HUI YAU PING v. SZE LOONG YAU AND OTHERS

CACV 12/2016

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVI l appeal no. 12 of 2016

(ON APPEAL FROM HCA 1923 OF 2011)

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(by original action)

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(by counterclaim)

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REASONS FOR JUDGMENT

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Hon Lam VP:

1.  I agree with the reasons for judgment of Yuen JA.

Hon Yuen JA:

2.  This is an appeal from a Judgment of Deputy High Court Judge S T Poon given on 23 December 2015.  At the conclusion of the hearing of the appeal on 3 August 2016, we dismissed the appeal with costs.  My reasons appear below.

Background

3.  This is one of those unfortunate cases where members of a previously close family have been using up their time and financial resources, and no doubt subjecting themselves to emotional stress, in litigation against one another.

4.1.  The plaintiff (“the Father”) was the founder of a paper manufacturing business, Grand Yick Paper Co Ltd (“GY”). His wife (“the Mother”) and her brother (“the Uncle”) participated in the business which became very successful. 

4.2.  There were 20m issued shares in GY. Before the events which gave rise to the litigation, the Father was the registered shareholder of 11.86m shares (59.3% of GY’s issued shares), the Uncle was the registered shareholder of 6.14m (30.7%), and another person (who was not a party to the litigation) was the registered shareholder of the balance of 2m shares (10%).

4.3.  GY operated its business from industrial premises in Kwai Chung (“the Workshops”) which were owned by the Father and the Uncle as tenants in common (as to 4/5th by the Father and 1/5th by the Uncle).

5.  The Father and the Mother resided in a flat in a development in North Point (“the Flat”), of which the registered owner was the Mother.  It was mortgaged to a bank to secure credit facilities for GY.

6.  There were 4 adult children of the family, Linda, Lily, Henry and Michael.  Linda, Lily and Michael (“the 3 children”) worked in GY.  Henry had originally worked for GY but left in 2002 to set up his own business, whilst remaining a consultant at GY.

7.  It is common ground that the extended family (including the Uncle) enjoyed a harmonious relationship until the middle of 2011.

Mother’s illness and death

8.  Unfortunately in 2007, the Mother was diagnosed with cancer.  She was admitted to hospital in mid-October 2007 for an operation and was discharged 2 weeks later.  Subsequently however she suffered a stroke and died on 19 March 2008.

9.  The Mother died intestate.  Under the Intestates Estates Ordinance, Cap. 73, the Father as surviving spouse would be entitled to half of her estate, with the balance to be divided equally among the 4 children.

10.  At the time of her death, the Father was (on his own reckoning[1]) nearly 70 years old.  On his own case, it was his wish to step down and leave the business to the younger generation.

Insurance funds

11.1.  In the meantime, shortly after the Mother’s death, in May and June 2008, 2 insurance funds were subscribed in the Father’s name.  His 4 children were named as beneficiaries.

11.2.  Subsequently in November 2009, a 3^rd fund was subscribed in the Father’s name, with Lily named as the only beneficiary.

11.3.  The ownership of these funds featured at the trial but not on this appeal except to a limited extent[2].

Letters of Administration and schedule of assets and liabilities

12.1.  Meanwhile Mr L T Chung, a solicitor of Messrs Peter Mo & Co (“the Solicitor”), was instructed to prepare an application to the Probate Registry for the grant of Letters of Administration of the Mother’s estate to the Father. 

12.2.  For that purpose, a schedule of the Mother’s assets and liabilities in Hong Kong[3] (“the Schedule”) was prepared by the Solicitor’s firm.  It was verified by the Father as affirmant.  The only liability disclosed in the Schedule was a debt of $3m to the Uncle which was described as a “personal loan”.  This will be discussed below[4].  

12.3.  The Letters of Administration were granted to the Father on 18 September 2008. 

12.4.  The Mother’s assets (other than the Flat) were distributed by the Father.  It would appear from the evidence that these assets (and other assets overseas) were distributed in accordance with what the parties understood to be the Mother’s wishes, rather than in strict accordance with the law governing distribution under intestates’ estates. Although the distribution of these assets gave rise to some disputes at trial, they did not feature in the appeal.

Deed of Family Arrangement and Release

13.1.  In due course, instructions were given to the Solicitor to prepare a Deed of Family Arrangement and Release (“DFAR”). Under this deed, the 4 children

(1)  released all their interests in the Flat, and

(2)  released the Father from the further administration of the Mother’s estate and from any claims they might have against him arising out of such administration.

13.2.  The DFAR was signed in escrow on 24 October 2008[5] pending the bank’s release of the existing mortgage of the Flat. 

Madam Lam

14.  In October 2008, a lady who later became the Father’s second wife (“the 2^nd wife”) moved into the Flat to reside with him.  Her relationship with the rest of the family was cordial at this stage.       

Release of existing mortgage

15.  In November 2008, the bank agreed to the release of the existing mortgage of the Flat upon the execution of a new first legal charge over it to secure facilities for GY.

1st transfer of shares

16.1.  On 8 January 2009, the Father transferred 5m of his shares (about 42% of his shareholding) in GY at a nominal consideration to the 3 children as follows: 

-  1m shares to Linda;

-  1m shares to Lily;

-  3m shares to Michael.

16.2.  The Father’s own case was that this transfer was a gift[6].

Assent and Mortgage

17.1.  About two weeks later, on 23 January 2009 the Father signed an Assent whereby he as administrator assigned the Flat to himself as beneficiary.  The same day was inserted on the DFAR (under which the children released their claims to the Flat). 

17.2.  On the same day, the Father (now the sole legal and beneficial owner of the Flat) signed a mortgage charging it to the same bank as security for facilities granted to GY.  In other words, the only difference in the mortgage arrangement was the substitution of the Father for the Mother as mortgagor.

“The 1^st agreement”

18.1.  It was the Father’s evidence that in March 2009[7] he entered into an agreement with the Uncle (acting on behalf of himself and the 3 children[8]) that he would transfer another tranche of his GY shares (4.86m shares) to the 3 children on condition that GY would (a) continue to pay him $100,000 monthly, and (b) redeem the mortgage over the Flat.   

18.2.  In respect of the sum of $100,000, it was the Father’s case that before the Mother’s death, she had received $100,000 monthly for the two of them, and that he received $26,500 directly from GY for his own expenses: para. 4 Re-Amended Reply and Defence to Counterclaim. 

18.3.  However his tax returns showed:

-  for the tax years 1.4.2006 - 31.3.2009, his income[9] was $344,500 (about $28,700 pm);

-  for the tax year 1.4.2009 - 31.3.2010, his income as director of GY was $713,000 (about $60,000 pm);

-  for the tax year 1.4.2010 - 31.3.2011, his income as director of GY was $780,000 ($65,000 pm) and as consultant of Grand View Paper Co Ltd (“GV”)[10]was $192,000 ($16,000 pm). 

18.4.  When the Father was cross-examined on the tax returns, he said

-  before the Mother’s death, it was she who had dealt with the finances;

-  after the Mother’s death (in March 2008), he had received $100,000 monthly, of which $60,000 was paid by GY and the balance of $40,000 was paid in cash to him by Linda with money from GY[11].

18.5.  The allegations of the 1^st agreement, the payment of $100,000 to the parents and the $40,000 cash payment, were denied by the defendants[12].

Second marriage

19.  On 8 April 2009 the Father married the 2^nd wife.

2^nd transfer of shares

20.1.  On 27 April 2009, the Father transferred 4.86m of his shares (about 41% of his shareholding) in GY at a nominal consideration to the 3 children as follows: 

-  1m shares to Linda;

-  1m shares to Lily;

-  2.86m shares to Michael.

20.2.  The Father’s case was that, unlike the 1^st transfer which was by way of gift, he made the 2^nd transfer to perform his part of the “1^st agreement” mentioned above.  That was denied by the defendants.

Assignment of Workshops

21.  In June 2009, GV was incorporated, the shareholders of which were the Uncle (40%), Michael (40%), Linda (10%) and Lily (10%).  

22.1.  On 7 December 2009, the Father and the Uncle executed an assignment of the Workshops[13] to GV for a consideration of $3.5m.  The Father and the Uncle as vendors were represented by Messrs Shea & Co, whilst GV was represented by the Solicitor’s firm.

22.2.  It was the Father’s case that the assignment had been fraudulently misrepresented[14]to him by the Uncle and Michael as mortgage documents, as security was “necessary for [GV] to apply licence in the Mainland China”[15].

22.3.  The assignment contained an acknowledgment of receipt of the consideration.  It is common ground that no money was actually transferred from GV to the Father or the Uncle[16]. The defendants’ case was the Father and the Uncle agreed that instead of GV making direct payment to them as vendors, its books would record a credit balance to them, and in the case of the Father’s share of the consideration, the books would record it as a credit balance to each of the 3 children in accordance with the sums he wished to give him or her[17].

“The 2^nd agreement”

23.1.  It was the Father’s case that there was then a 2^nd agreement between himself and the Uncle, in which he was “coerced” to agree to transfer the balance of his shares in GY (2m shares) to the family, failing which he would not be given the monthly payment of $100,000.

23.2.  The Father alleged that as a result, he agreed to transfer the 2m shares to Henry’s son King Pui (“the grandson”) on condition that (a) he would receive the monthly payment of $100,000 and (b) the mortgage over the Flat would be redeemed. 

The 3^rd transfer

24.1.  On 28 June 2010, the Father transferred 2m shares being the balance of his shareholding in GY to Lily at a nominal consideration.  There was no declaration of trust in favour of the grandson.

24.2.  The Father’s case was that he made this transfer to perform his part of the “2^nd agreement” mentioned above.  That was denied by the defendants.

“The 3^rd agreement”

25.1.  It was the Father’s case that in May 2011 however, he only received monthly payment of $60,000 instead of $100,000 as agreed.  

25.2.  The Father alleged that consequently in June - July 2011, he made a 3^rd agreement with the Uncle, in which he agreed to accept a reduced monthly payment of $60,000 in return for the immediate redemption of the mortgage over the Flat. 

Events in mid 2011

26.1.  It is common ground that relationships within the family broke down in the middle of 2011.

26.2.  On 16 July 2011, GY terminated the Father’s directorship. 

26.3.  On 26 July and 2 August 2011, the Father made the 2^nd wife the beneficiary of the 3 insurance funds in place of the children.

26.4.  In August 2011, GY stopped making payments to the Father.       

Proceedings

27.1.  In November 2011, the Father commenced proceedings against the Uncle, the 3 children and GV for:

-  specific performance of the 3^rd agreement (alternatively, the 2^nd or the 1^st agreement); in other words, payment of $60,000 monthly (alternatively $100,000 under the previous 2 agreements), and redemption of the mortgage over the Flat[18];

-  a declaration that Lily holds the 2m shares transferred to her in June 2010 on trust for the grandson;

-  a declaration that the assignment of the Workshops was null and void, rescission of the assignment and/or damages for fraudulent misrepresentation, and his share of rents for GY’s occupation of the Workshops;

and against GV solely for:

-  $2.8m, being his share of the sale consideration of $3.5m.

27.2.  As mentioned previously, the defendants denied that

-  there were any 1^st, 2^nd or 3^rd agreements;

-  Lily was holding the 2m shares on trust for the grandson;

and asserted that the Father had agreed to the assignment of the Workshops and the arrangement in respect of the consideration.

27.3.  Further, by way of counterclaim,

-  Linda alleged that the insurance funds were her personal investments and they had only been put in the Father’s name to take advantage of a more favourable rate of premium.  She filed a counterclaim in respect of them against both the Father and the 2^nd wife;

-  the Uncle alleged that the Mother’s estate owed him $3m “in respect of a loan he lent to [the Mother]”[19] and he claimed repayment by the Father in his capacity as administrator of the Mother’s estate[20].

27.4.  In respect of the Uncle’s claim against the Mother’s estate, the Father as administrator did not plead in defence that the administration had been completed and no assets remained to satisfy the claim[21]. Accordingly this issue was not considered at trial, so I say no more about it.

Trial

28.  The trial took 7 days.  The Father and Henry gave evidence, as did the Uncle and the 3 children.  Importantly, the Solicitor gave evidence as well. 

Judgment

29.  The judge remarked that “none of the parties in the present case [viz the Father, the Uncle and the 3 children] impressed me as honest witness”[22]. However he found the non-party witnesses, viz Henry and the Solicitor, were “honest witnesses”[23]. I shall refer later to a part of Henry’s evidence which is relied upon by Mr Kenneth CL Chan, counsel for the Father on appeal[24].

- No agreements

30.1.  The judge found that the Father’s own evidence of the 1^st agreement was too vague and general for the court to find a concluded contract with sufficiently clear terms which was binding on all parties present at the meeting[25]. The judge found the Father’s evidence of the 2^nd agreement, including the transfer to Lily to hold on trust for the grandson, was even “more lacking in particulars”[26]. As for the 3^rd agreement, it was “but a mere concession” by the Father[27] which obviously was not a stand-alone agreement, and was dependent upon his having proved the previous agreements.          

30.2.  The judge also found the Father’s case to be inherently improbable for 5 reasons listed in paras. 51-55 of the Judgment which I will not repeat here.  The judge found (para. 56):

“I believe that at the time of the transfers [the Father] was planning to retire from the operation of GY and the payment to [the Father], be it $100,000 or $60,000, was a form of gratuity given by the family to [the Father] in support of his livings, which is not a term of any agreement as alleged by [the Father]”.

30.3.  The judge said he would not rule out the fact that the Father had an expectation that he would be provided with a reasonable amount of money to support his living for the rest of his life after he had transferred all his assets to his children, but he had grounded his case solely on the alleged 3 agreements, and had not pleaded other causes of action such as proprietary estoppel[28].

30.4.  The judge duly dismissed the Father’s claims for specific performance of the agreements.

- No trust for 2m shares

31.  That included dismissal of the Father’s claim that Lily held the 2m shares transferred to her in June 2010 on trust for the grandson.  The judge noted that the Solicitor was never informed of the alleged trust, and there was no reason why the Father would have chosen Lily and not Henry to be the trustee of the shares for Henry’s son[29].

- No misrepresentation of the assignment

32.  As for the assignment of the Workshops, the judge rejected the Father’s case that he had been told by the Uncle and Michael that the document he signed was a mortgage to secure facilities for GV. 

32.1.  First, the relationships between the parties were still good at the time, and there was no reason for any deception[30].

32.2.  Second, the judge preferred the evidence of the Solicitor that he was present in his office at the time the assignment was explained to the Father by two clerks, one from his firm and the other from Messrs Shea & Co, whereas the Father had alleged that the Solicitor was not present[31] and that no one (whether from the Solicitor’s firm or from Messrs Shea & Co) had explained the assignment to him. 

32.3.  Third, the Father would have known from his business experience whether GV needed to provide security for credit facilities to obtain a licence[32].

32.4.  The judge found that the sum of $16,000 monthly, which the Father continued to receive even after the assignment, was another form of gratuity from the family, and was not paid to him as rent[33].

32.5.  The judge said at para. 70 that “the parties’ real intention” was to pass the Workshops to the children.  In this respect, I believe he must have been referring to the Father’s intention, rather than the Uncle’s (as the Uncle had shares in GV and retained an indirect interest in the Workshops that way).  It is clear that the judge meant the Father’s intention, for in the same paragraph, he referred specifically to the Father when he said that the “price of the transaction would not affect [the Father’s] mind to effect the transfer of his interest in the Workshops”.

32.6.  The judge duly dismissed the Father’s claims in respect of the assignment.

- The Uncle’s claim to $3m from the Mother’s estate

33.1.  As for the Uncle’s claim to $3m from the Mother’s estate, the Uncle had pleaded that it was a loan to the Mother[34]. No further and better particulars of this allegation were provided or sought.

33.2.  In the Uncle’s witness statement, he said[35]:

“[the Mother] and I trusted each other so much that I would lend her money without interest or security. Over the years, [the Mother] had borrowed money from me for various reasons, such as investment and property buying: [the Mother] had also repaid her debt from time to time. At the time of [the Mother’s] death, she still owed me around HK$3 million, which is confirmed by the affirmation signed by [the Father]”.

33.3.  Certainly this gives the impression of a normal loan situation, where the Uncle provided funds to the Mother, and she received funds from him for her own purposes, repaying him from time to time.

33.4.  However in court, the Uncle’s evidence described a different situation.  He said that for many years, he and the Mother had been receiving monies for “waste materials”, ie materials left over after GY’s use.  He said they shared the monies equally.  At first they had put the monies in a bank account, but later when the tax authorities on the mainland had become stricter, the Mother had kept the monies in cash.  She accounted to him from time to time, and he said after he received $540,000 cash from her prior to her hospitalization, there was a sum of $3m owing to him and that was known to the family (Linda had given instructions to the Solicitor’s firm about this liability and the Father had signed the Schedule).

34.1.  The judge was well aware that the Uncle’s description of how the sum of $3m had come about was different from the “loan” referred to in the pleadings and the witness statement.  The transcript shows the judge had asked the Uncle a series of questions to test his evidence[36]. In the end however, the judge accepted his evidence[37].

34.2.  The judge noted that the Schedule was prepared at a time when the parties were in a harmonious situation and there would have been no reason for Linda to provide the Solicitor with false information of a non-existent liability from the Mother to the Uncle[38].

34.3.  The judge clearly placed substantial weight on the fact that the sum of $3m had been affirmed by the Father in the Schedule of the Mother’s liabilities.  In fact the sum of $3m was the estate’s only liability. 

35.  Therefore in conclusion,

-  the Father’s claims against the defendants were dismissed;

-  the 3 children’s counterclaim against the Father to compel him to account for and distribute assets of the Mother’s estate[39] was dismissed;

-  Linda’s claim against the Father and the 2^nd wife in respect of the insurance funds was dismissed; and

-  the judge ordered that the Father as administrator of the Mother’s estate do pay the Uncle the sum of $3m with interest[40].

- Costs

36.  In respect of costs, the judge made an order nisi that all parties were to bear their own costs except that the Father should bear half of the Uncle’s claim in the counterclaim.  It is clear from para. 5 of the sealed order that those costs are to be borne by the Father in his capacity as administrator and not in his personal capacity[41].

Appeal 

37.  The Father appealed. 

Discussion

38.  Counsel for the Father Mr Chan acknowledged the difficulty of appealing primary findings of fact.  Yet all his submissions, whether written or oral, were in effect challenges to the judge’s primary findings of fact in a case where there was no contemporaneous documentary evidence in support of the Father’s case and where the judge had the advantage of seeing and hearing the witnesses give oral evidence.  

39.  I will focus on the points emphasized by Mr Chan. 

- The Uncle’s claim to $3m from the Mother’s estate

40.1.  Mr Chan submitted first, that this court should interfere with the judge’s finding that the Mother’s estate owed the Uncle $3m because that finding was “plainly wrong”.

40.2.  Mr Chan argued that no reasonable judge could have reached that conclusion in view of the two versions given by the Uncle, especially when the judge had rejected the Uncle’s evidence in respect of other matters.  Mr Chan also argued that the Uncle’s claim was unbelievable because the Mother or the Father would have had no difficulty paying him that sum, as they had been on good terms. 

41.  However as mentioned earlier, the judge was well aware of the difference between the Uncle’s earlier, unparticularised allegation of “loan” and his evidence in court of waste material monies which were “parked” with the Mother.  The judge put the Uncle through a long interrogation in the course of cross-examination.  He had the advantage of seeing and hearing detailed evidence being unfolded.  It cannot be said that no reasonable judge could have accepted the Uncle’s evidence.

42.  That is especially since that claim was corroborated by the Father’s own affirmation in the Schedule of the estate’s liabilities. 

42.1.  In this respect it should be noted first, that the Father and the Mother and the Uncle had been participating in the same business together for decades.  The Father, unlike a professional administrator examining a deceased person’s affairs “blind”, would therefore have been familiar with the Mother’s affairs. 

42.2.  Second, the Solicitor testified that he was present when his clerk explained the Schedule to the Father.  Mr Chan criticized the judge for accepting the Solicitor’s evidence, but as the judge noted:

“33. [The Solicitor] is an independent witness having no personal interest in this matter. From the audio recording of the telephone conversations between him and [the Father] produced by [the Father], I noticed that [the Solicitor] concerned very much on the interest and well beings of [the Father] and I do not think [the Solicitor] would give false evidence against [the Father] without cause”.

42.3.  Third and in any event, even though the clerk who had explained the Schedule to the Father was not called, one would have expected the Father (who was an experienced businessman) not to have signed the affirmation without explanation.  The sum of $3m would have stood out for special mention as it was the estate’s only liability.  Moreover as it was the only figure appearing on the page bearing the Father’s signature, it could not have escaped his attention.

43.  Finally in respect of the counterclaim for $3m, Mr Chan’s submission on costs[42] was premised on a misconception that the Father was liable to pay the Uncle’s costs in his personal capacity, which is not the case as can be seen from para. 5 of the sealed order.

- The alleged 3 agreements

44.  As for the 3 agreements, Mr Chan submitted that it would have been “natural and reasonable” for the Father to have imposed conditions for a monthly payment to himself and to have required GY to redeem the mortgage over the Flat, in exchange for the transfer of his shares in GY. 

45.  With the benefit of hindsight, this might well have been the wiser course for the Father to have taken.  However the judge rejected the Father’s allegation of the 3 agreements by reason of the paucity of evidence, having heard and seen him give oral evidence.  The submission that the judge could have ordered the defendants “to pay salary to the Father until he passed away or for such a reasonable period of time as his Lordship thinks fit”[43] served only to highlight the uncertain and ambiguous nature of the Father’s case of the alleged agreements.

46.  Further, Mr Chan submitted that in respect of the 2m shares transferred to Lily in June 2010, the judge had failed to take into account Henry’s evidence of an acknowledgment by Lily and the Uncle.

46.1.  In his witness statement[44], Henry had said the following:

“9. In around March or April 2010, my father said he decided to give his remaining 2,000,000 shares to my son, [the grandson].

10. In around May or June 2011, when my father and uncle and the others started the argument, I then came to know that my father had already transferred those 10% shares to the name of [Lily] for [Lily] to hold in trust until [the grandson] reaches 18 and by then she would return to [the grandson] the shares in full. I inquired about this with [the Uncle] and [Lily]. They also confirmed that [Lily] would transfer those shares back to the name of [the grandson] when [the grandson] reaches 18 years old”.

46.2.  He repeated this in his oral evidence[45].

47.  In their witness statements, Lily and the Uncle had denied the Father’s allegation that the 2m shares were to be held on trust for the grandson. 

48.  One would therefore have expected Henry’s evidence of the alleged acknowledgments by Lily and the Uncle to have been specifically put to them in cross-examination.  However (as confirmed by the Father’s counsel at trial) this was not done.  Nor was the evidence of the “acknowledgments” referred to the judge in the Father’s closing submissions. 

49.  In the circumstances, one can hardly criticize the judge for not taking this into account.  Nor can it be said that because the judge had said[46] that “the evidence [Henry] gave was on the whole consistent and reasonable” (emphasis added), that it had the effect of proving the Father’s case on the transfer of the 2m shares to Lily on trust for the grandson, let alone the rest of the alleged agreements.

- The assignment of the Workshops

50.  Finally, Mr Chan’s submissions do not substantiate his argument that the judge had a “misunderstanding” of the evidence in respect of the assignment of the Workshops.  Mr Chan emphasized that because the Solicitor’s signature did not appear in an interpretation clause on the assignment, it was “therefore highly doubtful as to whether [the Solicitor] had explained the contents of the documents to [the Father], especially [the Solicitor] was not representing [the Father and the Uncle] in the purported sale and purchase”. 

51.1.  With respect, that “doubt” does not follow at all.  The Solicitor was the family solicitor.  He had dealt with the Father’s application for Letters of Administration of the Mother’s estate, the DFAR, and the 1^st and 2^nd transfers of shares.  He was then approached to prepare the assignment.  At that stage, it is common ground that everyone was in a harmonious relationship.  As the Solicitor said in evidence, it was an intra-family transaction[47].

51.2.  The Solicitor duly instructed his staff to draft the assignment, and it was he who arranged[48] for the vendors (the Father and the Uncle) to be represented by Messrs Shea & Co whose clerk Mr Lee Tak On (“Mr Lee”) used to be the Solicitor’s colleague.  Neither Shea & Co nor Mr Lee was previously known to the vendors. 

51.3.  As such it was only natural that when the Father and the Uncle first arrived at the Solicitor’s office (the Uncle being both vendor and a director of the purchaser GV), the Solicitor’s clerk first explained the document to them, and then subsequently when Mr Lee arrived, he explained the document again as he was their legal representative for this transaction.  This was followed by confirmation from the Solicitor, who was after all the family solicitor, albeit technically only the purchaser’s solicitors for this particular transaction.

51.4.  I do not therefore see any “misunderstanding” of the evidence at all.   

- Costs of the counterclaim against the 2^nd wife

52.  Finally Mr Chan submitted that as Linda’s counterclaim against the 2^nd wife regarding the ownership of the insurance funds was dismissed, the judge should have awarded the 2^nd wife costs.

53.1.  It is correct that costs normally follow the event but given the intra-family nature of the litigation, the judge may well have thought it appropriate, in the exercise of his discretion, not to make a discrete order for the 2^nd wife’s costs.

53.2.  More importantly, the judge had made an order nisi.  The 2^nd wife could have applied to the judge to vary the order, in which event the judge might have varied the order, or if not, one would expect him to give reasons for making his order absolute. However the 2^nd wife did not make an application to vary the order nisi and instead sought to appeal the costs order after it became absolute.  In my view that is an improper course and there are no grounds on which this court would overturn the judge’s exercise of discretion.

Order

54.  For the reasons set out above, I dismissed the appeal with costs.  The court was not asked to certify the appeal for two counsel, and in any event I do not think two counsel was necessary.     

Hon Kwan JA:

55.  I agree with the reasons for judgment of Yuen JA.