KWAN SHIU YIN LOUIS as the Executor of the Estate of KWAN MAN CHOCK v. KWAN PO CHUEN PAULA

CACV 50/2024, [2026] HKCA 212

On appeal from [2024] HKCFI 56

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO 50 OF 2024

(ON APPEAL FROM HCA NO 1437 OF 2019)

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J U D G M E N T

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Hon Kwan VP (giving the Judgment of the Court):

1.  This is an application for leave to appeal to the Court of Final Appeal against our judgment on 17 January 2025, the reasons for which were handed down on 6 February 2026 (“CA Reasons”)[1]. By our judgment, we allowed the plaintiff’s appeal against the judgment of Ng J on 10 January 2024 (“CFI Judgment”)[2] dismissing his claim and ordered that there be a retrial of the action before another judge, limited to the issue of undue influence.

2.  The application for leave to appeal is made by a new team of counsel and solicitors for the defendant.

3.  We adopt the terms and expressions in the CA Reasons for convenience.

4.  We give leave to the defendant to amend her notice of motion to raise an additional question in her intended appeal to the Court of Final Appeal. The defendant is to file an amended notice of motion as per the draft annexed to her application for amendment within 7 days of this judgment, service of the amended notice of motion on the plaintiff is dispensed with. Costs of the amendment application are to the plaintiff.

5.  The questions said to be of great general and public importance as framed by the defendant will be considered in this order:

(1)  “Whether the approach relating to proof of undue influence where the relationship between the allegedly dominant party (B) and the allegedly subservient party (A) does not fall within Slade LJ’s Class 2A category (as laid down in Aboody[3]) represents a departure from the approach adopted by the English courts?” (“Question 1”)

(2)  “In determining the explicability or otherwise of the transaction by reference to the normal motives by which people are accustomed to act, which is entered into by the allegedly subservient party (A) under undue influence exercised by the allegedly dominant party (B), whether the Court is entitled to have regard to the special circumstances of the case including the subjective view of (A)?” (“Question 2”)

(3)  “Where the trial judge has applied the wrong test but it has not been shown that he misapprehended the facts in reaching his conclusion, whether the Court of Appeal should remit the matter to the original trial judge to decide having regard to what the Court of Appeal considered to be the correct approach instead of ordering a retrial of the issue afresh before another tribunal?” (“Question 3”)

6.  The defendant also relied on the “or otherwise” limb, stating in the notice of motion:

“Further or alternatively, the Defendant should be given leave to appeal pursuant to the said provision[4] on the ground that the appeal ought otherwise be submitted to the Court of Final Appeal for decision having regard to the fact that serious miscarriage of justice has been occasioned to the Defendant by the decision of the Court of Appeal. In result, she was not just deprived of the Deceased’s gift of valuable shares but she was also plunged into another gruelling trial in order to salvage the gift and her reputation. Such injustice ought to be undone by the Court of Final Appeal.”

Question 1

7.  Mr Albert Yau[5] submitted on behalf of the defendant that there is a difference between the approach of the Hong Kong courts and the English courts over the proof of undue influence where the relationship between the dominant party and the subservient party is not a relationship that falls within Slade LJ’s Class 2A category. In Li Sau Ying v Bank of China (Hong Kong) Ltd (2004) 7 HKCFAR 579 at §34, Lord Scott of Foscote NPJ cautioned against reliance on the evidential presumption of undue influence, which was likely to give rise to confusion. Also in §29, Lord Scott did not specifically mention the requirement of explicability (ie whether the impugned transaction can readily be explained by reference to what ordinary people do based on ordinary motives) and stated instead:

“For my part, I doubt the utility of the Class 2B classification … The presumption in Class 2B cases, … is doing no more than recognising that evidence of the relationship between the dominant and subservient parties, coupled with whatever other evidence is for the time being available, may be sufficient to justify a finding of undue influence on the balance of probabilities …”[6] (emphasis supplied by counsel)

8.  Mr Yau submitted that Lord Scott’s approach in Etridge was “less progressive” than the views he expressed in Li Sau Ying, because in Etridge he mentioned the twin requirements in determining whether undue influence could be inferred (“the combination of relationship and the nature of the transaction that gives rise to the presumption” (at §156)) and expressly referred to the nature of the impugned transaction (“its inexplicability by reference to the normal motives by which people act, may, and usually will, constitute important evidential material” (at §155)). And the twin requirements can be traced back to Allcard v Skinner (1887) 36 Ch D 145.

9.  Mr Yau argued that Lord Scott’s approach in Li Sau Ying marked a “departure from the traditional English approach” in respect of “presumed undue influence” (which expression is still used in the UK whereas its use was deprecated in Li Sau Ying) which focused on whether certain requirements were met, and, if satisfied, would shift the evidential onus to the transferee to explain the impugned transaction and if unexplained or not explained satisfactorily, undue influence would be established. Mr Yau submitted that the approach in Li Sau Ying “involves assessing the totality of the evidence and determining whether undue influence can be inferred, on a balance of probabilities, which impugn the transaction”. He added that under this approach, “[there] is no particular emphasis on the significance of specified factor; rather, the final determination depends on a holistic analysis of the entire body of evidence made available before the trial judge”. He called this the “totality approach”.

10.  Mr Yau submitted that Ng J had followed the above approach, and hence looked at the totality of the evidence in deciding whether undue influence was established.

11.  Question 1 and Mr Yau’s submissions are premised on a misreading of Lord Scott’s judgments in Etridge and Li Sau Ying. Mr Yau seized on the words “coupled with whatever other evidence is for the time being available” in the passage quoted above from Li Sau Ying at §29 to support his “totality approach”. These words came from the judgment of Lord Scott in Etridge at §161. In that passage, Lord Scott was not disavowing what he had said a few paragraphs earlier about the “twin requirements” at §§155 and 156, nor did he in Li Sau Ying advocate a departure from those well recognised requirements.

12.  What Lord Scott stated in Li Sau Ying was not a different approach from his judgment in Etridge. To put this to rest, it is worth giving a full quotation of what he said in Etridge at §219:

“219. The presumption of undue influence, whether in a category 2A case, or in a category 2B case, is a rebuttable evidential presumption. It is a presumption which arises if the nature of the relationship between two parties coupled with the nature of the transaction between them is such as justifies, in the absence of any other evidence, an inference that the transaction was procured by the undue influence of one party over the other. This evidential presumption shifts the onus to the dominant party and requires the dominant party, if he is to avoid a finding of undue influence, to adduce some sufficient additional evidence to rebut the presumption. In a case where there has been a full trial, however, the judge must decide on the totality of the evidence before the court whether or not the allegation of undue influence has been proved. In an appropriate case the presumption may carry the complainant home. But it makes no sense to find, on the one hand, that there was no undue influence but, on the other hand, that the presumption applies. If the presumption does, after all the evidence has been heard, still apply, then a finding of undue influence is justified. If, on the other hand, the judge, having heard the evidence, concludes that there was no undue influence, the presumption stands rebutted. A finding of actual undue influence and a finding that there is a presumption of undue influence are not alternatives to one another. The presumption is, I repeat, an evidential presumption. If it applies, and the evidence is not sufficient to rebut it, an allegation of undue influence succeeds.”

13.  As explained in the CA Reasons, the judge was in error in adopting the “totality approach”, due to a misunderstanding of the guidance in Li Sau Ying.

14.  We refuse to give leave to appeal for Question 1 because it is not reasonably arguable.

Question 2

15.  Mr Yau submitted that in assessing the explicability of the impugned transaction, the test is not entirely an objective test and whether a transaction is one that calls for explanation is “not based simply on the objective, general features of the transaction: it can be reached only once the specific facts of the case have been considered, and no explanation can be found as to why [the subservient party] should have chosen to enter into the transaction, except that his or her intention was procured by undue influence”[7].

16.  A further passage from Snell’s Equity at §8-029 (not cited by Mr Yau) may also be of assistance:

“As is the case with establishing a relationship of influence, the examination of the nature of the transaction is simply part of the central factual inquiry into the presence of undue influence. As a result, the examination is heavily fact-sensitive and cannot be wholly separated from the other factors relevant to the general inquiry, such as those going to the existence of a relationship of influence, nor from those used to rebut a presumption of undue influence should one arise. When considering the transaction, the court must ‘look at it in its context and see what its general nature was and what it was trying to achieve for the parties’. It should therefore be a mistake to think that, because the impugned transaction can be equated with one found to satisfy the test in a previous case, the presumption of undue influence necessarily arises in the present case. With that warning in mind, it can be noted that examples of transactions that have met the test include, but are not limited to, the following: substantial gifts, purchases at an undervalue, sales at an excessive price, leases which damage [the subservient party’s] reversion, loans on favourable terms, and transfers which involve an imbalance of benefits.”

17.  Mr Yau recognised that the judge had not made any finding of a relationship of influence, nor had the Court of Appeal decided whether the explicability of the impugned transaction should be assessed objectively or otherwise. The judge had not applied his mind to how the question of explicability of the transaction should be resolved. The views he expressed in §§48 and 49 of CFI Judgment were made in the context of whether the Deceased had intended to make a gift to Paula, and that is a different inquiry as explained in the CA Reasons. As the above passage in Snell’s Equity demonstrates, there are fact-sensitive questions that cannot be wholly separated from other factors relevant to the general inquiry. The relevant findings of primary fact have not been made, and that is why we ordered a retrial limited to the issue of undue influence.

18.  It is meaningless to grant leave to appeal on a hypothetical question. We refuse to give leave to appeal on Question 2.

Question 3

19.  This may be disposed of quickly. On no account could the question of whether the retrial should be conducted by the original trial judge or a different judge be a question of great general public importance. We refuse to give leave for Question 3.

“Or otherwise” ground

20.  We leave the complaint of injustice of a retrial for the “or otherwise” ground to be considered by the Appeal Committee of the Court of Final Appeal, in accordance with the usual practice.

Orders

21.  We dismiss the notice of motion for leave to appeal to the Court of Final Appeal as amended. We order the defendant to pay the plaintiff’s costs of this application.

22.  We have considered the statement of costs of the plaintiff for summary assessment. We regard the fees excessive and reduce the amount from $319,622 to $190,622. The assessment of costs is in the nature of an order nisi.