CHEUNG CHO KAM SINDY AND ANOTHER v. CHEUNG YUET YING ROSE

CACV 178/2008

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 178 OF 2008

(ON APPEAL FROM HCA NO. 885 OF 2005)

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J U D G M E N T

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Hon Rogers VP:

1.  This is an appeal from a judgment of Deputy High Court Judge Muttrie given on 13 July 2007.  The order that was made by the judge was that all moneys and securities and assets deposited in bank accounts of the deceased, Madam Lau Mei-tai, which were and are held by the defendant, whether solely or jointly with others, were declared to be held on trust for the deceased absolutely.

2.  The judge made other and further orders, including orders for interim payment of a sum in excess of $5 million to the 1st plaintiff, and a sum in excess of $1.5 million to the 2nd plaintiff.  I should state at the outset that the 1st and 2nd plaintiffs are sisters of the defendant.  There were other siblings who took part in the case but were not parties to the action.  There was also a father.

3.  The history of the matter is relatively simple, although the judgment is extensive.  For the full facts of the case reference can be made to the judgment.  In essence, the deceased was the mother of the family.  She, by all accounts, must have been a fairly shrewd lady.  She operated a store in the Wong Chuk Hang Estate.  By dint of her financial acumen - which was not apparently learned at school, but in practice - she managed to accumulate considerable wealth, largely probably by dealing in shares.  Towards the end of her life her health was not good.

4.  In summary, what the judge held was that the deceased had arranged for the defendant to help her manage her bank accounts.  There were a large number of bank accounts.  They are set out in paragraph 5 of the Amended Statement of Claim.  There was also a deposit box.  Many of those bank accounts were held in the name of the deceased solely, but the defendant had control of them.  Some of them were held in the name of the deceased and the defendant.  One of the interesting points of the evidence is that, while she was able, the deceased used to go to the bank to have her bank statements explained to her.  In later years, especially when she was in hospital, that was not possible.

5.  The judge carefully examined and considered the evidence that was given at the trial before him that had extended for a period of some five days.  He reached firm conclusions.  I think I need only cite from paragraph 80 of the judgment, where he said:

“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 consented 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 was 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 sum pleaded to her own use.”

6.  The judge did not alight upon that finding simply as such, but he had scrutinised the evidence.  He had examined in particular the evidence which had been given by Rose, and the way in which it had emerged over the course of time that Rose actually had claimed that the moneys and the contents of the deposit box belonged to her and had been given to her.  The judge was not satisfied and, thus, he came to his firm conclusions.  His judgment followed accordingly.

7.  On this appeal Mr Yip has manfully tried to argue that the judge should have applied the presumption of advancement.  He says that the judge should have started with that.  But the fact of the matter is that the presumption of advancement is only a presumption which is applied when there are no facts upon which the court can operate which would determine one way or the other where the particular property was intended to be owned.  Once the judge has made findings of fact, as has the judge in this case, there is no scope, in my view, for the presumption of advancement.

8.  For those simple reasons, in my view this appeal must fail.

Hon Le Pichon JA:

9.  I agree.

Hon Stone J:

10.  I entirely agree with the judgment of the Vice President.

11.  It seems to me, with respect, that the Appellant has given an wholly erroneous significance to the so-called “presumption of advancement.”  It is not a ‘starting point’, as Mr Yip strongly has maintained, which thus immediately reverses the burden of proof.  As the Vice President has intimated, the presumption is relevant only when there is no evidence of actual intention, or when the evidence available as to actual intention is evenly balanced.  This patently is not the case here.  The learned judge considered all the evidence and made his firm findings of fact.  In the circumstances I, too, fail to see how the presumption comes into play at all.

(Submission re costs)

Hon Rogers VP:

12.  We have generally adopted the approach that even if people do not ask for it, they will be entitled to a certificate for two counsel into the Order.  But we now will make it clear, as very often people forget to ask for it.  In this court we think that no case should come to this court unless it merits two counsel.

CACV 178/2008

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 178 OF 2008

(ON APPEAL FROM HCA NO. 885 OF 2005)

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BETWEEN

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D E C I S I O N

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1.  This is an application for security for costs on the appeal. The unusual feature of this case is that this appeal was due to be heard about two weeks ago. At the very last minute counsel for the Appellant fell ill, and so this appeal was adjourned. But it has this effect, that the court has read all the papers in the appeal and has read the skeleton arguments and, therefore, I am more familiar with the facts in issue of this case than would normally be the case on any security for costs application.

2.  On this application, it is put on the footing that the Appellant is impecunious and has no money and could not afford the costs, should costs be awarded against her. There is very little dispute about that. The Appellant has been very frank and has said that if I do order costs she cannot afford to pay them.

3.  That leads me to the second aspect that needs to be considered, and that is whether costs should be awarded on the basis that the Appellant is in person. In my view, in this case it is right to order security for costs because I do not consider that the appeal has sufficient merits that would warrant the allowing the appeal to go ahead without security simply on the basis that the appeal might be stifled. There comes a point when this court still has to order security even though the Appellant is in person and cannot afford the costs.

4.  In those circumstances, although something over $400,000 has been asked for as security, I consider an appropriate amount would be $250,000 for the security for costs on this appeal, and I propose to order that:

the Defendant do, on or before 27 August 2009, give security to answer costs in case any shall be awarded to be paid by the Defendant to the Plaintiffs by making lodgment in Court of the sum of $250,000 by cash or bankers draft, or by the provision of a bank guarantee of the like amount, which guarantee shall have been approved by the Registrar, and until such lodgment be made and notice thereof given to the Registrar and to the solicitors for the Plaintiffs (such notice to be given on the same day as the lodgment is made) all proceedings in the said appeal are to be stayed;

in default of the Defendant making such lodgment as aforesaid within the time specified above or within such further time as the Court may for special reasons allow, the said Appeal do (upon the solicitors for the Plaintiffs certifying such default to the Registrar) stand dismissed out of this Court without further order;

in the event that the appeal is dismissed in the circumstances provided for above the Defendant do pay to the Plaintiffs their costs occasioned by the said appeal, such costs to be taxed; and

the costs of this application be costs in the appeal.

CACV 178/2008

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 178 OF 2008

(ON APPEAL FROM HCA NO. 885 OF 2005)

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DECISION

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1.  This is an application for security for costs of an appeal which is set down for hearing in July of this year.  The matter was a claim by two sisters against their older sister who operated their mother’s bank accounts prior to the mother’s death.  The mother had been a shrewd person financially, starting from humble a background and running a shop.  She had made quite a significant amount apparently by operating the shop but also on the Stock Market.  Towards the end of her life, it appears that the defendant had operated the accounts.

2.  The other brothers and sisters and the husband, to a certain extent, as far as I can see - took grave suspicion as to what the defendant had done.  When the defendant was tackled about this immediately after the mother’s death, she returned in total, two sums.  The first was $4 million; the second was $6.7 million which was paid to the other siblings, seemingly without very much attention being paid as to whether there should be any estate duty paid, the provisions of which I believe was still in force at that stage.

3.  However, the case then went to trial with the two sisters claiming that there had been more money.  The judge came to the conclusion at paragraph 90 that there was $6.8 million which should be paid.  He had clearly, on the figures shown there, done what seems to me to have been taking partial account and then also ordered an account to be taken.  I have grave reservations as to whether that was the right course to take.  In my view, if the judge had seen that there was a further sum to be paid in addition to the $10.7 million which had already been paid, then what should have happened is that there should have been a proper account taken, not a partial account.  If necessary, the judge could have said, “Well, assets should be frozen in the meantime.”  That would have been the correct way of going about it.  But at the moment, it seems to me, that the judge has come to a conclusion that there is more money which the defendant has or has taken which has not been accounted for.  However, it is not clear on the judgment, at all, how he arrived at that figure.  In those circumstances, I have grave doubts that the right order was made.

4.  The defendant does appear to be impecunious.  I do not think there is much doubt about that and, indeed, that is the basis upon which this application has been brought.  Nevertheless, I am not prepared to grant security for costs on this appeal because I consider that there are strong grounds for saying that the wrong order has been made and the matter should have been gone about in a different way.

5.  I will say this, however - and this is with a view to the Civil Justice Reform coming into effect later this week - that this is essentially a family dispute.  The defendant was the oldest sister.  There seems to be some animosity between the sisters - some of them are actually overseas - but what should happen, in my view, is that the parties should really try and sit down together and sort out their differences.  It may be that the defendant has taken this money but it may also be that the defendant really has not got any money.  Maybe the money was spent; maybe some of the money was spent on the mother and her medical expenses.  I do not know.  The mother was in hospital for a very long time.

6.  But it seems to me that the family is in danger of tearing itself apart by relying on strict legal principles.  It may be that matters would be best served if some accommodation could be found between the members of the family which would not necessarily be on strict legal basis but would satisfy each of the parties as to what can be obtained, what can be put right, and what can no longer be put right.  I would suggest to the parties that they try and solve their differences other than by strict resort to litigation.

7.  So I propose to decline the application for security for costs but, in view of the reasons for doing so, I am not going to award any costs to either party.  I simply make no order as to costs.