Wong Siu Ying v. Hui Chak Chuen and Another

Case No.HCA 10380/1993

Court

High Court CFI

Date24 Mar 1999

Judge—

Case Document

100%Judiciary

HCA010380/1993

HCA 10380/93

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 10380 OF 1993

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BETWEEN
	WONG SIU YING	Plaintiff

	AND

	HUI CHAK CHUEN HUI SHEUNG YUNG	1st Defendant 2nd Defendant

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Coram: Mr. Recorder Edward Chan, S.C. in Court

Date of Hearing: 25 - 28 January, 1 - 6, 9, 10, 12 and 13 February 1999

Date of Handing Down Judgment: 24 March 1999

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J U D G M E N T

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Background

1. This case concerned the beneficial ownership of the property known as Flat A, 12th floor, Block 3, Braemar Hill Mansions and carport No. LG314 (hereinafter called "the property"). Currently the property was registered in the joint names of the plaintiff and the 1st defendant.

The relationship between the 1st and 2nd defendants

2. The 1st and 2nd defendants were husband and wife. The 1st defendant was born in China in 1940. His father was a businessman living in Philippines and at one time was doing quite well there. The 1st defendant came to Hong Kong in 1957 having received education in China up to form 2 level. He met the 2nd defendant and lived together with her in 1962. There was some suggestion that there was a customary marriage between him and the 2nd defendant in 1962. However this was not important because on 17th April, 1964, the 1st and 2nd defendants did go through a registry marriage. There were two children born out of this marriage. They were Hui Cheung On, born in 1963, and Hui Cheung Hing, born in 1966. The relationship between the 1st and 2nd defendants was never too good and had deteriorated since about 1974 or 1975. In 1976 the 2nd defendant filed a petition for divorce on the ground of unreasonable behaviour on the part of the 1st defendant. From the contents of the petition it was plain that the relationship between the 1st and 2nd defendants was really bad and there were suggestions that the 1st defendant was violent towards the 2nd defendant. Indeed the 1st defendant had been convicted of the offence of assaulting the 2nd defendant. However she later on withdrew the petition. Since about 1977 the 1st defendant only came back to the matrimonial home occasionally. The frequency of his visits gradually dropped over the years. At that time the 2nd defendant and the children resided at a flat at Canal Road West, Wanchai, which was rented property. The 1st defendant was the tenant. They had to move out of the flat sometime in 1986. The 2nd defendant's case was that this was all due to the fact that the 1st defendant did not renew the tenancy with the landlord.

3. Since 1977 the 1st defendant only came back to visit the 2nd defendant and the children occasionally. There was no fixed interval for his appearance. When he returned, he sometimes left some money for the upkeep of the family and the education of the children. Plainly he did not give sufficient support to the family, as the elder son had to go out to work to help to support the family when he was 16. Apparently although the 1st defendant did not leave his address with the 2nd defendant and his children, his children were able to get messages to him through his pager.

4. Round about the time of the 2nd defendant's leaving the flat at Canal Road West, the elder son also left her and the younger son to stay apart. Like his father he did not leave his new address with his brother and mother. Also around that time the younger son also completed his secondary school education and the 1st defendant had ceased making any contribution or payment for the support of the 2nd defendant or the children. The position was that the younger son, Hui Cheung Hing was left with the burden of taking care of the family consisting of himself and the 2nd defendant. He did not inform the 1st defendant of their new address. I find that since about this time, Hui Cheung Hing gradually developed a sense of hatred of his father, the 1st defendant. He felt that his father was not responsible and that his irresponsibility had deprived him of the opportunity of having tertiary education and led to his having had to shoulder the burden of having had to maintain his mother. Because of this unfair burden, he went into debts and he attributed this to the fault of the 1st defendant. Rightly or wrongly his perception that his father was always living an affluent life further aggravated his dissatisfaction and hatred of his father.

5. Since the 2nd defendant had moved out of the flat at Canal Road West, there was a period during which the 1st defendant and his sons had lost contact because the 1st defendant had either given up or changed his pager. It was never too clear from the evidence as to exactly when this period was. Nor was it clear from the evidence as to how they regained contacts with one another. However although the relationship between the Hui Cheung Hing and his father was not good, they were still on speaking terms until about September 1995 when Hui Cheung Hing filed his witness statement in this action. The relationship got worse since then and by the time of the trial, the 2 of them were at absolute loggerheads. This was amply demonstrated by the angry exchanges when Hui Cheung Hing was cross examined by the 1st defendant when they accused each other as lying. Hui Cheung Hing recounted the 1st defendant's criminal convictions on theft and on assault and the previous imprisonments for criminal offences and for failing to obey the order of the Family Court. He also told me that the 1st defendant had been engaged in drug trafficking. I do not consider that this last serious allegation is an issue relevant to this case before me and I make no finding thereon.

The plaintiff and her relationship with the 1st defendant

6. The plaintiff was born in China in 1949. She came to Hong Kong in December 1977. She had undergone a tough period in China during the Cultural Revolution. Even during the time of the Cultural Revolution, she had proven herself to be tough and enterprising and had great success in rearing pigs to help to support the livelihood of herself and her family. Although there was no evidence on her education level, she must be reasonably well educated up to secondary school level because she was a teacher before she came to Hong Kong. Soon after her arrival she found a job as a cashier in a restaurant. After working as a cashier for about half a year, she found that as a native speaker of Putonghua, she had greater opportunity to make more money in giving private tuition on Putonghua. She therefore quitted her job as cashier and started giving private tuition on Putonghua. She worked very hard and her income as a private tutor could sometimes reach as much as about $10,000 per month. However the income was not steady and would depend much on the number of pupils she had and also on the availability of the time of her pupils.

7. Since about 1979 the plaintiff found that there could be even greater opportunity to make more money as an estate agent. She realised that it would not require much capital to be an estate agent and she could operate from a telephone at her home. She was encouraged by her initial success in putting through a deal for 2 flats in Tai Koo Shing whereby she made several thousand dollars as commission. Since 1980 she gradually gave up giving private tuition on Putonghua and became a full time estate agent. She advertised in the name of Miss Wong in newspapers. She was able to produce copies of some of the advertisements placed by her in the Singtao Daily News in 1980 and 1981 provided by the Micro-File Centre Sing Tao Limited. I accept her evidence that since about 1980, the plaintiff also assumed a business name of Hai Fung Property Company, although for most of the time, she traded in the name of Miss Wong. She did not have any business registration until about February 1984 when she had to open a bank account in the name of Hai Fung Property Company to cash a cheque for her commission as her client insisted on issuing the cheque in that name. It is significant that Hai Fung was registered as a sole proprietorship with the plaintiff as the sole proprietor and that she was the only authorized signatory for the operation of the bank account opened in the name of Hai Fung Property Company with the Bank of East Asia.

8. In or about 1979 the plaintiff lived with a married man and she gave birth to a girl in April 1979. Their relationship stopped in 1980 when the man left the plaintiff and the plaintiff came to know that the man went to live with another woman. The plaintiff worked hard in her business of estate agent. After the girl was 10 months old, she sent her girl to her parents to be taken care of by her parents in China. She went to collect her girl and brought her back to Hong Kong about once every 6 months for a short time and then she would bring her girl back for her parents to take care of again. This arrangement continued until the girl was 5 years old. In fact the same arrangement was made with the 2 boys she later on gave birth to with the 1st defendant in 1984 and 1987.

9. The plaintiff met the 1st defendant in 1982. They soon fell in love and lived together as man and wife. The 1st defendant told the plaintiff that he was married but that his wife had died in the Philippines. The 1st defendant impressed her as being a son of an overseas Chinese businessman from the Philippines and he told her on many occasions that he went to visit his parents in Philippines. As far as his occupation was concerned, he told her that he was engaged in trading. I find that the plaintiff was never told at the time as to what trading business he had. It appeared to be in the nature of the 1st defendant not to inform his matrimonial partner the details of his occupation. Indeed in the petition filed by the 2nd defendant in 1976, she also said that the 1st defendant's occupation was unknown to her.

10. The plaintiff was very hard working and dedicated in her work. She also led a frugal life. She spent very little money on herself and especially in the earlier years, she gave a lot of assistance to her siblings and she maintained her parents. The plaintiff worked very hard as an estate agent between 1980 and 1990. By 1983 she concentrated her business in premises in Braemar Hill Mansions. Indeed in the mid 80s she was the most prominent estate agent for flats at the Braemar Hill Mansions. She gradually phased out her estate agent activities since 1990 because of inter alia competition from many others big estate agents. Another reason must be that she felt that she had made enough money as estate agent and also from the property investments she made during the years. Apart from estate agent business, the plaintiff was also engaged in investment or rather speculation on foreign exchange, and this continued even after she ceased to be active as an estate agent.

11. The plaintiff went to the Philippines with the 1st defendant in 1989 to meet the 1st defendant's father. By then the 1st defendant's father appeared to be rather poor but he treated the plaintiff well. The father suggested that the plaintiff and the 1st defendant should get married. The plaintiff agreed. According to the plaintiff the father obtained a marriage certificate for them without their attending any marriage registry. The plaintiff only found out that the 1st defendant's wife was still alive in 1991 when she applied for naturalization. The 1st defendant was charged with making a false statement of his marital status and was fined $2,000.

12. Since about 1982 the plaintiff resided with the 1st defendant as husband and wife. They had 2 children born in 1984 and 1987 respectively. At the beginning they resided in a flat to which the plaintiff was merely the principal tenant. The plaintiff let part of the flat to sub-tenants so that the rent she collected was more than sufficient to meet the rent she had to pay. Later by about 1987, the plaintiff, her children and the 1st defendant moved to the flat at flat D, 25th floor, Block 7 City Garden which was purchased in the plaintiff's name. Sometime towards the end of 1996 they moved to live in the property. The relationship between the plaintiff and the 1st defendant was not always a smooth one. There were occasions that they quarreled and on a few occasions after their quarrel the 1st defendant left the home for a number of days. There is no clear evidence on when the two of them quarreled or lived apart. I find that on and off their relationship as man and wife continued even up to the trial of this action.

The divorce suit and the present proceedings

13. In July 1992, the 1st defendant filed a petition for divorce on the ground of 5 years separation. On 21st November, 1992 the 2nd defendant filed a notice of intention to apply for ancillary relief and an order restraining the 1st defendant from disposing his interest in the flat of the property. On 4th December, 1992 a similar notice was filed in relation to the carport of the property. Both notices were registered against the property on 9th December 1992. I am inclined to think that these notices were not registrable against the property and it was a wrongful act to cause them to be registered. However I am told by counsel for the 2nd defendant that it was a very common practice to register this kind of notices in the land registry. In her affidavit of means filed on 6th May, 1993, the 2nd defendant further asserted that the 1st defendant also owned 3 other properties known as (1) Flat D 25th floor, Block 7, City Garden; (2) Room 01, 20th floor, Fortress Metro Tower, North Point; and (3) Room 9A, Block A, Cavendish Heights, 33 Perkins Road, Hong Kong. Property (1) was the flat where the plaintiff and the 1st defendant resided at the time and was also the address of the 1st defendant on the petition. It was registered in the sole name of the plaintiff. Property (2) appeared to be the address given by the plaintiff and the 1st defendant in the conveyancing document relating to the acquisition of the property and there was no evidence to suggest that the same was ever owned by either the plaintiff or the 1st defendant. Property (3) had nothing to do with either the plaintiff or the 1st defendant although the plaintiff's solicitors had once asserted in correspondence that all three properties were also owned by the plaintiff. I accept the plaintiff's evidence that her solicitors did so by mistake and without taking clear instruction from her.

14. It would appear that in November 1993 there was a hearing by His Honour Judge de Souza on the ancillary application when the plaintiff gave evidence asserting her sole beneficial ownership in the property. She was challenged by counsel acting for the 2nd defendant to produce evidence to prove her case. She did not go prepared for the documentary evidence. Soon after the hearing, she commenced the present proceedings on 15th November, 1993. However in January, 1994 the plaintiff also applied to be joined as a party to the ancillary relief proceedings evidently because of her interest in the property. The plaintiff was allowed to be joined by Order of Judge de Souza on 4th July, 1994 which also stayed the ancillary proceedings pending the outcome of this action. There was thus no determination by the Family Court on the issue of beneficial ownership of the property.

15. When the writ in this action was issued, only the 1st defendant was joined as the defendant. The statement of claim was filed on 14th July 1994 and on 1st September 1994 the plaintiff issued a summons to apply for judgment in default of defence. On 8th September 1994 the 2nd defendant applied by summons to be joined as a party to the present proceedings and her application was granted by Wong J. on 9th September 1994. The 2nd defendant asked me to infer that there was mala fide and collusion between the plaintiff and the 1st defendant. The contention was that by deliberately not joining the 2nd defendant, the plaintiff and the 1st defendant wanted to obtain a snap default judgment to defeat the claim of the 2nd defendant in the Family Court. I am not prepared to draw such inference because at the time the plaintiff was legally represented. The question of whom to join must depend on the advice from the plaintiff's legal advisers. I find it difficult to accept that the plaintiff's solicitors would not know that a judgment by default in an action to which the 2nd defendant was not a party would not bind the 2nd defendant and would not have much value as against the 2nd defendant. It is however true that the 1st defendant in fact accepted the plaintiff's claim that she was the sole beneficial owner of the property, and as such the 1st defendant could well be joined as a co-plaintiff in this action against the 2nd defendant for the determination of the question of the beneficial interest in the property. This is something I constantly bore in mind throughout this proceedings.

The property - the plaintiff's case

16. The plaintiff's case was very simple. The property was acquired by her and she provided all the consideration for the purchase of the property. Her explanation was that she asked the 1st defendant to sign the sale and purchase agreement with the vendor because she was a well known agent for properties in Braemar Hill, and that she was afraid that if the vendor heard that she was interested in purchasing the property, the vendor might think that the asking price might be too low and would raise the price. Furthermore, the vendor had instructed a separate agent to sell this property. By herself approaching that agent as an interested purchaser, the agent would also ask her to pay commission, as many agents would do in Hong Kong. However by putting up the 1st defendant as her client in buying the property, the situation would appear to be one in which the vendor and purchaser were separately represented by different agents and in such situation, usually each party would be paying his own agent commission. It was her idea that the property should be assigned to the joint name of herself and the 1st defendant. Her evidence was that she allowed the 1st defendant's name to be a joint owner because she wanted to give him some respect and pride.

17. The formal sale and purchase agreement for this property was indeed signed by the 1st defendant as purchaser on 23rd June, 1988. The price of the property was HK$1,890,000 and 10% deposit was payable on or before the signing of this agreement. The deposit was paid by 3 sums. The first sum of $50,000 was paid to the vendor's solicitors on 14th June, 1986 by the 1st defendant's cheque No. 181700 drawn on the Bank of China and the second sum of HK$50,000 was also paid to the vendor's solicitors on 16th June, 1986 by the 1st defendant's cheque No. 183229 drawn on the Bank of China. There could be no dispute on these payments as the bank statements of the 1st defendant's account and the receipts issued by the vendor's solicitors amply confirmed such payments. As evidenced by the receipt issued by the vendor's solicitors, the 3rd sum of HK$89,000 was paid by a cashier order issued by the Bank of China on 22nd June, 1986. I found that the 1st defendant caused the Bank of China to issue this cashier order and there was a clear transfer debit item in the sum of HK$89,000 appearing on 22nd June, 1986 of his bank statement. However it was also plain from the bank statements of the 1st defendant that he was able to issue the cheques and the cashier order because of monies paid into his account on 14th, 16th, 20th and 22nd June 1986. From the bank statements of the plaintiff's account with the Bank of China, it was plain that on 14th June, 1986 the plaintiff had withdrawn $53,000 from her account and her evidence was that out of this $53,000 she paid $50,000 into the 1st defendant's current account so as to enable him to issue the cheque on 14th June, 1986. Likewise, the plaintiff's bank statement also showed that on 16th June, 1986 there was a cash withdrawal of $50,000 and the plaintiff's evidence was that this was the sum she paid into the 1st defendant's account to enable him to issue the cheque on 16th June, 1986. The plaintiff's bank statement also showed that on 20th June, 1986 there were 2 transfer withdrawals in the sum of $150,000 and $50,000 respectively. She also produced copies of the bank transfer slips indicating that these 2 sums were transferred into the 1st defendant's current account on 20th June, 1986. Indeed the 1st defendant's current account bank statement also showed a transfer credit entry on 20th June, 1986 in the sum of $200,000. I do not know why the 1st defendant's bank statement did not show correspondingly 2 credit entries of $150,000 and $50,000. However I have no doubt that the $200,000 credit payment into the 1st defendant's bank account on 20th June, 1986 came from the plaintiff's bank account. The 1st defendant also issued a cheque on 29th June, 1986 in the sum of $1,085 for the payment of the solicitor's fees for the agreement. I found that the monies paid into the 1st defendant's account was more than sufficient to enable the 1st defendant to pay for the whole of the $189,000 deposit and also the $1,085 solicitor's fees.

18. The property was purchased subject to existing tenancy. The rent payable by the tenant then was $17,000 per month. The vendor had collected 2 months deposit which ought to be transferred to the purchaser. Instead of transferring the deposit, the vendor simply agreed to allow a deduction of $34,000 from the balance of the purchase price. After taking into account the deposit paid and the agreed deduction of $34,000, the balance of the price payable on completion would be $1,667,000. At the direction of the plaintiff, the 1st defendant gave instruction to their solicitors to prepare a nomination nominating himself and the plaintiff to take up the assignment. The nomination recited that the 1st defendant entered into the agreement with the vendor on behalf of himself and the plaintiff. I do not attach much weight to this statement in the nomination as plainly this was a formal document designed to satisfy the vendor on the form of the assignment. I do not think that either the plaintiff or the 1st defendant would pay much attention to the wordings of the nomination. The plaintiff borrowed the sum of HK$1,512,000 from Security Pacific Asian Bank Ltd. (which has since changed its name to the Bank of America (Asia) Ltd.) upon the security of the property in order to complete the purchase. The mortgage evidenced that the plaintiff was the borrower but both the plaintiff and the 1st defendant signed as joint mortgagors. This was hardly surprising as the property was assigned to the plaintiff and the 1st defendant as joint tenants. I am satisfied that the mortgage was obtained on the strength of the plaintiff's financial position and earning power alone. From all the evidence adduced before me, I cannot see any visible financial means or evidence of any income, which the 1st defendant could show to his banker to enable him to obtain any credit from the bank.

19. Having taken into account the amount raised by the mortgage and the rental deposit deduction, the amount payable to the vendor on completion was $155,000. The plaintiff paid this amount by purchasing a cashier order from money withdrawn from her account. She also paid the stamp duties and also the solicitors' cost by her own cheques. All these payments were supported by her bank statements, withdrawal slips and receipts issued by the solicitors.

20. Since completion, the mortgage installments were repaid by auto debit from the plaintiff's bank account with the Bank of America (Asia) Limited. When the existing tenant moved out, she was also instrumental to letting the property to the new tenants. During the period when the property was tenanted, the rent was paid into her bank account and the rent collected was more than sufficient to meet the mortgage installments. During the very short period between 2 tenancies, the installments were paid out of money from the account. The plaintiff also paid for the improvement of the property required by the tenants although she could not produce all the receipts or invoices in support of the full amount which she claimed she had spent. The final balance due to the mortgagee was paid off in December 1996 from money she raised from a mortgage of her property in City Garden. Thus the way that the property was being enjoyed and dealt with also supported the inference that the plaintiff was the sole beneficial owner of the property.

21. Thus I find that it is beyond dispute that the whole of the consideration for the acquisition of this property came from money from the plaintiff's bank account. In the absence of any evidence to show that the money in the plaintiff's bank account was held by her for someone else, the inference must be that the property was acquired by money provided by the plaintiff and unless there was any other evidence to show that the plaintiff intended to make any gift to the 1st defendant the inference must be that the 1st defendant held his share of the property on resulting trust for the plaintiff.

22. Indeed, the source of the funding for the acquisition together with all supporting documentary evidence were set out in the plaintiff's affirmation filed on 12th January, 1994 in support of the plaintiff's application to join in the ancillary relief proceedings. The 2nd defendant thus had ample opportunity to make all necessary investigations into the matter and to collect evidence, if so, to show that in fact the money used to pay for the property did not belong to the plaintiff.

The 2nd defendant's case

23. The 2nd defendant did not seriously challenge that the money used for the payment of the property was money coming from the bank account of the plaintiff, although in paragraph 4 of the Defence and Counterclaim filed by the 2nd defendant, the 2nd defendant did not admit paragraphs 4 to 9 of the Amended Statement of Claim which pleaded that the plaintiff had transferred money to the 1st defendant for the payment of the deposit. As I have pointed out above, the evidence in support of the plaintiff's case was overwhelming. It is important to note that it was never the 2nd defendant's case that the money used for the purchase of the property or any part thereof was money separately provided by the 1st defendant himself. The 2nd defendant however alleged that (a) the plaintiff and the 1st defendant were full equity partners in the plaintiff's business as a real estate agent and/or investor (see paragraph 2 of the Defence and Counterclaim); and (b) because of (a) the plaintiff also held her bank account on behalf of herself and also the 1st defendant; and hence (c) insofar as the property was acquired with money from the plaintiff's account, the same was acquired with money belonging beneficially to the plaintiff and the 1st defendant and the property should therefore belong to the plaintiff and the 1st defendant.

24. In the alternative to the contention above, the 2nd defendant's alternative case was that even if the property was acquired with money belonging to the plaintiff, the plaintiff had made a gift to the 1st defendant.

25. The last alternative case sought to be raised by the 2nd defendant was that as a matter of public policy, there could not be any resulting trust in favour of the plaintiff in the circumstances of the present case.

Any partnership between the plaintiff and the 1st defendant?

26. It is important to see from the 2nd defendant's pleading as to the particulars relied upon in support of the plea of partnership. These particulars were set out in paragraphs 2(i) to (iv) of the Defence and Counterclaim. Particulars (i) & (ii) alleged that the plaintiff and the 1st defendant resided together as husband and wife since 1982. Particular (iii) pleaded that the 1st defendant took active part in the running of the plaintiff's business as real estate agent and/or investor during the period of co-habitation with the plaintiff. Apart from this bald averment, there was no further detail as to the ways in which the 1st defendant was alleged to have participated in the plaintiff's business of estate agent or property investment. Particular (iv) identified the properties, which the 2nd defendant would say were properties acquired in the course of the partnership business. These properties were divided into 3 groups. The 1st group consisted of 3 properties all being properties at the Braemar Hill Mansions which were properties acquired in the name of the 1st defendant and which had all been sold. It is plain from the evidence that the 1st defendant signed the sale and purchase agreement as purchaser with the vendor of each of these 3 properties, and before the completion date, each of the properties was sold as confirmor. The 2nd group consisted of 6 properties which were acquired in the name of the plaintiff. None of these 6 properties was situated at Braemar Hill. There was no satisfactory evidence adduced by the 2nd defendant as to the source of the list of properties. However, it would appear that this list merely repeated the list of properties supplied by a firm of investigator employed by the 2nd defendant in 1993. The report was dated October 1993. Notwithstanding that in the Reply filed on 18th May, 1995 it was pointed out that the properties listed as items (aa), (bb), (dd) & (ee) were not acquired by the plaintiff but were by persons having names similar to the plaintiff only, no attempt had been made to amend the pleading. In all fairness to the 2nd defendant, I would point out that during the trial of this action, counsel for the 2nd defendant did concede that those 4 properties were not acquired by the plaintiff. The 3rd group consisted of 2 properties one of which was the property, the immediate subject matter of this action. The other was the property known as flat B, 7th floor, Block 2 Braemar Hill Mansion and carport No. LG297. The 1st defendant signed the sale and purchase agreements for the purchase of the properties under this group. Unlike those properties under the 1st group, the properties under this group were not sold before completion. When the sale and purchase agreements were completed, the properties under this group were assigned to the plaintiff and the 1st defendant as joint tenants. The suit property in this action was retained by the plaintiff and the 1st defendant, but the other property was sold on 6th April, 1992 at a gross profit of $4.4 million (i.e. profit before taking into account the cost of sale, disbursement, stamp duties and mortgage interest etc.).

27. It is important to realize that the particulars of the properties listed under paragraph 2(iv) of the Defence and Counterclaim could not advance the case on the existence of the partnership. At the most it could be said that if a partnership existed, these were the property transactions transacted by the partnership.

28. Partnership is defined in the Partnership Ordinance as the relation which subsists between persons carrying on a business in common with a view of profit. The Ordinance goes on to provide that joint tenancy, tenancy in common, joint property, common property, or part ownership does not itself create a partnership as to anything so held or owned, whether the tenants or owners do or do not share any profits made by the use thereof. Hence the mere existence of 2 properties in the joint names of the plaintiff and the 1st defendant did not show that there was a partnership between them in respect of the properties, and certainly this could not per se show that there was a partnership in respect of the estate agency business or any business of investment in property.

29. On the evidence before me, I find that the 1st defendant was not a man of means. There was very little reliable evidence on his means during the period before he met the plaintiff in 1982. On this point, there was the evidence of Hui Cheung Hing, who deposed to the effect that he had the impression that the 1st defendant was quite well off during the period when the 1st defendant still lived with the 2nd defendant. It was obvious that very little probative value could be attached to this kind of impression evidence as Hui Cheung Hing was then very young and that he formed such impression mainly from the fact that the 1st defendant appeared to him to be well dressed and he had the impression that the 1st defendant often wore expensive watches and ornaments. I do not think that at that young age Hui Cheung Hing's impression or his assessment on the cost of the clothes or the watches worn by the 1st defendant was reliable. What was plain was when Hui Cheung Hing was young, his family was poor and that since at least 1977, the 1st defendant did not give enough money towards the support of the 2nd defendant and his children. The situation may well be aggravated by the fact that the 1st defendant would spend a lot of money on himself leaving very little for his family.

30. My attention was drawn to the 1st defendant's affirmation of 16th March, 1993 ("the affidavit of means") which was filed in the Family Court proceedings whereby he deposed that he was unemployed and that he had been unemployed since 1977. If by saying "unemployed" the 1st defendant would mean to say that he did not have any occupation the statement in that affirmation was plainly inaccurate. In the context of that affirmation the statement was calculated to mislead and I bear this in mind when I assess the evidence of the 1st defendant. I accept the 1st defendant's evidence that since he came to Hong Kong, he was an employee for only a period of about 2 years as a staff in a warehouse of a grocery or supermarket in the mid seventies. Apart from that period of employment, he was a free lance broker earning a commission on deals brought about by him. As such broker he dealt with goods and other merchandise but not real estate. I would also not rule out the possibility that the 1st defendant bought and sold goods on particular isolated occasions thus earning a profit instead of commission. In the circumstances, it is not surprising that his income was very unsteady and there could be occasions that he could afford buying expensive watches or other ornaments for himself and yet on other occasions, he was financially very hard up. I also accept his evidence that he had owned valuable watches on many occasions but on each occasion, he lost them through disposal or pawning when he was financially hard up. I also find that the 1st defendant always dressed himself up tidily and neatly, as most brokers would do. I do not think that I would draw any inference that he was a man with means from the way he dressed. He did not have any formal business address and he operated mainly through telephone contacts and he carried a pager with him.

31. There was strong evidence to show that the 1st defendant was very fond of drinking and gambling. His drinking habit had caused great damage to his health and he ceased drinking strong spirit only in the last year or so. He was still very fond of gambling. He went to Macau to gamble, and also gambled on horses. He would gamble on card games at market places. This may well be a reason for his inability to adequately provide for the 2nd defendant and her children and later on, for his frequently having to borrow money from the plaintiff. There was certainly no evidence to suggest that he had accumulated any substantial saving or wealth at any time.

32. When the 1st defendant met the plaintiff, the plaintiff had already had a business of estate agency and was having reasonable success in her business. Although the plaintiff did not have any business registration then, there could be no doubt that she was the sole proprietor and any suggestion that the plaintiff and the 1st defendant were partners of the estate agency business must involve a change in the organization of the business by the admission of the 1st defendant as a partner. There is simply no such evidence. I accept the plaintiff's evidence that after the 1st defendant moved to live with the plaintiff in 1982, the 1st defendant did not stay in the flat to assist her estate agency business. The plaintiff was the person who collected information of the properties on offer. She organized the advertisements. She was also the person who brought the prospective purchasers or tenants to inspect the property. She also negotiated for her clients in order to bring about the transaction. In short she conducted the whole of the business of estate agency herself. The general life style of the 1st defendant at the time was that he would go out in the morning telling the plaintiff that he went out to meet friends for tea to discuss business. Very often the 1st defendant would only return very late in the evening. Also the 1st defendant frequently traveled to China and to Philippines.

33. It is also of significance that in 1984 the plaintiff caused her real estate agency business to be registered. If indeed the 1st defendant was a partner of the business as alleged by the 2nd defendant, it would be very surprising that the business of Hai Fung was registered as a sole proprietorship in the sole name of the plaintiff. Furthermore, it is also surprising that the 1st defendant was not a signatory to the only bank account of Hai Fung. Indeed there was no bank account operated by the plaintiff and the 1st defendant jointly. I find that the plaintiff and 1st defendant organized their financial affairs independently and there was no joint venture or business partnership of any sort between them.

34. In 1986, together with 2 other friends, the 1st defendant started Sun Luen (H.K.) Industrial Invest Co. which had a business registration carrying on general trading business at Room B-3 9th floor, Loyong Court Commercial Building, 212-220 Lockhart Road, Hong Kong. The 1st defendant used this address as his correspondence address. The business was not a success. By 1988 the rent for the business premises was in arrears. The plaintiff received a phone call from the landlord concerning the rent and it was only then that the plaintiff knew that the 1st defendant had this business. The business ceased in 1988. I find that the 1st defendant continued to be a free lance broker or trader since this business ceased.

35. It was suggested that as the 1st defendant's own business was a failure, it would be natural for him to become a broker in real estate in partnership with the plaintiff. I am not prepared to find that to be so. There is simply no evidence to show that the 1st defendant had participated in the running of the plaintiff's business as an estate agent. Both the plaintiff and the 1st defendant were cross examined at length on whether the 1st defendant had assisted in the estate agency business by answering telephone calls. As the plaintiff and the 1st defendant lived in the same flat where the plaintiff operated her business, it was certainly natural that the 1st defendant would on occasions answer the in coming phone calls. However I accept the evidence of both the plaintiff and the 1st defendant that in fact the plaintiff would rather prefer the 1st defendant not to answer the business calls of the plaintiff. The plaintiff had asked the 1st defendant not to answer the calls from a particular phone installed for the plaintiff's business. In any event, I do not think that the 1st defendant had answered many such calls, and on such occasions when he did so, I find that he did it officiously and certainly he did not do so regularly as his participation in the business. I am not prepared to infer that the 1st defendant would have a share in the business because of the occasional assistance in answering some telephone calls.

36. Apart from suggesting that the 1st defendant had answered phone calls as his participation in the business, the 2nd defendant was unable even to suggest in what way the 1st defendant had participated in the business of estate agency which generated the fund for the investment in property. It is also of significance that although the plaintiff had exhibited a record of her business identifying the properties transacted with contact names and telephone numbers in her affirmation filed in January, 1994, the 2nd defendant had not raised any suggestion that the 1st defendant had any part to play in any of the transactions. This was so even though the 2nd defendant had enlisted the services of private investigators.

37. As paragraph 2 of the Defence and Counterclaim showed, the 2nd defendant pleaded case was based nearly entirely on the allegation that the 1st defendant had actively participated in the running of the real estate agency business and the property investment business of the plaintiff. It was never pleaded that the 1st defendant has injected any capital into the business nor was there any evidence to that effect. In fact during the extremely lengthy and searching cross examination of the plaintiff and the 1st defendant by counsel for the 2nd defendant, there was never any suggestion that any sum of money was contributed by the 1st defendant as capital for the alleged partnership business. Nor was there any suggestion that any sum paid for the acquisition of any property whether the same was acquired in the name of the plaintiff or the 1st defendant could be identified as money belonging to the 1st defendant. However in her final submission, counsel for the 2nd defendant asked me to infer that the partnership existed because, amongst other things, the plaintiff had not been able to show that the income from the estate agency business would be sufficient to enable her to buy the properties and also that there was a lot more money being paid into the plaintiff's bank account than what the plaintiff had said in her evidence was the amount of profit she made from the real estate agency business. The underlying contention in such submission was that there must be capital contribution by the 1st defendant in the purchase of the property.

38. I do not think that such contention was open to the 2nd defendant on the pleading. In any event I am of the view that such contention was ill founded. There is simply no evidence of any financial contribution made by the 1st defendant towards the estate agency business nor is there any evidence that any of the properties acquired by the plaintiff in her name or in the name of the 1st defendant was paid for by money belonging to the 1st defendant. On the evidence before me, I do not think that the 1st defendant had the means of making such contribution and I accept his evidence that he did not make any contribution.

39. Counsel for the 2nd defendant drew my attention to the tax assessment of the plaintiff over the years. They showed that the plaintiff was only assessed to have a taxable income of $73,800 for 1983/84, $66,800 for 1985/86, $100,805 for 1987/88, $140,855 for 1988/89, $198,983 for 1989/90, $337,333 for 1990/91, $111,448 for 1991/92 and $171,657 for 1992/93. It was also pointed out that the plaintiff had been assessed nil taxable income for 1984/85. It was submitted that as the income of the plaintiff was so little, she could not afford to make any investment in buying and selling properties. I agree that the taxable income as assessed by the Inland Revenue Department did indicate that that the plaintiff would have difficulty in paying for her investment. However I do not consider that the taxable income stated on the tax assessments showed conclusively what was the actual income of the plaintiff. No doubt in making the assessment, the Inland Revenue Department would have relied largely on information supplied by the plaintiff herself and no doubt, the plaintiff must have represented to the Inland Revenue Dept. that her taxable income was as assessed or even lower than the figure assessed by the Inland Revenue Department. Having heard the evidence from the plaintiff I do not consider that the tax assessment truly reflected the plaintiff's income. Of course the fact that the plaintiff had under reported her income to the Inland Revenue Department is a factor that I have borne in mind when I assess the evidence of the plaintiff.

40. In any event I cannot see how the tax assessments would assist the case of the 2nd defendant. It has to be remembered that the plaintiff's income was assessed on the basis of the profit from the estate agency business and also from the property investment. The assessed taxable income was in relation to the whole of the business and not just half or any particular share of the income of the business. In cross examination, the plaintiff was at pain to point out that the Inland Revenue Dept. had given a nil assessment to the 1st defendant in relation to the income from the business. I think that counsel for the 2nd defendant must be right in pointing out that the Inland Revenue Department was not primarily concerned with who owned the business. Hence so long as tax was paid for the whole of the income of the business, the Inland Revenue Department would be happy just to accept the position as revealed by the business registration that the business was owned by the plaintiff and would not apportion any taxable income from the business to the 1st defendant. Thus even if the profit from the estate agency business was much smaller than what the plaintiff would assert in her evidence it threw no light on the question of the beneficial ownership of the business. Certainly it was of no probative value in showing that the 1st defendant was a partner of this business.

41. Furthermore it was the 2nd defendant's case that the 1st defendant had a beneficial interest in the property (and indeed in other properties acquired by the plaintiff) because the properties were acquired from money derived from the business to which he was a partner. I could not see how this contention could sit well with the contention that the business never made sufficient money to sustain the property investments.

42. Counsel for the 2nd defendant further submitted that I ought to infer that a partnership existed because, as she would submit, the plaintiff could not satisfactorily explain the source of over $500,000 that she expended on the initial deposits and other incidental expenses required for the purchase of the premises at Heng Fa Chuen, Whampoa Gardens, Fortress Metro Tower, City Garden and Davendish Heights between March, 1985 and December, 1985. It was also suggested that I ought to draw the inference that the 1st defendant was a partner or that he had paid money to the plaintiff for her business or property investment because for the year of 1985, the plaintiff's bank account showed that there was a total deposit of some $971,216.66 while on her evidence, she merely estimated the income from her estate agency business to be some $300,000. I reject these contentions for 4 main reasons. First, I do not see how the contention that the profit from the estate agency business was inadequate to sustain property investment could be probative to the issue as to whether that business was a partnership or sole proprietorship. Secondly, I do not agree that in the absence of any evidence that any money paid into her account did not belong to her, the plaintiff had any burden of showing how she earned or came by each and every credit entry in her bank statements. Thirdly, there is simply no evidence that the 1st defendant had made any contribution to the funds in the plaintiff's accounts. Nor do I think that he had the means to do so. Insofar as it was suggested that the 1st defendant would have the means because of his beneficial share in the business, the argument was self defeating as the 2nd defendant's case has always been that the whole finance of the business was under the control of the plaintiff. There was no evidence that the 1st defendant had any spare money to invest in the property. The overwhelming evidence was that the 1st defendant did not contribute to the upkeep of the plaintiff and from time to time had borrowed money from the plaintiff ostensibly for his business and he had made no repayment. In any event, I accept the plaintiff's evidence that the money in her account belonged to her and was derived mainly from her estate agency business. The other sources of the money in the account were from loans from time to time from a friend and often also from proceeds from property investment and form other form of investment such as foreign exchange dealing and shares. Fourthly, the total sum of credit entries in a bank account over a year had no relationship with the amount of earning of the account holder. Money drawn out from the bank account may be paid back into the account later on.

43. The 2nd defendant however further contended that I ought to find that the 1st defendant was a partner and a beneficial owner of the property because of the role he played in the acquisition of a number of properties at Braemar Hill and also one at Metro Fortress Tower. This argument was not open to the 2nd Defendant on the pleading and in any event it was unsound. I propose to deal with this contention later on in conjunction with the contention that the plaintiff had made a gift of interest in the property to the 1st defendant.

The evidence of Hui Cheung Hing

44. The 2nd defendant did not give evidence. Because of her mental condition, an order was made appointing the official solicitors to be her guardian ad litem on 15th October, 1998. She made a witness statement which was filed on 18th September, 1995 which made references to various documents. No application was made to adduce her statement as hearsay evidence under the Evidence Ordinance. However, the documents referred to in her statement were admitted as part of the agreed documents for this trial. Her second son Hui Cheung Hing gave evidence. His evidence on the early years was quite vague because he was then rather small. He however gave evidence that before he and the 2nd defendant ceased living in the flat at Canal Road West, the 1st defendant still returned to the flat occasionally although rather rarely. His evidence was that on those occasions the 1st defendant was well dressed and wearing an expensive watch. He also recalled an occasion that the 1st defendant wore a Rolex watch and a diamond ring. During these occasions the 1st defendant told him that he was residing at City Garden and that he had a lot of properties mentioning Cavendish Heights, Metro Fortress Tower and Braemar Hill. He also said he heard on these occasions that the 1st defendant claimed that he had property investment in China and in the Philippines.

45. Although the period spoken of by Hui Cheung Hing was between about 1977 to 1986 and by then he was between 11 to 20 years old and therefore might be expected to have memory on the events, I do not consider that this part of his evidence was totally reliable. I do however accept that the 1st defendant did on occasions visit the Canal Road West flat and on those occasions the 1st defendant was well dressed and appeared to be doing well. I do not rule out the possibility that on at least some of these occasions the 1stdefendant wore an expensive watch and perhaps also other ornaments. However I am not prepared to draw from this evidence the inference that the 1st defendant was generally financially very well off. As I have pointed out earlier, the nature of the 1st defendant's occupation was such that his income was subject to fluctuation and the 1st defendant also admitted that he had owned expensive watches on many occasions. His gambling habit would certainly aggravate the fluctuation of his cash flow and wealth. I consider that the prime reason for the 1st defendant's visit was to give money for the living and education of his children. I would not expect him to do so at the time when he was hard up and had to dispose of or pawn his watch. I do not consider that the 1st defendant would have mentioned anything about his property investment at Braemar Hill, City Garden, Metro Fortress Tower and City Garden in his visit during this period. It is to be noted even from the particulars pleaded in paragraph 2(iv) of the Defence and Counterclaim that it was only after March 1987 that the 1st defendant had signed any agreement for sale and purchase of any property at Braemar Hill. Insofar as City Garden was concerned, the property was acquired by the plaintiff and the assignment only took place in August 1986. Likewise the Cavendish property was also acquired by the plaintiff in her own name and the same was only assigned in 1987. Furthermore between 1986 and 1988 the 1st defendant operated his own business Sun Luen. It must be something he was proud of as this was his first (and only) proper business with proper business premises and a business registration. It was thus unlikely that he would talk about land investment rather than his own business during this period.

46. Mr. Hui Cheung Hing further said in his evidence that since he moved out of the flat at Canal Road West, there were 2 occasions when he and the 2nd defendant met the 1st defendant in the street. In his evidence he put the time for the first occasion to be one or two years before the petition for divorce. That would mean that the meeting took place sometime about 1990 or 1991. On this occasion they met the 1st defendant somewhere in Lockhart Road. He said that the 2nd defendant asked the 1st defendant to go to visit the 2nd defendant's mother and the 1st defendant did so. The 3 of them then took a taxi to the 2nd defendant's mother's place where there was some chatting. He heard the 1st defendant saying that he was living at City Garden and that he had a lot of investment in landed properties in Hong Kong, Philippines and also in China. The second occasion took place after the petition was filed and the parties met near Lee Theatre at Percival Street. According to Hui Cheung Hing, the 2nd defendant asked the 1st defendant for money and the 1st defendant gave her a few hundred dollars there and then. He noticed that the 1st defendant was well dressed wearing a gold watch and some sort of jade finger ring and he had a lot of money in his wallet.

47. Apart from the above 2 incidents, Hui Cheung Hing said he also met the 1st defendant for tea on 2 other occasions at the Metropolitan Restaurant in Admiralty. He was asked by his brother Hui Cheung On to attend. On one of these occasions, and he was unable to say which one, Hui Cheung On asked for the 1st defendant's financial support for his marriage and the 1st defendant drew a cheque of over $10,000 in his favour. On the same occasion, Hui Cheung Hing also asked the 1st defendant for money and he was given a few thousand dollars also by cheque. On both occasions the 1st defendant asked him and his brother to persuade the 2nd defendant not to stir up trouble and to consent to the divorce. He also said that on one occasion, the 1st defendant also asked him and Hui Cheung On to persuade the 2nd defendant to consent to the divorce and to give up legal aid. The 1st defendant offered $50,000 for the 2nd defendant to do so. He also said that on the 1st occasion, in the context of Hui Cheung On's asking if the 1st defendant had any contacts in China, the 1st defendant said he knew some high ranking officials in China and had produced some name cards. Also on one of the 2 occasions, the 1st defendant told him and his brother that he was involved in foreign exchange trading and had suffered a loss of up to $10 million. He said that the 1st defendant also took out a name card which appeared to be a card of someone from the Bank of America and said to them that he knew a lot of people in the Bank.

48. Hui Cheung Hing's evidence was that after having tea on the 1st occasion, the 1st defendant invited him and Hui Cheung On to go to Braemar Hill. The 1st defendant told them that he would like to go to the flat at Braemar Hill to meet someone interested in renting the property and to show this person the property. The 3 went there by taxi. The 1st defendant appeared to be very familiar to the care takers there. They went inside a flat in Braemar Hill but he did not pay attention to which flat they went to. The 1st defendant eventually met at least 2 persons in the flat and they appeared to be prospective tenants. He could not remember clearly the number of people coming. The 1st defendant appeared to have a discussion with these people on terms of letting, but he was unable to hear the discussions between them.

49. According to Hui Cheung Hing, after the tea on the 2nd occasion at Metropolitan Restaurant, again the 1st defendant invited him and his brother to a flat at Cavendish Heights. The 1st defendant said that he wanted to go to see the decoration of the flat. The 3 went there by taxi. The 1st defendant brought them to the club house of Cavendish Heights and they simply walked around the club house. The club house was not yet open for business. As they went along, they met the care takers and they addressed the 1st defendant as boss. Then, the 1st defendant led them into a flat. The flat was at a high level, but again he could not tell which flat it was. They went inside the flat. It appeared that the flat was newly decorated, and tins of paints were still seen on the floor. Inside the flat the 1st defendant also told him that the stove in the kitchen would have to be replaced because the tenant did not like the old one. He was asked why did he think the 1st defendant would bring him to look at the flat at Cavendish Heights, his answer was that it was the 1st Defendant's nature to show off. It was also Hui Cheung Hing's evidence that when he heard the 1st defendant saying that he had investment in properties in Hong Kong and elsewhere, he thought the 1st defendant was merely bragging. But when he was brought to see the flats at Braemar Hill and Cavendish Heights, he realised that the 1st defendant was not and did have the properties.

50. Apart from these 2 occasions, he had also met the 1st defendant at City Garden near where the 1st defendant lived. He did not however go to the flat there. He waited downstairs to meet the 1st defendant. His purpose was to ask the 1st defendant for money and he was given a few hundred dollars. It was not clear from his evidence as to the number of such occasions and their approximate dates. At certain part of his evidence in re-examination he said that his meeting with the 1st defendant should be in 1997 or later. However in other parts of his evidence he said that since he filed his witness statement in September, 1995 his relationship with the 1st defendant became really bad and when they met, the 1st defendant simply walked away from him saying to him : "you got your money from your lawyer."

51. Hui Cheung Hing was also very vague on the dates of the 2 visits to Braemar Hill and Cavendish Heights. It must be obvious to him that if he gave a definite date for the visits his evidence would be more vulnerable to be contradicted or proven to be wrong by other independent evidence. His evidence was that the 2 incidents were separated by a few months. When he was asked to put an approximate dates of the incidents, he could only say that it was sometime between 1992 and 1997. The significance of 1992 was that this was the year in which the petition was filed. Plainly from the contents of the conversation during the tea session, the meetings could only take place after the petition was presented. In re-examination, his attention was brought to the fact that the decree nisi for the divorce was granted on 18th March, 1993 and he was asked if he could be more specific on the dates of these meetings. His answer was that he thought that the meetings should take place probably in the summer of 1994 or 1995. When his attention was brought to the point that he said that the 1st defendant had asked him to persuade his mother to consent to the divorce and that could only make sense if this conversation was before the decree was granted in March 1993, he said that the meeting should be at the stage when it became obvious that there was going to be a dispute on the ancillary relief and that ownership and entitlement to certain property would be in dispute. He further said that it should be about the time when the ancillary relief proceedings was stayed. From the record the ancillary relief proceedings was stayed pending the determination of this action by the Order of Judge de Souza of 4th July, 1994.

52. It is of significance that when the 1st defendant was cross examined on the issue as to whether he had told the 2nd defendant and Hui Cheung Hing that he had a lot of money and had bought a lot of properties including Cavendish Heights and Braemar Hill, the 1st defendant denied the same. The 1st defendant was then referred to the Notice of Intention to Apply for Ancillary Relief filed in December, 1992 which named the property. It was put to the 1st defendant that the 2nd defendant's solicitors came to know of the property at Braemar Hill because the 1st defendant had told the 2nd defendant and Hui Cheung Hing that he had property there and that he had brought Hui Cheung Hing to a flat at Braemar Hill. From the question put, it was plain that the case of the 2nd defendant was that the tea sessions at Metropolitan Restaurant and the visit to Braemar Hill must have taken place in 1992 before the Notice of Intention to Apply for Ancillary Relief was filed in December 1992. As the 2 meetings were only separated by a few months, it must also follow that the visit to Cavendish Heights would also be in or about 1992 or at the most in the beginning of 1993.

53. On the other hand, the evidence of the 1st defendant was that he agreed that he had met the 2nd defendant and Hui Cheung Hing in the street. However he could not recall the occasion of his meeting them in Lockhart Road and his going to see his mother-in-law. He denied having said to his mother-in-law that he had property investments in Hong Kong, China and Philippines. Likewise he had no recollection of his meeting the 2nd defendant and Hui Cheung Hing near Lee Theatre. He however queried whether Hui Cheung Hing could be telling the truth when he sought to say that he had an expensive watch and that he had a lot of money in his wallet. He did not think that he would have given money to the 2nd defendant on this occasion. As to the two meetings for tea and the subsequent visits to Braemar Hill and Cavendish premises, his evidence was again that he could not recall having those meetings. However he was positive that he did not bring Hui Cheung Hing to any Braemar Hill premises. He agreed that he had once brought Hui Cheung Hing to the club house of Cavendish Heights. He himself frequently went there for drinks. However he denied having brought Hui Cheung Hing to any flat at Cavendish Heights.

54. It was strongly urged upon me that I should accept the evidence of Hui Cheung Hing. It was submitted that but for the fact that the 1st defendant had somehow bragged his wealth and claimed that he had property at Braemar Hill, the 2nd defendant would not be in a position to issue the Notice to Apply for Ancillary Relief making specific reference to the property in December, 1992. It was said the 2nd defendant and Hui Cheung Hing were able to give instruction because the 1st defendant had claimed that he owned property at Baremar Hill, City Garden, and Cavendish Heights, and the detailed address of these premises were obtained by the 2nd defendant's solicitors from land searches on all the flats in these developments. It was suggested that otherwise the 2nd defendant could not have made references to such properties in paragraph 8 of her affidavit of means filed on 6th May, 1993. As regards the visits to the Braemar Hill and Cavendish Heights property, it was suggested that there was reference to the tea sessions and the visits in the witness statement of Hui Cheung Hing filed in September, 1995 and unless he was actually brought to these premises by the 1st defendant he would not be able to depose to these incidents as he did. Reference was also made to the plaintiff's evidence that the plaintiff did suffer loss from foreign exchange dealing in the region of $10 million and it was also said that unless the 1st defendant had so told Hui Cheung Hing, Hui Cheung Hing would not be able to make up such story of $10 million loss from foreign exchange dealing in his witness statement.

55. Having heard the evidence, I find that the 1st defendant did meet the 2nd defendant and Hui Cheung Hing on 2 separate occasions at Lockhart Road and near Lee Theatre. I also find that in his usual self, the 1st defendant dressed up tidily and neatly on both occasions. I am also prepared to accept that the 1st defendant did wear an expensive watch on the occasion of the meeting near Lee Theatre. Beyond all these I am not prepared to find. Having regard to the personal relationship between the 1st and 2nd defendants and the fact that they merely met by chance in the street, I found it incredible that the 1st defendant would agree to go with the 2nd defendant to see his mother-in-law just for what appeared to be a curtsey visit and a chat. Likewise on the incident near Lee Theatre, I am not prepared to find that Hui Cheung Hing was able to see that the 1st defendant had a lot of money in his wallet and again having regard to the relationship between the 1st and 2nd defendants, I also find it unlikely that the 1st defendant would be prepared to give the 2nd defendant a few hundred dollars in this chance meeting in the street. Furthermore it seems to me that Hui Cheung Hing's memory on these occasions must be rather hazy and reference to his witness statement did not assist me in finding that his evidence was reliable. Indeed it was notable that in his statement he said that the incident near Lee Theatre took place a few months before the incident at Lockhart Road. However in his evidence the sequence was just the reverse. I do not say that Hui Cheung Hing deliberately lied. However it was plain and obvious that he had real difficulty in actually remembering the incidents.

56. Regarding the incidents at the Metropolitan Restaurant, I am also prepared to find that there were indeed such meetings between the 1st defendant and his sons. I am also find that to the 1st defendant, one of the main purposes of such meetings was to ask his sons to persuade the 2nd defendant to agree to the divorce. In line with the general character of the 1st defendant I am prepared to find that he must have boasted to his sons his success by saying that he was engaged in various property investments but without details. I am also prepared to find that he said that he had property dealing at Braemar Hill which was true at least to the extent that he did sign sale and purchase agreements in relation to a number of properties at Braemar Hill. I would also find that during one of these meetings he was asked by his sons for money, and he did give his sons money. He would be prepared to do that as he was asking his sons to help him to persuade the 2nd defendant. I also find that in the meeting he had told his sons that he suffered loss in foreign exchange dealing. However I find that this loss in foreign exchange trading was merely made up by him. There was good reason for him to make this up as in view of his boasting of his success, he would have to make up some story to explain why he could not afford to pay his sons more money than he did. It was a sheer co-incident that eventually by the date of trial, the plaintiff, who did trade on foreign exchange, did suffer an accumulated loss of about $10 million over the years.

57. I do not however find that the 1st defendant had brought Hui Cheung Hing to Braemar Hill to negotiate terms of tenancy with prospective tenants. The timing of this alleged incident was of crucial importance. On Hui Cheung Hing's evidence, this incident took place on the same day as the 1st occasion of his having tea with the 1st defendant at the Metropolitan Restaurant. Bearing in mind the contents of the conversations in the restaurant, I would consider that it is highly likely that the meeting took place before the decree nisi in March 1993. I do not think that Hui Cheung Hing was right to say in re-examination that the meeting should have taken place when it was plain that there was going to be dispute over the ownership of the property in ancillary relief proceedings. This was because the subject matter of the property in dispute in the ancillary relief proceedings was this property at Braemar Hill, and the nature of the dispute was whether the 1st defendant had any beneficial interest in this property. It was extremely surprising that in such circumstances, the 1st defendant would have brought Hui Cheung Hing to the property to negotiate the terms of a tenancy with prospective tenants. Furthermore the record of rental receipt from the property as produced by the plaintiff indicated and supported the plaintiff's evidence that there was no gap in the occupation by tenants throughout 1992 until October 1994. There would have been no occasion for the 1st defendant to do any negotiation with any tenant at a vacant flat.

58. In the circumstances I come to the view that this incident of bringing Hui Cheung Hing to the property at Braemar Hill did not occur. The other embellishment of the story such as the greeting by the care takers was simply made up to make the story more convincing. It is not necessary for me to decide why Hui Cheung Hing should make up such story.

59. In relation to the visit to Cavendish Heights, I accept the evidence of the 1st defendant that he had brought Hui Cheung Hing to the club house for drinks. However I do not accept the evidence of Hui Cheung Hing that the 1st defendant brought both him and his brother to a flat to inspect the decoration. Bearing in mind the possible timing of such alleged incidents, I do not consider that the 1st defendant would have brought Hui Cheung Hing to the plaintiff's flat at Cavendish Heights as that would only act to encourage more claims against him for ancillary relief.

60. The 2nd defendant further submitted that I should find that there was a partnership because I should draw some adverse inferences from certain evidence given by the plaintiff and the 1st defendant. The evidence included the evidence that the plaintiff had tried to forbid the 1st defendant from helping her to answer the phone, that the 1st defendant had always been financially dependent on the plaintiff in that he did not maintain the plaintiff but instead had to borrow money from the plaintiff and never repaid and yet the plaintiff continued to maintain this life style of the 1st defendant particularly in the light of the fact that the 1st defendant was a gambler and alcoholic and was a married man. In the circumstances it was submitted that it would be inconceivable that the plaintiff would still want to live with and perhaps also to marry the 1st defendant. It was not clear as to exactly what inference counsel would invite me to draw which was adverse to the plaintiff and the 1st defendant. The 2nd defendant also relied on the fact that after the property of flat B, 7th floor Block 2 Braemar Hill & carport No. LG297 was disposed of, the plaintiff had paid the 1st defendant some $500,000 during the period between March to November, 1992. It would appear to be the 2nd defendant's contention that these payments would represent the sharing of profit in a partnership.

61. I am unable to accept any of those submissions. As I have found as facts, the 1st defendant did not often answer the phone for the plaintiff and at any rate I accept the plaintiff's evidence that she rather have the 1st defendant not touching her customers as the 1st defendant was not familiar with the details of the transactions and the requirements of the clients. I accept the evidence from the plaintiff and the 1st defendant that the 1st defendant frequently asked the plaintiff for loans and that in most instances, he told the plaintiff that the purpose was for business. I also accept that the 1st defendant had not repaid the plaintiff. While it may well be unwise from a business point of view to continue to make loans to a person in such circumstances, the fact remained that for reasons that an outsider may not appreciate and for reasons that may not be wholly rational, the plaintiff and the 1st defendant loved one another to the extent that they had lived as man and wife. The fact that the 1st defendant was not a man of good character was neither here nor there. It was not challenged that the 1st defendant was an alcoholic. As far as his gambling habit is concerned, it was also the evidence of Hui Cheung Hing that the 1st defendant was fond of gambling. According to Hui Cheung Hing, the 1st defendant was on his way to gamble on horses on the occasion of his meeting him near Lee Theatre. He also testified that the 1st defendant also gambled in the market place and lost money to other players. It was common ground in this case that since 1982 the plaintiff and the 1st defendant lived together as man and wife. I could not see why I should draw an inference that the 1st defendant must have been a partner of the plaintiff's business or that he must have contributed towards the plaintiff's business from the mere fact that the plaintiff was prepared to live with him or to give him the financial support the way she did. I could not see why the fact that the 1st defendant was "good for nothing" would make it more or less probable that he was also a business partner of the plaintiff. No doubt there were occasions that they quarreled and I would not be surprised that the loans may be a reason for the quarrel. However, their relationship was maintained. I accept the evidence that the money paid by the plaintiff to the 1st defendant was either for specified purposes such as to make purchases or as loans or simply pocket money to spend. I also accept the plaintiff's evidence that sometimes she acceded to the request of the 1st defendant to let him have some money to gamble. I find that these sums simply were not the 1st defendant's share of profit as the amount paid bore no rational proportion to the profit made by the plaintiff. The fact that the plaintiff was prepared to be more generous in lending or giving money to the 1st defendant in 1992 was well understandable because the disposal of the property of flat B 7th floor, Block 2 Braemar Hill in April 1992 had brought her gross profit of over $4.4 million.

62. Finally the 2nd defendant asked me to draw an adverse inference from the following conducts of the plaintiff and the 1st defendant since 1992 and submitted that because I should take an adverse view on these conducts, I should find a partnership between the plaintiff and the 1st defendant in favour of the 2nd defendant. The conduct referred to in this submission were :

(a) After the 2nd defendant applied for ancillary relief and seeking to stop the 1st defendant from dealing with the property, there was no money coming from the plaintiff to be paid into the 1st defendant's bank account, although the plaintiff continued to provide for the 1st defendant.

(b) There was a Declaration of Trust in respect of the property made on 26th April 1993. A specific point was made that this deed was produced at the time when the solicitors ceased acting for the 1st defendant in the divorce proceedings although the plaintiff was the person who paid the solicitors for the 1st defendant.

(c) The 1st defendant's statement in his affidavit of means filed on 16th March, 1993 stating that he was unemployed since 1977 and that he had no income. This was in conflict with his evidence in Court that he was a free lance broker.

(d) That the 1st defendant was imprisoned for failing to comply with the Order to pay maintenance to the 2nd defendant. The submission was that he did so deliberately in order to give the impression that he had no means of any kind. A further point was made that in fact the 1st defendant did borrow from one Mr. Ho, a cellmate during his imprisonment, the sum of $200,000, and after his discharge from prison, the plaintiff still maintained him.

63. I am unable to accept the 2nd defendant's submission. In relation to the non-payment of money into the 1st defendant's bank account, I do not think that the same was probative to the issue I have to decide. The plaintiff's explanation was that since about November, 1992 she did not want to lend sizeable sums of money to the 1st defendant any more. It must be recalled that the plaintiff had lent him quite a lot of money in the past few months already. Furthermore it was nothing unusual that the plaintiff chose not to lend money to the 1st defendant for a certain period of time. Indeed it was plain from the evidence that in the years of 1990 and 1991 there was no banking transaction in the 1st defendant's bank account. I accept the plaintiff's evidence that during this period, the plaintiff did not lend or give the 1st defendant large sum of money and accordingly there was no banking transaction in the 1st defendant's bank account to reflect this. There was certainly no obligation for the plaintiff to lend the 1st defendant any money. I do not think that the 2nd defendant could complain that the plaintiff would not lend money to the 1st defendant so as to enable him to pay maintenance to the 2nd defendant. I do not think that I can draw any adverse inference against the plaintiff from her not lending or not giving the 1st defendant large sums of money so as to enable the 2nd defendant to obtain maintenance payment from the 1st defendant.

64. In relation to the Declaration of Trust, in view of the fact that it was only made in April, 1993, after the 2nd defendant had given the notice of intention to apply for ancillary relief and an order stopping the 1st defendant from disposing his interest in the property, I do not think that I should give much weight to this document in deciding whether the 1st defendant did or did not hold his share in the property on resulting trust for the plaintiff. However I do not think that I can draw any inference that because the declaration was made only at this stage hence what the document purported to evidence on its face was untrue. Like the case of most resulting trust, at the time when the resulting trust comes into existence, neither the trustee nor the beneficiary would apply their mind to the necessity of having a formal declaration of trust. I do not see the present arrangement between the plaintiff and the 1st defendant was in any way exceptional in this respect. However when there was intimation that someone might challenge the sole beneficial ownership of the plaintiff in the property, I cannot see how one could criticize the plaintiff and the 1st defendant for putting things right on the record. Furthermore I accept the plaintiff's evidence contained in her witness statement which was incorporated as part of her evidence in chief that the document was executed upon the advice of her lawyer. It was a matter of the plaintiff's privilege as to whether she would like to continue to support the 1st defendant on his legal fees. It is likewise the 1st defendant's privilege as to whether he wanted to be legally represented and if so by whom. I really do not see any basis of any criticism that the 1st defendant ceased to be legally represented at about the time of the Declaration of Trust. Nor do I see anything sinister in the plaintiff not giving him any further financial support on his legal fees.

65. In relation to the discrepancies between the affidavit of means and his evidence in Court, I have taken that into account when I assess the evidence of the 1st defendant. I fully appreciate that the 1st defendant would like to make himself appear to be a man without any means in the hope of reducing his liability to pay maintenance and had attempted to do so in his affidavit of means at the expense of accuracy. However the fact that I rejected his statement in the affidavit of means that he was "unemployed" and had no income since 1977 does not justify me to draw an inference that he was a partner of the plaintiff's business and property investment.

66. As to the point made in relation to the 1st defendant being imprisoned for failing to obey the Order for maintenance payment, I do not think that the reason for the 1st defendant's non-compliance of the Order has any bearing on the issue I have to decide in this proceedings. Nor was there much evidence adduced before me on this point. The only evidence on this point came from the 1st defendant. His evidence was to the effect that he was genuinely without means to pay the maintenance and he denied the suggestion that he would rather go to jail than to obey the order. I was not supplied with the Judge's reasons for ordering the 5 months imprisonment. From the length of the term itself, it is unlikely that the Judge would have accepted his explanation that he was genuinely without means. The 1st defendant's liability to comply with the Order of the Family Court could not be affected by my decision in this case, although my decision may affect the issue of the 1st defendant's assets and I would expect that that is a matter which the Family Court would take into account in deciding what ancillary relief order should be made. However that is a matter entirely in the hands of the Family Court. The whole episode of the 1st defendant's imprisonment could at the most indicate that the 1st defendant was rather determined not to pay the 2nd defendant any maintenance. As he might entertain such attitude, I would have to warn myself that he might not be telling me the truth when he gave evidence that he had no interest in the property or in the plaintiff's business. While I certainly have so warned myself when I consider the 1st defendant's evidence, I do not think that the episode per se could support an inference that the 1st defendant was a partner.

67. I fail to see the relevance of the 1st defendant's borrowing $200,000 from his cellmate. The evidence was that after the 1st defendant was discharged from prison in 1995, he borrowed $200,000 from one Mr. Ho, who was his mate in the same cell. The 1st defendant said that he borrowed the money to start some business and he still owed this Mr. Ho over $100,000. I fail to see how and why I should draw any inference adverse to the 1st defendant from his borrowing from Mr. Ho and the plaintiff still continuing to provide for his daily need, such as food, clothing and a home to live in. Certainly I do not think that these matters supported any inference that there was the partnership as alleged by the 2nd defendant.

68. Having considered all the evidence I come to the conclusion that there was no partnership between the plaintiff and the 1st defendant whether in relation to her estate agency business or her investment in various properties referred to in the Defence and Counterclaim and also in the evidence of this case.

Gift

69. I do not consider that on the pleading, it was open to the 2nd defendant to argue that the 1st defendant acquired beneficial interest in the property by way of gift. Even if it was open to the 2nd defendant on the pleading, I do not think that there was any gift of any interest in any landed property to the 1st defendant.

70. On the evidence, the 1st time that the plaintiff made use of the 1st defendant's name to buy property was in 1985. The property purchased on this occasion was Block A 10th floor, Room 4 of Metro Fortress Tower and it was directly purchased from the developer. The requirement at the time was that one would have to be registered as an interested buyer first and as to who could buy was to be decided by drawing of lots. In order to maximize the chance of buying, the plaintiff used the names of herself, the 1st defendant and a few others to be registered. In the event that turned out, only the 1st defendant succeeded in the drawing of the lots. Accordingly she went with the 1st defendant to choose the flat to buy. The plaintiff decided on which flat to buy. The 1st defendant signed the provisional sale and purchase agreement but the initial deposit was paid by the plaintiff directly with her own cheque. In fact all payments for this property were made by the plaintiff. The property was sold before completion about a year later and the proceeds were paid back to the plaintiff.

71. Apart from the purchase of this property in Metro Fortress Tower, all the other occasions where the 1st defendant was asked to sign the sale and purchase agreements were for the purchase of properties at Braemar Hill. I accept that the main reason for her using the name of the 1st defendant for Braemar Hill properties was that she considered herself to be a well known agent in Braemar Hill and that she was afraid that if the vendor knew that she was interested in buying, the vendor might think that the price asked for might be too low. I also accept that in the case of the suit property, another reason for the plaintiff using the 1st defendant's name to sign the agreement was her desire to avoid being asked to pay a commission to the vendor's agent. I note that the plaintiff had purchased many properties and with the only exception in relation to the property at Metro Fortress Tower, all properties other than those at Braemar Hill were acquired in her own name. On the other hand the sale and purchase agreements for all properties in Braemar Hill were all signed in the name of the 1st defendant. Many of these Braemar Hill properties were sold as confirmor before completion. The suit property and one other property at flat B 7th floor, Block 2 and carport No. LG297 were the only 2 which proceeded to completion. In both cases, the properties were assigned to the joined names of the plaintiff and the 1st defendant. In all cases when the properties were sold, the plaintiff received the proceeds.

72. I do not think that the plaintiff would intend to make any gift of any interest in landed property to the 1st defendant by using the 1st defendant's name in the purchase, notwithstanding their very close relationship. If she ever intended to make any gift of landed property interest, it would be too much of a co-incident that she would only intend to make gift of property at Braemar Hill and apparently only in relation to those properties which could not be disposed of before completion. Furthermore the way that the properties were acquired in the name of the 1st defendant also indicated that the 1st defendant was merely her nominee in executing the documentation. In this respect I accept the evidence that all the decisions relating to the buying and selling and also the letting of the properties were made by the plaintiff. The rents were paid into her bank account to which the 1st defendant has no control. This would also indicate that all along the plaintiff was the sole beneficial owner of the properties.

73. I do not consider that the fact that the 1st defendant had lent his assistance in signing the sale and purchase agreement and also the other necessary documentation such as the nomination, assignment and mortgage should be viewed as his participation in any partnership investment in the property. The 1st defendant certainly did not consider that by so doing, he was discharging an obligation in a partnership venture. It must be remembered that the plaintiff and the 1st defendant lived together as man and wife and that the plaintiff had given a lot of financial assistance to the 1st defendant. In the circumstances it would not be surprising that the 1st defendant would merely lend his name and assistance gratuitously to assist the plaintiff.

74. I therefore rejected any suggestion that there was any gift of any interest in the property or any properties listed in the Defence and Counterclaim to the 1st defendant.

Public Policy and Resulting Trust

75. On 10th February 1999, the 2nd defendant applied to amend her Defence and Counterclaim. By then even Hui Cheung Hing, the only witness called by the 2nd defendant, had completed his evidence. However technically the evidence of the case had not yet been completed because I had previously given leave to the 2nd defendant to further cross examine the plaintiff on certain bank statements of the 1st defendant produced by the plaintiff at the request of the 2nd defendant during her re-examination. As counsel for the 2nd defendant would require time to study the statements, I directed that the further cross examination on those statements should be deferred. Subject to this further cross examination the evidence in the case was completed. The application was to add a further paragraph 11A to the pleading contending in the alternative that "the resulting trust fails by reason of the fact that it would be against public policy to permit a presumption of resulting trust to arise when the admitted purpose of the plaintiff to put the said premises to the joint names of the 1st defendant and herself was improper and illegal namely, to deceive the vendor of the said premises and his/her agent in order to make financial gain for the plaintiff and cause financial loss to the said vendor and/or his/her agent." I considered that the proposed amendment should contain sufficient particulars of the deception and so I stood down the application until the particulars were properly formulated. On the next hearing day, counsel for the 2nd defendant formulated the particulars. The plaintiff opposed the application. She contended that there was nothing wrong in what she did. In response to my query as to whether she intended to apply for any adjournment in the event of my allowing the amendment, she told me that she did not want any adjournment and that the matter had enough delay already. She further told me that in 1992 when she tried to locate the agent she realized that the agency was no longer there. She could not now locate the vendor's agent through whom the transaction was concluded. I thus took it that the plaintiff objected to the amendment on the ground that it was useless in that the amendment was bound to fail and that the plaintiff was prejudiced because even if an adjournment was granted she could not locate the agent. Counsel for the 2nd defendant submitted that the amendment was merely for the sake of putting the record right because the 2nd defendant merely intended to rely on the evidence already given by the plaintiff relating to why she asked the 1st defendant to sign the agreement with the vendor. I was told that it was not the intention of the 2nd defendant to adduce any other evidence in support of the intended plea. Counsel for the 2nd defendant also reminded me of the principle that in the case of illegality which came to the Court's attention, the Court was bound to pay heed to the point even though illegality was not raised in the pleading. My attention was drawn to the commentary in paragraph 18/8/17 of the Supreme Court Practice 1999. It was contended that in view of this well know principle, it would not have made any difference as to whether amendment was made or not because in either case, I would have to consider the point and in either case the material which I would be considering would be the same. On this submission, the only purpose of the application for amendment was to give the plaintiff and the 1st defendant the warning that this public policy point would be taken against them.

76. In view of the fact that neither party would adduce any further evidence relating to the point raised by the amendment even if the amendment was allowed, and in view of the assurance that the points taken in the amendment were really those points on illegality which the Court would be bound to take recognizance of, even illegality was not pleaded, I decided that I should hear full argument on the merits of the point before I made my ruling on the amendment application. I have indicated that in view of the serious nature of the allegation raised in this amendment and in view of the lateness in making the application and the probable prejudice which the plaintiff may suffer in not being able to locate the agent, I would decline the application unless I am satisfied that the illegality and the improper conduct had been completely made out on the evidence adduced already. As the trial was near its end by the time this application was made, I considered that it would be most convenient that I should hear full argument on this point when the parties made their final submissions.

77. The 2nd defendant relied heavily in the decision of the Court of Appeal in Yim Bo Ying v Chung Iu Warm [1985] HKLR 354. There the registered owner of certain property claimed against her son in law possession and mesne profit of certain property. The defendant counterclaimed for a declaration that the plaintiff held the suit property upon resulting trust for his benefit, and on that basis he also counterclaimed for an order for the transfer of the property to him. The case of the defendant was that in fact he purchased the whole building in which the suit property formed part. He directed that the suit property be assigned to the plaintiff in order to effect a saving of stamp duty. It was his case that it was the common intention that the suit property was held by the plaintiff on trust for his benefit. The way it worked was that the total consideration for the whole building was $150,000 and ad valorem stamp duty would be payable on that sum. However if, as it happened in the case, the building was assigned as to the lower floor to the defendant and as to the upper floor to another person separately and each at the consideration of $75,000, then each assignment would only attract nominal stamp duty of $20 and there was thus considerable saving. The plaintiff disputed the defendant's counterclaim on the ground that she did provide money to purchase the property. The Judge found that the money was in fact provided by the defendant and also that he caused the property to be transferred to the plaintiff to save stamp duty. The Judge's finding was strongly queried by all members of the Court of Appeal. However the Court of Appeal decided that the appeal should be allowed on the new ground put forward in the Court of Appeal, namely that the Judge erred in ruling that there was a resulting trust when it was against public policy to permit such presumption of resulting trust to arise in the case before the Court when the admitted purpose for the causing of the property to be vested in the plaintiff was improper and illegal, viz. to save stamp duty which otherwise was payable to the Government. In giving his judgment, Fuad J.A. went through the authorities of Gascoigne v Gascoigne [1918] 1 KB 223, Re Emery's Investment Trust [1959] Ch 410, Tinker v Tinker [1970] P 136, Palaniappa Chettiar v Arunasalam Chettiar [1962] AC 294, and Groves v Groves (1829) 3 Y & J 163. All the cases considered except Groves v Groves involved the presumption of advancement and they were all cases involving the recovery of property from the donee who was either the wife or the children of the donor beneficiary. The court in each instance held that the beneficiary could not rebut the presumption of advancement by setting up his own illegality or fraud. Groves v Groves on the other hand was not a case involving the presumption of advancement. There the plaintiff claimed that he had bought property in the defendant's ancestor's name with a view of giving him a vote for the county. The action to recover the property failed because the plaintiff failed to prove that he advanced the money to buy the property. However the Court was also prepared to dismiss the claim because of the illegality of the plaintiff's original purpose in buying property in the defendant's ancestor's name and that prevented the Court from holding that there was a resulting trust.

78. The principles in all these cases were summarised by Fuad J.A. in these words (at page 362J) :

"It seems to me that all the cases founded on the basic principle that he who seeks equity must come with clean hands to receive it. I respectfully agree with the learned editors of SNELL (28the edition) p. 182 where it is said "There is no resulting trust where it would be against public policy to permit the presumption" relying on Groves v Groves.

I do not say that the position might not have been different had Mr. Chung himself not disclosed the purposes for which the property he said he had paid for was conveyed into Madam Yim's name. In such circumstances the case of Haigh v Kaye (1872) LR 7 Ch 469 might have applied. Lord Denning referred to that case in Chettiar v Chettiar at page 301, in these terms :

"In the conveyance it was stated that a sum of Stg. 850 had been paid by the defendant for it. The plaintiff proved that no such sum was paid and claimed that the defendant was a trustee for him. Now in that case the plaintiff had no reason to disclose any illegality and did not do so. It was the defendant who suggested that the transaction was entered into for a fraudulent purpose. He sought to drag it in without pleading it distinctly and he was not allowed to do so.""

Fuad J.A. held that in the case before him the defendant had himself asserted both in the particulars in his pleading and also in his evidence that the arrangement was made in order to save stamp duty. He would have to explain the reason for his putting the property in the plaintiff's name without expressly making her trustee. He could not say that as against the plaintiff the building belonged to him, yet as against the collector of stamp duty something to the effect that "Although the vendor disposed of the title to the whole building on the same day, the sale and purchase of the ground floor and cockloft formed an entirely separate transaction from that of the first floor and roof for I bought the former and Madam Yim the latter." Because of all these Fuad J.A. said that "For these reasons I would say "Let the estate lie where it falls"(Cheittiar v Chettiar [1962] AC at page 303)".

79. I consider that it is now well established that the Court would not uphold a resulting trust if it would be against public policy to do so, and it would be against public policy to allow someone to set up his own illegal act to show that there was a resulting trust. Where this happens, the approach of the Court is that "let the estate lie where it falls". In the present case the 2nd defendant contended that in order to set up the resulting trust the plaintiff had to and did set up her illegal and improper conduct viz. to deceive the vendor and her agent in order to make financial gain for herself and a loss to the vendor and her agent. It is further contended that it would be against public policy to permit the presumption of resulting trust in this case because the purpose of the whole arrangement was to deceive the vendor and her agent in order to make a financial gain for the plaintiff and to cause a financial loss to the vendor and the agent.

80. Having considered the evidence adduced in this case, I am not satisfied that any illegality or improper conduct as alleged was proved. The effect of the evidence of the plaintiff was that she asked the 1st defendant to sign the agreement because she was afraid that if the vendor knew that she was interested in the property the vendor might think that the asking price was too low and might want to ask for a higher price. In this case the evidence was that the vendor instructed an agent for the sale and hence it was likely that the negotiation was with the agent. There was no evidence on what instruction was given by the vendor to the agent regarding the price of the property she wanted. It may be the case that she gave the agent a blanket authority to sell to whosoever agreeing to buy at a certain minimum price. If this was the case, the fact that the purchaser was an estate agent was wholly immaterial. On the other hand it could also be the case that the vendor would merely ask her agent to solicit offers and she would then make a decision as to whether the offers were favourable enough for her own purpose. It might be the case that the vendor after learning of the offers would like to consider or re-consider if the offer was most favourable and would take into accounts all sorts of consideration such as whether the offer was coming from someone who was likely to be generous in making offers. All these were possibilities and there was simply no evidence to show what was in fact the case. There was no evidence that the plaintiff knew of the arrangement between the agent and the vendor. There was nothing to suggest that had the vendor known that the plaintiff or any other estate agent was interested in buying the property, the vendor would refuse to sell unless the price was higher than $1,890,000 or would at least try to bargain to for a price higher than $1,890,000. While it is not unreasonable to suppose that some vendors might think that estate agents would not be interested in buying property unless the price was favourable, this is by no means the thinking of every vendor. Certainly it is not universally true that all properties bought by estate agents were below market price or near the lower limit of the market price. On the evidence before me, what the plaintiff did was merely to avoid the complication that might arise if this vendor happened to be the type of persons who would subscribe to the view that if an estate agent was prepared to buy at a certain price, then the price must be on the low side. There was no evidence in this case as to whether the vendor of the property would in fact regard the identity or occupation of her purchaser as material for her consideration. On the evidence adduced in this case, I do not think that a case of illegality of deception of the vendor was made out or proved.

81. In relation to the contention that there was a deception of the agent, I do not think the case was made out either. The vendor's agent had no legal entitlement to charge any commission from the purchaser. This was so even if the purchaser was not represented by an agent. Of course the law does not stop an estate agent or broker instructed by the vendor to also act as agent or broker for the purchaser and in Hong Kong many estate agents did charge commission from both the vendor and the purchaser. But where the purchaser was unwilling to pay the agent the commission he wanted to charge, it would be a matter for vendor to decide whether he would nevertheless still agree to sell the property to the purchaser. Of course in such circumstances the agent might like to refuse to put through the deal and might not even inform the vendor of the offer from the purchaser, but whether he would be entitled to do so would depend on the terms of his employment. In the present case, what the plaintiff did was to avoid the vendor's agent from asking her for a commission. There was nothing to suggest that the transaction would not be concluded or would be concluded only on different terms if the vendor's agent was aware that the plaintiff herself was interested in the deal. In the circumstances I do not think that the case of illegality of deception of the agent was made out or proved.

82. My conclusion is fortified by the fact that although the agreement was signed by the 1st defendant alone as purchaser, before completion, the vendor and her agent must be aware that the plaintiff had an interest in the property. The name of the plaintiff appeared as one of the assignees on the assignment and the form of assignment would have been approved by the vendor or her solicitors in advance. The vendor was legally represented in the sale and purchase down to the time of completion. Had the vendor considered that there was a material deception or misrepresentation practiced on her by concealing from her that in fact the plaintiff, an estate agent, was interested in the purchase so as to induce her to sell at a lower price, she would have sought to avoid the sale and would not have completed the sale. Likewise by completion the vendor's agent must have realized that the plaintiff was herself interested in the property. Yet there was no suggestion that the agent had made any query or protest against any loss of commission.

83. Furthermore unlike the case of Yim Bo Ying v Chung Iu Warm and the cases considered in that decision, the present case was not a case where the trustee would seek to resist the recovery of the property by the beneficiary on the strength of a resulting trust. The 1st defendant never disputed the plaintiff's entitlement to the property. Indeed the stance of the 1st defendant was to support the trust. Even if the 1st defendant was to dispute the trust, the plaintiff did not have to rely on the presumption of resulting trust because by the Deed of Trust dated 26th April, 1993, the 1st defendant acknowledged that the property was in fact purchased by him on behalf of the plaintiff and all purchase money paid by him belonged to the plaintiff, and further expressly declared that he held the property on trust for the plaintiff. He had also covenanted by deed the he would at the request of the plaintiff assign and convey the property or any part of it to the plaintiff or to such person as directed by the plaintiff. Thus in the present case, even if there was any illegality in causing the 1st defendant to sign the agreement for sale and purchase and subsequently to become one of the joint owners of the property, the plaintiff did not have to rely on that illegality to seek the assistance of the Court. It is trite law that when there is illegality, the Court will not assist the party having had to rely on illegality but would say "Let the estate lie where it falls" (see Fuad J.A. in Yim Bo Ying v Chung Iu Warm supra at page 364G citing Lord Denning in Chettiar v Chettiar [1962] AC at page 303). However in this case having regard to the Declaration of Trust, the application of the doctrine of "Let the estate lie where it falls" would mean that the 1st defendant would remain to be a bare trustee for the plaintiff who held the entire beneficial estate of the property. Indeed, the situation in the present case is that if it is to be contended that the 1st defendant is holding his share in the property free from any trust in favour of the plaintiff, it is for the 1st defendant to set up the illegality to say that he acquired his share of the property by an illegal act. This is something which he would not be permitted to say and the Court will not give him any relief by reason of public policy.

84. Counsel for the 2nd defendant submitted that I ought not pay attention to the Declaration of Trust as it was not pleaded in the Statement of Claim that the plaintiff would rely on it. However if I were to allow the 2nd defendant to amend the Defence and Counterclaim as proposed, I do not think that I should refuse the plaintiff leave to make suitable amendment to plead the Declaration of Trust in answer to the new plea of the 2nd defendant.

85. As I do not think the point on public policy was made out on the evidence I would refuse the 2nd defendant's application to amend as it would be a useless amendment.

The Counterclaim

86. The 2nd defendant counterclaimed for (a) a declaration that the 1st defendant held the property as to half share on trust for himself and the 2nd defendant; and alternatively (b) a declaration that the 1st defendant holds the property as to half share as beneficial owner but subject to the 2nd defendant's equity as his wife of 30 years. The whole basis for claiming a trust in favour of the 2nd defendant was that the 2nd defendant was the wife of the 1st defendant and had contributed her effort as wife in brining up the children. In the trial, counsel for the 2nd defendant fairly conceded that the claim of any beneficial interest in favour of the 2nd defendant was not sustainable. I agree. If I should hold that 1st defendant should have any beneficial interest in the property, in view the fact that the plaintiff and the defendant were joint tenants and that in any event the 2nd defendant's case was that the property was acquired by money belonging to the partnership to which both the plaintiff and the 1st defendant were partners, the most that I should declare in the 2nd defendant's favour is that the 1st defendant was beneficial owner as to half of the interest in the property.

87. As I hold that the plaintiff was and still is the sole beneficial owner of the property, it must follow that the 1st defendant has never had any beneficial interest in the property. It must also follow that at all material times the 1st defendant held his interest in the property as trustee for the plaintiff. Thus, he cannot be holding any interest in the property as trustee for himself or the 2nd defendant.

Conclusion

88. There will be judgment for the plaintiff against both defendants. I will grant the plaintiff the declaration prayed for in paragraphs 1 to 3 of the prayer in the Amended Statement of Claim. I do not think there is any need for the plaintiff to have a declaration in terms of paragraph 4. In any event the evidence before me is that the mortgage in respect of the property had been redeemed and there is no suggestion that the property is about to be sold in the near future. Under paragraph 5 of the prayer, I will also order that the registration against the property in the Land Registry of the 2 Notices of Intention to apply for Ancillary Relief Memorial Nos. 5506312 and 5506313 be vacated. The 2nd defendant's counterclaim is dismissed.

89. So far as the question of cost is concerned, as I have not heard the parties, my order on cost would be order nisi only. As between the plaintiff and the 2nd defendant, I would order that the cost must follow the event and hence the 2nd defendant is to pay the plaintiff's cost of this action, including the counterclaim. As between the plaintiff and the 1st defendant, although the plaintiff succeeds in the action against the 1st defendant, I note that in effect the 1st defendant never actually resisted the plaintiff's claim and in fact the 1st defendant has come forward to support the plaintiff. As I remark earlier, the position of the 1st defendant in this case is very much the same as a co-plaintiff. Hence I will make no order as to cost between the plaintiff and the 1st defendant. In view of the fact that the 1st defendant and the 2nd defendant are truly adversaries in this action and the effect of my decision is that the 2nd defendant fails in her claim that the 1st defendant has any beneficial interest in the property, I will make an order that the 2nd defendant is to pay the cost of the 1st defendant as well.

	(Edward Chan)
	Recorder of the Court of First Instance

Representation:

Wong Siu Ying, in person, Plaintiff.

Hui Chak Cheung, in person, 1st Defendant.

Miss Sze Kin instructed by King & Co. for 2nd Defendant (Legal Aid).

Cites 1 case

Cases cited in this judgment

Yim Bo Ying v. Chung Iu Warm

[1985] HKLR 354

Court of Appeal19 Apr 1985