CITIC KA WAH BANK LTD v. CHINA’S BEST LTD AND OTHERS

HCMP 2313/1996

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 2313 OF 1996

----------------------

----------------------

----------------------

J U D G M E N T

----------------------

Background

1. This is a garnishee proceeding. The predecessor of the garnishees is Bank of America (Asia) Limited (“Bank of America”).

2. The predecessor of Citi Ka Wa Bank (“Ka Wa Bank”) obtained a $7 million judgment in a mortgagee action in December 1998 against three defendants, one of whom is the daughter (“the Daughter”) of the Claimant (“the Mother”).

3. The Daughter married a French man in August 1999 and left Hong Kong to settle in France.  In September 2005, she became a French citizen.

4. The judgment remained unsatisfied.  In November 2006,  Ka Wa Bank instituted bankruptcy proceedings against the Daughter, and successfully obtained a bankruptcy order in January 2007.

5. The Daughter applied in 5 June 2007 to annul the bankruptcy order on the ground that she was not domiciled in Hong Kong. The bankruptcy order was subsequently annulled by consent on 27 June 2007.

6. Ka Wa Bank discovered from the Daughter’s affirmation in support of the application to annul the bankruptcy order that the latter  maintained bank accounts with the garnishees.

7. Immediately before the bankruptcy order was annulled, Ka Wa Bank applied to attach the monies in the accounts maintained by the Daughter with the garnishees, and obtained on 26 June 2007 two Garnishee Orders Nisi in respect of the accounts held in the name of the Daughter with the garnishees.

8. Before the Notices of the Garnishee Order to Show Cause were heard, the Mother filed an application for dismissal of the two Garnishee Orders to Show Cause on the ground that she is the beneficial owner of the monies in the accounts of the garnishees held in the name of the Daughter.

9. The Mother was joined as the Claimant in the garnishee proceeding.  Ka Wah Bank’s application for Garnishee Order to Show Cause and the Mother’s application for dismissal were adjourned for trial of the issue as to whether the monies in the total sum of about $2,678,000 in the garnishees belong to the Daughter beneficially or whether the Daughter holds the monies on trust for the Mother.

Procedural Matter: In chambers or in court?

10. When the master adjourned the applications for the trial of the issue, he did not direct if the hearing should be heard in chambers or in open court.  By usual practice (I believe), the listing clerk listed the hearing in chambers.  Hence, the trial of the issue was initially heard in chambers.

11. Half way through the hearing, I started to be concerned that whether the hearing should have been conducted in open court rather than in chambers.  When I discussed with counsel, both counsel were of the initial view that it would be more appropriate to adjourn the hearing to open court.  In order to avoid any procedural pitfall, and to save time, I adjourned the hearing to open court without hearing full submissions from counsel.  I also directed that the earlier part of the proceedings (which were heard in chambers but open to the public) be treated as if it were heard in open court.  At the end of the hearing, I asked counsel to make submissions to clarify this procedural matter.

12. I am greatly indebted to Counsel, Mr. Lam for Ka Wa Bank and Miss Lan for the Mother for their very helpful submissions.  They both submitted that the hearing should be conducted in open court rather than in chambers.  I agree with them.

13. Garnishee proceedings are governed by O.49 of the Rules of the High Court.  Application for a garnishee order nisi is made ex parte in chambers (O.49 r.2).  A garnishee order nisi order is followed by an inter partes hearing for an order to show cause (O.49 r.3).  The rule is however silent as to whether the hearing should be in chambers or in open court.  However, by practice, the first hearing of the application for garnishee order to show cause is listed in a 3-minutes chambers hearing (See Hong King Civil Procedure 2008 (“HKCP”), para.32/6/6).  A disputed application is also usually disposed of by way of affidavit evidence heard in chambers without oral evidence.

14. In the instant case, the order for trial of the issue was made pursuant to O.49 r.6 (2), which provides that the determination of the validity of the claim “be tried in such manner as” in O.49 r.5.  O.49 r.5 empowers a master to try disputed question or issue in liability without “the need for any consent by the parties”.

15. Whilst O.49 r. 5 and r.6 expressly empower a master to hear a disputed garnishee proceeding without the need of the parties’ consent, they however do not stipulate whether the trial of the issue should be conducted in chambers or in court.

16. In respect of this lacuna, I agree with counsel that the present trial of issue should fall within the procedural ambit of O.36, which allows a question or issue of fact in any cause or matter to be tried by a master “with the consent of the parties”.  The express dispensation provided in O.49 r.5 of the requirement of the consent of the parties, in my view, simply removes any doubt that a master has jurisdiction to hear a disputed garnishee proceeding involving factual disputes even when it requires oral evidence to be given.

17. In my view, had the present hearing been heard in chambers, and should an appeal be brought, it will lead to a procedural absurdity that the appeal would have to be, as required by O.58 r.1, by way of a re-hearing before a single Judge (see also HKCP para.58/1/2).  In a case such as the instant one where viva voce evidence is given, and a master is required to make factual findings on disputed facts, I do not find it procedurally logical, in the event of an appeal is brought against a master’s finding, that a single Judge is to hear the case afresh.

18. From the discussion above, I come to the conclusion that when a garnishee proceeding involving disputed factual issues requiring viva voce evidence, a master’s jurisdiction to hear the disputes is conferred by O.36 r.1 as well as O.49 r.5, which is in open court without requiring the parties’ consent.

Issue

19. A bank cannot be garnisheed if the monies in the account of the judgment debtor in fact do not belong to the judgment debtor (See Harrods Ltd. v Tester [1937] 2 All ER 236 at 340 E-F). The parties have no quarrel with this principle of law.

20.  What is issue in this claim (as defined in the order of Master Kwang) is whether the monies in the accountsof the Daughter’s with the garnishees do not belong to her - as the Mother alleged - but to the Mother.

Evidence

21. The Mother is the only witness. 

22. The hearing was conducted in English.  The Mother’s evidence-in-chief is found in her four affirmations written in English.  Counsel however requested using use Chinese for the entire part of the Mother’s oral evidence and examinations without English interpretation. In order to save time, I acceded to the request.

23. The Mother’s evidence, briefly stated, is this.  She married young at the age of 19 to a policeman, and gave birth to three sons and the Daughter within the space of 4 yours between 1957 and 1960.  Her husband retired at the rank of police sergeant in 1972, and died in January 2008, sadly in the middle of the Mother’s disputed claim.  The Mother had all along been a full-time housewife, but did various odd jobs at home such as painting dolls, sewing etc. to augment the family income.

24. The Mother said she was frugal and hard working.  Around 1980s, when the children grew up and started gainful employment, the Mother, for several years, was able to earn about $5,000 per month by minding her neighbour’s children full time.

25. The Mother said she saved whatever she could from the monies earned from these odd jobs.  In addition, although her children were married in their early 20s, they however continued to give her money.  The Mother had also saved these contributions.

26. By the middle of 1980s, the Mother had accumulated some savings. The Daughter advised her to invest instead of simply keeping the monies in the Mother’s only bank accounts of Hong Kong and Shanghai Banking Corporation (“HSBC”) and Hang Seng Bank.  The Mother therefore invested $120,000 in British pounds in 1987, and made a gain of about $200,000 with the help of the Daughter.

27. The Mother’s next invested in HSBC shares, again with the help of theDaughter.  In 1991, the Mother disposed all her HSBC shares, and got a total sum of $1 million.

28. In 1998, the Mother said her total savings was about $2.5 million.  When the Mother found that the Bank of America had a branch near to her residence and offered higher interest rate than the HSBC and Hang SengBank, she opened a new account with the Bank of America by transferring to it $1 million.

29. In 2002, her late husband suffered from senile dementia.  She said her health also suffered greatly from the physical demands and emotional strain of looking after him. Fearing that she might predecease her husband, the Mother decided to transfer some of her savings to the Daughter’s bank account in order that she could use the money to look after her late husband should she die before the latter.

30. Hence, when the Daughter, who has since settled in France after her second marriage to a French man, visited Hong Kong in May 2004, the Mother closed all her accounts with the Bank of America, and transferred a sum of about $2,550,000 to the accounts the Daughter newly opened in the same bank.

31. By a power of attorney executed in favour of the Mother by the Daughter at the same time when she opened the accounts with the Bank of America, the Mother was empowered to have full use, and in fact had been operating the Daughter’s accounts with the garnishees until they were frozen (consequent on the Orders of Garnishee Nisi).

The factual contentions

32. This case stands and falls with the credibility of the Mother’s evidence.  Should I find her a credible witness and accept her evidence that the monies in the garnishees’ accounts in the name of the Daughter were trust monies, the Ordersof Garnishee Nisi would be discharged.  On the other hand, should I reject her evidence, Ka Wah Bank shall be entitled to have the nisi orders made absolute.

33. As Ka Wah Bank was not able to call any witness to contradict the Mother’s evidence, in opposing the Mother’s claim, it can only put the Mother to strict proof.

34. Mr. Lam contends that as Ka Wah Bank is unable to call any witnesses to refute the Mother’s allegation, it would be easier for her to tailor the evidence to fit her case. Further, in view of the special relationship between the Mother and the Daughter, the Mother has every motive to put forward self-serving evidence.  He submits that I should therefore attach very little weight to her evidence, in particular when the Mother’s evidence is:

(a)                  not supported by any documents on the most material issue (in particular, in relation to the alleged trust);

(b)                 not supported by any witnesses whom she could and should have called (in particular, the Daughter);

(c)                 inconsistent with her previous affirmations;

(d)                 inconsistent with the Daughter’s affirmation made in the bankruptcy proceedings;

(e)                  inconsistent with her subsequent conduct, in particular, that after her husband’s death; and

(f)                   inherently improbable and illogical.

Discussion

35. Owing to the special relationship between the account holder and the Claimant, I do not think that it can be disputed that extra care is required in assessing the Mother’s evidence. At the hearing, I therefore took exceptional care in observing the Mother’s demeanour when she gave evidence in court.  I note that the Mother is illiterate, and does not come across as a sophisticated woman.  After having observed her demeanor, and listened to her testimony, I find that thatthe Mother has by and large given straightforward answers to Mr. Lam’s vigorous cross-examination.  I do not find her evasive.  I have an overall favourable impression of the Mother being an honest witness. 

36. In spite of my favourable impression of the Mother, I should nonetheless scrutinize the Mother’s evidence with the greatest vigilance before I can conclude if the Mother’s claim is made out.

(I)  The source of monies in the garnishees

37. The Mother alleges that the monies she transferred to the Daughter’s accounts with the garnishees originally came from her.

38. Mr. Lam initially took issue with this allegation. However, after the conclusion of the Mother’s testimony, he conceded (which is fair in my view) that he could not seriously challenge her evidence in this respect

39. I find that the evidence about the source of monies is overwhelming. The two old passbooks of the Mother’s accounts of HSBC and Hang Seng Bank disclosed just shortly before the hearing, in my finding, are corroborative of the Mother’s evidence.

40. The passbook in respect of the account of HSBC shows transactions between the period of January 1995 and December 1997.  The Hang Seng Bank account passbook covers a period between July 1993 and April 1998.  In the Mother’s two accounts, I note that there were relatively large sums of time deposits of between $300,000 to $1 million going in and out of the accounts.

41. Further, there were also quite a lot of regular deposits in thesetwo accounts, which seem to support the Mother’s evidence that she had income from the earnings of her odd jobs as well as contributions from her children.

42. Hence, I believe that whenthe Mother opened accounts with the Bank of America in 1998, it is likely that she already had savings in the total amount of about $2.5 million.  I am satisfied that the transactions disclosed in the two passbooks do substantially bear out the Mother’s evidence. In the circumstances, I find on balance that the Mother has proved that the monies in the accounts of the garnishees originally came from her.

(II)  Reasons for the transfer

43. The monies transferredon 28 May 2004 from the Mother’s accounts to the Daughter’s is well documented, and hence is hardly disputed.

44. One of the main contentions is the Mother’s given intentions or reasons for the transfer, which have bearing on the issue of whether the transfer of the monies to the Daughter points to the creation of a trust.

45.  The Mother gave two reasons for the money transfer. In her 1^st Affirmation made in July 2007, the Mother said that in 2004 the health of her late husband deteriorated suddenly, and she wanted to let the Daughter deal with the monies for her so that she could devote more energy to look after her ill husband.  Later, in the 2^nd Affirmation made in August 2007, the Mother gave an additional reason that she was worried that should she   pre-decease her husband, her accounts would be frozen and money would not be immediately available to meet the medical expenses of the husband. The Mother therefore wanted to ensure that monies be available to cater for this contingency. In her 3^rd Affirmation made in March 2008, the Mother further added that she had been suffering from poor health, and thus she transferred the money to the Daughter to enable her to use the money for the benefit of the ill husband should anything happen to her.

(i) Arethe reasons corroborated?

(a)  By documents ?

46. Mr. Lam submitted that not only the Mother has not been able to adduce any documents in support of the alleged reasons for the transfer, the documents she had disclosed in fact contradict her evidence.  According to the Mother, before she transferred the monies to the Daughter, her  husband’s healthhad suddenly deteriorated.   However, according to a letter by her former solicitors dated 9 July 2007 (before the Mother’s 1^st Affirmation) written in connection with the Mother’s claim, the former solicitors did not mention about the deterioration of the late husband’s health in 2004. They, instead, stated that the husband has suffered ill health since late 2002.  Further, in the medical report written by a government hospital of the Mother’s late husband obtained for the purpose of this claim, it only states that the husband has been suffering from severe dementia since 2003.                 

47.Further, in respect of the Mother’s alleged depression and hypertension only raised in her 3rd Affirmation made in March 2008, Mr. Lam pointed out that her former solicitors had already mentioned the Mother’s condition in the letter of July 2007.  There is therefore no logical reason that her solicitors did not refer to her health condition when preparing her earlier affirmations.

48.Mr. Lam contends that the documents the Mother has disclosed do not support the Mother’s claim, but discredit it.

(b) By a family meeting?

49.During the cross-examination, the Mother revealed for the first time of an alleged family meeting in which she had expressly told her children about her intention to make arrangement for the welfare of her husband in the event that she died before him.

50.The Mother said that during the family meeting when she had told her children of her intention of making arrangement about putting away some of her monies on trust so that the late husband could be taken care should she die, all her three sons declined to act as trustee for her monies as they were civil servants.  She thought that a civil servant would be subject to investigation if one were found to have large sums of money going into the account.  For that reason and further for the fact that she completely trusted the Daughter, she decided to ask the Daughter to hold the monies on her behalf.                                                                             

51.The Mother said that at the time when the arrangement was discussed with her children at the dinner, she did not know the term “trust”    (信託), which term was only used by her lawyers. However, she had only used the word 託管 (which means to look after or to keep on her behalf) when she asked the Daughter to keep the monies on her behalf.  The Mother is adamant that she had expressly told the Daughter that she would not be permitted to use the monies in the accounts for her own use or without her permission.  The Mother said that as the monies in the Daughter’s account still belonged to her, she therefore wanted the Daughter to execute a power of attorney in her favour so that she could freely operate the accounts.

52.Mr. Lam contended that the mention of the family meeting for the first time only in court tends to show that the Mother was trying on as she went along. Further, Mr. Lam contended that, even according to the Mother’s evidence, the alleged express trust was, by its nature, inherently improbable because it was doubtful as to (i) whether the Mother had actually expressed her purported intentions with words to the effect of expressing an intention to create a trust for her monies;(ii) the  choice of the Daughter, who lived overseas, as the trustee rather than that of any of her three sons, who all live in Hong Kong, to hold the monies is illogical; (iii) the arrangement is not in writing , nor did it specify how the money were to be distributed in the event that there was money left after the purpose for which the alleged trust was created has been met; and (iv) the ambiguous purpose for which the money was to be used in the event she died before the husband.

(c) Any witnesses?

53.The Mother is the only witness.   She has not called any of her children to give evidence to corroborate her evidence.  She explained that it was because she did not want to trouble her sons, and  the Daughter was not able to come back to Hong Kong because she was still a judgment debtor.                  

54.Mr. Lam contended that the children’s evidence would be highly relevant to the Mother’s case. However, as the Mother had failed to call any witnesses to corroborate her evidence, Mr. Lam urged me to draw an adverse inference against her (Ip Man Shan Henry v Ching Hing Construction Co. Ltd (No.2) [2003] 1 HKC 269).

(ii) Discussion

(a) Documents corroborating the late husband’s health condition

55.The Mother was cross-examined in length.  I observed that the Mother looked extremely upset whenever she had to recount the medical conditions of her late husband such as when she recalled how stressful it was when her late husband became incontinent when going out. Every now and then,I had to ensure that she was emotionally fit to continue with her testimony.

56.According to the Mother, before she made the decision to transfer the monies to the Daughter, her personal circumstances were something like this:  Her late husband’s health had not been good for sometime.  Apart from suffering from dementia, her late husband had been suffering from diabetic, prostate and stomach problems for a long period of time.  At that time, all the children had moved out, she lived with the late husband, and was the sole person looking after him without engaging a helper. She also suffered from hypertension and depression consequent of what she believed to be the pressure of taking care of her late husband.

57. The Mother’s evidence regarding when the late husband’s health condition deteriorated appears, at first glance, rather confusing.  In her affirmation, she referred to year 2004. In her oral evidence, she said her late husband suffered from dementia since 2002. However when the evidence is considered together, I do not find her evidence inconsistent.  According to the same medical reportreferred to above, it confirms that the late husband suffered from severe dementia with behaviour problem since 2003, and further that the late husband suffered from “type 2 diabetes mellitus, hypertension, ischaemic heart disease, chronic renal failure, gouty arthritis and peptic ulcer with partial gastrectomy 25 years ago.”  The medical report also states that the late husband had poor cognitive function.

58.The medical report, in my view, certainly confirms that the late husband had not been in good health for quite some time.  His condition deteriorated to the extent that his cognitive function was found to be poor since 2003.  The Mother’s evidence that the late husband started to suffer from dementia in 2002 is in fact supported by documents.  According to the medical report the late husband was found to be suffering from severe dementia since 2003.  Hence, it is likely that the late husband’s condition had  gone downhill from then onwards.   I think it is wholly unfair to criticize the Mother for being unable to pinpoint to a particular time as to when the late husband’s condition started to deteriorate. 

59.On the evidence, I cannot say that the Mother’s evidence is not reliable.  On the contrary, I find there are documents supporting her evidence that before she made the money transfer, the late husband’s health had been adversely affected by dementia.     The solicitors’ letter also corroborates the Mother’s evidence that the late husband had been suffering from dementia since 2002.

60.In the circumstances, I find that before the money transfer in 2004, the late husband’s health was extremely poor.  Given the state of health the late husband was in at that time, I further accept the Mother’s evidence that she too had suffered from poor health as a result.

(b) Recent disclosure of a family meeting announcing her intention

61. Owing to the late husband’s condition (which was, as confirmed by the doctor, already severe by 2003), and that she was taking care of the late husband alone, the Mother, being the sole carer of the husband,would have been under extreme mental and physical pressure for some time before she decided to transfer some of her savings to the Daughter.

62.In view of the pressure and the worries the Mother was facing, would it not be unreasonable for the Mother to be concerned for her late husband’s welfare in the event she predeceased him, and started to make plans for this contingency?  I do not think it is unreasonable.

63.I further find that not only it is reasonable for the Mother to start planning for the contingency of her predeceasing the husband, it would also seem to be quite natural, in view of her pre-occupation with her late husband’s condition, that she would most likely discuss her worries about her late husband not only with her friends, but also with the children to whom she felt close.

64.When the Daughter came to Hong Kong for a family visit in May 2004, the close-knit family such as the Mother’s would undoubtedly gather together.  It would be logical that the Mother would choose a family occasion such as a family dinner to discuss with her children about her concern in relation to the care of her late husband in the event that she died before him.

65. It is true that the Mother only mentioned about this family meeting for the first time in her oral testimony.  Her credibility in relation to this family discussion wastherefore being attacked.  Under cross-examination, the Mother said that she believed she had mentioned this family discussion to her lawyers. However, she was not sure how her lawyers prepared her instructions.  She could not explain why the family discussion was not mentioned in her affirmations.  Although she said her lawyers explained to her the contents of the affirmations, she forgot the contents as soon as her lawyers had told her because of her poor memory.

66. The evidence of the family gathering, were it accepted, is favourable to her claim. I cannot find any logical reason therefore for the Mother to conceal it from her lawyers.                     

67. I think it is likely that the Mother might have omitted to tell her lawyers about this family gathering because of her poor mental and physical state at the time.  Apart from being required to deal with her claim (which must have been stressful), the Mother had been subject to the pressure of looking after her ill husband, who suddenly passed away in January this year in the middle of the claim.  The pressure must have been enormous.  I do not therefore find this late disclosure leads me to reject this aspect of her evidence. 

68.I find that the family meeting did take place.

69.The Daughter since her second marriage only visited Hong Kong occasionally. It would have been natural that the Mother would choose the time of the Daughter’s visit to discuss with all her children about her intention of making arrangement for the welfare of her late husband should she die before him. I believe that the Mother, beinguneducated, would hardly use any legalistic word to express such an intention.  She may not have even used the words 託管 (which may be a phrase she had heard as a result of the litigation). I am however satisfied that shehad used words sufficiently expressing an intention of wanting the Daughter to keep the monies on her behalf to cater for the contingency of her pre-deceasing the late husband.

70. Regarding the reason why she had chosen the Daughter instead of her sons to be her money-keeper, the Mother’s explanation - when examined from the Mother’s perspective - does not appear to be illogical.  She said that the reason why she preferred the Daughter to her three older sons to keep the monies, apart from her love and trust for the Daughter, was because she thought that her sons, being civil servants, would not be allowed to have large sums of monies in their bank accounts.  She also said that all her three sons had refused to keep the monies.

71. Whether the civil servant sons in fact were or were not allowed to hold the monies in my view is not relevant.  What really matters is what the Mother thought.  Among her four children, the Daughter was the only child who was not a civil servant.  Hence, to the Mother, the Daughter, whom she trusted and loved, would seem to be the most suitable choice of the person to keep the monies for her.

72.  I find that the Mother’s primary concern at that time was her concern about the husband’s welfare in the event that she died. Hence, I believe the Mother had not discussed with her children at the family dinner on matters such as how the money was to be distributed in the event of a surplus.  Obviously, at that time what really mattered to her was to ensure that a satisfactory arrangement to be in place for the future welfare of her late husband.  Such kind of arrangement is quite different to, for example, an arrangement for the disposal of a deceased’s estate.  This perhaps also explains why the Mother did not think of making a will for the reason that her purpose was not to make any arrangement about distribution of her assets upon her death.

73.  In any event, I do not think the Mother was sophisticated enough to think about matter such as making of a will.  I believe she was indeed worried about the prospect of her accounts being frozen when she died (as a result of what she has likely heard from her friends). Even a person dies leaving a will, an executor or the beneficiaries would unlikely be able to deal with the deceased’s accounts until probate is obtained. Therefore even if the Mother were to make a will, her accounts would still be frozen upon her death.  Whether it would be more logical for the Mother to make a will (as Mr. Lam suggested) is not relevant. I am inclined to think that the Mother must have thought that the most straightforward solution to her problem was by transferringsome of her monies into the accounts in the name of the Daughter.  She had said she had trusted her, and more importantly, the Daughter had in the past handled monies for her by investing on her behalf. 

74.  It is also suggested that the arrangement was loose in the sense that not only it was not recorded, there was also no clear explanation as to why or how the Mother decided the amounts deposited into the Daughter’s accounts.  Neither had the Mother given any satisfactory evidence as to whether the monies in the Daughter’s accounts in the event that she died were to be used for the late husband’s general living expenses or medical expenses.                   

75. According to the Mother’s evidence, she wanted to ensure that there were monies to pay for the husband’s living.  She had also briefly alluded to the payment of medical expenses in her oral evidence. Although the Mother’s evidence was not perfectly clear regarding how the monies were to be spent for her husband, I am inclined to believe that they must be for payment for all the late husband’s expenses.  In 2004, the late husband’s dementia was already so severe that he had lost his cognitive thinking, and undoubtedly he was not capable of looking after himself. The Mother had made it very clear that she wanted to provide for the care of the husband.  Hence, I do not find there is any ambiguity in relation to the Mother’s intention as to how the monies were to be spent as I am satisfied on the evidence that the Mother had intended the monies to cover all the expenses, including medical expenses, for the husband.

76. It is indeed quite true that the Mother’s evidence is not clear in relation to how she came to decide on the amount of about $2.5 million when transferring the monies to the Daughter’s accounts .   According to the bank statements the Mother had disclosed, it appears that the sums transferred to the Daughter’s newly opened accounts in the Bank of America were from the Mother’s two bank accounts –  the Bank of America and the Hang Seng Bank. The sum of $2.5 million was mostly from the closed accounts of Bank of America and another sum of about $400,000 was from Heng Seng Bank. After transferring these monies to the Daughter, the Mother in fact had only one HSBC account with about $1 million in her own name.  Although the Mother was unable to give a very clear answer, however, I am inclined to infer, after having looked at her evidence in the round, that the amounts deposited in the Daughter’s accounts were simply he aggregate sums from the Mother’s closing of her accounts with the Bank of America, and withdrawing a substantial amount of monies from her Heng Seng Bank, which would consequences of account consolidation as well as having monies for the care of the late husband- both of which the Mother had intended to achieve by the transfer.

77.  I am also satisfied that the Mother’s credibility has not been tainted for having failed to record the arrangement in writing.  Informal family arrangements are frequently made with nothing in writing.  I do not think there is anything unusual about it.

78.  I therefore find that the Mother had made known her reasons to the children for the money transfer in the family dinner.

(c) The effect of calling no witnesses

79. The Mother’s explanation for not calling her sons who were all in Hong Kong was because she did not wish to trouble them.  As for the Daughter, she said because she was in France, it was not convenient to call her.

80. If the sons did not wish to have anything to do with the Mother’s monies because of the fact that they were civil servants, it would not be unreasonable for them to wish to continue to stay out of any involvement with this matter. It is true that the Daughter, if available, may be in a position to give supporting evidence.  However, in view of the existing money judgment against the Daughter, it is highly unlikely that she would be willing to come back to Hong Kong to give evidence. Hence, it is not possible for the Mother to call her as a witness.  In any event, any evidence of the children in support of the Mother’s case, whatever it is worth, would not likely to be given much weight because of the family relationship.

81. I do not therefore think that I should draw any inference against the Mother because of her failure to call any of her children to be her witnesses.

(ii) Conclusion

82. From the discussion above, I am satisfied that as a result of the husband’s deteriorating health as well as the Mother’s own health, the Mother’s main reason for transferring the monies to the Daughter is to circumvent her fear of her accounts being frozen upon her predeceasing the late husband so that monies could not be available immediately for the care of the late husband. I find that the Mother’s intention is to let the Daughter keep the monies on her behalf for the welfare of her late husband.

(III) Was a trust created?

83. It is submitted that even if it were accepted that the Mother had transferred the money for the purpose of looking after the late husband after she died, the Mother would still be required to satisfy me that she had not allowed the Daughter to keep the money after the purpose for which the money was entrusted with the Daughter was no longer required.  Mr. Lam contended that in fact the evidence suggested that the Mother had most likely wanted the Daughter to keep the money for reasons that the Mother loved the Daughter the most, and in particular the Daughter was not financially well off.  Should that is what I have found, Mr. Lam submitted that it would not affect the fundamental nature of the transfer that no trust had been created.                     

84. Mr. Lam submitted that after the late husband had passed away, the Mother still has not asked the Daughter to transfer the money back to her, which evidence strongly suggests that the Mother had intended the Daughter to keep the monies. 

85. The Mother explained that the reason she has not asked the Daughter to transfer the money to her because the Daughter was not able to come back to Hong Kong due to the existing judgment against her. The Daughter is a judgment debtor with a judgment sum  exceeding $6 million.  She would naturally be least willing to come back to face the consequences.  The fact that the Daughter was not able to come back for her father’s funeral seems to support what the Mother said about her Daughter.Hence, it would not have been possible for the Mother to ask the Daughter to re- transfer the monies to her (possibly not until the Daughter resolves the problem of the money judgment).

86.   In any event,whether the Mother has failed to ask the Daughter to transfer the money back to her is only academic.  The husband only died after the Orders of Garnishee Nisi were made, and as a consequence, the re-transfer would not have been possible because the accounts with the garnishees were frozen. 

87. In her evidence, the Mother said she loved all her children, and she indeed loved the Daughter the most because she was the youngest child.  The fact that the Daughter has married twice and that her present husband is not a man of wealth, in my view, is insufficient for me to draw an inference that the Mother would be most willing to part with her monies.  In the last question by Mr. Lam, the Mother was asked whether she had thought about  letting the Daughter keep the money if it was no longer needed for the use of the late husband.  The Mother answered this question with great defiance, and replied that it would never occur to her to let the Daughter have the money as she had many children.

88.  The Mother’s answer to this question, in my view, is very cogent evidence that the Mother never intended to give any of the monies to the Daughter to whom she had transferred.    

89.  Had the Daughter been gifted the monies as Dr. Lam suspects, the Daughter, in view of her adverse financial situation, would likely resort to the use of the monies, and even completely depleted the accounts.  However, after the Mother had transferred a total sum of about $2.5 million to the Daughter’s accounts in May 2004, after 3 years, the total sum in the accounts as of 31 January 2007[1] had in fact slightly increased by about $126,600.  This, in my view, has weighed heavily in favour of the Mother’s case that she had continued to manage the time deposits in these accounts, and the Daughter, according to the Mother, was only required to remind her whenever fixed deposits were about to mature. 

90.  Without deciding whether Mr. Lam’s  assertion - that there was no trust when the Mother had intended to give the money to the Daughter after the original purpose for which the monies were held on trust had been served - is valid or not, I find the Mother has, all in all, adduced overwhelming evidence in support of her claim that the monies in the garnishees were hers, and she has not divested of her beneficial ownership.  I am unable to infer, as Mr. Lam contended, that the Mother intended to give away her monies to the Daughter just because the Mother loved her the most and was extremely concerned for her well-being.

91. For completeness, I accept that the Mother was not aware of the money judgment against the Daughter when she transferred the monies to her.  I think that had she been aware of the money judgment, it is unlikely that the Mother would transfer any sums of monies into an account of a judgment debtor. 

92.  From the above discussions, after having considered all the evidence very carefully, I conclude that the Mother has created a trust.

(IV) Findings

93 In light of the matters aforesaid, I find that the Mother has proved that when she transferred monies into the accounts in the name of the Daughter, she intended the Daughter to be a mere account holder.  She never intended to gift any of the monies to the Daughter.

94.In the circumstances, I find that the monies in the garnishees belong to the Mother beneficially and the Daughter merely holds the monies on trust for the Mother.

Conclusion

95.  In the circumstances, I find that the Mother succeeds in proving her claim.  It follows therefore that I shall dismiss the Notices of Garnishee Order to Show Cause, and discharge the Orders of Garnishee Nisi.

96. As the Mother is the successful party in this claim, I further grant a costs order nisi to her, including all costs reserved, together with a certificate for counsel, to be taxed if not agreed.

[1] The total amount in the accounts of BA was HK$2,552,218.32.  The account as of 31/1/2007 is in the total sum of HK$2,678,831.37.  Hence, the amount was increased  by $126,613.05.