King Yuen Vung George and Another v. Chan Wah Ying Wendy

HCA010410/1995

HCA 10410/1995

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 10410 OF 1995

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Coram: Deputy High Court Judge Poon in Court

Dates of Hearing: 5 - 9, 12 - 15 March 2001

Date of Handing Down Judgment: 21 June 2001

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J U D G M E N T

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Introduction

1.Mr King Sieh Ting ("Mr King") was a very successful, wealthy businessman. He controlled the Wearbest group of companies, including Wearbest Garment Manufacturing Co Ltd ("Wearbest Garment"). It was one of the largest garment manufacturers in Hong Kong. In the 1970s, Mr King was the chairman of the Hong Kong Garment Manufacturers' Association. On 20 December 1995, he died at the age of 73, leaving a very substantial estate.

2.In November 1994, Mr King paid the defendant $6,150,000. Later in May 1995, he further paid $10 million to the defendant. The plaintiffs, who are his children and the administrators of his estate, claim that Mr King and the defendant had on or about 2 November 1994 formed a partnership for purchasing real properties in Hong Kong and letting or selling the same with a view for profit after decoration and furnishing. Mr King's share in the partnership was 75% and the defendant's, 25%. The payments by Mr King represented his contribution to the partnership capital. The defendant, the plaintiffs say, had committed breach of her various duties towards the partnership, including failure to render an account of the income and expenditure. On 10 July 1995, the partnership was dissolved following a dispute between Mr King and the defendant. The defendant agreed to repay the monies invested by Mr King after she had sold the properties acquired. Alternatively, the plaintiffs aver that the payments were loans. In any event, the defendant had failed to make any repayment. The plaintiffs now claim for a declaration that the partnership had dissolved on 10 July 1995 or alternatively upon Mr King's death on 20 December 1995. They have an alternative claim for return of $16,150,000 on the basis that it was a loan.

3.The defendant does not deny that she had received $16,150,000 from Mr King. However, she claims it was a gift. No partnership as alleged ever existed. The plaintiffs' claims are all denied.

4.Now that Mr King had died, the plaintiffs could not possibly call him to give evidence. But they seek to rely on certain documentary evidence that involved Mr King before his death and two tapes which, they say, recorded telephone conversations between Mr King and the defendant at the material times, alluding to the partnership, its dissolution and the loan.

Cheques and account

5.The first set of documentary evidence relates to the payments. It is not in dispute that they were effected by six cheques drawn on Wearbest Garment's account no. 004-002-253565-001 with the Hong Kong and Shanghai Banking Corporation Limited. At the material times, Mr King had the benefit of an interest free facility granted by Wearbest Garment annually up to a maximum of $180,000,000: see the minutes of annual general meetings for the years 1993, 1994 and 1995. The cheques were issued against Mr King's current account with the company. Payment vouchers had been prepared for each of the cheques, indicating that they were for Mr King's private use. The particulars of the cheques and the payment vouchers are:

Hereinbelow, I will refer to the cheques as the 1st to 6th cheques respectively.

6.It is the plaintiffs' case that for each of the cheques, Mr King had written on a note accompanying the payment voucher words "Loan to Wendy", showing that Mr King did not intend it to be a gift. I will come to these documents in greater detail when dealing with the evidence of Wearbest Garment's chief accountant, Mr Lau Kwing Tong ("Mr Lau").

Mr King's statement to the police

7.The next piece of documentary evidence is a statement Mr King made to the police on 6 October 1995 when he made a report to the Commercial Crime Bureau, accusing the defendant of having defrauded him of $16,150,000. His complaint as detailed in the statement is this.

8.Mr King first met the defendant in June 1981 through a business friend, Mr Murjani. She was then working in Mr Murjani's company. In the beginning of 1982, the defendant asked him to give her financial support so that she could start her own garment business. Mr King agreed and lent her $600,000. In mid-1982, the defendant formed a Clipper Wendy Trading Co Ltd. Several months later, she told Mr King that the company faced financial difficulty. He lent her a further sum of $300,000. Between mid-1982 and mid-1983, Mr King was seriously ill. He therefore did not contact the defendant. After his recovery in mid-1983, he tried to but was unable to contact her. They did not meet again until about 1988 when she told him that she had married and was residing in USA.

9.In October 1994, a broker Christina Yip ("Ms Yip") called Mr King, asking him if he wished to meet with the defendant. He told Ms Yip to ask the defendant to call him. Several days later, the defendant called and asked to meet him. When they met, the defendant told Mr King that she was doing business by buying flats, renovating them and then selling or leasing them. She asked if Mr King was interested. She had a property in Happy Valley in hand, which was worth $6,150,000. He could pay the price and that would constitute 75% of his share in the partnership. She would contribute 25% by paying for and supervising the renovation. He agreed.

10.On 2 November 1994, at about 5:30 p.m., the defendant asked Mr King to pay $50,000 as deposit for the Happy Valley flat. On that day, Mr King gave the defendant a cheque for $50,000. He did not fill in the payee's name. He later learnt that Wong Wai Mo Andy was named as payee. He agreed to pay the balance of the price. It was effected by two cheques dated 4 November 1994 for $2.5 million and dated 17 November 1994 for $3.6 million respectively. The name of the payee for the cheques was left blank. He later knew that the defendant's name was filled in as the payee. (These were the 1st to 3rd cheques.)

11.In the beginning of May 1995, the defendant met with Mr King again. She told him that she had in mind two flats in mid-levels. The total price was $11,500,000. She suggested that Mr King should be responsible for $10 million as 75% of the partnership contribution and that she would be responsible for the balance of 25%. Mr King then suggested that the total payment of $16,150,000 be repaid to him by 4 six-monthly instalments and asked her to sign an IOU. She refused. She preferred to maintain the partnership. Mr King requested to sign an agreement for the partnership. She agreed to sign it after he had returned from his trip to USA and Europe. He was about to leave on 28 May 1995. In May 1995, Mr King gave 3 cheques to the defendant, totalling $10 million. They were dated 4 May, 11 May and 18 May for $3.5 million, $3.5 million and $3 million respectively. Mr King did not fill in the payee for these cheques. He later found out that the defendant was named as payee for all of them. (These were the 4th to 6th cheques.)

12.In July 1995, Mr King tried to contact the defendant but to no avail. On 10 July 1995, the defendant called him. Mr King asked about the property but she said as he was only a "sleeping partner", he had not right to do so. Mr King asked for repayment but was refused. He was unable to contact the defendant thereafter.

13.When Mr King gave the statement to the police, he was accompanied by his assistant and a barrister.

Tapes

14.According to his daughter, Lydia King ("Lydia"), Mr King had the habit of recording telephone conversations. On 9 October 1995, Mr King handed a tape ("Tape 14") to a solicitor, Ms Pauline Wong Tsip Yue ("Ms Wong"). In a subsequent conference on 23 November 1995, Mr King told Ms Wong that it recorded a call made by the defendant on 10 July 1995. In July 1996, Lydia found another tape ("Tape 13") while going through Mr King's personal belongings. It is the plaintiffs' case that this tape contained a telephone conversation between Mr King and the defendant shortly after 24 May 1995. The defendant did not dispute that the male voice on the tapes was Mr King's. However, she denies that the female voice recorded on the tapes was hers. In this connection, both parties had enlisted the assistance of experts to support their respective case. I will deal with the evidence of Lydia and the experts in greater detail later. At this juncture, I will set out the contents of the tapes. They had been played in court in full. Transcripts had also been produced as evidence. The telephone conversations were between Mr King and the same female who called herself "Wendy". I will refer to this female as "Wendy" hereinbelow.

15.Tape 13 lasted for nearly an hour. According to its contents, the conversation took place on a Monday shortly before Mr King was to leave for a trip on 28th day of the month. At the end of the conversation, Mr King and Wendy agreed to meet on the coming Wednesday at Nadaman, which presumably was the Japanese restaurant in Hong Kong Shangri-La.

16.For most of the time, Wendy spoke continuously and in length. She spoke in an assertive manner. Mr King listened to her with occasional utterances like "Hm", "yes", "I see". There were occasions where Mr King tried to interpose but was unsuccessful. She simply kept on talking. Even when they engaged in a dialogue, Wendy dominated the conversation.

17.The first part of the conversation was basically a long narrative by Wendy. She and Mr King were good old friends but had not met for many years. They met again in the previous year. Mr King had given her a gift, which was so big that it had softened even the heart of an angry woman. Mr King had previously told her that nowadays, it was common for a woman to serve two men. She had thought about it and considered the price the woman had to pay was not small: her family might break up and she might lose her children. She then touched upon the subject matter of partnership. In April, they had agreed to become partners for investing in properties. At that time, Wendy was viewing two flats. Mr King's share was 75% and hers, 25%. Mr King promised to pay his contribution in three instalments. Relying on Mr King's promise, the defendant paid a 10% deposit and waited for completion on 20 May. But on Saturday, Mr King called and suggested that they should cease to be partners and his payments be converted to an interest free loan so that they would not have any argument arising out of difference in opinion. She said she would consider it. After consideration, she now made this call to Mr King and told him her view, which was this. First, a loan would put her under great pressure to sell the property in order to make repayment. Secondly, since she had already paid 10% deposit, which was nearly $2 million, she could not refuse to take the loan. He had put her in such a position that she could not say no to his proposal. Had he not promised to invest as a partner, she would not have proceeded with the transaction and paid the deposit. Thirdly, she had to sleep with him in exchange for the loan. She felt humiliated because he treated her like a prostitute. Fourthly, he had suggested her to write an IOU. She was worried about two implications: (1) some might think that she was in financial difficulty and had to sleep with him in order to get the interest free loan; and (2) if her husband saw the IOU, her family would break up. He had said that the IOU was to make sure that if anything happened to her, her husband would not get any benefit. (Presumably, that referred to the scenario where the payments made by Mr King would fall into Wendy's estate should she die.) Wendy said she was also worried that if anything happened to him, the IOU would fall into the hands of his family. They might do something detrimental to her. She said she would not sign an IOU. She would try to sell the property and repay him.

18.Mr King said he had two reasons to convert the partnership into a loan: (1) they might not be happy because of difference in opinion; (2) it would be easier for her to achieve her own target. Wendy retorted and basically repeated in substance what she had already said. Mr King said he no long had any desire to sleep with her. In the past when they were "husband and wife", he had asked her if she would like to go to bed with him. Otherwise, she would be unhappy. Wendy then challenged what Mr King meant by going to bed. They went on to have similar arguments, which I do not think need to be repeated. Finally, Mr King said they should meet on Wednesday at Nadaman for dinner to discuss the matter face to face. He had already made the booking. Wendy said she would not go to the room any more. (It would appear from their conversation that on previous occasions when they met for dinner, Mr King had reserved a room in the hotel and that after dinner, they went to the room where Mr King asked Wendy to sleep with him.) Mr King agreed just to have dinner. But towards the end of the conversation, Mr King said he would call her and tell her the room number. Wendy said she would consider it and called him the following day.

19.Tape 14 is shorter. It lasted for about 23 minutes. Apparently, Wendy called from Los Angeles, USA. They first had a brief discussion on certain claims concerning some goods Wendy was then handling. Mr King then requested to see the two flats Wendy had bought. She disagreed. She did not want the agent to come in contact with him. Mr King said he was her partner and "husband". He was bored and hoped she could come back to Hong Kong soon. He called her darling and said he needed her. She said she would come back only if she had accumulated enough work. She also said that as a "sleeping partner", he was not entitled to see the flats. He said as a partner he was entitled to know what was going on with the flats. They then had an argument over Mr King's right as a "sleeping partner". Eventually, Mr King said he did not want to be a partner any more. He demanded Wendy to repay by instalment the monies he had paid. He would not charge interest or ask her to write an IOU. Wendy said, "That's all. There's nothing to say between us. Let's do just as what you've said just now. That's all. Bye-bye." She then hung up. Mr King was recorded to have said thereafter, "shameless".

20.The following points emerged from the contents of the telephone conversations. First, Mr King and Wendy had an intimate relationship in the past. Mr King wanted to maintain it but Wendy disagreed. He even wanted to go to bed with Wendy but was refused. Secondly, they had formed a partnership for investing in real properties with Mr King holding 75% and the defendant, 25%. Mr King had paid money to the defendant for buying properties, which were to be rented out after decoration. Thirdly, Mr King wanted to terminate the partnership and convert his payments to a loan. Wendy disagreed and according to Tape 13, they had agreed to meet face to face to discuss about it. Fourthly, assuming that the conversation recorded in Tape 14 came about later, the partnership was maintained despite the earlier conversation. However, they had dispute over Mr King's right as a "sleeping partner". This led to Mr King's decision to terminate the partnership and his demand that his money be returned by instalments. Wendy's response appeared to be quite equivocal.

Defendant's tapes

21.The defendant relies on an exemplar tape taken by her expert, Mr Fausto Poza on 6 November 2000 in his laboratory in USA. The tape had been played in court. It contained causal chats between the defendant and Mr Poza's assistant in Cantonese. The pitch of the defendant's voice as recorded in the tape is markedly higher than that of Wendy's voice. The defendant also seeks to rely on a video tape she took of her two sons in 1989. The video tape did not show the defendant but only recorded her voice. She was talking to the sons and the maid who was taking care of them. Again, the defendant's voice as recorded there was higher in pitch than Wendy's.

Plaintiffs' witnesses

22.The plaintiffs have called 5 factual witnesses, namely, Sergeant 21500, Woman Sergeant 18261, Lydia, Mr George King Yuen Vung ("George"), Mr King's eldest son and Mr Lau, and one expert, Dr Oscar Au. Lydia and George are the administrators of Mr King's estate. I will summarise their evidence below.

Evidence of the police officers

23.Both officers were responsible for handling Mr King's complaint back in 1995. They were both present when the plaintiffs' and the defendant's tapes were played in court.

24.Sergeant 21500 drafted a questionnaire to be answered by the defendant. The questionnaire was later sent out in November 1995. He did not remember if there was any reply. But he recalled that some time after the questionnaire had been sent out, he received a call from a woman. He felt that she was Wendy Chan because they talked about Mr King's case. The telephone conversation lasted for more than half an hour. Due to the lapse of time, he could not recall the details of the conversation. But he remembered that the woman talked very fast, seized every chance to speak, and when he occasionally tried to say something, asked him to wait until she had finished first. Woman Sergeant 18261 had at one stage picked up another phone to listen to the conversation for a short while. She did that because she felt strange that he had kept on listening without speaking for a long time.

25.Sergeant 21500 could not now recognize the woman's voice. However, he said it was closer to Wendy's voice in Tape 13 and 14 than the defendant's voice in the exemplar tape and the video tape.

26.Woman Sergeant 18261 learnt from a colleague that the woman who made the call to Sergeant 21500 was a Wendy Chan calling from USA. Seeing that Sergeant 21500 had listened to her on the phone for a long time without speaking, she picked up an extension to listen to the conversation. She had a particular impression of the woman's voice: she was fast, loud and aggressive. She could no longer recognise her voice. But like Sergeant 21500, she was of the view that her voice was closer to Wendy's in Tape 13 and 14 than the defendant's in the exemplar tape and the video tape.

27.Woman Sergeant 18261 also confirmed that Mr King had delivered a tape to the police. She could not recall if it was delivered at the time when the report was made or later. This had not been referred to in Mr King's statement but she said it was not a necessary practice to do so. She had listened to the tape for a short while and confirmed that it was Tape 14.

Lydia's evidence

28.Mr King had the habit of recording telephone conversations, which were usually conversations he had with overseas stock agents. He often traded in overseas stock. Mr King loved Peking opera. He thus also had many tapes of Peking opera sung by himself and other people. In the beginning of July 1996, Lydia packed her late father's belongings in his room. He had many tape recorders in his room. He also kept many tapes. Among them Lydia found Tape 13. Tape 13 attracted her attention because it was written on it in Mr King's own handwriting the words "KEEP KEEP Wendy". (I have examined Tape 14. The words "KEEP KEEP" were there but "Wendy" was not.) Lydia listened to it for a short while but hearing the voice of her late father upset her. Lydia therefore called her younger sister in San Francisco and asked her to come back to Hong Kong to listen to it, which she did. Lydia explained that she did not ask George to do so because she assumed that he was very busy dealing with the companies' affairs. Mr King died suddenly. George had to take care of many things. It just occurred to Lydia that her younger sister could help. After listening to the tape, her younger sister wrote down the contents. Lydia read it. Both of them thought that the tape was important. Therefore on 16 July 1996, Lydia sent a duplicate of the tape to Ms Elsie Leung, then with Messrs Iu Lai and Lee. On 18 August 1999, Lydia delivered the original of the tape to Mr Alex Liu of the plaintiffs' solicitors.

29.Mr King had a mistress Lisa Li. But Lydia was not aware if he had any other girlfriends. Finally, Lydia confirmed that Mr King was very careful with all things that involved money.

George's evidence

30.George was a minority shareholder and director of Wearbest Garment. He was also the production manager when Mr King was still operating the company. Mr King was its majority shareholder. Another shareholder was his wife. Whenever Mr King needed money for his personal use to be paid out from Wearbest Garment's account, he did not need prior approval of other directors or shareholders. He would simply give verbal or written instruction to the account department. Mr Lau would then carry out his instruction. George was not aware of Mr King issuing any of the six cheques to the defendant at the time. Nor did he have any personal knowledge why those cheques were issued. He was also not aware of Mr King setting up any overseas trust for the family members.

31.George first met the defendant in about 1980. In those days, the defendant was working for Mr Murjani's company. Altogether he met her for about six times on business or social occasions, including a boat trip where George's customers were entertained. According to George, the defendant was very smart. She was very fluent and kept on talking. On the boat trip, she acted like a tour guide, introducing the scenic spots of Hong Kong to his customers. George paid particular attention to how the defendant spoke. It was partly because he himself did not speak clearly after he suffered from a stroke earlier. Since then he paid particular attention to those who spoke smartly and fluently. Another reason was that Mr King was then thinking of employing the defendant as a sales representative. Mr King would like to have George's opinion if she was suitable. George considered Wendy's voice in Tape 13 and 14 to be more representative of the defendant's voice he heard back in 1980. The defendant's voice in the exemplar tape was too sharp. George also confirmed that the male voice in Tape 13 and 14 was his late father's.

32.Under cross-examination, George agreed that he had mentioned in the statement he gave police on 6 February 1996 that he first met the defendant in 1983. He agreed that that was the time he first met the defendant and he had not seen her since September 1983. He also agreed that he did not speak to the defendant at length. However, he disagreed with the suggestion that there was no such boat trip as described by him in chief, that he had mistaken about the defendant's voice or that the voice on the exemplar tape was more consistent with her voice he heard.

33.George further confirmed that Mr King controlled various companies and that he was familiar with using limited company to hold real property, and also with using nominee company. In the course of 1995, Mr King had transferred a substantial part of his shares in the Wearbest group of companies to a BVI company and a Bermuda company. George was a director of these overseas companies but it was Mr King who controlled them.

34.Like Lydia, George considered his late father to be very careful about money. He knew that Lisa Li was his mistress. But George was not aware if Mr King had given her large amount of money or gifts.

Mr Lau's evidence

35.Mr Lau first joined Wearbest Garment in 1963, left in 1966 and then rejoined it in 1979. He was promoted to the post of chief accountant in September 1984. As such, he was responsible for, among other things, issuing cheques and making record thereof. Over the years, he had very often come across Mr King's handwriting.

36.When Mr King wanted money for his own personal use and cheque to be issued, he would give Mr Lau oral or written instruction. Upon receiving instruction, Mr Lau would issue the cheque and made entry in the company's account record called "payment voucher". Cheque would be written out first and then put in Mr King' tray in his office for his signature. Record in the payment voucher would be made later on the following day. Mr King would endorse or initial on the payment voucher to indicate his approval. After that, Mr Lau would retrieve the payment voucher from Mr King's tray.

37.Mr Lau then described how the six cheques in question were issued and how the records on the payment vouchers were made. The procedure was similar to the one stated above. All the cheques except the 4th one were issued by Mr Lau upon Mr King's oral instruction. The 4th cheque was issued after the secretary to the board of directors had given Mr Lau a note dated 2 May 1995, instructing him to prepare the cheque. The note was written by the secretary. For all the cheques, Mr King's instruction, whether oral or per the secretary's note, was that the name of the payee should be left blank. All the cheques were signed by Mr King. Mr Lau prepared the payment vouchers. He filled in the particulars indicating that the cheques were issued for Mr King's private use and for his account. Mr King then initialled on all the payment vouchers to indicate his approval. (For particulars of the payment vouchers, see paragraph 6 above.) When Mr Lau retrieved from Mr King's tray the payment voucher for the 2nd, 3rd, 5th and 6th cheque, he found a note accompanying each voucher. The notes were dated 4 November, 17 November, 11 May and 18 May respectively. They were all in Mr King's handwriting and bore Mr King's initial. All the notes had the words "Loan to Wendy" written on them. For the 4th cheque, when Mr Lau retrieved the payment voucher, the note prepared by the secretary was also there. On the note, Mr King had added the words in his own handwriting "Loan to Wendy". Mr Lau stapled each set of payment voucher and the accompanying note together and kept them in the account department. The original of the payment voucher for the 1st cheque, each set of the payment voucher and the note for the other 5 cheques have been produced as evidence and marked as P1 to P6 respectively.

38.Under cross-examination, Mr Lau explained that he kept the notes in record for reference and audit purpose. He denied the suggestion that he had in fact not received the notes. Mr Lau was shown a table showing a summary of cheques and payment vouchers prepared for Mr King's personal use between April 1994 and December 1995. There were altogether 24 cheques and only 14 notes, including the five for cheques paid to the defendant. Not all of the notes had the purpose of the cheque stated. Some of the cheques were paid to Lisa Li and some to some other individuals. In this period, the total sum paid to Lisa Li was in the region of $3.34 million. Mr Lau had mentioned that for sums exceeding $100,000, there would usually be notes accompanying the payment vouchers. But he added that it was not necessarily the case. It was up to Mr King to decide. If no note had been made, he would not ask Mr King about it.

Dr Au's evidence

39.Dr Au is currently an assistant professor in the electrical and electronic engineering department of HKUST. He is an expert in sound and voice analysis. His expertise is not in issue.

40.Dr Au had performed analysis on Wendy's voice in Tape 13 and 14 and the defendant's voice in the exemplar tape and the video tape by using a process known as Statistical Speaker Analysis ("SSA"). His task was, among other things, to compare Wendy's voice with the defendant's voice in the exemplar tape. This analysis is insensitive to pitch profile and "falsetto" disguise. In simple terms, "falsetto" disguise means a person speaking at an artificially high pitch. He concluded that the voices he had examined were likely of the same person.

Mr Poza's evidence

41.The defendant called Mr Poza first. It is, I believe, apt to set out his evidence at this juncture so that the experts' evidence can be considered together conveniently.

42.Mr Poza's expertise as a sound expert is also not in issue. After listening to the tapes, Mr Poza concluded that since the pitch was markedly different, Wendy's voice in Tape 13 and 14 could not be the defendant's. That was confirmed by comparing the spectrograms of Wendy's voice and the defendant's. He then proceeded to measure the difference by a process known as Long Term Pitch Analysis ("LPTA").

43.Mr Poza agreed that SSA is a powerful tool for speaker verification when properly used. He frankly admitted that he did not have Dr. Au's expertise in SSA and could not second guess about Dr Au's mechanics. Mr Poza had to make enquiry with other experts in USA who had the requisite expertise in SSA. He also conceded that all his theories would fall apart if there was a disguise in the defendant's voice he had examined. (According to Dr Au, LPTA is sensitive to "falsetto" disguise.) But Mr Poza doubted if the defendant could speak in "falsetto" in the exemplar tape for such a long time. It would require training, he said.

44.The experts had gone in some length to explain the technical aspects of their examinations and comment on the lack of the examination his counterpart had performed. But I do not think I need to set them out in detail here. The reason will become apparent later.

The defendant's evidence

45.I now turn to the defendant's evidence. Her evidence was taken in Cantonese without translation. Counsel had agreed that for the purpose of this judgment I could set out her evidence in English and if necessary quote her evidence in Cantonese. It is convenient to deal with her evidence chronologically under various headings.

How they met and became lovers

46.She first met Mr King in 1979 on a business occasion. Mr King was then the chairman of the Hong Kong Garment Manufacturers' Association. She was working as a personal assistant of Mr Murjani, the founder of Murjani International Trading Co Ltd, an international garment manufacturing and trading company. She was also the manager. They then became good business friends and Mr King had told her his personal background, things about his family and companies. In about September or October 1981, the defendant joined another company.

47.In mid-1982, she decided to start her own business. Mr King learnt of that and suggested to set up a company jointly with her. She would be responsible for its daily operation and he would promote its business by introducing clients. The defendant agreed. In July 1982, a company called Clipper Wendy Trading Company Ltd ("Clipper Wendy") was formed. The defendant held 12,000 shares. The rest of 48,000 shares were held by two nominee companies of Mr King's. It was Mr King who made the arrangement for the incorporation of Clipper Wendy. Clipper Wendy then started to trade. At the same time, her relationship with Mr King flourished. They became lovers in about April 1983.

48.It can be seen that her evidence in this respect was not inconsistent with what Mr King had said in his police statement except Mr King had not mentioned their intimate relationship and his shareholding in Clipper Wendy.

Mr King's promise

49.In April 1983, Mr King promised to buy her a flat of about 2,000 square feet in size with a sea view in mid-levels. There were two reasons for Mr King's promise, the defendant explained in cross-examination. First, Mr King considered that they would need a place to meet in private. He therefore suggested buying a flat. Secondly, it was Mr King's wish to buy her the flat because he liked to give her a gift and she liked to have a flat. It should be noted that apart from this promise, Mr King had only given her some items of jewellery, which did not appear to be exceptionally expensive.

50.According to her estimate, the flat would worth about $2,800,000. Mr King initially gave her $300,000 by cheque, ie, about 10% of the price. When she asked him for the balance, Mr King told her that he had cash flow problems. At most he could only raise $600,000, ie, about 20% of the price. The defendant then told him that if he was in financial difficulty, he needed not do it, and that he could pay her after his difficulty was over. But she did ask Mr King to pay her the price in full. They began to have arguments over this and other matters. Their relationship turned sour.

51.Under cross-examination, she was asked why did they not rent a flat when Mr King could not afford to buy one if their intention was to have a place to meet privately. She said renting a flat was not necessary because Mr King could see her at her flat on Stubbs Road. She was living there alone. When pressed further, she said that Mr King's wish to give her the flat was equally important. She agreed that the main reason for their breaking up was that Mr King made up excuses for not giving her the flat. She admitted that she was at that time in love with him but also interested in his money. She was not sure if love or money was more important.

Breaking up and transfer of Clipper Wendy's shares

52.In order to compensate her, Mr King promised to transfer 18,000 shares in Clipper Wendy held by one of his nominee companies to the defendant. But he did not mention anything about the flat. Later, Mr King said he was suffering from depression and needed long term rest at home. The defendant thought it was only an excuse for not seeing her. In about July or August 1983, she suggested that they should break up. On 27 September 1983, Mr King transferred 18,000 shares under his control in Clipper Wendy to her as promised. They saw again but Mr King did not mention about the flat any more. She was utterly disappointed.

53.Under cross-examination, she said Mr King had told her that the 18,000 shares were not intended to be a substitute for the flat. It was a compensation for his failure to buy her the flat. According to her estimate, the value of the shares was about $120,000.

54.After the break-up, the business of Clipper Wendy started to diminish. In 1984, the defendant started a relationship with another man. She married him in 1985. From time to time, Mr King and the defendant met to discuss about Clipper Wendy. She felt that Mr King was in fact trying to renew their relationship. They did not mention about the flat at all. After her marriage, the defendant did not want to continue the business relationship with Mr King. She therefore reduced Clipper Wendy's business gradually. In 1986, she suggested to Mr King to wind up Clipper Wendy. Mr King disagreed. He said he wanted her to keep Clipper Wendy as a memento of their relationship. He would transfer all the shares under his control to her, which was done later on 3 November 1986. The value of the shares, according to her estimate, was about $200,000. She denied the suggestion that what Mr King had done was to have a clean break with her. Since the transfer, she did not have any contact whatsoever with Mr King. In 1989, she emigrated to USA. She came back to Hong Kong occasionally but did not see Mr King.

Meeting again in about August or September 1994

55.In about August 1994, she came back to Hong Kong with a view to investing in the property market. She had with her $6 million for that purpose. $4 million was in Hong Kong. The balance was in USA.

56.One day in August or September 1994, she received a call from Mr King. He invited her to have dinner at the Grill Room of Mandarin Oriental Hotel. She readily accepted the invitation. At dinner, they had a happy time catching up on each other. At the end, Mr King said he would call her again when he returned from his trip.

57.Under cross-examination, she agreed that she did not have any contact, either by phone, letter or meeting in person, with Mr King since November 1986. Thus in November 1994, when she received the call from Mr King, she was very surprised. He invited her to dinner which she promptly accepted because she still cared very much about Mr King. She went on to say that over the years, although they had no contact whatsoever, their love had "sublimed". They occupied a very important position in the other's heart. They still cared very much about each other. But she did not express her feelings towards him during dinner, which lasted for almost three hours. It was because she had not thought of him at all over the years. She felt that Mr King might wish to revive their love. She however did not in particular watch out for him although she was already married. She said it would be fine if she kept her bottom line. She promptly agreed to have dinner with him again. She explained that although she had the feeling that he might want to revive their relationship, she was not sure. If she refused him, she would be making presumptions on his motive.

Meetings in November 1994 and delivery of 1st to 3rd cheques

58.On 2 November 1994, Mr King called the defendant in the morning, again inviting her to have dinner at 7:30 pm at the Grill Room of Mandarin Oriental Hotel. She agreed in order to catch up further with him. At about 6 p.m. that evening, the defendant received a call from an estate agent, Ms Mabel Lam. Ms Lam had previously taken her to see a property in Happy Valley. Ms Lam told her that the owner had accepted her offer and asked her to sign the provisional agreement and pay a deposit of $50,000. The defendant suggested signing the agreement the following day because her cheque book was at the Chai Wan office and she had a dinner appointment later that evening. Ms Lam said she was worried that the owner might change his mind as the defendant had requested completion to be made in March 1995. The defendant then called Mr King and told him what had happened. She suggested postponing the dinner by 45 minutes. She hoped she could then have the time to locate a friend nearby who could lend her $50,000. She did not have sufficient time to go back to her office in Chai Wan because she was making herself up. Mr King said he might be able to help her. After checking that the staff at the account department of his company was still around, he said he could arrange a cheque for $50,000 to be issued to her. The defendant accepted his help. She did not think it was inappropriate to accept Mr King's cheque. Unless she was sure that Mr King really wanted to revive their relationship, she would be making an assumption that he still loved her.

59.She then called Ms Lam that she could sign the agreement that evening. Ms Lam and her husband picked the defendant up at her home and they went to Mandarin Oriental Hotel together. They arrived at 7:30 p.m. The defendant went into the Grill Room and saw Mr King. He gave her an envelope. Inside the envelope was a cheque for $50,000. (This was the 1st cheque.) The payee's name was left blank. The defendant went back to the hotel lobby and asked Ms Lam for the name of the owner. The defendant then wrote Mr Wong's name on the cheque. She also signed on the provisional agreement which was dated 3 November 1995. Ms Lam then left with the agreement to meet the owner for him to sign on it.

60.The defendant returned to the Grill Room and told Mr King that she would repay him the money the following day. Mr King said it was not necessary. The cheque was meant to be a gift. She felt strange and asked him why. Mr King said that since seeing her again, he had missed her a lot and found out that he still loved her very much, and that after much consideration, he decided to buy her the flat he had promised years ago. He went on to explain that back in 1983, it was his true intention to give her the flat. But at that time, his younger brother, also a director of Wearbest Garment, was suing him for using Wearbest Garment's money without authorisation. (The action, the defendant later found out after the present proceedings commenced, was HCA 8716 of 1983.) Mr King was then unable to use money from Wearbest Garment to buy her the flat. At the same time, he sustained lost in his investments. He therefore had cash flow problems. But he subsequently in October 1983 made huge profit from trading in US currency. Eventually, he settled the matter with his younger brother. In 1985, he bought out all his brother's shares in Wearbest Garment. By 1994, he had accumulated a wealth of $200 million. Thus he was at last able to fulfil his promise to the defendant. Mr King also told her that he was in the course of distributing his wealth to his family. To achieve this, he was setting up various trusts overseas. He also mentioned to her how he would distribute his wealth among the family. He said he would also give money to people he cared for, including her. But he did not want his family to know about it.

61.Under cross-examination, the defendant was asked why Mr King did not buy her the flat in 1985 when he had no difficulty to do so. She said Mr King told her that his priority in 1985 was to use the profits he made to acquire full ownership of Wearbest Garment and to make further investment. In 1995, his wish was to distribute his wealth of $200 million to his family and those he cared for.

62.Hearing what Mr Kind had said, the defendant was very happy but she was also worried if any condition would be attached to the gift. She asked Mr King if she had to do anything should she accept his gift. Mr King said no. She asked him how to effect the purchase. Mr King then asked her to estimate the price of 2,000 square feet flat with a sea view at mid-levels. She made a rough estimate of $16 million based on a price of about $8,000 per square foot. Mr King agreed that the estimate was reasonable. She then told Mr King that he did not require such a large flat in Hong Kong as she was not here for most of the time. Mr King then said she could have the money and use if for whatever purpose she liked. The defendant told Mr King that she wanted to use the money to buy two flats for investment purpose. One was the flat in Happy Valley. The other was in Bonham Road. (A provisional agreement for this flat dated 15 November 1994 has been produced in this connection.) The total costs for purchasing the two properties would be about HK$6.1 million including 7% for incidental expenses.

63.Hearing this, Mr King said he would give her HK$6.1 million by 2 cheques first. He would then give her another HK$10 million by another 3 cheques a few months later. That evening, they decided to have dinner the following day.

64.On 3 November 1994, they met again at the Grill Room of the Mandarin Oriental Hotel for dinner. Mr King handed her an envelope with a cheque of HK$2.5 million inside, post-dated to 4 November 1994. The space for payee was left blank. Mr King told her that she could fill in the name of the payee herself, and that he had post-dated the cheque by one day so that if it were lost, the cheque could be countermanded. She put her name on the cheque. (This was the 2nd cheque.) The defendant was very happy. She again asked Mr King if she had to do anything in exchange for the money. He replied no.

65.They met again for dinner at the Taipan Grill in the Hong Kong Hotel on 16 November 1994. Mr King handed her a cheque for HK$3.6 million post-dated to 17 November 1994. The payee was also left blank. She put her name on it. (This was the 3rd cheque.)

66.At the end of the dinner, Mr King said that he had registered a suite at the hotel. He gave her the key and asked her to go up to the suite after dinner . He had something very important to discuss with her. The defendant suggested discussing there and then. Mr King refused because it was inconvenient. She asked if they could just talk. Mr King said yes and they would do it in the living room of the suites. She agreed.

67.In the room, Mr King told her that he thought she had dedicated too much time to her work. He said he wanted her to have a more relaxed life so that he could see more often. He asked her to pick a car of any brand at his expense. He also asked her how much she spent on clothing and jewellery, saying that he wanted to deposit a monthly sum into her account. She started to wonder if Mr King might be attaching conditions to these gifts, ie, to see him more often. She therefore refused to accept them. Mr King did not press her further. They chatted for a while before leaving the suite.

68.Under cross-examination, she did not answer the question if it was reasonable for Mr King, whom she had not contacted since her marriage until August 1994, would have suddenly suggested giving her $16 million as a gift without any condition. She simply said she hoped what Mr King had said, namely, the gift being unconditional was true. She confirmed that when she received the 2nd cheque from Mr King, she suspected that it might come with conditions. That was why she asked him if she needed to do anything in exchange.

69.According to the agreements, completion of the sales of the two properties did not take place until January and March 1995 respectively. But Mr King paid her the sum of $6,150,000 in November 1994. She agreed that she did not need to get the money then to complete the sale but it was Mr King who said he would pay her the money in November 1994.

70.She further said that when on 16 November 1994, Mr King asked her to go up to the room he had previously registered, she was already watching out of him. But she agreed to go to the room because she was hoping that what Mr King had said that the payment being unconditional was true. She refused to accept Mr King's suggestion to buy her gifts like clothing, cars, jewellery and monthly deposit in her bank account because she thought these gifts were conditional. She however did not ask Mr King if any condition was attached. Her explanation was again if she did that, she would be making presumption about Mr King's motive. Mr King had already said that the sum of $16 million was unconditional. If she asked that question, Mr King might think that she had assumed that he had an ulterior motive. She did not want Mr King to see her in that light. She went on to explain that Mr King owed her the sum of $16 million. So no condition would be attached. But for the new gifts, there might be conditions.

Meetings in May 1995 and delivery of the 4th to 6th cheques

71.The defendant returned to USA in early December 1994 and came back to Hong Kong in January 1995 for about 2 weeks during which she completed the purchase of the flats. She then returned to USA and came back to Hong Kong in March. Whilst in Hong Kong, Mr King and she met for dinner about once every 10 days. They usually had dinner at the Petrus Restaurant at the Island Shangri-La Hotel, or the Grill Room of the Mandarin Oriental Hotel. During the course of these dinners, Mr King would often flirt verbally with her, treating her as if she was still his lover. He called her "darling", "wife". He seemed to enjoy these heartily. She was in a dilemma. She thought he should not be doing this but she did not want to see him unhappy. So she did not stop him. Under cross-examination, she said what Mr King did was having a sexual fantasy with her. But she did not think he wanted to attach any condition on the gift of $16 million. He had not demanded anything when they last spoke in the hotel room on 16 November 1994. She thus had confidence in him that he would not attach any condition to the gift.

72.They met again for dinner at the Petrus Restaurant of the Island Shangri-La Hotel on 3 May 1995. Mr King did not hand her a cheque as he did on the 2 previous occasions. Instead, he said that he had registered a room at the hotel, and said he wanted to talk in the room after dinner. She asked him if this was a condition for the cheque. He said no. He asked her if she was happy with what he had done for her so far. When she answered yes, Mr King then asked her if she did not want to make him happy as well. She told him yes but if he wanted her to be his lover, it would not work out because she was married. Mr King said it did not matter. He was confident that she would realise that he was the best man in her life, and that she would eventually leave her husband for him.

73.Eventually, she agreed to go up to the room after dinner. In the room, Mr King handed her a cheque for HK$3.5 million post-dated to 4 May 1995, again with the space for the payee left blank. She later put her name on it. (This was the 4th cheque.) After chatting for a while, Mr King asked to make love with her. She refused. Later, they left the room.

74.Under cross-examination, she said she did not return the cheque to Mr King because it was handed to her before he made the request for sex. In her mind, she did not regard the request for sex a condition for the cheque. If that was really a condition and she had refused it, Mr King would stop payment on the following day. Initially, she was not sure if it was a condition but when the cheque was honoured, she knew that his request for sex was not a condition.

75.They met again on 10 May 1995 at the Petrus Restaurant of the Island Shangri-La Hotel. He had again registered a room at the hotel. Initially, the defendant thought Mr King would not request to have sex because she had already refused it a few days ago. She therefore agreed to go to the room. They went up to the room after dinner where he handed her a cheque for HK$3.5 million with the space for payee left blank. Again, the defendant put her name on it later. (This was the 5th cheque.) Mr King repeatedly said he wanted to make love with her. She ignored him. From his demeanour, she thought he was not feeling well. Eventually, Mr King left. She left later.

76.On 17 May 1995, they met again at the Petrus Restaurant of the Island Shangri-La Hotel. Mr King had again registered a room at the Hotel. At the room, Mr King gave her a cheque for HK$3 million again with the space for the payee left blank. Again, the defendant put her name on it later. (This was the 6th cheque.) Mr King said he wanted to make love to her but was refused. They departed unhappily. Under cross-examination, she said she did not tell Mr King that they should not go to the room. She thought if he made the request again, she would simply refuse him, which she did.

77.She agreed that Mr King's ulterior motive of giving her the 4th, 5th and 6th cheque was obvious. But she did not think that her repeated refusal had changed his arrangement of paying her the money. She had never asked Mr King to leave blank the payee for all the cheques. It was Mr King who had the cheques prepared in such a way to show his style. But to play safe, he post-dated them so that if he or she should lose it, he could countermand them on the following day.

78.They met again on 24 May 1995. This was their last meeting. Mr King was to go on an overseas trip on 28 May 1995 and wanted to see her again before he left. She at first declined. However, he insisted. She reluctantly agreed but told him not to register for a hotel room. They met at the Nadaman Restaurant of the Island Shangri-La Hotel. Mr King had reserved a private dining cubicle. At dinner, she told him that she was glad that he eventually fulfilled his promise. She thanked him for his gift. She said she wanted to remain his long time friend. Mr King said that was not enough. He wanted her to be his lover. He said that her husband would know about their affair sooner or later, one way or another and she should make alternative arrangements to be with him so she would not be left alone her husband broke up with her. She told Mr King that her husband would not know of their affair. However, Mr King said that he would.

79.She sensed that Mr King was threatening to let her husband know of their affair. So she gave him a problem. She told him that they could be together only if they married. Mr King said that this was not possible. After a while he said that it was not important, but he still wanted her to stay in Hong Kong half of the time every year. He promised her gifts of cars and jewellery. She refused.

80.Mr King then accused her of being callous, ungrateful and heartless. Her response was that she would not have gone with him to the hotel room on the previous occasions if she was callous and ungrateful. He said that it was the least she could have done. The conversation deteriorated into a heated argument and the meeting ended on an unhappy note.

81.Under cross-examination, she said she did not return the $16 million to him because Mr King had never said that payment was conditional up his request for sex. She did not think the request of sex was a condition because Mr King owed her $16 million, he having made and broken the promise back in 1983. When pressed further, she said it was not a matter of believing him if he really did not impose any condition for the gift. In her mind, he should have given her $16 million a long time ago. It was just a belated gift. She accepted the gift very comfortably because he had said that it was unconditional. The fact that he had made some other requests was a different matter. Had he intended his request for sex to be a condition, he would have stopped payment for the last three cheques. But he did not.

Contacts in July 1995

82.The defendant returned to the United States around mid June 1995. On 2 July 1995, Mr King paged her on her pager in the United States. She returned his call. He said that he was unhappy because she did not wait for his return in Hong Kong, and that he missed her and asked her to return to Hong Kong as soon as possible. She told him she had not fixed her plan of coming back to Hong Kong yet. He was disappointed and accused her of deliberately staying away from him. They had an argument over the telephone, which ended by Mr King saying that he wanted to see her back in Hong Kong soon.

83.Mr King again paged her on 10 July 1995. When she returned his call, he asked her when she would return to Hong Kong. She told him she had not yet worked out a date. He then told her that if he was unhappy, he would see that she would be unhappy too. He intimated that he would let her husband and friends know of their affair. They then had another argument, and she ended the conversation by telling him not to page her again, that she would call him when she had planned her schedule.

84.Over the next week, Mr King continued to page her and returned his calls a few times. On each occasion he would ask her when she was returning to Hong Kong.

85.Finally, she told him not to call or page her again, and that she would speak to him in person when she returned to Hong Kong in early 1996. He objected to the date and demanded her to return to Hong Kong within 3 months, saying he could not wait for her for such a long time. She refused and hung up on him. Mr King then paged her continuously every day but she did not return his calls.

86.Mr King then tried to contact her through Ms Yip but the defendant simply ignored her calls.

Contact with the police

87.On or about 7 October 1995, the defendant received a fax from the staff of her company in Hong Kong that some officers from the Commercial Crime Bureau visited her Hong Kong Office in connection with an investigation they were conducting and asked her to contact Mr Tsoi Hei Ming of the Bureau. (That is Sergeant 21500.) She immediately called CCB from USA. She told the person answering the call that she was Wendy Chan and wanted to speak to Mr Choi. She was then put through to Mr Choi who related to her briefly Mr King's complaint and requested her to make a statement. The defendant said she would consider it with her lawyer. The telephone conversation lasted for several minutes. Police later had contact with her solicitors.

Tapes and her voice

88.Back in 1980s she had met George on business meals but they seldom talked to each other. She did not have the boat trip with George as alleged. Except saying hello, she did not talk to George on those occasions.

89.She agreed that before she called Mr Poza for examination of her voice, she already knew that Tape 13 and 14 were on the plaintiffs' lists of documents. She had also listened to the tapes and read the transcripts. She agreed that the male voice should be Mr King's. But she denied that Wendy's voice was hers. However, she could not explain why Mr King did not come up with a female voice that was similar to hers. She said she did not know what Mr King had in his mind.

90.The video tape of her sons was taken by her personally in 1989. Over the years, she had kept about 20 home video tapes of the family. She did not pick one that featured her appearance because she felt embarrassed and did not want to involve her family members and relatives.

91.It was suggested to her that her voice in court was lower in pitch than her voice in the exemplar tape. She said she was not aware of that. She added if that was the case, it might be due to the fact that she had not slept well in the two previous nights. Because of the publicity involved in this case, she was very stressful. She was asked to listen to an extract of what she had said in the exemplar tape and repeat it in court.

No partnership

92.She denied that she had ever entered into a partnership with Mr King on that she had borrowed HK$16,150,000 from him as alleged. The sum was in fact a gift. It was made by several cheques because Mr King did not want to alert his wife or George about it. She had used part of the sum of $615,000 given by Mr King in November 1994 to buy the two properties because she had them mortgaged. Because of Mr King's gift, she did not have to use any of her own money to buy the two properties. She used the sum of $10 million paid in May 1995 for other investment purposes. She had not used them to buy any property at all.

93.Finally, she agreed that Mr King was an organised man. He kept a pocket diary with him and would usually mark his appointments with her well in advance. She knew that when George was married, Mr King did not buy him a flat. She also knew that Lisa Li was Mr King's "second wife".

Issues

94.The issues before me are essentially whether the payment of $16,150,000 was a gift or whether it was Mr King's contribution to the partnership's capital or a loan.

A gift?

95.$16,150,000 was by any standard a substantial gift. Mr King even did not buy a flat for George when he got married. Between 1994 and 1995, he paid on average $170,000 a month to Lisa Li, the "official" second wife. "Who was the defendant that Mr King would give over $16 million as a gift?", Mr Leong, SC, counsel for the plaintiffs asked.

96.The defendant's case is that it was not only a gift but also a belated fulfilment of Mr King's promise to buy her a 2,000 square feet property with a harbour view in mid-levels made back in April 1983 when they were having an affair. It was Mr King's expressed wish to revive their affair after they met again in 1994. By necessary implication, the defendant is suggesting that Mr King gave her the money, hoping he would be able to win her back after all these years. Is that believable?

97.The affair between Mr King and the defendant lasted very briefly for about 3 to 4 months in 1983. According to the defendant, it was Mr King who suggested buying her a flat so that they could have a place to meet privately. When it was put to her that they could meet in her own flat in Stubbs Road, she switched her emphasis on Mr King's desire to buy her the flat to appease her. Assuming that Mr King did make the promise, it did not appear from the evidence before me that he was serious about it. Mr King was not particularly generous to the defendant. What he had given her was just a few items of jewellery that did not appear to be very expensive. In connection with his promise to buy the flat, the best he could do was to raise a further sum of $300,000 in addition to the $300,000 he had already paid her and to transfer 18,000 shares of Clipper Wendy (worth about $120,000) to her as compensation. Shortly after they broke up, Mr King had made huge profits from trading in foreign exchange in October 1983. By 1985, he had bought out his younger brother. He was then clearly in a position to fulfil his promise. Yet he did not do so because according to what he told the defendant on 2 November 1994, his priority was then to acquire full ownership of Wearbest Garment and to make further investment. What he had given her subsequently in November 1986 was merely all the shares under his control in Clipper Wendy, which were not particularly valuable (worth about $200,000). These all indicated that his affair with the defendant did not then occupy a particular important position in Mr King's agenda. He was simply not willing or ready to give the gift as promised even when he was able to do so. They had no contact whatsoever for more than 9 years before they met again in August 1994. Given the circumstances, what had prompted Mr King to suddenly change his mind and decide to fulfil his promise?

98.The defendant said Mr King told her that he had accumulated substantial wealth and was in the process of distributing his wealth to his family and those he cared for. Since they met again, Mr King found out that he still liked her very much and wanted to fulfil his promise. To bolster her case, she went on to make two points. First, Mr King suggested to her not to wind up Clipper Wendy but to keep it as a memento of their relationship. That was why he transferred all the shares under his control to her in November 1986. Secondly, despite the fact that they had no contact whatsoever for more than 9 years, their relationship had "sublimed".

99.The suggestion that Mr King was in the course of distributing his wealth was of course not borne out by evidence. Mr King for some reasons had transferred part of his assets outside Hong Kong in 1995. But they were still under his control. He had made no will either. I am unable to accept her evidence that Mr King had suggested keeping Clipper Wendy as a memento. If anything, it was a clear indication that he intended the transfer of the shares under his control to be a clean break of their relationship. I agree with Mr Leong's submission that it made better sense if Mr King had kept the shares and that it was a futile attempt to set the scene for the contact allegedly initiated by Mr King in August 1994. Her evidence that their feelings for each other had "sublimed" was, Mr Leong submitted, perverse. With no contact whatsoever for more than 9 years, any relationship between them must have died. This was particularly so when their affair only lasted for just three or four months and the defendant could not tell whether it was Mr King's money or person that won her heart. With respect, I entirely agree. Further, if what the defendant's evidence were true, there was no reason why she did not express her feelings towards Mr King when they first had dinner in August 1994. She explained she had not done so because she had not thought of him at all. That contradicted her own evidence that Mr King was very important in her heart over the years.

100.Mr Pang, counsel for the defendant, submitted that by the time they met again, Mr King, an old and wealthy gentleman, had got all what he wanted except the defendant. With his immense wealth, using $16 million to win her back did not cause him much. I must confess I have considerable doubt about this. After all, their affair was very brief and, as observed, I do not think the relationship he had with the defendant was not particularly important to him. In any event, it must have died after the long lapse of time. What made the defendant so special that Mr King would think it worth the while to spend such a huge fortune to win her back after all these years was not borne out by the evidence before me.

101.Further, if that were his intention, then obviously he would regard money as his most powerful tool. After all, it was the defendant's own evidence that in the past she was interested in both Mr King's person and his money. By the time he was about to give her the 4th cheque, he had already spent $6,150,000 and yet had not got what he wanted. Why did he not request for sex first before handing over the 4th cheque to her? The cheque for a further $3.5 million was certainly the bait in the circumstances. He could easily use that to lure the defendant. Why would he make the request for sex only after he had given that away? Further, after the meeting on 5 May 1994, it must have become obvious to Mr King that the defendant would not succumb to his desire. Why would he still give her the 5th cheque without first requesting for sex? He wasted an extra $3.5 million and failed to get what he desired. Yet when he gave her the 6th cheque, he repeated the same tactic, which, he must be aware by then, was doomed to failure. I fail to see any reason why he would have behaved in such a way if his real intention were to use his money to win the defendant back.

102.The defendant's evidence that she did not regard the gift as conditional is singularly unconvincing. All along, she did not regard any condition had been imposed on the payment of $16 million. From the outset, she was very concerned about the payment being conditional. She repeatedly said in evidence that she would not accept the cheques if any condition was attached. She was mindful that Mr King might wish to revive their relationship. But she readily accepted Mr King's repeated assurance that it was unconditional. On 16 November 1994, Mr King invited her for the first time to the hotel room. From what he had said, he obviously wanted to revive their relationship. She refused to accept gifts like clothing, jeweller and cars clearly because she thought it was conditional upon the renewal of their relationship. Yet she still believed that the payment of $16 million was unconditional. If Mr King had thought of giving her other gifts in order to revive their relationship, he would certainly use the sum of $16 million for the same purpose. It was obviously more substantial in value and hence more attractive.

103.After mid-March 1995, Mr King started to address her intimately as "darling" and "wife". Thus his desire to renew the relationship had not dwindled away. Instead, it grew. The defendant was also aware of that because she thought he was having a sexual fantasy with her. He turned his fantasy into action on 3 May 1995 when he explicitly requested for sex. His intention must have become obvious. Yet she did not tell him off or return the cheque to him. She said she did not regard the request for making love as a condition for the gift because if that was the case, Mr King could have countermanded the cheque after she had refused his request. She therefore did not consider the demand for sex was a condition. That was also her explanation for the acceptance of the 5th and 6th cheque when similar request for sex was made and refused.

104.If her evidence were true, it must be obvious to the defendant that when the 4th cheque was given to her, Mr King expected to have something in return from the defendant for it. It was sex to say the least. Whether it was called a condition was beside the point. What mattered was he did not expect to give away the cheque free. In such circumstances, given her stance not to accept any payment with any condition attached, she should have returned the cheque to him and refused to accept the 5th and 6th cheques. I am unable to accept her story.

105.The defendant later said in her evidence that she did not regard the request for sex as a condition for the gift despite what happened during their meetings in May 1995 because by then she considered the sum of $16 million as something that Mr King owed her. It was a belated gift, she said. What she did not explain was why she did not hold such a view from the outset when Mr King said he would fulfil his promise of buying her the flat. She was careful enough to ascertain from Mr King repeatedly if she had to do anything in exchange for the gift. In my view, she was making this up when she went along to supplement her very unconvincing evidence in this respect.

106.The defendant's evidence is also unsatisfactory in some other aspects, e.g., why Mr King had post-dated the cheques and why he did not name her as a payee on the 2nd to 6th cheques. Further, her explanation that he made the payment by 5 cheques was also unconvincing. He was the majority shareholder of Wearbest Garment. He did not need any prior approval from other directors or shareholder before he could utilise his credit facility. Nor did he need to account to them.

107.For the above reasons, I find the defendant a poor and unreliable witness. I do not see any truth in her evidence that the payment of $16,150,000 was a gift. I will come back to her evidence on the issues concerning her voice later.

A partnership

108.According to Mr King's statement to the police, it was the defendant who contacted him through a broker Ms Yip in August 1994. It was the defendant's own evidence that she purposely came back to Hong Kong in 1994 with a view to investing in property market. It is more likely than not that she took the initiative to approach Mr King, a wealthy man whom she had a brief affair before, hoping that he might be interested in investing with her. She did it through Ms Yip in order to save possible embarrassment if Mr King did not want to see her. A good test of the water indeed.

109.Mr Pang submitted that Mr King was a careful and organised man. He was very careful about money. In another instance of a loan to another woman, he had obtained from her a promissory note. In the past, when he had previous business dealings with the defendant, he caused to be formed a limited company, Clipper Wendy. There is no reason why he should not have put in place a formal business structure or documentation for the alleged partnership or loan. Mr Leong submitted that unlike at the time of Clipper Wendy when they hardly knew each other, Mr King must have developed some trust for the defendant when he decided to enter the partnership with her in 1994. In his police statement, Mr King did mention that formal documents were yet to be formalised. I agree with Mr Leong. Their relationship in 1994 was not purely a business one. They were once lovers although the previous relationship had ended on an unhappy note. Mr King was obviously interested in renewing or developing a romantic relationship with the defendant. It is therefore not surprising that he would agree to invest in the partnership and that they had not made any formal documentation on the partnership yet.

110.Mr King's endorsements of "Loan to Wendy" on the notes accompanying the payment vouchers were clear indication that the cheques were not meant to be a gift. Mr Leong submitted that endorsing on the notes was consistent with Mr King being a careful, organised and meticulous person. Mr Pang however submitted that either the notes or the Mr King's endorsements thereon were all manufactured for this litigation. Counsel pointed out that the endorsements were written at odd places on the notes. All the other notes for other payments to other individuals had the purpose of the payment stated. Mr King who had full access to the notes simply manufactured the evidence to bolster his allegations that it was a loan.

111.Mr Pang's submission ignored the fact that in October 1995, Mr King had made a report to the police on a case of partnership. A statement giving details of the partnership had been made by him in the company of a barrister. He had also given Tape 14 to Ms Wong and the police. If he had manufactured the endorsements on the notes, he would be making up evidence that contradicted his own complaint. Would a careful person like Mr King do that? I do not think so. Further, if he was to manufacture evidence, why did he not simply state on the notes that they were for the purpose of the partnership or alternatively state in the police statement that the cheques were in fact a loan. The fact that other notes did not state the purpose of the payments clearly demonstrated that given the special nature of the payments to be made to the defendant, Mr King was careful enough to make the endorsements "Loan to Wendy" on the relevant notes. It was entirely consistent with his careful way of handling matters concerning money.

112.In connection with the notes, Mr Pang also submitted that Mr Lau's evidence was dubious. I do not think I need to deal with his submissions in length. Suffice it to say that I have carefully considered Mr Lau's evidence and I am satisfied that he is a truthful witness and I accept his evidence in full. There might exist some minor discrepancies in his evidence but they did not affect his credibility as a whole.

113.The sums were paid by six cheques in two lots. This is consistent with what Mr King had said in his police statement. Monies were invested in a real property partnership at different stages, namely November 1994 and May 1995. The fact that the payees for the cheques were all left blank was also consistent with Mr King's case. They were left blank so that the necessary names for completing the transactions could be filled in.

114.For the foregoing reasons, I accept Mr King's statement to the police on 6 October 1995 and find that there existed a partnership between him and the defendant as disclosed there.

Issues concerning the defendant's voice

115.I now turn to the Tape 13 and 14. I accept that Mr King had told Ms Wong that Tape 14 contained a telephone conversation between him and the defendant on 10 July 1995. I also accept Lydia's evidence on how she had discovered Tape 13 and how she and her younger sister had handled it. According to Dr Au, which is unchallenged, the female voices in both tapes were likely to be the same person. The question is: was it really the defendant's voice?

116.The defendant denied that it was her voice. (She did not deny that on 10 July 1995, she made a call to Mr King from USA.) By necessary implication, she was suggesting that Mr King had manufactured them. The difficulties with this contention are obvious. First, Mr King was familiar with her voice. If he dared to fabricate evidence, he should have come up with one that was nearer to the defendant's voice. Secondly, he had handed only Tape 14 to his solicitor and the police. Tape 13 was found among his belongings after his death by Lydia. Why did he not give Tape 13, which recorded a longer conversation, to them as well? Thirdly, there was no reason why he needed to come up with two tapes when one would possibly do. Fourthly, Wendy spoke assertively and with emotional outburst and other mood variations that fit the context. It must be beyond any scriptwriter and rehearsals. And on the evidence before me, there is no suggestion that Mr King might have another girlfriend also known as "Wendy" at the material times. Fifthly, if the conversations were scripted, a much simpler version containing the essential parts would do. There was for example no reason to refer to their intimate relationship and Mr King's request for sex in such detail. Lastly, when Mr King handed Tape 14 to his solicitor and the police, he did not know he was about to die in three months. I do not think he would dare use a fake that was on the face of it so markedly different from the defendant's voice.

117.For the foregoing reasons, I reject the suggestion that Tape 13 and 14 were manufactured for this litigation. In my view, if Tape 14 did not record the conversation between Mr King and the defendant, he would not have given it to his solicitor and the police. I find that Wendy's voice in both Tape 13 and 14 was in fact the defendant's. My finding is supported indirectly by the evidence of George and the police officers, which I accept.

118.According to George, the way the defendant spoke had left a clear impression on him, although he had only saw her on six occasions some 20 years ago. (The discrepancy in his evidence as to when he first met the defendant is minor and does not affect his credibility.) She was assertive and fluent. This fit the way Wendy spoke in Tape 13 and 14. George also confirmed that the defendant's voice was nearer to Wendy's. The voice in the exemplar tape was too sharp.

119.The police officers had listened to a woman's call in connection with Mr King's complaint. They knew indirectly that it was from a Wendy Chan. Both officers had a clear impression of her voice: aggressive and fluent. She seized every opportunity to speak and even asked Sergeant 21500 to wait until she had finished first when he tried to interpose. This is consistent with the way Wendy spoke in Tape 13 and Tape 14. Both officers further confirmed that Wendy's voice was nearer to the woman's voice they had listened to. The defendant herself admitted that she had called Sergeant 21500 in connection with the case. There is no evidence before me to suggest that any other female also known as Wendy Chan had called him in that regard. I am therefore prepared to accept that it was in fact the defendant who made the call. The way she spoke as noted was consistent with Wendy's.

120.Dr Au's expert evidence also confirms my finding that Wendy's voice was in fact the defendant's. Both experts agreed that SSA is a powerful tool for voice verification. Mr Poza did not have Dr Au's expertise in respect of SSA. He started off with a conclusion that Wendy's voice and the defendant' voice were different by listening to their voices and comparing the spectrograms. He then used LTPA to quantify the difference. On the other hand, Dr Au employed SVV to examine if the two voices were of the same person or not. No doubt, his method was more advanced and powerful. Given Mr Poza's concession that he did not have the requisite expertise in SSA, I do not think he is qualified to comment on the lack of Dr Au's examination. I would accordingly prefer Dr Au's evidence to Mr Poza's. Dr Au was of the view that Wendy's voice and the defendant's voice were likely to be of the same person. This I accept.

121.Both experts agreed that human ear is the best tool to examine human voice. I have carefully listened to the defendant and how she gave evidence in court. To me, her voice unnaturally sharp and exceptionally monotonous. I noted that at times her pitch in court was not as high as that in the exemplar tape. When pressed, she could only say that she was emotionally stressed and did not have enough sleep. She was a very careful witness and gave her evidence slowly and in a composed way. In my view, she was simply trying her best not to give away her normal voice and the normal way she spoke: fluent and assertive if not aggressive. I have no hesitation to conclude that the defendant was speaking in disguise by raising her pitch while giving evidence in court and in the examination done by Mr Poza.

122.What remains is the video tape on her sons. I accept the experts' evidence that when a person speaks to a young toddler, like what the defendant was recorded to have done to her sons, he tends to raise his voice. This accords with common experience. It is therefore unsurprising that the defendant spoke in a higher pitch there. I noted that the way she spoke as recorded on the video tape sounded more natural than how she gave evidence in court. I do not find the defendant's explanation why she had chosen the particular video tape in question convincing. If her concern were genuine, exposing her two sons would be the last thing a caring mother should do. Counsel accepted that the video tape was composed of various extracts. In my view, she had deliberately chosen those extracts that had her voice recorded in a higher pitch than normal. I do not accept the defendant's voice recorded there was her normal voice.

123.Tape 13 and 14 are consistent with Mr King's statement to the police and corroborate his case on the partnership.

124.There remain two further points Mr Pang had raised in his submissions.

Lack of opportunity to tailor her case

125.Mr Pang submitted that since the parties' lists of documents and witness statements were simultaneously exchanged, the defendant had no opportunity to tailor her case to the documents or the plaintiffs' tapes.

126.The plaintiffs' list of documents and the first set of witness statements were all dated 1 November 1999. While the tapes and their transcripts were listed, none of the witness statements dealt with the contents thereof. Lydia's witness statement did describe how she had discovered Tape 13 among Mr King's belongings and how she had handled it. She however did not refer to its contents. The defendant's list of documents and first witness statement were dated 30 October 1999. Obviously, she did not deal with the tapes. She did not have the opportunity of listening to them and considering the transcripts yet. The identity of Wendy whose voice was recorded in Tape 13 and 14 was only put in issue subsequently. The parties then applied for directions for experts' evidence and supplemental witness statements to deal with this issue. When the defendant approached Mr Poza, she had already listened to the Tape 13 and 14. They are clearly damaging evidence. Not surprisingly in a desperate attempt to undermine the credibility of the tapes, she resorted to disguising her voice.

Attack on pleadings

127.Mr Pang submitted that the plaintiffs' pleadings gave some indication of a lack of credibility. The original statement of claim dated 12 October 1995 was made while Mr King was still alive. But it only pleaded a loan of $16,150,000 with a fixed repayment date of 10 September 1995. That date had not been referred to since. There was no explanation given for this date. Nor was there any reference to the alleged partnership. Contrast that with Mr King's statement to the police made six days ago on 6 October 1995 where he referred to the partnership, his suggestion to break it and the defendant's refusal to answer. This was not a loan and not an agreement to convert the partnership into a loan. Mr Pang complained that no explanation had been given for this. Mr King was at the material times legally represented. Tape 14 had been handled to his solicitor on 9 October 1995. No mistake could have been made. Mr Pang further submitted that the further and better particulars filed by the plaintiffs was not entirely consistent with the case now put to the defendant. Although the particulars mentioned that the defendant's time and effort in overseeing decoration etc. of the flats would be counted towards her capital contribution to the partnership, the detailed breakdown of the contributions as set out there did not reflect this. Nothing was allowed for the costs of management.

128.Mr Leong submitted that by 12 October 1995, i.e., when the statement of claim was filed, Mr King had already delivered Tape 14 to Ms Wong and had already given his statement to the police on a case of partnership. It was the solicitors who did the pleadings. It is probably a tactical decision made by the solicitor to simply plead a case of loan. It should not bear upon Mr King's credibility at all. Mr Leong further contended that the failure to provide for cost of management in the further and better particulars did not advance the defendant's case. When the particulars were filed, Mr King had already passed away. In his police statement, Mr King had already stated that formal documents of the partnership were yet to be finalised. Details would then be ironed out when formalities were attended to. In the circumstances, the particulars provided by the plaintiffs could very well be their doing best, as the administrators of Mr King's estate, to reconstruct the details of the partnership arrangement from the available materials.

129.I accept Mr Leong's submissions. It is apparent from the contents of Tape 14 that Mr King intended to terminate the partnership and converted it into a loan. The response from the defendant at the end of the conversation was rather equivocal. It is thus probable that the solicitors who drafted the statement of claim made a tactical decision to simple plead a case of loan. I also accept that in the absence of documents formally setting out the details of the partnership, the further and better particulars would be the best the plaintiffs could give in the circumstances. Minor discrepancies are tolerable. I do recognise the lack of explanation on the repayment date as originally pleaded in the statement of claim. But I do not think it necessarily damaged the plaintiffs' case when the matter is considered in the round.

Conclusion

130.For the foregoing reasons, I find that the plaintiffs have proved their case on the partnership between Mr King and the defendant. The payments of $16,150,000 by Mr King to the defendant were in fact his contribution to the partnership capital.

131.On the evidence before me, I am unable to come to a finding that the partnership had been terminated on 10 July 1995. According to Tape 14, it was Mr King's wish to terminate the partnership and convert his payments into a loan. The defendant's response was in my view equivocal. Further, in Mr King's own statement to the police made subsequently on 6 October 1995, he did not refer to the termination of the partnership or conversion of the payments into a loan. It is thus obvious that he did not regard what had happened on 10 July 1995 sufficient for such purposes. Accordingly, I will hold that the partnership was terminated upon Mr King's death on 20 December 1995.

132.I will grant the following relief to the plaintiffs:

(1) A declaration that the partnership between Mr King and the defendant was dissolved upon his death on 20 December 1995.

(2) An order that a receiver be appointed to receive the debts now due and owing and other property assets or effects belonging to the partnership.

(3) An order that the following accounts and inquiries be taken and made, that is to say,

(a) an account of the partnership debts and liabilities as at 20 December 1995;

(b) an account of all receipts and payments, dealings and transactions of the defendant in respect of the partnership business from 20 December 1995;

(c) an inquiry as to what has become of the property and assets of the partnership since 20 December 1995.

Costs

133.Costs should follow the events. I do not see any reason to the contrary. I will therefore made an order nisi that costs be to the plaintiffs, to be taxed if not agreed. The costs order will become absolute after 14 days of handing down of this judgment.

134.Finally, I would like to express my gratitude to counsel for their able assistance in this matter, especially on the very technical evidence of the experts although at the end I do not find it necessary to deal with it in depth.

Representation:

Mr Alan Leong SC and Mr Francis Yip, instructed by Messrs Boase, Cohen & Collins, for the Plaintiffs

Mr Robert Pang, instructed by Messrs Susan Liang & Co., for the Defendant