Poon Loi Tak the Administrator of the Late Poon Nuen Deceased v. Poon Loi Cheung Desmond
Read the full judgment text of HCA 3348/2016 on BabelCite. This High Court CFI judgment was delivered on 9 January 2023.
1. These proceedings have arisen from a dispute over the beneficial ownership of the credit balances in two bank accounts held with the Hongkong and Shanghai Banking Corporation Limited (“ HSBC ”) in the joint names of the Defendant (who is one of the elder brothers of the Plaintiff) and also his late father, Mr Poon Nuen (“ Father ”) who died intestate in April 2016. The credit balances in such accounts included the proceeds of a shop owned by Father, which was sold in 2014, details of which wi
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HCA 3348/2016 [2023] HKCFI 101 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE ACTION NO. 3348 OF 2016 ________________ BETWEEN
________________ Before: Mr Recorder Richard Khaw SC in Court Dates of Hearing: 1-3, 6-10, 10-15 and 29 December 2021 Date of Judgment: 9 January 2023 ________________ JUDGMENT ________________ A. INTRODUCTION 1.These proceedings have arisen from a dispute over the beneficial ownership of the credit balances in two bank accounts held with the Hongkong and Shanghai Banking Corporation Limited (“HSBC”) in the joint names of the Defendant (who is one of the elder brothers of the Plaintiff) and also his late father, Mr Poon Nuen (“Father”) who died intestate in April 2016. The credit balances in such accounts included the proceeds of a shop owned by Father, which was sold in 2014, details of which will be set out below. 2.After Father’s passing in April 2016, the Plaintiff (who was the administrator of Father’s estate) discovered that the Defendant had withdrawn funds from the two bank accounts both prior to and after Father’s death. The Plaintiff’s case is that Father was the sole beneficial owner of the bank accounts and the monies therein shall form part of Father’s estate. Hence, according to the Plaintiff, the Defendant was merely holding the bank accounts as Father’s agent or trustee. As alleged by the Plaintiff, the Defendant was in breach of trust or fiduciary duty by withdrawing the monies from the bank accounts without the consent or authorisation from Father or his estate. The Defendant’s position is that the credit balances in the two accounts were gifts made by Father to him and his primary case is that he “was at all material times the sole beneficial owner of the credit balance standing from time to time in [the two bank accounts]”. B. BACKGROUND B1. The family 3.Father and his wife, Madam Wong Oi (“Mother”), were a traditional Chinese couple who worked hard to earn a living and support their family. In 1955, Father started the business of manufacturing and selling noodles in the name of Wing Woo Noodle Factory (“Wing Woo”) (永和粉麵廠) with the assistance of Mother. In about 1964, Father together with Mother’s uncle jointly purchased a property known as Ground Floor, 91 Belcher’s Street, Hong Kong which was used as a shop for the business (“the Shop”). In about 1967, Father became the sole legal and beneficial owner of the Shop. 4.Mother was responsible for retail and wholesale operations of the Shop, while Father was responsible for bookkeeping and preparing the materials required for the manufacturing of noodles. The business of Wing Woo provided the main source of income to support the family before the children started to engage in gainful employment. 5.Father and Mother gave birth to six children who, in descending order of seniority, are:
B2. Properties owned by Father and Mother 6.Prior to the death of Father and Mother, the following properties were purchased:-
7.In relation to the above properties, whilst Mother was the legal and beneficial owner of the New Fortune House Property, the other four properties were registered in the sole name of Father. 8.Father and Mother (during their lifetime) lived in Nan Hai Property. Father allowed his children, if they so wished, to live in the properties without payment of rent. Thus, the Plaintiff, Loy Koon and Loi Chuen resided in the aforementioned properties. Prior to his first purchase of a property in Pokfulam in 1994, the Defendant together with his family had also stayed at the New Fortune House Property. In around late 1995, Wing Woo ceased its business and the Shop was then leased out until its sale in 2014. B3. Events after Mother’s death 9.In around 2010 to 2011, Mother was sick and had to be hospitalised from time to time. In around March 2010, given Mother’s hospitalisation, Father was added as a signatory to Mother’s Hang Seng Bank Savings Account numbered 296-080526-001 so that he could operate Mother’s bank account. Mother died on 6 February 2011. 10.After Mother’s death, on 23 February 2012, Father added the Plaintiff as a signatory to his Hang Seng Bank Account numbered 296-0-025597 (“Hang Seng Account”) such that the Plaintiff was authorised to operate the Hang Seng Account. 11.According to the Plaintiff, since Father became a signatory to Mother’s bank account at the time when Mother was ill and required Father’s assistance to settle her general and medical expenses, Father realised the need to have assistance from a family member for the purpose of taking care of his finance should needs arise. The Plaintiff also refers to Father’s deteriorating health condition after Mother’s passing as a reason for Father to add the Plaintiff as a signatory. It is also the Plaintiff’s evidence that the Defendant once told Father that when one of the Defendant’s former classmates was in serious illness, his wife could not have access to his bank accounts and had to borrow money from the Defendant. The Plaintiff believes that this also caused Father to consider making arrangements for further operations of this bank accounts. 12.All the siblings, except the Defendant, agreed that Father became quiet and lacked energy after Mother’s passing. There is a dispute on whether Father’s ill health affected his ability and I will further discuss this issue later. However, it appears from the evidence that Father’s health did deteriorate over time in that he was diagnosed with diabetes and hypertension in about 2008. It appears that he also had other health issues including blurred vision, memory loss, and retina degeneration, although the parties disagree on the severity of these conditions. B4. Joint bank accounts of Father and the Defendant 13.According to the Defendant, in around March 2012, Father told him over dinner that he wished to give some monies to him and asked him to go to HSBC Bank with him. On 20 March 2012, around one month after the Plaintiff was added as a signatory to Father’s Hang Seng Account, Father added the Defendant’s name to his HSBC Savings Account No. 008-8-068085 (“the Savings Account”) as a joint account holder. They signed a form titled “Personal Account Opening Form – Passbook Savings”, confirming their agreement. Clause 6 of that form provided that the bank, in the event of death of one of the joint account holders, shallo hold any credit balance of the Savings Account to the order of the survivor. 14.The Defendant claimed that in around November 2013, Father said he wished to give him some monies to assist him in buying a property. However, the Defendant said that he was not in need of money, and instead proposed to take ¾ of the then balance of the Savings Account to invest in a high yield foreign currency account to generate return. For this purpose, on 25 November 2013, Father and the Defendant attended the HSBC Bank (Westwood Branch) to open the Premier Account No. 650-062631-888 (“the Premier Account”) in their joint names. In doing so, Father and the Defendant signed “the Integrated Account-Investment Services Application Form” which included a declaration that they agreed to be governed by the Integrated Account Terms and Conditions, which specifically authorised the bank, in the event of death of one of the joint account holders, to hold any credit balance of the Premier Account to the order of the survivor. 15.On the same day, a sum of HK$1.6 million was transferred from the Savings Account to the Premier Account. The Defendant substantially used the said sum to invest in an Australian dollar fund Unit Trust. 16.The relevant evidence on Father’s intention and the Defendant’s understanding of the same at the time when the Defendant’s name was added to the Savings Account and also when the Premier Account was opened in their joint names will be analysed below. The Defendant also relies on, amongst others, the fact that he was named as one of the joint account holders (as opposed to merely an additional signatory) and the provision of the Personal Account Opening Form referred to above in support of his case. The legal effects of these arrangements will be examined below. B5. Sale of the Shop 17.On 20 December 2012, Father executed a Power of Attorney (“POA”) authorising the Defendant to sell the Shop on Father’s behalf. 18.The Shop was sold for HK$33 million (“the Sale Proceeds”), completion of which took place on 14 May 2014. Father instructed the Defendant to deposit the Sale Proceeds into their joint accounts (“the Joint Accounts”) without specifying whether he was referring to the Savings Account or the Premier Account. 19.The Defendant then instructed Father’s solicitors to deposit a sum of $3,297,000 (i.e. about 10% of the Sale Proceeds) into the Savings Account on 4 March 2014. After completion, three cheques representing the net balance of the purchase price were issued in favour of Father. A cheque for HK$155,000 was deposited into the Savings Account whilst two substantial cheques totalling HK$29,521,265 were deposited into the Premier Account. The Defendant alleges that he was not allowed to deposit any sum more than HK$10 million into the Savings Account. B6. Plaintiff’s evidence on Father’s acts prior to his death 20.It should be mentioned that the Plaintiff’s evidence specifically refers to the following incident which seems to suggest Father’s concern over the preservation of his assets (or potential future mismanagement of his estate) shortly before his death. This is denied by the Defendant. 21.In January 2016, Father handed over an envelope to the Plaintiff after dinner at Nan Hai Mansion and said:-
22.The envelope contained, inter alia, a Chinese written note (the “Chinese Note”):-
23.In March 2016, Father handed over a shoebox to the Plaintiff after a dinner at Nan Hai Mansion and said:-
B7. Discovery of the Defendant’s Withdrawals 24.In July 2016, when the Plaintiff and other siblings were preparing for the application for the Letters of Administration of Father’s estate, Loy Koon telephoned Loy Tat to inform him of his visit with the Defendant to the HSBC Bank to transfer away HK$10 million from the Premier Account on the day of Father’s passing. It was further found that a substantial amount of money in the total sum of HK$14,248,000 had been transferred out of the Premier Account into the Defendant’s own HSBC bank account, before and after Father’s death. Also, it was found that in April 2016, the Defendant attempted to open Father’s safe deposit box in Chong Hing Bank, but was unsuccessful because he did not have the correct key. He was requested by the Home Affairs Department to explain the incident. The details of the Defendant’s withdrawals from the Premier Account during the period between 12 May 2015 and 8 April 2016 (i.e. prior to Father’s death) are summarised as follows:
25.On the exact day of and also the day after Father’s death, the Defendant made 2 additional withdrawals:
26.These discoveries led to extensive arguments within the family. B8. The Action 27.On 8 December 2016, the Plaintiff instructed his former solicitors to issue a letter of demand to the Defendant for the withdrawn amount from the Premier Account. On 20 December 2016, the Plaintiff commenced the present proceedings. 28.The Plaintiff seeks, amongst others, a declaration that all the assets in both the Savings Account and the Premier Account are legally and beneficially owned by Father solely and absolutely and shall be vested into Father’s estate upon his death and also an order that the withdrawn monies in the total sum of HK$14,248,000 be returned to the Plaintiff (representing Father’s estate). 29.The Defendant denies liability and his pleaded position in respect of each of the two bank accounts is as follows:-
30.There is a debate on whether the Defendant is permitted to run the above alternative (and seemingly inconsistent) pleas and I will also address this below. C. RELEVANT LEGAL PRINCIPLES 31.In general, a legal co-ownership can be created by way of a joint account by virtue of a joint tenancy of the monies owed by the bank to the joint account holders, namely the chose in action arising from the credit balance in such account. Under joint tenancy, upon the death of one of the account holders, the legal title in the chose in action would vest in the remaining account holder. 32.The beneficial ownership of the credit balance in a joint account is, however, a question of intention of the joint account holders. There seems to be no dispute between the parties that if there is evidence upon which the Court could ascertain the intention of the parties, utility of the presumptions available at law will be substantially restricted (Overseas Trust Bank Ltd v Lee See Ching John [1999] 3 HKC 197, 201F-G; HSBC Private Trustee (Hong Kong) Ltd v Ho Yuen Ping Dorothy (unrep., HCA 2717/2008, 20 June 2011) §38; Lee Yee Wan Eva v Lee Tak Gate Richard [2018] 3 HKLRD 191 §25). In fact, both parties have referred the Court to the evidence on the question of Father’s intention and asked for a finding on the same. Hence, the overriding issue in this action centres upon Father’s intention. 33.In HSBC Private Trustee (Hong Kong) Ltd, Deputy High Court Judge Coleman SC (as he then was) summarised the following propositions on a joint account:-
34.Hence, in the present case, it is important to examine the intention of Father (now deceased) with care and caution. Moreover, the Court should only resort to evidential tools of presumptions when the evidence on intention is such that the Court is not capable of forming a view one way or another. 35.Further, the presumption of resulting trust could be displaced by the counter-presumption of advancement where a transfer is made from a father to his son (see Lewin on Trusts, 20th ed., §10.95, Snell’s Equity, 34th ed., §25-003; and Lee Yee Wan Eva (supra), per Peter Ng J §§22-25). Whilst the Plaintiff has cited a Canadian case, i.e. Pecore v Pecore [2007] 1 SCR 795 §40, in contending that the presumption of advancement should be limited to transfers by parents to minor children, the application of such presumption does not seem to be so restricted in view of the authorities in Hong Kong (see Nanyang Commercial Bank v Personal Representative of Vanneee Nativivat [2013] 2 HKLRD 749 §§31-32). 36.Nevertheless, as aforementioned, the presumptions are not of much value if the intention of the relevant parties can be ascertained from the evidence adduced. D. THE DEFENDANT’S PRIMARY AND ALTERNATIVE PLEAS 37.As mentioned above, the Defendant’s primary case is that he was at all material times the “sole beneficial owner” of the credit balance standing from time to time in both the Savings Account and the Premier Account. His “alternative” case is that Father and the Defendant were “joint beneficial owners” of the credit balance from time to time in the two bank accounts. In the “further alternative”, the Defendant contends that upon Father’s death, he became the “absolute sole beneficial owner” of the credit balance in the bank accounts by survivorship. 38.As a matter of principle, the Defendant’s “further alternative case” is part and parcel of his “alternative” case because joint equitable ownership of the credit balance in a bank account carries with it a right of survivorship in that upon the death of one of the account holders, the entire beneficial interest will vest in the surviving account holder. 39.The Plaintiff argues the Defendant’s pleas are inconsistent and he is required to elect which case he intends to rely on. Further, as contended by the Plaintiff, the Defendant, by relying on the alternative case of joint ownership, has “disavowed” his primary case. 40.Whenever a party pleads an alternative case, it may be said that such plea shows signs of some uncertainty. However, the question as to whether a party has “reasonable grounds” (see O.18 r.12A of the Rules of the High Court, Cap 4A) to make an alternative plea must depend on the individual circumstances of each case. For example, if a party has no direct knowledge of certain factual events and/or the court’s final rulings of such events may lead to different conclusions, there is no reason why such party should not be allowed to contemplate different possible scenarios by making alternative, albeit inconsistent, pleas. 41.In the present case, the overarching issue is Father’s intention. Although both parties have adduced evidence on this point, the Court could only infer his intention (assuming that it is not necessary to resort to legal presumptions) from the relevant circumstances, in the absence of any direct evidence from Father. Obviously, the Court’s ruling on Father’s intention could give rise to various possible scenarios and conclusions (including the Defendant’s primary and alternative cases). It could also be the case that the Defendant is simply not entitled to any interest in the two Joint Accounts at all. Hence, I am of the view that the Defendant should be allowed to run the two alternatives in his pleadings. 42.It is noted that the Plaintiff also complains that the Defendant’s pleaded case principally relies on the fact that he and Father were joint account holders and also on the documents signed for such purposes without much reference to Father’s express wish to gift the credit balances to the Defendant. However, this is not an issue of pleadings but it goes to the general credibility of the Defendant’ case on the alleged gift, which will be discussed below. E. FATHER’S INTENTION E1. The approach to ascertaining Father’s intention 43.As stated above, the Court should look at the relevant and admissible evidence of Father’s actual intention. However, if such evidence is non-existent, the Court would resort to presumptions. Further, according to the legal principles summarised above, if a gift is claimed, the onus is on the alleged donee (i.e. the Defendant in this case) to prove such gift. Given that the alleged gift was made by a person who is now deceased, the Court “must approach the claim with some caution and a true sense of enquiry”. 44.In Overseas Trust Bank Ltd (supra), the Court of Appeal held that the only relevant evidence as to the intention of the donor was that “before or at or immediately after the time of the transaction”. In this regard, in Overseas Trust Bank Ltd, Shephard v Cartwright [1955] AC 431 was cited for the proposition that:[1]
45.However, as pointed out by Stock NPJ in Leung Wing Yi Asther v Kwok Yu Wah (2015) 18 HKCFAR 605 at §§55-56, the modern approach is less rigid. Evidence of earlier and later events are admissible as evidence of intention at the time of the transfers. Having said that, contemporaneous conduct is inherently more likely to be a reliable indicator of intention, to be given greater weight, than are words and conduct after the event, especially in the case of self-serving statements or conduct of the transferor, who may long after the transaction be regretting earlier generosity. E2. Father’s personality and relationship with his children 46.Both Father and Mother came from a humble background. Father came to Hong Kong at the age of 6 and did not manage to receive any formal education. However, Father and Mother both worked very hard in order to earn a living and support their family. Father was a frugal and conservative person and was careful with his money. There is no dispute that he treated financial matters seriously and cautiously and was not willing to take risks in his investments. He appeared to prefer to manage his finances independently and was not easily influenced by others. 47.Father was a loving parent who cared for all his children. He tried his best to support his children at different stages. It is the evidence of the Plaintiff and Loy Tat that Father loved and treated his children fairly and equally. 48.The Plaintiff has adduced evidence to the effect that the Defendant is an “opportunist and risk-taker”. The Plaintiff takes the view that the Defendant is not a trustworthy person as he was suspected of misappropriating the patented gold refining formula of his former employer engaged in gold and jewellery manufacturing and this, according to the Plaintiff, eventually caused the Defendant to have to give an undertaking not to carry on business in the same industry. There is also evidence from the Plaintiff that the Defendant was not close to the parents and he did not often visit his parents once he began to work. However, quite apart from the issue of beneficial ownership, the fact that Father allowed the Defendant to hold Joint Accounts with him and also that Father executed a Power of Attorney in his favour shows that they had a sound relationship and Father also trusted the Defendant. 49.I am of the view Father has treated all his children (including the Defendant) fairly and maintained a good and harmonious relationship with all of them. I cannot find any particular incident(s) which could show that Father was particularly critical of or favourable to any of his children. E3. Alleged express wish of Father regarding the two Joint Accounts 50.In respect of the Savings Account, it is the Defendant’s pleaded case and also evidence (as stated in his witness statement) that “[i]n or around March 2012, Father told me that he wished to gift some monies to me and asked me to go to HSBC Bank with him”. 51.No further details were provided by the Defendant as to (1) whether Father had ever talked about his intention to gift some monies to him prior to 20 March 2012 and if not, why Father suddenly raised the idea of gifting him “some monies”; (2) whether there was any discussion on the amount of “some monies” in that particular conversation or otherwise; and (3) in what form such gift would be made and whether it was related to the credit balance in any of Father’s bank accounts. 52.However, under cross-examination, the Defendant referred to a conversation which took place in one dinner (with no specific date mentioned) where Father suddenly said that Mother had passed away for one year and he had not made a will yet; hence, he would wish to gift some monies to the Defendant. The Defendant, according to his evidence, did not respond to Father’s alleged wish. During cross-examination, the Defendant admitted that Father did not fully express his thoughts, but he understood (會意) and interpreted it to mean a gift. I agree with the Plaintiff that had such conversation actually taken place, the Defendant would not have omitted it from his witness statement. The Defendant’s explanation that he did not find it necessary to refer to the incident in his witness statement does not seem to have any meaningful substance. In any event, this additional piece of evidence (which emerged for the first time at trial) does not provide any concrete information which can help establish Father’s intention to gift the Defendant the credit balance of the Savings Account. 53.The Defendant further said in his witness statement that “[o]n or about 20 March 2012, Father and I went to HSBC Bank (Westwood Branch) together, and Father suggested to add me as a joint account holder of the Savings Account, so that I could freely use the monies in the account whenever I wished.” The Defendant also referred to the bank staff’s explanation to the effect that “the credit balance of the Savings Account would go to the survivor of either of us on the death of one of us.” These events, according to the Defendant, showed a “common understanding, intention and/or agreement” that “Father had made a gift of the credit balance standing from time to time in the Savings Account”. 54.However, it is also the Defendant’s evidence (which, again, was revealed for the first time at trial) that after adding the Defendant’s name to the Savings Account and when they stepped out of the Bank, the Defendant asked Father what would happen to him if he had taken Father’s monies. The Defendant claimed that Father said “when I decided to add your name to the account, the sums were intended to belong to you (預咗俾你)”. The Defendant said that he thus had the feeling (感覺) or there was a subtle understanding (默契) between the Defendant and Father that Father had gifted him the credit balance. I find this part of the Defendant’s evidence most artificial and self-serving for the following reasons:-
55.Moreover, the Defendant’s evidence that “out of respect for Father, I allowed Father to keep the passbook for the Savings Account so that Father could continue to use the monies therein for his own expenses if he wished to do so” is rather baffling. As mentioned above, the Defendant’s evidence fails to demonstrate any clear intention on Father’s part to gift the credit balance to the Defendant. Neither did Father, even on the Defendant’s evidence, ever indicate that he would no longer use any of the monies in the account. In the circumstances, the Defendant’s allegation that he “allowed” Father to continue to operate the account is quite inconsistent with the so-called “respect” for Father because there is simply no reason why Father would require any permission or authorisation from the Defendant to make further use of the account after the Defendant’s name was added onto it. 56.For the reasons stated above, I find that Father never expressed any wish or intention to gift the credit balance of the Savings Account to the Defendant. 57.In relation to the Premier Account, the Defendant ‘s case is that in or around November 2013, Father said he wished to gift the Defendant some monies to him to assist him in buying a property because (1) Father noticed that the Defendant had not used any money in the Savings Account; and (2) the Plaintiff, Loy Koon and Loi Chuen could reside in their parents’ properties rent-free whereas the Defendant did not enjoy such benefit. 58.However, the Defendant rejected Father’s offer. Instead, he told Father that “I was not really in need of money and I considered it was not the right time financially to purchase a property”. Instead, he proposed to take around ¾ of the then balance of the Savings Account, which was around HK$1.6 million at that time, to invest in a high yield foreign currency account (i.e. Unit Trust) to generate return. According to the Defendant, Father agreed with his proposal. It was on this basis that Father opened the Premier Account with the Defendant, and transferred HK$1.6 million from the Savings Account to the Premier Account. It is the Defendant’s evidence that they attended the same HSBC branch to open the Premier Account the following day and it was the Defendant’s suggestion that a joint account be opened “out of my respect to him despite it was his intention to give me the money”. 59.The Defendant’s evidence in this respect also has the following fundamental problems:-
60.Having regard to the above factors, I am of the view that Father did not express any intention or wish to gift the credit balance of the Premier Account to the Defendant. E4. Other circumstantial evidence on Father’s intention 61.Further to my previous rulings that Father did not express any intention or wish to gift the credit balances in the two Joint Accounts to the Defendant, I will now proceed to examine the other circumstantial evidence that the Defendant relies on. 62.According to the Defendant, he was the child “who had a particularly close relationship with the Father before he passed away”. The Defendant highlighted a few examples in this regard:-
63.On the other hand, the Plaintiff’s case is that the Defendant did not maintain a particularly close relationship with Father or Mother, whether in his childhood or after he began his working life. The Plaintiff contends that none of the incidents mentioned by the Defendant individually or cumulatively show a close and trusting relationship as alleged by the Defendant. The Plaintiff has highlighted the following incidents:-
64.The Plaintiff says that Father had a harmonious relationship with all his children and treated them equally and fairly. Although Father would financially support his children, he did not favour the Defendant over the others. Father had previously lent money to not only the Defendant but also other children. The Defendant has not been able to point to any particular incident (apart from the alleged gifts) where Father had expressed his affection for the Defendant specifically to the exclusion of his other children by making a significant monetary gift to the Defendant solely. 65.In response, it is submitted on behalf of the Defendant that the other siblings (including the Plaintiff, Loi Chuen and Loy Koon) have been staying rent-free in properties owned by Father and Mother. By contrast, the Defendant did not have such benefit since he moved out from New Fortune House since 1993. 66.It is not seriously disputed by the Defendant that Father maintained a harmonious relationship with all his children and supported them insofar as it was within his ability to do so. Under cross-examination, although the Plaintiff may have retracted from his previous position that the Defendant was relatively distant from Father, he maintained that Father was equally close to all of his children. The Defendant also accepts that the Plaintiff was entrusted by Father with handling some matters during his lifetime. 67.In my view, none of the matters raised by the Defendant, whether individually or cumulatively, showed that Father had a particularly close and trusting relationship with the Defendant. Although the Defendant was entrusted by Father to handle various matters on his behalf, the same could also be said of the Plaintiff. Even on the Defendant’s own case, there was no incident which showed that Father particularly and strongly favoured the Defendant over his other children. 68.Further, Father did not have the habit of making one-off individual monetary gifts. I accept the Plaintiff’s evidence that Father had insisted on Mother’s estate to remain undistributed until his own death. Although, on the Plaintiff’s case, Father contemplated a partial distribution of HK$2 million in early June 2014 of the sale proceeds of the Shop to each of his children, the sale of the Shop was an exceptional, one-off, event. In any event, the contemplated distribution proceeded on the basis of equal distribution amongst all his children. 69.As to the argument that the Defendant did not enjoy rent-free accommodation since he moved out of New Fortune House in 1993, it is submitted on behalf of the Plaintiff that all children were allowed to reside in one of the residences owned by Father and Mother, and the Defendant was never an exception. It was the Defendant’s own choice to move out of New Fortune House and move into his newly purchased property of over 1,000 square feet in Pok Fu Lam. Thus, the “loss” of rent-free accommodation was not a “loss” as such for which Father would have wished to compensate the Defendant. 70.I accept the Plaintiff’s argument that the above reasons provided by the Defendant for a gift of the credit balance in the Premier Account is invalid for the following reasons:-
71.In the circumstances, I accept the Plaintiff’s submission that there are no good reasons why Father would have suddenly decided to gift the two Joint Accounts to the Defendant. The circumstantial evidence fails to demonstrate that Father would have intended to make such gifts only in favour of the Defendant to the exclusion of his other children. E5. The Defendant’s alternative case 72.As stated above, the beneficial ownership of the funds in a joint account boils down to the question of the intention of the joint account holders. In view of my ruling that Father did not have any intention to gift the credit balances in the two Joint Accounts to the Defendant upon consideration of the Defendant’s evidence regarding the alleged express wish of Father and other circumstantial evidence, the Defendant’s alternative case on joint beneficial ownership also cannot stand. 73.The survivorship clause contained in the documents that Father and the Defendant were required to sign in respect of the Joint Accounts provided the following:-
74.It is well-established that a survivorship clause of this type is primarily a contractual arrangement between the bank and the joint account holders on how to deal with the money in the joint account. It does not declare the respective beneficial interests of the joint account holders. It is also not determinative of parties’ ownership of the money in the joint account. The parties’ intention overrides the survivorship clause (Kwok Siu Mui Diana, Administrator of the Estate of Leung Shui Lin, deceased v Kwok Siu Yee [2020] HKCFI 2663 per B Chu J §§79-88). 75.The Defendant has referred me to the decision of the High Court of Singapore in Lim Chen Yeow Kelvin v Goh Chin Peng [2008] SGHC 119 to demonstrate the importance of the survivorship clause in considering beneficial interest in a joint account. However, it should be pointed out that in Lim Chen Yeow Kelvin, the survivorship clause provided that in the event of the death of a joint account holder, the amount standing to the credit of the joint account shall be held “for the benefit and to the order of the survivor(s)” (emphasis added). It was held that “[t]hese [italicised] words ... constituted very strong evidence of what [the deceased]’s true intentions were, namely that … the defendant was to have the money beneficially if he survived her” (§80). Further, the court in that case found that there were other factors showing a strong intention of the deceased to make a gift. 76.It is also submitted on behalf of the Defendant that Father was aware of the difference between an additional signatory to a bank account and an additional joint account holder and his knowledge of such difference lends weight to the allegation that Father intended to pass the beneficial interests in the bank accounts. I disagree for the following reasons:-
E6. Subsequent events 77.I have also taken into account the events which occurred after the two joint accounts were created in order to consider if any of such events would have a bearing on the issue of intention. I come to the view that none of them would alter my views on Father’s intention. On the contrary, they further reinforce such views. I would like to summarise a few points. 78.It is undisputed that Father was entitled to withdraw monies from the joint accounts without the Defendant’s prior approval. In fact, Father made regular withdrawals of HK$5,000 from the Savings Account through automated teller machines. 79.The Defendant argues that Father’s control does not undermine his donative intent to make a gift by relying on the decision of Overseas Trust Bank Ltd (supra) at p.203G-I per Godfrey JA, p.209E-F per Mortimer VP. 80.In Overseas Trust Bank Ltd, Godfrey JA expressed:
81.Similarly, Mortimer VP also highlighted the significance of the words of Megarry J in In Re Figgis (supra):
82.In my view, whilst the authorities cited by Ms Tong establish that a gift of a standing credit balance in a bank account controlled and managed by the donor is, a matter of law, capable of being the subject of a gift, they do not go so far as to establish that the donor’s entitlement to withdraw monies from the account is irrelevant on the question of donative intent. In other words, depending on the circumstances of the case, weight may be attached to the fact that the donor was able to make withdrawals from the account as and when he saw fit. 83.As Overseas Trust Bank Ltd was heavily relied on by Ms Tong, I shall discuss that case in further detail. It was a case of three fixed deposit accounts in the name of the first defendant (the son) where the deceased (the father) retained control of the accounts and from time to time withdrew money from those accounts for his own purpose. Unlike the present case, the three accounts were not joint accounts but were accounts in the sole name of the son. At trial, the judge found that when the deceased made monetary gifts to members of his family, he would “without exception record the amount of the gift and the reasons for making [it]. Any acknowledgement from the recipient would also be faithfully recorded”.[2] In the absence of reference in the deceased’s diaries on the opening of the bank accounts or of the gifts and the son’s acknowledgment of the gifts, the judge held that the deceased never intended the monies in the accounts as gifts. 84.The Court of Appeal allowed the son’s appeal on the basis that the judge erred in relying on primarily the absence of reference in the deceased’s diaries to infer that the deceased did not have a particular intention.[3] Having reviewed the evidence before the trial judge, the Court concluded that there was no relevant and admissible evidence before the judge on the basis of which he could displace the presumption of advancement in favour of the son.[4] It was also against such background that the Court of Appeal did not give much weight to the fact that the accounts were controlled by the father. 85.In the present case, however, I have ruled on the basis of the available evidence that Father did not have any intention to gift the two bank accounts to the Defendant. The fact the Father was at liberty to withdraw monies from the accounts appears to be consistent with my findings. 86.Further, I note that Father kept the ATM cards, passbooks and ATM passwords of both Joint Accounts securely with him at all times as an outward manifestation of ownership. He also continued to rely upon the Savings Accounts to settle some of his ongoing expenses and asked for the bank statements of the Premier Account to be sent to his address. The fact that the bank statements were mailed to Father’s address from June 2014 onwards, whether on Father’s own request or the Defendant’s initiative, shows Father’s care and concern about the value of the monies in the account. He wanted to retain more control over the credit balance and monitor the Defendant’s performance. All these factors do not support Father’s donative intent. 87.The sale of the Shop took place in 2014, i.e. after the opening of the Premier Account. It is the Defendant’s case that in about late 2014, Father asked the Defendant how his business was going. When the Defendant told Father that his business was not doing too well, Father reiterated to the Defendant that he was free to use the monies in the Premier Account (including the proceeds of sale of the Shop Premises) as he desired and reminded him that the account belonged to him anyway. The Defendant also alleges that he then, by once again relying on the so-called “respect for the Father”, informed Father of the withdrawals he had made from the Premier Account between 12 May 2015 and 2 September 2015. 88.At trial, the Defendant nevertheless testified that at the time of depositing the Sale Proceeds into the Premier Account, the Defendant did not know that Father had gifted the same to him. Instead, the Defendant’s evidence was that the conversation in December 2014 was the first time Father made known that the Account belonged to the Defendant. I find the Defendant’s evidence in this respect unsatisfactory for the following reasons. 89.First, according to the Defendant’s case, at the time when the two Joint Accounts were created, it was Father’s intention to gift the credit balance “standing from time to time” in each account to the Defendant. Had this been true, the Defendant should have had little doubt that he had beneficial interest in the Sale Proceeds deposited into the two Joint Accounts. However, his testimony that he did not know if the Sale Proceeds were gifted to him is plainly contrary to his primary allegation. 90.Second, as analysed above, the Defendant’s evidence on Father’s intention or wish at the time when the two Joint Accounts were created is rather obscure and self-contradictory. In fact, the Defendant admitted that Father did not express his thoughts clearly. In the circumstances, when the Sale Proceeds of such a substantial amount were deposited into the accounts, one would have expected at least some discussions between Father and the Defendant on how the monies should be managed. The Defendant’s evidence that Father in late 2014 (i.e. more than 6 months after completion) simply told him in rather general terms that “he was free to use the monies in the Premier Account (including the Sale Proceeds)” is rather unrealistic and incredible. 91.Third, the Defendant’s case that he then informed Father of his previous withdrawals from the Premier Account and Father said “it would be fine to withdraw monies from the account” flatly contradicts his own case that he was all along entitled to use the monies in the account. The Defendant’s continuous use of the pretext “out of respect for Father” simply demonstrates his rather desperate attempt to justify the inconsistencies in his case. 92.Another matter which needs to be examined is the Defendant’s withdrawal from the Premier Account on the day of Father’s death, i.e. 20 April 2016. 93.The Defendant’s explanation is that the sum withdrawn was intended to be used to facilitate the purchase of the village house given that the provisional sale and purchase agreement (“the Provisional Agreement”) was initially arranged to be signed on 20 April 2016. He also alleges that there would be difficulty in getting a mortgage for the purchase of the village house and he also harboured fear (allegedly arising from what he heard from friend and classmates) that the Premier Account might be frozen as a result of Father’s death. 94.I find the Defendant’s explanation unacceptable:-
95.I also wish to comment on another incident which happened shortly after Father’s death. On 26 April 2016, i.e. 6 days after Father’s death, the Defendant attended Chong Hing Bank in attempt to open Father’s safe deposit box. He did so without the presence of any other siblings. Although the Defendant claimed that he had informed the Plaintiff before and after his visit to the bank, this was (1) denied by the Plaintiff and (2) was not mentioned in the Defendant’s statutory declaration to the Home Affairs Department explaining why he had attempted to open the safe deposit box. In any event, the Defendant failed to explain why he saw the need to “check out” the contents of the safe deposit box at that time. This, coupled with the withdrawal of HK$10 million immediately after he heard about Father’s passing, demonstrates that the Defendant was very eager to make his own attempt to take control of Father’s assets shortly after his passing. 96.Further, as set out above, according to the Plaintiff’s evidence, in about January 2016 (i.e. about 3 months before Father’s death), Father handed over various items, including, an envelope, a handwritten note and also a shoebox to the Plaintiff and gave him a warning of caution of what he should do for the purpose of carrying out a proper administration of estate upon Father’s death. The Defendant denies such incident and also disputes the authenticity of the handwritten note. 97.The above evidence, objectively viewed, appears to show Father’s concern as to whether the administration of his estate would be properly carried out; but it does not accuse any individual of any wrongdoing. Although the Plaintiff in his witness statement provided his somewhat subjective feeling by saying “I believe Father deliberately wrote the written note after his discovery of Desmond’s wrongful acts in order to remind me to be cautious of Desmond who would try to interrupt the administration of his Estate”, under cross-examination, the Plaintiff tried to retract this part of his evidence by saying that he “did not wish to speculate”. In the circumstances, I have decided not to attach any weight to this part of the Plaintiff’s evidence in assessing Father’s intention as I do not find it directly relevant to the issue. I have already considered all the other relevant evidence and materials in coming to my conclusion on Father’s intention. 98.Finally, insofar as the Defendant relies on the withdrawals which were made during Father’s lifeline (which, as alleged by the Defendant, were not opposed by Father), I wish to highlight the following points:-
99.Having made my rulings on Father’s intention, it is not necessary to resort to the legal presumptions. Further, in view of such rulings, whether Father decided to create the two Joint Accounts for administrative convenience is not of particular importance as there could be more than one reason for Father’s behaviour. As outlined above, there is a debate between the parties on Father’s health condition before the Defendant was made a joint account holder. The Defendant’s argument is that in view of Father’s condition at that time, he was not required to have an additional joint account holder simply to give him physical or administrative assistance in handling the accounts. However, I do not find this debate meaningful, given the fact that shortly after Mother’s death, Father immediately decided to have the Plaintiff designated as an additional signatory to the Hang Seng Bank account. This shows that Father might have needed at least some sense of security or peace of mind such that his bank accounts would not be left unattended in case his health condition did not allow him to operate them anymore. Further, I have already found that Father was not aware of the difference between adding a person as a signatory to a bank account and creating a joint bank account. F. CREDIBILITY OF THE WITNESSES F1. Witnesses of the Plaintiff 100.The Plaintiff has tendered witness statements from himself, Kit Bing, Loi Tat and Loi Chuen. At the trial, he has only called three witnesses, namely Loi Tat, the Plaintiff himself and Loi Chuen. 101.Kit Bing in her witness statement alleged that when she visited Father in around December 2013, she was told that he invested substantial sums in an Australian dollar fund upon the suggestion of the Defendant. In this connection, she said that Father regretted doing so and complained about it. However, since Kit Bing has chosen not to give evidence, the Defendant was not given the opportunity to cross-examine her. As a matter of fairness, I will not give any weight to Kit Bing’s evidence. 102.In general, I find the evidence of the Plaintiff and his witnesses reliable and credible. 103.Loi Tat gave his evidence on family matters including the personalities of the siblings, the relationships amongst them and their relationships with Father. He also testified on the deteriorating health condition of Father and the matters after his death. 104.The Defendant launched its attack against Loi Tat that he did not have first-hand knowledge as extensively as he claimed to be, particularly in relation to Father’s health. In contrast, it was the Plaintiff and Kit Bing who had personal knowledge. Further, the Defendant pointed to some discrepancies between his oral testimony and his witness statement. 105.In my view, the discrepancies between his oral evidence and his witness statement are immaterial, particularly when those discrepancies did not touch upon the core issues in this case. For example, the Defendant complained in his Closing Submissions that regarding Father’s retirement in 1992, Loi Tat testified that Mother asked the siblings one by one whether anyone of them would take over, whereas a contradictory account was given by Plaintiff and Loi Chuen that they never heard of it. Given the passage of time and that the nature of such events is not directly relevant to the main issues, I do not find that the credibility of Loi Tat is undermined. 106.The Plaintiff is a key witness in this case, and he was extensively cross-examined on various matters. His evidence covered topics across, amongst other things, Father’s personality, family matters including the relationships between family members and the dispositions of the siblings, Father’s medical condition, Father’s financial affairs and matters after Father’s death. 107.The Defendant contends that the Plaintiff’s evidence was unbelievable for the reasons that it was “one-sided and self-serving” and he was “unable to answer pertinent questions raised during [cross-examination] about inconsistencies in his own evidence”. The Defendant then gave some examples which will be summarised below:-
108.However, having seen and heard the Plaintiff’s evidence, I am of the view that the Plaintiff’s oral testimony is straightforward and forthcoming. For example, he did not insist that the Defendant was not trusted by Father during cross-examination. Neither did he maintain at trial that Father was worried about the administration of his estate because of his concern over the Defendant. 109.Regarding Loi Chuen’s evidence, in addition to family matters and the medical condition of Father, he also gave evidence on Father’s financial affairs and the sale of the Shop. 110.I accept the Defendant’s complaint that there were some uncertainties and inaccuracies in the answers given by Loi Chuen during cross-examination. For example, in respect of matters relating to the sale of the Shop such as whether the Defendant persuaded Father to sell the Shop, Loi Chuen seemed to have some confusion about the chronology of the relevant events and the places where those events took place. When he was pressed on matters that he did not have first-hand knowledge, such as Father’s investment portfolio and which of the siblings accompanied Father to medical appointments, he said he was unclear about those matters. 111.Nevertheless, apart from the above, Loi Chuen’s answers were mostly direct and not evasive. I find Loi Chuen’s testimony reliable. F2. The Defendant 112.As analysed above, I find the Defendant’s evidence, particularly in respect of his case on Father’s express intention to make a gift to him, obscure, self-contradictory and unreliable. There are also various inherent inconsistencies in his case which have already been discussed above. He also had the tendency of trying to tailor the facts in order to suit his needs. 113.I wish to only mention another incident which raises further doubts on the Defendant’s credibility. 114.As aforementioned, in 1986, the Defendant moved to Canada with his wife and worked in a U.S. based company engaged in gold and jewellery manufacturing for about two years. The Plaintiff alleges that, in around 1988, the Defendant was suspected of stealing a patented gold refining formula from the U.S. company and used it for his own profit and that the Defendant avoided criminal prosecution only after Father paid over HK$500,000 to the U.S. company pursuant to an out-of-court settlement. According to the Plaintiff, apart from the payment of the settlement sum, the Defendant had undertaken not to carry on business in the same industry. Nevertheless, as alleged by the Plaintiff, the Defendant disregarded the undertaking and started both Artec in his wife’s name and Sinocean in the names of his wife and Loy Koon to circumvent the undertaking and operate his new businesses in the same industry. 115.On Day 7 of the trial, during cross-examination, the Defendant was questioned about the operation of his businesses and the following matters were revealed:-
116.During cross-examination, although the Defendant admitted having given an undertaking to his former employer, he was adamant that it had nothing to do with any suspected criminal conduct. He claimed that the undertaking was given two months after he left the U.S. company in order to facilitate a prospective acquisition of the U.S. company. However, he had no knowledge of the details of the prospective acquisition. The Defendant claimed that the undertaking given only restricted himself, but not his companies or associates, from dealing with the then existing clients of his former employer for a period of 1.5 years. Although the undertaking did not prohibit him from engaging in jewellery-manufacturing, he sought to explain that he chose to set up Sinocean in the names of his wife and Loy Koon to avoid suspicion in case he was thought to have breached the undertaking. 117.In his Closing Submissions, the Plaintiff alleges that the Defendant interposed his wife, Loy Koon, and/or Father as owners of Sinocean and Artec so that he could continue to operate his jewellery-manufacturing business in the shadows in breach of the undertaking. The Plaintiff submits that the Defendant’s version of the undertaking that he had given was a complete fabrication for the following reasons:-
118.In response to the Plaintiff’s allegations, the Defendant submits that they are irrelevant to the issues in the present case and was not raised in the Plaintiff’s pleaded case. In his Closing Submissions, the Defendant repeated the explanation that he had provided during cross-examination, i.e. although he had given an undertaking to the U.S. Company, it had nothing to do with any alleged criminal conduct on his part. As to Sinocean, it was set up in the way it was out of an abundance of caution to avoid unnecessary trouble both to himself and his clients. 119.Although I accept that the above incidents are not directly relevant to the present dispute, the Defendant’s explanations demonstrate further problems in his credibility:-
120.Thus, I find that the Defendant’s overall credibility was further undermined by his response to the Plaintiff’s allegations regarding the alleged criminal investigation as discussed above. G. CONCLUSION 121.By reason of the above analysis, I am of the view that Father never intended to make an inter vivos gift of his beneficial interest in the Savings Account and/or the Premier Account (including the Sale Proceeds) to the Defendant. 122.Accordingly, I consider that the evidence supports the finding on the balance of probabilities that the Defendant held the funds in the Joint Accounts on trust for Father. I also find that between 12 May 2015 and 21 April 2016, the Defendant wrongfully caused the money in the Premier Account (which was then in the total sum of HK$14,248,000) to be transferred to his own HSBC bank account, in breach of his duty as a trustee and without consent from Father and/or the Estate. 123.In the circumstances, the Plaintiff’s claim succeeds and I enter judgment in favour of the Plaintiff. I hereby make the following order as sought by the Plaintiff:-
124.I also make an order nisi that the Defendant shall pay interest on the sum of HK$14,248,000 at prime rate plus 1% from 20 April 2016 (i.e. the date of Father’s death) to the date of this Judgment and thereafter at judgment rate until payment. 125.In addition, I make a costs order nisi that the Defendant do pay the Plaintiff the costs of this action, to be taxed if not agreed with certificate for two counsel. 126.The above orders nisi shall become absolute unless an application to vary the same is made within the next 14 days.
Ms Elaine Liu and Mr Abel Lam, instructed by K. B. Chau & Co., for the Plaintiff Ms Sara Tong and Ms Esther Mak, instructed by Patrick Chu, Conti Wong Lawyers LLP, for the Defendant | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cases cited in this judgment
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