NATIONAL MUTUAL INSURANCE CO (BERMUDA) LTD v. LAU CHUP HEI AND ANOTHER

1994, M.P. No. 3534

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS

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J U D G M E N T

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1. In July 1992, a woman named Chow Fung Lin (whom I shall call 'Fanny Chow') took out a policy of life insurance with the National Mutual Insurance Company (Bermuda) Limited (the 'insurance company'). One of the reasons why she chose that company was because an old acquaintance of hers, a woman named Chan Mei Lan ('Chan') was employed as an insurance agent by that company and it was Chan who assisted her in completing the necessary forms. The policy was on Fanny Chow's own life. However, she formally nominated her mother, Madam Koon Tung Ying, to be the beneficiary of the policy. At the same time as she took out the policy on her own life, Fanny Chow employed the services of Chan to take out two other policies, one on the life of her mother, one on the life of her father. There were, therefore, three policies in respect of which Fanny Chow paid premiums to the insurance company.

2. Sadly, in or about November 1993, Fanny Chow was diagnosed to be suffering from cancer. The cancer was terminal and some four months later, on 5th April 1994, she died. There is no evidence that in her life she had ever married nor is there evidence that she had had children. She died intestate leaving her two parents and four siblings. It is not disputed that, up until very shortly before her death when she fell into a coma, Chow remained alert and able rationally to communicate with others.

3. At the time of her death, Fanny Chow's mother, Madam Koon, believed that she was still the beneficiary of the life insurance policy and duly submitted a request to the insurance company for payment of the proceeds in the sum of US$200,000. It was then she discovered that seemingly, during the course of her final months, more particularly on 15th December 1993, her daughter had nominated another beneficiary in her place and had employed the services of the insurance agent, Chan, to give effect to that change.

4. Ostensibly, the new beneficiary was a gentleman named Lau Chup Hei ('Lau') who had been known to Fanny Chow for a number of years; in fact, from the time the two of them had served together in the Hong Kong Police. Madam Koon was aware that there had, in the very early days, been a suggestion of romantic involvement between the two but she believed this to be a matter of history, more particularly as, from about 1984 until the time of her death, her daughter had been living effectively as man and wife with a business partner, a Japanese gentleman named Toshiro Arai. The mother did not accept that her late daughter had knowingly made Lau the beneficiary of the life policy. She believed that a fraud had been perpetrated.

5. For his part, Lau, having obtained legal advice, demanded that the insurance company pay the proceeds of the policy to him, he being the duly nominated beneficiary at the date of Fanny Chow's death.

6. Faced with two competing claims, in December 1994 the insurance company instituted interpleader proceedings calling upon Lau and Madam Koon to state the nature and particulars of their respective claims. The proceeds of the life policy were paid into court. In February 1995, this Court ordered that Madam Koon be cited as the Plaintiff in the issue and Lau as Defendant, the matter to proceed to trial to determine who should receive the proceeds of the life policy.

The basis of the Plaintiff's claim

7. In broad sweep, it is Madam Koon's case that at some time in November or early December 1993, her daughter made an arrangement with the insurance agent, Chan, to change the method by which the premiums on all three life policies with the insurance company were to be paid. In pursuance of this arrangement - not on 15th December but on a date after that - Chan visited her daughter at the family home and represented to both her daughter and her son, Chow Tak Kee, that she had brought the necessary forms for signature to give effect to the payment change. Her daughter (who had the habit of signing blank forms when she believed that she could trust the person who would subsequently complete them) duly signed three forms without ensuring that they had first been completed or, if they were completed, without ensuring that the details accorded with her instructions.

8. All three forms were standard forms printed by the insurance company, each bearing the heading : 'Request For Service Application'. By ticking various boxes and entering certain particulars in other boxes a variety of changes could be made; inter alia a change of payment method or of bank account, a change of correspondence address or indeed, perhaps surprisingly, a change of beneficiary. In short, that single form allowed for all manner of changes from the purely mundane to those of considerable significance.

9. It is Madam Koon's case that one of these three forms was completed by the insurance agent, Chan, not to reflect the true intention of her daughter's wishes but rather to make it appear that her daughter had nominated Lau as the beneficiary of the policy drawn on her own life, a life which, to Chan's knowledge, was soon to end.

10. In her statement of claim, Madam Koon averred that, if this particular form had not been completed at the time her daughter signed it, it was invalid and ineffective for the purpose of changing the name of the beneficiary in that neither Chan nor anybody else had received her daughter's authority to make such a change. The form was therefore a forgery in that the same purported to be a request for the change of beneficiary on the said policy when, in fact and in truth, it was not and was never intended to be.

11. If, however, the form had been completed at the time her daughter signed it, it remained equally invalid and ineffective in that her daughter would have been 'fundamentally mistaken as to the character and nature' of the document, having been mislead by 'the fraud or fraudulent misrepresentation' of the agent, Chan, that her signature was required simply to change the method by which premiums were to be paid.

Fanny Chow's estate

12. To better understand the background, it should be noted that, while clearly the proceeds of the policy in dispute - an amount of US$200,000 - formed a substantial part of the assets left by Fanny Chow at her death, it was not the sole asset. A further life insurance policy in the sum of US$80,000 was left to Madam Koon and she has received those proceeds.

13. There was also a property in Sai Kung which fell into her estate. It appears that this had on it a substantial mortgage of at least $2,500,000. However, the property was at one time sold by the parents as administrators of the estate for a sum of $6,000,000. This sale was later rescinded and litigation has apparently taken place. But if the sale had gone through, it would have brought in a sum of something like $3,500,000.

14. It should also be mentioned that, in late December 1993, several months before her death, Fanny Chow paid to her mother a cash sum of $100,000.

15. While, on the totality of the evidence, it is therefore clear that Fanny Chow always maintained a close and loving relationship with her mother and father and, in the traditional manner, did what she considered proper to assist in their support, for example, by paying a regular monthly sum to her mother, there is nothing on the evidence to show that, by leaving Lau the proceeds of the one insurance policy, she must have appreciated at the time that she made the change that she would thereby be leaving her parents in a financial predicament.

The failure to plead conspiracy

16. The pleadings filed by Madam Koon, as I have indicated, allege only that the insurance agent, Chan, defrauded Fanny Chow so that the dying woman unwittingly placed her signature on a document believing it was intended simply to change a method of payment when, in fact, it was used to change the name of the beneficiary under that policy; the beneficiary not being Chan herself but being a third party, Lau. But why would Chan seek to commit such a fraud if she was not to receive the proceeds of the policy?

17. To think that she would do so purely on her own with the intention of later approaching Lau after Fanny Chow's death and telling him that he had only been made the beneficiary because of her fraud and that she should therefore be entitled to a share of the proceeds is, in my judgment, too remote to be feasible. The risks would be huge. In any event, when she testified, Chan struck me forcefully as a down-to-earth, pragmatic woman, hardly the kind to embark on such a wild and uncertain venture. Nor was it at any time suggested as part of the Plaintiff's case that Chan, a married woman, was having a carnal relationship with Lau or was somehow, at a distance, infatuated by him. All that was suggested was a friendship and such a friendship was admitted.

18. In such circumstances, Chan's motive for the alleged fraud could only have been financial and, if that was the case, the compelling inference, indeed the only reasonable inference, must be that Chan and Lau conspired together before Fanny Chow's death to bring about the fraud so that they could both benefit.

19. Indeed, in respect of the necessary motive, the Plaintiff's case was founded to a large degree on just such a conspiracy with Lau, the intended beneficiary under the policy, being the prime motivator of events. In this regard, in his written submissions, Plaintiff's counsel argued that Lau's motive was financial. He was in debt; his savings had decreased. Evidence showed that in December he had just $2,464 in his current account. Failing this, argued counsel, perhaps Lau felt that he has a 'moral right' to the proceeds of the insurance policy because of his 'relationship' with Fanny Chow. Counsel, in fact, detailed both Lau's opportunity and the means available to him to bring about the fraud. Inter alia, his written submissions were as follows -

"The opportunity was clearly present. Mr Lau had a terminally ill former girlfriend turned business customer with a life insurance policy and an insurance agent, Miss Chan, whom he was acquainted with and who was sympathetic to him and Insurance Proceeds that would only be payable after the deceased passed away and beyond her ability to challenge."

Counsel went on to argue -

" Lau had the means of bringing about the change of the beneficiary to himself: He had:-

(1) a terminally ill friend who was accustomed to signing forms and documents in blank;

(2) an RSA Form that was used for all types of changes to the Policy from the very minor to the very major;

(3) the help of an insurance agent, Chan, who was a good friend of the deceased and whom he knew both socially and professionally and who followed his instructions; and

(4) an insurance company that did not have a system to prevent abuses ..."

20. But if, evidentially, if only by inference, Plaintiff's case was founded on a conspiracy between Lau and the insurance agent, Chan, should not that conspiracy have been pleaded? I acknowledge the inherent difficulties of pleading a conspiracy and doing so with sufficient particularity when there is no direct evidence of one but if, on the clear balance of probabilities, a conspiracy is to be inferred, I see no reason why it should not be pleaded as such. Invariably, in both civil and criminal matters, conspiracies (of necessity) must often be proved by means of inferences, those inferences arising from the overt acts of the conspirators.

21. As to the need to plead the tort of conspiracy when the case is founded upon one, the headnote to Aktieselskabet Dansk Skibsfinansiering v. Wheelock Marden & Co Ltd & Ors [1994] 2 HKC 264 reads as follows -

(1) In addition to the general requirements of properly particularized pleadings, there was a special rule that allegations of fraud be pleaded distinctly and with the utmost particularity.

(2) The pleader in a claim in the tort of conspiracy had to plead at least one overt act which was the act of all the alleged conspirators or, failing that, a number of overt acts which include at least one act on the part of each conspirator. And the overt act or overt acts pleaded must be such as to show: (i) that the conspiratorial agreement alleged against the defendants had been entered into by each and every one of them; (ii) that the agreement and not merely the intention of one person alone, was implemented; and (iii) that such implementation caused the damage complained of."

22. In my judgment, a conspiracy that is alleged must be pleaded. How else, in this case, for example, was the defence to know fully the case it had to meet?

23. It has been argued by defence counsel that in the absence of such specific pleadings, it cannot be part of Plaintiff's case that Lau colluded in any way with Chan in attempting to effect the alleged fraud. As a matter of law, I agree with that submission. As a matter of fact, however, I should say that, on the totality of the evidence, even if a conspiracy had been pleaded, the result of this judgment would have been the same.

An outline of the defence

24. Because of the factual complexity of the evidence, before considering the testimony of the individual witnesses, something should be said in broad brush terms of the defence case. To all intents, the defence case rested on the evidence of the insurance agent Chan. Lau himself did not give evidence.

25. Chan testified that she and Fanny Chow had first got to know each other in the police and had remained friends since that time. Chan said that in 1991 she left the police and joined the insurance company as one of its agents. She remained with the insurance company until January 1994 when she followed her superior and several other agents to another company, Top Glory Insurance (Bermuda) Ltd. This move would, therefore, have taken place two to three months before Fanny Chow's death.

26. In July 1992, Chan said that she discussed insurance with Fanny Chow. As a result of these discussions Fanny Chow took out a policy on her own life, paying the premiums annually. This is the policy in dispute. In addition, Fanny Chow arranged for her parents each to take out life policies, nominating the other as beneficiary. The premiums on these policies were paid monthly by autopay. Fanny Chow paid all the premiums.

27. Concerning their relationship prior to Fanny Chow discovering she had cancer, Chan said that she and Fanny Chow would meet from time to time to have tea together or play mahjong. It was during this time, said Chan, that she was introduced to Lau. She had not known him in the police. She said that Lau, in fact, took out a medical insurance policy with her. The result of this, of course, was that Chan then had Lau's personal particulars in her files at work.

28. It was Chan's testimony that in early December 1993 she was telephoned by Fanny Chow who said that she was in the Baptist Hospital and had been diagnosed as suffering from cancer. Fanny Chow said that she wished to see Chan. When they met, said Chan, Fanny Chow told her that she wished to change the beneficiary on her own life policy from her mother to Lau. By this time, said Chan, she was aware that Fanny Chow and Lau shared a strong romantic bond.

29. According to Chan, being aware that her change of beneficiary would not be well accepted by her family or indeed by Mr Arai, Fanny Chow swore her to secrecy. Chan said that she agreed to keep the matter secret and, with one exception only, did so until after her friend's death. The one exception occurred shortly before Fanny Chow's death when she was back in hospital and lapsing into a coma. On that occasion, said Chan, she saw Lau at the hospital and was so touched by his grief that she intimated to him that Fanny Chow had left him the proceeds of her life policy.

30. As to the signing of the necessary forms to give effect to the change of beneficiary, it was Chan's testimony that, when first asked, she did not have the forms on her and said it would have to be done later. Chan said that she made several more visits to Fanny Chow in hospital but she did not bring the required forms ? essentially not wishing to push the matter, believing that her friend should have time to consider her decision - and Fanny Chow, she said, did not ask for them.

31. It was only after she had been released from hospital that Fanny Chow reminded her about the change of beneficiary. As a result, said Chan, she visited her on 15th December at her Shatin apartment. It was Madam Koon who answered the door and ushered her through to Fanny Chow's room. There was, therefore, just the two of them in the room. Chan said that she explained the form and was asked by Fanny Chow to fill in the relevant personal particulars by using her own records. The change of beneficiary form contained a box in which the relationship of the beneficiary is described. Chan said that she asked Fanny Chow about this and was asked to put down 'Lo Biu' which in Chinese characters means cousin. This was done. Chan said that she put down Fanny Chow's name on the form and Lau's name too and then requested Fanny Chow to sign. Once that was done, she said that she also signed and wrote down the place and date, those details being: 'HK, 15-12-93.' Later, at her office, said Chan, she filled in Lau's remaining details.

32. As a final matter, when considering the defence case in broad outline, it should be mentioned that, although Lau did not give evidence, a series of fifteen photographs were placed into evidence by the defence which depicted Fanny Chow and Lau together. From the date endorsements (made by the camera), it is apparent that the last of these photographs was taken in 1990, some three years before the change of beneficiary took place. It is apparent that these photographs were taken over an extended period of time dating back from 1990. The change in fashion and the ageing of the faces makes this apparent.

33. I appreciate fully that photographs of this kind reveal very little of what may or may not have been the true nature of the relationship between the two. Such photographs can easily be chosen at random in an attempt to show a false picture. In his closing submissions, Plaintiff's counsel described the photographs as an attempt by the defence to 'grasp at straws' by putting them forward as some basis from which the inference could be drawn that the change of beneficiary was genuine. But, with respect to Plaintiff's counsel who canvassed every matter possible on behalf of his client and did so with vigour and high professionalism, I do not believe that the defence put in the photographs as evidence to be taken in isolation. The photographs were to be taken in conjunction with all the other available evidence to show that there existed between Fanny Chow and Lau over an extended number of years a close and abiding relationship and that accordingly, in all the circumstances, it does not offend the probabilities to find that Fanny Chow may genuinely, in the knowledge of her approaching death, have desired to leave something to Lau in recognition of that relationship.

34. In this regard, on the totality of the evidence, I am constrained to say that I am sympathetic to the defence. I am satisfied that there was, in fact, a long-standing, close relationship between the two and that it was, in the early days at least, one of romance and later, while a sexual relationship has not been clearly shown, it was at least one of easy intimacy. One of the photographs, for example, shows Fanny Chow sitting on Lau's lap in an aircraft.

35. In my judgment, the following matters cannot be ignored. When they were both young police officers, Fanny Chow and Lau had a romantic involvement. Even after this was seemingly broken off because Lau was a married man, the two continued to see each other and go out together, albeit just as friends. Later, when Fanny Chow was in business, she took Lau's own daughter into the business. This led to a romance between Lau's daughter and Fanny Chow's brother, Jacky; a relationship which neither Lau nor Fanny Chow approved of. Later still, Lau himself came into the business and began travelling out of Hong Kong (to China, for example) for Fanny Chow. It is not disputed that Fanny Chow acted generously towards Lau. In her last months of life, it is clear that Fanny Chow was visited by Lau; indeed for a short period of time Fanny Chow and her parents stayed in an apartment owned by Lau. From the evidence of Mr Arai, it appears that Lau attended to the closing down of the office and, on the evidence generally, it appears that Fanny Chow entrusted Lau with her safety deposit box key.

36. I must also say that, in general terms, I was impressed by Chan as a credible witness. In light of that, I believe I am entitled to give some limited and cautious weight to her evidence concerning what she, as a friend of both parties, believed to be the true nature of the relationship. In this regard, during the course of her testimony, when dealing with the question of why the euphemism 'cousin' was entered onto the change of beneficiary form, the transcript reveals the following -

"COURT: At that moment in time, acting as a business agent effectively, did you not think it better to put in a real relationship as opposed to use a colloquialism that covered several different relationships?

A. Certainly, it would be better to put in the real relationship.

Q. What was the relationship, the real relationship between the deceased and Mr LAU, as you understood it?

A. As far as I was aware they were very close, intimate, between man and woman."

The burden of proof

37. Madam Koon's claim is founded on the allegation that the insurance agent, Chan, took it upon herself to perpetrate a calculated fraud on a dying friend; a course of conduct not only morally reprehensible but also criminal in nature. In light of this allegation, it is imperative to understand the nature of the burden of proof resting on Madam Koon's shoulders.

38. That burden has been described in Horual v. Neuberger Products Ltd [1957] 1 QBD 247, the headnote of which reads -

" In a civil action where fraud or other matter which is or may be a crime, is alleged against a party or against persons not parties to the action, the standard of proof to be applied is that applicable in civil actions generally, namely, proof on the balance of probability, and not the higher standard of proof beyond all reasonable doubt required in criminal matters; but there is no absolute standard of proof, and no great gulf between proof in criminal and civil matters; for in all cases the degree of probability must be commensurate with the occasion and proportionate to the subject-matter. The elements of gravity of an issue are part of the range of circumstances which have to be weighed when deciding as to the balance of probabilities."

39. Lord Denning on two occasions described the standard. In Bater v. Bater [1950] 2 All ER 458 C.A. he described it as follows -

"So also in civil cases, the case may be proved by a preponderance of probability, but there may be degrees of probability within that standard. The degree depends on the subject-matter. A civil court, when considering a charge of fraud, will naturally require for itself a higher degree of probability than that which it would require when asking if negligence is established. It does not adopt so high a degree as a criminal court, even when it is considering a charge of a criminal nature; but still it does require a degree of probability which is commensurate with the occasion."

40. More succinctly, in Blyth v. Blyth [1966] A.C. 643, he used the following words -

"so far as the grounds for divorce are concerned, the case, like any civil case, may be proved by a preponderance of probability, but the degree of probability depends on the subject-matter. In proportion as the offence is grave, so ought the proof to be clear."

41. In my judgment, the offence by the insurance agent, Chan, that is alleged is a grave one. Accordingly, the degree of probability supporting that allegation must be commensurate. Mayo J. (as he then was) expressed it succinctly in Trishul (UK) Ltd. v. Winnie Fung Tong [1986] HKC 465 when he said that there was a need for 'clear and cogent' evidence.

The Plaintiff's witnesses

42. Madam Koon gave evidence saying that her deceased daughter, Fanny Chow, had been the third of her five children. The other four children are still alive: they consist of three sons and one daughter. Concerning her deceased daughter, Madam Koon said that she had been born in August, 1954, which means that she would have been a few months short of her fortieth birthday when she died.

43. At eighteen, she said, Fanny Chow had joined the Hong Kong Police and some three to four years later she learnt that she was being courted by another police officer, the Defendant in this matter, Lau. By then, she said, her daughter was no longer living at home and so she had no idea whether the two of them had cohabited. She said, however, that she thought such a state of affairs would have been very unlikely as her daughter visited her regularly and confided in her and said nothing to her of any settled intimacy. In fact, Madam Koon testified that some time later her daughter informed her that she had learnt Lau was a married man with children and that in the circumstances, there was simply no way she could allow the courtship to continue.

44. When asked to describe the on-going relationship between Lau and her deceased daughter, Madam Koon was very defensive. But she was constrained to admit that, even after the revelation that Lau was married, he and her daughter continued to see each other; for instance, going to Macau together to gamble. She admitted that she had told her daughter, a single woman, not to keep seeing Lau, a married man. She said that her daughter had told her that they did not go out much together and when they did it was for innocent pursuits. Her daughter told her, she said, that, they were 'merely friends'.

45. Madam Koon said that in 1984 her daughter told her that she had met a Japanese man with whom she had become romantically involved. This man was named Toshiro Arai. Madam Koon recalled that the two began living as man and wife, their first residence being somewhere in Mei Foo Sun Chuen. The evidence shows that Mr Arai was considerably older than Chow, some eighteen or nineteen years older, but he was welcomed into Chow's family as he was considered generous and caring. According to Madam Koon, her daughter told her that she would want to marry Mr Arai one day. However, the evidence shows that in the period of approximately a decade between their meeting and Chow's death there was no formal marriage.

46. Chow and Mr Arai did, however, go into business together, that business relationship extending effectively until Chow's death. It is also apparent that the two maintained a close and caring relationship until the very end, Mr Arai paying for many of Chow's hospital bills and meeting her funeral expenses. I am satisfied on all the evidence that Mr Arai has always acted as an honourable man and has been much loved by the Chow family, this being one of the reasons why the family has found it so hard to believe that Fannny Chow could secretly have dishonoured that ten-year-old relationship by leaving the proceeds of her life insurance policy to Lau.

47. Indeed, in respect of that policy, it was Madam Koon's testimony that a month or so before she died (which would have been in February or March 1994), her daughter had told her that she need not worry about the future as she had life insurance valued at about two million dollars which would go to her. It was only after her daughter's death, said Madam Koon, that she appreciated the full import of her daughter's words when she discovered that there were two policies on her daughter's life; the one policy being with AIA Insurance for a sum of US$80,000 (approximately HK$600,000), the other policy being the one now in dispute for US$200,000 (approximately HK$1,550,000).

48. The fact of this promise by Fanny Chow to her mother could not be challenged by the defence as it was a promise seemingly made when the two women were alone with each other and the defence could have no insight into what Fanny Chow may or may not have been thinking at the time. The defence, as I understand it, has rested on the basis that, whatever the contents of this alleged promise may have been, the reality was different.

49. In respect of her evidence generally, I regret to say that I found Madam Koon's testimony to be tentative and nervous, clearly aimed more at supporting her own cause than genuinely attempting to recall the truth of past events. Perhaps this is understandable. No doubt the change of beneficiary caused her a good deal of anguish. Nevertheless, it materially reduced the degree to which I felt I could rely upon her as a witness of the truth.

50. The second witness called was Chow's younger brother, Chow Tak Kee, known by the first name of Jacky ('Jacky Chow').

51. Jacky Chow testified that he first began to assist his deceased sister in her business enterprises in or about 1983; first, he said, in a fashion business called Thousand Leaves and then in a business known as Charm Hong Kong Company. He conceded that, before he started working for his sister, he had held a series of different jobs.

52. Jacky Chow accepted that his sister had had a long association with Lau. Indeed, he accepted that in 1989 Lau's daughter had joined his sister's business and that, after about a year, he and the daughter had become romantically involved. Neither Lau nor his sister approved of this liaison. Jacky Chow said that despite the opposition, he and the daughter began living together and then married. I understand that marriage still subsists. Lau is, therefore, Jacky Chow's father-in-law.

53. After they had begun living together, because of the opposition to their union, both Jacky Chow and Lau's daughter left Fanny Chow's business and, for a time at least, there was little contact between Jacky Chow and his sister. However, by the time it was known that the sister was dying of cancer, the relationship had been repaired. In this regard, Jacky Chow spoke of cutting back on the work he was devoting to his own businesses at that time so that he could spend more time caring for his sister. It was for this reason, he said, that he was present when two critical meetings took place between the insurance agent, Chan, and his sister.

54. Jacky Chow said that the first meeting took place in or about mid December 1993 while the second meeting took place two or three days later. This second meeting was on a date after 15th December and could not have been on that date.

55. As concerns the first meeting, Jacky Chow recalled that the insurance agent, Chan, who was an old friend of his sister, suggested to his sister that, as she was ill, she should consider paying future premiums for the three life policies for which she was responsible by means of autopay. In his witness statement, Jacky Chow said : 'My sister had previously been paying for her policies by way of cheques which Chan came to collect'. His sister, he said, agreed that this was a good idea and specifically stated that she wished to change the payment method for the policy drawn on her own life as well as the policies taken out on the lives of her mother and father. Jacky Chow's clear understanding, therefore, was that the agent, Chan, would then take steps to bring about this change of premium payment in respect of all three policies by changing each to autopay.

56. Two or three days later, said Jacky Chow, Chan returned with certain insurance forms in her possession which, she said, were for his sister to sign. In his witness statement (adopted as his evidence in chief) he was again specific as to what happened -

" My sister and I were in the sitting room at that time. Before my sister signed the forms, Chan told her that these were the forms to change the mode of payment for our mother's, our father's and her own insurance policy. My sister then signed the forms and I saw her signing three forms. It was never her intention, so far as I know, to change the beneficiary of her own policy. Even before Chan arrived at the flat with the forms, I specifically remembered my sister telling me that she had asked Chan to bring some forms over for the specific purpose of changing the mode of payment i.e. from using cheques to autopay. She further told me that Chan would visit her on that day for that particular purpose. So when Chan arrived and I opened the door, I knew she had come to visit my sister for that purpose."

57. It was the clear thrust of Jacky Chow's evidence that there was no other time in December, when his sister was out of hospital, that Chan had the opportunity to visit his sister and get her to sign forms without him knowing. As for 15th December, the date appearing on the change of beneficiary document, he said that Chan could not have visited that day. It was his evidence that he was with his sister at home from about ten in the morning until one o'clock when he drove Mr Arai to the airport and that he was back home at 'two something' and remained there until six or seven that evening. At no time when he was there did Chan come to the home.

58. In light of these various matters, it was Jacky Chow's evidence that after the death of his sister, when he learnt that the beneficiary of the policy on her life had been changed to Lau, he suspected that the agent, Chan, had used one of the three signed forms to effect that change. These, of course, were forms which he knew had been intended to effect nothing more than a change in the method of paying premiums. On what he knew, therefore, there could only be one reason to explain the change in beneficiary : that had to be a calculated fraud on Chan's part. Early in defence counsel's cross-examination of Jacky Chow, this matter was clarified; the transcript reading as follows -

"Q. At the time when you learned that the beneficiary to your sister's policy had been changed, did you suspect Madam CHAN might have used the blank form with your sister's signature on it, then filled in the change of beneficiary? Did you suspect that?

A. Yes.

Q. So the only occasion you saw your sister signing the forms was the occasion she signed the form for change of mode of payment, is that right?

A. Right."

59. After the death of Fanny Chow, when it was discovered that Lau had been made the beneficiary of the insurance policy, there were two meetings between Chan and Mr Arai together with members of Fanny Chow's family. In respect of that second meeting, which took place at a hotel called the Windsor, one of the Chow family took along a tape recorder to secretly record what Chan had to say. The entire meeting was not recorded, large sections of the tape were apparently inaudible. However, those that were audible were transcribed and placed into evidence. They are revealing.

60. Despite the fact that Jacky Chow testified that, when he learnt of the change of beneficiary, he suspected Chan may have used one of the blank forms to fraudulently effect that change, he admitted that at the Windsor Hotel meeting he did not confront Chan concerning that issue. He agreed that not a word was said regarding it. This would be understandable if the meeting had been one of polite enquiry but it was far more robust than that, indeed at times it amounted to a cross-examination of Chan.

61. In his testimony, Jacky Chow explained that he really did not at the meeting tie in the date on the change of beneficiary form with the date on which he had taken Mr Arai to the airport. He further said that it was only later, when he opened some of his late sister's mail and found two forms from the insurance company concerning change of payment and not three that it all fell together in his mind. All this is understandable. But what is not quite so understandable is why, if early on he suspected that Chan had used a form signed by his sister to effect a fraud, he did not, directly or indirectly, put anything to her of that nature. To the contrary, it is fair to say, I believe, that the Windsor Hotel meeting was based on the premise that Fanny Chow had, in fact, made a rational decision to make Lau the beneficiary and that Chan had done no more than carry out her wishes. Then why should there have been a meeting at all? Why was the matter not simply accepted and left at that? To some extent Jacky Chow answered the question himself. The following extract from the transcript is self-explanatory -

"Court : So, would I be correct to say this : at this meeting at the Windsor, you had no suspicion, at that moment in time, that Miss CHAN had defrauded your late sister? You just felt that it was unfair that your late sister should have left the money to Mr LAU and that Miss CHAN had an obligation to try and convince her not to do so.

A. Yes."

62. While those at the meeting no doubt wished to find out exactly what had happened to bring about the change of beneficiary, it appears that they blamed Chan for her 'negligence' in not convincing their deceased sister against the idea of the change because, in broad terms, she had already been generous enough to Lau and had a duty to her own family. But the matter went further because it is clear that an attempt was made to try and obtain Chan's support to undo what at the time they believed their late sister had genuinely desired. On the part of one member of the Chow family, the sister named Cici, this appears to have gone so far as to amount to a request that Chan give false evidence. It was a request which was rejected. During cross-examination, Jacky Chow at first denied that there had been any request for Chan to perjure herself. He was evasive about the issue. Later, however, when pressed by defence counsel, he admitted that he had heard his sister say words to the effect -

"Secondly, couldn't you be on our side more? Because you are now working for Top Glory not National Mutual. Say that when Ah Pun [Fanny Chow] signed, she hesitated, she had not made up her mind. Be a witness."

Chan's answer to this was firm -

"I refuse this. In fact, your elder sister did not hesitate. It is not right to give false evidence."

At that moment, Jacky Chow attempted seemingly to put matters into context -

"You appreciate it is not giving false evidence. Ah King [Chan], the reason I blame you, you know that my sister has given quite a few to Ah Ngau [Lau]."

63. In the broad context, it became apparent that there could be no misinterpretation of the words recorded. In an attempt to ensure that this was the case, I spoke directly to Jacky Chow -

"Court : ... Answer the question, please. You were at a meeting where your sister in your presence asked Miss CHAN to give false evidence in this trial and Miss CHAN said no, she would be wrong to do so.

A. Right."

64. In a case which, in my judgment, turns so critically on findings of credibility, this admitted 'out of court' exchange tells badly against Jacky Chow. I accept that he did not in an outright fashion support his sister, Cici, but neither did he deprecate the suggestion. If anything, his words, on an ordinary reading, appear to be intended to add further moral pressure on Chan to change her stance. On the other hand, Chan's immediate refusal to even contemplate the giving of false evidence (when she was ignorant of the fact that her words were being recorded), stands very much to her credit and supports my view of her when she gave evidence; that is, of an honest woman who found herself caught in an invidious position and did her best to honour her obligations to her deceased friend.

65. However, my rejection of Jacky Chow's evidence where it conflicts with that of the insurance agent, Chan, is not based solely on matters of credibility. In my belief, the probabilities, far from constituting clear and cogent evidence to support Jacky Chow's testimony, tell against him.

66. One matter of central relevance that I found puzzling was Jacky Chow's unambiguous testimony that the insurance agent, Chan, was the one to suggest that Fanny Chow should in future consider paying the premiums on the three policies for which she was responsible by way of autopay rather than following her past practice of paying the premiums by cheque. This suggestion, according to Jacky Chow, was readily accepted by his sister. But the evidence, in my judgment, is quite clear that in respect of two of the policies at least - the one in the father's name and the one in the mother's name - payment was already being made by way of autopay; indeed, payments had been made that way from the very beginning. The relevant application forms show that to be the case and the agent, Chan, confirmed the accuracy of those documents including the fact that only the first three months' premiums were paid in advance in cash to cover the period when the autopay machinery was being put into place. If those two policies had always been paid by means of autopay, there would be no reason whatsoever for the insurance agent, Chan, to suggest that autopay should be set up a second time - at least not without some explanation. It must be remembered too that Fanny Chow was at all material times, despite her illness, accepted to be of clear mind. There can, therefore, be no suggestion that Chan was able to misrepresent the factual situation to a confused and ailing mind. Jacky Chow was himself asked by defence counsel if he could think of a reason why the same instruction concerning autopay should be repeated and he said he could not.

67. What then of the policy on Fanny Chow's own life, do the probabilities allow for a suggestion that Chan may have proposed this policy in future by paid by way of autopay? In my judgment, they do not. In respect of this policy, the evidence was again clear that, while premiums were not paid by means of autopay, they were annual premiums (not monthly ones) and were not, therefore, in the normal run of things, amenable to payment in that manner. In attempting to clarify this, I asked the following of Chan during her testimony -

"COURT : If somebody was paying an annual premium on a policy, and then they said to you that it was too much bother to try and remember each year, and asked to put it on autopay, what would be your answer?

A. Well, the company does not have the debit of autopay for payment made annually.

COURT : So that's the advice you would give the client, is it?

A. Right."

68. I accept, of course, that if she was intent on defrauding her friend, Chan may not have mentioned the fact that her insurance company, in the ordinary course of events, made no provision for payment of annual premiums by way of autopay. But the evidence revealed that Fanny Chow herself had been in business for several years, seeking out products in China, importing them and dealing inter alia with Korea and Japan. She would, therefore, have been no stranger to commercial matters and may perhaps be expected to have at least queried the matter or discussed the possibility of more direct methods of ensuring that, if she was still alive, the annual premium (due only some six months later) would be paid. But Jacky Chow, who says he was present at both meetings, spoke of nothing unusual, simply the suggestion made by Chan that, because of her illness, Chow should pay the premiums for her policies by way of autopay in future and Chow agreeing that she would like to do this in respect of all three policies.

69. In fairness to Jacky Chow, Chan, did recall that it was necessary at one time to make arrangements with Fanny Chow to have the premiums for her parents' two policies debited from a different bank account. This arose, said Chan, when she was advised by the insurance company that the monthly autopay premiums on the two policies could no longer be collected. As a result she had to contact Fanny Chow in regard to these two policies only and was advised by Fanny Chow that she had cancelled her bank account because of changes in her business. According to Chan, when the matter was discussed, Fanny Chow said that she would have to change the bank account from which premiums for those two policies were to be paid and she asked Chan to put that into effect. That was why, said Chan, she had to give forms to Fanny Chow for signature.

70. Perhaps it is this that led to Jacky Chow's confusion. But this matter related to two policies only not three and there would have been no reason to talk of previous premiums being paid by cheque when they had, in fact, been paid by autopay. Again Chan accepted that, while a new autopay system was being set up, perhaps cheques or cash to cover the interim period would have been requested; she said she could not remember. Perhaps this may also account for some of the confusion in Jacky Chow's evidence. But whatever the reason, remembering always where the burden of proof lies, Chow's evidence was far from clear and cogent.

71. What then of the various insurance forms which Jacky Chow discovered when, in May 1994 after his sister's death, he opened her mail? According to Chow, it was in the discovery of these forms that the seeds of his suspicions lay. As he said in his evidence -

"At that time, I had not yet received the two forms sent back to us by National Mutual. The time when I witnessed the signing of the three forms, I was not sure. Later, after the meeting - after the Windsor Hotel meeting - and then I went back to my deceased sister's premises where I later found the two forms and then I became suspicious. I suspected about the three forms signed by my deceased sister."

72. The various papers from the insurance company which were discovered by Jacky Chow relate only to the parents' two life policies. Those papers bear no date. On the face of the documents, therefore, there is no evidence of when they were despatched. Nor did Plaintiff seek any evidence from the insurance company itself as to when the papers were posted or why.

73. The date of posting, in my opinion, is material because it was the uncontested evidence of Chan that she left the insurance company in or about January 1994 and took up employment with Top Glory in or about February 1994. She said that she had no knowledge of these papers. She could not say, therefore, why they were sent. From her knowledge of how the insurance company managed its affairs, she could only say that she was aware that, if autopay premiums suddenly ceased, the company would send new forms to the client so that new autopay machinery could be set in place. She said it had not been her personal practice to send 'Request for Service Application' forms as was done in this instance.

74. What then - unexplained as they are - am I to make of these various insurance papers - Defence counsel argued forcefully that they prove nothing. As he put it : 'they are neither here nor there.' With respect, I agree.

75. Yes, the documents appear to request that monthly autopay arrangements be put into place in respect of both life polices. Direct debit authorisation forms for both polices are included. In addition, section 13 of the 'Request for Service Application' forms are ticked with the box indicating a request for monthly direct debit authorisation. But why? Is it suggested that these papers, found in May 1994 are a consequence of Fanny Chow's request made to Chan in or about December 1993? That appears to be the thrust of Jacky Chow's testimony. But, if so, why would they only have been discovered something like a month after Fanny Chow's death? Had Chan simply left them on file and had they been posted after her departure by a new agent? There is no evidence of that, indeed, as I have said, no evidence whatsoever as to when they were posted by the insurance company or received at Fanny Chow's residence. Could it be that, after Fanny Chow's death, her bank accounts were closed or frozen and, when the insurance company received no premiums, it then sent out the two sets of documents. That appears to be the surmise of the agent, Chan, and in the circumstances, with no evidence from the insurance company to explain when and why the forms were sent, it carries as much weight as any other surmises. In short, as defence counsel said, I am satisfied that the documents found by Jacky Chow prove nothing one way or the other.

76. The final witness called by the Plaintiff was Toshiro Arai. He said that he came to know Fanny Chow in a Macau casino in 1984 and some six months later they began to live together. Mr Arai said that he had his office in Tokyo and could, therefore, only come to Hong Kong once or twice a month. However he rented an apartment here in which Fanny Chow lived by herself when he was in Japan.

77. As to his knowledge of Lau, in his witness statement adopted as his evidence-in-chief, Mr Arai said the following -

"The first time I met Lau was in 1991. I met him in my Tsimshatsui office ran and managed by myself and Chow Fung Lin (our Tsimshatsui office was set up in 1987 - 1988 by myself and Chow). He came to our office and Chow introduced us. She told me Lau was a policeman about to retire. She also told me that Lau wanted to do business with us. I told Chow that since we were engaged in the business of importing from People's Republic of China and it was not very safe for a woman like Chow to travel alone in the P.R.C., I suggested that Lau could perhaps do the travelling to the P.R.C. on her behalf. Six months later, I told Chow to send Lau to P.R.C. to inspect some cargo for me. At that time, Lau was in the police. He went. He also went many times afterwards."

78. Mr Arai was unable to give any direct evidence on the matter of the change of beneficiary. His testimony was advanced by Plaintiff in an attempt to show that there were so many suspicious acts and omissions made by both Chan, and Lau concerning Fanny Chow's policy that the only inference to be drawn from their totality is that Chan defrauded Fanny Chow in respect of that policy.

79. Mr Arai said, for example, that his suspicions were aroused in or about February 1994 when he asked Chan if Fanny Chow had taken out any policy of insurance on her own life. Chan, he said, answered that Fanny Chow had not done so. Mr Arai said that he asked the same question again in March and received the same answer from Chan. These answers, he said, he knew to be untrue. In such circumstances, it is understandable that Mr Arai's suspicions would have been aroused. But Chan, in her evidence, admitted freely that she had lied to him. She had done so, she said, to avoid further questions concerning the policy because Fanny Chow had sworn her to secrecy concerning the change of beneficiary. In such circumstances, in judgment, Chan's lies are understandable.

80. As concerns Chan, Mr Arai spoke of confronting her at a meeting shortly after Fanny Chow's death, when the change of beneficiary was known, and asking when that change had taken place. He said that, when he was told it had happened on 15th December 1993, he was able to show her that he left Hong Kong on the one o'clock flight that day and was with Fanny Chow all morning. Her mother and her brother, Jacky Chow, were with her all day and they never witnessed any signing. So how could it have occurred that day? Chan, he said in his witness statement, did not answer, 'she just sat there and said nothing'.

81. The date of 15th December was, of course, an important part of Plaintiff's case. But with respect to Mr Arai's witness statement, it was wrong in two respects. First, as he himself corrected, he left later that afternoon not on the one o'clock flight. Second, his averment that Jacky Chow was with his sister all day was not strictly correct as it was Jacky Chow who drove him to the airport and must, therefore, have been away from the apartment for a length of time unknown to him.

82. In my judgment, if Chan is to be believed - and I do believe her - there was clearly an opportunity on 15th December for her to have an afternoon meeting with Fanny Chow at a time when only the mother was present in the apartment : that was the time when Jacky Chow had driven Mr Arai to the airport and before he had return.

83. According to Jacky Chow, he only started putting his suspicions together concerning 15th December when, in May 1994, he opened his late sister's mail and found the insurance forms. This seems a little strange considering Mr Arai's evidence that at one of the two meetings he specifically put the date of 15th December to Chan as a result of which the date would (by the end of the second meeting at least) have been a central issue. But leaving that aside, Jacky Chow's estimate as to how long he was away could only have been a matter of recollection of what for him, in December 1993, would have been a fairly mundane excursion. In light of Jacky Chow's tendency to colour the evidence in his favour, I am cautious as to the time period given by him during which he was absent from the apartment that day.

84. In any event, it appears to me that if Fanny Chow had wanted to effect the change of beneficiary and keep it secret from others, she may well have chosen the opportunity of Mr Arai and her brother's absence to contact Chan and tell her to come over.

85. There were, of course, other aspects of Mr Arai's testimony which were intended to reveal the suspicious nature of Chan and Lau's activities. One matter raised concerned an approach by Lau to him concerning the transfer of a property back to Mr Arai by using a blank piece of paper signed by Fanny Chow. This piece of evidence was put forward with the intention of showing no doubt that Lau was prepared to use Fanny Chan's signature for any purpose that suited him. I have given careful consideration to the implications of this evidence, the aim of which apparently was to benefit Mr Arai not prejudice him, but I am satisfied it takes the matter little further.

The defence

86. I have already, earlier in this judgment, given an outline of Chan's testimony. Accordingly, rather than going back over the same ground, I intend to focus on a number of material issues concerning her testimony.

87. On an objective view of the evidence, it is clear, in my judgment, that much of Chan's difficulty in this matter has sprung from her alleged bond of secrecy with Fanny Chow concerning the change of beneficiary. But was such a bond feasible? Yes, I believe it was. I consider it perfectly feasible that, if Fanny Chow did ask Chan at the Baptist Hospital to arrange for the change of beneficiary, that she would ask Chan to keep the matter secret. Chow must have appreciated that in all probability she would be placed under considerable moral and emotional pressure if her intention was made known to members of her family and to Mr Arai, her business partner and the man with whom she was living.

88. Where then would this have left Chan? Clearly, in my opinion, it would have left her in the most invidious position. She was both an insurance agent and a friend. Yes, a number of Chan's actions may now, from one perspective perhaps, be viewed as suspicious. But suspicious for what reason? That is the essential question. Suspicious because the probabilities suggest that Chan had involved herself in a calculated fraud of her dying friend or suspicious because, having entered into a pact of secrecy with her friend, that inevitably meant that she would thereafter, in order to honour the pact, have to involve herself in a degree of subterfuge? In my judgment, on the totality of the evidence and having seen Chan give evidence, I am satisfied that, if any suspicion does surround some of Chan's actions, it is explained by the second reason not the first.

89. Chan has been criticised for not safeguarding her own position (and putting matters beyond doubt) when she brought the change of beneficiary form to Fanny Chow for signature. Her failure to do so, it has been argued, must tell against her. Yes, clearly, with the benefit of hindsight, Chan would have been better served by taking precautions. But her position at the relevant time must be considered. She was a retired police constable, essentially an insurance salesperson who had been trained to follow standard commercial procedures. She may have anticipated, after Fanny Chow's death, some questions from the family and no doubt a degree of dissatisfaction. But there is nothing to suggest that she should have anticipated accusations of fraud; after all, she and Fanny Chow were old friends and she herself was in no way benefiting from the change. In any event, what was she realistically to do? By bringing along an independent witness, she would be bringing a third party into the matter, going against Fanny Chow's request for secrecy. By delegating the matter to another agent, she would be doing the same thing and, in addition, appearing perhaps to be displaying a degree of moral cowardice to her friend. Yes, of course, she could have asked for Fanny Chow to write a collateral letter confirming what the signature on the insurance document already said but that is putting onto the shoulders of Chan at that time the more cautious head of a litigation lawyer. Chan had her friend's signature on the relevant document, a signature which has not formally been challenged in these proceedings. In such circumstances, why should she necessarily anticipate at that time that her own word would be challenged?

90. What then of the fact that she retained a copy of the beneficiary document and did not place it in Fanny Chow's custody? Does this indicate that she wished to hide from Chow the fraudulent result of her signature? Chan explained her reasons for not leaving a copy with Fanny Chow as follows -

" I roughly remember I received a copy from the company and then I brought it with me to her home, and then I gave her the copy. I said, 'Everything has been settled. Look at it.' And I told her to make sure that the copy would be clipped to the policy, and after reading it, she said, 'Well, I think better not. I think it's better for you to keep it for me because I have to move house and it's not convenient.' So I kept it for her.

Q. Did she say move house or move office?

A. Well, after a long lapse of time I don't remember whether she said move house or move office."

91. Fanny Chow was ailing; her prognosis was grave. It must have been obvious that, it she was not well, her family could well open her mail for her. By posting a copy, therefore, a real risk would be run of discovery, whether the post was to the home or the office. By 'clipping' the document to the policy, a similar risk of discovery would exist.

92. Chan's testimony in this regard has been attacked on the basis that she originally said Fanny Chow told her she was moving office. That, however, could not be correct as at that time no such exercise took place. That may well be the case but Mr Arai in the course of his testimony confirmed that, after Fanny Chow fell ill, he did give instructions to Lau to close down the office as he was concerned for Fanny Chow's well-being. He said he could not recall exactly when this was but it was after Fanny Chow fell ill. I accept, of course, that moving an office and closing it are two different things. Nevertheless, without indulging in semantics, closing an office invariably means the removal of items and it is plausible to find that Fanny Chow may have preferred to employ the term 'move' rather than accept the finality of the word 'close'. I do not say this to excuse any inconsistency or weakness in Chan's evidence. I say it simply to illustrate that there can be many innocent reasons to explain the matter.

93. It was further argued by Plaintiff's counsel that Chan's retention of the change of beneficiary form, suspicious in itself, was made even more suspicious when it is realised that some eight to ten days after Fanny Chow's death she handed a copy of that form to Lau and suggested that he make his claim direct. This, it has been argued, indicates some form of collusion between the two. I cannot agree. I find nothing inherently suspicious in Chan handing a copy of the document to Lau so that he was aware of all the relevant details and then suggesting that he make the claim himself. I see it as an understandable consequence of earlier events. She was helping a friend.

94. During the course of her testimony, Chan was cross-examined at length about her meeting with Fanny Chow when the change of beneficiary document was signed. One of the matters dwelt upon was the puzzling description of Lau in that document as a 'cousin'. As to her explanation, I can do no better than quote direct from Chan's testimony. Under cross-examination she said the following :

"At that time, after I went into her room and I said - we had a brief conversation. I asked her about her health and then the deceased asked me, 'Well, have you brought the form?' I said, 'Yes, I have it with me.' And then she said, 'Well, give it to me quick, I'll sign it.' I immediately filled in some information. It is my normal practice to put down the particulars of the insured person and then I filled in the name LAU Chup-hei. And then I gave the deceased the document for her to read it and after she had read it, there was a relationship to fill in the column of the beneficiary so I asked her, 'Well, what should I put down there for the relationship?' But then the deceased asked me, 'Well, what do you think? What should we put there?' And I said, 'But he's your boyfriend.' And she said, 'Well, don't put down boyfriend there.' And then she asked me again, 'Well, what do you think? What should be better to be written down there?' And I then told her that I had clients who had friends of that sort of relationship and they just put down in the relationship column 'Lo Biu'. And then the deceased said, 'All right, well, you just do it for me. Put down 'Lo Biu' there for me.' And then I said to the deceased, 'All right, I'll put down 'cousin'."

95. I do not find this explanation in any way to be inherently implausible.

96. Chan was cross-examined at length as to why she had not explained it exactly that way to others earlier. It was argued by Plaintiff's counsel that much of Chan's evidence was inconsistent with earlier statements. I have taken care to examine that argument but it has caused me no concern. In her earlier meetings with Mr Arai and members of the Chow family, Chan was not given the privilege of explaining herself at leisure. Those meetings must have been stressful for her. Frankly, I can well understand why Lau himself refused to attend.

97. In summary, under lengthy and searching cross-examination, I found Chan to be an honest witness. I took into account that she had been a police officer and would have been more accustomed than others to the rigorous process of cross-examination. Despite that, I found her to be open and convincing. I am further satisfied that, with due allowance being made for the warping of memory with the passing of time, she did her best to recall events accurately. I am satisfied both on her evidence and on the probabilities generally that she did not perpetrate a fraud in respect of Fanny Chow's policy of insurance.

98. I come finally to the Plaintiff's argument that Lau's failure to testify must tell against him. In this regard, I have been referred to McQueen v. The Great Western Railway Company (1875) QBD 569 where the applicable principle was stated in the following terms -

"... If a prima facie case is made out, capable of being displaced, and if the party against whom it is established might by calling particular witnesses and producing particular evidence displace that prima facie case, and he omits to adduce that evidence, then the inference fairly arises, as a matter of inference for the jury and not as a matter of legal presumption, that the absence of that evidence is to be accounted for by the fact that even if it were adduced it would not disprove the prima facie case. But that always presupposes that a prima facie case has been established; and unless we can see our way clearly to the conclusion that a prima facie case has been established, the omission to call witnesses who might have been called on the part of the defendants amounts to nothing."

99. Counsel has also referred me to O'Donnell v. Reichard [1975] V.R. 916, a decision of the Supreme Court of Victoria, Australia -

"... the law may be stated to be that where a party without explanation fails to call as a witness a person whom he might reasonably be expected to call, if that person's evidence would be favourable to him, then, although the jury may not treat as evidence what they may as a matter of speculation think that that person would have said if he had been called as a witness, nevertheless it is open to the jury to infer that that person's evidence would not have helped that party's case; if the jury draw that inference, then they may properly take it into account against the party in question for two purposes, namely: (a) in deciding whether to accept any particular evidence, which has in fact been given, either for or against that party, and which relates to a matter with respect to which the person not called as a witness could have spoken; and (b) in deciding whether to draw inferences of fact, which are open to them upon evidence which has been given, again in relation to matters with respect to which the person not called as a witness could have spoken."

100. In the matter before me, however, it must be remembered that it was never pleaded that Lau and Chan had conspired together to bring about the fraud on Fanny Chow. No allegations were made against Lau in the pleadings. The allegations of improper conduct were made against Chan and Chan duly testified to answer those allegations. It must also be remembered that Lau was never alleged to be present at the meetings when Chan and Fanny Chow discussed the change of beneficiary. He would not, therefore, have been in a position to assist the court in that regard. In light of the fact that I am satisfied that Chan, for the defence, has more than adequately answered the allegations of the Plaintiff, while obviously Lau's evidence would have been of assistance, I cannot say that its omission would allow me in any way to draw the kind of inferences necessary to enable Plaintiff to succeed in this case.

101. In all the circumstances, while I sympathise with Plaintiff's grief and perhaps even her sense of bewilderment concerning her late daughter's bequest to Lau, on an objective assessment of the evidence, I am satisfied that she has failed to present the necessary clear and cogent evidence to enable her claim to succeed.

Orders

102. My orders, therefore, are as follows; namely that -

1. It being declared that the change of beneficiary form dated 15th December 1993 is a valid and effective document making the Defendant, Lau Chup Hei, the beneficiary under the policy of life insurance numbered 501-2342779 with the National Mutual Insurance Company (Bermuda) Limited, it is ordered that the said Lau Chup Hei be paid the proceeds of the said policy (plus any interest thereon) presently held by this Court.

2. Costs be awarded to the Defendant, Lau Chup Hei.