LAU SAU MAN also known as MIMI LEONG v. LAU YU FUN AND OTHERS

HCA 3398/2016

[2026] HKCFI 113

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 3398 OF 2016

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J U D G M E N T

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A. INTRODUCTION

1.  The plaintiff (“P”)  Madam Lau Sau Man was 83 years old[1] when she gifted her properties in Hong Kong in August 2012 to the 1^st defendant Lau Yu Fun (劉汝寬)  (“D1”)  who is her younger brother.  Some of those properties were later transferred to D1’s wife, the 2^nd defendant Tsang Wai Fan (曾惠芬)  (“D2”)  and D1 and D2’s son, the 3^rd defendant Lau Tsz Wing (劉子穎)  (“D3”)  (D1, D2 and D3 collectively as “Ds”). A few years later, P wanted the properties back.  She therefore brought the present action against Ds.

2.  P issued a writ with general endorsement against Ds in the present proceedings on 23 December 2016 on grounds based on breaches of fiduciary duties, misrepresentation, and/or conspiracy to defraud and dishonest assistance and/or knowing receipt (“the Writ”). 

3.  The statement of claim (“the SOC”)  was filed and served on Ds 6 months later on 19 June 2017.  The SOC was substantially amended some 6 years later and the amended statement of claim (“ASOC”)  was filed on 26 July 2023. 

4.  A 4-day trial took place before me in February/March 2025, some 12 and a half years after the material events took place. 

B. BACKGROUND

B.1  Undisputed / indisputable facts

5.  The following facts contained in the Parties’ Joint Undisputed Facts (“Joint Undisputed Facts”)  lodged with the Court on 13 January 2025 are not in dispute:-

“1. D1 is P’s younger brother.

2. D2 is D1’s wife. D3 is D1 and D2s’ son.

3. P emigrated to US after marriage and ordinarily resided therein since about 1969.

4. As to the properties in these proceedings:-

(a)  P acquired Flat B (including the roof thereof)  on 11/F, Lee Fat House, No.5 Yan Lok Square, Yuen Long, New Territories (‘the Yuen Long Flat’)  in 23 December 1992 and was the sole and legal beneficial owner thereof prior to the execution of the Provisional Sale and Purchase Agreement and Assignment in August 2012 in favour of D2;

(b)  Lau Cheuk-yiu alias Lau Leung Sheung granted all of Lot No. 753 in DD115 Land (‘DD115 Land’)  to P by way of an inter vivos gift on 25 July 1974;

(c)  Lau Yee Pang granted to Hui Siu Kwong and the Plaintiff in equal shares as joint tenants, all of: (i)  Flat B, 11^th Floor, Bloc 5, Locwood Court, Kingswood Villas, No.1 Tin Wu Road, Tin Shui Wai, Yuen Long, New Territories (‘Locwood Flat’); (ii)  Nos. 45, 49, Section B of Lot No. 52, Lots. Nos. 75, 77 and 91 in D.D. 60, Yuen Long, New Territories Hong Kong together with the buildings erected (‘Property I’); and (iii)  Section B of Lot No. 667 and Lot No. 1149 both in D.D. 115 (‘Property II’); and (iv)  Lot No. 124 and Section B of Lot No. 1613 both in D.D. 116 (‘Property III’), by intervivos gift on 24 March 1994.

5. On 10 August 2012, P returned to Hong Kong for a short visit. She stayed in Ds’ home.

6. In August 2012, P and D2 opened the Joint Account at the Bank of East Asia. P deposited sums including US2,500 into the said account.

7. P attended the office of Messrs. Y S Lau & Partners on 14 August 2012. She was accompanied by D1-2. She met Mr. YS Lau.

8. P delivered some original and copy titles deeds and the 2 sets of keys to Mr. YS Lau when they met.

9. Sometime in August 2012, P executed the a document which was a Will at the office of the said firm and also the further following documents at the firm’s office:-

(a)  the PoA;

(b)  the Severance Notices; and

(c)  the Yuen Long Flat S&P, and Assignment, in favour of D2, at the purported consideration of $1,600,000.

10. Relying on the PoA, D1 effected the following transactions:-

(a)  on 20.2.2013, 50% interest of Locwood Flat was sold to D2 at a purported consideration of $1,500,000;

(b)  on 20.4.2013, DD115 Land was sold to D3 at a purported consideration of $300,000; and

(c)  on 30.7.2013, Properties I, II and Ill were transferred to D3 at a purported consideration of $2,000,000.

11. No actual payment was made for the purported consideration in respect of the aforesaid transfers of properties.

12. No monies have been transferred in or out by either Plaintiff or D2 since the Joint Account was opened.

13. The written family agreement pleaded in Paragraph 39C of the Amended Defence is currently the subject of litigation and dispute between family members in other proceedings between D1 and the 5 daughters of Lau Leung Sheung.”

6.  It is further not in dispute that P executed the Will on 14 August 2012 at the office of Messrs Y S Lau & Partners (“YSL”).  It is also not in dispute that P received the original copy of the Will before she left YSL’s office on that day.

7.  Further, it is not disputed that other documents referred to in §9 of the Joint Undisputed Facts was executed by P on 21 August 2012 at YSL before a legal clerk of the firm by the name of Lee Cheuk Sum (李卓森)  (“Lee”).  His boss Mr Lau Yue Sum (劉汝琛)  (“YS Lau”)  was not in the office at the time when P executed the documents before Lee.

8.  The PoA (Power of Attorney)  referred to in §9 of the Joint Undisputed Facts was revoked by P by way of a statutory declaration on 13 October 2016.

B.2  P’s Case

9.  P’s case can be briefly summarised as follows. P did not intend to gift the properties referred to in §4 of the Joint Undisputed Facts (“the Properties”)  to Ds[2]. False promise was made by D1 that he would help to manage the Properties[3]. Relying on such promise, she agreed to attend a solicitor’s firm of a familial relative, namely, YSL[4]. There, she gave no instructions to the solicitor, but somehow a number of legal documents was prepared for her to sign later. On 14 August 2012, she signed the Will upon being asked by D1 to do so “without being advised, informed or explained its purpose or its contents”.  She only found out that it was a document purportedly to be her last will and testament after the commencement of these proceedings[5]. On 21 August 2012, she was asked to execute “a stack of documents” purportedly to appoint D1 as her agent. She was at YSL for no more than 15-20 minutes for signing papers[6]. She did not bother to read, or ask for an explanation from persons of the firm. She simply signed the documents[7]. Only after 4 years she realised that the signed documents were not something she actually intended[8]. She claims to be fundamentally misled. She now seeks to set aside all the transactions effected by virtue of those executed documents[9].

10.  P has pleaded the following causes of action in order to set aside the various transactions:

(1)  Fraudulent misrepresentation and/or conspiracy to defraud by Ds;

(2)  D1’s breach of fiduciary duties in relation to his wrongful use of the PoA for purposes other than which she conferred such power and contrary to her interests;

(3)  Knowing Receipt or Dishonest Assistance by D2 and D3;

(4)  Lack of consideration; and

(5)  Constructive Trust.

B.3  Ds’ Case

11.  Ds’ case in gist is that P ordinarily resides in the US. She owned the Properties referred to in the Joint Undisputed Facts but worried that some of them might be subject to outstanding estate duties.  She could not enjoy them herself and over the years she had had difficulty in receiving rental income of the Properties from her nephew and co-owner of the Locwood Flat Hui Siu Kwong (“Hui”).

12.  In August 2012, she returned to Hong Kong for a visit.  She stayed with D1 and D2 at their home.  She told D1 that she wanted to have the Properties gifted to him, together with the estate duty liabilities attached thereto, so that she would no longer be troubled with those matters[10]. To give effect to her intention, she attended YSL as per D1’s recommendation[11]. She gave detailed instructions to YS Lau[12]. A number of documents were prepared by the firm in accordance with her instructions.

13.  Specifically, the PoA was prepared pursuant to YS Lau’s advice, as an agreed/authorised mechanism for transferring the Properties as gift[13].

14.  When she met YS Lau, she told him that she would like to leave Hong Kong without an extended stay[14]. To cater for P’s plan, YS Lau advised her to make a PoA to D1 so that the transfer could be done by D1 on her behalf[15].

15.  All the legal documents were explained to P before she signed them. She was fully aware of the true legal effect of them. All the transactions in question were thus approved and authorised by P.

B.4  Agreed List of Issues

16.  Pursuant to the order made by this Court at the Pre-trial review (“PTR”)  on 10 December 2024, the parties lodged with the Court the Parties Joint Agreed List of Issues on 13 January 2025 (“Agreed List of Issues”). 

17.  The following are the issues agreed by that parties which was lodged just over a month prior to the commencement of the trial:-

“(1)  Did D1 make the representation pleaded in §7 of the Statement of Claim on or about 10 August 2012 at Ds’ home, namely:-

(a)  that the Plaintiff was elderly and not living in Hong Kong and that he would manage her properties and collect rent on her behalf and the estate duties; and

(b)  to manage her properties, they would need to open a joint account and go to a solicitors firm to execute some documents.

(2)  Was it P’s intention when executing all the documents in August 2012 and opening a joint account with D2:-

(a)  to alienate and assign the legal and beneficial interests in all of her Hong Kong Properties to D1 and his family as an immediate gift;

(b)  to enable D1 to manage the properties and collect rent on her behalf; or

(c)  to gift some of her properties to D1’s daughter?

(3)  At the solicitors firm and on both occasions:

(a)  was P advised, aware of and understood the documents and the legal consequences of the documents that she had executed at the solicitors firm?

(b)  what instructions, if any, were given by P to Messrs. Y S Lau & Partners on those occasions.

(3)  (sic)  Did P give D1 permission and authority to transfer her properties to himself and/or D2 and D3?

(4)  (sic)  Did any of the Ds provide any real consideration to P for all the transfers of all the properties to each of them?

(5)  (sic)  Is P entitled to restitution and/or restitutionary damages on any of the pleaded basis?”

18.  It should be noted here that whether the alleged gift of the Properties being a conditional and/or incomplete gift was never an issue in dispute between the parties, whether under the pleadings or Agreed List of Issues. 

C. DISCUSSION

C.1  New and unpleaded issues raised by P

19.  Based on the parties’ pleadings, the Joint Undisputed Facts and the Agreed List of Issues, the issues involved in this case at first appeared to be rather simple and straightforward.  They did not involve any complicated legal arguments.  The case principally is a factual dispute between the parties.  At the end of the day, it really depends on which version of the events the Court would accept after hearing the evidence.  However, somehow P and her legal team managed to turn this case into a rather technical and complicated one.  Instead of trying to focus on the factual issues in dispute based on the Agreed List of Issues, P and her legal team tried to raise a few new (but unpleaded)  issues at trial. This included (i)  YS Lau has conspired with Ds together to defraud against P by falsifying the attendance note prepared by him on 14 August 2012 (“Attendance Note”); (ii)  the argument that the signing of the PoA by P required 2 witnesses and therefore was invalid; and (iii)  the gift of the Properties to D1 was a conditional and incomplete gift.

20.  P had also tried very hard to oppose/prevent the production of the Attendance Note prepared by YS Lau prior to the commencement of the trial.  YS Lau says that the Attendance Note was written by him immediately after the meeting with P on 14 August 2012 when instructions were taken from her.  Without any direct evidence in support, P says that the Attendance Note was written by him subsequently in order to justify the events happened on 14 August 2012 and the documents executed by P on 21 August 2012. Again, without any direct evidence, P alleges that the Attendance Note at least was not in existence at the time when D2 made her affirmation in HCMP 1505/2014 on 27 March 2015[16]. In other words, P alleges that YS Lau has fraudulently made up the Attendance Note years later in order to conspire together with Ds to defraud against P. This was in fact put to YS Lau for the first time during cross-examination by P’s counsel without any proof at all.

21.  The alleged requirement that the PoA needed 2 persons to witness was never pleaded but was put to YS Lau and Lee under cross-examination.  However, regrettably, it was never followed up in P’s Closing.

22.  As said, P’s counsel Mr Earl Deng, appearing with Ms Winky Wong, also very belatedly tried to raise the issue of incomplete/conditional gift which had never been raised nor pleaded by P in the ASOC or the amended reply (“AR”).  It was mentioned for the first time under P’s Opening Submissions (“P’s Opening”).

C.2  P’s Pleaded Case

23.  In essence, P pleaded the following case against Ds:-

(a)  D1 made misrepresentations that he would manage the Properties for P. Out of trust and confidence towards him, P relied on D1’s words. Believing that all D1 did would be for the best of her benefit, she just followed D1’s instruction/arrangement without question; and

(b)  the executed documents were not prepared in accordance with her instructions. In fact, she did not give any instructions to YSL at all. Further, no one explained the legal effect of any of the executed documents (including the Will)  to her. Insofar as her understanding about the executed documents is concerned, she believed that they were merely to allow D1 to manage her Properties in Hong Kong.

24.  Thus, P says that none of the transactions were approved or authorized by her.  She therefore sought to set aside the transactions.

C.3  The 3 Main Issues

25.  I think it is fair to say that P’s pleaded case against Ds based on the causes of action of fraudulent misrepresentation, conspiracy to defraud, breach of fiduciary duties, dishonest assistance and knowing receipt, lack of consideration and construction trust would fall or stand with whether the Court accept P’s evidence that Ds, especially D1, made any false misrepresentation to her on 13 August 2012 while she was staying with D1 and D2.  In particular, whether the Court accepts P’s allegations that she was being misled into believing that she was only passing the management power of the Properties onto D1 and not as gift.  This essentially would require the Court to look into and decide whether D1 had made those alleged misrepresentations to her as pleaded under the ASOC.  For want of a better term, I would call this the Misrepresentation Issue. 

26.  This issue is closely related to what instructions, if any, were given by P to YS Lau on 14 August 2012 and the execution of the legal documents at YSL before Lee on 21 August 2012. I would like to call that the Execution Issue.

27.  Obviously, the main defence of Ds is that the Properties were given by P to D1 as gift, some of which he subsequently transferred to D2 and D3 via different legal instruments. As said, P at the trial raised for the first time (without pleading the issue anywhere)  that the gift was a conditional / imperfect gift.  P says that even if P fails on the Misrepresentation Issue and the Execution Issue and that Ds manage to prove that the Properties were given to D1 by P as gift, the gift was subject to the condition that D1 have to pay the estate duties on the Properties first.  Since D1 has failed to pay the estate duties, the condition of the gift has not been satisfied.  The gift is therefore incomplete and Ds have therefore failed to prove their defence based on gift.  I shall call that the Gift Issue.

C.3.1  Relevant Legal Principles

28.  Before delving into the evidence, I would like to briefly set out the legal principles on (i)  the different causes of action relied on by P in the ASOC which included fraudulent misrepresentation, conspiracy to defraud, breach of fiduciary duties, dishonest assistance & knowing receipt, lack of consideration and constructive trust; (ii)  the law on gift; and (iii)  how the Court would assess the evidence in a case where witnesses are trying to solely rely on their memory to recall some undocumented conversations which took place a long time ago.

C.3.2  Legal Principles on P’s Different Causes of Action

29.  Mr Deng has summarised the well-established legal principles for the different causes of action relied on by P in the AOSC.  They appeared in P’s Opening.  Those principles are not seriously disputed by Ds’ counsel.  I have highlighted some of them below for ease of reference. 

C.3.3  Fraudulent Misrepresentation 

30.  The principle of fraudulent misrepresentation is well-established.  In Chan Ching Ho Owen v Poon Yuk King (unreported, DCCJ 1802/2012, 28 November 2014), this Court held as follows:-

“12. The principle of fraudulent misrepresentation is well-established. It is succinctly summarized by Recorder Edward Chan SC at §35 of Queenston LLC v Serlen Ltd HCA 7585/2000 (27 April 2001):-

‘The essential ingredients for (fraudulent misrepresentation)  are (a)  the making of a representation to the plaintiff; (b)  the representation was untrue in a material respect; (c)  the defendants knew that the representation was untrue; (d)  the plaintiff was induced to act on the untrue representation and (e)  the plaintiff suffered loss and damage as a result.’

13. Where fraud is alleged, the plaintiff bears the burden of adducing cogent evidence to prove the allegation, as said by Muttrie DHCJ in China Everbright Finance Ltd v Chan Yung HCA 18300/1999 (24 October 2006)  at §46:-

‘Fraud is a serious allegation. The more serious the allegation, the more cogent must be the evidence to prove it. But the standard of proof is the balance of probabilities. …’”

31.  P acknowledges that she faces a high threshold to prove that she had been misled when executing all the documents on 21 August 2012 (“the Executed Documents”).

C.3.4  Conspiracy to Defraud

32.  In Pido v Compass Technology Co Ltd [2010] 2 HKLRD 537, §§13-17, Ma CJHC (as the CJ then was), set out the essential elements of a claim based on conspiracy:

(1)  there is an agreement between two or more persons;

(2)  there is an intention to injure the plaintiff by unlawful means whether or not it is the predominant purpose;

(3)  the acts were carried out pursuant to the agreement and the stated intention; and

(4)  there is damage caused to the plaintiff as a result.

33.  In addition to all the misrepresentations and knowledge of falsity set out in the misrepresentation cause of action, the following particulars for conspiracy are pleaded by P against Ds:

(1)  There was an agreement between Ds to deprive P of her interest in her properties and to undermine the Family Arrangement: (ASOC §9);

(2)  There was an intention to injure by unlawful means as they relied on the powers and assignments procured by D1’s fraudulent misrepresentations: (ASOC §§6-13);

(3)  The acts were carried out pursuant to the agreement and stated intention:

(a)  in that they were a family and related, D2 swore that she had acquired 50% of the beneficial and legal interest in the Locwood Flat upon payment of consideration, and D1 had a valid PoA to transfer such a property to her;

(b)  D2 assigned the Yuen Long Flat for HK$3,520,000 consideration to an unrelated third party and has not transferred any of the monies to P; and

(c)  D2 and D3 acquired the Joint Properties and the DD115 Properties without paying any good consideration and without any sale and purchase agreements: (ASOC §15).

(4)  There was damage to P in that all the Properties were assigned to D2 and D3 without any valuable consideration: (ASOC §16).

C.3.5  Breach of Fiduciary Duties

34.  In Bristol & West Building Society v Mothew [1998] 1 Ch 1, p.18, Millett LJ identified four facets of the core obligation of the fiduciary, which is “single-minded loyalty” to their principal. These are (1)  fiduciary must act in good faith; (2)  he must not make an unauthorized profit out of his trust; (3)  he must not place himself in a position where his duty and his interest may conflicts, and (4)  he may not act for his own benefit or the benefit of a third person without the informed consent of his principal.

35.  Where, in any transaction, an attorney (agent)  has benefited himself without the express approval or consent of the donor (the principal), the transaction is not void, but merely voidable: see Lo Tai Yam v. Hu Mu Simon [1997] HKLRD 588, at 592 per Stone J.

36.  Further, in Bristol and West Building Society, supra, Millett LJ said at 18:

“A fiduciary must act in good faith; he must not make a profit out of his trust; .... he may not act for his own benefit or the benefit of a third person without the informed consent of his principal.”

37.  In Tito v Waddell (No 2) [1977] Ch 106, Megarry VC noted, “the self-dealing rule is (to put it very shortly)  that if a trustee sells the trust property to himself, the sale is voidable by any beneficiary ex debito justitiae, however fair the transaction.”

38.  P’s case for breach of fiduciary duties has been pleaded in ASOC §§17-18.

C.3.6  Dishonest Assistance & Knowing Receipt

39.  Both dishonest assistance and knowing receipt are pleaded against Ds.  P says that both are equitable wrongs but are not identical. Dishonest assistance is an accessory equitable wrong whereas knowing receipt is not a form of accessory liability but has been described as “an equitable analogue of the tort of conversion because it is a proprietary wrong concerned with interference with equitable proprietary rights”, see Byers & Ors v Saudi National Bank [2024] 2 WLR 237 at §148, 151 per Lord Burrows.

C.3.6.1  Dishonest Assistance

40.  The requirements for dishonest assistance is fourfold, namely:-

(1)  breach of trust or fiduciary duty by someone other than the defendant;

(2)  the defendants’ assistance;

(3)  dishonesty; and

(4)  resulting loss, see Hui Cheung Fai v Daiwa Development & Ors (unreported, HCA 1734/2009, 8 April 2014)  at §130 per DHCJ Eugene Fung SC (as he then was).

41.  P allegedly has pleaded all the necessary elements at ASOC §20 to hold D2 and D3 liable as accessories, namely:-

(1)  D1 was a fiduciary of P;

(2)  D2 and D3 assisted because they received the Yuen Long Flat, the DD115 Properties and Joint Properties without paying any good consideration and also that D2 received a windfall of HK$3,520,000 when selling the Yuen Long Flat;

(3)  D2 and D3 were dishonest as they had actual or constructive knowledge based their intent as pleaded in ASOC §9(2)-(3)  and they assisted in the transfer of Ps properties without proper authorisation; and

(4)  P suffered loss as pleaded in ASOC §16.

C.3.6.2  Knowing Receipt

42.  Knowing receipt is where:

(1)  a defendant knowingly interferes with the equitable proprietary rights of the plaintiff by receiving or retaining, with the requisite knowledge, an asset in breach of trust or fiduciary duty, in which the plaintiff has an equitable interest, see Byers at §155(i)  per Lord Burrows; and

(2)  the requisite knowledge or state of mind is whether the receipt of trust property was said to be unconscionable, see Thanakharn Kasikorn Thai Chamkat (Mahachon)  v Akai Holdings Ltd (No. 2) (2010)  13 HKCFAR 479 at §134.

43.  P allegedly has pleaded all the necessary elements at ASOC §20 to hold D2 and D3 retained properties in which P had an equitable interest, which were obtained in breach of trust:-

(1)  D1 was a fiduciary of P;

(2)  D2 and D3 knowingly interfered because they received the Yuen Long Flat, the DD115 Properties and Joint Properties without paying any good consideration and also that D2 received a windfall of HK$3,520,000 when selling the Yuen Long Flat;

(3)  D2 and D3 had the knowledge that those were trust properties based their intent as pleaded in ASOC §9(2)-(3)  in that they were transferred without proper authorisation; and

(4)  P suffered loss as pleaded in ASOC §16.

44.  D2 has admitted to having knowledge of all the relevant events, including how the Properties were transferred into her name without consideration.  Therefore, as against D2, the issue is whether P’s intention was to gift her Properties to Ds’ family or simply only to D2.

45.  As for D3, he claims that he does not know the details of any arrangements and just signed as his father informed him that his aunt wanted to gift the Properties to their family. 

C.3.7  Lack of Consideration

46.  The principles on a total failure of consideration are trite. A consideration must (1)  be either a new benefit to the promisor or new detriment to the promisee (see §6-003, 6-004 of Chitty on Contracts (General Principles) 35^th Edition), (2)  be sufficient and need not be adequate (see §6-015 of Chitty), (3)  not be in the past (see §6-029 of Chitty), and (4)  move from the promisee at the promisor’s request (see §6-006 of Chitty).

47.  In the present case there is no dispute that there was no consideration paid as the defence is that the assignments of all the properties were an intervivos gift conditional on settlement of P’s estate duties liabilities: (Joint Undisputed Facts §11).

48.  Therefore, if the Court finds that there was no lawful gift, then it invariably follows that all the assignments made in favour to D2 and D3 are liable to be rescinded and/or set aside for lack of consideration or the proceeds are to be held on constructive trust for P as the donor of the PoA has clearly revoked the PoA and is entitled to change her intention at any time.

C.3.8  Constructive Trust

49.  The claim pleaded at ASOC §§26-30 is that P is entitled to the proceeds of properties and rental income from all of her properties which D1 admitted that he was receiving rent on. 

50.  The fallback is that even if she is not entitled to the entire period, she is entitled for the period up to the dates in which the respective properties were assigned.

C.3.9  The Law on Gifts

51.  In Ng Kit v Wu Tsun Hua & Ors [2021] HKCFI 877, DHCJ Paul Lam SC, after taking into account of Young Kin Kenneth, the Executor and Trustee of the Will of Yang Shen Sum, deceased v Lau Lan Fong Nancy, HCA 1545/2004 (6.9.2006, unreported); Halsbury’s Laws of England (5^th ed., 2014), vol. 52, §§201-270; and In re Cole, a bankrupt [1963] 1 Ch 175, summarized the relevant principles on the law on gifts at §33 as follows:-

“(a)  If a gift is claimed, the onus is on the donee to prove it.

(b)  A gift made between living persons (inter vivos)  may be defined shortly as the transfer of any property from one person to another gratuitously while the donor is alive and not in expectation of death. It is an act whereby something is voluntarily transferred from the true owner in possession with the full intention that the thing shall not return to the donor.

(c)  A gift is effective when the donor intends to make it a gift and the recipient takes the thing given and keeps it, knowing that he has done so.

(d)  As a general rule, all property, real and personal, may be the subject of gift. With certain exceptions, choses or things in actions are assignable, and may also be the subjects of gift.

(e)  A gift inter vivos may be made by various means: by deed or other instrument in writing; by delivery in cases where the subject of the gift admits of delivery; or by declaration of trust, which is the equitable equivalent of a gift.

(f)  Gifts of chattels are more often made by delivery than by deed. A gift of chattels is not complete unless accompanied by delivery. Actual delivery is not mere evidence of the gift, but is part of the gift itself. To constitute delivery, the acts must be such, or be accompanied by such words, as to be unequivocal. But actual manual delivery by the donor to the donee of a chattel is not essential. It is sufficient if the donee is put by the donor in possession of the chattel, or if the donee obtains possession with the donor's consent. Where chattels cannot be actually delivered owing to their bulk, they can be constructively delivered, for example by the delivery of the key of a warehouse in which they are stored. The delivery needs not be made at the time of the gift, delivery first and gift afterwards being as effectual as gift first and delivery afterwards.

(g)  Where a gift rests merely in promise, whether written or oral, or in unfulfilled intention, it is incomplete and imperfect, and the court will not compel the intending donor, or those claiming under him, to complete and perfect it, except in circumstances where the donor's subsequent conduct gives the donee a right to enforce the promise. If a gift is to be valid the donor must have done everything which, according to the nature of the property comprised in the gift, was necessary to be done by him in order to transfer the property and which it was in his power to do.

(h)  In order that a voluntary equitable assignment of an equitable chose or thing in action may be valid it must be in all respects complete and perfect, so that the assignee is entitled to demand payment from the trustee or holder of the fund or debt and the trustee or holder is bound to make payment to the assignee, with no further act on the assignor's part remaining to be done to perfect the assignee's title.

(i)  Save where a presumption of gift may arise, a gift between spouses or civil partners must be established in the same way as a gift between strangers; that is to say it must be made by deed or by delivery, and there must be a clear and distinct act of gift and evidence that a gift was intended, in particular when the claim is made after the death of the alleged donor.

(j)  An act showing an intention to change the ownership may constitute sufficient delivery, notwithstanding that the chattels continued to be used by the spouses or civil partners in common: the act, however, must be such or be accompanied by such words as to be unequivocal; for if the facts are equally consistent with an intention to make an absolute gift of the property and an intention to allow the other spouse or civil partner to have the use of it, then title does not pass to that other spouse or civil partner; and

(k)  Prima facie the donor of a completed gift is not entitled to revoke it nor to recall any payment made voluntarily.”

52.  I find the above passage helpful and would respectfully adopt the principles stated therein.

53.  As said, the issue of the alleged gift of the Properties to D1 being a conditional gift / imperfect gift was raised by P for the first time under P’s Opening.  P submits that she does not need to amend her pleadings in order to attack Ds’ own case as Ds have the burden to prove that the so called gift was valid and perfected.  Further, P says that Ds are not prejudiced.

54.  I shall deal with the laws on conditional gifts and incomplete gifts in the later part of the judgment when I discuss the Gift Issue. 

C.3.10  The law on assessing undocumented conversations evidence based on memory

55.  This case involves some important conversations between P and D1 in the presence of D2 on or about 13 August 2012 when P stayed at D1 and D2’s home.  There was no notes or documents which recorded those conversations.  It was not until years later that the parties tried to recall those conversations: first in the pleadings in 2016, later in their witness statements (“WS”)  in 2020; and lastly in the witness box during the trial in 2025. P’s case depends almost entirely on her memory.  What makes it more difficult in this case is the fact that both P and D1 are in their 90s by the time when they gave evidence in court.  They essentially are trying to remember some conversations during one summer morning over the breakfast table more than 12 years ago.  Inevitably, both of their evidence insofar as they are purely relying on their memories on those conversations, without the aid of any contemporaneous documents in support, are inconsistent, confusing and unreliable. This also applies in the case of D2 who is now in her 80s and who is apparently not in good health.  

56.  Thus, how the Court deals with such evidence is important.  I find a great deal of assistance from the judgment of Yu Man Fung Alice v Chiau Sing Chi Stephen [2020] HKCFI 2923, unreported, (23.12.2020; Coleman J)  where the Court dealt with a similar situation and stated the following:-

“53. This case depends in large part on the parties’ evidence based on what was said in relevant conversations, indeed primarily only one conversation (wherever or in whatever form it took place), which occurred as long as 18 years ago. But evidence based on recollection of what was said in an undocumented conversation which occurred as long ago is inherently problematic. It is, however, perhaps only in the last decade or so that courts have consistently properly recognised the fallibility and potential unreliability of human memory.

54. In Gestmin SGPA SA v Credit Suisse (UK)  Ltd [2013] EWHC 3560 (Comm)  at §§16-20, Leggatt J made certain observations on the point, to which he also returned in the Blue v Ashley case. Those observations have commended themselves to a number of other judges, including judges in Hong Kong: see, for example, Sarah Sally Chan-Kent v Chim Sau Ching [2019] HKCFI 3066 at §45.

55. In the Blue v Ashley case at §68, Leggatt J also referred to a paper published by two academic psychologists, Howe and Knott ‘The fallibility of memory in judicial processes: Lessons from the past and their modern consequences’ (2015)  Memory, 23, 633 at 651-3. He also footnoted, but did not make any extensive reference to, the book by the psychologist Schacter ‘How the Mind Forgets and Remembers: The Seven Sins of Memory’ (2001).

56. The various judicial and academic observations would bear repetition at some length, but I shall attempt to restate them in more compressed form:-

(1)  While everyone knows that memory is fallible, we are often unaware of the full extent to which our own and other people’s memories are unreliable;

(2)  Common and related errors include supposing that (a)  the stronger or more vivid a recollection, the more likely it is to be accurate, and (b)  the more confident a person is of their recollection, the more likely it is to be accurate;

(3)  But memory is not a mental record fixed at the time of the experience, then fading gradually over time. So, it is a misconception that memory operates like a camera or video device making a fixed and chronological record of an experience;

(4)  Rather, memories are fluid and malleable, being constantly rewritten whenever they are retrieved;

(5)  What gets encoded into memory in the first place is determined by what a person attends to, what they have already stored in memory, and their expectations, needs and emotional state;

(6)  This information is subsequently integrated or consolidated with other information already stored in a person’s long-term, autobiographical memory;

(7)  What is subsequently retrieved from that memory is determined by the same multitude of factors, and additionally by what drives the recollection of the event;

(8)  What is retold about an experience depends on the person to whom one is talking, and what the purpose is of remembering that particular event;

(9)  What gets remembered is reconstructed from the remnants of what was originally stored, taking account of whatever has already been forgotten or any interference from any new experiences across the interval between storing and retrieving a particular experience or event;

(10)  So the content of memory for experiences involves active manipulation, integration with pre-existing information, and reconstruction of that information;

(11)  Memory is particularly vulnerable to interference and alteration when a person is presented with new information or suggestions about an event in circumstances where his or her memory of it is already weak due to the passage of time;

(12)  Therefore, and in addition, the process of civil litigation itself subjects the memories of witnesses to powerful biases;

(13)  First, such witnesses often have a stake in a particular version of events. This is obvious where the witness is a party or has some type of loyalty to a party to the proceedings;

(14)  Secondly, other subtler influences come into play, perhaps from the process of preparing a witness statement and coming to court to give evidence for one side in the dispute. The natural desire to assist, or not prejudice, the party calling the witness, and the desire to give a good impression in a public forum, can be significant (even if unconscious)  motivating forces;

(15)  Considerable interference with memory is also introduced in civil litigation by the procedure of preparing for trial. A witness is asked to make a statement, often (as in this case)  when a long time has already elapsed since the relevant events. The statement is usually drafted for a witness by a lawyer who is inevitably conscious of the significance for the issues of the case of what the witness does or does not say;

(16)  The witness statement is made after the witness’s memory has been ‘refreshed’ by reading documents. Yet those documents themselves often include statements of case and other argumentative material, as well as documents not previously seen by the witness, or documents which came into existence after the events which the witness is being asked to recall;

(17)  The witness statement may go through several iterations before it is finalised;

(18)  Months or even years later, the witness will be asked to re-read his or her statement and review documents again before giving evidence in court;

(19)  The effect of the process is to establish in the mind of the witness the matters recorded in his or her own statement and other written material, whether they be in fact true or false, and to cause the witness’s memory of events to be based increasingly on this material and later interpretations of it, rather than on the original experience of the events;

(20)  There is also a powerful tendency for people to remember past events concerning themselves in a self-enhancing light; and

(21)  It is also not uncommon for witnesses to deceive themselves in what are essentially honest but nonetheless false recollections.

57. These matters do not mean that human memory is simply unreliable. Often, memory is reliable. However, it is also fallible, and so when assessing reliability, it is important to have in mind what causes that fallibility.

58. Therefore, in a case such as the present case, it seems to me that a sensible approach may be to limit (or at least be cautious about)  the reliance placed on the witnesses’ individual recollections of what was said in conversations, and to give more weight and make factual findings on inferences drawn from any documentary evidence as well as known or probable facts, in particular objective facts.

59.  Documents which are likely to be helpful are those contemporaneous documents which may describe not only what was going on, but also the motivation and state of mind of those concerned. Documents passing between the parties themselves can be important, but in some cases ‘internal’ documentation may also greatly assist.”

57.  Based on the principles laid down in the above case, in such situation, any contemporaneous documents, as well as known or probable facts (in particular objective facts)  would be preferred than to rely on the witnesses’ individual recollections of what was said in conversations: See also Macau First Universal International Limited v Ding Xiao Hong, unreported, HCA 992/2010 (20.8.2014; Au-Yeung J)  at §§48-52. 

58.  Further, in my judgment, in such cases, evidence from independent witnesses who have no vested interests in the outcome of the case would become more important and pertinent than to merely rely on the memory of the interested parties.

C.4  Assessment of the Parties’ Factual Witnesses’ Evidence

59.  In this case, when considering the parties’ key witnesses evidence, I have taken into account of the fact P was 83 years old at the time when the alleged fraudulent misrepresentations were made by D1 to her.  D1 was about 6 years younger than her.  By the time of trial, P has just turned 96. D1 was 90 and D2 was 83. 

60.  As I have observed during the trial, all of them were not in good health.  Their mind was clearly not sharp nor clear.  They all have difficulties in recalling the precise conversations which took place more than 12 years ago.  Their thinking and recollection of the was clearly confused and muddled.  They often mumbled words to themselves while being cross-examined.  They all were readily willing to agree to suggestions made to them by counsel on the other side during cross-examination.  Overall, in my view, all these 3 elderly witnesses gave rather confusing, inconsistent and unreliable accounts about the conversations which took place on 13 August 2012.  Their oral evidence also departed from their pleaded case and WS in material aspects. In P’s case, they were completely contradictory to the Attendance Note written by YS Lau on the day after those conversations and the subsequent Executed Documents prepared by YSL on her behalf and signed by her a week later. 

61.  Thus, I do not think it is safe for the Court to purely rely on the 3 elderly witnesses’ memory on the unrecorded conversations which took place over 12 years ago as the foundation of any factual findings in this case.  I prefer to rely on the contemporaneous documents like the Attendance Note, the Will and the Executed Documents.  In my view, they are objective evidence which more likely able to reflect the true intentions of the parties at the time.  I also would give more weight to the evidence of YS Lau and Lee who have no vested interests in the outcome of this case as they have in my view provided a more cogent and logical account of what took place in the meetings at the office of YSL on 14 and 21 August 2012.  More importantly, their evidence is entirely consistent with the contemporaneous documents.   

62.  As said, I consider that P’s case based on the various causes of action against Ds stands or falls with P being able to successfully establish the alleged fraudulent misrepresentations made by D1.  They will be dealt with under the Misrepresentation Issue.  The other claims like the alternative case for income and rents from DD115 Land and Section B of Lot 667 of Property II, which was introduced under the ASOC some 5 years after the SOC was served, was relatively minor and unimportant.  P’s counsel reliance on the unpleaded issue of “conditional gift” only came very late in the day during the trial only.  I shall deal with those issues separately under different headings.

C.5  The Misrepresentation Issue 

63.  P’s claim of fraudulent misrepresentation against D1 and conspiracy to defraud with D2 & D3 can be found in §§6-7 of ASOC. The passages underlined below did not appear in the SOC and were added in July 2023 when the SOC was amended and become the ASOC:-

“6. On or about 10 August 2012, the Plaintiff returned to Hong Kong for a short visit and was invited to stay with her younger brother, the 1^st Defendant whereby she indicated to the 1^st Defendant that:-

(1)  She wished to make arrangements for her affairs in Hong Kong due to her age and as it was difficult to manage the Joint Properties;

(2)  She wished to make the 1^st Defendant's daughters joint tenants to the Yuen Long Flat so that when she passes away, the 1^st Defendant's daughters would be the owners; and

(3)  For the avoidance of doubt, she never indicated that she would be bequeathing her entire property portfolio to the 1^st and 2^nd Defendants, which consists of inter alia the Joint Properties, the Yuen Long Flat and the DD 115 Land.

7. The 1^st Defendant made the following representations in response:

(1)  As the Plaintiff was elderly and not living in Hong Kong, it would be better for someone to manage all her properties;

(2)  He represented that he would take care as her agent in Hong Kong of everything including all the expenses and estate duties so the plaintiff would not have to be concerned; and

(3) They would need to open a joint bank account so that any accrued income from rental could be deposited there, and go to solicitors firm to execute some documents.”  

64.  As mentioned, the main problem with P’s above pleaded case is that the alleged conversations on 13 August 2012 were not recorded anywhere and that there was no corroborating evidence that the alleged misrepresentations were ever made by D1.  Thus, P’s case on the alleged fraudulent misrepresentation depends entirely on the accuracy of her recollection of the undocumented conversations more than 12 years ago.  This is to be contrasted with the contemporaneous Attendance Note taken by her solicitor YS Lau, when P attended the office of YSL on the next day.  It shows exactly the opposite as what P now claims under the ASOC.  The Attendance Note is totally in line with Ds’ case that P intended to gift the Properties to D1 and his family members.

C.5.1  P’s Evidence

65.  As highlighted by Ds’ counsel Mr Leo Wong in Ds’ Closing Submissions (“Ds’ Closing”), P’s account on the alleged misrepresentation is full of inconsistencies. 

66.  As pleaded in the ASOC, allegedly, D1 made the representation to P that it would be “better off for someone to manage all her properties” in Hong Kong and that he would take care as her agent in Hong Kong of everything including “all the expense and estate duties”: §§7 of ASOC.

67.  In P’s WS dated 29 September 2020, which contents were adopted as part of her evidence when she testified at trial, her case changed considerably in that she alleges that D1 only represented to her that he would help P to manage the “Yuen Long Flat” only: (§§22-27 of P’s WS).  Nothing was mentioned about requesting D1 to manage her other Properties.

68.  The allegation that P and D1 had talked about adding his daughter’s name to the Yuen Long Flat as joint tenants only appeared for the first time in P’s WS (which was filed in September 2020), long after the SOC was filed. This is in contrast to all the pre-2020 documents filed on behalf of P in various proceedings including the original SOC, the statutory declarations and the affirmations made in HCMP 1505/2014, this account was never mentioned.  Before that, P’s stance had all along been she had no intention of making any gift to D1 or his family members at all.

69.  However, the above is very different from the account she gave at trial.  During cross-examination, P was taken to §23 of her WS where she did not mention about how D1 responded when she made the suggestion that the daughter’s name be added to the Yuen Long Flat.  P replied that she only told D1’s daughter her intention in private when D1 was not present.  She had not told D1 her intention regarding the joint tenancy of the Yuen Long Flat at any time. 

70.  When asked about exactly how D1 had misrepresented to her regarding the handling of the Properties, the only short answer that P managed to give was she had asked D1 to help with the management (of the Properties)  (“我叫佢打理囉”). She did not give any further details as to what representations D1 might have made to her which was considered as untrue and/or fraudulent.

71.  This answer of her requesting D1 to manage the Properties on her behalf then became P’s “central theme” in her evidence as she had repeated this phrase multiple times as if she was reading it out from a prepared script.  When it was suggested to her that the answer given by her was too vague and general and whether she really understood the detailed accounts she gave in her WS, P replied that she could not remember (“唔記得”).

72.  When the only paragraph in her WS which contained the allegations of misrepresentation (§25)  was read to her under cross-examination, P appeared to be confused and hesitated to confirm that it represented her understanding.

73.  When asked to explain why estate duty was a relevant issue to the Yuen Long Flat, she could not give any satisfactory answer.

74.  Most importantly, P was not able to explain in her evidence, why when her intention was for D1 to manage her Properties only, she was willing to sign all the Executed Documents subsequently at YSL which, according to YS Lau, was allegedly prepared according to her instructions.

75.  Another matter which does not support P’s case of misrepresentation is the fact that she had brought with her the original title deeds of some of the Properties (together with some other copied title deeds)  when she met D1 at his home.  They were shown to D1. Subsequently, those title deeds were handed to YS Lau at YSL’s office.  In my view, the handing over of the original copies of the title deed of the Properties is not consistent with P’s case that she had only intended D1 to manage the Properties for her and not as gift.

76.  Overall, I find P’s evidence on the Misrepresentation Issue vague, confusing and inconsistent.  They fell far short in establishing the very serious allegations and high threshold of fraudulent misrepresentation and conspiracy to defraud made against Ds under the ASOC.  

77.  In the circumstances, I have no hesitation to dismiss P’s case on this issue based on her far from satisfactory evidence which was solely based on her memory of the conversations she had with D1 on 13 August 2012 without any contemporaneous documents in support.

78.  Likewise, her claims based on the causes of action of breach of fiduciary duties, dishonest assistance and knowing receipt, lack of consideration and construction trust, which entirely depends on whether her evidence on the undocumented conversations would be accepted, must fail also.

C.5.2  Raymond Cheng’s Evidence 

79.  Raymond Cheng (PW2)  who accompanied P for the visit to Hong Kong from US in August 2012 was not present during the undocumented conversations between P and D1 on 13 August nor was he present at YSL’s office when P attended the office of YSL on 14 and 21 August. Thus, his evidence does not assist P’s case in any way.

C.5.3  D1’s Evidence

80.  While I find D1’s evidence at times was confusing and not consistent, particularly when it comes to the land properties inherited from their grandfather and pass onto P via Lau Yee Pang (“LYP”), one of the most important matters that he was able to maintain throughout his evidence consistently is the fact that during the undocumented conversations on 13 August 2012, P said to him that she wanted to give the Properties to him.  It was according to those understanding that he had contacted YS Lau and arranged the meeting on the next day with P at YSL’s office. 

81.  Another thing which D1 was adamant throughout his evidence is the fact that he disagreed with the suggestion that P had only asked him to manage the Properties rather than passed them to him as gifts.  On this part of the evidence, I find D1’s evidence remained unshaken and consistent throughout.  Most importantly, on this crucial part of his evidence, his case is entirely supported by the contemporaneous documents like the Attendance Note, the Will and the Executed Documents.  They are also supported by the evidence of YS Lau and Lee who are not parties to the case and have no reason to lie about their involvement. 

82.  As to the “condition” that he has agreed to pay the estate duties of the Properties, D1 has never denied this either in his WS or evidence.  I shall come back to this matter when I discuss P’s unpleaded case of conditional / incomplete gift below.  

C.5.4  D2’s Evidence

83.  Equally, I find D2’s evidence not entirely satisfactory as she at times appears to be confused and not clear about what were asked of her.  It is also clear from her answers under cross-examination that she was not able to remember details of the conversations which took place between P and D1 on 13 August 2012.  But on the crucial issue of whether the Properties were given to D1 / her as gift, D2 was very clear and remained consistent throughout her evidence that they were so intended by P.  

C.5.5  D3’s Evidence

84.  It has been agreed by both sides that D3’s evidence is brief and of limited relevance.  He clearly has never made any representation to P or did he know what took place between P and D1/ D2 at their home on 13 August 2012.  He only found out from his parents at a later date that P had wanted to pass the title of Land 115 to his name. It was done through D1 by using the PoA.  He was asked by his father to go to the solicitors’ office to complete the assignment in July 2013.  Hence, D3’s evidence is inconsequential to the outcome of this case.

C.6  The Execution Issue

85.  Fortunately, my factual finding in this case does not need to depend on P’s memory (or that of D1 and D2’s for that matter)  on the undocumented conversations on 13 August 2012 as the events which subsequently took place at YSL on 14 August 2012 and the Excuted Documents signed by P at YSL on 21 August 2012 have, in my view, clearly demonstrated the true intention of the parties at the time.  I find that they are contemporaneous documents which came into existence as a result of the instructions given by P to YS Lau on 14 August at YSL’s office.

C.6.1  Events happened at YSL’s office 

86.  It is not in dispute that P had visited the office of YSL twice in August 2012.  First time was on 14 August when she went there with D1 and D2 where instructions were taken by YS Lau from her. Second time was a week later on 21 August (also with D1 and D2)  when she was attended by Lee, a very experienced legal/conveyancing clerk who worked in YSL. On that occasion, P signed and executed a number of legal documents prepared by Lee on the direction of his employer YS Lau.

87.  It is also not in dispute that the handling solicitor YS Lau was someone known to P as he was a distant relative of P and D1.  However, at that time P had not met YS Lau for over 20 years. Thus, P gave YS Lau a red packet when they met again on 14 August 2012 as was customary for people of her age to do.

88.  While the account given by P and Ds’ witnesses (in particular YS Lau and Lee)  as to what happened at YSL’s office might be different, there are a number of contemporaneous documents which came into existence at or around that time which tell a more consistent story.  They included (a)  the Attendance Note prepared by YS Lau after instructions were taken by him from P; (b)  the Will prepared by YS Lau according to P’s instructions on 14 August 2012; and (c)  the Executed Documents signed by P on 21 August 2012. 

89.  In my view, the above contemporaneous documents directly contradicted P’s case of fraudulent misrepresentation and/or conspiracy to defraud, etc.  On the other hand, they are entirely consistent with Ds’ case that the Properties were given by P to Ds by way of gift.

C.6.2  The Attendance Note

90.  In my judgment, the 2-page handwritten Attendance Note prepared by YS Lau (which was written in English)  is a very crucial piece of evidence in this case.  It recorded down the background to the case and the alleged instructions given by P to YS Lau at the meeting on 14 August 2012.  YS Lau testified that it was written by him immediately after the meeting he had with P.  It stated clearly the date and time of when the meeting started (at 3:30 pm)  and when did it end (at 4:30 pm).  It also recorded down the follow-up actions YS Lau took and the instructions he gave to his staff subsequent to the meeting.

91.  I think it is worth setting out the entire contents of the Attendance Note in full here due to its importance:-

“14/8/12 3:30pm

- Meeting with Lau Yu Fun, Lau Sau Man, Tsang Wai Fan

- Man said she just returned from USA, needed to wind up her assets in HK by giving them to Lau Yu Fun

- She first handed me a red-packet & I said at my age I still get a red-packet.

- I asked her what she wanted to do with her assets & she said she would give to Lau Yu Fun but the problem is it she would return to USA soon.

- I asked her what the properties are? She said one in Yuen Long called 利發楼, one in Tin Shui Wai co-owned by her with Hui Siu Kwong & other lands originated from 二伯.

- 利發楼 is in her own name but Tin Shui Wai Flat is in the joint name with Hui Siu Kwong, also some lands are also in the joint name of both.

- I said if the ppties (properties)  are under the joint names, the interest has to be severed before she could deal with it. We need to issue a notice of severance to sever the joint tenancy & to register in the land registry & also notify the other joint co-tenant.

- I need all the properties description fully before I could work on it & that would take me sometime to do it for transit.

- She said the other co-owner, is the son of Lau Sau Tong, named Hui Siu Kwong, is still occupying the co-owner property at Flat B, 11/F Block 5, Locwood Ct. She did not like him & wanted to sever the J/T as soon as possible.

- I asked her how long would she stay in HK & she said she would leave soon. I said I need the full list of ppties (properties)  & to conduct land search & to prepare deeds of gift to Fun. She asked me if there could have other way to dispense with her attending execution.

- I advised her she may execute a general power of attorney to Fun, but such power is very extensive, Fun could deal with anything what Man could do, even selling her underwear.

- She said she do not mind since everything is to Lau Yu Fun.

- She also said that she don’t have to return to HK for gifting the properties.

- I said once I have obtained the gift lists, I could prepare the documents.

- The documents I need to prepare

- General PA to Lau Yue Fun

- Deed of severance

- Agreement for S & P and Assignment of 利發楼 and Locwood flat

- [Agreement for S & P and Assignment of] other lands

- I said see what I could do in the meantime. Man said Fun would give me a list. He would give it to Sandra.

- Fun gave me (1)  Flat B & Roof, 11/F, Lee Fat House, Yuen Long,

NT

(2)  Flat B, 11/F, Block 5, Locwood Ct, Kingswood Villas, Tin Shui Wai

- I said I would prepare them ASAP.

- ended: 4:30pm

- Afterwards, I introduce them to Mr. Lee Cheuk Sum, my conveyancing clerk. I told them that Mr. Lee would attend them if I am not in the office.

-  I instructed Sandra to conduct a land search on 利發楼 first & opened the file & pass to Mr. Lee for further handling.  Then do the rest of the properties.”

92.  P, through her legal team, disputed that the Attendance Note was prepared by YS Lau contemporaneously and/or immediately after the meeting.  P boldly claimed (without any evidence in support)  that the contents of the Attendance Note were made up by YS Lau years after the meeting and it was a fabricated document.

93.  Through her counsel Mr Deng, P made the very bold (but bald)  assertion in court when YS Lau was being cross-examined by him that the witness lied about this whole event and made up the Attendance Note in order to conspire together with Ds against P.  Regrettably, such serious accusation made against an experienced solicitor was never pleaded by P in the ASOC or the AR.  The closest it got to any wrongdoings on the part of the solicitor suggested in the pleadings is the averment that YS Lau and D1 was “on the same side of the internal conflict between the Lau family members”: (See AR §14).

94.  I should note here that P’s former solicitors (Messrs Cheung & Liu)  had inspected the original copy of the Attendance Note back in December 2020.  Nothing suspicious was found.  Nonetheless, P revived such unfounded allegation against YS Lau at the PTR before me in December 2025 and has since relentlessly tried to challenge the authenticity of this document.  Further, P and her lawyers tried multiple times to exclude a copy of the Attendance Note to be included in the trial bundle.  Yet each time the challenge was proved to be unsuccessful.  But that did not stop P and her legal team to ask for the inspection of the original document just prior to the trial.  Again, nothing suspicious was found.

95.  The Court has had the opportunity to examine the original copy of the Attendance Note (“Exhibit D-1”)  during the trial.  The 2-page document was written on some “recycled” photocopied papers showing certain pages of an old edition of the White Book (pp 240-242 on the discussion on Order 14 at §§14/4/10 to 14/4/14).  In my view, it will not be difficult for P’s legal team to find out which edition of the White Book it was and whether that edition existed at the time when YS Lau said he wrote the Attendance Note.  Yet nothing was said about this during the trial or at any time at all despite the repeated attempts to inspect the original of that document.

96.  Despite of all the above, P still insisted to challenge the authenticity of the Attendance Note during the trial. At the end, those attempts proved to be futile.

C.6.3  YS Lau’s Evidence

97.  The extremely tenuous basis which P’s counsel suggested YS Lau was part of the conspiracy is based on an affirmation filed by D2 in HCMP 1505/2014 on 31 March 2015[17]. There, D2 stated that P offered to sell her 50% share in Locwood Flat to her at HK$1.5 million.  D2 said she found the price was good, so she agreed to buy.

98.  It was put to YS Lau that, because he was the handling solicitor for D2 in those proceedings, and had the Attendance Note existed, he would not have helped/allowed D2 to make the above allegation which was untrue as a matter of fact. 

99.  YS Lau disagreed. He said that when the affirmation was prepared, he knew and remembered clearly that P intended to gift all the Properties in Hong Kong (including the Locwood Flat)  to Ds.  Therefore, there was no need for him to refer to the Attendance Note. 

100.  He also did not consider the statement made by D2 being untrue.  The relevant sale and purchase agreement and assignment relating to the transaction expressly provided for a consideration of HK$1.5 million.  Therefore, the position stated in the affirmation was consistent with the conveyancing documents.

101.  I agree with the following submissions made by Ds’ counsel that YS Lau was justified to take such a view:-

(a)  It is his evidence that P told him in unequivocal terms that she intended to gift all the Properties to Ds (which include the Locwood Flat);

(b)  P also instructed that she did not mind how the transactions were to be effected because ultimately the Properties were meant to be gifted to D1;

(c)  The implication must be that she was happy to let D1 to decide whatever form the gift might take, under the extensive power derived from the PoA;

(d)  P herself executed documents to have the Yuen Long Flat transferred to D2 in the exact same way, ie in the form of sale and purchase with purported consideration, whereas between P and D2 it was intended as a gift and no consideration would pass between them;

(e)  Under such arrangement (sale and purchase instead of by way of deed of gift), it was natural for the parties to represent to a third party that the stated consideration already passed between them, instead of revealing their true bargain (ie gift). The purpose is to avoid requisition on title if the assignee was to sell the property in the future;

(f)  With that being the agreed basis which the parties (here P and D2)  assumed to be true (by convention), what D2 said in the affirmation could not be regarded as false; and

(g)  Both YS Lau and Lee said it was a common conveyancing practice for parties making a gift under the sale and purchase form through a purported consideration. There is no evidence produced by P to the contrary.

102.  In any event, as a matter of logic, I simply cannot see how the wrongly stated consideration of HK$1.5 million of the Locwood Flat in D2’s affirmation filed in March 2015 could prove that the Attendance Note did not exist at the time when D2 made the affirmation and that it must be a subsequent fabrication.  In my view, the two matters simply do not have any direct connection at all.

103.  I have the benefit of hearing the oral evidence given by YS Lau in court.  He is a very experienced solicitor in his 70s.  He is a partner of the law firm which bore his own name and of which he has been running for many years.  He gave his evidence in a direct and no nonsense manner.  He has not tried to avoid any difficult questions put to him by P’s counsel during cross-examination.  He also tried to explain why the Executed Documents were prepared in such a manner as he did, given P’s specific instructions that she wished to leave Hong Kong as soon as possible and did not want to return again for “gifting the properties”.  While with hindsight one may criticize the way the gift was effected, there is nothing in YS Lau’s evidence which suggests to me that he was doing anything other than trying his best to carry out his job as a solicitor professionally by strictly following the wishes and instructions of his client, namely, P.  Further, there is no evidence to suggest that he or his firm would receive any financial benefit other than the usual fees they would charge for the conveyancing transactions. I simply cannot imagine that he would risk losing his professional reputation (and possible livelihood)  to conspire together with Ds to try to defraud P by making up the Attendance Note in a relatively minor and ordinary conveyancing transaction. In my judgment, that is highly improbable.

104.  I find this whole episode most unfortunate as very serious accusations have been made by P through her counsel against a very experienced solicitor when there was nothing but pure conjectures to support such grave accusations.  It is most regrettable that P’s counsel saw fit to make those unpleaded and unfounded accusations against a solicitor in court when there was no tenable basis to do so.  

105.  In the aforestated premises, I find the Attendance Note was written by YS Lau on 14 August 2012 on the occasion when P attended his office.  There is no doubt in my mind that the Attendance Note has accurately recorded the instructions given by P to him and his firm at the time. As a result, legal documents were prepared according to those instructions.  In my judgment, based on the contents of the Attendance Note, there is no question that P had intended to gift the Properties to Ds at the time. There is also no doubt in my mind that P has subsequently changed her mind. This explains why she and her legal team had tried so hard to exclude the Attendance Note from the evidence prior to the trial.  In my view, those futile attempts and the serious allegations made against YS Lau were both unnecessary and uncalled for as it is beyond any shadow of doubt that the Attendance Note was genuine and it has accurately reflected P’s true intention to gift the Properties in Hong Kong to D1 and his family at the time.

106.  Of course whether things could have done better or more direct, like by using a deed of gift, instead of using the PoA and other legal instruments, is up for debate.  But it was a judgement call made by YS Lau at the time, based on the specific instructions from P that she wanted to effect the gift of the Properties to D1 as soon as possible and before she left Hong Kong for the US.  However, what P cannot do is try to “undo” the gift by making the unfounded allegation that the Attendance Note was a fraudulent document. 

C.7  The Will   

107.  When P first attended YSL’s office on 14 August 2012, she executed the Will which was witnessed by YS Lau and one Ms Yeung who was a clerk working for YSL at the time.  Under the Will, she bequeathed all her Properties in Hong Kong to D1 and D3 in equal shares.  D1 and D3 were also named as co-executors of the Will[18].

108.  P received the original copy of the Will before she left YSL on that day.

109.  YS Lau stated in evidence that he had prepared the Will according to the instructions given by P.  P on the other hand said that she had no idea what was stated in the Will.  She even claimed that she did not know what the word “will” mean and what that document was about.

110.  I do not accept P’s evidence on this at all.  As testified by YS Lau, P was a relatively healthy and robust 83 years old at the time when she made the Will back in August 2012.  By that time, she had already lived in the US for over 40 years.  She also had an office job that required her to use basic English.  She said she could read newspapers in English.  It is therefore most unlikely that she did not even know the meaning of the word “will” as an instrument of testamentary disposition when she signed the document at YSL on 14 August 2012.

111.  Significantly, although the 2-page Will was written in English, there was a signature clause at the end which P had placed her signature next to.  It specifically stated that following:

“SIGNED by the abovenamed Lau Sau Man as her last Will (the same having been truly interpreted to her in Cantonese dialect of the Chinese language by the undersigned Lau Yue Sum who understands both the English and Chinese languages and the said Lau Sau Man appeared thoroughly to understand this Will and to approve the contents thereof)  in the presence of us both present at the same time who at her request in her presence and in the presence of each other have hereunto subscribed our names as witnesses.”

112.  Underneath the above clause, besides the signatures of YS Lau and Ms Yeung, the clerk at YSL who had witnessed the signing of the Will, there was an additional signature of YS Lau under the words “INTERPRETED by:-”.  That means the contents of the Will had been interpreted by YS Lau to P.  I do not believe that YS Lau would put his signature to the “interpretation clause” if he had not in fact interpreted the contents to P, bearing in mind that it was witnessed by his clerk Ms Yeung.  

113.  I simply do not see how P can now argue that she did not know what she was signing when she put her signature in the Will next to the signature clause.   

114.  More importantly, P agreed that the original copy of the Will was provided to her on 14 August 2012, the date she executed the document.  However, it took more than 4 years for P to come to court to claim that the Will did not reflect her true intention.  She failed to provide any plausible explanation as to why it took her all that time to dispute the unequivocal contents of the Will.  No attempts were ever made to try to reconcile her case (that she did not intend to gift the Properties to D1)  with the contents of the Will which she had signed.  There was simply no mention of the Will in her WS. 

115.  In the circumstances, I find the Will executed by P on 14 August 2012 has accurately reflected her true intention at the time that she wanted to gift the Properties to Ds. 

C.8  The Executed Documents

116.  In my judgment, the Executed Documents also support Ds’ case that P had intended to gift the Properties to Ds, in accordance with the instructions of P as accurately recorded by YS Lau in the Attendance Note.

117.  For example, the notices to sever joint tenancy in the Locwood Flat with Hui were in line with YS Lau’s advice (as recorded in the Attendance Note)  so as to allow D1 to deal that particular property.

118.  The S&P agreement, confirmation and assignment relating to the Yuen Long Flat reflected the scheme of making an unconditional gift of that property by P to D2.

119.  It is important to note that P had put her signature on all the Executed Documents on 21 August 2012 when she attended YSL’s office for that purpose.  This shows that P must have intended to gift all the Properties to Ds as she had instructed YS Lau to do in their meeting on 14 August 2012.

120.  However, P now says that she did not know nor approve the Executed Documents.  She alleges that she was misled as to the effects of the documents she signed.

121.  In the ASOC, P alleges that no one from YS Lau or D1 has ever explained or interpreted the contents of the executed documents to her when she signed and executed them at YSL on 21 August 2012.  She did not ask any question because she relied on and believed D1’s representation that the documents were for the purpose of facilitating the management of the Properties and that she had full trust and confidence in D1 as he was her brother and YSL was run by a distant relative: (§8(b)-(c)  of ASOC).

122.  In P’s WS, she claims that Lee did not explain anything about the documents to her.  It was D1 who told her generally that documents she signed would allow him to manage the Yuen Long Flat and it would automatically transfer when she passes away: (§29(2)  of P’s WS).

123.  However, in her oral evidence, P said that D1 was not present when the Executed Documents were signed.

C.8.1  Lee’s Evidence

124.  It is clear that P’s evidence on the execution of documents was in direct conflict with those given by YS Lau and Lee.

125.  YS Lau in his WS stated that before P signed the Executed Documents on 21 August 2012, Lee had explained the contents of each of those documents to P and the legal effects of them.  P had no question about them before she signed.

126.  Lee in his WS stated how he had personally handled the conveyancing matters after receiving instructions from his boss YS Lau on 14 August 2012.  He had only briefly met P on 14 August 2012 at the end of his boss’s meeting with P, D1 and D2.  Lee had never met P prior to that date.

127.  Lee said on 21 August 2012, he was the person who had attended P, D1 and D2 as YS Lau was out of the office. After settling them down at a small conference room, Lee went back to his seat to fetch the file. Because P said she needed to go back to the US after dealing with the Properties, she told Lee that she had already instructed YS Lau to prepare the PoA for her to appoint D1 as her attorney.  Even though Lee had prepared the PoA prior to the meeting in accordance with the direction of his boss, Lee took the trouble to explain the two types of PoA to P.  For the general PoA which Lee had prepared for P, Lee explained to her that this would give tremendous power to the attorney and she should appoint a person whom she has complete trust to fill that role.  Lee emphasized to P that the attorney can sell, mortgage, rent out and gift any of her Properties as he likes once the PoA is signed.  

128.  P replied to him that D1 was her close family member of whom she has complete trust. Lee then explained in details the legal effects of the PoA to her: (Lee’s WS §5).

129.  Lee also explained the contents of the S&P agreement, the notice of severance, the purported consideration to the transfer (even though between P and D2 it was in fact a gift)  and other details of the legal documents to both P and D2. They both acknowledged that they understood the contents before they signed them: (Lee’s WS §6).

130.  Lee was also very cautious when asking P to execute the PoA as he recognized that it was a very important document. Hence, he asked a solicitor by the name of Shum Kwan Ming (岑君銘)  (“Shum”)  who was working at YSL at the time to witness the signing.  Lee knew Shum was a very meticulous lawyer.  He heard Shum explained the contents of the PoA to P and asked if she understood them before inviting P to sign on the document: (Lee’s WS §10).

131.  Despite the lengthy cross-examination by P’s counsel, I find Lee’s evidence remained unshaken and cogent.  As a legal clerk with experience of almost 50 years (he has worked as a legal clerk in different solicitor firms since 1976 and has been with YSL since 2005), I have no reason to doubt any part of his evidence when it comes to how he had prepared the PoA and the other Executed Documents.  I also have no reason to doubt that he had carefully and meticulously explained the contents of all the legal documents to P before she signed them.  The fact that Lee had taken the trouble to ask Shum to witness the signing of the PoA and have it explained to P one more time demonstrates to me that Lee was a very cautious and conscientious clerk.  I accept that the execution of the documents, including the explanations given by Lee and Shum, took slightly more than an hour as testified by Lee.  I do not accept that it only took 10 to 15 minutes as claimed by P in her evidence.  As Lee has no vested interests in the transactions between P and Ds (and none was suggested to him during cross-examination), there is no reason why Lee would lie about what took place on 21 August 2012 when P executed the PoA and other legal documents.  I simply do not see any reason why Lee or his firm would act without following P’s instructions and would act directly against her interests.  

132.  In conclusion, I find it is inherently improbable that YS Lau and Lee would have conspired with Ds together to defraud P.  I find that has never happened and was mere unfounded accusations made up by P and her legal team in order to try to get her out of the gift she made to Ds in August 2012.  I therefore have no hesitation to reject P’s case on the Execution Issue and accept the evidence given by YS Lau and Lee.

C.9  The Gift Issue

C.9.1  Taped telephone conversation between P & D1 in August 2016

133.  Besides the above documents, another important piece of evidence which indicates P’s intention at the material time when the gift was made is a taped telephone conversation adduced by P.  According to P, the conversation took place in or around August 2016, just a few months before the Writ was issued.

134.  The following extracts from the transcript of the taped conversation in my view has demonstrated the clear intention on the part of P that she had intended to gift the Locwood Flat to D2 as of that time, ie 4 years after the August 2012 conversations at D1 & D2’s home:

“P: 你又賣咗間樓，同阿小光兩份嗰層樓又賣咗係咪呀?

D1: 冇賣喎!仲喺度喎!

…

P: 宜家轉咗邊個名呀?

D1: 咪就係不嬲都係阿芬[D2]個名囉!

…

D1: 轉咗老婆個名!轉咗曾惠芬個名係咪呀?

…

P: 但係寫咗百幾萬喇喎! 150萬喎!

D1: 150萬唔係賣呀! 你，當你賣俾阿芬[D2]呀嘛!

P: 我，我，我唔係賣俾你喎!我賣俾，我唔係俾你，我係俾你唔係賣喎!但你寫咗賣唔啱喎!

D1: 如果你俾既，手續仲麻煩呀!

P: 冇麻煩，咪，俾冇麻煩，宜家我，所以我，整到我麻煩，就宜家係咁囉! … 阿寬[D1]，我愛你先俾你啫!如果我俾咗政府都唔會麻煩啦! … 你要俾tax嗰啲遺產稅嗰啲嘢，因為百幾萬呢你俾，要俾tax，我宜家麻煩就係俾tax呀! 如果唔俾tax我就冇麻煩喇! 唔會要咁同你講呀!”

[emphasis added]

135.  In fact, P has unequivocally confirmed the above in her evidence when cross-examined by Ds’ counsel Mr Wong during the trial:-

“P:	係我俾佢既
Wong:	係嘞，呢度呢就反映你，其實你原本果個意願囉，就係就住樂湖居你唔係諗住賣俾曾惠芬架嘛，你係送俾佢架嘛，咁你而家就糾正劉汝寛就話，你寫賣呢咁樣就唔啱嘞，應該你既理解係送先啱，係咪呀?呢度呢段錄音反映出嚟個事實…
P:	俾佢係咪即係送呀?
Wong:	即係唔諗住收錢喇，總之… 無論點寫…
P:	俾咪即係送囉
Wong:	係囉，咁個案情咪就係好簡單，其實就住樂湖居你就諗住送俾曾惠芬架嘛?好似呢段對話入面咁樣，你唔係諗住賣俾佢架嘛?啱唔啱呀?
P:	啱
Wong:	啱?咁到底而家呢單案你既立場係咩呀?你仲話人地誤導你?你根本就諗住送俾曾惠芬既?
P:	係呀
Wong:	係囉，咁你告咩呢，到底我哋呢單案係喺度做咩呢?
P:	送咗俾佢囉
Wong:	你而家想要取消番喎，你想攞番啲物業喎?點解你要咁樣做呀?
P:	我買咗啲田…
Wong:	嗱唔好講其他地先喇，我哋講樂湖居先喇，剛才你同意咗喇，你係送俾曾惠芬架嘛? … [The relevant part of the transcript read to P again]
P:	係呀啲嘢我俾佢
Wong:	咪係囉，好清楚喇?你俾佢呀嘛，唔係賣俾佢呀嘛?
P:	係想俾曾惠芬… 當你賣… [自言自語]
Wong:	[Continued to read the relevant part of the transcript] 即係而家根本你個關心就係因為你，送俾佢，但係呢又有個成交價喺度，搞到你呢，有人話，要追你遺產稅，所以你就覺得好麻煩嘞，係咪咁樣既情況呀?
P:	係
Wong:	所以，而家你走出嚟話要推翻呢啲咁樣既饋贈嘞，係咪咁樣，而家呢單案?
P:	係喇…係… [聽不清]
Wong:	所以同唔同意，其實由始至終你一開始同劉汝寛講，你都係話將樂湖居，係送俾曾惠芬既，你同唔同意呀?
P:	係呀，係送俾佢
Wong:	同樣道理嘞，其他果啲新界地你都係諗住送俾劉汝寛一家架嘛，最後送咗俾劉子穎呀嘛?呢個亦都係你本來既原意嚟架嘛?
P:	我送呀劉汝寛，無話俾佢個仔架
Wong:	咁但係你俾劉汝寛，劉汝寛就話佢老喇，俾佢個仔喇，係咪咁樣呀?
P:	佢…佢…阿寛話啫，我無講，佢個仔
Court:	即係你無話送俾個仔?
P:	我無…呀寛…係呀，俾呀寛…
Court:	你係俾呀寛，就無話俾佢個仔既?
P:	係”
[emphasis added]

136.  Given the above, I do not see how it can still be argued that P did not intend to gift the Locwood Flat to D2 in 2012. 

C.9.2  The unpleaded case of conditional Gift

137.  Given the dire lack of any credible evidence to prove her case against Ds, in another desperate attempt made by P, P’s counsel has, very belatedly under P’s Opening, introduced the unpleaded case of conditional gift / imperfect gift.

138.  First, I would like to point out the fact that this new issue of conditional / imperfect gift was never an issue in dispute between the parties before the unexpected mention of it in P’s Opening.  It was not pleaded in the P’s reply or AR after Ds had made clear of their main defence is that the Properties were gift from P.  The allegation that the gift was subject to a condition and/or was an imperfect one was not mentioned in the Attendance Note or any of the Executed Documents prepared on her behalf by YSL.  It was never mentioned in P’s own WS.  It was never an issue identified and agreed upon by the parties under the Agreed List of Issues. It is clearly an afterthought of P’s lawyers who realized just how hopeless P’s case was in view of the contemporaneous documents like the Attendance Note and the Executed Documents.

C.9.3  How P framed the conditional / imperfect gift issue

139.  The following is how P has introduced the issue of conditional / incomplete gift under P’s Opening.

140.  P says that Ds have pleaded a defence of gift.  If the Court finds that P had intended a gift, it is in fact not the end of the matter.  This is because in the present case:-

(1)  the gift as described by the Ds were not for chattels, but were gifts of interests in land, which are at all times subject to the formal requirements under s.4(1)  of the Conveyancing and Property Ordinance, Cap. 219; and

(2)  Ds’ pleaded case is that the gift was conditional:

(a)  See §5(a)  of the AD in reply to §6 of the ASOC where P pleaded that she did not intend to give a gift:

“it is denied she ever indicated to the 1^st Defendant that she needed someone to manage the Joint properties, or her other Hong Kong properties for her. Instead, she expressed an intention to give all her properties in Hong Kong (rather than the Yuen Long Flat only as alleged)  to the 1^st Defendant, and in return the latter would take care of her estate duty liability arising from those properties.” [emphasis added]

(b)  See §15 of the AD where Ds pleaded:

“It was the 1^st Defendant's understanding that upon transfers, he (the 1^st Defendant)  would have to be responsible for his due share of whatever estate duties payable on any or all of the properties.” [emphasis added]

141.  Therefore and in the absence of an express deed (after all the general power of attorney does not express powers to dispose of land and is drafted only in general terms), P submits the following questions must invariably arise:-

(1)  Was the gift perfected/completed? 

(2)  What were the conditions of the gifts?

(3)  Were those conditions breached?

(4)  What are the consequences of breach?

142.  P further submits that she does not need to amend her pleadings to attack the Ds’ own case – they have the onus to prove that the so called gift is valid and perfected. 

143.  Furthermore, P submits that Ds are not prejudiced for the following reasons:-

(1)  Ds have already pleaded and admitted that the gift was conditional and the conditions were sufficiently certain, c.f. Suen Shu Tai v Tam Fung Tai (unreported, HCA 1466/2010, 15 August 2013)  at §119 where the court held that the material facts of the condition must be pleaded. 

(2)  P has already pleaded the breach of condition, namely at ASOC§11(6)(c)  & 7(c)  where it is pleaded that Ds did not pay on behalf P any outstanding estate duties which P is ultimately liable for, and ASOC §12(3)  where it is pleaded that no payments were made towards estate duties owed to the Estate Duty Commissioner.

(3)  Ds own witnesses have confirmed that the gift was conditional on payment of estate duties as a condition subsequent and the issue of Estate duty is not a new matter introduced but one that has been at parties’ minds since 2012:-

(a)  see D2’s WS at §9:

“這反映原告人的確知道嘉湖山莊已轉名給我一事，亦印證了轉名的附帶條件是由我們處理與物業有關的遺產稅。” [emphasis added]

(b)  see D1’s WS at §10:

“(b)  她提議如果物業轉名給我，這產稅由我負責。我答應了” [emphasis added]

144.  In my view, the above position taken by P’s counsel on conditional / incomplete gift gives rise to 2 separate issues, namely, (i)  whether the issue of conditional / incomplete gift has to be specifically pleaded so that it can fully canvassed in evidence and argued at the trial; and (ii)  if no need to be pleaded, whether the gift was a conditional one and the condition has not been fulfilled and thus making it an imperfect / incomplete gift.

C.9.2  Whether the issue of conditional / incomplete gift has to be specifically pleaded? 

145.  In this regard, I am in agreement with the following submissions made by Mr Wong on behalf of Ds under Ds’ Opening.

146.  Whether the gift was conditional or not is a matter of P’s own intention. She has fully committed to the pleaded case that she did not intend the gift at all. A party is not entitled to plead an inconsistent alternative unless the party has reasonable grounds for so doing: RHC O.18 r.12A. I agree that the “conditional gift” intention is wholly incompatible with P’s “no intention to gift” case, and there is no reasonable ground for P to plead such an inconsistent alternative.

147.  It is therefore a futile exercise for P’s legal team trying to establish a completely new and self-contradictory case by simply quoting some of Ds’ statements out of context.

148.  Furthermore, on merits, P will face considerable difficulty to establish a case of “conditional gift” (also any breach of the said condition), even assuming that she is allowed to raise it at the trial (without any evidence in support):-

(a)  Between brother and sister, the parties’ exchange on estate duty issue was likely precatory words only, and acknowledgment of one’s moral obligation: Yeung Hock Wai v. Chan Wai Man [2020] HKCFI 1693 (B Chu J), §§137, 147, 150;

(b)  Ds did not admit, and there is nothing to suggest that, there was any intention between P and D1 to create legal relationships/obligations (as opposed to moral responsibility)  in respect of the estate duty issue;

(c)  The parties did not spell out the legal consequence(s), if any, if such “condition” is not fulfilled;

(d)  P did not give any instructions to YSL to incorporate the “condition” in the legal documents prepared on her behalf;

(e)  The alleged “condition”, even if legally binding, would be likely void for uncertainty: Yeung Hock Wai v. Chan Wai Man, supra, §§151-152, 162. The exact amount of estate duty that P was liable was not mentioned during the conversation. In fact, in P’s own statutory declaration, she stated her belief that, “Andrew also informed the Estate Duty Commissioner that as the 1^st Property [Locwood Flat] and 2^nd Property [Properties I, II and III] were a gift to him solely, he would be solely responsible for the estate duty thereon so that I do not have to pay any estate duty.” Further, there is no timetable in parties’ mind as to when D1 should “deal with” the estate duty liability, and what steps he should have taken for that purpose;

(f)  Based on information provided by the IRD, it appears that a significant portion of the estate duty in question arose from LYP’s potential 1/9 share of interest in the estate of Lau Leung Sheung. Whether or not LYP is entitled to the said interest turns on the validity of the DFA, which is the core issue to be tried in a pending High Court action between D1 and Mr Norman Chui (ie the administrator of the estate of Lau Leung Sheung). It follows that the exact extent of the estate duty is likely an issue yet to be resolved;

(g)  Even assuming that there was any legal obligation for Ds to pay up the outstanding estate duty, the performance was prevented by P. By a summons dated 12 December 2017, P sought against Ds preservation order of the Properties concerned herein. In response, Ds gave an undertaking to the court that they will not use, sell or otherwise dispose of their interest at the Properties, and the proceeds of sale of the Yuen Long Flat were to be stakeheld by Ds’ solicitors[19]; and

(h)  All along Ds did not deny their responsibility (though being a mere moral obligation)  to take care of the estate duty, which showed that the promise was honestly made.

149.  On the other hand, the argument based on “imperfect gift” appears inconceivable. By executing the PoA for the specific purpose of allowing D1 to transfer Properties on her behalf, P has taken all the steps necessary within her exclusive power for effecting the gift: Snell’s Equity, 33^rd Edn, p.653, 24-006. The Properties are now under the names of Ds and it was exactly why P now seeks to set aside those transactions.

150.  The following principles stated by Ma JA (as the CJ then was)  at Poon Hau Kei v Hsin Chong Construction Co Ltd and Others [2003] 2 HKLRD 56 (“Poon Hau Kei (CA)”)  are approved by the Court of Final Appeal (“CFA”)  in (2004)  7 HKCFAR 148 at 156-157 (“Poon Hau Kei (CFA)”), even though the CA decision was reversed:-

“41. In circumstances where the version of events as pleaded or advanced by a party is found not to be accurate or true, and another version is held to represent the true position, a court must be careful when asked to make a finding of liability (or some other legal consequence)  based on this other version. Before attempting to do so, the court must first be satisfied that the issue has been properly put before it and identified so that the other party becomes fully aware of the case he has to meet. This is usually done by the matter being made clear in the pleadings. Next, the court must also be satisfied that the “new version” is one that the other party has been given a full opportunity to deal with. Both elements must exist before a court can then proceed to make a finding of liability, or some other legal consequence based on the “new version”. There may, of course, be other considerations as well, but these two are usually the most important.

42. In dealing with the situation I have just identified (which is the position in the present case), the court may ask itself questions such as :

(1)  Is the so-called “new version” a radical departure or merely a variation, modification or development of an issue that is already before the court?; and

(2)  Would the other party’s preparation or conduct of the case have been different if the “new version” was the one that it had originally come to the court to meet?”

151.  I find the above passage helpful and consider that the principles stated herein apply in this case. In my view, the same two questions should be asked.

C.9.3  Question 1 – is the “new version” a radical departure of issues already before the court

152.  I agree with Mr Wong that the answer must be “yes”.

153.  All along on P’s pleadings, she fully committed to the case that there was no gift at all. The issue all along is whether a gift was intended.

154.  P is now trying to argue that:-

(a)  the gift to Ds was subject to a legally binding condition precedent, that Ds must pay up all possible estate duty before D1 was entitled to receive the gift;

(b)  D1 has breached the said condition; and

(c)  as a result, the gift to Ds should be set aside and invalidated.

155.  It goes without saying that the above line of argument was heading towards a completely different direction from the “no gift” scenario.

156.  P argues that she did not need to plead the above issues because it was borne out of Ds’ pleadings.

157.  I do not agree with that submission at all.

158.  With respect to P’s counsel, it was never featured in Ds’ case that the gift was subject to any condition precedent.

159.  Ds’ case was clearly that P intended a gift which would pass as soon as it could be practicably arranged by YSL: (AD §14; AD §§21-24).  In this sense, the gift was intended to be immediate and unconditional.

160.  Ds never pleaded that before they were entitled to receive the gift, they had to first do something (including clearing up all potential estate duties).

161.  Nor there were pleadings to the effect that D1 could only exercise the power under the PoA after certain conditions were met (which appears to be P’s current stance). To the contrary, Ds pleaded that D1 had P’s authority to deal with the Properties as his own: (AD §30).

162.  P should have sought clarification on Ds’ pleaded case if she considered that there was any unambiguity (which is denied by Ds). She did not seek further and better particulars in respect of the AD.

163.  In my judgment, it is incumbent for P to amend her pleadings if she now contends that the promise by D1 was a legally binding conditional precedent. Besides, she must specifically plead D1’s corresponding duties under the conditional precedent, and the facts as to how he breached them. She also needs to spell out the legal consequence which follows the alleged breach.

164.  She has completely failed to do so. In my judgment, she is not entitled to raise this now.

C.9.4  Question 2 – Would the preparation and conduct of Ds be different had the issues been pleaded?

165.  Again, I agree with Mr Wong that the answer must be “yes”.

166.  Mr Wong submits that had P properly pleaded the conditional gift issues, Ds would put P to an election as to which factual version of the same event she was going to run at trial.

167.  I agree.

168.  Of course, a party can generally plead and run cases in the alternative, but where he seeks to advance two entirely different factual versions in relation to the same event, he will almost invariably be required to elect which version he is going to advance. This approach is consistent with consideration of justice to the parties and proper trial management: Poon Hau Kei (CA), supra, §35 (Ma JA).

169.  P is not entitled to have the best of both worlds. She cannot avoid the aforesaid election (and preserving her “primary case”)  by not pleading the “alternative case” (viz. conditional gift line of defence), at the same time arguing that it was always open to her to fall back on the alternative case in the event her “primary case” failed.

170.  Further, had P chose to run the conditional gift case, I agree with Mr Wong that Ds would have been entitled to raise the following issues in response:-

(a)  whether P and D1 had any intention to create legal relationship over the estate duty liability;

(b)  whether condition was a condition precedent to the gift;

(c)  whether the condition was void for uncertainty;

(d)  what was the precise obligation(s)  on D1 in this regard, including whether, and if so, what, positive steps he ought to have taken, and by when he had to take those steps; and

(e)  whether there was any act of prevention by P against D1’s performance of those duties.

171.  The above issues are obviously fact sensitive. I agree with Mr Wong that the Court cannot try the issues in the absence of pleadings.

P’s Reply on Poon Hau Kei (CA)

172.  Mr Deng in P’s Closing stated that, unfortunate for Ds’ counsel, Poon Hau Kei (CA) was overturned by the CFA in Poon Hau Kei (CFA).  He cited the following passage of Bokhary PJ (who gave the judgment of the Court)  at §§18-19 to try to make good his point:-

“18. In each of those two cases the plaintiff sought to succeed on a scenario not pleaded by either side and outside the defendant’s contemplation. That is the opposite of the situation in the present case. The respondent pleaded the light trough scenario as one in which the accident was ‘caused solely or contributed to by the negligence of’ the appellant. (Emphasis supplied).

19. Provided that it does so in a fair manner, a court is entitled to decide in favour of a party on the basis of a scenario that he has not pleaded but his opponent has pleaded. This is a proposition at which I arrive on principle. It is also a proposition supported by highly persuasive authority. In John G. Stein & Co. Ltd v. O’Hanlon [1965] AC 890 at p.910A, Lord Guest said: ‘I fail to see how [the defenders] can have been in any way prejudiced when the facts upon which liability was established are those averred in the defences and spoken to by their witnesses in evidence’. Lord Reid (at p.906 C-D), Lord Evershed (at p.907 E-G)  and Lord Wilberforce (at p.913E)  agreed in terms with Lord Guest’s rejection of the defenders’ pleading point. And Lord Hodson did so in effect when (at p.907G)  he concurred in Lord Reid’s opinion.” [emphasis added]

173.  While it is true that Poon Hau Kei (CA) decision was subsequently overturned by the CFA in Poon Hau Kei (CFA), I do not think the principles laid down by the CA as cited in the passage by D’s counsel above was overruled by the CFA. In fact, Bokhary PJ specifically endorsed Ma JA’s above passage at §§11-12 (at pp 156-157)  but subject to the “omission” the learned judge has discussed in §12 of the CFA judgment.

174.  In my view, Poon Hau Kei dealt with a very unique (and very narrow)  situation where the respondent pleaded a scenario (the light rough scenario)  and said the accident was “caused solely or contributed to by the negligence of the appellant”.  It was a scenario which the appellant had not pleaded and not relied on at the trial.  He subsequently succeeded at the first instance not on his own pleaded case (the ladder scenario)  but the respondent’s case (the light trough scenario).  I note that the plea of the respondent was self-contained and complete by itself.  It did not require any clarification or subject to any condition.  

175.  Thus, in my judgment, the rules laid down by Bokhary PJ in Poon Hau Kei (CFA) do not apply in this case as the facts / pleas of Ds (now purportedly P tries to rely on)  in our present case are very different:-

(a)  What Ds have pleaded in AD §§5(a), 11, 14 & 15 made it very clear that defence is one of gift which “in return” D1 agreed to take care of or responsible for the estate duties of the Properties (See AD §§5(a)  and 15). 

(b)  D1 never denied, whether in the pleadings, his WS and in evidence, the fact that he has agreed to pay for the outstanding estate duties of the Properties;

(c)  However, D1 has never pleaded a case that the gift of the Properties was subject to the condition that he has to pay all the outstanding estate duties first before he could receive or complete the gift.

(d)  Thus, Ds have never pleaded a case of conditional / incomplete gift which P is now trying to rely on and succeed on the Gift Issue.

(e)  If it was truly P’s case that the gift was a conditional / incomplete one, then he who asserts must not only have to plead it but to prove it at trial also.

(f)  It would be grossly unfair for a party to try to rely on something which was never pleaded by him or his opponent. In fact, it would be highly prejudicial to the other side. 

176.  I agree with Bokhary PJ that in a situation like this ultimately it boils down to a question of fairness and whether the opponent will be prejudiced. 

177.  In this case, the fact is that P has specifically denied in the AR that she had made any gift to Ds: (See §§3a., 11, 10 & 15 of AR). It is not a situation that she has run her case in the alternative.  It is also not a case where she said that I might have given the Properties to D1 but they were all subject to some conditions that D1 has to fulfill first.  She could have raised the point in the reply or AR that they were conditional / incomplete gifts but she had not.

178.  In my judgment, it will be grossly unfair and highly prejudicial to allow P to raise the unpleaded issue of unconditional / incomplete gift at trial when it was not even pleaded by Ds.  I therefore will reject P’s case that she is entitled to succeed on the Gift Issue by relying on Ds’ pleaded case. 

C.9.5  Conclusion on the unpleaded case

179.  In conclusion, I am of the view that P should not be allowed to run the conditional gift argument without first having pleaded the issue in her reply or AR.

C.9.6  Pre-assignment rental income 

180.  On the alternative case about pre-assignment rental income (which was only introduced for the first time in the 2023 amendment under ASOC §§26-30), I agree with Ds that there is simply insufficient evidence in support.

181.  There was no serious dispute that the NT lands originated from P and D1’s father Lau Leung Sheung.

182.  P did not give any evidence to the effect that she did not agree to allow D1 to manage the NT lands before the gift. In fact, she did not touch upon the pre-assignment rental income issue in her WS.

183.  According to P’s own affirmation §22(2), she mentioned that since 1977, D1 has been collecting all the rental income from the lands belonging to Lau Leung Sheung and LYP. In 2000, the 2^nd Fong DFA was entered into. On 23 September 2010, P signed the said DFA and wrote “我明白家庭協議書 同意”.  According to the terms of the DFA, D1 (together with another manager, Lau Yu Woo)  was apparently authorised to manage the lands comprising the estate.

184.  In the AR, P denied the effect of the DFA §24(1). However, none of the averments stated therein (including, inter alia, the NT lands did not fall within the scope of the DFA; there was total failure of consideration; there being misrepresentation of law etc.)  were made out in evidence.

185.  On balance, I find that P failed to prove that D1’s receipt of the pre-transfer rents as trustee was against her consent. For this reason, this alternative claim will be dismissed also.

C.10  2 witnesses’ requirement under the PAO

186.  In a desperate attempt to try to set aside the PoA, P’s counsel suggested to YS Lau and Lee in cross-examination that there was a legal requirement that a power of attorney must be witnessed by 2 other persons.  Mr Deng referred them to section 2(2)  of the Power of Attorney Ordinance (Cap 31)  (“PAO”).  Both YS Lau and Lee disagreed.

187.  With greatest respect to Mr Deng, this argument is disingenuous and totally misconceived.  It is based on a complete misreading of the relevant section of the PAO.  I am surprised that an experienced counsel like Mr Deng would even attempt to put forward such an absurd proposition and interpretation of the statute on behalf of his client.

188.  Section 2(1)  of PAO provides that “An instrument creating a power of attorney shall be signed and sealed by, or by direction and in the presence of, the donor of the power”. [emphasis added]

189.  Section 2(2)  of PAO provides that “Where such an instrument is signed and sealed by a person by direction and in the presence of the donor of the power, two other persons shall be present as witnesses and shall attest the instrument.”

190.  The law in this area has been succinctly summarised by Godfrey J (as he then was)  in Champhon Industrial Ltd v Hight Projects Industrial Ltd, unreported, HCMP 3631/1992, 29 December 1992 at §2 on p3 of the judgment as follows:-

“The law as to attestation of deeds (including powers of attorney under seal)  is clear; at common law no attestation is required in order to prove due execution. It is desirable, and a wise practice, to have the execution of a power of attorney witnessed, preferably by two witnesses. But except where for some particular purpose a statute requires it, this is not necessary. (An example of a statutory requirement is to be found in this very field, in s 2(2)  of the Powers of Attorney Ordinance, Cap 31. In that sub-section there is to be found a provision to the effect that where a power of attorney is signed and sealed, not by the donor of the power himself, but by some other person by direction and in the presence of the donor of the power, two other persons shall be present as witnesses and shall attest the instrument.)”

191.  It is clear that P does not fall within the section 2(2)  situation as she was quite capable of signing and sealing of the PoA by herself without the need of having another person to sign and seal the instrument by her direction and in her presence.  Hence, the first half of s2(1)  of PAO applies to her. 

192.  Thus, insofar as P’s argument that the PoA was invalid due to the requirement of 2 persons have to witness and sign, that must fail also. 

193.  I note with great deal of regret that despite raising this matter boldly and putting it to YS Lau and Lee strongly during cross-examination, P’s counsel did not seek to argue or comment on this any further under P’s Closing.  In my view, this is rather irresponsible. 

C.11  Conclusion on the disputed facts

194.  In a case where parties are heavily relied on their memory of the unrecorded conversations which happened years ago, more weight should be given to the contemporaneous documents and inference drawn from the objective evidence rather than the witnesses’ recollections: see Yu Man Fung Alice, supra at §58.

195.  In my judgment, all the contemporaneous documents in this case point to one direction only and that is P intended to gift the Properties to D1 and his family in August 2012.  These documents included the Will prepared by YSL according to P’s instructions and signed by P on 14 August 2012; the Attendance Note composed by YS Lau immediately after his meeting with P on 14 August 2012; and the PoA, the severance notices and the S&P agreements prepared by YSL (according to P’s instructions)  which were subsequently signed and executed by P. 

196.  Based on the above contemporaneous documents and my findings on the parties witnesses’ oral evidence above, I would make the following factual findings that in August 2012:-

(a)  P intended to gift all her Properties to D1;

(b)  P intended the gift to take effect as soon as it could be practicably arranged. She wanted to have everything which required her attestation be signed within a short period of time, so that she did not need to stay in Hong Kong any longer than necessary;

(c)  P agreed, pursuant to YS Lau’s advice, to give a PoA in favour of D1, for the specific purpose of allowing him to transfer her Properties as he liked. Her ultimate intention was to leave everything to D1; and

(d)  P did not ever mention or ask YS Lau about any condition (precedent)  for her gift, much less asking him to incorporate any such condition into the legal documents, so that D1 could only transfer the Properties after satisfaction of those condition(s).

197.  I further find that the gift was completed in 2013 when D1 relied on the PoA to execute the relevant assignment of the Locwood Flat and the NT Lands to D2 and D3 respectively.  In my view, P has done everything necessary within her power in order to transfer the Properties to D1: Ng Kit v Wu Tsun Hua & Ors, supra at §§32-33. 

198.  At the time when D1 transferred the Locwood Flat to D1 and the NT Lands to D3, he was making use of the power given to him by P under the PoA.  The PoA was still valid and subsisting and the use of the PoA was with P’s express authorization.

199.  Thus, in my judgment, the gift then become irrevocable.

D. CONCLUSION

200.  Based on my analysis of the evidence and the findings above, I have no hesitation to dismiss P’s claims in this case at all.  In my judgment, they contain no merits at all and should have never been bought in the first place in the light of the unequivocal contemporaneous documents.

201.  Costs should follow the event.  P who has lost in her claims against Ds is ordered to pay the costs of the action of Ds, including any costs reserved.  Given the poor conduct of P in pursuing this case, including arguing on matters which are clearly unarguable (like the Attendance Note and PoA issues)  and the very late introduction of the unpleaded issue of unconditional gift, they have unnecessarily prolonged the trial and added unnecessary costs to the proceedings.  I am therefore of the view that Ds are entitled to a higher scale of costs in this case. I will therefore make an order nisi that P to pay the costs of Ds on an indemnity basis, such costs to be taxed if not agreed.  The order will become absolute in the absence of any application from the parties within 14 days after the judgment is handed down.