Cheung Cho Kam Sindy and Another v. Cheung Yuet Ying Rose

HCA 885/2005

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 885 OF 2005

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BETWEEN

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Before: Deputy High Court Judge Muttrie in Court

Dates of Hearing: 4-8 June 2007

Date of Judgment: 13 July 2007

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J U D G M E N T

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1.The plaintiffs and the defendant are sisters.  The plaintiffs claim against the defendant for breach of fiduciary duty and/or misrepresentation and/or conversion of funds belonging to the estate of their deceased mother, which they say the defendant held on trust for the latter.  The defendant however says that the funds were given to her by the mother in life and are hers absolutely.

Background

2.Madam Lau Mei Tai (“the Mother”) died intestate on 12 January 2005.  The plaintiffs, whom I will call Sindy and Stella respectively and the defendant, whom I will call Rose, are her daughters.

3.Madam Lau also left behind three sons named Wing Ki, Arthur, Wing Chor and Wing Shun, Timothy as well as her husband and the children’s father Cheung Lau Shing (“the Father”).  All of them are her next of kin and entitled to share in her intestate estate. 

4.By a Renunciation of Administration dated 29 January 2005, the Father renounced all his right and title to letters of administration of the estate.  By a Deed of Family Arrangement made on 23 March 2005 all the next of kin except Rose appointed Sindy to be the sole administratrix and apply for letters of administration.  By an order of the court dated 10 May 2005, Sindy was appointed to act as representative of the estate. 

5.The family was a traditional Chiu Chow family.  Originally they were farmers, but in 1972 the parents opened a provisions store in Wong Chuk Hang Estate.  The Mother handled the financial affairs of the store.  She also, it appears, traded in securities and made a lot of money by doing so; the plaintiffs have identified withdrawals from her accounts totalling more than $20 million.  All the family members originally helped out in the store, and indeed in the later years Wing Chor ran it for the parents, though he later opened a store of his own and then Wing Shun took care of the parents’ store.

6.Wing Chor lives with his family next door to the parental home in Aberdeen, in a flat bought by the Mother.  Arthur emigrated to Canada, where he now lives, in about 1980 and in 1993 Stella emigrated to New Zealand with her husband and children.

7.There is some dispute as to the relationship between the Mother and Rose in the later years of the Mother’s life, but in about 1973 Rose went to work in a fishing net factory in Aberdeen where she formed a relationship with the owner, a married man, and this led to a falling-out between Rose and the Mother and the rest of the family, although they were reconciled in the about 1979.  In fact, Rose has three children by this gentleman, Mr Kan and she still works for him.

8.The Mother contracted diabetes in about 1998 and she suffered from this condition and various related problems for the rest of her days.  She was admitted to the Queen Mary, Ruttonjee, Tang Shiu Kin and Tung Wah Hospitals at various times.  In 2001, she had some of her toes amputated and in December 2002 she had brain surgery.

9.In about 2002 the Mother, who kept a number of bank accounts, put some of her accounts into the joint names of herself and Rose.  She added Rose’s name as an attorney to her safe deposit box account.  When Sindy and the other family members came to prepare for the application for letters of administration, it was found that a substantial amount of money had been transferred out of the Mother’s bank accounts, including those in joint names with Rose, into Rose’s own accounts.  Also, it was found that in December 2002 Rose had reported to the bank that she had lost the keys of the safe deposit box, and had had the box opened by the bank.  She had taken the contents and had the box account closed. 

10.Not surprisingly, these discoveries led to a considerable amount of argument within the family.  Rose at this stage made certain payments to the Father and to her siblings on the basis of the figures to which she then admitted; see below.  Further accounts subsequently came to light, and that led to the issue of these proceedings.

The Action

11.On 10 May 2005 the plaintiffs applied for and obtained a Mareva injunction against the defendant removing from Hong Kong assets up to the value of $17,151,106.85.  The Writ was issued on 13 May 2005.

12.The plaintiff claims for a declaration that all monies, securities and assets deposited in the Mother’s bank accounts, whether held in the sole name or jointly with the defendant are held on trust for the Mother, for damages for breach of fiduciary duties and/or misappropriation of funds and/or conversion, and for various ancillary orders.  The defendant denies liability on the ground that she is the owner of the disputed funds, and claims set-off of sums paid out to the other family members, and counterclaims for a sum of $715,000 paid out to Stella.

Issues

13.Although there is evidence from the Father that the Mother’s money originally came from the proceeds of the family shop, the case is not brought on the basis that any other family member had, while the Mother was alive, a beneficial interest in that money, or what the Mother had managed to make with it by her investments.  The case is brought on the basis that all the money in the Mother’s accounts, including the joint accounts, belonged to her absolutely. 

14.The issues on liability are:

(1)     Whether the nomination of Rose as one of the signatories to the joint accounts was for convenience only;

(2)     Whether the Mother gave Rose as an unconditional gift inter vivos all the assets contained in the joint accounts and the safe deposit box (there being no allegation of donatio mortis causa); and

(3)     Whether the Mother approved and consented to Rose making 19 withdrawals from the joint accounts and three withdrawals from the accounts in Stella’s sole name. 

15.There is, I think, no dispute that since all the funds in the joint accounts and the assets in the safe deposit box came from the Mother in the first place, a presumption of a resulting trust arises.  But this is readily displaced; indeed, where there is sufficient evidence of the actual intention of the parties at the time of the transaction there is no room for the operation of the presumption; Yuen Yat Shan Fiona v Sit Hin Kau, CACV 41 of 2005.  At the same time there is no presumption of advancement as between mother and daughter; see Watson v Smith [1998] 3 HKC 481.  No assistance is to be drawn from the terms of the bank mandates, which go to the bank’s authority only; who holds the beneficial title is to be determined by the intentions of the joint account holders.  Lily Cheung v Standard Chartered Bank & Ors [1988] 1 HKLR 613. 

16.Money in a bank account, even where the account is controlled by the donor, and may turn out to be worth nothing, may still be the subject of a gift; see Overseas Trust Bank Ltd v Lee See Ching John [1999] 3 HKC 197.

17.If a gift is claimed the onus is on the donee to prove it.  Corroboration is not required as a matter of law, but where there is a claim that a gift has was made by a person who is now dead, the court must approach the claim with suspicion; see In re Garnett (1885) 31 Ch. D. 1 C.A., followed in Thomas v Times Book Co. Ltd [1966] 1 WLR 911.  Those cases, which arose out of allegations of gifts of chattels, were not cited in this case but I do not see that the principle can be any different as between the gift of a chattel and the gift of the funds in a bank account.  In the case of the chattel, the alleged donee’s possession does not, without more, prove beneficial ownership; and in a case such as this the fact of being a signatory to a bank account does not, without more, prove beneficial ownership either. 

18.The acts or declarations of the parties before or at the time of the transaction, or so immediately after it as to constitute a part of the transaction are admissible either for or against the party who did the act or made the declaration; but subsequent acts and declarations are only admissible in evidence against the party who made them, and not in his favour; see Watson v Smith, supra, per Godfrey JA at 465F-G/H-I.

19.In this case, there is little or nothing in the way of law to assist the court.  The matter is to be decided on the facts, and the intentions of a dead woman are to be established from evidence of what she said and did in life.

Matters Not in Dispute or Incontrovertible

20.There is no dispute that Rose made the 19 withdrawals or transfers set out in the Schedule to the Amended Statement of Claim, from Accounts identified as Nos. 8, 9 and 10 at paragraph 5 and on the list at page E38 of the bundles of documents.  I will refer to these by their respective numbers.  Most of the withdrawals, and indeed all the major withdrawals were made whilst the Mother was in hospital and some after she had died.  In particular sums of $3,722,000 and $2,570,000 were withdrawn from Account No. 8 on 12 January 2005, the date of the Mother’s death, and on 14 January 2005 respectively.  Large sums, both in Hong Kong dollars and foreign currencies were withdrawn from Account No. 9 and Account 10 between 17 December 2002 and 6 January 2003, when the Mother was in a bad condition (she is said to have been in a coma) and had to have brain surgery.

21.Rose also took all the contents of the safe deposit box (Item 13 on page E38).  On 17 December 2002 she signed a notice to the bank (again while the Mother was in hospital) that the two keys were lost, and had the box broken open.  The extent of the contents is not known to the plaintiffs, but after the Mother’s death Rose handed over the title deeds to the parents’ residence and the Mother’s burial place as well as certain gold items which had all been kept in the box.

22.The Mother had also opened three accounts in the name of Stella, which were operated by using a chop in Stella’s name.  There is no dispute that Rose made the withdrawals from those accounts pleaded at paragraph 18 of the Amended Statement of Claim.

23.A letter from the Liu Chong Hing Bank, Exhibit P1, shows that Account no. 8 was opened on 26 November 1992 and closed on 24 January 2005.  No. 9 was opened on 26 July 2002 and closed on 27 December 2002.  No. 10 was opened on 26 November 1992 and is still open.  The safe deposit box was surrendered on 17 November 2002.

24.The Mother was admitted to the various hospitals listed at page E39 of the bundles.  She was also admitted to the Tung Wah Hospital from 14 May to 16 July 2001, in between stays at the Queen Mary Hospital.  In this period she underwent an operation for the amputation of some of her toes.

25.Rose paid over $4,000,000 to the Father on 25 January 2005.  Following a family meeting on 1 February 2005 she paid over a further $6,705,000 to all the family members, including herself.  The Father received $1,700,000 and each of the siblings received $715,000. 

Evidence

26.Evidence for the plaintiffs comes from the plaintiffs themselves, namely Sindy and Stella as well as from Wing Chor and the Father.  For the defendant it comes from Rose herself.  Generally, Rose presents herself as the favourite daughter and the one who took the greatest part in looking after the Mother in her old age.  She admits that there was a falling-out between herself and the Mother earlier when she took up with Mr Kan but says that they were later reconciled.  She presents the rest of the family as a thoroughly bad lot.  She says that some of them, in particular the Father, mistreated the Mother, and others neglected her.  The Mother was disappointed by her husband and children and their conduct. 

27.Not surprisingly, the other witnesses contradict this.  They present the other children as dutiful and the Father as a loving and totally non-violent husband and father and they seek to show Rose in a bad light.  While they agree that Rose took the greater part in looking after the Mother in her latter years, they say, in effect that this was because Rose pushed them away.  They also say that Rose kept the Mother short of her medicine, in particular the Father who practically accuses Rose of having killed her.  At different times Wing Chor, the Father and Rose divided up the pills for the Mother, but it is said that when Rose did that the Mother suffered more from swelling than when the others did it.  They also say that Rose made herself the major communications link between the family, the doctors and hospitals and, in effect, hindered or prevented the mother from having dialysis treatment which might have prolonged her life.

28.I do not set out here at any length the various family members’ evidence about their relationships with each other and with the Mother.  The difficulty with this kind of evidence is that the perceptions which family members have of their relationships is always subjective.  Further, the relationships may and often do change according to circumstances.  More to the point, in this case the evidence of relationships is necessarily self-serving and there is no independent evidence to support it on either side. 

29.The case depends very much on the credibility of the witnesses.  As has often been said, the inherent probabilities of what the witnesses say is a better guide to their truthfulness and accuracy than is their demeanour. 

30.Even if it is possible to make a clear finding on this sort of evidence, it is in any event inferential as to what the Mother’s intentions were.  What individual family members think the Mother’s attitude was, or what she would have done, or would have wanted is of course of no real assistance.  It often happens when someone dies intestate that family members start staking their claims on the basis of what, according to them, the deceased person always wanted them to have, or promised they would have, and so forth.  It is necessary to look at what the witnesses say about the Mother’s declarations of her intentions, and to see if there is any independent support for that in the documents or in the surrounding facts and circumstances.  

31.With regard to the Mother’s stated intentions concerning her bank accounts, Wing Chor says that on a Sunday in July 1997 at the parents’ home, and in the presence of Rose, the Mother said that she was considering adding Rose as one of the joint holders of her bank accounts.  She said that her health was deteriorating and she wanted to have somebody to help her in dealing with the administrative arrangements.  Wing Chor asked why the mother did not choose Arthur, who was already a signatory for the safe deposit box, but she said that Arthur lived too far away.

32.Under cross-examination, Wing Chor was less clear about the date of this incident.  He seemed to think that the Mother’s statement that she would give the children taels of gold was involved, which he said happened some time before the Mother had her toes amputated in 2001; but then he came back to July 1997.  He also said that Sindy knew about the intention to add Rose to the joint accounts; the matter was discussed in her presence.  However, this did not appear in Sindy’s affirmation in the injunction proceedings.  Nor does it appear in Sindy’s witness statement where she says that the Mother told her in 2001 that she would nominate someone to operate her accounts, without specifying who; and it was only later that Sindy found out that it was Rose.

33.Wing Chor says further that on some other date, before she nominated Rose as one of the signatories, the Mother told Rose, in the presence of other family members that although she was a signatory, Rose could not treat the funds as her own.  Rose said that she would not do that, because they were all from the same family.

34.Concerning the cheques given to the children in mid- 2003, Wing Chor said that the Mother told him that she had asked Rose to write cheques for each of the children.  All were to have a share in her assets.  She told Wing Chor that she would give them the money to develop their businesses.  But they only realised after the death that Arthur, Stella and Wing Shun had never got their cheques.

35.Under cross-examination Wing Chor said that the Mother asked Rose in his presence to draw the cheques in favour of the children.  He knew that he received a cheque, and so did Cindy, but the others did not.  He did not know if the Mother had made any other arrangements in respect of the other children.

36.The Father says that at one stage when the Mother was ill she asked him to take care of her bank accounts for her.  She wanted someone to manage them for her administrative convenience.  He declined and suggested that she should ask one of the children who was young and literate, and this she did.

37.The Father could not remember when the Mother said this.  Under cross-examination, he said that he could not tell the year, because he is illiterate; but when he was asked by reference to the amputation of the Mother’s toes, he said that it was “long after”.  He said that he was present with Wing Chor when the Mother told Rose that she could not treat the money in the joint accounts as her own, and Rose agreed with that; but again, he had no idea as to when this happened.

38.With regard to the safe deposit box, the Father said that he always had a key for it; and he produced a key from his pocket, in court, though of course there is no way of knowing whether this was indeed the safe deposit box key or when he came by it, if it is.

39.The Father belonged to the common class of witnesses who find it hard to give a straight answer and begin most answers with the word “because”.  He was quite clear about the Mother’s intentions, namely that the money was hers and not Rose’s but was of little assistance as to when the arrangement was made to add her as a signatory, and he obviously knew very little about the Mother’s accounts or what she did with them.  He agreed that Rose operated the accounts for the Mother, especially when the latter was in hospital.  One significant point, which came out in examination-in-chief was that the Mother always received communications from the bank at home.  She was illiterate and would go to the bank to get them explained to her.  She did this even when she was ill.  When she was in hospital, she had Rose take the letters in and read them to her.

40.Stella, who lives in New Zealand, knew little or nothing of how the Mother handled her own accounts.  She did know that the Mother was keen to save money, and would save on behalf of her children by opening accounts in their names.  Stella agreed that the Mother would in this way favour some of the children over others.

41.Stella knew of an account opened in her own name, and before she went to New Zealand she had given her mother in total about $180,000 to put into it.  She did not know anything about the withdrawals on 20 March 2003.  It was her own money or money the Mother had given her and as far as she was concerned, the Mother would not give it to anyone else.  As to the $715,000 she received, she understood that it came from the Mother’s estate.

42.Sindy appears to have heard from the Father some time in early 2001 that the Mother wanted someone to be added as a signatory on her accounts, so that they could be operated for her when she was in hospital.  In late 2001, after the Mother came out of hospital, the Mother spoke to Sindy about this matter, but the choice of signatory was left up to the Mother, although Sindy understood that the authorisation would not give the signatory any right to the funds in the accounts.  It was only later that Sindy found out that Rose was the authorised signatory. 

43.This was visited under cross-examination.  Sindy said that she knew that Rose’s name was added, or to be added, when the Mother was in hospital for the toe operation.  She had not put this in her affirmation in the injunction proceedings, she said, because she did not have proof at that stage; but later on, documentary proof came to light.

44.It also appears that Sindy did not know about the payment out of the cheques to some of the children in mid-2003, until Wing Chor told her about it some time later.  She then remembered that the Mother had given her a cheque for $100,000 which at first she had refused but had later accepted for her daughter’s educational expenses.  Under cross-examination she said that after she had been given this cheque in a restaurant while Rose, who was with them, had been asked to leave her and the Mother alone for a little while, she told Rose about it, and Rose told her to keep it quiet from the others.  Then after the Mother died she mentioned this cheque to the others, and, as she put it, this “disclosed the act done by Rose”.

45.Sindy also covered the events after the Mother’s death at some length.  She produced a contemporaneous record of the family meeting on 1 February 2005.  This had been annexed to Sindy’s witness statement.  Although it was put to Sindy that this was not a full or accurate record, there is no evidence to say that it was not made there and then, in the meeting.  

46.Rose is the oldest daughter, and she says in her witness statement that her relationship with the Mother was the best amongst the children.  She did fall out with the Mother when she started her relationship with Mr Kan but that was many years ago; they were reconciled, and particularly in recent years her relationship with the Mother was very good.  According to Rose, the other children did not have such a good relationship with the Mother; I have dealt briefly above with what she said about that.

47.Rose said that the Mother was a shrewd and wise person, and when she gave up working in the store in 1995, she took to investing in the stock market and foreign currencies.  She had outstanding results.  However she never told anyone else about her successes.  Everyone knew that she had done well, but no one knew how much money she had made.

48.Rose says that in 1998, the Mother took her to open a chop-operated account in her sole name.  The Mother operated this account, and Rose did not know what the balance was.  The Mother also opened similar accounts in the names of the other siblings, except for Wing Choi and Sindy, and operated them in the same way.  According to Rose, the mother’s purpose was to use these accounts as a kind of leverage to encourage the children to treat her well.

49.She says that over the years, the Mother became disappointed by the conduct of the Father and the rest of the children.  The Father gambled and lost money, and he beat up the Mother.  Wing Chor and Wing Shun also speculated and they lost a lot of money.  Wing Shun had a criminal record for a bookmaking offence.  Arthur and Stella   lived overseas and had little to do with the Mother.  As for Sindy, the youngest, she did not “sweet-talk” the Mother, as the Mother wanted.  She always had heated quarrels with the Mother and sometimes assaulted her.

50.It was because of this that the Mother put the fixed deposit accounts (Account No. 10) in joint names, and added Rose’s name to the safe deposit box.  In about March 2002 she opened a savings account for the purpose of securities trading as well as a joint securities account also for the purpose of securities trading.  In fact this accords with what is pleaded at paragraph 5 of the Re-Amended Defence and Amended Counterclaim.  These were identified in cross-examination as Account No.8, which was in fact opened in 1992, but it appears from cross-examination that Rose’s name was added in March 2002.  Account No. 9 was identified as a foreign currency savings account, and different from Account No. 8.  As has been noted it was opened on 26 July and closed on 27 December 2002.

51.It was after this, in 2002, that the Mother told Rose that she would give her all the other assets represented by the joint fixed deposit accounts and the “joint” safe deposit box (which was not in fact joint, Rose’s name having been added as attorney) as an unconditional and absolute gift.  The joint savings passbook account and the joint securities account were to be used for the purpose of securities trading on Rose’s behalf.  Rose says that she protested about these gifts, and told the Mother that her assets should be distributed fairly among the rest of the family, but the Mother angrily rejected this proposition.

52.Rose says that at about the end of 2002 until the beginning of 2003 she transferred all other monies in the joint fixed deposit accounts on their respective maturity dates into her own account, and she closed the joint safe deposit box and took all the contents to her own home.  The Mother, she says, knew and approved of all of this. 

53.From cross-examination it appears that although Rose says that the funds in Account No. 8 were given to her when her name was added, the Mother wanted to use these funds for stock trading and kept control of them herself.  She said that if she made profits she would put the money in the joint account and eventually it would be given to Rose.  As to Account No. 10, the Mother told Rose – it is not clear when – that it was Rose’s, and then she told Rose in September or October 2002 to transfer all the funds into it into her own sole name.

54.As to when she was given the contents of the safe deposit box, at first Rose could not remember exactly.  Pressed further, she first said that it was at the same time as she was given the funds in Account No. 10; and then that it was done when her name was added; and then she returned to the position that the safe deposit box contents were given to her at the same time as the funds in Account No. 10.

55.In fact there were no transfers in September or October 2002.  If Rose was told to transfer Account No. 10 to herself, she did not do it then.  As I have noted, between 17 December 2002 and 6 January 2003 a number of transfers were made from Accounts Nos. 9 (which was closed on 27 December) and 10 and I take it that these are the transfers referred to.  The safe deposit box was likewise closed on 17 December 2002.  All this happened while the Mother was in hospital.  Rose’s answer to this is that she waited until the deposits in Account No. 10 reached their maturity dates.

56.Then, says Rose, in March 2003, the mother, being disappointed in Stella, decided to give the credit balance in Stella’s chop-operated accounts to Rose.  However, in June 2003, the Mother decided to give money to some of the other children.  She asked Rose to transfer $1,200,000 from the joint savings passbook account into a current account in the Mother’s sole name.  From this were paid out on 30 June 2003 personal cheques to Rose of $500,000; to Wing Chor of $500,000; to Wing Shun of $100,000; and to Sindy of $100,000.  According to Rose, the reason for the payment of $500,000 to herself was that the mother wanted to exhibit an open and apparent fairness of distribution among the recipients.  However she did not want to tell the others that she had made the gift of her assets to Rose.

57.It was suggested to Rose, but she denied, that cheques in favour of Arthur, Stella and Wing Shun must have been issued but never forwarded because cheques numbered sequentially with those which were issued to the others are not found nor is there any record that they were presented.  Rose denies this.

58.Rose says further that in October 2003, the Mother told her that she had given Arthur some money and wanted to close his chop-operated account and put the money into the joint names of herself and Rose.  She wanted to use the money for speculation.  They went to the bank and organised the transfers which were in fact rather complicated.

59.With regard to the death of the Mother, Rose says that she knew in advance that the mother was dying.  She took legal advice about the effect of the estate duty, and, acting on that advice and so that the joint savings passbook account and the joint securities account would not be frozen on the Mother’s death pending estate duty clearance and the grant of letters of administration she withdrew all the money from these accounts.

60.It had been planned in advance that the Mother would be buried in Macau.  According to Rose, she paid $338,300 for the funeral out of Account No. 8.  She also paid some other expenses and reimbursed Sindy for expenses in the sum of $36,790.

61.Rose says that at a family gathering before 25 January 2005, the family members confronted her and demanded the contents of the safe deposit box.  She told them that the contents consisted of the title deeds and some gold items.  Notwithstanding that it had been her mother’s intention to give her all the contents of the safe deposit box upon her death, she handed over these things at the funeral service on 25^th January.

62.Rose says that she made the payment of $4 million to the father because he threatened her.  At some point she handed over to Wing Shun a savings passbook and the chop in his name from the safe deposit box.  Then at another memorial service on 1 February 2005, she was again forced by the other members to give substantial sums to them.  There was a further incident in May 2005 when the family members came after her again.  On this occasion she was assaulted and the police were called.

63.Under cross-examination concerning the safe deposit box, Rose said that the Mother had given her the key in the beginning, but that she had told her Mother to keep it.  When the Mother was ill in hospital at the end of 2002, Rose decided, because the Mother had already told her that all the money would be paid to her, to open the box.  She could not find the key, and because the Mother was sick, she could not ask her for it.  The Father did not have a key at that time, so she could not ask him.  She had therefore declared to the bank that the key was lost.  She had taken the chops for the accounts of Stella, Wing Chun, and the mother, but she had told no one that she had taken the chops at that stage.

64.It was noted that Rose’s work address appeared on the documents relating to Stella’s account.  She explains that instructions for that had been given by the Mother to the bank.

65.With regard to the transactions referred to the paragraph 58 above,Rose explained that a payment of $80,000 to Arthur from Stella’s own account on 13 October 2003 had been made on the Mother’s instructions.  After cheques had been issued to some of the children on 30 June 2003, the Mother decided that Arthur should have a share as well.  The Mother did not want to use money from Account No. 8, because that was earmarked for investing, so she had asked Stella to issue a cheque from her own personal account.  Later the Mother closed Arthur’s account and put the balance into the joint investment account, saying that she had done her duty by him, and that the money in the latter account was Rose’s anyway.

Discussion

66.The plaintiffs and their witnesses are vague and contradictory as to when Rose’s name was put on the accounts.  Their evidence of how they came to know about it is hearsay and in some cases double hearsay.  However they were all quite clear that Rose’s name was added for the Mother’s administrative convenience, as they put it, because she was old and sick, and getting sicker.  Rose, under cross-examination, denied that this was the purpose, but it was noted that she hesitated in giving that answer, and when taxed further explained that it was because she was thinking of what happened before and after. 

67.In fact, under cross-examination Rose was rather self-contradictory on the point of when the Mother told her that the funds in the different accounts belonged to her.  It appears that the point at which the Mother said, according to Rose, that the assets were given to her came, at least in respect of some of the accounts, after her name had been added.  She says that for Account No. 8, the gift came at the time of putting her name on it; but at the same time the Mother kept control of the account for her own stock trading.  However, the gifts of Account No. 10 and the safe deposit box contents came in September or October 2002.  Further, it is noted that when Rose’s name was added to the safe deposit box account, it was added as an attorney rather than a joint holder; that is what the bank documents show.  This itself is contrary to the notion of a gift.

68.In those circumstances, I do not have any difficulty in accepting that, at any rate in the beginning, Rose’s name was put on the accounts for the purpose of administrative convenience.  It would make sense to do so; the mother had had a fairly long hospital stay in July to August 2001, and she was in and out of hospital a lot from the middle of 2002.  Her health was deteriorating at that time.

69.As I have said above, the allegation of a gift before death, by someone now deceased, must be regarded with suspicion.  Corroboration is not necessary but there should be some indication that the story is likely to be true.

70.Counsel for the defendant relies heavily on the fact that the Mother was not in hospital at all from the end of January 2003 to the end of January 2004, and in this time she made various withdrawals from her accounts, all of which are documented.  On one occasion she used her own chop.  She also used Account No. 8 to conduct stock trading between May 2003 and November 2004.  She must have known about the rather complicated series of transfers connected with the cashier order for Canadian dollars made paid to Arthur in October 2003; and while the bank statements were coming to her house, she never made any complaint about missing funds or missing chops.  Counsel also points to two large sums paid from Rose’s personal account to the joint account in March and April 2003, as well as the transfer connected with Arthur’s payment, which he says rebut any suggestion that Rose was withdrawing moneys from the joint account without the Mother’s knowledge.

71.I do not see that the use of the Mother’s chop after December 2002 means that the Mother knew it was being used.  Rose, as named attorney for the safe deposit box, could open the box if she was given the key, and chop a document at the bank on the Mother’s instructions while the Mother stayed at home.  However, once Rose had closed the box account in December 2002, she could do exactly the same without the Mother’s instructions or knowledge.  At the same time I accept that the position would be different where the Mother signed a document.  On the face of it, unless of course she was deceived in some way, she must have known what she was signing.

72.The fact that the statements were coming to the Mother’s house points to knowledge on her part of the account movements, but does not point to it unerringly.  The Father says that, though illiterate, the Mother used to go to the bank for explanation of documents she received, but when she was in hospital she had Rose explain them to her.  It is not difficult to imagine that when she was not in hospital, she might, being old and sick, have preferred to have Rose explain the documents, rather than go to the bank herself.  The point is that the contents of any explanation given by Rose would be controlled by Rose.

73.As to the stock trades, these are indeed documented but as account movements in Account No. 8.  Which of the two signatories instructed them is not known.  Though Rose says that she does not know about stocks, it does not follow that it could not have been she who instructed them.

74.Rose says that the payments made from her own account to Account No. 8 in 2003 after the Mother came out of hospital were made so that the Mother could “play”, or invest in stocks.  That may be so but the fact is open to another interpretation, namely that Rose, having taken out a great deal of money while the Mother was seriously ill in hospital, wanted to cover her tracks after the Mother had recovered. 

75.I make these points, not to say that they indicate that Rose did not have the Mother’s consent and approval for the transactions she made, but rather to say that although, on the face of them, they may be said to indicate that, they may also be said to indicate nothing of the sort.  In the situation where the onus is on Rose to prove the gift rather than on plaintiffs to disprove it, that is not enough.

76.I have noted above that at the family meeting on 1 February 2005, Sindy made what she says is a contemporaneous note.  There is nothing to contradict that she did so or that the note is accurate.  What the note shows is that the family asked Rose to account for the Mother’s money and property, and she said at first that she did not know how much there was, but later she gave some rough figures, and said that was all there was.  The division was agreed on that basis.

77.The point is that Rose does not appear, at this meeting, to have taken the line that the money was hers because the Mother had given it all to her.  Nor is there any other evidence, so far as I can see, that Rose said, at that stage, that there had been a gift or gifts.  That appeared in her 2nd affirmation in June 2005, which is in pretty much the same terms as her witness statement.

78.I can perhaps see the point of Rose agreeing with the Mother, as she says, that such a gift should not be disclosed to the family because it would cause trouble.  So it would.  But equally, without anyone knowing about the gift when it was made, there would only be Rose’s word for it, once the Mother died; and there would be trouble then anyway.  Once the Mother was dead, and the estate had to be ingathered, the trouble had indeed arrived.  There was no longer any point in hiding the story of the gift.  But when the family came after the money, Rose’s answer seems to have been “that’s all there is” rather than “she gave it all to me”.  This tends to indicate that the story of a gift is an afterthought.

79.As to the moneys in Stella’s chop-operated accounts they were obviously intended to benefit Stella from the outset; she knew about the accounts, and she put in some money of her own in the early days.  Of course, it was open to the Mother to change her mind about the funds she had put into the accounts, though she would necessarily have had to account to Stella for what Stella had put in, plus interest.  The point is that there is only Rose’s unsupported word that she did so and made a gift of the funds to Rose instead.  Again, the onus is on Rose and there is nothing to support what she says, and I am not prepared to accept her unsupported word that this is what happened.

Conclusion on Liability

80.I am not satisfied that the Mother’s funds, or the articles kept in her safe deposit box, or any of them, were given to Rose by the Mother as a gift inter vivos. Nor am I satisfied that the Mother approved and consorted to the withdrawals which Rose made. I am satisfied that Rose held the funds on trust for the Mother and, to the extent that she took them for herself, she is in breach of trust.  As to Stella’s account, the conclusion must be that the Mother kept the funds for Stella who was the beneficial owner and Rose wrongfully converted the sums pleaded to her own use. 

Counterclaim Against Stella

81.This is the only counterclaim pursued now.  On my finding above, Rose had no right to any of the money in Stella’s account, and the counterclaim must fail.

Quantum

82.The plaintiffs claim for, inter alia, damages, an order to return all the properties and assets kept in the safe deposit box, and an account.  Mr Ho, who appears for Rose, says that if I find for the plaintiffs on liability, there should at most be a monetary judgment which would allow for set-off of the monies already paid over by Rose to the other family members.  He has produced a sheet of calculations showing how the final figure is to be established.

83.Ms Liu, who appears for the plaintiff says that there should be monetary judgment on the 19 transactions identified, as well as an order for an account.  She argues that this is a case of breach of fiduciary duty, and it will be necessary to trace what happened to the funds taken by Rose, and any secret profits made.  There are also foreign exchange considerations.  She points as an example to the withdrawal of Australian currency on 27 December 2002 from Account No. 9.  This is shown as equivalent to HK$64,144.62 at that date but in her disclosure affirmation Rose says that these funds, after transfer to her own account were rolled over until 24 February 2005 when that account was closed and HK$69,038.90 credited to another Hong Kong dollar account.

84.Further, says Ms Liu, insofar as the unauthorised withdrawals were in foreign currency, the conversion rate should be that subsisting at the date when the court authorises the plaintiffs to enforce the judgment in Hong Kong dollars.  She relies on Services Europe Atlantique Sud (Seas) v Stockholms Rederiaktiebolag SVEA [1978] 2 WLR as authority for the proposition that damages should be awarded to a plaintiff, in contract or in tort, in the currency which most truly expresses his loss.

85.Mr Ho says that the plaintiffs have all along taken, for the purposes of their claims, the Hong Kong dollar values of the foreign currency transfer at their respective dates, and those should be taken as the effective figures. There is no need for an account.

86.This is a case of breach of fiduciary duty.  I presume that the duty would be owed to the Mother until the date of death and then to the estate until at least the date of the grant of letters of administration; but I think that ultimately the decision as to whether that or some other date is the effective date should be left to the judge or master who takes any account ordered.  Rose would have to account for any profits from the dates of the unauthorised transfers until the effective date, whether those profits arise from change in the exchange rates or otherwise.  Any sums paid out to the family members since the death would have to be set off against the total.  The same applies to the payments made by Rose to the joint account in 2003.

87.Rose’s position has all along been that she has handed over all of the contents of the safe deposit box.  It is difficult to see how the plaintiffs can go behind what Rose says about this and what she has affirmed in her many affirmations as to what she did with the moneys withdrawn, in the absence of any contrary independent evidence. 

88.Nevertheless, it seems to me that the plaintiffs must have an order for an account at least in order to deal with the foreign currency exchange movements and how they impact on the loss to the estate at the end of the day, and also to leave the way open for the plaintiffs, if so advised, to make any necessary application for tracing. 

89.I have considered whether a monetary judgment should be given at this stage, based on the Hong Kong dollar value of all the questioned transactions.  It seems to me that this is a practical solution in that it at least gives the parties a basis to work from in the account.  It may also make it easier for them to come to some arrangement as to what, if anything, is still owed.  It could ultimately save time and costs.  However the order should not be for a final judgment but rather for an order for an interim payment under Order 29 Rule 12, in circumstances referred to in paragraph a) thereof where an order is made for an account.

90.I will, therefore, make an order in favour in favour of the plaintiffs for an interim payment.  In so doing I will rely on Mr Ho’s calculations, taking into account all questioned transactions but setting off the payments from Rose’s own account to the joint account in 2003 and the after-death payments to the family members to produce a final figure of $6,839,225.43.  Of this Stella should have a share of $2,306,306.20 –$715,000, i.e. 1,591,306,20.

Judgment

91.There will accordingly be judgment in terms of the prayer of the Statement of Claim, save for Paragraph 3; I cannot see any point in ordering Rose to return any more of the contents of the safe deposit box when there is no evidence that she has them, and she has gone on oath denying it.  As to costs these will include any reserved costs in the injunction proceedings which have not yet been dealt with.

92.There will be an order for interim payment by the defendant to the 1^st plaintiff of $5,247,919.23 and to the 2^nd plaintiff of $1,591,306.20.

93.The Mareva injunction will be discharged.

94.Since the judgment is to be handed down the costs order is nisi.

Ms Elaine Liu and Mr Matthew Ho, instructed by Messrs Maggie P S Yeung & Co., for the 1^st and 2^nd Plaintiffs

Mr Gary Soo, instructed by Messrs Fung, Law & Ng, for the Defendant