Kishin Samtani, The Administrator of the Estate of Narian Samtani, Deceased v. Chandersen Tikamdas Samtani
Read the full judgment text of HCA 496/2011 on BabelCite. This High Court CFI judgment was delivered on 18 March 2025.
1. This trial concerns a dispute within the Samtani family. The parties herein are siblings, and are the children of the late Mr Tikamdas Parsram Samtani ( “Father” ) and his late wife Tikamdas Bhagwanti Samtani ( “Mother” ).
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HCA 496/2011 [2025] HKCFI 1076 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE ACTION NO. 496 OF 2011 _________________ BETWEEN
(by the Carry On Order of Master M Wong dated 31 August 2018) _________________
_________________ JUDGMENT _________________ A. INTRODUCTION 1.This trial concerns a dispute within the Samtani family. The parties herein are siblings, and are the children of the late Mr Tikamdas Parsram Samtani (“Father”) and his late wife Tikamdas Bhagwanti Samtani (“Mother”). 2.Father and Mother had 8 children, namely (in order of seniority):
3.Father founded and carried on import and export businesses under the trade names of Kay Tee Corporation (“Kay Tee”) and Kishoo Brothers (“Kishoo”) (collectively, “the Businesses”) since mid-1950s as a sole proprietor. 4.Narian, the defendant and Kishin were all, at one point or another, employees of the Businesses and received salary therefrom. 5.With effect from 26 May 1983, Father and the defendant were partners of the Businesses (“the 1983 Partnership”). Father was a 60% partner and the defendant was a 40% partner. 6.Father passed away on around 29 October 1989[1]. 7.After Father passed away, Narian and the defendant became the only partners of the Businesses (“the 1989 Partnership”). Narian was a 60% partner and the defendant was a 40% partner. 8.The following properties are currently registered under the defendant’s name:
9.The above-mentioned properties were purchased at the respective prices and dates as follow:
B. THE PLAINTIFF’S CLAIMS 10.This action was started in 2011 by Narian against the defendant. Unfortunately, Narian passed away in 2013. As a result, the action remained dormant for 5 years. Upon obtaining Letters of Administration of Narian’s estate, Kishin successfully applied for a “carry on” order in 2018 and substituted Narian as the plaintiff herein. In the light of these circumstances, the term “plaintiff” to be used hereinbelow in this Judgment shall be taken to mean either Narian or Kishin, as the case may be. B1. The plaintiff’s claims as pleaded in the Re-Re-Amended Statement of Claim 11.The plaintiff’s case as pleaded in the Re-Re-Amended Statement of Claim may be summarised as follows. 12.The Children (except Vidya) had at one time or another worked in the Businesses on the understanding with Father and one another that the sons (i.e. the defendant, Kishin and Narian) should be entitled to and share equally in the profits of such businesses and in the family wealth accumulated therefrom, and the daughters would be supported and provided for financially until they got married (“the Understanding”). 13.The Understanding continued despite the conversion of the sole-proprietorship into partnership and the subsequent re-constitution of the partnership. 14.There was also an Indian family tradition that Father tended to entrust the defendant as the eldest son of the family more with the family wealth generated by the Businesses and the assets acquired therewith, but only on the basis of the Understanding. 15.The Businesses had generated profit sufficient for the acquisition of various properties (including those set out in [8] above, a flat at Kong Wing Court, Aberdeen Centre (“the Aberdeen Centre Flat”), and another flat located in Tower 27 of the South Horizons which is registered under Rose’s name and currently occupied by her (“Rose’s SH Flat”)) pursuant to the Understanding. Such properties (except Rose’s SH Flat) were, according to Indian family tradition, held under the name of the defendant for the benefit of all the sons and the unmarried daughters of the family. 16.The individual situations of some of the landed properties purchased by the Samtani family were as follow:
17.It was agreed in around late 2004 between Narian and the defendant that Narian would transfer his 20% interest in the Manderly Garden House to the defendant who in return would transfer the defendant’s legal title and beneficial interest in the Evelyn Towers Flat together with $10 million (by instalments over 2 years) to Narian (“the Evelyn Towers Agreement”). 18.It was further agreed among the defendant, Kishin and Narian to acquire a flat in Braemar Hill Mansions (“the Braemar Hill Mansions Flat”) as tenants-in-common in equal shares (1/3 each), with an agreement, inter alia, that they would contribute equally to the mortgage repayments and outgoings thereof with funds from the Businesses, and the said flat would be used by Kishin and his family rent-free (“the Braemar Hill Mansions Agreement”). 19.The defendant breached the Understanding in that he, inter alia, had unlawfully and/or wrongfully claimed that the assets acquired with funds from the Businesses belong to him beneficially and exclusively. 20.So far as relief which relates to the landed properties are concerned, the plaintiff seeks the following against the defendant “being a 40% partner of the Businesses”:-[2]
21.Further, the plaintiff alleges that the defendant misappropriated monies belonging to the Businesses, in that at least between 2004 and 2010, the defendant had instructed customers of Kay Tee (i.e. Cassidy Electrical Supply Co Ltd (“CESCO”), E&M Lighting (“E&M”) and Woodies DIY Ltd (“Woodies”)) to remit monies in respect of goods ordered by them and as covered by invoices issued by Kay Tee and/or Kishoo, to his two personal accounts maintained with Standard Chartered Bank.[10] 22.It is alleged that the defendant would thereafter retain part of the monies received from the customers for his personal use, after which he would remit/transfer the balances to the bank account of Kay Tee and/or Kishoo.[11] It is thus suggested that the defendant thereby misappropriated the shortfall.[12] 23.In this regard, the plaintiff seeks the following relief:-
24.The plaintiff also seeks an injunction for the delivery up or access to all books, accounts and business records of Kay Tee and Kishoo.[17] 25.There are 3 other standalone allegations for breaches of agreements. 26.Firstly, the plaintiff pleaded that the defendant was in breach of the Manderly Rental Agreement by refusing to let it out since 1996.[18] However, no relief is sought in this respect. 27.Secondly, the plaintiff alleges that the defendant was in breach of the Evelyn Towers Agreement in that he had failed to transfer the Evelyn Towers Flat to Narian and to pay him $10 million.[19] The plaintiff seeks specific performance or alternatively damages for this alleged breach.[20] 28.Thirdly, the defendant was in breach of the Braemar Hill Mansions Agreement in that he had refused and/or failed to apply the funds of the Businesses to discharge the monthly mortgage instalments since 2005.[21] However, no relief has been sought in this respect. B2. The plaintiff’s claims at the Opening Submissions 29.At his Opening Submissions, Mr Hingorani submitted that, as far as the landed properties are concerned, the plaintiff would rely on common intention constructive trust. It was said, inter alia, that although this legal concept was not expressly stated in the Re-Re-Amended Statement of Claim, the defendant could not have been taken by surprise at all because the Understanding had been pleaded, and the Understanding was all about the family members’ common intention. 30.I am afraid I cannot accept that the plaintiff is entitled to rely on common intention constructive trust at the trial. 31.Firstly, I do not accept that this was, to say the least, adequately pleaded in the Re-Re-Amended Statement of Claim as alleged. 32.As summarized by G Lam J (as he then was) in Liu Wai Keung v Liu Wai Man [2013] 5 HKLRD 9 at [46], the elements which a plaintiff must prove in order to establish a common intention constructive trust in his favour are that:-
33.While there is no doubt that the facts which constitute “detriment reliance” need to be pleaded[22], it is clear that the plaintiff has not done so. In this regard, Mr Hingorani and Mr Lo suggested in their Opening Submissions that:
34.The above submissions cannot assist the plaintiff because:
35.Secondly, a more fundamental problem faced by the plaintiff is that the cause of action of common intention constructive trust is apparently not mentioned in the Writ, and as a result he cannot be permitted to run such a case. 36.The starting point is Order 18 rule 15(2) of the Rules of the High Court (“RHC”) which reads:
37.In Moulin Global Eyecare Holdings Ltd v Olivia Lee Sin Mei (2014) 17 HKCFAR 466, Mr Justice Gummow NPJ accepted that the indorsement in the writ marks out the perimeter or range of the area within which the plaintiff may express its claim in a formal fashion in the statement of claim whether as originally filed or as sought to be amended. 38.In Hong Kong Civil Procedure 2025, Vol.1, Commentary 18/15/8, the learned editors also summarised the legal position as follows:
39.In the Writ of Summons herein, the plaintiff stated that his claims were for:
40.It can be seen that the writ only included 2 causes of action, namely, a partnership claim and a contractual claim (regarding the Evelyn Towers Agreement). There is no trace of any common intention constructive trust claim. That is fatal to the plaintiff’s case of common intention constructive trust. 41.Apart from attempting to rely on common intention constructive trust, Mr Hingorani also informed this Court during his Opening Submissions that, as far as the landed properties are concerned, the plaintiff’s updated position on his claims would be as follows:
B3. The plaintiff’s claims at the Closing Submissions 42.At the stage of Closing Submissions, the plaintiff’s counsel further confirmed that the plaintiff would not rely on resulting trust in his case. 43.Hence, the followings are the remaining causes of action pursued by the plaintiff:
C. THE DEFENDANT’S CASE 44.The defendant’s case is relatively simple and may be summarised as follows:
45.The defendant also counterclaims against the plaintiff in relation to two matters:
D. THE PLAINTIFF’S DEFENCE TO COUNTERCLAIM 46.In relation to the defendant’s counterclaim, the plaintiff’s defence is that:
E. THE DEFENDANT’S APPLICATION TO ADDUCE WITNESS STATEMENT 47.Before I go on to deal with the substantive issues, I should put on record the reasoning for dismissing the defendant’s summons filed on 16 November 2023 (“the New Witness Statement Summons”) which was returnable on the first day of the trial, under which the defendant applied for leave to adduce the Supplemental Witness Statement of Michelle Samtani (“Michelle”) who is the defendant’s daughter. The main purpose of this witness statement was to produce various original copies of inward remittance advices (“the Original Advices”) and to explain certain handwritten notes thereon. 48.The New Witness Statement Summons was supported by the Affirmation of Jason John Samtani (“Jason”), who is the son of the defendant. Jason explained that:
49.Mr Lin for the defendant fairly accepted that this was a very late application. He drew this Court’s attention to the case of Parsad v Great Wealthy Engineering Co Ltd [2012] 3 HKLRD 705, in which Bharwaney J had the following to say:
50.The above general principles were not in dispute. For completeness, it may also be helpful to refer to the case of Chu Hsiao-Chiu alias Chu Tony Chu Hsiao Chiu alias Chu Hsiao Chiu, deceased v Ma Jinrui & Another [2020] HKCFI 942, in which the plaintiff therein sought leave to file two affidavits in opposition to various applications taken out by the defendants less than 3 weeks before the substantive hearing. In his Decision, Coleman J. took the view that:
51.Having heard counsel’s submissions, I held the view that the New Witness Statement Summons should be dismissed for the following reasons:
52.The New Witness Statement Summons had therefore been dismissed with costs. F. CREDIBILITY OF WITNESSES 53.In Hu Lan v David Golden [2023] HKCFI 873, this Court held that:
54.I will bear the above in mind when I consider the credibility of the witnesses in the present case. 55.In support of the plaintiff’s claims, statements of the following witnesses have been served:
56.Unfortunately, both Narian and Lily had passed away before the trial. In such circumstances, their witness statements were adduced as hearsay evidence. 57.On the other hand, apart from the defendant who had given evidence in Court, he had also called Rose and Michelle as his witnesses. F1. Kishin 58.I am of the view that Kishin is neither a credible nor a reliable witness for, inter alia, the following reasons. 59.Even though he did not have personal knowledge on quite a number of matters, he tended to give evidence on those matters anyway based on his own speculation without any basis. For example:
60.Some of Kishin’s evidence is very difficult to comprehend because they do not make sense. For example:
61.Kishin would refuse to give any direct answer which would be favourable to the defendant’s case even though such an answer was obviously the truth. A usual means for him to evade answering this kind of questions was to say “I can’t reply”. Even if he finally (and exceptionally) gave a direct answer to this sort of questions, it would take a very long time for him to do so. For example, he had taken a very long pause when he was confronted with Lily’s evidence that it was the defendant who added Narian as a partner of the Businesses. 62.Kishin has also given inconsistent evidence on a number of matters. It is obvious that he had no hesitation to change his evidence as long as it would suit his purpose. For example:
63.Further, there were many occasions when Kishin did not answer even straight forward questions directly, but only stated what he wanted to say. Such evasiveness, in my view, is an indication that he could not answer many of the questions asked by Mr Lin. 64.There were also many occasions when his evidence in Court was plainly contradictory to the evidence contained in his own witness statements. For example:
65.It is also surprising to note that sometimes Kishin could not answer Mr Lin’s question without reading his own witness statement again. Of course I have not lost sight of the fact that the focus of the questions was mainly about matters which took place many years ago, but that does not necessarily mean that it must be reasonable for Kishin to have the need to refer to his witness statement before answering, especially when those questions concerned matters which are so special that he would not lightly forget. For example, he made a request to read his own witness statement again when he was asked by Mr Lin to confirm that Narian and he were not made partners in 1983 because they were travelling all the time. He said he was confused because there were a lot of data for him to absorb. In my view, if he were always telling the truth, it should not be difficult for him to confirm the said matter which must be something special and within his personal knowledge. That shows how unreliable Kishin is as a witness. F2. Narian 66.It has been agreed between the parties that Narian’s witness statement may be admitted as hearsay evidence at the trial. The question for this Court is the weight to be attached to such evidence. 67.Section 49 of the Evidence Ordinance (Cap.8, Laws of Hong Kong) provides that:
68.I will now go through the factors set out in section 49(2) of the Evidence Ordinance:
69.Another important factor which this Court has to take into account is that Narian’s evidence cannot be tested by cross-examination. 70.With all the above matters in mind, I am of the view that the Court should only attach minimal weight to Narian’s evidence. F3. Lily 71.Apart from the fact that Lily is not a party herein, the other factors under section 49(2) of the Evidence Ordinance discussed above are equally applicable to Lily’s witness statement. I therefore come to the same conclusion that only minimal weight should be given to Lily’s evidence. F4. The defendant 72.According to Dr Edmund Woo’s report dated 27 July 2023, the defendant:
73.Dr Woo therefore advised the Court that the defendant should be given:
74.Given the defendant’s health condition, the Court’s sitting hours while the defendant was giving evidence had been adjusted accordingly. Hearings were also stood down from time to time (with the consent of Mr Hingorani who had always dealt with the defendant’s applications in this regard very fairly) whenever the defendant’s family members considered that the physical state of the defendant appeared to show that he needed a rest. These adjustments are important because, as a matter of fairness, the Court does not want to see that the quality of a witness’ evidence would be affected by his physical condition which might fluctuate from time to time. 75.With the above measures, I had an impression during the trial that the defendant could handle the cross-examination quite well. The most difficult part remained understanding what exactly the defendant was saying because of his slurred speech. While this had from time to time caused delay to the progress of the cross-examination because it might take time for the legal teams and this Court to figure out the exact meaning of the defendant, at the end of the day, I do not think there was any dispute as to what the defendant’s evidence was. 76.Having considered all relevant matters in the round, I am of the view that the Court should approach the defendant’s evidence cautiously, because there were quite a few occasions when his evidence in Court was plainly contradictory to what he had stated in his own witness statements. For example:
F5. Rose 77.Generally speaking, I am of the view that Rose’s evidence is unshaken in cross-examination. I accept her evidence. F6. Michelle 78.I bear in mind that Michelle is the defendant’s daughter. However, I find that her evidence was unshaken despite the cross-examination. I accept her evidence. G. DISCUSSION 79.There are 2 concepts which basically run through the plaintiff’s case, namely, the Understanding and the Indian family tradition. I will therefore consider these 2 matters first. G1. The alleged Understanding 80.To recap, according to the plaintiff’s case, the Understanding was that the sons of the Samtani family should be entitled to and share equally in the profits of the Businesses and in the family wealth accumulated therefrom, and the daughters would be supported and provided for financially until they got married. 81.There are many features in the present case which show, and therefore I find, that there was no such Understanding. I will just refer to a few below. 82.First, the allegation of such an Understanding is in direct contradiction against Narian’s case of partnership under which only he and the defendant (but not Kishin) should be entitled to the profit generated by the Businesses. This was indeed his stance from the very beginning: In the pre-action letter sent by Narian’s solicitors, Narian demanded the defendant to, inter alia, account to him 60% share in the Businesses rather than 1/3, which even Kishin accepted in Court that this is inconsistent with the alleged Understanding. 83.Second, Kishin said in his oral evidence that he considered that the Understanding existed because Father did mention that “everything in the Businesses belong to everyone”. This on the face of it is inconsistent with the alleged Understanding (because “everyone”, without qualification, must include even the married daughters), not to mention that in fact, as accepted by Kishin, Father had never said that the defendant should be responsible to look after the unmarried daughters after Father had passed away. 84.Third, Kishin said the Manderly Garden House was owned by the 4 of them (Kishin, Narian, the defendant and Rose) and they were the true owners, not holding the said property for anyone. This is in direct contradiction against the plaintiff’s case on the Understanding. So is the fact that Narian only held 20% of the said property while the defendant and Kishin held 30% each thereof – in other words, they were not having equal shares in the property. 85.Further, according to the plaintiff’s pleaded case, Kishin, Narian, the defendant and Rose would be personally liable for the repayment of the mortgage loan taken out for the purchase of the Manderly Garden House. This is puzzling as to why that would be so if the House was purchased pursuant to the Understanding. 86.Pausing here, it is noted that Lily explained in her witness statement that the percentage of ownership was in fact finalised upon discussion among Father, Mother, the defendant and herself, and that the defendant and Kishin were given a larger share of the property because they had already got married by then. This contradicts Kishin’s evidence that he and Narian had been involved in the discussion. 87.Fourth, if the Understanding existed, then the Conwell Offices would be belonging to the Businesses as well, and the defendant would be holding them only for and on behalf of the Businesses. In such a case, there is no way that Kay Tee would have entered into tenancy agreements with the defendant and pay the defendant monthly rent, still less for Narian to agree to such an arrangement and sign a number of tenancy agreements for that purpose. Further, it cannot be explained why the Businesses had never booked any rental income in respect of the 3/F Conwell Office which had all along been rented out to outside tenants. G2. The alleged Indian family tradition 88.Pursuant to the alleged Indian family tradition, Father tended to entrust the defendant as the eldest son of the family more with the family wealth generated by the Businesses and the assets acquired therewith but only on the basis of the Understanding. 89.However, it has been exposed at the trial that the alleged tradition simply did not exist, and I would so find. It may be demonstrated by the following matters. 90.First, it is evident that Father executed a power of attorney in 1962 by which he entrusted Lily to handle all his affairs including conducting the Businesses. On the face of it, this is inconsistent with the alleged Indian family tradition. Kishin tried to explain that Father elected to entrust Lily rather than the defendant at the time because the latter was still studying in the school. However, there is no evidence that this power of attorney has been revoked subsequently when the defendant grew older and started working at the Businesses. 91.Second, Father made his last will in 1963 under which he bequeathed everything to Mother. At the time, the defendant was already 17 years old. This action on the part of Father clearly shows that there was no Indian family tradition as such. When Kishin was cross-examined on this, he had paused for a long time and could not give any answer. 92.Third, if there was such an Indian family tradition for the eldest son to hold everything for the benefit of other family members, Kishin would not have (as he stated himself in his evidence) requested the defendant (shortly after Father’s passing) to make him a partner of the Businesses. In fact, Lily also stated in her witness statement that, in her view, every member of the family working in the Businesses should be made a partner thereof. This plainly contradicts the alleged Indian family tradition. 93.Fourth, if there was such an Indian family tradition, then the defendant should have been made sole proprietor rather than just a partner in 1989 (if not 1983), not to mention that, as a matter of fact, Narian was made a partner who had a larger share (60%) than the defendant (40%). When these factual scenarios were pointed out to Kishin for his explanation, he could not offer any. 94.Fifth, when Kishin was asked to articulate the alleged Indian family tradition in his own words while he was in the witness box, he started off by referring to the time when the parents had passed away. This apparently is quite different from the plaintiff’s pleaded case, which described the tradition to be applicable to the time when Father was still alive. G3. The plaintiff’s partnership claims on the landed properties 95.The plaintiff now claims 60% interest in the following properties on the basis that they are partnership properties:
96.It may be recalled that the respective years of purchase of these properties are as follow:
97.It should also be borne in mind that:
98.It can therefore be seen that:
99.The difficulty in the plaintiff’s case is, in the above circumstances, even if the Maiden Court Flat, the Aberdeen Centre Flat and the Conwell Offices were purchased with the monies of the Businesses, how can it be said that they were partnership properties of the 1989 Partnership? I will address this question below. G3.1 Partnership properties – the legal principles 100.It is well established that upon the admission of a new partner, the original partnership dissolves and a new partnership forms: Hadlee v Commissioner of Inland Revenue [1989] 2 NZLR 447 at 455. 101.In 勞慧聲經營之恆利公司 v 安聯保險香港有限公司 (HCA 4084/2001, unreported, 4 February 2005), Lam J (as Lam PJ then was) also had the following to say at [16]:
102.In Lindley & Banks on Partnership (21st Ed, 2022), the learned author wrote the followings:
G3.2 Application of the legal principles 103.As aforesaid, both the Maiden Court Flat and the Aberdeen Centre Flat were purchased while Father was the sole proprietor of the Businesses. Even if they were purchased with monies from the Businesses, it is difficult to see how they could be said to have been brought into the partnership, because even if the plaintiff’s case is accepted, they were purchased as family investments. Such a purpose had nothing to do with the Businesses. Hence, the plaintiff’s claim on these properties are bound to fail. 104.The Conwell Offices were purchased in 1987, that is, during the 1983 Partnership. 105.According to the legal principles referred to above, they could not form part of the partnership properties of the 1989 Partnership, unless it can be shown that there was no dissolution of the 1983 Partnership and the Interim Partnership as such. 106.The plaintiff argued the matter in the following way:
107.The emphasis of the plaintiff’s argument was the transfer of Father’s interest in the 1983 Partnership to Narian. 108.Before I consider this argument further by reference to the facts, I should point out that the plaintiff should not even be allowed to put forward this argument because it is plainly contradictory to his pleaded case. In paragraph 4 of the Re-Re-Amended Statement of Claim, it was pleaded that:
109.It can be seen that it was the plaintiff’s pleaded case that the partnership was “reconstituted” in 1989. From any view, this must be different from the case where the partnership remained the same despite the change of partners. 110.That being the case, the partnership properties, according to the plaintiff’s pleaded case, cannot be treated as being taken up by the 1989 Partnership as such. 111.Moreover, even if the plaintiff had not pleaded positively that the partnership had been reconstituted, he had never pleaded any material facts in support of his assertion that the 1989 Partnership had taken over the assets of the 1983 Partnership and the Interim Partnership. 112.Even if the plaintiff should be allowed to run such a case, it must be borne in mind that as at the effective date when Narian was added as a partner (1 October 1989), Father was still alive. Therefore, as at 1 October 1989, Father and Narian were partners at the same time. There is no evidence as to the respective percentage of interest held by them. But what is certain is that there could not be a transfer of 60% interest from Father to Narian as alleged. 113.Mr Hingorani tried to tackle this difficulty in the plaintiff’s case by suggesting that after Narian was made a partner on 1 October 1989, the partnership entered into a transitional period, during which Father was a partner without holding any equity interest in the partnership. With respect, this is totally unsupported by evidence and must be rejected. 114.In this regard, I note that the defendant’s evidence (which Kishin also accepted) was that in fact Narian was added by the defendant after the demise of Father. Indeed, it can be seen that the “Change of Partners” Form was dated 1 December 1989. Hence, it seems to me what happened was that the defendant somehow had inserted “1 October 1989” as the “Date of [Narian] joining the partnership”, that means the effective date was fixed retrospectively. If that is the case, that provides another reason why Narian’s share in the 1989 Partnership could not have been “transferred” by Father, because Father had already passed away when the defendant submitted the form to change the composition of the partnership. 115.This would be so even if it was Father’s intention that Narian and the defendant should be 60% : 40% partners, as the existence of the Interim Partnership means there could not have been any “transfer” of Father’s 60% interest to Narian. 116.The plaintiff further suggested that the defendant’s allegation that the 1989 Partnership is a new partnership has no evidential support. I do not accept this suggestion. It should be noted that it is the plaintiff’s case that the properties had been passed from one partnership to another. Therefore it should be the plaintiff who has the burden of proof. Furthermore, the formation of a new partnership is the legal effect caused by the admission of the new partner (and the retirement of the old partner). If the plaintiff contends otherwise, of course it should be the plaintiff who should satisfy the Court what he suggests to be the actual position. 117.For the sake of completeness and at the risk of stating the obvious, section 35(1) of the Partnership Ordinance (Cap.38, Laws of Hong Kong) should also be referred to. This provision stipulates that:
118.The plaintiff has not pleaded, nor has he adduced any evidence to prove, any agreement which negates the effect of Father’s death on the continuation of the partnership. 119.The conclusion that the landed properties are not partnership properties is further reinforced by the fact that there is no evidence that they had ever been recorded as such in the accounts of the 1989 Partnership. 120.As far as the 4/F Conwell Office is concerned, if it had all along been treated as a property owned by the 1989 Partnership, the Businesses would not have paid the defendant any rental as they did. 121.Most of the above analysis is not applicable to the South Horizons Flat, because it was purchased after the formation of the 1989 Partnership. In other words, the plaintiff does not have to establish the transfer of this property from one partnership to another. 122.However, the point on the accounts of the 1989 Partnership is still applicable – there is no evidence that the South Horizons Flat has ever been included as a partnership property in the account of the 1989 Partnership. Moreover, it is apparent that it was not purchased for the purpose of the Businesses. 123.I therefore hold that none of the landed properties belong to the 1989 Partnership and the plaintiff’s claims in this regard must fail. 124.Having said that, for the sake of completeness, I will deal with the plaintiff’s arguments that the aforesaid properties were all purchased from the Businesses’ funds below briefly. G3.3 Source of funds – the Maiden Court Flat and the Aberdeen Centre Flat 125.First and foremost, it should be pointed out that, since it is the plaintiff’s claims that the purchases of the landed properties were funded by the Businesses, the plaintiff has the burden of proving this allegation on the balance of probabilities. 126.In this regard, the plaintiff’s case theory is that:
127.Pausing here, it seems to me there is a fundamental problem with this case theory, in that the plaintiff has reversed the burden of proof. It must be borne in mind that the properties were held under the name of the defendant. If the plaintiff is alleging that the defendant was not the beneficial owner, it must be the plaintiff who should prove positively that the purchase funds came from the Businesses, rather than the other way round. 128.In this regard, in fact the plaintiff could not come up to prove, because Kishin admitted under cross-examination that he did not know where the funds came from – whether they came from the Businesses or from Father’s personal bank account. 129.Narian’s evidence is unhelpful in this respect also, for he could only make a bare assertion that the purchases were funded by the Businesses. 130.On the other hand, there is the evidence of the defendant that, apart from other investments, he had made a profit of around $700,000 – $800,000 within 3 months out of his purchase of an uncompleted property at Hill Grove in 1979. His evidence on what happened in this transaction is supported by the land search record. 131.I therefore hold that the plaintiff has failed to prove that the funds used to purchase the Maiden Court Flat and the Aberdeen Court Flat came from the Businesses. 132.This finding is also supported by the following objective fact: If the defendant had the habit of claiming family assets as his own, then why did he agree to add Narian as a partner after Father’s demise in 1989? What the defendant could have done at that time was to simply turn the Businesses into sole proprietorship so that he himself would have the sole power to control everything belonging to the family. However, not only did he not do so, he made Narian a partner – not only a partner, but a partner with a larger equity interest in the Businesses. In this regard, I have not forgotten the defendant’s letter dated 21 February 2011 to the plaintiff’s solicitors in which he stated that it was Father’s decision to give Narian his 60% ownership in the partnership. However, by the time the defendant submitted the “Change of Partner” form, Father had already passed away. Hence, the defendant could have ignored Father’s decision. 133.Another important matter which should be considered is this Court’s finding that the alleged Understanding and Indian family tradition did not exist. In such circumstances, there is no reason why the properties bought by Father or the Businesses should be registered under the sole name of the defendant. G3.4 Source of funds – the Conwell Offices 134.Apart from arguing that the defendant has not proved his source of funds, the plaintiff’s counsel has not made submissions on the plaintiff’s case that the Conwell Offices were purchased with the Businesses’ funds. 135.The plaintiff’s case in this regard is therefore bound to fail, as it is my view that the plaintiff should have the burden of proving his case. 136.In fact, it is not surprising that the plaintiff’s counsel could not say much about the Conwell Offices, because Kishin’s evidence on this matter is totally unhelpful:
137.Indeed, it is evident that the defendant used his personal cheques to pay for the legal costs of acquisition of the 3/F Conwell Office. If it was the Businesses which funded the purchase, there is no reason why the defendant’s personal cheque (rather than the Businesses’ cheque) was used. 138.Moreover, if the purchase funds were really coming from the Businesses, Narian as 60% partner of the Businesses would not have agreed to enter into tenancy agreements with the defendant in respect of the 4/F Conwell Office and pay rent to the defendant. 139.Furthermore, if the Businesses were the real owner of the 3/F Conwell Office, it is difficult to understand why the rental received from the tenant thereof had never been booked in the Businesses’ account. 140.The analysis in [132] and [133] above is also applicable. 141.I therefore find that the purchase funds for the Conwell Offices did not come from the Businesses as alleged by the plaintiff. G3.5 Source of funds – the South Horizons Flat 142.In Kishin’s witness statement, he alleged that the deposit for this property (and Rose’s SH Flat) came from family funds that had been deposited with Standard Chartered Bank, and the mortgage repayments and other expenses were covered by Businesses’ funds. 143.However, when he was cross-examined in Court, he stated that:
144.When Kishin was cross-examined further, he admitted that he did not know where exactly the defendant got the purchase money for the South Horizons Flat from. 145.When it was pointed out to Kishin that his evidenced in Court was different from what he said in his witness statement, he changed his evidence again and stated that he would stick to his witness statement. 146.In my view, the inconsistency in Kishin’s evidence shows that his evidence in this respect incredible and unreliable. He was only speculating in his evidence, and had no basis at all to support his allegation against the defendant. 147.The analysis in [133] above is also applicable. 148.I therefore find that the plaintiff has failed to prove that the source of funds for the purchase of the South Horizons Flat came from the Businesses. G4. The Evelyn Towers Agreement 149.To recap, it is alleged by the plaintiff that the Evelyn Towers Agreement was reached in around late 2004 between Narian and the defendant, under which Narian would transfer his 20% interest in the Manderly Garden House to the defendant who in return would transfer his legal title and beneficial interest in the Evelyn Towers Flat together with $10 million to Narian. 150.It is now alleged by the plaintiff that, while Narian had assigned his 20% interest in the Manderly Garden House to the defendant by virtue of a Vesting Assignment dated 1 February 2005, the defendant has refused and failed to transfer the Evelyn Towers Flat to Narian and pay him $10 million. 151.The defendant denied the existence of the Evelyn Towers Agreement. His case is that Narian agreed to transfer his 20% interest in the Manderly Garden House back to him because Narian was unable to make his 20% contribution towards the purchase price and the expenses in relation thereto. 152.The defendant’s case is supported by a Vesting Assignment dated 1 February 2005 executed by Narian by which he assigned his 20% interest in the Manderly Garden House to the defendant, in which the Evelyn Towers Agreement was not mentioned at all, and the payment of $10 million and/or the transfer of the Evelyn Towers Flat was not stated to be the consideration of the assignment of the said 20% interest. 153.Narian explained in his witness statement that he did not have any proper opportunity to read the aforesaid document before he signed it. However, it should be borne in mind that according to Narian’s own evidence, at the material time, he had already seen enough to realise that the defendant would not keep his words[26]. If what Narian said was true, it is difficult to understand why he would agree to execute the aforesaid document, still less not to insist in putting the Evelyn Towers Agreement into writing. 154.The defendant’s case is also supported by Rose, whose evidence is accepted by this Court. 155.I have therefore come to the conclusion that the plaintiff has failed to prove the existence of the Evelyn Towers Agreement. G5. Misappropriation of funds and the CESCO Arrangement 156.I have already summarised the respective cases of the parties in Sections B and C above and I would not repeat the same. 157.In support of his argument that the alleged CESCO Arrangement was a fabrication, the plaintiff relied heavily on the following features of the present case:
158.I agree that the fact that the defendant did not plead his case on the CESCO Arrangement right away when he filed his first version of the Defence is indeed suspicious and that is something that the Court has to take into account. However, it should be remembered that the CESCO Arrangement is supported by documents including credit notes issued by Kay Tee. If it is the plaintiff’s case that the alleged CESCO Arrangement did not exist at all, then it follows that it is also the plaintiff’s case that the credit notes must be fabricated documents, which were created in support of the defendant’s defence. In my view, this is a very serious allegation, and the Court should not come to this finding lightly without compelling evidence. 159.Having considered all the circumstances of the case, I am of the view that it is more likely than not that the CESCO Arrangement existed, and that the defendant did not misappropriate any money as alleged. 160.First, CESCO has issued a total of 3 confirmations (“the CESCO Confirmations”) which confirmed that CESCO had indeed received all commission from the defendant. That means the defendant did not misappropriate any short-fall as alleged. 161.In relation to the CESCO Confirmations, it is noted that the plaintiff has only challenged the authenticity of one of them by pleading, but did not file Notice of Non-Admission under Order 27 rule 4 of the RHC in respect of the other 2 confirmations. 162.The plaintiff asked the question why the defendant did not call the owners of CESCO to give evidence in Court. However, the reverse is true too. Given Kishin’s admission that he also had the contact information of CESCO, he could have approached CESCO and verified the genuineness of the content of the CESCO Confirmations. However, Kishin said he had dropped this idea because he thought CESCO would not reply anyway[27]. With all these in mind, I am of the view that due weight should be given to the confirmations in respect of which authenticity were not challenged. After all, there is no evidence as to why CESCO and its owners had to bend backwards to the extent of creating false documents to assist the defendant in his defence herein. 163.Second, the entries appearing in the CESCO Confirmations can be matched with contemporaneous documents such as the defendant’s bank statements which show that there were indeed corresponding remittances. There were also contemporaneous emails which show that CESCO had directed the defendant to pay the credit to CESCO’s designated parties. In other words, the defendant did not keep any short-fall for his own use as alleged. 164.Third, it should also be borne in mind that, as admitted by Kishin, at the material time the Businesses only had one computer and one email account the use of which were shared by the defendant and Narian. In other words, Narian could have accessed to the correspondence between the defendant and CESCO. This shows that it is more likely than not that Narian knew about the CESCO Arrangement. Indeed, it is the evidence of Michelle (which I accept) that Narian knew about it at all material times. Hence, the defendant could not be doing something behind Narian’s back. 165.Fourth, there is nothing suspicious for one of the CESCO Confirmations to be dated immediately after Narian’s 5th and 6th Affirmations and followed exactly as those particularized in Narian’s 5th and 6th Affirmations, because apparently the said confirmation was prepared specifically for the purpose of dealing with Narian’s allegations. 166.Fifth, if the defendant did misappropriate monies from the Businesses, one wonders why the plaintiff could only discover problems in relation to one customer (i.e. CESCO). In my view, this tends to support the defendant’s evidence that this was a special arrangement which was created at the request of one customer (CESCO) only. 167.Sixth, I reject Kishin’s evidence that the Businesses did not require the defendant to advance his own funds for the running of the business:
168.Seventh, insofar as it is the plaintiff’s case that there was no reason why the defendant would have to use his personal bank account to conduct business, this argument is made to be rejected, for Kishin also admitted in Court that he had opened a joint bank account with a client for the purpose of receiving payments owed to the Businesses. 169.To conclude, the plaintiff’s claim of misappropriation must be rejected. G6. The defendant’s counterclaim – Regal Top 170.The defendant alleged that Narian, in breach of his duties owed as a partner to the Businesses, had:
171.The defendant’s counsel have referred this Court to the case of Aas v Benham [1891] 2 Ch 244, in which Lindley LJ held at 255 that:
172.It is also trite that a fiduciary may not put himself in a position where his interest and duty conflict or there is a real risk that they might conflict. Thus, no actual conflict is required for a fiduciary to breach his duties, provided that there be a real sensible possibility of conflict: Poon Ka Man Jason v Cheng Wai Tao (2016) 19 HKCFAR 144 at [74]. 173.Section 32 of the Partnership Ordinance also provides that:
174.In the present case, it is undisputed that, after Kishin had left the Businesses, he set up Regal Top which engaged in import and export business. It is therefore apparent that Regal Top was carrying on a business of the same nature as the Businesses. Indeed, as admitted by Kishin, most customers of the Businesses and Regal Top were the same. 175.However, it was Narian’s evidence that he was not and had not been involved in Regal Top’s business. 176.In my view, Narian’s evidence in this regard must be rejected:
177.Given the nature of Regal Top’s business and the admitted common clientele, there must be a conflict of interest on the part of Narian. 178.Narian’s estate should therefore be ordered to give an account of profits which Narian had made in Regal Top. G7. The defendant’s counterclaim – Narian’s occupation of the Evelyn Towers Flat 179.It is undisputed that the defendant as legal and beneficial owner of the Evelyn Towers Flat had requested Narian on 12 May 2011 to leave the said property, which Narian had refused to do so. 180.In his submissions, the plaintiff opposed this claim by relying on (1) the Understanding; (2) resulting trust in favour of Father; and the Evelyn Towers Flat being a partnership asset. These defences have either been abandoned or rejected in the earlier part of this Judgment. 181.Hence, the plaintiff has no defence to this claim. 182.However, the defendant has not adduced any evidence in support of his claim of mesne profit. 183.In such circumstances, as accepted by Mr Lin, the defendant is only entitled to nominal damages. 184.I therefore access such damages at $1,000. H. ORDER 185.By reasons of the aforesaid:
I. COSTS 186.I make a costs order nisi that the plaintiff shall bear the costs of the defendant, with certificate for two counsel, to be taxed if not agreed. 187.The above order nisi shall become absolute in the absence of application to vary (which, if any, shall be made by letter, and will be disposed of on paper) within 14 days hereof.
Mr Jeevan Hingorani and Mr Tony Lo, instructed by Fairbairn Catley Low & Kong, for the plaintiff Mr Kenny Lin and Mr Jason Kung, instructed by Stevenson Wong & Co, for the defendant [1] This is shown by the Business Registration Record at [D1/4919] [2] Endorsement of Claim at §1 [3] Re-Re-Amended Statement of Claim at Prayer (1)(iv) [4] Re-Re-Amended Statement of Claim at Prayer (1)(v) [5] Re-Re-Amended Statement of Claim at Prayer (1)(vi) and (2) [6] Re-Re-Amended Statement of Claim at Prayer (3) [7] Re-Re-Amended Statement of Claim at Prayer (5A) – but this claim was dropped at the stage of Closing Submissions [8] Re-Re-Amended Statement of Claim at Prayer (5B) [9] Re-Re-Amended Statement of Claim at Prayer (5C) [10] Re-Re-Amended Statement of Claim at §20(16A) [11] Re-Re-Amended Statement of Claim at §20(16B) [12] Re-Re-Amended Statement of Claim at §20(16C) [13] Re-Re-Amended Statement of Claim at Prayer (1)(ii) [14] Re-Re-Amended Statement of Claim at Prayer (1)(iii) [15] Re-Re-Amended Statement of Claim at Prayer (1)(vi) and (2) [16] Re-Re-Amended Statement of Claim at Prayer (3) [17] Re-Re-Amended Statement of Claim at Prayer (8) – this was no longer pursued in the plaintiff’s Closing Submissions [18] Re-Re-Amended Statement of Claim at §15(3) and (14) [19] Re-Re-Amended Statement of Claim at §18 [20] Re-Re-Amended Statement of Claim at Prayers (4) – (5) [21] Re-Re-Amended Statement of Claim at §17 [22] O’ Neill v Holland [2022] 1 P & CR 3, at [62] [23] Adopted from the defendant’s Opening Submissions [24] This is the plaintiff’s own case – see the plaintiff’s Reply Submissions at paragraph 31 [25] Paragraph 232 of the plaintiff’s Closing Submissions [26] Paragraph 29 of Narian’s witness statement [27] Kishin had given inconsistent evidence in this regard – see [62(3)] above | ||||||||||||||||||||||||||||||||||||||||||
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