LI KIM SANG VICTOR v. CHEN CHI HSIA AND ANOTHER

[English Translation – 英譯本]
HCA 481/2008

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

HIGH COURT ACTION 481 OF 2008

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JUDGMENT

Introduction

1. This case concerns the beneficial ownership of the assets of the late Mr Lei Ting Kwong(‘the deceased’) and whether the assets are in the nature of charitable assets or trust assets.

Background to/issues in the present case

2. The deceased was a vajra grandmaster of Tibetan Buddhism. He founded Ching Yum Fat Kok (淨音佛閣) (‘the Retreat’) around 1961 and was the abbot of it before he died.

3. The Retreat, currently located at Nos 3-4, Fu Yung Shan New Village, Tsuen Wan, that is Lots 1243 and 1244(‘Lot 1243’and ‘Lot 1244’ respectively) in DD453, is a registered temple and a property under the name of the deceased.

4. The deceased had had three wives. The first two had divorced him. Li Kim Sang (‘the plaintiff’) and Li Kin Chung(transliteration) were children born to the deceased and his first former wife Lin Yin Chi(transliteration).

5. The first defendant Chen Chi Hsia (‘Madam Chen’) was the second former wife of the deceased. They married in 1987 and divorced in 1995. She had been a Recognized Resident (‘Recognized Resident’) of the Retreat and continued to reside there even after the divorce. One of the issues in the present case is whether Madam Chen was still a Recognized Resident at the time when the present proceedings were commenced.

6. The third wife was the current wife Wong Yau Hing(transliteration). She was also a Recognized Resident of the Retreat.

7. The three wives and the plaintiff were all disciples of the deceased. There was yet another Recognized Resident, by the name of Cho Wai Fun (transliteration).

8. On 23 September 2005, the deceased signed two notices:

(a)     The first one(‘the 2005 Notice’) read as follows:

‘… Recognized Residents of Ching Yum Fat Kok [i.e. the Retreat] possess the interest to keep and hold both the land of [the Retreat] at D.D. 453, Lot No. 1243, 1244 and the superstructure, movable and immovable assets etc thereon.’

(b)    The second notice conferred the Recognized Resident status on Wong Yau Hing (‘the Wong Yau Hing Notice’).

9. The plaintiff agrees that the said two Notices existed and that the deceased had, holding the Notices in his hand, had a meeting with the believers in Taiwan through video conference. However, what the deceased had said, whether or not the 2005 Notice was a will as alleged by Madam Chen, and how its content should be interpreted, are some of the hotly contested issues between the parties.

10. On 2 March 2006, when he was hospitalized for the last time, the deceased signed some bank documents to close three accounts maintained with the Shanghai Commercial Bank Ltd (‘SCB’) and transfer fixed deposits totalling approximately $14,300,000 to a joint account that he opened on that day with Madam Chen(‘the new account’).

11. The following day, Doctor Hwang Shu Tak certified in writing (‘Dr Hwang’s certificate’) that on 2 March 2006, the deceased was well orientated and mentally clear, albeit physically weak; he acted solely in accordance with his own wishes.

12. Five days later, i.e. on 7 March 2006, the deceased passed away at the age of 74. He died intestate. The assets under his name fall into three broad categories:

(1)    Properties in Hong Kong, including the Retreat;

(2)    Money; and

(3)    Three properties in Taiwan.

13. The plaintiff became the administrator of the deceased’s estate on 22 January 2007. He claims that the deposit in the new account is a personal asset of the deceased, not a gift given to Madam Chen. The plaintiff claims that, as the deceased was seriously ill and lacked mental capacity, the bank documents that he signed carried no legal effect; and that he signed those documents under the undue influence of Madam Chen. The transfer of the $14,300,000 to the new account was, the plaintiff claims, an unconscionable transaction.

14. Madam Chen denies that the deceased is the beneficial owner of the assets. She claims that he did not work outside of the Retreat, and that his assets were from donations made to the Recognized Residents by disciples and believers from all directions, both locally and overseas, for the purpose of promoting Buddhism. All assets under the name of the deceased are by nature religious interests. The purchased was purchased with donations from the public (in particular, fromthe disciples of the deceased), and the Retreat has all along been open to public for the purpose of public worship and performing various kinds of charitable work. Besides, before he died, the deceased often told his disciples and believers that all those assets were owned by the Recognized Residents, on whose behalf he managed and held the assets in the capacity of a trustee (see paragraph 2 of Re-amended Defence). The Recognized Residents are the sole legal and beneficial owners of those assets and manage them on behalf of a charitable trust for the purpose of promoting Buddhism and charitable causes (see paragraph 1 of the Counterclaim). The plaintiff should, Madam Chen claims, return the asset to the Recognized Residents or the Department of Justice.

15. The plaintiff denies the allegationsregarding a charitable trust. He also claims that Madam Chen has lost the status of a Recognized Resident and is therefore not entitled to make the counterclaim whether in her personal capacity or on behalf of the Recognized Residents.

The issues

16. In summary, the pleadings have disclosed the following issues:

A.   The source of the deceased’s assets;

B.   The purpose and use of Ching Yum Fat Kok;

C.   Whether the three items of the deceased’s assets are held on charitable trust;

D.   If those assets are not on charitable trust, whether the 2005 Notice constitutes a will by virtue of which the Recognized Residents are beneficiaries;

E.   Whether the first defendant is a Recognized Resident;

F.   Whether the deceased intended to give the deposit in the new account to the Recognized Residents as a gift for the purpose of promoting Buddhism;

G.   Whether the deceased opened the new account under the undue influence of Madam Chen; and

H.   Whether the transfer by deceased of the balance in the account to the new account was an unconscionable transaction.

17. One of the issues is whether any part of the deceased’s assets is charitable in nature, and if the answer is in the affirmative, what the form and scale of the charitable interest is. In light of this, by an order made on 15 September 2011, I invited the Secretary for Justice(‘the SJ’) to join in the present case as second defendant, in his capacity as Protector of Charities.

18. The SJ has assumed a neutral role in the present case. For the purpose of assisting the court in dealing with the claims in the present case justly and in accordance with the applicable laws, the SJ merely sent representatives to attend the trial on watching brief and submitted written opening submissionson the legal principles applicable to charitable interests.

19. The findings of fact I made in the end are set out under section I of this judgment.

Credibility of witnesses

20. The main witnesses in the present case are the plaintiff and Madam Chen.

21. At trial the plaintiff revealed himself as a clear-headed witness who answered questions carefully. He was able to grasp the questions and gave direct answers thereto. Although he liked to add many details that were not asked for, I consider him a veracious and reliable witness. In particular, the plaintiff had first-hand information on events which took place before 1987, when Madam Chen had yet to join the Retreat. Unless otherwise specified, in respect of occurrences before 1987, where there are discrepancies in the evidence given by the plaintiff and Madam Chen, I accept the plaintiff’s evidence except matters referred to in the latter part of paragraph (6) and paragraph (10) of his witness statement where he attempted to introduce Buddhist definitions.

22. The plaintiff left Hong Kong in 1982 or so. He later emigrated to the USA, returning to Hong Kong only occasionally during which he stayed at the Retreat. He began to take part in the management of the Retreat only after the deceased passed away. He has also admitted that he had no personal experience regarding the assets of the Retreat and of the deceased and their arrangements. In respect of this period, I place greater reliance on Madam Chen’s testimony and documentary evidence.

23. Madam Chen came across as a shrewd person when she made the opening submissions and cross-examined witnesses, but appeared evasive when being cross-examined, for example, when touching upon matters such as the man-and-wife relationship she had with the deceased, or whether the deceased had left the Retreat and given lectures in public places on Buddhism, or, despite repeated questioning by Mr Chong of Counsel, her steadfast denial of there being no handwritten instruction by the deceased on the subject of offering free medical attention and free medicine (note: the letter to the Chinese Medicine Council was not a handwritten instruction). During cross-examination, when Mr Chong put it to her that the Recognized Resident system would collapse if Recognized Residents could own the Retreat, she even gave answers which were simply irrelevant.

24. Madam Chen’s witness statements have not covered certain important matters, for example, the deceased issued the 2005 Notice because he knew he would soon re-incarnate, and he liked to lecture his disciples overnight on Buddhist teachings until 5 am.

25. Likewise, when cross-examining the witnesses for the plaintiff, Madam Chen failed to ask a number of important questions. For example, she did not ask the bank staff whether he had received an account opening form which was signed by the deceased and brought along by Cheung Wai Kuen(transliteration), nor did she ask the deceased’s disciples about the  work hours and rest hours of the deceased.

26. I appreciate that this is the first time Madam Chen becomes involvedin litigation and she is not familiar with litigation skills. However, in view of the matters set out in paragraphs 23 to 25, I have to carefully assess her evidence on individual issues.

27. Having heard all the evidence, I am of the view that, as far as the evidence on the marital relationship between Madam Chen and the deceased is concerned, it serves nothing but to humiliate Madam Chen and is of no assistance at all in resolving the issues and determining the credibility of Madam Chen. I do not adopt this evidence.

28. I do not think Madam Chen stirred up trouble out of selfish purposes or in order to misappropriate the deceased’s assets. This is borne out by the fact that, following the deceased’s death, she truthfully told fellow disciples what had happened at the hospital and had discussions with them, without intending to assume ownership of the money in the new account. Unless otherwise specified, I accept Madam Chen’s evidence.

29. Cheung Mou Dan(transliteration) and Wong Chun Hung(transliteration), witnesses for the plaintiff, have both passed away. They had known the deceased before the establishment of the Retreat and had some knowledge about the Retreat. Cheung Mou Dan was one of the donors, while Wong Chun Hung had known the deceased for some time and frequented the Retreat. They were merely the deceased’s followers, not his disciples. Pursuant to sections 47 to 49 of the Evidence Ordinance, Cap 8 of the Laws of Hong Kong, their written statements are admissible as evidence. The outcome of the present case would not confer upon them any personal benefit, and I see no reason why they would have wanted to lie. However, as they were quite advanced in age when they gave their written statements, I will rely on their statements only when there is other corroborative evidence.

30. The other factual witnesses (witnesses for the plaintiff and witnesses for Madam Chen will hereinafter be referred to as “PW” and “DW” respectively) each had their own stance. When they were in the witness box, they either challenged Mr Chong or Madam Chen or argued with either of them. Therefore, the testimonies of these witnesses were not entirely neutral. They also told the court matters that were not relevant to the case (for example, PW Chu Shuk Wah(transliteration) said Madam Chen had made a scene in the presence of the master and ten-odd people; Madam Chen and her witnesses said the plaintiff had reneged on his promise by not performing the terms of the 2005 Notice). Be that as it may, I am of the view that these witnesses have honestly told the court their observations and understanding of the matters. Although during cross-examination Mr Chong time and again criticized the witnesses for Madam Chen for refusing or not willing to answer questions, the fact is they did answer questions, only that those answers were not what Mr Chong had expected.

31. Mr Chong criticized the witnesses for Madam Chen (such as Cheung Wai Kuen, Chan Hon Cheung(transliteration), Lam Koon Kei(transliteration), Lai Kwok Fai(transliteration), Chan Fu Cheung(transliteration), Chan Tit Kwan(transliteration)) for giving evidence of identical content. Upon cross-examination, however, all of them denied having “copied” what other witnesses said. I find it hard to believe that these witnesses had not discussed their testimonies or “copied” oneanother’s testimonies. In fact, the witnesses for the plaintiff (such as Chu Shuk Wai(transliteration), Chu Shuk Ping(transliteration), Wong Ching Yu(transliteration)) had also “copied” one another’s testimonies. That said, I believe that the witnesses did so merely because they wanted to try their best to bring out the truth so as to avoid saying things inconsistent with the teachings of the deceased. As witnesses, they were all veracious but not entirely reliable. I shall turn to their evidence when I discussspecific issues.

32. Among the factual witnesses, I will accord greater weight to the evidence given by PWs Wong Ngan Tong(transliteration), Wong Ching Yu, Chu Shuk Wah, Chu Shuk Ping, Yiu Chung Ying(transliteration), Chan Fu Cheung and DWs Chu Wan Kam(transliteration), Cheung Wai Kuen.

33. PW Chu Shuk Wai was somewhat confused regarding time. Her recollection of the 2005 Notice was not accurate. After the deceased’s death, she had participated in some meetings of disciples. Without first getting a wholly clear picture, she talked about the contents of the 7 March and 10 April 2006 meetings in her witness statements. Although she was a veracious witness, I do not propose to rely on her evidence unless otherwise specified.

34. DW Chan Fuk Chueng gave more or less the same answer regardless of what he was asked about, and even claimed that it was what the deceased had said or that it was a consensus reached in the Buddhist Hall. The answers he gave showed that he did not understand the questions and only repeated what others said on the basis of the trust he had for fellow disciples. I do not rely on his evidence.

35. I shall examine the credibility of Wan Dan Wah (transliteration), So Chi Hung(transliteration), Cheung Wai Kuen, Cheng Kin Man(transliteration) and the doctor witnesses in Part F below when I discuss the issues regarding the new account.

36. Following the deceased’s death, his disciples had held several meetings which were audio-recorded. These recordings, the contents of which are not in dispute, are admitted as evidence.

A.   The sources of the deceased’s assets

A1.  The sources of the Hong Kong properties and money

37. Back in the 1960’s, the deceased was physically weak and needed a quiet place to cultivate himself in Buddhist practice and to treat his illness (see the statements of the plaintiff and the late PW Wong Chun Hung). At that time, the deceased’s wife Lin Yin Chi worked outside to earn money for the upkeep of the family. At that time, the deceased had yet to become a vajra grandmaster. He had no disciples and the maintenance he received was all from his fellow villagers.

38. There is no dispute that by 1961 or so the deceased already possessed the original site of the Retreat, on which wooden houses were built. The deceased acquiredLot 1243 through land exchange in 1962. The land exchange certificate expressly stated that Lot 1243 could only be used for private residential and religious purposes.

39. Around 1963, the main hall of Ching Yum Hok Kok (that is, the Retreat nowadays) was reconstructed. PW Yiu Chung Ying confirmed that his family, staff of his father and other natives of Chiu Chow and Swatow made donations to fund the expansion of the structure, such donation being evidenced by a donation record book (Exhibit D4). However, Mr Yiu, PW Chu Shuk Ping and family and the late PW Cheung Mou Dan all confirmed that the donations were made to the deceased and not for religious purpose.

40. In 1967, the deceased exchanged land for Lot 1244 but had to pay a land premium (New Grants nos. 4576 and 4601). The written record made by Mr Yeung Chun Pui (transliteration) on 12 October 1967 showed that the land premium and the fees payable were $35,000. This appears to exceed what the new grants required, but none of the witnesses could explain the difference in the amounts. However, of the said sum, $1,600 was donated by Mr Yeung. The deceased became the owner of Lots 1243 and 1244 from 1967 onwards.

41. In 1980, the deceased inherited the assets of his master Madam Ho Hong Nai (transliteration). Using this inheritance, he founded the Po Yin Buddhist Endowment Association Limited(“Endowment Association”) and purchased a conjoining unit in Causeway Bay as the address of the Endowment Association.

42. The aforesaid events all happened before Madam Chen joined the Retreat. With the plaintiff and his witnesses having corroborative evidence in the form of first-hand information,witnesses and documents, I find as a fact that the events set out in paragraphs 37 to 41 above did occur.

43. Thereafter, the deceased had received donations from his disciples and believers. Madam Chen emphasized in her opening address that the donations were for maintaining the deceased in the religious capacity of a vajra grandmaster, but she had no witness or evidence to support this allegation. Nor could she point out how much of the deceased’s money was obtained as a result of this religious capacity.

44. Furthermore, I am satisfied that the deceased had invested in foreign currencies and sold Buddhist figures and religious items. However, Madam Chen failed to prove how much of the donated money the deceased had used for these purposes or to what use the deceased had intended to put the proceeds of the investments and sales.

45. I find that the Hong Kong assets of the deceased had come from land exchanges, estate inheritance, donations made to him personally, personal investments, and sales of Buddha figures and religious items.

A.2  Origin of the Taiwan properties

46. There were three properties in Taiwan under the name of the deceased. They were the two properties situated at 4^th floor,No 47 Hu Dong Street (transliteration) and 4^th floor, No 49 Hu Dong Street (transliteration), Taipei, and Lot 72 of An Dong Street (transliteration), TaoYuan. However, neither in her pleadings nor in her statements did Madam Chen explain how these three properties had come about. Only at trial did she attempt to prove that they had come from donations made by disciples and believers. I do not take such evidence into consideration.

47. Even if I can consider it, the evidence shows that the Taiwan properties had come partly from donations made by disciples and believers and partly from the deceased’s own funds, with the ratios unknown.

B.   The purpose and use of Ching Yum Buddhist Retreat

48. Ching Yum Buddhist Retreat was initially the residence of the deceased and his family, including the plaintiff. It was where the deceased practised meditationand convalesced from illness.

49. The Retreat was registered as a temple on 22 May 1967 in accordance with the Chinese Temples Ordinance, Cap 153 of the Laws of Hong Kong but was not granted the exemption status of a charitable institution or trust of a public character pursuant to section 88 of the Inland Revenue Ordinance, Cap 112 of the Laws of Hong Kong. Only Lot 1243, which was used as a place of worship, enjoyed exemption from rates.

50. In 1971 and 1979, before Madam Chen joined the Retreat, the deceased filled out a Chinese Temple registration form in the capacity of an abbot. He described the Retreat as “managed single-handedly” by him, “a place where lay Buddhist monks self-practised”, “income was used on the self-practice of lay Buddhist monks”, and the “temple owner” was Lei Ting Kwong.

51. Thereafter, until the year of the deceased’s death, the renewal forms submitted to the Chinese Temple Committee were filled out by Madam Chen on behalf of the deceased and signed by the deceased. Their contents did not differ significantly from those set out in the preceding paragraph, but they confirmed that the structure was not used otherwise than as a temple and the names of the temple keepers were Cho Wai Fun, Wong Yau Hing and Madam Chen; that the temple would not charge any member of the public any fee or reward for worshipping or any other reason; that the income was applied to the repair and maintenance of the Retreat itself; and that the activities included provision offree medical attention and free medicine, religious and cultural exchanges among local and overseas believers and regular worships.

52. Besides, the Chinese Temple Committee would send people to inspect the Retreat from time to time. The inspectors were told by those who received them – whether the deceased, Cho Wai Fun or others – that the place where ashes of deceased persons and ancestral tablets were kept was available only for use by the disciples of the Retreat or their relatives and was not open to public application, and that the income was used to repair and maintain the Retreat itself (in 1995, 1998). The inspection report of 1986 even stated: “The ‘Retreat” is ordinarily used by disciples to study Buddhist practices. It occasionally takes charge of funeral praying sessions. Although the door [of the Retreat] is not wide open, Buddha worshipping by the public is welcomed.”

53. Furthermore, in an undated letter written by Madam Chen on his behalf, signed by him and addressed to “the Chinese Medicine Council of Hong Kong”, the deceased described the Retreat in these terms:

“Those who self-practise and lodge at the Retreat have to observe the background rules and perform voluntary work without break. The Retreat assumes full responsibility to clothe them, feed them, give them lodging, keep them when they are living and bury them when they pass away. … It is the principle of the Retreat not to sell vegetarian food, use Buddhism for commercial purpose or seek any kind of donations. All those who come to the Retreat for learning are treated the same no matter which part of the world they are from. The Retreat provides free medical attention and free medicine and has been doing this over the past several decades.”

54. It can be seen from the above documents, which are not in dispute and which had been in existence years before the litigation, that as its founder, the deceased had all along treated Ching Yum Buddhist Retreat as a monastery for self-practice, but disciples and believers were also welcomed to join the Retreat to practise Buddhism and worship Buddha.

55. At present, the Retreat comprises two parts: Open Altar (the red structure) and Closed Altar (the white structure).  Worshippers are allowed free access to and egress from the Open Altar, whereas the Closed Altar was where the deceased resided and received disciples and believers. There was a sign at the Retreat bearing the words: “Private property. No public access”.

56. Ching Yum Buddhist Retreat promoted Buddhism, held religious assemblies or ceremonies for conversion to Buddhism, helped chant scriptures free of charge, handed out vegetarian noodles on specified dates, printed scripture books and placed them at the Open Altar for use by Retreat visitors, but no monk/nun played host there. According to PWs Wong Ching Yu and Chu Shuk Ping, the Retreat never preached Buddhist teachings to the outside world,nor were monks/nuns invited to the Retreat to talk about Buddhism. The deceased only gave lectures to his disciples (that is, “the Kei Jes”（「其者」）). A disciple who wanted to meet the deceased had to make an application. Even Madam Chen has admitted this. In her affirmation, Madam Chen admitted that the studies and practices by the deceased and the Recognized Residents were done in complete isolation from the outside world, and that the disciples and believers followed the deceased and not a religion.

57. Based on the photos provided by Madam Chen, I believe that the deceased had blessed the believers at the car park of Ching Yum Buddhist Retreat. Apart from that, Madam Chen was only able to point out that the deceased had been to the Convention Centre once and had visited the residence of a lady in 1999 to talk about Buddhist teachings. I do not think that these isolated incidentswere capable of turning the Retreat into a place open to the public or where Buddhism was promoted to the outside world.

58. I accept the evidence of PWs Yiu Chung Ying and Chu Shuk Ping that all those who went in and out of the Retreat were natives of Chiu Chow or Swatow who introduced the Retreat to oneanother, and none of them was from anywhere else.

59. All of the witnesses for Madam Chen pointed out in their written statements that the Retreat did not rely on publicity and the believers came from everywhere, and therefore the Retreat was a “monastery for all directions”. But the term “all directions”did not appear in the handwritten instructions or letters of the deceased. DW Shum Kit King (transliteration) said there was a handwritten instruction but she never produced it, so it cannot be relied on. If “monastery for all directions” signifies that the disciples and believers came from places other than Hong Kong and Taiwan, which I accept this as true, “monastery for all directions”bears no other meaning in the present case.

60. I do not rule out that certain people (for example, a movie/TV star) could have gone to the Retreat to worship without having been introduced. But without introduction, believers were not allowed to casually enter the Retreat (for example, see the evidence of PW Wong Ching Yu). Even DW Lam Koon Kei, who said that the Retreat was fully open and that he met the deceased without having been introduced by disciples, admitted during cross-examination that he went to the Retreat through someone’s introduction. At the very least,those who attended worships held in the 7^th lunar month and on the 1^stand 15^th days of each lunar month were confined to disciples and believers and members of the public introduced by the disciples and believers (see paragraph 10.1 of Madam Chen’s affirmation dated 8 December 2011). However, according to the evidence of Wong Ching Yu, the so-called introduction was in fact informal. I am confident that it was not difficult for sincere worshippers to be introduced to worship at the Open Altar.

61. The deceased had disciples outside Hong Kong. But Madam Chen also counted in disciples of disciples and hence overstated the number of disciples as one million. During cross-examination, she admitted that there were about 200 disciples in Taiwan whereas the number of disciples in Hong Kong was unknown.

62. The various donation record books show that disciples and believers had made contributions to Ching Yum Buddhist Retreat. PW Chu Shuk Wai said that the donations Yiu Wing Kei and Ma Tin Yuen made for the main hall were for the sake of seeking fortune and not for charitable purpose. This tallies with what had been written in the “Table of Summary of the Life of Mr Lei Ting Kwong”: “After Typhoon Wanda was gone, asked people who sought fortune to rebuild”. PWs Chu Shuk Ping and Yiu Chung Ying, who gave evidence from personal experience, are more credible than, for example, Chu Wan Kam who repeated the deceased’s statement that some senior disciples assisted the deceased to collect donations from the believers.

63. Witnesses for the plaintiff, namely Wong Ngan Tong, Wong Ching Yu, Chu Shuk Wah, Chu Shuk Wai, Chu Shuk Ping and Wong Yick Kwan, all said that the monies given by the disciples and believers to the deceased were for his personal maintenance. Wong Ngan Tong went so far as to equate this kind of maintenance with tuition fee payment.

64. On the contrary, Madam Chen was unable to prove that the donations were made to the Retreat as an “institution”, or how much was donated.

65. Whether the Retreat had helped the poor is a matter of controversy. I accept that on his birthday each year the deceased would direct that the red packets he had received be given in the name of the Retreat to Po Cheung Association for the Elderly (‘Elderly Association’). The remaining donations were mainly madeto the relatives of the deceased.

66. Only one witness for Madam Chen said that the deceased had assisted him while he was unemployed. I accept this to be the truth, although this shows that financial assistance was provided to disciples.

67. The Retreat had also handed out free Chinese medicinal powder (part of it being funded by Madam Chen herself) or given disciples or believers free medical attention by Chinese medicine practitioners Wong Ngan Tong and Wong Ching Yu at the instruction of the deceased, but there was no resident medicine practitioner at the Retreat, and neither the deceased nor Madam Chen was a qualified Chinese medicine practitioner (see the evidence of Madam Chen, PW Chu Shuk Wai, PW Chu Shuk Ping, DW Cheung Wai Kuen).

68. The deceased had sold Buddha figures and religious items but there is no evidence that it was done for the Retreat.

69. I find that the Retreat was a privately-run monastery where lay Buddhist monks self-practised. It promoted Buddhism but did not rely on publicity to attract believers. Believers included people from places other than Hong Kong and Taiwan. They were not allowed to freely enter the Retreat unless they had referrals. The disciples and believers did make donations but they were made to the deceased personally or the organizations he designated (such as the Elderly Association). The deceased gavelimited financial assistance to his disciples; the Retreat gave free medical attention and free medicine to a limited extent, printed scripture books for those visiting the Retreat and maintained ancestral tablets for the dead, but was not open to the public.

C.   Are the three items of the deceased’s assets held on charitable trust?

C.1  Legal principles regarding charitable organizations and charitable trust

70. First of all, I would like thank Mr Chong and Ms Wong, Counsel for the plaintiff, and Ms Tong for the Department of Justice, for concisely and succinctlystating the relevant legal principles and, in their submissions, translating those principles into Chinese for the benefit of Madam Chen. The following principles are all extracted from their submissions.

71. In Cheung Man Yu v Lau Yuen Ching & Ors [2007] 4 HKC 314, Tang VP (as he then was)pointed out (in para.24) that to qualify as a public charity, three conditions must be satisfied:

(1)  The purposes of the institution must have charitable character;

(2)  The institution must exist for the benefit of the public;

(3)  The institution must be exclusively charitable.

72. At law, there are four major types of charity: for the relief of poverty, for the advancement of education, for the advancement of religion; and for other purposes beneficial to the community but not falling under any of the preceding types: The Commissioners for Special Purposes of the Income Tax v Pemsel [1891] AC 531, 583.

73. In Gilmour v Coats [1949] AC 426, the House of Lords held that a group formed by nuns who lived in seclusion and devoted themselves to prayer and meditation was not, at law, for a charitable purpose because the benefit brought about by praying for others and setting examples of a pious and upright life was too vague and could not be proved.

74. Public interest means that the trust must be for the benefit of the community or an appreciably important section of the community. Two closely related questions must be considered to determine if this requirement has been satisfied: first, whether the purposes of the trust confer a benefit on the public or a section of the public; and second, whether the class of persons eligible to benefit constitutes the public or a section of it. See Cheung Man Yu v Lau Yuen Ching & Ors [2007] 4 HKC 314, para.26；Tudor on Charities (8^th Ed), page 5.

75. A trust for the benefit of private individuals(such as the descendants of named or identified persons) would not be regarded as a charitable trust for public benefit. In order to constitute a public benefit, an ‘appreciably important’ or ‘substantial’ section of the public must be in a position to benefit from the charitable purpose. In Oppenheim v Tobacco Securities Trust Co Ltd [1951] AC 297, Lord Simonds pointed out that the phrase ‘section of the community’ indicates that (1) the possible beneficiaries must not be numerically negligible; and (2) the quality which distinguishes them from other members of the community so that they form by themselves a section of it, must be a quality which does not depend on their relationship with a particular individual or particular individuals.

76. For example, a trust established for the welfare of relatives rather than for a village is not charitable as it lacks the ‘public’ element: Ip Cheung-kwok v Ip Siu-bun and Others [1988] 2 HKLR 247, 253C.

77. The advancement of religion is a recognized charitable purpose, although religious trusts are still required to pass the test of public benefit: Gilmour v Coats [1949] AC 426, 446 and 455.  The following examples did not pass this test:

(a) A gift for the Church of England to conduct religious ceremonies in a “private” chapel was not charitable because no benefit to the public could be accrued: Hoare v Hoare (1886) 56 LT 147.

(b) The promotion of individual praying activities in private could not be charitable because it was for the mere purpose of improving the individual: Re Joy (1888) 60 LT 175.

78. Religion may be advanced or promoted in a variety of ways, for example, by promoting it and spreading its teachings among mankind, and to take positive steps to sustain and reinforce religious belief: United Grand Lodge of Ancient Free and Accepted Masons of England v Holborn Borough Council [1957] 1 WLR 1080, 1090. Other ways to promote religion include holding religious services, pastoral or missionary work, giving religious instructions, edifying and nurturing non-believers, healing faith, etc.

79. In Re Warre’s Will Trust [1953] 1 WLR 725, Harman J, applying Gilmour v Coats (supra), held that an Anglican retreat house was not a charitable institution, on the basis that he defined the term “retreat” as a retirement from worldly activities for a period of time during which the religious activities of praying, meditating and cleansing the soul were carried out. The judge took the view that such activities, while benefitting the person who undertook them, were not charitable activities from which any public benefit could be derived. That decision, although approved by Goff J in the subsequent case of Re Banfield [1968] 1 WLR 846, has been criticised as unsatisfactory on the ground that a retreat house may be open to the public and may conduct religious services and devotional addresses. The crucial test is whether the community in the retreat house “opens out to reach the public” (see Picarda, The Law and Practice Relating to Charities (4^th Ed) p.128; Tudor on Charities (8^th Ed) pp.84-85).

80. A gift for the benefit or support of clergy or preachers is a charitable object, provided that the gift is for the office-holder for the time being, and not restricted to the individual filling the office at the time (see Picarda, The Law and Practice Relating to Charities (4^th Ed), pp.107-108).

81. In Cheung Man Yu,the Court of Appeal laid down the following additional principles applicable to charitable institutions for religious purposes:

(a) The institution must prove that its religious purposes contain the element of public benefit in order to qualify as a charitable trust. (paras.24-26),

(b) Money is to raise specifically for the building of a place for public worship, which satisfies the requirement of a charity (para.39),

(c) Activities for the advancement of religion will not fail to qualify as a charity for lack of publicity or advertising. Religion may be advanced by word of mouth (para.40),

(d) If a building has been built for the advancement of religion, and there is the requisite public benefit, a legal charity can be established. It does not matter whether the person establishing the institution or its keeper knew that they had established a charitable trust. Nor does it matter that no formal declaration of establishment of trust has been made. Subsequent events may throw light on whether a charitable trust has been established, but they cannot by themselves alter the nature of the trust or convert a properly constituted charitable trust or its assets into a private trust or private property (para.46),

(e) A charity is not defined by its scale or resources. A legal charity may be small or run by a few people and does not have to be a public organization. Even if the building is modest, this does not detract from its religious character (paras.63, 90).

Exclusively charitable in character

82. An institution has to be exclusively charitable in nature to constitute a charity in the legal sense. It follows that a trust for purposes which include but are not limited to charity can never qualify as a charity (Picarda, The Law and Practice Relating to Charities (4^th Ed), p.328).

83. However, if the activities and benefits in question can properly be regarded as carrying out charitable purposes, and the ‘means’ or ‘consequences’ are incidental or conducive to the advancement of religion and not inconsistent with the nature of the charity, the charitable purpose will not be subverted: Picarda, The Law and Practice Relating to Charities (4^th Ed), pp.333-343. Examples include the keeper of the institution and her disciples residing on the premises, or the promotion of vegetarianism by the institution: Cheung Man Yu, paras.60-61.

Legal structure of charities

84. A charitable trust does not have a separate legal personality(unlike the case where a corporate structure is adopted). An enforceable charitable trust, like other private trusts, requires the setting up of unincorporated associations or companies limited by shares or guarantee. There must be certainty of words, certainty of subject matter and certainty of objects in the trust documents (see Picarda, The Law and Practice Relating to Charities(4^th Ed), pp.261, 319, 327). The trustees are under a duty to apply the funds to charitable purposes and are not at liberty to apply the funds to non-charitable purposes.

85. Furthermore, a charitable trust of land must, in order to be valid, be declared and proved in writing signed by the person capable of declaring such trust, or be declared and proved by a will made by that person: section 5(1) of the Conveyancing and Property Ordinance (Cap. 219); Chap Yick Clansman’s Association Ltd v Mok Fai [1997] 2 HKC 557.

86. Relying on paragraph 46 of the judgment in Cheung Man Yu,Mr Chong submitted that, in order to determine whether Ching Yum Buddhist Retreat was a charitable trust, the relevant time was when the Retreat was established, ie around 1962; and that what happened thereafter could at most help the court decide whether, if the Retreat was a charitable trust, the deceased had breached the charitable trust.

87. The SJ did not agree. Ms Tong submitted that even if the Retreat was not originally built for a legally accepted charitable purpose, the court may still find that a legally recognizable charitable trust had been established at some point during the lifetime of the deceased if there is evidence of the intention of converting the Retreat into a place for public worship or otherwise for the requisite public benefit.

88. I agree with Ms Tong. However, as Madam Chen had not in her pleadings averred in the alternative that the Retreat had at any time been converted into a charitable trust, the above submission made by Ms Tong is not applicable.

C2.  The parties’cases regarding charitable trust

89. The plaintiff argues that all three types of assets belong to the deceased. Madam Chen, on the other hand, contends that they were ‘religious assets’ donated to the Recognized Residents (including the deceased) of the Retreat by the disciples and believers from all directions, both locally and overseas, for the purpose of promoting Buddhism. The deceased had also often told the disciples and believers that those assets were owned by the Recognized Residents. Therefore, Madam Chen argues that the assets belong not to the deceased but to a charitable trust held by the deceased on behalf of the Recognized Residents.

90. I have to point out that ‘religious asset’ has no specific definition at law and does not require separate consideration. Madam Chen’s assertion,  that the assets are owned by the Recognized Residents but also belong to a charitable trust, is self-contradictory, because the former are personal assets whereas the latter are for public benefit. I shall deal with each assertion as an alternative for what it is worth.

91. I shall now analyze the three items of assets one by one. Apart from the new account, the burden is on Madam Chen to prove that the assets do not belong to the deceased. However, apart from some donation record books and relevant simple accounts that she has produced, much of Madam Chen’s testimony is no more than hearsay based on what the deceased had told her.

C3.  Do the deceased’s properties and money in Hong Kong belong to the charitable trust?

92. Judging by the source of the assets, it can be seen from the analysis in Part A hereinabove that not all the assets of the deceased came from donations. Where the assets were from donations, the donors specified that they were for the deceased personally and not for him in his religious capacity.(Picarda, The Law and Practice Relating to Charities (4^th Ed), pp.107-108)

93. Judging by the purpose for which the assets were held, there is no evidence to show that any of the gifts (including the wooden hut that Madam Chen said was given by a Buddhist monk and the estate of Madam Ho Hung Nai) were given on condition that they be put to charitable use. Nor was it specified that the donations the deceased received had to be used for promoting Buddhism or for charitable purposes. Even where donations were made to the Elderly Association, there is no evidence that the Elderly Association, being merely an institution run by the deceased’s second elder brother, was a charitable institution.

94. Judging by the use of the assets, there is no dispute that the deceased did not have to consult anyone. He accumulated wealth for himself and used the money on personal investments. He had even tried to deal with his assets by means of a will and the 2005 Notice.  Several months before his passing, the deceased discussed with his disciples how to deal with the $30 million, but he retained the decision-making power. When he was in hospital, he still hoped that the plaintiff could obtain the $30 million to be used for specified purposes. It is clear that the deceased regarded the assets as his own.

95. Even if the ‘coming from all directions, going to all directions’ that Madam Chen talked about refers to where the assets came from and went to, the evidence does show that the money of the deceased had gone different ways. For example, he took $100,000 from the estate of Madam Ho Hung Nai and gave it to the plaintiff. In 2004, he paid Madam Lin and her two children $1,000,000 each from his personal account. In 2004 and 2005, he gave money to the child/children of his daughter/s and his nephew/s. In 2005, he remitted money to the plaintiff upon his request and gave money to his nephew/niece by blood on the Mainland and to the Elderly Association (Exhibit D5). He had installed air-conditioner/s for the plaintiff and his family who were temporarily residing at the Endowment Association. He only paid the Recognized Residents a small amount of allowance and gave limited free medical attention and medicine and financial aid to his unemployed disciples.

96. These were not for purely charitable purposes, still less for purely religious purposes. It cannot be said that they benefitted an appreciably important section of the public. Moreover, the beneficiaries were all related to the deceased and the requisite public element was lacking: Oppenheim v Tobacco Securities Trust Co Ltd, Ip Cheung Kwok v Ip Sui Bun. Whether one is to adopt the explanation given by Madam Chen on the phrase ‘breaking up with close relatives’ (ie severing secular family ties) or that given by DW Cheung Wai Kuen (ie treating everyone equally, full of kindness and love, addressing each other not as father-and-son but as master-and-disciple), the deceased had not broken up with his six relatives, because it is clear that he treated relations and non-relations in different ways when using his assets.

97. In my judgment, the Hong Kong properties and money do not meet the three conditions required of charitable trusts as set out in Cheung Man Yu.

C4.  Is Ching Yum Buddhist Retreat held oncharitable trust?

98. I have discussed the purposes for which the Retreat was established and how the deceased dealt with it, conducted missionary work and helped the poor.

99. It is from the documents that came into being prior to the litigation that one can learn most about the purpose for which deceased established the Retreat. I have already held in Part B hereinabove that the Retreat was a privately run temple and a monastery for self-practice. Its purpose was not purely charitable in nature. Nor did it exist for public benefit: Re Warre’s Will Trust.

100. Even in the form/s Madam Chen filled out and submitted to the Chinese Temple Committee three months after the passing of the deceased, she still stated that the Retreat was a monastery for self-practice, that the Retreat was not open to public, that it did not accept public donations, that its owner was the deceased, and that one could only be a Recognized Resident if one had not broken any rules of the Retreat.

101. How did the deceased deal with the Retreat? There is no dispute that in the lectures he gave, the deceased did mention “coming from all directions, going to all directions”, but this phrase had not been recorded in the handwritten instruction or any document. Witnesses such as PW Wong Ngan Tong and DWs Lam Koon Kei and Lai Kwok Fai were unable to put the phrase in context. DWs Lam Koon Kei and Cheung Wai Kuen, Shum Kit King, Chan Tit Kwan and Chan Fu Cheung drew on their own understanding. They even interpreted the term “monastery for all directions” by saying that the deceased meant that the monastery was “a property jointly owned by the Recognized Residents” and not a personal property of the deceased so that it could be passed on for the purpose of promoting Buddhism.  If what they said were true, properties of the Recognized Residents were private properties and not charitable in nature.

102. As a matter of fact, by means of the will made in 1985 (which had since become ineffective), the deceased handed the Retreat to Cho Wai Fun without giving her the beneficial interest therein by way of gift, and instructed her to hand the property to another Recognized Resident, and his assets were to be dealt with as intestate at law. This shows that the deceased regarded the Retreat as his personal property.

103. The deceased, residing at the Retreat as a Recognized Resident and the abbot, was conducive to the advancement of the religion: Cheung Yu Man, at paras.60-61). However, as only one of the two buildings had such effect and it was not open to public, one cannot say that it only had such a conducive effect, still less that it existed for charity and the public. It was therefore inevitable that only one of the land lots of the Retreat could be exempted from rates pursuant to section 36(1)(d) of the Rates Ordinance, Cap 116 of the Laws of Hong Kong.

104. As regards missionary work, the Retreat welcomed believers taking part in worship, but it was not a place of worship maintained for public benefit, nor was it its main purpose to promote the advancement of Buddhism. It promoted Buddhism only to its disciples or the people they brought there but was not for public benefit: Oppenheim v Tobacco Securities Trust Co Ltd.

105. Madam Chen said the deceased named his disciples “Kei” （「其」）to signify that they had to be loyal to the deceased and not to Buddha. I shall leave aside for the time being the question of whether such personal worship constitutes a religion. The Recognized Residents devoted themselves to practise meditation and never took part in secular affairs. The deceased did not readily permit them to leave the Retreat and go out. It can be said that they were isolated from the outside world (see the affirmation of Madam Chen dated 9 July 2008). The situation is similar to that in Gilmour v Coats where the praying nuns were cloistered for the purpose of self-practice and not for seeking public benefit.

106. As regards helping the poor, as Chu Shuk Wai pointed out, it was financially impossible to consider doing charity work during the 1960s when the economic conditions were dire. Further, even if the Retreat had provided free medical attention and free medicine and relief money, they were only given to a handful of people who were related to the deceased and not to the general public.

107. In the past 50 years, the Retreat never departed from the objectives for which it was established. The way the deceased dealt with the Retreat, conducted missionary work and helped the poor showed that he regarded the Retreat as a privately owned self-practice monastery which did not exist for public benefit. I find that it was not a charitable institution.

108. Even if the Retreat was a charitable institution, the relevant trust over land, with no written declaration or proof, fails to meet the requirement of section 5(1) of the Conveyancing and Property Ordinance and is therefore unenforceable.

C5.  Are the properties in Taiwan held on charitable trust?

109. The analysis set out in Part A2 hereinabove shows that it is not clear which part of the Taiwan properties came from donations.  Whether the properties are charitable in nature has to be determined by the laws of Taiwan. Besides, as the properties involve foreign immovable assets, their interests are to be decided by the lex loci: Dicey, Morris and Collins on Conflict of Laws (15^th Ed), Vol 2, paras.23R-062 to 23-064. However, Madam Chen has not provided the court with the laws of Taiwan for consideration. Even if the laws of Hong Kong are applicable, it is only known that two conjoining properties were used for the purpose of Taipei Hostel, and there is no evidence to prove whether the properties in Taiwan satisfy the three conditions set out in Cheung Man Yu regarding charitable trusts. Paragraph 108 hereinabove also applies to the properties in Taiwan.

C6.  Did the deceased hold the assets as a trustee for the Recognized Residents?

110. The evidence of the plaintiff’s witnesses indicates that the purpose of the donations was for maintaining the deceased and the individuals or organizations designated by him. There is no evidence that the donations were for maintaining the Recognized Residents. PW Wong Ching Yu testified that she had never heard that the assets of the Retreat were jointly owned by the Recognized Residents.

111. Putting aside for now the question of the validity of the 2005 Notice (this will be discussed in Part D hereinbelow),  neither the intent nor conduct of the deceased during his lifetime shows that he was holding the assets and properties as a trustee for the Recognized Residents.

112. First, before his death, the deceased had sole power to decide how the assets were to be used. No Recognized Residents or disciples could question his decisions. All they could do was execute his instructions.

113. Second, donations had been made before the establishment of the system of Recognized Residents. Prior to 1968, the deceased had not yet practised as a member of the Trantrism Sect. It was only in 1976 that he was given the mantle of the sect he belonged to and began to take on disciples. DW Cheung Wai Kuen also agreed that the deceased began to take on disciples only in the 1970s. Cho Wai Fun, the earliest Recognized Resident now living, arrived at the Retreat in 1970 to study. The Rules of the Retreat came into being only about 20 years after the establishment of the Retreat (CB14, 15, 19. One can tell from the telephone number/s on the letter that it pre-dates Madam Chen’s arrival at the Retreat).

114. Third, even for the Recognized Residents, all that the deceased did was provide them with food, accommodation and medical benefits, keep them when they were living, and bury them when they passed away. The Recognized Residents had no financial autonomy. Had the Recognized Residents enjoyed any beneficial interest from the outset, it would not have been necessary for the deceased to make the 1995 will or issue the 2005 Notice and indeed he would not have been entitled to do so.

115. In my judgment, the deceased did not hold the assets for the Recognized Residents as a trustee.

D.   If the deceased’s assets had not been held on charitable trust, was the 2005 Notice a will by virtue of which the Recognized Residents became beneficiaries?

116. Madam Chen claims that the 2005 Notice was a will. On 24 September, ie the day following the making of the alleged will, the deceased held a video conference during which he announced the content of the 2005 Notice to his disciples and also introduced Wong Yau Hing as a Recognized Resident. On 25 September, the 2005 Notice was faxed to the Retreat.

117. Mr Chong has not disputed that the format of the 2005 Notice satisfies the legal requirements of a will. The issues are: Is the 2005 Notice indeed a will? If it is, does it have any legal effect? What assets does it grant? Is it a gift? To whom is the estate given?

D1.  Legal principles

118. Where words allow for more than one construction, the court will adopt the construction that tends to make the document effective.

“… Where words are capable of two constructions, even in the case of a deed, and much more in the case of a will, it is just and reasonable that such construction should be adopted as tends to make the document effective and the rule is to construe a will according to this maxim, giving effect as far as possible to every word, and giving effect to the gift if it is possible to do so rather than to declare it void for uncertainty and so defeat the testator’s intention.” Williams on Wills (9^th Ed), para.53.2.

D2.  Is the 2005 Notice a will?

119. Neither in the 2005 Notice itself nor during the aforesaid video conference did the deceased state that the Notice would only take effect after his passing. Madam Chen claims that, feeling that he would soon re-incarnate, the deceased contacted the Bank and made the 2005 Notice. However, it was only 8 years after his death that this piece of evidence — an important one which helps establish the requisite testamentary intent on the part of the deceased — was disclosed for the first time in the court. Besides, PW Wong Ching Yu testified that on the evening the deceased passed away, Madam Chen did not mention that the 2005 Notice was a will. This renders Madam Chen’s claim even more suspicious. I do not accept what she said about this.

120. Having made a will back in 1995, the deceased must have known that only by means of valid legal documents would his wish be honoured after his death. As late as January 2006, when the deceased was convalescing at Parc Palais, Madam Chen suggested to him that he deal with $30 million by way of a will, but he refused and even said “it is better to distribute [the money] now” than to hand it to the Retreat. It appears that the deceased did not intend to make a will.

121. If it had indeed been the deceased’s intention that the 2005 Notice would take effect only after his passing, it would not have been necessary for him to announce in advance the content of the 2005 Notice during the video conference.

122. On the other hand, judging by the display of the Wong Yau Hing Notice by the deceased on the day of the video conference, it would appear that the 2005 Notice had already taken effect. It was said that at that time, the deceased instructed his disciple Kan Wang Doe (transliteration) by saying: “Why do you have to work so hard? Wong Yau Hing has been in Hong Kong and residing in the Retreat for five years. She is already one of the bosses of the Retreat and owns one-third of the interest (‘the underlined words’). You work so hard to make money and yet still cannot compare with her!” Madam Chen submits that the “bosses” had the right to make decisions and right of ownership (ie title to property). If this were true, Wong Yau Hing would at that time have already owned one-third of the interest in the Retreat.

123. PW Wong Ngan Tong, the father of Wong Yau Hing, was a witness relevant to the video conference. Although he was already 79, he was clear-headed. Although the 2005 Notice might benefit his daughter, he had no personal interest therein. He gave an honest account and was a reliable witness. Unless otherwise specified, I accept his evidence.

124. Wong Ngan Tong confirmed that the video conference took place as usual during the weekend. The deceased stated the content of the 2005 Notice orally, but Mr Wong did not recall the deceased having said the underlined words. It was Mr Wong’s understanding that the three Recognized Residents referred to Madam Chen, Wong Yau Hing and Cho Wai Fun. He also confirmed that Wong Yau Hing as a Recognized Resident had the right to ‘keep and hold’ the deceased’s assets.

125. The plaintiff was not present at the video conference, but by way of cross-examination he raised doubts as to whether the deceased had said the underlined words. I do not think that the deceased had said the underlined words, for the following reasons:

(a) The deceased was in full control of financial matters both before and after he made the 2005 Notice. He could not possibly have regarded Wong Yau Hing as a boss.

(b) If what Madam Chen said regarding ‘breaking up with close relatives’ and ‘coming from all directions, going to all directions’ were true, it would have been impossible for the deceased to regard anyone as the boss of his assets.

(c) DW Wan Dan Wah was going in and out of the kitchen during the video conference and did not clearly hear the context of what was being said. It was only under cross-examination that she suddenly remembered that the deceased had said something relating to the title to the property before he died, but she was unable to state the context of it. I do not think I can rely on her evidence in this regard.

(d) The evidence of DW Cheung Wai Kuen cannot be relied on as he was only in the vicinity during the video conference and did not pay close attention to the content of the meeting. It was said that after the meeting the deceased repeated the content of the meeting to him and others. I am not convinced why Cheung Wai Kuen would remember those words, particularly when he was not a beneficiary or trustee.

(e) The testimonies of Madam Chen were not entirely consistent:

(i) Lee Yuk Fei (transliteration) heard the deceased say ‘to be jointly inherited by the three Recognized Residents’ and ‘jointly owned’ and mention ‘one-third’. But she could not quite remember that he said ‘one-third boss’ or ‘one-third property right’.

(ii) The video conference was one of the regular meetings. DW Lee Yuk Fei was unable to convince me why she could still remember the content of that meeting when she was invited to give a written statement for the first time after three years. She said there was an audio recording and she had made her own record, but neither of these was adduced as evidence.

(iii) Tsui Ngai Ning heard ‘Wong Yau Hing has ownership right to one-third of the assets’ and was not sure if ‘jointly inherit’, ‘jointly owned’ or ‘one-third boss’ had been said. She had made notes but they were not adduced as evidence.

(iv) Yau Keng Cheung (transliteration) heard ‘ownership to be handed to the three Recognized Residents to own jointly’ and ‘one-third boss’ (which was not recorded in his witness statement) but did not hear ‘jointly inherit’. He also admitted that what was recorded in the statement regarding the content of the video conference reflected his understanding of what the deceased said on that day and did not refer to the exact words uttered by the deceased. Nor did the deceased read out verbatim the two Notices.

126. I am of the view that, honest as they were, the witnesses for Madam Chen merely told the court their own understanding of the content of the video conference. It is therefore unsafe to rely on their evidence in this regard. I consider it more likely that the deceased only told off Kan Wang Doe and made an announcement in accordance with the content of the two Notices. Madam Chen has not been able to prove that he had said the underlined words.

127. On the other hand, there is circumstantial evidence that it may be the case that the 2005 Notice would only take effect after the passing of the deceased, just as the 1995 will would only give Cho Wai Fun the lifelong benefit of residing at the Retreat after the passing of the deceased.

128. Besides, the 1995 will accords with the way the deceased had, as shown in the handwritten instruction, all along treated the Recognized Residents as far as financial provisions were concerned, namely they were only given care and upkeep, clothing, food, accommodation and medical benefits during their lifetime and burial upon their passing. They also received several thousand to one hundred thousand dollars when they had been residing there for a certain number of years and met certain requirements [CB131], but never had the right to own or inherit assets. This has been confirmed in the witness statements of Madam Chen, Cheung Wai Kuen and Chu Wan Kam. Wong Ching Yu has also confirmed that she had never heard that assets of the Retreat were jointly owned by the Recognized Residents.

129. The issue of the 2005 Notice by the deceased did not serve to enlarge the right of the Recognized Residents to manage and use his assets. Furthermore, following the issue of the Notice, the deceased continued to hand out money as gifts and control assets. He did not agree with the suggestion of his disciple to inject $30 million into the Retreat; instead, during his hospitalization and in the presence of Madam Chen, he instructed that $30 million be given to the plaintiff and also allowed the plaintiff to use $20 million thereof for investment. Even though he opened a new account, he did not expressly say that the Recognized Residents were to be given $14,300,000.

130. All things considered, I draw the inference that it was not likely for the deceased to have passed the assets to the Recognized Residents with immediate effect or set up a trust by means of the 2005 Notice. His intention was that the 2005 Notice would only take effect upon his death. Pursuant to section 5(2) of the Wills Ordinance, Cap 30 of the Laws of Hong Kong, I find beyond reasonable doubt that the 2005 Notice is a will.

D3.  If the 2005 Notice is a will, is it valid at law?

131. Madam Chen and her witnesses (including Cheung Wai Kuen) repeatedly emphasized that it was the deceased’s wish that the Recognized Residents as a ‘group’ would continue to be in place. It follows that the ‘Recognized Residents’ referred to in the 2005 Notice were not confined to the people who had already been identified as at the date of the deceased’s passing, but also included persons unknown who would come into being in the ever-changing and infinite process.

132. As the deceased’s estate was not held on charitable trust, the number of beneficiaries was uncertain or ever-changing; each of the Recognized Residents had an interest for life only and did not enjoy an absolute right to own the deceased’s estate. The deceased’s estate would perpetuate, which would violate the rule against perpetuity: Williams on Wills (9^th Ed), paras.53.3-53.7 and 94.12；IpCheung Kwok v Ip Siu Bun & Ors[1988] 2 HKLR 247; Lau Leung Shi v Lau Po Tsun (1911) 6 HKLR 149.

133. I find that, even though it is a will, the 2005 Notice is void for violating the rule against perpetuity.

D4.  What assets did the 2005 Notice grant?

134. If I am wrong about this and the 2005 Notice is in fact valid at law, what assets does it cover? Mr Chong questioned whether the gift covered all ‘movable and immovable assets’ under the deceased’s name or only the ‘movable and immovable assets’ of ‘Ching Yum Buddhist Retreat’.

135. I have no doubt at all about the subject matters of the 2005 Notice because the deceased separated the three items with back-sloping commas:

(1) Land Lots Nos. 1243 and 1244 and their superstructure Ching Yum Buddhist Retreat;

(2) the movable assets under the deceased’s name (such as money);

(3) the immovable assets under the deceased’s name (such as the properties in Taiwan).

Put simply, the 2005 Notice covers all assets of the deceased.

D5.  Does the 2005 Notice make any gifts?

136. Whether gifts were made depends on the meaning of the words ‘possess the interest to keep and hold’. The deceased had never explained what they meant, and the witnesses interpreted the 2005 Notice solely according to their own understanding. Therefore, I will only use their evidence to test whether, as seen by an ordinary person, there is any ambiguity in the literal meaning of the words, or whether there is any circumstantial evidence that has to be considered. The interpretations given by the witnesses cannot fetter the court’s right to interpret the words.

137. According to Mr Chong, “interest” is a kind of benefit, whereas “keep and hold” suggests a responsibility. The two go against each other. Counsel submitted that, as the deceased did not expressly say that the assets referred to in the Notice were to be given to the Recognized Residents, the Notice does not confer any property right or benefit on the Recognized Residents; the Recognized Residents only had the right to protect Ching Yum Buddhist Retreat and its properties and benefits which, however, were not given to them as gifts.

138. In my view, the phrase ‘possess the interest to keep and hold’ is capable of the following interpretations:

(a) The word “interest” is not qualified and therefore refers to the legal and beneficial interests in the assets, which is what Madam Chen called ‘property right’. ‘Keep and hold’ was a term that the deceased had used many times to spur the Recognized Residents and disciples on [Rules of the Retreat, CB22, 124, 207, B4/1639], but he had never explained the term. It was featured in the Notice whereby Chu Shuk Ping was appointed as a Recognized Resident. According to Chu Shuk Ping’s testimony, to ‘keep and hold’ is to do general jobs such as cleaning, cooking, plant-watering etc. Therefore, in my view, the ordinary and natural meaning of ‘keep and hold’ is ‘protect and maintain’. The deceased gave property rights on the one hand and required protection and maintenance thereof on the other.

(b) “Protection and maintenance” is the main purpose, and possessing interest (as opposed to property right) is merely for achieving that purpose.  It is akin to a trust established for a purpose.

(c) The deceased only gave the Recognized Residents an option to shoulder the responsibility of protecting the Retreat, instead of imposing the legal responsibility on them. Had the deceased intended to give the Recognized Residents a ‘right to own’ and ‘the duty to protect and maintain’ to the Recognized Residents, a back-sloping comma should have been inserted between the words ‘interest’ and ‘keep and hold’ to indicate that the two co-existed. This is the interpretation that Mr Chong urges the court to accept.

139. I take into account the deceased’s usual style during his lifetime, namely that he would take care of the Recognized Residents only to the extent of keeping them while they were living, burying then when they died and giving them medical care and limited sums of money, but not giving them any property right. He only gave Cho Wai Fun lifelong rights in his 1995 will. Other than providing that the Retreat had to be passed on to other Recognized Residents, pursuant to clause 5 of the will, the remaining assets and properties were to be distributed according to the law of intestacy.

140. Of course, I cannot rule out the possibility that the deceased had changed his mind since 1995 or that he wanted to bequeath all his assets to the Recognized Residents after his passing.

141. In my view, judging by the ordinary and natural meaning of the words and also the style of the deceased over the years, the interpretation set out in paragraph 138(b) hereinabove more closely reflects the deceased’s intention. I do not quite agree with the interpretation set out in paragraph 138(c) because, on a literal reading, the words used in the 2005 Notice did not give any option, and also because that interpretation has disregarded the words ‘possess the interest’.

142. What baffles me is: under cross-examination, Madam Chen disclosed for the first time that she had pointed out to the deceased that the expression ‘interest to keep and hold’ was very unclear and would render it difficult for the Recognized Residents to take back the Retreat in future, and rather surprisingly, the deceased responded by saying, ‘If it is expressed too clearly, people will take action immediately.’ But he did not explain who those ‘people’ were and what action they would take. In this connection, an incident in which a Recognized Resident was threatened came to Madam Chen’s mind by association. Therefore, she surmised that the deceased was seeking to protect the Recognized Residents.

143. I do not accept the association Madam Chen drew, which seems strained. But I do accept that the deceased and Madam Chen had the aforesaid conversation. The deceased admittedly and intentionally kept the meaning ambiguous. This being the case, the court should not take it upon itself to guess the real meaning intended by the deceased. The principle set out in paragraph 118 hereinabove is not applicable.

144. Where certain words used in a will or a deed of gift are so ambiguous and unclear that it is impossible to  ascertain what the gift is, who the donee is or what the interest to be granted is, or where the gift allows for two or more alternative interpretations and the context or evidence or rules of construction cannot assist the court in resolving the ambiguity, or where the gift violates the rule against perpetuity, then the gift is void (see Williams on Wills (9^th Ed), paras.53.3-53.7, 94.7 and 94.12; Ip Cheung Kwok v Ip Siu Bun & Ors[1988] 2 HKLR 247; Lau Leung Shi v Lau Po Tsun(1911) 6 HKLR 149).

D6.  To whom was the estate given?

145. If I had to make a finding on the deceased’s intention, I would find that the will did not confer any property right on the Recognized Residents but only set up a trust so that they could possess the interest for achieving the purpose of protection and maintenance. However, in her counterclaim Madam Chen did not aver in the alternative that the 2005 Notice was a declaration of trust.

146. Be that as it may, a declaration of trust must possess three ‘certainties’: certainty of words, certainty of subject matter and certainty of objects. Lewin on Trusts (18^th Ed), paras.4‑02-4-03.

“Lord Langdale M.R. declared three essentials for the creation of a trust:

‘As a general rule it has been laid down, that when property is given absolutely to any person, and the same person is by the giver who has power to command, recommended, or entreated or wished, to dispose of that property, in favour of another, the recommendation, entreaty or wish shall be held to create a trust:

First, if the words are so used, that upon the whole, they ought to be construed as imperative,

Secondly, if the subject of the recommendation or wish be certain; and,

Thirdly, if the object or persons intended to have the benefit of the recommendation or wish be also certain.’

The ‘three certainties’ which must be found in a declaration of trust are therefore certainty of words, certainty of subject matter and certainty of objects.”

147. In the 2005 Notice, the subject matter is certain, namely all the assets of the deceased. But the words lacked certainty because the meaning of ‘to possess the interest to keep and hold’ is not clear, the ambiguity being intentionally kept by the deceased. If it was a trust, it did not have a specific beneficiary because the Recognized Residents were an ever-changing group who violated the rule against perpetuity. Nor did the 2005 Notice state who else apart from the Recognized Residents were the beneficiaries.

148. In her closing submissions, Madam Chen said that the deceased passed his mantle to the next generation through the Buddhist way of ‘passing the light’. But she did not adduce evidence to explain what ‘passing the light’ was. I therefore do not take this submission into consideration.

149. A private trust for an indefinite period of time will also be void as it violates the rule against perpetuity: IpCheung Kwok v Ip Siu Bun & Ors [1988] 2 HKLR 247, 252C‑D. The trust under the 2005 Notice is not valid at law.

150. In short, I find that even though the 2005 Notice constitutes a will, it does not have legal effect because it is not certain whether any bequest has been made, who the donee is and what the meaning of the words ‘possess the interest to keep and hold’ is, and also because it violates the rule against perpetuity. Applying the principle of resulting trust, all assets under the deceased’s name still belong to the deceased and his estate (see Snell’s Equity (32^nd Ed), para.25-025).

E.   If the 2005 Notice is a will or trust, is Madam Chen a Recognized Resident of the Retreat?

151. There were originally three Recognized Residents. As Cho Wai Fun has already left the Retreat and Wong Yau Hing has not joined as a party to the present claim, Madam Chen is the only possible beneficiary.

152. The plaintiff points out that, due to a mistake she had made, the status of Madam Chen as a Recognized Resident was terminated by notice on or about 1 March 2002. She has not resided at the Retreat since 2003 or so. From the passing of the deceased to 16 October 2007 when the plaintiff assumed ownership of the Retreat, Madam Chen never asked for permission to resume residence at the Retreat. Therefore, the plaintiff denies that Madam Chen is entitled to make a counterclaim in the present case whether in her personal capacity or on behalf of the Recognized Residents of the Retreat.

153. On the other hand, Madam Chen claims that the deceased allowed her to enjoy the status of Recognized Resident of both the Endowment Association and the Retreat and that, without giving any notice, the plaintiff forbade her from returning to Ching Yum Buddhist Retreat and revoked her status as a Recognized Resident of the Retreat, thereby breaking the promise the deceased had made.

154. According to The Rules on the Policy and Strategy of Ching Yum Buddhist Retreat (Detailed Rules enforced by the Retreat) (“Rules of the Retreat”) [CB117], those who have been attending and residing at the Retreat for 5 years are promoted to the status of Recognized Residents. The Residency System strictly requires practitioners to practice meditation at the Retreat and not to leave or stay out of the Retreat without permission.

155. Furthermore, according to the oral order made by the deceased on 1 March 2002 (‘the post reassignment  order’):

“(3) In respect of Chen Chi Hsia, whose Buddhist name is Kei Gong, was a resident attendee in 1987. Although she has contravened the notice once, the matter will not be pursued. She is promoted to the status of Recognized Resident and is hereby posted to the Succession Department, with five years of attendance residency deducted, which means an eleven-year of status as Recognized Resident. An allowance of HK$55,000 is given [to her]. If she does not report duty at the Succession Department, her seniority as a Recognized Resident and interest [as such] will continue.

If she reports duty at the Succession Department, the Department will have to give her the interest of care and upkeep. If she is remiss on her duty (and/or) violates the rules of the faith, she will be dealt with according to the rules of the Succession Department has and this will have nothing to do with the rules of interests of this Retreat. If there is change of personnel in the Succession Department and her post is no longer required, she can apply to return to the Retreat.

(4) Matters relating to post reassignments, resignations and entry/departure must be certified by a regular resident attendee on behalf of the master.”

These provisions show that the status of Recognized Resident of the Retreat and the post/duties at the Succession Department are mutually exclusive.

156. At issue is whether Madam Chen had already been transferred to the Succession Department (ie the Endowment Association or the Taipei Hostel that she referred to) and was no longer a Recognized Resident of the Retreat.

157. It is not disputed that, following the issuance of the post reassignment order, Madam Chen accepted the $55,000. Mr Chong argued that it was an “allowance” for terminating her service at the Retreat. However, my view is that it was an allowance and not money paid for termination of service. And before Madam Chen assumed duty at the Succession Department, her status and seniority as a Recognized Resident continued.

158. I also agree with Madam Chen’s statement that an order had to be made to expel someone from the Retreat. The post reassignment order shows that the deceased had a discretion not to expel an offender, and he had not insisted that Madam Chen leave the Retreat and join the Succession Department. Madam Chen continued to stay at the Retreat for a period of time after the issuance of the post reassignment order. This is evidenced by three handwritten instructions by the deceased dated 18.6.2002, 21.1.2003 and 27.1.2003 respectively, by which Madam Chen was instructed to handle work at the Retreat. The date of the first handwritten instruction is in dispute. Having considered the other dates the deceased wrote in English (such as CB145), I find that the date of this handwritten instruction is June and not January. In order words, it was made after the issuance of the post reassignment order.

159. In the renewal form dated 30 October 2003 submitted to the Chinese Temple Committee, Madam Chen was still named as one of the temple keepers. It appears that the form was filled out by Madam Chen and signed by the deceased.

160. During the two and a half years since around December 2003, Madam Chen followed the deceased to live outside the Retreat to look after him in illness until he passed away. In my view, as she left the Retreat pursuant to the wish of the deceased, this cannot be regarded as ‘leaving or staying out of the Retreat without permission’ or reporting duty or working at the Succession Department.

161. According to the Notice dated 18 August 2004, the deceased even authorized Cho Wai Fun and Madam Chen to open a joint account at Hang Seng Bank on 22 May 2003 to cater for the medical and nursing expenses of the resident attendees of the Retreat, which involved at that time an amount exceeding $2.9 million. On 30 September 2005, the Retreat opened a savings account with the SCB with Madam Chen and Cho Wai Fun as signatories. By that time, Wong Yau Hing was already a Recognized Resident.

162. Nevertheless, Mr Chong argued that although PW Chu Shuk Wah was not a Recognized Resident, she also had the authority to operate the medical account. Madam Chen also mentioned that at that time, as PW Wong Ching Yu resigned from the post of resident attendee, the Retreat was short of hands, and therefore the deceased suspended the post reassignment arrangement. In my view, this further shows that the deceased had suspended the arrangement to reassign Madam Chen to the Succession Department.

163. After the deceased’s passing, Madam Chen had at least been twice regarded by all as a Recognized Resident:

(i) On 10 March 2006, to implement the rule of the Retreat to ‘keep while living and bury on death’, the Retreat paid for the burial grounds of the three Recognized Residents. At that time, no one queried Madam Chen’s status as a Recognized Resident.

(ii) On 12 July 2006, the three Recognized Residents jointly filled out the form for submission to the Chinese Temple Committee. The words “temple keeper” were crossed out by hand and replaced by “Recognized Resident”.  Although Cho Wai Fun and Wong Yau Hing have not testified, their act predated the present litigation. It is clear that they acknowledged both within and without the Retreat that the status as a Recognized Resident had not changed with the passing of the deceased.

164. However, on 2 April 2006, which was less than one month from the passing of the deceased, Madam Chen took the initiative, during a meeting at the Retreat, to raise with fellow disciples about moving back to the Endowment Association, and further said that she did not have a house of her own. She had the right to draw monies from the Endowment Association to meet living expenses (be they regular payments from the Endowment Association or from the red packet of the dharma seat of the deceased), and this was the case at least until 27 April 2007. Madam Chen chose to draw food allowance from the red packet at the Endowment Association, and this shows that she had already opted for the post reassignment. She only returned to the Retreat occasionally, staying there for one or two days on each occasion, and returned to the Retreat in the 7^th lunar month every year.

165. Madam Chen claims that the deceased issued a handwritten instruction on 6 May 2005 giving her the right to take up permanent residence at the Endowment Association. However, she was not a Recognized Resident of the Association. Notwithstanding the fact that the plaintiff had, back in the pleadings stage, queried her status as a Recognized Resident of the Retreat, Madam Chen has never disclosed the handwritten instruction in question notwithstanding she is a director of the Association. During cross-examination, Mr Chong asked Madam Chen why she did not resume residence at the Retreat when her status as a Recognized Resident was not challenged at the 2 April 2006 meeting? She remained silent for 20 seconds and then answered, ‘[I] do not know how to answer’. She also admitted that the interest she could enjoy in the Retreat was greater than that in the Endowment Association.

166. As Madam Chen has given no reasonable explanation for not disclosing the 2005 handwritten instruction which she had all along possessed, I draw an inference adverse to her: Tullett & Tokyo International Securities Ltd v APC Securities Co Ltd[2001] 2 HKLRD 356, 365B-366C. I find that this handwritten instruction either did not exist or did not allow her to reside at two places at the same time. Having regard to the stringent fiscal policy that the deceased adopted towards the Recognized Residents, I do not believe he would be so generous as to allow Madam Chen to enjoy the benefits of both places simultaneously.

167. Having considered the various factors set out in this Part, I find that Madam Chen had lost the status of Recognized Resident of the Retreat latest by close of the meeting on 2 April 2006. She could at most return to the Retreat to take back her personal effects.

168. If Madam Chen wanted to take up a post at the Retreat afresh, it had to be ‘certified by a regular resident attendee on behalf of the master’. But there is no evidence that anyone had made such certification in accordance with the post reassignment order to restore her status as a Recognized Resident.

169. I find that Madam Chen was neither a Recognized Resident nor the beneficiary under the 2005 Notice. She also lacks the personal capacity to make the counterclaim in 2008.

F.   Did the deceased intend to donate the deposit in the new account to the Recognized Residents of Ching Yum Buddhist Retreat for the purpose of promoting Buddhism?

F1.  The parties’ respective cases

170. The plaintiff’s case is that at the time when the joint account was opened, the deceased did not have the requisite mental capacity, and hence the transfer of deposit made by the deceased should be set aside (Snell’s Equity (32^nd Ed), para.8-035).

171. Madam Chen, on the other hand, claims that the deceased clearly knew the difference between a joint account and an authorization account, and that he took the initiative to ask for the opening of the new account, which was done in the hospital ward in the presence of Madam Chen, Wan Dan Wah, Cheung Wai Kuen, So Chi Hung (collectively ‘the four disciples’) and two staff members of the bank as witnesses.

172. At law, once the deceased had passed away, the money in the joint account would automatically go under the name of Madam Chen. Mr Chong accepted that the plaintiff bears the burden of proving that the deceased did not have the requisite mental capacity.

F2.  Credibility of the relevant witnesses

173. In respect of this issue, apart from the evidence of the plaintiff and Madam Chen, I have also considered the evidence of the other witnesses including the remaining three disciples, PW Cheng Kin Man (bank staff) and three doctors.

174. In my view, despite discrepancies in their evidence, the four disciples have all honestly tried their best to tell the court what they know and believe are the facts. I do not think that they are conspiring with Madam Chen to give false evidence or helping her misappropriate the assets.

175. Having said that above, I will not rely on the evidence of So Chi Hung because he had never refreshed his memory of the written statement in the past 8 years. The recollection he made at trial was clearly inaccurate. For example, he remembered wrongly that the bank staff had come to the hospital twice, which is inconsistent with the objective hospital record.

176. The recollection Wan Dan Wah made was sketchy and inaccurate, and from time to time she offered her own interpretation of the matter. Even though she was an honest witness, I cannot fully rely on her evidence.

177. Cheung Wai Kuen was an honest and straightforward witness.  Even-tempered and clear-headed, he came forward to fight for justice for the Recognized Residents. As will be pointed out hereinbelow, some of the evidence he gave was inconsistent with that of Madam Chen and Cheng Kin Man. Unless otherwise specified, I shall adopt his evidence.

178. The four disciples jointly signed a statement dated 18 and 19 June 2006 (“the joint statement’). Although it was based on the record made by Madam Chen, I believe that the other three disciples signed only because they had agreed to its content. Given the proximity of the dates of the joint statement to the date of the deceased’s passing, the events should then still be fresh in the minds of the witnesses. I give great weight to its content.

179. PW Cheng Kin Man had already left SCB. He had no interest in the present case and testified at trial of his own accord. He had no friendly ties with the plaintiff and had only met him once after the death of the deceased. The plaintiff had secretly recorded his conversation with Cheng Kin Man. The quality of the recording was very poor with a lot of noise, but the content was clear. The plaintiff did not ask any leading questions, and Cheng Kin Man gave direct and natural replies. I fail to see any motive on the part of Cheng Kin Man to lie. Nor was there anything to make me feel that it was unfair to obtain evidence by making the said recording. I accept the recording as evidence. Unless otherwise specified, I adopt the testimony of Cheng Kin Man.

180. Dr Hwang Shu Tak, the doctor in charge of the deceased, Dr Lai Sau Shun, the expert witness for the plaintiff, and Dr Yu Wai Tak, the expert witness for the defence, were all honest witnesses. Dr Hwang and Dr Yu were initially of the view that the deceased had mental capacity to deal with assets, while Dr Lai thought otherwise. Following clarification by way of cross-examination, there was in fact not much difference in their professional opinions and conclusions.

F3.  The background of and what happened during the opening of the new account

181. Part F3 covers relevant circumstances which I have accepted and found as facts.

182. I accept the evidence of Madam Chen that the deceased had all along known the difference between a joint account and an authorization account. He held a joint account with Madam Chen at the Shamshuipo branch of SCB for the purpose of meeting medical and nursing expenses. In May 2003, he also instructed Madam Chen and Chu Shuk Wah to open a joint account of Ching Yum Buddhist Retreat at the Tsuen Wan branch of Hang Seng Bank to meet medical and nursing expenses of the Recognized Residents. At that time, the deceased transferred the deposit in the said Shamshuipo SCB medical account to this joint account. In August 2005 he also authorized Madam Chen to operate his personal account with the SCB.

183. In the summer of 2005, the deceased was minded to open a joint account with the SCB. PW Cheng Kin Man told him that once the joint account was opened, half of the money would belong to the other person with immediate effect. It was Cheng Kin Man’s impression that the deceased understood right away having been told only once. But on that occasion, the deceased did not open a joint account.

184. After some time, the deceased instructed Cheung Wai Kuen to take back some joint account opening documents from the bank. He further told Cheung Wai Kuen, ‘In future, if and when a joint account is opened, remember to leave it to a judge to give judgment.’

185. As the deceased was regarded as a regular customer during his lifetime, SCB gave indulgence to allow Cheung Wai Kuen to take away the account opening documents. They were documents that could be used on the one hand for opening a joint account and on the other for authorizing someone to be the signatory of the deceased’s personal account. The deceased took those documents with him upon admission to the hospital.

186. The deceased was admitted to the hospital on 13 February 2006 and stayed there until 7 March when he died. Dr Hwang opined that the deceased was mentally fit while in the hospital and was able to converse. In the early stage of his hospitalization, his condition was stabilized, but it then deteriorated and he was on the verge of death.

187. The plaintiff went to the hospital to visit the deceased on 20 February 2006. In the presence of Madam Chen, the deceased instructed that $30 million be given to the plaintiff. Although the specific arrangement is in dispute, as Madam Chen had kept a record prior to litigation, I tend to believe her version, namely that about two months before he was admitted to the hospital, the deceased at Parc Palais told the plaintiff, Madam Chen, So Chi Hung and Wan Dan Wah that no suitable person had yet been found to whom the management of the $30 million was to be entrusted. But while he was in the hospital, the deceased said: there was about $30 million; the plaintiff had to set up a company; $10 million was to be used for protecting the faith and the rest of the money could be used for doing business; any money earned would go to the plaintiff, whereas the capital should be returned to this company. At that time, the plaintiff asked: to whom should the money be handed later? The deceased said: let’s talk about it later.

188. Around 25 February, the deceased sent the plaintiff out of the hospital ward. They never saw each other again before the death of the deceased. Neither had the plaintiff asked to see the deceased or enquired of the medical/nursing staff about the condition of the deceased. However, in response to a question I asked, the plaintiff confirmed that he did not see anything unusual about the deceased’s mental condition.

189. In Madam Chen’s view, the deceased had “broken up with close relatives” (ie had severed secular family ties). But the plaintiff told others that he was the deceased’s son, and this enraged the deceased who then drove him out of the hospital ward and told him to return to the USA.

190. I do not accept this explanation. As PW Wong Ching Yu said, the deceased required the Recognized Residents to “break up with their close relatives” (see the handwritten instruction CB125) but did not require himself to do the same. Wong Ching Yu knew that the plaintiff was the deceased’s son, and the deceased had also introduced to others the plaintiff as his son. Although the deceased also asked the plaintiff to call him “master”, he did not forbid the witnesses in the present case to tell others that the plaintiff was his son. What is more, given that it was the deceased who asked the plaintiff to come back from the USA to visit him, how would he mind the plaintiff claiming to be his son?

191. I tend to believe the plaintiff’s version of the matter, namely that the deceased asked the plaintiff to leave the hospital ward, not Hong Kong, for an unknown reason. As a matter of fact, the deceased had in the past refused to see the plaintiff in the Retreat.

192. On 27 February, the deceased appeared dull. The plaintiff signed a “Do Not Attempt Resuscitation” form (‘DNAR’). DW Dr Yuexplained that DNAR indicated that the patient would die any time. The hospital would still do their best to treat him or reduce his pain and suffering, only that they would not resuscitate him when he fell into a coma or when his heartbeat stopped. If the patient showed signs of mental disorder and the doctor discarded the possibility that such disorder arose from physical problems, the doctor would refer him to a psychiatrist.

193. Madam Chen was not aware that there was a DNAR. The plaintiff believed that the deceased and the other three disciples were not aware of it either.

194. It was Madam Chen’s testimony that the deceased signed the joint account opening form on 1 March and asked Cheung Wai Kuen to take it to SCB. I take into account the following:

(a) Although Wan Dan Wah confirmed that the deceased did sign a document on 1 March and knew that Cheung Wai Kuen went to the bank on 2 March, she could not recall if he took anything with him to the bank.

(b) Madam Chen did not cross-examine Cheng Kin Man as to whether the bank had received from Cheung Wai Kuen a completed account opening form.

(c) The audio transcript from Cheng Kin Man records that the deceased had “taken the document back for signature but did not return it”.

(d) If the bank staff member was only interested to know the deceased’s health condition, he could simply ask the deceased in the hospital to confirm that he had completed an account opening form. It was not necessary to ask the deceased to sign a new form.

(e) There is no evidence that anyone had explained to the deceased why, having signed an account opening document the day before, he had to sign a new one on 2 March.

195. But there is a record of the 1 March incident in the joint statement. Besides, were it not for handing in the signed form, it would indeed not have been necessary for Cheung Wai Kuen to visit the bank in person the following day. It could have been done by calling up the bank and asking them to send someone over to the hospital. I am satisfied that the alleged incident did take place on 1 March.

196. On the night of 1 March, the deceased did not sleep well.

197. I am satisfied that on the morning of 2 March, the deceased did instruct So Chi Hung to go back to the Retreat to fetch him a figurine of the Buddha for emplacing. He also instructed Cheung Wai Kuen to go to the bank to open a joint account. The hospital record shows that from 9:55 am of that day onwards, although the deceased was conscious and was able to identify people, location and time, his heartbeat rate was 148-150 per minute. He even asked for medication. By about 1 pm, he had been transferred to ward A7, seen by the doctor and given more medication, and had also undergone gastric intubation, put on facial mask and had an ultra-sound scan taken of his heart.

198. Although after Cheung Wai Kuen had left, Dr Hwang examined the deceased at 9:55 am, no one told Dr Hwang about the wish of the deceased to open an account.

199. No one told the plaintiff, who was outside the ward, about the deceased’s wish of opening an account.  Although Cheung Wai Kuen had asked the deceased whether the plaintiff should be invited into the ward, the deceased ignored him. This contradicts Madam Chen’s statement that no one had raised with the deceased that the plaintiff be told to go back into the ward. Regarding this detail, I believe that Cheung Wai Kuen, who raised the matter, would have a better recollection than Madam Chen. I adopt his version.

200. I also believe that it was out of respect for the deceased and ignorance of the law that the four disciples did not ask the plaintiff or the doctor to go into the ward. It was absolutely not their intention to do anything that would prejudice the deceased or the plaintiff.

201. Cheung Kin Man and one other staff arrived at the ward at about 10 am. When the new account was being opened, the four disciples were present. According to the testimony of Cheng Kin Man, before he went to the hospital he had received instruction that the deceased wanted to convert his individual account into a joint account (‘account opening instruction’) and transfer the deposit from the individual account to the joint account (‘instruction to transfer money’). He was not sure who gave these instructions. He was only sure that he had not spoken with the deceased on the phone that day. Madam Chen also could not remember who told the bank, although she might have done so herself.

202. I have no doubt that the deceased conveyed the account opening instruction through Madam Chen or Cheung Wai Kuen. As regards the instruction to transfer money, the 1 March document can no longer be located. The joint statement does not mention that the deceased issued this instruction; it is only when it talks about Cheung Wai Kuen informing Madam Chen that bank staff would go to the hospital that it mentions “all accounts were to be closed and then consolidated into one newly-opened joint account”. It was only in his witness statement two years later that Cheung Wai Kuen said the deceased gave the instruction to transfer money on the morning of 2 March.

203. A deposit is required to open an account. I believe the deceased did give the instruction to transfer money and Cheung Wai Kuen did relay that instruction to Cheng Kin Man, otherwise the latter would not have brought along a big stack of documents, including account-closing and transfer forms, to the hospital.

204. The purpose of opening the account was in dispute. Cheng Kin Man said Madam Chen told him that the hospitalization of the deceased would entail a lot of medical expenses and, for fear that the deceased would not be able to sign in order to withdraw money, a joint account was to be opened so that Madam Chen could make withdrawals on his behalf to meet the medical expenses. Besides, the deceased also made sounds like ‘that’s right’, ‘that’s right’ from his throat. Cheung Wai Kuen denied this.

205. On the other hand, Madam Chen said, the account was opened “because Master feared that money could not be withdrawn in future” and not for the purpose of meeting medical expenses, as there was in place another account catering for medical expenses. Cheung Wai Kuen also denied that anyone had said this. He said no one mentioned for what purpose the account was opened.

206. I note that Cheng Kin Man did not mention medical purpose in the 2011 audio recording, but instead only mentioned this only seven years later in his witness statement. But if no one had told him, he would have had no reason to know that a lot of medical expenses would be incurred. On the other hand, Madam Chen had managed the Retreat and the deceased’s accounts, and therefore knew that there was no need for another medical account. Having evaluated the evidence, I accept Madam Chen’s version.

207. Madam Chen also claimed that the deceased asked Cheng Kin Man whether Madam Chen alone could withdraw money. In light of the physical condition of the deceased at that time, I tend to believe what Cheng Kin Man said, namely that the deceased had not said a complete sentence to him and therefore could not possibly have asked the said question. But Cheng Kin Man did tell him that withdrawals could also be made by one person signing.

208. The deceased was very frail in the hospital bed. He was short of breath, wearing a mask covering his nose and mouth, and needed the disciples to help him up from the bed. He gave no response to Cheng Kin Man’s question and appeared very exhausted. He kept gesticulating with his hand/s to show that he wanted to sign and came across as rather ‘impatient’. Fearing that he did not understand what he had to sign, Cheng Kin Man explained to him the difference between a joint account and an authorization account, and asked him if it was his wish to open a joint account and transfer his own deposit thereto. At that time, the deceased was unable to speak and only kept nodding. Cheng Kin Man considered that the deceased understood what he said. Cheng Kin Man’s account is consistent with the account given in the joint statement, namely that the deceased indicated to, and not told, the bank staff that it was his wish to do so.

209. The deceased was so frail that some of his signatures looked different, so he had to sign again. He was a bit piqued. In his witness statement, Cheng Kin Man said Madam Chen told the deceased to hurry up and sign. However, in the affirmation he made earlier, he said Madam Chen said he might not sign. I accept his earlier version.

210. Cheng Kin Man further explained that Madam Chen had asked him to leave behind the documents which would be returned to the bank after the deceased had duly signed them. Cheng Kin Man refused. To protect the bank and the deceased, he had to witness the signing by the deceased. Therefore, after the deceased had rested for about ten minutes, and with Madam Chen propping him up and reminding him, he continued to sign. But as he was indeed too tired, he only signed the forms for closing the fixed deposit accounts.

211. Cheng Kin Man did not think there was anything to indicate that the deceased did not understand what he was doing, or that it was necessary to enquire if he had any family member or to invite a doctor to be his witness. Upon knowing that the deceased was lying in bed, the bank obtained legal advice and requested a medical certificate proving that the deceased was mentally clear and sound. It was only after Cheng Kin Man had received the medical certificate from Dr Hwang that the applications of the deceased to open an account and transfer the money were approved.

212. After the bank staff had left, the deceased asked So Chi Hung and Wan Dan Wah to come forward to be his witnesses. ‘How (it) should be done, discuss (it) among fellow disciples. Rice-eating is as before’ (‘instruction of the deceased’). During the 2 April 2006 meeting, Madam Chen repeated it to fellow disciples. I do not consider that the four disciples had any motive to lie, and their statements in this regard are consistent. I am satisfied that the deceased did say those words.

213. In the afternoon of that day, the deceased learned that Cheng Kin Man was asking for a medical certificate. The deceased said, ‘What is true is true, what is false is false.’

214. At 4:20 am of 3 March 2006, the deceased woke up. He asked for permission to go home. In the afternoon of the same day, Dr Hwang recorded that the deceased appeared to be less orientated and was muttering to himself from time to time.

215. On 17 June 2013, Dr Hwang confirmed that from the time the deceased was admitted to the hospital to the day he passed away, he had shown no symptoms of mental problem and did not need any psychiatric assessment.

F4.  An assessment of the deceased’s mental capacity

216. The incident of giving instruction to deal with a Buddha figurine serves to demonstrate the deceased’s initiative and ability to give clear instructions on who to carry out religious work, but cannot demonstrate that he had the same ability to deal with financial matters. I attach no weight to this incident.

217. Cheng Kin Man said that he could tell from the expression in the deceased’s eyes that he was mentally clear. I do not think reliance should be placed on the judgment of Cheng Kin Man which was based on appearance. As he had no previous experience in handling the same kind of matter, he was not comfortable with leaving the forms there for the deceased to sign before returning them to the bank.

218. It is also unsafe to rely on the nodding or the reply ‘that’s right, that’s right’ that the deceased gave in response to leading questions by Cheng Kin Man. DW Dr Yu also agreed that where the deceased, and not a third party on his behalf, gave instructions on a matter, this would show that the deceased had greater cognitive power. However, at no point in the course of opening the joint account did the deceased issue instructions to Cheng Kin Man directly. Therefore, I do not have information for assessing the deceased’s cognitive power.

219. That one can sign his name does not reflect one’s mental capacity. PW Dr Lai explained that signing one’s name is a habitual and repetitive action. Even someone suffering from Alzheimer’s disease can sign, only that he may not understand what he is signing for.

220. Dr Hwang Shu Tak said that he saw the deceased twice a day and that the deceased was, in his view, mentally clear and not suffering from any mental problem. He could converse, was able to say that he was not feeling well, and could choose whether or not to accept invasive treatment (such as intubation). However, the subject matters of the conversations did not point to his mental capacity. Throughout the period when he was in the hospital up to the day of his passing, the deceased never received any mental tests. Dr Hwang also agreed that, given the deceased was already 74 years old and on the verge of death, no psychiatrist might be called even if the deceased had mental problems.

221. The medical treatment on the deceased indicated that he was having multiple symptoms, but the relevant ones were insomnia, rapid heartbeat, increased medication, multiple medical procedures, and the cries made in the middle of the night seeking permission to go home.

222. According to Madam Chen, the deceased had sometimes preached until 5 am before going to bed. PW Chu Shuk Wai and PW Chan Wai Tong also confirmed that the deceased used to stay up all night talking to people until 6 or 7 am. But he no longer did that after moving to the Endowment Association in 2003. In my view, insomnia per se cannot indicate that the deceased did not have mental capacity.

223. But Dr Yu said the situation set out in paragraph 197 hereinabove might constitute pressure on the deceased. His inability to speak, eagerness to sign, fatigue and inability to do anything other than nodding to indicate his wish, reinforce my view that the deceased was under physical pressure.

224. PW Dr Lai took the view that the incident in the middle of the night of 3 March showed that the deceased did not know that his own health was at risk and did not know how to protect himself. He was in a state of acute confusion, with his brain not being able to function normally. DW Dr Yu agreed with this, although he added that those who were critically ill usually wanted to die at home. The record does not show that Dr Hwang Shu Tak had asked the deceased direct why he wanted to go home. Therefore, in preparing the certificate dated 3 March, Dr Hwang had not taken into account whether this request of the deceased indicated that his mind was not normal, but Dr Hwang agreed in his testimony at trial that the deceased might be mentally unclear.

225. PW Dr Lai took the view that the deceased did not have mental capacity to deal with his assets.

226. DW Dr Hwang Shu Tak agreed. Had he been told on the morning of 2 March 2006 that the deceased would sign a will, he would have asked the deceased a series of questions, such as ‘Why make a will?’ and ‘To whom are you going to donate your assets?’ etc, to prevent him from being cheated.

227. DW Dr Yu stated that the medical record of the morning of 2 March 2006 contained no indication of any need to conduct mental tests on the deceased. In the expert report, he stated that the deceased had mental capacity. But Dr Yu also agreed that if he had known that the person minded to make a will was already 74 years old, that his family had already signed a DNAR and that the person himself made noisy demands for going home on the early morning of 3 March, then according to the medical record already known, Dr Yu would ask that person to undergo mental tests before making a will.

228. In my view, the three doctors have expressed a rational and reasonable approach to adopt in dealing with an elderly patient who wants to make a will. On the evidence set out in Part F herein, I find, on the balance of probabilities, that the deceased did not have mental capacity.

F5.  To whom does the money in the new account belong?

229. As the new account was opened when the deceased did not have mental capacity to do so, the principles of resulting trust dictate that the money in the account belongs to the deceased.

230. If I am wrong about this, ie the new account was opened when the deceased had mental capacity to do so, there are three possibilities regarding ownership of the money in the account: (a) the money belonged to the deceased; (b) the money belonged to the Recognized Residents; (c) owner and purpose unknown, and so the money returns to the deceased.

231. (a) is most probable. It is because whether the court adopts the evidence of Cheng Kin Man or that of Madam Chen, the purpose of opening the account was to facilitate withdrawals for use by the deceased and not to make a gift to anyone. As a matter of fact, on the night of the deceased’s passing, Madam Chen had a meeting with about 20 disciples at the Retreat, during which she said there was a total of about $30 million (not only $14.3 million) in the account under the deceased’s name, and instructed the plaintiff to take $10 million of that sum for the management of the Retreat. It can be seen that Madam Chen had no intention to monopolize the money in the new account and still regarded the money in the new account as the deceased’s. I agree with what Madam Chen said in her closing submission: she is holding the money in the new account for the deceased as a trustee.

232. (b) is improbable:

(i) Madam Chen claimed that because the plaintiff had told people that he was the biological son of the deceased, the deceased feared that he would take away all the money on his death, leaving the Recognized Residents penniless. However, she admitted under cross-examination that on that day the deceased did not give instruction to hand the money over to the Recognized Residents.

(ii) Cheung Wai Kuen said that, subsequent to the opening of the joint account, the deceased told him he was worried that the plaintiff had bad intention and feared that the Recognized Residents would not be able to withdraw money after his death. If this was indeed the case, it would contradict the wish the deceased expressed ten days before when he instructed that $30 million be given to the plaintiff. This even makes me wonder if the deceased was mentally disordered.

(iv)[sic] During the meeting on 2 April 2006, Madam Chen was still saying that the money in the new account belonged to the deceased and not the Recognized Residents. The deceased was unwilling to put the money into the Retreat right up to his death.

233. (c) is the possible result of ambiguities in the instruction given by the deceased:

(i) The subject matter is unclear: Does “How (it) should be done” refer to the handling of the money in the new account or some other matter?

(ii) The identity and number of trustees are unclear: “fellow disciples” included both male and female disciples, but the deceased had burned the disciple register in 1997. Madam Chen estimated that there were 200 disciples in Taiwan, whereas the number of disciples in Hong Kong was unknown although there were several dozens of believers in Hong Kong. Cheung Wai Kuen also had to rely on others to tell him the names of the disciples, but the name list he kept was also incomplete. Did all the disciples have to take part in the discussion? If the money was to be given to the Recognized Residents, why was the discussion not only among them but among the fellow disciples?

(iii) The purpose of the discussion is unclear. Other than on the occasion when the deceased was trying to recuperate in Parc Palais, the deceased had never discussed with anyone how to use money. The discussion on that occasion did not result in any decision on how the $30 million was to be dealt with either. What did he expect his disciples to discuss after he died? How was the matter to be resolved if the discussion failed? Wan Dan Wah said the matters to be discussed included the Retreat and the setting up of an endowment fund association for the protection of the faith. But the endowment fund association for the protection of the faith was something that had already been discussed during the deceased’s lifetime, although none had been set up throughout all those years. Whether in the meetings held shortly after the deceased’s passing or up to this point of time after 8 years, the disciples still have not yet reached any consensus. The money in the new account still cannot be used. This shows that the instruction to “discuss (it) among fellow disciples” was too ambiguous to be enforceable.

(iv) The meaning of “rice-eating is as before” is unknown. Madam Chen did not cross-examine the witnesses for the plaintiff on these words.  And instead of quoting the interpretation given by the deceased, Cheung Wai Kuen, So Chi Hung and Chen Tit Kwan interpreted those words, apparently on the basis of the day-to-day style of the deceased, to mean “all the operations of Ching Yum Buddhist Retreat are as before”. But all along, the deceased did not agree to put the money into the Retreat. On the occasion at Parc Palais, when So Chi Hung suggested that the money be put into the Retreat, the deceased said immediately, ‘It is better to distribute it than to put it into Ching Yum Buddhist Retreat.’ At the meeting on 2 April, Cheung Wai Kuen and Wan Dan Wah still insisted on putting into action these words that the deceased had uttered. Wan Dan Wah was of the view that the operation of the endowment fund association for the protection of the faith had also to be as usual. But the fund association had not yet been set up, so it could not possibly be said to be “as before”.

(v) Furthermore, the beneficiary is unknown.

234. The deceased had said to Cheung Wai Kuen, ‘In future, if and when a joint account is opened, remember to leave it to a judge to give judgment.’ These words beg understanding. The deceased did not make decisions for his own money but instead left it to the speculation of the court for the second time. He told Wan Dan Wah and So Chi Hung to come forward as witnesses, but on the one hand, they did not have a clear recollection, and on the other, they could not decide for the deceased. The court refuses to speculate.

235. The principle set out in paragraph 146 hereinabove also applies.

236. I find that the purpose of opening the new account was to facilitate Madam Chen to withdraw money for the deceased because he feared that money could not be withdrawn. It was not the intention of the deceased to give the money in the joint account to the Recognized Residents. The instruction given by the deceased gave was ambiguous: the subject matter, the identity and number of trustees and the purpose of the discussion were all unknown, so were the meaning of the words “rice-eating is as before” and the identity of the beneficiary. His instruction cannot be regarded as having created a legally valid trust. The money should be returned to the deceased’s estate. Madam Chen’s counterclaim regarding the new account fails.

G.   Did the deceased open the new account under the undue influence of Madam Chen?

237. To prove that a transaction arose from undue influence, the claimant does not have to prove that the transaction was against the wish of the principal; he only has to prove that the undue influence was one of the factors that contributed to the completion of the transaction: Snell’s Equity (32^nd Ed), para.8-025.

238. The plaintiff pleaded the following facts in paragraph 9C of his Re-amended Statement of Claim:

(a) In the three years before the deceased’s passing, he relied on Madam Chen to look after him round-the-clock;

(b) The deceased was extremely frail physically at the time of the opening of the account;

(c) The plaintiff was unable to meet the deceased. The deceased was in the company of the four disciples all along. Nor had the plaintiff been informed of the opening of the new account;

(d) The account opening instruction came from Madam Chen. On the evidence of Madam Chen and So Chi Hung, the deceased instructed Cheung Wai Kuen to take the account opening documents that had been duly signed the day before to the bank to go through the account opening procedures. There was no other application. On the oral evidence of Madam Chen, it was only after Cheung Wai Kuen had arrived at the bank and the bank staff learned that the deceased was in hospital that they, on their own initiative, suggested going to the hospital to assist the deceased in opening the account. Therefore, the deceased’s original intention was merely to open an account and not to transfer his wealth to the new account;

(e) At that time, the deceased did not receive independent legal advice as appropriate;

(f) $14.3 million dollars formed the lion’s share of the deceased’s assets, and it would put the deceased to serious disadvantage to transfer the money to the new account.

239. Mr Chong argued that the deceased trusted Madam Chen very much and she could manipulate or influence the deceased’s decisions including the decision to open a joint account and transfer a considerable portion of his wealth thereto. Had it been the deceased’s intention to hand over the deposits for the future operation of the Retreat, it would not have been necessary for him to open another account; it would have been open to him simply to put the money into the account operated by Cho Wai Fun and the first defendant. He inferred that it was Madam Chen who required the deceased to put the money into the joint account so that she could exert full control over it after his passing.

240. Except item (d), everything set out in paragraph 238 is factually true. It is not possible to open an account without putting money in it. I believe that Cheung Wai Kuen obtained the instruction from the deceased to transfer money. Even if I do not believe the evidence of Cheung Wai Kuen, Cheng Kin Man confirmed the account opening and money transfer instructions in the presence of the four disciples. Judging by the subservience the disciples had displayed toward the words of the deceased, if those instructions had not come from the deceased, I believe that the disciples would certainly have corrected him. I believe the four disciples were silent at that time because they genuinely believed that those were the instructions the deceased had given.

241. The deceased had always been his own man. I do not believe that Madam Chen could have unduly influenced him. At Parc Palais, it was in the presence of the plaintiff and the other disciples that Madam Chen put forward to the deceased the suggestion regarding how the money should be dealt with. The suggestion was not made for her own sake. While in the hospital, the deceased was attended to by his disciples round-the-clock. Even if Madam Chen had the selfish intention of lining her own pocket, the other three disciples would have had no motive to assist her. Furthermore, Madam Chen had never kept the account from others after the deceased’s passing, and during many of the meetings she had, in compliance with the deceased’s instruction, discussed with fellow disciples how the money in the account should be dealt with. The submission set out in paragraph 239 hereinabove is an overstatement. I do not accept this claim of the plaintiff.

H.   Unconscionable transaction

242. In Lo Wo v Cheung Chan Ka [2000] 2 HKLRD 370, 381D-382F, Waung J summarized the factors relevant to the determination of whether a transaction is unconscionable, as follows:

(i) Serious disadvantage of the exploitee (such as age, poverty, ignorance, lack of assistance or independent legal advice or inability to judge what is in his best interest) giving rise to the opportunity for the exploiter to take unconscionable advantage of him;

(ii) Terms of bargain being oppressive;

(iii) Morally culpable conduct of the exploiter.

‘1. Serious disadvantage of the exploitee

The traditional requirement of poverty and ignorance of the person exploited (‘exploitee’) stated in the old cases such as Fry v Lane, Re Fry, Whittet v Bush (1888) Ch D 312 had been broadened in recent years to include all species of serious disadvantage so that age, poverty, ignorance, lack of assistance or independent advice or inability to judge what is in his best interest are merely various aspects of serious disadvantage suffered by the exploitee giving rise to the opportunity for the other party who gains from the transaction (‘exploiter’) to take unconscionable advantage.

2. Terms of bargain being oppressive

The cases have shown that mere inadequacy of consideration is not sufficient for the court to act. The undervalue has to be such as to lead to the view that the exploitee had given away valuable assets or rights for much less than what they are worth to such extent as to either reinforce the view that the exploitee was at a serious disadvantage by a morally culpable exploiter or that the conduct of the Exploiter was morally culpable.

3. Morally culpable conduct of the exploiter

Exploitation is the foundation for a finding of unconscionable bargain and exploitation usually takes the form of the strong party, the Exploiter taking unfair advantage of the seriously disadvantaged party, the exploitee. What seems to be present in all cases where the courts have set aside for unconscionable bargains are circumstances of the transactions which suggest that the Exploiter was aware of an opportunity for exploitation and has taken advantage of such opportunity. … In Credit Lyonnais Bank Nederland NV v Burch [1997] 1 All ER 144, Millett LJ expressed the view at p.153 that impropriety could be inferred from the terms of the transaction itself in the absence of an innocent explanation and it seems to me that implicit in that statement is the assumption that the terms of the transaction are so unfavourable to the exploitee that the exploiter did know that the transaction was exploiting and unconscionable and hence there was impropriety in his conduct. It has been suggested that some of the cases were decided on basis of an objective standard instead of a subjective standard (see ‘Bamforth on Unconscionability as a Vitiating Factor’ (1995) Lloyd’s Maritime and Commercial Law Quarterly 538 at pp.548-551). This is an area of some difficulty, where the special facts of the cases (such as Commercial Bank of Australia Ltd vAmadio(1982-83) 151 CLR 447 which has large elements of constructive notice) might lead to specific conclusions which may not be wholly consistent with the subjective standard approach. For the limited purpose of this judgment and in the absence of focused arguments, I will assume that the traditional subjective standard applies and that for the court to reach a conclusion of unconscionable bargain it is necessary to have a finding of moral culpability against the exploiter, either by way of over-reaching or oppressive conduct or in the form of actual or constructive fraud. What seems to be necessary in my view is that the conduct of the exploiter in the circumstances has shocked the conscience of the court.”

243. Mr Chong argued that this transaction made a gift to Madam Chen half of the cash the deceased had. It was an exploitation and oppression to the deceased who was then critically ill and who did not stand to gain anything from it. Madam Chen did not have any evidence to prove that the transaction was fair and reasonable.

244. Although the deceased was old, his words were commands. Over the years, none of his disciples dared go against his wishes. I have already found that it was the deceased who asked for the opening of a new account, and the four disciples at that time were only trying their best to honour his wish. They did not stop Cheng Kin Man from explaining to the deceased the effect of opening a joint account; instead, as requested by Cheng, they provided the medical certificate prepared by Dr Hwang. They tried their best to carry out the instruction of the deceased after his passing. Nothing was done that could be described as exploiting or oppressing the deceased. I again consider that the submission set out in the preceding paragraph an overstatement. I do not accept this claim.

I.   Conclusion: findings of fact

245. The deceased owned the original site of the Retreat as early as the 1960s. At first, it served as the residence of the deceased and his family, including the plaintiff, and a place where the deceased practised meditation and recuperated. At that time, the deceased had yet to become a vajra grandmaster. He had no disciples. The maintenance he received came from fellow villagers and the income his wife earned by working.

246. The deceased’s assets in Hong Kong came from land exchange, inheritance, donations made to him personally, his personal investments, and proceeds of sale of Buddha figures and religious items.

247. As regards the properties in Taiwan, part of them came from donations made by disciples and believers, part from the deceased’s personal funds. The proportion is unknown.

248. As its founder, the deceased had never regarded the Retreat as a place for public worship but rather a private self-practice monastery. The Retreat was a place to promote Buddhism, a place where praying sessions and conversion ceremonies were held, where scriptures were chanted free of charge, where vegetarian noodles were handed out on designated dates, and where books of scripture were printed for use by visitors of the Retreat.

249. Whether judging by the source of the assets, the purpose for which they were held and the way they were used, the properties and money the deceased had in Hong Kong were neither held on charitable trust nor ‘religious assets’ or ‘ten squares assets’ as described by  Madam Chen. The deceased’s assets were not purely for charitable purposes, not even purely for religious purposes. They also lacked the element of benefitting the public. The Retreat was not a charitable trust either. Madam Chen has also failed to prove that the properties in Taiwan were held by a charitable trust. The deceased did not hold the assets as a trustee for the Recognized Residents.

250. The 2005 Notice is a will. The deceased had announced the content of the 2005 Notice and that of the Wong Yau Hing Notice in the video conference, but Madam Chen has failed to prove that the deceased had uttered the words that Wong Yau Hing was ‘already one of the bosses of the Retreat and own[ed] one-third of the interest’. Even though it is a will, the 2005 Notice is void for the reason that it violates the rule against perpetuity.

251. The deceased had never explained to Madam Chen or the believers in Taiwan at the video conference the meaning of the words ‘possess the interest to keep and hold’ in the 2005 Notice. Madam Chen thought that the words were not clear, but the deceased said, ‘If it is expressed too clearly, people will take action immediately’. He did not explain who ‘people’ were and what they would do. He deliberately kept the meaning ambiguous. The court should not take the matter in its own hands to surmise the true intention of the deceased.

252. If I am wrong about this, then I think under the 2005 Notice, the main purpose was to protect and maintain, and owning the interest (not the property right) was only a means to achieve this end. It was akin to a trust set up for a particular purpose, not a gift. As a trust, the subject matter of the 2005 Notice is certain, namely all the assets of the deceased. But it lacks certainty of words because the meaning of ‘possess the interest to keep and hold’ is not clear. It is not known if it was a gift or a trust. It also lacks certainty of object because the Recognized Residents were an ever-changing entity which is against the rule against perpetuity, and the 2005 Notice does not specify any other beneficiary apart from the Recognized Residents. The trust is not legally valid. Applying the principle of resulting trust, all the assets under the deceased’s name still belong to the deceased and his estate.

253. If the Recognized Residents were the beneficiaries under the 2005 Notice, Madam Chen had lost her status as a Recognized Resident latest by the end of the meeting on 2 April 2006. She therefore has no capacity to make the counterclaim.

254. It was the deceased who asked for the opening of the new account. Madam Chen told Cheng Kin Man at the hospital that the new account was to be opened for the purpose of facilitating Madam Chen to withdraw money for fear that withdrawals could not be made in future, not for the purpose of giving the Recognized Residents the money in the new account. Cheng Kin Man told the deceased that Madam Chen acting alone could withdraw money. The new account was opened when the deceased did not have the mental capacity to do so, but it was not opened under undue influence by Madam Chen, nor was it an unconscionable transaction.

255. After Cheng Kin Man had gone, the deceased spoke to the four disciples. He asked Wan Dan Wah and So Chi Hung to come forward to be witnesses and said, ‘How (it) should be done, discuss (it) among fellow disciples. Rice-eating is as before’. The wording of this instruction is ambiguous and unclear. Therefore, the trust is not legally valid. Madam Chen’s counterclaim in respect of the new account fails.

256. Madam Chen’s propositions that a charitable trust existed, that the deceased held the assets for the Recognized Residents on trust and that the 2005 Notice is a will, are self-contradictory, mixing up as they do charitable assets and private assets. That said, it is unfair to blame her on this. The 2005 Notice and the deceased’s instructions lack the certainties required by the law. And his wish of ‘leaving it to a judge to give judgment’ is also baffling, making it difficult for the disciples who genuinely wanted to give effect to the life-time intention and deathbed wish of the deceased, not to mention the clashes it caused to the disciples as a group. It was a waste of both time and effort.

257. I order as follows:

(1) I declare that the deceased and his estate are the sole beneficial owner of the new account;

(2) The first defendant shall within 28 days give an account of the money in the new account and all the monies that are therefore traceable, including but not limited to the investments and interest derived therefrom.

(3) The counterclaim is dismissed, but Madam Chen is allowed to return to the Retreat to take back her personal belongings.

258. In accordance with the principle that costs follow the event, costs in this action shall be paid by Madam Chen as the losing party. I make an order nisi that:

(5) The first defendant shall pay the costs of the plaintiff and the SJ; and

(6) The costs of the plaintiff himself shall be paid out of the deceased’s estate to be assessed on a trustee basis.

Unless any of the parties hereto applies by way of summons, the order nisi will become absolute on 10 March 2015.

259. I am deeply grateful to Mr Chong and Ms Wong of Counsel for bringing into focus the complex documents and facts of the present case, and I also express gratitude to Ms Tong and Mr Chung for their assistance to the court.

260. I would also like to thank Dr Hwang Shu Tak, Dr Lai Sau Shun and Dr Yu Wai Tak, whose professional and objective analysis have assisted the court.

Translated by the Judgment Translation Unit of the Judiciary and vetted by Mr. Edmund Cham, Solicitor.