Yuen Minghwa Francois v. Lo Mei Kin Stella
Read the full judgment text of CACV 225/2011 on BabelCite. This Court of Appeal judgment was delivered on 18 July 2012 before Yuen JA, Kwan JA, Bharwaney J.
Civil law – probate and succession – estate of deceased – claim by companion of deceased to beneficial ownership of 499 out of 500 shares in company (Asian Powers Limited) used by deceased as personal investment vehicle – allegation of forgery and back-dating of share allotment documents – appeal against trial judge's finding of forgery – whether trial judge erred in finding that unpleaded documents (Exhibits P2, P6, P8 and P9) were also forged where only pleaded documents were specifically alleged as forgeries – whether expert evidence by forensic chemist on ink analysis was within scope of leave to adduce expert evidence on dating of signatures – whether trial judge erred in accepting conclusions of Dr Aginsky that 9 signatures on Exhibits P2 to P10 were made with ink from same manufactured batch and with the same pen – whether board resolution of 31 July 2001 to issue 499 shares was invalid for lack of notice to a director – whether, even if valid, shares were held by appellant as nominee for deceased. Civil procedure – pleadings – authenticity of documents – RHC O 27, r 4 – deemed admission – whether expert permitted to examine documents other than those specifically pleaded as forgeries. Evidence – expert evidence – forensic document examination – ink analysis – ink aging – ink comparison – scientific evidence of Dr Aginsky (renowned forensic chemist) accepted – no challenge by appellant's own expert Mr Purdy. Estoppel – proprietary estoppel claim not appealed. Findings: (1) The trial judge was entitled to consider the authenticity of unpleaded documents as part of the expert examination under the orders of Saunders J; the deemed admission under RHC O 27, r 4 was effectively released. (2) The ink analysis test was within the scope of leave to adduce expert evidence in respect of dating of signatures; the order did not restrict experts to any particular test. (3) Dr Aginsky's first two conclusions (same ink batch and same pen) were properly accepted; his third conclusion on contemporaneous timing was not relied on as a matter for the court. (4) The board resolution of 31 July 2001 was invalid for lack of notice to a director Ms Yuen Aye Yen; Peter Yip v Asian Electronics distinguishable as it concerned a special article. (5) Even if validly allotted, the 499 shares were held by the appellant as nominee for YKK; cohabitation had ceased in 2000 and the 2003 HSBC update confirmed YKK as 100% shareholder. Outcome: Appeal dismissed with costs; costs on indemnity basis (subject to written submissions); case referred to Director of Public Prosecutions for further action.
Legal issues: Whether unpleaded documents could be found to be forged where only specific pleaded documents were alleged as forgeries · Whether Exhibits P2, P8 and P9 were forged and back-dated · Whether the trial judge erred in admitting the ink analysis test beyond the scope of the expert evidence order · Whether Dr Aginsky's conclusions could be relied upon · Whether the board resolution of 31 July 2001 was invalid for lack of notice to a director · Whether 499 shares, if validly allotted, were held by the appellant as nominee for YKK
Outcome: Appeal dismissed with costs. The decision of the trial judge that the documents upon which the appellant relied for her entitlement as shareholder in Asian Powers were forged and back-dated and void ab initio was upheld. Case to be referred to the Director of Public Prosecutions for further action.
Cited by 5 cases · Cites 2 cases
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CACV 225/2011 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF APPEAL CIVIL APPEAL NO. 225 OF 2011 (ON APPEAL FROM HCA 2682 of 2008) ------------------------
(By Original Action) and
(By Counterclaim) -------------------------
--------------------------------------------------- REASONS FOR JUDGMENT --------------------------------------------------- Yuen JA 1.I agree with the Reasons for Judgment of Bharwaney J. Kwan JA 2.I agree with the Reasons for Judgment of Bharwaney J. Hon Bharwaney J: 3.After hearing Counsel, we dismissed the appeal with costs and indicated that we would give our reasons later. The respondent sought costs on an indemnity basis which the appellant resisted, requesting time to file written submissions on the basis upon which the costs we had awarded ought to be taxed. We granted leave to the appellant to file these written submissions within 14 days after we had handed down our reasons for judgment, and we also gave leave to the respondent to file a written reply within 14 days thereafter. 4.This is an appeal from the decision of Deputy High Court Judge Robert Whitehead SC given after a lengthy trial in which he had to deal with a vast number of issues. The proceedings related to the estate of Mr Yuen Kiu Kwan (“YKK”) who died intestate in Hong Kong on 4 January 2008. He was survived by his three children from his marriage to Ms Ingeborg Santjer. They divorced in 1998, some years after YKK began a romantic relationship with Lo Mei Kin Stella, the appellant in these proceedings. YKK was a wealthy man and, for many years, had been engaged in shipping business. He owned a number of private companies which he used as his personal investment vehicles, and these companies owned a number of properties in Hong Kong. YKK was the beneficial owner of 100% of the shares in a company called Asian Powers Limited (“Asian Powers”). This company, in turn, was the majority shareholder in 4 of YKK’s property-holding companies and about a 10% shareholder in another company called Cerock Limited (“Cerock”). 5.Letters of Administration had been granted to one of the three children of YKK, Yuen Minghwa Francois, and he brought these proceedings as administrator of the estate against the appellant. He claimed possession of various properties which he alleged formed part of the assets of the estate as well as an account of the rents received in respect of those properties, and mesne profits in respect of the appellant’s occupation of the property in Ventris Place in Happy Valley, where she had cohabited with YKK. In addition, the administrator sought a declaration that YKK was, and the estate now is, the beneficial owner of 100% of the shares in Asian Powers. 6.In two other actions, Asian Powers and Cerock brought proceedings for repayments of various amounts on the ground that the appellant had acted fraudulently and/or in breach of her fiduciary duties as a director of these companies. 7.There was no serious dispute that the children of YKK were the lawful successors to his estate. However, a greater part of the trial was taken up with the question of the ownership of the shares in Asian Powers, the appellant claiming to own 499 out of 500 shares in Asian Powers. In addition, the appellant claimed to be the owner of Ventris Place under the doctrine of proprietary estoppel. The learned deputy judge found against the appellant on her proprietary estoppel claim and no appeal has been brought against this finding. The appeal has been brought against the judge’s findings in respect of the shareholding of Asian Powers. 8.The appellant claimed to be the beneficial owner of 499 out of 500 issued shares in Asian Powers, 1 of these shares being held by her nominee, HKC Nominees Ltd. It was her case that the number of shares in Asian Powers increased from 1 to 500 upon the issue of 499 shares to her on 31 July 2001. In respect of this transaction, the appellant relied, in particular, on a board resolution of that date approving the issue of this number of shares to the appellant for a nominal consideration of USD1 for each share. The respondent’s case was that the documentation supporting the issue of 499 shares to the appellant was forged, and that, in any event, the board resolution of 31 July 2001 was invalid. The respondent also contended, in the alternative, that if these shares in Asian Powers had been properly issued to the appellant, that they were held by the appellant on trust for YKK and, thereby, for his estate. 9.Asian Powers is a company incorporated under the laws of the Republic of Liberia. The documents that were relevant to this issue included :
10.In addition, the following documents were examined by the experts concerned, including Exhibit P1 referred to above :
11.The following documents were dated after the date of YKK on 4 January 2008 :
12.All these documents had been signed by the appellant. She had signed Exhibit 1 as secretary and treasurer of Asian Powers. The originals of all these 10 exhibits had been examined by the respondent’s expert, Dr Valery Aginsky, and by the appellant’s original expert, Mr Benny Kwok, and copies of all items were seen by Mr Dan Purdy, the appellant’s expert at trial. These documents bore the dates from 3 February 1994 to 22 August 2008. 13.After his examination, Dr Aginsky concluded :
And that :
14.The learned deputy judge had no hesitation in accepting Dr Aginsky’s scientific evidence. He noted that Dr Aginsky was a renowned forensic chemist and ink and document specialist and that even the appellant’s expert, Mr Purdy, had said that he highly respected Dr Aginsky and that, on occasions, he had referred matters to Dr Aginksy for Dr Aginsky’s advice and opinion. Mr Purdy did not attempt to dispute Dr Aginsky’s findings. Mr Purdy tried to postulate a number of situations in which it may have been possible for different writing instruments filled with ink from the same manufacturing batch to have been used. The learned deputy judge concluded that he was not assisted by Mr Purdy’s evidence. He found that it was highly probable that the appellant’s signatures appearing on Exhibits P2 to P10 were made with ink that came from the same manufacturing batch, and that the signatures were probably made using the same pen. 15.However, the learned deputy judge did not rely on Dr Aginsky’s view that it was probable that the exhibits were signed contemporaneously within a short period of time. Dr Aginsky had explained that the process of ink dating involved at least three different sub-approaches: ink aging, ink availability and ink comparison. Ink availability was of little value in the present case because the formulation of the ink used on each document had been available since before 1994. Further, the ink aging method when tried on Exhibits P4, 5 and 10, showed that the ink was no longer aging which meant only that the signatures were at least 6 months old when examined by Dr Aginsky in March 2010. For this reason, the ink aging method was also of no assistance in this case. As Dr Aginsky was not able to age the ink accurately, the learned deputy judge held that whether or not it was likely that the signatures were made all at once, or were made over a period of 10½ years, was a matter for him, and not a matter of expert opinion evidence. 16.After carefully considering the evidence, the learned deputy judge concluded as follows:
17.The specific documents which were pleaded in the respondent’s Re-Re-Amended Statement of Claim as being forged and backdated were Exhibit P3, the application for shares, Exhibit P4, minutes of meeting, and Exhibit P5, share certificate No. 2, all dated 31 July 2001, and Exhibit P7, share certificate No. 3, and Exhibit P10, share certificate No. 4, both dated 22 August 2008. Ground 1 of the Grounds of Appeal 18.The first ground of appeal taken by Mr Cheng Huan SC, appearing with Mr Edward Tang, for the appellant, was that the learned deputy judge erred in ruling on the authenticity of Exhibits P2, P6, P8 and P9, as these documents had never been pleaded by the respondent to be forgeries and that, in the absence of such a plea, the learned deputy judge was not entitled to find that they were forged. It had been specifically pleaded in the Re-Re-Amended Statement of Claim that the pleaded documents (Exhibits P3, P4, P5, P7 and P10) “were forged and back-dated by the defendant, and thus void ab initio and without effect”. No such plea was advanced in respect of the “unpleaded documents” (Exhibits P2, P6, P8 and P9). 19.It is common ground that the authenticity of the “unpleaded documents” was only called into question when Dr Aginsky’s report dated 7 April 2010 had been served on the appellant. 20.Mr Leo Remedios had been counsel for the appellant at the trial below and he had made the same submission to the learned deputy judge. In response, Mr Clifford Smith SC, who appeared before us and below, submitted that the pleaded case related to those documents which the appellant relied on specifically for her entitlement as shareholder, i.e. the application for shares to be issued to her and the share certificates. What had been sent to the experts were documents over that period, some of which related to the shares, and he submitted that a document could be a forgery without it being part of anyone’s pleading if it formed part of a pattern where other documents, which were mentioned in the pleadings, were also said to be forgeries. He also submitted that documents could be challenged as to their authenticity without a specific pleading that the documents were challenged as to their authenticity. 21.Mr Clifford Smith SC had also referred the learned deputy judge to the orders made by Saunders J, in connection with expert evidence, on 11 February 2010 and on 13 April 2010. In the former order, he granted leave to the respondent to adduce expert evidence in respect of the dating of the signatures on each of the pleaded documents. In the latter order, he gave leave to the appellant to file her own expert report “on signatures dating within 60 days counting from the date of receiving the 10 exhibits referred to in the respondent’s expert report dated 7 April 2010”. These included the “unpleaded documents”. 22.In his ruling on the pleading point that had been taken, the learned deputy judge said that it was clear that the orders of Saunders J, whilst concentrating upon the resolution of the authenticity of the pleaded documents, in no way restricted the experts from examining other documentation for the purposes of concluding whether or not the pleaded documents were themselves forgeries. The first order made by Saunders J. did not prohibit experts from looking at other documents which might or might not, in their opinion, themselves be back-dated. Indeed, his second order made it perfectly clear that the exhibits that were to be sent for examination by the appellant’s experts were to include the pleaded documents as well as the “unpleaded documents”. He concluded his ruling as follows:
23.The learned deputy judge’s conclusions in §§ 127 and 128 of his judgment are consistent with his ruling. 24.It is clear from the terms of RHC O 27, r 4 that the authenticity of a document may be challenged either by a denial of its authenticity in the pleadings or by service of a notice, pursuant to O 27, r 4(2), that the party does not admit the authenticity of that document and requires it to be proved at the trial. Although such a notice was not served in the present case, there was no doubt, after service of the report of Dr Aginsky in April 2010, that the authenticity of the “unpleaded documents” was being challenged together with the authenticity of the pleaded documents. The orders of Saunders J, and the ruling of the learned deputy judge, had the effect of releasing the respondent from the deemed admission flowing from O.27, r.4. I see nothing of substance in ground 1 of the grounds of appeal. The learned deputy judge was entirely right in his ruling. Ground 2, 3, & 4 of the Grounds of Appeal 25.Once the pleading point falls away, ground 2 of the grounds of appeal is reduced to a challenge to the factual finding of the learned deputy judge that Exhibit P2 was not signed on the date that it bears but was signed by the appellant at about the same time together with Exhibits P3 to P10, and, in all probability, after the death of YKK. 26.Exhibit P2 purports to be the minutes of a meeting of directors of Asian Powers held on 29 May 1998 with YKK and the appellant in attendance. It was signed by the appellant and recorded that Mr Sie Mou Sun resigned as director of the company with effect from 29 May 1998. The same information was contained in the company register of Asian Powers. It was submitted that the resignation of Mr Sie was entirely peripheral to the transfer of shares in Asian Powers and that it was difficult to conceive any cogent reason why the appellant would forge and back-date Exhibit P2. It was also submitted that the fact that the resignation of Mr Sie as a director actually occurred lent weight to Exhibit P2 being a genuine document as did the lack of the motive on the part of the appellant to forge and back-date this document. 27.Ground 2 can conveniently be dealt with together with grounds 3 and 4 of the grounds of appeal, which concerned Exhibit P8, the minutes of meeting, and Exhibit P9, the instrument of transfer, both dated 22 August 2008 (after the death of YKK on 4 January 2008) and which were co-signed by Ms Chung Yuk Lin, Jolene and Ms Mak Kar Won, Meg, respectively, in connection with the transfer of 1 share from the appellant to HKC Nominees Ltd. It was submitted that there was no suggestion that Ms Chung and Ms Mak participated in the forgery and the finding that Exhibits P8 and P9 were not signed on the dates that these documents bore was erroneous. There is some merit in this submission. However, the key point to note is that these documents, as well as Exhibit P7 (share certificate No.3) and Exhibit P10 (share certificate No.4), all bear the date of 22 August 2008, being the latest date of any of the documents examined by Dr Aginsky. If Exhibits P8 and P9 had been signed by Ms Chung and Ms Mak on or shortly after 22 August 2008, that fact would be consistent with the learned deputy judge’s finding that all 9 documents had been signed by the appellant, at or about that time, after the death of YKK. Such a finding would entirely support his conclusion that the critical documents, being Exhibits P3, 4 and 5, all dated 31 July 2001 and which related to the issue of 499 shares to the appellant, were forged and back-dated. When the appellant forged and back-dated Exhibits P3, 4 and 5, she also forged and back-dated Exhibit P2, in order to record facts that had actually occurred in the past and to create an aura of authenticity, not only in connection with Exhibit P2 dated 29 May 1998, but also the critical documents dated 31 July 2001 in connection with the transfer of 499 shares to her. 28.There is no substance in grounds 2, 3 and 4 of the Grounds of Appeal. Ground 5 of the Grounds of Appeal 29.It follows, from my rejection of grounds 1 and 2 of the grounds of appeal, that ground 5 of the grounds of appeal must also fail. Under this ground, it was submitted that, as the “unpleaded documents” did not form part of the respondent’s pleaded case, the learned deputy judge was not entitled to draw any conclusion as to their authenticity and, further, that, as the “unpleaded documents”, in particular, Exhibit P2, was in fact genuine, the learned deputy judge’s finding on the authenticity of the pleaded documents must be erroneous, having regard to the concession made by Dr Aginsky in cross-examination that:
30.Once it is concluded that the learned deputy judge was entitled to find that Exhibit P2 was back-dated, the concession that Dr Aginsky very fairly made becomes irrelevant. A close review of his evidence demonstrates that Dr Aginsky was consistent throughout. Assuming that all documents (Exhibits P2 to P10) were signed using ink from the same manufactured batch, it must follow that if it were established that Exhibit P2 was actually signed on 29 May 1998, then that would mean that the pen that was used to sign Exhibit P2 was then used to sign the other 8 documents. By his concession that his conclusion was incorrect, if Exhibit P2 was not back-dated and was, indeed, prepared on 29 May 1998, he was merely saying that his conclusion that Exhibits P2 to P10 were back-dated would be wrong but that he would still hold the view that they were, somehow or other, all signed with the same pen using ink from the same manufactured batch. However, he rightly pointed out that ‘it was unrealistic to assume that someone would prepare all these documents in 1998 and date them in 2008, 10 years later, so it is usually the other way.” Ground 6 of the Grounds of Appeal 31.Ground 6 of the grounds of appeal relates to the scope of the expert evidence in respect of which leave to adduce evidence at trial had been granted. It was submitted that the order of Saunders J made on 11 February 2010 confined the expert evidence to “the dating of the signatures” on the disputed documents and that Dr Aginsky deviated from the parameters of his duty, by performing both an ink aging test as well as an ink analysis test, when he should only have performed an ink aging test. Having performed the ink aging test on 3 of the 9 Exhibits with inconclusive results, Dr Aginsky ought to have concluded that he was unable to comply with the court order to provide expert evidence in respect of the dating of signatures, instead of proceeding to carry out an ink analysis test and concluding, from that analysis, that Exhibits P2 to P10 were signed contemporaneously within a short period of time. 32.There is no substance at all to this submission. As Dr Aginsky had explained in his evidence, the process of ink dating involved at least 3 different approaches, namely, ink aging, ink availability, and ink comparison. The ink aging method was tried on Exhibits P4, P5 and P10 and showed that the ink was no longer aging which meant only that the signatures were at least 6 months old when he examined these documents in March 2010. For this reason, the ink aging method was of no assistance in this case. 33.Similarly, the ink availability method was also of little value because the formulation of the ink used on each document had been available since before 1994. 34.However, the third approach, of ink comparison (i.e. the ink analysis test), produced results showing that the signatures on 9 of the 10 documents, Exhibits P2 to P10, were made using ink from the same manufactured batch. Given the evidence that the manufacturer, Pilot, produced new batches of ink at least once a month and, at times, as often as 3 times a month, and given the evidence that the impurities in the dye components provided a fingerprint or barcode that was unique to each particular manufactured batch, the use of ink comparison was appropriate to help to date the signatures on the examined documents: the fact that ink from the same manufactured batch was used in signing these documents supported the conclusion that the documents were not signed on the dates that they bore ranging from 29 May 1998 to 22 August 2008. Accordingly, the use of the ink analysis test was entirely appropriate and wholly within the scope of the order made by Saunders J granting leave to the respondent to adduce expert evidence in respect of the dating of the signatures on the documents concerned. In particular, the order of Saunders J did not restrict the experts to using any particular test for this purpose. Ground 7 of the Grounds of Appeal 35.Under ground 7 of the grounds of appeal, the appellant attacked the conclusions reached by Dr Aginsky and the reliance of the learned deputy judge on those conclusions. 36.The first conclusion of Dr Aginsky was that it was highly probable that the 9 signatures appearing on Exhibits P2 to 10 were made with ink that came from the same manufactured batch. In that connection, Mr Cheng Huan SC submitted that Dr Aginsky had very little, if any, factual basis upon which he could give evidence that Pilot produced new batches of ink at least once a month and, sometimes, as often as 3 times a month. However, towards the end of his evidence, Dr Aginsky had been asked by the learned deputy judge how many batches of ink would be manufactured per year by large manufacturers such as Zebra or Pilot. He answered that a minimum of 12 and a maximum of 30 or 40 batches would be manufactured per year. The appellant’s counsel was specifically asked by the learned deputy judge whether he wished to ask any questions arising from that, and he declined to do so. The basis upon which Dr Aginsky gave this evidence was not challenged and no basis has been shown to us why the learned deputy judge was wrong to accept this evidence. 37.It was also submitted that Dr Aginsky did not have first-hand or sufficient knowledge to reach the first conclusion that it was highly probable that the 9 signatures were made with ink that came from the same manufactured batch. It was suggested that Dr Aginsky did not have, in his possession, any documents that stated what Pilot’s quality standards were; or information concerning the equipment or method used in the manufacturing of ballpoint pens; or whether Pilot had modified or improved its pen production methods; that he had no first-hand expertise regarding the quality control measures in place; that his experience of Pilot’s ink was limited to only having analysed different batches of Pilot ink in the past; that he had agreed that 2 or more batches of ink could have the same compositions; that he had never consulted Pilot regarding the purity and quality of the ink produced; and that his conclusions regarding the batch manufacturing process of Pilot were only “a very educated guess”. 38.I do not see anything of substance in these submissions. Dr Aginsky’s first conclusion came from the result of his ink comparison test. His evidence was that the impurities in the dye components provided the fingerprint or barcode that was unique to each particular manufactured batch. Although it was theoretically possible that 2 batches could be indistinguishable, this could only happen if exactly the same components, with exactly the same impurities, were used. However, in practice, this could not occur as the impurities were impossible to control. As the impurities made up less than 1% of the mass of the dye, they had no effect on quality and, therefore, manufacturers were not concerned about them. The impurities were simply irrelevant for quality control purposes. He had analysed numerous black ballpoint ink formulations produced by Pilot over a period of 18 years or more and they all showed different results or barcodes. Dr Aginsky was a very impressive witness and his evidence fully supported his first conclusion. 39.The appellant also attacked Dr Aginsky’s second conclusion that the 9 signatures appearing on Exhibits P2 to P10 probably had been made using the same pen. He reached this second conclusion based on his first conclusion, and also on the presence of “goops and strings” that he found in the signatures on each of the 9 documents. 40.I have already held that Dr Aginsky was entitled to reach his first conclusion that it was highly probable that these 9 signatures were made with ink that came from the same manufactured batch. It follows that he was entitled to rely on his first conclusion when he came to deal with the question of whether or not the same pen was used to produce these 9 signatures. 41.In his first report, Dr Aginsky said that microscopic examination of the ink lines in the signatures showed similar morphology defects in the form of ink goops and strings. This suggested that the 9 signatures were likely to have been made with the same pen. An ink goop is a small dot-like deposit of ink, especially at point of redirection, e.g. in loops. Gooping is an unwanted smearing of ink and it typically occurs only after a ballpoint pen has been used for a certain period of time. A string is a portion of the ink still clinging to the writing instrument tip that strings along the ink line and then remains connected until the tension becomes too great and the string breaks, rebounding back on the paper in a thin thread of ink. Dr Aginsky noted that each string that he observed in Exhibits P2 to P10 originated from the goop area. In his supplemental report, Dr Aginsky referred to various factors responsible for the presence of goops and strings, including chemical composition which determines elasticity and viscosity, quality of the point design, period of time over which the pen has been used, any excessive wear and tear, and ambient temperature which was a very important factor as it affected viscosity. 42.Mr Cheng Huan SC relied on the latter factor, together with Dr Aginsky’s concession under cross-examination that the characteristic of the writer could affect the creation of goops and strings in that the angle of positioning of the pen relative to the surface of the paper was a relevant factor, to suggest that Dr Aginsky reached his second conclusion on “wobbly” grounds. I do not agree. The presence of similar morphology defects found in the signatures on each of the 9 documents is strong evidence upon which the expert concluded that all 9 signatures were produced by the same pen, notwithstanding the assumption that the appellant would append her signatures on these 9 documents by adopting the same writing style and manner. 43.Mr Cheng Huan SC then proceeded to submit that Dr Aginsky was wrong to reach his third conclusion that it was probable that these Exhibits were signed contemporaneously within a short period of time. There is nothing in this ground of appeal as the learned deputy judge, in fact, did not rely on Dr Aginsky’s view on this matter. He rightly held that, as Dr Aginsky was not able to age the ink accurately, whether or not it was likely that the signatures were made all at once, or made over a period of 10½ years, was a matter for the judgment of the court and not a matter of expert evidence. 44.The learned deputy judge was entitled to accept the first and second conclusions reached by Dr Aginsky and to find that it was highly probable that the signatures on Exhibits P2 to P10 were made with ink that came from the same manufactured batch and that the signatures were probably made using the same pen. 45.These findings meant that if these documents were genuinely signed on the dates that they bore, that would mean that the appellant had either kept and used the same pen over a period of about 10½ years, or that she had kept and used more than 1 pen over that period of time but that each of those pens contained ink from the same manufactured batch. The learned deputy judge accepted that it was theoretically possible to keep one or more ballpoint pens containing ink from the same manufactured batch and use that pen or pens over a period of 10½ years, but he concluded that such a theory was contrary to the evidence in this case. It is this conclusion that is the subject matter of the second part of ground 7 of the grounds of appeal. 46.Complaint, in particular, is made of the learned deputy judge’s assessment of the July 2003 HSBC update which, it is submitted, consisted of two mutually contradictory statements, namely, that YKK owned 100% of the shares in Asian Powers and that the appellant was a shareholder of Asian Powers. It was submitted that the learned deputy judge was wrong to conclude that this document did not indicate that she was a shareholder of Asian Powers and wrong to find that the document plainly said that YKK was the 100% shareholder of Asian Powers. I have looked closely at this document and conclude that the learned deputy judge was clearly right to find that this document showed YKK as holding 100% of the shares of Asian Powers, that being the figure that was typed in the printed box to indicate the percentage of his shareholding in the company in question. The typewritten figure of 100% clearly overrode the fact that the name of the appellant had been typed on the form as a shareholder of Asian Powers, together with YKK, particularly as the box on the same document, indicating that another person is the beneficial owner of the company, had not been ticked. 47.I dismiss this ground of appeal and hold that the learned deputy judge’s finding of forgery was amply supported by the scientific evidence and the other evidence, including the evidence that the documents in question were all signed in black ink whereas the appellant had given evidence that when she signed documents she would pick up any pen that came to hand, which might be of different colours. The proposition that the appellant had become the holder of 499 shares in July 2001 was contradicted by the HSBC update of 15 July 2003 showing YKK as holding 100% of the shares. The learned deputy judge rightly had regard to the evidence that cohabitation had ceased in 2000 between the appellant and YKK and that, therefore, it was inherently improbable that the YKK would have transferred to the appellant at the end of July 2001 some 99.8% of Asian Powers, a company that owned a very substantial part of the wealth of YKK. Given the importance of the transaction, and having regard to the evidence that most, if not all, important documents had been signed by YKK in the past, the learned deputy judge was justified in taking into account the absence of any documents signed by YKK himself in connection with the transfer of 99.8% of a very substantial part of the wealth of YKK. The learned deputy judge was also entitled to have regard to the fact, and rightly weighed in the balance before reaching his conclusions, that the appellant had demonstrated a propensity to engage in deceptive and fraudulent conduct in order to reward herself with the fruits of the estate of YKK to the disadvantage of his children, as evidenced by the deliberately untruthful affidavit sworn and filed by her in Queensland, Australia, in support of her application for Letters of Administration there, in which she deposed on oath that YKK was without issue. 48.I uphold the decision of the learned deputy judge that the documents upon which the appellant relies specifically for her entitlement as shareholder in Asian Powers were forged and back-dated and are void ab initio and without effect. Grounds 8 & 10 of the Grounds of Appeal 49.In the light of this decision, it is not necessary to deal with grounds 8 and 10 of the grounds of appeal which were predicated upon a conclusion that the documents relied upon by the appellant were genuine and valid. However, for the sake of completeness, I will deal with these grounds of appeal briefly. 50.Ground 8 of the grounds of appeal seeks to impugn the learned deputy judge’s conclusion that, even if a meeting of the board of directors had taken place on 31 July 2001, the board resolution at that meeting was invalid by reason of the fact that a director, Ms. Yuen Aye Yen, had received no notice of the meeting. It was conceded by counsel for the appellant at trial that no resolution had been made providing for a meeting on 31 July 2001 and that, therefore, it followed that the meeting on that day was a special meeting in respect of which notice had to be given to each director at least 48 hours prior thereto, pursuant to section 7 of Article III of the By-laws of Asian Powers. It is trite law that the absence of notice to a director will invalidate any resolution made at such special meetings. I agree with the submission of Mr Clifford Smith SC that the case of Peter Yip v Asian Electronics [1998] 2 HKC 96, which was relied upon by Mr Cheng Huan SC, is distinguishable for the reasons given by Recorder H Wong SC in Billion Express Industrial Ltd v Tsang Hung Kong, HCA 2740 of 2008, 23 May 2012, namely, that the articles of the company in question in Peter Yip v Asian Electronics included a special provision expressly providing that a resolution agreed upon by at least 75% of the directors shall be valid and effectual whether or not it shall be passed at the meeting of the directors duly convened and held. On the facts of that case, that article was satisfied and Le Pichon J, as she then was, was right to dismiss the challenge made by the plaintiff in Peter Yip v Asian Electronics that was based on lack of notice to directors. 51.Further, it is no answer to the lack of notice to say that the director in question would have been outvoted had she attended the meeting. The company is entitled to the collective wisdom and contribution of all the directors. The powers of management are delegated to the board of directors as a whole, not to individual directors. A director is entitled to attend at the meeting of directors, not merely to vote, but also to provide his views to the board and to persuade his fellow directors on matters raised for discussion. 52.Finally, the learned deputy judge was entitled to hold, even if 499 shares had properly been allotted to the appellant, that she held them as nominee for YKK. There was ample evidence adduced before the learned deputy judge from which he properly concluded that the appellant ceased to cohabit with YKK in 2000. The learned deputy judge was entitled to conclude that YKK, having ceased to cohabit with the appellant in 2000, would not have agreed, in July 2001, to transfer the beneficial interest in a very substantial part of his total assets to the appellant. This was a conclusion that was buttressed by the 2003 HSBC update statement signed by YKK stating that he beneficially held 100% of the shares in Asian Powers. 53.Ground 9 of the grounds of appeal was not pursued. 54.If this has not already been done, I propose to refer this case to the Director of Public Prosecutions for his further action.
Mr Clifford Smith, instructed by Norton Rose Hong Kong, for the Plaintiff (original action) / Respondent Mr Cheng Huan, SC and Mr Edward HM Tang, instructed by Choi & Associates, for the Defendant (original action) / Appellant |
Cases cited in this judgment