Pang Ping Kong and Others v. Pang Kam Lun and Others
Read the full judgment text of HCA 2273/2018 on BabelCite. This High Court CFI judgment was delivered on 10 April 2025.
1. This is the trial of the plaintiffs’ claim against the 1 st defendant for breach of fiduciary duties, against the 2 nd and 3 rd defendants for knowing receipt and dishonest assistance, and against all 3 defendants for conspiracy to injure by unlawful means. These claims arise from a sale and purchase transaction back in 2012 concerning Lot No.1512 in Demarcation District No.91, North, New Territories ( “Lot 1512” ).
Cited by 1 case · Cites 12 cases
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HCA 2273/2018 [2025] HKCFI 1464 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE ACTION NO. 2273 OF 2018 ________________________ BETWEEN
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________________________ J U D G M E N T ________________________ A. BACKGROUND 1.This is the trial of the plaintiffs’ claim against the 1st defendant for breach of fiduciary duties, against the 2nd and 3rd defendants for knowing receipt and dishonest assistance, and against all 3 defendants for conspiracy to injure by unlawful means. These claims arise from a sale and purchase transaction back in 2012 concerning Lot No.1512 in Demarcation District No.91, North, New Territories (“Lot 1512”). B. UNDISPUTED AND INDISPUTABLE FACTS 2.The following facts are either undisputed or indisputable. B1. Pang’s family, Pang’s family trust and the plaintiffs 3.Prior to 3 April 1992, a total of 9 lots of land in Demarcation District No. 91, North, New Territories (“the Lots”) and another piece of land in Demarcation District No. 51 were absolutely owned by Pang Shuk Shau (or Sau) (彭叔壽) (“Father”). 4.The Lots included Lot 1512 and Lot No. 1585 (“Lot 1585”) 5.Pang Shuk Shau (or Sau) was the father of the 1st plaintiff (“P1”), the 2nd plaintiff (“P2”), the 3rd plaintiff (“P3”), Pang Ching Pui (彭清培) (“Ching Pui”), the 5th plaintiff (“P5”), Pang Ping Fook (彭炳福) (“Ping Fook”), Pang Ching Fuk (彭清福) (“Ching Fuk”), Pang King Fuk (彭敬福) (“King Fuk”), Pang Ping Cheung (彭炳祥) (“Ping Cheung”) and Pang Fuk Cheung (彭福祥). 6.By a Deed of Gift dated 3 April 1992, Ping Fook, Ching Fuk and King Fuk became the registered co-owners of the Lots as tenants in common in equal shares. 7.By a Declaration of Trust dated the same date (“the Declaration of Trust”), Ping Fook, Ching Fuk and King Fuk declared that they shall hold, inter alia, the Lots upon a trust for sale for the benefit of themselves and 7 other named beneficiaries (“Other Beneficiaries”) as tenants in common in specified shares (“the Trust”). 8.The Other Beneficiaries include, inter alia, P1, P2, P3, Ching Pui and P5 (collectively, “the 5 Beneficiaries”). 9.Ching Pui died on 29 October 2017, and was survived by, inter alia, his son, i.e. the 4th plaintiff (“P4”). B2. The defendants 10.The 1st defendant (“D1”) and the 2nd defendant (“D2”) were the sons of Ping Fook, and hence grandsons of Pang Shuk Shau (or Sau). 11.D2 is D1’s younger brother. 12.D2 is now around 51 years old. He left Hong Kong and settled in the United Kingdom at about the age of 16, but has spent more time in Hong Kong since around 2015. 13.D3 is a limited company incorporated in Hong Kong. D2 has been the sole shareholder and sole director of D3 since around October 2012 the latest. D2’s wife, Wong I Wa (王懿華) (“D2’s Wife”), has at all material times been D3’s company secretary. B3. D1’s dealings with the Trust after Ping Fook’s death 14.Ping Fook passed away on 5 August 2009. 15.Pursuant to Grant No. HCAG 013474/2010 dated 26 January 2011, D1 (as the sole executor named in Ping Fook’s last will) obtained Probate to administer Ping Fook’s estate. By virtue of the executorship, D1 has succeeded to Ping Fook’s legal ownership in Lot 1512. 16.D1 became one of the joint account-holders and one of the joint authorised signatories, together with Ching Fuk and King Fuk, in respect of the bank account Nos. 0126xxxxxx2333 (saving) and 0126xxxxxx9468 (current) maintained with Bank of China (Hong Kong) Limited, into which the rental income and net sale proceeds derived from the sale of properties under the Trust were deposited. 17.D1 also became the book-keeper of the accounts and financial records in relation to the properties under the Trust. B4. Sale of Lot 1585 in 2012 18.In about February 2012, Lot 1585 was sold. 19.D1’s name appeared, together with Ching Fuk’s and King Fuk’s names, as the vendor, under the sale and purchase agreement and the assignment for the sale of Lot 1585. D1 also signed the said sale and purchase agreement in April 2012 and the said assignment in June 2012 together with Ching Fuk and King Fuk as the vendor. 20.Lung Sum Estate Agency (龍深地產公司) (“the Estate Agency”) and its handling estate agent, namely Madam Poon Mo Kuen Joe (潘慕娟) (“Poon”) acted as the estate agent for both the vendor (i.e. D1, Ching Fuk and King Fuk) and the purchaser in the transaction regarding Lot 1585. B5. Sale of Lot 1512 in 2012/2013 21.In around mid-2012, D2 instructed Poon to act as his agent and consultant in the purchase of Lot 1512, including conducting negotiation with the stakeholders of Lot 1512 on D2’s behalf. 22.The negotiation in respect of the sale of Lot 1512 (“the Negotiation”) began in around April 2012 / mid-2012. 23.In around September 2012, a meeting was held in a restaurant in Sheung Shui which was attended by, inter alia, Poon, Ching Fuk, P1, P2 and D1. 24.On 8 November 2012, Ching Fuk and King Fuk (as the vendor) entered into a provisional sale and purchase agreement for the sale of Lot 1512 at the consideration of $6.6 million with D3 (as the purchaser) (signed by Wong Kam Wa) and the Estate Agency (as the agent). 25.On 22 November 2012, D1, Ching Fuk and King Fuk (as the vendor) entered into 6 sets of sale and purchase agreements at the total consideration of $6.6 million with 6 different persons named as the respective purchasers in respect of 6 portions of land to be carved out from Lot 1512:-
26.In fact, the said Vong Sio Lon, Law Ka Chun Jacky, Lam Nga Shan and Wong Kam Wa are relatives of D2’s Wife, whereas Leung Lai Fan was a friend of D2’s Wife. 27.On 8 January 2013 (i.e. the day before the execution of the Assignments), P2 and P3 requested D1 face-to-face to cancel the sale of Lot 1512 despite the fact that compensation would be payable to the purchaser. 28.By a Deed Poll dated 9 January 2013 and registered with the Land Registry by Memorial No. 13040200310060, Lot 1512 was divided into 6 sections, namely Sections A – E and RP. 29.Also on 9 January 2013, D1, Ching Fuk and King Fuk (as the vendor) executed 6 sets of assignments in relation to Lot 1512, by which:
B6. Subsequent sale and dealings of Sections A – E of Lot 1512 30.On 13 May 2013, Sections A – D of Lot 1512 were further assigned at the same considerations as those paid for the acquisition from the Pangs, by the relatives or friend of D2’s Wife (as the case may be) to 4 indigenous villagers of Kai Leng (雞嶺村) (“the 4 Liu Villagers”), who remained the registered owners of Sections A – D as at the date of commencement of the present action:-
31.The assignments of Sections A – D of Lot 1512 from the relatives or friend of D2’s Wife to the 4 Liu Villagers is part of D2’s development project of Lot 1512. 32.On 13 October 2014, Section E was assigned by Wong Kam Wa to D3 under the Assignment registered with the Land Registry by Memorial No. 14111200220064 at the consideration of $1,000,000, which is $600,000 lower than the consideration paid for acquiring Section E from the Pangs. 33.D3 remains the registered owner of RP. 34.Planning permissions for building Small Houses on Sections A – D were applied for and obtained:
35.Subsequently, building licences for Small Houses were granted to:-
B7. Revelation of D2 as the real buyer of Lot 1512 36.Between March and April 2018, Poon contacted P1 by WhatsApp messages and there were exchanges of audio messages between the two of them. During these exchanges:-
37.As a result, in early April 2018, some of the family members including, inter alia, P1, P2, P4, Ching Fuk and King Fuk, attended two family meetings at Ching Fuk’s home and confronted D1 and D2 about the previous sale of Lot 1512:
B8. After commencement of the present action 38.In about October 2018, at the request of the plaintiffs, a full and proper account of the Trust was given to Pang Chun Wai (彭震威), the beneficiary under the will of Ping Cheung, one of the Other Beneficiaries. C. THE PLAINTIFFS’ CASE 39.The plaintiffs’ case may be summarised as follows. 40.After Ping Fook’s death on 5 August 2009 and D1’s succession to his father’s legal ownership in, inter alia, Lot 1512 and Lot 1585 by reason of D1’s sole executorship, D1 became a trustee of the Trust. 41.Alternatively, by assuming the role and participating in the subsequent dispositions of, inter alia, Lot 1512 as a trustee, D1 was subject to the same duties and obligations as were attached to Ping Fook’s office as a trustee. 42.In particular, after Ping Fook’s death, D1 had assumed the most active role amongst D1, Ching Fuk and King Fuk in managing and handling the assets of the Trust (including Lot 1512). This was the case as Ching Fuk and King Fuk were old and had resided in the UK for most of their life, while D1 is a younger family member and has all along lived in Hong Kong. 43.During the Negotiations for the sale of Lot 1512, D1 represented to one or more of the 5 Beneficiaries from around April to September 2012 (collectively, “the Representations”) that[1]:
44.Acting in reliance of and induced by D1’s Representations as aforesaid, the 5 Beneficiaries agreed for Lot 1512 to be sold to the Purported Investor at the total consideration of $6.6 million. 45.However, the Representations turned out to be false. In particular:
46.Accordingly, the plaintiffs contend that the series of dispositions of Lot 1512 as described above formed part of a scheme devised by D2 and jointly implemented with the assistance of, inter alia, D1 and D3, to extract Lot 1512 from the Trust for the purpose of self-profit by D2 – D3 to the exclusion of, inter alia, the 5 Beneficiaries under the Trust (“the Scheme”). 47.D1 had acquired knowledge from his younger brother D2, inter alia, that D2 was the real buyer of Lot 1512. 48.In carrying out the Scheme, D1 made the aforesaid false Representations to the 5 Beneficiaries and/or concealed from them the true identity of the buyer of Lot 1512 (i.e. D2). 49.Accordingly, D1 has acted in breach of trust and/or fiduciary duties with respect to the sale of Lot 1512. 50.If the 5 Beneficiaries had been made aware of the facts and matters in, inter alia, [45] – [46] above, they would not have agreed to the sale of Lot 1512, whether at $6.6 million or at all. 51.The plaintiffs further claim against D2 in knowing receipt and/or dishonest assistance as it was unconscionable for him to beneficially receive the relevant sections of Lot 1512, and/or he dishonestly assisted in D1’s breach of trust and/or fiduciary duties. 52.In addition, all defendants should be held liable for conspiracy to injure by unlawful means, as they conspired together to injure the 5 Beneficiaries and/or concealed such wrongdoings from them. 53.As a result, the 5 Beneficiaries have suffered substantial loss and damage in that Lot 1512 was disposed of from the Trust at a significant undervalue. 54.In relation to the First Meeting and the Second Meeting, it is the plaintiffs’ case that while D1 was present in both meetings, he had never denied thereat of his knowledge at the material time about D2 being the real buyer of Lot 1512. Neither did D2 do so in the Second Meeting. 55.The plaintiffs further relied on what Pang Siu Sim (sister of D1 and D2) (“Siu Sim”) told P3 when she paid a personal visit to P3 in the UK in June 2018. According to P3, Siu Sim admitted, inter alia, that D2 had informed his mother and other siblings (including D1) prior to the disposition of Lot 1512 of his plan to acquire the same, and D1 was asked by his mother not to disclose D2’s plan to the Other Beneficiaries (including the 5 Beneficiaries). D. THE DEFENDANTS’ CASE 56.The defendants’ case may be summarised as follows. 57.The defendants denied the plaintiffs’ allegations entirely. Generally, it is the defendants’ common case that the transaction was a result of commercial negotiations conducted at arm’s length. Further, the transaction was in fact led by P1 and Ching Fuk on behalf of all the beneficiaries of the Trust, and they were at all material times well aware of the development potential of Lot 1512. 58.It is D1’s case that, after the grant of Probate, he became one of the tenants in common of the remaining Trust properties together with Ching Fuk and King Fuk (i.e. the surviving trustees of the Trust). However, despite the grant, he was not expressly appointed to take over the trusteeship, and he did not handle any matter of the Trust until he was requested by Ching Fuk and King Fuk to join in and effect the sale of Lot 1585. He was since then habitually requested by them to assist in managing the lands under the Trust. 59.Further, D1 had no knowledge of D2’s involvement in the transaction. He did not know that the 5 individuals named in the Sale and Purchase Agreements and Assignments in relation to the sale of Lot 1512 were relatives / friend of D2’s Wife, nor did he know of the subsequent further transactions of the said piece of land. 60.The allegations of false representations are entirely denied by D1. It is D1’s case that: -
61.In the circumstances, it is D1’s case that the assignments were in fact made at the request and direction of all the beneficiaries under the Trust. Hence, the plaintiffs are estopped from claiming against him for the reliefs sought. Even if any such fiduciary duties are owed by D1 to the plaintiffs, such duties had not been breached and have been loyally discharged, and there was no secret profit made by him from the disposition of Lot 1512. 62.On the other hand, it is D2’s case he had never disclosed his business affairs to D1. 63.The sale and purchase of Lot 1512 at $6.6 million was the fruit of a series of negotiations conducted at arm’s length, where the plaintiffs at all material times had full knowledge of the market value and development opportunity of the land. 64.It is also the positive case of D2 and D3 that:-
E. THE ISSUES 65.The parties agreed in the course of the trial that the issues to be tried are as follows:
66.Be that as it may, by the time of the Closing Submissions, it is apparent that the plaintiffs’ main complaint against D1 has been narrowed down to the allegation that he has concealed the fact that D2 was the real buyer of Lot 1512. 67.The plaintiffs also do not maintain their allegation that it was D1 who initiated and led the dispositions of the lands under the Trust. 68.Hence, Issues (1.3) and (4.5) are no longer live issues. Issue (4.4) is confined to the representations on the Purported Investor and on “best price”. 69.Moreover, judging from the way the case was argued by the plaintiffs in their Closing Submissions, it seems that Issue 4.1 has been subsumed into Issue 6. I will therefore disregard issue 4.1 and do not treat it as a separate issue. F. CREDIBILITY AND RELIABILITY OF WITNESSES 70.In Hu Lan v David Golden [2023] HKCFI 873, this Court held that:
71.In the present case, when I assess the credibility and reliability of witnesses, I should also bear in mind the following features:
72.As a result, what Coleman J said in Yu Man Fung Alice v Chiau Sing Chi Stephen (HCA 1584/2012, unreported, 23 December 2020, [2020] HKCFI 2923) is particularly relevant:
73.In support of their case, the plaintiffs (except P5) have given evidence in Court. They have also called Ching Fuk as a factual witness. On the other hand, D1, D2, King Fuk and Siu Sim have given evidence for the defendants. 74.I will consider their credibility generally in turn below. F1. P1 75.It goes without saying that a witness should, in his witness statement, provide his own account of the relevant events independently, and his independent recollection should not be coloured or tainted by recollection of others. 76.However, a striking feature of the evidence of P1, P2 and P3 is that their witness statements are nearly identical. 77.A similar situation was found in Ho Sin Ying v. Chan Yui Ling (HCA 90/2010, unreported, 13 July 2012), in which DHCJ Saunders had made the following observations[3]:
78.With respect, I agree with his Lordship’s observations. 79.In the present case, what is even more worrying is that all of P1, P2 and P3 have to make the same correction to their respective witness statements during their examination-in-chief, namely, to correct the Purported Investor’s last offer from $6.6 million to $6.5 million. Taking into account what transpired from the trial, I am of the view that this is not a simple typing mistake, rather, the author of those witness statements has not taken into account the undisputed fact that the eventual contractual price was actually not proposed by the buyer but P1 himself (who, having received the last offer of $6.5 million, counter-offered $6.6 million). The question is how come neither P1 nor P2 could spot this mistake when they signed the witness statement (P3 was admittedly not in the meeting physically when this counter-offer was made by P1). I tend to think that this suggests that the witnesses have either conferred together about what they would include in their evidence, or they just follow what one another said to be the factual situation, or they simply signed whatever that was presented for them to sign, and that the drafter had prepared the statements out of a common template. 80.In my view, that explains why there were so many occasions when P1’s viva voce evidence was inconsistent with his 1st witness statement. 81.I will therefore give little weight to P1’s 1st witness statement. 82.Given how the plaintiffs run their case, the content of P1’s supplemental witness statement is largely irrelevant. 83.Turning to P1’s oral evidence in Court, he had given this Court an impression at the beginning of the cross-examination that he was very defensive to the extent that he was not quite truthful. For example:
84.Having said that, apart from the above, I find that he is generally credible in his oral evidence. F2. P2 85.For the same reason as explained in Section F1 above, I give little weight to P2’s witness statement. 86.In relation to P2’s oral evidence, I am of the view that it is generally speaking credible. An important factor which leads to this conclusion is that she had from time to time given evidence which is unfavourable to the plaintiffs’ case, and it seems to me that that must be part of the reason why the plaintiffs had to drop so many allegations of misrepresentations against D1. F3. P3 87.Again, P3’s 1st witness statement should be given little weight for the reason which I explained above. 88.As far as P3’s oral evidence is concerned, she has mixed up certain events probably because of her old age. For example, she stated that D2 was present when the $6.5 million offer was made at the Dao Heung Restaurant, and she tried to corroborate this part of her evidence by saying that she walked quite close to him when they left. However, it is undisputed by all others that D2 was not present in this meeting, and more importantly, according to P3’s own evidence, she was not even in Hong Kong at the material time. 89.This Court should therefore be cautious when considering her evidence. 90.The most important part of her evidence concerns Siu Sim’s alleged confession made to her at her home in UK. P3 has made a supplemental witness statement which does not have the same problem as her 1st witness statement. I will discuss this part of the evidence in Section G7.5 below. F4. P4 91.A very large part of P4’s witness statement is identical to that of P1 – P3’s 1st witness statement. I will not pay regard to that part of P4’s witness statement. 92.However, it turns out that the most important part of P4’s oral evidence is not about what he said in his witness statement, but about what was discussed in a family meeting held on the Ching Ming Festival in 2018 (the Second Meeting), which P4 explained at some length during re-examination. 93.I shall further analyse the evidence of the parties in relation to this family meeting below. At this juncture, what I would like to deal with is the defendants’ complaint that P4’s evidence in this regard was only given in re-examination, and as a result, the defendants’ counsel had had no chance to cross-examine him in this regard. On my part, I do not think it is a fair criticism:
F5. Ching Fuk 94.Ching Fuk understandably could not recollect quite a number of matters when he was cross-examined. 95.I also found that he always did not answer questions directly or had misunderstood the questions. 96.However, I do not think he intentionally did the above by reason of evasiveness. In my view, it is likely that it was because of his old age (he is over 83 years old) that he had performed in such a way. I have had this view because it is obvious that he had on various occasions given answers which were apparently unfavourable to the plaintiffs’ case. 97.Therefore, I find him to be someone who was trying his best to assist the Court but he was not a totally reliable witness. The Court has therefore to be cautious when considering his evidence. F6. D1 98.I must say that this Court was quite impressed when D1 started to give evidence under cross-examination. He was straight forward. He answered questions quickly and directly. He also did not hesitate to give answers which were not favourable to his own case. 99.However, when time went by, the answers which he gave became more and more unreasonable and illogical. Sometimes he had to take a long time before he could answer a question. At some other times he seemed to be unable to understand even straight forward and simple questions which I do not think he as a matter of fact really not being able to comprehend, rather, I tend to think he was buying more time to consider how to answer so as to achieve the best result. Further, he became more evasive. 100.As a result, it is my finding that generally speaking he is not a credible witness. I will further analyse his evidence in different appropriate Sections below. F7. D2 101.I have no hesitation in finding that D2 is an incredible witness. He was very evasive, and did not answer straight forward questions right away. Like D1, he also claimed not being able to understand certain questions asked by the plaintiffs’ counsel even though those questions were easy to comprehend. He was also inconsistent in his evidence. To me, it is clear that D2 had a lot to hide, and that is the reason why he had chosen to act in the witness box in the way he did. Indeed, in order to avoid giving truthful answers, he had provided quite a lot of apparently incredible and unreasonable evidence. 102.For the present purpose, I only need to cite a few examples as follows:
F8. King Fuk 103.The defendants’ counsel accepted that King Fuk, given his age, was confused with some of the past events that happened some 6 to 12 years ago and that his evidence was not entirely accurate when coming to details. 104.I am of the view that this is an understatement. 105.The fact is that he has contradicted his own witness statement at quite a number of places. In relation to 2 paragraphs thereof[4], he even said that they were “invented” by others and they were not what he intended to say. 106.I would therefore place little weight on his witness statement. 107.In relation to his oral evidence in Court, while he was still quite sharp despite his old age, some of his evidence were puzzling in the sense that they were clearly not the truth, for example, he stated that:
108.The above are plainly contrary to all other undisputed evidence given by the other witnesses. 109.While I do not think King Fuk was deliberately telling lie in Court, I am of the view that the Court has to be extremely cautious before accepting his oral evidence. F9. Siu Sim 110.Siu Sim’s evidence relates predominantly to the face-to-face discussion between her and P3 about D1’s role and knowledge during her visit to P3 in the UK in June 2018. 111.Whether I should accept her evidence depends on the inherent probability of the matter, which I will further discuss in Section G7.5 below. G. DISCUSSION G1. Issues 1.1 and 1.2 112.These 2 sub-issues read:
113.In relation to the question of whether D1 did take up Ping Fook’s office as trustee upon his demise, the defendants’ counsel submitted that there are 2 periods of time in concern. The first period, it was suggested, is between Ping Fook’s death to D1’s taking up the work of book-keeping and becoming a joint account holder in April 2012, and thereafter is the second period. 114.Without disrespect to counsel, I am of the view that there is no need to spend time on looking into what D1 did in the so-called first period, because it is crystal clear that D1 had been acting as a de facto trustee of the Trust from 19 April 2012 onwards. As explained by Lord Sumption SCJ in Williams v. Central Bank of Nigeria [2012] 3 All ER 579, a de facto trustee refers to persons who have lawfully assumed fiduciary obligations in relation to trust property, but without a formal appointment. I hold that D1 was such a trustee because:
115.In other words, by the time when the Negotiation (for the sale of Lot 1512) took place, D1 had already assumed the role as a de facto trustee of the Trust. G2. Issue 1.3 116.The question raised under this sub-issue is whether D1 initiate and led the disposition of the lands under the Trust. 117.This is no longer a live issue because the plaintiffs’ counsel accepted during Closing Submission that there is no evidence that D1 initiated and led the disposition of the lands under the Trust. At most it could only be said that he was involved in the whole process. 118.Be that as it may, in my view, this has no bearing on the issue of liability. G3. Issue 1.4 119.Under this sub-issue, the questions are what involvement did D1 have in the negotiation and the eventual sale of Lot 1512, and whether D1 acted in the capacity of a trustee. 120.There is undisputed evidence from D1 that, in the course of the Negotiations for the sale of Lot 1512, D1 had direct contact with Poon over the telephone for a few times and passed on information from Poon about the intended buyer’s offers to the beneficiaries. 121.D1’s counsel tried to play down his role and paint a picture as if he was just a messenger in terms of conveying what Poon told him to his uncles and aunties. I do not accept this argument:
122.Moreover, it is also D1’s evidence in Court that, after the provisional sale and purchase agreement for the sale of Lot 1512 had been signed, he kept the vendor’s copy with the other important documents of the Trust in the same briefcase under his sole safekeeping. 123.With all the above in mind, I am of the view that D1 must be acting as a de facto trustee of the Trust during the sale of Lot 1512. G4. Issue 1.5 124.The sub-issue here is whether the beneficiaries (in particular P1) and Ching Fuk, relied on D1 to act on their behalf in the negotiation of the sale of Lot 1512, and if so to what extent. 125.At the stage of Closing Submission, I told Mr Chan for the defendants that I was wondering whether this issue would still be relevant in the event it is this Court’s finding that D1 was indeed acting in the capacity of a trustee in the sale process of Lot 1512. Mr Chan initially argued that this issue is still relevant in such circumstances. However, upon reflection, he accepted that if this Court finds issue 1.4 in the plaintiffs’ favour, then D1 should have a duty to disclose to the plaintiffs that D2 was the real buyer behind the scene (on the assumption that D1 had such knowledge at the material time). Given that concession, I do not think further discussion on Issue 1.5 is required. G5. Issue 2 126.The question here is whether D1 at all material times owed any fiduciary duties to the 5 Beneficiaries, and if so what the contents of these fiduciary duties were. 127.Mr Chan for the defendants accepted that if the Court’s finding is that D1 was at the material time a de facto trustee of the Trust, then he naturally would owe fiduciary duties to the plaintiffs. 128.As summarized by Millett LJ (as Lord Millet then was) in Bristol & West Building Society v Mothew [1998] Ch 1, at 18A-C:-
129.In the context of sale of trust properties, a trustee has an overriding duty to obtain the best price which he can for the beneficiaries, notwithstanding that he may already be under a moral obligation to sell to someone else: Buttle v Saunders [1950] 2 All ER 193, at 195D-H. 130.Insofar as the no-conflict and no-profit rules are concerned:
131.In the context of the “no-conflict rule”, it is also clear that a fiduciary’s liability is strict. In this regard, the learned editors of Snell’s Equity (35th edition, 2025) stated at §7-023 that:-
132.In Leung Ping Chiu, Roy v Wai Wai Chen [2021] HKCA 941 at [187], the Court of Appeal cited with approval the Privy Council’s judgment in Brickenden v London Loan & Savings Co [1934] 3 DLR 465at 469 that:-
133.Mr Chan for the defendants also accepted that, if D1 is found to be a de facto trustee of the Trust, and if he knew about D2 being the real buyer of Lot 1512 behind the scene before the completion of the transaction:
G6. Issue 3 134.Under this issue, the general question is: Did D1 act in breach of trust and/or fiduciary duties in respect of the disposition of Lot 1512 from the Trust in 2012 to 2013? 135.The answer to this general question cannot be reached without consideration of the more specific questions which are listed under various sub-issues under Issue 4, out of which the most crucial question is whether D1 knew at the material time (i.e. before the completion of the transaction) that D2 was the real buyer of Lot 1512. I will therefore consider this sub-issue 4.2 first. 136.I will come back to issue 3 after considering the sub-issues under Issue 4. G7. Issues 4.2 and 4.3 137.There is admittedly no direct evidence that D1 had any knowledge that D2 was the real buyer of Lot 1512. Therefore, this Court has to take into account the available evidence and consider whether any reasonable inference can be drawn in this regard. 138.The plaintiffs relied on the following matters and submitted that such an inference can be drawn:
139.I shall consider these matters in turn, and then decide at the end whether such an inference can be drawn. G7.1 Family bonding 140.It is undisputed that the bonding among D1’s siblings is strong. 141.While a bad relationship among the family of D1 and D2 would tend to support a conclusion that D1 did not have knowledge about D2’s involvement in the purchase of Lot 1512, the reverse is not necessarily true. 142.I therefore view this “strong bonding” as a neutral factor. 143.Indeed, even the plaintiffs’ counsel, in substance, did not ask the Court to infer that D1 had knowledge about the real identity of the buyer by reason of such strong bonding. All they are arguing here in their Closing Submissions is that because of such good relationship within the family, D1 did not disclose the true facts to the beneficiaries including the plaintiffs. G7.2 The suggested cancellation of the transaction 144.According to P2 and P3:
145.D1 accepted that P2 and P3 did suggest to him on the day before the completion of the transaction that the sale should be cancelled. However, he denied that he had ever asked them “not to complicate matters”. On day 4 of the trial, he told the Court that:
146.On day 5 of the trial, D1 claimed that he recollected further details about what happened after P2 and P3 had made the aforesaid suggestion:
147.I take the view that D1’s evidence in this regard is totally incredible and I reject the same. On the other hand, I accept P2 and P3’s evidence on how D1 reacted when they suggested that the transaction be cancelled. 148.I do not accept D1’s evidence given on day 4 of the trial on how he reacted to P2 and P3’s suggestion because:
149.On the other hand, I do not accept D1’s evidence given on day 5 on this incident because:
150.I therefore find that it is more likely than not that the evidence of P2 and P3 is the truth: when they made the suggestion to D1, D1 simply asked them not to complicate matters without taking the matter further, even though they had volunteered to pay compensation for those beneficiaries who could not afford it. 151.It seems to me there are 3 possible reasons why D1 would have such an attitude:
152.Out of the above 3 possibilities, I do not think the compensation would play a part in affecting D1’s attitude, because if money was an issue, it is more likely than not that he would have raised that with P2 and P3. Given he would be an innocent party in the sense that it was not he who was eager to drop out, it is reasonable for him to at least raise the matter with P2 and P3 for discussion. Yet, he has not done so. 153.Neither do I think the trouble of having to deal with a matter which had been decided would affect his attitude as such, because according to D1, Ching Fuk was the person who was always taking the lead in the sale of the lands of the Trust. He could have asked him to follow up the matter. 154.I therefore find that it is more likely than not that D1 asked P2 and P3 “not to complicate the matter” because he himself was eager to see that the transaction could be completed. 155.D1 had never suggested that he was eager to see that the lands under the Trust would be sold. As to whether such lands should be sold, he always said he was indifferent and would follow the crowd. However, when P2 and P3 suggested that the transaction should be cancelled, he did not eager to find out how many beneficiaries would like to stop the transaction from being proceeded with. This is quite different from his alleged attitude. 156.Then why was he so eager to complete the sale? I am of the view that a possible reason is that he knew that D2 was the real buyer, and therefore he did not want to frustrate D2’s development plan. G7.3 Poon’s revelation 157.The plaintiffs then relied on Poon’s revelation of D1’s knowledge of the fact that D2 was the real buyer. 158.For this purpose, the transcripts of a number of Poon’s WhatsApp voice messages in around March to April 2018 have been placed before the Court. 159.Poon revealed in those WhatsApp voice messages that, while she was in the course of organizing a large-scale Poon Choi (盆菜) meal at Fanling Wai during Chinese New Year in 2018, she faced many objections as people from the Pang’s family thought that she had deceived the beneficiaries of the Trust in the sale of Lot 1512 and as a result she had earned millions of dollars from the transaction. As she did not want to take the blame for D2, she contacted P1 on her own initiative in 2018 and told him what actually happened back then so that P1 and others could help her clarify that it was actually D2 who reaped a huge profit from the said transaction. She also confirmed in her messages that D1 had knowledge about the identity of the real buyer even before the completion of the transaction. She further said that D2 had used his mother (Madam Lam) to suppress D1 from disclosing D2’s identity to the beneficiaries of the Trust. 160.The question here is the weight which the Court should attach on Poon’s WhatsApp messages which are hearsay evidence. 161.In this regard, section 49 of the Evidence Ordinance (Cap.8, Laws of Hong Kong) provides that:
162.I proceed now to go through the factors set out in section 49(2) of the Evidence Ordinance:
163.Having considered the above factors, I am of the view that weight may be given to Poon’s hearsay evidence. G7.4 The confrontational family meetings 164.It is undisputed that the First Meeting (held a few days before Ching Ming Festival in 2018) and the Second Meeting (held on the day of Ching Ming Festival in 2018) had indeed taken place. 165.Some undisputed facts in relation to those 2 meetings had been set out in [37] above. 166.I will look more closely at what happened in those 2 meetings in turn below. G7.4.1 The First Meeting 167.While P1 and P4 did give evidence on those family meetings, they did not explain clearly what D1’s response was in the First Meeting at all (in fact, it appears to me that P1 had only talked about the Second Meeting in his oral evidence). 168.On the other hand, D1 had been cross-examined in detail as to what happened in the First Meeting. In a gist, it was his evidence that:
169.D1 also said that, after the meeting, he did not call up D2 for the purpose of enquiring with him what happened at all because D2 was coming back to Hong Kong soon. D1 said he thought that he should talk about the matter with D2 face-to-face rather. 170.The plaintiffs submitted that it was strange that D1 did not say at the First Meeting that he would check with D2 about his involvement in the purchase of Lot 1512 first before giving an answer to the allegation against D2. On my part, I am not prepared to place too much weight on this aspect because, after all, D1 and D2 are brothers who were close to each other. It is not unreasonable for D1 to react in the way he did at the First Meeting, even if he indeed had no idea about D2’s involvement beforehand. I do not think inference can be drawn by such reaction of D1. 171.Having said that, I am not sure the same can be said about D1’s reaction after the First Meeting. 172.From any view, the allegations against D1 were very serious. This is particularly so when it was mentioned in the Complaint Sheets that the beneficiaries would report the matter to the Police. If D1 had never had knowledge about D2’s involvement before the First Meeting, his decision to wait until D2 came back to Hong Kong appears odd – why didn’t he call up D2 right away, and at least confirm with D2 whether he was the real buyer of Lot 1512 behind the scene? A possible answer is that he actually knew about that as a fact. Therefore, there was nothing for him to confirm. 173.D1 explained that he did not call up D2 and enquired about the matter because he wanted to scold D2 face-to-face. However, even if so, that did not stop him from finding out the truth from D2 first. He could still scold D2 face-to-face upon the latter’s return to Hong Kong. D1’s explanation is therefore not convincing at all. G7.4.2 Calling of the Second Meeting 174.According to D1, after D2 had come back to Hong Kong, D1 had asked D2 if he was the real buyer of Lot 1512. D1 also showed his frustration to D2 as D1 had become a scapegoat. D2 admitted that he was the real buyer and said sorry to D1. D1 then asked D2 to explain to the family members after grave-sweeping on the following day (i.e. Ching Ming Festival). D2 replied that he would contact P4 the next day and convene a meeting at Ching Fuk’s home for that purpose. 175.As a result, the Second Meeting was called. G7.4.3 The Second Meeting 176.According to P1 and P4, what happened in the Second Meeting (which was held in Ching Fuk’s home) was that:
177.On the other hand, according to D1:
178.In D2’s oral evidence, he stated that:
179.I reject the evidence of D1 and D2 on the Second Meeting:
180.On the other hand, the evidence of P1 and P4 on what happened in the Second Meeting makes much more sense, and I accept the same. 181.In my view, the most important feature of the Second Meeting is that D2 did not use the opportunity to clarify that D1 had no knowledge of his acquisition of Lot 1512 back in 2012. This is more consistent with the fact that D1 had had such knowledge all along. G7.5 Conversation between P3 and Siu Sim 182.It is undisputed that P3 and Siu Sim had had a chat over the Lot 1512 incident at P3’s home in UK. The question is what exactly had been said by Siu Sim during that meeting. 183.According to P3:
184.On the other hand, Siu Sim told this Court that:
185.The question to ask is “whether it was Siu Sim or P3 who was telling the truth”. In effect, this Court is asked to consider which of the following scenarios was more likely to be the truth:
186.In my view, when considering which version of event is more likely to have happened, it should be borne in mind that P3 and Siu Sim had had an intimate relationship, which started all the way back in the early 1990s when Siu Sim went to UK to make enquiry about university studies. Their relationship was so good that Siu Sim would visit P3 every time she travelled to UK, and vice versa. As admitted by Siu Sim, it was because of this close relationship that she would be quite care-free when she talked to P3. 187.Bearing the above in mind, I hold the view that it is more likely than not that P3 was telling the truth in relation to the meeting in UK, and that Siu Sim had indeed confessed to P3 that D1 had had knowledge about D2’s development plan in respect of Lot 1512, and that D1 did not disclose the same to the beneficiaries of the Trust because of Madam Lam’s instructions. I also take the view that Siu Sim was telling the truth when she told P3 what happened. 188.When coming to this conclusion, I have considered the following matters. 189.First, the close relationship between P3 and Siu Sim means that:
190.Second, the defendants relied heavily on the fact that the alleged confession was not pleaded in the Statement of Claim but only in the Reply. Neither did P3 mention this incident in her 1st witness statement. On the basis of these matters, it was suggested that that must be because the alleged confession by Siu Sim was a recent fabrication by P3. In this regard, P3 explained that she had struggled whether she should disclose this matter in this action because that would adversely affect Siu Sim’s relationship with her family members. P3 also stated that she initially also wanted to protection her relationship with Siu Sim. However, she had had a change of mind subsequently because concealing such a matter would be unfair to the other beneficiaries. 191.I accept P3’s explanation. I do not think P3 is a person of such a bad character who would fabricate an event for the purpose of obtaining judgment against the defendants in this case. 192.Third, it was submitted on behalf of the defendants that P3’s evidence is incredible generally and therefore the Court should not accept her evidence on the alleged confession. 193.I refer to Section F3 above in which I have found that P3 is generally speaking a credible witness. 194.Fourth, the defendants’ counsel stated that P3’s allegation that the conversation was in private between herself and Siu Sim must be false because, at the material time, Siu Sim’s husband and P3’s daughter were also present. 195.On my part, I do not see how this argument may assist the defendants, because there is no dispute that there was indeed a chat between P3 and Siu Sim at the material time. 196.Fifth, it was also argued that it is inherently improbable that Siu Sim would have made the alleged confession because this would in effect be supplying evidence to the plaintiff, especially when legal action was imminent. 197.As I explained above, I am of the view that given the close relationship between P3 and Siu Sim, it is inherently probable that Siu Sim would consider it safe to do what she did – she could not imagine at the time that P3 would eventually decide to disclose openly what Siu Sim said to her in private. 198.Sixth, it was further submitted by the defendants that the alleged usage of the words “愚孝” shows that P3 was in fact only repeating Poon’s representation rather than reciting what Siu Sim said, and that it is highly unlikely that Siu Sim would have used the same words. 199.With respect, those 2 Chinese words are not so special or unique that no one other than Poon could have used. I therefore reject the defendants’ submissions in this regard. G7.6 Conclusion 200.Having considered all the above matters in the round, I hold that D1 had had knowledge that D2 was the real buyer of Lot 1512 before the completion of the transaction. G8. Issue 4.4 201.The question under this issue is whether D1 had made the Representations before the sale of Lot 1512. 202.At the stage of Closing Submissions, the representations which were relied on by the plaintiff had been narrowed down to the followings:
G8.1 The Purported Investor 203.At the end of the day, it seems undisputed that Poon had indeed told the beneficiaries of the Trust that the buyer of Lot 1512 was a Mainland Chinese investor[5]. 204.According to King Fuk, all the beneficiaries were present when Poon made the above representation. It can be inferred that D1 was also there at the time and that he did hear Poon’s representation. However, he did not correct Poon’s assertion there and then. G8.2 The best price 205.The plaintiffs’ case in relation to this alleged representation is quite confusing. 206.It was pleaded in the Statement of Claim that:
207.In P1’s 1st witness statement, he stated that:
208.During P1’s examination-in-chief, he clarified that paragraph 13(ii) of his 1st witness statement should be corrected such that the representation of “best price” by D1 should be $6.5 million instead of $6.6 million. 209.Similar evidence (correction) has been given by P2 and P3. 210.In the light of such change of evidence, the plaintiffs could not come up to proof of this part of their pleaded case. 211.Indeed, such pleaded case does not make sense, because it is undisputed that the last offer of the buyer was $6.5 million, and that the price of $6.6 million was actually a counter-offer made by P1 on behalf of other beneficiaries. G9. Issue 3 212.Having considered the sub-issues under Issue 4, I now come back to the question – whether D1 had breached any fiduciary duties. 213.The relevant legal principles have been set out in Section G5 above. 214.As far as the concealment of the real identity of the buyer of Lot 1512 is concerned, Mr Chan for the defendants accepted that insofar as it is found by this Court that D1 had the knowledge before the completion of the sale of Lot 1512 that D2 was the real buyer, D1 must have the fiduciary duty to inform the beneficiaries of the Trust of the same. However, he did not do that. 215.Hence, D1 must be in breach of his fiduciary duties owed to the beneficiaries of the Trust. 216.By the same token, D1’s failure to correct Poon’s misrepresentation that the real buyer of Lot 1512 was a Mainland Chinese investor must also be a breach of his fiduciary duties. G10. Issue 5.1 217.As confirmed by the plaintiffs’ counsel at the stage of Closing Submissions, the plaintiffs would only pursue the claim of knowing receipt against D2[6]. 218.To succeed in this claim, the plaintiffs must show:
219.As to the beneficial receipt by D2 of the trust assets:
220.Regarding D2’s knowledge, his state of knowledge must be such as to make it unconscionable for him to retain the benefit of the receipt: Thanakharn Kasikorn Thai Chamkat (Mahachon) v Akai Holdings Ltd (No.2) (2010) 13 HKCFAR 479, at [127]. 221.On the facts of the present case:
222.In relation to D2’s knowledge, it should be noted that this Court has found that:
223.Given the close relationship among the members of this family, I am of the view that it can be inferred that D2 knew that Madam Lam had asked D1 not to disclose his identity as the real buyer of Lot 1512. This is particularly so because this must be a matter very important to D2 at the time, since, according to him, it was his deliberate decision to have his identity as real buyer concealed from the beneficiaries of the Trust. 224.D2’s knowledge of D1’s breach of fiduciary duties must make it unconscionable for him to retain the benefit of the receipt. 225.I therefore hold that D2 is liable for knowing receipt. G11. Issue 5.2 226.The plaintiffs claim against D2 for dishonest assistance by reason of his inducement of D1’s breach of fiduciary duties. Their claim against D3 has been abandoned at the stage of Closing Submissions. 227.In this regard, the plaintiffs must prove 4 elements:
(Kwong Yi Ling v Lau Kwun Leung & Others [2021] HKCFI 2303, at [12]) 228.I am of the view that the plaintiffs’ claim of dishonest assistance against D2 is a non-starter, because they have not pleaded in their Statement of Claim any allegation of act of assistance / inducement / procurement on the part of D2. 229.The plaintiffs’ counsel tried to salvage the plaintiffs’ case by referring this Court to paragraph 12.3 of the Amended Reply to the Defence of D2 and D3, in which it was pleaded that:
230.With respect, the effort of the plaintiffs’ counsel is futile:
231.I therefore dismiss the plaintiffs’ claim against D2 for knowing assistance. G12. Issue 6 232.The issue here is whether D1, D2 and D3 (or any two of them) are liable for the tort of conspiracy to injure by unlawful means, by conspiring and/or combining together to injure, inter alia, the 5 Beneficiaries and/or to conceal such wrongdoings from them as a result of which the 5 Beneficiaries were injured. G12.1 The legal principles 233.4 elements must be pleaded and proved on a claim of conspiracy to injure by unlawful means:
(see Pido v Compass Technology Co Ltd [2010] 2 HKLRD 537, per Ma CJHC (as he then was) at [17]) 234.In relation to the 1st element, since conspiracies are usually concealed, the existence of an agreed mechanism can only be inferred from overt acts: Pido v Compass Technology (supra), at [25]. 235.Further, the tort requires an agreement, a combination, understanding, or concert to injure, involving two or more persons. Of the various words used to describe a conspiracy, “combination” has been preferred to “agreement” on the ground that “agreement” might be thought to require some agreement of a contractual kind, whereas all that is needed is a combination and common intention: Clerk & Lindsell on Torts (24th edition (2023)), §23-103. 236.In relation to the 2nd element, although intention could be a matter of inference, the facts and circumstances must be examined to see what inferences could be drawn: Jackson Xu Zhao Ze v Tsai Tim Yuen (CACV 117/2013, unreported, 10 April 2014), at [5]. 237.In respect of the 3rd element, it is not necessary that every overt act is done by every conspirator, but the act must be done pursuant to the conspiracy. 238.Breach of fiduciary duties, knowing receipt and dishonest assistance are capable of constituting unlawful means for the purpose of this cause of action: see, for example, FM Capital Partners Ltd v Marino [2018] EWHC 1768 (Comm), at [455] – [456]; Iranian Offshore Engineering and Construction Company v Dean Investment Holdings SA [2019] EWHC 472 (Comm), at [172]. G12.2 Application of the law 239.As far as the 1st element is concerned, I am satisfied, by reason of the findings made under Section G10 above, that it can be inferred that there must be an understanding between D1 and D2 that D1 would not disclose D2’s identity as the real buyer to the beneficiaries of the Trust. 240.As D2 has been D3’s sole shareholder and sole director since around October 2012 the latest, D3 must be taken to have joined in as a party to the combination. 241.In relation to the 2nd element, the plaintiffs argued that the defendants had the intention to injure the 5 Beneficiaries by depriving them of the opportunity to develop Lot 1512 and to sell the land at a higher price. 242.In reply, the defendants argued that since none of the beneficiaries was entitled to develop Lot 1512 by building Small Houses in their own capacity anyway (and they all knew it), it simply cannot be said that the defendants had intended to injure the 5 Beneficiaries. 243.I accept the defendants’ submissions. I cannot see how it can be said that, by concealing D2’s identity as the real buyer, the defendants had the intention to injure the plaintiffs. This is particularly so, when the plaintiffs no longer maintained that there had been any misrepresentation on, for example, the development potential of the land. The plaintiffs all along thought they were selling the land to a Mainland investor. There is nothing which suggests that they considered that they were not entering into an arm’s length transaction, and, apart from to whom the land would be sold, they were selling Lot 1512 out of their own free will. On the other hand, while the defendants did conceal the identity of the real buyer from the plaintiffs, what they did was only to act as if it were an arm’s length transaction. 244.I therefore hold that the plaintiffs have failed to establish the 2nd element. 245.Neither do I think the plaintiffs were able to establish the 4th element – damage caused to them. They argued that this was proved because Lot 1512 was disposed of from the Trust. With respect, I disagree. This is because they did not dispose of the land for nothing, but at a price which they considered reasonable. Indeed, the transaction price was offered by themselves. G13. Market value of Lot 1512 G13.1 Introduction 246.Expert evidence has been adduced by both sides. The plaintiffs’ expert is Mr Lau Chun Hung Cliff[8] (“Mr Lau”), whereas the defendants’ expert is Mr Hui Wai Chun (“Mr Hui”). 247.Initially, parties were given leave to adduce expert reports on the market value of Lot 1512 as at 8 November 2012 (the date of the provisional sale and purchase agreement in relation to the sale of Lot 1512 by the Trust) (“the First Valuation”). 248.The purpose of the First Valuation was to ascertain whether Lot 1512 had been sold at an undervalue. However, in the light of the plaintiffs’ abandonment of certain of their allegations against D1, the plaintiffs’ counsel confirmed during Closing Submissions that the said valuation is no longer relevant for the purpose of this trial, save that the Court may take into account the respective experts’ approaches and evidence when deciding whether they are reliable experts, and use this as a yardstick when considering which of the Second Valuation should be accepted. 249.At the Pre-Trial Review held on 3 October 2024, directions have been given for the experts to adduce supplemental expert reports on the up-to-date market value of Lot 1512 (“the Second Valuation”). As a result, Mr Lau has produced a report assessing the valuation of the land as at 21 November 2024, and Mr Hui has given his opinion on such value as at 6 November 2024. While the 2 valuation dates are around 2 weeks apart, parties and their experts agreed that there was no substantial difference in the valuation, and that the Court may treat it as if both reports were providing valuation of the land as at 6 November 2024. 250.This Court would treat this latest valuation as the current valuation of the land, and would assess the quantum of equitable compensation according to the ultimately accepted valuation. G13.2 Reliability of the 2 experts 251.The Second Valuation conducted by the experts have produced quite different results:
252.Having considered the evidence of both experts, I take the view that Mr Lau’s opinion should be adopted. I will set out my reasons below. 253.Firstly, generally speaking, Mr Hui has appeared to me to be very argumentative. I have a very strong impression that he was much more interested in defending his position rather than trying to assist the Court, even if, upon cross-examination, his position seemed to be indefensible. 254.Secondly, Mr Hui was very evasive. He always refused to answer directly the questions put to him, for the purpose, in my view, to avoid giving any answer which is unfavourable to the defendants (his clients). Time and time again, he only repeated his own opinion in his own words, even if that means he had totally ignored the questions asked. 255.Thirdly, what worried this Court most was Mr Hui’s lack of impartiality when he discharged his duty as an expert. This was demonstrated when he was asked about whether the First Valuation should be done on vacant possession basis. It appeared that D2 had informed him that there was a tenant occupying Lot 1512. However, when Mr Hui was asked what he would do if, despite such an instruction, there was no information on the alleged tenancy at all, he said he would have to ask his clients whether he could do the valuation on vacant possession basis. With greatest respect, this is a totally unacceptable approach. This suggests that he was not minded to use purely his professional knowledge in assisting the Court, but to advance his clients’ interest. Regrettably, this answer in fact reinforces the impression which he had given to me in his other answers – he lacked the characteristic of impartiality which the Court required of experts. 256.Fourthly, Mr Lau seemed to me to be much more objective and fair. He had adopted comparables even though they are not favourable to the plaintiffs. In my view, he is much more reliable. 257.Fifthly, as far as the selection of comparables for the Second Valuation is concerned, it can be seen that the approaches adopted by the experts are different:
258.I am of the view that many of the comparables adopted by Mr Hui are unsuitable because Small Houses simply could not be built thereon. He was not comparing like with like. 259.Further, it is difficult to do adjustment to the time factor because it is undisputed by the experts that there had been a change in the system of ex-gratia compensation rates in 2022. 260.Most importantly, Mr Hui has not provided in his supplemental expert report the calculations and adjustments which he had made to his selected comparables. It is therefore unknown as to how he had come to his valuation of $4.3 million. 261.On the other hand, I accept Mr Lau’s opinion which is easily understood and reasonable. 262.I have therefore come to the view that the current market price of Lot 1512 should be valued as opined by Mr Lau as follows:
G14. Relief 263.To conclude, I have held that:
G14.1 D1’s breach of fiduciary duties 264.If a trustee’s breach of fiduciary duties resulted in a profit, equity will not allow the trustee to retain such profit but will require him to account for it, imposing a constructive trust. Since the jurisdiction is not punitive, the trustee will not be made to account for more than he actually received as a result of his breach: Libertarian Investments Ltd v Hall (2013) 16 HKCFAR 681, at [83] (per Ribeiro PJ). 265.Further or alternatively, beneficiaries are entitled to seek equitable compensation from the trustee, the purpose of which is to restore to them what has been lost as a result of the breach. In Libertarian Investments Ltd v Hall (supra), Ribeiro PJ adopted at [96] the following summary of the rules relating to equitable compensation of McLachlin J in Canson Enterprises Ltd. v. Boughton & Co. [1991] 3 SCR 534:
266.As explained under Section G13, I have found that the value of Lot 1512 as at 6 November 2024 (which is taken as the value as at the trial date) was $7.34 million (sold on “as a whole” basis). 267.The plaintiffs submitted (and the defendants’ counsel did not argue otherwise) that the quantum of equitable compensation which D1 shall pay the plaintiffs should be calculated as follows: ($7,340,000 – $6,600,000) x 3/8[9] = $277,500 G14.2 D2’s knowing receipt 268.If a claim for knowing receipt is established, the liability of the defendant is to make good to the trust (whose property has been transferred in breach of trust) the money, or the value of the property, which has been received by the defendant, with interest. Credit will be given to the consideration received by the plaintiff: Lewin, at §42-091 & §42-094. 269.I agree with the plaintiffs’ submissions (which the defendants’ counsel did not dispute) that the loss and damage suffered by the plaintiffs in this regard should be assessed based on the loss in value of each of the section(s) of Lot 1512 regarded as having been received by D2, and therefore the sub-division basis of valuation should be adopted. 270.Following such an approach, since the valuation of Lot 1512 as of the second valuation date (as accepted by this Court) was $7,510,000, the amount of equitable compensation payable by D2 for knowing receipt would be: ($7,510,000 – $6,600,000) x 3/8 = $341,250 271.I hold the view that $277,500 out of the said sum of $341,250 overlaps with the compensation payable by D1 to the plaintiffs. Therefore, D1 and D2 should be jointly and severally liable for the sum of $277,500, and D2 should be liable for the additional amount of $63,750 ($341,250 – $277,500). H. ORDER 272.I therefore order that:
I. COSTS 273.I make a costs order nisi that:
274.The above order nisi shall become absolute in the absence of application to vary (which, if any, will be disposed of on paper) within 14 days hereof.
Mr Benny Lo and Mr Victor Chan, instructed by Liu, Chan & Lam, for the plaintiffs Mr Chan Kai Ming Daniel, instructed by Howell & Co, for the defendants [1] There were 5 alleged representations pleaded in the Statement of Claim, but the plaintiffs abandoned 3 of those allegations at the stage of Closing Submissions. [2] In the plaintiffs’ Closing Submissions, they no longer maintained that the Scheme’s purpose was for the self-profit of D1 [3] Appeal against the decision was allowed but on grounds which are unrelated to the quoted observations [4] Paragraphs 34 – 35 [5] Both legal team relied on the evidence of P2 and King Fuk in this regard [6] The original claim was against D2 and D3 [7] The plaintiffs’ submission that “Ps have pleaded that D2 has, through his mother, induced D1 to conceal D2’s identity as the beneficial buyer if Lot 1512” at paragraph 59 of their Reply Submissions is without basis. [8] The original expert of the plaintiffs was Mr Jack Chan, who has left Landscope Surveyors Limited (which was engaged by the plaintiffs to commission an expert report for use in this action). By order dated 3 October 2024, and with the consent on the part of the defendants, Mr Jack Chan was substituted by Mr Lau as the plaintiffs’ expert [9] The plaintiffs’ proportional beneficial interests in Lot 1512 |
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