JONG YAT KIT, as Sole Administrator of the Estate of LI CHUNG, deceased v. LI MUN HOK STEVEN also known as LEE MUN HOK and LEE MUN HOK STEVEN

HCA 1767/2017

[2025] HKCFI 1764

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1767 OF 2017

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JUDGMENT

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This Judgment is divided into the following sections and sub-sections :

A.  INTRODUCTION

1.  Mr Li Chung (“Li Senior”), a successful businessman, passed away intestate on 15 November 2006 at the age of 86 leaving an estate of very substantial worth (“the Estate”) but entangled with issues in respect of administration.  Professional accountants have been successively appointed as its administrators under HCMP 2050/2007 since September 2008, and a number of them have since retired before due administration of the Estate is yet to be completed.  The Plaintiff is the present sole administrator appointed on 16 May 2014 (“the Administrator”).

2.  In this action commenced in July 2017, almost 11 years after Li Senior had passed away, the Administrator claims that the Defendant (“Steven”), the youngest son of Li Senior, had assumed and then breached the fiduciary duties he owed in respect of the funds he withdrew from the HSB Account (defined below) while Li Senior was still alive totalling HK$36,490,000 (“the Withdrawn Funds”), which the Administrator now says are held in trust by Steven for the Estate.

3.  Steven’s main defence is that the 17 Withdrawals (defined below) were made in accordance with Li Senior’s directions and were thus authorized by Li Senior.  Steven also said that HK$30,000,000 were express gifts, and among them the HK$10,000,000 transferred to his wife Madam Yip Kwai Sheung (“Madam Yip”) was a gift to her.  Steven relied on the presumption of advancement generally and particular regarding the remaining HK$6,490,000.  He also pleaded a limitation defence pursuant to s.20(2) of the Limitation Ordinance in respect of the said HK$10,000,000 transferred to Madam Yip.

4.  Steven also pleaded a fallback counterclaim that 2 sums of HK$7,620,409.64 and HK$18,367,071.32 (totalling HK$25,987,480.96, “the Counterclaimed Sum”) were respectively on 21 and 28 November 2005 deposited from his personal bank accounts into the HSB Account such that the same should be set off against such sum found due from him to the Estate.  This fallback counterclaim was formally withdrawn in Steven’s Closing Submissions.

5.  One matter much featured in this action is that Steven has been diagnosed with and treated for Bipolar I Disorder for years which is said to have affected his cognitive abilities and memory, such that there were difficulties in his “accounting” for the 17 Withdrawals (defined below).

6.  The Administrator’s claim, on the other hand, is not so much a direct allegation that Steven had misappropriated the Withdrawn Funds without the knowledge or consent of Li Senior, but its main thrust is that Steven has initially failed altogether to explain and account to the Estate as to why the Withdrawn Funds were paid to Steven himself and to Madam Yip, and that their explanations given at a later stage, as per Steven’s present defence, are not accepted by the Administrator, whose case focuses intensely on the legal requirements to account by a fiduciary, which the Administrator says Steven was, and which requirements the Administrator says Steven has failed to meet.  On the direct and rather important question of fact as to whether the 17 Withdrawals were made in accordance with the directions of and thus authorized by Li Senior, and also on Steve’s case of gift, on pleading the Administrator is merely putting Steven to strict proof without making any positive averments.  However, at trial and relying on the evidence of Dennis, Steven’s elder brother, and a number of documents, the Administrator was in fact contesting against it rather adversarially with some shades of a positive case on different matters.

7.  The Administrator only called one factual witness, namely, Dennis.  While Steven called 3, namely, himself, Madam Yip and Dr Chen Chia Lu Sylvia (“Dr Chen”), the Psychiatrist who has been, and is still, treating him for his bipolar disorder since 1994.

8.  Both parties have respectively adduced the Psychiatric expert reports of Dr Hung Bing Kei Gabriel for the Administrator and Dr Wong Yee Him John for Steven without calling them.  They have also filed a lengthy Joint Report^[1] (“the Joint Report”).  Both experts have not seen or interviewed Steven, but were asked, by gauging through the medical records of Dr Chen and the witness statements of Dennis and Steven (among some other documents) and accounting for the effect of medication, to give their opinion concerning Steven’s cognitive ability and his ability to manage financial affairs from 1991 to the end of 2006.  This Court at the PTR has raised certain queries and received both counsel’s response in their opening submissions, and the consensus was that this Court would leave counsel to address me on the use of such opinion and on any finding, if any, they would like this Court to make in respect of the disagreements in their opinion.

B.  THE WITHDRAWN FUNDS

9.  It is common ground that on around 18 November 2005, Li Senior opened another account with Hang Seng Bank (“the Bank”) with account no 265-460026-888 (“the HSB Account”) in his sole name.  On the same occasion, he made Steven its authorized signatory.  Then in the span of a year from 23 November 2005 to 31 October 2006, the 17 withdrawals from the HSB Account tabulated below were made by withdrawal forms signed by Steven (together “the 17 Withdrawals”, separately “Withdrawal 1”, “Withdrawal 2” etc per the number assigned to each withdrawal in the table below).  The funds withdrawn by the 17 Withdrawals together formed the Withdrawn Funds.

	Date of withdrawal	Transaction	Payee account no	Payee	Amount (HK$)
1	23 Nov 2005	Cashier order	007-206386-001 (HSBC)	Steven	250,000
2	11 Jan 2006	Cashier order	007-206386-001 (HSBC)	Steven	420,000
3	22 Feb 2006	Cashier order	007-206386-001 (HSBC)	Steven	170,000
4	20 Mar 2006	Cashier order	007-206386-001 (HSBC)	Steven	250,000
5	4 Apr 2006	Cashier order	007-206386-001 (HSBC)	Steven	300,000
6	21 Apr 2006	Cashier order	007-206386-001 (HSBC)	Steven	300,000
7	17 May 2006	Cashier order	007-206386-001 (HSBC)	Steven	400,000
8	7 Jun 2006	Cashier order	293-0-341595 (HSB)	Steven	8,200,000
9	7 Jun 2006	Debit as advised	385-582846-888 (HSB)	Steven	1,800,000
10	7 Jun 2006	Debit as advised	295-460410-888 (HSB)	Madam Yip	10,000,000
11	19 Jun 2006	Cashier order	007-206386-001 (HSBC)	Steven	300,000
12	20 Jul 2006	Cashier order	007-206386-001 (HSBC)	Steven	400,000
13	5 Aug 2006	Cashier order	007-206386-001 (HSBC)	Steven	700,000
14	21 Aug 2006	Cashier order	007-206386-001 (HSBC)	Steven	1,000,000
15	3 Octo 2006	Cashier order	007-206386-001 (HSBC)	Steven	1,000,000
16	31 Octo 2006	Debit as advised	265-459404-888 (HSB)	Steven	10,000,000
17	31 Octo 2006	Cashier order	N/A	Steven	1,000,000
Total					36,490,000

C.  BACKGROUND

C.1.  General comments

10.  The parties referred to these background matters extensively in their witness statements and in their oral evidence, many of which were raised and given in the 3 witness statements of Dennis.

11.  However, the Administrator’s position stated in his Closing Submissions was that “Most of Dennis’ evidence has no direct relevance on the issues at hand … The Plaintiff’s case therefore does not hinge on Dennis’ evidence”^[2]. Thus, in his Closing Submissions the Administrator did not really dispute these background matters.

12.  Mr Wong SC (leading Mr Lai), appearing for Steven contended that some of these background matters are particularly relevant and set out in his Closing Submissions a detailed summary of them, together with the purport and meaning thereon that Steven asked this Court to take note.

13.  With these introductory comments, I would narrate in a broad chronological order under suitable headings these background matters, most of which are common ground or not seriously disputed.  Where such matters are not, I will resolve or comment on them along the narrative.

C.2.  Li Senior and his family

14.  Li Senior was born in 1920.  He received no formal education but a few years of education from free school (義學).  He had become literate enough to read Chinese newspapers, but he did not understand English.

15.  His wife was Madam Lee Chan Wun Yin (“Madam Lee”). They had 7 children, 2 sons and 5 daughters, in descending seniority - Nancy, Lee Man For Dennis (“Dennis”), Helen, Ivy, Liza, Mimie and Steven.  His own lack of formal education might have led Li Senior to place particular importance and emphasis on the education of his children and later his grandchildren.  All his children received tertiary education in either the United States or Canada.  Dennis, the eldest son born in 1950, obtained a master’s degree in electrical engineering.  Steven, born in 1959, quitted his studies at Concordia University in Canada several months short of completing the courses and returned to Hong Kong in 1984 when he was 25, due to him suffering from bipolar disorder.

16.  All 5 daughters got married and emigrated to and lived overseas, and according to Dennis, prior to 1990.  The broad evidence is that all 11 children of the daughters are not conversant in Chinese, and that they were not particularly close to Li Senior.

17.  After their return from studies overseas, Dennis and Steven lived with their parents in the family residence at Estoril Court (“the Estoril Court Flat”).  Dennis and his wife after their marriage continued to live in the Estoril Court Flat with Li Senior, Madam Lee and Steven.  In 1988, Steven married Madam Yip, who then was a Mainland citizen not yet having the right to reside in Hong Kong.

18.  In 1991, Dennis and his family moved out of the Estoril Court Flat to their own residence, and about a year later, moved into a property on Robinson Road registered in the name of Chuen Ming Company Limited (“Chuen Ming”).  By then, Dennis has 2 sons and 2 daughters.

19.  Two years after Dennis and his family moved out and on 9 March 1993, Madam Lee passed away intestate.  There were however disputes among the siblings over the estate of Madam Lee which was worth about HK$127 million.  The disputes led to litigations.  Mr Wong submitted that these and other tensions are significant background matters.

20.  According to Madam Yip, Li Senior was diagnosed with coronary heart disease and diabetes in 1980s or early 1990s, his health had been deteriorating, and he was hospitalized in 1995, 1996, 1997 and 1998 for different ailments and incidents.  Dennis confirmed that Li Senior had been hospitalized almost every year since 1995 for one reason or another.

21.  In 1995, Madam Yip immigrated into Hong Kong.  Steven, Madam Yip and their sons, Ming Fung (born in 1992) and Ming Tak (born in 2001) continued to live with Li Senior until he passed away in 2006.

22.  It is not disputed that Steven and Madam Yip have been consistently taking care of Li Senior since 1995.  A matter that I will return to in due course.

C.3.  Business success of Li Senior and the family companies

23.  Li Senior was a self-made successful businessman.  He started his rattan trading and manufacturing business in the name of Lee Luen Yick in the 1940s, which was incorporated in 1970 to become Lee Luen Yick Rattan Factory Limited (“LLYCo”) which also exported rattan products.  The business had been very successful and profitable up to late 1980s or early 1990s.

24.  Since the mid-1960s, Li Senior set up various family companies for the purpose of investing, holding and/or managing real properties in various countries:

a.  In the 1960s, Lee Tai Enterprises Limited (“Lee Tai”) and Chuen Ming were established (together “the HK Companies”) to invest in properties in Hong Kong;

b.  Since the 1970s, Li Senior began to invest in real properties in the United States.  These investments were carried out through Lee Tai Enterprises USA Ltd and 238-240 7 Ave Corp (together “the US Companies”);

c.  Since the 1980s, Li Senior began to invest in and develop properties in the Mainland.  These properties were initially managed by one 南海市洲村聯豐企業發展公司 (“The Original Mainland Company”) and subsequently came under the management of 佛山市南海聯豐投資服務有限公司 (“The Mainland Company”); and

d.  Since the 1990s, Li Senior began to invest in properties in Australia as well.  These properties were held through two Australian companies, namely, Leetong Pty Limited and Lee Tai Enterprises (Aust) PTY Ltd (“the Australia Companies”).

 

25.  At or shortly after their incorporation, Li Senior allocated the shareholdings in these family companies among different family members, as follows:

a.  For LLYCo and the Hong Kong Companies, Li Senior, Madam Lee, Dennis and Steven each was allocated 20%, and the remaining 20% was allocated equally to each of the 5 daughters at 4% each.

b.  There is no clear information before the Court of the allocation of shareholdings concerning the US Companies.

c.  There is a dispute now between Steven and Dennis relating to the circumstances and events concerning the shareholding allocation of the Original Mainland Company and the subsequent take-over of the business and assets of the Original Mainland Company by the Mainland Company. Leaving the dispute aside for now, and for the Mainland Company as on 2002, Li Senior held 40% and Dennis and Steven were each allocated 30%.

d.  For the Australian Companies, Li Senior and Madam Lee together held 50%, while the remaining 50% was allocated with Dennis and Steven each 11.11% and the 5 daughters each 5.55%.

26.  Lee Tai and Chuen Ming have been the 2 flagship companies as far as investing in real properties are concerned.  Their business consists of leasing out the properties to earn rental incomes.  In 1998, each of them was said to have total net assets worth over HK$130 million and their combined total pre-tax income that year was over HK$30 million^[3].

C.4.  Management of the HK Companies and Li Senior’s financial practice in general

27.  Li Senior and Madam Lee in their lifetime had been the directors of the Hong Kong Companies, while all their children, except Liza and Mimie, have also been appointed as their directors for different period of time^[4], with Dennis being the longest serving one, being appointed in respect of both the HK Companies since 1993, and Steven was appointed Lee Tai’s director since 1998 and Chuen Ming’s since 1999.  Though there has been mention in the evidence that some of the daughters also attended the office to assist in the running of the HK Companies in some periods, Dennis has, since he finished his studies, been consistently assisting Li Senior, and mainly in the rattan businesses. Steven also attended the office full time to work, as will be alluded to below.

28.  The composition of the boards of directors and the participation of Madam Lee and his children notwithstanding, it is common ground that Li Senior had all along had the sole and final say on all matters relating to the financial affairs of the family companies and the family, including those of the HK Companies, and that he indeed did not want anyone to even question his financial matters and that his decisions would always go through the boards without too much question.  Madam Yip described Li Senior as being “一言堂”^[5], which was not disagreed by Dennis or Steven.

29.  It is common ground that Li Senior was a thoughtful person in business and financial matters and would have his reasons for his choices and decisions.  It is also the very clear tenor of Dennis’ evidence, not disputed by Steven, that Li Senior was very cautious in keeping the money and the bank accounts safe and exercised tight control over them.

30.  The evidence before this Court shows, and is common ground, that Li Senior had been following a consistent pattern in his managerial and financial practice, including the following:

a.  The properties held by the HK Companies were all managed by Hang Seng Real Estate Management Ltd (“HS Management Co”) on behalf of the HK Companies.  HS Management Co would collect rent from the tenants and defray the necessary expenses on behalf of the HK Companies and would produce monthly statements (“the HS Monthly Statements”) setting out separately the gross rental income collected and the expenses incurred on behalf of the HK Companies.  The net rental income would then be deposited into the saving accounts of the HK Companies.

b.  In line with his belief that the assets of the HK Companies were all his, Li Senior would from time to time cause the income of the HK Companies to be transferred from the respective company’s savings account into his personal bank accounts.  These sums were booked in the financial records of the HK Companies as loans due by Li Senior.  Li Senior would use such sums transferred to him for business, investment or other purposes, as he wished.

c.  Li Senior had been very careful with all matters concerning money and he did not trust anyone fully to handle his financial matters and the bank accounts, that Li Senior was very concerned about matters relating to his bank accounts and it was his habit to check very carefully every entry in the HS Monthly Statements and in the bank statements and passbooks of all the bank accounts to ensure that they were correct.  Madam Yip and Steven in their witness statements described that Li Senior knew his bank accounts inside out, which was not disputed by Dennis.

d.  Li Senior would keep the cheque books, passbooks and monthly statements of all the bank accounts safely, with those of the bank accounts of the HK Companies being locked up by Li Senior in the office of the HK Companies; while in his more advanced years, they together with the passbooks and bank statements of his personal accounts were locked up by him at home, and more likely in the safe he kept in his room in the Estoril Flat.

e.  Moreover, and apparently as yet one more measure to keep the money safe, there was an on-going arrangement between Li Senior and the Bank pursuant to which the Bank would verify payment instructions with Li Senior where there was either a cheque issued or a transfer out or withdrawal of a substantial amount from any of the bank accounts of the HK Companies^[6]. This was confirmed by Dennis in his oral evidence^[7].

31.  One other matter of common ground and some relevance is that Li Senior was a traditional Chinese patriarch who was concerned with leaving a lasting legacy and that his wishes were that he would not like the properties to be sold after his death, but that he would like the shares in the family companies to be held within the family and the family companies to continue to grow.

C.5.  Steven’s bipolar disorder and his work in the HK Companies

32.  The fact that Steven has been suffering from symptoms of bipolar disorder since around 1985, was later formally diagnosed, and that his condition affected the family dynamics have indeed been evident to all other sibling beneficiaries.  Such medical condition of Steven however was not accepted or admitted by the Administrator, who on pleadings challenged Steven to strict proof, and expert medical evidence was adduced, which turned out unsurprisingly did not dispute it.

33.  I have no hesitation in accepting the evidence of Steven and Madam Yip thereon and also particularly accepting the evidence of Dr Chen concerning the matters relating to the treatment of Steven, which are summarized in the next 3 paragraphs.  I also accept that the written notes produced by Dr Chen (“the Medical Notes”) are accurate contemporaneous records of what Steven told her in each of the consultations throughout the years.

34.  Dr Chen was first consulted by Steven in April 1991 when Madam Lee brought him along.  Dr Chen diagnosed him as suffering from Mood Disorder with psychotic features and admitted Steven in hospital for 6 days for treatment.  Steven however defaulted follow-up treatments after attending only a few times.  In December 1993, upon the request by one of the elder sisters, Dr Chen paid Steven a consultation home visit and Steven was admitted into hospital for a few days for treatment.  Steven defaulted further consultations save on one instance.

35.  Steven attended Dr Chen again on 1 June 1994 and told Dr Chen that his father asked him repeatedly to come back to see Dr Chen for treatment.  Since then to date, Steven has been attending Dr Chen’s clinic regularly at 3 to 4 weeks intervals for consultation and has been receiving his injections and oral medications to treat his Bipolar I Disorder.

36.  Dr Chen confirmed, from attending Steven all these years, that Steven was capable of comprehending the general operation of a bank account and the nature of a court proceedings, but when asked to think about any matter in depth or to make a judgment, he would experience immense stress and be overwhelmed by a sense of inability to cope, and he suffered from poor memory and had difficulty in recalling past events.

37.  Regarding the expert evidence adduced, what can be usefully gauged from the Joint Report, and as was pointed out by Mr Wong, and not disputed by Mr Ho, was that there were agreements by both experts that (a) Steven has been suffering from Bipolar I Disorder since latest by December 1993 and at least until late November 2006, and (b) Bipolar I Disorder and the medication Steven has been taking might affect his cognitive ability and his ability to comprehend and/or manage his personal and/or business affairs, but whether Steven had the capacity to manage his personal and/or business affairs “is ultimately a legal issue and for the Court to decide upon”^[8]. I would take the opportunity to record here that neither party in their Closing Submissions has found it necessary to ask this Court to resolve the differences in the experts’ opinion.

38.  Factually, it is not disputed that since Steven returned from Canada in 1984, he has been working in the office of LLYCo and the HK Companies (which shared the same office).  However, his duties were minimal, he did not participate in the operations of LLYCo or the HK Companies in any meaningful sense, and he did not understand much, if at all, about the operations of LLYCo and the HK Companies.  Yet, for many years, Steven would go to the office every day, would sit in his metal desk measured 4 feet times 3 feet, which was placed outside Madam Lee’s room, and spent most of the time doing things unrelated to the operation of the companies, like reading newspaper, copying and learning vocabularies.  It is common ground that Dennis and Madam Lee had their own respective rooms in the office, that after Madam Lee passed away, the daughters would sit in Madam Lee’s room when they attended the office to assist, but Steven never had a room and always sat at the said desk.  Steven’s evidence, without confirming the actual figures, was that he was given but meagre to reasonable salaries for his work^[9].  Notably, there is no evidence or material before me even suggesting or hinting that Steven rebelled against or even complained about the arrangement for him to attend the office to work daily in the manner described.

39.  It was Steven’s evidence in cross-examination^[10], corroborated by Dennis^[11], that Li Senior would occasionally give instructions to Steven to perform tasks.  These tasks included writing out pay cheques to employees for Li Senior to sign (as Li Senior’s hand then suffered from tremor) and signing documents according to Li Senior’s instructions.  Again, there is no evidence or material before me even suggesting that there was any occasion in which Steven did not follow such instructions of Li Senior.  Steven also said in evidence, which I accept as it was recorded in the Medical Notes that he had so told Dr Chen at the time, that he would very much like to learn more about the operation of the LLYCo and the HK Companies.

40.  It is Dennis’ evidence in cross examination^[12] that he knew about Steven’s mood disorder condition since mid-1980s as he and Steven (and Li Senior and Madam Lee) were living together in the Estoril Flat, and that because of Steven’s condition, Steven was not asked by Li Senior to assist in the family businesses.

41.  Yet, Li Senior and Madam Lee made the above arrangement for Steven to “work” in the office and Steven complied.  It seems to me very telling, and I take particular note, that Li Senior in respectively 1998 and 1999 appointed Steven as a director of the Hong Kong Companies despite Steven’s relative lack in capabilities and contributions to the family businesses.

42.  Mr Wong asked me to note and find that Li Senior (a) was well aware of Steven’s mood disorder, (b) was well aware of Steven’s lack of capability in handling complicated tasks and running businesses, and (c) was concerned that Steven’s ability to make a living for himself was way lower than that of his other siblings.  On such evidence as narrated, I think that such awareness and concern on the part of Li Senior (and Madam Lee) were evident, and I so find.  In fact, by arranging and insisting Steven to attend the office to work every day in such manner, I think, and as confirmed by Steven^[13], Li Senior and Madam Lee were trying to extol in Steven the traditional Chinese virtues, by which apparently Li Senior and Madam Lee had been living, of hard working and not idling by and that one need to work hard for one’s entitlements.

C.6.  Li Senior’s relationship with Steven and his family and with the other children since Madam Lee passed away in 1993

43.  Mr Wong advocated that these matters, in addition to others, also form an important context and backdrop to assess the veracity of Steven’s defences.  In Closing Submissions Mr Ho did not directly dispute that but asked this Court to adopt a “discipled approach to the assessment of evidence and not be distracted by irrelevant considerations”^[14] and then did not seriously contest these matters but essentially ignored them as, I understand it, being irrelevant.  I understand that Mr Ho asked this Court to focus evidence-wise mainly on his forensic analysis of Steven’s case on gift, particularly on the 2 conversations Madam Yip said she had with Li Senior in 2006.  With respect to Mr Ho, I must agree with Mr Wong that these are pertinent, and not distracting, background matters.

44.  The matters set out in the next 4 paragraphs were given in evidence by Madam Yip and Steven or are gauged from the Medical Notes.  They are unchallenged by the evidence of Dennis or in cross-examination.  I therefore find them established.

45.  As said, Steven and Madam Yip and their children lived with Li Senior in the Estoril Flat.  Li Senior and Steven’s family had a close relationship, and they often dined together.  The Estoril Flat was registered in the name of Chuen Ming, but Li Senior did not ask them to pay any rent. Rather, Li Senior had been paying basically all the living expenses of Steven and his family.

46.  Even before Madam Yip moved to Hong Kong and since, she had been a care-taker of Li Senior.  She in particular mentioned these incidents :

a.  In 1994 when Li Senior was staying in Foshan, he was taken ill with influenza with severe symptoms.  Madam Yip arranged and accompanied him to be hospitalized in 廣州中山大學附屬第一醫院.

b.  In October 1995, Madam Yip and Li Senior were staying in Foshan on business.  Li Senior contracted influenza and Madam Yip again arranged and accompanied him to be hospitalized in 廣州中山大學附屬第一醫院. There, it was discovered that he had biliary atresia, and an urgent operation was performed. Certain life-threatening complications developed after the operation and Dennis, Steven, Nancy, Ivy and Liza rushed to the hospital to see Li Senior.

c.  In 1996, when Li Senior was hospitalised in Hong Kong for about 2 months, Madam Yip visited Li Senior twice on a daily basis and prepared all his meals.

d.  In 1997, Madam Yip studied basic nursing knowledge so that she could take care of Li Senior’s basic medical needs on daily basis and help manage the diabetes condition of Li Senior.

e.  In 1998, Li Senior fractured his right femur, Madam Yip carried out physiotherapy with Li Senior and accompanied him on practice walks in the park every day until he recovered; while Steven supported and helped Li Senior to go to the bathroom and Steven also bathed him.

47.  Towards Li Senior’s more advanced years, Steven had also been bathing Li Senior and washing his feet on a regular basis until later a nurse was hired on a full-time basis in around 2005 to take care of Li Senior.  Dr. Chen recalled, and as written in the Medical Notes, and not challenged in her cross-examination, that Steven since around 2003 had tried very hard and enrolled in different courses so as not to disappoint Li Senior.

48.  Li Senior had a particular fondness for Steven’s children, and was concerned with their living and education.  Madam Yip and Steven gave evidence on the following, which was unchallenged:

a.  Li Senior was desirous that Madam Yip and Steven would have a second child and had been prompting them with assuring words that they did not need to worry about the finances in raising and educating one more child and that their family could always live in the Estoril Flat.  At such prompting, Steven and Madam Yip gave birth to their second child in 2001 and Li Senior was very happy and pleased that their 2^nd child is a son.

b.  In late 2001, Li Senior was pleased when he saw Steven’s eldest son studied until 11 pm.

c.  It was recorded in the Medical Notes^[15] that Steven told Dr Chen on 13 August 2002 that Li Senior has set aside “education fund” for his 2 sons and Steven confirmed the same in oral evidence^[16] but was unable to give further details.

d.  Li Senior was happy when in around 2004 Steven’s elder son was admitted into Wah Yan College, a renowned secondary school.

49.  Mr Wong submitted that the relationship between Li Senior and his other children in this period, by contrast, was distant, even at times fraught with tension, dispute and even litigation.  Mr Wong made clear, I think fairly and rightly, that he was merely asking the Court to take note of the following evidence which was presented, and he was not asking, and it is not necessary for, the Court to form any view on what was, or who was, right or wrong.

50.  It was the evidence given by Dennis, mostly in cross examination, which I accept and find, that

a.  Since about mid-1990s, he had views on the rattan business and the handling of certain assets rather different from those held by Li Senior who really wanted to continue the rattan goods manufacturing business in the Mainland through cooperation with certain municipal government^[17], while Dennis did not agree to such move and wanted to close down the rattan businesses.

b.  At the time, Dennis was busy and under great pressure from the weight of running a number of businesses and family affairs. There was then tension developed, which Dennis would not characterize as disputes, between him and Li Senior.  There was one specific incident in which Li Senior suspected Dennis had “hidden” some money, and that there were several instances in 1997 in which Dennis had rather rude verbal conflicts with Li Senior, and when pressed in cross-examination, Dennis accepted that he had more than once scolded Li Senior without giving him face (actual Chinese used in the question which Dennis agreed: “曾經毫無情面地駡你父親”)^[18].

c.  Dennis more than once described Li Senior’s attitude towards him as one of “distrust”^[19].

d.  Between 1993 to 1996, Li Senior had joint name bank accounts with Dennis and Dennis assisted Li Senior in matters concerning the bank accounts.  However, since Li Senior no longer trusted him, he asked Li Senior to give the responsibility to Steven, which Li Senior did by opening bank account(s) in his and Steven’s joint names and no longer deposit money into the joint name bank account(s) he held with Dennis^[20].

e.  His relationship with Li Senior has worsen since 1997^[21].

f.  Dennis even said that Steven had a great responsibility in the office, which was to spy on him to make sure Dennis did not do anything “tricky”^[22].

g.  Dennis said in his 1^st witness statement that in the last few years of Li Senior’s life, he had not taken care of Li Senior as he wished to^[23].

51.  Regarding Li Senior’s relationship with the daughters, as have mentioned, they did not seem to be close.

52.  Nancy, the eldest daughter of Li Senior, appeared to have a difficult relationship with Li Senior since the 2000s:

a.  At some point in time, Nancy, who was responsible for managing the US Companies, stopped producing the accounts of the US Companies to Li Senior^[24].

b.  The dispute between Li Senior and Nancy regarding the affairs of the US Companies had grown so serious that Li Senior had to enlist the assistance of Dennis to commence litigation against Nancy in the United States in 2003^[25].

c.  In 2003, Nancy commenced HCMP 1576/2003 to, among others, remove Dennis and Steven as the administrators of Madam Lee’s estate.  This litigation was known to Li Senior^[26].

C.7.  Provisions by Li Senior for his children

53.  The Administrator advocated as relevant background that Li Senior had during his lifetime already made or had prepared substantial provisions to his children, such that the alleged gifts to Steven and Madam Yip of the Withdrawn Funds were unlikely.  Per one of the PTR directions, the parties complied an agreed summary of evidence on dispositions received by the beneficiaries^[27] (“the Summary”), helpfully giving the Court a broad overview.

54.  As seen in the Summary, the main dispositions by Li Senior to his children consisted of the allocation of the shares of the family companies to them, which has been narrated above.  Of note is that there is no evidence before me showing that Li Senior had during his lifetime caused to be declared substantial, if any, dividends from these companies to be distributed to their shareholders.

55.  Next can be readily seen is that the very substantial dividends declared by the family companies and received by the beneficiary siblings were all declared and distributed since October 2007 after the passing of Li Senior and when the companies began to sell a substantial part of the real properties held by them.  In this regard, and as have noted, Li Senior has indicated his clear wish that he would not like the real properties to be sold.  I therefore do not think the receipts of substantial dividends to be declared by the family companies upon the sale of these properties were the “provisions to the children” that Li Senior had intended or contemplated in 2005 and 2006.

56.  The Administrator also included in the Summary a list of property investments made by Steven and Madam Yip^[28] despite the objection against its inclusion by Steven.  These property investments clearly fall outside the ambit of “dispositions received by the beneficiaries” per my direction and were apparently included to attempt impress the Court that Steven and Madam Yip were not in financial need. However, these property investments were all made after 2015 when Steven has already received the said substantial dividends; and there is nothing in the evidence to suggest that the funds used to pay for these investments were otherwise provided by Li Senior to Steven during his lifetime.

57.  What remain as being provisions made by Li Senior for his children was the Merrill Lynch Trust.

58.  The Merrill Lynch Trust was set up by Li Senior as the settlor under a trust deed dated 31 January 2003.  The trust deed was not produced in this action.  The properties settled in this trust consisted of shares of listed companies, worth about US$35 million in January 2007.  There is no information on the source of the funds, but it seems that in all likelihood, the funds came from the income earned by the HK Companies.  Under the trust, the 7 children were the beneficiaries each entitled to an equal 1/7 share.

59.  As gleaned from the letter of Merrill Lynch sent to Dennis dated 12 January 2007^[29], the trust deed specified that the beneficiaries were entitled to their respective share immediately upon the death of Li Senior and pursuant to the trust deed Merrill Lynch made the distribution forthwith.  Each of the children then was distributed listed stocks worth about US$5 million at the time of distribution.  I thus agree with Mr Wong’s observation that in setting up the Merrill Lynch Trust, Li Senior might very well have intended to provide quick liquidity to all his children immediately after his death, particularly bearing in mind that it was not his wish that any of the real properties held by the family companies would be sold.

60.  I take note that while Dennis stated in his witness statement that Li Senior set up the Merrill Lynch Trust after discussion with him^[30], he clarified in his oral evidence that his involvement was in fact limited to accompanying Li Senior to meet the staff of Merrill Lynch to understand how such a trust would work, but Li Senior had not discussed with him his thinking or told him whether he would actually, and if so, why he would, set up such a trust^[31].

61.  The other so-called provisions consist of:

a.  Dennis barely mentioned in his witness statement that prior to Li Senior’s passing and by way of administration of Madam Lee’s estate, there were distributions of Madam Lee’s shareholdings in the family companies and some cash distributions, but without any details, the amount(s) or date(s)^[32].

b.  Dennis also said that he recalled Li Senior had bought a life insurance policy from HSBC with Steven and his family as beneficiaries, but he could not provide any details^[33]. Upon enquiry by the Court and by way of top-up evidence in chief^[34], Madam Yip said she recalled that Steven received about US$400,000 compensation from that insurance.

c.  Steven and his family were allowed to occupy the Estoril Flat rent free until December 2011.

C.8.  Steven did not respond to the enquires by the administrators of the Estate; and the commencement of this action

62.  It is common ground that Steven failed to respond to the following 3 letters issued by the solicitors acting for the former administrators and the Administrator (together “the 3 Enquiry Letters”):

a.  their letter dated 22 May 2009^[35] in which the former administrators for the first time asked Steven (through his lawyers Messrs Arculli Fong & Ng) in respect of Withdrawal 16 and Withdrawal 17 on 31 October 2006 totalling HK$11,000,000, the arrangement between Li Senior and Steven relating to the operation of the HSB Account and the reasons for these 2 withdrawals;

b.  a long letter dated 23 August 2012^[36] addressed to Steven personally asking for inter alia the purpose of the HSB Account, purposes and the source of fund for each of the 17 Withdrawals and other withdrawals from and deposits into the HSB Accounts; and

c.  a further letter dated 11 June 2014^[37] also addressed to Steven personally asking inter alia for explanations for the 17 Withdrawals and origins of funds in the HSB Account.  In this letter, the former administrators for the first time stated that Steven had a duty to account and threatening legal proceedings to apply for an order for Steven to provide an account.

63.  It is common ground that a without prejudice meeting was held between the Administrator and Steven in mid-2014, the contents of which of course have not been disclosed in this action.

64.  The Administrator then made a Beddoe application on 4 May 2016 initially in respect of a claim for an order to account by Steven, but later for an action to recover the Withdrawn Funds.  The Beddoe order was given on 9 June 2017.  This action was then commenced a month later.  Steven’s appeal to the Court of Appeal against the granting of the Beddoe order was dismissed on 10 April 2018.

D.  AGREED LIST OF ISSUES

65.  The parties have agreed on such a list, consisting of 10 issues.  As it became clear as the trial opened that some of them have not accurately encapsulate the disputes and some are redundant, and that the live issues would be set out and addressed below, I do not propose to set these issues out and to clarify or modify them here, but would rather go to the issues direct.

E.  WHETHER LI SENIOR HAD AUTHORIZED THE 17 WITHDRAWALS

66.  This is the first half of agreed issue 4.  This factual issue concerns whether the 17 Withdrawals were in fact Li Senior’s own dispositions in that he had authorized them. Mr Wong has made it clear at the outset, not disputed by Mr Ho and I think rightly, that Steven did not and could not rely on the presumption of advancement in the resolution of this factual issue.  There are 3 matters that have bearing on this issue that I think would be conveniently dealt with under sections E.1., E.2. and E.3. below.

E.1.  Was the HSB Account opened by Li Senior for a specific or designated purpose ?  Dennis’ oral evidence thereon

67.  It was not the Administrator’s case advocated in the Beddoe application or pleaded in this action that the HSB Account was opened by Li Senior for a specific or designated purpose.  Indeed, as we can see from the 3 Enquiry Letters, the Administrator did not know and has been enquiring with Steven.

68.  Dennis also said he did not know in §11 of his witness statement^[38]:

“ … I was not involved when Father set up the bank account with Hang Seng Bank (“HSB”, account no.265-460261-888 the “HSB Account”) on 18 November 2005 with Steven as an authorized signatory, but this was consistent with his previous practice, I do not know whether father opened the HSBC account for any specific purpose.” (my emphasis)

69.  In §13(c) of Dennis’ 2^nd supplemental witness statement^[39], he further said:

“ Father had arranged for money to be kept by Steven which Steven was supposed to use to pay for the monthly expenses of the Companies (which I thought was in the region of HK$30 million)”.

Dennis there did not give any details as to this supposed arrangement or how he came by its knowledge.  Specifically, he did not say that this supposed HK$30 million was paid into the HSB Account, or indeed paid into in any bank account at all.  This is important as the common background, not yet mentioned before, is that Steven at the time had 2 bank accounts in the joint names of himself and Li Senior and Steven himself also had a number of bank accounts^[40].

70.  Yet, in cross-examination and after he confirmed that he did not know the purpose for the opening of the HSB Account^[41], Dennis went on to say, for the first time and in gist, that Li Senior asked Steven to deposit the sum (presumably the said HK$30 million) into Li Senior’s personal account but Steven deposited it into his personal account, and that Li Senior complained the matter to him and that was why Li Senior opened the HSB Account as a specific purpose account to pay these monthly expenses for his ease to keep track of them^[42].

71.  This was now presented by Dennis in cross-examination as a coherent story explaining the history and the specific purpose for which the HSB Account was opened.  Yet, all these were hitherto unmentioned in any of his 3 witness statements.

72.  Moreover, I accept as correct the following summary of evidence by Mr Wong:

a.  On 20 December 2005, there was remitted out from the HSB Account US$200,000 to Helen to reimburse her for the travelling and hotel expenses incurred in 2005 for a trip bringing her 3 children and several trips by herself to Hong Kong to see Li Senior^[43].

b.  As calculated out in the long §28 of Steven’s Closing Submissions by reference to Lee Tai’s and Chuen Ming’s respective Audited Accounts for Financial Year ended 31/3/2004, and confirmed by Dennis in oral evidence, the total monthly expenses of the HK Companies in 2003 and 2004 (not including the expenses that HS Management Co paid on behalf of the HK Companies which would be deducted from the rental income received) would be roughly in the range of HK$35,000 to HK$52,000 a year. Even if the profit taxes of HK Companies were factored in, the total expenses that the HK Companies needed to pay at the time would only be around several million per year.

c.  Dennis has also confirmed in oral evidence that in or about 2005, there was no large-scale renovation project which the HK Companies needed to carry out on any of the properties, and for which the HK Companies might need to pay directly^[44].

d.  Li Senior must have been very familiar with these figures on expenses and therefore on any view of the matter, there would have been no practical need for Li Senior to set aside an amount as large as HK$30 millionodd to defray the routine expenses of the HK Companies.

e.  There were only 4 instances of withdrawals from the HSB Account in 2005 and 2006 totalling about HK$2.4 million odd for payments of profits tax, while there was not a single instance of withdrawal or transfer out from the HSB Account in these 2 years for the payment of monthly or any other expenses of any of the family companies.

73.  Therefore, Dennis’ claim that the HSB Account was opened for the specific purpose of paying for the expenses of the HK Companies clearly had not been borne out by any instance of its use to so pay the monthly expenses nor by any need for such a large amount in the first place.  Moreover, this Court formed the clear view that Dennis was evasive in cross-examination when he denied any knowledge, not even a rough idea, of the average monthly expenses of the HK Companies, which companies were run consistently under the same pattern and which he helped run for decades as a director and assistant of Li Senior^[45]. I also find it hard to believe, since I was of the clear view that he knew what the regular monthly expenses of the HK Companies were, that he was not at all surprised when Li Senior told him that he would “arrange to be kept by Steven” HK$30 million to defray the running expenses of the HK Companies.

74.  In the premises, I conclude without hesitation that Dennis’ oral evidence mentioned above was at most an afterthought and guess to embellish the claim against Steven, and that if there was indeed such a conversation between him and Li Senior about an arrangement for money in the amount of HK$30 million to be kept by Steven, Dennis’ account was not a true or complete version of the conversation.  Thus, I would reject his such evidence.

75.  To be fair to Mr Ho and the Administrator, I note that the Administrator, I think very rightly, did not pursue Dennis’ said factual case in his Closing Submissions.

76.  On Steven’s part, he did not put forth any case concerning the purpose for the opening of the HSB Account.

77.  On the common ground that Li Senior was very thoughtful over money matters and was a person who would have his own ideas and purpose in the management of things, particularly money, this Court would have thought that Li Senior would have his own reasons as to why he opened the HSB Account in addition to the many accounts he already had.  However, before me now is no direct evidence thereon.

E.2.  The two letters signed by Li Senior both dated 11 November 2005

78.  The Administrator relies heavily on two letters both dated 11 November 2005 and signed by Li Senior respectively addressed to Lee Tai^[46] and Chuen Ming^[47] for the attention of Dennis as director (together “the Nov 2005 Letters”).  They have identical contents:

“Dear Sir,

This is to confirm that [Steven] has been acting as my custodian since 1 April 2003 and all the transactions effected between [Steven] and the abovenamed company would be accounted for in conjunction with [Li Senior’s] account.

Thank you for your attention”.

79.  It is common ground and indeed the Administrator’s own case that the Nov 2005 Letters were connected with 2 confirmation letters stated to be “Confirmations For Audit Purposes” also both dated 11 November 2005 in respect of respectively Lee Tai^[48] and Chuen Ming^[49] (together “the Confirmation Letters”).  Their contents are also identical save the figures.  In the Confirmation Letter in respect of Lee Tai, Li Senior signed to confirm that as on 31 March 2005, “due from you” (but in Chinese “貴號托管”) was the sum of HK$242,899,205.90.  Similarly, in the Confirmation Letter in respect of Chuen Ming, Li Senior signed to confirm that as on 31 March 2005, “due from you” (but in Chinese “貴號托管”) was the sum of HK$105,236.061.71.

80.  The Administrator pleaded in the Statement of Claim that

“ The Deceased entrusted the Defendant with the operation of the HSB Account, by appointing the Defendant as the custodian of his bank accounts as evidenced by the letters signed and issued by the Deceased dated 11 November 2005”^[50].

81.  The key averment in that plea was that Steven was entrusted with the operation of the HSB Account, and the latter part of the plea seeks to explain how Li Senior so entrusted Steven, namely, “by appointing [Steven] as the custodian of his bank accounts”.

82.  However, at trial, this plea was morphed into a submission that Steven was appointed by Li Senior as a custodian over the funds in the HSB Account (and that, together with other reasons, Steven owed the Estate a duty to account, on which I will say more later).  As I understand it, the submission therefore was that as Steven was such a “custodian”, he has had actual custody (or possession or control) of the funds sitting in the HSB Account.

83.  This distinction that I draw attention to is subtle, but clearly has significant consequences.

84.  With respect to Mr Ho and the Administrator, I do not read the Nov 2005 Letters as saying or evidencing that Li Senior had appointed Steven as his custodian of the funds in the HSB Account or that the two letters evidenced such an appointment.  In my view, one must read the letters fairly and particularly against their background, their purpose, and the fact as to who they were addressed to.

85.  Firstly, the plain language of the Nov 2005 Letters did not convey the meaning now advocated by the Administrator.  All the 2 letters said was that Li Senior confirmed that Steven “has been acting as my custodian since 1 April 2003” (my emphasis).  The confirmation therefore was expressed to be regarding Steven’s actions, and there was not even any mention that Steven was holding any of Li Senior’s property.

86.  Secondly, Dennis stated the following circumstances in his witness statement which clearly formed very relevant background to the Nov 2005 Letters :

“ I do not think Father really trusted anyone else fully to handle his financial matters and his bank accounts, but out of necessity, he came to rely on Steven to assist him with financial transactions such as transferring funds”^[51]; and

“ … later on, Father became less physically able and needed Steven’s assistance with fund transfers from the company bank accounts into his personal bank accounts from time to time and lock up the [passbooks] immediately after the transferring”^[52].

87.  In other words, in the later years substantial funds have been transferred out from the bank accounts of the HK Companies into Li Senior’s personal bank accounts by Li Senior with the assistance of Steven, even though the precise detail or mechanism of this “assistance” is not known.

88.  Thirdly, the Nov 2005 Letters (together with the Confirmation Letters) were evidently prepared for accounting purposes, and to be more precise, for auditing purposes.  They therefore concerned the dealings between Li Senior, as their director and shareholder, and the HK Companies.  Their purpose was that thereby Li Senior admitted and accepted that the withdrawals or transfers out from the companies’ bank accounts made with the assistance of Steven were made with Li Senior’s knowledge and authority and that, as a matter of accounting treatment, such sum so withdrawn or transferred out from the companies’ bank accounts would be part of the “due from you” sum that could and would be “accounted for in conjunction with Mr Li Chung’s Account”.

89.  Once the companies’ money was transferred into Li Senior’s personal bank accounts, the HK Companies and the auditor really and clearly had no business as to how Li Senior would thereafter use the money or what arrangement he might have or would make as to its safe-keeping or “custodianship” or use, which were Li Senior’s own personal business.  I do not see any reason, purpose or rationale why Li Senior would seek to tell or confirm with the auditor such matters of his own personal business in these 2 short letters, as the Administrator was effectively saying.

90.  Moreover, before me there is no evidence saying or even suggesting that Raymond Ching, the auditor who drafted the Nov 2005 Letters and the Confirmation Letters and who took them to the Estoril Flat for signature by Li Senior, knew or had it in mind when drafting the letters, that Li Senior would be opening the HSB Account a week later (on 18 November 2005) with Steven as one of the authorized signatory.

91.  Fourthly, Dennis in oral evidence gave his understanding of the purpose of Li Senior signing the Nov 2005 Letters thus:

“ Mr Wong: 我只有一個理解，是你爸爸叫Raymond、Raymond Ching [the auditor] 去做，而…

Dennis: 他 [Li Senior] 不想其他人對文學拿錢的質疑，Raymond很難解釋為什麼公司的錢出去，應該入爸爸的賬還是入Steven的賬，他要跟我爸爸搞清楚，後來爸爸說“你入我的賬”，就這樣。

Mr Wong: 其實你爸爸簽這封信，據你的了解是為了保障文學，是嗎？

Dennis: 是。”^[53]

92.  The reading advocated by the Administrator in fact imposes responsibility, burden and even liability on Steven, which therefore was apparently contrary to the purpose intended by Li Senior as understood by Dennis.

93.  Fifthly, on proper analysis, the funds sitting in the HSB Account were not “in the custody” of Steven.  Steven was only made one of the authorized signatories.  The common ground is that Li Senior was cautious and kept tight control, including locking up the passbooks after the transfers.  I have also come to the conclusion, to be explained during the discussion regarding the question of whether the 17 Withdrawals were authorized by Li Senior, that Li Senior had put in place the Protocol (defined below) as a means to control and safeguard the money in the HSB Account.

94.  In the premises and in my judgment, the Nov 2005 Letters only had the effect or purport as set out in §88 above and not those that the Administrator was contending, and the term “custodian” was used by Raymond Ching loosely and as a layman term.  I think the Administrator was over-reaching in building his such contention based on the single word “custodian”, but without regard to the plain language and the undisputed circumstances.

95.  Rather and in my view, what were conveyed by the Nov 2005 Letters and/or what could be reasonably inferred were:

a.  Li Senior acknowledged and confirmed that all the sums transferred from the companies’ bank accounts from 1 April 2003 until 31 March 2005, where there were involvements by Steven, without exception, were made with his knowledge and consent, such that he would bear the responsibility and liability for them.

b.  In light of the exceptional caution Li Senior had over financial matters and his habit of carefully checking the bank statements and passbooks, the inference is that as on 11 November 2005 he had no complaint concerning any wrongful transfer or misuse of his consent or authority by Steven.

E.3.  Li Senior’s medical condition in 2006; the letter dated 16 October 2006 from Dr. Adam Leung; Was Li Senior mentally or physically unfit and unable to speak in October 2006 ?

96.  There is no dispute that Li Senior was plagued with physical ailments in his final year and that he was hospitalized for two periods of time in 2006, namely from 28 March 2006 to 19 May 2006, and from 4 August 2006 to his passing on 15 November 2006.

97.  The captioned issues arose in this context.

98.  In §50 of the witness statement of Madam Yip filed on 12 November 2019, she spoke about a conversation she had with Li Senior on an occasion in the 2^nd half of October 2006 in which Li Senior said that he wished Steven’s 2 sons to have their secondary school education in the UK and he asked Steven to withdraw HK$10,000,000 from the HSB Account to pay for their education expenses in the UK (“the 2^nd Alleged Conversation”).  Then, Withdrawals 16 and 17 were both made on 31 October 2006.

99.  In the witness statements of Dennis, he said the following, which is now heavily relied on by the Administrator as one of the 2 most relevant parts of Dennis’ evidence^[54]:

“ 22. … If I remember accurately, in October 2006, Father had a hole under his throat (from a tracheotomy) for breathing, and he could not speak as result [sic]. Father was also sleeping or out of consciousness a lot of time. I believe that at that time, everyone in the family was aware that Father did not have the mental presence anymore to deal with any business or financial affairs”[55].

“ 16 …

(a) A withdrawal by Steven from Lee Tai’s bank account on 25 April 2006 in the sum of HK$9 million. The Accountant considered that due to Father’s medical condition at the time, Father did not have the mental capacity to direct Steven to make the withdrawal …

19. I have already indicated in my First Witness Statement that Father’s physical health was very poor in 2005 and 2006 and his mind was no longer sharp …”[56]

(all emphases are mine)

100.  The Administrator also produced and relied heavily on a letter dated 16 October 2006 written by Dr Leung Wing Hung, Adam^[57], a specialist in Cardiology, one of the treating doctors of Li Senior (“the Dr Leung Letter”):

“ This is to inform that Mr Li Chung has been hospitalized in the Intensive Care Unit of the Canossa Hospital in Hong Kong since August 4, 2006. He is suffering from multiple medical illnesses including severe recurrent chest infection, bilateral pleural effusion, chronic respiratory failure, congestive heart failure, anemia of chronic disorders and chronic renal failure. He is currently in critical condition requiring continuous mechanical ventilation therapy.

In view of his current medical condition, he is deemed mentally and physically unfit to mind his own business affairs. He is unable to gain understanding, to communicate and to make sound decision of his business in any capacity during his medical treatments.

Please feel free to contact me if additional information is required.”

101.  The evidence of Dennis that “Father did not have the mental presence anymore to deal with any business or financial affairs” and “his mind was no longer sharp” (my emphasis) are, as expressions, rather vague and ambiguous; and his repetition of the accountant’s view on Li Senior’s capacity was unfair when there is no direct allegation that Li Senior lacked capacity.  What was said in the Dr Leung Letter that Li Senior was “deemed” mentally and physically unfit and was “unable … to communicate” were also not entirely clear.  These were relied on at trial by the Administrator, as I have earlier noted, against the fact that there is no averment in the Administrator’s pleading that Li Senior was mentally or physically unfit to have the 2^nd Alleged Conversation or to give authorization.  This is unsatisfactory.

102.  In Closing Submissions, save that the Administrator asked me to find “as a matter of fact, the Deceased was unable to speak in late October 2006”^[58], the Administrator basically abandoned all other aspects of such alleged lack of mental and physical capacity on the part of Li Senior in late October 2006.  As such other aspects of alleged incapacity were no longer pursued and additionally in light of the evidence as summarized in §§81 – 82, 84 – 87 of Mr Wong’s Closing Submissions, which I accept as a correct summary without repeating them here, I find that Li Senior remained mentally and physically capable to conduct his affairs until slightly more than a week before his passing, as alluded to below.

103.  Concerning this dispute as to whether Li Senior was able to speak after the tracheotomy procedure, Mr Wong and Mr Ho disputed as to which party has the burden of proving this inability to speak, including if necessary, adducing the expert evidence thereon.  Mr Wong’s stance was that he who alleged had to prove, and since it was now said that because of the tracheotomy Li Senior was unable to speak, the Administrator had to proffer medical evidence to make good the allegation.  Mr Ho contended that Dennis had said in his witness statement that Li Senior had not been able to speak due to the tracheotomy, it was for Steven to adduce evidence to rebut and contest.

104.  Indisputably, whether Li Senior was able to speak in late October 2006 (regardless of the cause) is a question of fact for this Court to decide and on that the parties have proffered their respective factual evidence (which I will deal with next).  That said, the specific proposition - that one is unable to speak because of the tracheotomy procedure - is clearly a proposition that is required to be proved by expert medical evidence.  I so hold, and I further hold that the burden of proving this proposition is on the Administrator because he put forth it.

105.  There is before me no such expert medical evidence proffered by the Administrator, save purportedly the Dr Leung Letter.  Not only that, no medical reports or records of any sort regarding the medical condition of Li Senior in 2006 were produced for the purpose of this trial.  All that were contained in the trial bundles are the hospital bills of Canossa Hospital^[59] in respect of Li Senior’s hospitalization in 2006 and the Dr Leung Letter.  The Administrator therefore was running such a “factual” case based only on the rather vague factual evidence of Dennis and the Dr Leung Letter.

106.  Turning to the Dr Leung Letter, I do not consider it as sufficient or probative expert evidence on this specific issue of inability to speak for these reasons:

a.  According to Dennis’ oral evidence, which I have no reason to doubt and I accept, Nancy had as early as April 2006 asked Dr Leung to write a letter, which Dennis understood was for the purpose of the litigation between Li Senior and Nancy over the affairs of the US Companies, which litigation was still on going at the time.  Later in October 2006, Dr Leung issued the Dr Leung Letter as requested by Nancy.  Such being the case, I do not accept that the Dr Leung Letter was a piece of “objective” evidence as Mr Ho characterized.

b.  Dr Leung was a Specialist in Cardiology, and it seems that Cardiology is not a specialist field relating to the tracheotomy procedure and its effect. In any case, in the Dr Leung Letter, Dr Leung did not specifically address the tracheotomy procedure and its claimed effect of rendering the patient unable to speak.  He also did not specifically set out what the mechanical ventilation therapy entailed.

c.  Moreover, in the Dr Leung Letter, Dr Leung was not merely setting out the treatments he gave to Li Senior as a treating Cardiologist, but he was giving opinion on the general mental and physical fitness of Li Senior to manage his business affairs.  There is nothing to show that Dr Leung was an expert on the medical field concerning the mental abilities of a patient, yet he so opined.

d.  The Administrator was relying on Dr Leung’s opinion expressed in the Dr Leung Letter when simply there was no expert evidence directions sought or obtained to appoint him as such, which clearly deprived Steven his opportunity to proffer expert evidence in response.  It is simply not right nor proper for the Administrator to attempt to slip in and rely on such opinion evidence, as he did, to the prejudice of Steven.

107.  Regarding the factual witnesses’ evidence on whether Li Senior was able to speak since late October 2006:

a.  Though having so categorically said in §22 of his witness statement as quoted above, Dennis was, and I find, equivocal, vague and evasive when cross-examined^[60] on whether he tried or actually spoke to Li Senior in October and November 2006.  He said that he occasionally visited Li Senior in the hospital in that period, but either very late at about 11pm to midnight or very early in the morning before he went to work.  He explained that he visited Li Senior at such late hours because Li Senior did not sleep at night, apart from him being busy as he had to work.  Later, however, he said that Li Senior was always asleep or in a sleepy state.  When asked whether Li Senior tried to talk to him, he said he did not remember, but later said that his impression was that Li Senior did not try.  Then later, he said he had little chance to talk to Li Senior without expressing clearer what he meant by “he has little chance”.  The upshot is that when his evidence was tested in cross-examination, Dennis did not even say that he or Li Senior wanted or tried to talk to each other, but Li Senior was unable to speak because of the tracheotomy procedure.  In all, I am unable to find that his evidence on this topic proved what he earlier alleged or that such evidence is reliable.

b.  Madam Yip’s evidence^[61] was, which was unchallenged, that when Li Senior was hospitalized again at Canossa Hospital in early August 2006, she and Steven visited Li Senior almost on a daily basis and occasionally prepared meals for him if the doctor allowed.  She further said that Li Senior was awake and alert most of the time when they visited him.  When cross-examined, Madam Yip evidence was clear and unshaken, that up until about slightly more than a week before Li Senior passed away, Li Senior could still speak despite the tracheotomy.  For the reason I will express later on, I find Madam Yip a generally credible and reliable witness and would prefer her evidence over that of Dennis when they conflict, particularly in respect of evidence over Li Senior’s conditions and affairs in the period after around 1997.

c.  Steven’s oral evidence in substance was that he did not remember having talked to Li Senior since late October 2006, he did not know or remember whether Li Senior could or could not speak since late October 2006.

108.  Mr Ho additionally relied on the Medical Notes of a consultation on 26 October 2006, and I quote the entire note as it appears in the trial bundles^[62]:

 

“ 26.10.2006 Alone

Father – no reaction – still in hospital

Wife visits and accompanied father”
(original emphases)

Mr Ho submitted that what was recorded was consistent with Dennis’ evidence that Li Senior could not speak. With respect, this is really scraping the barrel on the part of the Administrator to try to find supporting evidence.  Against the background of the evidence from Dennis that Li Senior slept often (which was expected of a very aged patient with serious illnesses at an advanced stage), the mere words “no reaction” without more could very well meant that Steven on that occasion saw Li Senior not reacting because Li Senior might well have been sleeping.  I cannot and would not assume the mere 2 words of “no reaction” in the note meant that Steven had tried to talk to Li Senior but Li Senior could not speak.  I would not give any weight to this note.

109.  On the contrary, plainly there could have been many other witnesses, like the siblings, their children, other relatives and friends or any other person who had visited Li Senior after the tracheotomy procedure had been performed, who the Administrator could have contacted since Madam Yip filed her witness statement in November 2019 for the purpose of giving evidence on this point.  However, none was called as a witness by the Administrator.

110.  In the premises, on such evidence I find that Li Senior was still able to speak (though probably with some difficulty) until slightly more than a week before he passed.

E.4.  Parties’ evidence on this issue of authorization

111.  Steven’s evidence given in his witness statement was general, scanty and lacking in detail.  His evidence^[63] was that even though he was made a signatory to the HSB Account, Li Senior remained alert and knew full well matters relating to the HSB Account.  Any time Li Senior wanted to make a transaction, he would give instructions to him, and he merely acted according to Li Senior’s instructions and often times without knowing the purpose or reason.  Whenever he went to the Bank to carry out the transaction according to Li Senior’s instructions, he would have to wait until the bank staff confirmed Li Senior’s instructions.  He said he was not able to further explain any of the 17 Withdrawals due to his medical condition.

112.  In oral evidence, Steven said he was not able to remember much. He however

a.  said that Li Senior at the time did not use any mobile phone and the bank staff would usually call Li Senior by his home phone number to confirm the instructions;

b.  said that he would jot down the banking instructions given by Li Senior orally in a piece of paper or a notebook, would hand over the written instructions to the bank staff at the counter who would then fill out the bank form or slip for him, and he did not remember but should have reported to Li Senior each time after the transaction was done, and that the piece of paper was thrown away after each transaction^[64];

c.  said that if he made a mistake in carrying out Li Senior’s instruction, Li Senior would be angry and very displeased, though he did not think he had made any such mistakes^[65]; and

d.  said that, as a matter of habit, Li Senior would check the bank passbooks and bank statements.

113.  Dennis did not give any evidence specifically on this issue of authorization and the Administrators in his Closing Submissions did not mention there was any.

114.  Madam Yip gave evidence in support of Steven’s case of gift, which implicitly supports Steven’s case that there was authorization given by Li Senior regarding the Withdrawals in respect of the gifts, which I will allude to in due course.

E.5.  Credibility and reliability of Steven as a witness

115.  The Administrator’s submissions in substance were that Steven’s evidence was not useful, that there were doubts and gaps in his evidence, that he has failed to discharge his duty to account which duty as a matter of law was not tempered or affected by the fiduciary’s own lack of, or inadequacy in, abilities.

116.  Mr Wong recognized that Steven’s inability to give evidence on events and matters was unusual and glaring.  Such would have driven any fact-finding court to the conclusion that such a witness is not a truthful or reliable witness.  Mr Wong invited this Court, having regard to Steven’s diagnosis of Bipolar I Disorder and the consensus in the Joint Report that Bipolar I Disorder could have impaired a patient’s memory, to accept that Steven was nevertheless a truthful witness and has been doing his best to give truthful evidence.

117.  Indeed, in the course of trial, this Court has been directing its attention to consider, among others, and if I may be excused in putting it rather bluntly, whether Steven was feigning or exaggerating intentionally or even unintentionally his inability to remember and to understand in total or selectively over certain matters so as to advance his case or to dodge liability.

118.  Having carefully listened to and observed him giving evidence and considered the matter, I find the following persuasive and weighty:

a.  In a span of about 20 questions put to him in cross‑examination^[66], he casually and in the same consistent pace gave clear answers that would hurt his own case over a subject that has been the thrust of the Administrator’s complaint.  I am referring to the answers he gave to the effect that it was reasonable for him to keep records of each payment into or out of the bank accounts as instructed by Li Senior, that as a matter of fact he should have done so, and that he agreed that he should have done the same to his personal accounts.

b.  Similarly and even more so, in answer to this Court’s question as to the source of payments into the HSB Account (with the Counterclaimed Sum forming the bulk of them), Steven answered directly and spontaneously that he thought those should have been paid in pursuant to the directions of Li Senior.  I said “even more so” because it seems to me that in all likelihood he ought to have discussed with his legal advisers the contents of his Counterclaim and which sums it included before he gave evidence.  Yet, Steven gave the above answer spontaneously.

c.  The facts of this case are such that if Steven was minded to, there could have been many opportunities for him to easily embellish his case by, say, saying that this or that conversation has taken place between Li Senior and him alone, and in that case there would be very little the Administrator could do to produce rebuttal evidence or to contradict it.  Yet, he did not so embellish in his witness statements and this Court did not recall any when he gave oral evidence, and having re-read the transcript of evidence, this Court is unable to detect any.

d.  Dennis and the siblings clearly knew Steven well enough that if indeed Steven has better memory or cognitive ability than he now represented, I have little doubt that Dennis and the siblings would be able to recall instances showing it and would and could have given evidence to contradict and expose Steven.  However, there was not a hint of such in all 3 witness statements filed by Steven nor was any other witness called.

e.  I also find much force in the submission made by Mr Wong that Steven was arranged to have such minimal duties in the office for such a long period only after Li Senior had made the assessment that it would not be appropriate to assign Steven other tasks or responsibilities.  It would not be difficult to appreciate that such must not have been easy for Li Senior and must have been arranged as a matter of last resort.

f.  This Court was also favourably impressed by Steven, after having carefully observed his demeanors, that this Court believes he was a truthful witness.

119.  Taking these matters into account, I accept Mr Wong’s submission and find that Steven was an honest witness who has tried to give truthful testimony to the best of his abilities.  Having found that, I would still have reservation and have cautioned myself over the reliability of his evidence especially over his memory concerning details such as time and dates and contents of conversation and over matters which involve more complicated concepts.

E.6.  Did Li Senior authorize Steven to make the 17 Withdrawals?

120.  In adjudicating this factual issue, Mr Wong referred to the following cases and reminded this Court the following approach, which is trite and was not controversial :

a.  A sensible approach may be to limit, or at least be cautious about, the reliance placed on the witness’ individual recollections and to give more weight and make factual findings on inferences drawn from any documentary evidence as well as known or probable facts, in particular objective facts (Yu Man Fung Alice v. Chiau Sing Chi Stephen [2020] HKCFI 2923 at §58 per Coleman J.).

b.  The inherent probabilities and likelihoods of an event or account may often be of greater assistance in deciding what actually happened, on a balance of probabilities (Kong Fung RMB Remittance Exchange Limited v. Chan Kam Hoi and Others [2022] HKCFI 736 at §21 per Mimmie Chan J, citing Yu Man Fung Alice §62).

121.  By reason of the matters set out below concerning the contemporaneous documents, the known, probable and/or objective facts and evaluating the inherent probabilities, I find in favour of Steven’s case that on balance of probabilities the 17 Withdrawals were authorized by Li Senior.

122.  First, apart from the 17 Withdrawals, there were the following 5 withdrawals from and 1 payment into the HSB Account (among others), the purpose and details of which are common ground, which show undisputably or in all likelihood that they must have been made with the authority and knowledge of Li Senior.  These 5 withdrawals and one payment-in were chronologically:

a.  On 20 December 2005, the remittance out of US$200,000 to Helen to reimburse her for the travelling and hotel expenses;

b.  On 25 November 2005, a withdrawal of HK$167,942 for buying a cashier order to pay profit tax of Chuen Ming;

c.  Also on 25 November 2005, a withdrawal of HK$1,513,573 for buying a cashier order to pay profit tax of Lee Tai;

d.  On 20 March 2006, a withdrawal of HK$112,542 for buying a cashier order to pay profit tax of Chuen Ming;

e.  Also on 20 March 2006, a withdrawal of HK$565,089 for buying a cashier order to pay profit tax of Lee Tai; and

f.  On 25 April 2006, a deposit of HK$9,000,000 from the same amount withdrawn from Lee Tai’s bank account with the Bank number 283-2-307025 or a transfer-in of that amount from Lee Tai’s said account.

123.  The significance and implications of these 6 transactions are, which I find :

a.  As Lee Tai’s said bank account was a savings account, the common ground is that its passbook had been locked up by Li Senior. A further common ground is that as the passbook of Lee Tai’s (and Chuen Ming’s) savings bank account could not be printed on it an amount over HK$9,999,999, and once the balance accumulated close to that limit, Li Senior would cause a transfer of money in Lee Tai’s savings bank account (and Chuen Ming’s too) into his personal bank account.  The other common ground is that only Li Senior and not Steven who would know the balance in the Lee Tai saving’s bank account and Li Senior had been controlling tightly the money and Steven was never given such control.  With these as the undisputed consistent practice of Li Senior for years, the clear implication and inference, which I find on balance of probabilities, is that this deposit on 25 April 2006 was directed and authorized by Li Senior.

b.  In view of the common ground that there was a protocol between the Bank and Li Senior that when money was transferred out from the HK Companies’ bank accounts, the Bank was required to confirm the instruction with Li Senior and this deposit was made when Li Senior was hospitalized (Li Senior was hospitalized 28 March 2006 to 19 May 2006), it showed that the staff of the Bank was somehow able to contact Li Senior to confirm the instruction of this instance of withdrawal from Lee Tai’s said account.  I thus find that it corroborated Madam Yip’s evidence that she recollected a staff of the Bank visited Li Senior in hospital several times and this would have been one of them.

c.  The 4 withdrawals to pay profit tax of the HK Companies were clearly directed and authorized by Li Senior because by all accounts, Steven was not meaningfully involved in the operation of the HK Companies and would not have known, on his own without Li Senior, that profit tax of those 4 specific amounts was due and payable by the respective HK Companies on those dates.

d.  They clearly show incredible the impression, if not actual evidence, given by Dennis that Li Senior was in such poor health in 2005 and 2006 that he could not handle business and financial affairs.  On the contrary, they corroborate Madam Yip’s version that Li Senior was still very much managing the affairs of the companies in 2005 and 2006.

124.  Second, Withdrawals 8, 9 and 10 of respectively HK$8,200,000 to Steven, HK$1,800,000 to Steven and HK$10,000,000 to Madam Yip were made on the same occasion on 6 June 2006.  At the time, Li Senior was not hospitalized and was residing in the Estoril Flat.  These 3 withdrawals totalled to HK$20,000,000, according to Madam Yip, was the sum Li Senior told her in the 1^st Alleged Conversation (defined later) that would be gifted to her and Steven.

125.  Importantly, the 3 respective withdrawal forms produced by the Bank pertaining to each of these 3 withdrawals^[67] all contained an endorsement or note thereon in handwriting of identical contents:

“ T.C.戶主LI CHUNG 由於客人年老及聾不能cfm

7-6-06錄音下午4:00p.m.
T.C. 283 WU LAI SHAN 21989088 熟此客人也有提及此轉數及匯款，客人有出示CRM咭片, 283 WU LAI SHAN用電話錄音对身份”

126.  While there was no evidence from the Bank or its staff as to who made those written notes and what exactly they meant.  It is reasonably clear from reading the note that

a.  Li Senior was given a call by the bank staff, who recorded such call on about 4:00 pm.  However, the initial verification was unsuccessful due to Li Senior’s age and hearing problem (“T.C.戶主LI CHUNG 由於客人年老及聾不能cfm 7-6-06錄音下午4:00p.m.”);

b.  the staff then made a telephone call to Ms Wu Lai Shan who was stationed at the Mongkok branch of the bank to seek further verification (i.e. “T.C. 283 WU LAI SHAN 21989088”); and

c.  Ms Wu confirmed to the staff that Li Senior had mentioned to her about his wish to make these transfers (“T.C. 283 WU LAI SHAN 21989088熟此客人也有提及此轉數及匯款”) and Ms Wu had made a recording of the telephone call (“283 WU LAI SHAN用電話錄音对身份”).

127.  It seems to me highly inherently probable that the staff and Ms Wu would not lie or be mistaken, because otherwise they would have failed in their duty and be responsible for a no small amount of HK$20 million.  I therefore find on balance of probabilities that Ms Wu did successfully contact Li Senior and confirm with Li Senior the 3 withdrawals respectively to Steven and Madam Yip.  I thus find that these 3 withdrawals have been authorized by Li Senior.

128.  From the verification by the Bank as shown by the said written note, I find that there was in place a protocol in the operation of the HSB Account that certain withdrawals required the confirmation of or verification by Li Senior (“the Protocol”), contrary to a submission of the Administrator that there was no evidence showing there was such a protocol vis-à-vis the HSB Account (as opposed to it being common ground in respect of the bank accounts of the HK Companies).  I so find because Steven was the authorized signatory of the HSB Account, therefore, the inherent probability is that unless there was a specific instruction given by Li Senior limiting that authority, it would not be up to a particular teller or staff of the Bank to require, following his own wish or judgment, further confirmation or verification by Li Senior before he/she would process the transaction authorized by the signature of Steven.  In other words, I find that in the circumstances, it is very highly inherently probable that such limitation was not an arbitrary requirement by the bank staff nor a one-off requirement imposed by Li Senior, but was a matter of a standing instruction, and thus, a matter of protocol.

129.  Third, as Li Senior had been so cautious about his money and had a life-time habit of checking his passbooks and bank statements, and as he was clearly mentally and physically still capable of managing his affairs at least up until he was hospitalized again on 4 August 2006, I therefore find it inherently most probable that he continued to so check the passbooks and bank statements in June and July 2006.  In that period, Withdrawals 8, 9 and 10 had been made with his authorization, as I find above, as had Withdrawals 11 and 12 respectively on 19 June 2006 in the sum of HK$300,000 and on 20 July 2006 in the sum of HK$400,000.  If any of Withdrawals 1 to 12 had not indeed been authorized by him, in all likelihood Li Senior would have found out when checking the passbook/monthly statements of the HSB Account in June and July 2006 as the remaining balance would show the shortfall caused by any unauthorized withdrawals.  Not only was there no complaint from Li Senior whatsoever, it seems to me most inherently improbable that Steven would risk making Withdrawals 1 to 12 when he had no authority from Li Senior, not only because he was a filial son (as I find below), but also the overwhelming likelihood of being discovered by Li Senior in view of his known character, caution and habits of checking.

130.  Fourth, in all the evidence placed before this Court, oral and documentary (excluding Dennis’ evidence mentioned in §70 above about one instance of complaint by Li Senior, which I rejected), there is not even a hint or suggestion whatsoever that Li Senior had made any complaint against Steven concerning any handling of financial matters by Steven on Li Senior’s behalf, not just over any unauthorized withdrawals from the HSB Account made in or prior to July 2006 or any unauthorized withdrawals from the HSB Account then after, but there was simply not even one instance.  In this connection, I also bear in mind the inference I draw that by the Nov 2005 Letters Li Senior indicated he had no complaint concerning any wrongful transfer or misuse of his consent or authority by Steven in relation to dealings with the HK Companies that Steven had involved in.

131.  It therefore means that on the evidence before this Court, Steven had been faithfully and obediently following and executing the instructions of Li Senior over money matters for about a decade.

132.  Fifth, as I found above that there is a high inherent probability that a staff of the Bank had visited Li Senior in the hospital to confirm the instruction regarding the withdrawal of HK$9,000,000 from the savings account of Lee Tai on about 25 April 2006 as a matter of protocol and that further Ms Wu actually called Li Senior on 6 June 2006 to confirm Withdrawals 8, 9 and 10, pursuant to the Protocol, I find it equally, if not more, inherently probable that a staff of the Bank would have visited Li Senior in the hospital to confirm Withdrawals 16 and 17 both made on 31 October 2006 in the respective sums of HK$10,000,000 and HK$1,000,000.  I note that confirmations were sought regarding the withdrawal from Lee Tai’s bank account in the amount of HK$9,000,000 and regarding Withdrawals 8 and 10 in the respective sums of HK$8,200,000 and HK$10,000,000, such that I think Withdrawal 16 in the equally large sum of HK$10,000,000 should as a matter of high inherent probability likewise triggered the Protocol.  Li Senior evidently was a valued and long-term client of the Bank.  If the Bank had arranged its staff to pay a visit to Li Senior in the hospital to confirm an instruction on an earlier occasion, there seems to me no reason for the Bank to adopt an inconsistent practice on the next occasion, particularly in view of the facts, which the Bank must be aware, that Li Senior was of the advanced age of 86 by then and that his health was failing, and that once a client passed away, his bank accounts were to be suspended.

133.  Concerning a staff of the Bank visiting Li Senior in the hospital in about mid-October 2006, Madam Yip said in her witness statement^[68] in connection with a conversation she and Steven had with Li Senior around that time (“the 2^nd Alleged Conversation”), thus :

“ 50. 之後，爺爺於2006年9月左右再次入院，到10月下旬，在文學及本人到嘉諾撒醫院探望爺爺時，他當時跟我們說他希望能讓他的兩名孫兒能在中學時期開始到英國留學，他說自己應該時日無多，並要求文學在他戶口提取港幣一千萬用於孫兒留學的費用上。我從爺爺口中得知，在爺爺向我們說明他的期望後，有恒生銀行的職員曾到醫院探望爺爺。但就文學於何時及如何安排提取/轉賬的事宜，我未有牽涉在內，不知道詳情。 …” (my emphasis)

134.  Madam Yip’s such evidence was consistent with the inherent probability that a staff of the Bank would have visited Li Senior in the hospital to confirm Withdrawals 16 and 17 mentioned in §132 above.

135.  Based on the inherent probability and Madam Yip’s such evidence, which I accept for reasons to be explained in due course, I find that a staff from Bank visited Li Senior in about mid-October 2006.

136.  Sixth,I accept Mr Wong’s submission that Steven is a devout, obedient and filial son such that it makes it inherently improbable that he would lie about the 17 Withdrawals or any of them being authorized by Li Senior when they were not.  I so accept because (a) Steven complied with Li Senior’s wish and arrangement to work in the office all these years in the manner I narrated above, apparently without even complaining, (b) Li Senior apparently trusted Steven in that he trusted Steven to assist him to handle matters relating to his bank accounts, appointed Steven as director of the HK Companies in 1998 and 1999 despite the medical condition of Steven might have rendered him less capable and Li Senior signed the Nov 2005 Letters, (c) Steven had faithfully for a decade executed Li Senior’s instructions in the matters concerning the bank account, (d) it was recorded in the Medical Notes that Li Senior’s well being and his interaction with Steven had throughout the years been very much on Steven’s mind as he often and consistently told Dr Chen incidents and feelings concerning Li Senior and their interactions, and (e) Steven and Madam Yip consistently took care of Li Senior since 1995 which included Steven often and regularly bathed Li Senior and washed his feet.

137.  I also find in favour of Steven’s case on authorization as I find him a credible and truthful witness and I accept his testimony, albeit it was very general and broad, that he only carried out transactions in the HSB Account according to the directions and instructions of Li Senior.

138.  This Court has taken on board Mr Ho’s submission that this Court should distinguish Withdrawals 13 to 17 which were made on or after 5 August 2006 when Li Senior was hospitalized again on 4 August 2006 and remained so until he passed away on 15 November 2006.  This Court thus has also carefully considered the authorization issue regarding these 5 Withdrawals separately.

139.  Mr Ho referred to the fact that the hospital bills showed that Li Senior was admitted into Intensive Care “Room IC2A” from 13:16 hours on 5 August 2006 until he passed away.  However, there is no evidence before me indicating that there could be no visits for patients staying in the intensive care rooms; indeed, quite the contrary, the common ground is that Dennis, Steven and Madam Yip were able to visit Li Senior, even daily as Madam Yip said. Next, though the Administrator was keen to advance the impression that Li Senior was seriously ill then and could not have handled or communicated things about business and financial affairs, as I find above on available evidence, such was not the case save the period of slightly more than a week before he passed away.

140.  Though these last 5 Withdrawals are not as clearly shown to be authorized as the previous 12 are, my findings, views and analyses set out in §§128 and 130 to 137 above nevertheless still apply to them.  As I find in §135 above that a staff of the Bank did visit Li Senior in mid‑October 2006, and in light of my finding that the Protocol had been put in place by Li Senior and there being no evidence before me suggesting any other reason for a staff of the Bank to visit Li Senior around that time, I draw the inference based on high inherent probability that this visit was concerned with coming withdrawals, and Withdrawals 16 and 17 were the only 2 such withdrawals.

141.  Moreover, I consider it inherently not probable that Steven would literally on the very last few days of Li Senior’s life abruptly changed the entire course of his conduct for about a decade of faithfully following and executing Li Senior’s instructions, and instead did something rather out of character of making these 5 Withdrawals without the knowledge or authority of Li Senior; moreover, if he were minded to do so, there was no reason for him to leave about HK$4.5 million remaining in the HSB Account and not withdrawing them as well.  Moreover still, I find that Withdrawal 16 was a gift, as will be explained.

142.  Thus, specifically regarding Withdrawals 13 to 17, I find on balance of probabilities that they were also made with the authorization of Li Senior.

F.  STEVEN’S CASE OF GIFT

143.  This is the 2^nd half of agreed issue 4.

F.1.  Was there “no reason to make the gift” to Steven and Madam Yip?

144.  One of the main contentions advanced by the Administrator in the evidence of Dennis was this :

“ 26. I am not aware of any reason why Father would have made cash gifts in the magnitude of HK$10 million or HK$20 million to Steven and Yip, but not to any of his other children, in 2006”[69]. (my emphasis)

Dennis then repeated the same statement in §2 of his supplemental witness statement[70] and devoted the whole of his supplemental witness statement consisting of 30 paragraphs to deposing to the provisions to the children Li Senior had made and to provide “a full picture of Steven’s and Yip’s resources, both before and after Father’s passing”[71].

145.  As I highlighted in the above quotation, the real contention was not that there was no reason for Li Senior to make the gift, but there was no reason for Li Senior to make those gifts to Steven and Madam Yip in 2006 but not to his other children at the same time.  In other words, the point contented actually was that there should have been parity or equality on the part of Li Senior in the making of gifts to his children.  Moreover, the contention was couched as a subjective assertion that “[Dennis] was not aware of any reason” over this disparity.

146.  Though much time at trial was spent on the evidence connected with this contention, in his Closing Submissions the Administrator made little reference, if any at all, to the contention again and framed his submissions which I would quote in the next section.  However, such contention was not formally abandoned, and I would address it thus.

147.  As can be gathered from the background, Li Senior evidently had his own principles and thoughts as to the allocation of the shareholdings in the family companies to his children, as would recall, mostly followed the pattern that Dennis and Steven would be allocated equal but larger portions as compared to the 5 daughters who were allocated also equal shares among themselves but much smaller portions as compared to the 2 sons.

148.  That might have been so, but it was not the Administrator’s case, and there is before me no evidence, that it was Li Senior’s express, unchanging and even dogmatic intention that Dennis and Steven had to receive, or should be receiving, assets and money from him equally, such as to show that the alleged gifts were actually not intended or were somehow inherently improbable.  That being the case, this contention of parity was but a red herring.

149.  Similarly, the contention by Madam Yip that Li Senior originally intended to make a gift of the Original Mainland Company to Steven but later upon Dennis’ protest allocated the shares in the Mainland Company in the present manner and the contention by Dennis that Steven and Madam Yip already received substantial provisions from the Original Mainland Company and the Mainland Company are, in my judgment, both red herrings, over which in my view this Court does not need to come to any adjudication.

150.  Rather, the evidence before me established that Li Senior had made various cash gifts to his children and relatives, and not necessarily on a completely equal basis:

a.  Li Senior had made cash gifts of several millions Hong Kong dollars to each of his own brothers, in order to help them build their own houses in their hometown^[72].

b.  Li Senior had given tranches of cash of HK$1 to 2 million to Helen and Mimmie respectively in the 1990s^[73] and had also given some cash gifts also to Ivy and Liza, the amounts of which were not known, as these 4 daughters were employees and did not own a business^[74].

c.  Li Senior had also given US$200,000 to Helen in December 2005 to reimburse her for her travelling expenses^[75].

151.  The Administrator also raised a contention to the effect that Steven had been “adequately provided for”, and therefore the alleged gifts would not, or would unlikely, be intended.  I have no hesitation in rejecting this as a contention against the making of the alleged gifts to Steven and Madam Yip.  First, it is based on the premise that Li Senior would only give to Steven only what was “adequate” and no more.  There is simply no evidence before me as to whether that was indeed the thinking or mindset of Li Senior, or what “adequate” meant for Li Senior in terms of the wealth he possessed or the extent of his love, affection, care or special concern for Steven.

152.  On the contrary, I find the following concerns and considerations on the part of Li Senior over Steven and Steven’s sons established by evidence and indeed confirmed by Dennis, which I find for:

a.  By reason of the litigation among family members, Li Senior in 2005 (if not earlier) knew that his children were rather concerned about matters of money, to the extent that they might even commence litigation against each other^[76].

b.  Li Senior had reason to fear that Steven may be “bullied” by others after Li Senior passed away^[77].

c.  As mentioned in §42(c) above, Li Senior was concerned that Steven’s ability to make a living for himself was way lower than that of his other siblings.

d.  As set out in §48 above, Li Senior had a particular fondness for Steven’s children, and was concerned with their living and education.

153.  I would also note at this juncture that it was not the Administrator’s case that there was no longer any love and affection from Li Senior to Steven and Madam Yip in 2006.  On the contrary, as was undisputed by the Administrator, it was the opposite during the last decade of Li Senior’s life in that Steven’s family lived with and regularly had meals together Li Senior, their family was close to Li Senior, Madam Yip and Steven consistently cared for Li Senior especially when he was ill and had ailments, Li Senior trusted Steven in assisting him with money matters and Li Senior was fond of their 2 sons.

154.  I therefore reject Dennis’ evidence/assertion that there was no reason for Li Senior to make the alleged gifts to Steven and Madam Yip without making at the same time gifts in equal amounts to his other children.  On the contrary, in my view, the matters alluded to in the preceding 2 paragraphs support a rather high probability of Li Senior making the alleged gifts to Steven and Madam Yip.

F.2.  The Administrator’s contention in Closing Submissions

155.  In Closing Submissions, the Administrator said

“2. In summary, P’s case runs as follows:

(1) The “duty to account” [where he has custodial responsibility] is a fiduciary’s “irreducible core obligation”. The burden falls upon Steven, whom parties accept to be a fiduciary, to account for and justify each of the 17 withdrawals.

(2) The burden is a heavy one as Steven has objectively profited from the withdrawals at the Deceased’s expense. He is both the fiduciary and recipient, and the Court must not lightly conclude that a fiduciary has been authorised to take assets for himself.

(3) The duty to account requires a clear explanation on (i) when and how each withdrawal came to be authorised, (ii) the purpose behind each withdrawal, and (iii) some basic and informal records to record the same.

(4) Steven has accepted, under cross-examination, in clear terms that (i) it was reasonable for him to make such records, (ii) that it was within his ability to do so, and (iii) that he has in fact done so, although he has made no effort to try retrieve those records for the purposes of this trial (see Topic 1 in the Appendix – entitled “Steven’s duty to account”).

(5) The fiduciary is also under a duty (i) to make inquiries, (ii) to make his records available to the beneficiary and (iii) to render his account(s) as soon as possible once demanded.

(6) On the facts of this case, despite knowing that P was chasing for a response since May 2009, Steven and his wife Madam Yip had been stonewalling P’s legitimate requests. No response whatsoever (let alone any meaningful response) had been provided to P until Madam Yip put forward her “gift story” (and, even then, only in relation to the HK$20m gifted in June 2006) in her affirmation filed in response to the Beddoe proceedings (see Topic 2 in the Appendix – entitled “Stonewalling the Administrator”).

(7) Up to now, Steven and Madam Yip had only given purported explanations on items 8 to 10 and 16 in Schedule 1 to the SOC[CB/1/7] (i.e. the 2 alleged conversations between the Deceased and Madam Yip in June and late October 2006). No evidence has ever been provided as to how the Deceased had ever directed, or authorised, the remaining transfers. Indeed, item 13 (being a transfer made on 5 August 2006) was conducted the day after the Deceased was hospitalised in the Intensive Care Unit of Canossa Hospital on 4 August 2006.

(8) Steven’s failure to perform the discharge his duties as fiduciary must not work to his benefit. It is well‑established that any doubt or uncertainty in the evidence would be presumed against the defaulting fiduciary.” (original emphasis)

156.  Before I address these contentions, I would first consider Withdrawals 8, 9, 10 and 16 and the credibility and reliability of Madam Yip as a witness.

F.3.  Withdrawals 8, 9, 10 and 16 and credibility and reliability of Madam Yip’s evidence

157.  Madam Yip first gave evidence of what Li Senior told her on 7 June 2016 (“the 1^st Alleged Conversation”) in her affirmation filed on 10 May 2017 to oppose the Beddoe Application^[78] (“Yip’s Beddoe Aff”), thus:

“50. I am advised that the Plaintiff is contemplating seeking recovery from me the sum of HK$10 million transferred from the HSB Account to me on 7 June 2006, as recorded in the HSB Summary. I am extremely disappointed to learn of the Plaintiff’s intended action against me. I cannot see any basis for such intended action, for :-

(1) The two withdrawals to my husband's accounts in the amount of HK$8.2 million and HK$1.8 million and the withdrawal to my account in the amount of HK$10 million, all dated 7 June 2006, were made pursuant to the directions of Father on the same date.

(2) Father indicated to me that they were gifts from him, mainly for my husband to maintain his living in the future and as a token of appreciation for my effort in taking care of Father, my husband and the family throughout the past years.

(3) On 7 June 2016 I recall that Father said to me in the following words or words to similar effect :

“ 你兩個仔仔仲細，而且文學因為病情的關係在公司沒有地位。如果我過身，文學的哥哥姐姐一定唔會照顧你地一家人，我好清楚文學哥哥姐姐的性格。到期時，你地會好似係海中間飄下飄下咁，無人照顧。我宜家畀你地2000萬作為文學同你一家作不時之需，作為生活費以及兩個孫仔嘅教育資助。我希望即使我過咗身，你都可以盡心盡力支援文學，教好兩個孫仔。”

(4) Father then asked my husband and me to attend Hang Seng Bank to arrange for the transfers.  We did so accordingly.  I recall that, while we were at the Bank, the staff gave a call to Father seeking his confirmation of the transfers. Father indicated his approval and the transfers were made as a result.”

(my added emphasis, for reasons to be explained)

158.  Such evidence was repeated in substance in her witness statement.  In her witness statement, she also spoke about the 2^nd Alleged Conversation, which I quoted in §133 above.

159.  Mr Ho submitted that as Dennis was not present (in fact, no one else was) in these 2 Alleged Conversations, the Administrator was not in a position to proffer rebuttal evidence.  The Administrator made a number of criticisms on the credibility of Madam Yip’s such evidence.

160.  First, regarding the 1^st Alleged Conversation, he submitted that it was incredible that Madam Yip could recall the 1^st Alleged Conversation by producing the block quote of some 146 words, given the lapse of over 10 years and she did not say she had recorded it in writing.  However, Madam Yip had clearly stated in Yip’s Beddoe Aff that Li Senior said to her “words to similar effect” as I have highlighted in the above quote.  In other words, she had never represented her quote as an accurate verbatim record.  Thus and with respect, this criticism is a non-starter.

161.  Second, he criticized that Madam Yip only said in oral evidence for the first time that upon her return to the Estoril Flat on 7 June 2006 the Deceased said that the Bank had called him earlier to confirm the withdrawals.  As have mentioned, the documentary evidence independently established that the Bank in fact called Li Senior to confirm Withdrawals 8, 9 and 10, which corroborated (among others) Steven and Madam Yip’s evidence that these 3 withdrawals were authorized by Li Senior. This criticism of Madam Yip mentioning this conversation only for the first time in oral evidence is at most but a nit-pick that I find does not at all affect her credibility.

162.  Next, Mr Ho submitted that the 1^st Alleged Conversation and the gift of HK$20 million per the 1^st Alleged Conversation was not recorded in the Medical Notes of the consultation on the same day despite it having been established in oral evidence that the consultation took place after the 1^st Alleged Conversation.  First, it was the consistent evidence of Madam Yip that the 1^st Alleged Conversation was one between Li Senior and her.  It was not her evidence, or has it been established by other evidence, that Steven also took a part in that conversation.  Rather, her evidence was that after the 1^st Alleged Conversation Li Senior then asked Steven and her to attend the Bank to make the transfer/withdrawal.  Second and again with respect, I am not prepared to accept, as Mr Ho has assumed, that Steven’s consultations with Dr Chen would have been the occasions when Steven would be telling Dr Chen all the matters that were pertinent to the present disputes, such that any non-mention in the Medical Notes would suggest probatively that such in fact had never took place.  Simply as a matter of common sense, and unlike taking a police statement in police station in respect of an incident or taking a deposition in a judicial process over a claim, I think a patient’s consultations with his psychiatrist does not work that way.

163.  I thus, by just looking a bit closer at these criticisms themselves, would be prepared to dismiss them as being without substance.

164.  Regarding the alleged gift of HK$20 million communicated by Li Senior in the 1^st Alleged Conversation, taking into account (a) I find that it has clearly been established that the Withdrawals 8, 9 and 10 were contemporaneously authorized by Li Senior as confirmed by Ms Wu, (b) there is no evidence before me even suggesting that the HK$10 million paid to Steven that day and the HK$10 million paid to Madam Yip that day by Li Senior would be for any other purpose, (c) as I hold above in §154, the matters I mentioned there support a rather high probability that Li Senior would make the alleged gifts to Steven and Madam Yip, and (d) my favourable view below on the general credibility of Madam Yip’s evidence, which I accept, I therefore find that Steven’s case that Withdrawals 8, 9 and 10 were gifts to them, were made out. That in turn supports that Madam Yip’s evidence on the 1^st Alleged Conversation is credible, reliable and accurate, and in my view, boosts the general credibility of Madam Yip as a witness. 

165.  In respect of the 2^nd Alleged Conversation, Mr Ho made a number of forensic criticisms and submitted that her evidence thereon was not truthful or credible. These criticism included (a) that the 2^nd Alleged Conversation was not even mentioned in Yip’s Beddoe Aff, (b) the averments in §4(6) of the Defence and Counterclaim said that the conversation took place “in or around the latter half of 2006” as compared to mid to late October 2006 as said by Madam Yip in her witness statement, and (c) she had admitted in oral evidence that there were other conversations between Li Senior and her over Li Senior’s wish for her 2 sons to pursue their studies in the UK, and therefore there was a possibility of a mixing-up of the conversations on her part.

166.  In assessing the evidence of Madam Yip, this Court has borne very much in mind the caution and circumspection warranted by the fact that Madam Yip is herself a done, and that her evidence concerned conversations with Li Senior, who was deceased and would not be able to give evidence to contradict what Madam Yip said.

167.  With such caution and circumspection in mind, I note that save these forensic criticisms, the Administrator was unable to say that Madam Yip’s evidence (whether over these conversations or other background or general matters) was in any way shaken when tested in cross-examination, that there were any inconsistencies in her testimony or that she has changed or shifted her evidence in any way or that any of her testimony was inherently improbable.

168.  Having listened to and observed Madam Yip giving evidence, I am favourably impressed by her as a witness.  Like Steven, I am unable to detect any apparent embellishment on her part, nor did Mr Ho said there was any.  She readily and consistently said that she knew nothing of the other Withdrawals (other than Withdrawals 8, 9, 10 and 16) nor did she say she knew why after the 2^nd Alleged Conversation, Withdrawals 16 was only made days later on 31 October 2006.  Moreover and as said, her general credibility is bolstered by the fact that her evidence regarding the 1^st Alleged Conversation was confirmed by documentary evidence.  There were however a number of instances when it was shown that she did not remember the dates accurately.  For instance, though I accept that she had cared for Li Senior, she mis‑remembered mid-September 2006 as the time when Li Senior was hospitalized again in 2006 instead of early August (to be exact, 4 August).  Thus, though I find her a credible and reliable witness, I think she might not possess great memory and her evidence over dates and fine details not particularly reliable, which in my view explained the said matters the Administrator criticized concerning her evidence on the 2^nd Alleged Conversation. I also bear in mind that this action was commenced almost 11 years after the conversation took place.

169.  Thus and despite the Administrator’s criticisms, I accept her evidence concerning the 2^nd Alleged Conversation, save as to the exact date that it took place.  In particular, I accept her evidence (a) concerning the gist of the contents of that conversation, (b) that Li Senior had several conversations with her in 2006 indicating that Li Senor was very desirous for Steven and her to send their 2 sons to the UK to study secondary school, and (c) importantly, in the 2^nd Alleged Conversation, Li Senior said that he would ask Steven to withdraw HK$10 million from the HSB Account to pay for their 2 sons’ studies in the UK.  Incidentally, I also accept her evidence given in §50 of her witness statement^[79] that pursuant to Li Senior’s such wish and arrangement, Steven and her did send their elder son and younger son to study secondary school in the UK in respectively 2008 and 2014.

170.  In the premises, I hold in favour of Steven’s case that Withdrawals 8, 9 and 16 are shown to be gifts made by Li Senior to Steven, and Withdrawal 10 is shown to be a gift by Li Senior to Madam Yip.

171.  As to the remaining 13 Withdrawals, I have already held (together with the other 4 Withdrawals) that they were authorized by Li Senior.  However, there is no evidence proffered by Steven as to what Li Senior’s intention was after the same have been authorized by him to be transferred to Steven’s personal bank accounts or been paid to Steven.  In this regard, Steven relied on the presumption of advancement, to which I will now turn.

F.4.  Is the presumption of advancement applicable ? Steven as fiduciary, and the scope of his duty to account

172.  What I am addressing in this section either determine squarely or touch on the parties’ agreed issues 1, 2, 3, 5 and 7.

173.  The principles concerning presumption of advancement are trite and uncontroversial and need no introduction here.  I readily accept Mr Wong’s submission that, subject to the Administrator’s submission below, the presumption would apply with particular strength in the present circumstances – Steven is the younger son of Li Senior who was affected by Bipolar I Disorder for a greater part of his life, and over whom Li Senior had various concerns (among others) over his ability to make a living and to provide for his family, and whom in the last decade of his life had consistently take care of him during his illnesses, and with whom and his family Li Senior had remained very close until he passed.

174.  Mr Ho’s submission was that even if this Court finds that all the 17 Withdrawals were authorized by Li Senior, the presumption of advancement nevertheless cannot, as a matter of law and sound principle, be applied in favour of Steven.  I can do no better than quoting Mr Ho’s own words on this point in his Closing Submissions:

“ 87. Third, even if authorisation had been established (on applicable principles on the duty to account), the presumption cannot be applied to presume that these transfers were made as “gifts”. This follows from the “irreducible duty” to account. Steven has to explain every aspect of a transaction. To hold otherwise would be to render the irreducible core obligation of a fiduciary meaningless.”

175.  Though in pleading Steven averred that he was the authorized signatory of the HSB Account only and did not admit that he owed fiduciary duties to Li Senior, at trial, Mr Wong, I think fairly and rightly, accepted that Steven was, strictly speaking “a fiduciary” in respect of the HSB Account, but strenuously disputed that Steven was a trustee, or owed the same rigorous standard and onerous duties as if he were a trustee, and he submitted that the key matter was the precise scope of Steven’s duties by reference to the very nature and character of the particular relationship between him and Li Senior concerning the HSB Account.

176.  It was Mr Ho’s submission that “the categories of fiduciary relationships are infinitely varied and the duties of the fiduciary vary with the circumstances which generate the relationship” and “A fiduciary relationship arises where he undertakes an obligation to act in the interests of another”^[80], citing the Court of Final Appeal case of Libertarian Investments Ltd v Hall (2013) 16 HKCFAR 681.

177.  Mr Wong not only did not dispute that, but went much further and referred this court to these authoritative judicial observations:

“ 73. Where a party is found to have undertaken an obligation to act in another person’s interest, it is necessary to determine what precisely the fiduciary duty owed consists of. As pointed out by Mason J:

‘ ... it is now acknowledged generally that the scope of the fiduciary duty must be moulded according to the nature of the relationship and the facts of the case ... The often-repeated statement that the rule in Keech v Sandford ... applies to fiduciaries generally tends to obscure the variable nature of the duties which they owe. The rigorous standards appropriate to a trustee will not apply to a fiduciary who is permitted by contract to pursue his own interests in some respects.’ ” (Mr Wong’s emphasis)

  (Libertarian Investments Ltd v Hall (2013) 16 HKCFAR 681, §73, Ribeiro PJ)

“ 48. Generalities aside, it is important to recognise that how these duties are applied to the facts in any given case can only be determined by reference to the nature and character of the particular relationship in question: see Birtchnell v Equity Trustees, Executors and Agency Co. Ltd. (1929) 42 CLR 384, at 408 per Dixon J (a passage cited with approval by the Privy Council in Kuys). … How these fundamental fiduciary duties are to be applied in any given case will depend on factors such as the contents of the relevant partnership deed or contract of employment or the way in which the firm's activities are carried out. Thus, for instance, the contractual bargain between the parties may qualify, one way or another, the extent or rigour to which the fiduciary duties will be applied … ". (Mr Wong’s emphasis)

(Kao Lee & Yip (A Firm) V. Donald Koo Hoi Yan And Others [2003] 3 HKLRD 296, 313D-H, Ma J (as he then was))

178.  Mr Wong further referred to the observation given by Fletcher Moulton LJ in Re Coomber [1911] 1 Ch 723 at 728-729 to sound a warning against the danger of assuming that every fiduciary is subject to exactly the same kind of duty to the exact degree :

“ Fiduciary relations are of many different types; they extend from the relation of myself to an errand boy who is bound to bring me back my change up to the most intimate and confidential relations which can possibly exist between one party and another where the one is wholly in the hands of the other because of his infinite trust in him. All these are cases of fiduciary relations, and the Courts have again and again, in cases where there has been a fiduciary relation, interfered and set aside acts which, between persons in a wholly independent position, would have been perfectly valid. Thereupon in some minds there arises the idea that if there is any fiduciary relation whatever any of these types of interference is warranted by it. They conclude that every kind of fiduciary relation justifies every kind of interference. Of course that is absurd. The nature of the fiduciary relation must be such that it justifies the interference. There is no class of case in which one ought more carefully to bear in mind the facts of the case, when one reads the judgment of the Court on those facts, than cases which relate to fiduciary and confidential relations and the action of the Court with regard to them.” (Mr Wong’s emphasis)

179.  Mr Ho did not dispute these observations as correct and apposite.

180.  The Administrator’s central submission and premise was that “Steven was clearly intended to hold monies in the HSB Account as trustee/fiduciary for the [Li Senior]”^[81] and “it is the [Administrator’s] case that Steven is a fiduciary steward (i.e. custodian) of the funds in the HSB Account in favour of [Li Senior]”^[82] (my emphasis).

181.  Building on this central premise, Mr Ho cited a large number of authorities on a fiduciary’s “duty to account”, particularly on the duty to render an account of the trust assets by a trustee or one in the capacity akin to a trustee, arguing that Steven owed the same rigorous and full scope and extent of a trustee’s such duty.  It is not necessary for me to name or deal with each of these numerous authorities which emphasized the importance of that duty in various ways as the facts of the case may warrant; suffice for me just to mention that they included Wroe v Seed (1863) 66 ER 773 on the duty of an executor to render an account which duty was not excused by the executor’s personal inability to keep an account, Henchley v Thompson [2018] WTLR 1289 in respect of such duties owed by a de facto trustee under 2 settlement trusts, Armitage v Nurse [1998] Ch 241 in respect of duties of trustees under a settlement trust,  Baker v BCS Business Consulting Services Pte Ltd & Ors [2022] SGCA(I) 8, and Thomas & Hudson The Law of Trusts §10-141 on a trustee’s duty to keep proper accounts, and so on.

182.  It is clear from the authorities that the lynchpin of a trustee’s duty to render a full, proper and accurate account of the trust assets is the fact that a trustee has the legal title, possession and control of the trust assets, while the beneficiary has none of them and has to rely entirely on the trustee.

183.  It is evident from the observations quoted in §§177 and 178 above that the pertinent question the Court has to ask is what precisely the fiduciary duty owed consists of by reference to the nature and character of the particular relationship in question.  Then, the next question would be whether such duty to account, with its scope and extent established, would made the presumption of advancement inapplicable as a matter of law and principle, as contended by the Administrator.

184.  Therefore, the first question is: is Steven a trustee (or one akin to a trustee, “fiduciary/custodian” as the Administrator termed him) of the funds in the HSB Account, as the Administrator submitted?

185.  On this important question, the Administrator’s position and contention seem more an assumption/assertion.  He asserted that “Steven was clearly intended to hold monies in the HSB Account as trustee/fiduciary for the Deceased”^[83] and then in 3 sub-paragraphs thereunder substantiated it by referring to (a) Li Senior’s financial practice and character were such that he maintained a tight grasp on the companies’ and his assets, (b) the Nov 2005 Letters signed by Li Senior in which, as we have seen, the words “my custodian” were used, and (c) Steven was a personal assistant of Li Senior in dealing with the HSB Account and acted in accordance with Li Senior’s directions.  Also repeatedly mentioned by the Administrator was Steven’s admission through Mr Wong that he was “a fiduciary”.

186.  I have in §§78-95 above introduced, set out the related evidence, analysed and given my views on the Nov 2005 Letters.  I concluded that I rejected the Administrator’s reading or purport given to the Nov 2005 Letters.  There I also concluded that the funds sitting in the HSB Account were not “in the custody” of Steven.

187.  Concerning the other 2 matters relied on by the Administrator, the undisputed background or such found by me are : (a) Li Senior need Steven’s assistance to operate the HSB Account because of his hand tremor, his failing health and he being confined to the wheelchair, (b) such assistance consisted of Steven bringing Li Senior’s specific instruction as to that transaction to the Bank, the staff would write the same onto the appropriate bank slip or form to carry out that instruction, (c) Steven then signed the mandate, (d) when the Protocol was triggered (probably when the amount reached certain sum), confirmation or verification by Li Senior was required, which the Bank would obtain by phone or at a later stage by personal visit, and (e) Li Senior remained vigilant and kept tight control by locking up the passbook afterwards (if there was one), and habitually checking each entry in the passbook or bank statements.

188.  Importantly :

a.  It is not disputed that the so-called assistance given by Steven did not entail Li Senior giving Steven any discretion or power to use the money in the HSB Account, such as withdrawing certain amount of money for certain project, purpose or matter.  Steven’s power merely consisted of authorizing by his signature the specific transaction instructed by Li Senior.

b.  It is also Steven’s evidence, unchallenged and which I accept, that he did not question Li Senior, nor did he know, the purpose of each transaction he was asked by Li Senior to carry out in the HSB Account.

c.  In asking Steven to assist in the operation of the HSB Account, Li Senior was well aware of the limitation of Steven’s abilities in view of his Bipolar I Disorder.

189.  Simply put, Steven’s assistance and role was travelling to the Bank on Li Senior’s behalf to relay Li Senior’s specific instructions to the Bank without question or need to understand the purpose behind, and be Li Senior’s proxy to sign the necessary mandate.  Such being the nature and character of the relationship between Li Senior and Steven in respect of the HSB Account, Steven plainly was not, and I reject the Administrator’s submission that he was, the trustee or custodian of the funds in the HSB Account. I have no hesitation in accepting Mr Wong’s submission that Steven was much more akin to the “errand boy” example given by Fletcher Moulton LJ in Re Coomber [1911] 1 Ch 723 in his observation quoted in §178 above (I so accept without in any way demeaning Steven and the assistance he had given to Li Senior).

190.  Mr Ho cited and relied on Hollingworth v Juson [2006] 3 HKLRD 381, a decision by C Chu J (as the learned VP then was) in which her Ladyship made a summary order for account under O.43 r.1.  Mr Ho relied on it as a case the facts of which resemble the present one, he said. There, the plaintiff (“H”) was an elderly lady of 94 years old, the defendant (“J”) was her acquaintance who has been assisting H to manage her financial affairs.  J was made a signatory to H’s bank account, had possession of the cheque book and later also held and had use of an ATM card in respect of the bank account.  Bank statements were also directed to J’s premises.  When H was hospitalized for 10 days in August 2003, J withdrew about HK$1.5 million from the account, and had in other instances withdrew another HK$770,000.  J’s case was that he transferred large sums of money from the account to his personal account for fear that the money in H’s account would become inaccessible to meet expenses such as tax, medical fees and such should H had another fall.

191.  In my view, Hollingworth is distinguishable for the present purpose.  In Hollingworth, J was given unrestricted access to the money in the bank account generally “to manage H’s financial affairs”.  Therefore and firstly, regarding all the subject withdrawals made by J, none was made with the instructions or authorization of H.  Secondly, the identity of the payees, the purpose of the withdrawals and whether the amount tallied with the purpose were all only known to J and not to H.  His duty to account thus had to include accounting to H all these pieces of information.  Thirdly, C Chu J expressly stated in §38 of the decision that for the purpose of the application before her, it was not necessary or appropriate for her to conclude on the propriety or otherwise of J’s dealings; whereas I am dealing with the trial of the merits of the matter, and particularly, whether the presumption of advancement would be rendered inapplicable because of an overriding duty to account.

192.  In my judgment, the case of Hollingworth therefore does not affect my view expressed in §189 above.  Therefore and in my judgment, Steven owed the following fiduciary duties to Li Senior :

a.  To faithfully relay to the Bank the instructions given to him by Li Senior and execute the same by signing the necessary bank mandate;

b.  Not to abuse the authority to sign the mandate regarding the HSB Account given to him by Li Senior by signing and executing any bank transactions not specifically authorized by Li Senior; and

c.  Where he had abused that authority and withdrew or transferred funds from the HSB Account to any third party or to himself without the authorization of Li Senior, he would be under a duty to account with respect to details of those withdrawals and transfers and with respect to the sums so withdrawn.

193.  I also find support for my above holding on the scope of the fiduciary duties owed by Steven by considering this.  It is common ground, as I alluded to in §122 above, that there were 4 withdrawals from the HSB Account in the relevant period to pay the taxes of the Hong Kong Companies and 1 withdrawal by remittance out to Helen in the sum of US$200,000.  As I understand it, the purposes for these 5 transactions Steven was unable to explain or “to give an account” but were independently discovered by the Administrator through his diligent enquiries.  I do not think the Administrator can seriously bring a dispute that Steven had thereby breached his duty to account in respect of these 5 transactions and therefore is liable for some relief to be given to the Estate.

194.  In my judgment, therefore, that as Steven’s duty to account concerning transactions authorized by Li Senior did not extent to accounting for the purpose as to why Li Senior directed or authorized that transaction, there is no reason of principle why he could not avail himself of the presumption of advancement.

195.  I thus hold that the presumption of advancement would apply to the remaining 13 Withdrawals paid to Steven, such that these 13 Withdrawals were presumed to be gifts to Steven.

196.  I would also hold that in case I were wrong in accepting Madam Yip’s evidence on the 2^nd Alleged Conversation, the presumption would also apply to Withdrawal 16.  Mr Ho submitted that either Steven made good his case that Withdrawal 16 was a gift, or if not, he could not fall back on the presumption.  I would agree to that submission in a situation where the child/donee and the contestant each advocates a version of the donor’s intention and the child/donee’s is rejected.  Here is different, Steven could not remember (and I hold genuinely) and Madam Yip remembered the 2^nd Alleged Conversation.  Even if Madam Yip’s such evidence on the conversation was rejected, it does not logically show that Li Senior in fact had not spoken with Steven about it, or that Li Senior did not intend to benefit Steven – the lacuna of evidence on intention is still there, and there is no reason why the presumption should not operate, particularly in light of the high probability for Li Senior to make such a gift to Steven, as I found above.

G.  DID STEVEN BREACH HIS DUTY TO ACCOUNT?

197.  Given my above holding on the fiduciary duties Steven owed to Li Senior, I have held against the Administrator’s case that Steven owed such duty to account in the same extent and rigour of that of a trustee.  The Administrator’s case on breach of duty to account on the part of Steven therefore falls away with it.

198.  For completeness, based on the fiduciary duties I hold above that Steven owed to Li Senior, there is still the question as to whether Steven still owed to the Administrator a duty to account to him that the 17 Withdrawals were authorized.

199.  As the Administrator is a personal representative of Li Senior and the 17 Withdrawals had been authorized by Li Senior himself, my conclusion is that Steven did not and does not owe such a duty to the Administrator.

200.  That said, whether the failure by Steven to respond to the 3 Enquiry Letters would have implications on costs would be a matter to be considered, if at all, at a later stage.

H.  LIMITATION DEFENCE REGARDING WITHDRAWAL10

201.  This is agreed issue 8.

202.  As I hold that the sum of HK$10,000,000 paid to Madam Yip by Withdrawal 10 was a gift by Li Senior to her, this question of limitation defence under s.20(1) of the Limitation Ordinance Cap 347 (“the LO”) does not arise.

203.  For completeness, I would briefly give the below finding since this Court has heard the evidence.

204.  Under s.20(1)(b), no limitation period shall apply regarding an action commenced by a beneficiary “to recover from the trustee trust property or the proceeds thereof in the possession of the trustee, or previously received by the trustee and converted to his use”.

205.  The question then is whether the HK$10 million paid to Madam Yip has been “in the possession” of Steven (if he were held to be a trustee) or “previously received by [Steven] and converted to his use”.

206.  The evidence presented in this trial in this regard merely consisted of the 1^st Alleged Conversation in which Li Senior admonished Madam Yip to take care of Steven, Madam Yip’s evidence that she has been taking care of Steven (and Li Senior and her 2 sons) and that she was willing to heed Li Senior’s admonishment to continue to take care of Steven and their 2 sons.  There was no evidence, in any case no solid evidence with any glimpse of detail, presented or elicited showing that Steven has in any way possessed or is possessing, or previously received, or had or has power or control over that HK$10 million or any part thereof (Liu Wai Keung v Liu Wai Man [2015] 1 HKLRD 490 at §21 per Kwan JA (as she then was)).  I so find.

I.  DISPOSAL

207.  In the premises, I dismiss the Administrator’s claim against Steven in its entirety.  As have mentioned, the Counterclaim has been withdrawn by Steven in the course of trial.

208.  On costs, a number of matters make me consider it more appropriate to invite the parties to address me on costs rather than giving a costs order nisi, namely, the appropriate treatment of the costs of the Counterclaim which prima facie Steven should pay, Mr Wong on occasions at trial flagged certain matters regarding the conduct of the Administrator which might relate to costs, and they, including who should ultimately pay what costs, can be further considered in light of what I said herein above.

209.  Thus, I direct that the parties should attempt to agree on the costs order, failing which Steven should lodge and serve his written submissions on costs within 21 days from today, the Administrator his 21 days thereafter, and Steven may lodge and serve his reply submissions 10 days thereafter. The question of costs would be disposed of on papers unless otherwise directed.  All written submissions are limited to 10 pages, and no further submissions be lodged without leave.

210.  Lastly, I am grateful for the helpful assistance rendered by Mr Wong and Mr Lai, Mr Ho and Mr Yu.  This Court must also express its gratitude to the parties and their legal teams for their patience in waiting for the delivery of this judgment which regrettable has taken rather longer than expected.