Sze v. Yiu
Read the full judgment text of FCMC 1158/1997 on BabelCite. This Family Court judgment was delivered on 18 January 2000 before H.H. Judge Bruno Chan.
Matrimonial Proceedings and Property Ordinance s.17 – Disposition of matrimonial asset – Beneficial ownership – Trust – Husband's application to set aside sale proceeds transfer to mother-in-law – Whether property joint investment or mother's sole investment – Husband's evidence inconsistent and unconvincing – Payments found to be repayment of debts to mother – Property held in trust for mother – Application dismissed – Costs awarded to Wife and Mother
Legal issues: Joint investment of Husband and Wife · Husband's contribution and interest · Sole investment of Wife or Mother · Disposition under Section 17
Outcome: Section 17 application dismissed; costs awarded to Wife and Madam Lee
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FCMC001158/1997 IN THE DISTRICT COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION MATRIMONIAL CAUSES SUIT NO. 1158 OF 1997 _________________
_________________ Coram: H.H. Judge Bruno Chan in Chambers
Date of Handing Down of Judgment: 18 January 2000 _________________ J U D G M E N T _________________ 1. This is the Respondent Husband (Applicant)'s application under Section 17 of Matrimonial Proceedings and Property Ordinance to set aside a disposition of about $8.6 million by the Petitioner Wife (1st Respondent) to her mother (2nd Respondent) which he says was the sale proceeds of their matrimonial asset. 2. First, a few words about the strange heading as appeared in this proceedings where the Petitioner is also referred to as 1st Respondent, whilst the Respondent is also called the Applicant, and the Mother-in-law as 2nd Respondent. According to the Matrimonial Causes Rules, the party who issues the petition is the petitioner whilst the other party, i.e. the spouse, is the respondent, whereas Rule 13 specifically provides that where a petition alleges that the other party to the marriage has committed adultery or has been guilty of an improper association with a named person, that named person shall be made a party to the proceedings unless the court otherwise directs. There is no rule for making any other named person involved either in custody or ancillary relief applications a party to the proceedings. Such person, for instance, may apply under Rule 92 for custody without obtaining leave to intervene in the cause or being made a party to the proceedings, whereas Rule 69 provides certain persons such as the guardian of any child of the family or any person who has obtained leave to intervene in the cause may apply for ancillary relief for a child without any specific provision for that person to be made a party to the proceedings. 3. In the present case the Section 17 Application for avoidance of disposition was taken out by the Husband who is the Respondent in the cause as the Wife is the one who issued the petition and hence she is the Petitioner. The Section 17 Application is part of the ancillary relief proceedings between the parties in the cause and not some separate proceedings which require a separate heading in which the Husband becomes the Applicant and the Wife and the Mother-in-law respectively the 1st and 2nd Respondent. It is true that Section 17 refers to the person who brings the proceedings as "the applicant" and the person against whom the proceedings are brought as "the other party", such references are used only in that Section and do not mean to infer a different title to the parties originally named in the proceedings. The Mother-in-law in this case could have been simply referred as "Intervening Party" or "Intervener". The present heading is extremely inconvenient and confusing and there is simply no rule which allows this. As the heading now stands, I will just refer to the parties as the Husband and Wife whilst the Mother-in-law as Madam Lee in this judgment. Background 4. The parties were married on 10th October 1993 and there is one child of the marriage, a daughter born on 4th October 1995 who is now 4 years old. The Husband was a real property investor and a director of an estate agency known as U P Agency Ltd. The other director of the limited company was the Husband's sister who used to run an estate agency known as U P Agency until about June 1996 when it was incorporated into U P Agency Ltd. The Husband was also a director and shareholder of a real estate investment company known as JP Ltd. which he incorporated in 1990 with his father with each holding 1 nominal share. After the marriage the Wife was made a director and shareholder of the company also holding 1 share. She was all along in the insurance business and was a manager in AIA during the marriage. 5. Prior to the marriage the Wife resided in a City Garden property with her parents. The property was purchased in her name but she alleges that it belonged to her mother Madam Lee and that it was registered in her name because her mother wanted to make use of the low-interest loan which the Wife was able to obtain from AIA. 6. After the marriage the Wife moved to live with the Husband and his parents at a Beverly Hill property which was owned by JP. 7. In February 1996 a property at Flat A, 23/F, Block 11, Provident Centre, No. 40 Wharf Road, Hong Kong ("The Provident Centre Property") was purchased in the sole name of the Wife for $8,383,000. The provisional sale and purchase agreement was signed on 3rd February 1996 and the assignment was executed on 30th September 1996. 8. The property was later sold by the Wife in early 1997 for $11,880,000. The provisional agreement for sale was signed on 16th January 1997 and the completion took place on 5th March 1997. The net sale proceeds of $8,600,000 was then put in the bank account of the Wife's mother Madam Lee. 9. On 17th January 1997 the Wife left the matrimonial home at Beverly Hill after a heated argument with the Husband's mother on the evening of 16th January 1997. On 1st February 1997 she issued a petition for divorce in the present proceedings based on the Husband's behaviour. The petition was dated 20th January 1997 and in it the Wife also sought custody of the daughter and general ancillary reliefs. The petition became defended when the Husband filed an Answer and also cross-petitioned for divorce based on the Wife's behaviour. In his Answer the Husband also sought custody of the daughter and ancillary relief specifically for transfer and settlement of property order. 10. The proceedings were bitterly contested on all front and there were numerous interlocutory applications, but for the present purpose I shall only mention those that are more relevant. 11. On 12th May 1997 the Husband applied for an injunction restraining the Wife from, inter alia, disposing of or otherwise dealing with the proceeds of sale of the said Provident Centre Property. The matter came before Deputy Judge Saunders on 27th May 1997 when the Wife revealed that her mother Madam Lee was in fact the beneficial owner of the property and that after its sale, the proceeds had been returned to her mother. 12. As a result the hearing was adjourned to 19th June 1997 and Madam Lee was ordered to be joined in the proceedings. At the same time the Husband took out the present Section 17 Application for an order that the disposition by the Wife to Madam Lee of the sale proceeds of the Provident Centre Property be set aside. On 19th June 1997 after hearing argument from the parties and Madam Lee who was also represented, Deputy Judge Saunders granted the injunction against Madam Lee in respect of the sale proceeds until further order. The net sale proceeds of HK$8.6 million have since been frozen in an interest-earning bank account under the name of Madam Lee pending the determination of the Section 17 application. 13. The Husband and Wife were eventually able to first settle their dispute over the divorce when on 2nd June 1998 the decree of divorce was granted to the Wife, and later on custody when it was granted to the Wife on 9th March 1999 with defined access to the Husband, leaving only the Section 17 Application and the ancillary relief application which I had originally directed to be heard together. Unfortunately it turned out that the hearing of the Section 17 Application had taken up so much of the time allocated for the trial of both matters that it was agreed that the Court should give its decision on the Section 17 Application first whilst the ancillary relief hearing should be adjourned to a later stage. 14. Both parties and Madam Lee have filed substantive affirmations in the Section 17 Application and have given lengthy oral evidence at the hearing, with final written submissions made to save time and costs which, I understand, amount to more than $3 million in total. There is one small episode, though, that I ought to mention. During the course of her being cross-examined, the Wife suffered some sort of nervous breakdown which required medical attendance. Instead of adjourning the trial, it was agreed amongst the parties, and quite rightly so, that Madam Lee should start and finish her evidence before the Wife returned to complete her evidence. The medical report produced by the Wife later confirmed her situation and was not challenged by the Husband. The Husband's Case 15. The Husband's case is that he and the Wife jointly purchased the Provident Centre Property as their home as they intended to move from their Beverly Hill property to the Provident Centre which was close to his office and that it was also more convenient to his mother who had to go to the wet market to purchase grocery twice a day. He says although there was no expressed discussion with the Wife as to their respective share of interest in the property, as he had contributed about $1.5 million towards the purchase price, legal costs and stamp duty, he believes he should have 1/3 share in the property with 2/3 to the Wife. 16. He explains that the property was purchased in the name of the Wife because she suggested to make use of the low-interest loan from AIA to finance the purchase and that registering the property in her sole name was the only way to obtain the loan. 17. Although the provisional sale and purchase agreement was signed on 3rd February 1996, the Husband says that the completion date was not until 30th September 1996, some 7 1/2 months later because he needed more time to sell his Beverly Hill property. When the time was getting close to the completion date, he says he was advised by his mother that his name should be added to the title of the Provident Centre Property but the Wife refused because she said AIA would not allow it. The completion of the purchase took place as scheduled on 30th September 1996 with the assistance of a loan of $3 million from AIA and the sale proceeds of the City Garden Property, and the Wife was therefore registered as the sole owner. 18. After the purchase the Husband says he learnt from a friend who also worked at AIA that what the Wife had told him of not being able to add his name to the property as a co-owner was not true. When he raised the matter with the Wife, he says she would agree to add his name only if he would pay her 50% of the difference between the purchase price and the then increased market price of $11 million, to which he refused. This led to a heated argument between the Wife and the Husband's mother and as a result the Husband says his parents refused to move to the Provident Centre Property and so the parties remained in the Beverly Hill property. 19. The Husband believes that after the Wife had decided to divorce him, she secretly took steps to sell the Provident Centre Property without informing him and placed the sale proceeds with her mother with the intention to defeat his claims for ancillary reliefs or to deprive him of his fair share therein, which was the reason why he was not served with the divorce papers until 17th March 1997, some 1 1/2 months after the petition was issued. 20. The Husband does not accept that the property was Madam Lee's investment as alleged by the Wife. He believes that although some of the money for the purchase price might have come from Madam Lee's bank accounts, they actually belonged to the Wife, as was the case with the City Garden property which was purchased in the Wife's sole name. He also denies the Wife's allegation that his payment towards the purchase price was repayment of money owed to Madam Lee whom he says was merely a factory worker in the past with limited income and that as she had been unemployed in recent years, she could not have afforded an investment as substantial as the purchase of the Provident Centre Property. 21. The Husband believes that the Wife, on the other hand, was wealthy and that she had for years put most of her income in some bank accounts in joint name with her mother to avoid tax liabilities, which was also the reason why she had made her mother, who knew nothing about the insurance business, as one of her agents in order to divert some of her clients to her mother's name in order to earn more commissions. He therefore believes that the Wife paid for her share of the purchase of the Provident Centre Property from her money in the joint accounts with her mother, and that since the property belonged to both he and the Wife, the disposition of the net sale proceeds of $8.6 million by her to her mother which took place after the filing of her divorce petition was clearly intended to defeat his claims for ancillary reliefs against her in the divorce proceedings or to deprive him of his fair share in the sale proceeds and should therefore be set aside. The Wife's case 22. The Wife says that the Provident Centre Property was her mother's investment and that it was purchased in her name solely for the purpose of making use of the low-interest loan which she could obtain from AIA, as she had done before with the purchase of the City Garden property by her mother. She insists that all the purchase money came from her mother and that the alleged payments of the Husband were in fact his repayments of money owed to her mother from some earlier property investments which her mother participated through his connection. 23. The Wife says prior to her marriage she used to reside with her parents. She started to work as an insurance agent in late 1985 and had since made regular contribution to her mother. In 1987 her mother decided to move the family from their low cost public housing unit into a Lei King Wan property which her mother purchased with her own savings. In 1990 her mother sold the property for $1,238,000 and used the sale proceeds to purchase the City Garden Property for $1,490,000. This time the property was purchased in the Wife's name as she could benefit from a low-interest staff loan from AIA. 24. After the marriage the Wife moved from the City Garden property to the Husband's home at Beverly Hill, but she continued to contribute to her mother's household. In addition to her job at AIA, the Wife says she often had to assist the Husband in running his company JP the main business of which was investing and speculating in real properties. She says she had also regularly put part of her income in JP's accounts to meet the company's expenses but as she was busy with her work at AIA, she had to enlist her mother's assistance from time to time to do the banking for her, and that on some occasions when the Husband was in need of money for his business, she would borrow for him from her mother. 25. At the time of the purchase of the Provident Centre Property, the Wife says that the Husband owed her mother about $1 million being money which her mother had lent him as well as her share of profits and principal from 2 earlier property investments which she had participated through his connection but which he had since kept without repaying her. The Wife says these investments involved a Robinson Place property invested by the Husband's uncle and which Madam Lee had contributed 20% towards the purchase price and for which her share of profit and principal was $660,000, and another property in Provident Centre invested by JP for which Madam Lee had contributed $200,000 and her share of profit was $115,000. 26. The Wife says the Husband had however kept these monies and was reluctant to repay Madam Lee. She says when her mother decided to purchase the Provident Centre Property, she saw it as a good opportunity to get the money back from the Husband for her mother. She therefore told the Husband about the matter to which he agreed to repay her and it was also decided that they would view the property together with his parents and sister pretending to the owners that they were going to purchase the property as their home in the hope to bargain a good price. She says the Husband and his family therefore knew it was her mother's investment which was also the reason why she put down her mother's address at City Garden in the provisional sale and purchase agreement signed on 3rd February 1996 instead of her own address at Beverly Hill. 27. The Wife further says that on 15th February 1996 when she and the Husband attended at the solicitor's office to sign the formal sale and purchase agreement, the various payments made by the Husband towards the balance of the down payment and the stamp duty were all part of the repayment of the money which he owed her mother and not for his share in the property. 28. As the Provident Centre Property was purchased for short-term investment, the Wife says her mother then placed the property for sale through newspapers advertisement in December 1996. Soon a purchaser was found and the provisional sale and purchase agreement was signed on 16th January 1997 with completion to take place on 5th March 1997, whereupon she just returned the net sale proceeds of $8.6 million to her mother and it certainly was not any disposition to defeat the Husband's claims for ancillary relief as alleged by him. Madam Lee's case 29. The case of Madam Lee is essentially the same as the Wife's in that she was the beneficial owner of the Provident Centre Property. She further says that she came to Hong Kong from China in early 1970 and had worked hard in the factory for many years to make a living. Her son quitted school at an early age to work and was subsequently able to form his own business when he would from time to time give her money, and when her daughter i.e. the Wife started working in 1985 as an insurance agent, she would also regularly contribute towards her household. She says she herself worked in a garment factory in the 1980s as a sample maker making expensive high-class fashion and was able to earn $10,000 per month on average. She says she had lived thriftily and was able to accumulate some savings over the years which she had put in some joint accounts with her daughter on the advise of others for security reason. 30. As the financial situation of her family improved, Madam Lee says she decided to move her family out of their public housing unit to their own home by purchasing a property at Lei King Wan for $636,210 of which she paid $240,000 from her savings with the balance by means of a bank mortgage. 31. In 1990 Madam Lee and her family moved to the bigger City Garden property to improve their living standard. The property was purchased in the Wife's name because she had then become entitled to low-interest staff loan from AIA, but Madam Lee says the purchase moneys were all paid by her from the sale proceeds of her Lei King Wan property and from her savings. She says the arrangement was that as her daughter would assist her with the monthly mortgage payment, her monthly contribution to the family was therefore reduced accordingly. This continued after her daughter had married and moved out of the City Garden property until it was sold in 1996. 32. Madam Lee says in early 1996 she decided to invest in the Provident Centre Property as she had been able to accumulate substantial savings from her investment in foreign currencies. She intended the purchase to be a short-term investment and would try to sub-sell the property as a confirmor, which was the reason why the completion date was unusually long in 71/2 months' time. She says that in case she could not sub-sell the property and had to complete the purchase, she would make use of the low-interest loan which her daughter could obtain from AIA, which was the reason why she purchased the property in her daughter's name, and from the sale proceeds of her City Garden property which she found to be too big for just her and her husband and which she intended to sell in order to move to a smaller flat. 33. After the purchase of the Provident Centre Property, Madam Lee says she then tried to sell it by placing advertisements in newspapers and was able to find a good buyer in January 1997 for $11,880,000. She says after the sale it was only natural for her daughter to return to her the net sale proceeds of $8.6 million in which neither her daughter nor her husband has any beneficial interest upon which a claim could be made in their divorce proceedings. The Law 34. Section 17 of Matrimonial Proceedings and Property Ordinance provides:-
35. There is no dispute that the Wife's payment of the sale proceeds to her mother can be said to be a disposition within Section 17 and as it was made shortly before the Husband's application, thereby putting it within the 3 years' period referred to under (3) of the Section, the presumption is that the Wife disposed of the sale proceeds with the intention to defeat the Husband's claims for financial provision or his share in the sale proceeds, unless the contrary is shown. The burden that this is not the case is therefore on the Wife. However, if Madam Lee was in fact the sole beneficial owner of the Provident Centre Property, she must be entitled to its sale proceeds, and therefore it can not be a Section 17 disposition to be set aside. The consideration of Section 17 is only necessary if I find that either the Wife or the Husband is beneficially interested in the property. On the other hand, since the Provident Centre Property was purchased in the Wife's name and in the absence of a declaration of trust, the burden is on the Wife to prove she was merely holding the property in trust for her mother as alleged. It is apparent that there is quite an unusual amount of issues that need to be resolved in particularly in view of the intricate financial relationship and various past dealings between the 3 parties concerned before I can get to the truth of the matter. I shall now first examine the parties' evidence in details on the circumstances of the purchase of the property. The Issues 36. There is an unusually large number of issues in this case but the main issues are:-
I shall now consider the evidence of each issue in details. 37. The Husband's evidence given in chief is that he intended to move his family from Beverly Hill to the Provident Centre as it was close to his office with less than 5 minutes' walk and more convenient to his mother who had to purchase fresh food at the wet market in North Point 2 to 3 times each day after the birth of his daughter. He says he found the Provident Centre Property through his sister's real estate agency U P Agency and had viewed the property twice with the Wife, his mother and sister as his agent. However, upon cross-examination, the Husband admitted that before moving with his family to the matrimonial home in Beverly Hill after his marriage in 1993, he and his family all along lived in North Point and that he also worked in his sister's U P Agency in North Point. He also admitted that when he was residing in Beverly Hill, he would drive to work at U P Agency which had very flexible working hours and that he could use a car park space in City Garden which was owned by his company JP. As submitted by Miss Tsui for the Wife, this reason does not appear very satisfactory. 38. If however the 1st reason given by the Husband may not sound very convincing, I have more difficulty accepting his explanation for his 2nd reason that his mother had to go to the wet market 2 - 3 times each day which caused him to decide to move his home to the Provident Centre Property. Consider his following evidence given on cross-examination:-
39. I find it difficult to believe the Husband's evidence concerning his mother's marketing habit, in particularly of the fact that the parties at that time also had the use of a domestic helper. On the whole, I find the Husband's reasons for purchasing the Provident Centre Property unconvincing. However, it does not necessarily follow that he had not acquired any interest in the property. It is necessary to consider the other evidence relating to the purchase of the property. 40. It is not in dispute that on 3rd February 1996 the Wife, the Husband and his mother and sister attended at the Provident Centre Property to view the premises in the presence of the owners and their agent Ms Wong of City Property Agency, and that the provisional sale and purchase agreement was signed by the Wife in her sole name on the spot when she paid an initial deposit of $500,000 by means of her personal cheque drawn on her Citibank account, into which the Husband had paid $200,000 for the initial deposit. The Husband's evidence is that the property was recommended to him by U P Agency and he therefore brought his family to view the property on that day with his sister acting as his estate agent. He says he had intended to purchase the property through his company JP but at the time of the signing of the provisional sale and purchase agreement, the Wife suddenly suggested purchasing the property in her sole name in order to take advantage of the low-interest AIA loan. He says it was the first time he learnt about such a staff loan of AIA but he thought as they were husband and wife, he therefore let the Wife purchased the property in her sole name. The completion date was however put some 7 1/2 months later on 30th September 1996 as he says he needed time to sell his Beverly Hill Property to finance the purchase of the Provident Centre Property. 41. I find this Husband's explanation as to why the property was purchased in the Wife's sole name inconsistent and unsatisfactory. It is clear from his evidence that he had been looking for a property in North Point for quite some time with the intention to re-locate his family. It was to be an important investment and his evidence is that he had decided to purchase the property through his company JP, as he had done with almost all his major real estate investments since the incorporation of JP, and that he had held discussions with his family members about the intended move and that it was an unanimous decision. Surely then when he went to view the property on 3rd February 1996, he would have been fully prepared and ready to sign the provisional sale and purchase agreement in JP's name and to pay the initial deposit through JP's account. Yet the evidence reveals that it was only on 5th February 1996, two days after the provisional sale and purchase agreement that he made the first of his alleged contribution towards the purchase price by depositing $200,000 into the Wife's Citibank account. And why did he allow the Wife to put down her mother's City Garden address in the provisional sale and purchase agreement ? The Husband's following explanation on this is equally unconvincing:-
42. Furthermore, it is apparent from the fact that the completion date was put 7 1/2 months from the provisional sale and purchase agreement that the Husband would still have intended to sell his Beverly Hill property to finance the purchase despite the AIA loan which he obviously felt insufficient to meet the balance of the purchase price. Since the purchase could not be financed solely with the AIA loan, and that its low-interest advantage could not be enjoyed until the completion of the purchase, by which time the Husband would have sold the Beverly Hill Property which he says was then worth $11 - 12 million with sufficient funds to pay the balance of the purchase price of the Provident Centre Property even without the AIA loan, it begs the obvious question that why in the circumstances would the Husband agree to such an important purchase to be done in the Wife's sole name when the alleged advantage of the AIA loan which he says was the sole reason for him agreeing to do so was in fact no advantage at all ? 43. Let's say the Wife on 3rd February 1996 made the suggestion of AIA loan so suddenly that the Husband was not given sufficient time to consider before agreeing to her purchasing the property in her sole name. But the formal sale and purchase agreement was to take place at his solicitor's office on 16th February 1996, some two weeks later which would surely have given the Husband, his parents as well as his sister who he says was acting as his estate agent enough time to consider the implication of the Wife's suggestion and an opportunity for him to change his mind about her suggestion or to request to add his name as the purchaser in the formal sale and purchase agreement. 44. This however did not happen and the agreement was signed by the Wife in her sole name on 16th February 1996 when she paid the balance of the initial deposit in the sum of $338,300 at the solicitor's office which the Husband also attended. His evidence is that on that occasion he contributed by making 2 separate payments to the Wife in the respective sum of $80,000 and $65,000, and that later on 9th March 1996 he paid for the stamp duty in the sum of $230,532.50. His evidence on this was first set out in Paragraph 4 of his 2nd Affirmation and in his evidence in chief he gave more details as follows:-
45. During cross-examination, however, the Husband's evidence started to become confusing and unsatisfactory. Consider the following:-
46. Several questions later and when the Husband was shown evidence that the cheque for $80,000 was in fact paid into the solicitor's account, he gave the following explanation:-
47. I find this evidence of the Husband on his alleged payments made upon the signing of the sale and purchase agreement confusing, inconsistent and contradictory, and I do not believe that he paid the $65,000 to the Wife at all as alleged. Furthermore, it is clear from the provisional agreement that the balance of the initial deposit of $338,300 was to be paid to the vendors on 16th February 1996. The Husband as an experienced property investor and estate agent could not have any doubt as to exactly how much it was required to pay when the sale and purchase agreement was signed. It is also a common practice and in fact a duty of solicitors to inform their clients of their financial obligations well before the date when they are to execute conveyancing agreements or assignments. I find it incredible that the Husband would not have all the necessary payments ready on the day when the formal sale and purchase agreement was to be executed. It just doesn't ring true of someone who was supposed to be making an important investment on a $8 million property as a home for himself and his family. 48. I also find the Husband's evidence that he had paid the agency commission of $83,830 for the purchase unconvincing. There is no dispute that the property was purchased through the joint co-operation of City Garden Property Agency and U P Agency respectively representing the vendor and purchaser and therefore agency commission was payable. However in this case the Husband was supposed to be purchasing his own home with his sister with whom he had a good relationship acting as his agent and whose agency was also where the Husband worked. In fact when the commission was allegedly paid on 18th June 1996 when its receipt was issued, the sister's agency had already been incorporated into a limited company of which the Husband was one of the two directors. Although it is accepted that the agency and the subsequent limited company were legally two separate entities each with its own accounts, it can be argued that in reality they were at that time essentially the same business of the Husband and his sister which occupied the same office premises. One would have expected that the agency commission would easily be waived under the circumstances. 49. The Husband's evidence on this is however both vague and unsatisfactory. He said this on cross-examination:-
50. I find it difficult to accept the Husband's evidence as to why he didn't ask his sister to waive the commission under the circumstances in particularly in view of their relationship and his alleged tight financial situation at that time as evidenced by the fact that he could only make part contribution towards the purchase of the property. 51. Furthermore, despite the fact that the Husband has been able to produce copies of cheques, bank records and other documentary evidence to support his various alleged payments made in respect of the many relevant transactions mentioned in these proceedings, he has not produced a single piece of evidence to substantiate his payment of the commission which at $83,830 is not an insignificant sum. In fact I am unable to find from the disclosed bank statements either of the Husband's personal bank accounts or of the bank accounts of JP of any withdrawals at the material time that may remotely resemble such payment. I accept that the Husband did try to explain in cross-examination that he paid the agency commission on two separate occasions by both cash and cheque and hence he was unable to say for certain from the bank statements which withdrawals were for such payments. However he is unable to explain why the commission was settled in such manner. If he had difficulties at that time to settle the payment in one go, he could have asked his sister to waive the commission or to give him a discount, and if he did pay in full, there is no reason why he could only produce the receipt but no other documentary evidence of such payments. I simply find it difficult to accept his evidence on this issue. 52. The Husband's explanation of why he and his family did not move into the Provident Centre Property after the completion of its purchase in late 1996 is equally unconvincing. His evidence on this is set out in Paragraph 7 of his 2nd Affirmation as follows:-
53. In his evidence in chief, the Husband repeated the above explanation and added that after it was discovered that his name could be added to the property without affecting the AIA loan, and when the Wife refused to do so, she had a quarrel with his mother who later refused to move to the property, so as a result the family stayed at Beverly Hill and never moved to the Provident Centre Property. The main disputes on this issue therefore center around the several different time stages mentioned in the Husband's evidence which are relevant in establishing the credibility of his allegation. 54. Firstly, as pointed out by the Wife, since the Husband's mother was present when the Wife signed the provisional sale and purchase agreement on 3rd February 1996, she should and would have known there and then that the property was purchased in the Wife's sole name, yet the husband's evidence is that she only learnt about this when the time for the completion of the purchase was getting closer when she asked him about the matter. If the Husband's evidence is to be believed, clearly it was important to his mother that his name be included in the property, as the Wife's refusal would lead to a big quarrel with her which resulted in the whole family remaining in Beverly Hill instead of moving to their new home in North Point, something which the Husband says they had been planning to do so since late 1995. This begs the obvious question that even if she did not know that the Provident Centre Property was purchased in the Wife's sole name on 3rd February 1996, which is unlikely, why had the Husband's mother waited so long thereafter until the time for the completion of the purchase was getting close, to raise her big concern about the question of ownership of the property ? There is simply no explanation from the Husband. 55. The Husband's evidence as to when exactly he learnt that his name could be added to the property and his action taken thereafter is both baffling and incredible. Consider his following evidence on cross-examination:-
56. It is clear from the Husband's evidence that he was advised by his mother that his name should be added to the property and so he started to make enquiries with his friend working in AIA in June or July 1996 when he was told that it could be done. He therefore raised the matter with the Wife and when she refused, it led to the quarrel with him and his mother and the eventual abandonment of the plan to move his family to Provident Centre. If it was so important to the Husband that his name should be added to the property, why then did he wait until after the completion on 30th September 1996 to get the matter confirmed by AIA, when he had in fact already been making enquiry with his friend as early as June or July which should have given his ample time to make further enquiry with AIA before the completion date. 57. Furthermore, as the Husband has readily admitted that he and his family at that time were very angry with the Wife over her deceiving him about the AIA matter so much so that he quashed the plan to move his family to the Provident Centre Property, why then was he still willing to give her further sums of $200,000 and $300,000 for the completion of the purchase as alleged, without demanding her, for example, to execute a declaration of trust in respect of his share in the property or at least to give some acknowledgement of his contribution towards its purchase ? His alleged action or lack of such action as would have been expected of a reasonable person under the circumstances is indeed perplexing and incredible. 58. I also find the Husband's explanation given in Paragraph 8 of his 2nd Affirmation as to why he put the respective shares in the Provident Centre Property at 1/3 for him and 2/3 for his wife equally puzzling, contradictory and ultimately unconvincing. He said this in that paragraph:-
59. First of all, the basis upon which the Husband arrived at his share of 1/3 in the property is wholly and fundamentally wrong. The purchase price of the property was $8,383,000. Adding the stamp duty and costs of its purchase would bring the total amount to over $8.5 million. Even if I were to accept that the Husband had paid a total sum of $1.5 million towards the purchase of the property including stamp duty and agent commission, the fact that the balance of the purchase price was paid by the Wife's AIA loan and the sale proceeds of her mother's City Garden Property in which he had no interest at all, irregardless the true beneficial ownership thereof, the Husband's alleged payment of $1.5 million could not have, mathematically or otherwise, given him 1/3 share in the Provident Centre Property. Putting his case at the highest and using his own basis of calculation, it would be at most only 1/5. 60. Furthermore, the Husband's evidence here is that the original intention was to put up 30% of the purchase price by him and his Wife whilst the balance of 70% was to be financed by a mortgage loan. This clearly contradicts his earlier evidence in Paragraph 7 of the same affirmation when he tried to explain that the completion date was put back by 71/2 months because he intended to finance the purchase by selling the Beverly Hill Property. If it was indeed the Husband well-considered plan to purchase the Provident Centre Property as the new home for his family, it is incredible that he could be so inconsistent and contradictory in his evidence on how he had intended to finance the purchase. 61. Nor is he able to challenge the Wife's evidence about an incident which occurred after the purchase and which she says will go to refute once and for all the Husband's allegation that he had any interest in the Provident Centre Property. The Wife says that after her mother had sold her City Garden Property but before she could move into her new home, she needed somewhere to store her chandeliers and therefore the Wife took her chandeliers home and placed in her maid's room. When her mother-in-law did not allow it, she then put the chandeliers in the boot of the Husband's car. On 16th January 1997 the Husband told her to take the chandeliers out of his car as he needed to transport some roasted pork for the celebration of the opening of his branch office in Mei Foo Sun Chuen. When the Wife replied that she had nowhere to store her mother's chandeliers, the Husband said that she could take it to her mother's Provident Centre Property. This incident led to a heated quarrel between the parties which also involved the Husband's parents and the Wife's eventual departure from the matrimonial home on the following day. The Wife submits that the fact that the Husband told her to take the chandeliers to her mother's property at the Provident Centre could only mean one thing, i.e. the property belonged to her mother and that the Husband never had any interest therein. This is strong argument indeed but the Husband has never even tried to challenge the Wife's evidence on the incident. 62. For the reasons aforesaid I have come to the conclusion that the Husband's evidence that he purchased the Provident Centre Property jointly with the Wife as their new home is inconsistent, contradictory and ultimately unconvincing and cannot be sustained. I believe that he made up this story in order to boost his claims against the sale proceeds. This however by no means follows that he had no interest in the property. After all, it is not in dispute that he had made certain payments towards the purchase price, and if they were not meant to be his share of the investment in the property, then what could they be ? To answer this it is necessary to consider the evidence of both the Wife and Madam Lee about the Husband's payments. 63. The Husband's evidence as to his payments made towards the purchase of the Provident Centre Property is detailed in Paragraph 17 of his 7th Affirmation. OP the $1.5 million which he alleges to have paid, he says $1,205,592.50 could be traced from the relevant bank records, the particulars of which he sets out as follows:-
64. Of these alleged payments, only items (1), (2), (5) and (9) totalling $810,532.50 are admitted by the Wife and her mother Madam Lee as having come from the Husband towards the purchase of the property, not as his investment but merely repayment of monies due and owing to Madam Lee of her capital and profit from two earlier Joint-investments in a Robinson Place Property and another Provident Property Centre as well as a previous personal loan made to the Husband. They deny the other alleged payments of the Husband. I shall now consider the parties' evidence on this issue in details, first the Robinson Place investment. 65. The Husband's evidence is first set out in his 2nd Affirmation in which he said he was invited by his uncle Mr Yiu K.W. to take a 20% stake in his investment in this property, but when the time came for him to pay his uncle for his share, he did not have available funds handy and so he asked the Wife to lend him the money. After the property was sold, his uncle returned to him the capital as well as his share of the profit. He said he must have repaid his Wife the money she lent him for this transaction but was unable to pinpoint the time or manner of his repayment. 66. However, in his later 7th Affirmation, the Husband changed his evidence by saying that the 20% stake was in fact an investment of him and the Wife in equal share and that their respective share of capital and profit of $166,110.90 each were returned to them after the sale of the property. 67. In his evidence-in-chief, the Husband changed his evidence again when he said the following:-
68. The Husband has therefore given 3 versions of his investment in the Robinson Place Property, changing from the initial version that the 20% stake was his own investment funded with money borrowed from the Wife, to a joint investment with the Wife in equal share with each receiving their respective share of capital and profit after the sale of the property, to the final version that he had kept his Wife's share but that she might have been paid at some later stage. When he was asked to explain all these discrepancies, the Husband's answers were evasive and he even tried to blame his solicitors for not following his instructions. Consider his following evidence given on cross-examination:-
69. I in particularly find it difficult to believe that if it is true that the Wife did specifically ask to have 1/2 share in the Husband's 20% stake, why then did she not press him for her share of the capital and profit and instead allow him to keep the money ? I simply find the Husband's explanation for not repaying the Wife for her share of the investment because they often used each other's money and that he had paid her some other money during the marriage wholly unconvincing and unsatisfactory. Madam Lee's evidence, on the other hand, is more coherent and consistent. 70. She says she was given this investment opportunity as the Husband happened to be short of funds for the investment at that time and as his uncle needed someone to chip in financially for an investment which was surely going to make a quick profit, and as her daughter didn't wish to pass up such an opportunity, she was therefore asked to join in the investment. She says she therefore paid for her share of the capital investment from her bank account and is able to produce copies of the 2 cheques issued by her respectively dated 16th November 1993 for $177,352.00 and 23rd November 1993 for $3,131.00 in favour of the Husband's uncle as evidence of her investments, the timing and amount of which both support her case, and is confirmed by the land search record which shows that the property was purchased by a company of the Husband's uncle on 19th November 1993 for $6,955,000 and was later sold for $9,360,000. 71. What is more convincing of Madam Lee's evidence comes from copies of invoices of the solicitors handling the transaction produced by her, one of which dated 15th November 1993 shows what she says to be the handwriting of the Husband's uncle about her share of the legal costs of $3,131 for which she later issued the 2nd cheque referred above on 23rd November 1993. It is true that the handwritten words of "Yiu mother 3131" on the invoice may at first appear more logically to refer to the Husband's mother instead of Madam Lee whose maiden name or her husband's name is neither Yiu. However even the Husband agrees that it could not have meant his mother as she was never involved in this investment and there was no reason for his uncle to make any reference to his mother on the invoice. And since the Husband does not dispute that the handwriting was that of his uncle or that it could be forged or faked by the Wife or Madam Lee, the only logical conclusion one can draw on the evidence is that the uncle meant to refer Madam Lee as "Yiu mother" when he stated her share of the legal costs for the investment. 72. The Husband has also tried to cast doubt on Madam's Lee's evidence by arguing that since this investment was bound to make money, why would he pass up such an opportunity to his mother-in-law even if he was short of funds as he could have borrowed the $180,000 odd which was required for his share from anyone, such as the Wife or his family, or for that matter from Madam Lee, rather than giving up such a good opportunity. However it was also his evidence that he did at that time intend to speculate on Robinson Place which was a popular new project but as he was unable to successful draw lot for a unit, whereas his uncle was successful, he was therefore invited by his uncle to contribute towards the purchase. I find this inconsistent with his evidence that he had to borrow from his Wife for the first payment as he did not have sufficient money, whereas although he says that the 2nd payment was paid by him, he cannot remember the exact amount or other details. If there was the original intention to speculate on a property on his own which was then worth almost $7 million, as was indeed his evidence, why did he not have his funds ready for a mere 20% contribution towards his uncle's unit and instead had to borrow from his Wife ? It just doesn't sound right for someone who says he had planned for such an investment. 73. The Wife's evidence confirms that it was his uncle who invited the Husband to jointly invest in the Robinson Place Property but he passed over the chance to her mother. It is also her evidence, which is not disputed by the Husband, that the uncle frequently speculated in property investments and had often asked others including the Husband to join in the investments or speculations. She says on this occasion the Husband did not have extra money for this investment and so he passed the chance to her mother. It is submitted on behalf of the Wife that since the Husband at that time took part in many other profitable speculative activities, it shouldn't be surprising that he would give up a seemingly good opportunity to Madam Lee as relationship at that time was very good. I find this submission logical and sensible in particularly in view of the fact that the Husband had at that time on more than one occasion asked Madam Lee to co-operate in certain property transactions to enable him to obtain better mortgage terms which makes it all the more likely why the Husband was willing to pass up the Robinson Place investment to Madam Lee as a favour. 74. The Wife also in her evidence confirms that her mother did from time to time ask for repayment of her principal and profit made in the investment but the Husband always found excuses to delay payment. She says she did in 1995 pay her mother $150,000 as part-repayment from the JP's account but when the Husband found out about it, he gave her a fierce scolding. She therefore decided to wait until February 1996 to use her mother's investment in the Provident Centre Property as an excuse to press the Husband for repayment of the rest of the money which he still owed her at that time. This included money which Madam Lee says the Husband also owed her from another property investment, the evidence of which I shall now consider. 75. The issue over the 2nd alleged investment by Madam Lee is more complicated and the evidence less clear or direct. Madam's Lee's evidence is set out in her 1st Affirmation where she said she issued a cheque on 7th March 1994 for $200,000 in favour of the Husband's JP for her investment in Flat B, 13th Floor, Block 11, Provident Centre. She said the property was purchased for $7.25 million and was later sold for $8.25 million, giving her $115,455 as her share of the net profit but which together with her principal of $200,000 was kept by the Husband. 76. In her later Affirmation Madam Lee corrected herself by saying that she actually did not know the exact address of the property in Provident Centre for which she gave the Husband $200,000 for the investment. She said she merely gave the money to the Husband through her daughter for an investment in a property in Provident Centre. She also explained that she gave the wrong address of the property in her earlier Affirmation based on the incorrect information provided by her daughter. Like her investment in the Robinson Place Property, Madam Lee says the Husband had kept the money without repaying her. 77. In reply to Madam Lee's alleged investment in this 13B Provident Centre Property, the Husband said this in his 2nd Affirmation:-
78. The Husband further argues that it doesn't make sense that Madam Lee would invest $200,000 in a property without knowing the address, and that her explanation in her later affirmation was merely an attempt to backtrack on her evidence after being contradicted by the land registry record produced by him. 79. The Husband then later in his evidence-in-chief admitted that the cheque of $200,000 was in fact given to him by the Wife for the purpose of investing in a Kornhill Property which was purchased by him and his friend through his friend's company in equal share, and that the Wife's contribution was for 1/2 of his share. He said that the Kornhill property was purchased in 1994 for $4.5 million, but was later sold at a loss in 1997 for $4.1 million. He also said in his evidence that the $130,000 of so-called personal loan from Madam Lee was in fact a cheque given to him by the Wife also for the purchase of the same Kornhill Property, and he said this in his evidence:-
80. The Wife in her 2nd Affirmation confirmed her mother's payment of $200,000 by means of a cheque issued in favour of JP for investing in a property in Provident Centre but did not give the address. In her later Affirmation in reply to the Husband's 7th Affirmation, she gave the address of this property at 11B provident Centre. In cross-examination, she explained that she had made the mistake by confusing Flat 11B Block 11 with another property at Flat 13B Block 11 which was another investment made by the Husband jointly with his uncle's company Full Wealth, which was the reason why her mother gave the wrong address in her 1st Affirmation. 81. The Wife denies any involvement in the Husband's investment in the Kornhill Property and insists that her mother's payment of $200,000 was for the investment in 11B Block 5 Provident Centre Property which was a joint investment of her husband and his friend. She gave the following details in Paragraph 11 of her 3rd Affirmation:-
82. The documents produced by the Wife clearly implicates the Husband in 11B Provident Centre. Before he was confronted with these documents, the Husband gave the following evidence about the property in cross-examination:-
83. Several questions later, when he was shown the various documents relating to the purchase of 11B Provident Centre, the Husband gave the following evidence:-
84. Up to this point of the cross-examination, the Husband's evidence was still that he knew nothing about 11B Provident Centre but was unable to offer any explanation as to his connection with it as appeared in the several documents shown to him. However, when he was shown further documents, he gave the following evidence:-
85. I find the Husband's evidence on this issue evasive, difficult and inconsistent. His evidence about his planned investment in the Kornhill Property and yet had to borrow the money from his Wife is both incredible and contradictory, whilst he was unable to give any details of payments or to produce any documentary evidence such as bank statements or receipts to connect the mother-in-law's payment of $200,000 to this Kornhill Property. His evidence that this property was a joint investment between him and his friend's company Brillient Peak is inconsistent with the fact that the mother-in-law's cheque for $200,000 was made out to JP, and he is simply unable to give any logical explanation when confronted with the various documents produced by the Wife which apparently linked him to the purchase of 11B Provident Centre. On the whole, his evidence about the Wife or the mother-in-law investing the respective sums of $200,000 and $130,000 in the Kornhill Property is unreliable and unsatisfactory. 86. On the contrary, I find the evidence of Madam Lee and the Wife on the investments in the both Robinson Place Property and 11B Provident Centre as well as the personal loan thoroughly consistent, well-corroborated by documentary evidence and ultimately more reliable. The argument of the Husband about Madam Lee not knowing the correct address of the Provident Centre Property in which she was said to have invested $200,000 and her later attempt to backtrack on her evidence cannot remain on solid-ground when one considers that the investment was made through the Wife whom Madam Lee totally trusted and in view of the good relationship between the parties at that time. 87. As regard the remaining items of the Husband's alleged payment which are disputed, I also find the Husband's evidence unconvincing and unsatisfactory. The alleged payment of $10,000 was only made 2 days after the sale and purchase agreement and was a cash cheque endorsed by the Husband himself. His evidence as to why the payment was made to the Wife and the reason why he was able to remember this particular payment is incredible to say the least. The same can be said about the alleged payment of $36,230 which was made on 15th July 1996, some 5 months after the sale and purchase agreement but more than 2 months to go before the scheduled complete date when the balance of the purchase price would have to be paid. Although it is not disputed that this payment was received by the Wife, she denies that it had anything to do with the purchase of the property and set out her evidence in details in her Affirmation supported by documents that it was the Husband's reimbursement to her for various expenses unconnected with the property, which evidence I find to be much more convincing and consistent than the Husband's. 88. I have already dealt with the alleged agent commission of $83,830 earlier in the judgment and rejected the Husband's evidence. As to the last disputed payment of $200,000 allegedly made on 21st September 1996, the date is admittedly closer to the scheduled date of completion, but the Husband's evidence of such payment is again unsatisfactory. He was only able to produce a copy cheque for $100,000 instead of $200,000 and that this cheque was in fact cashed by himself. When asked why he did not simply just give the cheque to the Wife instead of cashing it himself and then gave the cash to her as alleged, his explanation that because he did not have her bank account number is unbelievable, in particular in view of the fact that he had in the past issued cheques to her or deposited cheques into her bank account. I do not believe that he had paid this sum to the wife as alleged and suspect that he simply picked out this item from his bank statements because of its proximity to the date of completion to push up his alleged contribution towards the purchase price of the Provident Centre Property. 89. Having considered the evidence before me and for the reasons aforesaid, I am satisfied that the Husband did not purchase the Provident Centre Property jointly with the Wife as alleged and that his various payments which I have found to have been made towards the purchase of the Property were repayments of monies which he at that time owed Madam Lee and not his contribution for his share in the property, whereas his remaining alleged payments have been successfully refuted by the Wife or Madam Lee. This however by no means follow that his S.17 Application has failed as the property was purchased in the Wife's name and that if the Wife had an interest in the property, whether wholly or jointly with her mother, her disposition of the sale proceeds could still come within the section and liable to be set aside. I shall now examine the evidence as to the ownership of the property. Beneficial Ownership of Provident Centre Property 90. The Husband believes that the Wife had placed most of her income with her mother to avoid higher tax as she had told him so during the marriage, and therefore although the purchase monies for the Provident Centre Property may appear to have come from Madam Lee, they in fact belonged to the Wife and hence she must be regarded as the beneficial owner of the property as well as its sale proceeds. This is of course disputed and it encumbrances on me to consider the financial background of both Madam Lee and the Wife and the evidence which lead to the purchase of the property. Like the other issues in this case, they are by no means simple or straightforward. 91. Madam Lee's financial background is set out in details in her 2nd Affirmation. Basically she says she married her husband in China who then came to work in Hong Kong in the 60s, whilst she and her 2 children came to join him in 1971. She first worked as a packing worker and later in a factory as a garment worker earning $800 per month. Her son quitted school early and started to work in an electronic factory. 92. Madam Lee says as she gained more experience in the garment field, she was able to earn more than $5,000 per month in 1975, increasing gradually to $8,000 per month in 1980. She says in 1981 she became a sample maker in a factory making what she says to be high-class evening gowns and dresses for export and was able to earn almost $10,000 per month on average until about 1988 when her income became unstable due to the general trend at that time of the garment business moving their factories into China. 93. In August 1985 the Wife finished her secondary education and started working as an insurance agent for AIA. Madam Lee says her daughter who was all along residing with her soon started paying her money regularly towards the family's household expenses. She says as she had introduced many of her friends, relatives and colleagues to her daughter as clients, and with the deteriorating garment business in Hong Kong and her daughter's encouragement, she decided in October 1990 to also work for AIA as a sub-agent of her daughter until September 1997 when her employment was terminated as she had to help looking after her granddaughter after the breakup of her daughter's marriage. 94. Apart from her income earned as a factory worker and later as an insurance agent all these years, Madam Lee says her son had also given her spending money since he started working. She says he was able to gradually worked his way up in the electronic factory and eventually started his own business in the early 80s. She says he would from time to time give her pocket money, in particularly during Lunar New Year when he would give her several tens of thousand dollars and that at present he still pays her $5,000 per month as her pocket money. 95. In addition, Madam Lee says in between 1973 and 1985, she was also able to earn extra income by letting out part of her rented flat at Tokwawan, Kowloon, and even after her family had moved into a public housing unit in Kwei Shing, she had kept the Tokwawan flat and let out extra rooms for more income. She says at one time she was able to make a profit of as much as $6,000 per month from subletting 5 rooms out of the Tokwawan flat. 96. Madam Lee admits that her husband, who used to trade in jade and jewellery business after he settled in Hong Kong in the 60s, had to retire in the early 80s due to some mental illness, but she says this has not caused her family any financial difficulty as her husband has been able to pay for his keeps from his own savings. She says with her own income earned over the years and with the monies given to her by her children, she was able to save up substantial sums which she later invested in foreign currencies and real properties, including the property in dispute. 97. Madam Lee says she had throughout the years put her savings in foreign currencies to earn higher interest and also to make good profits when the exchange rate of the particular currencies which she had invested, usually in the Australian and New Zealand dollars, had gone up as against the Hong Kong dollars. In January 1987 when she decided to purchase the Lei King Wan Property for $636,210, she says she had about $400,000 in savings from which she paid $240,000 as deposit and borrowed $390,000 from the Bank of Canton by means of a mortgage for the balance of the purchase price. 98. On 7th December 1988 Madam Lee re-mortgaged the Lei King Wan Property to Chase Manhattan Bank for a loan of $790,000 part of which she applied to discharge the mortgage due to the Bank of Canton, and lent $280,000 to the Wife for her purchase of a taxi in 1989. She admits that the Wife has since not repaid the said sum to her, but denies that the Wife had ever paid any money for the purchase of the Lei King Wan Property. She reasons that since the Wife had only been working for less than 2 years at the time of the purchase, she could not have been able to save up $240,000 for the deposit which she insists all came from her own savings. 99. Madam Lee says in 1990 she decided to move to the City Garden Property after her daughter's office had moved to North Point. The purchase price for the City Garden Property was $1,490,000 and as her daughter was then entitled to housing loan from AIA, Madam Lee says she decided to purchase the property in her daughter's name so as to benefit from the low-interest loan. She also put the Lei King Wan Property in the market for sale to finance the purchase of the new property. She says she paid an initial deposit of $30,000 for the City Garden Property and on 20th February 1990 when the sale and purchase agreement was signed by her daughter on her behalf, she paid a further deposit of $119,000 from her current account with the Bank of Communication. The sale was completed on 12th March 1990 when the balance of the purchase price was paid mainly by a mortgage of about $1.2 million from Chase Manhattan Bank. She has produced copies of various cheques and receipts as evidence of payments made by her towards the purchase of this property including legal costs and stamp duty. 100. Madam Lee says she was however unable to sell the Lei King Wan Property in time to finance the purchase of the City Garden Property which explains the reason why a mortgage had to be obtained from Chase Manhattan Bank for the purchase. The Lei King Wan Property was only sold on 2nd May 1990 for $1,238,000, the net proceeds of which she used to discharge the Chase Manhattan Bank mortgage which was then replaced by the AIA loan, whilst the balance of about $400,000 was then paid into her own bank account, the particulars of which however she says she can no longer recall due to the long lapse of time. 101. The City Garden Property was about 800 sq. ft. with 3 bedrooms. The family moved into their new home in April 1990 with Madam Lee and her husband each occupied one room while the Wife occupied the 3rd room. Madam Lee says as the monthly repayment of the AIA loan was deducted from her daughter's salary, her daughter therefore reduced her contribution of the household expenses and maintenance to Madam Lee and her husband, and that this arrangement continued even after her daughter married in 1993 and moved to the Husband's Beverly Hill Property until the sale of the City Garden Property in 1996. 102. Madam Lee says in 1996 she had about $3 million in savings and in view of the booming property market at that time which she says everybody was making money from speculating in properties, she therefore decided to invest in the Provident Centre Property. She says she intended to sub-sell the property which explains the rather long 7 1/2 months completion date, and that in case she was unable to sub-sell and had to complete the purchase, she would have to rely on a mortgage to help meet the balance of the purchase price which was the reason why she decided to again use her daughter's name in the purchase so as to make use of her AIA loan. 103. After the formal sale and purchase agreement was signed, Madam Lee says she then asked the Wife to list the Provident Centre Property for sale through the Husband's U P Agency. However she was unable to sub-sell the property at her intended price of $12 million and she therefore had to complete the purchase. She says at the same time she had wanted to sell her City Garden Property because she found it too big for her and her husband after her daughter's marriage. She therefore returned her public housing unit to the Government in return for a housing loan of $600,000 which she used to finance the purchase of a smaller flat in Fang Cheong Building in North Point. 104. The City Garden Property was sold for $4,355,000 on 6th September 1996 and after deducting the outstanding mortgage and necessary costs and expenses, Madam Lee says she put the net sale proceeds of $3.8 million odd in some fixed deposit accounts of hers which she later applied towards the balance of the purchase price of the Provident Centre Property together with her daughter's AIA loan of $3 million on 30th September 1996. 105. One of the most contentious aspects of Madam Lee's evidence is how she as a garment factory worker with apparently limited income was able to come up with the means to invest in a $8.8 million property. She was subject to lengthy and vigourous cross-examination on her alleged income earned as a garment factory worker in the 80s by Counsel for the Husband who confronted her with the wage indexes published by the Government Census and Statistics Department in the garment industry in 1983 and 1987 which showed that the average incomes of garment workers in various positions in that period were only between $3,000 - $4,000 per month, much less than her claimed income of about $10,000. 106. In reply, Madam Lee gave the following account of her earned income:-
107. She also gave further details in cross-examination as follows:-
108. There is indeed great disparity between Madam Lee's alleged income and those figures provided by the Census and Statistics Department. It is true that Madam Lee has not produced any evidence, documentary or otherwise, to support her allegation other than her own words, which is understandable in view of the long lapse of time, and I don't think anyone can seriously dispute that $10,000 was a significant amount in terms of salary in the early 80s, not just in the garment industry but also in many other professions. On the other hand, it must be pointed out that the figures from the Census and Statistics Department were no more than mere average or median incomes in the garment industry which, I am sure as in other industries or professions as well, must also have workers earning above or below these average or median incomes, as much will depend on other factors such as experience, expertise, age, overtime pay, etc. of the particular employee as well as the size, requirement, affordability, etc. of the particular employer or factory. In the absence of evidence or information as to how these figures were compiled, collated or interpreted by the Census and Statistics Department or any other direct evidence to challenge Madam Lee's evidence, I am unable to say that she could not have been able to earn as much as she alleges, for which she has given detailed and logical explanation. It really boils down to the question of credibility. 109. Having heard and observed her in evidence for days in Court, I am in fact quite impressed by the fact that she was always straightforward and forthcoming in her evidence, even in contentious or controversial areas involving complicated figures or dates when she was never vague, difficult or evasive, and I find her evidence generally consistent throughout the hearing. 110. Take for example, her evidence as to how she was able to accumulate $3 million in savings from 1987 to 1996 to finance the purchase of the Provident Centre Property. She first laid out the evidence as to her financial background, her jobs and income in her 2nd Affirmation filed on 15th January 1999, but she never gave any evidence in details as to how she actually saved up $3 million until she was cross-examined by Counsel for the Husband when she was asked, as instigated by me, to prepare a summary account in writing of her income and spendings from 1987 to 1996 to see if such savings were possible, as it appears on the face, as argued by the Husband, too far-fetched that a working class woman with Madam Lee's background was able to save up $3 million during those few years all by herself. 111. The point whether the summary was actually prepared by Madam Lee or assisted by her daughter as suspected by the Husband, is not really that relevant when she was able to demonstrate with the summary based on the evidence already given by her earlier either in her Affirmation or at the hearing that it was entirely possible. 112. One can of course find discrepencies in some of Madam Lee's lengthy evidence, such as her allegation that she was able to make as much as $6,000 per month at some stage by subletting her Tokwawan flat, when it was shown to her during cross-examination that it could only be $2,000 odd, whilst her evidence that she was able to place $280,000 in savings in foreign currencies after the purchase of the Lei King Wan Property was contradicted by her earlier evidence that she had $400,000 from which she spent $240,000 purchasing the Lei King Wan Property and so could only have $160,000 left instead of $280,000 as alleged, or that she was unable to say what interest rate or exchange rate it was in the 80s for Australian or New Zealand dollars which she says she had invested at that time, but I also remind myself that such discrepencies may be more to do with her stretching her memory over minute details of things that happened more than 10 years ago rather than indication of her having lied in her evidence. 113. No matter what the Husband says about Madam Lee's alleged income or savings, I don't think he is able to dispute that Lei King Wan Property was purchased by her or that the purchase monies did not come from the Wife since, as argued by Counsel for Madam Lee, the Wife could not have been able to save up $240,000 for the downpayment after having worked as an insurance agent for only 1 1/2 years, as it would mean that she was then able to earn substantially and to put aside a net sum of $15,000 every month during that period to be able to have that kind of savings which is most unlikely, if not virtually impossible, for an inexperienced insurance agent to achieve within such a short time. In fact, it is the Husband's submission that the Wife only started to earn a good living as an insurance sales manager in the early 90s and after she received 2 large sums of money from the sale of her taxi in 1993 and the insurance payout to her after the death of her former boyfriend. 114. Nor can it be disputed that the purchase of the City Garden Property in 1990 was partly funded by the sale proceeds of the Lei King Wan Property. Although at first sight the timing of the sale of the Lei King Wan Property and the purchase of the City Garden Property did not seem to support that, Madam Lee was later able to explain satisfactorily in her 2nd Affirmation as to such discrepency. She was also able to produce documentary evidence that the downpayments and legal costs all came from her personal accounts. 115. As pointed out by Counsel for Madam Lee, the Husband's case regarding the Wife's interest in the City Garden Property is not clear at all. In his submission the Husband argues that since the Property was in the Wife's sole name, that the mortgage loan was obtained by her at AIA, that the monthly instalments of the loan was paid by means of direct debit from the Wife's payroll account, that she also contributed to her mother's household expenses and paid pocket money to her mother, and that even after her marriage in 1993 and no longer lived in that property, she continued to pay money to her mother as well as the mortgage instalments. He contends that these evidence support his case that the City Garden Property belonged to the Wife and not Madam Lee. However this does not reconcile with the fact that this property was financed by the sale proceeds of Madam Lee's Lei King Wan Property. 116. Madam Lee has explained the reason why the City Garden Property was purchased in her daughter's name and it was a perfectly legitimate reason. I may have rejected the Husband's evidence as to his alleged interest in the Provident Centre Property, this was also the same reason put forward by him as to why he allowed the Provident Centre Property to be registered in the Wife's name. It is also true that the Wife had regularly contributed to her mother's household expenses and pocket money, which she says she has always done since she started earning as part of her filial duties towards her parents, something which is not at all uncommon in Hong Kong and which is also practised by the Husband in his own family. This common financial arrangement between parents and children contributing together towards the household expenses and / or maintenance payments by children to parents do not necessarily thereby create a beneficial interest in any property between them. There needs to be shown more direct and concrete evidence in particularly as to intention and source of the purchase monies. 117. It is true that the monthly mortgage instalment for the City Garden Property was paid out of the Wife's salary. Madam Lee says it was the internal arrangement of AIA and that her daughter therefore simply just reduced her monthly maintenance to her accordingly. She argues that this by no means follow that the Wife should be held as having contributed towards the purchase monies. Madam Lee is also able to prove, with supportive documentary evidence, that the downpayments and costs came from her bank accounts and that it was the sale proceeds of her Lei King Wan Property which funded the purchase of the City Garden Property. 118. The Husband's case is that the Wife had placed her income with her mother and that they were then holding several joint accounts which contained her money. This is what he said in his 2nd Affirmation:-
119. And in his 7th Affirmation, he said the following about his Wife:-
120. Clearly the only basis for the Husband to allege that the Wife had placed her monies or income with her mother is that she wanted to avoid tax liabilities and to maximize her commission earnings. Looking at the point of avoiding tax liabilities alone, one wonders how the Wife by placing her income with her mother could avoid her tax liabilities since she, as every tax payer in Hong Kong who is an employee, would have to pay tax based on the information provided by her employer, i.e. AIA, in the Employer's Tax Return of Remuneration submitted annually to the Inland Revenue Department on her behalf, and in the absence of any evidence that she had other jobs or business which she had not disclosed, I simply fail to see the logic in this argument of the Husband. 121. As to his second basis for alleging that the Wife had placed her income with her mother because she had been using her mother's name to sell insurance policies so as to earn more commission which, if true, could only mean that she had placed her mother's earned commissions which he believes to be hers into her mother's bank accounts. However her mother only started to work as an insurance agent for AIA in October 1990, whilst the City Garden Property was purchased in early 1990 when the payments and expenses were paid from Madam Lee's account in February and March 1990, long before the Wife could put her commissions allegedly earned through her mother into her accounts. Hence it cannot be argued that such money of the Wife had gone from her mother's accounts into the purchase of the City Garden Property. 122. Furthermore, is it not self-defeating to the Wife if the sole purpose of placing her income with her mother was to avoid tax liabilities and any possible investigation by the Inland Revenue Department, then for her to withdraw such income from her mother's accounts to purchase the City Garden Property in her sole name without making some documents such as a declaration of trust in favour of her mother just to show that the property did not belong to her in case she had to answer to Inland Revenue Department's enquiries ? On careful analysis of the Husband's arguments and for the reasons aforesaid, I have to say that his basis for alleging that the Wife had placed money with her mother which were later used to purchase the City Garden Property cannot stand and that his argument that the Wife had a beneficial interest in that property is rejected. 123. This however does not mean that it will bring a quick end to the Husband's case regarding the Wife's interest in the Provident Centre Property as it was purchased in 1996 and with Madam Lee admittedly working under the Wife as an insurance agent from 1990 until 1997, the Husband's argument of the Wife placing her income with her mother which eventually ended up in the purchase money for the property can no longer be easily dismissed as too far-fetched or invalid. In fact the Husband has alleged, in support of his argument, that the Wife was penalised by the Inland Revenue Department in the early 90s for failure to disclose accurately her taxable income and was ordered to pay $1 million as additional tax, and that she and her mother had set up joint bank accounts in which they mixed their monies together for no good reason. 124. The Wife denies that she was asked by the Inland Revenue Department to pay as much as $1 million for tax and penalty. She explains that it has been a practice in her trade to deduct expenses such as secretary, printing, entertainment, etc. from the gross income for filing tax returns, but in 1994 the Inland Revenue Department decided not to allow certain items of expenses claimed by her over the years and hence she was required to pay additional tax dating back from 1988 to 1993 totalling $329,005 including 5% surcharge as she asked to pay by instalments. She has produced copies of her various tax returns in that period and the demand for additional tax as evidence to refute the Husband's allegation of her having to pay $1 million in additional tax and fine. Regardless of the correct amount of additional tax that the Wife had to pay, I am unable to see its relevancy to the issue over her possible interest in the Provident Centre Property, the same can be said about the fact that the Wife has not repaid her mother's loan of $280,000 after selling her taxi which is not at all relevant to the issue. 125. The Husband's case of the Wife using her mother's name to sell insurance policies in order to earn more commissions, on the other hand, may be more relevant if true and that these commissions were paid into her mother's bank accounts in trust for the Wife and were later used to purchase the Provident Centre Property, in particular of the fact that they had at the material time held joint accounts. 126. Madam Lee did appear not very knowledgeable on how insurance premia are calculated or on the differences between different types of insurance policies under cross-examination, which she gave the excuse that she did not have to do the paper work herself in her line of work. But if what the Husband alleges is true that her earned commissions in fact belonged to the Wife, and since she had no other job or income when she was said to be working as an insurance agent, then how was she able to meet her own personal or household expenses during these years ? Such an arrangement, if true, would mean that the Wife would have to fully support Madam Lee and her household and given the fact that Madam Lee was only earning an average income of about $10,000 per month as an insurance agent from 1990 to 1995 according to the summary prepared by her to demonstrate how she was able to save up $3 million between 1987 and 1995, which is the only evidence on her income as an insurance agent before the court, I find that it hardly justifies such an arrangement by the Wife and more importantly, there would not be much left for her savings after meeting Madam Lee's living and household expenses, let alone to finance the purchase of a $8 million property. 127. It is true that Madam Lee had held joint accounts with the Wife at that time, which she explains were opened at the advice of the people working in the bank which she used to deal with for security reason due to her age, which cannot really be said to sound unreasonable or suspicious, in particular in view of the close relationship of mother and daughter and the fact that Madam Lee's husband is mentally disabled. This include a savings account and 2 fixed deposit certificates with the National Commercial Bank. 128. Whilst I can understand Madam Lee's reason for adding her daughter's name to these bank accounts of hers, there is the question of why the Wife would also deposit her money such as the sale proceeds of her taxi or insurance premium payments of her clients into these accounts so as to mix their monies together, in the words of the Husband, rather than into her own bank accounts. 129. The Wife explains that as a very busy insurance sales manager who also had to assist the Husband in running JP, she simply did not have time to do her own banking as well as that of JP, she therefore had to rely on her mother to run such errands for her including drawing and depositing money and issuing cheques on her behalf, and to do so her mother would have to operate such accounts which explains the reason why her monies including insurance premia paid by her clients were deposited into these joint accounts. 130. When queried how she was able to differentiate her monies from her mother's in these accounts, the Wife explained that she would keep a daily record of all the deposit of her monies on some pieces of papers which she would then cross-check against the bank statements, which is also why there were some notes or names next to certain entries in the bank statements indicating the identity of her clients who had deposited their insurance payments. 131. The Husband does not accept this explanation and argues that it is incredible that the Wife would adopt such a clumsy and inconvenient method to handle her clients' payments when it would have been much simpler for her to open a designated account for such payments with authority to her mother to do the banking for her in which case she would not have to go through all the trouble of making records of payments and cross-checking them in the bank statements so as to differential her monies from her mother's. The Husband's suggested method certainly looks to me a much more sensible way of doing things but people do not necessarily do things in their daily life in the most reasonable or convenient manner and I cannot say that the Wife's method is so inherently illogical or unreasonable that it should not believed. One should still have to look further for more concrete evidence as to her interest in the property. 132. The same can be said of the Husband's argument that it was highly unlikely that Madam Lee would invest in something as substantial as the $8 million Provident Centre Property when all along she had merely invested in much smaller scale such as the Kornhill Property, or even the Robinson Place Property if her evidence on that property was to be believed, which involved only a few hundred thousand dollars in joint investment with others. He argues that her alleged sole investment in the Provident Centre Property is wholly inconsistent with her conduct in the past, and is strong indication that either it was in fact not her investment but her daughter's, or at least it was their joint investment. 133. This argument, like the one before, seems valid on first glance but is nevertheless circumstantial based on various assumptions and not on any concrete evidence. Madam Lee has explained that after her daughter's marriage, she found her City Garden Property too big for just her and her husband and she had planned to purchase a smaller flat by returning her public housing unit to the government for a $600,000 housing loan. She says as she was going to sell the City Garden Property and with about $3 milllion in savings, she decided to invest in the Provident Centre Property because she had viewed similar premises which she found to have attractive features to make it a good investment, and as she had been following the property market closely and was convinced that the market would continue its upward trend so as to make her investment easily profitable, in particularly if she were to sub-sell it as a confirmor. She says she could also rely on her daughter's assistance in obtaining low-interest AIA loan in case she had to complete the purchase. 134. Every investment of course has its risk but it cannot be said that Madam Lee's investment in the Provident Centre Property was so risky or financially improbable that it could not be her sole investment without the financial backing or involvement of her daughter. She has explained that she had the means for such an investment, and with the property market situation at that time, I cannot say that Madam Lee's alleged sole investment in the Provident Centre Property is so unlikely that her evidence should not be accepted. 135. The Husband has also introduced a witness to challenge Madam Lee's evidence that she had actually viewed the Provident Centre Property before instructing the Wife to purchase it. This witness, a Miss Wong was the former owner of City Property Agency which acted for the then owner of the Provident Centre Property and was therefore responsible for showing the property to all potential buyers. She first gave a written statement in respect of the sale of the property to the Wife as follows:-
136. Her statement does not really contradict Madam Lee's evidence as it was her case, and that of the Wife, that after having viewed the property, it was decided that the Wife would go with the Husband and his family members to view the premises again pretending to purchase it as their home for the purpose of trying to negotiate a good price with the owners, as it would be easier to get the owners to come down from their demand if they thought that the property was to be purchased as a home rather then as an investment. If this was indeed the arrangement, it is no surprise that Miss Wong got the impression that the Husband and his family was buying the property. 137. Ms Wong was then called to give oral evidence at the hearing when she revealed that she closed down her agency in 1998 and that she gave her statement and evidence just from her memory without referring to any business records or documents of the particular transaction as she has not kept them after the close down of her previous company. Despite this she insisted that she was able to remember the transaction because she personally knew the Husband as a fellow real estate agent who also worked in the neighbourhood of her agency, and that neither she nor any of her staff had ever shown the property to Madam Lee. When asked by Counsel for Madam Lee as to how she was able to remember that Madam Lee was never taken to view the property, she replied that her staff would have reported to her if they had taken Madam Lee to view the premises as they would have meeting every evening to review their work of the day and also to keep record of all such viewings for each property of their clients. 138. Even assuming Ms Wong has amazing memory, I find it incredible that she was able to tell just from memory that neither she nor her staff had ever brought Madam Lee to view the premises, something which was supposed to occur more than 3 years ago in a business in which she and her staff must have dealt with many clients and potential clients and brought them to view countless different premises almost every day. She might well have daily meeting with her staff to discuss about various transactions, but I do not see the point of discussing unsuccessful case or uneventual viewing as in the case of Madam Lee, or for that matter to keep such record. And even if there were records, Ms Wong has conceded in her evidence that she never referred to such records before coming to Court to give evidence as she has not kept them after her business had ceased. 139. I am not suggesting that Ms Wong has lied in her evidence. Her evidence about what she saw at the premises on 3rd February 1996 when the Wife signed the provisional sale and purchase agreement was in general accepted by the Wife and Madam Lee to be accurate. I believe that the reasons why she was able to give such details is probably more of the case that she is able to remember the Husband as an acquaintance and that she had been reminded of the transaction from discussions with the Husband when he asked her to be his witness. I however have great difficulty accepting her basis for alleging that Madam Lee had never viewed the Provident Centre Property. 140. Madam Lee has already explained the reason why her investment in the Provident Centre Property was purchased in the Wife's name, and has produced evidence to show her subsequent repayment to her daughter of the several mortgage instalments debited from her daughter's salary account after the sale. She has also explained that as the investment was only for a short term and as she did put the property up for sale in January 1997 by newspapers advertisement, the unfortunate timing of the sale and her daughter's commencement of the divorce proceedings in the same month of January 1997 was merely a coincidence and not the Wife's planned attempt to dissipate her assets. In the absence of any other direct or concrete evidence of the Wife's contribution to the purchase of the property, and in the circumstances of the case and the evidence that have been presented before me, there is very little merits or substance left in the Husband's argument that the property was the Wife's investment. 141. The Wife married the Husband in October 1993. She was at the same time made a director and shareholder of the Husband's company JP which was the main and most important matrimonial asset of the parties. The Wife says she had during the marriage, i.e. between 1993 and 1996 paid about $1.8 million either as loans or injection of capital into JP. The Husband says that the Wife's total contribution to JP was much less, only about $535,000 as of 31st December 1995. The Wife has produced copies of her bank statements, deposit slips, etc. as evidence of her alleged contribution. She also says in evidence that in addition she also contributed regularly to the running expenses of JP and the family household expenses such as salary of the maids employed at different time of the marriage as well as the child's expenses. She reasons that as she earned only between $30,000 to $40,000 per month on average during the marriage, it would be virtually impossible to have any savings when she had to meet her own personal expenses as well as those expenses and payments aforesaid, let alone to have $3 million to invest in the Provident Centre Property. 142. It is unfortunate that the parties did not go into details on the evidence of the Wife's contribution to JP at the hearing to enable one to arrive safely any conclusion as to the exact amount of the Wife's contribution, but even if she only contributed as little as $500,000 odd between 1993 and 1995 as alleged by the Husband, it would still amount to an average of more than $20,000 per month. Taking into account of her own personal expenses and her household expenses, as well as her monthly maintenance to her mother, I agree with the Wife that her income was simply not sufficient to enable her to at the same time accumulate such savings for the purchase of the Provident Centre Property. 143. Furthermore, it is undisputed evidence that the Wife had during the marriage been actively involved in her husband's various investments not just through JP in the real property market in Hong Kong, but also in other investments or project in China. In fact she had started such joint investment with her husband even before their marriage in 1993. With their marriage generally a happy one until late 1996 or early 1997, and with their various joint investments generally successful and profitable at that time, and the fact that the Wife was given almost a free hand to manage the accounts of JP, I find it difficult to believe that she would still choose to secretly put aside some of her own income or monies with her mother and then in early 1996, shortly after the birth of their first child, she would use some of these secret funds to purchase such a substantial property as the Provident Centre Property as her own investment without allowing the Husband any share therein, yet at the same time decided to involve him and his family in the viewing and purchase of the property. The Husband's argument in the circumstances is simply not reasonable or logical, and I am satisfied that the Wife has successfully rebuted the presumption that she had any beneficial interest in the property. Conclusion 144. This case was complicated by the intricate financial relationship amongst the 3 parties resulted in enormous amount of evidence given in a trial which lasted almost 30 days, with most of the evidence diametrically opposed between the 2 sides. However, with also many of the facts of the dealings and transactions between the parties could not be disputed, it is virtually impossible for the evidence of the party guilty of not telling the truth to hold up consistently and logically against those facts, and at the end it is inevitable that the case of that party must fail upon close scrutiny. I have no difficulty in concluding that the Husband is that guilty party. On the other hand, the evidence of both the Wife and Madam Lee have been so consistent and so well corroborated each other that the logical and reasonable conclusion is that they have told the truth. Having considered all the facts and circumstances of the case and the evidence before me, I am satisfied that the Provident Centre Property was Madam Lee's sole investment, that the Wife was merely holding the property in trust for her and that neither the Wife nor the Husband had any beneficial interest therein. It follows that the sale proceeds of $8.6 million rightfully belong to Madam Lee and that the Husband's S.17 application must be dismissed, with costs to both the Wife and Madam Lee not just because costs should follow the event but also because I find that the Husband has fabricated his evidence in the application. My order is therefore as follows:-
Representation: Miss. Jennifer Tsui instructed by M/S Wong, Hui & Co. for Petitioner / 1st Respondent. Mr. Hylas Chung instructed by M/S Josip Ma & Co. for Respondent /Applicant. Miss. Anita Yip instructed by M/S Chaine, Chow & Barbara Hung for 2nd Respondent. |