Wong Chun Sau v. So Wing Lok Jonathan and Others
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HCA 289/2024 [2026] HKCFI 5824 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE ACTION NO 289 OF 2024 __________________ BETWEEN
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________________________ D E C I S I O N ________________________ I. INTRODUCTION 1.This is the Order 14 Summons filed on 15 September 2025 (the “Order 14 Summons”) by the Plaintiffs against:-
2.Essentially, the Plaintiffs seek an order to set aside the disposals of these properties (the “Subject Properties”) from the Plaintiffs to the 1st, 3rd and 4th Defendants or alternative relief for payments. I shall elaborate below at appropriate juncture. II. PARTIES 3.The 1st Plaintiff (“Madam Wong”), born in 1941, is the surviving wife of Mr So Fong Nam, deceased (the “Deceased”), who died intestate on 25 July 2017 and whose estate Madam Wong represents as the 2nd Plaintiff. 4.The 1st Defendant (“Jonathan”), born in 1965, is the eldest son of Madam Wong and the Deceased. The second son is So Wing On, born in 1971. They also had a daughter, youngest among the children, named Rachel (“Rachel”), born in 1973. 5.The 2nd Defendant (“Ho”) is Jonathan’s personal assistant. 6.The 3rd Defendant (“Emily”) is a practicing solicitor in the employ of Pang, Wan & Choi (“PWC”). The 4th Defendant (“Hugo”) is her son. 7.Joint Hilton International Limited (“Joint Hilton”) was a Hong Kong company in which at the material times, the Deceased had 70% of the shareholding and Jonathan had 30%. III. THE SUBJECT PROPERTIES 8.In this Part, I shall describe the Subject Properties one by one. A. Unit 907 9.On 28 March 1991, by a sale and purchase agreement, Unit 907 was purchased in Joint Hilton’s name for HK$850,000. By an assignment dated 12 April 1991, Unit 907 was assigned to Joint Hilton accordingly. 10.On 6 September 1996, by a sale and purchase agreement and an assignment, Unit 907 was purchased in and assigned to Madam Wong’s name. 11.On 3 October 2019, Madam Wong attended the office of PWC and signed a power of attorney (“Unit 907 POA”) appointing Jonathan over Unit 907. (On the same occasion, Madam Wong also signed powers of attorney appointing Jonathan over Units 808 and 908 and Billionnaire Avant Flat.) 12.On 3 April 2023:-
B. Unit 908 13.On 6 August 1980, by a sale and purchase agreement, Unit 908 was purchased in Madam Wong’s name. (On the same occasion, by a sale and purchase agreement, Unit 808 was also purchased in Madam Wong’s name.) By an assignment dated 1 October 1980, Unit 908 was assigned to Madam Wong. (On the same occasion, by assignment, Unit 808 was also assigned to Madam Wong.) 14.On 3 October 2019, Madam Wong attended PWC and signed a power of attorney (“Unit 908 POA”) appointing Jonathan over Unit 908. (On the same occasion, Madam Wong also signed the Unit 907 POA, and powers of attorney appointing Jonathan over Unit 808 and Billionnaire Avant Flat.) 15.On 3 April 2023:-
C. The One West Flat 16.On 12 December 2012, by a sale and purchase agreement, the One West Flat was purchased in Madam Wong’s name. Before the assignment dated 4 April 2014 of the One West Flat to Madam Wong, on 1 April 2014, a will was executed, or was executed purportedly, by Madam Wong providing for the One West Flat to pass to Rachel upon Madam Wong’s death. 17.From 8 July 2014 to 7 July 2020, Madam Wong entered, or purportedly entered, into tenancy agreements as landlord of the One West Flat. 18.On 1 October 2019, Madam Wong attended PWC and signed a power of attorney (the “One West Flat POA to D1”) appointing Jonathan over the One West Flat. (On the same occasion, Madam Wong also signed a power of attorney appointing Jonathan over the Everwell Flat.) 19.On 8 December 2020, Madam Wong signed a power of attorney appointing Cheng Wing Tak (“Cheng”) over the One West Flat. (On the same occasion, Madam Wong also signed powers of attorney appointing Cheng over the Billionnaire Avant Flat and the Everwell Flat.) 20.On 8 March 2023, Madam Wong signed a power of attorney (the “One West Flat POA to D2”) appointing Ho over the One West Flat. (On the same occasion, Madam Wong also signed a power of attorney appointing Ho over the Billionnaire Avant Flat.) 21.On 3 April 2023:-
22.On 31 October 2023, Ho, acting or purportedly acting as Madam Wong’s attorney, entered into a sale and purchase agreement of the One West Flat with Emily for HK$11.5 million, and on the same day, Ho assigned the One West Flat to Emily. 23.On 20 November 2023, Madam Wong signed, or purportedly signed, a Chinese confirmation (the “One West Flat Confirmation”) stating that she had no knowledge of any tenancy with respect to the One West Flat. D. The Billionnaire Avant Flat 24.On 29 October 2012, by a sale and purchase agreement, the Billionnaire Avant Flat was purchased in Madam Wong’s name. On 3 November 2014, by an assignment, the Billionnaire Avant Flat was assigned to Madam Wong. 25.From 1 June 2015 to 9 September 2020, Madam Wong entered, or purportedly entered, into tenancy agreements as landlord of the Billionnaire Avant Flat. 26.On 3 October 2019, Madam Wong attended PWC and signed a power of attorney (“Billionnaire Avant Flat POA to D1”) appointing Jonathan over the Billionnaire Avant Flat. (On the same occasion, Madam Wong also signed the Unit 907 POA, Unit 908 POA and a power of attorney appointing Jonathan over Unit 808.) 27.On 8 December 2020, Madam Wong signed a power of attorney appointing Cheng over the Billionnaire Avant Flat. (On the same occasion, Madam Wong also signed powers of attorney appointing Cheng over the One West Flat and the Everwell Flat.) 28.On 8 March 2023, Madam Wong signed a power of attorney appointing Ho over the Billionnaire Avant Flat (the “Billionnaire Avant Flat POA to D2”). (On the same occasion, Madam Wong also signed a power of attorney appointing Ho over the One West Flat POA to D2.) 29.On 3 April 2023:-
30.On 30 November 2023, Madam Wong signed, or purportedly signed, a Chinese confirmation (the “Billionnaire Avant Flat Confirmation of No Knowledge of Tenancy”) stating that she had no knowledge of any tenancy with respect to the Billionnaire Avant Flat. 31.On 21 November 2023, Ho, acting or purportedly acting as Madam Wong’s attorney, entered into a sale and purchase agreement of the Billionnaire Avant Flat in favour of Emily for HK$9 million. On the same day, Ho assigned the Billionnaire Avant Flat to Emily. 32.Further, on the same day, that is, 21 November 2023, Madam Wong signed, or purportedly signed, a Chinese confirmation (the “Billionnaire Avant Flat Confirmation of Payment”) on the satisfaction of completion including payment of purchase price. E. Unit 808 33.On 6 August 1980, by a sale and purchase agreement, Unit 808 was purchased in Madam Wong’s name. (On the same occasion, by a sale and purchase agreement, Unit 908 was also purchased in Madam Wong’s name.) By an assignment dated 1 October 1980, Unit 808 was assigned to Madam Wong. (On the same occasion, by assignment, Unit 908 was also assigned to Madam Wong.) 34.From 1 June 2014 to 4 March 2019, Madam Wong entered, or purportedly entered, into tenancy agreements as landlord of Unit 808. 35.On 3 October 2019, Madam Wong attended PWC and signed a power of attorney (the “Unit 808 POA”) appointing Jonathan over Unit 808. (On the same occasion, Madam Wong also signed the Unit 907 POA, Unit 908 POA and Billionnaire Avant Flat POA to D1.) 36.On 3 April 2023:-
37.On 31 December 2023, Madam Wong executed, or purportedly executed, a power of attorney (the “Unit 808 POA to D2”) appointing Ho over Unit 808. 38.On 22 January 2024, Ho, acting or purportedly acting as Madam Wong’s attorney, entered into a sale and purchase agreement of Unit 808 in favour of Emily for HK$4.2 million. On the same day, Ho assigned Unit 808 to Emily. F. The Everwell Flat 39.The Everwell Flat was the matrimonial home of Madam Wong and the Deceased. It was purchased in the Deceased’s name by a sale and purchase agreement dated 28 April 2000 for HK$7.8 million. By an assignment dated 10 May 2000, the Everwell Flat was assigned to the Deceased. 40.On 13 March 2018, letters of administration in respect of the estate of the Deceased was granted. Its schedule of assets included the Everwell Flat. 41.On 1 October 2019, Madam Wong attended PWC and signed a power of attorney (the “Everwell Flat POA to D1”) appointing Jonathan over the Everwell Flat. (On the same occasion, Madam Wong also signed the One West Flat POA to D1.) 42.On 24 November 2020, Emily sent Madam Wong WeChat voice messages claiming that she would help Madam Wong to lease out the Everwell Flat, arrange for tax refunds, and secure rental income, and urged Madam Wong to sign the authorisation documents arranged by New Zealand lawyers. 43.On 8 December 2020, Madam Wong signed a power of attorney appointing Cheng over the Everwell Flat. (On the same occasion, Madam Wong also signed powers of attorney appointing Cheng over the One West Flat and the Billionnaire Avant Flat.) 44.On 3 April 2023:-
45.On 4 April 2023, Madam Wong signed a power of attorney (the “Everwell Flat POA to D2”) appointing Ho over the Everwell Flat. 46.On 10 August 2023, Ho, acting or purportedly acting for Madam Wong, entered into a sale and purchase agreement of the Everwell Flat with Hugo for HK$17.5 million. On the same day, Ho assigned the Everwell Flat to Hugo. 47.Further, on the same day, that is, 10 August 2023, Madam Wong signed, or purportedly signed, a Chinese confirmation (the “Everwell Flat Confirmation of Payment”) on the satisfaction of completion including payment of purchase price. IV. THE PLAINTIFFS’ CASE 48.I shall summarise the Plaintiffs’ case in this Part. 49.After they got married in 1965, Madam Wong and the Deceased founded and operated a toy and clothing manufacturing business (the “Business”) under the name “Yau Fat”. The Business expanded over the years, with factories set up in the Mainland in the late 1970s receiving orders from all over the world. Throughout the years, they accumulated substantial wealth, and used the wealth to acquire the Subject Properties. At all material times, Madam Wong or the Deceased had been the owners of the Subject Properties and did not hold any of them on trust for anyone including Johnathan. 50.Jonathan assisted the Business in terms of translation because Madam Wong and the Deceased did not understand and speak English, while some of the Business’ customers were from the US. His role in the Business was so limited, and did not control and operate the Business. Jonathan had his own business but did not make much money for himself. 51.In August 2019, Jonathan took Madam Wong to New Zealand. Their staying together strengthened Madam Wong’s trust and confidence in Jonathan. In late September 2019, Jonathan arranged for Madam Wong to attend Emily’s office to sign documents. In reliance on Emily’s representation that these documents were for distribution of her wealth to her children after death, she signed the documents. These documents were (1) the Everwell Flat POA to D1; (2) the One West Flat POA to D1; (3) the Billionnaire Avant Flat POA to D1; (4) the Unit 907 POA; (5) the Unit 908 POA; and (6) the Unit 808 POA. 52.On 9 October 2019, Jonathan took Madam Wong back to New Zealand. They stayed there for three and a half years due to the COVID pandemic. During the stay, Madam Wong was entirely dependent on Jonathan. She had no access to independent assistance, and did not speak English. 53.In early April 2023, Madam Wong returned to Hong Kong, and left Hong Kong again, on 7 April 2023 to England. During this brief stay in Hong Kong, Jonathan caused Madam Wong to sign:-
54.Through these documents signed in early April 2023:-
55.On 22 January 2024, Rachel located Madam Wong at Jonathan’s residence in England and brought her back to Hong Kong. With lawyers’ assistance, Madam Wong discovered the full extent of unauthorised transfers of her assets by Jonathan. 56.In respect of D1’s Properties (Units 907 and 908) transferred to Jonathan, Madam Wong seeks to set aside the transfers and to be revested with the properties. The causes of action for such relief include:-
57.Alternatively, Madam Wong seeks payment of the purchase prices of Units 907 and 908 as stated in the Unit 907 Assignment and the Unit 908 Assignment. The cause of action is breach of contract. 58.In respect of D3&D4’s Properties, Madam Wong seeks to set aside the transfers and to be revested with the properties. The causes of action for such relief include:-
59.Alternatively, Madam Wong seeks payment of the purchase prices of D3&D4’s Properties. V. JONATHAN’S DEFENCE 60.I shall summarise the Jonathan’s defence in this Part. 61.Jonathan built substantial wealth from his own business and from the profits of the parents’ companies as he assisted and brought opportunities to the parents’ companies. To sustain the success of his own business, Jonathan has exhibited to his affirmation various articles and written interviews of him from magazines about his business. 62.Jonathan’s case is that the money from his own business and the profits of the parents’ businesses was his money, and that he “parked” the money into Madam Wong and the Deceased’s bank accounts for convenience. The Subject Properties were all acquired with his monies on the common intention that the Subject Properties would be held on trust for him. For Units 808 and 908, although they were acquired by the parents with the parents’ own money, Units 808 and 908 were subsequently mortgaged for loans, which were fully settled in 1996 with Jonathan’s money, on the common intention that Units 808 and 908 would become held on trust for him as well. Therefore, for all the Subject Properties, they were held on constructive trust or resulting trust for Jonathan. 63.The essence of the defences raised by Jonathan is set out in §57 of his Amended Defence:-
VI. EMILY AND HUGO’S DEFENCE 64.I shall summarise Emily and Hugo’s defence in this Part. There is no dispute that Hugo was just Emily’s nominee to receive one of the D3&4’s Properties, namely, the Everwell Flat. Therefore, the substance of their defence goes to Emily’s case. 65.Emily’s case is that Madam Wong and Jonathan all along told her that the Subject Properties were owned by Jonathan. From 2014 to 2019, for the services rendered by Emily to Jonathan’s business, a service fee (the “Service Fee”) of a total sum of HK$30,200,000 was incurred. Emily did not demand Jonathan to pay immediately over the years because of her trust in Jonathan, but in 2019, Jonathan decided to leave Hong Kong, and thus the payment of the Service Fee became an issue. However, Jonathan had liquidity issue, but eventually, Jonathan suggested, and Emily agreed to, using the D3&4’s Properties for settling the Service Fee. The agreement was an agreement reached between Emily, Jonathan and Madam Wong in an informal meeting in a hotel restaurant. Emily noticed that Madam Wong was independent, logical, smart and capable at the meeting. The contents of that meeting were recorded by Ho in the 3 April Memorandum mentioned above. It is an appropriate juncture to set out its contents:-
66.The 3 April Memorandum was signed by Madam Wong, Jonathan, Emily and Ho. 67.Further, as mentioned above, in respect of the Everwell Flat, the One West Flat and the Billionnaire Avant Flat, Madam Wong signed Chinese confirmations (witnessed by Jonathan) confirming that she was satisfied with the transfers of these three properties. 68.Therefore, on the belief that the Subject Properties were Jonathan’s, Emily denies that there was any undue influence over Madam Wong. Further, Madam Wong knew what she was agreeing to. Even if Madam Wong was the true owner, she would have agreed to the transfers as recorded in the 3 April Memorandum. In any event, even if there were, she had no notice of the undue influence. VII. THE PLAINTIFFS’ POSITION FOR THE PRESENT ORDER 14 APPLICATION 69.An Order 14 judgment will be entered only where the plaintiff has established his claim with no arguable defences and/or triable issues raised by the defendant. With his sensibility (for which I am grateful), Mr Patrick Chong, leading Mr Terrence Tai, counsel for the Plaintiffs, only relies on the following matters for the present application:-
70.I shall analyse the claim against Jonathan first. VIII. AS AGAINST JONATHAN 71.As the Plaintiffs do not rely on undue influence for the present purpose, I assume, for the present purpose, that there was no undue influence. It follows that Madam Wong, when executing the Unit 907 Assignment and Unit 908 Assignment, did intend to transfer the properties in accordance with the terms of the Assignments. The Unit 907 Assignment and Unit 908 Assignment stated that Jonathan would pay the purchase prices of HK$5,910,000 and HK$5,520,000 respectively. There is no dispute that Jonathan did not pay a single penny. Jonathan’s answer is capsulated in §39 of his Amended Defence:-
72.In respect to the beneficial ownership, having considered the following, I am of the view that Jonathan has failed to raise any arguable defence or triable issue:-
73.Madam Wong did execute the Unit 907 Assignment and Unit 908 Assignment. As I explained above, since the Plaintiffs are not relying on undue influence for the present purpose, I assume that there was no undue influence, and therefore, Madam Wong knew what she was executing – to transfer Units 907 and 908 for HK$5,910,000 and HK$5,520,000 respectively. In fact, according to Jonathan’s own case, Madam Wong told Jonathan that he did not have to pay her because of their living expenses in London. However, first, such case is inconsistent with Jonathan’s own case that he was the beneficial owner – if he were the beneficial owner, Madam Wong would not have said anything like that to the effect that Jonathan, though legally obligated to pay her, did not have to pay her but instead should use the purchase prices for their living expenses. Second, even assuming that Madam Wong did say that, this constitutes no valid legal ground for not paying Madam Wong. Further, Mr Mok fairly accepts that there could be no estoppel or acquiescence as pleaded in Jonathan’s Amended Defence, given that there is no plea and evidence of change of position or detrimental reliance. Absent any such valid defence, Madam Wong’s mere say-so, without any consideration, constitutes no legal agreement or waiver not to receive the purchase prices. Third and in any event, at most, though not pleaded, Jonathan may say that he did use the money for Madam Wong’s expenses and thus there should be some set-off. But there is no evidence at all of such expenses, and there is no counterclaim. 74.In the circumstances, I am not satisfied that Jonathan raises any arguable defence and/or triable issue to Madam Wong’s claim for the purchase prices. I therefore shall enter judgment against Jonathan. IX. AS AGAINST EMILY AND HUGO 75.As mentioned above, the Plaintiffs only rely on the cause of action of abuse of confidence. I shall examine the legal principles first, which I draw from the learned exposition in Chapter 14 of Enonchong, Duress, Undue Influence and Unconscionable Dealing (4th edition), relied upon by Mr Chong and counsel for Emily and Hugo, Mr Bernard Man SC leading Mr Mike Yeung. These are well-established common law principles dating back at latest to cases decided in the 1800s, which I find no reason not to endorse as part of the Hong Kong law. A. Legal principles in relation to abuse of confidence A1. Overview 76.Abuse of confidence applies “where a fiduciary enters into a transaction with his principal, as where a solicitor buys property from his client”: see Enonchong, Duress, Undue Influence and Unconscionable Dealing, supra §14-001. The effect is that a presumption arises that “the transaction is voidable unless the fiduciary can prove that the transaction is fair”. A2. Rationale 77.The concern of this cause of action is “that the fiduciary might have abused the confidence placed in him by acting to his own advantage at the expense of his principal’s interests”: see Enonchong, Duress, Undue Influence and Unconscionable Dealing, supra §14-001. The rationale is that “[s]ince a fiduciary has undertaken to act in the interests of their principal and owes a duty of undivided loyalty to their principal, the law seeks to ensure that the fiduciary does not abuse their position by obtaining an improper advantage for themselves to the detriment of their principal”: see Enonchong, Duress, Undue Influence and Unconscionable Dealing, supra 14-004. In a fiduciary relationship, “the principal reposes confidence and trust in the fiduciary” and “it is an unequal relationship” “in that the fiduciary acquires confidential information in the relationship which may be abused in a transaction between the parties”, or in that “the principal, who trusts the fiduciary, may not be on their guard, as they would be if contracting with a stranger”: see Enonchong, Duress, Undue Influence and Unconscionable Dealing, supra §14-005. This affords opportunity for abuse, “augmented by the strong incentive of personal interest where the fiduciary deals with their principal, so that they, the fiduciary, is faced with a conflict between their duty of undivided loyalty to their principal and their personal interest”: see Enonchong, Duress, Undue Influence and Unconscionable Dealing, supra §14-005. A3. Establishing abuse of confidence and its legal consequence 78.To establish abuse of confidence, the principal “is only required to prove the existence of a fiduciary relationship at the time of the transaction”. Upon such proof, a presumption of invalidity arises which shifts the burden of proof onto the fiduciary to show that the transaction is fair: see Enonchong, Duress, Undue Influence and Unconscionable Dealing, supra §14-015. “Proof of existence of a recognised [fiduciary] relationship is all that is required of the complainant. He does not have to prove that the fiduciary acted in breach of duty, nor is he required to prove that the transaction was disadvantageous to him”: see Enonchong, Duress, Undue Influence and Unconscionable Dealing, supra §14-016. A4. Burden on fiduciary to rebut the presumption of invalidity 79.Upon such proof, the presumption of invalidity arises. It is then for the fiduciary to prove that “the transaction was fair, and was freely entered into on the basis of adequate and independent advice”: see Enonchong, Duress, Undue Influence and Unconscionable Dealing, supra §14-018. The fiduciary “must take reasonable steps to place themselves in exactly the same position as a stranger would have been in, so as to cut themselves off from any confidential information they may have acquired in the relationship” to gain advantage from the relationship: see Enonchong, Duress, Undue Influence and Unconscionable Dealing, supra §14-019. 80.This requires the fiduciary to show (see Enonchong, Duress, Undue Influence and Unconscionable Dealing, supra §14-019):-
81.The first three elements concern procedural fairness, while the last element concerns substantive fairness. All of the elements must be established for the defence to the claim of abuse of confidence. A5. Fiduciary relationship and informed consent 82.For the first element, namely, a fiduciary relationship, as a matter of law a solicitor is recognised as a fiduciary to his client: see Enonchong, Duress, Undue Influence and Unconscionable Dealing, supra §14-008. However, it is not that every solicitor-client transaction would be subject to abuse of confidence. The two cases, namely, Allison v Clayhills (1908) 97 L.T. 709 and Montesquieu v Sandys (1811) 18 Ves. Jr. 302, referred to in Enonchong, Duress, Undue Influence and Unconscionable Dealing, supra §14-023, show that if the solicitor-client relationship concerns subject A, while the transaction in question concerns a totally different subject B, the existence of the fiduciary relationship would not subject the transaction concerning subject B into the principle against abuse of confidence:-
83.I add that it is a question of fact and degree. 84.In relation to consent, the consent must be “fully informed”. “[I]f the evidence is not sufficient to show fully informed consent, the transaction may be set aside even though there is not the slightest evidence of fraud or inadequacy of consideration”: see Enonchong, Duress, Undue Influence and Unconscionable Dealing, supra §14-024. The fiduciary must disclose his interest in the transaction and any profit or secret profit from the transaction: see Enonchong, Duress, Undue Influence and Unconscionable Dealing, supra §14-025. A6. Disclosure of material facts 85.For the second element, disclosure of material facts, the duty to make disclosure is “a strict one, so that if they fail to disclose a material fact, the transaction may be set aside even if it is not disadvantageous to the principal, or even if the fiduciary was motivated by a good intention in entering into the transaction with their principal, or even if the failure to disclose was the result of mere inadvertence rather than dishonesty, or even if the principal would have proceeded with the transaction had the disclosure been made”: see Enonchong, Duress, Undue Influence and Unconscionable Dealing, supra §14-028. In other words, substantive fairness would not cure the transaction if there was failure to disclose material facts: see Enonchong, Duress, Undue Influence and Unconscionable Dealing, supra §14-029. 86.Information is material if it is “material to the judgement of the principal before the transaction is completed. Therefore, information which is important to the principal in coming to the decision whether or not to proceed with the transaction at all, is information that is material to the transaction”. Not only that, it is material if the information would inform the principal as to whether to proceed with the transaction on the terms on offer: see Enonchong, Duress, Undue Influence and Unconscionable Dealing, supra §14-033. Materiality is not to be confused with causation. “The mere fact that the complainant would still have gone ahead with the transaction if the information had been disclosed does not mean that the information is not material to the transaction”: see Enonchong, Duress, Undue Influence and Unconscionable Dealing, supra §14-034 citing Johnson v EBS Pensioner Trustees Ltd [2002] EWCA Civ 164. 87.I stress that the information in question is facts, not advice. Advice is a concern of the next element. A7. Exercise of due diligence to get the best deal for the principal against fiduciary himself 88.“[A] fiduciary who deals with their principal may not be allowed to enforce the transaction if they failed in their duty to exercise reasonable care and diligence for the benefit of the principal. Thus, where a solicitor deals with their client the transaction cannot stand if the solicitor fails to show that they exercised all due diligence in advising their client in respect of the transaction”: see Enonchong, Duress, Undue Influence and Unconscionable Dealing, supra §14-035. 89.To prove that he has exercised all due diligence in advising, “the fiduciary may either provide the advice themselves or they may insist on the principal receiving competent independent advice”. In relation to a solicitor, “in some circumstances a solicitor may not be obliged to provide or to see that a client received unrequested advice as to the commercial wisdom of a proposed transaction”: see Enonchong, Duress, Undue Influence and Unconscionable Dealing, supra §14-035. In other words, independent advice is not necessary so long as the fiduciary or the solicitor himself provided competent advice: see Enonchong, Duress, Undue Influence and Unconscionable Dealing, supra §14-038. 90.I note, from the learned author’s exposition in relation to due diligence in Enonchong, Duress, Undue Influence and Unconscionable Dealing, supra §§14-035-14-040, that nothing is mentioned that causation would be an issue, that is, had proper advice been given, the transaction would still proceed. In my view, it must be correct because of the rationale of the abuse of confidence to protect the principal from the risk of the fiduciary’s conflict of interest, consistent with the irrelevance of causation in the context of failure to disclose material facts. A8. Substantive fairness of the transaction 91.The above three elements, as mentioned above, concern procedural fairness. The fourth element is substantive fairness. It is a question of fact. It goes to adequacy of consideration, transactional balance and other value judgments in different contexts: see Enonchong, Duress, Undue Influence and Unconscionable Dealing, supra §14-041 – 14-046. It is not necessary for me to go into detail for the present purpose because at least in the present case, whether the disposals in question were substantively fair is clearly a triable issue. B. Analysis 92.In relation to the existence of a fiduciary relationship, Mr Chong submits that Emily was Madam Wong’s solicitor at the time of the transactions in relation to D3&4’s Properties. He does not rely on any argument that even if Emily was not Madam Wong’s solicitor, Madam Wong still reposed trust and confidence in Emily. For his submissions that Emily was Madam Wong’s solicitor at the time of the transactions, Mr Chong relies on:-
93.For (2) – (4) above, even if these did happen, in my view, it does not follow that there was a solicitor-client relationship between Madam Wong and Emily. At least, there would be triable issue as to whether such solicitor-client relationship, if any, would be regarded as concerning any of the D3&4’s Properties. For (5), Mr Man reminds me that Madam Wong herself tries to disown the April 2023 Will by saying that she did not recollect signing the same. 94.It is for (1) that is clearer upon Emily’s own admission. That she advised and assisted in the application for letters of administration would, in my view, in itself or considered with (2) – (5) above, constitute a triable issue as to whether such solicitor-client relationship would be regarded as concerning any of the D3&4’s Properties. However, Emily’s advice and assistance in relation to the administration of the Deceased’s estate, comprised of the Everwell Flat, one of the D3&4’s Properties, is, upon Emily’s own admission, a fact not in dispute. 95.To me, this relationship clearly relates to the disposal of the Everwell Flat. Madam Wong, as the adminstratrix in relation to the disposal of the Everwell Flat, relied upon Emily as the solicitor advising and assisting the administration of the estate. The trust and confidence reposed in this solicitor-client relationship in relation to the disposal of the Everwell Flat was clear. 96.Mr Chong urges me not to segregate the Everwell Flat from the other three D3&4’s Properties. He submits that I should consider the matter as a whole, and apparently submits that once there is a solicitor-client relationship, the abuse of confidence would kick in. With respect, bearing in mind the legal principles explained in §§82 and 83 above, I cannot accept such submissions, at least for the present purpose. 97.There can be little dispute that from the 3 April Memorandum, Emily’s personal interest in the transaction was disclosed, and the material facts that the transaction was for paying the Service Fee were also disclosed (and Mr Chong does not suggest any other material facts not yet disclosed). Mr Man spent some submissions on the substantive fairness of the transaction, and as I mentioned above, it is a triable issue. It is Emily’s failure to raise any triable issue that she gave competent advice (if any) or advised Madam Wong to seek independent advice that Mr Chong relies on heavily. 98.For the present purpose, I assume that Emily did honestly hold the belief that the Everwell Flat was beneficially owned by Jonathan. However, as the solicitor advising and assisting the administration of the estate comprised of the Everwell Flat, in my view, she should still have advised Madam Wong that proper consent should be obtained from the beneficiaries of the Deceased’s estate, and/or that the other beneficiaries may raise issues. Even if she honestly believed that Jonathan beneficially owned the Everwell Flat, as a competent solicitor, Emily should have been able to appreciate a risk that the other beneficiaries may raise issue about the ownership of the property and the sale of the property which would not benefit the estate at all (even the outstanding balance of HK$12,000,000 to be paid by Emily as stated in the 3 April Memorandum, assumed to be received by the Deceased’s estate but not Madam Wong or Jonathan, would still fall short of the stated purchase price of HK$17,500,000 for the Everwell Flat stated in the 3 April Memorandum) because after all, she had only communicated with Jonathan and Madam Wong, and there is no evidence that she had communicated with any other beneficiaries in relation to the Everwell Flat. Such advice would be necessary to protect her client, namely Madam Wong, as the adminstratrix of the Deceased’s estate. Such advice is, in my view, what any reasonable solicitor would have given regardless of whether she would be the purchaser or not and whether she would appreciate any risk of dispute from other beneficiaries. After all, advising an administrator or administratrix to obtain consent from all the beneficiaries for a sale which would not benefit the estate at all would not be a burdensome step to take, and it would be prudent to give such advice without any harm to anyone. Perhaps it would be perceived in the present case that there may be apparent harm to Emily herself being the purchaser of the Everwell Flat. 99.This conflict of interest, in my view, was beyond doubt. Emily as the purchaser, who had been owed a debt of HK$30,200,000, would like to have the transaction proceed expeditiously in her favour. There is, however, no plea and no evidence as to any advice on obtaining consent from the other beneficiaries of the estate and no plea and no evidence of advising Madam Wong to obtain independent advice. 100.Mr Man submits that there should be a distinction between advice going to the substantive fairness of the transaction and advice peripheral to the transaction. He gave an example where a sale of property was fair in terms of value and everything but the solicitor engaged wrongly advised on the tax implication, resulting in more tax and duties to be paid. He submits that in such a situation, which in his submissions is no different from the present, it would be absurd that the transaction would be set aside. With respect, I do not see any absurdity – the solicitor would have the incentive to have the transaction proceed, and so he would be in conflict and may have incentive to advise that there would be tax benefits. It may be that he did not intentionally give wrong advice on the tax matter, but subconsciously or not, “human nature being what it is, there is a high risk that the fiduciary will be swayed by their interest rather than their duty”: see Enonchong, Duress, Undue Influence and Unconscionable Dealing, supra §14-005 citing Bray v Ford [1896] A.C. 44 at 51. It is the risk, rather than any intentional wrong, that the cause of action of abuse of confidence seeks to protect the principal from. 101.In the circumstances, Emily has not raised any triable issue in relation to the third requisite element of the defence to the claim of abuse of confidence, namely, exercising due diligence in giving proper advice. Therefore, she has failed to raise any arguable defence and triable issue to the claim of abuse of confidence in relation to the Everwell Flat. 102.I note that the presumption of invalidity only makes the transaction in question “voidable”, not “void”. However, the Everwell Flat has not been sold to any bona fide third party, and still remains with Hugo as Emily’s nominee. In the circumstances, I find it appropriate to set aside the disposal of the Everwell Flat. X. CONCLUSION 103.In the circumstances, I enter final judgment against Jonathan in favour of Madam Wong (as the 1st Plaintiff):-
104.In relation to Madam Wong’s claim against Emily and Hugo, I enter final judgment against Hugo in favour of Madam Wong (as the 2nd Plaintiff):-
105.As against Madam Wong’s claim against Emily in relation to Unit 808, the Billionnaire Avant Flat and the One West Flat, I dismiss the Order 14 Summons. I dismiss it rather than granting leave to defend because in my view, it is clear to me that from Emily and Hugo’s Defence, if not from the Re-Amended Statement of Claim itself in relation whether Emily was Madam Wong’s solicitor at the time of the relevant transactions, there are triable issues. 106.For costs, I make the following order nisi:-
107.For the summary assessment mentioned in §(3) above, upon the costs order nisi becoming absolute, Emily shall lodge and serve a statement of costs within 7 days, and Madam Wong (as the 1st Plaintiff) shall lodge and serve a list of objections within 7 days thereafter. 108.It remains for me to thank Mr Chong and Mr Tai (for Madam Wong), Mr Mok (for Jonathan), and last but not least, Mr Man and Mr Yeung (for Emily and Hugo) for their able and thorough assistance.
Mr Patrick Chong and Mr Terrence Tai, instructed by Sit, Fung, Kwong & Shum, for the 1st and 2nd Plaintiffs Mr Billy Mok, instructed by Kevin L.H. Kwong & Co., for the 1st Defendant Mr Bernard Man SC and Mr Mike Yeung, instructed by Kingston Tong and Co., for the 3rd and 4th Defendants |
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