YIU LIN TEI v. LIU PUI LAN AND ANOTHER

HCMP 1359/2008

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 1359 OF 2008

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J U D G M E N T

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Application

1.  This is a sad case of mother and son turning against each other over money matters, as part of the aftermath of the double life led by a self-made man as father in the two families he worked hard to provide for.

2.  It concerns the estate of the Deceased Mr Liu Wing On, who died intestate on 22^nd December 2004.  By its Re-re-amended Originating Summons, the Plaintiff claims for reasonable financial provisions to her under the Inheritance (Provision for Family and Dependants) Ordinance, Cap. 418 (“IPFDO”), and for transfer to her of a property in the estate of the Deceased claimed to have been held in trust for or vested in equity in her, and declarations to such effect.  In relation to the claim over the property, the Plaintiff relies on the doctrine of part performance under Section 7(d) of the Conveyancing and Property Ordinance and on proprietary estoppel under common law.

Relationship between the Parties

3.  The 1^st and 2^nd Defendants are co-administrators of the Deceased’s estate.  The Deceased was the father of the 2^nd Defendant, who was born of the Plaintiff in 1984.  The 1st Defendant is the wife of the Deceased.  They were lawfully married in Hong Kong in 1998 and have a daughter now aged 14.

4.  The Plaintiff had co-habited with the Deceased since about 1977 until the Deceased started co-habiting with the 1^st Defendant.  While there is evidence that the Deceased and the Plaintiff have had wedding pictures taken back in 1978, and had celebrated the occasion of their wedding with their friends and relatives, it is not disputed that the “marriage” did not take place in accordance with the Marriage Ordinance, Cap. 181.

5.  In about 1990, the stationery manufacturing business established by the Deceased and his partner Yip Man Sing (“Yip”) was renamed “Tsun Tat”.  The business was incorporated as Tsun Tat Stationery Manufactory Limited in 1998 (“Tsun Tat”).  Up to his death, the Deceased retained half of the shares in Tsun Tat while Yip held the other half.  The Deceased and Yip also held equal shares in a property-holding vehicle, Swallow Sweet Company Limited (“Swallow Sweet”) which holds several properties. They also co-owned some factory buildings and staff quarters in the Mainland.  None of the parties had had a hand in the running of the Tsun Tat business.

6.  It is common ground that the Plaintiff was not given any share of the estate under the Intestate’ Estates Ordinance, Cap. 73.

The Property

7.  The property in question is Flat H, 27th Floor and Roof Area H, Block 31, No.2 East Laguna Street, Laguna City, Kowloon (“the Property”).  It was purchased in the name of the Deceased in 1991.  Since then until at least about 1995, it was used as the home of the Deceased, the Plaintiff and their son, the 2^nd Defendant.  After 1995, the Deceased spent less and less time in this home.  The Property was rented out for some 2 years between 2003 to 2005, and the Plaintiff has been occupying the Property since late April 2006.  The Property is free from any mortgage.

8.  I shall first deal with the issue of ownership of this property before I turn to the issues under IPFDO.

Background Facts and Evidence relating to the Property

9.  The undisputed facts show that the Plaintiff and the Deceased co-habited in rented premises throughout the 1970’s.  In 1985, shortly after the birth of their son, the 2^nd Defendant, the Deceased purchased a flat in his sole name in Morning Star Mansion as their home.  By then, the Plaintiff had quitted her job in the garment factory to take care of her family.  A year later, the Deceased purchased another apartment in Kiu Yip Mansion (“Kiu Yip Mansion”) and the family moved to the latter premises.  According to her evidence, she contributed to the family expenses by taking outward processing jobs during these years.

10.  In 1991, the Deceased as sole owner purchased the Property with the intention to use it as his home with the Plaintiff and their son.  They later moved into the Property, and Kiu Yip Mansion was rented out.  In 1993, shortly after the Deceased underwent a kidney transplant, he assigned Kiu Yip Mansion to the Plaintiff alone as a gift, which the Plaintiff sold on 23 March 1998 at HK$1,400,000.

11.  On the other hand, according to the evidence of the 1^st Defendant, her relationship with the Deceased developed from colleagues to lovers as early as 1986.  By 1995, she was cohabiting with the Deceased, spending weekdays with her and their daughter at their home, and weekends either in the Mainland to visit his stationery factory or his son, the 1^st Defendant, at the home of the Plaintiff.  I accept the evidence of the 1^st and 2^nd Defendants that since 1995, the Deceased began to spend progressively less time at the home of the Plaintiff and more time at the 1^st Defendant’s home, as their relationship drifted further and further apart.

12.  In 2002 when the 2^nd Defendant attained the age of 18, the Deceased purchased two adjoining flats in Laguna City (“the Twin Properties”) as a gift to their son.  There is some dispute as to whether the Plaintiff made any contribution to the purchase, The Plaintiff and the 2^nd Defendant moved into the Twin Properties in the same year, and rented out the Property to a tenant in mid 2003.

13.  In the following year, the Deceased’s kidney problem relapsed.  According to the Plaintiff, she took full responsibility in taking care of him during this time until his death in 2004.  The Plaintiff gave evidence in affirmation and in court that in December 2004 while in his hospital bed, the Deceased confessed to her his guilt of having married the 1^st Defendant in 1998 and promised to transfer the Property into her sole name so she could have a place to live.

14.  On the evidence of the Plaintiff, that the intention to transfer the Property to her was raised by the Deceased more than once, and on an occasion, even in the presence of their family friend, Mrs Yip Man Ching, who was also the wife of the Deceased’s business partner.  There was no explanation why Mrs Yip was not called as a witness in this action.  In accordance with Hoie Sook Fong & Another v Ismail Halima & Another [2009]1HKC 326 @336, on the veracity of this aspect of the Plaintiff’s evidence which is hotly in dispute, I am entitled to draw an adverse inference against her, that if she had been called to give evidence, such evidence would not have supported the Plaintiff’s case.

15.  The Deceased passed away in December 2004 without any evidence of any step taken by him to transfer the Property to the Plaintiff.

16.  Shortly after the death of the Deceased, in 2005, a series of property transactions took place at the initiative of the Plaintiff. In March 2005, another Laguna property (“Block 6 Laguna”) was purchased in the joint names of the Plaintiff and the 2^nd Defendant with the intention to use it as their home.  In so doing, she took out a mortgage to complete the sale.

17.  The Twin Properties belonging solely to the 2^nd Defendant, which the Plaintiff and her son had been using as their home since some time in 2002, were sold between April to May 2005.  The 2^nd Defendant attributed the decision for this series of transactions solely to the Plaintiff, who explained she decided to save expenses by moving into a single-unit property with her son in order to avoid paying management fees and outgoing expenses for two units.  However, the lapse of time between the purchase and the sale aforesaid was not satisfactorily explained, and neither did she offer any reasonable explanation as to why she had seen fit to sell the Twin Properties, belonging solely to her son, to buy a property (Block 6 Laguna) under joint names, giving herself a share of ownership and control over the both the latter property and the proceeds of sale of the Twin Properties, which were deposited into an account in the joint names of the Plaintiff and the 2^nd Defendant.

18.  On the other hand, the lease of the Property in fact expired at the end of May 2005, although for reasons unclear to me, the tenant only handed over the keys two months later.  The Plaintiff only moved back into the Property from Block 6 Laguna in late April 2006, after having left the Property vacant for some 9 months.  While it was the evidence of the Plaintiff that she had taken time to consider whether to let out or move back into the Property on the strength of the Deceased’s promise that the Property would be transferred to her, there was no credible evidence to buttress the assertion that there was such pressing need to buy another property for use in order to save outgoing expenses only because the Property was to remain tenanted for another two months.

19.  Even more peculiarly, after taking possession of the Property from the outgoing tenant, the premises had apparently been left vacant and without an income until March 2006 when she took steps to have it extensively renovated at the cost of HK$225,000.  Defence counsel raised doubts on the quotation for the renovation works, which was dated the same day as the receipt.  I share the same doubts.  The Plaintiff moved back into the renovated Property from Block 6 Laguna only in late April 2006.  There is some dispute as to whether the 2^nd Defendant did move back into the Property with his mother at the same time.  According to the 2^nd Defendant, his relationship with his mother had deteriorated considerably when they lived in Block 6 Laguna, and by the time his mother moved back into the Property, he was already living with his present wife, and did not consider himself to be residing in the Property.  He has not lived there since.

20.  Counsel for the Plaintiff relies on the following matters in support of the Plaintiff’s claim of the Property based on proprietary estoppel:-

(a) the sale of Kiu Yip Mansion in 1998;

(b) the Plaintiff’s possession of the Property prior to the death of the Deceased in December 2004; and

(c) the Plaintiff having expended money on the renovation of the Property in 2006.

21.  The principles applicable to proprietary estoppel can be conveniently extracted from the passage in paragraph 5-72 of Ma’s Equity and Trusts Law in Hong Kong (2^nd ed.) as quoted from the judgment of Oliver J in Taylors Fashions Ltd v Liverpool Vitoria Trustees Co Ltd [1982] QB 133:

“[I]f A, under an expectation created or encouraged by B that A shall have a certain interest in land, thereafter, on the faith of such expectation and with the knowledge of B and without objection by him, acts to his detriment in connection with such land, a court of equity will compel B to give effect to such expectation.”

22.  A more recent approach found in the judgment of Robert Walker J in Jenning v Rice [2002]EWCA 159 is to formulate the test as a general unconscionability test -

“The equity arises not from the claimant’s expectations alone, but from the combination of expectations, detrimental reliance, and the unconscionableness of allowing the benefactor (or the deceased’s benefactor’s estate) to go back on the assurances.”

23.  On part performance, Counsel for the Plaintiff relies on paragraph [3.21] on Cap. 219 of The Annotated Ordinances of Hong Kong (2010 Reissue).  According to the authorities cited therein, the acts relied upon as part performance must be unequivocally, and in their own nature, referable for some such agreement as that alleged.  Further, the acts must point to the existence of some contract and must be consistent with a contract for the sale or other disposition of an interest in land.  I accept the correctness of the principles stated therein.

24.  On the evidence, I am unable to find sufficient evidence of any expectation of ownership of the Property created or encouraged by the Deceased.  I am unable to accept on a balance of probabilities that there was an initial promise when the Property was first acquired in 1991 to “leave” the Property in the name of the Plaintiff, or that such promise was repeated at the sickbed of the Deceased in December 2004.

25.  Against the backdrop of the gift of Kiu Yip Mansion in 1994 to the Plaintiff without the gift of the Property, which by then had already been acquired in the Deceased’s sole name and used as their home, I am not persuaded that the mere possession of the Property up to 2004 could give the Plaintiff any expectation of ownership of the Property.  Less still would such possession be evidentiary of detrimental reliance.  As for the sale of Kiu Yip Mansion by the Plaintiff 1998, there is no evidence that it was at the suggestion or encouragement of the Plaintiff.  Neither could it be said that the sale of Kiu Yip Mansion meant the Plaintiff would be left without a place to live in the future unless she had the assurance of ownership of the Property.  The proceeds of the sale of Kiu Yip Mansion was at the free disposal of the Plaintiff who could have invested in another property as she pleased.

26.  The doubtful evidence on the hefty expenses on renovation of the Property does not assist the Plaintiff’s case either, as the renovation took place well after the Deceased’s death, and was not a step he could have been accused of having encouraged or acquiesced, making it unconscionable for the Plaintiff’s expectation of her ownership of the Property not to be fulfilled.

27.  I turn to the claim for the transfer of the Property based on part performance of an oral agreement.  I have considered the affirmations and oral evidence before me.  I find that the Plaintiff has failed to prove on a balance of probabilities that the oral agreement existed in the first place.  I find that the Plaintiff’s testimony on the existence and terms of the oral agreement was neither credible nor unequivocal.  In view of the evidence on the facts set out above, I am not satisfied that the Deceased and the Plaintiff had acted unequivocally in manners which point to the existence of the alleged agreement, or that Plaintiff had always believed that the Property was to be vested in her. If the Deceased had agreed to and did intend to effect the transfer of the Property to the Plaintiff, he could well have caused the necessary documentation to be created by lawyers for that purpose even when he was hospitalized.

28.  I conclude that the Plaintiff’s claim on the ownership of the Property fails.

The Statutory Provisions under IPFDO

29.  Section 3 of the IPFDO provides as follows -

“(1) Where after the commencement of the Ordinance a person dies -

(a) domiciled in Hong Kong; or

(b) having been ordinarily resident in Hong Kong at any time in the 3 years immediately preceding his death,

and is survived by any of the following person:

(i) the wife or husband of the deceased;

...

(ix) any person (not being a person included in the foregoing paragraphs of this subsection) who immediately before the death of the deceased was being maintained, either wholly or substantially, by the deceased.

that person may apply to the court for an order under section 4 on the ground that the disposition of the deceased’s estate effected by his will or the law relating to intestacy, or the combination of his will and that law, is not such as to make reasonable financial provision for the applicant.

(2) In this Ordinance, ‘reasonable financial provision’ –

(a) in the case of any application made

(i) by virtue of subsection (1)(i) by the husband or wife of the deceased ...;

means such financial provision as it would be reasonable in all the circumstances of the case for such a person to receive, whether or not that provision is required for his or her maintenance;

(b) in the case of any other application made by virtue of subsection (1), means such financial provision as it would be reasonable in all the circumstances of the case for the applicant to receive for his maintenance.”

30.  Section 4 of the IPFDO empowers the court to make a wide range of orders in making reasonable financial provisions for persons qualified under section 3 above, including to make orders to for periodic or lump sum payments, and the transfer of property comprised in the estate.

31.  If I should consider that reasonable financial provision has not been made to the Plaintiff under the law relating to intestacy, which I do, I ought to have regard to a number of factors in determining whether and in what manner to exercise my power under section 4 of IPFDO.  These are set out in section 5(1) of the IPFDO –

“5(1) Where an application is made for an order under section 4, the court shall, in determining whether the disposition of the deceased’s estate effected by his will or the law relating to intestacy, or the combination of his will and that law, is such as to make reasonable financial provision for the applicant and, if the court considers that reasonable financial provision has not been made, in determining whether and in what manner it shall exercise its powers under that section, have regard to the following matters –

(a) the financial resources and financial needs which the applicant has or is likely to have in the foreseeable future;

(b) the financial resources and financial needs which any other applicant for an order under section 4 has or is likely to have in the foreseeable future;

(c) the financial resources and financial needs which any beneficiary of the estate of the deceased has or is likely to have in the foreseeable future;

(d) any obligations and responsibilities which the deceased had towards any applicant for an order under section 4 or towards any beneficiary of the estate of the deceased;

(e) the size and nature of the net estate of the deceased;

(f) any physical or mental disability of any applicant for an order under section 4 or any beneficiary of the estate of the deceased;

(g) any other matter, including the conduct of the applicant or any other person, which in the circumstances of the case the Court may consider relevant.”

Meaning of “Wife”

32.  Under the IPFDO, an applicant who is a “wife” to the deceased within the meaning of s. 2 enjoys slightly different rights compared with a mere dependant, e.g. a co-habitee who was maintained by the deceased prior to his death.  Under s. 3(2) of IPFDO, whereas a “wife” applying under s. 3(1)(i) is entitled to receive what is “reasonable financial provision” according to all the relevant circumstances, regardless of whether the provision is required for her maintenance, a dependent applying under s. 3(1)(ix) will only be awarded such financial provision that is reasonable in all the circumstances for her maintenance.

33.  Further, if the applicant is a “wife” within the meaning of s. 2 of the IPFDO, I should, in exercising my power under s. 4, additionally take into account the factors set out in s. 5(2), but not otherwise.  These factors relate to the age of the applicant, the length of the marriage and the contribution made by the applicant to the welfare of the family.

34.  In order to determine the appropriate provisions to apply to the Plaintiff’s application under the IPFDO, I must have regard to the meaning of “wife” under s.  2 of the IPFDO, which provides as follows –

“(1) In this Ordinance -

‘husband’ or ‘wife’, in relation to a deceased person, means

(a) a husband or wife of a valid marriage; and

(b) a person who in good faith entered into a void marriage with the deceased unless either -

(i) the marriage of the deceased and that person was dissolved or annulled during the lifetime of the deceased and the dissolution or annulment is recognized as valid by the law of Hong Kong; or

(ii)   that person has during the lifetime of the deceased entered into a later marriage.”

35.  Section 40 of the Marriage Ordinance (Cap. 181) provides that every marriage under the ordinance “shall be a Christian marriage or the civil equivalent of a Christian marriage”.  Section 20(1) of the Matrimonial Causes Ordinance, (Cap. 179), provides that a marriage taking place after 30 June 1972 shall be “void” only on any one of the four grounds stipulated thereunder.

36.  On the evidence, the Plaintiff and the Deceased lived as husband and wife since 1978.  While there were wedding pictures taken and banquet held to mark the occasion, there was no evidence of any formal ceremony.  I am not satisfied that the parties intended to create, or believed it would create, any marriage recognized by law.

37.  Following the authority of Ghandi v Patel [2002] 1 FLR 603 and Hudson v Leigh [2009] EWHC 1306 (Fam), I am satisfied on the evidence that the relationship between the Plaintiff and the Deceased did not fall within the meaning of a “marriage” under the Marriage Ordinance, nor did it fall within the meaning of a void marriage under s. 20 of the Matrimonial Causes Ordinance.  Accordingly, the Plaintiff is not a “wife” within the meaning of section 2 of the IPFDO.  Her application under IPFDO could only be made under s. 3(1)(ix) as a dependent.

The Deceased’s Obligation to the Plaintiff and the Beneficiaries

38.  As a consideration under s. 5(1)(d) of the IPFDO, it is clear that the Deceased considered himself responsible for the maintenance of the Plaintiff as the mother of his only son, the 2^nd Defendant, as well as towards his second family, namely, the 1^st Defendant and her teenage daughter.  To the Plaintiff in particular, with whom the Deceased had his first family, he had assumed that responsibility for at least 16 years prior to his death.  From the cash gifts he had made to the Plaintiff and the Defendants within 3 years prior to his death, he was shown to be a fairly generous man in terms of sharing his earnings with his families.

The Plaintiff’s Financial Resources and Financial Needs

39.  The Plaintiff’s evidence is that she stopped working since about 1988, and has relied on maintenance by the Deceased.

40.  According to the Plaintiff’s affirmation evidence, she received regular monthly payments of between HK$12,000 to HK$50,000 between the years 1994 to 2004, and the Deceased gave her pocket money and bought her gifts from time to time.  The Estate Duties Office reckoned that the Plaintiff received a total of HK$1,650,000 in cash gifts from the Deceased within the 3 years prior to the Deceased’s death.

41.  The Plaintiff claims to have no financial means and no income.  There is some evidence that she has been receiving CSSA payments since January 2011.  While the Plaintiff’s disclosure of bank books of the relevant accounts only covered selective periods, there is no clear evidence, despite cross-examination, that she has concealed any substantial amounts of money.

42.  I should mention that the Plaintiff retains a half-share in a shop space which is intended to be put up for sale by the 2^nd Defendant, with an estimated market value of HK$700,000.

43.  In her application under s. 4 of the IPFDO, in the event that the Plaintiff is held not to be a “wife” within the meaning of the Ordinance, she claims the sum of HK$35,000 for financial provision for her maintenance.  This is based on a breakdown contained in her first affirmation filed herein on 28th May 2008 (“the 2008 Estimate”).

44.  In the course of cross-examination by defence Counsel, she was challenged as to the level of her monthly expenses compared to that set out in another affirmation of hers in August 2009 filed in support of her claim for interim maintenance.  The Plaintiff’s answer was that the 2008 Estimate of HK$35,000 in expenses were justified as they covered the daily needs of 3 persons, whom I understood to include her domestic helper and the 2^nd Defendant.  She maintained the 2^nd Defendant moved back to live with her in the Property at the time.  Since her son will not in the foreseeable future be part of her household, an adjustment must be made in that regard.

45.  Further, having compared the two estimates contained in the Plaintiff’s affirmations of 2008 and 2009 respectively, I do find that some of items in the 2008 Estimate appear to overlap with one another, such as part of “wages and expenses payable to domestic helper” with “food” and “household expenses”.  The claims for some items in the 2008 Estimate are more likely than not inflated.  These include “household expenses”, “clothing”, “travelling expenses” and “medical expenses”.  In particular, in view of my decision in relation to ownership of the Property, and my decision not to order a transfer of the Property under s. 4(1)(c) of the IPFDO, items such as “management fee” and “government rent and rates” will not be payable by the Plaintiff if she were to rent a property as her home.

The Beneficiaries’ Financial Resources and Financial Needs

46.  Under s. 5(1)(c) of the IPFDO, there is little evidence of the personal financial circumstances of the Defendants and the 14-year-old daughter of the 1^st Defendant, who are all beneficiaries of the estate of the Deceased.

47.  It is not clear if the 1^st Defendant had any income of her own in the past years after having started a relationship with the Deceased.  However, judging from the cash gifts made to her in the last 3 years of the Deceased’s life, amounting to the sum of HK$2,670,000, it appears that she would not have been expected to rely on any income of her own for the maintenance of herself and her daughter.

48.  As far as the 2^nd Defendant is concerned, he did not appear to have earned a steady income since he had ceased to be a student.  He had previously started businesses selling computer games and operating a cyber cafe, none of which turned out to be profitable.  In fact he lost money in the short-lived cyber cafe business.  He denied having accepted a sum of HK$300,000 from his mother to start his business.  He believed money used by his mother to buy a car for him was his own money from the Deceased.

49.  For years he appeared to have relied on drawing money from the joint account held together with the Plaintiff to pay for his expenses, until funds in the account were exhausted.  He found himself employment in August 2010, but decided to leave his job in January 2011.  The prospect of his getting a job in the future is uncertain, but there is no suggestion that he expects to have difficulties finding a job which suits his ability.

Disabilities of the Plaintiff and the Beneficiaries

50.  The Plaintiff asserted that she suffered from liver tumor and was operated on in 2007.  However, the medical certificate she relied on does not support that assertion at all.  Instead, the doctor’s certificate dated 27th March 2008 contains diagnosis of her suffering from “latent diabetes, hyperlipidaemia and stricture”, and “vestibulopathy”.  Apart from that one-off consultation pursuant to which the certificate was obtained, there is no other evidence of her having attended regular medical treatments whether for her alleged liver tumor or the other ailments identified above.

51.  The Plaintiff was diagnosed to suffer from depression in a doctor’s certificate issued one day after the certificate referred to in the preceding paragraph was issued.  There was evidence that she underwent treatment by a psychiatrist in private practice between 2007 and 2008 and had made appointments to attend a public psychiatric clinic for follow-up treatment in 2011.

52.  In any event, I take the view that the identified medical conditions, if they amount to “disabilities” at all, will be sufficiently taken care of by the provision of a not insubstantial amount of monthly medical expenses within the sum attributed to monthly maintenance.

53.  There is no suggestion that the Defendants or the 1^st Defendant’s daughter suffer any disabilities.

The Size and Nature of the Net Estate

54.  As I decided above, the Property forms part of the estate of the Deceased.  At the date of the hearing, it was valued at HK$6,810,000.

55.  Yip was summoned to give evidence and produce accounting records of Tsun Tat and Swallow Sweet.  It transpired that a few months after the death of the Deceased, Yip had in fact incorporated a company with a name identical to Tsun Tat, save for the omission of the word “Manufactory” (“New Tsun Tat”).  This business was used to effectively take over the business of Tsun Tat.  When cross-examined on whether he had informed the Defendants of such a move, he gave different answers at different times.  Both Defendants denied that they ever knew New Tsun Tat existed until a recent company search uncovered it.  I do not believe that Yip had ever informed them of the incorporation of New Tsun Tat.  For what Yip had accepted in cross-examination as what he did with New Tsun Tat, and as shown in the relevant documentary evidence, I agree with Plaintiff’s Counsel that there is indeed a prima facie case of breach of fiduciary duty on the part of Yip which could give rise to a claim against him by the estate.  There is also evidence to suggest that rental income due to Swallow Sweet and Tsun Tat were unaccounted for.

56.  The other major assets of the estate comprises a half-share of the following-

(a) the retained profits of Tsun Tat and Swallow Sweet, up to the end of 2004 amounting to HK$64,645,417.44;

(b) two 3-storey factory buildings and one block of staff quarters, valued in 2005 at a sum in RMB which is equivalent to HK$10,460,598.93 at the current exchange rate of HK$1.187;

(c) the value of the properties held by Swallow Sweet –

i. Unit 30 and 31 Beverley Commercial Centre, sold for HK$1,820,000 in 2010;

ii. 1/F Wing Sum Industrial Building, valued at HK$9,900,000 in 2010;

iii. Flat Duplex H and Roof, 32/F Blk.1 Kingswood Villas Phase 7 with a current valuation of HK$6,040,000.

57.  The calculations pertaining to the above items are helpfully set out in the Plaintiff’s Closing Submissions, which I agree and adopt.  However, there are included in the Plaintiff’s counsel’s calculations the following items which were valuations of the sums the estate could potentially recover from Yip either on the basis that they are sums which should have been due to and received by Swallow Sweet or Tsun Tat but have been unaccounted for, or are sums which Yip ought to account to the joint business as a fiduciary.  These are –

(a) the profits of the joint business after 31 December 2004, excluding profits for the year 2004-2005, all of which are made up of the profits of New Tsun Tat after discounting losses made by the joint business since 2005;

(b) the sum of HK$331,220 believed to be rental for 1/F Wing Sum Industrial Building from April 2009 to end of March 2010; and

(c) the missing rental income from the Mainland factory buildings and staff quarters since the death of the Deceased, reckoned to be HK$8,699,400.

58.  Much as I see the merits of these potential claims against Yip by the estate, these remain potential claims yet to be made, proven and evaluated.  At present, I am not prepared to take into account these sums in ascertaining the nature and value of the net estate as if they were actual assets or profits of the two companies.

59.  Adding the figures set out in paragraphs 54 and 56 above, I find that the size and value of the net estate, as can be presently ascertained, is HK$42,277,476.

Conduct of the Parties and Credibility of Witnesses

60.  Under s. 5(1)(g) of the IPFDO, I am to exercise my powers with regard to any other relevant matters including conduct of the parties.  It is convenient to state my view of the credibility of the witnesses at the same time.

61.  There have been suggestions by the defence that the expenditure of HK$300,000 on hiring a private detective to investigate the woman who is now the wife of the 2^nd Defendant is unreasonable. The attitude adopted by the Plaintiff towards her son’s choice of spouse is obviously something which the 2^nd Defendant took serious exception to.  It was apparently the major issue that had caused a complete breakdown in the mother-and-son relationship.  While I cannot comment on the emotional intensity between mother and son on the one hand, and son and his wife on the other, I find that the expenditure and the Plaintiff’s attempt to justify it showed a serious lack of judgment on the part of the Plaintiff, a matter which I would take into account in exercising my power.

62.  As stated above, I also find the Plaintiff had, through the series of property transactions she initiated between 2005 and 2006, attempted to take advantage of her son by turning a gift of property made by the Deceased to the 2^nd Defendant into a joint asset between her and her son with the excess in sale proceeds made available to herself jointly with her son.  The accumulated hostility over the spouse issue the and lack of trust arising from these property dealings had no doubt fuelled the perception on the part of the 2^nd Defendant, whether rightly or wrongly, that the Plaintiff did in fact have the means to take care of herself, contrary to her assertions.

63.  Having heard and observed the Plaintiff in giving oral evidence, I do not find her a reliable witness.  Particularly in respect of the description of her relationship with her son and the Deceased, I am unable to accept her evidence where it is at variance with the evidence of the Defendants.  I find that she had at times exaggerated her role in taking care of the Deceased, and played down on the disagreement she had with her son in order to suit her case.

64.  On the other hand, I consider Plaintiff’s Counsel’s criticism of a lack of diligence in administering the estate partially justified, particularly in respect of the handling of the debt owed by Athens and in respect of evaluating the interest in the Deceased’s joint business with Yip and in negotiating with him for payment.  I note the Defendants’ complaint of the Plaintiff’s obstruction to the due administration of the estate by the filing of caveats.  While I accept that it had caused some delay in the administration of the estate, I am not prepared to consider such conduct was deliberately obstructive in the circumstances.

65.  As regards the 2^nd Defendant’s uncaring attitude towards his mother, it is a factor I would take into account not by way of moral judgment against any party, but as a reminder that she is unlikely to have her son’s resources to fall back on in times of need.  While I do not applaud the attitude of the 2^nd Defendant towards his mother, his calculating behaviour seems to reflect the scheming and manipulative conduct in which the Plaintiff appears to have perpetrated towards her son.

66.  I find the 1^st Defendant a reliable witness.  Her answers to questions were straightforward with no attempt to exaggerate or prevaricate.  On the other hand, I am unable to place the same reliance on the 2^nd Defendant’s evidence at all times.

67.  While the 2^nd Defendant appears to be dilatory in his attempts to find gainful employment, I am unable to justify placing too much weight on this factor in deciding on the Plaintiff’s claim.  If he is fortunate enough to be able to enjoy inheritance from his late father as would enable him to start another business, so be it.  He will have to learn through his own experience how to protect his investment and make it work for himself.

Decision on Quantum and Manner of Provision

68.  My decision on quantum is based on a consideration of all the relevant factors to be taken into account as stipulated under s. 5 of the IPFDO.  In arriving at the figure below, I have also carefully considered respective Counsel’s submissions.

69.  Doing the best I can in adjusting the various items of the Plaintiff’s claim in a fair and objective manner, I find that a fair and reasonable monthly sum for her maintenance is HK$30,000, excluding cost of her accommodation.

70.  Accepting the figure of HK$10,000 suggested by Plaintiff’s Counsel as a sum which may have to be added to the monthly maintenance figure if the Plaintiff is not to be given ownership or right to possession of the Property and has to rent a home, I would add that sum to the monthly maintenance figure to make a total of HK$40,000.

71.  The Plaintiff is entitled to financial provision for her maintenance based on a monthly sum of HK$40,000.  In accordance with the principle in Duxbury v Duxbury (1987) [1992] Fam 62, upon which defence Counsel did not advance any argument in disagreement, I find the appropriate formula to arrive at a lump sum figure to reflect the same provision is as follows –

HK$40,000 x 12 x 21 x 0.73 = HK$7,358,400

72.  Pursuant to the Order of Deputy Judge L. Chan, the Plaintiff had received in January 2010 from the Defendants interim relief by a payment of HK$20,000.  This sum ought to be deducted from the above lump sum figure.

73.  In considering the appropriate manner of payment to be made to the Plaintiff by the Defendants as joint administrators, I take into account the fact that there are no substantial assets in the hands of the Defendants which could immediately be realized to arrange for a lump sum payment, except for the Property, which the Plaintiff should vacate as soon as practicable.  I would however allow sufficient time for the Plaintiff to arrange for suitable rental accommodation for herself.

74.  I also have regard to the fact that the Deceased’s surviving business partner, Yip, had confirmed under cross-examination that he was prepared to consent to the immediate sale of the remaining properties held by Swallow Sweet, namely 1/F Wing Sum Industrial Building and the Duplex H and Roof, 32/F Blk. 1 at Kingswood Villas Phase 7 and have the half-share of the sale proceeds distributed to the Defendants thereafter.  Whether the Defendants choose to sell the Property in order to meet the lump payment to the Plaintiff or to pursue Yip in order to obtain the estate’s half-share of the Swallow Sweet properties in the near future is a matter for them, but they should be acting with due diligence and expedience in procuring for the sale of the properties in order to come up with payment.

75.  At the same time, the Plaintiff should vacate the Property within the time stipulated hereunder to enable the Plaintiffs to sell the Property if they so desire.  The payment of a sufficient sum within a short period is provided hereunder to enable the Plaintiff to arrange for the rental of and removal to her new home.

76.  On the Plaintiff’s claim for financial provision under the IPFDO, I make the following orders –

(a) A lump sum of HK$7,338,400 be paid to the Plaintiff by the Defendants in the following manner –

i. the first instalment in the sum of HK$138,400 within 1 month of the date of this decision;

ii. the second instalment in the sum of HK$3,600,000 within 3 months of the date of this decision or within 14 days of vacant possession of the Property (at 27H and Roof Area H, Block 31, No, 2 East Laguna Street, Laguna City, Kowloon, Hong Kong) having been delivered to the Defendants by the Plaintiff, whichever is the later; and

iii. the balance in the sum of HK$3,600,000 within 9 months of the date of this decision.

(b) The Plaintiff do deliver vacant possession of the Property to the Defendants within 3 months of the date of this decision.

(c) Prior to her delivering vacant possession of the Property, the Plaintiff do permit entry and inspection of the Property by potential buyers, estate agents and valuers, whether or not accompanied by the Defendants or either of them, between the hours of 11 am to 7 pm Monday to Saturday, upon not less than 24 hours’ notice given to her by the Defendants or either of them.

(d) Liberty to apply.

Costs

77.  On the question of costs, the Plaintiff has lost her proprietary claim but has largely succeeded in her claim for maintenance.  I reckon that the costs expended by the parties on the maintenance issue exceed the costs expended on the proprietary claim.  In the circumstances, I would order that the Defendants do pay to the Plaintiff half of the costs of these proceeding, and the Plaintiff’s own costs to be taxed in accordance with the Legal Aid Regulations (Cap. 91).

Concluding Remarks

78.  It remains for me to thank both counsel for their helpful submissions.