Glories Faith Investment Ltd v. Bruce Ramsey Abbott
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HCA1087/2006 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE ACTION NO. 1087 OF 2006 --------------------------- BETWEEN
---------------------------- Before : Mr Recorder Shieh, SC in Court Date of Hearing : 10-14 & 25 September 2007 Date of Judgment : 21 January 2008 --------------------------- J U D G M E N T --------------------------- The dispute 1.In this action, the plaintiff (“Glories Faith”) claims repayment of a debt in the amount of HK$3,000,000. The debt was allegedly incurred by the defendant (“Mr Abbott”) in an oral loan agreement allegedly made between Mrs Gloria Khin Khin Hla Green (“Mrs Green”) as lender and Mr Abbott as borrower in 2002. Although Mrs Green was said to be the lender, by a Deed of Assignment dated 28 April 2006 she assigned the benefit of the loan to Glories Faith, a company owned and controlled by her. Notice of assignment was given to Mr Abbott on 28 April 2006. 2.Mr Abbott does not dispute that he has received the benefit of HK$3,000,000 from Mrs Green (as will become clear later, not all of the HK$3,000,000 was paid to him : the bulk of the said HK$3,000,000 was in fact paid towards the purchase price and incidental expenses for a property acquired by Mr Abbott). He does not dispute that he has received the Notice of assignment. His case is that the HK$3,000,000 was a gift from Mrs Green, not a loan. And in any event the doctrine of estoppel operates to preclude recovery of the loan (if there was one). 3.The primary issue in this case is, therefore, whether the HK$3,000,000 paid by Mrs Green in 2002 for the benefit of Mr Abbott was a loan, or a gift, or something else. A secondary issue is whether, even if there was a loan, Mrs Green (and hence Glories Faith) is estopped from recovering it. The background facts 4.Mrs Green owned and operated two companies by the name of McRink. One is a Hong Kong company called McRink Surveyors Company Limited (“McRink HK”); the other is a BVI company called McRink Surveyors (BVI) Limited (“McRink BVI”). McRink HK was in the business of inspection and quality control. Put very briefly, it provides services to clients by inspecting their products and ensuring that they were safe and had met the requisite quality and standards. 5.In March 1990 Mrs Green met Mr Abbott. At that time Mr Abbott was working as Quality Manager for a UK company called Betacom plc (“Betacom”). The context for Mrs Green’s encounter with Mr Abbott was that at the time Betacom wished to engage McRink HK as the inspection agency for Betacom. 6.Mrs Green became acquainted with Mr Abbott. They started a joint venture business in December 1990 called Nerium Company Limited (“Nerium”). Mr Abbott owned 51% of Nerium and Mrs Green owned the other 49%. This joint venture last only about five months, and in May 1991 Mr Abbott sold his 51% shareholding to one Mrs Inez Anne Ewing and resigned as a director of Nerium. According to Mrs Green, she and Mr Abbott “could not see eye to eye on several matters”. 7.During the period from 5 April 1990 to 10 June 1991, Mrs Green and Mr Abbott had an intimate personal relationship. During this period Mr Abbott lived in Mrs Green’s apartment in Conduit Road. Mrs Abbott moved out of Mrs Green’s Conduit Road apartment on 10 June 1991 and moved to a place in Robinson Road. The time of the termination of the personal relationship coincided broadly with the end of the joint venture between them. 8.Then in November 1992, Mr Abbott moved into Mrs Green’s Conduit Road apartment again because at the time he was suffering from acute appendicitis and he needed a place to stay where care could be given to him. Mrs Green’s Conduit Road apartment had a lot of space available. There were also two maids. 9.Mr Abbott stayed in Mrs Green’s Conduit Road apartment until the end of 2002, when Mr Abbott moved into a property in a development in Kowloon called Central Park (near the Olympic Station). 10.The funds for the purchase of this property came from the HK$3,000,000 provided by Mrs Green (the subject matter of dispute in this action). 11.I should add that even though during this period Mr Abbott and Mrs Green lived “together”, it is common ground between the parties that this was not a romantic, intimate, or sexual relationship. Mr Abbott lived in a separate room. As Mr Abbott put it, they were companions and confidants. 12.Returning to the business side of things, starting from August 1993 Mr Abbott and his company namely BA Consultants Limited (“BA”) began to do consulting work for McRink HK. For this, Mr Abbott/BA were paid a sum of HK$25,000 per month. Later, this monthly fee was increased. A bonus also came to be paid at the end of the year starting in 2000. Further, in 2004 and 2005 McRink HK “paid” BA/Mr Abbott by providing them with “free inspections” — Mr Abbott had his own inspection business and his own clients, and from time to time McRink HK would make available its staff to provide services to Mr Abbott’s clients; Mr Abbott need not pay McRink HK for such services. In effect, Mr Abbott/BA received payment “in kind” from McRink HK for their services. 13.Mr Abbott did not work full time for McRink HK. He had other business activities, such as a telecom repair services business in the UK, a car alarm business in Hong Kong and a frozen food and prawn farming business in the Philippines. 14.For the purpose of his prawn business in the Philippines, Mr Abbott had borrowed money from Mrs Green. This happened on more than one occasion. These loans were not evidenced by any IOUs. They remained unpaid to this date. They are not claimed in this action. 15.To complete the picture about the Philippines, between 1995 and 2005 Mrs Green and Mr Abbott often spent their holidays in the Philippines. In about 1996 they decided to purchase a house there as their future residence after their retirement. They purchased a company called Demdikes Inc. (“Demdikes”). This company held a piece of land in the Philippines. The intended retirement home was to be built on this piece of land. Mr Abbott and Mrs Green agreed to share the building expenses equally. Construction work began in 1996. Later, the building expenses became unaffordable to Mr Abbott and Mrs Green bought out his shares in Demdikes, though Mr Abbott continued to assist in checking the progress of the construction and arranging for financing of the building works. 16.In about September 2002 Mr Abbott and Mrs Green had a conversation about Mr Abbott’s intended purchase of a property. The events leading to that conversation and the precise contents of that conversation are a matter of dispute between the parties. I shall have to come back to that at a later stage of this judgment. But the upshot of that conversation is that by a series of payments over October and November 2002, Mrs Green caused McRink HK to pay a total of HK$3,000,000 for Mr Abbott’s benefit. A large part of the said HK$3,000,000 was paid directly towards the purchase price and incidental expenses of Mr Abbott’s purchase of a property at Flat H, 22nd floor, Tower 2, Central Park, Hoi Ting Road, Kowloon (“the Central Park Property”). 17.The breakdown of the payment of the said HK$3,000,000 is set out below :
18.At around the same time, Mrs Green caused three sums of money (HK$144,600, HK$188,990 and HK$2,602,800) totalling HK$2,936,390 to be paid for the benefit of Miss Angel Sam (“Miss Sam”) in connection with her purchase of a property at Flat C, 42nd floor, Tower 7, Banyan Garden, 863 Lai Chee Kok Road, Kowloon (“the Lai Chee Kok Property”). Miss Sam is a long-serving employee of McRink HK. According to Miss Sam, she moved into the Lai Chee Kok Property in March 2005. 19.Later, in late 2004, Mrs Green caused another sum of HK$63,630 to be paid to Miss Sam. The total of the sums thus paid for the benefit of Miss Sam therefore became HK$3,000,000, which was the same as the total of the sums paid for the benefit of Mr Abbott. A breakdown of these various payments is set out below :
20.The nature of these payments and the circumstances under which they were agreed to be made available are a matter of dispute. Mrs Green and Miss Sam both say that these constituted a loan of HK$3,000,000 by Mrs Green to Miss Sam; Mr Abbott says that this was, like the HK$3,000,000 paid to him or for his benefit, a gift to Miss Sam. I shall have to come back to this later. 21.After completing the purchase of the Central Park Property, Mr Abbott moved out of Mrs Green’s Conduit Road apartment and moved into the Central Park Property in December 2002. But this was only a “parting” between Mrs Green and Mr Abbott in terms of places of residence : in terms of business Mr Abbott and BA continued to provide services to McRink HK; and there is nothing to suggest that the “companionship/confidant” type of relationship between the two of them has changed. 22.Also in around December 2002, Mrs Green caused 2 (out of 20) shares in McRink HK to be transferred to Mr Abbott. Bought and sold notes and instruments of transfer were signed and dated 27 December 2002. The Annual Return of McRink HK dated 29 March 2003 showed Mr Abbott to be the holder of 2 shares in McRink HK. A company known as Eterna Financial Ltd (“Eterna”) was shown to be the holder of another 2 shares in McRink HK. The remaining 16 shares were shown to be owned by Cocklesford (Holdings) Limited, a BVI company (there is no dispute that these 16 shares were in reality owned by Mrs Green). 23.The 2 shares in the name of Eterna represented a gift by Mrs Green to Miss Sam. Both Miss Sam and Mrs Green testified that the gift was made in 1995. However, the company registry records are slightly confused, in that in McRink HK’s annual return dated 29 March 1996, only 1 (but not 2) out of 20 shares was stated to be owned by Miss Sum. This remained the case in the annual return dated 29 March 1999. Then in the annual return dated 29 March 2000, 2 shares were stated to be owned by Eterna. Eterna was a BVI company. Mr Abbott’s counsel put it to Miss Sam that Mrs Green’s son and Miss Sam were shareholders; Miss Sam said that the shares were bearer shares and were kept in the safety deposit box of a company called Verity (Mrs Green’s private company). Nothing much turns on who the shareholders were or where the share certificates were kept. It is not disputed that these shares under Eterna’s name represented a gift to Miss Sam. 24.Both Mrs Green and Mr Abbott gave evidence that the 2 shares transferred to Mr Abbott in December 2002 represented a gift made by Mrs Green to Mr Abbott. They are also in agreement in their evidence that the “transfer” would not take effect until after Mrs Green’s death. A similar understanding existed in relation to the earlier gift of 2 shares to Miss Sam. The share certificates for Miss Sam’s shares and for Mr Abbott’s shares were kept by Mrs Green. 25.Similar gifts were made of the shares in McRink BVI. For the sake of convenience I shall only refer to the gift of the shares in McRink HK in the context of these gifts of shares. 26.The circumstances under which the gift of shares was made to Mr Abbott are a matter of dispute. I shall deal with this further below. 27.Some time in March 2004 Mr Abbott decided to upgrade his property by selling the Central Park Property and buying another (better) property (“the New Property”). He asked Mrs Green for a letter certifying his remuneration (for the purpose of obtaining a mortgage loan) and a letter dated 8 April 2004 was issued by McRink HK stating Mr Abbott’s monthly salary to be HK$35,000. 28.More importantly he asked Mrs Green for a loan of HK$1,000,000 for the purpose of such a purchase. Mrs Green agreed to make such a loan. 29.On 13 May 2004, a cheque of HK$1,000,000 (drawn on McRink’s BOA account) was paid to Mr Abbott. On the same day, Mr Abbott signed an IOU to McRink HK acknowledging the debt. According to this IOU, the loan was interest free, and repayable within four years. Up to the date of the trial Mr Abbott has repaid HK$750,000 (part of this was done by way of offsetting bonuses receivable by Mr Abbott from McRink HK). HK$250,000 remains outstanding. This trial is not concerned with recovery of this balance — it is not due yet. 30.The Central Park Property was not yet sold when the purchase of the New Property was completed. So Mr Abbott had to rely on a mortgage. The Central Park Property was eventually sold and completed in October 2004 and the proceeds were used to discharge the mortgage on the New Property in November 2004. 31.On 12 August 2005, a Memorandum of Sale and Purchase was signed between Miss Sam and a company called Duiker Limited (“Duiker”). According to Miss Sam the shareholders of Duiker were Mrs Green and herself, with Miss Sam holding her share on behalf of Mrs Green. In short, Duiker was Mrs Green’s company. 32.The Memorandum of Sale and Purchase related to the “sale and purchase” of a property known as Flat B, 3rd floor, Block B, Joyful Building, Tsuen Wan, New Territories (“the Tsuen Wan Property”) for the price of HK$850,000. Duiker was stated to be vendor and Miss Sam was stated to be the purchaser. An assignment was executed on the same day. 33.Despite the name of “Memorandum of Sale and Purchase”, according to Miss Sam, no purchase money changed hands and this was in fact a gift. Miss Sam said that she paid the stamp duty of HK$8,000 odd herself. The Tsuen Wan Property was the flat which Miss Sam and her family used to live in, before she (and her family) moved into the Lai Chee Kok Property in March 2005. As at the time of the assignment in August 2005, the Tsuen Wan Property was vacant. The significance of this transaction (and a related transaction in late 2006/early 2007 in which Miss Sam sold the Tsuen Wan Property) will become clear later. 34.Three days later, on 15 August 2005, a Letter of Non-Disclosure was signed by Mr Abbott on McRink HK letterhead. An identical letter was signed by Mr Abbott on McRink BVI letterhead. Nothing material turns on the fact that there are two identical letters. 35.It is common ground that the first paragraph and the penultimate paragraph of this letter referred to a recent incident when Miss Sam made “unauthorized borrowings” from McRink HK. The remainder of the letter imposed obligations of confidentiality and non-compete on Mr Abbott; it also went on to state that Mr Abbott had asked for his 10% share in both McRink HK and McRink BVI “now” (that is, as of the time the letter was written) rather than to wait until Mrs Green died. The letter said that Mrs Green had decided to give him the shares “now” as Mrs Green’s sons and sister could refuse to give him the shares (presumably this was a reference to after Mrs Green’s death). The letter then went to provide, in effect (this also appeared to be the understanding of the parties before me), that while Mrs Green was still alive Mr Abbott would only be entitled to 5% of the net profits of the companies. The letter also provided for limitations on to whom the shares might be sold, and what was to happen to the shares when Mr Abbott died. 36.At or around the time of this Letter of Non-Disclosure, Mrs Green gave the share certificates for Mr Abbott’s shares in McRink HK and McRink BVI to him. 37.The circumstances under which Mr Abbott’s Letter of Non-Disclosure was signed are in dispute. I will deal with this below. 38.I should add that Miss Sam also signed similar Letters of Non-Disclosure (on McRink HK and McRink BVI letterhead) dated 15 August 2005. 39.Over the years, Mrs Green has made a number of wills. For present purposes, two are relevant : one dated 8 September 2000 (“the 2000 Will”) and another dated 7 October 2005 (“the 2005 Will”). Both were in very simple form. Each will was accompanied by a Letter of Wishes (“LOW”) of the same date, setting out Mrs Green’s wishes in greater detail. 40.Irrespective of the niceties of the law relating to the status of letters of wishes, the parties before me have treated the LOWs as part of the Wills and I shall proceed on this basis. 41.In the 2000 Will, Mr Abbott and Miss Sam were appointed executors. Mr Abbott was given HK$1,000,000; in the 2000 LOW, Mr Abbott was given the right to reside in Mrs Green’s Conduit Road apartment. 42.In the 2005 Will, Mr Abbott and Mrs Green’s two sons were appointed executors. The HK$1,000,000 gift to Mr Abbott remained. 43.On 10 October 2005 (3 days after the making of the 2005 Will and the 2005 LOW), a board meeting for McRink HK was held. It was attended by Mrs Green, Mr Abbott, Miss Sam, and Mrs Green’s two sons Simon Green and Stuart Scott Green. Not all of them were directors. Though described as a board meeting, the minutes of that meeting suggested that it was more in the nature of a meeting among family and close associates for the purpose of discussing a host of personal and business matters. In this meeting, Mrs Green’s 2005 Will and 2005 LOW were read out. It also recorded that Miss Sam had returned her 10% shares to McRink HK and that Miss Sam had been asked by Mrs Green to resign from her directorship in McRink HK. McRink HK’s annual return dated 29 March 2006 did show that her shares were transferred to Cocklesford (Holdings) Ltd on 17 October 2005. 44.In February 2006, the relationship (both on a business level and a personal level) between Mr Abbott and Mrs Green broke down. A letter of cancellation dated 14 February 2006 was signed. By the said letter, Mr Abbott’s obligations of confidentiality and non-compete under the Letter of Non-Disclosure were released. In return, Mr Abbott agreed to return his 10% shares in McRink HK and McRink BVI to Mrs Green and agreed that he no longer had any rights to any assets in these companies. 45.The circumstances surrounding the breakdown in relationship are, as would come as no surprise to anyone reading this judgment so far, in dispute. Again this will be dealt with in greater detail below. 46.On 28 April 2006 Mrs Green assigned the alleged HK$3,000,000 loan to Glories Faith. Notice of assignment was given on the same day. Glories Faith’s solicitors issued a demand on 2 May 2006. The Writ herein was issued on 20 May 2006. 47.On 15 December 2006, Miss Sam entered into a provisional sale and purchase agreement for the sale of the Tsuen Wan Property (which, according to her, had been left vacant since its assignment to her in August 2005 — she said she paid for the management fees and did some renovations to it) to a Mr Kei Ka Hung for the price of HK$1,068,000. A deposit of HK$30,000 was paid. A formal sale and purchase agreement was signed on 28 December 2006. Completion took place on 30 January 2007 48.Miss Sam’s witness statement was signed by her on 14 December 2006, a day before the provisional sale and purchase agreement. According to her, she gave instructions to about three estate agency companies to try to sell the Tsuen Wan Property in the middle of 2006. According to her, the estate agent only rang her up with the offer after she had signed the witness statement. 49.On 22 December 2006, Miss Sam gave standing instructions to her bank to make monthly payments of HK$5,000 to an account of Mrs Green’s at Standard Chartered Bank. The reason for such payments was, according to Miss Sam, to repay the loan of HK$3,000,000 which Mrs Green extended to her by the payments in late 2002 as described above. This alleged purpose of the payments is challenged by Mr Abbott. Consideration of the evidence 50.I now turn to consider the primary factual issue in this case namely whether the payment of HK$3,000,000 for Mr Abbott’s benefit was in the nature of a loan or a gift. 51.I start with the question of burden of proof. 52.The parties are not in dispute that where money is proved or admitted to have been paid by A to B, then in the absence of any circumstances suggesting a presumption of advancement, there is prima facie an obligation to repay the money; accordingly if B claims that the money was intended as a gift, the onus is on him to prove this fact (Chitty on Contracts (29 ed.) (Vol.1) §38-229, applied in Lam Cheung Ping v. Chan Lai Ping Queenie HCA2167/2004; 5 June 2007, Deputy Judge Louis Chan). 53.In this case, given that the money was paid by Mrs Green for the benefit of Mr Abbott (though the funds were paid by cheques drawn on McRink’s BOA account, the evidence is that the ultimate source of the payments were Mrs Green’s private funds held by an entity called Verity), the burden is on Mr Abbott to prove that he is not liable to repay the money. 54.Mr Abbott described the circumstances surrounding the payment of the HK$3,000,000 in paragraphs 18 to 25 of his witness statement. He also supplemented it orally. In short :
55.Mrs Green set out the circumstances surrounding the payment of the HK$3,000,000 in paragraphs 15 to 20 and 22 to 33. She also supplemented it orally. In short :
56.Miss Sam gave evidence largely corroborative of Mrs Green’s evidence. 57.As there was no IOU for the alleged loan, the issue of whether the HK$3,000,000 was a gift or a loan turns on the credibility of the oral testimony of the witnesses. In assessing credibility of witnesses, the Court has to have regard to contemporaneous documents, demeanor and manner of witnesses when giving evidence, and inherently probabilities of the evidence. Inherent probabilities are to be evaluated against the surrounding or background facts. 58.I bear in mind the limited assistance of demeanor. Further, the Court only had the opportunity to observe the demeanor and manner of a witness during a short period of time when he or she testifies. That said, I have the following comments on the witnesses :
I should state that, as between Mrs Green and Mr Abbott, it is not a case where I can say, in a blanket way, that whenever there is a conflict between their evidence I would prefer one’s evidence over the other’s. Neither had impressed me entirely. There are parts of Mrs Green’s evidence which I prefer over Mr Abbott’s; and there are parts of Mr Abbott’s evidence which I prefer over Mrs Green’s.
59.I should state at this early juncture my finding on the central issue, and then explain my reasons in making the finding. 60.I find that the HK$3,000,000 was a loan, not a gift. This is my finding even if the burden of proof had been on Glories Faith. 61.A number of key factors are pertinent. 62.First, there is the inherent unlikelihood of someone in the position of Mrs Green making a gift of such magnitude to Mr Abbott without some reason and without informing Mr Abbott of such reason. 63.People normally make gifts for a reason : the reason could be love and affection; it could be to celebrate something worth celebrating; it could be to express one’s gratitude. The more substantial the gift, I would expect the underlying reason to be more substantive. And usually the maker of the gift would explain why the substantial gift is given (unless the context makes it clear). Every case depends on its own facts. 64.In this case I cannot see anything in the relationship between Mr Abbott and Mrs Green for Mrs Green to want to make such a substantial gift to Mr Abbott. It is common ground that whatever romantic or intimate attachment between Mrs Green and Mr Abbott had long ceased by the time the payments were made. No doubt they were personal companions, and Mr Abbott had helped out in the business (for which Mr Abbott and BA were remunerated). But that is a rather flimsy basis for the making of an unexplained HK$3,000,000 gift. 65.Mr Abbott’s evidence is that when Mrs Green promised to make a gift of HK$3,000,000 she did not say why she was making such a gift and he did not ask why. He just thought that it was a generous gesture and he accepted. I find this hard to accept. Ordinarily if someone is offered a substantial gift without any accompanying reason, the normal reaction (even if it were against the background of a long standing personal companionship, and even if he were minded to accept it) would be to inquire into the reason for the gift. Mr Abbott said that he did no such thing. When I asked him why he thought such a gift had been made to him, he gave a rambling answer about the amount of time that they had spent together, the things he had done for her and the places that they had been to together. But those were not very sound reasons. The distinct impression I got from observing Mr Abbott was that Mr Abbott was finding it difficult to address the matter directly and he was trying to fudge this issue. 66.Mr Abbott suggested that Mrs Green was a person of a generous disposition, and he referred to instances when she had sent money to her friends (one example being the sending of GBP500 to a lady friend in the UK). According to him, she had also sent large sums of money (the amounts were not specified by him) to her two sons. And he said that Mrs Green had helped to finance the acquisition of a property by Ms Petra Roberts (her son’s former girlfriend). In my judgment, these incidents (even if made good) do not go towards showing a propensity of making an unexplained substantial inter vivos gift to Mr Abbott. 67.The second pertinent factor is the fact that the total of the purchase price for the Central Park Property and the incidental expenses paid by Mrs Green was only HK$2,908,825. It was not quite HK$3,000,000. A payment of HK$91,175 was made in order to top up the total amount to HK$3,000,000. According to Mr Abbott, this amount of HK$91,175 was not the amount required for renovating the Central Park Property though he could not recall the exact renovation costs. 68.The significance of this factor is this. According to Mr Abbott’s evidence, Mrs Green agreed to make the gift after Mr Abbott had told Mrs Green that the price of the property he had found (there is some dispute as to whether on the same occasion Mr Abbott had told Mrs Green that he had already found a property which he wanted to purchase, but that is not material for present purposes) was about HK$3,000,000. Mrs Green then said “I will buy it for you.” 69.If Mrs Green’s making of a gift was prompted by information that Mr Abbott wanted to buy a property worth about HK$3,000,000, a natural way in which Mrs Green could have acted was to agree (and tell Mr Abbott) that she would pay for the flat. In such a case she would have completed the gift by paying HK$2,908,825 (being the purchase price plus the incidental expenses) without paying the final “top up” payment of HK$91,175. The sum paid by Mrs Green would not be HK$3,000,000. 70.Another way in which she could have acted was to agree to (and tell Mr Abbott) that she would pay for the flat and the renovation expenses. In such a case she would have to pay not just the HK$2,908,825 but HK$2,908,825 plus whatever renovation costs which Mr Abbott might incur. In such a case the total sum paid by Mrs Green would still not be HK$3,000,000. 71.It is possible, in theory, for a person to agree to gift a fixed sum of HK$3,000,000 to another upon learning that the latter needed about HK$3,000,000 to purchase a property. That might be along the lines of thinking “If you need about HK$3,000,000, I’ll round it up and give you HK$3,000,000 and let you spend it in the way you see fit.” However, on Mr Abbott’s own evidence this is not his case. According to Mr Abbott (upon being pressed on this point), Mrs Green did not say “I would give you HK$3,000,000” (I would note here that this contradicts his witness statement where he said at paragraph 21 that Mrs Green said that she would buy him the flat “by giving him HK$3,000,000.”) 72.When Mr Abbott was asked why, if Mrs Green had not said she would give him HK$3,000,000, Mrs Green would pay a “top up” sum to make up a round sum of HK$3,000,000 at the end (bearing in mind his evidence that Mrs Green did not say that she would give him HK$3,000,000), Mr Abbott said that it was presumably because Mrs Green had agreed with Angel and Mr Abbott that they would each get HK$3,000,000. But that immediately contradicts his earlier oral evidence that Mrs Green did not say she would give him HK$3,000,000. 73.And then, when asked why Mrs Green did not pay Mr Abbott more money to defray the renovation costs, Mr Abbott’s answer was that it was presumably because he did not ask. But he offered no sound reason why he should limit his final request to a sum just to make up the round sum of HK$3,000,000. HK$3,000,000 happened to be the approximate purchase price Mr Abbott mentioned to Mrs Green when he was asked. It cannot possibly have the effect of imposing any sort of constraints on Mr Abbott’s mind when he asked Mrs Green for the last payment. 74.Mr Abbott had great difficulties on explaining this part of the case. Overall, I find Mr Abbott’s evidence on this highly unconvincing. I reject his evidence. 75.I also reject the notion that both Mr Abbott and Mrs Green regarded, in their own minds, that the amount of the gift was fixed at HK$3,000,000 just because the sum of HK$3,000,000 had been mentioned by Mr Abbott in the context of giving an indication of how much the purchase would approximately be. 76.On the other hand, the payment of the top up amount to make up a final balance of HK$3,000,000 is entirely consistent with Mrs Green’s case that it was a straightforward loan of HK$3,000.000. In this regard I accept Mrs Green’s evidence that it was a loan. 77.I am aware that there is no IOU in this case, but at the end of the day I do not think that not too much weight is to be placed on the absence of an IOU.
78.In her 2000 Will and LOW, Mrs Green left Mr Abbott a sum of HK$1,000,000. Even after payment of the HK$3,000,000 to him in 2002, Mrs Green in her 2005 Will and LOW still left him a sum of HK$1,000,000. However, the making of a testamentary disposition of HK$1,000,000 does not necessarily mean that Mrs Green was a person of such generous disposition that she would be prepared to make an inter vivos gift of HK$3,000,000 to Mr Abbott as alleged. The probative value of this testamentary gift is minimal. 79.And I place little weight on the fact that Mrs Green has somehow not “deducted” or “set off” the HK$3,000,000 loan when she made her 2005 testamentary gift of HK$1,000,000. If the HK$3,000,000 was a loan, one would expect it to be repaid during the lifetime of Mrs Green and there is no inconsistency between the fact that (i) a HK$3,000,000 loan remained outstanding as at the time of the 2005 Will and (ii) Mrs Green had made a testamentary gift of HK$1,000,000 to Mr Abbott in her 2005 Will. I note that, whilst Mr Abbott contends that the 2004 loan of HK$1,000,000 to him was in reality made to him by Mrs Green (and not McRink HK), the outstanding balance as of October 2005 was likewise not “set off” or taken into account by Mrs Green in her 2005 Will. 80.Whilst on the subject of wills, I would like to deal with the question of Miss Petra Roberts (Mrs Green’s son’s former girlfriend) in connection with a point made by Mr Abbott’s counsel in closing submissions. One example of Mrs Green’s generosity is said to be Mrs Green’s gift of HK$2,500,000 to Miss Roberts, mentioned in the meeting on 10 October 2005 (when the 2005 Will and LOW were read out). However, Mr Abbott’s counsel also referred me to the fact that in the October 2005 LOW it was stated that (among others) Miss Petra Roberts had already been given their expectations whilst Mrs Green was alive and might not expect any further benefit under her death. This can be turned around and used as a point against Mr Abbott, in that this might suggest that if Mrs Green had in fact made an inter vivos gift to a person, she would remove any testamentary gift to that person in her will. In the present case, the HK$1,000,000 testamentary gift to Mr Abbott, contained in the 2000 Will actually remained in Mrs Abbott’s 2005 Will. It can therefore be argued that this tends to show that the HK$3,000,000 was not a gift but a loan. I do not want to get overly bogged down on this point, because this is not something which has been investigated in any detail in the oral evidence of Mrs Green. Suffice it to say that I have considered this point and found it to be of marginal relevance to the central issue in this case. 81.One feature of this case is that although the key issue (namely whether the payment of HK$3,000,000 was a gift or a loan) is a relatively simple one, the factual issues raised by the parties are numerous. Many such factual issues are hotly disputed, and call for an assessment of contested oral testimony. Much debate has centred on whether a witness was lying in his or her evidence on the particular point, and the truthfulness of the witnesses on these matters is said to be “relevant to credibility”. 82.Sometimes a disputed fact X is said to be relevant to credibility because it is said that fact X (say, the making of another gift) makes it more likely that the evidence of one party on the central is true (say, because it tends to show a propensity to be generous). Sometimes an issue of fact is said to be relevant to credibility simply because if a witness can be shown to be untruthful or unreliable in his/her evidence on that factual issue (which is not the central issue), it can be said that he or she is more likely to be untruthful or unreliable on the central issue. 83.The problem with focusing too much on such factual issues as matters “relevant to credit” is this : Unless the fact is undisputed or relatively easy to demonstrate, the ascertainment of that fact (or of who is telling the truth as to that fact) can turn into a trial within a trial, and hence detract from one’s attention on the real issue in the case. 84.Further, unless the relevance of the fact is clear (as opposed to tangential), the time and effort spent on investigating that fact is going to be disproportionate. 85.There is also the well-known fact that sometimes people lie (or give untruthful evidence) for reasons which do not impact on their credibility on the central issue. 86.In light of the above, suffice it for me to say that in coming to my findings of fact on the central issue I have considered all of counsel’s written and oral submissions on such factual issues and my factual findings have taken them into account. In deference to counsel’s effort and time spent on exploring some of these matters, I state some of my conclusions below.
87.In fairness to Mr Abbott, I have considered the possibility (in view of my comments above as to Mrs Green’s reaction to Mr Abbott’s girlfriend) whether this could be a case where Mrs Green had truly intended to make a gift to Mr Abbott when relationships were good but, because things had turned sour on a personal level, then decided to launch a vendetta against Mr Abbott by claiming that the HK$3,000,000 was a loan. However, on reflection, the fact that the loan was only demanded after relationship had turned sour on a personal level is itself a neutral factor, because it is equally consistent with the scenario that when relationships were good, Mrs Green was content for the loan to remain outstanding for some more time but when relationship turned sour, she saw no further reason why the debt should continue to remain unpaid. Having considered it, I am of the view that it does not detract from the other evidence in favour of a loan and my conclusion about the nature of the transaction is unaffected by my comment on Mrs Green above. 88.I now come to the question of the nature of payment of the HK$3,000,000 to Miss Sam. The nature of this payment is disputed.
89.In conclusion I find that not only has Mr Abbott failed to discharge the burden of showing that the HK$3,000,000 was a gift, Glories Faith has succeeded in proving that the HK$3,000,000 was a loan. 90.This leaves the issue of estoppel. This can be briefly dealt with. 91.There could be no estoppel by representation. Mrs Green never made any representation that the loan would not be enforced. Mere inaction or absence of demand could not, on the facts of this case, amount to a representation that the loan would not be enforced. And since Mr Abbott’s factual case is that the transaction was not a loan at all, he cannot possibly say that he relied on any representation that the loan would not be enforced. 92.There can be no estoppel by convention either. The parties had not acted on the basis of any shared mistaken assumption. Mrs Green had no mistake. She said the HK$3,000,000 was a loan and I have held that it was a loan. It is not even a case of a “unilateral mistake” (with reference to paragraph 67(1) of Mr Abbott’s closing submission). It is not Mr Abbott’s case that he was mistaken. He put forward a factual case as to the nature of the agreement which was rejected. I find that he was not labouring under any misapprehension as to the nature of the transaction. In any event, I reject Mr Abbott’s argument on unconscionability. It was said that had Mr Abbott known that he would be facing a demand for HK$3,000,000 he would, at the time when the 14 February 2006 cancellation letter was signed, have insisted on a different kind of deal. This assumes that Mrs Green would have agreed to such a deal if it were put forward by Mr Abbott. That could only be a matter of speculation by Mr Abbott. In fact nothing has been put before me to suggest that Mr Abbott stood any chance of successfully obtaining Mrs Green’s agreement to this revised deal. 93.I therefore reject the estoppel arguments without hesitation. 94.In view of my findings on the loan, it is not necessary for me to deal with the resulting trust issue raised by the Statement of Claim. 95.In order not to lengthen this judgment (which is already long bearing in mind the relative simplicity of the central issue) I have not made detailed comments or findings of all the factual or legal arguments so enthusiastically explored and argued before me by counsel. I have considered all of them, and the reason why I have not dealt with them in detail in this judgment is because in my judgment they do not detract from my conclusions in this case one way or the other. 96.I grant judgment in favour of Glories Faith in the sum of HK$3,000,000. For the sake of simplicity I order that interest shall run from 9 May 2006 (the time for payment under Glories Faith’s solicitors’ demand dated 2 May 2006) until judgment at judgment rate and thereafter also at judgment rate until payment. There shall also be a costs nisi in favour of Glories Faith.
Mr Cheung Kam Wing, Adonis, instructed by Messrs Y.L. Yeung & Co., for the Plaintiff Miss Wendy Bien, instructed by Messrs C.O. Chan & Co., for the Defendant | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cases cited in this judgment
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Further hearings and rulings under HCA 1087/2006