WONG KAM TONG v. LAM HONG CHING ANDY AND ANOTHER

HCA1144/2006
& HCA2320/2007

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 1144 OF 2006

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BETWEEN

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(HEARD TOGETHER)

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J U D G M E N T

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The actions and the issues

1.  Mr Sung Man Po (“Sung”)used to live in Sai Bin Wai, Sap Pak Heung, Yuen Long. On the basis of the evidence I have seen, he appeared to be rather active in the property market in Yuen Long at all material times. He died on 10 March 2004. He left a widow, Madam Zhong Yu Lian (“Zhong”)(or Chung Yun Lin in Cantonese transliteration), with whom he went through a marriage ceremony in 2002. Sung had a first wife who died some years ago. There is uncertainty over when the first wife died, but that does not matter for present purposes.

2.  The executor of his estate is Andy Lam Hong Ching (“Andy”), the plaintiff in HCA1144/2006 and the 1^st defendant in HCA2320/2007. Andy is the son of Mr Lam Tak Shing, who was a “godson” (in the traditional Chinese sense) of Sung. He is the 2^nd defendant in HCA2320/2007.

3.  Wong Kam Tong (“Wong”), the defendant in HCA11442006 and the plaintiff in HCA2320/2007, is an indigenous villager of Sai Bin Wai, Sap Pat Heung. At the material time he operated an estate agency in Yuen Long. Since both Wong and Sung lived in the same area, they came to know each other quite well. Wong has a number of brothers : Wong Lai Tong (“Lai Tong”), Wong Moon Lam (“Moon Lam”), a brother called Ah Wing (“Ah Wing”) and Wong Muk Lam (“Muk Lam”). Sung also knew Wong’s brothers. Wong’s wife is Madam Yeung So Mei (“Yeung”). Their daughter is GucciWong Miu Yin (“Gucci”). Lai Tong’s wife is Ng Mei Yee (“Ng Mei Yee”). In 1997 Muk Lam and Lai Tong were investigated by the ICAC over certain offences which necessitated the posting of substantial bail for them (I shall come back to this later). Lai Tong subsequently went to jail and he was in jail as at March 1999 (as evidenced by a letter he wrote from jail at that time). A High Court action (HCA9333/2000) was subsequently commenced by one Konson Nominees Limited against Lai Tong, Moon-Lam and Wong alleging their involvement in a property fraud. It seems reasonably clear that that the fraud alleged in the writ was the fraud which the ICAC investigated into and for which Lai Tong went to jail. I should make it clear that in referring to this writ and to the fraud investigation I am not making any finding that Wong was guilty of the underlying property fraud that was being alleged (or charged).

4.  These two actions concern three properties acquired in the name of one or the other of Sung and Wong.

5.  In HCA1144/2006, Andy (as executor of Sung’s estate) sued Wong for a declaration that Wong held a property known as 24/F, Flat 3, B Block, Ho Shun Tai Building, 10 Sai Ching Street, Yuen Long (“Flat 3”)on trust for Sung, on the ground that out of a purchase price of HK$1,250,000, Sung provided HK$1,010,000 by way of a cashier order issued by Shanghai Commercial Bank (“SCB”) and funded by Sung’s current account no.351-14-06043-5 with SCB, and that there was an agreement that Wong should hold Flat 3 as trustee for Sung. On 4 April 2006 Wong mortgaged Flat 3 in favour of HSBC to secure banking facilities (“the Mortgage”). Sung’s estate seeks an order that Wong should transfer Flat 3 to Andy free from the Mortgage, and other monetary relief.

6.  By way of defence, Wong pleaded and contended that the payment by Sung of HK$1,010,000 was in repayment of a pre-existing debt owed by Sung to Yeung (Wong’s wife). It was alleged that the pre-existing debt was in the amount of HK$1,032,000 and the amount was lent by Yeung by way of a cashier order issued by Ka Wah Bank and funded by Yeung’s account no.018-709-1-14700-6-00 with that bank. The cashier order was used to satisfy the balance of the purchase price in relation to Sung’s purchase of a property known as 22/F, Flat 2, A Block, Ho Shun Tai Building, 10 Sai Ching Street, Yuen Long (“Flat 2”) which Sung acquired in his name.

7.  In HCA2320/2007 (transferred from DCCJ2966/2006), Wong is the plaintiff. Andy is the 1^st defendant and Lam Tak Shing is the 2^nd defendant. Wong claimed that in or about March 1997 he and Sung agreed to purchase a property known as 20/F, Flat 6, A Block, Ho Shun King Building, 3 Fung Yau Street South, Yuen Long (“Flat 6”)at a price of HK$1,050,000 from the former owner Mr Petrik Wong, that Wong would contribute (and did contribute) HK$510,000 towards the purchase of Flat 6 (according to Wong this consisted of a payment of HK$50,000 for the initial deposit, HK$160,000 for the further deposit and a yet further sum of HK$300,000 paid to Sung). He further contended that it had been agreed (expressly or impliedly) that Wong and Sung would each have an equal interest in Flat 6. Flat 6 was conveyed into the sole name of Sung, and after his death Flat 6 was transferred by Andy (as executor) to Lam Tak Shing. Wong claimed a declaration that Flat 6 (now held by Lam Tak Shing) is subject to the equitable interest of Wong as tenants in common in equal shares with Sung or in such shares as the court shall determine.

8.  By way of defence, Andy and Lam Tak Shing denied the existence of any agreement alleged by Wong or that Wong had any interest in Flat 6. It was alternatively contended that even if there was any involvement by Wong in the matter of Flat 6, he was only acting in his capacity of a property agent of Sung. A number of other points on formality and registration are pleaded but they have not been pursued or argued at trial.

9.  There are a number of difficulties about this trial :

(1)  One of the key protagonists, namely Sung, is dead.  The court therefore did not have the benefit of his testimony.

(2)  Any alleged oral agreements were not reflected or hinted by any contemporaneous documentation.

(3)  The events in question took place more than 10 years ago.  The banking documents kept or disclosed by the parties are incomplete.

(4)  Writs of subpoena were only issued very late in the day against numerous third parties by Sung’s estate with a view to obtaining relevant documents.  This had resulted in the trial having to be truncated and prolonged.  The dates of hearing stated at the beginning of this judgment speak for themselves.

(5)  One of the recipients of the writs of subpoena is the CITIC Ka Wah Bank.  Whilst I have no doubt that CITIC Ka Wah Bank had done its very best to assist the court, because of the lapse of time and of the practicalities of its record keeping system, it was unable to provide a full picture of all the activities in the accounts held at the material time at Hong Kong Chinese Bank (“HKCB”) and Ka Wah Bank (CITIC Ka Wah Bank has since taken over their businesses).

(6)  Wong testified in the trial in October 2008.  However, after he had finished his oral evidence, further documents were produced by third parties pursuant to writs of subpoena issued against them.  Some of those documents had an impact on the evidence given by Wong.  As a matter of fairness, Wong was given the opportunity to return to the witness box to comment on them or be cross-examined on them before any points or arguments are allowed to be made against Wong (based on those documents) by Mr Marshall, SC.  However, that opportunity was not taken up by Wong, who decided not to go into the witness box again to explain those documents or to be cross-examined.

(7)  Even though witness statements of Yeung and Gucci have been filed, they did not testify.

(8)  Towards the end of the trial (in March 2009), Wong acted in person.  The court was therefore not provided with the benefit of any professional argument from Wong’s perspective during the stage of closing submissions.

Chronology of payments

10.  It would be appropriate and convenient to set out at this juncture a chronology of the various payments and transactions which form the subject matter of these actions :

	Flat 6	Flat 2	Flat 3
12 March 1997		Provisional sale and purchase agreement at a price of HK$1,290,000 signed by Gucci for and on behalf of Sung.  It stated that the initial deposit of HK$100,000 was paid by a cheque (105232) drawn on Ka Wah Bank.
15 March 1997	Provisional sale and purchase agreement for HK$1,050,000 signed by Gucci on behalf of Sung.  The initial deposit was stated to be HK$50,000.  It was paid by a cheque (105241) drawn on Yeung’s account at the Ka Wah Bank (exhibit CL-21).
20 March 1997		Sale and Purchase Agreement.  HK$158,000 was paid to the vendor.  This was funded by a withdrawal of the same amount from Sung’s SCB account that day.
27 March 1997	Sale and purchase agreement.  HK$160,000 was paid to the vendor by way of a cashier order issued by Ka Wah Bank.
23 April 1997	Yeung paid cheque of HK$300,000 to Sung.  At one time Mr Marshall, SC suggested that this cheque (a copy of which was produced by Wong in this litigation) was created ex post facto only for the purpose of this litigation and had in fact never been given to Sung or cashed.  However, following production of documents by CITIC Ka Wah Bank (showing that this cheque had indeed been cleared and paid – exhibit CL-20), the suggestion was not pursued.
3 June 1997		Assignment to Sung.  Completion monies (HK$1,032,000) paid by a cashier order issued by Ka Wah Bank, funded by money in Yeung’s account at Ka Wah Bank.
18 June 1997		Sale and purchase agreement whereby Sung re-sold Flat 2 for HK$1,430,000.  The agreement acknowledged receipt of two sums of HK$80,000 and HK$63,000 by way of deposits.
26 June 1997	Assignment to Sung.  Completion monies of HK$840,000 paid by a cashier order issued by Hong Kong Chinese Bank (“HKCB”), funded by Sung’s money in his account with HKCB.
2 July 1997			Provisional sale and purchase agreement for HK$1,250,000.  Deposit in the sum of HK$100,000 was paid by a cheque drawn on an account at Ka Wah Bank.
10 July 1997			Sale and purchase agreement.  Another deposit of HK$150,000 paid by way of a cashier order dated 7 July 1997 issued by HKCB, funded by money in Sung’s account with that bank.
22 July 1997		Property assigned by Sung to sub-buyer.  In the assignment, Sung used the address of Wong’s estate agency as his address.
6 September and 6 October 1997	Former tenant of Flat 6 acknowledged receipt of HK$30,000 from Wong for the purpose of securing her vacation from the premises.
31 October 1997			Assignment to Wong.  Completion monies of HK$1,010,000 paid by a cashier order issued by SCB dated 29 October 1997 funded by Sung’s account with that bank.

11.  It will be noted that in the above summary there had been no reference to any bank account in Wong’s name. This is because it is Wong’s case that in conducting his financial affairs he had no bank account of his own. Financial dealings were conducted via the bank account(s) of his wife who held his funds for him (indeed in Wong’s Defence in HCA1144/2006 it was pleaded in §3.1 and 3.2 that the loan was given by Yeung but I take that to mean “by Yeung on Wong’s behalf”).

Crystallising the specific issues

12.  The bone of contention between the parties was the precise nature of the relationship between them in the transactions in question and whether various payments had been made by Wong “beneficially” or whether he was only acting as an agent (or repository of funds) for Sung.

13.  Specifically :

(1)  In relation to HCA1144/2006, the defence of Wong is that the HK$1,010,000 cashier order was by way of repayment of a HK$1,032,000 loan made by way of a cashier order funded by Yeung’s account.  The fact that the HK$1,032,000 was funded by monies in Yeung’s account cannot be disputed.  What is in dispute is the nature of the payment.  Wong says it was a loan to Sung at a time when Sung had a short-term cash flow problem and Sung needed funds to finance his completion of the purchase of Flat 2.  If Wong can prove that the payment of HK$1,032,000 was in the nature of a loan, and that the HK$1,010,000 payment was in partial repayment thereof, then the latter payment did not confer any beneficial interest on Sung and his estate’s claim will fail.  But Sung’s estate says that Wong was merely acting as agent (or repository of funds) for Sung and denies that the HK$1,032,000 cashier order was in the nature of a loan.  If the initial HK$1,032,000 was not a loan, then the subsequent HK$1,010,000 could not have been a repayment of such a loan.  In that case, Wong’s defence will fail.

(2)  In relation to HCA2320/2007 Wong has, on the face of it, made some payments to the vendor of Flat 6 and a payment of HK$300,000 to Sung.  If these were made by him beneficially (and referable to the purchase of Flat 6) then he would acquire a beneficial interest in Flat 6.  But Sung’s estate says that any involvement of Wong in the purchase was only in his capacity as an agent.

14.  I wish to make three points before moving on to a discussion of the merits.

15.  First, no argument has been addressed to me (and no evidence has been adduced) to the effect that in making the various payments in question, there was any intention on the part of anyone to make a gift. I can therefore discount this possibility.

16.  Second, on the pleaded case of Sung’s estate in HCA1144/2006, out of a purchase price of HK$1,250,000 for Flat 3 Sung had only contributed a sum of HK$1,010,000 by way of a cashier order. However, in his Defence, Wong did not plead any point that even if the HK$1,010,000 was beneficially provided by Sung, this would still not entitle Sung to a 100% beneficial interest in Flat 3 but only to, say, a 1,010,000/1,250,000^th share by reference to ordinary resulting trusts principles. Even though the pleaded case of Sung’s estate (§3) pleaded a case based on “agreement”, the case as presented to me by Mr Marshall, SC was more in the nature of a case based on payment of the entirety of the purchase price and based on resulting trusts principles. As the trial developed, Wong and his legal advisors knew full well that nature of the case put against Wong and they had been content to deal with the case on that basis.

17.  Third, when I use the term “agent” to describe the nature of the case of Sung’s estate as to Wong’s role, I am not using the term in the sense of an agent which has authority to bring his principal into binding contractual relationships with third parties. I am using the term in the broad sense of describing a person who carries out the order or instructions of another, or keep the funds of another and apply such funds according to the wishes of another. All parties understood this to be the meaning of this concept as used at trial. It should therefore come as no surprise that I do not discuss matters such as whether there is actual, implied or apparent authority because this is simply not what I mean by “agent”. Also when I use the language of funds being “Sung’s money” or “Wong’s money” on paying money “beneficially” I am not using these concepts in the “trust” sense. I am simply using them in the broad sense of A having placed funds with B, and B having an obligation (or understanding) to apply an equivalent amount at A’s direction. In such case, even though there may be no trust (since legal and beneficial interest might have passed to B), B is still not regarded by me as having paid “his money”, or paid “beneficially”.

18.  I now turn to a discussion of the merits of the parties’ respective cases.

Assessment of credibility

19.  The case turns on the nature of various payments. The first “port of call” for any explanation as to the nature of those payments would be oral evidence from the primary protagonists. From Wong’s side the court has heard viva voce evidence from Wong himself. On Sung’s side the court has heard from Zhong (Sung’s widow) and Lam Tak Shing, neither of whom were able to assist on the specifics of the banking transactions because they did not have first hand knowledge.

20.  That is not to say that the court must accept Wong’s evidence. His evidence must still be tested against the contemporaneous documents and the inherent probabilities. If his oral testimony does not stand up to such scrutiny then it can still be rejected even though Sung was not there to contradict him.

21.  I have to say firmly, right at the outset, that having heard Wong over a number of days I find him to be a wholly incredible and unreliable witness.

22.  In terms of demeanour, his demeanour is extremely unimpressive. He was shifty when pressed into a corner. He would filibuster when a line of questioning was getting near a difficult area for him. He sometimes feigned indignation when pertinent questions were put to him and his performance in the witness box smacked of play-acting. Even when he was trying to appear indignant or “hurt” by the suggestions put against him, his reaction looked extremely exaggerated, rehearsed and artificial. At times he would pretend to be dumb in response to extremely simple questions and would avoid giving a straight answer. All in all, he was a paradigm example of an untruthful witness.

23.  Demeanour was not my only guide to assessing credibility. I am fully aware that demeanour can sometimes an elusive yardstick in assessing credibility. I have also had regard to the more important fact that much of his evidence is against the inherent probabilities and the contemporaneous documents. I shall set out a number of the more egregious examples later in this judgment.

24.  I reject his evidence in the material and crucial aspects that are relevant to the resolution of the issues in these actions. In particular:

(1)  I reject his evidence that he had made a loan of HK$1,032,000 to Sung to enable Sung to complete the purchase of Flat 2.

(2)  I reject his evidence that when Sung procured the payment of the HK$1,010,000 cashier order in connection with the purchase of Flat 3, Sung was repaying the aforesaid loan (the existence of which I had rejected).

(3)  I reject his evidence that in causing his wife or Gucci to pay for some of the deposits for the acquisition of various properties, he was doing so beneficially with a view to acquiring any interest in the property in his own right.

(4)  Though Yeung did pay HK$300,000 to Sung by way of a cheque dated 23 April 1997 I reject Wong’s evidence that this was referable to the acquisition of any interest in Flat 6.

(5)  I reject his evidence that there was any agreement that Flat 6 would be held by Sung for Wong and Sung equally.

25.  I now examine specific aspects of Wong’s evidence.

The alleged loan of HK$1,032,000 : adding up the sums

26.  I start with the suggestion that he extended a loan of HK$1,032,000 to Sung by a cashier order on 3 June 1997. On the face of it and as a matter of simple arithmetic, the cashier order of HK$1,010,000 paid on 31 October 1997 did not fully repay this “loan”. One may therefore legitimately ask what happened to the balance of the loan. However, the matter is not as simple as that, because it will be recalled that a deposit of HK$150,000 for Flat 3 was paid for the purchase of Flat 3 by a cashier order dated 7 July 1997 also funded by Sung. If one puts HK$1,032,000 (allegedly lent by Wong) on one side and HK$150,000 and HK$1,010,000 (totalling HK$1,160,000 and all funded by Sung) on the other side, one will end up with a scenario whereby Sung had paid more than Wong had paid and a balance was owed by Wong to Sung.

27.  According to Wong’s evidence (which he mentioned for the first time in the witness box during his evidence-in-chief), there was in fact a previous loan of HK$100,000 extended by him (through Gucci) to Sung to enable Sung to pay the initial deposit for Flat 2 on 12 March 1997. He said that he received a phone call from Gucci to the effect that Sung wanted her to issue a cheque for him. That cheque was in the amount of HK$100,000 and was used to pay the initial deposit of Flat 2. Wong explained that the cashier order of HK$150,000 dated 7 July 1997 was for repayment of this loan.

28.  However, the sums still do not add up. By paying HK$150,000 on 15 July 1997 to repay the HK$100,000 loan, Sung was overpaying Wong by HK$50,000. When asked about the “overpayment” or differential of HK$50,000, he explained that since he had also made the loan of HK$1,032,000 to Sung on 3 June 1997, he would deal with the two loans together with Sung.

29.  In other words, the total amount of loan he made to Sung (in relation to Sung’s purchase of Flat 2) was HK$1,032,000 plus HK$100,000, thereby totalling HK$1,132,000. Sung’s payments of $150,000 and $1,010,000 were in repayment of the total of these two loans. However, the figures still do not match because the “repayments” made by Sung, on Wong’s case, were HK$150,000 (the 7 July 1997 cashier order) and the HK$1,010,000 cashier order funded by Sung on completion of Flat 3. They add up to HK$1,160,000. Sung had therefore still overpaid him for HK$28,000 ($1,160,000 less $1,132,000). According to Wong, he repaid this surplus to Sung by a cash payment. Again this was never mentioned in the witness statements and only mentioned for the first time at trial when Wong was in the witness box.

30.  I find Wong’s attempt to tally the figures extremely difficult to believe and I reject his evidence. This whole saga about the additional loan of HK$100,000 was never mentioned in the witness statements and came out for the first time when Wong was in the witness box. If Wong’s evidence is true, then this HK$100,000 loan would be so inextricably linked with the other loan of HK$1,032,000 (because he decided to lump them together for the purpose of setting off against Sung’s payments of HK$150,000 and HK$1,010,000) that, it would have been inconceivable for him not to have told this part of the story right at the outset in his pleadings and witness statement.

31.  There is a small point about the HK$100,000 cheque which, whilst I do not rely on it to reject Wong’s evidence about the HK$100,000 loan, serves to reinforce my negative view about the veracity of his evidence. According to Wong, the cheque was issued by Gucci on 12 March 1997. However, the cheque number was 105232 whereas the cheque number of the HK$50,000 cheque used to pay for the initial deposit of Flat 6 on 15 March 1997 was 105241. The two cheques (both were Ka Wah Bank cheques) appeared to be part of the same sequence. Cheque 105241 was issued by Yeung (a copy of the cheque is in evidence). It is therefore more likely than not that cheque 105232 (the HK$100,000 cheque) was also issued by Yeung and not (as Wong maintained) Gucci. In the overall analysis it probably mattered little whether this cheque was issued by Gucci or Yeung, but the point serves to underline the unreliability of Wong’s evidence as to the incident of extending the prior “loan” of HK$100,000.

32.  Also during cross-examination, Wong mentioned two further loans to Sung for the first time.

33.  The first one was an alleged loan in the amount of HK$700,000. He said that this loan was made to Sung on 16 April 1997 by a cheque drawn by Yeung in favour of Sung. A search of the available records of all of Sung’s accounts (at HKCB, SCB and BOC) did not reveal any entry of HK$700,000 at around that time. There was, however, a credit entry of HK$701,160 into Sung’s savings account at HKCB. There was also a cheque drawn by Yeung on her Ka Wah Bank account for HK$701,160 in favour of Sung (exhibit CL-22). It seemed reasonably clear that Yeung paid HK$701,160 to Sung on 15 April 1997. The figures were close, and in fairness to Wong I asked Wong to clarify whether he had meant to say a loan of HK$700,000 or HK$701,160. Wong stood by his evidence of HK$700,000. One can therefore discount the payment of HK$701,160 as representing payment of the alleged loan. The upshot is that there is no evidence supporting such a HK$700,000 loan. Wong did not explain what the HK$701,160 payment was about and I do not need to make any positive findings. The evidence (documents produced by the solicitors’ firm of John Chan & Co.) shows that at around this period of time Sung had paid money towards the acquisition of a property in Gucci’s name, the property was quickly re-sold at a profit. HK$701,160 was very close to the amount paid by Sung (HK$771,160) and I would not be surprised if Yeung’s payment of HK$701,160 to Sung related to the purchase and sale of this other property.

34.  The other alleged loan was in the amount of HK$350,000. According to Wong this was made by a cheque drawn by Yeung in favour of someone surnamed “So” on 30 April 1997. There is no documentary evidence of any such payment made by Yeung to someone called “So”. There is documentary evidence of a bank transfer of HK$350,000 from Yeung’s account in Ka Wah Bank to Gucci’s account in Ka Wah Bank on 30 April 1997 (exhibit CL-23) but there is no evidence as to what happened to this sum after it was transferred to Gucci. As I said earlier, neither Yeung nor Gucci testified.

35.  Wong mentioned these two loans for the purpose of (i) showing that Sung had from time to time borrowed money from him and also (ii) to explain a HK$850,000 payment made from Sung’s HKCB account to Yeung on 30 May 1997. The significance of this HK$850,000 payment is that unless a plausible explanation can be suggested by Wong as to why Sung would pay such a large sum of money to Yeung (such as that it was a gift, or paid in discharge of a pre-existing liability, or paid for some other specific purpose), the fact of such a transfer is some evidence to suggest that Sung had been using Wong (or Yeung’s account) as a repository of funds for his property dealings (and given the extremely close proximity between the date of this payment and the date of the 2 June 1997 payment of the HK$1,032,000 cashier order which is now said by Wong to constitute his loan to Sung, it is reasonable to infer, in the absence of a plausible explanation, that this payment was for the purpose of putting Yeung in funds so that she could, probably together with other funds placed by Sung with him from time to time, procure the issuance of the HK$1,032,000 cashier order).

36.  One way to test the veracity of Wong’s evidence of the various loans is to “freeze” the time as at 30 May 1997 and see what loan or loans (as alleged by Wong) were outstanding at that time as between Wong and Sung and to see what ordinary, sensible persons would or would not have done in the circumstances.

37.  One arrives at the following picture :

(1)  According to Wong, on 12 March 1997 a loan of HK$100,000 was extended to Sung.  This was the loan made when Gucci Wong telephoned Wong about Sung’s request for a cheque of HK$100,000 to pay the initial deposit for Flat 2.

(2)  But according to Wong this loan had been settled globally together with the HK$1,032,000 loan (also made by him in relation to Sung’s purchase of Flat 2).  Therefore this loan was not one of the loans settled by the HK$850,000.

(3)  According to Wong, on 16 April 1997 there was a loan of HK$700,000.

(4)  According to Wong, on 30 April 1997 there was a loan of HK$350,000.

The total of these latter two loans was HK$1,050,000 ($700,000 + $350,000).

38.  Assuming for the sake of argument that the HK$850,000 (paid by Sung to Yeung on 30 May 1997) was for the purpose of repaying part of these two loans, the payment of HK$850,000 would still leave a balance of HK$200,000 ($1,050,000 less $850,000). There was no satisfactory explanation by Wong as to when and how this balance had been repaid by Sung.

39.  There are three further problems as to Wong’s account of the various loans.

40.  First, it is not readily understood why, if Sung did owe Wong money (HK$100,000 on 12 March 1997 + HK$700,000 on 16 April 1997 and HK$350,000 on 30 April 1997, already totalling HK$1,150,000) as alleged, Sung would want to repay HK$850,000 to Wong on 30 May 1997 only for Sung to almost immediately re-borrow HK$1,032,000 from Wong shortly afterwards on 2 June 1997 (as alleged by Wong) to purchase Flat 2.

(1)  Wong’s evidence is that Sung requested the HK$1,032,000 loan some days prior to 2 June 1997 and, because at that time Sung had not yet repaid the earlier loans he asked Sung to make a repayment first before he would lend the HK$1,032,000.  This makes no sense.

(2)  If the total outstanding loan owed by Sung as at the end of May 1997 (and immediately prior to 30 May 1997) was HK$1,150,000 (being HK$100,000 plus HK$700,000 plus HK$350,000) and if Sung then asked for yet a further loan of HK$1,032,000, I can see no reason why Wong would or should ask for a repayment with a view to making a fresh loan shortly thereafter.  The natural answer would just be to say no.

(3)  Further, if (as we now know from the documentary evidence) Sung in fact had at least HK$850,000 at his free disposal as at the end of May 1997 (as evidenced by his ability to transfer this sum to Yeung’s account on 30 May 1997) it made no sense for him to ask Wong to lend him HK$1,032,000.  When asked why Sung would not just use his HK$850,000 towards payment of the purchase price but would ask him for a loan instead, all that Wong could say was to say that one should ask why Sung would transfer money to Yeung’s account instead of paying the purchase price in his own name.  This was a blatant dodging of the question.  One cannot see any coherent or sensible reason why Sung would borrow (and why Wong would lend) in the circumstances prevailing as at late May 1997.

41.  Second, if one traces through the state of indebtedness between Sung and Wong as alleged by Wong, one can see the following :

(1)  If one pauses on 23 April 1997 and looks at the state of indebtedness then, one can see that on that day a total of HK$100,000 (the loan allegedly made on 12 March 1997 in respect of Flat 2) plus HK$700,000 (the loan allegedly made on 16 April 1997) namely HK$800,000 was owed by Sung to Wong.

(2)  Wong’s case is that on 23 April 1997 his wife issued a cheque of HK$300,000 as his contribution towards the purchase price of Flat 6 (subject matter of HCA2320/2007).  If there had genuinely been an indebtedness of HK$800,000 as alleged by Wong (see previous sub-paragraph), there was no need, if he had wanted to make a HK$300,000 contribution towards the purchase of Flat 6, to ask his wife to issue a cheque for that amount.  Given the state of alleged indebtedness between him and Sung, all he needed to do was to set off the HK$300,000 against the pre-existing debt of HK$800,000, leaving a reduced balance of HK$500,000 owed by Sung to him.

(3)  Completion of Flat 6 was not to take place until 26 June 1997.  Further deposit of HK$160,000 has already been paid in March 1997.  There was no need for Wong to pay HK$300,000 to Sung on 23 April 1997 for any purpose connected with Flat 6.

(4)  Wong was asked to explain these matters and he could not give any sensible or reasonable explanation.

(5)  This has a knock-on effect on the credibility of Wong’s evidence that the HK$300,000 paid on 23 April 1997 was a contribution towards the purchase of Flat 6.  I shall come back this later.

42.  Third, no reason was put forward as to why the March 1997 “loan” of $100,000 and the June 1997 “loan” of $1,032,000 should be singled out for repayment by Sung by way of the July payment of $150,000 and the October payment of $1,010,000 (plus the clumsy cash payment by $28,000 by Wong back to Sung in order to square the sums), leaving the “in-between” loans to be repaid separately.

Other pointers as to credibility of Wong’s evidence

43.  The above are enough for me to reject Wong’s evidence as to the various alleged loans he had made to Sung and of his evidence that various payments by Sung were by way of loan repayments. However, there are other factors tending to show the implausibility of Wong’s evidence and which reinforces my view above.

44.  First, there is no evidence that Wong was a man of any substance so as to be able to extend loans of the magnitude with which we are concerned. In fact the evidence shows that Wong was not a man of substance.

45.  At first Wong maintained that he had no bank accounts, but later on during the trial he said that he did have an account in the name of his estate agency business. If he had any significant income from this business, one would have expected to see substantial funds going into it first, and then withdrawn, or transferred to Yeung’s account. He said that he believed it to have been held with Standard Chartered Bank or HSBC but the documents produced by the ICAC on subpoena showed that his business account was in the name of Hang Sam Property Company (opened in 1994). A perusal of the bank documents of this business account showed that Wong’s business and finances (at least insofar as this account was concerned) was not that of a person who could extend loans of the sort of magnitude as alleged by him.

46.  From time to time Wong mentioned that he had other business or investments. By way of suggesting how he would put his wife’s bank accounts in funds, he said that he earned money in the PRC and that his wife had a business too. Specifically he had said that in the 1990’s he had a fishery business, an orchid in Guangxi, and a Karaoke in Xian. But there was not an iota of evidence to support his evidence as to these sources of funds and I reject Wong’s evidence without hesitation.

47.  Second, there is evidence that in the High Court action in connection with the property fraud mentioned earlier (to which Moon Lam, Lai Tong and Wong were all defendants), the plaintiff (the victim of the fraud) pleaded that Wong applied to a magistrate in 1998 to stand surety for Lai Tong and in the course of doing so Wong stated that he had a monthly income of HK$20,000 and he owned a property worth about HK$1,250,000 (on Mr Marshall’s case that was the value of a village house which Wong was living in). That is no doubt hearsay evidence, but the hearsay nature of the evidence only affects its weight. I take into account the fact that the pleading was drawn up by professional legal advisors and that in the normal course of events a pleading would have been supported by some underlying materials (so that, say, the pleader can plead specific dates and figures). When Wong was asked about the pleaded allegations in that High Court action, he accepted that he once went to court to ask for bail for someone. He said it was Muk Lam and not Lai Tong. He accepted that on that occasion he did not mention any assets and that apart from the HK$20,000 monthly income he did not mention any other income. Therefore even on Wong’s own case when he was trying to obtain bail for his sibling (when naturally he should be trying to demonstrate the full extent of his worth), he did not mention any substantial cash assets or that he was the owner of Flat 3 or that he had a half interest in Flat 6. If he indeed was the owner of these two properties in the way he now alleges, one would have expected him to say so at that time. There was no evidence that he did. Again the impact of this point on his credibility extends to the dispute about Flat 6. I shall come back to this later.

48.  Third, there were instances where Sung was providing (or called upon to provide) financial support to Wong’s family members. This shows that in the eyes of the Wong brothers/family, Sung was someone whom they looked to for financial support and this tends to negate any suggestion that Sung had to call on Wong for financial support by way of loans (as suggested by Wong).

(1)  For example in the documents produced by the ICAC on subpoena, it was demonstrated that two cashier orders of HK$500,000 each (and funded by Sung) were provided to the ICAC in July 1997 as bail money for Muk Lam and Lai Tong (in connection with their investigation by the ICAC).  Quite obviously Sung had enough financial muscle in July 1997 to provide bail of such order of magnitude.

(2)  According to a notebook kept by Sung (the original of which was produced by Lam Tak Shing during trial as LTS-1), Ng Mei Yuen (who, it will be recalled, was Lai Tong’s wife) acknowledged that she had borrowed HK$500,000 from Sung in June 1998.  The same notebook contained some rather unclear references to (apparently) Ah Wing but I think the clear acknowledgement of debt by Ng Mei Yuen sufficed to demonstrate the point, namely the sort of financial support provided by Sung to the Wong family.

(3)  In a letter written by Lai Tong in March 1999 (while he was in jail, probably in connection with the property scam for which he was investigated by the ICAC) to Sung, Lai Tong asked Sung for a loan of HK$50,000.

(4)  There were a number of draft loan agreements in the trial bundles, which according to Lam Tak Shing were prepared by him to record certain loans made by Sung to Lai Tong but which Lai Tong refused to sign.  The evidence relating to these drafts is rather unclear and inconclusive.  For present purposes I do not place any weight on these drafts.

49.  Fourth, it is abundantly clear from Sung’s bank account documents that he had considerable funds placed with different banks at the material time and that he was not in need of funds at the material time for the purpose of completing the purchase of Flat 2 (the transaction in which, according to Wong, Sung required his financial assistance). Wong suggests that Sung’s fixed deposits had not yet matured at the time of completion of Flat 2 and Sung had a cash flow problem, and that was why Sung had to borrow the HK$1,032,000 loan from him. However, the documentary evidence shows clearly that Sung was a person who was not averse to “breaking” a fixed deposit for the purpose of funding his property dealings. For example on 2 December 1996 he started a HK$1,000,000 deposit with the SCB for three months. That deposit expired on 3 March 1997 but it was renewed for a further three months. It was supposed to expire on 3 June 1997. However, the statement from SCB showed that instead of being allowed to expire on 3 June 1997 (or being renewed that day), the deposit was “broken” by Sung half way through the period of deposit, and it was transferred (together with a sum of interest in the amount of HK$1,643) to a savings account at SCB no.35114060435 on 19 March 1997. In the few weeks following that “break” (and transfer) there were other additions to the said account after 19 March 1997 but there were a number of outgoings from the same account to defray various items of payments. I need not go into the details of those payments, because the point is already sufficiently made that this suggests that Sung would “break” a deposit if he had to and therefore there was little reason for him to want to borrow from Wong simply because his funds were tied up in fixed deposits.

50.  Fifth, the flipside of the above point is that if it was indeed true that Sung’s reason (as relayed to Wong) for wanting to borrow from him was because Sung’s funds were held in fixed deposit, then it must be readily apparent to Wong that in agreeing to lend money to Sung he was doing Sung a massive favour. He was doing Sung a massive favour not only by way of “easing” any supposed cash-flow problem Sung had, but more importantly because he was enabling Sung to keep the money on deposit until maturity and thereby not having to pay whatever penalty to the bank (or suffer any lesser interest rate) which would otherwise result if he were to “break” the deposit early. It was therefore somewhat surprising and uncommercial for Wong not to have considered, or at least mention, the charging of interest. Yet he confirmed in the witness box that the above matters did not occur to him and he did not ask for interest. This is incredible.

51.  The matter is made even more incredible by reason of the following matters :

(1)  the fact that there was a considerable time gap between the alleged lending of the HK$1,032,000 and the alleged repayment on 31 October 1997 (4 months) and Wong was apparently content for the loan to remain outstanding for such a long time, without stipulation as to interest, and without any signs of chasing up;

(2)  any alleged short term cash flow difficulties faced by Sung would have ended at the time when his fixed deposits matured, and yet there was no evidence that Wong inquired into or was ever interested in when that took place (so that he could obtain repayment); and

(3)  irrespective of when Sung’s fixed deposit(s) matured, it is a fact that Sung’s resale of Flat 2 was completed on 22 July 1997, whereupon Sung should be in a position to repay the alleged debt.  As I said above the assignment (on the re-sale) stated Wong’s business address as Sung’s address and I do not believe that this would have been done without Wong’s knowledge that there was a re-sale.  If he knew of the re-sale and of Sung’s receipt of the completion monies (as I find he did know) then it is incredible that he did not thereupon ask Sung for repayment.

52.  Sixth, there is a point concerning payment of the final instalment of the purchase price (HK$1,010,000) for the purchase of Flat 3. That instalment was payable (and indeed paid) on 31 October 1997. This was two days after the maturity (on 29 October 1997) of a fixed deposit which commenced as early as 29 October 1996 and which was renewed (on three-month intervals) on 29 January 1997, 29 April 1997 and 29 July 1997, the last-mentioned renewal maturing on 29 October 1997. Upon its maturity on 29 October 1997 Sung did not renew the deposit but transferred it (together with interest of HK$16,383.56) to his savings account no.351-14-06043-5. On the same day a cashier order in the amount of HK$1,010,000 was issued by HKCB by debiting that very savings account and this cashier order was the one which was used to pay the last instalment of the purchase price of Flat 3. Mr Marshall submitted (and I accept) that this is entirely consistent with Sung having negotiated the completion date of the purchase of Flat 3 to take place shortly after the maturity of the three-month deposit on 29 October 1997. On Wong’s case, it would be a matter of remarkable coincidence (which I refuse to find) that the completion date of Flat 3 (there is no evidence that Wong negotiated this completion date in consultation with Sung) happened just to be two days after the maturity of Sung’s HK$1,000,000 fixed deposit.

53.  Seventh, Wong’s evidence has been demonstrated to be flatly contradictory to the documents. By way of example, I have in mind §4 of his witness statement in HCA1144/2006 (dated 24 January 2007). He said that the HK$150,000 further deposit for the purchase of Flat 3 was paid by a cashier funded by debiting Yeung’s account. In fact the cashier order was issued by HKCB. Yeung did not have any account with HKCB at the material time. This was pointed out by Mr Marshall in opening. When Wong gave evidence in chief he corrected his witness statement and retracted the evidence about the funding of the cashier order. More importantly, documents produced by CITIC Ka Wah Bank on subpoena showed that the cashier order was funded by Sung. In other words §4 of Wong’s witness statement has been proven to be untrue.

54.  I do not believe that the reference in §4 of Wong’s witness statement about the funding of the HK$150,000 cashier order was a mere mistake in recollection, as he suggested in the witness box. That is not the sort of thing which one would mistakenly recollect. On Wong’s own case now, both the HK$1,010,000 cashier order and the HK$150,000 cashier order were procured by Sung to repay prior debts. If he could so clearly recall that HK$1,010,000 cashier was a repayment of debt it is inconceivable that he would have mistakenly recalled the status and nature of the previous HK$150,000 cashier order.

55.  In my judgment the reality is that at the time Wong prepared his witness statement he was trying to create the (untrue) impression that he had funded the entire purchase price of Flat 3 and, to that end, he had to say (falsely) that the HK$150,000 was funded by his wife’s account. When he got caught out by Mr Marshall by pointing out that Yeung did not have an account at HKCB (which issued the cashier order), he had to make up the stories about the numerous loans made by him to Sung.

56.  Eighth, a letter before action was sent on behalf of Sung’s estate to Wong dated 11 May 2006. However, Wong did not put his side of the story by responding to this letter whether promptly or at all. I take due account of the fact that the Writ herein was issued on 26 May 2006, just about two weeks later. But Wong did not excuse his lack of a response by reference to this short time gap between the letter and the Writ. Rather, he first said that he had not received the letter. Then he said that he was in China and had been informed by his daughter about the receipt of a letter. Either way the evidence is incredible. Authenticity of the letter has not been disputed. The letter bore the dispatch chop of the solicitors and I find as a fact that it had been sent, received and not returned. And even if the letter arrived at a time when Wong was not in Hong Kong, receiving a solicitor’s demand letter was a serious matter and I find it inconceivable that no steps were taken by those in Hong Kong to properly understand the contents of the letter inform Wong as to the contents, and to give instructions for a rebuttal to be given if his current story is indeed true.

57.  Ninth, if it is indeed true that Wong was the legal and beneficial owner of Flat 3, I find it inconceivable that Sung were able to obtain access to the Flat and able to move in with his wife in 2002 (as I find they did) without any complaints by Wong. It is not Wong’s case that he allowed Sung and his wife to move in at the time. It is his case that he did not know and he would not have allowed (indeed he counterclaims for mesne profits for trespass).

58.  According to Zhong’s evidence, Sung and her moved in to Flat 3 after their dog passed away in 2002. When Sung took her to Flat 3 he already had two keys to the doors to Flat 3 (one wooden door and one metal door). But they encountered a combination lock at the door. Sung made a telephone call and spoke to a female. His hearing was not good and he passed the phone to Zhong, who asked the female (whom Zhong thought was the staff of an estate agency) for the combination code. They then succeeded in moving in. Despite a number of points being put to Zhong by way of challenge (such as why she said they “pressed” on the combination buttons when the combination code only required turning, not pressing) I find her a truthful witness and I believe in her evidence. Any imperfection in the wording and language she used during her evidence (and which was relied on by Wong’s counsel in cross-examination) was inconsequential, and did not detract from the straightforward manner and credible nature of her evidence.

59.  The important point about Zhong’s evidence was that Sung, despite not being the registered owner of Flat 3, was able to gain entry to Flat 3. Whether this was by means of being in possession of the keys or being able to procure (from the necessary sources) the necessary combination lock numbers, he must have done so with the blessing or arrangement of the registered owner, namely Wong (either by giving him the keys, or arranging for estate agents or other persons to give him the keys and tell him the code). I find it inconceivable that Sung could — if he were not the beneficial owner of Flat 3 — somehow sneak into Flat 3 and be able to live there with Zhong until his death without Wong knowing about it. And I find that Sung was able to gain entry to Flat 3 and stay there not because Wong was charitable to him and let him stay there (it is not his case anyway — as I said above he denies knowledge altogether) but because he knew full well that Sung was the owner and was entitled to live there.

60.  As part of the same point, the evidence shows that in October 2006 Wong made a police report about Flat 3 being unlawfully occupied. He also wrote in October 2006 to China Light and Power about the same point. I find all these steps to be self-serving and I refuse to accept that he only knew that Flat 3 was being occupied at such a late stage (it must be noted that October 2006 was after the commencement of proceedings by Sung’s estate). As I said earlier, I find it inconceivable for Sung to be able to move into Flat 3 without Wong’s blessing and knowledge. And even after 2002 there were numerous occasions when it must have been known or noticeable to Wong that Flat 3 was being occupied (or at least that the lock had been changed) and he could have objected or protested there and then if Flat 3 belonged to him. Yet he had taken no steps to challenge or complain about it until October 2006. For example he admitted in evidence that he had to attend the building where Flat 3 was located in order to sort out the matter about outstanding management fees. There were therefore ample opportunities for him to visit the flat on that occasion. The evidence shows that the outstanding management fees were cleared in January 2006 (on Wong’s case, so that he could then mortgage it). The truth is, and I find, that all along he was in no doubt that Flat 3 had been occupied by Sung and his wife. He took no steps to complain or challenge because he knew he had no right to do so. It was only after the commencement of HCA1144/2006 that he began to take self-serving steps by way of changing the door lock, reporting to the police and writing to China Light and Power.

61.  My adverse view on Wong’s case is also reinforced by the fact that he had chosen not to go back into the witness box to be questioned on the newly produced documents and the fact that he had chose to call neither Yeung nor Gucci to testify on his behalf. I disbelieve and reject any suggestion that the decision not to provide further evidence was due to any desire to complete the matter as soon as possible or (in the case of his wife) because she was having depression problems. Even if Yeung was having depression, there is no medical evidence that she was unfit to testify by reason of such depression (or for any other reasons). I draw the adverse inference against Wong that he decided not to call further evidence because of a realization that any further evidence or witnesses would not help his cause. Also throughout the trial he had shown no enthusiasm in attempting to procure the production of Ka Wah Bank documents relating to Yeung’s account. Now of course, even if he had tried, such documents may not be forthcoming from the bank. But the fact that he showed no signs of wanting positively to subpoena documents from Ka Wah Bank suggests that he feared the consequences.

62.  Also, in rejecting Wong’s evidence, I have not forgotten the fact that Wong has, under cross-examination as to the details of various payments and alleged loans, made numerous references to his having checked the contents of a certain “notebook” compiled and kept by his wife. Such a “notebook” has not previously been mentioned in the witness statements; nor has it ever been disclosed in discovery. A document purporting to be “the notebook” was later brought into court by his family members while Wong was still giving evidence and handed up to me. Because the document was not said to be Wong’s document, it could not be proved by him. It had to be proved by the person who is said to have been the maker of the document. Pending such proof, the document was physically received by the court (and copies were made and given to the parties for them to prepare and consider what to do with it if and when the notebook was introduced into evidence). It was not made an exhibit. However, as I said before, neither Gucci nor Yeung testified. The notebook was never proved as an exhibit. No attempt was made to disclose it by way of a supplemental list of documents. It is not even proven (or apparent) that it was a contemporaneous document. None of the parties had asked me to pay any regard to its contents. I therefore have not placed any weight on the document.

63.  I therefore find that the HK$1,010,000 cashier order and the HK$150,000 cashier order were not provided by Sung by way of repayment of loans. They were provided by him by way of acquisition of beneficial interest in Flat 3.

64.  This leaves the initial deposit of HK$100,000 paid by a Ka Wah Bank cheque no.109259. There is no evidence that Sung had a Ka Wah Bank account and this cheque was likely to be paid from either an account of Yeung or Gucci. In closing submissions Mr Marshall suggested that this was paid from Gucci’s account but in the end I do not think it matters whether it was from Gucci’s or Yeung’s account. Wong’s case is that this cheque represents his funds (in line with his case that Flat 3 was his property). I have already rejected his case about the HK$1,010,000 and HK$150,000. However, could it be said that Wong has still funded a small part of the purchase price to the extent of HK$100,000 and hence had a proportionate beneficial interest of 100,000/1,250,000?

65.  I do not think it can.

66.  One has to look at the big picture. While as a matter of textbook law it is technically possible for two persons to contribute unequally to the purchase price of a property (conveyed to the sole name of one of them) and hence for each of them to have a beneficial interest (proportionate to their uneven contribution), on the facts of this case there is no realistic basis for concluding that this was the intention or arrangement of the parties. In real life, if people go into arms length property venture by each contributing part of the purchase price, they are more likely to do so by reference to an agreed “neat” percentage either of the contribution amount, or the ultimate share of beneficial interest. 100,000/1,250,000 is a very haphazard and “rugged” figure. It is extremely unnatural for two persons to agree to contribute to the acquisition of a property (or agree to sharing the interest of a property) in the odd proportion of 100,000 –v– 1,150,000 without any rhyme or reason (and none has been suggested by Wong).

67.  In any event Wong has failed to satisfy me that the payment of HK$100,000 was intended as payment of “his own money” (as opposed to payment of money that was “parked” by Sung with Wong as agent) for the purpose of acquiring an interest in Flat 3. Indeed, if need be, on a balance of probabilities I find it is more likely than not that the HK$100,000 represented funds that Sung had entrusted with Wong pursuant to some prior arrangements or deposits. In this connection I need not repeat the analysis of the evidence above as to how Wong was not a person of substantial means (and hence unlikely to have been in a joint venture relationship with Sung in the acquisition of Flat 3). There is also evidence that Wong and his daughter Gucci have been doing “legwork” for Sung in Sung’s property dealings and acquisitions. This adds a great deal of weight and force to the suggestion that Sung was using Wong (and his wife’s account) as a repository of funds to facilitate his property dealings :

(1)  For example in Sung’s acquisition of Flat 2 (a property which is indisputably Sung’s, even on Wong’s own case), the provisional sale and purchase agreement dated 12 March 1997 (produced by Wong as WKT-2) was signed by Gucci on Sung’s behalf.

(2)  Also in the assignment of Flat 2, the address of Wong’s estate agency business was stated as Sung’s address.

(3)  There is no live evidence from Sung as to why he would wish to “park” some of his funds with Yeung’s account.  I take note of the fact that on occasions Sung had conducted his own banking transactions and thus he was not the sort of person who was completely incapable of going to the bank.  But it is not inconceivable that he would still wish to park some of his funds with Wong for reasons of convenience.

68.  That this is a probable scenario is reinforced by this : In the case of acquisition of Flat 2 in Sung’s name, I have rejected Wong’s evidence as to why Gucci (or Yeung, depending on whether cheque no.105232 in the amount of HK$100,000 for the initial deposit was issued by Gucci or Yeung) paid the initial HK$100,000. I have also rejected his evidence as to why Yeung funded the HK$1,032,000 cashier order. Once that evidence is rejected, there was no other reason proffered by Wong as to why those payments were made his wife and/or his daughter. Wong certainly does not put forward an inconsistent alternative factual case that he was actually a beneficial part owner of Flat 2. He accepts that Flat 2 belonged to Sung. Therefore following my rejection of Wong’s evidence of why the HK$1,032,000 and HK$100,000 were provided, the only plausible and logical explanation left is that he (through his wife/daughter) provided those amounts as paying agent of Sung. If one wants an example of Wong having acted as such a paying agent in some other transactions, the payment of HK$1,032,000 and HK$100,000 for Flat 2 is itself such an example.

69.  Therefore I find that all the payments in the acquisition of Flat 3 were funded by Sung. Wong was holding the legal title on resulting trust for Sung. It follows that Wong’s conduct in mortgaging Flat 3 to HSBC to secure banking facilities, Wong has acted in breach of trust. I shall deal with the question of remedies later in this judgment. I dismiss Wong’s counterclaim also.

Re-constructing the big jigsaw?

70.  Mr Marshall has, throughout the course of this trial, attempted to construct various theories as to how various transfers, withdrawals (many of which in cash) and deposits (again, many of which in cash) could fit into a larger scheme of transactions between Wong and Sung. Intricate and elaborate charts and submissions have been prepared with a view to showing how the two of them must have started off with a particular transaction and arrangement, how particular withdrawals in cash (from one or more of Sung’s accounts) must have been pooled together and later paid into one of Yeung’s or Gucci’s accounts to prepare for a particular cashier order or cheque payment used to pay for a particular transaction.

71.  His submissions had from time to time to be adjusted and amended, following new documents produced on subpoena. The latest revision followed the revelation by documents produced under subpoena by Messrs John Chan & Co. (solicitors) that certain of the payments evidenced by the bank records related to a hitherto unmentioned transaction involving the purchase, in the name of Gucci, of a property (not named or pleaded anywhere in the pleadings or witness statements in this action) known as Flat F, 13/F Ho Shun Fook Building, Yuen Long (“Flat F”) utilizing at least HK$771,160 funded by Sung (by way of a cashier order) on 14 April 1997.

72.  Tempting though it is to go down this route, in the end I have decided that this is not a route that I should embark on :

(1)  The evidence is incomplete.  Discovery and production of documents had been haphazard.  I cannot be satisfied that all the pieces of jigsaw are placed before me.

(2)  In any event, the immediate issues requiring my adjudication are the nature of the various payments.  It was sufficient for me to form a broad view, on a balance of probabilities, as to whether the suggestion of loans are made out, and as to whether any payments by Yeung/Gucci were really of “Wong’s funds”.  It is unnecessary for me to go further to find or speculate as to the detailed or individual transactions or how the funds came to be “parked” with Wong by Sung.

73.  It may be asked why Sung would want Wong to hold the legal title for him. After all, Sung held Flat 2 in his own name. However, on the issues as framed before me, once the only explanations proffered by Wong for Sung’s payments for Flat 3 were rejected, the only thing left is the fact that Sung had paid for the acquisition of Flat 3. On ordinary principles of resulting trusts, Wong held Flat 3 on trust for Sung and strictly speaking there is no need to plead or prove any underlying objective or motive for placing Flat 3 in Wong’s name.

74.  In any event, there could be a number of reasons why one person may want another to lend his name to property transactions. As I said above Sung did have a track record of utilizing the “services” of the Wong family (Gucci signing the Flat 2 agreement, using Wong’s business address in the assignment on re-sale) and it is not improbable or incredible that Sung would want to use Wong’s name to hold properties. Specifically, the reason suggested to the court on behalf of Sung’s estate (as to how Wong persuaded Sung to place Flat 3 under Wong’s name) was “tax reason”. That was not articulated in great detail, for understandable reasons because the witnesses for Sung’s estate could only describe what they had been told by Sung as to Wong’s reason for asking Sung to let him be the legal owner of Flat 3. I do not find it incredible for Wong to have said this to Sung. I find that in acquiring properties at the material time, Sung was minded to obtain quick sales at a profit (if possible). He has done this for Flat 2. It might and could be thought by a property speculator that if one person were to engage in a series of property “flipping” (buying and selling in quick succession) of several properties, it was more likely to raise the eyebrows of the Inland Revenue than if the properties were “spread” over different paper-owners so that it would not look as though the same owner was engaging in a series of speculation. I am not saying that this is the correct legal analysis, or that this is the way the Inland Revenue actually assesses profits tax based on property activities. That is not the point. The point I make is simply that it is not inconceivable for someone (such as Wong or Sung) to think like this, or to say these things to others with a view to inducing them to put their property under his name.

Flat 6 : equal ownership?

75.  I now come to HCA2320/2007. This concerns Wong’s claim that Flat 6, under Sung’s sole name (now transferred to Lam Tak Shing) was beneficially owned by him and Sung equally.

76.  I have already made severe and damning comments about Wong’s credibility in the context of HCA1144/2006. I bear in mind the possibility that one could well be driven to give untrue evidence in one action (or context) without necessarily giving untrue evidence in another action (or another context). However, in the circumstances of this case, my adverse views of Wong’s evidence which I discussed in the context of HCA1144/2006 apply equally to HCA2320/2007. The evidence in the two actions is intertwined. Evidence given in one action necessarily impacts on that in the other. Wong’s unimpressive demeanour permeates the whole of his evidence.

77.  Wong’s case hinges on :

(1)  Proof that there was an agreement between him and Sung that Flat 6 would be beneficially owned by them equally.

(2)  Proof that the initial deposit of HK$50,000 and subsequent deposit of HK$160,000 was funded by “Wong’s money”.

(3)  Proof that the payment of HK$300,000 by Yeung’s cheque to Sung on 23 April 1997 was referable or attributable to the purchase of Flat 6.

78.  I have already discussed Wong’s evidence about the payment of HK$300,000 in the context of HCA1144/2006. At that time there was no need for Sung to pay anything for Flat 6 at or near 23 April 1997. The chronology shows that the further deposit of HK$160,000 had been paid on 27 March 1997 and completion was not due until 26 June 1997. All he said in evidence to explain why he paid $300,000 to Sung was that Sung asked for HK$300,000. Wong could provide no specific reason and no context as to why at that point of time Sung would be asking him for HK$300,000 in connection with the purchase of Flat 6. While it is a fact that HK$300,000 was paid to Sung by a cheque drawn by Yeung, against the totality of the evidence in this case (including evidence produced by John Chan as to the property transaction involving Gucci and Sung concerning Flat F, referred to above in April 1997) I reject Wong’s evidence that this had anything to do with the purchase of Flat 6. I do not need to find positively what it was for.

79.  As to the initial deposit and further deposit, I am not satisfied that they were paid with “Wong’s money”. In the same way (and for the same reason) as I treated the HK$100,000 initial deposit for Flat 3, I would find that these were probably paid from Yeung’s account as Sung’s paying agent.

80.  I have also referred, above, to the fact that when Wong appeared in court to put himself forward as a surety in 1998, he did not mention his part ownership of Flat 6.

81.  His claim to a half interest in Flat 6 was also not foreshadowed by any letter before action (as one would expect if he had a genuine claim which he wished to pursue or resolve). It could not have escaped him, subsequent to Sung’s death, that if there were any co-ownership or joint venture issues between them over any property, then these had to be sorted out as soon as possible. Even on his own case, he had not done anything to sort out the alleged co-ownership issues over Flat 6 of his own volition. His claim over Flat 6 was raised for the first time in June 2006 by way of a separate writ in the District Court, only after Andy had commenced HCA1144/2006 in May 2006. This form of conduct bears the hallmark of a subsequent invention.

82.  For all these reasons I reject Wong’s claim over Flat 6 and dismiss HCA2320/2007 with costs to be taxed if not agreed.

83.  For the sake of completeness I should add that the title deeds to both Flat 3 and Flat 6 were kept by Wong at all material times. I did not find this odd or surprising because if (as I had found) Wong has been assisting Sung in his property deals and doing legwork for Sung, it is understandable why Sung would entrust the title deeds with him. This was particularly so if, as Flat 2 demonstrated, there was a possibility that Sung might wish to fetch a quick sale of his property for profit and it could be regarded as more convenient for title deeds to be kept by Wong who could be counted on to perform the tasks of taking the title deeds to estate agents or solicitors.

84.  There is some evidence of efforts made by Lam Tak Shing on behalf of Sung and/or his estate to have meetings and conversations with Wong to pursue primarily the question of title to Flat 3 and, secondarily, to talk about Flat 6. The evidence is contested by Wong and is not entirely conclusive or satisfactory. Lam Tak Shing was rather coy in describing exactly what it was that Sung wanted him to ask Wong about Flat 6. However, on a broad level of generality, I accept Lam Tak Shing’s evidence that attempts were indeed made to approach Wong during the meetings described by him over the question of Flat 3 and Flat 6. Beyond that, I do not think I need to make any findings about precisely what was being discussed in these meetings in order for me to resolve the crucial issues in dispute between the parties and I do not propose to do so.

85.  I have considered and re-read all the materials and arguments which the parties had put before me. The fact that I may not have referred exhaustively to all of them in this judgment is only because I do not think that they would have any material bearing on my reasoning above or the outcome of this trial.

Remedies and order

86.  I will deal with HCA2320/2007 first because the order is the simplest. I dismiss Wong’s claim with costs to be taxed if not agreed.

87.  I now turn to HCA1144/2006.

88.  I have no difficulty in granting the declaration sought in prayer 1 of the Statement of Claim in HCA1144/2006 and it is so ordered.

89.  The more difficult part is how to deal with the Mortgage.

90.  There is no doubt that Wong has acted in breach of trust by creating the Mortgage and I so find.

91.  HSBC (the mortgagee) is not a party to this action and it has not been pleaded or suggested before me that somehow the Mortgage was subject to the equitable interest of Sung (or his estate).

92.  This means that any re-transfer of legal title by Wong back to Sung’s estate would have to be subject to HSBC’s charge and it is for Wong to procure the discharge/release of that charge.

93.  Wong, as trustee in breach, is obliged to restore the beneficiary to the position as if the breach had not occurred. Mr Marshall suggested, at one stage, that if Wong is unlikely to be able to discharge the mortgage debt then one way of providing relief to his client was to try to order that some other unencumbered property of Wong to be charged in favour of Sung’s estate. I do not think this is open to me. Quite apart from the fact that I have not been addressed on the legal basis on which this can be done legitimately, this is not something that has been pleaded; nor has there been any investigation as to what unencumbered property Wong may own.

94.  This means that I can only order a re-transfer of Flat 3 by Wong free from encumbrances, coupled with an order for damages in the event that this is not done by Wong. Mr Marshall submitted a short timeframe of 7 days from judgment and I accept his suggestion. Therefore I order that :

(1)  Wong do transfer the legal title of Flat 3 to the plaintiff free from encumbrance within 7 days of this judgment.

(2)  Wong do, at or prior to the transfer of legal title pursuant to the order in (1)above, discharge all outstanding indebtedness secured by the Mortgage (under Memorial No.06050301960109) and procure the release of the Mortgage.

(3)  In default of compliance with the orders above, the plaintiff be at liberty to apply for directions for damages to be assessed before a Master for Wong’s breach of trust.

(4)  Costs be to the plaintiff to be taxed if not agreed.

(5)  Liberty to apply in the implementation of the order.

95.  For the assistance of the judicial officer who will be assessing such damages, I have already set out above my findings as to what constituted the breach of trust in question. No submissions have been addressed to me as to the appropriate period, basis (simple or compound) and rate of interest and these should be left to the assessment stage.