Ian Hung Wai v. Cheung Sau Kuen and Another

CACV 210/2010

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 210 OF 2010

(ON APPEAL FROM HCA NO. 1541 OF 2007)

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Before: Hon Tang Acting CJHC, Le Pichon JA and Hartmann JA in Court

Date of Hearing: 25 March 2011

Date of Judgment: 25 March 2011

Date of Handing Down Reasons for Judgment: 6 May 2011

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Hon Hartmann JA (giving the judgment of the Court):

Introduction

1.In about August 1999, the appellant (the plaintiff) began an intimate relationship with the respondent (the defendant).  The appellant was in his late-50s, and recently retired.  The respondent was some 18 years younger, a widow with three children.

2.The relationship endured for just over three years during which time the couple lived together in Shenzhen where the respondent lived with her mother and her children and ran a small business.

3.More than three years after the break-up, the appellant instituted action against the respondent claiming, among other things, delivery up of certain landed property in Shenzhen and payment of various sums of money.

4.Central to his case was the assertion that, during the period of their relationship he had given a number of gifts of considerable value to the respondent in contemplation of their intended marriage.  The gifts, were therefore subject to the condition of their marriage and upon the breakdown of their relationship, there having been no marriage, the gifts were returnable to him.

5.While the respondent accepted that for most of their relationship she had held the deepest feelings for the appellant, she denied that there had been any agreement, express or implied, that the two of them would marry.  It was her evidence that she had never committed herself to a marriage.  To the limited extent that the respondent admitted that the appellant had bestowed gifts upon her, it was therefore implicit that they had been absolute and unconditional in nature, given purely as expressions of the appellant’s affection for her.

6.When the matter came to trial before Thomas Au J in the Court of First Instance, the two principal issues that fell for determination were, first, whether the appellant had given the gifts to the respondent that he asserted and, second, whether those gifts had been in contemplation of, and conditional upon, their marriage or whether they had been unconditional in nature, expressions simply of the appellant’s affection for the respondent.

7.The judge was satisfied on the evidence that the gifts asserted by the appellant had, in fact, been made by him to the respondent.  However, as to the true nature of those gifts, the judge came to a finding of fact on the evidence that there had been no mutual commitment to marry.  As such, the gifts made by the appellant to the respondent were not conditional.  They were, to use the language of the judge, “absolute gifts” made out of love.  As such, the appellant had no right in law to demand their return or payment of their value.

8.When the matter came before us on appeal, we upheld the judge’s findings, dismissing the appeal and awarding costs to the respondent.  We said we would give our reasons later and do so now.

Background

9.It was the appellant’s case that, in about September 1999, shortly after they had begun their intimate relationship, he gave the respondent RMB215,000 to enable her to pay her share of the construction costs of a four-storey property in Shenzhen being built by herself and her sisters.  It was the appellant’s assertion that the apartment on the second floor was marked out as their future matrimonial home.

10.As it transpired, however, when the property was completed in or about June 2000, the respondent leased out the second floor apartment.

11.According to the appellant, at about the time of the completion of the construction, that is, in or about June 2000, the respondent purchased another property in Shenzhen and it was in this property that the appellant took up residence with the respondent, her children and her mother until about November 2002 when the relationship broke down.

12.It was the appellant’s case that he gave the respondent a sum of about HK$560,000 to enable her to purchase this second Shenzhen property, providing a further RMB110,000 to purchase furniture and fittings.

13.At about this time, that is, in about the middle of 2000, the appellant himself purchased an apartment in Hong Kong, in Tin Shui Wai, Yuen Long.  The purchase price was HK$820,000 to which had to be added the agent’s fees, legal costs and transfer duties.  In July 2000, the appellant and the respondent executed the necessary legal formalities to assign title in the apartment to the respondent.  Put simply, by the execution of these formalities, the appellant gave the apartment to the respondent.

14.In addition, it was the appellant’s case that, during the period of their relationship, he gave the respondent a sum of RMB400,000 to help her with her business and in addition gave her a sum of at least RMB42,000 to help meet the respondent’s household expenses and to help pay educational costs for her children.

15.In summary, it was the appellant’s case that he had made the following gifts to the respondent; first, the necessary funds to enable her to meet her share of constructing a property in Shenzhen, second, the necessary funds to enable her to purchase an apartment in Shenzhen which became the ‘family’ home, third, an apartment in Hong Kong and, fourth, various sums of money totaling at least RMB442,000.

16.It was the appellant’s case that each of these gifts were given to the respondent on the basis that she had on numerous occasions promised to marry him and to care for him in his old age.  At the time they were given there was therefore a mutual commitment to marry.  All of the gifts were given in contemplation of their marriage and were subject to the condition that there would be a marriage.

17.In addition to these gifts, it was the appellant’s contention that, during the period of their relationship, he had leant various sums of money totaling RMB400,000 to the respondent to help her and/or her family members. He sought repayment of these loans.

18.Finally, the appellant sought the return of a sapphire ring, valued, he said, at about HK$100,000 which he contended the respondent had in her possession and refused to return to him.

Gifts given in contemplation of marriage

19.When a man and a woman agree to marry, a gift given in contemplation of that marriage is given subject to the condition that there is to be a marriage. If no marriage takes place then the condition has not be fulfilled and the gift is returnable.  The common law position is subject to the condition – one arising out of the principles of contract – that if the one who has received the gift refuses to fulfill the condition under which it was given then that party must return it to the other.  Equally, if the one who has given the gift refuses to fulfill the condition under which it was given then that party loses the right to claim return of the gift.  In this regard, see Jacobs v Davis [1917] 2 KB 532 and Cohen v Sellar [1926] 1KB 536.  As McCardie observed in the second of these cases, there is, however, no question of return if a gift is absolute and free from condition.

20.In Hong Kong, the common law position has been modified to dispense with the condition that the right to claim back a gift or to retain it is subject to the party in question being the ‘innocent’ party.  In this regard, s. 25 of the Law Amendment and Reform (Consolidation) Ordinance, Cap. 23, provides that, if a party to an agreement to marry makes a gift to the other on the condition, express or implied, that it should be returned if the agreement is terminated, the party who has given the gift shall not be prevented from recovering it by reason only of his having terminated the agreement.

21.There is no dispute that the judge at first instance correctly identified the legal principles.

22.However, while the judge accepted that over the three years of the relationship there may have been reference to the possibility of marriage, he came to a primary finding of fact on the evidence that, whatever the aspirations of the appellant may have been, the respondent herself had not made, nor had she ever intended to make, any binding commitment to marry the appellant.  He further found that the respondent had not made any representations in terms of which she committed herself to marry the appellant. That being the case, there had never been any agreement to marry.  On the basis of these findings, the judge concluded that the gifts bestowed by the appellant on the respondent had been “absolute gifts” made “out of love”.

The loans and the sapphire ring

23.The appellant asserted that he had made various loans totaling RMB400,000 to the respondent.  The respondent denied each and every such loan. The judge found the appellant’s evidence advanced to prove the existence of the loans to be unsatisfactory and incapable of supporting his claim.  In the result, he concluded that the appellant had failed to prove their existence, preferring the evidence of the respondent that there had been no such loans.

24.As to the claim for the return of a sapphire ring, there was no evidence of what the appellant had paid for it and no certificate of valuation.  On the basis of independent evidence, the judge accepted that the appellant had at one time possessed a ring fitting the description that he gave but concluded that he had failed to discharge the burden on him to demonstrate that the ring had been taken by the respondent who refused to return it.

25.On appeal, no challenge was made to the findings of the judge in respect of the sapphire ring.

26.There were two grounds of appeal.  The first was limited in extent, the second far more extensive.

The first ground of appeal

27.Under this first ground, it was submitted that the judge had erred in finding that the appellant’s gifts were absolute and unconditional as opposed to being pursuant to a mutual commitment to marry when the respondent herself had, with the exception of the Hong Kong apartment, denied the existence of the gifts and had not herself pleaded that they were absolute and unconditional.

28.In this regard, Mr Andy Hung, the appellant’s counsel, submitted that, not only had the respondent denied receiving the advances of money from the appellant, she had put forward a positive case that she was wealthy enough not to need them and had, for example, paid for the costs relevant to the two Shenzhen properties out of her own resources.

29.But, as the judge correctly recognised, in determining the ‘gift’ issue, two matters fell for determination.  First, with the exception of the Hong Kong apartment which the respondent accepted was a gift, had the appellant proved the existence of each of the remaining gifts?  Second, if any of the remaining gifts were proved, what was their true nature?

30.In respect of the first matter, the judge rejected the respondent’s case that there had been no such gifts.  He was satisfied that the appellant had made each of the advances of money that he alleged and that they had been advanced to the respondent as gifts.

31.But the rejection of the respondent’s case in that singular respect, while of course it went to undermine the respondent’s credibility, did not of itself prove the true nature of the gifts.

32.Concerning that separate, second matter, in looking to all the evidence, the judge concluded that, at the time when the gifts had been made, there had been no mutual undertaking to marry and that the gifts therefore had not been made – and could not have been made – conditional upon any such marriage.

33.If the gifts were not conditional then, considered in context, it had to follow that they had been unconditional, that is, that they had been, as the judge expressed it, “absolute gifts” made as an expression of the appellant’s feelings for the respondent.  That finding was consequential upon the judge’s finding that the gifts had not been made in contemplation of a mutual commitment to marry and, as such, it mattered not whether the respondent had herself pleaded the issue.

The second ground of appeal

34.This was the appellant’s principal ground of appeal.  It was to the effect that, in determining the credibility of the appellant and the respondent, those findings being crucial to his overall determination, the judge fell into error in artificially segregating the issues and determining the credibility of the two parties within the confines of those segregated issues.  If, as he was obliged to do, the judge had considered the credibility of the two parties in the context of the evidence as a whole, a very different picture would have emerged, one that was favourable to the appellant.

35.It is, of course, long settled that assessments of credibility must be made by having regard to the evidence as a whole.  In Yuill v Yuill [1945] 20 P 15 (at 19), the Master of the Rolls, Lord Greene, commented that –

“… an impression as to the demeanour of a witness ought not to be adopted by a trial judge without testing it against the whole of the evidence of the witness in question. If it can be demonstrated to conviction that a witness whose demeanour has been praised by the trial judge has on some collateral matter deliberately given an untrue answer, the favourable view formed by the judge as to his demeanour must necessarily lose its value.”

36.In the present case, however, I am satisfied that there was no evidence that the judge fell into error in the manner submitted by the appellant’s counsel.

37.The architecture of every judgment must be decided by the matters that fall for determination in that judgment.  In the present case, the judge recognised at the outset that the first of the core issues was whether the necessary representations had been made to give rise to a mutual commitment to marry.

38.Having set out the uncontentious background, the judge went on to consider matters of undisputed evidence that helped him to determine that issue.  In particular, he looked to the undisputed facts that over the three years of the relationship there had been no formal announcement of any agreement to marry, no giving of any engagement ring and no evidence of even a tentative date being set for a wedding.  He considered other matters too such as the uncontested evidence that, when the appellant’s father passed away in early 2001, the respondent had not been invited to the funeral.  All of these matters were considered in the context of the testimony of both parties.  The judge found the appellant’s explanations to be unworthy of belief.

39.During the course of the trial, a Mr Tsang had testified on behalf of the appellant that he had attended a wedding in the Mainland which had also been attended by the appellant and the respondent.  Mr Tsang testified that, in meeting the respondent for the first time, he had spoken to her about her intended marriage to the appellant and had been told that matters were in hand.  This too was taken into account by the judge who, having had the benefit of hearing both Tsang and the respondent give evidence, concluded that the respondent’s comments were made in casual conversation; they were comments made by a woman having a love affair with the appellant and had therefore to be weighed in light of those facts.

40.Having looked to matters generally, the judge then, in the evidential context of each gift that he was satisfied the appellant had made to the respondent, went on to consider whether the evidence supported that particular gift being conditional on a mutual commitment to marry or being absolute and unconditional.  In each instance, he was satisfied that the evidence told against the appellant’s contention that the gift was given in contemplation of marriage.

41.For example, in respect of the gift of the Hong Kong apartment, it was the appellant’s evidence that the property was assigned to the respondent at her request as part of their mutual commitment to marry.  He gave a number of reasons why the respondent had requested the assignment of the property to her. The respondent gave evidence to the contrary, saying that the appellant had unexpectedly given her the property as a token of his love and was able to do so, he said, because he had profited in stock trading. In considering the evidence, the judge concluded that, even if there had been an agreement to marry, he could not be satisfied that the assignment of the property had been made subject to that agreement.

42.In short, in looking to the judgment as a whole, it is apparent that the judge looked first to the uncontested evidence that applied generally to the span of the relationship between the two parties and then to the evidence that was specific to each gift, coming to the conclusion that the specific evidence supported the general.

43.When read as a whole, it is clear therefore that the judge did not segregate the issues and then restrict himself to determining the credibility of the appellant and the respondent within those segregations without looking to the evidence as a whole.  To the contrary, what emerges are findings based on the overall span of the relevant evidence.

44.Among his criticisms, Mr Hung submitted that the judge’s failure to come to his findings in light of the evidence as a whole had resulted in findings that were inconsistent.  In this regard, he made specific reference to the judge’s findings that the appellant had not proved the existence of the loans totaling RMB400,000.  The judge, he suggested, had come to these findings on the basis that the loans had been made some eight or nine years earlier, the passage of time rendering the appellant’s evidence unreliable.  Elsewhere in the judgment, however, the judge had come to findings in favour of the appellant concerning advances of money made at or about the same time.  With respect to counsel, that criticism does no justice to the findings of the judge which were not based simply on the passage of time but, in respect of each and every payment, were based on an analysis of each and every transfer of funds and the circumstances in which they came to be made, seeking consistency between the appellant’s allegations and the documentary evidence.

45.Mr Hung further submitted that there was a failure by the judge to consider the inherent probabilities and improbabilities of the evidence when viewed in its entirety.  By this Mr Hung meant that the judge should have taken the following into account.  The appellant was a retiree who in the span of less than a year had made repeated payments to the respondent to enable her to acquire two different landed properties in Shenzhen and had then assigned to her a third property in Hong Kong.  Thereafter, he had advanced very substantial sums to her to help with her business and had given further financial assistance to meet domestic expenses and to help meet the educational expenses of the respondent’s three children.  In the result, the evidence revealed that by about mid-2002 the appellant had exhausted his savings and was reduced to borrowing from friends.  When looked at on this basis, the question had to be asked: why would “a man of the world” exhaust his worth in this manner unless it was, as he testified, in the context of a promise of marriage and an undertaking to care for him in his old age?

46.Leaving aside the fact that, on the findings of the judge, the appellant was regarded by his own father as a ‘big spender’, generous to his siblings and with a penchant for expensive clothing, the inherent difficulty with that approach to the evidence is that it is based on the surmise – and it is no more than a surmise – that the appellant was at the time acting entirely rationally as a so-called man of the world would do.  That approach however, is equally open to the surmise that the appellant, an older man, was infatuated with the respondent and, no doubt hoping for a lasting union, was prepared to shower gifts upon her without thought of tomorrow.  In matters of the heart rationality is not always a constant companion.

47.It cannot be said that the judge was unaware of the question of why the appellant would pass such riches to the respondent.  That question underpinned the core issue that it fell for him to determine.  That is one of the reasons, for example, why the judge took into account such matters as the failure over the entire three-year period of the relationship to enter into any public commitment to marriage.  Inherent in the judge’s findings lay the question: would a man of the world, acting rationally, continue to exhaust his wealth on the respondent when over such an extended period of time she avoided any such public commitment?

48.On behalf of the appellant, Mr Hung made a number of further submissions related to the individual findings of the judge, suggesting that the findings were erroneous because they were consequential upon a failure to consider the credibility of the two parties in the context of the evidence as a whole.  These submissions had no validity.  They were in substance no more than submissions that, on the evidence, other contrary findings were open to the judge and that he should have come to those findings.

49.It was, however, for the judge - upon his assessment of all the relevant evidence, as I am satisfied he did – to come to findings of primary fact.  Those findings having been made, an appellate court will not set them aside unless it is satisfied that they were plainly wrong.  If not so satisfied, the appellate court should defer to the judge’s determination even if in some doubt as to its correctness: see Ting Kwok Keung v Tam Dick Yuen and Others (2002) 5 HKCFAR 336, at 350.  With respect to the various findings of the judge that were criticised by Mr Hung, I am not satisfied that any of them were plainly wrong.

Hon Tang Acting CJHC:

50.I agree.

Hon Le Pichon JA:

51.I agree.

Mr Andy Hung, instructed by Messrs Christine M. Koo & Ip, assigned by DLA, for Appellant (Plaintiff)

Mr Raymond Fong, instructed by Messrs Kelvin Cheung & Co., for Respondent (Defendant)