Tsang Hon Chu Florence v. Tsang Hon Man Thomas

DCCJ 4307/2008

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 4307 OF 2008

____________

Coram: His Hon Judge Leung in Court

Date of hearing: 6, 7, 8, 9, 10 and 15 December 2010

Date of judgment: 30 May 2011

J U D G M E N T

1.This is a financial dispute between sister and brother arising out of their arrangement whereby they managed the residential property belonging to the other in Canada and Hong Kong respectively.

Background

2.The Plaintiff (“F”) and the Defendant (“T”) are sister and brother among a number of siblings.  At the material times, F was ordinarily resident in Hong Kong while T was ordinarily resident in Vancouver, Canada.  F used to be a University lecturer in Accountancy until the end of August 2003.  At the time of trial, she claimed to be a part-time examiner for SPACE while T claimed to be an accountant carrying on the business as an investment and emigration consultant in Canada.

3.Since 1995, F had owned an apartment in a residential condominium at Broughton Street in Vancouver (“the Vancouver Property”).  Since 1997, T was and still is the owner of a residential flat at Rialto Mansion on King’s Road, Hong Kong (“the HK Property”).

4.The Vancouver Property was subject to a mortgage and let for rent.  Documents in relation to that including demand for payment of the management fees and non-resident tax on rental income were addressed to F under the care of T at his Vancouver address.

5.The HK Property was too subject to a mortgage.  F acted as the guarantor of the mortgage loan.  She oversaw the letting of the flat and collected the rent for repayment of the mortgage instalments and expenses.  The utility accounts in respect of the flat were also opened in her name.  Documents in relation to the flat that were sent to F’s address in Hong Kong for the attention of T.

6.In about August 2004, the Vancouver Property was sold.  In November 2004, the mortgage in respect of the Hong Kong Property was also discharged.  Dispute between the sister and brother arose in 2005 to 2006.

7.In 2008, F commenced the present action.  She claims that she has discharged some of T’s liability in respect of the HK Property out of her own money.  On the other hand, T contends that the rental income from the HK Property together with the money he had sent to F from time to time were more than sufficient to discharge his liability in respect of the HK Property; and it was F who has pocketed some of the money and neglected to repay certain mortgage instalments.

8.F acts in person.  T used to have legal representation until 2 months before the trial.

Overview

9.Relative to the extent of the parties’ dispute, the state of the documentary evidence necessitates much of the verification to be left to oral evidence.  It could be seen that the figures asserted by the parties somehow varied at different stages.  Added to the difficulty was the acrimonious conduct of the trial by both parties.  In combination, they have rendered the determination of the dispute unnecessarily tedious.

The arrangement between the parties

10.According to F, the agreement between her and T in respect of mutual assistance in the management of each other’s property was reached orally at her home when T was in Hong Kong in 1997.  She understood her role as a normal leasing and rent collecting agent.  There was said to be no agreement in terms of the parties’ respective undertaking to discharge the mortgage repayments and other expenses in respect of the HK Property or the Vancouver Property.

11.As pleaded, F apparently pursues her claim on the basis of a written agreement signed by the parties and dated 15 February 2002.  According to that agreement, T apparently agreed to forfeit his interest in the HK Property in favour of F.

12.However, by his defence and as revealed by the evidence,  it should be clear that the agreement came into existence with a view to preventing the property from getting caught in the divorce between T and his ex-wife in Canada.  Indeed, notwithstanding the reference to the agreement, F claims for the payment of money owed by T effectively upon the taking of accounts between the parties in their mutual management of each other’s property.  F does not seek to enforcement the agreement.

13.According to T, an oral agreement was reached on the telephone in February 2001 in the following terms:

(1)  F would continue to look after the sufficiency of the balance of the joint account of F and the ex-wife of T and to deposit the money received from T into the joint account for the repayment of the mortgage in respect of the HK Property;

(2)  F would collect the rent from the HK Property and deposit the same into the joint account; and would notify T if any due rent had not been received;

(3)  F would notify T if the balance of the joint account was insufficient for repayment of the mortgage in respect of the HK Property;

(4)  T would act as the agent of F in respect of the tenancy over the Vancouver Property, including the payment of non-resident tax on F’s behalf;

(5)  T would collect the rent from the tenant of the Vancouver Property; and in the event of non-receipt of the rent, T would deposit an amount equivalent to 1 month’s rent into F’s bank account in Canada for the purpose of repayment of the mortgage in respect of the Vancouver Property.

(6)  T would also make deposit into F’s bank account in Canada as and when F requested.

14.The fact, as evidenced by the documents, was that incidental to her management of the HK Property, T acted as the guarantor of the mortgage.  A joint bank account was opened in the names of her and the then wife of T for the purpose of repayment of the mortgage instalments (“the Joint Account”).  F had also been appointed as T’s attorney in respect of the dealings in connection with the HK Property as T was ordinarily not resident here.

15.It was also the fact that in respect of the Vancouver Property, a Peter Tsang was on the record of the revenue authority the agent of F.  He is another brother of F and T.  T was on record the payer of income tax on the rental income from the Vancouver Property.

16.Seeing the parties testify and considering the evidence in respect of how things were done during the material time as a whole, I am not impressed that the arrangement between the parties were as a matter of fact so neatly and meticulously defined from the outset as alleged by T.  I am also not impressed that the arrangement started out with the intention to create a legal relationship.  Rather, it started and proceeded as mutual assistance between the sister and brother in the management of their respective properties.

17.That the parties did manage each other’s property, and eventually even expended on the discharge of some liabilities in connection with each other’s property, was undisputed fact.  The dispute, in my view, should entail nothing too different from the taking of accounts between them.

The pleaded cases

18.F claims that she has made up the shortfall in the funds needed to discharge some liabilities in connection with the management of the HK Property out of her own money.  As pleaded, T allegedly owes her the total sum of HK$267,493.88, which is calculated as follows:

19.According to T, the rental income from the HK Property should have been HK$148,400.00.  On top, T had allegedly paid to or for F the following sums of money:

20.Then T claims that F had let 5 mortgage instalments in respect of the HK Property in the total sum of HK$77,712.70 go into arrears.  That resulted in interest and penalty charges in the total sum of HK$10,049.06.  Those were eventually settled as part of the one-off repayment to the bank in November 2004.  T asserts that F is liable to pay him these 2 sums or a total sum of HK$87,761.76.

21.By pleading, T avers that the mortgage repayments in respect of the HK Property made under F’s management amounted to the lesser sum of HK$373,074.40.  T admits that F has paid management fees and property tax in the total sum of HK$6,164.00.

22.T calculates the accounts as follows:

23.Somehow T put forward a counterclaim in the sum of HK$487,951.18, which reflects the above calculation prior to giving credit to the mortgage repayments of HK$373,074.40.

24.Further, T suggests that there might have already been settlement between them on 12 October 2006 when T paid F a sum of HK$50,000, which formed part of the amount of HK$257,953.42 above.

25.In the circumstances, there are the following major areas of dispute:

(1)  the mortgage repayments and other payments made by F in respect of the HK Property;

(2)  the rental income from the HK Property;

(3)  payments made by T to and for F;

(4)  whether there has been settlement between the parties at HK$50,000 in 2006;

(5)  if not, which of F and T is entitled to what sum.

Mortgage repayments and other payments made by F in respect of the HK Property

Mortgage repayments made by F

26.There is no dispute that the mortgage repayments in respect of the HK property were primarily made by way of direct debit from the Joint Account.  F acknowledged receipt of the payments that T had made to F for the purpose of discharging the liabilities in connection with the HK Property since 1997.  Her case is that such pattern of payment stopped since February 2002.  Accordingly F set out for the purpose of her claim the mortgage repayments in respect of the HK Property that she had made since March 2002 until the property was redeemed by T in 2004.

27.The total amount of such mortgage repayments made under her management that F has put forward actually varies at different stages.  The latest formal version is contained in her particulars of pleading produced pursuant to the order of the court and the Scott Schedule in early 2010.   F has set out each and every mortgage repayments in respect of the HK Property during the period between 1March 2002 and 1 November 2004 in the total sum of HK$455,117.04, which is slightly less than the amount as per her statement of claim as amended in November 2009 (HK$457,960.20).

28.Most of the repayments set out by F, particularly those evidenced by the corresponding entries in the passbook of the Joint Account showing direct debit to the bank (“HSF”), are not in dispute.  However, question was raised by T as to 2 sums also allegedly mortgage repayments but not recorded in the same manner in the passbook.  They were the sums of HK$31,148.20 and HK$15,538.90 debited from the account in September 2002 and November 2003 respectively.

29.F explained that those sums were not shown in the same manner as other debit entries with reference to “HSF” in the passbook because they were indeed not paid by way of direct debit.  On both occasions, she was repaying overdue instalments that, as instructed by the bank, had to be made as a front desk transaction.  On balance, I would be slow to suspect that those sums were withdrawn from the account by F for her ulterior purpose, bearing mind the consistency between those 2 amounts and the other monthly instalments.  Towards the end of his cross examination, T apparently disputed those 2 sums of alleged mortgage repayment no more.

30.In the schedule of mortgage repayments, there were a few odd sums of alleged payment from the Joint Account that T also disputes.  In court, F managed to explain them as incidental charges levied by the bank in connection with the mortgage repayment through that account.  I accept the explanation and hence the relevance of these few odd sums.

31.I find the total amount of mortgage instalments and incidental charges paid in respect of the HK Property since F had to fund those payments since March 2002 until November 2004 was HK$455,117.04.

Missing mortgage payments and interest charges

32.T says that the following 5 mortgage instalments were missing from those repaid under F’s management.  He says that F let them go into arrears:

33.As a result, the bank charged T overdue interest in the total sum of HK$10,049.06.

34.Both the overdue instalments and the overdue interest were eventually settled as part of the final payment T made to redeem the HK Property in November 2004.  Now T claims that T is liable to compensate him for the amount of these 5 instalments and overdue interest.

35.F first denied the alleged overdue mortgage repayments.  At one point, she tried to explain in her evidence that only 2 instalments became overdue when she was away from Hong Kong.  However the various letters from the bank prove her wrong.  The fact was that the bank issued its mortgage instalment overdue reminder in early August 2003 for 2 overdue instalments.  In late April and May 2004, reminders were issued for 4 overdue instalments by then.  In the reminder issued in early October 2004, 5 mortgage instalments were said to be overdue in the total sum of HK$77,694.50 plus overdue interest.  All the reminders were issued to T but addressed to F’s address in Hong Kong.

36.Repayment of the mortgage instalments was T’s liability.  By saying that those mortgage instalments were missing, T did acknowledge that in calculating the mortgage instalments in question that were paid under F’s management, F also did not actually take into account those instalments.  This is apparent from the particulars of the mortgage instalments repaid under her management and the Scott Schedule.  Unless it is said that T had been put in funds specifically for those 5 instalments but had pocketed the same, there would be no basis for holding her personally liable for the amount of those instalment amounts.  Likewise, I am not prepared to hold F personally liable for the overdue interest, if it was not her failure to repay the mortgage notwithstanding sufficient funds to do so.

Other expenses paid in respect of the HK Property

37.The parties’ respective cases on these other expenses allegedly paid by F in respect of the HK Property also vary at different stages.

38.In her statement of claim, F pleads a sum of HK$17,229.00.  This was also the amount set out in the calculation done by T’s secretary in January 2005.  When she provided the particulars of these expenses in January 2010, F set out the various items of expenses making up a total sum of HK$18,474.00.  The difference was caused by 2 additional items of Government rates in 2004 that T actually admits.

39.The pleaded case of T is that a total sum of HK$6,164 representing 2 items of these expenses is admitted.  In his Scott Schedule dated February 2010, T admits more items to have been paid by F out of her personal account to the Joint Account amounting to a total sum of HK$10,272.00.

40.The items in dispute were allegedly payment of property tax (or Crown rent in fact), management fees, building insurance and electric charges.  The state of documentary evidence relating those items of expenses to the HK Property is indeed not direct.  However, F managed to explain these items of expenses with reference to the entries in her personal bank account statement.  Contrary to T’s suggestion, Crown rent and government rates (which are seen to have been paid out of the Joint Account) are different payments to different authorities.  The amounts are not inherently incredible.  F also managed to give particulars of the building insurance policy number in respect of the HK Property.  On balance, I accept her evidence in this respect and find that these items of expenses are proved.

Rental income from the HK Property

41.T refers to the rent that he expected to have received from the HK Property at the monthly rate of HK$5,300 during the period between July 2002 and October 2004; or the total sum of HK$148,400.  What F contends is that she has managed to collect rent from the property in the total sum of HK$141,730 in reality.

42.Except for the various entries into the Joint Account that seem to record the deposit of some of the rent collected from the HK Property, there is no document to evidence the actual amount of rent collected.

43.According to F, the tenancy documents and receipts were among various other documents in relation to the HK Property that had been taken away by T from her home when he was in Hong Kong in 2004.  F had even filed a complaint with the police, but only in 2009, about the alleged theft.  T denies the allegation.  According to him, he was not even in Hong Kong at the time when the alleged theft took place.  But he admitted having received from F a bag containing sheets of F’s calculation of the account between them.

44.The contemporaneous email correspondence between the parties in late December 2004 suggests that F had indeed asked T if he had taken the paper bag that contained all the records in respect of the HK Property.  She asked for copies of the records in order to answer the request for the return of 2 months’ bond money, which was presumably the tenancy deposit, by the former tenant of the HK Property, a Mr Ng.  T’s reply was that he thought he took the bag but had yet to look at it.

45.In her subsequent email, F explained to T that she had yet to reply to Mr Ng’s repeated requests because she did not have all the information.  In the same email, she complained that T owed her HK$300,000 by then.  This led to T’s reply that without checking, he thought that the figure of HK$300,000 was too high partly because some rent collected might not have been taken into account for some months.  Referring to Mr Ng’s request for the return of the tenancy deposit, T replied that even after deducting the deposit, Mr Ng still owed rent due to default of his Filipino tenants, or more precisely subtenants.  The reason T managed to tell this, as he wrote, was because he had looked at the rent book.

46.By email dated 3 January 2005, T put forward his calculation of the amount owing to F, attaching a calculation sheet containing the detailed breakdown of the amount repaid presumably to the bank, management fees and expenses paid by F as well as the rent received from the HK Property during the period between July 2002 and September 2004.

47.Certain inference may be drawn from the evidence.  T had admitted, or at least had not denied having taken the bag containing the records in respect of the HK Property in December 2004.  Whether they indeed consisted of all the records, they should consist of sufficient documents or records that equipped him with the knowledge about the rent in arrears owed by Mr Ng and his Filipino subtenants’ default that he referred to in his email.  T even referred to a rent book.

48.The records also enabled his secretary to calculate and to compile the table of calculations that T attached for F’s reference in the following month.  The only documents that he needed further check then, according to her, were the passbook of the Joint Account, which was admittedly in F’s possession, and his own payment to F.

49.According to the table of calculations put forward by T then, the monthly rental income during the period between July 2002 and September 2004 was not uniform.  This is in line with the case of F.  F explained that there had been occasional truncation of the tenancy.  At certain stage, the HK Property was sub-divided into various small rooms and sublet to various individuals.  She explained the difficulty in collecting all the rent from the head tenant.  The rental income could also be reduced due to occasional expenses such as replacement of ventilation fan.

50.Now T contends that the table of calculation prepared by his secretary was incorrect.  Yet the rent book or the records that he referred to above was not disclosed.  By asserting the rent that the tenant should have paid, T is effectively holding F personally liable for the rent.  In my view, there is no legal basis for that.

51.T alleges that except for the rent collected during the period between August and December 2002, the rest had not been deposited into the joint bank account in the name of F and his ex-wife in Hong Kong for the purpose of repaying the mortgage instalments in respect of the HK Property.  Some, though deposited, had also been withdrawn.

52.On balance, I accept F’s evidence in this respect; and find that the actual rental income collected in respect of the HK Property as explained by F was the correct amount.  As pleaded and particularised pursuant to the order of the court, the amount was HK$141,730.00.

Payments made by T to and for F

53.According to F, T used to make payments to enable the repayment of the mortgage instalments in respect of the HK Property.  He had allegedly stopped sending her money since February 2002 for such purpose.  She would make up the shortfall from time to time out of her money.

54.In her email to T towards the end of December 2004 (mentioned above), F made a similar complaint.  She complained that with the monthly rental income of about HK$5,300, she had to make up the shortfall of about HK$10,000 a month for 30 months for the repayment of the monthly mortgage instalment in the amount of over HK$15,500 together with the rates, management fees, land rent and insurance.

55.T contends that he has made many payments to and for F both in Canadian dollars and in Hong Kong dollars since April 2001.  The last one was made in Hong Kong on 12 October 2006.

In Canadian dollars

56.T alleges 14 payments to or for F in the total sum of CAD 23,104.69 during the period between April 2001 and October 2004.  This is substantially more than the total sum of CAD 3,001 that F admitted in the statement of claim.

57.The alleged payments in dispute consists of the follows:

Items (1) and (2)

58.There is no dispute that being a non-resident, F was subject to the imposition by the Canadian Government of tax on her rental income from the letting of the Vancouver Property.  It would be 25% withholding tax on the gross rental income to be remitted to the authority.  Alternatively the non-resident might save tax by electing to file the relevant return within time and claim expenses incurred against the rental income of the year of assessment.  The provisions were explained by the revenue authority in its letter dated 24 August 2000, which is amongst the documentary evidence.

59.According to F, she should not be subject to income tax liability because the rental income from the letting of the Vancouver Property fell short of the expenses incurred for its maintenance.  According to T, F was nevertheless charged with income tax on her rental income as she had been late in filing the relevant returns in order to benefit from the tax saving provisions.

60.The evidence is that F was indeed subject to such income tax.  The evidence also shows, and there is no dispute, that T paid income tax on the rental income from the Vancouver Property by way of cheques in April 2001 and April 2002 for the years of assessment 2000 and 2001 respectively.  Items (1) in the sum of CAD 2,315.22 and (2) in the sum of CAD 685.39 above represented the income tax refund for the 2 years by the Canadian revenue authority in November 2001 and December 2002.  The dispute is whether F or T had received these tax refunds.

61.The evidence shows that both sums were paid out by the authority by way of orders payable to F and addressed to T at his Vancouver address.  T avers that as the tax paid by him for F has been refunded, F should reimburse him of the same.  F, however, denies having received any of these payment orders; and suggests that T has already pocketed these tax refunds.

62.The orders for payment were addressed to T.  It follows that F could obtain them only from T.  However, there is no evidence in support of T’s having forwarded the orders for payment to F.  I also note that in the case of another similar order for payment of tax refund in issue, i.e., that dated October 2004 for CAD 3,033.63 (Item 11 above), T actually deposited the cheque into F’s bank account as requested by F by email.  This also made more sense than sending the same to F particularly if she was at the time residing in Hong Kong.

63.In his evidence, T suggested that the orders for payment of the tax refund were as good as bank drafts.  F then suggested that that enabled T to pocket the same.  In the absence of objective evidence in support, F’s assertion that T managed to and did obtain payment on these orders notwithstanding the fact that F was the specified payee cannot be lightly accepted as fact.

64.On balance, I find it hard to prefer either party’s assertion in respect of what happened to these 2 orders for payment of tax refund.  In view of the undisputed payment of income tax in these 2 sums by T for F, I decide that these 2 sums ought to be taken into account as F’s liability to reimburse T.

Item (5)

65.Item (5) above in the sum of CAD 3289.45 was allegedly the income tax T had paid for F as demanded by the Canadian revenue authority in early December 2002 for the year of assessment 2001.  There is dispute as to whether T had actually made such payment.

66.In the demand, the income tax was stated to consist of non-resident tax in the sum of CAD 2,833.68; penalty in the sum of CAD 283.36 and interest in the sum of CAD 172.41.  T produced his cheque for meeting such demand.  The cheque was dated 20 January 2003.  According to him in court, this was also the date when he sent the cheque to the authority by post.

67.However, in the statement of account issued by the authority dated 24 January 2003, it was shown that adjustments were actually made on 20 January 2003 with the result that the amount owing as of the date of 23 January 2003 was CAD 29.16 only.  T sought to suggest that that was the result of his cheque payment.

68.The statement of account dated 23 January 2003 recorded the amount owing from the last statement was CAD 3,289.45.  However no amount paid since then was recorded.  As to the present amount owing by F in the sum of CAD 29.16, the statement provided an explanation of changes that accounted for the balance.  The changes consisted of credit adjustments to the amount of the assessed tax, penalty and interest as well as the charging of interest.  These changes were made on 20 January 2003.

69.Even assuming that it was possible for T’s cheque to reach the authority prior to this statement of account, I find it odd that the cheque amount was not recorded as the amount paid.  The fact was that the adjustments recorded in the statement did not tally with the amount of the cheque.  Whilst the credit adjustments to the assessed tax (CAD 2,833.68) and penalty (CAD 283.36) indeed balanced out the same amounts that made up part of the balance of the last statement (CAD 3,289.45), the interest adjustment (CAD 174.30) differed from the assessed interest (CAD 172.41) and thus the amount represented by T’s cheque.

70.Hence the adjustments to the balance of the last statement produced a credit balance of CAD 1.89.  This explained the reduction of the new interest charge of CAD 31.05 to the final sum of CAD 29.16 – the debit balance of the statement.  That could not be the result of the alleged payment of CAD 3,289.45 by T.

71.There is no contrary documentary evidence to show the cheque was cashed by the revenue authority.

72.I find on balance that the alleged payment of CAD 3,289.45 by T for F is not proved.

Item (11)

73.As mentioned above, item (11) above in the sum of CAD 3,033.63 was admittedly deposited into the bank account of F.  The dispute is whether this was refund of income tax previously paid by T for F or refund of tax on the disposition of the Vancouver Property in August 2004 previously paid by F.

74.F’s case is that she sold the Vancouver Property in August 2004.  The documents evidence that.  He further explained how the tax refund of CAD 3,033.63 related to her disposition of the Vancouver Property rather than the previous income tax.

75.On the face of it, this income tax refund order for payment issued by the Canadian authority did not differ from the previous ones mentioned above.  However, unlike the previous cases, T produced no evidence of actual payment of this sum to the revenue authority that eventually led the refund.  On balance, I accept F’s explanation in respect of this item.

Items (3); (4); (7); (8); and (9)

76.These were allegedly sums paid by T as loan to F.

77.Item (3) was a sum of a bank draft for the sum of CAD 4,000 paid to F in early November 2002.  F admits the receipt of the sum which was deposited as HK$20,200.00 into her bank account towards the end of November 2002.  However, F avers that this was reimbursement to her for her payment to T’s lawyer by the name of Liu who handled T’s litigation in the Mainland.  Therefore this sum is irrelevant to the management of the HK Property.

78.F agreed that she received items (4), (7), (8) and (9) but all of them were taken by F as reimbursement to her for the payments that she had made to lawyer Liu for T in connection with his litigation and the property deal of T in Shenzhen.  Though details of these payments could not be corroborated by actual receipts, F managed to explain the various payments (in her pleading) with reference partly to the diary/calendar that she produced.

Item (6)

79.The cheque for this sum of CAD 2,000 was drawn in favour of the management company of the Vancouver Property dated 1 April 2003.  This was said to be T’s response to the letter of demand for outstanding management fees in the sum of CAD 2,357.44 in February 2003.

80.However, the account history of F reveals that F in fact already settled the amount demanded by way of cheque on 11 March 2003.  In view of that, T explained that subsequent to his drawing the cheque, he went to the bank to alter both the dates and the payee of the cheque so that that became a cheque deposit into F’s bank account on 10 March 2003 instead.  This, he suggested, enabled F to make out her cheque for the payment on the following day.

81.Referring to the relevant entry, F suggested that the cheque deposit shown on 10 March 2003 could not be T’s cheque deposit as alleged.  In my view, T’s evidence in this regard was simply artificial and an obvious attempt to make use of the entries in the account history to fit his case.  I reject T’s allegation in respect of this item.

Item (10)

82.The evidence reveals that this item of deposit into the bank account of F was more probably than not the rental from the Vancouver Property, which was increased to CAD 1,080 since April 2004.  I reject T’s allegation in respect of this item.

In HK dollars

83.T had allegedly made the following 6 payments during the period between February 2002 and March 2004 for mortgage repayment in respect of the HK Property:

Item (1)

84.F agreed that in early February 2002, T gave her a cheque in the sum of HK$22,000 with the instruction that HK$10,000 of it was for repayment of the mortgage instalment.  The rest was to be applied to pay the lawyer’s fee for his litigation and property dispute in the Mainland.  The letter from T to F then evidences that.  HK$9,600 (as claimed) should be taken into account as T’s payment towards the repayment of the mortgage instalment.

Item (2)

85.There is dispute as to whether item (2) in the sum of HK$30,833.00 was in fact paid at all.  The bank statement of F shows that there was indeed such a sum but that was a transfer from her savings to her current account in early September 2002.  There was no entry of cheque deposit of such sum on the 24^th or any other day of August 2002.

86.This cheque apparently drawn on 24 August 2002 was numbered 135626.  Surprisingly, another cheque drawn by T over 2 years later on 18 November 2004 was numbered 135570.  The sequence of these cheques caused F to query whether T made out the cheque for the said HK$30,833.00 as a mere afterthought upon viewing the bank statements disclosed by F and for the purpose of his claim.

87.In court, T tried to explain that both cheques came from the same cheque book; and he could have used the cheques in random sequence.  In view of the gap between the 2 cheques, I do find his explanation appealing.

88.On balance, I am sceptical about how this cheque came about.  For the present purpose, I reject that T has paid F this sum.

Items (3); (4); (5); and (6)

89.There is no dispute that items (3) to (6) above were received by F.  According to her, these were reimbursements for her payment of legal fees to Lawyer Liu for his litigation and property deal in the Mainland.

Litigation and property deal in the Mainland

90.It could be seen that a lot of the payments that F agrees to have received from T until early 2004 related to the litigation and property deal of T in the Mainland.  Therefore those payments received were irrelevant to the management of the HK Property; and no account should be taken of them.

91.There is no dispute that T and a Madam Li Lin was involved in matrimonial (or, according to F, bigamy) litigation in Shenzhen.  But according to T, the litigation had concluded by the end of 2000.  T was also involved in litigation in connection with his purchase of a commercial property at Diamond Plaza in Shenzhen.  But according to T, such litigation had also concluded by late 2002.  In other words, his payments to F subsequently could not relate to the litigation in the Mainland as F alleged.

92.Indeed there is not much documentary evidence in support of F’s case in this respect.  Her witness, Mr Cheng, could not say much about those litigations; but managed to testify that sometime in 2003, he had handed a sum of RMB 5,500 (then equivalent to HK$5,300) to lawyer Liu on behalf of F.  Cheng did so at Shenzhen.

93.Amongst the evidence, there was the letter from T to F in February 2002 mentioned above whereby T enclosed a post-dated cheque for HK$22,000 to F with the instruction that part of the sum should be forwarded to lawyer Liu in relation to his appeal case and dispute with the developer of Diamond Plaza.

94.There was also a declaration that F made at the District Office in October 2002 which, according to her, was related to T’s litigation in the Mainland.  In his email to F in as late as December 2004, T was still requesting F to arrange the collection of the property deed from Diamond Plaza upon the advice of Lawyer Liu.  F was asked to contact lawyer Liu first for such purpose.

95.These are examples that tend to suggest that T’s engagement of lawyer Liu in connection with his litigation and property dispute in the Mainland had not concluded by the end of 2000 or 2002 as he alleged.  Importantly, T has not produced a single document that might help substantiating his case in this respect.  His explanation in court of the inability to disclose or to obtain any kind of proof or confirmation from the court or lawyer Liu is difficult to accept.

96.On balance, I accept F’s evidence in respect of those payments that she had received in both Canadian dollars and Hong Kong dollars as mentioned above as reimbursement of her payment to lawyer Liu on T’s behalf.

Whether settlement at HK$50,000 on 12 October 2006

97.There is no dispute that a sum of HK$50,000 was paid by T to F during their meeting in Hong Kong on 12 October 2006.  Their brother, Tsang Hon Kay (“Kay”), was present at that meeting.  Kay was a witness called by T.  There is no dispute that the sum of HK$50,000 was paid by way of split cheques for the sums of HK$20,000 and HK$30,000 respectively.  The cheque for HK$20,000 was given to Kay as F’s repayment for what she owed him.  F got the cheque for HK$30,000.

98.In dispute is the nature of the payment of this sum of HK$50,000 by T to and for F.  F considered that as part payment of what T owed her.  As to T, his pleaded case is that F was then aware that she owed him money and because of financial problem, T lent the sum of HK$50,000 to F upon her request.

99.There is no dispute that upon receipt of the HK$50,000, F signed a receipt acknowledging on its face that that was payment of the balance owed to her.  The pleaded case of T is that he kept the original of the receipt while F had the copy.  However, T denies the truth of the receipt, as it should be F that owed him money.  In line with his pleaded case, the sum was paid to F as another loan as agreed. According to T, he therefore amended the receipt by stating that it was another loan to F.

100.If what T alleges is correct, one wonders why the receipt was drafted in such terms that had no hint of the alleged loan by T; and why T would accept such receipt in the first place.

101.But when T gave evidence, he suggested that while he knew that it was F who owed him money, he was willing to settle by paying her HK$50,000.  Hence the receipt. Subsequently, F allegedly changed her mind and revoked her promise over the telephone.  Therefore he had to treat the payment as a loan.  He amended the receipt accordingly.

102.T’s pleaded case and his evidence in court can hardly be reconciled.  His above evidence also defies understanding, if he in fact considered F owed him money.

103.Though Kay was present during that meeting, I am not impressed by the value of his evidence in this respect.

104.Considering the circumstances surrounding the payment of the sum of HK$50,000 on 12 October 2006, I would slow to conclude and find that the parties reached full and final settlement merely on the strength of the use of wordings of the receipt signed on that day.  T’s alternative case on this basis simply does not sit well with his primary contention that that payment was yet another loan to F.

Conclusion

105.The accounts between T and F should therefore be as follows:

Conclusion

106.In view of the above, T is liable to pay F a sum of HK$238,652.02 together with interest.

107.Costs normally follow the event, unless the circumstances of the case are such that other order as to costs ought to be made.  As mentioned at the beginning of this judgement, the parties are responsible for their acrimonious conduct during the trial.  Noticeable court time was spent on arguments and averments by the parties that were at the end dismissed.  Again both parties are responsible.  Considering all the circumstances, I think it is fair to order that they bear their own costs of this action.

Order

108.I give judgment in favour of F for damages in the sum of HK$238,652.02 with interest at the judgment rate until payment.  I make a nisi order that each party shall bear their own costs of this action, including any costs reserved.  In the absence of application within 14 days to vary, the nisi order shall become absolute.

The Plaintiff, in person, present

The Defendant, in person, present

Please refer to HCMP2613/2011 for the relevant appeal(s) to the Court of Appeal.