OFFICIAL ADMINISTRATOR v. THE LUK HOI TONG CO LTD AND ANOTHER

HCA 1348/2000

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 1348 OF 2000

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AND

HCAP 4/2000

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

PROBATE ACTION NO. 4 OF 2000

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BETWEEN

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(Heard Together)

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J U D G M E N T

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Introduction

1.  These two actions were tried by me together.  HCA 1348/2000, which I will refer to as “the High Court action” in this judgment, was commenced on 3 February 2000.  HCAP 4/2000, which I will refer to as “the probate action”, was commenced less than 1 month later on 1 March 2000.

2.  This is a very unfortunate case.  The original Plaintiff in the High Court action, Mr Lee Chaio Sing (“C S Lee”) was 90 years old at the time of trial, suffering from illnesses which prevented him from attending the trial personally.  He was resident in California in the States, and his evidence was taken via video-link.  Several weeks after the trial ended, very sadly he passed away.

3.  His antagonist in these proceedings was Mrs Lee Wong Siu Tsing, his sister-in-law, whom I will simply refer to as “Madam Wong” in this judgment.  Madam Wong is over 89 years old.

4.  Two other parties are involved.  One is Mr Harvey Sin Wai Lee (“Harvey Lee”), who is the son of Madam Wong and the nephew of C S Lee.  He is the Plaintiff in the probate action.  The other party is The Luk Hoi Tong Company Limited (“Luk Hoi Tong”).  It is a rather well known private limited company in Hong Kong.  In short, the individual parties are fighting for some ordinary and promoter’s shares in the company that were originally registered in the name of a deceased person but are now registered in the name of Madam Wong.

5.  The deceased person involved in these proceedings is Mr Lee Sing Hon (“the deceased”).  He was the natural uncle of C S Lee and his late elder brother, Mr Lee Yat Sun (“Yat Sun”).  Yat Sun was the late husband of Madam Wong and father of Harvey Lee.

6.  C S Lee was the administrator of the estate of the deceased pursuant to letters of administration granted to him in 1998.  However, C S Lee did not obtain the grant by virtue of his status as a nephew of the deceased.  Rather he obtained it on the basis that he was the adopted son of the deceased.

7.  The deceased was the registered owner of 85 ordinary shares and two promoter’s class B shares in the issued capital of Luk Hoi Tong.  He passed away in 1940.  The shares remained registered in his name after his death until 1985 when they were purportedly transferred to Madam Wong, who has since become the registered owner of the shares.

8.  In the High Court action, C S Lee as administrator of the estate of the deceased sought to challenge the 1985 transfer of the shares.  It is the estate’s case that the transfer is absolutely null and void for the simple reason that the deceased having died intestate in Hong Kong in 1940, and there having been no grant of representation of his estate until 1998 (in favour of C S Lee), there was simply no one who could represent the estate to transfer the shares to Madam Wong in 1985.  Indeed C S Lee said that Madam Wong wrongfully placed the chop of the deceased on the necessary transfer documents to effect the transfer fraudulently.  On behalf of the estate, he claimed relief against both Madam Wong as well as Luk Hoi Tong, which on the strength of the transfer documents registered Madam Wong as the new shareholder of the shares.

9.  In gist, Madam Wong’s defence is that she is and was at all material times the beneficial owner of the shares, they having been given to her and her late husband as a gift in 1960 by the widow of the deceased, Madam Chow Fung Yin (“Madam Chow”), shortly before her death.  In essence, she says that as such donee, she was entitled to have the shares registered in her sole name (after the death of Yat Sun in 1982), and in any event as the sole beneficial owner of the shares she is quite entitled to resist the claim by the estate for the return of the shares.  It is an essential part of Madam Wong’s defence in the High Court action that the widow (Madam Chow) had the necessary right and interest in the shares to give them to her and her late husband in 1960 shortly before her death.

10.  The probate action was commenced within a very short time after the High Court action by C S Lee on behalf of the estate against Madam Wong.  The probate action was commenced by Harvey Lee, the son of Madam Wong, against C S Lee.  First, it seeks the revocation of the grant of letters of administration of the estate in favour of C S Lee.  It is Harvey Lee’s case that C S Lee was not the adopted son, but merely a nephew, of the deceased.  The grant of letters of administration was obtained by C S Lee by means of a false and indeed fraudulent representation about his status.  It should be revoked on that ground alone.  Second, the action seeks a declaration that C S Lee was not an adopted son of the deceased.  Third, Harvey Lee asks for a grant of representation in his favour after revocation.  

11.  Having listened carefully to the evidence and considered the case in some detail, it seems plain to me that the probate action was commenced by Harvey Lee as a means to counter the claim made by C S Lee on behalf of the estate against his mother for the return of the shares.

Matters of procedure

12.  Following the unfortunate death of C S Lee after trial, I have given directions for the appointment of the Official Administrator to represent the estate of the deceased in the two actions, such appointment being limited to the taking of judgment, so as to overcome any possible procedural difficulties that may have arisen or might otherwise arise in terms of continuation of the two actions and the handing down of judgment.  As the estate of C S Lee is obviously interested in the outcome of the probate action (which directly challenges C S Lee’s alleged status as the adopted son of the deceased – a matter which affects not only administration but also succession), I have also ordered the joinder of C S Lee’s estate – also represented by the Official Administrator – as a 2^nd defendant in the probate action.  Likewise, the Official Administrator’s appointment is limited to the taking of judgment only.  The titles of the two actions have been amended accordingly.

Two main issues

13.  Two distinct, though inter-related, issues are involved in these two actions.  First, the validity of the alleged gift of the shares made by Madam Chow, the widow, to Madam Wong (and her late husband) in 1960.  That is the subject matter of the High Court action.  Second, the alleged adoption of C S Lee by the deceased (and his first wife – Madam Chan Yeuk Lan (“Madam Chan”) – who passed away in 1930 or 1931, after which the deceased remarried Madam Chow in the same year).  This is the issue raised in the probate action.  Although the pleadings do not say so in terms, it was C S Lee’s case at trial that the adoption took place in his home village, namely Wing On village in Toishan on the Mainland, in 1928.

14.  There are of course many other related and subsidiary issues.  But those two are the main issues.  They will be dealt with in some detail below.  Indeed it will be much more convenient to deal with the adoption issue first, before dealing with the issue of gift.  But before I do so, it will be necessary to give a brief account of the history of the matter, in order to better understand the two issues and the factual and legal matters involved.

Facts, evidence and disputes

15.  The deceased’s father was Lee Sing Yan (李聖恩).  The deceased was also known as Lee Do Jim (李道沾).  His elder brother was Lee Do Kok (李道覺) who was the natural father of Yat Sun and C S Lee.  The two brothers had an elder brother called Lee Do Chau (李道秋), who had apparently been adopted out of the family into a related family as son and heir.  According to the genealogies disclosed in these proceedings (the authenticity of which I have no doubt about), the three brothers had another brother by the name of Lee Yiu Chi (李耀池) – however, nothing is known about him apart from the entries in the genealogies, which merely mentioned that he was the fourth son of Lee Sing Yan.  There was no indication that he was married or had any descendants.

16.  As mentioned, Lee Do Kok had two sons, Yat Sun and C S Lee.  But his younger brother – the deceased and his (1^st) wife Madam Chan, had no children.  Whereas the deceased was a Wing On villager, Madam Chan came from a family in Hong Kong which formed Luk Hoi Tong in Hong Kong as well as some other companies in the Mainland including Shanghai.  The deceased worked in Luk Hoi Tong and was a minority shareholder.  Madam Chan also held some shares in Luk Hoi Tong.

17.  The couple had no children of their own and in the 1920s, they apparently “adopted” a baby or a small boy by the name of Lee Hang Wing (李杏榮) (“Hang Wing”) – who was according to the evidence, “picked up from the street” or “bought” from some outsider, and was brought up by the deceased and Madam Chan (and later Madam Chow) as their son.  Indeed in the genealogies, Hang Wing was simply recorded as the son of the deceased and Madam Chan.

18.  In brief, C S Lee’s case was that he had known the deceased and Madam Chan since childhood, and the couple were very fond of him.  When he was 13 (he having been born in 1915), he went from Toishan to Hong Kong to stay with the couple.  His original intention was to find work in Hong Kong, but not only did the deceased make him continue his study in Hong Kong, he and Madam Chan also formed the idea of adopting him formally as their son.  So in the same year, according to C S Lee, the deceased and Madam Chan took him back to Wing On village, and after arrival, the couple discussed and reached an agreement with C S Lee’s parents for his adoption.  C S Lee’s case was that the so-called “adoption” of Hang Wing, who was otherwise unrelated to the Lee clan, was merely informal and he could not serve as the deceased’s heir.  That was one of the reasons why the deceased and Madam Chan found it desirable to formally adopt him (C S Lee) as their son and heir.

19.  It was C S Lee’s case (and evidence) that on the same day, not only was the discussion held and agreement reached, the ceremony for adoption was also held.  The ceremony comprised essentially ancestral worship carried out by the natural parents as well as the adoptive parents and the adoptee (C S Lee).   The ancestral worship was followed by a banquet held in the same evening at home, comprising several tables of relatives, neighbours and fellow villagers.  According to C S Lee’s evidence, the deceased and Madam Chan took him back to Hong Kong on the following day.

20.  From then on C S Lee became a member of the deceased’s household, and lived with them while he was studying in Hong Kong.  Subsequently C S Lee received schooling in Guangzhou.  In 1936, he joined the Air Force under the then Nationalist Government in the Mainland.

21.  In 1930 or 1931 (per Madam Wong’s evidence), Madam Chan unfortunately passed away in Guangzhou.  According to the evidence of Madam Wong, within the same year, the deceased remarried Madam Chow, who thus became C S Lee’s (adoptive) stepmother.  In the same year, Yat Sun married Madam Wong.

22.  After marriage, Madam Chow gave birth to a baby (“Ah B”) who unfortunately died in infancy.

23.  In 1936, C S Lee joined the Air Force Academy in the Mainland against the wish of his adoptive father (per C S Lee’s evidence).  Shortly thereafter, China was at war with Japan, which lasted from 1937 for 8 long years.  Hong Kong was occupied by the Japanese as from late December 1941 soon after the outbreak of the Pacific War.  During those difficult years, much happened.

24.  C S Lee served in the Chinese Air Force and managed to survive the war.  However, the deceased died in Hong Kong in 1940 due to illness.  After his death, according to some evidence, Hang Wing disappeared in 1942 or 1944 and was not heard from since then.  However, according to the evidence of Madam Wong, Hang Wing actually survived the war but shortly after the Japanese surrender in 1945, he joined the Nationalist Army in Hong Kong and was never to be heard from again. In these proceedings, both parties have proceeded on the assumption that Hang Wing is long dead.  On the entirety of the evidence before me, I have no difficulty with that assumption.

25.  In any event, after the death of the deceased in 1940, Madam Chow “remarried” a gentleman by the name of Yu Fuk  (俞福).  However, it is Madam Wong’s and Harvey Lee’s case that Madam Chow did not formally remarry Mr Yu, who was already a married man with a wife, children and grandchildren.  Their family lived in the New Territories. They say Madam Chow merely cohabited with Mr Yu in Kowloon.  The significance of the issue of remarriage will become apparent in due course.

26.  It is common ground that there was a sort of “reunion” of the surviving members of the extended Lee family at Oi Kwan Hotel  (愛群大酒店) in Guangzhou in 1947.  Madam Wong said in evidence that this was a mere family gathering and reunion after the war.  Nothing particular happened.

27.  C S Lee said otherwise.  According to him, at that meeting, which was called by Madam Chow and attended by Madam Chow, C S Lee, Madam Wong and some other relatives and fellow villagers (including a Mr Lee Shing Yeung – who has given evidence at trial), as well as an assistant of Madam Chow (Miss Fok), Madam Chow re-confirmed to those present that C S Lee was the adopted son and heir of the deceased, with the right to succeed to his estate after his death.  At that meeting, Madam Chow formally handed over the assets left by the deceased to C S Lee as heir.  The assets comprised, amongst other things, the share certificates of the deceased’s shares in Luk Hoi Tong and some other companies, the title deed of a property owned by the deceased in Guangzhou, the share certificates of the shares owned by Madam Chan in Luk Hoi Tong, and some chops and seals of the deceased, Madam Chan and Hang Wing.

28.  It was C S Lee’s case and evidence that after taking possession of the share certificates and dividend books relating to the deceased’s and Madam Chan’s shares in Luk Hoi Tong, he started collecting dividends from Luk Hoi Tong.  That remained the position until the defeat of the Nationalist forces in the Mainland, which retreated to Taiwan.  C S Lee, as a member of the Nationalist Air Force, was also relocated to Taiwan.  In those circumstances, he said he mailed the share certificates and dividend books to Madam Chow in Hong Kong for the continued collection of dividends, which he allowed his (adoptive) stepmother to use for her own benefit, out of affection and filial duty.

29.  Madam Chow died of cancer in Hong Kong in 1960.  It was Madam Wong’s case and evidence that she having been a good friend of Madam Chow (and not merely a relative) since the early 1930s and she and her husband having taken care of Madam Chow during her last years when she was ill, about 1 week before her death in November 1960, Madam Chow gave the shares in Luk Hoi Tong belonging to the deceased and Madam Chan, the title deed to the Guangzhou property, as well as some seals and chops belonging to the deceased and Madam Chan, to her.  In evidence, Madam Wong said that the incident took place during a hospital visit.  Apart from her, Mr Yu Fuk was present together with a Rev. Wong and a fellow church member (relating to the Chan family to which Madam Chan belonged) from the church of which Madam Chow was a member.  Yat Sun to whom the assets were jointly given however was not present.  According to Madam Wong, Madam Chow asked Mr Yu to hand over a package of things put at home to Madam Wong and Yat Sun after her death.  Madam Chow asked Madam Wong to use “the dividends” for tithing (to church), ancestral worship, maintenance of the ancestors’ graves, meeting the education needs of the (extended) Lee family and taking care of the poor and needy amongst the family members.  According to Madam Wong’s understanding and interpretation of Madam Chow’s intention, the latter was giving the shares to Madam Wong and her husband as a gift unconditionally, even though she had expressed the wish for the dividends to be used in a certain way.  As for the Guangzhou property, it was to be held by her and her husband as a sort of ancestral home for use by the (extended) Lee family.

30.  According to Madam Wong, that was how and why after the death of Madam Chow in 1960, she and her husband took possession of the share certificates and dividend books relating to the shares in Luk Hoi Tong – they having received the package containing the shares, title deed and so forth from Mr Yu Fuk after Madam Chow’s death as per her deathbed instructions.  The couple thus started collecting dividends from Luk Hoi Tong.

31.  In evidence were many contemporaneous letters and documents evidencing the distribution of dividends since 1960 by Yat Sun and Madam Wong, and after Yat Sun’s death, by Madam Wong alone.  According to the documents as well as Madam Wong’s evidence, the dividends were distributed by them in accordance with Madam Chow’s wish.  Money was expended on tithing, ancestral worship, maintenance of ancestors’ tombs and graves.  Money was sent to two younger sisters of Yat Sun and C S Lee in the Mainland to cater for their needs.  Money was remitted to C S Lee as member of the extended Lee family.  Some money was distributed to the mother of Madam Chow who survived her daughter.  And the rest of the money was kept by the couple.

32.  C S Lee, on the other hand, had a very different story to tell.  His evidence was essentially that after the death of Madam Chow, as he was working and living in Taiwan, he entrusted his elder brother (Yat Sun) in Hong Kong with the task of collecting the dividends for him.  With his agreement, 20% of the dividends were given to Madam Chow’s surviving mother as living expenses, in accordance with what had been agreed with Madam Chow prior to her death.  Some money was spent on ancestral worship and maintenance of the graves and tombs in the Mainland.  Some money was sent to the sisters in the Mainland.  The rest, according to C S Lee, was remitted by his brother to him in Taiwan for his own use.  After the death of the mother of Madam Chow, Madam Wong requested C S Lee to let her and her husband keep the 20%, to which he agreed.  In mid 1970s, Yat Sun had a paralysing stoke in Hong Kong, and that was why he agreed to increase Yat Sun’s share of distribution to 50% (after deducting all other outgoings), with the remaining 50% dutifully sent by the couple to him in the States, where he had emigrated to.

33.  All this was evidenced by the correspondence, and by and large the position remained the same until 1996/1997 when disagreements and disputes broke out between the two Lee families.  According to C S Lee, he found that Madam Wong had been keeping more and more money to herself, under the pretext of using it in the Mainland for all sorts of purposes, resulting in less and less money being remitted to the States.  He claimed that the supposed expenditures were not supported by documents. 

34.  On the other hand, it would appear that by then Madam Wong had started accusing C S Lee of cheating her in relation to the Nationalist government title deed to the Guangzhou property which C S Lee made use of to apply for, eventually successfully, the formal title to the Guangzhou property from the Mainland government.

35.  Moreover, in his claimed status as the adopted son and heir of the deceased, C S Lee obtained a grant of representation from the Probate Registry of this court in 1998.  That claim of status was challenged by Harvey Lee in the States, and after proceedings there, a judgment by consent was obtained prohibiting C S Lee from using some declarations in which he claimed himself to be the adopted son of the deceased.

36.  In the meantime, C S Lee claimed that he discovered that Madam Wong had in 1985 caused the deceased’s (as well as Madam Chan’s) shares in Luk Hoi Tong to be transferred into her own name, by fraudulently making use of the chops of the deceased and Madam Chan.

37.  According to Madam Wong, she was merely completing the formality of the gift of the shares to her and her husband by Madam Chow back in 1960.  After the death of Yat Sun in 1982, she found it desirable to have the shares formally transferred to her own name.  Her intention was to continue using the dividends from the shares for various purposes as before.  She even went so far as to write down on the back of the new share certificates that the shares could not be sold and rather the dividends would be used for purposes of ancestral worship etc. (i.e. “Ching Sheung”) (“蒸嘗”).  Madam Wong explained that all that was done on a voluntary basis as she regarded Madam Chow as having given the shares unconditionally to her and her late husband.  She was merely carrying out the wish of Madam Chow out of moral duty only.

38.  There are, of course, many details and particulars in relation to the material events and history of the matter.  I will refer to them if necessary in this rather long judgment in due course.  But it is neither necessary nor practicably possible to refer to all of them in the judgment.  Needless to say, they have all been taken into account before I reach my factual findings and legal conclusions, regardless of whether they are expressly referred to in the judgment.

39.  I will now focus my attention on the two main issues raised in the two actions, namely adoption and gift.  Although I will deal with the two issues in turn, it is obvious that they are inter-related.  So far as facts and factual disputes are concerned, consideration and determination of one issue cannot be done without considering and deciding the other issue as well at the same time.  My treating the two issues separately in the judgment below for the sake of clarity of presentation should not be taken as reflecting a compartmentalized approach in the fact-finding process.

Issue of adoption

40.  There is no dispute and it was the common assumption of the parties at trial that the deceased died domiciled in Hong Kong.  On the entirety of the evidence before me, I have no difficultly with accepting such an assumption.  As the deceased passed away in Hong Kong in 1940, without leaving a will, succession to his estate is, as per the then applicable succession law in Hong Kong, governed by Chinese customary law.  Further, the parties were in agreement at trial that as Hang Wing was adopted from outside of the Lee clan, he was thus not entitled to succeed to the deceased’s estate.  In any event, he has disappeared during or after the war, and has not been heard from for more than half a century.  He had no known descendants either.  There is thus no question of his or his descendants succeeding to the estate of the deceased.

41.  More importantly, the parties agreed that if C S Lee was really adopted by the deceased as his son as claimed, then as his only (formally) adopted son, C S Lee would be entitled to succeed to the entire estate of the deceased pursuant to Chinese customary law on succession, including in particular the shares in Luk Hoi Tong, subject to the issue of gift of the shares raised by Madam Wong to be discussed later.

42.  Both sides have adduced expert evidence in support of their respective cases – Professor Hugh Baker for C S Lee and Dr K H Hwang for Madam Wong and Harvey Lee.  The experts are in agreement that there is no fixed formality requirement for a customary adoption.  But what is required is some kind of ceremony, comprising essentially ancestral worship.  Both experts agree that C S Lee as a nephew of the deceased was a suitable candidate for adoption purposes.  What they cannot tell us is, of course, whether a valid customary adoption has indeed taken place, which is a matter of fact and evidence.

43.  As mentioned above, although the pleadings do not say so (a matter which I will comment on very shortly), C S Lee has through his counsel confirmed in no uncertain terms, and indeed has run his case at trial on the basis, that he was adopted by the deceased and Madam Chan in Toishan in 1928.  He ran no alternative case of adoption on any other basis.

44.  I have already outlined the case of and evidence given by C S Lee regarding his adoption by the deceased and Madam Chan in Toishan in 1928.  In 1928, Madam Wong had not yet married Yat Sun, and she has no personal knowledge about the alleged adoption in 1928.  Yat Sun has already passed away and of course could not give evidence.  The natural parents as well as the alleged adoptive parents of C S Lee are all dead and they could not give evidence.  C S Lee could only rely on his own evidence about the alleged adoption, apart from the evidence of a neighbour, Lee Shing Yeung, who said he was present during the ancestral worship and attended the banquet afterwards.  (He was also present at the Oi Kwan Hotel meeting in 1947.)  By and large, Lee Shing Yeung’s oral evidence corroborated that given by C S Lee.

45.  Mr Lo, counsel acting for C S Lee at trial, referred me to a number of matters (which were essentially based on C S Lee’s own evidence), which he said were consistent with or supported C S Lee’s contention that he was adopted by the deceased as claimed: that the deceased had no natural son of his own, that Hang Wing was merely an informally adopted son with a doubtful background and possibly slightly retarded (as per C S Lee), that C S Lee was the deceased’s nephew and available for adoption, that the deceased was very fond of C S Lee, that C S Lee’s natural parents never asked C S Lee to return to live in the village with them, that C S Lee did not inherit his own natural parents’ estate, that C S Lee was accepted by the deceased and Madam Chan/Madam Chow into their household and was treated kindly and brought up by the deceased who financed his education and daily expenses and took him to social occasions and introduced him to his friends and colleagues at work, that Madam Chow recognized specifically his status as the deceased’s adopted son and heir at the Oi Kwan Hotel meeting, and that C S Lee was in the position to determine the distribution of dividends and had the use of a significant part of the dividends (as evidenced by the correspondence).  I will specifically deal with these two latter aspects in due course.

46.  In some of the letters written subsequently by either Madam Wong or one of his sons (Lee Sin Hang), C S Lee was referred to as the “heir” (“繼承人”) (Bundle D 341 and 346), who collected the assets of the deceased (D 343).  There were also various hearsay declarations and statements placed before the Court which to varying extents asserted that C S Lee was the adopted son and/or heir/successor of the deceased.  They included various declarations from the two sisters of C S Lee.  Both claimed that they had heard that their elder brother was adopted by the deceased when he was 13 years old (i.e. 1928).  A relative/friend (Lee Chau Wing) claimed in his statement that he heard about the adoption of the deceased when he was 13 years old in 1928 when he joined the deceased in Hong Kong.  There were some statements and declarations from friends and ex-colleagues of C S Lee.  Besides, there were various certificates issued by the relevant local authorities in the Mainland confirming C S Lee’s status as adopted son and/or successor of the deceased’s estate.

47.  There were other bits and pieces of evidence relied on by Mr Lo in his final submission, which I need not repeat here.  Suffice it to say they have all been taken into consideration in reaching my factual findings.

48.  On the other hand, the documentary and circumstantial evidence against C S Lee’s case of adoption is strong if not overwhelming.

49.  C S Lee’s pleadings in these two actions do not help him at all.  The alleged adoption in Toishan in 1928 was nowhere pleaded in the defence of C S Lee in the probate action.  What has been pleaded in paragraph 1(h) of the re-amended defence was simply that the deceased’s family, relatives, friends and business contacts all recognized C S Lee as being one of the deceased’s adopted sons.

50.  This prompted a request for further and better particulars from Harvey Lee which asked C S Lee to state whether he was adopted “by way of ceremony” and if the answer was “yes”, “when, where and how did the ceremony take place and who else were present in the ceremony”.

51.  In the further and better particulars provided, C S Lee answered the first question in the affirmative, and went on to describe the ceremony thus:

“The ceremony was held by the deceased and Chan Yeuk Lan after the Defendant [i.e. C S Lee] started to live with them in Canton and Hong Kong by their introducing the Defendant to their relatives and friends as their adopted son and having meals with such relatives and friends.  By Chow Fung Yee at Oi Kwan Hotel, Guangzhou, China in about 1946 or 1947 as particularized in the Defence.”

52.  The alleged adoption ceremony and banquet held in Toishan back in 1928 was not mentioned at all.

53.  Indeed the true case of C S Lee, i.e. that he was adopted in Toishan in 1928, did not feature in the proceedings until the witness statements from his side were filed in 2004.  Mr Lo, in paragraph 59 of his written opening submission, formally adopted that as the case of C S Lee at trial (with no pleading objection from Mr Hui, acting for Harvey Lee and Madam Wong in the two actions).

54.  C S Lee did not give any or any satisfactory explanation regarding why his real case on adoption, i.e. that he was adopted in Toishan in 1928, was not mentioned in his pleadings and other documents in the proceedings until his witness statement in 2004.  He did not see fit to disclose any of the relevant solicitors attendance notes regarding the instructions he had given to his solicitors and advisers on this aspect of the case.  Of course, he was not obliged to.  But that was obviously a matter that required explanation or clarification and only C S Lee and/or his team of lawyers and advisers would be in a position to provide the same.  For reasons of their own, they did not.

55.  Lee Shing Yeung’s evidence in support of C S Lee’s case carried little if any weight on analysis.  I would leave aside the discrepancies in the respective descriptions of the 1928 Toishan visit and the ceremony/banquet given by the witness and given by C S Lee in evidence.  Much allowance must be (and has been) given to the two elderly gentlemen (the witness is also 90 years old) for their recollections of events that allegedly took place 77 years ago.

56.  The real problem with the witness’ evidence lies elsewhere: back in 1998 the witness had made an affirmation in support of C S Lee’s application for grant of representation of the deceased, where he said in paragraph 4 that “after the war”, the deceased adopted C S Lee as his son.  That was of course not possible because the deceased died in 1940.  In evidence, the witness corrected himself by saying that “after” should have read “before”.  However, that still leaves a question mark over his affirmation and evidence in Court: if – as he maintained in the witness box – C S Lee was indeed adopted by the deceased in Toishan in 1928, why did he not specifically say so in his supporting affirmation?  In other words, even “before the war” would have been too general and vague for someone who purported to have eye-witnessed the adoption ceremony and attended the subsequent banquet in 1928.

57.  The problem did not stop there.  In a statement and a declaration both made in 2000, the witness (also known as Lee Kwok Choi) confirmed and declared as follows (taken from Bundle D 427, the statutory declaration):

“李肇新是李星漢之繼承兒子,其叔父李星漢生前已立有此意及後其遺孀周鳳賢女士於1948年秋在廣州市愛群酒店召集各親屬人等到場見証,並親將李星漢之遺產樓契,股票等財物,當衆交與李肇新,親手接收,並宣佈李肇新為其叔父李星漢之繼承人。”

58.  In the box, the witness attempted to, but could not, explain why the Toishan adoption in 1928 was not mentioned in his statement or declaration, which instead mentioned the Oi Kwan Hotel meeting as the basis for C S Lee’s claimed status as the adopted son of the deceased.  More importantly, the witness could not explain sensibly why he merely said in his statement and declaration that during the lifetime of the deceased, he had the intention to adopt C S Lee as his son, if – as he has said on oath in the witness box – the deceased did during his lifetime adopt C S Lee as his son, i.e. in Toishan in 1928.  He simply could not give any sensible explanation for it.

59.  An important question mark relates to the omission to mention ancestral worship in C S Lee’s witness statement, an omission also shared by Lee Shing Yeung in his original witness statement, both filed in 2004.  After the witness statements were filed, Professor Baker made his (first) expert report pointing out the importance of ancestral worship in the case of a Chinese customary adoption.  Then both witnesses put in supplementary witness statements to set out the alleged ancestral worship in 1928.

60.  If the initial omission by the two was rather surprising – if they were telling the truth in relation to the alleged adoption in 1928, the explanation given by Lee Shing Yeung in the box for the omission was even more so.  The witness claimed during cross-examination that his failure to mention the ancestral worship in his first witness statement was because those interviewing him for the purposes of preparing his witness statement never asked him questions about it.  After the witness statement was made, he somehow noticed that the ancestral worship had not been mentioned and it was an important aspect, and on his own motion, he caused a supplemental witness statement to be made.

61.  I have tried hard to imagine how it was possible for the person interviewing the witness for the purposes of preparing his witness statement to design and ask his questions in such a way that the witness would only mention about the return and visit of the deceased, Madam Chan and C S Lee to Toishan in 1928, their discussion with the natural parents about the adoption, and the banquet celebrating the adoption, without mentioning or touching on the ancestral worship that followed the discussion but preceded the banquet.  Given the nature of the story told by Lee Shing Yeung about the adoption in 1928, it was quite impossible for anyone interviewing him about the adoption to fail to elicit from him anything about the ancestral worship as part of the adoption ceremony – if it had actually occurred as now alleged.  Put another way, I totally disbelieve the witness’s explanation for the initial omission.  Nor do I find his evidence on why and how his supplemental witness statement was made convincing at all.  Quite plainly, C S Lee’s side was alerted to the need for ancestral worship by Professor Baker’s first expert report, and that prompted the making of the two supplemental reports by C S Lee and Lee Shing Yeung.

62.  Again no evidence was adduced from the person responsible for interviewing Lee Shing Yeung and preparing his witness statements on what had actually happened.  The notes of attendance were not disclosed.

63.  Mr Lo, on behalf of C S Lee, argued that according to their own evidence, both C S Lee and Lee Shing Yeung retained better recollections of their general relationships with the deceased than what happened actually during the adoption ceremony in Toishan in 1928.  That may perhaps be so.  But both of them sought to give evidence on what had happened and, as analysed above, their evidence gave rise to a number of questions and doubts, which cannot be easily explained away simply by suggestions of lapses of memory.

64.  In applying for the grant of representation, C S Lee relied on an expert opinion on Chinese law prepared by Mr H C Miu.  In the opinion, it was mentioned that the deceased was adopted in 1928.  But the place of adoption was said to be in Hong Kong.  That is in direct contradiction to C S Lee’s eventual case at trial.  C S Lee did not give any explanation for the contradiction in evidence.

65.  As regards the statements and declarations by the two sisters of C S Lee, although they both mentioned that C S Lee was adopted when he was 13 years old (1928), none of them mentioned that he was adopted in Toishan.  Rather they all referred to C S Lee moving to Hong Kong to live with the deceased when he was 13, where he was raised up by the deceased as his adopted son.  On a fair reading of their statements, they placed emphasis on the declaration by Madam Chow at the Oi Kwan Hotel meeting that C S Lee was the adopted son.  One would have thought that if there really was a customary adoption of C S Lee by the deceased back in 1928, the sisters would have made an express reference to it and used it as an important basis for their assertion that C S Lee was the adopted son of the deceased.

66.  In the US proceedings, C S Lee was cross-examined on his alleged adoption (Bundle D 486 to 487).  Yet in his answers, he could not give the place of adoption, nor could he remember the names of the witnesses supposed to be present.  C S Lee explained during evidence at trial that he was not feeling well when he was cross-examined in the US proceedings and that was why he failed to give evidence on his own adoption clearly.

67.  The genealogies are definitely against C S Lee’s case.  From the evidence, I would conclude that the earlier genealogy was prepared in the 1920s and it underwent revision in the 1930s.  They are authentic documents.  According to the earlier genealogy, the deceased was married to Madam Chan and they had a son Hang Wing.  According to the revised genealogy, the deceased was first married to Madam Chan and after her demise remarried Madam Chow and they had a son Hang Wing.  In the earlier as well as the revised genealogies, C S Lee was mentioned as the second son of Lee Do Kok.  The genealogies mentioned instances of adoption out from one family into another as heir.  Both the adoption in and adoption out were meticulously recorded.  Notably, C S Lee was not recorded as having been adopted out of his natural father’s family into the deceased’s family in either genealogy.

68.  The genealogies and the changes seen in the revised genealogy are significant in that the revised genealogy correctly reflected the facts of the death of Madam Chan and the remarriage of the deceased with Madam Chow, which took place in 1930 or 1931.  If C S Lee had been adopted out of his natural father’s family into the deceased’s family in Toishan in 1928, in the presence of family members, relatives and neighbours and there were ancestral worship and a banquet held in the village in relation to the adoption, it would seem quite unthinkable that the editor(s) of the revised genealogy would have missed out that adoption in the revision, whilst recording the death of Madam Chan and the remarriage of the deceased with Madam Chow in the revised edition.

69.  I am not saying that the genealogies must be 100% correct – the reference to Hang Wing as simply the son of the deceased is a notable exception (however, according to Madam Wong the deceased and Madam Chan were very secretive about the fact that Hang Wing was an adopted rather than a natural son), what the genealogies recorded and what they did not are of significance in the present case.

70.  As I have mentioned Hang Wing in the genealogies, a further point can be made against C S Lee’s case: if an informally adopted son like Hang Wing can find his place in the two genealogies, it would seem extremely strange that a formally adopted son via proper ceremony held at home would be missed out in the revised genealogy, if not also in the original genealogy.

71.  Still on Hang Wing, whilst doubts have been expressed regarding the origin of Hang Wing and whether he was formally adopted, the evidence is so scanty that I am unable to make any finding on it.  In spite all the doubts regarding the status of Hang Wing, both the earlier and the revised genealogies suggest that Hang Wing was a son of the deceased or of a status no different from that of a natural son.  On the scanty materials before me, I am unable to say that Hang Wing’s adoption was not regarded by the deceased and Madam Chan/Madam Chow as valid.  And if they did regard Hang Wing’s adoption as valid, the need for adopting another son would be lessened.

72.  The status of Hang Wing, in contrast to the alleged status of C S Lee, can be further seen in relation to the death of Madam Chan in 1930/31, the wedding of the deceased and Madam Chow in the same year, and the death of the deceased in 1940.  Madam Chan died in Guangzhou in 1930 or 1931.  At that time, the deceased, Hang Wing and C S Lee were living in Hong Kong.  According to C S Lee’s own evidence, after the death of Madam Chan, the deceased only took Hang Wing back to Guangzhou to attend the funeral of Madam Chan.  The deceased left C S Lee in Hong Kong “in order not to disturb [his] studies”.  I find this explanation very strange, if C S Lee was indeed the adopted son of the deceased and Madam Chan, which adoption allegedly took place just two or three years ago in Toishan in 1928.  Filial duty and respect for the dead would have required the presence of C S Lee at the funeral as an adopted son of the deceased and Madam Chan.

73.  Likewise, the deceased did not take C S Lee to Guangzhou to attend the wedding ceremony or banquet celebrating his remarriage to Madam Chow.  Only Hang Wing went with the deceased and Madam Chow.

74.  The deceased himself passed away in Hong Kong in 1940.  At that time, C S Lee was serving as an air force pilot fighting the Japanese in the Mainland.  It is understandable that communication with him was difficult and he could not return to Hong Kong to attend the funeral of the deceased.  The funeral was arranged by Madam Chow as widow.  The deceased was buried in Pokfulam.  His gravestone was erected by Madam Chow.  Engraved on the gravestone were the names of Madam Chow as widow and Hang Wing as son.  The name of C S Lee was not there.  There is no evidence from C S Lee regarding any attempt by him after the war to add his name back to the gravestone as the (adopted) son of the deceased, nor any explanation (insofar as he was aware) as to why his name did not appear on the gravestone as an adopted son of the deceased, alongside those of Madam Chow’s and Hang Wing’s.

75.  What happened in the two funerals and what was engraved on the gravestone of the deceased were significant, given the Chinese and cultural background of the case at the time when these events took place.

76.  The various certificates, declarations and supporting documents are of limited use to C S Lee’s case of adoption, not only because they are all hearsay documents and their makers were not available for cross-examination at trial, but also because of the fact that in none of them was it mentioned specifically or directly that C S Lee was adopted by the deceased and Madam Chan in Toishan in 1928.  Rather, by and large, they all focused on what happened at the Oi Kwan Hotel meeting in 1947.

77.  The various references in the correspondence and documents that suggested that C S Lee had an interest as an heir, successor or nephew in the estate of the deceased, including the property in Guangzhou, could be explained by reference to Madam Chow’s attempt to appoint C S Lee as heir or successor at the Oi Kwan Hotel meeting (which I find to be the case – see below), rather than by the alleged adoption in Toishan in 1928 (which I reject).

78.  Madam Wong and Harvey Lee called a witness, Chan Tung Man (陳同文) to say that as a former colleague in Luk Hoi Tong and friend of the deceased, he had not heard about the adoption of C S Lee.  The witness obviously knows something about the 1985 transfer, but for reasons of his own, he was not prepared to reveal it to the Court.  I was not impressed by his evidence in general and I placed very little weight on what he said about the adoption or the 1985 transfer.

Finding on alleged adoption

79.  I have borne the entirety of the evidence in mind, including, of course, the oral evidence and assertions of C S Lee and Lee Shing Yeung about the alleged adoption in Toishan in 1928.  I have considered not only the content of evidence but also the demeanour of C S Lee and Lee Shing Yeung whilst giving evidence at trial.  I have taken on board all the relevant matters and considerations, including but not limited to those specifically mentioned above.  I have also taken into account what happened or allegedly happened at the Oi Kwan Hotel meeting and the treatment of the dividends after the war up to 1996/1997 when disputes between the two sides broke out openly, which will be dealt with in greater detail below.

80.  I come to the conclusion on the evidence before me and I find that C S Lee was not adopted by the deceased and Madam Chan in Toishan in 1928 as claimed by him.  As this has been the only case of adoption put forward by C S Lee at trial, his case of adoption entirely fails.

The Oi Kwan Hotel meeting

81.  Before I turn to the second issue, it is convenient at this juncture to deal with, very quickly, the Oi Kwan Hotel meeting.  That meeting features under both issues.  It is relevant to the adoption issue because according to C S Lee’s case, in that meeting, Madam Chow confirmed to those present that C S Lee was the adopted son of the deceased entitled to succeed to his estate after his death.  It is relevant to the issue of gift because C S Lee claimed that in that meeting, not only his status as adopted son was confirmed, Madam Chow also gave the share certificates, dividend books, etc. to him as part of the handover of the assets of the estate of the deceased.

82.  There is no direct documentary evidence of what happened in that meeting.  But I have heard oral evidence from C S Lee, Lee Shing Yeung as well as Madam Wong who have all attended that meeting.  Madam Wong said it was just an ordinary reunion of close family members and relatives after the war.  Nothing special was mentioned or announced.  Nothing changed hands.

83.  Apart from the oral evidence, I have some declarations and statements made many years afterwards referring to the Oi Kwan Hotel meeting, and as mentioned above, the announcement made by Madam Chow in that meeting formed the basis of the assertions made in those documents and declarations that C S Lee was the lawful successor to the estate of the deceased.

84.  In determining what actually happened at that meeting, I have borne in mind the unsatisfactory credibility of C S Lee and Lee Shing Yeung in giving evidence.

85.  I have borne in mind the discrepancies in their accounts of what happened in that meeting – although I have also given much allowance for the fact that the two elderly gentlemen were trying to recall what happened or allegedly happened almost 60 years ago.  I have also borne in mind the fact that despite the alleged handover of, amongst other things, the shares certificates and dividend books in relation to the Luk Hoi Tong shares, Madam Chow apparently continued to enjoy the use of the dividends after the alleged handover as before.

86.  On the other hand, I take note of the fact that even up to the time of trial, C S Lee still retained the original share certificates of some shares held in the name of the deceased in some other companies, which have long become defunct.  This is consistent with his evidence that in that meeting, apart from the shares certificates in Luk Hoi Tong, Madam Chow also gave him share certificates in other companies in which the deceased held shares.  The share certificates and dividend books relating to the Luk Hoi Tong shares were subsequently mailed back to Madam Chow after C S Lee had moved to Taiwan in 1949.  He kept the share certificates in the other companies and still retained them up to the time of trial for their sentimental value.

87.  Furthermore, C S Lee managed to produce a receipt (Bundle D 677) evidencing the payment of dividend tax in 1948 in relation to the shares in Luk Hoi Tong.  This is consistent with his evidence that after the Oi Kwan Hotel meeting and before he was relocated to Taiwan in 1949, he collected dividends from Luk Hoi Tong.  Likewise, there was a letter issued by Luk Hoi Tong about the calling of an annual general meeting that was mailed to him whilst he was still stationed with the Air Force in Shanghai.

88.  As regards what happened during the meeting, I have not forgotten that even Madam Wong said during cross-examination that she was not too attentive to what had been said by those present, who spoke in the Toishan dialect amongst themselves (which Madam Wong could not quite understand).  Moreover, Madam Wong accepted that there was a parcel, “wrapped like a Christmas present”, placed on the coffee table.  She did not know what the content of the parcel was.

89.  I also bear in mind the background of the case as at the time of the Oi Kwan Hotel meeting.  On the evidence, although I reject C S Lee’s claim that he had been adopted by the deceased and Madam Chan in Toishan in 1928, I have no doubt that he enjoyed a very close relationship with the deceased and Madam Chan, and after her death, Madam Chow.  He was supported by the deceased for his living and studies in Hong Kong and Guangzhou.  He was known to the Chan family to which Madam Chan belonged.

90.  I do not doubt his claim that the deceased and Madam Chan/ Madam Chow were fond of him.  I do not exclude the possibility that after he had moved to Hong Kong to live with the deceased and his family, the deceased had treated him as a member of his household and may even have represented him to others that he was his son or adopted son.  But the difficulty faced by C S Lee in these two actions is two-fold: First, this was not the case run by him during trial.  Secondly and in any event, such an “adoption” cannot be a valid one, in light of the expert evidence that has been adduced before the Court.  But in terms of what actually happened in this rather unfortunate case, I am inclined to think that what has been pleaded in the further and better particulars better reflects the reality and truth than C S Lee’s story of a Toishan adoption in 1928 which only emerged at a relatively late stage.  Unfortunately for C S Lee, what has been pleaded in the defence and in the particulars cannot, as a matter of Chinese customary law, amount to a valid adoption.  That may well explain why at a later stage, the assertion of a formal customary adoption in Toishan in 1928 emerged.

91.  In relation to the Oi Kwan Hotel meeting, what happened after C S Lee had moved to live together with the deceased and his family certainly formed part of the relevant background in assessing the competing stories regarding what took place at the hotel meeting.

92.  Another relevant part of the background is this: By the time of the Oi Kwan Hotel meeting, the deceased had died and Madam Chow had either re-married Mr Yu or had started co-habitation with him.  Against the background of Chinese customary law and practice at the time, having so re-married or co-habited with another man after the death of her husband, it would be natural for Madam Chow to have wanted to, as an honest and decent person – and there was no suggestion whatsoever that she was not, handover the assets left by her late husband back to the Lee family.  As I will further elaborate on when I deal with the question of gift, it would also be natural and understandable for Madam Chow to have wanted to appoint C S Lee as heir to succeed to the assets of her late husband.

93.  On the materials before me, on a balance of probabilities, I find that what happened at the hotel meeting in 1947 was that it was a special meeting summoned by Madam Chow for the purposes of appointing C S Lee as heir to succeed to the assets left by the deceased, and her handing over of the assets to the successor so appointed accordingly.  I find it more likely than not that the meeting was much more than an ordinary family reunion.  It took place in Guangzhou, instead of in the village.  Some had to travel specifically from the village to Guangzhou to attend the meeting.  Relatives and neighbours attended the meeting.  It was not preceded or followed by any meals.  It had all the hallmarks of a special meeting called to deal with matters arising from the death of the deceased.  Apart from that meeting, no similar meeting ever took place, whether before or after, although the war had already ended in August 1945 whilst Madam Chow only passed away in late 1960.

94.  Furthermore, the subsequent correspondence between Yat Sun/Madam Wong and C S Lee quite plainly evidenced that the couple treated C S Lee as having some sort of claim or entitlement to the dividends or shares.  The subsequent application for repossession of the Guangzhou property from the Mainland government and the vesting of title to the property in the name of C S Lee as successor to the deceased also bore evidence to the appointment of C S Lee as successor to the estate of the deceased.

95.  As I say all in all, I find on a balance of probabilities that in that meeting, Madam Chow announced her appointment of C S Lee as successor to the deceased’s estate in (attempted) compliance with Chinese customary law and practice.  Again, the difficulty for C S Lee for the purposes of these two actions is two-fold: First, this was not the case run by him through counsel at trial.  His only case of adoption run at trial was that he was lawfully adopted by the deceased and Madam Chan in Toishan in 1928.  He ran no alternative case at trial.  The case as run, of course, differed much from his own pleaded case.  Secondly and more fatally, the appointment of an heir/successor after the death of the deceased by Madam Chow as widow, although possible under Chinese customary law (i.e. posthumous adoption), required a ceremony comprising essentially ancestral worship, as agreed by experts on both sides.  C S Lee admitted that no ancestral worship was carried out at the 1947 hotel meeting or on any other occasions.  In those circumstances, the purported appointment of him as successor was simply invalid.  Again, that may well explain why at trial, he did not base his alleged adoption on the Oi Kwan Hotel meeting in 1947.

96.  Though legally invalid, what happened at that hotel meeting factually explained well the subsequent handling of the shares and dividends, the correspondence between the parties, the declarations and documents, and even the pleadings of C S Lee.  All this leads me to the second main issue, i.e. the issue of the alleged gift of the deceased’s shares by Madam Chow before her death in favour of Yat Sun and Madam Wong.

Issue of gift

97.  I now turn to the issue of gift.  It is Madam Wong’s case that the shares in question were given by Madam Chow shortly before her death in 1960 to her and her husband jointly as a gift.  She relied on what was allegedly said by Madam Chow on her hospital bed one week prior to her death.  Madam Wong alone gave evidence on what happened during that hospital visit.

98.  This issue raises a number of sub-issues, including what was the interest of a widow in the estate of her late husband under Chinese customary law; what was the effect of her re-marriage or co-habitation with another person after the death of her husband on her interest in the estate; what would happen to the estate after the widow’s death, if before her death, no successor or heir was appointed or posthumously adopted to succeed to the late husband’s male-line; and general issues relating to incomplete gift and donatio mortis causa.

99.  In relation to donatio mortis causa, it should be pointed out that although it has not been specifically pleaded by Madam Wong in her defence in the High Court action, Mr Hui, her counsel, has indicated at a pre-trial hearing as well as at the trial that Madam Wong’s case of a gift of the shares is based on donatio mortis causa.

100.  For reasons that will become immediately apparent, I will first leave aside all the factual issues as well as issues relating to Chinese customary law, and focus on the questions of incomplete gift and donatio mortis causa.

Incomplete gift

101.  Based on Madam Wong’s own case, Madam Chow only gave her through Mr Yu Fuk the share certificates and dividend books relating to the shares, as well as some of the seals belonging to the deceased, Madam Chan and Hang Wing, after her death.  In fact, the seal of the deceased used for collecting dividends was missing and a new seal had to be made in order to collect dividends after Madam Chow’s death.  No instruments of transfer were executed, whether by Madam Chow on behalf of the estate or in her capacity as widow of the deceased or otherwise.

102.  In those circumstances, subject to the further argument based on donatio mortis causa, the purported gift (if any) of the shares in Luk Hoi Tong to Madam Wong and Yat Sun was incomplete and thus invalid: Re Rose [1952] 1 Ch. 499.  There is no equity to perfect an imperfect gift and equity does not assist a volunteer.  See also Milroy v. Lord (1862) 45 ER 1185, 1189.

103.  Mr Hui on behalf of Madam Wong did not seriously dispute this conclusion.

Donatio mortis causa

104.  That explains why he chose to place emphasis on the doctrine of donatio mortis causa, which was allowed to be run in the absence of any pleading objection from the other side.

105.  Hayton and Marshall, Commentary and cases on the Law of Trust and Equitable Remedies (11th ed.) 276 explains the doctrine as follows:

“	(b)	Donationes mortis causa.  Cases of donationes mortis causa sometimes provide an exception to the rule that equity will not perfect an imperfect gift.  A donatio mortis causa must comply with the following essential requirements:
		(i)	The donor must have made the gift in contemplation though not necessarily in expectation of death.
		(ii)	He must have delivered the subject-matter of the gift to the donee or transferred to him the means or part of the means of getting at that subject-matter, e.g. delivering a key, like car keys, or a key to a box containing essential indicia of title, intending to part with dominion over the property to which the key relates.
		(iii)	The circumstances must have been such as to establish that the gift was to be absolute and complete only on the donor’s death so as to be revocable before then.  A condition to this effect need not be expressed and will normally be implied from the fact that the gift was made when the donor was ill.”

106.  In Re Craven’s Estate [1937] 1 Ch. 423, Farwell J explained the requirement for the donor to part with dominion over the subject-matter (i.e. requirement (ii) set out in Hayton above) in greater detail as follows (at pages 427-428):

“I have considered what was the reason for imposing as a condition of a valid donatio that the donor must part with dominion over the subject-matter thereof and the answer seems to me to be that the subject-matter of the donatio must be some definite property, and, to ensure that, the donor must put it out of his power between the date of the donation and the date of the death to alter the subject-matter of the gift and substitute other chattels or property for it.  Otherwise, so long as the subject-matter of the gift remained in the dominion of the donor, the donor might at any time between the donatio and the gift deal with it as he or she pleased.  Take for instance the case of a box.  The donor says to the donee: “This box contains certain valuables which are to be yours in the event of my death from the operation which I am going to undergo in a few days, but I propose to retain the box and the key of the box.”  If that was the position it would be open to the donor at any time to take out of the box whatever was in it replacing it with other valuables, and in my view it is in order that that should not be possible that one of the requirements of a good donation is that the donor should have parted with dominion so that whatever the original subject-matter of the donatio was it should remain the subject-matter in the event of the death of the donor.  In the case of the box it is not necessary to hand over the box if the key is handed over because it is assumed that the key which unlocks the box being in the possession of the donee the donor cannot have access to the contents so as to deal with them in any way.  I know of no decided case in which the question has arisen whether the handing over of a box and one key, it being proved that there was another key retained by the donor, would be sufficient, but in the absence of authority, in my judgment, it would probably be held not to be sufficient parting with dominion because the donor would have retained dominion over the box and the contents of the box by retaining the power to open it although it might be in the possession of the donee.  However that may be, it seems to me that there must be such a parting with the dominion over the chattels or the property as to prevent the subject-matter of the donatio being dealt with by the donor in the interval between the donatio and either the death or the return of the articles by the donee to the donor.”

107.  In Bunn v. Markham (1816) 7 Taunt 224, the dying person caused the subject property to be sealed in three parcels and the names of the intended donees written thereon.  He declared that they were intended for the named donees and directed that they should be given to them after his death.  The parcels were then replaced in the chest to which the deceased retained the key.  The court held that there was no sufficient delivery and accordingly, no effective donatio mortis causa.  Gibbs CJ said (at pages 231-232):

“As to the other points, it is agreed on all hands, that a donatio mortis causa cannot exist, without a delivery.  The facts of this case are, that the property was taken out of a chest of the testator, looked over by him, and sealed up in three different parcels: being so sealed, he declares that it is intended for the witness’s mother and sister, and directs that it shall be given to them after his decease; there is no other delivery but that: it is replaced in the chest, and the keys are re-delivered to the testator, or by him or persons whom he always nominates as his servants for that effect, and he expresses a continual anxiety about the custody of the keys.  The question is, whether this be a sufficient delivery to make a donatio mortis causa; and we are clear that it is not. …  Seeing, therefore, that it is in the power of the donor at any time to revoke the donation before his death, and that there must be a continuing possession of the donee after the delivery to the time of the donor’s death; seeing too, here, that there is neither a delivery, nor a continuing possession, we are of opinion that no interest in this property passed to Mrs. and Miss Clifton under the supposed delivery to the son for the use of his mother and sister; and that therefore a nonsuit must be entered.”

108.  Dallas J said (at page 232):

“The property is disposed in a chest belonging to the testator; he retains the key; he does not even deliver it to the persons for whom the contents were intended.  If he had chosen to take out the bank-notes the next day, and dispose of them to another, it was competent for him so to do.  The donor, therefore, never divested himself of the possession for a moment, and therefore this is not a donatio mortis causa.”

109.  Park J said in his concurring judgment (at pages 232-233):

“Both by civil and by the English law, in this kind of donation there must be an act of delivery.  … for the testator states that it was to be delivered at a future time; in addition to this, the donor gets the keys, and is offended if any other gets the keys; neither is there a continuing possession, which is necessary.”

110.  The last judge in that case, Burrough J, also agreed (at page 233):

“… there must be a delivery either to the donee himself, or to some one else for the donee’s use: here is no such delivery, and therefore a nonsuit must be entered.”

111.  In my judgment, even on Madam Wong’s own case, there was no parting with the dominion of the shares by Madam Chow.  During the hospital visit, Madam Chow simply directed Mr Yu Fuk to give a parcel of things which she kept at her home in Kowloon to Madam Wong and Yat Sun after her death.  The parcel was kept at her home, and neither Madam Wong nor Yat Sun had access to it.  According to Madam Wong’s own case, the parcel of things was to be given by Mr Yu to her and Yat Sun after Madam Chow’s death, as per Madam Chow’s instructions: paragraph 16 of her witness statement dated 13 May 2004 and filed in the High Court action on 25 May 2004 (bundle B134, paragraph 16); and her evidence in Court.  Indeed in a letter written by Yat Sun to C S Lee after the death of Madam Chow and after Mr Yu Fuk had given the parcel to him, he complained about Madam Chow’s failure to handover the parcel to him prior to her death, thereby putting the return of the parcel at the mercy of Mr Yu.

112.  In my judgment, Madam Wong’s case, even if believed in full, is indistinguishable from Bunn v. Markham.  There has been no parting of dominion of the shares.  The share certificates, dividend books and seals all along remained in the possession of Madam Chow up to the time of death.

113.  The case cited by Mr Hui, Hutchieson’s Executors v. Shearer [1909] SC 15, concerning the gift of a sum of money that had been deposited in a bank, does not help his client’s case at all.  On the facts of that case, there plainly was sufficient delivery of the money in favour of the donee by the deceased, and there was a present intention to make the gift in contemplation of death.

114.  The case is therefore distinguishable from the present one.  It does not, as counsel argued, support the wide proposition that physical delivery of the subject matter of gift or the means (or part thereof) of getting at the subject matter is not necessary.

115.  In the circumstances, there was no effective donatio mortis causa even based on Madam Wong’s own case.

116.  For that reason alone, Madam Wong’s defence to the High Court action must fail.

117.  And for that reason, it becomes quite unnecessary to go into great detail in relation to the other sub-issues raised under this issue of gift.  For the sake of completeness, I will indicate very briefly my views on these sub-issues.

Finding on alleged gift

118.  Regarding Madam Wong’s assertion of a gift, I am of the view and find that Madam Chow never intended to make her an unconditional gift of the shares (or for that matter, the other remaining assets of the deceased).  It is clear from Madam Wong’s own evidence that Madam Chow was imposing various stringent conditions for giving the shares and other things to Madam Wong.  Essentially, she required Madam Wong to use the dividends for church tithing, ancestral worship, and other specific purposes for the benefit of the extended Lee family.  In terms of English law, she was making Madam Wong more a trustee than an absolute donee of the shares.

119.  I totally fail to see why Madam Chow should have wanted to make a gift to Madam Wong beneficially – she being only a niece-in-law of the deceased and Madam Chow.  If she had wanted to make a gift, C S Lee and Yat Sun, being the nephews of the deceased, would have been the most likely candidates.  And if she had wanted to include those married into the extended Lee family as beneficiaries, she should have included the wife of C S Lee as well, and not only Madam Wong.  And even if Madam Wong (as per her own evidence) enjoyed great friendship with Madam Chow and had been taking good care of her during her illness, I still doubt very much whether that would be sufficient to exclude C S Lee as a joint donee of the shares if she really had wanted to make a gift of the shares.

120.  The subsequent correspondence between the parties was plainly inconsistent with the case of an unconditional gift in favour of Yat Sun and Madam Wong.  For one, the letter written by Yat Sun to C S Lee shortly after the death of Madam Chow did not mention the alleged gift at all (D327).

121.  In that letter, it was mentioned (at D328) that prior to Madam Chow’s death, C S Lee had agreed to let Madam Chow’s mother have the use of 20% of the dividends, thus suggesting that C S Lee had a say on the use of the dividends, which would be quite contrary to the story that Madam Chow regarded herself as being in a position to dispose of the shares in favour of Madam Wong and Yat Sun freely.

122.  In general, that same letter (D327) written by Yat Sun to C S Lee shortly after Madam Chow’s death did not stand well with the assertion of an unconditional gift at all.  It reads more like an account given by Yat Sun to C S Lee of his collection on the latter’s behalf of the share certificates and other assets left by the deceased and returned by Madam Chow through Mr Yu to C S Lee.

123.  The subsequent letters written by Yat Sun or afterwards by Madam Wong clearly read more like the giving of an account of the collection and use of the dividends in Hong Kong and in the Mainland by the couple to C S Lee than their making a gift of part of the dividends to C S Lee out of the goodness of their heart.  The meticulous accounts given simply do not tally with the story of an unconditional gift.  I was not impressed by Madam Wong’s explanation regarding the character of Yat Sun to give an account of things big and small.  Nor was I impressed by Madam Wong’s attempt to distance herself from the letters written by Yat Sun or written by her at the direction of Yat Sun (after his repeated strokes).  I am quite satisfied on the evidence that she knew what was going on and took an active part in managing the dividends and giving an account to C S Lee.

124.  Her explanation that she and Yat Sun were simply giving an account to C S Lee as an interested relative pursuant to the wish of Madam Chow that needy relatives be looked after simply does not hold water because no similar account was given to the needy sisters living in the Mainland, who according to some of the letters did not even know that the money that they were sent came from the dividends.

125.  Madam Wong said that C S Lee was given a larger share of the dividends because he was in need of money after retirement and, in particular, after his emigration to the States.  That explanation loses much of its attraction once it is remembered that C S Lee continued to enjoy a substantial share of the dividends even after Yat Sun had suffered a paralyzing stroke in the mid-1970s.  From the letters, it is clear that Yat Sun and his family were having a very hard time as a result, yet the couple continued to give meticulous accounts of the use of the dividends to C S Lee year after year and send him a substantial share of the dividends; they even thanked him for allowing them to use part of the dividends, which were supposedly the money of Yat Sun and Madam Wong in the first place.

126.  There were many of these letters, which I will not refer to one by one.  As I said, they were all quite inconsistent with Madam Wong’s assertion of an unconditional gift.

127.  Madam Wong’s attempt to cast doubt on the authenticity of some of the letters produced by C S Lee that were quite obviously written by Yat Sun only served to put question marks over her own credibility.

128.  The sort of “self-help” way of effecting the transfer of the shares into her own name in 1985 did not really support Madam Wong’s assertion that she had been given unconditionally the shares by Madam Chow.  In short, the so-called transfer of the ordinary shares in 1985 was purportedly executed by a dead person (the deceased) and witnessed by another dead person (Madam Chan), through the use of their respective seals.  As regards the promoter’s shares, the transfer was not based upon any documentation at all.  Madam Wong’s use of dead persons’ seals and a fictitious price on the transfer documents to effect the transfer simply does not quite tally with her story of an unconditional gift 25 years before.

129.  One of the earliest documentary references to there having been an alleged gift of the shares in Madam Wong’s favour appeared in a letter written by her eldest son (Sin Hang) in May 1997 to C S Lee.  In the same letter, the son made adverse comments on her own mother’s memory of events (D736).

130.  The assertion of an unconditional gift by Madam Chow of the shares is, of course, inconsistent with C S Lee’s case that back in 1947 at the Oi Kwan Hotel meeting, Madam Chow had already handed over the assets of the deceased, including the shares, to him as heir or successor.  I have already dealt with this part of the dispute between the parties in the judgment above.  I will not repeat myself here.

131.  In an affidavit filed in relation to C S Lee’s immigration application to the United States, it was mentioned that C S Lee had income from some investment in Hong Kong, which I believe was a clear reference to the dividends from the Luk Hoi Tong shares, which is consistent with C S Lee’s case.

132.  The account given by Madam Wong in the witness box regarding what actually happened during the hospital visit, one week before Madam Chow died did not exactly tally with what she had said in her witness statement, particularly in relation to whether Madam Chow specifically mentioned or specified the assets to be given to her and her husband after her death.  Her account in Court was also different from an account said to have been given by her to her eldest son, which was recorded in the son’s letter to C S Lee dated 27 November 1996 (D369).  The son’s account suggested that Madam Wong was to receive the shares and Guangzhou property, all in the role of a trustee or fiduciary rather than an unconditional donee, and that if she had refused to take up the responsibility, Madam Chow would have asked the church to take it up after her death.  All this casts doubts on the credibility and reliability of Madam Wong’s evidence in this regard at trial.

133.  Harvey Lee also said in evidence that he had heard from her mother that she owned the shares and the Guangzhou property.  His evidence in this regard is of little value given its hearsay nature and lack of details.

134.  C S Lee’s claim that he had personally collected dividends from Luk Hon Tong in Hong Kong before he was relocated to Taiwan is not entirely incredible, even though he said that no seal was required to be used for the collection.  This is because on the evidence as a whole, I believe that he enjoyed a close relationship with the Chan family owning and running Luk Hoi Tong, and it was not surprising for him to be able to collect dividends without production of the seal.

135.  I bear in mind the dispute regarding the circumstances under which C S Lee applied for succession to the Guangzhou property (as successor/nephew of the deceased).

136.  In situations like the present, where only the alleged donee has given evidence before the court about the supposed gift, the court must scrutinize the evidence very carefully: Pettit, Equity and the Law of Trust (9th ed.) 122.

137.  Having considered the evidence as a whole, and bearing in mind, in particular, the matters specifically mentioned above, on the balance of probabilities, I have no hesitation in rejecting Madam Wong’s assertion of an unconditional gift in favour of her and her late husband by Madam Chow shortly before her death in 1960.

Chinese customary law

138.  As for Chinese customary law, both experts agreed that if a husband dies without leaving any male issue (natural or adopted), his widow is quite entitled to appoint or adopt an heir or successor to continue the male-line.  The widow enjoys a limited interest and use of the assets during her lifetime or widowhood.

139.  The crux of the dispute between the experts was in relation to the situation where the widow, for one reason or another, did not appoint an heir or successor.  Essentially, Professor Baker took the view that in such a case, after her death, the estate would go to the (male) next-of-kin of the deceased husband of the next generation, i.e. in the context of the present case, Yat Sun and C S Lee as the deceased’s nephews.

140.  In short, Dr Hwang opined that in the situation postulated, the widow’s interest would be one approaching that of an absolute owner.  She could freely dispose of the assets prior to her death in favour of whomsoever she wanted to give away the assets.  In that way, Dr Hwang sought to justify the alleged unconditional gift of the shares (and other assets) by Madam Chow in favour of Yat Sun and Madam Wong.

141.  Given my conclusions above relating to incomplete gift, donatio mortis causa and the factual assertion of Madam Wong (which I reject), all this is rather academic.

142.  I would simply indicate my preference for Professor Baker’s view to that expressed by Dr Hwang.

143.  I note from the authorities cited by Mr Hui during final submission that in Interpretation No. 206 of the Supreme Court at Peking dated 21 December 1914, the Supreme Court, in interpreting the relevant provisions in the Qing Code which still applied at that time of the republic government in the Mainland, upheld as valid a widow’s acts of disposal of properties belonging to her late husband, which were caused by a lack of necessities for life.

144.  In Interpretation No. 553 dated 13 December 1916, although the Supreme Court was of the view that only the direct descendants of a deceased person could challenge the act of disposal of a widow of the estate of the deceased, it did not doubt the correctness of an earlier judgment in that case which had ruled that the widow could not choose an heir from another village to succeed to her late husband’s estate, thereby in effect giving the estate to a stranger.

145.  I do not find any support in the authorities for Dr Hwang’s view.  The furthest the authorities would go was to endorse the disposal of the estate of the deceased by the widow out of necessity for maintenance purposes.  The second case referred to above, which turned on a procedural requirement of locus, confirmed on the facts of that case that a widow could not appoint whomsoever she liked to choose to be the heir.  I would have thought that, a fortiori, she could not give away the estate of her husband after her death to whomsoever she wanted to choose.

146.  It was suggested by Mr Hui during final submission that as no elders could be found to endorse any appointment of an heir by Madam Chow during her lifetime, therefore “out of necessity” she had to dispose of the assets of the deceased in whatever way she deemed fit.  I reject this argument.  First, there is no sufficient evidential basis for Mr Hui’s suggestion regarding the supposed “need” to dispose of the assets in the way she is said to have done.  More importantly, this so-called “necessity” never formed part of the case of Madam Wong on pleadings.  It was not seriously explored with the experts when they gave evidence, nor was it dealt with in the expert reports.  Finally, I simply reject the argument on its merit.  I do not think under Chinese customary law, “need” or “necessity” bears the meaning suggested by Mr Hui. 

147.  In my view, the matter is covered by the relevant provisions in the Qing Code (article 88(2)) regarding succession to property.  As a last resort, the property would be forfeited to the government.  There is no question of a widow, in the suggested situation, being entitled to dispose of the assets in whatever way she likes.

148.  During final submission, Mr Hui sought to draw a distinction between the situation where there had been a division of property amongst the sons of a family and where there was no such division.  Counsel argued that in the former case, even if the son had died without living any surviving male issue and his widow had made no appointment of an heir or successor after his death, his estate would not be succeeded to by his male next-of-kin of the next generation, in contradistinction to the situation where there had been no division of family property.  Mr Hui was unable to refer me to any authorities to support his proposition.  Nor was there anything in his expert’s evidence or reports to support the argument.  I reject it.

149.  The onus is certainly on Madam Wong to prove the capacity of Madam Chow to make the alleged unconditional gift.  On the materials before me, she has failed.

150.  As regards the issue of re-marriage/co-habitation, its significance lies in the fact that under the Qing Code, a widow’s interest in her late husband’s estate will cease upon her re-marriage.  The issue thus arises as to whether Madam Chow has formally married Mr Yu Fuk.  Again this is an academic question.  I would simply say that based on the limited materials before me, the presumption of reputed marriage as well as the presumption in favour of preserving the existing union (see my judgment in Wong Zhong Lan-xiang v. Frank Wong, HCAP 900002/95, paras. 76 and 77), I would be prepared to find that Madam Chow was lawfully married to Mr Yu.  I bear in mind, so far as evidence is concerned, Madam Chow’s own assertion of marriage, as recorded in Yat Sun’s letter written shortly after her death (D327), the way she was addressed in the funeral and on her gravestone, and the fact that she refused to be buried next to the deceased.  There were also other references in the correspondence to her being the wife of Mr Yu.

151.  I would only add that Madam Wong’s denial of the meeting summoned by Madam Chow and attended by her and her husband, as clearly referred to in Yat Sun’s letter written to C S Lee shortly after Madam Chow’s death (D327), in which Madam Chow stated quite clearly that she was formally married to Mr Yu, did Madam Wong little credit as a witness.

152.  In any event, even if Madam Chow had not formally married Mr Yu but simply co-habited with him, having listened to the experts’ evidence, I am of the view that she had severed her membership in the Lee family and regarded herself as a member of the Yu family on the evidence before me.  Her title (i.e. Mrs Yu) as well as the fact that she refused to be buried next to the deceased, and her insistence that her funeral be handled by the Yu family instead of the Lee family, all supported my conclusion.  Both experts agreed that if a widow should decide to give up her membership in her late husband’s family, and live together with another male person by way of co-habitation, her interest in the estate of her late husband would cease.  In this regard, Interpretation No. 1525 dated 3 May 1921 is distinguishable because in that case, the widow simply committed adultery but did not leave her late husband’s family.  (Incidentally, in that case the Supreme Court confirmed that a widow could dispose of the estate of her late husband in case of necessity.)

Conclusion on the issue of gift

153.  For all these reasons, I reject Madam Wong’s case of an unconditional gift.

Limitation defence

154.  Having thus dealt with the two main issues of adoption and gift, I now move on to deal with some consequential issues.  First, the question of limitation.  Madam Wong argues that in case her defence based on gift should fail, the claim by the estate against her to recover the shares and dividends is time-barred.

155.  I have no difficulty in rejecting this defence.  I agree with Mr Lo’s submission that in relation to a claim made by an estate through its administrator, time only starts to run from the date of the letters of administration.  Prior to that date, no one at law had a right to sue in the name of the estate.  Williams, Mortimer and Sunnucks, Executors, Administrators and Probate (18th ed.) para. 64-04 says as follows:

“There is, however, one notable exception to the general rule that no allowance is made for the interval between the death and the grant.  Although the Act provides that in actions for the recovery of land and advowsons by an administrator, the administrator shall be treated as claiming as if there had been no interval of time between the death of the deceased and the grant of letters of administration, it is clear that the old law applies to actions for the recovery of property other than land and advowsons.  Under that law, time does not begin to run in actions for the recovery of personalty by an administrator until a grant of letters of administration has been obtained.  The reasons for this exception is that in the absence of statutory provision, the administrator has no title until he has obtained a grant.” (emphasis added)

156.  In Chan Kit San v. Ho Fung Hang [1902] AC 257, an appeal case from Hong Kong, the Privy Council said at page 260 that “according to the well-established rule in English law, the statute [of limitation] runs against an intestate’s estate from the date of the grant of letters of administration only”.

157.  As the letters of administration were only granted to C S Lee in 1998, the High Court action commenced in 2000 was brought by C S Lee as administrator of the estate well within time.

158.  In any event, C S Lee said he discovered about the transfer in around 1997.  The grant of letters of administration was made in his favour in 1998.  I am prepared to find, if necessary, that C S Lee was not aware of the purported transfer of the shares into Madam Wong’s name until many years afterward.  The claim is covered by section 20 (constructive trust – see James v. Williams [2000] Ch. 1) and section 26 (concealment, etc.).  In view of my primary conclusion on the limitation defence, all this is rather academic.

Laches and acquiescence

159.  Mr Hui briefly mentioned laches and acquiescence in his final submission.  I see nothing in the argument.

Revocation of the grant of letters of administration

160.  Turning to the probate action, having concluded that C S Lee was not the adopted son of the deceased as claimed, the grant of letters of administration in his favour based on the sole premise that he was the adopted son is prima facie liable to be revoked pursuant to section 32(1) of the Probate and Administration Ordinance (Cap. 10) – this is so even though the grantee is dead and the grant has therefore ceased: Tristram and Coote’s Probate Practice (29^th ed.) paras. 17.11(m) and 17.37.  It is not necessary to make a finding of fraud against C S Lee: see Williams, Mortimer and Sunnucks, op. cit., 371 and the cases cited in note 33.

161.  In any event, I am not prepared to make a finding of fraud against C S Lee, although I do not accept his case of adoption in Toishan in 1928.  It must be remembered that in the present context, I am concerned with C S Lee’s application for letters of administration made in 1998.  At that time, as I noted above, he did not rely on the case that he was adopted in Toishan in 1928.  From all available materials, including Mr H C Miu’s expert opinion obtained in order to support the application for grant, his case was that he had been adopted in 1928 in Hong Kong.  That was quite consistent with what he has pleaded in the probate action.  On the evidence as a whole, I am inclined to think that C S Lee genuinely thought that he was an adopted son of the deceased as from 1928 after he had come to Hong Kong to stay together with the deceased and his family, and particularly given the purported appointment of him by Madam Chow as the successor or heir to the deceased’s estate at the Oi Kwan Hotel meeting.  As I also explained above, all this could not in law constitute him a lawful adopted son or successor of the deceased.  However, this is very different from saying that when he applied for representation in 1998, he knowingly put forward a false case.  The fact that I reject his claim of adoption based on an adoption in Toishan in 1928, a case run by him at trial, does not affect this conclusion.

Locus of Harvey Lee

162.  Mr Lo took some technical points and argued that Harvey Lee cannot ask the court to revoke the grant of letters of administration in the probate action.  He said Harvey Lee had no locus to mount the action, being only a grandnephew of the deceased.  I do not agree.  Given the expert evidence, after the death of his own father (Yat Sun), Harvey Lee has a (potential) interest in the estate of the deceased personally.

Joinder of parties

163.  Mr Lo also argued that Harvey Lee has not joined all the necessary parties as required by Order 76 rule 3 of the Rules of the High Court (Cap. 4).  I do not agree.  In my judgment, that rule, which applies to an action for revocation of a grant of probate or administration, only requires the executor or administrator under the grant (or any person claiming to be entitled to administer the estate under or by virtue of the grant in question) to be made a party.  In the present case, C S Lee was the administrator entitled to administer the estate pursuant to the letters of administration, which Harvey Lee seeks to revoke.  C S Lee has been joined.  There is therefore no question of non-joinder of any necessary parties.  Insofar as Yeung Chi Ding v. Yeung Tse Chun [1986] HKLR 131, 133E/F to G may seem to suggest otherwise, I would respectfully disagree.

164.  In any event, as the matter has been brought to the notice of the probate court, the court itself has the power under statute to revoke the grant.  The exercise of its probate jurisdiction does not depend on the application of an interested party or any technicalities.  There is nothing in Mr Lo’s argument.

Discretion on revocation of grant

165.  Of course, the Court has a discretion whether to revoke the grant.  It would not be fair to decide the question of discretion and revocation (in the context that the grantee has died) without affording the estate of C S Lee an opportunity to be heard, as the matter arose out of the untimely death of C S Lee after trial and the parties never addressed the Court on discretion and revocation in the context of the grantee having died. 

Declaration of status

166.  I would also defer the question of whether to grant a declaration, on top of the finding that I have made in this judgment, that C S Lee was not an adopted son of the deceased, until an opportunity has been given to C S Lee’s estate to address me on the matter, as C S Lee’s death, the cessation of the grant following his death, and whether the Court would revoke the grant nonetheless, might have a bearing on whether the Court should grant the discretionary relief in question.

Succession to the estate

167.  At this juncture, it is convenient to point out that the experts on both sides agreed that notwithstanding my first instance decision in Liu Ying Lan v. Liu Tung Tiu, HCA 6693/1992 (8 May 2002) and the Court of Appeal’s decision in that case ([2003] 3 HKLRD 249), where a deceased person was survived by a widow without any sons (adopted or not) or daughters, and if his widow died without having appointed or adopted any heir or successor during her lifetime (or “gifted” away the assets to someone else – as per Mr Hui’s contention) the estate would go to the dead man’s closest male next-of-kin of the next generation, even in the absence of any adoption of the next-of-kin.  A distinction between that situation and the situation faced by the courts in Liu Ying Lan is that in the latter case, it was a competition between the deceased’s daughters and the nephew, who was never adopted into the family of the deceased.  Here, there is no such competition between a daughter and a nephew.  If anything, it is a (potential) competition between the nephew and the government.  As has been pointed out by Jamieson, Chinese Family and Commercial Law, 30, the forfeiture of the estate to the government is perhaps never insisted upon as against relations of any kind.  Furthermore, the relevant Qing Code, i.e. article 88(2) providing for forfeiture of the property to the government, apparently provides for a discretion whether to forfeit (“酌撥充公”).

168.  In the circumstances of the present case and based on the expert evidence before me, I see no reason why in the absence of a valid adoption of C S Lee, and upon my rejection of the defence of gift raised by Madam Wong, the estate of the deceased should not be succeeded to by Yat Sun (and his family) and C S Lee (and his family).

Appointment of a new administrator

169.  Harvey Lee asks for a grant of representation in his favour.  A new grant is required following C S Lee’s death and the cessation of his grant, regardless of whether the Court should nonetheless revoke the grant.

170.  I do not think Harvey Lee is an appropriate choice.  He has obviously sided with his mother in the two actions, and I think there is much force in Mr Lo’s submission that the probate action was brought for the tactical purpose of thwarting the High Court action, under the (mistaken) belief that if C S Lee could somehow be removed as administrator of the estate, the action brought by C S Lee as administrator of the estate against Madam Wong would be dropped or otherwise disposed of.  In any event, given the serious conflicts and disputes amongst the two families, it is simply inappropriate to appoint Harvey Lee as the new administrator.

171.  For the same reason, I do not think it will be appropriate to appoint anyone from C S Lee’s family (his widow or children) to be the administrator.

172.  The only option left is to appoint an independent outsider to administer the estate.  That would, of course, cost money.  But that is a necessary evil in the circumstances of this case.  The court clearly has jurisdiction under section 36 to by-pass any person who would otherwise be entitled in priority to administration, and appoint another person to administer the estate when it is necessary or convenient to do so. 

173.  I have not heard from the parties about the right candidate.  The parties should be given an opportunity to be heard on the appropriate choice of this independent third party. 

Judgment in the High Court action

174.  Returning to the High Court action, judgment must be entered for the estate of the deceased against Madam Wong.  The claim is not restricted to the recovery of the shares.  It extends to the dividends collected and distributed in the past as well as those frozen by the litigation (and stake-held by Luk Hoi Tong).  In relation to the frozen dividends, they must be paid over by Luk Hoi Tong to the estate.  In relation to the past dividends that had already been collected and distributed, the distributions were, for all practical purposes, done with the agreement of the two sides, although strictly speaking, in the absence of a grant, the distributions amounted to intermeddling and misappropriation of the assets of the estate.  Given that the distributions were, in substance, consensual in nature, I see little point in the estate formally recovering the dividends from the parties (which would include not only Madam Wong’s side, but also C S Lee’s side), only to distribute any such recovered dividends to the two sides again.  (I think as amongst the beneficiaries of the estate themselves, they are estopped from challenging the previously agreed ratios of distribution, and the estate must distribute any such recovered dividends in accordance with such agreed proportions.)

175.  Given all this, and as the court can always give directions regarding administration, I will give the new administrator (to be appointed), as well as the beneficiaries an opportunity to be heard, and subject to that, I may well direct the administrator not to pursue further the dividends that have already been collected and distributed in the past.

176.  Luk Hoi Tong has not participated in the trial, it having reached an agreement with C S Lee to abide by the result of the High Court action.  The precise terms of the judgment to be entered against Luk Hoi Tong will have to be worked out and submitted to the Court for approval.

Further hearing

177.  In the circumstances, I would simply indicate that in the High Court action, I am prepared to give judgment in favour of the estate of the deceased against both Luk Hoi Tong and Madam Wong; and in relation to the probate action, I would need to hear the parties further on the relief to be granted and deal with all consequential matters. 

178.  The parties shall re-list the matter for hearing before me to sort things out.  I also give liberty to all non-parties who are interested beneficially in the estate of the deceased, whether in their own right or via the estate of Yat Sun or that of C S Lee, to appear before the Court at the hearing.  At the hearing, I will, where necessary, give directions on who may be heard on what issue or matter.  If anyone has a proposal to make in relation to the choice of the new administrator, he or she must put in the proposal by way of affidavit not later than 28 days before the date of hearing.  Any evidence in response to such proposal must be filed and served within 14 days thereafter.  Any reply thereto must be filed and served within 7 days thereafter.  The above timetable shall also apply to any other matters to be dealt with at the hearing, which should require evidence to be filed.  The estimated length of hearing is 1 day.

179.  My appointment of the Official Administrator to represent the estates of the deceased and C S Lee respectively to take judgment does not prevent anyone from applying to represent the estates after the taking of judgment.  If possible, questions of representation should be dealt with by agreement, failing which the same may be heard at the hearing.

180.  Amongst other things, I will deal with the question of costs at the hearing.

181.  Any draft orders, directions or judgments must be submitted to the Court not later than 7 days before the hearing for its consideration and approval.

182.  If everything can be dealt with by agreement, which must be indicated clearly in writing, Luk Hoi Tong need not attend the hearing.

183.  As procedurally speaking, the matter is not straightforward, I give the parties and all those beneficially interested in the estate of the deceased general liberty to apply.