Hsu Ching Fang v. Ng Chor Kuen and Others

Case No.HCMP 651/2014[2023] HKCFI 725

Court

High Court CFI

Date15 Mar 2023

Judge—

Case Document

100%Judiciary

HCMP 651/2014

[2023] HKCFI 725

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 651 OF 2014

________________________

	IN THE MATTER of the shares of BESTFIBRE COMPANY LIMITED (萬好紙業有限公司)
	and
	IN THE MATTER of Section 52 of the Trustees Ordinance (Cap 29)

________________________

BETWEEN

	HSU CHING FANG (許清芳)	Plaintiff
	and
	NG CHOR KUEN (吳楚娟)	1^st Defendant
	CHAN TSZ MAN PETER (陳子文)	2^nd Defendant
	HSU CHING CHUN (許清俊)	3^rd Defendant
	CHEN HSIU MIN (陳秀敏)	4^th Defendant

________________________

Before:

Mr Recorder William Wong, SC in Court

Dates of Hearing:	6-9 & 14 February 2023
Date of Judgment:	15 March 2023

________________________

J U D G M E N T

________________________

INTRODUCTION

1.The major issue in contention in the present case is whether, as a matter of fact, Mr Hsu Lao Yeo (the “Deceased”), during a dinner gathering at San Want Hotel in Taiwan on 25 August 2011 (the “Dinner”), made an immediate and outright inter vivos gift of his beneficial interest in all 8,000,000 shares of Bestfibre Company Limited (the “Bestfibre Shares”) to the Plaintiff, Mr Hsu Ching Fang and, the 3^rd Defendant, Mr Hsu Ching Chun. The 3^rd Defendant and the Plaintiff are brothers and the sons of the Deceased (the “Inter Vivos Gift” Issue).

2.The Plaintiff’s case is that the Deceased did make an immediate and outright inter vivos gift of the Bestfibre Shares to the two brothers. The 3^rd Defendant initially contested otherwise and strongly argued that the Deceased never intended and did not make an immediate and outright inter vivos gift to the two brothers. However, in his oral testimony, he said that as he was walking around during the Dinner, he did not heard that the Deceased make an immediate and outright inter vivos gift to him and his younger brother, the Plaintiff.

3.The 3^rd Defendant’s case is that the Deceased’s beneficial interest in the Bestfibre Shares should fall into the Deceased’s estate when he passed away on 31 December 2011 which will go to him alone as the Plaintiff and other beneficiaries have renounced their rights to the Deceased’s estate.

4.A related factual dispute is whether the agreement reached between the Plaintiff and the Defendant that the Bestfibre Shares should be distributed at the ratio of 55:45 between the Plaintiff and the 3^rd Defendant should be set aside on the ground of misrepresentation by the Plaintiff and/or set aside on the basis of total failure of consideration and/or revoked by the 3^rd Defendant by March 2012 (the “Distribution” Issue).

5.Bestfibre Company Limited is a Hong Kong company and is the registered owner of an industrial property, namely, Factory Unit 01A with its yard on ground floor, Profit Industrial Building, Nos.1-15 Kwai Fung Crescent and Nos. 65-69 Container Port Road, Kwai Chung.

6.There is no dispute that on 23 November 1998, the Deceased transferred 6,700,000 Bestfibre Shares to the 1^st Defendant who was a trusted trading partner of the Deceased and the 4^th Defendant who was then the Deceased’s cohabitee. He also transferred 1,300,000 shares to the 2^nd Defendant who is the 1^st Defendant’s son. Since then, the 1^st and 2^nd Defendants are the only two registered and legal shareholders of Bestfibre.

7.It is common ground that the 1^st and 2^nd Defendants were and are holding the Bestfibre Shares on trust. They take a neutral stance to the Plaintiff’s claims in the present case and agree to be bound by the decision of this Court. As such, this Court on the first day of the trial directed that there was no need for counsel to appear for the 1^st and 2^nd Defendants.

8.The 4^th Defendant also confirms that she has no beneficial interest in any of the Bestfibre Shares and the 1,300,000 shares transferred from her to the 2^nd Defendant on 23 November 1998 were beneficially owned by the Deceased.

THE PLAINTIFF’S CASE

9.In May 2011, the Deceased was diagnosed with lung cancer. In July 2011, the Deceased told the Plaintiff that he intended to gift all his assets to his two sons, namely, the Plaintiff and the 3^rd Defendant.

10.The Deceased then arranged the Dinner on 25 August 2011 at San Want Hotel in Taiwan. The Deceased called the 1^st Defendant and invited her to attend the Dinner. The Deceased told the 1^st Defendant that there was something that he needed the 1^st Defendant to do (有啲事要拜託妳做) and the 1^st Defendant understood that it was business related (應該係商業事情). The 1^st Defendant accepted the invitation and brought a friend to attend the Dinner with her.

11.The Deceased also called the 4^th Defendant. During the telephone call, the Deceased told the 4^th Defendant that the assets under their names were already given to the Plaintiff and the 3^rd Defendant and the Deceased had already signed a Power of Attorney. The Deceased asked the 4^th Defendant to go over to sign on a power of attorney.

12.The Plaintiff’s case is that after the meal at the Dinner, the Deceased told all persons present, including the Plaintiff, the 1^st Defendant, the 3^rd Defendant and the 4^th Defendant, and some other attendees, that he was not in good health and he would like to deal with all his assets and possessions appropriately. The Deceased then announced that he gave the Plainitff and the 3^rd Defendant (his two sons) all his assets in Chinese: “這些就都給你們了”. The Deceased also told the 1^st Defendant that “萬好股份給兩個仔”.

13.In other words, the Deceased made an inter vivos gift of his beneficial interests in the Bestfibre Shares to the Plaintiff and the 3^rd Defendant jointly.

14.The Deceased also orally notified the 1^st Defendant that the trust (under which the 1^st Defendant and the 2^nd Defendant held the Bestfibre Shares) was to be ceased and instructed 1^st Defendant to deal with the Plaintiff and the 3^rd Defendant forthwith from thereon and to have the Bestfibre Shares transferred to the Plaintiff and the 3^rd Defendant.

15.The 1^st Defendant agreed to the Deceased’s instruction and expressed her agreement to transfer the Bestfibre Shares and to inform the 2^nd Defendant of the instructions so that all the Bestfibre Shares could be transferred to the Plaintiff and the 3^rd Defendant as instructed.

16.Because of the Deceased’s expressed words of gift, Lawyer Huang (a Taiwanese lawyer) added some handwritten words in both the Power of Attorney of the Deceased and the 4^th Defendant, namely:

“包括將上述產業轉到被授權人名下。”

17.Both the Deceased and the 4^th Defendant initialized on the handwritten words (the “Handwritten Words”) to indicate their consent that the assets as set out in the two Powers of Attorney were to be transferred to the Plaintiff and the 3^rd Defendant. Witnessed by Lawyer Huang, the Deceased, the 4^th Defendant, the Plaintiff and the 3^rd Defendant signed on the two Powers of Attorney.

18.Following the Dinner, the Plaintiff and the 3^rd Defendant met in September 2011 to discuss the distribution of the Deceased’s assets. At first, the 3^rd Defendant proposed that he would take only 40% leaving 60% to the Plaintiff as the 3^rd Defendant had caused the Deceased to lose a lot of money in the past. A few days later, the 3^rd Defendant asked the Plaintiff to give 5% to his eldest son (also the eldest grandson of the Deceased) with whom the Plaintiff had a very good relationship. The Plaintiff agreed and the ratio was changed to 55% to the Plaintiff and 45% to the 3^rd Defendant (5% of which was supposed to be given to the 3^rd Defendant’s eldest son) (“the Agreed Ratio”). There was no mention of the Plaintiff’s taking care of their two sisters throughout the discussion.

19.They further agreed that the Agreed Ratio should apply for the distribution of 152,000 shares in Wah Luen International Investments Limited (“Wah Luen”), which were beneficially owned by the Deceased (“the Wah Luen Shares”). The Wah Luen Shares were also held by the 1^st Defendant on trust for the Deceased. The Deceased only had beneficial interest, but not the legal title, at the material time.

20.By a fax sent on or about 7 December 2011 (“the Fax”), the 3^rd Defendant gave written instructions to 1^st Defendant instructing her to transfer the Wah Luen Shares and the Bestfibre Shares to Zenith Top Holdings Ltd (the Plaintiff’s nominee) and Chen Hui-E (the 3^rd Defendant’s nominee) in accordance with the Agreed Ratio.

21.The 3^rd Defendant and the Plaintiff’s assistant, Ms Ng also came to Hong Kong on the same day to meet the 1^st Defendant.

22.On 14 December 2011, the Deceased’s Wah Luen Shares were transferred to Zenith Top and Chen Hui-E in accordance with the Agreed Ratio.

23.Due to the fact that the 2^nd Defendant was involved in a divorce proceedings in Hong Kong, the 1^st Defendant requested the Plaintiff and the 3^rd Defendant to delay the transfer of the legal title of the Bestfibre Shares for a few months. In the meantime, unfortunately, the Deceased died on 31 December 2011.

24.In February 2012, except the 3^rd Defendant and the Deceased’s wife, all beneficiaries of the Deceased’s estate renounced their entitlements to the estate of the Deceased.

25.On 16 April 2012, the 3^rd Defendant and Madam Liu (the Deceased’s wife) signed a deed of family arrangement whereby Madam Liu would only get NTD100,000 and all remaining assets would belong to the 3^rd Defendant.

26.Thereafter, the 3^rd Defendant started to allege that the Bestfibre Shares should fall into the Deceased’s estate and be given to him solely.

27.It is also the Plaintiff’s case is that since their mother’s death in 1986, he had been taking care of his two sisters by giving them a monthly payment of NTD30,000.

28.Around 1989 (around or before she got married), 許玉欣, the younger sister (the “Younger Sister”) had accumulated NTD2,000,000 and did not know what to do with it. As she trusted the Plaintiff very much, she put the money with the Plaintiff. Since then, the Plaintiff had been giving her an extra NTD20,000, totalling NTD50,000 per month. There was no discussion between the Younger Sister and the Plaintiff about the nature of the extra NTD20,000. Up to present, the Plaintiff is still paying his elder sister (the “Elder Sister”) NTD30,000 per month and the Younger Sister NTD50,000 per month.

THE 3^RD DEFENDANT’S CASE

29.The 3^rd Defendant is the eldest son of the Deceased. The Plaintiff is the 3^rd Defendant’s younger brother.

30.Bestfibre was initially incorporated by the Deceased and the 3^rd Defendant to operate a paper recycling business in Hong Kong. The 3^rd Defendant was the General Manager of Bestfibre. The 3^rd Defendant was the beneficial owner of 5,700,000 out of the 8,000,000 shares in Bestfibre, with the Deceased owning the remaining 2,300,000 shares.

31.Subsequently, in about 1992 to 1993, the 3^rd Defendant became gravely ill and was hospitalised. As a result of the 3^rd Defendant’s illness, it was agreed between the Deceased and the 3^rd Defendant that the Deceased would take over the operations of Bestfibre, and to that effect the 3^rd Defendant transferred all his shareholdings in Bestfibre to the Deceased.

32.On the 3^rd Defendant’s case, at the time of transfer of the shares to the Deceased in 1993, the Deceased had told the 3^rd Defendant with respect to the Bestfibre Shares that “我以後會還給你”. However, for the purpose of this trial, the 3^rd Defendant accepts that the Deceased was the beneficial owner of the Bestfibre Shares.

33.As a result of transfers of the Bestfibre Shares, since around February 1996 and before 23 November 1998, the Deceased became the owner of all the Bestfibre Shares, as follows:

(1) 6,700,000 held in the name of the Deceased.

(2) 1,300,000 held in the name of the 4^th Defendant.

34.On 23 November 1998 :-

(1) The 1^st Defendant became the registered owner of the 6,700,000 Bestfibre Shares held in the name of the Deceased; and

(2) The 2^nd Defendant became the registered owner of the 1,300,000 Bestfibre Shares held in the name of the 4^th Defendant.

35.In about May 2011, the Deceased was diagnosed with lung cancer.

36.Subsequently, in around May to June 2011, a family meeting was held with the assistance of a Mr Tsang (“Tsang”), one of the long-time employees of the Deceased, to plan for the distribution of the Deceased’s assets after his death (the “Family Meeting”). The Deceased, the Plaintiff, the 3^rd Defendant, Tsang, amongst others, were present at the Family Meeting.

37.At the Family Meeting, the Deceased orally expressed his intention that after his death, the 3^rd Defendant shall receive the majority of the Deceased’s assets in Hong Kong and Taiwan whilst the Plaintiff shall receive the majority of the Deceased’s assets in the USA.

38.The Family Meeting is evidenced by a fax sent over by Tsang to the Deceased dated 2 November 2011 at the request of the Deceased (the “Family Meeting Fax”):-

(1) It was stated that the Deceased’s assets in Hong Kong and Taiwan would be mainly given to the 3^rd Defendant, and those in the USA would be mainly given to the Plaintiff (“在台灣香港的事業以清俊為主，美國的以清芳為主”).

(2) The distribution of the Deceased’s assets in the USA (the “USA Assets”) was agreed to be: (1)35% to the 3^rd Defendant; (2)40% to the Plaintiff (with 10% held in the name of another person but beneficially owned by the Plaintiff); (3)10% to Tsang; and (4)15% undecided (the “15% USA Assets”).

39.It is the 3^rd Defendant’s understanding that he would receive his portion of the Deceased's assets in accordance with the discussions as set out in the Family Meeting.

40.After the Family Meeting, the Dinner took place in August 2011. It is the case of the 3^rd Defendant that the Powers of Attorney were produced for the Deceased and the 4^th Defendant to execute in favour of the Plaintiff and the 3^rd Defendant jointly.

41.The 3^rd Defendant did not hear the Deceased say the words “這些都給你們了” or any words with the effect of making an alleged gift to the Plaintiff and the 3^rd Defendant at the Dinner.

42.In around September 2011, the Plaintiff suggested that Bestfibre Shares should be split between the Plaintiff and the 3^rd Defendant in a 60:40 split as the Plaintiff had been taking care of their younger sisters by making gratuitous payment each month since about 1986 (respectively, the “Gratuitous Payments” and the “Misrepresentation”).

43.The 3^rd Defendant refused the 60:40 split as it was too much for the Plaintiff. In reliance on the Misrepresentation, and also in reliance on the implied understanding that the 3^rd Defendant was/would still be entitled to his portion of the USA (and Taiwan) assets as discussed and stipulated at the Family Meeting, the 3^rd Defendant concurred with the proposed ratio that the Bestfibre Shares should be distributed between the Plaintiff and the 3^rd Defendant in a 55:45 ratio.

44.Nothing was done in relation to the transfer of the Bestfibre Shares from September to November 2011. In early December 2011, the health condition of the Deceased deteriorated. It was around that time that the 3^rd Defendant was requested by the Plaintiff to send the Fax dated 7 December 2011 to 1^st and 2^nd Defendants stating the 55:45 split for, inter alia, the Bestfibre Shares.

45.It was also around that time, on or around 14 December 2011, that the Deceased and the 4^th Defendant executed share transfer documents for the shares in Wah Luen to be transferred to the Plaintiff and the 3^rd Defendant.

46.In around February or March 2012, it is the 3^rd Defendant’s case that he was informed and/or became aware that all or at least part of the Gratuitous Payments had been obtained from interest generated from the sisters’ assets, such that he became aware that the Plaintiff’s representation was untrue, misleading and/or incomplete.

47.Subsequently, in or around May or June 2012, the 3^rd Defendant also discovered that contrary to the understanding and discussions at the Family Meeting, the Plaintiff had taken the majority of the USA Assets for himself without his consent, and that even the 3^rd Defendant’s 35% of the USA Assets had gone unaccounted for and were not given to the 3^rd Defendant. Therefore, the understanding for distribution of the Deceased’s assets as discussed in the Family Meeting had not been followed and adhered to by the Plaintiff.

48.In light of this and the discovery about the sisters’ payments by the Plaintiff, the 3^rd Defendant had been labouring under a mistake and/or misunderstanding when concurring with the 55:45 split or when issuing the Fax dated 7 December 2011.

49.Consequently, in around February or March 2012, and again in May 2012 and October 2012, the 3^rd Defendant informed the 1^st Defendant that the former instructions (whether valid or not) were to be withdrawn and none of the Bestfibre Shares were to be transferred pursuant to the Fax dated 7 December 2011, and that all the Bestfibre Shares ought to be transferred to the 3^rd Defendant instead being the representative of the Deceased’s Estate.

50.As of date, the Bestfibre Shares remain registered under the names of the 1^st Defendant and the 2^nd Defendant.

APPROACH TO EVALUATION OF EVIDENCE

51.As can be seen from the narrative of the diametrically opposite account of events in relation to the Inter Vivos Gift Issue and the Distribution Issue, this case turns essentially on the Court’s assessment of the credibility of the parties’ respective case.

52.Lord Bingham in his book The Business of Judging at pp 5 – 6 insightfully said:

“Let me then turn to the central questions. Faced with a conflict of evidence on an issue substantially effecting the outcome of an action, often knowing that a decision this way or that will have momentous consequences on the parties’ lives or fortune, how can and should the judge set about his task of resolving it? How is he to resolve which witness is honest and which dishonest, which reliable and which unreliable? How, as between competing experts in a field not his own, is a judge to determine where the truth lies? Is our existing way of resolving expert conflicts the best way? I shall begin by considering the resolution of issues of primary fact, the choice between first-hand eye-witnesses. Then I shall turn to expert evidence.

The normal first step in resolving issues of primary fact is, I feel sure, to add to what is common ground between the parties (which the pleadings in the action should have identified, but often do not)  such facts as shown to be incontrovertible. In many cases, letter or minutes written well before there was any breath of dispute between the parties may throw a very clear light on their knowledge and intentions at a particular time ….

The most compendious statement known to me of the judicial process involved in assessing the credibility of an oral witness is to be found in the dissenting speech of Lord Pearce in the House of Lords in Onassis v Vergottis. In this he touches on so many of the matters which I wish to mention that I may perhaps be forgiven for citing the relevant passage in full:

‘Credibility’ involves wider problems than mere ‘demeanour’ which is mostly concerned with whether the witness appears to be telling the truth as he now believes it to be. Credibility covers the following problems. First, is the witness a truthful or untruthful person? Secondly, is he, though a truthful person, telling something less than the truth on this issue, or, though an untruthful person, telling the truth on this issue? Thirdly, though he is a truthful person telling the truth as he sees it, did he register the intentions of the conversation correctly and, if so, has his memory correctly retained them? Also, has his recollection even subsequently altered by unconscious bias or wishful thinking or by over-much discussion of it with others? Witnesses, especially those who are emotional, who think that they are morally in the right, tend very easily and unconsciously to conjure up a legal right that did not exist. It is a truism, often used in accident cases, that with every day that passes the memory becomes fainter and the imagination becomes more active. For that reason a witness, however honest, rarely persuades a Judge that his present recollection is preferable to that which was taken down in writing immediately after the accident occurred. Therefore, contemporary documents are always of the utmost importance. And lastly, although the honest witness believes he heard or saw this or that, is it so improbable that it is on balance more likely that he was mistaken? On this point it is essential that the balance of probability is put correctly into the scales in weighing the credibility of a witness. And motive is one aspect of probability. All these problems compendiously are entailed when a Judge assesses the credibility of a witness; they are all part of one judicial process. And in the process contemporary documents and admitted or incontrovertible facts and probabilities must play their proper part.

Every judge is familiar with cases in which the conflict between the accounts of different witnesses is so gross as to be inexplicable save on the basis that one or some of the witnesses are deliberately giving evidence which they know to be untrue. There are, no doubt, witnesses who follow the guidance of the Good Soldier Sveyk that ‘The main thing is always to say in court what isn’t true,’ as a matter of principle, but more often dishonest evidence is likely to be prompted by the hope of gain, the desire to avert blame or criticism, or misplaced loyalty to one or other of the parties. The main tests needed to determine whether a witness is lying or not are, I think, the following, although their relative importance will vary widely from case to case:

(1)  the consistency of the witness’s evidence with what is agreed, or clearly shown by other evidence, to have occurred;

(2)  the internal consistency of the witness’s evidence;

(3)  consistency with what the witness has said or deposed on other occasions;

(4)  the credit of the witness in relation to matters not germane to the litigation;

(5)  the demeanour of the witness.

The first three of these tests may in general be regarded as giving a useful pointer to where the truth lies. If a witness’s evidence conflicts with what is clearly shown to have occurred, or is internally self-contradictory, or conflicts with what the witness has previously said, it may usually be regarded as suspect. It may only be unreliable, and not dishonest, but the nature of the case may effectively rule out that possibility.” (Emphasis added).

53.In Lee Fu Wing v Yan Paul Po Ting [2009] 5 HKLRD 513, Deputy High Court Judge Au (as he then was) at 524 helpfully set out the well-established approach as to assessment of witnesses:

(1)  whether the party’s case is inherently plausible or implausible;

(2)  whether the party’s case is, in a material way, contradicted by other evidence (documentary or otherwise)  which is undisputed or indisputable;

(3)  where it is shown that a witness has been discredited over one or more matters to which he has given evidence using the above tests. This is relevant to the assessment of his overall credibility; and

(4)  the demeanour of the witnesses.

54.In Lam Rogerio Sou Fung v Tan Soon Gin George HCA2576/2005, unreported, 5 May 2011, Chu J (as she then was) at §§40-41 said:

“40. Mr Chain has referred me to what Lord Devlin said extra-judicially in The Judge (Oxford University Press, 1979) at p.63, where he endorsed the words of Mr Justice MacKenna in a paper entitled “Discretion” read at University College, Dublin on 21 January 1973 (printed in the Irish Jurist, vol.IX, new series, p.1) as follows:

“This is now I go about the business of finding facts. I start from the undisputed facts which both sides accept. I add to them such other facts as seem very likely to be true, as for example, those recorded in contemporary documents or spoken to by independent witness like the policeman giving evidence in a running down case about the marks on the road. I judge a witness to be unreliable if his evidence is, in any serious respect, inconsistent with these undisputed or indisputable facts, or of course if he contradicts himself on important points. I rely as little as possible on such deceptive matters as his demeanour. When I have done my best to separate the true from the false by these more or less objective tests, I say which story seems to me the more probable, the Plaintiff’s or the Defendant’s”

I respectfully agree.

41. I also agree what was said by Peter Smith J in EPI Environment Technologies Inc & Anor v Symphony Plastic Technologies plc & Anor [2005] 1 WLR 3456, 3470-3471 at para.74, that it is essential to have regard to the entirety of a witness’ evidence. As he observed, witnesses can make mistakes, but the mistakes do not necessarily affect other parts of their evidence. Likewise, witnesses can regularly lie. However, lies themselves do not mean necessarily that the entirety of that witness’ evidence is to be rejected. A witness may lie in a stupid attempt to bolster his case, but the actual case nevertheless remains good irrespective of the lie.”

55.On fact finding, especially in civil cases, the law is binary. In Re B [2009] 1 AC 11, Lord Hoffmann at §2 (p.17) said

“If a legal rule requires a fact to be proved (a “fact in issue”), a judge, or jury must decide whether or not it happened. There is no room for a finding that it might have happened. The law operates a binary system in which the only values are zero and one. The fact either happened or it did not. If the tribunal is left in doubt, the doubt is resolved by a rule that one party or the other carries the burden of proof. If the party who bears the burden of proof fails to discharge it, a value of zero is returned and the fact is treated as not having happened. If he does discharge it, a value of one is returned and the fact is treated as having happened.” (Emphasis added.)

56.In Lo Ming Chi Charles and another. v Full power Investment Holdings Corp and another [2021] HKCFI 3073, Mimmie Chan J. at §10 insightfully said:

“The Court is the finder of facts, but the finding of facts in any case cannot be equated with the ascertainment of the truth.” (Emphasis added.)

57.I find the above guidelines helpful and will apply the same in assessing the credibility of the parties’ diametrically different versions of events.

ANALYSIS AND ASSESSMENT

Inter Vivos Gift Issue

58.The factual issue for this Court to determine is whether there was an immediate, outright, effective gift of the Bestfibre Shares by the Deceased to the Plaintiff and the 3^rd Defendant at the Dinner.

59.Having considered the oral testimony of the factual witnesses, the contemporaneous documents and conduct of the parties, and inherent probabilities, I have come to the view that the Deceased did intend and actually gifted his beneficial interest in the Bestfibre Shares to the two sons, namely, the Plaintiff and the 3^rd Defendant on 25^th August 2011 at the Dinner.

60.There is no dispute that as a matter of law, beneficial and/or equitable interest can be gifted and/or transferred without writing. What is required is a clear intention to dispose of the property so that someone else should acquire a beneficial interest. (See: In re Kayford Ltd (In Liquidation) [1975] 1 WLR 279 at 281H; Paul v. Constance [1977] 1 WLR 527 at 531G.)

61.There is no requirement in law that a disposition of an equitable interest must be in writing. The Court of Final Appeal, in Yung Shu Wu v. Vivienne Sung Wu (2011) 14 HKCFAR 39 at §72 said:-

“First, the law of Hong Kong differs from the law of England as regards the formalities required for a disposition of an equitable interest, and English authorities on the topic must be read with that difference in mind. The English rule, originating in the Statute of Frauds 1677 and now embodied in s. 53(1)(c) of the Law of Property Act 1925, is that an inter vivos disposition of an equitable interest must be made by a written instrument signed by the disposer (or by an agent authorized in writing). Section 6(1)(c) of Law Amendment and Reform (Consolidation) Ordinance, Cap 23 (“LARCO”) was to the same effect. But s.6(1)(c) of LARCO was repealed in 1984 and has not been reenacted. So a signed written instrument is no longer required, as a matter of law, for the disposition of an equitable interest.” (Emphasis added)

62.The choice of law for the transfer of proprietary rights in a movable is the law of the place where the movable is situated. The court applies the laws of the lex situs. In other words, the issue of the beneficial ownership of the company shares is to be determined by the law of the place where the company was incorporated. ; (See: Halsbury’s Laws of Hong Kong, 2^nd Edn, Vol. 16 at §100.065; Triple Trading Ltd & Ors v. Prosperfield Ventrues Ltd & Anor (CFA) [2006] 1 HKLRD 200 at §86.)

63.First, all the participants who attended the Dinner, except the 3^rd Defendant, testified before this Court that the Deceased did express his intention to make an outright and immediate gift of his beneficial interest in the Bestfibre Shares to his two sons, the Plaintiff and the 3^rd Defendant. The 1^st Defendant, who is neutral in the present dispute, testified that the Deceased did say that he made an outright gift to his two sons. The 1^st Defendant confirmed that her pleaded case is true and accurate. In §10(a) of her Defence, she avers that “the Deceased did say something about giving his property to his two sons”. In §10(c), she avers that “the Deceased told the 1^st Defendant that the Deceased gave all his shares in Bestfibre to his two sons.” (Emphasis added.) In §10(e), she said “the 1^st Defendant orally agreed with the Deceased to transfer the shares of the Deceased to his two sons.”

64.The 1^st Defendant’s evidence was not challenged by the 3^rd Defendant. I accept Mr Wong’s submission that the Deceased made the trouble of inviting the 1^st Defendant to go to Taiwan for a specific and important purpose, namely, to gift his beneficial interest in the Bestfibre Shares to his two sons. There is nothing for this Court to doubt the credibility of the 1^st Defendant’s evidence. Her evidence confirms that there was an immediate and outright transfer of the Deceased’s beneficial interest in the Bestfibre Shares to the Plaintiff and the 3^rd Defendant.

65.Similarly, the 4^th Defendant, who is also neutral in this dispute, also confirmed that prior to the Dinner, the Deceased called her and told her that his assets including the Bestfibre Shares would be given to his two sons. The Deceased requested her to sign her Power of Attorney.

66.It is important to note that although the 4^th Defendant signed a consent letter dated 11 December 2013 (the “Consent Letter”), she explained that it was the 3^rd Defendant who arranged her to sign the Consent Letter (as well as her revocation of the Power of Attorney dated 2 April 2012) and hired the notary public 林金鳳.

67.Her evidence is that she did not want herself and her two daughters to be involved in the dispute between the Plaintiff and the 3^rd Defendant, she just signed it as requested without giving much thought to it.

68.Importantly, she said that as a long period of time had lapsed since the Dinner, she believed that the Plaintiff and the 3^rd Defendant should have already completed the “formalities” (手續) for the distribution of the Bestfibre Shares between themselves. It shows that in her mind, and indeed it was her evidence as well, the Deceased had already gifted the Bestfibre Shares to the two sons and she was labouring under the belief that the “formalities” had been completed long time ago. She repeated that a number of times in Court.

69.The 4^th Defendant also informed the Court that in the telephone conversation with the Deceased prior to her going to the Dinner, the Deceased did tell her that he had already gifted the shares to the Hsu brothers.

70.This Court accepts the 4^th Defendant as an honest and credible witness. On balance, it is more probable that it was the 3^rd Defendant who requested or demanded the 4^th Defendant to sign the Consent Letter and to revoke her Power of Attorney. The 3^rd Defendant’s case that he had never made such request or demand and it was the 4^th Defendant who on her own volition signed the Consent Letter and the Power of Attorney. Such case simply defies belief. It also affects the Court’s assessment of the credibility of the 3^rd Defendant. I find the 4^th Defendant’s explanation of the reasons leading to her signing of the Consent Letter and her revocation of her Power of Attorney credible.

71.Insofar as Ms Ng’s evidence is concerned, although she is the Plaintiff’s assistant, I find her evidence to be consistent and coherent. Her evidence is that Lawyer Huang, the Deceased and the 1^st Defendant were there when she arrived. When the Dinner was halfway through, Lawyer Huang took out a power of attorney to let the Deceased sign and the Deceased said “我把我的財產都給他們兩兄弟”. The 4^th Defendant arrived later and the Deceased told her that “我把這些都簽給他們了, 那你也趕快”. Then the Deceased said to the 1^st Defendant that “那你也趕快辦妥” and “以後你就對他們”. The 1^st Defendant replied that “會告訴我兒子”. Lawyer Huang then added the Handwritten Words in the Powers of Attorney. For each Power of Attorney, four copies were signed. The Deceased, the 3^rd Defendant, the Plaintiff and Lawyer Huang each have a copy.

72.By “以後你就對他們”, I am of the view that it means that from that point of time onwards, the 1^st Defendant were to deal with the Plaintiff and the 3^rd Defendant qua beneficial owners and to arrange for the transfer of legal titles of the Bestfibre Shares to them. Mr Lau for the 3^rd Defendant submitted that it could also mean that the 1^st Defendant would have to take instructions from the Plaintiff and the 3^rd Defendant because of the Powers of Attorney rather than because of an outright and immediate gift of beneficial ownership. However, against the factual matrix, I am of the view that on balance, an outright and immediate gift sits better with the intention of the Deceased and all the other circumstantial evidence. It makes little sense for the Deceased to maintain and/or keep the beneficial interest and then instruct the 1^st Defendant to only transfer the legal title of the Bestfibre Shares to the Plaintiff and the 3^rd Defendant pursuant to the terms of the Powers of Attorney.

73.As the 3^rd Defendant said during his oral testimony, if the beneficial interest were not passed prior to the Deceased’s death, there would be Taiwanese tax implications. The Deceased is a seasoned businessman. In my view, it is inherently improbable that he would have gone through the trouble of getting the 1^st Defendant to travel to Taiwan and yet let his beneficial interest in the Bestfibre Shares remained undisposed of.

74.The Plaintiff’s evidence on this issue is straightforward and credible. His evidence is that at the Dinner and in front of the people attending, the Deceased said “這些就都給你們(兄弟)了”. He understood the words “這些” to mean all the Deceased’s assets including the Bestfibre Shares since the 1^st Defendant was also invited to attend the Dinner. Lawyer Huang then took out the Powers of Attorney, added the Handwritten Words, and let the Deceased and the 4^th Defendant (who came later) sign them.

75.The 3^rd Defendant initially said that the Deceased did not utter words to the effect as alleged by the Plaintiff and the other witnesses including the 1^st Defendant and the 4^th Defendant. However, during cross-examination, he refined his evidence and said that as he was walking around during the Dinner, he did not hear the Deceased saying those words as suggested by the Plaintiff but he might have said so.

76.Secondly, it is important that the parties’ conduct speaks volume. After the Dinner, the Plaintiff and the 3^rd Defendant met in September 2011 and reached an agreement on the distribution ratio. Mr Wong for the Plaintiff rightly submitted that the 3^rd Defendant admitted that, if the Deceased were to pass away, Madam Liu, his two sons (i.e. the Plaintiff and the 3^rd Defendant) and four daughters (the Elder Sister, the Younger Sister and two daughters of the Deceased and the 4^th Defendant) would be the beneficiaries of the Deceased’s estate. So unless the Deceased had given all his assets to the Plaintiff and the 3^rd Defendant at the Dinner, there was no reason why they needed to discuss how the Deceased’s assets should be distributed between the two of them (to the exclusion of all other potential beneficiaries of the Deceased’s estate). I agree that the 3^rd Defendant’s conduct strongly suggests that he shared the same understanding with the Plaintiff that the Deceased’s assets had been gifted to them at the Dinner. Otherwise, it is inexplicable as to why the Plaintiff and the 3^rd Defendant could even have started to discuss and agree on a distribution ratio between themselves.

77.Thirdly, the Fax dated 7 December 2011 and the 3^rd Defendant’s trip to Hong Kong on the same day are strong and telling evidence which support the Plaintiff’s case. The fact that the Plaintiff and the 3^rd Defendant requested the Bestfibre Shares and Wah Luen Shares to be transferred to their respective nominees in accordance with the Agreed Ratio clearly shows that the transfer was for their own benefit, instead of for handling the same on behalf of the Deceased.

78.In fact, the 3^rd Defendant admitted that the purpose of asking the 1^st Defendant to arrange the transfer of the Bestfibre Shares and Wah Luen Shares was to distribute these assets between the Plaintiff and the 3^rd Defendant (and that was why the Plaintiff and the 3^rd Defendant appointed their own nominees as their respective new trustees), and the Wah Luen Shares transferred to Chen Hui-E were his personal assets after the transfer. At that time, the Deceased was still alive. If the Deceased had not given these assets to them at the Dinner, it is inexplicable as to on what basis the Plaintiff and the 3^rd Defendant could have requested the distribution of the same before the Deceased’s death. This gives credence to the Plaintiff’s case that beneficial interest of the Bestfibre Shares (like the Wah Luen Shares) had already passed to the Plaintiff and the 3^rd Defendant at the Dinner. Any discussion of a ratio of distribution could only be premised upon the Plaintiff and the 3^rd Defendant’s immediate and outright entitlement of the Bestfibre Shares.

79.Fourthly, the actual distribution of the Wah Luen Shares is a very strong supporting evidence for an outright and immediate gift of such shares to the Plaintiff and the 3^rd Defendant. There is no explanation as to why there should be a difference in treatment between the Wah Luen Shares and the Bestfibre Shares. In fact, but for the 2^nd Defendant’s divorce proceedings in Hong Kong, the Bestfibre Shares would, like the Wah Luen Shares, have been transferred to the Plaintiff and the 3^rd Defendant.

80.Fifthly, the existence of the Powers of Attorney which is heavily relied upon by the 3^rd Defendant is not inconsistent with an outright and immediate gift of the Deceased’s beneficial interest in the Bestfibre Shares. It must be remembered that as at the Dinner, the Deceased only has beneficial interest in the Bestfibre Shares and that was all that he could have gifted away as far as Bestfibre Shares are concerned. The fact that a power of attorney was executed as a means to implement the transfer of assets (including the Bestfibre Shares) to the two sons does not, by itself, defeats the existence of an outright and immediate inter vivos gift of the Deceased’s beneficial interest in the Bestfibre Shares. Mr Lau for the 3^rd Defendant rhetorically asked if the Deceased did intend to transfer his beneficial interest in the Bestfibre Shares, he could have set that out in the Powers of Attorney or in a written piece of document. If there is a written declaration of trust, there would be no need for this issue to be tried at all. There might be a basket of reasons as to why the Deceased had not then reduced the outright and immediate gift in written form (for example, taxation), but that is not fatal to the Deceased’s outright and immediate gift of the Bestfbre Shares to the Plaintiff and the 3^rd Defendant.

81.Indeed, the added Handwritten Words which were initialized by the Deceased and the 4^th Defendant supports the case of immediate and outright gift of, inter alia, the beneficial interest of the Bestfibre Shares. The Bestfibre Shares could be transferred into the names of the Plaintiff and the 3^rd Defendant only because there was an outright and immediate gift of the same. That, in my view, is the root cause.

82.Sixthly, insofar as the 3^rd Defendant’s reliance on the Family Meeting which predates the Dinner is concerned, even if the notes produced by Tsang is an accurate record of what were discussed at the meeting, it merely evidences an inchoate intention on the part of the Deceased. Nothing concrete was set in stone. The Deceased had not bequeathed any of his assets through a Will.

83.Mr Wong for the Plaintiff is correct that as Tsang was not called as a witness, the probative value of his note or fax is questionable. It is perfectly legitimate for Mr Wong to submit that there is no satisfactory explanation as to why Tsang needed to reduce his written notes into a fax six months after the meeting in May 2011 (it is impossible that it could be due to the distance between Taiwan and USA as alleged by the 3^rd Defendant as it is the 3^rd Defendant’s own evidence that it was sent by fax). If the Deceased was meant to give instructions on distribution of his assets at Family Meeting (as alleged by the 3^rd Defendant), Tsang, being his trusted employee, should have reduced his written notice into a fax or a memorandum as soon as practicable and not some six months after the event.

84.Mr Wong for the Plaintiff also rightly submitted that no distribution ratio was given for assets in Hong Kong and Taiwan. It is somewhat curious that distribution ratio was set out for the Deceased’s USA Assets only.

85.Mr Wong for the Plaintiff also insightfully pointed out that the 3^rd Defendant’s understanding that he would receive the majority of the Deceased’s assets in Hong Kong and Taiwan after his death is inconsistent with his instructions given to the 1^st Defendant to transfer the Bestfibre Shares and Wah Luen Share jointly when the Deceased was still alive.

86.Seventhly, I do not find the 3^rd Defendant to be a credible witness. His evidence is that he would have no problem to transfer 55% of the Bestfibre Shares to the Plaintiff had he not discovered that his 35% entitlement to the USA Assets had gone missing. This has never been the 3^rd Defendant’s pleaded case. His witness statement (§28-30) and Re-Amended Defence and Counterclaim (§19) rely only on the Misrepresentation. Mr Lau for the 3^rd Defendant submitted that there was also an underlying understanding in relation to the 3^rd Defendant’s entitlement to the USA Assets. However, this is not what the 3^rd Defendant said in his witness statement. It is also not his pleaded case.

87.Indeed, in §36 of his witness statement, the 3^rd Defendant only mentioned about the undecided 15% and not that his 35% entitlement had been gone missing. There is no proper explanation as to why such an important event was not mentioned in his witness statement and not formed part of his pleaded case.

88.Importantly, as a matter of fact, this Court is impressed by the testimony of 許玉欣. She gave very credible evidence that she was and is still grateful to the Plaintiff, her second brother, for taking care of her all those years. She repeatedly and in my view, rightly, stressed that the Plaintiff did not pay her any interest for her NTD2 million. But if one where to express it in terms of interest, it would be over 10% or even 20% per annum. She never looked at it that way. The Plaintiff took and is still taking good care of her at all relevant times and up to the present, pursuant to the promise he gave to their mother. She was and is still grateful to the Plaintiff. She was annoyed that what she had told the 3^rd Defendant about what the Plaintiff had helped her had turned into a ground for setting aside the agreement on the ratio of distribution.

89.In fact, the 3^rd Defendant confirmed to this Court that the support for the sisters is a relatively minor issue. But for the fact that he discovered that his 35% entitlement of the USA Assets had gone missing, he would not have tried to set aside the agreement on the ratio of distribution. His evidence is that given that he has lost all his entitlement in the USA Assets and the Plaintiff has obtained about 90% of the Deceased’s Taiwan assets, there is no longer any reason why he should share the Bestfibre Shares with the Plaintiff.

90.The 3^rd Defendant, under cross-examination, accepted that the Plaintiff has been taking care of the two sisters since the death of their mother by giving them monthly payments. As such, I do not find it responsible and credible to mount and maintain a claim on the Misrepresentation for the purpose of setting aside the agreement on the ratio of distribution.

91.Further, the 3^rd Defendant said that the Taiwan lawyer 黃啓倫 (“Lawyer Huang”) did not witness the Deceased’s signing of his Power of Attorney because he was late. According to the 3^rd Defendant’s oral testimony, the 4^th Defendant left the Dinner first, then followed by the Deceased and his wife (劉玉玄) (“Madam Liu”), and Lawyer Huang only arrived after they had left. Mr Wong for the Plaintiff is correct that the 3^rd Defendant’s evidence cannot be true as there are photos showing both the 4^th Defendant and Lawyer Huang, which means that they were present at the Dinner at the same time. When he was asked how could both the 4^th Defendant and Lawyer Huang possibly appear in the same photos if the 4^th Defendant had left before Lawyer Huang arrived, the 3^rd Defendant at first said that the quality of the black and white photos in the hearing bundles was not very good and he could not confirm whether the person marked “陳秀敏” was really the 4^th Defendant. When the original of the photograph was later shown to him, he said the person had the feeling of the 4^th Defendant (有那個味道）but still did not positively confirm that it was the 4^th Defendant. It is to be noted that the 3^rd Defendant said that he was close to the 4^th Defendant and treated her daughters as her sisters. Hence, I agree that it is difficult to fathom as why the 3^rd Defendant was unable to identify the 4^th Defendant.

92.Additionally, it is puzzling and unbelievable that the handwritten words “包括將上述產業轉到被授權人名下” in the Deceased’s Power of Attorney was added after the Deceased had left the Dinner. The 3^rd Defendant admitted that the initial next to the Handwritten Words was the Deceased’s. When he was asked how could the Deceased possibly sign next to the Handwritten Words if they were added after the Deceased had left, the 3^rd Defendant did not give any credible explanation but only said that “there was ghost in the family”.

93.Moreover, the 3^rd Defendant insisted that it was the Plaintiff who unilaterally arranged the Dinner which coincided with the 1^st Defendant’s visit to Taiwan during that period. The selection of guests was also arranged by the Plaintiff without the Deceased’s input and the Plaintiff had not informed the attendees of his ulterior motive. I agree that his evidence is flatly contradicted by all the objective and unchallenged evidence. First, the 1^st Defendant admitted that she had never met the Plaintiff before the Dinner and she was invited by the Deceased to attend the Dinner. The 4^th Defendant also confirmed that it was the Deceased who asked her to attend the Dinner. Secondly, the 1^st Defendant said that she specifically made a trip to Taiwan upon the Deceased’s invitation. It was not a case that the Plaintiff had arranged the Dinner on 25 August 2011 to coincide with the 1^st Defendant’s visit to Taiwan. Thirdly, both the 1^st Defendant and the 4^th Defendant confirmed that they knew the purpose of the Dinner before attending the same. This seriously affects the 3^rd Defendant’s credibility.

94.Importantly, as mentioned above, it is the 3^rd Defendant’s primary case and evidence in his witness statement that the Deceased did not say the words “這些就都給你們了” at the Dinner. During cross-examination, the 3^rd Defendant changed his evidence and said that he was walking around to take care of the 4^th Defendant who arrived late. The 3^rd Defendant eventually confirmed that he did not hear the Deceased saying the words but the Deceased might have spoken them.

95.Also, the 3^rd Defendant asserted that he was the majority shareholder of Bestfibre when it was established in 1987. In 1992, he became seriously ill and transferred all his shares in Bestfibre (including those being held on trust for him) to the Deceased or the 4^th Defendant upon the Deceased’s promise to return those shares when he recovered. When he was asked why he never asked the Deceased to return the shares, the 3^rd Defendant at first said that he had still not recovered. When it was pointed out to him that his evidence that he had not recovered was inconsistent with his evidence in his witness statement that “I supported my father’s decision and did not take up the business of Bestfibre after full health recovery” (emphasis added), the 3^rd Defendant insisted that there was no inconsistency because he was still on medication. The 3^rd Defendant later refined his evidence and said that he did ask the Deceased to return the shares but the Deceased was not pleased with his request and said, “You thought I am dying?” (你以為我會死).

96.Overall, this Court is not impressed with the testimony of the 3^rd Defendant. This Court finds that, for his own reasons, the 3^rd Defendant was trying to set aside his agreement with the Plaintiff on the ratio of distribution of the outright and immediate gift by the Deceased. This Court is not in a position to determine the issue of whether the Plaintiff has obtained all the USA Assets or 90% of the Taiwan assets of the Deceased in this trial as no evidence have been filed to support such allegations. However, this Court is of the clear view that, on balance, the Deceased did make an immediate and outright gift of his beneficial interest in the Bestfibre Shares and on that basis the Plaintiff and the 3^rd Defendant entered into an agreement to distribute the same between them according to the Agreed Ratio.

97.Finally, for the sake of completeness, this Court draws no adverse inference against the Plaintiff for the failure to call her sister 許玉芬 and 李粵強 to testify in court. The Plaintiff explained that許玉芬could not attend the trial because she had a serious traffic accident in December 2022 and was wheel-chair bound and 李粵強 could not attend because his mother, who was over 90, was in critical condition and may pass away anytime. The Plaintiff’s explanation is supported by documents which are not challenged. This Court does not take into account the content of their witness statements in the determination of the issues to be resolved in this trial.

98.Mr Lau for the 3^rd Defendant, doing his very best, submitted that the Plaintiff has not pleaded an immediate and outright gift of the Deceased’s beneficial interest in the Bestfibre Shares. This is not correct. Paragraph 11 of the Statement of Claim reads:-

“On or about 25 August 2011, after the meal at a dinner gather in a restaurant named “神旺大飯店” in Taiwan:

(1)  HLY told all persons present there that he was not in good health and that he would like to deal with all his assets and possessions appropriately. HLY announced in the presence of all those attending that dinner gathering that he gave the Plaintiff and the 3^rd Defendant all those assets in Chinese: “這些就都給你們了”;

(2)  HLY thereby effected a gift of, amongst other assets, his beneficial interest in the 8,000,000 shares in Bestfibre to the Plaintiff and the 3^rd Defendant jointly;

(3)  HLY orally notified the 1^st Defendant that the trust arrangement under which the 1^st Defendant and her son, namely, the 2^nd Defendant, were holding the shares in Bestfibre was to cease and instructed the 1^st Defendant to have all the Bestfibre Shares transferred to the Plaintiff and the 3^rd Defendant;

(4)  Mdm. Chen Hsiu Min orally confirmed the instructions to the 2^nd Defendant, albeit through the 1^st Defendant, to transfer all the shares of the Bestfibre held in his (the 2^nd Defendant’s)  name to the Plaintiff and the 3^rd Defendant;

(5)  The 1^st Defendant expressed her agreement to transfer the shares and to inform the 2^nd Defendant of the instructions so that all the Bestfibre Shares would be transferred to the Plaintiff and the 3^rd Defendant as instructed.” (emphasis added)

99.The 4^th Defendant in §6 of her witness statement states that:

“在許老有先生及本人簽署上述授權書時，許老有先生已向吳楚娟表示從那時開始吳楚娟、陳子文改為以信托方式為許清俊及許清芳持有該萬好股份，許老有先生不再享有該萬好股份的實益擁有權。”(Emphasis added.)

100.The 4^th Defendant is a neutral witness in this case. I find her evidence to be credible. Although she could not precisely understand the term “trust” as a legal concept, or that the precise word “trust” was used due to the long lapse of time, the only scenario where the Deceased would cease to have beneficial interest is that he passed to someone else. In this case, the Plaintiff and the Defendant. This evidence supports the Plaintiff’s case that the Deceased had unambiguously gifted his beneficial interest in the Bestfibre Shares to the Plaintiff and the 3^rd Defendant by saying “這些就都給你們了”. The fact that she agreed during cross examination that “POA is the only basis on which the two brothers could give instructions for the transfer of shares” is neither here nor there as the 4^th Defendant is not a lawyer. It is reasonable that she thought that the Powers of Attorney are the legal instruments for the purpose of transferring shares. I do not expect the 4^th Defendant to be able to engage in a conversation with Mr Lau on the rights of a beneficial owner of a share. What is important is that she gave evidence that the Deceased’s interest (whatever the legal nature) was passed to the two brothers and the 1^st and 2^nd Defendants were to act according to their instructions.

101.In Ng Kit, the Legal Representative and the Sole Beneficiary of the Estate of Ng Kwun Yuen deceased v Wu Tsun Hua [2021] HKCFI 877, Deputy High Court Judge Paul Lam SC at §§110-111 said:

“110. … 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:

“The statute does not forbid or destroy equitable assignments or impair their efficacy in the slightest degree.”

As stated in Halsbury’s Laws of England (5^th ed., 2009), vol. 13, §28 at p 23:

“No form of words is required for an equitable assignment; the only thing that is necessary is to make the meaning plain. The assignment may be by word of mouth, unless in the particular case writing is required by law, and no particular form of words is necessary so long as the words clearly show an intention that the assignee is to have the benefit of the chose or thing in action. There must, however, be some act by the assignor showing that he is passing the chose in action to the supposed assignee. An actual intention not to assign an interest will not prevent an assignment being effective if the parties have contracted to do an act which in law constitutes an assignment. The assignment may be addressed either to the debtor or to the assignee…”

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 (5^th 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 (5^th 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 (5^th 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 (5^th 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 (5^th ed., 2009), vol. 13, §47, p 37).” (Emphasis added)The Why there has been an immediate outright gift on 25^th August 2011: contemporaneous document, inherent probabilities, act of parties, September discussion, transfer to nominee, etc” (emphasis added).

102.I agree that the fact that a beneficial owner instructs his or her trustee to transfer the legal title to the donee at the same time when he or she makes the gift of beneficial interest does not mean that, as a general rule, all beneficial interest could only be passed when the legal title is transferred.

103.To conclude, I find that the Deceased clearly expressed his intention to make an immediate and outright gift of, inter alia, his beneficial interest in the Bestfibre Shares to the Plaintiff and the 3^rd Defendant. Such intention was reinforced by his instruction to the 1^st Defendant (and the 2^nd Defendant) to transfer the legal title of the Bestfibre Shares to the Plaintiff and the 3^rd Defendant and his execution, and causing the 4^th Defendant to execute, the Powers of Attorney. The Deceased’s intention to make a gift is clear and unambiguous. The Deceased’s intention was well understood by all persons attending the Dinner including the Plaintiff, the 1^st Defendant, the 4^th Defendant, Ms. Ng. Although the 3^rd Defendant refuses to admit, I am of the view that he must have known the Deceased’s intention to gift, for otherwise he would not have met the Plaintiff later to discuss the distribution ratio and gave instruction to the 1^st Defendant to transfer (the legal title of) the Bestfibre Shares in accordance with the Agreed Ratio.

104.It is also to be noted that the Deceased only had the beneficial interest of the Bestfibre Shares, insofar as the gift of such interest is concerned, he had done everything he could by expressing his intention to make a gift to the Plaintiff and the 3^rd Defendant and there was nothing more that he would need to do in order to complete the gift.

105.Hence, this Court finds that the gift of the beneficial interest of the Bestfibre Shares has been perfected at the Dinner and the 1^st and 2^nd Defendants are holding the Bestfibre Shares on trust for the Plaintiff and the 3^rd Defendant.

The Distribution Issue

106.The Distribution Issue is relatively straightforward. The Plaintiff’s pleaded case is that on or about 1 September 2011, P and D3 “agreed between themselves on the distribution proportion of 8,000,000 shares in Bestfibre, namely 55% and 45% for the Plaintiff and the 3^rd Defendant respectively”. In other words, the Plaintiff is seeking to enforce the agreement between him and the 3^rd Defendant. The 3^rd Defendant submitted that there is no consideration in support of the agreement. I disagree. It is established law that mutual promise can amount to consideration (See Chitty on Contracts, 34^th edition, paragraph 6-008). In Hang Seng Finance Limited v. Chan Kwok Yim, HCA 995/2000, 17^th April 2002, Deputy High Court Judge Ronny Tong SC, at §15 said:

“First, Mr Au-Yeung sought to argue that the Plaintiff’s claim as pleaded was defective in that no consideration had been pleaded. This is a bad point. The Plaintiff pleaded in paragraph 8 the retainer given to the Firm. There was obviously consideration in that the Plaintiff had agreed to retain the Firm and the Firm had agreed to act as the Plaintiff’s solicitors to prepare the mortgage in question. Such mutual promise is sufficient consideration for the enforcement of a contract; see: Chitty, 28^th edn., vol. 1, para.3.011. In any event, it was plainly an implied term that as solicitors acting on behalf of the Plaintiff, the Firm was entitled to fees to be paid by the Plaintiff.” (Emphasis added).

107.Further, in Whitlock v. Moree [2018] 3 LRC 250, Lord Briggs (with whom Lady Hale and Lord Sumption agree) at §24said:-

“Next, the co-owners receiving a transfer of property into joint names may themselves declare their agreement as to the beneficial interests on which that property is or is to be held and, if they do so in a written instrument, such as the conveyance to them, the identification of those beneficial interests will again be a matter of construction of the instrument, and recourse to doctrines of resulting, implied or constructive trust is impermissible: see Pettitt v Pettitt [1969] 2 All ER 385 at 405–406, [1970] AC 777 at 813 per Lord Upjohn and Gissing v Gissing [1970] 2 All ER 780 at 789–790, [1971] AC 886 at 905 per Lord Diplock.” (Emphasis added)

108.From the evidence, whether it is the Plaintiff’s version or the 3^rd Defendant’s version, the parties had negotiated on the distribution ratio and finally they mutually agreed on the Agreed Ratio. I accept Mr Wong’s submission that by mutually agreeing on the Agreed Ratio and jointly sending the Fax dated 7 December 2011 to the 1^st Defendant to request transfer of shares in accordance with the Agreed Ratio (the Fax dated 7 December 2011 was sent to the 1^st Defendant by the 3^rd Defendant with the Plaintiff’s consent), there is no room for the 3^rd Defendant to argue that he is not bound by the agreement, subject only to his defence of misrepresentation.

109.Mr Lau for the 3^rd Defendant ingeniously submitted that the default position is that the Bestfibre Shares were to be shared equally between the Plaintiff and the 3^rd Defendant and the agreement on distribution ratio means an inter vivos gift of 5% from the 3^rd Defendant to the Plaintiff. I am of the view that it is not necessary for this Court to go into this analysis as it has never been the Plaintiff’s pleaded case that the extra 5% was a gift from the 3^rd Defendant to the Plaintiff. It is clear to this Court, after the negotiation or discussion in September 2011, the parties have reached an agreement on distribution which the 3^rd Defendant now seeks to set aside on the ground of misrepresentation.

110.In any event, I agree with Mr Wong’s analysis that the intention of the 3^rd Defendant to gift 5% more to the Plaintiff (for whatever reasons) is clear from the 3^rd Defendant’s own oral testimony as well as the Fax dated 7 December 2011. It is difficult to see how the 3^rd Defendant can now argue that there was no clear intention of gift of 5% from the 3^rd Defendant. The gift of 5% of the beneficial interest in the Bestfibre Shares has been completed at the time when they agreed on the distribution ratio and evidenced by the Fax dated 7 December 2011.

Misrepresentation

111.The 3^rd Defendant’s case is that when he met with the Plaintiff to discuss the distribution ratio, the Plaintiff represented to him that the Plaintiff had been taking care of their younger sisters, by making gratuitous payments each month to their younger sisters since 1986. Relying on the Plaintiff’s representation, the 3^rd Defendant agreed the Agreed Ratio. After the death of the Deceased, in or about February to March 2012, the 3^rd Defendant learned that the Plaintiff’s representation had been incorrect and incomplete in that the Plaintiff’s part monthly payments had been taken from the interest generated from the sisters’ portion of the mother’s estate and were therefore not gratuitous at all.

112.The Plaintiff denies the 3^rd Defendant’s allegation and said that there was no mention of his monthly payments to the sisters when they discussed the distribution ratio. At first, the 3^rd Defendant proposed that he would take 40% only leaving the remaining 60% to the Plaintiff as the 3^rd Defendant had caused the Deceased to lose a lot of money in the past. A few days later, the 3^rd Defendant asked the Plaintiff to give 5% to his eldest son (also the eldest grandson of the Deceased) with whom the Plaintiff had a very good relationship. The Plaintiff agreed and the ratio was changed to 55% to the Plaintiff and 45% to the 3^rd Defendant (5% of which was supposed to be given to the 3^rd Defendant’s eldest son).

113.I have no hesitation in preferring and believing the Plaintiff’s account of events. I accept the Plaintiff as a very honest and credible witness. He has been taking care of his sisters for many years out of love and care. This is evident from her sister’s expression of gratitude to him. On the other hand, 許玉欣gave evidence that the 3^rd Defendant did cause the Deceased to lose a lot of money in the past. Mr Lau in his closing submissions referred to various minor inconsistencies in the Plaintiff’s evidence. I do not find them material in deciding on the overall credibility of the Plaintiff.

114.I also note that the 3^rd Defendant said that he discovered the Plaintiff’s misrepresentation shortly after the Deceased’s death. However, he did not raise such a complaint until his affirmation dated 20 October 2014, despite the fact that there was exchange of numerous letters between the respective legal representatives before that. This tends to show that the 3^rd Defendant’s version of events is incredible. Had he been fraudulently misled, as alleged, it is only natural that he would have complained in the first available opportunity and not to raise the same until his affirmation dated 20 October 2014. That should be the end of analysis on this issue.

115.In any event, even if the alleged representations were made, I find the same to be true and accurate. The evidence of 許玉欣is both clear and firm. I do not accept that because the Plaintiff has assisted her all the time so that the Court should ignore her evidence as being biased in favour of the Plaintiff. I find her testimony to be honest and truthful. Since the death of their mother in 1986, the Plaintiff had been paying her and the Elder Sister NTD30,000 per month. That should be the end of analysis. In around 1989, she accumulated a sum of NTD2 million and did not know what to do with it. As she trusted the Plaintiff very much, she put the said NTD2 million with the Plaintiff. Since then, the Plaintiff has been paying her an extra of NTD20,000 per month, in addition to the original NTD30,000 per month. She denied that the said sum of NTD2 million was a loan to the Plaintiff or that the extra NTD20,000 per month was interest. She asked rhetorically who would pay her such a high interest rate for such a long time if he did not have blood-relationship with her.

116.She further said that, after the death of the Deceased, she returned to Taiwan from Canada (where she is living) to attend his funeral and the 3^rd Defendant went to pick her up from the airport. During causal chat at the journey, the 3^rd Defendant learned for the first time that she had entrusted money with the Plaintiff (she had never mentioned to the 3^rd Defendant before). She believed that the 3^rd Defendant simply used the information to make up the reason for refusing to honour the Agreed Ratio.

117.The evidence of 許玉欣is not seriously challenged. In fact, even the 3^rd Defendant admitted that the Plaintiff had been taking good care of the two sisters. The 3^rd Defendant also admitted that he was thankful for the Plaintiff’s care and support to him and his family when he was seriously ill and when he went to jail. It appears that the Plaintiff had been consistently providing care and support to all his siblings. I agree that not only has the 3^rd Defendant failed to adduce evidence to support his allegation of misrepresentation, all evidence positively show that the Plaintiff’s representation (if they were made) was true and correct.

118.Further, it is the 3^rd Defendant’s own evidence during cross-examination that the main reason of his attempt to set aside the Agreed Ratio of distribution was because he believed that the Plaintiff had misappropriated his 35% share in the Deceased’s assets in USA and also taken 90% share in Deceased’s assets in Taiwan. Therefore, he took the view that it was only fair for him to get 100% of the Bestfibre Shares. He confirms that if the Plaintiff gives him back his 35% in the Deceased’s assets in USA, he has no objection to allow the Plaintiff to get 55% of the Bestfibre Shares.

119.I agree that it is clear that the 3^rd Defendant’s evidence is inconsistent with his case that he was induced to agree on the Agreed Ratio by the Plaintiff’s representation and he wanted to set aside the agreement because he discovered that the Plaintiff’s representation was incorrect or incomplete. Based on the 3^rd Defendant’s own oral testimony, it is clear that the Plaintiff’s representation (if they were made) had played no part in his agreeing on or resiling from the agreement of the Agreed Ratio.

The Powers of Attorney

120.Mr Lau for the 3^rd Defendant stressed the importance of the Powers of Attorney and the 4^th Defendant’s revocation of the same. However, as a result of this Court’s factual findings as set out above, I do not find it necessary to deal with the issue of the revocation of the 4^th Defendant’s Power of Attorney. The beneficial interest in the Bestfibre Shares has been gifted and the distribution ratio agreed upon.

121.I should also mention that Mr Lau for the 3^rd Defendant has diligently filed very comprehensive written closing submissions and a reply submissions listing out and detailing all possible arguments, legal or otherwise, for the 3^rd Defendant. This Court has carefully and duly considered the same. But in view of the factual findings as set out above, this Court finds it unnecessary to deal with each and every point raised by Mr Lau.

122.Mr Lau’s main point is that the intention was to appoint the Plaintiff and the 3^rd Defendant as lawful attorneys of the Bestfibre Shares at the Dinner so that those shares would be dealt with and/or obtained by the Plaintiff and the 3^rd Defendant by and pursuant to the Powers of Attorney. However, this does not sit well with this Court’s finding that there was an immediate and outright gift of the beneficial in the Bestfibre Shares. Apart from the factual findings, it is inherently unlikely that the Deceased, a seasoned businessman but not a lawyer, would have contemplated that the gift to his two sons could only be effected upon the registration of their names as legal owners on the register of members of Bestfibre Company Limited. This is unreal when the Deceased himself only had beneficial interest of the same.

123.The Powers of Attorney were executed not only to deal with the Bestfibre Shares but all the other assets of the Deceased. I do not find there to be any inconsistence between an immediate gift of the beneficial interest of the Bestfibre Shares and the execution of the Powers of Attorney to deal with all of the assets (including the Bestfibre Shares) of the Deceased.

124.Insofar as the 3^rd Defendant’s reliance on the solicitors’ correspondence in relation to demand for transfer of legal title pursuant to the Powers of Attorney, I do not find it necessarily inconsistent with an immediate and outright gift of the beneficial interest of the Bestfibre Shares. It was natural for solicitors to act on written documents, namely, the Powers of Attorney. This does not, by itself, defeats an immediate and outright gift of the beneficial interest of the Bestfibre Shares.

125.Mr Lau also submitted that it is important to bear in mind a distinction – the Plaintiff’s witnesses have all given evidence that the Deceased uttered certain words to the effect that he was “giving” (“給”) the Plaintiff and the 3^rd Defendant something in relation to his assets, but none of them said or was able to confirm that the Deceased actually used the word “gift” (“贈與”). With respect, I am of the view that this is irrelevant. Ordinary men in the street would not use words like贈與 in their colloquial conversations. I see no material difference between the word “give” (“俾”) and the word “gift” (“送俾”). Similarly, in my view it really does not matter whether the parties used the word “trust” in their dialogues.

126.Further, I do not accept that a lack of a proportion for distribution demonstrates a lack of intention to make an immediate gift. In fact, the 3^rd Defendant’s case is that in default the proportion should be 50:50.

127.Moreover, I am of the view that no mileage can be gained by referring to the act of deploying the Powers of Attorney to effect a share of the legal title of the Bestfibre Shares. It is correct as a matter of law that the Plaintiff and the 3^rd Defendant could have invoked their status as beneficial owners of the Bestfibre Shares to direct the 1^st and 2^nd Defendants to transfer the legal title of the same to them. But the mere fact that they relied on the Powers of Attorney is not inconsistent or defeats the fact that there was an immediate and outright gift of the Bestfibre Shares. It must be remembered that the Powers of Attorney were signed in order to facilitate the transfer of the Deceased’s assets including the Bestfibre Shares to the Plaintiff and the 3^rd Defendant (like the Wah Luen Shares), it is only common and logical for the parties to refer to the Powers of Attorney when demanding the 1^st and 2^nd Defendants to make the relevant transfer of legal title.

128.Indeed, it is the 3^rd Defendant’s own oral testimony that there would be tax implications if the Bestfibre Shares were to be bequeathed under a Will or passed the same through the estate of the Deceased. It is more probable than not that the Deceased preferred and intended to gift away the beneficial ownership of the Bestfibre Shares immediately in order to legally avoid estate duty of any sort in Taiwan.

DISPOSITION

129.For all the reasons set out above, I make the following orders:

(1)  A declaration that the 1^st Defendant and the 2^nd Defendants are holding 8,000,000 shares of Bestfibre Company Limited on trust for the Plaintiff and the 3^rd Defendant at the proportion of 55% and 45% respectively.

(2)  An order that the 1^st Defendant and/or the 2^nd Defendant do forthwith transfer 4,400,000 shares of Bestfibre Company Limited to Zenith Top Holdings Limited and 3,600,000 shares of Bestfibre Company Limited to the 3^rd Defendant together with any dividends or other related interest, if any.

(3)  An order nisi that the 3^rd Defendant do pay the Plaintiff’s costs of the action (including the 3^rd Defendant’s counterclaim)  to be taxed on a party to party basis if not agreed.

(4)  The costs between the Plaintiff, the 1^st Defendant and the 2^nd Defendant and the 3^rd Defendant be reserved with liberty to apply.