CHEUNG WAN OI KANDY v. LAM CHUNG MAN MANDY AND ANOTHER

HCA 1556/2020

[2026] HKCFI 344

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 1556 OF 2020

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BETWEEN

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JUDGMENT

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A. INTRODUCTION

1.  The plaintiff Madam Cheung Wan Oi Kandy (“P”) brought the present misrepresentation claims against the 1^st defendant Ms Lam Chung Man Mandy (“D1”) and the 2^nd defendant Bank of Communications Trustee Limited (“D2”), (collectively “Ds”).

2.  This case arose out of an insurance policy which P purchased in August 2017 (“the Chubb Policy”), not from D1 or D2, but from a licensed insurance broker firm known as Greater China Wealth & Risk Management Limited (“Greater China”) who is not a party to the present proceedings.

B. BACKGROUND

B1. General Background

3.  According to P, in early 2017, she was diagnosed with a serious medical condition. She was worried that she might pass away or become incapacitated. She wanted to set up a trust. She therefore approached D2 which is a licensed bank specialized in trust matters, to enquire about its private trust and estate planning services. She intended to set up a trust account with the bank and arranged a meeting on 13 June 2017 with its staff accordingly. D1, who was at the time the Section Head of D2’s Trust Business Team, met P at the bank as a potential customer, as part of her duties at the bank. This was the first time they met. They did not know each other and had never met before.

4.  P’s case is that as a result of a series of fraudulent misrepresentations and/or negligent recommendations / misrepresentations made by D1, for which P says D2 as D1’s employer is vicariously liable, she was misled into purchasing the Chubb Policy. It is to be noted here that the Chubb Policy is an investment-linked life insurance policy. It was sold to P by a licensed insurance agent by the name of Ngan Man Ting (“Ms Ngan”) who was working for Greater China at the time.

5.  According to P’s case, she purchased the Chubb Policy on 15 August 2017, which was slightly over 2 months after she had first met D1 in the bank. That was done in the office of Greater China, after having listened to a 1 to 1.5 hour-long presentation from the insurance agent Ms Ngan and a sales representative from Greater China Ms Vivian Chan (“Ms Chan”). On that occasion, P placed her signature 13 times on various policy documents (all written either in Chinese or in English with Chinese translation) to confirm her understanding and agreement of the terms of the Chubb Policy.

6.  In around mid-2019, which was about 2 years after P purchased the Chubb Policy, she decided it was not what she wanted.

7.  She asked Greater China to switch her policy to a different one. Her request was refused by Greater China. She then decided to voluntarily surrender the policy by not paying the premium and simply let the policy lapse. As the surrender value of the policy paid to her was less than the premiums she had paid, it resulted in significant monetary loss.

8.  P then issued the writ in this action against Ds in September 2020, claiming that she was being misled by a series of fraudulent misrepresentations and/or negligent recommendations made by D1 which led her into believing that the Chubb Policy she brought was something else. The core of P’s allegations is that she was misled into believing that the Chubb Policy was an “incapacity account insurance” (「失能戶口保險」) or “incapacity insurance” (「失能保險」). P claims that it was D1 who recommended the Chubb Policy to her as being suitable for her needs.

9.  As P’s counsel Mr Keith Lam, appearing with Mr Cedric Yeung, has highlighted in P’s opening submissions (“P’s Opening”), a key feature of her case is that P had made audio recordings of many of the meetings between the parties. Conversations which supposed to contain the alleged misrepresentations and/or statements made by D1 that gave rise to the present causes of action against Ds have been recorded and transcribed. As such, P says that her case was amply supported by those recordings. However, as was revealed during the trial, those audio recordings were incomplete and selective and made no direct reference to the alleged fraudulent misrepresentations and/or negligent recommendations made by D1 or D2 at all.

10.  What is also significant to note is the fact that, on Day 6 of this 7-day trial and at the end of parties’ evidence, P’s counsel informed the court that P no longer pursues the claim based on the alleged negligent misrepresentation / recommendations pleaded in the amended statement of claim (“ASOC”). Thus, only the fraudulent misrepresentations remain as the sole cause of action against Ds by the closing stage of the trial.

B2. P’s Personal Background

11.  P was born in 1967. She was 50 years old when she first met D1 at the bank. She received education up to Form 2 level. Her ability in understanding English is therefore limited. However, she has no problem in reading and understanding Chinese. She was previously the owner of a small clothing store in Whampoa Garden until 1993 when her daughter was born. P was married in 1985 when she was 18. However, that marriage ended up in divorce after only 2 years. P’s daughter was born out of a relationship with another man whom P has never married. Since the daughter was born, she has not been working and was supported by the daughter’s father. This is despite the fact that she and the daughter’s father had been separated. P and her daughter have been estranged from each other since September 2016.

12.  It has been claimed that before P engaged the services of Ds: (i) she had no experience in private trust and estate planning; and (ii) she had only invested in some stocks and real properties and a life insurance policy with Prudential issued in 2003 (“the Prudential Policy”).

13.  In early 2017, P was diagnosed with a tumour in one of her ureters. She consulted various doctors but the opinions as to her condition varied. The doctors were unable to conclude on what the cause of the tumour was, whether it was cancerous, or on the most appropriate course of the treatment.

14.  P then became very worried. She was particularly concerned that her health might deteriorate suddenly to the extent that she might pass away or become incapacitated. As a result, P began to explore various options for estate planning, including setting up a trust to deal with her assets.

15.  For that purpose, in March 2017, P enquired from the Bank of East Asia (“BEA”) for information about setting up a trust. However, P did not follow up with her enquiries with BEA.

16.  P tried very hard to paint a picture at the trial that she was an uneducated, inexperienced and vulnerable investor who knew nothing about insurance policy products. However, that did not tally with the evidence. In fact, the evidence emerged during the trial shows that P was an experienced, seasoned and successful investor who has accumulated substantial wealth of over HK$100 million by 2017. In the “Know Your Client (“KYC”) Form for Private Client” of D2 (“KYC Form”), which she was asked to fill in and sign on 27 July 2017, she declared that her total assets at that time was around HK$128 million. They mainly consisted of stocks & shares and landed properties. Significantly, prior to meeting D1 at D2’s office in June 2017, P already has had experience in purchasing large premium investment-linked life insurance policy under which she may suffer loss or make profit, depending on how long she would hold onto the policy. That was the Prudential Policy mentioned above. The total premium of the policy was about US$2.3 million to be paid in one go. It is a life insurance which would pay out benefits upon P’s death. The policy is an investment-linked product in that if P surrenders the policy, she will receive a sum of “guaranteed cash value”, the amount of which depends on how long she holds onto the policy. The Chubb Policy was the second investment-linked life insurance policy purchased by P. But that was not the last one.

17.  On 22 February 2018, less than 6 months after all the material events happened in this case, P purchased a third investment-linked life insurance policy from FT Life (“FT Life Policy”). The premium of that policy was even larger at US$7,692,307. Like the Chubb Policy, P would suffer significant loss if she surrenders the FT Life Policy in the earlier years after the policy was taken out but would stand to make substantial profit if she holds onto the policy long enough.

B3. D1’s Personal Background

18.  D1 was 34 years old when she first met P in June 2017. She graduated from Leeds Metropolitan University with a double degree in Accounting and Finance. She first spent a few months working in an informal job in a family office. Thereafter, she joined HSBC as a Trust Assistant, working in the Trust Department of the private banking arm of that bank. She spent about 5 years working in HSBC, where she received internal training about how to handle work in relation to trusts. They include learning about how to read trust instruments, documents and handling individual cases. She had handled about 300 cases during that time. While she was with HSBC, D1 also read a course known as “Trust and Estate Practitioner” which was provided by an UK institution known as “STEP”. It took her about 1.5 years to complete the course where at the end she was awarded the “Trust and Estate Practitioner Certificate”. She was later promoted to the rank of Senior Trust Assistant at HSBC.

19.  In October 2010, she left HSBC on her own accord in order to join D2 as a Trust Officer. In her 7 years with D2, as seen from her appraisal reports, she was highly regarded by her seniors and supervisors. By the time when she was assigned to handle P’s case, D1’s title was Section Head of the Trust Business Team in the Marketing Department of D2.

20.  It is not disputed that D1 was not a licensed insurance agent, nor is it in dispute that D2 ever holds a licence of insurance broker. At all material time, D1 was well aware of the fact that D2 is not a licensed insurance agency or broker. She was also aware that the bank prohibited its employees from selling insurance policies. Her job duties in the Trust Business Team did not include choosing or recommending insurance products for clients. When necessary, she would refer clients to the bank’s business partners which provide different professional services. These professional business partners include licensed insurance brokers such as Greater China.

21.  D1 left D2’s employment in October 2017, again on her own volition in order to join the Trust Department of BEA as a Senior Trust Manager. She spent about 2 years and 10 months working in BEA. She was about to accept an offer from the China Construction Bank (“CCB”) as the First Vice President in its Trust Department when she was served with the writ in the present proceedings. It caused the withdrawal of the offer by CCB. Due to the present litigation, D1 was not able to find a full-time job in any banks. She has worked as a consultant on a self-employed basis since she had lost the opportunity to join CCB.

B4. Relationship between D2 and D1

22.  D2 is a subsidiary principally owned by the Bank of Communications Co. Ltd, which offers professional private trusts services, including the setting up and administration of trusts, for private clients.

23.  As said, D1 was the Section Head of the Trust Business Team of D2 until October 2017.

24.  Neither D1 nor D2 was or is a licensed insurance agent under the Insurance Ordinance, Cap 41 (“IO”). Nor did they advertise or market themselves as such.

B5. Relationship between P and D1

25.  It is not in dispute that, after D1 left the employment of D2 in October 2017, D1 and P became close friends until their relationships broke down in or around mid-2018.

26.  Significantly, during the two-month period where the alleged fraudulent misrepresentations were made, ie from June to August 2017, P and D1’s relationship remained a business and professional one. P herself described the relationship as one between a banking staff and the bank’s client: see P’s 1^st witness statement (“P’s 1^st WS”) §34[1]. It is also clear that P did not place any trust or confidence from D1 on a personal level when they first met and before they became close friends after D1 left the bank. In P’s 1^st WS, she repeatedly said that she trusted the bank rather than D1 personally: see P’s 1^st WS §34 and §144.

27.  It is not disputed that the close relationship between P and D1 broke down in or around mid-2018. According to P, she started to lose trust in D1 in or around June to August 2018 after a series of events: see P’s WS §§121-128. P asked D1 not to attend her meeting with the staff of BEA on 30 August 2018, and P told her manager at BEA that she did not wish D1 to attend her meetings because she did not want D1 to know too much about her: see P’s WS §133.

28.  As shown in the WhatsApp records, D1 probably sensed the change in P’s attitude in or around August 2018. As on 29 August 2018, D1 called for a pause in the handling of P’s trust and Enduring Power of Attorney (“EPOA”). On 29 October 2018, D1 told P that she no longer wished to handle P’s matters and would return all the documents to her.

C. DISCUSSION

C1. Meetings between P and D1 from 13 June 2017 to 15 August 2017

29.  There were a number of meetings which took place between 13 June 2017 and 15 August 2017 amongst P and D1 (“the Meetings”). While the parties disputed what were said in the Meetings, it is not in dispute that the following meetings took place:-

(a) P and D1 first met on 13 June 2017 (“the 13 June 2017 Meeting”);

(b) On 20 June 2017, P and D1 met again to further discuss D2’s trust services at the bank (“the 20 June 2017 Meeting”);

(c) On 3 July 2017, P and D1 met again, during which P signed the service agreements of D2 (“the Service Agreements”). P also paid roughly half of the set-up fee at HK$220,000 (“the 3 July 2017 Meeting”);

(d) On 27 July 2017, P and D1 met to discuss P’s estate planning and the drawing up of P’s will. Also present at that meeting was a solicitor by the name of Mr Sam Cheung (“Sam Cheung”), who was eventually appointed as the executor of P’s will;

(e) On 3 August 2017, P, D1 and Sam Cheung met again to discuss P’s will. P and D1 also discussed the drawing up of P’s letter of wishes where it was explained that P can inject an insurance policy into a trust rather than injecting assets right away in order to save fees (“the 3 August 2017 Meeting”); and

(f) On 15 August 2017, two important events took place:-

(i) In the morning, P and D1 attended the office of Greater China to listen to a presentation delivered by the insurance agent (Ms Ngan) and sales representative (Ms Chan) from Greater China. At that meeting, P completed and signed the policy proposal, policy application form, financial needs analysis form and financial questionnaire, all issued by Greater China. She purchased the Chubb Policy and paid the first premium installment of HK$1,560,114; and

(ii) In the afternoon, P and D1 attended the bank to set up the Trust and the Sub-Trust by executing (a) a Trustee for each of the Trust; (b) a letter of wishes for the Trust (“Letter of Wishes”); and (c) a will (“P’s 1^st will”) appointing Sam Cheung as the executor and the bank as the alternative executor, devising P’s residual estate to the bank as the trustee of the Trust[2] (“the 15 August 2017 Meeting”).

30.  Unknown to Ds at the time, P secretly recorded the Meetings on 13 June 2017, 27 July 2017 and 3 August 2017 on her mobile phone without the permission or knowledge of D1. As transpired during the trial, those audio recordings were selective and incomplete. What is not clear is at which point during the Meetings P started to record the conversations and at which point she stopped. It is also not clear whether P had edited the recordings before she disclosed them for the purpose of the present proceedings. However, what is clear about the recordings is that they are not a complete and full record of the Meetings. Further, some of the important meetings like the one at Greater China’s office in the morning of 15 August 2017 was not recorded. Significantly, the recordings do not directly support or establish P’s case of fraudulent misrepresentations. P’s counsel invited the court to make inferences from parts of the recorded conversations in order to find any wrongdoings against Ds.

C2. P’s Case of Fraudulent Misrepresentation

31.  As P has abandoned her claim based on negligent misrepresentations / recommendations on the sixth day of the trial after the close of evidence, the only cause of action which the court needs to deal with is her pleaded case against Ds based on fraudulent misrepresentation.

32.  In gist, P claims that during the 2-month period from 3 June 2017 to 15 August 2017, D1 made a total of 7 representations, ie the 1^st to the 7^th Representation as pleaded under ASOC §§9, 12, 25, 29 and 30, regarding the features and the returns/payments from the Chubb Policy to P, knowing them to the untruth or being reckless as to whether they were truth, which induced P into signing the service agreements and purchase of the Chubb Policy[3]. In essence, P’s case is that she was misrepresented by D1 into believing that the Chubb Policy is an “incapacity insurance” in the sense that it will pay out money upon her in becoming incapacitated; she should be able to get back all the premiums paid at the 5^th year; and the amount paid out at the 5^th year would be sufficient to cover all her expenses if she became incapacitated.

C3. D1’s Defence on Fraudulent Misrepresentation

33.  In a nutshell, D1’s defence on the fraudulent misrepresentation as pleaded against her by P under the ASOC can be summarized as follows:-

(a) D1 did not make each of the 1^st to the 7^th Representations;[4]

(b) Each of the 1^st to the 7^th Representations (even if made) is not an actionable statement of present or past facts;[5]

(c) P did not rely on and was not induced by the 1^st Representation to enter into the Service Agreements;[6] nor did she rely on or was induced by the 2^nd to the 7^th Representation into purchasing the Chubb Policy;[7] and in any event, P was estopped (either contractually or otherwise) from asserting reliance or inducement by virtue of the exclusion clause (“Exclusion Clause”) set out in the Service Agreements;[8]

(d) P cannot prove that each of the 1^st to the 7^th Representations (even if made) are false;[9]

(e) P cannot prove that D1 made each of the 1^st to the 7^th Representations (even if made) in order to induce P to enter into the Service Agreements, purchase the Chubb Policy, and/or continue to engage the services of D1 and the D2[10]; and

(f) P cannot prove that D1 made each of the 1^st to the 7^th Representations (even if made) fraudulently, either with knowledge of their falsity or was reckless as to whether they were true. [11]

C4. D2’s Defence to the Fraudulent Misrepresentation

34.  In short, D2’s defence to the alleged fraudulent misrepresentation claims brought by P against it can be stated as follows:-

(a) P’s alleged 1^st to 7^th Representations made by D1, are not admitted by D2;

(b) Even if the 1^st to 7^th Representations were made (which is not admitted), the said Representations are not actionable as (i) a statement of opinion or forecast; (ii) a statement of fact or intention, and/or (iii) a statement as to a future state of affairs;[12]

(c) P did not rely on respectively the 1^st Representation and the 2^nd to 7^th Representations to enter into the Service Agreements and in her purchasing of the Chubb Policy for the Trust;[13]

(d) P is estopped (contractually or otherwise) from relying on or cannot rely on or be induced by the 1^st to 7^th Representations because of the express acknowledgment and declaration by P in (i) the PowerPoint Disclaimer and (ii) in the Service Agreement Exclusion Clauses and No-Reliance Clauses;[14]

(e) D2 did not owe any duty of care to P, and D2 also denies any alleged breach of duties owed to P. In particular, D2 did not recommend P in her purchasing of the Chubb Policy;[15]

(f) D2 should not be held vicariously liable for the alleged fraudulent misrepresentation of D1 (even if proven), because D1 was acting outside the scope of her authority (hence, not agent of D2) by making representations in respect of insurance policies, which D1 was not licensed and not authorized to do so;[16]

(g) Any loss and damage (if any) suffered by P was caused by P’s premature surrender of the Chubb Policy and P’s failure to mitigate her own loss. In any event, D2 should not be liable for such loss and damage because P did not seek recission of the Service Agreements under which D2 has duly performed its contractual obligations; the purchase of the Chubb Policy was distinct and independent of P’s entering the Service Agreements with D2; and such loss and damage is to remote and not directly caused by D2 or the making of the Service Agreements[17]; and

(h) In any event, by virtue of the contractual provisions in the Service Agreements namely Clauses 11(a) and 12, D2 claims for dismissal of the action and costs to be paid by P, on an indemnity basis.[18]

D. LEGAL PRINCIPLES INVOLVED

D1. Legal Principles on Fraudulent Misrepresentations

35.  The following legal principles on fraudulent misrepresentations would apply in this case.

36.  In Joytex Development Limited v Super Homes Ltd [2018] HKCFI 2286, at §§127(1)-(2), referring back to ADS v. Brothers (2000) 3 HKCFAR 70, DHCJ Alexander Stock SC summarized the applicable principles as follows:-

“(1)‘Fraudulent intent is required to be strictly proved. The standard of proof is the civil standard, but the evidence in support must be commensurate with the seriousness of what is alleged and its inherent improbability. Inferences of fraud are not lightly drawn.’

(2) ‘The tort of deceit requires a false representation which is made: (i) knowingly; (ii) without belief in its truth; or (iii) recklessly.’

(3)’Recklessness entails not caring whether the statement is true; an indifference to the truth. Negligence is insufficient, it does not amount to dishonesty.’” [emphasis added]

37.  §§5-14 to 5-16 in Misrepresentation, Mistake and Non-Disclosure by Cartwright (7th ed. 2025) (“Cartwight”) further stated that:-

“To establish a claim in the tort of deceit the representee must show that the representor was fraudulent, in that he did not honestly believe that his representation was true; and that he intended the representee to act upon the statement. The tort is one of intention; simple lack of care does not suffice, either as to the truth of the statement, or as to the realization that the statement might have the consequence that a person in the representee’s position might suffer harm by acting on it. In any claim in the tort of deceit, therefore, the enquiry into the defendant’s state of mind is a very significant element — and one which the courts require to be proved strictly.” (§5-14)

“… The essence of the tort is therefore fraud: and the core issue in a claim is whether the representee can show that the representor did not honestly believe the representation. He was fraudulent if he knew it was false; or suspected it might not be true; or was reckless as to its truth. But if he had a positive, honest belief in the truth of the statement, however unreasonable that belief might have been, he is not fraudulent and so cannot be held liable in deceit. So, too, if he knew the truth but it was not present to his mind when he made the statement and so he had forgotten it, or did not realise the significance of the information he had at his disposal, he is not dishonest for the purposes of the tort of deceit. And it must be remembered that it is for the representee to prove the representor’s dishonesty — his lack of honest belief in the truth of the statement; not for the representor to prove his honest belief.” (§5-15)

“The representor will be fraudulent if he made the statement ‘recklessly, careless whether it be true or false’. It is important to notice that Lord Herschell does not here say that a representor is fraudulent if he fails to take care — is negligent — whether his statement is true. Negligence is not dishonesty: and the House of Lords in Derry v Peek was at pains to emphasise that negligence is not sufficient for deceit. ‘Recklessness’ involves not caring whether the statement is true: an indifference to the truth.” (§5-16)

38.  More recently, in a 2025 decision which also concerns fraudulent misrepresentation claims, namely, Wong Wai Sum v Axa China Region Insurance Co. Ltd [2025] HKCFI 872, Cheng J provided a succinct summary of the law on fraudulent misrepresentation at §§72-76:-

“D2. Relevant principles

72. The burden of establishing fraudulent misrepresentation lies on the complainant. Whilst the burden is that of the balance of probabilities, it is to be borne in mind that the more serious an allegation is, the more cogent is the evidence required to overcome the unlikelihood of what is alleged and thus to prove it. This is because the inherent probability of an event is a matter to be taken into account when deciding whether it occurred. See In re H and others (minors) [1996] AC 563 at 586G (Lord Nicholls).

73. The elements of a claim of fraud or deceit were set out in Haifa International Finance Co Ltd v Concord Strategic Investments Ltd [2009] 4 HKLRD 29 at [15], citing Winfield & Jolowicz on Tort, 17th ed., at paragraph 11-3:

73.1 There must be a representation of fact made by words or conduct.

73.2 The representation must be made with knowledge that it is or may be false. It must be willfully false, or at least made in the absence of any genuine belief that it is true.

73.3 The representation must be made with the intention that it should be acted upon by the claimant, or by a class of persons which includes the claimant, in the manner which resulted in damage to him.

73.4 It must be proved that the claimant has acted upon the false statement.

73.5 It must be proved that the claimant suffered damage by so doing.

74. A representation will not be false simply because it is not entirely correct, provided that it is substantially correct, and the difference between what is represented and what is actually correct would not have been likely to induce a reasonable person in the position of the claimant to enter into the contract: China Alarm Holdings Acquisition LLC v Ing Alexander Yim Leung, unreported, HCA 503/2012, 24th March 2016 at §76 (DHCJ Keith, citing Raiffeisen Zentralbank Osterreich AG v Bank of Scotland plc [2011] 1 Lloyd’s Rep 123 at §149).

75. The claimant must prove that it was the representation which induced him to act upon it. He does not have to prove that the representation was the sole reason why he acted on it, but he has to prove that the representation did something more than merely encourage him to act upon it. The misrepresentation has to have played a real and substantial part in inducing him to act upon it; it has to have been the effective cause of him acting upon it in the sense that but for the representation, he would not have acted upon it. See China Alarm Holdings Acquisition LLC at §134.

76. For the mental element required to establish a claim in fraud, the Defendants cited the classic statement in Derry v Peek (1889) 14 App Cas 337 at 374 (Lord Herschell):

‘…fraud is proved when it is shewn that a false representation has been made (1) knowingly, or (2) without belief in its truth, or (3) recklessly, careless whether it be true or false. Although I have treated the second and third as distinct cases, I think the third is but an instance of the second, for one who makes a statement under such circumstances can have no real belief in the truth of what he states. To prevent a false statement being fraudulent, there must, I think, always be an honest belief in its truth. And this probably covers the whole ground, for one who knowingly alleges that which is false, has obviously no such honest belief. Thirdly, if fraud be proved, the motive of the person guilty of it is immaterial. It matters not that there was no intention to cheat or injure the person to whom the statement was made.’”

39.  In essence, for P to succeed in her claims against Ds based on fraudulent misrepresentation, she must establish that:-

(1) D1 made the alleged Representations;

(2) the Representations were actionable statements of present or past fact; and

(3) the statements were a “but for” cause of P’s entering into the Service Agreements and/or purchasing the Chubb Policy.

See Shine Grace Investment Ltd v Citibank, N.A. & Anor. [2018] HKCFI 1737 §166, per Ng J.

40.  The elements of fraudulent misrepresentation or deceit have also been summarized in Clerk & Lindsell on Tort (24th Edn., 2023) as follows:-

(a) There must be a representation of present fact.[19] A representation as to the future will not found liability in deceit.[20] Statement of opinions cannot found liability in deceit.[21] Positive representation is required and mere silence, however morally wrong, will not support an action of deceit.[22]

(b) The representation must be false. To determine whether a representation is true or not, the court looks to the reasonable meaning of what the defendant said.[23]

(c) The representation must be made with fraudulent intent, ie the defendant made the representation knowing that it was false or without genuine belief in its truth. A statement honestly believed by the defendant to be true, however implausible it may be, is not capable of amounting to fraud.[24]

(d) The representation must be intended by to be acted upon by the claimant.[25]

(e) The claimant has acted in reliance on the defendant’s representation. If the claimant would have done the same thing even in the absence of the representation, the claimant’s claim in deceit will fail.[26]

41.  Further, on the meaning of statements of opinions or statement of future facts, Cartwright summarized them as follows:-

(a) A statement of opinion is a statement of what the speaker thinks to be a valid assertion but without having the certainty that it is necessarily and assertion of truth (§3-16);

(b) A statement which is vague or not objectively verifiable may be characterized as an opinion rather than a statement of fact (§3-15). Similarly, a statement which there is an inherent lack of certainty, the statement is more likely to be characterized as one of opinion (§3-16); and

(c) A statement of what will happen in the future is simply a prediction which can in itself neither be true nor false at the time it is made, rather than a representation. (§3-44 and §3-45)

E. ASSESSMENT OF WITNESSES’ CREDIBILITY

42.  Before delving into the specific allegations made by P against Ds, I would like to make some general comments and observations on the credibility of the 3 key witnesses who gave evidence at the trial.

E1. P’s Evidence

43.  P gave evidence for almost 3 days during the trial. She was cross-examined by D1 and D2’s respective counsel extensively. I was able to listen to her evidence and observe her demeanor carefully over that time.

44.  There is no doubt that P is a very astute and shrewd investor. She clearly is very smart with her money which explains why over the years she was able to accumulate substantial wealth without much professional help. However, I also find her to be a very distrustful and suspicious person, who is always very guarded of people around her. During her 3-day of giving evidence in the witness box, she came across to me as a rather aloof, stubborn and opinionated lady. P gave me a strong impression that she is not someone who would be willing to listen to other people’s opinion or advice easily. She clearly has a very independent mind of her own.

45.  I also find her to be an extremely unreliable and incredible witness. Her evidence is full of inconsistencies, contradictions and exaggerations. Not only her serious allegations of fraudulent misrepresentations are not supported by the documentary evidence disclosed during the trial, in fact her evidence has been repeatedly contradicted by the contemporaneous documents. Most importantly, I consider her claims as rather far-fetched and inherently improbable.

46.  Overall, I do not accept her evidence.

E2. D1’s Evidence

47.  D1 also gave evidence in the witness box for a similar length of time as P. She was vigorously and meticulously cross-examined by P’s counsel Mr Lam for almost 3 days.

48.  On the whole, I find D1 as an honest and credible witness. While her evidence by no means is perfect or without its defects or inconsistencies, but on the core issues of the case, I find D1’s evidence remains unshaken and unequivocal. In particular, on the 7 Misrepresentations pleaded against her, D1 was able to give clear, cogent and logical accounts which are consistent with the documentary evidence and consistent with the audio recordings and transcripts of the Meetings.

49.  Despite being accused of some very serious wrongdoings, both on a personal and professional level, in my view, D1 was able to give her evidence in a calm, dignified and upright manner. Unlike P, she was not prone to react in any exaggerated or emotional manner. Nor did she make any vindictive and derogative remarks towards P, like what P did against her and Sam Cheung.

50.  Most importantly, I find D1’s evidence is consistent with the contemporaneous documents produced by the parties in the trial and accords with both common and commercial sense. In my view, her case is inherently much more probable than the one put forward by P in light of the documentary evidence.

51.  Generally speaking, I would accept and prefer her evidence than those given by P.

E3. D2’s Evidence

52.  Ms Zana Lau (“Ms Lau”) is an Assistant Chief Executive of D2. She was not working for D2 at the time when the events gave rise to the present action occurred. She therefore has no personal knowledge of the matters stated in her predecessors’ WS filed for the purpose of the trial. She merely adopted them during the trial. In her evidence, she mainly explained the internal regulations and compliance requirements of D2. Her evidence is not controversial and not seriously challenged by P. It is clear that Ms Lau is an objective and reliable witness.

53.  I accept her evidence.

E4. Whether the rule in Browne v Dunn should apply in this case?

54.  In P’s Closing, besides asking the court to prefer the evidence of P than that of D1, a lot of emphasis has been placed on the fact that much of P’s evidence was said to be unchallenged as there was barely any attempt to put D1’s competing version to P during cross-examination by D1’s counsel. In particular, it has only been suggested to P by D1’s counsel that she could possibly have misremembered what happened at the various meetings. Mr Lam submits therefore that P had no opportunity to explain or clarify her evidence, nor did she have any chance to comment on key aspects of D1’s competing version of events. P submits that, as a matter of basic fairness, under the well-established rule in Brown v Dunn, P’s unchallenged evidence should be accepted while D1’s contradictory account should be rejected: see Griffiths v Tui (UK) Ltd [2025] AC 374, §§70(i)-(vi) per Lord Hodge.

55.  On this issue, I accept Ms Lam’s submission that it has been long recognized that the rule in Browne v Dunn is to be applied flexibly in civil trial. It is inapplicable when there is ample evidence as to that P’s answer would be or that the witness’ factual evidence is manifestly incredible in light of the documentary evidence as happened in this case. As Ms Lam has submitted, even if Brown v Dunn is applicable, the failure to observe the rule is but one factor for the court to take into account in its overall assessment of evidence, it does not dictate what evidence must or must not be accepted by the court. In short, the applicability of the rule depends on the actual circumstances of each case: see DBS v Sit Pan Jit [2016] HKEC 1307 at §98.

56.  I shall deal with some of the specific allegations made by P’s counsel on this matter when discussing the evidence given by the different witnesses below.

F. ISSUES TO BE DETERMINED

57.  The main issue which the court has to determine in this case obviously is whether D1 has made each of the alleged 1^st to 7^th Representations to P and whether each of those Representations (if made) was fraudulent[27]. If P fails to establish this crucial issue, the rest of her case will collapse.

58.  In addition to the above main issue, the following issues have been identified by the parties in the Agreed Issues:-

(a) whether each of the 7 Representations (if made) is actionable as a matter of law[28];

(b) whether P had in fact relied on and was induced by the 1^st Representation into entering the Service Agreements; and whether P relied on and was induced by the 2^nd to 7^th Representations into purchasing the Chubb Policy[29];

(c) whether each of the 1^st to 7^th Representations (if made) was false[30];

(d) whether D1 and D2 respectively owed to P the alleged duties pleaded under ASOC §18; whether the alleged terms in ASOC §18 could be implied into the Service Agreements; and whether D1 and D2 acted in breach of those duties, including the alleged advisory duties pleaded in ASOC §18 in tort[31];

(e) whether D2 is and was vicariously liable for D1’s fraudulent misrepresentations[32]; and

(f) The alleged loss and damage suffered by P and the issue of causation[33].

F1. Whether D1 made the alleged 1^st to 7^th Representations and if so whether they were fraudulent

59.  There is no doubt that this is the main issue to be determined in this case.

60.  I notice one very peculiar feature about P’s case is the fact that P does not tie the pleaded representations to any particular statement in any particular meetings in order to establish her case against Ds. Instead, P claims that the Representations were made by reason of the statements made at some of the Meetings during the period from 13 June 2017 to 15 August 2017[34], without specifying in particular which one and what statement(s) she was relying on.

F2. The 1^st Representation

61.  The 1^st Representation has been pleaded under ASOC §9 as: “(a) there is available on the market insurance policies which insure against the insured becoming incapacitated and would pay out benefit to the policy holder upon the insured becoming incapacitated, and (b) that it was part of D2’s services to handle such a policy for its customer”, based on the alleged facts pleaded under ASOC §8:-

(a) P’s pleaded case is that the 1^st Representation was made during the 13 June 2017 Meeting.[35]; and

(b) P then changed her case to that the 1^st Representation was made during the 13 June 2017 Meeting and/or a meeting on 20 June 2017.[36] This shift is necessitated by P’s concession that the PowerPoint Slides prepared by D1 (“the PowerPoint Slides”) subsequent to the initial meeting on 13 June 2017 were only sent to her after 13 June 2017 and was explained to her on 20 June 2017.

F2.1 The 13 June 2017 Meeting

62.  P heavily relies on the audio recordings she made at the 13 June 2017 Meeting as evidence that D1 had made the 1^st Representation. With respect, nothing of the sort was said by D1 during that first meeting between them. As revealed by the recording, nowhere during that recorded conversation (and as shown also in the transcript) shows that D1 has ever said there existed an insurance policy which would insure against the P in the event that she would become incapacitated as alleged or at all. Neither did D1 use the term 「失能保險」 (“incapacity insurance”) or 「失能戶口保險」 (“incapacity insurance account”).

F2.2 The Audio Recording and Transcript

63.  When one listens to the audio recording or reads the transcript of the 13 June 2017 Meeting, it is beyond any shadow of doubt that D1 did not make the alleged 1^st Representation to P at all.

64.  Bearing in mind that this is the very first meeting between P and D1 on a strictly business / professional basis, I find it rather astounding that a prospective customer would choose to secretly record the conversations between herself and the bank officer. In my view, this shows P’s mistrust of people, including anyone who might be trying to assist her and giving her professional advice. Further, given P’s suspicious character, I cannot imagine that she would miss out anything important in the recorded conversation which might be helpful to establish her allegations against Ds. The fact that the recorded message on 13 June 2017 made no direct reference to the alleged 1^st Representation in my view speaks volume. The flip side of the coin is, given the fact that it was their first meeting, it is rather mindboggling that D1 would, knowingly or recklessly, make such alleged statements to P when she knew they were false or untrue or did not care whether they were false or untrue. In other words, why would she put her job on the line for a potential client whom she met for the first time.

65.  Insofar as the 13 June 2017 Meeting is concerned, P’s counsel in P’s Opening accepts that the transcript for this meeting is the most relevant out of all the audio recordings P made. It is important to note that P also accepts that the audio recording might not have captured the whole of the 13 June 2017 Meeting. Under cross-examination, P admitted that she could no longer recall the conversation she had with D1 before she started to record the conversation on that day. However, according to her recollection, D1 did not mention anything in relation to the “incapacity account insurance”.

66.  According to D1, the 13 June 2017 Meeting lasted for around 90 minutes, which was the usual time she would allocate for the first meeting with a new client. That was because D1 would need sufficient time for her to understand a client’s personal circumstances before she would be able to introduce and explain to the client the estate and trust services offered by D2.

67.  However, the recording covered about 45 minutes of that meeting only. The recorded conversations between P and D1 covered a wide-ranging topics. Amongst the incomplete recording, P relied on a few minutes of it only. They were played in court on Day 2 of the trial.

68.  The following has been said by D1 to P during the meeting as shown in the transcript:-

“Um …咁你要考慮做多樣嘢，就係 saving. 頭先我就係講話如果一個人失能呢，即係冇左思想行為能力嘅時候呢，你入面成個信託係未郁到住嘅，咁當你入面有個叫做 Letter of wishes 叫做意願書，咁我地會幫你規劃就係話一定要照顧左你自己先啦，冇可能你自己唔照顧就係唸百年歸老啲嘢去哂邊㗎嘛，咁點樣唸你自己呢，譬如喇你有病嘅時候我點樣去照顧你呀，各方面嗰啲呢就係意願書嗰度會規劃，但係因為如果你仲健康底下，你自己有神智嘅話，就算你有病你自己都識得出錢去做所有嘢㗎嘛，但係嘜嘢情況下呢你冇呢就係失能喇，失左能嘅意思就係你冇左思想行為能力，又或者第時老啲嘅時候可能係老人痴呆症，但又未去到失能喎，咁嘅時候呢 E 一度呢就有個保障，咁 E 個保障呢就會係入面有啲資產啦，就係要同你計數嘅，要根據你嘅意願書話俾我聽，例如你平時要用幾多錢，咁例如你嘅醫療要用幾多，咁 E度呢你就有個保障呢，就係有咩事我 E 度有錢去根據你嘅意願書去照顧你，譬如你話我到時可能touchwood 我係醫院嘅，喂我可能都需要有個護士呀各方面照顧我，咁你寫低話俾我聽囉，咁我到時你就會幫你實報實銷將啲嘢去照顧你需要嘅嘢，或者你屋企嗰層樓，要俾水、電、煤、管理費、差餉㗎嘛，咁你病左邊個幫你做呀？” [emphasis added]

69.  As can be seen from the above passage, what D1 said to P was clear:-

(a) P should also think about how to take care of herself whilst she is still alive but becomes incapacitated, not only about how to take care of other people after she has passed away; and

(b) she could plan how she would like to be taken care of when she becomes incapacitated by setting it out in the letter of wishes, and the bank would take care of her according to the letter of wishes.

70.  D1 then said to P that the bank could add an “incapacity account” (「失能戶口」) or a “stand-by incapacity account” (「備用的失能戶口」) to the trust, so that the trust could have some money to take care of P according to the letters of wishes, and the cost is at HK$5,600 only:-

“林: 咁你會見到㗎，其實我地個費用唔貴，因為你呢未放嘢入嚟，不過要做張平安紙，咁 E 度呢係豁免嘅，唔需要俾任何嘅管理年費，你如果加 E 個失能戶口，但我建議你加，因為你一個人同埋 E 一個位呢我覺得你必需要加㗎，但係你 E －個就唔需要急，但當我規劃意願書你決定左做嘅時候，個意願書規劃嘅時候我再幫你唸，咁 er... E 度你需要係幾多嚟保障你自己嘅，咁 E 個通常你當佢係一個儲蓄咁樣嘅戶口係for 失能㗎啫，即有咩事 E 度有舊錢根據你個意願書去俾錢你照顧你，因為你嘅資產未人嚟，出面恆生啦或者其他公司就會叫你將 E 啲嘢即時放人去個信託度㗎

張: 係

林: 譬如叫你 E 8 千萬就拿拿臨放入去

張: Um..

林: 如果唔係佢照顧唔到你，但係收個管理年費會比較貴，我唸佢地十萬 8 萬都走唔甩㗎喇，都可能唔止而家都可能要廿萬呀佢地， 20 萬度喇我估都應該乘左出嚟嗰個百分比，咁所以有好多客人就唔係好鐘意嘅，因為你而家都叫講真你係少少病咋嘛，咁你仲後生呢，你入面 E 啲嘢你自己操控都冇問題

張: 係呀

林: 最緊要做個備用嗰個失能戶口， E 個係我… Er ．一定要建議嘅，因為個年費都唔貴講緊港幣 5 千蚊

張: Um...

林: 再加多 6 百蚊雜費㗎啫，咁你總之total 你當 5 千 6 百蚊

張: 係

林: 咁你就 E 一個保障㗎喇，咁但係個銀碼幾多呢未知，因為我未真係同你規劃，真係同你規劃我會問你好多嘢嘅時候，你先…即我而家俾個 concept你啦，咁到真係個信託啟動後係咩意思呢，即係你個人都真係唔係度喇，又或者到你有一刻你覺得想真係將啲嘢早啲放哂人嚟嘅話呢” [emphasis added]

71.  Again, as can be seen from the above transcript of the audio recording, objectively construed, what D1 said to P was that:-

(a) P should add an “incapacity account” (「失能戶口」) or “standby incapacity account” (「備用失能戶口」) to her trust, so that she could use the trust structure and the letter of wishes to cater for her needs if she becomes incapacitated;

(b) other banks such as Hang Seng Bank would ask her to inject assets into the trust immediately for this purpose, but that would cost yearly administration fees in the range of HK$80,000, HK$100,000 or HK$200,000;

(c) but D2 could charge a much lower fee at HK$5,600 if P adds this incapacity account (「失能戶口」) or standby incapacity account (「備用失能戶口」), because D2 would not ask her to inject assets into the trust immediately;

(d) adding such account does not mean the trust is “activated”, the trust will only be activated upon her death; and

(e) D1 was at that stage only giving P a brief “concept” and would have to discuss with her in more details in the future.

72.  During cross-examination by D1’s counsel at the trial, the relevant parts of the audio recordings were played in court to P.[37] After listening to the same, P admitted that according to these recordings of the 13 June 2017 Meeting:-

(a) D1 did not make any reference to insurance;

(b) D1 did not mention that D2 would hold any insurance policy for P;

(c) D1 did not use the term “incapacity insurance” (「失能保險」) or “incapacity account insurance” (「失能戶口保險」);

(d) D1 did not suggest any insurance policy that would pay out any money upon a person becoming incapacitated; and

(e) D1 did not suggest any insurance policy that would be sufficient to pay for all expenses upon the insured becoming incapacitated.

F2.3 D1’s evidence in relation to the 13 June 2017 Meeting

73.  D1 also testified about the 13 June 2017 Meeting. In my view, the evidence which D1 gave in relation to this meeting was logical, reasonable and consistent with what she said in the audio recording. It also makes a great deal of common sense.

74.  I accept the following evidence which D1 gave in relation to the 13 June 2017 Meeting:-

(a) In the meeting, P disclosed to D1 that she had a tumour in her ureters which was a rare medical condition (“P’s Medical Condition”).[38] Given that P’s life insurance policy from Prudential was taken out some years ago, D1 recalled P asking her about the availability of a medical insurance policy, and D1 said it would be unlikely for P to be eligible given P’s Medical Condition.[39]

(b) It was in the above context that the 13 June 2017 Meeting continued. After telling P that it would be difficult for her to purchase any medical insurance, D1 mentioned to P, inter alia, an option of executing an EPOA when she was explaining the services offered by D2. However, P said it was unlikely that she would be able to name or think of any friend or relative who would act as her attorney. P also considered the fees to be charged by D2 to act as P’s attorney under the EPOA too expensive and on the high side.[40]

(c) D1 also explained the option of “standby discretionary trust” (「備用信託」) to P, which was part of the trust services provided by D2. In particular, D1’s unchallenged evidence was that she told P that this option might give rise to a risk that the trust could not be activated in the event that P might suddenly become incapacitated (or suffer from other unexpected adversities);[41] To cater for the aforesaid eventuality, D1 explained that to give P some or partial protection under the “standby discretionary trust”, P could inject into the trust an insurance policy with “cash value” which could be accumulated over the years and could then become the trust asset to be managed and utilized by D2, and the annual fees for D2 holding such insurance policy would be HK$5,600;[42] D1 told P that it would be preferable if the insurance policy injected (into the trust) would distribute regular coupon payments such that the coupon payments could be used to pay not only for the yearly fee charged by D2, but also for part of her maintenance and medical expenses. The whole structure was to provide partial protection to P in case she would suddenly become incapacitated or suffer from other unexpected adversities, the extent of which would depend on the amount of the insurance coverage as well as the terms of the insurance policy to be injected.[43]

(d) In the meantime, D1 made it clear to P that any insurance policy to be injected would have to be arranged and issued by an insurance company, but not by D2 as D2 was not a licensed insurer.[44] It is also D1’s evidence that in her contacts with P, she reminded P that D2 was not an insurance agent or broker, and that D2 only provided trust-related services and was not an insurance agent.[45]

75.  In light of D1’s evidence above, of which I accept, I find that, at the 13 June 2017 Meeting, D1 only suggested to P that D2 could hold an insurance with “cash value” under the structure of “standby discretionary trust” so that it could afford partial protection to P in case of her incapacitation. I further find that D1 had never suggested or said to P that there existed an insurance policy in the market which insures against the insured becoming incapacitated; neither did D1 suggest that it was part of D2’s services to handle the alleged “incapacity insurance”.

76.  In P’s Closing at §17, P’s counsel alleges that her recollection about what happened in the 13 June 2017 Meeting was not seriously challenged during cross-examination. Apart from vague suggestions that she could have misremembered the details of the meeting without the aid of contemporaneous documents and recordings, it was not put to her that any of her specific recollections is incorrect, nor was there any of the specific matters which D1 said were discussed was put to P, Mr Lam therefore submits that there is no reason or basis to reject P’s evidence.

77.  I do not agree. With respect, as the version given by P on what was said in the meeting was largely based on her subjective interpretation or understanding of what was said by D1 or being recorded in the corresponding audio recording, it is totally irrelevant and there is no need to challenge such evidence: see DBS v Sit Pan Jit (CA), supra at §100.

78.  P’s counsel also submits that at least 4 aspects of D1’s evidence concerning what happened in the 13 June 2017 Meeting were not put to P – being D1’s evidence on (a) medical insurance; (b) EPOA, (c) that P was cost-conscious; and (d) that her mentioning partial protection to P.

79.  I agree with D1 that items (a), (b) and (c) above have no bearing on the fraudulent misrepresentation claim. Fairness does not require those matters to be put to P. As to (d), D1’s case is that even on P’s own evidence, what D1 said on 13 June 2017 could not be objectively understood as promising “full protection”. Under cross-examination, P agreed that D1 did not say the arrangement could pay for “all” of P’s expenses on incapacity, contrary to her understanding as originally put in P’s 1^st WS at §27. However, this matter has no direct relevance of whether D1 had made the alleged fraudulent misrepresentation on that day. Therefore, again fairness does not require this to be specifically put to P.

F2.4 The 20 June 2017 Meeting

80.  P also relies on what D1 had said to her in the 20 June 2017 Meeting as part of the 1^st Representation. No audio recording was made by P of that meeting, at least no such recording was disclosed by P. Therefore, there is no contemporaneous record in support of P’s case that D1 did make the 1^st Representation on 20 June 2017. Instead, P heavily relied on the PowerPoint Slides provided by D1 to P as evidence of such fraudulent misrepresentation being made by D1.

F2.5 The PowerPoint Slides

81.  The PowerPoint Slides (which were written in Chinese) were prepared by D1 by using templates provided by D2. P heavily relied on page 10 of the PowerPoint Slides[46] which shows a diagram depicting the structure of a 「備用家庭信託」 (“Discretionary Family Trust”) specifically designed for P’s personal situation with pictures and annotation. Under the words 「主信託」 (“Main Trust”), 3 categories of assets have been described: (1) cash, stocks and funds, etc; (2) landed properties; and (3) 6 Chinese characters were written under 3 separate lines: 「失能 戶口 保險」 (“incapacity / account / insurance”). The PowerPoint Slides had been approved by D1’s seniors in D2 before she sent them to P.

82.  In my view, the following evidence given by D1 regarding the PowerPoint Slides was both logical and reasonable in the context of that particular page of the PowerPoint Slides:-

(a) D1 accepted that she might have said the 6 characters (「失能 戶口 保險」), but it was in the context of discussing partial protection to be offered by the policy in case of incapacitation;

(b) D1’s unshaken evidence was that she did not ask or recommend P to buy any “incapacity insurance” (「失能保險」) as alleged;

(c) D1 said “incapacity is a state; account and insurance are nouns” (「失能係一種狀態，戶口同埋保險係一個名詞」). Therefore, reference to 「失能戶口保險」 (incapacity / account / insurance) in the PowerPoint Slides was only used to describe D2’s services as trustee in holding insurance policies for the customers in its “incapacity account”;

(d) Its meaning should not be taken literally, as the arrow next to the phrase pointed to the further explanation that D2 would be named the holder and beneficiary of the policy (「保單持有人: 交通銀行信託有限公司受益人: 交通銀行信託有限公司」); and

(e) The phrase “incapacity account insurance”) (「失能戶口保險」) should not be understood in one single sentence (「係痴埋一齊」), it only referred to a situation where the insurance policy could be injected into the trust.

83.  In my view, what is very significant to note here is the fact that D1 said in her 7 years working for D2, she had never come across and there was no such thing as 「失能戶口保險」 (“incapacity or incapacitated account insurance”). I believe her as those 6 characters in my view simply could not carry the meaning of a type of insurance policy which did not exist in the market.

84.  Further, as submitted by Mr Leung for D2, D1’s evidence on the PowerPoint Slides was amply supported by following evidence given by Ms Lau on behalf of D2:-

(a) The PowerPoint Slides never suggested that D1 or D2 was licensed and/or authorized to carry on any regulated activities under the IO;

(b) In the words of Ms Lau, D2 might recommend suitable trust structure and the categories of assets to be injected into the trusts (「為客戶建議合適的信託架構和用以注入信託的資產類別」);[47]

(c) However, the PowerPoint Slides never represented or suggested that D2 (or its staff members) would sell, recommend, choose and/or advise on any sort of insurance products to the clients – this is and was never part of D2’s estate planning and management services;

(d) There was only one reference to the phrase 「失能 戶口 保險」 (“incapacity account insurance”) and on that page, a trust structure was suggested for P’s reference, under which various types of assets might be injected into the main trust. It was thus possible for an insurance policy to be held by D2 under the trust structure, and D2 would be the policy holder (「保單持有人」) and the beneficiary (「受益人」) of the policy in such circumstances;

(e) D2 would charge an annual fee of HK$5,600 for the services of holding up to 4 insurance policies even before the “activation” of the trust;

(f) The PowerPoint Slides never defined or introduced “incapacity insurance” or “incapacity account insurance” and did not make any recommendation to P as to what type of insurance policy she should or could buy, nor did the PowerPoint Slides represent to P that D2 would or could only pay the expenses upon P being incapacitated by utilizing the proceeds under the policy injected into the trust by P; and

(g) The PowerPoint Disclaimer further reminded P, inter alia, that the contents of the PowerPoint Slides are for reference only and are not intended to provide legal, tax or other advice and should not be regarded for such purposes, and before any commercial decision was made, professional advice should be sought independently. D2 should not be held responsible for transactions and consequences thereof arising out of and resulted from the contents of these files: see D2’s Opening §47.

85.  In contrast, the evidence P gave in relation to the PowerPoint Slides provided by D1 in my view was confusing, inconsistent and unreliable:-

(a) Both in P’s pleaded case under the ASOC and P’s 1^st WS, P unequivocally stated that the PowerPoint Slides were provided and contents explained to her by D1 on 13 June 2017;

(b) In P’s 2^nd WS, she completely changed her case and said that she was only referred to the PowerPoint Slides in the 20 June 2017 Meeting;

(c) When confronted with the indisputable WhatsApp record that the PowerPoint Slides were sent to her on 14 June 2017 by WhatsApp and by email on 15 June 2017, P was forced to admit that the PowerPoint Slides in fact were not provided to her at the 13 June 2017 Meeting;

(d) Despite of having sent to her on the above dates, P still insisted that she had only glanced through the contents of the PowerPoint Slides before the 20 June 2017 Meeting;

(e) P was repeatedly asked in light of the fact that D1’s explanation given on 13 June 2017 was clearly not aided by the PowerPoint Slides (and thus with no reference to the “incapacity account insurance” (「失能 戶口 保險」), would she still insist D1 as having made the 1^st Representation in the absence of the PowerPoint Slides. After dodging the question a number of times, P eventually answered in the positive; and

(f) In spite of admitting that D1 having explained the contents of the PowerPoint to her face-to-face, she alleged somehow that D1 did not explain the disclaimer which appeared on the last page of the PowerPoint Slides to her.

86.  As submitted by Ms Lam for D1, it is clear that P had completely forgotten what was said by D1 as she explained the PowerPoint Slides to her.

87.  The indisputable fact is that P, when deposing P’s 1^st WS, had mistaken what D1 said in the 13 June 2017 recording was the explanations accompanying the PowerPoint Slides. Further, her description of what happened in the 20 June 2017 Meeting did not mention “insurance”, let alone “incapacitated account insurance”: see P’s 1^st WS §§34-36. In fact, despite her reluctance and evasiveness to admit the same under cross-examination, the fact is that she had totally forgotten that the PowerPoint Slides were used in the 20 June 2017 Meeting or what was said by D1 when she explained the slides to her at the time of making P’s 1^st WS. Even in her “clarification” in P’s 2^nd WS, P did not mention what D1 said when she explained the PowerPoint Slides at the 20 June 2017 Meeting. What P said was only that D1 had written words on the PowerPoint Slides: see P’s 2^nd WS §4.5.

88.  When it was pointed out to P that she must have forgotten the existence of the PowerPoint Slides on 20 June 2017 when she made P’s 1^st WS because she made no mention of the slides in her descriptions for that meeting at all, she declined to accept the obvious. She said that when her made P’s 1^st WS, she remembered seeing the PowerPoint Slides in both the 13 June 2017 Meeting and the 20 June 2017 Meeting, but since she already mentioned it for the 13 June 2017 Meeting, she did not mention it again for the 20 June 2017 Meeting. She then tried to blame it on her illness. In my view, this shows P was prepared to make up a story in the witness box as she went. Again, this demonstrates that P is an unreliable witness.

89.  I agree with Ms Lam that the most objective evidence is the words handwritten on the PowerPoint Slides. P admitted that both herself and D1 did write on the printed copies of the PowerPoint Slides, the words/characters written in black were D1’s and those in red were P’s. Most of D1’s annotation concerns cost/fees of the trust arrangement. P’s annotations are predominantly found on the page setting out the cost/fees of the family discretionary trust. She wrote 「一年免費 15次股票買賣」「1億收6萬 1億5仟萬收9萬 每年管理費」 next to row setting out the annual management fees. Clearly what she concerned the most at the time was the charges/fees of the trusts. In P’s own evidence, she admitted that the most important part amongst the PowerPoint Slides was fees and charges (「我記得唔係成疊講」「收費最重要啦」). It is clear that the “incapacity / account / insurance” (「失能 戶口 保險」) appeared on page 10 of the PowerPoint Slides was not her focus or priority.

90.  Further, P clearly did not remember what D1 said when she explained the PowerPoint Slides to her on 20 June 2017. P’s own handwritten notes and oral evidence suggest that her focus at the time was on the fees and charges. I agree with Ms Lam that it is most disingenuous for P to now make a song and dance about the six characters 「失能 戶口 保險」 (“incapacity / account / insurance”) which is neither a common phrase with a settled meaning nor given a definition in the PowerPoint Slides.

91.  In this regard, I accept D1’s evidence that she went through the PowerPoint Slides with P page by page as per her usual practice and then she might explain a particular slide in more details depending on the client’s background and needs. She did explain page 11 of the PowerPoint Slides which sets out the standard fees for trusts in more details and put a star next to annual fees for holding insurance policies because P mentioned that the annual management fees charged were expensive and was attracted to the low cost of injecting insurance policies. I accept the fact that D1 did not tell P that she (D1) would help her (P) to buy an “insurance policy”, or an “incapacity insurance” or an “incapacitated account insurance”. As said, she did not use 「失能戶口保險」 as a single phrase in her explanation.

92.  In the aforesaid premises, I accept D1’s evidence and find the following in relation to the 20 June 2017 Meeting:-

(a) After explaining the PowerPoint Slides by D1 to P in detail, P decided to engage D2 to set up the “standby discretionary trust”;

(b) P mentioned that her priority was to renew her insurance package; she still wanted to take out a medical insurance policy;

(c) D1 repeated reminded her that it would be difficult for her to get any medical insurance given her Medical Condition;

(d) Upon P’s insistence, D1 asked P to provide her medical records so that she could make enquires on her behalf;

(e) P passed her medical records to D1 and authorized D1 to explore whether a medical insurance policy may be taken out;

(f) In case it was not possible, P would opt for the type of insurance policy which could give her the best protection against incapacitation or other adversities;

(g) It was in this context that D1 reiterated that she was not a licensed insurance agent or broker and D2 was not a licensed insurer; and

(h) It was also in this context that D1 indicated to P that there were insurance policies with saving components or with accumulated cash value and regular coupon payments which might be able to address her needs (ie offering partial protection against incapacitation) so D1 would explore the option with licensed agents or brokers and would report back to P.

93.  In the aforestated premises, I find as a fact that both D1 and D2 had never introduced, recommended and/or advised on any insurance policy or product to P, including the alleged “incapacity insurance” or “incapacitated / incapacity account insurance”. I further find that, save it was pointed out to P that D2 could hold and place an insurance policy in her account as part of D2’s trustee services, D1 has never represented to P that D2 would handle the alleged “incapacity insurance” for P. I therefore find that P has failed to establish D1 had made the 1^st Representation as alleged under the ASOC. I further find that the 1^st Representation, even if made, could not amount to a fraudulent misrepresentation in the circumstances.

F3. The 2^nd to 5^th Representations

F3.1 The pleaded 2^nd to 5^th Representations against Ds

94.  The 2^nd to the 5^th Representations are pleaded under ASOC §§25.1 to 25.4 as follows:-

(a) 2^nd Representation: “the proposed insurance policy is one which insures against (P) becoming incapacitated, and would pay out a benefit to the policy holder upon (P) becoming incapacitated”;

(b) 3^rd Representation: “Under the terms of the proposed insurance policy, upon (P) becoming incapacitated, the benefits under the policy would be available for use by the policy holder”;

(c) 4^th Representation: “the protection provided by the proposed insurance policy could not be achieved by the Existing Life Policy [ie the Prudential Policy]”; and

(d) 5^th Representation: “Under the terms of the proposed insurance policy, the policy holder can get back the total amount of the premiums paid after 5 years if he or she so wishes”.

95.  P says the 2^nd to 5^th Representations were made by D1 by virtue of what she said at (a) the 13 June 2017 Meeting; (b) the 20 June 2017 Meeting; (c) the 3 August 2017 Meeting; and/or (d) other lunch meetings in July and early August 2017.

96.  I have already dealt with the 13 June 2017 Meeting and the 20 June 2017 Meeting above and find no misrepresentations as alleged by P had ever been made by D1 during those 2 meetings. In my judgment, whatever statements were made by D1 in those 2 meetings, they also did not give rise to the alleged 2^nd to 5^th Representations made by P. This will only leave P with the 3 August 2017 Meeting and “other lunch meetings in July and early August 2017” as factual foundation to establish the 2^nd to 5^th Representations against D1.

F3.2 The 3 August 2017 Meeting

97.  P disclosed 3 truncated audio recordings of this meeting, the transcripts of which can be found at [C1/59/912-949] of the trial bundle. A summary of those transcripts can be found at D2’s 1^st WS §§31-34.

98.  Having read the transcripts of the 3 August 2017 Meeting, it is quite apparent to me (or in my view anybody who cares to read them objectively) that D1 did not make any of the alleged 2^nd to 5^th Representations to P at all.

99.  Both Ms Lam for D1 and Mr Leung for D2 have set out the relevant parts or summaries of the transcripts in their written submissions[48], I do not propose to repeat them here.

100.  In my judgment, insofar as incapacity and insurance are concerned, it is clear that D1 did not say that the insurance policy has to be one that would insure P against incapacity or would pay out money to her when she becomes incapacitated (as no such product can be found in the insurance market), D1’s key message to P is that injecting an insurance policy rather than assets right away into the trust could save P a lot of money by avoid paying the annual administrative fees.

101.  During cross-examination, P was asked to listen to part II of the audio recordings of the 3 August 2017 Meeting. After listening to the recordings:-

(a) P accepted that D1 had never told her that she would get back the total amount of premiums paid after 5 years at all;

(b) P was asked whether it was P’s subjective understanding that she could get back the premiums because of the words “completeness” (「完整性」), and P’s reply was that D1 mentioned the accrued value of the policy (「滾存」) would be “the best” after 5 years;

(c) When P was referred to the part of transcripts which says 「當然如果真係好差好差嘅時候，依個都有現金價值嘅，但係係 5 年打後依個現金價值嘅滾存就係最好囉」, P confirmed it was her own understanding that she could get back the premiums after 5 years;

(d) P admitted that D1 never said that after 5 years the insurance policy would be sufficient to pay for all expenses on incapacity; and

(e) P further admitted that it was her subjective belief that the insurance policy would be sufficient to pay for expenses upon her being incapacitated – her explanation was that D1 asked about the particulars of the expected expenses, without saying that the policy would only offer partial protection.[49]

102.  I agree with Ms Lam that what D1 said during that meeting could be succinctly summarized as follows:-

(a) Rather than injecting assets into the trust right away, P could inject an insurance policy instead. The reason is to save money (in terms of administrative fees);

(b) The upside of injecting assets into the trust right away is that there would be assets in the trust for her use if she becomes incapacitated immediately. But the downside is that she would have to start paying the expensive yearly administrative fees, which is at least HK$60,000 per year;

(c) On the other hand, injecting an insurance policy with cash value and regular coupon payments into the trust would only cost HK$5,600 per year. The downside is that she would have to wait for a few years until the policy has accumulated sufficient value for her use if she becomes incapacitated;

(d) Incapacity may or may not happen. Some of D1’s client would prefer to inject an insurance policy so that they could save money whilst at the same time making preparation for incapacity;

(e) For some of D1’s clients who are very old, D1 would suggest them to inject assets into the trust immediately;

(f) But D1 thinks P’s situation was somewhere “in the middle”. D1 thinks she would not be in much trouble within the next 3-5 years. D1 thinks P could use the incapacity account by injecting an insurance policy into the trust; and

(g) P could at most take out an insurance policy worth HK$7.5 million. P should let insurance policy continue to accrue for 5 years and the “integrity” of the account would become better.

103.  In light of the above, I do not consider the 3 August 2017 Meeting could in any way assist P in establishing the alleged 2^nd to 5^th Representations against D2.

F3.3 Other lunch meetings

104.  In a desperate attempt to salvage her case, P suggests some of the 2^nd to 5^th Representations were made by D1 at “other lunch meetings between [P] and [D1] in July and early August 2017”: see ASOC §§24-24.4.

105.  In my view, this plea can be quickly disposed of as it is unparticularised and unsubstantiated. In P’s 1^st WS §57, P only mentioned continuous discussion with D1 in relation to the setting up of trusts after meetings at D2’s office, there was no mention of any “lunch meetings”. While it is not disputed that P and D1 had lunch from time to time, there is no suggestion that they were anything but informal social gatherings. No particulars of any wrongdoings were made by P against D1 during those lunch meetings. As such, insofar as P tries to rely on any representation made by D1 over those lunch meetings is concerned, in my view they must fail also.

106.  In the aforestated premises, I find P has failed to establish her case against D1 based on the alleged 2^nd to 5^th Representations.

F4. The 6^th & 7^th Representations

107.  The 6^th Representations reads “Under the terms of the Policy, the benefits paid out or the cash value or other accrued benefits available upon (P) becoming incapacitated would be sufficient to pay for the expected Expenses on Incapacity to be stated in the Letter of Wishes”: see ASOC §29.1.

108.  The 7^th Representation reads “the cash value or other accrued benefits available after 5 years of the purchase of the Policy would be sufficient to pay for the expected Expenses on Incapacity to be stated in the Letter of Wishes”: see ASOC §29.2.

109.  P pleads that the 6^th and the 7^th Representations were made by D1 “by reasons of the statements made by D1 at the 13 June 2017 Meeting, the 20 June 2017 Meeting, the 3 August 2017 Meeting and/or other lunch meetings between P and D1 in July and early August 2017, and also on 15 August 2017”.[50]

110.  In terms of time frame, the only difference between the 2^nd to the 5^th Representations and 6^th to the 7^th Representations is the inclusion of the 15 August 2017 Meeting in the last two representations. I have already dealt with the statements purportedly made by D1 on 13 June, 20 June, 3 August 2017 and other lunch meetings above, I do not need to repeat them here.

111.  Whilst P does not expressly say in the ASOC when the Chubb Policy was identified, the move from “the proposed insurance policy” to “the Policy” by the inclusion of the 15 August 2017 clearly reflects P’s recognition that the Chubb Policy was only identified as “the” policy to be purchased by D1 on 15 August 2017, but not earlier.

112.  However, as disclosed in P’s Opening, P now seeks to move the date when the Chubb Policy was identified from 15 August 2017 to 3 August 2017. In §52 of P’s Opening, P says the Chubb Policy was identified at 14:59:43 on 3 August 2017 when D1 sent a document to P via WhatsApp saying to P that “this is the latest [policy] for your reference” (「最新的給你參考」)[51]. P says the document sent relates to the Chubb Policy.

113.  I agree with D1 and D2’s counsel that this does not assist P for the following reasons:-

(a) The WhatsApp conversation [C/41/1905] clearly shows that the earliest time the Chubb Policy was identified for reference or for discussion was in the afternoon of 3 August 2017, after the 3 August 2017 Meeting which, also as shown in the same conversation, occurred in the morning. Thus, all the discussions between P and D1 from the 13 June 2017 Meeting all the way to 3 August 2017 Meeting could not be pinned to the Chubb Policy, which only came into the play afterwards. It is clear that the parties were still in the process of searching for a policy at the time; and

(b) D1 expressly said to P that the document was provided to her “for [her] reference” (「給你參考」). Even at that point, the Chubb Policy only came into play as a policy which was provided for P’s consideration.

F5. The 15 August 2017 Meeting

114.  This is a very important date as far as P’s case is concerned. As said, 2 separate events happened on that day. In the morning, P and D1 attended the office of Greater China in Causeway Bay together. After lunch and in the afternoon, they went back to the bank to complete the formality of setting up the trust.

115.  Insofar as P’s case against Ds is based on fraudulent misrepresentations, the morning event at the office of Greater China is of critical importance.

116.  P agreed that she purchased the Chubb Policy and paid the first premium instalment in the sum of HK$1,560,114 during the 15 August 2017 Meeting at Greater China’s office, after listening to the insurance agent from Greater China, Ms Ngan, going through the details of the Chubb Policy for 1 to 1.5 hours.

F5.1 P’s pleaded case on the 15 August 2017 Meeting at Greater China

117.  On P’s own pleaded case, the following events happened at the Greater China office:-

(a) P and D1 met with 2 to 3 staff members of Greater China;[52]

(b) The meeting lasted for 1 to 1.5 hours;[53]

(c) The staff from Greater China explained (or, in P’s words “purportedly to explain”) in general terms the nature of the Chubb Policy to P[54];

(d) They asked P questions about her financial position and her purpose of purchasing an insurance policy[55];

(e) P did fill out the Financial Needs Analysis Form[56];

(f) P did sign various documents relating to the Chubb Policy[57];

(g) P did sign on various places on the Chubb Policy documents[58]; and

(h) P did sign the Chubb Policy Application Form.[59]

118.  However, as highlighted by Ms Lam in D1’s Closing, P has tried to downplay the significance of the Greater China meeting in her evidence in a number of ways. In my view, such attempts not only show up the weaknesses in P’s case, they also demonstrate how unreliable and how incredible P is as a witness.

F5.2 Length of the Greater China Meeting

119.  To downplay the significance of the Greater China meeting, P sought to shorten the length of the meeting from 1 to 1.5 hours in her pleadings[60], to 1 hour in P’s 1^st WS[61], and to even less in her oral evidence allegedly to take into account the time for travelling, taking the lift, going to the toilet, etc.

120.  As shown in the WhatsApp records disclosed by D1[62], parties met up at 11:20 am at Times Square and then went up together to the Greater China’s office in Causeway Bay. With an attempt to shorten the length of the meeting, P said for the first time in the witness box that they had made a lunch appointment at 1:00 pm in the Four Seasons Hotel in Central in advance. She claims that they dined not in a cafe but had a proper steak lunch in a formal restaurant in Four Seasons.

121.  However, this cannot be true as her credit card statement[63] shows that the cost for that two-person “steak lunch” at Four Seasons only cost her HK$541.50. In my view, it is most unlikely that they had a proper steak lunch together at Four Seasons at that price.

122.  D1’s version is that the Greater China meeting was around 3 hours (see D1’s WS §55) or at least more than 2 hours. In both her witness statement (see D1’s WS §70) and oral evidence, she said the lunch was a quick one. They did not go to the western restaurant in the Four Seasons and they definitely did not have steak. They probably had something really quick in the lounge like scones and a drink.

123.  As submitted by Ms Lam, whether it was for 1 to 1.5 hours or 2-3 hours, P would have more than sufficient time for the terms of the Chubb Policy to be explained to her. The significance of this episode is that it shows that P was willing and ready to lie under oath in order to improve her case.

F5.3 The role of Ms Ngan and Ms Chan

124.  It is clear that P also tried to downplay the role of Ms Ngan and Ms Chan respectively as insurance agent / sales representative from Greater China at this important meeting in her oral evidence. It is beyond dispute that these were their official roles and job titles in Greater China. Yet, at one point, P even sought to deny that they were staff of Greater China by claiming that she did not confirm their identities.

125.  In any event, P admitted that D1 only took her to the Greater China office but had said very little to say in the process (「間中搭一兩句嘴」). The persons responsible for explaining the policy to P and filling in the information in those forms were staff from Greater China according to her. Based on those admissions, in my judgment, it is most unlikely that D1 would have made any fraudulent misrepresentations to P in front of the insurance agent and sales representative.

126.  It is undeniable that Ms Ngan was P’s insurance agent as she had signed her name in such capacity 5 times[64] alongside P’s own signatures. At trial, P insisted that she did not understand that Ms Ngan was her insurance agent because it was Ms Vivian Chan who had passed the documents for her to sign. When it was pointed out to her that she contradicted her own answers given in the morning – where she said she understood that the persons who signed the insurance policy with her was her insurance agent – she had no good answers. This was but one of the examples showing that P was prepared to lie whenever it suits her. I do not find P being honest about the roles played by Ms Ngan and Ms Chan at the meeting in Greater China at all.

127.  The fact is, as P admitted in the morning of Day 2 of the trial, she did know that the person who signed the insurance policy with her was her insurance agent and the one responsible for explaining the terms of the policy to her. I agree with Ms Lam that the flip side of the coin must be that P knew D1 was not her insurance agent and was not responsible for explaining the terms of the Chubb Policy to her. Again, P’s evidence on this is clearly not believable.

F5.4 The Policy Proposal

128.  Amongst the various policy documents P were shown and has signed, obviously one of the most important ones was the Policy Proposal[65]. It is a short document and the body is only 6-page long. P signed on every single page of the body of that document[66].

129.  The Policy Proposal clearly sets out the premium the policy holder has to pay and the payout/benefits that she is entitled to in table format.

130.  The first page[67] set out the key points of the Chubb Policy: that its name is 「星鑽儲蓄壽險計劃」 (“Forever Diamond Savings Life Policy”) [emphasis added]; with a guaranteed life-long coupon payments (「終身保證入息」) of US$24,963 until P turns 100 years old; she has to pay yearly premium instalment of US$200,014.57 for 5 years. In other words, the total premium is about US$1 million.

131.  On the 2^nd to 5^th page of the document, it clearly sets out the amount of the money that P or the named beneficiary is entitled to or should expect to receive upon her surrendering of the policy or upon her death in 4 separate tables.

132.  The second page[68] lists out in table format (ie the “Payout Table”) the guaranteed and non-guaranteed cash value P would get if she surrenders the policy from the 1^st to the 30^th year, or from when she is 55 years until she turns 100 years old. It can be clearly seen that she would make a loss if she surrenders before the 10^th year, she would make profit from that points onwards, and would double, triple, or even receive an 8-fold returns if she holds onto the policy long enough.

133.  The 3^rd page[69] uses a similar payout table (“Payout Table for Death”) to set out the amount of sum that the beneficiary is entitled to receive when P dies (「身故賠償額」) at different number of years after the policy has been taken out.

134.  Since the amount of money P will be entitled to has a “non-guarantee component” (「非保證」), the 4^th page[70] set out in table format the amount of money P should expect to receive under the “optimistic scenario” （「樂觀情境」）and the “pessimistic scenario” （「悲觀情境」） when P surrenders the policy. Similarly, the 5^th page[71] set out the expected amount to be received by the named beneficiary under the two scenarios when P dies.

135.  In my judgment, from this short document, a reasonable person would have easily understood that (a) it is an investment-linked life insurance policy with saving component; (b) money would be received by the policy holder or the named beneficial either when the policy holder dies or when she surrenders the policy; and (c) the total amount of money to be received is clearly shown in the payout tables. Incapacity has not been mentioned at all in the Policy Proposal.

136.  I find P being a seasoned and shrewd investor must know what was being written on that document (which was written in Chinese) and what was being explained to her. In my judgment, there is no question that she knew exactly what she was buying when she purchased the Chubb Policy.

137.  The last page[72], which was also signed by P, contains two very clear warnings that P should not consider purchasing the Chubb Policy unless (i) she intends to pay off all the premiums under the specified period: (「除非閣下打算就以選擇的保險計劃期內支付全期保費，否則不應投保本報單」); and (ii) that if she terminates the Policy early or stops paying the premiums she may suffer great loss: (「如果閣下提早終止本報單或提前停止支付保費，閣下可能會蒙受重大損失」).

138.  In my judgment, anybody going to pay a lot of premium upfront like P did in this case would have known the purpose, the mode of payment and the dire effect of terminating the Chubb Policy or not paying the premiums by reading the above warnings. I therefore do not think P has relied on any of D1’s Representations made whether at the office of Greater China on 15 August 2017 or prior to this meeting as alleged or at all.

F5.5 The Financial Needs Analysis Form

139.  P signed 4 times on this document[73]. In it, P confirmed that:-

(a) Her objectives for buying insurances is for “financial protection against adversities like death, accidents or disabilities” (「為應付不時之需的財務保障（如死亡、意外、殘疾」） and “saving” (「儲蓄」)[74];

(b) The type of insurance she was looking for was “insurance product with investment element” (「有投資成分的保險產品」)[75];

(c) The target benefit/protection period for the insurance policy or investment plan was “ >20 years (「超過20年」)”[76];

(d) The intermediary explained two insurance options to P, being the Chubb Policy and the “AIA Forever Love Coupon Plan 6 years Policy” (“the AIA Plan”) and the product ultimately selected was the Chubb Policy[77]; and

(e) P signed on the declaration to confirm the accuracy of all the information given on the Financial Needs Analysis Form[78].

F5.6 P’s understanding of the documents she signed

140.  Under cross-examination, P agreed that she knew that signing on a document would bring legal consequences. She also confirmed that at the time she understood that putting her signatures on the documents meant purchasing the Chubb Policy. However, when it was put to her that she would have understood that she had to figure out the terms of the policy before she signed (「你會先搞清楚個保單條款先簽名」), her replies were nothing but evasive. After some attempts to dodge the question, she eventually came down to that she “figured out” the terms only by listening to what was said by D1 and the Greater China staff [79]. The central theme of P’s answers in relation to this matter is to deny that she did understand or was explained the terms clearly by the insurance agent as set out in the Chubb Policy documents. In my view, this is clearly not credible.

141.  In any event, such denial is contradicted by her own evidence in the P’s 1st WS at §73[80], where she said the Greater China staff did refer her to a table and explained to her the premiums she had to pay, as well as the dividends and interests she would receive every year[81]. At trial, she admitted that the “table” (「表格」) the Greater China staff took her to was likely to be the Payout Table at [C2/41/699].

142.  P’s evasiveness reached a new height when she was cross-examined on the circumstances surrounding the Greater China staff’s explanation of the Payout Table to her. At the time, she was already an experienced investor and had already purchased similar investment-linked insurance policy before. Yet, she denied knowing what “dividends” and “interests” are, or their importance. Again, I find that totally unbelievable.

143.  In my view, the pretence that she did not even understand what dividends and interests simply fly in the face of reality and her background as a seasoned investor. P clearly was not being honest with the court.

144.  On P’s own evidence, the Greater China staff did explain the figures on the Payout Table to her, and P did interact with the Greater China staff by requesting the staff to use Hong Kong dollars rather than US dollars in explaining the terms. This shows that P was able to understand what was being explained to her and the importance of those terms.

145.  As shown in one of the audio recordings disclosed by P, after P had changed her mind about the Chubb Policy and met up with Ms Chan of Greater China for a “solution” in June 2019, Ms Chan said that she did explain the function and surrender value of the Chubb Policy to her[82]. In the recording, P did not challenge or contradict what Ms Chan said to her. At trial, under cross-examination, P provided no good answers as to why she did not contradict Ms Chan during that conversation.

146.  During the 15 August 2017 Meeting at Greater China’s office, I find Ms Ngan and Ms Chan had clearly explained the key terms of the Chubb Policy to P. I find P was not telling the truth when she spoke about what happened during this meeting in her evidence:-

(a) The explanation about the Payout Table was undoubtedly the highlight of the meeting. Yet, P’s evidence in that regard is inconsistent. In her pleadings (P’s Rely to D1’s Defence §28.8(a)), she said the explanation by Greater China staff was not done by reference to any documents. But the evidence revealed during the trials shows that the Greater China staff specifically took P to the Payout Table;

(b) In her pleadings (P’s Rely to D1’s Defence §28.2(a)), P said Greater China staff asked P about her purpose of purchasing an insurance policy, P responded that it was to cater for her becoming incapacitated and neither the staff nor D1 responded or commented. Yet, in P’s 1^st WS §68, P said the Greater China staff nodded her head after hearing P’s answer. At trial, P said she was sure that the staff did nod her head and that left a deep impression on her. P offered no good explanation for such inconsistencies and in any event I doubt very much this happened at all; and

(c) Her evidence that only one policy was introduced to her (P’s 1^st WS §75[83]) was contradicted by her own signed confirmation at the Financial Analysis Form that two policies were explained to her[84].

147.  Based on the above, I find D1 did not make any fraudulent misrepresentations to P during the 15 August 2017 Meeting at the Greater China office. It is clear that D1 had acted nothing but professionally throughout the meeting by not participating in the presentation and explanation of the terms and conditions of the Chubb Policy by the insurance agent and sales representative from Greater China. I find the circumstances of P in signing the Chubb Policy were as those as analysed and summed up by D1’s counsel above.

148.  In my judgment, P knew exactly what she was doing when purchasing the Chubb Policy from Greater China. She had not been misled or misrepresented by D1 or anybody else at all when she signed the policy documents. Nor did she rely on any representations made by D1, whether at Greater China’s office or anywhere when she purchased the Chubb Policy.

F6. Audio Recordings and Transcripts after 15 August 2017

149.  During cross-examination by D1, P relied heavily on the transcript of a telephone conversation between P and D1 in or around August 2018, ie one year after the alleged representations were made by D1 in 2017.

150.  P had also secretly recorded various meetings with D1 and others on 13 June 2019, 18 June 2019, 20 June 2019, 9 August 2019 and 13 August 2019.

151.  I agree with Mr Leung for D2 that little weight, if any, can be attached to these recordings (and transcripts) and they were all made after the signing of the Service Agreements and the purchase of the Chubb Policy in 2017. In order to show that P was induced into entering the Service Agreements and purchasing the Chubb Policy by the alleged representations, evidence of what was said by D1 prior to the Service Agreements and/or the Chubb Policy have to be produced and not after.

F7. P’s audio recording practice

152.  This may be a convenient point to discuss the practice of P’s habit of making secret recordings of conversations she had with D1 and other parties involved in the setting up of the trust and purchase of the Chubb Policy.

153.  P has disclosed a number of audio recordings with different people on more than 10 different occasions from 13 June 2017 to August 2019 in this trial. P had a clear habit of making secret audio recordings of her conversations with different people and retaining the same for future use – as long as she thinks it is beneficial to her case. Yet, she claims not to have recorded the meetings on 20 June 2017, 3 July 2017 and 11 August 2017; and most importantly the crucial 15 August 2017 Meeting at Greater China.

154.  At trial, she offered no good explanation for the absence of recordings for those meetings. For someone with P’s character, I cannot imagine that she would fail to or forget to record those important meetings, particularly the 15 August 2017 Meeting at Greater China’s office. I find that she most likely had recorded those meetings, particularly the one on 15 August 2017, but chose not to disclose them as she knew that any of those recordings would not only not helping her in proving her allegations against Ds, but would completely contradict or undermine her case.

155.  P said she started making audio recordings after she had fallen sick and needed to see different doctors, and what the doctors said was difficult for her to understand so she made recording and listened to it again. She repeated a few times that back then her body was most important to her.

156.  I do not find such explanation convincing or credible at all. It is clear that P wanted to record and make use of whatever conversations she had with D1 or others involved in the case for future use and for her benefit. It has nothing to do with P’s Medical Condition at all. It was just a lame excuse.

157.  P also stated in evidence that as long as her phone had enough battery, she would remember to make recording and if it was related to her body, she would make recording. When it was pointed out to her that the recordings she disclosed were not conversations with her doctors and were unrelated to her body, she failed to offer any other good explanation. For meetings that she did not record, she resorted to saying that she either forgot to make recording or her phone ran out of battery. Again, I do not accept such pathetic excuse from P at all.

158.  I further note that all the recordings for the important meetings on 13 June, 27 July and 3 August 2017 are partial recordings only. They did not start from the beginning. From P’s evidence, she claims that the timing she started or paused the recording was totally random. She gave no clear answer to whether she started the recording for 13 June 2017 when D1 brought up the topic of incapacity. She said she did not make recording for the 20 June 2017 Meeting because she ran out of battery. She did not record the 3 July 2017 Meeting because she either ran out of battery or did not have enough battery. She recorded the 27 July 2017 Meeting because her phone had enough battery and she remembered to make recording.

159.  I do not accept any of the above purported explanations offered by P at all. In my judgment, P has clearly only selected what she wanted to record or disclose and what she considers might be helpful to her case. It is simply unbelievable that her phone happened to run out or running low of battery at some important meetings or at some critical junctures of the Meetings. In my judgment, P clearly is not telling the truth.

160.  I agree with Ms Lam that the 3 August 2017 recordings are worth highlighting. There were 3 truncated recordings containing various episodes within the same meeting. As to why she paused and then re-started the recording, she said sometimes she went to toilet and therefore paused the recording, but she did not remember if she went to the toilet between part 1 and part 2 of the recordings. She said she sometimes paused the recording in order to save battery.

161.  Part 2 of the 3 August 2017 Meeting recording was only 4 minutes 40 seconds long at [C3/59/920-922]. Part 2 starts exactly when D1 was about to move the conversation to a new topic (「進入講一講嗰，今次呢就可以......」) but she was interrupted by Sam Cheung who was trying to wrap up the previous topic, and the new topic D1 moved into concern the incapacity account function of the trust. In my view, either P’s alleged random recording practice happened to perfectly capture the beginning of this important topic or this section of the audio was selected or edited from a longer recording. When P was asked if the timing for the beginning of Part 2 was a mere coincidence, she said she could not remember. Common sense would tell us that it was very likely that there was post-event editing of the audio recordings. I so find that was what happened in this case.

162.  In the premises, I find P only chose to disclose parts of the recordings she considered helpful to her case. The recordings she has disclosed are selective and incomplete. In my view, it will be unsafe and in fact dangerous to rely on those recordings or take parts of the recordings out of context as evidence of wrongdoings or fraudulent misrepresentations against D1 or D2.

F8. Conclusion on the 1^st to 7^th Representations

163.  In conclusion, based on the above discussions, I find P has failed to establish that D1 and D2 have made any of the 7 Representations as pleaded under the ASOC. I further find that even if they were made, they could not have constituted to fraudulent misrepresentations.

164.  Given my conclusion on the above main issue, the rest of the issues defined by the parties will become academic. However, for the sake of competence, I shall briefly deal with them below.

G. Whether the alleged representations are actionable?

165.  D2 in its Defence pleaded the following regarding the 1^st to 7^th Representations:-

(a) are not actionable statements of present or past fact;

(b) are statement of opinion or forecast; and/or

(c) statement of future fact or intention; and/or

(d) statement as to a future state of affairs, all of which are not actionable misrepresentation.[85]

166.  In my judgment, none of the 7 Representations are actionable as a matter of law.

167.  I agree with Mr Leung for D2 that for the 1^st Representation, even if proven, was no more than a statement of opinion on the part of D1. Neither D1 or D2 was a licensed insurance agent or broker. It is clear from D1’s evidence that she was not an expert in the insurance sector and had never held herself out to be one. Whenever D1 received enquiries form P in relation to insurance matters, she would need to check with the licensed insurance agents: see D1’s WS §§9d and 25.

168.  I further accept Mr Leung’s submission that D1 did not possess the requisite professional knowledge or expertise on what insurance products or policies were available in the market. If she had ever suggested the existence of any insurance policy such as “incapacity insurance” or “incapacity account insurance” (which I find as a fact that she did not), that could only be her subjective opinion.

169.  Insofar as the 2^nd to 5^th Representations are concerned, I am of the opinion that they are not actionable either.

170.  It is clear that the alleged 2^nd to 5^th Representations all concerned with the terms and/or features of “the proposed insurance policy”, and not the actual Chubb Policy itself.

171.  P’s evidence is that she simply did not know that any policy would be issued by Chubb before 15 August 2017. I agree with Mr Leung that since no insurance policy had been confirmed by the parties before 15 August 2017, it must follow that any representation on “the proposed policy”, ie a policy which was yet to be confirmed or taken out must be referring to some future facts or a future state of affairs. In my view, such statements (even if made) would be a prediction or promise, not a representation: see Cartwright, op. cit. at §3-42.

172.  I further agree with Mr Leung that even if D1 made the alleged 2^nd to 5^th Representations to P, D1 was at most making some promises to P on the terms and/or features of the proposed insurance policy, without more. They were not representations actionable in law: see Yang Dandan v Hong Kong Resort Company Limited [2016] HKEC 1722 at §65 per Lam VP (as Lam PJ then was).

173.  Equally, I find the 6^th to 7^th Representations not actionable based on the simple reason that, at the time of the alleged 6^th to 7^th Representations, P’s Letter of Wishes was not yet executed or agreed upon. The final version of that document was signed by P in the afternoon of the 15 August 2017 Meeting at D2’s office only, ie after purchasing the Chubb Policy at Greater China’s office in the morning.

H. Whether there was any reliance or inducement?

174.  It is well established that for a claim premised on misrepresentation, the representee would have to prove the alleged representation made was the “but for” cause of the investment: see Shine Grace §166, per Peter Ng J.

175.  In respect of the 1^st Representation, D2 denies that P had relied upon the 1^st Representation and/or that the 1^st Representation was the “but for” cause of P entering into the Service Agreements.[86]

176.  Insofar as the 2^nd to 5^th Representations are concerned, D2 denies that P had allegedly relied upon the 2^nd to 5^th Representations and/or that the 2^nd to 5^th Representations (or any of them) was allegedly the “but for” cause of P purchasing the Chubb Policy from Chubb through Greater China.[87]

177.  D2 further says that 6^th to 7^th Representations were not relied upon by P. It is also pleaded by D2 that the 6^th to 7^th Representations were not the “but for” cause of P purchasing the Chubb Policy from Greater China.[88]

178.  Similar submissions have been made by Ms Lam on behalf of D1 in D1’s Closing.

179.  Thus, in order to succeed, P has to prove that she must have in fact relied on the Representations. The test for showing reliance is the “but-for test”, ie if the representee would have done the same thing even in the absence of the representation, the action in tort must fail: see Clerk & Lindsell, supra §17-36, citing Francis v Knapper [2016] EWHC 3093 (QB).

180.  Insofar as P seeks to argue that reliance could be established as long as the representation “was present in P’s mind when she made the decision” (see P’s Opening §87), this has been rejected by the Marlene Ng J in DBS v Sit Pan Jit, supra, §§285-286.

H1. P did not rely on the 1^st Representation made by D1

181.  In my judgment, it is quite clear that P did not rely on any of the 7 Representations made by D1 when she purchased the Chubb Policy for the following reasons.

182.  First, I accept that, at the 20 June 2017 Meeting, when D1 explained the PowerPoint Slides to P, D1 also went through the page on which the PowerPoint Disclaimer was available.

183.  I find D1 had in fact reminded P of the PowerPoint Disclaimer. D1 frankly admitted that she might not have used the strongest words in doing so because D1 (as the Section Head of Trust Business Team) did not wish to ruin D2’s business (「倒銀行米」), but it was her evidence that she did draw P’s attention to the disclaimer, and asked P to seek professional advice if necessary. I accept her evidence on this.

184.  The PowerPoint Slides were pre-contractual since the Service Agreements were signed on 3 July 2017. However, the PowerPoint Disclaimer made it abundantly clear, inter alia, that the contents of the PowerPoint Slides were for reference only and are not intended to provide legal, tax or other advice.

185.  D2 submits that by reason of the PowerPoint Disclaimer, it was made well known to P by 20 June 2017 that the information (including the alleged 1^st Representation, if any) arising from the PowerPoint Slides was for her reference only. I accept D2’s submission.

186.  Second, P signed the Service Agreements on 3 July 2017, and acknowledged the ‘No-Reliance clauses’ contained in Clauses 2(b) and 2(c) of the terms and conditions.

187.  During cross-examination, P was specially referred to the signing pages of the Service Agreements:-

(a) On the said pages, the unequivocal terms were, inter alia, that 「如閣下同意上述的條款及收費安排以及同意按照以下第四頁至第十四頁所提及條款及條件任用交銀信託服務，請在下面簽署以確認。」 (“Only if you agree to the above described terms and the terms and conditions mentioned on pages 4 to 14 below to engage D2’s trust services, then please sign below to confirm”) and right on top of P’s signature were the 8 words in Chinese 「本人接受以上條款」 (“I would accept the above terms”);

(b) When being cross-examined on this, P’s immediate answer was 「我無留意」 (“I did not pay attention”) and she only noticed that there were 「一堆字」 (“a bunch of characters”) printed on the page; and

(c) Further, P acknowledged that if 「嗰份嘢 / 成份嘢」 (“that document” / “the whole document”) was true and accurate, she would agree that she accepted the terms stated therein above, including the fee arrangements, and the terms and conditions set out in pages 4 to 14.

188.  Based on her own admissions and the fact that she had signed on the above pages in the Service Agreements, I fail to see how she could still say that she had relied on D1 when purchasing the Chubb Policy.

189.  Third, I find as a fact that D1 had properly explained the terms and conditions in the Service Agreements to P, and in particular D1 had specifically drawn P’s attention to, inter alia, the No-Reliance Clauses.[89]

190.  According to D1, it was the “compliance requirements” (「合規要求」) of D2 to explain the terms and conditions to its customers. D1 would therefore allow sufficient time for the client (ie P in this case) to read each page, and D1 would confirm with the client whether further explanation would be needed, before inviting the client to sign. I accept that this was exactly what D1 had done in this case.

191.  Fourth, there is no plea of “non est factum” in P’s pleaded case. P was properly explained the terms and conditions in the Service Agreements. As a person of full age and understanding, P should be bound by what she had signed, and it is no defence for P to say that she had not read or understood the contents of the document: see Ko Wang Ming v. Hong Kong Forex Investment Limited and Anor, HCA 2320/2008 (unrep., 27 December 2013) at §§60-62, referring to Ribeiro PJ in Ming Shiu Chung & Others v Ming Shiu Sum & Others (2006) 9 HKCFAR 334 at §84.

192.  Fifth, by virtue of the No-Reliance Clauses (ie Clauses 2b and 2c), P is contractually estopped from asserting reliance on any representation made by D1 (including the alleged 1^st to 7^th Representations). Instead, P must have acknowledged and accepted that she entered into the Service Agreements with D2 on the following basis:-

(a) Any discussion with D2 and/or its authorized persons was for general reference only, which should not be relied upon;

(b) Any information in D2’s leaflets/pamphlets, its PowerPoint introduction or its application forms was also for general reference only, which should not be relied upon; and

(c) P assumed sole responsibility to obtain all necessary advice for, inter alia, the trust structure and assets to be transferred into or out of the trust.

193.  In the aforestated premises, I accept Mr Leung’s submission made on behalf of D2 that the No-Reliance Clauses should not be subject to the “test of reasonableness” under CECO and are in any event reasonable in the circumstances of the present case, especially given P’s sophisticated financial background.

194.  I further accept Mr Leung’s submission that the No-Reliance Clauses merely define the nature and scope of the parties’ relationship between P and D2, and are not exclusion clauses in nature: cf the express exclusion clause contained in Clause 12 of the Service Agreements (「免責」).

H2. 2^nd to 7^th Representations – in purchasing the Chubb Policy

195.  D2 denies that P had relied on the 2^nd to 7^th Representations in her purchasing the Chubb Policy: see D2’s Defence §§8-9, 24.5, 27.5 and 30-31.9.

196.  I accept D2’s submissions above on the PowerPoint Disclaimer and the No-Reliance Clauses to make good of the point that P cannot rely on the 2^nd to 7^th Representations as the but for cause for purchasing the Chubb Policy.

197.  In light of the evidence unfolded at the trial, I accept D2’s submission that at the 15 August 2017 Meeting, having heard the detailed explanation and presentation by the staff of Greater China and upon P having considered her own needs and circumstances, out of 2 policies presented to her, namely, the AIA Plan and the Chubb Policy, P opted for the latter ie the Chubb Policy.[90] Accordingly, P fails to establish any causal link between what D1 allegedly represented and P’s own decision to take out the Chubb Policy.

198.  On the evidence, I find that P did not in fact rely upon any of the alleged 2^nd to 7^th Representations into purchasing the Chubb Policy.

199.  P accepted that it was the obligation of an insurance agent to explain any insurance policy to a client. Neither D1 nor D2 was a licensed insurance agent or broker. In the present case, it was the staff of Greater China who discharged the duty to explain to P in the 15 August 2017 Meeting.

200.  Third, according to D1, D1 had (with her lawyers) attended the office of Greater China to ascertain what happened in the 15 August 2017 Meeting after P commenced these proceedings. Indeed, D1’s evidence in D1’s WS §§53-65 is supported by the documentary evidence and should be preferred.

201.  In particular, Greater China’s staff gave detailed presentation to P on two policies – one was the Chubb Policy which was eventually taken out by P) and the other was the AIA Plan. This accorded with the record in the Financial Analysis Form dated 15 August 2017 which was signed by P on various pages therein: (see also discussions in Sections F5.5-F5.6 §§139-148 above).

202.  According to the Financial Analysis Form:-

(a) It was stated, inter alia, that “[b]ased on your answers to the questions above, the intermediary concerned has explored the following insurance options (as available to intermediary) to meet your objective(s) and needs(s)” (「根據閣下的上述選項， 中介人曾與閣下討論下列保險產品的選擇 (因應中介人所能提供的產品)，以迎合閣下選購保險產品的目標及滿足閣下的需要」); and

(b) Two insurance policies were referred to as “insurance products introduced” (「曾介紹的保險產品名稱」), one was “Chubb – FDR5” (ie the Chubb Policy) and the other one was the AIA Plan. “Chubb – FDR5” was ticked as the product selected.

203.  The intermediary (「中介人」) was Ms Ngan who also signed on the form, stamped with the chop of Greater China. She was therefore the authorized representative or agent of Greater China.

204.  P also signed the declaration page by which she declared the truth and correctness of all the information the “Financial Analysis Form” in the following terms:-

“I/We confirm that I/We have reviewed the information given in this Financial Needs Analysis Form (hereinafter refer to as ‘this Form’ and all information is true and correct. …

本人/吾等確認已覆審本財務需求分析表格 (以下簡稱為「本表格」 )的資料，並確認所有資料真確無誤。”

205.  Hence, I agree with Mr Leung that the contemporaneous record is entirely in support of D1’s evidence, ie Greater China gave a detailed presentation to P on two different insurance policies (the Chubb Policy and the AIA Plan), and after discussion with the representatives of Greater China without asking D1 for any opinion, P decided to choose the Chubb Policy.[91] And by virtue of the declaration signed by P in the Financial Analysis Form, she is not allowed to deny the same now.

206.  Fourth, as mentioned above, P signed 6 times on the proposal of the Chubb Policy at [C2/41/697-703]. They were all written in Chinese and in plain and simple language. None of the alleged 2^nd to 7^th Representations were reduced into writing. In contrast, the terms of the Chubb Policy proposal directly contradicted and negated the existence of and/or P’s purported reliance on the alleged 2^nd to 7^th Representations. I have already dealt with this matter under Section F5.4 §§128-138 above. I do not propose to repeat them here.

207.  I agree with D2 that the alleged 2^nd to 7^th Representations were not reflected in writing in the Chubb Policy proposal. However, no plausible explanation was ever given by P as to why she did not raise any proper query with the staff of Greater China on the spot. Instead, P’s only request for explanation from Greater China apparently concerned the currency conversion between HKD and USD, which was irrelevant to the alleged 2^nd to 7^th Representations.

208.  I also like to note that this was not the first time P had purchased any insurance policy or product. The terms of the Chubb Policy proposal were also set out in Chinese for her easy reading. And given her investment experience, it is improbable for P to have any misunderstanding of the terms therein. In fact, at the last page of the Chubb Policy proposal, P signed and declared, inter alia, that she confirmed that she had read and understood the information contained in the document (「我確認已閱讀及明白本銷售說明文件所提供的資料…」).

209.  In the aforesaid premises, I find as a fact that P had not relied on any of the alleged 2^nd to 7^th Representations when purchasing the Chubb Policy, even if they were made by Ds.

I. Whether each of the 1^st to 7^th Representations (if made) was false

210.  Based on the discussions and my findings above, I do not consider that each of the 7 Representations was false nor there was any fraudulent intent on the part of Ds when the alleged Representations were made.

J. Whether the alleged duties could be implied into the Service Agreements and whether Ds acted in breach of those duties

211.  P pleaded the following duties allegedly owed by Ds to P under ASOC §18:-

“18. By reason of the aforesaid, the 1^st and 2^nd Defendants assumed responsibility for and owed the following duties to the Plaintiff:-

18.1 to take reasonable steps to ascertain and understand the Plaintiffs needs and requirements for setting up a trust, including the Plaintiffs assets, financial situation and existing financial planning arrangements;

18.2 to exercise reasonable care and skill to ensure that the trust structure and its components (including any investments or assets to be held by the structure) recommended to the Plaintiff would suit the needs and requirements of the Plaintiff, and not to recommend or propose a trust structure which were not suitable for her;

18.3 to consider available alternative structures or arrangements and to take reasonable steps to ensure that the Plaintiff was aware of the available alternatives;

18.4 to explain the proposed trust structure and its components (including any investments or assets to be held by the structure) to the Plaintiff and to exercise reasonable care and skill to ensure that any such explanation is accurate and not misleading.”

212.  Mr Lam for P submits that in relation to D2, it owed an advisory duty to P that it assumed responsibility for its recommendations. He says that D2 owe the following specific duties in relation to its recommendations both in tort and in contract:-

(1) To take reasonable steps to ascertain and understand P’s needs and requirements for setting up a trust, including her assets, financial situation and existing financial planning arrangements;

(2) To exercise reasonable care and skill to ensure that the trust structure and its components (including any investments or assets to be held by the structure) recommended to P would suit her needs and requirements, and not to recommend or propose a trust structure which were not suitable for her;

(3) To consider available alternative structures or arrangements and to take reasonable steps to ensure that P was aware of the available alternatives; and

(4) To explain the proposed trust structure and its components to P and to exercise reasonable care and skill to ensure that any such explanation is accurate and not misleading.

213.  Similar advisory duties have been claimed to be owed by D1 to P: see P’s Opening §§157 to 160.

J1. Alleged implied terms are contrary to the express terms

214.  The alleged duties are premised on implied terms. It is trite that one cannot imply obligations that are contrary to the express terms of an agreement: Kwok Wai Hing Selina v HSBC Private Bank (Sussie) SA [2012] 4 HKC 260, §105, Reyes J; recently applied in Frank Lee & Anor v HSBC [2022] HKCFI 3680, §§117-118.

215.  I agree with Mr Leung’s submissions that the alleged duties were contrary to the express terms in the Service Agreements which excluded D2 from various liabilities which included the following:-

(1) to P’s alleged duty to advise/recommend, Clause 2(b) stipulated that “Customers should in relation to the setting-up structure, …holding and management of assets by the said structure and/or any other activities related to the said structure, independently seek and assume responsibility in obtaining legal and tax and/or any appropriate and necessary advice”: see Clause 2(b) of the Service Agreements; and

(2) contrary to P’s alleged duty to advise/recommend, Clause 2(c) further states that “in relation to all discussion with the Bank of Communications Trustee Ltd and/or its authorized persons…those are intended for general reference only, and the same should not be relied upon in any way.” (「與交銀信託或其受委人展開的任何討論及交銀信託的任何小冊子、 PowerPoint簡報或表格中提供的任何資料， 旨在提供一般資訊，不能在任何方面加以依賴。」): see Clause 2(c) of the Service Agreements.

J2. D2 did not assume duty to advise

216.  I further accept the following submissions made by Mr Leung on behalf of D2. The mere fact that the parties have had a relationship of customers and banker did not mean that the bank had a duty to consider the prudence of an investment from the customers’ perspective or to warn him of the risk involved. The mere act of giving advice did not necessarily mean that a bank had assumed legal responsibility for it. An important aspect to decide if the bank had assumed the legal responsibility was the terms of the contract between them: see Shine Grace Investment Ltd v Citibank, N.A. [2018] HKCFI 1737, §§88-94, per Ng J; also applied in Frank Lee v HSBC [2022] HKCFI 3680 at §119.

217.  One important aspect of the objective evidence in determining whether a bank has assumed legal responsibility to provide advice and owes a duty of care to its customer is the terms of the contract between them: see Titan Steel Wheels Ltd v Royal Bank of Scotland Plc [2010] 2 Lloyd’s Rep 92 at §§85-89; DBS Bank (Hong Kong) Ltd v San-Hot HK Industrial Co Ltd [2013] 4 HKC 1 at §223.

218.  In Titan Steel Wheels Ltd v Royal Bank of Scotland Plc at §§85-89, David Steel J explained the various ways in which the contractual terms might impact on the issue of assumption of responsibility. At §89, the learned judge concluded:-

“…the contractual provisions provide an evidential basis negating the coming into existence of a duty of care … Where the parties have purported to allocate by contract their respective roles and the risks involved in their relationship, this will in the normal run preclude any wider obligation from arising from a common law duty of care: Henderson v Merrett [1995] 2 AC 145.” (emphasis added)

219.  Similarly, in DBS Bank (Hong Kong) Ltd v San-Hot HK Industrial Co Ltd, DHCJ Pow SC summarized the proper question to ask at §223:-

“…when one objectively analyze the things said and done by DBS’s staff to Madam Hao [the client] throughout their dealings, one has to firmly bear in mind the contractual context under which such things were said and done. That was an important, if not the most important, contextual scene. The proper question was: whether such things were said and done within the framework contemplated by the terms and scope of the banking services agreement as oppose to DBS assuming responsibilities over and above their contractual obligations stipulated in the express terms of the banking services agreement.” (emphasis added)

220.  In Chang Pui Yin & Ors v Bank of Singapore Limited at §§44(a)-44(b), Lam VP (as he then was) reiterated the importance of examining the terms of the contract between the parties as follows:-

“(a) The extent of the assumption of legal responsibility for a statement is, as observed by Lord Hoffmann in Customs and Excise Commissioner v Barclays Bank plc, supra, facts and circumstances sensitive. The terms of the agreement between the parties is one of the relevant circumstances and in some cases disclaimers have been held to be effective to negate the assumption of legal responsibility.

(b) Therefore, it is not possible to deduce from the mere fact that a statement has been made (which can be described in a general sense as advisory services) that the maker of a statement has assumed legal responsibility for such statement. It is also erroneous to hold that because there had been such assumption of legal responsibility, clauses in the agreement which are inconsistent with such assumption of responsibility must be inapplicable. Such an approach is tantamount to the disregard of those clauses in the assessment as to the extent to which legal responsibility has been assumed for the statement and that would be wrong in law.” (emphasis added)

J3. D2 has no duty to advise under the Service Agreements

221.  As pointed out by Mr Leung, the contractual obligations of D2 as envisaged under the Services Agreements are contained in 7 clauses only. They are all written in Chinese and in simple and day to day language:-

(1) Clauses 1 relates to the setting up of the trust and injection of assets into the trust (成立費);

(2) Clause 2 relates to the annual administration fee for the trust after trust assets are injected into the trust (年度行政費);

(3) Clause 3 concerns D2’s transaction costs for handling any execution of transactions (交易手續費);

(4) Clause 4 relates to D2’s fees for collecting/redeeming compensation or accrued benefits from the insurer if an insurance policy has been injected into the Trust (保險賠償金手續費);

(5) Clause 5 provides for charges of D2 on dealing with distribution of trust asses (分配費);

(6) Clause 6 provides for miscellaneous charges of D2 such as photocopying, postage fees etc. (雜項費用); and

(7) Clause 7 relates to charges of D2 upon the termination of the Trust (信託撤銷費).

222.  Applying Chang Pui Yin & Ors v Bank of Singapore Limited at §§44(a)-44(b), per Lam VP (as he then was), in determining whether D2 has owed P the alleged duties, it is important to examine the terms of the Service Agreements between P and D2 because:-

(1) “The terms of the agreement between the parties is one of the relevant circumstances and in some cases disclaimers have been held to be effective to negate the assumption of legal responsibility.”; and

(2) It would also be “erroneous” and adopting an “approach wrong in law” by disregarding the clauses in the Service Agreements which are inconsistent with D2’s assumption of the alleged duties.

223.  I accept D2’s submissions that the alleged “duties” as pleaded in ASOC §18 are not covered by and/or inconsistent with Clauses 1 to 7 of the Service Agreements. In particular:-

(1) Clauses 1 to 7 do not include or provide for the alleged duty of D2 in “understanding and ascertaining P’s requirements for setting up a trust”(ASOC §18.1);

(2) Clauses 1 to 7 of the Service Agreements also did not provide for any alleged obligation on the part of D2 in “ensuring that the trust structure and its component recommended to P would suit her needs and requirements” (ASOC §18.2);

(3) the above Clauses 1 to 7 of the Service Agreements also did not expressly obligate upon D2 the alleged duty in “considering available alternative structures for P” (ASOC §18.3); “explaining the proposed trust structure and its components” (ASOC §18.4);

(4) accordingly, the contractual provisions above in the Service Agreements of this case provide an evidential basis for negating the coming into existence of any alleged duty of care: see Titan Steel Wheels Ltd (supra); and

(5) the present situation between P and D2 is precisely what has been described in Titan Steel Wheels Ltd by David Steel J: “Where the parties have purported to allocate by contract their respective roles and the risks involved in their relationship [ie the Service Agreements in this case], this will in the normal run preclude any wider obligation from arising from a common law duty of care: see Henderson v Merrett [1995] 2 AC 145.”

224.  Further, the duties as pleaded in ASOC §18 could neither be found in the express terms and conditions of the Service Agreements at pp. 4-14. To the contrary, D2 submits and I accept that the exclusion clauses and disclaimers in the Service Agreements namely, Clauses 2(b) and 2(c) to be effective in negating the assumption of the alleged duties by D2: see Chang Pui Yin v Bank of Singapore at §44, per Lam VP (as he then was).

225.  Here, Clause 2(b) and Clause 2 (c) of the Service Agreements made it very clear that D2 would assume no advisory duty or any of the duties pleaded in ASOC §18.

226.  In particular, P was reminded and informed to seek her own independent advice regarding assets to be transferred into the trust, and should not rely on any discussion she might have with D2 (including all staff and employees such as D1) or any information provided to P eg the PowerPoint Slides:-

(1) Clause 2(b) expressly provides the client should assume the “sole responsibility” to obtain all proper and necessary independent advice regarding the trust structure or the assets to be transferred into and out of the trust; and

(2) Clause 2(b) expressly provides that P cannot rely any discussion with the bank staff or any information provided to her.

227.  I further agree with Mr Leung that if the court were to look further to all aspects of the objective evidence of the relationship between the parties as well as other relevant factual circumstances (Chang Pui Yin v Bank of Singapore, at §29, §§35-37, Lam VP (as he then was)), these other relevant factors summarized below will further illustrate that no such alleged duties as contended by P should arise in the present circumstance:-

(1) The relationship between P and D2 was governed by the Service Agreements executed by the parties on 3 July 2017. P and D2 had no prior relationship with each other. P had only first met D1 sometime in June 2017;

(2) According to D1’s evidence (of which the court accepts), D1 had properly explained the terms and conditions of the Service Agreements to P on 3 July 2017;

(3) Authorities have repeatedly held that it is thus important to examine the terms of the contractual arrangement between the parties. I find that P and D2 had agreed to deal with each other on the basis of the Service Agreements so that D2 did not assume any of the alleged advisory duties as contended by P;

(4) Under the Service Agreements, D2 is only responsible for, inter alia, preparation of the trust documents, setting up of the trusts and handling and charging for injection of assets into the trust. D2 will also administer the trust upon the activation of the same;

(5) It is plain that D2’s express contractual obligations did not refer to any of the alleged duties in ASOC §18. As admitted by P with cross-examination, the Service Agreements did not mention or state that “D2 would sell, recommend and/or choose any insurance policies or products for P”; and

(6) Further, Clauses 2(b) and 2(c) of the Service Agreements (ie the No Reliance Clauses) are plainly inconsistent with any of the alleged advisory duties as pleaded in ASOC §18.

228.  I agree therefore that, pursuant to the Service Agreements, it is P who assumed sole responsibility in relation to, inter alia, the setting-up structure and the assets to be managed or held thereunder, and P would be responsible for seeking independent professional advice. P also agreed that she should not rely upon (1) any discussion with D2 and/or its authorized persons and (2) information contained in D2’s documents such as brochure and PowerPoint Slides.

229.  Under the Service Agreements, it is plain that D2 did not owe to P any advisory duty or the duties as pleaded in ASOC §18. Even though it may be envisaged that D2 and its staff (including D1) would “provide information” and have “discussion” with P, but it made expressly clear to P that all those information supplied or discussion was meant for reference only and P was reminded to obtain her own independent advice. This was how the parties in this case had ordered and arrange their commercial relationship, and I find this is the most important contextual scene against which all that was said and done by Ds should be viewed accordingly.

230.  As P’s case against D1 on advisory duty is based on the same factual allegations against D2: see P’s Opening §106, based on the same reasoning set out above, I also find D1 owed no such duty to P.

J4. Whether the alleged duties in ASOC were implied terms of the Service Agreements?

231.  P’s ASOC §19 contends that to give business efficacy and/or to reflect the parties’ obvious common intention and/or by virtue of the Supply of Services (Implied Terms) Ordinance (Cap. 457) (“the SSO”), the aforesaid alleged duties in ASOC §18 should be implied into the Service Agreements.

232.  With respect, I do not agree.

233.  Cheng J in Wong Wai Sum v AXA [2025] HKCFI 872 at §§100-101 stated that:-

“As held by the Court of Final Appeal in Kensland Realty Ltd v Whale View Investment Ltd & another (2001) 4 HKCFAR 381 at §23 and §59, the following conditions must be satisfied in order for a term to be implied into a contract (citing Lord Simon’s summary in BP Refinery (Westernpoint) Pty Ltd v Shire of Hastings (1977) 180 CLR 266:-

(1) it must be reasonable and equitable;

(2) it must be necessary to give business efficacy to the contract so that no term will be implied if the contract is effective without it;

(3) it must be so obvious that “it goes without saying”;

(4) it must be capable of clear expression; and

(5) it must not contradict any express term of the contract.”

234.  In my judgment, the alleged terms stated in ASOC §18 should not be implied into the Service Agreements as a matter of contract due to the following matters submitted by D2:-

(1) First, the Service Agreements is effective without the alleged implied contract terms, so that no further terms should be implied. It is not in dispute that the Service Agreements (for both the Main Trust and the Sub-Trust) are valid and subsisting. Since the signing of the Service Agreements by P on 3 July 2017, D2 has been performing its duties under the Service Agreements without any difficulties. Even without the alleged implied terms, P is and was able to enjoy D2’s services rendered under the Service Agreements, including but not limited to D2’s handling P’s further revision of her Letter of Wishes for the Main Trust in June 2019. It follows that no term should be implied if the contract ie the Service Agreements “is effective without it”;

(2) Second, the alleged implied terms are inconsistent with and contradict the express terms of the Service Agreements:-

(a) For example, contrary to P’s Alleged Duty to Advise/recommend, Clause 2(b) stipulated that “Customers should in relation to the setting-up structure, …holding and management of assets by the said structure and/or any other activities related to the said structure, independently seek and assume responsibility in obtaining legal and tax and/or any appropriate and necessary advice”; and

(b) contrary to P’s Alleged Duty to Advise/recommend, Clause 2(c) further states that “in relation to all discussion with the Bank of Communications Trustee Ltd and/or its authorized persons…those are intended for general reference only, and the same should not be relied upon in any way.”;

(3) Third, as pointed out by Lord Neuberger in Marks and Spencer plc v BNP Paribas Securities Trust Co (Jersey) Ltd and another [2016] AC 742 (cited in Wong Wai Sum v AXA, per Cheng J at §101), “The implication of a term was not critically dependent on proof of an actual intention of the parties when negotiating the contract. The question is what notional reasonable people, in the position of the parties at the time at which they were contracting, would have intended.” D2 submits and I accept, on the facts of this case, “notionable reasonable people” would not have intended that in coming to D2 for the purpose of “setting up a trust” and “injecting assets into the trust” (Clause 1 and 2) must, by implication of law or facts, include a duty to “recommend a suitable insurance product or particular insurance policy structure” to P;

(4) It would be wholly unreasonable and inequitable for the court to imply a duty/term upon D2 (which is not a licensed insurance agent) to exercise reasonable care and skills in giving advice to P on the particular type of insurance policies that would be suitable to her. For instance, advising P on the suitable insurance policy to be injected into the trust is an entirely different task from setting up the trust or handling the assets to be injected into the trust; and

(5) In any event, the express provision in Clause 4 of the Service Agreements, which relates to D2’s obligation of “collecting compensation/accrued benefits from the insurer of an insurance policy” is unable, as D2 submits, whether by way of business efficacy or obvious common intention, to give rise to an implied duty on the part of D2 which includes advising P on the suitable insurance policy for her needs. It is must be emphasized that “A term should not be implied into a detailed commercial contract merely because it appears fair or merely because one considers that the parties would have agreed it if it had been suggested to them. Those are necessary but not sufficient grounds for including a term.”: see Wong Wai Sum v AXA, at §§100-101.

J5. Whether the alleged duties can be implied by virtue of the SSO?

235.  I agree with Mr Leung that for reasons explained by Reyes J in Kwok Wai Hing Selina v HSBC Private Bank HCCL 7/2010 (21 June 2012) at §158, the application of the SSO is not engaged and P’s reliance on the SSO is misplaced:-

“158. Mr. Fung has also sought to rely on the Supply of Services (Implied Terms) Ordinance (Cap.457) (SSO). That imposes a duty on a supplier to carry out a relevant service with reasonable care and skill. It is not possible to contract out of that obligation when one supplies services to a consumer. However, here, HSBC accepts that it was obliged to discharge such services as it actually undertook to provide to Ms. Kwok, with reasonable care and skill. The question is just what duties HSBC undertook to provide. Mr. Fung having failed to persuade me that HSBC accepted the core duties, there can be no issue as to whether HSBC failed to execute any of its core duties with reasonable care and skill. The SSO is therefore not relevant.”

236.  Applying Kwok Wai Hing Selina v HSBC, supra, I find D2 did not owe any of the alleged duties contended by P in ASOC §18. In particular, as D2 emphasized on the facts of this case, D2 has not and has never assumed any alleged duty in advising and recommending to P the insurance policies suitable for the needs and requirements of P. It follows that there can be no issue as to whether D2 failed to execute any of the alleged duties with reasonable care and skills. Accordingly, the SSO is therefore not relevant.

J6. Whether Ds had assumed by advisory duty in tort?

237.  The issue here is whether in the circumstances of this case, D2 also owed to P the alleged advisory duties as pleaded in ASOC §18 in tort.

J6.1 Co-extensiveness of tortious and contractual duties

238.  In determining whether D2 had assumed any advisory duty in tort, reference should be made to the contract entered between P and D2. This is because the parties’ relationship was governed by the Service Agreements in this case.

239.  Further, authorities including various mis-selling cases between banks and their clients have held that the nature of tortious duties and contractual duties of the bank are generally co-extensive. It follows that P cannot seek to impose tortious duties which she is unable to bring into the contract by way of implied terms.

240.  In DBS v Sit Pan Jit, supra[92], the client, Sit, brought various equity linked notes through the bank, resulting in substantial losses. Sit sought to impose on the bank a range of tortious duty. Sit argued that a person assuming the responsibility of an investment advisor or even salesperson owed a wide range of tortious duty in law at §354. DHCJ Marlene Ng (as she then was), after a comprehensive review of the local and English authorities, held at §§354-364[93]:-

(1) The prior question was whether the bank assumed such duties in the first place [§354];

(2) To answer that question, it would be important to focus on what service the bank had agreed to provide pursuant to the contract between the bank and the client [§354];

(3) The starting point is that a duty of care to advise should not be readily inferred in a commercial relationship: §357. Where parties have ordered their relationship in the terms of a contract, the effect is that the bank's obligations in tort cannot be more extensive than what the parties have determined by contract. The duties in contract and in tort are coextensive [§359];

(4) Where parties are in a contractual relationship, their mutual obligations arise from their contract are to be found expressly or by necessary implication in the terms of the contract. Obligations in tort which may arise from such contractual relationship cannot be greater than those to be found expressly or by necessary implication in their contract [§359]; and

(5) Whilst the terms between the bank and the customer made it clear that the bank was not obliged to give “advice”, it is no answer to suggest that the bank did in fact advise [§§361-364].

241.  Based on the submissions made by Mr Leung on behalf of D2 below, I find that no advisory duty in tort could arise in the circumstance of this case.

242.  First, where parties ie P and D2 have ordered their relationship in the terms of a contract, the effect is that the bank’s obligations in tort cannot be more extensive than what the parties have determined by contract. The duties in contract and in tort are co-extensive. The mutual obligations are to be found expressly or by implication in the terms of the contract: see DBS v Sit at §359:-

(1) No such advisory duty in tort could arise because the duties in contract and in tort of the bank are co-extensive. Here, the contract ie Service Agreements between P and D2 did not expressly provide for any of the alleged duties in tort, as contended by P in ASOC §18.

(2) Further, even if the court were to investigate the parties’ mutual obligations with reference to the terms of the contract (which may arise by implication), no such alleged terms could be implied into the Service Agreements as a matter of contract. Accordingly, no co-extensive advisory duty in tort could arise at the same time.

243.  Second, as explained in D2’s opening §§63-67 and by Recorder Coleman SC (as he then was) in Cheung Chi Yuen Frank v Yeung Siu Wai Anthony [2018] HKCFI 1262 at §165 “that the lack of any advisory agreement entered into between the parties, and hence the lack of any express contractual duty to advise, was not determinative of whether the defendant owed tortious duties to advise. But the absence of any such contractual obligations was a factor to be given considerable weight when considering the existence or otherwise of a tortious duty to advise. JP Morgan Chase Bank v Springwell Navigation Corp [2008] EWHC1186 (Comm), per Gloster J”:-

(1) Applying the above, I agree with D2’s submission that whilst the lack of any express contractual duty to advise may not be determinative of whether D2 owed P any tortious duties to advise; and

(2) Nonetheless, by reason of the matters stated in §§213-244 above, the absence of any express contractual duty to advise coupled with the absence of any alleged implied contractual duty to advise in this case, is a factor to be “given considerable weight” by the court when deciding on the existence or otherwise of a tortious duty to advise, as alleged by P.

244.  Third, it was further held in DBS v Sit, supra at §§360-363 whilst the terms between the bank and the customer made it clear that the bank was not obliged to give “advice”, it is no answer to suggest that the bank did in fact advise.

245.  Thus, applying the authorities summarized by DHCJ Marlene Ng (as she then was) in DBS v Sit, supra, I accept the following submissions made by D2:-

(1) The alleged duty to advise in tort would be contrary to what the Clause 2(b) of the Service Agreements expressly says – “Customers should in relation to the setting-up structure, incorporation and the establishment of relevant companies, lateral structure and/or related company assets transfer, holding and management of assets by the said structure and/or any other activities related to the said structure, independently seek and assume responsibility in obtaining legal and tax and/or any appropriate and necessary advice”[94] : see Selina Kwok Wai Hing v HSBC §§103-106;

(2) Further, P’s argument that there was the alleged advisory duty in tort owed by D2 to P, “in this case is, in the light of the terms of [the Service Agreements], hopeless”. For “it is no answer, as it was suggested, that whilst the terms made it clear that the bank was not obliged to give ‘advice’ the bank was not protected if it did in fact advise.”: see DBS v Sit §360. There are a number of difficulties with this submission. That is because as David Steel J explained in Titan Steel Wheels Ltd that “The terms go much further than relieve the bank from any obligation to give advice; they provide that any statements are not to be treated as advice nor can they be relied upon by Titan.”;

(3) The above observation is particularly apt in the present case because Clause 2(c) of the Service Agreements is of similar effect. It is stated that any discussion and communications with D2 are “for general reference only” and “they cannot be relied upon”.;

(4) Clause 2(c) states that: “in relation to all discussion with the Bank of Communications Trustee Ltd and/or its authorized persons, and in respect of any information provided in the leaflets/pamphlets of the Bank of Communications Trustee Ltd, its powerpoint introduction or its application forms, those are intended for general reference only, and the same should not be relied upon in any way.”; and

(5) the original Chinese text of Clause 2(c) reads:「與交銀信託或其受委人展開的任何討論及交銀信託的任何小冊子、 powerpoint 簡報或表格中提供的任何資料， 旨在提供一般資訊，不能在任何方面加以依賴。」[emphasis added]

246.  Fourth, in DBS v San-Hot, supra, §223, DHCJ Jason Pow SC emphasized the “contractual context” as the most important “contextual scene” in objectively analyzing the things said and done by the bank’s officer to its customer. The proper question was: whether such things were said and done within the framework contemplated by the terms and scope of the bank services agreement as opposed to the bank assuming responsibilities above and beyond their contractual obligations stipulated in the express terms of the banking services agreement.

247.  I agree with D2’s submissions that the “things said and done” between Ds and P were within the contractual framework contemplated by the terms and scope of the Service Agreements which negates any assumption of duties by D2 over and above the contractual obligations stipulated in express terms of the Service Agreements for the Main Trust and the Sub-trust.

248.  For example, prior to the execution of the Service Agreements, D1 had by way of an email dated 15 June 2017, sent to P (a) the PowerPoint Slides and (b) a document entitled “Company Brochure 2017” (“the Brochure”). D2 submits and I accept that these two documents which may be regarded as “things done and said to P by Ds” would only further negate the assumption of duties in tort on the part of D2:-

(1) The PowerPoint Disclaimer in the PowerPoint Slides made it abundantly clear that the information therein was for reference only. Any customer or reader should seek professional advice independently, and D2 would not be responsible for transactions and consequences thereof arising out of and resulted from the contents of these files;

(2) The Brochure of D2 briefly introduced the services that D2 would provide to their customers including the setting up of trust, appointment of executor and power of attorney, seeking injunctions/freezing orders from the court. Under cross-examination, P also admitted that the entire Brochure did not mention that D2 would provide any services in selecting or recommending any insurance policies or products to P.

249.  Fifth, in Kwok Wai Hing Selina v HSBC (unrep., HCCL 7/2010, 21 June 2012), the claimant was a private banking customer who transacted accumulator contracts through HSBC, resulting in losses. Selina Kwok sued HSBC in both contract (breach of implied terms) and tort (assumption of responsibility). Both arguments were rejected by Reyes J in respect of “assumption of responsibility” in tort, Reyes J stated that “recourse to the law of tort cannot add significantly to an analysis based upon the law of contract” for the following reasons in §§136-139:-

“136. Mr. Fung also refers to duties of care at common law. But that does not really assist.

137. It is possible to claim pure economic loss under the law of tort when a defendant has breached a duty of care arising by reason of a special relationship between plaintiff and defendant. There is here a special relationship between Ms. Kwok and HSBC.

138. However, that special relationship is defined by the contract between Ms. Kwok and HSBC contained in and evidenced by the Account Opening Booklet and Risk Disclosure Statement. It follows that recourse to the law of tort cannot add significantly to an analysis based upon the law of contract.

139. In summary, to succeed in the present case, Mr. Fung has to persuade the Court that HSBC owed one or more of the core duties identified by him. But Mr. Fung has not satisfied the Court that any of the alleged core duties arise in the present instance. On the contrary, the existence of the core duties is negated by the express terms of the Account Opening Booklet and Risk Disclosure Statement. Nor does the Court accept that in the course of their relationship, HSBC voluntarily undertook any of the alleged core obligations towards Ms. Kwok.” [emphasis added]

250.  In the present case, I find the alleged duties of care in tort and in contract as alleged by P are the same: see ASOC §§18, 50-50.6. Therefore, the holding by Reyes J in Selina Kwok v HSBC is applicable.

251.  More recently, the above dicta of Reyes J in Selina Kwok v HSBC has been applied in Frank Lee v HSBC [2022] HKCFI 3680. Au-Yeung J also held at §135 that in the situation where “the duties in tort are the same as the contractual terms. In a banker/customer relationship established through agreements, recourse to the law of tort cannot add significantly to an analysis based on the law of contract”: see Selina Kwok §138.

J7. “Other relevant factors” for determining the existence of the alleged duty in tort

252.  In Cheung Chi Yuen, Frank v Yeung Siu Wai, Anthony [2019] HKCA 467, Kwan VP stated at §§37-38 that the judge took into account the following matters in determining if there was a duty owed in tort:-

(1) “The lack of any advisory agreement entered into between the parties was not determinative of whether the defendant owed tortious duties to advise, but the absence of any such contractual obligations were a factor to be given considerable weight.”; and

(2) “Other relevant factors included (a) the factual matrix of the relationship between the parties (what was said between them at the outset of the relationship, what roles each played during the relationship, the context in which the advice was given, whether the giver was doing so gratuitously or was getting a reward in some direct or indirect form, and the like); (b) the extent of the parties’ financial experience and sophistication; (c) the extent of the claimant’s reliance on the defendant and the foreseeability of such reliance; and (d) whether or not there were express disclaimers of responsibility.”

253.  I find these “other relevant factors” also existed in this case and would negate the existence of any alleged duties in tort owed by D2 to P.

254.  In relation to factor (a), Vivian Chan of Greater China has repeatedly confirmed in the meeting in 13 June 2019 that D1 has not received any benefits in her referral or introduction of P to Greater China.

255.  In relation to factor (b), I accept the following submission made by D2 that at all times, as I have found above, P is and was a sophisticated investor who is always capable of looking after her own interest.

256.  P has been a self-taught investor who learns by experience for many years. She managed to form her own financial view and had even given concrete guidance on investment (投資指引) in her letter(s) of wishes. As a strong-minded and experienced investor I agree that, it is entirely unrealistic for P to now suggest that she had to rely on and had heavily relied on the advice from D1/D2 in relation to, inter alia, the suitability of any investment or insurance policies that P intends to purchase – factor (c).

257.  In relation to factor (d), I find the answer must obviously be “Yes”.

K. Did D1/D2 recommend the Chubb Policy to P

258.  In respect of D2’s alleged breach of duties, P’s pleaded case in ASOC §50 is that “Further or alternatively, in recommending the Chubb Policy to [P], [D1 and D2] acted in breach of their duties to [P] pleaded at paragraphs 18 and 19 above”. ASOC §18.2 states Ds should exercise reasonable care to ensure that the assets held by the trust structure recommended to P would meet the needs of P.

259.  As I have found, on the evidence that D1 and D2 did not recommend and had not recommended the Chubb Policy to P, P’s case on any alleged breach of duties under ASOC §50 is bound to fail.

260.  Based on the matters discussed under Sections F1. to F5. above, I accept D2’s submissions that there is sufficient evidence before the court to support the finding that at all times, D1 and D2 had never recommended the Chubb Policy to P in this case.

261.  Thus, based on the evidence transpired at trial, I find D2 did not owe to P the alleged advisory duties. Further, based on the evidence, I find that both D1 and D2 did not recommend the Chubb Policy to P. As such, I find P has filled to establish the alleged breach of duties against both D1 and D2.

L. Whether D2 is vicariously liable for the acts of D1?

262.  Given my findings that D1 did not make any of the alleged 1^st to 7^th Representations, the issue of vicarious liability on the part of D2 become academic and does not arise. There is therefore no need for me to determine this issue.

M. The alleged loss and damage suffered by P and issue of causation

263.  Given my findings on liability above, strictly speaking, there is no need for me to go into the issue of quantum. However, for the sake of completeness, I shall deal with them briefly below.

264.  P seeks to establish that she had suffered the following loss and damage under P’s Opening at §§109, 116 and 167:-

(1) Set-up fee in the amount of HK$450,200 paid by P under the Service Agreements;

(2) The difference between the total amount of premiums paid by P under the Chubb Policy (ie HK$3,120,228.00) and the sum received upon its surrender (ie HK$864,111.92), ie HK$2,256,116.08; and

(3) Loss of profits made from alternative investments that P would have made with the premiums paid under the Chubb Policy.

M1. Setting up fee under the Services Agreements

265.  P only relied upon the 1^st Representation to claim the set-up fee under the Services Agreements: see ASOC §§54, 55. Since I found D1 did not make the alleged 1^st Representation, this alleged loss and damage will become academic.

266.  However, had P been able to establish liability against D1 under the 1^st Representation, I am of the view that P is still not able to recover such alleged loss based on the following matters submitted by D2.

267.  P paid the first HK$220,000 on 3 July 2017 and the remaining balance of HK$230,200 under the Service Agreements. Pursuant to the Service Agreements, D2 set up the two “standby discretionary trusts” for P. The Service Agreements are still subsisting and binding on P and D2, and the trusts are still operative. P further revised her Letter of Wishes for the Main Trust in June 2019.

268.  Given P’s Will and the Codicil to her Will, D2 has now been appointed as the sole executor and trustee of her Will. Upon P’s death, all P’s residuary estate would be devised to D2. The assets would be injected into the trust, and D2 would be obliged to administer the same pursuant to the trust deeds and the Service Agreements with reference to P’s Letter of Wishes.

269.  Hence, P did not suffer the alleged loss of set-up fees. I agree with Mr Leung that if P were allowed to claim the amount paid under the Service Agreements, she would be unjustly enriched by receiving D2’s trust services for free. In any case, even without the alleged 1^st Representation (or breach of duties), P would still have engaged D2’s services to set up the trusts in the present case.

M2. Difference between the Premiums Paid and the Surrender Value

270.  As I found above, the alleged representations and/or the relevant breach of duties are not the “but for” causes for P to purchase the Chubb Policy. In my judgment, P decided to take out the Chubb Policy because of (1) the explanation by the staff of Greater China; and (2) upon P’s own review and consideration of the Chubb Policy proposal and the AIA Plan presented to her.

271.  I agree with D2 that P’s purchase of the Chubb Policy from a third party was plainly a distinct and independent transaction from the Service Agreements. Accordingly, any alleged loss and damage flowing from and/or arising out of the Chubb Policy was not caused by the alleged misrepresentations or any breach of alleged duties, and was in any event too remote.

272.  In any event, the alleged loss and damage in relation to the Chubb Policy was caused by P’s own decision to cease payments under the Chubb Policy which led to the premature surrender of the same, and she failed to mitigate her loss and damage.

273.  According to the terms of the Chubb Policy, it is clear to P that she would recover significantly less than the paid premiums if she chose to surrender the policy prematurely, but she could make considerable profits if she surrendered the same after the 10^th year. P accepted under cross-examination that loss would incur if she surrendered the Chubb Policy in the first 9 years.

274.  P further admitted under cross-examination that she was forewarned of the substantial loss and damage upon premature surrender of the Chubb Policy in the following terms:-

「警告

除非閣下打算就巳選擇的保險計劃期內支付全期保費，否則不應投

保本保單。

如果閣下提早終止本保單或提前停止支付保費，閣下可能會蒙受重大損失。」[emphasis added]

275.  P confirmed that she received the Premium Reminder Notice issued by Chubb on about 27 August 2019, and despite the due date of the premium (17 August 2019), she did not pay the instalment. The Chubb Policy was automatically surrendered on about 19 September 2019 by reason of P’s failure to pay the premium in time.

276.  P conceded in court that it was “her own independent decision” to cease payment which resulted in the surrender of the Chubb Policy.

277.  I agree with D2 that it is entirely unreasonable for P to surrender the Chubb Policy in 2019. In terms of P’s wealth, P had over HK$128 million financial and fixed assets as of July 2017,224 HK$12 million of which was in cash or deposit. According to P, her estimate of stock dividends received in 2019 alone would be HK$3,000,000.

278.  Therefore, P had no urgent need to liquidate HK$864,112.92 out of the Chubb Policy in 2019 at all. Her unjustified decision to prematurely surrender the Chubb Policy was, in my view, a novus actus which broke the chain of causation or, alternatively, a failure to mitigate. I therefore do not consider P is entitled to recover the difference between the premiums paid and the surrender value.

M3. P’s Alleged Loss of Profits

279.  P’s case on the alleged loss of profits can be briefly summarised as follows:-

(1) If P did not purchase the Chubb Policy in August 2017, she would not have paid the 1^st premium instalment ie HK$1,560,114 and would use the money to purchase HSBC shares;

(2) In February 2018, P would have sold all her HSBC shares to purchase HSBC bonds (with a yield rate of 6.375% per annum) (“HSBC Bonds”); and

(3) On 14 September 2018, P would not have paid the 2^nd premium instalment ie HK$1,560,114 and would invest the said amount in HSBC Bonds.

280.  I agree with Mr Leung that P’s argument in this regard is based on various flawed premises.

281.  First, it is a wrong assumption that P would spend the sum of HK$1,560,114 to buy the HSBC shares immediately in August 2017:-

(1) Contrary to her witness statement, P’s oral evidence was that any purchase of HSBC shares would depend on price, and she did not buy any HSBC shares in August 2017 – she only bought the same in December 2017; and

(2) It was probable that P would have invested in other stocks (the investment return of which is unknown) given her stock portfolio as of August 2017, or that she might simply keep the cash and make no investment.

282.  Second, the fiction that P would have sold all her HSBC shares in February 2018 is completely contradicted by P’s oral evidence. Though P might have sold large amount of stocks during the month, P admitted at least twice in court that she did not sell any of her HSBC shares in February 2018. It follows that she could not have used any sale proceeds to buy the HSBC Bonds as alleged.

283.  Third, the presumption that P would have used the money to purchase the HSBC Bonds in September 2018 is also unsound:-

(1) P accepted in cross-examination that besides the HSBC Bonds, it would also be probable for her to purchase HSBC shares;

(2) As a seasoned investor who has vast experience in stock, properties, bonds and mutual funds for years, P might also invest in products other than the HSBC Bonds (the investment return of which is again unknown); and

(3) In the alternative, P might decide not to invest the sum and keep it as cash in hand.

284.  In the aforestated premises. P’s alleged loss of profits must fail.

N. CONCLUSION

285.  In conclusion, based on the above discussions, I find none of the allegations made against D1 and D2 under the ASOC has been established by P. I therefore would dismiss P’s claims against both Ds.

286.  Costs will follow the event.

287.  Insofar as D2’s costs is concerned, pursuant to Clauses 11(a) and 12 of the Service Agreements, D2 is contractually entitled to seek costs on an indemnity basis from P in this action: see D2’s Defence §§54-56.

288.  As stated in Bank of China (Hong Kong) Ltd v Twin Profit Ltd (2012) 15 HKCFAR 560, where parties have entered into a commercial transaction on a certain basis, the court should be slow to disturb their agreement, unless the circumstances are such as to cause the court in the exercise of its discretion to intervene. In Bank of China (HK) Ltd v Twin Profit Ltd (CACV 94/2010, 18 March 2011) §§2-8, Yuen JA held that in the exercise of the court’s unfettered discretion in making costs order, the court will in normal course give effect to a contractual clause which provides for the basis on which costs are to be quantified.

289.  Therefore, I would order P to pay D2’s costs of the action on an indemnity basis, to be taxed if not agreed, with certificate for two counsel.

290.  Insofar as D1’s costs is concerned, I am of the view that she should be entitled to her costs of the action on an indemnity basis also. In my view, P’s claims against D1 are founded on a very shaky and flimsy foundation. The action was taken only after the relationship between P and D1 had turned sour. It is clear to me that P was doing this out of spite towards D1 more than anything else. The action has caused a lot of damage to D1’s career in that it has basically stopped her from working as a trust expert or professional. I have no doubt that it has caused her enormous amount of mental stress and financial strain also. It is clear that none of the alleged 7 Representations has any real substance in the light of the documentary and other indisputable evidence. In my view, these proceedings should not have been commenced at all in the first place.

291.  I therefore order P to pay D1’s costs on an indemnity basis, to be taxed if not agreed.

292.  The above costs order is made on a nisi basis. Any party who wish to vary the same should apply by way of summons within 14 days from the date of handing down of the judgment. The matter will be dealt with by way of paper disposal.

293.  Lastly, it remains for me to thank counsel on both sides for their very helpful assistance.