Yeung Hock Wai also known as Yeung Hock Wi v. Chan Wai Man, The Administratrix of the Estate of Yeung Hung Hei Patrick, Deceased
Read the full judgment text of HCA 2812/2015 on BabelCite. This High Court CFI judgment was delivered on 29 July 2020.
1. The original action was started initially by a father against the estate of his deceased son claiming that the gift of ¼ interest in each of two properties to the son was subject to conditions and that by reason of the son’s breach of the conditions in 2004, the son’s share had reverted back to the father. The father subsequently passed away after commencement of the action and the action has since been carried on by his widow, who is the executrix of father’s estate.
Cited by 3 cases · Cites 5 cases
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HCA 2812/2015 [2020] HKCFI 1693 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE ACTION NO 2812 OF 2015 ________________________
AND BETWEEN
(by Original Action and by Order to Carry On dated 19th February 2019) _______________________ AND BETWEEN
AND BETWEEN
(by Counterclaim and by Order to Carry On dated 19th February 2019) _______________________ Before: Hon B Chu J in Court Dates of Hearing: 13 – 15, 17 and 22 January 2020 Date of Judgment: 29 July 2020 _________________ J U D G M E N T _________________ _____________________ Table of Contents _____________________ 1.The original action was started initially by a father against the estate of his deceased son claiming that the gift of ¼ interest in each of two properties to the son was subject to conditions and that by reason of the son’s breach of the conditions in 2004, the son’s share had reverted back to the father. The father subsequently passed away after commencement of the action and the action has since been carried on by his widow, who is the executrix of father’s estate. 2.The gift to the son, said to be subject to conditions, was of ¼ interest in two properties known as (i) Factory Units A and B, 1/F, Kapok Industrial Building, 373, To Kwan Wan Road, Kowloon (collectively “Tokwawan Property”) and (ii) Town House No 49, Sunderland Estate, No 1, Hereford Road, Kowloon (“Sunderland Property”) (collectively “Properties”). 3.The plaintiff in the original action was the late Mr Yeung Hock Wai (“Father”). Father married his 1st wife Madam Chan Mei Yip (“Madam Chan”) in the 1950s and they had 8 children who are by order of their ages as follows (whom I shall refer to by their respective first names in this judgment for easy reference) :
4.Father divorced Madam Chan in about 1978. In about 1979, he married Madam Asavayong Unruen (“Mrs Yeung”) and they had one son, namely Yeung Ka Hei (楊嘉熹), Jeffrey (“Jeffrey”), who was born in May 1980, and who is now 40 years old. 5.Patrick passed away intestate on 12 March 2015, and Madam Chan Wai Man Vivian (“Vivian”), his surviving spouse, obtained letters of administration of his estate on 26 November 2015[1]. By an order dated 19 February 2019, Vivian carried on defending Father’s original action on behalf of Patrick’s estate, and carried on Patrick’s counterclaim (“Counterclaim”) on behalf of his estate against Father, Mrs Yeung (in her personal capacity) and Jeffrey. 6.Father then passed away on 30 December 2018, at the age of 88. Mrs Yeung is the surviving spouse and the executrix named in Father’s will. By an order dated 19 February 2019, Mrs Yeung carried on the original action on behalf of Father’s estate and to defend the Counterclaim on behalf of Father’s estate. 7.Counsel Mr Paul Shieh SC and Mr Vincent Lung appeared for Mrs Yeung (on behalf of Father’s estate), Mrs Yeung (in her personal capacity) and Jeffrey, and Counsel Mr Paul Lam SC, Ms Maria So and Ms Astina Au appeared for Vivian (on behalf of Patrick’s estate). 8.Most of the background facts set out by Mr Lam SC in his Opening Submissions or by Father in his witness statement were not disputed. 9.Father was born in June 1930 in Chaozhou, Mainland China. He received education to Form 2 level and could read and write Chinese. He came to Hong Kong in about 1940s and his first job was to work in a rice shop on Canton Road and thereafter he worked as an apprentice for a Shanghainese master in his eldest brother’s plastic thread factory. He left that factory in about 1960s and with about HKD 40,000 given to him by his eldest brother for his long service, he started his own business called Katat Plastic Factory at a rented factory premises in Tokwawan (“Tokwawan Factory”). The main business of the Tokwawan Factory included manufacture and export of plastic toys, accessories for bridal wedding dress, plastic cake decorations, plastic festival decorations and plastic boxes etc. 10.The business grew gradually, and in about July 1966, Father bought the Tokwawan Property for HKD 309,900 as the factory premises for the Tokwawan Factory. 11.As his family needed more space, on 30 December 1971, he purchased a flat in Homantin with two car parking spaces (collectively “Fairland Gardens Property”) for HKD 321,000 in the joint names of him and Madam Chan. Later on 31 January 1974, he bought another property on Stafford Road in joint names with Madam Chan for HKD 1,250,000 (“Stafford Road Property”). 12.Father divorced Madam Chan in about 1978 after he allegedly discovered the affair between Madam Chan and his brother-in-law. As a result of the divorce court order, on 10 July 1979, he exchanged his share and interests in the Fairland Gardens Property with Madam Chan for her share and interests in the Stafford Road Property, and since then, Father became the sole owner of the Stafford Road Property, where he lived with his 8 children after the divorce. 13.Father married Mrs Yeung in September 1979. Mrs Yeung told the Court during the trial that she was a cousin of Father’s, and that her family was Overseas Chinese in Thailand and she was born in Thailand in January 1949. According to Mrs Yeung, she studied accounting at a university in Thailand and had worked as a financial controller before she met Father through family arrangement. They married in Hong Kong in 1979. She was about 30 years old when she married Father who was then about 49 years old. After marriage, Mrs Yeung moved to live in Hong Kong and in the Stafford Road Property together with Father and his 8 children by Madam Chan. In May 1980, she gave birth to Jeffrey. 14.On 25 November 1980, Katat Plastic Manufactory Limited (“Katat”) was incorporated by Father to operate the business of the Tokwawan Factory. Father and Mrs Yeung were the directors of Katat and the Tokwawan Property was the registered office of Katat. It was Father’s evidence in his witness statement that he had treated Katat as a family business and he had the wish that his offspring would inherit Katat some day. Katat was incorporated with 10,000 shares of HKD 1.00 each, and at the time of incorporation, Father held 8,000 shares, Mrs Yeung held 1,000 shares and Alfred, Father’s eldest son, held 1,000 shares. 15.It was not disputed that neither Mrs Yeung nor Alfred, who was 21 years old at that time, paid any consideration for the 1,000 shares registered in their respective names. 16.Father’s relationship with Alfred was not good and in about 1981, Alfred decided to attend university in Canada. Janny was the only child who was working in Katat at that time and she worked in Katat until she got married in about 1986/1987. After that, Lydia took over Janny’s job at Katat. Although Alfred had returned to Hong Kong for a short period of time, he never worked in Katat. In 1989, Alfred moved to Canada and has settled there since. 17.It was on 23 August 1983 that Father purchased the Sunderland Property in his sole name for HKD 2,601,720. Then a month later, Father also purchased No 48, Sunderland Estate, the town house adjoining the Sunderland Property in joint names with Mrs Yeung, for HKD 2,023,500 (“No 48, Sunderland”). 18.The two town houses became the family home since. 19.In about 1989/1990, due to the political instability in Hong Kong at the time, Father, Mrs Yeung, and the children (except the eldest daughter Janny who had married at the time) all applied to emigrate to Canada. Some of the children were already living or studying in Canada by that time. On 30 November 1990, Father and Mrs Yeung sold No 48 Sunderland, retaining only the Sunderland Property. 20.Patrick returned from Canada to Hong Kong in about November 1992, and he met Vivian in December 1992 in Hong Kong. 21.On 1 March 1993, Patrick was appointed as a director of Katat by Father. 22.In late 1993, Katat acquired premises and set up a factory plant called Katat (Liu Yue) Plastic Metal Factory at Da He Village, Liu Yuen Henggang, Longgang District, Shenzhen, and the factory started operation in about 1994 (“Shenzhen Factory”). 23.After obtaining their Canadian citizenship on about 18 January 1994, Father and Mrs Yeung (together with Lucy, Patrick, Lydia and Cathy) returned to settle in Hong Kong, while Jeffrey continued studying in Canada. Amongst the children who returned to Hong Kong, only Patrick and Lydia were willing to and did work at Katat. 24.According to the company records, it was on 1 September 1994 that Alfred transferred his shareholding of 1,000 shares in Katat to Patrick, although Father initially claimed in his statement of claim that this took place on 20 August 1993. 25.On 19 February 1997, Patrick and Vivian got married in Canada. Vivian was born in 1970, and after their married, they moved into the Sunderland Property. They had no children. 26.After marriage, Vivian also started to work in Katat as a clerk from about 1 March 1997. 27.In 1997/1998, and not too long after Patrick married Vivian, Lydia decided to leave Hong Kong and ceased working in Katat. Since then, Patrick became Father’s only child who was working in Katat. 28.In 1999, Father executed two assignments (collectively referred to as “Assignments”), as follows :
29.It was not disputed that no consideration was paid by Mrs Yeung, Patrick or Jeffrey as stated in the Assignments, and that the three of them were in effect gifted their respective ¼ share in the Properties (“Gift”). 30.The circumstances leading to Father executing the Assignments will be set out later. It was Father’s case that his decision for the Gift was to ensure that the three of them would (i) reside with him and take care of him during his lifetime; and (ii) work in Katat to manage his business until he passed away (“Conditions”). 31.Father said Mrs Yeung agreed to accept the Conditions when he first communicated to her his decision, and that as Jeffrey was still studying in Canada, he asked Mrs Yeung to explain to Jeffrey over a long-distance call his decision and Jeffrey said he agreed to accept the Conditions. Then one day in about 1999, when he, Mrs Yeung and Patrick were in the villa of the Shenzhen Factory, he had expressed his decision to Patrick, and according to Father and Mrs Yeung, Patrick immediately orally expressed that he agreed to accept the Conditions in exchange for the Gift. 32.Jeffrey completed his secondary school education in Canada and returned to Hong Kong in August 2000. On 27 February 2011, when he was almost 21 years old, Jeffrey was appointed a director of Katat. 33.On 2 March 2011, Father transferred 1,000 shares in Katat to Jeffrey (Father initially claimed in his witness statement that this took place on 26 November 1999). Upon the transfer, the shareholdings in Kata became:
34.On 20 July 2014, Jeffrey married Mimi, and after that, the two of them moved into the Sunderland Property, and Mimi also started working in Katat. Jeffrey and Mimi have two sons. 35.In late 2014/early 2015, Patrick and Vivian moved out of the Sunderland Property and ceased to work in Katat. By then, Father was around 74 years old whereas Patrick was about 38 years old. 36.Vivian had produced a letter dated 31 December 2004 (“Reference Letter”) which was a short one-page reference letter bearing Father’s signature which certified that Vivian was employed as a clerk at Katat from 1 March 1977 to 31 December 2004[2]. Father denied that he had signed on that document and claimed that Vivian left Katat without giving any notice. As a result of Father’s allegation about his signature being forged, leave was granted by DHCJ Sahkrani, as he then was, pursuant to Father’s application, for the parties to adduce their respective handwriting expert evidence. 37.According to Father and Mrs Yeung, one day in about early 2005 after Patrick and Vivian ceased to work at Katat, Mrs Yeung received a phone call from a worker at the Shenzhen Factory, and urged her and Father to go there as soon as possible. The next day, when Father, Mrs Yeung and Jeffrey arrived at the Shenzhen Factory, they saw Patrick instructing workers and some staff at the Shenzhen Factory to move away machines, and when Patrick saw him, Patrick immediately boarded his car and drove away. Father said he did not even have a chance to question Patrick and according to Father, he could not help breaking into tears at what Patrick was doing. Jeffrey said he took some photographs to show that the incident took place on 29 January 2005. 38.According to Vivian, Katat’s business was deteriorating from 1997 to 2004 and Patrick had proposed to Father to introduce some new technology and for that purpose, new machines for mould decorations were bought but when the new technology did not reap immediate profits, Father became dissatisfied and there were arguments and the relationship between Father and Patrick began to deteriorate. Vivian said Patrick had told her that Father had requested him to sign an IOU acknowledging that the costs of the new machines were from a loan of HKD 1m from Father to him and that Patrick was to be personally responsible for the costs of the new machines[3], and that was why Patrick removed the new machines from the Shenzhen Factory when left Katat. 39.Patrick was formally removed as a director of Katat on 30 June 2005, but Patrick continued to hold his 1,000 shares in Katat. 40.Father alleged that after Patrick left Katat and moved out of Sunderland Property in 2004, Patrick had never contacted him again. Apart from meeting in the course of summonses brought by the Building Authority against the owners of the Sunderland Property for failing to comply with the order to demolish unauthorized building works and to reinstate the affected parts of the building in about 2010[4], Father alleged that he or Mrs Yeung only met Patrick twice, namely (i) in about 2008/2009 at a family wedding and (ii) in about 2012/2013, at the funeral of Father’s elder brother. It was not disputed by Vivian that she and Patrick met Father at the wedding and the funeral. 41.After Patrick left Katat, he joined a company called Goldmark and brought with him the machines relating to the new technology which he removed from the Shenzhen Factory. Patrick’s salary was then around HKD 30000-35,000 per month, and after he left Goldmark in about 2008/2009, Patrick started his own business and he ran his own business until he passed away suddenly. 42.In the meantime, Katat’s business appeared to continue to deteriorate. The principal activities of Katat prior to 31 December 2013 were stated in its audited financial statements to be manufacturing through subcontracting and exporting of plastic ornaments. Since then, such principal activities had included “engaging in subletting properties for rental income”[5]. By 1 January 2015, Katat appeared to have ceased business operations and its income has been mainly rental income. 43.According to Vivian, in late 2014, Patrick learnt from a friend that Katat had ceased business, and he and Vivian decided to go to the Tokwawan Property on 7 December 2014 to see what had happened, and discovered that it had been partitioned into 10 odd small units for renting out purposes. Patrick became concerned over the fire regulations and the legal issues involved and he then through the introduction of a friend of his sought advice from someone called “William” who was said to have legal knowledge. Vivian had produced copies of Patrick’s what’s app messages in support of the legal advice received by Patrick through his friend[6]. Apparently, Patrick met with William and his friend on 28 February 2015, but before any action could be taken by Patrick, he passed away suddenly and unexpectedly in Shenzhen on 12 March 2015 due to an acute heart attack[7]. 44.According to Vivian, Patrick’s mother Madam Chan, and all his siblings attended his funeral, but Father and Mrs Yeung did not. 45.As Patrick died intestate, under section 4 (4) of the Intestate’s Estate Ordinance, Cap 73, apart from chattels, his estate is, amongst other things, to be charged with a net sum of HKD 1m, free of death duties (if any) and interests in favour of his surviving spouse Vivian, and subject to providing that sum and interests, his residuary estate would be held as to one half for his surviving spouse Vivian absolutely, and the other half for his then surviving parent, namely Father, absolutely. 46.Father claimed that, during the lifetime of Patrick, he had never asked Patrick to return his share and interests in the Properties in the hope that one day, he would repent and would, acting like return of prodigal son, admit fault to Father and to continue to honour the Conditions by coming back home to live with Father and to come back to work in Katat and to manage his business. 47.After Patrick passed away, Father instructed lawyers to claim back Patrick’s ¼ share and interests in the Properties from Vivian, the administratrix of Patrick’s estate. The present action was commenced on 1 December 2015 by Father, without any pre-action correspondence. 48.About 6 months after Patrick’s death, on 30 September 2015, Father made a will appointing Mrs Yeung as the sole executrix and the sole beneficiary of his estate. As a result of the will, Father’s half share in Patrick’s estate will now go to Mrs Yeung. 49.Mrs Yeung, Jeffrey, his wife Mimi and their two sons all lived with Father in the Sunderland Property until Father’s death. 50.It was most unfortunate that the two main characters in this action namely Father and Patrick had both passed away and they were not able to attend trial to give oral evidence. 51.Father had made a witness statement dated 3 November 2016 and a supplemental witness statement on 3 February 2017, which will be referred to respectively as his 1st and 2nd Statement. 52.Because of Father’s death, his witness statements were admitted as hearsay evidence. As his evidence could not be tested by cross examination, Mr Lam SC had referred the Court to s 49 of the Evidence Ordinance, Cap 8, which provides as follows:
53.With the above in mind, this Court will consider the weight to be given to Father’s witness statements later in the judgment. 54.As Father commenced this action after Patrick’s death, Patrick did not have a chance to defend himself or to make any witness statements to rebut Father’s/Mrs Yeung’s /Jeffrey’s evidence. 55.There were three factual witnesses who gave evidence during the trial, namely Mrs Yeung, Jeffrey and Vivian. Mrs Yeung made 3 witness statements, one on 3 November 2016, a supplemental one on 3 February 2017 and a 2nd supplemental witness statement dated 13 January 2020. They will be referred to respectively as the 1st, 2nd and 3rd Statement of Mrs Yeung. Jeffrey made only one witness statement. Vivian made two. 56.As for the handwriting experts, Father/Mrs Yeung had engaged Mr Robert Radley as their expert, and Patrick/Vivian engaged Ms Michelle Novotny. Only Mr Radley was able to give evidence during the trial. D. The agreed list of disputed issues 57.The parties have agreed to the following list of issues:
E. Issue 1 – Was the Gift subject to the Conditions 58.The Conditions as pleaded were[8]:
E.2 Circumstances leading to the execution of the Assignments in respect of the Properties 59.Father’s written evidence in his 1st Statement was that Patrick did not do well academically and was not able to get admitted into the schools in Canada and that in about 1987, he first flew to Buffalo City, USA, before flying to Toronto and then eventually was able to enrol into a school in Canada, and as Patrick was not working, he was supporting Patrick in full during those years, and that all along he loved Patrick very much. 60.Father’s written evidence was that Lydia’s departure upset him greatly, and he was distressed that notwithstanding the children received higher education that he did and were more capable than he was, yet they were not willing to help him in Katat. 61.It was also Father’s written evidence that as his 1st wife Madam Chan had betrayed him[9] and his children had all left him, he was worried when he grew old, there were no children beside him and no children to take over his business, and as he was a traditional Chaozhou man, he wanted his sons to take care of him and to take over his business. He therefore placed all hope on Patrick and Jeffrey, and that he was not able to face Patrick and Jeffrey leaving him or refusing to continue his business. That was why after much consideration, he decided on the Gift in exchange for the Conditions, namely the assurance of Mrs Yeung, Patrick and Jeffrey to live with him and to take care of him and to manage the business of Katat until his death[10]. 62.Father had emphasized in his 1st Statement that the Conditions were very important to him, otherwise he would not suddenly decide to divide the Properties into 4 shares. His written evidence was that :
63.As seen in Father’s 1st Statement, he did not actually say that when he told Mrs Yeung or when Jeffrey was told of his intended Gift and Conditions, they had immediately agreed. It was Mrs Yeung’s evidence and Jeffrey’s evidence that they had both immediately accepted the Conditions. Anyway, Patrick was said by Father and Mrs Yeung to have immediately agreed to the Conditions. 64.As pointed out by Mr Lam, by then Patrick had been working in Katat and living with Father for about 6 years and there was no evidence that he was thinking of leaving Katat at the time. It did not seem probable that Patrick would not have asked Father was to why he needed to impose the Conditions for the Gift and that he would immediately accept, as agreeing to the Conditions would have serious implications on not only Patrick but also Vivian. 65.Further, in trying to explain why he imposed the Conditions, Father’s written evidence was that “本人是傳統的潮州人，比較重男輕女，希望由兒子承繼本人在奇達建立的事業和照顧本人的餘生。當時本人已完全將希望放在Patrick 和 Jeffrey 身上，本人不能面對 Patrick 和 Jeffrey離棄本人或拒絕承繼生意的可能。”, namely he was anxious to ensure his sons would eventually succeed him to take over the business and operations of Katat[11]. Father did not say he also wanted Mrs Yeung to succeed or to take over his business, and in fact this would be contrary to his own evidence of 重男輕女. 66.There was also no evidence from Father, Mrs Yeung or Jeffrey that Father had said at the time as to what would happen in the event if any of them breached the Conditions. Jeffrey had said in cross examination that it was unnecessary for Father to spell out the consequences because Father always believed he could take back gifts given to his children at any time. This was however not Father’s own evidence and further it was not clear what would happen if Mrs Yeung were to breach the Conditions. 67.Jeffrey had also said in cross examination that in his conversations with his parents, Father had from time to time expressed his wishes that Jeffrey would take care of him and assist in the family business in future. As pointed out by Mr Lam, it is of course natural for a father from a traditional Chinese family to say such things to his sons from time to time but that did not mean that they would be transformed into the Conditions, or that the Gift was subject to the Conditions. Further, as Father’s concern was not confined to what happened during his life time, but also that his sons would succeed him in the business after his death, I find it was surprising that Father did not impose this requirement as part of the Conditions. 68.It was Father’s evidence in his 1st Statement that he trusted Patrick and he asked Patrick to find a lawyer to deal with the relevant legal documents for the transfer of the property interests and Patrick was solely responsible for the matters and details of instructing the lawyer, preparing documents and liaising with the lawyer and the Patrick told him that the lawyer was a friend of his 3rd daughter Annie and so Father trusted the lawyer that Patrick found. Also following the suggestion and arrangement from the lawyer, Jeffrey signed a Power of Attorney in Canada on 15 March 1999 to authorize Mrs Yeung to deal with the matters of the property interests transfer on his behalf (“P/A”). 69.Further, Father said he followed the advice of the lawyer and agreed to state the consideration in the Assignments, ie HKD 8,250,000 for the Sunderland Property and HKD 700,000 for the Tokwawan Property, but Mrs Yeung, Patrick and Jeffrey never paid any sum to him for the transfers. According to Father, he did not know why the Assignments were arranged to be signed on two separate days but he trusted Patrick and the lawyer introduced by him, and that he did not specifically ask for the reasons behind. 70.Mrs Yeung’s evidence in her 1st Statement that she took no part in the engagement of lawyers in the preparation of the conveyancing documents and that Father merely told him that Patrick would look for a lawyer to handle the matter. Since Jeffrey was in Canada, upon legal advice, Jeffrey appointed her to be his attorney by the P/A[12]. 71.Mrs Yeung said she was then arranged to sign the Assignments and was told by the solicitor involved that the Assignments would vest ¼ interest of the Properties in each of Patrick, Jeffrey and her, while the remaining ¼ interest would continue to be with Father. Mrs Yeung said she asked no further questions and did not know why the Assignments were signed on different dates and she did not ask, and also that although a purchase price was stated on both sets of conveyancing documents, she did not know the reasons behind, and that she did not in fact pay Father any purchase price, nor did she pay any as Jeffrey’s attorney and that she was told by Father that Patrick did not pay any purchase price either[13]. 72.Altogether there were 5 legal documents signed in relation to the transfer of the Properties as set out below, and they were dated on different dates, save items (iv) and (v) were of the same date:
73.The invoices from the solicitors’ firm in respect of the transfers of the Properties were dated 7 October 1999 and issued in favour of Father, who was named as the “Client” on the invoices[18] and the relevant receipts were also issued in favour of Father and both dated 10 April 2000[19]. There was also a cheque dated 8 April 2000 issued by Father in the sum of HKD 12,320[20]. There was no receipt for this sum. However, a subsequent receipt dated 16 June 2000 a sum of HKD 15,125 which was stated to be stamp duty in respect of the Sunderland Property was issued by the solicitors’ firm in favour of Patrick[21] and it would appear that it was paid by Patrick. 74.From the dates on the Assignments, as Father and Mrs Yeung had said in their respective 1st Statements, they appeared to be executed on different dates. 75.However, in Mrs Yeung’s 3rd Statement, signed on 13 January 2020, ie the first day of the trial, she suddenly said when she was reviewing her 1st Statement for the preparation of trial, she recalled that the 2 Provisional Agreements for Sale and Purchase and also the Assignments (ie items (ii) – (v)) were not signed on different dates, but were all signed in the law firm of Messrs Tang, Leung, Li & Tsang on one single occasion on one single day, as Father did not like to travel to a law firm to sign documents too often and that he requested that all documents concerning the transfer of the Properties to be signed on the same day so that he only needed to travel to a law firm on one occasion. 76.Under cross examination, Mrs Yeung maintained that she and Father only went to the solicitors’ office to sign the Assignments and all the documents on one occasion and on one day only as Father did not like to cross the harbour and the solicitors firm was on the other side of the harbour. When she was asked why both she and Father had stated in their respective 1st Statements that the Assignments were signed on two different occasions, she said she could not recall at the time. She then admitted that as it took place 17 or 18 years, it was difficult to recall. When asked why Father also remembered wrongly, she then said Father “老啦，我問佢，佢都唔知點答”. 77.Mrs Yeung’s above evidence in fact showed that Father’s evidence was based on her recollection of events. Although Mrs Yeung in her 3rd Statement said the 2 Provisional Agreements and the Assignments were signed on one single occasion on one single day[22], she made no mention in her 3rd Statement as to when the P/A which bore her signature was signed by her. When she was asked why the P/A was dated 30 March 1999, she said she could not recall, and it appeared to be her evidence that she also signed on the P/A on the same occasion when she signed the other 4 documents. It would seem unlikely that a notary would notarise a power of attorney without the donee’s signature or that it could be authenticated without the donee’s signature. In my view, it would seem more probable that Mrs Yeung had signed the P/A and the Assignments on difference dates. 78.It is quite clear that even Mrs Yeung, who is 19 years younger than Father, seemed to have difficulty recalling events 17 years earlier, and as pointed out by Mr Lam, irrespective of what the truth was, it was a good example of how unreliable the memory of Mrs Yeung and Father was. 79.As Leggat J had observed in Blue v Ashley [2017] EWHC 1928 (Comm), referred to this Court by Mr Lam, even for witnesses who were stating their honest belief based on their recollection, evidence based on recollection of what was said in undocumented conversations which occurred several years ago would be problematic as Leggat J had further explained in detail therein[23]. 80.By the time when Father and Mrs Yeung made their respective 1st Statements, it was already 17 or 18 years after the Gift. In particular, I find Father’s evidence was unreliable as Father was then already 86 years old and as I had said earlier, his recollection of events appeared to be based on Mrs Yeung’s recollection of event. 81.In any event, the transfers of the Properties were clearly not by way of a Deed of Gift, and whether the solicitor was found by Patrick or not, both Father and Mrs Yeung had attended the solicitors’ office and yet neither of them had asked Patrick or the solicitor as to why the transfers were by way of a sale and purchase which were clearly untrue according to their evidence. Further, it was Mrs Yeung’s evidence during the trial that Father had told the solicitor about the Conditions, but the solicitor simply acknowledged it without saying or doing anything. It did not seem to be probable that upon being told by the Father the Conditions and the Gift, the solicitor would then ignore the same and went ahead and prepared the documents as if they were for sale and purchase and without any explanations to Father or to Mrs Yeung. 82.Vivian’s solicitors had written to the solicitors firm Messrs Tang, Leung, Li, Tsang on 14 December 2015 to try to seek the relevant files concerning the transactions for inspection, but were informed that the solicitors firm were unable to retrieve their files. When asked during the trial, Mrs Yeung confirmed that after commencement of this action, she and Father never tried to contact the solicitors’ firm Messrs Tang, Leung, Li, Tsang or the handling solicitor to find out why the documents were drafted as if the transactions were a sale and purchase or when the documents were executed. 83.Having considered the evidence, I have to say that I find it inherently improbable that, even if Patrick had found the solicitor, neither Father nor Mrs Yeung had asked Patrick or the solicitor as to why the transactions were dressed up as a sale and purchase. I also find it improbable that if it were indeed Father’s intention to make a conditional gift of each of the Properties, there was no reason why the solicitors were not instructed to draft proper documents to reflect accurately Father’s intentions. In fact, Father should not be unfamiliar with property transactions or dealing with solicitors’ firms, having purchased at least Fairland Gardens, Stafford Road Property, the Sunderland Property, No 48 Sunderland, and the Tokwawan Property over the past years and having gone through divorce proceedings and exchange of properties with Madam Chan. 84.According to the written evidence of Father, and also Mrs Yeung’s evidence, Father chose to explain to Patrick during the 1999 Mainland Visit of his thinking, intentions and suggestions in relation to the Gift and the Conditions, rather than in the presence of Vivian. As Vivian’s interests would be affected by the Conditions, in that in the least, being Patrick’s wife, she would have to live with Father in the Sunderland Property until Father’s death, one would have thought that Father would want to make the Conditions clear to Vivian and binding on her as well as Patrick. 85.Anyway, as said earlier, it was Father’s written evidence that after Mrs Yeung had agreed to the Conditions, as Jeffrey was in Canada at the time, he asked Mrs Yeung to explain to Jeffrey his thoughts, will and suggestion via long-distance call, and that he had taken over the call and that Jeffrey said to him via the long-distance call that he agreed to accept the Conditions. 86.During the trial, Mrs Yeung maintained that when she telephoned Jeffrey long distance and told him of Father’s intended Gift and the Conditions, Jeffrey immediately accepted them and that she then passed the phone to Father who spoke to Jeffrey direct. 87.Jeffrey confirmed that there was such a telephone call from his mother, ie Mrs Yeung. He was then only about 18 or 19 and still at school. 88.According to Mrs Yeung’s oral evidence during the trial, after the telephone call to Jeffrey, she had asked Father whether he would go downstairs to Patrick’s bedroom tell Patrick but Father responded by saying as Vivian was there, he would mention to Patrick later on when they were in the Mainland, namely during Patrick’s visit to the Shenzhen Factory. However, this part of Mrs Yeung’s evidence was never mentioned in any of her 3 witness statements. When Mr Lam pointed this out to Mrs Yeung, her response was that these were details. 89.Mr Shieh SC on the other hand submitted that this was a spontaneous answer given by Mrs Yeung and that it made perfect sense for Mrs Yeung to have asked Father at the time to go to talk to Patrick then and there. 90.Anyway, according to Mrs Yeung, when Father explained to Patrick the proposed arrangement of the Gift and the Conditions in the villa of the Shenzhen Factory, Patrick immediately replied that he accepted the proposed arrangement and the Conditions. When Mrs Yeung was asked about why she would remember this, she replied that as it did take place and therefore she could recall well as to what happened. However, on the other hand, she had said she could not recall when the 1999 Mainland Visit took place or how long after it was after Father had first communicated his intentions to her. When asked how long was the discussion between Father and Patrick, she said she had no idea even though she agreed that it could not have been long as Patrick had immediatelyaccepted. 91.When asked whether Patrick ask or whether there was any discussion as to which part of the business of Katat he would be responsible for and which part of the business Jeffrey would be responsible for, Mrs Yeung said there were no details discussed. 92.When asked whether if a husband were to agree to live with his parent/s for life and if a husband were to agree to work for family business, would his wife be affected by such agreement, Mrs Yeung responded that she did not know and/or did not care, but she said Patrick did not mention that he had to talk to Vivian during the 1999 Mainland Visit when Father had the conversation with him. 93.Mrs Yeung confirmed that Father did not tell Patrick that he was not to tell Vivian that the Gift was subject to the Conditions. She and Jeffrey said that, although Patrick and Vivian continued to live at the Sunderland Property after 1999 for about 5 or 6 years before they moved out in early 2005, no one had ever mentioned about the Conditions in the presence of Vivian during any family gatherings. In fact, when Mrs Yeung was asked, her answer had been “梗係唔講，楊生唔俾講”. I do not find it make sense why Father would not allow anyone to mention the Conditions in presence of Viivan. 94.When asked whether she could think of any reasons that Patrick would not tell Vivian that there were Conditions to the Gift, her answer was she did not know. 95.Mrs Yeung also confirmed that Father did not tell Patrick that if he failed to comply with the Conditions, he had to transfer his ¼ share back to Father. 96.Vivian’s evidence was that Patrick had told her that Father would add the names of him, Mrs Yeung and Jeffrey to the Properties but Patrick had never told her during his lifetime that the Gift was subject to the Conditions, or any conditions. Vivian stressed that her relationship with Patrick was close and they would talk about everything. It was also her evidence that if the Gift were indeed subject to the Conditions, and if their plan of leaving Katat and moving out of the Sunderland Property would lead to a breach of the Conditions and Patrick losing his ¼ interest in the Properties, Patrick would certainly have discussed such important matters with her and that was particularly the case because Patrick had no other landed property apart from his ¼ interest in the Properties[24]. 97.Vivian’s above evidence was not really challenged, and in any event, there was nothing to contradict what Vivian had said, and I accept this part of her evidence. I also find it inherently improbable that Patrick would not have mentioned the Conditions, if such Conditions had existed, to Vivian, when they decided to move out of the Sunderland Property and/or when Patrick to leave and cease working for Katat, and further during all those 16 years before his death. 98.As accepted by Mrs Yeung, Patrick was not a traditional/old fashioned Chaozhounese like Father. Even if it was true that Father did not want to mention the Gift and the Conditions to Patrick in the presence of Vivian, there was no reason why Patrick would not have mentioned it to Vivian. I agree with what was submitted by Mr Lam, the Conditions (if true) would have significant impact on not just Patrick, but also Vivian. In fact, even after Patrick and Vivian had left Sunderland Property and Katat, there were many occasions on which they had talked about and needed to deal with the Properties in particular the Sunderland Property, as seen below. 99.First, as mentioned earlier, in late 2010, Patrick was summonsed for failing to comply with a building order concerning the Sunderland Property. He had to pay the fine in the sum of HK$7,350 on 1 September 2011 after being found guilty as well as legal fees (for both the trial and appeals) in the total sum of HK$38,525 which was paid by cheques issued by A Tech Industrial Ltd, a company owned equally by Patrick and Vivian[25]. According to Father, he was still angry with Patrick at the time and that was why he did not pay for Patrick’s share and only his own share, Mrs Yeung’s share and Jeffrey’s share. However, as seen in the “schedule of contributions” of the legal costs prepared by the solicitors, Patrick was separately named as a client[26] and if Patrick and Vivian had knowledge of the Conditions and that his breach would result in him losing his ¼ interest, there was no reason why they would pay for his share of the fine and legal fees. 100.Second, and more importantly, Vivian said that after they moved out of the Sunderland Property, Patrick would mention from time to time his intention to realise his ¼ interests in the Properties as he wanted to sever his ties with Father, Mrs Yeung and Jeffrey, but he did not know what to do. As mentioned earlier, they then discovered in early December 2014 that the Tokwawan Property had been leased to Katat and then partitioned into small units and let to outsiders by Katat without Patrick’s knowledge and consent, and Patrick was so upset that he and Vivian consulted a friend through whom Patrick obtained preliminary legal advice from “William”, and that they had a meeting with “William” on 28 February 2015, ie 12 days before Patrick died, and that Patrick had asked how he could convert his ¼ interests in the Properties into cash, and it was suggested that he should first approach Father and ask Father to buy out his share[27]. 101.Having considered all the above, as I have said earlier, I accept Vivian’s evidence that Patrick never told her about the Conditions. I do not find it probable that if Patrick indeed had agreed to the Conditions attached to the Gift during the 1999 Mainland Visit, he would not have told Vivian throughout all those years. E.5 Previous unconditional gifts 102.As pointed out by Mr Lam, on the evidence, Father had made other unconditional gifts to his ex-wife Madam Chan, and also Mrs Yeung and Jeffrey after 1999, and some concerned the matrimonial home and Katat, and yet the Gift was the only gift made by Father which was said to be subject to any conditions. 103.Mr Shieh however argued that for the other gifts, they were made by Father under very different contexts. In relation to the gifts of the landed properties, they were all made at the time of the purchases. As for the gift of the shares in Katat to Alfred, which were later forfeited by Alfred and assigned to Patrick, they were given to the sons who were willing to work in Katat. 104.However, since Patrick had left Katat, Father did not ask him to return the 1,000 shares held by him. 105.In my view, whether the landed properties were given at the time of the purchases and whether the shares were given under different context, they were still unconditional gifts. The fact was that only the Gift was the only gift said to subject to the conditions. E.6 The evidence of Father, Mrs Yeung and Jeffrey 106.As said earlier, I have found Father’s evidence unreliable. The reasons include that Father’s written evidence could not be tested, his age at the time of his witness statements, the long passage of time since the events, the lack of contemporaneous documents, and that his evidence appeared to be based on Mrs Yeung’s recollection of events. I am of the view that his evidence in the witness statements should not given much weight. In fact, Father’s subsequent conduct after Patrick left the Sunderland Property and Katat also did not support the existence of the Conditions. 107.Although her witness statement was in English, Mrs Yeung elected to give her evidence in Cantonese, notwithstanding that Cantonese was not her mother tongue and at times she would resort to English when giving evidence. Mrs Yeung is an educated and clever woman and she appeared to be tough and independent, as she was willing to marry Father who was 19 years older and she was willing to move to a new country to live with and to help care for 8 children of her husband’s first marriage. 108.Vivian had said when Patrick started to live in Sunderland Property in November 1992, Father, Mrs Yeung, Lucy, Lydia and Cathy were also living there and that shortly after she moved in after marrying Patrick, in about 1997, Lydia suddenly resigned from Katat and moved back to Canada, and later Lucy and Cathy also suddenly moved out of Sunderland Property. When Mrs Yeung was asked, she said it was one day when she and Father were in Thailand, Lydia suddenly telephoned Father to tell him she was leaving for Canada and Lydia did not explain why and that she chose to leave when Mrs Yeung was not there and without her knowledge. When she was asked as to why Lucy and Cathy also moved out of Sunderland Property, Mrs Yeung said at first she did not understand the question and later she said she did not know why. When she was asked whether there was a problem between her and the children of Father’s 1st marriage, she did not answer the question directly and only said she was a person who would often keep quiet. 109.On the other hand, it was Vivian’s evidence that she and Patrick thought the reason why Lydia, Lucy and Cathy all suddenly left was probably because they were not able to get along with Mrs Yeung as Mrs Yeung “挑撥離間”. This allegation was not put directly to Mrs Yeung. Although there was no sufficient evidence that Mrs Yeung was trying to cause any alienation between Father and the children of his 1st marriage, there was no evidence either that she had done anything to help to bring them closer. 110.In particular, in the case of Patrick, when Patrick and Vivian saw Father and Mrs Yeung at the family wedding, Patrick had in fact made the first move and gone over and gave some samples of his manufactured product/s to Father as a gift. Father’s evidence in his 1st Statement was that as Patrick had expressed no regrets over what he had done, he refused to respond and refused to accept the gift[28]. However, according to Vivian’s evidence, Father originally had accepted them but later at the end of the wedding banquet, when Patrick and Vivian came over to say goodbye to Father, Mrs Yeung returned the gifts to Patrick and told Patrick that they did not need such items while Father remained silent. When Mrs Yeung was asked about this during the trial, she claimed that it was Father who had “signaled her under the table” to return the gifts. Whether it was indeed Father’s idea or not, what is clear is that there was no evidence that Mrs Yeung had done anything to bridge the gap between Father and Patrick, in that she had done anything to persuade Father to accept the gifts. 111.What is also clear is that Father’s children from his 1st marriage gradually moved out of Sunderland Property and left, leaving only Mrs Yeung and Jeffrey, his wife and sons living in the Sunderland Property with Father until his death, and notwithstanding Father’s evidence that he had wanted his sons to succeed him in the business and that he was “重男輕女”, he made a will appointing Mrs Yeung to be the sole executrix and the sole beneficiary of his estate, leaving nothing to his sons, not even to Jeffrey. 112.It would appear that in about 1999, while Father and Mrs Yeung were in Canada visiting Jeffrey, one day, they received some documents which Patrick had sent them to ask them to sign. It was Mrs Yeung’s evidence that Patrick had not explained the contents of the documents and upon receipt, Mrs Yeung found out the document was to remove her as the company secretary of Katat and to appoint Vivian in her place. According to Mrs Yeung, both Father and she were shocked and she telephoned the accountant at Katat who said as Patrick told her that Mrs Yeung would be residing in Canada, she would be unable to attend to Katat’s affairs. Mrs Yeung said she was very angry with Patrick and Vivian at that time, but said later Patrick had apologized, and that she had left the matter behind. When it was put to Mrs Yeung during the trial that after her refusal to sign, Patrick did not insist on her signing or resigning as company secretary, her response was to that he would not dare“佢夠唔夠膽”, and she later further answered “我講乜佢同意”. 113.When Patrick passed away, Mrs Yeung and Father did not attend his funeral. When Mrs Yeung was asked, she said it was unlucky for an older person to attend the funeral of a younger person, namely “a white haired person will not send off a black haired person” (白頭人不送黑頭人), and that Father did ask Jeffrey to bring to Vivian “funeral gift” of HKD 20,000 (帛金). Mrs Yeung claimed she was at that time in Thailand and that she did not telephone Vivian, as there had not been much communication between them. 114.It is clear Mrs Yeung is prejudiced towards Patrick and Vivian, and she had frankly admitted that the relationship between her and Vivian was not a close one. She claimed that Vivian used to ignore them when she was living in Sunderland Property. Her prejudice and uncompromising attitude towards Vivian can also be seen in the extent of the pursuit towards the alleged forgery of the Reference Letter, which I will come to later. 115.Mrs Yeung refused to allow the surveyors to inspect the interiors of the Properties for the purpose of preparing valuation reports for the trial. When asked during the trial, she simply said she did not like strangers to come to inspect “her” properties. 116.Further, when Father was ordered to provide certain company documents for the handwriting experts, it was Father’s then evidence that those document were “stolen” during a burglary of Katat’s office in around late April 2007 when he and Mrs Yeung were still in Canada. According to Father, the drawers were opened but the locks were not broken. Later a report was made to the police[29]. Father did not say whom he suspected and only said certain company documents which he was ordered to produce to the handwriting experts were not available. However, during the trial, Mrs Yeung pointed her fingers at Patrick and Vivian, saying that they were the ones who had the keys. This again demonstrated Mrs Yeung’s strong prejudice towards Patrick and Vivian. 117.Anyway, Mrs Yeung’s evidence on the Gift and Conditions was not supported by any contemporaneous documents. As seen earlier, her recollection in relation to the signing of the transaction documents was problematic. Having considered her evidence, I do not find Mrs Yeung a reliable witness. Further, Mrs Yeung is the only one who stands to gain if Father’s claim is successful. 118.As for Jeffrey, he was only about 18/19 years old when the alleged telephone call was said to be made to him by his mother. Mrs Yeung had spoken to Jeffrey first, and all Jeffrey said was he immediately agreed and he told Father so. In any event, he was not present during the 1999 Mainland Visit, and he had only heard about the meeting subsequently and he was not able to provide details. He is clearly on his mother’s side and he stands to gain one day through his mother if Father’s and/or his mother’s claim is successful. I do not find him an independent or reliable witness. 119.Vivian was educated to Form 3 level and was working as a salesgirl at the time of the trial. It was not disputed that she and Patrick were very close. As said earlier, it was her evidence that Patrick had never informed her that the Gift of the Properties was subject to the Conditions, and this Court has earlier accepted her evidence. 120.It was Vivian who had disclosed the Reference Letter in her witness statement and her List of Documents on 5 September 2016 to support her evidence that Father had approved of her resignation without saying anything[30]. However, upon seeing a copy of the letter, Father and Mrs Yeung made supplemental witness statements claiming that they had never seen the document before and Father had not signed on it. It was Father’s evidence that Vivian never tendered her resignation to him and that he had never approved her resignation. Mrs Yeung also said she had never seen the letter before her solicitors showed it to her in October 2016. She said she had no knowledge of it and she never translated its contents to Father. 121.In short, both Father and Mrs Yeung maintained that Patrick and Vivian left suddenly. 122.The contents of the Reference Letter were as follows:
123.Vivian had produced the original letter during the trial. She explained in her witness statement that at around August/September 2004, she started to experience pain from her two wrists to her forearm, and had consulted an acupuncturist several times, but the situation did not improve and she later consulted a doctor and an occupational therapist for treatment. 124.During the treatment period, Vivian often had to attend medical appointments. Mimi, Jeffrey’s wife, had started working at Katat and took over her job duties, and Patrick also planned to move out of the Sunderland Property and leave Katat. She planned to resign at end of December 2004. Therefore, at about end of November, she had typed the Reference Letter and the purpose was only to certify the period of her employment at Katat. She had typed in 31 December 2004 as that was the day she had planned to resign. She said in early December, the exact date she did not recall, she informed Father and Mrs Yeung of her resignation and requested Father to sign on the Reference Letter. She said in fact both Father and Mrs Yeung did not object and Mrs Yeung looked pleased about that and prior to Father signing, Mrs Yeung had personally read the letter and after she agreed, she then handed to Father to sign and that all this took place in her presence. 125.Although Vivian disavowed any intention to rely on the Reference Letter to invite the trial judge to infer the existence or non-existence of the Conditions, Father and/or Mrs Yeung had insisted on seeking handwriting expert evidence to support their challenge against the authenticity of the Reference Letter. 126.Father’s expert, Mr Radley is an experienced handwriting expert. He gave lengthy evidence as to why he concluded that there was strong evidence that the Reference Letter was not authentic. 127.Vivian’s expert Ms Novotny unfortunately was not able to attend trial to give evidence and her conclusion was that it was inconclusive whether the Reference Letter was or was not authentic. As pointed out by Mr Lam, among the 27 similarities identified by Ms Novotny, Mr Radley agreed to 25 of them[31]. 128.On the scale, Mrs Novotny’s conclusion on the signature would be “0” and Mr Radley’s was “-2”. He did not give it a “-3” or “-4”, which would mean it was conclusive that the signature was a forgery and Mr Radley had explained that it would usually be a “clumsy forgery” which would lead to the “conclusive” level of “-3” or “-4”, and he had said the questioned signature of Father’s was a reasonably good quality simulation of a genuine signature of Father showing a good pictorial resemblance to his general signature style and the forger showed considerable penmanship ability[32]. Having said that, he noted there was an error concerning the number “5” in the telephone number which was simply corrected by hand[33] and that the letter was only printed out on A4 paper. 129.Mr Lam had set out in paragraph 87 of his Closing Submissions some 21 reasons to say why Mr Radley’s opinion should be rejected. I will not set them all out. Suffice to say, as Mr Lam had pointed out, although the experts had been provided with 110 known signatures covering the period between 1982 and 2017, Mr Radley chose to use 73 only. He did not use those before 2000 nor those after 2008, and he had excluded the known signatures in 1999. Mr Radley explained that he excluded those known signatures in 1999 because Father was possibly suffering from a transient physical illness at that time which had adversely affected his pen control. It was not clear what illness Mr Radley was referring to as there was no sufficient evidence that Father was in fact suffering from any such illness in 1999 and from which he was said to have recovered subsequently. 130.Mr Lam further pointed out that out of the 73 known signatures, only 12 were originals, 6 of them were signed on 21 August 2009. As to the remaining 6 originals, they were signed within one year from the questioned signatures, and they were mileage application or redemption forms, which were not the same class of documents as the Reference Letter which was a more formal document. Mr Radley accepted that there was deteriorating pen control since 2005 and he stated that this took place since November 2005. There were only 7 known signatures which were copies only between the questioned signature in December 2004 and November 2005 and, as pointed out by Mr Lam, there was no sufficient evidence to enable anyone to ascertain when the deterioration began. The deterioration was caused by Father’s advancing years and Father was already 74 years old by December 2004, and Mr Lam submitted that the deterioration which was a gradual process could well have already begun by December 2004. I accept that this was possible. 131.Ultimately, Mr Radley did accept that the Court would need to consider other factors such as the motive of the alleged forger, and he accepted that this would be a matter for the Court to decide. 132.There was no sufficient evidence that the Reference Letter was not a contemporaneous document, which was prepared in November/ December 2004. The Reference Letter simply stated the fact as to Vivian’s employment period at Katat, which no doubt would be reflected in the company’s records and/or tax returns and a fact which was not really challenged by Father and/or Mrs Yeung. A good quality simulation of a genuine signature would require practice and as Mr Radley said considerable penmanship ability. There was no evidence that Vivian or Patrick had possessed “considerable penmanship ability”. The present action was launched some 11 years after the Reference Letter and there was no evidence that Patrick or Vivian had any inkling in 2004 that they would one day end up in litigation with Father and/or Mrs Yeung in which there could be an issue as to whether Father had approved her resignation. There was no sufficient evidence of any motive for Vivian (or Patrick) to simulate Father’s signature in 2004, which if proved could be a criminal offence. 133.The burden was on Mrs Yeung to prove that the signature on the Reference Letter was not Father’s. Having considered all the circumstances of this case, I am not satisfied that the burden has been discharged. 134.In any event, I find that Vivian is a credible and reliable witness and I accept her evidence on the Reference Letter.
F. Issue 2 – If the Gift was made subject to the Conditions, was it legally invalid and/or unenforceable F.1 Whether there was intention to create any legal relations 136.Vivian’s case was that even if the Gift was found to be subject to the Conditions, such would have been a domestic arrangement between a parent and his child with no intention to create any legal relations. 137.Mr Lam submitted that in the context of considering an alleged conditional gift, it would be vital to distinguish between:
138.Mr Shieh on the other hand submitted that the contractual requirement of showing an intention to create legal relations does not extend to voluntary dispositions. He referred this Court to Ellis v Chief Adjudication Officer [1998] 1 FLR 184, in which a mother transferred ownership of her flat to her daughter on deed of gift subject to the conditions that her daughter would look after her in the flat and she would pay off the mortgage. The mortgage was repaid but the daughter evicted the mother from the flat, which she then sold. Whether the mother had beneficial interest in the property would affect her entitlement to social security benefits. 139.The Social Security Commissioner held that the gift was subject to conditions subsequent and when one of the conditions failed, the gift came to an end and the donee (daughter) held the property on trust for the donor (the mother), and the mother’s capital exceeded the threshold specified in the regulations thereby rendering her ineligible for income support. 140.The English Court of Appeal dismissed the appeal. As said by Staughton LJ at [1998] 1 FLR 184 at 188:
141.What Staughton LJ said in his above passage in relation to the intention to create legal relations was in the context of a contract. I do not think Staughton LJ had gone so far to consider whether it was also necessary to prove an intention to create legal relations in the case of a conditional gift since this issue was not raised by the mother in her claim. In any event, what was said by Staughton LJ was obiter dictum. 142.Mr Shieh had also referred to Esso Petroleum Co Ltd v Customs and Excise Commissioners [1975] 1 WLR 406, where coins bearing the likeness of footballers were distributed to Esso’s customers on the basis of one coin for every 4 gallons of petrol purchased. The Customs and Excise Commissioners claimed that the coins were goods “sold” and hence chargeable to tax. The Court of Appeal held that there was no intention to create legal obligations for the sale of the coins and hence no tax was chargeable and that at best, the transaction could be described as “an expression by the dealer of an intention to make a conditional gift”[34]. Mr Shieh argued that this strongly suggested that the requirement for an intention to create legal relations does not extend to conditional gifts. 143.The issue in that case was whether the coins were goods sold pursuant to a contract of sale. Again, I do not think the Court of Appeal had considered whether a conditional gift would require an intention to create legal relations or consequences. 144.Having considered the above cases , I would prefer to approach the matter following what was stated in Palmer and McKendrick on Interests in Goods (2nd ed, 1998), Chapter 18 on “Conditional Gifts”[35]:
F.2 Whether the Conditions were true qualifications on Father’s intention to benefit Mrs Yeung, Jeffrey and Patrick or merely precatory words 145.Mr Lam had referred the Court to a Canadian case Abdollahpour v Banifatemi [2014] ONSC 7273. In that case, in accordance with Iranian culture and tradition, the groom’s family made a gift to the bride on the occasion of their wedding by transferring 50% interest in a house; after a year and a half of the marriage the parties separated; the husband and his parents sought the return thereof. It was argued that the transfer was subject to the conditions that the parties stayed married and continued to reside in the property as a matrimonial home; and if the wife left the marriage her father verbally promised the husband’s father that he would return her interest in the property to them. 146.The judge rejected the husband’s family’s claim for the return of the property. His decision was upheld by the Court of Appeal for Ontario in Abdollahpour v Banifatemi [2015] ONCA 834. Blair JA held at pp 12-13:
147.In the present case, the Gift was made in a family context, and as pointed out by Mr Lam, it is not uncommon that, when parents make gifts to their, they would exhort them to be filial and grateful and parents would impress on the children their moral obligations rather than imposing on them any legal obligations. Second, it was not disputed that when Father was said to impose the Conditions, he had not stated what the legal consequences would be if Mrs Yeung, Patrick or Jeffrey had breached the Conditions, in particular, he did not say that in such event, they had to return the Gift to him. Third, as Father and Mrs Yeung both attended the solicitors’ office on at least one occasion, Father could have instructed the solicitors to prepare a proper deed of gift with the Conditions expressly spelt out, together with the legal consequences in the event of breach. Fourth, Father’s conduct after Patrick had breached the alleged Conditions was inconsistent with Father’s belief and understanding that the Conditions were intended to be legally binding. 148.As the evidence showed, for a period of over 10 years after Patrick moved out of the Sunderland Property and left Katat, Father had never taken, or even considered to take, any legal step to demand the return of the Properties. I do not find that Father’s explanation that he was waiting for Patrick to apologise as a prodigal son and to return to live in Sunderland Property or to return to work in Katat credible, particularly since 2014 (latest by 1 January 2015), Katat had ceased business operations, and there was no way that Patrick could have returned to work in Katat before his death even if he had wanted to. Further, as mentioned earlier, Patrick had to pay for his own share of the fine and legal costs in respect of those proceedings over the unauthorized structures in the Sunderland Property and, his notwithstanding explanation, Father’s attitude on this would indicate that ¼ interests in the Sunderland Property was Patrick’s legally and beneficially. 149.Although Patrick was formally removed as a director of Katat on 30 June 2005, Patrick was not asked by Father to transfer the shares in his name back to Father or to anyone even though Patrick was said to be in breach of the Conditions. Patrick remained a shareholder holding 1,000 shares in Katat as at 25 November 2016[36], notwithstanding that he passed away in March 2015. 150.Having considered all the above, I find that even assuming Father had imposed the alleged Conditions, the Conditions were merely precatory words by Father and did not form a true qualification on Father’s intention to bestow the Gift on Patrick. F.3 Whether the Conditions were void for uncertainty 151.Mr Lam submitted that if the condition subsequent to a gift were found to be void on whatever grounds, the gift would become absolute. As stated in Halsbury’s Laws of England 2014, 5th edition, volume 52 para 152 at page 240:
152.Mr Lam further cited to the Court various cases relating to testamentary dispositions in support of his arguments that the Conditions were void for uncertainty, namely Sifton v Sifton [1938] AC 656, Fillingham v Bromley Turn & Russ (1823) 530, 37 ER 1204, Re Brace [1954] 1 WLR 955 and Clayton v Ramsden [1943] AC 320. 153.Mr Shieh pointed out that the above authorities were “ancient” cases and submitted that modern judicial attitude is reluctant to strike down gifts based on perceived uncertainty: Cheung Tai Shing v Cheung Ching Fong [2019] HKCFI 103 (unreported, HCAP 9/2018, 18.1.2019)[37] at §21. In a slightly different context, the courts have significantly relaxed the test of certainty of objects for trusts although the class of beneficiaries may be said to be uncertain: Re Barlow’s Will Trusts [1979] 1 WLR 278[38] (where the term “friend” was deemed a sufficiently certain class of objects). This is to prevent gifts from being avoided too readily as a result of a supposed uncertainty. 154.Both the above cases cited by Mr Shieh were not cases concerning conditional gifts. 155.Suffice to say, each case depends on its own facts. I accept that the question of certainty depends on the context. 156.Mr Shieh argued that since the case arose out of a family context, and that one has to be reasonably robust in understanding and interpreting the Conditions. At the time of the Gift, Patrick was living in the Sunderland Property and there was nothing esoteric or fanciful about the nature of his presence on the property which raises any realistic questions or doubts as to the meaning of “reside”. 157.However, as pointed out by Mr Lam the 1st Condition not only required Patrick to reside with Father but also “to care for him” (照顧本人) and it was this phrase that made the 1st Condition uncertain. Father did not need any financial support from Patrick and Mr Lam posed a number of questions such as: did it mean that Patrick needed to eat with Father, talk to him, and go out with him? If so, how often? 158.The 2nd Condition required Patrick to assist Father in the business and operations of Katat (留在奇達工作和打理本人的生意). Mr Lam again submitted that this was uncertain, and raised questions such as whether it meant Patrick must remain a director, and what if Katat was not profitable and ceased to be commercially viable on whatever grounds. 159.In the Ellis case, it was held that the arrangement between the mother and the daughter was a gift subject to conditions subsequent and the two conditions were that (1) the daughter would look after the mother in the flat and (2) the daughter would pay off the remaining mortgage. The Court of Appeal dismissed the argument that the conditions were uncertain. Staughton LJ had said that the condition (1) could fairly be construed as requiring the daughter (i) to allow the mother to live in the flat for so long as it was reasonably practicable for her to do so, and (ii) to see that the mother was provided, for payment if required, with the basic necessities of life. 160.In the present case, the 1st Condition did not in fact require Patrick to reside with Father in the Sunderland Property, and also unlike the Ellis case where only the daughter and the mother were living in the flat, here there were many people living in the Sunderland Property, including 2 of the 3 donees and whether Patrick could reside with Father in the Sunderland Property would also depend on the other 2 donees. If Mrs Yeung were to evict Patrick, who would be in breach of the 1st Condition? Further, as pointed out by Mr Lam, the Father did not need Patrick to provide him with any financial support and it was clear that the 1st Condition was not concerned with the provision of money or materialistic support. By all accounts, Father was a wealthy man and had sufficient means to cover his own basic necessities of life. In any event, there was no evidence to the contrary. There was also no evidence from Father as to what it was expected of what Patrick was to do in caring for him. I find there was uncertainty in relation to the 1st Condition. 161.As for the 2nd Condition, at the time of the Gift, Father and Patrick were running the business of Katat together and there was no sufficient evidence that Mrs Yeung was an employee in Katat, although she was often accompanying Father to the factory premises and was a director and/or shareholder and the company secretary on company records. Although it was contemplated that Jeffrey would join Katat after he finished his studies in Canada, it was not clear what the individual roles of the 3 donees in Katat would be in the future. As mentioned earlier, Father’s evidence when he was explaining why he imposed the Conditions was that his wish was that his sons would “承繼” or inherit the business of Katat[39], and it would appear that he was talking about succession planning in so far as the Katat business was concerned, but on the other hand, he said the 2nd Condition was that the 3 donees would continue to remain working in Katat and to manage his business until his death[40]. Again, I find there was uncertainty in the 2nd Condition. 162.Having considered the above and all the evidence, it is my finding that the Conditions were void for uncertainty. F.4 Conditions not evidenced in writing 163.As made clear in Mr Shieh’s Opening Submissions, Father and/or Mrs Yeung as his executor were not bringing this action upon any “contract” for the sale or disposition of land. I am of the view that section 3 (1) of the Conveyancing and Property Ordinance Cap 219 is not engaged. G. Issue 3 – The legal consequences of Patrick’s breach of the Conditions 164.It was Father’s pleaded case that upon Patrick’s breach of the Conditions, since around 2004, Patrick (and upon his death his estate) held and still holds his interest in the Properties on trust (either resulting or constructive) for the sole benefit of Father (and upon his death his estate). 165.As the Social Security Commissioner held in paragraph 7 of his decision in the Ellis case:
166.It was agreed by Vivian that if this Court were to find that the Conditions existed in fact and were legally valid and enforceable, upon Patrick’s breach of the Conditions, he would hold his interests in the Properties on constructive or resulting trust for Father. H. Issue 4 (a) – Whether Father’s claim time barred 167.As identified orally by Mr Shieh in his opening, the difference between the parties was whether the trust was a Type 1 or Type 2 constructive trust under the Paragon Finance classification: see Timmerton Co Inc v Equity Trustees Ltd [2015] 1 HKLRD 247, at paragraphs 16-18. 168.Mr Shieh argued that it was clear that the trust was a Type 1 trust and not caught by limitation. Mr Lam on the other hand argued that the trust was a Type 2 trust. 169.In Timmerton Co Inc v Equity Trustee Ltd [2015] 1 HKLRD 247, Chu JA observed in paragraph 15 that, Millet LJ in Paragon Finance Plc v DB Thakerar & Co [1999] 1 All ER 400, 408j-409a, differentiated between two categories of constructive trusts and constructive trustees:
170.In paragraph 16 of her judgment, Chu JA repeated the differences between the two categories, namely :
171.Chu JA then held at paragraph 17:
172.She further noted in paragraph 18 that the above reasoning was applied by the Hong Kong Court of Final Appeal in Peconic Industrial Development Ltd v Lau Kwok Fai (2009) 12 HKCFAR 139 where Lord Hoffmann NPJ held that:
173.In the present case, even on Father’s case, Patrick was not a fiduciary in the first place. When the Gift was effected by the Assignments, the legal and beneficial interests in ¼ of the Properties passed to Patrick. He had not assumed any fiduciary obligations in relation to his interest in the Properties. On Father’s pleaded case, it was only upon Patrick’s breach of the Conditions that a constructive/resulting trusts arose. It was merely a remedial mechanism for giving relief in equity. 174.In the above circumstances, I am of the view that the limitation period should be 6 years. The Father’s case was that Patrick held the Properties on trust for him since 2004. Hence, the cause of action accrued at that time. The 6-year limitation period expired in about 2010. This action was commenced only on 1 December 2015, long after the limitation period has expired and was thus statute-barred. 175.It was also Vivian’s case that irrespective of whether Father’s claim was statute-barred, it would be barred by laches in equity. 176.As I have found earlier, I do not find the evidence that Father was secretly wishing Patrick to be remorseful and to repeat was credible. Father never asked Patrick to return. Although Father took steps to remove Patrick as a director of Katat, he never took any steps to claim back Patrick’s share and interest in the Properties. He only waited until after Patrick’s death before starting this action. Vivian suffered significant prejudice by reason of the delay. In my view, Father’s claim is barred by laches. J. Conclusion and order on Father’s claim 177.To summarise, Father’s claim fails as it is this Court’s finding that the Gift was not subject to the Conditions, and even if Father did utter those words said to form the Conditions, they were in my view merely precatory words and not intended to be a qualification of the Gift. I aslo find the Conditions were void for uncertainty. Although a trust would arise if Patrick were indeed in breach of the Conditions (if found to exist), in my view it was a “Type 2 “trust which would be statute barred and in any event, barred by laches. 178.Having regard to all the above, I dismiss the claims of Father (and his estate) in this action. K. Vivian’s counterclaim under the Partition Ordinance, Cap 352 (“PO”) 179.Vivian sought a sale of the Properties pursuant to section 6(1) of the PO, and consequential directions for the sale and distribution of the sale proceeds therefrom pursuant to section 6(3) of the PO. 180.Mr Shieh submitted if this Court were to find against the Father and/or his estate, Mrs Yeung (on behalf of Father’s estate and herself) and Jeffrey would be willing to undertake to buy out Patrick’s interests in the Properties at the value as stated in the latest valuation report and that pursuant to section 6(3) of the PO, such undertaking would preclude the making of an order for sale. 181.I direct the parties to submit an agreed order within 28 days hereof incorporating the undertaking of Mrs Yeung and Jeffrey, failing which each party shall submit its own draft supported by written submissions of not more than 10 pages for the Court to make a determination on paper the terms of the final order. 182.As for costs, I direct the parties to each lodge written submissions on costs of not more than 20 pages within 28 days for this Court to decide the question of costs on paper. 183.Lastly, I would express my gratitude to all Counsel for their assistance to this Court.
Mr Paul Shieh SC and Mr Vincent Lung, instructed by Li & Lai, for the plaintiff (Original Action) and the 1st to 3rd defendants (Counterclaim) Mr Paul Lam SC, Ms Maria So and Ms Astina Au, instructed by Tang & So, for the defendant (Original Action) and the plaintiff (Counterclaim) [1] E1:9-15 [2] C2:227 [3] See para 43, B:145 [4] Action No KCS 11425 -11428/2010, E2:320-332 [5] See “Principal Activities” at E4:844 (for year ended 31.12.14) and E4:872 (for year ended 31.12.15) [6] C2:270-274 [7] See para 75, B:153 [8] At para 11, Re-Re-Amended Statement of Claim, A:14 [9] As mentioned earlier, according to Father, Madam Chan had an affair with his brother-in-law and that was why he divorced her, B:9. [10] Paras 37-39 [11] See para 38, B:9 [12] E1:103-105 [13] See paras 31-35, B:87-88 [14] E1:106-107 [15] E1:108-113 [16] E1:188-189 [17] E1:190-195 [18] E1:114, E1:196 [19] E1:115, E1:197 [20] E1:198 [21] E1:116 [22] See para 2, B:101B, [23] At para 66, quoting from paragraphs [16] – [20] of Gestmin SGPS SA v Credit Suisse (UK) Limited [2013] EWHC 3560 (Comm); see also para 69 [24] See para 54, B:147, B:170 [25] See paras 56-65, B:147-150, B:171-174, also C2:230, 232,240, and E2:264, 366-368 [26] E2:358-359 [27] See paras 71-75, B:151-153, B:175-176, C2:245-249, 251-255, 270-274,276, 278-282 [28] See para 72, B:17 [29] F:79 [30] See para 49, B:146 [31] D1:59, at paras 53-54 [32] D1:101, para 48 and D1:92, para 11 [33] D1:91, para 8 [34] At p 412 [35] At p 433 [36] E3:643 [37] P’s Supp LOA #14 [38] P’s Supp LOA #15 [39] See para 38, B:9 [40] See para 41, B:10 |
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