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CACV 249 & 250/2013
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D CACV 249/2013
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IN THE HIGH COURT OF THE
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HONG KONG SPECIAL ADMINISTRATIVE REGION F
COURT OF APPEAL
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CIVIL APPEAL NO. 249 OF 2013
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(ON APPEAL FROM HCA NO. 2307 of 2009) H
I I
BETWEEN
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LAW MAN WAI Plaintiff
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and
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KWAN SAU SIM Defendant
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N N
AND
O O
CACV 250/2013
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IN THE HIGH COURT OF THE
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HONG KONG SPECIAL ADMINISTRATIVE REGION
R
R COURT OF APPEAL
CIVIL APPEAL NO. 250 OF 2013 S
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(ON APPEAL FROM HCA NO. 143 of 2010)
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BETWEEN
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LO MAN KAM Plaintiff
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and
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LAW MAN WAI Defendant
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(Heard together) G
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Before : Hon Cheung, Chu JJA and Poon J in Court I
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Date of Hearing : 18 July 2014 J
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Date of Further Submissions : 29 July, 4 and 14 August 2014
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Date of Judgment : 23 September 2014
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JUDGME NT N
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Hon Cheung JA : P
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Q Facts
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1) 6 t h Aunt
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1. Madam Lo Pui Kau （ 羅 佩 球 ） was an able and
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T wealthy woman. She came from a well to do family in
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Macau. Although she was married, she had no children of her
own. But she had many nephews and nieces. She was C
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known to them as 6 t h Aunt. She died in December 2001. In D
D
her will she gave her estate to her nephews and nieces and also
E
E her grandnephews. Amongst her nephews are Law Man Wai
（ 羅 文 蔚 ）(‘Wai’) (the plaintiff in HCA No. 2307 of 200 9) and F
F
Lo Man Kam（ 羅 文 錦 ）(‘Kam’) (the plaintiff in HCA No. 143 of
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G
2010).
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2) Wai and Kam
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2.1 Wai was born in 1942 and received his primary
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education in Macau. He came to Hong Kong when he was
K 14, attending, firstly, St Louis School and later on St Paul’s K
Co-Educational College where he graduated with good
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results. He did not continue higher education because his
mother was ill and he returned to Macau to be with her. In M
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Macau he started working in the Permit Department of the N
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British Consulate.
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2.2 In 1966 Wai came to Hong Kong and worked in the
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inward bills department of a bank. He married in
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1967. However he committed an offence a nd was jailed Q
between 1983 and 1985, during which time his wife deserted
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him. He has no children.
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2.3 In 1987 Wai met up with Kam in Hong Kong. Kam
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T was then 35 and working as a part time chauffe ur. He was
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already married to Kwan Sau Sim （ 關 秀 嬋 ） (‘Sim’) (the
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C defendant in HCA 2307 of 2009) who was a beautician, and
they had a young son (‘Tung’). D
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2.4 After Wai and Kam met up again, they became very E
E
close and they visited 6 t h Aunt frequently who had by then
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moved to live in Hong Kong with her sister known as the
G 5 t h Aunt. 6 t h Aunt loved Wai and Kam and they were her G
close relatives.
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3) The gifts I
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J 3.1 6 t h Aunt gave a lot of money to Wai who was
helping her with her foreign currency investments. By Wai’s K
K
th
own admission, between January and November 1999 6 Aunt
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L had given him about $29 million. 6 t h Aunt later had a
stroke. Kam said 6 t h Aunt told him and Sim during one of M
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their visits in 1999 after she had recovered from the stroke that
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N she had transferred part of her savings to Wai which was to be
shared between him and Wai equally after she passed O
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away. When Wai turned up later, 6 t h Aunt asked Wai to
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P confirm the transfer which he did and he said the money was
about $30 million. Q
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3.2 Kam further said that Wai later confirmed with him R
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on two other occasions that the gift from 6 t h Aunt was about
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$30 million to $35 million respectively. On the first of these
T occasions, Wai told Kam half of the money was Kam’s. T
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3.3 Wai’s position was different. He maintained in
these proceedings that the money given by 6 t h Aunt was gift to C
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him only. However what is clear is that starting from January D
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2000 up to June 2004 Wai had been giving Kam and Sim a total
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E of $12.8 million. Wai insisted that the money he gave to Kam
was entirely out of love and goodwill. F
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G
4) The properties G
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H 4.1 6 t h Aunt’s estate included real properties. Two of
these were sold by the executors of the estate to Wai, Kam and I
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another nephew Lo Man Hing. Two other properties were sold
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J by the executor to Sim. These two properties are a flat in
Fung Yip Building (‘the flat’) where 6 t h Aunt lived before she K
K
died and a shop in Hoi To Court (‘the shop’). Wai claimed
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L that although Sim purchased the properties in her name, it was
him who provided the consideration of M
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$7.96 million. Between June and August 2004, Wai had given
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N Kam and Sim $8.3 million in cash. He claimed that Sim held
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the properties on trust for him. As made clear in the judgment O
below there is no dispute that payments made by Wai to Sim
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were to be treated as payments to Kam.
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4.2 Sim denied this. She said she was the legal and
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R beneficial owner of the two properties and the money used for
the purchase of the properties was part of the gift given by S
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6 t h Aunt to Wai and Kam. She counterclaimed damages
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T against Wai for obstructing the sale by her of the flat to a
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purchaser. She also claimed that Wai had not accounted for
C the rent he received from the shop. Kam’s action against Wai C
was for, among other things, a declaration that Wai holds on D
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th
trust for him half of the money transferred by 6 Aunt to Wai
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E for their benefit, an account of the money that 6 t h Aunt had
given to Wai and payment of money found to be due from Wai F
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to him on the taking of the account.
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The judgment
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5. Recorder Jat SC, after a four day trial, found for Sim I
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and Kam. Wai now appeals.
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The appeal
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6. Wai is represented by Ms Margaret Ng who ably L
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conducted the appeal on his behalf. Originally her challenge
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M of the Recorder’s judgment was on two factual
grounds, namely, first, he erred in finding that 6 t h Aunt had N
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intended to give her money to both Wai and
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O Kam, and, second, he erred in finding that Sim was the
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beneficial owner of the two properties . Shortly before the P
appeal Wai’s notice of appeal was amended and a challenge on
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a point of law was raised, namely, the Recorder erred in failing
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to hold that, on Kam’s pleaded case that there was no perfected R
trust or gift in favour of Kam on the monies transferred to Wai.
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Validity of the gift
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7.1 I will deal first with the challenge on the validity of E
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the gift. This was not a point raised by Kam at the trial
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F below. However, the Recorder obliquely dealt with this issue
in paragraph 8 of the judgment, where he stated that ‘Ms Ng did G
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not dispute that the 6 th
Aunt’s gift, if proved, did not constitute
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H a valid trust’. Ms Ng informed the Court that this poi nt was
simply not raised at the trial. The Recorder, however, did not I
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elaborate how this would affect the parties’ case and he did not
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J address this matter further in his judgment.
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7.2 Ms Ng’s attack on the validity of the gift is on two
L limbs. First, the trust over 6 t h Aunt’s money was void for L
uncertainty (‘the uncertainty argument’) and second, the gift
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M th
was an imperfect gift in that 6 Aunt merely expressed an
N
N intention of gifting an as yet incompletely transferred and
unspecified sum of money to be held by Wai for Kam (‘the O
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imperfectly gift argument’).
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7.3 Kam and Sim (represented by Mr Albert Yau and
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Ms Melo Man) objected to Wai raising this challenge for the
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first time on appeal. Mr Yau argued that had this matter been R
raised below, there would be factual evidence called to deal
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with the challenge.
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7.4 Ms Ng relied on Flywin Co Ltd v Strong &
Associates Ltd (2002) 5 HKCFAR 356 and argued that Wai is C
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not barred from taking this point on appeal because it arises on D
D
Kam’s pleadings and no factual issue is involved. She relied
E
E on Bokhary PJ’s judgment at page 369 B-C that :
‘ He will be barred from doing so unless there is no F
F
reasonab le p oss ib ility that the state of the evidence
relevant to the p oint wou ld have been mater ially G
G mor e favour ab le to the other s ide if the point had
been taken at the tr ial.’
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I. The uncertainty argument I
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1) The principle J
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K 8. One of the three requirements for a valid trust is that
the subject matter of the trust must be certain. The following L
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principle from Pettit’s Equity and the Law of Trusts (12 th
Ed)
M
M page 51 illustrates the point :
N
N ‘ (B ) CERTAINTY OF SUB JECT
(i) It is abu ndantly clear that , in ord er to estab lis h O
O a trust, the trust prop erty must be
id entifiab le. Where it cannot be clear ly
id entified, the purp or ted trust is altog ether void P
P
as, for instance, in Palmer v Simmonds , in w hich the
subject of the alleged trust was ‘the bu lk of my said Q
Q residu ar y estate’ ; nor was a trust estab lis hed in Re
London Wine Co (Shippers) L td, in w hich a company
R
had stocks of wine in var ious warehouses , which it R
sold to var ious customers, the intention being that
the w ine purchased shou ld b ecome the pr operty of
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S the customers , but stored b y the company at the
customers’ expense. It was argue d that if the leg al
title had not passed to the customers, ther e was a T
T
trust in their favour. The cour t seems to have
accep ted that there was an intention to create a
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trust, but held that it nevertheless failed on the
grou nd of uncertainty of subject matt er, because
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C there was never any segreg ation or appr opr iation of
the wine w ithin the warehouse u ntil actu al deliver y
of the w ine to a purchaser. This last decis ion D
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seems r ig ht in pr incip le, but the subsequent Court of
Appeal decis ion in Hunter v Moss causes
difficu lties. In t hat case, it was held at first E
E
instance that the requ irement of certainty does not
app ly in the same way to trusts of intang ib le assets F
F such as, in the case befor e the court, 50 ou t of 950
ind is tingu is hab le s hares. In such cases, it w as
held, the question of certainty dep ends not on the G
G
app lication of any immutab le pr incip le based on the
requ irements of a need for segreg ation or
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H appropr iation, but rather on w hether, immed iately
after the purp orted declar ation of trust, the court
cou ld, if asked, make an order for the execution of I
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the purpor ted trust. O n this bas is , the trust was
upheld. The C ourt of Appeal express ly agreed
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J with the conclus ion of the judge below on the
uncertainty p oint and shou ld, p er haps, be tr eated as
accep ting his reas oning, althoug h it has been much K
K cr iticized b y most of the commentators, arg uing that
intang ib le assets are not in a d ifferent p os ition fr om
tang ib le. Nor is the analog y draw n b y the court L
L
with a demonstrative legacy of s hares valid, because
a trust of such s har es w ill become comp letely M
M constituted only when the par ticu lar shar es have
been vested in the trustee.
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Thomson & Hudson, however, while accep ting
that the d is tinction is mad e b y the au thor ities, argue
that the cr iticism is based on a misu nd erstand ing on O
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what is r equ ired to have ‘ certainty’. They suggest
that the law d oes not requ ire absolu te or P
P mathematica l cer tainty but looks for
‘wor kab ility’, which was present in Hunter v Moss .’
(emp has is added) Q
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2) The pleading
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9.1 In respect of the gift from 6 t h Aunt, Kam in his
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pleadings relied on an express trust or alternativel y a trust ‘by
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operation of law’ but without specifying its precise nature. In E
respect of the gift, this is what Kam pleaded in his re -amended
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statement of claim :
G
G ‘ 3. In 1999, the late Madam Lo started to transfer
money to the Defend ant for the b enefit of the
Plaintiff and the Defendant. U ntil after H
H
discover y, interr ogator ies and/or exchang e of
witness statements, the best particu lars the Plaintiff I
I can pr ovide are as follows :
PARTICULARS J
J
1) In or ab out ear ly 1999, the late Madam Lo
told the P laintiff that she had tr ansferred K
K
var ious sums of money in for eig n
currencies and H ong K ong d ollars L
L currency to the Defend ant and w ou ld
continue to d o the same.
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2) Accord ing to the late Madam Lo, the
monies which had been trans ferred to a nd
wou ld be trans ferred to the D efend ant N
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(collective ly r eferred to as “the Fu nd”)
were intend ed as a g ift to be s hared b y the O
O Plaintiff and the D efendant equ ally.
P
……’ (emp has is added) P
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Q 9.2 The Fund as defined by paragraph 3(2) is pleaded as
the subject matter of the trust : R
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‘ 6. B y reas on of the matters set ou t ab ove, an
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S express trust, the sub ject of w hich b eing the
Fund, was created s ince 19 Febru ar y, 1999, and /or at
latest b y 19 November 1999, b y the late Madam Lo T
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for the equal benefit of the P laintiff and the
Defend ant (‘the late Madam Lo’s Trust’).
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6A. Further to p ara 6 ab ove or in the
alter native, if the p laintiff’s case of an exp ress trust
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C cannot be made out, he avers that the D efend ant
holds the Fund on trust for b oth of them in equa l
shares b y op eration of law having reg ar d to t he D
D
circumstances as to how the D efendant first came
into p ossession of the var ious sums which compr is ed
the Fund. (Such circumstances, ap art fr om those E
E
stated ab ove, include the fact that he received thes e
var ious sums fr om the late Madam Lo with fu l l F
F know ledg e that the sums were not meant for his ow n
exclus ive or pers onal use but were meant for the
equal shar ing between him and the Plaintiff.)’ G
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(emp has is added)
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3) Wai’s argument
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10.1 Ms Ng argued that there is uncertainty in the subject
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matter of the trust because the Fund consisted of both of the
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K money that had been transferred from 6 t h Aunt to Wai and also
money of unspecified amount that had not yet been L
L
transferred. Ms Ng argued that at the time of 6 th
Aunt’s
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M expression of intent in early 1999 of making the future gift, the
subject matter of the purported gift had not yet been constituted N
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and was uncertain. It was uncertain at what point and what
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O further transfers would be made to constitute the purported
gift. On the particulars pleaded, five transfers were made P
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between 19 February and 23 March 1999. No declaration of
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Q trust was made on the transferred amounts by 6 t h Aunt
as, according to Kam, the transfers constituting the gift were R
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still incomplete, and other transfers were made o n or after 19
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S November 1999. No declaration of trust was made on the
final sum after further transfers were made to Wai. On Kam’s T
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pleadings there was no further conversation between Kam and
6 t h Aunt on the alleged gift. C
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D
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10.2 Accordingly, Ms Ng argued that neither the subject
E
of the gift nor the intention of gifting of the final sum was E
certain or ascertainable. Indeed, on Kam’s pleadings the sum
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F
of money constituting the purported gift was uncertain as to the
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total value as well as to the meaning of ‘transfer’, whether it G
included any cash withdrawals by Wai from time to
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H
time. This can be seen from paragraph 4(2) of the
I Re-Amended Statement of Claim : I
J
‘ 4(2) Upon a preliminar y enqu ir y w ith the J
Executor, the total sum trans ferr ed b y the
late Madam Lo to the Defendant in respect
K
K of the Fu nd was appr ox imately
HK$35,000,000 , before taking into accou nt
of interest accru ing thereto. L
L
PARTICULARS
M
M
Date of Transfer Amount
19 February 1999 GBP733,000 N
N
19 February 1999 AUD1,850,000 O
O
22 February 1999 CAD290,000
P
P 9 March 1999 USD513,000
Q
23 March 1999 HK$2,500,000 Q
19 November 1999 HK$2,700,000
R
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On divers dates from HK$6,800,000 (approx)
1999 to 2001, cash S
S withdrawal by the
Defendant
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Total (approx) : HK$35,000,000 ’
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4) Wai can take this point on appeal
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11. It is clear that arguments on the uncertainty of trust
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are based solely on the state of the pleadings which I have set
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out above. In my view Wai is entitled to raise this point on E
appeal.
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5) Merit of this point G
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H 12.1 I am also of the view that Ms Ng’s submission on the H
uncertainty of the subject matter is correct. When 6 t h Aunt
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informed Kam of the gift, the subject matter of the gift had not
J yet been constituted and was uncertain because the gift J
consisted of both the money that had been transferred to Wai
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and also money of unspecified amount that had not yet been
transferred. It was uncertain at what point and what further L
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transfers would be made to constitute the gift. I disagree with
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Mr Yau’s contrary argument that there is no uncertainty in the
N
N subject matter.
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O 12.2 Mr Yau argued that future assets may be included in
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the trust fund. He relied on Underhill and Hayton’s Law P
Relating to Trusts and Trustees, 18 t h ed., paragraph 1.4, where
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Q
the editors stated that :
R
R ‘ Whether or not spelled out in the definition section
of a trust instrument, the concep t of a tr ust fu nd
extends beyond the or ig inal settled assets ( often of a S
S
small value, e.g. ₤100) and the fru its thereof and
further assets subsequently trans ferred b y the settlor T
T or another settlor to the trustees. It extends to
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assets subsequently fr om time to time successively
substitu ted for such assets.’
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12.3 In my view this passage does not a ssist D
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Mr Yau. The discussion of this passage proceeded on the
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E
basis of a validly constituted trust. The issue of uncertainty
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of the subject matter is not discussed. F
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G 12.4 Mr Yau further relied on the statement in Hayton
and Mitchell’s Commentary and Cases on the Law of Trusts and H
H
Equitable Remedies, 13 th
ed., paragraph 4‒99 that :
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I
‘ To create a valid trust, the settlor must make it
certain ex actly w hich pr oper ty is to b e held on trust J
J for otherw ise ther e will be nothing specific to w hi ch
the trust can attach. The beneficial interests to be
K taken b y the beneficiar ies must als o b e cer tain.’ K
L
L 12.5 He submitted that there is no suggestion that the
trust is void simply because some of the assets comprising that M
M
trust fund happen to be unascertained at the time of its
N
N creation. Certainty of subject matter requires that the
property to be held on trust must be certain for otherwise there O
O
will be nothing specific to which the trust can attach. As long
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P as there is at the time of its creation suffic iently ascertainable
assets settled on that trust (and no doubt they encompass assets Q
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already transferred to the trustee to hold on trust), the trust is
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R valid even though it also consists of future -acquired property.
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12.6 In my view this passage in fact support s the
uncertainty argument. The uncertainty of the subject matter C
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renders the trust void is well established. D
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E
12.7 Further the traditional trust precedent that appeared E
at paragraph 1‒161 of Hayton and Mitchell and relied upon by
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Mr Yau does not help him. His reliance on
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Recital (C), namely : G
H ̒ (C) The Settlor may hereafter pay or trans fer H
further assets to or into the contr ol of the
Trustees hereof to b e held b y them on the
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I trusts of this Settlement’
J and the meaning of ‘trust fund’ in paragra ph 1.‒(2)(d), namely : J
K
K ̒ (iii) the assets fr om time to time representing the
said assets specified in the Second Sched ule
her eto and the said add itions to the Trust F und L
L
or any p art or par ts thereof respectively’
M
M must be read subject to Recitals (A) and (B) (footnote
omitted), namely : N
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̒ (A) The Settlor is des ir ous of making irr evocable O
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provis ion for the Specified C lass as her ein
defined [and for char ity] in manner her einafter
appear ing P
P
(B) With the intention of making such provis io n Q
Q the Settlor has pr ior to the ex ecution her eof
transferred to the Or ig inal Trustees the assets
specified in the Second Schedu le her eto and is R
R
desir ous of declar ing such trusts thereof as
her einafter appear’ (emp has is added)
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12.8 As can be seen from Recital (B), the trust is to be T
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declared in respect of the specified assets. In other words a
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valid trust is to be properly constituted by the specified
assets. It is upon this valid and subsisting trust that the C
C
settlor may transfer further assets to the trustees to be held on D
D
trust by them. The definition of ‘trust fund’ in the precedent
E
E does not carry the matter further. The starting point is that
there is a properly constituted trust with the subject matter F
F
being certain, namely, the designated assets which is the first
G
G item in the definition. This is unlike the present case where
the subject matter of the trust is to consist both the transferred H
H
money and unspecified money to be transferred in the future.
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I
12.9 Mr Yau also relied on a trust by operation of
J
J
law. He submitted that it is in the nature of a constructive
trust. Constructive trust was not pleaded nor argued upon at K
K
the trial. Mr Yau now submitted that it was unconscionable
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for Wai to deny on one hand the gift and on the other hand
continue receiving the money fro m 6 t h Aunt who made the M
M
transfer on the assumption that the gift was good and Wai N
N
would honour his obligation. This render s Wai a constructive
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O trustee. He referred to Underhill and Hayton at
paragraph 8.29 where it reads : P
P
̒ Where a cour t is imp os ing a construct ive trust over
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Q the defend ant’s pr oper ty in ord er to pr event his
unconscionab le behavior in tr ying, to the detr iment
of the claimant, to take ad vantage of u ncertainty R
R
created b y the d efendant, the court w ill circumvent
the u ncer tainty. Thus, a com mon intention
constru ctive trust of a “fair share” of a home will not S
S
be void for u ncer tainty bu t w ill be conver ted into a
trust of a specific s hare that the court consid ers fair T
T in the circumstances. ’
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12.10 Mr Yau, however, did not articulate how this would
convert an otherwise invalid trust into a valid one. C
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12.11 Subject to the issue of estoppel that I will later
E
discuss, I conclude that there is no valid trust. I also tend to E
agree with Ms Ng that if the express trust fails, Wai would
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either hold on resulting trust for 6 t h Aunt as to the half share
G
intended for Kam, or is accountable to her (or her estate) as her G
agent, but in neither case would Kam have any recourse against
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H
Wai by way of an account .
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II. Imperfect gift without transfer
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1) The principle
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K
13. Ms Ng relied on Milroy v Lord 4 DE G.F. & J. 264 at L
L
274 and 275 where Turner LJ held that :
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M
‘ I take the law of this C ourt to be well settled, that, in
order to rend er a volu ntar y s ettlement valid and N
N
effectu al, the settler must have d one ever ything
which, accord ing to the nature of the proper ty
compr ised in the settlement, was necessar y to be d one O
O
in order to transfer the pr op erty and r end er the
settlement b ind ing upon him. He may of course d o P
P this b y actually trans ferr ing the pr op er ty to the
persons for w hom he intends to pr ovide, and the
provis ion w ill then be effectu al, and it w ill be equally Q
Q
effectu al if he trans fers the pr op erty to a trustee for
the purposes of the settlement, or declar es that he R
R himself holds it in tr ust for those purp oses; and if the
proper ty be pers onal, the trust may, as I app rehend, be
declar ed either in wr iting or b y p ar ol; but, in order t o S
S
rend er the settlement b ind ing, one or other of these
mod es must, as I u nderstand the law of this Court, b e
T
T resorted to, for ther e is no equ ity in this Court to
perfect an imper fect g ift . The cases I think g o
U
U
V
V
由此
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A
B
B
further to this extent, that if the settlement is intended
to b e effectuated b y one of the mod es to which I have
C
C referred, the C ourt w ill not g ive effect t o it b y
app lying another of those mod es. If it is intended to
take effect b y trans fer, the C ourt w ill not hold the D
D
intended tr ansfer to op erate as a declaration of
trust, for then ever y imp er fect instrument wou ld be
made effectual b y being converted into a perfect E
E
trust. These are the pr incip les b y w hich, as I
conceive, this case must b e tr ied.’ (emp hasis added) F
F
G 2) Not necessary to address this point G
H
H 14. The imperfect gift argument is a related although
different issue from the uncertainty argu ment. The I
I
uncertainty of the subject matter will render the trust
J
J void. But an imperfect gift may arise even whe n there is no
issue of uncertainty of the subject matter but when the trust K
K
fund was not transferred to the trust. Having found that the
L
L trust is void for uncertainty, it is not necessary for me to
discuss this topic further. M
M
N
N Factual challenges
O
O
1) Wai’s argument
P
P
15.1 Ms Ng submitted that in respect of the gift to
Q
Q Kam, Kam bears the burden of proof and he had failed to
discharge the burden. She submitted that Kam’s evidence was R
R
unsatisfactory. He relied solely on a single conversation with
S
S 6 t h Aunt in early 1999 during a social visit. There was no
written record of the gifting. He could not recall the exact T
T
date or the actual words of gifting, or when the gift was
U
U
V
V
由此
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A
B
B
intended to be transferred to him. The only corroboration
came from Sim. By his own admission he had never C
C
mentioned the gift to anyone except Wai, neither d uring D
D
6 th
Aunt’s lifetime nor after her death or disclose d to any third
E
E party its existence until shortly before these actions 10 years
after 6 t h Aunt’s death. On such unsatisfactory evidence, and F
F
given the considerable inherent improbability , Kam’s claim
G
G should have been dismissed :
H
H
1) If 6 t h Aunt wanted to make a gift to Kam, there was
I no reason why she did not transfer the money to him; I
J
J 2) For such a substantial gift it was strange that neither
Kam nor anyone kept any record of it at any time; K
K
3) A total sum of $3,600,000 was paid by Wai to Kam L
L
in 2000. If it was part payment of the gift, it was strange that
M
M th
Kam never even acknowledged it to 6 Aunt;
N
N
4) 6 t h Aunt’s transfers to Wai were made known after
O
O her death, and Wai paid $4.77 million in estate duty; even then
P
Kam did not disclose that he had a share in the gift and he did P
not pay any part of the estate duty;
Q
Q
5) In the 10 years between the alleged gift and the R
R
commencement of proceedings, no account was kept by Kam of
S
S how much of Wai’s obligation under the gift had been
discharged and how much remained outstanding, whether T
T
U
U
V
V
由此
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A
B
B
interests were payable and if so at what rate (Kam claimed
interests on the gift in his statement of claim); and C
C
D
D
6) Stranger still, neither did Wai keep any account in
E
spite of his being a meticulous person with money. E
F
F 15.2 Ms Ng further submitted that :
G
G
1) the Recorder had reversed the burden of proof by
H requiring Wai to explain why he gave so much money to Kam; H
I
I 2) the Recorder had made his finding on a false
premise, namely, Wai was a man of modest means who had a J
J
relatively humble job with a pizza restaurant;
K
K
3) the Recorder had given inconsistent treatment to the
L
L
evidence of Sim and Madam Lee, the wife of the late tenant
who gave evidence for Wai; and M
M
N
N 4) the Recorder had failed to take proper acco unt of the
only relevant contemporaneous records of Wai which did not O
O
show he was paying off any obligation to Kam.
P
P
15.3 In respect of the two properties, Ms Ng submitted Q
Q
that Sim would only succeed if Kam could establish the
R
R $8.3 million was part of the gift f rom 6 t h Aunt. Wai’s
intention to buy the properties was supported by independent S
S
evidence. The payment of $8.3 million by cash was different
T
T from the previous payments to Kam by cheque or direct transfer
U
U
V
V
由此
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A
B
B
who was consistent with Wai’s explanation that he wished to
avoid any evidence of an inter vivos transfer attracting estate C
C
duty as he had just paid $4.77 million in estate duty for D
D
6 th
Aunt’s gift. The Recorder was wrong in his doubts about
E
E Wai’s evidence on his reasons for changing the name of the
purchaser of the shop and finally the Recorder had overly relied F
F
on demeanor and his assessments of characters.
G
G
2) Overview on factual challenge
H
H
16. It is necessary to take an overview before the I
I
detailed complaints are considered. As this is an appeal
J
J against the finding of fact by the Recorder , the well-established
principle in this regard is that the appellate court will not K
K
disturb such a finding unless it is shown to be plainly wrong,
L
L for example, where the finding is contrary to some
uncontroverted evidence or that the judge had ignored some M
M
material evidence ( Ting Kwok Keung v. Tam Dick Yuen &
N
N Others [2002] 3 HKLRD 1). For a recent affirmation of this
O
approach, see the United Kingdom Supreme Court judgment of O
McGraddie v McGraddie [2013] 1 WLR 2477.
P
P
3) Nature of payment Q
Q
R
17.1 In terms of the context of this case, the most R
prominent feature is that of the $29 million that Wai admitted
S
S
6 t h Aunt had given him, he had given more than half of them to
T Kam. The total amount was about $18 million. Even if the T
$8.3 million used in the purchase of the properties are to be
U
U
V
V
由此
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A
B
B
excluded from this sum, Wai had still given about $10 million
to Kam. C
C
D
D
17.2 Many of the payments continued after the purchase
E
of the properties until 2009. Even if some of the later E
payments are rentals as Kam and Sim had claimed, the amount
F
F
paid by Wai to Kam was very substantial indeed. If 6 t h Aunt
G
had indeed transferred about $35 million to Wai as Kam’s G
inquiry with the executor had suggested, th en the payment made
H
H
by Wai to Kam represented nearly half of that amount.
I
I
17.3 The payment was made by Wai to someone who is
J
J only his first cousin. Be fore they met up again in Hong Kong
in 1987, their two families were not close at all. When they K
K
eventually met again in 1987, Wai was aged 45 and Kam was 35.
L
L While they became close until their falling -out in November
2009, the inevitable question one has to ask is why was Wai so M
M
generous to Kam? There really is no indication that Wai and
N
N Kam had bonded so much in their relationship that Wai would
O
go to such length to help Kam out. It is said that Wai is not O
married and has no family of his own and it is not odd for him
P
P
to help Kam out. On the other hand Wai has his own siblings
Q
and the evidence shows that he had only given $500,000 to one Q
of his sisters.
R
R
17.4 One may ask, is it more likely that , Wai and to his S
S
credit, was merely fulfilling the obligation t hat 6 t h Aunt had
T
T imposed on him to share the money between him and Kam or
U
U
V
V
由此
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A
B
B
th
that Kam had made up a false story about the gift of 6 Aunt
C and Wai’s payment to him was entirely out of Wai’s generosity C
towards him? There is no presumption of gift from Wai to D
D
Kam because this presumption applies only between parent and
E
E child and between spouses. In any event this presumption can
easily be displaced (see Suen Shu Tai v Tam Fung Tai F
F
(CACV 187/2013)).
G
G
17.5 This is the stark context that the Recorder had to
H
H
decide on the nature of the money given by Wai to Kam. The
I amount of the payment cried out for an explanation from Wai. I
Ms Ng urged upon us not to be overly concerned with the
J
J
reason why Wai chose to give away his money. In my view
K one must consider the inherent probability of Wai’s actions. I K
do not regard the Recorder had reversed the burden of proof
L
L
which admittedly was imposed on Kam, when he rejected Wai’s
M explanation for the payment. In my view the Recorder’s M
factual finding in favour of Kam can be suppor ted by the N
N
inherent improbability of Wai’s case of the gift.
O
O
17.6 Many of the complaints raised by Ms Ng had been
P
P
argued and considered by the Recorder. Specifically he had
Q
borne in mind of Ms Ng’s impassioned closing submission that Q
Kam and Sim were ‘puttin g words in the mouth of an elderly
R
R
person who, has been dead for 10 years’.
S
S
17.7 Kam’s case on the nature of the gift is of course
T
T dependent on his and Sim’s oral evidence. The Recorder held
U
U
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V
由此
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A
B
B
that Kam gave the impression of being a straightforward man
who is not very sophisticated. Why 6 t h Aunt chose to give to C
C
him and Wai is not entirely without reason. While Wai may D
D
be 6 th
Aunt’s favourite nephew and since 1995 had been looking
E
E after her affairs, the Recorder also accepted Kam’s evidence
that : F
F
‘ 32. After 6 t h Au nt’s str oke, Kam and S im took
G
G mor e time to vis it and look after 6 t h Au nt. When
Kam and S im were cr oss -examined, b oth of them
showed gr ief and s orr ow when they recou nted how H
H
they vis ited 6 t h Au nt frequ ently and looked after her,
taking her to hosp ital vis its and staying w ith her in
hosp ital, and s o on. I find this aspect of their I
I
evidence genu ine and I accept it w ithou t hesitation.’
J
J
17.8 The Recorder rejected Wai’s explanation that the
K
K
$5.6 million given to Kam within a couple of months in early
L 2000 was to reimburse him for his loss in foreign currency L
investment. He found that :
M
M
‘ 85. ….There is no evidence that he had the means
to invest which w ou ld r esu lt in him incurr ing N
N
ob ligations of that mag nitude. There is, I s hou ld
add, no evidence that Wai ever asked him to repay O
O the $5.6 million.’
P
P
17.9 In respect of Wai’s generosity, Ms Ng’s submission
was that Wai is a person with a strong sense of family Q
Q
solidarity, and with no children of his own , Kam’s family was
R
R
the closest resemblance he had of a family, which would
explain why he had been so generous towards Kam and S
S
Sim. To that the Recorder held :
T
T
U
U
V
V
由此
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A
B
B
̒ 88. In my judg ment, while accepting that Wai was
a gener ous p erson, I am u nab le to accept that that C
C fact b y itself cou ld satis factor ily exp lain the size of
the b ou nty he had bestowed on Kam and Sim. It
seems to me most extr aord inar y, as gener ous as Wai D
D
may be, for him to g ift to Kam and S im somethin g
like half of w hat he had received fr om 6th Au nt. As
E
E will be seen below, he is not ab le to provide
satisfactor y exp lanation of a nu mber of u nd isputed
or ind isputab le facts w hich ser ious ly u nd ermine his F
F
case. I am ther efore not persuad ed that all these
payments were his g ifts to Kam and S im.
G
G
89. On the w hole, w hile Kam’s vers ion of the 6th
Au nt’s G ift is s omewhat u nusual, it is not incr ed ib le
H
H and I w ou ld need to assess it together w ith other
evidence of the dealings between the parties.’
I
I
17.10 The Recorder plainly had considered the issue of
J
J
inherent probability and other evidence in order to form an
K overall assessment of the parties’ credibility and the strength of K
their case. This includes the episode regarding the sale of a L
L
flat in Classic Mansion by Madam Chow, a lady friend of
M
M Wai, to Sim. Sim entered into a sales contract to buy the flat
for $1 million in May 2004. Kam’s evidence is that he asked N
N
Wai to return some of 6 t h Aunt’s gift to him so as to acquire the
O
O property. Sim said Wai told her that he wo uld deduct the
purchase price from the amount he had to pay Kam from P
P
6 t h Aunt’s gift. The sale was completed without Sim paying
Q
Q the vendor anything. In addition Wai gave her $100,000 to
return the 10% deposit that Sim had paid R
R
Madam Chow. Wai’s case was that the flat was his and
S
S Madam Chow held it on trust for him, and he directed
Madam Chow to transfer the property to Sim as a gift. T
T
U
U
V
V
由此
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A
B
B
17.11 The Recorder was clearly not impressed with Wai’s
version of the event . A conclusion, he, as a trial judge, was C
C
entitled to reach on the evidence he had heard and seen. D
D
E
17.12 The Recorder also considered Wai’s evidence on the E
purchase of the two properties unsatisfactory. The initial
F
F
offer to purchase the shop was made on behalf of Ever Rise
G
Investment Ltd, a company jointly owned by Wai and G
Sim. The offer to buy the flat was made on behalf of Wai
H
H
alone. The Recorder found Wai’s insistence that he intended
I to buy the shop alone unsatisfactory. While Wai maintained I
that Sim had never expressed any interest in buying the shop
J
J
and the flat, he was unable to explain why the offer to purchase
the shop was originally made on behalf of Ever Rise. Wai K
K
then said Sim became the purchaser because Kam who worked
L
L
as a clerk in a solicitor’s firm told him that this was to avoid
potential conflict of interest problems. M
M
N
N 17.13 The Recorder held that he was unable to accept
O
Wai’s explanation : O
P
̒ 100. …… It is an ob jective fact that three P
beneficiar ies, Wai, Kam and Lo Man H ing, had
previous ly purchased tw o pr op erties fr om the estate
Q
Q in their own names. Thus there was, so far as Wai
was concer ned, alread y a precedent. On the other
hand, the ad vice ab out seeking the beneficiar ies’ R
R consent wou ld be exactly w hat one w ou ld expect a
solicitor to g ive, w hether the s olicitor knew of the
previous purchase b y Wai, Kam and Law Man H ing S
S
or not ( althoug h there is no evidence w hether Mr Au
knew of that incident). T
T
U
U
V
V
由此
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A
B
B
101. Moreover, us ing S im’s name wou ld not have
solved any per ceived pr ob lem as s he was Kam’s
C
C spouse. Indeed, Law Man S hing d id wr ite to all the
beneficiar ies explaining that S im was Kam’s wife
and s oug ht their confir mation that they d id not ob ject D
D
to her purchas ing the Pr operties.’
E
E
17.14 The Recorder also found that Wai’s evidence on the
F
F payment of $8.3 million in cash unsatisfactory :
G
G ̒ 106. Ms Ng suggested when s he cr oss -examined
Sim that Wai decided to put the Pr operties in her
name after he had heard of s olicitor Au’ s advice H
H
abou t beneficiar ies bu ying the Pr oper ties fr om the
estate, and he w ithdrew cash fr om his accou nts in
I
I order to avoid any paper trail w ith a view to avoid ing
poss ib le estate duty. I am not convinced b y the
reasons ad vanced b y Ms Ng. First, I note that when J
J Wai gave evidence, he said that he had not met
solicitor Au and d id n ot get any ad vice fr om
him, which is incons istent w ith w hat was suggested K
K
to S im in cr oss -examination. I will not put much
weig ht on this d iscrep ancy, althoug h it is a sig n that L
L Wai’s case may not be as clear as he w ou ld want t o
suggest. Second ly, the ex p lanation that Wai pu t
the Prop erties in S im’s name w ith a r ather long term M
M
view of them eventu ally pass ing to Tung is
unconvincing. That purp ose w ou ld only have
N
N wor ked if S im continued to keep the Prop er ties after
Wai had p assed away and chose to pass th em t o
Tung. P lainly Wai w ou ld have no way of ensur ing O
O
that it w ou ld happ en as he had wis hed. Third ly, the
avoidance of estate duty reason is more
plaus ib le, b ear ing in mind that he had recently paid P
P
$4.77 million estate duty in respect of monies he had
received fr om 6 t h Au nt, bu t there was no suggestion Q
Q that Wai was somehow thinking that something mig ht
happ en to him. This is, in my view, a weak reaso n
R for reg is ter ing the Pr operties in S im’s name. R
107. The lack of any convincing reason fr om Wai is
S
S hig hlig hted when one cons iders the events after the
assig nment of the Pr operties to Sim, to which I tur n.’
T
T
U
U
V
V
由此
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A
B
B
17.15 It is apparent that the Recorder had also considered
C factors in Wai’s favour when he assessed the case : C
D ̒ 103. Ms Ng pointed out that on Kam and S im’s D
case, Wai w ou ld have started fr om a p os ition w her e
he was to pay half of the purchase pr ice of the Shop E
E to get 50% interest, and the fu ll pr ice of the Fu ng
Yip F lat to get 100% ownership, but he end ed up
paying all the purchase pr ice w ithout ow n ing any F
F
interest in either Prop erties. She submitted that it
wou ld b e most odd for Wai to intend that to G
G happ en. I agr ee that it is one of the major odd ities
in this case, but it cuts b oth ways and the r eason for
H
this odd ity is precisely the issue to b e res olved. H
104. I accept that there is evid ence, includ ing Law
Man S hing’s email in 2009 and Mad am Li’s I
I
evidence, suggesting that Wai must have told them
that he was the pur chaser of the S hop. There is J
J Kam’s ow n evidence that when Wai fou nd out ab out
the sale of the Fung Y ip F lat, he accused Kam and
K Sim of selling “his ” flat. There is no attempt b y K
Mr Yau to exp lor e w hy Wai wou ld have said that. I
must take such evidence in his favour into accou nt in L
L assessing the overall p icture.’
M
M
17.16 But having taken all these factors into account, the
Recorder found against Wai on the gift issue. In my view the N
N
Recorder was clearly entitled to such a view. It cannot be said
O
O
that he was plainly wrong on this issue.
P
P
17.17 I do not consider the Recorder had decided this issue
Q
Q simply on the demeanour of the parties. No doubt he had
taken this into account as he said in paragraph 102 of the R
R
judgment referring to Wai’s demeanour when he gave evidence
S
S
on the purchase of the two properties. But his finding is
T
clearly supported by other evidence. T
U
U
V
V
由此
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A
B
B
17.18 I do not regard the Recorder’s finding was
materially affected when he stated that Wai was a man of C
C
humble means who had a relatively humble job, when in fact he D
D
had earlier found Wai to be well educated and between 1995
E
E and 1999 was profitably engaged in foreign exchange
trading. Nor do I find the Recorder had applied different F
F
standards in assessing the evidence of Sim and Wai’s witness.
G
G
17.19 I do not regard my view on the invalidity of the trust
H
H
by reason of the uncertainty of the subject matter has any
I adverse bearing on the finding of fact by the Recorder. These I
are two distinct and unrelated issues.
J
J
4) The purchase of the properties K
K
18. In my view the Recorder was clearly entitled to find L
L
that the $8.3 million used for the purchase of the properties was
M
M th
part of the gift that 6 Aunt had given to Kam. He was
N
N entitled to find that there was no agreement between the parties
that Sim was to hold the properties for Wai. O
O
P
Estoppel by convention P
Q
Q 19.1 In his written submission , Mr Yau alluded to
estoppel but without specifying what kind of estoppel and how R
R
it is to be applied. This Court is of the view that on the basis
S
S of the finding on law and facts, estoppel by convention, which
will preclude Wai from denying the validity of the gift T
T
notwithstanding t he invalidity of the trust , is an arguable point
U
U
V
V
由此
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A
B
B
and because of the late challenge on the validity of the
trust, this point should be considered and further submissions C
C
on this point was directed and received from the parties . D
D
E
1) The principle E
F
19.2 Simply put, estoppel by convention is to prevent an F
unjust departure by one person from an assumption adopted by
G
G
another as the basis of some act or omission which, unless the
H assumption be adhered to, would operate to that other’s H
detriment.
I
I
19.3 In First Laser Ltd v Fujian Enterprises (Holdings) J
J
Co Ltd (2012) 15 HKCFAR 569 at 601 the Court of Final
K
K Appeal summarized the restatement of the principles on
estoppel by convention by Ribeiro PJ in Unruh v L
L
Seeberger (2007) 10 HKCFAR 31 as follows :
M
M
̒ (1) the parties entered into some tr ansaction or
legal relations hip on the b as is of an assump tion N
N
that was shared b y or common to them
both, and it was the element of commonality of
the assumption that ma r ked ou t estoppel b y O
O
convention as a d istinct form of estopp el [1 33];
P
P (2) it must be show n that assumption was
commu nicated between the parties and acted
upon, and there must be s ome mu tu ally Q
Q
manifest conduct b y the parties [135];
(3) there was no necess it y for the p arties to b elieve R
R
that the assumed state of affairs was true, nor
was there any necess ity for the parties to have S
S been mistaken [136];
(4) what is imp ortant is for them to act in the T
T
belief, manifes ted b y words or condu ct, that
they are both pr oceed ing w ith the transaction
U
U
V
V
由此
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A
B
B
on the bas is of the same s hared assump tion
[137];
C
C
(5) the contents of the common assumption must be
sufficiently certain to enab le the court to give D
D effect to it [138] ;
E
(6) estopp el b y convention is concer ned w ith a E
common assumption relied upon as a bas is upon
which the pers ons shar ing such assumptions
F
F enter into a tr ansaction or legal relation ship
[142]; and
G
G (7) there must be an attempt b y one party to depart
fr om the common assumption which depar ture
wou ld b e u njust because of the p art taken b y H
H
him in occas ioning its ad option b y the other
party, and the other party w ou ld su ffer I
I detr iment ar is ing out of his having enter ed into
the relevant transaction on the bas is of the
common assumption if the opp os ite party were J
J
afterwards allowed to set up rig hts incons is tent
with the assumption [150]. ’
K
K
19.4 See a further discussion of this doctrine in Ryan L
L
v. Moore [2005] 2 SCR 53 (Supreme Court of Canada) and
M
M Prime Sight Ltd. v Lavarello [2014] 2 WLR 84 (Privy Council
on appeal from Gibraltar ). N
N
O
O 2) The pleading
P
P
19.5 In her written response, Ms Ng argued that the
Q
estoppel must be specifically pleaded by reference to Muskham Q
Finance Limited v Howard [1963] 1 QB 904 at 913, Li Kwai
R
R
Fong Ah Pat v Bachy Soletanche Group &
S Another, unreported, CACV 30/1989 at p.3 and Gillett v Holt S
[2001] Ch. 210 at 224B. Since it has not been pleaded, it is
T
T
not open to Kam to rely on it now.
U
U
V
V
由此
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A
B
B
19.6 In my view, Wai may rely on this estoppel. As
Coppinger v. Norton [1902] 2 Ir. R. 241 observed, the C
C
requirement of pleading estoppel is subject to the pleader D
D
having the opportunity to do so. The principle is stated in the
E
E judgment of Wright J at 237. Although Wright J was the
dissenting judge, there was no disagreement by the other F
F
members to this principle on pleading :
G
G
̒ I think the ru le of p lead ing is ver y s hortly stated at
p. 192 of the first volume of R oscoe’s Nis i H
H Prius, last ed ition :—“The judgment is conclus ive
(i. e. an estoppel), if p leaded, where there is an
I opp ortu nity of p lead ing it ; but w here ther e is no such I
opp ortu nity, then it is conclus ive as evidence; but if
the par ty forbear to rely up on an estopp el, when he
J
J may p lead it, he is to be taken to waive the
estopp el, and to leave the pr ior judg ments as
evidence only for the jur y.’ (emp has is ad ded) K
K
L
L 19.7 This is also reflected in Hong Kong Civil Procedure
2014 volume 1, paragraph 18/8/11: M
M
̒ Estopp el must be specifically p leaded, u nless ther e
N
N is no opp ortu nity to d o s o. ’
O
O
19.8 The unusual feature in this case is that the invalidity
P
of the trust is only raised for the first time on appeal. It P
brings into focus the question now faced by this
Q
Q
Court, namely, what is the consequence of the parties’
R respective case if the challenge to the validity of the trust is R
substained while the factual findings are maintained. In my
S
S
view fairness in the circumstances must allow Mr Yau to raise
this point despite the matter not having been pleaded T
T
before. Further, it is quite impossible for Mr Yau to have
U
U
V
V
由此
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A
B
B
pleaded this beforehand in the absence of a specific plea on the
invalidity of the trust. This Court will, if necessary, grant C
C
leave to Mr Yau to file a respondent’s notice to rely on the D
D
estoppel by convention as identified in paragraph 19.1 herein.
E
E
Application of the estoppel in the present case
F
F
20. In my view estoppel by convention applies on the G
G
basis of my finding :
H
H
(1) i) The parties in this case entered into a transaction or
I
I
legal relationship on the basis of an assumption that was shared
J by or common to them both, namely, there was a valid gift of J
money from 6 t h Aunt to Wai and Kam. As Ribeiro PJ
K
K
explained in Unruh v Seeberger :
L
L
̒ 142. As is mad e clear in the statements of pr inciple
cited in s.D.2 above, an estoppel b y convention is
M
M concer ned w ith a common assumption relied upon as
the bas is upon which the pers ons shar ing such
assumptions enter into a transaction, w ith the wor d N
N
“transaction” to be u nderstood her e in the br oad
sense of the par ties engag ing in acts or omiss ions
O affecting their mu tual leg al relations hip . ’ O
(emp has is added)
P
P
ii) Ms Ng challenged the application of the
Q
Q
estoppel. She submitted that Kam has not satisfied the
R
threshold requirement because it is not shown that the parties R
had entered into some transaction or legal
S
S
relationship. Ms Ng argued that as far as Kam’s action was
T concerned, Kam was merely receivin g presents and payments T
from Wai to which he was not entitled, since there was no
U
U
V
V
由此
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A
B
B
gift. As for Wai’s action, there was still no ‘transaction’
C between Wai and Kam. The ‘transaction’ over the two C
properties were between the purchaser and Law Man Shing as D
D
vendor.
E
E
iii) I disagree. Here the parties must have been
F
F
engaged in acts or omissions affecting their mutual
G
relationship. On the basis of the factual finding the parties G
must have proceeded on the assumption of a valid gift. On
H
H
that assumption Wai was required to pay Kam his share of the
I gift and Kam could enforce the payment from Wai. Had the I
trust been a valid one, Wai was the trustee and Kam the
J
J
beneficiary of the trust with the attendant legal rights arising
from this relationship . K
K
L
L iv) Ms Ng further argued that there was no inducement
on the part of Wai for Kam to enter into the transaction. She M
M
relied on the part of the seventh proposition identified in
N
N paragraph 19.2 herein which deals with departure by one party
O
from the common assumption : the departure is unjust because O
of the part taken by him in occasioning its adoption by the other
P
P
party.
Q
Q
v) On the facts of this case as found by the
R
R Recorder, Wai must have relied upon and adopted what Wai
told him about 6 t h Aunt’s gift in his relationship with S
S
Wai. Examples of this reliance can be found in paragraphs 35
T
T and 84 of the judgment :
U
U
V
V
由此
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A
B
B
̒ 35. Kam further claims that a few months
later, dur ing a tr ip he and Wai took to Macau for
C
C ancestral w orship, Wai raised the matte r w ith him and
told him that the monies he had received fr om 6 t h Au nt
were in d iffer ent currencies but the total amou nt was D
D
abou t $30 million. In his or al evidence, Kam
descr ibed the scene in some d etail, includ ing that Wai
put his hand on his shou lder and said to him words to E
E
the effect that “half o f th e money was yours ”, and Kam
responded b y saying to Wai “ good/faith ful brother ” F
F (好 兄 弟 ).’
G ̒ 84. Kam turned noticeab ly emotional w hen he was G
cross-examined on why he d id not mention to 6 t h Au nt
that Wai had not been making pr ompt payments to
H
H him, and exp lained that he genu inely cared for
6 t h Au nt who was ver y fr ail after her str oke, and he
did not want to tr oub le 6 t h Au nt w ith this matter lest I
I
she mig ht think that he and Sim only cared for her
because of her money. Anyway, his evidence is that
J
J his u neas iness was alleviated when Wai paid him $5.6
million w ithin a coup le of months in ear ly 2000, and
he had no reason not to trust Wai. ’ (emp has is added) K
K
L
L (2) The assumption was communicated by some
mutually manifest conduct in the light of the factual findings M
M
that Wai had orally confirmed to Kam what 6 t h Aunt had told
N
N Kam about the gift .
O
O
(3) The issue of the invalidity of the trust is irrelevant
P because there is no necessity for the parties to believe that the P
assumed state of affairs was true.
Q
Q
(4) Wai and Kam had acted on the basis of the same R
R
shared assumption in the form of Wai providing the money to
S
S Kam and Kam receiving them over a substantial period of time .
T
T
U
U
V
V
由此
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A
B
B
(5) The content of the common assumption is
sufficiently certain, namely, there was a valid gift of money C
C
from 6 t h Aunt to Wai and Kam equally. Ms Ng’s successful D
D
argument on the uncertainty of trust which is based on a point
E
E of law does not in any way lessen the certainty of the content of
the common assumption. F
F
G
(6) Wai had departed from the common assumption by G
asserting that his payment to Kam was not pursuant to
H
H
6 t h Aunt ’s gift and this departure is unjust because in his action
I against Sim, he is denying that the payment of $8.3 million for I
the purchase of the two properties is part of the gift from
J
J
6 t h Aunt and by his assertion of right to these two properties, he
is seeking to deprive Kam and Sim what truly belongs to Kam K
K
under the gift. I disagree with Ms Ng that Kam could not be
L
L
said to have suffered any detriment.
M
M
(7) As a result Wai is estopp ed from denying the gift
N
N and his obligations towards Kam in respect of the gift.
O
O
Backdoor argument
P
P
21.1 Ms Ng submitted that to extend estoppel by
Q
Q
convention to apply to the circumstances of this case is in
R
effect to override Milroy v Lord, by coming to the aid of a R
volunteer and perfecting an imperfect gift by the backdoor on
S
S
the mere confirmation by a non -trustee of a failed gift of the
T gift. If Wai acted unconscionably in receiving money T
intended by the transferee for a different purpose and retaining
U
U
V
V
由此
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A
B
B
it for his own use, equity’s remedy is to make him accountable
to the transferee, not to the volunteer or any other person. C
C
D
D
21.2 The Court of Final Appeal in First Laser Ltd
E
discussed the backdoor argument in paragraphs 87 -89 in the E
context that estoppel by convention cannot normally be used in
F
F
effect to validate an agreement which by statute would
G
otherwise be invalid or unenforceable. In this case, the G
estoppel does not contravene any public policy.
H
H
Disposition of the Appeal I
I
J 1) Wai’s action (CACV 249/2013) J
K
K 22.1 Wai claimed that he is the beneficial owner of the
two properties. Sim’s case is that the money provided by Wai L
L
for the purchase of the two properties was money from the gift
M
M which Kam was entitled to receive from Wai and there was no
agreement that she was to hold the two properties on trust for N
N
Wai. The Recorder found for Sim on these two points.
O
O
22.2 As a result of the application of the doctrine of P
P
estoppel by convention, notwithstanding the invalidity of the
Q
Q trust, Wai is precluded from denying that the purchase price he
had provided for the two properties was money that Kam was R
R
beneficially entitled to. Further as a result of our conclusion
S
S that the Recorder was correct to find that there was no
agreement for Sim to hold the two properties on trust for T
T
Wai, there is no issue of Sim holding the properties on resulting
U
U
V
V
由此
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A
B
B
trust for Wai because she does not. Accordingly the Recorder
is correct to give judgment in favour of Sim. Wai’s appeal is C
C
accordingly dismissed. D
D
E
2) Kam’s action (CACV 250/2013) E
F
F 23.1 Kam’s action is based entirely on the gift. Mr Yau
informed the Court that due to the long lapse of time and the G
G
substantial amount he had already received from Wai, Kam
H
H does not intend to enforce the judgment ordering the taking of
account and payment arising from the result of the taking of I
I
account. Instead he invited this Court to decl are that the
J
J money transferred by 6 t h Aunt to Wai was her gift to Wai and
Kam and this gift included the $8.3 million for the purchase of K
K
the two properties.
L
L
23.2 In my view the declaration that should be granted in
M
M
the light of this Court’s conclusion o n estoppel is that Wai is
N
N estopped from denying that the money (which included the
$8.3 million) that he had paid to Kam was in the nature of a gift O
O
from 6th Aunt to Kam. This will replace the declaration made
P
P by the Recorder that :
‘ [Wai] holds on trust for [Kam] half of the F und or G ift Q
Q
transferred b y the late Mad am Lo Pu i Kau to [Wai] for
the benefit of [Kam] and [ Wai].’ R
R
23.3 The Court further records Kam’s position that he S
S
will not pursue the order for an account and payment upon
T
T
U
U
V
V
由此
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A
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B
taking account. Wai’s appeal is allowed to this limited
extent. C
C
D
D
Costs
E
E
24. The two appeals were heard together and there were
F
F common issues between them. Wai fails on the issue of the
gift because he is precluded from denying that the money he G
G
th
had paid to Kam was in the nature of a gift from 6 Aunt to
H
H Kam. This affects both appeals. However, he succeed s in
challenging the validity of the trust which took up a substantial I
I
part of the hearing. The costs order nisi in respect of the two
J
J appeals is that Wai is required to pay half of the costs of the
appeals respectively to Sim and Kam. K
K
Hon Chu JA : L
L
M
M 25. I agree with the judgment of Cheung JA and the
orders His Lordship proposes . N
N
O
O Hon Poon J :
P
P
26. I agree.
Q
Q
R
R
S
(Peter Cheung) (C. Chu) (J. Poon) S
Justice of Appeal Justice of Appeal Judge of the Court
of First Instance T
T
U
U
V
V
由此
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A
B
B
C
C Ms Margaret Ng, instructed by Lee & Chow, for the plaintiff in
CACV 249/2013 and defendant in CACV 250/2013 D
D
E Mr Albert Yau and Ms Melo Man , instructed by Tso Au Yim & E
Yeung, for the defendant in CACV 249/2013 and plaintiff
F
F in CACV 250/2013
G
G
H
H
I
I
J
J
K
K
L
L
M
M
N
N
O
O
P
P
Q
Q
R
R
S
S
T
T
U
U
V
V
由此
A
A
B B
CACV 249 & 250/2013
C C
D
D CACV 249/2013
E E
IN THE HIGH COURT OF THE
F
HONG KONG SPECIAL ADMINISTRATIVE REGION F
COURT OF APPEAL
G G
CIVIL APPEAL NO. 249 OF 2013
H
(ON APPEAL FROM HCA NO. 2307 of 2009) H
I I
BETWEEN
J J
LAW MAN WAI Plaintiff
K K
and
L L
KWAN SAU SIM Defendant
M
M
N N
AND
O O
CACV 250/2013
P P
IN THE HIGH COURT OF THE
Q Q
HONG KONG SPECIAL ADMINISTRATIVE REGION
R
R COURT OF APPEAL
CIVIL APPEAL NO. 250 OF 2013 S
S
(ON APPEAL FROM HCA NO. 143 of 2010)
T T
U U
V V
由此
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A
B
B
BETWEEN
C
C
LO MAN KAM Plaintiff
D
D
and
E
E
LAW MAN WAI Defendant
F
F
(Heard together) G
G
H
H
Before : Hon Cheung, Chu JJA and Poon J in Court I
I
Date of Hearing : 18 July 2014 J
J
Date of Further Submissions : 29 July, 4 and 14 August 2014
K
K
Date of Judgment : 23 September 2014
L
L
M
M
JUDGME NT N
N
O
O
Hon Cheung JA : P
P
Q
Q Facts
R
R
1) 6 t h Aunt
S
S
1. Madam Lo Pui Kau （ 羅 佩 球 ） was an able and
T
T wealthy woman. She came from a well to do family in
U
U
V
V
由此
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A
B
B
Macau. Although she was married, she had no children of her
own. But she had many nephews and nieces. She was C
C
known to them as 6 t h Aunt. She died in December 2001. In D
D
her will she gave her estate to her nephews and nieces and also
E
E her grandnephews. Amongst her nephews are Law Man Wai
（ 羅 文 蔚 ）(‘Wai’) (the plaintiff in HCA No. 2307 of 200 9) and F
F
Lo Man Kam（ 羅 文 錦 ）(‘Kam’) (the plaintiff in HCA No. 143 of
G
G
2010).
H
H
2) Wai and Kam
I
I
2.1 Wai was born in 1942 and received his primary
J
J
education in Macau. He came to Hong Kong when he was
K 14, attending, firstly, St Louis School and later on St Paul’s K
Co-Educational College where he graduated with good
L
L
results. He did not continue higher education because his
mother was ill and he returned to Macau to be with her. In M
M
Macau he started working in the Permit Department of the N
N
British Consulate.
O
O
2.2 In 1966 Wai came to Hong Kong and worked in the
P
P
inward bills department of a bank. He married in
Q
1967. However he committed an offence a nd was jailed Q
between 1983 and 1985, during which time his wife deserted
R
R
him. He has no children.
S
S
2.3 In 1987 Wai met up with Kam in Hong Kong. Kam
T
T was then 35 and working as a part time chauffe ur. He was
U
U
V
V
由此
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A
B
B
already married to Kwan Sau Sim （ 關 秀 嬋 ） (‘Sim’) (the
C
C defendant in HCA 2307 of 2009) who was a beautician, and
they had a young son (‘Tung’). D
D
2.4 After Wai and Kam met up again, they became very E
E
close and they visited 6 t h Aunt frequently who had by then
F
F
moved to live in Hong Kong with her sister known as the
G 5 t h Aunt. 6 t h Aunt loved Wai and Kam and they were her G
close relatives.
H
H
3) The gifts I
I
J
J 3.1 6 t h Aunt gave a lot of money to Wai who was
helping her with her foreign currency investments. By Wai’s K
K
th
own admission, between January and November 1999 6 Aunt
L
L had given him about $29 million. 6 t h Aunt later had a
stroke. Kam said 6 t h Aunt told him and Sim during one of M
M
their visits in 1999 after she had recovered from the stroke that
N
N she had transferred part of her savings to Wai which was to be
shared between him and Wai equally after she passed O
O
away. When Wai turned up later, 6 t h Aunt asked Wai to
P
P confirm the transfer which he did and he said the money was
about $30 million. Q
Q
3.2 Kam further said that Wai later confirmed with him R
R
on two other occasions that the gift from 6 t h Aunt was about
S
S
$30 million to $35 million respectively. On the first of these
T occasions, Wai told Kam half of the money was Kam’s. T
U
U
V
V
由此
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A
B
B
3.3 Wai’s position was different. He maintained in
these proceedings that the money given by 6 t h Aunt was gift to C
C
him only. However what is clear is that starting from January D
D
2000 up to June 2004 Wai had been giving Kam and Sim a total
E
E of $12.8 million. Wai insisted that the money he gave to Kam
was entirely out of love and goodwill. F
F
G
4) The properties G
H
H 4.1 6 t h Aunt’s estate included real properties. Two of
these were sold by the executors of the estate to Wai, Kam and I
I
another nephew Lo Man Hing. Two other properties were sold
J
J by the executor to Sim. These two properties are a flat in
Fung Yip Building (‘the flat’) where 6 t h Aunt lived before she K
K
died and a shop in Hoi To Court (‘the shop’). Wai claimed
L
L that although Sim purchased the properties in her name, it was
him who provided the consideration of M
M
$7.96 million. Between June and August 2004, Wai had given
N
N Kam and Sim $8.3 million in cash. He claimed that Sim held
O
the properties on trust for him. As made clear in the judgment O
below there is no dispute that payments made by Wai to Sim
P
P
were to be treated as payments to Kam.
Q
Q
4.2 Sim denied this. She said she was the legal and
R
R beneficial owner of the two properties and the money used for
the purchase of the properties was part of the gift given by S
S
6 t h Aunt to Wai and Kam. She counterclaimed damages
T
T against Wai for obstructing the sale by her of the flat to a
U
U
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V
由此
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A
B
B
purchaser. She also claimed that Wai had not accounted for
C the rent he received from the shop. Kam’s action against Wai C
was for, among other things, a declaration that Wai holds on D
D
th
trust for him half of the money transferred by 6 Aunt to Wai
E
E for their benefit, an account of the money that 6 t h Aunt had
given to Wai and payment of money found to be due from Wai F
F
to him on the taking of the account.
G
G
The judgment
H
H
5. Recorder Jat SC, after a four day trial, found for Sim I
I
and Kam. Wai now appeals.
J
J
The appeal
K
K
6. Wai is represented by Ms Margaret Ng who ably L
L
conducted the appeal on his behalf. Originally her challenge
M
M of the Recorder’s judgment was on two factual
grounds, namely, first, he erred in finding that 6 t h Aunt had N
N
intended to give her money to both Wai and
O
O Kam, and, second, he erred in finding that Sim was the
P
beneficial owner of the two properties . Shortly before the P
appeal Wai’s notice of appeal was amended and a challenge on
Q
Q
a point of law was raised, namely, the Recorder erred in failing
R
to hold that, on Kam’s pleaded case that there was no perfected R
trust or gift in favour of Kam on the monies transferred to Wai.
S
S
T
T
U
U
V
V
由此
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A
B
B
C
C
Validity of the gift
D
D
7.1 I will deal first with the challenge on the validity of E
E
the gift. This was not a point raised by Kam at the trial
F
F below. However, the Recorder obliquely dealt with this issue
in paragraph 8 of the judgment, where he stated that ‘Ms Ng did G
G
not dispute that the 6 th
Aunt’s gift, if proved, did not constitute
H
H a valid trust’. Ms Ng informed the Court that this poi nt was
simply not raised at the trial. The Recorder, however, did not I
I
elaborate how this would affect the parties’ case and he did not
J
J address this matter further in his judgment.
K
K
7.2 Ms Ng’s attack on the validity of the gift is on two
L limbs. First, the trust over 6 t h Aunt’s money was void for L
uncertainty (‘the uncertainty argument’) and second, the gift
M
M th
was an imperfect gift in that 6 Aunt merely expressed an
N
N intention of gifting an as yet incompletely transferred and
unspecified sum of money to be held by Wai for Kam (‘the O
O
imperfectly gift argument’).
P
P
7.3 Kam and Sim (represented by Mr Albert Yau and
Q
Q
Ms Melo Man) objected to Wai raising this challenge for the
R
first time on appeal. Mr Yau argued that had this matter been R
raised below, there would be factual evidence called to deal
S
S
with the challenge.
T
T
U
U
V
V
由此
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A
B
B
7.4 Ms Ng relied on Flywin Co Ltd v Strong &
Associates Ltd (2002) 5 HKCFAR 356 and argued that Wai is C
C
not barred from taking this point on appeal because it arises on D
D
Kam’s pleadings and no factual issue is involved. She relied
E
E on Bokhary PJ’s judgment at page 369 B-C that :
‘ He will be barred from doing so unless there is no F
F
reasonab le p oss ib ility that the state of the evidence
relevant to the p oint wou ld have been mater ially G
G mor e favour ab le to the other s ide if the point had
been taken at the tr ial.’
H
H
I. The uncertainty argument I
I
J
1) The principle J
K
K 8. One of the three requirements for a valid trust is that
the subject matter of the trust must be certain. The following L
L
principle from Pettit’s Equity and the Law of Trusts (12 th
Ed)
M
M page 51 illustrates the point :
N
N ‘ (B ) CERTAINTY OF SUB JECT
(i) It is abu ndantly clear that , in ord er to estab lis h O
O a trust, the trust prop erty must be
id entifiab le. Where it cannot be clear ly
id entified, the purp or ted trust is altog ether void P
P
as, for instance, in Palmer v Simmonds , in w hich the
subject of the alleged trust was ‘the bu lk of my said Q
Q residu ar y estate’ ; nor was a trust estab lis hed in Re
London Wine Co (Shippers) L td, in w hich a company
R
had stocks of wine in var ious warehouses , which it R
sold to var ious customers, the intention being that
the w ine purchased shou ld b ecome the pr operty of
S
S the customers , but stored b y the company at the
customers’ expense. It was argue d that if the leg al
title had not passed to the customers, ther e was a T
T
trust in their favour. The cour t seems to have
accep ted that there was an intention to create a
U
U
V
V
由此
- 9 - A
A
B
B
trust, but held that it nevertheless failed on the
grou nd of uncertainty of subject matt er, because
C
C there was never any segreg ation or appr opr iation of
the wine w ithin the warehouse u ntil actu al deliver y
of the w ine to a purchaser. This last decis ion D
D
seems r ig ht in pr incip le, but the subsequent Court of
Appeal decis ion in Hunter v Moss causes
difficu lties. In t hat case, it was held at first E
E
instance that the requ irement of certainty does not
app ly in the same way to trusts of intang ib le assets F
F such as, in the case befor e the court, 50 ou t of 950
ind is tingu is hab le s hares. In such cases, it w as
held, the question of certainty dep ends not on the G
G
app lication of any immutab le pr incip le based on the
requ irements of a need for segreg ation or
H
H appropr iation, but rather on w hether, immed iately
after the purp orted declar ation of trust, the court
cou ld, if asked, make an order for the execution of I
I
the purpor ted trust. O n this bas is , the trust was
upheld. The C ourt of Appeal express ly agreed
J
J with the conclus ion of the judge below on the
uncertainty p oint and shou ld, p er haps, be tr eated as
accep ting his reas oning, althoug h it has been much K
K cr iticized b y most of the commentators, arg uing that
intang ib le assets are not in a d ifferent p os ition fr om
tang ib le. Nor is the analog y draw n b y the court L
L
with a demonstrative legacy of s hares valid, because
a trust of such s har es w ill become comp letely M
M constituted only when the par ticu lar shar es have
been vested in the trustee.
N
N
Thomson & Hudson, however, while accep ting
that the d is tinction is mad e b y the au thor ities, argue
that the cr iticism is based on a misu nd erstand ing on O
O
what is r equ ired to have ‘ certainty’. They suggest
that the law d oes not requ ire absolu te or P
P mathematica l cer tainty but looks for
‘wor kab ility’, which was present in Hunter v Moss .’
(emp has is added) Q
Q
R
R
S
S
T
T
U
U
V
V
由此
- 10 - A
A
B
B
2) The pleading
C
C
9.1 In respect of the gift from 6 t h Aunt, Kam in his
D
D
pleadings relied on an express trust or alternativel y a trust ‘by
E
operation of law’ but without specifying its precise nature. In E
respect of the gift, this is what Kam pleaded in his re -amended
F
F
statement of claim :
G
G ‘ 3. In 1999, the late Madam Lo started to transfer
money to the Defend ant for the b enefit of the
Plaintiff and the Defendant. U ntil after H
H
discover y, interr ogator ies and/or exchang e of
witness statements, the best particu lars the Plaintiff I
I can pr ovide are as follows :
PARTICULARS J
J
1) In or ab out ear ly 1999, the late Madam Lo
told the P laintiff that she had tr ansferred K
K
var ious sums of money in for eig n
currencies and H ong K ong d ollars L
L currency to the Defend ant and w ou ld
continue to d o the same.
M
M
2) Accord ing to the late Madam Lo, the
monies which had been trans ferred to a nd
wou ld be trans ferred to the D efend ant N
N
(collective ly r eferred to as “the Fu nd”)
were intend ed as a g ift to be s hared b y the O
O Plaintiff and the D efendant equ ally.
P
……’ (emp has is added) P
Q
Q 9.2 The Fund as defined by paragraph 3(2) is pleaded as
the subject matter of the trust : R
R
‘ 6. B y reas on of the matters set ou t ab ove, an
S
S express trust, the sub ject of w hich b eing the
Fund, was created s ince 19 Febru ar y, 1999, and /or at
latest b y 19 November 1999, b y the late Madam Lo T
T
for the equal benefit of the P laintiff and the
Defend ant (‘the late Madam Lo’s Trust’).
U
U
V
V
由此
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A
B
B
6A. Further to p ara 6 ab ove or in the
alter native, if the p laintiff’s case of an exp ress trust
C
C cannot be made out, he avers that the D efend ant
holds the Fund on trust for b oth of them in equa l
shares b y op eration of law having reg ar d to t he D
D
circumstances as to how the D efendant first came
into p ossession of the var ious sums which compr is ed
the Fund. (Such circumstances, ap art fr om those E
E
stated ab ove, include the fact that he received thes e
var ious sums fr om the late Madam Lo with fu l l F
F know ledg e that the sums were not meant for his ow n
exclus ive or pers onal use but were meant for the
equal shar ing between him and the Plaintiff.)’ G
G
(emp has is added)
H
H
3) Wai’s argument
I
I
10.1 Ms Ng argued that there is uncertainty in the subject
J
J
matter of the trust because the Fund consisted of both of the
K
K money that had been transferred from 6 t h Aunt to Wai and also
money of unspecified amount that had not yet been L
L
transferred. Ms Ng argued that at the time of 6 th
Aunt’s
M
M expression of intent in early 1999 of making the future gift, the
subject matter of the purported gift had not yet been constituted N
N
and was uncertain. It was uncertain at what point and what
O
O further transfers would be made to constitute the purported
gift. On the particulars pleaded, five transfers were made P
P
between 19 February and 23 March 1999. No declaration of
Q
Q trust was made on the transferred amounts by 6 t h Aunt
as, according to Kam, the transfers constituting the gift were R
R
still incomplete, and other transfers were made o n or after 19
S
S November 1999. No declaration of trust was made on the
final sum after further transfers were made to Wai. On Kam’s T
T
U
U
V
V
由此
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A
B
B
pleadings there was no further conversation between Kam and
6 t h Aunt on the alleged gift. C
C
D
D
10.2 Accordingly, Ms Ng argued that neither the subject
E
of the gift nor the intention of gifting of the final sum was E
certain or ascertainable. Indeed, on Kam’s pleadings the sum
F
F
of money constituting the purported gift was uncertain as to the
G
total value as well as to the meaning of ‘transfer’, whether it G
included any cash withdrawals by Wai from time to
H
H
time. This can be seen from paragraph 4(2) of the
I Re-Amended Statement of Claim : I
J
‘ 4(2) Upon a preliminar y enqu ir y w ith the J
Executor, the total sum trans ferr ed b y the
late Madam Lo to the Defendant in respect
K
K of the Fu nd was appr ox imately
HK$35,000,000 , before taking into accou nt
of interest accru ing thereto. L
L
PARTICULARS
M
M
Date of Transfer Amount
19 February 1999 GBP733,000 N
N
19 February 1999 AUD1,850,000 O
O
22 February 1999 CAD290,000
P
P 9 March 1999 USD513,000
Q
23 March 1999 HK$2,500,000 Q
19 November 1999 HK$2,700,000
R
R
On divers dates from HK$6,800,000 (approx)
1999 to 2001, cash S
S withdrawal by the
Defendant
T
T
Total (approx) : HK$35,000,000 ’
U
U
V
V
由此
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A
B
B
4) Wai can take this point on appeal
C
C
11. It is clear that arguments on the uncertainty of trust
D
D
are based solely on the state of the pleadings which I have set
E
out above. In my view Wai is entitled to raise this point on E
appeal.
F
F
5) Merit of this point G
G
H 12.1 I am also of the view that Ms Ng’s submission on the H
uncertainty of the subject matter is correct. When 6 t h Aunt
I
I
informed Kam of the gift, the subject matter of the gift had not
J yet been constituted and was uncertain because the gift J
consisted of both the money that had been transferred to Wai
K
K
and also money of unspecified amount that had not yet been
transferred. It was uncertain at what point and what further L
L
transfers would be made to constitute the gift. I disagree with
M
M
Mr Yau’s contrary argument that there is no uncertainty in the
N
N subject matter.
O
O 12.2 Mr Yau argued that future assets may be included in
P
the trust fund. He relied on Underhill and Hayton’s Law P
Relating to Trusts and Trustees, 18 t h ed., paragraph 1.4, where
Q
Q
the editors stated that :
R
R ‘ Whether or not spelled out in the definition section
of a trust instrument, the concep t of a tr ust fu nd
extends beyond the or ig inal settled assets ( often of a S
S
small value, e.g. ₤100) and the fru its thereof and
further assets subsequently trans ferred b y the settlor T
T or another settlor to the trustees. It extends to
U
U
V
V
由此
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A
B
B
assets subsequently fr om time to time successively
substitu ted for such assets.’
C
C
12.3 In my view this passage does not a ssist D
D
Mr Yau. The discussion of this passage proceeded on the
E
E
basis of a validly constituted trust. The issue of uncertainty
F
of the subject matter is not discussed. F
G
G 12.4 Mr Yau further relied on the statement in Hayton
and Mitchell’s Commentary and Cases on the Law of Trusts and H
H
Equitable Remedies, 13 th
ed., paragraph 4‒99 that :
I
I
‘ To create a valid trust, the settlor must make it
certain ex actly w hich pr oper ty is to b e held on trust J
J for otherw ise ther e will be nothing specific to w hi ch
the trust can attach. The beneficial interests to be
K taken b y the beneficiar ies must als o b e cer tain.’ K
L
L 12.5 He submitted that there is no suggestion that the
trust is void simply because some of the assets comprising that M
M
trust fund happen to be unascertained at the time of its
N
N creation. Certainty of subject matter requires that the
property to be held on trust must be certain for otherwise there O
O
will be nothing specific to which the trust can attach. As long
P
P as there is at the time of its creation suffic iently ascertainable
assets settled on that trust (and no doubt they encompass assets Q
Q
already transferred to the trustee to hold on trust), the trust is
R
R valid even though it also consists of future -acquired property.
S
S
T
T
U
U
V
V
由此
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A
B
B
12.6 In my view this passage in fact support s the
uncertainty argument. The uncertainty of the subject matter C
C
renders the trust void is well established. D
D
E
12.7 Further the traditional trust precedent that appeared E
at paragraph 1‒161 of Hayton and Mitchell and relied upon by
F
F
Mr Yau does not help him. His reliance on
G
Recital (C), namely : G
H ̒ (C) The Settlor may hereafter pay or trans fer H
further assets to or into the contr ol of the
Trustees hereof to b e held b y them on the
I
I trusts of this Settlement’
J and the meaning of ‘trust fund’ in paragra ph 1.‒(2)(d), namely : J
K
K ̒ (iii) the assets fr om time to time representing the
said assets specified in the Second Sched ule
her eto and the said add itions to the Trust F und L
L
or any p art or par ts thereof respectively’
M
M must be read subject to Recitals (A) and (B) (footnote
omitted), namely : N
N
̒ (A) The Settlor is des ir ous of making irr evocable O
O
provis ion for the Specified C lass as her ein
defined [and for char ity] in manner her einafter
appear ing P
P
(B) With the intention of making such provis io n Q
Q the Settlor has pr ior to the ex ecution her eof
transferred to the Or ig inal Trustees the assets
specified in the Second Schedu le her eto and is R
R
desir ous of declar ing such trusts thereof as
her einafter appear’ (emp has is added)
S
S
12.8 As can be seen from Recital (B), the trust is to be T
T
declared in respect of the specified assets. In other words a
U
U
V
V
由此
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A
B
B
valid trust is to be properly constituted by the specified
assets. It is upon this valid and subsisting trust that the C
C
settlor may transfer further assets to the trustees to be held on D
D
trust by them. The definition of ‘trust fund’ in the precedent
E
E does not carry the matter further. The starting point is that
there is a properly constituted trust with the subject matter F
F
being certain, namely, the designated assets which is the first
G
G item in the definition. This is unlike the present case where
the subject matter of the trust is to consist both the transferred H
H
money and unspecified money to be transferred in the future.
I
I
12.9 Mr Yau also relied on a trust by operation of
J
J
law. He submitted that it is in the nature of a constructive
trust. Constructive trust was not pleaded nor argued upon at K
K
the trial. Mr Yau now submitted that it was unconscionable
L
L
for Wai to deny on one hand the gift and on the other hand
continue receiving the money fro m 6 t h Aunt who made the M
M
transfer on the assumption that the gift was good and Wai N
N
would honour his obligation. This render s Wai a constructive
O
O trustee. He referred to Underhill and Hayton at
paragraph 8.29 where it reads : P
P
̒ Where a cour t is imp os ing a construct ive trust over
Q
Q the defend ant’s pr oper ty in ord er to pr event his
unconscionab le behavior in tr ying, to the detr iment
of the claimant, to take ad vantage of u ncertainty R
R
created b y the d efendant, the court w ill circumvent
the u ncer tainty. Thus, a com mon intention
constru ctive trust of a “fair share” of a home will not S
S
be void for u ncer tainty bu t w ill be conver ted into a
trust of a specific s hare that the court consid ers fair T
T in the circumstances. ’
U
U
V
V
由此
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A
B
B
12.10 Mr Yau, however, did not articulate how this would
convert an otherwise invalid trust into a valid one. C
C
D
D
12.11 Subject to the issue of estoppel that I will later
E
discuss, I conclude that there is no valid trust. I also tend to E
agree with Ms Ng that if the express trust fails, Wai would
F
F
either hold on resulting trust for 6 t h Aunt as to the half share
G
intended for Kam, or is accountable to her (or her estate) as her G
agent, but in neither case would Kam have any recourse against
H
H
Wai by way of an account .
I
I
II. Imperfect gift without transfer
J
J
1) The principle
K
K
13. Ms Ng relied on Milroy v Lord 4 DE G.F. & J. 264 at L
L
274 and 275 where Turner LJ held that :
M
M
‘ I take the law of this C ourt to be well settled, that, in
order to rend er a volu ntar y s ettlement valid and N
N
effectu al, the settler must have d one ever ything
which, accord ing to the nature of the proper ty
compr ised in the settlement, was necessar y to be d one O
O
in order to transfer the pr op erty and r end er the
settlement b ind ing upon him. He may of course d o P
P this b y actually trans ferr ing the pr op er ty to the
persons for w hom he intends to pr ovide, and the
provis ion w ill then be effectu al, and it w ill be equally Q
Q
effectu al if he trans fers the pr op erty to a trustee for
the purposes of the settlement, or declar es that he R
R himself holds it in tr ust for those purp oses; and if the
proper ty be pers onal, the trust may, as I app rehend, be
declar ed either in wr iting or b y p ar ol; but, in order t o S
S
rend er the settlement b ind ing, one or other of these
mod es must, as I u nderstand the law of this Court, b e
T
T resorted to, for ther e is no equ ity in this Court to
perfect an imper fect g ift . The cases I think g o
U
U
V
V
由此
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A
B
B
further to this extent, that if the settlement is intended
to b e effectuated b y one of the mod es to which I have
C
C referred, the C ourt w ill not g ive effect t o it b y
app lying another of those mod es. If it is intended to
take effect b y trans fer, the C ourt w ill not hold the D
D
intended tr ansfer to op erate as a declaration of
trust, for then ever y imp er fect instrument wou ld be
made effectual b y being converted into a perfect E
E
trust. These are the pr incip les b y w hich, as I
conceive, this case must b e tr ied.’ (emp hasis added) F
F
G 2) Not necessary to address this point G
H
H 14. The imperfect gift argument is a related although
different issue from the uncertainty argu ment. The I
I
uncertainty of the subject matter will render the trust
J
J void. But an imperfect gift may arise even whe n there is no
issue of uncertainty of the subject matter but when the trust K
K
fund was not transferred to the trust. Having found that the
L
L trust is void for uncertainty, it is not necessary for me to
discuss this topic further. M
M
N
N Factual challenges
O
O
1) Wai’s argument
P
P
15.1 Ms Ng submitted that in respect of the gift to
Q
Q Kam, Kam bears the burden of proof and he had failed to
discharge the burden. She submitted that Kam’s evidence was R
R
unsatisfactory. He relied solely on a single conversation with
S
S 6 t h Aunt in early 1999 during a social visit. There was no
written record of the gifting. He could not recall the exact T
T
date or the actual words of gifting, or when the gift was
U
U
V
V
由此
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A
B
B
intended to be transferred to him. The only corroboration
came from Sim. By his own admission he had never C
C
mentioned the gift to anyone except Wai, neither d uring D
D
6 th
Aunt’s lifetime nor after her death or disclose d to any third
E
E party its existence until shortly before these actions 10 years
after 6 t h Aunt’s death. On such unsatisfactory evidence, and F
F
given the considerable inherent improbability , Kam’s claim
G
G should have been dismissed :
H
H
1) If 6 t h Aunt wanted to make a gift to Kam, there was
I no reason why she did not transfer the money to him; I
J
J 2) For such a substantial gift it was strange that neither
Kam nor anyone kept any record of it at any time; K
K
3) A total sum of $3,600,000 was paid by Wai to Kam L
L
in 2000. If it was part payment of the gift, it was strange that
M
M th
Kam never even acknowledged it to 6 Aunt;
N
N
4) 6 t h Aunt’s transfers to Wai were made known after
O
O her death, and Wai paid $4.77 million in estate duty; even then
P
Kam did not disclose that he had a share in the gift and he did P
not pay any part of the estate duty;
Q
Q
5) In the 10 years between the alleged gift and the R
R
commencement of proceedings, no account was kept by Kam of
S
S how much of Wai’s obligation under the gift had been
discharged and how much remained outstanding, whether T
T
U
U
V
V
由此
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A
B
B
interests were payable and if so at what rate (Kam claimed
interests on the gift in his statement of claim); and C
C
D
D
6) Stranger still, neither did Wai keep any account in
E
spite of his being a meticulous person with money. E
F
F 15.2 Ms Ng further submitted that :
G
G
1) the Recorder had reversed the burden of proof by
H requiring Wai to explain why he gave so much money to Kam; H
I
I 2) the Recorder had made his finding on a false
premise, namely, Wai was a man of modest means who had a J
J
relatively humble job with a pizza restaurant;
K
K
3) the Recorder had given inconsistent treatment to the
L
L
evidence of Sim and Madam Lee, the wife of the late tenant
who gave evidence for Wai; and M
M
N
N 4) the Recorder had failed to take proper acco unt of the
only relevant contemporaneous records of Wai which did not O
O
show he was paying off any obligation to Kam.
P
P
15.3 In respect of the two properties, Ms Ng submitted Q
Q
that Sim would only succeed if Kam could establish the
R
R $8.3 million was part of the gift f rom 6 t h Aunt. Wai’s
intention to buy the properties was supported by independent S
S
evidence. The payment of $8.3 million by cash was different
T
T from the previous payments to Kam by cheque or direct transfer
U
U
V
V
由此
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A
B
B
who was consistent with Wai’s explanation that he wished to
avoid any evidence of an inter vivos transfer attracting estate C
C
duty as he had just paid $4.77 million in estate duty for D
D
6 th
Aunt’s gift. The Recorder was wrong in his doubts about
E
E Wai’s evidence on his reasons for changing the name of the
purchaser of the shop and finally the Recorder had overly relied F
F
on demeanor and his assessments of characters.
G
G
2) Overview on factual challenge
H
H
16. It is necessary to take an overview before the I
I
detailed complaints are considered. As this is an appeal
J
J against the finding of fact by the Recorder , the well-established
principle in this regard is that the appellate court will not K
K
disturb such a finding unless it is shown to be plainly wrong,
L
L for example, where the finding is contrary to some
uncontroverted evidence or that the judge had ignored some M
M
material evidence ( Ting Kwok Keung v. Tam Dick Yuen &
N
N Others [2002] 3 HKLRD 1). For a recent affirmation of this
O
approach, see the United Kingdom Supreme Court judgment of O
McGraddie v McGraddie [2013] 1 WLR 2477.
P
P
3) Nature of payment Q
Q
R
17.1 In terms of the context of this case, the most R
prominent feature is that of the $29 million that Wai admitted
S
S
6 t h Aunt had given him, he had given more than half of them to
T Kam. The total amount was about $18 million. Even if the T
$8.3 million used in the purchase of the properties are to be
U
U
V
V
由此
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A
B
B
excluded from this sum, Wai had still given about $10 million
to Kam. C
C
D
D
17.2 Many of the payments continued after the purchase
E
of the properties until 2009. Even if some of the later E
payments are rentals as Kam and Sim had claimed, the amount
F
F
paid by Wai to Kam was very substantial indeed. If 6 t h Aunt
G
had indeed transferred about $35 million to Wai as Kam’s G
inquiry with the executor had suggested, th en the payment made
H
H
by Wai to Kam represented nearly half of that amount.
I
I
17.3 The payment was made by Wai to someone who is
J
J only his first cousin. Be fore they met up again in Hong Kong
in 1987, their two families were not close at all. When they K
K
eventually met again in 1987, Wai was aged 45 and Kam was 35.
L
L While they became close until their falling -out in November
2009, the inevitable question one has to ask is why was Wai so M
M
generous to Kam? There really is no indication that Wai and
N
N Kam had bonded so much in their relationship that Wai would
O
go to such length to help Kam out. It is said that Wai is not O
married and has no family of his own and it is not odd for him
P
P
to help Kam out. On the other hand Wai has his own siblings
Q
and the evidence shows that he had only given $500,000 to one Q
of his sisters.
R
R
17.4 One may ask, is it more likely that , Wai and to his S
S
credit, was merely fulfilling the obligation t hat 6 t h Aunt had
T
T imposed on him to share the money between him and Kam or
U
U
V
V
由此
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A
B
B
th
that Kam had made up a false story about the gift of 6 Aunt
C and Wai’s payment to him was entirely out of Wai’s generosity C
towards him? There is no presumption of gift from Wai to D
D
Kam because this presumption applies only between parent and
E
E child and between spouses. In any event this presumption can
easily be displaced (see Suen Shu Tai v Tam Fung Tai F
F
(CACV 187/2013)).
G
G
17.5 This is the stark context that the Recorder had to
H
H
decide on the nature of the money given by Wai to Kam. The
I amount of the payment cried out for an explanation from Wai. I
Ms Ng urged upon us not to be overly concerned with the
J
J
reason why Wai chose to give away his money. In my view
K one must consider the inherent probability of Wai’s actions. I K
do not regard the Recorder had reversed the burden of proof
L
L
which admittedly was imposed on Kam, when he rejected Wai’s
M explanation for the payment. In my view the Recorder’s M
factual finding in favour of Kam can be suppor ted by the N
N
inherent improbability of Wai’s case of the gift.
O
O
17.6 Many of the complaints raised by Ms Ng had been
P
P
argued and considered by the Recorder. Specifically he had
Q
borne in mind of Ms Ng’s impassioned closing submission that Q
Kam and Sim were ‘puttin g words in the mouth of an elderly
R
R
person who, has been dead for 10 years’.
S
S
17.7 Kam’s case on the nature of the gift is of course
T
T dependent on his and Sim’s oral evidence. The Recorder held
U
U
V
V
由此
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A
B
B
that Kam gave the impression of being a straightforward man
who is not very sophisticated. Why 6 t h Aunt chose to give to C
C
him and Wai is not entirely without reason. While Wai may D
D
be 6 th
Aunt’s favourite nephew and since 1995 had been looking
E
E after her affairs, the Recorder also accepted Kam’s evidence
that : F
F
‘ 32. After 6 t h Au nt’s str oke, Kam and S im took
G
G mor e time to vis it and look after 6 t h Au nt. When
Kam and S im were cr oss -examined, b oth of them
showed gr ief and s orr ow when they recou nted how H
H
they vis ited 6 t h Au nt frequ ently and looked after her,
taking her to hosp ital vis its and staying w ith her in
hosp ital, and s o on. I find this aspect of their I
I
evidence genu ine and I accept it w ithou t hesitation.’
J
J
17.8 The Recorder rejected Wai’s explanation that the
K
K
$5.6 million given to Kam within a couple of months in early
L 2000 was to reimburse him for his loss in foreign currency L
investment. He found that :
M
M
‘ 85. ….There is no evidence that he had the means
to invest which w ou ld r esu lt in him incurr ing N
N
ob ligations of that mag nitude. There is, I s hou ld
add, no evidence that Wai ever asked him to repay O
O the $5.6 million.’
P
P
17.9 In respect of Wai’s generosity, Ms Ng’s submission
was that Wai is a person with a strong sense of family Q
Q
solidarity, and with no children of his own , Kam’s family was
R
R
the closest resemblance he had of a family, which would
explain why he had been so generous towards Kam and S
S
Sim. To that the Recorder held :
T
T
U
U
V
V
由此
- 25 - A
A
B
B
̒ 88. In my judg ment, while accepting that Wai was
a gener ous p erson, I am u nab le to accept that that C
C fact b y itself cou ld satis factor ily exp lain the size of
the b ou nty he had bestowed on Kam and Sim. It
seems to me most extr aord inar y, as gener ous as Wai D
D
may be, for him to g ift to Kam and S im somethin g
like half of w hat he had received fr om 6th Au nt. As
E
E will be seen below, he is not ab le to provide
satisfactor y exp lanation of a nu mber of u nd isputed
or ind isputab le facts w hich ser ious ly u nd ermine his F
F
case. I am ther efore not persuad ed that all these
payments were his g ifts to Kam and S im.
G
G
89. On the w hole, w hile Kam’s vers ion of the 6th
Au nt’s G ift is s omewhat u nusual, it is not incr ed ib le
H
H and I w ou ld need to assess it together w ith other
evidence of the dealings between the parties.’
I
I
17.10 The Recorder plainly had considered the issue of
J
J
inherent probability and other evidence in order to form an
K overall assessment of the parties’ credibility and the strength of K
their case. This includes the episode regarding the sale of a L
L
flat in Classic Mansion by Madam Chow, a lady friend of
M
M Wai, to Sim. Sim entered into a sales contract to buy the flat
for $1 million in May 2004. Kam’s evidence is that he asked N
N
Wai to return some of 6 t h Aunt’s gift to him so as to acquire the
O
O property. Sim said Wai told her that he wo uld deduct the
purchase price from the amount he had to pay Kam from P
P
6 t h Aunt’s gift. The sale was completed without Sim paying
Q
Q the vendor anything. In addition Wai gave her $100,000 to
return the 10% deposit that Sim had paid R
R
Madam Chow. Wai’s case was that the flat was his and
S
S Madam Chow held it on trust for him, and he directed
Madam Chow to transfer the property to Sim as a gift. T
T
U
U
V
V
由此
- 26 - A
A
B
B
17.11 The Recorder was clearly not impressed with Wai’s
version of the event . A conclusion, he, as a trial judge, was C
C
entitled to reach on the evidence he had heard and seen. D
D
E
17.12 The Recorder also considered Wai’s evidence on the E
purchase of the two properties unsatisfactory. The initial
F
F
offer to purchase the shop was made on behalf of Ever Rise
G
Investment Ltd, a company jointly owned by Wai and G
Sim. The offer to buy the flat was made on behalf of Wai
H
H
alone. The Recorder found Wai’s insistence that he intended
I to buy the shop alone unsatisfactory. While Wai maintained I
that Sim had never expressed any interest in buying the shop
J
J
and the flat, he was unable to explain why the offer to purchase
the shop was originally made on behalf of Ever Rise. Wai K
K
then said Sim became the purchaser because Kam who worked
L
L
as a clerk in a solicitor’s firm told him that this was to avoid
potential conflict of interest problems. M
M
N
N 17.13 The Recorder held that he was unable to accept
O
Wai’s explanation : O
P
̒ 100. …… It is an ob jective fact that three P
beneficiar ies, Wai, Kam and Lo Man H ing, had
previous ly purchased tw o pr op erties fr om the estate
Q
Q in their own names. Thus there was, so far as Wai
was concer ned, alread y a precedent. On the other
hand, the ad vice ab out seeking the beneficiar ies’ R
R consent wou ld be exactly w hat one w ou ld expect a
solicitor to g ive, w hether the s olicitor knew of the
previous purchase b y Wai, Kam and Law Man H ing S
S
or not ( althoug h there is no evidence w hether Mr Au
knew of that incident). T
T
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B
101. Moreover, us ing S im’s name wou ld not have
solved any per ceived pr ob lem as s he was Kam’s
C
C spouse. Indeed, Law Man S hing d id wr ite to all the
beneficiar ies explaining that S im was Kam’s wife
and s oug ht their confir mation that they d id not ob ject D
D
to her purchas ing the Pr operties.’
E
E
17.14 The Recorder also found that Wai’s evidence on the
F
F payment of $8.3 million in cash unsatisfactory :
G
G ̒ 106. Ms Ng suggested when s he cr oss -examined
Sim that Wai decided to put the Pr operties in her
name after he had heard of s olicitor Au’ s advice H
H
abou t beneficiar ies bu ying the Pr oper ties fr om the
estate, and he w ithdrew cash fr om his accou nts in
I
I order to avoid any paper trail w ith a view to avoid ing
poss ib le estate duty. I am not convinced b y the
reasons ad vanced b y Ms Ng. First, I note that when J
J Wai gave evidence, he said that he had not met
solicitor Au and d id n ot get any ad vice fr om
him, which is incons istent w ith w hat was suggested K
K
to S im in cr oss -examination. I will not put much
weig ht on this d iscrep ancy, althoug h it is a sig n that L
L Wai’s case may not be as clear as he w ou ld want t o
suggest. Second ly, the ex p lanation that Wai pu t
the Prop erties in S im’s name w ith a r ather long term M
M
view of them eventu ally pass ing to Tung is
unconvincing. That purp ose w ou ld only have
N
N wor ked if S im continued to keep the Prop er ties after
Wai had p assed away and chose to pass th em t o
Tung. P lainly Wai w ou ld have no way of ensur ing O
O
that it w ou ld happ en as he had wis hed. Third ly, the
avoidance of estate duty reason is more
plaus ib le, b ear ing in mind that he had recently paid P
P
$4.77 million estate duty in respect of monies he had
received fr om 6 t h Au nt, bu t there was no suggestion Q
Q that Wai was somehow thinking that something mig ht
happ en to him. This is, in my view, a weak reaso n
R for reg is ter ing the Pr operties in S im’s name. R
107. The lack of any convincing reason fr om Wai is
S
S hig hlig hted when one cons iders the events after the
assig nment of the Pr operties to Sim, to which I tur n.’
T
T
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17.15 It is apparent that the Recorder had also considered
C factors in Wai’s favour when he assessed the case : C
D ̒ 103. Ms Ng pointed out that on Kam and S im’s D
case, Wai w ou ld have started fr om a p os ition w her e
he was to pay half of the purchase pr ice of the Shop E
E to get 50% interest, and the fu ll pr ice of the Fu ng
Yip F lat to get 100% ownership, but he end ed up
paying all the purchase pr ice w ithout ow n ing any F
F
interest in either Prop erties. She submitted that it
wou ld b e most odd for Wai to intend that to G
G happ en. I agr ee that it is one of the major odd ities
in this case, but it cuts b oth ways and the r eason for
H
this odd ity is precisely the issue to b e res olved. H
104. I accept that there is evid ence, includ ing Law
Man S hing’s email in 2009 and Mad am Li’s I
I
evidence, suggesting that Wai must have told them
that he was the pur chaser of the S hop. There is J
J Kam’s ow n evidence that when Wai fou nd out ab out
the sale of the Fung Y ip F lat, he accused Kam and
K Sim of selling “his ” flat. There is no attempt b y K
Mr Yau to exp lor e w hy Wai wou ld have said that. I
must take such evidence in his favour into accou nt in L
L assessing the overall p icture.’
M
M
17.16 But having taken all these factors into account, the
Recorder found against Wai on the gift issue. In my view the N
N
Recorder was clearly entitled to such a view. It cannot be said
O
O
that he was plainly wrong on this issue.
P
P
17.17 I do not consider the Recorder had decided this issue
Q
Q simply on the demeanour of the parties. No doubt he had
taken this into account as he said in paragraph 102 of the R
R
judgment referring to Wai’s demeanour when he gave evidence
S
S
on the purchase of the two properties. But his finding is
T
clearly supported by other evidence. T
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17.18 I do not regard the Recorder’s finding was
materially affected when he stated that Wai was a man of C
C
humble means who had a relatively humble job, when in fact he D
D
had earlier found Wai to be well educated and between 1995
E
E and 1999 was profitably engaged in foreign exchange
trading. Nor do I find the Recorder had applied different F
F
standards in assessing the evidence of Sim and Wai’s witness.
G
G
17.19 I do not regard my view on the invalidity of the trust
H
H
by reason of the uncertainty of the subject matter has any
I adverse bearing on the finding of fact by the Recorder. These I
are two distinct and unrelated issues.
J
J
4) The purchase of the properties K
K
18. In my view the Recorder was clearly entitled to find L
L
that the $8.3 million used for the purchase of the properties was
M
M th
part of the gift that 6 Aunt had given to Kam. He was
N
N entitled to find that there was no agreement between the parties
that Sim was to hold the properties for Wai. O
O
P
Estoppel by convention P
Q
Q 19.1 In his written submission , Mr Yau alluded to
estoppel but without specifying what kind of estoppel and how R
R
it is to be applied. This Court is of the view that on the basis
S
S of the finding on law and facts, estoppel by convention, which
will preclude Wai from denying the validity of the gift T
T
notwithstanding t he invalidity of the trust , is an arguable point
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and because of the late challenge on the validity of the
trust, this point should be considered and further submissions C
C
on this point was directed and received from the parties . D
D
E
1) The principle E
F
19.2 Simply put, estoppel by convention is to prevent an F
unjust departure by one person from an assumption adopted by
G
G
another as the basis of some act or omission which, unless the
H assumption be adhered to, would operate to that other’s H
detriment.
I
I
19.3 In First Laser Ltd v Fujian Enterprises (Holdings) J
J
Co Ltd (2012) 15 HKCFAR 569 at 601 the Court of Final
K
K Appeal summarized the restatement of the principles on
estoppel by convention by Ribeiro PJ in Unruh v L
L
Seeberger (2007) 10 HKCFAR 31 as follows :
M
M
̒ (1) the parties entered into some tr ansaction or
legal relations hip on the b as is of an assump tion N
N
that was shared b y or common to them
both, and it was the element of commonality of
the assumption that ma r ked ou t estoppel b y O
O
convention as a d istinct form of estopp el [1 33];
P
P (2) it must be show n that assumption was
commu nicated between the parties and acted
upon, and there must be s ome mu tu ally Q
Q
manifest conduct b y the parties [135];
(3) there was no necess it y for the p arties to b elieve R
R
that the assumed state of affairs was true, nor
was there any necess ity for the parties to have S
S been mistaken [136];
(4) what is imp ortant is for them to act in the T
T
belief, manifes ted b y words or condu ct, that
they are both pr oceed ing w ith the transaction
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on the bas is of the same s hared assump tion
[137];
C
C
(5) the contents of the common assumption must be
sufficiently certain to enab le the court to give D
D effect to it [138] ;
E
(6) estopp el b y convention is concer ned w ith a E
common assumption relied upon as a bas is upon
which the pers ons shar ing such assumptions
F
F enter into a tr ansaction or legal relation ship
[142]; and
G
G (7) there must be an attempt b y one party to depart
fr om the common assumption which depar ture
wou ld b e u njust because of the p art taken b y H
H
him in occas ioning its ad option b y the other
party, and the other party w ou ld su ffer I
I detr iment ar is ing out of his having enter ed into
the relevant transaction on the bas is of the
common assumption if the opp os ite party were J
J
afterwards allowed to set up rig hts incons is tent
with the assumption [150]. ’
K
K
19.4 See a further discussion of this doctrine in Ryan L
L
v. Moore [2005] 2 SCR 53 (Supreme Court of Canada) and
M
M Prime Sight Ltd. v Lavarello [2014] 2 WLR 84 (Privy Council
on appeal from Gibraltar ). N
N
O
O 2) The pleading
P
P
19.5 In her written response, Ms Ng argued that the
Q
estoppel must be specifically pleaded by reference to Muskham Q
Finance Limited v Howard [1963] 1 QB 904 at 913, Li Kwai
R
R
Fong Ah Pat v Bachy Soletanche Group &
S Another, unreported, CACV 30/1989 at p.3 and Gillett v Holt S
[2001] Ch. 210 at 224B. Since it has not been pleaded, it is
T
T
not open to Kam to rely on it now.
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19.6 In my view, Wai may rely on this estoppel. As
Coppinger v. Norton [1902] 2 Ir. R. 241 observed, the C
C
requirement of pleading estoppel is subject to the pleader D
D
having the opportunity to do so. The principle is stated in the
E
E judgment of Wright J at 237. Although Wright J was the
dissenting judge, there was no disagreement by the other F
F
members to this principle on pleading :
G
G
̒ I think the ru le of p lead ing is ver y s hortly stated at
p. 192 of the first volume of R oscoe’s Nis i H
H Prius, last ed ition :—“The judgment is conclus ive
(i. e. an estoppel), if p leaded, where there is an
I opp ortu nity of p lead ing it ; but w here ther e is no such I
opp ortu nity, then it is conclus ive as evidence; but if
the par ty forbear to rely up on an estopp el, when he
J
J may p lead it, he is to be taken to waive the
estopp el, and to leave the pr ior judg ments as
evidence only for the jur y.’ (emp has is ad ded) K
K
L
L 19.7 This is also reflected in Hong Kong Civil Procedure
2014 volume 1, paragraph 18/8/11: M
M
̒ Estopp el must be specifically p leaded, u nless ther e
N
N is no opp ortu nity to d o s o. ’
O
O
19.8 The unusual feature in this case is that the invalidity
P
of the trust is only raised for the first time on appeal. It P
brings into focus the question now faced by this
Q
Q
Court, namely, what is the consequence of the parties’
R respective case if the challenge to the validity of the trust is R
substained while the factual findings are maintained. In my
S
S
view fairness in the circumstances must allow Mr Yau to raise
this point despite the matter not having been pleaded T
T
before. Further, it is quite impossible for Mr Yau to have
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pleaded this beforehand in the absence of a specific plea on the
invalidity of the trust. This Court will, if necessary, grant C
C
leave to Mr Yau to file a respondent’s notice to rely on the D
D
estoppel by convention as identified in paragraph 19.1 herein.
E
E
Application of the estoppel in the present case
F
F
20. In my view estoppel by convention applies on the G
G
basis of my finding :
H
H
(1) i) The parties in this case entered into a transaction or
I
I
legal relationship on the basis of an assumption that was shared
J by or common to them both, namely, there was a valid gift of J
money from 6 t h Aunt to Wai and Kam. As Ribeiro PJ
K
K
explained in Unruh v Seeberger :
L
L
̒ 142. As is mad e clear in the statements of pr inciple
cited in s.D.2 above, an estoppel b y convention is
M
M concer ned w ith a common assumption relied upon as
the bas is upon which the pers ons shar ing such
assumptions enter into a transaction, w ith the wor d N
N
“transaction” to be u nderstood her e in the br oad
sense of the par ties engag ing in acts or omiss ions
O affecting their mu tual leg al relations hip . ’ O
(emp has is added)
P
P
ii) Ms Ng challenged the application of the
Q
Q
estoppel. She submitted that Kam has not satisfied the
R
threshold requirement because it is not shown that the parties R
had entered into some transaction or legal
S
S
relationship. Ms Ng argued that as far as Kam’s action was
T concerned, Kam was merely receivin g presents and payments T
from Wai to which he was not entitled, since there was no
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gift. As for Wai’s action, there was still no ‘transaction’
C between Wai and Kam. The ‘transaction’ over the two C
properties were between the purchaser and Law Man Shing as D
D
vendor.
E
E
iii) I disagree. Here the parties must have been
F
F
engaged in acts or omissions affecting their mutual
G
relationship. On the basis of the factual finding the parties G
must have proceeded on the assumption of a valid gift. On
H
H
that assumption Wai was required to pay Kam his share of the
I gift and Kam could enforce the payment from Wai. Had the I
trust been a valid one, Wai was the trustee and Kam the
J
J
beneficiary of the trust with the attendant legal rights arising
from this relationship . K
K
L
L iv) Ms Ng further argued that there was no inducement
on the part of Wai for Kam to enter into the transaction. She M
M
relied on the part of the seventh proposition identified in
N
N paragraph 19.2 herein which deals with departure by one party
O
from the common assumption : the departure is unjust because O
of the part taken by him in occasioning its adoption by the other
P
P
party.
Q
Q
v) On the facts of this case as found by the
R
R Recorder, Wai must have relied upon and adopted what Wai
told him about 6 t h Aunt’s gift in his relationship with S
S
Wai. Examples of this reliance can be found in paragraphs 35
T
T and 84 of the judgment :
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̒ 35. Kam further claims that a few months
later, dur ing a tr ip he and Wai took to Macau for
C
C ancestral w orship, Wai raised the matte r w ith him and
told him that the monies he had received fr om 6 t h Au nt
were in d iffer ent currencies but the total amou nt was D
D
abou t $30 million. In his or al evidence, Kam
descr ibed the scene in some d etail, includ ing that Wai
put his hand on his shou lder and said to him words to E
E
the effect that “half o f th e money was yours ”, and Kam
responded b y saying to Wai “ good/faith ful brother ” F
F (好 兄 弟 ).’
G ̒ 84. Kam turned noticeab ly emotional w hen he was G
cross-examined on why he d id not mention to 6 t h Au nt
that Wai had not been making pr ompt payments to
H
H him, and exp lained that he genu inely cared for
6 t h Au nt who was ver y fr ail after her str oke, and he
did not want to tr oub le 6 t h Au nt w ith this matter lest I
I
she mig ht think that he and Sim only cared for her
because of her money. Anyway, his evidence is that
J
J his u neas iness was alleviated when Wai paid him $5.6
million w ithin a coup le of months in ear ly 2000, and
he had no reason not to trust Wai. ’ (emp has is added) K
K
L
L (2) The assumption was communicated by some
mutually manifest conduct in the light of the factual findings M
M
that Wai had orally confirmed to Kam what 6 t h Aunt had told
N
N Kam about the gift .
O
O
(3) The issue of the invalidity of the trust is irrelevant
P because there is no necessity for the parties to believe that the P
assumed state of affairs was true.
Q
Q
(4) Wai and Kam had acted on the basis of the same R
R
shared assumption in the form of Wai providing the money to
S
S Kam and Kam receiving them over a substantial period of time .
T
T
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(5) The content of the common assumption is
sufficiently certain, namely, there was a valid gift of money C
C
from 6 t h Aunt to Wai and Kam equally. Ms Ng’s successful D
D
argument on the uncertainty of trust which is based on a point
E
E of law does not in any way lessen the certainty of the content of
the common assumption. F
F
G
(6) Wai had departed from the common assumption by G
asserting that his payment to Kam was not pursuant to
H
H
6 t h Aunt ’s gift and this departure is unjust because in his action
I against Sim, he is denying that the payment of $8.3 million for I
the purchase of the two properties is part of the gift from
J
J
6 t h Aunt and by his assertion of right to these two properties, he
is seeking to deprive Kam and Sim what truly belongs to Kam K
K
under the gift. I disagree with Ms Ng that Kam could not be
L
L
said to have suffered any detriment.
M
M
(7) As a result Wai is estopp ed from denying the gift
N
N and his obligations towards Kam in respect of the gift.
O
O
Backdoor argument
P
P
21.1 Ms Ng submitted that to extend estoppel by
Q
Q
convention to apply to the circumstances of this case is in
R
effect to override Milroy v Lord, by coming to the aid of a R
volunteer and perfecting an imperfect gift by the backdoor on
S
S
the mere confirmation by a non -trustee of a failed gift of the
T gift. If Wai acted unconscionably in receiving money T
intended by the transferee for a different purpose and retaining
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it for his own use, equity’s remedy is to make him accountable
to the transferee, not to the volunteer or any other person. C
C
D
D
21.2 The Court of Final Appeal in First Laser Ltd
E
discussed the backdoor argument in paragraphs 87 -89 in the E
context that estoppel by convention cannot normally be used in
F
F
effect to validate an agreement which by statute would
G
otherwise be invalid or unenforceable. In this case, the G
estoppel does not contravene any public policy.
H
H
Disposition of the Appeal I
I
J 1) Wai’s action (CACV 249/2013) J
K
K 22.1 Wai claimed that he is the beneficial owner of the
two properties. Sim’s case is that the money provided by Wai L
L
for the purchase of the two properties was money from the gift
M
M which Kam was entitled to receive from Wai and there was no
agreement that she was to hold the two properties on trust for N
N
Wai. The Recorder found for Sim on these two points.
O
O
22.2 As a result of the application of the doctrine of P
P
estoppel by convention, notwithstanding the invalidity of the
Q
Q trust, Wai is precluded from denying that the purchase price he
had provided for the two properties was money that Kam was R
R
beneficially entitled to. Further as a result of our conclusion
S
S that the Recorder was correct to find that there was no
agreement for Sim to hold the two properties on trust for T
T
Wai, there is no issue of Sim holding the properties on resulting
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trust for Wai because she does not. Accordingly the Recorder
is correct to give judgment in favour of Sim. Wai’s appeal is C
C
accordingly dismissed. D
D
E
2) Kam’s action (CACV 250/2013) E
F
F 23.1 Kam’s action is based entirely on the gift. Mr Yau
informed the Court that due to the long lapse of time and the G
G
substantial amount he had already received from Wai, Kam
H
H does not intend to enforce the judgment ordering the taking of
account and payment arising from the result of the taking of I
I
account. Instead he invited this Court to decl are that the
J
J money transferred by 6 t h Aunt to Wai was her gift to Wai and
Kam and this gift included the $8.3 million for the purchase of K
K
the two properties.
L
L
23.2 In my view the declaration that should be granted in
M
M
the light of this Court’s conclusion o n estoppel is that Wai is
N
N estopped from denying that the money (which included the
$8.3 million) that he had paid to Kam was in the nature of a gift O
O
from 6th Aunt to Kam. This will replace the declaration made
P
P by the Recorder that :
‘ [Wai] holds on trust for [Kam] half of the F und or G ift Q
Q
transferred b y the late Mad am Lo Pu i Kau to [Wai] for
the benefit of [Kam] and [ Wai].’ R
R
23.3 The Court further records Kam’s position that he S
S
will not pursue the order for an account and payment upon
T
T
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taking account. Wai’s appeal is allowed to this limited
extent. C
C
D
D
Costs
E
E
24. The two appeals were heard together and there were
F
F common issues between them. Wai fails on the issue of the
gift because he is precluded from denying that the money he G
G
th
had paid to Kam was in the nature of a gift from 6 Aunt to
H
H Kam. This affects both appeals. However, he succeed s in
challenging the validity of the trust which took up a substantial I
I
part of the hearing. The costs order nisi in respect of the two
J
J appeals is that Wai is required to pay half of the costs of the
appeals respectively to Sim and Kam. K
K
Hon Chu JA : L
L
M
M 25. I agree with the judgment of Cheung JA and the
orders His Lordship proposes . N
N
O
O Hon Poon J :
P
P
26. I agree.
Q
Q
R
R
S
(Peter Cheung) (C. Chu) (J. Poon) S
Justice of Appeal Justice of Appeal Judge of the Court
of First Instance T
T
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C
C Ms Margaret Ng, instructed by Lee & Chow, for the plaintiff in
CACV 249/2013 and defendant in CACV 250/2013 D
D
E Mr Albert Yau and Ms Melo Man , instructed by Tso Au Yim & E
Yeung, for the defendant in CACV 249/2013 and plaintiff
F
F in CACV 250/2013
G
G
H
H
I
I
J
J
K
K
L
L
M
M
N
N
O
O
P
P
Q
Q
R
R
S
S
T
T
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