CHOI WAI HING v. TAM YIK FU

1993, No. A11430

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

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J U D G M E N T

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1. The Plaintiff and the Defendant were husband and wife. They got married on the 31st of October 1981. Their marriage did not work well and a decree nisi was made on the 23rd of October 1992 which decree was made absolute on the 16th of December 1992. The decree was grant towards a petition by the Defendant for a divorce on the ground of a two years separation with consent.

2. In the petition for divorce dated the 22nd of June 1992, the Defendant did not pray for any ancillary relief. Similarly in the acknowledgment of service, the Plaintiff made no application pertaining to her financial position at all. Indeed, in a separation agreement dated July 1989 signed by the Plaintiff and the Defendant, the following was stipulated:

"Hereafter in all matters, each party shall not be liable to the other, nor interfere with each other, and shall not go for his/her own futures, this agreement is hereby evidenced in writing."

3. Further they also set out the terms of their divorce in a document dated 26th of August 1991 as follows:

"1. Custody of Children: no children, not necessary.

2. Maintenance: Husband insists not to pay any, wife also agrees not to receive any.

3. Costs: Both parties agree to share equally, that is, each pays HK$3,000.00, total costs HK$6,000.00. Both parties agrees to have no further claim against each other."

4. By a deed of assignment dated 21st of December 1987 and registered in the District Land Registry, Island by Memorial No. 138284, the Plaintiff became the registered owner of the premises at Unit B, Ground Floor, No. 13 Yung Shui Long New Village, Lamma Island.(hereinafter called the said premises)

5. The said premises had been used by the Plaintiff and the Defendant as their matrimonial home until their marriage broke down and thereafter, the Plaintiff lived there alone.

6. In November 1993, the Plaintiff intended to sell the said premises for the sum of HK$775,000.00 and she discovered that an instrument was registered against the said premises in the District Land Office by the Defendant. The instrument was dated the 17th of December 1991 and titled "Notice of Third Party Interest" in which the Defendant alleged that he paid the entire purchase price of the said premises of HK$185,000.00 and was therefore the true and sole beneficial owner of the said premises. The Plaintiff was holding the said premises as Trustee on his behalf and it was intended that should the circumstances demand, the Plaintiff would transfer the said premises back to the Defendant's name any time at his request.

7. The Plaintiff commenced the present proceeding against the Defendant seeking a declaration that the contents of the "Notice of Third Party Interest" registered against the said premises were false and therefore null and void. The Plaintiff also seeks exemplary damages against the Defendant.

8. To facilitate the sale of the said premises, the Plaintiff had taken out an interlocutory injunction application against the Defendant which application was subsequently compromised to enable the Plaintiff to sell the said premises.

9. It is the Defendant's case that he contributed wholly or in part the purchase price of the said premises and is therefore entitled to the whole or part of the proceed of the said premises.

10. The Plaintiff denies the Defendant's allegation. The Plaintiff claims that the purchase price of the said premises was entirely funded by herself. Alternatively, even if the Defendant did contribute part of the purchase price of the said premises, his contribution was by way of gift in favour of the Plaintiff.

11. It is the parties' consensus that the main issue for the Court to resolve is who funded the purchase of the said premises and if the Defendant contributed wholly or in part such purchase price, whether the doctrine of presumption of advancement operates against him and if not, to what extent he should be entitled to the proceed of the sale of the said premises. Should the Court find against the Defendant on the main issue, whether it is a proper case to award exemplary damages against the Defendant. The Plaintiff concedes that she suffered no special damages.

12. It appears not in dispute that before their marriage, the Plaintiff and the Defendant purchased in their joint names in March 1981 the premises at Flat No. 11 on the 12th Floor, Moon Wah Building, Nos. 9-23 Sui Man Road, Hong Kong.(The Moon Wah Premises) and the purchase price was financed by the following contributions;

1. $100,000. mortgage loan from the Hang Seng Bank Ltd.

2. $60,000. loan from the Defendant's brother in law, Mr. Wong Loi.

3. $30,000. loan from the Defendant's mother.

4. About $30,000. contribution from the Defendant, and

5. About $20,000. contribution from the Plaintiff.

13. It is also not in dispute that the mortgage was discharged in early 1982. In July 1985, the Defendant was investigated by the ICAC and in order to avoid possible confiscation, the Defendant assigned his share of the Moon Wah premises to the Plaintiff by a Deed of Gift dated 23rd of October 1985. The Defendant was subsequently convicted of bribery offenses and was sentenced to a term of 18 months imprisonment. He was only discharged from prison in April 1987.

14. The Moon Wah premises was sold for $250,000.00 shortly after the purchase of the said premises. A sum of $250,000.00 was paid into the account of the Plaintiff on the 28th of December 1987 and from the same account, a sum of $140,000.00 was transferred into the account of the Defendant by the Plaintiff.

15. Of the purchase price of the said premises, apart from an initial deposit of $5,000.00 paid by the Defendant, the balance of $180,000.00 was paid by the Plaintiff. It is not disputed that the further deposit of $60,000.00 was paid by the Plaintiff and the balance of $120,000.00 was paid by means of two cashier order of $40,000.00 and $80,000.00 respectively by debiting the Plaintiff's account with the Hang Seng Bank on the 21st of December, 1987.

16. It is the Defendant's case that although the Plaintiff did pay the sum of $180,000.00, the understanding was that she was only paying the sums on behalf of the Defendant and that she would be reimbursed by the Defendant from the Defendant's share of the proceed of the sale of the Moon Wah premises. Hence, the Plaintiff was holding the said premises in trust for the Defendant and the Defendant was the sole beneficial owner of the said premises.

17. The Defendant did not dispute that the Plaintiff had transferred a sum of $140,000.00 into his account on the 31st of December 1987. However the Defendant claimed that such sum was not his share of the proceed of the sale of the Moon Wah premises at all. The Defendant suggested that he had been trading in fur business in Japan and at the material time, a profit of about $300,000.00 in cash had been accumulated and was put in a cash deposit box in the name of the Plaintiff. The $140,000.00 was the balance of the said profit of $300,000.00 after repaying some loans from the Plaintiff's parents and Mr. Wong Loi in connection with the purchase of the Moon Wah premises as well as allowing the Plaintiff to retain part of the said profit.

18. Both the Plaintiff and the Defendant claimed that the fur business in Japan belonged to her or him to the exclusion of the other and so was the profit. However it seem not in dispute that a sum of $300,000.00 was paid over to the brother-in-law of the Defendant, Mr. Wong Loi for safe-custody in or around July 1985 when the Defendant was under investigation by the ICAC. Subsequently, 2 sums of $30,000.00 and $40,000.00 was repaid by Wong Loi as the legal expenses for the Defendant. After the Defendant was released from jail, Mr. Wong Loi paid him a sum of $190,000.00 as a full discharge of the said sum of $300,000.00, taking into consideration the initial loan of $60,000.00 from Mr. Wong Loi in connection with the purchase of the Moon Wah premises. The Plaintiff claims that such sum of $300,000 was the profit from the fur trading whereas the Defendant claims it was profit from another source.

19. The Defendant's case as set out in the Defence and Counterclaim and repeated by him in his statements and in his evidence in chief is that the purchase price of the said premises came from him alone and it was agreed that the said premises would be registered in the Plaintiff's name for business convenience and that the defendant remained the sole beneficial owner of the said premises. The suggestion was that the $180,000.00 paid by the Plaintiff to purchase the said premises was paid by her on behalf of the Defendant and that she would be repaid by the Defendant from the proceeds of the sale of the Moon Wah premises. To push the Defendant's case to its logical conclusion, the Defendant was saying that he was to be entitled to the entire proceeds of the sale of the Moon Wah premises.

20. However, under cross-examination, the Defendant's evidence changed substantially. He said during the marriage with the Plaintiff, two separate sums of $300,000.00 each had been made and saved, one from trading of furs in Japan and another from a source that he did not disclosed. From the way in which the Defendant gave evidence and the undisputed fact that he was convicted and sentenced to jail for accepting bride, it might not be too difficulty to infer such undisclosed source. The Defendant said it was the $300,000.00 earning from the undisclosed source that was given to Mr. Wong Loi in 1985 for save custody after it was taken out from a time deposit account in the name of the Plaintiff. It was not disputed that this entire sum of $300,000.00 was subsequently repaid to the Defendant or used by him to the exclusion of the Plaintiff.

21. The Defendant suggested that the trading of furs in Japan was in fact a joint effort on the part of both himself and the Plaintiff. He said the boss was introduced to the Plaintiff by him and that he himself would travel to Japan, be it less frequent than the Plaintiff. He said he would leave Hong Kong on Saturday afternoons and return on late evening on Sundays in order not to affect his job at the Japanese Consulate in Hong Kong. He said of the sum of $300,000.00 earned and saved from trading in furs, $100,000.00 was used to paid up the mortgaged loan in connection with the Moon Wah premises, including a loan from the plaintiff's parents, another sum of $60,000.00 was paid back to Mr. Wong Loi and the balance was kept by the Plaintiff.

22. While the Court is more inclined to accept the Defendant's evidence that the trading in furs was a joint effort on the part of both the Plaintiff and the Defendant and not solely to the credit of the Plaintiff as claimed by her, the Defendant's evidence did not support his case that he should be entitled solely to the proceeds of the sale of the Moon Wah premises and/or that he funded entirely himself the purchase price of the said premises.

23. On the Defendant's own case, the Moon Wah premises belonged to both of them jointly. Indeed at one stage of his evidence, the Defendant said he considered both of them equally entitled to the Moon Wah premises. It is perhaps not difficulty to understand such attitude. After all, the Moon Wah premises was intended to be their matrimonial home when they got married.

24. That being the Defendant's evidence, there was absolutely no basis for asserting that the Defendant was entitled to the entire proceeds of the Moon Wah premises or that he funded entirely the purchase price of the said premises. The suggestion that the sum of $140,000.00 paid into his account by the Plaintiff on the 31st of December 1987 was a repayment by the Plaintiff to the Defendant as his profit from the fur trading must also fail.

25. In so far as the Defendant's counterclaim rests on the assertion that he funded the entire purchase price of the said premises, his case had not been made out at all.

26. Mr. Liang on behalf of the Defendant is compelled to put the Defendant's case on a 'fall-back' situation, suggesting that the said premises was purchased in the course of the marriage, used as the matrimonial home, and partly funded by the Defendant and must therefore be intended to be belonged to both of them beneficially. It is suggested that the Plaintiff in one of her statements indicated that the Defendant had made a loan to her to enable her to purchase the said premises. The Plaintiff denied having obtained any loan from the Defendant. In any event, it was never the Defendant's case nor his evidence that the Plaintiff ever obtained a loan from him either. At the most, the Defendant can only claim to have partly contributed towards the purchase price of the said premises by suggesting that the Plaintiff must have used part of the profit from the fur trading in paying for the price of the said premises.

27. I accept that when a property is acquired in the course of a marriage, it is not too difficulty to infer that it is intended both the husband and the wife will be jointly entitled to the property although it was only registered in the name of one of them. The absence of evidence to show that one of the party has contributed directly towards the purchase price or the extent of such contribution may not be that important. What is important is to ascertain the intention of the parties at the material time.

28. When the said premises was purchased and then registered in the name of Plaintiff, was it intended that the Defendant would also be entitled to it beneficially ?

29. Mr. Liang emphasized on the payment of the initial deposit of $5,000.00 by the Defendant. On the other hand, there were a number of factors indicating clearly that the Defendant was not to have any interest in the said property.

1. When the Moon Wah premises was purchased, it was registered in the names of both the Plaintiff and the Defendant. The said premises was only registered in the Plaintiff's name.

2. The entire purchase price, with the exception of the initial deposit of $5,000.00 came entirely from the accounts in the sole name of the Plaintiff.

3. The profit of $300,000.00 from the undisclosed source was paid to and/or used for the sole benefit of the Defendant to the exclusion of the Plaintiff.

4. Shortly after the Moon Wah premises was sold, the Plaintiff paid a sum of $140,000.00 to the Defendant which clearly meant to cover the Defendant's share of interest in the Moon Wah premises.

5. The Defendant had never claimed to be entitled to the said property before he registered the Notice of Third Party Interest and such Notice was in fact registered without the Plaintiff knowing about it.

30. On the evidence before the Court, I am inclined to the view that when the said premises was acquired, both the Plaintiff and the Defendant had decided to operate separately and independently on financial matters and it was never intended that the Defendant would retain any interest over the said premises at all despite the payment of the $5,000.00 initial deposit. That was why the said premises was registered in the sole name of the Plaintiff and that was why the Plaintiff found it necessary to pay to the Defendant the sum of $140,000.00 on the selling of the Moon Wah premises which sum included the repayment to the Defendant of the said sum of $5,000.00.

31. Such view was reinforced by the conduct of the parties when they were arranging a divorce in 1991. If the Defendant intended to retain or claim to have any interest in the said premises, he would not have signed the separation agreement and the divorce document containing term to the effect that he would have no claim against the Plaintiff. He would not have, in his own petition for divorce, clearly indicated that he had not claim for any ancillary relief against the Plaintiff.

32. The Defendant claimed that at the time of the divorce, it did not occur to him that it was necessary to settle the ownership of the said property and that his lawyer had not advised him of such need. I do not accept such assertion. If his lawyer had not advised him of such matter, perhaps the proper party to claim against would be his lawyer. I also do not accept the assertion that there was any agreement between the Plaintiff and the Defendant that the Plaintiff would hold the said premises or any part thereof for the benefit of the Defendant.

33. There is in my view absolutely no merit in the Defendant's claim over the said property and the Counterclaim by the Defendant against the Plaintiff must be dismissed.

34. The only outstanding matter is the claim by the Plaintiff against the Defendant for exemplary damages. It is the Plaintiff's contention that by registering the Notice of Third Party Interest against the said premises, the Defendant was guilty of outrageous conduct of malice and fraud, calculated by him to make a profit for himself to justify punitive damages against him.

35. I do not consider it appropriate to order exemplary damages in a case involving a party to a marriage claiming another party over property acquired during the course of the marriage at all. The Defendant might take the view that he had a legitimate claim over the said property. Such view, misguided as it obviously was, is not something that calls for punitive damages.

36. I feel unable to leave the case without mentioning one further matter. The said property, on the Defendant's assertion, is clearly a matrimonial property and if he claims to have any interest over it, he should have pursued his claim in the family court in the course of the divorce proceeding. If he decided not to pursue his claim in the divorce proceeding, he must be estopped from making a similar claim subsequently in another court. The Plaintiff had not relied on this and I have not heard argument from the parties. If the Plaintiff had relied on it, the Defendant would probably find it difficulty to resist.

37. In the light of the history of the case, the only order I need to make is to dismiss the Defendant's counterclaim. I also order that the Defendant is to pay the Plaintiff's costs of the proceeding to be taxed if not agreed. As the Defendant is legally aided, his own costs is to be taxed in accordance with Legal Aid Regulations.