Chong Tao Boon Vincent v. Wong Raymond Fook Lam
Read the full judgment text of HCA 2161/2015 on BabelCite. This High Court CFI judgment was delivered on 18 October 2019.
1. The present two actions arose out of disputes between two former good friends, P and D, essentially over monies held in D’s name in trust for P and a property in Mainland China.
Cites 1 case
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HCA 2161/2015 [2019] HKCFI 2556 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE ACTION NO 2161 OF 2015 AND ACTION NO 1759 OF 2016 ________________________ BETWEEN
______________________ (Consolidated by the Order of Master J Wong dated 12th December 2016)
_________________ J U D G M E N T _________________ Introduction 1.The present two actions arose out of disputes between two former good friends, P and D, essentially over monies held in D’s name in trust for P and a property in Mainland China. 2.According to P, in November 2007 a sum of HK$3,473,157 was entrusted to D as a trustee (“Trust Monies”). In P’s consolidated statement of claim (“CSOC”), he claimed, amongst other things, (1) an account and inquiry, and payment, of a sum of HK$2,430,595.00 held by D, after giving credit for all monies properly expended by D in respect of the Property (defined below) or any part thereof out of the Trust Monies, (2) a declaration that D holds 50% of the beneficial interest in the Property as nominee and trustee for P, and (3) delivery up of two cases of Penfolds Grange 2001 wine (“Australian Wine”). 3.The property in question is a villa in a development called “Waterville Resort” in Lijiang, Yunnan (“Property”). 4.It was not disputed that the Trust Monies were P’s share of profits arising out of a share trading joint venture between P, D and D’s friend, Ms Cindy Chung (“CC”). 5.In D’s amended consolidated defence and counterclaim (“AD&C”), he denied that there was any remaining balance of the Trust Monies still being held by him for P in that all the Trust Monies had already been duly paid back to P and in fact taking into account all payments which D had made on behalf of P as agreed, P owed D a sum of HK $9,666 which D counterclaimed. 6.As for the Property, D denied withholding any information in relation to the Property from P and that he had through his then solicitors in November 2015 informed P that D agreed to assist in providing any necessary documents to effect the transfer of P’s interest in the Property to P and that P’s claim was wholly unnecessary and an abuse of process and a waste of costs. 7.Insofar as the Australian Wine was concerned, D’s pleaded case was that as P had informed D that he was not interested in sharing the wine, and therefore D did not hold the Australian Wine in trust for P, and that P’s claim was an abuse of process and a waste of costs. 8.P denied that he had informed D that he was not interested in the wine. On the 1st day of the trial, it was made clear by D’s counsel that D was willing to deliver the two cases of the Australian Wine to P and delivery was subsequently made to P’s solicitors’ office the following day. 9.There was another item, a Lowe handbag, which was a matter of dispute at one stage, and P’s case was that it was purchased by P at the request of D to be a present to be given to D’s secretary and the purchase price of HK$2,710 was deducted from the Trust Monies. Anyway, this matter was also resolved. 10.By the end of the trial, the parties were in agreement that irrespective of the outcome of the other disputed issues, a credit of HK$32,275.60 (representing the costs of the Lowe handbag and the Australian Wine) should be given to D. 11.Counsel Ms Queenie Lau appeared for P at the trial and Mr Steven Kwan and Ms Charlotte OT Chan appeared for D. Background How parties met 12.P said he came to know D in around 2005 as their children were attending the same kindergarten. 13.D is a chartered accountant by training and qualified in London in 1980. He joined the Shui On Group in 1989 and was the Group Finance Director between 1992 and 1995. He became an Executive Director of SOCAM Development Ltd (“SOCAM”), a listed company of the Shui On Group from 1997 to 2007. Between March 2007 and June 2009, he was appointed an Executive Director of another affiliated company of SOCAM which was listed on the London Stock Exchange. Subsequently, he rejoined SOCAM and became the Managing Director and Chief Financial Officer. He served a total of nearly 28 years with various companies in the Shui On Group before his retirement in December 2016. 14.According to D, P is also a qualified accountant, and that he came to know P in 2003, although in his statement of claim in the Ammolie Action (defined below), D had said he and P met in or around 2004[1]. P was a consultant with Moores Rowland, and later, he set up his own firm, Questmark Asia Limited (“Questmark”), which was said to provide, amongst other things, PRC-related business advisory and private equity consultation services[2]. 15.Although the two of them gave slightly different years as to when they met, it was not really disputed that they were good friends for some 8 or 9 years until 2014. As a result of their friendship, they started to become jointly involved in various investments as early as 2006 which are mentioned below. The first one in time appeared to be the Lushan Projects. D’s investments in the purported Lushan Projects in 2006-2007 16.In D’s AD&C, he had pleaded by way of background to the present matter an action HCA 2514/2014 which was brought by D’s company Ammolite Wealth Limited (“Ammolite”) on 10 December 2014 against 5 defendants including P as 3rd defendant (“Ammolite Action”). From copies of the statement of claim and a decision of Master Wong of 18 April 2016 in the Ammolite Action (“Wong’s Decision”)[3], it can be seen that D had invested in 3 purported projects in Lushan, Jiangxi, in about 2006 – 2007 (“Lushan Projects”). The 3 Lushan Projects were joint ventures between Hong Kong entities and Mainland entities. It was D’s allegation that be became involved through the alleged introduction and solicitation of P. 17.The Hong Kong entities included the 4th defendant in the Ammolite Action, a Hong Kong limited company, and its subsidiary, the 5th defendant. Ammolite agreed to subscribe for certain shares in the 4th defendant after D agreed to invest in the Lucshan Projects. The remaining shares in the 4th defendant was held by the 1st defendant in the Ammolite Action, also a Hong Kong limited company, which in turn was owned by the 2nd defendant therein. 18.According to D, he was instructed by P to transfer (i) RMB3,150,000 (or HK$3,060,000) on 19 April 2006 to the personal account of the 2nd defendant named in the Ammolite Action for one of the projects, (ii) HK$1,050,000 on 23 October 2006 to the 1st defendant as instructed by P for another of the projects, and (iii) a total of HK$10m to the 1st defendant on 17 and 21 May 2007 for the 3rd project. 19.It was D’s case in the Ammolite Action that the Lushan Projects were not genuine projects. Subsequently, D was only partially repaid HK$6.6m. 20.This eventually led to the issue of the Ammolite Action on 10 December 2014. There were two causes of action pleaded by Ammolite, namely conspiracy to injure and breach of contract against all 5 defendants, but as against P, the only cause of action was conspiracy to injure. D was claiming against P and the other defendants sums in excess of HK$4.45m and RMB3.15m for loss and damage suffered as a result of, amongst other things, P’s alleged act of tortious conspiracy with the other defendants by engineering a scheme regarding projects that were not genuine. 21.Ammolite’s claim against P and the other 4 defendants based on conspiracy to injure was later struck out on 18 April 2016 pursuant to Wong’s Decision but Ammolite’s claim against the other 4 defendants based on breach of contract had remained. Joint Investment in publicly listed shares in about February 2007 22.It would appear from the Share Schedule referred to later in this judgment that the parties decided to jointly invest in listed company shares sometime in February 2007. According to D’s evidence during the trial, he and P and had invested in 7 shares since about February 2007 but by 31 May 2007, the net result was there was no loss or profit, and that, as seen later, the 1st Joint Venture (defined later) in share trading started on about 1 June 2007. The joint acquisition of the Property in May 2007 23.Prior to the 1st Joint Venture, in around March or April 2007, P and D discussed the possibility of jointly acquiring a villa in Mainland China and that in around May 2007, they agreed to jointly acquire the Property and that at the request of P and his family, the Property was to be registered in D’s sole name, and D would hold 50% of the beneficial interest in the Property as nominee for P and his family. There were two deeds of trust executed on 10 October 2008 and 18 December 2008 by P and D to reflect the beneficial interest held for P[4] (“Trust Deeds”). 24.According to D, it was their common intention that the responsibility of taking care of the Property should be shared by P and D as they were both regular travellers to Mainland China. The 1st Joint Venture in June 2007 25.It was not disputed that D introduced his friend CC to P in around 2006 and that in around June 2007, P, D and CC orally agreed to form a joint venture by which they would trade in stocks listed on the Hong Kong Stock Exchange (“1st Joint Venture”). P & D had respectively given his own version as to the terms of the 1st Joint Venture. 26.What was not disputed was that (i) all investment decisions must be unanimously agreed by all three of them, (ii) any profit or loss would be shared equally amongst the three of them and (iii) P himself did not make any cash contribution towards the 1st Joint Venture, and that his contribution was only to provide “intangible information” on the stocks. 27.Although P’s wife (“Doo”) was working for the Securities and Futures Commission at the time in 2007 and still is, it was not disputed that the information P provided towards the 1st Joint Venture was obtained by P through proper and legitimate sources and from his own research and publicly available information. 28.What was also not disputed was that after trading for several months, the three of them decided to terminate the 1st Joint Venture and there was then a lunch at the Forum Restaurant on 5 December 2007 to celebrate (“Celebratory Lunch”), as with seed money of HK$10m, they made another sum of about HK$10m, within a short time and each of them was allocated one third of the amount. There was a dispute by P as to whether D had accounted to him the loss and profits of the 1st Joint Venture or provided to him any calculations at or prior to the lunch. However, it was not disputed that the amount of P’s share of the profits was HK$3,473,157.39. 29.It was P’s evidence in his witness statement that in or around November 2007, shortly before the termination of the 1st Joint Venture, D had suggested to him that he would hold P’s share of the profits for P as D was able to help P to obtain favourable interest rates and P agreed to D holding the sum which formed the Trust Monies. 30.On the other hand, D’s case was that it was P who requested D to hold P’s share of profits of HK$3,473,157 for him for the time being. Although it would appear that D was not disputing P’s share of the profits was about HK$3.47m in his witness statement (which was also agreed in the Scott Schedule) during the trial, his evidence was that by the time of the Celebratory Lunch, it was only about HK$2.5m. I will come back to this part of his evidence later. 2nd Joint Venture in December 2007 31.It was D’s pleaded case that after the termination of the 1st Joint Venture, there was a 2nd joint venture set up at the Celebratory Lunch between P, D and CC again for the trading of shares (“2nd Joint Venture”). According to D, there was a net loss of HK$4,577,610 as at 3 June 2015 under the 2nd Joint Venture and that P’s share of the net loss was HK$1,525,870[5]. It was further D’s pleaded case that on 23 June 2015, D and CC had instructed solicitors Mayer Brown JSM (“MBJSM”) to send a letter of demand to P seek payment of the sum of HK$1,525,870. D had also pleaded that he and CC would separately claim from P regarding the 2nd Venture. There appeared to be no further follow up. P had denied there was a 2nd Joint Venture. Commencement of the present actions in 2016 32.On 16 September 2015, P issued HCA 2161/2015 to claim against D an account and inquiry of a sum of HK$2,430,595, the balance of the Trust Monies, as at 23 July 2010. 33.Later, on 5 July 2016, P issued HCA 1759/2016 to claim the other reliefs which he sought in his CSOC. 34.It was D’s pleaded case that it was on the basis of the Ammolite Action and the demand letter sent by MBJSM on 23 June 2015 in relation to the 2nd Joint Venture that P decided to issue the present actions against D[6]. 35.By the time the Ammolite Action was launched on 10 December 2014, the relationship between the parties had turned sour. 36.Further, from the exchange of letters between P’s solicitors and MBJSM in relation to the 2nd Joint Venture, it can be seen that it was only during such exchange that P then demanded D to return what P claimed to be the balance of Trust Monies. The Scott Schedule 37.The Scott Schedule contained 48 items. Section A of the Scott Schedule sets out the undisputed items. What was stated to be not disputed under Section A was in November/December 2007, the Trust Monies were HK$3,473,157. 38.As said earlier, D’s evidence during the trial was that the monies held on trust by him for P at the Celebratory Lunch were only HK $2.5m. 39.On the other hand, according to P’s latest case, D and CC were not entitled to charge interests on the amounts advanced by them and that, with interests of HK$9,178 added back, the Trust Monies should have been a total of HK$3,482,335. 40.Under Section A, the following 4 payments from D to P were not disputed:
41.It was also not disputed under Section A that the following monies were expended by D on instructions of P:
42.Further, there were 2 items of interests on “fixed deposit of HK$2.5m” credited to P:
43.Under Section A, the amount of the Trust Monies of HK$3,473,157, after deducting the 4 undisputed payments and including the 2 items of interests above, was HK$2,430,595. 44.It was stated in Section B of the Scott Schedule that P would give credit to, subject to proof by D, the following:
45.Then, Section C of the Scott Schedule sets out 17 items (items 32 to 48 inclusive) in relation to disputed items of payments or disputed transactions. 46.Suffice to say, as summarised by Mr Kwan in his Closing Submissions, there were only 4 main issues which would require determination by the Court, namely:
47.Before I consider the above 4 issues, there were some other factual disputes upon which I will set out first and my findings thereon. The witnesses 48.P filed one witness statement and had called no witnesses save himself. 49.As for D, he had filed one witness statement and had also arranged his former secretary Ms Bonnie Wong (“Bonnie”) and his former driver Mr Cheung Kwong Tak (“Eric”) to give evidence on his behalf. Bonnie and Eric had each filed a witness statement. 50.Bonnie and Eric were at all material times and still are employees of the Shui On Group. They were not personally employed by D. Bonnie joined the Shui On Group in 1992 and was assigned to serve D from 1997 until D’s retirement at end of 2016, and after D’s retirement, Bonnie has remained an employee of the Shui On Group and has been assigned to work for the present CEO of the Shui On Group until present. Eric joined the Shui On Group in 1997 and was assigned to serve D until D’s retirement, after which he has been serving another senior executive till present. The amount of the Trust Monies 51.As said earlier and as seen in D’s AD&C and also the Scott Schedule, it was not disputed that P’s share of the profits of the 1st Joint Venture was about HK$3,473,157. 52.According to P’s evidence in his witness statement, at around the time of the termination of the 1st Joint Venture, D had orally informed him that his share of the profit was HK$3,473,157 but according to P, D did not provide him with any documents evidencing the calculations concerning the figure. 53.On the other hand, D had produced a schedule of the share trading in the 1st Joint Venture (“Share Schedule”)[7] which D said he had shown to P at the Celebratory Lunch and which indicated that P’s share was HK$3,473,157.39. P denied having seen a copy of the Share Schedule as alleged by D at that time. 54.Anyway, during the trial, D’s evidence was that in fact prior to the Celebratory Lunch, P already knew that his share of profits from the 1st Joint Venture was about HK$3.47m. 55.As a sum of HK$200,000 had already been withdrawn by P and that there had been mortgage and other payments made by D on behalf of P in relation to the Property of about $800,000, the remaining balance of the Trust Monies held by D for P at the time of the Celebratory Lunch was only HK$2.5m. 56.As seen in the Scott Schedule, it was not disputed that on 24 November 2007, a sum of HK$200,000 in cash was paid out of the Trust Monies by D to P[8]. Further, it was not disputed that on 30 November 2007, D had paid HK$390,220 for P, being 50% of the deposit for the Property[9]. According to the Scott Schedule, there were no other payments from the Trust Monies prior to the Celebratory Lunch. 57.However, according to the Note (defined later) written by P himself, there was also a sum of HK$7,000, which was amended to HK$3,112 for a record/CD player. As for the mortgage loan from China Citic Bank for the purchase of the Property, this was RMB 760,000 which was advanced on 24 October 2007[10] and according to the mortgage repayment schedule, the 1st monthly repayment instalment was RMB 8,614.13 commencing from 10 November 2007[11] (“Repayment Schedule”), and P’s share being 50% would only be about RMB4,300 a month, or say HK$5,000. 58.As the 1st Joint Venture was an informal arrangement, it was not clear when exactly the date of the termination was. However, even taking into account the various sums withdrawn by P and/or expended out of the Trust Monies on behalf of P prior to the Celebratory Lunch, by the time of the Celebratory Lunch, the balance of the Trust Monies was less than HK$3.47m odd, it should still be around HK$2,875,000. I do not know how D came up with an amount of HK$2.5m. In fact, I find this part of D’s evidence rather confusing. 59.Suffice to say at this stage, whatever D’s evidence was at the trial, the balance of the Trust Monies at the Celebratory Lunch or just prior thereto was not HK$2.5m. Further, the amount of Trust Monies being HK$3,473,157 was undisputed throughout and this was the opening amount set out in the 1st Completion Statement (defined later) prepared by D and provided by D to P. I am satisfied that the “opening amount” of the Trust Monies was an amount of HK$3,473,157 being P’s share of the profits at the termination of the 1st Joint Venture. Why payments to P were made in cash 60.Both P and D are well educated and they are qualified accountants, and yet they chose to carry out the 1st Joint Venture orally without, anything in writing or any written agreement in relation to the terms of thereof, eg the respective contributions to be made by either of them or by CC whether in monetary or non-monetary terms, or the sharing of profits or losses, or when there would be an account taken or a distribution made. As for the trust of the Trust Monies, again there was no trust deed or any written document to reflect the terms of the trust, even though there were the Trust Deeds in relation to the Property. 61.Not only did P and D have no written agreements or anything in writing in relation to the terms of 1st Joint Venture or the trust of the Trust Monies, as seen from the 4 undisputed cash payments to P, they chose to carry out the transactions between them in cash, with no receipt required at the time of each payment. 62.As to why payments to P had to be made by cash, according to D, this was at the request of P and that the reasons were (1) P did not wish his wife Doo to know about this source of cash he had and (2) that he could use cash in Mainland China. 63.P denied under cross examination that it was he who had wanted money in cash, and he had also said that it was unbelievable that he did not want his wife to know about it. However, P had admitted earlier on during cross examination that his wife was not aware that he was to provide information on the shares as part of the terms of 1st Joint Venture and that the others were to provide the funds. 64.When P was asked why D would want to take upon the burden to withdraw cash from the bank in person each time in order to pay P, P had said that it was D who had indicated to him that he handled a lot of cash transactions in his business and that D asked him whether he would accept cash and P said yes. When asked what he had spent his cash on, P had given an example that on one occasion he had commissioned an artist during a charity function to paint a vase and that he had to pay HK$100,000 in cash. P claimed that D knew about this as he was present. P had also admitted that receiving cash of say HK$200,000 was convenient to him as he would use it over travel over the years. 65.P admitted that between 2007 to 2011 that he had to travel from time to time to the Mainland, and that when he went on business there, his wife would not accompany him. It was put to him that he had wanted to spend cash on his personal activities in the Mainland. P answered that he did not ask for cash but when D paid him cash, he used it from time to time in Mainland China or elsewhere when he would exchange the HKD cash into other currencies. 66.It was put to P that it was he who had asked for cash and it was he who determined on the timing and the amount of the cash, P maintained that the offer of payment in cash came from D but agreed that the timing and the amount of each withdrawal was decided by P. It was also P’s evidence that D would give him the cash within a reasonable time. 67.On the other hand, D denied that he had to handle cash during his work or that he had ever told P that he had to handle a lot of cash transactions in connection with his work. There was no sufficient evidence that D being an Executive Director of an affiliated property company of SOCAM in 2007 would need to handle a lot of cash transactions in his work, nor did it seem probable. It would have been more convenient for D to give P a cheque or to arrange for a bank transfer than for D to go to the bank personally to withdraw cash for P on each occasion. Although D’s evidence was at times rather confusing, on weighing up their respective evidence, I find D’s version more probable and that, for whatever reasons, it was P who had requested payments in cash from the Trust Monies from D. The Share Schedule and the Note 68.Apart from the 1st Completion Statement and the Interests Tables (referred to later), P had produced no documentations in relation to the 1st Joint Venture. As said earlier, he had denied being shown by D a copy of the Share Schedule at the Celebratory Lunch, or any other documents evidencing the calculations concerning the figure of HK$3,473,157 being his share of profits. P maintained he trusted D and it was D who told him the amount allocated to him. 69.D had stated in his witness statement that CC and he would use their respective brokerage accounts to trade in the shares for the 1st Joint Venture and Bonnie was responsible for keeping records of the transactions of the shares, and that P was to make recommendations on the stocks. 70.As seen in the Share Schedule and as earlier mentioned, in fact the share trading venture between P and D started earlier in February 2007, and after the commencement of the 1st Joint Venture, there were about 14 shares traded between June and November 2007. As P was the one who provided “intangible information” on those shares from his research and analysis, one would have thought there must have been some record kept by P as to which shares he had provided information or made recommendations. When P was asked by Mr Kwan would he not be interested in whether information he provided had resulted in a loss or a profit, his answer was rather evasive. First his answer was that he did not go into details, and when the question was repeated, he then replied he was interested in the total profit made and left it to D to account. 71.The Share Schedule was the only allegedly contemporaneous document which would purport to record the shares purchase and/or sold, and how the profit from the share trading in the 1st Joint Venture had come to HK$3,473,157.39, or rounded off to $3,473,157. It was not clear who prepared the Share Schedule as D said it was Bonnie but Bonnie said it was not her. Anyway, it did not seem probable that after having the Share Schedule prepared, D then failed to produce or show a copy to P. Having considered their evidence, I find more probable than not that P had been provided and/or shown a copy by D at the Celebratory Lunch. 72.In any event, it was P’s evidence that it was D who informed him his share of the profit from the 1st Joint Venture was HK$3,473,157 and that P then deduced that the total profit from the 1st Joint Venture was at the date of termination around $10,419,741. 73.About 3 weeks before the trial, D produced a note of account (“Note”)[12]. It was not disputed that the Note was written by P although it was not signed by P. 74.There were 9 items in the Note starting with “Distribution 2007” of 3,473,157 followed by 7 items each showing the date, description and the debit amount, and then the last item was “Balance 2,569,297”. It was not disputed that the Note was an account which purported to set out the opening amount of HK$3,473,157 and various deductions therefrom, ending with a balance of HK$2,569,297. As the last item above the balance was “9.6.2010 cash (100,000)”, the Note must have been written after the date 9 June 2010. 75.It was P’s evidence at the trial that the Note was written by him at the request by D to acknowledge and confirm the sums referred to therein. 76.However, it was never pleaded by P that he had ever signed any note or document to acknowledge or to confirm the 4 undisputed payments to him. P never mentioned the Note in his witness statement or produced a copy thereof. 77.It was put to P by Mr Kwan that the Note was in fact provided by P to D based on P’s own record back in winter 2007 as to the “plus and minus” of the Trust Monies and that prior to writing out the Note, P had been provided with a copy of the Share Schedule by D and thus P was able to write in the Note that “Distribution 2007” was HK$3,473,157. As said earlier, P denied that D had produced to him the Share Schedule or any calculations of his share of profit and claimed that the figure for the opening balance on the Note was only quoted to him by D. 78.P’s evidence was that he could not recall exactly when the Note was written. In fact, apart from saying that the starting figure of 3,473,157 must have been given to him by D, P could not recall whether the figure was given to him orally or in writing by D, and P agreed with Mr Kwan that he could not have remembered the figure on the top of his head. He maintained that all the figures and documentations on the Note were with D all the time and that he relied on verbal figures provided by D when writing out those figures in the Note. 79.The figure of 3,473,157 was an odd figure, and it would not be easy for anyone to remember such an odd figure without having a record of it. There was no explanation from P how the figure was quoted to him by D and P could not recall whether D was present when he wrote the Note. 80.Ms Lau submitted that it was much more likely that it was D who had asked P to write the Note and that such a document would be much more useful to D to make sure that P had acknowledged the sums of cash he had received from D. 81.D’s evidence at the trial was that he could not remember whether it was he who had asked P to write the Note but he accepted that it was possible that he did but said it was also possible that P had written it of his own accord. 82.As said earlier, the last item on the Note was P’s withdrawal of an amount of $100,000 in cash on 9 June 2010, the Note must have been written after that date. This would thus be about 6 weeks prior to the 1st Completion Statement mentioned below. The 1st Completion Statement was a much more detailed statement and it was not disputed (save for one item in relation to the miscalculation of Ms Chung’s interest). Had D wanted a document from P to acknowledge or confirm receipt of payments in and out of the Trust Monies, one would have thought P could simply have asked D to sign on the 1st Completion Statement as an acknowledgment of the accuracy thereof. Further, D’s case was his secretary Bonnie had kept a record of all “ins” and “outs” of the Trust Monies. Thus, if it was D who gave the figures to P to write out, then there would not have been a mistake regarding the amount of the payment for the record/CD player. On the other hand, Bonnie had admitted the cash of $100,000 paid to P on 11 November 2009 was in fact paid on 11 December 2009 and she did not spot this error. This error appeared both on the Note and the 1st Completion Statement. 83.I have earlier accepted D’s evidence that P had been provided and/or shown a copy of the Share Schedule at the Celebratory Lunch. In any event, whether D had or had not shown P the Share Schedule or whether it was P who wrote the Note of his own accord and from his own record or whether it was D who had asked P to write it and provided the figures to him, I do not find it probable that P had kept no record of his own in relation to the share transactions or the figures in the Note, bearing in mind P is himself a qualified accountant and that his only contribution to the 1st Joint Venture was the intangible information on the stocks. The “Completion Statements” 84.There were different versions of what was described as “Completion Statements” which had been produced by D:
Annex 1 and the 2nd Annex 1 85.The contents of the Annex 1 and the 2nd Annex 1 were identical, save that there were only two rows in the 2nd Annex 1, namely the top and the bottom row, were highlighted in yellow, whereas Annex 1 had contained many items highlighted in yellow. 86.When D was cross examined over the “partial disappearance of yellow highlighting in the 2nd Annex 1”, he said he did not know why. He was not able to offer any explanation apart from saying that maybe it was due to the photocopying machine of his solicitors. Ms Lau had put to D that P’s case was that he had made changes to the document but D disagreed. 87.Subsequently, the “original” of Annex 1[18], or the copy provided originally by D to his solicitors, was handed up to the Court by Mr Kwan. Insofar as one can see, it was the same as Annex 1 save that the yellow highlights in Annex 1 seemed to be more faded that those in the “original”. 88.Ms Lau submitted that the photocopying would not take out part of the yellow highlighting and that the differences in Annex 1 and 2nd Annex 1 were suspicious and that they were not contemporaneous documents prepared in or around March 2011 as claimed by D and Bonnie. 89.Even though there were no satisfactory explanations, the copy of the 2nd Annex 1 in the Court’s bundle seemed to be less sharp than the “original” and in fact the blue highlighted rows appeared to be a much darker blue than the “original” and even the handwritten annotations (save the words “vouched by RW”) were in a darker blue, and it appeared that the blue colour part had been touched up, when compared to the “original”. Apart from the colour highlights, the contents of the 2nd Annex 1 were identical with the “original” and of Annex 1, save that the words “Annex 1” was typed on the right top corner of the 2nd Annex 1. In any event, even though I accept that there was different highlighting, but after examining and comparing the two versions with the “original”, since the contents were exactly the same, I do not find there was sufficient evidence to say that the differences in the colour highlighting would mean that Annex 1 was not a contemporaneous document or that it was not prepared in about April 2011 as alleged by D, or it was not the same document as the 2nd Annex 1. The 1st Completion Statement and the Interests Tables 90.As mentioned, it was not disputed by P that the 1st Completion Statement and the Interests Tables were given to him by D in around August 2010. 91.The 1st Completion Statement showed two items of credits into the Trust Monies of interests: (i) on 22 October 2008 of HK$37,527.2 representing interests on fixed deposit of HK$2.5m (Hang Seng Bank) from 5 December 2007 to 22 October 2008; and (ii) on 23 July 2010 of HK$32,386.70 being interests on fixed deposit of HK$2.5m (DBS Bank) from 23 October 2008 to 23 July 2010. Thus, the impression one would get from reading the 1st Completion Statement coupled with the Interests Tables would be that a sum of HK$2.5m of the Trust Monies had been placed on fixed deposits, firstly with the Hang Seng Bank and later with the DBS Bank. 92.As earlier mentioned, it was D’s evidence during the trial that by the time of the Celebratory Lunch, the Trust Monies were only about HK$2.5m. Further, according to D, he had told P prior to the Celebratory Lunch the amount of his share and P had told D that he wanted to withdraw the amount of HK$2.5m in cash after the Celebratory Lunch. 93.D said as a result, he had arranged for a sum of HK$2.5m to be gathered in his account at the Hang Seng Bank, in order for it to be withdrawn by P in cash after the Celebratory Lunch. It was D’s evidence that he had to gather this sum from his other bank accounts a few days prior to the lunch in order to pay P. Then, according to D, P changed his mind and told D at the Celebratory Lunch he did not want to withdraw HK$2.5m cash all in one go and that he only wanted to withdraw in smaller amounts. 94.D said he was in fact quite upset at this since he had gone to the trouble of gathering all the cash for P. Further, as P changed his mind about withdrawing the entire sum of HK$2.5m in cash, after the lunch, D then arranged for the sum of HK$2.5m to be placed on a fixed deposit with the Hang Seng Bank commencing 5 December 2007 for 2 to 3 months. Thereafter, he did not continue with the fixed deposit, and merely instructed his secretary Bonnie to call the Hang Seng Bank to find out about the fixed deposit interest rate was and then set out the interests which the HK$2.5m would have earned in a table. Later, D found out the fixed deposit interest rate offered by the DBS Bank was higher, and thus from 23 October 2008 onwards, he then instructed Bonnie to call the DBS Bank to find out the rate and set out the interests which the HK$2.5m would have earned fixed deposit with DBS Bank in a table until 23 July 2010. Thereafter, as the interest rates were very low, he decided not to account for the interests to P any more. 95.It was D’s evidence at the trial that he had told P that he would account to P for interests and that he had also told P that after 23 July 2010, he would no longer account for the interests. 96.D’s above evidence in relation to the gathering of HK$2.5m to pay P after the Celebratory Lunch was never mentioned in his witness statement. 97.It was also D’s evidence in his witness statement that upon request by P for D to keep his share of profits from the 1st Joint Venture for the time being, it was agreed between them P that (1) P’s share of acquiring the Property including mortgage repayments and other transactions would be paid by D on behalf of P and deducted from P’s share of profit from the 1st Joint Venture and (2) D would account to P the corresponding interest earned on the undrawn balance of his share of profit at a rate offered by a reputable bank. It would further appear from D’s witness statement that what D had said about his agreement occurred prior to the Celebratory Lunch. 98.As said earlier, D’s evidence was rather confusing. As I have said earlier, and as seen in the 1st Completion Statement, the balance at the date of the Celebratory Lunch or 5 December 2007 was about $2.8m and not HK$2.5m. There was no sufficient evidence that D had actually gathered from other accounts HK$2.5m into his account with the Hang Seng Bank to pay P. There was also no sufficient evidence as to why P would want to have HK$2.5m in cash all at one go. 99.I find no sufficient evidence to support what D had said at the trial about P had wanted to withdraw the entire sum of HK$2.5m in cash and then changed his mind. However, notwithstanding this, D did maintain his evidence that he and P had agreed that he would account to P for interests at fixed deposit rate and that at the time when he gave P the 1st Completion Statement and the Interests Tables in August 2010, he had also told P that after 23 July 2010, as interests rate were too low, D would not calculate interests or account to P interests any more. D said at the time, his family and P’s family met almost every week and that he and P had discussed this. 100.On the other hand, P’s evidence was that he only found out for the first time during the trial that D had not in fact placed the sum of HK$2.5m on fixed deposit, and that the interests credited to him by D were not actually paid by any bank, but by D. He also denied that D had told him after 23 July 2010, there would be no more interests on the balance of the Trust Monies. 101.What seemed clear was that the Trust Monies were not placed in a separate account by D, and D had admitted that the Trust Monies were placed in his own accounts with various banks and intermingled with his own funds. Ms Lau submitted that D was in breach of his duty as a trustee. However, D, although a chartered accountant, was not a professional trustee and there was no formal trust arrangement between P and him over the Trust Monies. D had said during the trial that that his duty to P was that whenever P asked for money from the Trust Monies, D would give it to P. 102.As said earlier, P did not dispute that he was given a copy of the 1st Completion Statement and the Interests Tables in August 2010. The items of payments in and out of the Trust Monies as set out in the 1st Completion Statement were not disputed by P upon receipt thereof. There was no dispute at that time that as at 23 July 2010, the balance of the Trust Monies was HK$2,430,595 (save that it was P’s evidence at the trial that he had overlooked the item of “Jan-08 CC miscalculation interest” in the 1st Completion Statement). 103.Even though P could have been misled into thinking HK$2.5m was placed separately on a fixed deposit, it was not P’s evidence at the trial that had he known the truth, he would have objected to D placing the amount in his own account together with his own funds and accounting to P fixed deposit interests. The parties were good friends at the time, and P himself had repeatedly said he trusted D. There was no sufficient evidence that had P known, he would have terminated the trust in August 2010 and/or to withdraw the entire balance of the Trust Monies immediately. In any event, even on P’s case, he must have known upon receipt of the 1st Completion Statement, that as at 23 July 2010, the balance was less than HK$2.5m and there could not have been a sum of HK $2.5m placed on fixed deposit after that date. He must also have known that there were ongoing mortgage repayments and/or other expenses (as could be seen from the 1st Completion Statement and later, the purchase of Dom Perignon) which would continue to be met from the Trust Monies, thereby reducing the balance. Also, it was his evidence that any time he requested for cash, P had produced the cash within a reasonable short time, which meant that the balance of the monies could not have been placed on fixed deposit. In any event, I find that there was no sufficient evidence that, whether it was the banks which had paid the interest at fixed deposit rate or whether it was D would have made any difference to P at the time, so long as whenever he needed any cash, D would pay him. The 2nd Completion Statement and Annex 1 104.D’s evidence in his witness statement was that in mid February 2011, he forwarded to P the 2nd Completion Statement which showed a balance of HK$1,323,979.60 being the balance of the Trust Monies. When it was put to D that there was no email or other document to evidence the “forwarding” by him to P of the 2nd Completion Statement in February 2011, D replied that at the time he and P would meet every week and that that he in fact handed the document to P in person. 105.It was D’s evidence in his witness statement that after the provision of the 2nd Completion Statement to P, he and P discussed the possibility of jointly acquiring an office premise in Centre Mark II on Queen’s Road Central/Jervois Street (“Office”) but it was later decided that the Office was too small for joint acquisition, and that P would take it up for his own use, and subsequently, the Office was purchased in the name of P’s wife Doo. 106.It was further D’s evidence that P informed him that he would like to withdraw most of the balance of the Trust Funds as stated in the 2nd Completion Statement to fund the purchase of the Office. As a result, D made 3 payments to P. I will consider the disputed payments later. 107.According to D, after the above 3 payments to P, Bonnie had in accordance with past practices, written to record the payments on a copy of the 2nd Completion Statement and there were also the words “vouched by RW” which were written by D (“Written Annotations”). The copy of the 2nd Completion Statement with the Written Annotations was Annex 1. In his witness statement, D had said a copy of Annex 1 was given to P but did not actually say who, how, or when the document was given to P. Under cross examination, D had at first said it was given to P in the 1st or 2nd week of March or April 2011. 108.As pointed out by Ms Lau, since the last payment was said by D to be on 31 March 2011, he could not have given a copy of Annex 1 to P in March 2011. Upon being pointed but by Ms Lau, D then corrected himself and said it was in April 2011 that he gave Annex 1 to P. 109.D’s evidence on when the 2nd Completion Statement and Annex 1 were given to P was again confusing and indeed, as pointed out by Ms Lau, had confused his own legal team, in that in the “Schedule of Bank Withdrawals” attached to Mr Kwan’s Closing Submissions, Annex 1 was stated to be provided by D to P on 27 August 2015. Anyway, so far as this Court could gather, D’s eventual evidence during the trial was that a copy of the 2nd Completion Statement (ie without the Handwritten Annotations) was handed to P by him in February 2011, and a copy of Annex 1 (ie a copy of the 2nd Completion Statement with the Handwritten Annotations) was given to P in April 2011, soon after it was prepared. 110.It was Bonnie’s evidence that she was responsible for keeping records of D’s expenditure over the years when she was his secretary, and that whenever D wanted to withdraw cash from his bank accounts, he would ask her whether there would be sufficient balance for his withdrawal. Further, every time D withdrew cash from his bank accounts, he would inform her through telephone the details, amount and purpose and occasionally when he forgot to do so on the same day, he would inform her the next day. Bonnie said she would note down the details of such withdrawals on a worksheet by hand and that later cross checked the worksheet with the monthly bank statements when received. 111.Bonnie had confirmed in her examination in chief that the 1st Completion Statement was prepared by her on the computer. She had clarified that there was one error in the 1st Completion Statement, namely the payment to P on 11 November 2009 should in fact be on 11 December 2009 and that although as seen in the relevant Hang Seng Bank statement, on that day, HK$200,000 was withdrawn but only HK$100,000 was alleged to have been paid to P. 112.During cross examination, Bonnie confirmed she was the one who prepared the Interests Tables and that she was the one who called the bank on D’s instructions, after the first 2 to 3 months of placing the HK$2.5m on fixed deposit, in relation to the fixed deposit interests. She accepted that on the face of it, a reader would not know that the sum was not actually placed on fixed deposit. She had said her English was not good and when she prepared the tables, it did not occur to her that they would be shown to other parties or that there would be so many questions arising from the tables. She merely followed D’s instructions and prepared two tables with the interests she found out from the banks. 113.It was Bonnie’s evidence that the Share Schedule was not prepared by her but she had seen it, and that it was one day when D returned to the office and gave her the document and asked her to file it. She also said the Note was not prepared by her, and again it was one day when D returned to the office and gave her the document and asked her to file it. She said she had checked the amounts and noticed that the amount of 7,000 for the item of “record player” on the Note was wrong and should be 3,112 and she was the one who amended it. She said D did not ask her to check but when she discovered the mistake, she told D. 114.Bonnie confirmed that the 2nd Completion Statement was an update prepared by her after 7 January 2011 and printed out at the request of D. She said D did not tell her why he requested her to print it out. Bonnie also confirmed that all the Handwritten Annotations were written by her in March 2011 when D told her to, save the words “vouched by RW” which were written by D. 115.When Bonnie was asked during cross examination why she wrote the Handwritten Annotations, she had said that D was very impatient, and her practice was to write down the figures he told her first and then later when she needed to update, she would then type in the updated amounts on the computer. This was because D was busy and she was also very busy and she had to do other work. During cross examination, Bonnie had confirmed that she had a typed up copy including her part of the Handwritten Annotations on the computer. She was not able to provide an explanation as why a typed copy was not produced and instead Annex 1 was produced. She also could not recall whether a typed up copy was ever printed out for D. 116.Nonetheless, Bonnie maintained that the Handwritten Annotations were made contemporaneously by her and were not made for the purpose of litigation. She had also said after she had written the dates and sums, she had kept the document as she had to keep record of the balances for D, since if he withdrew cash from an account with no sufficient cash, then there would be an overdraft, and she would feel bad as he would be embarrassed. 117.Ms Lau submitted that D’s evidence about handing a copy of the 2nd Completion Statement to P personally was not consistent with what he said in his witness statement about having “forwarded” a copy of the 2nd Completion Statement to P. I accept that by saying he “forwarded”, it would appear that D had sent by email or letter, and D did not make it clear in his witness statement that what he did was that he actually handed a copy to P in person. 118.Even if D’s evidence on how he had provided the 2nd Completion Statement to P was inconsistent, D’s evidence was that P had been given a copy of Annex 1, ie the 2nd Completion Statement with the Handwritten Annotations, and at the trial he said this was in April 2011. 119.On the other hand, P’s case was he never received a copy of the 2nd Completion Statement, and Annex 1 was sent to him for the first time under cover of a letter dated 27 August 2015 from MBJSM[19], after the disputes between the parties had arisen. 120.P had said under cross examination that he had not asked D for a statement after August 2010 and agreed that if he had asked D, D would have produced a statement like the 1st Completion Statement but P said he did not ask for one as they were seeing each other quite often and not much was going on with the Trust Monies, and they were focusing on the “property project” which he seemed to be referring to the Lushan Projects. 121.Anyway, what was common ground was that P and D were seeing each other very often, and according to D, almost every week. 122.However , as one can see from the statement of claim in the Ammolite Action, it was on 30 May 2014 that D’s solicitors MBJSM wrote to P and also the 2nd defendant in that action, demanding them to, amongst other things, render accounts of the 4th and 5th defendant which were allegedly under the control of the 2nd defendant and P[20]. Thus, by then, the relationship between P and D must have already broken down. Notwithstanding this, on P’s case, he still did not seek any statements or accounts from D in relation to the 1st Joint Venture. In fact, the evidence seemed to show that had D not demanded from P his share of loss in the 2nd Joint Venture, P would not have raised the matter of the 1st Joint Venture or sought any information thereon from D in relation to the Trust Monies. 123.Having considered the above, I must say I find this odd. 124.During the trial, P was asked by Mr Kwan that whether it was his case that Annex 1 was a false document, P was evasive and his first response was that was the document he received to show the handwritten cash payments. When he was asked again whether it was his case that Annex 1 was forged, he then said that was what he was saying and he did not receive the 4 handwritten payments. When asked whether it was his case that the disputed 5th, 6th and 7th payments were forged in that he also did not receive them, P’s answer was correct. 125.As pointed out by Mr Kwan to P, since it was P’s case that he never received the 2nd Completion Statement in February 2011 and that Annex 1 was forged, then why would D have the 5th, 6th and 7th payments typed up on the 2nd Completion Statement and then the other 3 payments in March 2011 handwritten on Annex 1. P said he could not explain. 126.I do not find it probable that if D had indeed wanted to make up a false document or to make up a false story, he would make up and produce first the 2nd Completion Statement with the 3 disputed 5th, 6th and 7th payments all typed up and then make up another one Annex 1, which was the 2nd Completion Statement with 4 handwritten payments. One would have thought it would have been much simpler to produce one false statement with all disputed payments typed up rather than a convoluted and confusing story of two versions of the statements. 127.In any event, there seemed to be no report to the police by P of any false documents being rendered. 128.Having weighed up P’s evidence and D’s evidence, even though D’s evidence was confusing, I find that D’s version is more probable, and I find it more probable than not that he did give to P a copy of the 2nd Completion Statement in February 2011 and a copy of Annex 1 later in about April 2011. The 6 disputed payments 129.Whether a copy of the 2nd Completion Statement or a copy of Annex 1 was provided to P in 2011 or not, the main issue was whether the balance of the Trust Monies had been returned to P by D by end of March 2011. 130.There were altogether 10 payments to P alleged by D, 4 undisputed as set out earlier and 6 (5th to 10th) disputed payments totalling HK$2.3m as follows :
131.As seen in the above table, the 6 disputed payments involved 7 cash withdraws on D’s part from his bank accounts. 132.The 4 undisputed payments totalled HK$500,000 and were spread out from late November 2007 to mid June 2010, namely over about 2½ years. 133.It was D’s evidence in his witness statement that when P requested cash, and before D went to the bank, he would ask Bonnie which of his bank accounts would have sufficient amount for the cash withdrawal, and then his driver Eric would take him to that bank and he would withdraw the amount personally. D would then inform Bonnie immediately or on the same day and she would accordingly record such payment/withdrawal and the nature of such payment/withdrawal in her records and “registered the same amount in a summary when she checked with the monthly bank statement shortly afterwards”[21]. It was D’s evidence that the same routine was followed by Bonnie and Eric for each of the 11 cash withdrawals for the 10 payments he made from his bank accounts to pay P and that those cash withdrawals were also registered in the company’s computer in and around the same month when Bonnie updated her records, ie starting from 2007. It was also D’s evidence that he seldom withdrew large amounts of cash for his personal use although he admitted during the trial then were a few cash withdrawals for his personal use or to give to his family members. 134.It was further D’s evidence that on two of those occasions he withdrew cash for P, he had personally handed to P the cash in his car and some of the cash payments were delivered by Eric, pursuant to D’s instructions, to P personally at his home or office or at locations in Central and Causeway Bay. Thus, according to D, all the cash payments to P followed the same pattern of recording as far as Bonnie was concerned, and that there was the same routine of Eric taking D to the relevant bank to withdraw the cash personally. 135.Eric attended the trial for cross examination and that he confirmed that between 2007 and March 2011, he had driven D to various banks to obtain cash, and that there were at least 6 occasions that D had given him an envelope with cash and asked him to deliver to P, namely one occasion when he delivered cash to P in Central, twice to P’s office in Kowloon Bay, once to P in Causeway Bay and once to P’s home in North Point. It was also his evidence that he recalled at least twice that he saw D personally handed an envelope with cash to P in the car. 136.Bonnie had confirmed D’s evidence about D’s practice and her practice every time D withdrew cash from his bank accounts. As mentioned earlier, Bonnie further confirmed that she would note down the details of such withdrawals on a worksheet by hand and cross checked the worksheet with bank statements when received. She had also said she would routinely note down the nature of payments and the respective payees of each item on the bank statement records and would mark the payments to P as “VC”. Bonnie said she had known P since 2005. Bonnie had identified each of the 11 withdrawals set out above from the relevant bank statements. 137.Bonnie had referred to her hand written records/worksheets in her witness statement and had produced her record for August 2010 and March 2011, with irrelevant information redacted (“Handwritten Records”)[22]. According to Bonnie, “VC” on the Handwritten Records referred to P. Further, according to Bonnie, all the cash withdrawals to P would have been marked with “VC” on the original unredacted relevant bank statements, but there had been over-redaction of the bank statements and all her annotations of “VC” had been redacted. D had tried to produce the revised redacted copies of the bank statements with Bonnie’s handwritten annotations at the commencement of this trial, but due to strong objection by Ms Lau, this was not in the end allowed by this Court due to lateness. However, to illustrate her point, Bonnie did refer to one of the statements at the Standard Chartered Bank indicating the cash withdrawal of HK$410,000 on 9 March 2011 and the copy of the statement had faint handwritten annotation containing illegible words but with “VC” discernible[23]. 138.The Handwritten Records for the month of August 2010 showed the following two items: -
139.The above withdrawals could also be identified from the relevant bank statements[24]. According to Bonnie, “HKB1” meant the 001 account or current account at HSBC and the “tick “or “√” was made by her after checking the withdrawal with the relevant bank statement when received. 140.The Handwritten Records for the month of March 2011 showed the following:
141.The above withdrawals could also be identified in the relevant bank statements[25]. As seen in the statement of the Standard Chartered Bank, on 9 March 2011 a total HK$410,000 was withdrawn, and according to Bonnie, HK$400,000 was for P, and the HK$10,000 was for D. 142.According to D, after rendering of the 1st Completion Statement to P, he had paid HK$500,000 in cash to P on 17 August 2010 (5th payment), and another HK$500,000 (6th payment) in cash to P on 24 August 2010. On about 13 October 2010, he and P jointly purchased 3 cases of Dom Perignon and P instructed him to use part of the Trust Monies to pay for P’s half share of the price, which was HK$8,194. Then on 30 November 2010, he paid a further sum of HK$100,000 in cash to P (7th payment). 143.There was no Handwritten Record for the cash payment on 30 November 2010, although the relevant HSBC statement did show a withdrawal of cash of HK$100,000 on that day[26]. 144.As mentioned earlier, it was D’s evidence that after he had provided P with a copy of the 2nd Completion Statement, he and P had discussed purchasing the Office jointly and later it was purchased in Doo’s name. According to D, on or shortly before 9 March 2011, P informed D that he would like to withdraw most of the balance of the Trust Funds as stated in the 2nd Completion Statement to fund the purchase of the Office. As a result, D made the 3 payments to P in March 2011 totalling HK$1.2m. 145.On the other hand, P’s evidence in his witness statement was that the above never happened and P simply said it was his wife who purchased the Office, and that they were financially independent from each other and his wife had funded the Office from her income and savings with the assistance of a mortgage loan. 146.As seen from the registration record of the Land Registry[27], Doo was registered as the purchaser of the Office, and there was a mortgage loan entered into with the Shanghai Commercial Bank on 19 April 2011. 147.D had produced a copy of the Preliminary Sale and Purchase Agreement for the Office[28] (“PSPA”), which was signed on 16 February 2011 by P on behalf of a company Trillion Market Limited which was owned by D (“Trillion”), as purchaser and that the purchase price was HK$4,820,000. The preliminary deposit was HK$241,000 and was paid on signing of the PSPA. A further deposit of HK$241,000 was to be paid on or before 2 March 2011 and the balance of HK$4,338,000 was to be paid on or before 19 April 2011. 148.P was asked during cross examination that if the sale had gone through with the Office held by Trillion, whether this would mean Trillion would hold the Office in trust for him and D, P did not answer the question and replied he could not speculate. When asked who provided the initial deposit of HK$241,000, P replied that it was a long time ago, and if he recollected correctly, he might have provided the initial deposit. As for who paid for the further deposit, P again said he could not remember. P’s evidence during the trial was that although the PSPA was signed in the name of Trillion, D was not in Hong Kong at the time and as they had intended to invest jointly, D had authorised P to sign on behalf of Trillion. P then went on to say that D then found the Office too small, and D bought another office at CitiCorp Centre at about twice as big as the Office in the name of Trillion, and D took back the company Trillion. 149.P never mentioned in his witness statement that he and D had initially intended to jointly invest in the Office. When cross examined on this, P said he did not mention this because it was not relevant. 150.It was also put to P that since the purchase of the Office, it was P’s company Questmark which had been using the Office as its office and the P’s wife was only a nominee for P in purchasing the Office. P’s response was the Office was purchased in his wife’s name and that the Office was used by Questmark which had paid a nominal rent. 151.It was put to P that his failure to call his wife to testify was because she could give detrimental evidence against P as to the source of funds for the purchase of the office. P disagreed. 152.P had also produced a letter dated 20 April 2017 from Cathay Pacific in relation to his travel schedule in March 2011 as follows :-
153.P’s travel schedule would show that that the only day he could have received cash from D would have been on 10 March 2011. P did not produce a copy of the travel schedule from Cathay Pacific until about a few weeks before the trial. 154.At the trial, under cross examination, D had said that he might have given P both sums of HK$400,000 on 10 March 2011, instead of one sum on 9 March 2011 and one sum on 10 March 2011, since P did not arrive in Hong Kong until 9:30 pm on 9 March 2011. Ms Lau submitted this was a good example of how D said one thing, realised there was a problem with his evidence and then he tried to change it. 155.Although P’s travel schedule would seem to contradict D’s evidence that a sum of HK$400,000 was paid to P on 9 March 2011, as P only returned to Hong Kong late that night, it would however support D’s case that P had given him short notice, namely on or shortly before 9 March 2011, that P would like to withdraw most of the remaining sum in cash from the Trust Monies and that was why D then went to withdraw cash from 3 banks on 9 and 10 March 2011 in order to give the cash to P. 156.Ms Lau submitted that there was no proper explanation from D as to why D had to withdraw cash on both 9 and 10 March 2011, if he were only going to give P the total of HK$800,000 all in one go on 10 March 2011. D had explained he was very busy and could not go to different banks three times in one day. 157.There was a formal agreement for sale and purchase of the office dated 2 March 2011 produced at the trial. The PSPA and the formal agreement showed the initial deposit and the further deposit for the Office had already been paid by 2 March 2011, and the deadline for the balance was 19 April 2011. Although on the face of the document, the sum of HK$241,000 for further deposit was paid by Doo, there was no evidence as to the financial arrangement between P and his wife or the amount of the mortgage loan from the Shanghai Commercial Bank. It was not clear whether the entire balance of $4,338,000 was from the mortgage loan or only part thereof. The purchase in Doo’s name or payments from Doo’s account would not necessarily contradict D’s case that P had requested withdrawals totalling $1.2m which D said P told him was for the purchase. 158.Ms Lau had pointed out that Bonnie and Eric were not really independent witnesses in that they had both worked for D for some 19 – 20 years and that even if they were employed by the Shui On Group, they clearly had a long standing relationship with D and would wish to help him. 159.Even if Bonnie and Eric may have a long standing relationship and felt loyalty towards D, this would not necessarily mean that they would be willing to give untruthful evidence, or they had conspired together with D in relation to the payments to P. 160.Eric had given a very specific number of at least 6 occasions about delivering cash to P between 2007 and March 2011. When asked why he recalled 6 times, he had said he gone to Kowloon Bay on 2 occasions, to Central on 2 occasions, to Causeway Bay once and to P’s home once. Eric also said he had opened the envelopes in question and discovered that there were indeed lots of cash as what D had allegedly told him. When Eric was asked during cross examination that it would be odd for him to be opening an envelope that did not belong to him, Eric had said the envelopes were not sealed. Ms Lau had criticised his evidence as being inconsistent with what he had said in his witness statement. 161.I accept there were some inconsistences but I do not find such inconsistencies would render Eric an unreliable witness. In my view, Eric’s evidence would generally accord with D’s evidence of having to go to the bank to withdraw cash personally and to have cash delivered to P. 162.As for Bonnie, she had maintained that the Handwritten Records kept by her were contemporaneous and further the Handwritten Annotations on Annex 1 were contemporaneous. Insofar as the Handwritten Records were concerned, there were differences between each of the Handwritten Records, which showed spontaneity, rather than they being prepared or copied all at one go. As said earlier, the bank statements were according to D over-redacted and it seemed only by inadvertence the statement of Standard Chartered Bank with Bonnie’s annotation of “VC” against the withdrawal of HK$410,000 on 9 March 2011 was not obliterated during redaction. I find Bonnie a credible and reliable witness and I do not find it probable that Bonnie had prepared the Handwritten Records, or made those Handwritten Annotations on Annex 1 only for the purpose of litigation. I accept her evidence that they were made contemporaneously as said by her. 163.Neither P nor D is a completely reliable witness. As said earlier, I have found certain parts of D’s evidence confusing. D had often shot out his answers without thinking and it was only when the problems with his answers were pointed out to him, he would then think about it and then came out with further explanations and/or different answers. As pointed out by Ms Lau, he had changed his evidence. Notwithstanding this being unsatisfactory, he was more forthcoming and open with his answers. By comparison, I find P had been cautious and not forthcoming in giving his answers and he had revealed very little information about himself, such as what kind of business he was carrying on which would involve frequent trips to Mainland China and/or other places or how he had used the undisputed cash payments to him. In particular, I find there was no credible explanation from P as to why for a period of over 5 years from after 9 June 2010 until 11 August 2015[29] he had made no requests for cash from D at all (as such was his case) even though he had continued to travel to the Mainland and elsewhere. As mentioned earlier, I have also found P evasive in answering questions. 164.As previously said, if D had indeed wanted to make up a false document or to make up a false story, he could have produced a typed up version of the Completion Statement including all 6 disputed payments. Even though Bonnie only wrote down the dates and amounts of the withdrawals by D on Annex 1 per D’s instructions, I have accepted her evidence they were contemporaneous. In 2011, P and D were still good friends. There was nothing to suggest that at that time D was planning not to return any balance of the Trust Monies to P. Having weighed up their respective evidence, and that D’s evidence was corroborated by Bonnie’s and Eric’s evidence, I find on a balance of probabilities that D has satisfied the burden on him and that the 6 disputed payments had been made to P in the manner described by D. The Interests Issue 165.The dispute over this was in relation to 2 items on the Share Schedule, namely (i) HK$6,088.83 on 21 November 2007 as interest cost from D and (ii) HK$3,090 on 23 November 2007 as interest cost from CC. P said it only became apparent from the Share Schedule which was disclosed around 3 weeks before the trial that D and CC had been charging interests. 166.P accepted that the total sum of (i) and (ii) of HK$9,178 was a small amount but said it was a matter of principle, and that partners should not charge for interests. P further accepted that there was an item “CC-miscalculation interest” in January 2008 on the 1st Completion Statement, which was not disputed by him at the time, but his evidence was that he had overlooked this item when the 1st Completion Statement was provided to him. 167.When asked about the two items on the Share Schedule during cross examination, D had said that when the Share Schedule was produced by him at the Celebratory Lunch, everyone was very happy about the profit and they all looked at the Share Schedule and he could not recall whether they had considered the Share Schedule item by item. It was also D’s evidence that according to CC, the HK$9,178 was “margin interests” charged by broker/s and that the shares were often bought by CC, since she had more free time to trade than D. When D was asked why those amounts were so precise, D was not able to offer any explanation. 168.In relation to the item of “CC miscalculation interests” on the 1st Completion Statement, D had said that should be CC’s calculation of interests, and not a “miscalculation” if he had remembered correctly and further D pointed out that P had accepted it at the time. D said he did not know how this came about as it was too small a figure. 169.First of all, it was my finding earlier that more probable than not, a copy of the Share Schedule was provided or shown to P at the time of the Celebration Lunch. Secondly, P’s evidence was that he had overlooked the item of “CC miscalculation interest” of HK$7,000 on the 1st Completion Statement and he later then said he did not raise any objection as it was a small sum and it was an “one-off” interest. 170.There was no sufficient evidence that CC had not charged or had not received the interest as stated in the Share Schedule and/or the 1st Completion Statement. If P had an issue with the items regarding the interests, he should have raised this with CC also, since the interests were said to be not only charged by D but also by CC. Even if on P’s case he only saw the Share Schedule for the first time around 3 weeks prior to the trial, it was open for P to call CC or to serve a subpoena on her. 171.In my view, it is too late for P to now raise this issue and in any event, I accept D’s evidence that the charging of interests had been accepted and agreed to by P at the time when P was given a copy of the 1st Completion Statement. The Property Issue 172.D had admitted that he held/holds 50% of the beneficial interest in the Property as nominee and trustee for P, and it was D’s case that since there had never been any dispute about the ownership of the Property, the Court should not need to grant a declaration in this regard. 173.Ms Lau submitted there were various reasons why it was reasonable for P to seek a declaration in relation to his beneficial ownership of the Property. These can be summarised into the following:
D’s change of position in relation to the Australian Wine 174.One of the reasons which was argued on behalf of P for seeking a declaration was that D had made “several 180 degree turns” with respect to P’s entitlement to the Australian Wine. 175.P had produced the emails concerning D purchasing the Australian Wine which emails were forwarded to P and after purchase, the amount of Hk$29,565.60 was debited from the Trust Monies on 23 October 2008 as seen in the 1st Completion Statement. This item was later deleted by D from the 2nd Completion Statement and Annex 1. Although D had agreed in the MBJSM letter of 27 November 2015 to arrange for the delivery of the Australian Wine as well as the Dom Perignon Champagne, in MBJSM’s letter of 11 December 2015, D had further explained that he had reversed the entry of the item in the 1st Completion Statement and therefore, there was no such entry in Annex 1, and this was because P had informed him that P no longer wanted the Australian Wine and that the agreed delivery of the same was a mistake. 176.P’s solicitors reply of 18 May 2016 then stated that MBJSM’s letter of 11 December 2015 was a repeated denial to P’s rightful demand, without stating clearly that P had wanted the Australian Wine and therefore the cost of which should not have been removed. 177.There was no sufficient evidence as to whether P did or did not change his mind about the Australian Wine after the 1st Completion Statement. However, there were no sufficient evidence that had P made it clear after MBJSM’s letter of 11 December 2015 that he still wanted the Australian Wine and P agreed to the cost being taken out of the Trust Monies, that D would still have failed to deliver the same. As D had given an explanation that the agreed delivery was a mistake, I do not find that there had been multiple 180 degree turns on D’s part in relation to the Australian Wine, as submitted on P’s behalf. 178.In any event, there was no reason why the matter of the Australian Wine would justify P in seeking a declaration of his 50% of the beneficial interest in the Property. D’s failure to provide information and documentation to P in relation to the Property 179.There was no evidence that P had ever requested for any documentary information in relation to the mortgage payments of the Property and it would appear that he only instructed his solicitors to seek such information by their letter of 4 September 2015[30]. In that letter, P had sought (i) detailed breakdown figures and (ii) schedule of the mortgage payments from December 2010 up till then (if any), and (iii) confirmation that MBJSM’s clients (which would seem to include both D and CC) had not been in default in any of the mortgage payments up to then. 180.In the reply dated 7 September 2015 from MBJSM, they informed P that he could contact D’s secretary for details of any mortgage repayments and further informed P that the mortgage over the Property had already been redeemed[31]. 181.There was no response from P’s solicitors until 27 November 2015 when they then demanded D to transfer 50% interest in the Property to P and to let P have the contact information of D’s lawyer for the necessary transfer formalities to be carried out[32]. There was no follow up on P’s part in relation to seeking details of the mortgage repayments nor was there any evidence that P had contacted D’s secretary for such information. Anyway, there was no objection on D’s part in relation to the transfer of the 50% interest into P’s name. 182.After D disclosed in his pleadings (i) an “investment return” in June 2011 of HK$110, 933 and (ii) the mortgage loan had been fully repaid in December 2012, with the final payment of HK$256,655, P’s solicitors sent a letter on 8 December 2015 and sought (i) contact information of D’s Mainland lawyer to commence the transfer procedure and (ii) 5 items of information including nature of the “investment return” and copies of tenancy agreements (if any) and (iii) all relevant documentary evidence showing the mortgage payments and full redemption of the Property[33]. 183.MBJSM’s response was that all income derived from the Property had been pleaded and that the management of the Property had since its acquisition in 2008 been rested with a Mainland property management company, which D believed had been in great financial difficulties and which D had extreme difficulty to contact. Further, it was stated therein that D had no knowledge or information of the current status of the Property and the sum of HK$221,866 pleaded was the rental income of 3 years after deductions of expenses and P’s share was HK$110,933. MBJSM had said that they would produce evidential proof of D’s case at the stage of the discovery[34]. 184.In the AD&C, it was D’s pleaded case that in late March 2017 that he had made further attempts and personally communicated with the mortgagee bank, ie the China Citic Bank, in Mainland China in order to obtain a complete set of information and bank statements in relation to the Property up to 29 March 2017, and he then set out the information in paragraph 22A of the AD&C. D had since produced copies of the statements and documents said to be received by him in March 2017[35] 185.As I have said earlier, the parties were good friends in 2011 and 2012 and the parties and their family were seeing each other frequently. P had also said on a number of occasions during the trial that he trusted D, and there was no evidence that P had sought any documentary evidence in relation to the Property throughout until September 2015. 186.There seemed to be problems with the developer in that there was delay in obtaining the title deeds and the management company of the Property should be known to P as seen in emails sent by D to P and his wife in May 2011 and in December 2012[36]. 187.One of the emails produced by D was an email dated 1 June 2011 from Bonnie to D in which Bonnie had mentioned a Mr Li Yik having received a sum of RMB 210,000 and RMB 60,000 was still missing. According to D, Mr Li Yik worked for the Shui On Group and that D had asked Mr Li to go and help negotiate with the management company of the Property in relation to penalties for late handing over of the Property, and that after deducting two amounts, the net amount was about RMB170,000 or RMB165,406.97 namely item 1 set out paragraph 22A of AD&C[37]. The two amounts deducted were (i) the additional sum which D had to pay due to the variance of the area of the Property upon completion; and (ii) the various taxes payable on completion. D claimed there were no supporting documents. 188.When asked why he did not inform P that the mortgage loan was repaid and the Property was redeemed, D’s evidence that as they were meeting every week, he had told P that to get the title deeds, they had to pay off the mortgage loan, and further he had in the email of 12 December 2012 mentioned to P and his wife that the title deeds would be in his hands in a month’s time and that P knew that the Property was redeemed and the title deeds would be obtained. 189.A copy of the title deeds was not included in the trial bundles, and it was only during the trial when this Court asked D where it was, then the following day, Mr Kwan produced a copy to the Court[38]. 190.Further, it only became clear during the trial that the item of net “investment return” stated in the AD&C was the rental income guaranteed by the management company under a “Guaranteed Return Agreement”, which originally was for one year and later changed to three years. When asked why a copy of the “Guaranteed Return Agreement” was not in the trial bundles, D said it was an inadvertent omission. D maintained that he had told P about all this when they were meeting every week. 191.When it was put to D that he never mentioned it to P, D disagreed and pointed out he and P purchased the Property in 2007 and maintained they had met almost every week until the Ammolite Action in 2014. 192.What was clear during the trial was that the documents were produced by D on a piece-meal basis and there seemed to be documents which D had not yet produced due to what he said were inadvertent omissions. 193.The trust concerning the Property will continue until 50% of the interests has been transferred to or vested in P. In the meantime, D remains a trustee, and he is under a continuing duty as such. P had to issue the present action in order to obtain the present information on the Property. The relationship and trust between P and D has completely broken down. In my view, D’s failure to provide information and documentation to P earlier was sufficient reason for P seeking a declaration. Mainland tax and procedural issues 194.According to P, a declaration would assist him in the formalities in arranging for the transfer of 50% of the Property into his name and to meet the Mainland tax challenges. There was no sufficient evidence to contradict P’s evidence in this regard. Conclusion 195.Having considered all the above, I am of the view that it is reasonable for P to seek the declaration as set out in the CSOC. I am prepared to grant P the declaration as sought. The Account Issue 196.I have found earlier that D had discharged the burden on him and that on a balance of probabilities he had made the 6 disputed payments to P. The interests charged by D and CC had been dealt with earlier, and insofar as the mortgage payments, D had produced sufficient documentary evidence in support of the same and I accept that the mortgage payments were duly made by D until the Property was redeemed. As for the Australian Wine and the Lowe handbag, a sum HK$32,275.60 is to be credited to D. I am of the view that there is no need to conduct an account and inquiry in relation to the Trust Monies save as mentioned below. 197.As for the Property, I find D’s evidence as to the payment set out in items 42 – 48 of the Scott Schedule confusing and he had not provided all the supporting evidence in relation to the disputed amounts set out in items 42 – 48 of the Scott Schedule. I therefore will order D to tender verified accounts and supporting documents in relation to those disputed items within 3 months. 198.Insofar as D’s counterclaim is concerned, the amount can only be ascertained upon D’s rendering of the above accounts and supporting documents. Order 199.In light of all said above, I dismiss paragraphs (1) and (2) of the CSOC in respect of an account and inquiry of the sum of HK$2,430,595 save for disputed amounts in items 42 to 48 of the Scott Schedule in relation to the Property. In respect of paragraphs (3) and (4) of the CSOC, I (i) declare that D holds 50% of the beneficial interest in the Property as nominee and trustee for P and (ii) order an account of all monies, including rents and profits, which were received by and/or come to the hands of D or any other person on his behalf or account in respect of the disputed amounts in items 42 to 48 of the Scott Schedule. I order P to pay D any amount if there is a deficit and/or D to pay P if there is still any amount remaining of the Trust Monies after the account in (ii) has been provided. 200.As neither party can be said to have succeeded entirely, I make no order as to costs including any reserved costs. This is an order nisi which will be made final after 21 days.
Ms Queenie Lau, instructed by Kok & Ha, for the plaintiff Mr Steven Kwan and Ms Charlotte OT Chan, instructed by Lam and Lai, for the defendant [1] At para 4 of the statement of claim in HCA 2514/2014, Exhibit D-2 [2] See para 4, supra [3] Exhibit D-2 [4] C:139-142; see also P’s explanation as to why there were two deeds of different dates at para 37, B:92 [5] See para 15(1), A:26 [6] At paras 2-4, A:15-17 [7] C:123-2 [8] Item 2, Section A Scott Schedule, A:66 [9] Item 6, Section A supra [10] C:125 [11] C:162 [12] C:123-3 [13] C:120 [14] C:121 [15] C:123 [16] Per Annex 1 as attached to D’s AD&C, at A:38, and also at C:206 [17] C:123-1 [18] Exhibit P1A [19] C:205 [20] See para 42, statement of claim Exhibit D2 [21] See para 19, B:104 [22] C:123-4 to C:123-7 [23] C:173 [24] C:178-179 [25] C:181-184 [26] C:180 [27] C:153-160 [28] C:143 [29] See letter dated 11.08.15 from D’s solicitors, C:198-199 [30] At item 4, C:208 [31] C:209 [32] C:210 [33] C:214-215 [34] C:216 [35] C:162-169 [36] C:142-1 to 142-3 [37] A:32 [38] Exhibit D-1 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cases cited in this judgment
Further hearings and rulings under HCA 2161/2015