Case Document

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DCCJ 6673 / 2001

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 6673 OF 2001

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BETWEEN
	LAI YUET SAU	Plaintiff
	and
	NGAN WAI FONG	Defendant

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Coram:	His Honour Judge Thomas Au in Court
	(open to public)

Date of Hearing: 26,27,28,29 November 2007, 19 & 20 March 2008

Date of Handing Down Judgment: 9 April 2008

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JUDGMENT

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1.The Defendant Ms Ngan has been running a pet shop in Tai Po. The Plaintiff Ms Lai says that on 1 December 1997, Ms Ngan sold to her 51% interest in the pet shop business. Ms Lai also says she has since made a loan in a total sum of HK$160,000.00 (by way of part of her entitlement in the dividends) to Ms Ngan.

2.Ms Lai now claims for a declaration that she was a 51% partner of the pet shop business, which was dissolved on 3 March 2001. She also claims (a) repayment HK$160,000.00 as a loan made to Ms Ngan through various dividends already declared, and (b) HK$240,000.00 as 51% value of the partnership assets as at 3 March 2001. Ms Lai also seeks an order for account and inquiry, as well as an injunction to restrain Ms Ngan from excluding her access to the books and records of the partnership[1].

3.Ms Ngan denies having agreed to sell 51% share of the business to Ms Lai. There is thus never the alleged partnership. She also denies Ms Lai has ever made the alleged loans to her.

4.The fundamental issues I have to decide at trial are thus:

(1)	Whether Ms Ngan agreed to sell 51% share of the business to Ms Lai.
(2)	Whether Ms Lai has made any loan in the sum of HK$160,000.00 to Ms Ngan.

Background

5.The following relevant background, unless otherwise stated, are undisputed or unchallenged.

6.Ms Ngan was married to one Mr Chiang in 1986. They were eventually formally divorced pursuant to a petition filed by Ms Ngan in May 1997. They have one son.

7.Mr Chiang had been a habitual gambler. He was also convicted and imprisoned for trafficking in dangerous drug in 1989. He was released from prison in about September 1993.

8.At the material time between 1994 and March 2001, Ms Ngan had been the only registered proprietor of the business under the name of Tai Po Pet Shop, having the shop in Tai Po. Notwithstanding this, it is common ground that Ms Ngan’s father has a 25% interest in the business.

9.Ms Lai was formerly an assistant correctional service officer. In 1996, she joined the Food, Environment and Hygiene Department as an assistant hawker control officer.

10.One Mr Lai Kwok Cheung was also a correctional service officer apparently at an inspector grade. At all material times, Mr Lai Kwok Cheung was the boyfriend of Ms Lai.

11.In about end of 1993 or early 1994, Mr Lai Kwok Cheung and Ms Lai came to know Ms Ngan. Later, they had become good friends. Apparently, Mr Lai Kwok Cheung had also become an intimate boyfriend of Ms Ngan. The three of them occasionally would live together at a flat in Tai Po owned by Mr Lai Kwok Cheung.

12.From the evidence presented to the Court, Mr Lai Kwok Cheung was a dorminant and strong figure amongst the two ladies. They would generally listen to him and follow his instructions or “advices”.

13.In around 1997, in particular after Ms Ngan had filed the divorce petition, Mr Chiang was apparently not happy with the pending divorce. He had been going to the pet shop to cause various harassments and disturbances. It is also Ms Lai’s own evidence (which I accept) that Mr Chiang would even come to the shop to take away various merchantable commodities without making any payments.

14.On 1 December 1997, Ms Ngan and Ms Lai signed a Chinese document at Mr Lai Kwok Cheung’s Tai Po flat. It is stated in the document (“the Document”) that Ms Ngan as a 75% owner of Tai Po pet shop would sell 51% share in the business to Ms Lai for the price of HK$240,000. It also provides an acknowledgment for the receipt of this sum, and that Ms Lai from then onwards would have the rights to deal with all matters and interests of the pet shop.

15.It is common ground that when this was signed, Mr Lai Kwok Cheung was present.

16.However, what is hotly disputed at trial is whether a lady named Ms Wong Lan Tai was in fact also present there and signed the Document as a witness at the same time. It is similarly hotly disputed as to the reasons for and the circumstances under which the Document was prepared and signed. The parties also dispute as to whether the stated purchase price was in fact paid.

17.Thereafter, it is common ground that Ms Lai had been involved in the affairs of the running of the pet shop. In particular, she was added as signatory to the pet shop’s bank accounts. Mr Lai Kwok Cheung was also so added to be a signatory. Ms Lai was responsible for the preparation of the ledgers of the business, although it was Ms Ngan’s sister who helped out in preparing the tax returns documents. Ms Ngan says Ms Lai helped out as a part-time worker and she was paid for that. Ms Lai says she participated the affairs as a partner and was not paid.

18.In February 2001, disputes arose between the parties, and Ms Ngan did not allow Ms Lai to go to the pet shop nor to take away the business’s books and records.

19.In March 2001, the registered proprietor of the business registration of the pet shop was changed to Ms Ngan’s sister.

20.In April 2001, Ms Lai brought the present claim against Ms Ngan.

Whether Ms Ngan agreed to sell 51% share of the business to Ms Lai

21.Ms Lai and Ms Ngan both give evidence at trial. Ms Wong also gives evidence for Ms Lai.

Ms Lai’s case and evidence

22.Ms Lai’s case and evidence can be summarized as follows.

23.Respectively in January and August 1997, Ms Ngan borrowed from Ms Lai a total sum of HK$100,000.00 free of interest. Each time Ms Lai lent Ms Ngan HK$50,000.00. When the sums were lent, there was no discussion on when they should be repaid. Later, after the total sum of HK$100,000.00 was lent, an IOU was signed by Ms Ngan to confirm the borrowing, since it appeared that Ms Ngan was then unable to make repayment.

24.A month or so after August 1997, Ms Ngan further asked Ms Lai to lend her another HK$100,000.00. Ms Lai later refused. Ms Ngan then suggested to sell 51% share of the pet shop business to Ms Lai as (a) she had no money to repay the previous loan, and (b) she did not want to run the business anymore as she was unhappy, apparently because of the on-going divorce and Mr Chiang’s harassment.

25.Ms Lai eventually agreed to purchase the shares of the business. On 31 December 1997, at Mr Lai Kwok Cheung’s flat, Ms Ngan hand drafted two copies of the Document. Ms Ngan and Ms Lai both signed each of the original handwritten copies, and each of them kept one copy. In other words, they each should have in their possession a handwritten and signed copy of the Document. Ms Lai then gave HK$140,000.00 cash to Ms Ngan as part of the payment of the purchase price, and she further tore up the IOU to signify using the HK$100,000.00 outstanding loan to set-off the rest of the purchase price.

26.After they had signed, Ms Lai then asked Ms Wong, who was her friend and happened to be invited to the flat to have dinner with them that evening, to also sign the two hand written copies of the Document as a witness.

27.Ms Wong gives evidence in support of Ms Lai’s evidence to the extent that she signed two handwritten originals of the Document in front of Ms Ngan and Ms Lai, after they had signed. She also says she saw Ms Lai handing over a stack of cash to Ms Ngan, who then counted it. However, she accepts that she had not heard the discussions amongst them and Mr Lai Kwok Cheung when they were preparing the Document, and she herself had not counted the cash.

Ms Ngan’s case and evidence

28.Ms Ngan denies ever borrowing the initial HK$100,000.00 loan from Ms Lai as alleged.

29.Further, although accepting that she drafted and signed the Document, Ms Ngan’s case and evidence is as follows.

30.At around late 1997, she was heavily troubled and harassed by Mr Chiang in light of the on-going divorce. In particular Mr Chiang had been going to the pet shop to harass her, and cause troubles.

31.She sought advice from Mr Lai Kwok Cheung, as he was the prison officer who supervised Mr Chiang when Mr Chiang was in prison. Mr Lai Kwok Cheung suggested and advised her that she should pretend to have sold the majority interest in the business to him, so that he could have proper authority to deal with and to deter Mr Chiang from further harassing her and the pet shop business. He said he needed something in writing so that he could show it to Mr Chiang when needed. Later, he suggested that the sale should be made on the face of it to Ms Lai, as it would be inappropriate and inconvenient for him, being Mr Chiang’s former correctional officer, to be formally involved.

32.Ms Ngan, at that time having developed an intimate and close relationship with him and having trusted him, accepted Mr Lai Kwok Cheung’s suggestion.

33.Thus, on 31 December 1997, she hand drafted the Document at Mr Lai Kwok Cheung’s flat. The contents were dictated to her by Mr Lai Kwok Cheung. She had only hand written one copy of the Document. After writing out the Document, she and Ms Lai signed on it. Ms Lai then made a further copy out of the Document by using the fax machine in the flat. After that was made, Mr Lai Kwok Cheung then said it would be better to have a witness signed on the document to make it more credible. He instructed, and Ms Lai then scribbled a signature (which was different from her own) at the space marked for the witness on the fax copy. Ms Lai then further made a copy out of this fax copy by the use of the fax machine. This later fax copy (bearing Ms Lai’s scribbled signature as a witness) was given to Ms Ngan for her keeping.

34.It is Ms Ngan’s evidence that no money had ever changed hands for the stated purchase price whether by cash or by setting off against any loans. It is so because the Document was made only for the purpose of giving Mr Lai Kwok Cheung something in hand to stop Mr Chiang from further harassing her and the pet shop business. She never intended to sell any shares of the business to Ms Lai.

Discussion

35.After hearing and considering the testimony of Ms Lai and Ms Ngan, together with the documentary evidence presented and the common background set out above, I reject Ms Lai’s evidence for the following reasons.

36.First, Ms Lai’s essential evidence of the initial loans is unreliable, as it is inconsistent and contradictory to common sense and certain documentary evidence:

(1)	The evidence that Ms Lai lent HK$100,000.00 to Ms Ngan in two trenches, once in January and once in August 1997 only comes out during evidence in chief. It was never so stated in her affirmation made in April 2001 and her witness statement in March 2006. In the affirmation and witness statement, her evidence is to the effect that Ms Ngan borrowed HK$100,000.00 from her in one go.

(2)	When cross-examined on this inconsistency, Ms Lai explained that it was only after she looked at the relevant bank passbook records that she could remember the January and August occasions. I reject this explanation:

	(a)	It is hard to believe for five years since the issue of the action in April 2001 until the making of the witness statement in March 2006, she had not had the benefit of the relevant passbook records to enable her to state her case clearly in the witness statement.

	(b)	In any event, the identified two relevant entries in the passbook in fact do not show the exact figure of HK$50,000. One entry dated 23 January 1997 shows a figure of HK$35,000.00, while the other entry dated 25 August 1997 shows a figure of HK$23,000.00. As such, it is difficult to understand how she could by looking at these figures relate to the two exact occasions in January and August when she had allegedly lent HK$50,000.00 each to Ms Ngan, when without these records she could not even remember the loan was made in trenches.

(3)	Further, she explains that these entries represent the sums she withdrew as cash from the bank at the relevant time, and then coupled with her cash in hand, she made the respective loans of HK$50,000.00 each to Ms Ngan. However this evidence is contradicted when it is pointed out to her under cross-examination that the HK$23,000.00 withdrawal made in August was in fact a transfer (as noted in the passbook) but not cash withdrawal. When so confronted, Ms Lai changes her evidence again to say that she first transferred this sum to her another bank account, before withdrawal. Without offering any good reasons as to why this should be done in such a convoluted way, I reject this explanation as contradictory to common sense.

(4)	For these same reasons, I also reject these passbook statements as evidence in support of the existence of the loans.

37.Secondly, Ms Lai’s evidence as to circumstances leading to the selling of the shares in the business to her is similarly unreliable:

(1)	It is important to note that when Ms Lai was asked in chief as to why Ms Ngan wanted to sell the shares to her, her immediate and only answer is that Ms Ngan could not repay her the initial loans, and that Ms Ngan wanted to borrow more. It is only later when this question is asked again Ms Lai comes up with the further reason that Ms Ngan was “unhappy” and did not want to run the business. As such, in my view, Ms Lai’s evidence is that the main reason for Ms Ngan to decide to sell her the shares in the business was because Ms Ngan could not repay her and needed to borrow more.

(2)	Given my above rejection of the evidence on the existence of the initial loans of HK$100,000.00, the central reason alleged by Ms Lai for Ms Ngan to sell the shares to Ms Lai is gone.

(3)	Further, the reason that Ms Ngan wanted to sell the shares as she was unhappy and did not want to run the business is in my judgment, beyond common and commercial sense, and is also inherently unlikely:

	(a)	It is common ground that in fact, after the Document was signed, Ms Ngan was as heavily involved in the running of the pet shop as before. In fact she was the principal person running the shop, and deciding when dividends should be declared and how much they should be. This is wholly contradictory to Ms Lai’s evidence that Ms Ngan wanted to sell the shares to her because she did not want to run the business.

	(b)	Further, if she did not want to run the business as alleged, why did she not suggest to sell her entire interest in the business to Ms Lai. It is not Ms Lai’s evidence that she was unable financially to buy out Ms Ngan’s entire share in the business. The fact that Ms Lai only allegedly offered to sell 51% shares of the business is inconsistent with Ms Lai’s evidence that Ms Ngan did not want to run the business.

38.I therefore reject Ms Lai’s evidence as to the reasons and circumstances leading to Ms Ngan’s decision to sell 51% of the shares in the business to her.

39.Further, I also reject Ms Lai’s evidence that Ms Ngan hand drafted two copies of the Document and that they were then respectively signed by Ms Wong as a witness right there and then. My reasons are as follows:

(1)	Ms Ngan provided to this Court her original copy of the Document, which is only an already faded fax copy of it. When one examines this copy and the photocopy of it (apparently made much earlier on when the action began 6 to 7 years ago when the fax copy was clearer), the signature of the witness is clearly different from Ms Wong’s signature as now appears on Ms Lai’s original handwritten copy of the Document discovered by her.

(2)	Further, the handwritten characters and format of Ms Ngan’s fax copy of the Document are identical with, and are exactly the same as, the ones appearing on the handwritten original of the Document kept by Ms Lai. As fairly and rightly accepted by Mr Tsui, Counsel for Ms Lai, this shows that Ms Ngan’s fax copy is a copy made from Ms Lai’s original handwritten copy of the Document, since no two handwritten copies (if they were in existence) could be of exactly the same handwritten characters and format.

(3)	However, on Ms Lai’s original handwritten Document, the witness signature is Ms Wong’s, which as I said above is clearly different from the scribbled signature appearing on Ms Ngan’s fax copy.

(4)	As such, the likelihood is that Ms Wong only signed on the handwritten original of the Document after a fax copy of it was made, and it was on this first fax copy where the scribbled signature was made.

(5)	In light of the above, I am of the clear view that Ms Lai’s version of events as to the signing of the Document is inconsistent with and contradictory to the objective evidence of these available copies of the Document. Her evidence to me is incredible.

40.For these same reasons, I also reject Ms Wong’s evidence that she signed two original handwritten copies of the Document in front of Ms Lai and Ms Ngan, after they had respectively signed them. Her evidence is similarly contradictory to the objective documentary evidence.

41.Given my rejection of Ms Lai and Ms Wong’s above evidence on how the Document was signed, I also have no hesitation to reject their evidence that Ms Lai handed over a stack of cash to Ms Ngan for settling the purchase price. I also reject Ms Lai’s evidence that she tore up the alleged IOU as part of the payment for the purchase price.

42.Moreover, Ms Lai’s evidence and case that Ms Ngan intended and agreed to sell 51% share of the business to her for HK$240,000.00 and that she had paid for it are inconsistent with and contradicted by the following:

(1)

In a recorded telephone conversation between Ms Ngan and Mr Lai Kwok Cheung^[2] (apparently when he was in the United States) made sometime in 2001 (but after the dispute between Ms Ngan and Ms Lai had arisen), Ms Ngan had expressly said that she owned the pet shop. In response, Mr Lai Kwok Cheung (who on both side’s evidence had clear knowledge as to how the Document and the apparent agreement to sell the shares came about, and that he was present when the Document was signed) never in reply said that Ms Lai had purchased 51% shares of the business. Instead he said in effect that he “fought” back the shop with his life and protected it with the assistance of a triad boss. The relevant parts of the transcript (which is not challenged by Ms Lai) of the telephone conversation are as follows:

“	顏：	咁間舖由始至終都係我架啦
	黎：	呀，你講得大聲啲囉，唔緊要架，你要爭乜嘢唧
		你爭條麻甩佬，你就唔好要間舖頭囉
		梗係架啦，邊有可能樣樣攞晒，乜嘢都拎晒，喺晒你嗰邊嘅啫
	顏：	咁嗰間舖頭由始至終都唔係你哋架啦
	黎：	係呀，大家都唔好要囉，間舖頭唔係你架，你唔好咁大聲由此至終都係你架
		我同你講呀，你唔好嚟橫折曲嚟講呀
		大埔寵物店已經收咗皮架啦，你同蔣德良收檔嘅時候無改名嘅就係
		你唔好嚟橫折曲嚟講，間舖頭係我用命打交打番嚟架
		你唔敢反對我呢個講法格
		呀，我搵黑社會大哥保番嚟間舖頭
		今時今日阿何生拍吓籮柚叫我行呀，叫我起錨，得唔得，你話得唔得呀，你同我講，你估我得唔得”

(2)	In my view, if there had been a genuine agreement for sale of the shares, and if Ms Lai had in fact paid for the shares, in reply to Ms Ngan’s assertion that she owned the shop, the first response Mr Lai Kwok Cheung, having been fully involved with these transactions, would and should have been that she had sold 51% of the shares to Ms Lai.

(3)	The lack of such response coupled with Mr Lai Kwok Cheung’s above actual reply, they point strongly to the fact that there has never been a genuine and intended sale and purchase of 51% of the shares in the business for HK$240,000.00.

(4)	Further, it is against commercial and common sense that Ms Lai needed only to pay 50% of the agreed stated value of the business, i.e., HK$240,000.00, for 51% of the shares. Why should she be benefited with the majority shareholding with only paying for 50% of the value. When so asked by the Court, she could not offer any reasonable explanation but just say that they had never thought of it, an explanation I reject.

43.In support of her case, Ms Lai also relies on the evidence of two power of attorney made respectively by Ms Lai and Ms Ngan to empower Mr Lai to deal with the matters of pet shop, and the common facts that Ms Lai had been made a signatory of the business bank accounts, involved in preparing the ledgers of the business and helping out with its running.

44.In my view, in light of the common background that at the material times, the three of them were very close to each other and that Mr Chiang had been harassing Ms Ngan and the pet shop business, this evidence supports both Ms Lai and Ms Ngan’s respective case. Therefore, the evidence is at best neutral to the question as to whether there was in fact a sale of the shares and whether there was a partnership. It does not in any way outweigh my above views in rejecting Ms Lai’s essential evidence.

45.For all the above reasons, I reject Ms Lai’s case and evidence (including that of Ms Wong) under this issue of the alleged shares sales and purchase agreement.

46.On the other hand, I accept Ms Ngan’s case and evidence. I find her a reliable witness and her evidence is inherently more likely and consistent with my observations and the objective evidence I set out above in rejecting Ms Lai’s evidence. She gives evidence in a relatively consistent manner, and her case is also more consistent with the above common background

47.In the circumstances, I find on a balance of probabilities that:

(1)	There is never the agreement for Ms Ngan to sell to Ms Lai 51% shares of the pet shop business, and Ms Lai has not paid Ms Ngan the purchase price as stated in the Document.

(2)	I further find that the Document was prepared and signed by the parties solely for the purpose using it as a tool to deter Mr Chiang from continuing to harass Ms Ngan and the pet shop business. There is no intention between Ms Ngan and Ms Lai that the Document is to be legally binding and to be enforced. Further, when Ms Ngan and Ms Lai signed it, although Mr Lai Kwok Cheung was present, Ms Wong was not present.

Whether Ms Lai has made any loan in the sum of HK$160,000.00 to Ms Ngan

Ms Lai’s case and evidence

48.Ms Lai’s case on these alleged loans run as follows.

49.There were oral terms of the alleged partnership between her and Ms Ngan for the pet shop business that:

(1)	Any declared dividends of the business would be split into four shares. She would be entitled to two shares (as 51% shareholder), Ms Ngan entitled to one and Ms Ngan’s father to the remaining one share.

(2)	She would lend interest free one share of her declared dividends (whenever they are distributed) to Ms Ngan and these should be repaid three years from 1 December 1997, that is on 1 December 2000.

50.Between April 1998 and November 2000, Ms Lai had under this oral terms lent to Ms Ngan a total of HK$160,000.00, the particulars of which are as follows:

	28 April 1998	HK$20,000.00
	24 September 1998	HK$15,000.00
	23 February 1999	HK$15,000.00
	14 October 1999	HK$30,000.00
	11 January 2000	HK$15,000.00
	20 May 2000	HK$25,000.00
	21 November 2000	HK$40,000.00

51.In support of her case, Ms Lai relies on her oral testimony and various ledgers of the pet shop prepared by her.

Ms Ngan’s case and evidence

52.As Ms Ngan denies the existence of the agreement of the sale of 51% shares in the business to Ms Lai, she similarly denies the existence of the partnership and any such oral terms of loans by the use of dividends. She naturally also denies the existence of these loans.

Discussion

53.Given my above finding that there was no agreement for the sale of 51% shares in the business to Ms Lai, it follows that Ms Lai’s case must also fail on the existence of these loans by way of the dividends. This is so as without the purchase of the 51% shares in the business, there is simply no question of the alleged partnership, and any oral terms for the loans.

54.Further and in any event, insofar as necessary, I will also reject Ms Lai’s evidence on the existence of these loans:

(1)	First, it is contrary to common and commercial sense that there is no record or documentation whatsoever to note down the alleged partnership term of the loans, the distribution of the dividends amongst the three alleged shareholders, and the making of the loans. This is more so incredible in light of the following:

	(a)	It was Ms Lai who had taken the trouble and been preparing the ledgers, obviously for records and for tax filing purposes. As such, it is difficult to understand why she did not put into any written record of the divisions of the dividends and the making of the loans.
	(b)	Given Ms Ngan’s alleged previous inability to repay the alleged initial loans, and thus the alleged need to have an IOU written subsequently, it is again difficult to understand why Ms Lai did not find it necessary to put into writing the alleged partnership term of the loans, and the making of the loans.


(2)	Further, for the payment of dividends recorded on the ledgers for February 1999, October 1999, and May 2000, Ms Lai in chief says they should respectively be HK$60,000.00, HK$120,000.00 and HK$100,000.00 instead of the recorded sums of HK$45,000.00, HK$71,000.00 and 87,000.00. Ms Lai says the unrecorded additional sums came from the partnership’s investments in the stock market under her and Mr Lai Kwok Cheung’s names, and in subscribing to a saving plan maintained with a bank. I find this evidence similarly incredible:

	(a)	It is hard to believe that if there were in fact these additional incomes for the business coming from stock investments and saving plan, they would have not been contained or mentioned in Ms Lai’s pleadings, her previous affirmation, answers to further and better particulars and her witness statement.

	(b)	Similarly there is no documentary evidence whatsoever, such as account statements, to support the existence of these stock investments and the withdrawal of the alleged profits from them. These stock investments were said to be made in Ms Lai’s and Mr Lai Kwok Cheung’s accounts, and thus it is fully within her power to produce these documents, if the allegation were true. The failure to produce such documents points strongly that there were never such investments made on behalf of the alleged partnership.

	(c)	There is also no acceptable explanation as to why there is no record in the ledgers (prepared by Ms Lai) of (a) the initial funds allegedly drawn from the business to be invested in the stocks, and (b) the payment of these alleged profits into the business accounts. This again points to the fact there were never these investments made for the alleged partnership.

	(d)	There is no commercial or acceptable explanation as to why if the dividends were paid as much as Ms Lai now alleges, they were not so properly recorded in the ledgers. Mr Raymond Tsui, counsel for Ms Lai submits, that there is no reason why Ms Lai should make these up to make her case more difficult given the written records. I do not think this can take Ms Lai’s evidence any further, in particular in light of my above observations. In any event, I could at least think of one possible reason why Ms Lai wants to do so: to make those recorded dividends evenly divisible by a factor of 4 to support her case, when the original recorded figures could not be so divided.

55.For the above reasons, in my judgment, Ms Lai has failed to prove the existence of the loans.

Other issues

56.In light of my above findings that (a) there is no agreement for sale of 51% shares of the pet shop business by Ms Ngan to Ms Lai, (b) there is no partnership of the business between Ms Ngan and Ms Lai, (c) there is never the alleged loans of HK$160,000.00 made by Ms Lai to Ms Ngan, it follows that all the other reliefs sought by Ms Lai should fail, as they are premised upon the existence of the partnership.

57.Insofar as necessary, I further rule that Ms Lai has failed to show that the value the business asset was HK$480,000.00 as at 1 March 2001. I reject her case and evidence on this since:

(1)	The ledgers produced by her simply do not support these allegations.

(2)	Her oral testimony on these issues is not supported by any documents such as the ledgers, and books and records, and there is no reasonable explanation as to why there are no such records.

(3)	Her unilateral filing of revised tax returns to the IRD to the extent of the alleged profits of the business is self-serving. The said tax returns are not supported by any underlying documents presented to the Court. It is to be noted that they were only filed after the disputes had arisen, and Ms Ngan has lodged objections to the revised assessments based on these tax returns. The IRD has yet to make a decision on the objections.

(4)	I also find her generally as not a reliable witness for the reasons given in the above sections.

Conclusion

58.For the above reasons, I dismiss Ms Ngan’s claims. I further order in the counterclaim that:

(1)	The Document is not legally binding between the parties.


(2)	Ms Lai shall forthwith return to the Ms Ngan all the books and records of the pet shop business kept by her.

59.There is no reason why costs should not follow the events. I therefore further make an order nisi that costs of the action (including the counterclaim) be to Ms Ngan to be taxed if not agreed, with certificate for counsel. This order would be made absolute 14 days after this judgment unless any of the parties apply to vary it in writing.

(Thomas Au)
District Judge

Mr. Raymond Tsui Wai Nam instructed by Messrs. Kevin Ng & Co. for Plaintiff.

Mr. James TZE instructed by Messrs. Gary Lau & Partners for Defendant.

[1]In the prayers of the Re-Amended Statement of Claim, Ms Lai also claims for HK$440,000.00 as her share of undeclared dividend of retained profit of the partnership. However, this relief is no longer pursued by her counsel, as set out at paragraph 21 of his written closing submissions.

[2] Although Ms Lai does not admit that the male voice in the recorded telephone conversation is Mr Lai Kwok Cheung, she is careful not to deny that when asked by the Court. It is also important to note, that although until the trial, Mr Lai Kwok Cheung was an intended witness for Ms Lai (a witness statement of him has been filed), Ms Lai has never formally put on record to deny through her solicitors that the conversation was made between Mr Lai Kwok Cheung and Ms Ngan. In the premises, and in light of the contents of the conversation, the common facts that Ms Lai, Mr Lai Kwok Cheung and Ms Ngan were the persons closely involved in the subject matter transactions, and Ms Ngan’s evidence (which I accept), I accept that this is a recorded conversation between Ms Ngan and Mr Lai Kwok Cheung.

Cites 1 case

Cases cited in this judgment

Lai Yuet Sau v. Ngan Wai Fong

DCCJ 6673/2001 · District Court

09 Apr 2008

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