Ng Kit, The Legal Representative and The Sole Beneficiary of the Estate of Ng Kwun Yuen (吳坤元) Deceased v. Wu Tsun Hua and Others
Read the full judgment text of HCA 201/2017 on BabelCite. This High Court CFI judgment was delivered on 14 April 2021.
1. This is yet another unhappy case between family members. The Plaintiff claims that the Defendants have kept a large quantity of antiques in their flats in Hong Kong and Shanghai belonging to the deceased; and, further, the 2 nd Defendant has misappropriated JPY3,000,000 (equivalent to about HK$210,000 at present) paid by a third party to settle trade debts owed to the deceased’s company. The Defendants contend that they were not properties belonging to the deceased’s estate; instead, they wer
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HCA 201/2017 [2021] HKCFI 877 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE ACTION NO 201 OF 2017 ________________________ BETWEEN
________________________ Before: Deputy High Court Judge Paul Lam SC in Chambers Date of Hearing: 10, 12, 15, 16 and 18 March 2021 Date of Judgment: 14 April 2021 ________________________ J U D G M E N T ________________________ A. INTRODUCTION 1.This is yet another unhappy case between family members. The Plaintiff claims that the Defendants have kept a large quantity of antiques in their flats in Hong Kong and Shanghai belonging to the deceased; and, further, the 2nd Defendant has misappropriated JPY3,000,000 (equivalent to about HK$210,000 at present) paid by a third party to settle trade debts owed to the deceased’s company. The Defendants contend that they were not properties belonging to the deceased’s estate; instead, they were given to them as gifts by the deceased during his lifetime. 2.The 3rd Defendant is a sole proprietorship run by the 2nd Defendant, and is not a separate legal entity. It is wrong to sue it separately. The Defendants have been acting in person in these proceedings. The 2nd Defendant conducted the case on behalf of herself and the 1st Defendant. B. THE FAMILY 3.Ng Kwun Yuen (吳坤元), the deceased (“the Deceased”), was born on 1 May 1928. 4.The Plaintiff (“P”), Ng Kit (吳傑), was born on 17 August 1953. He was the son of the Deceased and his first wife, Wong Sup Han (王淑閑), who divorced the Deceased and left when P was 3 years old. Chang Wah Ming (張華明) (“Chang”) was the Deceased’s second wife, who married him when P was 5 years old. Chang brought P up. She died on 10 May 1996. P is highly educated. He went to England in around 1972 when he was about 19 years old. P’s wife is Choy Sau Lin (蔡秀蓮) (“Choy”), a Malaysian Chinese whom he married in 1978. Jonathan Joseph Woo (吳松翰) (“Jonathan”), born on 26 February 1982, is P’s son. P and Choy lived in England between 1972 and 1995; they lived in Singapore between 1995 and 2003; after that, they returned to England and have been residing there since then. 5.The 1st Defendant, Wu Tsun Hau (吳春花) (“D1”), born on 7 March 1945, was the Deceased’s third wife. She is a Taiwanese. She met the Deceased when she was about 18 years old. They started a relationship about 2 to 3 years later. They married formally in Taiwan on 16 October 1996, shortly after Chang had passed away. The 2nd Defendant, Wu Chi (吳琪) (“D2”), was the daughter of the Deceased and D1 born in Taiwan on 17 August 1968. She used to run an interior design company in Shanghai. After the Deceased became ill in mid-2008, she came to Hong Kong to take care of him. D2 has a younger brother called Ng Hao Chuan (吳浩銓) (“Hao Chuan”), and an adopted elder sister called Wu Ting (吳婷) (“Ting”) (who is 5 years older than D2). Mok Sui Kei (莫瑞祺) (“Mok”), born on 21 August 1963, is D2’s husband. He is the principal of a secondary school in Hong Kong. 6.All over the years, P did not approve the Deceased’s relationship with D1 and her children. In an email dated 26 April 2011, he told D2 that “I never want to meet with you & your mother in the first place”. D2 said that she only met P for the first time in about August 2008 after the Deceased had been diagnosed as suffering from stomach cancer. P also hid the existence of D1 and her children from his own family. When he and his own family members returned to Hong Kong to visit the Deceased, D1 and her children would need to avoid meeting them. Choy and Jonathan have never met D1 or D2. C. THE FAMILY’S REAL PROPERTIES IN HONG KONG AND SHANGHAI 7.The Deceased used to live with Chang at Flat D, 6th Floor, Windsor Mansion (豐樂大廈), No. 17 Austin Avenue, Kowloon, Hong Kong (“the Windsor Flat”). He was the registered and beneficial owner. When Chang was still alive, D1 would stay in hotels when she came to Hong Kong to visit the Deceased. After Chang passed away, the Deceased and D1 would live in the Windsor Flat when they were in Hong Kong. 8.On 25 September 2007, the Deceased acquired Flat 3D, Pacific Building (太平洋大廈), 65-67 Kimberley Road, Tsimshatsui, Kowloon (“the Pacific Flat”). The Deceased put the Pacific Flat under the names of himself and D1 as joint tenants. The Pacific Flat is very close to the Windsor Flat. P said they are only about 200 metres apart. 9.The Deceased and D2 used to jointly own a property at Shanghai, which is known as Flat D, 29/F, Hai Hua Garden 3, Lane 38, Dapu Road, Shanghai (上海打浦路38弄海華花園3號29D) (“the Shanghai Flat”). They acquired it on 6 July 2000. On 12 October 2009, it was transferred into the joint names of D2 and her sister, Ting. D. THE DECEASED’S BUSINESS 10.The Deceased was the sole proprietor of a business called Golden Arts & Crafts Co (“Golden Arts”) whose address was the Windsor Flat. The nature of its business was antiques, arts and jewellery dealing, import & export trading. The business commenced on 28 February 1998. It started to use the Chinese name “源浩行” on 6 April 2005. On 28 July 2000, the business address was changed to Flat/room 112A Grosvenor Mansion, 110-112 Austin Road, Tsimshatsui; and, on 9 October 2004, it was changed back to the Windsor Flat. 11.The only staff member of Golden Arts was a Madam Lu Tian Hui (陸天慧) (“Lu”). She left Golden Arts in about June 2009. She was very close to the Deceased’s family. 12.A client of Golden Arts was a Japanese company known as ACT East Co Ltd (“AEC”) whose president was one Mr Katsuhiko Sato (佐藤勝彥) (“Sato”). They started to do business in the late 1990s. The product traded was known as JET. 13.Golden Arts ceased business formally on 6 July 2011 after the Deceased passed away on 12 March 2011. E. THE DECEASED’S DETERIORATION OF HEALTH AND DEMISE 14.In about July 2008, the Deceased was diagnosed to be suffering from stomach cancer. 15.On 11 August 2008, the Deceased made a will at a solicitors’ firm in Hong Kong (“the Will”). In the Will, he gave the Windsor Flat and all his residuary estate to P. 16.On 7 April 2010, the Deceased made another will in Taiwan in which he appointed P as his executor who should be responsible for his funeral and burial matters. 17.As one would expect, the Deceased’s physical and mental condition deteriorated gradually in 2010. In an email dated 9 April 2010, P told D2 that the Deceased’s “brain is not as normal as before”. On 29 April 2010, D2 informed P that the Deceased scored 24 out of 30 in the mini-mental state examination; and he suffered some loss of memory. In an email from D2 to P dated 14 May 2010, D2 said that the doctor at the geriatric psychiatry department of Kowloon Hospital opined that the Deceased was suffering from very early staged Alzheimer’s disease. In an email dated 15 November 2010, P told D2 that he believed the Deceased’s mental condition was getting worse though he looked very normal when he spoke. In an email to D2 dated 8 December 2010, P said that, as the Deceased’s mental condition had become worse, there was no need to brief him on any financial or business matter anymore; his judgment was questionable as they were not sure whether his mind was clear. 18.On 1 December 2010, the Deceased was admitted to the Hong Kong Anti-Cancer Society Jockey Club Cancer Rehabilitation Centre at 30 Nam Long Shan Road, Wong Chuk Hang, Hong Kong (“the Medical Centre”). Since then, D2 would prepare meals for the Deceased, and visit him every day. She would spend most of day in the Medical Centre. D1 also went to visit the Deceased for a few hours every afternoon. 19.On 20 January 2011, P returned to Hong Kong to visit the Deceased. Jonathan came back on 22 January 2011. 20.On or about 24 and 25 January 2011, the Deceased signed a handwritten document which P describes as a codicil (“the Codicil”). There are two signed copies: the first copy without any witness’ signature was in D2’s possession and had been produced as an exhibit; the second copy with the signatures of two witnesses was in P’s possession and had been filed to the Probate Registry. The content of the Codicil is as follows:
21.Ds claim that, on 26 January 2011, the Deceased signed another document (“the Chinese Declaration”) as follows:
22.P and Jonathan left Hong Kong on or about 26 January 2011. 23.On 9 February 2011, P wrote an email to D2 mentioning that they had a quarrel in the Medical Centre about 2 weeks ago. There was undoubtedly a quarrel between them on 26 January 2011. 24.Ds also claim that the Deceased gave a letter, which was dated 11 February 2011 and put inside an envelope, to her some time in February 2011 (“the 11/2/2011 Letter”). It reads as follows:
25.The Deceased died of stomach cancer on 12 March 2011 at the age of 82 at Queen Elizabeth Hospital. 26.On 12 June 2012, based on the Will and the Codicil, probate was granted to P by the Hong Kong Court under Grant No. HCAG001525/2012. F. THE ISSUES 27.This case concerns 3 subject matters. 28.First, P claims for the return of the antiques in the Pacific Flat. There is a dispute whether all of them are truly antiques. I shall simply describe them as artefacts. Ds’ case is that they were gifts given by the Deceased to D1. 29.Second, P claims for the return of the antiques (which, again, will be described as artefacts) in the Shanghai Flat. Ds’ case is that they belonged to D2 and her sister after the Deceased transferred the property into their joint names. 30.Third, P claims for the return of JPY3,000,000 which had been paid by AEC into D2’s bank account after the Deceased’s death. Ds’ case is that they were gifts given by the Deceased to D2. 31.Hence, in respect of all 3 subject matters, the question is whether they belonged to the Deceased at the time of his death, and hence, have become parts of his estate (as contended by P); or they already belonged to D1, D2 and Ting at the time when the Deceased died as a result of various gifts made to them during his lifetime (as contended by Ds). There are some related legal issues which I will explain below. G. THE LAW ON GIFTS 32.In short, as submitted by P, a perfect gift may be made by a transfer of the gifted asset to the donee, accompanied by an intention in the donor to make a gift; the donor has to have done everything necessary to be done which is within his own power to do in order to transfer the gifted asset to the donee (T Choithram SA v Pagarani [2001] 1 WLR 1 at 11D-E). 33.P cites Young Tin Kin Kenneth, the Executor and Trustee of the Will of Yang Shen Sum, deceased v Lau Lan Fong Nancy, HCA1545/2004 (6 September 2006, unreported) where DHCJ Muttrie considered the relevant legal principles in §§52-62. I have also considered Halsbury’s Laws of England (5th ed., 2014), vol. 52, §§201-270; and In re Cole, a bankrupt [1963] 1 Ch 175. For the present purpose, the relevant principles are as follows:
H. CREDIBILITY OF THE WITNESSES 34.At the trial, P, Choy and Jonathan (who were all in England) gave evidence via video-conferencing facilities for P’s case. On the other hand, D1, D2, Mok and Mr Jia Xiong Wu (解雄武) (“Jia”), a good friend of the Deceased, gave evidence for Ds’ case. (Although Ds have also produced statements made by 4 other witnesses, I shall ignore them as they have not been called to give evidence.) I have considered all evidence (both oral and written) given by the witnesses, and submissions made by the parties on the credibility of their evidence. 35.The general principles which the Court applies as to fact finding and the assessment of credibility are well established (e.g. Hui Cheung Fai v Daiwa Development Ltd, HCA1734/2009 (8 April 2014, unreported), §§76-83). Coleman J in §§53-62 of his recent judgment in Yu Man Fung Alice v Chiau Sing Chi Stephen [2020] HKCFI 2923 set out at length the principles on assessing evidence based on memory. I will not repeat those principles save that I would add the following observations. In applying these principles, it is vital to bear in mind the context. A dispute arising out of a family context (like this case) is very different from a dispute arising out of a commercial context. In the context of a traditional Chinese family, it is unlikely that family members would record their oral communications in writing. Things that have been said are very often repeated in not exactly the same language. As they would speak to one another regularly, it would be difficult to recall clearly the exact content, wording and other particulars of the oral conversations especially after a long passage of time. Further, the language used may be somewhat casual, reserved and imprecise. Different families of course have different stories. It is therefore crucial to bear in mind the background and personalities of the family members, as well as their relationship, at the material time. 36.In this case, both D1 and D2 rely on what the Deceased had purportedly said to them to support their case that the Deceased had made various gifts to them. I remind myself that extreme caution and great care are called for when assessing their allegations. In Yung Shu Wu v Vivienne Sung Wu (2011) 14 HKCFAR 39 at 66-67, §72, Lord Walker NPJ held that:
In re Silver Bell Uniform Ltd [2012] 1 HKLRD 719 at 730, §29, Fok JA (as he then was) described the principle as a “sensible and self-evident proposition of common sense”. He held earlier at pp 728-729, §27 that:
See also Halsbury’s Laws of England (5th ed., 2014), vol. 52, §§216-217. 37.I have no doubt that the Deceased was a kind gentleman who loved dearly all his wives and children. He was in a difficult position because he knew P did not accept his family in Taiwan (i.e. D1, D2 and her siblings). He had tried his best to maintain a harmonious relationship among them. Although he maintained regular contacts with P, the fact is P had left home and settled in England for a very long time. Jia, based on what he had been told by the Deceased, said that their relationship was “一般” and the Deceased felt that they were “格格不入”. It was plausible that the Deceased would not, and did not in fact, tell P everything in particular if the matter would likely lead to conflicts between P and Ds. I believe his relationship with D1 and D2 was much closer. D1 became his de facto wife at a very young age, and was the only one accompanying him after Chang passed away in 1996. D1 said that the Deceased treated her extremely well. D2 said that, even before the Deceased became ill in 2008, she would spend about half a year in Hong Kong with the Deceased. She closed her interior design business in Shanghai and settled in Hong Kong to look after the Deceased after he became ill. I have no doubt that she was extremely filial, and the Deceased loved and trusted her very much. 38.Before I turn to consider the evidence on specific issues, I would set out my overall impression and general observations on the witnesses:
I. THE ARTEFACTS IN THE PACIFIC FLAT 39.Pursuant to an order made by the Court at the Pre-trial Review, P confirmed that his case is that, at the time of the Deceased’s death, he had a total of 1205 pieces of artefacts in the Pacific Flat and the Shanghai Flat. He set out the particulars of these artefacts in 2 lists: the first list consists of 777 pieces with photos whereas the second list consists of 428 pieces without photos. 40.These 2 lists were prepared on the basis of a master list kept by P. P said that, since mid-1972, the Deceased instructed him to compile a list of artefacts acquired and kept by the Deceased. Initially, the record was handwritten in a notebook. Later on, he complied the record on computer. He said that, sometimes, he would update the list based on information provided by the Deceased by letters; but more often, he would do so whenever he returned to Hong Kong to visit the Deceased. The list had been updated to 2003 consisting of 1635 items. P said that, according to the master list, the Deceased should have about 1,700 pieces of artefacts by 2004. As the Deceased had shipped about 250 pieces to Singapore, and given him about 200 pieces in Hong Kong, there should be around 1,200 pieces in the possession of D1 and D2 in the Pacific Flat and the Shanghai Flat, and also one Mr Chen Lai Lin (陳來林) (“Chen”), a friend of the Deceased, in Shanghai. 41.P said that he had been to the Pacific Flat on 2 consecutive days in December 2007 or January 2008. He only stayed there for about 10 minutes each time. Hence, although he could see that there were artefacts in the flat, he did not have the time and chance to count or make any record. 42.In the Schedule of Assets and Liabilities dated 8 June 2012, P stated that the Deceased’s assets included “500 pieces of tall antique display cabins, Chinese antiques, jade sculptures and statures, ivory carvings/statures, rose quartz carvings/statures, clear nature crystal carvings/statures, lapis lazuli cravings/statures, coral carvings/sculptures, malachite carvings/sculptures and antiques and artifacts at the [Pacific Flat].” P explained in Court that the “500 pieces” were meant to refer to artefacts in his possession but not those in the Pacific Flat. This is a very strained, and strange, interpretation of the statement. I believe when he made the schedule, he did not have any clear idea about the quantity of artefacts in the Pacific Flat and hence, he only gave a guesstimate. 43.On 25 June 2019, in reply to P’s interrogatories, D1 and D2 made affirmations stating that the Deceased had given D1 32 pieces of artefacts but they could not confirm whether they are among the 1205 pieces claimed by P. On 7 September 2019, D2 made a supplemental affirmation reaffirmed what they stated in their previous affirmation. The evidence given by them in Court reveals that, in fact, there are now more than 32 pieces of artefacts in the Pacific Flat. There should be a few hundreds, but the exact number is unclear. D2 explained that they believed they were being asked to confirm how many pieces had been given to D1 as gifts, which she understood to be referring to objects the acquisition of which D1 had played no part at all. She said the Deceased and D1 would go to buy artefacts from time to time together. They had apparently not included those artefacts in their affirmations. P critcises that Ds should know that this was not the question they were being asked, in particular, they were asked to particularize all those artefacts which had been moved to the Pacific Flat; and they made false statements in their affirmations deliberately. However, I note that P has never suggested before that Ds had failed to answer the interrogatories properly. Ds were not legally represented, and it was plausible that they did not understand the interrogatories properly. I accept that Ds did not make untrue statements intentionally in their affirmations. 44.On the evidence, it is unclear what and how many artefacts were in the Pacific Flat when the Deceased passed away. Nevertheless, it seems that, ever since some artefacts had been moved to the Pacific Flat shortly after the acquisition thereof by the Deceased on 25 September 2007, they have remained there up to the present. 45.It is vital to consider why the Deceased bought the Pacific Flat and put it under the joint names of himself and D1. Before that, and when Chang was alive, D1 would need to stay in hotels when she came to visit the Deceased in Hong Kong. After Chang passed away, D1 and her children would live in the Windsor Flat when they came to Hong Kong. However, whenever P came back to visit the Deceased, they had to move out temporarily. The Deceased felt sorry that D1 had to act in such manner, and hence, decided to buy the Pacific Flat. I have no doubt that the Deceased intended that the Pacific Flat shall be the home of D1 where she could use and stay in her own right. 46.Most importantly, D1 said that after acquiring the Pacific Flat and completing the refurbishment work, the Deceased directed his son, Hao Chuan, to move some of the artefacts from the Windsor Flat to the Pacific Flat. The whole process took about 3 weeks. On one day, the Deceased told her that:
47.If D1’s evidence in this respect is accepted, there should be little doubt that the Deceased had made a valid gift of all those artefacts, which had been moved to the Pacific Flat at his direction, to D1. The big question is whether her evidence should be believed. 48.To begin with, the absence of any contemporaneous record of the gift is hardly surprising. On the contrary, I would have found it rather strange and unnatural if there was any such written record. 49.P argues that the Deceased moved some of the artefacts to the Pacific Flat merely because the Windsor Flat was crammed with too many artefacts; hence, the Deceased moved some of them to the Pacific Flat for storage only. I have no doubt that the Deceased had kept a large quantity of artefacts in the Windsor Flat, which was a fact confirmed by Jia. I would agree that the effect of moving some of the artefacts to the Pacific Flat was that the Windsor flat would become less crammed with artefacts, and hence more spacious. I am also prepared to accept that maybe this was one of the reasons why the Deceased decided to move some of them to the Pacific Flat. However, I am not satisfied that this was the only, or the main, reason. D2 pointed out that the Windsor Flat was more than 1,000 sq. ft. whereas the Pacific Flat was much smaller with an area of about 600 sq. ft. only. There is no evidence that the Deceased was unhappy about keeping so many artefacts in the Windsor Flat. Further, the Deceased intended to continue to live in the Windsor Flat most of the time even after the acquisition of the Pacific Flat (which was in fact what happened). It is also necessary to bear in mind the reason why the Deceased bought the Pacific Flat as mentioned above. In the circumstances, I take the view that it was inherently likely that the Deceased moved some of the artefacts to the Pacific Flat deliberately with the intention of giving them as gifts to D1. This is indeed what a loving husband would very often do: to fill a flat bought for his wife with furniture and objects which he intended would also belong to his wife. I have no doubt whatsoever that the Deceased loved D1 very much. In an email dated 25 April 2011 to P, D2 stated that D1 had once saved P from being imprisoned, and even his life, in Taiwan more than 40 years ago. They had been together since D1 was very young for more than four decades by the time the Deceased bought the Pacific Flat. D1 also said that some artefacts in her home in Taiwan were also given to her by the Deceased as gifts. Having said all these, I still need to consider what happened subsequently before I can decide whether I should accept D1’s evidence. 50.The Deceased did not refer to any artefact in the Will, but P relies heavily on the Codicil. P admitted that it was his idea to ask the Deceased to sign the Codicil. The Will did not refer specifically to any artefact at all. P returned to Hong Kong on 20 January 2011 to see the Deceased at the Medical Centre. He said that, on 21 January 2011, the Deceased told him that he could start to collect the artefacts in the Pacific Flat and the Shanghai Flat. However, on 22 January 2011, when he told D2 that he wished to collect them at a convenient time, D2 replied that they had nothing to do with her and said words to the effect that they all belonged to D1. He then said he would seek clarifications from the Deceased. Hence, on 23 January 2011, he explained the difficulty to the Deceased, and the Deceased agreed to sign a document to confirm his intention. On 24 January 2011, he produced to the Deceased a duplicate of the Codicil. After he explained its content to the Deceased, the Deceased signed on it. On 25 January 2011, he brought another duplicate of the Codicil and asked the Deceased to sign again. The content was the same except the date. He explained that it was more appropriate if the Deceased could sign it in the presence of two witnesses, namely, Madam Ki Noh Chun (祁糯珍) (“Ki”) and Jonathan. He explained the content of the Codicil again to the Deceased in the presence of Ki and his son. After that, the Deceased, Ki and his son signed on the document. 51.P said in his witness statement that he had destroyed the first duplicate of the Codicil dated 24 January 2011 which had been signed by the Deceased on 24 January 2011. This cannot be true. D2 has produced a copy of the Codicil signed by the Deceased without any witness’ signature, which was also dated 25 January 2011 (not 24 January 2011). D2 said P gave this document to her on 26 January 2011. 52.In any event, it is clear that P intended to use the Codicil to remove any potential ambiguity in the Will in this respect, and to make it clear that the Deceased had agreed to give all his artefacts wherever situate to P. It is therefore necessary to construe the meaning of the Codicil. In law, when construing such a unilateral document, the same objective approach as what the Court would adopt in construing a contract applies equally. In Ming Shiu Chung & Others v Ming Shiu Sum & Others (2006) 9 HKCFAR 334 at 358-359, Ribeiro PJ held that:
53.Objectively construed, the content of the Codicil is reasonably clear. First, the Deceased stated that all artefacts in the Pacific Flat and the Shanghai Flat belonged to him. Second, the Deceased authorised P to collect them at any time; and stated that, after P had collected them, they would all belong to P. 54.There is no dispute that the Deceased had signed on the two copies of the Codicil. In law, a person is bound by a document signed by him unless there are some vitiating factors (which must be pleaded and proved); it does not matter that he does not even know the content of the document (Ming Shiu Chung & Others v Ming Shiu Sum & Others (2006) 9 HKCFAR 334 at 361J-365I, §§84-90, per Ribeiro PJ). 55.D2 is adamant that the content of the Codicil could not possibly reflect the Deceased’s true intention. However, she was not present when the Deceased signed on the two copies of the Codicil. But she said that, on 25 January 2011, when she saw the Deceased after P left the Medical Centre, he appeared to be distressed and had soiled the bed. 56.Jonathan returned to Hong Kong on 22 January 2011, and visited the Deceased for 3 consecutive days on 23 to 25 January 2011. He gave evidence to corroborate what P said in this respect. He has also taken some video clips of the Deceased by his i-phone showing the Deceased signing on the Codicil. However, there was no voice recording. I cannot tell exactly what P or the others present had said to the Deceased. I can only say that, from what I can observe from the video clips, the Deceased appeared to be very sad. I also note from the video clips that a photo of Chang was put next to the Codicil. P said that he brought the photo because the Deceased told him he missed Chang. I am, however, under a distinct impression that the photo was placed next to the Codicil intentionally. P said that, at that time, although the Deceased was physically weak, his memory was sound and normal, and he was mentally sound. Such evidence is curious bearing in mind that, in his emails written to D2 in 2010 mentioned above, he had expressed concerns about the memory and mental condition of the Deceased. Knowing that the Codicil was intended to be an important document, he had not arranged lawyers or doctors to witness the Deceased’s execution thereof. I have reservations whether P had told me the whole truth as to the circumstances in which he persuaded the Deceased to sign the Codicil. I believe that P must have tried hard to persuade the Deceased to sign the document. Having said that, there is insufficient evidence to prove that the Deceased’s execution of the Codicil was procured by any undue influence exerted by P. 57.Nevertheless, even though no vitiating factor has been proved and the Codicil appears to be a document binding on Deceased, this is not the end of the matter. It is crucial to discern the true object or purpose of ascertaining the meaning of the Codicil (Ming Shiu Chung & Others v Ming Shiu Sum & Others (2006) 9 HKCFAR 334 at 359, §§74-75). P’s case is that it operates and has the legal effect of a codicil. I disagree. I take the view that this document is not a codicil properly-so-called. A codicil is of similar nature to a will as regards both its purposes and the formalities relating to it, but in general, it is supplemental to and considered as annexed to a will previously made, being executed for the purpose of adding to, varying or revoking the provisions of that will (Halsbury’s Laws of England (2016), vol. 102, §§1-2, pp 9-10). However, in order to constitute a testamentary instrument, it must be for the purpose of making dispositions of property to take effect on or after the testator’s death. Here, the Deceased purported to authorize P to collect the artefacts at any time, and stated P shall be become the owner once they were collected. The phrase “at any time” (隨時) implies that the Deceased intended that P may collect the artefacts immediately during his lifetime. As mentioned, this is what P intended to do in fact. An instrument which comes into operation in the settlor’s lifetime is not testamentary. 58.It seems possible to construe the Codicil as a power of attorney whereby the Deceased conferred the authority on P to collect the artefacts on his behalf, coupled with a declaration of future gift of such artefacts to P. Nevertheless, irrespective of what the legal effect of the Codicil is (if any), and even if it is a codicil properly-so-called, it cannot be used to set aside any earlier legally binding acts of the Deceased. To be more specific, if, as Ds contend, the Deceased had already given the artefacts in both the Pacific Flat and the Shanghai Flat to them as gifts, the Deceased would not be entitled to revoke the gifts in whatever manner. 59.The true significance of the Codicil concerns the credibility of the parties’ respective case. Not surprisingly, P relies heavily on it because its content is inconsistent with Ds’ suggestion that the Deceased had already given the artefacts to them as gifts; and having signed the Codicil in the absence of proof of any vitiating factor, there must be a strong argument that the Deceased had knowingly and voluntarily acknowledged the correctness and truthfulness of its content. However, there was another possibility. Although the Deceased had already given the artefacts as gifts to Ds, P managed to persuade him to take back the gifts, and give them to him instead. P said in Court that the Deceased was “耳仔軟” and could be persuaded easily to change his mind. The Codicil is not a piece of conclusive evidence supporting P’s case. It is important to move on to consider what happened soon after the Deceased signed the Codicil. 60.P claims that, on the next day i.e. 26 January 2011, P provided D2 with a copy of the Codicil in the presence of the Deceased, who confirmed having signed the same. P demanded D2 to return the artefacts immediately but D2 refused, and said she could ask the Deceased to sign yet another document. On the other hand, D2 said P lost his temper and yelled loudly at her. Seeing what happened, the Deceased cried. I am sure that there was a quarrel in the Medical Centre on that day as P referred to it in his email dated 9 February 2011. I am also sure that the quarrel touched upon the artefacts and other financial matters. However, I am not sure what exactly each party had said to the other. 61.What is far more important is that Ds state that the Deceased signed the Chinese Declaration on 26 January 2011. D2 said that she kept the copy Codicil given by P in a drawer close to the Deceased’s bed in the Medical Centre. D2 said the Deceased would be sober for short periods of time only, usually after taking showers or having meals. After taking shower on 26 January 2011 (which must be after the quarrel between P and D2), the Deceased asked her to take out and read to him the Codicil. He then dictated the content of the Chinese Declaration to D2, and asked her to write on a piece of paper. D2 wrote the Chinese Declaration accordingly. The Deceased then signed on it. After that, D2 put the Chinese Declaration together with the copy Codicil back into the drawer. 62.P challenges both the authenticity and validity of the Chinese Declaration, which was only disclosed formally on 4 July 2017 to P’s solicitors. He said D2 only mentioned about it in April 2011 after the Deceased’s burial. D2 explained that P left Hong Kong soon after the quarrel in the morning on 26 January 2011; and she had not thought about the matter further after putting the documents in the drawer. P asserted in Court that the Deceased’s signature on the document was forged. It is an utmost serious allegation which must be proved by cogent evidence. There is no such evidence. I have no difficulty in holding that the Deceased’s signature was genuine. P’s counsel, adopting a more realistic approach, argued that D2 induced the Deceased to sign the document but he did not in fact know its content. As mentioned, to challenge a signed document, vitiating factors must be pleaded and proved. P was not present, and has no direct knowledge, of the matter. I have reminded myself that I must be very cautious in considering D2’s evidence on this point when the only person who could confirm the truthfulness of her evidence had passed away (i.e. the Deceased). I decide to accept her evidence. 63.P submits that, in any event, the first sentence of the Chinese Declaration is ambiguous because it merely stated that, after the Deceased died, all artefacts that he had moved to the Pacific Flat should remain there and nobody should take them away. He argues that this would mean that even D1 cannot take them away. Such a literal interpretation does not make sense and must be wrong. This is indeed a point against P. Had D2 intended to make a false document to defeat the purpose of the Codicil, one would have thought that she could have easily used clearer language, for example, by stating expressly that all artefacts in the Pacific Flat belonged or should belong to D1; and she would have also dealt with the artefacts in the Shanghai Flat as well (which were not mentioned in the Chinese Declaration). I believe what happened was that D2 simply wrote down faithfully what the Deceased dictated to her. 64.The Chinese Declaration has not been produced as a testamentary instrument. Its true significance is that it is a piece of contemporaneous document evincing the Deceased’s intention and state of mind at the material time. Again, it is therefore necessary to construe the document objectively. I have already rejected the literal interpretation adopted by P. When construing the document, in particular, the words chosen by the Deceased, one should bear in mind the rather difficult situation he was facing at that time. He was aware that there were heated arguments concerning the artefacts between his children whom he all loved. It is most natural that he would choose the language carefully which should make his intention clear enough but at the same time, not escalate the conflicts between P and Ds insofar as possible. Looking at the matter from this perspective, I take the view that the message that the Deceased intended to convey is clear. He stated expressly that the artefacts in the Pacific Flat should remain where they were after he died. To his knowledge, the Pacific Flat, held by him and D1 as joint tenants, would belong to D1 solely after he passed away. By stating that the artefacts should remain in the Pacific Flat after he died, he was confirming his intention that they belonged, or should belong, to D1. When he directed that nobody should take them away, I have no doubt that he had P in mind bearing in mind that the document was prepared in response to the Codicil he signed the day before and he knew well that P was trying to collect the artefacts in the Pacific Flat. Nobody other than P had expressed any intention to take away the artefacts in the Pacific Flat. I take the view that the Deceased signed the Chinese Declaration because he wanted to revoke the authority given to P to collect the artefacts in the Pacific Flat, as well as the purported future gift to P, in the Codicil which he signed on the previous day. 65.The next important event is that, D2 said that, subsequently, the Deceased gave the 11/2/2011 Letter, put inside an envelope addressed to P and signed by the Deceased at the back, to her. Again, P challenges both the authenticity and validity of the 11/2/2011 Letter, which was only disclosed formally on 18 July 2017 to P’s solicitors. There is no cogent evidence that the Deceased’s signature on the document was forged. As to the allegation that D2 induced the Deceased to sign the document when he did not know or agree to its content, P does not have any direct evidence proving such allegation. I have reminded myself yet again that I must assess D2’s evidence on this document with great care. I have decided to accept her evidence. It is not her case that she prepared the document. Indeed, she said she did not know who assisted the Deceased to prepare it. P was addressed as “弟弟” in the letter, which P admitted to be his nickname used by the Deceased. The letter contained the Deceased’s exhortations to P. If this was a false document produced by D2, some of these exhortations would not have been necessary. It should be noted that the letter referred to artefacts in Singapore, the Pacific Flat and the Shanghai Flat. P never suggested that D2 wanted to claim the artefacts in Singapore from him. There was no apparent reason why, if it was a false document drafted by D2, she had to mention the artefacts in Singapore at all. In addition, it was merely stated that it was the Deceased’s decision to put (放置) the artefacts in those places. Again, one would have thought that clearer language spelling out who was or should be the owner would and could have been used had the document been prepared falsely by D2. In fact, when the Deceased had already signed the Chinese Declaration on 26 January 2011 (which P claims to be false as well), there was no conceivable need for D2 to prepare yet another false document, in particular, about the artefacts in the Pacific Flat. The first sentence of the letter referred to a “mail” written by P to D2. It must be a reference to the email dated 9 February 2011. D2 said, which I accept, that from time to time, the Deceased would ask her to read emails exchanged between P and her to him. This matches with the date of the letter i.e. 11 February 2011, which was 2 days after the said email. P pointed out that D2 said in her Defence that the Deceased gave her the 11/2/2011 Letter before the Chinese New Year but the Chinese New Year in 2011 was in fact before 11 February 2011. I accept D2’s explanation that she could not recall the date clearly. Her main concern at that time was to take care of the Deceased. And she was asked to recall what happened many years later. It is understandable why she made such an inadvertent mistake in this respect. P also questions why D2 did not give the 11/2/2011 Letter to him immediately when it was addressed to him. I accept D2’s explanation that she had put the letter together with the copy Codicil and the Chinese Declaration in the drawer at the Medical Centre and did not think about it further before the Deceased died as she was concentrating on taking care of the Deceased at that time. It is also necessary to bear in mind that, by then, P had returned to England. 66.The 11/2/2011 Letter is a just a letter not intended to have any legal effect. Like the Chinese Declaration, its significance lies in the fact that it is a piece of contemporaneous document evincing the Deceased’ intention and state of mind. Construing the document objectively, the most important point is the Deceased’s statement that it was his decision to place the artefacts in various places i.e. Singapore, the Pacific Flat and Shanghai, and his hope that P would obey his arrangement. Although he simply used the phrase “放置”, what he clearly meant must be that he intended that the artefacts should stay with, and belong to, the owners or occupiers of the real properties where they had been placed. 67.P also argues that the Deceased had already given a large amount of assets to Ds. It is not for the Court to decide whether the Deceased’s distribution of assets during his lifetime and upon his death was fair, which would be a subjective question depending largely on from whose perspective one is considering the matter. Insofar it is suggested that it was inherently improbable that the Deceased would have given such a substantial quantity of artefacts to D1 as gifts, I do not agree. First, although P pleaded that the estimated value of the artefacts in the Pacific Flat and the Shanghai Flat was in a total sum of about HK$40 million, he had not produced any evidence to substantiate his estimate. At the Pre-trial Review, he abandoned his claim for the sum of HK$40 million in lieu of delivery of the artefacts. Second, apart from the artefacts in Singapore (which I will mention in more detail later), P had been given all the artefacts (the value thereof is unknown) remaining in the Windsor Flat. One must also not forget that he got the Windsor Flat which is much larger than the Pacific Flat. 68.P also argues that Ds should have asked the Deceased to sign a clear written document to confirm his gifts (including the artefacts in the Pacific Flat and Shanghai Flat, and also the trade debts owed by AEC to Golden Arts) when they realized that P was disputing the same by January 2011. D2 explained that, when the dispute arose in January 2011, the Deceased was critically ill. She concentrated on taking care of him, and never thought that P would start a litigation. It had not occurred to her that she would need to prepare any written record of the gifts given by the Deceased. I accept her evidence. 69.For all the above reasons, I believe and accept Ds’ case that the Deceased had given all the artefacts in the Pacific Flat to D1 as gifts. I have considered whether D1 became the sole owner of those artefacts as a result. After they had been moved to the Pacific Flat, the Deceased continued to enjoy the possession thereof by studying them, and showing them to his friends. The Chinese Declaration and the 11/2/2011 Letter may suggest that the Deceased believed that he still had the power to dispose of the artefacts. D1 said in Court that, had the Deceased wanted to sell some of them, she would not object. On the other hand, she said more than once that the Deceased said to her words to the effect that: “Yours is yours and mine is also yours” (您的是您的, 我的也是您的). This is again what a loving and generous husband would say to his wife. I am inclined to the view the Deceased intended to give the artefacts to D1 as the sole beneficial owner, but knowing that she would allow him to continue to enjoy them and would respect his wish if he wanted to deal with them in some other ways later. The Deceased cannot be expected to know that, in law, a gift, once completed, is irrevocable. Moreover, although it is impermissible to revoke a complete gift, there is nothing to stop the donee from returning the gift to the donor subsequently and voluntarily. In law, this would just be a new gift from the donee back to the donor. An alternative analysis is that, after the Deceased gave the artefacts to D1, he remained as one of the owners with the intention that D1 would become the sole owner automatically upon his death. In other words, the Deceased and D1 became joint tenants of those artefacts. Joint ownership of chattels as joint tenants is viable in law (Palmer and McKendrick, Interests in Goods (2nd, ed., 1998), chapter 10, pp 251-255). In the case of joint tenancy, the parties have the right of survivorship i.e. when one of the joint tenants dies, his interest in the joint chattel automatically accrues to the surviving party. If this is the correct analysis, D1 would have become the sole owner of the artefacts in the Pacific Flat automatically upon the Deceased’s death. For the present purpose, it does not matter which analysis is correct i.e. whether D1 became the sole owner or a joint-tenant together with the Deceased after the Deceased gave the artefacts to her. What is crucial is that, under both analyses, the artefacts in the Pacific Flat did not belong to the estate of the Deceased. J. THE ARTEFACTS IN THE SHANGHAI FLAT 70.To begin with, P is claiming for the return of objects outside Hong Kong. The legal question is whether he has the right to do so. 71.P relies on Chang Wing Ka John v Chang Wing Dee and others [2021] HKCFI 47 whereby DHCJ To held in §225:
72.P has missed the point. As stated in Williams, Mortimer and Sunnucks on Executors, Administrators and Probate (21st ed., 2018), §43-30 at pp 747-748:
In Dicey, Morris and Collins on The Conflict of Laws (15th ed., 2012), the authors state at §26-023, pp 1401-1402:
And at §26-077, p 1403:
73.The question is not whether the Hong Kong Court has jurisdiction over D2 (which is not in dispute). The problem is that the probate granted by the Hong Kong Court does not extend to the Deceased’s assets outside Hong Kong; and the Hong Kong grant does not give P any authority to collect the Deceased’s assets in the Mainland, or to compel delivery thereof to him. There is no evidence that P has obtained probate of the Will in the Mainland. 74.An additional problem is that P has not joined Ting as a defendant. On the evidence, Ting, as one of the joint tenants of the Shanghai Flat, is also in possession of the artefacts in the flat. 75.In Young Tin Kin Kenneth, the Executor and Trustee of the Will of Yang Shen Sum, deceased v Lau Lan Fong Nancy, HCA1545/2004 (6 September 2006, unreported), DHCJ Muttrie granted a declaration that “the Collection, which then consisted of those 75 pieces plus two more kept at the residence of Master Yang in Vancouver was the property of Mr Yang at the date of death”; this relief was made at the request of the Canadian lawyers handling probate of the Canadian property of the deceased (§20). Here, P seeks various orders including the delivery of the Shanghai artefacts (to be identified by an affirmation) to him or make them available for collection in Hong Kong. He is not seeking a mere declaration that the artefacts in the Shanghai Flat belonged to the Deceased at the time of his death. For the above legal reasons, P’s claim in this respect should be dismissed. Nevertheless, for the sake of completeness, I shall go on to consider whether the artefacts in the Shanghai Flat were a part of the Deceased’s estate. 76.First, there is no dispute that there are some artefacts in the Shanghai Flat. On about 21 March 2010, P and the Deceased went to Shanghai. The Deceased took P to the Shanghai Flat when D2 and Ting were not there. On that occasion, P took photos of the artefacts in the Shanghai Flat. For the present purpose, it is unnecessary to identify what and how many artefacts there were in the Shanghai Flat. 77.P claims that, in about 2007, Chen, a friend of the Deceased mentioned above, tried to persuade the Deceased to jointly open an antique shop in Shanghai. Therefore, the Deceased shipped a significant number of antiques to Shanghai for such purpose. Most, if not all, of those antiques had been stored in the Shanghai Flat. Both P and D2 opposed the idea of opening an antique shop. As a result, the Deceased gave up the idea. In an email from D2 to P dated 2 September 2009, D2 said that the Deceased had a new idea of opening an antique shop in Shanghai but no one agreed in view of his health and personality. In the circumstances, P contends that the Deceased merely stored the artefacts in the Shanghai Flat in anticipation of opening an antique shop. Hence, they remained his property which became a part of his estate upon his death. 78.D2 merely stated in her Defence that the artefacts in the Shanghai Flat belonged to her and her sister. She stated in her affirmation dated 25 June 2019 that the Shanghai Flat did not contain anything belonging to the Deceased’s estate. She had not explained why she said they belonged to her and her sister. 79.Having said that, D2 said in Court that at around the time the Shanghai Flat was transferred to the joint names of D2 and her sister on 12 October 2009, the Deceased said that all things inside the flat would belong to them and would have nothing to do with him (in Chinese, words to the effect that “房子內的東西都是妳們倆姊妹的, 不關我的事了”). 80.P complains that it is not open to Ds to run an alternative case of gift, which has not been pleaded. First, D2 has not run any inconsistent case in the alternative: what happened is simply that she clarified in Court the basis on which she pleaded that the artefacts in the Shanghai Flat belonged to her and her sister. Second, P has not requested D2 to provide further and better particulars of her Defence; and there is no suggestion that he has suffered any prejudice. As D2 is not legally represented, she would not know that she ought to have pleaded the gift in the Defence. Further, D2 seems to disagree that the artefacts in the Shanghai Flat should be described as “gifts”; she said that the flat was transferred to her and her sister as a sale. This may well be why she did not plead “gift” expressly. Nevertheless, it is for the Court to assess the evidence objectively to see whether the artefacts were gifts from the Deceased. This would depend on whether I accept D2’s evidence. 81.P points out that, according to an email written by D2 to him dated 7 March 2010, the possibility of opening an antique shop in Shanghai was still on the table. In that email, she merely informed P that she would go to Shanghai and expected that Chen would talk to her about opening an antique shop; she said she disagreed with the proposal and asked P’s permission to reject such proposal in his name. In an email dated 31 July 2010, P told D2 that she should just tell Chen that they did not want to bid or sell any antique as their main concern was the Deceased’s health; P also talked about collecting antiques left by the Deceased with Chen. In these emails, there was no suggestion that, at that time, the Deceased wanted to use any of the artefacts in the Shanghai Flat to open an antique shop. There was no reference to those artefacts at all. The focus was on how to reject Chen’s proposal, ascertain whether Chen was in possession of Deceased’s artefacts, and take them back if any. These emails are not inconsistent with Ds’ case. 82.In fact, this was not the first time that the Deceased gave artefacts to his children as gifts, which were initially intended to be used to open an antique shop after he abandoned such plan. As mentioned, P and Choy lived in Singapore between 1995 and 2003. They said that, in about 1996, the Deceased planned to open an antique shop in Singapore. Hence, in about 1997, the Deceased shipped about 250 pieces of antiques to their home at Singapore. However, after doing studies and researches for about 2 years, they concluded that it would not be a viable business and they also did not have the time to run such a business. They informed the Deceased accordingly. The Deceased then decided to give up the idea. Notwithstanding that, in about 2001 or 2003, when the Deceased visited Singapore, the Deceased told them that P could keep the antiques in Singapore as gifts. 83.P relies on the Codicil which referred to the artefacts in the Shanghai Flat. He challenges the 11/2/2011 Letter (in which the Deceased said it was his decision to place the artefacts in the Shanghai Flat), and repeats the criticisms that he has made in relation to Ds’ case concerning the artefacts in the Pacific Flat. Suffice for me to say that, for reasons I gave above, I reject all these criticisms and accept D2’s evidence in this respect. 84.All in all, I accept that, when the Deceased transferred the Shanghai Flat to D2 and her sister, he made a gift of all the artefacts inside the flat to them. There was a change in possession of those artefacts because, before the transfer, he was one of the co-owners having the right to possession of the flat and hence, the objects inside; but by transferring his share to Ting, he gave up his right to possession to both the flat and the objects inside. Accordingly, there was a complete gift of the artefacts inside the flat. It follows that the artefacts in the Shanghai Flat no longer belonged to the Deceased when he died. K. THE JPY3,000,000 PAID BY AEC 85.There is no dispute that AEC remitted a total sum of JPY3,000,000 into D2’s personal bank account (no. 012-922-92939938) held with Bank of China (Hong Kong) Limited between 22 March 2011 and 12 April 2012 as follows.
86.D2’s case is that the Deceased had given his business to her, including all trade receivables, as a gift. P contends that D2 gave different versions, and her case is contradicted by contemporaneous documents. 87.What is not in serious dispute is that, sometime after the Deceased became ill, D2 became the one actually running the business of Golden Arts. D2 said that, after July 2008 when the Deceased had been diagnosed as suffering from cancer, he asked her to manage his business. On the other hand, P said that, since about June 2009 after Lu left, the Deceased had entrusted D2 to assist in running his business. 88.It appears that there was a meeting in late November 2008 (after the Deceased learnt that he was suffering from cancer) at which the Deceased told Sato that he would hand over the business to D2. In an email dated 2 April 2011 (“the 2/4/2010 Email”), Mok informed P that:
89.Neither D1 nor D2 referred to this incident specifically in their Defence or witness statements. But D2 confirmed in Court that there was in fact such a meeting in November 2008. 90.In Ds’ Defence and witness statements, they put the focus on what happened in December 2009. They said that in December 2009, D2 had a miscarriage. D1 said in her witness statement that, after learning that, the Deceased said to her that:
She then asked him:
The Deceased then replied:
91.Pausing here, it is noteworthy that, D1 had in fact confirmed that, to her knowledge, when the Deceased started to become ill, he had already told Sato that D2 would take over (接手) Golden Arts. This is entirely consistent with, and supports, the existence of the meeting in November 2008 mentioned above. D1 was not suggesting that it was only in December 2009 that the Deceased said for the first time that he would give his business to D2. He merely reminded D1 of his decision; and in effect, explained why, after D2’s miscarriage, there was more the reason to justify giving the business to D2. I do not accept that there is any material inconsistency in Ds’ case as alleged by P. 92.P also argues that there is another inconsistency in Ds’ case. In D1’s witness statement, she went on to say that:
In contrast, in D2’s Defence, she stated that, in late 2009, not 2010, the Deceased gave the JET raw materials, finished products and semi-finished products to her. P argues that D1 changed the time to 2010 in her witness statement after P disclosed an email dated 14 May 2010, which showed that, by May 2010, the Deceased was still in control of the business; and hence, it could not be true that the business had already been given to her in late 2009 as pleaded in D2’s Defence 93.It must be true that D2 had a miscarriage in December 2009 because she mentioned this in her email to P dated 7 March 2010. I do not see any real inconsistency between D2’s Defence and D1’s witness statement. D1 was not involved in Golden Arts. She was simply saying that she only repeated to D2 what the Deceased had said her in October 2010, but not immediately after her conversation with the Deceased in December 2009. If one considers her evidence in this respect as a whole, it is clear that she was not saying that the Deceased only decided to give his business to her in December 2010. I accept D2’s evidence that the Deceased often repeated what he said. And even if there may be some inconsistencies on the relevant dates given by D1 and D2, I believe they were caused by genuine difficulties in recollection rather than any intention to lie deliberately. 94.P also points out that, in D2’s witness statement, she stated that, on a day in early 2010, the Deceased called Sato and told him that AEC should remit monies to D2’s bank account, and she was shocked upon hearing that. P submits that, if the business had already been given to her, there was no reason why she was shocked. D2 explained that she was shocked by the Deceased’s direction that Sato should remit the monies to her bank account. She knew by then that P was very concerned about the accounts of Golden Arts, and she feared that P would raise serious disputes if he found out that she had taken over the business and received the monies derived from the business. She said that she managed to persuade the Deceased that the monies should be remitted to the Deceased’s personal account, and only in an emergency, she would inform Sato to change the account. She further said that she was an authorised signatory of the Deceased’s bank account, and the Deceased allowed her to deal with the monies in the account as she wished. Hence, it did not make any real difference to her. For these reasons, up to the Deceased’s death, AEC continued to pay trade debts owed to Golden Arts into the Deceased’s personal account. This explains why, notwithstanding that the Deceased had already given his business to her, the trade debts were only paid to D2’s account after the Deceased’s death. I accept D2’s evidence in this respect. 95.P relies heavily on the email dated 14 May 2010 from D2 to P. In that email, D2 said that the Deceased insisted on taking an order from AEC; the Deceased allowed her to take care of the matter upon her promise that the payment from this order would be remitted to the Deceased’s account. D2 explained that P would be upset if he knew that the Deceased had given his business to her, and would probably confront the Deceased on this. She wrote the letter in such manner solely to avoid any potential conflict between the Deceased and P. P also referred to some earlier emails in late April 2010 and subsequent emails in July to December 2010 in which he asked about the business of Golden Arts; and D2 provided answers and sought his views. He claimed that D2 would not have written in such manner if the Deceased had already given the business to her. D2 gave the same explanation, which I accept i.e. she wished to avoid any potential conflicts between the Deceased and P. 96.On 1 December 2010, P wrote an email to Sato. He said that he had met Sato a few times, and the last time was about 10 years before that. He wanted to have a meeting with Sato to discuss future business plan. In an email dated 8 December 2010, P told D2 that Sato had not replied to his email. In another email dated 23 December 2010, P repeated to D2 that Sato had not replied to him. According to emails on 5 January 2011, Sato apparently had not received P’s email, and P said he would re-send it. In an email dated 9 February 2011, Mok informed P that Sato would only be free after 20 March 2011 and he could not reply to P’s email in English. The Deceased passed away on 12 March 2010. P did not meet Sato before the Deceased’s death. 97.As mentioned, from 22 March 2011 to 12 April 2012, AEC paid a total sum of JPY3,000,000 to D2. There is no dispute that that these payments were made at D2’s direction to Sato. 98.Sato came to Hong Kong to attend the Deceased’s funeral on 11 April 2010. Shortly before that, on 2 April 2010, Mok sent the 2/4/2010 Email to P. This email is important because it was written at a time before P found out the payments to D2 and when there was not yet any dispute between P and D2 in this respect. As mentioned, in that email, Mok referred to the meeting in November 2008 at which the Deceased told Sato that he would hand over his business to D2. 99.It is unclear when P ultimately met Sato, and what had been said when they met. Nevertheless, P discovered about the payments from AEC to D2 by about July 2011. On 16 July 2011, P exchange a few emails with Mok on this matter. First, P said that Sato told him that D2 asked him to settle all outstanding payments through a different account; he requested D2 to tell him the truth; and he would ask Sato to suspend all payments. Mok replied that:
100.P was unhappy with the reply and complained that D2 lied to him. Mok then told P that:
101.Mok has not been cross examined on the 2/4/2011 Email or those exchanged with P on 17 July 2011. I accept that what Mok said in those emails represents the truth. 102.The Deceased’s business was terminated upon his death. The registration was cancelled on 6 July 2011. 103.On 23 June 2011, D2 commenced a business also called Golden Arts & Crafts Co (源浩行). P argues that D2 set up this company to deceive AEC into transferring monies to her. This cannot be true as the transfer of monies started in March 2011 and finished in April 2011 before D2 commenced her business. 104.It appears that D2 and Sato had a meeting in Hong Kong on 5 March 2012. According to a memorandum signed by them, they agreed that the order in April 2010 should be dealt with separately from the previous trade debts; that particular order involved a sum of about JPY7,000,000, and Sato agreed to pay at least JPY500,000 a month. In another letter dated 10 March 2012, Sato said that he was in a difficult position as both P and D2 were the children of the Deceased; he had reported to P about the sums owed to Golden Arts at P’s request; and he would pay each of them JPY250,000 each. These documents came into existence after Sato learnt that a dispute between P and D2 had arisen; and their content is not entirely clear. They do not provide mush help in resolving the real issue. 105.By a letter dated 10 March 2014, P, through solicitors, asked Sato to provide the particulars of the JPY3,000,000 he had paid to D2. For reasons unknown to me, Sato replied only after more than one year by a letter in Japanese dated 28 December 2015. The Chinese translation of the letter provides, inter alia, that:
106.P relies heavily on the phrase “代办”, which suggests that D2 was merely entrusted by the Deceased to manage his business as his agent. Putting aside that it is a Chinese translation of the letter written in Japanese, the letter itself was written by Sato when he knew that there was a serious dispute between P and D2. His delay in replying to P’s solicitors’ letter, and his written exchanges with D2 in March 2012 mentioned above, show that he did not want to get involved in the dispute. I would not attach much weight to the wording of his letter written in these circumstances. 107.One needs to be realistic. The Deceased knew that he was suffering from cancer in mid-2008. It must be clear to him that there was little real chance, if any, that he could continue to run the business by himself. It was most natural that he needed to find someone whom he trusted to take over his business. He loved and trusted D2 very much. In the circumstances, it was most natural that he would give his business to D2. She was in fact the one actually running the business after he became ill. There is no suggestion that D2 received any salary or remuneration from the Deceased for managing the business. It is unreal to suggest that D2 was merely a gratuitous agent running the business on behalf of his father. 108.All in all, notwithstanding the absence of any formal document, I believe and accept that, in about November 2008, the Deceased had transferred his business in Golden Arts to D2. The question is how the transfer of business would impact on the trade receivables owed by AEC to Golden Arts. 109.P argues that an assignment of debt or chose in action must be made in accordance with section 9 of the Law Amendment and Reform (Consolidation) Ordinance (Cap. 23) (see W H Coole Trading as J T Shaw v B Pasco (1923) 18 HKLR 62). In particular, the assignor must give written notice of the assignment to the debtor. Hence, P contends that, even if I find in favour of D2 on the facts, her claim should still fail as a matter of law. 110.While P is correct that there was no valid assignment of the trade receivables owed by AEC to the Deceased under the statute, one must not forget that it is possible to have an equitable assignment of a chose in action. In Brandt’s Sons & Co v Dunlop Rubber Co Ltd [1905] AC 454 at 461, Lord MacNaghten held that:
As stated in Halsbury’s Laws of England (5th ed., 2009), vol. 13, §28 at p 23:
It is even possible, in equity, to assign a chose or thing in action which is not yet in existence (in Halsbury’s Laws of England (5th ed., 2009), vol. 13, §30 at p 25). 111.Furthermore, consideration is not required to support the equitable assignment of an existing legal chose or thing in action, provided that the assignor has done everything required to be done by him to make the assignment complete in equity (Halsbury’s Laws of England (5th ed., 2009), vol. 13, §34, p 27). On the other hand, an assignment of future property can only operate as a contract to assign when the property comes into existence, and consideration is therefore needed (Halsbury’s Laws of England (5th ed., 2009), vol. 13, §36, p 28). As between the assignor and the assignee, an equitable assignment, whether voluntary or for value, is absolute and complete without notice having been given to the debtor; but in order to make the assignee’s title effective against the debtor, notice of the assignment must be given (Halsbury’s Laws of England (5th ed., 2009), vol. 13, §§40-41, p 33). Generally speaking, an informal notice would be sufficient (including an oral notice in the ordinary course of business); it is sufficient to show that the debtor has had knowledge of the assignment, regardless of the source or mode of his knowledge (Halsbury’s Laws of England (5th ed., 2009), vol. 13, §47, p 37). 112.In German v Yates (1915) 27 TLR 52, the plaintiff’s wife, having lent S. £100 and taken from her an I.O.U. afterwards asked S. to pay M. the £100 when due. S. agreed and the plaintiff’s wife tore up the I.O.U. and S. gave M. a new I.O.U. for £100 payable to M. The plaintiff’s wife then died, and the plaintiff, as the administrator of her estate, brought an action against S. and M. to recover the amount. Lush J reaffirmed that the English statute governing legal assignment had not destroyed equitable assignments or impaired their efficiency in any way. He observed that the proposition that for every equitable assignment there must be consideration applied only to an assignment of rights of property which were not yet in existence but he held that the action failed because:
He then added that:
113.In a case where there was a tripartite agreement whereby the debtor agreed to pay the debt to a third party instead of the creditor, I take the view that there would be a valid equitable assignment of the chose in action supported by consideration because the parties have in effect entered into a legally binding “novation” or substituted agreement (see Anson’s Law of Contract, (31st ed., 2020), p 662). 114.Returning to the facts of this case, I find that, in the meeting in November 2008 at which Sato was also present, Sato on behalf of AEC knew that the Deceased would transfer his business to D2, he agreed to continue to do business with Golden Arts on such basis, and also to pay all trade debts (both past and future) to D2 as she directed. This was, in law, a tripartite agreement. 115.It is unknown whether the trade debts making up the total sum of the JPY3,000,000 received by D2 were incurred before or after the transfer of business. Insofar the JPY3,000,000 covered any trade debts owed to the Deceased before the transfer of business, I take the view that there was a valid equitable assignment supported by good consideration i.e. a novation agreement as just described. And even if there was no good consideration, according to German v Yates, since the Deceased had not revoked his direction before he died, his executor cannot ignore it. Furthermore, the absence of good consideration (if that be the case) does not matter because the trade debts had already been paid, and D2 is not seeking the Court’s assistance to enforce the equitable assignment. On the other hand, insofar the JPY3,000,000 concerned any trade debts incurred after the Deceased had transferred his business, D2 was of course entitled to receive them in her own right as the new proprietor of the business. 116.An alternative analysis is this. In Sato’s letter dated 28 December 2015, he said it was impossible to tell to which particular orders the JPY3,000,000 was related; and, in practice, there was just a running account (流水帳). Under a running account, the true nature of the debtor’s liability is a single and undivided debt for the amount of the balance due on the account for the time being, without regard to the several items which, as a matter of history, contribute to that balance (Nu Look Ipi Enterprises Ltd v Chan Siu Mui and Tam Lan Chi Lorche, the administratrix of the estate of Tam Kam Fai Francis, deceased [2021] HKCFI 588, §20). If that was indeed the situation in this case, the tripartite agreement would be that, after the Deceased transferred his business to D2, AEC would pay the net outstanding balance accruing from time to time in the running account between AEC and Golden Arts as directed by D2 (irrespective of whether it consisted of trade debts incurred before the transfer and, if so, how much). 117.It does not really matter which is a more accurate description of the tripartite agreement between the Deceased, D2 and Sato of AEC. The important point is that, as submitted by D2, it is unthinkable that Sato would agree to pay the outstanding trade debts to her without knowing that this was the direction given by the Deceased. The legal effect of the tripartite agreement is that, whatever liabilities already owed by AEC to the Deceased were discharged, and would be replaced by liabilities in the same amount owed by AEC to D2; and, from then on, all liabilities arising out of the business would be owed by AEC to D2. 118.All in all, I conclude that D2 was entitled to receive the JPY3,000,000 from AEC both in law and in fact. This sum of money did not form a part of the Deceased’s estate. L. CONCLUSION AND ORDER 119.For the above reasons, I dismiss all P’s claims and his action. 120.Costs should follow the event. Hence, P should pay the costs of this action (including all previous costs reserved or in respect of which the Court has ordered to be in the cause). Under Order 62, rule 9(4)(b), Rules of the High Court, the Court in awarding costs to any person may direct that, instead of taxed costs, that person shall be entitled to a sum of money summarily assessed in lieu of taxed costs (see Hong Kong Civil Procedure 2021, vol. 1, §§62/9-62/9/12 at pp 1311-1315). Ds are acting in person. According to D2, they have incurred a modest sum of about HK$70,000 for this litigation. This is an appropriate case for the Court to exercise its discretionary power to direct that Ds’ costs should be assessed summarily, and I so order. 121.To enable me to access Ds’ costs summarily, I give the following directions:
I shall then assess Ds’ costs summarily on paper. 122.To ensure that Ds will understand this judgment and the directions I have given on costs, I direct that a Court Interpreter should stand by when this judgment is handed down in case Ds wish the judgment to be interpreted to them.
Mr Richard Yip, instructed by Christine M. Koo & Ip, Solicitors & Notaries LLP, for the Plaintiff The 1st Defendant acting in person The 2nd Defendant acting in person The 3rd Defendant acting in person |
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