A A

B HCA 3246/2016 B
[2018] HKCFI 33

C C
IN THE HIGH COURT OF THE
D D
HONG KONG SPECIAL ADMINISTRATIVE REGION
E COURT OF FIRST INSTANCE E

HIGH COURT ACTION NO 3246 OF 2016 F

____________
G G

H BETWEEN H

TAO, SOH NGUN Plaintiff

I I
(also known as LO TO LI KWAN or
LO TO LEE KWAN)
J (in her personal capacity and in the capacity as the sole J

executrix of the estate of Lo Ying Shek (also known as

K Lo Tau Koon or Lo Ping), deceased) K

L and L

HSBC INTERNATIONAL TRUSTEE LIMITED Defendant

M M

____________
N N

O
Before: Hon Chow J in Chambers (Open to Public) O
Date of Hearing: 21 December 2017
P Date of Decision: 12 January 2018 P

Q Q
__________________
D E C I S I O N
R R
__________________

S S

INTRODUCTION
T T

U U

V V
 - 2 -
A A

B 1. The issue for determination is whether the Defendant should B

be ordered to give further and better particulars of various pleas in the

C C
Amended Defence under the Plaintiff’s summons dated 21 November
D 2017. D

E E
BRIEF OVERVIEW OF THE PARTIES’ RESPECTIVE CASES

F
(i) The Plaintiff’s case

G 2. The Plaintiff is the wife of the late Mr Lo Ying Shek (“the G

Father”), who passed away on 1 September 2006. They were the

H H
co-founders of the Grate Eagle Group (“GE”), with The Great Eagle
I Company, Limited as its holding company, the shares of which have been I

publicly listed in Hong Kong since 1972.

J J

K 3. On 14 April 1984, the Father and the Plaintiff set up two K

private discretionary family trusts known as “The Lo Ying Shek Family

L L
Trust” (“the Trust”) and “The Lo To Li Kwan Trust” (“the Plaintiff’s
M Trust”) respectively for the purpose of minimizing the estate duty payable M

in respect of their assets passing on their death whilst effective control

N N
over those assets would be retained by the Father and the Plaintiff during
O their lifetime. Hongkong Bank Trustee Limited (“the Original Trustee”) O

was appointed as trustee of the two trusts.

P P

Q 4. On or about 14 June 1984, the Father and the Plaintiff Q

decided to merge the Plaintiff’s Trust with the Trust, and to jointly use the
R R
Trust for the aforesaid purpose. On or about 21 July 1984, the Plaintiff’s
S Trust was wound up and the name of the Trust was changed to “The Lo S

Family Trust”.
T T

U U

V V
 - 3 -
A A

B 5. The assets of the Trust (“the Trust Fund”), which were B

provided by the Father and the Plaintiff, include substantially the entirety
C C
of their respective assets and in particular, their controlling interest in GE.
D D
6. At all material times, there was a common understanding
E E
(“the Alleged Common Understanding”) between the Original Trustee,
the Father and the Plaintiff that:- F

(1) The Trust was to be established solely for the purpose of

G G
minimizing the estate duty payable in respect of the Father
H and the Plaintiff’s assets passing on their death whilst H

allowing them to retain effective control over those assets

I I
during their lifetime.
J J
(2) The Original Trustee would administer the Trust and the
K assets to be injected into the Trust in accordance with the K

wishes, requests and instructions of the Father and the

L L
Plaintiff (and should either of them predecease the other, the
M Original Trustee would accede to the wishes, requests and M

instructions of the survivor), and that such wishes, requests

N N
and instructions would be given to the Original Trustee in
O writing from time to time. O

P P
7. In around November 1999, the Defendant (HSBC

Q International Trustee Limited) became the trustee of the Trust in place of Q

the Original Trustee.
R R

S
8. The Alleged Common Understanding continued after the S
Defendant took over as trustee of the Trust.
T T

U U

V V
 - 4 -
A A

B 9. Prior to January 2016:- B

(1) all the instructions given by the Father and/or the Plaintiff to
C C
the Original Trustee or the Defendant were fully complied
D with and followed, pursuant to the Alleged Common D

Understanding; and
E E

(2) the Original Trustee and the Defendant never purported to

F
exercise any of their discretionary powers under the relevant
G trust deed (“the Trust Deed”), and all matters concerning the G

administration of the Trust and the Trust Fund were carried

H H
out upon the instructions of the Father and/or the Plaintiff.
I I

10. However, since January 2016, the Defendant suddenly

J J
departed from the Alleged Common Understanding and refused to follow
K or adhere to the Plaintiff’s requests or instructions as regards the K

administration of the Trust and the Trust Fund as set out in a series of
L L
letters issued in 2016 (“the 2016 Letters”).
M M
11. In the exercise of its powers and discretions in the
N N
administration of the Trust and the Trust Fund, the Defendant is under a

O duty to, inter alia:- O

(1) take serious account of the Plaintiff’s requests and

P P
instructions as the primary or material consideration;
Q Q
(2) consider and take serious account of the Alleged Common

R Understanding, in particular the understanding that it would R

administer the Trust and the Trust Fund in accordance with
S S
the Plaintiff’s wishes, requests and instructions;
T T

U U

V V
 - 5 -
A A

B (3) consider and take serious account of the Plaintiff’s legitimate B

expectation that the Defendant would (inter alia) continue to

C C
comply with and follow her requests and instructions
D concerning the administration of the Trust during her D

lifetime; and
E E
(4) comply with and follow the Plaintiff’s requests and
instructions concerning the administration of the Trust F

during her lifetime unless there is a very good reason not to

G G
do so.
H H

12. In departing from the Alleged Common Understanding and

I I
in failing or refusing to give effect to the Plaintiff’s requests and
J instructions, the Defendant breached its duties as trustee of the Trust. J

K K
13. Further, the Defendant allowed itself to be placed in a
L position of conflict of interests, in that it has at all material times been the L

trustee of a discretionary trust of which one of the children of the Father

M M
and the Plaintiff, namely, Lo Ka Shui, was the founder, and the Defendant
N exercised its powers in such a manner as to favour Lo Ka Shui’s interests N

over the interests of the Plaintiff and other beneficiaries of the Trust.
O O

P 14. By this action, the Plaintiff claims against the Defendant for, P

inter alia, an order that the Defendant do forthwith consider or

Q Q
re-consider the Plaintiff’s requests and instructions as contained in the
R 2016 Letters, or alternatively the Defendant be removed as trustee of the R

Trust.
S S

T (ii) The Defendant’s case T

U U

V V
 - 6 -
A A

B 15. The Trust is a conventional discretionary trust. The B

Defendant, as trustee of the Trust, has under the Trust Deed the widest
C C
powers of appointment and application of capital and income for the
D benefit of all or any one or more of the beneficiaries, together with wide D

powers of investment and management. The Defendant is entitled to

E E
exercise its powers in such manner as it thinks fit in its “absolute and
uncontrolled discretion”. F

G G
16. The Original Trustee assumed and occupied office as trustee

H of the Trust in 1984 and executed the Trust on the basis that the powers H

and provisions as declared and contained in the Trust Deed were the trusts
I I
on which it held the Trust Fund. The Defendant has continued to act on
J the same basis after it replaced the Original Trustee as trustee of the Trust J

in November 1999.
K K

L
17. The Defendant is under a duty (inter alia) to consider the L
wishes of the Plaintiff whose wishes the Defendant in its discretion
M M
considers relevant to the exercise in question, and is entitled to give such

N weight to any such wishes as it thinks appropriate (see paragraph 14(4) of N

the Amended Defence). At the hearing on 21 December 2017,
O O
Mr Eugene Fung, SC (on behalf of the Defendant) also accepted, as

P I understand him, the proposition at paragraph 29-163 of Lewin on Trust, P

19th Ed, that the Defendant is “bound” to take serious account of the
Q Q
settlor’s wishes, even to the extent of them being the primary or material

R consideration. R

S S

T T

U U

V V
 - 7 -
A A

B 18. The Defendant is entitled to give effect to, or act in B

accordance with, the settlor’s wishes, but is not obliged to do so if, in the
C C
proper exercise of its discretion, it determines otherwise.
D D
19. The Defendant disputes the Alleged Common
E E
Understanding. Although the Original Trustee and Defendant did in
practice from time to time act in accordance with the Father’s wishes in F
relation to ministerial acts of investment and administration of the Trust,
G G
they were not undertaken pursuant to the Alleged Common

H Understanding. H

I I
20. The Defendant’s reasons or justification for not acceding to

J
the Plaintiff’s requests or instructions as contained in the 2016 Letters are J
fully pleaded in the Amended Defence, which it is not necessary for me to
K K
set out in this decision.

L L
THE PLAINTIFF’S FIRST SET OF REQUESTS
M M
21. The Plaintiff’s first set of requests for further and better
N particulars relates to three paragraphs of the Amended Defence, namely, N

paragraphs 26(1), 59 and 64 thereof. In order to understand those

O O
paragraphs, it is necessary first to refer to the relevant averments in the
P Re-Amended Statement of Claim which were responded to by those P

paragraphs of the Amended Defence.

Q Q

R 22. In the Re-Amended Statement of Claim:- R

S (1) At paragraph 19, the Plaintiff pleads that pursuant to the S

Alleged Common Understanding, various letters and written
T T
instructions were issued by or on behalf of the Father and the

U U

V V
 - 8 -
A A

B Plaintiff to the Original Trustee from 1984 to 1999 setting B

out their specific requests and instructions concerning the

C C
administration of the Trust and the Trust Fund. Particulars
D are given in respect of 7 matters (defined as the “Specific D

Instructions to the Original Trustee”) in sub-paragraphs (1)

E E
to (7), followed by a general averment in sub-paragraph (8)
that “The Plaintiff does not have in her possession copies of F

all the letters and written instructions issued to the Original

G G
Trustee and reserves her right to provide further particulars
H after discovery”. H

(2) At paragraph 20, the Plaintiff pleads that each of the Specific
I I
Instructions to the Original Trustee were fully complied with
J by the Original Trustee pursuant to the Alleged Common J

Understanding. Further, the Original Trustee never

K K
purported to exercise any of its discretionary powers under
L the Trust Deed, and all matters concerning the administration L

of the Trust and the Trust Fund were carried out upon the
M M
instructions and/or consent of the Father and/or the Plaintiff.
N N
(3) At paragraph 21, the Plaintiff refers to the Original Trustee’s
O conduct in relation to a number of specific matters, O

particularized in sub-paragraphs (1) to (6), “as evidencing

P P
the [Alleged] Common Understanding and the Original
Q Trustee’s agreement to abide by it in the administration of Q

the Trust and the Trust Fund”.

R R
(4) At paragraph 28, the Plaintiff pleads that pursuant to the
S S
Alleged Common Understanding, various letters were issued

T
by or on behalf of the Father and the Plaintiff to the T

U U

V V
 - 9 -
A A

B Defendant since November 1999 setting out their requests B

and instructions concerning the administration of the Trust

C C
and the Trust Fund. Particulars are given in respect of 4
D matters (defined as the “Specific Instructions to the D

Defendant”) in sub-paragraphs (1) to (4), followed by a

E E
general averment (in sub-paragraph (5)) that “The Plaintiff
does not have in her possession copies of all the letters and F

written instructions issued to the Defendant and reserves her

G G
right to provide further particulars after discovery”.
H (5) Lastly, at paragraph 29, the Plaintiff pleads that each of the H

Specific Instructions to the Defendant were fully complied

I I
with by the Defendant pursuant to the Alleged Common
J Understanding. Further, prior to 2016, the Defendant never J

purported to exercise any of its discretionary powers under

K K
the Trust Deed, and all matters concerning the administration
L of the Trust and the Trust Fund were carried out upon the L

instructions and/or consent of the Father and/or the Plaintiff.

M M

N 23. In the Amended Defence:- N

O (1) At paragraph 23, the Defendant admits that during the O

Father’s lifetime – that is over the 15 years between 1984

P P
and 1999 – the Original Trustee did in practice from time to
Q time act in accordance with the Father’s wishes in relation to Q

ministerial acts of investment and administration of the

R R
Trust, including the matters referred to sub-paragraphs 19(1)
S to (7) and sub-paragraphs 21(1) to (5) of the Amended S

Statement of Claim, but denies that they were undertaken

T T
pursuant to the Alleged Common Understanding.
U U

V V
 - 10 -
A A

B (2) At paragraph 24, the Defendant further admits that during B

the remainder of the Father’s lifetime – that is over the

C C
following 7 years between 1999 and 2006 – the Defendant
D did on the three occasions referred to in sub- D

paragraphs 28(1) to (3) of the Amended Statement of Claim

E E
act in accordance with the Father’s wishes in relation to
ministerial acts of investment and administration of the F

Trust, but denies that they were undertaken pursuant to the

G G
Alleged Common Understanding. In so far as the matter
H referred to in sub-paragraph 28(4) is concerned, the H

Defendant avers that “the position is equally explicable [as

I I
in relation to the other three matters], though in fact … that
J matter was dealt with as a technical issue between the J

Defendant, JSM and a representative of GE …”.

K K

L 24. The Plaintiff’s first set of requests for further and better L

particulars relates to the following pleas in the Amended Defence,

M M
namely:-
N (1) Paragraph 26(1) – N

O “The Defendant denies as regards the Original Trustee O

(paragraph 20 of the Amended Statement of Claim) and the

P P
Defendant (paragraph 29 of the Amended Statement of Claim)
Q that in any of the cases relied on by the Plaintiff and pleaded Q

to at !paragraphs 23 to 25 above, the Original Trustee or the

R R
Defendant (as the case may be) - in acting in accordance
S with the wishes of Mr Lo (and, insofar as was also the S

case, the Plaintiff) - was not exercising discretions

T T
conferred on it as trustee of the Trust.”
U U

V V
 - 11 -
A A

B (2) Paragraph 59 – B

“As to paragraph 19 to 21 of the Amended Statement of

C C
Claim, the Defendant repeats paragraphs 23 and 26 above
D ....” D

E (3) Paragraph 63 – E

“In the premises, and generally (including as regards the

F
matters chronologically pleaded at paragraph 30 of the
G Amended Statement of Claim), paragraph 29 of the G

Amended Statement of Claim is denied.”

H H

I 25. The further and better particulars sought by the Plaintiff are I

as follows:-
J J

(1) State whether it is the Defendant’s case that the

K K
Defendant or the Original Trustee has ever exercised its
L discretion when it purported to exercise any of the L

powers under the Trust Deed, and if so, set out in a

M M
chronological order each and every occasion when it is
N alleged that the Defendant or the Original Trustee did N

exercise its discretion, giving i n respect of each such

O O
occasion full particulars of the following:
P (i) the date when the discretion was allegedly exercised; P

Q (ii) the identity of the person(s) who al1egedly Q

exercised the discretion on behalf of the Defendant

R R
or the Original Trustee;
S (iii) the subject matter of the decision; S

T (iv) the matters that the person(s) who made the decision T

U U

V V
 - 12 -
A A

B have taken into account in the exercise of the B

discretion;
C C
(v) whether the decision was in accordance with the
D instructions or requests made by Mr Lo Ying Shek D

and/or the Plaintiff (or anyone acting on their behalf)

E E
in respect of the subject matter; and
F
(vi) whether the decision maker took into account any
G matter other than the fact that it was Mr Lo G

Ying Shek’s and/or the Plaintiff’s instruction or

H H
request that the Defendant or the Original Trustee
I should exercise the power; and if so, set out all the I

matters which were taken into account.

J J

K (2) State whether it is the Defendant’s case that it or the K

Original Trustee has ever exercised its discretion in

L L
declining or refusing to accede to a request or instruction
M from Mr Lo Ying Shek and/or the Plaintiff (or anyone M

acting on their behalf), and if so, give full particulars of

N N
each of such occasions, stating in respect of each such
O occasion: O

(i) the date when the Defendant or the Original Trustee

P P
allegedly exercised its discretion to refuse to accede
Q to a request or instruction from Mr Lo Ying Shek Q

and/or the Plaintiff (or anyone acting on their behalf);

R R
(ii) the subject matter of the request or instruction;
S S
(iii) the identity of the person(s) who allegedly exercised
T the discretion on behalf of the Defendant or the T

U U

V V
 - 13 -
A A

B Original Trustee; and B

(iv) the matters which the person(s) who exercised the

C C
discretion took into account in refusing to accede
D to the request or instructions from Mr D

Lo Ying Shek and/or the Plaintiff.

E E

(3) State whether it is the Defendant’s case that it or the F

Original Trustee has ever exercised its discretion in the

G G
exercise of the powers under the trust which did not
H result from a request or instruction from Mr Lo Ying Shek H

and/or the Plaintiff (or anyone acting on their behalf), and

I I
if so, please state in respect of each occasion:
J (i) the date when the Defendant or the Original Trustee J

allegedly exercised such discretion;

K K

(ii) the subject matter of the exercise of power;

L L
(iii) the identity of the person(s) who allegedly exercised
M the discretion on behalf of the Defendant or the M

Original Trustee; and

N N

(iv) the matters which the person who exercised the

O O
discretion took into account.
P P

26. In my view, the Plaintiff is not entitled to the particulars

Q Q
sought referred to in paragraph 25(1) above, for the following
R reasons. R

S S
27. First, by paragraphs 26(1), 59 and 64 of the Amended

T Defence, the Defendant denies that, in acting in accordance with the T

U U

V V
 - 14 -
A A

B wishes of the Father in relation to a number of specific matters B

(namely, those pleaded by the Plaintiff at paragraphs 19, 21 and 28 of

C C
the Re-Amended Statement of Claim and responded to by the
D Defendant at paragraphs 23 to 25 of the Amended Defence), the D

Original Trustee or the Defendant were not exercising discretions

E E
conferred on them as trustee of the Trust. It can be seen immediately
that the Defendant is denying a negative allegation. The question is F

whether such denial is a mere traverse (in respect of which no

G G
particulars will be ordered), or a negative pregnant with an
H affirmative (in respect of which particulars will be ordered). The H

distinction between the two was clearly explained by Godfrey J (as

I I
he then was) in Tin Shui Wai Development Ltd v AG [1991] 1
J HKC 509 at 511-512, as follows:- J

K “It is for present purposes essential to notice that what we have K

here is a negative allegation made by the plaintiff and traversed
by the defendant. Such a traverse necessarily involves a double
L negative; but, although, in ordinary parlance, a double negative L
must involve an affirmative proposition, for pleading purposes
the denial of a negative allegation does not necessarily involve
M M
the making of an affirmative proposition. Whether it does so or
not depends on whether it is, on the one hand, a mere traverse;
N or, on the other hand, a traverse which, though negative in N
form, is in fact pregnant with an affirmative. The denial of a
negative allegation may operate as a bare traverse and no more,
O whereby the defendant simply puts the plaintiff to the proof of O
the negative alleged. In such a case, if it is not possible to read
P into the mere denial of the negative allegation any affirmative P
allegation beyond that which is necessarily implied from such a
traverse, particulars will not be ordered; but then once the
Q plaintiff establishes a prima facie case, the defendant will be Q
precluded from setting up an affirmative case in answer, for
that would be to allow him to set up a case which he has not
R R
pleaded. Alternatively, if it is clear to the court, either from the
nature of the case or from what is stated by counsel or
S otherwise, that the defendant intends to set up an affirmative S
case, which, if established, would defeat the plaintiff's prima
facie case, particulars of such an affirmative case will be
T ordered; for otherwise there will be doubt as to what are the T

U U

V V
 - 15 -
A A

B
issues to be determined between the parties. Where the denial B
of a negative allegation leaves it in doubt as to what the true
nature of the denial is, the pleading will be regarded as
C embarrassing and evasive and it will be ordered to be struck C
out, or amended, or particulars may be ordered of any
affirmative case relied on.”
D D

E
28. In the present case, I consider that a fair reading of the E
Amended Defence, in particular the various pleas mentioned in
F
paragraph 24 above in the context of the issues raised on the pleadings,

G
is that the denial is a mere traverse and not a pregnant negative raising an G
affirmative case. In this regard, it is important to note that there is no
H H
allegation on the pleadings that the Original Trustee or the Defendant

I
failed to properly discharge their duties as trustee in acting in accordance I
with the wishes of the Father in relation to the specific matters pleaded
J J
by the Plaintiff at paragraphs 19, 21 and 28 of the Re-Amended

K
Statement of Claim and responded to by the Defendant at K
paragraphs 23 to 25 of the Amended Defence. It is not, as I see it, an
L L
essential part of the Defendant’s defence to the Plaintiff’s claims to

M prove affirmatively that the Original Trustee and the Defendant did M
properly exercise the discretions conferred on them as trustee of the
N N
Trust in relation to those matters. The Defendant would not, of

O course, accept that they failed to do so and, if asked or pressed, O

would say that they did, but that is not the same as setting up an
P P
affirmative case regarding the exercise of their discretions in relation

Q to the aforesaid specific matters. Q

R R
29. It is also important to note that the Plaintiff’s allegation

S
that the Original Trustee and the Defendant never properly exercised S
their discretionary powers under the Trust prior to 2016 but simply
T T
acted in accordance with the wishes of the Father and/or the Plaintiff

U U

V V
 - 16 -
A A

B is put forward for the purpose of evidencing the Alleged Common B

Understanding. Subject to the question of the admissibility of such

C C
evidence which I understand will be challenged by the Defendant and
D will have to be determined by the trial judge, even if the Plaintiff D

should successfully prove such allegation at the trial, it does not

E E
necessarily mean that there was indeed the Alleged Common
Understanding, because it may mean just that the Original Trustee F

and the Defendant failed to properly exercise their discretion

G G
independently.
H H

30. The question of whether a denial of a negative allegation

I I
amounts to a mere traverse or a pregnant negative raising an
J affirmation case is to be determined primarily on the basis of the existing J

pleadings. Nevertheless, as stated by Goddard LJ in Pinson v Lloyds

K K
and National Provincial Foreign Bank, Limited [1941] 2 KB 72 at 80:-
L L
“If it is clear to the Court, either from the nature of the case or
from the admission of counsel or otherwise, that it is intended
M to set up an affirmative case, so that the traverse is what has M
been described as a negative pregnant, it seems to me that
particulars of the affirmative case ought to be delivered.”
N N

31. It seems to me that the converse must also hold good. In

O O
the present case, Mr Fung has stated that the relevant paragraphs of
P the Amended Defence giving rise to the requests for particulars:- P

Q “do not involve any traverse which imports affirmative Q

allegations as to which particulars should be ordered. Those
paragraphs of the [Amended Defence] merely traverse [the
R R
Plaintiff’s] allegation that [the Defendant] never exercised
any of its discretionary powers under the Trust Deed prior to
S 2016, without making any affirmative allegation beyond that S
which is in any event to be implied from the denial of [the
Plaintiff’s] negative allegation” (see paragraph 31 of Mr
T Fung’s Skeleton Submissions dated 19 December 2017). T

U U

V V
 - 17 -
A A

B I consider that I am entitled to act upon this confirmation given by B

leading counsel on behalf of the Defendant.

C C

D
32. Second, it is clear that the denials in paragraphs 26(1), 59 D
and 64 of the Amended Defence relate only to the specific matters
E E
pleaded by the Plaintiff at paragraphs 19, 21 and 28 of the
Re-Amended Statement of Claim and responded to by the Defendant F
at paragraphs 23 to 25 of the Amended Defence. The Plaintiff’s
G G
request for particulars referred to in paragraph 25(1) above goes

H considerably beyond the Defendant’s pleas, in that the Plaintiff is H

asking the Defendant to “set out in a chronological order each and

I I
every occasion when it is alleged that the Defendant or the Original
J Trustee did exercise its discretion” and then give detailed particulars in J

respect of each and every such occasion. There is, I consider, no proper
K K
basis for the Plaintiff to seek such wide ranging particulars having regard
L to the limited pleas in paragraphs 26(1), 59 and 64 of the Amended L

Defence. In this connection, I note that the Plaintiff has not put
M M
forward any alternative, narrower, application. That being the
N position, the particulars sought cannot be regarded as being N

“necessary either for disposing fairly of the cause or matter or for

O O
saving costs” under Order 18, rule 12 (3B) of the Rules of the High
P Court, Cap 4A. P

Q Q
33. The above reasons also apply to the Plaintiff’s requests

R for the particulars referred to in paragraph 25(2) and (3) above. In R

addition, it is clear that the Defendant has not alleged in the Amended
S S
Defence that it or the Original Trustee ever “exercised its discretion
T in declining or refusing to accede to a request or instruction from Mr T

U U

V V
 - 18 -
A A

B Lo Ying Shek and/or the Plaintiff” or “exercised its discretion in the B

exercise of the powers under the trust which did not result from a
C C
request or instruction from Mr Lo Ying Shek and/or the Plaintiff” prior
D to 2016. The Plaintiff is not, in my view, entitled to ask for D

particulars of something which has not, in fact, been alleged on the

E E
pleadings.
F
34. There is one other matter that I cannot let pass without
G G
mentioning in this Decision. As pointed out by Mr Fung at the

H hearing on 21 December 2017, it is not the Plaintiff’s case that the H

Trust was a sham. It would not, of course, be in the interests of either

I I
the Plaintiff or the Defendant to contend that the Trust was a sham.
J However, the question may legitimately be asked whether the true J

arrangement of the relevant parties involved a conspiracy to defraud

K K
the Estate Duty Commissioner. It is plainly not possible for this issue
L to be resolved in the present application. I shall leave it to the trial L

judge to consider whether the issue of the legality of the arrangement,

M M
as well its implications, ought to be investigated at the trial.
N N
THE PLAINTIFF’S SECOND SET OF REQUESTS
O O
35. The Plaintiff’s second set of requests relates to
P P
paragraph 54(3)(b) of the Amended Defence. In order to understand that

Q
paragraph, it is necessary first to refer to paragraph 14 of the Q
Re-Amended Statement of Claim, which pleads as follows:-
R R
“… At all material times since the establishment of the Trust,
the Original Trustee (for the period until its replacement by the
S S
Defendant in around November 1999) and the Defendant (since
November 1999) were paid a fixed annual fee for their services,
T T

U U

V V
 - 19 -
A A

B
which was relatively insubstantial compared with the value of B
the Trust Fund.”

C C
36. As confirmed by Mr Benjamin Yu, SC (for the Plaintiff) at
D the hearing on 21 December 2017, the above plea is made to support the D

“implicit” allegation referred to in paragraph 54(3) of the Amended

E E
Defence, namely, that the “fees are not substantial relative to the
exceptional value of the trust property, and/or that the Trust is accorded F

special terms as to fees, because the Trust is not a genuine trust

G G
established and operated in accordance with its trust documentation and
H governing law”. In respect of this allegation, the Defendant’s response H

(inter alia), in paragraph 54(3)(b) of the Amended Defence, is that –

I I

“the Original Trustee and the Defendant have been

J willing to continue in office on fixed rather than J
percentage fees in circumstances where GE, Mr. Lo,
various of the Children, and the Plaintiff, were important
K customers of various business functions of the HSBC K
Group.”
L L

37. The further and better particulars sought by the Plaintiff are
M M
as follows:-
N (1) State the names of those Children who are or have been N

“important customers of various business functions of the

O O
HSBC Group”;
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(2) State on what basis or criteria does the Defendant
Q consider those Children identified in (1) above as Q

“important customers”; and

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(3) State the precise “business functions” of the HSBC Group
S which (i) GE; (ii) Mr. Lo; (iii) each of the Children named S

in sub-paragraph (1) above; and (iv) the Plaintiff are or

T T

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A A

B have been important customers, including particulars as to B

the services provided by HSBC to each of them and the

C C
time period during which such services were allegedly
D provided. D

E E
38. I consider that the Plaintiff is entitled to the particulars
sought. I am unable to accept Mr Fung’s submissions that those F
particulars relate to “matters of evidence”, or are “wholly unnecessary for
G G
the fair disposal of this action or for saving costs”. It seems to me that

H the requests ask for particulars of fact which go directly to the H

Defendant’s allegation that “GE, Mr. Lo, various of the Children, and
I I
the Plaintiff” were “important” customers of the HSBC Group, and
J would explain why the Original Trustee and the Defendant would be J

prepared to accept a fixed percentage fee for acting as trustee of the Trust
K K
which, according to the Plaintiff, is “relatively insubstantial compared
L with the value of the Trust Fund”. L

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DISPOSITION

N N
39. For the foregoing reasons, I order the Defendant to give the

O
particular sought by the Plaintiff referred to in paragraph 37 above within O
14 days of the date of the order herein. On the issue of costs, most of the
P P
time at the hearing on 21 December 2017 was spent on the first set of

Q
requests, which the Defendant has successfully resisted. Overall, Q
I consider that a fair order to make would be that the Defendant shall
R R
have 80% of the costs of the application, to be taxed if not agreed, and

S
I so order. In view of the fact that the application relates only to a matter S
of particulars which seems to me to be relatively straight forward, I am
T T
not inclined to grant certificate for two counsel. This having been said,

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A A

B I should acknowledge that I have substantially benefitted from the careful B

and cogent submissions of counsel from both sides, to whom I am greatly

C C
indebted.
D D

E E

(Anderson Chow) F
Judge of the Court of First Instance
High Court
G G

H Mr Benjamin Yu, SC and Ms Sara Tong, instructed by Vivien Chan & Co, H
for the Plaintiff
I I
Mr Eugene Fung, SC and Ms Janet Ho, instructed by Clifford Chance, for
J
the Defendant J

K K

L L

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N N

O O

P P

Q Q

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S S

T T

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