LI KA SING AS ADMINISTRATOR OF THE ESTATE OF KAN KIT WAN, DECEASED v. TONG MEI LIN AND OTHERS

HCMP 2150/2016

[2018] HKCFI 1949

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 2150 OF 2016

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JUDGMENT

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PRELIMINARIES

1.  By order of Deputy High Court Judge Au-Yeung (as she then was) dated 24 May 2012 (HCMP 664/2011), the Plaintiff, a professional accountant, was appointed the administrator of the estate of the late Madam Kan Kit Wan (the “Deceased”), who died intestate at the age of 89 on 14 June 2007.

2.  Consequentially, Letters of Administration were granted to the Plaintiff on 14 September 2012 (HCAG 6338/2012).

3.  The Deceased was married to the late Mr Tong Fat Hung, who pre-deceased her on 24 December 1975 at the age of 70.  The 1^st to 7^th Defendants were children born of their marriage.  For ease of reference, Mr Tong Fat Hung, deceased, is hereinafter referred to as the “Father”.

4.  The Father was very successful in operating a family business involving the trading of metal wires.  Between 1960 and 1970, a total of eight landed properties (both residential and commercial) were acquired on the strength of the wealth amassed through the family business.

5.  Amongst the eight properties, three were registered under the name of the Deceased (the “3 Properties”) and the remaining five were registered under the names of some of the children.

6.  This is the Plaintiff’s application under Order 85, rule 2(3) of the Rules of the High Court for approval of the sales of the 3 Properties and ancillary directions pertinent thereto. 

7.  The Plaintiff’s action against the 1^stDefendant was discontinued on 23 August 2016 in circumstances, which will become apparent in the judgment hereinafter (see paragraph 68 below).  The 2^nd, 3^rd, 4^th and 6^th Defendants are not legally represented and they appeared at the trial in person.  

8.  Various affirmations have been filed by the Plaintiff, the 5^th and 7^thDefendants pursuant to directions of the Court.  It is discernable from the affirmations that there are substantial factual disputes surroundingthe purchase of the various properties and the beneficial ownership thereof.  

9.  In particular, there are serious disputes between Tong Kwok Kee (the 7^th Defendant) and Tong Kwok Cheong (the 5^thDefendant)as to whether the 3 Properties form part of the estate of the Deceased.   The 5^thDefendant (along with the Plaintiff) takes the stance that they are whereas the 7^thDefendant claims that the 3 Properties (as indeed all eight properties) belong to the Father’s estate, which has yet to be administered.

10.  Before me,each of the 2^nd, 3^rd, 4^th and 6^thDefendants unequivocally confirmed that they were in support of the 5^thDefendant’s position.

11.  By order of the Honourable Mr Justice Chow herein (dated 28 July 2017), the 7^thDefendant was appointed as the representative of the Father’s estate, which has since been joined as an Interested Party.

12.  It is agreed by all parties that there are three issues before the Court, namely:

1^st Issue:   Whether the 3 Properties are owned by the Deceased’s estate or the Father’s estate;

2^nd Issue:  If the 3 Properties belong to the Deceased’s estate, how and on what terms should the 3 Properties be sold; and

3^rd Issue:  Once the 3 Properties are sold, should the distribution of the Deceased’s estate await the distribution of the Father’s estate.

13.  This case was listed to be heard in Chambers (not open to the public).  However, Order 28, rule 3A of the Rules of the High Court provides that “An originating summons must be heard in open court unless the Court otherwise directs.”

14.  Further, the proceedings herein do not fall within the exceptions set out in Schedule 2 to Practice Direction 25.1, which are proceedings usually not open to the public. 

15.  More importantly, I brought the parties’ attention to the case of Li Lim Chi Dorothy v Lin Fung Industrial Company [2017] 2 HKLRD 746 (also cited in Hong Kong Civil Procedure 2018 at 85/2/17) wherein Lam VP said:

“ 1.4. Administration proceedings under Order 85 proceeded byway of originating summons procedure are suitable for summary resolution of disputes regarding the administration of an estate. However, when there are serious issues regarding whether certain assets formed part of the estate, particularly when complicated factual issues are raised and examination of evidence of the witnesses is necessary, it is not appropriate to proceed in such manner. The action has to be proceeded by writ.”

 ( emphasis added)

16.  In the premises, the action herein ought to have been begun by writ. That notwithstanding, in view of the fact that the issues in dispute fall within a narrow compass in respect whereof extensive affirmations have been filed, I exercised my discretion to proceed with the trial in open court upon assurance from all counsel that they were ready to proceed.

17.  In so deciding, I gave due regard for the expectation of the parties to have the matter resolved as soon as practicable and the fact that the 2^ndDefendant returned to Hong Kong from Canada for the purpose of the trial.

18.  Lamentably, this case is complicated by an array of litigations amongst some of the Defendants since 2007 (ie after the demise of the Deceased) arising from or pertinent to (a) the administration of the Deceased’s estate and that of the Father; (b) the beneficial ownership of the various landed properties; (c) the whereabouts of other assets allegedlybelonging to the Deceased and/or the family business, which was said to be operating under a partnership consisting of some, but not all, of the family members since about 1975.

19.  I have made clear to the parties that I would restrict my judgment to the three issues identified hereinabove since it would not be appropriate for me to make any decision, which may influence or preempt the decision of the Court on other issues that may arise in the catalogue of ancillary proceedings, whether contemplated or already commenced.

THE FAMILY

20.  In 1950s, the Father along with the Deceased, came to Hong Kong from Mainland China.  The Father set up Sam Hing Metal Company (“Sam Hing”) in Kowloon, which was concerned in the trading of metal wires of various kinds. It seems that prior to 1975, the English name of the business was “Sham Hing” but nothing turns on that (see para 134 below).

21.  The exact dates of births of the seven children were not included in the evidence adduced in the trial. However, it is known that the 1^stDefendant, theeldest child in the family, was born in 1940.  Thereafter, five sons and one daughter were successively born (ie the 3^rd to 7^th Defendants followed the 2^ndDefendant).

22.  It is also known that the 5^thDefendant was born in 1946 and the 7^thDefendant, in 1951.  It is discernable from the documents that the 3^rdDefendant (the first son) was born in about 1943 and the 2^ndDefendant (the youngest of the children), in about 1959.

23.  In early 1960, Sam Hing operated from a shop situated at 575 Reclamation Street, Tai Kok Tsui, Kowloon.  The business was so successful that the family was able to acquire the following eight landed properties between 1960 and 1970:

	Date of purchase	Address	Name and age of registered owner	Age of the Father
(1)	1 March 1960	G/F, 73 Prince Edward Road (shop)	The Deceased (at age 43)	55
(2)	11 February 1961	1/F, 186 Tong Mei Road (residential)	The Deceased (at age 44)	56
(3)	11 February 1961	1/F, 81 Prince Edward Road (residential)	Kwok Keung (D3 at age 18)	56
(4)	20 August 1961	Flat F, G/F Wing Shun Building Nos 53 – 67 Larch Street and No 4 Lime Street (shop)	The Deceased (at age 44)	56
(5)	16 November 1962	1/F, No. 10 Playing Field Road (residential)	Kwok Keung (D3 at age 19)	57
(6)	24 November 1964	G/F, Shop B, 85 Prince Edward Road (shop)	Kwok Keung (D3 at age 21)	59
		As of 21 May 1972:	Kwok Keung (D3 at age 29) – 50% Kwok Wah (D4 at age 27) – 50%	67
(7)	3 June 1966	Shop A, 87 Prince Edward Road (shop) together with Flat A on M/F	Wai Lin (D1 at age 26)	61
(8)	26 October 1970	G/F & M/F of 91 Prince Edward Road (shop)	Kwok Wah (D4 at age 25) – 50% Kwok Cheong (D5 at age 23) – 50%	65

24.  The action herein only concerns the 3 Properties, which are registered under the name of the Deceased and enumerated hereinabove as Properties (1), (2) and (4).

25.  The values of the 3 Properties have appreciated considerably since the time of purchase:

	Date of purchase	Address / purchase price	Valuation by K T Liu Surveyor (for Plaintiff)	Valuation by Centaline Surveyors (for D5)
(1)	1 March 1960	G/F, 73 Prince Edward Road (shop)  / HK$ 60,000	HK$ 12,414,080	HK$ 18,580,000
(2)	11 February 1961	1/F, 186 Tong Mei Road (residential)  / HK$27,075	HK$ 3,270,000	HK$ 3,850,000
(4)	20 August 1961	Flat F, G/F Wing Shun Building Nos 53 – 67 Larch Street and No 4 Lime Street (shop) / HK$ 114,000	HK$ 22,044,120	HK$ 22,990,000
			HK$ 37,728,200	HK$ 45,420,000

THE CHINESE WILL OF THE FATHER

26.  It is not disputed that about one month or so after the death of the Deceased on 14 June 2007, the children gathered for a meeting at the Deceased latest residence at 1/F, 10 Playing Field Road (Property (5)).The Deceased’s drawer was opened for inspection of the content whereupon an envelope marked with the Chinese characters “遺囑” (meaning a will) was found. 

27.  Inside the envelope was a 4-page hand-written document (in Chinese) dated 1 December 1975.  As discernable from its content, it is a homemade will bearing a legible signature in three Chinese characters “湯發鴻”, which is the name of the Father but it was not witnessed (the “Chinese Will”).

28.  Up to the time of discovery of the Chinese Will as aforesaid, no one had sought to act on the Chinese Will and no application had been made by anyone to administer the Father’s estate.  It was not until 30 September 2016, when the 7^thDefendant did so in the circumstances described below (HCAG 13525/2016).  It would therefore appear that the Chinese Will was hidden or forgotten for some 32 years between 1975 and 2007.

29.  In HCMP 664/2011, the 1^st and 2^ndDefendants jointly applied for appointment of the Plaintiff herein as administrator of the Deceased’s estate.  In connection therewith, the 1^stDefendant deposed to the provenance of the Chinese Will in an affidavit (dated 15 April 2011) in the following terms:

“ 8. On or about 01/12/1975, at the direction of the Father, I had written out a Will for him in Chinese (‘the Will’) which was signed by the Father. . .

9. Despite the legal title to the above properties having been vested in the various children and the Mother, by the Will, the Father purported to make dispositions (‘Father’s Wishes’), inter alia, of various properties to the Mother and his children as follows …

10. On 17/12/1975, I was admitted as a partner of the firm …. My Father passed away on 24/12/1975 … and ceased to be a partner of the firm.

11. To the best of my own knowledge, no probate of the Will has been taken out after the demise of the Father in December 1975. As all the properties had already been registered either in the names of the siblings or the Mother but not in the Father’s name, no one was even bothered to obtain a grant of probate in respect of the Father’s estate or to observe the Father’s Wishes as contained in the Will.

12. Since the death of the Father, the business of ‘Sam Hing’continued and was mainly conducted by Kwok Keung [D3] … and Kwok Wah [D4] … until its cessation of business in 2010. Neither myself nor any other partners were actively involved in daily management of the firm’s business.”

30.  The Chinese Will is divided into various parts.  Part I dealt with disposition of the eight properties.  In light of the different numberingused therein, it is necessary to re-arrange them to align with the enumeration as in paragraph 23 herein above.  In gist, the respective beneficiaries of the 8 Properties as stated in Chinese Will are as follows: 

	Date of purchase	Address	Registered owner (“RO”)	Beneficiary under the Chinese Will
(1)	1 March 1960	G/F, 73 Prince Edward Road (shop)	The Deceased	Kwok Kee  (D7)
(2)	11 February 1961	1/F, 186 Tong Mei Road (residential)	The Deceased	Same as RO (but not to be sold)
(3)	11 February 1961	1/F, 81 Prince Edward Road (residential)	Kwok Keung (D3)	Same as RO
(4)	20 August 1961	Flat F, G/F Wing Shun Building Nos 53 – 67 Larch Street and No 4 Lime Street (shop)	The Deceased	Kwok Cheong (D5) and Mei Lin (D2)in equal shares
(5)	16 November 1962	1/F, No. 10 Playing Field Road (residential)	Kwok Keung (D3)	Same as RO
(6)	24 November 1964	G/F, Shop B, 85 Prince Edward Road (shop)	As of 21 May 1972:
			Kwok Keung (D3) – 50%	Same as RO
			Kwok Wah (D4) – 50%	Same as RO
(7)	3 June 1966	Shop A, 87 Prince Edward Road (shop) together with Flat A on M/F	Wai Lin (D1)	Wai Lin (D1) and Kwok Sing (D6) in equal shares
(8)	26 October 1970	G/F & M/F of 91 Prince Edward Road (shop)	Kwok Wah (D4) – 50%	Same as RO
			Kwok Cheong (D5) – 50%	Same as RO

31.  Part II provided for bequeaths in the sums of US$90,000, HK$60,000 and HK$40,000 to the Deceased, the 1^stDefendant and the 2^ndDefendant respectively. 

32.  Thereafter, instructions were given in the Chinese Will for the followings:

 (a) realization of the assets of Sam Hing to be administered by the 3^rd and 4^thDefendants, which was to be divided into 7 equal shares to be allocated to the five sons and the Deceased (ie 2 shares to the 3^rdDefendant, 1 share to each of 4^th to 7^th Defendants and 1 share to the Deceased);

 (b) provision of financial support to the unmarried children from the family (common) asset; and

 (c) provision of financial support from the family (common) asset for the education of the 7^thDefendant (youngest son then aged 24) and 2^ndDefendant (youngest daughter then aged about 16) until they graduated from university.

33.  At the concluding part of the Chinese Will is an aspirational statement from the Father urging the seven children to lead a frugal life, be kind to their mother (the Deceased), live in harmony, support each other at times of adversity and avoid disputes over monetary matters.  This is a bit of an irony in light of the array of litigations taken out by the some of the Defendants, inter se, since 2007.

THE ARRAY OF LITIGATIONS

34.  In order to make sense of the evidence adduce in the trial, it is necessary to refer to some of the litigations amongst the Defendants since the death of the Deceased in 2007:

Date	Action No	Taken out by / nature
2007	HCA 1939/2007	D5 against D1 for specific performance of a writtenagreement entered into on 18 November 2005 for saleof her “legal” interest in the G/F shop of Property (7)and D1’s expectant share in the Deceased’s estate.
		Judgment of DHCJ Mayo dated 5 November 2012 in favour of D5 (affirmed by Court of Appeal in CACV 268/2012 on 26 November 2013).
26 June 2008	HCMP 1186/2008	D1’s proceedings against partners of Sam Hing claiming for possession of Property (7) and an account of rental income.
		The action was compromised on 26 September 2008and Property (7) was returned to D1 in October 2008. An account was also given for rental income from 31 May 2008 to 31 October 2008.
		However, D5 claimed that he was not involved and had no knowledge of the compromise reached between D1 and D3 (along with D4, D6 and D7) until much later—see also para 23B of Amended Defence of D1 (in HCA 1939/2007).
		The Partnership of Sam Hing was dissolved on 31 October 2008—see Amended Defence (at paras 23A to 23F) and Judgment of DHCJ Mayo (at para 40) in HCA 1939/2007.
15 August 2008	HCAG 7374/2008	Application of D6 and D7 for a grant of Letters of Administration in respect of the Deceased’s estate (cf HCCA 2235/2008,caveat entered by D5 on 20 August 2008).
2009	HCMP 1856/2009	Taken out by D7 (probably against D3 and D4 and others concerned) to seek an account of rental income arising from the 3 Properties (see Letter fromMessrs S Y Fung (for D7) to other Defendants dated 22 October 2013 [B/287 of the Trial Bundle].
12 September 2011	HCMP 664/2011	Amended Originating Summons taken out by D1 and D2 for appointment of professional accountant as administrator of the Deceased’s estate.
		Order of DHCJ Au-Yeung on 24 May 2012 appointing the Plaintiff as administrator of the Deceased’s estate.
		Corresponding Letters of Administration granted to the Plaintiff on 14 September 2012 (HCAG 6338/2012).
12 April 2013	HCMP 776/2013	Intended Beddoe Application by the Plaintiff hereinto seek a declaration that the Chinese Will is invalid.
		Application held in abeyance due to objection from D3, D4, D5 and D6 by individual letters dated 25 April 2013 [B/285] and from D7 by a letter dated 26 April 2013 [C/383-2] (though D7 sought to withdraw that letter on 2 September 2014 [C/383-4]).
2014	DCMP 2470/2014	D3 claiming against D7 for vacant possession of Property (5), the childhood family home to which D7 returned to live in mid-2005 in order to look after the Deceased.
		On 30 January 2015, Deputy District Judge Amy Chan refused D3’s application for summary disposal of the matter (under Order 113 of the Rules of the District Court) holding that there was a triable issueas to the beneficial ownership of Property (5) despite D3’s claim that he paid for the purchase price of HK$113,000 in 1962.  Action pending.
30 September 2016	HCAG 13525/2016	D7’s application for Letters of Administration in respect of the Father’s estate (alleged to be intestatedespite the existence of the Chinese Will), cf HCCA 556/2011, caveat entered by D5.

MONIES FOR PURCHASING THE 3 PROPERTIES

35.  It was the practice of the Father to purchase property and put it under the name of the Deceased or the older children (see observation of DHCJ Mayo at para 10 of the judgment in HCA 1939/2007).

36.  Before the trial herein, the position of both 5^th and 7^thDefendants was that monies for purchasing all eight properties were paid by the Father, although they were registered in the name of the Deceased or some of the Defendants (see para 5 of the 5^thDefendant’s 2^ndAffirmation herein (dated 14 June 2017) and para 4 of the 7^thDefendant’s Affirmation herein (dated 18 January 2017) referring to para 5 of the 1^stDefendant’s Affidavit (dated 15 April 2011) filed in HCMP 664/2011).

37.  In particular, in a letter dated 21 August 2008 from Messrs C YTsang & Co (acting for the 3^rdDefendant) to the other Defendants on the subject of the administration of the Deceased’s estate [C/574], it is stated:

“ Further, in the Chinese Will of the late father Tong Fat Hung, instructions were given on the proper disposal of all the propertiesheld under the Deceased’s name which were paid for by the father. The administration of the Deceased’s estate cannot proceed if no consideration is given to the wish of the father. If an agreement cannot be reached within the family, our client is prepared to obtain a grant of probate of the Chinese will of the father. Apparently, the various properties set out in the Chinese will, including the properties currently under the name of the Deceased and the siblings, were held on trust for the estate of Tong Fat Hung. It means in effect the scope of the estate of the Deceased is highly uncertain ….” (emphasis added)

38.  In a letter (in Chinese) dated 22 October 2013 issued by Messrs S Y Fung, Solicitors (for the 7^thDefendant) under HCMP 1856/2009 [B/287], while recognizing that the 3 Properties were in the name of the Deceased, it is stated that:

(a) in an affirmation filed in HCMP 1856/2009, the 3^rdDefendant said that the Deceased “contribute” the rental income from the 3 Properties to Sam Hing;

(b) the Father started Sam Hing in 1954 and operated the businessuntil his death in 1975.  Thereafter, the business was operatedthrough a partnership of seven persons until the demise of theDeceased, a total of 54 years.  In the affirmation of the 3^rd and 4^th Defendants (filed in HCMP 664/2011), they both claimed to have followed the Father in 1950s and 1960s while workingfor Sam Hing.  This afforded proof that the cash and properties of the Deceased came from asset of the Father.

39.  There is no dispute that Properties (1) and (4), which were acquired in 1960 and 1961 respectively, were initially used for the purposeof the business of Sam Hing.  It would appear that these two premises were rented out at some later stage after the main operation of Sam Hing became based at Properties (6) and (7), which were adjourning, and probably other premises.

40.  Property (2) was the family home acquired in 1961 before Property (5) at 1/F, 10 Playing Field Road, was acquired in 1962. Likewise,Property (2) was rented out at some stage although no detailed evidence was adduced at trial.

41.  It is highly relevant that this case involves a traditional and closely-knitted Chinese family.  The Father and the Deceased came to Hong Kongfrom the mainland shortly after the establishment of the People’s Republic of China in 1949.  When the 3 Properties were acquired in 1960 and 1962,the business of Sam Hing, though thriving, was still at its infancy.

42.  Against this background, it is likely that the Deceased was put in charge of the wealth amassed by the Father from the family business so that she could look after the outgoings of the household and the well-being of the children.  In this scenario, it is less likely that the Deceased would have any substantial amount of “private” money to herself.

43.  In the course of the trial, the 5^th Defendant, along with the Plaintiff, sought to establish through oral evidence of the 5^thDefendant that although the Deceased did not have any independent source of income, she would have received gifts of money from the Father from time to time.  Hence, it was suggested that the Deceased might have contributed to the purchase price of the 3 Properties from her “private” assets. Frankly, the 7^thDefendant accepted that he could not rule out such possibility.

44.  With due respect to the effort of counsel, I find this factual proposition of the Deceased contributing to the purchase price out of her own pocket rather unrealistic.

45.  To start with, the Deceased had no independent source of income.  She was essentially a housewife and she would only attend to logistical matters of Sam Hing such as catering for staff and other personnel matters since some of staff came from her side of the family. 

46.  For that matter, it is also highly unlikely for any of the children to have an independent source of income when the eight properties were purchased (between 1960 and 1970).  To put things in perspectives:

 (a) in 1960, when Property (1) was purchased, the 1^stDefendant (aged 20) went to study in Taiwan.  The 3^rdDefendant was only 17 and was probably assisting in the family business.  The 5^thDefendant was then 14 whereas the 7^thDefendant was only 9.

 (b) in 1970, when Property (8) was purchased, the 5^thDefendant was 24 and the 7^thDefendant was only 19. 

47.  Importantly, when the 3 Properties were purchased between 1960 and 1962, the 5^thDefendant (aged 14 to 16) and the 7^thDefendant (aged 9 to 11) were both too young to know about the details of the financial affairs of the family. 

48.  Further, no evidence is called from the 1^stDefendant (then aged 20 to 22 and studying in Taiwan) and the 3^rdDefendant (then aged 17 to 19) as to the arrangement of family finance at the material times.  Nor was there any documentary evidence adduced in support of such factual proposition.  

49.  In the premises, I do not see the need to digress into a discussion on the factual scenario of the Deceased contributing to the purchase price of the 3 Properties or indeed any of the eight properties.

50.  In all circumstances, I find that the monies for purchase of all the 3 Properties (in 1960 to 1962) came from the Father and the wealth he had amassed through the business of Sam Hing. 

51.  In passing, it is noteworthy that (in DCMP 2470/2014) the 3^rdDefendant attempted to evict the 7^thDefendant from the family home at1/F, 10 Playing Field Road (Property (5)), where the Deceased was staying  apparently accompanied by the 7^thDefendant, at the time of her demise on 14 June 2007.  

52.  As that case is still on-going, the least said by me the better.  However, it is extraordinary that the 3^rdDefendant claim therein that he paid for the purchase price of Property (5) in November 1962 in the sum of HK$113,000.

53.  As rightly observed by judge in refusing the 3^rdDefendant’s application for summary judgment, the 3^rdDefendant (then 19 years old) was at school leaver age.  It gives rise to the query as to the source of the 3^rdDefendant’s finance so as to enable him to pay for the purchase price of Property (5) as he claimed.  However, no evidence was adduced therein by the 3^rdDefendant in this respect (see paras 9 and 18 of judgment of Deputy District Judge Amy Chan dated 30 January 2015 in DCMP 2470/2014).

54.  For the avoidance of doubt, my judgment herein in respect of the source of the purchase money of the 3 Properties shall not affect any future determination on any issue in respect of the other five properties in any of the ancillary court proceedings.

PRESUMPTION OF ADVANCEMENT VIS-À-VIS PRESUMPTION OF RESULTING TRUST

55.  The presumption of advancement is rooted in the socio-economic norm as to the way in which the head of a family would providefor his dependants, normally, wife and children.  The presumption has been applied in Hong Kong in a number of cases.

56.  In Lee Tso Fong v Kwok Wai Sun [2008] 4 HKLRD 270, DHCJ A To (as To J then was), referring to Dyer v Dyer (1788) 2 Cox Eq Cas 92, explained as follows:

“ Presumption of resulting trust

5. … where a person purchases property with his own money and directs that the property be transferred to the name of another, in the absence of evidence to the contrary, there is a presumption that the property is held by the person to whom it is transferred under a resulting trust in favour of the person who provided the money for its purchase. The law imputes a common intention tothe parties to hold the property under a resulting trust even in theabsence of such intention. This presumption may be rebutted byproof of the actual common intention of the parties. The classic authority for this proposition is Dyer v Dyer (1788) 2 Cox Eq Cas 92.

Presumption of advancement

6. Dyer v Dyer is also the classic authority for the proposition that where a person purchases property and transfers it to the name of his child, there is a presumption that a gift was intended. …

…

10. … Unlike the presumption of resulting trust, where the law imputes a common intention between the parties when there was none, the presumption of advancement is a rule of evidence. It infers an intention which, according to human nature or human behaviour, must have been what was in the contemplation of the parties at the time of the relevant transaction. Human nature or human behaviour is a reflection of the social norm which changes with time and with socio-economic conditions. …

11. A typical example of the court adapting itself to the changing socio-economic conditions is the presumption of advancement by husband to wife. That was a presumption whichwas recognised in the 19th century: see Re Eykyu’s Trusts (1877) 6 Ch D 115. …

…

13. This presumption of advancement is based on the father–child relationship, the child’s dependence on the father, the father’s moral obligation to give and the common experience that the father, being older and having accumulated wealth, is more likely or is commonly intended to make gifts to his child.  The presumption does not apply to strangers or other relationships.” 

 ( emphasis added)

57.  Referring to Pettitt v Pettitt [1970] AC 777, the learned judge acknowledged in Lee Tso Fong (supra), at para 11, the sentiment that the strength of the presumption of advancement (from a husband to a wife) has been much diminished with changing socio-economic conditions as the spouses are becoming more financially independent.

58.  Subsequently in 盧合v林真妹 HCA 214/2009 (unreported), 24 February 2012, To J specifically held (at paragraph 33) that despite the diminishing effect of the presumption of advancement (from husband to wife), it would not have affected the application of the presumption to dispositions made in 1970s.

59.  It is instructive to note that the presumption of advancement (as applied in Hong Kong) also found expression in Cheung Pui Yuen v Worldcup Investments Inc (2009) 12 HKCFAR 31 wherein Litton NPJ explained (at 36) that:

“ 6. The presumption of advancement is nothing more than an evidential tool; its weight varies with the circumstances of the case. English case law over the past half-century indicates that the presumption, in a family context, now carries less weight than it did in earlier times. Lord Diplock explained why this is so in Pettitt v Pettitt [1970] AC 777 at p.824A–D. As he said, aperson’s intention depends upon the social environment in whichhe lives and the common habits of thought of those who live in it. And he went on:

The consensus of judicial opinion which gave rise to the presumptions of ‘advancement’ and ‘resulting trust’ in transactions between husband and wife is to be found in cases relating to the propertied classes of the nineteenth century and the first quarter of the twentieth century among whom marriage settlements were common, and it was unusual for the wife to contribute by her earnings to the family income. It was not until after World War II that the courts were required to consider the proprietary rights in family assets of a different social class. … It would, in my view, be an abuse of the legal technique for ascertaining or imputing intention to apply to transactions between the post-war generation of married couples ‘presumptions’ which are based upon inferences of fact which an earlier generation of judges drew as to the most likely intentions ofearlier generations of spouses belonging to the propertied classes of a different social era.

It was observations like these which led Lord Denning MR in Falconer v Falconer [1970] 1 WLR 1333 at p.1336A to say that,as between husband and wife, the presumption of advancement had very little place in the law today.

7. But, as Cons V-P observed in Re Mak Woon Shui [1992] 2 HKC 144 at p.149, the social changes which influenced their Lordships in England do not have the same force in Hong Kong;the presumption of advancement in the local context is not so easily displaced.” (emphasis added)

60.  In short, where the purchase money for a property is paid by a person but put in the name of another person, a presumption of resulting trust will arise.  However, where the other person is a wife or child of the paying party, the presumption of advancement will apply.

61.  In Lee Tso Fong, supra, DHCJ A To (at paragraphs 23 to 26) explained the proper approach towards the apparent conflict between presumption of resulting trust and presumption of advancement in the following terms:

“ 23. Prima facie, beneficial ownership goes hand in hand with legal ownership. …

24.   … Bearing in mind that the legal burden is on the party seeking to prove his equitable right which is inconsistent with theundisputed legal title, [the party] must bear the evidential burden of rebutting the presumption of advancement, which is part of his legal burden of proving the resulting trust. …

25. The above conclusion is consistent with the commonly held opinion as to the nature of the presumption of advancement vis-à-vis the presumption of resulting trust.  In his Equity: A Course of Lectures(2nd ed., 1936) at pp.77–80, Maitland referred to the presumption of advancement as a sub-rule that qualifies the presumption of resulting trust.  In Murless v Franklin (1818) 1 Swans 13 at p.17; 36 ER 278 at p.280, Lord Eldon referred to the presumption of resulting trust as the general rule which is subject to an exception where the purchaser was under a species of natural obligation to provide for the nominee.  In Napier v Public Trustee (WA) (1980) 55 ALJR 1 at p.3, Aickin J also spokeof the presumption of advancement as an exception to the primary presumption of resulting trust.  In Pettit, Equity and the Law of Trusts (6th ed., 1989), the learned author refers to evidence which rebuts the presumption of advancement as reinstating the presumption of resulting trust.  It therefore appears that the commonly-held opinion is that the presumption of resulting trust is the basic rule while the presumption of advancement is the exception. …” (emphasis added)

62.  Lee Tso Fong (supra) is a case involving the purchase price for landed property being paid by a parent, which was put in the name of a child.  However, there is no reason why the same principles as expounded by DHCJ A To and recited hereinabove should not apply to the present case involving the Father and the Deceased, who were husband and wife.

 (a) Since the monies for purchase of the 3 Properties were paid by the Father, the starting position is that a presumption of resulting trust in favour of the Father’s estate would arise subject to the effect of any presumption of advancement.

 (b) The 3 Properties were put under the name of the Deceased. The mere husband-and-wife relationship between the Father and the Deceased is sufficient to give rise to the presumption of advancement, which would qualify and displace the presumption of resulting trust.

 (c) Since the 7^thDefendant is seeking to prove the Father’s equitable right, which is inconsistent with the undisputed legal title of the Deceased, he bears the burden of proof to rebut the presumption of advancement.

63.  In approaching evidence as to the intention of the donor or transferor atthe material time of his disposition of the property in question, the previousrestrictive rule under Shephard v Cartwright [1955] AC 431 has since been relaxed.  It is now all a matter of weight.

64.  In Leung Wing Yi Asther v Kwok Yu Wah (2015) 18 HKCFAR 605 (at 626), Stock NPJ explained:

“ Non-proximate conduct

…

55. A question canvassed in the course of argument before this Court was whether those earlier and later events were admissible as evidence of intention at the time of transfers. It seems to me that they were and that the issue was one of weight.… it was held in Shephard v Cartwright that whereas acts and declarations of the parties before or at the time of the transactionor so immediately after it as to render it a part of that transaction are admissible ‘either for or against the party who did the act or made the declaration…subsequent declarations are admissible asevidence only against the party who made them, not in his favour.’[Citing Snell’s Principles of Equity (24th ed., 1954) p.153.] The modern approach is less rigid in relation to evidence of subsequent conduct:

…it does not follow that subsequent conduct is necessarily irrelevant. Where the existence of an equitable interest depends upon a rebuttable presumption or inference of the transferor’s intention, evidence may be given of the subsequent conduct in order to rebut the presumption or inference which would otherwise be drawn. [Citing Tribe v Tribe [1996] Ch 107, 129 (Millett LJ, as he then was). See also Lavelle v Lavelle [2004] 2 FCR 418 at [17]–[19] and Snell’s Equity (33rd ed., 2015) para.25-013.]

56. As a matter of common experience, 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.’ [Lavelle v Lavelle, [19].] That rationale is not restricted to evidence in rebuttal of presumptions but embraces any evidence from which an inference of the transferor’s intention may properly be drawn.” (emphasis added)

65.  In short, all evidence relating to the intention of the donor or transferor,whether before or after bestowing the gift or making the transfer, is admissible.  However, the less proximate in time is the conduct or declaration subsequent to disposition of the property, the less is the weight to be attached to such evidence.

ABSENCE OF THE 1^ST DEFENDANT

66.  The 1^stDefendant was studying in Taiwan around the time when the 3 Properties were acquired in 1960 and 1961.  Probably, she did not have much first-hand knowledge of the transactions involving the 3 Properties. In fact, she emigrated to the USA in 1971. 

67.  However, it is remarkable that none of the parties saw fit to call the 1^stDefendant to give evidence as to the circumstances giving rise to the Chinese Will. 

68.  In a way, the 1^stDefendant’s absence is explained by the fact that the action against her herein was discontinued. Shortly after the commencement of the proceedings herein, it was perceived, rightly or wrongly, that the action against the 1^stDefendant ought to be discontinued since:

 (a) the 1^stDefendant no longer had any interest in the Deceased’s estate due to the fact that by a written agreement dated 18 November 2005 she had sold to the 5^thDefendant (i)  her“legal” interest in the ground floor shop of Property (7); and (ii) her expectant shares in the Deceased’s estate;

 (b) notwithstanding the 1^stDefendant’s attempt to avoid her obligation under the agreement, the 5^thDefendant succeeded in obtaining a decree of specific performance (see DHCJ Mayo in HCA 1939/2007, unreported, 5 November 2012) which was upheld on 26 November 2013 by the Court of Appeal in CACV 268/2012 Tong Kwok Cheong v Tong Wai Lin [2014] 1 HKLRD 339).

69.  With due respect, I am of the view that the discontinuance of the action against the 1^stDefendant is not entirely prudent, bearing in mind that the Plaintiff has not taken any active steps in proceeding with the intended application for a declaration concerning the alleged invalidity of Chinese Will (under HCMP 776/2013).

70.  To put it at the lowest, it is at least arguable that the 3 Properties belong to the Father’s estate.  In that case, if the Chinese Willis held to be invalid, the 1^stDefendant may have an interest in the intestate estate of the Father.

71.  Undeniably, before the 5^thDefendant’s 2^ndAffirmation (filed herein on 14 June 2017) no one has cast any doubt on the authenticity of the Chinese Will and the facts and matters pertinent to its provenance as deposed to in the 1^stDefendant’s affidavit (dated 15 April 2011) filed in HCMP 664/2011 (see para 29 hereinabove).

72.  Incidentally, it is noteworthy that in DCMP 2470/2014, the 3^rdDefendant did not dispute the genuineness of the Chinese Will either (see Judgment of Deputy District Judge Amy Chan dated 30 January 2015 at para 22).

73.  Since the 7^thDefendant is seeking to rely on the Chinese Will in support of his contention as to the intention of the Father in treating all eight properties as still belonging to him and hence at his disposal as at 1 December 1975 (ie three weeks prior to his death), I am invited by the Plaintiff and the 5^thDefendant to draw an adverse inference against the 7^thDefendant for failing to call to 1^stDefendant to give evidence.

74.  The approach towards the drawing of adverse inference from the absence of a witness is neatly summarized by DHCJ M H Lam (as the Honourable Mr Justice Lam VP then was) in Ip Man Shan Henry & Anor v Ching Hing Construction Co Ltd & Ors (No 2) [2003] 1 HKC 256, viz:

“ 155. … In my judgment, the relevant principles applicable to civil proceedings can be summarized as follows,

(a) if a prima facie case is made out, and if there are evidence available to the party against whom the case is established which could displace the prima facie case, and he omits to call such evidence, an inference could be drawn;

(b) however, the inference could be rebutted by a plausible explanation by the party who elected not to call the evidence;

(c) if an inference is to be drawn, it would be an inference that such available evidence, even if adduced, would not displace the prima facie case;

(d) it is also open to a tribunal of fact, upon the drawing of such an inference, to take it into account in respect of a matter with respect to which the person not called as a witness could have spoken,

i. in deciding whether to accept any particular evidence, which has in fact been given, either for or against that party;

ii. in deciding whether to draw inferences of fact, which are open to them upon evidence which has been given.” (empahsis added)

75.  To be fair, Messrs Chak & Associates (acting for the 7^thDefendant) did send a letter on 19 July 2017 seeking clarification from the 1^st Defendant as to the circumstances surrounding the purchase of the 3 Properties so as to assist in determining whether they belonged to the Father’s estate.  There was no reply from the 1^st Defendant and no further effort was made by the 7^th Defendant to contact her.

76.  It may not be wise for the 7^thDefendant to leave it at that since he is seeking to rely on the Chinese Will and he bears the burden of rebutting the presumption of advancement.  However, the 1^stDefendant is in USA and hence outside jurisdiction and the 7^thDefendant explained that his relationship with the 1^stDefendant had turned cold after all these years.    

77.  More importantly, the Father died of “Hypertensive Renal Disease” in St Teresa’s Hospital on 24 December 1975.  There was no evidence as to his testamentary capacity but the uncontroverted evidence of the 7^thDefendant was that the Father was still lucid when he visited him in November 1975.

78.  Apart from the query raised by way of a bare assertion (in para 7 of his 2^ndAffirmation), the 5^thDefendant has not sought to adduce any factual or expert evidence to raise issue or make out a prima facie case that the Father was lacking in testamentary capacity at the material time or that the Chinese Will was not authentic.

79.  Further, this action ought to have been, but was not, begun by writ so that the 7^thDefendant might not be as acutely aware of the issues and the significance of the provenance of the Chinese Will as he otherwise would have been.

80.  Lastly, it is trite that there is no property in a witness.  There is no reason why the 5^thDefendant or any other party could not call the 1^stDefendant as a witness.  

81.  In all circumstances, no adverse inference can be drawn from the mere fact that the 7^thDefendant did not call the 1^st Defendant as a witness since he might reasonably rely on the 1^stDefendant’s affidavit, for what it is worth, which no one has previously sought to dispute.

DISCUSSION

82.  Through the good work of counsel, the logistics as to the mechanism of the proposed sales, the setting of asking prices and distribution of the proceeds of sales (ie matters pertinent to the 2^nd and 3^rd Issues) have been agreed amongst all parties (see below).

83.  With the resolution of the 2^nd and 3^rd Issues, the 1^stIssue is the kernel of the whole matter herein. 

1^st Issue:  Whether the 3 Properties are owned by the Deceased’s estate or the Father’s estate

84.  In essence, the Plaintiff and the 5^thDefendant took the stance that notwithstanding that the purchase prices of the 3 Properties were paid by the Father, both the legal and beneficial interest in the 3 Properties have vested in the Deceased, the registered owner, by operation of the presumption of advancement.

85.  On the strength of the authorities as helpfully summarized by DHCJ A To in Lee Tso Fong (supra), I am satisfied that the mere husband-and-wife relationship between the Deceased and the Father, is sufficient to give rise to the presumption of advancement.

86.  This is buttressed by the factual evidence that the Father was a very frugal and responsible person.  He was a successful businessman and had amassed substantial wealth from his business.  This had allowed him to be generous towards financial support of his family members including the Deceased and the children.  There is no evidence that during his lifetime, the Father had demanded for return of any of the properties purchased by him and put under the name of the Deceased or the children.

87.  In the premises, the legal burden to rebut the presumption of advancement rests on the 7^thDefendant, who is seeking to establish equitable interest belonging to the Father’s estate, inconsistent with the undisputed legal title (see paragraphs 61 and 62 above).

88.  Naturally, the Plaintiff, as a court appointed administrator, would not have any first-hand knowledge as to the use of and rental income, if any, derived from the 3 Properties prior to the demise of the Deceased.

89.  As explained, when the 3 Properties were purchased between1960 and 1962, the 5^thDefendant was aged 14 to 16, and the 7^thDefendant,9 to 11.  It is hardly surprising that they did not have much knowledge about the detailed circumstances surrounding the transactions either.

90.  The Father was mainly assisted by the 3^rd and 4^th Defendants in running the business of Sam Hing but no information was forthcoming from them.  Neither the Plaintiff, nor the 5^th or 7^th Defendant sought to call the 3^rd or 4^th Defendants to give evidence although they were present throughout the trial.

91.  The net effect is that very little is known about the circumstances surrounding the purchase and use of the 3 Properties. However, there is some evidence from the 5^thDefendant that Properties (1) and (4) were used by Sam Hing initially and they were rented out to other unrelated parties at some stage prior to the death of the Deceased.  Likewise, Property (2) was rented out probably after the family home at Playing Field Road (Property (5)) was acquired.

92.  That said, no detail as to the accounting for the rental payments, if any, paid by Sam Hing and subsequently by the respective tenants of the 3 Properties during the lifetime of the Deceased, still less during the lifetime of the Father.

The 5^th Defendant’s case

93.  In the absence of first-hand knowledge in respect of the 3 Properties, inference has to be drawn, where appropriate, from evidence asto the practice adopted by the family in respect of the use and managementof the other properties, which the 5^thDefendant claimed to have knowledge. 

94.  But then again, his evidence in this regard would be of limited relevance and weight since it is the intention of the Father (as opposed to the Deceased or other family members) at the relevant time of purchase of each of the 3 Properties that matters. 

95.  In passing, it is noteworthy that in HCA 1939/2007, the 5^thDefendant’s evidence was that under the agreement made between him and the 1^stDefendant on 18 November 2005, the purchase price of US$260,000 for sale from the 1^stDefendant to the 5^thDefendant of her (a) “legal” interest in the shop at Property (7) at 87 Prince Edward Road West; and (b) expectant interest in the Deceased’s estate, was a nominal figure fixed and agreed upon with reference to the amount sufficient for the 1^stDefendant to discharge the mortgage of her house in California, USA.

96.  Further, the 5^thDefendant said therein that the market rent of Property (7) was irrelevant since the 1^stDefendant would not be entitled to any rental income from Sam Hing, which belonged to the Deceased, as long as Sam Hing remained in business, in accordance with the wish of the Father and the Deceased.

97.  The 5^thDefendant sought to draw assistance from his own experience in respect of Property (8) at 91 Prince Edward Road West, which was purchased in 1970, when he was only 24 years of age.  He gave evidence that sometime prior to the purchase of Property (8), when he was driving the Deceased and the Father in the car, the Deceased uttered expression to the effect that a property would be put under his name since everyone in the family would have the same. 

98.  The 5^thDefendant also gave evidence that he was subsequently asked to attend a firm of solicitor to sign some papers, a reference to the conveyance of Property (8).  That said, the documentary evidence shows that Property (8) was purchased and registered under the joint names of the 5^thDefendant and the 4^thDefendant but the 5^thDefendant’s evidence was silent as to the involvement of the 4^thDefendant.

99.  It is remarkable that such significant evidence of what transpired during the said car ride shedding light on Father’s practice in putting properties under the names of his children, by way of gift, is nowhere to be found in the three affirmations filed by the 5^th Defendant hereinor any of voluminous correspondence exchanged between the parties since the demise of the Deceased in 2007. 

100.  It may be that, as suggested by Mr Chain, since Property (8) is not one of the 3 Properties, which are at the core of this trial, it was understandable that the 5^thDefendant have omitted such evidence in his affirmations. 

101.  However, the 5^thDefendant also gave evidence that in respect of rental income for Property (8) paid by Sam Hing, it was dealt with by an annual account rendered by the 3^rd or 4^th Defendants to the Deceased around the time of Lunar New Year along with a cheque. 

102.  The 5^thDefendant explained that he had no idea as to the amount and it was not his concern as long as the Deceased appeared to be happy and had no complaint.  He regarded his forgoing of the rental income from Property (8) in the manner as aforesaid as his way to “contribute” towards financial support of the Deceased.

103.  Pausing there, it is not disputed that Property (8) was sold in 2013 and the proceeds were shared by the 4^thDefendant and 5^thDefendant (but not the other siblings).  Remarkably, the 5^thDefendant was unable to give any details as to his shares of the rental income derived from Property (8), which, according to him, had been rented out to an outsider since 1990s.  He said the 4^thDefendant had acknowledged his liability to account to him the rental income, about HK$20,000 per month, which would be quite substantial given the long lapse of time.

104.  By reference to the handling of Property (8) as aforesaid, the 5^thDefendant sought to paint the picture that any sibling with his or her name appearing as the registered owner of any of the 8 properties would probably have done the same to “contribute” towards financial support of the Deceased.  That is the evidence he relied on in HCA 1939/2007 to show that that although Property (7) was registered under the name of the 1^stDefendant, she would not be entitled to any rental income.

105.  The sketchy picture painted by the 5^thDefendant as to his “contribution” to support the Deceased from the rental income of Property (8) does not sit comfortably with the recount made by the 7^thDefendant in his letter (dated 22 October 2013) with reference to the 3^rdDefendant’s affirmation filed in HCMP 1856/2009 that it was in fact the Deceased who “contributed” the rental income in respect of the all 3 Properties to Sam Hing, rather than the other way around (see para 38(a) above).  The assertion of the 7^thDefendant was apparently not disputed by any of the parties.

106.  Pausing there, I observed that DHCJ Mayo accepted the 5^thDefendant’s evidence that “he has been involved in the activities of SamHing nearly all of his life” (see para 7 of the judgment in HCA 1939/2007). In contrast, in his own evidence before me, the 5^thDefendant said that he was not so involved and it was mainly left to the 3^rd and 4^th Defendants.

107.  In the premises, I do not find the evidence of the 5^thDefendant as to the use and management of the various properties and the treatment of the rental income reliable although I am sure that he was doing his best to assist the Court.

The 7^th Defendant’s case

108.  Understandably, due to his tender years when the 3 Propertieswere purchased, the 7^thDefendant did not have any direct knowledge of the transaction or the intention of the Father at the material times. He readily accepted that his understanding was only by way of inference from the arrangementof the family business and the family circumstances as he understood them to be.

109.  As discernible from the 7^thDefendant’s affirmations, he also sought to rely on the various observations made by the court in the array of litigations (a) pertinent to the appointment of administrator of the Deceased’s estate; or (b) in respect of matters relating to some of the eight properties, to shed light on the beneficial ownership, use and management of the 3 Properties in order to rebut the presumption of advancement (eg Property (5) in DCMP 2470/2014 and Property (7) in HCMP 1186/2008 and HCA 1939/2007).

110.  Suffice it to say that in none of the array of litigations was thebeneficial ownership of any of the eight properties resolved as a matter of judicial pronouncement. More importantly, none of the decisions in these other proceedings is binding on all parties on the 1^st Issue presently before the Court.   

111.  By way of example, although a decree of specific performance of the sale agreement in favour of the 5^thDefendant was granted by the Court against the 1^stDefendant in HCA 1939/2007 (see paras 34 and  68(b) above), nofinding of fact was made by the Court therein as to the beneficial ownership of Property (7).  It may that no such issue was raised at trial.   

112.  It is not disputed that the purchase moneies for the 3 Properties came from the Father, who was the head of the household.  From this, the 7^thDefendant inferred that the 3 Properties belonged to the estate of the Father.  Strangely, he was at pains to emphasize that the right of the Father’s estate had to be established through litigation in the court. 

113.  Along the same vein, it is remarkable that he relied heavily on (a) the affidavit of the 1^stDefendant filed in HCMP 664/2011 in showing the provenance of the Chinese Will; (b) the Chinese Will to show the Father’s intention of treating all eight properties as still belonging to him and still at his disposal (ie less than one month prior to his death in 1975).

114.  However, despite his reliance on the Chinese Will, the 7^thDefendant took the stance that the Father died intestate.  This was also his position, when he applied for grant of Letters of Administration of the Father’s estate (in HCAG 13525/2016).

115.  I am left with the distinct impression that rather than giving evidence on facts, the 7^thDefendant was no more than taking a stance on the basis of the legal effect of the Chinese Will as he perceived it to be.  Rightly or wrongly, he regarded the Chinese Will as invalid, albeit genuine.  The question as to validity (or otherwise) of the Chinese Will is not a matter before the Courtin this trial but that may explain the selective way in which the 7^thDefendant has sought to rely on the Chinese Will.

116.  The 5^thDefendant (along with the Plaintiff) sought to challengethe 7^thDefendant’s motive as he appeared to have changed his stance as to beneficial ownership of the 3 Properties along the way.

117.  Firstly, in applying for administration of the Deceased’s estate (under HCAG 7374/2008), the 7^thDefendant jointly swore an affirmation with the 6^thDefendant deposing to the fact that the 3 Properties were assets under the Deceased’s estate and not held on trust for anyone. 

118.  However, more recently in HCAG 13525/2016 relating to administration of the Father’s estate, the 7^thDefendant made an affirmationclaiming that the 3 Properties were assets under the Father’s intestate estate. Therefore, it was put to him that he changed his position as it suited him.  To this, the 7^thDefendant explained that the application under HCMP 664/2011 was led by the 1^stDefendant and he did not seek independent legal advice until much later.

119.  Secondly, in response to HCMP 776/2013 taken out by the Plaintiff herein for a declaration that Chinese Will was invalid, the 7^thDefendant sent a letter to the Plaintiff’s solicitors on 26 April 2013 acknowledging that:

 (a) all the eight properties mentioned in Chinese Will were not owned by the Father and not at his disposal;

 (b) whatever was said in the Chinese Will in respect of the disposal of the eight properties was no more than an expression of the Father’s wishes;

 (c) the Chinese Will was invalid and had no effect on the administration of the estate of the Deceased; and

 (d) he had no intention to apply for grant of probate of the Father’s estate.

120.  It is beyond dispute that the said letter sent by the 7^thDefendant was identical to letters sent by the 3^rd, 4^th, 5^th and 6^th Defendants around the same time.  In fact, it is a pro forma letter prepared at the instigation ofthe 5^thDefendant for fear that the Plaintiff’s application (in HCMP 776/2013)would serve no useful purpose but would dissipate the asset in the Deceased’sestate.

121.  I accept that the 7^thDefendant subscribed to such thinking andsimply went along to sign the pro forma letter without addressing his mind to the legal effect as to the administration of the Father’s estate. 

122.  Thereafter, by a letter dated 2 September 2014 issued by Messrs S Y Fung, Solicitors (for the 7^thDefendant), the Plaintiff raised queries on matters pertinent of administration of the Deceased’s estate by the Plaintiff and sought to withdraw the said pro forma letter.

123.  Again, it was put to 7^thDefendant that he changed his positionwhenever it suited him.  However, it is not disputed that in about July 2014,if not earlier, the 3^rdDefendant had demanded the 7^thDefendant to vacant the family home at 1/F, 10 Playing Field Road (Property (5)). 

124.  Thereafter, an action was taken out in the District Court by the3^rdDefendant to evict the 7^thDefendant (DCMP 2470/2014).  As explained,the 3^rd Defendant claimed therein that he paid for the sum of HK$113,000 for the purchase of Property (5), when he was only aged 19.  Upon this, the Deputy District Judge found a triable issue and refused to grant summary judgment.

125.  From the perspective of the 7^th Defendant, Property (5) was the childhood family home to which he returned to stay in about mid‑2005 to look after the Deceased.  Hence, he sought to take issue with the 3^rd Defendant as to the beneficial ownership of Property (5).

126.  In all circumstances, I will not be prepared to say that the 7^thDefendant’s position vis-à-vis the 3^rdDefendant in respect of Property (5)is not arguable.  Hence, I will not hold anything against him arising from his withdrawal of the pro forma letter.

127.  In turn, the 7^thDefendant levelled criticism on the 5^thDefendant for resiling from his position, as evidenced in the letter from Messrs C Y Tsang & Co dated 22 August 2008, that the eight properties were purchased with moneies from the Father and “apparently” the respective registered owner(s) held the relevant property on trust for the Father’s estate (see para 37 above). 

128.  In this respect, the 5^thDefendant explained that about 14 days after issuing the said letter, he received legal advice as to the operation of the presumption of advancement and hence he no longer maintained the position as stated in the said letter.  The 5^thDefendant added that he played a significant role in promoting a Deed of Family Arrangement, which unfortunately did not come to fruition.

129.  Further, Counsel for the 7^thDefendant cross-examined the 5^thDefendant along the line that he changed its position and sought to keep the 3 Properties under the Deceased’s estate since he had succeeded in his claim against the 1^stDefendant (HCA 1939/2007 upheld on appeal in CACV 268/2012), which would allow him to have two out of seven shares (instead of only one share) in the expectant interest from the Deceased’s estate (see paragraph 34 above).

130.  At a glance, the total value of the 3 Properties is now between HK$37,728,200 and HK$45,420,000 (see para 25 above).  The average is HK$41,574,100 in total and each share is only about HK$41,574,100 ÷ 7 = HK$5,939,157 (say HK$6.0 million).  Two shares would be about HK$12 million.

131.  Under the Chinese Will, the 5^thDefendant would have been able to obtain half share in Property (4), which would already be worth about HK$11 million (see para 25 above).  It would have been easier to the 5^thDefendant to embrace the Chinese Will if his intention was merely to maximize his share.  Hence, I do not find this argument of the 7^thDefendant attractive.

132.  Further, the 7^thDefendant gave evidence as to his recollection of overhearing conversation between the Deceased and the Father about the need to purchase properties for storage of goods for the purpose of the business of Sam Hing.

133.  The 7^thDefendant inferred therefrom that the Father intendedthe beneficial ownerships of the various properties to remain with him and Sam Hing. This is a non sequitur.

134.  Importantly, the family business (then under the name of “Sham Hing”) was operated as a sole-proprietorship since 1950s until sometime in 1975, when it was formed into a partnership (adopting the name “Sam Hing”) consisting of the Deceased and the five sons (ie the 3^rd to 7^th Defendants only)—see paras 4 and 7 of the Affidavit of the 1^stDefendant in HCMP 664/2011.  Hence, the partnership was formed years after the purchase of the last of the eight properties in 1970. 

135.  In the premises, I agree with Mr Chain that the 7^thDefendant’sbelated assertion that the eight properties were held on behalf of Sam Hing was too imprecise to be of any substance.

136.  Along the same vein, the 7^thDefendant said he recalled, whilegiving evidence in the witness box, that around the time of his school certificateexamination in 1969, the Deceased mentioned that the properties were to bedealt with by the Father, when he was still alive, and then by the Deceased according to the Father’s wish.  By this, he inferred that the properties belonged to or were to be reverted to the Father’s estate.

137.  No explanation was proffered by the 7^thDefendant for the lateness of such evidence and why it was not mentioned in his affirmations. Hence, the reliability of the 7^thDefendant’s evidence in this respect is doubtful.

138.  In any event, it is difficult to see how the Deceased’s avowed intention as to the way in which she would deal with the properties can impact on the ascertainment of the Father’s intention at the material times when the 3 Properties were purchased back in 1960 to 1962.

139.  In her closing submission, Miss Tang (for the 7^{t h}Defendant) advanced an argument that “there were always a common intention/‌understanding between the family members that the registered owner of the properties were holding on trust for the Father and Sam Hing” and invited the Court to find a constructive trust. 

140.  There is no substance in this argument.  The properties were purchased when all the defendants were so young.  There can be hardly any common intention to speak of.  No evidence is adduced to that effect.  I therefore reject the 7^thDefendant’s novel argument of constructive trust, which, in any event, has not been properly raised.

141.  In my view, the way the Father set up the family business and his practice of putting properties under the names of family members was quite common amidst the socio-economic environment in Hong Kong in 1960s, in which the Father and the Deceased found themselves.

142.  It is more likely than not that the Father focused on operating the family business of Sam Hing whereas the wealth and assets amassed from the business were given to the Deceased to manage.  It is also likely that if the Father had required money for any purpose, he could have drawn on the family asset (including the rental income from the properties or the profit from the business).

143.  After the death of the Father in 1975, while the 3^rd and 4^th Defendants might have rendered annual account to the Deceased for the business of Sam Hing, it was unlikely that any rent was paid by Sam Hingfor occupying and use of the shop premises.  Hence, in the 3^rdDefendant’saffirmation filed in HCMP 1856/2009, it was stated that that the Deceased “contribute” the rental income from the 3 Properties to Sam Hing (see para 38(a) above).

144.  It is also likely that where a property was rented out and not used by Sam Hing, the rents would be collected by the 3^rd and/or 4^th Defendants and accounted to the Deceased after the demise of the Father in 1975.

145.  For the sake of completeness, it is not disputed that the understanding of all siblings was that the properties could not be disposed of during the lifetime of the Father and the Deceased.  However, as pointedout by Mr Chain, the fact that the Father continued to enjoy and/or control all eight properties during his lifetime is not inconsistent with the presumption of advancement (see Lewin on Trust (19 ed) at paragraphs 9-044 to 9-045).

Effect of the Chinese Will – Whether Presumption of Advancement rebutted

146.  The only objective evidence as to the Father’s intention concerning the disposal of the eight properties is afforded by the Chinese Will, which was not witnessed.  However, the uncontroverted evidence is that it was written out by the 1^stDefendant in the circumstances deposed to in her affidavit in HCMP 664/2011 (see paragraph 29 above).

147.  The 7^thDefendant gave evidence that he was studying in Taiwan in 1975.  When he returned to Hong Kong to visit the Father in November 1975 (ie one month prior to the Father’s death), there seemed nothing wrong with his mental faculty although the 7^thDefendant was admittedly not a medical expert.

148.  In the absence of expert evidence as to the mental capacity ofthe Deceased adduced by the Plaintiff or the 5^thDefendant, there is nothing to raise the evidential burden on the testamentary capacity of the Father.

149.  That said, it does not mean that the Court has to accept the Chinese Will at face value.  It would appear that there is more to the Chinese Will than what meets the eyes in respect of which only the 1^stDefendant can explain:

 (a) In Part II of the Chinese Will, it was clearly contemplated that the assets in the Sam Hing were to be realized and divided between the Deceased and the five sons (ie the 3^rd to 7^th Defendants) to the exclusion of the daughters (ie the 1^stand 2^nd Defendants).

 (b) It is unknown when exactly in 1975 Sam Hing started to operate under a partnership and under what circumstances was the 1^stDefendant admitted to the partnership on 17 December 1975 (ie just one week before the death of the Father on 24 December 1975).

 (c) All along Property (7) was registered under the name of the 1^stDefendant.  Apparently, both the 1^st and 5^th Defendants assumed that the beneficial ownership would go with the legaltitle in entering into the sales agreement on 18 November 2005 (HCA 1939/2007).

 (d) It would appear that the Chinese Will was not discovered until the time of the family meeting held at Property (5) about a month after the death of the Deceased on 14 June 2007.  Presumably, up to that stage, only the 1^stDefendant had knowledge of the content of the Chinese Will.

 (e) It remains a mystery that the sales agreement between the 1^st and 5^th Defendant was totally silent on the issue of beneficial ownership of the Property (7) since under the Chinese Will the 6^thDefendant would have an equal share along with the 1^stDefendant.

150.  As explained, I am not prepared to draw any adverse inferenceagainst the 7^thDefendant, or indeed, any of the Defendants, for failing to call the 1^stDefendant to give evidence amidst the peculiar circumstances created by the array of litigations and the discontinuance of the action against the 1^stDefendant by the Plaintiff.  However, in light of the various discrepancies identified in paragraph 149 above, I am unable to attach much weight to the Chinese Will.

151.  Further, although the two Chinese words “遺囑” (meaning a will) were written on the envelope, such description cannot be found in the body of the Chinese Will.

152.  In terms of the content, the Chinese Will is equally consistent of being an expression of wish by the Father as to how the various properties were to be kept by the family members.

153.  Notably, there is no variance between the registered ownership and the purported “beneficial interest” in Properties (2), (5), (6) and (8) as expressed in the Chinese Will. 

154.  In effect, in the Chinese Will, the Father was only dealing with the 3 Properties (Properties (1), (2) and (4)) registered in the name of the Deceased and Property (7) registered under the name of the 1^stDefendant.

155.  As for the 3 Properties (Properties (1), (2) and (4)), what is said in the Chinese Will is, at least, consistent with the Father expressing his wish that after the enjoyment of a life interest by the Deceased, Property (1)should be given to the 7^thDefendant and Property (4) was to be shared between the 5^thDefendant and the 2^ndDefendant.

156.  Pausing there, the Father also signified his wish that the first family home at 186 Tong Mei Road (Property (2)) registered in the name of the Deceased was not to be sold. Needless to say, even if the Chinese Will is valid (as a will), the restraint on alienation in respect of Property (2) is void and not binding (see In re Brown [1954] 1 Ch 39, at 43 – 44).

157.  As for Property (7), it is consistent with an expression of wish that it was to be shared between the 1^st Defendant and the 6^thDefendant.

158.  Remarkably, the 7^thDefendant is relying on the Chinese Will as evidence of the Father’s intention to treat all eight properties as still belonging to him as of 1 December 1975.  However, in the same breath, the 7^thDefendant’s position is that the various bequeaths made by the Father under in the Chinese Will are invalid.  Hence, it does appear that he is seeking to rely on the Chinese Will in a selective manner as if was seeking to line his own pocket.

159.  However, I am satisfied that the 7^thDefendant was laboring under his genuine wish to clarify matters and his desire to obtain a decision from the Court as to the effect of the Chinese Will since:

 (a) when the Chinese Will was discovered during the said family meeting in 2007, some of the siblings entered into a heated debate resulting in him leaving the family home at Playing Field Road and not knowing exactly what was canvassed; and

 (b) he perceived, rightly or wrongly, that the Chinese Will might be invalid for want of a witness.  

160.  In assessing the 7^thDefendant’s credibility and intention, I duly take into account the fact that amidst the recent challenge as to the authenticity and provenance of the Chinese Will, he frankly admitted that he could not even recognize the Father’s signature. 

161.  It would have been easy for the 7^thDefendant to claim that the signature appearing on the Chinese Will was that of the Father in order to buttress his case.  To his credit, he duly refrained from doing so. 

162.  Further, by taking the stance that the Chinese Will is invalid, albeit genuine, the 7^thDefendant stands to lose his sole claim to Property (1), which is already worth between HK$12,414,080 and HK$18,580,000 upon current valuation (see para 25 above).

163.  In passing, the 7^th Defendant resorted to the provisions made in the Chinese Will for the education of himself and the 2^nd Defendant through university, which tallied with what the Deceased told him after the death of the Father, as evidence of the genuineness of the Chinese Will.

164.  Needless to say, such provisions made by the Father for the education of the 7^th Defendant and the 2^nd Defendant are quite irrelevant and nowhere near sufficient to rebut the presumption of advancement in respect of the 3 Properties, particularly, in view of the relationship between the Father and the Deceased as husband-and-wife. 

165.  At the end of the day, the evidence adduced by the 7^thDefendant (including that afforded by the Chinese Will) is insufficient to rebut the presumption of advancement. Accordingly, I hold that the 3 Properties are part of the estate of the Deceased.

2^nd Issue:  If the 3 Properties belong to the Deceased’s estate, how and on what terms should the 3 Properties be sold?

166.  I am gladdened by the fact that all parties have been able to agree on the mode of sale of the 3 Properties and the respective asking price as set out in paragraphs (1) to (8) of a draft order submitted to the Court towards the end of the trial, which have been orally confirmed by all parties.

167.  I also agree with Mr Chain that in order not to compromise thebargaining position of the Plaintiff in effecting the sales of the 3 Properties,paragraphs (1) and (8) of the draft order shall be drawn up in a separate order, which shall be kept in the court file and not be made searchable or accessible by non-parties unless with leave of the Court.

168.  In the open order to be drawn up (see below), reference should be made to the fact that the terms of paragraphs (1) to (8) have been separately drawn up and kept in the court file.

3^rd Issue:  Once the 3 Properties are sold, should the distribution of the Deceased’s estate await the distribution of the Father’s estate?

169.  In light of the consensus between the parties (including the 7^thDefendant), I would grant an order in accordance with paragraphs (9) and (10) of the draft terms with slight adjustment as follows:

“ (9) Upon the completion of the sake of the 3 Properties, the Plaintiff do prepare updated accounts of the Estate and furnish the same to the Defendants as soon as practicable.

(10) Thereafter, the Plaintiff do settle all liabilities of the Estate and distribute the remaining assets of the Estate to the Defendants as soon as practicable.”

170.  Thereafter, there shall be a further order that:

“ (11) In the event of an appeal against the Order herein, the Plaintiff’s obligation under Paragraph (10) hereinabove shall be suspended in which case all proceeds from the sales of the 3 Properties, or any of them, less expenses directly incurred on and for the purpose of the sales, shall be paid into court forthwith, pending further order of the Court.”

COSTS

171.  The starting position is that costs is in the discretion of the Court (see section 52A of the High Court Ordinance, Cap 4 and Order 62(4)of the Rules of High Court, Cap 4A).

172.  In a case of this nature, it is instructive to note the proper approach towards the award of costs as expounded by Lord Scott of Foscote NPJ in Cheung Pui Yuen v Worldcup Investments Inc (2009) 12 HKCFAR 31 at 57 – 58 that:

“ 56. …The principle was explained by Kekewich J in Re Buckton [1907] 2 Ch 406 at pp.414/415. He referred, first, to cases in which trustees ask the court to determine some question which has arisen in the administration of the trust. In such cases, said Kekewich J, the general rule would be that the costs of all necessary parties would be taxed as between solicitor and client and paid out of the estate. He then referred to a second class of case in which the question for determination by the court is raised not by the trustees but by some of the beneficiaries. In such a case, if the question raised would have justified an application by the trustees but for some reason or other the application has been made by beneficiaries, the same costs consequences, he said, should follow:

The application is necessary for the administration of the trust, and the costs of all parties are necessarily incurred for the benefit of the estate as a whole. (p.415)

Kekewich J distinguished, however, the first and second classes of case from the third class, a class where the application to the court is made by a beneficiary but is, in substance although not in form, an adverse claim made in hostile litigation. In such a case, said the judge, the rule applicable to hostile litigation should be applied and the unsuccessful party ordered to pay the costs.” (emphasis added)

173.  In all circumstances, I am of the view that this case falls into the first or second category as identified by Kekewich J in Re Buckton and endorsed by the Court of Final Appeal in Cheung Pui Yuen (supra).

174.  The Plaintiff found it necessary to take out the application (under HCMP 776/2013) although it was held in abeyance.  The existence of the Chinese Will and the peculiar circumstances created by the array of litigation dictate that the involvement of the Court to resolve the issues arising from the Chinese Will and its impact on the administration of the Deceased’s estate is almost inevitable. 

175.  In his affirmation dated 12 April 2013 (filed in HCMP 776/2013), the Plaintiff deposed to the fact that only the 3^rd, 4^th and 6^thDefendants alleged in a joint letter dated 22 February 2013 that the Chinese Will was invalid whereas the 2^nd, 5^th and 7^th Defendants did not reply.

176.  With hindsight, the attempt made the 5^thDefendant to short-circuit the process by convincing the 3^rd, 4^th, 6^th and 7^th Defendants to sign the said pro forma letter to force the Plaintiff not to proceed with the application under HCMP 776/2013 is ill-advised (see paras 119 to 120 above). In fact, the position of the 2^ndDefendant therein is unknown although the 2^ndDefendant was in support of the 5^thDefendant’s stance herein. 

177.  For reasons set out in paragraphs 159 to 163 above, I am of the view that the 7^thDefendant cannot be blamed for seeking a ruling from the Court as to the beneficial ownership of the 3 Properties.

178.  In the premises, I order that (a) the Plaintiff’s costs is to be paid out of the estate of the Deceased; (b) the costs of 5^th and 7^th Defendants be taxed as between solicitor and client and paid out of the estate of the Deceased; (c) there be no order as to costs in respect of the 2^nd, 3^rd, 4^th and 6^th Defendants and the Interested Party.

179.  I shall leave it to the Plaintiff and the legally represented parties to draw up the two orders as provided hereinabove.  There shall also be liberty to apply should there be any outstanding matters.

180.  I cannot conclude this part of the judgment without paying tribute to the 2^ndDefendant in suggesting that regardless of the result of this application, the costs of all parties should be borne by the estate of  the Deceased.

181.  Whilst the 2^ndDefendant was not addressing the Court on the niceties of the law, she certainly was speaking from her perspective as a caring and responsible member of the family.  I hope the parties would take comfort from the fact that my ruling on costs herein is in consonance with the good sense exhibited by the 2^ndDefendant.

182.  Lamentably, no application was made for the relevant action(s) to be consolidated for determination at the same time.  As matters now stand, the Court is only able to deal with issues pertinent to the 3 Properties.

183.  Incidentally, I note that Properties (3), (6) and (8) have already been sold presumably on the assumption that the beneficial interests coincided with the respective legal titles.  For the avoidance of doubt, nothing in this judgment shall affect the determination of any disputes relating to the other properties including those three.

184.  It remains for me to thank counsel for their able assistance.