LAW MAN WAI v. KWAN SAU SIM

HCA 2307/2009 & HCA 143/2010
(Heard Together)

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

HIGH COURT ACTION NO 2307 OF 2009

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J U D G M E N T

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A. INTRODUCTION AND PARTIES

1. The protagonists in these actions are Mr Law Man Wai (羅文蔚, “Wai”) on the one hand, and Mr Lo Man Kam (羅文錦, “Kam”) and his wife Madam Kwan Sau Sim (關秀嬋, “Sim”) on the other.  Wai and Kam are first cousins.

2. Wai commenced HCA 2307 of 2009 against Sim for, inter alia, a declaration that Sim holds on trust for him two properties purchased in her name (collectively “Properties”), namely:

(i)     Shop 7 on Ground Floor & Lavatory marked “27” (No. 27 Cannon Street), Hoi To Court, Nos 271-275 Gloucester Road and Nos 15-27 Cannon Street, Hong Kong (“Shop”); and

(ii)    Flat E, 14/F Fung Yip Building, Nos 347-349 Des Voeux Road West, Hong Kong (“Fung Yip Flat”).

3. Sim’s case is that she is and has always been the beneficial owner of the Properties. Although there is no dispute that Wai first paid Kam and Sim $8.3 million, and Sim used the money received from Wai to pay for the purchase of the Properties, why Wai paid Kam and Sim the $8.3 million in the first place is hotly in dispute. Sim’s and Kam’s case is that Wai held on trust for Kam monies which were gifted to Kam and Wai jointly by their 6^th aunt, the late Madam Lo Pui Kau (羅佩球, “6^th Aunt”), and the monies used to purchase the Properties were part of Wai’s payment (or repayment) of Kam’s entitlement under that gift (“6^th Aunt’s Gift”).

4. Kam’s claim against Wai for an account of 6^th Aunt’s Gift is the subject matter of HCA 143 of 2010.  In essence, Kam’s case in relation to the 6^th Aunt’s Gift is that in around 1999, 6^th Aunt transferred various sums of money to Wai for the express purpose of holding the monies for the benefit of Wai and Kam jointly. Kam claims that based on information given to him by Wai, the total sum transferred by 6^th Aunt to Wai for this purpose was about $30 million or $35 million in principal. Between 2000 and February 2009, Wai had transferred to Kam and Sim (there is no dispute for this purpose that payments made to Sim are to be treated as payments to Kam) a total of some $18.6 million, inclusive of the amounts used to pay for the purchase of the Properties and by way of transfer of another property to Sim. Kam seeks an account from Wai of 6^th Aunt’s Gift and the balance which is properly due to him.

5. Wai disputes the 6^th Aunt’s Gift. His case is, in essence, that the monies given to him by 6^th Aunt - Wai says the total sum was about $28 million only - was for his sole benefit, and the payments he had made to Kam and Sim over the years were his gifts to Kam and Sim.

6. The main issues for determination are:

(i)     Whether Wai held on trust for Kam monies transferred to him by 6^th Aunt, and if so whether Wai is liable to account to Kam for any balance which is properly due to Kam; and

(ii)    Whether Wai is the beneficial owner of the Properties purchased in Sim’s name.

7. Mr Albert Yau, who appeared on behalf of Kam and Sim, opened the trial on the basis that the critical issue is to ask whether 6^th Aunt intended to gift her monies to Wai solely or to Wai and Kam jointly. He accepted that the burden was on Kam to prove the 6^th Aunt’s Gift.

8. Ms Margaret Ng, counsel for Wai, did not dissent from Mr Yau’s proposition. Her contention was that if Kam and Sim fail to prove that Wai held on trust for Kam money gifted by 6^th Aunt, the issue of the purchase money would largely resolve in Wai’s favour. Ms Ng did not dispute that the 6^th Aunt’s Gift, if proved, did not constitute a valid trust.

9. Both sides have produced schedules of payments (including bank transfers) between Wai and Kam/Sim. The dates and amounts are largely in agreement. The dispute is in the nature of the transfers and payments. Thus counsel agreed that the two actions stand or fall together.

B.   BACKGROUND TO THE DISPUTE

10. Unless otherwise stated, the background leading to the present dispute recounted in paragraphs 11 to 32 below are largely based on Wai’s witness statements and are not in dispute.

B(1).  6^th Aunt and 5^th Aunt

11. A convenient starting point would be 6^th Aunt. She was born in 1913 or 1914 to a well-to-do family in Macau.  Her father Mr Lo Choi Sang (羅載生), the patriarch of the family, ran a prosperous business called Tai Seng Lee (大生利) selling, amongst other things, household goods and provisions. The business was also a main supplier of provisions for the Portuguese battalion in Macau.

12. 6^th Aunt did not receive much formal education but assisted her father in the business. She was obviously a very capable person as she learnt to speak Japanese, English and Portuguese fluently. She was married to a Mr Lau but they separated soon afterwards and had no children. Her husband died in the 1970s. After separating from her husband, 6^th Aunt ran her own provisions business in Macau until the mid-1980s.  The business was, on all accounts, successful and she had accumulated substantial wealth from it.

13. 6^th Aunt was very close to her elder sister, Madam Lo Pui Lan (羅佩蘭, “5^th Aunt”). 5^th Aunt originally helped her father in the business but later on she assisted her elder brother Mr Lo Fat Hoi (羅佛海, Kam’s father) to run a branch of the family business. When Mr Lo Fat Hoi passed away, 5^th Aunt took over the business of the branch which prospered until the mid-1980s. The branch eventually closed in January 1986.

14. 5^th Aunt was never married and she stayed close to 6^th Aunt. After 1986, 5^th Aunt and 6^th Aunt lived together in the Fung Yip Flat, one of a number of properties they had acquired in Hong Kong.

15. Neither 5^th Aunt nor 6^th Aunt had any children. They made mutual wills leaving all their assets to the other. Thus when 5^th Aunt passed away in 1992 all her assets went to 6^th Aunt, who was, as noted about, reasonably well off independently.

B(2).  Wai

16. It is convenient to describe Wai’s background at this juncture. He was born in 1942. He received primary education in Macau. He came to Hong Kong when he was 14, attending firstly St Louis School and later on St Paul’s Co-Educational College where he graduated with good results. He did not continue higher education because his mother was ill, and he returned to Macau to be with her. In Macau he started working in the Permit Department of the British Consulate.

17. In 1966 Wai came to Hong Kong and worked in the inward bills department of a bank. He married in 1967. Regrettably he had a brush with the law and was jailed between 1983 and 1985, during which time his wife deserted him. He has no children.

18. It can be seen that Wai is a well-educated person, whose command of the English language was good enough for employment with the British Consulate in Macau and a commercial bank in Hong Kong.

19. According to Wai, 6^th Aunt, who was in her twenties when Wai was born, was always very fond of and pampered him.  She and 5^th Aunt would visit him in Hong Kong from time to time when they came here to manage their affairs. His witness statement humbly describes himself as “arguably the one closest to [5^th and 6^th Aunt]” amongst their nephews and nieces. Wai’s witness statement describes in some detail how 6^th Aunt did not look down upon him despite his past, and allowed him to manage her properties and financial affairs all by himself since around mid-1990s, and which he did up to 6^th Aunt’s death in 2001.

20. In his Defence in HCA 2307 of 2009, Wai admitted that between January and November 1999, he received the following sums from 6^th Aunt:

Date of Transfer	Amount/currency
3 January 1999 to 20 December 1999	HK$1,664,000 [by way of withdrawals from 6th Aunt’s bank accounts]
19 February 1999	GBP 733,000
19 February 1999	AUD 1,850,000
22 February 1999	CAD 290,000
9 March 1999	USD 513,000
23 March 1999	HK$2,500,000
19 November 1999	HK$2,700,000
Total (HK$ equivalent)	About $29 million

21. It is convenient here to mention briefly about the Shop. 5^th and 6^th Aunts bought the Shop as joint tenants in 1966, and upon 5^th Aunt’s death 6^th Aunt became its sole owner. It has been leased for many years to Mr Chan Wai Ki (“Mr Chan”), who with the assistance of his wife Madam Li Lai Kuen (“Madam Li”) ran a custom tailor business there called DeLorean (“歐陸” in Chinese). Mr Chan passed away in June 2012 and Madam Li continues to run the tailor shop there.

22. By reason of his management of 6^th Aunt’s affairs, Wai became very good friends of Mr Chan and Madam Li for some 20 years. It is Wai’s evidence, which is not disputed, that from time to time Mr Chan would not be able to keep up with the rental, but Wai would tolerate that. Mr Chan and Madam Li were so grateful to Wai that they called him “benefactor” (恩公).

B(3).  Kam and Sim

23. Meanwhile, in 1987, Wai met up with Kam in Hong Kong. Kam, as I mentioned earlier, is one of the sons of Mr Lo Fat Hoi, the elder brother of Wai’s father Mr Lo Sheung Chi (羅尚志), 5^th Aunt and 6^th Aunt. Wai and Kam are thus first cousins (it is noted that in Chinese first cousins often just call each other “brothers” or “sisters”).

24. In 1987, Kam was 35 and working as a part time chauffer. He was already married to Sim, who was a beautician, and they had a young son (“Tung”). He and his family only contacted 5^th or 6^th Aunt or other members of the Law family infrequently. According to Kam, his mother by chance ran into Wai in Hong Kong in 1987 and that was how he came to be in contact with Wai. Wai gave a different account but how Kam and Wai re-united does not matter. What is not disputed is that prior to that, the two branches of the family had had little contact with each other. Other branches of the family had either emigrated or were not in frequent contact either.

25. Anyway, after Kam and Wai met up in Hong Kong, Kam and Sim started visiting 5^th Aunt and 6^th Aunt frequently. According to Kam, whose evidence in this regard is not challenged and which I accept, 6^th Aunt loved him and Wai as they were the closest relatives of 6^th Aunt and those who showed real care for her.

26. In the meantime, Wai had grown to be very close to Kam and his family. Kam said in evidence of their frequent gatherings and trips to Macau for ancestral worship. Wai himself says in his witness statement that Kam “fully embraced my friendship and we became [close].” Sim also gave evidence that Wai would ask her out for tea from time to time when Wai worked for a popular chain pizza restaurant near to Sim’s workplace. Although there is not much evidence in relation to Tung, it would appear that Wai was on good terms with him as well.

27. All in all, Wai on the one hand and Kam and his family on the other became very close since around the late 1980s.

28. I would mention in passing that Kam has a brother called Law Man Shing (羅文星), who will feature in the case at a later stage.

B(4).  6^th Aunt’s stroke

29. 5^th Aunt passed away in December 1992 and 6^th Aunt resided on her own with 2 helpers in the Fung Yip Flat. In 1999, 6^th Aunt suffered a stroke and fell into a coma for 20 days. Although she recovered, her health deteriorated ever since.

30. By that time 6^th Aunt had entrusted Wai with practically all her finances and affairs. Wai’s own evidence is that since the mid-1990s, 6^th Aunt had trusted him so much that he was in charge of her bank accounts and in possession of her ATM cards and cheque books. She would send him to withdraw money from her accounts to defray her living expenses. Kam on his part gave evidence to the effect that 6^th Aunt had told him of such arrangement with Wai in around 1993-1994.

31. In 1995, Wai quit his job with the restaurant to concentrate on foreign exchange speculation and looking after 6^th Aunt’s affairs. Wai produced at trial his “log book” recording the income (mainly rental) received by him on behalf of 6^th Aunt and the expenses he had paid on her behalf over the years.

32. After 6^th Aunt’s stroke, Kam and Sim took more time to visit and look after 6^th Aunt.  When Kam and Sim were cross-examined, both of them showed grief and sorrow when they recounted how they visited 6^th Aunt frequently and looked after her, taking her to hospital visits and staying with her in hospital, and so on. I find this aspect of their evidence genuine and I accept it without hesitation.

B(5).  6^th Aunt’s Gift

33. It was against the above background that Kam claims that 6^th Aunt told him of her gift to him and Wai. According to Kam, one day in 1999 after 6^th Aunt had recovered from her stroke, he had agreed with Wai to visit 6^th Aunt at the Fung Yip Flat. It was one of many such visits. He and Sim arrived at 6^th Aunt’s place first.  Before Wai had arrived, and while they were chatting, 6^th Aunt told Kam in the presence of Sim that she (6^th Aunt) thought that life was unpredictable and she had decided to make some early arrangements with regard to her money. She told Kam and Sim that she had transferred part of her savings to Wai, which was to be shared by Wai and Kam equally when she was no longer around. She said that the monies included foreign currencies.

34. Shortly afterwards, Wai arrived. 6^th Aunt told Kam to ask Wai about the transfers and in the presence of 6^th Aunt and Sim he asked Wai to confirm it, which Wai did.  Wai also said that he had put part of the monies he had received from 6^th Aunt on fixed deposits, and that the total amount of money gifted to the two of them amounted to about $30 million.

35. Kam further claims that a few months later, during a trip he and Wai took to Macau for ancestral worship, Wai raised the matter with him and told him that the monies he had received from 6^th Aunt were in different currencies but the total amount was about $30 million. In his oral evidence, Kam described the scene in some detail, including that Wai put his hand on his shoulder and said to him words to the effect that “half of the money was yours”, and Kam responded by saying to Wai “good/faithful brother” (好兄弟).

36. Kam also said that on another occasion in early 2000, he had asked Wai how much was his share of 6^th Aunt’s Gift and on this occasion, Wai told him that the amount of the 6^th Aunt’s Gift was about $35 million.

37. Shortly after this, between January and June 2000, Wai gave Kam a number of cheques totalling $5.6 million. Kam said that these payments reinforced his trust in Wai and he did not chase Wai further.

38. Wai’s version, on the other hand, is that the money he had received from 6^th Aunt was for his sole benefit. He has been the one who had looked after 6^th Aunt, especially towards the late stages of her life. It was entirely out of love and goodwill that he had paid Kam and Sim over $12.8 million (disregarding the money used to pay for the Properties) over the years.

39. Whether Kam can prove the 6^th Aunt’s Gift is the crux of the dispute.

B(6).  6^th Aunt’s estate

40. Continuing with the narrative of the background facts, 6^th Aunt passed away in December 2001. She left a will bequeathing her assets amongst her nephews and nieces. Law Man Shing was one of the two named executors of the will (the other being Madam Lo Wai Tsun, a sister of Kam who had pre-deceased 6^th Aunt). Other than the executors, who got more shares than the other beneficiaries, each nephew/grand-nephew received 4/60^th share while each niece received 2/60^th share of her estate. (It will, however, be remembered that the money already transferred to Wai, whether for his benefit solely or for the benefit of Wai and Kam, was not included as part of her estate to be distributed under the will.)

41. The administration of 6^th Aunt’s estate is relevant not only in respect of the disposition of the Properties but also in respect of two other properties owned by 6^th Aunt, a flat in Hunghom and an office unit in Central. Wai, Kam and another cousin beneficiary Mr Lo Man Hing were interested in buying the two properties from the estate, with each of them contributing and having one-third interest. Law Man Shing (being the sole executor) consulted with the other beneficiaries and with their unanimous consent agreed to sell the two properties to the three of them. Thus Wai, Kam and Lo Man Hing in their own names acquired the two properties in October 2002.

42. Probate of 6^th Aunt’s will - and resolving issues with the government relating to estate duties which remained payable at the time - took some time, and was not finalised until late 2002. Kam said that during this time he did not chase Wai for his share of 6^th Aunt’s Gift. It is not in dispute that sometime in 2003 to 2004 Wai also paid estate duties of some $4.77 million in respect of monies he had received from 6^th Aunt prior to her death.

43. In about the second half of 2003, Wai began to pay Kam (usually by way of cheques drawn in favour of Sim or direct transfer into her account) various amounts of money. It is Kam’s evidence that in 2003 he had asked Wai to make the payments to Sim’s account. Some of these payments were relatively small amounts of $10,000 or $20,000 or so, but sometimes over $100,000. Kam claims these were payments by Wai of his part of the 6^th Aunt’s Gift, while Wai claims that these were simply gifts from him to Kam and Sim.

44. It is convenient here to give a brief description of the payments from Wai to Kam/Sim. They could be roughly divided into 4 periods:

(i)  Between December 1999 and June 2000: $5,610,000 was paid to Kam, all by cheques.

(ii) October 2003 up to 1 June 2004: various payments were made to Sim, ranging from $20,000 to $500,000. Included in this period was the $1 million in respect of the “transfer” of the Classic Flat (see below).

(iii) From 16 June to 5 August 2004: Wai paid Kam and Sim a total of $8.3 million, in connection with the purchase of the Properties.

(iv) From 6 August 2004 to 8 September 2009: various cheque payments and bank transfers to Sim. Kam and Sim claim that parts of these payments/transfers were for payment of rent of the Shop, which Wai disputes.

45. There were various other payments from Wai to Kam and Sim, most of which Kam and Sim accepted were gifts from Wai or to be treated as repayment of 6^th Aunt’s Gift. It is unnecessary to set out these payments, which are largely not in dispute and can be found in Schedules 2 to 4 to Sim’s supplemental witness statement.

B(7).  Classic Flat

46. Another episode which requires mentioning is Sim’s acquisition of a flat in a building known as Classic Mansion (“Classic Flat”) from Madam Chow Fung Yee (“Madam Chow”), a lady friend of Wai’s. This flat was acquired and registered in Madam Chow’s name in October 2003 for $838,000. In 2004, Sim understood from Wai that Madam Chow was desirous of selling the flat for $1 million. Sim was interested in acquiring it and agreed to buy it from Madam Chow. A provisional sale and purchase agreement was signed on 11 May 2004 and Sim paid Madam Chow $100,000 by cheque as deposit.

47. Kam’s evidence is that a few days after signing the provisional sale and purchase agreement, he called up Wai and asked him to return some of 6^th Aunt’s Gift to him so as to pay for this property. Sim gave a similar but not identical account. According to Sim, Wai told her that he would deduct the purchase price from the amount he had to pay Kam from 6^th Aunt’s Gift. Wai, of course, denies ever saying anything of the kind to Sim or Kam. His case is that he gifted the Classic Flat to Sim.

48. In any case, the sale and purchase of the Classic Flat was completed on 31 May 2004 without Sim paying Madam Fung any further money. Additionally, on the day following completion, Wai deposited a cheque for $100,000 into Sim’s account to “return” the initial deposit which Sim had paid Madam Chow. The net result is that Sim acquired the Classic Flat without paying any money for it.

49. On Kam and Sim’s case, the “transfer” of the property to Sim formed part of the repayment of 6^th Aunt’s Gift to Kam and they treat it as repayment of $1 million. Wai’s case, on the other hand, is that the Classic Flat was his and Madam Chow held it on trust for him, and he directed Madam Chow to transfer the property to Sim as a gift.

B(8).  Purchase of the Properties

50. The purchase of the Properties took place shortly after the transfer of the Classic Flat. As mentioned above, the Properties were owned by 6^th Aunt and formed part of her estate. The contemporaneous documents show the following objective facts which are not disputed.

51. In around February 2004, Wai and Sim incorporated or acquired a company called Ever Rise Investment Limited (“Ever Rise”) for the purpose of intended joint property investments. Wai and Sim each held 50% of Ever Rise’s issued shares. Prior to June 2004, no investment had been carried out via Ever Rise which remained dormant.

52. By letter dated 9 June 2004, Messrs Au, Thong & Tsang (“ATT”) acting for Ever Rise wrote to Messrs Tai, Tang & Chong (“TTC” who were acting for Law Man Shing) offering to purchase the Shop from Law Man Shing (as executor of 6^th Aunt’s will) for $6.47 million (corrected to $6.74 million by another letter of the same date). Kam had been working as a legal clerk at ATT since around 1998.

53. By another letter dated 9 June 2004, ATT acting for Wai offered to purchase the Fung Yip Flat from Law Man Shing (as executor of 6^th Aunt’s will) for $1.22 million.

54. The consideration for the purchase of the Properties from the estate had apparently been discussed between Law Man Shing, Wai and Kam some time beforehand. Exactly how the purchase prices were agreed is not material.

55. By separate letters dated 10 June 2004, TTC sent draft sale and purchase agreements for the Properties to ATT. Initial deposits were paid by cashier’s order on 16 June 2004.

56. On 17 June 2004, ATT wrote to TTC stating that the names of the intended purchaser should be Sim instead of Ever Rise in the case of the Shop, and Sim instead of Wai in the case of the Fung Yip Flat.

57. TCC wrote back on the following day saying that Law Man Shing did not agree to the change of purchaser in both cases. However, on 21 June 2004, TTC wrote to ATT saying that Law Man Shing no longer objected to the proposed change of purchaser. What happened was that on 19 June 2004, Law Man Shing sent an email to the beneficiaries seeking their agreement to the change of purchasers. It is relevant to record how Law Man Shing put the matter to the beneficiaries in his email:

“As you may recall I have sought your opinion regarding the sale of [the Properties] to Man Wai.

During the course of finalising the sale and purchase agreements, Man Wai and Man Kam would like the two properties to be sold to Kwan Sau Sim (wife of Man Kam) for the same agreed prices.

Since Sau Sim is the wife of Man Kam and the sale is proposed by Man Wai, I am prepared to proceed with the transactions (under the terms similar to those I agreed with Man Wai). However, if any beneficiary has a valid reason that the property should not be sold to Kwan Sau Sim please let me know not later than 26^th June 2004 (Hong Kong time). If I do not receive any objection with a valid reason by 26^th June 2004 (Hong Kong time), I shall sign the sale and purchase agreements (to sell the two properties to Kwan Sau Sim) as soon as I receive them. Take care.” (original underlining)

58. Apparently the beneficiaries agreed or did not object to the change and eventually, the Properties were conveyed to Sim on or about 22 July 2004 and 10 August 2004 respectively. The Shop was assigned to Sim subject to the tenancy of Mr Chan. I mention in passing that Law Man Shing did serve on Mr Chan a notice to quit dated 27 May 2004 terminating the tenancy with effect from 30 November 2004, presumably in anticipation of the intended sale of the Shop, but no one seems to have paid much, if any, attention to it.

59. Law Man Shing resides in Canada. Neither side offered him as a witness at the trial. In an email to Kam’s former solicitors dated 17 December 2009, Law Man Shing recalled the events in 2004 as follows:

“In accordance with the request of my brother, LO Man Kam, I list below, for your information, what I can recall regarding the transactions of the captioned two named properties in 2004.

It is my understanding that the potential litigation is between LO Man Kam (my half-brother) and LAW Man Wai (my cousin). Man Wai’s father and my father, both deceased, are full blood brothers.

Both properties were owned by my aunts, LO Pui Lan and LO Pui Kau, both deceased. The ownership for both properties was held as Tenants in Common (i.e. no right of survivorship).

The property at Fung Yip Building was used as the main residence of my aunts in Hong Kong prior to their death. LO Pui Lan passed away in 1992 and LO Pui Kau passed away on 2^nd December 2001. As I had concerns that a tenanted property might have adverse effect on its value when it was to be sold, this property was not leased for the period from December 2001 (when my aunt passed away) to July 2004 (when the property was sold to Kwan Sau Sim). During that period, my cousin helped me to look after the property. All expenses in connection with the management were paid by him. From time to time during the previous years, I indicated to beneficiaries that I would reimburse him for the expenses he paid for the management of the Fung Yip Building unit upon receiving supporting information from him.

For the other property at 27 Cannon Street, G/F., I did not know that my aunts owned this property until I was told by LAW Man Wai in a lunch on 24^th December 2002 (i.e. more than 3 weeks after my aunt LO Pui Kau passed away). LO Man Kam was also there.

The Cannon Street property was tenanted and LAW Man Wai was helping my aunt, LO Pui Kau, to deal with the tenant (CHAN Wai Ki) up to the time she passed away. The Tenant looked after the expenses of the property. Therefore, the rental income received was net of all outgoings except property tax. The rent was deposited monthly (with the exception of some months when he was in default of payment) into an HSBC cheque account in my name (being used as an estate account). The rents for the period from December 2001 (after the aunt LO Pui Kau passed away) to the time of change of ownership in August 2004 have been duly paid.

On 8^th June 2004, a verbal agreement was reached with my cousin, LAW Man Wai that he would purchase the captioned two properties at prices of HK$6.74M and HK$1.22M respectively. My half-brother, LO Man Kam was beside LAW Man Wai at the time of our telephone conversation. Man Kam indicated that his firm would be acting for Man Wai as lawyer for the purchaser. Man Kam also cautioned me that the property at Fung Yip Building was to be sold in vacant possession. I asked him to double check that with Man Wai (beside him at that time).

While waiting for the remaining steps of the proposed sales to be completed, I received an e-mail dated 17^th June 2004 from my lawyer, Alexis Lee of M/S Tai Tang & Chong, (copy attached) indicating that the purchaser was going to be Kwan Sau Sim.

At first I did not know who was KWAN Sau Sim. Although I met the spouse of LO Man Kam a number of times prior to that time, I did not know her name. At that time, I was thinking of a possibility that Man Wai might want to sub-sell the Property before completion. When I talked to LAW Man Wai regarding the change of purchaser, Man Wai asked me why he could not purchase a property and let it be registered in the name of another person.

Later, I found out KWAN Sau Sim was spouse of my half-brother LO Man Kam.

Please note that notwithstanding that Man Wai indicated to me as mentioned above, I must make it clear that neither has LO Man Kam nor has KWAN Sau Sim indicated to me that KWAN Sau Sim was acting on behalf of LAW Man Wai for the purchase.

On 19^th June 2004, after talking to Man Wai and Man Kam (in separate telephone conversations), I agreed to sell the two properties to KWAN Sau Sim, subject to no objection from the beneficiaries with a valid reason. An e-mail dated 19^th June 2004 (copy attached) addressed to a number of beneficiaries was subsequently sent and requested their feedback not later than 26^th June 2004 (if they have a valid reason not to sell the properties to KWAN Sau Sim).

After no disagreement was received from the beneficiaries after 26^th June 2004, I proceeded with remaining steps to complete the transactions.  My perspective, as the representative of the vendor, from that time onward, was to treat KWAN Sau Sim as the one and only one prospective purchaser.”

60. I will refer to the parties’ explanation of the change of purchasers when I evaluate the evidence.

61. It is appropriate at this point to describe how the purchase money for the Properties was paid, which again is not substantially in dispute. I set out in the table below the payments from Wai to Sim and Kam and the corresponding payments from Sim’s account to pay for the purchase of the Properties.

Date	Total amount	Method of payment (payee)	Payment from Sim’s account
16 June 2004	$1 million	2 cash deposits of $300,000 and $200,000 (Sim) 2 bank transfers of $300,000 and $200,000 (Sim)	Cashier order $130,000 (initial deposit for Fung Yip Flat) Cashier order $870,000 (initial deposit for Shop)
8 July 2004	$1.2 million	Cash deposit $300,000 and bank transfer $300,000 (Kam) Cash deposit $300,000 and bank transfer $300,000 (Sim)
15 July 2004	$0.9 million	Cheque $40,000 and 2 cash deposits $260,000 and $300,000 (Kam) Cash deposit $300,000 (Sim)	Cashier’s order $1,090,000 (balance purchase price for Fung Yip Flat)
16 July 2004	$300,000	Cash deposit $300,000 (Sim)
22 July 2004	$1.2 million	3 cash deposits @ $300,000 (Sim) cash deposit $300,000 (Kam)
2 August 2004	$1.2 million	2 cash deposits @ $300,000 (Sim) 2 cash deposits @ $300,000 (Kam)
4 August 2004	$1.2 million	2 cash deposits @ $300,000 (Sim) 2 cash deposits @ $300,000 (Kam)
5 August 2004	$1.2 million	2 cash deposits @ $300,000 (Sim) 2 cash deposits @ $300,000 (Kam)	Cashier’s order $5,870,000 (balance purchase price for Shop)
5 August 2004	$100,000	Bank transfer (Sim)	For payment of stamp duty and lawyers’ fees
Total:	$8.3 million

62. In relation to the various cash deposits, what happened was that Wai, Kam and Sim (and on one occasion Tung was present as well) went to Wai’s bank to withdraw cash, which Kam and Sim immediately took to their bank and deposited into their accounts. Apparently, the cash deposits were in tranches of not more than $300,000 because the bank would charge a handling fee for cash deposits above that sum.

B(9).  Tenancy agreement of Shop and rental payment

63. After the assignment of the Shop to Sim, she entered into a written tenancy agreement with Mr Chan dated 30 September 2004 at a monthly rental of $40,000 for one year from October 2004 to September 2005. This was arranged by Wai who alone liaised with Mr Chan.

64. Wai continued to collect the rent from Mr Chan in much the same way that he had been handling all tenancy matters on behalf of 6^th Aunt for a number of years before her death.  However, there is no dispute that the rent actually paid by Mr Chan to Wai remained at $20,000 per month, the same amount he had been paying prior to 6^th Aunt’s death, despite the “paper rent” of $40,000 under the tenancy agreement, and even then Mr Chan did not always keep up with the rental payments.

65. From the bank statements produced, it can be seen that from September 2004 to September 2009, Wai paid Sim from time to time sums of money roughly corresponding to the amount of money paid by Mr Chan to Wai and the time when Mr Chan made payments to Wai. I say roughly in that sometimes it is difficult to pair the rental payments from Mr Chan directly with Wai’s payments to Sim, both in terms of timing or in amount. For example, there were times when Wai paid sums larger or smaller than $20,000 shortly before or after Mr Chan paid rent to Wai. Sometimes the time gap was a few days, sometimes a few weeks. Also, sometimes Wai would pay money to Sim even though Mr Chan had not paid the rent for that month. There are many variations, and Wai also paid Kam and Sim other sums from time to time. But by and large there was a pattern that Wai paid Sim sums largely corresponding to or larger than the rental payments from Mr Chan, and more often than not, these payments were regularly made at the beginning of the month. This pattern continued until around September 2009 when the parties’ relationship turned sour.

66. It is Sim’s case that these payments, which are listed in Schedule 2 to her witness statement, represented Wai’s payment to her of rentals collected from Mr Chan, totalling $900,000, which she was entitled to receive as owner of the Shop. Her evidence is that although she wanted to increase the rent to $40,000 per month, and Mr Chan did (through the arrangements of Wai) sign a tenancy agreement for 1 year with a stated rental of $40,000, Wai asked Sim to allow Mr Chan to continue to pay only $20,000. Although she was not entirely happy with it, she agreed to the arrangement because Wai and Mr Chan were very good friends and Sim and Kam were at that time still very close to Wai. On top of that, Wai had been honouring his obligation to pay Kam sums in respect of 6^th Aunt’s Gift, and she and Kam agreed to accommodate Mr Chan so as to “oblige” or “accommodate” Wai (they use the words “順意” in Chinese). Sim also points out that whilst she had left the collection of rent and other matters relating to the Shop such as paying management fees and government rates, she had since around 2006 been paying the government rent of the Shop.

67. Wai’s version is fundamentally different. His evidence is that the payments he made to Sim from September 2004 onwards were his gifts to her and not in any way connected with the rental from Mr Chan. He referred to several payments of $20,000 he had made to Sim between November 2003 and February 2004, ie, before the assignment of the Shop to Sim. Wai’s case is that these payments were subsidies for her living expenses which Sim had requested from him. On Sim’s part, she agreed that the payments to her pre-September 2004 were not rent but were part repayment of 6^th Aunt’s Gift. She denied ever having asked Wai to give her any subsidy.

68. To complete this part of the narrative, Mr Chan passed away in June 2012. His widow, Madam Li, continues to run the business at the Shop despite a notice to quit dated 20 August 2012 terminating the tenancy on 30 September 2012. Madam Li gave evidence at the trial which I will describe in more detail later on.

B(10). Breakdown of relationship

69. The close relationship between Wai on the one hand and Kam and Sim on the other eventually broke down in the second half of 2009. Two incidents (or alleged incidents) led to that breakdown.

70. First, Kam and Sim alleged that on an occasion in August 2009, Wai indecently assaulted Sim. It is unnecessary to describe here the details of that incident as recounted by Kam and Sim in their witness statements and in oral evidence. Suffice it to say that it is their evidence that soon after the incident their relationship with Wai cooled off abruptly.

71. The other incident which is not in dispute is that in November 2009, Sim signed a preliminary sale and purchase agreement with a third party to sell the Fung Yip Flat for $2.95 million. Wai claims that he found out the sale because one of his lady friends, whom Wai had allowed to reside at the Fung Yip Flat but had moved out by November 2009, returned to the building to pay the management fees and was told by the management office that the Fung Yip Flat had been sold. She informed Wai, and Wai confronted Kam and Sim with the sale.

72. Kam and Sim’s evidence is that Wai did telephone Kam concerning the sale of the Fung Yip Flat, and accused them of selling “his” property without his consent.  However, Kam and Sim’s evidence is that they did not know why Wai would make such an accusation and visited Wai at his residence with a view to discussing the matter with him, but Wai refused to see them or open the door, and the situation deteriorated into an unpleasant scene. They did not contact each other since. Wai issued the writ in HCA 2307 of 2009 shortly afterwards.

73. After commencement of the proceedings, Sim proposed to complete the sale of the Fung Yip Flat with the net proceeds being stakeheld pending resolution of these proceedings, but Wai refused. In the end, she had to cancel the sale and paid compensation of $180,000 to the purchaser.

74. As to the Shop, pursuant to an order of Mr Justice Au dated 3 March 2010, Wai paid the rental collected by him from September 2009 to March 2010 to his solicitors to be stakeheld pending resolution of these proceedings. The same order also provided that Sim was entitled to receive rent henceforth, such rent being paid over to her solicitors for stakeholding, and could take action against the tenant for failure to pay rent or breach of tenancy agreement. Mr Chan was notified of this by letter dated 2 June 2010.

75. Sim complains that in the course of the proceedings in January 2011, she made a request through her solicitors to Wai to seek his co-operation to discuss raising the rental of the Shop to the market level, but Wai refused. Eventually, a notice of termination dated 20 August 2012 was served on the tenant (by that time Mr Chan had passed away) terminating the tenancy on 30 September 2012.  At trial, the parties agreed that the market rental of the Shop from February 2011 up to trial was $70,000 per month.

C.   ASSESSMENT OF EVIDENCE

76. The objective facts summarised above portray a case with a number of unusual features. The most puzzling feature of all must be the undisputed fact that Wai paid Kam and Sim sums of $18.6 million (on Kam and Sim’s case) or $12.8 million (on Wai’s own case) over a number of years. Although Wai and Kam were first cousins and indisputably very close to each other, it remains a fact that Wai was prior to his receipt of the substantial payments from 6^th Aunt – between $28-29 million on his own case and $30-35 million as Kam contends – a man of modest means who had a relatively humble job with a pizza restaurant. While it is not impossible that he was happy to share his fortune with his “brother” and his family, the degree or extent of his generosity towards Kam is nevertheless difficult to understand. Why he did so is, as I have said, the crux of the dispute between the two sides.

77. Four witnesses gave evidence at trial, they are: Kam, Sim, Wai and Madam Li. I will have to assess their evidence against the undisputed objective evidence and inherent probabilities. In this connection, I have been reminded that in assessing credibility, the court:

“… takes into account the contemporaneous documents or any evidence which is undisputed or indisputable, tending to support or contradict one account or the other and the overall impression of the characters and motivation of the witnesses: see In re B (Children)(Care Proceedings: Standard of Proof) [2009] 1 AC 11 per Baroness Hale at para.31 at p.24, applied … in Standard Chartered Bank v Li Wai Ping & others, HCA 10587/2000 & HCA 3575/2003, 17 February 2011, unreported, at para.19.”

See: Big Island Construction (HK) Ltd v Wu Yi Development Co Ltd HCA 1957/2005, HCA 714/2007, HCA 886/2007 & HCA 1364/2008, unrep, Poon J 28 July 2001, at para.24.

78. I also bear in mind what Stock JA (with whom Tang JA agreed) said in Esquire (Electronics) Ltd v Hongkong and Shanghai Banking Corp Ltd [2007] 3 HKLRD at §135:

“… the truth, in so far as one is able to reach it or, as is sometimes the case, to reach a version of it that is more likely to be correct or not, can best be tested by reference to contemporaneous documentation where it exists, or to its absence where one would expect it to be created, as well as to inherent probabilities (though bearing in mind that there may be occasions where the truth may run against that particular grain) having regard to all the facts that are known.”

C(1).  6^th Aunt’s Gift

79. Chronologically the first major dispute is the 6^th Aunt’s Gift. Although this is the ultimate issue for decision, it is still convenient to consider the evidence in relation to this episode first.

80. Kam gave evidence substantially in accordance with his pleaded case and witness statements, which I have summarised above. He gave the impression of a straight forward man who is not very sophisticated. His evidence is, on the whole, consistent with that of Sim.

81. When cross-examined on the occasion when 6^th Aunt told him (and Sim) of her Gift, he gave straight forward answers, although he wasn't quite able to recall precisely what was said by 6^th Aunt. This is perhaps understandable given the passage of time, although as Ms Ng pointed out one may expect him to have a very vivid memory of that fateful evening. Nor was he able to give any reason why 6^th Aunt, who obviously was a capable woman, did not give him the money straight away. These are points against Kam which I have to bear in mind, although I do not think these are enough to cast such serious doubt over Kam’s evidence that I can reject if off hand.

82. Ms Ng, in an impassioned closing, warned me to treat Kam and Sim’s version with caution because they were “putting words in the mouth of an elderly lady who has been dead for 10 years”. Ms Ng emphasised that 6^th Aunt was an educated, independent and sophisticated person who could easily have paid Kam directly had she wanted to benefit him, instead of paying over substantial sums to Wai alone but to hold the money for the benefit of Wai and Kam. There is force in that submission and I will bear that warning firmly in mind.

83. Ms Ng also submitted that Kam and Sim’s evidence, that 6^th Aunt told Kam to confirm with Wai when the latter arrived, is rather odd. When taxed on why he never asked Wai for a precise account of the amount he was supposed to get, or when Wai would pay over his share to him, Kam’s explanation is that he did not feel it necessary to seek confirmation from Wai because he was on good terms with Wai and he trusted him. On Kam’s own case he was going to get $15 million or more, and it seemed odd that he did not make any record of the 6^th Aunt’s Gift, or take any steps to ensure that Wai would give him at least a timetable as to when his share of 6^th Aunt’s Gift would be paid to him. Nevertheless, his evidence is that he did ask Wai about the amount of 6^th Aunt’s Gift and was comfortable with the answer given by Wai, general as it might have been. He maintained that he trusted Wai. Although not decisive in itself, I think Kam’s explanation is credible.

84. Kam turned noticeably emotional when he was cross-examined on why he did not mention to 6^th Aunt that Wai had not been making prompt payments to him, and explained that he genuinely cared for 6^th Aunt who was very frail after her stroke, and he did not want to trouble 6^th Aunt with this matter lest she might think that he and Sim only cared for her because of her money. Anyway, his evidence is that his uneasiness was alleviated when Wai paid him $5.6 million within a couple of months in early 2000, and he had no reason not to trust Wai.

85. It was suggested to Kam that the $5.6 million was in fact to help him out on his foreign exchange losses. Kam flatly denied this. I do not accept the suggestion. Although Kam accepted that he dabbled with foreign exchange speculation (he said he learnt it from Wai), there is no evidence that Kam was incurring losses or in need of cash of that magnitude at the time. There is no evidence that he had the means to invest which would result in him incurring obligations of that magnitude. There is, I should add, no evidence that Wai ever asked him to repay the $5.6 million.

86. Sim gave a similar and consistent account of the circumstances when 6^th Aunt told them of the 6^th Aunt’s Gift. Her evidence is firm on the main issues as well as many details. For example, she was very clear on Wai’s job with the pizza restaurant, and could recount details of the occasions when they had tea. She was visibly upset when questioned, albeit briefly, on the indecent assault episode. Hence although she has an obvious interest in the outcome of the litigation, I think I would need to take her evidence into account when assessing the overall probabilities.

87. As to Wai, Ms Ng made a forceful submission that his evidence should be gauged against his character, in that he was a very generous person as evidenced by his generosity towards his lady friends and others, such as Mr Chan.  Whilst there is little evidence about Wai’s lady friends other than Madam Chow, there can be no doubt that Wai was a generous person. Ms Ng emphasised that he had a colourful life, having fallen but was forgiven and received with love by 6^th Aunt. She submitted that Wai is a person with a strong sense of family solidarity, and with no children of his own Kam’s family was the closest resemblance he had of a family, which would explain why he had been so generous towards Kam and Sim.

88. In my judgment, while accepting that Wai was a generous person, I am unable to accept that that fact by itself could satisfactorily explain the size of the bounty he had bestowed on Kam and Sim. It seems to me most extraordinary, as generous as Wai may be, for him to gift to Kam and Sim something like half of what he had received from 6^th Aunt. As will be seen below, he is not able to provide satisfactory explanation of a number of undisputed or indisputable facts which seriously undermine his case. I am therefore not persuaded that all these payments were his gifts to Kam and Sim.

89. On the whole, while Kam’s version of the 6^th Aunt’s Gift is somewhat unusual, it is not incredible and I would need to assess it together with other evidence of the dealings between the parties.

C(2).  Classic Flat

90. The Classic Flat is another odd episode. Kam and Sim’s version, which I have already summarised, seems to me to be more probable.

91. Wai’s version, on the other hand, does not appear to be credible. He said that originally Sim wanted to buy the property from him, but later she suggested that Wai should gift it to her. This evidence is not only uncorroborated by any evidence, but also contrary to the written provisional sale and purchase agreement and the payment of the initial deposit of $100,000 to Madam Chow.

92. When cross-examined on this matter, Wai was not able to give convincing answers. For example, he was asked whether the Classic Flat beneficially belonged to him or was his gift to Madam Chow, he said that it was his. But he also said that it was Madam Chow who wanted to sell it for $1 million so that she would make a profit. When questioned how Madam Chow could make a profit if Wai were the beneficial owner, he was not able to give any sensible answer.

93. I am not assisted by the absence of Madam Chow. Be that as it may, the evidence suggests, and I accept, that the Classic Flat was Wai’s gift to Madam Chow, and it was Madam Chow who had wanted to dispose of it for her own benefit, which led to Sim agreeing to buy it from her.

94. In short, I reject Wai’s evidence in relation to the circumstances surrounding the transfer of the Classic Flat to Sim. This is a factor against Wai, although not decisive as to whether this property was a gift from Wai to Sim, or whether the arrangement was in repayment of part of 6^th Aunt’s Gift.

C(3).  Initial offers to purchase the Properties

95. It will be recalled that the initial offer to purchase the Shop was made on behalf of Ever Rise, while the offer to purchase the Fung Yip Flat was made on behalf of Wai alone.

96. There is no dispute that initially, Wai had intended to purchase the Properties from the estate. At least in relation to the Fung Yip Flat, there is no dispute that he intended to purchase it on his own. However, his evidence that he was also the sole intended purchaser of the Shop is materially inconsistent with the contemporaneous documents.

97. Kam’s evidence is that originally Wai wanted to acquire the Fung Yip Flat on his own, and the Shop jointly with Sim via Ever Rise. He was present when Wai discussed the price with Law Man Shing over the phone. His firm, it will be remembered, wrote the offer letters on behalf of Wai for the Fung Yip Flat and Ever Rise for the Shop, and handled the conveyancing matters. His evidence is that Wai changed his mind and did not want to proceed when the partner of his firm, a Mr Au, advised Wai that the consent of all the beneficiaries would be required. In turn Sim wanted to purchase the Properties. His version is substantially, although not entirely, corroborated by Law Man Shing’s email quoted in paragraph 59 above. Sim gave similar evidence.

98. Wai accepted that Ever Rise was the vehicle that he and Sim intended to use for their joint investment. He, however, was adamant in his evidence that he was all along the only person who wanted to buy both Properties. He was firm that Sim never expressed any interest in buying either of the Properties but he was not able to explain why the offer to purchase the Shop was originally made on behalf of Ever Rise, resorting to saying that he did not know because it was handled by Kam and his firm.

99. Wai is also not able to give a convincing explanation why he wanted to change the purchasers of the Properties to Sim. He denied ever meeting solicitor Au or having received any advice about potential conflict of interest. His evidence is that it was Kam who had suggested to him that he should use Sim’s name to avoid potential problems later on.

100. I am unable to accept Wai’s explanation. It is an objective fact that three beneficiaries, Wai, Kam and Lo Man Hing, had previously purchased two properties from the estate in their own names. Thus there was, so far as Wai was concerned, already a precedent. On the other hand, the advice about seeking the beneficiaries’ consent would be exactly what one would expect a solicitor to give, whether the solicitor knew of the previous purchase by Wai, Kam and Law Man Hing or not (although there is no evidence whether Mr Au knew of that incident).

101. Moreover, using Sim’s name would not have solved any perceived problem as she was Kam’s spouse. Indeed, Law Man Shing did write to all the beneficiaries explaining that Sim was Kam’s wife and sought their confirmation that they did not object to her purchasing the Properties.

102. I should also mention here that while Wai was on the whole rather confident and relaxed in the witness box, when he was cross-examined about Ever Rise and the change of purchasers of the Properties, I observed that Wai was noticeably very tense and nervous. He sat upright with his back very straight, leaning forward and paying much more attention to Mr Yau’s questions. Another noticeable sign of nervousness was that one of his legs jiggled involuntarily. I will need to take his demeanour into account when assessing his evidence.

103. Ms Ng pointed out that on Kam and Sim’s case, Wai would have started from a position where he was to pay half of the purchase price of the Shop to get 50% interest, and the full price of the Fung Yip Flat to get 100% ownership, but he ended up paying all the purchase price without owning any interest in either Properties.  She submitted that it would be most odd for Wai to intend that to happen. I agree that it is one of the major oddities in this case, but it cuts both ways and the reason for this oddity is precisely the issue to be resolved.

104. I accept that there is evidence, including Law Man Shing’s email in 2009 and Madam Li’s evidence, suggesting that Wai must have told them that he was the purchaser of the Shop. There is Kam’s own evidence that when Wai found out about the sale of the Fung Yip Flat, he accused Kam and Sim of selling “his” flat. There is no attempt by Mr Yau to explore why Wai would have said that. I must take such evidence in his favour into account in assessing the overall picture.

C(4).  Withdrawal of $8.2 million in cash

105. The withdrawal of $8.2 million in cash is, of course, another one of the unusual features of the case. Kam and Sim’s evidence is that it was Wai’s idea and they did not know and did not ask why Wai chose to give them the money in this way.

106. Ms Ng suggested when she cross-examined Sim that Wai decided to put the Properties in her name after he had heard of solicitor Au’s advice about beneficiaries buying the Properties from the estate, and he withdrew cash from his accounts in order to avoid any paper trail with a view to avoiding possible estate duty. I am not convinced by the reasons advanced by Ms Ng. First, I note that when Wai gave evidence, he said that he had not met solicitor Au and did not get any advice from him, which is inconsistent with what was suggested to Sim in cross-examination. I will not put much weight on this discrepancy, although it is a sign that Wai’s case may not be as clear as he would want to suggest. Secondly, the explanation that Wai put the Properties in Sim’s name with a rather long term view of them eventually passing to Tung is unconvincing. That purpose would only have worked if Sim continued to keep the Properties after Wai had passed away and chose to pass them to Tung. Plainly Wai would have no way of ensuring that it would happen as he had wished. Thirdly, the avoidance of estate duty reason is more plausible, bearing in mind that he had recently paid $4.77 million estate duty in respect of monies he had received from 6^th Aunt, but there was no suggestion that Wai was somehow thinking that something might happen to him. This is, in my view, a weak reason for registering the Properties in Sim’s name.

107. The lack of any convincing reason from Wai is highlighted when one considers the events after the assignment of the Properties to Sim, to which I turn.

C(5).  Tenancy agreement & rental from the Shop

108. The written tenancy agreement is another piece of objective evidence which is inconsistent with Wai’s story. If he were indeed the beneficial owner of the Shop, there was no reason to enter into the tenancy agreement with a rent of $40,000 at all. Indeed, even Madam Li said in her witness statement that she found it illogical.

109. During cross-examination, Wai originally explained that this was to give the impression that the Shop was attracting a higher return if he had to mortgage it. This was difficult to understand as there was no suggestion that the Shop would be mortgaged within the year or at all. Later on, he agreed when it was pointed out to him that he could not have the Shop mortgaged because it was in Sim’s name, unless Sim would do so at his direction.

110. The payments of $20,000 to Sim is in favour of Kam and Sim, although just slightly. This is because the payments are not directly referable to the rentals received by Wai from Mr Chan, and Sim could not explain the pre-September 2001 payments other than to say that these were Wai’s repayments of the 6^th Aunt Gift. On the other hand, I reject Wai’s claim that the payments were “living subsidy” paid to Sim at Sim’s request. I accept Sim’s evidence that she had never asked Wai for any “subsidy”, and the evidence shows that at the relevant time Sim and Kam between them had unencumbered assets of over $10 million excluding the Properties.

111. Madam Li gave evidence of Wai’s years of friendship with her and her late husband. Her evidence points strongly to Wai being a generous person. She also said that it was her, and her husband’s, understanding that Wai was the owner of the Shop. She was, however, not privy to the reason why Sim was the registered owner of the Shop, or why Mr Chan entered into the tenancy agreement with Sim. Moreover, I consider that I should receive Madam Li’s evidence with caution, as she has an obvious monetary interest in the outcome of these actions.

C(6).  Wai’s records

112. Finally, Ms Ng also stressed on behalf of Wai that he had kept meticulous records of the payments made from his accounts, and none of the entries indicated that the payments to Kam and Sim were gifts. That Wai did keep detailed records is plain to see from the bank statements he has produced. However, the manuscripts he wrote only recorded either the payor in respect of an inward payment (such as “歐陸租” indicating the payment was for rental of the Shop), or the payee (such as “KSS” for Sim), or what the payment was for (such as “補足印花稅” “top up for stamp duty” in respect of the $100,000 paid to Sim on 5 August 2004, or “margin”).

113. Furthermore, Wai accepted that the only sizable gift Wai had made other than those made to Kam and Sim was a gift of $500,000 to his sister Madam Lo Wai Yee in 2004. As pointed out by Mr Yau, on this occasion Wai wrote on the bank statement that the payment was for “gift to elder sister” (“送家姐”). This is to be contrasted with his manuscripts to the payments to Kam and Sim, none of which mentioned “gifts” or words to that effect.

114. Thus while Wai’s records are detailed, the same is not decisive one way or the other.

D.   OVERALL ASSESSMENT OF EVIDENCE

115. Looking at the evidence in the round, this is far from a case where the evidence points clearly to one or the other direction. There is evidence in support of each side’s case; at the same time, there are gaps in either side’s case which are inexplicable on the evidence.  I must therefore do the best I can, taking into account all the evidence, oral and documentary, and assess them against the inherent probabilities.

116. Having carefully considered all the evidence, I have come to the conclusion that Kam and Sim’s evidence is to be preferred. In my view, they are reliable witnesses whose evidence is in material respects consistent with the contemporaneous documents. Wai’s story, on the other hand, has far more inexplicable holes and he cannot offer any sensible explanation where his evidence appears to contradict the contemporaneous documents. I am satisfied that Kam and Sim’s evidence should be accepted in all material aspects in so far as the same conflicts with Wai’s evidence.

117. I therefore find, on the balance of probabilities, that 6^th Aunt did intend her transfers of monies to Wai for the benefit of Wai and Kam jointly.

118. I also find, on the balance of probabilities, that although the purchase money for the Properties originated from Wai, the transfers were in repayment of the 6^th Aunt’s Gift rather than for Wai’s purchase of the Properties. In other words, I am satisfied that Sim, rather than Wai, was the beneficial owner of the Properties.

E.   Order

119. Accordingly, Wai’s claim in HCA 2307 of 2009 is dismissed. There will be an order on Sim’s counterclaim for:

(i)     A declaration that she is and was at all material times the beneficial owner of the Properties and Wai has no interest in either of the Properties;

(ii)    Damages suffered by her as a result of Wai’s adverse claims in the sum of $1,030,000, comprising the compensation paid to the purchaser in the sum of $180,000, and difference in rental of $850,000 ($50,000 for 17 months from February 2011 to June 2012);

(iii)    The rental payment currently stakeheld be released to her.

120. In respect of HCA 143 of 2010, Kam’s claim succeeds and I shall make an order in terms of prayers (1), (2), (3) and (4) of his Re-Amended Statement of Claim. I should mention that while preparing this judgment, I was hesitant as to whether I should order an account. This is because on Kam’s own case, he has received some $18 million from Wai, and there is little evidence on which one can confidently say that Wai still owes him anything, or at least anything substantial to justify the expense of taking an account. However, I have decided to make the order since it is a trustee’s duty to account to his beneficiary, and there is no agreement that Wai’s disclosure of what he had received from 6^th Aunt is complete. Nor did Ms Ng suggest that it would not be appropriate to order an account in the circumstances of this case.

121. At the moment I am not inclined to make an order under prayer (5) for tracing; whether such an order ought to be made should await the taking of the account.

122. I shall leave it to the good sense of counsel to work out the precise terms of the order(s) to be made following from this judgment. There shall also be a costs order nisi that Kam and Sim shall have their costs of the actions, to be taxed if not agreed.