Cheng Lap Kai v. Secretary for Justice

HCMP 879/2012

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 879 OF 2012

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Before : Deputy High Court Judge B Chu in Chambers

Date of Hearing : 23 January 2013

Date of Judgment : 6 February 2013

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J U D G M E N T

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Introduction

1.The applicant Mr Cheng is seeking a declaration that certain assets of the estate of the deceased (“Deceased”) had been given to him by by way of donatio mortis causa.

2.The Secretary of Justice is the respondent in this application since should Mr Cheng fail in his application, the estate of the Deceased would vest in the Government of Hong Kong as bona vacantia.  The Secretary of Justice takes a neutral stance in the present application, apart from appearing to cross examine Mr Cheng and to make submissions.

3.Originally Mr Cheng was also seeking a declaration that he was the sole beneficiary of the estate of the Deceased but this part of his claim had been abandoned.

Factual Background

4.Mr Cheng was the one and only witness in this application and the factual background essentially came from his 3 affirmations, his supporting documents and photographs, and his oral evidence during the hearing.

5.Mr Cheng was born in Hong Kong in December 1951, and is now 61 years of age.

6.According to Mr Cheng, when he was 21 years old, he was told by his father that he was in fact an adopted child.  Mr Cheng Senior and his former wife, who was the sister of Mr Cheng’s natural mother adopted him when he was about 2 years old.  Later, in about 1955/1956, his adoptive parents separated after an argument and he was left in the care of his adoptive father.

7.Mr Cheng Senior married the Deceased in May 1959 in Hong Kong according to Chinese customary rites and ceremonies.  No children were born out of this marriage.

8.After his adoptive father married the Deceased, Mr Cheng lived together with them and they brought him up as their only son and reciprocally, he said he also treated them as his own father and mother in all aspects.  At the time of Mr Cheng’s marriage in 1974, on his marriage certificate[1], his father was stated to be Mr Cheng Senior and the Deceased was one of the witnesses who signed on his marriage certificate.

9.After his wife gave birth to a son later in 1974, Mr Cheng and his family moved away from his adoptive parents due to lack of space in their flat, but continued to visit them regularly.  Then in 1975, they moved back to live with his adoptive father and the Deceased when they moved to a more spacious flat on Nathan Road (“the Nathan Road Flat”).

10.When his adoptive father passed away in December 1980, on the death certificate, Mr Cheng was stated to be the son of the deceased being present at the death[2].

11.Mr Cheng Senior died intestate.  The Deceased applied for the letters of administration of his estate as his lawful widow.  In the affirmation of the Deceased made at the time of her application for letters of administration[3], the Deceased had stated therein that Mr Cheng was adopted at the age of 2 years by Mr Cheng Senior. Further, according to that affirmation, Mr Cheng Senior had no issue or child who predeceased him, and left no wife other than the Deceased.

12.After the death of Mr Cheng Senior, Mr Cheng and his wife and son continued to live with the Deceased at the Nathan Road Flat until mid 1985 when the Deceased decided to sell the Nathan Road Flat.  After sale, according to Mr Cheng, the Deceased gave him HK$100,000 for him to buy his own flat. The Deceased then rented a suite at her friend’s flat until 1995 when she was allocated a public housing unit in Kwun Tong (“Kwun Tong Flat”).

13.According to Mr Cheng, throughout those few years when his family was living with the Deceased after the death of his adoptive father, he would pay household contribution/maintenance to the Deceased, but after he bought his own flat, he paid her less as he needed to pay for the mortgage of his own flat and to maintain his own family.

14.Since 1985, the Deceased had lived alone.  Mr Cheng said he would visit her about once a week or every two weeks, and would give her sums every month, about HK$1,000 per month.  Mr Cheng had produced an individual tax return for 1996/1997 to show that he had applied for dependant parent allowance for supporting the Deceased[4].

15.In about June 2000, the Deceased apparently had an accidental fall and suffered a fractured leg.  Thereafter she applied for elderly service with the United Christian Hospital (“Hospital”) and provided the name of Mr Cheng as her son to be the contact person.[5]

16.There was very little information provided by Mr Cheng as to how the Deceased led her life for the next 10 years. According to what Mr Cheng said during the hearing, the Deceased preferred to live alone, and she liked to play mahjong, and one of her mahjong friends was living in a flat in Mei Foo Sun Chuen (“Mei Foo Flat”).  The Deceased and her friend used to buy shares together through the Mei Foo branch of a securities company which I shall simply call Christfund, and further the Deceased had used the Mei Foo Flat as her address for Christfund to send her securities statements, and the Mei Foo Flat was also registered as the address of the Deceased for some shares she held[6]?

17.In about September 2010, the Deceased was apparently complaining of stomach problems, and Mr Cheng accompanied her to the Hospital for a follow up consultation.

18.The Deceased was later diagnosed with gall bladder cancer in October and died on 28 November 2010 in the Hospital at the age of 82 years[7].

19.She died intestate.  There was no evidence that the Deceased was married to anyone else during her lifetime, other than Mr Cheng Senior.  Further, according to Mr Cheng, the Deceased had no parents, no children, no siblings and no relatives, apart from him.

20.The Deceased’s estate consisted of cash in her savings accounts at Bank of China (“BOC”) and Bank of Communications (“BOCOM”), shares in public listed companies in Hong Kong and some cash, jewellery and valuables in a safe deposit box at Bank of East Asia (BEA Box”).

21.It is Mr Cheng’s case is that between September 2010 and her death, the Deceased had gifted to him all her above assets by way of donatio mortis causa (“DMC”).  I will go into his evidence on these alleged gifts later on in this judgment.

The Law on DMC

22.It is a well-established principle that there is no equity to perfect an imperfect gift and equity does not assist a volunteer.  An incomplete gift is therefore invalid[8]. A DMC is, however an exception to this well-established principle.  It is now also well-established that there are 3 essential requirements for an effectual or valid DMC, as laid down in the case of Cain v Moon[9].

23.In the case of Official Administrator v Luk Hoi Tong Co Ltd[10], A Cheung J (as he then was) quoted the following passage from Hayton and Marshall[11] on the doctrine of DMC and the 3 requirements:-

“Cases of donatio mortis causa sometimes provide an exception to the rule that equity will not perfect an imperfect gift. A donatio mortis causa must comply with the following essential requirements:

(i) The donor must have made the gift in contemplation though not necessarily in expectation of death.

(ii) He must have delivered the subject-matter of the gift to the donee or transferred to him the means or part of the means of getting at that subject-matter, e.g. delivering a key, like car keys, or a key to a box containing essential indicia of title, intending to part with dominion over the property to which the key relates.

(iii) The circumstances must have been such as to establish that the gift was to be absolute and complete only on the donor’s death so as to be revocable before then.  A condition to this effect need not be expressed and will normally be implied from the fact that the gift was made when the donor was ill.”

24.As for the 2^nd requirement for the donor to “part with dominion” over the subject matter, Cheung CJHC has referred to the following explanation in the case of In re Craven’s Estate[12]. In that case, Farwell J had said as follows[13]:-

“I have considered what was the reason for imposing as a condition of a valid donatio that the donor must part with dominion over the subject-matter thereof and the answer seems to me to be that the subject-matter of the donatio must be some definite property, and, to ensure that, the donor must put it out of his power between the date of the donation and the date of the death to alter the subject-matter of the gift and substitute other chattels or property for it.  Otherwise, so long as the subject-matter of the gift remained in the dominion of the donor, the donor might at any time between the donatio and the gift deal with it as he or she pleased.  Take for instance the case of a box.  The donor says to the donee: “This box contains certain valuables which are to be yours in the event of my death from the operation which I am going to undergo in a few days, but I propose to retain the box and the key of the box.”  If that was the position it would be open to the donor at any time to take out of the box whatever was in it replacing it with other valuables, and in my view it is in order that that should not be possible that one of the requirements of a good donation is that the donor should have parted with dominion so that whatever the original subject-matter of the donatio was it should remain the subject-matter in the event of the death of the donor.  In the case of the box it is not necessary to hand over the box if the key is handed over because it is assumed that the key which unlocks the box being in the possession of the donee the donor cannot have access to the contents so as to deal with them in any way.  I know of no decided case in which the question has arisen whether the handing over of a box and one key, it being proved that there was another key retained by the donor, would be sufficient, but in the absence of authority, in my judgment, it would probably be held not to be sufficient parting with dominion because the donor would have retained dominion over the box and the contents of the box by retaining the power to open it although it might be in the possession of the donee.  However that may be, it seems to me that there must be such a parting with the dominion over the chattels or the property as to prevent the subject-matter of the donatio being dealt with by the donor in the interval between the donatio and either the death or the return of the articles by the donee to the donor.”

25.Cheung CJHC has also referred to Bunn v Markham (1816) 7 Taunt 224, where the dying person caused the subject property to be sealed in three parcels and the names of the intended donees written thereon.  He declared that they were intended for the named donees and directed that they should be given to them after his death.  The parcels were then replaced in the chest to which the deceased retained the key.  The court held that there was no sufficient delivery and accordingly, no effective donatio mortis causa.  Gibbs CJ said (at pages 231-232):-

“As to the other points, it is agreed on all hands, that a donatio mortis causa cannot exist, without a delivery. The facts of this case are, that the property was taken out of a chest of the testator, looked over by him, and sealed up in three different parcels: being so sealed, he declares that it is intended for the witness’s mother and sister, and directs that it shall be given to them after his decease; there is no other delivery but that: it is replaced in the chest, and the keys are re-delivered to the testator, or by him or persons whom he always nominates as his servants for that effect, and he expresses a continual anxiety about the custody of the keys. The question is, whether this be a sufficient delivery to make a donatio mortis causa; and we are clear that it is not. … Seeing, therefore, that it is in the power of the donor at any time to revoke the donation before his death, and that there must be a continuing possession of the donee after the delivery to the time of the donor’s death; seeing too, here, that there is neither a delivery, nor a continuing possession, we are of opinion that no interest in this property passed to Mrs. and Miss Clifton under the supposed delivery to the son for the use of his mother and sister; and that therefore a nonsuit must be entered.”

26.The 2^nd requirement has also been elaborated in the case of Official Administrator, the Personal Representative of the Estate of Lung Nga Lai Eilly v Kong Mei Sin and Others[14]. In that case Lisa Wong DHCJ (as she then was) has said:-

“The donor must have delivered to the donee the subject-matter (in the case of a chose in possession) or the indicia of title (in the case of a chose in action) of the gift, or transferred to him the means of getting at that subject-matter or indicia of title, e.g. delivering a key, like car keys, or a key to a box containing the indicia of title, intending to part with dominion over the gift.”

27.Although the above judgment is now subject of an appeal, it is not disputed that the appeal should not affect the above quoted passage.

The Burden of Proof

28.Lord Chelmsford has said in the case of Cosnahan v Grice[15],

“Cases of this kind demand the strictest scrutiny. So many opportunities, and such strong temptations, present themselves to unscrupulous persons to pretend these deathbed donations, that there is always danger of having an entirely fabricated case set up. And, without any imputation of fraudulent contrivance, it is so easy to mistake the meaning of persons languishing in a mortal illness, and by a slight change of words, to convert their expressions of intended benefit into an actual gift of property, that no case of this description ought to prevail, unless it is supported by evidence of the clearest and most unequivocal character.”

29.The burden of proof in the present application clearly rests on Mr Cheng that all 3 requirements of a DMC have been satisfied.

Whether Shares can be subject matter of a DMC

30.Mr Suen, appearing on behalf of the Secretary of Justice, has raised a query as to whether share certificates can be subject matter of a DMC or as I understand, whether shares can be the subject matter of a DMC.

31.In this application, the shares concerned are of public listed companies in Hong Kong.  As pointed out by Professor Pettit in “Equity and the Law of Trusts” (“Pettit”), it is commonly stated that some things cannot form the subject matter of a DMC and these seem to fall into two categories, namely (i) railway stock and building society shares; and (ii) donor’s own cheque or promissory note[16].

32.Regarding (i) above, Mr Suen has referred this court to two English cases, Moore v Moore[17] on railway stock, and Re Weston[18]on building society shares.

33.In the case of Moore v Moore, two years before his death, the deceased gave to his wife a railway debenture subsequently converted into railway stock, which remained in his name and on which the dividends were received by him but paid to his wife.  He gave the certificates to his wife and they remained in her possession until he required them in order to replace a lost dividend warrant.  While on his death-bed he handed the certificates to his wife saying that they were hers.  It was held, among other things, that the wife’s claim that the railway stock was gifted to her failed.  The wife’s claim was based on several grounds, including that the three sums of railway stock were the subject matter of a DMC, but the then V.C. also held also that railway stock could not be the subject matter of a DMC, relying on an earlier case of Ward v Turner[19]to say railway stock was not substantially distinguishable from some annuities bond, the subject matter of the DMC in Ward v Turner.

34.In the case of In re Weston, one part of the deceased’s estate consisted of some building society shares.  The defendant was claiming that those shares were subject matter of a DMC but it was held, among other things, that the gift of the building society shares failed.  The judge in this case had referred to the case of Moore v Moore and said he was not able to distinguish the subject matter of the gift, namely the building society shares from that of an ordinary certificate of railway stock, like that which was dealt with in Moore v Moore, and the mere fact that under the rules of the society there was a power to withdraw these investment shares at any time, and obtain the money for them, was not sufficient to differentiate the case from that of Moore v Moore[20].

35.The judge in In re Weston followed what the V.C. had said in Moore v Moore, and the V.C. in turn simply followed what was said in the case of Ward v Turner, without providing much rationale.

36.Pettit has on the other hand submitted that Ward v Turner should be regarded as deciding that the delivery (emphasis added) of the receipts of the annuities in question in that case did not ‘amount to a transfer’, not that the annuities in question could never be the subject matter of a DMC[21]. In Ward v Turner, the receipts concerned were the receipts for the consideration money of the purchase of the annuities.  Having read Lord Chancellor Hardwicke’s judgment in this 1751 case, I tend to agree with Pettit’s submissions.  In the side note of the report, so far as one can make out by this court, it is set out “In the case donationum mortis causa, an actual delivery in indispensible to vest the property, if the subject matter is capable of delivery.  If it be not so, there must be a delivery of what is equivalent to it at law (1).  In the case of stock, delivery of the receipts not sufficient to constitute such a gift, though strong evidence of the intent…” (italics as in text).

37.The submissions before Lord Chancellor Hardwicke were also reported, and the following extract could shed some light on what can form the subject matter of a DMC:-

“….Two questions arose, first, whether in fact these things were given? Secondly, whether properly given in point of law? Donations mortis causa are derived from the civil law. Justinian’s Inst. Lib.2, tit.7 shews the nature of them; and that in general any thing is properly the subject matter of such donations that maybe the subject matter of a legacy or donation inter vivos.”

38.It seems from the above that there is no reason as to why shares cannot be the subject matter of a DMC.

39.In the case of Sen v Headley[22], it was held that a gift of land by delivery of title deeds should not be excluded from the doctrine of DMC when the general requirements for such a gift are satisfied.  The Court of Appeal considered the general question of whether land can be the subject matter of a valid DMC, in view of what was said in the older case of Duffield v Elwes[23].  The Court of Appeal in Sen v Headley, admitting the doctrine of DMC to be anomalous, said anomalies did not justify anomalous exceptions, and was unwilling to make a distinction in the case of land which in its view would be to make just such an exception.  

40.In view of what was said in Sen v Headley, arguably, shares should not be excepted from the doctrine of DMC, and this appears to be the view in Pettit.  Further, as pointed out in Pettit, support for this can also be found in what Wallace A-CJ of the Court of Appeal in the New South Wales had said in Dufficy v Mollica[24]. In light of this and the above, I have come to the view that shares can be subject matter of a DMC.

41.Then follows another issue as to whether delivery of share certificates can amount to a valid DMC of the shares.  Again this issue appears to have originated from the case of Ward v Turner where Lord Hardwicke in his judgment said that that, after acceptance of the stock, the receipts ‘are nothing but waste paper”[25].

42.In Hayton & Mitchell: Trusts and Equitable Remedies it is stated that delivery of title deeds of land or of share certificates is capable of amounting to a DMC of the land or of the shares[26]. The footnote therein referred to the New South Wales Court of Appeal case of Dufficy v Mollica[27]referred to above where it was held that a delivery of share certificates could amount to a valid DMC of the shares.

43.Mr Suen has also referred this court to another New South Wales Supreme Court case of Public Trustee v Bussell[28] where Cohen J followed what was said in of Dufficy v Mollica and held that delivery of share certificates could be a valid DMC.  Cohen J has said that a share certificate constitutes indicium of title and not merely evidence of shareholding, and handing over of a share certificate in contemplation of death amounted to delivery of part of the means by which the donee could have the shares transferred into his name and which, with other conditions satisfied, was sufficient to constitute a DMC.

44.I further quote the following extract from what Cohen J has said:-

“It seems to me that on principle there is no distinction between the delivery of a bank passbook, where it is necessary to have a signed withdrawal slip in order to obtain the money in the account, and the delivery of a share certificate where it is necessary to have a signed transfer in order to have the shares put in the name of the done. In each case there has not been an immediate gift but a necessary means of obtaining the property has been delivered on a conditional basis[29].

45.Cohen J then considered the relevant Companies (New South Wales) Code and the memorandum and articles of association of each of the companies concerned and then went on to say, in relation to share certificates:-

“… They in fact constitute the indication of title which is issued by the company and which is an essential document for the purpose of the shares being transferred. Apart from the share register, which is not within the control of any of the shareholders, there is no other form of indication of entitlement to the shares. In my opinion they constitute indicia of title and not merely evidence of the shareholding. The handing over of the share certificates in this case therefore was a sufficient compliance with the second condition because it was a delivery of part of the means of getting at the property.”

46.Mr Wang, Counsel for Mr Cheng, has referred this court to the case of Cai Guo Xiang and Mok Hang Won Elsa[30] where it was held that the deceased had effected a valid gift to the defendant by way of DMC of the contents of the deceased’s safe deposit box, which contained, among other items, public listed company share certificates.  Mr Wang has also referred to the Official Administrator v The Luk Hoi Tong Co Ltd & Anor[31], where the alleged gift was of shares by the deceased.  In this case, it was held that there was no parting of dominion of the shares of a private company since the share certificates, dividend books and seals all along remained in the possession of the deceased up to the time of death. 

47.Although the issues raised by Mr Suen were not specifically raised in the two above Hong Kong cases, it seems to be accepted that a valid DMC can be affected by the delivery of share certificates which are prima facie evidence of title of the member to the shares.[32]

48.Having considered the New South Wales cases, I share the views therein and see no reason why delivery of the share certificates cannot amount to a sufficient compliance of the 2^nd condition of the 3 requirements.

Evidence on the Gifts

49.I now come to the alleged gifts by way of DMC.  According to Mr Cheng, there were 3 occasions on which the Deceased said and/or gave something to him which amount to a DMC:-

I. In September 2010 (1^st Occasion)

(1) In about September 2010, after the Deceased had attended the Hospital for follow-up consultation in relation to her stomach problems, Mr Cheng accompanied her home.  At her home, he tried to give HK$1,000 to the Deceased who refused to accept the same and the Deceased then told Mr Cheng that:-

(a)  She was receiving HK$1,000 “fruit money” from the Social Welfare Department (“the SWD Assistance”) and there was no need for him to give her money;

(b) She had the following arrangement:-

(i)  She had HK$800.000 odd, out of which HK$100,000 odd was in cash and HK$600,000 odd was in securities;

(ii)  She then showed him her passbooks of her savings accounts at BOC and BOCOM and showed her monies and securities to him, but she did not hand over these to him at that time;

(iii) She told him the securities documents were in a mess as some were in her safe deposit box, some were held in the securities company (later found out by Mr Cheng to be Christfund) and some were placed at home, and she would tidy up the documents and give to him later by transferring the same to his name, but these securities documents had to be gathered together first.  According to Mr Cheng’s 2^nd affirmation, she told him some shares and securities account statements were placed in a drawer in the left side of her wardrobe (“Drawer”) and pointed out the wardrobe but did not open the wardrobe or the Drawer on that occasion.

(iv) As her savings accounts did not have any interests, she would later arrange transfer of money equivalent to RMB100,000 to a fixed deposit account to be opened in their joint names, which would be utilized to settle her future funeral expenses, and the remaining sum of HK$20,000 and the SWD Assistance and interests from securities would be sufficient for her.  Thus, there was no need for Mr Cheng to give any money to her;

(v)  She told him to arrange for the administration of her estate in his favour after her death.

(2)  Mr Cheng then said as a result of the above, she gave to Mr Cheng a set of keys (including a key to the door, a padlock used to lock the gate and a key to the letter box of her home) and asked Mr Cheng to duplicate the set of keys.

II.  On or about 27 October 2010 (2nd Occasion)

(1)  When the Deceased went to the Hospital in September 2010, she underwent a scan of her stomach.  She then went back to the Hospital for follow up consultation in early October 2010 and was told her scan result that she was suffering from gall bladder cancer.  On that occasion, she was accompanied by Mr Cheng’s son, as Mr Cheng was not in Hong Kong.  Apparently due to her age, and the position of the tumour, the doctor did not suggest any operation or any chemotherapy or any other treatment.

(2)  On about 25 October 2010, the Deceased went to the Hospital by herself for an out-patient consultation, and while at the Hospital she suddenly fainted and was admitted into the Hospital.

(3)  After she was admitted into Hospital for two days, according to Mr Cheng, she requested to be discharged from the Hospital in order to enable her to arrange the transfer of all her assets to Mr Cheng by will.  Mr Cheng accompanied her home on about 27 October 2010. After she arrived at home:-

(i)   She gave Mr Cheng 2 keys to her safe deposit box at the Bank of East Asia (“BEA Box”). Prior to her giving him the keys, she had told him that she would give him everything in her safe deposit box.  She further asked him to arrange a dinner with his family;

(ii)  Mr Cheng then asked the Deceased, if after she passed away, whether he should contact anyone.  She then replied that she had no other relative or siblings and all her assets would be given to him.

(4)  The Deceased and Mr Cheng’s family then had dinner together several days afterwards when photographs were taken.  Thereafter the Deceased continued to stay alone at Kwun Tong Flat.  According to Mr Cheng, although she would like to engage solicitor to prepare a will in his favour, she was too ill to do so.

III.  Early November 2010 (3^rd Occasion)

(1)  On about 1 or 2 November 2010, the Deceased felt unwell again, and she pressed the emergency bell installed in her Kwun Tong Flat.  She was admitted to the Hospital.  Several days after her admission, she:-

(i)  gave Mr Cheng the passbooks of her savings accounts at BOC and also BOCOM respectively, which showed she held shares in public companies;

(ii) told Mr Cheng that she would give to him all the following after her death since she thought she would pass away shortly:-

(a)  all her properties in the box,

(b)  all her monies in her bank accounts at BOC and BCOM,

(c)  the interests in the share certificates (sic) together with any bonus thereon which were kept at home and in the safe deposit box and at securities companies (later found to be Christfund).

(2)  she also asked Mr Cheng to open her letter box to collect letters as well as to settle her utilities bills.

Mr Cheng’s Demeanour

50.As mentioned earlier, Mr Cheng was the only witness in this application. Although he was not merely a friend of the Deceased as in the case of Cao Guo Xiang by his lawful attorney Lam Fong and Mok Hang Wong Elsa[33] or a neighbor as in the case of Estate of Lung Nga Lai Eilly[34], his Counsel Mr Wang has agreed that the principle is still the same and that cases of this kind demand the strictest scrutiny. 

51.Mr Cheng became rather emotional when being asked by Mr Suen, Counsel on behalf of the Department of Justice, as to how he came to be adopted by Mr Cheng Senior and how he found out about his own adoption.  These were matters which were not disclosed by Mr Cheng in his affirmations. So far as his relationship to the Deceased is concerned, there were some supporting documents and photographs as I have referred to above.  Mr Cheng did not appear to be making up the details when he was being asked and I find he was truthful as to his relationship with the Deceased.

52.He was the only person present with the Deceased when the alleged gifts were made by the Deceased and his evidence was not corroborated.

53.Mr Cheng’s 1^st affirmation was in English but his 2^nd and 3^rd affirmations were in Chinese, and he gave evidence in Cantonese.  From my observation, he did not put any gloss over his evidence, answered questions in a straightforward manner without much hesitation.  It is now over two years since the Deceased died, and there were some inconsistencies between what he said during the hearing and what he had said in his affirmations but this should not affect his general credibility.  Having observed his general demeanor, I have no reason to believe what he said was not truthful.

The Findings

54.Essentially, there are 4 parts of the Deceased’s estate:-

(i)  Shares in Hong Kong public companies, of which share certificates and Christfund securities account statements were found in the Drawer by Mr Cheng, after the death of the Deceased (“1^st Part”);

(ii)  Contents of the BEA Box, containing jewellery and other valuables, some foreign currencies, a deposit receipt, and share certificates of shares of Hong Kong public listed companies (“2^nd Part”);

(iii) Monies in the Deceased’s bank accounts BOC and BOCOM (“3^rd Part”);

(iv)  Shares of which share certificates were collected by Mr Cheng from the Mei Foo Flat, or the letter box of the Deceased, after the death of the Deceased (“4^th Part”).

2^nd Part

55.The Deceased was told of her cancer in early October 2010, and that there would be no operation or treatment, and she was told to wait.  Having been told this by the doctor, she should know that she would not have long to live.  Later that month, when she asked to be discharged 2 days after she was admitted to the Hospital, according to Mr Cheng, this was because she wanted to deal with the transfer of all assets to him by way of making a will. The 2^nd Occasion took place about 2 days after her discharge, and it was on the 2^nd Occasion that she gave 2 keys to the BEA Box to Mr Cheng, and told him that she had no other relative or siblings and that all her assets would be given to him if she passed away.

56.The 2 keys given to Mr Cheng by the Deceased were the only keys to the BEA Box.  The Deceased did not retain one of the keys.  There seems to be no reason to doubt what Mr Cheng had said, and on a balance of probabilities, I accept his evidence and find that the Deceased did give him both the keys to BEA Box on the 2^nd Occasion.  It is not disputed that the keys would be the means of getting at the subject matter of the gift, namely the contents of the BEA Box.  I am satisfied that there was a delivery of the means or part of the means of getting at the contents inside the BEA Box by the Deceased, including the shares as evidenced by those share certificates found inside[35], and the Deceased had intended to part with dominion over the property to which the key related.

57.I further find that the gift was made by the Deceased in contemplation of her death, and it was absolute and complete and only to be conditional on her death.  All 3 requirements of a DMC are thus satisfied in relation to the contents of the BEA Box.

3^rd Part

58.As for the monies in the bank accounts at BOC and BOCOM, Mr Cheng said the Deceased was admitted into the Hospital in early November 2010. She remained there until she passed away on the 27 November.  Mr Cheng said he was in Shenzhen when the Deceased was admitted and he said he came back immediately to visit her.  This was about 2 days after her admission, and this was the 3^rd Occasion.  When he saw the Deceased, she was in agony. Mr Cheng said Deceased had taken a bag to the Hospital and she had kept her savings passbooks of BOC and BOCOM inside her bag.  It was on this occasion she gave him her passbooks, and when he visited her again with his wife in another 2 days’ time, the Deceased reminded him to go and apply for letters of administration of her estate.  According to Mr Cheng, the condition of the Deceased remained unchanged at first but after about mid November, she became unconscious.  Mr Cheng said it was he who discharged all the Hospital bills for the Deceased during her hospitalization, and that he also paid her rent, outgoings and utilities.

59.Again, there seems no reason to doubt what Mr Cheng had said, and on a balance of probabilities, I find that the Deceased did give him her the two passbooks when she was in the Hospital.  By this time, the Deceased probably realized that she was coming to the end of her life soon, and she must have made the gift in contemplation of her death.  There is no dispute that the delivering of the passbooks could amount to parting with dominion over the monies in bank accounts.  I thus find that by delivery the passbooks to Mr Cheng, there was parting of dominion of the monies in the Deceased’s accounts at BOC and BOCOM, and the gift was intended by the Deceased absolute and complete and only to be conditional on her death.  The 3 requirements of a DMC in respect of the monies in the Deceased’s savings accounts at BOC and BOCOM are thus satisfied.

1^st Part and 4^th Part

60.Apart from the shares of which share certificates were found in the BEA Box, the Deceased also had shares of which share certificates and securities documents were found in various locations:-

(i)  Those shares held by Christfund as nominee for the Deceased, as evidenced by Deceased’s statements of her securities account held at Christfund, which were found inside the Drawer[36];

(ii)  Those shares evidenced by share certificates found inside the Drawer[37], and a brown envelope containing dividend payments in relation to 1,116 MTR shares[38];

(iii)  500 shares of Sunevision Holdings Ltd evidenced by a share certificate issued on 25 November 2010 which was sent to the Mei Foo Flat and collected therefrom by Mr Cheng, after the death of the Deceased[39];

(iv)  100 shares in Bank of China Limited evidenced by a share certificate issued on 13 December 2010[40], found in the letter box of the Deceased by Mr Cheng, after the death of the Deceased.

61.So far as the 1,116 MTR shares are concerned, as the share certificates are now in the BEA Box they form part of an effective DMC as I have found earlier.  Mr Suen has raised an issue on whether the alleged gifts of the other shares were made in contemplation of death and whether there had been delivery.

62.On the 1^st Occasion, the Deceased had just returned from the Hospital after a consultation over her stomach problems and although she had undergone a scan, the result was not yet known.  Although she mentioned opening a joint account for future funeral expenses, there was no evidence to indicate that the Deceased knew she was suffering from any serious illness at that time, let alone a life-threatening one.  According to Mr Cheng’s 1^st affirmation, it appears to this court what the Deceased said to him was only explaining to him why she was refusing to accept further money from him or why he did not need to pay her any more money.

63.The Deceased mentioned that she intended to open a joint account with him for transfer of some money for future funeral expenses, and that she would gather together the securities documents and would transfer these to him later, but no securities documents were handed to Mr Cheng on the 1^st Occasion nor were they even shown to him.  The Deceased had only said that the securities documents were messy, some were at home, some at the safe deposit box, and some with securities firm.

64.Even if the Deceased did point out to Mr Cheng the location of her wardrobe or the Drawer, neither of them opened the wardrobe or the Drawer to inspect the contents therein.  The Deceased did not tell Mr Cheng exactly what documents were kept where.  Further, according to what Mr Cheng told the court during the hearing, later when he went to the Kwun Tong Flat after the death of the Deceased he saw there was a pair of keys to the Drawer, and one key was inserted into the keyhole of the Drawer, but the Drawer was not locked.  The keys to the Drawer were never handed over to Mr Cheng by the Deceased before her death.

65.It was also on the 1^st Occasion that the Deceased gave Mr Cheng a set of her keys to the Kwun Tong flat and her letter box to duplicate, but she continued to keep her own set.  The duplicate set of keys would enable Mr Cheng to gain entry to the Kwun Tong Flat and to the Deceased’s letter box.  As the Deceased was living alone, and having just been to the Hospital, what the Deceased did appears to this court more like a practical arrangement for convenience.

66.Mr Wang has agreed that as the Deceased was still residing in the Kwun Tong Flat, she obviously was still holding her own set of the keys for her own use[41]. There was no evidence of her handing over of her own set of keys over to Mr Cheng before her death.

67.Mr Wang however submits that by the time the Deceased was admitted in the Hospital in November 2010, she was no long able to return to her home and the nature of the keys previously transferred should be changed and an intention of giving all properties inside should be found.  Mr Wang has argued that such intention was supported by what the Deceased said to Mr Cheng on the 3^rd Occasion.

68.Further, Mr Wang has submitted by giving Mr Cheng one set of the keys to the Kwun Tong Flat on the 1^st Occasion, followed by what she said to him on the 3^rd Occasion, the Deceased had effectively, with the intention of parting with dominion over the shares, delivered the keys to Mr Cheng, which was the means of getting at the shares, of which share certificates and Christfund Statements were found in the Drawer inside the Kwun Tong Flat, and the gifts were made in contemplation of her death.

69.Mr Wang has relied on Cain v Moon[42] where it was held that an antecedent delivery should be as good as a delivery at the time of the gift[43].

70.In Cain v Moon, the deceased had deposited money at the bank and a deposit note was given to her, which she kept in a small cash box, which was kept locked and of which she retained the key.  In early 1893, the deceased was ill, and at end of June, the defendant visited her, and during this visit, the deceased handed the deposit note to the defendant telling her never to part with it and that was for her past kindness to her during her recent illness. From that day onward, the deposit note had remained in the possession of the defendant with the full knowledge of the deceased, and in September 1895 , the defendant visited the deceased who was then seriously ill and the deceased told her everything she possessed and the deposit note was for her in case of the deceased’s death. She died 5 days later.

71.In the present application, had the Deceased handed the share certificates or the securities accounts statements to Mr Cheng on the 1^st Occasion, I could see that it could perhaps be argued that there was “antecedent delivery”. On the 1^st Occasion, the Deceased had only asked Mr Cheng to make a duplicate set of keys to the Kwun Tong Flat and the letter box.  There was no handing over of her own set of keys, not on the 1^st Occasion, nor on the 3^rd Occasion or any other occasion.  I am of the view that this can be distinguished from Cain v Moon and I do not find there was sufficient evidence of any delivery, with the intention of parting with dominion, whether “antecedent” or not.  I do not find there the 2^nd requirement of the 3 requirements of a DMC was satisfied and the alleged gift of the shares of which certificates and securities account statements were found inside the Drawer, save for the 1,116 MTR shares.

72.So far as the 500 shares of Sunevision Holdings Ltd evidenced by a certificate issued on 25 November 2010 are concerned, the share certificate was sent to the Mei Foo Flat and collected by Mr Cheng after death of the Deceased. Subsequently, at the opening of the BEA Box, an older certificate issued on 15 March 2000 of 500 shares of Sunevision Holdings Ltd was found.  After hearing, upon clarification from the Share Registrar, it turned out that these 500 shares evidenced by certificate issued on 25 November 2010 were bonus shares.  As I have found that the original 500 shares evidenced by the share certificate issued on 15 March 2000 found inside the BEA Box was a valid gift by DMC, I am of the view that the bonus shares formed part of the gift.

73.Then there are the 100 shares of the Bank of China Ltd as evidenced by a share certificate issued on 13 December 2010.  According to Mr Cheng, when the Deceased was hospitalized, he found in her letter box, a notice of offer of an option for the Deceased to take up an allotment of 100 shares, arising out of her holding of 1,000 shares.  Mr Cheng said as the Deceased was in hospital, he decided to pay for the 100 shares on behalf of the Deceased.  The share certificate of the Deceased’s 1,000 shares was found inside the Drawer subsequently.  Mr Cheng collected the certificate for the 100 shares from the letter box of the Deceased some time in December 2010 after her death.  I have found the alleged gift of the 1,000 shares has failed, and it follows that these additional 100 shares should fail and in any event, I find the 2^nd of the 3 requirements not satisfied.  Whatever Mr Cheng has paid on behalf of the Deceased should be repaid to him from the estate.

74.In view of the above, Mr Cheng has failed to prove that the 1^st Part and the 4^th Part of the Deceased’s estate were given to him by way of DMC, and his application in connection with those assets must fail.

75.Mr Cheng is only entitled to the following by way of an effective DMC:-

(i)   all monies held in the savings accounts of the Deceased, namely account no. 070-917-1-064568-3 at the Bank of China (Hong Kong) Ltd and account no. 02755110010383 at the Bank of Communications, as at date of death of the Deceased.

(ii)  all contents of the safe deposit box number 013-191-01-01149 at the Bank of East Asia Ltd, Waterloo Branch, including the deposit receipt for HK$300, foreign currencies, shares as evidenced by the share certificates contained therein, jewellery and valuables.  For avoidance of doubt, the shares will include any bonus shares and dividends arising therefrom.

76.Mr Cheng has succeeded partly on his application. Having considered to the circumstances of the case, I make no order as to costs.  This is an order nisi, which will be made final and absolute after 21 days.

Mr Justin Wang, instructed by T Y Lam & Co, for the Applicant

Mr Suen Sze Yick, GC & Mr Gordon Chung, GC, of the Department of Justice, for the respondent