Aldl v. Ftfc and Another

FCMC 13698/2013

[2024] HKFC 13

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MATRIMONIAL CAUSES

NO. 13698 OF 2013

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BETWEEN

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J U D G M E N T
(Preliminary Issues and Section 17 Applications)

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1.The present trial concerns 4 sets of the preliminary issues and applications pursuant to section 17 of the Matrimonial Proceedings and Property Ordinance (Cap. 192) (“MPPO”) as set out below.

A. Background

2.The Petitioner (“W”) commenced the petition for divorce against the 1^st Respondent (“H”) based on unreasonable behaviour on 10 April 2013 and subsequently issued a fresh petition on 26 September 2013 based on one-year separation from and since July 2012 with H’s consent.

3.The parties were married in 1987 in Australia where both parties graduated from university. In 1992, the couple moved to Hong Kong for H to pursue his career as a medical doctor. H obtained his specialist qualification in anaesthesiology in 1998 and began private practice as a sole practitioner in 2009.

4.In January 2012, H incorporated a limited company with an issued share capital of $1 (“TF Co. Ltd.”), which bears his first name, to conduct his medical practice and became the company’s sole director and shareholder.

5.The 2^nd Respondent[1] (“R2”) was a registered nurse and got acquainted with H when they were co-workers in the same hospital in about 1999. H admitted that he started an extra-marital affair with R2 in 2001. Since mid-2001, H started to stay overnight about once or twice a week in the apartment rented by R2.

6.H confessed to W about his affair with R2 and proposed to W to seek a divorce in early 2006. This was followed by H moving away from the former matrimonial home in Union Court, Shatin (“Former Matrimonial Home”) to live with R2 in April 2006. After W ingested an overdose of sleeping pills in May 2006, H returned to the Former Matrimonial Home once a week, sometimes stayed overnight.

7.The following facts are uncontroverted:

(1) 49A Banyan Garden

In October 2003, R2 acquired Flat A, 49^th Floor, Tower X, Banyan Garden, No. 863 Lai Chi Kok Road, Kowloon (“49A Banyan Garden”) at a consideration of HK$2,002,000. The property was initially mortgaged to DBS Bank (Hong Kong) Limited (“DBS”) as security for a mortgage loan of just over HK$1,800,000. R2 was the sole-named borrower and mortgagor. In January 2007, the original mortgage was discharged and replaced with a mortgage from Bank of China (“BOC”) as security for a mortgage loan of HK$1,200,000, under which H was named as a joint borrower. The property has been rented out since 1 May 2007.

(2) Car Parks Nos. 12 and 13

In November 2003, R2 acquired Car Parking Spaces No. 12 and No. 13 within the same development (“Car Parks Nos. 12 and 13”), each for a consideration of HK$228,000, which were mortgaged to Hang Seng Bank.

(3) 52G Banyan Garden

In August 2006, R2 acquired Flat G, 52^nd Floor, Tower XX, Banyan Gardens, No. 863 Lai Chi Kok Road, Kowloon (“52G Banyan Garden”) at a consideration of HK$3,950,000. The property was mortgaged to BOC on 15 August 2006 as security for a mortgage loan of HK$2,370,000. H and R2 are joint borrowers. It has been rented out since about June 2009.

(4) Liberte Sale Proceeds

In March 2007, R2 acquired Flat H (together with balcony), 26^th Floor, Block XXX, Liberte, No. 833 Lai Chi Kok Road, Kowloon (“Liberte”) at a consideration of HK$2,580,000. The property was mortgaged to DBS on 8 March 2007. H and R2 were joint borrowers. Liberte was subsequently sold in November 2012, and was rented out prior to being sold. The net proceeds of sale in the sum of HK$4,290,342 were collected by R2 (“Liberte Sale Proceeds”).

(5) Parc Oasis

In March 2009, R2 acquired Flat E, 2^nd Floor, Tower XXX, No. 21 Parc Oasis Road, Parc Oasis, Kowloon (“Parc Oasis”) at a consideration of HK$5,200,000, which was mortgaged to Standard Chartered Bank (Hong Kong) Limited on 31 March 2009 for a mortgage loan of HK$3,640,000, of which H is a guarantor. H and R2 have been cohabiting at Parc Oasis. Between the period from 1 April 2011 and 31 March 2014, Parc Oasis was claimed to be rented by R2 to H, as evidenced by two tenancy agreements. H also claims that he made regular rental payments to R2.

8.On 22 April 2013, H caused the allotment of 9,999 shares of TF Co. Ltd. to R2. H resigned as director of TF Co. Ltd. shortly thereafter and R2 was appointed in his place as sole director. From 2013 to 2021, R2 received no less than HK$7,500,000 and HK$16,002,500 purportedly as ‘dividends’ (“Dividends”) and ‘director’s emoluments’ from TF Co. Ltd. (“Director’s Emoluments”).

9.On around 2 May 2013, R2 received the sums of HK$2,880,310, US$412,252.43, and A$290,349.24 (“Unit Trust Funds”), [2] comprising all the deposits then held in H’s Bank Account No. 119-668XXX-833 (“H’s 119 Account”).

10.The present trial concerns 4 sets of the preliminary issues and applications as follows:

(1) W’s claim pursuant to her Re-Re-Amended Points of Claim for a determination or ruling that:

(a) R2 holds 49A Banyan Garden, Car Parks Nos. 12 and 13, 52G Banyan Garden, Liberte and/or the Liberte Sale Proceeds, and Parc Oasis (collectively “Landed Properties”), together with all rental income derived therefrom, on trust for H; and

(b) R2 is liable to account for all money, income, payment and/or profits received or acquired, directly or indirectly, as a result of holding the Landed Properties.

(collectively, “Landed Properties Preliminary Issue”).

(2) R2’s claim pursuant to her Points of Claim (“R2’s POC”) for a determination or ruling that:

(a) H holds as trustee a “50% beneficial shareholding, interest and/or ownership in TF Co. Ltd. (comprising the Medical Consultancy Business, Knittingstar and all assets held by TF Co. Ltd.) on trust” for R2; and

(b) A sum of HK$3,727,056 held in H’s 119 Account belongs beneficially to TF Co. Ltd.

(collectively, “TF Co. Ltd. Preliminary Issue”).

(3) W’s summons dated 26 August 2013 pursuant to section 17 of the MPPO (“Unit Trust Section 17 Application”) for, inter alia, the transfer of the Unit Trust Funds to R2 to be set aside.

(4) W’s summons dated 10 May 2022 (“Dividends and Director’s Emoluments Section 17 Application”) under section 17 of the MPPO for, inter alia:

(a) The transfers of the Dividends and Director’s Emoluments to R2 to be set aside; and

(b) The re-transfer of the Dividends and Director’s Emoluments from R2 to H or TF Co. Ltd. (to hold the same on trust for H).

11.Subsequently, R2 has entered into a Deed of Assignment and Waiver dated 3 February 2021 (“Deed of Assignment”) purporting to assign her alleged beneficial interest in TF Co. Ltd. to H and “unconditionally and irrevocably waive and relinquish” all her alleged entitlement, rights, and interests in the company.

12.H has accepted that he had made substantial contributions to the acquisition of the Landed Properties under R2’s name. But he claims that these were all gifts to R2 out of his love and affection towards R2.

B. Issues for Determination

13.The following four main questions are to be determined:

(1) Landed Properties Preliminary Issue: Whether H is a beneficial owner of each of the Landed Properties, and if yes, or to what extent.

(2) TF Co. Ltd. Preliminary Issue: Whether R2 is the alleged 50% beneficial shareholder of TF Co. Ltd.

(3) Dividends and Directors’ Emoluments Section 17 Application: Irrespective of any finding as to R2’s beneficial interest, whether the Court is entitled to set aside the Dividends and Directors’ Emoluments if it is satisfied that the payments were intended or merely a veiled attempt by H to dissipate his assets and defeat W’s claim for financial provision.

(4) Unit Trust Section 17 Application: Whether H intended to defeat W’s claim for financial provision by transferring the Unit Trust Funds to R2.

14.There is also a side issue regarding the purported existence and effect of a “Financial Agreement” in 2006 and a “Divorce Agreement” in 2012 made between W and H as alleged by H.

C. Landed Properties Preliminary Issue

C.1 Parties’ respective cases

15.In short, it is W’s case that the Landed Properties registered in the sole name of R2 belong beneficially to H, either wholly or in such other proportion as the Court shall determine. W relies on common intention constructive trusts and resulting trusts.

16.On the other hand, it is H’s and R2’s case that R2 purchased the Landed Properties with her own funds plus money gifted to her by H out of love and affection. R2 wanted a form of security (or ‘揸手’) in the event that the relationship between H and R2 did not work.

17.R2 also accepted that she received financial support from H after she resigned as a nurse in late April 2006.

18.In support of H’s case of gift, he alleged that a “Financial Agreement” was made between W and him in 2006 at the time of their de facto separation, under the terms of which the parties agreed they would “become financially independent from each other” save for maintenance payments to W.

19.H further alleged that he and W reached a “Divorce Agreement” in 2012, pursuant to which W would receive the proceeds of all of the family’s landed property (three properties in total) and H would no longer pay her maintenance, and in return W would agree to a divorce.

C.2 Applicable legal principles

20.Parties have no dispute that the starting point is that equity follows the law.

21.There is a presumption that the beneficial interest follows the legal interest, and the onus is on the party alleging that the beneficial interest is different: Leung Hang Lin and Another v Lam Mei Yung [2019] HKCFI 2819, §8(1). In the present case, the onus is on W.

22.The relevant legal principles of trust law are explained in Bhura v Bhura (No. 2) [2015] 1 FLR 153 at §8, Liu Wai Keung v Liu Wai Man [2013] 5 HKLRD 9 at §§46-50, and Primecredit Ltd v Yeung Chun Pang Barry [2017] 4 HKLRD 327 at §§2.3-2.4.

23.In order to prove a common intention constructive trust, W has to establish that (a) there was a common intention of H and R2 that H would be the beneficial owner of the Landed Properties, (b) H had altered his position in detrimental reliance upon the common intention, and (c) it would be unconscionable for R2 being the registered owner to assert full ownership in reliance on her legal title to the Landed Properties: Liu Wai Keung’s case at §46.

24.For the question of common intention, W has to show either (1) an express ‘agreement, arrangement or understanding’ between the parties (ie H and R2) that the non-legal owner (ie H) was to have a beneficial interest or (2) that such an ‘agreement, arrangement or understanding’ is to be inferred from the parties’ conduct: Mo Ying v Brillex (CA), [5.8]; Primecredit Ltd v Yeung Chun Pang Barry [2017] 4 HKLRD 327 (CA).

25.W does not plead any express agreement between H and R2 that any of the Landed Properties were to be held by R2 on trust for H. In other words, W has to prove that an ‘agreement, arrangement or understanding’ between H and R2 that H was to have a beneficial interest in each of the Landed Properties is to be inferred from the conducts of H and R2.

26.As there is no suggestion from any of the parties that the intention of H and R2 had ever changed, it is the common intention of H and R2 at the respective time of the acquisitions of each of the Landed Properties that is relevant: Liu Wai Keung’s case at §48.

27.Presumptions of resulting trust and presumption of advancement may only be resorted to where the intention is not expressed. In Lui Kam Lau & Others v Leung Ming Fai [1994] 3 HKC 477, the court said that:

“Where a property is purchased in the name of one but with the money of another, the Court must ascertain the true intention of the parties as to whether it is the former or the latter who should have the beneficial interest in the property. Where there is admissible evidence of the actual express intention of the parties, the Court will act on such intention accordingly. But where the intention is not expressed, the Court must ascertain the intention of the parties objectively. In so doing, the Court will resort to two tools: the presumption of resulting trust and the presumption of advancement.”

28.W has the burden of proof of the resulting trust as she alleged. In Re Superyield Holdings Ltd [2000] 2 HKC 90, at 91F, the court held:

“..… (3) The burden of proof of a resulting trust fell upon the party asserting that the equitable right was not consistent with the legal title.”

29.It is also a well-established principle that ownership of an asset vis-à-vis a spouse and a third party should be ascertained by reference to the general law of property. In Prest v Petrodel [2013] 2 AC 415, Lord Sumption JSC said, at §37:

“Courts exercising family jurisdiction do not occupy a desert island in which general legal concepts are suspended or mean something different. If a right of property exists, it exists in every division of the High Court and in every jurisdiction of the county courts. If it does not exist, it does not exist anywhere.”

30.Ms Cheng and Mr Kwan for W further relied on a passage of Lord Sumption JSC in Prest’s case (at §45) relating to the drawing of adverse inferences in claims for ancillary financial relief and submitted that this court may also draw adverse inferences against H and R2 in the preliminary issue trial:

“The modification to which I have referred concerns the drawing of adverse inferences in claims for ancillary financial relief in matrimonial proceedings, which have some important distinctive features. There is a public interest in the proper maintenance of the wife by her former husband, especially (but not only) where the interests of the children are engaged. Partly for that reason, the proceedings although in form adversarial have a substantial inquisitorial element. The family finances will commonly have been the responsibility of the husband, so that although technically a claimant, the wife is in reality dependent on the disclosure and evidence of the husband to ascertain the extent of her proper claim. The concept of the burden of proof, which has always been one of the main factors inhibiting the drawing of adverse inferences from the absence of evidence or disclosure, cannot be applied in the same way to proceedings of this kind as it is in ordinary civil litigation. These considerations are not a licence to engage in pure speculation. But judges exercising family jurisdiction are entitled to draw on their experience and to take notice of the inherent probabilities when deciding what an uncommunicative husband is likely to be concealing. I refer to the husband because the husband is usually the economically dominant party, but of course the same applies to the economically dominant spouse whoever it is.” (Emphasis supplied)

31.Mr Marwah and Mr Baker for H pointed out that the UK Supreme Court in Prest’s case was dealing with an ancillary relief claims which have “a substantial inquisitorial element” whereas this court is dealing with a preliminary issue trial, in which R2 was ordered to be joined and ordinary civil procedural rules are used such as filing of formal pleadings and witness statements etc[3].

32.I am of the view that in these preliminary issue proceedings, this court has the task to make finding of the primary facts and is entitled to draw the necessary inferences concerning the common intention of H and R2 at the respective time of the acquisitions of each of the Landed Properties, but not necessarily to draw adverse inference against H and R2 if they fail to furnish credible evidence as to their true intentions. In Jones v Kernott [2012] 1 AC 776, §§34-36:

“… As Lord Diplock also put it in Gissing v Gissing [1971] AC 886, 906:

“As in so many branches of English law in which legal rights and obligations depend upon the intentions of the parties to a transaction, the relevant intention of each party is the intention which was reasonably understood by the other party to be manifested by that party’s words or conduct notwithstanding that he did not consciously formulate that intention in his own mind or even acted with some different intention which he did not communicate to the other party.”

The point has been developed by Nick Piska, “Intention, Fairness and the Presumption of Resulting Trust after Stack v Dowden” (2008) 71 MLR 120. He observes, at pp 127-128:

“Subjective intentions can never be accessed directly, so the court must always direct itself to a consideration of the parties’ objective intentions through a careful consideration of the relevant facts … It is not that the parties’ subjective intentions are irrelevant but rather a finding as to subjective intention can only be made on an objective basis.”

In the meantime there will continue to be many difficult cases in which the court has to reach a conclusion on sparse and conflicting evidence. It is the court’s duty to reach a decision on even the most difficult case … The trial judge has the onerous task of finding the primary facts and drawing the necessary inferences and conclusions, and appellate courts will be slow to overturn the trial judge’s findings.” [Emphasis supplied]

33.Besides, Mr Yim for R2 urged me to exercise ultra-caution when considering W’s application, bearing in mind also “[t]he Court is of course not a court of morals. If the husband chose to be a philanderer and have mistresses and children born from these relationships, it is not for the Court to condemn his behaviour as being immoral”: MKKWH v RKSH (Ancillary Relief Addbacks and Claw Backs) [2013] HKFLR 540, 557, §68.

C.3 Discussion

34.The acquisitions of the Landed Properties and the transfers of monies from H to R2 took place at different time over 10 odd years. Ms Cheng and Mr Kwan for W submitted that from the outset, H and R2 already demonstrated they were prepared to lie on oath about the nature of their relationship and the year when they met, plainly with a view to conceal the Landed Properties that were purchased in R2’s name and the substantial monetary transfers made to her.

35.For instance, in H’s Answers to W’s Questionnaire, he gave definitive answers firmly denying any monetary contributions to 49A Banyan Garden, 52G Banyan Garden, or Parc Oasis or even the fact of his having resided in the former two properties.

36.Ms Cheng and Mr Kwan for W are very helpful in making the following table illustrating the synchrony of fund flows between H and R2 and the transactions for funding the purchase of each of the Landed Properties, except Car Parks Nos. 12 and 13. There are at least two examples of direct remittances by H to third parties for the payment of renovation and legal fees.

Date (D/M/Y)	Event
09.12.2002	H transferred HK$207,000 to R2 by cheque (no.431703) from the Citibank Joint Current Account of W and H (the “Joint Current Account”)
27.08.2003	Agreement for Sale and Purchase in relation to 49A Banyan Garden at HK$2,002,000.
08.09.2003	H transferred HK$133,000 to R2 by cheque (no.839381) from the Joint Current Account
09.10.2003	H paid HK$200,000 to R2 by cheque (no.839384) from the Joint Current Account On the same day, 49A Banyan Garden was assigned to R2.
08.06.2005	H transferred HK$122,800 to R2 by cheque (no.552000) from the Joint Current Account
15.07.2005	H transferred HK$49,500 to R2 by cheque (no. 431683) from the Joint Current Account
20.09.2005	H transferred HK$160,000 to R2 by cheque (no.431688) from the Joint Current Account
Around April 2006	H left the employ of the Hospital Authority and received superannuation of over HK$2,300,000. From the bank statement provided by HSBC in relation to H’s 119 Account, a sum of HK$2,890,371.21 was paid to H on 09.06.2006.
07.07.2006 to 12.07.2006	H transferred in total a sum of HK$400,000 from H’s 119 Account to R2’s Current Account on the following dates: 07.07.2006 ($50,000); 09.07.2006 ($50,000); 10.07.2006 ($50,000); 11.07.2006 ($200,000) and 12.07.2006 ($50,000)
12.07.2006	R2 issued cheque (no.939803) from R2’s Current Account for HK$383,975 to Iu, Lai & Li Solicitors
14.07.2006	Agreement for Sale and Purchase in relation to 52G Banyan Garden at HK$3,950,000.
31.07.2006	H transferred HK$39,500 from H’s 119 Account to R2’s Current Account on 30.07.2006 R2 issued cheque (no.939804) from R2’s Current Account for HK$39,500 to Hong Kong Property Services (Agency) Ltd
07.08.2006	H transferred HK$50,000 from H’s 119 Account to R2’s Current Account
08.08.2006	H transferred HK$1,200,000 from H’s 119 Account to R2’s Current Account
11.08.2006	R2 issued cheque (no.939807) from R2’s 541 Current Account for HK$1,192,110 to Iu, Lai & Li Solicitors
15.08.2006	Assignment for the purchase of 52G Banyan Garden with mortgage with Bank of China (prepared by Messrs. Iu, Lai & Li). R2 issued cheque (no.939810) from R2’s Current Account for HK$50,000 to Mr. Lam Chun Kit, the interior decorator
21.09.2006	H transferred HK$50,000 from H’s 119 Account to R2’s Current Account
22.09.2006	R2 issued cheque (no.939814) from R2’s Current Account for HK$50,000 to Mr. Lam Chun Kit
28.09.2006	H transferred HK$50,000 from H’s 119 Account to R2’s Current Account R2 issued cheque (no.939815) from R2’s Current Account for HK$50,000 to Mr. Lam Chun Kit
11.11.2006	H issued cheque (no.869212) for HK$44,880 to Mr. Lam Chun Kit
02.01.2007	H issued cheque (no.869219) for HK$518,555.65 to Tsang, Chan & Wong
05.01.2007 to 13.01.2007	H transferred in total a sum of HK$165,000 from H’s 119 Account to R2’s Current Account on the following dates:- 05.01.2007 ($50,000); 08.01.2007 ($15,000); 09.01.2007 ($50,000) and 12.01.2007 ($50,000)
09.01.2007	Mortgage (prepared by Messrs. Tsang, Chan & Woo) with BOC in respect of 49A Banyan Garden (in place of mortgage with DBS).
19.01.2007	R2 transferred a sum of HK$158,000 from R2’s Account to the account of Wong & Poon, Solicitors
22.01.2007	H paid a sum of HK$400,000 to R2 Agreement for Sale and Purchase in relation to Liberte at HK$2,580,000.
02.03.2007	H issued cheque (no.869227) for HK$400,000 to R2
05.03.2007	R2 issued cheque (no.939828) for HK$748,600 to Wong & Poon Solicitors
07.03.2007	R2 issued cheque (no.939832) for HK$25,800 to Centaline Property Agency Limited
08.03.2007	Assignment for the purchase of Liberte with mortgage (prepared by Wong & Poon) with DBS.
04.02.2009	Provisional Agreement for Sale and Purchase in relation to Parc Oasis at HK$5,200,000.
11.02.2009	H transferred HK$320,000 to R2 by cheque (no.112471) from H’s 119 Account
26.03.2009	H transferred a sum of HK$800,000 from H’s 119 Account to R2’s Account
31.03.2009	Assignment for the purchase of Parc Oasis with mortgage.
08.10.2012	Agreement for Sale and Purchase in relation to the sale of Liberte at HK$5,400,000.
14.11.2012	Assignment for the sale of Liberte.

37.Apart from these lump sums, Schedules 1 to 4 of W’s Re-Re Amended Points of Claim tabulate records of regular payments from H and TF Co. Ltd. to R2. According to Schedule 1, during the period from November 2009 to February 2015, H made payments of HK$2,252,000 to R2. According to Schedule 2, during the period from February 2007 to March 2013, H made credit transfers of HK$6,558,430 to R2. According to Schedule 3, during the period from August 2013 to February 2015, TF Co. Ltd. made payments of HK$2,776,660.47 to R2. According to Schedule 4, during the period from February 2013 to October 2013, TF Co. Ltd. made payments of HK$6 million to R2.

38.H and R2 have no dispute of these transfers and payments.

39.Later, H confessed he had all along failed to properly disclose his relationship with R2, which started much earlier in 2001. In his 2^nd Affirmation dated 22 April 2014, he said that this was to protect “the emotional stability of [W]” and R2 from “harm” from W. He also said that at the time of purchase of 52G Banyan Garden in about July 2006, he “was firmly intent on divorcing” with W. H also accepted in cross examination that he plans to marry with R2.

40.There is no dispute that H had not acquired any new properties under his own name since the beginning of his relationship with R2, except a property at Metro Town, Sai Kung which was purchased in September 2005 and conveyed to the names of H and his mother in December 2006.

41.Ms Cheng and Mr Kwan for W submitted that H and R2 tried to draw an artificial, contrived and unrealistic distinction between (a) ‘gifts’ for the exclusive purpose of purchasing the Landed Properties, and (b) ‘gifts’ of ‘pocket money’ which R2 could theoretically use for any purpose.

42.In the present case, there is no evidence that when H made the payments to R2, he imposed any condition that R2 had to use such payments for the exclusive purpose of purchasing the Landed Properties. If there is no such condition, I am entitled to accept and find that R2 could be free to use the payments received from H for any purpose, not just for the exclusive purpose of purchasing the Landed Properties.

43.In the present case, although H has a very special relationship with R2, namely cohabitees, I do not think that presumption of advancement is applicable in this kind of relationship[4]. In my view, the true question is whether such a relationship makes it more probable than not that a gift was intended.

44.H had repeatedly said in his evidence, such as his 2^nd Affirmation dated 22 April 2014, his Answer dated 27 October 2014 and his witness statement, that all payments made by to R2 were gift.

45.H did make a lots of payments to R2 from time to time, which were more than sufficient to purchase the Landed Properties with mortgage. I find that R2 did inform H of her intention to purchase the Landed Properties except Car Parks Nos. 12 and 13 at the material times and upon the request of R2, H was willing to make all necessary and in fact more than sufficient payments and funding to her. I will further discuss the purchase of each of the Landed Properties one by one below. The circumstances leading to the relevant purchases were explained by H and R2 in their witness statements and affirmations. On the other hand, W can produce no evidence to contradict their evidence except by saying that H and R2 are not credible witnesses.

C.3.1 49A Banyan Garden

46.According to R2’ witness statement[5], in the evening of 25 August 2003, H and R2 came across an exhibition booth for selling properties. H encouraged R2 to purchase a 2-bed-room flat. Eventually, R2 decided to buy 49A Banyan Garden.

47.The initial deposit of HK$100,100 was paid by H by his credit card on 25 August 2003. The Formal Agreement for Sale and Purchase at a consideration of HK$2,002,000 was signed by R2 on 27 August 2003 ie 2 days later. R2 admitted in her witness statement that the total down-payment of HK$200,200 were all made by H but as a gift to her out of his love and affection. The property was completed and acquired in the name of R2 on 9 October 2003 with a mortgage loan of just over HK$1,800,000. The monthly mortgage instalment is about HK$8,000.

48.Indeed, payment of HK$207,000 had been made by H to R2 as early as in December 2002 (about 8 months before the initial deposit was paid) according to the table above. No doubt, I have no hesitation to find that this HK$207,000 made by H to R2 is a gift since there is no evidence that they ever contemplate to buy a flat at that time.

49.Subsequently, at least HK$333,000 (ie HK$133,000 + HK$200,000[6]) had been paid by H to R2 before the date of completion on 9 October 2003. It is obvious that H had made payments to R2 more than sufficient to purchase 49A Banyan Garden at the time of acquisition. If there was a common intention between H and R2 at that time that R2 was holding the property on trust for H, it was only necessary for H to make down-payment of HK$200,200 but not payments in the total of HK$333,000 to R2.

50.Furthermore, it is not clear from the evidence that who is the one to pay the mortgage instalments of 49A Banyan Garden from November 2003. There is no evidence that H had made any payment to R2 after the completion on 9 October 2003. H did make a payment of HK$122,800 to R2 on 8 June 2005 but not earlier. In the circumstances, I find that it was R2 instead of H to pay the mortgage instalments of 49A Banyan Garden from November 2003 at least up to June 2005.

51.In my view, R2 was free to use all these payments made by H to her. Perhaps, she may have used part of them to pay the mortgage instalments, other expenses of 49A Banyan Garden or even her own personal expenses. However, it is not sufficient to infer from these conducts that H and R2 had formed a common intention that H has a beneficial interest in 49A Banyan Garden.

52.The subsequent change of mortgage in 2007, under which H was named as a joint borrower, is not relevant as W never pleads any change of common intention between H and R2. The fact that H issued cheque for HK$518,555.65 to Tsang, Chan & Wong which prepared the change of mortgage in respect of 49A Banyan Garden in 2007 is neither here nor there.

53.In about June 2009, 49A Banyan Garden was rented out. If it is H who receives its rental, it would no doubt assist her case of common intention constructive trust. However, there is no such evidence. As R2 is the registered owner, I have to assume that the tenant should have paid rent to R2 instead of H. Again, W bears the burden of proof if there is not the case.

54.H on one hand paid R2 more than sufficient amount to pay the mortgage instalments and on the other hand, allowed R2 to keep the rental income. In the circumstances, I find that on the balance of probabilities, all the payments made by H to R2 are gifts and H and R2 never had the common intention that he has any beneficial interest in this property.

C.3.2 Car Parks Nos. 12 and 13

55.Car Parks Nos. 12 and 13 were purchased in November 2003, each for a consideration of HK$228,000, and mortgaged to Hang Seng Bank. R2 said that she did not inform H before she purchased the car parks. Similarly, the facts as to who pays the mortgage instalments and receives the rental are not clear. But I would assume that it should be R2 as she is the registered owner. In my view, save and except that H did make some payments to R2, W proves nothing.

C.3.3 52G Banyan Garden

56.The circumstances leading to the purchase of this property in July 2006 were explained by R2 in her witness statement[7]. H had paid part of the renovation fees (ie HK$44,880) to a third party directly. I also accept that H did involve in the discussion of this purchase with R2. In my view, this court should not then infer from these conducts that H would therefore have some beneficial interest in 52G Banyan Garden.

C.3.4 Liberte Sale Proceeds

57.For Liberte, it was purchased in 2007 after R2 had a disagreement with H who advised against purchasing this property[8]. It was rented out and it was R2 but not H to receive the rental. Later, it was sold in 2012 and Liberte Sale Proceeds was all received by R2.

58.If H and R2 had the common intention at the time of its acquisition that he should have the beneficial interest in the same, he would have asked R2 to pay him at least part of the Liberte Sale Proceeds. Certainly, there is no such evidence. The only inference that I can draw is the payments to R2 are gifts.

C.3.5 Parc Oasis

59.It was purchased in 2009 and H initially disagreed but eventually accepted R2’s proposal of purchase due to her insistence[9]. They are currently residing therein.

60.H produced two unstamped tenancy agreements for his purported leasing of Parc Oasis from R2. The following tenancy arrangement apparently began only on 1 April 2011:

(1) Tenancy Agreement between H and R2 dated 25 March 2011, for the period between 1 April 2011 and 31 March 2012, at a monthly rental of HK$25,000.

(2) Tenancy Agreement between H and R2 dated 25 March 2012, for the period between 1 April 2012 and 31 March 2014, at a monthly rental of HK$25,000.

61.Ms Cheng and Mr Kwan for W submitted that these transfers were just another means by which H routed monies to R2. In my view, this submission may be relevant to the ancillary relief claims against H but not in the preliminary issue trial.

62.As a matter of fact, H started to make payment to R2 as early as in December 2002, well before the purchase of 49A Banyan Garden in August 2003. This payment must be gift. As H and R2 had cohabited since 2006, it is not unreasonable for H to make regular payments to R2 as gift. R2 must be free to use these payments for whatever purposes she liked, such as discharging the household expenses including the monthly mortgage instalments etc. Even if H did contemplate to divorce with W in 2006 or earlier, I do not think that the court can then draw an artificial timeline that those payments made by H to R2 before that time were gifts but those made afterwards were gifts for the exclusive purpose of purchasing 52G Banyan Garden, Liberte and Parc Oasis.

63.It is not unreasonable for R2 as a mistress of H to have some securities from H just in case subsequently H reconciled with W or the relationship between R2 and H broken down for some other reasons. I can see no good reason why R2 would agree with H or would form the common intention that he should have the beneficial interest in any of the Landed Properties.

64.Ms Cheng and Mr Kwan for W argued that the context behind each of the purchases reveal strong incentives on H’s part to place assets in his mistress’s name and beyond W’s reach to protect himself against W’s financial claims in the event of divorce proceedings. It is just W’s speculation without any solid evidence. H is no doubt a highly educated professional. In my view, there are many ways or better ways for H to hide the assets beyond W’s reach. There is also a high risk to place almost all the assets in R2’s sole name if unfortunately, their relationship broken down in the future as they are simply cohabitees, not yet get married.

65.I have to stress that the duty of the court is to assess the evidence but not to make speculations. Having carefully considered all the relevant circumstances and on a balance of probabilities, I find that all payments made by H to R2 were gifts out of his love and affection. W fails to persuade me to infer from the conducts of H and R2 that they have the necessary common intention as alleged by W.

C.3.6 H’s detrimental reliance

66.Apart from proving that the common intention to be inferred by the conducts of H and R2 that that H would be the beneficial owner of the Landed Properties, W has to establish that H had altered his position in detrimental reliance upon the common intention. In my view, there is simply no such evidence. Whether or not H and R2 can prove their allegation of gift, W must fail to show any detriment on the party of H. Indeed, there is no evidence that he had suffered any detriment.

67.What W can prove is that H did make a lot of payments to R2 from time to time. Even if H and R2 chose to lie about the nature and starting date of their relationship, W cannot simply say that as H and R2 are not credible witnesses, the court should draw adverse inference against them and then conclude that the common intention constructive trust is proved. In my view, W has to prove much more than that.

68.Mr Marwah and Mr Baker for H correctly submitted that W cannot win simply by showing that H’s and R2’s evidence is to be rejected. As explained in Ng Yuk Pui Kelly v Dung Wai Man & Ors [2019] HKCFI 210 §36, W must prove H and R2 agreed that H would have the beneficial interest in the Landed Properties, regardless of H and R2’s evidence:

“The burden of proof for the three primary issues is on [the plaintiff] … it is incumbent upon [the plaintiff] to adduce sufficient positive evidence to prove his case. Otherwise, even if the Defendants’ evidence should be rejected, [the plaintiff’s] case will still be unproven (see Chan Ka Lim v Chow Wai Kin [2008] 5 HKLRD 881 at §26 per Le Pichon JA citing Scrutton LJ in Hobbs v Tinling (CT) & Co Ltd [1929] 2 KB 1 at p 21).”

69.In the circumstances, I conclude that W fails to discharge the burden to prove common intention constructive trust for the Landed Properties.

C.3.7 Resulting Trust

70.For the presumption of resulting trust, I consider that in most of the cases, it is usually the claimant who is the payer relies on such presumption. In the present case, H is the payer but he is not the claimant who wants to claim any beneficial interest in any of the Landed Properties. I doubt that W can rely on such presumption.

71.In any event, as H’s evidence that all the payments to R2 are gifts is accepted by me, it is sufficient to rebut the presumption of resulting trust. Furthermore, since W bears the burden of proof, I am of the view that she also fails to discharge such burden showing the resulting trust as alleged by her.

C.3.8 Conclusion

72.For the purpose of determining the Landed Properties Preliminary Issue, I do not think necessary to consider the “Financial Agreement” and the “Divorce Agreement” alleged by H. The alleged 2 Agreements will be further discussed in the judgment for ancillary relief. Based on the reasons given above, I am able to find that H is not a beneficial owner of each of the Landed Properties.

D. TF Co. Ltd. Preliminary Issue

D.1 R2’s case

73.On 5 January 2012, TF Co. Ltd. was incorporated in Hong Kong with an issued capital of $1, at which time H was the sole shareholder of the 1 issued share.

74.It is R2’s pleaded case that H held and still holds as trustee half of the beneficial shareholding, interest and/or ownership in TF Co. Ltd. on trust in her favour. R2 relies on express trust and common intention constructive trust. The express agreements between H and R2 as to their respective shares in the Medical Consultancy Business and TF Co. Ltd. were reached in 2009 and late 2011 respectively when they decided to commence the business in the form of a sole proprietorship and when they decided to set up TF Co. Ltd. to take over the Medical Consultancy Business.

75.R2 urge this Court to take into account in making findings as to the said express agreements or, if necessary, in inferring the intention of H and R2:-

(1) Prior to 2009, R2 had already been offering substantial assistance to H’s medical practice. When H was a resident anesthesiologist in Tsuen Wan Adventist Hospital between 2006 and 2009, R2 would introduce businesses to H, take care of and manage his diary and accounts.

(2) In 2009, R2 continued to assist H and was heavily involved in the running of the Medical Consultancy Business.

(3) In about May 2012, R2 set up Knittingstar using her own funds. In order to allow the business of TF Co. Ltd. to expand to non-medical fields, she caused her own business of Knittingstar to be transferred to TF Co. Ltd. at nil consideration

76.H and R2 later set up TF Co. Ltd. at the suggestion of R2’s second sister to save tax and R2 was not named as a shareholder and director to avoid any complication which might delay the process for TF Co. Ltd. to obtain the licence to work in private hospitals. R2 was an authorised signatory on the bank account of TF Co. Ltd.

77.On 22 April 2013, 9,999 shares of TF Co. Ltd. were allotted to R2 and H only retained one share. H resigned as director on 26 April 2013 and R2 was appointed as director in his place.

78.R2 subsequently executed the “Deed of Assignment and Waiver” in 2021 assigning all of her rights, interest and benefits of and in the 5,000 shares of TF Co. Ltd. to H and explained that she executed such a document for the purpose of emigration and no consideration was received by her when she transferred her shares to H.

D.2 H’s case

79.H admits R2’s case. In 2009, after resigning from the hospital and commence practice ‘freelance’, H commenced the Medical Consultancy Business as a sole proprietorship, and R2 was not named as a partner. However, he and R2 had the agreement that they would share the profits equally and H would hold 50% of the business ‘on trust’ for R2.

80.H accepted that R2 was not registered as a business partner of the medical business or made a director or shareholder of TF Co. Ltd. at the time of its incorporation in 2012. According to H’s witness statement, this was mainly due to some supposed ‘conflict of interest’. In other words, since hospitals may not grant permission to non-medical professional, it is necessary to keep R2’s name off the record. Besides, he further explained that it would be easier for TF Co. Ltd. to obtain initial permission from hospitals, clinics and other institutions, to pay service fees directly to TF Co. Ltd.. H and R2 subsequently learned that documents for hospital admissions do not need to be submitted again, so that R2 being made a shareholder did not give rise to the ‘conflict’ again.

81.On 26 August 2013, W took out the Unit Trust Section 17 Application, which, among other things, sought an order to set aside the allotment of shares to R2. H agreed to set aside the allotment of 9,999 shares in §§27-28 of his affirmation filed 9 October 2013.[10]

D.3 W’s case

82.TF Co. Ltd. is and was always a corporate vehicle used by H to conduct his medical practice. The company is H’s ‘alter ego’, and another wallet of his to deposit his professional income.

83.R2’s business, namely Knittingstar ceased operations on 29 February 2020. Based on the following table synthesised from the Audited Financial Statements of TF Co. Ltd. over the years, the gross profit of Knittingstar was trivial compared to H’s yearly medical services income:

Year	Knittingstar Gross Profit / (Loss) (HKD)	Medical Service Income (HKD)
2013	80,070	9,003,132
2014	(82,337)	8,342,087
2015	133,572	8,606,540
2016	170,897	8,386,606
2017	192,367	8,778,793
2018	106,956	9,773,105
2019	177,737	11,322,250
2020	(106,094)	10,202,495
2021	–	6,653,865

84.The fact that R2 received no consideration for purportedly giving up her interest by the ‘Deed of Assignment and Waiver’ in 2021 reinforces the W’s claim that R2 was never a true owner of TF Co. Ltd..

D.4 Discussion

85.To start with, R2 bears the burden of proof. Her and H’s evidence concerning their express agreement as to their respective shares in TF Co. Ltd. is not supported by any documentary evidence.

86.To the contrary, their conducts in respect of the allotment of 9,999 shares on 22 April 2013 contradict their alleged express agreement. In my view, if H did hold half of the beneficial shareholding, interest and/or ownership in TF Co. Ltd. on trust in R2’s favour, he only had to cause TF Co. Ltd. to allot 1 share to her but not 9,999 shares. He claimed that as a result of W’s financial claim and his frustration at her purported money-mindedness, he “lost all [his] energy and motivation and intended to withdraw from [his] involvement in [TF Co. Ltd.]”. He further claimed that he was simply doing what the accountant told him to do. I reject his explanations. At that time, H had likely sought legal advice since he had given his solicitors, Messrs. Au Yeung Lo & Chung the authority to accept service of the W’s petition for divorce on 23 April 2013. He should seek legal advice rather than accountant advice.

87.Furthermore, as said in §§27-28 of his affirmation filed 9 October 2013, his solicitors had advised him that the allotment of shares might amount to disposition of his own asset. In my view, if H considered at that time that he held 50% of the beneficial shareholding, interest and/or ownership in TF Co. Ltd. on trust for R2, he did not need to set aside the whole allotment of 9,999 shares but only 9,998 shares, so that each of H and R2 would then hold 1 share. In any event, H has not set aside the whole allotment or any of them as agreed.

88.In the first place, R2 had explained the reason why she was not named as a director is to avoid any complications which might delay the process for TF Co. Ltd. to obtain the licence to work in private hospitals. R2 further explained under cross-examination “… then in year 2013, since we renewed the admission rights every year, the hospitals no longer asked us to submit the documents of the company. Therefore, we knew that in year 2013, they would no longer check the things of the company”. If that is the case, it is still unnecessary and unreasonable for H to resign as director on 26 April 2013.

89.I also consider that R2’s explanation of execution of the ‘Deed of Assignment and Waiver’ in 2021 for the purpose of emigration is unacceptable. She simply produced no further document showing her plan to migrate to other country. There is no documentary evidence from H concerning emigration too.

90.After assigning 5,000 shares of TF Co. Ltd. to H, R2 will then have 4,999 shares and H has 5,001 shares. It seems to me very strange. R2 fails to explain how such shareholding will help her plan of emigration.

91.In order to be consistent with the alleged agreement and understanding that R2 was entitled to 50% of the beneficial shareholding, interest and/or ownership in TF Co. Ltd., R2 should simply assign 4,999 shares instead of 5,000 shares of TF Co. Ltd. to H, such that both of them would hold 1 share of the company. Both R2 and H were legally represented and could seek legal advice at the time of execution of the ‘Deed of Assignment and Waiver’ in 2021. I find that R2’s execution of the ‘Deed of Assignment and Waiver’ contradicts the alleged agreement and understanding.

92.I accept that since 2009, R2 had already been assisting H with his medical practice and referring business to him for many years. Nonetheless, this fact has very little bearing. A competent staff is always able to assist his boss in his business and refer clients. H kept making a lot of payments, some of which are alleged to be director’s emoluments, the amounts of which are very substantial, to R2 from time to time and some of these payments sufficiently reflect the contributions made by R2 to TF Co. Ltd.. Hence, I refuse to draw any inference from R2’s conducts that she and H had formed the alleged agreement and understanding at the material time.

93.Based on the table prepared by W, I accept her submission that the gross profit of Knittingstar was trivial compared to H’s yearly medical services income in TF Co. Ltd. In other words, the fact that TF Co. Ltd. carried on knitwear trading business in the name of “Knittingstar” as shown in its first financial statement for the period from 5 January 2012 to 31 March 2013, in my view, has very little significance.

94.As a whole, the evidence of R2 and H in respect of TF Co. Ltd. Preliminary Issue is not credible. I am not satisfied that R2 can discharge the burden of proof. I find that she never and does not hold any interests in TF Co. Ltd..

95.It is pleaded in R2’s POC that the sum of HK$3,727,056 held in H’s 119 Account belongs beneficially to TF Co. Ltd.. As I find that TF Co. Ltd. is wholly owned by H, there is no difference if this sum belongs beneficially to TF Co. Ltd. or H.

E. Dividends and Director’s Emoluments Section 17 Application

96.The Dividends and Director’s Emoluments Section 17 Application are concerned with setting aside the following transfers, which are not disputed, as seen from R2’s 3^rd Affirmation at §6[11] and also H’s Form E at §3.6[12]:

Year	Purported Nature of Payment as alleged by R2 and H (which is not accepted by W) and amount	Transferor	Transferee
2013	director’s emolument: HK$30,000	TF Co. Ltd.	R2
2014	director’s emolument: HK$1,200,000	TF Co. Ltd.	R2
2015	director’s emolument: HK$2,397,500	TF Co. Ltd.	R2
	dividends: HK$1,000,000	H	R2
2016	director’s emolument: HK$1,680,000	TF Co. Ltd.	R2
	dividends: HK$1,000,000	H	R2
2017	director’s emolument: HK$2,010,000	TF Co. Ltd.	R2
2018	director’s emolument: HK$2,160,000	TF Co. Ltd.	R2
	dividends: HK$1,000,000	H	R2
2019	director’s emolument: HK$2,400,000	TF Co. Ltd.	R2
	dividends: HK$2,500,000	H	R2
2020	director’s emolument: HK$2,400,000	TF Co. Ltd.	R2
	dividends: HK$2,000,000	H	R2
2021	director’s emolument: HK$1,725,000	TF Co. Ltd.	R2
2022	director’s emolument: Unknown	–	–
It is not disputed by H and R2 that the figures for director’s emoluments are taken from the Audited Financial Statements for the fiscal year ended 31 March.

97.Ms Cheng and Mr Kwan for W submitted that since TF Co. Ltd. is and was always a corporate vehicle used by H to conduct his medical practice, TF Co. Ltd. is H’s ‘alter ego’ and another wallet of his to deposit his professional income. As R2 has no interests in TF Co. Ltd., she has no entitlement to the Dividends she has received over the years. The remittance of so-called Director’s Emoluments from TF Co. Ltd.’s bank accounts to R2 are therefore dissipations of H’s property.

98.Mr Yim for R2 raised the questions as to whether this Court has jurisdiction to rule on the Dividends and Director’s Emoluments Section 17 Application and whether the alleged “dispositions” under both applications were reviewable under section 17 of the MPPO.

99.Section 17 of the MPPO provides:

(1) Where proceedings for relief under any of the relevant provisions of this Ordinance (hereafter in this section referred to as ‘financial provision’) are brought by a person (hereafter in this section referred to as ‘the applicant’) against any other person (hereafter in this section referred to as ‘the other party’), the court may, on an application by the applicant –

(a) …

(b) if it is satisfied that the other party has, with the intention aforesaid, made a disposition to which this paragraph applies and that if the disposition were set aside financial provision or different financial provision would be granted to the applicant, make an order setting aside the disposition and give such consequential directions as it thinks fit for giving effect to the other (including directions requiring the making of any payment or the disposal of any property);

(c) …

and an application for the purposes of paragraph (b) shall be made in the proceedings for the financial provision in question.

(2) Paragraphs (b) and (c) of subsection (1) apply respectively to any disposition made by the other party (whether before or after the commencement of the proceedings for financial provision), not being a disposition made for valuable consideration (other than marriage) to a person who, at the time of the disposition, acted in relation to it in good faith and without notice of any such intention as aforesaid on the part of the other party.

(3) Where an application is made under this section with respect to a disposition which took place less than three years before the date of the application or to a disposition or other dealing with property which is about to take place and the court is satisfied –

(a) in a case falling within subsection (1)(a) or (b), that the disposition or other dealing would (apart from this section) have the consequence, or

(b) …

of defeating the applicant’s claim for financial provision, it shall be presumed, unless the contrary is shown, that the other party disposed of the property with the intention aforesaid or, as the case may be, is, with that intention, about to dispose of or deal with the property.

(4) In this section –

…..

“disposition” (財產處置) does not include any provision contained in a will or codicil but, with that exception, includes any conveyance, assurance or gift of property of any description, whether made by an instrument or otherwise;

….

“the relevant provisions of this Ordinance” (本條例的有關條文) means any of the provisions of sections 3, 4, 5, 6, 6A, 8, 11 (except subsection (6)) and 15; (Amended 69 of 1997 s.33)

……

and any reference to defeating an applicant’s claim for financial provision is a reference to preventing financial provision from being granted to the applicant, or to the applicant for the benefit of a child of the family, or reducing the amount of any financial provision which might be so granted, or frustrating or impeding the enforcement of any order which might be or has been made at the instance of the applicant under the relevant provisions of this Ordinance.

(5) The provisions of this section shall not apply to a disposition made more than three years before the commencement of this Ordinance. (emphasis added)

100.Mr Yim for R2 submitted that Section 17(1)(b) is only engaged if the Court “is satisfied that the other party has… made a disposition to which this paragraph applies…” As to the meaning of “the other party”, section 17(1) provides: -

“Where proceedings for relief under any of the relevant provisions of this Ordinance (hereafter in this section referred to as ‘financial provision’) are brought by a person (hereafter in this section referred to as ‘the applicant’) against any other person (hereafter in this section referred to as ‘the other party’)...” (emphasis added)

101.It was held by the Court of Appeal in HKCB Finance Ltd v Yuen Yi Wan Sandy, CACV355/2005, 01/08/2006 at §7:-

“7. It is significant to note that that section gives power to the court to set aside a disposition made by "the other party" but subject to the limitation in subsection (2). The "other party" is defined at the commencement of subsection (1) as being the person against whom relief is sought under the provisions of the Ordinance, that is somebody against whom an order for maintenance is sought. Hence in those circumstances the order made by HH Judge Gill did not, and could not have, set aside the mortgage granted by the first defendant to the plaintiff.” (emphasis added)

102.Mr Yim for R2 further submitted that the UK Supreme Court in Prest v Petrodel Resources Ltd [2013] 2 AC 415, 489B, emphasised that in the field of family law as in any other the law of property applies and that it is not possible to ignore a company’s separate legal personality, except in the most limited circumstances (see 488A-D).

103.However, based on the table in para. 96 above, there were 5 transfers or dispositions from H not from TF Co. Ltd., namely 3 sums of HK$1,000,000 each in 2015, 2016, 2018 and HK$2,500,000 in 2019 and HK$2,000,000 in 2020, totalling HK$7,500,000 (“the said HK$7,500,000”), which were said to be the Dividends paid to R2. H and R2 had not challenged the table in their evidence and closing submissions. In my view, there is no reason for H to pay dividends out of his own pocket to R2 on behalf of TF Co. Ltd., especially when H claims TF Co. Ltd. to be a separate legal entity.

104.Furthermore, nature of the Dividends and that of the Director’s Emoluments are not the same. For the Dividends, they were paid to R2 on the basis that she is a shareholder of TF Co. Ltd.. Nonetheless, I find that she is not. Thus, she is not entitled to receive any of the Dividends in any event.

105.Unlike the Dividends, I accept that the Director’s Emoluments paid by paid TF Co. Ltd. to R2 were remuneration generated through R2’s own hard works including the introduction of businesses to the company, taking care of and managing H’s diary and accounts of TF Co. Ltd. etc. Hence, the Director’s Emoluments should not be included in or mixed with the financial dispute between H and W.

106.I consider that it is unnecessary to determine the academic question raised by Mr Yim for R2, namely whether the Director’s Emoluments received by R2 from TF Co. Ltd. (but not H) are reviewable under section 17(1)(b) of the MPPO.

107.In the circumstances, I am satisfied that for the said HK$7,500,000, H has the intention of defeating W’s claim for financial provision and I now order to set aside these dispositions pursuant to section 17 of the MPPO. Alternatively, I would take the said HK$7,500,000 into account by adding back this sum to H’s assets when dealing with the trial of the ancillary relief.

F. Unit Trust Section 17 Application

108.W applied by summons dated 26 August 2013 to set aside under section 17 the following 3 transfers, made from H’s 119 Account to R2 in April / May 2013 and for consequential directions for re-transfer and restraint:

a. of HK$2,880,310;

b. of US$412,252.43;

c. of AU$290,349.24.

109.The statutory evidential presumption engages (that H intended to defeat W’s ancillary relief claims) in respect of these transfers, such that he ought to offer rebuttal evidence.

110.H and R2 explained in respect of these payments as follows:

a. Between February 2012 and May 2013, H and R2 agreed to transfer funds from TF Co. Ltd.’s bank account (on which both H and R2 were jointly named and able to sign singly) to H’s 119 Account to invest in securities, funds and other products. Ten deposits totalling HK$4.82 million were made.

b. After W issued her ancillary relief claim, H ‘sorted out’ the calculation of who owned what of the funds had been used for investment. As at April 2013, H held:

i. HK$3.72 million on trust for TF Co. Ltd.; and

ii. HK$1.2 million on trust for R2.

c. When H received W’s ancillary relief claim, he ‘got into a sudden panic’ as he thought that W would make claims to property held by him on trust for others. H resolved to return the funds credited to his account but held for others, i.e. TF Co. Ltd. and R2, to their beneficial owners. At this point he had not taken legal advice.

d. The HK$3.72 million was held in a unit trust comprising US$412,252.43 and AU$290,349.24, and H understood it could only be ‘transferred out’ to an HSBC account. Thus, and as he had not at that time calculated who owned exactly what pursuant to the investments, they were paid to R2’s HSBC not TF Co. Ltd.’s account.

111.Mr Yim for R2 accepted in the closing that the sum of HK$2,880,310 belonged to H but contested that the sums of US$412,252.43 and AU$290,329.24 never beneficially owned by H and should not be reviewable.

112.As I find that TF Co. Ltd. is beneficially owned by H and the sums of HK$2,880,310 and HK$3,727,056 were respectively returned to H and TF Co. Ltd., Ms Cheng for W accepted that W will not seek the transfer of HK$3,727,056 to H. Both sums of HK$2,880,310 and HK$3,727,056 has already formed part of H’s assets.

113.In my view, there is no evidence showing that R2 did transfer any sums to H for investment at any time and the sums transferred to H between February 2012 and May 2013 were from the accounts of TF Co. Ltd. not from R2. Thus, I disagree that H held any part of the said sums on trust for R2. The story of H and R2 is self-serving, incredible, and built on nothing more than bare assertions. I conclude that the Unit Trust Funds as a whole are beneficially owned by H and/or TF Co. Ltd. but not R2. Hence, H fails to rebut the presumption that the Unit Trust Funds were dissipated with the intention of defeating W’s claim for ancillary relief.

114.Ms Cheng for W submitted in her opening that the Court shall first ascertain the value of the Unit Trust Funds (in HKD) at the time of their dissipation. According to the bank statements of H’s 119 Account dated 30 April 2013, the US and Australian-dollar investments were respectively worth HK$3,199,429.27 and HK$2,332,562.40 (at the then-prevailing HSBC exchange rate of 1 USD = HK$7.760850; 1 AUD = HK$8.033644). As a matter of arithmetic, the Unit Trust Funds would have then been worth approximately HK$8,412,301.67.

Investment	Original Currency Value	Approximate HKD Value (Time of Dissipation)
Local HK Securities	HK$2,880,310.00	HK$2,880,310.00
USD Unit Trust	US$412,252.43	HK$3,199,429.27
AUD Unit Trust	AU$290,349.24	HK$2,332,562.40
Total:		HK$8,412,301.67

115.Mr Marwah for H and Mr Yim for R2 had not challenged Ms Cheng’s submission in this regard, namely the value of the Unit Trust Funds (in HKD) at the time of their dissipation.

116.As the sums of HK$2,880,310 and HK$3,727,056 were respectively returned to H and TF Co. Ltd., Ms Cheng for W submitted that the balance in the sum of HK$1,804,935.67 (ie HK$8,412,301.67 - HK$2,880,310 - HK$3,727,056) has not been returned by R2 who shall account for the same. I accept her submission.

117.I therefore order that R2 do return the sum of HK$1,804,935.67 to H. Alternatively, I would take the said HK$1,804,935.67 into account by adding back this sum to H’s assets when dealing with the trial of the ancillary relief.

G. Conclusion

118.In the circumstances, I find that:

i. regarding the Landed Properties Preliminary Issue, H is not a beneficial owner of any of the Landed Properties; and

ii. regarding the TF Co. Ltd. Preliminary Issue, R2 is not the alleged 50% beneficial shareholder of TF Co. Ltd. and the sum of HK$3,727,056 held in H’s 119 Account belongs beneficially to TF Co. Ltd..

119.As to the Dividends and Directors’ Emoluments Section 17 Application, I order to set aside the transfer of the said HK$7,500,000 from H to R2. Alternatively, I would take the said HK$7,500,000 into account by adding back this sum to H’s assets when dealing with the trial of the ancillary relief.

120.With regard to the Unit Trust Section 17 Application, I therefore order that R2 do return the sum of HK$1,804,935.67 to H. Alternatively, I would take the said HK$1,804,935.67 into account by adding back this sum to H’s assets when dealing with the trial of the ancillary relief.

121.As to the question of costs, I do not think that any of the parties can be regarded as the winner as part of the issues in dispute are ruled in favour of some of them but not all. I consider that the fair costs order shall be no order as to costs. I now make an order nisi that no order as to costs of these 4 sets of the preliminary issues and applications including all costs reserved in relation thereto, which shall become absolute unless any of the parties take out a summons to vary with supporting affidavits, if necessary, within 14 days.

122.The trial of the ancillary relief proceedings between H and W had been heard before me and finished on 24 May 2023. The judgment for the ancillary relief will be handed down together with this judgment, which will no doubt greatly affect the outcome of the ancillary relief judgment.

123.Last but not least, I thank all Counsel for their assistance.

Petitioner: Ms Bonnie Cheng and Mr Adrian Kwan instructed by Chaine Chow & Barbara Hung

1^st Respondent: Mr Azan Marwah and Mr Josh Baker instructed by Tsang, Chan & Woo Solicitors & Notaries

2^nd Respondent: Mr Eugene Yim instructed by Chui & Lau