HCA007225/1997
HCA 7225/1997
IN THE HIGH COURT OF THE
HONG KONG SPECIAL ADMINISTRATIVE REGION
COURT OF FIRST INSTANCE
ACTION NO. 7225 OF 1997
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| BETWEEN | | |
| WONG WAI SIN | Plaintiff |
| | |
| AND | |
| | |
| WONG WAI MUI | Defendant |
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Coram: Deputy High Court Judge To in Court
Date of Hearing: 22, 23, 26-28 June 2000
Date of Judgment: 21 July 2000
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J U D G M E N T
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Background:
1. The parties to this litigation are sisters. The defendant elder sister came to Hong Kong in the early sixties followed by the plaintiff younger sister. They lived happily together and worked together. Even after they had their separate households, the plaintiff used to visit the defendant very regularly and stay in her home. In the eighties when the worry about the future loomed over Hong Kong, they entered the property market. Fuelled by the government's high land price policy, their speculative activities were very successful. The relation between the two sisters had been extremely good and close, until one day when money set them apart.
2. The dispute is related to an apartment unit in Marina Cove (hereinafter called "MC-2") which the plaintiff alleged was bought by the defendant as her agent while she was in Guanzhou and she paid the down payment upon her return. The defence case is that the defendant bought the property for herself and the down payment, although paid by the plaintiff, was from the defendant's own funds of $330,000 entrusted to the plaintiff. The plaintiff explained that the $330,000 was proceeds of sale of a ground floor unit in Wo Mei Village (hereinafter called "WM-G") belonging to the plaintiff but held in the defendant's name. That was disputed by the defendant who alleged that the said property was bought using her share of the common fund from their joint property investments. The accusation and explanation were, as Mr Li described, like a ping pong game. This game involved about twenty property transactions. This Court is now asked to find out the truth among these entangled transactions spread over 20 years.
3. Counsel agreed that the issue is only a factual one. If the down payment was paid by funds belonging to the plaintiff, MC-2 was held by the defendant on trust for the plaintiff. If the down payment was paid by funds belonging to the defendant, the property was the defendant's absolutely.
The joint current account:
4. Most of the property transactions were paid by cheques from a joint account in the names of the parties with Sin Hua Trust Savings & Commercial Bank, Account No. 03138400004008. According to the plaintiff, the joint account was to facilitate depositing and drawing money out from the account by the defendant on behalf of the plaintiff in connection with the plaintiff's property speculation business. It is not disputed that this account has all the time been under the control of the plaintiff, even up to the date of hearing. When a cheque has to be issued, the plaintiff would transfer funds from her savings account into this joint account.
Purchase and sale of Avon Villa:
5. On 25 January 1984, a second floor unit in Avon Villa in Sai Kung was purchased in the joint names of the parties. At the time, the plaintiff was living in a public housing unit in Sau Mau Ping and working in a hotel in the afternoon. The defendant was living in Choi Wan Estate with her husband and children. She was a full time housewife. Her husband, Mr Chow, was a truck driver and had his own truck.
6. According to the plaintiff, this property was bought using her own funds and she paid the mortgage instalments. It was acquired in joint names for convenience, at the suggestion of the defendant so that the defendant could assist in decorating or renting or selling the property. Their relation was very close then.
7. The defendant alleged that this was the beginning of their joint property investment activity and she contributed equally in cash to the purchase price, the solicitor's fees and conveyancing expenses. She could not produce any documentary evidence in support of her claim.
8. The defendant said that this property was purchased for sale and the plaintiff never resided in the property. The plaintiff said she did reside there and even lodged complaint against the owner of the ground floor unit for setting up a canopy which affected her enjoyment of her flat. However after residing there for a few months, she found it too hot as it was on the top floor and she began to look for another property. Her response was spontaneous and appeared credible.
9. The property was acquired for $126,000 and sold at $155,000 on 30 October 1984 at a gross profit of $29,000. I estimate that the profit net of expenses, decoration costs and mortgage interest was about $20,000.
Purchase and sale of Tai Po Tsai Upper Village ("TPT-1"):
10. The plaintiff next purchased a ground floor unit in 200 Tai Po Tsai Upper Village (hereinafter called "TPT-1"). The plaintiff claimed that TPT-1 was also acquired in joint names for similar reasons but solely with her own funds.
11. The defendant's allegation was that the purchase was a joint investment rolled over with the profits from Avon Villa. A close examination of the conveyancing documents of Avon Villa and TPT-1 shows that the defendant's account could not have been true. The provisional sale and purchase agreement of TPT-1 was signed on 23 July 1984 with a deposit of $5,000. The purchase was completed on 25 September 1984. These dates were respectively three months and one month before the sale of Avon Villa. Thus the proceeds of sale of Avon Villa could not have been applied towards payment of either the initial deposit or the down payment of TPT-1. This casts doubts on the defendant's allegation of rolling over and common fund.
12. On 21 May 1985, the plaintiff sold TPT-1 because the Lands Department required her to pull down the fencing she set up in front of her property. TPT-1 was acquired for $205,000 and sold at $228,000. I estimate that there was a profit of $10,000 net of conveyancing expenses, decoration costs and mortgage interest.
Purchase and sale of Tai Po Tsai Lower Village ("TPT-2"):
13. At about the same time, through the introduction of an indigenous villager, the plaintiff purchased another property in 71 Tai Po Tsai Lower Village (hereinafter called "TPT-2"). She paid the villager $2,000 as commission. This property was purchased at $230,000 in the plaintiff's sole name and sold at $250,000. According to the plaintiff, at that point in time, attracted by the commission, the defendant became interested in working as an estate agent, and she gave her a private car for the defendant's use in her business.
11 other property transactions between 1985 and 1987:
14. Thereafter, there were another eleven property transactions, all in the sole name of the plaintiff. The plaintiff said that these eleven properties and TPT-2 were all purchased with her own funds. These 12 transactions support the plaintiff's account that these were all her personal investments. Had there been a joint investment, some of these properties would have been transacted in joint names or in the name of the defendant. The defendant's allegation was that these transactions were their joint investments and the plaintiff informed her that her share of their common fund had by then rolled up to $380,000.
Purchase of Wo Mei Village Property ("WM-G" and "WM-1"):
15. The dispute of the sisters came to a turning point in 1987 when they acquired properties in Wo Mei Village. The defendant located a three storey village house in Wo Mei Village, which had to be sold as one transaction because of the payment of land premium to government. The defendant found a buyer, Mr Tang (DW2) who was willing to buy the second floor with roof (hereinafter called "WM-2") for $440,000 inclusive of his share of the land premium.
16. The plaintiff wanted to buy the first and second floors with roof, but was nevertheless persuaded by the defendant to give precedence to DW2 because he was a bank manager who would give them convenience in arranging mortgages. Hence the plaintiff agreed to purchase the ground floor and first floor (hereinafter called "WM-G" and "WM-1" respectively) instead. A provisional sale and purchase agreement was entered into between the vendor and the defendant for the purchase of the entire block for $1,160,000 on 21 April 1987, but the plaintiff paid the deposit of $30,000. The sale and purchase was completed on 29 September 1987 with WM-2 conveyed to DW2, WM-1 conveyed to the plaintiff and WM-G to the defendant. The plaintiff paid a total of $430,000 through the joint account by transferring funds from her saving account. The balance of the purchase price was paid by way of a mortgage over WM-G. The plaintiff paid the monthly instalment through the joint account. On 15 March 1988, the plaintiff sold WM-1 for $480,000 and discharged the outstanding mortgage on WM-G on the same day using the proceeds of sale. The above facts were not in dispute.
17. The plaintiff's case is that she purchased WM-G and WM-1 for herself absolutely for $720,000. As the plaintiff had other properties, she could not raise any mortgage against either WM-1 or WM-G. So the defendant agreed to use her name as the purchaser of WM-G and to raise a mortgage using that property. Thus out of the $430,000 paid by the plaintiff, the plaintiff apportioned $360,000 as the purchase price for WM-1 which was conveyed to her name and the balance of $60,000 was treated as the down payment for WM-G which was conveyed to the name of the defendant. She said that WM-G had a front garden and had access to some Crown land at the rear and should therefore be more expensive; but as she was the beneficial owner of both properties, she simply apportioned the purchase price equally, i.e. $360,000 in respect of each property.
18. The defendant's case was that the plaintiff told her by that time her share of the common fund had accumulated up to $380,000 as a result of the profits from the previous fourteen transactions. She bought WM-G using her share of the common fund for herself. Shortly before completion, the plaintiff told her and DW2 that she had found a property in Green Park which the plaintiff very much wanted to purchase. The plaintiff had no funds and asked the defendant to raise a mortgage on WM-G so as to assist the plaintiff to purchase Green Park (hereinafter called "Green Park"). The plaintiff undertook to pay the mortgage instalments and to redeem WM-G as soon as she sold WM-1. She went with the plaintiff and DW2 to view Green Park for the purpose of assessing a mortgage of Green Park.
19. DW2 also gave evidence to corroborate the defendant's. He said that initially the plaintiff assured him that there was no need to raise any mortgage in paying for the land premium and buying the property in Wo Mei Village. However, about a week before completion, the plaintiff and defendant went to his bank. There, the plaintiff told him that she needed a loan to help her to purchase Green Park and requested for a mortgage over WM-G. He said that as the plaintiff could not obtain mortgage over two properties at the same time, the plaintiff and defendant agreed to use the defendant's property for the purpose of raising a mortgage. He consulted his superior urgently and obtained approval for the mortgage. Then after lunch, the three of them went to Green Park for a view and to assess the value of the property so as to process the plaintiff's mortgage for Green Park. When he reached Green Park, DW2 saw that the frame work of the building had been completed. There was no sales office. DW2 walked or climbed through the scaffoldings to take measurements of the unit to be purchased for his assessment purpose.
20. The plaintiff denied that she raised money for purchasing Green Park by mortgaging WM-G. She said that the funds for purchasing Green Park came from another property transaction in Lot 1087 in Sai Kung (hereinafter called "Lot 1087"), which I shall come to in a moment.
21. I shall now examine the defendant's and DW2's evidence against the Wo Mei and the Green Park transactions. WM-G was mortgaged on 29 September 1987. Thus on the evidence of DW2, the plaintiff and defendant visited him on or about 22 September 1987 when the purchase of Green Park was mentioned by the plaintiff. Green Park was sold as a pre-completed building. The memorandum of sale of Green Park was dated 27 January 1988. Thus on the basis of DW2's evidence, the plaintiff had decided to purchase Green Park and discussed with him about its mortgage more than four months before she signed the memorandum for purchase. That must be incredible, especially in the light of the profit she made over the purchase and sale of Lot 1087. Accordingly, I find that the plaintiff was the beneficial owner of WM-G (For further supporting evidence, see "Sale of WM-1" below).
Purchase and sale of Lot 1087:
22. The defendant located the developer of this property and introduced him to the plaintiff. The plaintiff paid $100,000 as deposit to the developer, Mr Lam on 10 July 1987. The purchase price for the entire block was $630,000. The defendant also found a sub-purchaser for the first and second floor and roof for $700,000 and another sub-purchaser for the ground floor for $380,000 on 14 August 1987. The sale and sub-sale were all completed on 15 December 1987, with a net profit of $252,435. The plaintiff said she used this profit to pay the initial deposit of $20,000 and the further deposit of $118,481.40 on 27 and 28 January 1988 respectively. Her account fit in very nicely with the timing.
23. The defendant's case was that this transaction was another of their joint investments. The sub-sale was signed by the defendant as vendor or agent of the vendor, while the property was assigned to the plaintiff. This is equivocal as to whether the transaction was a joint venture or the plaintiff's own.
24. However, on the defendant's case, there was no more common fund, except perhaps what was left of the $20,000. On the other hand, the cheque used to pay the down payment was drawn from the joint account controlled by the plaintiff using her funds and the subsequent conveyance was in her name. These suggest the plaintiff's account is more credible.
Purchase of property at Green Park:
25. On 27 January 1988, the plaintiff came across this property when she accompanied the defendant when showing properties to her clients. She paid an initial deposit of $20,000 and a further deposit of $118,481.40 the following day. According to the plaintiff the funds came from her profit from the sale of Lot 1087.
26. The defendant's allegation was that before completion of the purchase of WM-1 and WM-G, the plaintiff came across Green Park and wanted to release funds originally set aside for WM-1 and WM-G for the purpose of paying the deposit of $140,000 for Green Park. As I have already indicated, this is incredible as the allegation could not fit into the time frame when these transactions occurred. It is impossible to envisage that the plaintiff could have the foresight to arrange for the mortgage more than four months before she actually pay the deposit for Green Park. Even if Lot 1087 was a joint venture, the plaintiff's share of the profit from its sale gives a complete explanation of the funds required for the purchase of Green Park. I reject the defendant's allegation.
Sale of WM-1:
27. This property was sold on 15 March 1988 at $480,000 at a profit of $120,000. Part of the proceeds was used to discharge the mortgage on WM-G. This is supportive of the account of the plaintiff as well as that of the defendant. However, as I have found DW2's version about the Green Park transaction incredible, I am bound to reject the defendant's version. Thus on balance, I find that this is consistent with and supportive of the plaintiff's account of the events, which I am bound to accept. This reinforces my finding that the plaintiff was the beneficial owner of WM-G.
Defendant's purchase of Marina Cove Property ("MC-1") Plaintiff's loan of $250,000/$270,000 to defendant:
28. The defendant purchased a ground floor apartment unit in Marina Cove (hereinafter called "MC-1") at $932,000 on 23 May 1988. The plaintiff lent the defendant $150,000 and $100,000 for paying down payment and decoration expenses on 11 and 17 May 1988 respectively. These loans were not in dispute. In addition, the plaintiff also lent her another $20,000 to cover probably solicitor's fees and conveyancing expenses. This was not admitted or denied by the defendant who said that she could not recall one way or the other.
29. Thus as at 25 August 1988, the plaintiff said the defendant owed her $270,000; while the defendant admitted it was only $250,000. On the other hand, according to the defendant's evidence, there was also at the time a balance of $20,000 in her share of the common fund after allowing for her purchase price for WM-G. The defendant could not explain why this balance was not deducted from the loan.
Sale of WM-G and Repayment of defendant's loan/handing over of proceeds of sale:
30. On 15 June 1988, WM-G was sold at $600,000. At the time, the property was unencumbered as the mortgage had been discharged. The defendant gave the plaintiff a cashier order in the sum of $330,000. These facts were not in dispute.
31. According to the plaintiff, as the property was the plaintiff's, and the defendant should have accounted to her the sale price in full. However, the defendant only gave her $330,000, saying that she would keep the balance of $270,000 for negotiation of another property in Ho Chung. Nothing materialised from the negotiation after more than a year. When the plaintiff asked for return of the money, the defendant asked if she could keep it for her use for the time being. As their relation then was very good, the plaintiff agreed.
32. The defendant's account was as follows. The $330,000 was to repay the plaintiff's loan of $250,000 she borrowed for the purchase of MC-1. The balance of $80,000 represented interest and her gift to the plaintiff to celebrate her acquisition of Green Park. If $80,000 was interest for a principal loan of $250,000 for one month, the interest rate was almost 400%! That was exorbitant. Even if half of the money was to be treated as gift, the interest rate was 200%. That is inconsistent with their good relation then. In Court, she added yet a further reason. This was because she made a greater profit from WM-G than the plaintiff from WM-1. This is a departure from her statement. Under cross examination, the defendant said that the $80,000 was for buying air conditioners and furniture, but she had never seen the bills for these items and was not aware how much they cost. I consider her reason for the generosity incredible. For this reason and for other reasons that follow, I reject the defendant's account.
Plaintiff's loan to defendant's friend:
33. Having sold WM-G, the defendant moved into MC-1. According to the plaintiff, the sitting room was furnished like an office. At the time, the defendant admittedly with her friend, Mr Ho (hereinafter called "Ho") and two others were the owners of Right Bond Investment Limited operating at MC-1. Ho later became the defendant's present husband after her then husband died.
34. According to the plaintiff, at a meeting on 7 December 1988, the defendant requested her to lend $94,000 to Ho. The defendant asked the plaintiff to treat it as if it were a loan to the defendant and undertook to repay. The defendant requested a money order to be issued in the name of Ho. As the sisters' relation was very good then, the plaintiff agreed without question. A money order was purchased in Ho's name with money from the plaintiff's saving account with Sin Hua Trust Savings & Commercial Bank Ltd. These are supported by uncontroverted bank documents.
35. By that stage, according to the plaintiff's account, the defendant owed her a total of $364,000 comprising of $270,000 for the purchase of MC-1 and $94,000 loan to Ho. In addition, the defendant had on account another sum of $270,000 being proceeds of sale from WM-G, for the purpose of negotiating for a deal in Ho Chung.
36. The defendant denied to have knowledge of this loan. Ho, her present husband, was with her throughout the proceedings and should be aware of the allegation that was being made in relation to him. Yet the defendant offered nothing either in her own evidence or by calling Ho to explain this money order of $94,000 or to confirm whether it had been repaid. I reject the defendant's evidence and accept the plaintiff's evidence that it was a loan to Ho guaranteed by the defendant and that this loan had never been repaid.
Defendant's sale of MC-1and repayment/safe custody of $360,000:
37. The defendant sold MC-1 on 20 February 1989 for $1,170,000. A week later, she repaid the plaintiff $360,000 by two cheques of $300,000 and $60,000. No reason was offered by either the plaintiff or the defendant why two cheques were used. I assume it was for the plaintiff's convenience for banking with different banks and that there was no other significance. This payment assumed significance in relation to the suit premises.
38. According to the plaintiff, this was to repay the loan for purchasing MC-1 and the loan to Ho totalling $364,000. She said that the defendant requested her to waive the balance of $4,000, which she happily agreed in view of their good relations then. At that time, the defendant was still holding onto the $270,000 proceeds of sale from WM-G.
39. According to the defendant, the money was entrusted to the plaintiff for safe custody. The defendant was on bad terms with her then husband, Mr Chow (hereinafter called "Chow"). She was worried that Chow would make a claim on the money if they had a divorce. She said she had quarrels with Chow because Chow wanted the money to buy another truck for his business, while she wanted to keep the money for other property investments. Eventually, she and Chow entered into a separation agreement on 4 October 1989.
Purchase of suit property at Marina Cove ("MC-2"):
40. On 13 August 1990, the suit premises were acquired. This was 26 months after the defendant had been holding onto the proceeds of sales from WM-G, on the plaintiff's case; or 17 months after the plaintiff had safe custody of the defendant's $360,000, on the defendant's case.
41. According to the plaintiff, she had occasionally raised the question of the outstanding proceeds of sales from WM-G, but the defendant excused return of the money saying that the negotiations over the Ho Chung property was still on going. Later, the defendant just asked to be allowed to have use of the money for the time being.
42. The plaintiff had expressed her interest in Marina Cove properties as the rental return was high and there was potential for appreciation. She asked the defendant to watch out for such properties. While she was visiting her younger sister in Guanzhou, the defendant phoned her from Hong Kong and informed her that a fifth floor unit in Marina Cove was available. In 1990, travelling to and from Guanzhou was not as convenient as it is today. She asked the defendant to pay the deposit and undertook to reimburse her. She returned to Hong Kong two days later and met the defendant at On Kei Coffee Stall in Choi Wan Estate where they used to meet. There she reimbursed the defendant $20,000 from the cash she had with her on her Guanzhou trip for the deposit the defendant paid on her behalf. She accompanied the defendant on two occasions to the solicitors' office to pay the further deposit of $110,000 and down payment of $156,840. These payments totalling $266,840 were made from the plaintiff's own account and were fully documented. These facts were not disputed by the defendant. The balance of the purchase price was financed by a mortgage with the defendant as the mortgagor.
43. The plaintiff did not request for MC-2 to be conveyed to her name as the defendant had told her that it would be difficult and inconvenient to ask the vendor to sign the agreement. She trusted the defendant as she had done before and did not see any need to replace the defendant as the purchaser. Upon completion, the defendant asked to move into the property as it was convenient to where she was working and she undertook to pay the mortgage in lieu of rent. At the time, the rental income exceeded the mortgage instalment. After six months, the defendant moved to her own property in Nam Shan Village. The defendant told the plaintiff that she had rented MC-2 to a European for $16,000 to $17,000 but the lease had not been stamped. The rental income was $4,000 to $5,000 in excess of the mortgage instalment and the defendant suggested to account to the plaintiff upon sale of the property. When the plaintiff asked for an account, the defendant just deferred saying that there was surplus of rent over mortgage instalment.
44. The defendant's case was that she purchased the property for herself absolutely, with Ho paying the deposit of $20,000 by cheque. She telephoned the plaintiff in Guanzhou and asked for return of the $360,000 kept by the plaintiff so that she might complete the purchase. The plaintiff never paid her $20,000 in On Kei Coffee Stall as the property was purchased by herself. The plaintiff said it was not convenient to return her the total sum but agreed to pay the various amounts upon completion as required. Thus on her account, the plaintiff still owed her $93,160 (i.e. $330,000 - $266,840)plus interest from the money entrusted to her care. She had never asked the plaintiff for permission to move into MC-2 and had not rented it out after she moved to Nam Shan Village.
Purchase of a third property in Marina Cove ("MC-3")
45. In July 1991, the plaintiff purchased a sixth floor property in Marina Cove in her name. It was rented out by the defendant as owner. Nothing really significant turned on those transactions except that they showed the sisters' relation was still very good and the defendant always acted on the plaintiff's behalf and as landlord.
Redemption of MC-2:
46. On 5 November 1991, the defendant sold her village house in Nam Shan Village for $1,700,000 and discharged the outstanding mortgage of MC-2 in the amount of $984,216.12 on 2 December 1991. She used the balance to invest in another house in Mok Tse Che (hereinafter called "MTC"). The plaintiff was not aware of the redemption of MC-2 and thought it was leased to an European under an un-stamped lease.
47. According to the defendant, MC-2 had been left vacant since she moved into MTC in March or April 1992 to secure her right over the property pending litigation. She renovated MC-2 in July or August 1992 with a view to move back there after the litigation over MTC was concluded. However, that took much longer. Eventually MC-2 was rented out on 21 February 1993.
Property in Mok Tse Che and Wong Chuk Wan:
48. On 6 November 1991, the sisters jointly purchased MTC for $900,000. Later, they sold the property and invested the proceeds in another property in Wong Chuk Wan (hereinafter called "WCW"). There is no direct significance in these transactions.
49. According to the plaintiff, the defendant suggested her to jointly invest in MTC but she refused as it was located on a slope. The defendant bought but the developer refused to pay the land premium. The defendant turned to the plaintiff for help. The plaintiff contributed her share of $450,000 to the investment and in addition paid the premium of $1,000,000. Later, this property was sold and the proceeds invested in WCW. Both properties were sold at a profit. These payments were not in dispute. The defendant's version was that these were investments voluntarily entered into by the plaintiff.
50. The significance of these transactions is that when the account was finalised, the plaintiff issued the defendant a cheque of $673,830 on 11 June 1995 in respect of the defendant's share of the proceeds of sale. Counsel suggested to the plaintiff that if indeed the defendant was indebted to her, she could have deducted the debt from this cheque. Counsel also suggested to the plaintiff that she deducted rent from the defendant's share of profit in respect of the defendant's occupation of these properties. The plaintiff's reply was that the defendant insisted to deal with this account separately from the money owing. As for rent, she said that she felt offended when her other sisters told her that the defendant complained for having to pay rent for occupation of the plaintiff's property, so she may as well charge the defendant rent. These spontaneous answers, in my view, boosted her credibility. In respect of these two transactions, the plaintiff had been very generous. Despite that she financed 70% of the investment, she shared the profit equally with the defendant.
Property in Fairview Park ("FVP-F10"):
51. On 22 January 1992, the plaintiff purchased a house in 10th Street, Section F of Fairview Park (hereinafter called "FVP-F10") in joint names with the defendant. On 1 July 1992, the defendant executed a deed of trust that her share of FVP-F10 was held on trust for the plaintiff. Upon sale of the property on 28 July 1993, the defendant handed over the proceeds of sale to the plaintiff. All these facts were not in dispute.
52. This transaction was raised for cross examination purpose. Counsel suggested to the plaintiff that if she were the beneficial owner of MC-2, she should have asked to have MC-2 included in the deed of trust or for a similar deed to be executed in respect of MC-2. The plaintiff replied that she was then applying for migration to Canada under the investor's category and had to prove her net worth. She was advised by the immigration consultant that with inclusion of FVP-F10, her net worth would qualify. She had enquired from the consultant if she should include MC-2 as well, but was advised that she should not because unlike FVP-F10, she was not a joint owner of MC-2. I agree that to do so would render the declaration of trust in respect of FVP-F10 dubious. I consider her answer credible and sensible.
Loan of $145,000/Repayment of balance of $360,000:
53. A few days after receipt of the proceeds of sale of FVP-F10, namely on 28 July 1993, the plaintiff gave the defendant $145,000.
54. According to the plaintiff, this was just a loan requested by the defendant. In addition, she had given her various sums of $20,000 to $80,000 throughout the years. This is not incredible in view of their good relations and the various properties the defendant introduced and services rendered to her. The defendant would also have been remunerated by the commission from the other parties to the transactions, the profits from the joint investments and the extra finance provided by the plaintiff in relation to those investments.
55. The defendant's case was that this $145,000 was the balance of the $360,000 held by the plaintiff after deducting the deposit and down payment for MC-2, i.e. $93,160 ($360,000 - $110,000 - $156,840). She said that the surplus of $51,840 was to reimburse her for the work she had done to FVP-F10. These included paving the garden with marble and planting trees in the garden. In her witness statement, she said that the balance represented a gift to her for all the work she has done to the property particularly her acting as the bare trustee for the plaintiff. In my view, she was departing from her statement, which referred to services of a personal nature rather than reimbursement. I do not consider her account credible.
The dispute:
56. The relations between the sisters was still very good in July 1993 when the plaintiff lent the defendant $145,000 and invested in WCW. The relations started to deteriorate when finalising the account for WCW in June 1995, when some gossip and dispute over money arose between the sisters. The plaintiff felt the defendant was dishonest in repeating a claim of $50,000 expenses and in accusing her of charging the defendant rent for occupation of the plaintiff's property. I need not investigate into the truth of these allegations. There were no further loans from the plaintiff to the defendant thereafter.
57. According to the plaintiff, the defendant was still indebted to her at least for the $270,000 proceeds of sale from WM-G. There was also the account to be taken in respect of MC-2. Despite repeated request, the defendant avoided the issue and refused to return the debt or to give an account. Eventually the sisters came to a confrontation when the plaintiff discovered in 1997 that the defendant had redeemed the mortgage over MC-2 in December 1992 without her knowledge. The parties resorted to litigation.
Credibility:
58. As submitted by Mr Yeung, for the defendant, the case stands or falls on my finding of credibility of the plaintiff and the defendant and her witness. He submitted that the plaintiff was a very shrewd person and the mastermind of all the investments. She had control of most of the joint accounts and kept clear records and was well organised. I agree with all these observations. I also find her a credible witness. Her account of the events was simple and straight forward. Her explanations of the various transactions, loans and payments were cogent and tie in well with the amounts and the timing of the various transactions as I have already observed when going through the various property transactions. Her evidence was supported by documentary evidence and when tested against the totality of the evidence is credible. I am satisfied that she was a credible witness and accept her evidence.
59. On the other hand, the defence appears doubious and the defendant's evidence appears convoluted. She did not dispute the documentary evidence, which of course she could not, but sought to explain why the payments were made. She began her defence with a common fund which rolled over with her share accumulated up to $380,000. She kept no record and had no account of this common fund. The only evidence was her testimony and what she alleged as being said by the plaintiff. The other evidence was that WM-G and MC-2 were conveyed to her in her sole name.
60. However, her story of rolling over and common fund wrecked at the start as the conveyancing documents show that the purchase of TPT-1 was completed a month before the sale of Avon Villa. There could be no truth in her story of rolling over.
61. Her evidence that WM-G was purchased with her share of common fund and then mortgaged to release funds for the plaintiff to purchase Green Park was also completely discredited by documentary evidence and by her own witness DW2. The plaintiff made a profit of $252,435 from the Lot 1087 transaction. Even if that were a joint investment, half of the profit from that transaction plus the plaintiff's initial capital of $100,000 were more than enough to cover the down payment required for Green Park. That was just three weeks before she bought Green Park. Furthermore, DW2's evidence that the plaintiff discussed with him about purchasing Green Park more than four months before she actually found the property and paid the deposit for the purchase is a concoction made without regard to the timing and the documentary evidence. DW2 could not have been honestly mistaken as his evidence was specific both as to time and event. He was deliberately concocting evidence. I find DW2 wholly incredible, and with that goes the credibility of the defendant who must have colluded with him. I therefore reject the defendant's evidence that WM-G was purchased by the defendant from her share of the common fund but was used by the plaintiff to raise a mortgage for the purchase of Green Park.
62. The defendant could not dispute that upon sale of WM-G she paid the plaintiff $330,000 by a money order. This is indicative that the plaintiff had some interest in WM-G. She sought to explain that as a repayment of the $250,000 borrowed from the plaintiff to enable her to complete the purchase of MC-1. But the figures did not tally. She then explained that the difference of $80,000 was in respect of interest and gifts to celebrate the plaintiff's purchase of Green Park. For reasons as I have given earlier, I find the explanation incredible. Her evidence further destroyed her case of common fund and ownership in WM-G. With that I can conclude there was no common fund and that WM-G was held by the defendant on trust for the plaintiff.
63. The defendant could not dispute that the plaintiff provided at least $266,840 towards the down payment for the suit property. She explained that this was from her fund of $360,000 which she entrusted to the plaintiff for custody in view of her bad relations with her husband. The amount did not tally and she brought in another payment of $145,000 more than four years later to explain the difference. That amount was surplus by $51,840. Again she sought to explain that by alleging the difference as a gift by the plaintiff for her work in respect of FVP-F10. For reasons as I have explained, I find her explanation incredible and reject her evidence.
64. On the other hand, the plaintiff's account was simple. The $360,000 was not money given to her for custody. It was a repayment of the $270,000 she lent her for the purchase of MC-1 and the $94,000 she lent to Ho at her request and upon her guarantee to repay, less a waiver of $4,000. This is a simple account and ties in well with time, documents and amount. In the face of the uncontroverted money order of $94,000 to Ho, the defendant offered no explanation and did not call Ho to give an explanation. This renders the plaintiff's account more credible than the defendant's. For all these reasons, I reject the defendant's evidence and accept the plaintiff's.
Conclusion:
65. I am therefore satisfied that the defendant purchased the suit property as agent of the plaintiff, that the plaintiff paid the deposit and down payment totalling $286,840, that the defendant has been holding the property upon trust for the plaintiff.
66. Mr Li for the plaintiff requested for a transfer order or vesting order in respect of MC-2, subject to the payment to the defendant by the plaintiff of the amount of money the defendant paid to discharge the mortgage over MC-2; and for an account of rental income to be taken before a Master. On a preliminary view, had MC-2 been rented at the same rent of $21,000 per month since February 1993 as alleged by the defendant, the rental income would more or less cover the mortgage repayment of $984,216.21 plus interest on that amount since the repayment up to today. It would therefore be prejudicial to the plaintiff if the transfer order or vesting order is to be made subject to the payment by the plaintiff of the said $984,216.21. It is also unfair for the order to be issued without taking an account first.
67. Accordingly, I grant a declaration that the defendant is and has been holding the suit property upon trust for the plaintiff. The defendant shall pay the plaintiff's costs, to be taxed, if not agreed.
68. I shall now invite counsel to seek direction for the further conduct of the proceedings in respect of the outstanding relief sought.
| (Anthony To) |
| Deputy High Court Judge |
Representation:
Mr Li Chau Yuen, instructed by Messrs Raymond Hung & Co, for the Plaintiff
Mr Dominic Yeung, instructed by Messrs Kwok, Ng & Chan, for the Defendant
上訴法庭駁回被告人的上訴。請參閱 CACV485/2000 日期: 2001年9月21日