Ho Che Ying v. Hong Kong and Shanghai Bank, Hong Kong (Trustee) Ltd

HCMP000158/1971

IN THE SUPREME COURT OF HONG KONG

(ORIGINAL JURISDICTION)

MISCELLANEOUS PROCEEDINGS NO. 158 OF 1971

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Coram: Blair-Kerr, S.P.J.

Date of Judgment: 21 May 1973

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JUDGMENT

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1. In 1967 CHEN Yeh Yik (hereinafter referred to as "the deceased") owned the following securities:-

His wife, Ko Che Ying, owned the following:

The First National City Bank (hereinafter referred to as "FNCB") held all these shares (with the exception of the Green Island Cement Co. shares) for safe-keeping.

2. In August 1967, the deceased instructed FNCB to transfer his 3 securities (particularised above) to a joint account (no. M-020-184) in the name of himself and KO Che Ying jointly. In September 1967, Ko Che Ying gave instructions to FNCB to transfer her securities (particularised above) to this same joint account as collateral security in respect of the deceased's overdrafts with the FNCB. On 10th August 1970, the deceased and Ko executed a joint account mandate. In this document, both parties said:

"We confirm that our signatures below also signify our consent to the agreement printed on the reverse hereof."

The agreement contained the following clauses :-

"That any balance now or hereafter on deposit to the credit of the account is and will be owned by us as joint tenants ...... That each of us hereby authorises and empowers the other of us to endorse for deposit and to deposit in the account any and all checks drafts notes or other instruments for the payment of money ...... In event of the death of either of us you will be promptly notified thereof in writing and the amount on deposit to the credit of the account at the time of such death shall belong to and may be disposed of by you as the property of the survivor of us ......".

3. On 29th September 1967, the FNCB wrote to the deceased as follows :-

"Please note that we are now holding the following shares in your name as our collateral:

No. of shares

4. The deceased pledged all these securities held on the joint account as collateral security for overdraft facilities.

5. Thereafter, there were certain bonus issues and certain sales with the result that the securities held by the FNCB as collateral on the joint account were:

6. For some reason or other, the parties decided to change their bank. On 10th November 1970 a joint account mandate addressed to the Hang Seng Bank Ltd. was signed by both the deceased and KO Che Ying in which they said:-

"We, the undersigned, Chen Yeh Yik and Ko Che Ying, hereby request and authorise you

7. The four securities particularised above were transferred to, and registered in, the name of the Hang Seng Bank's nominee company - Hang Seng (Nominee) Ltd.

8. The intention of the deceased and his wife was undoubtedly that the Hang Seng Bank should open a joint account in their joint names. But this Bank, apparently, made a mistake and opened the account in the name of the deceased only. On 20th November 1970 they wrote to him saying:-

"Since all the shares which you hypothecate to secure overdraft facilities upon your joint account are in your sole name, there is no need for your wife to sign the letter of hypothecation enclosed with your above-mentioned letter. But as your wife has also signed it, the document is not deemed in order and we feel compelled to enclose another copy which you will please sign alone ...."

9. The Hang Seng Bank appear to have been under a misapprehension. Prior to their transfer to the name of Hang Seng (Nominee) Ltd., the shares were in the name of the FNCB's nominees. Clearly, the Hang Seng Bank's letter of 20th November 1970 came as a surprise to the deceased because on 25th November 1970, he replied:

"Now that the joint account is opened, I or my wife Ko Che Ying may by the sole signature of either of us instruct your bank to buy or sell shares. If there is any overdraft debt yet unpaid of course we will have to have your agreement before either of us may withdraw part of the shares deposited with your bank. But the most important thing is whether my wife has power to withdraw. Please write me to clarify this matter because the letter of hypothecation bears only my signature, and will this be in conflict with future withdrawals of shares by my wife."

Obviously, the word "withdrawal" in this letter was not used with reference to the withdrawal of cash from the account by means of cheques. The account was at all times overdrawn. Clearly, the deceased was referring to the power of either party to withdraw shares deposited with the bank. He was asserting a right of owner-ship in his wife; and he was not drawing any distinction between shares at one time wholly owned by her and shares at one time wholly owned by himself. He does not limit his wife's right of withdrawal of shares in any way. Having regard to the terms of the joint account mandate and this letter of 25th November 1970 from the deceased, I do not see how (subject to the bank's lien) the Hang Seng Bank could have refused a request by either the deceased or his wife to release any, or all, of the shares deposited by way of collateral security in this joint account; and indeed on 3rd December 1970 the Bank wrote to the deceased saying:

"Your wife has authority to withdraw the shares at any time."

10. The deceased died on 10th December 1970.

11. Having carefully considered the statement of agreed facts and the supporting documents, in relation to the decisions in Re Figgis⁽¹⁾, Marshal v. Crutwell⁽²⁾, Brandt v. Dunlop⁽³⁾, In re Wale⁽⁴⁾, and Re Bishop⁽⁵⁾ I am clearly of the opinion that the intention of the deceased was to provide for his wife; that the shares in question were their joint property as from 1967; that the ordinary rule of survivorship in accordance with the terms of the joint account mandate applies; and that, subject to the bank's lien, she is the beneficial owner of the shares, or the proceeds of sale thereof.

12. Certain of the shares were sold by the Hang Seng Bank to liquidate the overdraft on the joint account, leaving the following:

These shares were, by consent, of all parties, sold on 8th October 1971 for $559,932; and this sum was placed on deposit as from 21st October 1971 in the Hang Seng Bank.

13. I therefore order that this sum of $559,932, together with accrued interest thereon, be now paid to the solicitors of KO Che Ying, namely Messrs. Deacons.

14. The costs of the Hongkong & Shanghai Bank Hongkong (Trustee) Ltd., the executrix of the will of the deceased, will be taxed in accordance with the Practice Direction of 3rd June 1958 (that is to say on a solicitor and client basis), and paid out of the estate.

15. KO Che Ying's costs will be taxed on a party and party basis and also paid out of the estate.

16. Certified fit for counsel - 2 counsel in the case of KO Che Ying.

Representation:

Henry Litton, Q.C. and Sakhrani (Deacons) for plaintiff.

Swaine (Wilkinson & Grist) for defendant.

(1) [1968] 1 A.E.R. 999

(2) [1875] 20 Equity 328

(3) [1905] A.C. 462

(4) [1956] 1 W.L.R. 1346

(5) [1965] 1 A.E.R. 249