CHAN LAI YING, LIANA v. LAM KWOK FAI, ANTONIO

HCA4/2003

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 4/2003

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JUDGMENT

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1. At the conclusion of the trial on 23rd June 2004 I entered judgment for the plaintiff for payment of the sum of $776,605.15 together with interest thereon at the prescribed rate, on the usual basis, and costs as taxed or agreed. These are my reasons for doing so.

2. The plaintiff's claim is for payment of an outstanding balance of an amount loaned by her to the defendant. To place that loan in perspective it is necessary to look, briefly, at the background.

3. The plaintiff is a 46 year old, single, female employed in a managerial position by Cathay Pacific Airways. She and the defendant shared an intimate relationship for a number of years. The plaintiff says, and the defendant accepts, that throughout the years she was keen to marry and raised the matter a number of times. The defendant also accepts that he demurred, citing a desire to improve his financial lot and to further his career as the reason. In assessing the evidence I have born in mind, carefully, the relationship that existed between the parties.

4. They commenced cohabiting. In they jointly purchased a property in Belair Gardens, Shatin. The plaintiff says that she viewed this acquisition as providing, in the future, a matrimonial home for them. There is no dispute that in 1988 the defendant purported to sell to the plaintiff his one-half share in the property. The evidence of each of them is that neither anticipated that she would pay the declared sale price, for the transaction was designed simply to enable the plaintiff to obtain a mortgage through her employer at a more favourable rate than that which was then being paid: to enjoy this benefit it was necessary that the property be held in her sole name.

5. It is evident from the exhibits that the mortgage repayment of $2,997.00 per month was thereafter deducted from the plaintiff's salary. The defendant does not deny that to be so but says that, in fact, he had paid an amount monthly of around $3,000.00 designed to refund that payment to the plaintiff. The plaintiff disputes this and says that the defendant made no contribution; that they remained financially independent of one another despite their cohabitation; that, at that time, the defendant's financial position was such that he was not in a position to make a contribution - being the reason he delayed marriage.

6. I accept the plaintiff's evidence on this aspect, as on all the others. Brevity will be served by saying now that I found the defendant to be a singularly unimpressive and, overall, entirely incredible witness. He was evasive almost throughout his evidence, parts of which were wholly inconsistent with commonsense. I reject his evidence wherever it conflicts with that of the plaintiff, who impressed me as an honest witness giving evidence to the best of her ability.

7. In regard to the issue of the purchase of the Belair Garden flat the defendant claims in his evidence that, over and above the monthly contribution which he says he has been making, he has also contributed an initial capital amount of between $50,000.00 and $60,000.00. That, I am satisfied, has no foundation in truth. It is entirely absent from his witness statement. It is so fundamental to his case that it would have appeared in the statement had it been true. What this claim demonstrates is the defendant's willingness to say anything at all which he now perceives may bolster his case.

8. In February 1990 the plaintiff and defendant decided to purchase a further property in Pictorial Garden, Shatin. The property was bought "off plan" and monthly instalments were to be paid pursuant to an Equitable Mortgage until such time as the property would be assigned to them. The plaintiff says that this was intended to replace the Belair Garden flat as a future home as, according to her understanding, marriage was anticipated: the defendant says that this was purely to be a joint investment.

9. In order to partially fund the purchase of the Pictorial Garden flat the Belair Garden flat was sold to the plaintiff's sister at a slight discount from the market price: the reason for the discount was that the plaintiff wished to remain in occupation of the Belair Garden flat, with the defendant, until the Pictorial Garden flat was ready for occupation. This scheme, however, went somewhat awry when the plaintiff's sister required occupation of the Belair Garden flat before the Pictorial Garden flat was available. As a consequence, the parties moved out in early to mid 1991, returning to their respective parental homes. There is no dispute that the defendant continued to contribute some $7,000.00 per month as a one half share of the payment due under the Equitable Mortgage.

10. The relationship between the parties had deteriorated by the time the Pictorial Garden flat was capable of assignment. The plaintiff says, and I accept, that she had gone to sign the documentation necessary in connection with the assignment; it was also expected that the defendant would attend; he failed to arrive; when she telephoned to find out why he was absent, he had told her that he was still at home in bed. She was distressed by this conduct and challenged him about his continued interest in the purchase of the property. She indicated that she intended to proceed with the purchase, to his exclusion. He agreed to this, according to her, provided that she repay to him the contributions which he had made towards the repayment of the Equitable Mortgage. He nominated an amount of $130,000.00 as his requirement. She considered the request as reasonable, which is borne out by the figures disclosed in the evidence, and made that payment to him.

11. There is no dispute that she did effect such a payment, which in any event is demonstrated in the documentation. The defendant says, contrary to her evidence, that at no stage was there any agreement that she continue with the purchase alone; that at all times it was their intention to jointly own the property in a manner similar to that in which they had held the Belair Garden flat; that there were two reasons why the property was registered in her sole name being, firstly, that he had a bad track record in business in Hong Kong and thought that his involvement with business in the Mainland may adversely affect the plaintiff and, secondly, that it would facilitate the grant of a mortgage if the property were registered in the plaintiff's sole name; that the payment which was made to him was his one half share of the profit realised from the disposal of the Belair Garden flat which he had requested be paid to him in order that he may invest in that business in the Mainland.

12. Again I reject the defendant's evidence. He was cross-examined as to why he failed to attend the pre-arranged meeting to sign documentation in connection with the assignment. He did not dispute that he had failed to attend such a meeting but said that he had no recollection of having done so. I simply do not accept that.

13. According to his evidence the business venture with which he involved himself in the Mainland was operated through a company which was registered in the name of another person. It is thus difficult to conceive how that could have had any adverse effect on joint ownership of the Pictorial Garden flat: certainly the defendant was unable to suggest any when he was cross-examined on this matter.

14. The defendant was particularly evasive and his evidence especially unconvincing when testifying on the issue of assignment of the Pictorial Gardens flat solely to the plaintiff. His claim that he had simply omitted these explanations from his witness statement, which he adopted as his evidence in chief, is hollow.

15. I accept the plaintiff's evidence that by payment of the sum of $130,000.00 the defendant had no further interest in the Pictorial Garden flat. It follows that notwithstanding any arrangement which may have existed prior to that payment, with effect from the time of the payment the defendant had no proprietary interest in or claim to the flat which became the exclusive property of the plaintiff.

16. The plaintiff took possession of the Pictorial Gardens flat but did not move in immediately. She says that this was because she was uncertain of what to do with the property as a result of another schism in her relationship with the defendant - whether to sell it, occupy it herself or let it. Eventually she moved in in late 1992.

17. The parties resumed their relationship in 1995 but, according to the plaintiff, did not resume living together. Her evidence is that at no stage did the defendant move into the Pictorial Garden flat - yet he says he did, and that he continued throughout to provide moneys at the rate of some $10,000.00 per month towards the mortgage repayment until the flat was finally sold in 1999. He testified that he had arranged for a friend, whose name he could not recall, to effect decoration of the flat; that he had contributed an amount, which he could not recall, to that cost.

18. It is obviously difficult for the plaintiff to prove that an event, the defendant living with her, did not happen but it would be relatively easy for the defendant to demonstrate that he had done so: other than his evidence, which I reject, he has made no effort to show this to be the case. Obviously, I am mindful of the fact that it is the plaintiff who bears the burden of proof. I accept the plaintiff's evidence that the defendant neither lived in Pictorial Garden and nor made any monthly payment to her at that stage.

19. The plaintiff says that in March 1997 the defendant sought a loan of $1,000,000.00 from her. It is this loan, less partial repayment, which forms the subject matter of the claim. Each was aware of the surge in the property and stock markets. He expressed the desire to use the funds to invest in the latter. She agreed to make the loan on condition that the defendant pay her a monthly amount of $10,000.00 which would be enough, when added to her then salary, to ensure that she was able to service the mortgage she would have to obtain in order to put him in funds.

20. The most compelling portion of her testimony is her explanation why she agreed to lend the money to the defendant: he had told her that if he could make money, he would be able to afford to marry her which, regardless of all that had gone before, she was "anxious" to do. This explanation has a real ring of truth to it.

21. The plaintiff remortgaged the property: that is not in dispute. She paid $1,000,000.00 over to the defendant: that is not in dispute. It is the plaintiff's case that the defendant then started to make payments to her in terms of their arrangement, repaying an amount of $100,000.00 by way of 10 payments before notifying her in August 1998 that he could no longer maintain payments. A striking feature of the plaintiff's evidence is that she is only able to identify seven payments in a Hong Kong Bank bank account as emanating from the defendant which amount to $70,000.00 - yet insists that he actually had paid the greater amount. In my judgment, this underscores her veracity.

22. Some of the identified payments were for amounts greater than $10,000.00, the excess being explained by the necessity for the defendant to reimburse her for purchases she had made on his behalf: the defendant accepted that she had made some purchases for him but disputed that this had occurred in two consecutive months. Despite denying in his pleadings that he had paid the sum of $100,000.00 to the plaintiff, the defendant accepted in his testimony that the payments identified by the plaintiff had been made by him, albeit that he attributes a different cause for them.

23. The defendant proffers a very different version of events concerning the payment to him. It is his contention that they were living together in the Pictorial Garden flat and decided, jointly, to remortgage it so as to make capital available for joint investment in the stock market although the investment would be conducted in his sole name. The intention was that they would thus have joint investments in the property market and the stock market, the former in the sole name of the plaintiff, the latter in that of the defendant. The defendant asserts in his witness statement that the $1,000,000.00 had been paid into his bank account and that he "...then purchased the stock in (sic) various dates in the period from mid March to April 1997 in my own account name...".

24. It is significant that he makes no mention at all in his witness statement of what he said during cross-examination - that in addition to the $1,000,000.00 which had only been made available in "May or June" 1997 he had previously injected some $200,000.00 from his personal resources into this joint investment. He claimed that this had occurred in either early 1997 or in late 1996/early 1997. had this claim had any foundation in fact, it would have appeared in his witness statement. It is evident from the documentation that heavy losses were sustained in this venture.

25. The plaintiff's evidence is that during the period from the repayment by her to the defendant of the sum of $130,000.00 until the defendant started paying the agreed monthly sums of $10,000.00 to her, she had received no moneys from him at all. The defendant says in cross-examination that he had maintained monthly payments of a minimum of $10,000.00 as his contribution to the joint venture, that such payments were not repayment of the loan as claimed by the plaintiff. He testified that he paid up to the "last two months" before the sale of the Pictorial Garden flat in 1999 although he also said that he had stopped making payment in 1998 because he knew that the plaintiff could easily sell the property. Once again, the defendant makes no attempt to establish the fact of the payments other than to rely on his own testimony.

26. I reject his evidence. I am satisfied that he made no monthly payments in the interim period to the plaintiff; that payments commenced with those made into her Hong Kong Bank account, identified by her as having been made by him, which he accepts; that such payments were made pursuant to the terms of the loan made by the plaintiff. The fact of those payments supports the plaintiff's version.

27. Although there were a number of other conflicts in the evidence of the parties, each of which I would resolve in favour of the plaintiff given my acceptance of her evidence, there is only one further matter which I find it necessary to address.

28. The relationship between the parties appears to finally have ended in late 1998, the reason being immaterial to these proceedings. The plaintiff sold the Pictorial Garden property in 1999 at a reasonably substantial profit. It is not in dispute that she has retained the proceeds of that sale. Nor is it in dispute that in February 2000 the defendant transferred to the plaintiff all the remaining stocks in the account previously operated by him. The plaintiff says that this was in part payment of the amount outstanding in terms of the loan. The defendant's evidence was unclear as to just why he effected this transfer. I accept the plaintiff's evidence that the transfer of the shares was effected by the defendant in recognition and reduction of his indebtedness to her consequent upon the loan: his acquiescence in her retention of the proceeds of the sale of the Pictorial Garden flat demonstrates his acceptance that he had no interest in that property. I reject his particularly unctuous assertion that he had not sought an accounting between them on what he says were the joint venture investments because, whilst he owed her no money legally, he felt he owed her something from their relationship over the years.

29. In the circumstances, the plaintiff satisfied me, on a balance of probabilities, that she had effected the loan as particularized to the defendant who had made partial repayment to her of the amounts reflected in her amended statement of claim. She was thus entitled to judgment in her favour. Counsel accepted that costs should follow the event.