LEE CHI HANG LARRY and WONG YING KIT EDDIE, the executors of the estate of WONG WAI CHUN, deceased AND OTHERS v. WELL DONE GARMENT FACTORY LTD AND ANOTHER

CACV 363/2021
(On appeal from HCA 227/2012,
HCA 464/2013 &
HCA 465/2013 (Consolidated))

[2022] HKCA 1720

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO.363 OF 2021

(ON APPEAL FROM CONSOLIDATED ACTIONS NO

HCA 227/2012, HCA 464/2013 AND HCA 465/2013)

________________________

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO.227 OF 2012

(ON TRANSFER FROM DCCJ NO.3995 OF 2009)

ACTION NO.464 OF 2013

(ON TRANSFER FROM DCCJ NO.928 OF 2011)

ACTION NO.465 OF 2013

(ON TRANSFER FROM DCCJ NO.4775 OF 2011)

________________________

(By Original Action)

(By Counterclaim)

_____________________

______________________________________

R E A S O N S    F O R    J U D G M E N T

______________________________________

Hon Chow JA (giving the Reasons for Judgment of the Court):

INTRODUCTION

1.  On 25 June 2021, Deputy High Court Judge M K Liu gave a judgment (“the Judgment”) in (i) the consolidated action of HCA 227/2012, HCA 464/2013 and HCA 465/2013 (“the Loans Action”), and (ii) HCA 913/2013 (“the Shares Action”), which were tried together.

2.  In respect of the Loans Action, the Judge dismissed:

(1)  the claim of the Executors (“the Executors”) of the estate of the late Wong Wai Chun[1] (“WWC”) against Well Done Garment Factory Limited (“Well Done”) for the recovery of loans in the total sum of HK$2,300,000;

(2)  the claim of Wong Shiu Luen (“WSL”) against Hong Kong Welldone Garment Factory Company Limited (“HK Welldone”) for the recovery of loans in the total sum of HK$1,131,000; and

(3)  the claim of WSL trading as Well Tai Trading Company (“Well Tai”) against Well Done and HK Welldone for the sum of HK$252,404.16 as money due and owing to Well Tai.

3.  The Judge also upheld:

(1)  the counterclaim of Wong Ying Wai (“WYW”) against the Executors for an account and inquiry of the sum of HK$2,569,000 received by WWC as trustee from WYW, and payment of the said sum of HK$2,569,000 or any sum found due upon the taking of the said account and inquiry; and

(2)  the counterclaim of Well Done against WWC’s estate for the repayment of the sum of HK$45,994.46.

4.  In what follows, unless the context indicates otherwise:

(1)  the Executors, WSL and Well Tai will collectively be referred to as “Ps”: and

(2)  WYW, Well Done and HK Welldone will collectively be referred to as “Ds”.

5.  By Amended Notice of Appeal dated 20 April 2022, Ps appealed against the Judgment in relation to the Loans Action.

6.  At the conclusion of the hearing on 2 November 2022, Ps’ appeal was dismissed with costs to Ds, with reasons to be given later, which we now do.

BACKGROUND FACTS

(i)  The parties

7.  The late Wong Chun[2] (“WC”), WWC and WSL were siblings. WC was the father of WYW.

8.  Prior to his death, WC was the largest shareholder and a director of a number of companies, including Well Done and HK Welldone. Well Done, established by WC, was the main operating company of his garment business.

9.  WWC was a minority shareholder and director of Well Done and HK Welldone. She was also an employee of Well Done.

10.  WSL was a minority shareholder of Well Done, and a director of Well Done and HK Welldone.

(ii)  The Shares Action

11.  As at March 1993, Well Done had a total of 3,000 issued shares, held as follows:

(1)  WC - 1,100 shares,

(2)  WWC - 950 shares, and

(3)  WSL - 950 shares.

12.  On 1 December 1996, there was an allotment of 87,000 new shares of Well Done to WC (“the 1996 Allotment”), such that the shareholdings of Well Done became:

(1)  WC - 88,100 shares;

(2)  WWC - 950 shares; and

(3)  WSL - 950 shares.

13.  As at 2001, HK Welldone had a total of 100 shares, held as follows:

(1)  WC - 90 shares; and

(2)  WWC - 10 shares.

14.  In late October/early November 2001, shortly before his death, WC transferred (inter alia) his 88,100 shares in Well Done and 90 shares in HK Welldone to WYW (“the 2001 Transfers”).

15.  The validity of the 1996 Allotment and 2001 Transfers was challenged by WWC and WSL in the Shares Action. Those challenges were rejected by the Judge. It is unnecessary to say anything further about them because there is no appeal against that part of the Judgment relating to the Shares Action.

(iii)  The Loans Action

16.  In the Loans Action:

(1)  The Executors claimed against Well Done for the recovery of loans in the total sum of HK$2.3m which it was alleged arose from the following deposits made by WWC into Well Done’s bank account at Standard Chartered Bank -

(a)  HK$1m on 9 June 2007;

(b)  HK$700,000 on 25 June 2007;

(c)  HK$300,000 on 25 June 2007; and

(d)  HK$300,000 on 20 November 2007.

(2)  WSL claimed against HK Welldone for the recovery of loans in the total sum of HK$1.131m which it was alleged arose from the following deposits made by WSL into HK Welldone’s bank account at Bank of China:

(a)  HK$480,000 on 29 August 2007;

(b)  HK$400,000 on 4 October 2007; and

(c)  HK$251,000 on 12 November 2007.

(3)  Well Tai claimed against Well Done and HK Welldone for the recovery of loans in the total sum of HK$252,404.16 which it was alleged were made over a period of time.

17.  Ds admitted the deposits made by WWC and WSL to Well Done and HK Welldone on the dates mentioned in §16(1) and (2) above, but made no admission as to the alleged payments made by Well Tai referred to in §16(3) above. Ds denied being liable to WWC, WSL and Well Tai in respect of the alleged loans on the following grounds, as summarised by the Judge at §§35 and 36 of the Judgment:

WWC and WSL’s alleged loans

(1)  Prior to WC’s death, WC maintained a bank account at Banco Weng Hang SA in Macau (“the Macau Account”) which had accumulated a substantial amount of cash, and passed the account to WYW. It was an established practice that when Well Done/HK Welldone were in need of money, WYW would utilise the funds in the Macau Account to assist the companies.

(2)  In early 2007, WWC told WYW that Well Done needed HK$4m to pay the land premium for its factory in Zhongshan and certain other expenses. She suggested to WYW that the money taken from the Macau Account should not be paid directly into Well Done’s account as this might give rise to accounting or tax issues, but should be paid through WWC or WSL. WYW did as suggested and withdrew HK$4m from the Macau Account and gave the cash to WWC on or about 6 March 2007.

(3)  In June 2007, WWC / WSL told WYW that there was a shortage of cashflow in Well Done and HK Welldone, and requested WYW to withdraw HK$2m from the Macau Account to ease the cashflow problems. WYW did as requested and withdrew HK$2m from the Macau Account and gave the cash to WWC on or about 12 June 2007.

(4)  The moneys that WSL and WWC paid to Well Done/HK Welldone in fact came from the HK$6m paid by WYW to WWC in March/June 2007. Thus, the alleged loans were owed by the companies to WYW, and not to WWC or WSL.

Well Tai’s alleged loans

(5)  Well Tai was all along trading with funds provided by WC or Well Done, and thus any debt owed to Well Tai should not be regarded as a debt owing to WSL personally, but in fact should be regarded as a debt to WC or Well Done.

18.  In respect of the HK$6m paid by WYW to WWC mentioned in §17(2) and (3) above, Ds further alleged that WWC received the same as trustee or agent either for Well Done/HK Welldone (to use the monies for their purposes), or for WYW (to use them to his order), such that WWC was liable to account to Ds as to how the HK$6m had been used, including any balance remaining, and to repay such balance. Ds counterclaimed against WWC’s estate for an account of the HK$6m received by WWC as trustee or agent, an inquiry as to what balance of the said HK$6m remained in WWC’s estate, and an order requiring WWC’s estate to repay the balance of HK$3.7m (after deducting the alleged loans of HK$2.3m) or any sum found due. On the other hand, Ps denied that WSL or WWC had received HK$6m from WYW, and said that the moneys paid to Well Done and HK Welldone were paid from their own moneys.

19.  In addition, Well Done alleged that WWC had withdrawn the sum of HK$45,994.46, being Well Done’s mandatory provident fund contribution (“the MPF Contribution”) to WWC’s account at HSBC, on 7 April 2008 without the prior knowledge or consent of Well Done, and she also received her long service payment in full (HK$163,068.50) in September 2009 (having left Well Done’s employment in June 2009). The MPF Contribution should have been set off against the amount of the long service payment payable to WWC. Accordingly, Well Done counterclaimed against WWC’s estate for the repayment of the said sum of HK$45,994.46.

(iv)  The Judge’s findings in the Loans Action

20.  In respect of the alleged loans made by WWC, WSL and Well Tai to Well Done and/or HK Welldone, the Judge made the following findings at §148 of the Judgment:

“(1) The money in the Macau Account was a gift from WC to WYW during WC’s lifetime. After the death of WC, the money in the Macau Account was and is WYW’s own money.

(2) In March 2007, upon WWC’s request, WYW withdrew HK$4m cash from the Macau Account and passed the HK$4m cash to WWC. As told by WWC, the sum would be used to pay a land premium concerning Well Done’s Zhongshan factory.

(3) In June 2007, upon WWC’s request, WYW withdrew HK$2m cash from the Macau Account and passed the HK$2m cash to WWC. As told by WWC, the HK$2m would be used by Well Done, and some of which would be used to pay ‘Lai See’ for the purpose of facilitating Well Done’s business in the Mainland.

(4) The HK$2.3m claimed by WWC, and the HK$1.131m claimed by WSL in the Loans Action, in fact are originated from the HK$6m given by WYW to WWC.

(5) The balance of the HK$6m, ie HK$2.569m, has not yet been accounted for by WWC’s estate.

(6) In respect of Well Tai’s Claim, the HK$252,404.16 owed to Well Tai is not a debt owed to WSL, but should be a debt owed to WC or Well Done. WSL himself is not entitled to claim back that sum.”

21.  Accordingly, the Judge dismissed Ps’ claims in the Loans Action (§§157 and 159 of the Judgment).

22.  In respect of Ds’ counterclaim against WWC’s estate for an account and inquiry in respect of the HK$6m received by WWC, the Judge considered that WWC’s estate should not be required to account for the amount of HK$3.431m (HK$2.3m + HK$1.131m) which had already been paid to Well Done/HK Welldone, but should account for the balance in the sum of HK$2.569m. The Judge made the following order in favour of WYW against WWC’s estate:

(1)  an account of the sum of HK$2.569m received by WWC as trustee for WYW, and an inquiry into the manner in which WWC applied the said money; and

(2)  repayment of the said sum of HK$2.569m or any sum found due to WYW after taking into consideration the aforesaid account and inquiry (§157 of the Judgment).

23.  In respect of Well Done’s counterclaim against WWC’s estate for repayment of the sum of HK$45,994.46, the Judge made the following finding at §150 of the Judgment:

“As to the case put forward by Ds that Well Done has overpaid a MPF contribution of HK$45,994.46, WWC has admitted in [13(e)] of WWC’s [witness statement] that full amount of the long service payment had been paid to her by Well Done. There is also documentary evidence showing that WWC had withdrawn HK$45,994.46 from her MPF account on 7/4/2008. As a matter of law, having received the full amount of long service payment, WWC would not be able to get the HK$45,994.46. In my view, in relation to this claim, WWC’s estate is unable to put forward a defence substantiated by evidence. I therefore must allow this claim made by Well Done.”

24.  Accordingly, the Judge ordered WWC’s estate to repay the sum of HK$45,994.46 to Well Done (§160 of the Judgment).

THE PRESENT APPEAL

25.  Ps’ Amended Notice of Appeal consists of 9 paragraphs, which have been grouped into 5 grounds of appeal in the Skeleton Submissions of Mr Tony Ng dated 5 October 2022:

(1)  Ground 1 challenges the Judge’s finding that the HK$2.3m paid by WWC to Well Done originated from the HK$6m paid by WYW to her.

(2)  Ground 2 challenges the Judge’s finding that the HK$1.131m paid by WSL to HK Welldone also originated from the HK$6m paid by WYW to WWC.

(3)  Ground 3 challenges the Judge’s finding at §78 of the Judgment that the business of Well Tai was run by WSL on behalf of WC (and later WYW) or Well Done, and thus the monies (HK$252,404.16) paid to Well Done/HK Welldone came from WC (and later WYW) or Well Done.

(4)  Ground 4 challenges the Judge’s finding that, upon WWC’s request, WYW withdrew HK$6m from the Macau Account and gave it to WWC, and WWC (or her estate) had not accounted for the balance of HK$2.569m.

(5)  Ground 5 challenges the Judge’s finding in respect of Well Done’s counterclaim against WWC’s estate for the repayment of the sum of HK$45,994.46.

APPLICABLE PRINCIPLES

26.  Although Ps contend, at §§1, 5, 6 and 8 of the Amended Notice of Appeal, that the Judge “erred in law” in various aspects, it is apparent from a cursory reading of the Amended Notice of Appeal and Mr Ng’s Skeleton Submissions that the present appeal is largely concerned with challenges to findings of primary fact made by the Judge.

27.  The applicable principles concerning appeals against findings of fact made by a primary judge are well settled: see the judgment of Lam VP (as he then was) in China Gold Finance Ltd v CIL Holdings Ltd, CACV 11/2015, 27 November 2015, at §§11-22 -

(1)  The Court of Appeal can only intervene in a finding of fact by a primary judge where the finding is plainly wrong.

(2)  It is a misuse of the appellate process to place before the Court of Appeal submissions which, in substance, are (or should be) submissions advanced by way of closing submissions at the trial after the judge has heard all the evidence.

(3)  In an appeal, the Court of Appeal focuses on the question whether the primary judge has fallen into palpable errors which could give rise to grounds for intervention by the appellate court. It is not germane that the Court of Appeal may reach a different conclusion from that of the judge.

(4)  It is not helpful for counsel and litigants in person to merely repeat submissions already advanced and considered by the primary judge at the trial. The starting point should be the judgment of the primary judge and the identification of palpable errors (which must be errors of such nature which warrant intervention by the Court of Appeal) in the judgment. The mere assertion that the finding of the judge is against the weight of the evidence or that the judge should have reached another conclusion because of points advanced in the closing submissions below are not errors coming within that category.

(5)  Where a trial judge has reached a conclusion on the primary facts, the kinds of mistake which could engage an appellate court’s power of intervention are: (i) where there was no evidence to support the conclusion, (ii) the conclusion was based on a misunderstanding of the evidence, or (iii) the conclusion was one which no reasonable judge could have reached.

(6)  With the recognition of the rationale for appellate restraint, there is also a greater appreciation of the need to exercise restraint in respect of findings of secondary facts based on inference drawn from findings of primary fact.

28.  Mr Ng has raised a variety of detailed factual points in support of the 5 grounds advanced in support of Ps’ appeal. We shall deal with the more significant points below.

GROUND 1: SOURCE OF THE HK$2.3M PAID BY WWC TO WELL DONE

29.  Ground 1 challenges the Judge’s finding that the HK$2.3m allegedly loaned by WWC to Well Done in fact originated from the HK$6m paid by WYW to WWC in March/June 2007.

30.  One of the matters which the Judge took into account in reaching this finding was the view taken by the Judge that the evidence showed it was unlikely that the HK$2.3m was from WWC’s own funds having regard to the following matters:

“(1) WSL has given evidence that WWC’s monthly salary when she left Well Done in 2009 was HK$15,000 per month. Based upon this, it can reasonably infer that WWC’s salary level was not high throughout her employment, and it is unlikely that she would have a lot of savings to be able to come up with HK$2.3m spare money in 2007.

(2) WWC has only disclosed the bank passbooks of her bank accounts at the Standard Chartered Bank and Nanyang Commercial Bank which cover 2007. Although these accounts usually had significant moneys coming in and out, it cannot be known where was/were the ultimate source(s) of those funds. Further, the maximum amount of funds in these accounts did not appear to exceed HK$2-3m at any given time, which paled in comparison to the amounts in the Macau Account.

(3) On 25/6/2007, there was a cash deposit of HK$700,000 into WWC’s Nanyang Commercial Bank account, which was immediately transferred out. This corresponds with the HK$700,000 she deposited into Well Done on that day by cashier’s order. So one can conclude that the HK$700,000 provided by WWC to Well Done on 25/6/2007 was in fact originated from a cash deposit. As to from where WWC could obtain the cash, there was no explanation in the evidence adduced by Ps.

(4) On the same date, there was another sum, ie HK$300,000, deposited by WWC into Well Done’s account. It was deposited by cash. There was no corresponding entry in either account of WWC. As to from where WWC could obtain the cash, there was again no explanation in the evidence adduced by Ps.” (§91 of the Judgment)

31.  Mr Ng says that the bank passbooks of WWC’s bank accounts at Standard Chartered Bank (“the SCB Account”) and Nanyang Commercial Bank (“the NCB Account”) show that during the period from June to November 2007, WWC had sufficient funds of her own to make the loans totalling HK$2.3m to Well Done. In particular, he points to the fact that the SCB Account had a balance of over HK$1m even before WYW’s alleged withdrawal of HK$4m from the Macau Account on 6 March 2007, and the NCB Account also had a balance of over HK$1.5m on 28 February 2007. Thus, Mr Ng argues, the Judge’s finding concerning “the [in]sufficiency of the balances in the bank accounts is clearly contradicted by the bank passbooks disclosed by WWC”.

32.  We do not accept this argument. The Judge did not find that WWC’s 2 bank accounts did not have sufficient funds to enable her to make payments in the total sum of HK$2.3m to Well Done between June and November 2007. The issue that the Judge determined was rather the source of the funds which enabled the payments to be made. As correctly observed by the Judge, the bank passbooks produced by WWC could not show the ultimate source of the funds even though the 2 accounts usually had significant sums coming in and out. We do not consider that the Judge’s view is in any way contradicted by the bank passbooks produced by WWC.

33.  Mr Ng next argues that the Judge failed to consider that the payments by WWC were made on four occasions and not in one go, and thus there was no need for WWC’s accounts to show a balance of HK$2-3m at any particular point in time in order to prove that WWC had the financial means to make the alleged loans to Well Done. This argument goes nowhere. The Judge was plainly aware of the fact that the HK$2.3m was not paid by WWC in one go (see §34(1) of the Judgment). He did not find against P because WWC’s accounts did not have a total balance of HK$2-3m at any particular point in time. The Judge was making a different point at §91(2) of the Judgment, namely, that the maximum amount of funds in the 2 accounts did not appear to exceed HK$2-3m at any given time, which paled in comparison to the monies in the Macau Account.

34.  Mr Ng next makes the point that Ds had, over the years, repeatedly affirmed in documents, including audited reports, that the amount of HK$2.3m was owed by Well Done to WWC. This point does not assist Ps in the present appeal. The Judge was aware of the potential relevance of the accounting documents. He specifically raised this point with the parties at the trial[3], and received submissions from counsel in closing[4]. The weight (if any) which might be given to the documents was a matter for the Judge.

35.  Other subsidiary points raised by Mr Ng, namely, (i) Ds never suggested that WWC had no financial means to come up with HK$2.3m, (ii) Ds had admitted in their pleadings in the Shares Action that WWC had provided “finance”[5] to the companies in the past, and (iii) Wong Yee Ching (“Madam Wong”)[6] did not refer to the fact that WWC had taken HK$6m from WYW in the lists of expenses that she used to prepare each month for moneys taken from the Macau Account, are not matters of a kind which would entitle this Court to intervene in the Judge’s finding of primary fact that the HK$2.3m paid by WWC to Well Done was sourced from the HK$6m paid by WYW to WWC. We also agree with the submission of Mr Keith Lam[7] that Mr Ng’s argument about the absence of any reference to the HK$6m in the lists of expenses prepared by Madam Wong has no merits, because (i) Madam Wong was never asked whether the lists that she had prepared referred to the HK$6m cash paid by WYW to WWC, and (ii) WWC’s instruction to Madam Wong was to keep a list of the WYW’s daily expenses paid out of money taken from the Macau Account and passed to WWC to keep, save that in respect of a specific sum of HK$500,000 paid by WSL to HK Welldone on 29 August 2007, WWC told Madam Wong that this amount came from the money that she held for WYW and instructed her to include it in the monthly list of expenses prepared by her (see §§129 and 131 of the Judgment).

GROUND 2: SOURCE OF THE HK$1.131M PAID BY WSL TO HK WELLDONE

36.  This ground challenges the Judge’s finding that the HK$1.131m allegedly loaned by WSL to Well Done also originated from the HK$6m paid by WYW to WWC in March/June 2007.

37.  In support of this ground of appeal, Mr Ng argues that there is no evidence that WWC has given any of the HK$6m to WSL, and Ds have never suggested that any sums deposited into WSL’s “1^st BOCHK Account” (from which he made the alleged loans totalling HK$1.131m to HK Welldone) originated from the HK$6m. This argument has no merits, for the following reasons:

(1)  Ds were not privy to the dealings between WWC and WSL. It is hardly surprising that Ds were unable to adduce evidence to prove that WWC paid any part of the HK$6m to WSL.

(2)  On the other hand, WYW evidence[8] was that -

(a)  In early 2007, WWC told him on several occasions at Well Done’s office in Kwun Tong that Well Done needed around HK$4m to pay the land premium and other expenses in relation to Well Done’s factory in Zhongshan City, and WSL was present on some of the occasions. WWC told him to withdraw money from the Macau Account and give the money to her, and she would then arrange for the money to be paid through WWC/WSL into Well Done’s account. As a result, WYW withdrew HK$4m from the Macau Account on 6 March 2007 and handed over the money to WWC at her residence.

(b)  In about June 2007, WWC told WYW that there was shortage of cashflow in Well Done and HK Welldone’s business, and asked him to withdraw HK$2m from the Macau Account and pay the money to her. On or about 12 June 2007, WYW withdrew HK$2m from the Macau Account and handed the money over to WWC at her residence.

(3)  Further, Madam Wong gave evidence that -

(a)  WWC and WSL had asked WYW to come up with funds to pay the land premium for Well Done’s factory in the Mainland.

(b)  WWC had told her that the sum of HK$500,000 transferred by WSL to HK Welldone on 29 August 2007 came from the money originated from the Macau Account that she held for WYW, and asked her to include this amount in the monthly list of expenses to be prepared by her[9]. This sum of HK$500,000 became the alleged loan of HK$480,000 that WSL paid to HK Welldone on 29 August 2007 (after giving credit for a small repayment of HK$20,000).

(4)  WYW also said that the HK$1.131m paid by WSL to HK Welldone was paid out of the HK$6m that he had paid to WWC, and HK Welldone never borrowed HK$1.131m or any part thereof from WSL[10].

In our view, the Judge was entitled to accept the evidence of WYW and Madam Wong, and came to the conclusion that the sum of HK$1.131m paid by WSL to HK Welldone in fact originated from the HK$6m paid by WYW to WWC.

38.  Mr Ng next relies on the fact that the balances in the 1^st BOCHK Account during the relevant period clearly show that WSL had sufficient funds to provide the loans to HK Welldone. As mentioned above, the issue for determination by the Judge was the source of the funds which enabled WSL to make the payments totalling HK$1.131m to HK Welldone between August and November 2007. The fact that WSL’s bank account had sufficient funds to make the payments was beside the point. At §§72 to 73 of the Judgment, the Judge stated as follows:

“[72] In respect of the HK$1.131m claimed by WSL, the money came from an account with the Bank of China (Hong Kong) held by WSL (‘the 1^st BOCHK Account’). There was not a lot of spare money in the 1^st BOCHK Account in 2007, as it was invariably the case that money would be deposited and then immediately withdrawn. Otherwise, the balance in that account was usually about HK$10,000.

[73] In my view, this suggests that the HK$1.131m from the 1^st BOCHK Account in fact was from another ultimate source. According to WSL, the 1^st BOCHK Account was Well Tai’s account and he had another personal account with the same bank (‘the 2^nd BOCHK Account’), and that the money in the 2^nd BOCHK Account was even less. When asked how much money he had in the 2^nd BOCHK Account, he first said HK$100,000 to HK$200,000, and later he said sometimes more than HK$500,000, sometimes less. Even if there is any truth in this answer, it is clear that WSL would not have enough money of his own in the 1^st BOCHK Account or the 2^nd BOCHK Account to lend HK$1.131m to HK Welldone.”

We consider that the Judge was entitled to come to these views on the evidence before him.

39.  At §23(v) of Mr Ng’s Skeleton Submissions, he raises the point that the land premium for Well Done’s factory premises in the Mainland had already been settled by the time that Mr Fok[11] wrote his letter dated 2 June 2007 asking for a “reward” for his efforts in reducing the amount of the premium payable by Well Done, and argues that this fact shows there was no need to arrange for money to be deposited into the company’s account though WWC or WSL in June to November 2007. On behalf of Ds, Mr Lam objects to this point being taken on the ground that it is a new point which was never run at the trial, and there was no cross-examination of Ds’ witnesses on this matter. Mr Ng has not given any response to Mr Lam’s objection. We agree with Mr Lam that Ps are not entitled to rely on this new point in the present appeal. In any event, we accept Mr Lam’s submission, at §31 of his Skeleton Submissions, that there was evidence at the trial to the effect that the process relating to the payment of the land premium was not completed until after Madam Wong left the employment of Well Done at the end of October 2007. Such evidence would be consistent with the timing of the payments by WWC and WSL to Well Done/HK Welldone up to November 2007.

40.  At §23(vi) of Mr Ng’s Skeleton Submissions, he argues that it was “WYW’s changed version in his oral testimony that the HK$2m cash would be taken into China directly”, and thus there would not be any need to arrange money to be deposited into the company’s account through WWC or WSL (as stated by WYW at §16 of his witness statement dated 4 December 2014). However, as correctly pointed out by Mr Lam, what WYW said in his oral evidence was that when WWC asked him for HK$2m in June 2007, there was no specific mention as to whether the money would be paid into Well Done (as that was not clear at the time), and he just gave the money to WWC. As to whether the money would go through Well Done, that was something to be handled by WWC/WSL[12]. While this part of WYW’s evidence may not be entirely consistent with what he said at §16 of his witness statement, this discrepancy was taken into account by the Judge in his assessment of WYW’s testimony[13].

41.  Mr Ng next makes the point, at §23(vii) of his Skeleton Submissions, that according to WYW’s oral testimony, WSL was not present when WWC asked him for HK$2m to pay “Lai See”, and there is no evidence that WSL ever knew about this conversation/request between WWC and WYW in June 2007. We do not see that these matters would impact upon the Judge’s finding that the moneys paid by WSL to HK Welldone was sourced from the HK$6m paid by WYW to WWC.

42.  Mr Ng also argues that (i) Ds had repeatedly affirmed in documents, including audited reports, that HK Welldone owed HK$1.131m to WSL, (ii) Ds never suggested that WSL did not have the financial means to make the loans totalling HK$1.131m to HK Welldone, (iii) Ds had admitted that WSL had financially supported the companies[14], and (iv) the Judge failed to consider or take into account the fact that the loans were made on several occasions and not in one go. We have already dealt with similar arguments under Ground 1 above, and do not propose to repeat our views in so far as these arguments are advanced under Ground 2.

GROUND 3: WELL TAI’S CLAIM AGAINST WELL DONE/HK WELLDONE

43.  This ground challenges the Judge’s finding that the business of Well Tai was run by WSL on behalf of WC (and later WYW) or Well Done, and thus the monies (HK$252,404.16) paid to Well Done/HK Welldone came from WC (and later WYW) or Well Done.

44.  In support of this ground of appeal, Mr Ng raises a pleading point that Ds have never pleaded and/or suggested that Well Tai was run on behalf of WC and/or WYW. This pleading point has no substance. The critical issue for determination by the Judge was whether the moneys paid by Well Tai to Well Done/HK Welldone were in fact moneys belonging to WC or Well Done, and thus not due to WSL. At §§3(1)(c) and 6 of the Consolidated Defence and Counterclaim of Ds filed in the Loans Action, the following was pleaded:

(1)  §3(1)(c) -

“Well Tai, albeit registered under the name of [WSL] in 1993 under the request of and using the funds of the late [WC] or Well Done. Well Tai is an affiliated company of Well Done and HK Welldone.”

(2)  §6 -

“… Even if, which is not admitted, Well Done and HK Welldone owe Well Tai a sum of HK$252,404.16, Well Done and HK Welldone repeat paragraph 3(1)(c) above and say that any money purportedly due and owing to Well Tai in fact represents money due and owing to the late [WC] or Well Done.

45.  We consider that Ds have sufficiently pleaded the case that Well Tai, although registered in the name of WSL, was in fact WC’s company and was run using funds provided by WC or Well Done. The Judge’s finding at §78 of the Judgment, namely, “… the business of Well Tai was run by WSL on behalf of WC (and later WYW) or Well Done, and the funds came from either of them”, was not outside the scope of Ds’ pleading.

46.  Mr Ng next argues that Ds did not adduce any evidence, either in WYW’s witness statement or oral testimony at the trial, to dispute Well Tai’s claim, and there is no basis and/or it is plainly wrong for the Judge to come to the said finding at §78 of the Judgment.

47.  At of the §77 Judgment, the Judge stated as follows:

“Under cross-examination, WSL has given the following evidence:

(1) Well Tai’s role in the garment manufacturing business is one of middleman between Well Done and the garment factory in Mainland China, in that Well Done would engage Well Tai, and Well Tai would in turn place orders with the garment factory. This was done because in order to comply with certain requirements relating to tax or to reduce tax liability, there needed to be a separate entity.

(2) At first, WSL said that as a middleman, Well Tai would only charge (from Well Done) enough to cover its expenses (including what it would pay to the garment factory, its transport expenses, and other administrative). Later, he tried to change his answer and said that there would be a little profit. However, WSL was unable to explain what was the little profit and how this was calculated. As per the accounts of Well Tai, the profit made each year in fact was negligible – about just HK$10,000 when the turnover amounted to HK$9m or HK$10m.

(3) In his oral evidence, WSL said that when the business of Well Tai was first run, it was WC who asked WSL to start running that business. This contradicts WSL’s pleading and evidence in his witness statement.

(4) In my view, it is clear that WSL did not make the decisions for Well Tai. He is unable to explain why or how the profit margin was decided or calculated, and repeatedly said that it was done by the accounts people. This is unbelievable if he was the real boss of the business. Despite claiming that this is a separate business, the accounting matters were handled by Madam Wong. This clearly suggests that the business decisions were made by WC during his lifetime, and thereafter by WYW.”

48.  In our view, it was open to the Judge to make the finding at §78 of the Judgment based on the above evidence.

49.  Lastly, Mr Ng relies on the fact that Well Tai was registered in the name of WSL, and the audited accounts of Well Done stated that Well Tai was operated by WSL. These facts, while relevant, cannot be regarded as conclusive evidence of who was the real owner of Well Tai.

GROUND 4: WYW’S PAYMENT OF HK$6M TO WWC

50.  This ground challenges the Judge’s finding that, upon WWC’s request, WYW withdrew HK$6m from the Macau Account and gave it to WWC, and WWC (or her estate) had not accounted for the sum of HK$2.569m.

51.  Mr Ng argues that in coming to the above finding, the Judge failed to “properly consider or take into account the evidence of the case as stated in para.6(a) of the Amended Notice of Appeal”[15]. The following 6 matters are listed in §6(a) of the Amended Notice of Appeal:

“… i) the documents of the companies, some of which were signed by WYW, have all along showed and contradicted WYW’s case that the money was given to WWC and then deposited back to the companies; ii) no documents were produced by WYW at all for the alleged payments of land premium through the Hong Kong companies and then the Chinese factory; iii) WYW has never produced his Macau Account in order to prove his alleged adopted practice… WYW had never asked/demanded WWC to account for the HK$6,000,000.00 until the commencement of the action; iv) the alleged IRD investigation was against the companies as well as WSL in 2005, which made it all the more unlikely that WSL would agree or intend to inject cash into Well Done through himself as alleged by WYW; v) WYW also advanced money in the total sum of HK$1,900,000 to HK Welldone during the period from August 2007 to December 2009, which contradicts his case of being advised by WWC not to advance money through himself; and vi) the money was alleged to be paid in cash to WWC in March 2007 when the deposits were only needed to be made in June 2007.”

52.  In substance, Mr Ng is inviting the Court of Appeal to retry the case as the primary judge. This is a misuse of the appellate procedure. An assertion that the trial judge failed to properly consider or take into account some matters of evidence or aspects of the case in reaching his conclusion(s) without showing that the judge made palpable error(s) in his judgment is not a valid ground of appeal.

53.  In any event, we agree with the submissions of Mr Lam that none of the points raised in §6(a) of the Amended Notice of Appeal has substance:

(1)  In respect of point (i), the critical issue for determination by the Judge was how the specific sums of HK$4m and HK$2m withdrawn by WYW from the Macau Account were used. The Judge accepted WYW’s evidence that he paid the two sums to WWC in cash in March/June 2007. Ps have failed to identify the precise documents relied upon, or demonstrate how such documents contradicted WYW’s evidence which was accepted by the Judge.

(2)  Points (ii) and (v) relate to matters which were considered by the Judge and resolved in Ds’ favour (see §§117 and 120 of the Judgment).

(3)  In respect of point (iii), the “adopted practice” referred to by Ds at §3(7) of the Consolidated Defence and Counterclaim in the Loans Action (namely, that money accumulated in the Macau Account were used to meet the cashflow requirements of, inter alia, Well Done/HK Welldone as and when needed) only formed the background to Ds’ case concerning the payment of HK$4m and HK$2m by WYW to WWC in March and June 2007. The relevant bank statements of the Macau Account[16] showed that WYW withdrew HK$4m on 6 March 2007 and HK$2m on 12 June 2007 from that account (see §118 of the Judgment). The critical issue which required determination by the Judge was whether WYW then paid the monies to WWC. The Judge accepted WYW’s evidence that he did. This is a finding which was open to the Judge to make. As for the fact that WYW had not demanded WWC to account for the HK$6m prior to the commencement of the actions, WYW explained in his evidence that he had not previously questioned WWC’s use of the money and only raised it when WWC/WSL claimed against Well Done/HK Welldone for the recovery of the alleged loans of HK$2.3m and HK$1.131m[17]. It was a matter for the Judge to decide what, if any, weight should be given to this matter in the overall assessment of WYW’s evidence.

(4)  In respect of point (iv), the Judge accepted WYW’s evidence that he was told by WWC that he should not pay money directly to Well Done, but should pay the money to WWC/WSL for them to put money into Well Done, because the Inland Revenue Department (“IRD”) had previously investigated Well Done and might question the source of funds if they were provided by WYW who was too young to have substantial funds, while it would be easier for WWC/WSL to explain their source of funds (see §§112(3) and 119 of the Judgment). The fact that WSL had previously also been investigated by IRD does not contradict WYW’s evidence as to what he was told by WWC, or show that WYW’s evidence was untrue.

(5)  In respect of point (vi), the Judge found that in early 2007, there was discussion concerning the payment of land premium in respect of Well Done’s factory in Zhongshan (see §113 of the Judgment), and at an early stage (prior to Mr Fok’s letter of 2 June 2007), it was contemplated that a large premium was required to be paid (totalling some RMB 3.15m). These would be consistent with the timing of WWC’s request to WYW for HK$4m in March 2007, although the land premium might not have been required to be paid immediately at that time.

54.  Mr Ng next argues that had various matters referred to in §39 of his Skeleton Submissions “been properly considered, WYW’s alleged incidents concerning the payments of land premium and ‘Lai See’ would definitely not have been believed”. The matters that Mr Ng relies on are as follows:

“i) No documents/records evidencing the alleged payment of land premium for over HK$1 million have ever been produced by WYW; ii) No Bank statements of the Macau Account have been produced to prove the alleged ‘adopted practice’; iii) Despite the alleged warning from WWC that deposits made to the companies by WYW would raise the IRD’s suspicion, WYW still made two deposits of HK$500,000 and HK$850,000 to HK Welldone on 29 August 2007 and 22 October 2007 respectively… iv) Cash from the Macau Account was withdrawn and paid to WWC in March 2007 when the deposits were only needed to be made in June 2007; v) WYW had never demanded WWC to account for the money before the commencement of the actions.”

55.  We have already dealt with these matters in §53 above. In any event, Mr Ng’s argument goes only to the assessment of the evidence by the Judge. He has failed to demonstrate any palpable error(s) in any material findings by the Judge which would warrant intervention by the Court of Appeal.

56.  Mr Ng also argues that the Judge failed to properly resolve the material discrepancies between the evidence of WYW and Madam Wong referred to in §134 of the Judgment, namely, (1) whether Madam Wong was present and overheard the discussion among WWC, WSL and WYW as to whether to pay land premium; (2) whether WYW had asked Madam Wong whether the land premium should be paid; and (3) whether WYW had asked Madam Wong about the source of funds in the Macau Account. The Judge considered that, given the long lapse of time, WYW and Madam Wong’s different recollections of the details of some events were understandable, and took the view that the aforesaid discrepancies were “minor” ones which did not affect the credibility of both WYW and Madam Wong. We consider that it was open to the Judge to take this view.

57.  Lastly, Mr Ng argues that the Judge’s finding that WWC had not yet accounted for the balance of HK$6m is not supported by evidence when it was WYW’s oral testimony that he had “no doubt” that the said sum had been used and had not asked WWC to account for the said sum. This argument has no merits. A trustee is generally under a duty to properly account for any part of the trust funds that comes into his hands, and a beneficiary is entitled to an account from the trustee as of right. The Judge found that WWC had received HK$6m from WYW and, out of that sum, HK$3.431m (HK$2.3m + HK$1.131m) had been paid to Well Done/HK Welldone, leaving the balance of HK$2.569m held by WWC as trustee which WWC or her estate had never unaccounted for. While it is correct that in his evidence, WYW said that he “一定會知道佢係用咗啲錢去封利是”, “都相信係做咗喇”, and “即係深信就係黃慧珍已經用咗嗰四百萬, 關於嗰啲補地價㗎喇”[18], the fact that WYW understood or believed that the money had been used by WWC to pay land premium or “Lai See” or otherwise for the benefit of Well Done/HK Welldone is not a good reason to refuse to order WWC to give an account. Neither is it an excuse for WWC (or her estate) to refuse to give an account merely because WYW had not previously asked for an account prior to the commencement of the actions.

GROUND 5: WELL DONE’S COUNTERCLAIM AGAINST WWC’S ESTATE

58.  This ground concerns the Judge’s conclusion that WWC’s estate was liable to repay the sum of HK$45,994.46, being overpayment of the long service payment received by WWC from Well Done in September 2009. The evidence before the Judge showed that:

(1)  On 7 April 2008, WWC withdrew the MPF Contribution of HK$45,994.46 paid by Well Done into WWC’s account at HSBC[19].

(2)  When her employment with Well Done came to an end in June 2009, she received the full amount of the long service payment (HK$163,068.50) in September 2009 from Well Done without any deduction of the MPF Contribution that she had received in April 2008.

Under s 31Y of the Employment Ordinance (Cap 57), the amount of long service payment payable by Well Done to WWC should be reduced by the amount of the MPF paid to WWC. Accordingly, there was an overpayment to WWC to the extent of HK$45,994.46. The Judge considered that WWC’s estate was unable to put forward any defence to this claim of Well Done.

59.  Mr Ng advances two principal arguments to challenge this conclusion of the Judge. First, he argues that Ds’ case was that WWC, without any prior consent or knowledge of Well Done, misappropriated the sum of HK$45,994.46 on 7 April 2008, but Ds have failed to produce any authority or basis as to why WWC could not get the MPF Contribution when she reached the age of 65. Further, Ds have failed to produce any evidence in support of the allegation that WWC misappropriated the said sum without Well Done’s prior consent or knowledge.

60.  We do not accept this argument. At §13(c) of Ds’ Consolidated Defence and Counterclaim in the Loans Action dated 12 October 2017, the following was pleaded:

“In breach of her aforesaid fiduciary duties and duties towards Well Done and HK Welldone at the material times, the late [WWC]:-

(c) had on or about 7 April 2008, without the prior consent or knowledge of Well Done, misappropriated a sum of HK$45,994.46 being Well Done’s contribution to Mandatory Provident Fund maintained at The Hongkong and Shanghai Banking Corporation, which had not been set off against the long service payment eventually paid by Welldone to the late [WWC] upon the cessation of her employment. In other words, the late [WWC] had received full payment of her long service payment without deducting the said HK$45,994.46.” [underlining added]

61.  Further, at §16(b) of Ds’ Consolidated Defence and Counterclaim, it was pleaded that:

“By reason of the above, Well Done, HK Welldone and/or [WYW] have suffered loss and damages, particulars of which are as follows:

                                                                      Particulars

(d)  The HK$45,994.46 misappropriated by the late [WWC] as pleaded in paragraph 13(c) above …”

62.  Thus, although there was an allegation of “misappropriation” of the sum of HK$45,994.46 by WWC, it was clear from the pleadings that Ds’ complaint was that WWC received her long service payment in full without deducting the MPF Contribution that she had received. In other words, Well Done had made an overpayment of HK$45,994.46 to WWC which it was seeking to recover from WWC’s estate. While we consider that the case against WWC/WWC’s estate could have been better pleaded, we do not believe that the Executors were in any way misled as regards the substance of the case which they had to meet.

63.  In Ps’ Reply to Consolidated Defence and Counterclaim dated 6 November 2017, the Executors’ answer to the complaint was a mere general denial, as follows:

“8. As to paragraph 13, it is denied that the late [WWC] was in breach of her fiduciary duties and paragraph 7 above is repeated.

(c) Paragraph 13(c) is entirely denied and the Defendant is put to strict proof thereof.

9. Paragraphs 14, 15 and 16 are denied and paragraphs 3 to 8 above are repeated.”

64.  In WWC’s witness statement dated 4 October 2013, at §13(e), she alleged that Well Done voluntarily paid her the full amount of the long service payment without deducting the MPF Contribution. The Judge took the view, for the reasons explained at §82 of the Judgment, that save and except concessions made by WWC in her witness statement, no weight should be attached to that witness statement. The Judge was, we consider, entitled to take that view in the circumstances of the present case.

65.  We consider that the Judge correctly focused on the overpayment of the long service payment to WWC without deduction of the MPF Contribution, and came to the view that WWC’s estate was unable to put forward any defence to the claim.

66.  Second, Mr Ng argues that while s 31Y of the Employment Ordinance allows an employer the right to set off the amount of the mandatory provident fund received by an employee from the long service payment payable to the employee, it does not forbid the employee from getting the mandatory provident fund contribution paid by the employer if the employer chooses not to exercise the right of set off. He further argues that there was clear oral evidence from WYW that the full amount of the long service payment was voluntarily given by Well Done to WWC.

67.  We likewise reject this argument. Leaving aside the fact that the defence of “voluntary” payment was not raised in Ps’ pleadings, in view of the fact that WWC’s evidence on this matter was not accepted by the Judge, there was no evidence to support this defence. On the other hand, WYW’s evidence, which the Judge accepted, was that WWC, without any authorization or approval from Well Done, withdrew from her MPF account the amount of HK$45,994.46[20]. The oral evidence of WYW that Mr Ng now relies on[21] does not show that Well Done voluntarily agreed to pay WWC the full amount of the long service payment with knowledge that she had previously obtained the MPF Contribution.

68.  In conclusion, Ps’ grounds of appeal are all rejected.

DISPOSITION

69.  For the above reasons, Ps’ appeal is dismissed with costs to Ds, to be taxed if not agreed.