Ming Shiu Chung and Others v. Ming Shiu Sum and Others
Read the full judgment text of CACV 180/2004 on BabelCite. This Court of Appeal judgment was delivered on 26 May 2005.
1. Ming John Fook, the deceased, was the father of 7 children. One, Kenneth, has passed away. His estate is the 3 rd defendant. The other children are the 1 st to 4 th plaintiffs, the 1 st defendant and the 4 th defendant. The 3 rd defendant has taken no part in the proceedings. The 4 th defendant has appeared in person.
Cited by 4 cases · Cites 2 cases
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CACV 180/2004 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF APPEAL CIVIL APPEAL NO. 180 OF 2004 (ON APPEAL FROM HCA 18407 OF 1999) ______________ BETWEEN
______________ Before: Hon Cheung, Tang JJA and Kwan J in Court Dates of Hearing: 24-26 May 2005 Date of Decision: 26 May 2005 Date of Reasons for Decision and Decision on Costs: 20 June 2005 _____________________________________________________________ REASONS FOR DECISION & DECISION ON COSTS _____________________________________________________________ REASONS FOR DECISION Hon Tang JA (giving the reasons for decision of the Court): 1.Ming John Fook, the deceased, was the father of 7 children. One, Kenneth, has passed away. His estate is the 3rd defendant. The other children are the 1st to 4th plaintiffs, the 1st defendant and the 4th defendant. The 3rd defendant has taken no part in the proceedings. The 4th defendant has appeared in person. 2.In 1992, the father was 83 and his health was failing. 3.In a report on a brain scan which was done on the father dated 6 October 1992, under clinical history and finding, this entry appeared: “Progressive mental confusion. Choking on swallowing and weakness of lower limbs.” 4.According to the medical report dated 13 April 1994, Dr Donald Y C Yu said: “The deceased complained of a mild headache in early October 1992 and a CT scan then showed multiple metastatic tumours in his brain secondary to a primary lung cancer”. Dr Yu went on to say that up to October 1992, the father’s mental state “had not been found to be abnormal. Although he had mild features of Parkinsonism, he was mentally clear and had no mental confusion or irrational behaviour.” 5.The father died on 21 December 1992, the cause of death given on his death certificate was colon cancer. 6.Because of his failing health, the father had prepared a Chinese Memorandum. He had that typed. He also signed it and had his signature witnessed by a trainee solicitor and a clerk to Messrs Baker & McKenzie, Solicitors. The Chinese Memorandum ran to two pages and has an appendix. It was dated 29 September 1992. The father arranged to have the Chinese Memorandum read out at a dinner attended by all his children. In order to induce his children, many from abroad, to attend the dinner, he promised each child $5 million for attending. 7.All his children were in Hong Kong on 10 October 1992. At dinner, the Chinese Memorandum was read out in the presence of the deceased and his children. According to the 3rd plaintiff (Ronald) “the deceased nodded his head and did not say anything”. Nothing turned on this, but the 4th plaintiff, Bertha, did not stay for dinner because of a quarrel with some of her brothers. She was given the $5 million nevertheless. 8.We must consider the Chinese Memorandum as a whole but the following paragraphs of the Chinese Memorandum are of particular significance. “To resolve the problem of my future estate tax, I founded Ming Cheung Fuk Overseas Company (明長福海外公司) where I put all the capital and assets in my name. The statement of assets and liabilities is in the appendix. The appendix which was also signed by the deceased and witnessed showed that the father’s assets consisted of shares in 6 companies with a net asset value of some $288 million. 9.The Chinese Memorandum contained also a brief survey of the deceased’s life and exhortations to the children for the future. The Company referred to in the Chinese memorandum namely Ming Cheung Fuk Overseas Company was in fact J F Ming Inc., a BVI Company (“the Company”). It was acquired by the father in April 1991. The evidence is not very clear nor was it explored at the trial, but it seems that shares in the 6 companies referred to the appendix were transferred to the Company during the father’s life time. According to the 1st defendant (Lawrence), the Company was a holding company for 8 companies including all the companies named in the appendix. 10.Although according to the Chinese Memorandum, 7,000 bearer shares would be deposited at a bank deposit box that was not done. 11.However, after the father’s death, and in January 1993, seven lots of 1,000 bearer shares in the Company were issued to each of the seven children. 12.The following events took place after the father’s death. 13.On 8 February 1993, each of the seven children was paid $5 million each out of the Company. 14.On 30 April 1993, at a meeting attended by all the children, they agreed to a voluntary liquidation of the Company. Lawrence signified his agreement by signing the record of the meeting. 15.In January 1994, $7 million was paid out of the Company and $1 million each was given to each of the seven children. 16.On 28 January 1994, Kenneth was made a director of Ming Hsing Development Company Limited (MHD). 17.On 21 February 1994, five of the children of the deceased resolved to remove Lawrence as director of the Company. 18.On 24 February 1994, Baker & McKenzie acting on behalf of Lawrence wrote to inform the plaintiffs’ solicitors that according to the Company’s records, they were not the majority shareholders of the Company, and that the resolution passed on 21 February was ineffective. 19.It was Lawrence’s case that on 8 August 1992, he had been allotted 5,000 ordinary shares and 5,000 bearer shares in the Company. As evidence, Lawrence relied on two minutes of the meeting of the directors of the Company both apparently dated 8 August 1992 bearing what appeared to be Lawrence’s and the father’s signatures (the August Minutes). One of the minutes, related to 5,000 ordinary shares and the other 5,000 bearer shares. Lawrence also relied on five share certificates each for 1,000 ordinary shares and five share certificates each for 1,000 bearer shares. These share certificates also bore the date of 8 August 1992 as well as what appeared to be the signatures of the father and Lawrence. 20.It was Lawrence’s case that he was his father’s partner. However, Lawrence had not pleaded that he was entitled to the 10,000 shares as of right. Nor that they had been gifted to them. We believe that since it was (or seemed to have been) Lawrence’s case that he was entitled to those shares as of right, he should have pleaded that in his defence, since it was relevant to his defence and might take the opposite party by surprise otherwise. But nothing turned on this, since such allegation was raised by Lawrence and dealt with by the judge. It was not Lawrence’s case that the shares were gifts (by virtue of presumption of advancement alone or otherwise). Anyway, having regard to the finding that the father did not know what he was signing no question of gift could arise. 21.The disclosure of these documents prompted a report to the police by Ronald of forgery. 22.The Statement of Claim in the present proceedings was filed on 23 December 1999 in which the plaintiffs sought inter alia, a declaration that the allotment of 10,000 shares to Lawrence was void and of no effect. The plaintiffs’ claim was put on two bases. First, the minutes as well as the share certificates (the documents) were not signed by the father. Secondly, if they had been signed by the father, he did not know what he was signing. 23.At the trial, expert evidence on handwriting was called. The plaintiffs called Dr Cheng and Lawrence, a Mr Westwood. Dr Cheng and Mr Westwood agreed on the genuineness of the father’s signatures on four of the share certificates. They were the ordinary share certificates No. 2 and No. 3 as well as the bearer certificates No. BSS 1 and BSS2. These documents bore what the experts referred to as the father’s complicated form of signatures. The other documents bore the father’s simplified form of signatures. 24.In relation to the other signatures, the judge said:
25.However, Dr Cheng also discovered upon examination of the documents that they had been altered. This is what the judge said about the alterations:
26.The judge found that the signatures on the two ordinary share certificates and the two bearer certificates referred to in para. 23 above were genuine. Then in relation to the other six certificates, the judge said at paragraph 117: “I cannot come to a concluded view, one way or the other as regards the authenticity of the Father’s signatures on the remaining six share certificates. As the Father had in mind creating seven equal lots of bearer shares in JFM Inc and as he had signed four share certificates, I draw as the only reasonable inference that at the highest, three of the purported signatures of the Father in these six certificates were genuine and the other three were forgeries. I cannot say which is which. Irrespective of whether the purported signatures of the Father were genuine or not, the shares represented by these six share certificates are not valid as no resolution has been passed approving their issue. I am able to make to the above finding of fact and reach a conclusion on the invalidity of the Additional Shares without resort of Lawrence Ming’s or the Defendants’ failure in discharging the burden of proof.” 27.As for the August Minutes, he said:
There was no unequivocal finding by the judge that the father’s signatures on the August Minutes were not genuine. 28.The judge said he was able to decide the issue of forgery: “… without resort to Lawrence Ming’s or the Defendants’ failure in discharging the burden of proof.” 29.It is not clear what the judge meant when he said: “… I draw as the only reasonable inference that at the highest, three of the purported signatures of the Father in these six certificates were genuine and the other three were forgeries.” 30.If he could not conclude whether the signatures were genuine or false, he should not have come to the consideration that they were not genuine. 31.A finding of forgery is serious one, as Lord Nicholls of Birkenhead said in Re H (Minors) [1996] AC 563 at 586 and cited by Sir Anthony Mason NPJ in HKSAR v Lee Ming Tee [2003] 6 HKCFAR 336 at 362: “When assessing the probabilities the court will have in mind as a factor, to whatever extent is appropriate in the particular case, that the more serious the allegation the less likely it is that the event occurred and, hence, the stronger should be the evidence before the court concludes that the allegation is established on the balance of probability.” That being the case, we are of the view that unless the judge was satisfied that the signatures were not genuine he should not have so found. 32.The judge was influenced by his belief that the father would not have signed more than seven share certificates. That might be so if the father knew what he was signing. But if he knew what he was signing and that he intended only to sign 7 bearer share certificates then he should not have signed the ordinary share certificates Nos. 2 and 3 either. But if the father did not know what he was signing, why would he not have signed all ten share certificates (and the August Minutes as well) rather than just seven? 33.Mr Yu, SC, who appeared for the 1st defendant, also relied on indentations which were found on some of the documents. The judge dealt with that at paragraph 90 of his judgment: “The experts also agreed that indentations of the signatures on some of the documents were found on the other documents. Mr Wong, SC, submitted that the presence of indentations create a nexus between the documents which gives rise to the reasonable inference that they were executed on one occasion. Further, with the genuine signatures on “02”, “03” and the September Minutes as the nexus between the documents, Mr Wong, SC, invited me to draw the inference that all these twelve documents were indeed signed by the Father on one and the same occasion. With respect, this not the only inference that could be drawn. Though it must be conclusive that the documents bearing the indentations of the signature of another document must be placed beneath that other document when that other document was signed, that does not mean the two documents must be signed on the same occasion.” 34.Mr Yu submitted that the judge had applied too stringent a test: the inference could be drawn even if it was not the only inference. We were taken through the evidence of Dr Cheng and Mr Westwood by Mr Yu. We believe that on the basis of such evidence, the judge ought to have concluded that the signatures on the August Minutes as well as all ten share certificates were the signatures of the father. 35.It follows that in our view the judge’s finding on forgery cannot stand. That being the case it is not necessary for us to decide who had the onus of proof. At the opening, Mr Grossman SC, who appeared for the plaintiffs accepted that the onus was on the plaintiffs. The judge found that it was on the 1st defendant relying on Doe D Devine v Wilson (1855) 10 Moo PC 502 at 531: “In a civil case the onus of proving the genuineness of a deed is cast upon the party who produces it, and asserts its validity. If there be conflicting evidence as to the genuineness, either by reason of alleged forgery, or otherwise, the party asserting the deed must satisfy the jury that it is genuine.” That was followed by this court in Club Deluxe Ltd v Club Metropolitan Ltd and Others [1995] 2 HKLR 69. We believe the onus is on the party “who produces (the document), and asserts its validity”. It does not depend on who was the plaintiff. Nor that it was the plaintiffs who sought a declaration that the documents were forged rather than Lawrence who was seeking a declaration that they were genuine. But, here, since we are of the opinion that the genuineness of the signatures have been proved it does not matter who had the burden. 36.We turn to consider the question of knowledge and consent. 37.As we understand it, the 1st defendant did not contend that the judge could not have found on the basis of the evidence before him that although the documents bore genuine signatures of the deceased those documents were signed by him without knowing what it was that he was signing. 38.Mr Yu accepted in the course of the arguments that if the father had signed an undisputed document stating clearly that he had not allotted or agreed to the allotment of 10,000 shares to Lawrence that document would be highly material when one comes to consider whether the father knew what he was signing. Depending on the circumstances, the court might come to the conclusion that the father had forgotten about the allotment of the 10,000 shares, was not aware of the content of the documents relating to the 10,000 shares which he signed, or was untruthful when he signed the later document stating that he had not allotted or agreed to the allotment of the 10,000 shares. 39.Mr Yu also accepted that the Chinese Memorandum was a circumstantial evidence which the court was entitled to take into account in deciding whether the father had knowingly signed the documents. Mr Yu submitted that properly understood the Chinese Memorandum is consistent with the allotment of the 10,000 shares. Secondly, the Chinese Memorandum was misleading and deliberately so because of what had happened in 1977. 40.However, it was Mr Yu’s principal submission to us that the judge had adopted the wrong approach to the Chinese Memorandum. He complained that the judge treated the Chinese Memorandum as a legal document to be construed. 41.However, MrYu would not dispute that the court must read the Chinese Memorandum for its meaning. The judge after referring to Jumbo King Ltd v Faithful Properties Ltd & Ors [1999] 2 HKCFAR 279 at 296, said in paragraph 34: “… The meaning of a document is to be sought in the document itself. Interpretation of a unilateral document is the ascertainment of the meaning which the document would convey to a reasonable person having all the background knowledge which would reasonably have been available to the maker of the document in the situation he was at the time of making the document. The background or the matrix of fact includes absolutely anything which would have affected the way in which the language of the document would have been understood by a reasonable man.” 42.We believe that was the correct approach for the judge to adopt. It was not necessary for him to do more. On the whole, we believe that was the judge’s approach. 43.Indeed, we believe it was Lawrence whose attempt to “reveal” subtle messages encoded in the Chinese Memorandum who had to resort to fine linguistic techniques. The judge was right when he refused to “add to the Chinese Memorandum words which are not there so as to give the document a distorted construction and to attribute an intention to its maker which is inconsistent with that which the plain language of the Chinese Memorandum conveys” para. 37. 44.We believe, unless the father intended to mislead his other children, the Chinese Memorandum is irreconcilable with the issue of the 10,000 shares to the 1st defendant. In the circumstances of this case we do not believe that the father could have forgotten about the allotments if they were made. 45.We refer to the passages from the Chinese Memorandum quoted above. The father said that he founded the Company “to resolve the problem of my future estate tax”, that he put “all the capital and assets in his name” into the Company and that all the capital and assets in his name were set out in the appendix and that he was making an equal distribution of the shares in the Company to his seven children. 46.One does not have to be a lawyer to understand those passages in the Chinese Memorandum. They are plain enough. Mr Yu argued that the father had not said that the 7,000 bearer shares were all the shares in the Company. But having regarded to the fact that he founded the Company “to resolve the problem of my future estate tax” and that he had decided to divide the shares of the Company into seven parts, we do not agree that the father was saying in a subtle way that there were other shares in the Company. It is plain that he was saying that he was putting all his capital and assets into the Company. That of course is inconsistent with the 1st defendant’s case that he was his father’s partner, which, if true, meant that the assets in the appendix did not all belong to the deceased. 47.Moreover, the appendix, where the net value of his assets was stated, would have been most misleading if by the time of the Chinese Memorandum, Lawrence had already been allotted the 10,000 shares. Mr Yu accepted that the Chinese Memorandum is misleading. The judge referred to it as a cruel lie. Mr Yu disagreed and said that it might have been a lie but it was not cruel since he had given $5 million to each of the children for attending! 48.Mr Yu also argued that the judge ought to have adopted an overall approach. He relied in particular on the 1977 incident. The judge referred to the 1977 incident in paragraphs 29 to 31 of his judgment. That involved MHD which according to the appendix by 1992 had a net asset value of $30 million. 49.In 1977, all the children were shareholders in MHD with the exception of Bertha. The 1st defendant was the registered owner of 1,400 shares. The other children were holding 1,000 shares each. According to Ronald, Bertha had not been given any shares because the deceased was not happy with Bertha’s then boyfriend. But according to him, the deceased gave 400 extra shares to Lawrence to hold on trust for Bertha and another 600 to the mother to hold on trust for Bertha. The judge accepted Ronald’s evidence. But the 1977 incident was not concerned with Bertha’s shares. According to the 1st defendant and his evidence was accepted by the judge, all the sons with the exception of Alex Ming who was then in Canada confronted the father in 1977 and complained about the appointment of the 1st defendant as managing director of MHD. He said his father was angry and asked his brothers to return the shares to him. They refused. Eventually, the father had to buy those shares back. He paid each child $200,000 for 1,000 shares. 50.As for the 1st defendant’s 1,400 shares, he transferred the 1,000 shares back to his father but the other 400 shares were transferred to his mother. The other children transferred their 1,000 shares back to the father. 51.According to Lawrence, it was because of the 1977 incident that the father did not wish to tell his other children in 1992 that he had allotted 10,000 shares to Lawrence. According to the 1st defendant, he had discussed the problem with the father. This is what Lawrence said in chief:
He returned to it later in his evidence in chief:
52.However, the father had never produced anything to explain the allotment of 10,000 shares. Nor was it Lawrence’s case that the father would prepare a separate document. Rather it was Lawrence’s case that the Chinese Memorandum contained subtle messages to inform the other children that Lawrence was the majority shareholder and that 7,000 bearer shares were not all the shares in the Company. 53.First, Lawrence relied on the fact that in the Chinese Memorandum, the 7,000 shares were stated to be bearer stocks. This was mentioned there times in the Chinese Memorandum. The hidden message being that there were ordinary shares. We see no significance in this. It is quite clear the father was emphasizing that the children were not the shareholders of the Company until after they had obtained the bearer share certificates after his death. 54.Then Mr Yu relied on the fact that in the Chinese Memorandum, the children were told: “you should never harbour any greed”. He argued that this was a subtle way to tell the other children that they should not be greedy of the 10,000 shares which had been allotted to Lawrence. However, we are unable to read that into the Chinese Memorandum. This is the context in which the reference to greed appeared: “Our company’s achievement is not made by opportunities at all but by the hard work and full support of Ka-fok and Siu-sum. I know you all are good-natured and will not do any evil deeds. Yet you must remember this: you should never harbour any greed. The achievement I have made is the result of hard work, not of greed. I hope you will work even harder. With the competitive edge the company has and the knowledge you possess, I hope you can excel the business of the company. Do not let me down and spoil the efforts I have made in my life.” It is clear the father was saying to the children that he did not succeed by greed but through hard work, and the children should not rely on greed but should work even harder. 55.Another matter that Lawrence relied on was the desire of the father to keep the Company together. It is said that was why the father gave Lawrence a controlling interest in the Company. But this cannot stand against the other evidence. No doubt, the father wished his children to live in harmony. He also wished that his life’s work should be preserved and continued. Many fathers wished that. But one cannot control life from the grave. We believe that had the father actually intended to allot the extra shares to Lawrence, especially having regard to the 1977 incident, he would have either told the children so in the Chinese Memorandum or have a separate document prepared, properly witnessed, to be read after his death. We only pause to note that under the father’s will (made on 18 July 1964 and not revoked), his estate was to be divided equally between his children. We believe it is common ground that his “estate” had been transferred to the Company. We agree with the judge’s view that the father had always treated his children equally. 56.We have no doubt that each of the other children went away from the dinner thinking that he was going to inherit one-seventh of the Company which had a net value of some $288 million namely some $40 million each instead of one-seventeenth. Mr Yu also referred to the fact that in the last sentence of the memorandum quoted in para. 8 above, the father wrote: “if you want to transact any business which involves Ming Cheung Fok Overseas Company’s assets, you have to secure Siu-sum’s consent first because he knows all the procedures and is well-informed on Hong Kong’s realty.” He said that supported Lawrence’s case that he was the majority shareholder. We do not agree. 57.Lawrence’s case is that he was treated by his father as a partner and he was promised shares. He said that he had also given joint and several personal guarantees on loans granted to MHD and other companies in the group. There is no evidence how much such guarantees were worth since there was no evidence that Lawrence was a person of substance apart from his expectation as a son of his father. If Lawrence was independently wealthy that might be a reason for the father not to give him more. If he was not wealthy then his guarantees were not of much value to the group. It was Lawrence’s evidence that in relation to the 1977 incident, he returned his shares because he did not want to create any further friction within the family, but that he was promised by the father that he would be rewarded more in due course. Then in relation to the Company he said in his evidence that his father had a lot of hidden apprehension or worries, he said:
58.The judge at paragraph 53 of his judgment said that the father would be telling a very cruel lie to the six children and that he would be landing his children into a long and bitter dispute for a few moment of peace. We agree. 59.Mr Yu argued that the father would not have known that his signatures on the two minutes and the ten share certificates which he signed in front of his secretary and which had been prepared by an accountant would be open to dispute. 60.The father was a highly successful businessman. The Chinese Memorandum prepared by him showed that he was a rational and intelligent person. He took the trouble of having his signatures on the Chinese Memorandum (both pages) and the appendix witnessed by two employees of solicitors. He called the children back with the inducement of $5 million. He had the memorandum read out to them in his presence. He also indicated by nodding that it was his document. We do not believe such a person would have knowingly been party to an allotment of 10,000 shares to the 1st defendant without leaving cogent evidence about the genuineness of the transaction. We do not accept Mr Yu’s argument. 61.Mr Yu also criticised the judge’s finding on the credibility of Lawrence. 62.Lawrence was educated at the University of New South Wales majoring in accountancy. We have read his evidence with care. We have no doubt that he is an intelligent man. Moreover, he is a man who was not slow to stand on his strict legal right. This was demonstrated by the fact that in probate proceedings between the parties namely No. P16 of 1996, he opposed the plaintiffs’ application for inspection by the plaintiffs’ experts of certain documents including the August Minutes and the ten share certificates. That was decided by Yam J against the 1st defendant on 7 January 1998. He then took the matter on appeal in CACV 22 of 1998 which was heard and dismissed on 10 June 1998. According to Lawrence, he had nothing to hide but he appealed because he had been advised that the plaintiffs were not entitled to inspection. The argument advanced on his behalf was described by Rogers JA (as he then was) as highly technical. 63.That being the personality of Lawrence, we find it difficult to believe that Lawrence would not have insisted on the father either telling the children during his life time that 10,000 shares had been allotted to him or doing so by means of a separate document properly authenticated that he had done so. Nor do we believe that Lawrence would have allowed the other children to draw an equal amount of money from the Company after the father’s death. Nor agree to the dissolution of the Company. We also find it difficult to believe or understand his silence until 1994 about the fact that he had been allotted to 10,000 shares. Lawrence’s explanation that he feared litigation which would result in the banks calling in loans in relation to which he was a guarantor was rightly not accepted by the judge. Mr Yu made the point that why should Lawrence keep quiet about the 10,000 shares after the father’s death. Only Lawrence would know. We only need to say that is not the conduct one would expect from a person who claimed to be entitled to the shares as a partner. Nor, even as a person who had been made a gift of these shares. 64.The judge dealt with Lawrence’s credibility in paras 81-83 and 96-110 of the judgment. We believe the judge was entitled not to accept Lawrence’s explanation regarding the litigation over the inspection by experts of the documents. It was something which could go to credibility. It might be of limited weight but we do not agree that it was irrelevant. As for para. 82, we have to say that overall we agree with his assessment. 65.The judge went on to say:
We are not surprised that he rejected Lawrence’s evidence. The judge went on to say in para. 101：
We do not believe this can be faulted. 66.We have referred earlier to the alterations made to the August Minutes as well as to the ten share certificates. Now, the explanation for the alterations came from Ivy Wong, the secretary. The judge dealt with Ivy Wong’s evidence in paragraph 73 to 80 of his judgment. She was a well-qualified secretary. She joined MHD in June 1991. According to her, she developed an intimate relationship with Lawrence after the father’s death. She gave birth to their daughter in January 1994. Also according to her since about the end of 1995, she and Lawrence slept in different rooms until 2001 when Lawrence moved out. Lawrence continued to support her daughter and provided her with living expenses of $20,000 to $30,000 a month and accommodation in Conduit Road. 67.The judge was not impressed with the credibility of Ivy Wong. We have to say having read her evidence and the three statements that she had given to the police in connection with their investigation into the alleged forgery, we are not surprised. She gave two statements to the police in 1995 and one in 2000. In her two statements to the police in 1995, she had not mentioned the alterations nor the fact that according to her the documents were signed not on the dates which appeared on the face of documents but on 8 October 1992. 68.The 1st statement to the police given on 6 January 1995 was misleading. We find it difficult to understand why since she was responding to inquiry about possible forgery of the documents she should not have told the police the circumstances under which those documents were prepared. Instead in her statement, she said that she was told by Lawrence to prepare the August Minutes and the ten share certificates on 8 August 1992. And that she did so. It would have been obvious to any person that the circumstances under which those documents were prepared must have been highly relevant to the inquiry. The judge was entitled to refuse to accept her explanation that she had forgotten about the alterations because of her fright and nervousness. Or that she had been asked leading questions by the police. 69.The alterations were carefully made. They were not apparent even on a reasonably careful examination of the documents. She had taken care to make those alterations. It is difficult to believe that she could have forgotten them. Nor do we find her explanation as to how she had put the date of 8 October on the documents instead of the date of 8 August credible. Nor her explanation that although she was told by Lawrence to prepare the documents in August, she was too busy to attend to them until October. We have no doubt that her explanation why she refused consent to supplying her police statement to the plaintiffs was rightly rejected by the judge. She said she refused because she was worried about the safety of her daughter. 70.Mr Yu argued that the alterations were immaterial. He said that although the plaintiffs insisted on their materiality they never explained why or how it was that the alterations were material. Of course, they might not be material in the sense that if the documents had indeed been signed by the father, it did not matter whether they were signed on 8 August or 8 October. Nor if the father knew what he was signing it mattered whether he signed on 8 August or 8 October. It is common sense that when forgery and lack of consent or knowledge were in issue, the dates when and circumstances under which the documents were prepared would be relevant matters to be taken into account in the decision. Nor does it matter whether as a matter of legal analysis, the alterations were material or not. What is important is whether as a matter of common sense persons such as Ivy Wong or Lawrence might have regarded them as material. There were substantial alterations which required explanation. Also, the changes to the numbers on the bearer certificates showed they were meant to follow the issue of the 7,000 bearer shares. There is of course no evidence when these documents were signed. The evidence that they were signed on 8 October depended principally on the evidence of Ivy Wong. If Ivy Wong and Lawrence are not reliable witnesses, there is simply no evidence when they were signed. We do not know whether the date 8 October 1992 has any significance. We note that the deceased had signed at least 8 other documents bearing the date 8 October 1992 which were relied on by Dr Cheng for controlled signatures. Such documents included Notice of Increase in Nominal Capital and Return of Allotments in relation to 4 of the 6 companies in the appendix. It is probable that there were board resolutions bearing those dates and new share certificates bearing those dates too. However, this had not been explored at trial and we ignore them. 71.Lawrence also relied on the evidence of Betty Wong who was regarded by the judge as an honest witness. According to her, she was asked by Lawrence to prepare the August and September minutes. As prepared by her, they were undated. She has no independent recollection which set of minutes was prepared first. Nor could she remember when she prepared them. She believed however that she prepared the August Minutes first because as she explained in her evidence if the September Minutes had come first then since the subsequent allotment of 10,000 shares would have affected the majority interest of the father, she would have prepared a consent for the father to sign as well. However, that was not the reason given by her in the witness statement. The judge was entitled to proceed on the basis that she was unable to recall which set of minutes was prepared first. 72.We turn to consider other submissions made on behalf of Lawrence. First, that the judge found fraud when none had been pleaded. Mr Grossman, SC who appeared on behalf of the plaintiffs accepted that he had not pleaded fraud. Nor would he rely on any finding of fraud. 73.The judge however said at paragraph 118 of his judgment: “Conjecture And then at paragraph 120 when dealing with costs, he said: “What Lawrence Ming did involved a fraudulent breach of trust.” And he ordered costs on the full indemnity basis. 74.What the judge said in paragraph 118 of the judgment was not necessary to his judgment. It is obvious that it was not meant to be part of his reasons for his decision. 75.But as the quotation from Litton JA shows even when forgery has been proved the plaintiffs did not need to prove who or how the forgery was made. The same applied to absence of consent and knowledge. Provided that the plaintiffs succeed in proving that the father did not know what he had signed, it was unnecessary for them to prove how or why it was that he nevertheless signed. 76.Since Lawrence’s case on partnership (hence entitlement to the shares as of right) has been rejected by the judge, and any case based on gift, if any, rejected because the father did not know what he had signed, the allotment of the shares had no effect. In any event, Lawrence could not have any beneficial interest in those shares. 77.Mr Grossman sought to rely on Barry v Butlin (1838) 2 Moo PC 480 on the shifting of the onus. He submitted that the rule in Barry and Butlin is applicable to inter-vivos gift in similar circumstances. This argument had not been advanced at trial. Nor was it Lawrence’s case that the shares were gifts. That was not the plaintiffs’ case either. We do not believe this helps Mr Grossman. 78.We believe the onus of proof was on the plaintiffs to prove that the father did not know what he was signing. But, this is not a case which depended on the onus of proof. We are clearly satisfied on the evidence that the father could not have known what he was signing. We are clearly of the view that had he known he would not have signed. 79.Lastly, Mr Yu argued that having regard to the unsatisfactory nature of the judge’s decision, we should exercise the functions of review conferred on the Court of Appeal. And he has reminded us of the well-known dictum of Kirby J in Whisprun Pty Ltd v Dixon (2003) 77 AJLR 1598 at 1615. He reminded us that it is the duty of this court to make up our own mind not disregarding the judgment appealed from and giving special weight to that judgment in cases where the credibility of witnesses come into question, but with full liability to draw our own inferences from the facts proved or admitted and to decide accordingly. And that we have a duty to rehear the case and cannot excuse ourselves from the task of weighing conflicting evidence and drawing our own conclusion. 80.Mr Yu also referred us to the case of the “Ikarian Reefer” [1995] 1 Lloyd’s Rep. 455. In that case the vessel went aground and was then destroyed by fire. The question for the decision was whether the defendant insurer had proved to the relevant standard that the vessel was deliberately set on fire with the connivance of the owners. An important witness for the owners was the Master of the vessel whose evidence was accepted by the trial judge who found that he was an honest witness. This is what the judge said of the Master in his judgment: “I formed the impression (based on seeing and hearing the Master and on his demeanour) that he was a truthful witness and that he did not deliberately run Ikarian Reefer aground. …” at 478. On appeal that finding was overturned. 81.Mr Yu argued that this is not a case where there is conflicting evidence. It is all one way since none of the plaintiffs was able to give evidence regarding the documents, the Court of Appeal is entitled to draw its own inferences on the evidence, giving due weight to the opinion of the trial judge on credibility, but not shrinking from disagreeing with the judge when satisfied that he is wrong even allowing for the benefit he has of observing the demeanour of the witnesses. 82.That we are perfectly willing to do. But as we have explained above we are clearly of the view that the judge has come to the correct conclusion. Namely that the father did not know and could not have known the content of the August Minutes or the ten share certificates when he signed them. 83.Having regard to the evidence and what we believe to be the inherent probabilities of the case, we are bound to say that had the judge accepted Lawrence’s evidence based on his demeanour alone, we would have felt obliged to interfere. 84.Mr Yu also suggested that there should be a retrial before another judge but as the case of Onassis & Anr v Virgottis [1968] 2 Lloyd’s Rep. 403 has made clear retrials are rarely ordered and it should not be ordered unless the Court of Appeal is not able to come to a conclusion in regard to the case. Here, we have no difficulty in coming to a conclusion. For the above reasons, the appeal was dismissed. DECISION ON COSTS 85.We turn to consider the question of costs. In the court below the judge ordered costs against Lawrence on an indemnity basis. He did so because he had found forgery proved. He did so also because he was of view that Lawrence had been guilty of fraudulent breach of trust. As we have said, fraud had not been pleaded and was not relied on. We have overturned the finding of forgery. In all the circumstances, we believe that the proper order should be costs on the party and party basis. 86.When we dismissed the appeal, we dismissed it with costs but reserving the question whether such costs should be on an indemnity basis. We see no reason why we should order costs on an indemnity basis and we do not do so. Therefore, the appeal is dismissed with costs against the 1st defendant in favour of the plaintiffs and the 4th defendant. As we have also ordered at the conclusion of the appeal, the 1st defendant is entitled to the costs of the plaintiffs’ application to adduce fresh evidence.
Mr Clive Grossman, SC and Mr Paul Lam, instructed by Messrs Richards Butler, for the Plaintiffs Mr Benjamin Yu, SC, Mr Wong Yan Lung, SC and Mr Jonathan Chang, instructed by Messrs Robin Bridge & John Liu, for the 1st Defendant (Appellant) The 2nd Defendant, absent The 4th Defendant, in person, present Appeal by the 1st Defendant to Court of Final Appeal. Please refer to FACV25/2005 dated 23 May 2006 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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