TKF v. NST

FCMC 13902 / 2017

[2024] HKFC 75

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MATRIMONIAL CAUSES

NO. 13902 OF 2017

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JUDGMENT
( Preliminary Issue
Beneficial Ownership of Stone Seals)

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A.  Introduction

1.  The dispute is whether the Petitioner (“W”) (as contended by the Respondent (“H”)) or the Intervener (as contended by W) is the legal and beneficial owner of the 101 items of stone seals (“the Stone Seals”) identified in the publication entitled “石印章極品收藏集” (“the Book”).[1] This was heard as a preliminary issue in the claims for ancillary relief.

2.  This ownership dispute between the spouse and a third party shall be approached by reference to the general law of property as applied in the civil courts: TL v ML[2]; LLC v LMWA[3]. H has the burden of proof on a balance of probability that W is the legal and beneficial owner of the Stone Seals. The court is entitled to take into account all the evidence adduced by both parties.

B.  Background

3.  H and W are in their sixties.

4.  W and the Intervener were married in 1980. They have a daughter (“Daughter”) born in 1983 in Shanghai. The Intervener has worked in the Shanghai Orchestra. W was under the employ of a Mainland handicraft and artwork company (“Arts Company”) in Fuzhou between 1990 and 1995. The Arts Company was engaging in the production, sourcing and sale of artscraft and stone seals. The marriage between W and the Intervener was dissolved in December 1992.

5.  W and H got married in November 1995 in Shanghai. In December 1996, W and the Daughter came to Hong Kong to join H.

B1.  H’s case

6.  The gist of H’s case pleaded in his Points of Claim is that when W was working at the Arts Company, she built up her own collection of stone seals (including the Stone Seals). She brought them with her when she came to Hong Kong in December 1996. The Stone Seals were kept under the bed in their matrimonial home between 1997 and 2008. Thereafter, the Stone Seals were kept in safe deposit boxes rented at banks. H produced a letter from a bank showing the safe deposit box opened in his name with W added as an authorised signatory. Subsequently, W removed the Stone Seals from the safe deposit box without notice to H.

7.  W was engaging in the business of the collection and valuation of famous stones, including the Four Famous Stones (四大名石) (namely, 壽山石，青田石，昌化石，巴林石) from the Mainland. In the Book written/edited by W, W stated that she has collected stone seals made from the Four Famous Stones. The Book presented the Stone Seals with photographs and descriptions. The Book was published in November/December 2012.

8.  There was a set of photographs of the Stone Seals taken by digital camera in Hong Kong in around 2007. As these photographs were not of good quality, H had assisted W in taking photographs of the Stone Seals for the Book in 2012. H had also assisted W in receiving and recommending potential buyers of the Stone Seals.

B2.  W’s case

9.  W maintained that she had never engaged in any sale and purchase of national stones (國石) or stone seals. It is her pleaded case that the Stone Seals were purchased by the Intervener prior to 1993 (“以呈請人暸解，所有書內藏品皆是由擬介入人於1993 年前出資購入的”)[4].

10.  She also pleaded that by a divorce agreement made with the Intervener in December 1992 (“Divorce Agreement”), it was agreed that all the family assets (which was not particularised) belong to the Intervener.

11.  The Stone Seals were loaned to her by the Intervener for the publication of the Book as a conclusion of her work experience in the Arts Company (“於2010 年，呈請人希望擬介入人借出藏品，以供出版一本書籍，作為呈請人在內地工藝品公司工作的一個經驗總結”)[5]. The Intervener initially refused to lend the Stone Seals to her. He only agreed after the Daughter’s persuasion. The Stone Seals were brought to Hong Kong in around 2010. They were returned to the Intervener in Shanghai by the Daughter before the publication of the Book.

12.  The digital camera photos of the Stone Seals were taken in Shanghai in 2007, but not in Hong Kong.

13.  At the oral opening submission, Mr Lee, Counsel for W, confirmed after having taken instruction from W that she did not rely on the Divorce Agreement. Her only case is that the Stone Seals were purchased by the Intervener before 1993 and thus were owned by the Intervener. Mr Lee attempted to re-argue the point on the Divorce Agreement in the closing submission.[6] Such attempts must be in vain.

B3.  The Intervener

14.  The Intervener has not participated nor filed any document in these proceedings. The parties did not take issue on service of the proceedings effected on the Intervener. The Daughter has testified that the Intervener has knowledge of these proceedings.

15.  Having satisfied that the Intervener was served with the documents of these proceedings, I allowed H’s application (which was not objected by W) to proceed with the trial notwithstanding the absence of the Intervener.

C.  Decision

16.  At common law, the ownership of a chattel is presumed to follow from possession: The Law of Personal Property (3^rd ed.) by Bridge at [11-012].

17.  The concept of ownership in respect of chattels consists of a number of rights over the property, including the rights of exclusive enjoyment, destruction, alteration and alienation, maintaining and recovering possession of the property from all other persons: Halsbury’s Laws of Hong Kong, Personal Property, Vol 42, 2^nd edition at p. 505.

18.  The general rule is that the validity and precise effect of the purported change in property interests is governed by lex situs rule: The Conflict of Laws in Hong Kong (3^rd ed.) by Graeme Johnston at [6.010 – 6.011].

19.  In this case, I do not find it helpful to merely rely on the legal presumption to resolve the ownership dispute. The finding of possession is not conclusive to the ownership rights. The court will consider the evidence in its entirety to determine whether W or the Intervener is the owner of the Stone Seals.

20.  This is essentially a dispute on facts. It is common ground that at least during the period of 2010 to 2012, W was in possession of the Stone Seals in Hong Kong. None of the parties have adduced direct evidence on the acquisition of the Stone Seals save their bare assertions.

21.  In the evaluation of the witnesses’ evidence and the cases put forward by the parties, I have regard to the following:

(1)  Documentary evidence, in particular contemporaneous documents and other documents existed prior to the dispute;

(2)  The inherent plausibility or implausibility of a party’s case;

(3)  The internal consistency or inconsistency of a witness’ evidence;

(4)  The consistency of a witness’ evidence when compared with the other undisputed or indisputable evidence;

(5)  A witness’ evidence shall be considered in its entirety;

(6)  The making of a mistake by a witness does not necessarily render the other part of his testimony unreliable;

(7)  Whether a witness has been discredited over one or more matters in his testimony;

(8)  Whether the witness was evasive, shifting his case, making new allegations, making selective disclosure and/or blaming the legal advisers in cross-examination;

(9)  Whether the witness has any motive for not telling the truth;

(10)  The demeanour of a witness which has to be approached with care as demeanour can be deceptive.

See: Yu Man Fung Alice v Chiau Sing Chi Stephen[7].

22.  Having considered the evidence of H (for his case), W and Daughter (for W’s case) and the documentary evidence adduced, for the reasons below, I accept on a balance of probability that W is the legal and beneficial owner of the Stone Seals.

C1.  The Book

23.  W wrote in the Book (extracted below) that she collected (收集) and kept (保存) some rare stone seals made from the Four Famous Stones in the Mainland, which she presented as a collection in the Book[8]:

(1)  “1990年至1995年在福州國豐工藝品有限公司任職副總經理， 1996年至今定居香港。”

(2)  “是命運讓我走進了這個盛行的行業，讓我有機會接觸到…四大名石原石，欣賞到無數製成的印章和工藝品，並深深愛上了我們中華民族特有的 “方寸” 文化。同時，也讓我產生了一個強烈的信念 – 要在這個成行的時期，收集和保存一批四大名石製成的印章與工藝品佳作。”

(3)  “為了出一本好書，讓我們中華民族獨特的 “方寸”文化藝術在我們這一代人的努力下繼續傳承，20多年前我便不斷的進入各深山礦區尋找優質的石材，拜訪老一輩的收藏者，參觀學習，對比老石章的切割技術和雕刻工藝。”

(4)  “本人有幸參與從各地石農、礦區選購材料，相石、切割、打磨、雕刻、拋光、包裝等過程，幸運地收藏了一部份罕見的精品寶物。將之結集出版，是希望能給當代的收藏家和喜愛中國四大名石的人士提供一本鑑賞的資料，與大家共同分享美的盛宴。” (emphasis added)

24.  W described in the Book the following occasions of her acquiring or purchasing different kinds of stone seals:

(1)  “在 1992年 12 月收購了石巢老人撰寫的《印石辨》書中所有物品後…”

(2)  “第一次進入壽山鄉採購田黃原石…”

(3)  “20年前在壽山鄉採購了多塊田黃原石…”

(4)  “內蒙赤峰有位… 巴林石個體戶石商… 20年前去他的庫存搜尋，很幸運地收購到幾塊雞血原石和二十幾方的巴林黃凍石章製成品。其中有兩方是黃凍雞血石章．真是難得一見，在石商界、石藏界稱為 "田黃雞血石"。本書的封面圖片就是其中的一方。”

25.  The Book presented 101 items of Stone Seals in four chapters: (1) 田黃石/福黃石，(2) 昌化鷄血石/巴林鷄血石，(3) 芙蓉石/粉紅凍石/封門青石，(4) 品種石珍品.

26.  W admitted that the references to “我” or “本人” in the Book are references to her. There was no mention of the Intervener in the Book.

27.  It was enunciated in the Book that the Stone Seals are W’s own collection, acquired and kept by her over the past 20 years. W had not seriously argued otherwise.

28.  The Book was published by a reputable publishing house. W agreed that the publishing house would treat its publication (including the accuracy of its contents) seriously.

29.  W argued at the witness box that the Book was “compiled/edited” (編著) but not “authored” (著) by her and therefore under the PRC copyright law, she did not have to own the Stone Seals. Putting aside the lack of evidence on the PRC copyright law to support her assertion, this argument is a confusion of the real issue. It is irrelevant as to whether the Book was authored or edited by her. The issue in this trial is not whether W has complied with the PRC copyright law. The real issue is about W’s representation in the Book that the Stone Seals were acquired and collected by her.

30.  W further argued that the acquisition and collection described in the Book were acts done by her on behalf of the Arts Company[9]. This must be rejected. Firstly, it is plain that the Book referred to W’s personal acquisitions but not her acts on behalf of the Arts Company. Secondly, it contradicted with W’s only case that the Stone Seals were acquired by the Intervener. Thirdly, if the acquisitions were made for the Arts Company, why were they not owned by the Arts Company.

31.  Daughter attempted to explain the omission of the Intervener in the Book by asserting that the Intervener is in the cultural sector and he did not want to get involved in commercial activity. However, W stated in the preface of the Book that the publication is to provide materials for appreciation of stone seals by collectors (將之結集出版，是希望能給當代的收藏家和喜愛中國四大名石的人士提供一本鑑賞的資料，與大家共同分享美的盛宴). This is more cultural than commercial.

C2.  The Letter

32.  H adduced a letter found in the computer stored in W’s room at the matrimonial home (“the Letter”). The Letter was addressed to a host of a television show “投資與收藏” at the Phoenix TV. The brief resume of W and her contact phone number were included in the Letter. W admitted that she watched the above television show and knew one of the hosts.

33.  It was stated in the Letter that W has a personal collection of stone seals, including over 100 items of the Four Famous Stones invested and collected by her between 1989 and 1995:

(1)  “[…] 在1989年至1995年個人投資收藏了百件中國四大名石的頂級珍品。每一件藏品從各產地礦區選料、相石、切割、打磨、雕刻、抛光、包裝本人都親自參與其中。”

(2)  “另外希望可以直接面談，與您分享我的一些私人收藏以及聊一下其他合作的可能性。同時傳幾張藏品的相片，田黃石、鴨血石、芙蓉石、福黃石等；請多多指教，本人是在家裡用自然光傻瓜機拍的。” (emphasis added)

34.  W denied knowledge of the Letter. Her bare denial is rejected for the following reasons:

(1)  The Letter was found in a computer in W’s room in the matrimonial home. There is no suggestion that anyone other than H, W and Daughter would have access to that computer.

(2)  It was shown in the file information of the Letter that the Letter was last edited on 24 February 2010. There is no conceivable motive for H to fabricate the Letter when the parties are in good marital relationship.

(3)  Part of the content of the Letter is the same as the preface of the Book drafted by W subsequently.

(4)  The Daughter’s name was shown in file information as author of the Letter. It is more likely than not that the Daughter has assisted W in the typing or drafting of the Letter.

C3.  Evidence in support of W’s engagement in acquiring stone seals

35.  I do not accept W’s plea that she has never engaged in the acquisition of stone seals for the following reasons:

(1)  It is common ground that through her works at the Arts Company between 1990 and 1995, W accumulated the knowledge and expertise in selecting and purchasing stone seals. An outsider to the industry would not have the necessary knowledge and expertise. The Intervener has been working in the music industry. W agreed that at least up to the time when she divorced with the Intervener, W was the only person between the two of them possessed professional knowledge in relation to stone seals.

(2)  In her name card, W professed to be a consultant for private collectors of Four Famous Stones, and the author of the Book.

(3)  W admitted that she is a collector of stone seals. She stated in her evidence that she owns 28 items of memorabilia that she has kept from her days in the traditional art field (“本人還有大約 28 件紀念品, 是本人過去從事工作收藏作為紀念及送禮之用”).

(4)  She wrote about her acquisition and collection of the Stone Seals in the Book and the Letter.

(5)  W’s evidence on the attempts to market the sale of the stone seals.

36.  I do not find the consignment note (“Consignment Note”) adduced by H helpful to the resolution of this ownership dispute. The stone seals referred to in the Consignment Note were not the Stone Seals in issue and the consignment was back in 1994 and 1995.

37.  The Consignment Note recorded the consignment of some high-quality stone seals (“高檔石章”) to a shop called 上海蘭馨 (“Shanghai Shop”) for sale in 1994. It was written by W on the Consignment Note that:

“以上高檔石章寄托上海蘭馨珠寶經營部銷售，時間為三個月，貨品售出國豐工廠收回7成 ，蘭馨得到3成 ，以上貨品如有售出總價為228,600 。國豐收回160,020. 多謝信譽合作。”

38.  The statement that 70% of the sale proceeds were to be received by the Arts Company (貨品售出國豐工廠收回7成) suggested that this was the Arts Company’s consignment. Although the Consignment Note was signed by W on her own name without the company chop or seal of the Arts Company, and H’s evidence (which was denied by W) that he visited the Shanghai Shop with W in 1995 to collect the proceeds from the sale of the consigned stone seals, these do not conclusively prove that the consignment was W’s personal consignment.

C4.  Reliability of the evidence of W and the Daughter

39.  In general, W’s evidence is not reliable. The most notable example is the fundamental change of her case about the acquisition of the Stone Seals. She pleaded in the Points of Defence that the Stone Seals were purchased by the Intervener prior to 1993. However, she testified in the witness box that the Stone Seals were acquired through the following means:

(1)  jointly purchased by the Intervener and W during their travel;

(2)  purchased by the Intervener from the Arts Company during 1990-1995; and

(3)  gifts from her supervisor to W as reward.

40.  There is not a shred of evidence corroborated either of the above bare assertions made by W.

41.  Overall, W was evasive in her answers during cross examination. She attempted to blame her lawyers for the inconsistencies or omissions in the pleadings and affirmations despite she has fully adopted them at the examination-in-chief. She had gone so far to suggest at cross examination that she had not read the pleadings or affirmations when she signed them. When she was further pressed, she retracted and said that she had read them and the contents therein are correct.

42.  The Daughter indiscriminately adopted the entirety of W’s witness statement despite her admission that she has no direct knowledge of some of the matters stated in W’s witness statement. Take for example, she accepted that she did not know whether W had engaged in the sale and purchase of Stone Seals. I have reservations on the reliability of the Daughter’s evidence and find her evidence unhelpful.

43.  The Daughter was about 10 years old in 1993. She has no knowledge of the acquisition of the Stone Seals. All she has said was that the Intervener brought her to the Arts Company in Fuzhou to collect money and stones from W in about 1990 (when she was 7 years old). She did not give particulars of the stones that were said to have collected by the Intervener except at the end that she suddenly identified four of the Stone Seals. She admitted that she had not witnessed any financial transactions. She only has recollection that the Intervener brought them from Fuzhou to Shanghai.

44.  It was W’s evidence that the Intervener had visited Fuzhou in early 1990s to collect money from her for the living expenses of the Daughter. The taking of stone seals by H from Fuzhou to Shanghai during their marriage (even if proved) would not be sufficient to prove the Intervener’s ownership of those stone seals. Her evidence about the visits to the Shanghai Shop with the Intervener to collect money on behalf of W because W was busy in Fuzhou is unrelated to the ownership of the Stone Seals.

C5.  Unnecessary to draw adverse inference

45.  Mr Lam, Counsel for H, submitted that adverse inference should be drawn from the non-participation of the Intervener in these proceedings and the failure of W to call the Intervener to give evidence.

46.  The evidence of the Intervener on the ownership of the Stone Seals is very relevant. Despite W’s attempt to distant herself from the Intervener, she agreed that she could contact him through the Daughter. The Daughter has suggested some reasons for the Intervener’s absence, but the true reason remain unclear.

47.  As mentioned, I reach a finding of W’s ownership on the evidence analysed above, there is no need to resort to the drawing of adverse inference.

D.  Disposition

48.  For the reasons set out above, I find that W is the legal and beneficial owner of the Stone Seals.

49.  The usual starting point on costs is costs follow the event. There is no reason for departing this starting point. I make an order nisi (which shall become absolute in 14 days) that W pay H the costs of the preliminary issue on a party and party basis, to be taxed if not agreed. W’s own costs is to be taxed in accordance with the Legal Aid Regulations.

50.  The parties do lodge a joint proposed case management directions for the ancillary relief dispute within 28 days.