CHEUNG CHO KAM SINDY AND ANOTHER v. CHEUNG YUET YING ROSE

HCA 885/2005

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 885 OF 2005

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JUDGMENT

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1.  The deceased, was the mother of the 1^st and 2^nd plaintiffs, and the defendant, (Rose).  There are three other children.  The deceased passed away on 12 January 2005, leaving her husband and the six children.  She died intestate.  Her husband, who is 77 and illiterate, and his six children are entitled to share in the deceased’s estate.

2.  In the course of applying for Letters of Administration family members discovered that sometime in 2002, when the deceased was ill, substantial sums of money had been transferred from the deceased’s bank accounts to personal accounts belonging to Rose.  It appears also that funds were held in joint bank accounts in the name of Rose and the deceased.  There is evidence which tends to establish, at least on a prima facie basis, that virtually immediately after the death of the deceased, Rose took steps to move funds from those accounts to her own accounts, and to sell securities held in their joint names.  There was also a safe deposit box held by the deceased, although Rose held the key.

3.  The plaintiffs’ case is that Rose refused to allow any family member to accompany her to inspect the safe deposit box.  The family members asked Rose to account for the transfer of funds but she refused to do so and the plaintiffs’ case is that she has been avoiding them.  There is good evidence to support these contentions. Consequently these proceedings were issued.

4.  On 10 May 2005, Madam Justice Beeson made an ex parte order appointing the 1st Plaintiff to represent the estate.  At the same time an injunction order was made restraining Rose from removing from Hong Kong any of her assets within Hong Kong, whether solely or jointly owned, up to the value of HK$17,151,106.85, or disposing of or dealing with or diminishing her assets within Hong Kong whether solely or jointly owned, to the same value.  The figure contained in the injunction was apparently reached after consideration of available information.  A further order was made in the following terms:

“	4.	The Intended Defendant must inform the Solicitors for the Intended Plaintiffs in writing at once of all her assets of an individual value of HK$17,151,106.85 or more in Hong Kong, whether in his own name or not, whether solely or jointly owned, giving the value, location and details of all such assets.  The Intended Defendant may be entitled to refuse to provide some or all of this information on the grounds that it may incriminate her. (sic)
	5.	This information must be contained in an affidavit which must be served on the solicitors for the Intended Plaintiff within 14 days after this Order has been served on the Intended Defendant.”

The usual undertakings were given by the plaintiffs.  The injunction is in the nature of a Mareva injunction.

5.  On 20 May 2005, the return day, on an inter partes summons dated the 13th of May 2005, I made an order continuing the orders made by Madam Justice Beeson together with further procedural orders.

6.  On 28 May 2005, Rose, apparently on the basis of legal advice, swore an affidavit in which she said:

I hereby declare that I do not own, hold and possess any assets of an individual value of HK$17,151,106.85 or more in Hong Kong, whether in my own name or not, whether solely or jointly owned.

Although not sworn and filed until 28 May 2005, Mr Chu had indicated to me on 20 May 2005, that that was the terms of the affidavit that would be filed.  As I indicated to him then, and repeat now, that I am of the view that such an affidavit borders on contempt.  The purpose of the order was absolutely plain and for Rose’s solicitors to adopt an interpretation that the assets required to be disclosed could only be a single asset of the particular value or more was a plain device intended to enable Rose to avoid putting information before the court.  While it is right that that literal interpretation may be taken, when clear purpose of the order is known the literal interpretation ought not to have be followed, and the position should have been clarified with the Court, if necessary by appropriate application.

7.  On 16 June 2005, Rosa filed a further affidavit running to some 29 pages.  That affidavit did not meet the requirement that she disclose her assets, but sought to answer allegations made against her by the plaintiffs.  It is an affidavit that may become relevant should the matter proceed to trial.  It is an affidavit that will become relevant should the matter proceed to trial.

8.  The plaintiffs now seek an order that Rose should make full disclosure of her assets.  This application is opposed by Mr Chu for Rose.  Cases such as this, involving disputes between family members as to the entitlement to inherited funds, are not uncommon in the courts of Hong Kong.  It is perfectly normal and proper in such cases, and indeed in any case where the court has found it appropriate to issue a Mareva injunction to require the defendant to file a comprehensive affidavit identifying the deponent’s assets.

9.  I did not require to hear from Ms Liu at the beginning of hearing, as the plain starting point in a case such as this was that an affidavit of full disclosure of assets should be filed.  I was assisted by Mr Chu, for Rose, who had prepared a written submission supported by no less than 47 authorities.  I had the opportunity to consider that submission and those authorities prior to the hearing.  I heard Mr Chu but he was quite unable to persuade me that no disclosure should be made.  I so indicated to the parties at the hearing, and now give my reasons for that ruling.

10.  The case for Rose, as disclosed by her substantive affidavit, is that either the disputed assets have been given to her as unconditional and absolute gifts by her mother, being gifts inter vivos, or that she was entitled to the disputed assets by way of the right of survivorship in a joint account.  Mr Chu contended that the application for the interim injunction ought not to have been made in the first place and that it is liable to be discharged or set aside, and further that as the requirement for disclosure is dependent upon the injunction, and as the injunction was liable to be set aside, there was no basis to order disclosure.

11.  As to the principles upon which an injunction in such circumstances will be granted, Mr Chu argued particularly that there was no evidence that Rose might dissipate her assets.  It is not necessary for me to reach any conclusion on any of the evidence presently before the court.  I am satisfied that the evidence before the Court, although it is disputed, as to Rose’s conduct in relation to the funds immediately following the death of the deceased, is more than ample evidence from which an inference arises that, unless enjoined, there is a real and substantial risk that Rose will take steps to put assets in her name, which assets may well belong to the estate of the deceased, beyond the reach of her father, her siblings, and the court.

12.  Mr Chu reminded me that in cases of serious allegations such as fraud a high degree of proof is required.  That is right, but at this interlocutory stage the court is entitled to proceed upon the basis of the affidavits.  The allegations made by the plaintiffs are not allegations which may be dismissed out of hand and do not further require, at this stage, to be tested.  They are neither unbelievable and nor incredible.  The response of Rose in the affidavit as to her assets already filed demonstrates that she is prepared to take any step at all to avoid properly informing the court of her assets.  The approach demonstrated by that affidavit is itself sufficient to justify an injunction in this case.

13.  Mr Chu reminded me of the provisions of O 41 R 5(2) as to the use of hearsay.  Where there is hearsay in the affidavits filed by the plaintiffs’ I am satisfied that they have sufficiently condescended to particulars to enable those affidavits to be read.

14.  The essence of Mr Chu’s argument was to contend that by virtue of the presumption of advancement and the right of survivorship in a joint account, the plaintiffs’ claim has no prospect whatsoever of success, and accordingly the injunction not to have been issued, and consequently disclosure ought not to follow.

15.  It takes little evidence today to set aside the presumption of advancement.  That must be more particularly so in circumstances where, absent any evidence of particular need, very substantial sums are put in the name of one of only six siblings, by an ill parent.  The evidence establishes, indeed it is part of Rose’s own case, that the payments were made to her when her mother was elderly and ill.  The clear inference arises from that fact that her mother's intention was not to make an absolute gift of the funds, but to set up a system where, for convenience, Rose could attend to administrative matters in relation to the funds, on her mother's behalf.  Any assessment as to the presumption of advancement is a matter for trial.  It is sufficient if I say at the moment that on the evidence before me I have little doubt that the presumption will not apply in this case.

16.  Those same facts raises the inference that any funds placed by the mother into her daughter’s account were placed in circumstances in which the daughter held the funds on trust for the mother.  That inference is sufficient to raise a triable issue as the applicability of the operation of the doctrine of jus accrescendi, or the right of survivorship.  If any property or fund is held on trust for the deceased then no right of survivorship accrues to Rose, instead she would continue to hold the property on trust for the estate of the deceased.

17.  Mr Chu next raised the privilege against self-incrimination.  It is right that the privilege exists, but the existence of the privilege is not a ground to oppose the making of a disclosure order.  It may provide an answer to a disclosure order, but until it is taken in an appropriate affidavit, it is not relevant.

18.  Mr Chu’s final point was that as an affidavit had been filed verifying assets, the matter was res judicata, and no further order could be made by the court.  I reject the proposition.  In the first place, when regard it is had to the true purpose of the order for disclosure already made, the affidavit filed simply does not answer the order.  Secondly, if the order may be read as restrictively as Mr Chu contended, then no order has been made in relation to any other assets of Rose, and the matter is not res judicata.  There cannot be a clearer case in which an appropriate disclosure order should be made.

19.  A further summons for disclosure has been filed by the plaintiffs, in which the expression “individual assets” has been replaced by the expression “all her assets up to an aggregate value of not less than HK$17,151,106.85”.  While that description may surmount the literal interpretation previously adopted, I have come to the conclusion that there should be no restriction on the value of the assets to be disclosed and that justice will only properly be achieved if Rose makes full disclosure of all of her assets.

20.  There will accordingly be an order in terms of the summons dated 6 June 2005, save that in paragraph 1(a) the expression “up to an aggregate value of not less than $17,151,106.85” shall be omitted.

21.  It has already been intimated that Rose may endeavour to rely upon the privilege against self-incrimination in the course of answering the order.  While it is right that the privilege exists, those advising Rose must have careful regard to certain matters.  First, they would be well advised to have particular regard to the notes as to their own obligations in respect of discovery by Rose as set out in paragraph 24/2/8 1 Hong Kong Practice 2004.

22.  Second, I have no doubt that the courts of Hong Kong will approach any consideration of the right of privilege against self-incrimination in an affidavit of discovery or disclosure of assets in civil proceedings bearing in mind the words of Lord Templeman and Lord Griffiths in A T & T Istel v Tully [1992] 3 All ER 523 at 530 and 534 where they held, as recorded in the headnote:

“The privilege against self-incrimination can only be justified on two grounds, first that it discourages the ill treatment of a suspect and secondly that it discourages the production of dubious confessions.  The exercise of the privilege against self-incrimination in civil proceedings is an archaic and unjustifiable survival from the past and it is difficult to see any reason why the privilege should be exercisable so as to enable a litigant to refuse relevant and even vital documents which are in his possession or power and which speak for themselves.”

23.  It is plain in the light of that statement that a simple affidavit by Rose in which she asserts the privilege against self-incrimination would not be a satisfactory response to the order.  The terms of the order are comprehensive, and many answers may be given which will plainly not raise any risk of self-incrimination.  The privilege may be asserted only and in so far as a genuine risk of self-incrimination is raised and the Court will be vigilant to ensure that an improper or unjustified claim of self-incrimination does not enable Rose to refuse relevant and vital documents in her possession or information with in her knowledge.

24.  There has been no sensible basis at all upon which the summons for disclosure might properly have been opposed.  There will be an order nisi, to be made absolute in 14 days, that the defendant must pay the plaintiff's costs of and incidental to the summons for disclosure, those costs must be paid forthwith.