LUK SHAU CHUN v. KWONG HON WAH

Summary judgment - striking out counterclaim - appeals from Master - whether delay in appealing explained and excusable - whether triable issue - whether verifying affirmation defective if fails to confirm statement of claim that disputed property purchased and instead states property gifted - whether evidence in support of trust admissible - whether taking of accounts necessary - whether any balance in defendant's favour could only be pleaded in counterclaim and not by way of set-off Held: 1. In the circumstances proper case for time to appeal to be extended; 2. Verifying affirmation defective; 3. Evidence that defendant purchased property in wife's name to protect it from creditors inadmissible to rebut presumption of advancement; 4. Other admissible evidence arguably supports creation of trust; 5. Taking of accounts necessary; 6. As plaintiff not suing on bill of exchange any credit in his favour may properly be pleaded by way of set off; 7. Leave to defend conditional upon payment into court within 7 days of full amount claimed of $637,333.75 granted; Master's order striking out counterclaim set aside.

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

H.C. Action No. 2129 of 1988

____________

BETWEEN

____________

___________

JUDGMENT

___________

1. This is an appeal from orders of a Master made on 1st July 1988 under which the plaintiff was granted summary judgment under Order 14 RSC, Cap. 4 and the defendant's counterclaim was struck out. In her statement of claim, the plaintiff pleaded that that in January 1978 she purchased Flat 2, West Block, Mandarin Villa, 10 Shui Fai Terrace, Hong Kong for $350,000 of which she paid $100,000 and financed the balance of $250,000 by a mortgage obtained from Chiap Hua Finance Ltd.

2. The plaintiff and the defendant were then husband and wife but divorce proceedings have since been commenced and a decree nisi granted in Divorce Suit No. 219/88. After the parties separated in January 1982 the plaintiff pleaded that the sum secured under the mortgage was at the request of the defendant successively refinanced for increased sums with first the Algemene Bank Nederland NV and later the Po Sang Bank Ltd. The plaintiff further pleaded that in about July 1987, due to the defendant's default, she was obliged to repay the then balance owing of $637,333.57 to the Po Sang Bank for which purpose she arranged a new mortgage from the Kincheng Banking Corporation.

3. The plaintiff further pleaded that the $637,333.57 was paid to the plaintiff for the defendant's use. She asserted that the plaintiff was liable to indemnify her for the $637,333.57 plus interest owing under the mortgage or alternatively repay her that sum. The Amended Defence pleaded that the property was purchased in the name of the plaintiff but with the intention, that she hold it in trust for the defendant and not by way of gift. Further that the plaintiff never provided or contributed any money for the purchase of the property. The defendant pleaded that when the mortgage to the Kincheng Banking Corporation was executed to redeem the mortgage to Po Sang Bank Ltd., the plaintiff in breach of trust, wrongfully withdrew a further sum of $182,666.43 for her own us and benefit. The defendant counter-claimed, inter alia, for repayment of the $182,666.43 and also for accounts and inquiries.

4. On 11th May 1988 the plaintiff filed an Order 14 RSC summons, for Summary judgment and on 20th June 1988 another summons under Order 18 Rule 19 RSC to have the counterclaim struck out. The plaintiff filed an affirmation in support of the Order 14 summons. In respect of the defence plea that the property was held in trust for the defendant, the plaintiff affirmed that the property in 1978 was gifted to her by the defendant. In support of the allegation of gift she exhibited a copy of an affirmation filed by the defendant in the divorce proceedings in which he set out his means and made a final affirmation in these terms:

"Further, I will waive my claim in respect of the property known as Flat 2, 4th Floor, West Block, Mandarin Villa, No. 10 Shiu Fai Terrace, Happy Valley, Hong Kong which was a gift from me to the petitioner in 1978."

5. To the defendant's plea that he had out of his own money, paid the instalments due to Chiap Hua and later reduced the balance due to ABN, the plaintiff replied that if such payments were not gifts but debts owed by her to the defendant, their recovery was time barred by the Limitation Ordinance, Cap. 347.

6. The plaintiff's two summonses came before Master Jennings on 1st July 1988 when he granted summary judgment for the $637,333.57 plus interest claimed and struck out the defendant's counterclaim. The plaintiff quickly took steps to enforce the judgment issuing a bankruptcy notice on 21st July 1988 and commencing garnishee proceedings involving 5 banks in respect of which garnishee orders nisi, in relation to 4 of those banks, were made on 8th August 1988.

7. During the same months the defendant instituted successive appeals against the Master's orders. Under Order 58 Rule 1 RSC, appeals from Masters must be brought within 5 days. Time for appeal expired, after the exclusion of an intervening Sunday, on 7th July 1988. The Defendant on 26th July 1988 filed a notice of appeal dated 23rd July 1988 against the Master's orders. The notice of appeal necessarily sought an extension of time for appealing.

8. The notice of appeal came on for hearing before Liu J., on 10th August 1988 when, through Counsel, the defendant applied to withdraw his appeal. This course was consented to by the plaintiff and the sealed order records that the defendant with the consent of the plaintiff was granted "leave to withdraw." On 11th August 1988 the defendant filed a summons for a stay of execution. Shortly thereafter, on 18th August 1988 the defendant filed a further notice of appeal which is the notice of appeal now before the Court. The notice of appeal is against both summary judgment and the order striking out the counterclaim and similarly seeks an extension of time for appealing. In view of the attempt to commence a second appeal, the defendant considered it inappropriate to pursue the summons for stay of execution and a Master on 18 August 1988, gave leave to withdraw that summons.

9. The summonses raise two main issues. First, it is necessary to consider the circumstances surrounding the defendant's delay in appealing and any prejudice the plaintiff may have suffered by that delay, before determining whether to extend time for appealing. Secondly, if time is extended, it will be necessary to decide whether there is a triable issue or for some other reason, the appellant should be given leave to defend. At this stage I hold that if leave to defend is granted, the counterclaim should also be allowed to proceed. I will consider these two issues in turn.

10. Whether time for appeal should be extended

11. Counsel for the defendant submitted that the period of delay could be divided into two parts. First the 19 days from when time first expired on 7th July until 26th July 1988, when the first notice of appeal was filed. Secondly, the later period of 8 days from when the first appeal was withdrawn on 10th August until the second notice of appeal was filed on 18th August 1988. Counsel for the plaintiff submitted that the period of delay was 41 days measured from the time when the period for appeal expired on 7th July until the present notice of appeal was filed on 18th August 1988. I hold that the period of delay was 41 days. However, in considering all the relevant circumstances, I will take into account that during l4 days of that 41 days period, the plaintiff was on notice that the defendant was pursuing an appeal.

12. The 5 day time limit for appeals may be extended by this Court under the general discretion to extend time provided by Order 3 Rule 5 RSC. The discretion to extend time must, of course, be exercised judicially. The principles upon which that discretion should be exercised are well settled. At least since Revici v. Prentice Hall Inc (1969) 1 ALL ER 772 it has been clear that it is not sufficient for an applicant to offer to pay costs and satisfy the Court that the other party will not suffer any prejudice. The delay in self must satisfactorily be explained. Our own Courts in Stevenson v. The Chartered Bank (1977) HKLR 165 and Chiu Butt-york v. Chiu Kwok-lim (1980) HKLR 459 have emphasized that there must be adequate material placed before the Court before it can exercise its discretion to extend time.

13. The defendant by affirmation, explained that at the summary hearing he concentrated on the defence that the property was held in trust for him and did not consider that if that defence failed, he had an alternative defence of set-off in respect of the monies he had expended on the property or in favour of the plaintiff since the property was acquired. In any event at that time he understood that the relevant accounts had been destroyed. The defendant affirmed that shortly after the Master's orders he instructed his solicitors to appeal but they advised him that unless he could explain the statement in the divorce proceedings affirmation that he had gifted the property to the plaintiff his chances were slim. The defendant's explanation of that statement was that he was acting in person at the time and informally consulted a solicitor on the contents of the plaintiff's petition. The solicitor replied that as she knew both parties she could not act for either.

14. The defendant later showed the petition to a solicitors clerk explaining that he would pay maintenance totalling $4,000 per month and agree to abandon his claim in the property. The latter proposal the defendant claimed, was subject to the plaintiff taking over the existing mortgage and assuming responsibility for mortgage payments. The clerk prepared the affirmation which was later filed in person by the defendant. The defendant stated that the affirmation was not interpreted to him and he wrongly understood it corresponded with his instructions. The defendant asserted that he does not have an adequate understanding of English and I record that the affirmation filed does not include the usual interpretation clause. The defendant stated that he was only prepared to abandon his interest in the property if that enabled him to settle the plaintiff's maintenance claim at the relatively low level of $3,000 per month for her and $1,000 per month for their daughter.

15. The defendant further affirmed that it was only recently that he was able to obtain a copy of the separation agreement to confirm its precise contents and I note that it was supplied to him on 23rd August 1988. The separation agreement includes the usual clause that the wife shall indemnify the husband against all debts incurred by her. So far as the accounts supporting both the beneficial ownership and set off claims were concerned, the defendant stated that although he believed these had been destroyed, on the return of his mother to Hong Kong on 9th August 1988, she informed him that she held the accounts in a safe at her home. These accounts were the following day handed to the defendant and many of them have been exhibited to his subsequent affirmation.

16. The defendant's mother left Hong Kong on 30th June 1986 going to the United States and only returned to Hong Kong on 9th August 1988. The defendant also explained that the issue of the bankruptcy notice and garnishee proceedings in July 1988, caused considerable disruption to the business he now carries on with a partner. Apparently cheques were dishonoured, which required him to placate his partner and the various business payees of other cheques as well as rearranging payment.

17. The plaintiff in her 4th Affirmation dealt with the defendant's explanations which attempted to explain the delay. She stated that both appeals were merely steps taken by the defendant to delay execution. The plaintiff denies that she owes the defendant any sums which may give rise to set off. Earlier in her 2nd Affirmation she asserted that the defendant's knowledge of English was good.

18. I have already recorded that the first notice of appeal was withdrawn by leave on 10th August 1988. There was therefore no determination on the merits in that appeal. I recognise that in 1 'The Supreme Court Practice 1988' 846 it is merely noted at 59/1/13 without the citation of authority that:

"If an appeal is withdrawn, as opposed to being dismissed, it would appear that, subject to obtaining the necessary extension of time, the appellant could proceed with an appeal by serving a fresh notice of appeal."

In Heun Sook Jong v. Miller HCA 3993/85, Liu J., on 8th August 1988 was prepared to proceed on the basis that where an appeal was withdrawn, even by consent, the party could seek to re-open the matter by filing a new notice of appeal. I hold that where an appeal is withdrawn the appellant may subsequently file a second notice of appeal, although in most cases it will also be necessary for him to apply to have time for appeal extended.

19. The defendant's explanation for withdrawing the first appeal was that he did so acting on Counsel's then advice. At that stage it was considered that the evidence to explain the gift statement in the defendant's divorce proceedings affirmation, was inadequate. The defendant's mother had also not yet returned from the United States to reveal that the accounts, at least relevant to set-off, had not been destroyed. It was submitted that the advice given to the defendant , which led to the withdrawal of the first appeal, was ill-founded and unduly pessimistic. I was referred to the fact that in both Stevenson v. The Chartered Bank and Chiu Butt-york v. Chiu Kwok-lim it was held that delays due to the mistakes or negligence of an appellant's solicitor and not due to the appellant personally, were factors the Court should take into account in favour of an appellant when exercising the Court's discretion to grant an extension of time.

20. In the exercise of the Court's discretion to extend time there are also cases where it has been held that an enquiry should, at this stage, be made into the merits of the appellant's case. However, at least since Palata Investments v. Burt & Sinfield (1985) 2 ALL ER 517 it is clear that the Court is not obliged at this stage, to enter upon that far ranging enquiry where the time involved is short. In that case the English Court of Appeal was considering the position which arose following a notice of appeal Practice Direction published in (1982) 1 WLR 1312 but the judgment is of general application and corresponds with the position in Hong Kong. Ackner L.J. at page 521:

"... in cases where the delay was very short and there was an acceptable excuse for the delay, as a general rule the appellant should not be deprived of his right of appeal and so no question of the merits of the appeal will arise. We wish to emphasize that the discretion which fell to be exercised is unfettered and should be exercised flexibly with regard to the facts of the particular case. No doubt in some cases it may be material to have regard to the merits of the appeal, because it may be wrong, and indeed may be an unkindness to the appellant himself, to extend his time for appealing after he has allowed the time to elapse, to enable him to pursue a hopeless appeal."

21. The only Hong Kong authority cited, where a first appeal had been withdrawn and a second notice of appeal together with an application to extend time filed, was Heun Sook Jong v. Miller where the time which had elapsed was nearly 2 years 9 months compared with the present 41 days. Clearly there would have to be very exceptional circumstances to excuse a delay of 2 years 9 months, particularly when dealing with the very short appeal period of 5 days for Naster's appeals. No such circumstances were found in that case and the application to extend time was understandably refused.

22. In this case I do have a detailed explanation from the defendant raising a number of factors, in an attempt to excuse the delay. Some are of more weight than others. For example the solicitors mistake and negligence in the two cases cited was essentially of a passive kind. But in this case the alleged professional mistake was the positive considered advice to the defendant to withdraw his appeal which he accepted. On this ground his position is much weaker, than the position of the appellants in the other two cases.

23. I have also considered whether the plaintiff has been prejudiced by the delay. The ownership of the property has not so far been affected. I am aware that the plaintiff is now facing financial difficulties in part due to the defendant's default, since 15th August 1988, in paying interim maintenance, in terms of the Court's order in the divorce proceedings, at the rate of $10,000 per month. The defendant states this is solely due to the plaintiff's action in having his bank accounts frozen under the garnishee proceedings. I do take into account that on 4th October 1988 the Kincheng Banking Corporation wrote to the plaintiff asking for payment of the prior mortgage instalment repayment which was overdue. Again the plaintiff states that she is unable to pay this instalment due to the defendant's default and is concerned that the Bank may exercise its forfeiture powers.

24. The delay while much less than in Heun Sook Jong v. Miller is more than in Palata Investments Ltd. v. Burt & Sinfield. I remind myself too, that the short period of 3 days delay in the latter case, has to be considered in the light of the much longer relevant appeal period of 4 weeks. These cases while helpful are not, of course, decisive. As Ackner L.J. declared, the discretion to extend time is unfettered and should be exercised flexibly with regard to the facts of the particular case. At the same time that discretion must always be exercised judicially.

25. I would record, without going into the merits at this stage in detail, that the grounds of the defendant's appeal do not result in its falling into the hopeless category of cases referred to in Palata Investments Ltd. v. Burt & Sinfield. To the extent that merits are relevant my findings on the merits are recorded in the latter part of this judgment. After reviewing all the factors relevant to the exercise of my discretion in this particular case, I am satisfied that it is a proper case for time for appeal to be extended. Time for appeal is extended accordingly.

26. Whether there is a triable issue

27. I now turn to consider whether leave to defend should be granted. The purpose of Order 14 is to enable a plaintiff to obtain judgment without trial, if she can prove her claim clearly and the defendant is unable to set up a genuine defence, or raise a triable issue. The circumstances where a defendant should be granted leave to defend include those where he has a good defence on the merits, a dispute on facts which ought to be tried, or where there is a real dispute over the amount due which requires the taking of an account. Where set-off is raised, if the claim is not founded on a bill of exchange, a defendant is entitled to leave to defend up to the amount claimed. At times it may be necessary for accounts to be taken before the amount of set-off can be determined.

28. I would also record that while procedurally the present hearing is by way of appeal, it is to be dealt with by way of rehearing. Although I give due regard to the Master's orders, I also have much more factual evidence to consider. Before the Master there were two affirmations from the plaintiff and one affirmation from the defendant. At the commencement of this appeal hearing the number of affirmations filed by the plaintiff had increased to 5 while the defendant had filed a further 2 affirmations. Nearly all of the more recent affirmations were substantial. They were included in an agreed bundle which, after the plaintiff's 5th Affirmation is added, consisted of 622 pages together with a pleadings bundle of 47 pages.

29. The burden rests on the defendant to show cause that there is an issue in dispute which ought to be tried. It was submitted for the defendant that there were at least four issues which required to be tried, none of which could be disposed of summarily. During the hearing the emphasis on these issues changed. The first issue to be considered relates to the plaintiff's pleading in the statement of claim that she purchased the property. Leading Counsel for the defendant reminded the Court that under Order 14 Rule 2(1) the plaintiff was obliged to file an affirmation verifying the facts on which the claim is based.

30. In none of the plaintiff's affirmations does she verify that she purchased the property. To the contrary she affirms that the defendant gifted the property to her. The defendant's affirmations assert that he paid in full the cash applied for the purchase and as between the parties, has been responsible for making payments under the mortgages which have secured the balance of the purchase price. In fact he further affirms, that the property is held by the plaintiff in trust for him. The statement of claim does not plead that the plaintiff became the owner of the property by way of gift.

31. The law is well settled that any defect in the statement of claim cannot be corrected by the plaintiff's affidavit. Any defect of substance may, of course, be amended under Order 20 RSC. Counsel for the plaintiff did not seek to amend and submitted that the fact that the statement of claim pleaded purchase and not gift, was irrelevant.

32. The second issue advanced by the defendant was whether the plaintiff held the property absolutely or in trust for the defendant. Leading Counsel for the defendant conceded from the outset that in view of the defendant's divorce proceedings gift statement affirmation, this was a substantial difficulty to overcome. However, the Court was referred to the defendant's explanation and to the fact that the solicitors clerk who was alleged to have prepared the affirmation was overseas at the time the Order 14 affirmations were prepared.

33. The evidence whether the property was held on trust rested on the defendant's affirmations including the lengthy exhibits. Quite apart from the defendant's affirmation in the divorce proceedings, where a husband purchases property in the name of his wife, the law presumes in accordance with the principle of advancement, that it is a gift to the wife. The Court was referred to two aspects of the defendant's present affirmations. First, his allegation that the property was not a gift. He explained it was purchased in his wife's name to protect the property from his creditors.

34. Secondly, the inferences to be drawn from the fact that after the parties separated, the defendant continued to collectrents, refinanced mortgages on the property for his own independent business interests and remained responsible for mortgage payments. If a trust existed a further triable issue arose whether the plaintiff was in breach of trust. This was based on the allegation that the plaintiff used $182,666.43 of the money available, on refinancing the mortgages, for her own benefit.

35. Counsel for the plaintiff submitted that it was not open to the defendant to attempt to rebut the presumption of advancement, because he had expressly affirmed that the reason why the property was purchased in his wife's name, was to prevent his creditors executing claims against the property if his business failed. In his 3rd Affirmation the defendant stated that at one time his business contingent liabilities under guarantees, exceeded $60 million. This particular limitation on evidence which can be used to rebut the presumption of advancement, is summarised in 'Snell's Principles of Equity' (28th Edn) 186 in these words:

"(c) Improper purposes. The presumptions are not rebuttable by evidence of an improper purpose. Thus where a husband puts property into his wife's name, he cannot be heard to say that he did so to defeat his creditors ... and that his wife knew this. The rules of equity cannot be used to aid in iniquity and the presumptions will apply unless a proper ground for rebutting them is both pleaded and proved."

This statement reflects judgments to that effect in Gascoigne v. Gascoigne (1918) 1 KB 223 and Tinker v. Tinker (1970) 1 All ER 540 to which I was also referred.

36. The third issue raised by the defendant was whether there was any obligation on the part of the defendant to indemnify the plaintiff. If the plaintiff owns the property beneficially, it was submitted, there were no facts pleaded averring why the defendant should indemnify the plaintiff for the property's outgoings or liabilities.

37. The fourth issue advanced by the defendant, in the event of the plaintiff having a right of indemnity, was whether in turn the defendant had a right of set-off. If so, then a right of counterclaim could also arise. It was submitted that if the property was gifted, then at least after the date of separation, the defendant was not responsible for the property's outgoings and other liabilities. On the evidence Counsel for the defendant submitted the set off at least amounted to $625,907.31 which nearly equalled the plaintiff's claim of $637,333.57. The former sum was in part made up of $132,416.77 being the balance of the mortgage debt alleged to be owed by the plaintiff, if she were the beneficial owner, to Chiap Hua Finance Ltd. which the defendant had repaid. The balance of $493,490.54 were sums paid by the defendant to the plaintiff since the parties separated in 1982.

38. The defendant exhibited to his affirmations a large number of the defendant's credit card vouchers in respect of charges incurred by the plaintiff's supplementary cards. These were for periods after the separation. I have already recorded that the separation agreement included the usual provision under which the wife agreed to indemnify the husband, against all debts incurred by her. There were a large number of financial dealings where, on the defendant's allegations, the plaintiff's debts were charged against him. On the other hand the mortgage, rental and other transactions in relation to the property, were carried out in the plaintiff's name but were, if the property was held in trust, for the benefit of the defendant. The unclear, at times confusing nature and multiplicity of these transactions, in the defendant's submission, resulted in this being a classic case where the taking of accounts was essential.

39. Counsel for the plaintiff submitted that the defendant's allegations were untrue and advanced only for purposes of delay. The credit card vouchers and other similar payments were for expenses incurred by the plaintiff for herself and her daughter and were not mortgage repayments. Further, the maintenance provisions in the separation agreement merely set out the defendant's minimum financial obligations and it was open to him to make better provision which had in fact been his practice.

40. In any event, it was submitted, this categoryof payments was irrelevant to the present action and were properly amounts to be dealt with in the divorce proceedings. The plaintiff in her 4th Affirmation reanalysed these amounts into 6 separate schedules. If those amounts were to be raised in the present proceedings, the plaintiff submitted, they were not available to the defendant by way of set off but could only be included in counter-claim. In that event, they did not affect the plaintiff's right to summary judgment on her statement of claim.

41. In considering the lengthy affirmation evidence on these questions, I remind myself that at this Order 14 interlocutory stage, I am merely concerned with whether there is a triable issue. Leaving to one side the defendant's explanation that the reason for purchasing the property in his wife's name was to protect it from his creditors, there remain a large number of direct conflicts of fact in the parties competing affirmations. Leading Counsel for the defendant referred to Paclantic Financing Co. Inc. v. Moscow Narodny Bank Ltd (1984) 1 WLP 930 submitting that the defendant's affirmations should only be rejected if they are inherently unreliable, self-contradictory, inadmissible or irrelevant. He recognised the difficulty created by the defendant's own conflicting affirmations on the gift or trust issue.

42. However, it was submitted for the defendant that he had now, in accordance with the Paclantic Financing Co. Inc. v. Moscow Narodny Bank Ltd. requirements, given the Court a plausible explanation of the reason for the conflicting statements. That issue, it was further submitted, could only be finally determined at trial, where the Court could make determinations of credibility and have the advantage of the conflicting testimony subjected to cross-examination. In considering whether to reject the defendant's admissible affirmation evidence, I do so in accordance with the stricture administered on the trial judge's categorisation, by the Court of Appeal in Paclantic Financing Co. Inc. v. Moscow Narodny Bank at page 939:

"We wish, however, to express our reservations about a statement which seeks to categorise, in exclusive terms the circumstances in which affidavit evidence can be rejected."

I accept that rejection is dependent on the judicial exercise of this Court's discretion, in the light of the evidence and other relevant circumstances, arising in this particular case.

43. Dealing wth the relevant points raised in turn, I am satisfied that if the plaintiff had been suing a third party in relation to the property and although gifted to her by the defendant, she pleaded she acquired the property by purchase, no objection could have been taken to the pleading. Certainly as between the vendor and the plaintiff, she purchased the property. Whether the purchase price was provided from her own funds or by way of gift from her husband, would have been irrelevant. In the present action the position is different, because the dispute is between the plaintiff and her husband. As against her husband, she pleads she purchased the property. In her verifying affirmation she does not confirm purchase but refers only to the defendant's admission of gift. The defendant in his affirmation asserts a third alternative, namely that the plaintiff holds the property in trust. The prima facie evidence at this stage, establishes that the difference between the mortgage and the purchase price was paid by the defendant and not by the plaintiff. Leaving to one side the question of trust, I hold that the plaintiff's affirmation insufficiently verifies the statement of claim.

44. I go on to deal with the more substantial issue relating to the allegations of trust. I accept that it is not open to the defendant to attempt to rebut the presumption of advancement, by asserting that the property was purchased in the plaintiff's name to protect it from his creditors. Those allegations are not admissible to rebut the presumption. The defendant would need to plead and prove other rebuttable evidence admissible in equity.

45. Other evidence before me included the practice of the defendant after the date of separation, when his formal financial obligation was only to pay the plaintiff $2,000 per month, continuing to accept responsibility for the property's outgoings. There was also the conduct of the plaintiff, after separation, allowing the defendant to collect rents and willingly signing the various security documents, on the rearrangement of mortgages. I am satisfied that it is arguable that the latter evidence may be severed from the inadmissible allegations, to provide some admissible evidence relevant to rebutting the presumption.

46. The third and fourth issues arise in the alternative. If the property were gifted, then I am satisfied that since the date of separation, the defendant has continued to be responsible for at least some of its outgoings and the plaintiff has executed, at his request without protest, the new mortgages required on the successive refinancing of the property. The separation agreement was unfortunately silent on the property. The statement of claim does not plead why the plaintiff is entitled to be indemnified. The documents are also silent, if there were a gift, whether as between the parties, the gift was subject to or free of encumbrances.

47. The mass of payments evidenced by cheques, credit card vouchers and other documents exhibited by both parties, reveal payments of substantial sums. The pattern of at least some of those payments, prima facie, is unusual. The majority of the credit card payments certainly do not, as the defendant initially alleged, relate to mortgage repayments but to payment of personal expenses of the plaintiff for herself or their daughter. The plaintiff asserts that these amounts are relevant to the divorce proceedings but not to the present action. At this stage on the evidence before me, I could not make a finding on this issue or on whether payments substantially in excess of the amounts payable under the separation agreement, were made voluntarily by the defendant as further maintenance.

48. The more these payments are analysed, the stronger becomes the defendant's submission that an account is required. I am satisfied that an account is necessary. Whether any balance in the defendant's favour should be pleaded by way of set-off or counterclaim is not clear on the evidence before me. However, I reject the plaintiff's submisson that it could only be pleaded by way of counterlcaim and therefore does not affect her summary judgment. If the plaintiff had sued on a bill of exchange, it is true the defendant could not have pleaded set-off and could only have brought his own counterclaim. But the plaintiff is not suing on a bill of exchange, so the defence of set-off is, as a matter of law, available.

49. After considering all relevant factors in the light of Counsels submissons, I accept that many of the plaintiff's submissions have considerable cogency. This was recognised by leading Counsel for the defendant who acknowledged that if leave were granted, it could not be unconditional. In fact the defendant offered as a condition of leave to pay the whole sum claimed into Court within 14 days. At the same time, while the obstacles facing the defendant are considerable, I am unable to reach the conclusion that his proposed defence is a sham.

50. I confirm the order I made orally at the end of the hearing, that the appeal is allowed and leave to defend granted conditional upon the defendant, within 7 days of my oral judgment, paying into Court the full sum of $637,333.57 claimed. I also confirm that the Master's order striking out the defendant's counterclaim was set aside. Leave is also granted to the defendant to re-amend his defence and counterclaim on terms to be decided. Liberty to apply is reserved to both parties on these and any other incidental matters including any application for a speedy trial or other directions. Finally, I confirm that the Master's orders as to costs will remain unchanged. The defendant shall pay the costs of and occasioned by this appeal in any event; to be taxed if not agreed.