Yang Foo-oi By Leung Ping Chiu, Roy Her Next Friend v. Wai Wai Chen and Another
Read the full judgment text of HCA 1739/2010 on BabelCite. This High Court CFI judgment was delivered on 20 January 2020.
1. In this Decision, I shall adopt the nomenclature used in the Judgment of this Action dated 29 November 2016 (“Judgment”). There are 3 applications before the court, namely :
Cited by 2 cases · Cites 9 cases
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HCA 1739/2010 [2020] HKCFI 235 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE ACTION NO. 1739 OF 2010 ________________________ BETWEEN
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_________________ D E C I S I O N _________________ 1.In this Decision, I shall adopt the nomenclature used in the Judgment of this Action dated 29 November 2016 (“Judgment”). There are 3 applications before the court, namely :
Background 2.The unusual circumstances giving rise to these applications are as follows. 3.This Action was commenced by Yang in November 2010 against Vivien. Timford was joined as a defendant in December 2012. Yang’s primary claim against Vivien was to set aside two “Disputed Agreements” which she entered into with Vivien in respect of Chen’s distribution of assets to his family and for consequential relief. In the event that the Disputed Agreements were held to be valid, Yang had an alternative claim: (i) in respect of the beneficial ownership of the shares in Timford and (ii) for a shortfall in the charitable donation which Vivien was obliged to make under those Agreements. 4.The trial of this action took 21 days from 21 September to 1 November 2016. By the Judgment, Yang’s claim for rescission of the Disputed Agreements was upheld on the grounds of: (i) breach of fiduciary duties; (ii) breach of duty of disclosure in respect of a family arrangement; and (iii) undue influence. Consequential relief of account of profits or alternatively equitable compensation was granted. Yang’s alternative claim was also upheld in the event that the court was wrong on her primary case. 5.On 23 December 2016, the Defendants filed a Notice of Appeal against the Judgment. 6.In April 2016, Vivien commenced HCMH 19/2016 (“MH Proceedings”) seeking to appoint a committee to manage and administer Yang’s affairs. Angela intervened in those proceedings. In her 4th Affirmation filed in the MH Proceedings on 26 May 2017, it was stated that the Certificate of Family and Property submitted by Vivien was not accurate, and redacted copies of 4 documents were exhibited: the G/D, D/G, an Irrevocable Power of Attorney (“P/A”) (all dated 12 December 2012) and a Deed of Assignment (“D/A”) dated 20 December 2012. These documents were subsequently referred to as “Gift Documents”. 7.By an Order dated 18 September 2017 in the MH Proceedings, Lok J directed Angela to provide Vivien with unredacted copies of the Gift Documents. After receiving those documents on 27 September 2017, Vivien applied in the MH Proceedings on 20 October 2017 for leave to use the Gift Documents in her appeal against the Judgment (“Appeal”). That application was granted on 23 October 2017, one day before the hearing of the Appeal. 8.On the same day (23 October 2017), Vivien took out an application in the Appeal to adduce the Gift Documents as fresh evidence. She contended that by the Gift Documents Yang’s claims in this Action against her (“Claims”) were vested in Angela. 9.It should be noted that Vivien’s position “has always been that she does not accept the validity of the assignment of [this Action] to Angela and that the validity of the [D/G] should be challenged whenever it is possible to do so”[1]. I shall return to this issue below. 10.Yang’s position before the Court of Appeal (“CA”) was that she did not admit that the Gift Documents had the effect of assigning the Claims to Angela. However, she applied for Angela to be joined as a co-plaintiff to deal with any technical issue which might arise from the Gift Documents. The CA decided to stay the Appeal pending the determination of the issues of locus and joinder by this court. Hence these applications. Issues 11.There is an Amended Joint List of Agreed Issues filed pursuant to the directions of this court. It contains no less than 14 issues with 5 sub-issues. The respective position on the main issues 12.Yang’s stance on the main issues[2] had been summarized by Mr Yu SC, who appeared with Mr Man SC, Mr Lam and Mr Lee for her, as follows :
13.On behalf of the Defendants, Mr Strachan SC, who appeared with Mr Dawes SC, Mr Chau and Mr Man, contends that :
Witnesses 14.The hearing was conducted with cross-examination of the witnesses. However, the only witnesses were those of Yang, namely, Angela, Mr David Wong (“Wong”) who acted for Yang and drafted the Gift Documents and Ms Ann Hui (“Hui”) who assisted Wong in relation to those Documents. Gift Documents 15.On 12 December 2012, Yang executed 3 documents in her hospital room, namely, the G/D, D/G and P/A. These were short documents in Chinese and expressed in simple terms. 16.Each one of the Documents was signed by Yang and witnessed by Wong and Dr Wong Yee Him (“Dr Wong”), a psychiatrist. A statement by Dr Wong was contained in each Document to the effect that Yang was mentally capable to execute the Document and she did so voluntarily. 17.It is reasonably plain from the terms of the G/D that :
18.There were only 3 clauses in the body of the D/G. Clause (1) referred to the reservation of HK$0.2b for Yang’s living and other expenses. The terms of Clause (2) go to the heart of the dispute on the construction of the Gift Documents:
19.Clause 3 referred to the assets which Angela was holding on her mother’s behalf. They were considered as immediately transferred to her as beneficial owner. 20.The term “全部和任何財產” (translated as “all and any of my properties”) was also used in Clause (3) and the G/D. 21.As stated, the P/A was created to enable Angela to take any steps which were considered necessary to transfer Yang’s assets to her, her nominees or companies pursuant to the D/G. 22.Clause (1) of this document also contained the reference to 全部和任何財產. 23.Clause (2) of the P/A was in the following terms:
24.On 20 December 2012, Yang executed the D/A in favour of Angela in connection with the debts owed to her by 9 companies in which she had an interest. The stated purpose of the document was to complete the gift to Angela. Legal principles for construction of the Gift Documents 25.The parties are in agreement that Lord Neuberger’s dicta in Marley v Rawlings [2015] AC 129, §§19 and 23, authoritatively encapsulated the principles for interpretation of unilateral documents, such as the D/G, which are the same as those which apply to the interpretation of commercial contracts. 26.When interpreting a contract, the court is concerned to find the intention of the party or parties, and it does so by identifying the meaning of the relevant words in the light of (i) the natural and ordinary meaning of those words, (ii) the overall purpose of the document, (iii) any other provisions of the document, (iv) the facts known or assumed by the parties at the time when the document was executed and (v) common sense, but ignoring subjective evidence of any party’s intentions (§19). 27.The parties also agree with the dicta of Lord Walker NPJ in Secretary for Justice v Joseph Lo Kin Ching (2015) 18 HKCFAR 169, §31, which identified two all-important general principles of construction, namely, (i) that words must be read and understood in their context and (ii) that the document must be read as a whole. 28.In the same paragraph, Lord Walker cited with approval the dicta of Lord Neuberger on an iterative approach:
29.Further, Lord Walker pointed out that where the document was drawn up by a lawyer, the words are looked at more strictly than where the document had been written by a layman (§32). 30.Mr Strachan had also drawn the attention of the court to Guest on the Law of Assignment, rubric 1-44: “The expression of intention will be construed objectively. An assignment may be collected from the outward expression of intention, whether or not an assignment was subjectively intended by the assignor”. 31.Finally, relying on Fully Profit (Asia) Ltd v Secretary for Justice (2013) 16 HKCFAR 351, §§15-16, Mr Yu emphasised that it is not particularly helpful to refer to ordinary and natural meaning, especially for a general term such as “財產” in this case. In those paragraphs, it was held by of Ma CJ:
Undisputed or indisputable facts 32.The personal circumstances of Yang had been referred to in the Judgment[4]. She was 88 at the time of the execution of the Gift Documents. She was in poor health[5]. She only received primary school education and, in the words of Daniel who had looked after her financial affairs for many years, she lacked “understanding of how modern commercial structures and finance works operate”. 33.There was a breakdown of relationship in the family[6] which started with the distribution of Chen’s assets. The 2008 Will, which was made in February that year, suggests that the breakdown of relationship between Yang and Vivien must have occurred by then. In December 2009, Yang petitioned for the divorce with her husband of 60 years. 34.This Action was brought by Yang against her own daughter in November 2010. It is plain that such an action would not have been taken lightly. There was a Letter of Authority dated 18 August 2010 addressed to Yang’s solicitors which authorised Angela to represent her mother in giving instructions to the solicitors pursuant to the Retainer which was signed on that day. 35.Yang suffered 2 strokes in early December 2010. In April 2011, she executed two Enduring Power of Attorney and a General Power of Attorney appointing Angela as her lawful attorney to take care of her properties and affairs in the event that she lost or might be said to have lost her mental capacity. Clearly, Yang was alive to the possibility that she might become incapacitated one day. 36.Pursuant to an Order dated November 2008 made in mental health proceedings in relation to Chen, he was declared mentally incapacitated and a committee of his estate was appointed. In December 2008, Mr Man Mo Leung (“Man”), an accountant, became that committee. 37.In December 2011, Yang was served with a Summons by Man which sought to disclose the evidence of Yang and Angela filed in the divorce proceedings for the purpose of an intended application of a Statutory Will to remove Angela as a beneficiary of Chen’s estate. 38.In February 2012, Yang made a Statutory Declaration expressing strong objection to Man’s intended application. She accused Man of being under the influence of Vivien[7]. 39.Shortly before the making of the Gift Documents, on 20 and 27 November 2012, Instruments of Transfer were executed by Yang in favour of Angela in respect of the shares of 5 out of the 9 companies referred to in the D/A. The shares in respect of 3 of the remaining 4 companies were transferred to Angela in 2010 (Sino Portfolio International Ltd), 2011 (Southern Territories Group Ltd) and 30 June 2017 (Jesteburg Co Ltd). The last company was a wholly owned subsidiary of 1 of the 5 transferred in November 2012, and no separate transfer was needed. 40.The G/D referred to the assets of Yang as having a total value not less than HK$15b after her divorce and as of July 2011. I shall return to this valuation when I deal with the evidence of the witnesses. 41.However, it is clear from the Form E filed by Yang in the divorce proceedings dated 7 May 2010 that her personal assets were estimated to be worth about HK$7.62b. Pursuant to an order made in the divorce proceedings dated 19 April 2011, Yang was to receive from Chen a lump sum of HK$7b, the entirety of which would be received by her within 3 months of that day (on which the Decree Absolute was pronounced). These sums added up to HK$14.62b. 42.8 MA[8], held by a company called Jadespring Ltd, was part of Yang’s assets set out in the Form E. There were 2 valuation reports of that property. The market value of that property was about HK$4.33b as at 31 March 2010. Such value had increased to about HK$4.85b two years later. Adding the appreciation of HK$0.52b to HK$14.62 equals HK$15.14b. 43.There was a detailed medical report from Dr Wong dated 21 December 2012 in respect of Yang’s mental capacity in relation to the Documents she executed on 12 December 2012 and the D/A she executed on 20 December 2012. 44.The mental state examination conducted by Dr Wong found that Yang appeared to be free from major psychiatric symptoms. Although she demonstrated clear understanding of what was said to her, she had difficulty expressing her thoughts with appropriate words, could not articulate her ideas precisely and often communicated in single words and short phases. Such condition related to expressive dysphasia from which Yang was suffering. However, she understood instructions given to her very well, and gave relevant and appropriate responses to all Dr Wong’s questions. 45.Yang’s mood was not overtly depressed (she was diagnosed in November 2010 by Dr Wong to be suffering from “major depressive disorder, recurrent, in partial remission”). Her orientation and short-term memory were both good. 46.Yang had poor attention span which was exacerbated by performance anxiety during the examination. Perhaps due to weakness of her hand muscles, Yang seemed to have difficulty in writing. She had no difficulty with judgment and problem solving. She scored 25 out of 30 under Folstein’s Mini Mental State Examination, losing marks in attention (scored 3 out of 5), writing (1 out of 5) and doing interlocking pentagon (1 out of 5). The score was an improvement to her performance in March and April 2011, and similar to her score from November 2011. 47.Dr Wong confirmed that Yang had the mental capacity to execute the Gift Documents on 12 and 20 December 2012. 48.The above is based on the Judgement and the documents before the court, and is either uncontroversial or indisputable. I next turn to the evidence before the court. Evidence 49.The circumstances leading to the accelerated vesting of properties in Angela by way of the Gift Documents are clear from the G/D itself and the undisputed evidence. Such evidence is consistent with Angela’s explanations. In particular, the legal action taken by Man and Yang’s great displeasure over it would have made her realise that her own testamentary wishes could be at risk of being overridden by Vivien. 50.Angela’s evidence was that Mr Tommy Lam (“Lam”) of Messrs Keith Lam, Lau and Chan was originally instructed by Yang to assist her in relation to the intended gift to Angela. Lam was subsequently replaced by Wong (senior partner) of Messrs Wong, Hui & Co (“WH”) in early December 2012 at the wish of her mother. The share transfers referred to in para 39 above was part of the work undertaken by Lam. 51.Yang was familiar with Wong who had acted for her in various matters since 2008. Through those years of service, Wong had acquired knowledge over Yang’s affairs (including her relationship with Vivien) and had established a good rapport with her. He was instructed by Yang that Angela would act as a liaison person for her, and that he could act on Angela’s instructions given on behalf of her mother. 52.On 4 December 2012, Wong met with Angela at the office of another firm of solicitors and was informed that Yang wished to make a gift to her. 53.Later that day, Wong went to see Yang at the hospital to take instructions. They were alone. He was told that Yang wanted to give all her things (“所有嘢”) to Angela and wanted his help. He confirmed with his client that by “all her things” she meant all her properties (“財產”). 54.Wong pointed out to Yang that Angela would receive all of her assets under the 2008 Will and asked why she wanted to make a gift now. In reply, Yang said that she did not want Angela to have trouble (“麻煩”) in the future. When asked to clarify, Yang said that by “trouble” she meant litigation (“打官司”). She also said that she would feel relieved after giving all her properties to Angela. 55.In response to Wong’s advice that she should consider reserving sufficient resources for herself to meet her personal expenses for the rest of her life, Yang indicated that she would like to keep HK$200 million for her own use. She gave instructions to Wong for preparation of the documents to give effect to her intended gift to Angela. There was a brief Attendance Note of this meeting which, to some extent, corroborated Wong’s evidence. 56.Wong’s evidence was that Yang did not give him any instruction to deal with this Action. However, he agreed in cross-examination that there was no specific asset mentioned by Yang for the intended gift. 57.In drafting the Gift Documents, Wong chose to use simple terms which would be easy for Yang to understand. He also wrote to Dr Wong with the intention of engaging him to conduct an assessment of Yang’s mental capacity in relation to the making of the gift. 58.On 11 December 2012, Wong and his partner, Hui, had a meeting with Angela and her assistants. As recorded in Hui’s Attendance Note, an estimate was worked out in respect of the total value of Yang’s assets that would be covered by the gift (not less than HK$15b). It was Wong’s advice to carry out that exercise so as to provide his client with an idea of what she was gifting to Angela. 59.As Angela, Wong and Hui explained, the estimate of HK$15b comprised of the following :
There is no dispute that Yang was not informed as to how the HK$15b was compiled. 60.On 12 December 2012, Wong, Hui and Dr Wong went to see Yang at the hospital. Dr Wong then carried out an assessment of Yang’s mental capacity in private. He confirmed that: (i) Yang had the mental capacity to understand and execute the G/D, D/G and P/A and (ii) she wanted to execute such Documents. 61.Subsequently, Wong attended to the execution of those documents by Yang in the presence of Hui and Dr Wong. Yang was asked to carefully read the Documents, and Wong also read out the contents to her. After confirming with Yang that she understood and approved of the Documents, and that she wanted to sign them, the execution of the Documents was carried out. 62.There was a brief Attendance Note made by Hui of the events of the 12 December 2012. 63.Later, Wong prepared the D/A. On 20 December 2012, Wong, Hui and Dr Wong again met with Yang in the hospital. Dr Wong conducted an assessment of Yang’s mental capacity and confirmed that he was satisfied that Yang was mentally capable of executing the D/A and that she wished to do so. Wong then attended to the execution of the D/A in the same manner as described above in the presence of Dr Wong and Hui. 64.Wong’s recollection about the execution of the Gift Documents was challenged. Although his evidence was detailed, he explained that what was done was in accordance with his normal practice and he had a good memory. I find the explanation reasonable. The events of the 12 and 20 December 2012 as described by Wong, whilst elaborate, were not out of the ordinary. Yang was a very substantial client of WH. There was thus good reason for Wong to remember those events. I accept the evidence. 65.Wong’s evidence was that if it had crossed his mind that Yang had wanted to assign this Action to Angela, he would have sought specific instructions from Yang, researched into issues of assignability (which were complicated) and champerty, and made enquiries with Yang’s solicitors for this Action. If he had concluded that it was assignable, he would have prepared a separate deed to effect an assignment. 66.By a letter dated 16 January 2013, certified copies of the executed Gift Documents were sent to Angela by WH. It was stated that the originals might be collected at WH’s office. The letter also referred to certain formalities to be complied with by Angela in respect of some of the properties assigned, eg, giving notices of the change of shareholders in respect of shares in BVI companies. There was no mention of any formality concerning any assignment of the Claims, eg, executing a Deed of Assignment or giving notice of assignment to Vivien. 67.On 18 January 2013, Wong met Angela at the hospital and he handed the original Gift Documents to her. According to both of them, on that occasion Angela asked Wong if Yang’s gift to her under the Gift Documents had included this Action, to which Wong replied “no” and left. This part of the evidence is hotly contested. Vivien contends that such exchange never happened. This piece of evidence is highly material to Vivien’s contention that Angela had deliberately concealed the Gift Documents from the court. 68.Angela’s evidence is that her mother told her that she would like to give her all her “things” (“物事” spoken in the Ningpo dialect), and it never occurred to her that this Action was part of the gift. Neither did it occur to her that the Gift Documents were relevant to the further conduct of this Action until the matter was raised by Vivien in around early October 2017. 69.Angela had the experience of assigning her legal claims to a defendant involved in a US litigation by Boster Associates Ltd (“Boster”). This led her to believe that such an assignment would require an assignment document[9] and the giving of notice of the assignment. 70.In about August or September 2012, Angela had made preliminary inquiries with two of her legal advisors (a US Attorney and a Hong Kong solicitor) as to whether this Action could be assigned because she was concerned as to what would happen to it if her mother’s health deteriorated. She was told by both that it would raise very complex issues and she did not pursue the matter any further. 71.She encountered unexpected problems arising from the Boster lawsuit. In particular, she said that there were many Motions filed by the other side to challenge the assignment of her claims. Also, she was much surprised by a reversal by the Judge of a ruling made in December 2012 in her favour. Angela described the experience as a can of worms and that she had her fingers burnt. 72.On 18 January 2013, when she saw a copy of WH’s letter of 16 January 2013 which mentioned an Assignment, she was concerned about the potential problem associated with it, and it prompted her to make the enquiry with Wong (see para 67 above). Construction of the Gift Documents 73.The focus of the contest here is on the G/D and the D/G (the subject matters of the Rectification Summons). In this exercise, the court shall bear in mind the legal principles identified above and exclude the subjective evidence of intention from its consideration. 74.Vivien’s case is based heavily on the terms of the Documents. It was provided in the D/G that, with the exception of the HK$200m, “all and any” of Yang’s properties were immediately gifted to Angela. In the G/D, it was stated that the gift was “regardless of [the properties’] value”. Further, the purpose of the gift was to accelerate the bequest to Angela as the sole beneficiary under the 2008 Will. Under that Will, everything was bequested to Angela. Apart from the specific exclusion of the HK$200m, nothing was excluded from the gift. Therefore, it is contended that everything meant everything, which included the Claims. These are forceful submissions. 75.I certainly agree that the purpose of the Documents was to accelerate the vesting of Yang’s properties in Angela (save for the money reserved for herself), which were intended to be gifted to her daughter under the 2008 Will. However, that was not the entirety of the purpose, nor does it provide in full the context of the exercise. 76.The reason why the Gift Documents came to be made was actually stated in the G/D: “to avoid unnecessary disputes in the future”. It is reasonably clear from the reference to Yang’s stated determination not make any gift to Vivien that it was envisaged by her that Vivien might dispute the 2008 Will under which the entirety of her estate would go to Angela. Indeed, Vivien was probably the only person who might challenge that Will. The acceleration of the gift under the 2008 Will fortifies the view that the disputes sought to be avoided were the potential disputes over that Will. 77.Further, the possibility of disputes was underscored by: (i) the fact that Yang had changed her 2004 Will by giving all her properties to Angela instead of equal sharing between the 2 daughters; and (ii) Yang’s experience that Man wanted to exclude Angela from Chen’s estate. 78.Two important points emerged from the discussions in the preceding 3 paragraphs about the purpose and context of the Documents, namely: (a) to benefit Angela (these were after all gift documents); and (b) to avoid disputes. Such purpose and context did not sit well with an intention to pass a litigation between Yang and Vivien to Angela. 79.Firstly, to construe the gift as inclusive of the Claims would certainly put Angela on a collision course with her sister. This is the antithesis to avoiding disputes. I agree with Mr Yu that it must have been a painful decision for Yang to sue her daughter. The suggestion that Yang (or any mother) intended to cause her only daughters to fight one another in court on a matter in which one of them was not involved is highly exceptional. 80.Secondly, it is equally doubtful whether the Claims or this Action was regarded as a benefit to Angela. The fruits of this litigation would be so regarded, but in December 2012 it was nowhere near a trial. At that time, the litigation would be a source of liability, ie, the need to fund it. It may be added that not many people in Hong Kong would generally regard a litigation as a benefit. Gifting the litigation is therefore not consonant with the objective of benefitting Angela. 81.If, by the D/G, it was only intended to make a gift of the fruits of this Action, this would be an assignment of future property. Such an assignment would not give to the assignee a right to interfere in the action, ie, Yang would not have lost her locus to pursue this Action: see Glegg v Bromley [1912] 3 KB 474, 483-484. It would take effect as an agreement to assign, and if given without consideration, would not be enforceable: Guest on The Law of Assignment, rubric 3-21. There is no suggestion that Angela had provided any consideration for any agreement to assign. Thus, such a construction would not assist Vivien[10]. 82.However, the fruits of this Action would eventually go to Angela under the 2008 Will, which was preserved pursuant to Clause (4) of the G/D. In other words, a construction that this Action did not form part of the gift would not deprive Angela of the fruits of it, or depart from Yang’s intention to give all her assets to Angela. 83.Thirdly, it is not consonant with the purpose of accelerating the vesting of properties, which would be left to Angela under the 2008 Will, to construe the Documents as assigning the Claims to Angela. The reason is that normally rights of action are not bequeathed in wills. Instead, when a person dies, the power to commence and maintain existing proceedings will be vested in the personal representative: s.53 of the Probate and Administration Ordinance, Cap 10. Thus, the subject of a bequest would normally be the fruits of the proceedings, as recovered by the personal representative. The costs of the proceedings would be borne by the estate. Such practice is not controversial. 84.It follows therefore that it would not be consistent with the purpose of accelerating the gift to construe the Documents as including this Action, which had not been tried and would have required considerable funding to bring to fruition, if any. It may be said to be more consistent with an intention to pass to Angela all of Yang’s properties for the Action to take its course and that any fruits thereof to go to Angela under the 2008 Will. 85.Fourthly, there was no assignment of any right of action prepared after the D/G. This is in stark contrast with the D/A which was executed on 20 December 2012 by which various debts were assigned to Angela (Yang also executed Instruments of Transfer in respect of various companies in favour of her daughter). Yang had the service of experienced solicitors in relation to the Gift Documents. It is highly unlikely that experienced solicitors would have overlooked the need to have a deed of assignment prepared for an assignment of a right of action. This militates against the construction that Yang intended to include the Claims as part of the gift to Angela under the Documents. 86.Fifthly, there was the valuation of the properties gifted away in Clause (1) of the G/D (not less than HK$15b as of July 2011). Although the compilation of that figure did not involve Yang[11], there is undisputed evidence from Dr Wong that when he asked Yang what she was giving away, Yang pointed to the Documents. When she was further asked about the value of what she was giving away, Yang pointed to Clause (1) of the G/D which contained the valuation. The irresistible inference is that Yang had laid her trust on the professionals[12] and adopted the valuation they produced. 87.I have difficulty accepting Mr Strachan’s submission that the valuation bears no weight for the present purpose because Yang was not told what was included in the figure. As a matter of principle, I am unable to see why the reliance by Yang on her solicitors to estimate the value of the gift is any different to the reliance by a contracting party on his solicitors in the formulation of the terms of contract. Both must be taken to have adopted the advice of his/her solicitors and legal consequences would follow. 88.I am inclined to agree with Mr Yu that there is objective evidence on what was included in the HK$15b (apart from the unchallenged evidence of the witnesses on how that sum was calculated, see also paras 41 to 42 above). In my view, this piece of evidence may be used as a test on whether the Claims were intended to be included in the Gift Documents under the iterative approach. The HK$15b did not include any valuation of the Claims. 89.Finally, Mr Yu questioned whether the term 財產 (properties) could have been understood by Yang, an old lady with limited education, as including her action against Vivien. Wong’s unchallenged evidence was that he drafted the Gift Documents in simple terms so that they might be easily understood by Yang. 90.Although the Documents were drafted by a solicitor, they were unilateral documents prepared for an old lady with limited education to reflect her intention. The distinction with legally crafted commercial documents to reflect the fruit of negotiations is obvious. 91.The words 財產 may appear to lawyers to include chose in action under which a litigation may belong (putting aside the many legal arguments on whether this Action was assignable (see below)). To many, if not most, laymen a litigation may not be correctly described as 財產. I am inclined to the view that, like the word of “house” in Fully Profit (supra), those words must be construed in context. As analysed above, the context and the purpose of the Gift Documents were not consistent with the construction that this Action was part of the gift. 92.For these reasons, I hold that a reasonable person with knowledge of the relevant background would not have understood the Gift Documents to include the Claims (or this Action) as part of the gift to Angela. Accordingly, the Locus Summons must be dismissed. 93.Given the dismissal of the Locus Summons, the remainder of the issues are not relevant. However, this court was invited by Yang to indicate its view on those issues. I shall do so with a little more succinctness whilst trying to do justice to the searching analysis of counsel and the many bundles of authorities cited in support. 94.The remaining issues will be addressed in the order set out in para 12 above, which is logical. Rectification 95.This point only arises if it is found that on a proper construction of the Gift Documents this Action was not included as part of the gift. The dispute here is boiled down to essentially 1 point, which had been encapsulated in para 38 of the Vivien’s Closing Submissions:
96.There is no dispute over the following legal principles applicable to rectification :
97.Vivien’s contention is based on what had been referred to as criterion 3 in the case of Giles v Royal National Institute for the Blind [2014] EWHC 1373, the dicta of Barling J at §25, where 4 criteria were set out for grant of the remedy of rectification :
98.Importantly, these criteria were explicitly stated to have been based on a leading authority of the Court of Appeal in Racal Group Services Ltd v Ashmore [1995] STC 1151. In particular, criterion 3 was based on p.1158g-j of that judgment, where Gibson LJ held :
99.With great respect, it may be seen that criterion 3 is excessively wide as a general proposition. For proper understanding, one should go firstly to Van der Linde. In that case, the covenantor wanted to provide an annuity to his sister but with tax advantage. His deed of covenant failed to achieve the desired effect. It should be noted that the proposed rectification was to substitute “an annual sum of 400l” by “such an annual sum as shall after deduction of income tax at the standard rate for the time being amount to 400l”. Evershed J held at p.312 :
100.The ratio of that case was that it is insufficient to show an intention to achieve a purpose (to save tax in that case), the intention as to the manner in which the purpose is to be achieved has to be shown. 101.Racal also involved a fiscal device, Mr Yu had helpfully suggested that there is an excellent summary of that case in Armstrong v Armstrong [2019] EWHC 2559, §§27-28 :
102.The problems in the two cases were similar in that although there was an intention to achieve a tax advantage, the manner in which it was to be accomplished was not shown. In the case of Racal, the claimant probably thought (erroneously) that what was provided in the covenant would meet the 4 year requirement. Hence, it could not be shown when the covenanted payments should be made so as to (correctly) meet that requirement. 103.I am inclined to agree with Mr Yu that the above principle would not answer the issue in this case, ie, whether it is necessary to show that Yang had thought about making a gift of this Action and then decided against it, or whether it is sufficient to show that she did not intend to gift this Action to Angela. Put another way, I do not believe that the principle can be applied to the facts in this case. 104.I believe that the answer here rests on what Yang had intended to gift to her daughter by “all and any of her properties (財產), regardless of their value”. Most importantly, her understanding of (or intention behind) the term 財產. If she did not understand those words to include a litigation, it is sterile to say that she needed to consider whether this Action should be included in the gift. In other words, I am in favour of the Yang’s contention (see para 95 above). 105.The evidence before the court is fairly overwhelming in so far as Yang’s subjective intention is concerned. There is the unchallenged evidence of Angela that her mother spoke of giving her “物事” (things) in the Ningpo dialect. It was not Angela’s understanding that her mother intended to include a litigation as part of her 物事. The evidence of Wong is that Yang told him that she wanted to give “所有嘢” (all her things) to Angela. The term “財產” (properties) was suggested by Wong, and adopted by Yang. Importantly, none of the people involved in the transaction, Angela, Wong and Hui, had the understanding that Yang intended to include this Action as part of the gift. 106.Some of the analysis under “Construction of the Gift Documents” apply equally here. It is quite unlikely that an old lady with limited education and no understanding of “how modern commercial structures and finance works operate” would understand that財產would include a litigation. 107.I have made the point under Construction that it would be highly unusual for a mother to gift a litigation which would result in a fight between her only two daughters. There is no reason to believe that Yang wanted her daughters to turn against one another or to make their relationship worse than it was. 108.There is also the evidence, again unchallenged, from both Angela and Wong that Yang regarded this Action as a personal matter between herself and Vivien. Angela also said that one of the reasons for her mother to reserve some money to herself was to pay for legal expenses. 109.Steps were taken by Yang in furtherance of this Action after the execution of the Gift Documents. On 6 February 2013, a Reply to the Defence of the 2nd Defendant was filed. It contained a statement of truth in Chinese in which Yang was described as the plaintiff, and it was signed by her. A Chinese Supplemental Witness Statement of Yang was filed on 8 February 2013. Paragraph 1 of the statement stated that: “但我要吿慧慧是因爲慧慧不尊重我，而且很貪心，利用我對她的信任侵吞我的資產”. 110.These documents, especially what was stated in para 1 of Yang’s Supplemental Witness Statement, are not consistent with an intention to gift this Action to Angela. The statement quoted above resonant with the evidence of Angela and Wong that Yang regarded this Action as personal between herself and Vivien. 111.There can be no issue regarding Yang’s mental capacity at the time of taking these steps. The matter was investigated at the trial with the benefit of medical evidence. Contrary to Vivien’s contention, the court was not satisfied that Yang did not have the mental capacity (Judgment, §225). 112.Finally, I agree with Mr Yu that if it was Yang’s intention to gift this Action to Angela, it is highly unlikely for her not to have said anything about it to Angela. The evidence of the compilation of the HK$15b strongly militates against any suggestion that Angela had in mind that this Action was part of the gift. 113.For these reasons, I am satisfied that the discretionary relief of rectification should be granted (in the terms sought in the Rectification Summons) if it is necessary to do so. Assignability 114.This is a complicated topic encompassing a number of sub-topics. To begin with, one must look at the legal nature of the causes of action in question. They were summarised in §§5-7 of the Judgment, namely:
115.Pursuant to §§230-231 of the Judgment, the primary relief granted by the court was rescission of the Disputed Agreements, ie, Yang’s succeeded in her primary case. It was granted on the bases of Vivien’s breach of fiduciary duties, undue influence and material non-disclosure in respect of a family arrangement. The claim based on misrepresentation failed. 116.Consequent upon rescission of the Disputed Agreements, Yang was entitled to have Proposal A specifically enforced. The court identified 3 alternative relief: (1) specific performance by way of transfer of properties; (2) equitable compensation; and (3) account of profits, and held that Yang was entitled to elect between the last 2 remedies. Mere equity 117.Yang’s right to rescind the Disputed Agreements was a “mere equity” and not a chose in action, in contrast with, eg, a claim for beneficial interest under a trust which is an equitable chose in action[14]. 118.In ICS v West Bromwich [1998] 1 WLR 896, at 915C-F and 916E, Lord Hoffmann held that a right to rescind a mortgage separate from the property to the mortgage was not assignable:
119.However, it is common ground that if the mere equity here was incidental to a property (including a chose in action, such as a debt) which was also assigned, then the assignment of it would be permissible. 120.Given this position, it is unnecessary to resolve the interesting issue of the conflict between Prosser v Edmonds (1835) 1 Y&C Ex 481 and Dickinson v Burrell (1866) LR 1 Eq 337 where the same principle (a mere right to sue cannot be assigned) was applied differently on indistinguishable facts[15]. Assignment of right of action incidental to property 121.Here, one needs to examine what property Yang might have to which the mere equity to rescind the Disputed Agreements was incidental at the time of the execution of the Gift Documents. 122.After having entered into the Disputed Agreements, Yang had disposed of one half of her rights under Proposal A (crystallised under Proposal B), namely, the “HK$1.5b assets” to be received from Vivien. She no longer had any right to receive properties under Proposal A from Vivien. 123.Yang’s rights under the Disputed Agreements, namely, the distribution arrangements under Proposal Y5, had been executed or completed, save for an outstanding donation by Vivien to Foundation B. Thus, the only outstanding right of Yang was to compel Vivien to make the outstanding donation. 124.As for the dispute over Timford, it arose only due to Vivien’s obsession that none of Timford’s assets would go to her sister: see Judgment, §§57-59, 63, 94-97, 109 and 228. Although Timford was related to Proposal Y5, it may be said that since the HK$300m assets had been transferred to Timford, Yang had a standalone right to ask for the transfer of the shares in Timford to her. However, her primary case was to unravel the transactions under the Disputed Agreements. 125.In these circumstances, can it be said that Yang’s right to rescind the Disputed Agreements was incidental to any property so as to support an assignment? 126.Properly analysed, Yang no longer had any rights under Proposal A, which were superseded by the Disputed Agreements. The only right Yang had at the time of the execution of the Gift Documents was the right to compel Vivien to make the outstanding donation and to transfer the shares in Timford to her. I agree with Mr Yu that since her right to rescind the Disputed Agreements would destroy the right to compel the donation and transfer, they cannot sensibly be regarded as “incidental to” that right of rescission. 127.In the premises, Yang’s right to rescind the Disputed Agreements cannot be said to be incidental to any property. 128.I am unable to see a valid answer to Yang’s case in this regard. It was submitted on behalf of Vivien that the right of action was assigned as part of the gift of all the other assets of Yang by virtue of the Gift Documents. Therefore, it was incidental to Yang’s rights and benefits under the “Disputed Agreements, Proposal A and any purported trusts constituted pursuant to the CHL exercise”. There is much conflation in the submission. 129.In my view, the court is required to examine the nature of the right of action, and to analyse it to see what, if any, property can be said to have been assigned with such right. Vivien’s submission does not withstand this process of examination. 130.Examples of assignment incidental to property right can be found in Guest on the Law of Assignment, rubric 4-23. They include assigning a property together with an accrued claim for breaches of covenant[16]. ICS is another example where a property was assigned with the right to rescind the mortgage over the same. I agree with Mr Yu that the requirement cannot be satisfied by having the claim transferred together with some unrelated property. Otherwise, every claim can be assigned by assigning HK$1 with it. 131.In respect of Vivien’s argument based on Yang’s alternative claims as constituting property incidental to the assignment, firstly, the further alternative case (see para 114(3) above) was advanced on the basis if Yang had not given up her entitlement under Proposal A despite having entered into the Disputed Agreements[17]. It was a fall back argument. Unsurprisingly, it was not pressed at the trial[18]. 132.As regards the claim based on the Disputed Agreements, see the analysis above. 133.Finally, I believe that the court should take a holistic view of this Action. It was about Yang’s complaint that she was short-changed by Vivien. The alternative claim on the basis that the Disputed Agreements were valid was not the real thrust of the case, and it would not survive if the primary claim was upheld. I see neither legal justification nor common sense to determine this issue on the basis of an alternative instead of the primary case. 134.In the premises, I hold that the mere equity in question could not be assigned as a matter of law. Causes of action personal to Yang 135.The arguments here turn upon the correct understanding of the ratio of Simpson v Norfolk NHS Trust [2012] QB 640 and the application thereof. I start with some legal background which I gratefully adopt with modifications from Yang’s Opening Submissions. 136.In Trendtex Trading Corp v Credit Suisse [1982] AC 679, Lord Roskill held at 702G:
137.Quite recently, in Simpson (supra), in considering whether a tort claim for personal injury was assignable, Moore-Bick LJ held at §§8-9:
138.This restriction of assignment applies equally to contractual obligations which are regarded as personal in nature. By “personal” it is meant that the performance, the right to which is sought to be assigned, was intended by the parties to be rendered only to the obligee: Guest on the Law of Assignment, rubric 4-34. 139.The rationale for this restriction was explained by Collins MR in Tolhurst v Associated Portland Cement Manufacturers (1900) Ltd [1902] 2 KB 660 at 668:
140.Simpson had brought a change in the law in that personal injury action is no longer unassignable. However, it is common ground that the restriction would remain in respect of a contract for the performance by a well-known artist. Another example of non-assignability can be found in Simpson (§8), a policy of motor insurance is personal to the policyholder and cannot be assigned to the purchaser of the vehicle insured under the policy. The reason being that the identity of the insured was material to the risk undertaken by the insurer. 141.It appears that the ratio of Simpson was encapsulated in the sentence: “whether the identity of the person to whom the obligation is owed is an essential aspect of it” (§8)[19]. 142.Accordingly, personal injury action is excluded from the restriction to assignment because the defendant’s obligation depends on his negligence and it matters not who the victim is. However, a contract between a well-known opera singer and an opera house would not meet that test because the obligation to either party would be personal in that the identity of the performer or the venue of performance would be an essential aspect of the contract. 143.It had been suggested that defamation cases would now be assignable[20]. With respect, I am unable to agree because the defamatory statement would only be applicable to the person defamed. Also, there may be a claim for apology which is quite meaningless to anyone else. 144.Applying the ratio of Simpson to this case, in my view the Claims were not assignable. As pointed out above, Yang’s primary claim was for rescission of the Disputed Agreements, which succeeded on the bases of: (i) breach of fiduciary duties; (ii) breach of duty of disclosure in respect of a family arrangement; and (iii) undue influence. 145.In respect of (i), the fiduciary relationship arose out of an “agency type relationship”; “ascendency or trust and confidence relationship”; “conditional receipt and retention of property”; and “direction by Chen as beneficial owner”[21]. Each of these features was premised upon the personal relationship between mother and daughter, and Vivien’s fiduciary obligations arising from these features were owed to Yang and no one else. 146.The duty of disclosure on the part of Vivien in respect of a family arrangement was also personal to Yang[22]. 147.The claim for undue influence was based on the fact that Yang reposed a sufficient degree of trust and confidence in Vivien to give rise to an obligation of fairness and candour[23]. Hence, this cause of action was equally personal to Yang. 148.In the premises, each of the causes of action which was upheld by court in respect of the rescission claim involved a personal element which was essential to it. 149.Further, I agree with Mr Yu that since the remedy of rescission was discretionary, discretionary factors such as the conduct of the person to whom the equitable obligation was originally owed were relevant. 150.In the premises, I hold that this Action were not assignable to Angela because the primary causes of action were personal to Yang. Champerty 151.There is no disagreement that a bare right to litigate cannot be assigned if it contravenes the law on champerty: Trendtex, supra, at 702F-H. Champerty is a form of maintenance and occurs when the person maintaining another person takes as his reward a portion of the property in dispute: Unruh v Seeberger (2007) 10 HKCFAR 31, §85. 152.The dispute here is whether an assignment of this Action to Angela (assuming that it was included in the D/G) would come under an exception to the prohibition. Vivien relies on Angela’s interest by reason of her expectation of getting the fruits of this Action under the 2008 Will as an answer to the prohibition under the law of champerty. 153.Mr Yu relies on Hutley v Hutley (1872-73) LR 8 QB 112 for 2 legal propositions: (i) family relationship between the assignor and assignee would not justify champerty; and (ii) the interest as a beneficiary under a will would not justify champerty either. 154.In Hutley, the brother of a deceased person (defendant) agreed to share with his cousin (plaintiff) the real and personal property which might come to him in consideration of the plaintiff taking steps to contest the validity of the will of the deceased. The court unanimously held that the family relationship could not justify an agreement of champerty. 155.However, it is unclear whether the court would have rejected the plaintiff’s interest in revoking the will of the deceased thereby reviving a former will under which certain property was bequeathed to him as a justification for a champertous agreement. In respect of that matter, the court held that the plaintiff was not maintaining the litigation solely for his own interest but was maintaining the defendant’s action with the view to sharing the fruits of the litigation in the event of success: see the main judgment of the court of Blackburn J (p.116); Lush J and Archibald J (p.117). Hence, I am not satisfied that Mr Yu’s proposition (ii) is supported by Hutley. 156.Mr Yu argued that a will is ambulatory and does not take effect until the maker’s death[24]. It may be changed in the meantime. 157.It was submitted by Mr Strachan that the scope of champerty is shrinking as the law evolves and modernises: see Trendtex, 702H-703A and Unruh, part C.5C. In particular, “the fact that an arrangement may be caught by the broad definitions of maintenance or champerty is not in itself sufficient to found liability. The totality of the facts must be examined asking whether they pose a genuine risk to the integrity of the court’s processes … one must today look at the facts of the particular case and consider whether those facts suggest that the agreement in question might tempt the allegedly champertous maintainer for his personal gain to inflame the damages, to supress evidence, to suborn witnesses or otherwise undermine the ends of justice.” (Unruh, §102) [emphasis added]. 158.Ironically, whilst arguing that an assignment of this Action would not be champertous, Vivien also alleges that since Angela stood to gain all the fruits of this Action through the 2008 Will, this was of direct relevance to her contention that Yang’s case had been engineered by Angela[25]. However, the present exercise is not concerned with the merits of Vivien’s allegation. Rather, it is to consider whether at the time of the Gift Documents the facts were such that Angela was liable to be tempted to intermeddle with the Action. 159.I can find no principles in the authorities cited to the court to guide it to reach the correct decision in the present case. However, in my evaluation of the facts of this case, I am not inclined to the view that Angela was liable to intermeddle with this Action in the manner alluded to in Unruh. In particular, I bear in mind that there was much indisputable facts and documents in support of Yang’s causes of action. By December 2012, Yang had already verified her pleadings by Statements of Truth and filed her witness statement. Further, Angela was not involved in the dealings between Yang and Vivien which were the subject matters of this Action. 160.In the premises, I do not agree that an assignment of this Action to Angela would infringe the rule of champerty. 161.Taking stock on the issue of assignability, having agreed with Yang’s submissions on mere equity and personal causes of action, I hold that this Action could not be assigned to Angela as a matter of law. 162.The next topic concerns Yang’s locus to pursue this Action as from 12 December 2012[26]. Lack of notice of assignment to Vivien 163.There are 3 points advanced on behalf of Yang as to why she had locus to pursue this Action. These arguments are based on the assumption that this Action was assigned to Angela under the Gift Documents. Before dealing them, I should identify a few non-contentious facts. 164.This Action was commenced prior to the Gift Documents. Therefore, there can be no issue that Yang was entitled to bring this Action. No notice of any assignment had been given to Vivien by anyone in respect of any assignment of this Action. According to Vivien’s case, she was first apprised of the D/G on 27 September 2017. By then, the Judgment had been handed down. Yang was able to give full discharge to Vivien 165.It is contended by Yang that, absent notice of assignment to Vivien, she was able to give full discharge to her. This proposition is well-supported by the authorities cited before the court[27]. 166.This point must be examined against the facts identified in para 165 above. If Yang did assign this Action to Angela in December 2012, she would still be able to give full discharge to Vivien for the satisfaction of the remedy granted against her. Therefore, I am unable to see why the Judgment should be set aside for lack of locus. 167.However, once Vivien became aware of the assignment, Yang could not give such full discharge, and the issue becomes whether Angela should be joined in these proceedings so that she can pursue the remedies granted in the Judgment (see below). Exercise of contractual rights 168.It was argued on behalf of Yang that the right to terminate or affect the contractual relationship (the Disputed Agreements) between her as the assignor and Vivien as the obligor could not be exercised by an assignee (Angela) where the obligor did not have notice of the assignment, citing in support Warner Bros Records Inc v Rollgreen Ltd [1976] QB 430 at 442E-G, 443H-444A, 444G and 445B-C and General Nutrition, supra, §§35-80. 169.Mr Strachan challenged the applicability of this principle on the basis that this Action was not concerned with a contractual right but an equitable right to rescission. After careful consideration, I am inclined to agree with Mr Yu that the distinction makes no difference in principle. For instance, the following dicta of Lord Denning MR in Warner Bros (at 442E-G) can be applied in the case of an assignee of an equitable right of rescission:
170.In the present case, if Angela had told Vivien that she wanted to have the Disputed Agreements rescinded without telling her sister that her mother’s causes of action had been assigned to her, no doubt such a request would be ignored. 171.In the premises, assuming there was an assignment of this Action to Angela in December 2012, Yang remained entitle to seek to set aside the Disputed Agreements (acting as the trustee of Angela: Warner Bros, 443H) due to the lack of notice to Vivien. This is another reason to reject the suggestion that Yang had no locus in obtaining the Judgment. 172.However, like the previous point, the real issue is that of joinder of Angela because Yang had by the Judgment obtained relief (which is to be finalised) and Vivien had notice of the assignment since September 2017. Rights of an equitable assignee 173.Based on the same 2 authorities, Mr Yu submitted that absent notice to the obligor, an equitable assignee only had rights against the assignor (see in particular General Nutrition, §74). 174.With respect, I do not believe that this point takes the matter any further. The real issue is that of joinder. Equitable assignment of an equitable chose 175.Before moving to the issue of joinder, I shall deal with Vivien’s argument that an equitable assignment of an equitable chose (which undisputedly would have been the situation in this case, assuming there was an assignment in December 2012) would completely pass the interest in the chose from the assignor to the assignee such that the former no longer had any right to maintain any claim in respect of the chose, citing in support Fulham v M’Carthy (1848) 1 HL Cas 703, 717-719 and Donaldson v Donaldson (1854) Kay 709, 719. 176.I agree with Mr Yu that these authorities do not assist Vivien’s case. Fulham was decided in 1848 on the basis of the then practice of the Court of Equity. The modern practice is that where there is a non-joinder or misjoinder, the duty of the court is not to dismiss the action but to ensure that the right parties are before the court (see below). 177.The case of Donaldson suggests that the title of an assignee is only complete when notice was given to the obligor (at 719). 178.For completeness, I should mention that even after an assignment of her causes of action there would have been a legitimate reason for Yang to remain in this Action. By December 2012, much costs had been incurred in these proceedings and Yang might have to answer for the same depending on the outcome of the proceedings. Joinder 179.One starts with O.15, r.6(1) which provides that: “No cause or matter shall be defeated by reason of the misjoinder or nonjoinder of any party; and the Court may in any cause or matter determine the issues or questions in dispute so far as they affect the rights and interests of the persons who are parties to the cause or matter.” 180.O.15, r.7(2) further provides: “Where at any stage of the proceedings[28] in any cause or matter the interest or liability of any party is assigned or transmitted to or devolves upon some other person, the Court may, if it thinks it necessary in order to ensure that all matters in dispute in the cause or matter may be effectually and completely determined and adjudicated upon, order that other person be made a party to the cause or matter and the proceedings to be carried on as if he had been substituted for the first mentioned party.” 181.Pursuant to O.1A, r.2(1), the exercise of power under or the interpretation of these rules must be considered in light of the underlying objectives set out under O.1A, r.1. One such objectives is to ensure fairness between the parties (O.1A, r.1(d)). O.1A, r.2(2) mandates the court to recognise that “the primary aim in exercising the powers of the Court is to secure the just resolution of disputes in accordance with the substantive rights of the parties.” 182.Consonant with these rules, in Van Gelder v Sowerby Bridge (1890) 44 ChD 374, at 394, Bowen LJ held that it was the “bounden duty” of the court to add a necessary party to the proceedings pursuant to the then English equivalent of O.15, r.6(1). In Kendall v Hamilton (1878-1879) LR 4 App Cas 504, at 531, Lord Penzance observed that since the sweeping changes introduced by the Judicature Act of 1873, “non-joinder of any party under any circumstances has ceased to be an answer, objection, or defence to the action”. 183.The authority relied upon by Vivien, Mercer Corpn v Rolls Royce Ltd [1971] WLR 1520 is also consistent with the principle that the power of the court is to be exercised to meet the justice of the case: see 1524D-E, 1526F, 1527E and 1528H. 184.In light of these authorities, and the facts that: (a) Yang clearly had locus until December 2012 (assuming there was a valid assignment); and (b) Yang had locus at least until September 2017 for the reasons given in paras 166 to 173 above, this court would have no difficulty in granting relief under O.15, r.7(2) to have Angela joined as a Plaintiff to this Action. 185.However, Vivien opposes the Joinder Summons and contends that Angela should not be joined because:
186.The first contention is based on the allegation that Angela believed or understood that the Gift Documents had the effect of transferring this Action to her such that Yang was no longer able to pursue the same[29]. This allegation turns upon the factual disputes, to which I now turn. Credibility of the witnesses 187.The credibility of Angela and Wong is challenged, that of Hui is not. This court shall rely on inherent probabilities as a reliable guide to determine the credibility of the evidence. Whether Angela believed or understood that this Action was transferred to her 188.This is the lynchpin of Vivien’s allegation of intention to deceive on Angela’s part. Unless it is established that Angela knew or believed that this Action was assigned to her under the Gift Documents (assuming it was the case), this allegation has no leg to stand on. 189.Angela’s evidence that no one involved with the Gift Documents had in mind that the lawsuit was assigned to her is supported by the uncontested evidence on the compilation of the HK$15b (which did not take into account this Action), as well as the absence of any Deed of Assignment. These are objective and compelling evidence. 190.If it was the case that Angela was prepared to deceive the court in hiding the assignment, she must have regarded it as something important. It is highly unlikely for something important to have been left out in the valuation of Yang’s assets or in the preparation of necessary documentation (the undisputed evidence is that Angela was aware that an assignment would require a formal document[30]). 191.Further, Angela’s evidence of her enquiry with Wong on 18 January 2013[31] was corroborated by Wong. Wong is a very senior solicitor. Someone in that position would not lightly perjure himself to assist the lay client, even a very wealthy one. 192.Wong’s evidence that he did not have in mind that this Action was part of the gift to Angela is likewise supported by the compilation of the HK$15b and the lack of any Deed of Assignment. If Wong had thought that this Action was part of the gift, it is inconceivable that it was ignored in the calculation of Yang’s assets and the preparation of necessary documentation. 193.Indeed, Wong’s evidence is that if Yang had wanted to assign this Action to Angela and it was capable of being assigned, he would have to take various steps pursuant to such instruction. He would have to quantify the value of this Action. If it was not possible to do so, the asset value stated in the G/D would have to be qualified. A formal assignment would have to be drawn up. Yang’s solicitors conducting this Action would have to be contacted with the view to making an application to substitute the Plaintiff. Such evidence accords with what one expects from an experienced solicitor, and it is inherently credible. 194.The fact that Wong did not have in mind that this Action was part of the gift is consistent with his evidence (and that of Angela) that he gave a dismissive answer to Angela’s query on the 18th, and he thought that it was a stupid question (Wong was of course aware that Angela had participated in the asset valuation exercise and might have thought that she knew perfectly well what was and was not included in the HK$15b). 195.Despite the lengthy cross-examination of both Angela and Wong, I am unable to see what motive there was for a very senior solicitor to perjure himself. 196.Whilst there were variations in some of the details (eg, whether Angela took out the documents in the envelope handed to her by Wong), I take the view that the evidence of Angela and Wong over the brief meeting on 18 January 2013 is substantially consistent. Variations over the details on an event which took place years ago must be expected. 197.For the above reasons, I accept the evidence that Angela was told by Wong on 18 January 2013 that this Action was not part of the gift to her from her mother. 198.Finally, I do not accept the allegation that Angela had concealed the Gift Documents. Her evidence that copies of such documents were given to the solicitor who handled this Action on behalf of her mother in March 2013 was not challenged. 199.In the premises, the allegation of deceit must be rejected. Whether injustice would result from the joinder of Angela 200.It is contended by Vivien that if Angela had been joined: (a) the findings in the Judgment on credibility of Angela and Vivien and “the material issues in the case” would have been different[32]; and (b) the conduct of the proceedings, including the scope of cross-examination and discovery that would have been made by Angela would have been different[33]. 201.Two main points had been made to support this part of Vivien’s case, namely, (a) Angela had allegedly given false evidence both at the trial and this hearing on 8 MA; and (b) if the true picture had emerged at the trial, the court’s determination on the construction of Proposal A and Vivien’s duty to disclose the value of the properties to her mother would have been different. 202.I am inclined to agree with Mr Yu that these arguments are hopeless. 203.On 8 MA, first and foremost, despite the investment of much time in the cross-examination on this topic and the submissions on the same, I remain unable to see any relevance it has to the issues in this Action. 204.It became abundantly clear at the hearing that the 8 MA matter was discussed openly with the involvement of both Vivien and the senior staff of Nan Fung. Much, if not all, of the documents on which Angela was cross-examined at the hearing were available to Vivien. However, Vivien did not raise any issue about it at the trial, and no discovery was made by her of the related documents. It was raised for the first time during the cross-examination of Angela at the trial. 205.These circumstances underline the lack of relevance in the matter. Further, any inconsistency in Angela’s evidence at the trial on that matter must be viewed in light of the absence of notice that it would be raised. 206.Secondly, the fact is that Angela was given a blank share transfer form by Stephen for the shares of the company holding 8 MA. She did not accept the form due to potential US tax liability[34]. It must be remembered that 8 MA was stated to have been given to Angela under various Proposals of Chen which preceded Proposal A, eg, Proposal B70699[35]. Further, the fact that Angela required a trust to minimise her exposure to US tax was not a secret[36]. I therefore struggle to see why it was suggested, with cynicism, that Angela wanted to have 8 MA for herself. 207.Thirdly, it is a fact that there were many changes made by Chen on how his assets were to be distributed. This is consistent with Angela’s evidence that it was a confusing time and that there were many ideas being considered on the distribution of assets. The court should be slow to look at an individual document and come to the view that it contradicts the evidence of Angela. 208.Fourthly, Angela’s evidence that the senior staff insisted that 8 MA must be transferred to her before it could be transferred to her mother is consistent with the terms of Proposal A and supported by the documents identified by Mr Yu[37]. 209.Finally, 8 MA was transferred to Yang as a matter of fact[38]. 210.On the point concerning the construction of Proposal A and Vivien’s disclosure duty to her mother (see para 202 above), it was never part of Vivien’s case that her obligations to her mother under Proposal A were somehow dependent upon how Angela would discharge hers. 211.I am unable to find any evidence uncovered at the hearing or submissions made in these applications which impacts upon the reasoning set out in the Judgment, §§118-123. 212.As pointed out by Mr Yu, Vivien had not been able to explain what her proposed construction of Proposal A was and how Angela’s evidence would make a difference. 213.For completeness, Vivien complains that Angela should not be allowed to be joined at this stage of the proceedings to enable the benefit of the judgment to be “simply picked up by [Angela]” as the assignee. With respect, the injustice goes the other way. I see no sound reason for Vivien to be able to evade a judgment obtained after a trial with the finding that she had short-changed her mother. 214.In the premises, if it is necessary, I would have granted the relief under the Joinder Summons. Abuse of process 215.This issue is intricately related to the one of Conditional Judgment. 216.This issue arose from the fact that whilst challenging the Judgment based on the contention that the Claims had been assigned to Angela under the Gift Documents, Vivien had made clear that when she is able to do so she would be contending that those very Documents were obtained by Angela with undue influence and breach of fiduciary duty, and that they should be set aside[39]. It was said that such contention “will be advanced as soon as may be, whether in proceedings in which Vivien participates or in other proceedings instituted by her (eg, mental health proceedings, proceedings instituted after the death of Yang or otherwise)”. 217.There is no dispute that where a plaintiff in subsequent proceedings adopts a position which is inconsistent with the position he had adopted in previous proceedings, that would generally be regarded as an abuse of process. 218.Abuse of process is plainly a flexible concept which can be applied in circumstances which may be different but not any less abusive of the court’s process. Much of the debate here was based on the authority of Re Shun Tak Holdings Ltd [2009] 5 HKLRD 743, §§83-90 (Kwan J, as she then was). In that case, the petitioners asked the Hong Kong Court to order the company’s subsidiary (Interdragon) to bring proceedings against a Macanese company (STDM) in which it held shares to recover dividends due and payable. However, the petitioners had previously brought proceedings in Macau to set aside Interdragon’s shareholding in STDM on the basis that the share transfer breached certain procedural requirements (§84). This was held to be impermissible and an abuse of process (§§85, 88-89). The relevant relief in the petition was struck out as a consequence of the abuse of process. 219.The court found that the stance taken in the Macanese proceedings was the petitioners’ primary factual position, Kwan J held at §85:
220.Shun Tak may be seen to be an extension or a flexible application of the principle of abuse of process to a case whether inconsistent positions were advanced by a party in two pending actions. 221.This court was previously informed that the contention that the Gift Documents should be set aside represented Vivien’s primary position. Whether that position should be so labelled is not critical. However, there can be little doubt that the “primary position” represents a much larger prize for Vivien. She would stand to benefit from her mother’s estate, which would include the compensation obtained under the Judgment. If the “primary position” prevails, her sister would not get more than her from their mother’s estate[40]. Therefore, if Vivien is in a position to challenge the Gift Documents, the overwhelming probability is that she would do so. 222.On the other hand, there is currently no legal proceedings on foot in which Vivien is arguing that the Gift Documents are invalid. Thus, Shun Tak may be distinguished certainly on the facts. 223.Should the abuse of process principle be applied to a case where a party is advancing a position which he has made clear that he would abandon should the opportunity arise in the future? This is where the issue merges with the one of Conditional Judgment. 224.I do not believe that the question should be answered in the affirmative with the facts of the present case. Firstly, Vivien has not currently issued any proceedings which would render the Locus Summons an abuse of process. Secondly, although the chances may be slim, it is possible that the opportunity to launch inconsistent proceedings would not materialise, eg, if Vivien predeceased her mother. Hence, if she is not allowed to argue the Locus Summons, she may end up having no opportunity to ventilate her grievance. 225.This brings the court to consider the last issue of Conditional Judgment. Conditional Judgment 226.It had been proposed by Vivien that the court may consider setting aside the Judgment “on condition of it not being later shown that the Deed of Gift is invalid”. 227.I agree with Mr Yu that plainly the Proposed Condition is a gambit by Vivien to avoid the legal consequences of the position she has taken in these proceedings. It is to pre-empt the operation of the doctrines of election and abuse of process. Mr Yu submitted that, as a matter of principle, such a step should not be sanctioned by the court. It is also inequitable for a wrongdoer to be afforded an opportunity to blow hot and cold as and when it suits her needs. 228.I have already touched on the principle of abuse of process. The doctrine of election was defined in Spencer Bower: Reliance-Based Estoppel, 5th edn, rubric 13.1, as follows:
229.The doctrines of election and abuse of process may be seen to overlap: see First National Bank Plc v Walker [2001] 1 FLR 505, §54 (Sir Andrew Morritt V-C). 230.It must also be said that the Proposed Condition is against the principle of finality of proceedings. 231.I am unable to see what justification there can be to allow Vivien to blow hot and cold after she had successfully invoked the power of the court to set aside the Judgment on the basis that the Claims were validly assigned to Angela under the Gift Documents. 232.I should mention in particular that there is no evidence in any shape or form that the validity of the Gift Documents were tainted. Those documents were prepared with the assistance of solicitors and a doctor. Wong’s evidence that he conducted the relevant interviews with Yang in the absence of Angela was not challenged. 233.Finally, I agree with Mr Yu that none of the authorities relied upon by Vivien assists her. Those authorities had been carefully analysed in the written submissions[41] and I do not propose to repeat them. Disposition 234.Having construed the Gift Documents against the Defendants, the Locus Summons is dismissed. I make no order on the Joinder Summons and the Rectification Summons. 235.I make an order nisi that the costs of and occasioned by these Summonses be paid by the Defendants with a certificate for 3 counsel. 236.Last but not least, I am indebted to counsel for their assistance.
Mr Benjamin Yu SC, Mr Bernard Man SC, Mr Keith Lam and Mr Jason Lee, instructed by Clifford Chance, for the Plaintiff Mr Mark Strachan SC, Mr Victor Dawes SC, Mr Jeffrey Chau and Mr James Man, instructed by Mayer Brown, for the 1st and 2nd Defendants [1] Skeleton Argument of the Defendants, §157(2). [2] Resolution of these issues would embrace all the material disputes before the court. [3] According to the Agreed Chronology, the 2008 Will replaced one made in October 2004 (“2004 Will”) whereby Vivien and Angela were named joined executors with equal share in Yang’s estate. [4] See Judgment, §§131, 132, 135 and 224. [5] Although she was staying at a hospital, it was out of her preference rather than necessity, and she was free to leave the hospital, eg, to have dinner with Angela. [6] Judgment, §§32, 61, 62, 107 and 109. [7] Para 7 of the Declaration. [8] See Judgment, §41(1). [9] Angela executed an Assignment in relation to that case on 6 September 2012. [10] This was not a construction advanced by Vivien. [11] See para 59 above. [12] Wong confirmed this in his evidence. [13] Joscelyne v Nissen [1970] 2 QB 86, at 98D-E. [14] See Guest on The Law of Assignment, 3rd edn, rubric 1-07. [15] See Bruty v Edmundson (1915) 113 LT 1197 at 1200; McGregor v Fraser (1913) 32 NZLR 1325 at 1330, 1331-1332 & 1334; Keogh v McGrath (1880) 5 LR Ir 478 at 516; Assignment of Choses in Action in relation to Maintenance and Champerty by Winfield (1919) 35 LQR 143 at 159. If it is necessary to resolve the conflict, I am inclined to view that Prosser is to be preferred in light of the foregoing authorities. [16] See Ellis v Torrington [1920] 1 KB 399. [17] See Re-Amended Statement of Claim, §§79-83. [18] See Judgment, §229. [19] Mr Yu formulated the test as whether it was a personal relationship which gave rise to the obligation [of the defendant] (Day 2/ p.39/ l.8). [20] See The Law of Assignment by Smith and Leslie, 3rd edn, rubric 23.60. [21] Judgment, §§127-156. [22] Judgment, §§170-207. [23] Judgment, §§213-215. [24] See SJ v Joseph Lo Kin Ching (2015) 18 HKCFAR 169, §27. [25] Vivien’s Skeleton Arguments, §210. [26] See para 1 of the Locus Summons. [27] See Donaldson v Donaldson (1854) Kay 711, at 719 (Sir W Page Wood V-C); Ward v Duncombe [1893] AC 369, at 392 (Lord McNaughten); General Nutrition v Holland [2017] EWHC 746 (Ch), §67 (Warren J); and The Law of Personal Property by Bridge, 2nd edn, rubric 21-049. [28] Emphasis added. [29] Issue 4 of the Agreed List of Issues. [30] See para 69 above. [31] See para 67 above. [32] Issue 5. [33] Issue 8 (disagreed). [34] Judgment, §78. [35] Judgment, §41. [36] Judgment, §35. [37] See Yang’s Reply to Vivien’s Closing Submissions, §33.1. [38] See Judgment, §76. [39] Vivien’s position had been made clear since the lodging of her Skeleton Arguments dated 23 July 2018, §§19, 24-25. [40] See Judgment, §109. [41] Yang’s Opening, §§213-220 and her Reply Submissions, §§41-44. |
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