Kwan Shiu Yin Louis As the Executor of the Estate of Kwan Man Chock v. Kwan Po Chuen Paula

HCA 1437/2019

[2024] HKCFI 56

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 1437 OF 2019

_________________

_________________

________________

JUDGMENT

________________

Introduction

1.This is the trial of the Action commenced by Writ on 8 August 2019.

2.Mr Kwan Man Chock (“Deceased”) was the original Plaintiff. He was born in 1929 and passed away on 15 November 2019 at the age of 90, about 3 months after the Writ had been issued. Mr Kwan Shiu Yin Louis (“Louis”), was his only son and the sole executor of the estate of the Deceased (“Estate”) under a will made by the Deceased on 13 August 2019 (“2019 Will”)[1].

3.The Defendant is the niece of the Deceased. She is the daughter of the Deceased’s younger brother, Mr Kwan Man Bun and his wife Madam Leung Nga Wan. The Defendant also has an elder brother viz Mr Kwan Siu Hong Gabriel (“Gabriel”).

4.It is not in dispute that certain listed shares originally held by the Deceased had been transferred to the Defendant in 2019. It is also not in dispute that the Defendant had paid no consideration for the shares and is still holding them in her name.

Transfer Date	Stock	No. of Shares
30 April 2019[2]	SUNeVision Holdings Ltd (“SUNeVision”)	2,050,000
22 May 2019	CK Asset Holdings Limited (“CK Asset”)	159,000
22 May 2019	CK Hutchison Holdings Limited (“Hutchison”)	162,000
22 May 2019	Henderson Land Development Company Limited (“Henderson”)	25,002
31 May 2019	Far East Consortium International Limited (“Far East”)	696,608

(“SUNeVision Shares” and “Other Shares” respectively and collectively “Shares”)

5.The Plaintiff’s claim herein is for the return of the Shares together with any dividends or bonus shares to the Estate; alternatively a declaration that the same are held by the Defendant on trust for the Estate.

The parties’ cases

The Plaintiff’s case

6.The following is derived from the Plaintiff’s Opening and the Re-Amended Statement of Claim (“RASOC”) dated 11 November 2021.[3]

7.In or about late 2017, at the age of 88, the Deceased was diagnosed with liver cancer. Since then, the Defendant and her parents started to pay close attention to him, visit him and accompany him for meals and medical appointments more frequently than they used to. In some conversations, the Deceased mentioned to the Defendant his investment in shares of Hong Kong listed companies.

8.The transfer of the SUNeVision Shares arose as a result of the so-called “First Representations” in about January 2018 which were untrue and made dishonestly and fraudulently by the Defendant and/or her father and/or her mother to the Deceased that:

(1)  Gabriel was proficient at purple star astrology (紫微斗數) and his prediction was very accurate.

(2)  Gabriel had made predictions about the marriage of Louis that his marriage would not last long and Louis and his wife would divorce for the reason that they had no children.

(3)  If the Deceased died before Louis’ divorce, his stocks would be inherited by Louis. Subsequently, if Louis went through a divorce, he had to distribute the stocks inherited from the Deceased to his wife.

(4)  In order to avoid the above, the Deceased should not hold too many stocks under his own name and should assign them to the Defendant to hold the same on trust on his behalf.

(“First Representations”)

9.Induced by and relying on the First Representations, on or about 19 January 2018, the Deceased and the Defendant went to Hong Kong Securities Clearing Company Limited to carry out the necessary procedure for changing the owner’s name of the SUNeVision Shares from the Deceased to Defendant. The date of the transfer was originally pleaded as 19 January 2018. It is only by green amendments that the date was changed to 30 April 2019.

10.The First Representations were untrue and were made by the Defendant and/or her father and/or her mother dishonestly and fraudulently. The First Representations were untrue in that:

(1)  Louis and his wife at all material times were never divorced and had never planned to.

(2)  Even if Louis inherited the stocks from the Deceased after his death and Louis subsequently went through a divorce, he was not necessarily required to distribute the stocks which he inherited to his wife.

11.As to the transfers of the Other Shares, they arose out of one occasion in or about May 2019 at the Defendant’s home where the so-called “Second Representations” which were untrue and made dishonestly and fraudulently by the Defendant and/or her father and/or her mother to the Deceased that:

(1)  The Deceased’s medical expenses for treating liver cancer were substantial.

(2)  It would be better for the Deceased to sign some clean copies of standard transfer forms of shares shown to him by the Defendant so that when he ran out of cash to pay his medical bills, the Defendant could use them for the transfer of the Other Shares to her and sell them upon his instructions.

(“Second Representations”)

12.Induced by and relying on the Second Representations, the Deceased signed four copies of the transfer forms (“4 signed transfer forms”) without filling in any details. After signing, the Defendant took them away and the Deceased did not keep any copy.

13.The Second Representations were untrue and were made by the Defendant and/or her father and/or her mother dishonestly and fraudulently. The Second Representations were untrue in that the Deceased had never asked or instructed the Defendant to transfer the Other Shares to herself by executing the 4 signed transfer forms without his approval for the purpose of raising money to settle his medical fees.

14.By red amendments made on 24 February 2021, the Plaintiff pleaded a one-liner alternative case of undue influence of the Defendant and/or her father and/or her mother over the Deceased which procured the transfer of the SUNeVision Shares to the Defendant and the signing of the 4 signed transfer forms. Some particulars of undue influence were given in March 2021 pursuant to a request by the Defendant. A particularised plea of undue influence appeared only by way of green amendments made on 15 November 2021.

15.It is pleaded in the RASOC that the transfers of the Shares were procured by the undue influence over the Deceased by the Defendant and/or her family, that the Deceased reposed trust and confidence in the Defendant and/or her family, and the transfers of the Shares were not readily explicable and called for an explanation – the Shares comprising nearly 60% of the Deceased’s total assets and over 72% of his liquid assets and the Deceased had other nieces and nephews.

16.It is further pleaded that prior to the transfers of the Shares to the Defendant, the Deceased did not receive any independent advice and did not give any full, free and informed consent. It was never the intention of the Deceased to transfer the Shares to the Defendant as gifts. Even if the Deceased had authorised the transfers of the Other Shares by executing the 4 signed transfer forms, there was never any intention on his part to transfer the beneficial interests in the same to the Defendant.

The Defendant’s case

17.The Defendant’s case is straightforward – neither she nor her parents had made the First or the Second Representations to the Deceased. She also denies the exercise of undue influence over the Deceased by her or her family. Her case is that the Shares were genuine gifts from the Deceased to her to thank her and her parents for their care which he did not receive from Louis. Specifically, the Deceased gave the Shares to the Defendant as gifts because:

(1)  the Defendant had treated the Deceased well at all material times;

(2)  the Defendant was not married - the Deceased gave the Shares to her to provide for her living when she became old;

(3)  the Deceased appreciated the Defendant for referring him doctors to treat his liver cancer.

18.The Defendant counterclaims for a declaration that she is absolutely entitled to the Shares.

19.Specifically in relation to the transfer of the SUNeVision Shares, it is pleaded in para 14 of the Re-Amended Defence and Counterclaim (“RADCC”) that since February 2019, the Deceased had told the Defendant’s family that Louis did not honour his parents at all and he intended to change his former will made in May 2018 ie the 2018 Will. On or about 20 April 2019, the Deceased changed his mind and did not amend his will. Instead, he informed the Defendant that he would give the SUNeVision Shares to her as a gift. Consequently, on 30 April 2019, the Deceased and the Defendant went to the Customer Services Centre of the Hong Kong Securities Clearing Company Limited to carry out the necessary procedure for the transfer. The transfer was subsequently executed on 6 May 2019 and share certificates were issued in the Defendant’s name on that day.

20.In relation to the Other Shares, it is pleaded in para 16 of the RADCC as follows:

“(a) The Defendant avers that:-

（i） On 19 May 2019, the Plaintiff [4] was discharged from the hospital and returned home with his son, Louis, and the Defendant. After the Plaintiff had arrived home, he discovered the key for his Safety Box was lost (“Loss of Key Problem”). He believed Louis had taken the Safety Box Key from him.

（ii） On 20 May 2019, at the Plaintiff’s request, the Defendant and her mother accompanied the Plaintiff to the Bank of China to report and resolve the Loss of Key Problem. However, as the Safety Box was jointly held by the Plaintiff and his wife, the Bank could not assist the Plaintiff unless both the Plaintiff and his wife were present.

（iii） Therefore, on 21 May 2019, the Defendant and her mother accompanied the Plaintiff together with his wife (who was staying in an elderly’s home) to the Bank of China again, to resolve the Loss of Key Problem.

（iv） With the assistance of the bank staff, the Plaintiff had regained access to the Safety Box. He then took out his share certificates of CK Asset, Hutchison and Henderson from the Safety Box.

（v） After retrieving the aforesaid share certificates, the Plaintiff requested the Defendant’s assistance to count the number of shares he held in CK Asset, Hutchison and Henderson.

（vi） It was only then did the Defendant know about the number of shares the Plaintiff held in CK Asset, Hutchison and Henderson.

（vii） As the Plaintiff intended to transfer part of his shares in CK Asset, Hutchison and Henderson as gifts to the Defendant, he requested the Defendant to fill in the three transfer forms with the numbers of shares to be transferred, for him to sign.

（viii） The transfers of shares of CK Asset, Hutchison[5] from the Plaintiff to the Defendant were then executed on 22 May 2019[6].

(b) The Plaintiff was angry with his son Louis for various reasons, including him not honouring and taking care of his parents and the Loss of Key Problem. He further took the shares certificates in Far East from his Safety Box and gifted them to the Defendant on 27 May 2019. The share transfer was later executed on 31 May 2019.[7]”

The issues and witnesses

21.Despite what is pleaded in the RASOC, the only issues set out in the Plaintiff’s Closing are as follows:

(1)  Whether the Deceased intended to transfer the beneficial interests in the Shares to the Defendant as a gift.

(2)  Even if the Deceased intended to transfer the beneficial interests in the Shares to the Defendant, whether the transfers should be set aside for undue influence.

22.The dishonest and fraudulent First and Second Representations were pleaded from the outset of the Action and featured prominently in the original Statement of Claim[8]and remain in the RASOC. Curiously, in his Closing, the Plaintiff viz Louis submits he does not need to establish the pleaded misrepresentations and this court does not need to decide on whether a cause of action in misrepresentation has been made out[9]. Rather, the misrepresentations are said to provide the background and the reasons for which the Deceased transferred the SUNeVision Shares and executed the 4 signed transfer forms, thus enabling the transfer of the Other Shares to the Defendant.

23.In this court’s view, it is of course up to the Plaintiff to pursue or not pursue any part of his pleaded claim. Here, despite Mr Pang SC’s denial during his oral Opening, it is abundantly clear to this court that the Plaintiff has effectively abandoned his claim in misrepresentation. This is important inter alia to the credibility of Louis – after the Deceased had passed away, Louis continued to vouch for the veracity of the amended Statement of Claim and the RASOC in which the pleas of the dishonest and fraudulent First and Second Representations remain. In Louis’ first witness statement (“Louis 1”) at para 26, he also referred to what the Deceased had allegedly told him that on a day in May 2019, the Defendant and her mother “used false words to persuade and trick him into signing four share transfer instruments”[10] which were blank.

24.The effective abandonment of the Plaintiff’s claim in misrepresentation is also important to the remaining claim in undue influence. This is because the only pleaded manner in which the Deceased’s trust and confidence had been “abused” is by the fraudulent and dishonest First and the Second Representations. Without establishing the two misrepresentations, there is no leg for the claim in undue influence to stand on. This point will be elaborated later in this Judgment.

25.As far as witnesses are concerned, the Plaintiff called 3 witnesses:

(1)  Louis himself.

(2)  Wong Hau Wing (“Wing”), a niece of the Deceased.

(3)  Wong Hau Mei (“Mei”), another niece of the Deceased.

26.From the Defendant’s side, the Defendant herself.

27.This court has carefully considered the testimony of all witnesses and assessed it against such of the documentary evidence as there is and the known and undisputed surrounding circumstances of this case. This court has also considered the inherent probabilities or otherwise of the parties’ respective contentions, and assessed the witnesses’ credibility accordingly. Lastly, this court would also take note of the well-established general approach on fact-finding and assessment of credibility as summarised in Hui Cheung Fai v Daiwa Development Limited unrep, HCA 1734 of 2009, 8 April 2014, DHCJ Eugene Fung SC at [77] - [83]. The approach is really all common sense but it is perhaps worth reminding oneself of the following:

(1)  Contemporaneous written documents and documents which came into existence before the problems in question emerged are of the greatest importance in assessing credibility.

(2)  In deciding whether to accept a witness’ account, importance should be attached to the inherent likelihood or unlikelihood of an event having happened, or the apparent logic of events.

(3)  In determining a witness’ credibility, it is important to have regard to the consistency of the witness’ evidence with undisputed or indisputable evidence, and the internal consistency of the witness’ evidence, which is to be tested by a comparison between the witness’ oral testimony and his witness statement.

Deliberation

Intention to make a gift of the Shares to the Defendant

28.In the Plaintiff’s Closing submissions at para 8, he starts off by referring to the presumption of resulting trust: Westdeutsche Landesbank Girozentrale v Islington LBC [1996] AC 669, at 708A-B. This is a red herring since resulting trust has never been part of the Plaintiff’s case since the commencement of this Action. It is true that the Plaintiff’s case is that the SUNeVision Shares were transferred to the Defendant for her to hold them on trust for the Deceased, but only as a result of the First Representations by the Defendant and/or her parents, and not by operation of the presumption of resulting trust: Plaintiff’s Opening at para 6. The Plaintiff’s case on the Other Shares is that they were transferred to the Defendant without the Deceased’s consent by using the 4 signed transfer forms which the Deceased had been induced to sign by the Second Representations by the Defendant and/or her parents: Plaintiff’s Opening at para 6. Again, there is no hint of reliance on the presumption of resulting trust.

29.The real issue is whether at the material time the Deceased intended to make a gift of the Shares to the Defendant. This is a question of fact to be decided on the totality of the evidence in the circumstances of this case.

30.It is apparent from the Deceased’s affirmation that it was never his intention to transfer the SUNeVision Shares or the Other Shares to the Defendant as a gift. But that assertion must be viewed with circumspection for 3 reasons.

31.First, the Deceased’s denial of making any gift of the Shares to the Defendant was premised on him having been induced to transfer the SUNeVision Shares and to sign the share transfer forms of the Other Shares by the First and Second Representations. No other explanation was put forward by the Deceased or any of the Plaintiff’s witnesses as to why he did what he did. As shall be seen in the next section of this Judgment, this court finds the Plaintiff’s evidence on the First and the Second Representations highly unsatisfactory and unreliable.

32.Further, there is no contemporaneous documents to support the Deceased’s stated intention in his affirmation. For instance, if the Deceased’s intention regarding the SUNeVision Shares was not a gift but to make the Defendant a trustee of them, it would have been easy enough for the Deceased to write down on a piece of paper for the Defendant to sign, or better still, to instruct a lawyer to prepare a deed of trust to record the fact that the Defendant would only be holding the SUNeVision Shares as a trustee only. And if the Deceased’s intention regarding the other Shares was not a gift but simply to enable the Defendant to sell some of them upon his instructions in order to pay his medical bills, again it would be easy enough for the Deceased to put that down in writing and ask the Defendant to acknowledge it.

33.In these circumstances, the Deceased’s denial of any intention to make a gift of the Shares to the Defendant is nothing but a bare denial.

34.Second, the Deceased’s affirmation was filed in August 2019 upon the commencement of this Action in support of his application for an injunction and thus was made after he had decided to get the Shares back from the Defendant. It is obvious that whatever the Deceased said about his intention in August 2019 in the affirmation is self-serving and does not necessarily represent his actual intention back in April and May 2019 when the relevant transactions about the Shares took place.

35.Third, as Mr Chang SC submits in his Closing, by making a police report in July 2019 and commencing this Action in August 2019, one cannot rule out the possibility that the Deceased might have a change of heart about the Shares. According to her first witness statement (“Paula 1”), the Deceased told the Defendant sometime in mid-June 2019 that he was under pressure from Louis to claim back the Shares from her. Whether he was pressurized by Louis to do so or whether he did so because he wished to pacify Louis and keep his only son by his bedside remains a mystery. Since the Deceased is not available as a witness and be tested in cross-examination as to his real intention at the material time, it would be imprudent for this court to take what the Deceased said in his affirmation at its face value.

36.On the Defendant’s side, there is her clear and detailed testimony in Paula 1 about the transfer of the SUNeVision Shares as a gift to her from the Deceased on a step-by-step basis from about 20 April to early May 2019. The transfer was on the Deceased’s prescribed condition inter alia that she should bear the costs of the stamp duty for the transfer. The stamp duty of HK$27,434, as shown on the Standard Form of Transfer, was duly paid on 2 May 2019 and recorded in the bank statement of the joint bank account of the Defendant’s parents.

37.Similarly, there is the Defendant’s clear and detailed testimony in Paula 1 about the gift of the Other Shares to her by the Deceased on a step-by-step basis in May 2019. It started with the Deceased expressing his intention to the Defendant at the hospital to make a gift of part of the Other Shares to her and asking the Defendant to tell her mother to get some blank transfer forms, then the discovery of the loss of the keys to the Deceased’s safety box after he had been discharged from hospital, the unclenching of the safety box to retrieve the share certificates of CK Asset, Hutchison and Henderson, the Deceased signing on 3 share transfer forms after the Defendant had filled in the particulars, the payment of the stamp duty for the transfer of the 3 shares and taking the stamped transfer forms and the share certificates to Computershare to effect the formalities for the change of owner’s name for the CK Asset, Hutchison and Henderson Shares.

38.A similar step-by-step description of the Deceased expressing his intention to make a gift of the Far East Shares to the Defendant and how the Defendant went about effecting the transfer were also set out in Paula 1.

39.The hiccup this time was that on 27 May 2019, after yumcha, the Deceased, the Defendant and her parents went to the bank for the Deceased to retrieve the share certificates from his safety box. They returned to the Defendant’s home and the Defendant’s mother miscounted the number of Far East Shares as 698,372. The Defendant’s mother filled the wrong number in the share transfer form and the Deceased signed it. The Defendant’s mother paid HK$4,866 as stamp duty for the transfer on the same day ie 27 May 2019. On 31 May 2019, when the Defendant and her mother went to Tricor with the stamped share transfer form and the share certificates of Far East to complete the transfer, it was discovered by the staff of Tricor that the number of shares stated in the form was wrong – the correct number should only be 696,608 shares. The Defendant and her mother took the share transfer form to the hospital for the Deceased to counter-sign the amendment of the number of shares, which he did. Eventually, share certificates were issued in the name of the Defendant on 31 May 2019.

40.This court finds the Defendant’s testimony on her central case about the gift of the Shares by the Deceased to her is inherently credible and in particular, the amount of details set out in Paula 1 does impress this court that her account of what happened clearly has a ring of truth. Importantly, while in the witness box, the Defendant gave her testimony in a straightforward manner with no sign of embellishment and her credibility has not been shaken in a fairly brief cross-examination. On the whole, this court finds her a truthful witness and accepts her testimony.

41.In the Plaintiff’s Closing submissions, Mr Pang SC makes use of the testimony of Wing and Mei to discredit the Defendant in relation to a wholly peripheral matter ie they both denied having provided ID card copies to the Deceased for the preparation of a new will. This is to be contrasted with Paula 1 where she described an incident on 13 February 2019 during yumcha when the Deceased said that he had taken the initiative to ask his relatives to send their HKID cards to his phone for the purpose of preparing a new will to make them beneficiaries under that new will. Wing and Mei were adamant that they did no such thing in 2019 as alleged. Mr Pang SC submits that the Defendant had made this up but was caught out by Wing and Mei. Mr Pang SC also submits that Wing and Mei both referred to an incident in June 2019 when the Deceased was in hospital and told them he suspected his stocks had been tricked away by the Defendant.

42.Given the peripheral nature of such evidence, Mr Chang SC did not see fit to cross-examine Wing and Mei, advisedly so in this court’s view, as that would be a waste of time.

43.In the Plaintiff’s Closing submissions, Mr Pang SC also tries to discredit the Defendant by reference to her evidence (i) on the disposal of 3 letters from Computershare to the Deceased dated 23 May 2019 about the transfer of the CK Asset, Hutchison and Henderson Shares, and (ii) on the payment of HK$300,000 to the Deceased, being part of the dividends the Defendant received from the CK Asset and Hutchison Shares in early June 2019, to express her gratitude to the Deceased for the gift of the shares and out of filial piety. Mr Pang SC submits the Defendant’s evidence is inherently improbable and does not make sense. This court does not agree. Suffice it to say that even for the sake of argument that what the Defendant said she had done does not make sense to Mr Pang SC, the matters are so peripheral in nature that it would not affect this court’s assessment of the Defendant as a truthful witness.

44.As for the inherent probabilities of the Deceased having made such a worthy gift to the Defendant, having considered the Plaintiff’s and the Defendant’s submissions on this topic, this court’s view is this.

45.The starting point is what the Deceased said in his affirmation in paras 17 and 18.

“17. Since the diagnosis of my liver cancer in late 2017, Paula's family started to pay close attention to my health condition. Her family also started to visit me and have yumcha lunch with me in Chinese tea restaurant more frequently than before. Sometimes Paula would come alone; sometimes she would come with Leung Nga Wan; and sometimes she would come with both Kwan Man Bun and Leung Nga Wan. Prior to the discovery of my liver cancer, I used to meet Paula's family only about 3-4 times each year, mostly during traditional festivals such as Chinese New Year or Winter Solstice or for the purpose of celebrating my birthday.

18. I was happy when Paula's family started to visit me more because Louis was not always available for me, as he had to work and for a few months from late 2018, he was occupied with searching for a new job. I was even happier to see Paula visiting me more because I, as a traditional Chinese man, somehow see and treat her as my own daughter because she is the daughter of my younger brother, Kwan Man Bun.” (emphasis added)

46.In his Opening, Mr Pang SC very fairly submits that the Plaintiff is not suggesting there is anything sinister about the Defendant seeing the Deceased more often after knowing him to have liver cancer and accepts that the Defendant had taken care of the Deceased at that crucial time.

47.At that time, the Deceased’s wife was in no position to take care of the Deceased. She was also of advanced age, having been diagnosed with dementia and lung cancer and admitted to an elderly home since about 2016-2017. She passed away in June 2020 at the age of 84.

48.It is common human experience that for a person of very advanced age and in critical health condition like the Deceased with only months left in life, he would be particularly appreciative of the care and attention provided to him by a close relative he liked and would wish to reward her with some of what would soon become his estate which he, or his frail wife, had no use.

49.It is not for this court to put a monetary value on the care and attention provided to him by the Defendant or to decide how appreciative the Deceased was towards the Defendant in monetary terms. That was a wholly subjective matter for the Deceased to decide. Given the unavailability of the Deceased as a witness, it would be dangerous to try to second guess him now. The Deceased did what he did and this court does not find it inherently improbable for the Deceased to have made a gift of the Shares to the Defendant in such circumstances.

50.Further, as Mr Chang SC submits, this case is not about whether Louis was a good or bad son or whether Louis has always been unfilial to the Deceased. This is a highly subjective matter - Louis, the Defendant, Wing and Mei had different perceptions as to how Louis had treated the Deceased and how the Deceased had responded. But the opinion of the person which counts most is that of the Deceased. Given the issues in this case and the absence of the Deceased as a witness, it is unnecessary for this court to and in any event this court is not in a position to make a finding on that.

51.Nevertheless, the evidence does suggest that the Deceased and Louis were not on particularly congenial terms in the Deceased’s last days, as described in the Defendant’s second supplemental witness statement (“Paula 3”).

52.In Paula 3 at para 2, the Defendant gave a few examples known to her of what she perceived as Louis’ “filial disobedience to the Deceased”. In particular, the Deceased was not pleased with how infrequently and perfunctorily Louis had visited him and his absence when the Deceased required urgent medical care. In cross-examination in the afternoon on Day 1, Mr Chang SC put to Louis what was set out in Paula 3 at para 2(b)(ii), (iv),(v) and (vi) 1^st sentence. In answer, Louis agreed with what was described in those passages.[11] As submitted by Mr Chang SC, such evidence and admission does provide a foundation for the Deceased to make a gift of the Shares to the Defendant instead of leaving almost his entire estate to Louis.

53.As the evidence shows, the Deceased had not completely cut Louis out from his estate despite the Deceased’s dissatisfaction with him. In Louis’ supplemental witness statement (“Louis 2”), he said the Deceased’s estate was worth over HK$55.6 million (property worth over HK$10.1 million plus liquid assets worth HK$45.5 million). According to the 2019 Will, Louis still received the property and the bulk of the remaining assets after the distribution of HK$250,000 each to the Deceased’s 4 relatives.

54.Having considered the Plaintiff’s submissions carefully, this court does not agree that all or any of them has a material impact on the credibility on the Defendant’s testimony and hence her central case that the Shares were gifts by the Deceased to her.

55.To conclude on this issue, this court finds in favour of the Defendant that the Deceased had intended to and did make a gift of the Shares to her. That disposes of the 1^st issue.

Undue Influence

56.In his oral Opening, Mr Pang SC submits that this case is not about presumption of undue influence. Rather, this court should look at the totality of the evidence which may (or may not) point to whether there was undue influence as a result of the abuse of trust and confidence reposed in the Defendant by the Deceased. Mr Pang SC further submits that while the Defendant had taken care of the Deceased, the worth of the alleged gifts is such that it does not accord with inherent probabilities. This is because the Deceased had always been a frugal person. Notwithstanding that, the Deceased is said to have given away over 60% of his life savings and more than 70% of his liquid assets, while the Shares were income generating. In Louis 2 at para 20, the value of the Shares was said to be HK$33 million. This is to be contrasted with what the Defendant was to receive under the 2018 Will ie HK$250,000.

57.In Ho Keung & Ors v Lau Yuet Hing [2023] HKCFI 6, this court expressed its view on the law on undue influence as follows.

“114. The essence of the defence of undue influence was neatly summarized in Bank of China (Hong Kong) Limited v Wong King Sing & Others [2002] 1 HKLRD 358, delivered shortly after the law was clarified in Royal Bank of Scotland v. Etridge (No.2) [2002] 2 AC 773. At [34] - [35] of the judgment, Recorder Ma SC (as he then was) observed:

‘34.…it is to be borne in mind that the defence of undue influence is ultimately a simple concept. It has all to do with informed consent. Once a court forms the view that consent was freely given with full knowledge of the consequences of entering into the relevant transaction, that is the end of the matter, however improvident the transaction may objectively appear. The rationale for the defence of undue influence is to prevent the victimisation of the complainant. It is there to protect people from being forced, tricked or misled in any way by others into entering into a disadvantageous transaction: see Allcard v. Skinner (1887) 36 Ch.D. 145, at 182–3; National Westminster Bank Plc v. Morgan [1985] AC 686, at 705. As Lord Nicholls of Birkenhead said in Royal Bank of Scotland v. Etridge at 1029 paragraph 8, the unacceptable conduct lies in ‘a relationship between two persons where one has acquired over another a measure of influence, or ascendancy, of which the ascendant person then takes unfair advantage.

35. The burden is of course on the person seeking to set aside or avoid liability under the relevant transaction. It is not for the other party to prove that the transaction was entered into with full understanding of the nature and consequences of the transaction…’” (emphasis added)

…

118. In Li Sau Ying v Bank of China (Hong Kong) Ltd[12], the Court of Final Appeal expressed grave misgivings on the use of the expression “presumed undue influence” and, in particular, its use in connection with Class 2B cases…

119. At [34], Lord Scott of Foscote concluded that in future cases, where undue influence has to be proved but where the relationship between the parties is not a relationship that falls within the Class 2A category, the parties will concentrate on whether the evidence justifies the inference that, on a balance of probabilities, the impugned transaction was procured by undue influence, that is to say, by an abuse by the allegedly dominant party of the trust and confidence reposed in him by the allegedly subservient party. That is how this court is minded to approach the issue.”

58.As can be seen from the above, the burden of proof is on the Plaintiff to establish that the Deceased had been “forced, tricked or misled” by the Defendant, her mother and/or her father into entering into the transactions relating to the SUNeVision Shares and the Other Shares. At this juncture, it is worth repeating that undue influence was only first raised as a one-liner in the Amended Statement of Claim filed on 21 February 2021.

59.In answer to the Defendant’s request for further and better particulars of the Amended Statement of Claim, this is what the Plaintiff provided in March 2021.

60.First, under para 14 of the Amended Statement of Claim:

“(a) The Defendant is the Plaintiff’s niece. The Defendant’s father, Kwan Man Bun, is the younger brother of the Plaintiff. The Plaintiff at all material times reposed trust and confidence in each of the member in the Defendant’s Family. By reason of his old age before he passed away and his health condition as pleaded in paragraphs 8-10 of the Amended Statement of Claim, the Plaintiff was in a subservient position in such trust and confidence relationship between himself and the Defendant’s Family.

(b) By abusing such trust and confidence relationship and making the First Representations, the transfer of 2,050,000 shares of SUNeVision from the Plaintiff to the Defendant was procured by undue influence of the Defendant and/or her father and/or her mother over the Plaintiff at the material times.” (emphasis added)

61.Second, under para 17 of the Amended Statement of Claim:

“(a) The matters as pleaded in Answer (a) to Request 1 above are repeated.

(b) The Plaintiff attended the Defendant’s home alone on that day in or about May 2019 as pleaded in paragraph 16 of the Amended Statement of Claim. In the abuse of the trust and confidence relationship between the Plaintiff and each of the member of the Defendant’s Family and by making the Second Representations, the signing of the Four Signed Transfer Forms by the Plaintiff was procured by undue influence of the Defendant and/or her mother and/or her father over the Plaintiff at the material times.” (emphasis added)

62.It is highly important that the plea of undue influence was introduced long after the Deceased had passed away. The Deceased himself had raised no such plea in his affirmation in support of the injunction or in the original Statement of Claim. Mr Chang SC submits that since whether the Defendant and/or her mother and/or her father had abused the trust and confidence of the Deceased and victimized him is a question of fact, without the evidence of the Deceased (nor even an allegation of abuse and victimization from him), it is difficult to see how the Plaintiff can make good the plea of undue influence.

63.Just as importantly, the only pleaded manner in which the Deceased’s trust and confidence had been “abused” and that he had been “tricked” or “misled” into parting with the Shares is by the First and the Second Representations, which are untrue and are said to have been made fraudulently and dishonestly. Mr Chang SC submits that these fraudulent and dishonest misrepresentations form the very bedrock of the Plaintiff’s case, not just background information as Mr Pang SC chooses to describe it. If the Plaintiff fails to prove these fraudulent and dishonest misrepresentations with sufficiently cogent and compelling evidence to the requisite standard of Re H (Minors) [1996] AC 563, its case on undue influence has no leg to stand on. After all, the Plaintiff’s case of abuse of the Deceased’s trust and confidence is the making of the two fraudulent and dishonest Representations which the Deceased did not question because he trusted the Defendant, her mother and/or her father. There is force in Mr Chang SC’s submission.

64.This court now turns to the Plaintiff’s evidence on the First and the Second Representations which, in its view, is highly unsatisfactory and unreliable.

65.First, the plea shows that the Deceased and Louis are inconsistent as to which of the Defendant, her mother and/or her father had made which representation.

(1)  In the Deceased’s affirmation at para 20, he said it was the Defendant alone who made the First Representations to him on a number of (unidentified) occasions in January 2018.

(2)  In the Deceased’s affirmation at para 28, again he said it was the Defendant alone who made the Second Representations to him on a day in May 2019 in order to convince him to sign on some clean share transfer forms. On this one occasion, the Defendant and her parents as well as the Deceased headed back to the Defendant’s home after a yumcha lunch where the Second Representations were made.

(3)  A few months later, when the original Statement of Claim was filed, it became the Defendant and/or her father and/or her mother who repeatedly made the First Representations on a number of (unidentified) occasions in January 2018. It was also pleaded that the Defendant and/or her father and/or her mother who made the Second Representations to convince him to sign some clean share transfer forms on a day in May 2019. The Statement of Truth was signed by the Deceased himself.

(4)  The same plea remain in the Amended Statement of Claim and the RASOC, vouched for by Louis himself who signed the Statement of Truth.

66.Second, if one takes the plea that it was the the Defendant and/or her father and/or her mother who made the First and Second Representations as the Plaintiff’s “definitive” case, then the Plaintiff needs to show which one or more of the three made which Representation and how he and/or she had acted fraudulently or dishonestly. But there is nothing useful in Louis’ witness statements which sheds light on this important issue.

67.This is not surprising since there is no suggestion in his witness statements that Louis was present when the Representations were said to be made to the Deceased– his evidence is just hearsay heard from the Deceased. Indeed, in Louis 1 at para 26, Louis only said the Deceased told him in early July 2019 about executing the 4 signed transfer forms after the Defendant and her mother used false words to trick him into doing so, presumably by the Second Representations. As far as the First Representations are concerned, Louis only said the Deceased told him that in early 2019 that he had temporarily entrusted roughly 2,050,000 shares in SUNeVision with the Defendant, without mentioning about being tricked or misled by the First Representations or who had made them. During Louis’ cross-examination in the afternoon on Day 1, he accepted that para 26[13] of Louis 1 were all that the Deceased had told him on that occasion.

68.Surprisingly, while in the witness box during his cross-examination in the afternoon on Day 1, Louis said he was present on some of the occasions when the Representations were made by the Defendant’s parents to the Deceased. This is not in his witness statements. This also contradicts the Deceased’s affirmation in which the Deceased only referred to the Defendant as the maker of the Representations. Louis’ surprising testimony was raised for the first time during his cross-examination by Mr Chang SC.

69.For ease of reference, this court shall set out the relevant parts of his cross-examination in the transcript as follows.

“Q. All right. Can you turn to page 17, paragraph 13[14]?

MR CHANG: Can Mr Interpreter translate the first paragraph? Don’t need to go through the...

INTERPRETER: Not – not the subparagraph?

MR CHANG: Not the subparagraph, just the first one.

A. Yes, I understand.

Q. Now, on what basis did you say these representations were made by the defendant’s father?

A. Previously at the defendant’s home and we went out for yum cha in a Chinese restaurant. Mainly on these two occasions. More than once these representations were made to me.

Q. Well, this paragraph says these representations were made to your father.

A. I was present with my father.

Q. Is there any reference to your presence with your father when these representations were made in your witness statement?

A. When I was present with my father I heard Leung Nga-wan’s, the defendant’s mother, Kwan Po-chuen, and also Kwan Man-bun, say these things.

Q. So you heard the defendant’s parents say these to your father in your presence?

A. Yes.

Q. Well, I put to you that never happened.

A. I agree. There’s no such thing. At that time they claimed they had such a production and told my father.

Q. All right. I think I’ve messed up the question.

COURT: Could you repeat your question?

MR CHANG: I’ll repeat it.

Q. I put to you that the defendant and her parents never made these statements to your father in your presence?

A. I disagree.

Q. In fact, even your father’s affirmation didn’t refer to the defendant’s parents saying those things to him. Were you aware of that?

A. I noticed it.

Q. All right. Well, your father is not here, but – so I probably won’t ask you anything, but I note your answer. So you were there on all these occasions?

A. Not necessarily. I can’t say for sure I was present on each and every occasion because I can’t rule out the possibility that when my father went to the defendant’s home in my absence he might have heard the same statements from the defendant.[15]

…

“Q. Paragraph 16 of the statement of claim[16], bundle 1, page 18.

MR CHANG: Can Mr Interpreter interpret the paragraph without the subparagraph?

INTERPRETER: Yes. Yes.

MR CHANG: Thank you.

Q. Now, let’s start it this way. You were not there, right, on – on 19 May?

A. Not present.

Q. All right. So on what basis do you confirm the representations were made by the defendant’s father or the mother?

A. I was – I was told by my father.

Q. Well, if we go back to your witness statement and see what your father told you, bundle 18, page 26. No, page 27. Paragraph 26. We’ve been through this paragraph. Now, where was the defendant’s father mentioned?

A. In the second line he said after he had yum cha with the defendant’s family, the defendant’s family, I think, included Kwan Man-bun.

Q. Yes, but if you read on, your father said the defendant and her mother used false words to lure and cheat your father, not the father. There was no mention of the defendant’s father being involved.

A. Very – very often I heard that it was mainly Leung Nga-wan who said these things, but I believe the whole family went to have yum cha, including Kwan Man-bun, Leung Nga-wan and Kwan Po-chuen.

Q. Well, I’m not interested in whether the defendant’s mother went yum cha. I’m asking you when you say in the statement of claim, which you verified, the defendant’s father was involved in making false representations, what’s your basis?

A. Mainly, it’s not the one occasion. Most of the time it was said by Leung Nga-wan and on a small number of occasions it was said by Kwan Man-bun to echo what Leung Nga-wan has said.

COURT: So Mr Kwan, you insisted that the defendant’s father has also made the second representations to your father?

A. Kwan Man-bun did say those things, though, on a smaller number of occasions.

COURT: Thank you. You can move on.”[17]

70.This court has little doubt that Louis made this up in order to justify what was pleaded in the RASOC, the truth of which he had vouched for by his Statement of Truth. For how else could Louis suddenly remember in June 2023 what happened in January 2018 (First Representations) and May 2019 (Second Representations) what he did not remember when he made his 3 witness statements earlier, and which actually contradicted the Deceased’s affirmation which was filed at the commencement of this Action?

71.Further, neither of the Plaintiff’s 2 other witnesses viz Wing and Mei claim to have any personal knowledge of how when and by whom the Representations were said to be made to the Deceased. Nor did they purport to have any knowledge about the alleged abuse of the Deceased’s trust and confidence by the Defendant, her father or mother.

72.Third, according to the Deceased’s affirmation at paras 35 and 36, on 10 July 2019, the Deceased made a report to the Hung Hom police station in relation to the “unlawful and unauthorised transfer of shares out of my account procured by Paula.” That was after the Deceased said he had discovered the reduction of his shareholding in CK Asset, Hutchison and Henderson. However, what was recorded in the notebook of the relevant SPC[18] is very different from the Deceased’s affirmation or the Statement of Claim. For ease of reference, the English translation of the transcript is set out in full below.

“Informant Mr. Kwan Man Chock claims that in or around early 2019, he himself brought a copy of a standard form of share transfer to his brother’s home at Ka Wai Chuen, and signed on the transfer form to authorise any person holding the transfer form can deal with his shares for him in the future as his medical fees. According to Kwan Man Chock, he did not specify who should deal with [the shares] for him, it is acceptable as long as it is a relative of his holding the transfer form. He was of sound mind at the time and nobody threatened or induced him to sign.

Recently, Mr. Kwan Man Chock discovered that his shares originally in his account were transferred to another account, and suspected that they were transferred to his niece, Kwan Po Chuen’s account. [He] wished to contact her for transferring the shares back to his account but failed to make contact, so he seeks help from the police.

After learning about this from Mr. Kwan and his son, I explained to them that Mr. Kwan brought the share transfer form to his brother’s home by himself, and represented that any relative holding the share transfer form, including all persons present at the time and also Kwan Po Chuen, can deal with shares on his behalf as his medical fees in the future, and to date he had never told his brother’s family and Kwan Po Chuen that he needed money. Given the incident does not involve any criminal element, [I] suggested Mr. Kwan and his son to pursue the shares through the civil route.” (emphasis added)

73.The contrast between what the Deceased told the police and what is stated in his affirmation is stark. First, the Deceased claimed that it was he himself who had brought a copy of the share transfer form to his brother’s home at Ka Wai Chuen[19] in early 2019. In the Deceased’s affirmation, he said it was the Defendant herself who showed him some copies of standard share transfer form on a day in May 2019 at the Defendant’s home. Second, the Deceased claimed he did not specify who should deal with the shares for him as long as it was a relative. In the Deceased’s affirmation, it is reasonably clear that the Deceased only agreed that it was the Defendant who should deal with the shares. Third, the Deceased claimed nobody threatened or induced him to sign on the share transfer form. In the Deceased’s affirmation, it is said that the Deceased was induced by the Second Representations to sign on the share transfer form.

74.Fourth, as far as the SUNeVision Shares are concerned, the First Representations were pleaded as having been made in January 2018. However, the undisputed documentary evidence shows the Withdrawal Order Input Request Form for the SUNeVision Shares was only executed on 30 April 2019, some 15 months later. How was it that the Deceased could have been induced by and relied on the First Representations allegedly made to him 15 months ago to request for the transfer of the SUNeVision Shares to the Defendant is never explained in the Plaintiff’s evidence. For that matter, how the Deceased could have been under the undue influence of the Defendant, her mother and/or her father in April 2019 is also never explained. Mr Chang SC submits that it is incredible for an alleged misrepresentation to take effect only after 15 months. There is also force in that submission.

75.Further, Mr Chang SC submits that the alleged contents of the First Representations said to have been relied upon by the Deceased are laughable. They are all about Gabriel’s alleged prediction of Louis’ divorce because his marriage produced no children and once the Deceased passed away and then Louis went through a divorce, Louis had to distribute the stocks he inherited from the Deceased to his wife. To avoid all that, the Deceased should assign his stocks to the Defendant on trust for him.

76.It is of course possible that the Deceased was a particularly gullible person and instantly believed in Gabriel’s prowess in 紫微斗數. But there is no evidence which can possibly elevate a mere possibility to a probability. On the contrary, Louis’ evidence is that the Deceased’s estate was worth over HK$55.6 million which is rather improbable for a very gullible person to have accumulated in his lifetime. And if the Deceased gullibly believed in the First Representations, why stop with SUNeVision Shares but not the Other Shares? Further, why did he not write down on a piece of paper to be signed by the Defendant, or better still, instruct a lawyer to prepare a deed of trust to record that the Defendant would only be holding the SUNeVision Shares as a trustee which is the Plaintiff’s case all along?

77.Fifth, as far as the Far East Shares are concerned, the Plaintiff’s case and the Deceased’s affirmation say that he had only signed a blank form. However, Mr Chang SC is able to show to this court a Standard Form of Transfer regarding the Far East Shares. That form contains only just the signature of the Deceased where the transferor was supposed to sign, but also the Deceased’s signature immediately below the number of shares ie 696,608, the reason being the Defendant’s mother had miscounted the number of shares held by the Defendant and had to amend the number originally put in the form. The countersigning by the Deceased was to confirm the correct number of shares to be transferred.

78.Sixth, as stated earlier, the Plaintiff’s 2 other witnesses viz Wing and Mei has no personal knowledge of and hence no relevant testimony to give on the crucial facts of this case ie the alleged abuse of the Deceased’s trust and confidence.

79.All in all, this court is of the view that the Plaintiff’s evidence is hardly cogent and compelling in support of his case of undue influence, premised as it is on the First and Second Representations. On the other hand, for reasons already explained in the earlier section, this court finds the Defendant a truthful witness and her testimony on her central case inherently credible and should be accepted.

80.To conclude, this court finds the Plaintiff has failed to establish its case of undue influence. Rather, this court finds as a fact that (i) none of the First or Second Representations were ever made to the Deceased; and (ii) the Deceased had transferred the Shares to the Defendant with his informed consent.

Disposition and costs order nisi

81.The Plaintiff’s claim is hereby dismissed.

82.In view of the dismissal of the Plaintiff’s claim, it is strictly speaking unnecessary to grant the Defendant’s Counterclaim for a declaration that she is absolutely entitled to the Shares and Mr Chang SC does not insist on that declaration. But the effect of the dismissal of the Plaintiff’s claim is the same.

83.Costs of the entire Action shall be to the Defendant, including all costs reserved, if any, be taxed if not agreed, and paid by the Plaintiff forthwith, certificate for 2 counsel.

84.In consequence of the dismissal of the Plaintiff’s claim, the injunction granted by Campbell-Moffat J on 8 August 2019 and varied and continued by Coleman J on 15 August and 6 September 2019 should be discharged. But since there may be costs issues, counsel have agreed on Day 3 to deal with the discharge and the costs involved separately, and no doubt sensibly.

85.This court thanks counsel on both sides for their helpful assistance.

Mr Robert Pang, SC and Mr Vincent Kee instructed by M/s Cheung & Co, for the Plaintiff

Mr Jonathan Chang, SC, Mr Tony Ko and Ms Michelle Lin, instructed by M/s Jackson Ho & Co, for the Defendant