Wong Chung Ngai v. Zhong Hong

HCA 1355/2018

[2024] HKCFI 2715

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1355 OF 2018

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J U D G M E N T

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1.This is is the trial of an action. The Plaintiff’s case is that the property at Flat B, 10/F, Tower 1, The Regalia, No.33 King's Park Rise, Kowloon, Hong Kong ("Regalia") was owned jointly between the Plaintiff ("P") and the Defendant ("D"), although the legal title of the Regalia was vested in the joint names of P's father and D. P alleges that P's father was merely a trustee for P. When Regalia was sold it was orally agreed between P and D that the cheque for the proceeds of sale should be made payable to D who should, after the cheque was cleared, account to P his rightful entitlement which was HK$5,238,569.92 (“the Oral Agreement”). P alleges that D failed to do so despite demands. In the circumstances, D was indebted to P in an amount of HK$5,238,569.92. The present action is based upon the said indebtedness.

2.D denied the existence of the Oral Agreement. The case of D is that Regalia was purchased by her as the sole beneficial owner and for her personal use. P’s father was made a joint owner merely for the purpose of obtaining a mortgage. It was expressly agreed between P, P’s father and D that P’s father was merely acting as a trustee and that D was the sole beneficial owner of Regalia. D accordingly counterclaimed various declaratory reliefs.

Relevant Background

3.P was educated in Canada and in 1995/1996, he and his business partner set up a garment business named Joy Plus Trading (HK) Limited (“Joy Plus”). Joy Plus also runs a garment factory in the PRC.

4.P was married with one son and one daughter. P developed ex-marital affair with his then secretary Madam Mak and in 1999, P and Madam Mak jointly owned a property called Bayview Garden. Then in 2001, P and Madam Mak again acquired a property called Astoria as joint tenants.

5.In or about 2001/2002, P developed another romantic relationship with D via social platform. D was then married to a Hong Kong man and has one daughter. D came to Hong Kong on a “one-way permit” in 2002.

6.In early 2003, P and D began to cohabitate, initially in a rented flat. On 20 November 2003, a property known as “49C Liberte” was acquired with P and D being joint tenants at a consideration of HK$2,180,000. P paid the deposit and the acquisition was backed by a bank mortgage. P and D then cohabitated in 49C Liberte. Since, 2004, D’s daughter named Chung Tse Ying (“Chung”) also began living with P and D in 49C Liberte.

7.In October 2003, Bayview Garden was sold. In September 2004, Astoria was also sold. Both properties were apparently sold at a loss. P however continued to maintain Mak. P admitted in cross-examination that he had 3 families to take care of during the time he lived with D.

8.In 2004, P and D acquired a property in Shenzhen (“SZ Property”). It was purchased in the joint names of P and D. In P’s witness statement, he only said he bought the SZ Property at the price of slightly over RMB1 million but did not say how the purchase price was made up. D’s evidence was more specific. She said in cross-examination that the purchase price was RMB1.2 million and that she and P each paid RMB500,000. The remaining RMB200,000 was supported by a mortgage. Mortgage instalments were contributed by both P and D although payments were made out of D’s PRC bank account. After a year, D realized that the interest payments were rather high and decided to repay the mortgage. D said it was her who repaid the outstanding mortgage.

9.Then in 2005, D and her ex-husband finalized their divorce.

10.It is not disputed that the SZ Property was sold in 2006. P said in his witness statement that it was sold for RMB3.3 million and he gave half of the proceeds, i.e. RMB1.6 million to D. On the other hand, D said each of them got RMB1.6 million and P’s RMB1.6 million had been distributed to him.

11.On 17 May 2007, P’s father and D signed a provisional sale and purchase agreement for the acquisition of Regalia. The consideration was HK$7,150,000. The initial deposit of HK$220,000 was paid by a personal cheque of D. Then on 30 May 2007, formal sale and purchase agreement was signed. A further deposit of HK$495,000 was again paid by D via a cashier’s order. Stamp duty of HK$268,355 was also paid by D’s personal cheque.

12.On 27 June 2007, one day before the completion date, an interest free loan in the amount of HK$1 million was obtained from P’s father. That sum of HK$1 million was deposited by way of a cheque into the HSBC bank account of D. As subsequent documents[1] show, this loan was in reality recognized by P, P’s father and D as a loan by P’s father to D.

13.Completion of the acquisition of Regalia took place on 28 June 2007 at the office of Messrs. Lau, Chan & Ko. A mortgage loan facility agreement was signed by D and P’s father as borrowers and the loan amount was HK$3 million. The balance of purchase price plus legal costs was in the sum of HK$3,443,500 and was paid to Messrs. Lau, Chan & Ko by way of D’s personal cheque.

14.It is also agreed that subsequent mortgage instalment payments were automatically withdrawn from D’s personal bank account at HSBC.

15.In or around December 2007, P, D and Chung moved into Regalia.

16.On 29 February 2008, 49C Liberte was sold at a consideration of HK$3,438,000. In his witness statement, P said that all proceeds of sale went to D save that HK$1.5 million was used as a partial repayment of the Regalia mortgage. On the other hand, D’s evidence is that P had regularly borrowed money from her in order to fund his trading business and garment factory in the PRC as well as his personal life. It was not unusual for P to borrow hundreds of thousands of RMB from D every few months. P would mostly repay such loans in Hong Kong dollars. Prior to the sale of 49C Liberte, P was indebted to her for RMB2.5 million odd. D had recently obtained and produced bank documents showing that between July 2006 and June 2007, she had lent RMB2,571,000 to P. Although each of P and D would be entitled to HK$1.7 million out of sale of 49C Liberte, the entire proceeds of sale was deposited into D’s HSBC bank account because P used his HK$1.7 million to partially repay D. According to D, all proceeds from the sale of 49C Liberte deposited into her bank account were thus her money and she could deal with it as she pleased. On 7 March 2008, she arranged for and made a partial repayment of HK$1.5 million to the bank to reduce the Regalia mortgage[2].

17.On 7 January 2011, D granted a loan of RMB1 million to Joy Plus which is evidenced by an IOU[3].

18.Then in 2011/2012, P’s divorce proceedings with his ex-wife was finalized.

19.In January 2012, P again asked D for a loan to fund Joy Plus as it was in need of financial assistance. On 9 January 2012, D arranged for the re-mortgage of Regalia[4]. Then on 10 January 2012, D lent HK$2.5 million to Joy Plus which is evidenced by an IOU[5]. This IOU stated that the loan was made by D to Joy Plus, not by D and P’s father or by D and P.

20.On 18 August 2014, D again re-mortgage Regalia and obtained HK$1,095,862 for her own use. The documents[6] show that as of 11 August 2014, the outstanding mortgage loan was HK$3,104,138.00. This outstanding was repaid on 18 August 2014. On the same day, a fresh loan account was established in the joint name of D and P’s father. The new loan amount was HK$4,200,000. The original outstanding HK$3,104,138.00 was repaid, leaving a balance of exactly HK$1,095,862. In P’s witness statement[7], he did not suggest that D had to obtain his consent or the consent of P’s father before doing so.

21.In late 2014, the relationship between P and D turned sour. D moved out of Regalia in early 2015. P also moved out of Regalia in March 2015. Chung had already left Hong Kong for studies in Canada in August 2013.

22.According to the Agreed Statement of Facts, on 15 June 2015, D entered into a Provisional Sale and Purchase Agreement for the sale of Regalia at a consideration of HK$14,600,000. P did not mention about this incident in his witness statement. D however said that as the sole beneficial owner of Regalia, it was unnecessary to inform P’s father regarding this. It was only after she accepted the offer and signed the Provisional Sale and Purchase Agreement that P was informed so that he could arrange P’s father to execute relevant documents at various stages.

23.Completion of the sale of Regalia was scheduled on 26 August 2015. According to D, she discussed with P in order to arrange for the repayment of HK$1million interest free loan to P’s father. It was arranged that the said HK$1million could be set off from the amount of HK$2.5 million that Joy Plus owed D. Hence, two documents[8] were executed which have the effect of Joy Plus taking over the loan of HK$1million owed to P’s father. The corresponding outstanding amount owed by Joy Plus to D was reduced to HK$1.5 million. P admitted in cross-examination that these two documents were prepared by Joy Plus’ staff at his instruction.

24.On 26 August 2015, D, Chung, P and P’s father together attended the office of Messrs. Tam, Pun & Yipp to complete the sale of Regalia. According to a completion statement[9], after deducting redemption money and all related expenses, a balance sum of HK$7,557,139.84 would be payable to the vendors upon completion. A cheque for this sum was made to D. Including the deposits totaling HK$2,920,000 that had already been received by D, D obtained a total of HK$10,477,139.84 by the sale of Regalia.

25.On 25 May 2018, D received a demand letter from P’s solicitors demanding for the payment of HK$5,238,569.92 which is the amount claimed by P in this action.

P’s case of the Oral Agreement

26.According to P’s witness statement, when completion of the sale of Regalia was about to take place, he and D talked about the arrangement. D suggested that the whole proceeds of sale be paid to her first, to spare the need of troubling P’s father. D promised that “once the funds was received”, she would account to P his half share. In §11 of the Statement of Claim, it was pleaded that D agreed that “[she] should after the cheque was cleared account to P his rightful entitlement in the said amount of HK$5,238,569,92”.

27.P’s witness statement continued to say that he was unable to reach D after the completion of the sale of Regalia. The telephone number D used could no longer reach her. This lasted for months. When he at last reached D and talked to her, she wrongfully claimed that Regalia belonged solely to her and she owed P nothing.

28.In the course of P’s Opening I referred Counsel for P to §12 of the Statement of Claim which vaguely referred to “repeated demands made by P and by a letter dated 25 May 2018”. I asked Counsel whether, between 26 August 2015 and 25 May 2018, there were occasions when P demanded D to repay the alleged debt. Counsel for P merely referred me to §§38 and 39 of P’s Witness Statement which talked about the incident set out in paragraph 27 above. Counsel for P said that according to his instructions, P could only say  that it took place in a matter of months after the date of completion of the sale of Regalia. In other words, since around the first or second quarter of 2016, no demand was ever made by P until the issuance of the demand letter dated 25 May 2018. In fact, §12 of the Statement of Claim pleaded that D became incommunicado.

29.However, P had filed an affirmation dated 19 October 2019 in support of his injunction application. At §47, P referred to an incident that took place on 18 October 2017. In fact, after moving out of Regalia, P rented a unit in Block 3 Liberte. Incidentally, D also bought a flat in Block 2 of Liberte. On 18 October 2017, P and D met each other inside one of the lifts leading to the podium. At the time, P was with his present wife whom he married in 2016. There was an altercation between P’s present wife and D. Yet, P did not mention making any demand to D for repayment. The subject of “debt” was not mentioned at all.

D's case on the Oral Agreement

30.D denies the existence of the Oral Agreement. D’s case is simple and straightforward. In 2007, she decided to acquire Regalia as sole owner for personal use. D would allow P to reside therein while they remained in a romantic relationship. The sole reason for P’s father to be named as a joint tenant was to facilitate the obtainment of a mortgage loan. All payments involved in the acquisition of Regalia were made by D save that she had obtained an interest free loan of HK$1 million from P’s father. It was their understanding that this loan would be repaid after D sold Regalia. This loan was also made on the condition that P’s father may stay in Regalia if he so wished.

31.When Regalia was sold in 2015, P demanded that the HK$1 million loan be used to partially set-off a loan of HK$2.5 million previously made by D to Joy Plus. D agreed. Other than that, there was never any agreement for any part of the proceeds to be given or transferred to P after the sale of Regalia. D was truly entitled to the entirety of the sale proceeds of Regalia.

D’s Summons to adduce further documents

32.Returnable on the first day of the trial was a summons issued by D for an order that D do have retrospective leave to file and serve her 2^nd Supplemental List of Documents dated 11 March 2024. D’s application was opposed. After hearing submissions from counsel, I allowed D’s application save and except Item 21 of the 2^nd Supplemental List of Documents and promised to give my reasons in the course of this Judgment.

33.The trial of this action was originally scheduled to start on 8 May 2023. It was however adjourned to 14 April 2024. During the adjournment, P obtained a consent order for third party discovery against HSBC in relation to parties’ bank statements. Pursuant to the consent order, parties were directed to file further witness statements as to facts in relation to the bank statements.

34.On 23 November 2023, bank statements were provided to P’s solicitors and on 23 January 2024, P filed his Supplemental Witness Statement.

35.On 11 March 2024, D’s solicitors filed and served the 2^nd Supplemental List of Documents of D. On 20 March 2024, D filed and served her Supplemental Witness Statement where she made specific references to bank documents disclosed as Items 22 to 26 of the 2^nd Supplemental List of Documents.

36.Then on 26 March 2024 (20 days before the scheduled commencement of the trial), P’s solicitors wrote to D’s solicitors enclosing a revised Bundle B and a Bundle C3. Bundle C3 contained all of the documents now sought to be relied on by D in her 2^nd Supplemental List of Documents. The said letter specifically stated:

“We refer to the above action and send you herewith a revised Bundle (B) and a Bundle (C3) for your attention. We should be grateful if you would replace the index of Witness Statements and Affirmation and insert pages 52-65 into the Bundle (B).”

The preparation of trial bundles by P was pursuant to the Order of Peter Ng J. made on 2 February 2023. Paragraph 4 of the said Order obliged P to lodge with the Court and serve on D agreed trial bundles. By the time of this letter, P and his solicitors already had two weeks to consider the documents disclosed in D’s 2^nd Supplemental List of Documents and to formulate their position. In my view, the action of P’s solicitors indicated P’s agreement to include the documents disclosed in D’s 2^nd Supplemental List of Documents as part of the documents which can be adduced and used at the trial. At the very least, the said letter impliedly conveyed a message that production of those documents would not be opposed by P.

37.Since 26 March 2024, there was no indication of change of stance up to 5 April 2024 when P’s Counsel filed and serve P’s Written Opening. There was no indication in P’s Written Opening that P would oppose to D’s production and reliance on the documents already lodged with Court under Bundle C3.

38.On 8 April 2024, P’s solicitors suddenly wrote to D’s solicitors saying:-

“We referred to the Defendant’s Supplemental List of Documents dated 11 March 2024 and the documents disclosed.

Although the documents are now contained in Bundle C3, we should put on record that we object of their production.

It is trite law that late production of documents are not permissible without the leave of the court. We note that your client has never sought leave for the documents’ production…”

The said letter then continued with demanding D’s confirmation that Bundle C3 should be removed from the court and the documents therein should be ignored. In my view, P’s solicitors were seeking to withdraw from their previous agreement of including Bundle C3 (and documents therein) as part of the agreed trial bundle.

39.Consequently, D issued a summons dated 10 April 2024, returnable on the first day of the trial, seeking retrospective leave to file and serve her 2^nd Supplemental List of Documents.

40.Counsel for P opposed the application on the grounds of (1) lateness; and (2) no chance to investigate and respond. He did not question the relevance of these documents. Counsel for P also indicated that there was no challenge to authenticity.

41.On the point of lateness, Counsel for P frankly acknowledged that P’s objection was late. First of all, it was in my view not only late. It was an attempt to backtrack from an implied agreement to include the documents in the agreed trial bundles, which agreement had already been intimated to D. Secondly, D had explained in her 2^nd Affirmation why such documents were not disclosed earlier and I accepted her explanations as genuine, particularly in the light of the developments after the last adjournment of the trial. Thirdly, the documents were in any event provided to P on 11 March 2024. There was more than one month in which P could make investigation or response (if so genuinely called for). For nearly one month, i.e. up to 8 April 2024, P’s solicitors had never indicated to D’s solicitors in what ways their investigation and/or response would be hampered or prejudiced by the lateness of the disclosure. It is important to note that Item 17 consisted of contemporaneous Whatsapp messages between P and D at the relevant time. Item 18 showed official records of telephone calls between P and D generated by the mobile phone service provider. Item 19 was just another IOU between D and Joy Plus. Item 20 was just a copy of the Provisional Sale and Purchase Agreement for the sale of Regalia (which is not a fact in dispute). Items 22 to 27 were official bank documents. Up to the first day of the trial, P had slightly over one month to prepare for his responses, if any. There was no attempt to prepare a draft further supplemental witness statement to set out P’s responses. Surely, if Counsel for P applied for leave to adduce P’s responses to those newly included documents in the course of his examination-in-chief, I would afford P with such opportunity[10].

42.In the circumstances, I did not see any real prejudice on P if such documents were to be received in evidence save and except one item, i.e. Item 21. Item 21 consisted of a bundle of copies of handwritten notes of D. These documents purported to show that D had been carrying on garment trading. In my view, these documents were not sufficiently relevant and probative to the real issues in dispute because they were all undated and illegible. When I raised my concerns with Counsel for D, he fairly acknowledged the problem and the marginal relevance of these handwritten notes. In the circumstances, I was not prepared to exercise my discretion to allow Item 21 to be adduced and relied upon by D.

Credibility of P

43.It is not disputed that P’s case is based on an alleged oral agreement. The burden of proof is on P. He is the only witness for his case. According to P’s case, the alleged indebtedness arose as soon as the solicitors’ cheque of HK$7,557,139.84 became cleared, i.e. within one or two days from 26 August 2015[11]. The date of the demand letter from P’s solicitors was 25 May 2018, some 33 months later. As mentioned above, during P’s Opening, Counsel for P clarified that the so-called “repeated demands” meant: (1) an incident which took place in a matter of “months” after 26 August 2015 at which D wrongfully claimed that Regalia belonged solely to her and that she owed P nothing; and (2) the demand letter dated 25 May 2018. In other words, there were around 2 years during which no demands for repayment of the alleged indebtedness were made by P. According to the Statement of Claim[12], D at first procrastinated and later avoided P by changing her telephone number and became incommunicado. Although not so expressly pleaded, it was the apparent reason put forward by P to explain why no formal demand was made until 25 May 2018. P had put forward no other reason, whether in his pleadings or in his witness statements, to explain why no demand for repayment of the alleged indebtedness was made until 25 May 2018.

44.I agree with counsel for D that whether D had in truth been avoiding P and became incommunicado is an important pointer both as to the inherent probability of P’s case and his credibility.

45.This is why the WhatsApp exchanges[13] between P and D recently disclosed by D become crucially important. These messages covered a period between 30 December 2015 and 4 July 2016. The following points can be observed:-

(1)  In the conversations on 30 December 2015 (4 months after the completion of sale of Regalia), D told P that she would be in Hong Kong for some times and invited P to call her when he was free to do so. P returned with an emoji “Okay”. D even told P that he should telephone her if she did not reply by WhatsApp. There was absolutely no sign of D seeking to avoid P.

(2)  On 10 January 2016, D dunned for repayment of loan interest. It must be a reference to D’s interest-bearing loan made to Joy Plus which was still outstanding in the reduced amount of HK$1.5 million. P replied saying that interest would be deposited, apparently into D’s bank account, on Monday. Then D asked when could the loan balance be repaid. P replied saying that he (or Joy Plus) was in financial difficulties. In my view, it is most extraordinary that if D were indebted to P as claimed, he would not have demanded D to repay him the alleged indebtedness.

(3)  There were further conversations on 11 and 13 January 2016. Again, there was absolutely no sign of D avoiding P. Neither was there mentioning of the Oral Agreement and the alleged indebtedness.

(4)  On 17 February 2016, D again dunned for interest payment. P promised to deposit interest the next day. Again, P did not demand for repayment of the alleged indebtedness. By this time, it was already about 6 months from the completion of sale of Regalia.

(5)  On 11 March 2016, D complained about the lack of punctuality in payment of loan interest. P tried to explain, saying that it was out of his control. D specifically said:-

“我真係唔想每個月追利息數, 為何沒賣樓前很準時,賣完樓之後就開始拖,咁大間公司拖一個女子幾千元利息有意思嗎”

P then replied in this way:-

“我今期糧都未有得出, 我又能怎樣, 幾千元對你一點影響都無, 對我來說是要攤大手掌問人借錢過日子”

Here, D specifically referred to the sale of Regalia. In P’s reply, he stressed his dire financial difficulties, saying that he had to live on borrowings. In my view, it is most extraordinary that P did not mention the Oral Agreement and the alleged indebtedness at all. Then D said further:-

“你又怎知我無影響呢, 只是真係影響到我就要調動計劃, 每個月供樓都要靠呢筆數, 我有啲嘢想請教你,你如方便電我”

Hence, this is unmistakable contemporaneous evidence that D had not been avoiding P at all. The conversations actually continued with P teaching D how to conduct her garment business.

(6)  The conversations on 14 April 2016 touched upon D’s visit to P’s factory in “茶山”. P was apparently unhappy with D’s visit without first notifying him. P said:-

“我已交代完你去廠就通知我, 避免撞到, 已經係特登避開你”

It is in my view clear contemporaneous evidence that it was P who was seeking to avoid D. Then on 18 April 2016, D again dunned for interest payment. P replied saying:-

“你給我帳戶吧, 我自己入畀你, 窮也不在乎這幾千元”

Not only did P fail to mention the Oral Agreement and the alleged indebtedness, he even offered to use his own money to repay D the interest payment owed from Joy Plus. In my view, it is again extraordinary. If D were truly indebted to P for over HK$5 million as he so claimed, the most natural thing for P to suggest would be a setoff of the interest payment from D’s indebtedness towards him.

(7)  P and D continued to communicate through WhatsApp. It was clear that P was aware that D had moved to Block 2 of Liberte. Then on 7 June 2016, D asked P about Joy Plus’ attitude towards the outstanding HK$1.5 million debt owing to D. D said:-

“我想知, 你們公司究竟想點

當初借錢因為我們同居關係而借, 依家已分開真係無任何理由再借錢給你們, 現在出現問題你乜都唔理咁, 一句你都冇辦法就當冇咗件事, 做人係咩咁呢, 係咩應該想辦法解決呢…

做人坦誠啲好, 講真年初你想我幫你, 借十五萬你, 我真係唔知借還是唔借, 嗰一刻我其實好想借, 幫你渡過難關, 但諗下我們什麼關係都不是了, 正確講係你唔想再和我有任何關係, 我何必咁傻, 我亦知你仲係同個美容女一起, 點解佢唔幫你

電話唔聽 是否要我上公司炒”

It is thus clear that it was P who was trying to avoid D. Up to this point in time, P still had not mentioned a thing about D owing him the alleged indebtedness. More importantly, D mentioned that in early 2016, P even attempted to borrow money from her. If P’s case were truthful, he should be dunning D for repayment of his rightful entitlement to the proceeds of sale of Regalia rather than asking D for a loan. Furthermore, it is clear that by June 2016, P and D had already severed all relationships. P was then engaged in another amorous affair. P did not deny any of the assertions made by D in these conversations. More interestingly, P even suggested D to sue Joy Plus.

(8)  Eventually, on 3 July 2016, D again dunned P for repayment and complained about P refusing to answer her telephone calls. There was apparently no further reply from P. By this time, it was nearly 1 year after the completion of the sale of Regalia.

46.In my view, the contents of these contemporaneous WhatsApp messages exposed the inherent improbability of P’s case. If there were such an alleged Oral Agreement, D would have long been in breach and became indebted to P since around 27 or 28 August 2015. It is plainly inconceivable why one cannot find any trace of P demanding D to repay him all or at least part of the alleged indebtedness. These messages also flatly contradicted P’s assertions that D became incommunicado. The episode of P seeking to borrow HK$150,000 from D (instead of demanding her to repay him) is simply irreconcilable.

47.Under cross-examination, P then offered a different version as to the term of the alleged Oral Agreement. P first said that towards the end of 2014, D suggested that due to their frequent quarrels, they should separate for one year. If after one year, they each find another lover, then they would separate. According to P, D specifically said “I would pay this money back to you if we separate”. When Counsel for D asked P when was D supposed to repay him the HK$5 million odd, P said: “One year later. We would separate for one year. If we reunite, we would get married and this money would be used to buy a flat. I never thought of getting this money back unless we became really separate.”  It was then put to P that this version was different from what he stated in the Statement of Claim and Witness Statement. In his pleadings and Witness Statement, his case was that around 26 August 2015, completion date for the sale of Regalia, D promised to pay him the HK$ 5 million odd “after the cheque was cleared” or “after fund was received”. P was asked which version was correct. P said the version he gave in Court was correct and what he stated in his pleadings and Witness Statement was wrong. P was not re-examined on this point. Accordingly, P provided no cogent explanation as to how such a fundamental discrepancy could have occurred. It is noteworthy that not only were the Statement of Claim and Witness Statement backed by P’s statements of truth. In fact, P also filed an affirmation in support of his injunction application wherein he deposed to the version given in his pleadings and Witness Statement.

48.In the light of the above, I am thoroughly unimpressed by P as a witness. In fact, on numerous occasions throughout his cross-examination, P gave answers that were either contradicted by contemporaneous documents; inconsistent with his witness statements; or not covered by his witness statements thereby bearing hallmarks of recent fabrications. The following are the salient instances:-

(1)  P admitted in cross-examination that he got remarried in June 2016. He met his new wife in 2015 and amorous relationship already developed in the beginning of 2016. Counsel for D thus put to P that even on his new case of “one year cooling period”, by end of 2015 or beginning of 2016, he should have dunned for repayment of the alleged HK$5 million odd indebtedness. P then gave a new story never hitherto mentioned in his pleadings, affirmation and witness statements. P alleged that one night in 2014, D lured him into confiding with her his under-table dealings with a supplier of Joy Plus (named Pang Pui Ping). P alleged that D surreptitiously taped him. Then towards the end of 2015 when D told him that all proceeds of sale of Regalia belonged to her and that she would not repay to him his share, D told him about the tape and threatened that should P try to get payment from her, she would expose the tape. P even said that D taped him with the intention of blackmailing him in due course. P thus said he was under threat when he engaged in those WhatsApp messages with D. This was no doubt a very serious allegation raised for the first time on the third day of the trial. P stated in the box that he could produce the tape. Initially, Counsel for D sought to put to P that there was no such tape. This question was then withdrawn. There was no subsequent application for late production of this alleged tape. When asked as to why he did not mention such serious allegation in his affirmation and witness statements, P said:

“When I sue D, she said it was all her money. I consider it ridiculous. I just have to show that the money came from me. Then I would win. D had never worked and would not have money. I decided that I need not say all these in my evidence. That is all.”

P was not further re-examined on this point. Neither was this serious allegation put to D when she was cross-examined. In my view, P’s explanation was not credible and was most probably his lame attempt to wriggle out of the contents of the WhatsApp messages. It is noteworthy that although copies of the WhatsApp messages were only disclosed in the 2^nd Supplemental List of Document of D on 11 March 2024, D had in fact mentioned about the existence of WhatsApp messages between her and P as early as 19 September 2019 in §22 of D’s Witness Statement. If there were any truth in P’s allegations, I cannot understand why it was not mentioned in his Supplemental Witness Statement. In my view, P had been making up his evidence as and when it suited him.

(2)  In D’s 2^nd Supplemental List of Documents, various banking records were disclosed which were summarized in Exhibit D-1. In the course of P’s evidence-in-chief, he gave evidence about the 6 transactions listed on Exhibit D-1 evidenced by C3/616. P said that they relate to D’s business of buying leftover materials of Joy Plus at very low costs and used P’s factory to produce them into garments. D then sold the garments for profit. D thus had to pay P’s factory for fabrics and OEM charges. In relation to transactions (1) and (2), they were like money exchange transactions. D wanted Hong Kong dollars and she would transfer RMB to P’s factory. For transactions (3) to (6), they were related to D’s garment business. D paid “Pang Pui Ping” which was a supplier of Joy Plus.

In cross-examination, it was put to P that his evidence actually contradicted §10 of his Witness Statement in which he said:

“D had been a housewife ever since I met her. She had received some training as a beautician but had never worked as one. Indeed throughout her life and until now she never has a job or an income.”

Initially, P tried to argue (in my view evasively) that §10 was not incorrect because he gave her this opportunity and she had to rely on his factory. P said it was like giving money to her and if that was treated as a job, then he would agree that §10 was incorrect. Eventually, P accepted that §10 was incorrect. Furthermore, on the one hand P said that D’s garment business commenced only after 2009 and hence prior to that D was an incomeless housewife, yet on the other hand his evidence about transactions (1) and (2) of Exhibit D-1 meant that D must have had independent financial resources to engage in such money exchange transactions well back in 2006[14]. I agree with Counsel for D that this episode demonstrated P’s disingenuous attempt to belittle D’s financial ability and would only withdraw when he was faced with the inevitable.

(3)  In relation to the five 2007 transactions in Exhibit D-1, they were all transfers of RMB from D’s bank account in China Merchant Bank in the PRC to P. In his viva voce evidence-in-chief, P said he and D jointly owned the Shenzhen Property as husband and wife. They agreed to use the proceeds of sale of the Shenzhen Property to purchase Regalia. The said 5 transactions represented D transferring the proceeds of sale of the Shenzhen Property to P’s bank account in the PRC so that he would use his method of converting them into Hong Kong dollars in Hong Kong. P said he then transferred the Hong Kong dollars to D’s HSBC bank account so that she could pay for the deposit of Regalia. P said that the sale of the Shenzhen Property generated RMB 3.2 million which were all placed with D. D should have transferred them all to Hong Kong for the acquisition of Regalia. Yet in June 2007, D suddenly said she would only put up RMB 1 million for the purchase of Regalia, so she only transferred RMB2,412,500 to him (i.e the total sum of the said 5 transactions) because D treated RMB 1.6 million belonged to him. In cross-examination, Counsel for D pointed out his evidence given in Court was inconsistent with §§13 and 17 of his Witness Statement and §18 of his Affirmation. In both documents, P said that he had given “half of the proceeds of sale of the Shenzhen Property, i.e. RMB 1.6M to D”. This implied that P had obtained and kept his share of RMB 1.6M. When pressed for an explanation for such discrepancy, P said: “I agree I did not say so. I never thought I had to say so”. This is in my view not a cogent explanation at all.

(4)  P’s oral evidence as to why Regalia was acquired was also different from what he portrayed in his Witness Statement. In his viva voce evidence-in-chief, P said that D wanted a bigger flat in Hong Kong, therefore they had to sell the Shenzhen Property so that its proceeds of sale could be used to buy a bigger flat in Hong Kong. In cross-examination, P was confronted with §14 of his Witness Statement where he said:-

“After the Shenzhen Property was sold, we felt that we were in a financial position to acquire a bigger property as our home to replace Liberte if we ask my father for a small loan.”

P was again unable to provide a cogent explanation for the discrepancy.

(5)  In relation to the loan of HK$1 million obtained from P’s father, Counsel for D put to P that it was an interest-free loan. P disagreed. P’s answer was contrary to what appeared on §11 of the Agreed Statement of Facts. P then explained that when D asked P’s father for the loan, D said: “Father, if we make profit, we will share some to you” and that was why no interest was charged. This was again new evidence never before mentioned in his pleadings, witness statements and affirmation. No cogent explanation was offered as to why such evidence surfaced only on the 3^rd day of the trial. Moreover, it was inconsistent with the objective fact that on completion of the sale of Regalia, it was arranged between P, P’s father and D that the entire balance of proceeds of sale of Regalia was released by the solicitors to D. As part of the arrangement, P’s father was apparently contended with his original interest-free loan of HK$ 1 million to D being replaced by an interest-bearing loan from Joy Plus which would generate interest at 6% per annum as from 25 August 2015[15].

(6)  This brings to another important episode which again exposed, in my view, the inherent improbability of P’s case. It is P’s case that he is entitled to half of the beneficial interest in Regalia and that P’s father acted as his trustee in the acquisition of Regalia. If that were true, then upon the sale of Regalia, one would expect that the balance of proceeds of sale would be released to the two registered joint-owners by way of split cheques in amounts/proportion agreed between them. Instead, it is P’s pleaded case that the entire balance of proceeds of sale of Regalia was agreed to be released to D alone with her oral agreement to “account to P as soon as funds are received”. It is difficult to under the logic of this arrangement. When P was cross-examined as to why he did not ask the solicitors to issue split cheques, P said:-

“Solicitors’ split cheques will only give one to my father and one to D. D suggested: ‘Your father is so old, should not ask him to go to bank to deal with this money. And in fact, he is only involved with HK$1 million, and this HK$1 million loan was transferred to [Joy Plus]. There is no point in asking father to be troubled. Why not deposit the money to me. You don’t trust me? You had trusted me when the Shenzhen Property was sold. Unless you mistrust me, unless you don’t want to be with me again. We are just cooling off for one year, I did not say I am separating from you.’ Therefore, I agreed at the time.”

It was pointed out to P that the above evidence was again different from what he portrayed in §§36 and 37 of his Witness Statement. P agreed but said that he had told his barrister in the course of a number of conferences. I have been reminded by Counsel for D of the case Northampton Borough Council v. Cardoza & oths. [2019] BCC 582, at §37:-

“Factors relevant to the evaluation of a witness’s evidence were identified by Lewison J (as he then was) in Painter v. Hutchison [2007] EWHC 758 (Ch): [2008] BPIR 170 at [3] when addressing the unsatisfactory nature of the defendant’s approach to giving evidence. These included: evasive and argumentative answers, tangential speeches avoiding the question, blaming legal advisers for pleading, disclosure and evidence shortcomings, self-contradiction, internal inconsistency, shifting case, new evidence and selective disclosure. This was not intended to be an exhaustive list, but it is important and very helpful.” [emphasis added]

In any event, it is difficult to see how P’s father would be particularly troubled by a split-cheques arrangement. P’s father attended the solicitors’ office together with P, D and Chung on the day of completion. P’s father, as one of the two joint owners, also needed to give authorization to solicitors, whether the proceeds be released by way of split cheques or by way of one cheque to D. If split cheques were issued to D and P’s father, anyone could help depositing that cheque into the bank account of P’s father. He needed not be troubled. P’s father could then release the money to P by simply issuing a cheque. It is clear that P’s father had a current account because his original loan of HK$1 million to D was made by a cheque that was deposited into D’s bank account[16]. All-in-all, I am not impressed by P’s evidence and the blaming of his legal adviser.

(7)  P was also cross-examined on the sale of Liberte 49C. He said that after repaying the mortgage, a balance of HK$3 million odd was obtained. He said that since the property was in their joint names, he and D were each entitled to half of that money. He agreed that the entire balance of sale price went to D’s bank account. Thus, when HK$1.5 million was used to partially repay the mortgage of Regalia, this sum was his half share of the proceeds of sale of Liberte 49C. It was then put to P that his viva voce evidence was not reflected in §§20 and 21 of his Witness Statement. P agreed but again said he had told his lawyers. I am equally unimpressed by P’s evidence and the blaming of his legal adviser.

(8)  P was also cross-examined on C1/231 (dated 10 January 2012) which was the IOU issued by Joy Plus to D when the latter granted a loan of HK$2.5 million at the interest rate of 6% per annum. It is not in dispute that D first obtained this sum of HK$2.5 million by re-mortgaging Regalia. P agreed that by that time, his divorce was completed and there was no need to evade/avoid the Family Court. It was thus put to P that if his case were true, he was half beneficial owner of Regalia and thus half of this HK$2.5 million belonged to him. It was thus put to him that there was no reason why C1/231 evidenced a loan made by D alone, not a loan made by D and P. P explained that he was embarrassed because of conflict of interest and he never thought he needed to disclose to his business partner that half of the loan came from him. P then further alleged that the idea came from D. At the time, P said he was under grave financial stress and D suggested to him that since the mortgage loan interest was only 2% per annum, he could lend money to Joy Plus at 6% per annum. Counsel for D then put to P that his viva voce evidence was contrary to §§22-23 of his Witness Statement and §9 of the Reply and Defence to Counterclaim. P appreciated the discrepancy but maintained that the version he gave in Court was the correct version. He provided no explanation as to why he had hitherto repeatedly avowed to wrong facts in his pleadings and Witness Statement. In any event, this HK$2.5 million was partially repaid by set off as explained in paragraph 23 hereinabove. The contemporaneous WhatsApp messages showed that D repeatedly dunned for repayment of the outstanding balance of HK$1.5 million. P never suggested in those messages that half of the outstanding loan of HK$1.5 million was in fact his money. In my view, C1/231 is directly corroborative of D’s case that she was the sole beneficial owner of Regalia and all monies deriving therefrom.

(9)  P was then cross-examined on the 2^nd remortgage of Regalia on 18 August 2014 when D obtained HK$1 million odd. It was put to P that if his case were true, he should have obtained half of this HK$1 million odd. P then offered for the first time why this remortgage took place. P said that D told him that if she took this HK$1 million odd more from the remortgage, P would not need to pay her maintenance again. This evidence was again not mentioned in any of his pleadings, affirmation and witness statements. I agree with Counsel for D that this was a beguiling attempt on the part of P to wriggle out of the objective fact that D was in full control of Regalia, which was consistent with the fact that she was in reality the sole beneficial owner of Regalia. In any event, P accepted that D did not seek his consent before arranging for this remortgage. P said he only learnt about this afterwards. It is to be noted that this 2^nd remortgage involved the closing of the previous loan account and the opening of a new loan account by the two registered joint tenants. In other words, P’s father participated and acted in accordance with D’s wish and direction. It is thus consistent with D’s case that P’s father all along acted as her trustee instead.

(10)  P’s evidence as to how much he allegedly contributed to the purchase of Regalia had also been shifting throughout. In his Witness Statement[17], he said he contributed HK$1,711,835. In his Affirmation filed in support of his injunction application at §22, he said his Witness Statement was mistaken. He said he contributed HK$2,435,000. This was the figure he deposed to in his examination-in-chief. Yet in the course of cross-examination, he referred to Exhibit D-1 and said that out of the 5 remittances of 2007, RMB1.6 million belonged to him. Apart from this RMB1.6 million, he also remitted RMB500,000 to D through money exchanger. He said RMB 2.1M was the money he put into Regalia. There was no attempt to correlate “HK$2,435,000” and “RMB2.1 million”, whether by exchange rate or otherwise. In any event, the allegation of remitting RMB500,000 to D through money exchanger was not documented and appeared for the first time in the course of his cross-examination. It was also different from what P portrayed in §15 of his Witness Statement. It is unclear whether P was referring to the RMB500,000 which he said in Court he gave her prior to her divorce with her ex-husband. If it were the same RMB500,000, such would have been D's money since 2005[18]. In fact, I note that in the course of his evidence, P repeatedly referred to monies gifted or given to D as “his money” simply because such monies originated from him. In similar vein, P’s allegation that he had been responsible for paying the Regalia mortgage instalments should be treated with grave circumspect. For instance, P said he would give D monthly maintenance of HK$10,000 and mortgage payment of HK$16,000. He relied on C1/114 and said that he paid HK$16,000 into D’s mortgage repayment account. That was however factually wrong. This document showed that HK$16,000 was paid into D’s personal savings account on 22 February 2008. The mortgage repayment account was different and in the joint name of D and P’s father[19]. As of February 2008, the monthly mortgage instalment was merely HK$7,959. In fact, from C1/114 onwards, documents relied on by P showed varying sums of HK$10,000, HK$12,000, HK$15,000, HK$5,000 or even HK$3,000 paid by P into D’s savings account. They bore no necessary relationship with the monthly mortgage instalments that changed a few times as a result of successive remortgaging. Counsel for D in fact pointed out that based on the documents adduced by P, the money he gave to D every year were not sufficient to account for the total mortgage repayments made during that year. It is important to note that the objective indisputable fact is that all payments for the acquisition of Regalia came from D’s HSBC bank account. P pointed to the 5 transactions in Exhibit D-1 to say that they were RMB that D remitted to him so that he would turn them into HKD and he deposited them by cash into D’s HSBC bank account so that she could pay for the acquisition of Regalia. In other words, they were still monies originated from D’s PRC bank accounts. It is never part of P’s pleaded case that D had been holding monies in her PRC bank accounts on trust for him. It was only P’s bare assertion that those 5 sums represented his contributions in the acquisition of Regalia. The strength of such assertion is thus as good as his credibility.

49.According to P’s own case, he owned half beneficial interest in Regalia. The reason why his name was not put as a joint owner with D was because he was about to formally go through a divorce. In cross-examination, P agreed that he intended to evade his obligations under the divorce proceedings. He also agreed that he intended to lie to the Court about his interest in Regalia. He also agreed that he had filed a Form E without disclosing his interest in Regalia. In assessing the credibility of P, I also bear in mind that he is person who has the propensity of lying to the Court as and when it suits him.

50.Taking into account all of the above, I find that P is not a truthful and credible witness. Since he is the only witness for the plaintiff’s case, I am not satisfied that P has discharged the burden of proving the Oral Agreement and the indebtedness on balance of probability. I am also not satisfied that P has discharged the burden of proving his alleged contributions in the acquisition of Regalia on balance of probability. Since the Oral Agreement and his alleged contributions were the quintessential basis of P’s claim, on this ground alone, I shall dismiss P’s claim.

Credibility of D and Chung

51.Although it is strictly not necessary to do so, I would out of completeness briefly explain my assessment of the credibility of D and Chung.

52.In my view, D is a far more reliable witness. Her evidence was largely consistent with contemporaneous documents. For instance, the fact that all monies paid to the vendor and vendor’s solicitors in the acquisition of Regalia came from her bank account was well documented. The fact that she was the sole borrower of HK$1 million from P’s father was also consistently documented in C1/261 to 263 which, as admitted by P in cross-examination, were drafted by staff of Joy Plus at his instructions. The bank documents relating to remortgages also showed that P’s father had been acting under D’s directions. In particular, P admitted that he did not even have prior knowledge of the last remortgaging. This is consistent with the recognition that D was the sole beneficial owner of Regalia. The fact that all proceeds of sale of Regalia were released by the solicitors to D was also consistent with her sole beneficial ownership. Her evidence showed no significant departure from her pleaded case and witness statements despite vigorous cross-examination. In particular, on the important issue of whether she had been avoiding P and became incommunicado, §§20 to 22 of her Witness Statement were fully corroborated by the WhatsApp messages adduced. The fact that she was the sole lender of HK$2.5 million to Joy Plus was also well documented. It is clear from the WhatsApp messages that after the set-off of HK$1 million upon the sale of Regalia, she remained the sole creditor of the balance of HK$1.5 million loan owed by Joy Plus. The original HK$2.5 million used in the loan to Joy Plus was obtained from a remortgage of Regalia. The fact that she was regarded as the sole creditor of Joy Plus in the WhatsApp messages is again consistent with her case that all along, she was the sole beneficial owner of Regalia. I also accept her evidence about her personal background, her online garment business, the properties she owned at different stages in time in the PRC and her independent financial resources. I also accept her evidence that from time to time, she was able to lend substantial sums of money to P and Joy Plus which was largely supported by the PRC bank documents recently adduced and summarized in Exhibit D-1. For instance, in C3/616, various sums were remitted by D to a supplier of Joy Plus and a staff of Joy Plus bearing remarks such as “代鵬干付款”; “代香港鵬干付沈江龍加工費” ; and simply “鵬干”. “鵬干”is the Chinese name of Joy Plus. Another example is C3/613 where D’s remittance to “沈江龍”, the accountant of Joy Plus, was described as “工廠工資”. All-in-all, I find D to be an honest and reliable witness. Whenever D’s evidence was in conflict with that of P, I have no hesitation in preferring the evidence of D.

53.I also find Chung to be an honest and direct witness. Her evidence was very limited in scope. On the completion day of the sale of Regalia, Chung went together with P, P’s father and D to the solicitors’ office. Chung said that after the legal formalities for the sale was completed, she saw P produced a piece of paper for D to sign. She heard D asked whether it should be written down clearly that the loan of HK$1 million was now repaid to P’s father and the balance of HK$1.5 million remained outstanding and that P’s father was not entitled to any of the sale proceeds of Regalia or words to that effect. She heard P replied by saying that it was unnecessary since HK$1 million had been received and the company still owed D HK$1.5 million. P accepted that P’s father was not entitled to any of the sale proceeds of Regalia. P then drove P’s father home. Chung also said that when all parties departed from the solicitors’ office and whilst inside the car. P uttered towards D: “你而家安樂曬啦, 收曬錢, 揸住成千萬, 日子好好過啦, 唔係好似我咁, 仲要捱” or words to that effect. Throughout the incident, Chung said that she never heard anything like what P alleged as the Oral Agreement. Chung was hardly cross-examined. It was only put to her that the above quoted utterance did not take place.

Conclusion

54.In conclusion, the plaintiff’s claim is dismissed with costs. I will also release the defendant from her undertaking given to the Court pursuant to the Order of Mr Justice Yeung on 24 February 2020. In the course of the trial, Counsel for D indicated that D no longer needed to pursue the declaratory reliefs in the Counterclaim since Regalia had already been sold. Accordingly, the Counterclaim is also dismissed with no order as to costs.

55.I further order that the plaintiff do pay to the defendant costs of the action, to be taxed if not agreed on party-and-party basis with certificates for Counsel. Counsel for D applied for indemnity costs. Although I have found P not credible and reliable and rejected his case, I do not think that the entire circumstances of this case justifies my exercise of discretion to order indemnity costs. Since I have considered counsel’s written submissions on costs, for avoidance of doubt, the above order on costs is not made on nisi basis.

56.Finally, I would like to thank Counsel for their assistance.

Mr Edward M. H. Chan, instructed by Messrs. Eric Lai, Jason Cheung & Co., for the Plaintiff

Mr Kay K.W. Chan, instructed by Messrs. Au & Associates, for the Defendant