Chan Cheung Hing v. Chan Tang Law
Read the full judgment text of HCMP 726/1979 on BabelCite. This High Court CFI judgment.
1. The applicant, Chan Cheung Hing, (the husband), seeks a declaration that certain properties are the joint property of himself and the respondent, Chan Tang Lan, (the wife), and asks for an order that the said property be sold and the net proceeds divided equally between them. The properties involved are:-
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HCMP000726/1979 1979, No. 726 IN THE SUPREME COURT OF HONG KONG HIGH COURT MISCELLANEOUS PROCEEDINGS ______________
BETWEEN
_________ Coram: Hon. Power, J. Dates of Hearing: 31.10.83, 1.11.83, 7.11.83 to 10.11.83 inclusive. Date of Delivery of Judgment: 16th December 1983. ______________ J U D G M E N T ______________ 1. The applicant, Chan Cheung Hing, (the husband), seeks a declaration that certain properties are the joint property of himself and the respondent, Chan Tang Lan, (the wife), and asks for an order that the said property be sold and the net proceeds divided equally between them. The properties involved are:-
2. The husband, in his affidavit in support of the application, said that the parties were married on the 17th October 1961 in Hong Kong. He said that in 1968 he and his friend Wong Chi Hang were operating a knitting factory called the Chung Shing Knitting Factory (the Chung Shing Factory) at 77 Un Chau Street, Ground Floor. It appeared from his evidence that this factory had originally operated from 216 Apliu Street. He said that the factory was registered in his name and that of the said Wong Chi Hang, who was, by 1968, residing in America. He said, when he came to give evidence, that he and Mr. Wong had started the factory in 1958 and that, after Mr. Wong left for America in 1962 or 1963, he was not only running the factory but was also entitled to the full profit therefrom. He said that he used to put all the cheques payable to the business in a drawer in his bedroom which was inside the factory and that the respondent took cheques and cash and paid them into her private bank account. He said that the business was run at a profit and that he had no objection to his wife so doing as she was assisting him in the management and up-keep of the home and that it was his impression that she was saving up for them both. He said that the property at 78, Un Chau Street was purchased on the 26th July 1968 and that the purchase price of $27,500 was paid for by funds drawn from the respondent's bank account. He said that after the purchase he put at least $8,000 into the decoration of the premises. He agreed that the premises were registered in the wife's name. 3. He said that on the 26th March 1970 he and his wife purchased the property at 282, Cheung Sha Wan Road, and that he put up $20,000 whilst she put up $30,000 from her bank account. He said that the balance of the purchase price of $111,000 was raised through a mortgage to the Wing Lung Bank which was repaid by instalments of $1,800 to $2,000 per month and that the first 20 instalments were paid by him through his own private bank account. He said that the rest of the instalments were paid by the wife. He said that she subsequently sold the property on the 6th May 1978 and that he believed that she applied the proceeds towards the purchase of the property at 14-20 Wah Wing Industrial Building. He said that he was not consulted at all as to this purchase. 4. He said that in about October 1972 the business registration of the Chung Shing Factory was cancelled and the Cheung Hing Knitting Factory (the Cheung Hing Factory) was then registered with the respondent as sole proprietor. The particulars in the Business Registration application in this regard showed that the application, which stated that the business had commenced on 1st July 1970, was made in the name of the respondent and was registered on 16th February 1971. It further showed that on 29th June 1973 the name of the business was changed from Cheung Hing Knitting Factory to Cheung Hing Kee Knitting Factory. I will refer to this business hereafter as the Cheung Hing Factory. No record was ever produced showing either registration or cancellation thereof of the Chung Shing Factory. He said that most of the assets, chattels and machinery in the factory were those of the former Chung Shing Factory and that he thereafter carried on substantially the same business under the name Cheung Hing Factory. He said that on the 28th October 1972 he and the wife purchased the premises at 2 Fat Tseung Street at the price of $130,000 and that that the property was also registered in the wife's name. He said that the property at 286-300 Cheung Sha Wan Road was purchased by himself and his wife on the 25th March 1974 and that this was also registered in her name and was also purchased out of money derived from the Cheung Hing Factory. He said that the wife paid the purchase price of $103,000 out of her private bank account. In fact the Record of Owners shows that the purchase of this property was, in part, financed by a mortgage of $55,000 which was paid off by January 1982. He said that at the time of the marriage the wife was without substantial means and that throughout the marriage she had never been employed in any gainful employment and had never had any independent capital, assets or source of income. 5. The wife filed an affidavit in which she said that she was a widow at the time of her marriage and that on the death of her former husband, a Mr. Chong Kwai Fun, she inherited 2 stone-houses in the Yuen Long Market area and cash in the sum of $150,000 which she kept in a safe deposit box at the Liu Chong Hing Bank. She said that just before her marriage, she sold the two stone-houses for a total price of $7,000. She said that her husband had informed her that he was only employed as a knitting worker earning $100-$200 per month. She said that he was not in a position to support her or her son of the former marriage, who was then three years of age, and that she "worked at Shamshuipo in Kowloon and kept a store in Yuen Long carrying on business by the name of Tai Wo Dispensary (Medicine) Company". 6. She said that from 1961-1967 she lived with her son in Yuen Long whereas her husband stayed at Pak Hoi Street in Shamshuipo. She said that during that period, she would, on occasions, travel to Kowloon to stay with the applicant for the weekend. She said that she has to give the applicant $300-$400, 3 or 4 times a month for his own up-keep. Her affidavit, in this regard, is not altogether clear as she appears to be saying that she was living in Yuen Long and keeping a store there that, at the same time, she was working in Shamshuipo. It seems that she may have been intending to convey that, towards the latter part of the period mentioned, she was working in Shamshuipo. 7. If she was giving her husband $300-$400 per month between the years 1961-1967, she would, during the whole period, have given him an amount of not less than $70,000. She also said that she gave him a sum of $3,500 in the year 1963 when he informed her that he would like to join a partnership business. 8. She said that about the year 1966 she cancelled the said deposit box at the Liu Chong Hing Bank and used her savings for the purchase of stocks and shares. She went on to say that later, i.e. after the year 1966, she sold all the stock in trade of the said dispensary company for a sum in excess of $30,000 and that in July 1968 she purchased a property at 78 Un Chau Street for the sum of $27,500. She said that after the purchase of this property her husband came to live with her and the child of the former marriage at those premises. She denied that the husband had paid at least $8,000 for decoration and said that he made absolutely no contribution to the up-keep of the family. She went on to say that between the years 1968 and 1970 she supported herself and her son by working as a garment worker and by investing and speculating in the stock market. She denied that she had ever taken any money from the husband's business and said that "his allegations are but malicious fabrications on his part". She said that in about March 1970 she purchased a property at 282 Cheung Sha Wan Road for $111,000 and that part of the purchase price was obtained by a mortgage in the sum of $55,000 from the Wing Lung Bank and that the balance was paid by her partly from money left to her by her former husband and partly from her earnings and savings. She said that she eventually sold this property on the 6th May 1978 because she was in need of money to make severance payments to workers and to pay creditors of the Cheung Hing Factory. 9. She said that, in about 1971, she had started that factory. She said that she was sole proprietor of the factory and was fully in charge thereof and that at first there were 3 workers employed by her and that her husband worked as her manager. She said that she purchased all machinery and installations out of her own money and that she opened a banking account for the firm with the Sin Hua Trust, Savings and Commercial Bank. She said that she ran the factory from 8 o'clock in the morning until 9 o'clock in the evening every working day and that the applicant would arrive at 11 o'clock in the morning and "would disappear by 3 o'clock in the afternoon, and then I would not see him again until well after midnight". 10. She said that in October 1972 she purchased the property at No.2 Fat Tseung Street for $130,000, from her earnings and savings. 11. She said that in March 1974 she purchased a property at 286-300 cheung Sha Wan Road for $103,000 and that she financed this purchase in part by way of a mortgage for $70,000 from the Kwang Tung Province Bank. It appears that from the Land Office search that this mortgage was paid off by the month of June 1977. In her affidavit the respondent made no mention of the premises at 14-20 Wah Wing Industrial Building. 12. In an affidavit in reply, the husband said that the two stone-houses were sold in 1973 or 1974 for a few thousand dollars which was just about sufficient to discharge a debt incurred by the adopted son of the respondent and her former husband. He said that the Tai Woo Dispensary (Medicine) Co. had been sold long before his marriage and that his wife informed him that it had been done to raise money to meet medical expenses for the step son of her former husband. The husband said that the wife had never invested in stocks and shares and had never mentioned a safe deposit box at the Liu Chong Hing Bank to him. He said that the years 1968 to 1970 were years when the Chung Shing Knitting Factory was at its most profitable. 13. The first witness to give evidence was a Mr. Tsang Kwok Man who said that he had formerly worked for the applicant. He said that he worked for him as an apprentice in the Chung Shing Knitting Factory and that the applicant was the "sort of person in charge" of that factory. He said the factory moved to Cheung Sha Wan and changed its name to the Cheung Hing Knitting Factory. He said that it was in the same business but its scale expanded. He said that he had worked for more than three years for the two factories and that Madam Tang Lan usually paid the wages. Under cross-examination he said that the factory had one night and two day workers and that he had only worked for the Chung Shing Factory for about three months before the change over. He said that he always saw Madam Tang Lan in both factory premises - she would come at about 11 in the morning and prepare lunch and after lunch she would leave and would later return to prepare the dinner. He said that he considered the husband and the wife as proprietor and proprietress. 14. He referred to the business as being a "husband and wife business". He said that he particularly remembered the name "Chung Shing" because customers calling on the telephone to the new factory still continued to use the name of the old factory. In re-examination he said that sometimes Madam Tang Lan had dropped in to see how the factory was working and that sometimes she came at 9 a.m. to see if the workers had started. 15. The applicant then gave evidence in which he said that the name of the factory was changed from Chung Shing to Cheung Hing because, after the former partner in Cheung Hing, Wong Chi Hang, had immigrated to America in the early sixties, he managed the factory and that "I had not kept any account books and neither did I file any tax returns, so I was afraid the Government might look for me to recover outstanding tax for past years and so when factory moved I decided to change its name altogether. Madam Tang made the suggestion and I decided to adopt this method". He said that the business name Cheung Hing, which is made up of his two given names, was later changed to Cheung Hing Kee because it was discovered in the company registry files that there were two Cheung Hing factories. He said that Cheung Hing Kee came to a stop in 1978 and that prior to the cessation of business, there had been one application to the Labour Tribunal for severance pay. He said that Madam Tang Lan had handled the application while he kept the factory operating. He said that there were no workers thereafter in the factory and that there were no debts owed to creditors. He said that there was never any discussion about sharing of profits of the factory and that he had let his wife keep the profits in her savings account. He said that the "savings were for the family in general - in case profits declined". He said, correcting what he had said in his affidavit, that he had contributed $36,000 to the purchase of the property at 282 Cheung Sha Wan Road. He said that he was now able to say this with certainty because he had been able to refer to his current account ledger at the Wing Lung Bank. He referred to a current account ledger with the Wing Lung Bank Ltd. in the name Cheung Hing Knitting which he said could be operated upon both by himself and his wife and to another account in the name Cheung Hing Kee Knitting Factory, to which the same arrangement applied, in the Sin Hua Trust, Commercial and Saving Bank. He said that the sale of the premises at 282 Cheung Sha Wan Road in 1978 was done without his knowledge and that he was given $28,000 therefrom. He said that, when the wife told him about the proceeds of the sale, she varied between the figure of $600,000 and $600,000 odd. He said that she told him that the property at Kwai Chung cost $500,000 odd. According to the extract from the Register the actual purchase price was $456,632. 16. Under cross-examination he said that quite a lot of profit was made from the Chung Shing Factory but that he had never paid any tax or filed any return. He was asked whether he was ever chased by the Government and said, "At first I was given a letter by a certain department asking me to state my assets and after I filed the form, nothing further was heard from authorities". 17. He agreed that as well as the account at the Wing Lung Bank in the name of Cheung Hing, he had two private accounts, but he said that the moneys from the business was sometimes paid into his wife's account and sometimes into his own account. 18. As to the purchase of the property at 282 Cheung Sha Wan Road, he said that the decision to purchase was made by them both after going to inspect the property. He said that he had put that property in his wife's name "because I was worried about Government making inquiries in our business". He was then asked, "Was that the only reason?" and he said "Yes - fear Inland Revenue chase our taxes". He was asked whether the four other properties were registered in her name for the same reason and he said, Apart from that there was the reason that subsequently she was in control of the financial aspect of our business so naturally the properties purchased would be in her name." He was then asked "But one reason was so the Government could not look to you to pay income tax?" and he answered "Yes". 19. Mr. Eddis who appeared for the husband suggested that what he was really saying when giving this evidence was that the reason he put the properties in his wife's name was to avoid a mix-up between the possible income tax liability of the first firm and that of the second. I find myself unable to agree with this. He clearly indicates in the passages cited above that the reason the properties were placed in his wife's name was so that the Inland Revenue would not be able to obtain anything from him if an attempt was made to recover taxes. 20. When it was suggested to him that he was paying moneys from the factory into his own account he said that what had to be taken into account was that he was spending money from that account to keep the factory in operation. He denied that his wife had continued to run any businesses of her former husband after the marriage. He agreed that they had lived apart in the first half of the sixties but said that from 1965 they lived together at 77 Un Chau Street. 21. During re-examination the applicant, by leave, produced a number of cheques. The first of these, Exhibit 3 was a cheque drawn on the Overseas Trust Bank dated the 31st March 1967 made out to the Chung Shing Factory which bore in the back the endorsement "Tang Lan". The second cheque, Exhibit 4 was dated the 28th July 1967. It was drawn on the Overseas Trust Bank Ltd. and made out in favour of Wong Tang. The applicant said that Wong Tang gave it to him as payment. That cheque was also endorsed with the name "Tang Lan" on the back. The witness also produced Exhibit 5 which comprised three cheques made out to the Chung Shing Factory, two of these were dated in 1961 and one in 1970 and he produced Exhibit 6, a further 8 cheques, drawn in favour of Chung Shing, bearing dates from 1963 to 1970. These cheques, on their face, indicated both that some entity known as Chung Shing had existed and that the respondent had some connection therewith. 22. I turn now to the evidence of Madam Tang Lan. I apologise for setting out her evidence and cross-examination at such length. I do not, however, see how the view I have taken of her as a witness can be adequately explained in any other way. Madam Tang gave evidence that she had got to know the applicant while still cohabiting with her former husband and that she had married him on the 17th October 1961. She said that her former husband ran a Chinese medicine shop, the Tai Wor Tong in Yuen Long and a transportation business known as the Tai Wor Lorry Co. and that, as well as helping him run his two companies, she ran her own furniture shop, the Cheung Kee Co. 23. She said that her husband died in 1955 or 1956 without a will and that he left her "in the region of $100,000". She then went on to say that the amount was "around $150,000". She said that her husband also left her the Chinese medicine shop and that she still had the furniture company, but that, by the time of his death, the transportation company had ceased business. She said that she was also left 2 stone huts in the town area of Yuen Long. She said that, after her husband's death, the income from the medicine shop went down and that, on the advice of friends, she wound it up. She said that she sold the stone house for $3,000 to $5,000 each and that the medicine shop was sold for $30,000 including stock. 24. She said that at first she had kept the cash at home, but then upon the advice of a Madam Yiu, she put it in a safe deposit box at the Liu Chong Hing Bank. As to the Chung Shing Factory, she said that the applicant had told her that: "He was a partner of Chung Shing Factory but that was a pack of lies and there has never been such a kind of business venture". 25. The witness then went on to say, in answer to a question from the bench, that she had heard of the Chung Shing Knitting Factory when she was first acquainted with the applicant and that it was mentioned in connection with an address in Apliu Street. She said that the applicant then told her that he worked in that place. This was hardly on all fours with her evidence given earlier that there had never been such a kind of business venture. 26. She went on to say that at the time of the marriage she was "living in Yuen Long and managing that furniture shop in Yuen Long and it was some time after we married that I moved to live in the urban area of Kowloon". She said that she stayed in Yuen Long and ran the furniture shop "until the year of riots" and that she then wound up the furniture business and moved to live with the applicant in Un Chau Street. It seems to me that "the year of the riots", to which the witness referred, was probably 1967. This evidence seems to confirm the correctness of the interpretation which I placed upon her affidavit that she was only saying that she had worked as a textile worker after 1965. In her further evidence she said: "After our marriage I was staying in Yuen Long so the applicant had to travel all the way to the New Territories to see me in Yuen Long, but as I was busy in my business, I did not have much time to see him". This was, to some extent, at variance with her affidavit evidence where she said that it was she who used to travel to Kowloon to see her husband. She went on to say that they were living apart until they moved into the flat in Un Chau Street which was in 1967 or 1968. She said that in 1963 she gave the applicant $3,500. She said that she did not know what it was meant for but she believed that he used to pay for off-course betting on horse and dog races. This was contrary to what she had stated in her affidavit where she had said that "the applicant informed me that he would like to join in a partnership business and at his request I gave him a sum of $3,500". In her evidence she denied that her husband had ever said he would like to join in a partnership business. 27. She went on to state that she had started investing in stock market in 1971, at the earliest", and that she kept on investing in 1972 and remembered the market fall in 1973. She produced four purchase notes, Exhibit 9, from the Sun Fat Investment Co., all of which related to purchases in March 1973. She said that these were the only invoices that she had left. These showed a series of purchases, which can only be described as disastrous, immediately prior to the stock market crash in 1973. They certainly do nothing to support her suggestion that her share dealings had been very successful. She said that the majority of money made on the stock market had been paid into a savings account and that sum had been put into her current account. When asked by the bench where her current account was, she said "Mostly in Wing Lung Bank, I have thrown the pass-book away". She said that she was unable to locate any of the records relating to this account. 28. Mrs. Bokhary who appeared for the wife then announced that some of these records had been located; however, in the outcome, she did not seek to tender them. 29. The wife again repeated that "To the best of my knowledge there was no Chung Shing Factory located in Un Chau Street and it was just the words of the applicant". As to the Cheung Hing Factory, she said that she had started with her own money. She said there was no truth in the suggestion that she had taken cheques from a drawer and banked them when her husband was running the Chung Shing Factory. As to Cheung Hing, she said that he was the manager and that she used to pay him $3,000 per month. 30. As to the purchase of the property at Wah Wing Industrial Building in 1978, she said that she paid for it. She explained how this purchase was made by saying that the Cheung Hing Kee Factory was running down in about 1978 and so she decided to sell it. She appears to be referring here to the sale of the premises at 282 Cheung Sha Wan Road where the factory was situated. She said that she sold it for $600,000, out of which she had to pay $300,000 to settle the debts owed by the factory and as severance fees to the workers and that after selling her "own treasure of precious stones and diamonds and gold ornaments, she gathered $500,000 to purchase the premises in the Wah Wing Industrial Building. She appeared to be saying that about $300,000 of the money to purchase that building had come from the money she received when she sold the factory and that the remainder had come from monies which she had raised by selling precious stones, diamonds and gold ornaments. 31. She said that at the time when the factory wound up, there were four or five employees. She denied that there was only one worker who had to be given severance pay. She said that she had financial control of the factory and that "she also doubled up as a cook, cooking meals for those trainees. After lunch I went back to work at my post in the factory until about 4 p.m. when I would go to the market to buy food for dinner". She said that she worked at the factory from 8 a.m. until 9 p.m., and during that time she was either shopping for and preparing the two meals provided or working on the machines. 32. As to the applicant, she said he would rise "almost at noon" and then go to a tea house and would then come to the factory at about 12.30 and take lunch at 1 p.m. She said, "He would nibble at several grains of rice like a cockroach and that would be his lunch. At 2 he would go to the tea house again and then would only turn up at 4 or 5 p.m. and sometimes not come back at all". This seems hardly in accord with her earlier evidence that her husband was the manager of the factory and was paid $3,000 per month. She went on then to say "It was I who ran the factory and looked after all its affairs". She said that not only was she paying her husband $3,000 per month but also that she gave him $300 to $500 whenever requested. She said that the frequency of this request depended upon whether or not he was winning at the horse and dog races. She said that he was also able to operate on the factory account and could draw monies therefrom without her knowing it and that he spent all the money which should be the factory's earnings. It was her evidence, then, that he was paid a salary of $3,000 a month, that he received $300 to $500 from her whenever he asked for it and that he withdrew the profits from the company account. 33. When questioned further by her own counsel about his withdrawing money from the company account, she said "That was his money, he had the right to use it and I just did not bother to stop him". She was asked to explain this statement and said, "In a way I treated this account and all the money in it as his property, so I did not pay attention. I just let him operate this account as he liked". She seemed, in this statement, to be very close to admitting that the applicant did have an entitlement to a share in the profits of the factory. 34. Under cross-examination she said that she lived in one of the four properties the subject of this action and that she had no other properties in her name or with others. She went on to confirm that she supported herself from the rental of three of the properties and lived in one of them. She said that she had not invested in any property since 1978. She said that her son was Chan Ying Lun but said she did not Know if he bore the English name Allen. She said that she had never heard of the Wing Cheong Building and she denied living on the 22nd floor of that building. She denied having purchased premises in that building with her son on the 2nd November 1979. She was then shown a certified true copy of a Sub-division Register from the Registrar General's Department (Exhibit 10). This showed that on the 2nd November 1979, Chan Ying Lun, Allen and Tang Lan became joint tenants of Flat B, on the 22nd floor of Wing Cheong Building, having purchased that flat from the Siu Fook Investment Co., Ltd. for an amount of $230,850. It showed that on the date of registration, 17th December 1979, the flat had been mortgaged to the Wing Lung Bank Ltd. for an amount of $167,026.53. When asked about this document she sought to explain it by saying that it was a "kind of mortgage purchase". She went on to say "To the best of my memory, it would be Chan Ying Lun, Allen who mortgaged this property to a bank and is occupying this flat". She then admitted that Chan Ying Lun, Allen was her son. She then sought to suggest, quite incorrectly on the face of the record, that the joint tenancy status had been amended and that now only Chan Ying Lun lived there "in his own property and does not have to pay property tax as he is living in his own property and it is he who is paying monthly instalments to bank". 35. It is not clear what she was trying to convey by this answer. She appears to have been trying to say that this was really her son's transaction and not her own. However, when pressed by Mr. Eddis, she admitted that she knew that the purchase had been in her name and that it was only later that her son took over the mortgage repayments. She then admitted that at the time of purchase she was the financier as well as the purchaser. She then said that it was only for the first year after the purchase that she made the mortgage repayments and that after that year her son "took up the occupancy" of the flat alone. 36. She tried to explain her previous answer, that she had not bought any properties since 1978, by saying that all previous purchases had been in her name only and that this was in the name of herself and her son. She then went on to say that she "might have forgotten and failed to remember joint purchases". She was asked by the Bench where this flat was and she said, "I do not know. Wherever you say it is. I would say this building does not exist. I will take your word." When pressed further, and reminder that she must make truthful answers, she said, "His residential address is 404-412 Reclamation Street, 22nd floor, Mong Kok, Kowloon. It is called the Wing Cheong Building. It is no use saying that I am unable and putting words in my mouth". 37. It seemed to me perfectly clear that throughout the above exchange the witness had been fully aware both of the purchase and of the address of this property and that she had told a series of deliberate lies in this regard. 38. She said that her first husband had died before the 1967 riots, but that he had been alive in 1956 when her son was born. She had produced a business registration (Exhibit 7) which showed that Jong Kwai Fun was the registered owner of a transportation company carried on in the name Tai Wo Tong from 8 Tai Cheong Street, Yuen Long, New Territories, which was also the residential address, and that the business had commenced on the 10th October 1949. She had also produced a business registration certificate showing that she herself Tang Lan was the registered proprietor of a business which was described as "Furniture Maker (Carpenter) (small scale)" which was carried on under the name Cheung Kee from an address at 88 Tai Cheong Street, Yuer Long, New Territories and that it had commenced business on the 30th September 1955 (Exhibit 8). This certificate bore a stamp "File Cancelled 31st December 1960". There was no registration produced for a medicine shop, however, the witness said that Tai Wo Tong was both a transportation company and a medicine company. She said that she had sold the stock of the medicine company at most two years after her husband's death and agreed that would be in about 1959. She said that she had put the proceeds which were $30,000 odd in a safe deposit box. This was completely at variance with her affidavit evidence which was that she sold the dispensary sometime after 1966. She said that she took the money", presumably the money from the safe deposit box, bit by bit to use in the purchase of flats or properties when cash in hand was not sufficient. 39. She was asked where she lived after the marriage and said that after her marriage to the applicant, she still owned and ran the furniture shop in Yuen Long. When the question was repeated she said, "After the marriage I had a job in a garment factory which made western style shirts, working in the urban area of Kowloon. No, then I was still living in Yuen Long, has not moved to Kowloon yet". She was then asked the question a third time and she said, "Still living in Yuen Long and looking after the furniture business". She went on to say that she kept on this business for two to three years after 1961. According to Business Registration Certificate relating to the business it was cancelled on the 31st December 1960. The notation, if true, indicates that the respondent had ceased to operate the business prior to her marriage to the applicant. When the date on the certificate was put to the respondent, she said that she must have forgotten the time. When pressed, she said that when she married the applicant in 1961, she was still attending to the drug store and the furniture shop. It was then put to her that she had said that she had sold the stock of the medicine shop in 1959. Her answers thereafter were somewhat confused. At one stage, she seemed to agree that she was not running the medicine shop but to be saying that she was still running the furniture shop next door. Later she appeared to resile from this. Finally she said that "At the time of the marriage, I was still doing the medicine business". She said that at the time of the marriage, she had an occupation and "a whole safe deposit box bulging with money". She said that in the safe deposit box, there was a huge sum of money and she "wrapped it safely and neatly". She then agreed that she had written to the authorities and told them that the furniture business had ceased prior to the 31st December 1960. She then went on to say, "I still occupied the premises for a few months after cessation because it was owned by my god-father" and that, as well as disposing of some stock after business had 'officially' ceased at December 31st 1960, she still had to collect some debts. She then agreed that the only job she had to do after December 1960 was collecting a few debts. It was finally put to her: So you had no job in connection with the furniture business 10 months later when you married Mr. Chan? and she answered, "Right. You are correct. At the time of the legal marriage in October, I was not working simply because I do not like working. Be that as it may, I was still occupying that residential unit." She went on to say, "I was not working. I had no occupation but I was still living in Yuen Long". 40. In the light of these last answers, it seems clear that all of the evidence in which she had suggested that she had been running both a medicine company and a furniture business after 1960 was untrue. 41. The witness sought to explain the cheques, Exhibits 3 and 4, and her signatures which appeared thereon, by saying that when the defendant was getting ready to bet on racing on a Friday or Saturday morning and especially when he was indebted, "He would rush into the factory with similar cheques to this one and say, 'Hey I am in a hurry, I need money', he exchanged cash with these cheques in a hurry like hell and I never had any idea where they came from. It may be he was robbing them in the street. 42. When asked by the Bench whether she was seriously suggesting that the cheques were the proceeds of robberies, she said, "No, may be he just picked them up some way". It will be remembered that the cheques were dated 1967 when the only factory that could have been in existence was the Chung Shing Factory. When asked what factory she was referring to she, when she said "he would rush into the factory", said that it was not a factory that he had rushed into, but their common home. She then went on to agree that the applicant had told her that he was working in Chung Shing and that she had seen the name Chung Shing on the cheques. She still, however, seemed to be suggesting that Chung Shing had never existed as she continued to say that the information she had in that regard was "just his (her husband's) words" 43. At this stage she said that the applicant had no brains or ability to manage machines and that the $3,000 she paid him as a manager was given because he was her husband and that the position of manager was "a titular post". It seemed to me that she was driven to make this suggestion so that she could continue to maintain that her husband had no expertise to bring to the setting up and operation of the Chung Shing Factory. 44. I found her explanation as to how her name came to be on the cheques wholly inconvincing. I am quite satisfied that she was not telling the truth both as to the cheques and as to the existence and operation of the Chung Shing Factory. 45. The witness was then questioned about her stock exchange dealings. She said she began to deal extensively in 1971 and into 1972 and not to mention 1973 when the market crashed She agreed that the stock market crash had been towards the end of March 1973 and that the market had then fallen 80% to 90%. While she would not agree that the purchases in March 1973 were disastrous, she did say that three of the transactions were so unsuccessful that she tore up the certificates and threw them away. These three transactions totalled more than $30,000. As to the fourth transaction, which was a purchase of shares in the Hong Kong and Shanghai Bank, she said she had kept that certificate. This transaction can hardly be suggested to have been an advantageous one as she appears to have paid $496 per share (Exhibit 9). She said that she had not been able to get any records of any of her other dealings because the brokerage shop had closed for over 10 years. It is to be noted that she produced no records of any sort to show that she had had successful dealings on the stock market. 46. She had been quite positive in her evidence that she started investing in 1971. She was asked by the Bench about her affidavit in which she said that she invested and speculated in 1968 to 1970. She then said that she had been investing in those years but on a small scale and that "When the market came to a boom in 1971/72, I was so interested that I quit being a garment worker and hung around agents keeping a full time eye on the market". She agreed that in about 1971, she became a full time speculator on the stock market. It seems to me to be impossible to reconcile this statement with her evidence that she was both manager and cook of the Cheung Hing Factory which according to the business registration certificate commenced operations in July 1970. Mr. Eddis asked why she had made no mention of her stock market dealings in 1971, 1972, and 1973 in her affidavit. Her answer appeared to be that he had been careful to keep her stock market activity "away from the knowledge of others. When pressed to answer the question she said that she had done her dealings "almost in secret as I did not want the applicant to know as he had previously advised me not to speculate so much". She finally answered by saying that she had forgotten to mention this in her affidavit. I found her evidence that she had dealt extensively and successfully on the stock market wholly inconvincing and I reject it. 47. She said that Madam Tang Yau had witnessed the giving of $3,500 to the applicant but that she had never discussed her evidence with Madam Tang. She said that this money had been given before her marriage in 1961 and that the applicant did not tell her what the money was to be used for. She gave a series of unsatisfactory answers in an attempt to explain how she had come to say, in her affidavit, both that the handing over took place in 1963 and that the applicant had told her why he needed the money. She appeared finally to be saying that there were two lots of $3,500 handed over one before the marriage and one after. Again in this respect I was satisfied that her evidence was wholly unreliable and unworthy of any credit. 48. The wife called a witness Tang Yuet Ngor who said that she had known the wife since 1952 or 1953 and she had introduced the husband and the wife. She said she also knew the wife's first husband, a Mr. Chong, who had been a businessman running a herbal dispensary and a transportation business. She said that the applicant lived in Apliu Street and that after the introduction, there was never any meeting between she, the applicant and respondent. She then said that they had met on other occasions but that there had always been more than the three of them present. She went on, in apparent contradiction of this statement, to say that she had seen the wife and the husband in premises in Yee Kuk Street and that the husband asked the wife could he borrow $3,500 which she had lent to him. She said that she saw the money passing hands. Later in her evidence she again said that after the initial introduction, there was never an occasion when just the three of them were alone together. She said that from the time of introduction until "right up to recent time, I have not even come across them until asked to be a witness". She then again contradicted this saying that she had met the two of them on the occasion when the $3,500 passed hands. Her evidence was wholly unsatisfactory as she appeared to be confirming her original statement that she had never been with the husband and wife after the first meeting and, at the same time, to be saying that she had been present at another meeting when the $3,500 had changed hands. She denied that she had ever told the wife that she was able to remember the incident when the money changed hands but was unable to say how it could come about that the wife was able to tell the Court that she would be giving evidence with regard to this incident. I was not impressed by the evidence of this witness and am not prepared to accept that she was a witness of truth. 49. The next witness called was a Madam Yu Yuk Shan who said that she had known the wife since 1956. She said that the wife's former husband, Chong Kwai Fun, had been the resident herbalist in a Chinese herbal dispensary known as the Tai Wor Tong. She said that Mr. Chong was the sole owner of 8 or 9 goods vehicles and that he operated a further 2 vehicles in partnership with her husband. She said, however, that this business although it had run well at first, ran down and that her husband withdrew from his partnership in the two lorries. She said that the Tai Wor Tong business, which was at first a herbal shop, later became half herbal and half furniture. She said that after Mr. Chong died, business continued to go down, and that finally the wife decided to wind up the three businesses. 50. She said that on one occasion, the wife came to her and asked her to accompanied her to a bank in Shamshuipo and that she then showed her 2 wrapped bundles which she said contained bank notes to the amount of $100,000. She said she was asked to carry one of the bundles and they went to a bank in Shamshuipo where the wife left her to go to place the bundles in a safe deposit box. She said that all of the business of the former husband was closed about one year after his death and that this was before the husband and wife married. She said that she had been asked to assist taking the money to the bank after the cessation of the three businesses. She said that she had never advised the wife to take the money to the bank. This lady appeared to be a witness of truth and I accept that an incident occurred when she was shown 2 wrapped bundles and asked to go to the bank. 51. I have no hesitation in holding that the respondent was not a witness of truth. I am satisfied that she deliberately lied to the Court whenever she thought a lie would assist her to establish her entitlement to the properties in question. 52. I am satisfied that the applicant ran the Chung Shing Factory up until about 1970 and that thereafter he ran the Cheung Hing Factory. I am satisfied that the reason for putting the latter factory into the wife's name was to ensure that the Inland Revenue, should they discover that tax was owing, would not be able to recover it. I am satisfied that the business was put in the wife's name at her suggestion. I am satisfied that profits from both factories were kept by the wife. I accept that the respondent was left some money by her former husband. I do not accept that, by 1965, whatever moneys had been left to her had succeeded intact. Indeed if any credence be given to her evidence then such moneys must have been almost wholly disbursed. 53. Mrs. Bokhary referred me to the case of Gascoigne v. Gascoigne(1) where a husband had taken a lease of land in his wife's name and built a house upon it with his own money. The County Court judge found that the husband had used his wife's name in the transaction with her knowledge and connivance because he was in debt and was desirous of protecting the property from his creditors. It was held that he could not be allowed to set up his fraudulent design to rebut the presumption that the conveyance was intended as a gift to her, and that she was entitled to retain the property for her own use notwithstanding that she was a party to the fraud. 54. The judgment of the Court which was read by Lush J. states at 226:-
55. Mrs. Bokhary submitted that this was the very circumstances with which we were dealing in the present case. It must, however, be borne in mind, and I will turn to the significance of this later, that the husband in Gascoigne v. Gascoigne was seeking a declaration of trust, i.e. a declaration that he had an equitable interest in the property. He was seeking, as the learned judge said, "to obtain relief in equity". 56. Mrs. Bokhary also referred to Tinker v. Tinker(2) where a husband, who was found to have acted honestly on the advice of his solicitors, had conveyed into his wife's name a property which was intended for use as the matrimonial home in order to avoid it being claimed by creditors of his business if that business failed. The Court held that the presumption was that the property was conveyed to the wife for her own use and that this was not rebutted by the husband's evidence that it was conveyed to defeat his oreditors, and that accordingly the house belonged to the wife. That case is not on all fours with the present case as the Court of Appeal found that, as it had been held that the husband was acting honestly, he must have been so acting when he transferred the house to his wife and what followed must have been a genuine transfer. 57. Lord Denning, at 542, said that the husband was on the horns of a dilemma:-
His Lordship in that passage appeared to be approaching the matter in much the same way as the Court approached the similar set of circumstances in Gascoigne v. Gascoigne. The difference, of course, between the facts in the two cases, is that in Gascoigne v. Gascoigne, as, indeed, is so in the present case, the husband was dishonest whereas in Tinker's case, the husband was found to be honest. It having been argued to the contrary Lord Denning affirmed that, in his view, Gascoigne v. Gascoigne was good law. 58. Lord Justice Salmon seems to have taken the view that, as the husband was found to be honest, then his transaction must have been an honest one. He said at p.542:-
While his emphasis appears to have been different from that of Lord Denning, both recognized the existence of the presumption and were satisfied that Gascoigne v. Gascoigne was correctly decided. 59. Lord Salmon went on to refer to Gascoigne v. Gascoigne saying:-
60. Mrs. Bokhary submitted that, bearing in mind the evidence of the husband himself, this Court, applying the principles laid in the two above cases, could not allow the husband to challenge the presumption that arose when he put the properties in his wife's name by saying that he did it so as to put himself in a position where he could evade payment of tax. 61. Mr. Eddis submitted that Tinker v. Tinker was wrongly decided and that this Court should refuse to be bound thereby. He referred to Pettitt v. Pettitt(3) arguing, on the authority of that case, that it is doubtful if there is any presumption of advancement and, that, if there is, it should not be applied in the present case. He referred to the judgment of Lord Reid at p.793 where he said referring to the presumption:-
It was in reliance upon this statement that Mr. Eddis suggested either that the presumption had no force at all or, at the very least, that the present case was one in which it should not be applied. 62. I turn firstly to Gascoigne v. Gascoigne. In that case the husband was seeking a declaration that the wife was trustee for him of the disputed property. He was clearly seeking equitable relief. This is not so in the case presently before the Court. In the present case, the husband makes his application under Section 6 of the Married Persons Status Ordinance (Cap. 182) which is the Hong Kong equivalent of Section 17 of the Married Woman's Property Act of 1882. In the present case the applicant is not seeking any equitable relief but is simply asking for a statutory relief as provided for by Section 6. That being so it might be suggested that the principles in Gascoigne v. Gascoigne have no application. At first sight I thought that there was considerable weight in this submission and would have been pleased to adopt it. It is with some regret that I find that I am not persuaded as to its correctness. It is true that the husband is seeking statutory relief. Section 6 (1) and (2) read as follows:-
63. Before the Court comes to grant the relief under S.6(2) it must determine in whom the title to the property lies or to whom possession of the property should be given. In the present case, the legal title of the property clearly lies in the wife. The husband says, however, that he has an equitable interest in the property and that, when the question of title is being determined, the Court should recognize this interest and, having recognized it, give effect thereto by making an order under S.6(2). Before the Court makes any order under S.6(2) it must, therefore, determine whether or not the applicant has an equitable interest in the property. An equitable right is, therefore, in question. I am satisfied, for the reasons set out in Gascoigne v. Gascoigne, that the husband cannot be allowed to establish this right by giving evidence that he allowed the properties to be put in his wife's name in order to evade payment of tax. 64. Although he is seeking statutory relief, he must, to obtain it, establish an equitable interest. He is debarred from establishing that interest and obtaining the consequential relief in any case where to do so he would have to rely upon evidence of his own wrongdoing. 65. There is another possible distinction between the present facts and those in Gascoigne v. Gascoigne. The husband's evidence established that the wife suggested that the second textile factory be placed in her name. Can the present circumstances be distinguished from those in Gascoigne v. Gascoigne upon the ground that here the wife did not simply know of and connive at the actions of her husband, but was an instigator thereof and had an expectation that she would participate in the benefits to be derived therefrom? The hands of the wife were just as unclear as those of her husband. If she was seeking equitable relief, I have no doubt that the Court would hold that she was not entitled thereto. Can the husband urge this as a consideration in the present circumstances? With considerable misgiving, I am constrained, by the view which I take of the law, to say that he cannot. The wife is seeking no relief, equitable or otherwise. She is simply saying that she is the legal owner of the land and there is no dispute about that. It is the husband alone who seeks to invoke the aid of equity and the Court must look only to see whether he is entitled thereto. 66. It was also submitted that the circumstances of the present case, like those in Pettitt v. Pettitt, did not call for the application of the presumption. Even if this be so, we are nonetheless left with the position that the legal ownership is in the wife and that the husband can only succeed in disturbing that legal ownership if he is entitled to present evidence to the Court showing an equitable entitlement in himself. If he is not entitled so to do then the presumption is of little importance as the wife is entitled, whether or not there is a presumption, to rely upon her legal title. As long as the husband is not permitted to establish any equitable entitlement, the wife would, I am satisfied, be entitled to rely upon her undisputed legal title. 67. It is now necessary to determine whether the husband is prevented, as regards each property, from establishing an equitable interest therein. 68. I am satisfied that the questions which must be answered when making this determination are as follows:-
69. He was asked whether the four other properties were put in her name for the same reason, and he agreed that they were, but said "Apart from that, there was the reason that subsequently she was in control of the financial aspect of her business, so naturally the properties purchased would be in her name". Upon the basis of this admission I am satisfied that I must find that the property at 78 Un Chau Street, although purchased in 1968, was also placed in his wife's name to evade payment of tax and that he cannot be heard to raise that fact to establish equitable ownership in himself. I am satisfied that the same finding must be made in relation to the premises at 286-300 Cheung Sha Wan Road which were purchased in 1974. 70. I do not, however, consider that the same considerations apply to the purchase in 1978 of the industrial premises at 14-20 Wah Wing Industrial Building. 71. On the evidence of the husband, which I accept, he did not even know that this property was being purchased. It cannot, I am satisfied, be suggested that this property was put in the wife's name with his connivance in an endeavour to evade payment of tax. Despite his answer which I have set out above, I am satisfied that he cannot be held to have been acting in an endeavour to avoid payment of taxes in relation to a transaction of which he had no knowledge and that he is not debarred from giving evidence to establish his equity in that property. 72. According to the wife, about $300,000 of the monies that went towards the purchase of 14-20 Wah Wing Industrial Building came from the sale of the property at 282 Cheung Sha Wan Road for $600,000 and $300,000 of that money was used to pay off debts. She says that she raised the balance of the purchase price by selling precious stones etc. I do not accept this evidence. I am satisfied that the $600,000 went back into the family fund and that 14-20 Wah Wing Industrial Building was purchased with money that came therefrom. 73. To what extent is the husband entitled to share in the family fund and in any purchase made therefrom? There is no evidence as to the amount of earnings that went into the family fund nor am I satisfied as to the amount the wife brought thereto. 74. It was a family fund into which moneys from both parties were intermingled without accounting. I am satisfied that this was done because the parties regarded themselves as being equally entitled thereto and that it is proper for this Court to hold that each was so entitled.
75. I order that the property be sold and that the proceeds be divided equally between the parties. 76. The husband also claims a share in the proceeds of the disposal of 282 Cheung Sha Wan Road. I am satisfied, as I have indicated above, that those proceeds were paid into the family fund and that the fund was used to purchase the property at 14-20 Wah Wing Industrial Building. I have held that he has an entitlement to share in that purchase. That award I am satisfied, meets his claim in this regard. 77. I cannot help but feel that the law has worked harshly with the husband in this matter. I am, however, constrained to take the view I have done because of the authorities which I have set out above. If I am wrong in having taken such a view, then it is my hope that I will be set right in another place. 78. Finally I feel it appropriate to indicate, as did Lord Denning in Tinker v. Tinker, that the decision which I have given under Section 6 of the Married Persons Status Ordinance in no way affects any power the Court may have to vary the position under Section 6 of the Matrimonial Proceedings and Property Ordinance, Cap. 192.
(1) (1918) 1 K.B. 223 (2) (1970) 1 All E.R. 540 (3) (1970) A.C. 777. Representation: Mr. Eddis (instructed by Director of Legal Aid) for Plaintiff. Mrs. Bokhary (instructed by Kwan & Kwan) for Respondent. |