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Polly Hui

Magnate's claim of right to revoke trusts failed for lack of evidence

Tycoon Eric Hotung lost his legal battle against his own children yesterday after the High Court dismissed his claim he had the right to revoke two trusts he set up for them more than a quarter of a century ago.

The absence of reliable evidence to support the 78-year-old's case was highlighted as a major reason for the judgment handed down by Mr Justice Robert Tang in the Court of First Instance.

'This is not a case which turned on the honesty of any of the witnesses called on behalf of the plaintiff. I accept that they have tried their best and told me what they believed to be true,' the judge wrote. 'However, I am not satisfied that I can rely on their recollection.'

Mr Hotung, a grandson of philanthropist Sir Robert Hotung, set up a trust for three of his five sons under the trusteeship of his cousin Winnie Ho Yuen-ki, and a separate one for his three daughters under Hillhead Limited in 1979.

Kevin Egan represented three of his children, Anthony, Sean and Sheridan, as defence counsel.

Mr Hotung revoked the trusts last year after his children brought lawsuits against the trustees. He sought clarification from the Court of First Instance that he had the right to revoke the trusts. The 78-year-old argued he had orally instructed the trustees that the trusts were to carry conditions of secrecy and revocable rights - despite the absence of such clauses in the trust deeds.

Although Alan Hann and Ronald Ho, who ran Hillhead, had told the court in January that the patriarch had given them the oral instructions, the judge said he believed their evidence was based on inferences drawn from what they believed to be the standard practice of their company rather than any communication from Mr Hotung.

The judge described as 'an overstatement' a claim by Gerard McCoy, senior counsel representing the plaintiff, that 'it was not in [Mr Hotung's] DNA to have made unconditional gifts of the shares to his children'. The judge supported his finding by saying there was no suggestion of revocable rights in another trust Mr Hotung had set up for four of his children.

Mr Justice Tang said there was no evidence to show any blank instruments of transfer, a set of documents that would give Mr Hotung the power to transfer the shares of the trusts wherever he wanted, had been issued at the time the trusts were set up as alleged by the plaintiff.

The judge also said the assets in the trust, worth between 10 and 12 per cent of Mr Hotung's fortune in 1979, constituted a smaller percentage of his wealth today.

'It is probable that the plaintiff did not believe it was necessary for him to make the trusts revocable. He might well have thought that the expectation of a share in his larger estate would be a powerful incentive to the children not to displease him,' he wrote.

It has not been decided yet who will foot the bill for the trial. The judge invited the parties to make written submissions within the next three weeks on the issue.

Speaking from Beijing last night, where he is on a business trip, Mr Hotung said: 'The judge is entitled to his opinion and I can't comment on that. I can't say I am overjoyed.'

Asked if he would appeal, he said: 'That is all in the hands of my lawyers.'

Stephen Peaker, solicitor representing Mr Hotung's children, said last night his clients did not wish to comment until the issue of legal costs was settled.

Additional reporting by Simon Parry



Judge rules against Eric Hotung in battle with three children