CHOI YUK YING v. NG NGOK CHUEN

CACV 230/2017

CACV 39/2018

(Heard Together)

[2019] HKCA 171

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NOS. 230 OF 2017 AND 39 OF 2018

(ON APPEAL FROM HCA 1853 OF 2014)

________________________

________________________

(Heard Together)

_______________

JUDGMENT

________________

Hon Yuen JA:

1.  There are two appeals arising from the trial of HCA1853/2014.

CACV39/2018

2.1.   On 13 February 2017, the first day of trial, leading counsel for the plaintiff¹ made an oral application before the trial judge DHCJ Anita Yip (“the judge”) for leave to amend the Statement of Claim to plead constructive trust. 

2.2.   This was opposed by leading counsel for the defendant², who in addition asked the court to rule that the plaintiff be debarred from running the constructive trust argument during trial or in closing submissions. 

3.  For reasons given in writing the following day (14 February 2017), the judge refused to grant leave to the plaintiff to amend to plead constructive trust³ and ruled that she be debarred from running the issue (“the CT Decision”).

4.1.   The plaintiff subsequently applied for leave to appeal against the CT Decision. The judge refused leave on 14 December 2017.  Leave was given by another division of this Court⁴ on 9 February 2018.  We were informed that no reasons have been given for the grant of leave.

4.2.   CACV39/2018 (“the CT appeal”) is the appeal against the CT Decision.

CACV230/2017   

5.  CACV 230/2017 (“the main appeal”) is the appeal from the judge’s Judgment given on 18 September 2017 (“the Judgment) after an 8-day trial.

Background

6.  To understand the arguments before this Court, it is necessary to set out some background.

7.  Mr Ng Kam Chow, who was born in 1922, had two children by his first wife from whom he was divorced - a daughter born in 1949 called Susanna Soon Fong (“SF”), and a son born in 1950 the defendant Henry Ngok Chuen (“NC”).

8.  Madam Choi Yuk Ying the plaintiff, who was born in 1928, had two children by her first husband who had died - a son born in 1948 called Kan Hoi (“KH”) and a daughter born in 1949 called Man Hing (“MH”).

9.  In 1967, Mr Ng married Madam Choi.  Accordingly Mr Ng became the step-father of KH and MH, and Madam Choi became the step-mother of SF and NC.  However I shall for convenience refer to Mr Ng as “the Father” and Madam Choi as “the Mother”.  The Father was a businessman and the Mother, who was illiterate, looked after the family. 

10.  It is common ground that from about 1966, the Father (with the assistance of KH) built up a successful business in the sale of embroidered items to tourists through a company called Hanley Artware.  The profits generated were invested in the purchase of properties, some held by a company called Yanley Investment Ltd.  Properties were also held in the names of individual members of the family, such as the Father, KH and SF.  NC, who had gone abroad for tertiary education, worked for a time in the family business on his return to Hong Kong, but emigrated to the USA in 1983.  

11.  Sometime no later than early 1986, the Father was diagnosed with cancer and became seriously ill.  On 7 August 1986, he made a Will⁵.

12.  The Father then procured the transfers of certain properties⁶ (collectively “the assignments”) to each of the children.  The Mother herself already had some properties in her own name. 

Assignments and Powers of Attorney

13.  The following assignments were made to each of the children at nil or nominal consideration.  At around the same time, each of them executed a Power of Attorney (“P/A”) appointing the Mother to be his/her attorney in respect of that property.  

Child	Date of assignment	Property	Date of Power of Attorney
KH	20.10.1986	14A Cameron Rd	20.10.1986
MH	20.10.1986	22A Carnarvon Rd	20.10.1986
SF	5.5.1977 + 21.10.1986	Mirador shops	21.10.1986
NC	24.10.1986	59 Granville Rd	24.10.1986

14.  The Granville Road property assigned to NC (“the Property”) is the subject matter of these proceedings.  NC was living in the USA and he executed the assignment and P/A there.

15.1.   The assignments and P/As were all prepared by the same firm of solicitors engaged by the Father, Philip KH Wong & Co⁷.

15.2.   The P/As were not expressed to be irrevocable.  In each P/A, each child appointed the Mother to be his/her attorney “in my name and on my behalf” to rent out the property, to receive rents and to pay outgoings.  There was no power to sell or mortgage the property.

15.3.   I shall discuss in detail later the issue regarding the reason for the execution of the P/As.  In summary,

-   the Mother’s case was that the Father had made it a condition of the assignment to each child that she be entitled to a life interest in the rental income of the assigned property.  At trial, Mr Shieh submitted that the condition was the “only plausible reason” for the execution of the P/As.  On appeal, Mr Shieh did not put his case so high, but contended that the P/As were “strongly suggestive” of the existence of the condition;

-   NC’s case was that the Father had not imposed any condition on the assignment to him⁸.  He said the Father had simply told him in a long-distance call that the Property would be assigned to him.  The Father did not mention a P/A either.  He (NC) was sent the P/A when he was in the USA, and after reading it, he signed it as he needed someone in Hong Kong to look after the Property due to his residence overseas. He was not aware that the other children had signed P/As in respect of their respective properties. 

16.  Shortly after the above assignments, the Father died on 29 October 1986.  KH became the head of the family and controlled the family business (although NC was a director and shareholder⁹). The Mother lived with MH, who helped in the business, and MH’s sons by her divorced husband. 

17.  As for NC, it was the Mother’s case that nobody in the family was aware if NC was working overseas or not, although it was common ground that he had received the most education and at that time, relationships within the family were cordial. The question of the Mother’s knowledge of NC’s financial situation is relevant to issues surrounding events in 1996 discussed below. 

Mother’s receipt of rents

18.1.   After the assignments, the rents of all 4 properties were collected by MH and paid into the Mother’s bank account.  In 1986, the rents came up to about $150,000. The rents from the properties assigned to KH and MH were applied towards servicing mortgages on Yanley’s properties.  In 1989, MH sold her property and transferred the proceeds to Yanley.

18.2.   As for the reason why the rent for NC’s Property was received by the Mother, in summary,

-   the Mother’s case was that she was entitled to the rent as the Father had made her life interest a condition of the assignment;

-   NC’s case was that after the Father’s death, KH had told him that it was the Father’s wish that the children give the rents from their respective properties to the Mother, and he therefore did so out of respect for the Father’s wish according to KH, and as a gesture of goodwill towards the Mother.

19.  It is common ground that from 1986 to 1996, the rent from NC’s Property was received by the Mother.  

Mother’s application to emigrate to Canada

20.  NC moved from the USA to Canada and became a landed immigrant in 1987.

21.1.   In 1989, the Mother applied to emigrate to Canada.  NC was her sponsor/guarantor. As part of the application, NC undertook to the Canadian authorities to financially maintain the Mother.  The application documents included a list of his businesses there. 

21.2.   The Mother visited NC in Toronto, Canada where he had a spacious home.  It was common ground that he had a comfortable way of life.  What was disputed at trial was whether the Mother knew that NC had businesses in Canada which supported that way of life.  This is relevant to the events in 1996 which will be discussed later.  

21.3.   As a matter of completeness, the Mother did not proceed with her plan of emigration and continued to live in Hong Kong.

Man Hing’s application to emigrate to Canada

22.  In 1993, Man Hing also applied to emigrate to Canada with her two sons.  As part of their application, they were offered employment by NC’s toy company in Canada.  However in her witness statement, MH denied that NC had ever mentioned (amongst other things) his toy business in Canada¹⁰.

NC’s request in 1993

23.  It is common ground that in 1993, NC indicated that he would like to start receiving the rent for the Property himself.  However the witnesses gave different versions of what happened.

-   The Mother’s evidence was that she did not see NC in 1993 at all. 

-   KH, who was the Mother’s witness, alleged that NC told him during a visit to Hong Kong in 1993 that he (NC) needed the money because he was in financial difficulties and needed money to raise his family.  KH scolded NC, telling him to act like a man and be responsible for raising his family, and not reach out to their elderly mother for money.  According to KH, he told NC that if NC was still in financial difficulties in 3 years’ time, he (NC) could raise the request then, and the matter could be discussed again.  According to KH, he then told the Mother about this conversation with NC. 

-   NC’s evidence was that on that visit, he approached the Mother and said that he would like to start receiving the rent for the Property in order to expand his business in Canada.  He did not say he was in financial difficulties, or that he needed the money to raise his family, because he was not in financial difficulties and he had only wanted to expand his business.  The Mother did not give an immediate response, but later in the course of the same visit, KH told him to act like a man, and not reach out to the Mother for money.  According to NC, KH then told him he could start receiving the rent 3 years later.  NC did not know what the rent had been used for hitherto.  As KH indicated that the period was not negotiable, NC did not seek to do so to avoid an argument. However he (NC) did indicate that he might wish to sell his shares in Yanley.

NC’s receipt of rent from 1996 onwards

24.1.   It is common ground that NC did start receiving the rent from the Property in 1996 without a further request.  It came up to about $2-3 million a year. 

24.2.   The Mother said she voluntarily relinquished the rent because NC had told her that he was in financial difficulties.  She said she did not know that he had businesses in Canada, nor did she take any steps to find out about his financial situation. 

24.3.   KH made arrangements for the rent to be deposited into NC’s bank account in Hong Kong.  At trial he claimed he did not know about NC’s financial situation either.  He claimed:

(a)   he did not know about the Mother’s or MH’s applications to emigrate to Canada¹¹,

(b)   he did not even vaguely know what (if anything) NC had been doing for a living after his emigration in 1983¹², and  

(c)    it did not occur to him to do any business or property searches on NC whether in 1993 or 1996¹³ or thereafter¹⁴, even though the Mother had relinquished the rent from the Property by reason only of NC’s alleged financial difficulties.

24.4.   Thereafter NC sent the Mother $5,000 a month from time to time as pocket money.

The 1997 P/A

25.1.   The Mother alleged that in 1997, a tenant of the Property requested a confirmation of the effectiveness of the 1986 P/A.  A new P/A¹⁵ was then sent to NC for execution.

25.2.   NC’s case was that he was sent a P/A which included a new additional power to sell or mortgage the Property¹⁶. He then instructed lawyers in Canada to draft a new P/A which did not contain that power, which he signed on 13 May 1997. 

25.3.   Irrespective of the contents of the draft sent to NC, an issue raised at trial was why he signed this new P/A.  This will be discussed below.

NC’s return to live in Hong Kong

26.  In 2001, NC bought an apartment in Hong Kong priced at nearly $8 million. 

27.1.   In 2002, he returned to live in Hong Kong permanently.  It is not disputed that he lived in a series of luxury apartments in prestigious developments.

27.2.   The Mother (sometimes with other children) visited NC at these luxury apartments. Nevertheless she continued to permit him to keep the rent from the Property (a permission he had obtained from her on the basis that he was in financial difficulties) because she said she was not aware of his financial situation. 

27.3.   KH’s evidence at trial was that he thought it was wrong of NC to fund his (NC’s) comfortable lifestyle with money which should have gone to the Mother.  However he did not speak to the Mother about it¹⁷. 

28.  In short, NC received the rent for the Property for some 18 years after 1996 (and for 12 of those 18 years, he was in Hong Kong living a lifestyle which did not show financial difficulties) without any question from the Mother.  

Disputes

29.  On 8 July 2013, NC raised the matter of the sale of his shares in Yanley.  

30.  In March 2014, KH procured searches to be done on NC’s properties in Hong Kong, Canada and the mainland.  The Mother alleges that it was only at this point of time that she realised that NC was not in financial difficulties, whether in 1996 or since.

31.1.   Meanwhile, NC took a series of steps towards ascertaining the value of his shares in Yanley, including requesting for information about the company.  

31.2.   In April 2014, NC’s then solicitors Wong and Partners (“W&P”) wrote to Yanley’s solicitors Kitty So and Tong (“KST”), requesting inspection of Yanley’s audited reports and related documents.  It would appear that the letter also expressed “concerns” as to the way the company was managed. 

31.3.   On 29 April 2014, KST wrote to W&P saying (among other things):

“(b) the Company is a family company and there has been agreement between all family members and in consideration of the transfer of other properties by [the Father] to his children (including your client) all income of the Company as well as those from the other properties so transferred should go to [the Mother] ... for her own use and disposal during her life”. (Emphasis added).

The May 2014 letter

32.  On 7 May 2014, W&P replied to KST in a 4-page letter (“the May 2014 letter”).  Of relevance to this appeal is the following passage:

“(b) our client categorically denies the alleged agreement whereby ‘all income of the Company as well as those from the other properties so transferred should go to [the Mother] ... for her own use and disposal during her life’. ...

(c) the true arrangement was that the rental income of the following properties held in the names of the following persons would belong to the mother and for her own use during her lifetime. The Company and its assets have never been subject to the said arrangement:

(iii) No. 59 Granville Road in the name of Ng Ngok Chuen; ...”.

(Emphasis added).

33.1.   On 26 May 2014, the Mother’s solicitors William WL Fan & Co (“WFC”) wrote to W&P referring to the 7 May 2014 letter, and asserted that there was an oral agreement whereby in consideration of the Father transferring the 4 properties to the children, the Mother should be solely entitled to “all the income of the Company as well as the income from the aforesaid properties during her lifetime”.

33.2.   On 12 June 2014, NC’s new solicitors PC Woo & Co wrote to WFC denying that he had entered into the alleged oral agreement.  The letter stated that NC was told by KH of the Father’s wish for the Mother to receive the rental income of the 4 properties during her lifetime.  It went on to say:

“Purely as a gesture of goodwill and to honour [the Father’s] alleged wish, our client did not object to allowing [the Mother] to collect the rental income from the Property (‘the Arrangement’)”.

Legal Proceedings

34.  On 19 September 2014, the Mother commenced HCA1853/2014 against NC.  The statement of claim included the following passages (emphasis added).

-   Para. 3(1) pleaded that before the Father died, he transferred and/or procured the transfer of the 4 properties to the 4 children “on the basis that a life interest in all income from these properties would vest in the [Mother] from the date of transfer and that they would hold such properties subject to this life interest”.

-   Para. 3(2) pleaded that “in consideration for the aforesaid transfers, [the children] each agreed that the [Mother] would be solely entitled to all income from these properties as aforesaid during her lifetime”.  

-   Para. 4 pleaded specifically as regards NC that in or around September 1986, the Father “agreed to transfer the ... Property to [NC], in consideration for which [NC] agreed that the [Mother] shall be solely and fully entitled to all the income from the Property during her lifetime”.

-   Para. 5 pleaded “in the premises, [the Father] and/or [NC] assigned and/or agreed to assign to the [Mother] all rights, interest and entitlement in respect of all future income of the Property to the [Mother] from the date of transfer of the Property to [NC] for the duration of her lifetime (‘the Assignment’)”.   

-   Para. 6 pleaded that “pursuant to the aforesaid agreement and/or the Assignment, in or around October 1986, [the Father] transferred the Property to NC without payment of consideration and NC executed the P/A in favour of the Mother.

-   Para. 7 pleaded that “further or alternatively, these transactions in themselves amounted to an assignment to the [Mother] of all rights, interest and entitlement in respect of all future income of the Property from the date of transfer of the Property to [NC] for the duration of her lifetime”.

Trial

35.  The trial commenced on 13 February 2017.  The Mother gave oral evidence, as did KH and MH as her witnesses.  NC also gave oral evidence.  The trial concluded on 13 March 2017.

The judge’s Judgment

36.1.   The judge handed down a 59-page Judgment on 18 September 2017.  The Judgment was structured in the following way:

A.   Background (§§1-6)

B.   Undisputed facts (§§7 - 24)

C.   The Mother’s pleaded case (§§25-35)

D.   NC’s pleaded case (§§36-49)

E.   Evidence of the Mother and her witnesses, KH and MH (§50)

E1.   The Mother’s evidence and its evaluation (§§51-68)

E2.   KH’s evidence and its evaluation (§§69-94)

E3.   MH’s evidence and its evaluation (§§95-113)

F.   Evidence of NC (§§114-129)

G.   Issues to be determined (§§130-133)

H.   Was the transfer of the Granville Road Property subject to a condition imposed by the Father that the Mother should have an interest in the rental income of the same during her lifetime?  (§§134-177)

At the conclusion of Section H, the judge stated that she has rejected the Mother’s case on the facts, but in deference to counsel’s submissions, she would briefly deal with a few other matters raised in argument. 

I.    What is the legal nature of the Mother’s interest in the Granville Road Property?  How was it created?  Is it legally valid and enforceable? (§§178-180)

J(1).   Creation of a life interest (§§181-185)

J(2).   Equitable assignment by the Father to the Mother of the income for life; equitable assignment by NC and/or agreement to assign to the Mother the right to the income for life (§§186-200)

K.   Misrepresentation (§§201-209)

L.   Other issues¹⁸ (§210)

M   Counterclaim (§§211-218)

N.   Conclusion (§219)

O.   Costs (§220).   

36.2.   The judge found on the facts¹⁹ that the Property had not been transferred subject to the condition alleged by the Mother. 

36.3.   In relation to the other issues which she discussed in deference to counsel’s submissions, she held:

J(1).   the creation of a life interest had not been the Mother’s case and hence it would not be entertained²⁰;

J(2).   a right to receive rents in the future is a future chose in action, and can only be enforceable as an agreement to assign if it is supported by consideration, which the Mother had not given²¹;

K.   the evidence fell far short of a case of fraudulent misrepresentation²².

36.4.   The judge dismissed the Mother’s claim and granted a declaration by way of counterclaim that NC is solely and beneficially entitled to all income to be derived from the Property.  She ordered the Mother to pay NC’s costs.

Appeal

37.  The Mother appealed.  Before this court, Mr Shieh sought an order that the Judgment be set aside and that there be a re-trial of the Mother’s claim.  He put forward 2 grounds²³:

(1)   the judge had not (or could not be seen to have) applied an independent mind in resolving the issues in that:

(i)   a substantial part of the Judgment had been copied and reproduced from NC’s Opening and Closing Submissions; and

(ii)   the judge omitted to deal with the Mother’s submissions on various matters relating to the disputed issues, and to provide adequate reasons for their rejection.

(2)   the judge failed to consider (or otherwise misapplied) the legal principles in relation to the Mother’s claim to a life interest in the income of the Property (and on the issue of constructive trust, if the CT Appeal succeeds).

(1) Did the judge apply an independent mind?

(i)  Copying one side’s submissions as part of the judgment

38.1.   There was annexed to the Notice of Appeal a 28-page appendix setting out passages in the Judgment which corresponded closely to passages in the written submissions of NC’s counsel in opening and closing.  This court was also supplied with a copy of the Judgment in which the reproduced passages were highlighted.

38.2.   Comparing passages in the Judgment with those in the submissions of NC’s counsel, there can be no escaping the fact that many passages had been reproduced, without attribution²⁴, as part of the Judgment.  With respect, this court needs to firmly discourage judges from adopting this approach, for the “wholesale copying of one side’s submissions was bound to raise doubts in the mind of the other side” as to

-   whether the judge had brought an independent mind to his judicial function, and

-   whether the points made by the other side had been adequately considered²⁵.

38.3.   The reproduction of only one side’s submissions as part of a judgment is bound to invite the sort of criticism that has been leveled against the judge in this case, and it is an unnecessary and undesirable distraction when the minds of the parties and the appellate court should be focused on the core issues raised in the case.

39.1.   Having said that, Mr Shieh correctly accepts that reproduction by itself is not a ground of appeal.  He does not quarrel with the following passages from the judgment of the Supreme Court of Canada in Cojocaru v B.C. Womens’ Hospital ²⁶where a trial judge had copied 321 of the 368 paragraphs in his judgment in a medical negligence case.  The main issue on appeal was whether such extensive copying had displaced the presumption of judicial integrity and impartiality²⁷. 

39.2.   In a section headed “The Permissibility of Judicial Copying: A Look at the Cases”, McLachlin CJ considered a number of authorities in England, Hong Kong, Australia, the United States and the lower courts in Canada before summarizing the position as follows:

“[49] In summary, courts in Canada and elsewhere have held that copying in reasons for judgment is not, in itself, grounds for setting the judge’s decision aside. However, if the incorporation of the material of others would lead a reasonable person apprised of all the relevant facts to conclude that the trial judge has not put his or her mind to the issues and made an independent decision based on the evidence and the law, the presumption of judicial integrity is rebutted and the decision may be set aside.

[50] This does not negate the fact that, as a general rule, it is good judicial practice for a judge to set out the contending positions of the parties on the facts and the law, and explain in her own words her conclusions on the facts and the law. The process of casting reasons for judgment in the judge’s own words helps to ensure that the judge has independently considered the issues and come to grips with them. As the cases illustrate, the importance of this may vary with the nature of the case. It some cases, the issues are so clear that adoption of one party’s submissions ... may be uncontroversial. By contrast, in complex cases involving disputed facts and legal principles, the best practice is to discuss the issues, the evidence and the judge’s conclusions in the judge’s own words. The point remains, however, that a judge’s failure to adhere to best practice does not, without more, permit the judge’s decisions to be overturned on appeal”.

39.3.   Pausing there, I would only wish to add one comment to that part of §50 above where McLachlin CJ advised that it is good judicial practice for a judge to set out the contending positions of the parties on the facts and the law. 

39.4.   In view of:

(1)   the constraints of time on judges in Hong Kong due to the heavy caseload and the complexity of modern litigation,

(2)    the provision by counsel of written submissions being the norm in most trials now, and

(3)   the fact that the determination of factual issues would only be of importance and interest to the particular parties,

I suggest that it is not necessary for a judge to set out the parties’ respective submissions on factual issues, and it would be adequate to only refer to relevant paragraphs in the parties’ respective written submissions²⁸ on any factual issue being discussed.

(ii) Omission to deal with the Mother’s submissions?

40.1.   Returning to the Judgment in the present case, having correctly accepted that reproduction is not in itself a ground of appeal, Mr Shieh submitted that the judge had omitted to deal with the Mother’s submissions on various matters relating to the disputed issues and to provide adequate reasons for their rejection, thereby failing to apply an independent mind in determining the issues²⁹.

40.2.   Mr Shieh accepted that a judge need not deal with each and every single argument of each party presented in the course of a trial, but he submitted that the judge had failed to properly address the Mother’s competing submissions on the following 6 “big picture” points:

(1)   the children’s execution of the 1986 P/As;

(2)   NC’s execution of the 1997 P/A;

(3)   the judge took into account irrelevant considerations advanced by NC without regard to the Mother’s competing submissions;

(4)   the May 2014 letter;

(5)   the inherent probabilities of the parties’ respective cases when tested against NC’s own evidence;

(6)   allegations added by NC by way of evidence in chief which had not been put to the Mother or her witnesses.

I shall deal with each in turn. 

41.  First, it was submitted by Mr Shieh that the judge had not given any or any proper reasons for rejecting the Mother’s submission that “there could not be any other plausible reason” for the children’s execution of the 4 P/As (other than the condition imposed by the Father that the Mother should be entitled to a life interest in the incomes).  He said if the Father had only wished that the Mother receive the rents, the assignments without more would have been sufficient.  

42.  At the hearing of the appeal, the court suggested that at least one other plausible reason was that the Father intended by way of the P/As to provide the Mother with some comfort.  Mr Shieh accepted that that would have been a plausible reason and that he had put his case too high.  He submitted that the P/As were nevertheless “strongly suggestive” of the condition.

43.1.   It is clear from the Judgment that the judge was aware of the “no other plausible reason” argument³⁰ but she also considered an alternative way of putting the Mother’s case: that the P/A “reflected and embodied her entitlement to receive all income from the [Property] for her lifetime and on its own is a piece of evidence pointing towards the existence of the alleged life interest”³¹.

43.2.   The judge rejected the Mother’s contention on the grounds that the P/Asexplicitly stated that the acts of the Mother as attorney (including the receipt of rents) are done in the name and “on behalf of” the owners of the properties, thus contradicting her argument that it “reflected and embodied her entitlement”³² (Emphasis added). Irrespective of whose words in which the point is put, this point is clear and obvious from the face of the documents themselves. 

43.3.   The judge then went on to hold³³ that “if it was [the Father’s] wish to secure [the Mother’] life interest in the rental income and it was the solicitor’s intention to give effect to the same, those representing [the Father] could have chosen a different instrument, such as a deed, or to make the 1986 Power of Attorney explicitly irrevocable.  However, none of these were done”³⁴.

44.1.   The judge did not explore any other plausible reason(s) for the P/As because she found that the documents on their face simply failed to support the Mother’s case of “entitlement”.  These are findings which are logical and which the judge was entitled to, and did, make in Section H of the Judgment on the documentary evidence alone.  

44.2.   They are adequate reasons for the findings and I do not see how those findings can be challenged.  It was for the Mother to prove an entitlement to a life interest in the incomes from the properties, or put another way, she had to prove in a court of law that the children’s ownership of the properties was subjected to an obligation to her which had been imposed as a matter of law, rather than as a matter of morals or family duty.  The P/As (which were revocable) did not prove, and were not consistent with, the imposition of such a legal obligation.  Rather, the very revocability of the P/As speaks volumes against the Mother’s case of her “lifetime” protection.  They are consistent with the Father’s implementation of only a wish that after his death, the Mother would be financially supported by the children from the properties he had given them: the P/As provided a convenient means for the Mother to collect money monthly, instead of the children having to dig into their own pockets; but as the P/As were revocable, each of the children retained full power and freedom to deal with his/her property when and how he/she wanted to, without being restricted or hampered.

44.3.   The other submissions made by Mr Shieh under this head (in relation to NC’s evidence regarding his execution of the P/A) overlap with his submissions under point (6), which are discussed later in this Judgment.

45.  Second, NC’s execution of the 1997 P/A which was drafted by his own lawyers.  Mr Shieh had submitted at trial³⁵ that other than the Mother’s alleged life interest, “there could be no other credible or plausible reason why NC would continue to name [the Mother] as the attorney in the 1997 P/A” because in any event, it was not really the Mother who collected the rent (which by this time, were being deposited in NC’s account).  He submitted on appeal that “no findings were made to reconcile the 1997 P/A with NC’s case”.  

46.  The judge dealt with the 1997 P/A briefly after she had already rejected the argument that the 1986 P/A suggested that the Mother was entitled to the rental income³⁶.  In my view, the judge was entitled to deal with this submission briefly, as the 1997 P/A was no different from the 1986 P/A.  The reason for the 1997 P/A coming into being was neutral, as it was the Mother’s own evidence that the 1997 P/A was required by a tenant.  The content of both the 1986 and 1997 P/As was similar.  Both in 1986 and in 1997, NC was living overseas.  Further, both in 1986 and in 1997, it was known that the Mother herself would not be collecting the rent, which would be done by one or other of the children living in Hong Kong.  The 1997 P/A thus merely maintained the status quo³⁷ of the 1986 P/A which the judge had already dealt with.  There was no inconsistency between the 1997 P/A and NC’s case which the judge needed to “reconcile”.

47.  Third, Mr Shieh submitted that the judge took into account irrelevant considerations advanced by NC, without regard to the Mother’s competing submissions.  He emphasized the judge’s consideration of the Mother’s needs which were less than the rental incomes, and the use to which the money had been put during the period when she received them.  Mr Shieh argued that these were irrelevant whether (on the Mother’s case) the Father had made it a condition of the assignments, or (on NC’s case) that according to KH, the Father had only wished that she would receive the money.

48.1.   I should note first that the parts of the Judgment dealing with these considerations³⁸ were not reproduced from NC’s submissions but were written in the judge’s own words.  Mr Shieh’s submission on this point is therefore not that the judge had not brought an independent mind to bear, but is simply an attempt to set aside the Judgment on the basis that the judge had taken some irrelevant matters into consideration.

48.2.   Having said that, I do have some difficulty following the judge’s conclusion that because the Mother did not “need” the money, it was unlikely that the Father would have imposed a condition that she be entitled to the rental incomes from the 4 properties during her lifetime.  Whatever may have been the Father’s investment philosophy³⁹, these 4 properties were personal properties, handed down from father to child, and it has not been suggested that these are properties of the businesses. 

48.3.   It is correct that if the Mother had been used to an extravagant lifestyle, her spending habits might have been evidence in support of the condition, as the Father would have needed to ensure that her lifestyle could be supported after his death.  However, the converse does not follow.  The fact that the Mother was a person of frugal habits does not prove that there was no such condition.  Money not “needed” can be spent, saved, invested or given away.  

48.4.   The evidence was that all the children executed P/As enabling the Mother to receive the rents⁴⁰ and she did receive the rents from all 4 properties from 1986 onwards⁴¹ for her own use, with none of the children having raised the question whether she needed all that money in view of her modest lifestyle. 

48.5.   Accordingly, whether the Mother had a “need” for the money does not add to the determination of the issue whether the children had been placed under a legal obligation to give her the rents for her lifetime, which was what she was required to prove to the court.

48.6.   Having said that, I do not think that the fact that the judge was side-tracked into considering the Mother’s “needs” is sufficient to vitiate the Judgment if it was otherwise supported by other evidence and reasons.

49.  Fourth, the May 2014 letter.  This has been set out in §32 above.  The judge dealt with this in § 173:

“As regards the [W&P] letter dated 7 May 2014, it is important to consider the letter in its proper context. This was a response to a letter dated 29 April 2014 from the solicitors of [the Mother]’s camp, concerning the affairs of Yanley. I agree with the defendant that this cannot be construed as an admission that [the Mother] had a legally enforceable life interest in the rental income of the [Property]. I accept [NC’s] evidence that his understanding of ‘arrangement’ was based on whether he agreed to let [the Mother] collect the rent as was the case in 1986 to 1996, but could be changed subsequently”.

50.1.   Although this was mostly reproduced from the submissions of NC’s counsel, the point is a straightforward one, irrespective of whose language it was couched in.  First, the judge focused on the word “arrangement” used in the W&P letter, which was clearly in contradistinction with the word “agreement” used in the KST letter. 

50.2.   Further, NC’s evidence was that under that arrangement, the Mother could have the rent to keep for herself⁴², with no specified temporal limit⁴³, until such time as he wanted it for other purposes, and his case was corroborated by the discussion in 1993 when he said he wanted the rent for expansion of his business, which was followed by his receipt of the rent from 1996 onwards.  When cross-examined on this letter, his evidence was unshaken:

“ Q: But if money belongs to mother you can’t, by your own decision, deprive her of that money now.

A: If under your assumption, yes, I agree. But this is only until the time I raised with them that I wanted to collect the rent myself, and they also agreed to that.

Q: You are talking about the conversation in 1993?

A: Yes”. (Emphasis added).

50.3.   NC was the only witness who gave evidence about the letter.  The judge accepted his evidence, and it is well-established that an appellate court does not interfere with a trial judge’s assessment of a witness’ veracity when the judge had the benefit of seeing and hearing him give evidence (and it would appear from the Transcript) under strenuous cross-examination.

51.  Fifth, the inherent probabilities of the parties’ respective cases when tested against NC’s own evidence.  Mr Shieh’s complaint was that the judge did not address the following evidence from NC:

(1)   when discussing NC’s proposal in 1993 to receive the rent, KH told him to “live like a man” and not reach out to the Mother for money;

(2)   NC did not ask for an explanation why he had to wait for 3 years;

(3)   why NC was content to accept KH’s answer if he (NC) was entitled to the rent;

(4)   why in 1996 KH would have suggested that NC could start receiving the rent, without NC having made a request.

52.  In my view, these do not constitute a “big picture point”.  As for the first point, there can be no doubt but that by wanting to receive the rent himself, the consequence was that NC would be reducing the Mother’s income.  KH’s comment is consistent with that consequence.  No inherent improbability is thrown up by that evidence.  As for the second and third points, it was common ground that the family enjoyed cordial relationships, and KH was the head of the family and controlled the family business after the Father’s death.  As KH said the period was not negotiable, NC did not ask further to avoid an argument.  NC’s evidence was that he only wanted the money to expand his business, which he could do after 3 years.  No belligerence was called for. Again, these pieces of evidence do not throw up any inherent improbabilities. Finally, the fourth point is in favour of NC rather than the Mother.  It is consistent with NC’s entitlement to the rent that he did not have to ask again in 1996.

53.1.   Sixth, Mr Shieh complains that new allegations were added by NC by way of evidence in chief which had not been put to the Mother or her witnesses, and it was unfair and wrong for the judge to accept that evidence.

53.2.   Mr Wong has in his skeleton submissions listed out 10 additional pieces of evidence elicited in evidence in chief.  However, of those, only 3 featured in the Judgment⁴⁴. They were:

(6)   why NC appointed the Mother as his attorney in 1986;

(8)   MH’s visit to Toronto;

(10)   MH’s application for immigration to Canada.

54.1.

“Q: Even though you were named as attorney, is it right that everybody knew you would not go and collect the rent and handle rental affairs personally, you would leave it to say [KH] or [MH] to do it for you?

A: Yes”.

54.2.

55.  In conclusion, it has not been shown that the judge had failed to properly address the Mother’s competing submissions on any of the 6 “big picture” points such that, coupled with the judge’s copying of NC’s submissions, the Judgment should be set aside on the ground that the judge had failed to apply her mind independently to the issues before her. 

56.  As mentioned earlier, it is regrettable that the judge has copied extensively in some sections of the Judgment, because it is clear from other sections that she has independently assessed the parties’ respective cases.  For instance, the judge had added her own observations on the quality of the Mother’s evidence on her visit to NC in Toronto and how that impacted on her “assumption” that NC was in financial difficulties⁴⁷, and how it was incredible that the Mother had never asked any questions about NC’s financial situation even though the family had met regularly⁴⁸.  They belie the Mother’s excuse for why she stopped receiving the rent from 1996 in favour of NC, and is consistent with an acceptance and acknowledgment that the rent was simply not hers as a matter of entitlement.  As with all cases, all relevant pieces of evidence should be taken into account, and the judge was entitled to place more weight on what happened in 1996 and thereafter.  In my view, this is not a case which had to be resolved on the burden of proof and references to cases such as Rhesa Shipping v Edmunds (The Popi M)⁴⁹are not necessary.  

(2) Life interest and the CT Appeal

57.  The 2^nd ground of appeal is that the judge had failed to consider (or otherwise misapplied) the legal principles in relation to the Mother’s claim to a life interest in the income of the Property (and on the issue of constructive trust, if the CT Appeal succeeds). 

58.  From what I can glean from Mr Shieh’s oral closing submissions, he contended that there had been an express declaration by the Father of a trust, for the benefit of the Mother, in a life interest in the income from the Property⁵⁰. 

59.  This can be conveniently discussed with the CT Appeal, which arises from the judge’s refusal to permit the Mother to (a) amend the Statement of Claim to plead constructive trust, and (b) run the argument in submissions.  

60.1.    The judge dealt with the life interest issue in Section J(1) of the Judgment, in which she held that the creation of a life interest had not been the Mother’s case and hence it would not be entertained.

60.2.   The judge dealt with the CT issue in her Reasons for Decision, in which she held that that new cause of action was not obvious from the pleadings.  She rejected Mr Shieh’s argument based on In re Vandervell’s Trusts (No.2)⁵¹ where it was said that it was sufficient for the pleader to state the material facts, and need not state the legal result.  

61.  It is obvious that the 2^nd ground of appeal is only pertinent if the Mother succeeds in establishing her case on the facts.  Given the disposal of the 1^st ground of appeal above, this ground is therefore academic.  However, in any event, I would agree with the judge that the case as finally advanced on behalf of the Mother was by no means clear from the Statement of Claim. 

62.1.   This brings me to the CT Appeal.  Reading the oral final submissions⁵², one can see arguments advanced as if litigation were a game, with references to the other side falling into “traps” laid in ambiguous pleadings setting out only basic facts, thereby leaving the pleader room to spring on the other side as many legal consequences as can be fashioned at trial (without setting them out). 

62.2.   This attitude should be discouraged.  It has been said many times that “trial by ambush” has no place in modern litigation.  “Trial by ambush” includes advancing new legal consequences in opening submissions (and in the present case, oral additions to written opening submissions).  This is unfair to the other side and also inconvenient for the court. 

62.3.   One of the purposes of having unambiguous pleadings is to let the court know the issues thrown up by the parties’ respective cases in as full an extent as possible.  This not only assists in the listing of cases by providing an accurate estimate of the time required for the hearing.  It is also essential for judges who now have to read extensively into the case before trial so as to reduce sitting time and hence save parties’ costs.  In the present case, if the judge had allowed the amendment, NC’s team would have had to consider possible defences to constructive trust, take instructions and possibly call evidence on e.g. the issue of unconscionability.  In my view, she was clearly right to reject the application.

Order

63.  For the reasons set out above, I would dismiss both appeals.  The parties having agreed that costs should follow the event and that the appeals should be certified fit for 2 counsel, I would order that the appellant pay the respondent’s costs with certificate for 2 counsel.

Hon Kwan JA:

64.  I agree with the judgment of Yuen JA.

Hon Chu JA:

65.  I agree with the judgment of Yuen JA.