TANG YING LOI v. TANG YING IP alias TANG YING YIP AND OTHERS

CACV 36/2015

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 36 OF 2015

(ON APPEAL FROM HCA NO. 2487 OF 2009)

________________________

________________________

________________

D E C I S I O N

________________

Hon Cheung JA (giving Decision of the Court) :

1.  The 1^st and 3^rd defendants seek leave to appeal to the Court of Final Appeal against our judgment of 6 November 2015. They contend there are questions of great general or public importance or which otherwise ought to be submitted to the Court of Final Appeal for determination. The questions that are framed are as follows :

‘ A.Where a personal representative has used money from the estate towards the completion of the purchase of a property but:

(1) he could in any event have completed the purchase from his own resources and/or

(2) he repaid the money in full (as always intended) a few months after completion at a time when the capital value of the property was less than the cost of acquisition,

whether the personal representative is accountable to the beneficiaries of the estate for such proportion of the capital value and net rents and profits of the property down to the date of the taking of the account, many years later, which the amount of the estate money used to complete the purchase bears to the total acquisition costs (including stamp duty and solicitors’ costs and disbursements) of the property.

Alternatively

B. Where a personal representative has used money from the estate towards the completion of the purchase of a property, in considering whether and if so to what extent such personal representative is liable to account for profits:

(1) whether the “but for” test for the purpose of establishing a causal connection between the breach of duty and the profits derived from the acquisition and holding of the property is satisfied in every case simply by virtue of the use of money associated with the breach of duty towards the purchase of the property;

(2) whether it is irrelevant that the personal representative had acquired a beneficial interest in the property by entering into a specifically enforceable contract for the sale and purchase of the property and paying the deposit with his own funds;

(3) whether it is irrelevant that the personal representative would still have purchased the property had he not used the money from the estate;

(4) whether it is relevant that the money from the estate was applied towards the acquisition of the property in entering into the agreement for sale and purchase, or applied towards the payment of the balance;

(5) whether it is relevant that the opportunity for purchasing and the decision to purchase the property was made by the personal representative entirely independently from his office and the breach of duty;

(6) whether it is irrelevant that the personal representative could in any event have completed the purchase of the property from his own resources; and

(7) whether in holding that the personal representative is liable to account for 40.4% of the appreciation in capital value and rents and profits of the property during the whole period of more than 12 years, it is irrelevant that the personal representative had repaid the money borrowed from the estate in full within a period of less than 7 months from the date when the personal representative used the money from the estate and that at the time of repayment, the capital value of the property was less than the acquisition cost.’

2.  In our view, these questions are not reasonably arguable as questions of great general or public importance.  The principle of causal connection between the breach of trust and the loss to the trust estate is well-established by the judgments of the Court of Final Appeal.  The concern here is really the application of this principle to the facts of this case. Our decision that the ‘but for’ principle is engaged is fact specific. 

3.  The three principal grounds relied upon by the defendants, namely, the ability of the 1^st defendant to complete the purchase with his own resource, his antecedent acquisition of interest in the property and his eventual repayment in full of the trust money are no more than factual issues to be considered in the application of the principle as there are infinite variations to the theme whether in any given case the causal connection is shown. 

4.  The fact that the trustee has resources of his own cannot be singled out as if it is a specific component which will negate liability because the whole of the circumstances as to why the trustee did not use his own funds in the first place must be looked at.  In any event, the Court is not concerned with hypothetical situations.  The fact is, as found by Chow J at paragraph 66 of his judgment and affirmed by us at paragraph 4.43 of our judgment, that the 1^st defendant chose not to use his resource to acquire the property.

5.  The antecedent acquisition point is again fact specific and we had dealt with it at paragraph 4.26 of our judgment.

6.  Likewise, the issue of repayment which is relevant both to the issue of liability and inquiry as to profit, must be considered in the light of the circumstances. 

7.  The alternative formulation does not advance the matter further.  If anything it only highlights the fact sensitive nature of the analysis.

8.  We are also not satisfied that the ‘or otherwise’ ground is engaged by reference to the so-called outcome of the case.  In any event, this is, generally speaking, a matter for the Court of Final Appeal itself to decide whether leave should be granted on this ground.

9.  Accordingly the application is refused with costs to the plaintiff.