CHING CHI SAU v. YIP WOON YIN JUDY AND ANOTHER

HCA 352/2008

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 352 OF 2008

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J U D G M E N T

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Overview

1.  At the trial, Dr Ching Chi Sau (“Dr Ching”) was 83 years old and Yip Woon Yin Judy (“Madam Yip”) was 66 years old. They started a relationship and, shortly afterwards, their co-habitation in or about 1993 after they met in a Chinese opera singing class. Their love story ended on a bitter note and they broke up in 2008. In the same year, Dr Ching instituted these proceedings against Madam Yip.

2.  When they were on good terms, certain landed properties were bought either in their joint names or in the sole name of Madam Yip or Bestview Hong Kong Group Limited (“Bestview”) of which Madam Yip is the sole shareholder. In this action, Dr Ching primarily claims beneficial interests in such properties and other consequential relief. Further, Dr Ching alleges that Madam Yip took away, and now wrongfully retains, certain valuables from their home when she relocated to another flat. Dr Ching now asks for an order for delivery for such personal properties.

3.  On the other hand, Madam Yip counterclaims for repayment of loans advanced to Dr Ching and certain declaratory relief in relation to the landed properties in dispute.

4.  To cut a long story short, Dr Ching’s principal allegation is that the landed properties in dispute were purchased, solely or partially, with his monies and hence he should have beneficial interests in them albeit that for most of them he does not hold any legal title pursuant to an oral investment agreement between Madam Yip and him (“the Investment Agreement”). Madam Yip’s contention is that she alone financed the purchase of such properties out of the profits generated from her investments in shares and financial derivatives. Madam Yip further denies any possession let alone wrongful retention of Dr Ching’s personal chattels save a stamp album on which she claims a lien in respect of the loans she allegedly extended to Dr Ching.   

5.  Dr Ching and Madam Yip are obviously the protagonists in this action. There are a number of factual issues arising from their dealings which spanned more than a decade. Their versions of events, mostly unsupported by contemporaneous documents, are more often than not very different. Madam Yip’s allegations of forgery in respect of some handwritten documents further add fuel to their controversy. A large part of the trial was devoted to handwriting expert evidence adduced by both parties to resolve the authenticity issue relating to certain handwritten documents produced by Dr Ching. Those documents purportedly bore Madam Yip’s signatures. Dr Ching relies on those documents, which he argues can shed light on, if not being definitive to, the key issue as to the beneficial ownership of the properties in dispute.

6.  The properties in dispute include:

	Description	Registered Owner(s)	Present status
(1)	House 21 with carport, entrance and yard, garden, flat roof and roof, Fortune Garden, No.72 Ting Kok Road, Tai Po, New Territories, Hong Kong (“FG House”)	Dr Ching and Madam Yip	Sold by mortgagee in March 2009
(2)	Car Park No.41, UG/F, Fok On Garden, 11 On Chun Street, Shatin, New Territories, Hong Kong (“Carpark 41”)	Dr Ching and Madam Yip	Sold in September 2013
(3)	Shop 102, U/F, Fok On Garden, No.11 On Chun Street, Shatin, New Territories (“Shop 102”)	Madam Yip only	Sold in July 2005
(4)	Ground Floor, No.49 Boundary Street, Kowloon (“BS Shop”)	Madam Yip	Sold in January 2011
(5)	Shop 16A, Level 1, Block C, Greenery Plaza, No.3 Chui Yi Street, Tai Po, New Territories (“GP Shop”)	Madam Yip	Sold in December 2007
(6)	Flat D, 13/F., Cheong Ling Manson, Nullah Road, Kowloon (“CL Flat”)	Bestview	Occupied by Madam Yip only

7.   The foregoing only serves as a general introduction of this action. I shall now set out as follows the relevant undisputed and/or indisputable facts mostly gleaned from undisputed documentary evidence.

Undisputed and/or indisputable facts

8.  Dr Ching received medical education and training in the Mainland in the 1950s and he settled in Hong Kong with his ex-wife Wong Leung Lin (“Madam Wong”) in 1963. Dr Ching started practicing as a general medical practitioner in Hong Kong in or about 1964. He still keeps his private practice presently.

9.  Dr Ching petitioned for divorce in 1984 on the ground of 2-year separation with the consent of Madam Wong. Dr Ching and Madam Wong have two sons and one daughter. Their marriage was formally dissolved by a decree dated 22 December 1994.

10.  Though their divorce proceedings were uncontested, Dr Ching and Madam Wong had another acrimonious lawsuit in 1994 under HCA 7713/1994 where Dr Ching sued Madam Wong, their eldest son and Leading Edge Computer Technology Company Limited (“LECTCL”). Madam Wong and their two sons were the shareholders of LECTCL, which was the registered owner of their place of residence in North Point notwithstanding their legal separation. This High Court action was finally stayed in August 1994.

11.  Madam Yip is also a divorcee. She first married a merchant in 1967 and they had three sons. This marriage ended in 1975. She next married one Mr Ki in 1989 and again divorced in 1992.

12.  Before Madam Yip met Dr Ching in 1993, Madam Yip had three properties located in Tower 3, Manlai Court No.45 Man Lai Road, Shatin, New Territories (“Manlai Court”) registered in her sole name. They were Flat F, 2/F (“Flat 2F”) and Flat G, 2/F (“Flat 2G”) acquired in December 1991 and Flat B on the 19/F (“Flat 19B”) acquired in July 1992. Madam Yip resided at Flat 19B with her eldest son.

13.  When Dr Ching and Madam Yip met in the singing class, Dr Ching was 62 years old and Madam Yip was 46. They soon fell in love and started co-habitation at Flat 19B after Dr Ching went to visit Madam Yip late one evening and the true reason behind the visit, though debated, is immaterial. They took wedding photos together and stayed together as if they had been a married couple.

14.  On 12 January 1994, Madam Yip completed the sale of Flat 2F in consideration of HK$2,870,000.

15.  Before long, Dr Ching and Madam Yip looked for a larger home. On 1 April 1994, they entered into a provisional agreement for sale and purchase to purchase a property known as House A 21, Fortune Garden, Tai Po, New Territories (“FG House”). The agreed consideration was HK$8.9 million. A deposit of HK$200,000 was paid to the vendors and the formal sale and purchase agreement was to be signed on 2 May 1994 whereupon a further deposit of HK$690,000 was payable. Completion was fixed on 8 September 1994.

16.  Dr Ching and Madam Yip then entered into a formal sale and purchase agreement dated 10 May 1994 with the vendors. They paid a sum of HK$690,000 as further deposit on the same day.

17.  The completion did not take place in September 1994 as scheduled. Dr Ching and Madam Yip required more time to arrange finance of the balance of the consideration. They had an agreement with the vendors to postpone completion to December 1994 whilst they obtained vacant possession and started occupation of the FG House in September 1994 pursuant to the formal sale and purchase agreement. They however made a monthly payment to the vendors in the sum of HK$60,000 as rent and interest on the balance of the consideration. The assignment in respect of the FG House was finally made on 23 December 1994 as a result of the postponement. A legal charge in favour of Union Bank of Hong Kong Limited (“the Union Bank”) was made in respect of the FG House of the same date.

18.  Prior to the assignment, the following events took place. First, on 1 December 1994, Dr Ching in his own handwriting wrote a memo consisting of three paragraphs with his signature (“Memo 1”). The memo was written in the Chinese language and could be summarized in English (without certified translation) as follows:

i. After completion of the transaction, the FG House would immediately be transferred to Madam Yip in her name;

ii. Within six weeks after the completion in respect of the FG House, (if) Dr Ching could not recover any debt in Canada, (Dr Ching) would be willing to break up with Madam Yip; and

iii. In the event of separation with Madam Yip due to economic reason (unable to recover the debt), Dr Ching would be willing to continue to pay the instalments for one year.     

19.  It is the first controversial document. There is no authenticity issue but the parties differ on the true meaning and effect of Memo 1.

20.  On 20 December 1994, Madam Yip caused a further charge to be made in favour of United Chinese Bank Limited for the consideration of HK$850,000.

21.  In the trial bundle, there can be found a witness summons dated 5 May 1995 issued to Dr Ching in respect of a charge laid against Madam Wong. Madam Wong was charged with the offence of fighting in a public place on 13 December 1994 at Des Voeux Road (“the Offence”) and Madam Yip was involved in the Offence.

22.  Next came another controversial document. It is another handwritten note created by Dr Ching with his signature dated 8 April 1996 (“Memo 2”). Again the parties differ on the true meaning and effect of Memo 2. My English translations of its contents are as follows:

“In relation to the beneficial interest of the FG House, originally it was co-owned by Dr Ching and Madam Yip. Now it is agreed that Madam Yip owns the said beneficial interest solely and the title was to be held under Madam Yip’s sole name as evidenced by this document. The sale proceeds and/or rental income of this property could be independently dealt with and totally belong to Madam Yip.”

23.  About a month later, Dr Ching executed a Power of Attorney in favour of Madam Yip on 16 May 1996 (“the POA”). Under the POA, Dr Ching, in the capacity of one of the beneficial owners as joint tenants of the FG House, appointed Madam Yip to act on his behalf to handle all the dealings relating to the FG House including but not limited to its leasing and sale. The POA was prepared with the assistance of one Mr Lee of Messrs Massie & Pickavant, who then resided in the vicinity of the FG House.

24.  On 12 June 1996, a document was purportedly produced and its authenticity was hotly contested. It was a memo written by Dr Ching signed by Dr Ching and purportedly by Madam Yip as well (“Memo 3”). Memo 3 was written on a piece of paper with the letterhead of Aquality Trading & Finance Co.. My English translations of its contents are as follows:

  (1) Both parties agreed that they should continue to stay together for a few years before confirming the legal status of the relationship;

  (2) Madam Yip suggested to transfer the beneficial interests in Flat 2G and Flat 19B (both mortgaged) to Dr Ching in exchange for the beneficial interests in the FG House … all vested in the sole name of Madam Yip. The deliberation period would be three months and thereafter take the further step to look for a lawyer.

  (3) Within six months after the date of the exchange transaction, if there is any economic loss suffered by Madam Yip, Dr Ching shall pay the mortgage repayment for 1 year in respect of the FG House only. Due to the non-completion of the exchange procedure, Madam Yip claimed that the originals of Dr Ching’s notes issued to Madam Yip on 1 December 1994 and 8 April 1996 (Memo 1 and Memo 2) have gone missing and hence they are invalid.

  (4) To show his sincerity and his the fact that the relationship in their advanced age is treasured, (Dr Ching) shall give the following personal treasures to Madam Yip for safekeeping purposes and Madam Yip promises that she would not appropriate the same. They include: some antique banknotes of Hong Kong totaling HK$2,632, 78 golden coins and a few sets of stamps from the Qing Dynasty.

25.  Memo 3 bore the signature of Madam Yip with the date of 12 June 1996 beneath it. Madam Yip denies vigorously that it was her signature.

26.  On 24 July 1999, the Union Bank granted Dr Ching and Madam Yip a loan of HK$300,000 and the loan was secured by a charge on the FG House.

27.  On 23 March 2000, Dr Ching and Madam Yip remortgaged the FG House to Standard Chartered Bank (“SC Bank”) and obtained a loan in the sum of HK$3 million with a cash rebate of HK$95,000. The mortgage granted to the Union Bank was thereby discharged.

28.  Next came a controversial event. On 30 July 2001, Dr Ching and Madam Yip caused to be created a legal charge in favour of General Capital (Hong Kong) Limited (“GC”) for a loan of HK$4,195,800 (“GC 1^st Loan”). With the GC 1^st Loan, the mortgage of SC Bankwas paid off by a cheque in the amount of HK2,511,637.98 and there was a remaining balance of HK$1,677,162.02. The parties differ on the use of the loan but the undisputed fact is that on 31 July 2001, Madam Yip received two cheques in her favour alone. One cheque was of HK$1,377,162 and the other one HK$150,000. Dr Ching also received a cheque of HK$150,000 in his favour.

29.  By an assignment dated 17 September 2001, Carpark 41 was acquired in the joint names of Dr Ching and Madam Yip at the cost of HK$250,000.

30.  Shop 102 on the other hand was purchased by the assignment dated 18 April 2002 in consideration of HK$350,000. Madam Yip became the sole registered owner of Shop 102. Dr Ching carried on his medical practice at Shop 102 until it was sold in July 2005.

31.  By an assignment dated 30 November 2002, Madam Yip acquired the BS Shop in her sole name in consideration of HK$4,250,000. The BS Shop was partitioned into three units with three sitting tenants. The acquisition was funded by a mortgage loan secured by a mortgage of the same date in favour of Bank of America (Asia) Limited (“BA Bank”). By an assignment of rentals of the same date, Madam Yip further assigned all the rentals in respect of the BS Shop to Bank of America. After the expiry of the tenancy of the middle unit, it was first occupied by Dr Ching as his night clinic and was later merged with the first unit and turned into a restaurant in July 2004. The entire BS Shop was eventually sold in 2005.

32.  Shortly after the purchase of the BS Shop, a controversial document was created purportedly. It was another memo written on a withdrawal slip of the Union Bank dated 19 December 2002 (“Memo 4”). At that time the mortgage in favour of the Union Bank had already been discharged. There were three numbered paragraphs written by Dr Ching and was signed by both Dr Ching and Madam Yip. My translations of the contents of Memo 4 are as follows:

  (1) No 49 Boundary Street shop (BS Shop) down payment HK$1.3 million was paid by the remortgage of the FG House with GC. Madam Yip admits holding the property as trustee;

  (2) Dr Ching is willing to sell his treasures and pay HK$45,000 each month to redeem the mortgage within three years;

  (3) For this transaction, the commission of the estate agent Tin Shing Property Agency Co (天誠地產) was paid by Dr Ching.

33.  According to Dr Ching, the parties actually signed two documents bearing the same content of Memo 4. Dr Ching produced two copies of the same documents so that each of them could have a copy. The copy now produced by Dr Ching is the copy retained by him.

34.  Madam Yip denies having signed any copy of Memo 4 altogether and claims that it is a forgery.

35.  Dr Ching discloses another memo purportedly signed by Madam Yip less than a year later. It was also written by Dr Ching on a withdrawal slip of the Union Bank and was dated 23 November 2003 (“Memo 5”). It appears to be an account and my translations of the contents of Memo 5 are as follows:

 Dec 2002 to Nov 2003

 The big sum for paying the mortgage payment of the BS Shop received

 Dr Ching contributed $45,000 x 12 = $540,000

 Rental receipt 27,000 x 12  = $324,000

 Fuk On 102 = $60,000

 Car park = $21,600

 (Total: $945,600)

36.  As with Memo 4, Madam Yip signed two documents prepared by Dr Ching bearing the same contents. Both versions of Memo 5 were written by Dr Ching and he also made a photocopy of the copy given to Madam Yip. For ease of reference, Dr Ching’s copy of Memo 5 is referred to hereinafter as Memo 5C and the photocopy of the copy of Memo 5 given to Madam Yip as Memo 5Y. Dr Ching produced both Memo 5C and the photocopy of Memo 5Y as evidence.

37.  By an assignment dated 31 December 2003, Madam Yip acquired GP Shop in her sole name at the cost of HK$2,350,000 with a sitting tenant Mr Ho. The acquisition was funded by the mortgage granted in favour of BA. The tenancy lasted from 23 April 2007 to 22 March 2010 and the monthly rent was HK$18,000. Again, Madam Yip assigned the rentals to BA.

38.  In late October 2005, Madam Yip made rearrangement of the mortgage relating to the BS Shop. The mortgage in favour of BA was redeemed by way of a new mortgage loan granted by Bank of China (Hong Kong) Limited (“BOC”) secured by a mortgage dated 8 November 2005. The BOC mortgage was finally redeemed on 26 December 2006.  

39.  On 11 January 2007, Bestview was incorporated. In late January 2007, Madam Yip acquired Bestview. She has ever since held all its 10,000 issued shares and been the sole director. Dr Ching, on the other hand, is the company secretary of Bestview.

40.  On 7 February 2007, Bestview entered into a sale and purchase agreement in respect of the CL Flat with one Mr Tong and the purchase price was HK$2 million. The assignment was executed on 29 March 2007.

41.  The next remarkable event took place at FG House on the Christmas eve in 2007. Dr Ching again created a memo on a withdrawal slip of the Union Bank dated 24 December 2007 (“Memo 6C”) and he also made a copy of Memo 6C on another withdrawal slip for Madam Yip (“Memo 6Y”). Dr Ching made a photocopy of Memo 6Y and in these proceedings he disclosed both Memo 6C and the photocopy of Memo 6Y. Both Memos 6C and 6Y bore the signatures of Madam Yip and Dr Ching. My translations of the contents of Memos 6C and 6Y are as follows:

“GP Shop to be sold at the price of HK$5.2 million … the balance of about HK$4 million to be earmarked for redeeming the mortgage of FG House. Madam Yip promises that in the course of her appropriation (of the balance), she would indemnify any loss caused to Dr Ching but any profit reaped as a result thereof has nothing to do with Dr Ching.”

42.  Madam Yip adopts the same position in regard to these Memo 6C and 6Y. She admits that she went to the FG House after a Christmas party held at her restaurant at BS Shop under the trade name of “Ma Court Restaurant & Lounge” (“the Restaurant”) but denies having signed any of these Memos.

Authenticity of the Controversial Documents

43.  I find it convenient and logical to determine the issue of authenticity of the foregoing controversial documents first. I do so because the parties agree that these documents relate to the central issue, i.e. the beneficial ownership of some landed properties in these proceedings. Further, given the relevance of these documents and the gravity of the allegations of forgery, my determination of the authenticity would also have a bearing on the general credibility of Dr Ching and Madam Yip. If I find Dr Ching to have forged those documents to suit his case, I am entitled to have a very dim view of his evidence generally. Likewise, if I conclude that Madam Yip goes out of her way to deny the existence of those documents and even sees fit to falsely make serious allegations against Dr Ching, which can give rise to criminal liability to be borne by an elderly man, this again is something that may shed light on her general credibility in respect of the main issues in this action.

44.  Both Dr Ching and Madam Yip testified in respect of the authenticity issue. The parties have also adduced expert evidence. Dr Ching’s expert is Mr Cheng Yau Sang Patrick and Madam Yip’s expert is Dr Daniel In-Jea Wong.

General Legal Principles relating to Handwriting Expert Evidence

45.  I would first set out the undisputed general principles germane to the authenticity issue. Both parties refer to the decision of the Court of Final Appeal in Nina Kung v Wang Din Shin [2005] 8 HKCFAR 387. They agree that Dr Ching bears the legal burden to prove the authenticity of the controversial documents throughout. It is also not argued that Madam Yip having positively asserted forgery has the evidential burden of adducing evidence sufficiently cogent and probative to raise and substantiate her allegation of forgery: §180 of Nina Kung v Wang Din Shin, supra. Where allegations of forgery are made, the courts rightly demand a standard of proof commensurate with the seriousness of the allegations and evidence to a very high standard of cogency is necessary to justify a finding of forgery: Lord Scott at §626.  

46.  It is imperative to examine handwriting expert evidence in its proper context. As regards the nature of handwriting expert evidence, the following dicta in Nina Wang v Wang Din Shin are apposite. First, as per Chan PJ, handwriting analysis was not an exact science and the opinion of a handwriting expert, however objective, was inherently less precise than a conclusion based on the results of a scientific analysis and its acceptability depended very much on how sound and convincing the reasons for his opinion were: §20.

47.  The dicta of Riberiro PJ are also instructive. First, his Lordship observed that “handwriting evidence is necessarily of a lower order of cogency than direct evidence of execution”: §393. Secondly, it was observed that “it is important, when evaluating expert evidence on handwriting, to recognise that such evidence has both a harder, more “scientific”, side and a softer, less precise, facet involving professional judgment of a relatively subjective nature”: §394. To clarify this observation, Ribeiro PJ further referred to the following passage in Phipson on Evidence (15^th ed., 2000) p.22 §37-10 (the same passage can be found in the current 18^th ed. at §33-10):

“Expert witnesses have the advantage of a particular skill or training. This not only enables them to form opinions and to draw inferences from observed facts, but also to identify facts which may be obscure or invisible to a lay witness. The latter might simply be described as “scientific evidence”, the former as “expert evidence of opinion”. A microbiologist who looks through a microscope and identifies a microbe is perceiving a fact no less than the bank-clerk who sees an armed robbery committed. The only difference is that the former can use a particular instrument and can ascribe objective significance to the data he perceives. The question of subjective assessment and interpretation which is the essence of opinion evidence hardly enters into the matter at all. An example of the dichotomy can be seen in the case of a conflict between experts on handwriting as to the authenticity of a document. By virtue of their training such experts would be able to distinguish parts of letters or techniques of word-formation which a layman would be unable to observe: this is the scientific part of their work. The question of which features are significant and the inferences to be drawn from them are questions of judgment, assessment, opinion.”

48.  With these principles in mind, I turn to the expert evidence adduced by the parties. Ms Tsui, counsel for Dr Ching, and Mr Tze, counsel for Madam Yip, agreed that their expert evidence should be received before the testimony of their factual witnesses. Throughout Dr Ching and Madam Yip were present at trial when their experts testified.

Respective Experts’ Background

49.  At the outset, a brief introduction of the respective experts’ qualifications and expertise will be helpful. Mr Cheng has a strong academic background in the relevant area. He earned a chemistry degree in the first class from London University in 1977 and a master degree in Forenic Science from Strathclyde University in Glasgow in 1978. From 1978 to 2004, he worked for the government and his last post was Senior Chemist and Head of the Questioned Documents Section of the Forensic Science Division in the Government Laboratory. He has extensive publications on handwritings and forgery. He is no stranger to the courts and he has testified on numerous occasions at all level of the courts of first instance as expert witness in both civil and criminal proceedings. This is evidenced by a long list of cases in which Mr Cheng testified as an expert witness. Since 2004, he has started his private practice as a “Forensic Handwriting and Document Examiner”. He was the Government handwriting expert in the Nina Kung case when he was still in the civil service. This turns out to be a ground of attack on his expertise and I shall deal with it later.

50.  Dr Wong obtained his degree and master degree of science from University of Newcastle upon Tyne, England. He is also a Doctor of Philosophy of University of Glasgow, Scotland. He worked as a chemist in the Hong Kong Government Laboratory from 1990 to 2004 during which he acquired extensive experience in the decipherment of authorship of questioned handwriting or signatures by dealing with more than five hundred of such cases. He has testified for more than thirty times in the courts and his expertise has been accepted. In May 2004, Dr Wong left the civil service and became a freelance Documents Examiner. He gave expert evidence on questioned documents and handwriting for four times in court and once in a police disciplinary hearing. In September 2006, he founded the Hong Kong Forensic Society and became its director. Since 2010, Dr Wong teaches as a lecturer on the course “Advance Certificate on Criminal Investment and Forensic Science” organized by the Hong Kong Institute of Management and thus far he has lectured thrice. The expertise of Dr Wong is not in dispute.

51.  Mr Cheng first filed his expert report dated 9 August 2011 and Dr Wong filed his report consisting of two separate parts both dated 22 October 2011. In the second part, Dr Wong rendered his observation of certain controversial documents by the use of the Electrostatic Detection Apparatus (“ESDA”). Apparently Mr Cheng was provided with the transparencies of the ESDA coming with the report of Dr Wong. By a letter dated 16 December 2011 (“the Letter”), Mr Cheng commented on the observations of Dr Wong on such ESDA transparencies. Pursuant to the order of Master Lung (as he then was) dated 20 May 2011, Mr Cheng and Dr Wong produced a joint report dated 10 August 2012 (“the Joint Report”).

52.  As between the two experts, as a preliminary observation, I found Mr Cheng to be the far better witness. His richer experience aside, his evidence, both written and oral, was organized, methodical and persuasive whereas those of Dr Wong, in particular given his changing positions and admission of many negligent omissions in his expert report, could hardly inspire me with much confidence.

53.  Mr Tze challenges the expertise and credibility of Mr Cheng on account of his involvement in the Nina Kung case. There, the trial judge Yam J accepted, in addition to other handwriting expert evidence, Mr Cheng’s expert evidence to the effect that the signatures of one late Mr Tse Ping Yim were mere forgeries. On appeal, Yuen JA and Wuang J (with Yueng JA dissenting) accepted the evidence of Mr Tse in the form of his two statutory declarations and overturned the factual finding of Yam J that his signatures were forged. When the matter reached the Court of Final Appeal, all the parties agreed that they were not a forgery. Thus, in effect, Mr Tse’s evidence in this regard was not accepted.

54.  Mr Tze mentioned this rejection of evidence to Mr Cheng under cross-examination. Mr Cheng replied that he did not know how the Court of Appeal and the Court of Final Appeal dealt with his evidence.

55.  Mr Tze makes two points out of this. First, he submits that Mr Cheng is not a reliable handwriting expert. Second, he submits that it is unreasonable for Mr Cheng to be unaware of the subsequent rejection of his evidence by the higher courts in the Nina Kung case.

56.  I cannot accept his first submission. The reliability of his expert evidence depends on different matters in different cases. Sometimes, in a particular case, he may have limitations, not necessarily due to his own faults, which may undermine the persuasiveness of his opinion. The mere fact that an expert has his evidence rejected on one occasion does not and cannot mean that he is always unreliable.

57.  On the other hand, I agree that given the publicity of the Nina Kung case, its relevance to Mr Cheng’s expertise and most importantly his personal involvement, Mr Cheng should more likely than not know that his evidence was not accepted by the majority in the Court of Appeal. However, I do not think his denial of knowledge necessarily points to the fact that he is not a trustworthy expert. He may simply be embarrassed to accept the rejection of his evidence openly. After all, it is the soundness of his reasoning for his opinion that matters in the present case.

58.  Altogether forty specimens of Madam Yip’s signatures (“the Specimens”) were provided to Mr Cheng and Dr Wong for control purposes. All but three of them are photocopies only. Dr Wong in addition was given forty more specimens at his request and Mr Cheng did not have the sight of the same.

59.  In the first place, it has to be pointed out it is apparent from all the Specimens that the signatures of Madam Yip throughout the years (1994 to 2011) share a similar pictorial design and little significant changes have been undergone. Two more recent specimens are annexed hereto as Appendix 1.

60.  As observed by Mr Cheng, Madam Yip’s signature is very personalized, unique and certainly complicated in its design. Dr Wong does not argue otherwise. It is basically composed of three main parts. It starts with a combination of an “S” structure and a “Y” structure and then followed by a “W” structure with a “J” structure. Lastly, the third and final part starts with a “W” configuration with its end shooting to the upper right.

61.  To recap, the questioned signatures appear in Memos 3, 4, 5C, 5Y, 6C and 6Y. They were respectively referred to as Q1, Q2, Q3, Q4, Q5 and Q6 by Mr Cheng. Dr Wong has a different system of reference but for the purpose of this Judgment, I would adopt the references of Mr Cheng. Moreover, it should be noted that Q4 and Q6 are photocopied versions only. The original copy of Memos 5Y and 6Y is not available.

62.  Mr Cheng in his first report set out his comparison between all the questioned signatures against the Specimens. He noticed no signature deviations and observed that the questioned signatures agree with the Specimens in design and writing characteristics. Any differences could be characterised as natural variations commonplace in one’s different signatures over a period of time.

63.  On the issue of naturalness, Mr Cheng first observed that the Specimens were naturally, fluently and spontaneously written with variations in writing pressure in good line quality with natural variations of writing characteristics. He expressly acknowledged the inherent limitations of the photocopy nature of the large majority of the Specimens.

64.  Then he turned to the questioned signatures. He concluded that they were naturally and fluently written in good line quality with variations in writing pressure are good indications of genuineness of a signature. He was not shaken under cross-examination. Mr Cheng concluded that all the questioned signatures were most probably written by the signatory of the Specimens, i.e. Madam Yip.

65.  Alarmingly, Dr Wong said little about the naturalness or the lack of it of the questioned signatures. He only highlighted the unsatisfactory nature of photocopied documents, which hindered his observation of the writing characteristics of the questioned signatures. In the Joint Report, the only thing he said about naturalness of the questioned signatures was that usual indications of unnaturalness such as pen pressure variation and retouDr Ching might not be readily identified in Q4 and Q6 because they were photocopies only.

66.  Indeed, Dr Wong agreed during trial that he negligently did not elaborate his views on naturalness in his report and that there is no significant issue of naturalness about the questioned signatures though he mentioned without any apparent conviction that there were some unnaturalness in Q4 and Q5.

67.  I can say no better about the importance of naturalness than Chan PJ in the Nina Kung case at §§68-69:

68. Naturalness found in a signature is regarded as a very strong indication of genuineness.  The rationale is that a forger would normally concentrate on the form of the writing, trying his best to make his work look genuine whereas the writer of a genuine signature is simply doing it as part of his writing habit, giving allowance for the difference between doing ordinary handwriting and signing a signature.  Harrison explained this in greater detail at p. 399 of his book:

“… a genuine signature, particularly that of a practised writer, is written fluently and without conscious thought being given to the exact form of the letters, simply because of the familiarity of the writer with the task he is accomplishing.

In marked contrast, … when a form is produced from memory, or perhaps copied from one which is before the writer, to form a simulated forgery, there can be no swift, carefree movement of the pen. Unlike the casual writer, the forger has to concentrate on the task in hand if he is to ensure that his pen point is reproducing the letter designs he has memorised or is observing with half his attention whilst giving the remainder to the writing.

Instead of a swift and sweeping movement of the pen, there has to be a slow and careful motion which is the product of care from the moment the pen is cautiously applied to the paper until it is finally lifted from its surface.  The forger has a double care; not only has he to copy the handwriting of another, but he must continually be on the alert to suppress his own handwriting instincts.  Therefore that which is finally committed to the paper, be it either traced or simulated forgery, cannot be termed ‘handwriting’ in a normal sense of the word; it is more accurately described as a careful and painstaking ‘drawing’ of the handwriting of another person.”

69. It would seem that evidence of pauses or hesitations and changes of pen pressure, direction and speed would be signs of unnatural writing and hence indicative of forgery.  On the other hand, if the writing is natural and free flowing with what can be described as “flying starts” and “flying finishes” or intermediate strokes where the pen comes off the paper or connecting strokes which show continuity of pen movements, these would be regarded as indications of unconsciousness of details pointing to genuineness.  See Osborn 364.

68.  I am satisfied that I can rely on Mr Cheng’s evidence in respect of naturalness and approve his conclusion. The complaints of Dr Wong such as the shortage of contemporaneous control specimens created in 90s (only four available) and the agreed limitations of photocopy were of little substance. Dr Wong failed to point out any significant changes in Madam Yip’s signatures in any event. On the face of the questioned signatures only, on a balance of probabilities, I am satisfied with the assistance of expert evidence that no issue of forgery could arise.

69.  Dr Wong raised the allegation of tracing in his reports and this indeed took up a large amount of the trial time. The allegation arose out of his ESDA findings that there were indentations on Memos 4, 5C and 6C. In his report, Dr Wong claimed that the indentation on Memo 4 corresponds with Q4 (signature on Memo 5Y), the indentation on Memo 5C corresponds with Q5 (signature on Memo 6C) and the indentation on Memo 6C corresponds with, again, Q4 (signature on Memo 5Y). Dr Wong inferred that Q4 appearing in the original copy of Memo 5Y was created on top of Memos 4 and Memo 6C and that Q5 appearing in Memo 6C was created on top of Memo 5C. Dr Wong opined that this showed Q4 and Q5 could have been produced by tracing though under cross-examination he accepted that it was inherently impossible that Q4 was produced by tracing two model signatures in Memos 4 and 6C.

70.  Mr Cheng by the Letter indicated his agreement that Q4 appearing in the original copy of Memo 5Y was created on top of Memo 4. Mr Cheng also gave a qualified opinion that Q5 appearing in Memo 6C was created on top of Memo 5C. His reservation was due to the inferior quality of the transparency and the lack of complete matching. However, Mr Cheng disagreed that the indentation appearing in Memo 6C corresponded with any of the questioned signatures.

71.  Regrettably, the experts did not do anything further to prove or disprove this serious allegation of tracing in the Joint Report. I should first point out that Madam Yip does not have to go so far as to adduce evidence of tracing. A forged signature is already a forgery regardless of whether it is a traced copy or not. Further, I believe that it is nothing more than common sense that when an indented signature is found on a document bearing another signature, it does not necessarily mean that the former was a traced copy of the latter. It really depends on the superimposability of the former on the latter. Also to establish tracing, the indentations found must necessarily correspond closely with the suspected model signatures. Both Mr Cheng and Dr Wong agree to these propositions.

72.  To assess the superimposability of the indented signatures (Q4 and Q5) on Memos 4, 5C and 6C and the proximity between the indentations and suspected model signatures, Dr Wong conducted tests and measurements in court, which consumed a great deal of time. For superimposability, the transparency copies of Q4 and Q5 and indeed all other questioned signatures were placed on top of the ESDA transparencies of Memos 4, 5C and 6C. Measurements of their correspondence and dissimilarities were recorded. Dr Wong could not explain satisfactorily why he did not undergo this exercise to prove tracing in his reports and merely accepted that it was his negligence.

73.  I do not think it is necessary to set out the findings here. Suffice it to say, it was clear that the superimposability of these questioned signatures was low. Dr Wong accepted that Q4 and Q5 could not be a complete match of the signatures found in Memos 4, 5C and 6C. It is also clear that the indented signature found in Memo 5C does not really correspond with Q5 and more importantly, the indentation does not actually correspond with the Q3 on Memo 5C either. It means that Q3 could not be the model signature for any traced signatures.  

74.  Mr Tze referred to an article of which Mr Cheng was a co-author. It was entitled “Forgery II- Tracing” published in Journal of Forensic Sciences, Vol.38, No.2, March 1993 at pp.413-424. The short point made by Mr Tze out of this article is that even a traced copy does not coincide the model signature precisely.

75.  I accept that Mr Tze’s submission is right. Indeed the focus of the article is to show that, as revealed in the test undertaken by the authors, in traced forgeries, the general shape and pictorial effect of the model were closely followed but details might be neglected. In other words, a traced forgery may not be able to superimpose completely on its model signature.

76.  However, in the present case, I agree with Mr Cheng that the differences were so significant that the questioned signatures could not possibly be created by tracing.   

77.  In addition, if Q4 and Q5 had been indeed traced forgeries, their naturalness would have inevitably been compromised with the presence of all the hesitation and measured indicators. On this issue, with my acceptance of Mr Cheng’s opinion, I am not at all convinced that they were traced copies of the signatures appearing in Memos 4, 5C and 6C or any other model signatures.

78.  Moreover, it is noteworthy that none of the indentations found in Memos 4, 5C and 6C coincides with sufficient proximity with the respective signatures appearing therein. It follows that none of them was ever used as the model signature for tracing. Dr Wong’s assertion of tracing has no evidential basis at all and is purely speculative.

79.  To sum up, I find the evidence of Mr Cheng reasonable and acceptable and I have little concern about the authenticity of the questioned signatures on their face. On the other hand, I am not convinced by the evidence of Dr Wong that any of the questioned signatures was prima facie a forgery.

80.  Bearing in mind that handwriting expert evidence is secondary to direct evidence of the parties to the relevant documents, I proceed to assess the evidence of Dr Ching and Madam Yip in regard to the creation of the controversial documents.

81.  Dr Ching explained why he created Memos 3, 4, 5 and 6. For Memo 3, it was his idea to produce the same to give Madam Yip some reassurance of his commitment to her that he would take care of her during her lifetime. However, Dr Ching was not serious about the purported properties exchange scheme recorded in Memo 3. He never intended to vest all his interest in the FG House in Madam Yip as he intended it to be his last home.

82.  For Memo 4, Dr Ching explained that it was created shortly after the acquisition of the BS Shop under the sole name of Madam Yip. It was a big investment and it is understandable that Dr Ching was eager to make it clear his contribution to this investment, his commitment to redeem the mortgage and his beneficial interest in the BS Shop. He was able to recall that it was created when they returned home after the dinner with the estate agent of Tin Shing Property Agency Co assisting in the transaction.

83.  For Memo 5, Dr Ching said that it was his idea that he had to reduce into writing certain financial matters. The purpose was to avoid any dispute between Madam Yip and him. It was created at the FG House and Madam Yip signed her name on two copies drafted by him.

84.  For Memo 6, the subject matter was the GP Shop. It was created at the FG House after a Christmas party held at the Restaurant in the midst of their dispute about the sale of the GP Shop at the FG House. Dr Ching maintained that he was concerned about the sale proceeds of the GP Shop as Madam Yip had previously claimed to be the sole owner of the property and that she confessed to him that she had used some of the sale proceeds for her investments in the stock and forex market. I note that Dr Ching was not cross-examined on these matters. Nor is there any rebutting evidence of Madam Yip in her witness statements.

85.  Dr Ching could recall that on each occasion when Memos 4, 5 and 6 were made in the bedroom of the FG House, he usually wrote all the contents of the document and then leave the same on the desk to let Madam Yip read and sign the same. The desk had some drawers and Dr Ching placed his documents including all the controversial documents in one of the drawers. He might not witness the signatures of Madam Yip on all such occasions. On each of such occasions, Dr Ching prepared an identical copy in his handwriting for Madam Yip to sign. After Madam Yip had signed it, he had it photocopied. Dr Ching kept the photocopy and gave Madam Yip the original copy.

86.  In cross-examination, Mr Tze’s major challenge was about the truthfulness of the contents of these documents. Madam Yip now denies the matters stated in the controversial documents. Admittedly, if these documents contained nothing but obviously unreal matters, on a balance of probabilities, Madam Yip should be reluctant to append her signatures on them. This would suggest that there is a higher probability that the questioned signatures were forgeries.  

87.  However, I am impressed by Dr Ching’s evidence in this respect. I do not expect he could now tell the minute details of the circumstances under which these documents came into being. Anyhow he was able to give more background details of the same spontaneously which to a large extent were agreed by Madam Yip. Examples include the dinner with the estate agent and the Christmas party at the Restaurant. 

88.  Moreover, in the course of his oral testimony in respect of the issue of authenticity, I was impressed by Dr Ching’s certainty and he did not strike me to be a forger. In fact, it is inherently improbable for him being an elderly doctor to forge one signature, which is a serious criminal act. The inherent improbability of his forging six signatures is even higher. I also accept the forceful submission of Ms Tsui that it is inherently improbable for a forger to forge two signatures on two separate documents containing the same contents. Whilst another copy would not give him any extra mileage, another forged signature would only expose him to a higher (and unnecessary) risk of his forgery being detected. This is an approach that the court is entitled to take for the purpose of examining the inherent probabilities: §390 of the Nina Kung case per Ribeiro PJ.  

89.  On the other hand, the evidence of Madam Yip in a large measure provides an easy answer to the question of authenticity. Her evidence is incredible and effectively represents a complete volte-face in her case of authenticity in total disregard of her own expert evidence.

90.  First, under cross-examination in respect of Q1, to make this court believe Dr Ching’s capability of forging her complex and highly personalized signatures, she told a strange story of her own volition in tears. She said Dr Ching excelled at forging signatures. In 1994, she once saw him forging the signature of Madam Wong in a legal document for the purpose of their divorce proceedings. Madam Wong actually did not want the divorce at all. On the strength of the document bearing the forged signature of Madam Wong, Dr Ching succeeded in procuring the divorce. She claimed that Madam Wong reported the forgery to the police subsequently.

91.  Dr Ching was desperate to destroy all evidence of his forgery. Dr Ching went so far as to dispose of the typewriter he used to type the contents of the document including the address bearing the forged signature of Madam Wong. On one occasion, Dr Ching and Madam Yip left home with the typewriter with a view to its disposal. In the end, they deliberately left it behind inside a train heading for Kowloon Station from Tai Wai Station.

92.  The account in itself is illogical and incapable of belief to start with. I cannot understand why Dr Ching had to desert the typewriter altogether when he created the forged signature by hand.

93.  Further, the actual experience and/skill of Dr Ching’s forgery must be relevant to and/or supportive of her allegation of forgery. There is no reason why Madam Yip would keep this material matter strictly to herself until cross-examination. She should have told her expert and her lawyers and she claimed to have told Dr Wong and her counsel. Dr Ching should have been cross-examined about his forgery experience and skill. Madam Yip should have mentioned the same in her witness statements and at the very least, in her evidence in chief. I cannot accept her new allegation.

94.  Secondly, under cross-examination, Madam Yip in passing mentioned that Dr Ching had asked her to sign on a stack of withdrawal slips of the Union Bank in advance. Upon further enquires, Madam Yip gave further details.

95.  She maintained that Dr Ching and she had brought home a few withdrawal slips home from the Union Bank and she had signed 6 to 7 blank withdrawal slips at Dr Ching’s request so that he could withdraw money from their account to make mortgage payment conveniently. Such withdrawal slips were placed inside a drawer. She said now she was very certain about this.

96.  She went on to say that after she heard the evidence of Dr Wong about the questioned signatures looked genuine (真跡) probably by reason of tracing, she kept thinking about it and it dawned on her that Dr Ching could have used those blank withdrawal slips bearing her signatures to make up all those controversial documents. In other words, the signatures appearing thereon, i.e. Q2, Q3, Q4, Q5 and Q6 were indeed her genuine signatures but she insisted that Memos 4, 5C, 5Y, 6C and 6Y were still forgery since the contents thereof were not really endorsed by her with her signatures.

97.  Madam Yip explained that she had come to this conclusion only a few days prior to her testimony but she had to wait for her turn to testify to disclose this to the court.

98.  I cannot accept her evidence. Madam Yip’s new story speaks volume for the lack of her own conviction in and also the validity of her allegations of forgery. All the expert analysis of the questioned signatures including her own expert was rendered an exercise in futility. It turns out that the authenticity of the questioned signatures is a non-issue at all despite her pleaded case.

99.  I cannot accept Madam Yip’s explanation that she genuinely recalled her true events in the wake of the reference by Dr Wong to the method of tracing and the words “真跡”. Dr Wong’s report was available in October 2011 and there Dr Wong also made reference to tracing. Madam Yip had more than two years before the trial to recall about her signatures on the blank withdrawal slips.

100.  Even if she actually did so only upon hearing the oral evidence of Dr Wong, given the importance and materiality of her new allegation, there is no reason why it was not put to Dr Ching when he was cross-examined before her own testimony. Nor is there any reason why she only waited until the middle of her cross-examination to reveal it for the very first time.

101.  I am mindful that her new allegation does not cover Q1 and it calls for separate consideration. As noted above, Memo 3 containing Q1 was written on a different piece of paper. Her evidence relating to the authenticity of Q1 again was not impressive. She could not explain why she did not expressly claim that it was a forgery in her pleadings. Nor did she do so in her witness statements. She merely observed that the contents of Q1 were unreasonable and unacceptable. She received a copy of Memo 3 from Dr Ching’s solicitors in October 2008. She reported forgery to the police in February 2009 about Q2 to Q6 but inexplicably her allegation did not include Q1. Her solicitors first raised the authenticity issue by their letter dated 15 November 2010 but again the accusation of forgery did not include Q1.

102.  Madam Yip put the blame on her legal advisors for all those omissions, and actually she did not hesitate to do so for many other omissions and inexplicable matters throughout her testimony. I fail to see how her legal advisors could be held responsible for her failure to allege to the police the falsity of Q1.    

103.  By reason of the foregoing, taking into account all the relevant evidence, expert and factual, and assessing their inherent improbability, I am firmly of the view that there is no real authenticity issue in respect of the questioned signatures (Q1 to Q6) and hence of all Memos 3, 4, 5C, 5Y, 6C and 6Y. I am satisfied that Dr Ching has discharged his burden of proof in respect of the genuineness of the questioned signatures in Memos 3, 4, 5C, 5Y, 6C and 6Y. I do not think the evidence of Dr Wong and Madam Yip is capable of raising any issue as to their authenticity.

104.  In his closing submissions, Mr Tze prays in aid section 69(a)(iii) & (vii) of the Crimes Ordinance, Cap.200 and submits that the Memos 3, 4, 5C, 5Y, 6C and 6Y can still be forgery even with the genuine signatures of Madam Yip if I accept that her evidence that she did sign the blank withdrawal slips. It follows that Dr Ching made use of such signed withdrawal slips to create such memos.

105.  I do not accept this submission. In the first place, I refuse to accept her evidence of signing the blank withdrawal slips. I cannot understand how such blank withdrawal slips could make it convenient for Dr Ching to make mortgage payments to the Union Bank. Such payments should be made by depositing money into their joint account in the Union Bank to be deducted by autopay or standing instructions and not by withdrawing money therefrom. The bank statements relating to their account with the Union Bank further negative her allegation. Also, this is simply not the pleaded case of Madam Yip. Dr Ching was never asked to meet this new case at all. Such a conclusion is not open to this court at all.

106.  Lastly, before leaving the issue of authenticity, I should point out that there remains a mystery as to why Q4 corresponded with the indented signature found on Memo 4. Q4 was purportedly appended to the original of Memo 5Y on 23 November 2003 whereas Memo 4 was created almost a year ago on 19 December 2002. This however does not alter my view on the issue of authenticity.

107.  It crossed my mind that Madam Yip’s allegation of her signing blank withdrawal slips might provide an answer to the mystery. Yet, I cannot really accept her allegation, as explained above. Even if I do so, there are still missing links to establish forgery and there can be other innocuous explanations. Since this allegation was not being properly raised by pleadings and investigated at trial, this court should not be tempted to speculate.

108.  Lastly I make it clear that I appreciate that the fact that Memos 3, 4, 5C, 5Y, 6C and 6Y are genuine documents does not mean that their contents are necessarily true and accurate. This is so even with the endorsement of the contents by Madam Yip’s signatures.

109.  Now I start my analysis of other factual disputes relating to the major debates involving landed properties and Dr Ching’s personal chattels. Only Dr Ching and Madam Yip are privy to these disputes. Dr Ching called four other witnesses to testify for him. Their evidence sought to establish that Madam Yip was a domineering wife of Dr Ching and that she took cash from the clinic of Dr Ching. It is clear that they had a very low regard of Madam Yip and Madam Yip actually accepts that she had taken cash from the takings of the clinic. Their evidence is of little assistance to me.

110.  Insofar as the evidence of Dr Ching and Madam Yip is concerned, in my fact-finding exercise, I bear in mind the following guidelines of DHCJ Au (as he then was) in Lee Fu Wing v Yan Po Ting Paul [2009] 5 HKLRD 513 at §53

“In assessing the credibility of a part’s case on a particular issue, … the Court should take into consideration the following:

(1) Whether the party’scase is inherently plausible or implausible;

(2) Whether the party’s case is, in a material way, contradicted by other evidence (documentary or otherwise) which is undisputed or indisputable;

(3) Where it is shown that a witness has been discredited over one or more matters to which he has given evidence using the above tests. This is relevant to the assessment of his overall credibility; and

(4) The demeanour of the witnesses.”

111.  Whilst I shall consider the inherent plausibility of their respective allegations separately, I would at the outset state my general observations about Dr Ching and Madam Yip as witnesses.

112.  Neither Dr Ching nor Madam Yip struck me as an honest and straightforward witness. They are intelligent and know their core contentions well. When they were unable to give satisfactory answers under cross-examination, they would be quick to reiterate their core contentions.

113.  Dr Ching was well educated and clear thinking notwithstanding his advanced age. He appeared to be an astute gentleman to me, making an effort, albeit at times contrived, to handle tricky questions under cross-examination. On the other hand, Madam Yip was prone to exaggeration and she did not really care what she had stated in her witness statements. Very often when she was asked to explain the inconsistencies between her witness statements and her oral testimony or contemporaneous documents, she did not hesitate to blame her group of lawyers (我班律師) and claim that she did not pay attention to the contents of her lengthy statements despite the statements of truth contained therein. Her allegation of forgery, which I find to be false, seriously undermines her credibility too. 

114.  The unreliability of their evidence is exacerbated by the fact that most of the relevant events took place a long time ago and their memory might have faded and/or coloured by their mutual resentment. Generally I deal with their (and in particular Madam Yip’s) oral evidence which is not supported by contemporaneous documents with great circumspection.

Property Issues

115.  I shall first deal with the landed properties. The central debate is about the beneficial ownership of the FG House, the BS Shop, the GP Shop and the CL Flat and hence all the rental income and/or sale proceeds generated from these properties.

116.  The FG House, the BS Shop and the GP Shop have been sold already. The net sale proceeds of the FG House and the BS Shop (in the sum of HK$3,563,689.26 and HK$26,965,946.00 respectively) have been deposited into this court pending determination of these proceedings. Except the FG House, which was registered in the joint names of Dr Ching and Madam Yip, both the BS Shop and the GP Shop (“Madam Yip’s Properties”) were registered under the sole name of Madam Yip. Bestview is the sole registered owner of the CL Flat.

117.  Dr Ching claims equal beneficial ownership in all of Madam Yip’s Properties and the CL Flat whereas Madam Yip denies his claim and further contends that she was the sole beneficial owner of the FG House on the strength of Memo 1 and Memo 2. Incidentally, Madam Yip seeks a declaration to the effect that the document is legal, enforceable and binding on the parties thereto in respect of Memo 1 and Memo 2.

118.  Hence, the dispute is about a non-registered owner claiming beneficial interests in a property against its legal title owner. Ribeiro PJ in Luo Xing Juan v Estate of Hui Shui See (2009) 12 HKCFAR 1, which concerned equitable rights alleged to have arisen in the course of a relationship between an unmarried couple regarding a property, set out the legal principles relating to this kind of dispute as follows:

“35. It is against this background that the alleged common intention constructive trust must be considered. As the line of cases commencing with Pettitt v Pettitt and Gissing v Gissing show, where beneficial interests arise in a domestic cohabitation context, equity converts the person in whom the property is vested into a trustee of that property for both parties. As Lord Diplock puts it in Gissing v Gissing:

“Any claim to a beneficial interest in land by a person, whether spouse or stranger, in whom the legal estate in the land is not vested must be based upon the proposition that the person in whom the legal estate is vested holds it as trustee upon trust to give effect to the beneficial interest of the claimant as cestui que trust.”

36. This is so in cases where a resulting trust arises by virtue of the claimant’s contribution in money or in some other way towards the property’s acquisition. Equity holds the legal owner to be a trustee of that property for the claimant in an appropriate share, giving effect to the parties’ presumed intention.

37. It is also the case where a constructive trust is imposed. Equity attaches the conscience of the legal owner and attributes to the claimant an appropriate beneficial interest in the property. As Millett LJ pointed out in Paragon Finance plc v D B Thakerar:

“A constructive trust arises by operation of law whenever the circumstances are such that it would be unconscionable for the owner of property (usually but not necessarily the legal estate) to assert his own beneficial interest in the property and deny the beneficial interest of another.”

38. Where a constructive trust is alleged to arise on the basis of the parties’ common intention, it is the intention commonly held by the property owner and the claimant regarding their shared beneficial interests in the property that matters. The trust is constituted by the claimant’s detrimental reliance on their common intention and the unconscionability of the property owner departing therefrom.

119.  I also take heed of the warning of Riberiro PJ (at §34) against transforming a company’s interest in a property into the interest of a trustee solely on the basis of a constructive trust resting on the couple’s common intention. It was also highlighted that the basic proposition is that a shareholder has no legal or equitable interest in the company’s property.

120.  The common intention, or the agreement, arrangement or understanding, between the parties may be based on express discussions between them or inferred from their conduct: Mo Ying v Brillex Development Limited and Anor. [2014] 3 HKLRD 224 at §§37-40 per DHCJ Eugene Fung SC adopting Lloyds Bank Plc v Rosset [1991] 1 AC 107 at 132E-133B per Lord Bridge and Oxley v Hiscock [2005] Fam 211 at §§47 and 68 per Chadwick LJ.

121.  Finally, the House of Lords in Stack v Dowden [2007] 2 AC 432 expounded the legal principles regarding a common intention trust. The following are apposite.

122.  At §68, Baroness Hale said this:

“The burden will therefore be on the person seeking to show that the parties did intend their beneficial interests to be different from their legal interests, and in what way. This is not a task to be lightly embarked upon. In family disputes, strong feelings are aroused when couples split up. These often lead the parties, honestly but mistakenly, to reinterpret the past in self-exculpatory or vengeful terms. They also lead people to spend far more on the legal battle than is warranted by the sums actually at stake. A full examination of the facts is likely to involve disproportionate costs. In joint names cases it is also unlikely to lead to a different result unless the facts are very unusual.”

123.  At §138, Lord Neuberger in his dissenting judgment said this:

“The fact that the ownership of the beneficial interest in a home is determined at the date of acquisition does not mean that it cannot alter thereafter. … it seems that ‘compelling evidence’ is required before one can infer that, subsequent to the acquisition of the home, the parties intended a change in the shares in which the beneficial ownership is held. Such evidence would normally involve discussions, statements or actions, subsequent to that acquisition, from which an agreement or common understanding can be inferred.”

124.  I now turn to ascertain the beneficial ownership in the subject properties with these legal principles in mind.

The FG House

125.  The first property is the FG House and Madam Yip has to persuade this court why she alone had the beneficial interest in the property though it was registered in the joint names of Dr Ching and her.

126.  On this issue, I make the following observations and factual findings:

(A) Both Dr Ching and Madam Yip made contribution to the down payment. The initial deposit of HK$200,000 was paid by Dr Ching.

(B) Dr Ching and Madam Yip did have financial difficulties in raising the entire down payment. This resulted in the postponement of the completion date thereby incurring extra costs of renting the FG House pending completion. Madam Yip eventually raised fund by causing a further charge to be made on her Flat 2G in favour of the United Chinese Bank Limited.

(C) I do not accept Dr Ching’s allegation that he from December 1993 to July 1994 made a monthly payment of HK$30,000 to Madam Yip for saving purposes and hence the contribution of Madam Yip to the down payment should be deducted by the total savings in the sum of HK$240,000. Madam Yip admitted that she had received such sums from Dr Ching as accommodation charges. I too cannot accept this. They then had just started their intimate co-habiting relationship and I believe as a doctor with an established practice, it is probable that Dr Ching paid her as general household expenses.

(D) I do not accept that Madam Yip made any loans to Dr Ching for the purpose of buying the FG House. Dr Ching and Madam Yip merely pooled their financial resources together to secure a luxurious flat as their home. As Madam Yip accepted, Dr Ching loved her so much that he wanted to buy a flat and marry her. The FG House was clearly intended to be their family home. In fact, Madam Yip accepted that she was known to be Mrs Ching in the FG property among its security guards.

(E) I accept that Dr Ching might have exaggerated to Madam Yip his wealth including the value of his treasure collections (banknotes and stamps, etc.) and the debt owed to him in a legal action in Canada. Probably he wanted to assure Madam Yip that his financial predicament was only short-term and he was a man of means. I however did not believe he actually asked Madam Yip for loans. Madam Yip had made no record whatsoever of the alleged loans (not in any one of the Memos) and over the years she never attempted to recover them.

(F) I have no idea as to the exact amounts which Dr Ching and Madam Yip respectively paid towards the down payment of HK$4.2 million. The answer cannot be found in contemporaneous documents and I do not find the parties’ evidence in this regard reliable. Their contributions could be unequal and I am satisfied that Madam Yip’s contribution was also substantial.

(G) I accept that Dr Ching and Madam Yip did intend themselves to be the equal beneficial owners of the FG House. Their intention was fully and truly reflected by the joint tenancy.

(H) I am not satisfied that there is sufficient and compelling evidence adduced by Madam Yip to establish that there was a post-acquisition change in the beneficial ownership agreed or commonly intended by Dr Ching and Madam Yip.

(I) It is not in dispute that Dr Ching was liable to repay the mortgage repayments throughout the years and he alone did so except that Madam Yip paid thirteen monthly payments of HK$18,000 towards the end.

(J) Madam Yip relies on Memos 1 and 2. I do not think they can assist her. For Memo 1, Dr Ching purportedly agreed to transfer his legal title to Madam Yip after completion. To begin with, this agreement did not make much sense as the legal title had not been vested in him at that time. Hence, he did not have to wait until completion to make Madam Yip the sole registered owner by any transfer of title. It appeared to be more like a sweet talk than a serious and binding agreement. Neither Dr Ching nor Madam Yip did anything to rectify the legal title to the FG House over a decade. Madam Yip explained that she thought she could rely on the treasured collections of Dr Ching and that she merely wanted to save legal expenses and stamp duty that would be incurred in a transfer. I do not believe that she could be that simple-minded, particularly given her allegation that she already discovered the low value of the stamp collections kept by her as security in or about 1996.

(K) For Memo 1, I make it clear that I do not accept Dr Ching’s explanation that the contents were suggested to him by Madam Yip so as to fend off the harassment by Madam Wong. I refuse to accept his explanation that all the wordings came from Madam Yip and he merely dictated them on this document. I find his explanations absurd and incredible. Such contents could hardly serve the purpose. The legal ownership of the FG House was irrelevant if Madam Wong intended to cause nuisance to Madam Yip and/or Dr Ching in occupation of the FG House. I too do not understand, and Dr Ching could not explain, in what way the wordings were so ungrammatical and/or strange that they could not have been originated from him as he alleged.

(L) I do not find Memo 2 legally binding and enforceable, either. First of all, it acknowledged the equal ownership of the FG House at the outset, thereby negating any alleged legal effect of or any intention purportedly evinced by Memo 1. Though on the face of it, Dr Ching relinquished all his interests in the FG House and Madam Yip would become its sole owner, again I do not find Dr Ching to have intended this document to have any contractual force or legal effect. Indeed Dr Ching has never done anything to give up his beneficial interests up till its compulsory sale in 2009 pursuant to Memo 2. Nor has Madam Yip done anything to secure his half share of the FG House for no plausible reason. On balance of probabilities, it was again the sweet talking of Dr Ching only.

(M) I also reject Dr Ching’s similar explanations about the creation of Memo 2 for the same reason in respect of Memo 1.

(N) If Memos 1 and 2 were of any legal effect or embodied any agreement and/or intention of Dr Ching’s to give up his interests, there was no reason why Madam Yip did not show them to Mr Lee for his preparation of the POA.

(O) Further, even in the preamble of the POA, executed shortly after Memo 2 was created, it was clearly stated that Dr Ching was one of the beneficial owners as joint tenants of the property. There was no reason why Madam Yip still acknowledged Dr Ching’s beneficial interests instead of taking the chance to make it clear that he was merely her trustee holding half share of the property for her.

(P) In Memo 3, it was recorded that Madam Yip suggested that she would exchange Flat 2G and Flat 19B with Dr Ching’s half share of the FG House. I accept that it was indeed her suggestion though it might not be genuine. There was no follow-up action taken by the parties at all. Nevertheless, it shows that Madam Yip again accepted that Dr Ching had half share in the FG House.

(Q) Even in her tax return filed in May 2004, Madam Yip accepted that she only had 50% interest in the FG House.

(U) The GC 1^st Loan was used to redeem the mortgage with the SC Bank. I cannot accept any balance of the GC 1^st Loan belonged to Madam Yip absolutely. It was raised by a charge on the FG House and both Dr Ching and Madam Yip were in law liable to repay the GC 1^st Loan. I accept that Dr Ching required the sum of HK$150,000 for the specific purpose of mortgage repayment of the FG House and I cannot accept that the said sum was a personal loan extended to him by Madam Wong. The balance of HK$1,527,162.02 (“the 1^st Fund”) was paid to Madam Yip but was not meant to be owned by her absolutely.

127.  In the premises, I reject Madam Yip’s allegation that she was the sole beneficial owner of the FG House. Both Dr Ching and Madam Yip bore the legal obligations to repay all those mortgages/charges (though in fact Dr Ching alone made almost all the repayments) in respect of the FG House. I hold that all monies raised by such mortgages/charges including all the GC loans could not possibly be solely owned by Madam Yip as claimed. Dr Ching and Madam Yip should have equal shares in all such monies.

The BS Shop, the GP Shop and the CL Flat

128.  Dr Ching relies on the Investment Agreement in his pleaded case relating to his alleged beneficial interest in Madam Yip’s Properties. The Investment Agreement was orally made in or about 2000 at the FG House in the course of his discussion with Madam Yip about property investment. Dr Ching also pleads that the Investment Agreement was their understanding in anticipation of a life-long relationship. It consists of the following terms:

(1) in order to prepare for the retirement of Dr Ching and maintain the living of Dr Ching and Madam Yip after retirement, Dr Ching and Madam Yip were to jointly make investment in the property market;

(2) the funds required for the investment were to be raised by re-financing of the FG House, or from the rental income of the properties acquired for investment and the income of Dr Ching (“the Investment Funds”), and if necessary, from Madam Yip’s money;

(3) Dr Ching and Madam Yip were jointly to decide on the property to be acquired for the investment, the time when the acquired property to be sold, and how the proceeds of sale thereof were to be utilized or dealt with for further investment purpose;

(4) the proceeds of sale of the investment properties should be reserved for further investment;

(5) as Dr Ching was approaching retirement age, it was difficult for him to obtain mortgage from banks. The investment properties would be acquired in the sole name of Madam Yip to hold on trust for Dr Ching and Madam Yip;

(6) Dr Ching would employ Madam Yip as a nurse assistant of Dr Ching so that she could have income proof, if required, for making mortgage application to banks; and

(7) Dr Ching and Madam Yip shall be beneficially entitled to the properties acquired for investment and the rental income and the proceeds of sale of such properties in equal shares.

129.  Dr Ching’s case is that Madam Yip’s Properties and the CL Flat were purchased pursuant to this understanding embodied in the Investment Agreement mainly with the funds obtained from further mortgages/charges of the FG House and rental income and sale proceeds of Carpark 41 and sales proceeds of Shop 102.

130.  I believe that in or about 2000, Dr Ching did consider Madam Yip his life-long lover in light of his advanced age. Given their imitate relationship, it was probable that they had discussion about joint investments. I find that on a balance of probabilities, Dr Ching and Madam Yip had a discussion about joint investment in landed properties. I agree that Dr Ching might have practical difficulties in securing mortgage since he was almost 70 years old and it would be easier for Madam Yip with a modest income to do so. All in all, I find the terms of the Investment Agreement fair and reasonable in all the circumstances.

131.  I accept that they had the understanding in terms of the Investment Agreement though I am not sure whether the parties expressly conclude the Investment Agreement orally. Yet this is not essential. As will be explained below, I accept that they certainly by their conduct carried out their investment plan in accordance with the understanding set out in the Investment Agreement. I thus conclude that Dr Ching’s case of the Investment Agreement is inherently plausible and acceptable.

132.  Now I turn to the acquisitions of the properties in the wake of the Investment Agreement. In my fact-finding exercise in relation to the tracing of the actual sources of purchase prices, I am considerably handicapped by the inadequacy of contemporaneous documents such as the relevant bank statements to prove how the purchase prices were raised. The parties have not produced to me the full picture of their financial condition showing their respective incomes and expenditures throughout the relevant period.

133.  I have serious reservation about the financial soundness of Madam Yip prior to 2007. She held out to have substantial means. She had three properties at Manlai Court immediately before her co-habitation with Dr Ching and she had rental income. However, her bank statements produced by her do not suggest that she enjoyed wealth. She added that she also invested heavily in the stock and forex markets. She said once she lost hundreds of thousands on one single trading day. That may explain why she could not retain impressive credit balance in her bank statements.

134.  Since their relationship started, Madam Yip had not been in gainful employment until she was employed by Dr Ching as a nurse assistant with a monthly income of HK$10,000 pursuant to the Investment Agreement. On the other hand, the Restaurant operated by Madam Yip from September 2004 to March 2008 did not yield much revenue, as shown in the tax returns filed. Madam Yip accepted that she operated the Restaurant just for fun and not for profit.

135.  Dr Ching has all along practised as a doctor. He even for some time operated a night clinic. His tax returns show that from 1995/1996 to 2006/2007, his average net annual income was about HK$200,000 only. In light of this, I cannot understand Dr Ching’s allegation that Madam Yip managed to take away from the earnings of his clinic in the sum of HK$45,000 per month.

136.  Dr Ching in addition explained that he took part in trading of his treasure collections and he made sizeable profits. However, he claimed that he kept no record of such trade. There is no documentary evidence to prove such trade and hence his profits at all. I am unable to accept the alleged profit he made.

137.  Dr Ching is always in debt. He borrowed money from, among other persons, his former nurse, Ms Choi, and his sister and he has not yet repaid them. Both of them testified for him anyhow. I too have serious doubt about his financial soundness.

136.   In the circumstances, I derive particular assistance from Memos 4, 5 and 6. They are contemporaneous statements throwing light on the source of the purchase price of the GP Shop and the BS Shop. I am reluctant to rely on Madam Yip’s evidence in this respect unless it is supported by cogent documentary evidence especially on account of my low opinion of her general credibility.

137.   Looking at the evidence in the round, I have the following observations and findings in respect of the BS Shop:

(A) I accept Dr Ching’s evidence that Carpark 41 was purchased by the use of the 1^st Fund out of the GC 1^st Loan in September 2001 in the joint names of Dr Ching and Madam Yip. This is apparently inconsistent with the Investment Agreement. Nevertheless, I note that it was purchased without the assistance of a mortgage and I accept Dr Ching’s explanation that he had to be one of the registered owners of the carpark space of Fuk On Garden so as to entitle him to hang up the signboard of his clinic outside the external wall.

(B) Madam Yip claimed that she used her own fund of HK$410,000 (inclusive of estate agent commission and legal expenses) to purchase Shop 102 in April 2002 in a forced sale. Indeed she accepted that her alleged own fund came from the 1^st Fund.

(C) Relying on Memo 4, I accept that the BS Shop was purchased with the 1^st Fund and Madam Yip agreed that she held it on trust for Dr Ching. I also accept Dr Ching’s evidence that he was responsible for paying the mortgage payment with the assistance of the rental income yielded from the partitioned units.

(D) I accept Dr Ching’s evidence that he wanted to give Madam Yip a shot in the arm that he was even willing to sell his treasured collections so as to redeem the mortgage within 3 years. Whether he could actually make such profits out of the sale is immaterial. I also accept Dr Ching’s evidence that he dealt with the previous owner of the BS Shop through Tin Shing Property Agency Co for the purpose of the acquisition pursuant to the Investment Agreement and eventually he himself paid the agent commission by his personal cheque. He was eager to have his payment of commission acknowledged by Madam Yip in Memo 4.

(E) For completeness, I do not accept that Dr Ching’s allegation that there was an oral tenancy agreement made between Madam Yip and him that she had to pay the market rent of HK$45,000 per month for the Restaurant’s use of the BS Shop and the same would become the Investment Funds. There is no reason why Dr Ching did not reduce this agreement into writing so that Madam Yip could have no quarrel about her contractual obligation.

(F) Further I note that in the tax returns filed by the Restaurant, no rental payment was reported as expense of its business operation. It defies commercial sense and harms the financial interest of her business if Madam Yip did have to pay rent for the Restaurant pursuant to the oral tenancy. This is another reason why I do not accept the alleged oral tenancy.

(G) I accept that pursuant to the Investment Agreement, Madam Yip holds the rental income of the BS Shop on trust for both Dr Ching and herself. It is accepted that there were tenancies from April 2008 to early January 2011. The first and the only known one was granted to Fulsmart Foods Company Limited for its Japanese restaurant operated under the trade name of大作居酒屋. Madam Yip must be accountable to Dr Ching for his half share of all the rental income of the BS Shop.      

138.  Mr Tze makes a thorough calculation of all the alleged uses of the 1^st Fund and comes to the conclusion that the balance of the 1^st Fund could hardly cover the down payment for the purchase of the BS Shop in the sum of HK$1.28 (and not HK$1.3 million as stated in Memo 4). He also highlights that Dr Ching firstly got the amount of the cash rebate from the SC Bank wrong. It should be HK$95,000 and not HK$350,000. Mr Tze is quite right.

139.  However, I do not think the inaccuracies of such figures are suggestive of any dishonesty on the part of Dr Ching and they certainly cannot dilute the effect of the acknowledgement made by Madam Yip as to the source of the fund for down payment of the BS Shop. Though the figure might not be exact, and I accept that the 1^st Fund could not fully cover the acquisitions of Carpark 41 and Shop 102 and the down payment for the BS Shop, Memo 4 does show that the parties agreed that a substantial part of the down payment indeed came out of the 1^st Fund and that Madam Yip would be the trustee for Dr Ching for his half share in the BS Shop.

140.  In regard to the GP Shop, I have the following observations and findings:

(A) It is not in dispute that the GP Shop was acquired with a sitting tenancy. It yielded sufficient rental income (about HK$15,000 per month) to cover all the monthly mortgage repayments to the BA Bank (about HK$13,000) until the GP Shop was sold. The debate is about the source of the monies for down payment.

(B) I reject Madam Yip’s evidence that she alone paid the down payment in the sum of HK$705,000 out of her savings in December 2003. There is not a shred of evidence of her alleged savings at all. The bank statements of Madam Yip referred to me by Mr Tze in his closing submissions do not really evidence the alleged savings.

(C) I accept that more likely than not, the said sum came from the balance of the 1^st Fund (if any), the cash rebate of the SC Bank, the sale proceeds of Carpark 41 (HK$260,000) and the rental income thereof before it was sold in September 2003 and/or other remaining balance of the Investment Funds as pleaded. I am aware that equally there is no documentary proof adduced by Dr Ching (save Memo 5) in this regard but I believe it is more probable that the down payment was raised by such funds intended for investment purpose rather than Madam Yip’s own fund.

(D) I accept the explanation of Dr Ching as to the purpose of Memo 5. By this document, Dr Ching wanted to show Madam Yip that there should be sufficient Investment Funds to purchase the GP Shop, which seemed to be a good investment to him. He set out all the possible incomes in Memo 5 to give Madam Yip encouragement and reassurance.

(E) That being the case, the validity of those figures in fact, though properly and skillfully challenged by Mr Tze, is not really material.

(F) Madam Yip also accepted that Dr Ching indeed contacted some estate agents over the phone with a view to a sale of the GP Shop. He even set the asking price. There is no evidence that Madam Yip ever stopped him from doing so. In fact, this dovetails with the terms of the Investment Agreement in that he though not being the registered owner would also decide on the sale of the investment properties.

(G) Lastly, in Memo 6, Madam Yip confirmed that the sale proceeds of the GP Shop had to be applied to redeem the mortgage in respect of the FG House in accordance with the Investment Agreement. It follows that Madam Yip agreed that the GP Shop was necessarily purchased pursuant to the Investment Agreement as their joint investment.

(H) However, no valuation evidence was adduced with respect to the market price of the GP Shop. I have no basis to conclude that Madam Yip sold it at an undervalue and hence I am not convinced that Dr Ching has suffered loss as a result of an undervalue sale.

(I) Madam Yip accepted that she had used the sale proceeds in the sum of HK$4 million in her own investment activities in Memo 6. She is clearly accountable to Dr Ching for his half share of the trust money.

(J) Lastly I am not satisfied that because of the failure of Madam Yip to account for the sale proceeds of the GP Shop, the FG House was to be compulsorily sold by the mortgagee bank at an undervalue. The causal link cannot be established to my satisfaction. In any event, there is no expert evidence to prove that the FG House was indeed sold at an undervalue.

141.  I do not find this issue to be easy. Yet, given my finding for the actual existence of the Investment Agreement and the intimacy of their relationship in 2003, it was inherently improbable that Madam Yip would invest in a real property with her own monies in breach of the Investment Agreement. The two Memos could lend support to the case of Dr Ching too.

The CL Flat

142.  Dr Ching claims that there are additional Investment Funds to finance the purchase of the CL Flat, all of which were further loans granted by GC secured by the FG House. First, on 26 November 2004, there was a further loan of HK$528,196.36 (“the GC 2^nd Loan”). It became the 2^nd Fund pursuant to the Investment Agreement. The entire 2^nd Fund has been kept by Madam Yip.

143.  Second, on 28 July 2006, a further loan of HK$603,844.20 (“the GC 3^rd Loan”) was granted for investment purpose and it became the 3^rd Fund. Half of the 3^rd Fund was retained by Dr Ching to pay the mortgage of the FG House. The balance of about HK$300,000 has been kept by Madam Yip.

144.  Lastly, a loan of HK$600,000 (“the GC 4^th Loan”) was granted on 27 September 2007 and it became the 4^th Fund. Again, half of the 4^th Fund was kept by Dr Ching to pay the mortgage of the FG House. The balance of HK$300,000 has been kept by Madam Yip.    

145.  I accept that as with the 1^st Fund, the 2^nd Fund, the 3^rd Fund and the 4^th Fund are trust monies pursuant to the Investment Agreement and Madam Yip holds the balance of the same on trust for both Dr Ching and Madam Yip herself in equal shares as a trustee. Madam Yip cannot misuse the same for her personal purpose in breach of trust. She must be liable for any damages arising from her breach of trust.

146.  Returning to the ownership of the CL Flat, however, I am not satisfied that Dr Wong is entitled to half share of its beneficial interest pursuant to the Investment Agreement for the following reasons.      

(A) Firstly, I refuse to accept Dr Ching’s allegation that the GC 2^nd Loan was procured in November 2004 for the specific purpose of acquiring the CL Flat. I cannot accept that they finally agreed with Mr Tong who was their singing instructor on the purchase price of HK$2 million after negotiation for over two years. Whether or not Dr Ching knew him personally right from the beginning as alleged by Dr Ching is irrelevant. The alleged marathon negotiation in a volatile property market simply defies common sense. If Mr Tong’s evidence is helpful to his claim, I see no reason why Dr Ching has not asked him to testify for him.

(B) Bestview was a shelf company purchased by Madam Yip for the specific purpose of acquiring the CL Flat. As accepted by Madam Yip, the name of Bestview was actually chosen by Dr Ching.

(C) The Investment Agreement did not cover any common intention to acquire a property in the sole name of an incorporated company. This is not determinative though.

(D) Dr Ching could not have been misled by Madam Yip into believing that he had become a 70% owner of Bestview. He had previous experience of being a shareholder. He knew that to acquire shares he had to sign certain legal documents such as an Instrument of Transfer and Bought and Sold notes. He was asked to sign to give his consent to act as the company secretary of Bestview and he should be aware that he had not yet signed any documents to become its shareholder. I cannot believe that he only found out he was neither a shareholder nor a director in March 2008.

(E) I accept Madam Yip’s evidence that at that time in early 2007, despite Dr Ching and Madam Yip still resided together, their relationship had already deteriorated and Madam Yip wanted to cut her ties with Dr Ching. The basis of the Investment Agreement, that is, a life-long relationship, had already gone.

(F) I accept that Madam Yip did not intend the CL Flat to be a joint investment item with Dr Ching. Her clear intention was to terminate her relationship with Dr Ching and to reside separately at the CL Flat on her own though she told Dr Ching that the CL Flat was closer to the Restaurant and hence it was more convenient to her. It was an excuse. On the other hand, Dr Ching’s evidence was that he preferred to stay at the FG House alone for better air. Their relationship was clearly broken. I see no basis to form their common intention to further invest on landed properties.

(G) More importantly, there is no cogent evidence of Dr Ching’s financial contribution to the acquisition of the CL Flat. Nor can I infer that any of the Investment Funds were applied to the purchase price.

(H) On the contrary, Madam Yip’s assertion that the purchase price was raised by her withdrawal of a sum of HK$500,000.00 from her fixed deposit on 12 February 2007 and by a further charge on Flat 19B and a mortgage on the CL Flat in favour of GC is supported by banking documents. Her evidence is credible. This is so even though the initial deposit of HK$100,000 (prior to 7 February 2007) and the further deposit of HK$100,000 (paid on 7 February 2007) were paid before her said withdrawal.  

(I) Dr Ching failed to adduce any supporting evidence to substantiate his allegation that the renovation expense of the CL Flat was funded by him.

(J) In the premises, I hold that the CL Flat does not fall within the Investment Agreement and was not acquired by Bestview with any Investment Funds. There is nothing to constitute Bestview a trustee for Dr Ching and Madam Yip.

147.  By reason of the foregoing matters, I hold that Dr Ching has no beneficial interest in the CL Flat. His claim against Bestview must fail.

Trespass on Personal Chattels

148.  As rightly pointed out by Mr Tze, the case of Dr Ching in respect of this complaint is ever-changing. His evidence is tenuous too and I am reluctant to rely on his impaired recollection of his properties allegedly being retained by Madam Yip. It seems that Ms Tsui is now happy to insist on the stamp album only. The stamp album was referred to in Memo 3.

149.  Dr Ching said it contained invaluable stamps of HK$6 million worth.  Madam Yip disagreed and said after a professional valuation it was found out, to her utmost disappointment, that it was only worth HK$3,000. It is now placed in her safe.

150.  The actual worth of the stamp album is quite irrelevant. Madam Yip insists on retaining the same because it was given to her as a security for the 1^st Loan. In other words, she claims a lien on the stamp album.

151.  In light of my finding that there was no such loan, Madam Yip clearly has no legal right to hold on to the stamp album. She must return the same to Dr Ching through her solicitors forthwith.

Madam Yip and Bestview’s Counterclaim

152.  Though Bestview makes no claim in the counterclaim, it is a joint counterclaim. Their counterclaim can be disposed of briefly in light of my foregoing findings.    

153.  Madam Yip alleged that the 2^nd Fund, the 3^rd Fund and the 4^th Fund were lent to Dr Ching as the 3^rd Loan, the 4^th Loan and the 5^th Loan for him to make the mortgage repayments of the FG House/BS Shop. Those funds should be applied to make mortgage repayments in respect of such properties purchased pursuant to the Investment Agreement to start with. They were not the personal properties of Madam Yip. She could not have granted the alleged loans at all with those 2^nd Fund, 3^rd Fund and 4^th Fund. The cheques issued by Dr Ching as security for the alleged loans were only extorted from him. They cannot justify the alleged 3^rd, 4^th and 5^th Loans which Madam Yip was never in a position to extend.

154.  I hold the same view for her loans allegedly coming from her own savings and secured by the cheques of Dr Ching, i.e. the 6^th Loan purportedly granted to him on divers dates from 2004 to 2007 as pleaded. I am not persuaded by credible evidence that Madam Yip actually lent Dr Ching money other than the Investment Funds.

155.  Lastly, insofar as those loans extended to Dr Ching by one Ms Chow evidenced by two IOUs are concerned, I refuse to accept the evidence of Madam Yip that she was the real lender and she only used Ms Chow as a front to give Dr Ching more pressure to repay her. I refuse to accept her allegation in the absence of any corroborative evidence of Ms Chow.

156.  The allegation of the 7^th Loan in the pleading seems to have been abandoned. So does the allegation of Dr Ching’s wrongful detention of the photo album of Madam Yip. I have heard no submissions on these allegations. I do not think that they are substantiated by any credible evidence anyway.

Conclusions and Orders

157.  In summary, I hold that the BS Shop and the GP Shop were purchased pursuant to the Investment Agreement. Dr Ching thus has half beneficial interests in these two properties. I allow Dr Ching’s claim in respect of these two properties.

158.  In respect of the CL Flat, I dismiss Dr Ching’s claim against Bestview in its entirety.

159.  I also make an order that Madam Yip do forthwith deliver up to Dr Ching his stamp album. Or alternatively, damages for trespasses to be assessed.

160.  I further dismiss the counterclaim of Madam Yip and Bestview.

161.  There is no reason why costs should not follow the event. I make an order nisi that Madam Yip do pay Dr Ching his costs of this action including the counterclaim.

162.  Madam Yip’s singularly unmeritorious allegations of forgery warrant this court’s strong disapproval. It is a complete waste of time and indeed an abuse of process. I have been given to understand that Dr Ching is still under criminal investigation regarding Madam Yip’s allegations of forgery. No doubt his legal advisors should let the police know my findings on the issue of authenticity as soon as possible so that their investigation may take a new direction.

163.  In the premises, I believe it is appropriate to order Madam Yip to pay Dr Ching’s his costs relating to the authenticity issue including his expert expenses on an indemnity basis.

164.  Lastly, I make an order nisi that Dr Ching do pay Bestview its costs of this action.

165.  It remains for me to extend my apology for having taken unexpectedly long time to make this Judgment available and for any extra anxiety so caused to the parties. I have been ably assisted by the meticulous and comprehensive written submissions of both Ms Tsui and Mr Tze. I thank both counsel for their invaluable assistance and helpful submissions too.