designation of donees. Wong Ying Wai amended the Drafts to the current executed form. 90.The Defendants were asked in cross-examination why they should take all the trouble and waste $38,000 costs in preparing the Deeds of Gift when the same result had been achieved by the Will. All Defendants (except Chi (D1)) said that a will could always be changed but Deeds of Gift could prevent the Plaintiff from changing his mind. This piece of evidence spoke volumes. 91.It was puzzling how Wong Ying Wai and all Defendants could have forgotten to mention the stamp duty issue in their witness statements. I reject the existence of the stamp duty issue. 92.The Plaintiff maintained that he did not know about the arrangement of the gifts (本人並不知道相關送贈的實質安排). This averment only appeared in the supplemental witness statement, but he could not tell who asked him to prepare it. He insisted, under cross-examination, that he had only signed one set of deeds of gift. Under re-examination, he said 1-2 sets; and that he had been to CKC 2-3 times, maximum 3 times. He denied that the issue of stamp duty was raised. 93.The evidence that it was the Plaintiff who designated the donees for each half-property contradicted the contemporaneous interview record with Dr Mok, wherein the Plaintiff said that it was the Defendants who divided the properties among themselves (T5 & 6). 94.I find that instructions to prepare deeds of gift were first given on 19 October 2012. The first set of deeds of gift probably reflected the original intention. I reject the new evidence in paragraph 88 above. I find that the designation of donees was the idea of the Defendants to prevent the Plaintiff from changing his mind. Sau King (D4) gave instruction to Wong Ying Wai which led to change of the Drafts. I shall state my conclusion on Issue 4 after analysing Issue 5. Issue 5: Did the Defendants prefer their own interests to that of the Plaintiff? 95.It was not disputed that the Deeds of Gift had serious and adverse effects on the Plaintiff. He was left with savings and was deprived of his sole source of income. 96.There were 4 matters that might fall under this complaint: (i) saving of stamp duty; (ii) failure to reflect the true intentions of the Plaintiff; (iii) failure to implement the settlement; and (iv) failure to advise the Plaintiff of the alternative of making a will. 97.With regard to (i), I do not think the saving of stamp duty, even if true and agreed to by the Plaintiff, could be the subject of complaint. The saving of stamp duty cost nothing to the Plaintiff. 98.With regard to (ii), there was failure to reflect the true intentions of the Plaintiff, ie “equal distribution”. However, such failure did not cause the Plaintiff to lose more assets or lose them earlier. The beneficiaries were the same. 99.With regard to (iii), I accept that the Plaintiff was hard of hearing and it might be useless for Wong Ying Wai to call him. Wong Ying Wai sought clarification from Sau King (D4) instead. She told him that “the 5 children had never agreed to any arrangement” (五名子女根本没有同意任何安排). This tallied with the Plaintiff’s version in paragraph 59 of his supplemental witness statement. The Plaintiff had never indicated any view different to the settlement in his witness statements. 100.The Defendants’ reference to an alleged “agreement” with the Plaintiff on designation of donees was made after the Defendants declined to accept the settlement. One could immediately see how the Plaintiff could be influenced depending on whether he had a “meeting” with Kuen or the Defendants. 101.Sau King (D4)’s instructions on designation of donees were given before the Defendants acquired any interest in the 4 half-properties. When Wong Ying Wai saw the Plaintiff in person, he had never verified with the Plaintiff personally whether the settlement existed or should be implemented. This was despite the Plaintiff telling CKC that the fight over his property (爭產) was resolved and that somebody used his name to sue Kuen. 102.With regard to item (iv), the Plaintiff had never been advised that he could have more prudently made (or kept) the Will whilst retaining the interests in the properties without undue risk to himself: Inche Noriah v Shaik Allie bin Omar [1929] AC 127, at p 136. This authority was about presumed undue influence because of the relationship between the aunt (donor) and nephew (donee) but the circumstances were very similar to this case. There the donor had received independent legal advice from a lawyer giving the advice in good faith. The gifts divested the 90 years old donor virtually of her entire asset in favour of her nephew who used to manage her assets. The gifts were set aside. 103.It was true that the Defendants had not informed the respective tenants of the change in legal title and allowed Kuen and the Plaintiff to continue to receive the rent after the Deeds of Gift were executed. Nor had Sing (D2) sought rent from the Plaintiff for using the Man Po Property. I accept that their attempt to prevent leasing out of the Properties or threat to recover possession was to prevent the Plaintiff from wasting money on litigation. Even so, that did not affect the legal position that the Plaintiff had been divested of all interests in the 4 half-properties and was left at the mercy of the Defendants. 104.I find, on the bases of items (iii) and (iv) and my findings under Issue 4, that the Defendants had preferred their interests over that of the Plaintiff. They acted in concert to acquire for themselves all the interests of the Plaintiff in the 4 half-properties during his lifetime. They blatantly disregarded the adverse effects it would have on the Plaintiff. J. DID THE PLAINTIFF UNDERSTAND THE EFFECT AND CONSEQUENCES OF THE DEEDS OF GIFT? 105.As a reminder, it was not the Plaintiff’s case that he did not understand the effect and consequences of executing the Deeds of Gift. 106.I accept Wong Ying Wai’s evidence that at the time of the execution of the Deeds of Gift, the Plaintiff was accompanied by Siu Ling. Sau King (D4) was outside the partition area where Wong Ying Wai’s desk was. Wong Ying Wai reminded the Plaintiff of his original intention and that it was changed. He told the Plaintiff which property was given to whom, that it would be easier for management in future and that it saved stamp duty. He also told the Plaintiff that once the properties were given to his children, the properties would no longer be his but his children’s and that he would have no properties. 107.Save for the fact that he had mentioned the saving of stamp duty, I accept Wong Ying Wai’ evidence. I find that Wong Ying Wai had interpreted the contents to the Plaintiff and CK Chan verified Wong Ying Wai’s signature. I accept those had happened as a matter of formality. 108.Mr Mak submits that the Plaintiff had gone back to Kuen at Wah Kay Property, hoping to collect rent. This showed that the Plaintiff did not understand the effect of the Deeds of Gift. 109.I do not accept this. The Plaintiff’s character was that he probably treated the rental as still his. Having the closest relationship with Kuen, he had obviously returned to him for assistance. 110.The son-in-law was present at CKC. He said that after signing the Deeds of Gift, the Plaintiff said he felt relieved and was satisfied with his own arrangement. He did not find the Plaintiff being misled, threatened or forced to sign the Deeds of Gift. 111.Sau Yung (D5) allegedly heard the Plaintiff’s remarks and yet her witness statement did not mention them. 112.I am satisfied that the Plaintiff did utter the remarks. However, I place little weight on them. They were far from showing what arrangements the Plaintiff had made. There was never any issue of the Plaintiff being threatened or forced. With his limited time at CKC’s office, the son-in-law could hardly tell whether or not the Plaintiff was misled. 113.The following matters indicated and I find that the Plaintiff knew the effect and consequences of the Deeds of Gift:
114.This finding holds good even if his original intention was only to make a will or make gifts after his death. K. LACK OF INDEPENDENT LEGAL ADVICE 115.It was not in dispute that the Plaintiff never had independent legal advice. Wong Ying Wai regarded the Defendants also as clients. He treated the family as “a group”. He admitted that the close relationship between the parties did not cause him to think of the possibility that the Plaintiff would end up having no rental income. This admission aptly illustrated how he completely overlooked the conflict of interest that existed within the “group” and the need to safeguard the Plaintiff’s interests. L. FAILURE TO TAKE CARE OF THE PLAINTIFF 116.On the Plaintiff’s own case, the Defendants were gradually fulfilling the Promise by 7 November 2012. However, he felt that he was not enjoying the same standard of living. 117.There were various explanations as to why the Plaintiff left Chi (D1)’s home. The probable version was that Siu Ling was not happy with the arrangement that all siblings had a share in the Plaintiff’s properties but she alone had to take care of him. The Plaintiff also believed that by going back to Kuen, he could collect the rent. 118.Whichever explanation is accepted, none of the Defendants had ever offered to take care of the Plaintiff ever since. Chi (D1), Sing (D2) and Sau King (D4) told the Plaintiff that they would surrender the relevant property to him provided the others did so. Their assertion of property rights through issue of solicitors’ letters in December 2013 would have deprived the Plaintiff of income for his livelihood. I find that the Defendants had breached the Promise. M. FINDINGS OF FACTS 119.The Plaintiff initiated the gifts, which were made because of the repeated Promise and the Plaintiff’s wish for Siu Ling to take care of him. 120.The Plaintiff did not impose trust and confidence on the Defendants. 121.After the gifts were announced, the Plaintiff had expected to depend exclusively on the Defendants and their spouses to live with and take care of him. It did happen for about 4 months. 122.The Defendants had no prior dealings with CKC or Wong Ying Wai. The first day of the Plaintiff and Defendants’ visit to CKC was 19th October 2012. The Plaintiff gave instructions to do the Will, the Notices of Severance, the Deeds of Gift and to issue the demand letter to Kuen. The Notices of Severance and Will were executed on the 19th. 123.The Defendants made concerted and strenuous efforts to conceal the existence or knowledge of the Will. It was probably to prevent the Plaintiff from replying on the Will to assert gifts after death, and equal division. 124.The Defendants designated the donees for each property. Wong Ying Wai received instructions from Sau King (D4) to prepare the Deeds of Gift with their present contents about 2 days before 13 November 2012. The purpose was to avoid future difficulty over management. 125.The Will and Deeds of Gift were interpreted to the Plaintiff as a matter of formality. The Plaintiff understood the contents, effect and consequences of these 2 legal documents. 126.The Defendants were acting in concert in their endeavours to acquire for themselves all the interests of the Plaintiff in the 4 half-properties during his lifetime. They preferred their own interests over that of the Plaintiff in giving instructions contrary to the settlement. The Deeds of Gift did not reflect the original intention. The Defendants had blatantly disregarded the seriousness and adverse effects that the Deeds of Gift would have on the Plaintiff, leaving him with very limited financial resources and depriving him of his sole source of income. 127.There was no advice on the difference between a will and a deed of gift and the drastic consequences to the Plaintiff in terms of ownership and income. 128.There was conflict of interest between the Plaintiff on the one hand and the Defendants on the other. CKC overlooked it and failed to advise the Plaintiff to seek independent legal advice. 129.The Defendants breached the promise. N. UNDUE INFLUENCE 130.Undue influence consists not of a lack of understanding or an absence of consent but of a lack of sufficient independence in relation to the transaction. It is recognized that a person may understand fully the implications of a substantial gift and still be acting under the undue influence of another. It is their weakness which is being protected not their inability to comprehend: Royal Bank of Scotland plc v Etridge (No.2) [2002] 2 AC 773 at p 824. 131.The mere fact of the Plaintiff having made inter vivos gifts of all his landed properties and that it was manifestly disadvantageous to him were not sufficient to found a case of undue influence. Otherwise it would be reversing the burden of proof: To Pui Kui v Ng Kwok Piu & ors, CACV 281/2012, 21 August 2014, §69. 132.That the gift originated from the complainant would not preclude a finding of undue influence if there are other circumstances pointing to it: Curtis v Pulbrook [2009] EWCA 782 at §143. 133.As Mr Lai rightly pointed out, this was not the only instance where the Plaintiff made inter vivos gifts to his children. See how he dealt with the QRW Property and 6 other properties, and made cash gifts. The Plaintiff did not argue that any of those transactions were tainted with any impropriety. 134.Pre-action, the Plaintiff’s case was solely based on breach of the Promise. See the letters dated 5 April and 15 May 2013. 135.Mr Lai submits that the court should be slow to infer undue influence even if the nature of a transaction is manifestly disadvantageous, particularly in the context of a Chinese family: China Hong Kong Textile Co Ltd at §25. 136.I do not think the context of a Chinese family has significance in this case. The Chan family was not a close-knit family. The Defendants and Kuen created a situation of conflict which the Plaintiff was truly unable to resolve by March 2013. 137.I place little weight on the stamp duty issue. If it ever existed, it only meant that the Defendants managed to save themselves money. To the Plaintiff, there was no disadvantage; he was still giving out the same interests to the Defendants. 138.Applying the principles in paragraph 2 above, it was clear that the Defendants were the dominant party, had the capacity to influence the Plaintiff and did exert that influence. That exercise was undue as they preferred their own interests over that of the Plaintiff. They influenced Wong not to implement the settlement, and decided how the properties were to be allocated to the donees. The Defendants did not allow the Plaintiff to exercise free and informed judgment. Chitty on Contracts,§7‑068. The Plaintiff’s mind was a mere channel through which the will of the Defendants operated: Aboody, at p 969G. 139.The fact that the same lawyer acted for both parties does not render the advice less independent. The material consideration is whether the adviser has given the advice from the advisee’s own separate point of view and for his own separate benefit. 140.In Wadlow v Samuel [2006] EHWC 1492 (QB), the “victim” received advice from a lawyer who had acted and later continued to act for the “influencer”. Gray J was nonetheless content to accept that the advice so given to the “victim” was independent. 141.In the present case, CKC ignored the Plaintiff’s express instructions on settlement and did not verify Sau King (D4)’s instructions with the Plaintiff personally. Paragraphs 127-128 were particularly damaging since the Plaintiff was aged 86. 142.Applying China Hong Kong Textile, the transaction had underlying impropriety. Actual undue influence was a significant, though not only, reason for executing the Deeds of Gift. The Deeds of Gift ought to be set aside. O. ORDER 143.I order that the Deeds of Gift be set aside and that the interests in the 4 half-properties be reverted by the Defendants to the Plaintiff. There be liberty to apply. The Plaintiff does not seek damages and I make no order to that effect. 144.I make an order nisi that the Defendants do bear the Plaintiff’s costs, to be taxed if not agreed. 145.I thank counsel for their thorough preparation and assistance to the court. I am particularly impressed by the patience of Mr Adrian Lai in cross-examination of the Plaintiff who was of advanced age and hard of hearing.
Mr Paul Mak, instructed by Cheung, Chan & Chung, for the Plaintiff Mr Adrian Lai, instructed by Chak & Associates, for the Defendants | |||||||||||||||||||||||||||||||||||||||||
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