WONG CHAK WING AND ANOTHER v. CAMELO INVESTMENT LTD AND OTHERS

HCA 65/2011 and
HCA 1390/2010
(Heard Together)

[2021] HKCFI 3710

HCA 65/2011

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 65 OF 2011

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AND

HCA 1390/2010

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1390 OF 2010

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J U D G M E N T

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A.  Introduction

1.  Wan Sing Hon (the “Deceased”)  passed away on 9 July 2010. Disputes have developed between the Deceased’s estate (the “Estate”)  and some of the Deceased’s siblings in respect of a business undertaking and certain landed properties.  HCA 1390/2010 (relating to the business undertaking, “HCA 1390”)  and HCA 65/2011 (relating to the disputes over the landed properties, “HCA 65”)  have subsequently been commenced.  They have been ordered to be tried together.

2.  This is the trial of the two actions.

B.  The parties involved, and the properties they hold (or held)

3.  There are quite a number of physical persons and companies involved, as follows.

4.  Wan Nam Fei (the “Father”)  and Chow Wai Fong (the “Mother”)  were husband and wife.  The Mother passed away in 2004.  The Father passed away in December 2010.

5.  The Father and Mother had 4 children.  In descending order of seniority they are:

(a)  Ms Wan Mui Man (“Mui Man” or “MM”):

(i)  Mui Man passed away on 27 July 2015;

(ii)  Neither Mui Man (before her death)  nor her estate (after her death)  has been joined as a party to these actions;

(b)  Mr Wan Hon Hung Johnny (“Johnny”):

(i)  Johnny is the 1^st defendant in HCA 1390 and 9^th defendant in HCA 65;

(ii)  Johnny’s wife is Madam Li Suet Wan (“Johnny’s Wife” or “LSW”);

(c)  Ms Wan Chui Kwan (“CK”, previously known as Wan Chui Man):

(i)  CK is the 2^nd defendant in HCA 1390 and 10^th defendant in HCA 65;

(ii)  She has two sons, Tsang Sai Kit (born 1979, “CK’s Elder Son”)  and Tsang Sai Hong (born 1990);

(d)  The Deceased:

(i)  He passed away on 9 July 2010.  According to his death certificate, the cause of death was “adverse effects of cocaine, accidental poisoning by and exposure to narcotics and psychodysleptics [hallucinogens], not elsewhere classified – home”;

(ii)  The cause of death was in effect cocaine overdose.  His death was sudden.  He was 48 at the time of his death;

(iii)  His widow is Wong Chak Wing (“WCW”);

(iv)  WCW’s sister is Wong Yuen Han Maggie (“WCW’s Sister” or “Maggie Wong”);

(v)  WCW and Maggie Wong are together the plaintiffs in HCA 65.  They are suing as the Joint Administratrix of the Estate;

(vi)  Maggie Wong’s husband is Chung Chik Wai Kenny (“Maggie’s Husband”);

(vii)  WCW and Maggie Wong’s parents are Wong Yung Ton (“WCW’s Mother”)  and Wong Yung Kwei (“WCW’s Father”).

6.  The parties in HCA 65 are as follows:

(a)  As have been mentioned above, the plaintiffs are WCW and Maggie Wong suing in their capacity as the joint administratrix of the Estate;

(b)  There are ten defendants;

(c)  The 1^st to 6^th defendants (respectively “D1” (or “Camelo”), “D2” (or “King Speed”), “D3” (or “Smart Deal”), “D4” (“Macro Sport”), “D5” (or “Lucky Holdings”)  and “D6” (or “Multi Well”))  are companies;

(d)  D1, D3, D4 and D5 were incorporated in the Marshall Islands.  They will be, together with Galaxy Group Limited (“Galaxy”)  (as explained below), referred to when appropriate as the “Marshall Islands Companies”.  D2 and D6 are Hong Kong companies.  I will set out more information about D1 to D6 below;

(e)  The 7^th defendant (“D7” or “Derek Chui”)  was a friend of the Deceased.  He worked for Calvary Consultant Limited (“Calvary”)  in the business of providing company secretarial services;

(f)  The 8^th defendant (“D8” or “Master One”)  was another company incorporated in the Marshall Islands.  Johnny had been its sole director and shareholder.  It was the assignee of a property at Shop No 42, 1^st Floor, Wonder Building, Nos.161-175 Fuk Wa Street, Kowloon (the “WB Shop”)  from Kwan Kit Yuk on 13 August 2010.  It was annulled on 8 October 2012;

(g)  The 9^th and 10^th defendants are, as said, Johnny and CK respectively.

7.  More in respect of D1, D3, D4 and D5:

(a)  D1, D3, D4 and D5 were incorporated in the Marshall Islands respective on 19 April 2004, 23 July 2004, 10 May 2005 and 23 February 2006;

(b)  From incorporation until 20 March 2013, the shares in D1, D3, D4 and D5 had been solely held respectively by Xie Shuxian (“謝淑賢”), Zhu Bingqi (“朱炳其”), Zhu Jianxing(“朱建星”), and He Huiying (“何惠英”).  They are residents in the Mainland (together the “Mainland Shareholders”).  They were until that same date also the sole director of the company which shares they held;

(c)  There is no dispute that the Mainland Shareholders held the shares as trustees.  Who they held those shares for are however in dispute;

(d)  It is the case of Johnny and CK that those Mainland Shareholders transferred their respective shares in the Marshall Islands Companies to CK on 20 March 2013, when CK was also appointed their sole director;

(e)  WCW denies that.  She challenges the authenticity of the relevant documents (being 4 sets of Instruments of Transfer, Sold & Bought Notes, and Resignations of Director, which will be referred to, together with the set relating to Galaxy, as the “Mainland Transfer Documents”)[1].

8.  More in respect of D2:

(a)  It was incorporated in Hong Kong on 22 November 2002;

(b)  Its initial directors and shareholders were WCW’s Sister and the Maggie’s Husband;

(c)  Its directors and shareholders at various stages included also Mass Profit (Hong Kong)  Limited (ie the plaintiff in HCA 1390, “Mass Profit”)  and Shooting Star International Limited (“Shooting Star”);

(d)  Shooting Star has since respectively 1 October 2005 and 22 November 2005 become its sole director and shareholder;

(e)  In relation to Shooting Star:

(i)  It is not a party to these proceedings;

(ii)  It is a BVI company incorporated on 18 May 1999[2]:

(iii)  Its initial shareholder was the Mother.  On 4 December 2000, the Mother transferred her share to Johnny’s Wife.  On 1 March 2005, Johnny’s Wife transferred her share to WCW’s Mother, and CK and WCW were each allotted a new share.  Its current shareholders are WCW, WCW’s Mother and CK;

(iv)  Its initial director was the Mother.  On 22 November 2000, WCW was appointed.  On 4 December 2000, Mother resigned, and Johnny’s Wife became appointed.  On 1 March 2005, the Deceased were appointed, and Johnny’s Wife resigned.  The position had apparently remained the same until the Deceased’s death;

(v)  Parties agree that Shooting Star has been the corporate vehicle holding the shares in D2 and Yorick International Limited (“Yorick”, together with Shooting Star, the “BVI Companies”).  The beneficial ownership and control of Shooting Star and Yorick are in dispute;

(f)  Yorick is another BVI company.  It was incorporated in the BVI on 23 October 1999.  The shares were bearer shares.  Since 1 March 2005, Shooting Star has been its sole shareholder.  The Deceased had been its sole director all along.

9.  More in relation to D6:

(a)  It was incorporated in Hong Kong on 15 May 2002;

(b)  Its initial shareholders were WCW’s Father and CK’s Elder Son.  Over the years its shareholders included also a Multi Win Holdings Limited and Galaxy. Since 1 August 2005, Galaxy has been its sole shareholder;

(c)  Parties cannot trace the shareholding and directorship of Multi Win Holdings Limited;

(d)  Its initial directors were WCW’s Father and CK’s Elder Son.  Over the years they included also a resident in the Mainland called 朱建科, another person called Pang Chu Keung and Galaxy.  As of 15 May 2006, Galaxy has been its sole director;

(e)  In respect of Galaxy:

(i)  It is not a party to these proceedings;

(ii)  It was incorporated in the Marshall Islands on 25 October 2004;

(iii)  Its initial sole shareholder and director was another resident in the Mainland called Liu Huiquen (“劉惠全”);

(iv)  It is the case of Johnny and CK that 劉惠全 transferred his shares in Galaxy to CK on 20 March 2013, when CK was also appointed their sole director;

(v)  WCW denies that.  She challenges the authenticity of the relevant Mainland Transfer Documents;

(vi)  Whilst parties agree that Galaxy has been the corporate vehicle holding the shares in D6, its beneficial ownership is in dispute.

10.  Each of D1 to D6 holds certain landed properties (the “Landed Properties”).  Those Landed Properties are at the centre of the dispute in HCA 65.  The particulars below are gleaned from the land search records:

Property		First purchased (in the name of)	Current registered owner (date of transfer (if not the original purchaser))
1	“Shop 66”[3]	5-2-2001 (“Topmond”[4])	D3 (20-8-04)
2	“Shop 42”[5]	4-5-2001 (Topmond)	D1 (20-8-04)
3	“Shop 40”[6]	3-4-2002 (“Multi Honour”[7])	D3 (20-8-04)
4	“No. 31 Cumberland Road”[8]	30-9-2002 (D6)	D6
5	“Shop 68”[9]	18-10-2005 (D4)	D4
6	“Albion Gardens”[10]	29-4-2006 (D5)	D5
7	“Yuk Sing House”[11]	28-6-2006 (D2)	D2
8	“Ho Fai Garden”[12]	4-12-2006 (D2)	D2
9	“Shop 21”[13]	1-3-2007 (D2)	D2

11.  As can be seen from the table above, Topmond was the initial purchaser of Shop 66 and Shop 42.  In relation to Topmond:

(a)  It is a Hong Kong company;

(b)  It was incorporated on 10 November 2000;

(c)  Between November 2000 and January 2005, WCW’s Mother had been the majority shareholder (holding at different stages 9,998 or 9,999 of 10,000 shares);

(d)  As of 10 November 2005, Yorick held 9,999 share.  The other share was held by WCW’s Mother;

(e)  In November 2006, it was dissolved;

(f)  Its directors had changed over the years.  WCW’s Mother had been a director from November 2000 to November 2005.  At different stages, CK’s Elder Son and Yorick had also been directors.

12.  Also as can be seen from the table above, Multi Honour was the initial purchaser of Shop 40.  In relation to Multi Honour:

(a)  It is a Hong Kong Company;

(b)  It was incorporated on 1 March 2002;

(c)  Its initial shareholders were WCW’s Mother and Johnny’s Wife, who were also the initial directors;

(d)  At various stages, its shareholders included also Yorick;

(e)  As of 1 March 2005 till, it appears, now, its shareholders have been Yorick (holding 9,999 shares)  and Johnny’s Wife holding the other one;

(f)  It appears that as from June 2005, its directors have been Yorick and Johnny’s Wife.

13.  The WB Shop is another property in dispute:

(a)  It was first acquired in the name of CK on 28 July 2005;

(b)  It was assigned by CK to Kwan Kit Yuk by assignment dated 18 January 2006.  On that same date, Kwan Kit Yuk signed a power of attorney in favour of CK (the “KKY PA”);

(c)  Kwan Kit Yuk was a former employee of Mass Profit;

(d)  By assignment dated 13 August 2010, Kwan Kit Yuk assigned the WB Shop to D8;

(e)  By a sale and purchase agreement dated 25 November 2010, D8 agreed to sell the WB Shop to two unrelated third parties at HK$700,000.  The assignment took place on 21 January 2011.

14.  The parties in HCA 1390 are as follows:

(a)  The plaintiff is Mass Profit;

(b)  Mass Profit was incorporated in Hong Kong on 28 June 1999, apparently as a shelf company in the beginning.  The initial shareholders were some unconnected third parties;

(c)  In respect of its shareholders:

(i)  On 3 August 1999, Shooting Star and the Mother were each transferred one share by those initial shareholders;

(ii)  On 6 August 2001, the Mother transferred her share to Yorick;

(iii)  On 27 July 2004, Shooting Star transferred[14] its share to the Deceased;

(iv)  On 3 November 2004, Yorick transferred[15] its share to the Deceased.  The Deceased became the sole shareholder;

(v)  On 3 March 2005, the Deceased transferred[16] one share to WCW;

(vi)  Upon the death of the Deceased, WCW has become the sole shareholder;

(d)  In respect of its directors:

(i)  The initial directors were the Deceased and the Mother;

(ii)  On 4 December 2000, Yorick was appointed in place of the Mother;

(iii)  On 27 July 2004, upon Yorick’s resignation, the Deceased became the sole director;

(iv)  on 20 January 2005, WCW was appointed as a director;

(v)  Upon the death of the Deceased, WCW has become the sole director;

(e)  In respect of its registered office:

(i)  On 1 September 2005, the registered office of Mass Profit was first changed from somewhere outside Golden Centre to Shop 66[17];

(ii)  On 8 May 2006, it was changed to Shop 68[18];

(iii)  As shown on its Annual Return of 28 June 2008, its registered office were both Shops 66 and 68[19];

(f)  The 1^st defendant is Johnny;

(g)  The 2^nd defendant is CK;

(h)  The 3^rd defendant is Pepson Technology Limited (“Pepson”):

(i)  It was a Hong Kong company;

(ii)  It was incorporated on 22 March 2010;

(iii)  Johnny was on 5 July 2010 appointed its sole director, and had since then been its only director;

(iv)  On that same date, its registered office was changed to Shops 66 and 68[20];

(v)  On 15 July 2010, Johnny became its sole shareholder;

(vi)  Its business address had been Shops 40, 40A, 42, 66 and 68[21];

(vii)  It was dissolved on 20 December 2013.

15.  The main protagonists are WCW of one camp, and Johnny and CK of the other.  Mui Man has never been involved.

C.  Representation

16.  Mr Derek JY Chan appeared for the plaintiffs in both actions. 

17.  Ms Astina Au together with Mr Jason Ko appeared for D7.

18.  Mr Roy Lau and Ms Fiona Chong appeared for Johnny and CK.

19.  An order has previously granted by the Registrar permitting CK as director to represent D1, D3, D4 and D5.  They have filed a defence and counterclaim.  Despite that, CK has indicated that they are willing to be bound by any judgment in HCA 65.  Their attendance has been excused.

20.  D2 has taken no active part in the proceedings. It has been joined so that it will be bound by the judgment.  It was absent during the trial.

21.  The current sole director and shareholder of D6 is Galaxy.  No permission has been granted to anyone to act in person for D6.  D6 was absent during the trial.

22.  D8 and Pepson have been, as mentioned above, annulled or dissolved.  They did not participate in the trial.

D.  The Estate’s application to rely on certain documents as hearsay

23.  I record that on the first morning of the trial, Mr Chan made an application before me for leave to rely on 5 affirmations made by 5 individuals in November 2014 in the Mainland.  4 of them were the Mainland Shareholders. The other one was said to be the go-between (namely朱炳森).  Having heard parties, I refused that application.  I gave orally my reasons.  The main one was that the Estate had had ample time to seek to adduce those affirmations.  They have previously been ordered to be expunged from the court files by a Master in the course of an application by the Estate for discovery against a third party, but have not otherwise been disclosed in any list of documents.  The application was late. In my view, D9 and D10 would suffer prejudice if I were to allow the application at such a late stage.  D9 and D10 would have been deprived of the opportunity to try to call those individuals as witnesses.  I order that costs of the application should be to D9 and D10.  

E.  Parties’ cases in gist

24.  The parties’ pleaded cases in HCA 65 may be summarized as follows:

(a)  HCA 65 concerns primarily the beneficial ownership of the Landed Properties which D1 to D6 hold;

(b)  It is common ground that D1 to D6 hold them as trustees.  The identities of the beneficial owners are the core of the dispute;

(c)  The Estate’s case is that they were purchased with the Deceased’s funds, so that he was, and the Estate upon his death is, the beneficial owner.  It seeks amongst other relief various declarations to those effects;

(d)  It is the case of Johnny and CK that they were purchased by the “Wan’s Family” using funds generated by “Wan’s family business”, and are therefore beneficially owned by the “Wan’s Family”.  The term “Wan’s Family” is defined to comprise the Deceased, Johnny, CK and MM.  They counterclaim, in respect of each of the 9 Landed Properties, for a declaration that the companies concerned hold them on trust for the Estate of MM, Johnny, CK and the Estate of the Deceased in equal shares;

(e)  Apart from those Landed Properties now still registered in the name of D1 to D6, there was further the WB Shop:

(i)  the Estate claims that it used to be beneficially owned by the Deceased but had been wrongfully sold by Johnny via D8 at the price of HK$700,000.  The Estate claims breach of trust in that regard against D8 and dishonest assistance against Johnny;

(ii)  Johnny pleads that the WB Shop was also purchased with funds generated from the Wan’s family business.  It was originally registered in the name of CK on trust for the Wan’s Family.  It was later assigned to Kwan Kit Yuk for management of the Wan’s family business and assets.  Kwan Kit Yuk signed the KKY PA, and subsequently assigned it to D8, which held it on trust for the Wan’s Family.  The proceeds of its sale in 2011 by D8 formed part of the assets of the Wan’s Family;

(f)  D7 was the Deceased’s long term friend.  It is the Estate’s case that he was engaged by the Deceased to provide assistance to the Deceased in relation to his business activities and operation, including assisting the Deceased to set up, maintain and organize the Group Companies[22] and its corporate structure.  The Estate’s claim against him relates to his alleged failure in handing over the company kits (and hence control over the offshore companies)  to the Estate upon the Deceased’s death, in breach of his duties as an agent to the Deceased;

(g)  D7’s case is that he never owed any duty to the Deceased or his Estate, whether by virtue of his role as an agent or as a fiduciary.  Alternatively, if he owed the Deceased or his Estate any of the alleged duties, he had never acted in breach of them.

25.  In respect of the disputes between the Estate and the Deceased’s siblings, I observe and point out the following matters immediately.  The Estate pleads that the funds for the purchase of the Landed Properties came from the Deceased.  Johnny and CK on the other hand plead that the purchases were financed by funds generated by Wan’s family business[23]. However, apart from some very generally averments, neither side has been able to plead or provide, despite requests, any particulars on the sources of those funds[24]. Further, and as can be seen later, neither parties are able to provide any documentary proof of their respective cases.  Whilst the trial bundles excluding court documents and witness statements comprise 11 files, they contain just “Title Deeds and Land Search” (Part I and Bundle C11), “Companies Documents” (Part II), “Correspondence” (Part III), “Other Documents” (Part IV, which are mainly declarations by the Mainland Shareholders), “Documents in HCMP 1554 of 2010” (Part V), and “Documents in DCCC 722 of 2013” (Part VI”).  I will deal with the evidence in further details later.

26.  In respect of the claim by the Estate against D7, the following features should be noted:

(a)  D7 is alleged to be the agent of the Deceased, but not any of the companies.  Any duties which D7 owed are alleged to have been owed by D7 as an agent to the Deceased as the principal, and upon his death, to the Estate; and

(b)  No contract has been pleaded between D7 and the Deceased.  In particular, no remuneration or consideration has been pleaded. 

27.  The parties’ pleaded cases in respect of HCA 1390 may be summarized as follows:

(a)  Mass Profit’s case may be summarized as follows.  It carries on the business of trading in computer parts and accessories in the name of Dragon World Computer Accessories Company (“Dragon World”)  at Shops 40, 42, 66 and 68 inside Golden Centre at Sham Shui Po (“Golden Centre”).  The Deceased and WCW used to be its directors and shareholders.  Upon the death of the Deceased, it became under the sole control of WCW.  Johnny and CK were its employees.  They have acted in breach of their fiduciary and/or contractual duty after the death of the Deceased by, inter alia, setting up a competing business, diverting business opportunities, and misappropriating cash, inventory and other assets.  Pepson was used by Johnny and CK for those purposes.  An account, equitable compensation and injunctive relief are being sought against Johnny and CK.  As Pepson has been dissolved (on about 20 December 2013), no relief can be sought against it.

(b)  In gist, it is Johnny and CK’s case that Mass Profit is part of Wan’s family business.  They were not its employees.  Pepson was set up with the Deceased’s agreement before his death to operate the computer business of Mass Profit in order to avoid any complications with the divorce proceedings intended to take place between the Deceased and WCW.  They deny any breach as alleged. Johnny further counterclaims for sums in the total amount of HK$2,296,695.50 which he claims are payments he had made on behalf of P to settle suppliers’ accounts during the period between 30 June 2010 and 31 July 2010.

F.  The agreed issues

28.  Parties are able to agree upon two lists of issues.

29.  The list relating to HCA 65 is as follows (the issue numbers being added by me):

(a)  In respect of the Landed Properties:

(i)  Were the Landed Properties purchased by the Deceased using his own funds or from funds derived from the “Wan’s Family”[25] comprising the Deceased, Johnny, MM’s estate and CK (“Issue 1”)?

(ii)  Whether the Landed Properties are held by D1 to D6 respectively on resulting or constructive trust for the Estate or on resulting or constructive trust for the “Wan’s Family” (“Issue 2”);

(iii)  What declaratory relief should be granted in respect of the Landed Properties held by D1 to D6 (“Issue 3”)?

(b)  In respect of the WB Shop:

(i)  Whether the WB Shop was beneficially owned by the Deceased but held in the name of CK and subsequently Kwan Kit Yuk as a nominee (“Issue 4”), and whether the WB Shop was held by D8 on constructive trust for the Estate (“Issue 5”);

(ii)  If so, whether D8 acted in breach of trust or fiduciary duty as trustee of the WB Shop by causing its sale without the authority of the Estate on 25 November 2010, and whether Johnny dishonestly assisted such breach of trust or fiduciary duty (“Issue 6”);

(iii)  If so, what relief should be ordered against D8 and/or Johnny (“Issue 7”);

(c)  In respect of the claim against D7:

(i)  Whether D7 owed any fiduciary or other duties as pleaded[26] to the Deceased and/or the Estate in respect of the administration of the Group Companies[27] (“Issue 8”);

(ii)  If so, whether D7 acted in breach of his duties to the Deceased and/or the Estate (“Issue 9”);

(iii)  If so, what relief should be granted against D7 (“Issue 10”)?

30.  The list relating to HCA 1390 is as follows:

(a)  Were Johnny and CK employees of Mass Profit owing employee’s duties and/or fiduciary duties as pleaded at §7 and 8 of Mass Profit’s Statement of Claim, and if so, when did their employment cease (“Issue 11”)?

(b)  If so, whether Johnny and CK acted in breach of their duties above by the following acts (“Issue 12”):

(i)  Setting up or causing to be set up Pepson to compete with Mass Profit under the trading name known as “Tai Tai Computer Accessories Co”;

(ii)  Rendering their service to Pepson (as a competitor of Mass Profit)  during their employment with Mass Profit;

(iii)  Divulging business opportunities from Mass Profit to Pepson;

(iv)  Soliciting employees of Mass Profit to work for Pepson (this issue is disagreed by Johnny and CK);

(v)  Diverting Mass Profit’s inventory, leasehold, contact information of customers and suppliers, goodwill and profits and/or procuring Mass Profit’s customers to pay their purchase price or deposits to Pepson;

(vi)  Issuing four cheques totalling HK$4,683,230 issued by Mass Profit payable to themselves.

(c)  Whether Mass Profit was a “Wan’s family business” as alleged by Johnny and CK, and if so, whether and how this affects (if at all)  Johnny and CK’s liability in respect of the acts mentioned above (“Issue 13”);

(d)  Whether Mass Profit is entitled to the relief prayed for, namely declaratory and injunctive relief, an account of profits, and/or damages/restitution/compensation in respect of Johnny and CK’s breach of duties (“Issue 14”);

(e)  In respect of the counterclaim, whether Johnny is entitled to reimbursement of alleged payments totalling the sum of HK$2,296,695.50 (“Issue 15”).

G.  The witnesses

31.  For Mass Profit in HCA 1390 and the Estate in HCA 65, WCW has been called. She has given altogether 3 witness statements – one in HCA 1390 (“WCW/1390/WS”)  and two in HCA 65 (dated 16 December 2015 (“WCW/65/WS1”)  and 21 September 2018 (“WCW/65/WS2”)).  She has adopted them as her evidence in chief, and has been cross-examined.

32.  In both actions, Johnny and CK have been called:

(a)  Johnny has given altogether 3 witness statements – one in HCA 1390 (“Johnny/1390/WS”)  and two in HCA 65 (dated 30 November 2015 (“Johnny/65/WS1”)  and 5 October 2018 (“Johnny/65/WS2”));

(b)  CK has provided altogether 2 witness statements – one in HCA 1390 (“CK/1390/WS”)  and one in HCA 65 (“CK/65/WS”);

(c)  Both have adopted their respective witness statements as their evidence in chief, and have been cross-examined.

33.  Derek Chui has been called in HCA 65.  He has given one witness statement (“D7/65”)  which he has adopted as his evidence in chief.  He has been cross-examined.

34.  I remind myself that when considering a witness’ credibility the importance of considering the inherent likelihood or unlikelihood of the witness’ evidence, the consistency of the witness’ evidence with undisputed or indisputable evidence, with contemporaneous conduct and documents, and the internal consistency of the witness’ evidence.  I need to consider the totality of the evidence.  I warn myself against attaching undue weight on demeanour, though demeanour is obviously relevant when considering credibility.

35.  In the above regards, I have in particular reminded myself of the approaches explained in by B Chu J in Ip Fung Kuen v Sam Kee Frozen Meat Company Limited & Ors, HCA 1897/2009 (unrep, 6 April 2016)  at §§65 to 67 (and the cases cited therein), which Mr Lau has cited to me.  Those approaches are not controversial, which I apply.

36.  Given the number and diversity of the issues involved, I have decided to consider the credibility and reliability of the witnesses on an issue by issue basis.  I adopt this approach because the Court is entitled to reject the evidence of a witness in multiple areas but find in their favour on certain issues.  Another reason is that different aspects of the witnesses’ evidence have different degree of documentary support.  Some in fact have none. 

37.  I state however that whilst I have decided to adopt the above approach, I have considered the totality of the evidence in the round before reaching any conclusion on the reliability and credibility of any particular witness on any specific issue. 

H.  Issue 1, and the factual aspects of Issue 4 and Issue 5

38.  Issue 1 is a factual issue.

39.  The most important question central to Issue 4 and Issue 5 is whether the WB Shop was purchased with the Deceased’s funds, or with the funds from the Wan’s Family.  This question is also factual, and may conveniently be considered together with Issue 1.

H.1.  WCW’s evidence

40.  WCW’s evidence in this regard, both in her witness statements and in court, is that the Landed Properties and the WB Shop were purchased by the Deceased with his own funds.

41.  I do not find WCW’s evidence in this regard to be reliable.  The main reasons are as follows:

(a)  In WSW/65/WS1, WSW at §§5, 6 and 9 asserts that the Landed Properties and the WB Shop were purchased by the Deceased with his own funds, that he was the beneficial owner of those properties, and that he was also the beneficial owner and controller of D1 to D6 and Shooting Star, Yorick, Galaxy and Multi Honour.  She has however failed therein to specify any basis in support of her assertion;

(b)  To start with, WCW’s assertions at §5 of WSW/65/WS1 that on 20 August 2004, Shop 66 and Shop 40 were purchased by D3, and Shop 42 purchased by D1, are misleading, and do not represent the whole truth:

(i)  Shop 66 and Shop 42 were first purchased by Topmond on 5 February and 4 May 2001 respectively.  Shop 40 was first purchased by Multi Honour on 3 April 2002.  They were only subsequently transferred to two of the Marshall Islands Companies (i.e. D1 and D3)  on 20 August 2004;

(ii)  In her witness statements, WCW has never mentioned Topmond, never mentioned the initial acquisitions by Topmond and Multi Honour of those shops, and has not even asserted that the funds for those acquisitions were provided by the Deceased;

(iii)  During cross-examination, when being asked as to whether those transfers on 20 August 2004 involved any actual payment of consideration, she said that she was not clear about it, and claimed that it was the Deceased who handled them;

(c)  As is clear from cross-examination, and as has been accepted by Mr Chan, WCW was not personally privy to the details of exactly how the Landed Properties and the WB Shop were acquired, or the structure of the corporate vehicles holding the same[28];

(d)  On certain matters, WCW seeks to rely upon what the Deceased had allegedly told her.  An example is §26 of WSW/65/WS1.  Another example is the alleged shareholding arrangements made with the Mainland Shareholders, which WCW accepted and claimed during cross-examination were not made through her but through the Deceased.  However, those hearsay statements lack details, and in any event constitute no objective evidence (like fund-flow)  showing that the purchase prices were in fact sourced from the Deceased’s own funds;

(e)  P also seeks to rely on what 朱炳森 allegedly told her in November 2014.  Those statements allegedly from 朱炳森 are hearsay, and were not made contemporaneous to the events they related to.  No reasons have been offered as to why 朱炳森 or the Mainland Shareholders were not called as a witness.  It should also be noted that WCW clearly has motive to conceal or misrepresent matters;

(f)  I attach no weight to those hearsay statements;

(g)  I make it clear that I am not drawing any adverse inference against WCW for her failing to call any of the Mainland Shareholders and 朱炳森.  In the light of Cheung Kwong Yuen v Sun Hui Fang, DCCJ 743/2016 (unrep, 6 September 2017)  at §§27 to 32 per HH Judge MK Liu and the cases cited therein, Mr Lau accepted and confirmed that he was not relying on any adverse inference against WCW in this regard given the fact that he had not cross-examined WCW on her failure to do so.  What I am doing is to, with reference to section 49(2)  of the Evidence Ordinance, Cap 8, consider the weight of the hearsay relied upon by WCW;

(h)  Two main planks of WCW’s case are that (1)  Deceased had accumulated substantial personal wealth, and that (2)  he applied his wealth towards the purchases of the Landed Properties and the WB Shop;

(i)  Neither of those 2 planks are supported by any documentary evidence. The absence of documentary evidence is inherently most improbable if WCW’s case represents the truth;

(j)  In respect of the assertion that the Deceased had substantial personal wealth:

(i)  At §16 of WCW/65/WS1, WSW asserts that from about the end of the 1980s, the Deceased had started to engage in estate agency business with several friends, that he started to speculate in real properties, and had owed in his own name at the same time a number of properties, which included properties at “豪景花園、浪翠園、雅山園（兩個單位）及干德道6號”.  She asserts that the Deceased had as a result accumulated substantial wealth;

(ii)  However, in respect of the alleged estate agency business, no documentary evidence (e.g. business registration, accounts, tax returns etc)  of any kind has been produced;

(iii)  In respect of the number of properties which WCW claims the Deceased had owned, apart from the one at 豪景花園, their particulars have not been revealed, and no land search record has been produced;

(iv)  In respect of the property at 豪景花園, the relevant land search records have been produced.  Those records show that the Deceased as one of the 2 joint tenant purchased the property in October 1991 at HK$1,400,000, and sold it in July 2004 at HK1,418,000 making a profit of only HK$18,000 after 13 years.  That hardly supports WCW’s case;

(v)  No tax return of the Deceased has been produced;

(vi)  No bank statement of any of the Deceased’s personal bank accounts has been produced showing his assets at time contemporaneous to the acquisitions of the Landed Properties and the WB Shop;

(vii)  Reference has been made to the fact that there was some HK$16,000,000 in the Deceased’s account at the time of his death.  But that was in 2010, which was not contemporaneous to any of the acquisitions;

(viii)  WCW also relied on the Deceased’s alleged computer business at Golden Centre.  She claims that the Deceased first rented Shop 42 in 1993.  No lease has however been produced.  She then claims that the Deceased subsequently rented Shops 21, 40, 66 and 68 and expanded his business.  At §2 of the Statement of Claim in HCA 1390, Mass Profit pleads that at all material times, it carried on business at Shops 40, 42, 66 and 68.  In so far as one can gather from the accounts of Mass Profit, and even assuming that the Deceased was its sole beneficial owner, the accumulated profits of Mass Profit and the declared dividends between 1999 and 2008 were far from being sufficient to fund the purchases of the Landed Properties (the total purchase price being upwards of HK$70 million)  and the WB Shop[29];

(ix)  In short, apart from WCW’s bare assertions, there is no objective and documentary proof which shows that the Deceased had the means and assets to acquire the Landed Properties and the WB Shop;

(k)  In respect of the allegation that the Deceased applied his funds towards the purchases of the Landed Properties and the WB Shop:

(i)  WCW has not been able to produce any documentary proof that the funds for the purchases of the Landed Properties and WB Shop came from the Deceased.  There is no bank statement, no cheques, no evidence of payments to or through conveyancing solicitors, receipts, repayment of mortgages, etc.  There is nothing;

(ii)  WCW blamed Johnny and CK for her inability to produce documents to support her case.  She claimed that several days after the Deceased’s death, her children told her that Johnny and CK went to their home and took from there several green boxes containing company kits and two bags of documents.  She claims that she has therefore lost all the documents in support.  However, WCW’s evidence on that alleged incident is hearsay, lacks particulars, and with no evidence on the details as to what documents had allegedly been taken away.  It was just an easy and convenient excuse with no substance;

(iii)  In any event, there is no reason why WCW could not have in the name of the Estate written to the banks for documents showing fund-flow, issue of cheques, etc.  She claimed during cross-examination that she had done that, but no relevant information on the purchases could be found from the materials obtained from the banks.  I do not accept her evidence in this regard.  No particulars of such attempts have ever been provided, and no such statements have been discovered or produced;

(iv)  The absence of documentary proof is most surprising, and is inherently most improbable if the Estate’s case were correct, given the fact that 10 properties (the Landed Properties and the WB Shop), and hence at least 10 transactions, had been involved.  There must have been a very substantial number of payments, which should each have their own paper trail;

(v)  On the other hand, Johnny has been able to adduce some documents showing that he and other members of the family had contributed towards some of the purchase prices (notably that of No.31 Cumberland Road)[30]. WCW has not offered any explanation for that;

(vi)  I note further HCMP 1554/2010. It was an action commenced by WCW on 17 August 2010 for an order that she be appointed as the administrator ad colligenda bona of the Estate for the purpose of getting in the assets of the Estate.  It was commenced shortly after the Deceased’s death.  The lack of documentary support both in respect of the Deceased’s alleged wealth and the alleged application of his funds towards the purchases of the Landed Properties and the WB Shop are rendered thereby even more conspicuous and troubling;

(vii)  In gist, apart from WCW’s bare assertion, there is no document showing that funds had flowed from the Deceased towards the acquisitions of any of the properties involved.

42.  For the above reasons, I do not accept WCW’s assertion and evidence that the acquisitions of the Landed Properties and WB Shop were funded by the Deceased’s personal funds.  I find that she simply insists upon and asserts her case despite the lack of basis of her assertions, which she must have realized. Such insistence and bare assertion of her case without objective support substantially and adversely affects her reliability as a witness.

H.2.  Johnny’s evidence

43.  I next consider Johnny’s evidence.  I find his evidence on the source of funds also to be unreliable.  His evidence on Father’s wealth and on Father being the source of the funds for the requisitions are mostly his bare assertions.  I highlight the following matters and analysis.

44.  In WCW’s original Statement of Claim, it was pleaded at §§2 to 5 that although the 9 Landed Properties are registered in the name of D1 to D6, they were in fact purchased with the Deceased’s funds, so that D1 to D6 held as nominees the Landed Properties on trust for the Deceased, and since his death, the Estate.

45.  At §3 of his original Defence of 22 March 2011, Johnny averred that “Paragraphs 2 to 47 [of the Statement of Claim] do not concern [Master One] and [Johnny] and the matters pleaded therein are not admitted”[31]. Johnny only pleaded to WCW’s case in relation to the WB Shop, and even in that regard, Johnny only put WCW to strict proof.

46.  It was only in 2014 when Johnny amended his Defence and pleaded his present defence at §5[32] that:

“The [Landed] Properties were purchased by members of the Wan’s family comprising of [sic] [the Deceased]; [Johnny], [MM] and [CK] … using the funds generated by the family businesses.”

47.  Johnny claimed that his lawyers might not have explained §3 of his original Defence to him.  I do not find that allegation inherently probable or credible.

48.  In his Answers to Requests for Further and Better Particulars of his Re-Amended Defence and Counterclaim, Johnny adopted the answers earlier given by CK[33] and says that the family businesses “include but not limited to taxis, land properties, information technology related hardware and accessories, and metal related businesses in Hong Kong and the Mainland”, and that the “family businesses were carried out in various forms including individual investments, partnerships and/or limited companies”.  The names of the older businesses of 華記and 華聯have also been provided.

49.  However, as demonstrated during cross-examination, rather than funds from the family businesses, Johnny’s case that the majority of the funds for the purchase of the Landed Properties and the WB Shop in fact came from the Father.

50.  Johnny was however extremely vague as to how the Father accumulated his wealth.  Apart from saying in broad and vague terms that Father had businesses in Shenzhen, Hunan and Beijing, and that he conducted them sometime between about 1980 and 2000, he was not able to tell this Court in any clearer terms what those businesses were, when they were carried out, and in which cities.

51.  Johnny mentioned during his evidence about Hunan gang, and how he had helped many years ago in transporting cash to Hong Kong.  Who those members of the Hunan gang were has never been revealed.  And none of his evidence about taking cash to Hong Kong appears in his witness statements.

52.  He was aware of the importance of establishing the source of the funds, yet he was not able to produce documentary proof on Father’s wealth.  There has been no bank statement, no tax return, whether in Hong Kong or in the Mainland, no business accounts – nothing.  He claimed that Father was not willing to talk about his businesses, that “佢有啲生意不願多提嘅，講得好隱晦嘅，唔想我哋問嘅”.  He gave similar answers during re-examination[34].

53.  The net result is that, similar to WCW in respect of the Deceased’s alleged wealth, Johnny has not been able to give any detail about Father’s businesses in the Mainland, how he made his fortune, how much he had made, and beyond the assertions that sums of cash had been transported to Hong Kong, where those sums had become.

54.  Further, again similar to WCW in respect of the Deceased’s alleged funding of the acquisitions, Johnny has not been able to produce any documentary proof on fund-flow showing that it was the Father who had funded the purchases of the Landed Properties and the WB Shop.  My criticisms in relation to WCW’s case in this regard, accentuated by the number of transactions involved, apply equally here.

55.  As has further been demonstrated during cross-examination, Johnny’s involvement in the acquisitions of the Landed Properties and the WB Shop was, despite his assertions, limited:

(a)  In respect of Shop 66, he was not involved in the setting up of Topmond, did not know how Topmond paid for the acquisitions of Shop 66, whether the purchase price was paid in one lump sum or by instalments, or whether mortgage had been obtained.  He said that it was Father who was responsible for all those.  The material parts of his evidence are that:

“問： 傾嘅時候有冇傾過邊個負責出錢呀？

答： 阿爸出錢吖嘛。

問： 全數佢出？

答： 係。

問： 佢用咩嘢形式去付款呀？

答： 唔知。

…

問： … 你同唔同意吖，呢單案件裡面係冇任何文件睇到係由你嘅阿爸尹南飛出資為Topmond購買呢一個66號鋪嘅，你同唔同意？

答： 咁如果係冇文件嘅，我同意嘅。

問： 你有冇印象Topmond嗰陣時買呢個物業，第一個物業需要幾多錢呀？

答： 呢個物業當時我記得好似係大約六百萬喥喇。

問： 你記得嗰$6,000,000係點樣畀法呢？係你爸爸一次過畀吖，分期畀吖，抑或點呢？

答： 呢啲爸爸負責㗎，我唔知。”

(b)  In respect of Shop 42, he did not know how the purchase price was paid, and accepted that there was no document showing that the funds came from Father, that:

“問： 咁最後錢點樣畀你又知唔知呢？買呢個42號物業嘅錢？

答： 通常呢啲老竇搞晒㗎喇，我係唔知嘅。

問： 咁你追完你老竇，你阿爸，追完你阿爸，佢點樣回應你呀？

答： 「得喇。」

問： 你同唔同意我哋呢單案件裡面睇唔到任何文件，42號鋪嘅買價係由你爸爸付出嘅，你同唔同意？

答： 呢樣我同意。”

(c)  In respect of Shop 40, he similarly did not know how the purchase price was paid, and accepted that there was no document showing that the funds came from Father, that:

“問： ...跟住就問佢攞錢？你同唔同意喺呢單案裡面嘅文件完全睇唔到點樣支付買價嘅，40號鋪，同唔同意？

答： 我同意嘅。

問： 亦都冇文件顯示買價係由你爸爸付出嘅，同唔同意？

答： 係。

問： 當時Multi Honour買番嚟嘅時候呢，嗰個買價就係$1,950,000，你有冇印象係用咩嘢形式去畀㗎？

答： 阿爸畀，我冇乜印象。”

(d)  In respect of No. 31 Cumberland Road, Johnny in his witness statement[35] talks about Father asking members of the Wan’s family to gather money to prepare for its purchase.  He produced some deposit and transfer slips to show transfers from Yorick, the Deceased, the Mother and CK into his account, and then for him to transfer the total gathered sum of HK$4,000,000 into an account of the Deceased at Macau on 2 July 2002, and subsequently a transfer of HK$4,000,000 from Shooting Star back to him (Johnny).  The overall position is however far from clear, and Johnny himself had the following to say when giving oral evidence:

“問： 最終買31號金巴倫道點樣支付嗰個買價你知唔知？

答： 阿爸負責，我唔知。

問： 係咪將金巴倫道嗰$35,000,000全部款項都係由你阿爸支付㗎？

答： 係。

問： 全部款項？

答： 我應該咁答你喇，佢先頭最早係我哋夾錢畀個首期先嘅，後來佢就畀番我哋嘅，嗰啲。

問： 後期再畀番你哋係咩嘢意思？即係你哋...

答： 我--我哋又...

問： ...夾咗錢畀首...

答： 我都出咗成一百萬，咁阿聲就「一百四十幾」，CK呢，...

問： 你阿爸...

答： ...呢啲首期係佢叫我哋出住先㗎嘛。

問： 佢又用咩嘢形式畀番你哋呀，你而家嘅講法就？

答： 可能有啲入戶口，有啲畀現金喇，詳細我唔記得喇。

問： 你話你阿爸之後幫你哋，或者將你哋畀訂金嗰啲錢畀番你哋呢個說法，從來冇喺你之前嘅口供度提過喎，你同唔同意？

答： 冇呀。”

(e)  In respect of the assignment of Shop 66, Shop 42 and Shop 40 on 20 August 2004, he was not involved in the payment of stamp duties, and did not know how they were paid.  He simply asserted that they were paid by Father;

(f)  In respect of the purchase of Shop 68, Johnny asserts at §71 of Johnny/65/WS1 that the funds came from the Wan’s Family, with no documentary support of the same.  Under cross-examination, he said that:

“問： 咁我唔同你拗呢個，斟酌呢個字係咩嘢意思喇，我好簡單問你，根據你嘅案情，Macro Sport買68號鋪嘅資金係咩嘢人付出嘅？

答： 我阿爸。

問： 你本人有冇出過錢呀？或者我簡單啲問你吖，除咗你阿爸，有冇其他人出過錢呀？

答： 我所知係我阿爸咋。”

(g)  In respect of Albion Gardens, Johnny says[36] that he by bank transfer repaid WCW deposit in the sum of HK$500,000 which she had earlier paid on behalf of D5.  He produces a deposit form[37] in support of his alleged repayment.  He also claims that he has paid deposit in the sum of HK$738,000[38].  He has however failed to produce the statements of his accounts showing the source and fund-flow of those sums.  He produces further what appears to be a fax from a firm of solicitor Chan Leung & Co (“Chan Leung & Co”)[39] requesting payment of the balance of the purchase price in the sum of HK$11,620,407.43.  He however in the course of cross-examination confirmed that he could not recall the payment of that sum, and that his recollection of this purchase was vague.  In particular, he said that:

“問： 咁最後呢，似乎根據你嘅講法，就係畀咗$14,107.43，咁我向你指出，去到你畀呢一萬四千一百多嘅時候，其實嗰$11,606,350嗰筆錢應該係已經存入咗呢間律師樓嘅戶口嘅，你同唔同意？

答： 可能係喇。

問： 可能係，實際上有冇咁做你都唔記得喇？

答： 唔記得。

問： 你同唔同意喺呢單案完全冇任何證據顯示，$11,606,350呢一個款項係邊個存入嘅，你同唔同意？

答： 我同意係睇唔到嘅。”

(h)  In respect of Yuk Sing House, he was vague and could not recall much about the establishment of D2, and had little impression about the acquisition, the related documents, and even about the property itself.  His answers to most questions put to him during cross-examination on this property were “無印象”;

(i)  In respect of Ho Fai Garden, his answers to a lot of questions put to him during cross-examination were again “無乜印象” or “印象好薄弱”.  He confirmed on the other hand that there is no documentary evidence showing that the purchase money came from Father;

(j)  In respect of Shop 21, again he said that he could not recall the details in relation to the decision leading to its purchase, and when asked whether all the purchase money came from Father, his answer was “應該係”;

(k)  In respect of the WB Shop, whilst he says at §107 of Johnny/65/WS1 that it was part of the Wan’s Family asset, he said during cross-examination that:

“問： 之後嘅物業就係Wonder Building Shop，福仁大廈嗰個鋪。你107段就話呢一個係尹家資產嘅一部分，你所謂尹家資產係咩嘢意思？

答： 如果咁樣解釋，就應該係由我老竇出錢係屬於尹家㗎囉。

問： 即係你而家嘅講法係你阿爸出錢買呢個福仁大廈物業嘅？

答： 因為呢個我唔敢肯定答你，詳細我都唔記得喇，同時呢一個係應該係最平一個，$400,000㗎咋，最先買番嚟。

問： 買福仁大廈之前，有冇傾過買完之後個業權，實質擁有權係邊個擁有㗎？

答：因為如果我記得，翠君話可能佢喺裡面又出咗啲錢，實際我都唔係好記得，因為佢係$400,000嘢㗎咋。”

56.  Johnny’s failure to call a number of witnesses:

(a)  The above are sufficient to cast serious concern over the reliability of Johnny’s evidence on the source of the funds;

(b)  In addition, Mr Chan relies onLi Sau Keung v Maxcredit Engineering Ltd [2004] 1 HKC 434 and criticizes Johnny and CK for not calling a number of witnesses;

(c)  In gist, the principle is that where a person without explanation fails to call as a witness a person who they might reasonably be expected to call, it is open to the Court to infer that that person’s evidence would not have helped that party’s case;

(d)  The persons whom Mr Chan submits Johnny and CK should reasonably have called included:

(i)  The Mainland Shareholders and 劉惠全;  

(ii)  Johnny’s Wife;

(iii)  CK’s Elder Son;

(iv)  Kwan Kit Yuk;

(v)  Joyce Lam, who according to §72 of Johnny/65/WS1 was an employee of the Wan’s family business who signed for both Shooting Star and D4 in respect of the assignment of Shop 68; and

(vi)  the person with Messrs Chan Leung & Co who handled the purchase of Albion Gardens;

(e)  I deal with the Mainland Shareholders and 劉惠全first:

(i)  In Johnny/65/WS1, at §§68 and 69, Johnny asserts that Father asked him to establish the Marshall Islands Companies.  He did so. He arranged the Mainland Shareholders and 劉惠全 to come to Hong Kong to sign the necessary documents.  All of them were aware of the arrangements, and promised to transfer the companies back to Wan’s Family upon request, which they ultimately did on 20 March 2013 – hence the Mainland Transfer Documents.  In the course of his evidence during the trial, he produced the original of those 15 documents as D1[40]. Attached to Johnny/65/WS1 as Annex HH-16 are 5 declarations by the Mainland Shareholders and 劉惠全 (the “Mainlanders’ Declarations”)[41] which on the face of their contents support Johnny and CK’s case in this regard;

(ii)  In respect of the Mainland Shareholders and 劉惠全, Mr Lau’s submission is that Johnny and CK do not have to call them, as the Mainlanders’ Declarations support Johnny and CK’s evidence, and as no non-admission notice under Order 27 rule 4 has been filed in those regards;

(iii)  I note that the Mainlanders’ Declarations have been covered by a list of documents, and that WCW has not filed any notice under Order 27 rule 4 in relation to them.  The authenticity of the Mainlanders’ Declarations is therefore deemed to have been admitted. But the deemed admission does not go to the truth of their contents.  Given the issues framed in the pleadings and the contents of WCW’s witness statements, it must have been clear to Johnny and CK that the truth of the contents of the Mainlanders’ Declarations has remained very much in dispute;

(iv)  In respect of the Mainland Transfer Documents, Mr Lau’s submission is that while a notice of non-admission has been filed, it was not put to Johnny during cross-examination that they were forged.  I accept that, and find that their authenticity has been established;

(v)  Whilst I find that the authenticity of the Mainland Transfer Documents has been proved, the circumstances leading to their execution are however entirely different matters.  Given the issues framed in the pleadings and the contents of WCW’s witness statements, it must again have been clear to Johnny and CK that those circumstances have remained very much in dispute;

(vi)  When asked during cross-examination as to why he did not call the Mainland Shareholders and 劉惠全, Johnny merely said that he felt that that was not necessary.  I do not find that explanation convincing at all;

(vii)  In my view, the Mainland Shareholders and 劉惠全are witnesses whom Johnny and CK are reasonably expected to call.  I accept Mr Chan’s submission in this regard and draw the inference that had they been called, they would not have helped Johnny and CK’s case.  As to what they might actually have said, or whether they might have assisted WCW’s case, I cannot speculate;

(viii)  In any event, I bear in mind Section 49(2)  of the Evidence Ordinance.  It is Johnny’s evidence that he arranged the Mainland Shareholders and 劉惠全to come to Hong Kong a number of times.  There is no evidence suggesting that it would not have been practicable to call them.  The Mainlanders’ Declarations were not made contemporaneous to the events between 2004 and 2006 when they were allegedly asked by Father to be nominees (directly in the case of 朱炳其, and indirectly through 朱炳其 for the rest), lack particulars, and were made for the purpose of litigation.  I in any event place no weight on them in the absence of the Mainland Shareholders and 劉惠全 being called;

(f)  I next consider the other persons whom Mr Chan submits Johnny and CK might reasonably be expected to call;

(i)  In respect of those other persons, Mr Lau’s submissions in gist are that that they are only signatories to various documents, and are not reasonably expected to be called;

(ii)  I do not agree.  The potential significance of their evidence goes beyond the facts that they were signatories to a number of conveyancing documents.  The important questions are why they so acted, how they were approached, what they had been told, and by whom.  In the case of Johnny’s Wife and CK’s Elder Son, they were in fact not just signatories.  Johnny’s Wife had at some stages been the shareholder of Shooting Star and Multi Honour.  CK’s Elder Son had at some stages been the director of Topmond, and the director and shareholder of D6.  The questions are again why they so acted, how they were approached, what they had been told, and by whom;

(iii)  No satisfactory reason has been given as to why those persons were not called.  In particular, in relation to Joyce Chan, Johnny said that he had lost her phone number and could no longer contacted her.  But he accepted that he had not asked other colleagues for her number.  In respect of Albion Gardens, beyond saying that his memory of the transaction was vague, no explanation had been given as to why the person or persons of Messrs Chan Leung & Co were not approached.  Johnny accepted that he had not requested Kwan Kit Yuk to be a witness.  No explanation as to why has been offered.  In respect of CK’s Elder Son, when asked why he was not called, Johnny’s answer was he had no explanation;

(iv)  In my view, those other persons are witnesses whom Johnny and CK are reasonably expected to call.  I accept Mr Chan’s submission in this regard and draw the inference that had they been called, they would not have helped Johnny and CK’s case.  As to what they might actually have said, or whether they might have assisted WCW’s case, I cannot speculate;

(g)  I record again this.  There is no property in witnesses.  WCW could herself take steps to call some or all of those persons. However, as I have mentioned above, Mr Lau accepted in the course of his closing submissions that he did not cross-examine WCW on the matter, and therefore did not seek to invite this Court to draw any adverse inference against her.

H.3.  CK’s evidence

57.  CK’s evidence and assertion that it was Father who provided the funds for the purchases of the Landed Properties and the WB Shop are in my view equally unreliable.  My view is based on the following reasons and analysis:

(a)  Similar to Johnny, CK has not been able to provide any document relevant to Father’s businesses, how much he had earned, and how his alleged wealth had been handled;

(b)  In this regard, the following answer from CK during cross-examination is telling, suggesting that even members of the Wan’s Family had queries as to where Father got the money from:

“尹梅文係唔會分--唔涉及我哋呢啲公司呢啲事嘅，因為我一直都好怕提到分錢呀，阿爸嗰啲資金嗰啲嘅，佢覺得啲錢唔知邊度嚟嘅，所以佢根本佢就唔想涉及，佢本身係銀行做，我姐夫又係公務員，佢哋根本唔想涉及我阿爸任何嘅資金上面啲--啲事嘅。”

(c)  CK’s failure to provide any document in the above regard should further be considered in the context of her position as the executor of Father’s will.  She was in the position to investigate into Father’s accounts and his assets.  She in effect chose not to do so.  Upon cross-examination, she had the following to say, which are not convincing:

“問： 妳係幾時開始做妳爸爸嘅遺產承辦人，香港？

答： 佢喺2010年嘅12月頭嗰陣時--其實可以講11月底，佢準備立遺囑，跟住我係--因為我而家冇資料喺手，我只係啱--靠我嘅記憶，係12月頭嗰陣時同佢做遺囑嘅，跟住就--過幾日佢就過身喇。

問： 當妳準備應付呢一單案件嘅時候，妳有冇嘗試搵番妳爸爸銀行紀錄，睇番佢有冇就住呢單案件涉及嘅任何物業提供過任何款項呀？

答： 冇。

問： 點解呢？

答： 一直以嚟我爸爸都唔會同我哋講佢啲資金點樣嚟呀，佢銀行戶口都唔會同我哋提呢樣嘢，叫我哋唔好問咁多嘢嘅。咁我點會嗰一刻嚟問佢你嗰啲--應該係由佢主動同我哋講㗎嘛。

問： 或者我講清楚啲，喺妳爸爸過身之後，當妳成為咗佢嘅遺產承辦人，妳有冇以遺產承辦人嘅身分查番佢嘅銀行紀錄，睇番佢會唔會係有任何呢啲物業度，出過任何資金？

答： 冇。

問： 原因妳連試都唔試，就係因為妳明知根本唔係妳阿爸出錢嘅，妳同唔同意呀？

答： 因為我知我阿爸根本唔會用自己嘅銀行戶口去搞呢啲佢嘅資金。”

(d)  Nor does she have any personal knowledge on the flow of the funds used for the purchases.  She acknowledged that in the course of cross-examination, that

“問： 請妳揭去呢份證人陳述書嘅第25段，558頁，558。第25段妳就話，「由於漢雄主要負責財政事務，他更熟悉尹家的業務公司和物業狀況，他應該夠--應能夠詳細解釋關於設立各公司購買物業的來龍去脈」。我咁講正唔正確呢，就係妳本人其實唔係咁熟悉呢一單案件購買物業嗰啲錢嘅來龍去脈，妳同唔同意呀？

答： 詳細來龍去脈我真係唔係咁熟悉。

問： 購買呢一單案件涉及嘅物業啲資金，點樣出，邊個出，妳都唔係太了解嘅，妳同唔同意呀？

答： 我只係知道係我阿爸攞資金出嚟啫。”

(e)  In respect of the WB Shop:

(i)  At §30 of CK/65/WS, she asserts that the WB Shop “was initially owned by me for the Wan’s Family”.  She has given therein no particular on the flow of fund;

(ii)  However, when under cross-examination, CK claimed that the purchase money in fact came from her, that:

“問： 根據妳嘅講法，呢個係尹家嘅物業嚟嘅，係咪？

答： 係。

問： 但係呢一個物業買入嘅金錢，係如何支付，妳其實係唔知嘅，係咪？

答： 我知。

問： 妳嘅講法係妳阿爸畀嘅，係咪？

答： 唔係，係我付--我係去註--係我同律師樓做，然後轉賬過數畀律師樓嘅。

問： 妳呢個講法有冇任何文件支撐呀？

答： 買賣有買賣，有律師樓文件㗎喎。

問： 有冇喺呢單案件裡面披露呀？

答： 有㗎。

問： 妳喺妳嘅證人陳述書完全冇提過話福仁大廈買番嚟嘅時候係由妳出錢㗎喎，妳同唔同意呀？

答： 唔需要提呀，因為喺原告人告Master One嗰度處，係已經--我係已經有講過㗎喎。

問： 妳嘅講法係妳嘅私己錢嚟嘅，妳自己嘅錢嚟嘅，買呢個Wonder Building Shop？

答： 係。

問： 咁妳點解會話呢個Wonder Building Shop係尹家嘅物業呢？

答： 係我私己錢呀，我啲錢都係做生意賺番嚟，都係我阿爸嘅資金嚟㗎嘛。我喺龍珠電腦公司嗰度做，都係我做--都係我覺得我哋呢啲錢都係屬於尹家嘅，因為由我阿爸嗰度賺番嚟嘅，生意上。

問： 我向妳指出，呢一個講法係妳啱啱先作出嚟嘅，妳同唔同意呀？

答： 我唔同意囉。”

(iii)  CK has given inconsistent evidence in relation to the source of funds for the purchase of the WB Shop.  No document has been adduced in support.  Her evidence is also inconsistent with that of Johnny.  I do not accept her evidence in this regard;

(f)  I repeat my observations on Johnny and CK’s failure to call the number of persons discussed above as witnesses.

H.4.  Inferences

58.  The non-acceptance of the witnesses’ evidence on the source of funds is not the necessarily end of this issue.  Nor is the absence of documentary proof necessarily conclusive.  On this issue, counsel have invited me to draw inferences from the facts.  It is their submissions on inferences which I now turn to.

H.4.a.  Mr Chan’s submissions

59.  As I have mentioned above, Mr Chan has acknowledged the limits of WCW’s evidence[42]. In his written closing submissions, Mr Chan submits that in light of the death of the Deceased, this Court is entitled to fill the gaps in WCW’s evidence through contemporaneous documents, surrounding circumstances, and inherent probabilities in order to make the necessary inferences[43]. He then relies upon a number of matters which he submits support the inference that the acquisitions of the Landed Properties and the WB Shop were funded by the Deceased’s funds.  I will consider them in turn.

H.4.a.i   WCW’s case vs Johnny and CK’s case

60.  Mr Chan submits[44] that on the basis of the pleadings there are only two versions on the source of funds: the Deceased according to WCW, and the Wan’s Family according to Johnny and CK (and the Father according to the oral evidence).  He criticizes and attacks Johnny and CK’s case[45].  He submits that the objective evidence shows that the Deceased was a person of substantial financial means, but that there is on the other hand no reliable evidence on the worth of the Father.  He submits that once the Court rejects the assertion of Johnny and CK that their Father was the funder of all the Landed Properties and the WB Shop, then on the balance of probabilities it is likely that WCW’s version of events is accurate as the funds for the properties have to come from someone and there is no other logical candidate apart from the Deceased[46]. 

61.  I have stated my views on the unreliability of both WCW’s and Johnny and CK’s evidence on the worth of the Deceased and the Father.  I have also stated my views on the unreliability of their evidence on the source of funds.  I have highlighted the most unusual and surprising feature of this case that there is a lack of documentary proof on those two planks.  I do not accept Mr Chan’s submissions that there is any objective evidence showing that the Deceased was a person of substantial financial means.

62.  But most importantly, I do not accept the approach and logic advanced by Mr Chan that simply because there are only two pleaded versions, the non-acceptance or rejection of one will lead to a finding that the other version is more likely.

63.  In the above regard, I accept Mr Lau’s submission[47], that WCW is asking for declaratory relief.  She has the burden to prove her case of resulting trust.  Even in the absence of any opposing parties, WCW will still have to prove her case.

64.  Analogy can be drawn from the well-established practice of the Court that the power to make binding declaration is discretionary.  A declaration cannot be made merely on admissions by the parties whether in pleadings or otherwise, nor even by consent – see §15/16/2 of Hong Kong Civil Procedure 2022, Vol.1.  If a declaration should not be made merely on admissions or even by consent, I see no reason why then the non-acceptance or rejection of one pleaded version should lead to a finding that the other version is more likely.  The court’s assessment of the evidence should not be fettered in such a way. 

65.  In my view, even upon the non-acceptance of Johnny and CK’s case, it is still incumbent upon WCW to prove, directly and/or inferentially, that it was the Deceased who funded the purchase of the Landed Properties and the WB Shop. The reverse is also true.

66.  To the above I add this.  Mr Chan criticizes Johnny and CK for their failure to call a number of witnesses.  I have covered this above.  Whilst I have acceded to Mr Chan’s submissions and drawn the adverse inferences discussed above, I am not prepared to go further to draw any inference in favor of WCW that her case is as a result more likely to be true.  I note the discussion by HH Judge MK Liu in Cheung Kwong Yuen at §§27-32 and the cases cited therein, which Mr Chan has highlighted.  I note that an adverse inference may go to strengthen the evidence adduced on the issue by the other party, or to weaken the evidence adduced by the party who might reasonably have expected to call the witness. But whether such an inference can be drawn in favour of the other party is still dependent upon whether the rest of the evidence allows such an inference to be drawn and that such evidence is credible and reliable in the first place – see again Cheung Kwong Yuen at §§27-32 and the cases cited therein, and in particular Kao Lee & Yip v Koo Hoi Yan & Others [2003] 3 HKLRD 296, per Ma J (as the ex-Chief Justice then was)  at §34.  In this case in particular, it is definitely not a binary either / or situation.

H.4.a.ii  The corporate holding vehicles

67.  Mr Chan next[48] refers to the corporate vehicles used to hold the Landed Properties and the WB Shop.  He submits that apart from the Mainland Shareholders and 劉惠全, the shareholders and directors or those companies “included members of the Deceased’s family members or close relatives…, with the common denominator being the Deceased (rather than the Father or the “Wan’s family”)”.  Mr Chan highlights in particular the involvement of members of WCW’s maiden family.

68.  When considering the corporate holding vehicles, I have also considered Mr Chan’s further submissions dealing specifically with each of the Landed Properties[49] and WB Shop[50].    

69.  I have set out above the directors and shareholders of the companies involved.  I have considered them in detail.  I have considered them with temporal reference to the time when the properties were purchased.  I note that the persons involved at various stages included the Mother, CK, CK’s Elder Son, Johnny’s Wife, WCW’s Mother, WCW’s Father, WCW’s Sister, Maggie’s Husband, Shooting Star, Galaxy and Mass Profit.  They changed at various stages.  I note specifically that in relation to Shooting Star, pleaded by the Estate[51] to be the ultimate holding company of the “Group” of which D1 to D6 being members, the initial shareholder was the Mother, and that CK remains a shareholder even now.  The Mainland Shareholders and 劉惠全were involved.  None of them have been called as a witness to testify.  I have explained why I place no weight on the related hearsay evidence relied upon by both sides.  There had been “bearer shares” (in the case of Yorick).  There was also Multi Win Holdings Limited in respect of which the shareholding and directorship could not be traced.  Looking at the corporate holding structure as a whole, I am not able to conclude that the Deceased was the “common denominator”.  From those primarily facts, I am not able to draw any inference about the source of funds concerned.

70.  To complete the picture, I note also Mr Chan’s reliance upon WCW’s alleged payment of registration fees of Topmond and King Speed[52]. But I note on the other hand that a related fax for payment of those fees was addressed to “Johnny”[53]. Mr Chan relies further upon the evidence that Ho Fai Garden was the residential home of WCW’s parents, which Mr Chan submits is inherently improbable if it was part of the Wan’s Family asset.  Given the in-law relationship, the evidence that Ho Fai Garden is a small property, I do not find that inherently improbable.   

H.4.a.iii  The Mainland Shareholders, 劉惠全, and the Mainlanders’ Declarations

71.  I have explained above that despite my finding on the authenticity of the Mainland Transfer Documents, there remains no reliable evidence on the circumstances leading to their execution.  I have explained why I have decided to place no weight on the Mainlanders’ Declarations.  I have also explained why I have accepted Mr Chan’s submissions and draw the inference that had the Mainland Shareholders and 劉惠全 been called, they would not have helped Johnny and CK’s case, but that as to what they might actually have said, or whether they might have assisted WCW’s case, I cannot speculate.

72.  But despite my view on the Mainlanders’ Declarations, it remains incumbent upon WCW to prove her case by admissible and reliable evidence.  I have explained above why I on the first day of the trial refused the Estate’s application to rely on the 5 affirmations by the Mainland Shareholders and 朱炳森.  I have also explained why I have decided to place no weight on the hearsay statements which WCW seeks to rely on.  I have also explained why I find WCW’s evidence on source of funds unreliable.

H.4.a.iv  The two instruments of transfer signed in blank

73.  Mr Chan refers to:

(a)  in respect of D1[54], an undated blank instrument of transfer appearing to be signed by謝淑賢, with the Deceased named as the transferee[55], and

(b)  in respect of Galaxy, a similar undated blank instrument of transfer appearing to be signed by劉惠全, with the Deceased named as the transferee[56].

74.  The weight of those two documents has to be carefully considered.  They were disclosed by Johnny and CK.  They were only copies[57], and no original has been produced.  According to Johnny, they were amongst the documents seized by the police at Yuk Sing House.

75.  Johnny’s evidence on the circumstances leading to the execution of those two documents are not clear.  I note that Mr Chan on the one hand suggested during cross-examination to Johnny that it was 朱炳森 who arranged for the involvement of the Mainland Shareholders and 劉惠全, but on the other hand when it came to the provenance of those two documents sought to rely on Johnny’s version.  I do not find that conducive towards the weight I can place on the two documents.

76.  Johnny said further that they were probably drafted by the accountant responsible.  He was however not clear and vague as to their contents. 

77.  Neither謝淑賢nor 劉惠全has been called. 

78.  In any event, as Mr Chan has acknowledged[58], there are amongst the bundles only 2 documents of such kind.  I cannot draw the inference which Mr Chan invites me to draw that “it is likely that all 5 Marshall Island Companies were set up in a similar manner”[59].

79.  I have considered those two instruments of transfer carefully.  I accept that they can be consistent with WCW’s case.  But given all of the other matters I have set out and explained above, I am of the view that they are far from being sufficient, either individually or collectively with other matters, to ground any inference that the Deceased was the source of all the funds involved.

80.  To complete the picture, I note Johnny’s assertion that his side also had similar documents, which however have been misplaced.  Johnny has never mentioned that in his witness statements.  I do not accept his evidence in this regard.

H.4.a.v   Alleged reasons why WCW failed to produce documents

81.  Mr Chan submits[60] that WCW’s efforts in locating direct documentary evidence to support the source of funds were hampered by the fact that Johnny and CK took away two huge plastic bags of documents from Albion Gardens.  I have dealt with this above.  WCW has no personal knowledge as to what had been taken.  In any event, as I have observed above, there is no reason why WCW could not have in the name of the Estate written to the banks for documents showing fund-flow, issue of cheques, etc.

H.4.a.vi  The Criminal conviction

82.  I note that Mr Chan seeks to rely on the conviction of Johnny in DCCC 722/2013 of conspiracy to steal in relation to nine cheques and HK$16 million in the Deceased’s bank account (the “Conviction”).  That has been pleaded at §62A of the Re-Re-Amended Statement of Claim in HCA 65.  It is averred that the conviction “constitutes evidence of [Johnny’s] propensity to commit acts of dishonesty in respect of the Estate, which is material and relevant to, inter alia, the issue of whether [Johnny] dishonestly assisted Master One’s breaches of trust and/or fiduciary duties owed to the Estate”.

83.  As is apparent from what has been pleaded, and as opened upon by Mr Chan, WCW seeks to rely upon the Conviction to prove her case in relation of Johnny’s alleged breach of trust concerning the WB Shop.  I do not find the Conviction material in my assessment of the evidence on the factual issue of fund-flow.

H.4.b  Mr Lau’s submissions

84.  I now turn to Mr Lau’s submissions.

85.  At Section A of his written closing submissions, he criticizes and attacks WCW’s case on source of funds.

86.  I have deal with the material points above.

87.  As I have observed above, any rejection and non-acceptance of WCW’s evidence on source of funds will not necessarily lead to a finding that the other version is more likely.  Mr Lau’s submission that WCW has the burden to prove her case, which I accept, applies equally to Johnny and CK.

88.  At Section B of his written closing submissions, Mr Lau raises a number of points which he submits support Johnny and CK’s case that the source of the funds was the Father.  I deal with the main ones below:

(a)  He submits[61] that Johnny and CK explained the full sequence of events with supporting reasons.  By that, he refers mainly to Johnny’s and CK’s evidence on Father’s businesses in Hong Kong, his connection with the 湖南幫, how funds were allegedly moved to Hong Kong, the use of off-shore companies to “avoid any complications”, and to avoid the properties from being dragged into possible divorce proceedings between the Deceased and WCW;

(b)  In that regard, Mr Lau also refers[62] to Johnny and CK’s assertions that Father had generated “lots of money over the years for purchasing valuable properties due to his connections with 湖南幫and the businesses in the Mainland”, and how the Father was reluctant to discuss with his family his businesses;

(c)  I have considered those evidence and matters.  I have covered them above.  They are nothing more than Johnny and CK’s assertions, not supported by any documents.  In this regard, I find the absence of any documents on the Father’s worth and fund-flow most surprising;

(d)  It is not, I note, Johnny and CK’s case that all the funds, in relation to all 10 purchases involving more than HK$70 million, were paid for with untraceable cash with no paper trail.  If that were their case, the court would have to assess their case and consider whether it makes sense.  It is however not.  The stark reality is the complete lack of documentary support as I have explained above, which I find most surprising and inherently most improbable;

(e)  Then, similar to Mr Chan, Mr Lau relies on the directorship and shareholding of the various companies involved[63]. I have dealt with similar arguments by Mr Chan;

(f)  I however flag up one matter here.  Mr Lau submits[64], with reference to the financial statements of Mass Profit, that Mass Profit was originally set up just for holding the taxi and taxi license of the Wan’s Family.  I accept that submission.  That is however more relevant to HCA 1390 which I will come to.  But even with the acceptance of that evidence, I remain of the view that Johnny and CK’s evidence on the source of funds is overall unreliable;

(g)  Mr Lau next[65] relies on the evidence on a number of payments by Johnny in relation to No. 31 Cumberland Road, Albion Gardens, Yuk Shing House and Shop 21.  I have considered those payments set out in Mr Lau’s written opening[66].  I have on the other hand set out above the evidence showing Johnny’s limited involvement in the acquisitions of the properties.  I have also set out the problems in relation to the more substantial of those payments.  The bottom line remains this.  Those payments can be consistent with Johnny and CK’s case.  They however in the whole fall far short of being able to ground any inference that all the acquisitions were funded by the Father;

(h)  Mr Lau relies[67] on the Mainland Transfer Documents.  I have dealt with them above;

(i)  In relation to the WB Shop, I have observed that CK has provided inconsistent evidence on the source of funds.  Her oral evidence that the money came from her 私己錢 is also inconsistent with Johnny’s evidence.  Mr Lau refers to and rely on the KKY PA. He submits that if the purchase price were provided by the Deceased, one would expect that the KKY PA would have been executed in favor of the Deceased.  In my view, it is a very small circumstantial point which hardly assists Johnny or CK when the full circumstances are considered.

(j)  Mr Lau relies on various other matter in support of Johnny and CK’s case, including the poor relationship between the Deceased and WCW.  In that regard, I note the letter from WCW’s solicitors to the Deceased of 14 December 2009[68], that (“WCW’s Separation Letter”):

“當事人向本行聲稱，由於他與台端意見不舍，已於2009年8月開始與台端分居。本行現依當事人之指示向台端發出比分居通知書。本行亦受託通知台端，當事人將繼續與台端分居，不再有共同的婚姻生活。在分居期間，台端不可以作任何形式騷擾當事人及其親屬、同事或朋友，亦不得干涉當事人和其朋友及親戚的交往和活動。”

I accept that the relationship between the Deceased and WCW had not been smooth all along.  That however does not ground any inference in support of Johnny and CK’s case.

H.5.  Conclusion of Issue 1 and the factual aspects of Issue 4 and Issue 5

89.  For the above reasons, I conclude on the evidence that:

(a)  the Estate has failed to establish on the balance of probabilities that the Landed Properties and the WB Shop were purchased by the Deceased using his own funds; and

(b)  Johnny and CK have failed to establish on the balance of probabilities that the Landed Properties and the WB Shop were purchased from funds derived from the Wan’s Family, or from the Father.

I  Issue 2, and the balance of Issue 4 and Issue 5

90.  There is no dispute between the parties on the law.  Both Mr Chan and Mr Lau have cited to me Primecredit Ltd v Yeung Chun Pang Barry [2017] 4 HKLRD 327, and in particular §§1.3, 1.4, 2.3 and 2.4.

91.  The dispute here is on the facts. 

92.  As can be seen from §4 of the Estate’s Re-Re-Amended Statement of Claim, the Estate’s claim, whether legally to be regarded as basing on common intention constructive trust or resulting trust, is based factually on the allegation that all purchases of the Landed Properties and the WB Shop were funded by the Deceased using his own funds.

93.  I have concluded that the Estate has failed to establish that.

94.  It follows that the Estate has failed to establish that the Landed Properties are held by D1 to D6 for the Estate, whether on resulting or constructive trust.

95.  It follows further that the Estate has failed to establish that the WB Shop was beneficially owned by the Deceased, or that it was held by CK and later Kwan Kit Yuk as a nominee, or that D8 held it on constructive trust for the Estate.

96.  In so far as Johnny and CK are concerned:

(a)  At one stage during his closing submissions, Mr Lau sought to argue that Johnny and CK’s case is based not simply on the payment of purchase prices, but independent of that, common intention of the parties;

(b)  I do not accept that that is open to them.  Their pleaded case, as can be seen clearly from §5 and §20 of Johnny’s Re-Amended Defence and Counterclaim, and the same paragraphs of CK’s Amended Defence and Counterclaim, are based on the payment of purchase prices.  In the end, Mr Lau accepted that he could not shy away from that;

(c)  In any event, when under cross-examination, Johnny accepted that there had been no express discussion or agreement between the members of the Wan’s Family before the purchases, that:

“問： 你同唔同意我呢個講法，就係你四兄弟姊妹從來未試過坐埋一齊同意話呢一單案件買嘅物業係你哋四位共同擁有，各人揸四分一嘅，你同唔同意？

答： 我同意喎。”

(d)  I have concluded that Johnny and CK have failed to establish on the balance of probabilities that the Landed Properties and the WB Shop were purchased from funds derived from the Wan’s Family or from the Father;

(e)  It follows that they have failed to establish that D1 to D6 hold the Landed Properties on trust for the Wan’s Family, whether on resulting trust or constructive trust.

J.  Issue 3

97.  On the findings above, no declaratory relief would be granted in respect the Landed Properties.

98.  I add and highlight the discretionary nature of this Court’s power to make binding declarations.  On the evidence before me which comprises unsupported assertions and at best tenuous circumstantial inferences which could hardly be safely drawn, this is in my view far from being an appropriate case for me to exercise my discretion and make any binding declarations on title.  As I have observed above, even members of the Wan’s Family had queries as to where Father got the money from.  It is also not appropriate, I repeat, for this Court to adopt a binary either/or approach in making binding declarations in favor of one party on the basis that I have rejected the case put forward by the other party.  It would have been wrong for this Court to do so.

K.  Issue 6 and Issue 7

99.  Issues 6 and 7 are as a result not engaged.

L.  Issue 8

100.  I now turn to the Estate’s case against D7 and consider Issue 8.

L.1.  The scope of Issue 8 clarified

101.  Issue 8, to recapitulate, concerns whether D7 owed any fiduciary or other duties as pleaded[69] to the Deceased and/or the Estate in respect of the administration of D1 to D6, Shooting Star, Yorick, Galaxy and Multi Honour (i.e. the Group Companies as defined in the Re-Re-Amended Statement of Claim in HCA 65).

102.  I repeat what I have observed in §26 above.

103.  I record that on the second day of the trial, Mr Chan acknowledged that no agreement against D7 has been pleaded.  In the course of his closing submissions, Mr Chan confirmed in clear terms that the legal basis of the Estate’s case against D7 is confined to one of non-contractual agency[70].

104.  There is a related point, which is this.  Even upon the assumption that a duty had arisen and was owed by D7 to the Deceased, one might still need to consider whether that duty was personal to the Deceased, and whether it survived the Deceased’s death.  However, Ms Au in this regard in the course of her closing submissions accepted that that point had not been pleaded, and D7 would not base his defence on it.

105.  Issue 8 is therefore whether, on the basis of non-contractual agency/the Hedley Byrne principles, whether D7 owed the Deceased (and upon his death the Estate)  those duties as pleaded.

L.2.  Relevant principles on non-contractual agency/the Hedley Byrne principles

106.  It is common ground between the parties that duties may arise even in the case of a gratuitous agent.

107.  As explained in Chitty on Contracts: Hong Kong Specific Contract (6^th Edn)  §1-135:

“Where there is no contract between an agent and her principal, or where the agent is not paid for the services rendered, the agent is said to be a gratuitous agent. Liability of such agents arises under tort only, but only where it can be shown that she assumed responsibility for the action in question.”

108.  The authority cited in support of the above paragraph is Henderson v Merrett Syndicates Ltd [1995] 2 AC 145 at footnote 487, that:

“Henderson v Merrett Syndicates Ltd … where the House of Lords held that an assumption of responsibility by a person rendering professional or quasi-professional services coupled with a concomitant reliance by the person for whom the services were rendered could give rise to a tortious duty of care irrespective of whether there was a contractual relationship between the parties …”

109.  In Henderson v Merrett Syndicates, the House of Lords considered and explained the case of Hedley Byrne & Co Ltd v Heller & Partners Ltd [1964] AC 465.  The following observations made by Lord Goff (or passages cited by His Lordship from Hedley Byrne)  are relevant:

“[Hedley Byrne] established that, in certain circumstances, a duty of care may exist in respect of words as well as deeds, and further that liability may arise in negligence in respect of pure economic loss which is not parasitic upon physical damage …” (page 178 D-E)

“…it should now be regarded as settled that if someone possessed of a special skill undertakes, quite irrespective of contract, to apply that skill for the assistance of another person who relies upon such skill, a duty of care will arise … Furthermore, if in a sphere in which a person is so placed that others could reasonably rely upon his judgment or his skill or upon his ability to make careful inquiry, a person takes it upon himself to give information or advice to, or allows his information or advice to be passed on to, another person who, as he knows or should know, will place reliance upon it, then a duty of care will arise.” (page 178 F-H, citing from the speech of Lord Morris in Hedley Byrne)

“…the categories of special relationships which may give rise to a duty to take care in word as well as in deed are not limited to contractual relationships or to relationships of fiduciary duty, but include also relationships which … are ‘equivalent to contract,’ that is, where there is an assumption of responsibility in circumstances in which, but for the absence of consideration, there would be a contract ... Where there is no consideration, it will be necessary to exercise greater care in distinguishing between social and professional relationships and between those which are of a contractual character and those which are not. It may often be material to consider whether the adviser is acting purely out of good nature or whether he is getting his reward in some indirect form …” (page 179 B-E, citing from Hedley Byrne)

“From these statements, and from their application in Hedley Byrne, we can derive some understanding of the breadth of the principle underlying the case. We can see that it rests upon a relationship between the parties, which may be general or specific to the particular transaction, and which may or may not be contractual in nature. All of their Lordships spoke in terms of one party having assumed or undertaken a responsibility towards the other … Further, Lord Morris spoke of that party being possessed of a ‘special skill’ which he undertakes to ‘apply for the assistance of another who relies upon such skill.’” (page 180 C-D)

“… in a context concerned with a liability which may arise under a contract or in a situation ‘equivalent to contract,’ it must be expected that an objective test will be applied when asking the question whether, in a particular case, responsibility should be held to have been assumed by the defendant to the plaintiff …’ (page 181 B-C)

“… The concept indicates too that in some circumstances, for example where the undertaking to furnish the relevant service is given on an informal occasion, there may be no assumption of responsibility …” (page 181 D-E)

110.  Chaudhry v Prabhakar [1989] 1 WLR 29 is a case in which liability was attached to a gratuitous agent.  That was a case in which the plaintiff, who had just passed her driving test, asked her close friend to find her a second-hand car.  The friend agreed to help with no payment.  He was not a mechanic, but was regarded by the plaintiff as knowing much more about cars than she did.  A car was found.  He assured the plaintiff that it had not been involved in an accident.  Relying on the assurance, she bought the car.  It turned out that the car had been involved in an accident, was not road-worthy, and repairs had to be carried out.  The plaintiff sued the friend for damages.  In rejecting the submission that the standard of care was a subjective one, Stuart-Smith LJ observed that:

“… I am quite satisfied that this is an objective standard and is not simply to be measured by the agent’s honest statement that he would have similarly acted if he had been transacting the business on his own account, however foolish that may be. For my part, I would prefer to state an agent’s duty of care as that which may reasonably be expected of him in all the circumstances …” (page 33H – 34B)

“I have no doubt that one of the relevant circumstances is whether or not the agent is paid. If he is, the relationship is a contractual one and there may be express terms upon which the parties can rely.” (page 34 D-E)

“When considering the question of whether a duty of care arises, the relationship between the parties is material. If they are friends, the true view may be that the advice or representation is made upon a purely social occasion and the circumstances show that there has not been a voluntary assumption of responsibility.” (page 34 H)

“But where, as in this case, the relationship of principal and agent exists, such that a contract comes into existence between the principal and the third party, it seems to me that, at the very least, this relationship is powerful evidence that the occasion is not a purely social one, but, to use Lord Reid’s expression, is in a business connection. Indeed the relationship between the parties is one that is equivalent to contract … save only for the absence of consideration.

It seems to me that all the necessary ingredients are here present. The plaintiff clearly relied upon the first defendant’s skill and judgment, and, although it may not have been great, it was greater than hers and was quite sufficient for the purpose of asking the appropriate questions of the second defendant. The first defendant also knew that the plaintiff P was relying on him; indeed he told her that she did not need to have it inspected by a mechanic and she did not do so on the strength of his recommendation. It was clearly in a business connection, because he knew that she was there and then going to commit herself to buying the car for £4,500 through his agency.

If, as I think, the duty of care in this case can equally be said to arise under the Hedley Byrne principle, then logically the standard of care, or the nature and extent of the duty, should be the same as that required of an unpaid agent. And this is an additional reason why I prefer to state the duty as I have, namely, to take such care as is reasonably to be expected of him in all the circumstances.” (page 35C-F)

111.  I highlight the observation of Stuart-Smith LJ in Chaudhry that the duty of care of a gratuitous agent can equally be said to arise under the Hedley Byrne principle, and that the duty is reasonably to be expected of him in the circumstances.

112.  The relevant principles are summarized in Bowstead & Reynolds on Agency (22^nd Edn)  at §§6-027 to 6-028, that:

“A gratuitous agent will be liable to the principal if in carrying out the work the agent fails to exercise the degree of care which may reasonably be expected of the agent in all the circumstances.

… There is no general requirement in the law of agency that an agent has a contract with the principal, and the external position between principal and third party can certainly be changed by a gratuitous agent.  The internal position between principal and agent however, is, in such a case only imperfectly enforceable. Where there is no contract between principal and agent, it would seem that the alleged agent cannot be liable for pure failure to do what was undertaken without consideration.  However, where he assumed responsibility to exercise care and skill, the agent can be liable in tort for negligently failing to complete, or to complete with due care, work that was undertaken and upon which the agent has embarked.”

113.  I apply the above principles.

L.3.  The Estate’s case as pleaded vs as now being argued

114.  With Mr Chan’s clarification that the Estate’s case against D7 is one based on non-contractual agency/Hedley Byrne, and having discussed the applicable law above, I revisit the Estate’s pleaded case against D7.

115.  The material paragraphs are §§12 to 17 of the Re-Re-Amended Statement of Claim in HCA 65.  Therein, it is pleaded that in about “7 or 8 years ago”, the Deceased engaged D7 in providing assistance to the Deceased in relation to his business activities and operations (§12), that to enable D7 to provide the assistance to the Deceased, the Deceased appointed D7 as his agent in, inter alia, the administration of the Group Companies, and that as a result D7 was appointed the Authorized Person of the BVI and Marshall Islands Companies and was responsible for filing corporate records and communications with those companies’ respective agents in the BVI and Marshall Islands as agent for and on behalf of the Deceased.

116.  As submitted by Ms Au, it has never been the Estate’s pleaded case that the Deceased had relied on the special skills or expertise of D7[71]. Nor has any assumption of responsibility by D1 been pleaded, such that there is no plea as to what responsibility D7 had allegedly assumed, how, and when such assumption of responsibility arose[72]. When making his reply submissions in court, Mr Chan submitted that those were mere further particulars which D7 could have sought but did not.  I do not agree.  Those are constituent facts of the cause of action which the Estate, as clarified by Mr Chan, is running against D7.  It is incumbent upon the Estate to plead them.

117.  I accept Ms Au’s submissions[73] that on this basis alone, the Estate’s case against D7 must fail.

L.4.  Whether duties on the evidence

118.  In addition to and despite the above, I have nonetheless considered the evidence and considered whether the facts and evidence suggest that a duty has arisen.  I do not find the exercise easy, given the lack of pleading on the elements of “assumption of responsibility” and “reliance”.

119.  As Mr Chan has submitted, the issue is one of mixed law and facts.

120.  I have considered WCW’s evidence in respect of her case against D7.  I find that she, similar to her position in relation to the Landed Properties and the WB Shop, had little direct knowledge on the matters. I find that her evidence is unreliable:

(a)  At §46 of 65/WCW/WS1, she claims that:

“…我知死者有兩三個公司綠盒放在愛賓花園，而大部份公司綠盒都會送交授權人徐生管理。徐生是死者的老朋友，在約死者過身前7或8年死者曾聘用徐生，徐生對死者的業務提供多種的服務,包括成立公司、準備公司文件及提供會計服務等等。”

(b)  Therein, she has failed to provide the basis of her alleged knowledge. But then when under cross-examination, she claimed that she had been told various matters by the Deceased, and that she was even personally present on some occasions when D7 attended their home to discuss various matters with the Deceased.  None of those alleged conversations or meetings appear in her witness statements.  I do not accept her evidence in those regards;

(c)  Therein, she also claims that D7 was engaged by the Deceased about 7 or 8 years before his death.  WCW however accepted under cross-examination that there was not one single document which shows D7’s involvement prior to 2007;

(d)  I also accept Ms Au’s submissions that WCW was quick in filling in the gaps left by her lack of knowledge by asserting matters for the first time in the witness stand.  A clear example concerns whether D7 has received remuneration.  She disagreed to the suggestion that D7 had received none, and asserted that the fact that she did not know the precise figure did not mean that D7 had not received any.  It may be reiterated that it is not even the Estate’s pleaded case that D7 had received remuneration;

(e)  In relation to the question as to whether D7 had returned relevant documents in relation to Yorick, I accept Ms Au’s submissions that WCW was shown to have made allegations without bothering to check the truth of the same;

(f)  She has also given inconsistent and inherently improbable evidence in relation to the meeting she had with D7 shortly after the Deceased’s death.  I will have something more to say below in this particular regard. 

121.  D7’s evidence in gist is that:

(a)  it was during a gathering in July 2007 when the Deceased came to know that D7 had been working in company secretarial business and first requested him to help in handling some secretarial matters for several companies, which turned out to be the BVI Companies;

(b)  In about May 2010, the Deceased requested Calvary through D7 to act as the correspondence agent in respect of the Marshall Islands Companies;

(c)  He had never been paid any remuneration, and he acted on a gratuitous basis in helping out his friend to deal with some simple administrative matters such as payment of bills and filing of routine returns.  He had no power or authority to act on behalf of the Deceased or any of those offshore companies;

(d)  He had never been in possession of or known about the whereabouts of the company kits of all those offshore companies.

122.  Mr Chan criticizes D7 as being evasive, not forthcoming, and in some aspects outright untruthful.  He highlights the aspects of D7’s evidence on the manner in which he had been reimbursed by the Deceased for the bills he had paid, whether he had informed his boss about using Calvary, whether he and his company had any prior experience in handling offshore companies, whether he had ordered any Certificate of Incumbency for the BVI Companies, and his role in the matters which Mr Chan submitted D7 had downplayed.  He pointed to the evidence suggesting that D7 had been appointed the authorized person for the BVI Companies[74], and Calvary the qualified intermediary for the Marshall Islands Companies[75]. He submitted that there were aspects of D7’s evidence which were muddle and confused, defy logic or incredible.

123.  I find D7 in general to be an honest witness who has tried his best to give his evidence.  Given the lapse of time, it is not unreasonable that he could not recall the details of certain aspects of the matter.  I do not find his evidence that he and Calvary had no prior experience in dealing with offshore companies “defies logic”, or that his evidence on his role “does not bear scrutiny”.  I accept his evidence that he and the Deceased had been friends for many years, and that he received no remuneration for helping out.  In such context, I do not find his lack of prior experience in offshore companies or his role in the matters incredible or inherently improbable.  Importantly also, D7’s evidence is not contradicted by any contemporaneous documents.  I accept D7’s evidence in those regards.

124.  Mr Chan relies heavily on the evidence showing that D7 had been appointed the authorized person for the BVI Companies, and Calvary the qualified intermediary for the Marshall Islands Companies.  He submits that those were “crucial roles”[76], so that “the relationship between the Deceased and D7 goes beyond a merely social relationship”[77].

125.  I accept Ms Au’s submissions that there is no expert evidence on those roles.  The OIL Letter which Mr Chan seeks to rely on is far from being clear.

126.  Importantly, and in the context of this issue under discussion, there is no evidence as to how D7 had assumed responsibility in relation to the Company Kits, and what responsibility he had assumed.

127.  On the element of reliance, Mr Chan submits that

“ Chui’s role must have been greater than he let on. It is most probable that Deceased would have relied on Chui’s experience, skill and judgment in handling offshore company matters and engaged him in a professional capacity, whether or not he was remunerated or not. Otherwise, there was no reason why the Deceased would ask Chui specifically to assist him because he worked for a company secretarial services company.”

That appears to be the highest which Mr Chan can put the Estate’s case.  The problem remains that no actual reliance has been pleaded. Nor have any facts been particularized in the pleadings from which the Estate avers reliance can be objectively inferred.  On the facts, and on the evidence which I have accepted, no inference of objective reliance can in my view be drawn.

128.  To the above I add the following:

(a)  In the light of Mr Chan’s clarification that the Estate’s case is based on non-contractual agency/Hedley Byrne, it does not seem that the Estate is relying on any fiduciary relationship between the Deceased and D7.  I note however that in the course of his oral closing submissions, Mr Chan submitted that as D7 was given the responsibility of keeping custody of the Company Kits, which was an important responsibility involving a degree of trust and confidence, the relationship between the Deceased and D7 was more akin to the nature of a fiduciary relationship than just a matter involving the tortuous duty of care and skill;

(b)  If the above line is still being pursued, I record that I do not accept those submissions.  They are circular as to what D7’s responsibilities were. I repeat that I accept D7’s evidence in that regard.  Not all agents are fiduciaries. The facts and circumstances must be carefully examined to see whether in fact a purported agent is in a fiduciary relationship to his principal – Boardman v Phipps [1967] 2 AC 46 at 127.  Further, as I will go into when considering Issue 9, the evidence is insufficient to show that D7 in fact had any of the Company Kits.

L.5.  Conclusion on Issue 8

129.  For the reasons set out above, I on the facts and evidence before me answer Issue 8 in the negative.

M.   Issue 9

130.  Given my conclusion on Issue 8, Issue 9 does not arise.  I consider it nonetheless.

M.1.  Issue 9 clarified

131.  Again, Issue 9 requires some clarifications.

132.  At §51 of Mr Chan’s written closing submissions, he submits that:

“Once the Court finds that a duty of care exists, the next question is whether Chui acted in breach of such duties. P submits that Chui is in breach of his duties by failing to procure the return of the company kits and in complying with the instructions of the Estate to transfer the offshore companies back to the Estate.” (Emphasis added)

133.  In the course of Ms Au’s oral closing submission, Ms Au took me through the Estate’s Re-Re-Amended Statement of Claim.  She highlighted §§34 to 36 there.  She submitted that the complaint concerns the statutory records, information, books, accounts and the Company Kits of the Group Companies. There is nothing therein which relate to any “instructions of the Estate to transfer the offshore companies back to the Estate”.

134.  Ms Au’s submission in this regard is correct.  In the course of his oral closing, Mr Chan accepted that in the light of the Estate’s pleadings, its claim is confined to the Company Kits themselves, and that the gravamen of its complaint is really the non-return of the company kits. 

M.2.  Whether breach

135.  At §18 of the Estate’s Re-Re-Amended Statement of Claim, the Estate pleads that:

“As an agent of the Deceased, [D7] has been in possession and/or custody of the company kits (the ‘Company Kits’)  and corporate records of the Group Companies in the Group as agent for an on behalf of the Deceased.”

136.  That paragraph, read in the light of the clarifications by Mr Chan made in the course of his closing submissions as mentioned above, means that the Estate’s case against D7 is that:

(a)  D7 had been in possession and/or custody of the Company Kits; and

(b)  D7 failed his duties by failing to return the Company Kits.

137.  I accept Ms Au’s submission made in the course of her oral closing submissions that unless the Estate can establish that D7 factually had the Company Kits, the Estate has no case against D7.

138.  D7 denies having had any of the Company Kits.

139.  WCW did not have any personal knowledge on the matter.  She in fact could not tell which sets of Company Kit were kept by the Deceased, and which sets allegedly by D7.

140.  In inviting this Court to find that D7 was entrusted by the Deceased with custody of the Company Kits of the BVI and Marshall Islands Companies, Mr Chan at §49 of his written closing submissions relies on three matters:

(a)  The OIL Letter:

(i)  OIL has been pleaded as the registered agent of the BVI Companies;

(ii)  On 9 November 2010, Messrs Lam & Co, solicitors for the administrators of the Estate, wrote to OIL and asked inter alia for the provision of registers of the BVI Companies;

(iii)  In reply, OIL issued the OIL Letter dated 10 November 2010.  It was said therein, inter alia, that:

“Please note that we only provide registered agent/office services instead of ongoing secretarial services to the [BVI] Companies. The company kits are generally maintained by those professional intermediaries or end-user themselves.” (Emphasis added)

(iv)  Mr Chan relies on that underlined sentence, and submits that D7 did not deny that this could be the case sometimes;

(v)  That underlined sentence talks only about general practice, and in any event suggests that company kits may equally be maintained by the end-users themselves;

(vi)  The letter does not even start to demonstrate that D7 had any of the Company Kits;

(b)  Logic:

(i)  Next, Mr Chan summits[78] that it “makes logical sense for the Deceased to ask [D7] to keep custody of the company kits of the offshore companies, including the register of members and directors, given that [D7] was the one who assisted the Deceased to handle changes of shareholders / directors when requested”;

(ii)  I accept Ms Au’s submissions that the question is not whether it makes logical sense for the Deceased to ask D7 to keep the Company Kits.  The question is whether the evidence establishes that the Deceased did, and that D7 had them.  D7’s evidence that he had never had the Company Kits is not contradicted by any evidence, and is not inherently improbable;

(c)  WCW’s evidence:

(i)  Mr Chan at §49.2 of his written closing submissions continues to submit that:

“WCW’s oral evidence as to [D7’s] role when Chui was questioned about the company kits shortly after the Deceased’s passing tallies with her previous statement to the police recounting the same event.”

(ii)  At §50 of 65/WCW/WS1, WCW says that during a meeting she had with D7 shortly after the death of the Deceased, D7 said to her that he “是唯一一個可以處理死者公司公司綠盒的人。他答應我會交還我所有公司綠盒及公司記錄”;

(iii)  D7 denies having said that;

(iv)  The Deceased was obviously in the position to handle the Company Kits.  I find it inherently improbable that D7 would have said that he (D7)  was the only person who could do that, and it does not appear that WCW was saying that D7 was referring to the time after the Deceased’s death.  Her evidence under cross-examination alleging that D7 raised three fingers and made an oath during that meeting does not appear in her witness statement.  I have considered Mr Chan’s submissions that that allegation was contained in a statement WCW gave to the police in 2011.  In the course of his oral closing submission, Mr Chan clarified that his reference to WCW’s police statement was made to preempt any submission by Ms Au of recent fabrication, but that a previous consistent statement made in anticipation of proceedings otherwise could not add to what a witness has said in the witness box.

141.  In my view, what Mr Chan seeks to rely on fall far short of establishing that D7 had or had been entrusted with any of the Company Kits.

142.  In so far as relevant, I record also that according to the evidence, D7 had written to OIL[79], obtained the registers for the BVI Companies and returned them to WCW either directly or through her solicitors[80]. In respect of the Marshall Islands Companies, according to the letter of 16 November 2010 from International Registries (Far East)  Limited[81], Marshall Islands non-resident domestic corporations are not required to publicly file information with the Register of Corporations regarding the company’s business activities, accounts, directors or shareholders.

143.  I have discussed above the law in relation to the duty of a gratuitous agent.  On the evidence, I am not satisfied that the Estate has established any breach of D7’s part.

M.4.  Conclusion

144.  For the above reasons, I would in any event answer Issue 9 in the negative.

N.  Issue 10

145.  Given my views on Issue 8 and Issue 9, Issue 10 is not engaged.

O.  Disposition of HCA 65

146.  For the above reasons:

(a)  I dismiss the Estate’s claim against all defendants;

(b)  I dismiss also the counterclaim of D1, D3, D4, D5, Johnny and CK.

P.  HCA 1390

147.  I now proceed to consider HCA 1390. 

P.1.  Whether Pepson was set up with the Deceased’s prior agreement – the “Real Issue”

148.  Despite the agreed issues as framed by the parties, it has become clear that the most important issue in HCA 1390 is whether Pepson was set up with the Deceased’s agreement before his death to operate the computer business of Mass Profit in order to avoid any complications with the intended divorce proceedings between the Deceased and WCW.  If yes, irrespective of whether Johnny and CK were employees of Mass Profit, they did what they did with the agreement and at the instigation of the Deceased as the director who had the management of Mass Profit, and the acts complained of can hardly be said to constitute any breach of the part of Johnny and CK.  In his written closing submissions[82], Mr Chan describes this issue as the only real issue in dispute.  During his oral closing, Mr Chan accepted that it would not be factually easy for Mass Profit to establish its case if the acts complained of were done at the instigation of the Deceased.  As Mr Chan put it during his closing submissions, Mass Profit’s case is that it was managed by the Deceased, and the present management cannot really complain about a decision made by the director who was factually the party who carried out the management of the company.

149.  Whilst I have ruled as unreliable Johnny and CK’s evidence on the source of funds in relation to the acquisitions of the Landed Properties and the WB Shop, I am of the view that their evidence that Mass Profit was originally set up just for holding the taxi license of the Wan’s Family is supported by documents.  I also accept Johnny’s evidence that Pepson was set up with the prior agreement and consent of the Deceased.  My reasons are as follows:

(a)  The initial shareholders of Mass Profit were Shooting Star and Mother. I have set out above the initial shareholders of Shooting Star, who were Mother to start with;

(b)  The tenancy agreement for Shop 66 rented in the name of 神通電訊公司 was signed by CK’s Elder Son[83];

(c)  As can be seen from the financial statements of Mass Profit for the years ending 2000 to 2003[84], the only non-current assets of Mass Profit were a taxi licence and a taxi car;

(d)  According to those financial statements, Mass Profit only first showed profit after tax of HK$2,779,316 in March 2003, consistent with the case of Johnny and CK[85];

(e)  Under cross-examination, WSW was asked as to whether, shortly before the Deceased’s death, she intended to divorce the Deceased.  WSW denied that;

(f)  Her denial was contradicted by WCW’s Separation Letter, which contents I have cited above;

(g)  At that time, WCW was a 50% shareholder of Mass Profit.  Johnny’s evidence that the Deceased’s proposal to set up another company to carry on the business of Mass Profit so as to avoid any complication over the intended divorce proceedings with WCW is consistent with the then relationship between the Deceased and WCW, is inherently probable, and is credible;

(h)  Subsequent events are also consistent with the above observations. Pepson was incorporated on 22 March 2010.  Johnny was its sole shareholder. Its registered office was Shops 66 and 68, exactly the same as that of Mass Profit.  The date of commencement of business was 22 March 2010[86]. That was before the Deceased’s death.  It is common ground that the Deceased died abruptly.  No one expected his untimely death.  But for his death, the establishment of Pepson with the same registered address as Mass Profit would most certainly have come to the Deceased’s attention.  Johnny also himself acted as the director.  No nominee was used.  It would have been foolhardy for Johnny to have done all the above if the establishment of Pepson was not with the prior agreement of the Deceased, but were done secretly with the intention of diverting business from Mass Profit;

(i)  On 17 July 2017, Johnny sent emails[87] to the supplier of Mass Profit and Dragon World, informing them that Dragon World had changed its name to Tai Tai Computer Accessories Co.  There is force in Mr Lau’s submission[88] that if Johnny had intended to divert business of Mass Profit secretly, he would not have issued such emails openly and in the name of Dragon World;

(j)  I have considered Mr Chan’s submissions to the contrary.  I have also considered the matters he relied on at §65 of his submissions.  I do not accept his submissions that all the circumstances support the inference that the transfer of business to Pepson was done clandestinely without the prior knowledge of the Deceased.  In my view, the facts and evidence suggest the contrary.

150.  For the reasons set out above, I answer the Real Issue in the affirmative

P.2.  Issue 11

151.  Upon my conclusion on the Real Issue, I agree, as submitted by Mr Lau[89], that Mass Profit’s claim under HCA 1390 ought to be dismissed.

152.  I set out nonetheless my views in gist on the agreed issues as below. 

153.  In See Poon Chau Nam v Yim Siu Cheung (2007)  10 HKCFAR 156, Ribeiro PJ explained at §18 that:

“The modern approach to the question whether one person is another’s employee is therefore to examine all the features of their relationship against the background of the indicia developed in the abovementioned case-law with a view to deciding whether, as a matter of overall impression, the relationship is one of employment, bearing in mind the purpose for which the question is asked. It involves a nuanced and not a mechanical approach …”

154.  In the present case, the relationship between the Deceased, Johnny and CK was primarily a domestic one.  They were siblings.  There were no written employment agreements in existence.  Until the complaint by CK which I will come to, they had not been registered to any Mandatory Provident Fund Scheme (“MPFS”), not provided with statutory holidays, and with no employee insurance. These are common to both Johnny and CK.

155.  Specifically in the case of Johnny:

(a)  He was not even required to punch in when he went to work at Mass Profit;

(b)  At §60 of his written closing submissions, the main point which Mr Chan was able to rely on is WCW’s evidence that Johnny was paid a monthly salary by Mass Profit in cash, and that Johnny has not adduced any documentary evidence to rebut that;

(c)  The onus is on WCW to prove her case against Johnny.  As submitted by Mr Lau[90] which I accept, WCW has taken over the control of Mass Profit since late 2010, and has been in the position to produce documents in support of her allegation.  She has not.  I do not accept her bare asserting in this regard.

156.  Having considered the evidence and all the relevant facts as submitted to me, I conclude that Mass Profit has failed to prove that Johnny was an employee.

157.  Specifically in the case of CK:

(a)  Mr Chan relies on a number of matters against CK.  CK punched in when she attended Mass Profit.  He relies on CK’s original defence admitting that she was formally employed by Mass Profit.  Mr Chan submits that CK’s present attempt to resile from that should not be believed.  He refers further to a complaint by CK to the Mandatory Provident Fund Schemes Authority (“MPFA”)  (as revealed in the letter of 25 January 2011 from the MPFA to Mass Profit[91]). He refers also to a Member enrolment Form dated 19 April 2011[92];

(b)  CK explained that she punched in to set a good example.  I find that answer plausible;

(c)  CK explained that she complained to MPFA out of her anger against WCW at the time.  Her answer during cross-examination was as follows:

“係嘅，我嗰陣時係真係好嬲，想告佢，煩下佢嘅。因為佢唔畀殮葬費同埋生活費我，要去追討，差唔多用咗超過$200,000嘅律師費去追討，我得番嚟嘅都唔夠$100,000。所以我一氣之下就唯有承認自己係僱員，去告發佢。”

(d)  I note that the complaint was made after the death of the Deceased, when CK, Johnny and WCW were embroiled in bitter disputes.  As revealed by WCW in her letter in reply to the MPFA, Johnny and CK were the authorized signatories of Mass Profit regarding MPF matters.  Despite that, during all the time prior to the Deceased’s death, CK had never been registered to any MPFS.  I do not approve of CK’s conduct, but on balance, I accept her evidence that she made the complaint out of anger seeking to trouble WCW.  I accept her explanation despite her original pleading, which has since been amended.

158.  Having considered the evidence and all the relevant facts as submitted to me, I conclude that Mass Profit has failed to prove that CK was an employee

159.  On the face of pleadings, and as accepted by Mr Chan in the course of his closing submissions, Mass Profit’s case against Johnny and CK is contractual, premised upon the existence of a relationship of employment between them and Mass Profit.  Mass Profit has failed to prove the existence of that relationship.  It has failed to prove the existence of any of the duties as pleaded against Johnny and CK.

160.  I answer Issue 11 in the negative.

P.3.  Issue 12

161.  Issue 12 is prefaced by “If so”.  In the light of my findings on the Real Issue and Issue 11, Issue 12 and all the sub-issues under it are not engaged.

162.  I will just record that in respect of the 4 cheques mentioned as part of that issue, 2 of them were bounced, and sums in the total amount of the other 2 had been paid into court in another action.  No loss on the part of Mass Profit has been established.

P.4.  Issue 13

163.  In respect of Issue 13, I have in effect dealt with it when I consider the Real Issue.  I accept that Mass Profit was initially set out to hold the taxi license and the taxi car.  The computer business was subsequently transferred to it in about 2003.  In anticipation of a divorce between him and WCW, the Deceased agreed to the setting up of a new company, which turned out to be Pepson, to carry on the business of Mass Profit.  These are the findings that I make.  I have explained above the effects of those findings on the liabilities of Johnny and CK.

P.5.  Issue 14

164.  It follows that Mass Profit is not entitled to any of the relief it has prayed for.

P.6.  Issue 15

165.  What is left is Johnny’s counterclaim.

166.  Little has been pleaded in Johnny’s Amended Counterclaim[93] about those payments which he claimed he had made on behalf of Mass Profit.  He refers them as “payments … of a total sum of about HK$2,296,695.50 he made on behalf of [Mass Profit] to settle suppliers’ accounts for the period from 30^th June 2010 to 31 July 2010”[94], and that “suppliers of [Mass Profit] which have an outstanding balance against [Mass Profit] and/or holding previous cheques issued by [Mass Profit]  but remains unpaid came to [Johnny] to chase for settlement of their invoices”.[95]  Annexure I is attached to the Amended Counterclaim, which is said to be “a schedule of all the payments made by [Johnny] on behalf of [Mass Profit] in settling the suppliers’ accounts totaling about HK$2,296,695.50”.  Annexure I contains only the name of the alleged suppliers, the number of the cheques, their amounts, and the periods in which they were allegedly paid.  Those are all the particulars provided.  There are no descriptions of the goods, no invoices number, nor receipts, nor particulars of any of the underlying documents.

167.  In Johnny/1390/WS, Johnny has given no further particulars on those payments beyond claiming that he used his own financial resources to settle the debts of Mass Profit “in the sum of about $2.29 million”[96]

168.  Whilst the relevant cheques have been produced[97], they cannot by themselves establish what the related payments were for.

169.  When under cross-examination, Johnny claimed that all the underlying documents had been lost upon change of solicitors, that:

“問： 咁呢一份反申索書--抗辯書同埋反申索書黑色嘅部分呢，就係你喺2010年你嘅律師代你存檔嘅，咁呢一份文件黑色嘅部分喺2010年11月30號存檔之前，你律師都有解釋過畀你聽嘅，係咪？

答： 應該就有。

問： 喺呢份文件嘅第21同22頁，先睇21頁先，21頁嘅E分段，E分段，你喺2010年11月已經提出你而家所講嘅反申索㗎喇，呢二百二十九萬多嘅款項，咁你就提供咗一個表，喺24頁列出你所有聲稱支付支票嘅貨數，睇唔睇到？

答： 唔，見到。

問： 換句話講，你喺2010年11月已經知道你希望追討呢二百多萬呢系列嘅支票嘅款項，你同唔同意？

答： 應該係。

問： 嗰陣時相隔你最後一張追討嘅支票，9月10號嘅，講緊係兩、三個月。

答： 喀。

問： 當時你大可以同當時嘅供應商攞番相關嘅單據，你同唔同意？

答： 咁我認為攞啲單據嚟做乜啫，我應該係有單據㗎，我記得，我畀咗上一手嗰個律師，佢可能轉畀我而家呢位律師呢，就冇埋，我記得個情形好似係咁嘅。

問： 呢樣嘢喺你嘅證人供詞完全冇提過㗎喎，你同唔同意？

答： 我唔知個律師點寫我啲證人供詞，我個大綱我畀佢，佢寫，寫完，係解釋完之後，咁一大輪消化完，咁就簽個名。”

170.  The original Counterclaim which contained Annexure I was filed in November 2010.  No particular of any of the underlying documents has ever been pleaded.  His explanation on the loss of the document has never been raised in his witness statement.  I do not accept Johnny’s explanation in that regard. 

171.  In the absence of any supporting documents, I cannot be satisfied as to the nature of the payments which Johnny claims he has paid on behalf of Mass Profit.  This is particularly so given the involvement of Tai Tai Computer Accessories Co.  As pointed out during cross-examination, at least one of the cheques has the words “太太” written at the back.  I bear in mind also the fact that it is not one or two cheques which Johnny is suing on.  Annexure I sets out more than 30 cheques.  I am not prepared to accept Johnny’s bare assertions in the absence of documentary proof.  I also in this regard accept Mr Chan’s submissions[98] that in the absence of the underlying documents, Mass Profit cannot begin to scrutinize whether those amounts related to Mass Profit at all.

172.  I dismiss Johnny’s Counterclaim.

P.7.  Conclusion

173.  For the above reason, I dismiss both Mass Profit’s claim and Johnny’s Counterclaim in HCA 1390.

Q.  Overall disposition

174.  In respect of HCA 65:

(a)  I dismiss the Estate’s claim against all defendants;

(b)  I dismiss also the counterclaim of D1, D3, D4, D5, Johnny and CK.

175.  In respect of HCA 1390, I dismiss both Mass Profit’s claim and Johnny’s Counterclaim.

R.  Costs

176.  In respect of HCA 65:

(a)  In respect of the Estate, D1, D3, D4, D5, Johnny and CK, given my dismissal of both the claim and counterclaim, and given their close connection and comparable complexity, I make a costs order nisi that there be no order as to costs;

(b)  In respect of D7, I make an order nisi that he shall have the costs in defending the Estate’s claim against him, with certificate for one counsel only, to be taxed if not agreed;

(c)  In respect of D2, D6, and D8, given their status or absence of participation, I make a costs order nisi that there be no order as to costs.

177.  In respect of HCA 1390:

(a)  In respect of Johnny:

(i)  Compared with Mass Profit’s claim, Johnny’s Counterclaim has not taken up as much time;

(ii)  Despite my dismissal of Johnny’s Counterclaim, I make a costs order nisi that he shall have 70% of his costs in defending Mass Profit’s claim to reflect the fact that he has lost his Counterclaim, with certificate for 2 counsel, to be taxed if not agreed;

(iii)  on a nisi basis, I will not make any separate costs order in respect of Johnny’s Counterclaim;

(b)  In respect of CK, she has made no Counterclaim.  I make a costs order nisi that she shall have her costs in defending Mass Profit’s Claim, with certificate for 2 counsel, to be taxed if not agreed;

(c)  Pepson has been dissolved.  On a nisi basis, I make no order as to costs in so far as Pepson is concerned.