Kwei Wah Shan v. John Kui and Another
Read the full judgment text of CACV 26/1973 on BabelCite. This Court of Appeal judgment.
1. This is a family dispute. The Plaintiff is the father of the first Defendant and was the father-in-law of the second Defendant. The First Defendant and second Defendant were husband and wife but have been divorced. The claim relates to property which the Plaintiff alleges is held by the second Defendant on trust for him, but which the second Defendant says was given to her as beneficial owner. The first Defendant has not contested the action as he asserts that he has no possession of, or cont
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CACV000026/1973 IN THE SUPREME COURT OF HONG KONG (APPELLATE JURISDICTION) CIVIL APPEAL NO. 26 OF 1973 (On appeal from O.J. 166/1970) -----------------
----------------- Coram: Briggs, C.J., Huggins & McMullin, JJ. Date of Judgment: 28th May, 1974. ----------------- JUDGMENT ----------------- Huggins, J.: 1. This is a family dispute. The Plaintiff is the father of the first Defendant and was the father-in-law of the second Defendant. The First Defendant and second Defendant were husband and wife but have been divorced. The claim relates to property which the Plaintiff alleges is held by the second Defendant on trust for him, but which the second Defendant says was given to her as beneficial owner. The first Defendant has not contested the action as he asserts that he has no possession of, or control over, the property. 2. The greater part of the argument has related to the jewellery and I will deal with that part of the claim first. The main difficulty in the case disappears when one appreciates the manner in which this claim to the jewellery was pleaded. As I understand the statement of claim, which contains a great deal of irrelevant matter, the Plaintiff alleges that he purchased the jewellery, that he assigned it to the second Defendant, that that assignment was by way of trust, that the trust was void and that in consequence the second Defendant holds the jewellery in trust for the Plaintiff. In the alternative the Plaintiff alleges that if the trust was not void there was a constructive trust in his favour arising from the second Defendant's ceasing to be the wife of the first Defendant. The Plaintiff claims declarations of his rights in the property, an injunction against disposal and an order for specific delivery. The learned judge held that he could not be entitled to these reliefs unless he proved that the admitted assignment to the second Defendant was made on the basis of the alleged trust. It is argued that the learned judge was wrong in holding that the legal burden of proof in the case was on the Plaintiff. What the Plaintiff was really contending was that it was unnecessary to prove the trust at all: in effect he was saying that once it was admitted that he had been the owner of the property the legal burden was transferred to the second Defendant to show that the Plaintiff had deprived himself of the property in the jewellery by an assignment by way of gift to the second Defendant. That might have been the position had the Plaintiff not himself implicitly pleaded an assignment to the second Defendant, albeit an assignment by way of trust. As it is, the argument is manifestly unsound. The learned judge himself obscured the true issues by saying, inter alia,
Despite an apparent suggestion to the contrary by counsel for the Plaintiff the assignment was never in doubt. Of course, if the second Defendant could prove affirmatively that the assignment was by way of gift that necessarily defeated the Plaintiff's claim, but it was not incumbent on her to prove that there was a gift. On the other hand, it was not so much for the Plaintiff to prove that the assignment was not by way of gift as to prove that it was by way of trust. 3. The only doubts I have had in the case have arisen from the learned judge's approach to some of the evidence. The Plaintiff sought to prove the trust in part by evidence that the jewellery was of a kind which might well be made the subject of a trust. He said that he had received four pieces of jade from his father and had three of them incorporated into the jade necklace which is part of the jewellery claimed. The allegation was that the rest of the necklace had been built up from other items of jewellery which had been bought over a period on his behalf by Dr. Lee, while the fourth piece of jade was set into a matching finger-ring. The second Defendant's case was that the jade necklace was purchased in its present form, along with two other necklaces, the intention being that one should be given to each of the Plaintiff's daughters and the third to his daughter-in-law, the second Defendant. The learned judge said:
That is not precisely what Miss Kui said. It was not her evidence that the set pieces were broken up "in order to find matching stones": she said that Dr. Lee found set pieces containing matching stones and that they were bought and broken up. Whether or not that method of making up the necklace would be either wasteful or expensive is not self evident and in my view it was not open to the judge to assume that it would be, although it may be that he could have been entitled to say that it was rather less probable that a necklace would be made up in this way. 4. More serious, in my view, was the learned judge's attitude to the evidence that the clasp of the jade necklace bore a serial number. He said:
The questions to which the learned judge refers were never intended to put the Plaintiff's case to the witness: they were putting hypothetical situations for the purpose of demonstrating that the witness's evidence did not support the second Defendant's case. It never was the Plaintiff's case that every jade stone "in the necklace" had been changed, which would have implied that the setting of the necklace remained substantially as it always had been: his case was that a completely new setting had been made, into which the three "family" stones were set together with stones from the broken up items, and that the clasp from one of those items was also used. It is true that he never said in so many words that the clasp had been detached and re-used in this way, but he may have thought it was implicit in the evidence he adduced and was certainly not inconsistent with it. It was the second Defendant who called Mr. Kwok, and her counsel had not suggested to the Plaintiff's witnesses that if their evidence was true there would not have been a serial number on the clasp. Nor did either side put questions to Mr. Kwok to establish what would be the practice of his firm if they were asked to reset a customer's own gems and to fit a clasp which the customer produced but which already bore a serial number. In effect the judge was asked to assume that in those circumstances a jeweller would automatically, and without the customer's leave, delete the serial number. That might indeed be the case, but for my part I think it was wholly wrong for the judge, as I think he did, to make such an assumption. It would equally be wrong for us to make it, even though one of us might have more than a passing knowledge of the jeweller trade. It was the second Defendant who was trying to make some point of the presence of the serial number and one would have expected that, if full weight was to be obtained from the point, her counsel would establish that in the circumstances contended for by the Plaintiff the serial number would not have been there. As it was, the point was robbed of much of its force. The presence of the serial number was still some, but very slight, evidence that the necklace in which the clasp was found was the one originally sold by Mr. Kwok's company. However, it was strengthened by the production by Mr. Kwok of the record kept of the necklace which had been sold under the serial number found on the clasp. Mr. Kwok said that that record was sufficient to enable him to say that the existing necklace was substantially like the one which had been sold under the serial number. The question is what weight the learned judge was entitled to attach to that evidence, because it is clear that he treated it as strong corroboration of the evidence of Mrs. Tan, the second Defendant's mother. Mr. Kwok did not suggest that he was able positively to identify the necklace from the description in the record. He seems to have thought that it was of about the right value and he said it contained twenty pieces of jade, which he seemed to think were of the same general shape and value as those described in the record. He did not claim to have counted the diamonds in the necklace, a comparison which would have added immensely to the weight of his evidence. As it is, I think the record was, again, some slight evidence in the second Defendant's favour but in the result I think the learned judge clearly misdirected himself as to the weight which he could properly attach to Mr. Kwok's evidence as a whole. 5. Would he have found an intention to make and receive a gift even if he had appreciated the true value of Mr. Kwok's evidence. He relied also upon the evidence of Mrs. Tan and counsel for the second Defendant have suggested that, in like manner, the judge failed properly to evaluate her evidence. She asserted that she accompanied Dr. Lee on the occasions when she went shopping for jewellery and that the jade necklace now in question was bought by Dr. Lee as it now is. It is submitted that she could not have recognised with any degree of certainty a necklace which she had not seen for about ten years. That was a matter for the judge and I do not think we are in a position to say that he ought not to have believed Mrs. Tan. 6. It must also be remembered that this was in any event only a peripheral issue, for whether the origin of the jewellery was as contended for by the Plaintiff or was as contended for by the second Defendant was not in truth decisive of the question whether or not there was an entrustment. I think the argument is that the learned judge indicated that he thought that unless the origin was as contended for by the Plaintiff, this necklace could not be a "family treasure" or heirloom, as alleged by the Plaintiff, because it was not of sufficient value. It is true that he rejected part of the evidence of the expert in Chinese custom, who had (in my view wrongly) been permitted to express his opinion that some of the sets of jewellery shown to him were in fact family treasures, basing himself to a large extent upon his own valuation of them. The judge rightly observed that the witness was not a qualified valuer, but I think the suggestion is that the judge then fell into the error of substitution his own valuation when he referred to "a necklace or bracelet of a quality as those produced in court" and said:
There is certainly some ground for suspicion of such an error but I am not persuaded that the error has been established. 7. Reading the judgment as a whole I think that the real basis of the decision was that, even if the jewellery was of a kind which a paterfamilias might regard as worthy of being passed on as family treasure, the evidence did not establish that the appropriate entrustment had been made. That is a conclusion which in my opinion is not open to attack. The Plaintiff was not ordered to give particulars of the date of the alleged assignment by way of trust. However, in the evidence adduced for the Plaintiff it was not alleged that the assignment by way of trust was made at the engagement party but rather that it was made at the breakfast table the morning after the couple returned from their honeymoon or, even later, on board a ship. That was the case put up by Mr. Bernacchi in addressing the Court during the course of the evidence. The learned judge found that there was an assignment to the second Defendant on the day of the engagement party, when there was no suggestion of the creation of a trust. There was then a consequential finding that there was no assignment by way of trust on the later occasions. Upon the appeal it appeared to be suggested that the trust was created on the day of the engagement party, despite the fact that in the lower court that was not the basis of the Plaintiff's case. It is unfortunate that the judge misdirected himself as to the evidence of what was said when the jewellery was handed over by the Fourth Aunt on the day of the engagement party: she did not say "these are gifts from the Kwei family for Mei Mei" but "these are the things ......". However, the important point is that the judge found that nothing was said which was indicative of a trust. He was not satisfied that the Plaintiff purported to create a trust on the later occasion and he pointed out that even if the Plaintiff had purported to do so could not create a trust over property which he had alread assigned to the second Defendant beneficially. 8. Although the point was never clearly formulated I think what counsel for the Plaintiff was really seeking to do was to challenge the finding that there was an assignment of any kind on the occasion of the engagement party. If there was not, then there must have been a bailment on that day - something which was never put to the witnesses and which has never been openly argued although the suggestion was made by the learned Chief Justice in the course of the hearing of the appeal. The judge clearly rejected this possibility. He emphasised that nothing was said which indicated that the jewellery was to be treated differently from articles which were delivered at the same time and which were admittedly gifts. He pointed out that the jewellery was left in the possession of the second Defendant or her family after the engagement party. The reason why they were then taken back into the Plaintiff's custody was not explored, but the fact that he did take them is not inconsistent with his having parted with the property in the jewellery previously. The judge made it clear that he appreciated that there could be no assignment unless the Plaintiff intended to transfer the property in the goods. He disbelieved the evidence of the Plaintiff himself as to what his intentions were. The learned judge saw the witnesses and we could not say he came to the wrong conclusion. It is not without significance that the Plaintiff has claimed as part of the family treasure the engagement ring given by the first Defendant to the second Defendant. 9. Having disbelieved the Plaintiff the judge was, I think, entitled to make the findin which he did as to the day of the assignment, but, even if he was not, the fact remains that he did not believe that there was an assignment by way of trust on any later occasion. The evidence, accepted by the judge, was that an entrustment of family treasures would have to be mademon a "grand family occasion", which an ordinary family breakfast or a bidding of farewell on board a ship would not be. More important, he did not believe that anything was said on the later occasions which indicated that an assignment by way of trust was then being made. 10. In my view it was open to the judge to reach the conclusion which he did on the evidence and we ought not to interfere. For my part I do not think it is necessary to consider whether the learned judge was justified in finding affirmatively that the assignment was by way of gift. The other members of the Court are of opinion that he was and they would infer the intention of the Plaintiff to make a gift from the circumstances in which the jewellery was delivered to the second Defendant. It should not be assumed that I would dissent from that. 11. I can deal quite shortly with the appeal in respect of the land and shares. As against the second Defendant the learned judge refused to enter judgment upon the pleadings because no allegations were made against her in respect of this property. Counsel in his argument made no attempt to differentiate between the land and the shares: as to both he submitted that if the Plaintiff was entitled to judgment against the first Defendant (as the judge found) he was necessarily entitled to judgment against the second Defendant. That does not follow: it is still necessary to establish a cause of action against a defendant. 12. I would dismiss the appeal. 28th May 1974. Representation: IN THE SUPREME COURT OF HONG KONG (APPELLATE JURISDICTION) CIVIL APPEAL NO. 26 OF 1973 ON APPEAL FROM O.J. 166/70 -----------------
----------------- Coram: Full Court (Briggs, C.J., Huggins & McMullin, JJ.) Date of Judgment: 28th May, 1974. ----------------- JUDGMENT ----------------- McMullin, J. : 13. I agree that this appeal must be dismissed. A great part of the very elaborate argument advanced on behalf of the appellant was directed to the contention that the trial judge had mistakenly assigned the burden of proof in the case generally to the plaintiff. At one point, indeed, counsel for the plaintiff went so far as to say that the learned judge had not erred in relation to the facts which he found but only in relation to the law concerning the onus of proof. Perhaps it would be unfair to saddle counsel with the full implications of that admission for in the concluding paragraph of the judgment there is a clear finding that the four sets of jewellery claimed in paragraphs (a) to (e) of the schedule to the claim were gifts. It might be said that on that bare finding of fact, and in view of counsel's admission, the question of the onus of proof was academic. However, the substance of Mr. Bernacchi's contention was that the judge had come to his conclusion "for the aforesaid reasons" which reasons were based upon his critical examination of the plaintiff's evidence relating to the alleged creation of a trust. The complaint is that, in effect, he only found that there had been a gratuitous transfer by way of gift because the plaintiff had failed to persuade him that there had been an intention to assign by way of trust. The "aforesaid reasons" referred to in the concluding paragraph of the judgment did undoubtedly include a close and critical examination of the evidence given by the plaintiff and his witnesses to support the allegation of trust but when he dismissed that contention the learned trial judge did so not merely because he thought the evidence insufficient to establish such a trust but because he found that the evidence as a whole - much of which was not in controversy - indicated an outright gift rather than a conditional assignment. He was not therefore in the position of the trial judge in HO Yau-yu v. YU Ming(1) who, confronted with two wholly contradictory accounts of the matter in suit, and being unable to say that either party was lying, determined in favour of the defendant on the ground that the onus was upon the plaintiff to prove his case and he had failed to do so. 14. I think Mr. Lee was right to contend that the question of where the onus lies becomes largely irrelevant when, as here, there is a detailed examination and appraisal of the narrative of events given by the witnesses on each side, a finding of fact whenever facts were in dispute and a final interpretation of all the facts - both those in common and those determined upon contest - leading to an adjudication by way of inference on the balance of probability, of the basic issue. In this case the issue: on what terms was the jewellery assigned? On the pleadings and in the evidence what the plaintiff alleged was the creation of a certain kind of trust; the defendant denied that and alleged an outright gift. This cause was not to be decided by a tactical skirmish over the pleadings and the issues raised by them once the evidence was in; nor was it so decided. Mr. Bernacchi, in addressing the court of trial at the conclusion of the evidence, appears to have submitted that if the facts found by the judge were equally consistent with the creation of a trust as with an outright gift the plaintiff must succeed since the jewellery was admittedly the plaintiff's own property originally and within his right of disposal. It was, he said, therefore primarily for the second defendant to prove the gift which she alleged. If the evidence hung in the balance then, counsel argued, she had failed to do so. This was an argument which might have had considerably more weight if the case for the plaintiff had been pleaded simply on his original ownership and possession coupled with a denial of any intention to part with the property. As it was pleaded, however, he was setting up a substantive case involving a particular form of assignment. In saying that the onus was on the plaintiff to show that there had been no intention of gift the trial judge was, perhaps inadvertently, drawn in the wake of counsel's submission to an angle of approach which was not appropriate to the case as pleaded and the evidence led. What he meant is clear enough. While it was not for the plaintiff to show that there had been no gift it was manifestly his task to show that there had been a transfer upon trust for that is his case as pleaded. No question had been raised at the outset as to who should begin nor should it have been. In proving his own case the plaintiff must necessarily disprove the case for the defence. I cannot find anywhere in the judgment anything to support the notice that the judge was threatened by the horns of an evidentiary dilemma which he avoided only by resort to the onus of proof. He could not consider the plaintiff's case without, at the same time, considering the second defendant's opposing contention and his final conclusion was based upon a balancing of the probabilities as to the facts and the likeliest inference to be drawn from the findings so made. 15. Although Mr. Bernacchi laid the greatest stress upon the alleged misdirection on the law relating to the burden of proof, the real substance of his case, as I see it, was in his criticism of certain of the reasons given by the trial judge for accepting the second defendant's evidence and that of her witnesses where it was in conflict with the evidence led on behalf of the plaintiff. Not all of that criticism was without substance. The most questionable aspects of the trial judge's findings have already been dealt with fully by Huggins J. and I am in respectful agreement with what he said concerning that. There is no doubt that, in accepting Mrs. Tan's evidence concerning the purchase by Dr. Lee of the jade necklace and the precious stones which allegedly constituted two of the four sets of the disputed jewellery, and in rejecting Dr. Lee's evidence in that regard, the trial judge did rely on the evidence of Mr. Kwok the jeweller who purported to identify the jade necklace and certain of these gems as items purchased from his firm or made up by his firm at the request of Dr. Lee. It may be that the judge would not have felt so confident of the worth of Mr. Kwok's evidence if the weakness of that identification, resting as it did to a considerable extent on the identification of the serial number upon the clasp of the jade necklace, had been present to his mind. Had he not relied on that evidence it may be that he would have been less ready to accept Mrs. Tan's identification of the jade necklace as something bought entire fifteen years previously from the Tai Loy Jewellery Company. It is true also that there were passages in the judgment which indicate an inclination on the part of the judge to substitute his own opinion for the sworn testimony of the witnesses in matters where he could not fairly claim a special competence. An example of that is found in his observations concerning the worth of some of the jewellery and the doubt which he expressed as to whether jewellery of that description could be the subject of a family trust. Another example is to be found in his criticism of the evidence of Mr. Henry Hu concerning the existence and nature of Chinese custom in Hong Kong relating to the creation of "family treasures" and the manner in which such property may be given upon trust. But all these criticisms are criticisms in detail. Mr. Bernacchi conceded that if there was evidence upon which the judge could rely as showing a gift his client's case must fail. I am satisfied that the learned trial judge did not find that there had been a gift simply because the proof of entrustment was inadequate. He made a positive finding on the evidence that these jewels had been given to the second defendant by way of gift. He did so by examining the opposed contentions of plaintiff and defendant pari passu in his prolonged excursion through the evidence. There were, other than the plaintiff's own vehement protestations, undoubtedly some parts of the testimony, either among those facts which the judge found proved to his satisfaction or which were not in contest, which, in isolation, could advance the notice of a trust; but the overwhelming probability which, to my mind, arises from the uncontested evidence is that a gift was intended. That evidence runs so strongly counter to the plaintiff's allegation of conditional assignment that I think that the learned trial judge was fully justified in rejecting the plaintiff's evidence as to any intention of making such an assignment at the time the jewels were given into the possession of the second defendant i.e. on the date of the engagement party and, further, in rejecting his evidence that this intention had been made clear to his son before that occasion and to his son and daughter-in-law on two occasions thereafter. Accepting that the word "gift" was never used at any time the following matters, as it seems to me, are the salient features of the evidence showing that such was nevertheless the intention : -
16. These are some of the more striking features of the evidence pointing positively in the direction of gift. But the force of them is only rightly perceived when they are viewed in the light of the manner in which it was sought to show that the giving had been on terms of trust. It was certainly the case for the plaintiff at the outset that the creation of a trust had moved beyond mere intention. It was not something that he had kept, as it were, in petto. He professed to have discussed the matter with his son before the engagement party and the latter supported him in this. But the real thrust of his contention is to be found in the opening remarks of his own counsel coupled with the evidence of Mr. Henry Hu, the expert on Chinese custom, relating to the creation of family treasures and trusts. One of the essential elements for the creation of such a trust was, according to Mr. Hu, the announcement of it at some "grand family occasion". That occasion according to Mr. Bernacchi, in opening his client's case, was the occasion of the engagement party. When the plaintiff's own evidence made it clear that there had been no such announcement at the engagement party nor any other observance which could be interpreted as a solemn dedication of trust, counsel, in the course of the subsequent cross-examination of Mr. Hu, informed the court that the formal entrustment had occurred during a conversation between the plaintiff, his son and his daughter-in-law at the breakfast table in his house a day or two after the young couple had returned from their honeymoon, an occasion which, by common consent, clearly did not fulfil the prescription of Mr. Hu. What is the significance of this? It is not that the failure to show the necessary pre-condition for the creation of a customary trust must, on its own, give rise to the inference of gift, which was, I think, the meaning which Mr. Bernacchi attached to the judge's handling of the evidence. It is rather that those positive elements which on their own would imply a gratuitous assignment are greatly fortified by the plaintiff's remarkable and very radical change of approach in the course of the hearing. It was, in short, a good reason for disbelieving the plaintiff's story of a trust and for accepting the defendant's contention of gift. Mr. Bernacchi, on the hearing of the appeal, was content to put the case no higher than that the evidence could as readily be interpreted as showing the creation of a Chinese customary trust as of an outright gift and it was for that reason that the question of the onus of proof bulked so large in his argument. He said at one point that if there was evidence of gift he must fail; if not he must succeed. To my mind the judge clearly thought that there had been a gift and on the evidence I think that that conclusion was amply justified. 17. I agreed with what has been said by Huggins J. in relation to the other property viz. : the land and the shares. I think the learned judge rightly refused to enter judgment against the second defendant in relation thereto. Representation: (1) (1962) H.K.L.R. 682. |