Chan Pui Sze and Mak Hau Yin (The Joint and Several Trustees of the Property of the Bankrupt) v. Wang Jue

On 8 October 2026, the Court of Appeal (Chu VP, Barma and G Lam JJA) handed down judgment in Chan Pui Sze and Mak Hau Yin (as Trustees of the Bankrupt) v Wang Jue [2026] HKCA 1776, dismissing the Trustees' appeal and upholding Cheng J's dismissal of their claim at [2024] HKCFI 2491. Mr José-Antonio Maurellet SC (with Mr Jason Yu and Mr Charlie Liu), instructed by Messrs LCP, acted for the successful Defendant.

The Trustees of Mr Qin Jun's bankruptcy estate brought proceedings under s 49 of the Bankruptcy Ordinance (Cap 6) to set aside transfers Qin made in August 2013 of his interests in two Palo Alto and Tiburon properties to his wife, Wang. Wang defended on the basis that the transfers were made pursuant to a Marital Settlement Agreement (the "Agreement") signed on 2 August 2013, and were therefore supported by consideration. The trial judge accepted that defence, finding the Agreement was genuine and not a sham, and dismissed the Trustees' claim. The Trustees appealed.

The court held that: (1) on authenticity, even assuming the judge misstated the burden of proof in one passage (§112), she had not relied on the burden to dispose of the issue; she accepted Wang's evidence and the contemporaneous transfer deeds, which expressly referenced the Agreement as the basis for a documentary transfer tax exemption; (2) on the alleged errors in §106 of the judgment, the judge did not misunderstand the Trustees' case regarding the alleged pretence, and her treatment of Wang's subjective belief in 2013 was not inconsistent with her earlier objective finding on common intention at the time of acquisition in 2010 (§92), since a subjective belief in sole ownership can coexist with the absence of a common intention trust; (3) on adverse inferences, the judge was entitled to draw some inferences from Qin's failure to testify but not others, because the Trustees bore the burden of proving a common dishonest intention for sham, and the critical allegation that there was no genuine separation was never put to Wang in cross-examination; (4) on non-performance, the judge was entitled to find that subsequent transfers and payments between the parties, in the context of a 20-year marriage with four young children, were not of such a scale as to compel a finding of sham (§109); and (5) on consideration, the Agreement's mutual promises and release of claims provided consideration, and Wang's pleading was not confined to actual forbearance from divorce.

The Trustees' appeal was dismissed, with an order nisi that they pay Wang's costs, certified for two counsel.

Why it matters

First, in sham cases the burden lies on the party alleging the sham to prove a common dishonest intention, and the central allegation must be put to the witness in cross-examination if adverse inferences are to be drawn from a non-attending party. Second, the appellate court will not lightly disturb a trial judge's finding that a party acted honestly, particularly where the trial judge has had the advantage of seeing the witnesses give evidence. Third, for insolvency practitioners, marital settlement agreements, even imperfectly performed, will defeat s 49 undervalue claims if genuinely entered into, since mutual promises of release are themselves sufficient consideration.