LU SUI PING v. GAO LI FU

HCMP 1314/2006

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 1314 OF 2006

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J U D G M E N T

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1.  Mr Gao Yuan, a Chinese citizen, died intestate in Guangzhou on 1 February 2005, leaving his widow, Madam Lu and one son born in 1986.  She applies for a declaration that the Mr Gao’s domicile shall be Hong Kong.  This is opposed by the defendant, who is Mr Gao’s father.

2.  Evidence for Madam Lu came from Madam Lu herself, and evidence for the defendant came from Mr Gao’s sister, Madam Gao Mei Yuan, and Mr Cheng Zhongyou, a former colleague and a friend of Mr Gao for 35 years.

3.  Mr Gao was born in China in 1948.  He grew up in Guangdong Province and married Madam Lu in Guangzhou in 1978.  He died in Guangzhou on 1 February 2005, and his body is buried there. 

4.  After Mr Gao died, the defendant and Mr Gao’s siblings instituted proceedings against Madam Lu and her son in the People’s Court of the Tian He District, Guangzhou City, for division and distribution of Mr Gao’s estate in China and Hong Kong.  Judgment was given on 24 November 2006.  The court made orders in respect of the estate in China, but declined to make them in respect of the estate in Hong Kong.  It said that because the assets were in Hong Kong, it had no means to verify the truth and validity of the details of them and could not make any ruling.  It further said that for the purpose of saving costs, the assets in Hong Kong could be dealt with by the successors of Mr Gao in the Hong Kong courts, and that it would not deal with the application in respect of them.

5.  There was some dispute as to whether the court said that it did not have jurisdiction to deal with them; I do not think that really concerns me one way or another but I take it, from the translation given by the court interpreter, there being no certified translation of the judgment, that the court did not pronounce on the question of its jurisdiction.

6.  According to a certificate of exemption from estate duty issued by the Commissioner in Hong Kong on 18 November 2005, the estate in Hong Kong consisted of bank accounts and shares, to a total value of some $2.6 million.  Mr Gao having died intestate, if Madam Lu establishes domicile the estate in Hong Kong will fall to be dealt with under the Intestate Estates Ordinance, Cap.73, and will go to Madam Lu and her son.  If not, then the estate in Hong Kong will have to be divided according to the Chinese law of intestacy.  I am told that this would give the defendant a 25% share.

Madam Lu’s case

7.  There is and can be no dispute that Mr Gao, who was born in China to a Chinese father who never left that country, had a Chinese domicile of origin.  Madam Lu’s case is that he acquired a domicile of choice in Hong Kong, where he worked and resided between September 1990 and January 2001, and maintained that domicile of choice until his death.

Principles

8.  These are to be found in the Rules set out in The Conflict of Laws by Dicey, Morris & Collins, 14^th Ed., 2006, Chapter 6.

9.  By Rule 9, every person receives at birth a domicile of origin; for a legitimate child, born during his father’s lifetime, that domicile is the country in which his father was domiciled at the time of his birth.

10.  By Rule 10, every independent person can acquire a domicile of choice by the combination of residence and intention of permanent or indefinite residence, but not otherwise.  However, by Rule 13, a person abandons a domicile of choice in a country by ceasing to reside there and ceasing to intend to reside there permanently or indefinitely, and not otherwise.  When a domicile of choice is abandoned, a new domicile of choice is acquired, or the domicile of origin revives.

11.  By Rule 7, an existing domicile is presumed to continue until it is proved that a new domicile has been acquired.  The burden of proving a change of domicile lies on the party who asserts it.  The standard is the balance of probabilities, but it has been said that unless the judicial conscience is satisfied by evidence of a change the domicile of origin persists; and the acquisition of a domicile of choice is a serious matter, not lightly inferred; per Scarman J in In the Estate of Fuld (No.3) [1967] P 77 at 80.

12.  Rule 11 provides that any circumstance which is evidence of a person’s residence or of his intention to reside permanently or indefinitely in a country is to be considered in determining whether he has acquired a domicile of choice there; and by Rule 12, the court in determining such intention may have regard to the motive for which the person has taken up residence there, the fact that the residence was not freely chosen, or the fact that the residence was precarious.

13.  A classic statement on domicile appears in the judgment of Scarman J in In the Estate of Fuld, at pages 682 and 684 and was cited with approval by Cheung JA in Wong Zhong Lan Xiang v Wong Frank [2003] 44 HKC 609 at paragraph 87.  It reads as follows:

“Domicile is ‘that legal relationship between a person ... and a territory subject to a distinctive legal system which invokes the system as [his] personal law ...’:  see Henderson v. Henderson.  It is a combination of residence and intention.  It takes two forms — domicile of origin and domicile of choice.  A classic description of the concept is to be found in Lord Westbury’s speech in Udny v. Udny.  Two features of his description are of particular importance in the present case.  First, that the domicile of origin prevails in the absence of a domicile of choice, i.e., if a domicile of choice has never been acquired or, if once acquired, has been abandoned.  Secondly, that a domicile of choice is acquired when a man fixes voluntarily his sole or chief residence in a particular place with an intention of continuing to reside there for an unlimited time.

…

In the light of these cases, the law, so far as relevant to my task, may be stated as follows:  (1) The domicile of origin adheres — unless displaced by satisfactory evidence of the acquisition and continuance of a domicile of choice; (2) a domicile of choice is acquired only if it be affirmatively shown that the propositus is resident within a territory subject to a distinctive legal system with the intention, formed independently or external pressures, of residing there indefinitely.  If a man intends to return to the land of his birth upon a clearly foreseen and reasonably anticipated contingency, e.g. the end of his job, the intention required by law is lacking; but, if he has in mind only a vague possibility, such as making a fortune (a modern example might be winning a football pool), or some sentiment about dying in the land of his fathers, such a state of mind is consistent with the intention required by law.  But no clear line can be drawn: the ultimate decision in each case is one of fact — of the weight to be attached to the various factors and future contingencies in the contemplation of the propositus, their importance to him, and the probability, in his assessment, of the contingencies he has in contemplation being transformed into actualities.  (3) It follows that, though a man has left the territory of his domicile of origin with intention of never returning, though he be resident in a new territory, yet if his mind be not made up or evidence be lacking or unsatisfactory as to what is his state of mind, his domicile of origin adheres.  And, if he has acquired but abandoned a domicile of choice either because he no longer resides in the territory or because he no longer intends to reside there indefinitely, the domicile of origin revives until such time as by a combination of residence and intention he acquires a new domicile of choice.”

Issues

14.  We are concerned here with Mr Gao’s domicile at the time of his death in 2005.  The issues are:

(1)     whether, during his 10 years’ residence in Hong Kong, Mr Gao acquired a Hong Kong domicile of choice; and

(2)     if he acquired such a domicile, whether he abandoned it when he returned to live in Guangzhou in 1990, so that his Chinese domicile of origin revived.

Undisputed facts

15.  The following facts are undisputed or indisputable on the documents.

16.  Mr Gao worked in shipping.  Madam Lu says that he was originally a pilot in Dongshan and later worked at Whampoa Harbour in Guangzhou.  It is not in dispute that Mr Gao came to Hong Kong in 1990 and worked here in a group of companies known as the Yiu Xue group.  There is some dispute as to whether he was employed in Hong Kong by a Guangzhou constituent of the group, or by a Hong Kong constituent, but I do not think that is important one way or the other.

17.  Mr Gao lived in Hong Kong in company quarters.  He never acquired any property of his own in Hong Kong.  Madam Lu and their son used to come and stay with Mr Gao at the quarters from time to time; but according to Madam Lu, Mr Gao himself used to go home to Guangzhou every weekend and holiday.

18.  Mr Gao was paid his salary in Hong Kong dollars in Hong Kong, and he paid taxes in Hong Kong; a tax demand for the year 1999/2000 shows a total income of $464,118 and one for the year 2000/2001 shows a total income of $401,040.  In both cases, quarters are allowed for.

19.  Mr Gao moved to Guangzhou in early 2001 and it is not in dispute that until about February 2003 he was employed there by the Guangzhou arm of the Yiu Xue Group.  He was paid in Guangzhou, in renminbi.  He lived in his own property there, at Ha Tong New Village, Tin Ho District.  A Property Ownership Certificate shows that this property was bought from Yue Xiu Enterprises (Holdings) Co. in November 1999; Madam Lu says that the property was assigned by the work unit rather than bought, but in any event she does not dispute that once the property came into the ownership of Mr Gao it belonged to him in perpetuity.

20.  In 2003, Mr Gao left the Yiu Xue group.  He worked for a private company in Guangzhou, and he continued to live there.  There is a letter from a Hong Kong company, Sun Cypress Shipping Ltd, which shows that he was employed by it as a shipping consultant for Chinese business from March 2003 and was deployed from March 2004 to work in its Guangzhou office.  No salary figure is given and it is said that there was no written employment contract. 

21.  While he was in Hong Kong Mr Gao became eligible, after seven years’ residence, to apply for a Hong Kong permanent identity card.  He applied for such card which was issued on 21 December 2000.  He also applied for a Hong Kong SAR passport, which was issued on 8 January 2001, and for a US visa, valid for 10 years, which was issued on 7 February 2001.  He never travelled to the USA.

Evidence

22.  The picture of Mr Gao which Madam Lu paints in her first affirmation is that of a man who joined a company and worked at its subsidiary in Hong Kong for 10 years, intending from the outset to develop his career and reside in Hong Kong permanently.  From 2001 to 2003, he was seconded by his Hong Kong employer to work at its Guangzhou office.  From 2003 he worked as a consultant for a different Hong Kong company.  With the intention of treating Hong Kong as his permanent home, he obtained a permanent identity card and a HKSAR passport.  He kept most of his money in Hong Kong.  He arranged to send his son to study in the UK, intending that the son should work in Hong Kong after graduation.  The family never bought any assets or property on the Mainland because it was Mr Gao’s intention that they would all live together in Hong Kong after the son graduated.

23.  The picture painted by Mr Gao’s sister, Madam Gao Mei Yang in her affirmation is of a man seconded to work in Hong Kong by his employer in Guangzhou.  He did not intend to live in Hong Kong; indeed, he bought a house in Guangzhou in 1999.  He had strong family ties in Guangzhou and at some time he had told Madam Gao he intended to stay in Guangzhou until his retirement.

24.  There was some argument about what this meant; it was suggested that the words Madam Gao would have used in Chinese would have meant “in retirement” rather than “until retirement”.  The latter is of course what appears in the affirmation, which was translated to Madam Gao before she signed it.  Madam Gao said in oral evidence that she really meant that she had been told that Mr Gao would stay in Guangzhou “in retirement”.  That may be so but it says little for the reliability of this piece of evidence. 

25.  The friend and colleague, Mr Cheng, also affirmed that Mr Gao was seconded to Hong Kong by his employer in Guangzhou, and later recalled there.  This was a common practice and followed a roster system.  Like other seconded workers, or as Mr Cheng called them in his oral evidence, “assignment cadres”, Mr Gao had lived in company quarters; his family used to come to Hong Kong to visit him there.  After Mr Gao had left Hong Kong, he was allowed to use Mr Cheng’s residential address in Hong Kong for correspondence purposes.  In particular, he wanted to be able to use his Hong Kong tax returns in support of his application to have his son sent to the UK to study.  In 1999, Mr Gao had bought from his Guangzhou employer the premises provided by the employer, and after he returned to Guangzhou had lived there until his death.  All his work was based in Guangzhou.  Mr Gao had never told Mr Cheng that he wanted to stay in Hong Kong, but had rather told him that because of his family ties, he wanted to stay in Guangzhou after his retirement. 

26.  Madam Lu was cross-examined at length, and the picture changed considerably.  She admitted that Mr Gao had been posted to Hong Kong in 1990 by his Guangzhou employer under the company’s roster system, and that he had been recalled to Guangzhou by his employer there in 2000.  She agreed that it was common for persons with Chinese citizenship to obtain, if they could, a Hong Kong permanent identity card and a HKSAR passport so as to be able to get work in Hong Kong.  There were various other points on which she changed but it is not necessary to set them all out.

27.  She also told the court that Mr Gao had never told her where he wished his remains to be buried, and that while he was in Hong Kong, he used to go home to Guangzhou almost every weekend.

28.  She insisted, however, that the plan was ultimately for Mr Gao, herself and their son all to live in Hong Kong, once the son graduated.

Did Mr Gao acquire a Hong Kong domicile of choice between 1990 and 2000?

29.  Madam Lu was constrained to make many admissions in cross-examination.  She also insisted on certain facts which could simply not be correct, for instance that the house at Ha Tong New Village had not been bought, when there was a certificate which said that it had.  These factors obviously cast doubt on the truth and accuracy of her evidence.  I do not see, therefore, that her own evidence as to the intentions of Mr Gao is of much value.

30.  As noted above, what is required is proof of residence and the intention of permanent or indefinite residence.  Residence in the country for the purposes of domicile is physical presence in that country as an inhabitant of it; see IRC v Duchess of Portland [1982] Ch 314 at 318-9.  So a traveller is not an inhabitant; and a person posted to a country, such as a soldier living in barracks, may not be an inhabitant.

31.  In this case Mr Gao lived in company quarters during the week.  He did not set up any home of his own in Hong Kong; he maintained his family home, with his wife and son in it, in Guangzhou and he went back there nearly every weekend.  Leaving aside for the moment any other factors, it seems to me doubtful that this kind of residence in Hong Kong would count as residence as an inhabitant of Hong Kong; rather it was casual residence for the purpose of work, while the real residence remained in Guangzhou.

32.  The more important factor is of course the intention to reside permanently or indefinitely.  There is no doubt that Mr Gao was an “assignment cadre”.  His residence in Hong Kong was probably freely chosen in the sense that he could have chosen to be on the assignment roster or not; after all, as Mr Cheng said, an assignment cadre would have a higher salary in Hong Kong.  But the employment in Hong Kong was necessarily precarious; Mr Gao would only stay here until his work unit recalled him to Guangzhou.  This impermanence is a factor against residence or the intention to reside.

33.  Impermanent residence in quarters or barracks may not be a bar to having the intention to reside permanently or indefinitely; see Stone v Stone [1958] 1 WLR 1287.  However, one has to look at the whole picture.  The fact is that Mr Gao maintained his home in Guangzhou throughout his stay in Hong Kong, and went there nearly every weekend; and in early 2001 he did return to Guangzhou, and resided there in the family home he had kept up all along, until his death in 2005.  All this casts doubt on any intention to reside in Hong Kong permanently or indefinitely.

34.  Madam Lu relies on the fact that Mr Gao obtained his permanent identity card and HKSAR passport and also a US visa, though he never used it.  In fact he obtained these things around the time he left Hong Kong for Guangzhou.  As Mr Cheng explained, most of the assignment cadres will obtain these documents for convenience of travel, or for a better opportunity to live or work in Hong Kong in the future, and as I have indicated Madam Lu in cross-examination largely agreed with this.

35.  There are obviously many good reasons for a Chinese citizen to obtain a Hong Kong permanent identity card, a SAR passport and a US visa if he can; and Mr Gao could.

36.  I note that by Article 24 of the Basic Law, Chinese citizens who have ordinarily resided in Hong Kong for a continuous period of not less than 7 years are permanent residents of Hong Kong; unlike foreigners, they do not have to show that they have taken Hong Kong as their permanent place of residence.  I do not see the obtaining of these travel documents as indicative of the intention to reside permanently or indefinitely in Hong Kong.

37.  Some reliance was also placed on the fact that most of Mr Gao’s money was kept in Hong Kong.  In fact, rather more was in Guangzhou than Madam Lu originally said, as may be seen from the judgment of the Chinese court.  But in any event I do not see that to keep money in one country or another, in this day and age, is particularly indicative of an intention to reside there.  Money may be kept in one place or another for all kind of reasons.

38.  Looking at the picture overall, I am not satisfied that Mr Gao had the necessary type of residence or the necessary intention, during the period he was in Hong Kong, to give rise to a domicile of choice in Hong Kong.

If domicile of choice arose, was it abandoned on return to Guangzhou?

39.  This question arises only if I am wrong in my finding above and Mr Gao was resident and had the necessary intention.

40.  The fact is that Mr Gao returned to his home in Guangzhou and lived there for about four years, before he died there.  He may have worked for a Hong Kong company as a consultant, but he worked for it in Guangzhou, and he was paid in Guangzhou.  The connection with Hong Kong was effectively terminated.  Mr Gao did not maintain residence in Hong Kong.  He had no home in Hong Kong.  He was certainly not in the position of maintaining a home in Hong Kong while being temporarily assigned to Guangzhou which is the import of Madam Lu’s original affirmation.

41.  Madam Lu says that Mr Gao intended to move back and reside in Hong Kong permanently or indefinitely once his son graduated and went to work there.  If this was to happen on his own retirement, it is somewhat improbable given the difference in the cost of living between Hong Kong and the Mainland; pensioners tend to move the other way, because the pension goes further on the Mainland.  However, if there was such an intention, it could not give rise to a domicile of choice unless there was residence at the same time.  So even if Mr Gao up to the time of his death intended one day to reside permanently in Hong Kong, that would not keep his domicile alive once he went back to China; his domicile of origin would revive.  He might, had he moved to Hong Kong, been able to set up a fresh domicile of choice; but his death unfortunately supervened. 

Result

42.  I find that Madam Lu has not proved that Mr Gao was domiciled in Hong Kong at the time of his death.  The originating summons is dismissed with costs (nisi) to the defendant to be taxed if not agreed.