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Yip Wing Ching v Yip Shung Kin And Another

Judgment Cited authorities 4 Cited in Precedent Map Related
Vincent
Judgment Date14 August 2019
Neutral Citation[2019] HKCFI 2018
Year2019
Judgement NumberHCMP818/2018
Subject MatterMiscellaneous Proceedings
CourtCourt of First Instance (Hong Kong)
HCMP818/2018 YIP WING CHING v. YIP SHUNG KIN AND ANOTHER

HCMP 818/2018

[2019] HKCFI 2018

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 818 OF 2018

(TRANSFERRED FROM FCMP 29 OF 2018)

____________

IN THE MATTER of the Estate of LAU MEI WAH (deceased)
and
IN THE MATTER of sections 4 and 7 of the Inheritance (Provision for Family and Dependants) Ordinance (Cap 481)

____________

BETWEEN
YIP WING CHING (葉永清) Applicant
and
YIP SHUNG KIN and YIP TIN YAU,
Executors of the Estate of LAU MEI WAH, deceased
(葉崇堅 及 葉天佑，劉美華(已故) 的遺產執行人)		 Respondents

____________

Before: Deputy High Court Judge William Wong SC in Chambers

Date of Hearing: 8 August 2019

Date of Decision: 14 August 2019

______________

DECISION

______________


Application

1. In these proceedings, Yip Wing Ching (the “Applicant”) seeks an order for the transfer of half of the net estate of Madam Lau Mei Wah (the “Deceased”) under section 4 of the Inheritance (Provision for Family and Dependants) Ordinance, Cap 481 (the “Ordinance”). There is no dispute that the Applicant has the relevant locus to institute these proceedings in his status as the husband of the Deceased.

2. By a summons dated 30 July 2018 (the “Summons”), the Applicant applies for interim maintenance and legal fees provision from theestate of the Deceased (the “Estate”) pursuant to section 7 of the Ordinance in the following terms:

“ There shall be paid to the Applicant out of the estate of Lau Mei Wah (Deceased) the sum of HK$1 million as legal fees incurred and/or payable plus a monthly sum of legal fees of $100,000 thereafter until further ordered [sic]; and a monthly maintenance sum of $107,827.60 from today hereof or such sum or sums at such interval as the court thinks reasonable.”

3. The application is opposed by the executors of the Estate (the “Executors”).

Background

4. The Applicant married the Deceased in 1979. Together they have two sons who are the Executors. They represent the Estate in these proceedings.

5. In the 1990s, the Applicant and the Deceased established a travel services business. The business subsequently developed into a group of companies (the “Group”) with Yip’s International Holdings Limited (“YI Holdings”) as the holding company.

6. The family also incorporated Yip’s Enterprises Management Limited (“YE Management”), a property holding company holding various landed properties in Hong Kong.

7. Prior to March 2014, the Applicant, the Deceased and the two sons respectively held 55%, 25%, 10% and 10% shareholding in YI Holdings and YE Management, and were directors of the two companies.

8. In around 1995, the Deceased discovered the Applicant had an affair with a lady.

9. In around March 2012, the Deceased discovered that the Applicant had yet another affair with a mistress in the Mainland, one Madam Xu Qiao Hong (“Madam Xu”). The Applicant and Madam Xu have a daughter born in June 2013.

10. It is the Executors’ case that in or about April 2012, in order toseek the Deceased’s forgiveness, the Applicant made the following promises to her:

(1) He would retire from the Group business so as to spend more quality time with the Deceased.

(2) He would gift and transfer 55% shares he held in YI Holdings and YE Management to the Deceased unconditionally to show his sincerity in seeking to reconcile with her.

(3) In October 2012, the Deceased decided to give the Applicant a chance to reconcile and indicated to the Applicant that she accepted his promises.

(4) Accordingly, in or about November 2012, the Applicant executed a number of documents to effect the transfer of the shares and gave the documents to the Deceased for her retention,thereby perfecting the gift of the shares to her absolutely and unconditionally.

(5) However, contrary to his earlier promises to the Deceased, from 2013, the Applicant began to travel to the Mainland to meet Madam Xu again frequently.

(6) Further, the Deceased discovered that the Applicant committedvarious acts of serious misconduct against the Group, includingmisappropriating funds of the Group, setting up a new business venture (Elegance Global Investment Limited) in competition with the Group and converting the vehicle registration documents (“VRDs”) belonging to the Group for his own use.

(7) In such circumstances, the Deceased completed the transfer documents in March or April 2014.

11. The Applicant was subsequently removed from the boards of YI Holdings, YE Management and the subsidiaries of the Group.

12. The family disputes have resulted in a number of legal actions. In HCA 1061/2014, Nam Kee Travel Company Limited (“Nam Kee”), a subsidiary of YI Holdings sued the Applicant for misappropriation of funds in the total amount of HK$30 million. A freezing injunction was granted against the Applicant on 14 August 2014.

13. Subsequently, Nam Kee obtained three disclosure orders in aid of its tracing claim in respect of the whereabouts of the HK$25 million (out of the misappropriated HK$30 million) paid into Mr Yip’s account with Public Bank (“PB Account”).

14. It later transpired from the discovered documents that the Applicant withdrew HK$1.7 million from the PB Account the day before thegranting of the freezing injunction, after he received notice of the application.

15. HCA 1389/2014 relates to the claims against the Applicant for the return of the VRDs. This action is currently dormant following the return of the VRDs by the Applicant.

16. In HCA 1563/2014, the Deceased sought a declaration that she is the legal and beneficial owner of the 55% shares of YI Holdings and YE Management. The Applicant counterclaims for a declaration that he is still the legal and beneficial owner of the said shares on the ground that he was induced by the Deceased’s fraudulent misrepresentation and/or under mistake to transfer the said shares to her. The Applicant also relies on a declaration of trust dated 20 September 2012 to say that the Deceased at all material times held the said shares on trust for him. It is the Deceased’s case that the declaration of trust was a forged document.

17. On 17 February 2015, the Applicant petitioned for divorce against the Deceased in FCMC 2121/2015 on the ground that she had behaved in such a way that he could not reasonably be expected to live with her. The petition was subsequently withdrawn.

18. On 13 May 2016, the Applicant presented yet another petition for divorce against the Deceased in FCMC 5768/2016, this time on the ground of a two-year separation.

19. Unfortunately, the Deceased died on 15 August 2016, before any order was made in the divorce suit. Under her will dated 8 July 2014 (the “Will”), the Deceased appointed her two sons as the executors and bequeathed all her assets to them.

20. The Applicant attempted to dispute the validity of the Will, alleging inter alia that it was executed under the undue influence of the Executors. As such, the Executors commenced HCAP 30/2016 to propound the Will in solemn form. By a Decision dated 9 July 2017, Deputy High Court Judge Kent Yee granted summary judgment in favour of the Executors.

21. On 5 February 2018, the Applicant commenced these proceedings against the Executors, seeking an order that the Estate do transfer half of its net assets to him. The Executors’ case is that:

(1) The 55% shares of YI Holdings and YE Management gifted by the Applicant to the Deceased in 2012 should be regarded as property falling outside the ambit of marital acquest to be divided between them upon divorce, or alternatively as propertyattributable only to the Deceased because it was so intended by the Applicant and the Deceased.

(2) In exercising its powers under section 4 of the Ordinance, the Court should have regard to the serious wrongs committed by the Applicant against the Deceased and the Group as pleaded in HCA 1061/2014, HCA 1389/2014 and HCA 1563/2014.

Applicable legal principles

22. Section 7(1) of the Ordinance provides that:

“ Where on an application for an order under section 4 it appears to the court—

(a) that the applicant is in immediate need of financial assistance,but it is not yet possible to determine what order (if any) should be made under that section; and

(b) that property forming part of the net estate of the deceased is or can be made available to meet the need of the applicant,

the court may order that, subject to such conditions or restrictions, if any, as the court may impose and to any further order of the court, there shall be paid to the applicant out of the net estate of the deceased such sum or sums and (if more than one) at such intervals as the court thinks reasonable; and the court may order that, subject to this Ordinance, such payments are to be made untilsuch date as the court may specify, not being later than the date on which the court either makes an order under section 4 or decides not to exercise its powers under that section.”

23. In ACLS v HSB(T)L[2013] 2 HKLRD 444, Lam JA (as he then was) at §§22 – 23 said:

“ 22. In our judgment, the proper construction of s.7 must have regard to the statutory scheme of the Ordinance as a whole.

23. The primary objective of the Ordinance can be found in s.3. In short, it is to provide an avenue for persons who are the dependants of a deceased person to seek reasonable financial provision from the estate of the deceased where the will of the deceased or the law as to intestacy (or a combination of both) does not make such provision. The surviving spouse and a tsipare deemed to be dependants. However, for any other person whoclaimed to be a dependant, he or she can only apply if he or she had been maintained, either wholly or substantially, by the deceased...

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