But Wai Sum v. But Wai Keung

HCA 244/2012

[2021] HKCFI 3708

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 244 OF 2012

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Before:  Deputy High Court Judge MK Liu in Court

Dates of Hearing: 22 - 25 March, 25 - 29 October & 16 December 2021

Date of Judgment:  23 December 2021

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JUDGMENT

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1.The dispute herein is a dispute between two brothers. The issue to be resolved by the court is who is the true owner of a property known as Flat A, 30/F, Tower 3, Tuen Mun Town Plaza, 1 Tuen Mun Street, Tuen Mun (“the TM Property”). The plaintiff (“P”) is the registered owner of the TM Property. However, most of the title deeds are in the defendant (“D”)’s possession. Each of them claims that he is the sole beneficiary owner of the TM Property.

2.D is the second eldest brother of P.  The eldest brother is the late Mr But Wai Tong (畢偉棠) (“Tong”).  P is the youngest one among the three brothers.  The three brothers were all born in Mainland China in the 1950s.  Tong came to Hong Kong in or about 1974, while D came to Hong Kong in about 1976, and P came to Hong Kong in about 1978.  Tong passed away on 1 August 2014.

3.Both parties are legally represented in these proceedings at all times, save that D was acting in person from 2 May 2018 to 17 September 2021.

A.  THE PARTIES’ RESPECTIVE CASES

4.I would first set out the parties’ respective pleaded cases.

A1.    P’s case

5.According to P’s pleaded case, when the three brothers reunited together in Hong Kong in or about 1978, they started selling handbags as hawkers in various areas of Hong Kong (“the Handbags Business”).  Each of them sold handbags at some particular areas in Hong Kong.  They decided to pool their incomes together to enhance their financial strength with the intention to purchase landed properties for each of them when there were sufficient savings from their pooled income (“the Pooled Fund”).

6.P claimed that there was an oral agreement among the three brothers (“the Oral Agreement”), by which they have agreed:

(1)  when there were sufficient savings in the Pooled Fund which were generated from the Handbags Business, landed properties would be purchased for each of the said three brothers, and each of them would have at least one property; and

(2)  the eldest brother would purchase a landed property by using the Pooled Fund first, and then D would be entitled to purchase a landed property by using the same fund, and thereafter it would be P’s turn to use the same fund to purchase a landed property.

7.Pursuant to the Oral Agreement, a property known as Flat 5, 9/F, Block B, Tung Lo Court, 136-154 Tai Po Road, Shamshuipo, Kowloon (“the SSP Property”) was purchased in or about 1981 in the name of Tong.  The SSP Property was purchased by using the Pooled Fund and without any mortgage.

8.The Handbags Business grew in the 1980s.  In or about 1986, the Handbags Business started to have its own retail shop.  Tong rented a shop situated at Shop 49, G/F Gala Shopping Mall, No. 56 Dundas Street, Kowloon (“the Gala Shop”) to sell handbags under a trade name of Wing Hing Handbag (永興手袋) (“WHH”).

9.In or about 1988, the Handbags Business expanded its business to involve processing works as well.  As such, a company known as Wing Hing Handbag FTY (永興手袋廠) (“Wing Hing FTY”) was established with Tong and D being the registered partners.  At that time, a factory unit situated at Room A, 5/F, Wing Hong industrial Building, 18-26, Kwai Fung Street, New Territories was rented for the processing works.  Although P was not named as a partner of Wing Hing FTY, it was agreed or understood by all the three brothers that Wing Hing FTY was just the operating name of the Handbags Business and P was one of the de facto partners of Wing Hing FTY.  P was also one of the de facto partners of the Handbags Business.  P’s main role in Wing Hing FTY and the Handbags Business was to oversee the production of handbags for the Handbags Business in Mainland China.

10.Pursuant to the Oral Agreement, in or about February 1990, a property known as Workshop No. 4, 14/F, Wang Lung Industrial Building, No. 11 Lung Tak Street, Tsuen Wan, New Territories was purchased in the name of D (“the TW Workshop”) at the consideration of HK$677,300.00. The deposits for purchasing the TW Workshop came from the Pooled Fund.  The remaining balance was paid by a mortgage loan obtained from the Citibank (“the Citibank Mortgage”).  The monthly mortgage repayments were all paid by money generated from the Handbags Business. In or about September 2001, the Citibank Mortgage was fully paid up and discharged.

11.When the TW Workshop was purchased in or about 1990, it was intended by all the three brothers that D would be the beneficial owner of this property.  However, this intention changed in or about 2001, when the three brothers agreed that D should buy a residential unit instead of having a workshop.

12.After the purchase of the TW Workshop by D, P should be the next one entitled to purchase a landed property in accordance with the Oral Agreement.  The TM Property was purchased and registered under P’s name in these circumstances.  The deposits for purchasing the TM Property came from the Pooled Fund.  The remaining balance was paid by a mortgage loan obtained from HSBC (“the HSBC Mortgage”).  The monthly mortgage repayments were all paid by money generated from the Handbags Business.  The sale and purchase agreement of the TM Property was signed on 31 August 1990, and the assignment was executed on 28 September 1990.  In or about July 2001, the HSBC Mortgage was fully paid up and discharged.

13.Pursuant to the Oral Agreement, the SSP Property, the TW Workshop, and the TM Property were beneficially owned by Tong, D and P respectively.  However, the beneficial ownership of the TW Workshop changed as a result of an agreement reached by the three brothers in 2001.

14.In or about 1990, D got married with his wife. At that time, P was based and lived in Mainland China overseeing the production of handbags for the Handbags Business and only occasioned lived in the TM Property when he returned to Hong Kong from Mainland China.  Upon D’s request, P agreed and allowed D and his wife to move into the TM Property to live therein.

15.In or about 1999, Tong suggested that D should purchase a residential property instead of owning the TW Workshop.  Therefore, in or about November 1999, a flat known as Flat F, 18/F, Tower 1, Royal Jubilee, 88 San Shing Avenue, Shek Wu Hui, Sheung Shui, New Territories (“the SS Property”) was purchased in the name of D in 2001 for a consideration of HK$ 1,828,000.  At the time of purchase, the SS Property was still under construction and was only completed in or about April 2001. The deposits for purchasing the SS Property came from the Pooled Fund.  The remaining balance was paid by a mortgage loan obtained from the Dao Heng Bank.  The monthly mortgage repayments were all paid by money generated from the Handbags Business.  The SS Property was sold by D for HK$1,280,000 in 2005.

16.After the purchase of the SS Property, the TW Workshop was no longer solely beneficially owned by D and was held by D on trust for the three brothers in equal shares.

17.In or around late 1998, P got married with his wife in Mainland China.  Since about 2001 and with the permission from D, P started living in the SS Property whenever he was in Hong Kong and had been living thereat until it was sold in 2005.  P’s wife and children would also stay at the SS Property whenever they came to Hong Kong to visit P.  P had to live in the SS Property, for the TM Property was occupied by D and his family.

18.While P was living in the SS Property, P put his belongings therein, including the title deeds of the TM Property (“the title deeds”).  In about early May 2005 (a couple of days before D needed to hand over the SS Property to the new owner), D removed all P’s belongings from the SS Property.  When questioned by P as to the whereabouts of the title deeds, D denied that he had taken them away and just replied that there were no such title deeds inside the SS Property.  Having obtained the reply, P then believed that the title deeds were lost.  Against such a background, P made a statutory declaration in or about August 2008 concerning the missing title deeds (“the SD”) when he applied for a banking facility with the Bank of China (Hong Kong) Limited in August 2008.  P claimed that he was under an honest belief that the title deeds were missing at the time of the SD.

19.P claimed that subsequently, P discovered that D in fact had been keeping the title deeds.  P discovered this because in D’s solicitors’ letter dated 23 December 2011, D solicitors said that that title deeds were in D’s possession.  D is keeping the title deeds without P’s consent.

20.P claims for a declaration that he is the sole beneficial owner of the TM Property, an order requiring D to deliver vacant possession of the TM Property to him, and an order requiring D to pay mesne profits to him.

21.In P’s Re-Amended Statement of Claim, P has made a claim concerning the TW Workshop.  However, in P’s opening submissions, Ms Gloriane YY Hui for P has made it clear that P would abandon the claim concerning the TW Workshop and would only pursue his claim concerning the TM Property. Accordingly, there would be no need for me to set out P’s pleaded case concerning the TW Workshop in this judgment.

22.P and Tong’s wife, Madam Wong Li Sheung (黃李嫦) (“Wong”) have given evidence in support of P’s case.  P has also produced a statutory declaration made by Tong on 30 July 2014, in which Tong confirmed the contents of a witness statement signed by him on the same date.  Ms Hui has invited me to attach weight to the matters said in Tong’s statutory declaration and in Tong’s witness statement. 

A2.    D’s case

23.According to D’s pleaded case:

(1)  He first joined his friend, Mr Ng Kong Yuen (“Ng”), who also came from Mainland China, to make and sell women handbags in about December 1977.

(2)  At the beginning, D and Ng made the handbags by themselves during day time and sold the handbags as hawkers at Tung Choi Street in the evening.  Subsequently, the business grew to such extent that they had to contract-out the final processing work to others.

(3)  The joint business of D and Ng continued until about late 1987.

(4)  Tong came to and settled in Hong Kong in about 1974, and had worked as a moulding worker until he joined D to form Wing Hing FTY in about 1988.

(5)  P came to and settled in Hong Kong in 1978.  When P first arrived in Hong Kong, he resided with D at a property rented by D.  P later worked as a furniture delivery worker for many years before he was employed to work in Wing Hing FTY as a casual worker in about 1988.

(6)  P was never a partner in Wing Hing FTY or in any other business with D.  P owned no interest or share in Wing Hing FTY or any other business run by D.  At the time when P arrived in Hong Kong, he owned no asset and he was fully dependent on the D financially.  P had no financial means to start any business or join any of D’s business, nor did he have any money to purchase any handbags to sell as a hawker.

(7)  The Pooled Fund as alleged by P is not true and has never existed.

(8)  The Oral Agreement as alleged by P is untrue.

24.Before establishing Wing Hing FTY, D was not in any business with Tong.  Tong did not have any involvement in D’s handbag business with Ng.  It was D alone, not the Tong, who rented the Gala Shop.

25.As to Wing Hing FTY,

(1)  Wing Hing FTY was a partnership formed by D and Tong in 1988 for the business of processing handbags.  Until its cessation in 2005, D and Tong were the only two partners each holding 50% share of Wing Hing FTY.

(2)  At the inception of Wing Hing FTY, the principal place of business was situated at Room A, 5th Floor, Wing Hong Industrial Building, 18-26 Kwai Chung Street, Kwai Chung, New Territories, which was a rented industrial unit.

(3)  Subsequently, D purchased the TW Workshop in 1990 as an investment.  All the purchase money of the TW Workshop, including the deposits and mortgage repayments, were paid by D using his own funds.  The TW Workshop was purchased in D’s name by D at the consideration of HK$677,300.

(4)  Since the TW Workshop was an industrial premises and since Wing Hing FTY was a business run by D himself and Tong, D used the TW Workshop as office and workshop to run the business of Wing Hing FTY.

(5)  P had at all the material times worked in Wing Hing FTY only as a casual worker/employee from June 1988 until 2005.  He owned no interest or share at all in the business of Wing Hing FTY.

(6)  There has never been any agreement among the three brothers in relation to the TW Workshop or the SS Property as alleged by P or at all.  It was the sole decision of D to purchase the SS Property for his own investment purpose.

26.In relation to the TM Property,

(1)  In or about August 1990, D intended to purchase the TM Property as his matrimonial home in anticipation of his marriage in October 1990.  D paid an initial deposit of HK$1,500 to Hong Yip Properties Agency Ltd (“Hong Yip’) and signed the provisional sale and purchase agreement as the intended purchaser.

(2)  At that time, D had just purchased the TW Workshop, which was mortgaged to Citibank.

(3)  Due to the political situation in Mainland China in 1989, the then market sentiment in 1990 was low and D had difficulties in finding a bank which was willing to provide another mortgage loan to him for the purchase of the TM Property.

(4)  At the request of D, P agreed with D the following arrangements (“the TM Property Agreement”):

(a)  The TM Property would be purchased by P for D and registered in the name of P in order to secure the required mortgage loan.

(b)  D would pay all the deposits required for the purchase of the TM Property, as well as the mortgage payments, and all other expenses concerning the TM Property.

(c)  P would own no beneficial interest in the TM Property.

(d)  P would transfer the legal title of the TM Property to D at the discharge of the mortgage or at any time at the request of D.

(5)  It was under the above agreement and understanding that P entered into a formal sale and purchase agreement (“the SPA”) with the vendor on 31 August 1990 for the purchase of the TM Property in his name at the consideration of HK$550,000.

(6)  It was also under the above agreement and understanding that D paid the conveyancing expenses and provided the total deposits of HK$55,000 as well as HK$50,000 for the interior decoration in the TM Property at the signing of the SPA.  D further provided a sum of HK$95,000 as part payment of the balance of the purchase price of the TM Property at completion of the SPA.

(7)  The remaining balance of HK$400,000 of the purchase price of the TM Property was paid by the HSBC Mortgage.  D provided money for the monthly mortgage repayments until the HSBC Mortgage was fully repaid in June 2001.  P redeemed the HSBC Mortgage in July 2001 without the D’s knowledge.

(8)  The sale and purchase of the TM Property was completed on 28 September 1990, and ever since then, D and his family have been residing therein.

27.As to the SS Property, since the SS Property was close to the border, D would stay in the SS Property occasionally when he returned late to Hong Kong after attending business in Mainland China.  He had also allowed P, Tong, and their mother to have a temporary stay there.  Tong and P used to have to work between Mainland China and Hong Kong and would stay in the SS Property when necessary for convenience.  P and his family did not reside in the SS Property as alleged by P.

28.As to the title deeds of the TM Property,

(1)  In about June 2001, the HSBC Mortgage was fully repaid.  The title deeds were subsequently returned to P in or about 2003.

(2)  Pursuant to the agreement between P and D, D requested P to transfer back the legal title of the TM Property to D.  P did not make the transfer as requested by D and just delayed taking action to effect the transfer.

(3)  P only reassured D by returning the title deeds and documents of the TM Property to the D for his custody in or about 2004.

(4)  It was under these circumstances that D is now in possession of the title deeds.

(5)  On 20 August 2008, when P made the SD, P was fully aware that the title deeds were in D’s possession.  The SD was falsely made by P.

29.D claims that he is the sole beneficial owner of the TM Property.  He seeks a declaration to that effect and an order requiring P to transfer the legal title back to him.  D also seeks an order requiring P to hand over the documents which may affect the title to the TM Property and are still in P’s possession to D.

30.D has given evidence in support of his case.  He has also filed a witness statement of Mr Leung Yau Cheung (梁有祥) (“Leung”) dated 5 December 2016.  However, Leung did not give evidence in the trial.  Mr Vicent Li (together with Mr Owen Tsoi) for D has made it clear that D would not rely upon Leung’s witness statement as evidence in this case.  I would not consider the matters mentioned in that witness statement.

B.  THE PRINCIPLES

31.There is no dispute that D bears the burden to show that legal ownership of the TM Property is different from the beneficial ownership of the same, ie notwithstanding the fact that P is the registered owner of the TM Property, D is the sole beneficial owner of the property and P is merely holding the property on trust for D.  D is relying upon the TM Property Agreement, which shows a common intention between P and D regarding the beneficial ownership of the TM Property.  D’s case is based upon constructive trust by common intention.

32.There can be a constructive trust in a domestic context by reference to common intention.  The principles have been recently succinctly summarized by Recorder Winnie Tam SC in Chin Nai Man v Chin Yat Keung Alex^[1], in which the learned judge said:

“9. It should first be noted that the plaintiff does not rely on express trusts, notwithstanding his case that there was an express agreement between the plaintiff and the defendant over the creation of trusts over the Six Properties. Any express trusts would have failed for formal requirements under s5(1) of the Conveyancing and Property Ordinance (Cap 219). Rather, the plaintiff relies on both resulting and constructive trusts.

10. The following legal principles are not in dispute. Legal ownership of a property is normally consistent with the beneficial entitlement. The onus is upon the person seeking to show that the beneficial ownership is different from the legal ownership: see Chan Hin v Chen Bai Dyi (unreported, HCA 680/2014, 25.7.2017, Anthony Chan J) at §21; Stack v Dowden [2007] 2 AC 432 at §§56, 68. In the present case, the burden rests on the plaintiff.

11. In a domestic context, if it is possible to resolve the matter by reference to common intention, there is no need to resort to resulting trust: see the recent Court of Appeal decision of Primecredit Ltd v Yeung Chun Pang Barry (unreported, CACV 246/2016, 21.7.2017) at §1.3 (per Lam VP).

12. In ascertaining the (alleged) common intention;

(a) The plaintiff must prove (i) there was a common intention between him and the defendant that the plaintiff was to be the beneficial owner of the property despite that it was acquired in the defendant’s name; (ii) the plaintiff altered his position in detrimental reliance upon such common intention; and (iii) it is unconscionable for the defendant to assert ownership in reliance on his legal title to the property;

(b) In ascertaining whether there was a common intention, it is the objective intention of each party which was reasonably understood by the other party to be manifested by that party’s words and conduct that one must examine;

(c) Such intention is to be found, first and foremost, from any agreement, arrangement or understanding reached between the parties with respect to the beneficial ownership of the property concerned based on evidence of express discussions. It is only where there is no evidence to support a finding of such an agreement or arrangement that the court seeks to infer from the conduct of the parties the relevant common intention;

(d) Even where reliance is placed on an express agreement, arrangement or understanding between the parties, their other conduct remains relevant as a matter by reference to which their assertions about the agreement or understanding must be gauged and tested.

See Liu Wai Keung v Liu Wai Man [2013] 5 HKLRD 9 at §§46‑50, Godfrey Lam J, approved in WML v LCK (unreported, CACV 82/2014, 27.2.2015 at §41).

13 The modern approach in conducting the assessment is to adopt a holistic approach having regard to the context. Context was even described as a “fundamental consideration”: Chan Hin v Chen Bai Dyi (unreported, HCA 680/2014, 25.7.2017).

14. In the context of a traditional Chinese family involving older generations, where explicit discussions on property rights within the family was not that common, the Court has to pay more regard to circumstantial matters: Primecredit Ltd v Yeung Chun Pang Barry (unreported, CACV 246/2016, 21.7.2017).”

33.As to the law on common intention constructive trust, see also the Court of Final Appeal’s decision in Luo Xing Juan v Estate of Hui Shui See^[2], and the Court of Appeal’s decision in Cheung Lai Mui v Cheung Wai Shing^[3].

34.The issues in a trial are defined by pleadings, not by evidence.  One cannot slip in an unpleaded issue by saying that there is evidence on the issue.  As said by Ma CJ in Kwok Chin Wing v 21 Holdings Ltd^[4]:

“21. It should by now really be quite unnecessary to issue yet another reminder on the rationale behind pleadings. The basic objective is fairly and precisely to inform the other party or parties in the litigation of the stance of the pleading party (in other words, that party’s case) so that proper preparation is made possible, and to ensure that time and effort are not expended unnecessarily on other issues: - Wing Hang Bank Limited v Crystal Jet International Limited [2005] 2 HKLRD 795, 799 [6(1)]. It is the pleadings that will define the issues in a trial and dictate the course of proceedings both before and at trial. Where witnesses are involved, it will be the pleaded issues that define the scope of the evidence, and not the other way round. In other words, it will not be acceptable for unpleaded issues to be raised out of the evidence which is to be or has been adduced. As the Court of Appeal remarked in Wing Hang Bank Limited v Crystal Jet International Limited: -

‘(2) In a trial, particularly where evidence is given by witnesses, it becomes extremely important that each side knows exactly what are the live issues. Where issues are sought to be introduced that have not been adequately or properly pleaded, amendments must be sought unless the consent of the other party or parties has been obtained. It will simply not do for unpleaded issues to be “slipped in” when evidence is being given in the hope that the other side is not sufficiently alert to object.’

22. …… one does not sift through the evidence adduced in a trial in the hope that something was said that can conceivably found a cause of action. Issues, I would reiterate, must be properly pleaded unless for some reason the pleadings have assumed a less significant role in the proceedings.” (Emphasis added)

35.As to assessing the credibility and reliability of witnesses, a succinct summary of the guiding principles can be found in Lee Fu Wing v Yau Po Ting Paul^[5], in which DHCJ Au (as he then was) said:

“53. In assessing the credibility of a party’s case on a particular issue, I accept the submissions of [counsel] that the Court should take into considerations the following: -

(1) Whether the party’s case is inherently plausible or implausible.

(2) Whether the party’s case is, in a material way, contradicted by other evidence (documentary or otherwise) which is undisputed or indisputable.

(3) Where it is shown that a witness has been discredited over one or more matters to which he has given evidence using the above tests. This is relevant to the assessment of his overall credibility.

(4) The demeanour of the witnesses.”

36.Where there is a long passage of time between the events and the trial, contemporaneous documentation is of particular importance.  In Esquire (Electronics) Ltd v Hong Kong and Shanghai Banking Corp Ltd ^[6], Stock JA (as he then was) said:

“…… Comparison with contemporaneous documentation is always an aid to reliability of oral testimony, unless there is reason to believe that the documentation is contrived or materially incomplete; but where the passage of time between events and trial is as long as it was in the present case, and where there is such a host of contemporaneous documentation, as there was in this case, the documentation must, I would have thought, assume a special importance. ……

I would venture to suggest that the truth, in so far as one is able to reach it or, as is sometimes the case, to reach a version of it that is more likely to be correct than not, can best be tested by reference to contemporaneous documentation where it exists, or to its absence where one would expect it to have been created, as well as to inherent probabilities (though bearing in mind that there may be occasions where the truth may run against that particular grain) having regard to all the facts that are known. This is particularly so in a case such as the present, where events have taken place so long before trial and where there exists a mountain of contemporaneous documentation that can be used to point the way. This is not to say that the documentation should have been treated as if it stood on its own, not to be explained, contradicted or supported by oral testimony. It is however to say that in this case the approach adopted to assessment of the facts placed far too much emphasis on character impression and too little upon what was suggested by the documentation and by the inherent probabilities in their historical context. That documentation, as well as conflicts within the evidence, inherent probabilities, and a study of how matters were originally pleaded and asserted in witness statements – these are the factors which in a trial such as this, so long removed from the time of the events in question, were likely to be of particular use in assessing the facts ……” (Emphasis added)

37.In respect of disputes between family members, the following have to be borne in mind:

(1)  In Chen Tek Yee & Ors v. Chan Moon Shing^[7], Yuen JA said:-

“29. …… when the parties are in a personal relationship (as contrasted with parties in a commercial transaction), it would be unrealistic to expect written records of assurances ……”

(2)  Similarly, in Cheung Lai Mui v. Cheung Wai Shing & Ors^[8], Wilson Chan J said:

“95. …… Members of the family dealt with each other on the basis of trust, not mistrust. They could not have envisaged litigation in the future, and they would not have generated records to protect themselves out of the blue.”

C.  THE EVIDENCE

C1.    Contemporaneous documentary evidence

38.There has not been any notice filed under Order 27 rule 4(2) disputing the authenticity of any document disclosed in the parties’ respective lists of documents.  Accordingly, each party is bound by the deemed admission set out in Order 27 rule 4(1), ie

(1)  any document described in the other party’s list of documents as an original document is such a document and was printed, written, signed or executed as it purports respectively to have been, and

(2)  that any document described therein as a copy is a true copy.

39.Mr Li has drawn my attention to two categories of contemporaneous documentary evidence, which (according to Mr Li) clearly support D’s case:

(1)  Documents showing that D has paid the purchase price and mortgage repayments of the TM Property;

(2)  Documents showing P’s role in Wing Hing FTY.

40.As to the payment of the purchase price and the mortgage repayments concerning the TM Property, the following matters have been shown in the contemporaneous documents.

41.As per the SPA dated 31 August 1990:

(1)  the purchase price would be in the sum of HK$550,000;

(2)  the purchaser paid a total sum of HK$55,000 (HK$10,000 of which was initial deposit to the vendor; and the rest would be paid to the law firm - Lo, Wong & Tsui as stakeholders);

(3)  a sum of HK$10,000 was received by the vendor as initial deposit;

(4)  a sum of HK$45,000 was received by Lo, Wong & Tsui as stakeholders;

(5)  a sum of HK$50,000 was received by the vendor for the interior decoration inside the TM Property;

(6)  the balance of purchase price of HK$495,000 would be paid on the completion date, which should be on or before 29 September 1990.[9]

42.As the mortgage loan from the HSBC Mortgage was in the sum of HK$400,000, the balance of purchase price to be paid less mortgage would be HK$95,000.

43.The cheque stubs of D’s personal bank account at Hang Seng Bank show that the D has made payments which are more or less consistent with payments stipulated in the SPA:

(1)  Cheque stub number 611212 dated 31 August 1990 in the sum of HK$55,000 was drawn to the law firm handling the sale and purchase of the TM Property, representing the initial deposit to the vendor (ie HK$10,000) and further deposit to the law firm (ie HK$45,000).

(2)  Cheque stub number 611217 dated 28 September 1990 in the sum of HK$50,000 was drawn to the vendor of the TM Property, representing the payment for the interior decoration inside the TM Property (HK$50,000).

(3)  Cheque stub number 611218 dated 28 September 1990 in the sum of HK$95,000 was drawn to the law firm handling sale and purchase of the TM Property, representing the balance of purchase price less the mortgage loan obtained from HSBC (ie HK$495,000 – HK$400,000).

44.I say that the cheque stubs are more or less consistent with payments stipulated in the SPA.  There is no perfect match between the cheque stubs and the payments recorded in the SPA.  The discrepancies are as follows:

(1)  In the SPA, it is recorded that the initial deposit of HK$10,000 “had been paid to the Vendor by the Purchaser prior to the execution hereof”.  However, according to the cheque stub number 611212, the initial deposit of HK$10,000 and the further deposit of HK$45,000 were paid in one go and were paid to the law firm on the date of the SPA.

(2)  As per the SPA, the HK$50,000 for the interior decoration inside the TM Property was paid to the vendor on the date of the SPA.  However, as per the cheque stub number 611217, that cheque was drawn on the actual completion date, ie 28 September 1990.

45.Notwithstanding the aforesaid discrepancies, I accept that the amounts as recorded in the cheque stubs are the payments of the corresponding sums shown in the SPA as submitted by Mr Li.

(1)  P is bound by the deemed admission in Order 27 rule 4(1) and the authenticity of the cheque stubs cannot be disputed.  There is no reason to say that D would make some false records on the cheque stubs in 1990 to plan for the present litigation.

(2)  Cheque stub number 611212 was dated 31 August 1990, resembling the date of the SPA.  Cheque stubs number 611217 and 611218 were dated 28 September 1990, which was the actual completion date.

(3)  Under cross-examination, D explained that the later two cheques, ie 611217 and 611218, were, upon the vendor’s request, handed to the vendor in one go upon completion, and at the same time D got the keys from the vendor.  D explained that such arrangement was based on the trust and confidence between D and the vendor.

(4)  P has not produced any document showing how the amounts recorded in the SPA were paid.

(5)  With all the aforesaid in mind, I accept the explanation given by D, and I also accept the submission made by Mr Li that the amounts as recorded in the cheque stubs are in fact the payments of the corresponding sums shown in the SPA.

46.The cheque stubs of Wing Hing FTY’s account with the Sin Hua Trust, Savings & Commercial Bank Ltd support that the mortgage repayments concerning the TM Property were made by D:

(1)  The monthly mortgage repayment of the TM Property was about HK$4,000 and that of the TW Workshop was about HK$6,000.

(2)  Cheque stub number 533415 in the sum of HK$12,000 dated 24 January 1991 was drawn to D for the purpose of “供廠樓屯門樓”.

(3)  Cheque stub number 560351 in the sum of HK$12,000 dated 7 March 1991 was drawn to D for the purpose of “公樓”[10].

(4)  Cheque stub number 560376 in the sum of HK$12,000 dated 23 April 1991 was drawn for the purpose of “公廠樓”[11].

(5)  Cheque stub number 560399 in the sum of HK$12,000 dated 16 July 1991 was drawn for the purpose of “供廠樓屯門樓”.

(6)  Cheque stub number 560410 in the sum of HK12,000 dated 14 August 1991 was drawn for the purpose of “供樓”.

(7)  Cheque stub number 560415 in the sum of HK$12,000 dated 2 September 1991 was drawn to D for the purpose of “供屯門樓”.

(8)  Cheque stub number 719179 in the sum of HK$12,000 dated 16 January 1992 was drawn for the purpose of “供廠樓屯門”.

(9)  Cheque stub number 417867 in the sum of HK$6,000 dated 14 December 1995 was drawn to D for the purpose of “樓”.

47.Mr Li submits that:

(1)  The aforesaid cheque stubs from the Wing Hing FTY’s account show the amounts of HK$12,000 or HK$6,000.  The amount of HK$12,000 would be sufficient to cover the mortgage repayments of both the TM Property and the TW Workshop.  In the case of the cheque stub of HK$6,000, that would be sufficient to cover the mortgage repayment of the TM Property.

(2)  As shown in the documents, Wing Hing FTY’s yearly profit was almost invariably in the range of around HK$200,000 to around HK$400,000.  Splitting the profits between Tong and D in equal shares, the occasional withdrawal of HK$12,000 from Wing Hing FTY by D for the purpose of repaying mortgage fell within D’s entitlement to the profits from Wing Hing FTY.

48.Bearing in mind that there are also clear references to 廠樓 and 屯門樓 on these cheque stubs, and bearing in mind that the authenticity of these cheque stubs cannot be disputed, I agree with Mr Li and accept the submission made by him.

49.D also relies upon a receipt issued to him by Hong Yip dated 20 August 1990.  The receipt shows that Hong Yip received a sum of HK$1,500 from D for “屯門市廣場 3A 30/F”.  There cannot be any doubt that the property mentioned in the receipt is the TM Property.  As to the nature of this payment, the evidence is not clear.  The nature of the payment has not been set out in the receipt.  In D’s evidence, D said that the HK$1,500 was “initial deposit”. However, I note that the sum was paid to the estate agent, not the then owner of the TM Property.  Be that as it may, the receipt is a contemporaneous document showing that D himself did make payment to the estate agent concerning the purchase of the TM Property.

50.As to P’s role in Wing Hing FTY, the contemporaneous documentary evidence shows that P was merely an employee, and not a partner of Wing Hing FTY.

51.As per Wing Hing FTY’s business registration dated 27 April 1988, Wing Hing FTY was a partnership formed on that date, and Tong and D were the only two partners of Wing Hing FTY.

52.There is a handwritten record concerning the partners and the employees of Wing Hing FTY (“the Handwritten Record”).  At an early stage of P’s stage, P confirmed that the handwriting on that record was Tong’s handwriting.  However, at a later stage of P’s evidence, P averred that the Handwritten Record was a forged document.  No notice disputing the authenticity of the Handwritten Record has ever been filed by P.  After P finishing his evidence, I asked Ms Hui whether P would seek leave to dispute the authenticity of the Handwritten Record.  After taking instructions, Ms Hui told me that P would not apply for such leave.  In the circumstances, P must be bound by the deemed admission in Order 27 rule 4(1) and the Handwritten Record must be treated as an authentic document.  Based upon the confirmation given by P in his evidence, the Handwritten Record was made by Tong.

53.The Handwritten Record contains the following:

(1)  The Handwritten Record was made on papers bearing the name, the address and the telephone number of Wing Hing FTY at the top of each page.

(2)  The personal particulars and the salaries of certain employees were put down in the record.

(3)  Tong and D were recorded as “東主” of Wing Hing FTY.  Under their names, there were the words “月薪” with no specified figure next to them.

(4)  P’s name, HKID Number, and address were recorded in this document.  Under P’s name, it was recorded “月薪2900: 1988年6月份开工”.

(5)  The words “東主” only appear under Tong’s name and D’s name, but not under P’s name.

54.In my view, the Handwritten Record is a clear documentary evidence showing that P was merely an employee and not a partner in Wing Hing FTY.  The fact that the Handwritten Record was made by Tong carries considerable weight, for this means that the Handwritten Record is a document from an independent source.  I attach full weight to the Handwritten Record.

55.There is also a tax return signed by P for 2002/2003 (“the Tax Return”).  In the Tax Return, P stated that he worked in Wing Hing FTY as a “什工” for the period between 1 April 2002 and 31 March 2003, and earned a total income of HK$48,000.  Immediately above P’s signature on the Tax Return, there is a declaration in the following terms:

“本人謹此聲明，在此報稅表及其附錄(如適用)，以及所有附件所填報的資料均屬真確，並無遺漏。”

56.Under cross-examination, P agreed that he had signed the Tax Return.  However, P said that when he signed the Tax Return, the Tax Return was a blank form.  At that time, he needed to rush back to Mainland China to look after some business.  The information therein was filled in by his wife after he signed the form.  In my judgment, P’s evidence is inherently improbable and I refuse to accept the same.  There was very little information in the Tax Return.  Any reasonable person would only need to spend a few minutes to fill in such information.  Even if P would need to rush back to the Mainland, that would not prevent him from spending a few minutes to fill in the Tax Return first.  In any event, even if there is any truth in P’s explanation, this does not mean that his wife would fill in incorrect information on P’s behalf.

57.In my judgment, there is no reason why P should not be bound by the information as set out in the Tax Return.

58.There are also records showing Wing Hing FTY’s profits from 1992/1993 to 2001/2002.  As revealed by these records:

(1)  Wing Hing FTY’s profits in these years were mostly in the range around HK$200,000 to around HK$400,000 a year.

(2)  Tong and D split the profits in equal shares each year.  P did not have any share in the profits.

59.Ms Hui has drawn my attention to the tenancy agreement of the Gala Shop signed by “BUTT WAI TONG trading as WING HING HANDBAG” dated 9 May 1986 (“the Gala TA”).  Ms Hui submits that the Gala TA is a contemporaneous document supporting P’s case. 

60.Having considered the evidence, with respect, I cannot accept Ms Hui’s submission.

(1)  As to the Gala TA, P’s evidence is that in or about 1986, Tong rented the Gala Shop under the trade name of WHH.  P claimed that as a partner of the business, he had assisted in managing the Gala Shop.

(2)  However, as per the Gala TA, WHH was a trade name used by Tong alone.  In other words, WHH was a sole proprietorship operated by Tong.  The Gala TA certainly does not show that P was a partner in WHH.

(3)  Regarding the Gala Shop, D’s evidence is that although the tenancy agreement was signed by Tong, D was the one renting the shop behind the scene.  The fact that the Gala TA was signed by Tong was due to Tong’s fleeting involvement in D’s handbag business during Tong’s sick leave. In around 1985, Tong suffered an industrial accident and his shoulder was burnt severely.  During Tong’s sick leave period, D wanted to rent a shop at Gala Shopping Mall to sell some leather handbags.  However, as D was having a business with Ng at that time, D was unable to handle two businesses at the same time.  So D asked Tong to help to handle the matters relating to the shop, including signing the tenancy agreement and supervising the staff.  However, after Tong has fully recovered, Tong decided to return to work in the moulding factory.  Since D had not hired any staff to work at the shop, the shop was closed within a short period of time, well before the end of the term of the tenancy.

(4)  In my view, the Gala TA cannot be said as a contemporaneous document supporting P’s case.  In particular, the Gala TA certainly cannot show that WHH was a partnership business, with all the three brothers being the de facto partners.  Further, having considered all the evidence as a whole, I am of the view that there is no basis to doubt D’s explanation concerning the Gala TA. 

61.In my judgment, the contemporaneous documentary evidence is clearly in support of D’s case and is contradicting P’s case.

C2.    P

62.Having seen and heard P’s evidence, I am of the view that P is an untruthful and unreliable witness.  He is evasive and would often shy away when he was confronted by questions based upon contemporaneous documentary evidence.  His evidence is inherently improbable on various material aspects.

63.In his evidence, P said:

(1)  The three brothers engaged in the Handbags Business since 1978 as partners despite P having limited financial resources at that time.

(2)  In or about 1978, the three brothers decided to pool their incomes together to form the Pooled Fund to allow them to buy landed properties in turn and made the Oral Agreement.

(3)  In about 1988, Wing Hing FTY was established with Tong and D being the registered partners, but P was also a de facto partner of Wing Hing FTY.

(4)  In about 1981, the SSP Property was purchased by funding from the Pooled Fund and registered in the name of Tong pursuant to the Oral Agreement.

(5)  In about 1990, the TW Workshop was purchased by funding from the Pooled Fund and registered in the name of D pursuant to the Oral Agreement.  The mortgage repayment was funded by the Pooled Fund.

(6)  In about 1990, after the TW Workshop was purchased, the TM Property was purchased by funding from the Pooled Fund and registered in the name of P pursuant to the Oral Agreement.

(7)  However, the TM Property was used as the matrimonial home of D because of the following circumstances.  In 1990, D was about to get married and was looking for a residential unit as the matrimonial home.  The father of D’s fiancée offered to purchase a residential unit as the matrimonial home of the new couple.  Tong disagreed with this arrangement and insisted on purchasing the TM Property under P’s name, but the TM Property would be used as the matrimonial home of D and his wife.  P also agreed that D and his wife would live in the TM Property.

(8)  In about 2001, the SS Property was purchased by funding from the Pooled Fund and registered in the name of D pursuant to the Oral Agreement.  At that time, it was thought that D should have his own residential property.  P stayed in the SS Property and placed the title deeds of the TM Property inside the SS Property.

64.As said in the above, P’s case is contradicted by contemporaneous documentary evidence.  Further, P has not been able to produce any contemporaneous documents in support of his own case.  This is a significant factor in assessing the credibility and reliability of P’s evidence.

65.P’s allegation that he was a de facto partner of the Handbags Business and later a de facto partner of Wing Hing FTY is inherently improbable and cannot be true.

(1)  There is no credible and reliable evidence showing that P has injected any realistic resources into the partnership. Further, there is also no credible and reliable evidence showing that P would suffer any loss personally if the partnership has any losses.

(2)  P claimed that he had taken part in the management of Wing Hing FTY, but was unable to tell the particulars of his management duties in Wing Hing FTY.  When being pushed, P could only say that he was responsible for handling handbag samples, designing and at most overseeing other workers.  He admitted that he was not involved in accounting nor hiring of workers.  However, even if P was really responsible for such jobs in Wing Hing FTY as claimed by him, that would not lead to the conclusion that he was a partner of Wing Hing FTY.  Those jobs could also be done by an employee of Wing Hing FTY.

(3)  When being asked whether he knew any of the employees mentioned in the Handwritten Record, P replied in the negative.  It is inherently improbable that P was managing Wing Hing FTY, when he knew none of the employees of Wing Hing FTY. 

(4)  When being asked the role of a partner in a business, P admitted that he did not know.  P went further to say that he was only educated up to primary 3 level, and Tong would decide everything.  While P did not know what a partner should be responsible for and while it was Tong who made every decision, it would be difficult to imagine how P could claim that he was managing Wing Hing FTY in these circumstances.

66.P claimed that the three brothers were the de facto partners of Wing Hing FTY.  The reason for only registering Tong and D as partners of Wing Hing FTY was for the purpose of protecting P.  If anything happened to the partnership, P would be unaffected.  P said that this was Tong’s idea.  In my view, P’s evidence on this point is problematic.

(1)  Under cross-examination, P was asked whether sole proprietorship would offer a better risk protection than a partnership, ie the business was run by only one brother de jure, but was owned by the three brothers de facto.  P said that the three of them would need to shoulder risks, and if the business was only registered under one brother’s name, it would not be a “合作”.

(2)  Clearly, P’s answer has contradicted his own evidence.  If P’s answer is true, that would be no reason not naming P as a registered partner of Wing Hing FTY.  On the other hand, if offering protection to the brother(s) is important, the best idea would be having a sole proprietorship and not a partnership as suggested by Mr Li.

(3)  P could offer no satisfactory answer on the point.  This also undermines P’s evidence.

67.P claimed that he had the right to check the bank passbooks of Wing Hing FTY so that he could get an idea of Wing Hing FTY’s profits and losses.  However, this episode has not been stated in his witness statement and is merely an answer given by P in response to the question from the bench.  I am of the view that there is inherent improbability in this answer.  If P had really been given the right to monitor Wing Hing FTY’s accounts, P would have had been made as an authorized signatory of those accounts.  Although P was not a registered partner of Wing Hing FTY, if both Tong and D agreed, Tong and D could still make P as an authorized signatory of Wing Hing FTY’s accounts.  However, as admitted by P, only Tong and D were the signatories of Wing Hing FTY’s accounts.  That being the case, it is inherent improbable that P was given the right to monitor Wing Hing FTY’s accounts.  

68.As to the Pooled Fund, P alleged that Tong would keep accounts of the Pooled Fund and would decide how to utilize the same.  P claimed that Tong would deposit some of the Pooled Fund into the respective accounts of the three brothers for future use.  As submitted by Mr Li, P’s evidence is inherently improbable and does not make any sense.

(1)  It does not make sense for Tong to deposit sums into the three brothers’ respective accounts, as that would simply make the account taking exercise difficult or impossible.

(2)  P alleged that the three brothers’ respective accounts were kept and managed by Tong and they would not withdraw money from their accounts because they were bound by the Oral Agreement.  If that was true, depositing sums into separate account would serve no useful purpose and would only create confusion.

(3)  Under cross-examination, P in fact admitted that he could access his bank account and took money out of it if he wished to.  This highlights the inherent improbability of the such arrangement as alleged by P, as Tong would be unable to keep track of the flow of funds with certainty.

69.In his oral evidence given at the trial, P claimed that Tong told him that it was better to distribute the incomes generated by Wing Hing FTY into the respective accounts of the three brothers to reduce the risk in view of the tax issue.  I am unable to accept this answer:

(1)  This has not been stated in P’s witness statements at all and was only mentioned by P for the first time in his oral evidence. Given that the Pooled Fund arrangement is an essential feature of P’s case and that P has been represented by lawyers at all times in these proceedings, it is inherently improbable that P would miss this part in any of his witness statements, if there is any truth in this allegation.

(2)  P could not tell that by this operation, what kind of risk in relation to which tax could be reduced.  Without these essential details, the operation as alleged by P does not make any sense. 

70.I agree with Mr Li that a more consistent and reasonable reading of the circumstances must be that there were no Pooled Fund at all, and the money deposited into the three brothers’ respective accounts were in fact their respective remunerations received from Wing Hing FTY.

71.As to when and how the alleged Oral Agreement was reached, P could not give clear evidence on these important matters.  In my view, the alleged Oral Agreement is based upon the Pooled Fund as suggested by P.  While the allegation concerning the Pooled Fund is untrue and the Pooled Fund in fact does not exist, naturally P could not tell when and how the alleged Oral Agreement was made.

72.That the alleged Oral Agreement is untrue can also be revealed by examining the circumstances concerning the TW Workshop as alleged by P.  According to P, Wing Hing FTY was a partnership business of the three brothers.  Wing Hing FTY was running its business at the TW Workshop. According to P’s case, the TW Workshop was a property beneficially owned by D under the Oral Agreement.  That would mean that Tong and the P were utilizing the TW Workshop at D’s expense, while they enjoyed the fruit of the business by purchasing their own residential properties, leaving D to sort out his own living arrangement himself.  It is inherent improbable that D would have agreed to such an unfair arrangement.

73.P claimed the sources of money used for monthly mortgage repayment of the TM Property were from profits generated from the business of Wing Hing FTY.  P said that that he almost received no income from Wing Hing FTY except bonus, his daily living expenses, and the funds required for the acquisition of the TM Property.  These returns were his rewards for working at Wing Hing FTY.  Since he was often working in the Mainland and was seldom in Hong Kong, Tong would deposit the funds required for mortgage repayments of TM Property into P’s own saving account held with HSBC, and the monthly mortgage repayments would be deducted from that account.

74.P has not produced any contemporaneous documentary evidence in support of his allegation.  At the same time, P’s evidence is contradicted by the cheque stubs mentioned in [46] above.  The cheque stubs show that the money from Wing Hing FTY was paid to D, and D would use the money to pay the mortgage repayments concerning the TM Property.

75.Regarding the title deeds, P’s evidence given in the witness box is contradicted by what he has said in the SD.

(1)  In the SD, P said:

“I, BUT WAI SUM …… of [the address of the TM Property] do hereby solemnly sincerely and truly declare as follows: -

……

2. After completion of the registration of the Release Memorial No. …, all the title deeds and documents of [the TM Property] were returned to and kept by me in my residence at the aforesaid address.

……

5. After conducting an exhaustive search at my residence, it was discovered that the original of those title deeds and documents as set out in the Schedule hereto … of [the TM Property] cannot be found or traced and I verily believe the same have been lost and cannot be found.” (Emphasis added)

(2) However, in his evidence given in the trial. P said that he placed the title deeds in the SS Property at all times. In about early May 2005, D removed all the P’s belongings from the SS Property. In answering the enquiries made by P, D denied that he had taken away the title deeds and said that there were no such title deeds inside the SS Property.

(3) The contents of the SD and P’s evidence given in the trial clearly contradict with each other.

76.P tried to explain the contradiction by saying the following:

(1)  He did not have any residential address in Hong Kong since May 2005, after he was evicted by D from the SS Property.

(2)  P agreed that it would not be correct to state the TM Property as his residential address in the SD.  At the time of SD, he was under an impression that it would be necessary to put down a residential address in Hong Kong in the SD.

(3)  He did not pay particular attention to the contents of the SD when the contents were being interpreted to him.

77.P said that he originally kept all the title deeds inside the TM Property after redeeming the mortgage.  Later, he wanted to take all the title deeds to the Mainland.  He found that the title deeds were heavy.  Therefore, he only took part of the title deeds to the Mainland and left the remaining in the TM Property.  As to the reason why he failed to mention that he in fact kept part of the title deeds in his witness statements, he admitted that it was his fault.

78.In my view, the matters said by P as summarized in [76] and [77] above are matters made up by P in the witness box and untrue. I refuse to accept all these matters said by P.

(1)  The SD was prepared by a law firm representing P at that time.  In these circumstances, it is inherently improbable that P would be under a misimpression that he must put down a Hong Kong residential address in the SD.

(2)  The TM Property has been stated as P’s residence in the SD.  This must be the result of an express instruction from P.

(3)  It would be contrary to common sense to have title deeds separately stored at different places, particularly when one of the places is a place in the Mainland.  It would certainly be a troublesome exercise to carry such important documents to a place which is far away, and there would be inherent risk in doing so.

(4)  P has been legally represented in these proceedings at all times, and P has never disclosed that he is in possession of any part of the title deeds.

79.The unreliability of P’s evidence is also shown by the answers given by P concerning the Handwritten Record as mentioned in [52] to [54] above.  As said in the above, at an early stage, P has confirmed that the Handwritten Record was made by Tong.  However, at a later time, when being pressed by questions based upon the Handwritten Record, P said that the Handwritten Record was a forged document.  No notice disputing the authenticity of the Handwritten Record has ever been filed by P.  After P finishing his, in response to the question from the court, Ms Hui told me that P would not seek leave to challenge the authenticity of the Handwritten Record.  In the circumstances, I must proceed on the basis that the Handwritten Record is an authentic document.  The inevitable conclusion is that under cross-examination, facing unanswerable questions based upon the Handwritten Record, P told a lie and alleged that the Handwritten Record was a forgery.  The untrue evidence given by P concerning the Handwritten Record has seriously undermined the reliability of his evidence as a whole.

80.For all the reasons set out in the above, I conclude that P’s evidence is untrue and unreliable.  Save and except those parts which are consistent with D’s case, I refuse to accept P’s evidence in its entirety.

C3.    Wong

81.Wong mentioned the following in her evidence:

(1)  Wong came to know Tong in 1985.  She married to Tong in or about 1986.  At that time Tong, D, and P were running the Handbags Business together.

(2)  She came to know the Oral Agreement and the Pooled Fund arrangement from the three brothers.

(3)  She assisted Tong to deposit money into the mortgage repayment account of the TW Workshop.

(4)  She assisted P in paying bills concerning the TM Property.

(5)  She assisted D in finding the SS Property, and she learned from the three brothers that it was purchased for D’s family to live in.  However, D did not move in and P moved in instead.

(6)  Tong handled all the purchasing matters of the SS Property.  The down-payment of the SS Property was over HK$1 million.  Tong asked her to take out cash of HK$800,000 from her safe deposit box to pay part of the down-payment.  The remaining balance was paid by money from the Handbags Business.

82.As admitted by Wong, she only came to know Tong in 1985.  Accordingly, as to the matters among the three brothers before 1985, Wong would not have any personal knowledge of those matters.  That would include whether the Pooled Fund arrangement and the Oral Agreement as alleged by P are true or not.

83.As to the setting up of Wing Hing FTY, Wong mentioned the following in her evidence:

(1)  Wong said that at one time, there was a discussion between Tong and D inside the SSP Property concerning the setting up of Wing Hing FTY.  P was not there at that time.

(2)  Wong was inside the SSP Property at that time, but she did not participate in the discussion.  She was doing something else inside the unit at that time.  She did not hear the entire discussion between Tong and D.

(3)  This was the only occasion that she was aware of the discussion concerning the setting up of Wing Hing FTY.

84.As to the episode that following Tong’s instruction, Wong took out HK$800,000 from her safe deposit box to pay for part of the down-payment of the SS Property, I am unable to accept that this is a true.

(1)  Under cross-examination, Wong said that she would place revenue money from Wing Hing FTY into the safe deposit box.  She claimed that Tong instructed her to do so, for Tong wanted to conceal some incomes of Wing Hing FTY, so that Wing Hing FTY would be able to pay less tax.  She said that at one time, there was a total amount of HK$800,000 cash in the safe deposit box, and there were also some other items like ornaments in that safe deposit box.

(2)  Initially, she clearly and unequivocally said that the money in the safe deposit box was all HK$500 notes.  I then asked Wong to explain why all the payments received by Wing Hing FTY from its customers were HK$500 notes and why there was no bank note in any other denomination. Wong then changed her evidence and said that there were also some HK$100 notes.  The change in her evidence is odd.  In my view, the abrupt change in her evidence showing that her evidence is untrue and unreliable.

(3)  Wong claimed that there was no record made as to the amount of cash inside the safe deposit box from time to time.  In my view, it is inherently improbable that such record has never been made.  Bearing in mind that the money kept in the safe deposit box was cash and was Wing Hing FTY’s property, and bearing in mind that Wing Hing FTY was a partnership owned by the three brothers in equal shares (according to P’s case), it is inherently improbable that Tong would not make and would not keep any record showing the amount of cash in the safe deposit box from time to time.

(4)  Wong said that she took out the HK$800,000 from the safe deposit box, and took the cash back to her home and kept the money inside the safe in her home.  At a later time, Tong used the money to pay part of the down-payment of the SS Property.  With respect, Wong’s evidence is perplexing and cannot be accepted.

(a)  If it would be safe to keep HK$800,000 inside the safe in her home, Wong would have no need to take the money to the bank and place the same inside the safe deposit box in the bank in the first place.

(b)  If it would not be safe to keep HK$800,000 in the safe in her home, Wong would have no reason to take out the HK$800,000 from the safe deposit box in the bank and place the same inside her home.

85.In my view, Wong’s evidence cannot shed any light on the crucial issues in these proceedings.  Clearly, Wong cannot tell from her personal knowledge whether the Pooled Fund arrangement and the Oral Agreement as alleged by P are true or not.  Wong also cannot tell from her personal knowledge whether Wing Hing FTY was owned by the three brothers or by Tong and D only.  Further, for the reasons set out in [84], at least part of her evidence is untrue, and that affects the reliability of the other parts of her evidence.  I decline to attach any weight to Wong’s evidence.

C4.    Tong’s witness statement and statutory declaration

86.As mentioned in the above, Tong passed away on 1 August 2014.  Tong signed his statutory declaration and his witness statement on 30 July 2014, just two days before his death.  P has produced a medical certificate signed by a doctor, showing that Tong was able to understand everything and signed the statutory declaration and the witness statement without any undue influence from anyone on 30 July 2014.

87.The doctor has not said why he could conclude that Tong was able to understand and to confirm the contents of the statutory declaration and the witness statement on 30 July 2014.  The statutory declaration and the witness statement were signed by Tong just two days before his death.  In these circumstances, one would expect that some examinations would be done to check whether Tong had the mental capacity to make the statutory declaration and the witness statement on 30 July 2014.  However, based upon the evidence before the court, it is not known whether such examinations have been performed, and if yes, what were the outcomes of those examinations.

88.Even if I put aside the aforesaid matters, and even if I take the opinion set out in the medical certificate on its face value, I am of the view that no weight should be given to Tong’s statutory declaration and witness statement in any event.

89.Regarding Tong’s evidence, P said the following in his witness statement dated 23 December 2016:

“44. Tong has always been willing and prepared to be my witness to support my claim against [D]. Upon Tong’s instructions, [the solicitors then acting for P in this case] has prepared a witness statement for his signing. Unfortunately Tong became seriously ill in or about early 2014 because of liver cancer. He passed away on 1^st August 2014. However, before his death, on 30^th July 2014, Tong signed his witness statement and a declaration confirming the truth of the contents stated in his witness statement. ……”

90.In Ko Nga Chun v Companhia De Desenvol Vimento Wui San Limitada & Anor^[12], DHCJ To refused to admit the hearsay statement of a deceased witness, and said at [20]:

“…… It is important that the evidence of such a crucial witness should be tested by cross-examination. Should a witness of such critical importance be about to demise, the party seeking to rely on his evidence should have taken steps to secure his evidence by deposition under Order 39 rule 1 of the Rules of the High Court. Ko Kan’s death was well anticipated. Yet the Plaintiff failed to adopt this course and thereby deprive the defendants of the chance of cross-examination. Without such cross-examination, the defendants are severely prejudiced. This is an appropriate case which the Plaintiff should have secured the evidence of Ko Kan by Order 39 procedure and to avail her opponent the chance of cross-examination.”

91.P must know that Tong’s evidence is crucial, for Tong is the one personally involved in all the material matters which are contested in these proceedings.  P commenced these proceedings in February 2012. According to P, Tong was willing to be a witness to give evidence in support of P’s case at all times.  P also knew that Tong became seriously ill in about early 2014 because of liver cancer.

92.As mentioned in the above, the contemporaneous documentary evidence is in support of D’s case and contradicting P’s case.  D should be entitled to test whether Tong’s evidence could stand in view of the contemporaneous documentary evidence by cross-examination.  Tong’s death on 1 August 2014 is not a sudden death but could be anticipated in early 2014.  Given that P has been legally represented at all times in these proceedings, P must know or ought to have known that there is a fair way to preserve Tong’s evidence, ie by a deposition under Order 39.  If a deposition is taken, D would have an opportunity to cross-examine Tong in the process of taking the deposition.  However, P did not make any application under Order 39 rule 1 to preserve Tong’s evidence by deposition.  P has not offered any explanation as to why he did not do so.  Without making an application under Order 39, P in fact has deprived D of the chance of cross-examining Tong.  In these circumstances, it would be grossly unfair to D if any weight is given to Tong’s statutory declaration and witness statement.  I decline to attach any weight to the statutory declaration and the witness statement.

C5.    D

93.Having seen and heard D’s evidence, I am of the view that D is an honest and reliable witness.  His evidence is supported by the contemporaneous documentary documents.  He has provided straightforward answers under cross-examination, and his evidence remains unshaken under cross-examination.

94.D mentioned the following in his evidence:

(1)  He started handbags business with Ng in about 1977.

(2)  Before 1988, Tong worked as a moulding worker and P worked as a furniture delivery worker.

(3)  In 1987, the partnership between D and Ng ended.  D asked Tong to join him to form a new partnership.

(4)  Wing Hing FTY was formed as a partnership between Tong and D in 1988. P was just a casual worker employed by Wing Hing FTY.

(5)  The TW Workshop was purchased with D’s own savings together with a bank mortgage.

(6)  The TM Property was purchased as D’s matrimonial home but registered P’s name because D could not obtain another mortgage at that time.  D asked P to help him to purchase the TM Property just for the purpose of obtaining the HSBC Mortgage.  D would also act as a guarantor.  D would be responsible for the entire purchase price, and D would pay the mortgage repayments.  D trusted that once all the formalities were done, P would transfer the legal title back to D.  

(7)  D has paid the down-payment and all the mortgage repayments of the TM Property.  However, P was unwilling to transfer the legal title back to D.

(8)  The SS Property was purchased with D’s own funds as an investment.  D allowed his mother, sister, Tong and P and some factory workers to stay in the SS Property whenever they came to visit Hong Kong from the Mainland.

(9)  In about 2004, P was planning to emigrate to New Zealand and would need D to act as his guarantor.  D said that he would only agree to do so if P handed back the title deeds to him.  P agreed. The title deeds were returned by P to D in these circumstances.  However, at a later time, D was told by his solicitors that among the tile deeds returned to him by D, the last assignment and the last mortgage concerning the TM Property signed by P were missing.

95.Under cross-examination, D was asked why he did not produce the personal guarantee signed by him in relation to the purchase of the TM Property.  D explained that he had approached the bank to try to obtain a copy of the personal guarantee, but the bank told him that the document could not be retrieved due to the long lapse of time.  I accept the explanation offered by D.  Having considered the documentary evidence before me as a whole, I do not regard the absence of the personal guarantee would have any material impact on the parties’ respective cases.

96.D was also asked why he did not produce all the documents relating to the mortgage repayments concerning the TM Property.  D said that he had kept the records, but due to the long lapse of time, D was not sure the whereabouts of most of the documents, as it was difficult to keep all the documents over decades.  I accept D’s explanation.  There is no reason to suggest that D has concealed some documents which are in support of P’s case or contradicting D’s case.  If P has any reasonable basis to say so, P should have made an application for a specific order against D.  However, no such application has ever been made.

97.D was also asked questions concerning some cheque stubs in his cheque books under cross-examination. 

(1)  Regarding cheque numbers 611228, 611230 and 611233, the cheque stubs only show that these cheques were payable to Sino Estates Management Ltd, the management company of the TM Property.  D said that he could only recall that these payments were paid to the management company, but would not recall the purposes of these payments.

(2)  Regarding cheque numbers 533403 and 560363, the cheque stubs show that the payments were payable to the management company and these payments were management fees.  D confirmed that these payments were the management fees of the TM Property paid to the management company.

The veracity of these answers cannot be doubted.

98.Ms Hui submits that in various tax returns submitted to the Inland Revenue Department by Wing Hing FTY, D’s monthly income from Wing Hing FTY was about HK$10,000.00.  That being the case, D would not be financially able to pay the monthly mortgage repayments concerning the TW Workshop, the TM Property and the SS Property, the total of which would be about HK$20,000.  Having considered the evidence, I am of the view that there is no merit in this challenge.

(1)  As per the tax returns submitted by Wing Hing FTY, D’s yearly income from Wing Hing FTY should be in the region of HK$120,000 – HK$200,000, and sometimes went beyond HK$200,000.

(2)  D said that apart from the income from Wing Hing FTY, he also had savings and incomes from investment in foreign currencies and gold.  There is no reason to doubt the truth of this answer.

(3)  The period of time when D was required to repay all three mortgages was short and lasted for about 2 years only.[13]  Apart from the income from Wing Hing FTY, D also had savings and incomes from investments.  In the circumstances, there could not be any surprise that D would be able to afford the mortgage repayments concerning the 3 properties in these 2 years.

(4)  Save and except the 2-year period mentioned in the above, the total of the monthly mortgage repayments concerning the TW Workshop and the TM Property was only about HK$10,000.  Since apart from the income from Wing Hing FTY, D also had savings and investment incomes, D would certainly be able to pay the monthly mortgage repayments.

99.Having considered all the evidence as a whole, I have no reason to doubt D’s evidence.  I accept D’s evidence and attach full weight to his evidence.

D.  MY FINDINGS

100.Based upon the evidence accepted by this court, I find that:

(1)  The Pooled Fund and the Oral Agreement as alleged by P are untrue and have never existed.

(2)  The TM Property Agreement in D’s case is true.

(3)  Notwithstanding that the TM Property has been registered under P’s name, all the payments relating to the purchase of the that property, including the deposits, the fee for the interior decoration of the property, and the mortgage repayments were paid by D.

(4)  D is the sole beneficial owner of the TM Property, and P is merely holding the same on trust for D.

101.As a result of these findings, P’s claim must be dismissed and D’s counterclaim must be allowed.

E.  COSTS

102.Before discussing costs, I should mention that there are many unexpected events in these proceedings, leading to the deferment and lengthening of the trial.

(1)  Originally, the trial was fixed to take place in the period from 7 December 2020 to 11 December 2020, with 5 days reserved.  On 18 August 2020, D’s daughter wrote a letter to the court on behalf of D, requesting to postpone the trial.  The reason given in the letter is that D was in Australia at that time and D was unable to return to Hong Kong to attend the trial.  Further, D did not have the means to retain lawyers to represent him in the trial.

(2)  On 24 August 2020, I informed the parties in writing that the trial would not be postponed.  These proceedings were commenced in 2012.  In the interest of both P and D, these proceedings should be brought to the end without any delay.  D might participate in the trial through video-conference facilities (“VCF”).

(3)  Subsequently, there were further correspondence exchanges between the court and parties.  P submitted that D should be required to come back to Hong Kong to attend the trial and should not be allowed to participate in the trial through VCF.  P also submitted that the trial should not be postponed.  D said that he would not be able to use VCF to participate in the trial, and he planned to come back to Hong Kong in late September 2020.  However, D wanted to have an adjournment so that he would have time to apply for legal aid.

(4)  On 17 September 2020, I directed that the trial should take place as scheduled, and D should attend the trial in person.

(5)  Notwithstanding my direction made on 17 September 2020, D kept on requesting for postponing the trial.  All these requests were refused.

(6)  On 1 December 2020, the Social Welfare Department wrote to the court, enclosing a letter signed by a doctor in the Castle Peak Hospital.  In that letter, the doctor said that D was admitted to Castle Peak Hospital on 26 November 2020 for recurrent depressive disorder.  The doctor further said that D was unfit to attend the court hearing on 7 December 2020.

(7)  As a result of sudden change in D’s health, the trial could not commence on 7 December 2020 as scheduled.

(8)  On or about 8 January 2021, through the Social Welfare Department, the court received a medical report concerning D.  In this medical report, the doctor stated that D was admitted to hospital on 26 November 2020 due to health reasons.  D was discharged on 18 December 2020 and would be fit to attend court hearing from that date onwards.

(9)  Subsequently, the trial was fixed to commence on 22 March 2021.

(10)  On 22 March 2021, the trial began.  D was acting in person at that time.  In the afternoon on 24 March 2021 (Day 3 of the trial), D claimed that he was unwell and would need to go to hospital. I adjourned the trial to the next day.  On 25 March 2021, D did not come to the court.  After making some enquiries, the court came to know that D had been admitted to hospital.  I therefore adjourned the trial.

(11)  D has provided medical reports to the court showing that he was admitted to Queen Mary Hospital on 24 March 2021 for some medical reasons, and was discharged on 30 April 2021.

(12)  D retained lawyers to represent him in these proceedings on 17 September 2021.

(13)  The adjourned trial started on 25 October 2021.

(14)  In the trial in March 2021, D has already cross examined P.  However, at the beginning of the adjourned trial, Mr Li made an application for leave to reopen the cross-examination of P.  The reason in support of the application is that D was not feeling well when he was cross-examining P in the trial in March 2021.  I granted leave, for the application was supported by the medical reports produced by D. I granted leave to Mr Li to further cross-examined P, with costs of the application to P in any event.

(15)  P continued to give evidence on 25 October 2021 and in the morning of 26 October 2021.  However, in the afternoon on 26 October 2021, P did not come back to the court to continue to give evidence.  Ms Hui informed me that P had been admitted to hospital.  I therefore adjourned the case to 27 October 2021.

(16)  On 27 October 2021, all counsel agreed that the court could proceed to hear the evidence of Wong first.  I acceded to the request.  Wong’s evidence was finished in the morning.  P was unable to return to the court to continue his evidence in that afternoon.  I therefore adjourned the case to 28 October 2021.

(17)  On 28 October 2021, P came back to the court to continue his evidence.

103.Ms Hui submits that the costs occasioned by the adjournment of the trial in December 2020 and in March 2021 should be borne by D in any event.  I would not accede to this request.  In my view, there is satisfactory medical evidence showing that D was unable to attend the trial in December 2020, and could not continue to attend the trial in March 2021 due to health reasons.  I do not think that D should be required to bear costs because of some health reasons which are beyond his control.

104.Mr Li submits that costs of the hearing on 29 October 2021 should be borne by P in any event.  Mr Li submits that P’s absence in the afternoon of 26 October 2021 and in the afternoon of 27 October 2021 has not been explained by any medical evidence.  Accordingly, whether P’s absence is due to genuine medical reason is in doubt.  Had the afternoon on 26 October 2021 and the afternoon on 27 October 2021 not been wasted, the parties would have had no need to have an extra hearing day on 29 October 2021.  In these circumstances, costs of the hearing on 29 October 2021 should be borne by P in any event. 

105.After the hearing of the final submissions on 16 December 2021, P’s solicitors wrote to the court on 17 December 2021 and provided two medial certificates concerning P’s health situation on 26 October 2021 and 27 October 2021 to the court.  In my view, no matter whether P’s absence in the trial in the afternoon on 26 October 2021 and in the morning on 27 October 2021 is due to genuine medial reason or not, that would not have a material impact on the outcome of the costs issue. As a result of my ruling in this case, applying the general rule of costs following the event, costs of these proceedings (including costs of the hearing on 29 October 2021) would be borne by P.  There would be no need for me to make a separate costs order concerning the hearing on 29 October 2021.

106.I would order that costs of these proceedings, including all costs reserved (if any), be paid by P to D, to be taxed if not agreed. With no disrespect to Mr Li and Mr Tsoi, I am of the view that the complexity of these proceedings would not be sufficient to justify a certificate for two counsel.  There be no certificate for two counsel.  During the period while D was receiving legal aid, D’s own costs be taxed in accordance with the Legal Aid Regulations.  The costs order would be made on nisi basis.

F.  DEPOSITION

107.I make the following order:

(1)  P’s claim be dismissed;

(2)  there be a declaration that D is the sole beneficial owner of the TM Property;

(3)  P shall execute an assignment and all necessary documents (if any) at his own costs to transfer his legal title in the TM Property to D within 42 days, failing which a partner of the law firm representing D in these proceedings (the name of the partner be provided by D’s solicitors in the draft order) be authorized to execute the assignment and all necessary documents (if any) on behalf of P to transfer the legal title to D, and all the reasonable conveyancing costs be borne by P;

(4)  P do hand over all the title deeds of the TM Property which are in his possession to D within 42 days; and

(5)  there be liberty to apply.

108.There be a costs order nisi as set out in [106] above.  Any application for varying the costs order nisi must be taken out within 21 days, otherwise the costs order nisi will become absolute.

109.I further direct that D’s solicitors do prepare a draft order in accordance with this judgment and, after seeking P’s solicitors’ comment on the same, submit the draft order to the court for approval within 21 days.

110.For avoidance of doubt, all the time stipulated in [107] to [109] shall start to run from the date of this judgment.  In laying down those time limits, I have already taken the coming Christmas and New Year holidays into account.

111.Lastly, it remains for me to thank counsel for the assistance rendered to the court.

Ms Gloriane Hui, instructed by Ellen Au & Co, for the plaintiff

The defendant appeared in person from 22 to 25 March 2021 and legally represented by Mr Vincent Li and Mr Owen Tsoi, instructed by K B Chau & Cofrom 25 to 29 October & 16 December 2021