YUNG SHU WU v. VIVIENNE SUNG WU alias SUNG PING VIVIENNE AND OTHERS

HCMP 4073/2003

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 4073 OF 2003

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J U D G M E N T

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1.  These proceedings started off as an application by the Plaintiff for construction of a clause in the last will of Kwang Shu Wu alias Wu Kwang Shu, deceased (“KS”).  The will is dated 26 October 2002 (“the Last Will”).  The clause in question reads:

“I give, devise and bequeath unto my three children, GERALDINE AMBER WU, CHRISTOPHER CHARLES WU and SEAN EDWARD WU, in equal shares, the corporate accounts maintained by me at the Bank of East Asia in Hong Kong, including an account for Good Harvest Capital Limited, with an estimated worth of U.S. Dollars Four Million One Hundred Thousand (US$4,100,000), an account for Hacienda Pacific Limited, with an estimated worth of U.S. Dollars Five Hundred Thousand (US$500,000), and an account for Vacha Limited, with an estimated worth of U.S. Dollars Two Hundred and Seventy Thousand ($270,000).”

2.  Geraldine Amber Wu (“Geraldine”) is the daughter of KS by his first wife who had passed away in 1981.  KS married the 1st defendant (“Vivienne”) on 11 November 1983.  Christopher Charles Wu, the 3rd defendant (“Chris”), and Sean Edward Wu, the 4th defendant (“Sean”), were born out of this marriage.  The 5th defendant, Good Harvest Capital Limited (“Good Harvest”) and the 7th defendant, Vacha Limited (“Vacha”) are companies incorporated in the Republic of Liberia.  They were owned by KS and Vivienne with each holding 1 share of each company.  KS and Vivienne were the only officers of the two companies.  For the 6th defendant, Hacienda Pacific Limited (“Hacienda”), KS was the sole beneficial owner of its only share and its only officer. 

3.  The plaintiff is KS’s elder brother and sole executor of the Last Will.  He thought the clause quoted about was ambiguous as he did not know if KS intended to make a specific bequest of the balances in the accounts at the time of his death or at the time when the Last Will was made or the specific sums mentioned in that clause.

4.  Vivienne filed an affirmation on 25 June 2004 in these proceedings.  She said the plaintiff’s application was premised upon KS being the sole beneficial owner of the three companies or of the moneys in the accounts held by them with the Bank of East Asia, the 8th defendant (“BEA”).  It is her case that all assets of KS in New York belong to the daughter, Geraldine and all assets of KS outside New York belong to her.  She also said that she had in fact withdrawn no less than US$4.175 million from the accounts of Good Harvest and Vacha in July and August 2002.

5.  By an order of Mr Justice A Cheung made on 8 February 2005, these proceedings were ordered to continue as if they had begun by writ.

THE STATEMENT OF CLAIM

6.  The plaintiff pleaded that Good Harvest and Hacienda had accounts with BEA.  They together with Vacha also had accounts with First Pacific Bank (“FPB”).  FPB was taken over by BEA in December 2000.  There was no business relationship between KS and these three companies.  KS was a banker and a business consultant.  He used the bank accounts of the three companies as receptacles for his earnings.

7.  At the end of 2001, the total balance in the accounts of Vacha maintained with BEA was at about US$270,000.  Also at the end of 2001, the total balance in the accounts of Hacienda maintained with BEA (including FPB) was at about US$710,000.  In or around May 2002, the total balance in the accounts of Good Harvest maintained with BEA (including FPB) was at about US$4.1 million. 

8.  Between January and September 2002, KS directed Vivienne to withdraw funds from the accounts of Hacienda maintained with BEA/FPB for his living and medical expenses and Vivienne transferred about US$200,000 from these accounts into her accounts during this period.  Therefore, when KS made the Last Will on 26 October 2002, the balances in the accounts of Good Harvest, Hacienda and Vacha should have been about US$4.1 million, US$500,000 and US$270,000 respectively.  The plaintiff therefore seeks a declaration that KS intended by the clause of the Last Will as quoted in the Originating Summons to give a specific bequest to Geraldine, Chris and Sean (to be divided equally) of the actual balances in the accounts of Vacha and Hacienda as in December 2001 and of Good Harvest as in May 2002 plus interests and dividends and less proper bank charges and the sum of about US$200,000 withdrawn per his authority accrued up to the time of his death.

9.  The plaintiff further pleaded that Vivienne had without the knowledge or approval of KS between 15 to 24 July 2002 transferred US$3,870,753.41 out of an account of Good Harvest maintained with BEA and on 15 October 2002 transferred US$72,460.76 and HK$200,000 from the accounts of Hacienda and Vacha at BEA respectively.  In addition, Vivienne had, without knowledge and approval of KS, on 2 August 2002 transferred US$305,032.02 out of an account of Vacha maintained with the Bank of China (“BoC”) but not with BEA.  Though Vivienne had discussions with KS about money, she did not reveal these transfers to him.  The plaintiff therefore seeks the return of these moneys by Vivienne.

THE DEFENCE AND COUNTERCLAIM OF VIVIENNE

10.  Vivienne pleaded that she and KS married on 11 November 1983 and Chris and Sean were born on 10 August 1986 and 23 October 1988 respectively.  In about 1988 or 1989, KS set up a business consultancy with her support and assistance.  KS in the name of Vacha also invested in and worked for First Sino Bank in Shanghai since about 1995.  She and KS were co-owners of Good Harvest and Vacha.  She was the co-director and president of Good Harvest since 26 November 1984 and the co-director and Secretary of Vacha since 18 March 1986.

11.  She further pleaded that she and KS jointly acquired, owned and controlled Good Harvest and Vacha which were their nominees.  Their nominees were mainly to carry on KS’s consultancy business, to hold the returns from such business and to invest the returns all on trust for them in equal shares.  The returns from the consultancy business and the investments of the returns were paid into the bank accounts of Good Harvest and Vacha maintained with BEA, FPB and elsewhere.  Both she and KS were signatories to all these accounts and both could operate them singly.

12.  On about 18 December 2001, KS was diagnosed with liver cancer and was advised that he had only months to live.  Shortly thereafter and before 27 December 2001, KS orally gave her all his assets outside New York for her to provide for the future of her sons, Chris and Sean.  These assets included KS’s full beneficial interest in the assets held in the name of Hacienda, his half beneficial interest in the assets held in the names of Good Harvest and Vacha and the moneys and securities in their bank accounts.  In order to complete the gift of his beneficial interest in the moneys and securities held in the name of Hacienda, KS on or about 27 December 2001 procured the addition of her as a signatory to the bank accounts of Hacienda that were maintained with BEA, FPB and Shanghai Commercial Bank Limited (“SCB”) and allowed her to operate the accounts singly.

13.  In late December 2001, she became the sole beneficial owner of all the assets held in the names of Good Harvest, Vacha and Hacienda including the moneys and securities held in their accounts with BEA, FPB and SCB.  Regarding the withdrawals of moneys from the accounts of these companies, she was entitled to do so as she was the sole beneficial owner thereof.

14.  Regarding the total balance in the accounts of the three companies maintained with BEA and FPB, they were at US$345,371.63 for Vacha as at 31 December 2001, US$235,058.02 for Hacienda as at 31 December 2001 and US$3,966,792.15 for Good Harvest as at 31 May 2003.  Between January and September 2002, she only withdrew US$146,541.94 from the accounts of Hacienda maintained with BEA and FPB.  As at 26 October 2002, the date of the will, the total balance in the accounts of these companies with BEA was US$103,623.19, US$33,657.36 and US$79,680.27 for Vacha, Hacienda and Good Harvest respectively.

15.  She denied that KS had any right to dispose of by the Last Will the moneys and securities in the accounts of the three companies maintained with BEA and FPB.  She seeks a declaration that all the moneys and securities in these accounts have become her property since late December 2001 to the exclusion of KS. 

16.  In a nutshell, her defence in relation to the moneys in the accounts of Vacha and Good Harvest is that she has always been their half-owner and she became their sole owner in late December 2001 when KS made a gift of his half interest in her.  Regarding the moneys in the accounts of Hacienda, which used to be owned by KS solely, KS gave them to her also in late December 2001.

REPLY AND DEFENCE TO COUNTERCLAIM

17.  KS was a US citizen and resident of New York.  In order to provide information to the US tax authorities on KS’s assets, Vivienne made two sworn depositions on 7 November 2003 and 13 January 2004 in New York in the presence of her US attorney and the plaintiff’s US attorney.  The plaintiff in the reply made a number of references to Vivienne’s depositions to contradict the points in her defence and counterclaim.  She had said in the depositions that she only knew the broad nature of KS’s consulting business, but not the details.  She did not know anything about Hacienda which belonged to KS.  KS put his consulting fees into Hacienda and Vacha and she did not know why.  KS was one of the founders of First Sino Bank in Shanghai but she had no idea as to who else was involved in founding this bank.

18.  She did not know the source of KS’s wages and salaries of US$90,000 as reported by KS in his tax return to the US government.  She did not even know if this was the salary paid by First Sino Bank.  She had not worked since mid-1980s when she was pregnant with Chris.  She did not know much about Vacha or Good Harvest.  She also said KS almost never gave her gifts of any substantial nature.  She admitted that the moneys that KS paid into Good Harvest’s bank accounts represented his net earnings from all sources.

19.  The plaintiff also denied that she has any beneficial interest in Vacha or Good Harvest.  It is the plaintiff’s case that she was made a shareholder and director as a matter of convenience only.

20.  The plaintiff also referred to a will of KS made in Honolulu, Hawaii on 15 January 2002 (“the Second Will”) by which he bequeathed to Vivienne his checking account with Citibank of New York and to his daughter, Geraldine all the rest of his properties.  He also appointed Vivienne as his personal representative in administering his estate.  The plaintiff said that the provisions in the Second Will were contradictory to the oral gifts alleged by Vivienne.  KS had also not executed any instrument of transfer in favour of Vivienne or done anything within his power to transfer his legal and beneficial interest in the alleged gifts to Vivienne.

THE WILLS AND CODICILS OF KS

   The 1st Will

21.  KS made several wills and codicils.  He made the 1st will in New York on 9 November 1981 (“the 1st Will”) which was before his marriage with Vivienne.  By this will, he gave everything to Geraldine.  He married Vivienne on 11 November 1983.  PW2, Mr Frey, who was KS’s lawyer in New York, said that the 1st Will was not evoked by the marriage, but Vivienne upon marrying KS became entitled to a share of KS’s estate.  The reason being that no one could disinherit his spouse under the law of New York.

The 1st Codicil

22.  KS then made the 1st codicil to the 1st Will in New York on 29 May 1986 (“the 1st Codicil”).  According to Mr Frey, the effect of this document was to keep Vivienne’s share of KS’s estate to the minimum under New York law, namely the income to be derived from ¹/₃ of KS’s assets.  Upon Vivienne’s death, this ¹/₃ of assets would also go to Geraldine.  The 1st Codicil also stated that KS made no provision for his future child to be born of the then pregnancy of Vivienne.

The 2nd Codicil

23.  Chris was born on 10 August 1986.  Sean was born on 23 October 1988.  On 16 November 1989, KS made a 2nd codicil in New York (“the 2nd Codicil”).  This 2nd Codicil modified the 1st Will and the 1st Codicil.  The provision in the 1st Codicil, which kept Vivienne’s entitlement to the minimum, was ousted from the properties of KS located in Hong Kong.  The paragraph in the 1st Codicil denying any provision for Chris was deleted in its entirety.  The matrimonial home in South Bay, Hong Kong was given to Vivienne.  In fact this flat was already owned by KS and Vivienne as joint tenants.  All the rest of the properties in Hong Kong including bank accounts and shares of companies incorporated in Hong Kong were given to his two sons Chris and Sean.

The 2nd Will

24.  KS made his 2nd Will more than ten years later.  He did so in Honolulu, Hawaii on 15 January 2002.  The 2nd Will revoked all previous wills and codicils.  It gave Vivienne a checking account with Citibank New York.  For the rest of the properties whether real, personal or mixed and wheresoever situated, they were all given to Geraldine.  Vivienne was also appointed the personal representative to administer the estate.  According to Vivienne, the checking account at Citibank New York was for paying the mortgage installments for the vacation home in Honolulu.  This was not disputed.

25.  The draft of the 2nd Will was sent by the Honolulu lawyer, Mr Thomas Mui to KS under cover of a letter dated 12 January 2002.  Paragraph 2 of the letter sheds some light on why the will was drafted in this manner.  It reads:

“In regards to your Last Will and Testament, you have informed me that all of your American assets, except for your checking account at Citibank is in joint name or with designated beneficiaries.  Accordingly, I have made your Will a simple one as the other assets would be distributed outside of the will, that is, it would automatically go to the beneficiaries without a direction from the will.  In the case of the Citibank account, you have designated your wife Vivienne as the sole beneficiary.”

   The 3rd Will

26.  KS made his 3rd will (the Last Will) on 26 October 2002 in Shanghai.  This will again revoked all previous wills and codicils.  By the Last Will, KS bequeathed all his assets in New York including his accounts maintained at Fidelity Investments, Empire Investments, Citibank and Chase to Geraldine. 

27.  Regarding his assts in Hong Kong, he bequeathed his bank account with the BEA to Vivienne, Chris and Sean in equal shares, his bank account with the Standard Chartered Bank to Chris and Sean in equal shares, the matrimonial home in South Bay and the vacation house in Honolulu to Geraldine, Chris and Sean in equal shares and the US$4.1 million of Good Harvest, US$500,000 of Hacienda and US$270,000 of Vacha to Geraldine, Chris and Sean in equal shares.  The last part is the subject matter of this action. 

28.  It is not known why KS should have bequeathed the two real properties to Geraldine, Chris and Sean.  These two properties were in fact owned by him and Vivienne as joint tenants and he had no power to dispose of them by the Last Will.

29.  I think on the plain wording of the wills, the Last Will was much more generous to Chris and Sean than the 2nd Will.  Under the 2nd Will, save the checking account at Citibank New York, all assets went to Geraldine; nothing was provided for Chris and Sean.

30.  I also observed a peculiar feature about the 2nd Will in that it appointed Vivienne as the personal representative to administer the estate.  After administering the estate, Vivienne had to handover everything remaining to Geraldine save the said checking account.  She could not handover anything to her sons Chris and Sean.

VIVIENNE’S EVIDENCE

31.  Vivienne gave evidence by herself.  She also called a number of witnesses.  Four of her witnesses had their statements admitted without their attending the trial. 

Vivienne

32.  Vivienne was born in Shanghai to a wealthy family.  Her father was in business and industry and had a large estate in Shanghai.  She inherited some money from his father.  She received primary and secondary education in Shanghai.  She came and settled in Hong Kong on her own in 1979.  She worked as an assistant manager for a timber trading company in 1980.  In March 1981, she incorporated her own fur trading company.  Her company acted as a commission agent between the Mainland sellers and the outside purchasers.  She was able to purchase a flat in Happy Valley in 1983 at the price of HK$580,000.  That was with the help of mortgage finance.

33.  It seemed that she was known to some people of influence in the Mainland.  The undisputed evidence of a psychiatrist, Dr Rosenthal showed that in October 1981, she was able to arrange for him private tours of two psychiatric hospitals and private meetings with health care officials at many levels in Beijing and Shanghai.  Dr Rosenthal was then a young doctor.  She did that one year before the officials of the American Psychiatric Association were able to do so.

34.  Vivienne met KS in early 1983.  KS was then a vice-president of a US engineering company Ebasco.  He frequently travelled between the US and the Mainland on business.  Geraldine was then aged 9 and living in New York under the care of a housekeeper.  He and Vivienne married on 11 November 1983.  They then went to live in New York for two months, but Vivienne and Geraldine could not get along with each other.  Geraldine therefore continued living in New York under the care of the housekeeper whilst KS and Vivienne lived in Hong Kong.  Every year, KS would go to New York to keep Geraldine company during her school holidays.  KS was seconded by Ebasco to work in Hong Kong.  Vivienne continued with her fur trading business. 

35.  Vivienne then gave birth to Chris in 1986.  In early 1987, the family moved to the South Bay matrimonial home.  Sean was born in October 1988.  Vivienne began winding down her fur trading business in 1987.  She put an end to it in 1990.

36.  KS resigned from Ebasco in 1988 or 1989 and started his own engineering consulting business.  He had his office at home.  Vivienne assisted him in developing and expanding the business.  She also claimed to be talented in public relations and produced some photographs taken with the leaders of the Mainland Government.

37.  KS’s business flourished and diversified into banking consultancy.  In May 1997, KS and Vivienne bought a vacation house in Honolulu as joint tenants.  Vivienne made a down payment of US$80,000 for the house and KS serviced the mortgage loan.

38.  In 2000, Chris went to a boarding school in Boston and Sean started his secondary school in Honolulu.  KS also made arrangements to secure Vivienne’s financial security.  He paid Vivienne US$15,000 to US$20,000 every month as household expenses.

39.  Before KS resigned from Ebasco, he had already prepared to go into business.  He and Vivienne therefore acquired Good Harvest and Vacha in July 1984 and February 1986 respectively for use as their nominees in the business.  They also used these two companies to hold shares in their business ventures.  Either of them could operate the bank accounts of the companies singly.  Vivienne was responsible for operating the accounts on a day-to-day basis.  Vivienne also referred to the sale by KS of his interest in First Sino Bank, but that is irrelevant to this action. 

40.  Apart from their joint venture in Good Harvest and Vacha, they also kept individual savings and investments.  KS held some of his personal savings and investments in Hacienda.  Vivienne did the same with her company Cardinal Pacific Limited (“Cardinal”).

41.  On 18 December 2001, KS was diagnosed in Hong Kong with suspected liver cancer.  The suspicion was confirmed by a specialist Dr Lam on 28 December 2001.  They then went to the US for a 2nd opinion.  Before leaving Hong Kong, they had discussed the financial provision for the family.  They agreed that the assets of KS in New York should go to Geraldine and his estate outside New York should go to Vivienne, Chris and Sean through gifts to Vivienne.  

42.  As a result of the agreement, KS on 27 December 2001 added Vivienne as a signatory to the bank accounts of Hacienda with the Standard Chartered Bank and FPB for her to operate them singly.  This was to allow her to withdraw money from the Hacienda accounts as KS had given them to her as a gift.  Regarding the gifts of KS’s interest in Good Harvest and Vacha, nothing needed to be done as Vivienne could already operate their accounts.  Just in case if KS had omitted any act, he also signed three blank papers for Vivienne so that she could use them to complete the omission.

43.  Regarding Geraldine, KS had transferred to her a total of US$250,000 on 27 October 2001 and 5 November 2001.  That was before the diagnosis of suspected cancer.  On 28 and 31 December 2001, KS again transferred US$250,000 to Geraldine from Hacienda’s foreign currency account with SCB.

44.  KS and Vivienne then went to the US on 29 December 2001 for a 2nd opinion.  Unfortunately, the 2nd opinion confirmed a stage four liver cancer.  KS then made the 2nd Will in Honolulu.  Vivienne was then unaware of the 1st Will and the Codicils.  After that, they went to San Francisco for treatment, but none was recommended by the hospital.  They then went to Shanghai on 31 March 2002 for treatment.  Geraldine also joined them in Shanghai on the same day.  Chris and Sean also joined KS during their summer vacation.

45.  When they were in Shanghai, Vivienne worked very hard to provide KS with nourishing food.  When KS had difficulty to fit into the environment of the hospital, they moved to an apartment owned by Vivienne’s elder brother.  On 28 August 2002, Vivienne left Shanghai to accompany Chris and Sean back to school in the US.  Before her departure, she also moved KS to her own flat which was a few floors below her brother’s flat.

46.  She returned to Shanghai on 17 September 2002 and found that both KS and Geraldine had disappeared.  She made enquiries for their whereabouts but without success.  She was no doubt quite desperate then.  She told an old friend of KS that she was contemplating approaching the US consulate for assistance.  KS then made a phone call to her brother and said that he was all right.  But KS hung up without leaving any address or phone number.  A cablegram later informed her that KS had passed away on 19 December 2002 in Hangzhou.  She, Chris and Sean later attended the funeral in the US.

Shen Ming

47.  Vivienne’s elder brother also testified that Vivienne had devoted all her time and efforts to take care of KS.  She took him to and from hospital, went to the market to buy fresh food and did the cooking for him. 

Chao Pei Pei

48.  Their domestic helper in Shanghai Madam Chao also testified that Vivienne had insisted on taking care of KS by taking him to and from hospital, buying fresh food and doing the cooking for KS.  Vivienne was exhausted but still put KS’s interest before hers. 

Chu Wai Fuk

49.  Vivienne’s sister in law, who was living in San Francisco, also testified that Vivienne and KS were a loving couple and Vivienne was taking care of KS day and night when KS was suffering from cancer.  KS seemed particularly concerned about Chris and Sean who were 16 and 14 respectively.  In early 2002, KS told Madam Chu that he had already given Vivienne all his assets in Hong Kong so that Vivienne could provide for the future education and living of Chris and Sean.  Madam Chu’s evidence was not challenged.

Margaret Zee

50.  Madam Zee was a good friend of Vivienne.  She testified that she had asked KS on 14 January 2002 about his financial arrangements for the future of Vivienne, Chris and Sean.  KS told her that he would leave everything in Hong Kong to Vivienne so that the future of Chris and Sean could be adequately provided for.

Professor Zhang Cun-Hui

51.  Professor Zhang was not required to be called.  He taught statistics in New Jersey University.  His wife is the niece of Vivienne.  His family was familiar with KS’s family.  They had visited each other on many occasions.  He visited KS and Vivienne in Shanghai on 5 July 2002 and conversed with KS for about an hour.  KS told him that his health was in the hands of good doctors and he had made arrangements so that Vivienne, Chris and Sean would be financially secure no matter what the result of the treatment would be.

Dr Rosenthal

52.  Dr Rosenthal was not required to be called.  He said in his witness statement that his family had visited KS’s family in Shanghai in August 2002.  They jointly celebrated the birthday of Chris and his son.  In the same evening, KS told him privately that he knew his children were worried about him and his future.  But he told Dr Rosenthal that through Vivienne, their futures would be all right and they should not worry. 

53.  These witnesses also said that KS and Vivienne were a loving couple and had a harmonious relationship.

Chau Sau Ping Polly

54.  Madam Chau formerly worked in FPB.  She and her senior were responsible for the accounts of Good Harvest and Vacha.  She said Vivienne was in charge of the accounts of these two companies.  She had said in her witness statement that KS seldom gave her instructions in respect of these two companies.  She corrected it in her oral evidence by saying that KS had never given her instruction on the accounts of these two companies.  For Hacienda, there were many instructions to her and they were from KS.

Chui Yuk Har Lydia

55.  Madam Chui worked for a secretarial service company.  Her company provided service to Good Harvest, Vacha and Hacienda.  She took instructions from Vivienne in respect of the matters of Good Harvest and Vacha.  She also said in her witness statement that:

“7.    On or about 27th or 28th December 2001, when I returned to the office from my annual leave, I learnt that KS had cancer and he wanted to change the mandate of the bank accounts of Hacienda.  KS wanted Vivienne to operate and handle the company accounts of Hacienda.  He therefore instructed us to prepare the necessary documents to give instructions to the bank to add Vivienne as an additional signatory to all bank accounts of Hacienda.  As a matter of urgency, we prepared the relevant documents and arranged them to be delivered by hand to a medical centre in Central immediately where KS and Vivienne were waiting to see a doctor.”

56.  However, she said in her oral evidence that after her return from leave, the matter of adding Vivienne as a signatory for Hacienda had been done by her subordinate.  Her subordinate said either KS or Vivienne could sign.  Her boss one Madam Ng later told her that KS wanted to give Hacienda to Vivienne, but the time for documentation was short.  The quickest way was to give signature right to Vivienne.  Once the funds were drawn out form the accounts and licence fees not paid, the company would be struck out.  That was the quickest way to let Vivienne get hold of the assets of Hacienda.

57.  She admitted that her boss Madam Ng and Vivienne had been friends for many years.  Her oral evidence that they made Vivienne the owner of Hacienda by making her a signatory of the accounts of Hacienda is of importance to Vivienne’s case.  But this evidence did not appear in her witness statement.  Her witness statement only said KS wanted Vivienne to operate and handle the company accounts of Hacienda.  Since she was only told about this by her boss, her boss could also have come and give this evidence for Vivienne.  There is also evidence that when the plaintiff’s solicitors were making enquiry from her company in relation to these companies, her company did not appear to be co-operative.  For these reasons, I have to consider her oral allegation on the purpose of making Vivienne an additional signatory of Hacienda with more care.

CHRIS’ EVIDENCE

58.  Chris said in his witness statement that he had two private conversations with KS in March and the summer of 2002 regarding the future of his and his brother.  KS reassured him that no matter the outcome of the various medical treatments, and whether the attempts to prolong his life were successful, he would not have to worry about his future provisions as KS had already made financial arrangements with Vivienne to secure the future of his and his brother.

59.  Chris on 22 September 2002 sent KS an e-mail.  It was in extremely rude terms.  KS must have been extremely offended by it.  I think any right-minded person would think that it was an extremely awful e-mail.  However, one must try to understand Chris’ situation at that time.  From the evidence of Vivienne and her witnesses, I find that she had been working very hard for the physical well-being of KS.  She had been working at full stretch for KS.  I do not think the plaintiff has disputed this.  However, Vivienne and Geraldine could not get along with each other.  There must have been some tension developed in the family.  This is apparent from Chris’s e-mail.  

60.  This is also confirmed by the evidence of Dr Rosenthal who had visited KS’s family in August 2002 in Shanghai.  He said in his witness statement that Chris and Sean had told him of lingering tensions in their home created by a recent visit by Geraldine.  He thought Sean was very unhappy and felt that Vivienne had been mistreated by Geraldine.  Vivienne however continued to be attentive to the needs of KS and withheld her response to the situation.

61.  The e-mail of Chris also revealed that KS and Vivienne had quarrel(s) in the summer and it appeared that KS had sided with Geraldine.  Chris might have taken the view that KS was not being fair to his mother.  He might well have harboured some grievance in his heart.  The e-mail also revealed that there were arguments on distribution of KS’s assets to Vivienne and her sons on the one hand and Geraldine on the other.  Chris in particular pointed out in the e-mail that equal distribution of assets was not right because Chris and Sean still need many more years of education whilst Geraldine was already studying for her PhD.

62.  It is clear that the family was not happy when it was in Shanghai.  When Vivienne found out the disappearance of KS and Geraldine on 17 September 2002 and told Chris about it, Chris must have been extremely angry, because this would mean to him the abandonment by KS of Vivienne and his sons in favour of Geraldine.  This was despite all that Vivienne had done for KS.  Vivienne was devastated.  She was desperate to find KS.  It is therefore not difficult to visualize the tremendous distress and anxiety that Chris was in when he wrote the e-mail.  But for that intolerable distress, I do not think this fine young man would have written what he wrote.   

63.  It is also difficult to say who was right and who was wrong as it was all a matter of human relations.  Indeed the plaintiff has observed in his supplemental witness statement that Vivienne wanted to monopolise KS and could not tolerate KS loving anyone but her and her sons, but KS was not prepared to sever his relationships with Geraldine and the plaintiff for the sake of Vivienne.  This observation might have been coloured by some exaggeration, it however supports my view that the family was not in harmony when in Shanghai. 

64.  In think Chris has been punished enough for this e-mail when he was referred to it subsequently in the preparation for this trial and also in this trial.  I hope nobody will mention this e-mail again as it can only deepen old wounds.

THE PLAINTIFF’S EVIDENCE

65.  The plaintiff gave evidence by himself and called KS’s former New York Lawyer Mr Frey to testify for him.

   The plaintiff

66.  He queried Vivienne’s assertion that KS had been diagnosed of liver cancer on 18 December 2001.  I note that further documents now show that there was a suspicion on 18 December 2001 which was strengthened on 27 December 2001.  The expert, Dr Lam confirmed it to be the case on 28 December 2001.  The biopsy result obtained on 11 January 2002 in Hawaii was a 2nd opinion.  

67.  The plaintiff said that on 16 January 2002, KS and Vivienne and Geraldine went to San Francisco for verification and treatment of the illness.  KS had an operation on 14 March 2002 to remove the right lobe of the liver, but the disease had already spread to the left lobe.  The plaintiff visited KS on 21 March 2002 together with his son.  KS told him that he would go to Shanghai for treatment.  KS and Vivienne arrived in Shanghai on 31 March 2002.  Geraldine also arrived there on the same day.  KS stayed in a hospital in April and May and then moved to the apartment of Vivienne’s elder brother in June to early August.

68.  KS told him in September 2002 that Vivienne had started to abuse KS verbally from around late April 2002.  She wanted KS to divulge all his financial information.

69.  In June 2002, Chris and Sean started their summer holidays and they split their times between Hong Kong and Shanghai.

70.  On 21 July 2002, Vivienne had a big quarrel with KS.  She had screamed and yelled for seven hours until it was 3 a.m.  The treating doctor noticed the condition of KS and commented that adequate sleep and reduced stress were critical for liver function.  The plaintiff suspected the cause of the quarrel was that KS had made two transfers of US$7,500 each to Geraldine on 28 June and 4 July 2002. 

71.  The plaintiff also referred to three transfers of money by Vivienne from the accounts of Good Harvest to her own account Cardinal between 15 and 24 July 2002.  The total sum transferred was US$3,780,753.  The plaintiff only knew this after the death of KS.  KS further told him in September that KS was angry and had responded to Vivienne that the money belonged to him and he could do whatever he liked with it.  KS emphasised that the money in the corporate accounts belonged to him.

72.  After this quarrel, KS made two more transfers of US$7,500 each to Geraldine on 31 July 2002.  The plaintiff thought that KS effected these two transfers to emphasis that he owned the money.  KS told the plaintiff that he had asked Geraldine not to return the money, but Geraldine returned it to KS’s individual account to reduce Vivienne’s abusive pressure. 

73.  The plaintiff went to Shanghai on 29 August, the day after Vivienne had taken the children to school in the US.  Geraldine had also returned to Shanghai on 26 August 2002 to take Vivienne’s place to look after KS.  Vivienne found out on 11 September through the domestic helper that the plaintiff was there.  She then told KS that both Geraldine and the plaintiff should leave Shanghai before her return.  The plaintiff left Shanghai on 12 September 2002.  KS and Geraldine moved out of Vivienne’s apartment on 13 September 2002 without leaving behind any information of their whereabouts.

74.  On 22 September 2002, Chris sent KS an e-mail.  I have already dealt with it above.

75.  On 25 September 2002, KS called his New York lawyer Mr Frey and told Mr Frey that he had been verbally abused by Vivienne after he had become ill and he was then with Geraldine who was a great comfort to him.  I will refer to this conversation in more detail when I deal with Mr Frey’s evidence.

76.  The plaintiff returned to Shanghai on 26 October 2002.  KS also executed his Last Will on the same day.  The plaintiff was named the executor of the will and his son was named the alternate executor and trustee of the two sons of KS.  On the next day, KS was transferred to a hospital in Hangzhou and had an operation shortly thereafter.  Unfortunately, the operation was not successful and he died on 19 December 2002.  A memorial service was held for him in the Mainland on 19 December and his body was sent to New York on 29 December.  A funeral was held on 9 January 2003 and Vivienne, Chris and Sean also attended.

77.  The plaintiff in his oral evidence said that he knew Geraldine’s mother reasonably well and he had looked after Geraldine when KS was not around.  He was however not too familiar with Vivienne.  Vivienne had complained to him about KS and Geraldine.  He and Vivienne spoke to each other in Shanghainese.  He met KS whenever he came to Hong Kong and when KS was in Hong Kong, but KS did not want to mix his sons with him.  He said KS did not want his sons to acquire the character of Vivienne.  KS also toldhim that Vivienne wanted KS to turnover the keys of the New York apartment in which Geraldine was residing.  He also elaborated on the big quarrel that took place on 21 July.  He said KS had told this to all his good friends.  Even his doctor remembered it.  It was over his remittances of US$7,500 each to Geraldine.  The marriage of KS and Vivienne was then on the rocks.  KS had said that he would divorce Vivienne if he should recover from the illness.  The plaintiff also said that KS and Vivienne only behaved as a loving couple before others because of a matter of face.

78.  He also said when KS asked him to be the executor in the Last Will, he was not briefed about the estate.  He however asked KS if KS was sure that all the money was there because he knew that Vivienne had the signing power.  KS replied that he knew the money was there as Vivienne would not dare to take it away.  KS further said that even if Vivienne had taken the money away, it could be recovered by legal proceedings.

Stephen Frey

79.  Mr Frey said he represented KS in various legal matters for more than 25 years since December 1977.  During this period he had many conversations with KS primarily on legal matters and also personal discussions.  Their last conversation was on 25 September 2002 when he returned the call of KS.  KS was in Shanghai.  The conversation took about 23 minutes he took some notes of it. 

80.  KS told him that in December 2001, a Hong Kong doctor advised him that he had a serious liver disease and he had only six more months to live.  KS had also told him that his marriage to Vivienne had not been good for many years.  After KS had become ill, Vivienne “hi-jacked” him and abused him.  He also said that he had moved out of Vivienne’s apartment and he did not want Vivienne to know of his whereabouts.  Mr Frey also said that on 15 May 1986, he had drafted for KS a codicil (the 1st Codicil) to his will (the 1st Will) which would give Vivienne the minimum of her entitlement under New York law.  The codicil was reviewed by KS who executed it on 29 May 1986.  During July 1986 (which was about a month before the birth of Chris), KS had instructed him to research into the merits of the law of divorce of New York as compared to that of Hong Kong.  He later made a report of his research to KS.  There was no further development on this.  He also produced of bundle of e-mail and copy letters showing that KS and Geraldine had, through his help, written to the management of the New York apartment to bar the entry of other people into that apartment.

81.  The notes of the conversation showed that KS had also referred to the e-mail from Chris who wanted access to the New York apartment.  That was the reason for the letter to the management of the apartment.  Mr Frey also said that he had asked KS why he wanted to send the letter to the management.  KS told him that the sons would want to go to the apartment to look for things of value or documents that would lead to things of value.

ANALYSIS AND DECISION

82.  Though these proceedings started off for the purpose of interpreting a provision in the last will of KS, they have become a battle between Vivienne and the plaintiff on Vivienne’s counterclaim for the moneys in the accounts of the three companies.

Approach in dealing with the evidence

83.  Mr Miu, counsel for the plaintiff, accepts that there is no absolute rule that there must be corroborative evidence in support of a claim against the estate of a deceased, but he urges me to be careful with Vivienne’s evidence.  He said her evidence should be thoroughly sifted.

84.  Vivienne did not appear to be a person of mild temperament.  When she gave evidence, she had on occasions knocked on the witness stand with her knuckles to emphasis her points.  She had spoken loudly and firmly.  Mr Miu at times had difficulty to interject in her answers.  She appeared to be taking over the cross-examination.  She had repeatedly demanded written proof of the plaintiff’s case.  Very often she did not answer the questions directly.  She appeared to be domineering.  She also gave emphatic speeches which demonstrated her displeasure with the cross-examination.  She also admitted to have a quick temper.  In the light of all these, I have to scrutinize her evidence very carefully.  I would consider whether there is corroboration of her evidence by other witnesses and the contemporaneous documents.  I would also look for corroboration of her evidence from the conduct and behaviour of KS as can be gleaned from the evidence of other witnesses and the documents.

85.  The plaintiff on the other hand has given his evidence smoothly.  He was responsive to the questions.  He was straightforward in his answers.  Though he appeared to be more familiar with Geraldine and her deceased’s mother, I have not detected any bias in him.  I find him a reliable witness and I accept his evidence.  To the extent that his evidence was hearsay, I accept that he had honestly repeated what he was told.

Relationship between KS and Vivienne

86.  Though KS and Vivienne appeared to many people as a loving couple, I accept the plaintiff’s evidence and find that their relationship was not as good as they portrayed.

87.  They married on 11 November 1983 after knowing each other for less than a year.  They together acquired Good Harvest in July 1984 and Vacha in February 1986.  Vivienne was pregnant with Chris in 1986.  But their relationship was not good at the later stage of the pregnancy.  That was demonstrated by the terms of the 1st Codicil executed by KS on 29 May 1986.  That provided to Vivienne the minimum under New York law and nothing to Chris.  Their relationship was at the low ebb in July 1986.  KS in that month instructed Mr Frey to research into the law of divorce in New York and compare that with the divorce law of Hong Kong.  Chris was born on 10 August 1986.  Luckily, there was no further development on the issue of divorce.  KS and Vivienne in fact purchased the South Bay matrimonial home in February 1987 as joint tenants.  That might have meant some improvement in their relationship. 

88.  Sean was born on 23 October 1988.  KS executed his 2nd Codicil to the 1st will on 16 November 1989.  I think the 2nd Codicil should reflect an improvement of their relationship as it modified the 1st Will and 1st Codicil so that all Hong Kong assets would go to Vivienne and her sons and those outside Hong Kong to Geraldine. 

89.  Whatever might have been their relationship since the 2nd Codicil, there is no evidence of any significant change in it afterwards.  Perhaps KS and Vivienne had adjusted and settled into their respective roles and their relationship had become stabilized.  In May 1997, KS and Vivienne further bought a vacation house in Honolulu as joint tenants.  Vivienne paid the initial sum of US$80,000 and the balance was on mortgage with mortgage installments paid by KS.  Since he executed the 2nd Codicil on 16 November 1989, KS did not make any further will or codicil for over ten years.  There was also no sign of deterioration of relationship when KS was diagnosed of cancer in Hong Kong in December 2001.

Vivienne’s claim of ½ ownership of Good Harvest and Vacha

90.  I now deal with Vivienne’s claim that she was always a ½ owner of Good Harvest and Vacha and everything held in their names.  Mr Miu referred to KS’s instruction to Mr Frey on 19 May 1986 for the 1st Codicil and said it was an indication of poor relationship.  He further submitted that making the wife a joint tenant in some properties would not really cost the husband anything in real terms as the wife’s share in the properties upon divorce or death of the husband would be correspondingly reduced.  Though the plaintiff accepts that KS had given ½ of Good Harvest and Vacha to Vivienne and also made her a joint tenant of the South Bay matrimonial home, the ownership of ½ of the shares of the two companies did not equate to ownership of ½ of the moneys held in their bank accounts.    

91.  Mr Miu adopted an accounting approach.  He submitted that since there was no contract of service or service agreement between KS or Hacienda with Good Harvest or Vacha, the moneys deposited by KS and/or Hacienda into the accounts of Good Harvest and Vacha must be loans/advances from KS/Hacienda.  These deposits would increase the assets of the two companies and at the same time create liabilities of loans from shareholder.  Therefore, ½ ownership of the shares of the two companies did not mean ½ ownership of the credit balances in the bank accounts. 

92.  However, no books of accounts had been prepared for these two companies.  There is no dispute that KS solely owned Hacienda at least before the alleged gift on about 27 December 2001.  If KS should have wanted to keep the moneys or investments as his, he could have left them in the accounts of Hacienda, there was no need for him to make any transfer from the accounts of Hacienda or anywhere else into the accounts of Good Harvest or Vacha.  I also see no reason why KS should have transferred moneys into the accounts of the two companies as advances and created corresponding liabilities from the companies to him.  No useful purpose would have been served by such arrangement. 

93.  I also refer to the evidence of Madam Chau formerly of FPB and that of Madam Chui of the Secretarial Company.  They both said that the affairs of Good Harvest and Vacha were managed by Vivienne and the affairs of Hacienda were managed by KS alone.  The plaintiff did not challenge their evidence on this point.  If Vivienne had no interest in the moneys and investments held by these two companies, there was no reason why she should have taken the trouble of managing all their affairs.  There was also no reason why KS did not manage their affairs as he did for Hacienda.

94.  Mr Miu also submitted that KS had not given Vivienne any expensive gift and he would not have made her such expensive gifts.  However, the fact that one does not buy expensive diamond rings or jewellery for his wife does not mean that he would not share the family assets with her.

95.  The obvious purpose of KS in effecting the transfers to Good Harvest and Vacha was to share the moneys with Vivienne.  I therefore find that KS made the transfers so that the moneys would be kept in these accounts as family savings.  These two companies only held the moneys for KS and Vivienne as their nominees.  The moneys were to be owned as the assets of the Hong Kong family that did not include Geraldine.  Regarding Geraldine, there was evidence that KS had given her moneys as well.  There is evidence that KS had transferred US$250,000 to her in October and November 2001 before the diagnosis of cancer.  Indeed Mr Miu for the plaintiff has pointed out that Mr Frey, the long time attorney of KS, had also said that the Hong Kong assets and New York assets of KS were of more or less equal value. 

96.  I therefore find that Vivienne was indeed a ½ owner of Good Harvest and Vacha and everything held in their names. 

Vivienne’s claim of KS’s interests in the accounts of Good Harvest, Vacha and Hacienda on about 27 December 2001

97.  Regarding Vivienne’s claim of gifts of KS’s interests in the moneys and stocks held in the accounts of Good Harvest, Vacha and Hacienda on about 27 December 2001, one has to consider their relationship in December 2001.  On 27 December, they were advised that there was a strong suspicion that KS had liver cancer.  The suspicion of cancer was confirmed on the next day.  Their relationship at that time was not particularly bad.  There was in fact solidarity between them.  Not beaten by the diagnosis, they went together to Hawaii for a 2nd opinion.  The 2nd opinion came on 11 January 2002 and confirmed the bad news.  It was a stage four liver cancer.  At that time, neither KS nor Vivienne could have brushed aside the imminent risk of death of KS.  The Hawaiian lawyer Mr. Mui sent KS the draft of the 2nd Will on 12 January 2002.  KS executed this 2nd Will on 15 January 2002 in Hawaii just before he and Vivienne flew to San Francisco for his treatment. 

98.  The 2nd Will appointed Vivienne as the personal representative and gave almost everything to Geraldine.  The appointment of personal representative showed the faith of KS in Vivienne and the state of their relationship at that time.  However, this will only gave Vivienne a checking account in New York for servicing the mortgage of the vacation home.  It is not easy to understand why KS would provide nothing for Vivienne, Chris and Sean.  It is even more difficult to understand why KS would still have appointed Vivienne as the personal representative.  This would have required her to hand over everything to Geraldine after administering the estate.  I think the answer lies in the 2nd paragraph of the covering letter of Mr Mui, the Hawaiian lawyer, which has been referred to above.  Mr Mui said in this paragraph that KS had told him that all KS’s American assets except the checking account were in joint names or with designated beneficiaries.  Hence, Mr Mui just made a simple will for KS as the other assets would be distributed automatically to the beneficiaries without a direction from the will.

99.  So there must have been assets given to Vivienne and her sons which passed outside the 2nd Will.  Otherwise, the scheme in this will would appear to be less than wise.  I do not think KS at that time would have devised in the 2nd Will a scheme that would prove to be difficult for Vivienne and/or Geraldine. 

100.  However, even if the 2nd Will is read together with the 2nd paragraph of Mr Mui’s covering letter, where are the assets left for Vivienne and her sons?  There is no evidence or suggestion that any of KS’s American assets had been given to Vivienne and/or her sons.  But what about the assets in Hong Kong?  In his 1st Will as modified by the two Codicils, all Hong Kong assets would go to Vivienne and her sons (or the Hong Kong family).  There was no evidence that the relationship between KS and Vivienne in January 2002 had worsened.  In fact, they were then fighting shoulder to shoulder against the imminent risk of death of KS.  So there was no reason for KS to provide less for Vivienne and her sons in the 2nd Will than previously.  But the 2nd Will did not appear to have provided for Vivienne save the checking account.  The 2nd Will also did not say that the Hong Kong assets would go to Vivienne and her sons.  On the face of this will, KS’s Hong Kong assets would also go under to Geraldine unless they were already held in joint names or would otherwise pass to the beneficiary outside this will.

101.  The only significant assets in Hong Kong were the moneys and stocks in the accounts of the three companies Good Harvest, Vacha and Hacienda.  For Good Harvest and Vacha, KS and Vivienne were their equal shareholders.  That in law did not mean that they were joint owners of the properties of the companies.  The companies were the owners of their properties.  However, KS and Vivienne could operate the bank accounts held by these two companies singly.  Vivienne thus had the liberty to withdraw the funds in the accounts of these companies.  She was also added as a signatory to the accounts of Hacienda on 27 December 2001.  Despite not holding any share of this company, she had the same liberty to withdraw money from it.  The company would also be struck out later if no licence fees were paid.  If KS should have given Vivienne all his interests in the moneys in the accounts of the three companies, then Vivienne and her sons (or the Hong Kong family) would have all the Hong Kong assets including the South Bay matrimonial home and Geraldine would have all the New York assets.  The assets in both places were of more or less equal value.  The situation would be the same as in the 1st Will as modified by the two Codicils.  The only change was the acquisition of the vacation house in Honolulu which was held in the joint names of KS and Vivienne.

102.  Vivienne said that KS made gifts of his interests in the moneys in the accounts of the three companies on about 27 December 2001.  The addition of her as a signatory of the Hacienda accounts was one proof.  That was the time when the suspicion of liver cancer was strengthened.  The cancer was confirmed on next day.  KS then transferred to Geraldine a total of US$250,000 between 28 and 31 December 2001.  That might well have been part of his scheme of distribution of assets.  He then made the 2nd Will in Hawaii giving the residue of his assets to Geraldine as he had already arranged for the passing of his assets outside this will.  Though Mr Mui’s letter merely referred to American assets, I think that could have been the result of confusion/error in communication.  Otherwise, there was no sensible explanation for giving everything including the moneys in the accounts of the three companies to Geraldine and appointing Vivienne as the personal representative. 

103.  There was also the evidence of Vivienne’s sister-in-law Madam Chu, Vivienne’s good friend Madam Margaret Zee, Dr Robinson, Professor Tsang and Chris.  The evidence of the ladies was specifically that KS had left his Hong Kong assets to Vivienne and her sons.  Professor Zhang said that KS had told him that KS had made arrangements so that Vivienne, Chris and Sean would be financially secure.  Dr Rosenthal’s evidence said KS had told him that the futures of Chris and Sean would be all right through arrangement with Vivienne.  Mr Miu submitted that Chris was trying to buttress his mother’s case.  But the same cannot be said about the evidence of the other witnesses whose evidence on this point was not challenged.  I also note that the conversations referred to by these witnesses took place either immediately before the execution of the 2^nd Will or thereafter but before the making of the Last Will.  Hence, KS should be referring to arrangements he had made prior to the making of the 2nd Will as that Will on the face of it gave almost everything to Geraldine.

104.  Mr Miu, however, submitted that if KS were to make a gift of his interest to Vivienne, he would have executed the proper documentation.  The addition of Vivienne as a signatory of Hacienda was just consistent with the purpose of convenience only.  There was also no hurry for the gift to be completed even if the suspicion of cancer would be confirmed.  The documentation would also have been simple to arrange.  These criticisms no doubt have strength.  However, one must not lose sight of the fact that in December 2001, the relationship between KS and Vivienne had not changed for the worse.  The verbal abuse by Vivienne on KS, even if true, did not come until late April 2002.  They were still in solidarity in December 2001 and had a consensus on the distribution of assets.  In those circumstances, it would have been all too easy for them to have chosen the shortcut for the proper route.

105.  Mr Miu also submitted that on 27 December 2001, there were the 1st Will and the two Codicils that had already provided for Chris and Sean.  He therefore submitted that it made no sense for KS to make an oral gift of his interest in Hacienda in order to provide for his sons.  But KS’s gift of interest in the three companies to Vivienne would not have affected the operation of the 1st Will and the two Codicils.  It was in line with that arrangement.  At that time, KS would also not want Vivienne to know about the contents of the 1st Will and the two Codicils.  To make the gifts of interests in the three companies to Vivienne would have made Vivienne feel secured.

106.  Mr Miu further argued that the 2nd Codicil which provided that all the rest and remainder of KS’s estate in Hong Kong including bank accounts maintained by him and his stock ownership would not include the credit balances of Good Harvest, Vacha or Hacienda.  I do no find this interpretation attractive.  The 2nd Codicil clearly gave all assets in Hong Kong to Chris and Sean save the South Bay matrimonial home.  I do not think the phrases for including KS’s bank accounts and stock ownership would have the effect of excluding the interest of KS in the moneys and stocks held by these three companies from the wholesale bequeath at the beginning of this clause.

107.  It is also the plaintiff’s case that KS had by the 2nd Will bequeathed everything including the moneys in the accounts of the three companies to Geraldine save the checking account with Citibank New York.  The plaintiff did not accept that the moneys in the accounts of the three companies had passed to Vivienne outside this will.  An analysis of what happened after the making of this will can prove that this is not the correct view.

108.  It is the plaintiff’s case that Vivienne started to verbally abuse KS from late April 2002.  There was also a big quarrel on 21 July.  The anger of KS seemed to have lingered.  When Vivienne was in the US with Chris and Sean, he together with Geraldine moved out of Vivienne’s apartment on 13 September and did not leave any information for contact.  He wanted to be estranged from her.  The e-mail by Chris on 22 September further offended him tremendously.  He took the trouble of getting help from Mr Frey to stop Chris from getting into the New York apartment.  He told Mr Frey that Chris wanted to go there for things of value or documents leading to things of value.

109.  From his conversation with Mr Frey, it can be seen that his relationship with Vivienne at that time was at new low ebb.  He also told the plaintiff his intent to divorce Vivienne upon recovering.  When he heard that Vivienne might contact the US Consulate to look for him, he phoned her elder brother so as to stop her, but he still left no contact for her.  That was their then state of relationship.  If, as the plaintiff contends, the 2nd Will made in Hawaii had given almost everything to Geraldine including KS’s interest in these three companies and the moneys held by them, then the Last Will made on 26 October 2002 in Shanghai had reduced Geraldine’s entitlement to the moneys held by these three companies by ²/₃ as it gave all these moneys to the three of them in equal shares.  However, in the light of the attitude of KS to Vivienne, the e-mail by Chris to him,the fact that Geraldine was with him and was a great comfort to him, there was absolutely no reason for him to have substantially reduced the entitlement of Geraldine to reward Chris and Sean by his Last will.  The reasonable way of understanding the Last Will is that it was an attempt by KS to reduce the entitlement of his Hong Kong family to the moneys held by the three companies by giving ¹/₃ of them to Geraldine.

110.  Therefore, the correct understanding of why KS had made the 2nd Will in those terms was because the Hong Kong assets including the moneys held by the three companies had passed to Vivienne (or the Hong Kong family) outside this will. 

111.  For the above reasons, despite KS and Vivienne not being joint tenants of the moneys held in the accounts of the three companies and despite these moneys not being American assets, I find that KS had intended them to pass outside the 2nd Will as he had already made gifts of his interests in the moneys in their accounts to Vivienne.  I also find that he made these gifts to Vivienne on about 27 December 2001 when he added her as a signatory of the Hacienda accounts.  The gifts were also completed upon their making.  The companies were merely their nominees to hold the moneys. 

112.  I would therefore accept the evidence of Madam Chui that the purpose of adding Vivienne as a signatory to Hacienda was to let her take over this company.  I do not know why she had not added this evidence into her witness statement.  In fact, what she said in the witness statement can be taken as a contradiction of what she said orally.  But even if I should be wrong in accepting this part of the evidence of Madam Chui, my conclusion is still amply supported by the other evidence and analyses outlined above.  I do not think the imperfection of Miss Chui’s evidence is weighty enough to cause me to conclude differently.

113.  I therefore find that the Last Will was just an attempt by KS to redistribute what he had previously given to Vivienne (or the Hong Kong family).  He wanted to do this to punish Vivienne and Chris.  This was however not permissible as he had no more control over what he had previously given to Vivienne (or the Hong Kong family) (Shephard v Cartwright [1955] AC 431).  The clause in the Last Will which is the subject of this action is just as futile as another clause in this will which provided for the devolution of the South Bay matrimonial home and the Honolulu vacation house.

114.  I further find that when KS transferred US$2,202,459.10 from an account of Hacienda to an account of Good Harvest on 17 April 2002, he did it for the purpose of making a gift of it to Vivienne.

115.  Mr Miu has criticized Vivienne’s credibility by referring to her case here and its discrepancies with her depositions in the US.  She demonstrated in the depositions her ignorance of the business of KS and his companies.  She said she knew almost nothing about the three companies and the role of KS in setting up First Sino Bank.  She explained in this trial that she was reluctant to discuss these matters in the US, hence her pretended ignorance.  Considering the undisputed evidence that she alone handled all the affairs of Good Harvest and Vacha at the bank and at the secretarial company, it is unlikely that she was so ignorant about these two companies.  However, I do not think she really had a thorough knowledge of the business of KS but chose not to discuss it in the deposition.  I think she should have some idea of KS’s business, but I doubt if she had played an active role in it as she alleged.  She already had a family to look after and the two sons were growing and needed her attention.

116.  I come to the conclusion of gifts of moneys by KS to Vivienne more because of my analysis of the relationship between KS and Vivienne, the way that KS had dealt with his assets in his various wills and codicils and the unchallenged evidence of Vivienne’s witnesses.  They gave tremendous support to Vivienne’s own evidence.

First Sino Bank shares

117.  I do not accept Vivienne’s evidence that she had not verbally abused KS or that there was no quarrel on 21 July 2002.  On these matters, the evidence of the plaintiff has proved otherwise.  But what financial information did Vivienne want KS to divulge?  There is also the evidence of Mr Frey that KS was afraid that Chris might go to the New York apartment to look for things of value or documentation leading to things of value.  But what thing of value was Chris going after? 

118.  Despite the distribution by KS of his Hong Kong and New York assets which were roughly of equal value, KS had not accounted for the 12.5% shares of First Sino Bank or their proceeds.  Vivienne produced a document dated 2 August 2002 showing that KS had sold these sharesfor US$9 million.  A sum of US$5 million was applied to repayment of a debt and the balance of US$4 million was paid at KS’s direction to one Grand Strength Limited.  What Vivienne was trying so hard to get KS to divulge were probably these shares or their proceeds.  KS’s suspicion of what Chris wanted from the New York apartment might have been the same thing.  In any case, these shares are not a subject matter of this action and I will say no more about them.

119.  I have found that there was indeed a big quarrel on 21 July 2007.  It may well be caused by the remittances in sums of US$7,500 and the First Sino Bank shares.  However, I do not think it necessary for me to determine whether Geraldine had returned the money voluntarily and against the wish of KS or she did so at the request of KS.  This has little importance even on Vivienne’s credibility.

Vivienne’s transfers of money from the accounts of Good Harvest, Vacha and Hacienda to the accounts of Cardinal

120.  There was also an argument on whether KS had knowledge of Vivienne’s transfers of money from the accounts of Good Harvest, Vacha and Hacienda to her own company Cardinal.  She made the transfers after she had been aware of the remittance by KS of two sums of US$7,500 each to Geraldine.  She then had the big quarrel with KS on 21 July.  I think it was more likely than not that she had effected her transfers without telling KS about them.  This was consistent with her US deposition but not her evidence in this trial.  She made the transfers as safety measures to prevent KS from defeating her interests in these moneys.  The same applied to her subsequent transfers of moneys to Luxembourg in October 2002.  She just tried to put the moneys out of reach of KS. 

US$5 million from Sunny Score

121.  Finally, I also mention that Vivienne in the course of her evidence appeared to claim that two sums of US$2.5 million each received by Hacienda from a company called Sunny Score Investments Limited on 16 October 2001 and 15 March 2002 respectively should belong to Vacha.  Ms Wong, leading counsel for Vivienne, has made it plain that no such claim was being made.  I therefore say no more about it.

JUDGMENT

122.  In the light of my findings, I declare that the moneys and securities in the bank accounts in the names of Good Harvest, Vacha and Hacienda as more particularly set out in the schedules 1A, 1B and 1C of Vivienne’s counterclaim have since about 27 December 2001 belonged to Vivienne to the exclusion of KS and his estate after his death.

123.  I also make an order nisi that the plaintiff do pay all the defendants their costs of these proceedings.