HCA 3348/2016
[2023] HKCFI 101
IN THE HIGH COURT OF THE
HONG KONG SPECIAL ADMINISTRATIVE REGION
COURT OF FIRST INSTANCE
ACTION NO. 3348 OF 2016
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BETWEEN
| | POON LOI TAK (潘來德) the Administrator of the late POON NUEN (潘暖) deceased | Plaintiff |
| | and | |
| | POON LOI CHEUNG DESMOND (潘來祥) | Defendant |
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Before: Mr Recorder Richard Khaw SC in Court
Dates of Hearing: 1-3, 6-10, 10-15 and 29 December 2021
Date of Judgment: 9 January 2023
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JUDGMENT
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A. INTRODUCTION
1. These proceedings have arisen from a dispute over the beneficial ownership of the credit balances in two bank accounts held with the Hongkong and Shanghai Banking Corporation Limited (“HSBC”) in the joint names of the Defendant (who is one of the elder brothers of the Plaintiff) and also his late father, Mr Poon Nuen (“Father”) who died intestate in April 2016. The credit balances in such accounts included the proceeds of a shop owned by Father, which was sold in 2014, details of which will be set out below.
2. After Father’s passing in April 2016, the Plaintiff (who was the administrator of Father’s estate) discovered that the Defendant had withdrawn funds from the two bank accounts both prior to and after Father’s death. The Plaintiff’s case is that Father was the sole beneficial owner of the bank accounts and the monies therein shall form part of Father’s estate. Hence, according to the Plaintiff, the Defendant was merely holding the bank accounts as Father’s agent or trustee. As alleged by the Plaintiff, the Defendant was in breach of trust or fiduciary duty by withdrawing the monies from the bank accounts without the consent or authorisation from Father or his estate. The Defendant’s position is that the credit balances in the two accounts were gifts made by Father to him and his primary case is that he “was at all material times the sole beneficial owner of the credit balance standing from time to time in [the two bank accounts]”.
B. BACKGROUND
B1. The family
3. Father and his wife, Madam Wong Oi (“Mother”), were a traditional Chinese couple who worked hard to earn a living and support their family. In 1955, Father started the business of manufacturing and selling noodles in the name of Wing Woo Noodle Factory (“Wing Woo”) (永和粉麵廠) with the assistance of Mother. In about 1964, Father together with Mother’s uncle jointly purchased a property known as Ground Floor, 91 Belcher’s Street, Hong Kong which was used as a shop for the business (“the Shop”). In about 1967, Father became the sole legal and beneficial owner of the Shop.
4. Mother was responsible for retail and wholesale operations of the Shop, while Father was responsible for bookkeeping and preparing the materials required for the manufacturing of noodles. The business of Wing Woo provided the main source of income to support the family before the children started to engage in gainful employment.
5. Father and Mother gave birth to six children who, in descending order of seniority, are:
(1) Poon Kit Bing (“Kit Bing”), who is the only daughter and also the eldest child in the family, was employed by a stockbroker firm and engaged in stock trading. Although she and her family emigrated to Canada and subsequently the United States more than 30 years ago, she kept close contact with her parents through long-distance calls and visited her parents around once a year upon her return to Hong Kong. She always resided in her parent’s home during her stay in Hong Kong.
(2) Poon Loy Koon (“Loy Koon”) had worked full-time in the Shop and was familiar with the manufacturing process. In 1993, he succeeded the family business and was responsible for running it until the shop premises were rented out in around late 1995. Before Father’s death, he worked part-time at the company of the Defendant with a monthly salary which started at about HK$4,000 and was increased to HK$15,000 after the commencement of the present proceedings.
(3) The Defendant, Poon Loi Cheung, Desmond, born in 1958, assisted in the family business during his school years until 1977 when he started to work as an ornament apprentice. In 1979, he worked as a junior account clerk at a foreign investment company and as a goldsmith master in the jewellery processing and manufacturing industry at a U.S. jewellery company in Canada in late 1986.
He returned to Hong Kong in 1988 and continued working with the Hong Kong branch of the U.S. company to promote its business of mixed-alloy materials until 1991. In 1992, he started a new company, Sinocean Company Ltd (“Sinocean”), carrying on the business of casting and manufacturing jewellery. Sinocean was registered under the names of Loy Koon and his wife. In the same year, Artec Company Ltd (“Artec”) was set up in his wife’s name. It engaged in the business of selling Italian and German machinery equipment to produce metal alloys.
His business expansion continued in recent years. For instance, in 2011, he started a sole proprietorship in Hong Kong for manufacturing jewellery with a Japanese company. And in 2017, he set up Oriental Trade Express Limited with his partner to export machinery equipment to Thailand. He also owned a company called Far East (HK) Enterprises. 2 years before the COVID-19 pandemic outbreak, he set up another company to invest in a noodle business with his friends.
(4) The Plaintiff, Poon Loi Tak, was born in 1960. He completed university education and attained a Master’s degree in Industrial Engineering in the United States. Upon completing his studies, the Plaintiff was employed by Boeing Aircraft in the United States from 1986 for a few years, and in 1990, he started to work as a lecturer at City University of Hong Kong.
(5) Poon Loi Tat (“Loi Tat”), born in 1964, mostly operated his real estate business in the Mainland China. He visited his parents every 1-2 months and stayed with them for approximately one week upon each visit.
(6) Poon Loi Chuen (“Loi Chuen”), who moved out from Nan Hai Property (as defined below) after his marriage, and moved into Ki Lung Street Property (as defined below) in around 2000. He regularly visited his parents during the weekends.
B2. Properties owned by Father and Mother
6. Prior to the death of Father and Mother, the following properties were purchased:-
(1) Flat Bl, 1st Floor, Namhung Mansion, No.5 Belcher's Street, Hong Kong (the "Namhung Property");
(2) Flat 01, 14th Floor, Nan Hai Mansion, No. 46-47 Praya Kennedy Town, Hong.Kong (the "Nan Hai Property");
(3) 4th Floor, No.220 Ki Lung Street, Kowloon, Hong Kong (the "KiLung Street Property");
(4) Ground Floor, 91 Belcher’s Street, Kennedy Town, Hong Kong (i.e. the Shop); and
(5) Flat B6, 17th Floor, New Fortune House, Nos.4-8 North Street, Hong Kong (“New Fortune House Property”).
7. In relation to the above properties, whilst Mother was the legal and beneficial owner of the New Fortune House Property, the other four properties were registered in the sole name of Father.
8. Father and Mother (during their lifetime) lived in Nan Hai Property. Father allowed his children, if they so wished, to live in the properties without payment of rent. Thus, the Plaintiff, Loy Koon and Loi Chuen resided in the aforementioned properties. Prior to his first purchase of a property in Pokfulam in 1994, the Defendant together with his family had also stayed at the New Fortune House Property. In around late 1995, Wing Woo ceased its business and the Shop was then leased out until its sale in 2014.
B3. Events after Mother’s death
9. In around 2010 to 2011, Mother was sick and had to be hospitalised from time to time. In around March 2010, given Mother’s hospitalisation, Father was added as a signatory to Mother’s Hang Seng Bank Savings Account numbered 296-080526-001 so that he could operate Mother’s bank account. Mother died on 6 February 2011.
10. After Mother’s death, on 23 February 2012, Father added the Plaintiff as a signatory to his Hang Seng Bank Account numbered 296-0-025597 (“Hang Seng Account”) such that the Plaintiff was authorised to operate the Hang Seng Account.
11. According to the Plaintiff, since Father became a signatory to Mother’s bank account at the time when Mother was ill and required Father’s assistance to settle her general and medical expenses, Father realised the need to have assistance from a family member for the purpose of taking care of his finance should needs arise. The Plaintiff also refers to Father’s deteriorating health condition after Mother’s passing as a reason for Father to add the Plaintiff as a signatory. It is also the Plaintiff’s evidence that the Defendant once told Father that when one of the Defendant’s former classmates was in serious illness, his wife could not have access to his bank accounts and had to borrow money from the Defendant. The Plaintiff believes that this also caused Father to consider making arrangements for further operations of this bank accounts.
12. All the siblings, except the Defendant, agreed that Father became quiet and lacked energy after Mother’s passing. There is a dispute on whether Father’s ill health affected his ability and I will further discuss this issue later. However, it appears from the evidence that Father’s health did deteriorate over time in that he was diagnosed with diabetes and hypertension in about 2008. It appears that he also had other health issues including blurred vision, memory loss, and retina degeneration, although the parties disagree on the severity of these conditions.
B4. Joint bank accounts of Father and the Defendant
13. According to the Defendant, in around March 2012, Father told him over dinner that he wished to give some monies to him and asked him to go to HSBC Bank with him. On 20 March 2012, around one month after the Plaintiff was added as a signatory to Father’s Hang Seng Account, Father added the Defendant’s name to his HSBC Savings Account No. 008-8-068085 (“the Savings Account”) as a joint account holder. They signed a form titled “Personal Account Opening Form – Passbook Savings”, confirming their agreement. Clause 6 of that form provided that the bank, in the event of death of one of the joint account holders, shallo hold any credit balance of the Savings Account to the order of the survivor.
14. The Defendant claimed that in around November 2013, Father said he wished to give him some monies to assist him in buying a property. However, the Defendant said that he was not in need of money, and instead proposed to take ¾ of the then balance of the Savings Account to invest in a high yield foreign currency account to generate return. For this purpose, on 25 November 2013, Father and the Defendant attended the HSBC Bank (Westwood Branch) to open the Premier Account No. 650-062631-888 (“the Premier Account”) in their joint names. In doing so, Father and the Defendant signed “the Integrated Account-Investment Services Application Form” which included a declaration that they agreed to be governed by the Integrated Account Terms and Conditions, which specifically authorised the bank, in the event of death of one of the joint account holders, to hold any credit balance of the Premier Account to the order of the survivor.
15. On the same day, a sum of HK$1.6 million was transferred from the Savings Account to the Premier Account. The Defendant substantially used the said sum to invest in an Australian dollar fund Unit Trust.
16. The relevant evidence on Father’s intention and the Defendant’s understanding of the same at the time when the Defendant’s name was added to the Savings Account and also when the Premier Account was opened in their joint names will be analysed below. The Defendant also relies on, amongst others, the fact that he was named as one of the joint account holders (as opposed to merely an additional signatory) and the provision of the Personal Account Opening Form referred to above in support of his case. The legal effects of these arrangements will be examined below.
B5. Sale of the Shop
17. On 20 December 2012, Father executed a Power of Attorney (“POA”) authorising the Defendant to sell the Shop on Father’s behalf.
18. The Shop was sold for HK$33 million (“the Sale Proceeds”), completion of which took place on 14 May 2014. Father instructed the Defendant to deposit the Sale Proceeds into their joint accounts (“the Joint Accounts”) without specifying whether he was referring to the Savings Account or the Premier Account.
19. The Defendant then instructed Father’s solicitors to deposit a sum of $3,297,000 (i.e. about 10% of the Sale Proceeds) into the Savings Account on 4 March 2014. After completion, three cheques representing the net balance of the purchase price were issued in favour of Father. A cheque for HK$155,000 was deposited into the Savings Account whilst two substantial cheques totalling HK$29,521,265 were deposited into the Premier Account. The Defendant alleges that he was not allowed to deposit any sum more than HK$10 million into the Savings Account.
B6. Plaintiff’s evidence on Father’s acts prior to his death
20. It should be mentioned that the Plaintiff’s evidence specifically refers to the following incident which seems to suggest Father’s concern over the preservation of his assets (or potential future mismanagement of his estate) shortly before his death. This is denied by the Defendant.
21. In January 2016, Father handed over an envelope to the Plaintiff after dinner at Nan Hai Mansion and said:-
“雞皮紙袋內係我和媽的證件，第日辦遺產手續時會有用的，幫我帶回五福保管，唔好唔見，唔好講比其他人知。”
22. The envelope contained, inter alia, a Chinese written note (the “Chinese Note”):-
“記著領死亡證，切勿亂交別人手上，否則任人（魚肉），切記切記，一切手續辦妥時，才死亡證交出，切記切記”
23. In March 2016, Father handed over a shoebox to the Plaintiff after a dinner at Nan Hai Mansion and said:-
“呢啲係我匯豐的簿仔和銀行卡，我大部分錢都放在裡面，全部都是我的錢，等我用完用剩後，你就分了它啦，不要講給別人知，要小心保管，小心喎。”
B7. Discovery of the Defendant’s Withdrawals
24. In July 2016, when the Plaintiff and other siblings were preparing for the application for the Letters of Administration of Father’s estate, Loy Koon telephoned Loy Tat to inform him of his visit with the Defendant to the HSBC Bank to transfer away HK$10 million from the Premier Account on the day of Father’s passing. It was further found that a substantial amount of money in the total sum of HK$14,248,000 had been transferred out of the Premier Account into the Defendant’s own HSBC bank account, before and after Father’s death. Also, it was found that in April 2016, the Defendant attempted to open Father’s safe deposit box in Chong Hing Bank, but was unsuccessful because he did not have the correct key. He was requested by the Home Affairs Department to explain the incident. The details of the Defendant’s withdrawals from the Premier Account during the period between 12 May 2015 and 8 April 2016 (i.e. prior to Father’s death) are summarised as follows:
| Item No. | Date | Amount (HK$) |
| 1. | 12/5/2015 | 248,000.00 |
| 2. | 2/9/2015 | 200,000.00 |
| 3. | 9/9/2015 | 300,000.00 |
| 4. | 6/10/2015 | 100,000.00 |
| 5. | 16/10/2015 | 400,000.00 |
| 6. | 9/11/2015 | 300,000.00 |
| 7. | 21/12/2015 | 200,000.00 |
| 8. | 23/12/2015 | 300,000.00 |
| 9. | 25/2/2016 | 400,000.00 |
| 10. | 2/3/2016 | 200,000.00 |
| 11. | 11/3/2016 | 400,000.00 |
| 12. | 21/3/2016 | 200,000.00 |
| 13. | 22/3/2016 | 200,000.00 |
| 14. | 29/3/2016 | 300,000.00 |
| 15. | 8/4/2016 | 300,000.00 |
25. On the exact day of and also the day after Father’s death, the Defendant made 2 additional withdrawals:
| Item No. | Date | Amount (HK$) |
| 16. | 20/4/2016 | 10,000,000.00 |
| 17. | 21/4/2016 | 200,000.00 |
| Total: | 10,200,000.00 |
26. These discoveries led to extensive arguments within the family.
B8. The Action
27. On 8 December 2016, the Plaintiff instructed his former solicitors to issue a letter of demand to the Defendant for the withdrawn amount from the Premier Account. On 20 December 2016, the Plaintiff commenced the present proceedings.
28. The Plaintiff seeks, amongst others, a declaration that all the assets in both the Savings Account and the Premier Account are legally and beneficially owned by Father solely and absolutely and shall be vested into Father’s estate upon his death and also an order that the withdrawn monies in the total sum of HK$14,248,000 be returned to the Plaintiff (representing Father’s estate).
29. The Defendant denies liability and his pleaded position in respect of each of the two bank accounts is as follows:-
(1) The Defendant was at all material times the sole beneficial owner of the [bank accounts].
(2) Alternatively, the Father and the Defendant were joint beneficial owners of the credit balanced from time to time in the [bank accounts].
(3) Further and/or in the further alternative, upon the Father’s death, the Defendant became the absolute sole beneficial owner of the credit balance in the [bank accounts] by survivorship.
30. There is a debate on whether the Defendant is permitted to run the above alternative (and seemingly inconsistent) pleas and I will also address this below.
C. RELEVANT LEGAL PRINCIPLES
31. In general, a legal co-ownership can be created by way of a joint account by virtue of a joint tenancy of the monies owed by the bank to the joint account holders, namely the chose in action arising from the credit balance in such account. Under joint tenancy, upon the death of one of the account holders, the legal title in the chose in action would vest in the remaining account holder.
32. The beneficial ownership of the credit balance in a joint account is, however, a question of intention of the joint account holders. There seems to be no dispute between the parties that if there is evidence upon which the Court could ascertain the intention of the parties, utility of the presumptions available at law will be substantially restricted (Overseas Trust Bank Ltd v Lee See Ching John [1999] 3 HKC 197, 201F-G; HSBC Private Trustee (Hong Kong) Ltd v Ho Yuen Ping Dorothy (unrep., HCA 2717/2008, 20 June 2011) §38; Lee Yee Wan Eva v Lee Tak Gate Richard [2018] 3 HKLRD 191 §25). In fact, both parties have referred the Court to the evidence on the question of Father’s intention and asked for a finding on the same. Hence, the overriding issue in this action centres upon Father’s intention.
33. In HSBC Private Trustee (Hong Kong) Ltd, Deputy High Court Judge Coleman SC (as he then was) summarised the following propositions on a joint account:-
(1) A presumption of resulting trust arises when the source of monies in a joint account came from only one holder of the joint account. But such presumption is readily displaceable by sufficient evidence of the actual intention of the parties at the time of the transaction: §40.
(2) If a gift is claimed, the onus is on the donee to prove it. Whilst corroboration is not required as a matter of law, where there is a claim that a gift was made by a person who is now deceased, the court must approach the claim with some caution and a true sense of enquiry: §41.
(3) The fact of being a signatory to a bank account does not, without more, prove beneficial ownership. The matter is to be decided on the facts and intentions of the deceased, on the evidence which established what he or she did or said in life: §43.
34. Hence, in the present case, it is important to examine the intention of Father (now deceased) with care and caution. Moreover, the Court should only resort to evidential tools of presumptions when the evidence on intention is such that the Court is not capable of forming a view one way or another.
35. Further, the presumption of resulting trust could be displaced by the counter-presumption of advancement where a transfer is made from a father to his son (see Lewin on Trusts, 20th ed., §10.95, Snell’s Equity, 34th ed., §25-003; and Lee Yee Wan Eva (supra), per Peter Ng J §§22-25). Whilst the Plaintiff has cited a Canadian case, i.e. Pecore v Pecore [2007] 1 SCR 795 §40, in contending that the presumption of advancement should be limited to transfers by parents to minor children, the application of such presumption does not seem to be so restricted in view of the authorities in Hong Kong (see Nanyang Commercial Bank v Personal Representative of Vanneee Nativivat [2013] 2 HKLRD 749 §§31-32).
36. Nevertheless, as aforementioned, the presumptions are not of much value if the intention of the relevant parties can be ascertained from the evidence adduced.
D. THE DEFENDANT’S PRIMARY AND ALTERNATIVE PLEAS
37. As mentioned above, the Defendant’s primary case is that he was at all material times the “sole beneficial owner” of the credit balance standing from time to time in both the Savings Account and the Premier Account. His “alternative” case is that Father and the Defendant were “joint beneficial owners” of the credit balance from time to time in the two bank accounts. In the “further alternative”, the Defendant contends that upon Father’s death, he became the “absolute sole beneficial owner” of the credit balance in the bank accounts by survivorship.
38. As a matter of principle, the Defendant’s “further alternative case” is part and parcel of his “alternative” case because joint equitable ownership of the credit balance in a bank account carries with it a right of survivorship in that upon the death of one of the account holders, the entire beneficial interest will vest in the surviving account holder.
39. The Plaintiff argues the Defendant’s pleas are inconsistent and he is required to elect which case he intends to rely on. Further, as contended by the Plaintiff, the Defendant, by relying on the alternative case of joint ownership, has “disavowed” his primary case.
40. Whenever a party pleads an alternative case, it may be said that such plea shows signs of some uncertainty. However, the question as to whether a party has “reasonable grounds” (see O.18 r.12A of the Rules of the High Court, Cap 4A) to make an alternative plea must depend on the individual circumstances of each case. For example, if a party has no direct knowledge of certain factual events and/or the court’s final rulings of such events may lead to different conclusions, there is no reason why such party should not be allowed to contemplate different possible scenarios by making alternative, albeit inconsistent, pleas.
41. In the present case, the overarching issue is Father’s intention. Although both parties have adduced evidence on this point, the Court could only infer his intention (assuming that it is not necessary to resort to legal presumptions) from the relevant circumstances, in the absence of any direct evidence from Father. Obviously, the Court’s ruling on Father’s intention could give rise to various possible scenarios and conclusions (including the Defendant’s primary and alternative cases). It could also be the case that the Defendant is simply not entitled to any interest in the two Joint Accounts at all. Hence, I am of the view that the Defendant should be allowed to run the two alternatives in his pleadings.
42. It is noted that the Plaintiff also complains that the Defendant’s pleaded case principally relies on the fact that he and Father were joint account holders and also on the documents signed for such purposes without much reference to Father’s express wish to gift the credit balances to the Defendant. However, this is not an issue of pleadings but it goes to the general credibility of the Defendant’ case on the alleged gift, which will be discussed below.
E. FATHER’S INTENTION
E1. The approach to ascertaining Father’s intention
43. As stated above, the Court should look at the relevant and admissible evidence of Father’s actual intention. However, if such evidence is non-existent, the Court would resort to presumptions. Further, according to the legal principles summarised above, if a gift is claimed, the onus is on the alleged donee (i.e. the Defendant in this case) to prove such gift. Given that the alleged gift was made by a person who is now deceased, the Court “must approach the claim with some caution and a true sense of enquiry”.
44. In Overseas Trust Bank Ltd (supra), the Court of Appeal held that the only relevant evidence as to the intention of the donor was that “before or at or immediately after the time of the transaction”. In this regard, in Overseas Trust Bank Ltd, Shephard v Cartwright [1955] AC 431 was cited for the proposition that:[1]
“...evidence of the acts and declarations of the parties before or at or immediately after the time of the transaction, constituting part of that transaction, is admissible for or against the party doing the act or making the declaration; but that evidence of subsequent acts or declarations is admissible only against the party doing or making them.”
45. However, as pointed out by Stock NPJ in Leung Wing Yi Asther v Kwok Yu Wah (2015) 18 HKCFAR 605 at §§55-56, the modern approach is less rigid. Evidence of earlier and later events are admissible as evidence of intention at the time of the transfers. Having said that, contemporaneous conduct is inherently more likely to be a reliable indicator of intention, to be given greater weight, than are words and conduct after the event, especially in the case of self-serving statements or conduct of the transferor, who may long after the transaction be regretting earlier generosity.
E2. Father’s personality and relationship with his children
46. Both Father and Mother came from a humble background. Father came to Hong Kong at the age of 6 and did not manage to receive any formal education. However, Father and Mother both worked very hard in order to earn a living and support their family. Father was a frugal and conservative person and was careful with his money. There is no dispute that he treated financial matters seriously and cautiously and was not willing to take risks in his investments. He appeared to prefer to manage his finances independently and was not easily influenced by others.
47. Father was a loving parent who cared for all his children. He tried his best to support his children at different stages. It is the evidence of the Plaintiff and Loy Tat that Father loved and treated his children fairly and equally.
48. The Plaintiff has adduced evidence to the effect that the Defendant is an “opportunist and risk-taker”. The Plaintiff takes the view that the Defendant is not a trustworthy person as he was suspected of misappropriating the patented gold refining formula of his former employer engaged in gold and jewellery manufacturing and this, according to the Plaintiff, eventually caused the Defendant to have to give an undertaking not to carry on business in the same industry. There is also evidence from the Plaintiff that the Defendant was not close to the parents and he did not often visit his parents once he began to work. However, quite apart from the issue of beneficial ownership, the fact that Father allowed the Defendant to hold Joint Accounts with him and also that Father executed a Power of Attorney in his favour shows that they had a sound relationship and Father also trusted the Defendant.
49. I am of the view Father has treated all his children (including the Defendant) fairly and maintained a good and harmonious relationship with all of them. I cannot find any particular incident(s) which could show that Father was particularly critical of or favourable to any of his children.
E3. Alleged express wish of Father regarding the two Joint Accounts
50. In respect of the Savings Account, it is the Defendant’s pleaded case and also evidence (as stated in his witness statement) that “[i]n or around March 2012, Father told me that he wished to gift some monies to me and asked me to go to HSBC Bank with him”.
51. No further details were provided by the Defendant as to (1) whether Father had ever talked about his intention to gift some monies to him prior to 20 March 2012 and if not, why Father suddenly raised the idea of gifting him “some monies”; (2) whether there was any discussion on the amount of “some monies” in that particular conversation or otherwise; and (3) in what form such gift would be made and whether it was related to the credit balance in any of Father’s bank accounts.
52. However, under cross-examination, the Defendant referred to a conversation which took place in one dinner (with no specific date mentioned) where Father suddenly said that Mother had passed away for one year and he had not made a will yet; hence, he would wish to gift some monies to the Defendant. The Defendant, according to his evidence, did not respond to Father’s alleged wish. During cross-examination, the Defendant admitted that Father did not fully express his thoughts, but he understood (會意) and interpreted it to mean a gift. I agree with the Plaintiff that had such conversation actually taken place, the Defendant would not have omitted it from his witness statement. The Defendant’s explanation that he did not find it necessary to refer to the incident in his witness statement does not seem to have any meaningful substance. In any event, this additional piece of evidence (which emerged for the first time at trial) does not provide any concrete information which can help establish Father’s intention to gift the Defendant the credit balance of the Savings Account.
53. The Defendant further said in his witness statement that “[o]n or about 20 March 2012, Father and I went to HSBC Bank (Westwood Branch) together, and Father suggested to add me as a joint account holder of the Savings Account, so that I could freely use the monies in the account whenever I wished.” The Defendant also referred to the bank staff’s explanation to the effect that “the credit balance of the Savings Account would go to the survivor of either of us on the death of one of us.” These events, according to the Defendant, showed a “common understanding, intention and/or agreement” that “Father had made a gift of the credit balance standing from time to time in the Savings Account”.
54. However, it is also the Defendant’s evidence (which, again, was revealed for the first time at trial) that after adding the Defendant’s name to the Savings Account and when they stepped out of the Bank, the Defendant asked Father what would happen to him if he had taken Father’s monies. The Defendant claimed that Father said “when I decided to add your name to the account, the sums were intended to belong to you (預咗俾你)”. The Defendant said that he thus had the feeling (感覺) or there was a subtle understanding (默契) between the Defendant and Father that Father had gifted him the credit balance. I find this part of the Defendant’s evidence most artificial and self-serving for the following reasons:-
(1) Again, there is no proper explanation from the Defendant as to why this part of the evidence has never been included in any of his three witness statements.
(2) It is the Defendant’s evidence that in view of Father’s express wish and the bank staff’s explanation, he was given to understand that the credit balance was gifted to him. In that case, why did the Defendant still find it necessary to ask Father what would happen if he took monies from the account? This additional evidence of the Defendant also raises considerable doubts on whether the bank staff really provided any explanation to the Defendant and Father as alleged or at all.
(3) Further, the Defendant’s question to Father regarding what would happen if he took monies from the account (which is in my view, glaringly self-serving) does not sit comfortably with the Defendant’s own evidence that he was not in need of the monies in the Savings Account.
55. Moreover, the Defendant’s evidence that “out of respect for Father, I allowed Father to keep the passbook for the Savings Account so that Father could continue to use the monies therein for his own expenses if he wished to do so” is rather baffling. As mentioned above, the Defendant’s evidence fails to demonstrate any clear intention on Father’s part to gift the credit balance to the Defendant. Neither did Father, even on the Defendant’s evidence, ever indicate that he would no longer use any of the monies in the account. In the circumstances, the Defendant’s allegation that he “allowed” Father to continue to operate the account is quite inconsistent with the so-called “respect” for Father because there is simply no reason why Father would require any permission or authorisation from the Defendant to make further use of the account after the Defendant’s name was added onto it.
56. For the reasons stated above, I find that Father never expressed any wish or intention to gift the credit balance of the Savings Account to the Defendant.
57. In relation to the Premier Account, the Defendant ‘s case is that in or around November 2013, Father said he wished to gift the Defendant some monies to him to assist him in buying a property because (1) Father noticed that the Defendant had not used any money in the Savings Account; and (2) the Plaintiff, Loy Koon and Loi Chuen could reside in their parents’ properties rent-free whereas the Defendant did not enjoy such benefit.
58. However, the Defendant rejected Father’s offer. Instead, he told Father that “I was not really in need of money and I considered it was not the right time financially to purchase a property”. Instead, he proposed to take around ¾ of the then balance of the Savings Account, which was around HK$1.6 million at that time, to invest in a high yield foreign currency account (i.e. Unit Trust) to generate return. According to the Defendant, Father agreed with his proposal. It was on this basis that Father opened the Premier Account with the Defendant, and transferred HK$1.6 million from the Savings Account to the Premier Account. It is the Defendant’s evidence that they attended the same HSBC branch to open the Premier Account the following day and it was the Defendant’s suggestion that a joint account be opened “out of my respect to him despite it was his intention to give me the money”.
59. The Defendant’s evidence in this respect also has the following fundamental problems:-
(1) The above evidence from the Defendant is only that Father wished to gift “some monies” to him but has never referred to Father’s wish to gift the credit balance of the Premier Account to the Defendant.
(2) As mentioned, when the Premier Account was opened, it was decided that a sum of HK$1.6 million was to be transferred from the Savings Account and deposited into the Premier Account for future investment purposes. There is no mention in the Defendant’s evidence that any additional monies would be deposited into the HSBC Premier Account at the time when it was opened or thereafter. Had it been Father’s intention to gift the credit balance to the Defendant by way of opening a new account (with a view to, according to the Defendant’s case, enabling the Defendant to purchase his own property), one would have expected Father to put in additional funds in the new account for the benefit of the Defendant. But this is not the case here.
(3) As submitted by the Plaintiff, it had been pleaded in the Defendant’s original Defence that in relation to the opening of the Premier Account, Father “wished to gift some monies from his own savings (approximately HK$1.6 million) to the Defendant”, but the Defendant deleted the reference to the monies being from Father’s own savings in his 4th version (i.e. the Re-Re-Re Amended Defence).
(4) Under cross-examination, the Defendant admitted that there was a mistake in timing regarding the original version of his pleaded case. He meant that Father wished to gift him HK$1.6 million before adding his name to the Savings Account. This further reinforces the lack of clarity and credibility in the Defendant’s evidence relating to the alleged express wish or intention of Father.
(5) The Defendant admits that it was his own suggestion (as opposed to Father’s suggestion) to name both him and Father as joint holders of the Premier Account. There is no reference in the Defendant’s evidence as to the way in which Father had ever proposed this additional account to be opened and operated.
(6) In fact, the Defendant’s allegation that he decided to open a joint Premier Account “out of respect” for Father is, once again, plainly self-serving, particularly when, as mentioned above, there is simply no evidence which could establish any nexus between Father’s alleged wish to gift some monies to the Defendant with the credit balance in the Premier Account.
(7) Finally, whilst the fact that a gift of a standing credit balance in a joint account which is fluctuating and potentially defeasible does not undermine a donative intent, if the claim for a gift includes a substantial sum (i.e. the sum of about HK$30 million being part of the Sale Proceeds of the Shop in 2014) which was not contemplated at the time when the alleged gift was made but was only subsequently deposited, it is important to have clear and cogent evidence which can prove that the gift was intended to cover all further deposits. In the present case, there is no sufficient evidence in support of such intention.
60. Having regard to the above factors, I am of the view that Father did not express any intention or wish to gift the credit balance of the Premier Account to the Defendant.
E4. Other circumstantial evidence on Father’s intention
61. Further to my previous rulings that Father did not express any intention or wish to gift the credit balances in the two Joint Accounts to the Defendant, I will now proceed to examine the other circumstantial evidence that the Defendant relies on.
62. According to the Defendant, he was the child “who had a particularly close relationship with the Father before he passed away”. The Defendant highlighted a few examples in this regard:-
(1) Since Primary 1, the Defendant spent considerable time assisting Father in his business until Father’s retirement in 1992. The Defendant and Loy Koon were the only two siblings who knew and participated in the noodle manufacturing process. When Father wished to retire in around late 1992, he specifically wanted the Defendant to take over the business which represented his life’s work. It was only because the Defendant had, by then, already started his own business that he turned down Father’s suggestion. The Plaintiff and his witnesses had all acknowledged their limited involvement in the business in the past.
(2) Father entrusted the Defendant to deal with rental and tenancy matters of the Shop Premises since 1996 until its eventual sale in 2014. The Defendant was able to speak in detail about the administrative matters concerning the lease of the shop and the repair work which he had arranged to be carried out in the past without seeking reimbursement from Father.
(3) Father entrusted the Defendant in collecting the monthly rental income of the Ki Lung Street Property from 1980 to 1997, which was one of the main sources of Father’s income at the relevant time.
(4) In the 20 years prior to Father’s death, Father entrusted the filing of his tax return forms to the Defendant, save for one year where this was done by the Plaintiff because the Defendant was busy.
(5) Father and Mother discussed with the Defendant and accepted his suggestions in relation to their cemetery arrangements. It was the Defendant who arranged and paid for Father’s funeral expenses.
(6) Whenever the Defendant visited Father at the Nan Hai Property, Father would prepare a good meal for him, whereas Father would not do the same for his other children.
(7) When Father and Mother re-registered their marriage in 1983, Father asked the Defendant to be one of the witnesses to the solemnisation.
63. On the other hand, the Plaintiff’s case is that the Defendant did not maintain a particularly close relationship with Father or Mother, whether in his childhood or after he began his working life. The Plaintiff contends that none of the incidents mentioned by the Defendant individually or cumulatively show a close and trusting relationship as alleged by the Defendant. The Plaintiff has highlighted the following incidents:-
(1) The Defendant did not help out in Father’s Shop as frequently as alleged. On the contrary, the Defendant spent most of his childhood with friends.
(2) The Defendant has not been able to provide any documentary evidence or receipts in support of his contention of having arranged for repair works for Father’s shop.
(3) In relation to the Ki Lung Street Property, the rent was paid by the tenant by way of mailing cheques to Father. The tenant had never failed to pay rent.
(4) It was the Plaintiff who had been filing the majority of Father’s tax returns.
(5) As to Father’s funeral expenses, contrary to the Defendant’s assertions on the stand, the Defendant did not pay for Father’s columbarium expenses. The truth is that on 24 September 2010, Father paid for both his and Mother’s columbarium expenses.
(6) Given Mother’s declining health and Father’s long-term health issues including diabetes, the elaborate meals alleged by the Defendant with Father are clearly an exaggeration.
(7) The Defendant’s signature on the parents’ marriage certificate does not correspond with the Defendant’s signatures in any other documents.
64. The Plaintiff says that Father had a harmonious relationship with all his children and treated them equally and fairly. Although Father would financially support his children, he did not favour the Defendant over the others. Father had previously lent money to not only the Defendant but also other children. The Defendant has not been able to point to any particular incident (apart from the alleged gifts) where Father had expressed his affection for the Defendant specifically to the exclusion of his other children by making a significant monetary gift to the Defendant solely.
65. In response, it is submitted on behalf of the Defendant that the other siblings (including the Plaintiff, Loi Chuen and Loy Koon) have been staying rent-free in properties owned by Father and Mother. By contrast, the Defendant did not have such benefit since he moved out from New Fortune House since 1993.
66. It is not seriously disputed by the Defendant that Father maintained a harmonious relationship with all his children and supported them insofar as it was within his ability to do so. Under cross-examination, although the Plaintiff may have retracted from his previous position that the Defendant was relatively distant from Father, he maintained that Father was equally close to all of his children. The Defendant also accepts that the Plaintiff was entrusted by Father with handling some matters during his lifetime.
67. In my view, none of the matters raised by the Defendant, whether individually or cumulatively, showed that Father had a particularly close and trusting relationship with the Defendant. Although the Defendant was entrusted by Father to handle various matters on his behalf, the same could also be said of the Plaintiff. Even on the Defendant’s own case, there was no incident which showed that Father particularly and strongly favoured the Defendant over his other children.
68. Further, Father did not have the habit of making one-off individual monetary gifts. I accept the Plaintiff’s evidence that Father had insisted on Mother’s estate to remain undistributed until his own death. Although, on the Plaintiff’s case, Father contemplated a partial distribution of HK$2 million in early June 2014 of the sale proceeds of the Shop to each of his children, the sale of the Shop was an exceptional, one-off, event. In any event, the contemplated distribution proceeded on the basis of equal distribution amongst all his children.
69. As to the argument that the Defendant did not enjoy rent-free accommodation since he moved out of New Fortune House in 1993, it is submitted on behalf of the Plaintiff that all children were allowed to reside in one of the residences owned by Father and Mother, and the Defendant was never an exception. It was the Defendant’s own choice to move out of New Fortune House and move into his newly purchased property of over 1,000 square feet in Pok Fu Lam. Thus, the “loss” of rent-free accommodation was not a “loss” as such for which Father would have wished to compensate the Defendant.
70. I accept the Plaintiff’s argument that the above reasons provided by the Defendant for a gift of the credit balance in the Premier Account is invalid for the following reasons:-
(1) As mentioned above, it was the Defendant’s own choice to move out of New Fortune House. Since then, the Defendant did well in real estate trading and was able to afford a flat which housed his entire family. That being the case, Father would not have been concerned about the Defendant not having a “roof over his head” with his family.
(2) Not only the Defendant, but also Loi Tat and Kit Bing did not have the benefit from Father and Mother of an apartment which could house their families. On the Defendant’s case, Father’s gift of the credit balance to him would leave Loi Tat and Kit Bing unremedied. There is simply no reason why Father would have done so, particularly in light of my ruling that Father treated all his children fairly and equally.
71. In the circumstances, I accept the Plaintiff’s submission that there are no good reasons why Father would have suddenly decided to gift the two Joint Accounts to the Defendant. The circumstantial evidence fails to demonstrate that Father would have intended to make such gifts only in favour of the Defendant to the exclusion of his other children.
E5. The Defendant’s alternative case
72. As stated above, the beneficial ownership of the funds in a joint account boils down to the question of the intention of the joint account holders. In view of my ruling that Father did not have any intention to gift the credit balances in the two Joint Accounts to the Defendant upon consideration of the Defendant’s evidence regarding the alleged express wish of Father and other circumstantial evidence, the Defendant’s alternative case on joint beneficial ownership also cannot stand.
73. The survivorship clause contained in the documents that Father and the Defendant were required to sign in respect of the Joint Accounts provided the following:-
“On the death of either, any or all of us, to hold any credit balance on the Account, and any securities, deeds, boxes and parcels and their contents, and property of any description held in the Account or otherwise in our joint names to the order of the survivor or (if more than one) the survivors of us or the personal representative(s) of the last survivor, without prejudice, however, to any rights the Bank may have in respect thereof arising out of any lien, mortgage, charge, pledge, set-off, counter-claim or otherwise whatsoever and we agree to indemnify the Bank in respect of any claim which may be made against the Bank as a result of the Bank’s complying with this request and authorisation.”
74. It is well-established that a survivorship clause of this type is primarily a contractual arrangement between the bank and the joint account holders on how to deal with the money in the joint account. It does not declare the respective beneficial interests of the joint account holders. It is also not determinative of parties’ ownership of the money in the joint account. The parties’ intention overrides the survivorship clause (Kwok Siu Mui Diana, Administrator of the Estate of Leung Shui Lin, deceased v Kwok Siu Yee[2020] HKCFI 2663per B Chu J §§79-88).
75. The Defendant has referred me to the decision of the High Court of Singapore in Lim Chen Yeow Kelvin v Goh Chin Peng [2008] SGHC 119 to demonstrate the importance of the survivorship clause in considering beneficial interest in a joint account. However, it should be pointed out that in Lim Chen Yeow Kelvin, the survivorship clause provided that in the event of the death of a joint account holder, the amount standing to the credit of the joint account shall be held “for the benefit and to the order of the survivor(s)” (emphasis added). It was held that “[t]hese [italicised] words ... constituted very strong evidence of what [the deceased]’s true intentions were, namely that … the defendant was to have the money beneficially if he survived her” (§80). Further, the court in that case found that there were other factors showing a strong intention of the deceased to make a gift.
76. It is also submitted on behalf of the Defendant that Father was aware of the difference between an additional signatory to a bank account and an additional joint account holder and his knowledge of such difference lends weight to the allegation that Father intended to pass the beneficial interests in the bank accounts. I disagree for the following reasons:-
(1) The Defendant emphasises that the bank staff had explained the survivorship clause to him and Father. However, as discussed above, the survivorship clause for the Savings Account and the Premier Account did not actually address the question of beneficial ownership.
(2) Further, as mentioned above, had the bank staff explained the relevant terms and conditions to the effect that the bank accounts would beneficially belong to the Defendant, the Defendant would not have asked Father, after the Saving Account was opened, what would happen if he took monies from that account.
(3) As I will further explain below, one of the reasons (provided by the Defendant) why he decided to withdraw a sum of HK$10 million on the date of Father’s passing was that he feared that the account might be frozen by the bank in view of Father’s death. However, this is clearly at odds with the Defendant’s case that as a result of, amongst others, the bank staff’s explanation, he had the “understanding” that the credit balances in the bank accounts should belong to him.
(4) In the circumstances, if the Defendant, on his own case, was uncertain about his entitlements despite the alleged explanations from the bank staff, it is inconceivable that Father would have been aware of the difference between having an additional signatory to his own account and having a bank account with another person as joint account holders.
E6. Subsequent events
77. I have also taken into account the events which occurred after the two joint accounts were created in order to consider if any of such events would have a bearing on the issue of intention. I come to the view that none of them would alter my views on Father’s intention. On the contrary, they further reinforce such views. I would like to summarise a few points.
78. It is undisputed that Father was entitled to withdraw monies from the joint accounts without the Defendant’s prior approval. In fact, Father made regular withdrawals of HK$5,000 from the Savings Account through automated teller machines.
79. The Defendant argues that Father’s control does not undermine his donative intent to make a gift by relying on the decision of Overseas Trust Bank Ltd (supra) at p.203G-I per Godfrey JA, p.209E-F per Mortimer VP.
80. In Overseas Trust Bank Ltd, Godfrey JA expressed:
“It is perhaps an odd sort of ‘gift’ with which we are concerned here, a gift of moneys controlled and managed by the donor and (in lawyers’ language), liable to be revoked pro tanto by drawings made from the accounts by the donor for his own benefit during his lifetime. But these odd characteristics do not as a matter of law preclude the transaction being regarded as one in which the donee takes an immediate beneficial interest in the money.
In the words of Megarry J in InRe Figgis [1969] 1 Ch 123, at 149:
It may be that the correct analysis is that there is an immediate gift of a fluctuating and defeasible asset consisting of the chose in action for the time being constituting the balance in the bank account.
Megarry J thought the subject ‘worthy of academic disputation’ (loc cit). But I would adopt this analysis; hold that it applies to the transactions in dispute here; and allow the son’s appeal.”
81. Similarly, Mortimer VP also highlighted the significance of the words of Megarry J in InRe Figgis (supra):
“I tum finally to the nature of the gift. The gift by the father — in Megarry J's words in Re Figgis [1969] 1 Ch 123 at 149 — was ‘an immediate gift of a fluctuating and defeasible asset consisting of the chose in action for the time being constituting the balance in the bank account’, is a strange legal animal indeed. However, even though it is a gift of something which may turn out to be nothing, it is recognised by the law, in spite of the difficulty in providing any wholly sound, legal analysis.”
82. In my view, whilst the authorities cited by Ms Tong establish that a gift of a standing credit balance in a bank account controlled and managed by the donor is, a matter of law, capable of being the subject of a gift, they do not go so far as to establish that the donor’s entitlement to withdraw monies from the account is irrelevant on the question of donative intent. In other words, depending on the circumstances of the case, weight may be attached to the fact that the donor was able to make withdrawals from the account as and when he saw fit.
83. As Overseas Trust Bank Ltd was heavily relied on by Ms Tong, I shall discuss that case in further detail. It was a case of three fixed deposit accounts in the name of the first defendant (the son) where the deceased (the father) retained control of the accounts and from time to time withdrew money from those accounts for his own purpose. Unlike the present case, the three accounts were not joint accounts but were accounts in the sole name of the son. At trial, the judge found that when the deceased made monetary gifts to members of his family, he would “without exception record the amount of the gift and the reasons for making [it]. Any acknowledgement from the recipient would also be faithfully recorded”.[2] In the absence of reference in the deceased’s diaries on the opening of the bank accounts or of the gifts and the son’s acknowledgment of the gifts, the judge held that the deceased never intended the monies in the accounts as gifts.
84. The Court of Appeal allowed the son’s appeal on the basis that the judge erred in relying on primarily the absence of reference in the deceased’s diaries to infer that the deceased did not have a particular intention.[3] Having reviewed the evidence before the trial judge, the Court concluded that there was no relevant and admissible evidence before the judge on the basis of which he could displace the presumption of advancement in favour of the son.[4] It was also against such background that the Court of Appeal did not give much weight to the fact that the accounts were controlled by the father.
85. In the present case, however, I have ruled on the basis of the available evidence that Father did not have any intention to gift the two bank accounts to the Defendant. The fact the Father was at liberty to withdraw monies from the accounts appears to be consistent with my findings.
86. Further, I note that Father kept the ATM cards, passbooks and ATM passwords of both Joint Accounts securely with him at all times as an outward manifestation of ownership. He also continued to rely upon the Savings Accounts to settle some of his ongoing expenses and asked for the bank statements of the Premier Account to be sent to his address. The fact that the bank statements were mailed to Father’s address from June 2014 onwards, whether on Father’s own request or the Defendant’s initiative, shows Father’s care and concern about the value of the monies in the account. He wanted to retain more control over the credit balance and monitor the Defendant’s performance. All these factors do not support Father’s donative intent.
87. The sale of the Shop took place in 2014, i.e. after the opening of the Premier Account. It is the Defendant’s case that in about late 2014, Father asked the Defendant how his business was going. When the Defendant told Father that his business was not doing too well, Father reiterated to the Defendant that he was free to use the monies in the Premier Account (including the proceeds of sale of the Shop Premises) as he desired and reminded him that the account belonged to him anyway. The Defendant also alleges that he then, by once again relying on the so-called “respect for the Father”, informed Father of the withdrawals he had made from the Premier Account between 12 May 2015 and 2 September 2015.
88. At trial, the Defendant nevertheless testified that at the time of depositing the Sale Proceeds into the Premier Account, the Defendant did not know that Father had gifted the same to him. Instead, the Defendant’s evidence was that the conversation in December 2014 was the first time Father made known that the Account belonged to the Defendant. I find the Defendant’s evidence in this respect unsatisfactory for the following reasons.
89. First, according to the Defendant’s case, at the time when the two Joint Accounts were created, it was Father’s intention to gift the credit balance “standing from time to time” in each account to the Defendant. Had this been true, the Defendant should have had little doubt that he had beneficial interest in the Sale Proceeds deposited into the two Joint Accounts. However, his testimony that he did not know if the Sale Proceeds were gifted to him is plainly contrary to his primary allegation.
90. Second, as analysed above, the Defendant’s evidence on Father’s intention or wish at the time when the two Joint Accounts were created is rather obscure and self-contradictory. In fact, the Defendant admitted that Father did not express his thoughts clearly. In the circumstances, when the Sale Proceeds of such a substantial amount were deposited into the accounts, one would have expected at least some discussions between Father and the Defendant on how the monies should be managed. The Defendant’s evidence that Father in late 2014 (i.e. more than 6 months after completion) simply told him in rather general terms that “he was free to use the monies in the Premier Account (including the Sale Proceeds)” is rather unrealistic and incredible.
91. Third, the Defendant’s case that he then informed Father of his previous withdrawals from the Premier Account and Father said “it would be fine to withdraw monies from the account” flatly contradicts his own case that he was all along entitled to use the monies in the account. The Defendant’s continuous use of the pretext “out of respect for Father” simply demonstrates his rather desperate attempt to justify the inconsistencies in his case.
92. Another matter which needs to be examined is the Defendant’s withdrawal from the Premier Account on the day of Father’s death, i.e. 20 April 2016.
93. The Defendant’s explanation is that the sum withdrawn was intended to be used to facilitate the purchase of the village house given that the provisional sale and purchase agreement (“the Provisional Agreement”) was initially arranged to be signed on 20 April 2016. He also alleges that there would be difficulty in getting a mortgage for the purchase of the village house and he also harboured fear (allegedly arising from what he heard from friend and classmates) that the Premier Account might be frozen as a result of Father’s death.
94. I find the Defendant’s explanation unacceptable:-
(1) Although the Defendant and the vendor agreed on the sale and purchase on 18 April 2016, there is no explanation as to why the Provisional Agreement was scheduled to be signed only on 20 April 2016. In fact, there is no evidence showing that the Provisional Agreement was actually intended to be signed on 20 April 2016.
(2) Upon hearing Father’s passing, the first thing which the Defendant did was to transfer HK$10 million from the Premier Account to himself (before seeing Father’s body), which runs contrary to his allegation that on the day of Father’s death, his “mind was not on financial or administrative matters”.
(3) The Defendant agreed that he knew he could postpone the signing of the Provisional Agreement. In the circumstances, there was no reason why he had to rush to withdraw HK$10 million from the Premier Account.
(4) As discussed above, the Defendant’s evidence that he was worried about the account being frozen is against his own case of his understanding and/or knowledge of the alleged gift and also the effect of the survivorship clause as allegedly explained by the bank staff.
(5) The Defendant has never produced any evidence to show that he was not capable of paying for the purchase of the village house through his own resources such that he was in urgent need of the withdrawn sum.
95. I also wish to comment on another incident which happened shortly after Father’s death. On 26 April 2016, i.e. 6 days after Father’s death, the Defendant attended Chong Hing Bank in attempt to open Father’s safe deposit box. He did so without the presence of any other siblings. Although the Defendant claimed that he had informed the Plaintiff before and after his visit to the bank, this was (1) denied by the Plaintiff and (2) was not mentioned in the Defendant’s statutory declaration to the Home Affairs Department explaining why he had attempted to open the safe deposit box. In any event, the Defendant failed to explain why he saw the need to “check out” the contents of the safe deposit box at that time. This, coupled with the withdrawal of HK$10 million immediately after he heard about Father’s passing, demonstrates that the Defendant was very eager to make his own attempt to take control of Father’s assets shortly after his passing.
96. Further, as set out above, according to the Plaintiff’s evidence, in about January 2016 (i.e. about 3 months before Father’s death), Father handed over various items, including, an envelope, a handwritten note and also a shoebox to the Plaintiff and gave him a warning of caution of what he should do for the purpose of carrying out a proper administration of estate upon Father’s death. The Defendant denies such incident and also disputes the authenticity of the handwritten note.
97. The above evidence, objectively viewed, appears to show Father’s concern as to whether the administration of his estate would be properly carried out; but it does not accuse any individual of any wrongdoing. Although the Plaintiff in his witness statement provided his somewhat subjective feeling by saying “I believe Father deliberately wrote the written note after his discovery of Desmond’s wrongful acts in order to remind me to be cautious of Desmond who would try to interrupt the administration of his Estate”, under cross-examination, the Plaintiff tried to retract this part of his evidence by saying that he “did not wish to speculate”. In the circumstances, I have decided not to attach any weight to this part of the Plaintiff’s evidence in assessing Father’s intention as I do not find it directly relevant to the issue. I have already considered all the other relevant evidence and materials in coming to my conclusion on Father’s intention.
98. Finally, insofar as the Defendant relies on the withdrawals which were made during Father’s lifeline (which, as alleged by the Defendant, were not opposed by Father), I wish to highlight the following points:-
(1) The Defendant has made withdrawals from the Premier Account in the total sum of HK$4,048,000 during the period between May 2015 and April 2016.
(2) The Defendant has disclosed bank statements of the above account together with envelopes bearing Father’s handwritten scribbles to show that Father had read such statements with knowledge of the Defendant’s withdrawals but did not raise any queries. However, it should be noted that the Defendant’s disclosure is only limited to the bank statements issued between July and October 2015 and does not cover the other withdrawals made by the Defendant.
(3) As discussed above, I see no reason why the Defendant would have informed Father in late 2014 of his previous withdrawals thereby prompting Father to give the Defendant an alleged reassurance about his liberty to use the monies in the account if the Defendant all along understood that the account belonged to him beneficially.
(4) Even assuming that Father had read the bank statements during the period between July and October 2015 and did not object to any of the withdrawals, it does not help salvage the Defendant’s case on the question of Father’s intention which has been assessed above. To say the least, the absence of Father’s objection to various withdrawals for a particular period could mean that Father specifically allowed the Defendant to withdraw monies from the account for certain purposes. For example, on the Defendant’s own case, he chose to inform Father in late 2014 that his business was not doing well. If Father, given what he had heard from the Defendant, allowed him to take monies from the account to solve his financial difficulties at that time, this could not be taken as a factor in support of a gift.
(5) In any event, I note that the Defendant has never run the argument of waiver or acquiescence.
99. Having made my rulings on Father’s intention, it is not necessary to resort to the legal presumptions. Further, in view of such rulings, whether Father decided to create the two Joint Accounts for administrative convenience is not of particular importance as there could be more than one reason for Father’s behaviour. As outlined above, there is a debate between the parties on Father’s health condition before the Defendant was made a joint account holder. The Defendant’s argument is that in view of Father’s condition at that time, he was not required to have an additional joint account holder simply to give him physical or administrative assistance in handling the accounts. However, I do not find this debate meaningful, given the fact that shortly after Mother’s death, Father immediately decided to have the Plaintiff designated as an additional signatory to the Hang Seng Bank account. This shows that Father might have needed at least some sense of security or peace of mind such that his bank accounts would not be left unattended in case his health condition did not allow him to operate them anymore. Further, I have already found that Father was not aware of the difference between adding a person as a signatory to a bank account and creating a joint bank account.
F. CREDIBILITY OF THE WITNESSES
F1. Witnesses of the Plaintiff
100. The Plaintiff has tendered witness statements from himself, Kit Bing, Loi Tat and Loi Chuen. At the trial, he has only called three witnesses, namely Loi Tat, the Plaintiff himself and Loi Chuen.
101. Kit Bing in her witness statement alleged that when she visited Father in around December 2013, she was told that he invested substantial sums in an Australian dollar fund upon the suggestion of the Defendant. In this connection, she said that Father regretted doing so and complained about it. However, since Kit Bing has chosen not to give evidence, the Defendant was not given the opportunity to cross-examine her. As a matter of fairness, I will not give any weight to Kit Bing’s evidence.
102. In general, I find the evidence of the Plaintiff and his witnesses reliable and credible.
103. Loi Tat gave his evidence on family matters including the personalities of the siblings, the relationships amongst them and their relationships with Father. He also testified on the deteriorating health condition of Father and the matters after his death.
104. The Defendant launched its attack against Loi Tat that he did not have first-hand knowledge as extensively as he claimed to be, particularly in relation to Father’s health. In contrast, it was the Plaintiff and Kit Bing who had personal knowledge. Further, the Defendant pointed to some discrepancies between his oral testimony and his witness statement.
105. In my view, the discrepancies between his oral evidence and his witness statement are immaterial, particularly when those discrepancies did not touch upon the core issues in this case. For example, the Defendant complained in his Closing Submissions that regarding Father’s retirement in 1992, Loi Tat testified that Mother asked the siblings one by one whether anyone of them would take over, whereas a contradictory account was given by Plaintiff and Loi Chuen that they never heard of it. Given the passage of time and that the nature of such events is not directly relevant to the main issues, I do not find that the credibility of Loi Tat is undermined.
106. The Plaintiff is a key witness in this case, and he was extensively cross-examined on various matters. His evidence covered topics across, amongst other things, Father’s personality, family matters including the relationships between family members and the dispositions of the siblings, Father’s medical condition, Father’s financial affairs and matters after Father’s death.
107. The Defendant contends that the Plaintiff’s evidence was unbelievable for the reasons that it was “one-sided and self-serving” and he was “unable to answer pertinent questions raised during [cross-examination] about inconsistencies in his own evidence”. The Defendant then gave some examples which will be summarised below:-
(1) The Plaintiff had altered his evidence in relation to the payment of rent for residing in Father’s and Mother’s properties.
(2) The Plaintiff had changed his evidence in respect of a HSBC account as to whether it was jointly held by Father and Mother or by Mother alone.
(3) Regarding the Plaintiff’s assertion that Father taught the siblings that “financial matters … should be made clear and be segregated even among family members”, the Plaintiff during cross-examination was unable to recite the words of Father but instead changed the Father’s wording when pressed.
(4) The Plaintiff claimed that Father would usually make long-distance calls to Kit Bing, but he could not give any further particulars of the content of those conversations.
(5) When the Plaintiff was asked whether Father used the Savings Account for his daily expenses, he replied that he only knew about the Hang Seng Account.
108. However, having seen and heard the Plaintiff’s evidence, I am of the view that the Plaintiff’s oral testimony is straightforward and forthcoming. For example, he did not insist that the Defendant was not trusted by Father during cross-examination. Neither did he maintain at trial that Father was worried about the administration of his estate because of his concern over the Defendant.
109. Regarding Loi Chuen’s evidence, in addition to family matters and the medical condition of Father, he also gave evidence on Father’s financial affairs and the sale of the Shop.
110. I accept the Defendant’s complaint that there were some uncertainties and inaccuracies in the answers given by Loi Chuen during cross-examination. For example, in respect of matters relating to the sale of the Shop such as whether the Defendant persuaded Father to sell the Shop, Loi Chuen seemed to have some confusion about the chronology of the relevant events and the places where those events took place. When he was pressed on matters that he did not have first-hand knowledge, such as Father’s investment portfolio and which of the siblings accompanied Father to medical appointments, he said he was unclear about those matters.
111. Nevertheless, apart from the above, Loi Chuen’s answers were mostly direct and not evasive. I find Loi Chuen’s testimony reliable.
F2. The Defendant
112. As analysed above, I find the Defendant’s evidence, particularly in respect of his case on Father’s express intention to make a gift to him, obscure, self-contradictory and unreliable. There are also various inherent inconsistencies in his case which have already been discussed above. He also had the tendency of trying to tailor the facts in order to suit his needs.
113. I wish to only mention another incident which raises further doubts on the Defendant’s credibility.
114. As aforementioned, in 1986, the Defendant moved to Canada with his wife and worked in a U.S. based company engaged in gold and jewellery manufacturing for about two years. The Plaintiff alleges that, in around 1988, the Defendant was suspected of stealing a patented gold refining formula from the U.S. company and used it for his own profit and that the Defendant avoided criminal prosecution only after Father paid over HK$500,000 to the U.S. company pursuant to an out-of-court settlement. According to the Plaintiff, apart from the payment of the settlement sum, the Defendant had undertaken not to carry on business in the same industry. Nevertheless, as alleged by the Plaintiff, the Defendant disregarded the undertaking and started both Artec in his wife’s name and Sinocean in the names of his wife and Loy Koon to circumvent the undertaking and operate his new businesses in the same industry.
115. On Day 7 of the trial, during cross-examination, the Defendant was questioned about the operation of his businesses and the following matters were revealed:-
(1) Sinocean, which engaged in the business of jewellery casting, was initially held in the names of his wife and Loy Koon. In 1994, the Defendant’s wife was replaced by Father as one of the directors and shareholders of Sinocean.
(2) Artec was held in the name of the Defendant’s wife. The Defendant initially claimed that Artec was only engaged in jewellery consultancy and the sale of jewellery-manufacturing machines. However, this was contradicted by his later evidence that his parents regularly made soup for him because a lot of smoke was created by gold-melting at Artec’s Kam Mou office. Thus, it appears that Artec was also in the business of jewellery manufacturing.
116. During cross-examination, although the Defendant admitted having given an undertaking to his former employer, he was adamant that it had nothing to do with any suspected criminal conduct. He claimed that the undertaking was given two months after he left the U.S. company in order to facilitate a prospective acquisition of the U.S. company. However, he had no knowledge of the details of the prospective acquisition. The Defendant claimed that the undertaking given only restricted himself, but not his companies or associates, from dealing with the then existing clients of his former employer for a period of 1.5 years. Although the undertaking did not prohibit him from engaging in jewellery-manufacturing, he sought to explain that he chose to set up Sinocean in the names of his wife and Loy Koon to avoid suspicion in case he was thought to have breached the undertaking.
117. In his Closing Submissions, the Plaintiff alleges that the Defendant interposed his wife, Loy Koon, and/or Father as owners of Sinocean and Artec so that he could continue to operate his jewellery-manufacturing business in the shadows in breach of the undertaking. The Plaintiff submits that the Defendant’s version of the undertaking that he had given was a complete fabrication for the following reasons:-
(1) The Defendant’s allegation that the alleged undertaking was only signed 2 months after he left the company runs against common sense and standard commercial practice.
(2) The Defendant’s own evidence was that the alleged acquirer initially required his services to be included as part of the acquisition. Notwithstanding this, the Defendant left the company without any undertaking. Instead, the Defendant was only invited to give an undertaking, allegedly for US$70,000, 2 months after he had left the company and started his own business. The circumstances in which the Defendant had allegedly given the undertaking was illogical and strange.
(3) The terms of the undertaking, as alleged by the Defendant, would have only covered the Defendant personally, but not his companies or agents. Any properly drafted undertaking would have restricted the use of companies as a way to circumvent the prohibition.
(4) Although the Defendant claimed that the proposed acquisition was eventually successful, according to the shareholder and director records of the Hong Kong branch of the U.S. Company, there was no change in shareholders or directors between 1988 and 1999. There was simply no acquisition whatsoever.
118. In response to the Plaintiff’s allegations, the Defendant submits that they are irrelevant to the issues in the present case and was not raised in the Plaintiff’s pleaded case. In his Closing Submissions, the Defendant repeated the explanation that he had provided during cross-examination, i.e. although he had given an undertaking to the U.S. Company, it had nothing to do with any alleged criminal conduct on his part. As to Sinocean, it was set up in the way it was out of an abundance of caution to avoid unnecessary trouble both to himself and his clients.
119. Although I accept that the above incidents are not directly relevant to the present dispute, the Defendant’s explanations demonstrate further problems in his credibility:-
(1) Although the issue of the Defendant’s alleged criminal case was mentioned in the Plaintiff’s witness statement, the Defendant refused to provide any explanation until he made his Further Supplemental Witness Statement. Even then, the Defendant was not forthcoming about his explanation. He did not reveal the name of his former employer, nor did he mention anything about the undertaking that, in cross-examination, he first claimed to have given.
(2) For the reasons canvassed above, the alleged terms of the undertaking simply defy commercial sense. Further, had the terms of the undertaking been as alleged by the Defendant, there would have been no good reason to interpose his wife, Loy Koon and Father as owners of Sinocean. This is especially so because, on the Defendant’s own evidence, Sinocean would have been able to obtain loans more easily if he himself were a director/shareholder. The Defendant’s explanation that he made arrangements for the abovementioned people to be owners of Sinocean “out of abundance of caution” is merely a convenient yet empty . Thus, I find that the Defendant failed to tell the truth in this regard.
(3) Hence, even if I accept the Defendant’s evidence regarding the terms of the undertaking that he had given (which I do not), the way in which Sinocean was set up, coupled with the type of business that it was engaged in, still calls for an explanation. Yet, throughout the proceedings, the Defendant was not forthcoming in his disclosure of information concerning Sinocean.
120. Thus, I find that the Defendant’s overall credibility was further undermined by his response to the Plaintiff’s allegations regarding the alleged criminal investigation as discussed above.
G. CONCLUSION
121. By reason of the above analysis, I am of the view that Father never intended to make an inter vivos gift of his beneficial interest in the Savings Account and/or the Premier Account (including the Sale Proceeds) to the Defendant.
122. Accordingly, I consider that the evidence supports the finding on the balance of probabilities that the Defendant held the funds in the Joint Accounts on trust for Father. I also find that between 12 May 2015 and 21 April 2016, the Defendant wrongfully caused the money in the Premier Account (which was then in the total sum of HK$14,248,000) to be transferred to his own HSBC bank account, in breach of his duty as a trustee and without consent from Father and/or the Estate.
123. In the circumstances, the Plaintiff’s claim succeeds and I enter judgment in favour of the Plaintiff. I hereby make the following order as sought by the Plaintiff:-
(1) A declaration that the balance standing in the Savings Account and the Premier Account as well as the Sale Proceeds therein shall vest into the Estate upon Father’s death on 20 April 2016.
(2) An order that the Defendant shall repay the sum of HK$14,248,000 withdrawn by him from the Premier Account.
(3) An order that an account and an inquiry shall be taken of all money withdrawn from the Savings Account and/or the Premier Account that came to the hands of the Defendant or received by any other person on behalf or account of the Defendant, without Father’s and/or the Plaintiff’s authorisation.
(4) An account of the Sale Proceeds received by the Defendant.
(5) Delivery up by the Defendant of all money (with interest thereon) and properties belonging to Father and/or the Estate upon taking such accounts and/or inquiries under paragraphs (3) and (4) above.
124. I also make an order nisi that the Defendant shall pay interest on the sum of HK$14,248,000 at prime rate plus 1% from 20 April 2016 (i.e. the date of Father’s death) to the date of this Judgment and thereafter at judgment rate until payment.
125. In addition, I make a costs order nisi that the Defendant do pay the Plaintiff the costs of this action, to be taxed if not agreed with certificate for two counsel.
126. The above orders nisi shall become absolute unless an application to vary the same is made within the next 14 days.
| | (Richard Khaw SC) |
| | Recorder of the High Court |
Ms Elaine Liu and Mr Abel Lam, instructed by K. B. Chau & Co., for the Plaintiff
Ms Sara Tong and Ms Esther Mak, instructed by Patrick Chu, Conti Wong Lawyers LLP, for the Defendant
[1] Overseas Trust Bank Ltd p.201H-202B
[2] Overseas Trust Bank Ltd p.203A-B
[3] Overseas Trust Bank Ltd p.204F-I and 205D
[4] Overseas Trust Bank Ltd p.203F-G, p.206E and p.209G.