LAM YI LAI v. CHAU SHEK LEUNG

Date of handing down judgment: 25 May 2001

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J U D G M E N T

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1. The first of these consolidated actions concerns a property known as Flat B3, 2nd Floor, Hong Yuen Court, Nos. 1-5 Tak Shing Street, Kowloon, which was purchased in June 1994. The assignment was in the name of the defendant, but the plaintiff claims that the purchase price was solely provided by her and that the defendant has accordingly been holding the property in trust for her since then. It is further contended by the plaintiff that the defendant signed two declarations of trust, in a deed of trust dated 28 April 1996, and a memorandum in Chinese dated 17 June 1996, confirming her beneficial ownership. The property has since been sold and the sale proceeds held by solicitors as stakeholders pending the outcome of these proceedings. The plaintiff now seeks a declaration that she is entitled to those proceeds.

2. The second action seeks similar relief as to declaration of ownership in respect of two properties: the first is a flat occupying the 4th floor of Pak Cheung Building, 2B Tak Shing Street, Kowloon, and the second is a car parking space on the ground floor of Fortune Terrace, nos. 4-16 Tak Shing Street, Kowloon. The first was purchased in 1992, and the assignment dated 5 May 1992 is again in the name of the defendant. The plaintiff maintains that she provided the funds for its purchase, and relies in addition on a deed of trust apparently dated also 5 May 1992 in which she claims the defendant confirms her beneficial ownership. I qualify the dating of this document by the word "apparently" for reasons which will appear below. This property was also the subject of an agreement to sell on 13 March 1996, but this was later cancelled and the deposit of $240,000.00 forfeited, which is again held by solicitors pending the outcome of this action, and which the plaintiff also claims. The plaintiff now resides in this property. The second property, the carpark space, was purchased in 1993, the plaintiff says from funds provided by her. There is no dispute that payments for all three properties were made from the plaintiff's own bank account.

3. The defendant in answer to these claims says first that the money held by the plaintiff and used for the purchase of the various properties was earned by him as a decorator and paid to the plaintiff for her to manage and hold in trust for him, and in his defences he lists four sums he now says he can recall paying to the plaintiff in 1992, 1993 and 1995. However, it is apparent from the documentary evidence that these sums were all the proceeds of the sale of properties in the name of the defendant, and that they were paid to the plaintiff either by the defendant or by the solicitors dealing with the sale. There can accordingly be no doubt that this money was not money earned by the defendant in his decorating business, and whether or not he was beneficially entitled to those sale proceeds, and was depositing them with the plaintiff on trust, is one of the principal issues here. He further says that other sums were paid to her on other occasions, but provides no particulars of these. The defendant's case as appears from his evidence now is that all the money accumulated in the plaintiff's bank account is the result of profits made from his initial venture into property investment, with money solely provided by him, and the function of the plaintiff was merely to manage it on his behalf.

4. Secondly, the defendant contends that the declarations of trust in respect of the first action are invalid in that, in respect of that of 28 April 1996, he did not know what he was signing, and in respect of both they were signed under duress or while the defendant was intoxicated. The declaration of trust in respect of the property in the second action he claims is a forgery. The defendant further claims against the plaintiff for malicious prosecution.

5. The facts surrounding these claims inevitably revolve around the relationship between the parties themselves, and the breakdown of that relationship in 1995 and 1996, of which I have heard considerable and lengthy evidence, sometimes accompanied by outbursts of emotion, much of which, while the subject of a great deal of unfortunate publicity, may have only peripheral relevance to the issues I have to decide. I hope I may be forgiven therefore for not dealing in detail with every incident which has been related to me in the course of this lengthy trial.

6. The parties met in 1983 when the plaintiff was aged 25 and the defendant 23. They commenced living together shortly afterwards and continued to do so for the following 13 years, going through a ceremony of marriage in 1988 and holding a banquet, although the marriage was never registered. During this time the plaintiff gave birth to their two sons and the couple were regarded by their family and friends as man and wife until they finally separated in March 1996. Also during this period a large number of properties were bought and sold, three of them being the subject of these proceedings. All these properties were purchased in the names of the parties, or the plaintiff's mother, Yu Mui, father, Lam Ming, grandmother, grandfather, or younger brother, but there is no suggestion that any other party but either the plaintiff or the defendant provided the money for each purchase, the sole question here being which. For the answer to that question I must first go back to the period before the parties met to look at their backgrounds, and which of them is most likely to have had the financial resources to provide what has been described as the "seed money" to fund the first purchases, which in turn produced the profits to continue what was clearly for a long time a successful property business, with the sale and purchase of some 50 properties over the next 10 years, most with substantial profits.

The parties prior to 1985

7. The plaintiff was born on Ping Chau in 1958, where her father was the manager of a wood processing factory. Her education continued until she was 18, attending Johnson Secondary School in Wanchai. She then obtained employment as an office assistant with Jardines where she remained about two months, leaving to work as a sales assistant in a shop for about 9 months. During this time she admits that she was not earning very much. She then received training in the Auxiliary Police and worked as such part time for about a year to a year and a half, receiving, as she put it "a few tens of dollars" daily. At some time in this period after leaving school she moved to Hennessy Road, Wanchai and shared a flat with other girls, paying rent of $1,600.00 per month, although she also had a live-in boyfriend, a Mr Luk, a police officer, for some of the time, who paid her a sum towards the rent, and, presumably household expenses, of $2,000.00 a month, which she described as a nominal sum. From 1978, therefore, the plaintiff had no regular employment for several years. In spite of this, she maintains that the money which funded the first successful property purchase, at Kai Yuen Terrace, North Point, came from her savings, and gave an explanation of where those savings had originated.

8. The first source of savings was the money she received from "rich men". During the period after, or possibly at the same time as, her service with the Auxiliary Police, she says she was introduced, by a lady called Amy who was a night club hostess, and the elder sister of one of the plaintiff's classmates, to rich men with whom she would have meals and who would give her money and gifts of watches. This continued, she said, until about 1984, a period of some 6 years. The money was given at Chinese New Year as lai see, and amounted to not more than $100,000.00 over the 6 years. The gifts she did not sell for sentimental reasons. The money she claims she received averages out at less than $1,400.00 a month over this period, which I do not consider to be a source of substantial savings.

9. I should mention at this point that the defendant claims that the plaintiff was working as a night club hostess herself when he met her. If this were true, it might well have accounted for the savings she claims, as she is clearly an intelligent and well educated woman, and, as I find, a good businesswoman. However, she strongly denies that she ever worked in a night club, and, in the absence of any other evidence to support the defendant's contention, I have to accept that.

10. The second source of savings the plaintiff claims is from previous dealings in real property and a restaurant on Ping Chau. Prior to the Kai Yuen Terrace property, she claims that she entered into two other property deals from which she made money. The first of these was while she was still at school when she says she was lent money to deal in a property as a confirmor. From this she says there was only a small profit, possibly a few thousand dollars. There is no documentary evidence of this transaction. The second was a property in Chi Yan Lane, Ping Chau, which was purchased in the plaintiff's name in February 1982 for $135,000.00 with a mortgage of $90,000.00, requiring therefore a payment of $45,000.00 in addition to agent's commission, stamp duty and legal fees. This, she says, was given to her by a Mr Wong who had been her boyfriend when she was 18, some 6 years previously. Again there is no documentary evidence of the source of those funds, or any details of the "Mr Wong", apart from her evidence, supported to some extent by her parents, neither of whom were impressive witnesses. I have to say that, without something more persuasive, I find the plaintiff's account of this transaction not credible. Be that as it may, it certainly took place in that the property was assigned to her and the purchase price paid, and a mortgage entered into by her. There is no evidence of how she obtained a mortgage at a time when she had no employment, and, on the evidence before me, little in the way of savings. It appears from her witness statement that her parents lived in this property, as she says, in paragraph 10, that they moved out of there to go to Kai Yuen Terrace. I consider it more probable, on the evidence I have heard of the plaintiff's father's means, that this property was purchased with his savings and intended as his and his wife's residence. He was the manager of a factory on Ping Chau, with a substantial salary, unlike the plaintiff who says she had none, and savings in the bank of some "10's of thousands of dollars", which would have been more than adequate to finance the purchase of this property. Indeed, the plaintiff's witness Ng Choi Fong, who had known the plaintiff and her family since she was a child, said she considered that the family could be regarded as quite rich. I do not find it unusual that he should put the property in the name of his daughter, in the same way that later properties were put in his name and that of his wife.

11. Even if this was the plaintiff's property, I am far from satisfied that she made any profit from it. I say this for two reasons. The first is that it was sold by the mortgagee, on the face of it, at a price $48,000.00 less than the purchase price, and the second that the plaintiff says she had ceased paying instalments on the mortgage in late 1984 "because she did not like the flat". Whatever the reason for this extraordinary decision - why instead not sell it? - by the time it was sold nearly two and a half years later, the unpaid interest alone, and interest payment on the unpaid principal, must have been considerable. I find her evidence that she received $30,000.00 from the bank improbable.

12. There is also a third matter regarding this property which makes it unlikely she retained any of the sale proceeds. In May 1985 the property was charged by the same bank to secure payment of a judgment debt against the plaintiff of $30,585.58 with interest at 22.5% to the date of judgment. The plaintiff claimed not to remember having been the subject of court proceedings at all. It is unlikely that this was a debt connected to the mortgage, as the proceedings would have been under the mortgage, not in a separate action, and the sum and interest claimed bear no relation to the terms of the mortgage. As the plaintiff could not remember paying this debt, this too must have been claimed by the bank from the proceeds, if any, after payment of the mortgage and interest.

13. For similar reasons as with this property, I am not satisfied that the plaintiff paid for and owned the restaurant on Ping Chau which was opened in 1982. As I have found above, the evidence does not support any substantial savings by the plaintiff prior to this, nor that she was in a position to pay the $60,000.00 she says the restaurant cost to set up. Again, on the evidence before me, I find it more likely that it was her father, who she admitted had had the idea of the restaurant, and who said in his witness statement that he held himself out as the boss, although later denying this in evidence, who both put up the funds and considered it to be his business. Indeed, in his own evidence, he admitted contributing to the cost of the restaurant, but said he could not remember how much. I find the whole of the plaintiff's evidence about this period, even though supported by her parents, to be inherently improbable and contradictory. In her witness statement she said that she lived in Wanchai during at least part of this period, as the defendant had then lived with her for a year prior to the purchase of Kai Yuen Terrace and sale of the restaurant. Yet her evidence in cross-examination was that she closed the restaurant because Ping Chau was too quiet and she wanted to go out to karaoke clubs in Wanchai. There has been considerable evidence given about the profitability, or lack of it, of this restaurant, and possibility of the latter being the true reason for its closing. I do not intend to go into it as I am satisfied for the above reasons that if any profit was made on the sale, it was not the plaintiff who was the recipient when it was sold in 1985.

14. Before leaving the plaintiff's means prior to the purchase of Kai Yuen Terrace, I would add that the lack of anything other than frankly unsatisfactory oral evidence has given the plaintiff an uphill task of persuading me that she was a woman of means. It is unfortunate to say the least that no documentary evidence, in the form of bank statements or otherwise, was forthcoming prior to 1987, the only written evidence at all being in her own diary, where she claims it records her buying some gold in 1980. It does not assist her in the source or existence of any other funds.

15. The defendant came to Hong Kong in 1978 as an illegal immigrant but, as I believe was the practice at the time, allowed to stay. He was then 18. He said that he had had education to primary 2 on the mainland, and since then had gained experience in masonry, carpentry and painting as well as receiving training in martial arts. He said that he can read and write some Chinese, but knew no English. Upon coming to Hong Kong he initially worked as a coolie but soon found regular employment and later joined up with others from his native place to become sub-sub-contractors on building sites. He said that he specialised then in masonry and laying tiles and, by 1980, was earning about $6,000.00 a month, although he varied this to $2,000.00 to $3,000.00 in cross-examination. He said that he then moved on to doing interior decoration work which he was doing by the time he met the plaintiff in 1983, and was soon earning more, over $10,000.00 a month, and found the work less hard than on construction sites. Again, in cross-examination this changed to doing partly decoration and partly construction site work. In addition to this, he said he earned money by renting out part of the flat he occupied in Canton Road and had partitioned, and received a profit, after paying his own rent, of about $1,000.00 a month. Further, he said that he made money from his hobby of collecting and repairing birdcages, collecting antiques, particularly china bird feeding cups, watches and jade, about which he had acquired some knowledge. This latter is supported to some extent by the plaintiff, who gave evidence of helping him to open an antique shop later in their relationship. He said that by 1983 he had savings of over $100,000.00 and in 1983 had made a profit of $100,000.00 on one transaction selling an ivory birdcage. In general I accept that the defendant had regular employment and at least some income from other sources. It may be that he used his martial arts skills to assist others as well, he clearly kept up those skills and was keen on physical fitness, and probably quite vain as to his appearance, which appears to have been what attracted the plaintiff to him.

16. The defendant said that he had a habit of keeping all his money in cash which he secreted in his flat. His explanation for this was that he found banks "troublesome" and he did not want a cheque account as he did not know how to write the Chinese characters for numbers used on them. Although there was some dispute between counsel as to whether such characters were necessary on cheques, having seen how easily the simple numbers could be altered by one or two strokes, I do not consider it at all unlikely that banks prefer the more complex version. Having said that, I do find it odd that he did not make greater use of a savings account, as it is clear from the documentary evidence here that he has had such accounts over the years, and he did not say why he found them "troublesome".

17. The plaintiff denies that the defendant was working at all when they met except as a part-time bouncer at night clubs, called in when there was trouble, and a fighter in "underground" boxing matches. Indeed, she says that she met him when he was brought to Ping Chau to help with some trouble with one of the employees at the restaurant.

18. This is not a case of which of the parties' evidence I wholly believe and which reject. There are numerous inconsistencies and contradictions in the evidence of both, and I am not satisfied that I have heard the entire truth from either. This may not be deliberate, as they are both trying to recall events some 20 years and more ago. But bearing in mind that it is not in dispute that one of them provided the funds for the purchase of the Kai Yuen Terrace property in January 1985, I have to ask myself, looking at the totality of the evidence, which it was more likely to be. On that basis I have no hesitation in saying that I consider it probable that it was the defendant, who I accept at least had steady employment, rather than the plaintiff, who admits to being unemployed, apart from assisting at the Ping Chau restaurant, and whose income, if any, on her own evidence came only from gifts at Chinese New Year from rich men she had dinner with. Her mother's assertion that the plaintiff made her fortune in Ping Chau just does not bear close examination.

19. In the same way, it is more likely than not that the defendant also provided the funds for the other two properties bought in 1985, the flat in Concord Building, in Mongkok, in August 1985, and that in Kimley Building, Tsimshatsui, in July 1985. Both these were purchased before the sale of Kai Yuen Terrace on 10 August 1985, and, even if the deposit had been paid by then, it would be unlikely if it was sufficient to pay the $37,000.00 required for Concord Building with the mortgage, and the $38,000.00 for Kimley Building. After those properties, I can see that the profits from later purchases multiplied to the extent that they were sufficient to fund, at least partly, the purchase of the next.

20. Having considered the situation of the parties and the purchases up to 1985, I must now look at events after that and up to the purchase of the properties in question.

1985 to 1994

21. The flat in Concord Building was sold in August 1985, three weeks after Kai Yuen Terrace, but Kimley Building became the parties' home for about 18 months. There is some disagreement about who lived there with them, and whether the plaintiff's parents and a Singaporean lady were also there, but I do not consider the matter relevant to any issues here, except that I am satisfied that, by this time, the plaintiff and defendant were a settled couple and were living together there. Apart from a flat in Fa Yuen Street, Mongkok, bought in November 1985 and sold two months later, there was no further action on properties until 1987, when, in January and February, Kimley Building was sold and a flat at Wonderland Villas, Kwai Chung bought. All these properties were assigned in the name of other members of the family, although there is no dispute that all proceeds of sale were paid into the plaintiff's account, and it was the plaintiff who handled the transactions.

22. It was during this time that the company "House Living" was formed. There is some dispute not only over exactly when it was formed, but about who started it and the name it was first called. The defendant says that he started it in 1985 in a shop which had been a bird shop in Battery Street, Yaumatei, which he took over from a friend, Fok Chou Lam, and he called it House Living Real Estate Decoration Company, but did not register it. He said that he used it principally for his decoration work, but also employed a lady for renting out premises, but was not engaged in buying and selling property. He says that it was not until 1987 that he decided to use the firm for property dealing and only then enlisted the assistance of the plaintiff as he did not know how to deal with the paper work or write out cheques. This, I regret, does not have the ring of truth about it. While I accept that he continued with his decoration work, he does not explain how, before 1987, he managed the financial side of the part of this business dealing in rental properties, without a cheque account, or sufficient education to manage the paperwork, which he readily admits. It defies common sense that he continued to deal only in cash and kept the profits from the business in his flat. There is no evidence at all to support that of the defendant, and I find it unconvincing.

23. The plaintiff's account of this period, which I prefer, is that the business was started in about 1987 and registered as "House Living Property Co." in the name of the defendant. About six months later the words "Interior Design" were added to the name. There seems to be little dispute that it was the plaintiff who operated the business in the office, although the defendant, who seems to be an earlier riser in the morning to exercise, was the one who usually opened the office for other staff.

24. The plaintiff's case as to the business is that it was totally hers, and the defendant had no interest in it at all. She says that she was recognised as the boss by the staff and customers, and he did nothing but go around with his friends, often carrying a birdcage, and was known as "Prince Chau" as he did not have to work, being kept by a successful, and latterly wealthy, woman. The defendant's is the mirror image of this; that the business was his, and she was there merely to help keep the books and look after his money in her account.

25. I have no difficulty in rejecting both these accounts. It is clear from the plaintiff's own evidence that the defendant continued with his decoration business. She gave evidence that she had seen the records he kept of work done, although she was evasive when asked to particularize how many books and whether there were also rolls of receipts and invoices. Although the defendant says, which I accept, that his records disappeared in a burglary at his home, I have seen some documentary evidence of work done by him, and I am satisfied that he was not the idle lay-about that the plaintiff would have me believe, and that a considerable amount of his work went into the improvement of properties that they bought for resale.

26. From the evidence I have heard, I consider that the most likely course of events in these early years were that they were in business together. They were apparently happily settled together, had discovered what profit was to be made by dealing in property, and had different abilities which complemented each other. The plaintiff had the education and business acumen to manage the estate agency, and later more than one, with the paperwork and money side, and the defendant, with his practical skills, was able to recognise properties which could show a profit after renovation by himself and those he employed to assist. While I am satisfied, as I have found above, that it was the defendant's money which seeded the operation, the business which developed under the name House Living was a joint enterprise, principally as an estate agent, receiving commission on sales, which was totally run by the plaintiff, but also as a decoration company, and investing the profits from this and their own property dealing in further property investments, the proceeds from all of which went into the plaintiff's bank account, and which accumulated into what was clearly a considerable sum of money. No accounts appear to have been prepared for the business until 1989, but those produced show a substantial turnover both from decoration works as well as commission on property sales. The items in these accounts up to March 1996 include payments for materials and casual workers, which supports the defendant's contentions as to his decoration work and hiring labourers to assist. There is no such item after he left in 1996.

27. Several witnesses have given evidence in the course of this trial as to whom they considered to be the "boss" of the business. The friends of the plaintiff were certain it was her, and the defendant's witness, Mr Yip Hoi Ching, said that he had been at the office and the staff had addressed the defendant as the boss. The only member of the staff I have heard from is Miss Tam, and she was only employed from July 1995, when the relationship between the parties was already strained and it is likely that the defendant visited the office less. Indeed, in the division of responsibilities between them, I do not find it unusual that the plaintiff would be the one to operate her side of the business exclusively from the office, where her friends and staff would see her from day to day, and the defendant would be occupied elsewhere. Nothing therefore in this evidence changes my view as to the interests each had in this business.

28. Much has been made throughout these proceedings of the fact that, at various times, different names had been used, not only for the property transactions, but for the registered owner of the company. It started in 1987 in the name of the defendant, which to me is logical as it was his money which initially funded their business. Later it was changed to the name of the plaintiff's brother, and latterly to that of her mother. Various reasons have been put forward by the plaintiff for this, as it was she who dealt with such paperwork, merely asking the defendant to sign papers when necessary, but I find them all unconvincing. There seems throughout a reluctance on her part to attach her name to either the properties or the business, which I can find no explanation for except possibly for the reason she gives in her witness statement, which was to reduce tax exposure. I am however satisfied that it does not indicate in any way true ownership of those properties or business, and does not assist in deciding the issues before me.

29. By the early 1990's the situation was that the parties had developed the business together, the income from decorating and commissions being amalgamated in the plaintiff's accounts with profits from sale and purchase of properties, and further reinvested in other properties. The joint nature of the enterprise is further evidenced by the large number of those properties where the provisional sale and purchase agreements were signed by the defendant, although, as before, usually then assigned in the name of another member of the family. This might have gone on indefinitely, to the mutual benefit of both of them, and their children, had relations between them not started to break down in 1995.

30. Apart from one incident in about 1991 when the plaintiff and defendant had an argument which resulted in the defendant damaging some property in the shop, the relationship appears to have been a harmonious one with them working together accumulating a degree of wealth. This began to come to an end in 1995 when the plaintiff, apparently with the initial approval of the defendant, started to make donations to charities large enough to have her accepted on to the board of Yan Chai Hospital. This in turn led to her involvement in social events connected with the charity, and possibly others, in which the defendant did not wish to take part. It is clear that she liked the bright lights, the socializing and the publicity, but these were equally clearly not to the defendant's taste, who also resented pictures of her with other men and stories in the newspapers. Both parties are of an emotional and volatile nature, and it is not surprising that a number of incidents occurred, and accusations as to infidelity were made, as their relationship proceeded to its inevitable end the following year. These do not concern the central issue here, although I will return to them briefly when I consider the counterclaim for malicious prosecution, and the question of duress in relation to the declarations of trust. Suffice it to say that the relationship essentially came to an end in March 1996 after both parties had taken overdoses of sleeping pills and been treated in hospital, and the defendant returned to find that the plaintiff had barred him from the flat they shared in Pak Cheung Building, and he left. They have not lived together since.

The declarations of trust

31. To take these documents in order of time, the first is that dated on the face if it 5 May 1992. On that day the assignment of the Pak Cheung Building flat was completed at their solicitor's office in the name of the defendant. The first problem with the declaration of trust is that it could not have been prepared on or before that day, as the person who drafted it, in reciting the assignment of the property to the defendant, also included the memorial number under which that assignment was registered in the Land Office. The assignment was not registered in the Land Office and given a memorial number until 8 July 1992, over two months later. Further, while the stamp duty on the assignment was paid on 8 June 1992, that on the declaration was not paid until 19 November 1992. It was not registered with the Land Office until the same day these proceedings commenced.

32. The handwriting expert, Mr Fung Hung-tim, who gave evidence about this document confirmed that the memorial number was typed at the same time as the body of the document. Mr Fung also said that there were erasure marks on parts of the document where dates appear to have been altered, and more importantly, where the signature said to be the defendant's appears. A signature similar to the defendant's seems to have been erased and another written on top. This latter, Mr Fung says, was slowly drawn over the erased area and is of the view that it could be a forgery. In addition to this, there are a number of errors in the body of the document which are not explained, except by careless copying of another. The address of the parties is incorrect, it refers to the "5th Floor" as well as the fourth, to money provided by the "said Company" rather than the plaintiff, and to the defendant throughout as "she" and "her". In short, not only is the document badly, and incorrectly, drafted, which may just be extremely careless preparation, the dating of it and the evidence of Mr Fung lead me to conclude that it cannot be relied on as a clear declaration of trust by the defendant, and I reject it as evidence.

33. The second declaration of trust is that dated 28 April 1996, and purports to relate to the Hong Yuen apartment, and whichever of the parties is telling the truth about it, the circumstances surrounding its signing are extraordinary.

34. The plaintiff's version of events is that she had invited the defendant to a restaurant for a dinner to celebrate his birthday. Earlier that day she had instructed one of her employees to collect the trust deed from her solicitor, a Miss Shirley Chui, who had issued the writ in the first proceedings two days before and had advised her to get the defendant to sign such a document. At the dinner also were their two children, her mother, two maids and some of the firm's staff. During the dinner the plaintiff telephoned Miss Chui who came to join the party, and, as arranged with the plaintiff, as they were leaving, took the opportunity to serve the writ on the defendant. It is clear to me that the dinner that night was arranged by the plaintiff solely as a way to make sure that the defendant was there to be served with the writ by Miss Chui. Why this was necessary is not clear. There is no suggestion that she did not know the defendant's address, which was owned by one of her friends. I can only assume that it also had the effect of ensuring his presence so that she could obtain his signature on the declaration of trust.

35. The plaintiff said that after he was served with the writ they then parted and she went home, but the defendant called her later that night and they met in a restaurant where she explained the deed to him and asked him to sign. He refused and she went home again. He then rang a second time and they met again, and again refused to sign, and she went home. After half an hour she says he rang again and said he would sign if she would spend the night with him. They met outside her home and she brought her maid down with her. The defendant signed the document and the maid took it back. She says they then went to the Hong Yuen Court flat and slept together. The next day the deed was taken to the solicitors by Teresa Tam her employee, but she received a telephone call from Miss Chui to say that it was not witnessed. They apparently agreed that Miss Tam would witness it, although she had not been there, which she did, also signing to the effect that she had interpreted it to him. I will comment on the solicitor's role in all this later.

36. The defendant agrees that, following the dinner, he was handed a document by Miss Chui, but says that it was in a manila envelope and he did not know what it was. Indeed, even if it was not, with his lack of knowledge of English, and in the absence of any explanation, I would not expect him to appreciate the nature or significance of it. He says that he went home and it was the plaintiff who telephoned him and asked him to meet her outside her flat as there were letters about tax she would like him to tidy up. They met outside and her maid came down with a thick bundle of documents which, he said he signed without knowing what it was, and the plaintiff made him sign again as his signature was not like normal. They then went home separately, and he said he only found out later what it was he had signed. He also says that he felt frightened and under duress because of previous threats she had made about police and triads.

37. The allegation of duress is based on threats the defendant says the plaintiff made after their separation. It is apparent that there was a highly charged emotional atmosphere surrounding the ending of the parties' relationship, and no doubt many accusations and recriminations were exchanged. One incident arising out of this was on 11 March 1996 when the plaintiff took a number of tranquilliser pills, and claims that the defendant forced her to do so by threatening her with a knife. It is not entirely clear what happened, but her friend Miss Luk Sze Man gave evidence that she had telephoned and spoken to the defendant who told her that the plaintiff had taken the pills but seemed calm about it. She called the police and the plaintiff was taken to hospital. I have not seen any medical report as to her condition. The plaintiff made no report to the police concerning the defendant's behaviour, saying that her brother persuaded her not to. The defendant denies any threats and says he did not know she had taken the pills, and also denies the police were called. I do not, for the purposes of these proceedings, need to establish what transpired on that occasion, but it is likely that the truth lies somewhere between the two accounts I have heard. There is certainly no doubt that the defendant also took an overdose a day later, and was admitted to hospital himself. It was upon his discharge that the plaintiff prevented him from returning to their home, and he was forced to leave.

38. The second event involving the police was also in March 1996 when the defendant sought to retrieve documents he said were his from the shop. Miss Tam, their employee, stopped him and called the police who advised him to leave.

39. The third incident was that I will refer to as the "baseball bat incident" on 28 March 1996. I will deal with it more fully shortly in looking at the claim by the defendant of malicious prosecution, but it was clearly another confused and emotionally charged event which resulted in the police being called and the defendant charged with assault.

40. The only other occasion involving the police before the end of April 1996 was after the defendant found his room had been broken into and a bag of his records and documents stolen. He also found a slip of paper under the door saying the police wanted to interview him in connection with a double murder. He did speak to them, but heard nothing more about it. He blames both matters on the plaintiff. He says that she arranged the burglary, and claims that the photographs exhibited by her in these proceedings had been in the bag, and that she had him interviewed about the murder. There is however nothing to support these allegations. In addition to these incidents, he claims that the plaintiff frequently telephoned threatening him with both triads and the police, saying she knew senior officers.

41. I have no doubt that many things were said between the parties at this difficult time, but there is nothing in this evidence to persuade me that threats were made of such a nature that the defendant not only would take them seriously, but be intimidated to such an extent that he would act in a way he would not otherwise have done. To seek to rely on duress to invalidate an act, as the defendant does here in relation to the document on 28 April 1996, there must be an immediate and real threat which the party receiving it believes could affect him adversely. This in my view is not such a case.

42. However, to return to the declaration of trust itself, in order to accept this as a genuine statement of trust and ownership, I have to be satisfied that the defendant knew what he was signing and intended to do so. On his account he clearly did not. As has been observed already, the plaintiff had throughout all their business dealings been the one to handle paperwork, accounts and tax matters. The defendant went so far as to say that he was nervous of anything requiring brain power, which he accepted his education had not given him. Over the years he had signed many documents at the request of the plaintiff, and their property and business dealings had not terminated immediately on their separation. But even on the plaintiff's account it is doubtful that he was made aware of the extent of the declaration he was asked to sign. She admits that she did not explain it fully, only giving him the gist of it. Taking this together with the devious arrangements to ensure his presence at the time, the frankly dishonest subsequent behaviour in obtaining Miss Tam's signature as to having witnessed and explained the document, I consider it more likely than not that the defendant did not fully appreciate the contents of the declaration and I propose to disregard it.

43. My view as to the nature of this document, and the plaintiff's attitude to its validity, is to some extent confirmed by the fact that the plaintiff deemed it necessary to try to obtain the defendant's signature on yet another document dealing with the same subject matter, which I will deal with now.

44. The third document is referred to as a "memorandum in Chinese", and the circumstances surrounding its signing on 17 June 1996 are possibly even more extraordinary. This took place in a room in the Panda Hotel in Tsuen Wan. Not surprisingly, given the nature of the rest of the evidence in this case, the parties do not agree on how they came to be there. By this time, the sale of the Hong Yuen Court flat had taken place and the proceeds held by the solicitors. The plaintiff in her witness statement claims that the defendant telephoned her after midnight and wanted to spend the night with her, and said that if she did he would instruct his solicitors to release the proceeds of sale of the Hong Yuen apartment. She agreed and he collected her in a taxi, took her to the hotel, where he signed the document, which she said she had asked her staff to prepare sometime earlier, and they went to bed. However, in cross-examination she claimed that she did not consent to sex, and the defendant forced her. This does not fit well with her account of agreeing to sleep with the defendant if he signed the document, and does not explain why she still spent the rest of the night there.

45. The defendant's account is that it was the plaintiff who invited him to the hotel to see the children, and he went and met her there, and was told the children were being brought by the maid. She then gave him a drink of "black ant wine" of which he had about a quarter of a glass, and claims he remembers little else, except signing something, until the morning. He says he did not know what it was he signed, although he admitted that the handwriting on the document was his, and claims that he would not have signed if he had known, but that he was affected by the wine which the plaintiff had persuaded him to drink saying it was good for men's health.

46. Not for the first time in this case do I find the account of both parties lacking credibility. But what is clear to me, given the whole circumstances of this case and the behaviour of both over the first half of 1996, is that the defendant would not willingly have given the instructions contained in the memorandum, or made the statement that he was not the owner, for the promise of sex with the plaintiff, which she now says she was not willing to give.

47. I have a further reservation about this document. While the plaintiff says that it was prepared by her staff "some time earlier", I find it, firstly, too much of a coincidence that she happened to have it with her the night she says the defendant called, and, secondly, the wording is such that it is extremely unlikely to have been drafted by her or one of her staff. I consider it more likely that this was a document prepared by her solicitor to overcome the objection to the previous document that it was in English, and the plaintiff again manoeuvered him into a situation of signing it.

48. Whatever the truth of this incident, I do not consider this to be a free and voluntary declaration by the defendant.

49. Before leaving this part, I have to put on record my disapproval of the part played by the plaintiff's legal representatives in the matter of these documents. The first, as I have already found, is totally discredited, and could not have been signed on the date it bears. Yet it purports to be witnessed and interpreted by a clerk of the plaintiff's solicitors on that date. As to the second, even if one disregards the devious arrangements to serve the writ and immediately provide evidence to support the plaintiff's case, the connivance of Miss Chui of the plaintiff's solicitors, whether she is a clerk or a solicitor, in arranging the signature of Miss Tam as witness and interpreter, is a matter which should possibly be looked into by others.

Ownership of the properties

50. The approach to this case by both parties has been that they are solely entitled to the absolute exclusion of the other, and that the money used to buy the properties was solely theirs and not the other's. Mr Chiu for the defendant contends that it is not open to me to find on any other basis, and that whoever provided the initial money which started the property dealings must be entitled to everything which flowed from that first purchase, of Kai Yuen Terrace. I regret that I do not consider it to be quite as simple as that.

51. I start from the proposition that the purchase price of all three properties was paid from the plaintiff's bank account, raising a presumption that the properties thereby purchased belonged to her, and the defendant holds them on trust for her. This presumption can be rebutted by evidence of an agreement to share ownership of the properties in a particular way, or by evidence, or the conduct of the parties, from which I can infer the intention of the parties that the ownership should be in one or the other, or both. I also have to take into account that I am considering the ownership, not of the first property, Kai Yuen Terrace, but of properties bought several years later, when proceeds from other properties, and from the estate agency business, had accumulated in the plaintiff's account. Although it is not part of either party's case that their assets were pooled in the plaintiff's account, and the property bought from that account, on the evidence before me I can come to no other conclusion but that this was the reality of the situation. All three of these properties were bought outright without a mortgage from funds in the plaintiff's account, and, as I have found, both parties had contributed to those funds. The only question now is what proportions can be attributable to each. There is no doubt that the court can apportion such shares without a detailed, and in this case, almost impossibly complicated, exercise of tracing payments made by each into the account. As Waite LJ said in Midland Bank plc v Cooke and anor [1995] 4 All ER 562, at p. 574:─

"The general principle to be derived from Gissing v Gissing and Grant v Edwards can in my judgment be summarised in this way. When the court is proceeding, in cases like the present where the partner without legal title has successfully asserted an equitable interest through direct contribution, to determine (in the absence of express evidence of intention) what proportions the parties must be assumed to have intended for their beneficial ownership, the duty of the judge is to undertake a survey of the whole course of dealing between the parties relevant to their ownership and occupation of the property and their sharing of its burdens and advantages. That scrutiny will not confine itself to the limited range of acts of direct contribution of the sort that are needed to found a beneficial interest in the first place. It will take into consideration all conduct which throws light on the question what shares were intended. Only if that search proves inconclusive does the court fall back on the maxim that 'equality is equity'."

52. As is apparent from my findings as to the development of the business above, from the first the parties were acting in concert. While the initial money came from the defendant to commence what became a business, it did become such a business into which they both invested further money and effort. Neither could, particularly in the early years, have built it up so successfully without the other, and it was quite obviously a joint enterprise. It would in my view now be an impossible task to try to separate or identify what each party contributed to the business in terms of both money and effort in the years prior to the purchase of the properties with which we are concerned. So I must look at the surrounding circumstances and their relationship to see whether it can give any assistance as to their intentions.

53. Until 1995 the parties regarded themselves, and were regarded by others, as a married couple, and in addition they combined their talents to do well together. The first in time of the properties the subject of these proceedings is Pak Cheung House, which has been, since its purchase in 1992, the home of the parties and their children. The second and third were respectively the 45th and 48th properties which they had purchased since they were together. If the question had been asked in those years, when the relationship was still harmonious: to whom do the properties and the money made from them belong, I have no doubt that the immediate answer would have been: to both. In the overall circumstances of their working, living and bringing up their children together, I cannot conceive of them having any intention other than to share equally. Even if that were not the intention, I have now no evidence of any other, and I would then have to, as suggested by Waite LJ, fall back on the maxim 'equality is equity'.

54. I accordingly find that the properties in question are beneficially owned by both, and are held by the defendant on trust for himself and the plaintiff in equal shares.

55. Subject to one matter, the parties are therefore entitled to share equally the sum held by solicitors in respect of the proceeds of sale of the Hong Yuen Court flat, and the deposit forfeited in respect of the Pak Cheung House flat. The one matter which has to be taken into account in this is the sum already received by the defendant in respect of part of the deposit for Hong Yuen Court. Evidence as to this was given by Miss Tam who said that the defendant had received three sums, the $100,000.00 initial deposit on signing of the provisional sale and purchase agreement, the $230,000.00 further deposit on signing the formal agreement, and a sum of $450,000.00. This latter sum was said by Miss Tam to have been paid by the purchasers in cash to reduce the price shown on the assignment and thereby evade part of the stamp duty. The defendant denies this arrangement, but in any event, if it occurred, it was clearly illegal, and on the basis of the maxim 'ex turpi causa non oritur actio' I propose to ignore it. As to the rest, the defendant admits receiving $230,000.00 which he kept, as he maintained the flat was his, and it was certainly in his name, but denies receiving the $100,000.00. On this I prefer his evidence to that of Miss Tam, whose evidence I found inconsistent and unreliable, and can see no logical reason why he should deny receiving this money, while claiming the flat was his and admitting retaining the balance of the deposit. In paying the parties their shares of the proceeds of sale of Hong Yuen Court, the sum of $230,000.00 must be taken into account as part of it.

Malicious Prosecution

56. The last matter to be considered is the defendant's counterclaim for malicious prosecution. Mr Chiu for the defendant has conceded that this can only be based on what is referred to as the "baseball bat incident" as being the only incident for which a prosecution was brought against the defendant and on which he was acquitted. The incident occurred on 27 March 1996 at Pak Cheung House. There is considerable dispute about what happened that evening but what is clear is that there was dispute over the defendant's address book, which he had come to collect and in which there were some entries that the plaintiff objected to. An argument ensued and each says the other picked up the baseball bat to hit the other with it.

57. There are a number of matters which cause me to doubt the plaintiffs' version, and indeed caused the magistrate trying the case to do so as well. The principal concern I have is that the defendant, being a fit strong man, had he intended the plaintiff harm, would have had little difficulty in assaulting her if he had wished to do so, even with what was clearly a child's toy baseball bat. Yet there were only very minor superficial abrasions on the plaintiff. Secondly I am surprised that the only witness to the incident the plaintiff produced, or told the police of, was her maid, when it is not in dispute that other friends of the couple were present and the plaintiff's mother. The maid's evidence was totally discredited in court when she admitted she had not even been in the room.

58. The defendant's account was that it was the plaintiff who produced the bat and tried to strike him, but he had no difficulty in protecting himself and taking the bat from her. I have to say that I prefer the defendant's version of the events that evening, but it is possible that the plaintiff received her abrasions in the struggle, and in the emotional state she was clearly in, called the police. Once the police were involved, no doubt she felt that she had to proceed with her version, and in any event she had to some extent been injured.

59. In these circumstances is there any ground for the defendant's claim of malicious prosecution? I think not. While I accept that such a claim may be made against a party who has made a report to the police as a result of which the other party is the subject of a prosecution, I would need clearer evidence than this that the plaintiff believed that she had no grounds at all to report the incident, and that it was malicious. The plaintiff says that she was frightened of the defendant, and, whatever the truth of what occurred, I can understand that. It must have been a highly charged emotional atmosphere, both were very angry, and she was aware of the potential of the defendant to injure her if he chose to do so. Calling the police might well in those circumstances have been an act of self defence. Once that had happened, like so many things, it may not have been easy to stop it. Secondly, it was within the power of the police to further investigate the incident to see whether charges should be brought. This was not a case where the facts were solely within the knowledge of the plaintiff and the police had to rely on what she told them. The defendant himself could have given them the names of other witnesses who would either have supported her story, or not, in which case I have no doubt that it would have been dropped. I am not prepared therefore to say that it was the evidence of the plaintiff alone which caused the prosecution and the first requirement of the tort, that it was the plaintiff who set the law in motion on a criminal charge, is not fully satisfied. I am satisfied that a sufficient degree of malice exists, and, were it not for the matter of causation of the prosecution, I would have held that that the defendant had established his claim here. In the circumstances however it will be dismissed.

Conclusion

60. On both actions I accordingly order that both parties succeed on their claims for a declaration as to half interests only, and subject to the provision for the sum of $230,000.00 already received by the defendant referred to above. I have heard no submissions as to the claim for damages for breach of trust and accordingly make no order, but with liberty to the parties to address me further on this if they wish. The defendant's claim for malicious prosecution is dismissed.

61. There will be liberty to apply generally for any further orders necessitated by this judgment.

Costs

62. As both parties have succeeded in their claims relating to the properties to the extent of half only I see no reason why either should pay any part of the other's costs for that part of the case. The only other matter is that of the defendant's counterclaim for malicious prosecution which has failed, and for which, on the face of it, the plaintiff is entitled to costs. Although this was a comparatively small part of the proceedings, rather than leave to the taxing master time consuming, difficult, and for the parties, expensive taxation proceedings, I will assess the proportion of the costs at 10% of the whole matter, in the hope that the parties' legal representatives can agree a sum without incurring further costs.

63. There will accordingly be an order nisi that the defendant pays 10% of the plaintiff's costs to be taxed if not agreed, and there be no order in respect of the defendant's costs, save that his own costs be taxed in accordance with Legal Aid Regulations.

64. I have been considerably assisted by counsel in their very full written final submissions, which were extremely useful given the long time gap when the proceedings went part heard from December to May, and for which I gave them time during the last days of the trial. For the assistance of the taxing master I order that for each counsel two days preparation of those submissions be considered as days of trial.