TSANG FLORENCE HON CHU v. CHU SUET CHUNG

DCCJ 261/2016

[2023] HKDC 1583

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 261 OF 2016

(Transferred from High Court Action No. 1261 of 2015)

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(by original action)

(by counterclaim)

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JUDGMENT

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1.  This case concerned a property known as Flat C, 12/F, Block B, Shaukiwan Centre, 7 Factory Street, Hong Kong (“the Property”) the legal owners of which are the defendant by original action and plaintiff by counter-claim, Chu Suet Chung (“Chung”) and the 2^nd defendant by counterclaim, Tsang Thomas Hon Man (“Thomas”) as joint tenant.

2.  The plaintiff by original action and 1^st defendant by counterclaim, Tsang Florence Hon Chu (“Florence”) claims that Chung holds her half share in the Property on trust for her and seek a declaration of 50% joint tenancy of the Property, vacant possession of the property and mense profit (from 1 August 2014 until delivery of vacant possession).

3.  Chung counterclaims that for a declaration to the effect that she (together with Thomas) are still holding the Property as joint tenants and sought indemnity from Thomas for loss and damages suffered by Chung from any successful claim by Florence in the original action etc.

The case of Florence and Thomas

4.  The case of Florence, the plaintiff in the original action, as stated in the Statement of Claim, mainly relies on two documents:

i)  a Declaration of Trust dated 3 January 2011 purportedly signed by Chung (“the Purported Declaration”) that Chung was holding her half share in the Property on trust for Florence (paragraph 3 of the Statement of Claim, Trial Bundle A1 page 2-3); and

ii)  a tenancy agreement dated 4 January 2011 for the Property by Florence and Thomas as “landlords in joint tenant” of the Property to Chung as purported tenant for a period of three years (“the Purported Tenancy Agreement”) which was also purported signed by Chung (paragraph 4 of the Statement of Claim, Trial Bundle A1 page 3-4).

5.  The background of the case, according to Florence’s witness statement (Trial Bundle A1 page 185-188), was that:

i)  Florence was in Australia in September 2010 when Thomas, her brother, invited her to “invest jointly to buy a property in Hong Kong”;

ii)  It was then agreed that Florence would contribute HK$400,000 as down payment and she would also contribute 50% of the mortgage payment on the balance in order to acquire 50% interest of the property;

iii)  Florence transferred HK$414,239.86 (including bank charges etc.) to Thomas on 15^th and 20^th September 2010 as down payment for the Property;

iv)  As Florence was “fulfilling the citizenship residency requirement in Australia”, she could not come back to Hong Kong to deal with matters regarding the purchase so as suggested by Thomas, Florence allowed Chung to become a nominal holder of the Property.

v)  To “safeguard” her interest in the Property, Florence asked Thomas to prepare a declaration of trust which was duly signed by Chung (which was the Purported Declaration).

vi)  Florence has continued to contribute 50% of the mortgage payment for the Property.

vii)  During June 2014 to February 2015, Florence returned to Hong Kong and made repeated request to Chung to re-assign her interest in the Property back to her, but Chung refused.

6.  Thomas’ case aligned with Florence’s: he had not enough money to purchase the Property so invited Florence to invest jointly. Florence paid 50% of the entire down payment of HK$800,000 (paragraph 8(a) of the Amended Reply and Defence to Counterclaim, Trial Bundle A1 page 37).

7.  Further, according to the Thomas’ 4 witness statements (Trial Bundle A1 page 177-184, A2 page 256-263, A2 page 264-268, page 269- 272):

i)  Chung was a masseur at Ocean Palace Sauna (“the Parlour”) which was operated by Wider Ascent Holdings Limited (“the Company”);

ii)  Thomas was acquainted with Chung around September 2010 after he patronized the Parlour;

iii)  At his first visit, Chung advised that the Parlour was available for sale and Thomas was interested. Chung arranged Thomas to meet with the shareholders of the Company and Thomas decided to purchase the Company with a partner, Mr. Poon Yau Sing (“Poon”);

iv)  It was agreed that Poon would hold 48% and Thomas would hold 52% of the Company. It was further agreed that Poon’s shares would be held in trust by Thomas and Chung. So of Poon’s 48%, 5% would be held in trust by Chung and the remaining 43% would be held in trust by Thomas;

v)  Poon suggested that Chung would be the licence holder of the Parlour;

vi)  As Chung’s service was “badly needed for the successful operation of the Parlour”, Thomas decided to purchase the Property “to be used as a staff quarter” for Chung;

vii)  Thomas did not have enough money so invited Florence to jointly invest in the Property;

viii)  As above, since Florence could not come to Hong Kong, Florence agreed to allow Chung as the nominal holder of the property for 3 years until 31 July 2014 when Chung should then transfer the interest back to Florence;

ix)  Chung and Thomas signed an agreement in Chinese stating the arrangement stated in paragraph 7(h) above on 16 October 2010 (“the Purported Agreement”, copy of which at Trial Bundle B1, page 1) (paragraphs 11 and 12 of the witness statement of Thomas, Trial Bundle A1 page 179);

x)  He then entered a Preliminary Sale and Purchase Agreement on the Property on 17 October 2010 for HK$2,000,000. He claimed that he and Florence both contributed HK$400,000 for the purchase. The alleged contribution by Florence was documented by a bank passbook produced by Thomas which showed a receipt of a sum of HK$37,722.39 on 15 September 2010 and a sum of HK$376,517.47 on 21 September 2010 (Bundle B1, Page 20);

xi)  The remaining balance of HK$1,200,00 was raised in a mortgage with him as the sole borrower and that he was repaying the loan except for the months of April and May 2015 when Chung paid with his notice or consent;

xii)  He also claimed that he paid for the renovation, furniture, electric appliances etc.;

xiii)  Thomas also claimed that his relationship with Chung was “all along employer and employee” and not “lovers” as Chung claimed. He claimed that the reason why he agreed to put Chung’s name on the legal title of the Property was (as I translate):

“Chung requested that her living condition be improved or she would resign from her employment and the masseurs under her would also leave. My sister Florence was living in Australia at the time but she wanted to invest in Hong Kong properties so I jointly invest with Florence but allow Chung to live in it.” (paragraph 4 of the Thomas’ Supplemental Witness Statement, Trial Bundle A2 page 257)

xiv)  As for the reason why Thomas and Chung was holding the Property as joint tenants instead of tenants-in-common, Thomas claims that (as I translate):

“When I and Chung attended the solicitors’ firm, solicitor Chan did not appear. There was only a conveyancing clerk of the firm, Mr. Wong Yin Wai, present. He did not explain the difference between “joint tenant” and “tenant-in-common”…I used “joint tenant” because Chung has already on 16 and 17 October 2010 respectively signed an agreement (i.e. the Purported Agreement) and a letter of undertaking (titled “承諾書”) (“the Purported Undertaking Letter” Trial Bundle B1, Page 2, the original is produced as Exhibit P2) which stated clearly that 50% of the interest of the Property belong to Florence and promised to return the interest in the (Purported Undertaking Letter)…” (paragraph 11 of the Supplemental Witness Statement of Thomas, Trial Bundle A2 page 258-259);

xv)  Besides these documents concerning the Property (i.e. the Purported Agreement and the Purported Undertaking Letter), Thomas further claimed that on 3 January 2011, Chung signed the Purported Declaration after he explained the contents and nature of such in detail to her (paragraph 17 of the witness statement of Thomas, Trial Bundle A1 page 181);

xvi)  The Purported Declaration is in English except the Chinese name of Florence;

xvii)  However, in his Supplemental Witness Statement, Thomas also claimed that Chung understood English and has helped the Company in dealing with English documents. (paragraph 13 of the Supplemental Witness of Thomas, Trial Bundle A2, page 259);

xviii)  On the same day, i.e. 3 January 2011, Thomas claimed that Chung also signed a letter of authorisation in Chinese (titled “授權書”) (“the Purported Authorisation Letter”, Trial Bundle B1 page 15) after he explained the contents and nature of such in detail to her (paragraph 18 of the Witness Statement of Thomas, Trial Bundle A1 page 181);

xix)  The Purported Authorisation Letter stated again that Chung held the Property on behalf of Florence and would return the same to Florence “without the need to sign further documents” ;

xx)  It is of note that the original Purported Authorisation Letter was produced at trial as part of Exhibit P5 and this was attached, by a staple to a copy of the Declaration of Trust. Both documents appeared to be photocopied stapled together in Trial Bundle B1 Page 14;

xxi)  On the next day, i.e. 4 January 2011, Thomas claimed that Chung further signed the Purported Tenancy Agreement (in Chinese) for the Property with Thomas and Florence as the landlords (although only signed by Thomas) and her as the tenant. The rental period was from 1 January 2011 to 31 July 2014 (a copy of the Purported Tenancy Agreement is at Trial Bundle B1, Page 17);

xxii)  Clause 1 of the Alleged Tenancy Agreement offered a rental free period of 12 months for Chung as director / manager of the Parlour;

xxiii)  Clause 3 of the Alleged Tenancy Agreement offered a further rent free period of 12 months as consideration for Chung agreeing to hold 50% interest of the Property for Florence until 31 July 2014 when such should be returned;

xxiv)  Thomas also claimed that the rents payable by Chung for the 4 months from January to April 2013 was deducted from Chung’s salary and he has issued receipts to Chung (the “Purported Rental Receipts” Trial Bundle B1 p. 22, 24, 25 and 26 for the months of January, February, March and April 2013 respectively); and

xxv)  Thomas claimed that Chung failed to pay rent since May 2013 and that Florence has requested Chung to assigned her interest in the property back to Florence but to no avail.

The case of Chung

8.  Chung’s case was that she was a masseur at the Parlour since 2008 and around June 2009, she was introduced to Thomas who then patronized the Parlour with Chung giving him a massage. From then on, Thomas started to court Chung and from 2009 to 2014, they were in an intimate relationship of boyfriend and girlfriend (paragraphs 4.2 and 4.3 of the Amended Defence and Counterclaim, Trial Bundle A1, page 11 and paragraphs 5 to 8 of Chung’s witness statement, Trial Bundle A1, page 191-193).

9.  Around September 2010, Thomas asked Chung to move in with him but she requested to move to a property under her name. They started to look for a suitable property and found the Property.

10.  Chung claimed that Thomas voluntarily suggested for Chung be a co-owner: the aim was to keep his promise to her, to show responsibility and to provide a degree of safety to her (paragraph 12 of Chung’s witness statement Trial Bundle A1, page 195).

11.  On 29 October 2010, Chung went with Thomas to the law firm in charge of the conveyancing, C.K. Chan & Co., to sign the Sale and Purchase Agreement and the solicitor explained the difference between holding the Property as joint tenancy and tenant-in-common. They decided to hold as joint tenants (paragraph 14 of Chung’s witness statement, Trial Bundle A1, page 196).

12.  Chung claimed that she was aware of the sale of the Company around 20 December 2010 and informed Thomas, who agreed to buy all the shares of the Company and then Chung could assist him in running the business of the Parlour. Thomas then paid the deposit of HK$20,000 to Mr. Wong and Mr. Wan to buy the Company and agreed to pay the balance of HK$160,000 on or before 4 January 2011. Thomas would appoint Chung as a director and secretary of the Company and also as a license holder of the Parlour (paragraphs 17 of Chung’s witness statement, Trial Bundle A1, page 199)

13.  Around 3 January 2011, Thomas gave Chung three documents to sign in the office of the Parlour. He told her that these were all documents concerning the Company. As this was Chung’s first time signing documents as the director and secretary of the Company, she asked Thomas what the documents were as she could not read them. But Thomas reassured her that these were Company documents and asked her to sign them. She trusted Thomas so she signed them. She also claimed that Thomas placed the documents in a bundle and only lifted up each page for her to sign, so she was unable to read the content. Thomas did not explain nor afford her the chance and time to ask other about the content. The whole process took about 1 minute. Thomas took the documents and left.

14.  As Chung could not read English, from then on, Chung only signed Company documents which were in Chinese. English documents were handled by a Mr. Lau in the Company.

15.  It was only in March 2015 when Chung received the letter from lawyers acting for Florence and after asking her own lawyers that Chung realised that these were the Purported Declaration and 2 further documents also titled “Declaration of Trust” but both dated 4 January 2010. (paragraph 18 of Chung’s witness statement, Trial Bundle A1, page 199).

16.  It was not in dispute that of the two further documents:

i)  the first document was concerned with share arrangement of the Company between Chung and Thomas and stated that Chung was holding 200 shares of the Company on trust for Thomas. (“the Company Shares Declaration for Thomas” a copy of which is at Trial Bundle B1 page 114); and

ii)  the second document is concerned with the share arrangement of the Company between Chung and Poon and stated that Chung was holding 300 shares of the Company on trust for Poon etc. (“the Company Shares Declaration for Poon”, a copy of which is at Trial Bundle B1 page115).

17.  Chung has participated in choosing decoration materials (but Thomas paid for the decoration), purchased various furniture etc., and has paid for rates and government rents and management fees for the Property (paragraph 19 of Chung’s witness statement, Trial Bundle A1, page 200).

18.  It was only after:

i)  Meeting and knowing Florence for the first time around the summer of 2012 that Chung first heard Florence demanding her to assign the interest in the Property to her and that Chung owed Florence HK$400,000, both of which was denied by Chung (paragraph 4.18 and 4.19 of the Amended Defence and Counterclaim, Trial Bundle A1, page 16);

ii)  Receiving a letter dated 5 February 2015 from Florence’s lawyer that she first became aware that Florence and Thomas claim that Chung was a mere tenant in the Property (which she denies) (paragraph 19 of Chung’s witness statement, Trial Bundle A1, page 200-201).

19.  Chung also denied signing the Purported Tenancy Agreement, the Purported Agreement amongst other documents (paragraph 20 of Chung’s witness statement, Trial Bundle A1, page 201).

20.  The Mortgage dated 29 December 2010 and registered in the Land Registry against the Property was executed by both Thomas and Chung (paragraph 4.9 of the Amended Defence and Counterclaim, Trial Bundle A1, pahe 13). Chung was aware that Thomas paid the deposit of the Property and has not heard him mentioned anyone else paying.

21.  As for the mortgage repayment, this was serviced by the turnover of the operation of the Company: Chung would withdraw cash from the Company’s safe every month and paid it into the account of Thomas maintained with the mortgagee bank until March 2015 (paragraph 4.16 of the Amended Defence and Counterclaim, Trial Bundle A1 page 15). Chung paid the mortgage once in June 2015 but otherwise the repayments were paid by Thomas since April 2015 (paragraph 4.17 of the Amended Defence and Counterclaim, Trial Bundle A1, page 15).

Evaluation of the evidence

Evidence from Florence

22.  First of all, Florence, when under cross-examination, admitted that she has commenced a civil claim (DCCJ 4307 / 2008) against Thomas at the relevant time.

23.  In fact, according to the judgment of that case, the trial dates were 6-10 and 15 December 2010 and Florence had acted in person and had attended that trial.

24.  This immediately raised a question on her claim that she could not come back to Hong Kong to deal with the purchase of the Property a few months before (in September / October 2010) due to the need to “fulfill the citizenship residency requirement in Australia”.

25.  When this was raised by Mr. Enzo Chow (“Mr. Chow”), the counsel for Chung, during cross-examination, Florence changed her evidence and claimed that the “real” reason was that the air tickets were too expensive.

26.  Florence also admitted to Mr. Chow that that DCCJ 4307/2008 concerned a “financial dispute” between her and Thomas.

27.  The obvious improbability was why Florence would enter into a joint investment with Thomas in September 2010 when they were in the middle of a financial dispute with ongoing litigation since 2008, and that this alleged joint investment agreement was literally done 2-3 months before the trial.

28.  In addition, I note that the trial judge in that case observed (in paragraph 9 of the judgment):

“…Added to the difficulty was the acrimonious conduct of the trial by both parties. In combination, they have rendered the determination of the dispute unnecessarily tedious”.

29.  Such conduct would be most unexpected between two parties if their relationship was cordial enough for a joint investment agreement just 2-3 months previously.

30.  When cross-examined, Florence simply said that she was able to invest jointly with Thomas if there was a good investment. There would be “no limit” because the intention was for mutual profit. She further explained that Thomas had financial difficulties at the time so she helped him to invest jointly. She claimed that she “trusted” Thomas as a family.

31.  As to the ongoing “financial dispute” at the time, Florence explained that it was a dispute because Thomas did not keep good documentation in black and white so he tried to deny certain payments, but now he has learned and she has asked him to keep everything clearly in white and black documentation (as in the current case).

32.  Mr. Chow then asked Florence to confirm that the receipt in Trial Bundle B1 page 19 was the one concerning the deposit she paid for the Property. She confirmed so and further told the court that she had in fact produced the original on the first day of the hearing because she “found the original the night before”.

33.  Mr. Chow then pointed out that the date of the receipt was 25 September 2011, which would be some one year after she allegedly paid the deposit for the Property (September 2010!!).

34.  Florence then claimed that only after this case (i.e. DCCJ 4307 / 2008) (presumably she meant after the trial and judgment of the case) that she asked for a receipt from Thomas for the sake of clear documentation!

35.  Further, this receipt only mentioned the funds for down payment for the Property and that Florence “will be entitled to 50%” of the Property. There was no mention of Chung holding the Property on Trust for Florence.

36.  When asked why she did not ask for the declaration of trust (i.e. the Purported Declaration which was dated 3 January 2011) from Thomas at the same time she asked for the receipt (presumably in September 2011), Florence admitted that she had not done so.

37.  Florence further explained that she was a “layman regarding law” (although she did not deny that she held the qualification of accountancy) and therefore thought that the receipt was enough and she did not care “what happened in between”.

38.  As such, Florence was suggesting that she did not know enough about law to ask for a copy of a declaration of trust, but yet she must know enough about law to ask Thomas to procure a declaration of trust from Chung in the first place. This was clearly not credible.

39.  What was even more bizarre was Florence’s admission that she has never seen the Purported Declaration until she returned to Hong Kong in 2014. She also confirmed that the declaration of trust she saw (produced by Thomas to her) was the one copy of which was at Trial Bundle B1, page 13.

40.  When asked why she did not ask Thomas for a copy of the declaration of trust between 2010 and 2014, Florence claimed:

“Yes, I do that all the time. There was an investment in a Malaysia property with my sister and I only ask for the title deeds 3 years later.” (Later, Florence admitted she could not remember when she returned to Hong Kong and it might be in the summer of 2013.)

41.  In short, the court was asked to believe that a person in active financial dispute with another due to “unclear documentation” would enter into an agreement for joint investment with that same person some 3 months before an apparently “acrimonious” trial concerning that financial dispute, and all through that time, there was no “clear documentation” of her payment in the agreement until she requested for such some 1 year after the actual payment, and at the time of such request, she did not bother to request for “clear documentation” of the declaration of trust (which was central to her interest in the agreement), and she did not request to see that for another 2-3 years…all because she trusted that person (whom she was also suing because he was denying certain “undocumented” payments) as a member of the family.

42.  In addition, Florence evidence was lacking in many details: her witness statement did not contain any details as to what happened when she returned to Hong Kong, including how she come to see the copy of the Purported Declaration and what other documents she saw, whether she had made a demand for the alleged outstanding rent, how she came to meet Chung (whom she claimed she was not acquainted with at the time) and the circumstances of that meeting.

43.  It was only with much prompting that Florence admitted that she had met Thomas first who showed her the Purported Declaration (and another document in Chinese but she could not remember whether it was the Purported Undertaking Letter or the Purported Authorisation Letter). Thomas said he would organize a meeting with Chung at a tea house and Florence brought along her two friends: a Mr. Cheng (who was a legal executive) and a Ms. Hui.

44.  It was indeed strange for Florence to be so casual about such documentations given her claimed insistence on “clear documentation” after DCCJ 4307 / 2008.

45.  When asked why she needed to brought along two friends, she at first explained that she was claiming something from Chung so needed to “protect her interest”. But then when asked whether she already knew Chung would refuse so she needed to bring “friends”, Florence claimed that this was only a “Yum Cha between friends” because she just returned to Hong Kong. It was then pointed out that this was a discussion of a private matter, Florence answered that:

“I have not thought of that. This was just a friendly “Yum Cha”!”

46.  When asked what else was discussed with Thomas, Florence initially said “nothing else”, but then when she was reminded about the alleged tenancy agreement, she changed her mind and claimed:

“Yes, Thomas told me about the tenancy agreement with Chung before in a long distance call. And told me that Chung has not been paying rent.”

47.  Florence explained that Thomas claimed that he could not talk to Chung (despite being her boss).

48.  On further questioning, Florence claimed that during the “Yum Cha” when asked to return the Property, Chung simply said:

“I cannot give it back” and “I could not tell you the reason”.

49.  Florence then claimed that Ms. Hui later told her that Chung admitted that she had an affair with Thomas, and Florence was perhaps hinting that as the reason why Thomas claimed he could not himself talk to Chung to demand the return of the Property etc.

50.  In any case, it is clear that Florence claimed that various documents, including the Purported Declaration, were shown to her by Thomas, and she was bringing two “friends” including a legal executive to meet Chung, so this was clearly never meant to be a “friendly Yum Cha” between friends.

51.  Of course, one would question why Florence would not take a copy of all the documents Thomas shown her and keep that herself so she would know exactly what documents was shown to her by Thomas, given her recent financial dispute with Thomas concerning “unclear documentation”.

Evidence from Thomas

52.  The evidence given by Thomas was even more problematic.

Evasive attitude

53.  Firstly, it was of note that Thomas was exceptionally evasive and uncooperative under cross-examination.

54.  For example, Thomas would not even answer a simple ground-laying question from Mr. Chow regarding his own affirmation (Affirmation of Tsang Thomas Hon Man, Trial Bundle A2, page 302):

“Did you check the content of this document before signing it?”

55.  Instead of answering this very simple question, Thomas asked:

“What do you want to ask?”

56.  When repeatedly directed by the court to answer the question, he first said, “I could not remember”; then “I am not sure”; then “No!”; then “Let’s assume I have” (“當係有!”) and finally “I have signed it, let’s assume I have” (“我簽咗落去，當係有!”).

Time sequence problems

57.  Thomas claimed that he was first acquainted with Chung in September 2010. This was when he first got notice that the Parlour was up for sale.

58.  As such, according to the scenario presented by Thomas, he would need to do the following by 15 September 2010:

i)  meet with the one of owners, a Mr. Wong (“Wong”), at the Company office to assess the business;

ii)  invite Poon as partner for business;

iii)  agree with Poon and Chung on the share arrangements of the Company (including the trust arrangement of such shares);

iv)  agreeing on the purchase price of the Parlour / Company;

v)  give Chung a promotion to become the manager of the Parlour / Company and to take over as the licence holder of the Parlour from one of the previous owners;

vi)  be told by Chung that, as a condition of such a promotion, she would need better accommodation closer to the Parlour otherwise she would resign and take staff working under her away;

vii)  succumb to Chung’s threat and agree to provide a “staff quarter” for her;

viii)  instruct an estate agent to look for a suitable property;

ix)  presumably inspect the Property, negotiate and agree for the purchase price;

x)  discuss with Florence regarding buying the Property as a joint investment and obtain her agreement for:

•  the purchase price;

•  Chung as a legal co-owner but holding the beneficial interest for her;

•  Chung using the Property as a “staff quarter”;

•  Chung paying rent under a rather complicated rental arrangement (as stated in the Purported Tenancy Agreement) etc.,
all done in the middle of an ongoing financial dispute and upcoming trial between the two in DCCJ 4307 / 2008; and then

xi)  receive the funds from Florence for her share of the deposit on the Property, the first sum of which was received on 15 September 2010.

59.  In short, even if Thomas first met Chung in the Parlour on 1 September 2010, all the above 11 steps have to be achieved within 14 days. I find this scenario inherently unlikely and not credible.

60.  Assuming that this is even achievable, it would be such a huge “mad-dash” but neither Thomas nor Florence gave evidence on why there was a reason for such a rush.

61.  It is also strange that, after purportedly receiving the funds (totally some HK$400,000) from Florence on 15 and 20 (or 21) September 2010, and having done all those “mad-dash” steps, the Preliminary Sale and Purchase Agreement for the Property was only signed almost a month later, 17 October 2010 (“PS&P”), and even then, only a deposit of HK$50,000 was needed to be paid (Trial Bundle B1, page 3).

62.  It was also stated in the PS&P that the balance of deposit of HK$150,000 (i.e. 10% of purchase price of HK$2,000,000) only needed to be paid on 29 October 2010 and the balance of HK$1,800,000 on 29 December 2010.

63.  As such, one wonders why Florence needed to transfer her alleged share of the purchase price in such a “mad-dash” in mid-September?

64.  It was also around the time of the PS&P that Thomas claimed that Chung signed the Purported Agreement (16 October 2010) and Purported Undertaking Letter (17 October 2010).

65.  When questioned in court, Thomas claimed that both documents were signed by Chung at the management office of the Parlour so he had attended the office on consecutive days.

66.  When asked why he needed to do so over 2 days, Thomas explained that he also wanted to inspect how busy the business was and Wong welcomed him to attend the office any time.

67.  Later, when asked why he needed Chung to signed both documents which stated the same “beneficiary arrangement” of the Property over consecutive days, Thomas claimed that after Purported Agreement was signed on 16 October 2010, he called Florence that night who told him to get Chung to sign a letter of undertaking “to be safe”. All these were new evidence that Thomas never mentioned in any of his witness statements or in his earlier answer in court.

68.  One wonders how this time sequence could be logical: why Wong be still around to welcome Thomas to inspect the business at this time (i.e. 16 and 17 October 2010)?

69.  Clearly, Thomas would need to complete the purchase of the Parlour / Company from Wong before he was able to take over the management of the Company and promote Chung to a manager and license holder of the Parlour. Chung could only then demand better “staff accommodation” which Thomas bought by signing the PS&P on 17 October 2010. Logically, Wong would have long sold the Company to Thomas by this time.

70.  Later, Thomas also claimed that Chung was working as a masseur for Wong at the time so she was busy working and could only attend the estate agent’s office, with permission with Mr. Wong, to sign the PS&P after Thomas’s signing.

71.  When clarification of the time sequence was sought, Thomas claimed he could not remember. Later he said that he only took over the Parlour business around 1 January 2011 but had paid a deposit of HK$20,000 before then. Quite how he could promote Chung before he became her employer was not explained.

72.  As such, on balance of probability, I am not convinced that Thomas was telling the truth regarding these matters.

Joint tenancy

73.  One central problem with the evidence of Thomas was that if Chung, who was supposedly only a staff at the Parlour (albeit a valuable one), has only sought better staff accommodation closer to the Parlour, why would Thomas need to put her name as a joint tenant in the Property?

74.  No explanation was provided in the witness statements of Thomas. However, under cross-examination in court, Thomas claimed that Chung had threatened to quit unless she became a registered owner of the Property, so he consented.

75.  This is new evidence: previously, Thomas had only claimed that Chung requested better staff accommodation or threaten to leave (paragraph 9 of Thomas’ Witness Statement, Trial Bundle A1, page 179 and paragraph 4 of the Thomas’ Supplemental Witness Statement, Trial Bundle A2 page 257).

76.  Further, with this new evidence, the court was asked to believe that an employer had consented to an employee (whom he had met for no more than 14 days) to become a registered co-owner of the “staff accommodation” that he and his sister was paying for, when the only apparent purpose was to provide rent-free and better accommodation closer to the work place for this supposedly “valuable” staff. This new scenario was highly unlikely and therefore not credible.

Documents produced by Thomas

77.  There are far too many examples of problems and inconsistencies with the evidence from Thomas to list out here, but the most important ones concern the documents that he has produced, as below.

78.  In fact, during the cross-examination, in view of possible implication of matters of a criminal nature, the court has given Thomas the appropriate warning as to his privilege against self-incrimination when providing answers.

The Purported Agreement

79.  This was the earliest dated document relevant to this case. It was supposedly dated 16 October 2010 but only a copy was produced by Thomas (Trial Bundle B1 page 1). Chung denied signing this.

80.  Under cross-examination, Mr. Chow raised that when one reviewed the Purported Agreement when compared to the Parlour Agreement signed by Chung on 1 January 2011 (the “Parlour Agreement”, a copy of which is produced at Trial Bundle B1 page 10), the signatures of Chung on both documents appeared completely identical (as shown, for example, when the documents are placed one over another with a light shining from behind).

81.  Further, I note that the wordings in Chinese “甲方” “乙方” also appear on both documents.

82.  When questioned why he could not produce the original, Thomas explained at first that he did not possess the original because it was given to Chung because she demanded it. He then later changed his story and claimed that the original was kept in the office of the Parlour but Chung has the key and a lot of documents were lost (thus perhaps implying that Chung has stolen the original).

83.  And when Mr. Chow confronted him on the two versions, Thomas gave a third version: that the original was given to Chung but she has kept it in the office of the Parlour and she must have taken it!

84.  Of course, if this was to be believed, one would question why Thomas never took out an application for specific discovery against Chung for such documents.

85.  It was clear that Thomas was making up the story as he went.

86.  Indeed, the apparently identical signatures on both documents raised a certain suspicion that this document might be forged by a “copy and paste” process from another document bearing Chung’s signature, in this case, the Parlour Agreement (or vice versa since only copies were produced in court)

87.  Without further evidence, how this document was generated was mere speculation and in no way affect the court’s consideration on the available evidence.

88.  In any case, it is clear to this court that, on balance of probability, the Purported Agreement was not generated in the manner as alleged by Thomas.

The Purported Undertaking Letter

89.  This was dated 17 October 2010 and Chung also denied signing this.

90.  Firstly, as a passing comment, I note that Thomas, in his first witness statement dated 20 January 2017, never mentioned the Purported Undertaking Letter signed on 17 October 2010 (despite mentioning the Purported Agreement signed on 16 October 2010). He only first mentioned that document in his Supplemental Witness Statement dated 24 July 2017.

91.  The original of the Purported Undertaking Letter was produced as Exhibit P4 in Court.

92.  Strangely, both the Purported Undertaking Letter and the Purported Authorisation Letter (part of Exhibit P5) are not of the usual A4 size documents but are only about 6.5cm and 3.5cm in longtitudinal length respectively. It may appear, at least to this court’s non-expert eyes, that both documents might have been cropped from pieces of normal A4 size paper (being the same width as a normal size A4 paper).

93.  When one looks at the original Purported Undertaking Letter, it would be clear that the content was handwritten and there were also the original signatures of Thomas and Chung.

94.  Another peculiar feature is that the writings regarding the undertaking appeared to be squeezed into a narrow space just above the signatures.

95.  A further peculiar feature is that, whilst part of this document would appear to be printed (i.e. the names of the signatories “Tsang Thomas Hon-Man” and “Chu Suet Chung”, and the words “Dated this”), the Chinese words meaning “witness” and “undertaking party” were hand-written before the printed names of Thomas and Chung.

96.  It would seem unusual that when one prepared a document, one would print out one part but handwrote on others (including the very important content of the undertaking).

97.  Under cross-examination, Thomas was very reluctant to admit in court that the handwriting was his. At one point, he claimed:

“I could not remember.”

98.  When questioned how one could not remember (or recognise) his own handwriting, Thomas then admitted: “It should be my handwriting” (“應該係我寫”) before finally admitting that “I wrote it”.

99.  Thomas also admitted that this document was signed at the management office of the Parlour and explained that he wrote the content by hand because there were no staff, they were not free because this was before he took over the Company.

100.  However, when it was pointed out to him that the names of the signatories and the words “Dated this” were printed, Thomas quickly changed his story and claimed that:

“By chance, there is a typewriter so we typed the names” (“咁啱有個打字機，我哋打個名上去”)

101.  When it was put to him that these words were not typed but printed by computer, Thomas said:

“I cannot remember whether it was a typewriter or computer.”

102.  When asked who typed this, Thomas then claimed:

“By chance there is a secretary who was free. I asked the secretary to add a few words, the secretary said yes. Pay her some money and she helped us type.” (“咁啱佢有個秘書得閒，叫佢加幾個字，佢話好啦，俾啲錢佢佢同我哋寫”)

103.  As such, when asked how this document was generated, Thomas has given the court 3 different versions of events:

i)  He wrote it by hand because there was no staff;

ii)  By chance he found a typewriter and typed it; and

iii)  By chance there was a secretary who was free and she typed the names etc. and he paid her some money.

104.  Further, when Thomas was asked why he used such a small piece of paper, he replied:

“To save paper! I have to photocopy twice.”

105.  This does not make sense. I would think that if Thomas had written on a piece of paper and had it photocopied, the photocopy must be on a normal standard size piece of paper (e.g. usually of A4 size in an office photocopying machine). I cannot see how photocopying a small piece of paper could save paper.

106.  Later, on the next day, when further clarification was sought on how this document was created, Thomas confirmed that the sequence was:

i)  he started with an A4 sheet;

ii)  he then wrote the content on it;

iii)  have the names etc. typed out by an old IBM-like type-writer by a staff;

iv)  the 3 lines for the signatures and date were hand-drawn using a ruler;

v)  he then signed it;

vi)  he then made a photocopy of it;

vii)  Chung then signed it; and

viii)  he then cut the paper into this size (by cutting not only the top but also the bottom).

107.  When asked why he wanted to cut the paper into this small size, Thomas explained that this was because:

i)  he only need to put down one sentence so no need for a full sheet of paper; and

ii)  he wanted to staple this to a sheet containing the ID card of Chung so it could be seen easily (presumably he meant that this small sheet of paper would not cover the sheet in the bottom).

108.  These explanations were clearly absurd. Further, this was inconsistent with Thomas’ earlier explanation that this was for “saving paper”. Further, Thomas was the witness in this document so it would appear strange that he chose to sign it first.

109.  At this point, a warning was given to Thomas on his privilege against self-incrimination, and it was put to him whether he has any concern that by cropping the sheet of paper where there were signatures instead of providing the full sheet, people might suspect that there might be other writings on the sheet which has been cropped away.

110.  Thomas answered:

“No comment.”

111.  Indeed, the unusual size and features of this document and the failure of Thomas to give any credible account of its creation do raise a suspicion that this document could have been created in other ways: the most obvious of which might be by cropping the bottom of a pre-existing document (perhaps one of the Company documents already signed by Thomas and Chung) with the handwritings then added into the narrow blank space just above the signatures.

112.  Of course, without further evidence, how this document has actually been generated is no more than speculation at present and this matter plays no part in my decision in this case.

113.  In any case, on balance of probability, I am of the view that this document has not been generated and signed as Thomas alleged.

The Purported Declaration

114.  This document is supposedly dated 3 January 2010. As mentioned above, there are two further documents also entitled “Declaration of Trust” both dated 4 January 2010: the Company Shares Declaration for Thomas (Trial Bundle B1 page 114) and the Company Shares Declaration for Poon (Trial Bundle B1 page 115).

115.  In his evidence in chief, Thomas explained how the company’s auditor, Lai Fung Ying CPE (“Lai”), advised that the 500 shares to be held separately and that these two documents (i.e. the Company Shares Declaration for Thomas and the Company Shares Declaration for Poon, collectively referred to as “the Two Company Shares Declarations”) were prepared by Lai.

116.  Crucially, Thomas also claimed that Lai has prepared the Purported Declaration on 3 January 2011 (thus the date on the document), but Chung signed it and the stamps were done on 4 January 2011.

117.  In particular, Thomas in his oral evidence (at around 11:26:50 am on the second day of the trial), after confirming that the Two Company Shares Declarations were prepared by Lai:

“同時我哋有個Declaration of Trust，佢話可以做埋一齊，咁佢就同我哋prepare左，Declaration of Trust，做嗰時係1月3號，咁Declaration of trust type 咗落去1月3號嘅，另外嗰兩份Declaration of Trust shares，佢就冇type date，後來1月4號Stamp落去嘅。”

118.  Thomas further explained that all 3 documents were prepared by Lai on 3 January 2011 when they originally planned to meet, but they met on 4 January 2011 instead. Since Lai have not typed the dates on the Two Company Shares Declarations, they were stamped “4 Jan 2011”, but the date “3^rd day of January 2011” was already typed on the Purported Declaration, it was left as that.

119.  Of course, if all three documents were prepared by the same accountant, Lai, one wonders why she would type the date on one but used date stamps on the others.

120.  In any case, Thomas confirmed that the Purported Declaration and the Two Company Shares Declaration were signed by Chung on 4 January 2011 in the office of Lai’s office, Cathy Lai, John Tsang and Co., in Mongkok.

121.  He said that this took place in the conference room at around 2 p.m. and the meeting was attended by Lai (who left the meeting early), a staff at Lai’s office and the new and old shareholders of the Company (i.e. Thomas, Poon, a certain Mr. Michael Tsang, Chung, Wong and a younger Mr. Wan, the son of the older Mr. Wan who was an “old” shareholder with Wong). Thomas also claimed that he heard the staff explained the content of the Two Company Shares Declaration and the Purported Declaration to Chung in Chinese (all items in the document including that she was holding 50% interest of the Property for Florence) before she signed all three documents.

122.  However, on questioning, Thomas admitted that he has never asked the others in the meeting whether they all heard the staff explaining the content of the Purported Declaration to Chung.

123.  When asked further, Thomas attempted to explain by suggesting “they are very important and busy people” and “they were probably not listening and talking about business and the stock market”.

124.  This is rather strange given that the defence of Chung was that the documents were in English with no Chinese translation and there was no explanation of the true nature and content of documents to her (see Defence paragraph 5.2, Trial Bundle A1, page 18). There were at least 5 other potential witnesses there (Lai’s staff, Poon, Wong, the younger Mr. Wan and Michael Tsang) and yet Thomas admitted that he had not even approached any one of them.

125.  Thomas then explained that Chung also signed the Purported Authorisation Letter at the same time which was in Chinese so Chung must have understood, so that was enough.

126.  Further, it is of note that all three documents: the Purported Declaration and the two Company Shares Declarations did not contain a signature of the witness. One would expect that if a staff of Lai had explained the contents to Chung at the meeting as Thomas alleged, the staff would have signed as a witness.

127.  When questioned, Thomas simply asserted: “The staff said there was no need!” I found that it not credible that a staff from a professional accountancy firm would say that.

128.  Of course, this version of events was completely different from what Thomas claimed in his witness statement: that he had himself explained the contents and nature of the Purported Declaration to Chung (paragraph 17 of the witness statement of Thomas, Trial Bundle A1 page 181). When Mr. Chow put this to Thomas, he changed his story and claimed:

“The staff explained and then I explained.”

129.  Concerning the Purported Authorisation letter, Thomas claimed that this was prepared by him and was also signed by Chung during this meeting although it was also dated 3 January 2011. He confirmed that he had brought this small (cropped) piece of paper to Lai’s office and he had borrowed a stapler from Lai’s office and stapled this to the Purported Declaration.

130.  When asked when these two documents were stapled together, Thomas claimed that:

“簽嗰陣時係釘埋一齊…釘好咗叫佢簽”

131.  Of course, if these two documents were stapled together before Chung signed them, one would question why Thomas could not produce the original of the Purported Declaration.

132.  In fact, Exhibit P5 are two documents stapled together: the original of the Purported Authorisation Letter and a copy of the Purported Declaration. The staple holes were obvious on the copy of Purported Declaration. If the two documents were stapled together before Chung signed both, then how come a copy of the Purported Declaration is now stapled to the original of the Purported Authorisation Letter?

133.  When Thomas was asked to clarify, he then changed his story and claimed that Chung signed the Purported Declaration first, and then a copy was made. He then stapled this to the Purported Authority Letter and asked Chung to sign on it. And then all the original documents were sent for stamping.

134.  However, this still could not explain how the Purported Declaration produced as part of Exhibit P5 is not only a copy, but also a stamped copy.

135.  Even if Thomas’ second version of how these documents were generated was true, someone must have, at a later stage when the Purported Declaration was stamped, replaced the unstamped copy with a stamped copy and re-stapled this to the original Purported Authorisation Letter.

136.  Very much later, Thomas again changed his story claiming that these documents were stapled together after the Purported Declaration was stamped. Thomas then claimed that he indeed had the original Purported Declaration, but was given to his former solicitor Colin and was then lost.

137.  However, this third version from Thomas of the “lost original” could not explain that, if the original Purported Authority Letter was initially stapled to the original (but lost) Purported Declaration, why would Exhibit P5 be the copy Purported Declaration stapled to the original Purported Authority Letter? Someone would have to, after the purported loss of the original, made a copy of the Purported Declaration and re-stapled that to “re-create” Exhibit P5.

138.  Further, if the two original documents were initially stapled together, why would Colin (the solicitor) decide to separate them and then only ask to keep the original Purported Declaration and not the original Purported Authority Letter as well?

139.  As such, I find none of these versions of events from Thomas remotely credible and I would not accept, on balance of probability that such documents were generated and signed by Chung under the circumstances as alleged by Thomas.

140.  However, there may be a much more serious problem.

141.  Even with visual inspection by non-expert eyes of this court, the Company Shares Declaration for Thomas showed a remarkable similarity to the Purported Declaration (a copy of which is at Trial Bundle B1 page 113):

i)  on the top of both documents, three stamps appeared to be done at exactly the same positions;

ii)  the two signatures inside two of the stamps looks identical and also signed in exactly the same positions;

iii)  at the bottom of both documents, below the entries of the dates, the printed wordings for the signatures were identical; and

iv)  the signatures of Chung on both documents also appeared to be completely identical and in exactly the same positions.

142.  In fact, if one superimposes the top of both documents together against a bright light, the three stamps and the two signatures appears to be aligned exactly. And if one superimposes the bottom of the two documents in a similar fashion, the signature of Chung, together with the typed out name of Chung in English and Chinese, and the line for signature, also appears to be aligned exactly.

143.  As such, even in the non-expert eyes of this court, there is a question of how likely it would be, by sheer chance, that 3 stamps and 3 signatures of 3 different persons would be placed on (what appeared to be) exactly the same positions on two documents purported to be signed on different days.

144.  By way of contrast, when comparing the Company Shares Declaration for Thomas and the Company Shares Declaration for Poon, the three stamps on the top of each documents appear to be in slightly different positions, the two signatures inside two of the stamps also appear to be in different positions, and the signatures of Chung appeared to be quite similar but certainly signed in different positions at the bottom of the two documents.

145.  I would doubt that Lai prepared this document as Thomas claimed. Lai was not called as a witness so no conclusion can be drawn on this matter.

146.  Of course, without further evidence, how this document has actually been generated is no more than speculation at present and this matter plays no part in my decision in this case.

147.  In any case, on balance of probability, I am of the view that this document has not been generated as Thomas alleged.

The Purported Authorisation Letter

148.  This is supposedly dated 3 January 2010. Chung also denied signing this document.

149.  The problem with Thomas’ evidence as to how the original of this document could be stapled to a copy of the stamped Purported Declaration has already been mentioned above.

150.  Further, the original Purported Authorisation Letter has the handwriting of what appeared to be the signature of Chung on it (part of Exhibit P5). The content of this was printed but unlike the Purported Undertaking Letter, the document appeared to be cropped just underneath the signature so no printed name appeared below the signature.

151.  Similar to the Purported Undertaking Letter, the odd shape and features of this document again might raise the suspicion that it was created by printing new content on a document already containing the signature of Chung, perhaps there were writings below the signature which required to be cropped away.

152.  As an overall observation, there was clearly an unexplainable inconsistency with whether Thomas could produce the original or a copy of various purported documents which were central to this case.

153.  In summary:

i)  the original documents produced were Purported Undertaking Letter and Purported Authorisation Letter which were of unusual “cropped” sizes; and

ii)  As for the Purported Agreement and Purported Declaration, which must have been the most important documents for him and Florence, Thomas could only produce a copy and claimed that “Chung requested the original” so he gave them to her. Of course, Thomas did not provide any logical explanations as to why Chung wanted the originals of certain documents but not others.

154.  Thomas later made an absurd claim in court that he (as a director and shareholder of the Company) did not possess the key to the safe in the Company and that various original documents were kept locked in the safe. He also claimed that only Chung (and later Chung’s sister) had the key.

155.  One would question why Thomas was suddenly so keen to distance himself from various original Company documents.

156.  As stated in paragraphs 111 and 151 above, the court has grounds to suspect that the Purported Undertaking Letter and the Purported Authorisation Letter might be created by cropping original Company documents which already contains signatures, and the fact that Thomas has failed to provide any convincing account of their creation would only raise further suspicion.

157.  Thomas was then asked: if he did not possess the key to the safe, how would he know what was kept in the safe? He again changed his story and denied that he told the court that certain documents were kept in the safe, but in fact, they were kept in the file cabinet in the Company office.

158.  But as such, this came back to the question of why Thomas could not produce the originals of some documents.

The Purported Tenancy Agreement

159.  Chung also dispute signing this document.

160.  There are problems with this document: although the tenancy agreement was purported to be signed in 4 January 2011 (a copy of which at Trial Bundle B1) but the Stamp Certificate (Trial Bundle B1, page 16) was dated 13 October 2015.

161.  Thomas explained that they have initiated a claim in Lands Tribunal against Chung for rents arears in the Property and was advised by the officer to it stamped otherwise they would not accept the claim.

162.  Another problem was that the Purported Tenancy Agreement was supposedly signed on 4 January 2011 stating that the renal period would start on 1 January 2011. However, there was a decoration contract signed by Thomas dated 5 January 2011 (Trial Bundle B1, page 18). The decoration work appeared rather extensive (including new shower unit, toilet, basin, water pipes, electrical wiring, floor tiles, water-heater, false ceiling, new paints on all the ceiling and walls etc.) and it would be rather strange that rental period (albeit initially rent free) for “staff accommodation” would commence before decoration works even started. It is self-evident from the list of decoration works that the Property could not be used for accommodation (e.g. no water or electricity) until such works were completed.

163.  Thomas claimed that the Purported Tenancy Agreement must be authentic because he had a Stamp Certificate and the Inland Revenue Department would only stamp on original documents. However, only copies of these documents (including the Stamp Certificate) were disclosed to the court.

The Purported Rental Receipts

164.  Thomas claimed that Chung has paid rent for the 4 months of January to April 2013. He said that he was away from Hong Kong during these months but when he returned in May 2013 (he claimed he was in Canada from February to April 2013), Chung refused to pay further rent because she claimed she did not have enough money to pay.

165.  In support, he has produced the Purported Rental Receipts which were receipts dated 1^st January 2013, 1^st February 2013, 1^st March 2013 and 1^st April 2013 (Trial Bundle B1, page 22, 24, 25 and 26)

166.  However, Thomas could not provide a reasonable, coherent and consistent answer for the simple question of “How did Chung pay the rent?”

167.  In the Affirmation of Tsang Thomas Hon Man affirmed on 24 July 2017 and filed on 16 August 2017. Thomas provided the following answer to Interrogatory 9 (Trial Bundle A2, p.310):

“Please specify by what means the Defendant (by original action) had paid the monthly rental for the months of January, February, March and April 2013 in respect of the property

Answer

The rentals payable were set off against the salary payable to the Defendant (by original action).”

168.  However, if it was true that rentals were simply set off against the salary, it would be rather difficult for Chung to refuse to pay rent.

169.  Under cross-examination, Thomas further elaborated that, at the time, he paid HK$30,000 per month as salary to Chung but this was divided in three payments of HK$10,000 on 10^th , 20^th and 30^th. He claimed that salary was paid in cash placed inside an envelope. On the first payment of the month (i.e. on the 10^th), Chung would take the envelope, open it and “voluntarily” handed back HK$9,500 as rent and retained only HK$500, and then the rental receipt was issued to her.

170.  If Chung was paying rent this on the 10^th of each month, why were the Purported Receipts all dated the 1^st of each month? Thomas simply said this was “his usual practice”.

171.  Further, if the arrangement was that cash was handed to Chung and then for her to hand the rent back, if Chung had really refused to pay rent, the Company could simply pay her HK$500 on the 10^th.

172.  When this was put to Thomas, he claimed that:

“If she does not consent, you cannot force her. She has the right to refuse.”

173.  So according to this new scenario from Thomas, there was this the rather strange and convoluted arrangement of “handing back” salary as rent from Chung, and when Chung allegedly refused to pay rent, Thomas initiated a claim at the Lands Tribunal rather than trying a simpler method to ensure payment (for example, by setting off the rentals against her salary which was the answer he provided under oath in his Affirmation) at least until July 2014 when the Parlour was still in business.

174.  Further, if Chung had refused to pay rent since May 2013, why would Thomas not taken action to evict Chung within 2 or 3 months, but wait until 2015 before initiating action at the Lands Tribunal? Thomas explained that Chung was still a valuable staff at the Parlour and they did not want the business to be affected. However, by July 2014, the business was closed.

175.  On further questioning, Thomas claimed that all the cash for salaries for the staff of the Parlour were inside a safe in the office and only Chung held the key. Thomas would calculate the salary each period and Chung would open the safe and count the cash and place them in envelopes for each staff and handed to them.

176.  As for her own salary, Chung would also count the money and placed in envelopes. However, for the 10^th of each month, she would leave that envelope (with HK$9,500) in the safe as rent.

177.  But how could Thomas check the safe if he did not have the key? Thomas explained that he had to ask Chung to open the safe each time to check, then issued the receipt.

178.  But earlier Thomas had given evidence that he was not in Hong Kong from February 2013 until May 2013. If so, how could Thomas issue the receipt from February to April 2013?

179.  Thomas sought to explain that he was still in Hong Kong around 10^th February 2013 so he could still ask Chung to open the safe etc. However, when he returned to Hong Kong in May 2013, Chung refused to pay rent.

180.  So presumably, when Thomas returned to Hong Kong in May 2013, he asked Chung to open the safe and she would hand over the two envelopes for the rent for March and April 2013 voluntarily, but then refused to pay rent for May. Presumably, Thomas then issued the two rental receipts for March and April to her, and both retrospectively dated by him!

181.  This was at least the third version of the answer on the simple question of “How did Chung pay the rents?” Thomas was clearly inventing stories as he went along so this became an evolving story getting more and more convoluted and absurd.

182.  Thomas then claimed that Chung refused to pay rent and instead requested a raise in salary, but he told her that since the employment contract stated that her salary should be HK$30,000, it should not be breached so he refused the request.

183.  Such evidence from Thomas has taken a new level of absurdity: Thomas claimed that on one hand, Chung was such a valuable staff that he would tolerate her not paying rent (and thus breaching the Purported Tenancy Agreement), but on the other hand self-evidently not valuable enough to be given a raise in her salary (thus avoid breaching the Employment Contract).

184.  Thomas then changed his story again and claimed that Chung did not refused to pay rent but only ask for “some relief so she can pay rent later”. Of course, this was again inconsistent with his earlier evidence.

185.  I need not record here every detail of all the inconsistent and unbelievable evidence given by Thomas: there were plenty more. Suffice to say that I am not convinced that the Purported Rental Receipts were created as Thomas claimed and as such, I am not convinced that Chung had paid any rent at all under this Purported Tenancy Agreement or otherwise.

Handwriting Expert Report

186.  Due to the concerns raised during the cross-examination of Thomas as stated above, the court has adjourned the trial to hear submissions from both sides concerning the instruction of a handwriting expert.

187.  Mr. Ng, Counsel for Florence and Thomas opposed the instruction for handwriting expert arguing that Chung had confirmed previously that this was not necessary and also that this was very late and against the objectives of the CJR.

188.  However, the court was concerned that there was a very serious matter here which might touch upon the criminal offence of forgery. After due consideration, the court made the order for the parties to instruct a single joint handwriting expert; for the trial to proceed to hear the evidence from all factual witnesses and then be adjourned pending expert evidence; and there be leave if needed for parties to apply to recall any factual witnesses after hearing the expert evidence. The costs of and occasioned by the order be in the cause.

189.  After some delay, Mr. S.C. Leung (“Mr. Leung”) was instructed as the single joint handwriting expert and he has produced an expert report dated 16 June 2021 (“the Expert Report”).

190.  I will discuss some important aspects of his findings below.

The Purported Undertaking Letter

191.  Two of such documents were produced (as Exhibits P2 and P4) and Mr. Leung confirmed that P4 contained the original handwritten signature and P2 is a copy of it: both documents are found to be superimposable to one another. (Paragraphs 3.3 and 3.4 of the Expert Report).

192.  Mr. Leung was specifically instructed to verify whether there was evidence to support Thomas’ claim regarding how the original document (i.e. Exhibit P4) was created (see paragraph 106 above), that is, by:

i)  Using an IBM-like typewriter to type out the English words;

ii)  Using a ruler to draw 2 straight lines under the signatures; and

iii)  Cutting out the bottom half of the paper.

193.  Mr. Leung’s opinion in answer to i) and ii) above was:

“However, the printed English texts and lines comprise black toner particles. It therefore indicates that the printed English texts and signature lines on P4 were not produced by an electric typewriter (that should be using a typewriter ribbon), but was probably generated by a laser printer or copier.” (my underlining, paragraph 4.2.2(ii) of the Expert Report)

“…in P4, the printed lines under the two signatures as well as that present as well as that present immediately after “Dated this” are not hand-drawn but comprise black toner particles.” (my underlining, paragraph 4.3 of the Expert Report)

194.  Regarding iii), Mr. Leung opined:

“The width measurement of about 21 cm correspond to that of A4 paper. The findings suggest that…P2 and P4 were produced at the bottom part of 2 pieces of A4 paper, and were then cut away at the upper edge, probably by using a pair of scissors...” (paragraph 4.4.2 of the Expert Report)

195.  As such, Mr. Leung’s opinion clearly disputes Thomas’ claim of how this document was created. It therefore supports this court’s view (see paragraph 113 above) which was based on Thomas’ inconsistent evidence and unconvincing explanations of the peculiar features of this document.

The Purported Authorisation Letter

196.  Mr. Leung’s opinion when the signatures of Chung was examined, he opined:

“details of the relative distance and position of characters, radicals and strokes in this signature in P5 are different from the abovementioned signature in P2 & P4” (paragraph 3.2 of the Expert Report)

197.  Mr. Leung did not draw any conclusion on this observation so the court is not making any findings on this matter.

198.  However, Mr. Leung is also of the opinion that:

“…P5 was produced on an A4 paper and trimmed away at both the upper and bottom edges, probably by using a pair of scissors.” (paragraph 4.4 of the Expert Report)

199.  As such, Mr. Leung confirmed the suspicion of this court (see paragraphs 92 and 150 above) that the this was created slightly differently from the Purported Undertaking Letter, with the former created by trimming both the top and bottom of the original piece of paper (thus leaving nothing underneath the signature line) and the latter only the top (thus leaving the printed names of the parties etc.)

The Purported Declaration

200.  Mr. Leung agreed that the original Purported Authorisation Letter was stapled to a copy of the Purported Declaration and presented as Exhibit P5 (paragraph 5.1 of the Expert Report).

201.  Mr. Leung was specifically instructed to examine the chops and initials on three documents (all titled “Declaration of Trust”): the Purported Declaration and the Company Shares Declaration for Thomas.

202.  It was slightly confusing because two copies of the Purported Declaration were produced to Mr. Leung and he referred to one as “P5” (i.e. the copy Purported Declaration stapled to the Purported Authorisation Letter as Exhibit P5) and the other as “P113” which was a copy of this document at Trial Bundle B1, page 113.

203.  There was no dispute that P113 was a photocopy of “P5”.

204.  A copy of the Company Shares Declaration for Thomas was produced to Mr. Leung which was a copy of Trial Bundle B1, page 114, which Mr. Leung referred as “P114”.

205.  Mr. Leung opined that:

“…using the Regula 4167 Light Table Pro and overlaid on top of one another…the 3 chops, 2 initials on P5 & P113 can also overlap with those on P114.” (paragraph 5.1.2 (ii) of the Expert Report)

“Since P5 (and its copy P113) is different in terms of contents from P114, those 3 chops and 2 initials on P5 (and its copy P113) & P114 should have been transplanted from the same template-document (which could be an original document, or a copy) by cut-and-paste.” (my underlining, paragraph 5.1.3 (ii) of the Expert Report)

206.  Mr. Leung was called to give oral evidence at the reconvened trial and he clarified this by stating that there are many places where the Purported Declaration overlapped with the Company Shares Declaration for Thomas including the 3 stamps of the Stamp Office at the top of both documents, the initials of the officers of the Stamp Office at the top of both documents, the signature of Chung on both documents.

207.  It is highly unlikely that three stamps and two initials by officers at the Stamp Office, as well as the signature by another person, would, by pure chance, be done at exactly the same places on two documents. Thomas and Florence have failed to produce the original of both these documents so one must question the authenticity of these documents.

208.  In fact, the court has asked Mr. Leung what the possibilities would be given the similarities of these two documents and Mr. Leung opined only three possibilities:

i)  the Purported Declaration was genuine;

ii)  the Company Shares Declaration for Thomas was genuine; or

iii)  none is genuine.

209.  This is rather alarming: it means Mr. Leung is of the view that Thomas has produced at least one, if not two false documents.

210.  As it happened, neither Thomas nor Florence attended the reconvened trial so the court did not hear any further evidence from them to explain this matter.

211.  In any case, it is clear that Thomas’ evidence of how these documents were created was not to be believed.

Evidence of Chung

212.  Against the problematic case of Florence and Thomas, the evidence from Chung and her witness (and ex-colleague at the Parlour) Li Wai Hung (“Li”, name as I translated) were mostly straightforward and reasonable.

213.  I need not spend too much time discussing such evidence save as to say that both Chung and Li has provided the court with a large amount of details to support Chung’s case particularly with regard to her relationship with Thomas (e.g. details of their daily lives). This court accepts the relationship was of a boyfriend and girlfriend at the relevant time.

214.  Further, this court also accepts the circumstances of the signing of the documents as alleged by Chung: that this occurred on 3 June 2011 in the Parlour Office and that Thomas informed her that these were “company documents” and “just sign them” without providing any explanation or translation of such despite Chung not understanding English. Also, Chung could not see the content of the documents clearly because Thomas had put them in a bundle and only lifted the page for Chung to sign.

Discussion

215.  Thomas has been evasive, hostile and argumentative all along during cross-examination despite repeated guidance from the court.

216.  Indeed, when he actually answered any questions, the answers were mostly inconsistent and illogical. When his evidence was challenged, Thomas would create, on the spot, newer versions of the same event, apparently without any hint of concern that he was actually giving evidence under oath. There were often so many versions of his evidence that the court needed to listen to the court recordings or risk losing count.

217.  As such, the court finds Thomas to be a thoroughly dishonest witness (if not possibly the most dishonest witness that this court has ever come across). None of his evidence (or rather, none of any one of his many versions) concerning the background of the case and the circumstances of how the Purported Agreement, the Purported Undertaking Letter, the Purported Declaration, the Purported Authorisation Letter, the Purported Tenancy Agreement, the Purported Rental Receipts etc. came to be created could be accepted by this court.

218.  Suffice to say, there are also big problems with the evidence from Florence as stated before.

219.  Mr. Leung’s expert evidence must be considered as “final nail of the coffin” of their case.

220.  It is trite that if a person is registered in law as the owner of a landed property, he / she is presumed to be the beneficial owner unless and until the otherwise is proved (Stack v Dowden [2007] 2 AC 432).

221.  Florence (and Thomas) has clearly failed to prove her claim against Chung.

222.  On balance of probability, I find no convincing evidence to show that Chung should be holding 50% of the interest under the joint tenancy of the Property in trust for the Florence as alleged or at all. Similarly, I also find no convincing evidence to show that Chung has signed any tenancy agreement and thus has owed any outstanding rent in terms of mesne profits from such agreement as alleged or at all.

223.  I note that Chung did admit to signing the Purported Declaration in her pleadings (paragraph 5 of Amended Defence and Counterclaim, Trial Bundle A1 page 17) but argued that the declaration was not binding due to non est factum and / or fraudulent misrepresentation / undue influence given the circumstances of the signing.

224.  Despite this position, Chung has filed and served a Notice of Non-Admission of Documents (including the Purported Declaration which was listed as item 8 on the said notice) pursuant to Order 27 rule 4(2). (It goes without saying that Thomas has all along failed to produce the original Purported Declaration and, given the findings of the court, he has clearly, on his part, failed to prove the authenticity of such documents.)

225.  Of course, all this has happened before the evidence obtained from cross-examination of Thomas and from Mr. Leung. It is debatable whether Chung should have applied to amend her Amended Defence and Counterclaim even at that late stage given such alarming new evidence.

226.  Nevertheless, this court has no problem accepting the evidence from Chung (and Li) in particular regarding the circumstances of the signing of the documents by Chung on 3 January 2011.

227.  Thus, even if the Purported Declaration was indeed one of three documents that Thomas has procured Chung to sign on that day, the Purported Declaration was clearly not a “company document” (being only concerned with the alleged beneficial interest of 50% of the Property).

228.  Even on Thomas’ own evidence, he claimed to have instructed Lai to draft the Purported Declaration in addition to the two Company Shares Declarations, thus there was no doubt that he was aware that the Purported Declaration has nothing to do with the Company. By telling Chung that the documents were all “company documents”, Thomas had clearly made a fraudulent misrepresentation in inducing Chung to sign the Purported Declaration.

229.  Further, Chung’s defence of non est factum is also accepted by the court given that the court finds that Chung was not capable of both reading and sufficiently understanding the content of the Purported Agreement under the circumstances. Given Chung’s background as a masseur and girlfriend of Thomas (and the trust she placed on his words at the time), I find no negligence on part of Chung in failing to take precautions. As above, I also find that the Purported Declaration was clearly fundamentally different from what Chung was led to believe by Thomas (that it was a “company document”) (as per Saunders v Anglia Building Society [1971] AC 1004).

230.  In any case, by application of the legal principle under Stack v Dowden as above, the court finds on balance of probability that Chung is the legal and the beneficial owner of the Property in joint tenancy with Thomas.

Order

231.  The court therefore dismisses the case of the plaintiff (by original action) and finds for the defendant (by original action) and her counterclaim against the 1^st and 2^nd defendants (by counterclaim).

232.  As such, the court orders that there be:

i)  A declaration that the Declaration of Trust dated 3 January 2011 (referred to in paragraph 3 of the Statement of Claim filed in this Action) and the tenancy agreement dated 4^th January 2011 (referred to in paragraph 4 of the Statement of Claimed filed in this Action) are null and void, and in any event of no legal effect and unenforceable at all;

ii)  A declaration that Thomas (the 2^nd defendant by counterclaim) and the Defendant (by original action) are still holding the Property as joint tenants; and

iii)  The costs of the action be to the defendant (by original action) to be taxed if not agreed, with certificate for counsel.

Further direction

233.  As above, the evidence from this trial revealed a far more serious matter: even without considering the circumstances that various documents were alleged to be created, at the very least, a handwriting expert has opined that Thomas has produced at least one false document in court.

234.  I am therefore directing that a copy of this judgment be sent to the Department of Justice for consideration for further investigation into whether any criminal offence, including forgery, was committed by any parties in this case and to take the necessary legal action if needed.

235.  As a passing comment, I note that Mr. Leung has not given any expert opinion on the rather striking similarity of the signatures of Chung on the Purported Agreement (Exhibit “P1”) and the “Parlour Agreement” (Trial Bundle B1 page 10) and addressing the concern of whether one document was created by “copy and paste” of the other. However, Mr. Leung’s opinion is already more than enough to assist the court in this civil claim and perhaps this further matter can be investigated under the context of a criminal investigation.

236.  The court will therefore retain various evidence and exhibits produced at trial. These will be made available to the Department of Justice for their investigation upon application.