PANG SIU HING v. TSANG KWOK MAN

HCA6970/2000

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO.6970 OF 2000

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J U D G M E N T

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1. Tsang Yee Yuen ("the deceased") was an hawker. He spent all his working life earning his living as an hawker. In 1958, when the deceased was 23 years of age, he married Pang Siu Hing. She is the administratrix of his estate. Their marriage was blessed with five sons. They were born in the years of the decade commencing 1958. Tsang Kwok Man ("the defendant') was born in 1963. His elder brother, Tsang Kwok Fai, called as a witness by the plaintiff, was born in 1961.

2. The deceased died in hospital on 11 January 1999 having been admitted to hospital on 17 December 1998. At the time of his death the deceased was the joint owner with the plaintiff, as tenant-in-common, of premises at Flat B, 1/F, Block 3, Balwin Court, 154-164, Argyle Street, Kowloon. In mid-June 1998, the deceased held two Hong Kong dollar time deposits with the Mongkok Branch of the Kwong On Bank. Separate account numbers were ascribed to those two time deposits. One time deposit was in the sum of approximately $1.2 million ("the $1.2 million deposit") and the other, approximately $1.8 million ("the $1.8 million deposit"). On 25 June 1998, an account in the joint names of the deceased and the defendant ("the joint account") was opened with the Kwong On Bank. The joint account mandate permitted either one of the two to operate the account, the deceased by use of a chop impression and the defendant by manuscript signature. On 25 June 1998, the $1.8 million deposit in the sole name of the deceased was transferred to the joint account to create another one month deposit. Similarly, on 15 July 1998, the $1.2 million deposit was transferred from the account in the sole name of the deceased to the joint account creating a separate deposit.

3. On 30 December 1998, the $1.8 million account was closed on the instructions of the defendant and a cashier's cheque drawn in his name. The $1.2 million deposit remained in the joint account until after the death of the deceased, it being closed on 21 January 1998 on the instructions of the defendant and a cashier's order drawn in his favour for the balance of that account.

THE PRESENT PROCEEDINGS

4. The plaintiff, as administratrix of the estate of the deceased, commenced the present proceedings on 12 July 2000. By the Amended Statement of Claim she seeks a declaration that both the $1.2 million and $1.8 million deposits, together with the interest accumulated thereon, are held on trust for the estate of the deceased. In addition, the plaintiff seeks related relief, including an enquiry and an account.

THE ISSUES

The plaintiff's case

5. The plaintiff avers that the transfers of the $1.2 million and $1.8 million deposits from the account in the sole name of the deceased to the account in the joint names of the deceased and the defendant were made under the undue influence of the defendant. Further, that at all times it was the intention of the deceased that the monies held in the joint names of the deceased and the defendant be held for and on his behalf for his sole use and benefit during his life and thereafter upon his death for distribution amongst his family.

6. The essence of the plaintiff's case in respect of undue influence is that the deceased had become dependent upon the defendant not only for his personal care, provision of a home and sustenance but also in respect of the management of various aspects of his financial affairs, in particular, the management of Balwin Court and matters related thereto, which had been rented out commencing the beginning of January 1995. In addition, that at the time of the transfer of the two fixed deposits in June and July 1998, the deceased was in chronic bad health and had been recently admitted as a patient to hospital.

The defendant's case

7. The essence of the defendant's case is reliance upon the relationship of the deceased and the defendant, namely father and son, which is said to give to the presumption of advancement in favour of the defendant in respect of the two deposits. Also, it is denied that the deceased was under the undue influence of the defendant. Further, it is denied that the two fixed deposits in the joint-named account of the deceased and the defendant belonged to the deceased solely in his life or that on his death they were to be distributed amongst the deceased's family. In particular, the defendant avers that in December 1998, the deceased told the defendant on separate occasions that the two fixed deposits in the account in their joint names were monies that he was now giving to the defendant to deal with in any way that he so chose in his absolute discretion.

THE PRESUMPTION OF ADVANCEMENT

8. It is well settled law that a presumption of advancement in favour of a child arises on the occasion of the transfer of property by the father into the name of the son. On the transfer of the two sums of money into the joint account in the names of father and son, the money having been provided solely by the father, there is a rebuttable presumption of advancement to the child, upon survivorship, of the amount, if any, standing to the credit of the account as at the death of the father. (See McEvoy v. The Belfast Banking Company [1935] AC 24.) Of the issue Megarry J said in In re Figgis, DECD [1969] 1 Ch. 123, at 144C :

" The application of the presumption of advancement to a joint bank account seems undoubted; ...."

Megarry J went on to recognize that there were unusual features in the operation of the presumption of advancement in the case of bank accounts :

" It appears to me that there is some difficulty in defining the precise way in which the doctrine of advancement operates in the case of bank accounts. ...."

Later, he offered a solution :

" It may be that the correct analysis is that there is an immediate gift of a fluctuating and defeasible asset consisting of the chose in action for the time being constituting the balance in the bank account. ..."

9. In Overseas Trust Bank Limited v. Lee See Ching John [1999] 3 HKC 197, the relevant factual background was the creation by the deceased father of three fixed deposit accounts in the name of his son. Nevertheless, all the account documents were sent to the father, all the monies deposited into the accounts came from him and he would from time to time withdraw money from those accounts for his own purpose. Notwithstanding those features Godfrey JA said in his judgment (p.203H) :

"... But this odd characteristics do not as a matter of law preclude the transaction being regarded as one in which the donee takes an immediate beneficial interest in the money."

He went on to adopt the analysis of Megarry J cited earlier.

10. Of the nature and operation of the "presumption", Godfrey JA said (p.201E-G) :

".... This 'presumption' (known as 'the presumption of advancement') is, like all presumptions, a device 'whereby the courts are entitled to pronounce on an issue notwithstanding that there is no evidence or insufficient evidence about it.... It describes the readiness of the courts to draw inferences from common human experience... In reality it is no more than a slightly grandiose term for the ordinary process of judicial reasoning about facts': see Phipson on Evidence, (14th Ed, 1990) at p 83. It follows that if there is evidence, even if only slight evidence, militating against the operation of the 'presumption', the court is at liberty to treat the 'presumption' as displaced. ..."

The ambit of the evidence available to rebut the presumption

11. Objection is taken on behalf of the defendant to recourse by the court to the evidence given by the plaintiff of a conversation had with the deceased on 18 December 1998, the day after the deceased's admission to hospital and shortly before his death on 11 January 1999.

12. In her evidence the plaintiff testified that she had a conversation with the deceased on 18 December 1998 after she had discovered the time deposit slip in the joint name of the deceased and the defendant. She testified that she raised with the deceased the circumstances in which that occurred and that the deceased had assured her that it did not matter that it was held in joint name, that he had instructed the defendant that if anything was to happen to the deceased all his property including the deposit would be handed over to the plaintiff for distribution to members of the family. Mr Mak submits that this evidence is not admissible to rebut the presumption of advancement, being a declaration of the deceased donor subsequent to the transfer of the monies. He submits that subsequent acts or declarations by the deceased are only admissible as evidence against but not in favour of the plaintiff. In support of that submission he relies upon the judgment of the Court of Appeal in Overseas Trust Bank Ltd v. Lee See Ching John [1999] 3 HKC 197. In his judgment Godfrey JA addressed this issue thus :

"What evidence is relevant and admissible on these issues?

It has been clear since at least 1818 (see Murless v Franklin (1818) 1 Swan 13; 18) that, in cases like this, the only admissible evidence as to the intention of the father must apply to the time of the initial transaction. ..."

The learned judge went on to say :

"... The leading case of Shephard v Cartwright [1955] AC 431, which is to the same effect, makes it clear further that evidence of the acts and declarations of the parties before or at or immediately after the time of the transaction, constituting part of that transaction, is admissible for or against the party doing the act or making the declaration; but that evidence of subsequent acts or declarations is admissible only against the party doing or making them."

13. In the speech of Viscount Simonds in Shephard v. Cartwright [1955] AC 431, the following assertions in Snell's Equity, 24th edn, p.153 were described as well settled law :

" The acts and declarations of the parties before or at the time of the purchase, or so immediately after it as to constitute a part of the transaction, are admissible in evidence either for or against the party who did the act or made the declaration ... But subsequent declarations are admissible as evidence only against the party who made them, and not in his favour." (p.445)

14. As I understood Mr Wong, he sought to distinguish those cases on the basis that there the assets, shares and subsequently monies in one case and monies in the other, had been placed in the sole name of the donee. Here, the monies were placed in a joint account. However, in my judgment there is no valid distinction, the presumption of advancement arising in both cases.

15. In my judgment, evidence of assertions by the deceased to the plaintiff on 18 December 1998 that he intended and had instructed the defendant to make the monies in the fixed deposit available to the plaintiff for distribution to the family on his death is not admissible and available to the plaintiff in rebutting the presumption of advancement. By contrast, the evidence of the defendant of his conversations with the deceased on or about 5 December 1998 and at a date some days subsequently in which he testified the defendant indicated that the monies in the two fixed deposits were a gift by the deceased to the defendant for him to do as he chose is admissible is admissible in favour of the defendant, being declarations against the deceased's interests and the interests of his estate. Nevertheless, I propose to consider whether I find proved all three asserted conversations in my review of the evidence.

UNDUE INFLUENCE

16. The recent decision of the House of Lords in Royal Bank of Scotland plc v. Etridge (No.2) [2002] 2 AC 773 in which the subject of undue influence was addressed comprehensively has been considered at first instance by Mr Recorder Ma, (as he then was), in Bank of China (Hong Kong) Ltd v. Wong King Sing [2002] 1 HKC 83. In the speech of Lord Nicholls in Royal Bank of Scotland plc v. Etridge (No.2), the objective of the development of the defence of undue influence was addressed (p.794G) thus :

" ... Undue influence is one of the grounds of relief developed by the courts of equity as a court of conscience. The objective is to ensure that the influence of one person over another is not abused. ..."

The defence has developed to provide protection in a relationship between two persons where one has acquired over another a measure of influence or ascendancy of which that person takes unfair advantage. Of those circumstances Lord Nicholls went on to say (p.795, paragraph 9) :

" ... the influence one person has over another provides scope for misuse without any specific overt acts of persuasion. The relationship between two individuals may be such that, without more, one of them is disposed to agree a course of action proposed by the other. Typically this occurs when one person places trust in another to look after his affairs and interests, and the latter betrays this trust by preferring his own interests. He abuses the influence he has acquired."

Of the ambit of the relationship between the two parties, he went on to say (p.795H, paragraph 11) :

" ... The principle is not confined to cases of abuse trust and confidence. It also includes, for instance, cases where a vulnerable person has been exploited. Indeed, there is no single touchstone for determining whether the principle is applicable. Several expressions have been used in an endeavour to encapsulate the essence : trust and confidence, reliance, dependence or vulnerability on the one hand and ascendancy, domination or control on the other. None of these descriptions is perfect. None is all embracing. Each has its proper place."

17. The burden of proving an allegation of undue influence rests upon the person who claims to have been wronged. That is the legal burden. However, the evidential burden may shift. The different classes of undue influence were delineated in the judgment of the Court of Appeal of England and Wales in Bank of Credit and Commerce International SA v. Aboody [1990] 1QB 923 at 953. That classification was summarised by Lord Browne-Wilkinson in his speech in the decision of the House of Lords in Barclays Bank plc v. O' Brien [1994] 1 AC 180 at 189B-190A :

"Class 1: Actual undue influence

In these cases it is necessary for the claimant to prove affirmatively that the wrongdoer exerted undue influence on the complainant to enter into the particular transaction which is impugned.

Class 2: Presumed undue influence

18. In these cases the complainant only has to show, in the first instance that there was a relationship of trust and confidence between the complainant and the wrongdoer of such a nature that is fair to presume that the wrongdoer abused that relationship in procuring the complainant to enter into the impugned transaction. In Class 2 cases therefore there is no need to produce evidence that actual undue influence was exerted in relation to the particular transaction impugned : once a confidential relationship has been proved, the burden then shifts to the wrongdoer to prove that the complainant entered into the impugned transaction freely, for example by showing that the complainant had independent advice. Such a confidential relationship can be established in two ways, viz.,

Class 2(A)

Certain relationship (for example solicitor and client, medical advisor and patient) as a matter of law raise the presumption that undue influence has been exercised.

Class 2(B)

Even if there is no relationship falling within Class 2(A), if the complainant proves the de facto existence of a relationship under which the complainant generally reposed trust and confidence in the wrongdoer, the existence of such relationship raises the presumption of undue influence. In a Class 2(B) case therefore, in the absence of evidence disproving undue influence, the complainant will succeed in setting aside the impugned transaction merely by proof that the complainant reposed trust and confidence in the wrongdoer without having to prove that the wrongdoer exerted actual undue influence or otherwise abused such trust and confidence in relation to the particular transaction impugned."

18. In this case the plaintiff does not contend for Class 1 : Actual undue influence or for Class 2A : Presumed undue influence. Rather it is contended that the relationship between the deceased and the defendant falls into the Class 2B category.

19. Of the sequential approach needed in the analysis of the evidence, Lord Nicholls in Royal Bank of Scotland plc v. Etridge (No.2) said (p.796 E, paragraph 14) :

" Proof that the complainant placed trust and confidence in the other party in relation to the management of the complainant's financial affairs, coupled with a transaction which calls for explanation, will normally be sufficient, failing satisfactory evidence to the contrary, to discharge the burden of proof. On proof of these two matters the stage is set for the court to infer that, in the absence of a satisfactory explanation, the transaction can only have been procured by undue influence. In other words, proof of these two facts is prima facie evidence that the defendant abused the influence he acquired in the parties' relationship. He preferred his own interests. He did not behave fairly to the other. So the evidential burden then shifts to him. It is for him to produce evidence to counter the inference which otherwise should be drawn."

20. Of the circumstances proof of which is required to give rise to the operation of the presumption, Lord Nicholls went on to say (p.798D-G, paragraphs 21-24) :

" As already noted, there are two prerequisites to the evidential shift in the burden of proof from the complainant to the other party. First, that the complainant reposed trust and confidence in other party, or the other party acquired ascendancy over the complainant. Second, that the transaction is not readily explicable by the relationship of the parties.

Lindley LJ summarized this second prerequisite in the leading authority of Allcard v Skinner 26 Ch D 145, where the donor parted with almost all her property. Lindley LJ pointed out that where a gift of a small amount is made to a person standing in a confidential relationship to the donor, some proof of the exercise of the influence of the donee must be given, The mere existence of the influence is not enough. He continued, at p 185 'But if the gift is so large as not to be reasonably accounted for on the ground of friendship, relationship, charity, or other ordinary motives on which ordinary men act, the burden is upon the donee to support the gift.' In Bank of Montreal v Stuart [1911] AC 120, 137 Lord Macnaghten used the phrase 'immoderate and irrational' to describe this concept.

The need for this second prerequisite has recently been questioned : see Nourse LJ in Barclays Bank plc v Coleman [2001] QB, 20, 30-32, one of the cases under appeal before your Lordships' House. Mr Sher invited your Lordships to depart from the decision of the House on this point in National Westminster Bank plc v Morgan [1985] AC 686.

My Lords, this is not an invitation I would accept. The second prerequisite, as expressed by Lindley LJ, is good sense. It is a necessary limitation upon the width of the first prerequisite. ..."

Lord Nicholls concluded by saying (p.799A) :

" ... So something more is needed before the law reverses the burden of proof, something which calls for an explanation. When that something more is present, the greater the disadvantage to the vulnerable person, the more cogent must be the explanation before the presumption will be regarded as rebutted."

21. In his judgment in the Bank of China (Hong Kong) Ltd v. Wong King Sing [2002] 1 HKC 83 Mr Recorder Ma identified the matters which needed to be proved to give rise to the presumption in class 2B cases (p.96A) :

" In Class 2(B) cases, the complainant needs to do more before the presumption arises. Here, the complainant has first to show that :

(a) he placed trust and confidence in the influencer or that the influencer had acquired an ascendancy or domination over him; and

(b) the transaction cannot be readily explicable by the relationship of the parties."

Of the second matter, Mr Recorder Ma went on to say (pp.98B-99B) :

" As to the second matter to be proved (i.e. the transaction cannot be readily explicable by the relationship of the parties), the point here is that transactions are commonly entered into by people on the ground of friendship, relationship or charity or for other motives on which many people ordinarily act. It would be wrong for the law to set aside everyday transactions when, say, a gift was clearly intended, such as birthday presents or gifts : see Royal Bank of Scotland v. Etridge at 1033 paragraph 24. The presumption under Class 2(B) is intended to apply when the complainant 'makes a gift so large, or enters into a transaction so improvident, as not to be reasonably accounted for on the ground of friendship, relationship, charity or other ordinary motives on which ordinary men act' : see Goldsworthy v. Brickell at 401F-H; Allcard v. Skinner (1885) Ch.D. 145, at 185; Royal Bank of Scotland v. Etridge at 1032 paragraph 22, 1034 paragraph 29, 1088 paragraph 220. And yet, it has to be recognised that sometimes it is the very relationship whether of friendship, kinship or otherwise, that would give rise to the complainant reposing the requisite degree of trust and confidence in the influencer in the first place. The line therefore between what is reasonable (and therefore) acceptable and what is not may therefore at times be hard to gauge. One of the keys is to look at the nature of the transaction itself : Royal Bank of Scotland v. Etridge at 1074 paragraph 156. A Christmas gift is not the same as an unlimited guarantee. This by itself however does not provide the complete answer. Another important guide lies in my view in always looking at the respective characters of the complainant and of the influencer when assessing the impact of their relationship, particularly that of the complainant : c.f. In re. the Estate of Brocklehurst [1978] Ch 14, at 39E-40B. If the complainant is for example a well educated or strong-willed person capable of independent thought, a court may more likely be of the view that he was able to make an informed and free choice for himself in deciding whether or not to enter into the relevant transaction for the benefit of his friend or relative even though he would not personally benefit from the transaction. On the other hand, a naive and dependent person, easily influenced by a stronger or more dominant personality, would be regarded in a completely different light when he has entered into a disadvantageous transaction. In his case, he could well be regarded as having reposed such trust and confidence in the influencer that it becomes questionable whether his decision to enter into the transaction was voluntary. In most cases, it may be sufficient for the court to ask whether the decision was likely to have been freely and voluntarily made by the complainant or whether his mind was effectively made up for him by the influencer. A good illustration of this point is Inche Noriah v. Shaik Allie Bin Omar [1929] AC 127 where the relevant transaction was set aside as between an aunt who was old and illiterate, and her nephew who had the management of her affairs."

22. In the advice of the Privy Council in Inche Noriah v. Shaik Allie Bin Omar [1929] AC 127 their Lordships advised that, notwithstanding that the donor had received independent legal advice from a solicitor before making the gift in question that the facts proved by the respondent were not sufficient to rebut the presumption of undue influence (p.136).

23. Of the issue of independent advice Lord Nicholls in his speech in Royal Bank of Scotland plc v. Etridge (No.2) (p.798A-C, paragraph 20) stated :

"Independent advice

Proof that the complainant received advice from a third party before entering into the impugned transaction is one of the matters a court takes into account when weighing all the evidence. The weight, or importance, to be attached to such advice depends on all the circumstances. In the normal course, advice from a solicitor or other outside adviser can be expected to bring home to a complainant a proper understanding of what he or she is about to do. But a person may understand fully the implications of a proposed transaction, for instance, a substantial gift, and yet still be acting under the undue influence of another. Proof of outside advice does not, of itself, necessarily show that the subsequent completion of the transaction was free from the exercise of undue influence. Whether it will be proper to infer that outside advice had an emancipating effect, so that the transaction was not brought about by the exercise of undue influence, is a question of fact to be decided having regard to all the evidence in the case."

EVIDENCE

Family relations

24. Much time was spent in evidence in addressing in minute detail the family life of the plaintiff, the deceased and their children from the time of their marriage in 1958. From the minutiae, the following undisputed evidence is relevant to the background of the matters in issue. In about 1973, having given birth to five sons, the plaintiff started to work as an hawker herself. That was necessary to make ends meet in the family.

25. In 1976, the eldest son, Tsang Kwok Leung, went to Canada to further his education. His expenses in Canada were supported by the family to the extent of $3,000 per month. That amount matched the amount paid by the deceased to the plaintiff as house-keeping monies per month. The deceased would pay the plaintiff no more. She paid those monies to support Kwok Leung in Canada and paid the family expenses in Hong Kong from her own earnings as an hawker. Eventually, Kwok Leung went on to graduate from a university in civil engineering.

26. In about the end of 1986, on the occasion of the marriage the second son, Tsang Kwok Fai, the deceased provided the balance of the purchase price, $250,000, of a flat in City One, Shatin, purchased by Tsang Kwok Fai.

27. In about May 1987, on the occasion of the marriage of the defendant, the deceased provided the defendant with about $150,000 to $160,000 to assist him in the purchase of a property to be a matrimonial home. A few months later, the deceased provided the defendant with a similar sum of money in order that the monies owing on the mortgage might be repaid. The circumstances of these two gifts of money by the deceased to the defendant are matters that I will return to in the context of the character of the defendant.

28. In about 1990, domestic premises at Flat B, 1/F, Block 3, Balwin Court, 154-164 Argyle Street were bought in the name of the plaintiff and the deceased. That purchase was funded in part by the proceeds of the sale of a previous matrimonial home and warehouse premises previously owned by the deceased's mother-in-law, which on her death had been sold.

29. Sometime later, having obtained his master's degree in Canada, Tsang Kwok Leung returned to Hong Kong to live with the plaintiff, the deceased and Tsang Kwok Ming at the Balwin Court premises. However, having married in Hong Kong he returned to live in Canada. Since he had obtained the benefit of family support for his education, he was not given monies equivalent to those given to Tsang Kwok Fai and the defendant to purchase property on the occasion of their marriage. By this time, the deceased had retired from work.

The defendant's care of the deceased and managements of some of his financial affairs

30. In June 1994, the deceased, the plaintiff and Tsang Kwok Ming emigrated to Canada. In anticipation of that event the plaintiff and the deceased executed a power of attorney, dated 15 June 1994, in favour of the defendant to enter into tenancy agreements and manage the premises at Balwin Court on their behalf. However, the deceased did not enjoy life in Canada and, after a few months, returned to live in Hong Kong. Thereafter, save for a month long visit to Canada in March 1995, he resided in Hong Kong.

31. Pursuant to the power of attorney, the defendant entered into a two-year tenancy agreement to commence 1 January 1995 in respect of the Balwin Court premises. From the time of his return to Hong Kong from Canada, apart from the periods of his hospitalization in June, July, the second half of December 1998 and the first half of January 1999, the deceased lived with the defendant and his family at various quarters provided by the Customs and Excise Department.

32. On 14 April 1997, pursuant to the power of attorney, the defendant entered into a second tenancy agreement for two years to commence on 1 May 1997 in respect of the Balwin Court premises. Throughout the currency of both of these tenancies in respect of Balwin Court, the defendant had collected rent on behalf of the plaintiff and the deceased. However, acting on the instructions of the deceased, from the net rental proceeds from Balwin Court, the defendant caused his wife to pay into the bank account of the plaintiff only $1,000 a month whilst the balance was paid into the bank account of the deceased. Nevertheless, again, on the instructions of the deceased, for a certain period in the first tenancy, the defendant caused his wife to make remittances every three months to the plaintiff of Cdn$1,500. In respect of the second tenancy, the defendant paid all of the net rentals into the account of the deceased.

33. In 1997, Tsang Kwok Ming returned from Canada to Hong Kong. The plaintiff requested the defendant to assist Tsang Kwok Ming in paying for accommodation, the source to be part of the rental proceeds of Balwin Court. No agreement was reached between husband and wife. On 30 October 1997, solicitors acting for the plaintiff served upon the deceased a Notice of Severance of their joint tenancy in respect of Balwin Court. Thereafter, the defendant paid half of the net rental proceeds from Balwin Court into a bank account of the plaintiff, the other half being paid to the deceased.

The health of the deceased

34. The deceased suffered from diabetes for some 10 years before his death. In addition, he had long-standing alcoholic and hepatitis B related liver cirrhosis and hypertension. On 7 June 1998, the deceased was admitted to the Accident and Emergency Department of the Prince of Wales Hospital suffering from hepatic encephalopathy which was precipitated by spontaneous bacterial peritonitis. He was treated at that hospital from 7 to 15 June 1998, after which he was transferred to Shatin Hospital for a course of rehabilitation, from which he was discharged on 27 June 1998. At both hospitals he was treated with antibiotics.

35. On 2 July 1998, the deceased was re-admitted to the Prince of Wales Hospital suffering from E Coli septicemia. His general condition was fair; he was mentally dull; the Glasgow Coma Scale was 11 out of 15; he was jaundiced and the air-entry was decreased on the right lung base. He was transferred to Shatin Hospital from which he was discharged on 1 August 1998.

36. The deceased was admitted to the Accident and Emergency Unit of Queen Elizabeth Hospital on the evening of 17 December 1998 and transferred to the Prince of Wales Hospital on 19 December 1998. The deceased was suffering from hepatic and encephalopathy and right pleural effusion. Surgical treatment was not appropriate because of his poor medical condition. The cause of his death on 11 January 1999 was refractory right pleural empyema and liver failure.

THE CHARACTER OF THE DECEASED

37. I accept the evidence of the plaintiff and her son, Tsang Kwok Fai, that the deceased was a mean man in the sense that he was very careful indeed in spending money. As the plaintiff testified, when the deceased returned to Hong Kong after spending some months in Canada, he would not live in the Balwin Court premises, the former matrimonial home, concerned that to do so would be a waste of money, that is the loss of rental income, rather he preferred to live with his son, the defendant and his family in their 200 sq.ft. premises. That necessitated the conversion of a balcony into a room in which he shared a double bunk with the defendant's young daughter. Similarly, I accept the evidence of the plaintiff that in December 1998, in the realization that her husband's days were numbered, she took steps to find him a place in an old people's home. However, he refused, telling her that the $6,500 per month payment was too much.

38. I accept the plaintiff's testimony that both she and the deceased had treated their five sons equally. As she said, it was their marital arrangement that on the marriage of each of the sons, the son would be provided with a contribution towards the purchase of a matrimonial home. That is borne out by the undisputed evidence.

39. Of their concept of marriage, she contrasted it with a modern concept of marriage. She said their concept was not of a romantic marriage but one in which marriage brought duties and obligations :

(1) the duty to earn a living;

(2) the obligation to look after each and every one of their children; and

(3) the duty not to break the law.

THE CHARACTER OF THE DEFENDANT

40. The defendant testified that he was a senior Customs and Excise Officer, married with two daughters. As noted earlier, on the occasion of his marriage, he was given in succession two sums of money by the deceased in respect of his purchase of a matrimonial home. Of the first sum of money of $150,000 to $160,000, he testified that he had not in fact used all of that money towards the purchase of the premises, rather, he applied for a mortgage. Furthermore, the property was acquired in the sole name of his wife. He told neither the deceased nor the plaintiff of that and chose not to do so because he thought his father would disapprove of that arrangement. Finding it difficult to repay the monthly repayment, the defendant testified that he had approached his father again requesting further monies. He did not tell his father that he had not used all of the first sum of money provided in the purchase of the property. His father provided the second tranche of money but, far from using it to redeem the mortgage, the defendant placed it on deposit with a bank and continued to pay the mortgage. Again, he did not tell the deceased of that. When he was able to obtain Customs and Excise department quarters, the property was sold and the proceeds used in what transpired to be an unsuccessful business venture.

41. In cross-examination, the defendant accepted that he had lied to his father in telling him that the premises he had bought had been registered in his own name. Further, he accepted that prior to asking his father for the second sum of money, he had been invited to join the business venture and that he understood that his father's provision of that second sum of money was for the sole purpose of redeeming the matrimonial property mortgage. However, he had placed the money on deposit in a bank. He agreed that in this conduct he was again lying to his father.

THE CIRCUMSTANCES LEADING TO THE CREATION OF THE JOINT ACCOUNT

42. The evidence of Tsang Kwok Fai as to the provenance of the monies that created the two separate fixed deposits in the joint account on 25 June and 15 July 1998 is not in dispute. It is clear that those monies came from fixed deposits in accounts in the name of the deceased with the Kwong On Bank. For a period of over two years in each case, they had been renewed from time to time. There is no evidence to suggest that they were otherwise then in the control of the deceased up and until 25 June and 15 July 1998 respectively.

43. As noted earlier, on 7 June 1998, the deceased was admitted to the Prince of Wales Hospital. In his testimony, the defendant said that the deceased had not returned home and that it was the police who had told him that he had been admitted to hospital. He said that he went to visit the deceased but found that the deceased could not recognize him. The defendant testified that it was whilst the deceased was hospitalized at Shatin Hospital, one or two days after 15 June 1998 that, "out of the blue", the deceased had given him instructions that he wished to have the defendant's name added to his fixed deposit accounts. It is to be noted that in the Further and Better Particulars of the Amended Defence, the defendant had stipulated that date as being 7 June 1998. The defendant testified that the deceased had said that he could operate the accounts himself and use the money in any way he liked.

44. The defendant denied the suggestion put to him in cross-examination that it was made apparent to him that the deceased was creating the joint account because of concerns about his own mortality and, in particular, to make it known what his assets were to facilitate distribution of them to the family after his death. It is to be noted in that context that the deceased's signature for purposes of the joint account was by the impression of a chop in contrast to the manuscript signature used to withdraw the existing fixed deposit accounts to create the new account and the joint account.

45. As noted earlier, the deceased was discharged from hospital on 1 August 1998. The Kwong On Bank fixed deposit renewal record recorded the renewal of each of the two deposits on a monthly basis until the withdrawal and closure of the account in respect of the $1.8 million deposit on 30 December 1998 and the withdrawal and closure of the account in respect of the $1.2 million on 21 January 1999. None of the documentation indicates upon whose instructions the deposits were renewed. The defendant testified that he received the monthly time deposit advices and gave them to his father. He denied renewing the deposits himself. Of the closure of the account in respect of the $1.8 million deposit on 30 December 1998, that is, prior to the death of the deceased on 11 January 1999, the defendant testified that he had closed the account and caused the monies to be paid by cheque into his name. He said he did so because the deposit had matured on that date.

46. The plaintiff testified that following the admission of the deceased to Queen Elizabeth Hospital on the evening of 17 December 1998, nursing staff gave her his clothing. Having returned to Balwin Court, she found in that clothing two deposit slips relating to the $1.2 million deposit in the joint account. In evidence, she identified them as being the deposit slips that encompassed the period 18 September to 19 November 1998. However, in her witness statement, adopted as her evidence-in-chief, she said that one of the deposit slips that she found was the one that expired on 21 December 1998, in another words, a few days ahead of her discovery of the existence of this joint account. At all events, she was so concerned as to this discovery that, not being able to read the name in English, she telephoned her son Tsang Kwong Fai and spelt out the name on the slip. She was told that it was the name of the defendant. She testified that although she had been married to the deceased for 40 years, at no stage had she ever shared a joint account with him. Notwithstanding that it was in the early hours of the morning of 18 December, the plaintiff testified that she telephoned and spoke to the defendant. She inquired of him how it was that his name appeared on a joint account deposit slip with that of the deceased. She said that the defendant said, "Why did you come to Hong Kong? Why did you cause trouble, you idiot!" She said that defendant gave her no explanation for the joint account. She testified that she had not known of this deposit prior to the discovery of the bank deposit slip, nor did she know then of the existence of the $1.8 million deposit.

47. The defendant testified that he did have a telephone conversation initiated by his mother in which she inquired of him how it was that his name came to be with that of the deceased in a joint account in respect of the $1.2 million deposit. He said that conversation took place in the afternoon of 18 December. He testified that he told her that that had come about as a result of his father's instructions to him. He denied using any abusive language. He said that he had caused the account to be closed and a cheque issued because his mother had asked him to do that. The bank told him that it was not possible to issue the cashier's order in her name which had been her request. The defendant accepted that he did not disclose to his mother then or indeed, subsequently, in December 1998, January and February 1999, the existence of the joint account deposit in the sum of $1.8 million.

48. It is the evidence of the defendant that on the morning of 5 December 1998, the deceased gave him the Kwong On Bank deposit slip reflecting the one-month deposit of the $1.8 million and declared to him, "I give this money to you absolutely, you can deal with it in whatever way you like". The deceased went on to tell him to accept it and not to ask any question. It is the evidence of the defendant that some days thereafter, the deceased repeated the process in respect of the $1.2 million deposit, telling him in respect of those monies "I also give it to you, you can deal with it in whatever way you like. If you want you can distribute this money to you mother and your brothers. It is all up to you."

49. The plaintiff testified that she returned to Canada and to her employment on 21 December 1998. As noted earlier, the deceased died on 11 January 1999. The plaintiff testified that she made arrangements to return to Hong Kong immediately.

50. On 23 January 1999, after the identification of the deceased's body, the family met at a restaurant in Shatin and discussed the issue of the estate of the deceased and its distribution. It is the plaintiff's evidence that those present, included all of the deceased's sons, save for Tsang Kwok Hung. She understood, and she thought all others did, that the deceased's estate in essence comprised his interest in Balwin Court and the $1.2 million deposit. Certainly, she says the defendant made no mention of the $1.8 million deposit in the joint account. It is her evidence that all present agreed that the $1.2 million deposit formed part of the estate and that it was Tsang Kwok Leung's proposal that the defendant withdraw that money and divide it between the members of the family. She says that the defendant appeared to agree to that proposal although, for her own part, she thought it appropriate to ascertain all the estate first before there was to be any distribution.

51. The plaintiff says that on 25 January 1999 she instructed solicitors to apply on her behalf for Letters of Administration in respect of the estate of the deceased. On 31 January 1999, the family met again for a "dai zai" ceremony for the deceased. The plaintiff says that the defendant was present. After the ceremony Tsang Kwok Leung handed a letter to the plaintiff and copies to the others present and a total of four cheques. The cheques were drawn on the joint account of the defendant and his wife, dated 30 January 1999 and made in favour of the plaintiff, Tsang Kwok Fai and Tsang Kwok Ming. The letter of Tsang Kwok Leung explained that the cheques represented a distribution of the $1.2 million deposit less expenses already incurred by the defendant in respect of the funeral and prospective expenses in respect of estate duty. Of the status of the $1.2 million, the letter asserts :

" Strictly speaking, Ah Man is not required to account for this time deposit, because father did not make any will. However, Ah Man without any hesitation handed over the whole sum for every body's determination. According to the arrangement made and agreed in front of auntie on 23rd, after all the funeral expenses (about $150,000) were paid, half would be taken over by mother, the other half would be distributed among our five brothers and mother equally."

52. The defendant agreed in cross-examination that at the meeting of 23 January 1999, he was aware that the others present knew only of the $1.2 million deposit in the joint account and that he made no mention of the $1.8 million deposit, which he had transferred from the joint account to his own name on 30 December 1998. He denied that he was prepared to hand over the $1.2 million deposit only because his mother had discovered its existence and that he made no mention, nor did he hand over the $1.8 million deposit because no one knew of its existence.

53. On 1 February 1999, solicitors representing the plaintiff wrote to the defendant returning the four cheques handed over on 31 January 1999, advising the plaintiff proposed to seek the issue of Letters of Administration in her favour and asking the defendant to hand over the $1.2 million deposit to her solicitors. By letter of 5 February 1999, solicitors acting for the defendant advised the solicitors acting for the plaintiff that the defendant was not willing to hand over the $1.2 million deposit, and asserting that in drawing the four cheques handed over on 31 January 1999, "There is no unilateral attempt on the part of our client to tamper with the estate of the deceased." By letter of 22 February 1999, the plaintiff's solicitors again sought the hand-over of the $1.2 million deposit and denied that there had been an agreement to distribute the estate. By response of 26 February 1999, the defendant's solicitors asserted :

" We are instructed to reply that the meeting of the whole family is held on 23 January 1999 together with the above named deceased's younger sister at (Shatin Floating Restaurant) for the purpose of discussing the captioned matter and the distribution of the sum of HK$1,237,021.89 (part of the estate of the abovementioned deceased) was made by agreement of the whole family including your client at that time in the following manner." (emphasis added)

Then follows a description of the division of the $1.2 million, after which the letter asserts :

" As aforesaid, there is no unilateral attempt on the part of our client to tamper with the estate of the deceased."

54. It is the plaintiff's evidence that it was not until late March 1999 that as a result of inquiries made of the Kwong On Bank, the plaintiff came to know of the existence of the $1.8 million deposit in the joint account. On 31 March 1999, the plaintiff's solicitors wrote to the defendant's solicitors advising them of their discovery, asserting that the defendant had hitherto not disclosed its existence and asking to be enlightened as to the matter. On 1 April 1999, the defendant's solicitors responded by asserting that the defendant claimed that the $1.8 million deposit had been a gift by the deceased to the defendant. Correspondence ensued between the parties' solicitors on that topic. On 13 August 1999, the plaintiff's solicitors wrote to the defendant's solicitors on that subject but also asserted :

" In fact, we have instructions that a few days before the deceased's death, he was admitted to Queen Elizabeth Hospital on 16 December 1998. Before that admission, he stayed with our client for a few days at their house at Flat B, 1/F, Block 3, Balwin Court, 154-164 Argyle Street, Homantin, Kowloon. During that short stay there, the deceased told our client that there were two such sums which for convenience for bank jointly with your clients' name were in fact meant for the estate after our client's death."

55. It is to be noted that those assertions are at variance with the testimony of the plaintiff that she had only discovered the existence of the $1.2 million bank deposit in the joint account on 18 December 1998, and that it was as a result of that discovery that she had a conversation with the deceased that day in which he had reassured her that those monies, that is, the $1.2 million deposit, were for distribution to the family in the event of his death. Further, the assertions in the letter of 13 August 1999 formed no part of the evidence of the plaintiff at trial.

56. The undisputed evidence of the fact of the opening of the joint account with Kwong On Bank in the names of the defendant and the deceased on 25 June 1998, the subsequent creation of two fixed deposits, the one of $1.8 million and the other of $1.2 million on 25 June and 15 July 1998 respectively, gives rise, as I have indicated earlier, to the presumption of advancement in favour of the defendant.

57. I am satisfied on all of the evidence, in particular on the evidence of the creation of a power of attorney dated 15 June 1994 in favour of the defendant in respect of the granting of tenancies in relation to and the management of Balwin Court, the subsequent exercise of that power of attorney by the grant of tenancies and management of the premises including distribution of the rental proceeds, together with the fact that since the beginning of 1995 the deceased had lived with the defendant and his family, and in light of the deceased's long term chronic illnesses that the evidence establishes that the deceased reposed trust and confidence in the defendant, not only for his day-to-day life but also the management of a substantial part of his financial affairs. The transfer into the joint account of the approximate total of $3 million, which amounted almost to all of his liquid assets and the greater part of his overall estate, is in my judgment not readily explicable by their relationship of father and son. Accordingly, the presumption of undue influence arises.

58. It follows that two conflicting presumptions arise from the findings that I make from the evidence. I am satisfied that a resolution of whether or not those presumptions are rebutted can be determined by an examination of the evidence overall.

59. I accept that the evidence establishes that the defendant was a mean man but one who, nevertheless, together with the plaintiff treated their sons equally in life. In that respect it is to be noted that the deceased made substantial provision for two of the sons to purchase matrimonial homes on their marriage and the elder son was provided with an education in Canada. Further, it is to be noted that the grant of the power of attorney to the defendant in June 1994 which was employed subsequent to the deceased's return to Hong Kong to reside was clearly designed to reserve to the deceased and to some extent the plaintiff the benefits flowing from that property. The deceased was handing over management of his financial affairs to the defendant, but not the benefits. Similarly, it is to be noted that although the monies were transferred to the joint account in June and mid-July 1998 the "roll-over" of the monthly deposits continued without diminution until, whilst the deceased was hospitalized in December 1998, the defendant withdrew the $1.8 million deposit.

60. In making findings in relation to the evidence of the defendant, I have regard to the evidence that he gave that he lied to his father about various matters involving money obtained from his father at the time of his marriage. I reject his evidence, asserted in his witness statement dated 5 July 2001 which he adopted in the trial, that the deceased told him, "I could operate those accounts myself, I could use the money in those accounts in any way I like." As noted earlier, the defendant made no use whatsoever of any of those monies at all until the deceased was hospitalized at the end of December, after the discovery of the $1.2 million deposit by the plaintiff at which point he withdrew the $1.8 million deposit. I am satisfied that the transfer of the monies in June and July 1998 into the joint account was made, no doubt at the time when the deceased was shocked at his first admission to hospital which had been a lengthy stay, in order that access be possible to those monies in the event that the deceased, through ill health, was unable to make transactions. It was intended that the monies be available for the benefit of the deceased in his lifetime and that thereafter the monies be part of his estate for distribution to the family.

61. I reject the evidence of the defendant that he had two conversations, the one on 5 December 1998 and the other a few days later, in which the deceased had said on the former occasion, "I give this money to you absolutely, you can deal with it in whatever way you like." And on the latter occasion, "that other sum of money I also give to you, you can deal with it in whatever way as you like. If you want you can distribute this money to your mother and your brothers. It is all up to you." That evidence is at odds not only with the defendant's subsequent conduct with his family and letters written on his behalf by his solicitors to solicitors representing the plaintiff but also with the evidence of the deceased's attitude to money and with the way in which he treated his sons equally and without favour.

62. I accept the evidence of the plaintiff that on her discovery on 18 December 1998 of the bank deposit slip relating to the $1.2 million deposit in the joint account, she raised with the defendant the circumstances in which that came about. I am satisfied that the plaintiff was not given any explanation that this was a gift to the defendant. I accept the evidence of the plaintiff as to the meeting of 23 January 1999 of the family in which the defendant treated the issue of the $1.2 million deposit as being part of the estate. Further, it is to be noted that that is the description given to the $1.2 million deposit in the letter of the defendant's solicitors dated 26 February 1999 to the plaintiff's solicitors.

63. I do not accept the plaintiff's evidence of the conversation she said that she had with the deceased on 18 December 1998 at the hospital in which she asked him of the fact of the existence of a deposit in the joint account of $1.2 million and in which she attributed to the deceased the assertion that "it had always been his specific instructions to Raymond that should any misfortune (meaning death) occur be fall on him, all his properties including the said deposit would be handed over to me for distribution among the members of the family." That account is at complete variance with assertions made by solicitors acting on her behalf in August 1998 in which it was claimed that the plaintiff had a conversation with the deceased at Balwin Court shortly before his hospitalization on 17 December in which the subject of both deposits had been raised, in respect of which the deceased had reassured her that the monies "were in fact meant for the estate after our client's death (sic)."

64. I am satisfied that the transfers of the two deposits into the joint account were made only for convenience during the lifetime of the deceased and that upon his death he intended they form part of his estate for distribution to his wife and all of his sons. Of the issue of independent advice being given to the deceased at the time of the creation of the joint account and the subsequent deposit of the $1.8 million and $1.2 million deposits, the defendant testified that he had gone together with a member of staff of the Kwong On Bank to the hospital with the necessary bank documents. In his witness statement dated 21 May 2003, adopted as his evidence in the trial, the defendant said that he was not present at the time that the bank documents were completed with the deceased. In his oral evidence, he asserted that he was not calling that bank employee as a witness because he was not able to locate him. Whatever the reason may be for the absence of this evidence, the fact remains that there is no evidence of any independent advice having being given to the deceased at the time of the creation of the joint account followed by the transfer of the two deposits.

CONCLUSION

65. On a consideration of all the evidence, I am satisfied that the presumption of advancement in favour of the defendant is overwhelmingly rebutted by the evidence. I am sure that the deceased did not intend to make a gift of either of the deposits to the defendant. I reject the submission made on behalf of the defendant that the transfers of the deposits into the joint account were by way of 'donatio mortis causa'. Of the presumption of undue influence, I am satisfied that the presumption is not only not rebutted but is strengthened substantially by all of the evidence.

66. Accordingly, I grant the plaintiff the relief sought, namely :

(1) a declaration that the sums of $1,178,547.10 and $1,769,157.32 and the interest accumulated thereon held on trust for the deceased's estate absolutely;

(2) an enquiry into what has become of the sums of $1,178,547.10 and $1,769,157.32;

(3) an account of what is due to the deceased's estate;

(4) payment to the plaintiff of the amount or amounts found due on taking the account; and

(5) costs to be taxed, if not agreed.