LAU PING LAM v. CHOI SAU POON AND ANOTHER

DCCJ 3183/2022

[2025] HKDC 1931

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 3183 OF 2022

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(By original action)

(By counterclaim)

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J U D G M E N T

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Introduction

1.  The Plaintiff Mr. Lau Ping Lam (“Lau”)  alleges that during his courtship with the 1^st Defendant Ms. Cheung Hei Man (“Cheung”), he made a loan of $2,200,000 to Cheung and he acquired a property which has been held by Cheung’s mother, the 1^st Defendant Ms. Choi Sau Poon (“Choi”), on trust for him.

2.  In this action, Lau claims against Cheung for the repayment of the loan and against Choi for the return of the property from Choi.  Choi, on the other hand, counterclaims against Lau and the 2^nd Defendant by counterclaim Chun Sang (Hong Kong)  Engineering Company Limited (“Chun Sang”)  for $1,000,000, which she said was transferred by her to Lau and/or Chun Sang.

3.  This action was ordered to be heard and tried together with DCCJ 2784/2022, which was a dispute between Cheung and a company that used to be controlled by Lau, but the latter action was settled on day one of the trial.

Background

4.  In around late 2018 and early 2019, Lau and Cheung became acquainted with each other.  At that time, Lau was about 62 years old whereas Cheung was about 38 years of age. 

5.  Lau was a seasoned businessman engaging in the business of construction works. At various points of time, Lau was in control of such corporate vehicles as Chun Sang, Millions Engineering Company Limited (“Millions Engineering”)  and Build Rich (HK)  Development Company Limited (“Build Rich”).  Cheung was, by contrast, less financially well-off; she was working as a travel agent and she had to support her teenage daughter from her previous marriage.

6.  Lau and Cheung started dating in April 2019 and Lau would take care of Cheung’s ordinary expenses.  Lau would buy Cheung gifts from time to time, including a brand-new Mercedez-Benz GLA200 motor vehicle which was purchased in around May or June 2019.  Lau also paid for the vacation trips of Cheung, her daughter and Choi to Canada and Thailand. 

7.  In October 2019, Lau said Cheung would like to make money by herself and for this purpose she orally asked for a loan of $2,200,000 from Lau.  Through two cheques dated 22 and 23 October 2019 respectively, Lau caused two sums of $200,000 and $2,000,000 to be paid to Cheung. 

8.  Cheung denied having received the said sum of $200,000 from Lau.  As to the other sum of $2,000,000, Cheung said that she always aspired to send her daughter to study abroad.  Lau offered to support her daughter’s overseas education expenses and therefore gifted her with $2,000,000.

9.  Since around May 2020, Lau and Cheung started cohabiting in a rented property in Kornhill until August 2021, when they moved to another rented property in Wong Tai Sin. 

10.  According to Lau, in about October 2021, Cheung proposed buying a property for investment and that Cheung would manage the rental affairs and would collect the rental income for herself.  Lau agreed and eventually they decided to buy the property situate at 2^nd Floor, No. 1128 Canton Road, Kowloon (“Property”)  at a consideration of $4,600,000.  The Property was registered in Choi’s name as Cheung would not like her entitlement to public housing be affected, and having Choi as the registered owner would facilitate her to handle the management of the Property.

11.  On Lau’s case, the origins of the purchase money were as follows:-

(i)  In around August 2020, Lau through Build Rich gave Cheung some $500,000 for her to start her own business.  Lau has thereafter till May 2021 given her some additional $180,000 for Cheung’s intended business.  Ultimately Cheung did not start any business so the said $680,000 was used to pay for the purchase price of the Property.

(ii)  Before completion, Lau asked to borrow some $2,500,000 from Build Rich (which by then was no longer under Lau’s control as Lau allegedly sold it to a Ms. Cheung Sze Mei Amy (“Amy”)), and Build Rich lent some $2,800,000 to him, and the loan proceeds were used to settle the outstanding balance of the purchase price.

(iii)  On the date of completion (i.e. 11 January 2022), Lau borrowed another $500,000 from Build Rich to pay for the purchase price.  This left an outstanding balance of $565,000, which was paid by Cheung on Lau’s behalf.  Lau eventually repaid all $565,000 to Cheung, with his own money as well as a further loan from Build Rich in the sum of $150,000.

12.  Cheung, on the other hand, said Lau originally planned to gift her the Property to fulfil her wish to be a property owner.  She was, however, unwilling to give up her public housing unit.  In response Lau suggested gifting Choi the Property instead, so that Choi could obtain the rental income to support her own living expenses. 

13.  Cheung said that Lau engaged Amy, a solicitor from Messrs. Zebra HY Kwan & Partners to handle the purchase.  She did not dispute that the purchase money came from Lau, but she said a large part of the purchase price was contributed in the following manner instead:-

(i)  In January 2022, Lau transferred 10 sums in the total amount of $990,000 to her for purchasing the Property.

(ii)  Also in January 2022, Lau caused Build Rich to transfer five sums in the total amount of $2,000,000 to her.

(iii)  Further, on 16 November 2021 and 14 December 2021, Lau arranged for Build Rich to transfer sums of $310,000 and $139,000 to Messrs. Zebra HY Kwan & Partners.

14.  On 13 February 2022, there were some quarrels between Lau and Cheung. On that occasion, Lau wrote and signed two declarations, and Cheung’s daughter also signed as a witness.  Given the importance of the two documents, which is rather self-evident, I shall reproduce their original contents below in full (save that I shall omit the HKID numbers mentioned therein):-

(i)  In the first document (“Document 1”), Lau wrote the following:-

“我劉炳林持有香港身份証 … 今天在証明如下 (- 物業地址香港九龍廣東道一一二八号廣東大樓二樓 (即唐樓三樓)  單位贈送給蔡秀盤女士持有香港身份証 …，特此立約

以後劉炳林不能取回。”

(ii)  In the second document (“Document 2”), Lau wrote the following:-

“我劉炳林持有身份証 … 在此承諾張曦文女仕，有關劉炳林贈送無論任何禮物或現金都不能要求張小姐歸還。

特此立據。”

15.  Cheung and Choi contended that Document 1 and Document 2 demonstrated Lau’s intention to gift the money and Property to them absolutely. Alternatively, by virtue of the representations contained in the documents, Lau is now estopped from claiming for the repayment of the money and the return of the Property.  Lau said he wrote the documents under duress.

16.  In March 2022, Lau would like to apply for a loan of $1,200,000 from a money lender named YH Services Limited.  According to him, Amy was chasing him for repayment of the money owed by him to Build Rich, as Chun Sang was in need of money (by then Lau has purportedly sold Chun Sang to Amy as well).  So Lau would use part of the loan proceeds in the sum of $1,000,000 to repay Build Rich.  As YH Services Limited required a property mortgage as security, Lau asked Choi to sign the loan agreement as borrower, and he signed as guarantor. It has always been his stance that he would be responsible for repaying the loan owed to YH Services Limited.

17.  Choi’s case is that Lau told her that he would like to obtain a loan for a birthday gift for Cheung, whose birthday fell on 27 March.  Lau said of the $1,200,000 loan proceeds, he would apply $1,000,000 as a birthday gift to Cheung, and gift the remaining $200,000 to Choi.  Acting on Lau’s representations, after obtaining the loan proceeds on 1 April 2022, Choi transferred a sum of $1,000,000 to Chun Sang and retained $200,000 for her own self. 

18.  Eventually Lau did not gift $1,000,000 to Cheung.  Apparently the loan owed to YH Services Limited remains outstanding (at least partially)  to date. Choi claims Lau and Chun Sang for the return of the $1,000,000.

19.  On 23 June 2022, Cheung and her daughter moved out of the Wong Tai Sin property and her relationship with Lau ended.  Lau claimed that Cheung stole $600,000 of cash from the Wong Tai Sin property, and he reported the matter to the Police.  The Police apparently is no longer pursuing this matter, and Lau has not commenced any legal action to recover this sum.

20.  On 22 July 2022, Lau sought Amy’s permission to cause Build Rich to commence proceedings in DCCJ 2807/2022 to sue Choi to recover the Property and to sue Cheung for the repayment of $2,200,000.  That action was subsequently withdrawn, and Lau commenced this action instead on 17 August 2022.

21.  In view of the parties’ stance, and with reference to the agreed list of issues submitted by them, I consider that there are the following main issues to be resolved:-

(i)  Whether Lau caused $2,200,000 or $2,000,000 to be transferred to Cheung?

(ii)  Be it $2,200,000 or $2,000,000, whether the transfer was a gift or a loan to Cheung?  If it was a loan, whether Lau was estopped from claiming for repayment?

(iii)  Whether the Property was a gift to Choi or Choi holds the property on trust for Lau?  If Choi holds it on trust, whether Lau was estopped from claiming beneficial interest in the Property?

(iv)  Whether Lau and/or Chun Sang are liable to pay $1,000,000 to Choi?

Credibility of Witnesses

22.  The disputes in this case are largely factual.  In resolving factual disputes, I have regard to the following principles:-

(i)  Where there is a host of contemporaneous documentation, such documentation must assume a special importance. The truth can best be tested by reference to contemporaneous documentation where it exists, as well as to inherent improbabilities having regard to all the facts that are known: Esquire (Electronics)  Ltd v Hong Kong and Shanghai Banking Corp Ltd [2007] 3 HKLRD 439 at §135.

(ii)  In assessing the credibility of a party’s case on a particular issue, the court should take into consideration the following: whether the party’s case is inherently plausible or implausible; whether the party’s case is, in a material way, contradicted by other evidence (documentary or otherwise)  which is undisputed or indisputable; 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, which is relevant to the assessment of his overall credibility; and the demeanour of the witnesses: Lee Fu Wing v Yan Po Ting Paul[2009] 5 HKLRD 513 at §53.

23.  The credibility of the witnesses is especially important in this case, because there is scant documentary evidence that directly corroborates any parties’ case on the disputed issues (apart from Document 1 and Document 2). 

24.  In this regard, I regrettably consider Lau to be an unreliable and untruthful witness, and my huge reservations about his general credibility arise from his account of his relationship with Build Rich and Chun Sang.  Worse still, Lau called Amy to testify in the trial in relation to matters concerning Build Rich and Chun Sang, and I find her, a solicitor by profession and hence an officer of the Court, to be totally untruthful as well.

25.  Build Rich used to be held by Lau and a Mr. Wong Man Ue in the proportion of 900 shares and 100 shares respectively.  Lau alleged that he sold his 900 shares to Amy on 30 September 2021 for $230,000.  I find this suggestion wholly unbelievable, and I consider that at all material times Lau has always been the real owner of the 900 shares (if not also the 100 shares used to be held by Mr. Wong).  I have taken into account the following matters:-

(i)  On Lau’s own case, Lau borrowed some $3,450,000 from Build Rich to finance the acquisition of the Property ($2,800,000 + $500,000 + $150,000). 

(ii)  There is one written memorandum dated 1 November 2021, where Amy as sole director of Build Rich purportedly resolved to cause Build Rich to lend $2,500,000 to Lau.  There is however no documentation that supports the other facilities advanced to Lau, and neither Lau nor Amy could offer any explanation for that.

(iii)  Further, the terms of the loan of $2,500,000 are unreal.  According to the said memorandum, the loan is interest free and is repayable only upon demand.  There is no commercially acceptable reason for Amy to agree to lend a significant sum of money to Lau for no interest just one month after she acquired Build Rich.

(iv)  Amy said that when she acquired Build Rich, there was not much cash in Build Rich’s account.  This renders it even more unbelievable for her to have agreed to cause Build Rich to lend such sizeable sums to Lau. 

(v)  The loan apparently is still owing to Build Rich, and Amy could give no reason why she saw it fit not to cause Build Rich to demand Lau to make repayment after such a significant lapse of time.

(vi)  It is also noteworthy that by the time Amy executed the aforementioned memorandum on 1 November 2021, she only held 900 shares out of 1,000 shares in Build Rich.  Mr. Wong was still holding the other 100 shares, and he purportedly sold his 100 shares to Amy only on 31 May 2022.  No explanation has been given as to why Mr. Wong would agree to cause Build Rich to lend the money to Lau.

(vii)  According to both Lau and Amy, at the time Lau sold his 900 shares to Amy, Build Rich was engaged in a construction project in Ma On Shan that could bring in profits in the tune of $3,000,000.  Given this potential earning, neither Lau nor Amy could credibly explain why Lau would sell his shares for a mere sum of $230,000. 

(viii)  As mentioned above, Build Rich once commenced proceedings in DCCJ 2807/2022 to sue Cheung and Choi for the money and Property.  However, it has always been Lau’s case that the money lent to Cheung came from him, and the Property was held on trust for him.  If Lau had not always regarded Build Rich as his alter ego, there would have been no reason for him to commence that action in Build Rich’s name.  Similarly, Amy would not have had any justification for Lau to use Build Rich’s name to sue Cheung and Choi.

26.  More importantly, in addition to the above inherent impossibilities, Lau and Amy’s account is contradicted by documentary evidence:-

(i)  On 3 May 2022, Lau sent a message to Cheung, where he told Cheung that Amy would agree to hold the shares of Build Rich for two years, and she would charge a fee of $40,000 per month.  He also said that Amy’s firm could help Build Rich to purchase construction bonds necessary for its projects.

(ii)  On 10 September 2022, Lau sent another message to Cheung, where he said that his net worth was over $130,000,000, as Build Rich and Chun Sang together were worth more than $100,000,000.

(iii)  Lau tried to explain away the 3 May 2022 message by saying that he was only telling a lie to Cheung.  He could not, however, give any reasons why he had to lie to Cheung about the shareholding arrangement. 

(iv)  As to the 10 September 2022 message, Lau said that as Cheung had broken up with him, he wanted to exaggerate his wealth to make Cheung jealous.  This is inherently unbelievable, and there is no reason why he had to be so specific about the composition of his wealth. 

27.  As for Chun Sang, it used to be held by Lau and a Mr. Leung Kwok Hung in the proportion of 27,000 shares and 3,000 shares respectively.  Lau alleged that he sold his 27,000 shares to Amy on 13 January 2022 for $27,000.  Again, I find this suggestion wholly unbelievable, and having taken into account the following matters, I consider that at all material times Lau has always been the real owner of the 27,000 shares (if not also the 3,000 shares held by Mr. Leung):-

(i)  As mentioned above, on 10 September 2022, Lau told Cheung that his wealth comprised his interests in Chun Sang.  I do not accept Lau’s saying that he was only telling a lie to make Cheung jealous.

(ii)  Earlier on 29 June 2022, Lau sent a message to Cheung, where he said he would leave Chun Sang to be managed by another person called Roland.  Lau could not explain why he could decide who was to manage Chun Sang some five months after he purportedly sold all his shares in Chun Sang.

(iii)  Neither Lau nor Amy could explain how the sale price of $27,000 was agreed upon.  This only represented the face value of the shares and did not take into account the projects of Chun Sang, which included a project relating to the third-runway of the Hong Kong airport and a project in Kazakhstan.

(iv)  Neither of them could explain what has happened to the 3,000 shares held by Mr. Leung.

28.  Lau’s relationship with the two companies is not directly relevant to the disputed issues.  That said, his preparedness to lie about these peripheral matters and to get a solicitor to lie about these matters for him shows him to be an incredible witness, and I am entitled to take this into account in assessing the various disputed issues.

Issue (1)  – $2,200,000 or $2,000,000

29.  To recapitulate, Lau said he lent $2,200,000 to Cheung in October 2019, whereas Cheung said she received $2,000,000 from Lau in that instance.

30.  In Lau’s first witness statement, he said that asked his mother to issue two cheques to Cheung.  One was a cash cheque dated 22 October 2019 for $200,000 and the other was a cheque dated 23 October 2019 for $2,000,000.  He produced copies of the two cheques, and it can be noted that the number of the $200,000 cash cheque was “962233”, and it was cleared at 15:32 on 23 October 2019.

31.  Lau’s mother, who has been deceased by the time of this trial, made a witness statement in DCCJ 2807/2022 (i.e. the action where Build Rich was the plaintiff suing Cheung and Choi).  In that statement, she produced a different cash cheque.  While it was also dated 22 October 2019, its number was “962230” and it was cleared at 15:06 on 25 October 2019. 

32.  On 26 July 2022, Lau sent a photo of the cash cheque bearing the number “962230” to Cheung and said that was what Cheung owed to him.  In his second witness statement, Lau clarified that the cash cheque given to Cheung was actually the one bearing the number “962233”.

33.  Lau attempted to explain away the inconsistency by saying that he issued a lot of cash cheques in the course of his business so he may have mixed the two cheques up.  That, however, cannot explain why his mother would also produce a wrong cash cheque in her witness statement.

34.  During cross examination, Lau said that on 23 October 2019, he had lunch with Cheung before they went to the bank to cash the two cheques.  Cheung requested to have cash immediately, but the $2,000,000 cheque was crossed so the sum could only be deposited into her bank account.  Lau helped Cheung queue in the bank to cash the cash cheque, and he gave the cash to Cheung.  Two points are worth noting:-

(i)  In his witness statements, Lau said he gave the cash cheque to Cheung, who took the cash out herself.  However, his oral testimony was that he did not give the cash cheque to Cheung; rather, he took the cash from the bank and gave it to Cheung.

(ii)  On Lau’s case, both the crossed cheque and the cash cheque should be cleared at around the same time.  However, it can be seen that the $2,000,000 crossed cheque was cleared at 13:28 on 23 October 2019, whereas the cash cheque numbered “962233” was cleared at 15:32.  Lau could not explain why the two cheques were as a matter of fact cleared two hours apart.

35.  Taking into account the aforesaid inconsistencies and inexplicable matters, as well as Lau’s general incredibility, I find that on that October 2019 occasion, Lau gave Cheung a sum of $2,000,000, not $2,200,000.

Issue (2)  – Loan or Gift

36.  Ms. Joyce Lee, counsel for Cheung and Choi, fairly accepted that the burden lied with Cheung to prove that the $2,000,000 was a gift.  She and Mr. Foster Yim, counsel for Lau and Chun Sang, helpfully made submissions on the relevant principles in ascertaining whether there was an intention to gift, and I shall summarize such principles as follows:-

(i)  It is not profitable to consider the strength of any presumption of fact, nor will considering who bears the onus of proof be generally determinative or even very helpful.  The question of intention to create legal relations is simply a question of fact, to be inferred from the terms of the agreement and the surrounding facts and circumstances.  The Court should consider the totality of the evidence in ascertaining the parties’ intention: Yu Man Fung Alice v Chiau Sing Chi Stephen [2021] HKCA 1456 at §§51-52 per Kwan VP.

(ii)  Earlier and later events are admissible as evidence of intention at the time of transfers.  The issue, rather, is one of weight.  Contemporaneous conduct is inherently more likely to be a reliable indicator of intention, to be given greater weight, than are words and conduct after the event, especially in the case of self-serving statements or conduct of the transferor, who may long after the transaction be regretting earlier generosity: Leung Wing Yi Asther v Kwok Yu Wah (2015)  18 HKCFAR 605 at §§55-56 per Stock NPJ.

(iii)  In Cheung Pui Yuen v Worldcup Investments Inc (2009)  12 HKCFAR 31 at §38, Lord Scott of Foscote NPJ agreed with the Court of Appeal that the trial judge was entitled to accept a 1996 statutory declaration as reliable evidence of a deceased’s intention to make a gift in 1985.

37.  The fact that I ruled against Lau on the amount he gave Cheung in October 2019 casts doubt on the veracity of his claim that he loaned the money to Cheung.  Indeed the only case advanced by Lau was that he lent $2,200,000 to Cheung, and he did not put forward any alternative case that he lent $2,000,000 to Cheung.  It is difficult to conceive of any justification for me to come to the conclusion that Lau actually lent $2,000,000 to Cheung. 

38.  In any event, there are multiple other reasons for me to accept Cheung’s case and reject Lau’s case.

39.  First of all, considering the pattern of Lau generously gifting Cheung at the material time, it is more probable that the sum of $2,000,000 was also a gift.  Compared to other gifts, the sum of $2,000,000 was not extraordinary or out of proportion.  Those other gifts or financial support include:-

(i)  Lau gifted Cheung a Mercedez-Benz GLA200 motor vehicle in around May or June 2019, i.e. not long after he started dating Cheung.  On Lau’s case, the vehicle costed over two hundred thousand dollars.

(ii)  Lau paid for the vacations of Cheung, her daughter and Choi to Canada and Thailand.  He did not even join their trip to Canada, and on Lau’s case, he gave Cheung some $80,000 for the Canadian trip.

(iii)  During their courtship, Lau would pay for their expenses including the rent of the two properties in which they cohabited.  Further, Lau said initially he would give Cheung some $30,000 a month as living expenses, and the amount was adjusted up to $80,000 - $100,000 a month later.

(iv)  On 5 December 2019, Cheung engaged a consultant to process her intended application to migrate to Australia. The consultancy fee of $100,000 was paid by Lau (though Cheung said Lau actually paid a bit more for the consultancy and legal fee).  The generosity of this gift should be appreciated against Lau’s case that he and Cheung broke up for the first time in November 2019 and between December 2019 and May 2020 they remained separated.  Despite that, he helped Cheung settle the hefty consultancy fee.

(v)  In fact, to support Cheung’s migration plan, Lau transferred to Cheung sums over $1,000,000 in August and September 2020 for the purchase of a property in Australia and paid AUD67,000 to Australian lawyers to handle the conveyancing transaction.  While Lau said the Australian property was for investment, he admitted that he would let Cheung live there.  And while he denied having paid AUD67,000 for the conveyancing fees, he admitted he paid $460,000 in August 2020, which according to Cheung was transferred in AUD to the Australian lawyers. 

40.  Mr. Yim for Lau attempted to play down the significance of the Mercedez-Benz motor vehicle and the monies paid for Cheung’ migration plan by arguing that when the vehicle was sold Cheung handed over the proceeds back to Lau and when her migration plan did not materialize she paid $1,200,000 back to Lau. Nevertheless, the undisputed evidence is that Cheung gave the monies back to Lau out of her own volition and Lau did not request it.  Cheung’s acts thus do not detract from Lau’s generosity towards her.

41.  Secondly, apart from the actual gifts mentioned above, Lau has shown himself ready to give Cheung substantial assets.  While he did not ultimately give those assets to Cheung, his readiness to do so makes it unsurprising that he would be willing to gift $2,000,000 to Cheung.  Those intended bequests or gifts include:-

(i)  On 19 March 2022, Lau executed a will where he stated that he would bequeath all his real and personal properties to Cheung.  Lau had six other siblings and two young daughters, and yet he was willing to bequeath all his properties to Cheung after his death.  During cross examination, Lau said he could always change his will.  That is certainly true, but the fact remains that on his case he did not change his will until some time later, and even in that new will he stated that he would bequeath Build Rich to Cheung.  It may be recalled that Lau once told Cheung that Build Rich was worth a lot of money.

(ii)  A few days after they broke up, Lau sent a message to Cheung on 29 June 2022, where he referred to his earlier proposal of giving $10,000,000 to Cheung.

(iii)  Subsequently, Lau sent a message to Cheung on 10 September 2022, where he said that had they not broken up, he would have kept only Kaiser (M&E)  Engineering Company Limited to himself and divided his remaining assets in two halves, one to be given to Cheung and the other to his two daughters.

42.  Thirdly, it is inherently improbable that Lau would leave no documentary trace to support his claim that the $2,000,000 was a loan to Cheung.  While I can understand that given their close relationship at that time it may not be considered necessary for them to sign any written loan agreement, I find it unbelievable that there would not exist even a single message between them where they would refer to the loan.  Lau said he did send messages to demand repayment of the loan, but he has not produced any of those alleged messages.  Even after they broke up and when Lau threatened to sue Cheung, he merely referred to a litigation concerning two cheques, one of $2,000,000 and one of $200,000, without saying that Cheung owed him the sums by way of a loan.

43.  Fourthly, on Lau’s own case, when he purchased the Property, he had to ask Cheung to pay the outstanding balance of $565,000 on his behalf, and he subsequently repaid this $565,000 to Cheung.  Assuming this allegation is true, it begs explanation as to why Lau would find it necessary to repay $565,000 to Cheung when Cheung was still owing him $2,200,000 or $2,000,000, and Lau has not given any such explanation.

44.  Last but not least, I consider that while Document 2 is not a contemporaneous document, Lau recorded his own intention there that the previous monies given to Cheung, including the $2,000,000, were gifts.  I find that it accurately reflects his intention at the time when Lau gave the $2,000,000 to Cheung. 

45.  Lau said that he wrote Document 1 and Document 2 involuntarily and under duress.  I do not accept his allegation for the following reasons:-

(i)  According to his witness statement, on 13 February 2022, Cheung demanded him to gift the Property to her.  After Lau refused her demand, Cheung took out a knife and pointed it to Lau, and threatened to die together with him.  He tried to calm her down, but she kept pointing the knife at him and repeating her demand to be gifted with the Property.  Under her threat and duress, he wrote Document 1.  However, Cheung was still not satisfied and raised the knife again towards him, demanding him to write another declaration in relation to other gifts.  Under such threats, he wrote Document 2.

(ii)  Nevertheless, when he was in the witness box, he gave a rather different version of the event.  He said that when they were quarreling, Cheung pointed a knife at him, so he decided to go back to his room and hide there.  After ten minutes he went back to the living room, and he saw that Cheung had already put down the knife.  They then cooled down for two to three hours, and Cheung calmly demanded him to write the documents.  He even said that if Cheung had threatened him to write the declarations, he would not have caved.

(iii)  The two versions are markedly different and there is no reason for me not to accept what he said during cross examination (except for the part where he said Cheung held a knife against him at one point, which I will address later).  In the premises, I find that he wrote Document 1 and Document 2 voluntarily. 

(iv)  In fact, Cheung’s daughter video-recorded Lau’s writing of the two documents.  From what I can observe from the video, while Lau was not very happy at that time, he did not appear that he was being threatened to write the declarations.  In the course of his composition, he would even seek clarifications from Cheung and propose his own wordings.  There is nothing in the video that suggests that he was under duress.

(v)  Lau has called their Filipino helper at the material time, Ms. Suelen Maryjane Bacerra, to testify.  Ms. Bacerra said that on one occasion she found a knife in a trash bin in the Wong Tai Sin property and she asked Cheung’s daughter about it.  Cheung’s daughter told her that Cheung held that knife against Lau the night before.  I found Ms. Bacerra’s evidence to be of limited probative value, as she could not recall when her conversation with Cheung’s daughter took place.  During cross examination, she once said it should be in February 2022, but later she clarified that she actually could not remember when it was.  She could be referring to another incident, in light of Cheung’s unchallenged evidence that she did on another occasion in April or May 2022 point a knife at Lau.

(vi)  Lau has also produced a relevant tape recording.  He said he put a recording device in Cheung’s car, which recorded a conversation between Cheung and her daughter.  Cheung said she would kill Lau, and Cheung’s daughter asked Cheung not to threaten Lau again.  Lau said Cheung and her daughter were talking about the incident on 13 February 2022.  Having listened to the tape recording, it appears to me that Cheung uttered that sentence only at the spur of the moment and she did not seriously mean she would kill Lau.  For inexplicable reasons, Lau only disclosed a short extract of the recording, so the context of that conversation is not clear at all.  More importantly, Lau could not explain why he did not adduce any written records to support his claim that that tape recording was recorded on a date near 13 February 2022.  As the date of the recording is unknown, Cheung and her daughter could well be referring to some other incidents, especially when Cheung herself admitted that she once pointed a knife at Lau in April or May 2022.

(vii)  I also find it unbelievable that Lau has not reported the matter to the Police.  He said he was soft-hearted and did not want to see Cheung going to jail.  I do not accept his explanation.  After all, on another occasion when he suspected Cheung to have stolen $600,000 from the Wong Tai Sin property on 23 June 2022, he reported the matter to the Police and gave a detailed statement without caring if Cheung would be arrested.  And even if he was soft-hearted in February 2022, by the time he reported the suspected theft to the Police, he would have been expected to mention the incident in February 2022.  That he has not said anything about being coerced into writing Document 1 and Document 2 shows that he wrote them voluntarily.

46.  I find it more likely than not that Cheung was telling the truth, in that Lau wrote the two declarations in an attempt to console her and to convince her that he was sincere in maintaining their relationship.

47.  Having considered the totality of the evidence, I find that the $2,000,000 given to Cheung was intended by Lau as a gift, not a loan.  In the circumstances, Cheung’s alternative case of estoppel does not arise for consideration.  That said, I should briefly mention that if I had found that the $2,000,000 was a loan, I would have rejected Cheung’s estoppel defence:-

(i)  In her Defence, Cheung pleaded that relying on the representation as embodied in Document 2, she halted the quarreling with Lau and did not break up with him in February 2022, and she utilized the money for her daughter’s use.

(ii)  That she would have broken up with Lau had Lau not made the representation is nothing but a bare assertion of Cheung.  It is nowhere mentioned in Document 1 or Document 2 or any other written materials.  And a careful reading of Cheung’s witness statement would reveal that she actually did not threaten to break up with Lau on 13 February 2022; putting her case to the highest, she might have mentioned it in early 2022, but not on 13 February 2022.  I do not accept that she remained in a relationship with Lau in reliance of Lau’s representation.

(iii)  Regarding her daughter’s expenses, she admitted that eventually she did not send her daughter to study abroad.  In other words, she did not spend extra money on her daughter in reliance of Lau’s representation.  Any other spending to maintain her daughter’s daily living would have to be incurred one way or another.

(iv)  I therefore find that there is no detrimental reliance on Cheung’s part, which would have been fatal to her estoppel defence.

Issue (3)  – Trust or Gift

48.  There is no dispute between the parties that as Lau paid for the purchase price of the Property, there would prima facie be a resulting trust in Lau’s favour and that outside of the domestic consumer context, the presumption of resulting trust as opposed to the doctrine of common intention constructive trust should apply: see Jones v Kernott [2012] AC 776 at §8; Laskar v Laskar [2008] 1 WLR 2695 at §§17-19; Chan Sang v Chan Kwok [2015] 3 HKLRD 131 at §§34-36 per Chow J (as Chow JA then was).

49.  It is thus incumbent on Choi to prove that the Property was intended by Lau as a gift to her, and I would have to consider the totality of the evidence to determine the parties’ intention.

50.  I would first note that there was no good reason for Lau to register the Property in somebody else’s name.  It is not uncommon for a property buyer to nominate another person to be the registered owner to minimize tax liabilities or to avoid any adverse impact on his entitlement to social benefits such as public housing.  However, Lau did not offer any of these reasons.  Rather, he simply said that he agreed with Cheung’s suggestion to have Choi as the registered owner so as to facilitate her (it is not clear whether he meant Cheung or Choi)  to manage the Property, including to attend owners’ meetings.  I do not consider it to be a good reason.  After all, Cheung and Choi could manage the Property for him even if Lau was named as the registered owner, and arranging proxies to attend owners’ meetings is commonplace.  In the absence of a good reason to have a trust arrangement in place, I consider that the act of naming Choi as the registered owner reflects Lau’s intention to gift Choi with the Property.

51.  While the Property is quite valuable, there was nothing extraordinary for Lau to make such a gift to Choi.  As analyzed above, Lau was very generous towards Cheung, and on various occasions he even indicated that he would give sizeable assets to Cheung.  Given his affection for Cheung, it is capable of belief and inherently probable that he would be willing to gift the Property to Choi as per Cheung’s suggestion.

52.  The written correspondence between Lau and Choi also supports Choi’s case:-

(i)  There was a message from Lau to Choi, the date of which is not known. In that message, Lau explained that he registered the writ of summons in the Land Registry to prevent anyone from controlling the Property, but Choi could keep collecting the rent for herself or live there until her death (“今次我安排[釘]契目的只有一個 任何人都不能擁有這間屋話事權 除左呢個原因外並無任何想法 妳可以永遠收租或住下去 直到妳[百]年歸老也是我對妳的承諾”).

(ii)  There was another message from Lau to Choi dated 20 July 2022, where he said Cheung suggested him to buy Choi the Property to fulfil her wish (“當初她講得很清楚 是給妳有個物業還妳一個心願”).

(iii)  On 28 July 2022, Lau told Choi that had their relationship not broken down, the Property had been intended to be given to Choi (“原本落(sic)真的留下呢個物業給你。現在沒有辦法一拍兩散只係痛心又再一次浪費我的金”).

(iv)  In my view, the above messages clearly show it was Lau’s intention to gift the Property to Choi, and he regretted it after Cheung broke up with him. One may contend that the first message can be interpreted to mean that Lau has only granted a lifetime license to Choi, but that would not be consistent with Lau’s own pleaded case, which is simply that Choi held the Property on bare trust for Lau.

53.  There is also a legal document signed by Choi and Lau where both of them agreed that Choi was the sole beneficial owner of the Property:-

(i)  As mentioned above, in March 2022, Lau would like to apply for a loan of $1,200,000 from YH Services Limited.  On 31 March 2022, Choi as borrower, Lau as guarantor and YH Services Limited as lender executed a loan agreement.

(ii)  The said loan agreement contains the following clause in its preamble: “(b)  The Mortgagor(s)  is the legal and [sole] beneficial owner(s)  of the Property(ies)  described in the Second Schedule hereto …”

(iii)  Since Lau also signed the said loan agreement, he must be taken to have agreed with the contents therein and to have acknowledged that Choi was the sole beneficial owner of the Property.  Lau has not suggested that he was attempting to deceive or defraud YH Services Limited by making a false representation as to the beneficial ownership of the Property.

54.  Lastly, Document 1 reflects Lau’s intention to gift the Property to Choi.  As analyzed above, I do not accept Lau’s allegation that he wrote the document under threat or duress.  Mr. Yim argued that had the Property been intended as a gift at the time of acquisition, it would not have been necessary for Cheung to demand Lau to write Document 1.  I do not see anything unusual for Cheung to raise this demand to put the matter beyond doubt especially when she was quarreling with Lau at that time.

55.  Taking into account the totality of the evidence, I find that the Property was intended by Lau as a gift to Choi.  As a result of my finding, Choi’s alternative case of estoppel does not arise for consideration.  For the sake of completeness, I would say that if I had found that the Property was initially intended to be held by Choi on trust, I would have rejected Choi’s estoppel defence:-

(i)  In her Defence, Choi pleaded that relying on the representation as embodied in Document 1 as well as the various messages sent by Lau to her, she entered into the loan agreement with YH Services Limited, delivered the title deeds of the Property to YH Services to YH Services Limited, and paid for all incidental expenses related to the occupation of the Property.

(ii)  I find that on the evidence, Choi agreed to enter into the loan agreement not because of Lau’s representation about gifting the Property to her.  There is no conceivable causal relation between receiving the Property as a gift and agreeing to act as the borrower.  Furthermore, the various messages sent by Lau (hence the representations therein)  postdated the loan agreement. Rather, she agreed to act as the borrower because Lau represented to her that he would be solely responsible for repayment, and that he would gift $200,000 of the loan proceeds to her and give $1,000,000 to Cheung. 

(iii)  As to the incidental expenses, while there is no denying that she has incurred those expenses, she at the same time collects the rental income from the Property.  There is no suggestion that the rental income is insufficient to cover the expenses.  So even if there was reliance on Choi’s part, such reliance was not detrimental.

56.  Choi counterclaims for declaratory reliefs to the effect that Lau has no beneficial interest in the Property and that she is the sole beneficial owner. She also seeks an order that the registration of the writ in this action against the Property be vacated.  Given my finding above, I would make grant such reliefs.

Issue (4)  – Choi’s Counterclaim for $1,000,000

57.  Choi’s pleaded counterclaim for $1,000,000 can be summarized as follows:-

(i)  Lau represented to her that he needed to obtain a loan as Cheung’s birthday gift, and that out of the $1,200,000 proceeds, $1,000,000 would be applied to the benefit of Cheung and $200,000 would be retained by Choi.

(ii)  Lau also represented that he would be responsible for the repayment of the principal and interest payable.

(iii)  On 31 March 2022, in reliance of Lau’s representations, Choi entered into the loan agreement with YH Services Limited.

(iv)  On 1 April 2022, the $1,200,000 loan proceeds were transferred to Choi’s bank account.  Lau’s employee, a Ms. Maggie Lau, assisted Choi to draw down the loan.  However, Ms. Lau directed Choi to effect a transfer of $1,000,000 to Chun Sang.

(v)  Upon her enquiries, Lau said he needed the $1,000,000 to pay wages of his employees.  He would be responsible for making full repayment to YH Services Limited.  Once his cashflow improved, he would give Cheung $10,000,000 (as opposed to the original $1,000,000).

(vi)  Lau has failed to repay the loan to YH Services Limited and has failed to give $10,000,000 to Cheung.  The consideration for the transfer of $1,000,000 to Lau and/or Chun Sang has therefore failed, and Lau and/or Chun Sang have been unjustly enriched.

58.  I have no problem in accepting Choi’s allegations that Lau at one point made those representations to her.  Indeed Lau himself repeatedly pleaded in his Defence to Counterclaim and stated in his witness statements that he would be solely responsible for all repayment of the loan.  Further, on 15 September 2022, Choi sent a message to Lau, where she referred to Lau’s representations that $1,000,000 of the loan proceeds would be given to Cheung and $200,000 would be given to Choi, as well as Lau’s representation that once his cash flow improved he would give $10,000,000 to Cheung.  Back then, Lau did not refute Choi’s message, and I find that Choi was accurately setting out Lau’s representations.

59.  Having said the above, despite Lau’s representations to her, according to her own witness statement Choi knew that the $1,000,000 was being transferred to Chun Sang, not Lau or Cheung (although she tried to retract from this during cross examination, which I do not accept).  Ms. Maggie Lau asked her to transfer the sum to Chun Sang and told her that it was for Lau’s business use.  In other words, when it came to the moment for her to effect the transfer, she had no reason to think that Lau would apply the $1,000,000 to the benefit of Cheung, but she effected the transfer anyway.  It means that she herself accepted that the original consideration for her to enter into the loan agreement was no longer required, and she cannot now complain that the consideration has failed. 

60.  Furthermore, I consider that Choi’s unjust enrichment claim has to be dismissed as she could not satisfy one crucial requirement for establishing an unjust enrichment claim:-

(i)  It is trite that to succeed on an unjust enrichment claim, the claimant must prove among others that the defendant has been enriched and the enrichment must have been gained at the claimant’s expense.

(ii)  While Lau and Chun Sang have been enriched, I do not think that as a matter of fact they were enriched at Choi’s expense.  It is true that the loan proceeds of $1,200,000 were first paid into Choi’s bank account, and Choi transferred $1,000,000 to Chun Sang.  Notwithstanding that, considering the totality of the evidence, it is clear to me that it has always been agreed between Lau and Choi that Lau would be the real borrower.  After all, he agreed to be solely responsible for repayment, and it was him who decided where the loan proceeds should go. 

(iii)  Put it another way, Choi never has had any beneficial interest in the $1,200,000 loan proceeds.  She was named a borrower only because the Property, which was hers, was required to be mortgaged.  She received the loan proceeds from YH Services Limited only as a nominee, and the proceeds belonged to Lau. Lau, as the sole beneficial owner of the $1,200,000, then directed $1,000,000 to be transferred to Chun Sang and $200,000 to be given to Choi.

(iv)  In reality, Lau and Chun Sang’s enrichment did not come at the expense of Choi.  Her unjust enrichment claim must therefore necessarily fail.  To allow Choi’s claim is tantamount to allowing Choi to sue on Lau’s gratuitous promise to gift Cheung with $1,000,000, which is not legally permissible.

61.  I have not lost sight of the fact that Lau has yet to make full repayment and that YH Services Limited has commenced proceedings against Choi. It would be for Choi to bring Lau in as a third party and seek indemnity from or damages against him, and I do not foresee that there is any practical possibility for Lau to retract from his clear position that he alone would be fully responsible for repaying the loan.

Conclusion

62.  In conclusion, I would dismiss Lau’s claims against Cheung and Choi in their entirety.  I would also dismiss Choi’s counterclaims against Lau and Chun Sang, save that I would make the following orders in relation to the Property:-

(i)  A declaration that Lau has no beneficial interest in the Property;

(ii)  A declaration that Choi is the sole beneficial owner of the Property; and

(iii)  The registration of the writ of summons in this action against the Property in the Land Registry be vacated.

63.  Cheung is wholly successful in her defence so she should be awarded costs.  Choi succeeded in defending Lau’s claim for the return of the Property, but her main counterclaim for unjust enrichment failed (the other counterclaims are just the flip side of her defence against Lau’s claims).  I consider it just to make no order as to costs between Lau and Choi, whereas Chun Sang should be awarded costs.  I therefore make the following costs order nisi:-

(i)  Lau do pay the costs of Cheung including all costs reserved, to be taxed if not agreed, with certificate for counsel;

(ii)  Choi do pay the costs of Chun Sang including all costs reserved, to be taxed if not agreed, with certificate for counsel; and

(iii)  There be no order as to costs between Lau and Choi.