Leung Chi Man v. Mok Sau Lim

HCMP 1599/2003

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 1599 OF 2003

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BETWEEN

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Before: Recorder Edward Chan SC in Court

Dates of Hearing: 25, 26, 27, 28, 31 January 2005 & 1, 2, 3 February 2005

Date of Judgment: 23 March 2005

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J U D G M E N T

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General introduction

1.This is an action for inter alia an inventory account of the estate of Leung Ha Chai.

2.The Defendant is the widow and executrix of the Will of Leung Ha Chai deceased (the “Deceased”).  There are 4 children surviving the Deceased and they were all born by the Defendant.  In order of seniority they are (1) Leung Suk Yin (the “daughter”), (2) Leung Chi On (“Chi On”), (3) Leung Chi Man (the Plaintiff) and (4) Leung Chi Wai (“Chi Wai”). 

3.By the Statement of Claim the Plaintiff pleaded that the Deceased had by his Will devised a small village exempted house in the New Territories (“Ting house”) and his interest in certain other property (“the pond property”) to Chi On, Chi Wai and the Plaintiff in equal shares.  He further pleaded that the Defendant had failed to distribute and pay him his share of the estate under the Will, and that she had “failed or refused to exhibit a true and perfect inventory of all and singular the estate and effects and to render a just and true account”.  In particular the Plaintiff alleged that the Defendant purported to render an account to him on 20 February 2003 and 21 February 2003 but the Plaintiff’s case was that those were not “true and perfect inventory of all and singular the estate and effects”.  In the Statement of Claim the Plaintiff also claimed many other relieves in connection with the administration of the estate including tracing inquiries and declaration that the Defendant held monies and assets as constructive trustees for her.  However, apart from the failure to distribute to the Plaintiff his share of the estate and to render the account, there was no other fact pleaded to support any of those relieves.

4.The Defendant on the other hand contended that the Defendant had through her son Chi On prepared various accounts on different dates and subject to certain amendments, they were proper accounts and the accounts given to the Plaintiff in February 2003 were proper accounts.  I will have to consider whether those account statements given to the Plaintiff were sufficient to discharge the Defendant’s duty as executrix.  What is clear is that those accounts contained a number of deductions reflecting the repayment of debts alleged to be owed by the Deceased and also entries relating to the expenses of a certain property known as flat B on the 9^th floor of block 13 of Charming Garden, which was referred to as the Charming Garden property throughout this trial.  It was the Defendant’s contention that the Plaintiff’s entitlement to certain of the Deceased’s property under the Will was subject to the deduction of these Charming Garden property expenses.  The Defendant’s case was that there was a promise or a secret trust binding on the 3 sons to hold the property specifically devised to them under the Will in trust for certain purposes and that the Plaintiff was under an obligation to pay for the Charming Garden expenses and to pay his due share to maintain her.  In short her case was that the deductions were proper deductions.  It was further the Defendant’s case that in or about August 2002 there was an agreement between her and the Plaintiff whether the Plaintiff had agreed to waive all his entitlement in relation to the pond property in consideration of the Plaintiff’s not being required to contribute to the family expenses and not being required to make any further payment for the expenses of the Charming Garden property.  As an alternative, it was alleged that the Plaintiff was estopped by his conduct from denying that he had waived his entitlement in relation to the pond property.

5.The Plaintiff of course did not agree that there was any secret trust or that he was under any obligation in relation to his entitlement under the Will.  The Plaintiff contended that on the pleading the issue of secret trust was not open to the Defendant.  Furthermore, the Plaintiff not only challenged the deduction in relation to the Charming Garden property, he also challenged many other deductions from the Deceased’s property on account of repayment of debts owed by the Deceased. 

6.What appears to be a very strict forward and simple issue in this case viz. whether the account statements given to the Plaintiff were sufficient had become muddled with numerous sub-issues on whether the Defendant as executrix was right in making various payments from the assets of the estate and whether those payments or deductions should affect the Plaintiff’s share under the Will of the Deceased.   It is really in relation to all these issues raised in the Defence that had taken up nearly all the time of the trial.  However, in view of all these sub-issues it is necessary to go into the details of the relationship of the family members and their role in relation to the purchase of the Charming Garden property as well as the subsequent disputes between the family members after the death of the Deceased.

The background facts

7.The Deceased was in fact an indigenous villager in the New Territories.  However, for many years before 1990 the Deceased and his family lived in Ho Man Tin Estate, which was a public housing development of the Housing Department.  Since at least the 1990s, he had been working in Tai Kok Tsui.  His job was such that he had to be on duty for one day and would have the next day as his rest day. 

8.The unit occupied by the family was about 250 square feet.  The unit was not partitioned into bed room and living room.  The family members just slept on beds and bunk beds in the unit.  In 1988 the daughter purchased a flat and she moved out but later on she sold her flat and moved back to live with the family.  When she moved out the mother of the Deceased moved in and lived with the family for 1 to 2 years.  Suffice is to say that at all material times, while living at Ho Man Tin Estate, the family lived in rather crowded condition. 

9.As an indigenous villager of the New Territories, the Deceased was entitled to build a village small house, which is normally known as “Ting house”.  The Deceased did make use of this opportunity to build a Ting house at Sha Kong Wai, Yuen Long.  However, he did not have enough money to finance the construction of the house.  He raised money from the daughter and other relatives of the Defendant to complete the construction.  The amount of the loans he borrowed was in dispute.  At the beginning of the trial, I was told by the parties that the parties had agreed to defer their dispute in relation to the loans from the Defendant’s relatives.  However, the amount of the money raised from the daughter remained to be in dispute. 

10.Having heard the evidence from the witnesses from the defence and in particular the daughter, I find that the daughter provided the Deceased $350,000 to assist the Deceased to build the Ting house.  I find that the Plaintiff’s contention that the daughter had only provided $300,000 was just an opportunist’s attempt to take advantage from a typographical error made by Chi On in one of the account statements.  I used the more neutral word “raise” and “provide” because I accept the daughter’s evidence that at the time when the Deceased asked for the money, it was not clear whether he would ask for a pure loan or some contribution to enable him to build the Ting house.  The understanding then was that after the Ting house was completed the daughter would be given the 2^nd floor of the Ting house.  The Ting house was completed sometime in 1993 (although the Certificate of Compliance was only issued on 24 March 1995) and shortly after the completion of the Ting house, the daughter got married and moved to live on the 2^nd floor of the Ting house.  Bearing in mind the relationship between the Deceased and the daughter and the well known fact that there were restrictions on the transfer of ownership of Ting house, I am not surprised that there was no formal agreement to record the arrangement and that there was no assignment of the 2^nd floor to the daughter. 

11.Apart from having a Ting house, the Deceased also had a half share in subsection 1 of section B of lot 2841 in Demarcation District 129, New Territories.  This piece of land was referred to as the pond property throughout the trial.  There was some suggestion that the Deceased also had to raise some money in order to obtain a clear title of his half share interest in the pond property.  However, as the parties had agreed to leave out the issue of the loans from relatives in this action, there is no investigation into how the Deceased acquired his interest in the pond property.

12.Apart from the Ting house and the pond property the Deceased also had some interest in various pieces of land through his entitlement in the estate of Leung Kun.  It is not in dispute that even up to the time of the trial, there was not yet any transfer or distribution made by the personal representative or the trustee holding those properties. 

13.There are disputes between the parties on many factual matters which I find it surprising that the parties would be in dispute.  In fact many of these facts are background materials and do not have any direct bearing on the central issues between the parties.  The upshot of this is that the trial had taken 8 days. 

14.Since the completion of the Ting house, the Plaintiff’s contention was that the Deceased moved in to live in the Ting house.  However, the Defendant’s contention was that he did not.  He only went to stay there a few days a week.  It is probably a matter of preference as to how one would like to describe the situation.  The Deceased worked at Tai Kok Tsui and he was required to be on duty for 24 hours and then he would have a full day rest.  The Defendant’s case as supported by the evidence from the Defendant’s witnesses was that in view of the conditions at Ho Man Tin Estate, the Deceased would often prefer to go to stay at the ground floor of the Ting house so that he could sleep better.  However, he was very much a member of the household at Ho Man Tin Estate.  I accept this evidence.

15.However it is not the case that only the Deceased would go to stay at the Ting house.  At all material times before August 1998 all the household members would visit the Ting house and stay there from time to time, particularly during festivals days.

16.I find that between 1993 to 11 January 1998, the date of death of the Deceased, the Deceased and the Defendant together with the 3 sons lived as one household at Ho Man Tin Estate.  At that time, of the 3 sons, only Chi On and the Plaintiff were working and Chi Wai was still at school.  It was not in dispute that during this period, the Deceased, the Plaintiff and Chi On all contributed to the household expenses.  It appeared that they all paid their contributions to the Defendant who used the money to run the household including the payment of the rent.  The Defendant was not in work by 1997 and 1998.  Towards 1997 and 1998 the Plaintiff’s contribution was $3,500 per month.  As to the Deceased’s contribution, the Plaintiff’s evidence was that by 1997 he would contribute $6,000 per month.  The Defendant’s evidence was that he contributed only about $5,000 per month.  Since it would appear that the household money was paid to the Defendant, I prefer the Defendant’s evidence.  Furthermore, since the Deceased’s earning was only about $10,000 per month and he had to do quite a bit of travelling between Tai Kok Tsui and Sha Kong Wai, it was likely that his contribution for the household expenses would be reduced.  After all by 1997 both Chi On and the Plaintiff were working and making contributions towards the household expenses.

17.The family members were rather close to each other and were living happily together until at least the middle of 1998.

18.In 1996 and 1997 the Housing Department was engaged in the redevelopment of Ho Man Tin Estate.  While the block where the Leungs were residing was not immediately affected, the living condition and environment of the estate were considerably worsened because of the redevelopment.  It is the Defendant’s case that this was one of the major reasons for the decision to acquire another property to be used as the residence of the family. 

19.I also accept the evidence of Chi On that since his acquiring his interest in the pond property, the Deceased had in 1996 plans to enter into joint venture development with others to develop the pond property by building Ting houses there.  The plan was that 9 blocks of Ting houses would be built with funds provided by the joint venture developer partner and there would be a split with the developers on the completed blocks so that the Deceased and the co-owners of the land would get 3 blocks.  It was estimated that the 3 blocks would be worth about $9 million at the time and the Deceased’s share would be about $4.5 million.   In view of the good and close relationship amongst the family members at that time, I also find that the Plaintiff must also be aware of the plan of the Deceased. 

20.The proposed joint venture was not carried out.  The plan to develop the pond property was eventually turned down by the Government because the land was required by the Government in connection with some public road project and hence the Government had put a halt on giving approval for the development of the pond property and probably also other properties in the vicinity.  The upshot was that there was a petition made by the village representatives to the Government to ask the Government to permit development or to make a quick decision on resumption.  In these circumstances I find that it must be obvious to the Deceased that his interest in the pond property would be worth some money.  Again I do not think that in view of the closeness of the relationship amongst the family members at the time, the Plaintiff would not be aware of the Deceased’s plan in relation to the pond property or that there was a good prospect that the Government would resume the land.

21.The Defendant’s case was that sometime around the end of 1996 the Deceased had the idea of buying a property for the family to live in.  He asked Chi On if he was prepared to contribute towards the payment of the mortgage for the property or not and Chi On agreed to do so.  Eventually Chi On found out that in fact it was the Deceased’s plan for the family to surrender their tenancy of their unit at Ho Man Tin Estate in exchange for the right to purchase a flat of the Home Ownership Scheme.  There was a dispute between the parties as to whether it was the Deceased’s idea to buy any property at all.  The Plaintiff’s case was that the Deceased did not want to buy any property and had no reason to do so at the time because he had the Ting house to live in and was then in debts and that he had a small income only.  Also the Plaintiff’s evidence was that the Deceased strongly objected to the purchase of the Charming Garden property.

22.On this point, I accept the evidence from the Defence side.  Although the Deceased was in debt as a result of his having had to raise money for the construction of the Ting house, the creditors appeared to be close friends or relatives of the Defendant.  There was no formal agreement on the loan in many cases.  Thus although he was in debt, there did not appear to be any pressure on him to immediately repay the debts.  Furthermore, there was every reason for him to expect that money could be obtained either through development or through the resumption of the pond property.  The living condition of the family at Ho Man Tin was worsening because of the redevelopment of the estate.  His children, Chi On and the Plaintiff, were both working and had a decent income by that time.  Although he had the Ting house to retrieve to, the Ting house was at Sha Kong Wai and was not convenient for the working children.  It would plainly make sense that he would like to have better accommodation for the family.   Furthermore between 1996 up to about the last quarter of 1997, the property market in Hong Kong was rising very rapidly and the general public sentiment at the time was heavily inclined towards purchasing or investing in property.

Home Ownership flat application

23.On 28 January 1997 the Defendant applied to the Hong Kong Housing Authority for permission to purchase a flat under the Home Ownership Scheme.  The application was made on the basis that she would give up her tenancy of the unit at Ho Man Tin.  The application was made in the name of the Defendant because she was named as the head of the household of the tenancy of the Ho Man Tin unit.  In fact all members of the household would have to sign on the form too.  The Plaintiff was also one of the persons signing on the form.  In fact he also signed on behalf of Chi On.  I find that at that time, the whole family was interested in having new accommodation at a Home Ownership flat in lieu of the Ho Man Tin unit.  It is notable that at that time, the Home Ownership flats available to the applicants would not include any flat at the Charming Garden.

24.The application made in January 1997 was not successful.  I was told that there was a subsequent application made sometime around the middle of the year.  On this occasion the Charming Garden was available as one of the choices.  The application was successful and in fact the Charming Garden was the first choice of the family.  I would mention that the application form for this successful application was not produced in the trial.  Although I accept the explanation that at the time the family did not realise that the application form might be relevant one day in a litigation amongst the family members, plainly if this action was properly prepared, the parties, in particular the Defendant, could and should have approached the Housing Department to see if a copy could be made available.  However, since there was no serious dispute on the existence of this second application and there was no reason to believe that the relevant application form would be in a different format from that used in the January 1997 application, I am prepared to infer that all family members including the Deceased and the Plaintiff would have signed on the form and would be aware of the Defendant’s application for a right to purchase a Home Ownership flat with the Charming Garden as the first choice.  There was no evidence to suggest that there was any real disagreement amongst members of the family on this issue, and I would find that in fact both the Deceased and the Plaintiff were happy for the family to give up the Ho Man Tin unit in exchange for better accommodation in a Home Ownership flat, preferably at the Charming Garden. 

25.However the absence of the relevant application form and also the documentary proof of the success in the application would mean that there is no clear evidence as to whether the application was made before or after the making of the Will by the Deceased and/or the incident whereby the Deceased and his family members discussed about the Will which may have an important bearing on the finding of what in fact took place in the discussion.

The making of the Will

26.In 1997 the health of the Deceased was not good.  In mid 1997, the Defendant had a discussion with the Deceased over the disposal of his properties upon his death.  The Defendant suggested that the Deceased should make a Will to deal with the disposition of his properties upon death.  The thinking of the couple at the time was that as both of them were getting old, upon the death of both of them, ultimately the properties would be left to their children.  Hence the idea then was that instead of leaving the properties to the Defendant and for her to pass them on to the sons upon her death, the Deceased should directly leave the properties to the 3 sons.  In this way, it was hoped that there could be some saving of legal costs, estate duties and legal procedures.  While I accept the evidence of the Defendant, on this point, it would appear that the couple had merely concentrated their minds on the Ting house and the pond property and had not paid much attention to the Deceased’s interest in the estate of Leung Kun.  During the trial, there was no probing on the couple’s thinking about the Deceased’s interest in the estate of Leung Kun.  From the evidence before me, there was no information on when the Deceased had become entitled to his share of the interest in the estate of Leung Kun although it was clear that he became entitled to the interest in the estate of Leung Kun by the date of his death on 18 January 1998.  Even if the Deceased had become interested in the estate of Leung Kun by mid 1997, it was also probable that at the time, the couple had forgotten about or was not aware of its value and had not applied their mind to it.  After all the Deceased did not specifically deal with it in his Will and even up to the date of the trial, the personal representative and trustee of the property of the estate of Leung Kun had still not yet distributed the property under the estate.

The agreement with the daughter

27.The testamentary disposition of the Ting house was obviously something which the Deceased was very concerned with at the time when he made his Will.  The Ting house had 3 storeys.  Hence it would be ideal if it was to be left to the 3 sons of the Deceased so that each of them could, upon division of the property, have a separate floor in the house.  However, at the time, the 2^nd floor of the Ting house was occupied by the daughter who had paid the Deceased $350,000 for the construction of the house.  Before making the Will, the Deceased and the Defendant had a discussion with the daughter, and offered to repay the daughter the sum of $350,000 plus $150,000 in consideration of the daughter agreeing to vacate the 2^nd floor.  The daughter agreed to the proposal.  One of the reasons was that in 1995, she had applied for the right to purchase a Home Ownership flat herself and was successful in her application.  Hence she had plans to move out from the Ting house by 1997 to live in her own flat.  Furthermore, her child had reached the age for kindergarten and it appeared that she would prefer him to study near her new home. 

28.The Plaintiff strongly challenged the agreement reached between the Deceased and the daughter, and he strongly challenged the propriety of the estate paying the $150,000 to the daughter.  Even though the Deceased did not have the cash at the time to pay the daughter, it did not mean that the Deceased would not have made this offer because plainly at the time, every one in the family was aware that the pond property would in due course be able to be converted into monies through resumption by the Government.  I find that the agreement reached was more than reasonable and was in fact the sort of arrangement with give and take on both sides that one would expect to be entered into amongst members of a family.  Although the daughter had only contributed $350,000, the 2^nd floor by 1997 must be worth a lot more than $350,000 or what it was worth in 1993 when the Ting house was completed.  The $150,000 extra compensation could not be said to be generous and in fact I find that the daughter was very reasonable and considerate in accepting the Deceased’s proposal.  In pursuance of the agreement, the daughter did move out from the 2^nd floor of the Ting house in July or August 1997.

The provisions in the Will

29.In pursuance of the Defendant’s suggestion, the Deceased did make a Will.  The Will was made in a solicitor firm and was dated 23 June 1997.  By his Will the Deceased appointed the Defendant to be the sole executrix and trustee of the Will.  Subject to the payment of all debts and funeral and testamentary expenses, the Deceased devised the Ting house and his interest in the pond property to the Defendant upon trust to divide the same into 3 shares and to stand possessed thereof upon trust for the 3 sons such that each of the 3 sons would have a share.  The Deceased further directed that his residuary estate shall be distributed in accordance with the provision of the Intestate’s Estate Ordinance.  It is to be noted that apart from the share that she would be entitled as the widow of the Deceased on intestacy in relation to the residuary estate, the Deceased had made no provision in his Will for the Defendant at all.

The meeting after the Will

30.It is common ground that shortly after the Deceased made his Will, he had a discussion with his 3 sons in relation to his Will and this took place in the Ting house.  However, the parties are in dispute on nearly everything else in relation to this meeting.  First there is the dispute on whether the Defendant was present during this discussion.  The Plaintiff said that she was not but the Defendant as well as all her 2 other sons said she was.  Whether the Defendant was present or not would not have any significant bearing on the contents of the conversation between the Deceased and his sons.  It may have a bearing on the credibility on the parties.  Having heard the evidence from the witnesses, I find that in fact the Defendant was present during this meeting too.  It was not usual for a father to discuss his Will with his sons.  However, it is common ground that the Deceased had taken this rather unusual step to do so.  It was not in serious dispute that the Defendant did accompany the Deceased to the solicitor firm to make his Will.  The contents of the Will would not be a secret to her.  Further, even on the Plaintiff’s case the Deceased had told his sons that they needed to take care of the Defendant.  In these circumstances, it is just but natural that the Deceased would not have excluded the Defendant from attending this family meeting when the contents of his Will were discussed.  In fact there was a good reason for the Deceased to want the Defendant to be present to put her mind at ease.

31.According to the Plaintiff, what took place was that the Deceased told those present that the Ting house and his interest in the pond property would be given to the 3 sons in equal shares.  The Plaintiff further said : “he then specifically told us that when the properties were sold, we needed to repay the relatives with the debts which were loaned by them to build the Sha Kong Wai house.  The Deceased also told us that we needed to take care of the Defendant.  All the 3 sons agreed to the Deceased’s arrangement at the family meeting.”  However, when being questioned as to what properties he understood the Deceased was referring to when he said “when the properties were sold”, the Plaintiff’s answer was that he did not know what the Deceased meant and added that “we had 2 properties” presumably meaning the Ting house and the pond property. 

32.According to the Defendant’s witnesses, by the time of this family meeting at the Ting house, the family had already known that their application for the right to purchase of a Home Ownership flat was successful and the family had their eyes on the purchase of a flat at Charming Garden, being their first choice.  As I have pointed out earlier, there was no documentary confirmation on whether by the time of the Will, it was known that the Defendant was successful in her application for the Home Ownership flat purchase.  However, in my view the Plaintiff must be aware of the timing of the successful application and in view of the fact that it was not seriously challenged that by the time of the family meeting in relation to the Will it was already known that the Defendant was successful in her application for the purchase of a Home Ownership flat, I am prepared to find that by the time of this meeting the Deceased was already aware of the successful application and that it was the wish of the Deceased as well that a flat at Charming Garden would be purchased. 

33.On the part of the Defence, there were 3 witnesses giving evidence on what took place in this meeting.  They are the Defendant, Chi On and Chi Wai.  Their accounts of the events were not totally identical but were quite consistent.  According to them, the Deceased took out the Will and told those present that he had made a Will giving his 2 properties, i.e. the Ting house and the pond property to the 3 sons in equal shares.  He told the meeting that the Defendant was the executrix but the 2 properties would not be in her name.  He told the 3 sons that he wanted the 3 sons to promise him 3 things.  The first was that the 3 sons would join in their effort to pay for the mortgage of the flat which was for the family to live in.  The Defendant would be able to live in the flat until her death and after her death, the sons could sell the flat and divide the proceeds.  The second thing was that he wanted the sons to agree to maintain and support the Defendant.  The third thing was the repayment of $350,000 to the daughter plus a compensation of $150,000.  Chi Wai was then still studying and did not have any income.  He said to the Deceased that he was studying and did not have money.  The Deceased then told him that the 2 brothers could pay first and when the pond property was realised, he could use his share of the proceeds to repay the brothers and for payment.  The Deceased further told the 3 sons that if any of them did not agree to the 3 requirements, he would change his Will.  All 3 sons agreed to carry out the requests of the Deceased. 

34.I have to resolve the conflict between the parties on what took place during this meeting.  In doing so, I note that (a) the case of the Defendant was not in complete agreement with the contents of the witness statements filed by the Defendant’s witnesses and in particular the exchange between the Deceased and Chi Wai was not recorded in any of the witness statements filed by the Defendant at all; and (b) the Defendant’s counsel had not put to the Plaintiff the details of the Defendant’s case on what took place in this meeting although with the exception of the exchange between the Deceased and Chi Wai, the other salient points of the events were already disclosed in the witness statements and to the extent that they differed from the Plaintiff’s case, they were specifically put to and denied by the Plaintiff during his examination in chief.  Furthermore, I also note that in the witness statement and also in the Defence, it was specifically said that the sons were to contribute to the payment for the purchase of a flat at Charming Garden when it was clear that by the time of this meeting, the Defendant had not gone to select her Home Ownership flat yet. 

35.On the other hand, I also have regard to the inherent probability of the matter in the light of other objective factors.  In my view, the main purpose of the meeting must be that the Deceased would like to make sure that although there was no specific provision for the Defendant, she would be adequately taken care of by the sons.

36.One the disputes between the parties was whether the monies to be paid to the daughter was mentioned.  In this regard, I have little difficulty in concluding that the Plaintiff must be mistaken or deliberately mistaken when he said that there was no mention of the monies to be paid to the daughter.  The Deceased was able to device the Ting house to the 3 sons in equal shares only because he had secured the agreement of the daughter to move out of the 2^nd floor and thereby implicitly also relinquishing any interest she might have in the house for having provided or contributed money for the construction of the house.  If the Deceased had gone to the extent of telling his sons that debts would have to be repaid, it was but natural that he should mention about this repayment to the daughter.  Furthermore there was no special provisions made in the Will in favour of the daughter who had given great assistance to the Deceased in helping him to finance the construction of the Ting house.  It is thus natural and probable that the Deceased would want to make sure that if by the time of his death the daughter had still not been paid the $500,000, he wanted that his sons who took nearly all his properties, to pay the daughter the amount that he had promised her.

37.Secondly there is the dispute between the parties on whether the Deceased had mentioned that the sons would have to contribute to the mortgage or the purchase of the flat or the Charming Garden flat.  On this point when the discrepancy between the evidence and the witness statement was pointed out to him, Chi On’s explanation was that at the time, the whole family thought that they were going to purchase the Home Ownership flat at Charming Garden.  This was because by then it was already known that their application was successful and Charming Garden was their first choice.  While I am prepared to accept his evidence and explanation that the family members including the Deceased would probably have in mind that they would like to purchase a flat at Charming Garden, the Deceased must realise that the objective circumstances must be such that there existed the possibility that they would not necessarily end up in purchasing any flat at Charming Garden or any Home Ownership flats available from that batch at all, because the flats at Charming Garden might be sold out before their turn to choose the flat, or alternatively they might not want to buy any from those available for their choice and for that reason they might not end up in buying any Home Ownership flat at all.  Thus I am not prepared to find that there was cogent enough evidence for me to find that the Deceased mentioned that the sons should contribute to the payment or the mortgage of a flat at Charming Garden. 

38.The next question is would the Deceased have told the sons to contribute to the payment for a flat (without specifying which flat) for the family to live in?  On this issue, my finding is that he probably did.  The reason was that by that time, the living condition at Ho Man Tin was far from ideal.  The Ting house at Sha Kong Wai was a bit far away and at least at that time, none of the sons was staying there.  Maintaining the Defendant would obviously entail providing her with suitable accommodation.  I find that at the time the relationship amongst the family members was good and barring the situation of any of the sons getting married and thus would have a reason to live apart from the rest of the family members, it was the natural assumption of the Deceased that the Defendant and the sons would live together as a family.  At the time, the family had decided to purchase a flat from the Home Ownership scheme and preferably one from the Charming Garden.  It was reasonably anticipated that the flat would have to be purchased by mortgage over a number of years.  While it was possible that the Deceased might think that the repayment of the mortgage might commence during the Deceased’s life time, bearing in mind that the mortgage was to be repaid over a long period of time, it was probable that the Deceased would anticipate that by the time of his death, the mortgage might not have been completely repaid.  The Defendant had no income and was not specifically provided for under the Will, and so it was natural that the Deceased would like his sons to promise to acquire a flat for the Defendant and the family to live in.

39.In relation to the issue of whether the exchange between the Deceased and Chi Wai had taken place at all, with some hesitation, and having taken into account the demeanor of Chi On, Chi Wai and the Defendant, I am also prepared to find that it did.  My hesitation came from the fact that there was no mention of this exchange in the witness statements of the Defendant and Chi Wai.  On the other hand, it appears to me that the whole of the Defendant’s case was rather sloppily prepared.  Furthermore, the objective circumstances were such that Chi Wai in fact did not have any income at the time, and he was being asked to commit to spend money if only for the maintenance of the Defendant.  It was not at all surprising that he would raise his concern with the Deceased. 

40.In relation to the condition concerning the Defendant, I note that the Plaintiff’s version was that the Deceased wanted the sons to take care of the Defendant, whilst the Defendant’s version was that the sons were to maintain and support the Defendant.  I do not consider that there was any real difference between the two.  The conversation between the Deceased and the sons would be in Cantonese.  The sense must be clear that the sons were to ensure that the Defendant would be maintained and her cost for living properly provided for. 

The purchase of the Charming Garden flat

41.On or about 9 August 1997 the Defendant went with the 3 sons to the Hong Kong Housing Authority to choose the flat she would like to purchase from the Home Ownership scheme.  The Deceased did not go because he had to work on that day.  The Plaintiff said that he also went because he was out of work at that time.  However, I do not accept any suggestion that the Plaintiff was merely passively dragged along to attend the occasion and was not really interested in the purchase of the flat at Charming Garden.  If he was really completely disinterested, I see no reason for him to come along with the Defendant at all even though he was out of work at the time.

42.I accept the Defendant’s evidence that while the intention was that the flat at Charming Garden was to be purchased with the joint effort of the family and in particular that of the sons, the original intention was that she should be the sole person to be named as the purchaser.  I also accept the evidence from Chi On that before the selection of the flat, he had already opened an account whereby he could get facilities in the sum of $50,000 and on the day of the selection of the flat, he had signed up further banking facilities to enable him to obtain money for payment of the deposit.  However, I do not find that because of all these arrangements, it was his and the Defendant’s intention that they should be the sole beneficial owners of the flat to be purchased.  At that time, although it was known that the Government would in due course resume the pond property, the resumption had not taken place and so the compensation for resumption was not yet available.  The Deceased did not appear to have much cash and in view of his age it was probably difficult for him to obtain any bridging loan to purchase the flat.  The Plaintiff was out of job at the time.  It was thus natural that the task for finding money to pay the deposit and other sundry expenses in relation to the purchase of the flat would fall on Chi On. 

43.Although all 4 members of the family went to the office of the Housing Authority, only 2 were allowed to go into the room to actually pick the flat.  In the circumstances, it was natural that the Defendant and Chi On who had the money to pay the deposit went into the room to pick the flat.  After the Defendant and Chi On had chosen the flat some preliminary agreement was signed and a deposit was paid.  Again the preliminary agreement was not produced in the trial.  The deposit and other incidental charges were paid by Chi On.  As the Defendant and Chi On were the persons named as the purchasers, it was also natural that they were the mortgagors in the mortgage and it was also natural that repayments of the mortgage were effected through the account of Chi On who had an income.

44.According to the Plaintiff’s evidence, around the date of the selection of the flat, the Plaintiff asked the Defendant whether she would expect the Plaintiff to pay any sum to contribute to the mortgage loan for the purchase of the flat.  The Defendant’s answer was that he was not in employment at the time and there was no need for the Plaintiff to make any contribution until he was able to engage in a gainful employment.  The Plaintiff relied on this conversation as showing that there was no agreement for him to make any contribution towards the purchase of the Charming Garden flat.  While I accept that this conversation took place, I do not accept the Plaintiff’s contention on the effect of the conversation.  In my view, the very reason for the Plaintiff’s enquiry and the Defendant’s answer was that it was assumed by the Plaintiff and the Defendant and also all members of the family that the Plaintiff would have to contribute to the purchase of the flat, but in view of the fact that the Plaintiff did not have any income for the time being, he was not expected to make any contribution during the time when he did not have any income.  He would be expected to contribute once that state of affairs, i.e. his unemployment, was over.  In this respect, the treatment of the Plaintiff was very similar to that of Chi Wai who was not expected to make any payment while he still had no income but would have to make it up afterwards when he had money. 

45.A few days after, there was a conversation between the Plaintiff and the Defendant.  The Plaintiff asked the Defendant whether she planned to add the Plaintiff’s name as one of the owners of the Charming Garden flat.  In the context, I would interpret that as a request for the addition of his name to be one of the co-owners.  At that time, the Defendant’s answer was negative.  There was a dispute between the parties on whether on the same occasion the Defendant had also given as a reason for her refusal that is, he who had the money to make the payment would become the owner of the property.  On this point, I find that she probably did.  The reason for my finding is that this statement made at a time when the Plaintiff was out of employment, would be particularly hurtful to the Plaintiff and he would have a good reason to remember this.  This might very well also be a distant cause for this litigation.  On the other hand, on the part of the Defendant, she might just be thinking that owners would just refer to the names of the persons appearing as the assignees on the assignment and she probably had in her mind that it would be a lot more convenient for Chi On who had an income to be a registered owner because the bank financing the purchase would be more ready to lend to those who had an income.  At least there would be fewer questions asked.  In the circumstances, she might not have any particular reason to remember this exchange between her and the Plaintiff.

46.The Deceased was diagnosed to have liver cancer in October 1997.  I accept the evidence from the Defendant and Chi Wai that after the Deceased knew that he had cancer, the Deceased asked the Defendant and Chi Wai to accompany him to go to look at the block where the Charming Garden property was.  The visit took place and during the visit the Deceased said words to the effect that the property being a Home Ownership flat was worth its price.  This is an incident which is supportive of the Defendant’s case that in fact the Deceased was throughout keen in purchasing a Home Ownership flat for the family to live in.

47.The Deceased died on 11 January 1998.

48.The formal sale and purchase agreement for the Charming Garden property was dated 20 February 1998.  The price for the property was $2.19 million.  It is common ground that completion of the purchase took place on 30 June 1998 and the Defendant and Chi On raised the amount of $2,081,070 by mortgage to complete the sale.  On 22 June 1998, the Defendant and Chi On also raised a 36-month installment loan to pay the legal fees and the stamp duties for the transaction.  In the usual course of event, the repayments of the mortgage and the installment loan would commence at the end of July 1998, i.e. one month after the draw down. 

49.The arrangement on the mechanics of the repayment of the mortgage was that Chi On would pay the mortgagee bank the amount of the installment each month.  For the first 3 years, he would also be paying the monthly repayments of the legal fees and stamp duty loan.  The Defendant continued to run the family household and she obtained money from both Chi On and the Plaintiff to do so.  Later on after the Plaintiff had ceased paying the Defendant any monthly payment, the Defendant ran the family out of monies obtained from Chi On and Chi Wai.  The manner of paying off the mortgagee bank did not change.

The increase in the Plaintiff’s monthly contribution

50.After the completion of the purchase of the Charming Garden property, the Defendant, Chi On and Chi Wai moved to live in the Charming Garden property.  Before they moved there, and while the whole family was still living at Ho Man Tin, there was an occasion whereby Chi On and the Plaintiff discussed about the contribution to the family to be made by the Plaintiff.  The discussion took place in the presence of also Chi Wai and the Defendant.  While the existence of such discussion at the Ho Man Tin unit and the persons present were not in dispute, again nearly every other material aspects of this discussion was disputed between the parties.

51.First there is the dispute on the approximate timing and context of this discussion.  According to the Plaintiff this took place in or about May 1998, which would be before the completion of the purchase of the Charming Garden property.  According to Chi On, the Defendant and Chi Wai, the discussion took place in or about August 1998 which would be after the completion of the purchase but before the family moved to the Charming Garden property.  Bearing in mind that in the account statement prepared by Chi On, it was recorded that the Plaintiff had made an increased contribution since July 1998, I find that it was probable that the discussion had taken place before the completion of the purchase of the Charming Garden property.  I am of the view that the Defendant and her witnesses were probably mistaken on their recollection on the timing.  However, I am not prepared to infer from this common mistake that the Defendant and her witnesses had got together to concoct any evidence. 

52.The setting of this discussion was clear.  The family was about to give up their existing home at Ho Man Tin when the Charming Garden property was available for them to move in.  It was common ground that what triggered off this discussion was that the Plaintiff told Chi On in the presence of other family members that he was not going to move to Charming Garden and that he wanted to move to live at the Ting house.  According to the Plaintiff’s witness statement which he adopted as his evidence in chief, he told Chi On that he did not want to involve himself in the Charming Garden at all because the Defendant had refused to add his name to be a registered owner of the property.  The Defendant then said that since Chi On paid for the installments, he should own the Charming Garden and that all the money given by the Plaintiff to her was only treated as family expenses and not mortgage repayments.  Hence the Plaintiff did not make any contribution to the Charming Garden.  Chi On then said that Chi Wai was still studying and he would prefer the Sha Kong Wai Ting house to be rented out to support the mortgage loan.  The Plaintiff did not agree and eventually Chi On proposed that the Plaintiff should pay the Defendant a monthly sum of $6,000, and was allowed to live in one of the storeys of the Ting house.  The Plaintiff further said that after this meeting, he began to pay a monthly sum of $6,000 to the Defendant and he treated this sum as either rental for the renting of one storey of the Ting house and/or living expenses or contribution to the Defendant.  However, in his oral evidence in chief, when asked for the reason for the increase in his contribution, the Plaintiff simply said that in 1998 the Deceased passed away and the family did not have the benefit of the Deceased’s $6,000 monthly contribution.  The clear message from his oral evidence was that his $6,000 contribution was to replace the $6,000 contribution from the Deceased.  Also the Plaintiff confirmed in his oral evidence in chief that the $6,000 per month he paid to the Defendant was for the sole purpose of family expenses and was for no other purpose. 

53.On the other hand, a different picture emerged from the evidence of the Defendant and her witnesses.  The evidence from the Defendant and her 2 other sons was not identical as some covered the event in greater details than the others.  By and large their testimonies were consistent.  According to the evidence of Chi On, on hearing that the Plaintiff did not want to move to live in the Charming Garden property, both the Defendant and Chi On asked him why.  However, the Plaintiff asked them not to bother about it and that the Plaintiff simply wanted to move to live at Yuen Long.  Then Chi On told him that by this arrangement the family would have to spend more money and that if the Plaintiff did not give Chi On a helping hand, with Chi Wai still studying, Chi On would not be able to support the family and repay the mortgage.  Chi On also said that if the Plaintiff did not go to live at the Ting house, it could be rented out for more money.  The Plaintiff then said he had his name to the ownership of the Ting house as well.  Then seeing that the Plaintiff was so concerned that he was not named as an owner of the Charming Garden property, Chi On said to the Plaintiff that his concern could be easily addressed by spending a few thousand dollars legal fees to add his name as an owner of the property.  Chi On also reminded the Plaintiff that it was the Deceased’s desire that after purchasing the property, the family should live there and after the death of the Defendant the property could be sold and the proceeds divided.  Chi On further said to the Plaintiff that Chi Wai was still studying and the Plaintiff was not earning much and so Chi On would pay the mortgage first and after the pond property was realised, the Plaintiff and Chi Wai could repay Chi On for their shares.  The Plaintiff then volunteered to pay $2,500 as his mortgage contribution but at the same time saying that no matter what happened, he would like to move to live at the Ting house.  Thus the Defendant’s case was that it was clear to the Plaintiff and everyone else that the Plaintiff agreed to contribute $2,500 for the repayment of the Charming Garden mortgage and that was the reason for the increase of his contribution from $3,500 to $6,000 per month. 

54.I do not think that either side had told me the whole truth concerning what happened in this discussion.  Taking into account the inherent probability of the matter and also the parties’ subsequent behaviour, I find that the Plaintiff had announced his intention not to move to live at the Charming Garden partly as a pretext to further his desire to have his name added as a co-owner of the Charming Garden property.  I do not consider it likely that the Defendant would have told the Plaintiff on that occasion that as Chi On paid for the property, Chi On should own the property and that all the money given by the Plaintiff to the Defendant was only treated as family expenses and not mortgage repayments.  This is because at the time, the general understanding of the family would appear to be that the Charming Garden was to replace the Ho Man Tin unit as the family home, and furthermore, there was no question of any money paid by the Plaintiff up to that stage to be treated as mortgage repayments because there was no need to make any mortgage repayment yet.  It follows that I am not convinced that anyone had mentioned during this meeting anything about the ownership of the Charming Garden flat including that it was owned by Chi On or that the Plaintiff did not have any interest or share in the property.  However, when the Plaintiff was being confronted by the suggestion that if he was so concerned about whether he had his name on the title deeds, then the family could spend a few thousand dollars legal fees to arrange for that to be done, he probably felt a bit uneasy to insist on that to be done and had therefore not further pursued his request for his name to be added to the title deeds.  This reaction was not surprising because the parties are all family members and everyone knew at that time, that cash wise, the family could not comfortably afford the fees.  I find it likely that in order to induce the Plaintiff to contribute to the family expenses (including the mortgage repayments), Chi On had reminded the Plaintiff that it was the wish of the Deceased to acquire the new family home.  I also accept the evidence that Chi On did tell the Plaintiff that if he did not move into the Ting house, the same could be let for more money.  I also accept the evidence that the Plaintiff had reminded the other family members that he had one third share in the Ting house and he was entitled to live there.  Of course, I accept that the Plaintiff agreed to pay an increased contribution towards the family in the sum of $6,000 per month.  However, I am not satisfied that there was any express mention that the extra sum of $2,500 was for the purpose of mortgage repayments nor do I think that there was any express mention that the increased amount was for any particular purpose.  It follows that I do not accept that there was any expressed understanding reached at the meeting that the sum paid by the Plaintiff was only as his contribution as rent for a floor at the Ting house, nor was there any clear understanding reached that the whole sum of $6,000 was only as contribution for the family expenses or for the living expenses of the Defendant.  Since the Plaintiff was undoubtedly given an one third share of the Ting house, I do not see why anyone present in the meeting should think that he should pay rent.  I do not see why the Plaintiff should expressly volunteer to contribute $2,500 as mortgage repayments because plainly at that time, the Plaintiff had not yet succeeded in getting himself to be named as one of the co-owners of the Charming Garden property.  I do not accept that it was the understanding of the persons present then that the increased payment offered by the Plaintiff was just for the family expenses or living expenses of the Defendant because since the Plaintiff would not be living with the family at Charming Garden, there was really no reason for him to pay an increased amount towards the daily expenses or the living expenses of the Defendant.  I consider that it was likely the Plaintiff agreed to pay an extra sum because he realised that without the extra contribution from him, it was difficult for Chi On and the family to sustain the family expenses which would include the mortgage repayments.  He may like to keep the purpose of his increased payment deliberately vague so as to avoid an immediate confrontation during the meeting and meanwhile, he could keep his option open in claiming that he had also contributed towards the purchase of the Charming Garden property.  In short the situation is that, like many arrangements within a family there was no clear common understanding amongst the persons present on the purpose of the increased payment.   Meanwhile it appeared that Chi On and other members of the family was still under the impression that one day the Plaintiff would move to live in the Charming Garden property because when the flat was furnished, space was reserved to enable the Plaintiff to move in to live with the family.

55.However, I find that at the time, Chi On and the Defendant were under the impression that the Plaintiff had agreed to help out in making contribution towards the family expenses which would include the mortgage and installment loan repayments.  This is because without the contribution from the Plaintiff they would not be in a position to sustain both the household expenses and the repayments of the mortgage and the installment loan.  By May or June 1998 it was common knowledge that landed properties in Hong Kong had fallen sharply in value and the Charming Garden flat would not be worth $2.19 million.  At that time, Chi On and the Defendant had the option of either not completing and losing the deposit or selling back the property to the Housing Authority after completion at the original price.  Moneywise, they would be better off by choosing either of those options.  I find that they decided to keep the Charming Garden property because somehow they felt obliged to keep that property because of the Will of the Deceased.

The events in 2000

56.Probate of the Deceased’s Will was granted on 19 May 2000.  Meanwhile, it was common ground that the legal charges for obtaining probate were paid by the Plaintiff, Chi On, and also the daughter. 

57.It is common ground that since July 1998 the Plaintiff paid the Defendant the sum of $6,000 per month and this state of affair lasted until about August 2002.  The Defendant ran the household with monies provided by the Plaintiff and also Chi On.  In the initial years, the whole family expenses including the installment repayments of the loans for the purchase of the Charming Garden property ran into about $30,000 per month.  This amount was made up by (a) mortgage repayment in the sum of about $18,000 per month; (b) installment loan for the legal fees and stamp duties in the sum of $2,360 per month; and (c) other family expenses in the sum of about $9,500 per month.  The Defendant was the person running the household.  Although the Plaintiff’s payment was made directly to the Defendant while Chi On was the person who repaid the banks for the loans, I consider that this arrangement did not mean that the Plaintiff could not have contributed towards the mortgage repayments, because I take the view that the arrangement was an arrangement of convenience only so as to save the trouble of having monies from both the Plaintiff and Chi On being put into a common pool or account and then drawing out from that common pool or account to make payment for household expenses and installment repayments.  At any rate, it does not appear that the Plaintiff was in any way concerned as to how the Defendant dealt with his $6,000 contribution. 

58.At the beginning of 2000 the Defendant received a letter from the Government confirming that the pond property would be resumed and also informing the Defendant of the amount of compensation for the Deceased’s share of the property.  It was not clear whether the Defendant was told of the exact amount of the compensation.  Again for some unknown reason, this letter was not available in the trial.  It is however common ground that after the receipt of this letter the Defendant and Chi On were aware that compensation in the sum of about $3.3 million would be payable.  The offer of compensation was made known to the family members including the Plaintiff.  The compensation would belong to the Deceased’s estate. The Defendant had asked Chi On to make out an account statement in relation to the compensation and the various payments which should be paid by the estate.  Chi On did make out such an account statement (hereinafter called the February A/C).  It was common ground that this February A/C was made sometime in February 2000 and a copy of it was given to the Plaintiff in February 2000.  According to the Plaintiff, until after the Plaintiff had instructed his solicitors to demand an account of the estate in October 2002, this was the only account statement ever given to him.  According to the Defendant and her witnesses, there were further revised account statements given to the Plaintiff in July and sometime in or after August 2000.  What took place in 2000 amongst the family members are in hot dispute.

59.From the February A/C it could be seen that the expenses incurred in the purchase of the Charming Garden property as well as the mortgage repayments between July 1998 to January 2000 and the installment loan repayments were put as deduction items in the account.  There were also deduction items of the Government rent and rates for the Charming Garden property.  Further there was a list of debts which were also deduction items.  In this account statement, the amount owed to the daughter was stated to be $300,000 and the amount due to the Plaintiff for the Deceased having sold his Ting right was not mentioned in the statement at all.  The Plaintiff’s $6000 monthly contribution was treated as an income item in the account.  There were two other deduction items worth noting.  First there was the deduction of $150,000 as cash to the daughter, and secondly there was also a deduction item of $200,000 described as “family funding”.

60.In mid 1998 the Plaintiff moved to live at the 2^nd floor of the Ting house.  However, he maintained regular contacts with the Defendant and his siblings until about October 2002 when he instructed his solicitors to demand the Defendant to give him accounts.  Shortly after the Plaintiff moved to live in the Ting house, his girl friend joined him.  They got married and their marriage was registered in November 1999.  However, like many traditional Chinese families in Hong Kong, it was considered that a marriage was not complete without a wedding reception ceremony and a wedding banquet.  In fact the banquet for the Plaintiff’s wedding took place in a hotel in October 2000 and shortly before that there was also a “basin food” banquet at Yuen Long to celebrate the Plaintiff’s wedding.  Chi Wai was the Plaintiff’s best man at his wedding banquets.  After October 2000, the Plaintiff and his wife also visited the Defendant at Charming Garden occasionally for dinners and on festival occasions. However, it is common ground that he did so increasing sparingly towards October 2002. 

61.The Plaintiff’s evidence on the events between 2000 to 26 October 2002 when the Plaintiff instructed his solicitors to write a letter of demand to the Defendant was set out in paragraphs 49 to 73 of his witness statement which he adopted as his evidence in chief.  I will only briefly summarise his evidence below.

62.According to the Plaintiff, after the Defendant received the information that the Government would pay $3.3 million as compensation for the resumption of the pond property she called a family meeting to consider how the sum should be distributed.  The meeting took place in about February 2000.  In this meeting the Plaintiff proposed that the sum should be distributed according to the Will.  Chi On said in the meeting that the resumption money belonged to the whole family.  The Defendant wanted to use the money (a) to repay debts owed by the Deceased to relatives in connection with the construction of the Ting house; (b) to pay a sum of $200,000 for herself; (c) to pay a sum of $150,000 to the daughter; and (d) set aside a sum of $300,000 for the repair of the Ting house.  There was no agreement on the Defendant’s proposal.  The Plaintiff wanted the sum of $100,000 on account of the fact that the Deceased had sold his (the Plaintiff’s) right to construct a Ting house (hereinafter called “Ting right”) and everyone agreed to pay the Plaintiff this sum.  Chi On then produced the February A/C (bundle C page 98).  On seeing that this February A/C contained entries showing deductions for mortgage loan repayments for the Charming Garden property and other expenses of the Charming Garden, the Plaintiff objected the statement.  He said that he had already told the Defendant and Chi On that he was not going to be involved in the Charming Garden property.  Chi On’s reaction was that the monies belonged to the Deceased and if the Deceased was alive, he would not distribute the money and that the Charming Garden property belonged not just to him (Chi On) and the Defendant but belonged to the whole family.  Chi On accused the Plaintiff for living apart and increasing his burden and the Plaintiff reminded Chi On that he contributed $6,000 to the family as expenses.  Chi On offered to add the Plaintiff’s name to the Charming Garden property and also said that the Plaintiff had also an obligation to pay for the Defendant’s living expenses.  The Plaintiff then suggested that a sum of $100,000 should be distributed to each person (without clarifying as to whether “each person” would include the Defendant) and the balance of the money to be deposited in a bank for investment for the time being and that the issue on Charming Garden should be deferred.  The Plaintiff also said that he did not agree to the list of figures in the February A/C but would give further consideration to the figures. 

63.According to the Plaintiff, after 2 days the Plaintiff called the Defendant and invited the Defendant to discuss with him the distribution of the estate.  He told the Defendant that after careful thinking, he did not wish to pay any money regarding Charming Garden.  The Defendant suggested that Charming Garden should be sold and Chi On should be reimbursed the money lost on the decoration and down payment out of the resumption money.  The Plaintiff disagreed to such suggestion.  The Plaintiff reminded the Defendant that he had been paying her $6,000 per month and had thus made some contribution to her.  There was no conclusion in this discussion. 

64.Again according to the Plaintiff, in the next morning, he called the Defendant again and invited the Defendant, Chi On and Chi Wai to meet at Ho Choi Restaurant to discuss on the distribution of the resumption money.   The meeting took place with only the Plaintiff, the Defendant and Chi Wai attending.  In the meeting, the Plaintiff again told the Defendant that he had thought about the matter carefully and he did not want to make any contribution towards Charming Garden at all.  He said to the Defendant that the arrangement on Charming Garden was to assist Chi On only and the Defendant agreed.  The Plaintiff further said that he did not want to assist Chi On because both the Defendant and Chi On never counted him to share in the ownership of Charming Garden right from the beginning.  He told the Defendant that he did not earn much money and he needed to take care of his family.  He repeated to the Defendant that he did not want to be involved in Charming Garden and that the Defendant as executrix would have to arrange to split the compensation.  However, if the Defendant really forced him to help Chi On, he, the Plaintiff, would not pay any further money to her as living expenses.  There was no agreement or conclusion reached in the meeting. 

65.The Plaintiff did cease making any payment to the Defendant after August 2000. 

66.According to the Plaintiff, between 2001 and 2002, he asked the Defendant to transfer the title of the Ting house to him.  The Defendant told him that the solicitors had told her that there was no need to transfer the property since nobody would take his share of the Ting house.  The Defendant further told him that according to the solicitors, premium was required for transferring the title of the Ting house.  On a day that the Plaintiff could not recall, the Defendant asked him to sign a consent letter authorizing the Defendant to handle his share of the estate but the Plaintiff refused.  No copy of this document was ever produced or discovered in this action.  Eventually on 29 October 2002, the Plaintiff instructed his solicitors to write a letter of demand to the Defendant.

67.On the other hand, the account of the events from the Defendant and her witnesses was quite different.  The evidence from the Defendant and her witnesses on these events were not identical, and the depth they dealt with these events also varied.  However, on the whole the stories were consistent.  I would set out the gist of the evidence from the Defendant’s side below.

68.After the Defendant received the letter from the Government relating to her the amount of the proposed compensation for resumption of the pond property at the beginning of 2000, the Defendant asked Chi On to draw up the February A/C.  The Defendant was not educated and she left it to Chi On to draw up the account.  However, the information on the debts to be repaid was supplied by her to Chi On.  The rest of the information in the account such as the expenses in connection with the Charming Garden were obviously known to Chi On.  After Chi On had prepared the February A/C, the account was distributed to all the siblings (including the daughter) one day in or about February 2000 after dinner.  Chi On briefly explained what the February A/C purported to show.  According to the Defendant’s witnesses, there was no discussion on the February A/C on this occasion.  It would appear that the February A/C was distributed for the information of the siblings.  Chi On only received 2 comments on this statement – one from the daughter and one from the Plaintiff.  The daughter took the February A/C back to her home to read.  After she had time to read the account she discovered that there was a mistake in the amount on her contribution for the construction of the Ting house because the amount was stated to be $300,000 instead of $350,000.  She called to inform Chi On of the mistake and Chi On agreed to rectify it.  The Plaintiff after reading the account at his home also called Chi On to tell Chi On that he should include an amount of $80,000 for his Ting right, which was sold by the Deceased.  Apart from that between February 2000 to about July 2000 the Plaintiff did not raise any other objection to the February A/C.

69.In about July 2000, Chi On prepared another account statement (hereinafter called “July A/C”) which was a modification of the February A/C.  The July A/C was also distributed to all siblings including the Plaintiff.  Apparently the purpose for this was that since the February A/C Chi On had done some amendments to the account statement and wanted to keep the family members informed of the account position.  The July A/C was distributed after dinner at the Charming Garden.  There was no discussion on the account on the same occasion when this July A/C was distributed.

70.I would pause here to observe that in this July A/C, the mortgage repayments had not been updated to June or July 2000.  It stayed at January 2000.  Likewise the Government rent and rates stayed at March 2000 and not June 2000.  There were some changes in the figures for the expenses of furniture and appliances for the Charming Garden property, also some amendments to the amounts of the debts payable to those who lent for the construction of the Ting house.  In this regard the amount of debt said to be due to the daughter was amended to $330,000.  A sum of $80,000 was allowed as payment for the sale of the Plaintiff’s Ting right.  However, the amount of the Plaintiff’s contribution was not updated and stayed at the same figure as of January 2000.  According to Chi On, he meant to type in $350,000 as the debt due to the daughter but he made a mistake in typing $330,000.

71.It is common ground that the Defendant actually received the resumption money on 17 August 2000.  According to the Defendant’s witnesses, about 2 days before the receipt of the money, i.e. on or about 15 August 2000, the Defendant and all her 4 children had dinner at the Charming Garden property.  It appears that the dinner was arranged by the Defendant so that the children would have the opportunity to discuss about the compensation which was due to be received.  After dinner, the Defendant and the four children went into the room of Chi Wai where the computer was.  The July A/C document was stored in the computer.  Chi On went to the computer and opened the July A/C document.  The rest of the children stood before the computer looking at the document on the monitor.  The Defendant started off the conversation by telling the children that she was just the executrix to distribute the resumption money and that the children were to sort out themselves as to how the money should be distributed.  The daughter pointed out to Chi On that there was a mistake on the amount due to her and Chi On realised the typing error and amended the figure to $350,000.  Also at that time, Chi On also realised that the amount of $114,000 contribution made by the Plaintiff should not be added as an income item, and hence he deleted the item.  Chi On also updated the amount of mortgage repayments for the Charming Garden property up to August 2000 and the payment of Government rent and rates was also updated.  The contribution from the Plaintiff was updated to $156,000.  The Plaintiff then raised the point about the amount that he should be compensated for the Deceased’s selling his Ting right.  He said that the right should be worth $100,000 and since every one agreed Chi On deleted the figure of $80,000.  At the time Chi On did not put in any amount to replace the $80,000.  The Plaintiff also suggested that each of the 3 sons would pay $100,000 to the Defendant and every one agreed.  Hence Chi On amended the item of family funding of $200,000 and replaced it by “family funding (Mom) $300,000”.  There were also amendments to the solicitors’ charge from $150,000 to $69,000 odd.  The reason for this was that previously the figure of $150,000 was just the estimated cost and by this meeting in August 2000, Chi On was aware that the actual cost was only $69,365.  This figure would appear to be excluding the sum of $17,000 paid or contributed by the Plaintiff.   The amendment was done on the computer.  After all the amendments, Chi On arrived at a figure of about $1.08 million as being the money available for distribution.  The brothers then discussed on how to deal with the balance of the money available.  Chi On proposed 2 options.  First there was the option that the 3 brothers divided up the balance of the proceeds, but then that would mean that amongst the brothers, for each month, they would have to come up with about $26,000 for the repayment of the mortgage for the Charming Garden and also as household expenses for the Charming Garden household.  The second option was to leave the money with the Defendant who would then use the money for the purpose of repaying the Charming Garden mortgage and to pay for the household expenses of the Charming Garden household.  It was estimated that the money would be exhausted in 3 to 4 years.  The Plaintiff then said that he wanted to draw his share of the money but he did not want to continue contributing towards the mortgage and expenses of the Charming Garden.  Chi On then asked him whether he would like to have the Charming Garden sold but if this was done, with Charming Garden being negative equity at the time, there would be a loss.  Chi On further said that it was the wish of the Deceased that the brothers would contribute to the purchase of the flat and that the Plaintiff could not just take the money but not making any contribution.  Accordingly apart from the amount of the debts to be repaid which was set out in the document in the computer, there was no agreement on how to deal with the balance available.  

72.I pause here to note that the details as to how the figures were amended during the meeting were mainly based on the evidence of Chi On.  There was no record of exactly what amendments he did to the document in the computer.

73.According to the Defendant and her witnesses it was only during this meeting in August 2000 that the Plaintiff raised for the first time that he would not like to contribute towards the mortgage of the Charming Garden.  However, the Plaintiff had raised no objection to the other deductions of the Charming Garden expenses. 

74.After this meeting, there was no further discussion between the Defendant and the Plaintiff until one day towards the end of August 2000, the Plaintiff called the Defendant very early in the morning inviting the Defendant, Chi On and Chi Wai to a meeting at Ho Choi Restaurant.  Chi On could not make it.  The Defendant and Chi Wai went to meet the Plaintiff at Ho Choi Restaurant.

75.In the meeting at Ho Choi Restaurant, the Plaintiff told the Defendant that he would not take part in the Charming Garden any more and would not make any further payment to support the Defendant.  The Plaintiff said that as to what the Deceased had given to him, the Defendant could treat it as either for her living expenses, or if she so wished, she could use it for the Charming Garden purposes.  In response to the Defendant’s request for clarification as to what the Plaintiff meant when he said he would not take part in the Charming Garden any more, the Plaintiff told the Defendant that what he meant was that he would not take any interest in the Charming Garden nor would he pay any mortgage or expenses for the Charming Garden any more.  The Plaintiff also told the Defendant that he knew his own situation.  He did not earn much and he had his family to support.  He would not make any payment to the Defendant any more.  In the context, it is clear that although the Plaintiff spoke in terms of what the Deceased had given him, he meant the resumption money of the pond property only and not his whole entitlement under the Will.

76.On hearing the proposal from the Plaintiff, the Defendant became angry and eventually she was pacified by Chi Wai who told her that if that was what the Plaintiff wanted, let that be the case, meaning that she should agree to the Plaintiff’s proposal.  The Defendant took Chi Wai’s advice.

77.To the Defendant and Chi Wai, the Plaintiff had clearly indicated that he would give up his share of the resumption money of the pond property in return for his not being required to discharge any obligation to maintain the Defendant or to contribute towards the purchase of the Charming Garden property. 

78.After the Ho Choi Restaurant meeting, the Defendant had a discussion with Chi On and Chi Wai.  They decided that if that was what the Plaintiff desired, they would accept his proposal.  Hence from then onwards the Defendant dealt with the resumption money on the basis that the Plaintiff had relinquished his right to the resumption money in the pond property and also his interest in the Charming Garden property.  On the other hand, the Plaintiff ceased paying $6,000 per month and made no further payment to the Defendant.

79.The Defendant received the resumption money on or about 17 August 2000.  She instructed Chi On to write cheques to repay the debts borrowed by the Deceased.  The amounts repaid were not exactly the sum stated in the February A/C or the July A/C because in some instances, interest was also paid.  The Plaintiff was paid his $100,000 as compensation for his Ting right and was further repaid the sum of $17,000 being his contribution towards the legal expenses incurred for the estate. 

80.At the end of August 2000, Chi On updated the account in his computer to put in the up to date figures then known to him.  The figure of $117,000 was inserted as the figure for the sale of the Plaintiff’s Ting right and also his contribution towards the solicitors’ cost.   Also since one of the relatives had asked the Defendant to lend to him $200,000, after consulting Chi On and Chi Wai, the Defendant lent him the sum of $200,000, and this amount was also inserted in the account as “loan to uncle”.  In view of his understanding that the Plaintiff would relinquish his interest in Charming Garden, Chi On removed the item of the $156,000 being the Plaintiff’s contribution for the Charming Garden property from the statement.  At the same time, he also deducted from the amount he paid as mortgage expenses an equivalent sum of $156,000 in order to show parity of treatment between him and the Plaintiff.  The final product was printed out and was found at bundle C page 108 (the “August A/C”).  According to Chi On, he gave all his siblings a copy of this document and received no comment from anyone including the Plaintiff. 

81.Also in or about September, Chi On and Chi Wai thought that the interest for the mortgage was very high and a sum of $1 million out of the compensation money was used to effect a partial repayment of the mortgage of the Charming Garden so as to lessen the interest burden. 

82.Meanwhile, the Plaintiff had his wedding ceremony and banquets in October 2000.  The Defendant paid for the Basin food banquet held in Yuen Long and spent about $20,000 odd for that.  She paid the money out of the compensation money from the estate. The family members all gave relatively expensive gift to the Plaintiff and his wife including, cheque of $10,000, gold dragon and phoenix bracelets, gold necklace, gold chain and small diamond chain etc.  The family also offered a sum of $50,000 to the Plaintiff for his wedding, however the Plaintiff declined the offer.  There was no challenge to this part of the evidence.

83.As to the $20,000 for the Basin food banquet, eventually when the Plaintiff through his solicitors demanded the Defendant for an account, the Defendant got a bit angry and included that sum as a deduction item in the accounts sent to the Plaintiff in February 2003.

Assessment of the evidence on events in 2000

84.Having seen and heard the witnesses giving evidence, I must say that I am not impressed by the Defendant as a witness.  She appeared to me to have her mind set on a script and felt that she should be reciting from a particular script paying little heed to what questions were asked of her.  However I must also give allowance for her age and her education level and before I accept or reject her evidence, I must also consider the inherent probability of the matter and also whether her evidence was supported by evidence from other witnesses.  As to the other witnesses of the Defence, I am impressed by the evidence of the daughter and Chi Wai, they both gave evidence in a straight forward manner.  I am particularly impressed by the evidence of the daughter.  She had very little stake in the estate and I was impressed by her impartiality.  As for Chi On, I find that he was a sophisticated person and is very much the person behind the Defendant giving her assistance on how to run the estate.  On the whole, he is also a truthful witnesses, although, it would appear to me that in the zealous hope of convincing me to accept his evidence, he had unconsciously loaded his evidence with details which appeared to be retrospective reconstruction of the events rather than genuine recollection from their memories.  In so far as the Plaintiff is concerned, despite the fact that he was less educated than Chi On, I find that he is also a very sophisticated person having wide exposure to the business world.  He was a smart witness and was always alert to the implication of the answers he gave to his case so much so that he would refuse to give an answer which he thought may not be favourable to his case.  For instance, he refused to give an answer to the size of the Ho Man Tin unit.  Having been living there for a great number of years, it was improbable that he would not be able to give an answer on the approximate size of the unit.  Plainly he did not want to give an answer on the size because he did not want to admit that unit was crowded and thus provided support to the Plaintiff’s case that there was a good reason for the Deceased and possibly for the whole family to want to buy a home ownership flat to be used as the family home. 

85.In making my finding of facts in this case, I must not just take into account the demeanour of the witnesses.  Also in a dispute of this nature when the Plaintiff appeared to be a break away member of the family, I have to warn myself that I should not find in favour of the Defendant’s case simply because there appeared to be a larger number of witnesses coming forward to testify on the same story.  The more important matter that I must consider is the inherent probability of the matter to be measured against common sense and the undisputed facts and documents.

86.Having considered the evidence from both sides carefully, on the whole, I prefer the evidence from the Defence save for those parts which I specifically point out.

87.While the parties are agreed that the February A/C had been distributed to all the siblings, there was disagreement on whether there was any discussion taken place over the account or on the distribution of the compensation in February.  On the Plaintiff’s version, he had firmly indicated his disagreement to any deduction on account of any expenses in connection with the Charming Garden right from the time he got the February A/C.  He maintained his disagreement in the meeting with the Defendant two days later and yet again in the Ho Choi Restaurant meeting which according to him took place in about February 2000.  It is of particular importance that according to him, the last words with the Defendant were that if the Defendant would force him to assist Chi On, he would not pay the Defendant any more money.  However, there was no sign that the Defendant had changed her stance.  Yet the Plaintiff continued to pay the Defendant $6,000 until after August 2000.  The Plaintiff’s explanation was that he ceased paying the Defendant after the Defendant had actually received the compensation money.  However on the Plaintiff’s own account, there was no further discussion between him and any member of the family in relation to the resumption money after February 2000.  He did not give any evidence as to whether he was aware of the Defendant’s receipt of the resumption money in or about August 2000 and if so how.  Of course, it is possible that the Plaintiff would become aware of the payment of the compensation money in August 2000 because on 18 August 2000 he was given $117,000 or that he might have become aware of the same through one of his visits to the family at the Charming Garden.  However if it was so, it would be difficult to imagine that there would not be any further discussion amongst the family members on the distribution of the resumption money after February 2000 as alleged by the Plaintiff.  Moreover, if nothing more is said and no further account document on the proposed method to distribute the compensation was given to the Plaintiff, one would be at a loss to see how the Plaintiff would formulate the view that the Defendant had forced him to assist Chi On and thus leading to the Plaintiff’s deciding to cease paying any further money to the Defendant.

88.Furthermore, undoubtedly Chi On prepared another statement in July 2000.  That July A/C was quite a sloppy one in the sense that the information thereon was not really quite up to date.  For instance the mortgage repayment was only recorded up to January 2000 and the Government rent and rates payment stopped at the first quarter of 2000.  If there were indeed the meetings and discussions taking place as alleged by the Plaintiff in February 2000, it is difficult to see why Chi On would still prepare the July A/C and later on the August A/C.  If it was to be assumed that Chi On and the Defendant were somehow determined to ignore the clear demand of the Plaintiff that he was not to have anything to do with the Charming Garden property whatsoever and was not to shoulder any of the Charming Garden mortgage and expenses and the July A/C was prepared so as to effect a fait accompli situation or was made just for the purpose of this litigation, then it is difficult to see why Chi On would have failed to include the further mortgage payment between January to June or July 2000 in the document.  Furthermore, it was common ground that there was never any real disagreement on the part of anyone that the Plaintiff should be paid $100,000 as compensation for the Deceased’s sale of his Ting right and if in fact the Plaintiff had raised this point in a meeting in February 2000, I see little reason for Chi On not put in the figure of $100,000 when he prepared the July A/C.  In my view, it is thus more probable that there was no strong views expressed after the distribution of the February A/C and that was why Chi On was not in the alert when he set off to prepare the July A/C. 

89.Furthermore on the Plaintiff’s version of the event, his relationship with the Defendant would not be good after the February confrontation at the Ho Choi Restaurant.  Although I would not consider it improbable that despite the confrontation the Plaintiff would still return to the home at Charming Garden for meals on festival days and the siblings and the Defendant would still attend his wedding receptions, I find it improbable that the Defendant, Chi On, and the daughter and her husband would still be prepared to make expensive gifts to the Plaintiff for his wedding.  Furthermore, there can be little doubt that the Defendant paid for the basin food banquet for the Plaintiff’s wedding.  Even though the amount was not very big, I would consider it improbable if there was no “settlement” between the Plaintiff and the Defendant over the distribution of the resumption money.  Thus I consider that it is probable that by October 2000, the Plaintiff and the Defendant must have come to some terms which both parties were happy with.  I could not see how this could have happened if the Plaintiff’s version of the events was true.

90.I would thus accept the account of the events from the Defendant’s witnesses which I have summarised above.  However as to what exactly happened in the August meeting before the computer, I am not satisfied that the account given in Chi On’s evidence on how he amended the account statement on the computer was the complete picture.  On his account (which I have summarised above), one could not see how one could arrive at a balance of $1.08 million available for division out of the compensation money.  I do not consider that the omission was important.  At the end of the day, it was clear that on that occasion, there was no agreement reached on whether the Plaintiff would be agreeable to contribute towards the purchase and the expenses of the Charming Garden property.

91.Also I accept the Plaintiff’s evidence to the extent that there was a meeting between the Plaintiff and the Defendant in the absence of any of the other siblings although I do not think that this meeting would have taken place in February 2000.  I see no reason why the Plaintiff should make up a story on this meeting.  However in my view, it is more likely that this meeting which the Plaintiff put it as between the time of a discussion on the February A/C and the meeting at the Ho Choi Restaurant, should have taken place in August 2000 between the time of the August meeting before the computer and the meeting at Ho Choi Restaurant. 

Events in 2002

92.In relation to the events after 2000, I accept the Plaintiff’s evidence that between 2001 and 2002 he had asked the Defendant to transfer his share of the title of the Ting house to him and that the Defendant had told him that the solicitors had told her that there was no need to transfer the property since nobody would take his share of the Ting house.  The Defendant further told him that according to the solicitors, premium was required for transferring the title of the Ting house.  Whether any premium was payable or not, it would appear from the correspondence between the Defendant’s solicitors and the District Lands Office that the Defendant’s solicitors had entertained doubt as to whether the transfer to a beneficiary under a Will would be caught by the prohibition against alienation in the Government lease. The correspondence between the Defendant’s solicitors and the Lands Department indicated that as late as 18 March 2003, the Lands Department was still unsure as to whether the vesting of title under a Will would be in breach of the prohibition against alienation.  I also accept the Plaintiff’s evidence to the extent that sometime between 2001 and 2002 the Defendant had asked him to sign something which was connected with the estate.  As the document was not available I am not prepared to make any finding on the exact nature of this document.

93.On the part of the Defendant, I accept her evidence that sometime in 2002 and prior to receiving any letter from the Plaintiff’s solicitors, the Plaintiff had approached her for some small loans but for one reason or another she did not lend the Plaintiff the money. 

94.On 26 October 2002, the Plaintiff’s solicitors wrote to the Defendant demanding the Defendant to give an account of the estate and also “to advise on the detail schedule on the distribution of the estate”.  On 30 October 2002, the Defendant wrote back to say that she had distributed “as per the mutual agreement of Leung Chi On, Leung Chi Man and Leung Chi Wai”.  On 6 December 2002, the Plaintiff’s solicitors again demanded the Defendant to “render a just and true account” and to pay to the Plaintiff his entitlement under the Will.  Meanwhile the Defendant and the other siblings attempted to contact the Plaintiff for discussion but the Plaintiff refused to discuss the matter, although it appeared that there was eventually one meeting between the Plaintiff and the Defendant at the Plaintiff’s solicitors’ office, but there was no conclusion.  On 20 January 2003 the Plaintiff sent to the Defendant’s solicitors a statement of allocation on the compensation from the Government for the resumption of the pond property (hereinafter called the “January 2003 A/C”).  The January 2003 A/C was largely a modified version of the August A/C.  The Plaintiff’s solicitors were not happy with the account rendered and on 7 February 2003 wrote back to ask a series of questions on the account.  The solicitors also pointed out that the account only dealt with compensation and did not disclose and deal with other assets of the estate at all.  The Defendant replied to the solicitors’ letter on 20 February 2003 and at the same time also sent along a further account (the February 2003 A/C).  However, the February 2003 A/C was just another modification of the January 2003 A/C and did not purport to deal with any other assets of the estate.  

95.On 12 April 2003, the Plaintiff commenced proceedings by way of originating summons asking the Defendant to exhibit on oath a true and perfect inventory of all and singular the estate and effects and to render a just and true account thereof.  Eventually the action was ordered to continue as if it was commenced by writ with pleadings filed.  In the statement of claim the Plaintiff widened the scope of the relieves he would like to claim to include inter alia, tracing relieves, and orders for payment of money to him.

The claim for account – prayer (a)

96.Section 56 of the Probate and Administration Ordinance provides that :

“The personal representation of a deceased person shall, when lawfully required so to do, exhibit, by affidavit filed in the court, a true and perfect inventory and account of the movable and immovable, property of the deceased, and the court shall have power as heretofore to require personal representatives to bring in inventories.”

Apart from s56, before probate was granted, the Defendant had made an affirmation to faithfully administer the estate, and it is recorded in the Grant of Probate that :

“ … She having been first affirmed well and faithfully to administer the same by paying the just debts of the deceased and the legacies contained in the said Will and to exhibit a true and perfect inventory of all and singular the said estate and effects and to render a just and true account thereof whenever required by law to do.”

97.In the present case, the Plaintiff asked for an order in terms of the words underlined above.  Counsel for the Plaintiff submitted that since the Plaintiff had an interest as a beneficiary he could demand the personal representative to exhibit a true and perfect inventory at any time and the personal representative was obliged to do so even without an order from the Court.  Furthermore, it was submitted that the Plaintiff could demand that the personal representative must make an affidavit or affirmation exhibiting the inventory account.  This would in effect mean that the personal representative would be obliged at the instance of a beneficiary without any Court order to make an affirmation to verify the inventory account at any time. 

98.Counsel for the Plaintiff relied on the decision of Chung J in Edwin Kwok Wing Yun, the trustee in bankruptcy of the property of Lee Sin Chung v Lee Shuk Yee, the Administratrix of the estate of Lee Kwong Yuen, deceased HCMP No. 3904 of 2001 where the plaintiff claimed inter alia, the relief of an account of the administration of the deceased’s estate to be rendered by the defendant.  Like the Plaintiff in the present action, the plaintiff there also relied on s56 of the Probate and Administration Ordinance, and contended that the personal representative was obliged to render (a) an inventory; and (b) an account, and to verify them on oath.  Chung J accepted the plaintiff’s submission that :

“11.  In relation to the first point, namely, the nature of the personal representative’s duty, the plaintiff asks the court to note s 56 is different from s 25, Administration of Estate Act 1925.  In England, the personal representative of a deceased are under a duty, when required by court, to render an account of the administration of the estate to the court: 17 Halsbury’s Laws of England 1117, text to n. 2.  The legislative history of the relevant provisions has been set out in Williams, Mortimer and Sunnucks on Executors, Administrators and Probate (2000), § 6-13 as follows :-

“A representative is under a duty, when required to do so by the court, to exhibit on oath in the court a full inventory of the estate and when so required render an account of the administration of the estate to the court.  Formerly the exhibition of a true and perfect inventory and account of the estate was automatically required by stature, but the change introduced by the Administration of Estates Act 1971 apparently recognized the modern practice not to require an inventory or account unless an application had been made to the court for the urpose by some party interested.”

12.  The Plaintiff submits that the Hong Kong provision reflects the pre 1971 position in England.  Thus, a representative may be compelled to exhibit an inventory on the application of any person having an interest, or even the appearance of an interest. ... This, the plaintiff argues, is the true meaning of the phrase :-

“ … when lawfully required to do … ”

99.The Plaintiff’s counsel submitted that the passage quoted from the current edition of Williams, Mortimer and Sunnucks on Executors, Administrators and Probate (2000), § 6-13 suggested that the position in England before 1971 was that there was an automatic requirement for a perfect inventory and account and the personal representative must supply such inventory and account and verify them on oath to any person having an interest in the estate even without a Court order upon the demand of that person.  There was no need for the person requiring the inventory and account to apply to Court.  Of course if the personal representative should fail to render the inventory and the account, then the person demanding those would be able to apply to Court for such an order and the Court would be bound to grant such order in the face of the wordings of the section.  Since the person applying for the inventory and account would have the right to have them without any Court order, it must follow that absent any special circumstances he would be entitled to costs in an application for the inventory and account. 

100.With respect to those who entertain a view to the contrary, I do not consider that section 56 of the Probate and Administration Ordinance would have the effect of conferring a right on a person having an interest in the estate to demand the personal representative to supply to him an inventory and account and have them verified on oath without any application to the court.   In this respect I consider that counsel for the Plaintiff might have read too much into the comment on the previous practice by the editor of the current edition of Williams, Mortimer and Sunnucks on Executors, Administrators and Probate (2000) § 6-13 quoted above.

101.Section 56 of the Probate and Administration Ordinance is in the same terms as section 25 of the Administration of Estate Act 1925 before the same was amended in 1971.  On plain reading of the wordings of the section, I find it difficult to escape from the conclusion that the section does contemplate that some sort of order from the Court would be required before the personal representative would be obliged to supply the inventory and account on oath.  This is because of the words “when lawfully required so to do, exhibit, by affidavit filed in court” in the section.  Plainly if the section contemplates that no proceedings in Court would be required at all, how could the affidavit and the exhibited inventory and account be filed in Court?

102.On the effect of s25 of the Administration of Estate Act 1925, the editors of the 3^rd edition of Halsbury’s Law of England (1956) vol. 16 paragraph 569 wrote :

“The Inventory.   In the case of a person dying after 1925, the personal representative must, when lawfully required to do so (m), exhibit on oath in the court a true and perfect inventory and account of the real and personal estate of the deceased, and the court has power as previously to require the personal representatives to bring in inventories (o)

Foot note (m) - The application is by summons; see p. 163, ante.  For a form of affidavit to lead the summons to exhibit an inventory and a form of inventory, see 13 Ency. Court Forms 392, 393.

Foot note (o) - Administration of Estate Act 1925 s. 25, which replaces with extension to personal representatives generally and to real estate … ”

Thus the editors of the 3^rd edition of Halsbury’s Laws of England certainly took the view that s25 of the Administration of Estate Act 1925 (as applicable in 1956) would contemplate an application to be made to the Court before the personal representative could be compelled to render the inventory and account.

103.While it appears that before 1925, the Ecclesiastical Courts would require an inventory to be exhibited even before the granting of probate, the long practice since at least 1811 was that the personal representative did not render an inventory or account unless an application was made to the Court by a person interested.  In Phillips v Bignell(1811) 1 Phillim 239 at 240, Sir John Nicholl said :

“The cannons require an inventory to be exhibited even before probate is granted; and this was the old practice of this Court, and indeed is still the practice in some country jurisdictions.  The statute (21 H. VIII c 5, s. 4) requires executors and administrators to exhibit inventories as part of their duty, without any proceedings to call upon them to do see (sic).

The modern practice, however, is certainly not to render an account unless it shall be called for; but the executor must remember that he has bound himself by his oath to render a just account when he is by law required.  The Court may, and in some instances does, for the protection and security of the parties interested, require ex officio that an inventory shall be exhibited; and though the Court does not exact this in all cases, still it always will, where a party having an interest in the property applies for it.”

104.Also in the 12^th edition of Williams on Executor (1930), the editors said the following in relation to the personal representative’s obligation to render an inventory and account :

“When and how inventory exhibited   According to the modern practice a personal representative does not exhibit an inventory unless an application is made to the registrar on summons for that purpose by some party interested.  Having regard to the form of affidavit for the Inland Revenue, an application for an order to exhibit an inventory is now very seldom made.  But since this affidavit is filed in the Inland Revenue Office and not in the Probate Division, and is not accessible to everybody, it may still be convenient in some cases to apply tot he registrar of the Probate Division for an inventory to be exhibited.  The exhibition of inventories is not an obsolete practice.”

105.The practice spoken of by the editors in the 12^th edition of Williams on Executors would appear to be confined to the inventory and not the account of the estate during the administration of the estate.  In the context of Hong Kong, since the schedule of property of the estate for estate duty purposes is invariably annexed to the grant, in most cases, there is not much point for any one to ask for an inventory as he would have already had the inventory of the estate if he has a copy of the grant.

106.However, having regard to the wordings of section 56 and the pre 1971 practice in England as recorded in the 3^rd edition of Halsbury’s Laws of England and Williams on Executors 12^th edition, I am of the view that section 56 does contemplate that an application to the Court is required.  However, Phillips v Bignall did establish that there was a right under the practice of the Ecclesiastical Court to call for the inventory and account without any proceedings, I am also prepared to hold that the Plaintiff in the present case would have the right to ask the Defendant to render the inventory and account.  However, there is nothing to suggest that apart from statute the party interested could demand the personal representative to render the inventory and account on oath. 

107.In relation to the law on the liability of the personal representative to furnish an account, the law is summarized in § 969 of the 3^rd edition of Halsbury’s Laws of England (1956) :

“General duty to keep accounts.       It is the duty of executors and administrators to keep clear and accurate accounts, and to be always ready to render such accounts when called upon to do so.  It is no excuse that they are inexperienced in keeping accounts, for in such case it would be their duty to employ a competent accountant to keep them.  Where they are required by the beneficiaries to furnish accounts, they may demand to have the costs of doing so paid or guaranteed before complying with the request.  A legatee is not entitled to a copy of the accounts at the expense of the estate, but he is entitled to inspect the accounts kept by the representative.

A personal representative is liable to be ordered by the Court to account either generally in proceedings for general administration of the estate or under the jurisdiction of the Court to order specific accounts.”

The passage in the 3^rd edition of Halsbury’s Laws of England is reproduced in total in § 801 vol 17(2) of the 4^th edition (2000) of Halsbury’s Laws of England and would thus represents the up to date statement of the law.

108.In the present case, the Plaintiff contended that notwithstanding the various demands made, the Defendant had failed to render any inventory or account of the estate at all.  The contention is that none of the statements furnished by the Defendant including the February A/C, the January 2003 A/C and the February 2003 A/C would meet the requirement of “a true and perfect inventory of all and singular the estate and effects”.  Furthermore, it was contended that they were not proper accounts of the estate.  In any event, none of the account statements given was verified on oath.  The position would not be different even if, which the Plaintiff denied, the July A/C and the August A/C had been furnished to the Plaintiff.

109.Although the law would allow the Defendant as executrix to demand the Plaintiff to pay or guarantee the costs for furnishing the account before she would comply with the Plaintiff’s demand, the Defendant had not taken such point.  Looking at the account statements furnished by the Defendant to the Plaintiff, I agree with the Plaintiff’s submission that they were not account or inventory of the estate.  As an inventory, they merely purported to cover the resumption compensation in respect of the pond property only.  As an account of the estate, again they merely dealt with how the resumption compensation was dealt with.  Even though in my view the Plaintiff is not entitled to demand that the inventory and account are to be verified on oath without an application to Court, plainly what is done by the Plaintiff is not sufficient.  In the circumstances the Plaintiff is entitled to an order from the Court to compel the Defendant to supply the inventory and account. 

110.In the circumstances, in relation to the Plaintiff’s claim under prayer (a), I would order that within 3 months from the date of my order, the Defendant shall furnish to the Plaintiff an inventory and account of all the properties of the Deceased’s estate and shall verify the same on an affirmation or affidavit.  The Defendant’s costs for the preparation of the inventory and account are to be paid out of the estate and the costs of the copying of the inventory and account and also the costs of the verifying affirmation are to be paid by the Plaintiff.

The claim for tracing and account – prayers (b) to (g)

111.On the Plaintiff’s pleading there is no fact pleaded to show any claim for breach of fiduciary duties in misappropriating any trust property or any property of the estate.  The only wrongful acts pleaded are (a) the failure to furnish the inventory and account; and (b) the failure to pay the Plaintiff the legacies under the Will.  The failure to pay the Plaintiff the legacies per se does not mean that the Defendant had misappropriated the legacies or had made use of the legacies for her own purposes.  Thus on the pleading ground alone, I should refuse to grant the relief in prayers (b) to (g) which are predicated on a claim of wrongful breach of trust or wrongful appropriation of trust property beneficially belonging to the Plaintiff.

The legacy

112.However, the Plaintiff did plead the failure to distribute and pay to the Plaintiff his share of entitlement under the Will of the Deceased and had thereby become constructive or resulting trustees for the portion of the estate which she should have distributed to the Plaintiff.  If this cause of action is proved, relief could be given under prayer (h) i.e. any other relief.

113.There could be no dispute that the Defendant as personal representative owes to the Plaintiff and other beneficiaries under the Will a duty to properly administer the estate in accordance with the terms of the Will.  It is equally clear that insofar as the property of the estate is concerned, the Defendant as executrix had the title of the Ting house vested on her, and had collected the resumption compensation in respect of the pond property.  In relation to the properties derived from the estate of Leung Kun, it is not in dispute that the Deceased’s shares of those properties have not yet been vested in the Defendant.  As to other items of the property of the estate as disclosed in the schedule of property annexed to the grant, it would appear that they were really insignificant, being a sum of $2,098.28 in the bank account and also the sum of $100 being the key deposit of the safe deposit box in a bank.  These two amounts in cash would not even be sufficient for the costs of obtaining the grant.

114.Before proceeding to consider whether the Defendant was obliged to distribute the estate, it is necessary to ascertain whether all the debts of the Deceased had been paid or provided for.  Further, it is necessary to decide whether the debts should be paid out of the residuary estate or the specific gift made under clause 3 of the Will. The gift of the Ting house and the pond property to the 3 sons under clause 3 of the Will is expressed to be “subject to the payment of all my debts and funeral and testamentary expenses”.  It is an interesting question as to whether the provision in clause 3 would amount to a direction in the Will varying the statutory order for the application of assets for the payment of debts and funeral expenses or whether the provision in clause 3 would just have the effect of making the pond property and the Ting house charged with or subject to a charge for the payment of debts within the meaning of paragraph 4 of Part II of the Schedule to the Probate and Administration Ordinance.  In the absence of any argument by counsel, I am not prepared to make any ruling on this point.

115.Whatever is the true effect of the opening words in clause 3 of the Will, the Defendant appeared to have paid the debts of the Deceased out of the resumption money of the pond property.  On top of that the Defendant also sought to pay the Charming Garden mortgage installments and other Charming Garden expenses out of the pond property resumption money.  The Plaintiff raised great objection to the payment of the Charming Garden mortgage installments and expenses out of the resumption money.  However, the Plaintiff’s attitude towards the payment of debts out of the resumption money is not clear.  At one stage in her final submission, counsel for the Plaintiff appeared to have conceded that it would be proper to pay the just debts of the Deceased out of the resumption money.  However, it is not clear whether she has properly considered the effect of section 63 and the Schedule of the Probate and Administration Ordinance.  In all fairness I am not prepared to hold the Plaintiff to such concession.

116.The Defendant on the other hand does not recognise that the Plaintiff’s right to receive the gift under clause 3 was an unconditional one.  Her contention was that the gift was subject to a secret trust such that she was entitled to deduct from the gift in favour of the Plaintiff (and other sons) the mortgage payments and expenses of the Charming Garden property.  Her further contention was that as a result of the meeting at Ho Choi Restaurant, the Plaintiff had given up all his entitlement in relation to the resumption compensation.

Secret trust

117.The Plaintiff contended that the Defendant was not entitled to rely on any secret trust because the Defendant had not properly pleaded a case for secret trust and in particular the Defendant did not plead with particularity how the secret trust is said to arise, whether by way of express trust, resulting trust and/or constructive trust and the basis upon which it was alleged to arise.  In this respect, the Plaintiff’s counsel submitted that the pleading in paragraph 7A of the Re-amended Defence would not be sufficient to sustain a case that the Charming Garden property was to be held in secret trust for the members of the Leung family.

118.I agree with the Plaintiff’s counsel’s submission on the point about paragraph 7A of the Re-amended Defence.  Plainly if any secret trust has arisen at all, it must be the asset of the estate that was made the subject matter of a gift, which would be held on secret trust.  Thus whether the Charming Garden property was held in trust or not, plainly it could not be held on secret trust.

119.On the requirement of a fully secret trust, I adopt the statement of the law set out in § 460 of vol 50 of the 4^th edition of Halsbury’s Laws of England :

“Where on the face of the will the gift is an absolute one, but it can be proved that either before or after the date of the will, but during the testator’s lifetime, the donee received from the testator a communication of certain trusts or conditions to be attached to the gift and to be binding on the doneee, and that the donee accepted the gift on those trusts and conditions, either by his express agreement or by his silence, and thereby induced the testator to make the gift, or to leave the gift already made unrevoked, then evidence of those trust or conditions is admissible, except in so far as such evidence would contradict the will.”

120.Also I would also adopt the following passages in the 17^th edition of Lewin on Trusts as the correct statement of the law and requirements of a secret trust :

"	§ 3-73	... Secret trusts arise where a testator intends his gift to the primary donee to be employed as he, and not the primary donee, desires and tells the primary donee of his intention and (either by an express promise or by the tacit promise which is signified by acquiescence) the primary donee encourages the testator to bequeath this money in the faith that his intentions will be carried out …
	§ 3-75	The primary donee will be subjected to a trust for the secondary donee where the secondary donee his personal representative proves:
	(1)	an intention on the part of the testator to subject the primary donee to an obligation in favour of the secondary donee;
	(2)	communication of that intention to the primary donee; and
	(3)	acceptance of that obligation by the primary donee, either expressly or by implication."

121.In the present case, I am of the view that although the words “secret trust” were never used in the Re-amended Defence, the factual background giving rise to the obligation to which the Plaintiff as a primary donee under the Will would be subject to, had been pleaded in paragraph 5 of the Re-amended Defence, although other particulars such as the exact identity of the property alleged to be subject to such obligation has not been properly identified.  Furthermore, evidence on the meeting at the Ting house and the behaviour of the parties afterwards were led without any objection and the Plaintiff could not be said to be taken by surprise on the Defendant’s case.  In the circumstances although the Re-amended Defence was far from being a model pleading, I am prepared to entertain the Defendant’s case on secret trust.

122.On my finding of facts above, I am satisfied that the Deceased intended that his sons would carry out 3 things as conditions for their taking the gift of the Ting house and the pond property under the Will and the sons had agreed to carry out these conditions.  The 3 conditions were : (a) the repayment of the sum of $350,000 to the daughter plus a further sum of $150,000; (b) to maintain and support the Defendant; and (c) to jointly contribute to the purchase of a flat to be used as the family home.

123.In relation to the condition of the repayment to the daughter, I find that the amount of $500,000 was a debt due by the Deceased to the daughter.  It was supported by sufficient consideration.  The only significance of this being a binding obligation on the sons is that the amount would be repayable out of the Ting house and the pond property and not the residuary estate of the Deceased under paragraph 2 of Part II of the Schedule of the Probate and Administration Ordinance.

124.In relation to the condition about the maintenance of the Defendant, I am of the view that this was clearly a binding obligation on the sons as a condition for taking under the Will.  While no amount to be spent on maintenance was mentioned, I would consider that it must be understood that the Defendant would be reasonably maintained to at least the same standard of living she enjoyed at the time of the conversation in mid 1997.

125.In relation to the condition about the joint purchase of a flat, while I am prepared to find that the Deceased must have mentioned this as a condition and the sons accepted it, I would consider that there were some considerable uncertainties on this condition.  For instance, there was no certainty as to what property the sons were supposed to purchase.  Although it was understood by everyone concerned that it was likely that a home ownership flat at Charming Garden would be purchased, the identity of the flat, the size and the costs for such flat were wholly uncertain.  In the premises I am not prepared to hold that this would be a binding obligation on the sons.

126.Thus in my view, the Defendant was not entitled to deduct the mortgage repayments and other expenses from the legacy of the pond property on the basis that the Plaintiff’s entitlement under the Will to the pond property was subject to the condition that the Plaintiff would have to contribute to the purchase of a flat.

Trust of the Charming Garden property

127.Although in my view what took place during the meeting at the Ting house in 1997 would not be sufficiently certain to give rise to a binding obligation to contribute to the purchase of the Charming Garden property, the episode would be very relevant to the issue of whether there was any agreement or implied understanding amongst the family members that the Charming Garden property was to be purchased with the joint efforts and resources of the sons and to be beneficially enjoyed by the Defendant and the sons during the life time of the Defendant and upon her death by the sons absolutely.  On the basis of my finding of facts set out above, I am of the view that at the time of the purchase of the Charming Garden property in August 1997 and at the time of the assignment in June 1998, there was such an agreement or implied understanding.  In pursuance of this understanding the Plaintiff had contributed $6,000 per month towards the household expenses at Charming Garden and also the mortgage repayments.  This would have given the Plaintiff a beneficial interest in the property. 

The agreement to waive the interest in the compensation

128.As a result of the meeting at Ho Choi Restaurant and the subsequent conducts of the parties viz., the Plaintiff’s stopping to maintain the Defendant and the Defendant, Chi On and Chi Wai using $1 million out of the compensation monies to repay part of the outstanding mortgage of the Charming Garden property, I find that there was an agreement on the part of the Plaintiff to waive all his entitlements in the compensation monies of the pond property in consideration of his being released from the obligation to maintain the Defendant and to further contribute to the mortgage repayments of the Charming Garden property.  Alternatively I find that the Plaintiff was estopped from asserting that he has not given up his interest in the pond property compensation.  However, I do not consider that the waiver or relinquishing of such of the beneficial interest in the Charming Garden property that he had acquired through the contribution that he had given prior to August 2000 would be effective.  This is because the beneficial interest he had thus acquired was an equitable interest in land, and under section 5 of the Conveyancing and Property Ordinance such equitable interest could only be disposed of by writing.

129.However, the Plaintiff’s waiver of his entitlement to the compensation money was not required to be in writing, and this would mean that the Defendant no longer owes him an obligation to distribute any part of the pond property resumption compensation to him.  Consequently it also follows that there is no subsisting breach of any fiduciary duties owed by the Defendant to the Plaintiff in relation to her handling of the resumption compensation which could give rise to any relieves prayed for under paragraphs (b) to (g) of the prayer in the Statement of Claim.

The Ting house

130.Although once upon a time, the Plaintiff’s right to the Ting house was subject to his obligation to maintain the Defendant and to pay the sum of $500,000 to the daughter, such obligation ceased in or about August 2000 with Plaintiff’s agreement to waive his entitlement to the compensation money.  Since the daughter had been paid and it would appear that other creditors who had made lending for the purpose of the construction of the Ting house were also repaid out of the proceeds of the compensation, the Plaintiff’s entitlement to an one third share of the Ting house was free from any condition or obligation or trust of any kind.  Furthermore since the issuance of this action, the District Lands Office has clarified that no premium would be required for vesting the one third share on the Plaintiff.  I see no reason for the Defendant’s holding up an assent in favour of the Plaintiff of an one third share in the Ting house subject to the Plaintiff’s payment of the costs for doing so.  I would thus be prepared to grant the Plaintiff the relief under paragraph (h) of the prayer that subject to the Plaintiff’s payment of all the costs and expenses involved, the Defendant does execute an assent in respect of one third undivided share of the Ting house within 3 months from the date of the order.  However, the parties may think it worthwhile to consider whether the vesting should be deferred until a proper deed of mutual covenant is drawn up in relation to the Ting house so that the Defendant could assent to each of sons a separate floor of the Ting house.  Of course if this is to happen, the sons would have to agree amongst themselves who is to take which floor and/or on the equalization monies (if any) on account of the difference in the value of the floors. 

131.If the Plaintiff is prepared to accept the order I proposed in the last paragraph, the Plaintiff should draw up the order using proper conveyancing description of the Ting house.

Conclusion

132.The Plaintiff has succeeded in this action to the extent that I am prepared to grant the Plaintiff relieves under paragraphs (a) and (h) of the prayer in terms that I have outlined above. 

Costs

133.In the hope of reducing costs, I will endeavour to give my provisional views on costs on an order nisi basis.

134.Although the Plaintiff appears to be the successful party, in fact the Plaintiff has failed on many of the factual issues.  It appears to me that this is a case which falls within the 3^rd principle enunciated by Nourse L.J. In re Elgindata Ltd. [1992] 1 WLR 1207 at pages 1213H-1214D where he discussed the principles on the award of costs :

“ … The principles are these. (i) Costs are in the discretion of the court.  (ii) they should follow the event, except when it appears to the court that in the circumstances of the case some other order should be made.  (iii) The general rule does not cease to apply simply because the successful party raises issues or makes allegations on which he fails, but where that has caused a significant increase in the length or cost of the proceedings he may be deprived of the whole or a part of his costs.  (iv) Where the successful party raises issues or makes allegations improperly or unreasonably, the court may not only deprive him of his costs but may order him to pay the whole or a part of the unsuccessful party’s costs.  Of these principles the first, second and fourth are expressly recognised or provided for by rules 2(4), 3(3) and 10 respectively.  The third depends on well established practice.  Moreover, the fourth implies that a successful party who neither improperly nor unreasonably raises issues or makes allegations on which he fails ought not to be ordered to pay any part of the successful party’s cost. … ”

My tentative view is that in exercise of my discretion on costs, I would make an order nisi that the Plaintiff be given 50% of his costs only.

135.The Plaintiff’s success lies mainly in his being held to be entitled to the inventory and account.  At the time of the issuance of this action, the Defendant would be entitled to defer the execution of the assent pending the clarification from the District Lands Office on the question of premium.  I appreciate that at all times before the commencement of the proceedings, the Defendant had acted in person and as such I could see the reason why the Defendant had failed to render the inventory and account of the estate.  However since the commencement of action, the Defendant was represented.  I must say that I am truly surprised that it would appear that the Defendant had not been properly advised that the various account statements given to the Plaintiff were simply not inventory or account of the estate.  The Defendant is well advised as to obtain separate legal advice on whether she has been properly served by her lawyers.

136.Further, I would mention that although with the view of saving costs, I have endeavoured to resolve the conflicts between the parties as much as possible, I can see that there are still many issues that may arise between the parties on the administration of this estate.  For instance, of the various debts owed by the Deceased, only the amount due to the daughter was resolved in this action and the Plaintiff has expressly reserved his position on the amounts owed to other creditors.  There is also the outstanding question of whether the debts of the Deceased were payable out of the residuary estate.  The present litigation is lengthy and wholly unjustified from the point of view of the amount in dispute.  In the event of any conflict in the future, I would suggest that the parties do consider mediation.

Ms Grace Chow, instructed by Messrs Jesse H Y Kwok & Co., for the Plaintiff

Mr Andrew Leung, instructed by Messrs Winnie Lo & Wong, for the Defendant

Appeal by the plaintiff to Court of Appeal dismissed. Please refer to CACV215/2005 dated 16 May 2006