YUEN MINGHWA FRANCOIS v. LO MEI KIN STELLA

HCA2682/2008, HCA1609/2010 & HCA1610/2010

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 2682 OF 2008

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BETWEEN

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(HEARD TOGETHER)

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JUDGMENT

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THE BACKGROUND

1.  By the Order of Mr Justice Saunders these three actions were ordered to be tried together.  At trial I made further orders (by consent) that the evidence of each witness in the trial stand as evidence in all three actions, and that the documents in the Trial Bundles stand as the documents in all three actions. 

2.  On 4 January 2008 Mr Yuen Kiu Kwan (“YKK”) died in Hong Kong, intestate.  He is survived by his three children Yuen MingHwa Francois, the plaintiff and the administrator in HCA2602/2008 (hereinafter referred to as “the Main Action”), Yuen MingTa Michael the 2^nd defendant by Counterclaim in the Main Action, and Yuen MingLan Helga the 3^rd defendant by Counterclaim in the Main Action. 

3.  The three children are the children from YKK’s marriage to Ingeborg Santjer (who in evidence described herself as Mrs Yuen), their marriage having been dissolved in 1998.

4.  YKK had for many years been engaged in the shipping business.  He also owned a number of private companies that acted as his personal investment vehicles, as follows :

Company	Shareholder	No. of shares/ totalissued shares
Great Field	The Deceased Lo Mei Kin Stella	1/2 1/2
Cerock	The Deceased Asian Powers Chan Suk Ching	9000/10,000 999/10,000 1/10,000
Otbo	The Deceased Chan Suk Ching	1/2 1/2
Smart Promotion	The Deceased Lo Mei Kin Stella	1/2 1/2
Kingsfield	The Deceased Lo Mei Kin Stella Asian Powers	1/5,000 1/5,000 4,998/5,000
Kingsview	The Deceased Lo Mei Kin Stella Asian Powers	1/5,000 1/5,000 4,998/5,000
Fedicia	The Deceased Asian Powers	1/50,000 49,999/50,000
Wonderland	The Deceased Lo Mei Kin Stella Asian Powers	1/5,000 1/5,000 4,998/5,000

(1)   Kingsfield owns a property at 8/F, Caltex House, 258 Hennessy Road, Wanchai;

(2)   Kingsview owns a property at Shop G43, East Commercial Block, South Horizons, Apleichau;

(3)   Cerock owns properties at 802, K. Wah Centre, 191 Java Road, North Point and Flat E, 33/F La Place de Victoria, 632 King’s Road, North Point & Car Park No. 306;

(4)   Wonderland owns properties at Flat A, 4/F & Roof, Block 13, Kenswood Court; Car Park No. 580 at Basement, Kenswood Court, Kingswood Villas, Tin ShuI Wai, New Territories; and Unit 219 including Terrance thereto, My Loft, 9 Hoi Wing Road, Tuen Mun, New Territories

(5)   Otbo owns a property at Unit No. 11, 13/F, Block 5, Nan Fung Industrial City, 18 Tin Hau Road, Tuen Mun, New Territories.

5.  The defendant in all three actions, Lo Mei Kin Stella (“Madam Lo”) first met YKK in about 1985 when he was 59 years old (and still married) and Madam Lo was aged 26. At that stage their relationship was one of friendship, and in 1989 Madam Lo married a Doctor Lau and left Hong Kong to live in Toronto, Canada.  In 1992, Madam Lo returned to Hong Kong.  At about that time YKK and Madam Lo began a romantic relationship.  Madam Lo began to work in YKK’s businesses.  Madam Lo subsequently divorced her husband and, she says, began to cohabit with YKK at his home in Ventris Place.

6.  In the Main Action the administrator seeks possession of the Estate’s assets as follows :

(a) the Hong Kong properties which comprise :

(i) Ventris Place;

(ii) Kingswood Villas; and

(ii) A carpark at South Horizon;

(b) a property in Shanghai; and

(c) YKK’s personal effects.

The administrator also seeks against Madam Lo :

(d) an account of the rents received in respect of Kingswood Villas, the carpark at South Horizon and the Shanghai property; alternatively mesne profits; and

(e) mesne profits in respect of Madam Lo’s occupation of Ventris Place.

The administrator further seeks in respect of a company called Asian Powers Limited :

(f)   a declaration that YKK was and the Estate is now the beneficial owner of 100% of the shares in Asian Powers Limited.  As noted from the chart in paragraph 4 herein, Asian Powers is the majority shareholder in four of YKK’s property holding companies and about a 10% shareholder in Cerock Limited.

7.  In respect of HCA1609/2010 (the “Asian Powers Action”) Asian Powers makes claim against Madam Lo for payment of sums paid from the company’s bank account over a period of two years after the death of YKK from 22 January 2008 to 20 January 2010 and pleaded in paragraph 15 of the Re-Re-Amended Statement of Claim and the Schedule thereto.  It is said that the payments were for the benefit of Madam Lo and/or others whom she wished to benefit and were not made as part of the conduct of Asian Powers business.  That in procuring these payments Madam Lo acted fraudulently and/or in breach of her fiduciary duties as a director of the company and is liable to account for these sums and repay them.

8.  In HCA1610/2011 (“the Cerock Action”), Cerock claims repayment for sums paid from the company’s bank account pleaded in paragraphs 22 and 23 of the Re-Re-Statement of Claim and the Schedule thereto.  The basis of Cerock’s claim is again fraud and/or breach of fiduciary duty by Madam Lo as a director, in that the payments were for the benefit of herself and/or others whom she wished to benefit, and were not made as part of the conduct of Cerock’s business.  There is a further claim in restitution of monies that were paid by Cerock to Madam Lo as salary.

9.  Cerock has a further claim relating to Madam Lo’s occupation of the premises owned by Cerock at 802, K. Wah Centre at 191 Java Road, North Point which are office premises from which YKK’s businesses were run.  It is claimed that Madam Lo has unlawfully occupied these premises following the death of YKK, and Cerock seeks an order for vacant possession of the premises and damages.

10.  The administrator obtained Letters of Administration on 27 October 2008.  Thereafter Madam Lo opposed the administrator’s application for registration as a member of each of the companies as successor-in-title to the deceased’s shares.  This resulted in court proceedings (HCMP414/2009) wherein Madam Justice Kwan granted the administrator’s application.   

11.  On 5 October 2009, the administrator obtained a Beddoe Order in HCMP1310/2009.  In December 2009 the administrator obtained an interim injunction restraining Madam Lo from disposing of the assets of the Estate, and an order to deliver up the title deeds, keys to properties and corporate documents of Asian Powers.

12.  In May 2010 Mr Justice Saunders found Madam Lo to be in contempt of court for acting in breach of the said interim injunction order and fined her HK$100,000.

THE MAIN ACTION : THE ADMINISTRATOR’S CASE

13.  The administrator’s case is a straightforward one.  YKK having died intestate with no wife at the time of his death, his three children Michael, Francois and Helga are, pursuant to section 4(5) of the Intestates Estate Ordinance (Cap. 73), the lawful successors to the Estate.  Section 4(5) provides :

“If the intestate leaves Issue but no husband or wife the residuary estate of the intestate shall be held on the statutory trusts for the Issue of the Estate.”

14.  Mr Clifford Smith, SC who appeared together with Mr Denis Kwok of counsel for the administrator submitted that apart from the question of the ownership of the shares in Asian Powers, there is no serious dispute that at the time of his death YKK owned all of the properties in question, thus the lawful successors to the Estate are YKK’s three children.

THE MAIN ACTION : THE DEFENDANT’S CASE

15.  Madam Lo asserts proprietary claims as follows : in respect of the property at Ventris Place, Madam Lo alleges that in mid 1992 YKK asked her to reside with him at Ventris Place and assured her that she could forever have it as her home. This assurance is referred to in Madam Lo’s pleading as the “Home Assurance”.

16.  Madam Lo says she relied on the Home Assurance in that she moved into Ventris Place and lived there with YKK from 1992 until his death in 2008.  That she spent time and money improving the apartment and participated on the Committee of Incorporated Owners of Ventris Place.  That she did not look for any other male companion, nor did she look for a job or resume her previous career but spent her time working for YKK without salary or reward. That she did not prevail upon YKK to make a will in her favour and accepted only a small amount maintenance from her husband upon her divorce. Furthermore, she did not press YKK to assign any interest to her in Ventris Place.

17.  Madam Lo relies on these matters in saying that she acted to her detriment in relying upon the Home Assurance, and that it would now be unconscionable for the Estate to resile from this Assurance.

18.  In addition, Madam Lo says that YKK promised or represented to Madam Lo that if she moved into Ventris Place to live with him, he would look after her forever and that all his present and future assets would belong to her upon his death.  This is referred to in Madam Lo’s pleadings as the “Financial Assurances” which were repeated from time to time during the currency of her relationship with YKK. 

19.  In respect of the Financial Assurances, Madam Lo relies upon the same conduct on her part set out in paragraph 16 above.

20.  In addition, Madam Lo has pleaded an alleged “common understanding” which essentially in my view adds nothing to the Home Assurance and Financial Assurances above. 

21.  In short, Madam Lo says that the Home Assurance and Financial Assurances and the circumstances surrounding the same amount to a proprietary estoppel in respect of YKK’s Estate, such that she is the sole beneficiary of the Estate.

22.  In addition Madam Lo originally made claim to the Hong Kong properties being Ventris Place, Kingswood Villas and the carpark at South Horizon on the basis of a donatio mortis causa, which arose, she said, during a dinner to celebrate YKK’s 75^th birthday on or about 1 March 2001, whereat YKK allegedly announced that he was contemplating his own death in the near future, and that he would give his assets to Madam Lo should he die.  The basis of the alleged gift was the permission by YKK to permit Madam Lo to continue to retain the key to a cabinet at the K. Wah Centre office which contained the title deeds to the aforementioned properties.  In his closing submissions, Mr Leo Remedios who leads Mr Jose Remedios and Mr Sergius Wai on behalf of Madam Lo, abandoned this claim on the basis that it was unsustainable.

23.  In respect of Asian Powers Madam Lo claims that she is the beneficial owner of 499 of the 500 issued shares of Asian Powers (one of the 499 shares is held by Madam Lo’s nominee, HKC Nominees Ltd).  It is Madam Lo’s case that the number of shares increased from 1 to 500 upon the Issue of 499 shares to her on 31 July 2001 [although a question remains as to whether Madam Lo had a beneficial interest in any shares in Asian Powers before that date].  In respect of this transaction Madam Lo relies in particular upon a board resolution of Asian Powers of that date which was passed to approve the issuance of 499 shares to Madam Lo for a nominal consideration of USD1 each. 

24.  In consequence Madam Lo makes a counterclaim for declarations in respect of her asserted rights set out above, and in respect of a payment by the administrator to her of HKD17 million being the Estate’s 50% share of dividends of HKD34 million declared by a company called Great Field Limited.

THE MAIN ACTION: THE ADMINISTRATOR’S RESPONSE

25.  In short, the administrator says that the Home Assurance and the Financial Assurances were never made by YKK; that in any event Madam Lo has suffered no detriment and there would be nothing “unconscionable” in the Estate denying Madam Lo the benefits she seeks.

26.  In respect of the Asian Powers shares the administrator says that the documentation supporting the transfer of 499 shares to Madam Lo is forged in that the documentation was signed contemporaneously and not over a period of several years, and in any event the board resolution of 31 July 2001 is invalid.  Alternatively if the shares were properly issued, then the same were held by Madam Lo on trust for YKK and thereby for his Estate. 

THE ASIAN POWERS ACTION : THE PLAINTIFF’S CASE

27.  The plaintiff company accepts that if Madam Lo succeeds on her counterclaim in the Main Action, and she is found to be the sole beneficiary of the Estate and/or to be the holder of approximately 98% of the shares in Asian Powers, then the claims in the Asian Powers Action would not be viable.

28.  As noted in paragraph 7 herein, Asian Powers says that Madam Lo as its director, in breach of her fiduciary duties, wrongfully procured payments from the company’s bank accounts to herself or for her benefit or to third persons.  Thus says Asian Powers, Madam Lo is liable to account for what she wrongfully removed from the company.

THE ASIAN POWERS ACTION : MADAM LO’S CASE

29.  Madam Lo’s position is simple.  She owns 98% of Asian Powers and her nominee, HKC Nominees Ltd. owns 1 share.  As such this Action against her is wholly misconceived.

30.  Further or alternatively, Madam Lo says that she is the sole beneficiary of YKK’s Estate and that even if YKK was the sole shareholder of Asian Powers at the time of his death, Madam Lo would now be entitled to 100% of the shareholding in Asian Powers.

THE CEROCK ACTION : THE PLAINTIFF’S CASE

31.  As noted in paragraph 8 herein, the allegations advanced by the plaintiff company are similar to those in the Asian Powers Action, that Madam Lo whilst acting as its director wrongfully procured payments from its bank accounts for herself or for her benefit or to third persons, and that she is now liable to account for the same. Furthermore, the plaintiff Company claims damages (mesne profits) for what it says is Madam Lo’s wrongfully occupation of its premises at K. Wah Centre, and the restitution of salary paid to her. 

32.  The shareholding of Cerock is not disputed.  There are 10,000 issued shares and at the date of YKK’s death, he held 9,000, Asian Powers held 999 and Madam Chan Suk Ching held 1 share as nominee for YKK. The Estate thus holds 90.01% of the shares in Cerock.  If Madam Lo were to succeed in her Counterclaim in the Main Action for a declaration that she is the sole beneficiary of the Estate, then the Cerrock Action would not be viable.

THE CEROCK ACTION : MADAM LO’S CASE

33.  Madam Lo says that by virtue of the fact she is the sole beneficiary of YKK’s Estate, she is thus (at least) a 90.01% shareholder in Cerock and as such the Cerock Action is misconceived.

THE ISSUES

34.  Counsel for the administrator, Mr Smith, SC and counsel for Madam Lo, Mr Remedios provided the court with a list of agreed issues which arise from the parties’ pleadings.  These issues are as follows :

Issue 1 :   Whether Madam Lo and YKK cohabited in the Ventris Place property since 1992 until the time of YKK’s death in 2008?

Issue 2 :   Whether YKK ever assured Madam Lo that she could forever live in and have the Ventris Place property as her home?

Issue 3 :   Whether YKK ever assured and/or promised Madam Lo that all assets that YKK had would also belong to her and that all assets would belong solely to her upon YKK’s death?

Issue 4 :   Whether Madam Lo relied upon the assurances/ understanding as stated above to her detriment, and if so, to what extent?

Issue 5 :   Whether, in light of Issues 1 to 4 above and/or in the circumstances of the case, it would be unconscionable for the Estate to deny the relief claimed by Madam Lo?

Issue 6 :   Whether the Hong Kong properties (as defined in paragraph 3 of the Re-Re-Amended Statement of Claim) were the subject matter of a donatio mortis causa made by YKK to Madam Lo sometime in March 2001 (this Issue has now been abandoned by Madam Lo)?

Issue 7 :   Was/Is Madam Lo the majority shareholder of Asian Powers?  Were the corporate documents as pleaded in paragraph 7A(4)(b) to (f) of the Re-Re-Amended Statement of Claim forged and backdated by Madam Lo to give the false appearance that she was/is the majority shareholder of Asian Powers?

Issue 8 :   Whether Cerock employed Madam Lo as managing director with a salary of $40,000 or at all, and whether the board resolution dated 29 May 2009 was valid?

Issue 9 :   Whether the funds withdrawn from the bank accounts of Asian Powers and Cerock were improper and/or acts of misappropriation by Madam Lo at the time when she was a director of both Asian Powers and Cerock?

THE WITNESSES’ EVIDENCE — A BRIEF SUMMARY

The plaintiff’s witnesses

(a)     Yuen MingHwa Francois, the administrator, Yuen MingTa Michael, and Yuen MingLan Helga

35.  These are YKK’s three children.  They are now all adults and reside overseas but came to Hong Kong to give evidence.

36.  The thrust of their evidence was that their mother Ingeborg Santjer (Mrs Yuen) commenced divorce proceedings in about 1994 against YKK as a result of his relationship with Madam Lo.  That their father did not want the divorce and still loved his wife but that Mrs Yuen nevertheless pursued the divorce.  That predictably the divorce traumatised all of the children and that whilst the children attempted to remain neutral, they tended to side with their mother, and relations with their father remained awkward for a number of years.  However, in around 2000, Mrs Yuen resumed contact with YKK and thereafter relations between YKK and his former wife and with his children and grandchildren steadily improved.  I was shown photographs taken in Singapore in 2007 of YKK with his children, grandchildren and former wife.  The photographs depicted what appeared to be a happy and unified family gathering. 

37.  All three children gave evidence as to their attendance at their father’s funeral in Hong Kong in January 2008. The evidence was to the effect that Madam Lo, with their agreement, made preparations for the funeral (none of the children can speak Chinese) but that when they attended the funeral, no consideration was extended to them by Madam Lo, and that they felt distressed and humiliated by the way they were treated. 

38.  The administrator, Francois Yuen further gave evidence as to what he described as Madam Lo’s intermeddling with the assets within the Estate, and the difficulties she repeatedly presented him with in his attempts to administer the Estate.

(b)     Ingeborg Santjer (Mrs Yuen), YKK’s former wife, Yuan Aye Ven, the deceased’s elder sister

39.  Madam Yuen gave evidence as to her divorce from YKK and that in the beginning of 2000 she began to be in contact with him again.  She described YKK as an “old fashioned Shanghaiese man who did not always express his love and affection towards his children in words”.  She confirmed, however, that he loved his children and always provided for their needs and education.  Watching Mrs Yuen give her evidence, I was in no doubt that she still harbours a deep affection for YKK. 

40.  Madam Yuan gave evidence of events at the time of YKK’s death.  She further confirmed that she knew Madam Lo.

(c)      Sie Mou Sun, the brother-in-law of YKK

41.  This gentleman is deceased and his witness statement was admitted by consent.  I did not find his evidence helpful and considering that he was not available for cross-examination, I have decided to attach no weight to it.

(d)     Mary Jane Martin Gilbaliga, Josephine P Martin

42.  Ms Gilbaliga and Ms Martin are sisters.  They both worked as domestic helpers at YKK’s premises in Ventris Place, Ms Gilbaliga from 18 October 1997 to 18 November 2007 and Ms Martin from 18 November 2007 to 9 January 2008.  Ms Gilbaliga gave evidence as to the domestic situation at Ventris Place during her employment.  Specifically she said that Madam Lo was residing at Ventris Place when Ms Gilbaliga arrived in 1997, but that Madam Lo ceased to reside at Ventris Place from about the year 2000 onwards.  Thereafter Madam Lo visited YKK occasionally and there was about a period of one year when she did not visit YKK at Ventris Place at all.  YKK had a good relationship with Ms Gilbaliga and in 2007 he told her he wanted to leave 10% of his assets to each of his children and grandchildren.  The witness did not remember YKK saying that he would leave anything to Madam Lo.

43.  Ms Martin confirmed that whilst she worked at Ventris Place between 18 November 2007 until January 2008 when YKK passed away, Madam Lo did not live at Ventris Place, and only occasionally visited YKK there.  Ms Martin further told me that on a number of occasions between 4 January 2008 and 9 January 2008 Madam Lo told her that if Ms Martin was asked whether Madam Lo lived with YKK at Ventris Place, she should respond to the effect that “Madam Lo lived at the Ventris Place residence with Mr Yuen”.  Ms Martin told me that such an answer if given would “not accord with the truth”.

(e)      To Poon Keung (Sonny) 

44.  Mr To was employed in various of YKK’s companies for 13 years prior to YKK’s death in January 2008. He gave evidence as to the business activities of YKK’s companies and of Madam Lo’s involvement in those businesses.  He also gave evidence as to the opening of YKK’s safe after his death and as to the location of YKK’s title deeds in respect of his properties in a filing cabinet at YKK’s office, and that the only person who had the key to the opening of the filing cabinet was YKK.  He said that Madam Lo lived at Dynasty Court in 1995 and 1996 and at Kingswood Villas at least between November 2004 and July 2007.  He said that Madam Lo told him that she then moved to South Horizons.  In cross- examination Mr To was challenged on these matters and also asked about aspects of YKK’s business.

(f)      Chan Suk Ching Teresa

45.  Ms Chan worked for one of YKK’s companies from May 1985 to December 1992 and was registered as a director or shareholder of some of YKK’s companies.  She was never involved in the management of the same and received no director’s remunerations.  She left YKK’s employment in 1992 but remained in contact with YKK until 2007 and gave evidence as to discussions she had with him about his family and business.  She was initially friendly with Madam Lo but they eventually fell out and as noted the witness left the business in 1992. 

(g)     Mr Gareth Williams

46.  Mr Williams works for Cushman & Wakefield which provide valuation advisory services.  He gave expert evidence as to rental value of various properties owned by YKK or by his companies.  No evidence contrary to Mr Williams’s evidence was led at trial, and I record here that I accept and will rely upon his evidence relating to valuation.

(h)     Dr Valery Aginsky

47.  Dr Aginsky is a forensic chemist and pursuant to an order made by Mr Justice Saunders dated 11 February 2010 examined ten documents signed by Madam Lo over a 10½ year period (Exhibits P1 to P10) related to Asian Powers.  He concluded :

“Based on the results obtained, it is highly probable that on 9 exhibits (exhibits P2 to P10) bearing the dates from 29 May 1998 to 22 August 2008, the signatures in the name of Lo Mei Kin Stella were all made using the black ballpoint ink of the same manufacturing batch and, probably, using the same pen.”

The defendant’s witnesses

(a)   Madam Lo

48.  Madam Lo gave evidence of her relationship with YKK.  She confirmed that she had begun a romantic and sexual relationship with YKK in 1992 and had moved into his home in Ventris Place. She confirmed that she had lived in Ventris Place (except for the period of time when she and YKK lived in Dynasty Court during renovation of Ventris Place, and some brief occasions when she had stayed with her mother), up until the death of YKK in January 2008.  She confirmed the giving of the Home Assurance and the Financial Assurances mentioned hereinbefore and also the donatio mortis causa (now abandoned).  Madam Lo maintained that she was the majority shareholder of Asian Powers and denied that the relevant documents found in Exhibits P2-P10 were in any way forged or backdated.

49.  Madam Lo maintained that the various financial transactions using the monies of Asian Powers and Cerock were not in any way improper, or acts of misappropriation, asserting that she was the majority shareholder of Asian Powers, and/or as she was the sole beneficiary to YKK’s Estate, she was perfectly entitled to use these sums and to occupy the office at K. Wah Centre. 

50.  Madam Lo further gave evidence to the effect that YKK had very little regard for this three children or his former wife.

(b)   Loh Chow Sim Priscilla  

51.  Ms Loh was YKK’s personal assistant in Singapore and gave evidence about conversations she had with YKK, in particular, a conversation in 2004 where Madam Loh suggested that YKK make a will in respect of his children.  Madam Loh gave evidence that upon hearing such a suggestion YKK said “I don’t have any children”.

(c)    Mr Dan C. Purdy

52.  Mr Purdy is a forensic document examiner.  He gave expert evidence of a technical review of the forensic report issued by Dr Aginsky.  He is not a forensic chemist and he says in his report that his review “should not however be confused with the thorough examination of the original evidence”.  Mr Purdy postulated various scenarios in which the documents in Exhibits P2-P10 could possibly have been written by different writing instruments filled with ink from the same manufacturing batch. 

(d)   Mr Henry Sung and Mr Ho Kwok Sun

53.  The evidence in these gentlemen’s witness statements was not challenged, and they were not called to court.  I found their evidence of limited assistance. 

DISCUSSION

Issues 1, 2 and 3

54.  It is convenient to consider Issue 1 (cohabitation at the Ventris Place property); Issue 2 (the Home Assurance), and Issue 3 (the Financial Assurances) together. 

55.  I have no doubt that in or about 1992 Madam Lo embarked upon a romantic and a physical relationship with YKK.  YKK was then in his mid-60s and Madam Lo was 33 years old.  Although I have some misgivings, I am prepared to accept that Madam Lo began cohabiting at Ventris Place with YKK at about the same time.

56.  YKK adopted a generous attitude towards Madam Lo; she apparently wanted for nothing, her credit card bills were paid by YKK through his companies and she was provided with the services of a driver, and a club membership.  Madam Lo clearly benefited substantially in material terms during the currency of this relationship.  The evidence establishes that in about 1992 Madam Lo was working as a secretary earning about $8,000 a month and had a small apartment in Seaview Building in Tuen Mun; whereas by 2010 her assets consisting of bank deposits, listed shares and property amounting to about $33 million (this is quite apart from her asserted interests in Asian Powers). 

57.  Madam Lo also became embedded in YKK’s business affairs. Whilst YKK was primarily concerned in the shipping industry, the evidence suggests that Madam Lo was active in the purchasing and management of YKK’s property interests.  Mr Sonny To’s evidence, which I accept as truthful and accurate however was to the effect that Madam Lo did not attend the office regularly, and was frequently absent.

58.  I also have no hesitation in finding that although an awkward and somewhat frosty relationship existed between YKK and his ex-wife and children during and immediately after the divorce proceedings, that by about 2000 this relationship began to improve.  Despite evidence to the contrary from Madam Lo and Priscilla Loh, I find that YKK at all material times maintained a love for his children (and possibly his ex-wife).  I find that at least from 2000 onwards YKK’s contacts with his ex-wife, and later his children and his grandchildren continued to flourish, and to a large extent bridges that had been broken during the divorce process were repaired. 

59.  I find YKK’s children, Francois, Michael and Helga, and their mother Ingeborg Santjer (Yuen) to be thoroughly honest witnesses, and wherever their evidence is at odds with that of Madam Lo, I prefer the evidence of these witnesses.

60.  Madam Lo was in the witness box for a period of about two days.  During this time she was extensively cross-examined by Mr Smith, SC.  I have had the fullest opportunity to observe her demeanor in the witness box and to consider carefully the evidence that she gave in cross-examination.  She struck me as an intelligent and articulate witness.  She is fluent in both Cantonese and English although (as was her right) she elected to give her evidence in Cantonese.

61.  On 16 July 2009 Madam Lo swore an affidavit in Hong Kong [Bundle H(b)2560].  This affidavit was sworn in connection with Madam Lo’s application for letters of administration of the Estate of YKK in Queensland, Australia.  YKK apparently owned a townhouse in Brisbane.  This affidavit was not produced by Madam Lo in discovery, but had to be sought out and was obtained by the administrator’s solicitors directly before the commencement of the trial [I say more about this at paragraph 94].

62.  In that affidavit Madam Lo deposed on oath as follows :

“We had a sexual relationship and lived together on a genuine domestic basis as de facto husband and wife, neither of us wished to marry as we both had previous failed marriages.” (emphasis added)

63.  Madam Lo further deposed on oath as follows :

“The deceased died having been divorced from his ex spouse Ingeborg Santjer by decree nisi dated 11^th April 1996 made absolute by order of the High Court of the Republic of Singapore on 8^th April 1998 a copy of which is exhibited B to this affidavit, and never remarried and without issue, parent, aunt or uncle, brother or sister.” (emphasis added)

64.  In cross-examination Madam Lo conceded that at the time she made this affidavit she knew that YKK not only had the three children Francois, Michael and Helga, but also had two living sisters.

65.  When asked why she had said on oath that YKK “died without brother or sister” Madam Lo’s evidence was as follows :

“I am sorry. It’s my mistake. My memory failed me. I explained it wrongly to my lawyer. I can’t recall.”

66.  When asked why she had said on oath that the deceased died without issue, Madam Lo responded :

“My understanding here was wrong because I thought it meant here that between KK and me we had no kids.”

67.  Madam Lo further conceded in cross-examination that she had the benefit of legal advice when preparing this affidavit, and that the Australian qualified lawyer making explanation to her explained precisely the meaning of “no Issue of the deceased”.

68.  I do not accept as truthful Madam Lo’s evidence that she had make a mistake about whether YKK had any sisters, nor that her memory failed her, nor that she explained matters wrongly to her lawyer.  Nor do I accept that when stating that YKK died without issue, she thought the matter referred to whether she and YKK had had children.

69.  This affidavit, sworn by Madam Lo after YKK’s death in direct relation to his Estate, and during the currency of her dispute with the administrator and his siblings over the beneficial interest of that Estate, has caused me the gravest concern.  In my view it not only impacts upon Madam Lo’s reliability and truthfulness, but it also demonstrates the lengths that she is prepared to go to in order to advance her claim to beneficial interest in the Estate, whilst at the same time seeking to deny YKK’s children their claimed beneficial interests.

70.  In my view Madam Lo had no hesitation, in effect attempting to practice a fraud upon the Australian Court in swearing this patently untruthful affidavit.

71.  In furtherance of this course of conduct Mr Smith, SC asked Madam Lo about a notice placed in the classified pages of the South China Morning Post on Friday 5 June 2009, which gave notice of her application for grant of letters of administration on intestacy in the Supreme Court in Brisbane, and providing that objection to the grant could be taken by lodging a caveat in that registry.  Such notice was apparently required to be made pursuant to her application for letters of administration in Australia.  By this time litigation over YKK’s Estate was already well underway and Madam Lo was asked in cross-examination why she had made no attempt to notify either the administrator or the solicitors acting for the administrator or any other member of his family that she was taking out letters of administration in Australia.  Her answer was :

“Because I was told by a lawyer that if no one raised any objection within 14 days then its done, and I had no idea to where I could inform them.”

72.  This was plainly in my view a further untruth.  Madam Lo knew precisely how to contact the administrator and/or his Solicitors, and indeed had joined Michael, Francois and Helga in her counterclaim.  I conclude that Madam Lo embarked upon a deliberate and dishonest course of conduct to obtain YKK’s assets in Australia whilst attempting to ensure that his children were kept in ignorance as to what she was doing.

73.  I have carefully considered the evidence given by Mary Jane Martin Gilbaliga and her sister Josephine P. Martin who as noted worked as domestic helpers in the Ventris Place property, Ms Gilbaliga from 18 October 1997 to 18 November 2007 and Ms Martin from 18 November 2007 to 9 January 2008.  I found them to be honest and reliable witnesses.  I have no reason to doubt that from about 2000 onwards up until the deceased’s death in January 2008, Madam Lo did not reside at Ventris Place and that she went there only for occasional visits; and that for about a period of about one year she did not visit YKK at Ventris Place at all.  I reject Madam Lo’s evidence to the contrary.  I note in addition that in a number of documents and records between 2004 and 2007 Madam Lo gave her address as an apartment in South Horizons.

74.  I also accept Josephine Martin’s evidence that Madam Lo attempted to influence any evidence Ms Martin would give as to Madam Lo’s period of residence at Ventris Place.

75.  I accept Mr Remedios’s proposition that the closer the relationship between Madam Lo and YKK, the more likely that the Home and Financial Assurances were in fact made.  Whilst no doubt for a period of several years YKK and Madam Lo enjoyed a close relationship, I find that Madam Lo has exaggerated the intensity and duration of that relationship.  In her witness statement dated 11 December 2009 which was admitted as evidence in chief, Madam Lo says that YKK proposed marriage to her but that she asked him to postpone such marriage saying that “with true love the marriage certificate does not matter to me”.  In cross-examination Madam Lo insisted that YKK asked her to marry him and if she had agreed then they would have got married.  As pointed out during her cross-examination this contradicted the sworn affidavit made in the Administration Proceedings in Queensland Australia, in which Madam Lo stated that neither her nor YKK wished to marry as they both had previously failed marriages.  Madam Lo was asked this by Mr Smith, SC :

“Q: And I suggest to you that the meaning of that is quite clear: neither of you were interested in getting married.

A: Temporarily, yes.  But it doesn’t rule out the possibility that we would in future.”

76.  The sworn evidence presented to the Australian Court about YKK’s position on marriage to Madam Lo is markedly at odds with her evidence to this Court.  I conclude that I am unable to accept as truthful, Madam Lo’s assertion that YKK proposed marriage to her. 

77.  Mr Remedios has prayed in aid of two documents in which Madam Lo is described as YKK’s “spouse”.  These documents are :

(a)   An Inland Revenue document entitled “Election for Personal Assessment” and dated 12 October 1999 (Bundle G-1800-1801) and signed by YKK and Madam Lo, in which as Mr Remedios accepted, an attempt was made to obtain a more favourable rate of taxation by describing Madam Lo as a “spouse”.

(b)   A World Trade Centre Club application dated 29 September 1993 (G-1799) where Madam Lo was described as a “spouse” in order to obtain for her a spouse’s club membership card.

78.  The purpose of describing Madam Lo as a “spouse” in both these documents was simply to obtain advantages to which Madam Lo would not have otherwise have been entitled.  These documents in no way persuade me that YKK proposed marriage to Madam Lo, nor that he was more likely to have made the Home Assurance or Financial Assurances.  To the contrary, these documents provide further examples of Madam Lo’s willingness to advantage herself through deceptive conduct. 

79.  Mr Remedios has also pointed to the fact that prior to YKK’s funeral, Madam Lo took out obituaries in both the South China Morning Post and in a Chinese newspaper in which she described herself as “the surviving wife”.  Furthermore, at the memorial service held on 20 January 2008, Madam Lo gave a speech in Putonghua (a language YKK’s children were unable to understand) in the capacity of YKK’s “widow”. These statements, connected with the funeral, were those of Madam Lo (and not YKK).  They were again deceptive statements in that Madam Lo was neither the surviving wife nor widow of YKK.  I do not think that these statements of her status in any way advance the likelihood that YKK had made the Home and Financial Assurances.  I have noted that YKK’s children Francois, Michael and Helga were in effect deliberately sidelined by Madam Lo at the funeral, and I bear in mind the later conduct by Madam Lo in securing the premises at Ventris Place and the control of YKK’s businesses to the exclusion of YKK’s children.  I cannot help but think that Madam Lo’s domination of the funeral and the description as “surviving wife” and “widow” were the first of many steps she was to take to secure her position over YKK’s Estate, to the exclusion of his children.

80.  As noted, I found Madam Lo to be an intelligent witness. She also struck me as strong willed and assertive.  From the evidence I have heard about YKK, it appears he too was an intelligent and successful businessman.  The obvious question arises as to why persons such as Madam Lo and YKK would rely on oral “assurances” (if such were made) rather than ensuring that a will was made.

81.  Madam Lo had said that she did raise the Issue of a will with YKK (whilst waiting on a pedestrian crossing in North Point ), but that YKK responded to the effect that he did not want others to know of their assets, and did not want lawyers to profit.

82.  I do not believe that Madam Lo would have been content with the oral assurances (if made).  I do not accept her account of raising the matter of a will in such casual circumstances.  She appeared to me an efficient and businesslike person.  If the assurances were ever made, I believe that Madam Lo would have made far more concentrated efforts to have the same reduced into writing.  Absence of such effort on Madam Lo’s part is to me indicative that the assurances were never made. 

83.  In relation to the Home Assurance (that Madam Lo could keep Ventris Place as her home) this assurance was, according to Madam Lo, made in 1992 whilst YKK was still married to Mrs Yuen, and Mrs Yuen retained a half share in the Ventris Place apartment.  It is to say the least odd that YKK would make such an assurance while still married to Mrs Yuen and whilst she was a 50% owner of the Ventris Place property.  I also accept the evidence of Francois Yuen that his father did not really want to be divorced from his wife, and that it was Mrs Yuen and not YKK that pushed ahead with the divorce proceedings.  Bearing this in mind, it is in my view even stranger that as early as 1992, YKK should be offering to gift his then matrimonial home to Madam Lo.

84.  Madam Lo has also said in her evidence in chief (witness statement dated 11 December 2009 paragraph 5(f)) that YKK, upon receiving his divorce in Singapore, wanted to put Madam Lo’s name on the title deeds to Ventris Place.  Madam Lo however says she declined this offer because stamp duty would be payable and as Madam Lo found this to be “wasteful”, she did not proceed with the documentation.  I do not for a moment accept this evidence.  Having carefully observed and listened to Madam Lo’s evidence in Court, I have no doubt that if she had been presented with an opportunity to secure her position in relation to Ventris Place, that the matter of having to pay stamp duty would not have stopped her doing so. 

85.  I also bear in mind that the claimed existence of the “Home Assurance” and the “Financial Assurances” did not emerge until some 15 months after YKK’s death, when they first appeared in Madam Lo’s Defence filed in March 2009.  Prior to that there had been considerable correspondence between her solicitors and the solicitors representing the administrator, but no mention of these assurances was made.  In my view, if such assurances had been made, they would have been at the fore front of Madam Lo’s attempts to secure any perceived rights she had in respect of YKK’s Estate.

86.  I have carefully considered all the matters advanced by Mr Remedios including the fact that YKK continued to pay (through his companies) Madam Lo’s credit card bills, and that she continued until his death to work in his companies.  I have carefully observed Madam Lo’s demeanor in the witness box and have fully considered everything that she has had to say. 

87.  I found Madam Lo to be a dishonest and opportunistic witness. 

88.  Having considered all of the evidence I simply do not believe Madam Lo when she says that the Home Assurance and the Financial Assurances were made to her by YKK.  To conclude upon the first three issues I find as follows.

Issue 1 

89.  I find that Madam Lo cohabited with YKK at the Ventris Place property from approximately 1992 until approximately 2000 although there were periods during this time when she plainly did not live at Ventris Place. From about 2000 onwards, I find that she did not cohabit and/or reside at the Ventris Place property with YKK and only visited YKK at that address occasionally, and that for a period of about one year she did not visit him at all. 

Issue 2

90.  I find that YKK never assured Madam Lo that she could forever live in and have the Ventris Place property as her home.

Issue 3

91.  I find that YKK never assured and/or promised Madam Lo that all his assets would also belong to her and that all his assets would be left solely to her upon his death. 

Issue 4 and Issue 5

92.  In view of my findings as to Issues 1, 2 and 3, Issues 4 and 5 do not arise for determination.  However, had they done so, I wish to record my views on these issues.

93.  First of all, I think that the Home Assurance and the Financial Assurances were conditional assurances (although I have found they were not made).  At the time the Home Assurance was allegedly made, YKK was 65 years old and Madam Lo was 33 years old.  I believe that had that assurance been made, and had the later and allegedly repeated Financial Assurances been made, they would have been made on the basis that Madam Lo continued to cohabit with YKK until his death.  When these assurances were allegedly made, YKK was approaching the autumn of his life and I doubt that he would have made such assurances on any other basis than he expected Madam Lo to cohabit with him and to look after him until his death.  I have found that Madam Lo did not do this.  In fact she did not cohabit with him at all for an 8-year period leading up to YKK’s death.  I also accept Mr Clifford Smith, SC’s submission that the pleaded particulars of these assurances found in Madam Lo’s Defence, themselves firmly indicate the conditional nature of these assurances.

94.  Had it been necessary I would have concluded that Madam Lo had not acted to her detriment in reliance upon the alleged assurances and therefore had not established a proprietary estoppel.  Indeed the evidence establishes that Madam Lo very much shared the fruits of any endeavours that her and YKK undertook and that today, quite apart from the question of beneficial entitlement to the Estate, or entitlement to the shares in Asian Powers, Madam Lo is as a direct result of her association with YKK, a wealthy woman.  But for her association with YKK I very much doubt that she would have found herself in such secure financial circumstances.

95.  Had I been called upon to consider the question of whether it was unconscionable for the Estate to deny the relief claimed by Madam Lo, I would have found that it was not unconscionable to do so.  In view of the substantial benefits Madam Lo has enjoyed and accumulated over the years that she was associated with YKK, it would be wholly disproportionate in my view to now award her sole beneficial interest (or any other interest) in YKK’s Estate.

96.  As noted in paragraph 61 herein, the affidavit sworn by Madam Lo on 16 July 2009 in the application for letters of administration in Australia was not produced by her in discovery. When I enquired of Mr Remedios about this, he assured me on behalf of his Instructing Solicitor (Paul Kwong of Paul Kwong & Co) that Mr Kwong had had no knowledge of either the proceedings in Australia or of the affidavit.  During Madam Lo’s evidence she told me that Mr Kwong did know of the Australian proceedings and of the affidavit, and had advised her that it was unnecessary to make discovery of the same.  As a result of this evidence I have considered whether it is appropriate to refer this matter to the Law Society.  However in view of the unsatisfactory nature of Madam Lo’s evidence, both as to truthfulness and reliability, I have decided not to take this matter any further.

Issue 6 : Donatio Mortis Causa

97.  As noted, Mr Remedios abandoned this claim during his closing submissions on the basis that such claim was unsustainable.  I respectfully agree with him.

Issue 7 – Forgery?

98.  To recap this concerns the Issue whether Madam Lo was/is the majority shareholder of Asian Powers.  Were the corporate documents as pleaded in paragraph 7A(iv)(b) to (f) of the Re-Re-Amended Statement of Claim, forged and backdated by Madam Lo to give the false appearance that she was/is the majority shareholder of Asian Powers?

99.  I begin this analysis on the basis that the documents sought to be impugned are on the face of them perfectly regular corporate documents which disclose that from 2001 onwards Madam Lo held 499 of 500 issued shares of Asian Powers and is thus the majority shareholder of that company.  The burden of displacing what is plainly recorded in these documents rests fairly and squarely upon the plaintiff/administrator. Allegations of forgery are very serious allegations and the burden resting upon the plaintiff/administrator is correspondingly a heavy one.

100.  I have read and re-read the Court of Final Appeal’s judgments in Nina Kung v. Wong Din Shin [2005] 8 HKCFAR 387 and Ming Shiu Chung & Others v. Ming Shiu Sum & Others [2006] 9 HKCFAR 334 in regard to the way in which the Court should approach and deal with allegations of serious misconduct.  I acknowledge that a standard of proof commensurate with the seriousness of the allegations is required, and that evidence to a very high standard of cogency is necessary before a court could be justified in finding that a party has committed forgery.  Plainly, inferences of fraud and serious conduct are not to be reached by conjecture, nor on a mere balance of probabilities. 

101.  I have also been referred to Re H & Others [minors] Sexual Abuse : Standard of Proof [1996] AC 563 and the judgment of Litton PJ in HKSAR v. Egan [2010] 13 HKCFAR 314 at 410.  It is plain that I must approach this matter factoring in the inherently greater improbability of serious misconduct as compared with lesser forms of misconduct, and thus requiring the person bearing the burden of proving the allegation to prove it with evidence of a commensurate cogency.

THE DOCUMENTS

102.  The documents relevant to determining the shareholding in Asian Powers are as follows :

(a)   The transfer of subscription of 1 share to YKK dated 3 February 1994 [Core 244].

(b)   A certificate in respect of 1 share issued to YKK dated 3 February 1994 [Core 246].

(c)   A “Resolution in writing of the sole shareholder of the company” dated 26^t August 1994 wherein Mr Sie Mou Sun is described as the sole shareholder.  This document is not signed by YKK.  Madam Lo’s evidence was to the effect that this document was prepared in relation to the establishment of a bank account with HSBC; that Mr Sie was not really the shareholder but as this was a family matter, Mr Sie had been described as such.  Madam Lo was asked the following by the Court :

“Q: You were asked whether you were prepared to sign this document to cause the bank to get the wrong impression as to who the sole shareholder was :- is that correct?

A: You may say so.”

(d)   A Customer Information Statement provided to Wardley Securities Ltd, signed by YKK and dated 24 November 1994 indicating that YKK was the sole shareholder. 

(e)   A “Certificate of managing director”signed by YKK and dated 26 January 1996 in which both YKK and Madam Lo are said to hold one share each in Asian Powers. This document was substantially relied upon by Mr Remedios to demonstrate that Madam Lo had at least a 50% interest in Asian Powers. However, in cross-examination Madam Lo was then asked about the later “Register of Members” [Core P70] and the following exchange took place :

“Q: Now if we look at the top part of the document on page 70 it shows that on 3^rd February 1994 one share had been issued and that was acquired by K.K. Yuen, do you see that?

A: Yes.

Q: And if you look at the bottom half of the document where your name appears, you will see that the shares were acquired by you according to this document on 31^st July 2001 being 499 shares.

A: Yes.

Q: So on this document which is produced from information supplied by you, you were not a shareholder until 31^st July 2001.

A: Yes.”

And then later in the cross-examination, Mr Smith, SC asked this :

“Q: And do you also agree with me that whatever is stated here on page 95 which is the BNP document, is not reflected in the register of members which is on page 70 and from which the information came from.

A: It was correct that it was not reflected but there was reason. In relation to the BNP document, it’s for account opening and since we have to take out loans with that bank, so both KK and me had to indicate that we have each got one share of the company so that we could take out loans to buy ships….

Q: So are you saying Madam Lo that the BNP document was filled in the way that we see it filled here, so that you and Mr Yuen could both get a loan?

A: Yes. And also for opening the account because it requires both of our signatures, either one of us could draw money.”

(f)   A Register of the Members of Asian Powers containing information that Madam Lo agreed had been provided by her, which indicates that YKK held one share in Asian Powers, and Madam Lo 499 shares.  This document is unsigned and undated. [Core 70]

(g)   An HSBC, Update of Customer Information Statement signed by YKK and by Madam Lo which according to a letter from HSBC was supplied to HSBC in July 2003[Core 260.2].  Mr Remedios has made various submissions to persuade me that this document indicates that Madam Lo is a shareholder of Asian Powers.  With respect, I entirely disagree with his analysis.  The document plainly says that YKK is the 100% shareholder of Asian Powers, and although in the same document YKK was asked to indicate if he was not the beneficial owner of these shares, he did not do so. 

(h)   “Certificate of Election Incumbency and Shareholding of Asian Powers Limited” dated 2 November 2009 signed by Madam Lo [F1528] in which YKK is described as having one share in Asian Powers Limited, HKC Nominees Ltd one share and Madam Lo 498 shares.  This document which came into existence after YKK’s death is plainly a self-serving document. 

103.  Based upon the above documentation Madam Lo’s case is that she holds 498 of the 500 issued shares in Asian Powers and that she does so by virtue of a resolution dated 31 July 2001 (Exhibit P4) in which she was issued 499 shares at a price of USD1 each (1 share was later transferred to HKC Nominees Ltd).  In connection with this resolution, Madam Lo relies on an application for shares of common stock dated 31 July 2001 and signed by her (Exhibit P3); a certificate No. 2 for 499 shares in Asian Powers and signed by her dated 31 July 2001 (Exhibit P5); a certificate No. 3 (Exhibit P7) showing Madam Lo as holding 498 shares and signed by her dated 22 August 2008 (Exhibit P7) and a certificate No. 4 in respect of HKC Nominees Ltd for 1 share dated 22 August 2008 and signed by Madam Lo (Exhibit P10). 

104.  I conclude from the above documentation and the evidence about that documentation that I have heard, that YKK at least until 31 July 2001 was the sole shareholder in Asian Powers.  The documents that suggest otherwise were prepared for purposes unconnected with the actual shareholding of the company.  Furthermore, up until July 2001, there is only one share certificate issued and that is to YKK, and there is no resolution of the company issuing any further shares other than that one share.

THE EXPERT EVIDENCE

105.  The plaintiff called Dr Valery N. Aginsky a forensic chemist and ink and document dating specialist.  Dr Aginsky was provided with 10 documents bearing Madam Lo’s signature.  These documents are Exhibits P1-10 and bear the dates from 3 February 1994 to 22 August 2008.  There was some dispute by Mr Remedios as to whether Dr Aginsky and indeed the Court could have regard to documents other than Exhibits P3, P4, P5, P7 and P10 being the only documents actually pleaded to be forgeries.  I ruled on this and could see no objection to Dr Aginsky examining all the documents being Exhibits P1-P10.  Mr Justice Saunders’s Order dated 13 April 2010 provided for all 10 documents, Exhibits P1-P10 referred to in Dr Aginsky’s report to be available for examination by the defendant’s expert : Dr Aginsky concluded :

“The data in the table show that on Exhibits 2 to 10 bearing the dates from 29^th May 1998 to 22^nd August 2008, with signatures in the name of Lo Mei Kin, Stella were all made using the black ballpoint ink of the same composition – Ink II. It is highly probable that these 9 signatures were made with the ink that came from the same manufacturing batch. Besides, the microscopic examination showed that these 9 signatures probably have been made using the same pen.”

106.  Dr Aginsky also explained (Note 1 of his report) that :

“Inks are manufactured in batches, not in a continuous stream. Each batch is a certain quantity of ink produced in a single manufacturing run. Batch to batch variations for inks are usually significant enough to be detected by modern analytical methods, including TLC and GC/MS used in this case.”

107.  Dr Aginsky further stated that :

“In this examination the TLC analysis of the ink samples showed that all signatures on the 10 exhibits were made using ballpoint ink[s] manufacturing by Pilot Corporation [Japan].”

Dr Aginsky further stated that Pilot Corporation (Japan) would produce between 12 to 40 separate batches of ink each year.

108.  In relation to the pen used to make these signatures Dr Aginsky said this :

“In this examination using 20X magnification, I note that ink lines in the signatures in the name of Lo Mei Kin, Stella that appeared on 9 exhibits bearing dates from 29 May 1998 to 22 August 2008 have similar morphology defects (ink goops and strings). This suggests that these 9 signatures are likely to have been made with the same pen.”

109.  The defendant Madam Lo called Mr Dan C Purdy a forensic document examiner who undertook a technical review of Dr Aginsky’s report.  As noted, however, he accepted that his review “should not however be confused with the thorough examination of the original evidence”.  Mr Purdy accepted that he was not a forensic chemist and indeed his evidence was, with respect, of little assistance in relation to ink analysis.  He did, however, postulate a number of situations in which it may have been possible for different writing instruments filled with ink from the same manufacturing batch to have been used.

110.  I have no hesitation in accepting Dr Aginsky’s scientific evidence.  He appears to be a renowned forensic chemist and ink and document specialist.  Indeed the defendant’s expert Mr Purdy said that he highly respected Dr Aginsky and that on occasions Mr Purdy himself had referred matters to Dr Aginsky for Dr Aginsky’s advice and opinion. 

111.  Mr Purdy’s evidence did not really dispute Dr Aginsky’s findings as to the ink all coming from the same batch.  In this regard Mr Purdy accepted that he is not a forensic chemist.  Although I found his evidence to be utterly truthful, I was, with respect, not much assisted by it.

112.  In conclusion, I find that it is highly probable that Madam Lo’s signatures on documents P2-P10 were made with ink that came from the same manufacturing batch, and that the signatures were probably made using the same pen.

113.  I have not relied upon Dr Aginsky’s view that :

“It is probable that these exhibits were signed contemporaneously within a short period of time.”

Dr Aginsky was not able to age the ink accurately.  In these circumstances, whether or not it is likely that the signatures were made all at once or were made over a period of 10½ years, is a matter for the judgment of the Court, and is not a matter of expert evidence. However, if these documents were genuinely signed on the dates they bear, it would mean that Madam Lo had kept and used the same pen over a period of about 10½ years, or that she had kept and used more than one pen, but each of those pens contained ink from the same manufactured batch.

114.  While I acknowledge that it is theoretically possible to keep one or more ballpoint pens containing the ink from the same batch, and use that pen or pens over a period of 10½ years, such a theory is contrary to the evidence in this case.

115.  Madam Lo gave evidence on this subject in cross-examination by Mr Smith, SC :

“Q: To take you back to your witness statement in Bundle D at page 854 at paragraph 38 … I will just read this to you “I have always been the person taking care of KK since we were living as husband and wife: whether it be advising him on purchasing real property in the real estate market or be it replenishing office supplies in our office.  I do not remember which or what pen was used to sign the 9 documents examined by Dr Aginsky but I do remember I have always bought ball pens of the same brand namely Pilot in bulk (a dozen) for KK and I to use.  Our practice was to use at least 3 such ball pens at any given time.” 

A: Yes.

Q: When you say that you bought them in bulk (a dozen) or so at a time, how often would you do that?

A: Around 3 or 4 months.

Q: Every 3 or 4 months another batch?

A: Roughly.

Q: Is it possible do you think Madam Lo that you would have kept one pen and used it throughout this period of some 10 years that would have been since 1998 to 2008. 

A: I can tell you that it is the case that I kept using one brand of pens for 10 years, yes.

Q: Pilot?

A: Yes.

Q: But would you be using the same pen (indicates own pen).  This happens to be Pilot coincidentally.  But would you be using that pen for 10 years, just a pen, the same pen all the time?

A: I would use another one if I had used it up.”

116.  The expert evidence strongly supports the conclusion that the signatures on Exhibits P2-P9 were all made with a Pilot pen or pens using the same batch of ink.  Pilot makes between 12 and 40 different batches of ink every year.  Madam Lo specifically bought Pilot pens in bulk, a dozen or so at a time, used them up and bought again in bulk every three or four months.

117.  Mr Smith, SC also submits that all the suspect documents were signed in black ink.  He has demonstrated that Madam Lo used other colour ink pens as well.  Her evidence was as follows :

“Q: Yes. And did you always use black pen or did you sometimes use blue pens or some other colour?

A: I will use other colours as well. It depends on which colour of pen that I picked up.

Q: And in fact during the same period you signed quite a few documents

A: Yes.”

118.  The likelihood of all of these documents being signed in black ink when the author of the signatures regularly uses other colour inks, again supports, says Mr Smith, SC the view that these documents were signed at or about the same time. 

119.  I have also taken into account the circumstances prevailing in July 2001.  I have found as a fact that by that time Madam Lo had ceased to cohabit with YKK.  I also note that Asian Powers through its shareholding in various of YKK’s other companies owned or controlled most of YKK’s property portfolio in Hong Kong.  Thus if YKK were transferring the ownership of Asian Powers to Madam Lo he was in fact transferring to her a very substantial part of his entire assets.  Mr Smith, SC has asked to me to note, and I accept that except for fairly mundane and routine matters, YKK almost invariably signed documents dealing with matters of importance to his business.  The July 2001 resolution does not bear YKK’s signature.  I think it very likely that if YKK was in fact divesting himself of a substantial part of his entire assets, one would find his signature on at least one of the relevant documents.  Furthermore, it is in my view very unlikely that YKK would give away such substantial assets to a woman that he had ceased to cohabit with.  I also take note of the HSBC Update of Customer Information Statement, in which two years after the alleged resolution granting Madam Lo 99% of Asian Powers shares, YKK confirms (by his own signature) that he in fact owns 100% of the shares in Asian Powers.

120.  I also take into account the affidavit signed by Madam Lo in the Australian Letter of Administration proceedings dated 16 July 2009.  I have found that the most material parts of this affidavit relating to whether YKK had Issue or living siblings to have been deliberately untruthful, and calculated to reward Madam Lo with the fruits of YKK’s Estate to the disadvantage of his children.

121.  In Nina Kung v. Wang Din Shin [2005] 8 HKCFAR 387 at 560ILord Scott NPJ said this (626) :

“The passage from Lord Nicholl’s opinion in Re H & Others (Minors) (Sexual Abuse : Standard of Proof) [1996] AC 563 that I have cited stresses the need to concentrate on the inherent probability or improbability of the serious allegation being true. In the present case there are two such allegations, the principal allegation is that Mrs Wang procured the forgery of her husband’s signature on each of the four 1990 documents. The other allegation is that Mr Tse became a conspirator with Mrs Wang in a conspiracy to utter a forged will. The probability of these allegations being true must be judged on the evidence adduced in the case. But it must also take account of propensity. If such an allegation is made against a person with a record of involvement in forgery or fraud, the strength of the other evidence necessary to satisfy the balance of probability test is obviously less than would otherwise be required. Evidence of propensity must go into the balance.”

122.  In my view Madam Lo has a demonstrated propensity to engage in deceptive or fraudulent conduct in relation to YKK’s Estate.  I place this in the balance, in my consideration as to whether the plaintiff/ administrator has proven that the documents in question being documents exhibits P3, P4, P5, P7 and P10 are forged in the sense that they have been signed and backdated to make them appear to have been created at different times, to give the false impression that Madam Lo was and is the majority shareholder of Asian Powers.

123.  I have also had regard Madam Lo’s evidence as to how her shareholding in Asian Powers allegedly came into being  Her case appeared to be that at least by the time that the “Certificate of managing director” dated 26 January 1996 was signed, she was a 50% holder in Asian Powers as was YKK.  This approach appeared during trial to unravel when it was pointed out that as at 21 July 2001 Madam Lo’s case was that 499 shares out of 500 were issued to her, such that if before July 2001 YKK held 1 share and she held 1 share, then mathematically it was simply impossible for her to Issue to herself 499 out of 500 shares.  The evidence was as follows :

“[Mr Smith, SC cross-examining]

Q: Just remind yourself by going back to page 70 according to the register of members, on 21^st July 2001 499 shares were issued, which used up the whole of the 500?

A: Yes.

Q: So prior to that date it could not have been the position that you held 1 share; do you agree?

A: Disagree.”

124.  Although the witness disagreed with this proposition, Mr Smith, SC was plainly right. 

125.  Madam Lo’s case then appeared during trial to become one of there having been merely an intention in YKK to make her a 50% shareholder in Asian Powers and that this intention crystalised when the share Issue took place in July 2001.  Again, the problem with this approach is that if YKK intended her to be a 50% shareholder, why did he agree to Issue to her 99% of the shares in 2001.  In short Madam Lo’s own evidence as to the circumstances in which she says she became the holder of 499 (later 498) shares in Asian Powers is inconsistent and unbelievable.

CONCLUSION ON FORGERY

126.  In Nina Kung v. Wang Din Shin [2005] 8 HKCFAR at 561G, Lord Scott saidthis :

“The Judge started from the wrong standpoint. Instead of requiring Mrs Wang to dispel his suspicious circumstances, he should have considered all the reasonably probative circumstantial evidence in the round and asked himself whether its weight was sufficient to establish the very serious allegations that were made against Mrs Wang and Mr Tse.”

127.  I have considered all the matters and evidence set out in paragraphs 99 to 125 above in the round.  I have asked myself whether its weight is sufficient to establish the very serious allegations now made against Madam Lo. Having very carefully considered this matter I find that the weight is sufficient, and I find that the documents Exhibits P2 to P10 were not signed on the dates that the documents bear, but were all signed at or about the same time by Madam Lo. I find that this in all probability occurred after the death of YKK.

128.  For the purpose of this Judgment I find that the documents upon which Madam Lo relies specifically for her entitlement as a shareholder in Asian Powers, and which are pleaded in paragraph 7A(4)(b) to (f) of the plaintiff’s Re-Re-Amended Statement of Claim, are forged and backdated and are void ab initio and without effect.

129.  Mr Smith, SC’s further or alternative case was that the board resolution dated 31 July 2001 was invalid because Yuen Aye Ven a director at the time, received no notification of the resolution/meeting thus invalidating it.  Had it been necessary I would have decided this matter in favour of the plaintiff.  Mr Remedios sought to persuade me that no notice was necessary.  I do not agree.  The purpose of the meeting, to issue 499 new shares out of a limit of 500, went to the very core of the Company’s affairs.  Proper notice should have been given to its directors.  Failure to do so plainly in my view invalidated this purported resolution.

130.  Mr Smith, SC also advanced the alternative case that if in fact the 499 Asian Powers shares were properly issued to Madam Lo, then she held the same on trust for YKK.  Had it been necessary to decide this Issue I would have accepted Mr Smith’s proposition.  I do not believe that YKK, having ceased to cohabit with Madam Lo, would in July of 2001 have agreed to transfer the beneficial interest in a very substantial part of his total assets (the properties held by Asian Powers by virtue of its shareholding in the various companies) to Madam Lo. Furthermore the later 2003 HSBC Update Customer Information Statement signed by YKK makes clear that YKK beneficially held 100% of the shares in Asian Powers.

131.  The plaintiff therefore succeeds on its claims in the Main Action.  I will hear Counsel as to the appropriate orders to be made, consequent upon my findings herein.

132.  In view of my findings above, Madam Lo’s counterclaim is dismissed. 

HCA1609/2010 : THE ASIAN POWERS ACTION

133.  Having found that Madam Lo is neither the beneficiary of the Estate of YKK, nor a shareholder in Asian Powers, I now turn to consider the Asian Powers Action. 

134.  Asian Powers is an investment holding company with no active business operations.  Its main source of income was rent in respect of Unit 3304, Bank of America Tower.  The rental income from this property was paid into HSBC account no. 044-227502-001. The other assets of the company include securities with HSBC Broking Securities (Asia) Ltd., cash in the foresaid HSBC account, and a call deposit account with BNP (Paribas).

135.  Madam Lo caused Asian Powers to make multifarious payments for her own use and benefit.  These included numerous payments of her credit card bills, payment of her lawyers bills, of decoration bills for Ventris Place, and management service bills to name but a few.  Counsel have produced a list of agreed items where Madam Lo made payments “outside the object clause of Asian Powers” referred to as “Agreed Schedule A”.  The total amount of agreed payments is $2,732,995.73.  As Madam Lo’s defence that she was entitled to take these payments for her benefit from Asian Powers fails, there will be judgment for the plaintiff in this amount.

136.  Agreed Schedule A also contains a list of non-agreed items.  Madam Lo says that these payments were made for the benefit of Asian Powers and not for her own use and benefit.  To the contrary, the plaintiff company says that these payments were made either fraudulently and/or in breach of Madam Lo’s fiduciary duties as a director to the company.  Thus she must account for the same and/or make restitution, alternatively pay damages to be assessed.

137.  The disputed items referred to are :

(a)   The salaries paid to a number of persons Madam Lo caused to be employed by Asian Powers after YKK’s death.

(b)   A fee of $250,000 to Dickson Secretarial Services Ltd.

Although claimed in the Agreed Schedule A the matters referred to under “Hong Kong China Consultancy Ltd.” are now agreed so that the total claim in respect of salary and consultancy fees is $501,916.

138.  I am bound to say that I agree with Mr Remedios when he submits that there is absolutely no evidence of fraud in respect of any of these matters.  I therefore consider these claims on the basis of whether they arise from breaches of fiduciary duty by Madam Lo.

139.  The persons employed after YKK’s death are said by the plaintiff to have been unnecessary to its business.  I agree that it is to say at least surprising that this number of persons were employed, one of them at what appears to be a very high salary. However, no adverse motive for these hirings has been attributed to Madam Lo. There is no evidence that she is in any way related or connected to the persons that she hired.  The hirings took place after YKK’s death when there must have been some disruption to the businesses, bearing in mind that YKK had worked in these businesses until his death.

140.  There may well have been mismanagement by Madam Lo in employing these people but I can find no breach of any fiduciary duty in her doing so.  Nor can I say there was any “intermeddling” with the assets or affairs of the Estate.  The claim in respect of employee salaries is dismissed.

141.  With regard to Dickson Secretarial Services it was never entirely clear in evidence exactly what services were provided.  It is tolerably clear that Dickson Secretarial Services were involved in arranging the payment of Great Field Ltd dividends as well as “restructuring the group”.  Mr Smith, SC says that arranging the Great Field dividend was not for the benefit of Asian Powers.  Technically he is correct, but this was very much a family type business where the resources of one company owned by YKK would be utilized to support the other companies within the group.

142.  Although I have some misgivings about this payment to Dickson Secretarial Services, I cannot, on balance, conclude that the payment was authorized by Madam Lo in breach of her fiduciary duties.  Accordingly, this claim is dismissed.

143.  Mr Remedios has advanced on behalf of his client what is in effect a setoff against monies owed by his client to Asian Powers.  He says that a total of HK$2,369,389.16 was paid into Asian Powers’s account by Madam Lo from her share of the dividend paid by Great Field Ltd.  Therefore, says Mr Remedios, the amount of agreed payments claimed by the plaintiff should be reduced to HK$363,607.37. 

144.  On 17 January 2008 Madam Lo had the sum of US$2.2 million remitted to her account with BNP Paribas by Great Field Ltd in payment of her share of dividends.  Mr Remedios has taken me through a number of documents to suggest that part of this dividend eventually ended up in the account of Asian Powers, placed there he says by Madam Lo to help Asian Powers with its cash flow problems.  However, Mr Remedios conceded that whilst there is banking documentation showing transfers of monies by Great Field to Asian Powers, there is no document to show that Madam Lo paid the subject sums into the account of Asian Powers.  Mr Remedios appears to suggest that there is no evidence that Great Field had any monies over and above the dividend monies [$34 million] so the monies paid by Great Field must somehow be Madam Lo’s share of the dividends that were paid to her.  I do not accept these submissions.  I can find no responsible evidence that these monies were credited to Asian Powers by Madam Lo, and any claim in respect of the same is dismissed.

CONCLUSION IN THE ASIAN POWERS ACTION

145.  Issue 9 is resolved as set out above in favour of the plaintiff.  There will be judgment for the plaintiff in the sum of $2,732,995.73.

HCA1610/2010 : THE CEROCK ACTION

146.  As in the Asian Powers Action, Counsel have agreed a list of items where Madam Lo has made payments “outside the object clauses of Cerock”.  This has been designated as “Agreed Schedule B”.

147.  Madam Lo has conceded the sum of $4,200 in relation to payments to Hong Ling Decoration Engineering Company, and $3,060 in relation to Jones La Salle Management Services Ltd such that there will be judgment in total of $7,260 in respect of these two claims.

148.  As to the items that the plaintiff alleges were made for Madam Lo’s own use and benefit, these are payments to employees, and HSBC Mandatory Provident Fund Super Trust payments which are connected to the employees of Cerock.  In short, I can find no evidence of any fraud in respect of these contested payments.  Also and for the reasons expressed in the Asian Powers Action, I can find no breach of fiduciary duty on the part of Madam Lo in respect to her employment of these persons nor in respect of the MPF payments.  Nor do I find that she has “intermeddled” in the Estate.  The plaintiff’s claim in the sum $297,659.49 is dismissed.

149.  Cerock however has further claims.  Issue 8 agreed between the parties, to recap, is whether Cerock employed the defendant as managing director with the salary of HK$40,000 per month or at all, and whether the board resolution dated 29 May 2009 was valid.

150.  The disputed board resolution (E1105) resolved as follows :

“That the company has since 1992 employed Ms Lo Mei Kin Stella as its managing director at HK$40,000 per month with salaries tax thereon payable by the company.”

151.  There was no evidence that Madam Lo had in fact been employed by the plaintiff since 1992, she had paid no salaries tax and there were no entries in any of the company’s books as to her employment with the company.  Madam Lo’s evidence was as follows :

“His Lordship: I am just going to ask you once again. If you don’t understand the question, please say so. The question was this : are you saying that this resolution was passed in 2009 to retrospectively reward you for your efforts on behalf of the company since 1992

A : yes.”

152.  In my view this resolution was passed for an ulterior motive (to wrongfully reward Madam Lo) and is clearly not for the benefit of the plaintiff company.  It was passed in plain breach of Madam Lo’s fiduciary duty to the plaintiff company and for an improper purpose.  It is plainly in my view an invalid resolution.  It is also plain that one of the directors at the material time, Chan Suk Ching had no notice of this meeting to pass the resolution.  In my view too this would have invalidated the resolution.

153.  Mr Remedios contends however that Madam Lo has only received “salary” for an eight-month period amounting to HK$313,000, and that during this time she ran the companies and is entitled to be paid for her services.  In other words, it appears that Madam Lo makes claim on a quantum meruit basis.  The short answer to this is that there is no meritorious quantum meruit claim and that is the end of this matter. 

154.  Therefore, there will be judgment for the plaintiff in this aspect, in the sum of $313,000. 

155.  The remaining claim in the Cerock Action relates to the plaintiff’s occupation of the office premises at Room 802 K. Wah Centre, 191 Java Road, North Point.

156.  It is not disputed that Madam Lo has been in occupation of these premises since the death of YKK.  She received written demands dated 10 May and 19 May 2010 to vacate the premises but failed to do so.

157.  The plaintiff company says Madam Lo unlawfully occupied the premises throughout the period following the death of YKK as no licence was ever granted to her.  Alternatively, any right of occupation depended upon being a director and would have terminated upon her resignation as director on 5 February 2010. Alternatively, any licence she may have had would have been terminable on notice, and the demands made in May 2010 would have served as notice in that regard.

158.  Madam Lo appears to accept that her entitlement to use the premises would have ended in May 2010 except for her Counterclaim in the Main Action (which has been dismissed). 

159.  The plaintiff claims :

(a)   mesne Profits;

(b)   management fees paid by Cerock to Jones Lang for the period April 2010 to January 2011 in the amount of $94,116.47; and

(c)   legal costs paid to Chung & Kwan when demand for management fees was made on behalf of Jones Lang.

160.  A valuation report prepared by Mr Gareth Williams was made available to the court.  No contrary valuation evidence was adduced by Madam Lo, and I accept Mr Williams’s conclusions contained in his report. 

161.  In my view, Madam Lo had a right to occupy the premises whilst she remained a director of Cerock.  Although her directorship terminated on 5 February 2010 I am persuaded that she would still require notice to vacant the premises.  Through abundance of caution I prefer to rely upon the notice dated 19 May 2010 as the date upon which Madam Lo’s occupation of the premise s terminated. Thus the plaintiff is entitled to mesne profits calculated from 19 May 2010.  There will be an order for delivery up of the premises.  I will hear Counsel upon the terms of the appropriate orders to be made.

162.  As to the plaintiff’s claims for management fees paid by Cerock to Jones Lang and legal costs paid to Chung & Kwan, the plaintiff in my view would have to pay management fees in any event.  The asserted legal cost of $420 is in my view de-minimus and the claim in respect of management fees and legal costs is dismissed.

163.  The claim appearing in the Re-Re-Amended Statement of Claim paragraph 36B relating to damages claimed in the sum of $16,790 as a result of dealing with the actions taken by Messrs. Chung & Kwan is also dismissed.  I have heard no evidence nor have been addressed in any detail as to how this sum is arrived at, nor am I satisfied that it has been demonstrated that Madam Lo herself was responsible for the failure to pay the outstanding management fees and repair and maintenance expenses in relation to the K. Wah office.

CONCLUSIONS IN THE CEROCK ACTION

164.  The plaintiff is entitled to judgment as indicated in my reasons above.

ORDERS TO BE MADE

165.  It only remains to thank counsel for the administrator and for Madam Lo who have, in the best traditions of the Bar, worked together and with the court to fully assist the court in its deliberations.

166.  I will now hear counsel as to the appropriate orders to be made in the light of my findings herein.