LUN KWAI HAR v. HUNG YING YI

HCA 1164/2013

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1164 OF 2013

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J U D G M E N T
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Introduction

1.  This is the trial of the action brought by the plaintiff against the defendant.  The plaintiff is the mother of Mr Pang Ho Lung (“Pang”).  The defendant lived with Pang as husband and wife between around 2002 and 2013. This action is about the entitlement to the proceeds of sale of a property acquired in 2005 in the name of the plaintiff and the defendant.

Factual background

2.  The plaintiff is an old lady who had operated, through her company Fook Hing Enterprises Development Limited, a jewellery shop in Aberdeen for many years.

3.  The defendant was originally resident in the Mainland and came to live permanently in Hong Kong in the early 2000s.  Soon she and Pang began to live as husband and wife without being married.

4.  From about 2002, Pang and the defendant had together run a shop for rental of video compact discs and laser discs called “Happy Family VCD Video” (“the VCD shop”) in a shopping mall in Tseung Kwan O. Since 2004 the business had been registered in the name of the defendant, but it seems to me that at the material times it was a husband and wife’s venture by which they together tried to make a living.

5.  The defendant gave birth to a daughter in May 2005.

6.  There is no dispute that in October 2004, a sale and purchase agreement was entered into in the name of the plaintiff’s daughter, Madam Pang Mun Yee (“Mun Yee”), to purchase a residential property, namely, Flat F, 37^th Floor, Tower 3, Ocean Shores, 88 O King Road, Tseung Kwan O (“the Property”), at the price of $3 million.  The sale and purchase was completed on 24 December 2004, financed by a mortgage loan from HKCB Finance Limited (“HKCB”) in the sum of $2.1 million.  While Mun Yee was the registered owner and mortgagor, she and the plaintiff were together the borrowers of this loan.  It is common ground between the parties to this action that despite being the legal holder, Mun Yee had no beneficial interest in the Property.  Who funded the purchase of the Property and who its beneficial owner was were in dispute between the parties.

7.  On 9 January 2005, the Property was let to a tenant for a term of 2 years commencing 16 February 2005 at the monthly rent of $10,000.

8.  In October 2005, the Property was assigned by Mun Yee to the plaintiff and the defendant as tenants in common in equal shares. The transaction was structured as a sale and purchase at the price of $3.45 million, with a sale and purchase agreement dated 27 September 2005 and an assignment dated 20 October 2005.  There is no dispute however that in fact no price was paid to Mun Yee.  A new mortgage loan was obtained from HKCB in the sum of $2.415 million to discharge the previous mortgage.  The plaintiff and the defendant, as registered owners, were naturally the mortgagors; the borrower of the loan was the defendant alone.

9.  The first tenancy of the Property was terminated in 2006.  In 2007, the plaintiff and the defendant as landlords entered into a tenancy agreement with another tenant for a term of 3 years at the monthly rent of $10,000 at first and later $13,000.

10.  In 2010, the defendant gave birth to a son for Pang.  When the tenancy of the Property expired, Pang, the defendant and their two children moved to live in the Property themselves.

11.  Pang was heavily in debt and was eventually adjudicated bankrupt on his own petition in late 2010.

12.  It is common ground that in March 2012, the plaintiff and the defendant as vendors entered into a sale and purchase agreement to sell the Property to a third party for $4.95 million.  On 29 March 2012, an account was opened with Chiyu Bank in the joint names of the plaintiff and defendant (“the Joint Account”), into which the deposits and net proceeds of sale received from the purchaser were subsequently paid.  It is common ground that the Joint Account was opened for the purpose of receiving the money from the sale of the Property.  The total net proceeds, after repayment of the mortgage loan and expenses, amounted to $2,858,277.94.  The date and amount of the payments into the Joint Account are as follows:

Date	Nature	Amount
29 March 2012	Deposit	$200,000
12 April 2012	Further deposit	$295,000
21 May 2012	Net proceeds from balance of purchase price	$2,363,277.94
	Total	$2,858,277.94

13.  After the sale of the Property, the defendant and Pang moved to live with the plaintiff in To Kwa Wan. 

14.  In around May 2013, the relationship between the defendant and Pang broke down.  On 28 May 2013, they had a quarrel in which the defendant was battered by Pang.  Mun Yee called the police and the defendant went to a hospital.

15.  There is some dispute as to whether the defendant continued to live in their home after that incident.  After 24 June 2013 she had not returned again.  The two young children have continued to stay with the plaintiff, their grandmother.

16.  The plaintiff alleged that she asked the defendant to return the proceeds of sale of the Property which the defendant refused.

17.  There is no dispute that the defendant had withdrawn money from the Joint Account and deposited some of the funds withdrawn into her own accounts with other banks.  From the documents it can be seen that the withdrawals mostly took place between 12 April and 17 October 2012.

18.  On 7 June 2013, the plaintiff went to the bank and withdrew the remaining balance of $60,364.15 from the Joint Account and closed it.

19.  On 28 June 2013 the plaintiff applied for and obtained ex parte a Mareva injunction restraining the defendant from removing from Hong Kong her assets up to the value of $1,429,138.97 being half of the total net proceeds of sale of the Property.  On the same date the plaintiff issued the writ of summons herein.  On the return date of 3 July 2013 the ex parte injunction was discharged on the ground that it had been obtained by the plaintiff by virtue of serious material non‑disclosure.

The plaintiff’s case

20.  The plaintiff’s case is that in October 2004, she intended to purchase the Property for the ultimate benefit of Pang so that it would be his when the plaintiff died.  Pang was, however, in debt and could not acquire any property for that reason.  The plaintiff therefore orally agreed with Mun Yee that the Property would be purchased in the name of Mun Yee, who would hold the Property on trust for the plaintiff.  The plaintiff paid $900,000 as down payment towards the purchase price, obtained a mortgage loan from HKCB to pay the balance of the price, and made monthly repayments of the mortgage loan in the sum of over $8,000 each.

21.  The plaintiff says that when the Property was let in February 2005, Mun Yee agreed to hold the rent received from the tenant on trust for the plaintiff.  The plaintiff further says that in 2005, Mun Yee was in financial difficulty and needed to dispose of the Property. There was a meeting in around August 2005 attended by the plaintiff, Pang, Mun Yee and the defendant, at which the plaintiff informed the others that she intended the Property to be solely owned by Pang in future when the plaintiff died.  Because Pang and Mun Yee were both in financial difficulties and the plaintiff was unable personally to obtain a mortgage loan having regard to her then age of 68, the plaintiff proposed that the defendant become a registered co-owner in order to obtain financing by way of a mortgage loan.  The defendant agreed to become a co-owner holding the Property on trust for the plaintiff. The plaintiff provided the down payment for the purchase of the Property.  The plaintiff and the defendant obtained a mortgage loan from HKCB and thereafter the plaintiff made monthly mortgage repayments of around $13,712 each.

22.  The plaintiff says that when the Property was again let out in 2007, it was agreed that the rent received from the tenant would be held on trust by the defendant for the plaintiff and would partly be used for repayment of the mortgage loan.

23.  The plaintiff says that, in March 2012, when the Property was sold to a third party, the proceeds of sale belonged entirely to her. However, the Joint Account was opened with the defendant on the advice of solicitors.  Further, the plaintiff agreed to let the defendant be the sole signatory and take possession of the sole ATM card for the Joint Account because the defendant had represented to her that, as she was 75 years old, she might have difficulties attending the bank for withdrawal of money, and promised that prior to any withdrawal she would obtain the plaintiff’s consent. The plaintiff says that on about 7 June 2013, she discovered that without her knowledge and consent, the defendant had withdrawn most of the money from the Joint Account.

The defendant’s case

24.  The defendant’s case is that in October 2004, she and Pang decided to acquire the Property.  The plaintiff agreed to act as guarantor for the mortgage loan on condition that the Property was registered in Mun Yee’s sole name.  The plaintiff also gave $300,000 as a gift to the defendant and Pang to help them with the down payment.  The defendant says she contributed $600,000 to make up the balance of the down payment.  A mortgage loan for $2.1 million was obtained.

25.  The defendant says that the rent from the 2005 tenancy was paid directly into the defendant’s bank account at the Bank of East Asia.

26.  The defendant says that in 2005, it was agreed among the plaintiff, Mun Yee, the defendant and Pang that the Property would be conveyed to the defendant and the plaintiff as tenants in common in equal shares, but that the plaintiff would hold her half share on trust for the defendant, who was the full beneficial owner.

27.  The defendant says that when the Property was sold in 2012, the plaintiff agreed that the defendant should have control over the Joint Account because the Property belonged to the defendant.

28.  Further, the defendant says that the money withdrawn from the Joint Account was used in part (i) to make monthly repayments of a $400,000 loan secured over a property in To Kwa Wan belonging to the plaintiff; (ii) to pay off Pang’s debts to third parties; and (iii) to pay Pang’s own expenses.

The Issues

29.  The crux of the case is the beneficial ownership of the funds withdrawn by the defendant from the Joint Account.  The principle governing this question, as stated by Stamp J in Re Bishop [1965] Ch 450, 458-459 and approved by the Court of Final Appeal in Yung Shu Wu v Vivienne Sung Wu (2011) 14 HKCFAR 39, §66, is this:

“… in the absence of some circumstances or some evidence of intention that the joint account was to have a limited operation or was set up and kept up for some special purpose, each spouse has power to draw on the joint account not only for the benefit of the spouses but also for his or her own benefit.”

Thus in the absence of circumstances indicating otherwise, money withdrawn from a joint account by one account-holder may become his or hers outright irrespective of the original source of the funds.  As Lord Walker NPJ put it in Yung Shu Wu at §67:

“If one account-holder has the legal right to withdraw money, and does so, it is up to the other account-holder, if he or she objects, to establish some equitable right which trumps the legal ownership.”

The principle is not only applicable as between spouses, as is shown by Russell v Scott (1936) 55 CLR 440, a case of a joint account held by an elderly lady and her nephew.

30.  The issue therefore becomes whether the Joint Account in this case was to have a more limited operation or was set up and kept up for some special purpose.  On this point there is some common ground on the pleadings.  The plaintiff pleaded in her statement of claim (at §18) that the Joint Account was opened on solicitors’ advice, implicitly for the purpose of receiving the price paid by the purchaser for the Property.  In her defence (at §28) (signed by solicitors who represented the defendant at the time), the defendant admitted this and added that the account was created “for the sole purpose of serving as a savings account for the net proceeds of sale … received by the Defendant and the Plaintiff”.  Neither party contends that even if the money in the account were jointly owned, either holder could withdraw money from it for her own benefit which became hers outright.  Instead, the plaintiff contends that all the money in the account was hers, and that monies withdrawn by the defendant remained the plaintiff’s.  The defendant in contrast contends that all the funds in the account were hers, because they represented the proceeds of sale of the Property which was hers, and that the plaintiff therefore agreed that the defendant was entitled to the free use of the money.  There is no suggestion by the defendant in her pleading or otherwise that the beneficial entitlement to the monies changed upon withdrawal from the Joint Account.  Although the mandate for the Joint Account was that either holder could operate it, there is no suggestion from the defendant that her relationship with the plaintiff was so close that they decided to share the money in the Joint Account so that either could withdraw money without accounting for it to the other.  On the contrary, the defendant’s case is that the plaintiff did not like or welcome her.

31.  On this basis (and on the evidence they gave) it seems to me that the parties’ intention was that the beneficial ownership of the proceeds, whether remaining in or withdrawn from the Joint Account, reflected and followed the beneficial ownership of the Property, and that there was no intention that either account holder could by an act of withdrawal appropriate any money to herself beneficially.

32.  There are therefore two crucial issues:

(1) what was the intention with regard to the beneficial ownership of the Property in 2005 when it was acquired in the names of the plaintiff and defendant?

(2) was there any agreement regarding the defendant’s use of the money in the Joint Account?

33.  Because the Property was acquired in Mun Yee’s name in 2004 and transferred by her to the plaintiff and the defendant in 2005, however, I shall also deal with the evidence concerning the acquisition of the Property in 2004.

Acquisition of the Property in 2004

34.  The evidence shows that the steps for the purchase of the Property in 2004 were taken by Pang.  Thus he signed the appointment letter of the estate agent.  He also signed the provisional sale and purchase agreement dated 15 October 2004 although he stated that he signed on behalf of Mun Yee.

35.  The payment of the purchase price was made up as follows:

(1) A preliminary deposit of $100,000 was paid by a cheque of the VCD shop signed by the defendant on 18 October 2004.

(2) $200,000 was paid by a cashier’s order dated 26 October 2004.

(3) $45,210 was paid for stamp duty and registration fee by the plaintiff’s cheque dated 27 October 2004 to the purchaser’s solicitors.

(4) $2,100,000 was paid from the proceeds of a mortgage loan from HKCB (the borrowers of which were the plaintiff and Mun Yee).

(5) The balance of the purchase price and other disbursements were paid by the plaintiff’s cheque for $608,774.50 on 22 December 2004.

36.  The defendant asserted that she contributed $600,000 towards the purchase of the Property and that the plaintiff gave her $300,000 as compensation for a lost opportunity to purchase a flat at the lower price of $2,700,000 earlier.  I reject that evidence.  There is clear documentary evidence that the sum of $608,774.50 was paid by the plaintiff’s cheque, not by the defendant.  The plaintiff’s evidence was not very clear as to the precise bank account from which the cashier’s order of $200,000 was funded.  But on the whole I accept it was more probable that she rather than the defendant provided the money.  The defendant claimed that she raised funds from relatives in Hong Kong to make the payment for the purchase but had produced no documentary or witness evidence at all in these proceedings to support that claim.

37.  I also find the defendant’s version of this acquisition internally incoherent.  She alleged that because she was a new immigrant to Hong Kong, the mortgage bank required a guarantor to be responsible for the loan.  She said the plaintiff agreed to be a guarantor on condition that the Property was to be registered in Mun Yee’s name.  What happened, however, was that the Property was registered in the sole name of Mun Yee.  As such there was no need for any guarantor.  Nevertheless the plaintiff was a joint borrower with Mun Yee, whereas the defendant’s name did not feature in any of the transaction documents at all.

38.  The defendant relied on the fact that after the purchase of the Property, the management fees were paid with cheques of the VCD shop.  The demand for rates and government rent of the Property were also sent to the VCD shop.  I do not think that this supports the defendant’s case.  She and Pang were both responsible for the VCD shop.  The fact that the VCD shop contributed $100,000 towards the purchase and thereafter paid certain outgoings is equally consistent with the plaintiff’s case that the Property was meant eventually for Pang’s benefit. 

39.  It is probable that the parties did not at the time draw a clear distinction between Pang and the defendant.  The plaintiff was more concerned to draw a distinction between Pang and Mun Yee, to ensure that her treatment of her two children was equal.  The plaintiff had in August 2004 acquired a property in Wan Chai in the joint names of the plaintiff and Mun Yee, intending that Mun Yee would become solely entitled to it when she survived the plaintiff.  I accept that when the plaintiff contributed substantial sums towards the purchase of the Property she intended that it would eventually be for Pang, as opposed to Mun Yee. 

40.  The defendant also relied on the fact that in the tenancy agreement, while the landlord was stated to be Mun Yee, the number inserted as the landlord’s telephone number was the defendant’s.  Again I think this only goes to show that the Property was not meant for Mun Yee.  It is not in my view significant evidence that the defendant as opposed to Pang had some interest in the Property.

41.  It is unnecessary to make a determination of the precise beneficial entitlement to the Property before the transfer to the plaintiff and the defendant in 2005.  As with many family arrangements, it is likely that the parties never gave any real thought to the precise legal consequences flowing from their dealings.  What is reasonably clear from the evidence is that when the Property was acquired from a third party in 2004, the plaintiff funded the majority of the down payment, Pang and the defendant through the VCD shop contributed a small part of it, the Property was purchased in the name of Mun Yee merely as the legal holder, a mortgage loan was obtained from HKCB with the plaintiff and Mun Yee as borrowers, and Pang and the defendant tried to meet the mortgage loan repayments and other outgoings using the rental income supplemented by money from the business income of the VCD shop.  It may be that as a result of their mutual arrangements some kind of limited equitable interest in the Property arose in favour of Pang and the defendant as against the legal holder, Mun Yee, but it is not necessary for the purposes of this action to define or quantify that interest.

Transfer of the Property to the plaintiff and defendant in 2005

42.  In 2005 the defendant gave birth to a daughter for Pang.  This, at the time, could only have cemented the defendant’s bond with Pang and the plaintiff.  It could also be seen from the documents that the running of the VCD shop was increasingly entrusted to the defendant.

43.  I accept that because Mun Yee also had or anticipated financial difficulties in 2005, the family came to a consensus that she should no longer hold the Property as legal owner.  What was decided and done eventually was that the Property should be transferred into the plaintiff’s and the defendant’s name as tenants in common.  Although the transaction was structured as a sale for $3.45 million there was no price paid.  The financial transactions that did take place were as follows:

(1) Stamp duty and other fees were paid with the VCD shop’s cheque for $77,835 dated 3 October 2005 and signed by the defendant.

(2) A new mortgage loan was obtained in the sum of $2.415 million.  The plaintiff and the defendant were both mortgagors while the defendant was the sole borrower under this loan.  The monthly repayment instalment required was approximately $13,700 at the then prevailing interest rate.

44.  Although less than $2.1 million was required to discharge the previous mortgage loan, the parties obtained a new loan for $2.415 million because the Property had increased in value, enabling a larger mortgage loan to be obtained, and decided to use the surplus money raised to acquire another flat in an uncompleted development called Metro Town (都會駅) in Tseung Kwan O.  Thus Pang signed an agreement to purchase a flat there on 2 September 2005 for the price of $3.447 million. 

45.  The acquisition of the flat in Metro Town was eventually made in the name of the plaintiff, after completion of the development, in December 2006, with a mortgage loan from Dah Sing Bank with the plaintiff and the defendant together as borrowers.  (It appears, however, that the family did not make any capital profit out of this investment.  The Metro Town flat was sold in January 2010 for $3.33 million.)

46.  The plaintiff alleged that in August 2005 there was a meeting among herself, Pang, the defendant and Mun Yee in which it was agreed that the defendant would hold the Property (as one of the co‑owners) on trust for the plaintiff.  I view this evidence with much scepticism.  At trial the plaintiff was unable to recall any details.  She confessed she had a deteriorated mental condition and there were many things she could not remember.  In her oral evidence she said that the transfer in 2005 was needed because Mun Yee wanted to obtain a government loan to buy a property, which was different from the reason given in her witness statement and also disavowed by Pang.  The plaintiff was also unable to explain why the defendant was made the sole borrower of the new mortgage loan in 2005 if it was agreed that she had no interest in the Property at all.  While the plaintiff claimed that it would be difficult for her to obtain a mortgage loan because of her age, that did not prevent her from being joint borrowers with Mun Yee under the previous mortgage loan.  There is no credible explanation why she should not at least be a joint borrower with the defendant if the defendant was to have no interest in the Property at all.

47.  In addition to her confession that she had a deteriorating mental condition, I have doubt about the plaintiff’s credibility generally because of the seriously misleading evidence she gave in the ex parte application for injunction.  Pang and the defendant broke up in about May and June 2013.  The plaintiff said in her affirmation in June 2013 that the defendant had “deserted” Pang at the end of May 2013.  In fact, as was admitted by the plaintiff at trial, the defendant was battered by Pang on 28 May 2013, so much so that Mun Yee called the police.  Also, on 25 June 2013 the plaintiff and the defendant both went to the kindergarten graduation ceremony of the defendant’s son.  This is to be contrasted with what the plaintiff said in her affirmations made in support for an application for Mareva injunction in late June and early July 2013.  There she represented to the court that she called the defendant between 7 and 17 June 2013 and the defendant refused to return the plaintiff’s portion of the money, and that from 17 June 2013 onwards she had tried to contact the defendant but could not locate her.  The plaintiff then deposed that she believed the defendant had relocated to her parents’ home in Mainland China and on 25 June 2013 she instructed solicitors to apply for an injunction.  In fact, as must have been known to the plaintiff, the defendant was during all that time running the VCD shop in Tseung Kwan O, and the plaintiff actually saw the defendant on 25 June 2013. 

48.  There was in the trial bundles an undated handwritten one‑page statement of Mun Yee purporting to support the plaintiff’s version of events.  Very little weight can in my view be placed on that document.  It is undated; its contents are not entirely clearly expressed; it is in certain parts inconsistent with a letter apparently written by Mun Yee to the Inland Revenue Department dated 12 February 2011 concerning the rental income from the Property, which the plaintiff was unable to explain.  Most importantly, as Mun Yee had not been called by the plaintiff to testify, what she wrote in the statement was not tested by cross‑examination.

49.  Pang also gave evidence confirming the plaintiff’s evidence but given he is the plaintiff’s son and estranged from the defendant I find it unsafe to put much weight on his evidence.

50.  On the other hand I am unable to accept the defendant’s assertion in her defence that she owned the Property entirely and that she agreed the plaintiff would become a registered co-owner in 2005 based on Pang’s representation that the arrangement was necessary to enable the defendant to obtain a mortgage loan.  The premise of her allegation was that she wholly and beneficially owned the Property to start with from 2004, which, for the reasons stated earlier, I reject.  The defendant has not given any explanation for the representation allegedly made by Pang or why she found it even superficially plausible.  The alleged representation seems to me to be so lacking in logic and foundation that I am unable to accept the defendant’s allegation that Pang made it or that she acted on it.

51.  I note that the 2005/06 and 2007/08 tax returns of the defendant showed that property tax was incurred but indicated that the defendant owned only part of the property in question, which presumably was the Property.

52.  Mr Fung who appeared on behalf of the plaintiff did not argue for a resulting trust in her favour arising in 2005.  In any event I do not think it could be said that the plaintiff was the sole beneficial owner of the Property upon the transfer in 2005 by reason of a resulting trust. First, as I have stated above, Pang and the defendant might have had some equity in the Property arising from their contribution towards the purchase in 2004 and also from their payments thereafter towards the outgoings and the mortgage loan.  Accordingly the Property as held by Mun Yee between 2004 and 2005 did not solely belong beneficially to the plaintiff.  Secondly, upon the transfer in 2005, the original mortgage was discharged by a new mortgage loan taken out by the defendant as sole borrower.  The incurring of liability under a mortgage loan on the part of the defendant for the purpose of the acquisition of the Property could be viewed as a financial contribution, so that it could not be said the Property was acquired in 2005 with only the plaintiff’s resources: see Crisp v Mullings [1976] 2 EGLR 103 and Re Superyield Holdings [2000] 2 HKC 90, 107; (quoted in Wong Kwok Ki Stephen (as the joint and several trustee of the property of Lai Kam Po) v Lee Lai Ying (DCCJ 677/2013; 29 November 2013) at §§97 & 98).

53.  The defendant placed reliance on the fact that after the 2005 transfer, the rent was paid by the tenant into the defendant’s account.  I do not find this arrangement to be of much probative value.  It was quite clearly the parties’ intention that the Property was to be let with the rental income used to meet the mortgage loan repayments from month to month. There is no dispute that the mortgage loan repayment was made from the defendant’s account.

54.  The defendant also relied on the fact that she was authorised by the plaintiff to operate the Joint Account alone in support of her contention that she owned all the money in it.  This argument is misconceived.  In fact, the mandate for the Joint Account was that the signature of either of the two account-holders was effective to operate it. This does not support the suggestion that the defendant owned all the funds any more than that the plaintiff owned them.

55.  In these circumstances, where I find both sides’ oral assertions about beneficial entitlement to be suspect, I have to rely on the undisputed or incontrovertible evidence.  I conclude that neither the plaintiff nor the defendant has succeeded in establishing her case as regards beneficial ownership of the Property upon the transfer in 2005.  In these circumstances it seems to me that one goes back to the starting point which is that beneficial ownership follows the legal title: Snell’s Equity (32^nd ed), §24-049.  It is not improbable that although the purchase of the Property in 2004 was funded primarily by the plaintiff, it was regarded as a property intended for Pang and his own family as opposed to Mun Yee, and that as between Pang and the defendant, who were for all intents and purposes husband and wife, they regarded the Property as theirs in common.  As a conclusion I find that after the 2005 transfer, the Property was owned beneficially, as it was legally, by the plaintiff and the defendant as tenants in common, with an intention that the interest held by the plaintiff would at some point be given to Pang.  It may be that Pang had some equity in the half share of the Property held by the plaintiff but it is unnecessary for the purposes of this action to delve into this.

Use of the money in the Joint Account

56.  On my findings, given that the Property was co-owned by the plaintiff and the defendant as tenants in common, the proceeds of sale were co-owned by them.  Further, as stated earlier, the sole purpose of opening the Joint Account was to hold the proceeds of sale, there being no intention that either holder could withdraw and thereby appropriate the other party’s share of the money.  On this footing it seems to me that for any withdrawal beyond her half share, the burden lies on the defendant to show that she had a legitimate basis for withdrawing and retaining the money.  It has not been disputed that the total net proceeds of the Property amounted $2,858,277.94, and that the plaintiff’s half share was $1,429,138.97.

57.  The sum of $60,364.15 remained on 7 June 2013 which the plaintiff herself withdrew for which credit must be given out of her own half share.

58.  Moreover, the plaintiff and Pang both admitted that the defendant was asked to withdraw money to repay a loan owed to Dah Sing Bank secured by a mortgage of the plaintiff’s property in To Kwa Wan, which had apparently been borrowed to raise funds to purchase the Metro Town property in the plaintiff’s name.  The plaintiff said that it was money used by Pang to purchase a property at Metro Town.  On 22 June 2012, a balance of $274,949.52 remained owing to Dah Sing Bank which was repaid.  I accept the defendant’s evidence that the repayment was made with money withdrawn from the Joint Account and that this was done with the consent of the plaintiff, to discharge the mortgage over the plaintiff’s To Kwa Wan property.  It follows that the plaintiff must also give credit for this sum.

59.  The defendant claimed that the rest of the money was used to repay Pang’s debts and that this was done with the consent of the plaintiff.  In my view the defendant’s evidence fell short of substantiating this claim.  She has not produced any significant documentary evidence to support her case.  It is difficult to believe that repayment of sums totalling over $2 million on the defendant’s case was not reflected in any receipt or document or recorded in any way in writing.  In contrast, such evidence as there is shows that substantial sums were put on time deposit in the defendant’s own accounts.  For example, a sum of $500,000 was withdrawn from the Joint Account on 17 October 2012 and on the same day the defendant made a time deposit of $500,000 for 4 months in her own account at Citibank.  On 3 April 2013 the defendant made a time deposit for one year of the sum of RMB 401,000 (which was close to $501,000 at the then exchange rate) in her own account at Nanyang Commercial Bank.  When questioned with reference to the particular withdrawals, the defendant was unable to give a satisfactory account as to what sums were used to repay Pang’s debts as alleged.  Nor has it been explained, given that Pang had been made bankrupt in 2010, why he had debts to the tune of over $2 million that needed to be repaid with what was – on the defendant’s case – her own money.  More generally, I also have doubt on the credibility of the defendant’s evidence given that her evidence relating to the purchase of the Property in 2004 was in my view incredible.

60.  In conclusion I am unable to accept the defendant’s assertion that the money withdrawn was spent in repaying Pang’s debts.  It follows that the defendant is liable to account for and pay to the plaintiff her half share of the money in the account (i.e. $1,429,138.97) less the 2 sums referred to above for which credit has to be given (i.e. $60,364.15 and $274,949.52). 

Conclusion and orders

61.  For the reasons above, there will be judgment for the plaintiff in the sum of $1,093,825.30.

62.  As regards costs, in her statement of claim and opening submissions the plaintiff claimed primarily the entire proceeds in the sum of $2,858,277.94, on the basis that she was the full beneficial owner of the Property and hence its proceeds of sale.  I have rejected that case and that part of the plaintiff’s evidence.  In consequence and in all the circumstances I am inclined to take the view that the plaintiff should not have all of her costs.  Further, the plaintiff’s non‑disclosure and misrepresentation to the court in the ex parte application for Mareva injunction (see paragraph 47 above) was in my view so preposterous as to warrant a further reduction of her entitlement to the costs of the action.  I make an order nisi that the defendant is to pay the plaintiff 40% of the costs of the action excluding any costs related to the Mareva injunction.  Any application to vary this costs order nisi should be made by summons within 28 days.