COSMOS MUTUAL LTD v. TONG BING LUN

HCA 2419 / 2005

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 2419 OF 2005

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BETWEEN

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J U D G M E N T

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I.    Introduction

1.  Cosmos Mutual Limited (the Plaintiff) is the registered owner of Apartment A (“Apartment A”) and Apartment C (“Apartment C”) on Park Level of Park Chalet, No. 10 Sear Ranch at Lantau Island. 

2.  It is common ground that (a) Cosmos is the alter ego of one Ms Fong Lai Kuen, and (b) Ms Fong and Mr Tong Bing Lun (the Defendant) had been lovers.

3.  It is Cosmos’ case that Mr Tong has been wrongfully occupying part of Apartment A and the entire Apartment C (“the licensed premises” ^[1]) after his licence to use and occupy the same was validly terminated by Cosmos on 28 August 2005.  By way of the present action, Cosmos claims against Mr Tong for vacant possession of the licensed premises, various injunctions to restrain Mr Tong from using the same, and damages in mesne profit, utility charges and management fees.

4.  Initially, Mr Tong in his pleading raised various defences and counterclaimed for a declaration that he had a beneficial interest in Apartments A and C, and that Cosmos had been holding the same on trust for him.  However, in the middle of the trial[2]:

(1)  Mr Tong confines his defence and counterclaim to a narrow one:  that he is entitled to occupy and use Apartment Apursuant to an oral agreement reached between him and Ms Fong that he could live there for life (“the oral life licence agreement”).   It is Mr Tong’s case that the oral life licence agreement was reached sometime in September 1989 when Apartment A was purchase by him for Ms Fong as their intended matrimonial and retirement home. 

(2)  Mr Tong confirms that he is no longer claiming any right to continue to occupy and use Apartment C.

5.  Ms Fong denies that there was the oral life licence agreement.

6.  In light of the above, the only principal issue before me for the trial is whether in September 1989, Mr Tong and Ms Fong reached the oral life licence agreement relating to Apartment A.

7.  This is entirely a factual question, and given that (a) Apartment A is registered in Cosmos’ name, and (b) Mr Tong accepts that Apartment A was purchased for Ms Fong beneficially in 1989, the burden is on Mr Tong to prove the oral life licence agreement.

II.   Background facts

8.  Unless otherwise stated, the following are undisputed background facts leading to the present dispute.

9.  In 1983, Ms Fong and Mr Tong met each other when they were on a holiday trip to Australia.  They were themselves respectively married at that time.   Ms Fong was a housewife and was relatively well off financially.  Mr Tong was a conveyancing clerk working in a law firm.

10.  Ms Fong and Mr Tong soon developed an intimate relationship, which lasted for some twenty years as explained below.

11.  Throughout their relationship, Mr Tong had made investments in various business ventures and been involved in properties speculations.  He had also been giving advices to Ms Fong as to the purchase of properties. 

12.  Although accepting that between 1984 and 1988, he had been borrowing money from Ms Fong for his investments in business ventures and speculation on properties, Mr Tong disputes at trial the total amount of the loans.

13.  In about 1987, Mr Tong took Ms Fong to Sea Ranch for a leisure visit.  This was the first time Ms Fong visited Sea Ranch.  They both liked the place given her open and quiet environment. 

14.  In November 1988, Mr Tong was divorced from his wife as his wife found out about the affairs he had with Ms Fong.

15.  In August 1989, Ms Fong emigrated to Canada with her husband and their young daughter.   However, her relationship with Mr Tong continued, and she had returned to Hong Kong from time to time to meet up with him.

16.  Soon after her emigration to Canada, in September 1989, Mr Tong wrote to Ms Fong and said he had found a property which he knew she would like and would purchase it for her^[3].

17.  Ms Fong then paid a visit back to Hong Kong in about September and October 1989.  Apartment A was eventually purchased and registered in Ms Fong’s name.  Ms Fong paid HK$100,000 as part of the purchase price, and returned to Canada.  Mr Tong had it mortgaged for HK$270,000 to meet the balance of the purchase price.  He had been paying the instalments of the mortgage before he eventually redeemed it in March 1991.

18.  In May 1990, Mr Tong also signed a written Chinese document (“the Written Acknowledgement of Debt”), acknowledging that he owed Ms Fong a total sum of HK$710,045.76 (“the Agreed Debt”).  It was provided in it that the Agreed Debt would be settled by a number of transactions involving the transfer of certain properties to Ms Fong with agreed values, and the transfer of shares in a company which owned a property.

19.  Mr Tong says the transactions set out in the Written Acknowledgement of Debt had all been carried out.  Ms Fong however says most of the transactions were not completed, and the Agreed Debt was not fully settled.

20.  Between 1990 and 1996, Mr Tong had been further borrowing various sums of money from Ms Fong and had used some of Ms Fong’s money without her prior consent.  Apparently, most of the money was used for his speculations on properties.   Mr Tong had made  a partial repayment by assigning to Ms Fong his property at Wing Lok Street. 

21.  In 1993, Ms Fong returned to Hong Kong for good from Canada after obtaining her Canadian citizenship, but still went back to Canada from time to time to visit her daughter.    She sold her former matrimonial home for HK$7.55 millions. 

22.  In February 1994, Ms Fong purchased Apartment 2A above Apartment A at Sea Ranch.  By 1995, Ms Fong was also divorced from her husband. Ms Fong says the reason for the divorce was that she could no longer stand her husband’s affair, which had become an open secret amongst their friends.

23.  After her return to Hong Kong, Ms Fong had been living in Sea Ranch at Apartment A.  Mr Tong also lived there.   Since then they had been to overseas trips occasionally.

24.  In June 1997, Mr Tong acquired Apartment C at Sea Ranch in the name of Victory Score Ltd, of which his children were the shareholders and directors.  Apartment C adjoined Apartment A, and shared a common front garden.

25.  In September 1997, Mr Tong caused Victory Score assigned Apartment C to Ms Fong at the value of HK$1 million.  It is Ms Fong’s case that he assigned Apartment to her as partial repayment of the outstanding debt owed to her by him.  Mr Tong disputes that that was the purpose of the assignment. 

26.  In the later half of 1998, there were renovations carried out at Apartments A and C in accordance with Ms Fong’s idea on design.  The renovations resulted in the two apartments sharing one kitchen, one internal bathroom, and two bedrooms (one in each of the apartments).  Mr Tong paid for the renovations in the sum of HK$330,000.  Ms Fong says the renovations were paid for by Mr Tong, as she agreed that HK$500,000 could be set-off against the then existing debt owed by him to her. 

27.  Between April 1998 and October 1999, two High Court actions[4] were respectively issued in Ms Fong’s name against the management company of Sea Ranch (collectively “the Management Dispute Actions”), seeking to remove the manager.  Mr Fong says Mr Tong in fact used her name only to initiate the actions, since she was the owner of properties at Sea Ranch, and they were effectively Mr Tong’s action.

28.  In November 1999, Mr Tong’s law firm, which acted for Ms Fong in the Management Dispute Actions, confirmed in a letter that it would waive Ms Fong’s legal fees in these actions.

29.  At the same time, since about 1998 or 1999, the relationship between Ms Fong and Mr Tong had experienced ups and downs, and started to deteriorate.  They had frequent quarrels over money.  Since March 1999, they had started to sleep in separate rooms. 

30.   In April 2001, judgments were entered against Ms Fong in the Management Dispute Actions with costs.   

31.  Between May and September 2001, on the advice of Mr Tong, Ms Fong assigned her various landed properties to other persons or companies to avoid enforcement of the costs order against her properties.  She assigned Apartment A to Cosmos, which then further assigned it to Ms Fong’s friend, she also assigned Apartment C to one of her friends.  Apartment 2A was assigned to Redford Ltd.

32.  Later in September 2001, a Mareva injunction for the benefit of the costs order was granted against Ms Fong.  On the advice of Mr Tong, Ms Fong promptly left Apartments A and C with him to live in various places in Hong Kong and the Mainland for temporary purposes. 

33.  In October, the management company commenced proceedings to seek to set aside the above transfers of Ms Fong’s various properties.   Soon thereafter, Ms Fong settled with the management company on the legal costs liability in the sum of HK$2 million.   The Mareva injunction was then discharged, and the action to set aside the transfers was not pursued.

34.  By this time, the relationship between Ms Fong and Mr Tong had broken down almost completely.   Since leaving Sea Ranch, Ms Fong has not moved back to live at Apartments A and C, while Mr Tong has.

35.  In about 2002, Mr Tong retired.

36.  In April 2003, all of Ms Fong’s properties were reassigned back respectively to Cosmos.

37.  In about May 2005, a further dispute arose between Ms Fong and Mr Tong, where Ms Fong suspected that Mr Tong had brought other women to Apartment C.  Mr Tong’s belongings were removed from Apartment A by the maid under Ms Fong’s instructions.

38.  Later, Ms Fong learnt that Mr Tong had chained and padlocked the entrance to Apartments A & C, which prevented Ms Fong’s friends to use the place for holidays.

39.  By a letter dated 29 July 2005 issued by Ms Fong’s solicitors, Ms Fong informed Mr Tong that his licence to live at Apartments A & C was terminated, and he was given a one-month notice to move out. 

40.  Mr Tong did not reply to this notice, but has continued to stay at the licensed premises.

41.  In November 2005, Cosmos brought the present proceedings against Mr Tong seeking, amongst others, vacant possession of the licensed premises.

III.    The parties’ principal case and evidence

General observation

42.  Only Ms Fong and Mr Tong give evidence at trial. 

43.  In the course of the trial, lots of evidence have been adduced and cross-examined upon in relation to their relationship and the financial dealings between them before and after the purchase of Apartment A.

44.  However, in the middle of his oral evidence, Mr Tong confirms with the Court that his only case is the oral life licence agreement.  He also confirms that he is not seeking any beneficial interest in Apartment A or Apartment C, and the life licence agreement only relates to Apartment A.  He accepts that he has no right to occupy Apartment C if Ms Fong via Cosmos does not consent to that.

45.  In light of Mr Tong’s above case, in my view, quite a substantial part of the evidence adduced and contested upon is irrelevant, or is of only marginal relevance, to the finding of whether there was the oral life licence agreement. 

46.  In the premises, in this judgment, I will primarily deal with the evidence which I think will reflect significantly on the question of whether there was the oral life licence agreement.

Whether there was the oral life licence agreement

47.  The question of whether there existed the life licence oral agreement is a factual one.  It is essentially the assessment of credibility of the witnesses’ evidence.

48.  As I said above, the burden is on Mr Tong to prove the life licence oral agreement.  I will therefore look at his evidence first.

Mr Tong’s case and evidence on the oral life licence agreement

49.  Mr Tong’s case on how the parties reached the oral life licence agreement can be summarized as follows.

50.  Not long after they had met with each other in Australia in 1983, and until Ms Fong emigrated to Canada in 1989, he had been cohabitating with Ms Fong at various flats at different times.  Mr Tong purchased all these flats at different times, which were sold subsequently for a profit.   

51.  Before Ms Fong emigrated to Canada, they agreed that they would first respectively divorce their spouse and got married after Ms Fong had obtained the Canadian citizenship. 

52.  In about 1987, Mr Tong and Ms Fong visited Sea Ranch for the first time.  Sea Ranch is a holiday resort and residential development in Lantau Island. 

53.  After the visit, they both liked the place very much, and thought that the place would be very suitable for retirement since it was quiet with much open space and greeneries. They also said that if an opportunity arose in the future, they should purchase a unit there for retirement purpose.

54.  Sometime in August or September 1989 after Ms Fong had emigrated to Canada, Mr Tong noticed from the newspaper that someone was putting up Apartment A on sale.  He thought of his and Ms Fong’s fondness and desire of owning a property at Sea Ranch for retirement.   He therefore contacted the owner with the intention of purchasing the unit.  He also promptly wrote to Ms Fong telling her that he had located a suitable place to be purchased for her, which he knew she would like it.

55.  When Ms Fong returned to Hong Kong for a visit in September 1989, he made an appointment with the owner of Apartment A for viewing.  He and Ms Fong then went to look at Apartment A.  After viewing, they decided to buy it, and he immediately paid the owner a deposit of HK$30,000.

56.  On their return from Sea Ranch on the ferry, they discussed and agreed that Apartment A was for their joint use for retirement, and would be used as their matrimonial home until they died. 

57.  Ms Fong paid HK$100,000 as part of the purchase price.  Mr Tong paid the balance of it by way of mortgage, which he discharged about 2 years later.    Mr Tong accepts that Apartment A was purchased for Ms Fong beneficially.

58.  It is Mr Tong’s case that the discussions and conversations made on the first and second visit to Sea Ranch, understood together, amount to an oral agreement between them that, although Apartment A was purchased for Ms Fong, he would be given a life licence to live there for his life.  This is so because Apartment A was purchased for the agreed and joint objective to be used as their matrimonial home and for retirement.  Mr Tong also says the licence was irrevocable since Apartment A was purchased for her based on that intention.

Ms Fong’s case and evidence on the oral life licence agreement

59.  Ms Fong’s primary case and evidence on the purchase of Apartment A is essentially as follows.

60.  Although accepting that they had an affair and had been meeting each other at various flats bought by Mr Tong at different times for speculation purposes, Ms Fong says she had not been cohabiting with Mr Tong before she left for Canada in 1989.   During this period of time, she had not stayed overnight with Mr Tong when they met, and had always returned to her home to look after her young daughter.

61.  Further, given that they had their own families, Ms Fong says both of them had always recognized that their relationship was nothing but only an affair, and there was never any agreement or understanding that they would respectively divorce their spouses and get married with each other eventually. 

62.  Before she emigrated to Canada, the total outstanding sum of the loans that Mr Tong had borrowed from her was HK$1,050,000.   Amongst these loans, she had lent HK$850,000 by different trenches to Mr Tong for him to invest in a jewellery business carried on under the name of B B Gems Ltd.

63.  Although he had been saying that he would repay her all the loans, he had only made some partial repayments.

64.  It is Ms Fong’s evidence that Mr Tong’s promise to purchase Apartment A for her was his attempt to impress her and to continue their relationship.   Later, when she found out that, without her knowledge, Mr Tong had to in fact mortgage Apartment A to pay for the balance of the purchase price, she insisted that he should redeem it as soon as possible.  Eventually, Mr Tong did that and it was agreed that HK$270,000 (being that part of the balance of the purchase price) was used to set-off part of the then outstanding loans owed by him.

65.  Ms Fong denies that there was the oral life licence agreement.  Although she accepts that on their first visit to Sea Ranch in 1987, she indicated that she liked the place, Ms Fong denies that on their return from Sea Ranch in September 1989 she discussed and agreed with Mr Tong that they would use Apartment A as their home and for retirement.

66.  Mr Fong also says she had allowed Mr Tong to move in to live at Apartment A, as Mr Tong said that it was only for temporary purpose while he was looking for a suitable place for himself.  Ms Fong also accepts that she was happy at that time to have his company.    However, Mr Tong has since not moved out of Apartment A, notwithstanding her repeated demands and requests in later years when their relationship broke down.

IV.    Discussion of the evidence

Mr Tong’s evidence

67.  I do not accept Mr Tong’s evidence on the oral life licence agreement.  My reasons are as follows.

68.  Mr Tong’s evidence that there was the oral life licence agreement is incredible when looked at against the contemporaneous documentary evidence:

(1)  It is common ground that since 1998, their relationship had been deteriorating and Ms Fong had on divers occasions asked Mr Tong to move out of the apartments. 

(2)  In these circumstances, if there were in fact the oral life licence agreement, one would have expected that Mr Tong would hastily remind Ms Fong of the agreement, and assert his right to remain in Apartment A.

(3)  However, instead of doing so, between 2003 and 2004, Mr Tong had agreed in writing[5] that he would move out of the Apartment A by notifying Ms Fong the specific time by which he would do so.

(4)  This is in stark contradiction of his case that there was the oral life licence agreement.

(5)  Under cross-examination, Mr Tong explains that he did not want to mention in writing about the oral life licence agreement, as this would only serve a blow to Ms Fong when she was in a bad mood. 

(6)  I do not accept this explanation: 

(a)  Mr Tong did not seem to be worried about serving a blow to Ms Fong when in the period between September 2004 and January 2005, he had made various written proposals[6] to her to seek for a share of beneficial interest in Apartments A (and C) (which he knew he did not have any).   I find it hard to believe that Mr Tong would on the one hand find it inappropriate to remind Ms Fong about the oral life licence agreement because he was worried that this would serve a blow to her, while on the other hand he had no problem in asking Ms Fong to give him a beneficial interest in the apartments.

(b)    It is also inexplicable, if there were in fact the oral life licence agreement, as to why in making these proposals for getting a beneficial interest in both Apartments A and C (which have not been accepted by Ms Fong), Mr Tong had also never mentioned about his right to live there for life, or the discussion he allegedly had with Ms Fong for using Apartment A for retirement purpose.

(c)  Further, their relationship had deteriorated substantially generally by this time. By 2001 or so, Ms Fong had already moved out of Apartment A, and they seldom saw each other.  Their relationship had by then practically broken down almost completely.  I find it contrary to common sense that Mr Tong would still refrain from mentioning the oral life licence agreement, if in fact there were one, simply because he consistently did not want to upset her.  

(d)    The lack of any written reminder to Ms Fong of the oral life licence agreement is also contrary to Mr Tong’s own evidence that he had a “propensity to put pen to paper to have a contemporaneous record of events or my thoughts”[7].

(7)  For the above reasons:

(a)  the fact that Mr Tong has never mentioned about the oral life licence agreement in (a) his many and various letters or notes written to Ms Fong concerning his intention to move out of Apartment A at her request, and (b) his various written proposals to seek a beneficial interest in Apartment A clearly supports, in my view, that there was never the oral life licence agreement; and

(b)     the fact that, upon receiving the notice of termination in July 2008, Mr Tong had not made any written reply to assert his right to remain in Apartment A by reason of the oral life licence agreement,

show that there was never such an agreement between the parties.

69.  Further, I also find not find Mr Tong a credible and reliable witness.

70.  First, Mr Tong does not impress me as a frank and honest witness.   He generally does not give evidence in a straightforward manner: Even in answering simple and direct questions, he usually starts off with a long preamble (which is often wholly irrelevant to the questions asked), which is followed by a convoluted explanation and answer.  He also often takes long pauses and is hesitant in answering questions.

71.  Secondly, Mr Tong has changed his fundamental case repeatedly throughout the trial without any good explanations, which in my judgment casts serious doubts on the credibility of his case and the evidence in support of it: 

(1)  In his Defence and Counterclaim, he pleaded that he had a beneficial interest in Apartments A and C and sought a declaration to that effect.  At the beginning of the trial, Mr Tong through his counsel amended the pleading and sought also a declaration that he had a life licence to use and occupy both Apartment A and Apartment C.  As I mentioned above, in the middle of the trial, Mr Tong further changes his case completely and accepts that Ms Fong has the entire beneficial interest in these properties[8], and limits his case to the oral life licence agreement relating to Apartment A only. 

(2)  In his witness statements, he sets out evidence which is later contradicted by his oral evidence.  For example, he said in his witness statement that he wrote the letter to Ms Fong in September 1989 concerning the idea of buying her a property because he wanted to win her heart.  Under cross-examination, he disowns this part of the evidence and says he wrote the letter to materialize the understanding that they were to retire in Sea Ranch.  

(3)  When asked as to why there are those contradictions, he repeatedly blames his lawyers for drafting the statements, and that he only followed and respected their advice even though he knew that what were stated in the statements were incorrect.  I find this explanation incredible and do not accept it. 

(4)  Mr Tong put to Ms Fong in cross-examination that she did not seek repayments of debts because she had already made profits to the tune of HK$6 millions from property speculations as advised by him in between 1985 and 1992.  However, when he was cross-examined about the inconsistency of such an assertion with the Written Acknowledgment of Debt whereby he acknowledged the Agreed Debt and proposed how it was to be settled, Mr Tong immediately says (unconvincingly in my view) that he has been misunderstood as to the case he had put to Ms Fong.  As far as I can see, there cannot be any misunderstanding of the case that he has put to Ms Fong.  The fact that he could not explain what was the actual case that he had wanted to put to Ms Fong underlines the absurdity of his explanation.

72.  The following are also some examples of Mr Tong’s evasiveness in giving evidence, his readiness to change his version of events or evidence whenever it suits him, and of the incredible and illogical explanations given by him to try to explain the inconsistency of his evidence. 

73.  In relation the issue as to whether Ms Fong had lent a total sum of HK$850,000 to Mr Tong in 1986 for his investment in BB Gems:

(1)  Ms Fong says this is supported by a cheque in the sum of HK$850,000 issued by BB Gems given to her by him as a security for repayment of the loan.

(2)  Mr Tong denies that he had borrowed this sum from Ms Fong for his investment in BB Gems.  In his witness statement dated 30 April 2007, he claimed that Ms Fong was very capable in investment, and she herself invested HK$500,000 in BB Gems and had asked one of its partners to buy gems in Hong Kong and smuggle them to America for sale, and to use the proceeds to buy gems in Columbia for the Hong Kong market to make a profit.

(3)  However, in his 2^nd supplemental witness statement dated 25 February 2008, Mr Tong changed his case and said that this sum of HK$850,000 was owed to Ms Fong by BB Gems but not him personally.

(4)  During cross-examination of Ms Fong by Mr Tong’s counsel[9] and later by Mr Tong himself, it was however put to Ms Fong that she had invested HK$850,000 in BB Gems and, when she requested for proof, the cheque was given to her as a proof.

(5)  When questioned by this court as to why a cheque issued by BB Gems would constitute a proof of Ms Fong’s investment in the company, Mr Tong explains that a cheque was used instead of issuing shares in BB Gems to Ms Fong in order to avoid the Inland Revenue Department from finding out that, Ms Fong, a lady who had no gainful employment, had invested substantially in a jewellery business.  Mr Tong says if so found out, the IRD would become suspicious and cause an investigation into Ms Fong.

(6)  I find this explanation wholly incredible, which in any event does not make any logical or common sense:

(a)  There is absolutely no objective or credible evidence before me to support Mr Tong’s bare assertion that somehow the IRD would be maintaining a watch list on women without gainful employment making investment in jewellery business.   Without such objective evidence, I do not accept the assertion that, and cannot see why, the IRD would become suspicious of Ms Fong simply because she had invested in BB Gems.

(b) Further, even if one were to avoid alerting the IRD about Ms Fong’s investment in BB Gems by not issuing any shares in the company to her, it escapes me as to why BB Gems could not have adopted the more conventional and reasonable method by recording the investment in a written agreement to serve as a proof for her.  Mr Tong could not give me any answer when I asked him this question.

(7)  Further, in a letter sent by him to Ms Fong on 24 November 1986 from Columbia, when he was there on business for BB Gems, he wrote that she would be paid HK$60,000 a month by the company.  Ms Fong says this was his suggestion as to how he would repay her the sum lent to him. 

(8)  When cross-examined on this letter, Mr Tong first gives the answer that this was meant to indicate the projected dividend of profit to be given to her for her investment.  But when asked as to why it would be expressed as a monthly payment given that it would be uncertain as to the income arising from the business, he changes his evidence and says that the sentence in the letter was only meant to be a joke.  When pressed further, Mr Tong changes his story again and says what he meant was that he would pay her this sum from his share of profit as a gift to her.

(9)  I equally find Mr Tong’s above explanations incredible, which are clearly contrary to the obvious objective meaning of the words.   In my view, these words in the letter support the case that Mr Tong was referring to a suggestion as to how he would repay Ms Fong the loan.

74.  Finally, Mr Tong strikes me as a person who is prepared to say something which he knows to be incorrect in order to achieve his own purpose:

(1)  In relation to the incident where he prevented Ms Fong’s friends from using Apartments A and C for the weekend by chaining and locking up the entrance to it, Mr Tong sent a by a letter dated 24 June 2005 to the management office to support his right to chain and lock up the entrance.  In this letter, Mr Tong stated that he had 70% beneficial interest in Apartment A.

(2) By reason of Mr Tong’s acceptance in this trial that he has no beneficial interest in Apartments A and C, it is clear that Mr Tong was prepared to and did intentionally state in this letter something which he knew to be untrue simply for the purpose of bolstering his “right” to chain up the entrance to Apartments A and C.

75.  For all the above reasons, I have no hesitation in rejecting Mr Tong’s evidence in support of the oral life licence agreement.   

Ms Fong’s evidence

76.  To the contrary, I find Ms Fong a reliable and credible witness.  She gives evidence in a straightforward and frank manner.  She is also not in any material way shaken under cross-examination.   Her evidence is also generally consistent with and supported by the contemporaneous documents, such as the various letters written by Mr Tong to her and the Written Acknowledgment of Debt.

77.  I therefore accept entirely Ms Fong’s evidence, and in case of any conflict, I prefer her evidence to that of Mr Tong’s.

V   Findings

The oral life licence agreement

78.  Mr Tong has failed to prove, on the balance of probabilities, to my satisfaction that:

(1)  Ms Fong discussed and agreed with him in September 1989 that they would use Apartment A as their matrimonial and retirement home.

(2)  There was the oral life licence agreement.

79.  I therefore find that there was no oral life licence agreement between Mr Tong and Ms Fong.

Other issues of fact

80.  Given my above finding that there was no oral life licence agreement between the parties, this would have been sufficient to dispose of the trial. 

81.  However, insofar as necessary, I would also make the following findings of fact.  These findings are based on (a) my general preference of Ms Fong’s evidence as a credible witness to that of Mr Tong, (b) if relevant, the objective contemporaneous documents or unchallenged evidence as set out below which are in support these findings, and (c) the common background facts mentioned earlier in this judgment:

(1)    Ms Fong had made a loan to Mr Tong in the total sum of HK$850,000 in around 1986 for his investment in BB Gems.  This fact is supported by the cheque of HK$850,000 issued to her and the Written Acknowledgement of Debt.  The calculation of the Agreed Debt in the Written Acknowledgement of Debt is only correct if this HK$850,000 has been taken into account.

(2)  Ms Fong had not been cohabitating with Mr Tong before she emigrated to Canada in 1989.  This is inherently incredible in light of (a) the unchallenged evidence that Ms Fong’s daughter was still very small at that time and required her close care, and (b) Mr Tong’s own evidence that during that period of time, she had been flying to other Asian countries from time to time to assist her then husband’s business.

(3)  Before Ms Fong emigrated to Canada, there was no agreement or understanding between Ms Fong and Mr Tong that they would get married after Ms Fong had obtained her Canadian citizenship.   This finding is supported by Mr Tong’s own evidence[10] that when he wrote to her (when she was still in Canada) to tell her that he was to buy a flat for her, he only “wanted to win her heart and to live with her at Sea Ranch as soon as possible”.  If there were already the agreement to marry, he would not have needed to do that in order to “win her heart”.

(4)  Mr Tong initially wanted to purchase Apartment A for Ms Fong as a gift to win her heart.  But later, when Mr Tong paid off the balance of the purchase price of Apartment A in the sum of HK$270,000, it was also agreed that this sum would be used to set off partially against the debt then owed by him to Ms Fong.  This finding is supported by the Written Acknowledgment of Debt, as the Agreed Debt is only correct after taking into account of this repayment.

(5)  Most of the proposed transactions to settle the Agreed Debt as set out in the Written Acknowledgment of Debt had not been carried out.  Mr Tong has not been able to provide any documentary proof to show their completion. 

(6)  Mr Tong caused Victory Score to assign Apartment C to Ms Fong for the value of HK$1,000,000 to set-off partially the debt owed by him to Ms Fong at that time.  This is consistent with the fact that Mr Tong had been repaying Ms Fong’s debt by the transfer of various properties to her, and that Ms Fong had not factually paid for this assignment.  Further, Mr Tong has not proffered any other good reason to explain why he assigned Apartment C to Ms Fong. 

(7)  The Management Dispute Actions were initiated solely under Mr Tong’s advice and suggestion.  Ms Fong simply followed his advice and lent her name to the actions and took part in them as and when necessary.  Effectively, they were Mr Tong’s actions.  Mr Tong is his letter to Ms Fong dated 3 June 2002 confirmed that the litigations were caused by him[11] and that he would have to repay Ms Fong the HK$2 millions.   This is also inherently supported by the fact that Mr Tong’s law firm agreed to waive all the legal fees for these actions even at the early stage of the proceedings.

VI.    Conclusion

82.  For the above reasons, and given Mr Tong’s own concession that he has no beneficial interest in both Apartments A and C, Cosmos has succeeded in its claim.  I further dismiss Mr Tong’s counterclaim.  

83.  I therefore enter judgment against Mr Tong and make the following orders:

(1)  There be a declaration that Mr Tong’s licence to use and occupy the licensed premises was validly terminated by Cosmos on 28 August 2005.

(2)  Mr Tong shall forthwith deliver vacant possession of the licensed premises to Cosmos.

(3)  Unless consented by Cosmos, Mr Tong, whether by himself, his servants or agents or otherwise howsoever, is restrained from remaining on or continuing in occupation of or entering into the licensed premises.

(4)  Mr Tong, whether by himself, his servants or agents or otherwise howsoever, is restrained from:

(a)  preventing Cosmos, its agents, invitees and licencees from entering into and remaining on the licensed premises; and,

(b) interfering with Cosmos, its agents, invitees and licencees in using the licensed premises.

(5)  Mr Tong shall pay Cosmos:

(a) mesne profit of his use of the licensed premises from 28 August 2005 until vacant possession of the same is delivered, the quantum of which is to be assessed.

(b) management fee and electricity charges of Apartment C from 28 August 2005 until delivery up of vacant possession of the licensed premises, the quantum of which is to be assessed.

84.  I do not see why costs should not follow the event in this case.  Given that Cosmos is successful in its claim, I therefore further make an order nisi that costs of the action (including the Counterclaim) be to Cosmos to be taxed of not agreed.  Unless any of the parties applies in writing to vary it, this costs order nisi shall be made absolute 14 days from today.

[1] The relevant part of Apartment A together with Apartment C is represented by the shaded area in the layout plan attached to the Amended Statement of Claim.

[2] Mr Tong had since the commencement of the action been legally represented until the 4^th day of the trial (during the cross-examination of Ms Fong), when his counsel and solicitors (at Mr Tong’s instructions) applied leave to cease acting for him.  The court granted leave, and since the 4^th day of trial, Mr Tong had been acting in person in conducting the remainder of the trial.   Mr Tong however consents to this judgment being written in English.

[3] The Chinese words were “不要擔心是否買得起，我送給你作為妳一心離開妳家庭的補償。”.

[4] HMCP1530/1998 and HCMP 5458/1999.

[5] One letter, albeit undated, was written (as accepted by Mr Tong in evidence) sometime in September 2003, and another dated 8 January 2004.

[6] In a letter dated 21 September 2004, and in draft agreements respectively dated December 2004, January 2005 and 8 January 2005.

[7] Paragraph 9 of Mr Tong’s 2^nd supplemental witness statement.

[8] This is in any event supported by a note written by him on 20 May 1990 confirming that Apartment A belonged to Ms Fong, and she had the full right to deal with it.  Mr Tong says in oral evidence that this note was only written to pacify Ms Fong at that time, as she was angry about finding a lipstick in the apartment and about certain documents concerning a company called Yorho.  I do not accept these explanations since, for no good reasons, Mr Tong made no reference to them when he sought to explain how this note came about in his supplemental witness statement.  I find that the note correctly reflects position at that time.

[9] When Mr Tong was still legally represented.

[10] At paragraph 9.2.4 of Mr Tong’s 2^nd supplemental witness statement.

[11] In Chinese“澄碧邨案件是由我而起 ”.